Health insurance prices for Colorado PERA members will increase before 2025

Tens of thousands of public sector retirees received an unwelcome message this fall when renewal rates for Medicare Advantage plans through the state pension plan hit their inboxes.

Two of the three plans offered will see huge increases before 2025: one plan’s premium prices will increase by 130%, while another plan will increase by more than 200%. A third plan will see no change in premium prices.

“When I talked to them, they said, ‘You might want to prepare for a little sticker shock,’” said Bill Heicher, a retired district wildlife manager in Eagle. “Well, holy moly.”

Even with a subsidy for his years of service in state government, Heicher and his wife’s plans rise to a combined $583 per month, up from $394.

The rate changes mark the first time in three years that many members of the Colorado Public Employees’ Retirement Association, or PERA, have seen increases in their health insurance bills. And that explains the problem, says Andrew Roth, the pension’s executive director and CEO.

When PERA added UnitedHealthcare’s Medicare Advantage plans to its 2022 offering in 2021, it was a great deal. United not only offered rates below 2021 premiums, but also locked in those rates for three years.

Now that the deal is complete, Roth says PERA’s 2025 rates should “reflect what’s happening in the market overall.”

“Unfortunately, we don’t have a magic wand to lower premiums,” Roth said.

Medicare Advantage plans are essentially enhanced versions of Medicare coverage that work like more traditional health insurance plans. That means they come with premiums, out-of-pocket expenses, coverage benefits and limitations, and specified networks of medical providers.

PERA, like many other public pensions, has provided medical coverage to its beneficiaries for decades. Today, nearly 64,000 people – both public sector retirees and their spouses or dependents – are enrolled in a Medicare plan through PERA.

The pension also provides health coverage for retirees who are under 65, the age at which they are eligible for Medicare. About 7,000 people are covered by this — and while these plans cost much more than Medicare plans, they generally don’t see big increases in premium prices.

Roth said PERA is trying to offer its members health insurance plans with “richer” benefits. This means, in an actuarial sense, that there is more value for money. Only next year’s Medicare plans will cost a lot more money.

The increases are included in two UnitedHealthcare plans. One of the United plans jumps to a monthly premium of $349 in 2025, from a monthly premium of $152 in 2024. The other United plan increases from $52 per month to $169 per month.

PERA also offers a Medicare Advantage plan through Kaiser Permanente. That plan remains stable at $170 per month.

Retirees can receive a subsidy from PERA to help reduce the cost of their premiums. The subsidy is $5.75 per month for each year of service – up to a maximum of $115.

For reference, unsubsidized premiums for a 40-year-old buying their own insurance in Colorado averages about $460 per month.

PERA members could drop the retirement plans and opt for cheaper Medicare Advantage plans available on the open market. But those plans may not offer the same level of benefits, or access to the same doctors.

Heicher, the retired wildlife manager, said he has looked into that — as well as switching to a plan through PERA with cheaper premiums. But between the extra copays and higher deductibles, he said those plans ultimately weren’t cheaper. Additionally, living in a relatively rural area means that the physician networks for some of those plans are not as robust.

So he has resigned himself to paying the higher rates.

“You also have to deal with everything else that goes up: property taxes, groceries, transportation costs, everything,” he said. “It’s just like everyone else: you have to live within your means. It means doing without.”

“I’m not sure yet how we’re going to do it. Be sure to dip into your savings.”

Roth said he has heard from many PERA members about the higher rates, and he offered empathy for the hardship.

“We absolutely feel the pain of our members,” he said. “We are aware that disruption is difficult for our retirees.”

Combined with other changes in PERA which have reduced benefits for membersHeicher said many state retirees are struggling. And he wondered whether the younger generation will see value in service to the state, especially when it comes to state government jobs still pay less than the private sector.

“It’s actually a bit depressing,” he said. “It’s an accumulation of everything that really lets a lot of us down.”

Type of story: News

Based on facts, either directly observed and verified by the reporter, or reported and verified from expert sources.