PEBP board hears actuarial warning on reserves, orders analyses on plan design and pharmacy costs

The Public Employees Benefits Program Board met Friday morning and spent much of the session on financial briefings and potential plan‑design changes after the actuarial firm Segal reported near‑term reserve shortfalls and long‑term retiree‑health liabilities.

Segal principal Richard Ward told the board that enrollment has shifted toward the low‑deductible PPO while the consumer‑directed health plan (CDHP) remains the single largest enrollment pool. Segal cited rising pharmacy trend driven by specialty drugs — including GLP‑1 agents — and a medical trends environment that warrants continued caution. The board was shown that fiscal year 2025 cash on hand dropped to about $67 million, while a set of actuarial reserve targets (IBNR, catastrophic and HRA protections) produced a combined funding need staff and public commenters described as deficient by tens of millions of dollars.

Why it matters: Board members and public commenters said they want reserves restored over a reasonable timetable without cutting core benefits. Segal and staff described a range of tools — from rate adjustments and subsidy policy changes to targeted pharmacy steps — that could help stabilize the fund while balancing member affordability.

The board took several discrete actions and instructions:

- Interim policies/procedures: The board…