Alabama Retired State Employees’ Association Says Proposed Insurance Premium Increase “Unfair and Painful” to Retirees

From the Alabama Retired State Employees Association

Alabama Retired State Employees Association Executive Director Lindsey Ward said on Wednesday that an across-the-board, $20-a-month premium increase proposed by the State Employees Insurance Board would be an “unfair and painful” burden to retirees who have not received a cost-of-living adjustment in 20 years.

The SEIB executive committee voted on Tuesday to recommend the blanket increase as a method of addressing rising healthcare costs and falling revenues flowing into the state budget.

The Public Education Employees Health Insurance Program, which provides coverage for active and retired educators, faces similar economic pressures but has thus far declined to propose any boost in premiums.

“The cost of health insurance coverage for state government retirees is primarily carried by Medicare, not SEIB, while all of the costs for active employee coverage are paid by the state,” Ward said. “At the same time, active state employees have received nine cost-of-living adjustment raises since 2006 while state retirees have received zero, so asking both groups to pay the same increase is unfair and painful to retirees living on a fixed pension income.”

Ward noted that on the federal level, Medicare premium increases for senior citizens are tied directly to Social Security COLAs, and a “hold harmless provision” prevents retirees from seeing their benefits decrease as a result of Medicare increases.

In addition, while SEIB can withdraw up to 10% from its reserve fund in order to balance revenues against outlays, the agency’s executive staff recommended withdrawing only 5%, equivalent to roughly $17 million.

Because the proposed premium increase would bring in an estimated $12 million, tapping the full 10% withdrawal from the reserve fund, or another $17 million, that is allowed would remove the need for the premium hike altogether for at least another year.

“All we are demanding is fairness and simple commonsense, and this premium increase fails to meet either of those criteria,” Ward said. “Someone at SEIB needs to fire up their calculator, go back to the drawing board, and come up with a plan that doesn’t penalize the elderly for simply being elderly.”

During its 2025 regular session, the Alabama Legislature passed a bill drafted by ARSEA that allows regular cost-of-living adjustments to once again be awarded to state and local retirees without adversely affecting the finances of the Retirement Systems of Alabama.The legislation, which was signed into law by Gov. Kay Ivey, treats COLAs like a line item in the state budget that must be funded by the Legislature each year rather than requiring the Retirement Systems of Alabama to carry the full weight of funding them each year, which was the previous practice.

Despite passage of the legislation, lawmakers declined to include a retiree COLA during the FY2027 budget it approved earlier this year.

“The Legislature last awarded a COLA benefit increase to state government retirees when President George W. Bush was in White House and the iPhone did not yet exist,” Ward said.

“The facts are simple – state retirees cannot afford an insurance premium increase, and plenty of time remains for the SEIB to find another proposal or stopgap measure before January, so find another solution.”

As a result of skyrocketing inflation, figures show that the value and buying power of a monthly benefit for a state worker who retired from active employment in 2006 is now less than half what it was when they left state service

The full SEIB is expected to vote on the across-the-board premium increase at its next meeting, scheduled for Thursday, September 10, and Ward is encouraging retired state employees across the state to contact the SEIB and express their strong displeasure with the proposal.

The Alabama Retired State Employees' Association was founded in 1980, and the Alabama Public Employees’ Advocacy League was created in 1996. The two groups later combined and rebranded as ARSEA/APEAL. ARSEA/APEAL is Alabama’s largest and most effective statewide association representing state, municipal, county, and public board retirees. The group works to protect and expand the retirement and health insurance benefits that its members earned during long careers in state and local government service.