The Nebraska Legislature Appropriations Committee began hearings on the proposed 2025-2027 Biennium State Budget on February 18, 2025. The mainline budget bill, LB 261, contains recommended appropriations to fund all base salary increases that our union negotiated with the governor’s office. Additional funding is included in agency specific budget requests. The budget that will fully fund salary increases is expected to be passed by the legislature and signed into law by the governor this spring.
In addition to salaries, the governor requested a significant increase in funding for state employee health insurance benefits. The governor requested an 11% increase in funding for each fiscal year. This does not necessarily mean that state employee health insurance premiums will go up by 11% each of the next two years, however, as we approach the end of the current insurance year, it is now becoming clear that health insurance premiums will likely rise at a higher rate this year due to a high level of catastrophic claims.
The State of Nebraska is self insured, without stop loss coverage, meaning, the State fully pays all claims from its own self paid insurance fund. After years where claims come in at a higher rate than the previous year, it is common for the premium rates to increase to cover those costs. Our insurance fund has seen a higher level of catastrophic claims this year, which will likely lead to a higher increase than recent years. Fluctuations in health insurance premium increases in self funded pools tend to be cyclical. The ten year history of the employee portion of single premium insurance increases is as follows:
FY16 – 14% – $682 ($28.42/paycheck)
FY17 – 11% – $609 ($25.38/paycheck)
FY18 – 14% – $869 ($36.21/paycheck)
FY19 – 3.3% – $233 ($9.71/paycheck)
FY20 – 3% – $217 ($9.04/paycheck)
FY21 – 2.5% – $187 ($7.79/paycheck)
FY22 – 0% – $0 ($0/paycheck + premium rebate)
FY23 – 4% – $306 ($12.75/paycheck)
FY24 – 4% – $318 ($13.25/paycheck)
FY25 – 4% – $331 ($13.79/paycheck)
While it’s very hard to predict the second year of the biennium this early, we expect the FY26 increase will be higher than recent years. We will continue to monitor the health insurance fund and the budget bills as they proceed through the legislature and provide members with updates as they become available.
