PEP reviews rising costs of mandated health coverage amid legislative changes

In a recent meeting of the Public Employees Benefits Program (PEBP) Board, held on March 7, 2025, critical discussions unfolded regarding the financial implications of proposed legislative changes affecting employee benefits in Nevada. The atmosphere was charged with concern as board members navigated the complexities of rising costs associated with new mandates and the sustainability of the benefits program.

Executive Officer Celestina Glover opened the floor by addressing the potential financial burden of new legislation, highlighting that while many employers have inquired about expanded benefits, the reality is that these changes come with significant costs. Glover noted that the program is facing increased administrative and claims costs, with uncertainties surrounding when new members might join the plan. The board anticipates that the earliest influx of 15-year retirees could occur in 2027, but prior local government employment could accelerate this timeline.

Board member Michelle Kelly raised a pertinent question about the tracking of past legislative impacts on the program's finances. She pointed out that while new benefits are often mandated, funding has not kept pace with inflation or the added costs of these benefits. Glover acknowledged the challenge, explaining that while PEP tracks legislation, they have not formally documented the associated costs, which could provide valuable insights for future discussions.

The conversation shifted to specific bills, including AB 169, which proposes significant changes to coverage limits. Board member Laura Rich expressed concern over the projected $3.3 million cost associated with this bill, questioning the methodology behind such estimates. Glover clarified that this figure represents a worst-case scenario, where members could potentially utilize benefits far beyond current limits, leading to substantial financial implications.

Rich also emphasized the importance of balancing benefits for active employees versus retirees, noting that many other employers focus their resources on current staff to enhance recruitment efforts. Glover agreed, acknowledging the need for a strategic approach to funding that prioritizes active employee benefits while still considering the obligations to retirees.

As the meeting concluded, it was clear that the PEBP Board faces a challenging landscape. With legislative changes on the horizon and financial pressures mounting, the board must navigate these complexities to ensure the sustainability of employee benefits in Nevada. The discussions underscored the importance of transparency and strategic planning as they prepare for the future, leaving board members and stakeholders alike pondering the implications of these decisions on the state's workforce.