CalPERS Health Premiums to Increase in 2024
June 22, 2023
This week, the California Public Employees’ Retirement System’s (CalPERS) Pension and Health Benefits Committee received an update on the Rate Development Process and the 2024 proposed premiums for the CalPERS health plans.
Last year, the CalPERS Board of Administration approved health plan premiums for calendar year 2023 that represented a 6.75 percent increase from the prior year. The 2024 preliminary premiums reflect an average increase of 11.78 percent but vary widely by plan with two popular Preferred Provider Organization (PPO) plans increasing substantially more. In an effort to smooth out the cost increases for PPOs, CalPERS is contemplating a range of options that would include a one risk pool phase-in over either two or three years that would increase the 2024 premiums by either 11.27 percent or 10.99 percent, respectively.
The proposed increases for the 2024 premiums are largely due to rising medical costs and continued high pharmacy costs, but also include other factors such as an additional surcharge and decreased Federal Medicare Reserves. CalPERS participates in the Rate Development Process each year, during which the Board considers new health plans, expansions of existing health plans, and benefit design changes. Health carriers submitted their initial premiums to CalPERS earlier this year and met with the CalPERS rates team to discuss data, assumptions, and models used to calculate the proposed premiums. The final 2024 premiums, which will go into effect January 1, 2024, may change slightly before final adoption by the Board (during an offsite meeting in July 2023).
While employees and employers will see increased premiums on average, the actual increase or decrease will vary based on plans. The impact on counties and other agencies that contract with CalPERS for health plans will be determined by the negotiated health premium contribution amount of each agency.