State worker benefits slashed

CARSON CITY -- A state panel voted Thursday to reduce benefits for tens of thousands of retired and current state employees, including eliminating insurance for some family members and drastically reducing other coverage.

The Public Employees' Benefit Program Board approved measures that eliminated insurance for spouses or domestic partners of employee or retirees who have other available coverage through an employer. The cuts, which will go into effect next July, affect 70,000 participants.

The board also eliminated dental benefits, except for preventive procedures such as cleanings, an annual exam and X-rays. More costly procedures, such as filling cavities, fitting crowns or having root canals, are no longer covered.

"Our decisions here today are going to be significant and have a long-term impact," Randall Kirner, board chairman, said near the end of the eight-hour meeting.

The board also voted to end supplemental coverage for retirees on Medicare, and move them to a market-exchange system in which they would choose from various private plans and providers for Medigap and prescription drug coverage.

James Wells, program executive officer, said without program cuts, premiums for current employees alone would skyrocket as much as 500 percent, from $40 to about $200 monthly.

Jim Richardson of the Nevada Faculty Alliance, which represents higher-education faculty, said he had concerns about the market exchange for Medicare recipients, saying it "sounds too good to be true."

Perhaps the biggest change was doing away with the existing preferred-provider system in favor of a high-deductible program. Deductibles for individuals will jump from $800 annually to $2,000, and up to $4,000 for family coverage.

Co-payments that currently limit out-of-pocket costs for prescriptions and doctor visits will be eliminated. Participants will pay 25 percent of the total cost, with a cap of $3,900 for individuals and $7,800 for families.

The board also reduced life insurance payouts and long-term disability benefits. It slashed the payouts by half, to $10,000 for active workers and $5,000 for retirees.

The disability benefits were pared from 60 percent to 40 percent of employee base pay, with a worker option to purchase the extra 20 percent.

Representatives of retirees and employee groups said the changes were drastic and could have unintended consequences.

"Obviously these plans cut utilization," Richardson said. "What that means is people don't go to the doctor."

The cuts Thursday trimmed $80.7 million in subsidized services, which is about two-thirds of a $111 million shortfall faced by the program for the two-year budget cycle that begins July 1, 2011.

The remaining $30 million will be made up in higher premiums paid by workers and retirees. The board will tackle those options when it meets next month.

Marty Bibb, executive director of Retired Public Employees of Nevada, said the program has given up roughly $80 million in budget cuts over the past two years.

"We recognize that there are serious budget cuts that have to be made," he said, adding the board's proposals are a "dramatic departure" from current practices.

To offset the burden to workers and retirees, the board agreed to help set up health savings accounts and health reimbursement accounts that could be used for out-of-pocket costs or noncovered expenses.

Some of the changes will have to be approved by the Legislature.