Stephanie Azar, CEO of the State Employees Insurance Board, speaking to its executive committee on Sept. 3, 2025, in the RSA building in Montgomery, Alabama. The executive committee approved Azar's proposed benefit changes, which will be brought to the full board for a voter later this month.(Anna Barrett/Alabama Reflector)
In the face of rising insurance rates, Alabama will have to consider allocating more money to the state employees’ health insurance program while altering state workers’ benefits, the State Employees’ Insurance Board leader said during a meeting Wednesday.
Stephanie Azar, CEO of the board, told members of the executive committee that without increased state support or benefit changes, the SEIB would gradually go into debt over the next three years.
“The board has known for some time that there would be difficult decisions coming due to the health care inflation and the issues we may face,” Azar said. “I will say that any changes or any decisions that will be made should not occur at one time, or even in one year, but will require the board to remain open to the pathway over the next several years to ensure the plan remains financially strong while maintaining excellent benefits for the members.”
Azar also recommended the board authorize a withdrawal from the Retirees’ Trust Fund to address funding shortfalls in the coming months. Withdrawals are limited to 10% of the trust’s fair market value on the last day of the previous fiscal year, Azar said, which was $304.7 million. She recommended pulling the maximum amount allowed, $30.4 million.
“I think that is not a good practice to pull from the trust, but I think that this board is going to have to pull from the trust,” Alabama Finance Director Bill Poole said.
Azar said the last time money was taken from the trust was in fiscal years 2015 and 2016, also to address funding shortfalls. She also recommended that the board withdraw 5% of the trust at the end of FY26 if needed.
Although the $30.4 million will help, Azar said the $30.4 million will only pay for about three weeks of expenses.
“This was enlightening to me when I heard this, but SEIB spends a little over $10 million in a week,” Azar said.
The executive committee approved benefit changes to bring before the full board for a vote, including:
- Major medical calendar year deductible (from $300 to $350)
- Inpatient hospital stays (from $250 to $300 deductible, and from $25 to $50 copay)
- Emergency room visits (from no copay to $250 copay excluding accidents and $300 copay including accidents)
- Specialist and ER physician visits (from $35 copay to $40)
Azar said the changes would save SEIB up to $6.2 million per year.
Connie Grier, an elected active employee representative, convinced the executive committee to reduce Azar’s initial recommendation for an increased specialist copay of $50 down to $40.
“I feel like $50 for a specialist is going to discourage some people from going to a specialist,” Grier said. “There are a whole lot of specialists. I think people are actually seeing more specialists now than what we used to 10 years ago.”
Azar said that benefit change was the biggest driver of savings in its original form at about $3.7 million per year.
“It is still a very rich benefit program, even with benefit changes,” Azar said.
She also recommended increasing the per member per month rate from $1,025 to $1,175 for full-time employees, which the board will request from the Legislature when the 2026 legislative session begins in January. Azar said about 30% of the coverage is paid for by the state, $6% is from the employer, and 28% falls to the employee. The final funding decision will lay with legislators.
Earlier Wednesday, the Public Education Employees Health Insurance Plan board approved a rate increase request.
“The point is: health care costs are going up everywhere,” Poole said.
Faye Nelson, who chairs SEIB, said she would support the changes the board sought, but that there would have to be changes to premiums.
“The reality is, it’s going to be more of a cost to our employees either now or later,” Nelson said.
From Alabama Reflector Post Url: Visit
Author: Anna Barrett