Beginning Jan. 1, all new North Carolina state employees and teachers will no longer receive the retiree health coverage benefits offered to current employees.
This is due to a state budget change in 2017.
State Treasurer Dale Folwell said the 2017 budget change was enacted by the state legislature to control rising expenditures. For the past several years, medical assistance and supplemental hospital payments have been among the top three expenditures for the state, making up more than $16 billion combined of the state’s total $54 billion in expenditures last year.
Though the state will continue to provide health insurance for active employees, lawmakers hope this change will help to mitigate the rising costs of insurance that the state is responsible for providing.
“Our total focus at the treasurer’s office is making money and saving money,” Folwell said. “Every time we make it or save it, it goes back into these plans so that they are around for the next generation of public service workers.”
Folwell said the state’s current unfunded healthcare liability for retirees is $28 billion, which is larger than the state’s current debt, over $14.5 billion dollars in 2020.
He said while the treasurer’s office did not decide on the budget change, he believes it will help the state to continue funding other benefits for current employees and retirees, including the state’s health and pension plans.
Suzanne Beasley, director of government relations at the State Employee Association of North Carolina, said she worries this change could have a major effect on recruitment this year, as she believes retiree benefits were one of the major draws to employment in the state.
“That’s a recruitment tool that it could make or break a compensation package that would lure in good quality candidates for state government work,” she said.
