Roughly 300,000 education employees across Alabama felt the effects of an insurance premium hike for the first time last week as changes to the Public Education Employees’ Health Insurance Plan (PEEHIP) went into effect Oct. 1.
Approved by PEEHIP’s board in April, changes included a $15 increase to individual plans and a $30 increase to family plans. A monthly surcharge paid by members whose spouses have other insurance options was doubled from $50 to $100.

Public Education Employees’ Health Insurance Plan (PEEHIP).

Public Education Employees’ Health Insurance Plan (PEEHIP).

For many teachers and paraprofessionals, the timing of the rate increase is frustrating because it comes on the heels of a 4 percent pay raise the state Legislature approved during its 2016 regular session.

Chris Hiscox, a science teacher at Davidson High School, said the benefits of PEEHIP have always been a perk of the job in public education. As an individual policyholder, Hiscox said his paycheck hasn’t taken too much of hit but his colleagues’ have.

“I’m pretty fortunate that it doesn’t affect me as much, but it’s affecting those that have spouse or family coverage pretty badly,” Hiscox said. “I know talking to my colleagues here, it’s hurting.”

Those higher rates have a measurable effect on Alabama teachers who earn an average salary $36,144, but it’s the support staff, who in some cases earn half of that, who are really seeing a dip in their take-home pay.

“This is hitting our pocket hard. You’re taking $100 out of someone’s check that only brings home $1,000 a month. In my eyes, that’s groceries for a week,” said Dana Childress, a paraprofessional at Alma Bryant High School in Bayou La Batre. “It always seems like once we do get a raise, it just makes things worse instead of making them better.”

A 20-year employee of the Mobile County schools, Childress said she’s currently paying back student loans from 2005 she borrowed to earn a degree when the state began a push for “highly qualified” personnel. Now, Childress said her 4 percent cost of living of adjustment is being completely negated by the increase in her insurance premiums.

“In some ways, it feels like a slap in the face. I went back and did all of that for a raise, and I’m not even seeing it. It’s just put me and a lot of others in a bind,” Childress said. “Yeah, we put a smile on our face and we come to work because it’s for these kids, but we have to have an income to provide for own families.”

The rates went into effect in most employees’ most recent paycheck, despite a last-ditch effort from the Alabama Education Association to have a judge stop PEEHIP from collecting the new premiums until a lawsuit filed over the rate hike is resolved in court.

That suit, filed by the AEA in May, alleges the PEEHIP board violated the Alabama Open Meetings Act when information about the new rates and the program’s finances were discussed in a closed meeting hours before the board voted to increase the premiums on April 27.

Don Yancey, deputy director of Retirement Systems of Alabama, told Lagniappe holding “working sessions” prior to a public meeting isn’t uncommon for the board — something of which the AEA should be aware, he said.

“It was not a board meeting. It was not called as a meeting, not announced as a meeting and there was no deliberation between the board members,” Yancey added. “There’s lot of things we present that are very complicated, and we’ve always tried to educate the board in advance.”

Yancey said he believes AEA’s lawsuit has no legal basis, adding that allegations of an improperly advertised meeting were likely the only way it could challenge the increased premiums. However, that seems to be at odds with accounts from at least some of the PEEHIP board’s own members.

With a 7-6 vote, the premium hike barely passed, and at least two board members have submitted affidavits discussing their notice of the “educational” meeting and how information in it was presented. Some members of the board also objected to the meeting because the “public was not allowed to attend.”

“Information was provided in a way that was designed to suggest that the board should adopt the proposed premium increases,” board member Susan Brown wrote in her affidavit. “There was deliberation concerning [rate increases], which later in the day was going to come up for a vote.”

As for the premium increases, Yancey said despite an additional $23 million from the state this year, PEEHIP would be facing a $140 million deficit without them. Though he said it’s unfortunate the increase came as teachers were seeing a “long-deserved” raise, Yancey called those “two separate issues” despite the AEA’s attempt to “tie them together.”

“The Legislature can grant teachers a pay raise whenever it has the money to and deems appropriate, but [neither] the Legislature nor PEEHIP can do anything to address the increasing cost of health care, which is going up at an average rate of 12 percent every year depending on whose numbers you’re looking at,” he added.

According to Yancey, some PEEHIP members may qualify for premium assistance that can offer up to a “50 percent savings” for those who meet the federal requirements. A link to an application for that program is available here.

As for the lawsuit, the AEA has recently claimed a “half victory,” despite Montgomery County Circuit Judge Johnny Hardwick denying its request to stop the increased premiums from being deducted from employees’ checks.

However, in a Sept. 23 hearing Hardwick also said any funds generated from the new premiums “must be retained in a separate, segregated, interest-bearing account” in the event AEA’s lawsuit proves successful.

Downplaying the requirement, Yancey said PEEHIP is “fully aware what would be required if the new premiums were invalidated” in court.

“The problem there is, we’d just be right back to being $140 million in the hole,” he said. “I can reasonably assure you that, if that happened, somewhere around next August or September we would not be able to continue operating.”