Healthcare insurance costs for state employees will go up in January, though an agreement between the Montana Federation of Public Employees and the office of Gov. Greg Gianforte has mitigated some of the spikes that the Montana Department of Administration announced at the end of August.
Individual deductibles will increase from $1,000 to $2,000. Out-of-pocket maximums for individuals will rise from $4,000 to $6,500, and for families from $8,000 to $13,000.
The premium hikes announced in August remain unchanged. Monthly employee contributions will increase by either $60 or $100, depending on whether the plan covers an additional family member.
About 28,000 people use the state healthcare plan, including current state employees and their families and retirees. The DOA announced in late August an even more dramatic increase in health insurance costs — tripled deductibles and doubled out-of-pocket maximums — beginning in the new year. According to the DOA, the funds the state uses to pay healthcare claims are running low, necessitating the increases.
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The Montana Department of Administration announced in late August a substantial increase in insurance costs — tripled deductibles and doubled out-of-pocket maximums — beginning January 2027. About 28,000 people use the state healthcare plan, including current state employees and retirees, along with their families. With funding low, DOA is planning to raise employee contributions. The…
Mitigating the rate hikes became a significant issue for the Montana Federation of Public Employees, the union that represents about 6,000 state employees, during MFPE’s biannual negotiations with the governor’s office in early September.
Usually, autumn talks between the public employees union and the executive branch are focused exclusively on changes to state employee compensation that will take effect after the incoming Legislature gavels out. But open enrollment in healthcare plans for state employees, beginning Oct. 21, created urgency to address the looming cost increases.
Softening those increases required locating additional funds to supplement the pool of money that pays for state employees’ healthcare — a pool primarily funded by the state and contributions from state employees.
The two sides struck a deal Sept. 22 to offset some of the projected increases. (The deal also outlines other forms of state employee compensation over the next biennium.)
To help stabilize the healthcare fund, the state will propose legislation in 2027 to increase its spending on state employee healthcare.
That package will include a $30 million investment into the healthcare pool from the general fund in July 2027, according to Charlie Roth, a spokesperson for the governor. The state will also propose raising its monthly contribution by an additional 5% on top of a 2.5% increase already scheduled for January. For 2028 and 2029, which did not have scheduled increases because they had not yet been bargained for, the state will propose a 7% increase.
The Sept. 22 agreement will be proposed as House Bill 13, perennial legislation defining state employee compensation, during the 2027 legislative session, which begins in early January. Like any other bill, it could be amended before it’s passed. But negotiated pay plans have passed through the Legislature without significant amendments for the past several sessions, according to MFPE spokesperson Sam Telling.
Both the governor’s office and MFPE celebrated last week’s deal.
“The governor’s office is proud of the work of the negotiating team to reach an agreement that reflects the state’s commitment to hardworking employees and looks forward to working with the legislature and the unions to approve the plan,” Roth wrote in a statement emailed to MTFP on Monday.
“The State and its employees negotiated a fair Pay Plan amid rising healthcare costs and economic uncertainty,” Adam Haight, secretary treasurer for LiUNA Local 1686, wrote in a statement released by MFPE Tuesday. “Under this plan, state workers will not get ahead financially, but we limited the harm as much as we could. Unfortunately, workers across the state are bearing the burden of surging healthcare costs.”
Rep. Luke Muszkiewicz, D-Helena, who questioned Amy Jenks, the healthcare and benefits administrator at the Montana Department of Administration, about the state of the healthcare fund during a September hearing of the General Government Interim Budget Committee, said he is “optimistic” about the solution.
Muszkiewicz told MTFP on Tuesday he will be “keen on taking a look” at quarterly reports on the state employee healthcare fund to make sure the pool stays solvent.
“What they’ve achieved here is a plan that hopefully will get us through the next biennium with the state health plan maintaining healthy reserves. Of course, that was also the plan with HB 13 last session, and we now know that that was not adequate,” Muszkiewicz said. “So I think we need to continue to really stay focused on the health of the state health plan.”
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