In the 2025-2027 biennium state budget, the legislature fully funded our negotiated salaries, and the legislature included an 11% increase in health insurance funding for each fiscal year. Last year (FY26), we saw state employee health insurance premiums increase by 8%, which was the highest increase in eight years.
As we approach the end of the current insurance year, it is becoming clear that health insurance premiums will likely rise at a higher-than-average rate again this year (FY27). This is mostly attributed to a high level of catastrophic claims in our self-insurance pool.
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. United Health Care and Blue Cross/Blue Shield do not pay the cost of insurance claims. The health insurance company simply facilitates claims. After a year 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 self-insurance fund has seen a higher level of catastrophic claims over the past two years, which will likely lead to a higher increase than average when the new insurance year begins. 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:
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)
FY26 – 8% – $357 ($14.89/paycheck)
Despite record salary increases, significant health insurance increases are challenging for our members to absorb. Our union contract includes minimum levels of coverage that the state must provide, however, in years where catastrophic claims are high, we see higher than average premium increases because of those guarantees.
We will continue to monitor the health insurance fund and make recommendations to control costs during the contract negotiations process later this year. Not a union member? Join your union today and gain a voice in the contract negotiations process.