PEIA Costs Under Scrutiny at West Virginia Capitol
CHARLESTON, W.Va. – Discussions surrounding the rising costs of health insurance for West Virginia’s public employees are gaining traction at the state capitol. While coverage appears stable for the 2026 plan year due to approved premium and out-of-pocket expense adjustments, the long-term financial health of the Public Employees Insurance Agency (PEIA) remains a key concern for lawmakers and public employee unions.
Representatives from various public employee unions convened a press conference on Wednesday at the Culture Center, located across from the State Capitol Building, where the 2025 legislative session is underway. They were joined by approximately 200 delegates attending the annual West Virginia AFL-CIO legislative conference. The message was clear: a long-term, sustainable solution for PEIA is urgently needed.

“It’s clear that making PEIA as best as it possibly can be and keeping it in that realm moving forward has not been a priority,” stated Josh Sword, president of the West Virginia AFL-CIO. “We need for decision makers to make funding PEIA a priority so it’s stabilized moving forward.”
The PEIA Finance Board recently approved premium increases, effective July 1, 2026. These increases include a 14% rise for state employees, a 16% increase for local government employees participating in the plan, and a 12% increase for retirees. These adjustments are estimated to cost the state approximately $113 million.
“Our retirees are also facing increases with their PEIA fees and charges,” said Kristie Skidmore, president of the West Virginia Chapter of the American Federation of Teachers. “We depend on our retirees as substitutes in our classrooms on a daily basis. So, we need some work to be done to help them out as well.”
The Finance Board also greenlit a 40% increase in out-of-pocket maximums for state and local government employees, along with increases in co-pays. Furthermore, the monthly spousal surcharge, introduced a few years ago, will double from $147 to $350. Administration fees for state and local fund employers are seeing a $2.50 increase as well.
For several months, AFT-WV has spearheaded a petition drive, advocating for the Legislature to address PEIA’s financial challenges. The union successfully gathered over 7,000 signatures, and support for this effort extended to all 55 county boards of education.
Reading an excerpt from the petition, Skidmore emphasized, “A well-funded and sustainable PEIA is essential for attracting and retaining qualified educators and school personnel, ensuring that West Virginia’s children receive the highest quality education possible.”
Joe White, executive director of the West Virginia School Service Personnel Association, provided a specific example: a Harrison County school employee with 28 years of experience, earning between $38,101 and $44,100 annually, faced a staggering $8,152 increase in total employee costs due to PEIA premium increases between fiscal year 2023 and fiscal year 2026. This translates to a 190% increase in premiums over the four-year period.
White urged the Legislature to fulfill its commitments, stating, “We’re asking that the Legislature do what the Legislature said they would do and what they’re obligated to do in stabilizing PEIA for the public employees in the state of West Virginia. Folks, PEA is a benefit. It was promised to the public employees in the State of West Virginia.”
The rise in premiums, out-of-pocket expenses, and other charges stems partly from the ongoing increase in healthcare costs impacting both public and private health insurance plans. However, in West Virginia, a significant portion of this increase can be attributed to a freeze implemented by former governor Jim Justice beginning in 2018.
That freeze was partially lifted with the passage of Senate Bill 268 in 2023, which restored PEIA to an 80/20 employer-employee match for state employees, with the ratio shifting to 70/30 for out-of-state medical care for non-contiguous out-of-state counties. Among other reforms, SB 268 set the reimbursement rate for all health care providers at a minimum of 110% of Medicare’s reimbursement rates.
Governor Patrick Morrisey addressed PEIA’s budgetary impact during his State of the State address on Feb. 12.
“Another major driver of West Virginia’s budgetary challenges is the Public Employees Insurance Agency. This is a problem that, quite frankly, has been kicked down the road. And now we must deal with it,” he said.
Morrisey proposed a balanced general revenue budget, estimating $5.323 billion in revenue for the 2026 fiscal year starting in July. This represents a 1.1% increase from the current fiscal year’s estimate and an increase of $58.6 million. The budget fully funds programs, including PEIA, without relying on reserve funds for the first time in state history. Last October, lawmakers had to approve a supplemental appropriation of $87 million for the PEIA reserve fund during a special session.
“My budget grows PEIA by about $45 million this year so that the state can meet its legal obligations,” Morrisey said. “Yet that new state commitment doesn’t even address the 14.4% employee premium increase expected this year. This is one of the many problems that we have inherited.”
During his address, Morrisey urged the Legislature to collaborate on both short-term and long-term PEIA solutions, including ways to assist public employee retirees.
PEIA currently provides coverage for approximately 13% of West Virginians.
The House Appropriations and Banking/Insurance subcommittees of the House Finance Committee held a budget briefing on Wednesday morning with Jason Haught, the chief financial officer and acting executive director of PEIA. Haught indicated that escalating healthcare costs, particularly in pharmaceuticals and expected increases in Medicare Advantage rates, are forcing difficult decisions regarding premiums, deductibles, and benefits.
“It is an unfortunate reality that health care costs are increasing,” Haught said. “The manner in which we fund those health care costs must change with them to maintain a viable plan for the folks that need it…The deductible and out-of-pocket changes, they are large but unfortunately necessary.”
According to PEIA data, total prescription net plan costs were $256.5 million in fiscal year 2024 (July 2023 to June 2024), marking a 16.6% increase from the $220.1 million recorded in fiscal year 2023. Further increases are expected for fiscal year 2026.
“The (pharmaceutical) manufacturers get to set the list price at whatever amount they want, and there’s no regulation on that list pricing,” Haught said. “I think that has produced some unsustainable cost trends to the health care marketplace.”
During a legislative interim meeting last November, PEIA presented several cost-cutting proposals. These included limiting “gold card” prescribers – doctors authorized to approve prescriptions for PEIA patients without prior authorization – and altering the minimum reimbursement rate of 110% of Medicare rates to be applied only to hospitals. Another proposal involved opening the non-public pool to include additional county and city public employees, albeit with certain safeguards. A moratorium, enacted in 2021, currently restricts additional local governments from participating in PEIA; however, expanding the pool could potentially lead to lower prescription drug prices through increased negotiating leverage.
Currently, PEIA has over 155,000 active members and 56,000 retirees, a decrease of between 10,000 and 15,000 members over the past few years. Dale Lee, president of the West Virginia Education Association, was a member of the 2019 Public Employees Insurance Agency Task Force formed by Justice.
One of the concepts discussed by the task force was a flexible 80/20 plan, with the state contributing no less than 80% and employees no more than 20%.
Lee believes that such a flexible plan would offer the state more flexibility in managing future premium increases.
“Had we had that language in 2019 when we suggested it in the years that we had these tax revenue surpluses, the state could have put additional money in that would have kept the costs low,” Lee said. “The other important part of that: it gives the finance board some flexibility. Currently, under the hard fast 80/20 rule, when money is put into PEIA, then they have no choice but to increase the premiums.”
With the 60-day legislative session underway, eight bills addressing PEIA have been introduced. However, none have yet been taken up by a committee or subcommittee.
Some of these bills include: Senate Bill 40, which proposes dissolving PEIA and converting it to an employer-owned mutual insurance company; House Bill 2623, which would abolish PEIA and establish contract health care for state employees; House Bill 2965, which redirects payments to PEIA to employees in the form of a health savings account; and House Bill 2968, which suggests dissolving PEIA as a public health care entity and allowing it to operate as a private health care insurance company.
Public employee union representatives have made their stance clear: they oppose dissolving or privatizing PEIA and are against providing a monthly health savings account benefit.
“Folks, that’s not the answer,” said Elaine Harris, a representative for the Communications Workers of America District 2-13, which represents correctional employees in West Virginia. “There needs to be work done to stabilize the plan. Those of us that have negotiated contracts in the private sector, we can tell you that privatizing is not the answer.”
“If privatization is simply handing PEIA over to a for-profit conglomerate organization that’s going to make a profit on it? It’s going to be bad for PEIA plan participants. It’s that simple,” said Sword.
“Any of the options that are presently there now is not a workable option,” White said. “By abolishing it, that kind of gets rid of a responsibility on them…That benefit is a responsibility, and that responsibility is for the Legislature and the governor – together in the budget – to provide the money that it takes to put into PEIA so the employees of West Virginia can have insurance.”