In public comments by Dr. Kent Ervin submitted to the Public Employees’ Benefits Program (PEBP) Board for their February 24th meeting, the NFA raises significant concerns about severe, unexplained fiscal discrepancies in PEBP’s projections for Plan Year 2027. Despite substantial increases in state funding approved by the Nevada Legislature and Governor, PEBP and its actuarial consultant, the Segal Group, are presenting revenue estimates that are approximately $100 million per year lower than what was budgeted. The NFA believes that this gap is neither adequately explained nor justified.
Dr. Ervin highlights repeated errors in PEBP and Segal’s previous presentations—including incorrect employer funding amounts and omissions of reserve data—and contends that these mistakes undermine confidence in the rate‑setting process. Because of these inaccuracies, the memo asserts that the Board should postpone any action on plan design or employee premiums until the financial projections can be validated.
Key concerns include:
- Revenue shortfalls: Segal’s projected revenues for FY2026 and FY2027 fall far below legislatively approved budget levels, despite increases in state subsidies and employee premiums. The memo questions Segal’s methodology and asks why revenue is lagging even when expenditures are on track.
- Lack of transparency and accountability: The memo argues that PEBP has not provided clear documentation explaining the discrepancies, and that “final” funding numbers used by Segal were available publicly a year earlier.
- Impact on employees: The proposed premium changes—especially shifting to percentage‑based premiums that vary by plan option and dependent tier—are described as inequitable. The memo highlights that some tiers, particularly families with children, would face disproportionately large increases. It also raises concerns about rising out‑of‑pocket maximums, which would hurt members with chronic health needs.
- Cross‑subsidization between plans: Under Segal’s proposed methodology, employer contributions would decrease for members enrolled in the high‑deductible plan—even though that plan already subsidizes richer plan options.
- An independent audit of PEBP’s budgeting, accounting, and rate‑setting processes.
- Phasing in any employee premium increases over at least three years, separating ongoing costs from temporary reserve restoration.
- Maintaining the long‑standing flat‑dollar employer contribution policy rather than moving to percentage‑based premiums.
- Protecting out‑of‑pocket maximums from further increases.
- Examining more equitable alternatives, such as the memo’s own proposed model that retains flat subsidies and a three‑year phase‑in.
To address these issues, the NFA recommends:
The NFA calls on the PEBP Board to adhere to their stated values of affordability, accountability, fairness, compassion, and sustainability while addressing this “sudden fiscal crisis.” The resolution requires a comprehensive audit and demands transparency and accuracy.
