More than 77,000 state employees will pay higher premiums for their health insurance for the second year in a row as the State Health Plan continues to dig out of a projected $1 billion deficit for 2027.
Members of the State Health Plan’s Board of Trustees voted today for the average 5% increase in monthly premiums, which will take effect in January.
At the same time, active state employees will get an overhauled insurance system that comes with lower out-of-pocket costs for their medical bills if they choose certain providers.
How much will state employees pay in premiums next year?
Premiums already rose for most state employees this year as the State Health Plan shifted them to a sliding scale based on annual salaries.
In 2026, state employees making $50,000 or less saw their premiums rise from $25 to $35 a month for the Standard plan, and from $50 to $66 for the Plus plan. Employees making $90,000 or more saw the largest increases of up to $110 more per month.
After today’s unanimous vote, state employees whose insurance only covers the employee will see modest increases of up to $4 per month in 2027.
Employees whose insurance also covers their spouse or the rest of their family will see increases as high as $42 per month, depending on their salaries.
Advocates for state employees unsuccessfully pushed for trustees to keep premiums flat, arguing the recently passed state budget does not provide high enough raises to keep up with rising costs.
“A 3% raise for most state employees is not going to cover inflation for this year alone much less the increase y’all gave them for their health plan last year, and then what we assume will be an increase for all of them this year,” Ardis Watkins, executive director of the State Employees Association of North Carolina, told trustees Friday before the vote.
State Treasurer Brad Briner, who oversees the State Health Plan, said trustees would likely need to consider at least marginally higher premiums every year, arguing it’s simply not realistic to keep them flat.
“We can’t do that with medical costs going up,” Briner said. “But what we can do is keep them consistent as a percentage of compensation.”
How is the health insurance network changing for state employees?
In June, trustees approved a new system for active state employees that they said will help them save money, even as premiums go up.
Starting next year, it will divide health care providers into four tiers – rather than the standard “in-network” and “out-of-network” classifications – each of which will have its own out-of-pocket expenses.
It includes a “preferred” provider category with significantly lower deductibles, out-of-pocket maximums and other costs, but requires those providers to opt into the program and provide discounts in exchange for the State Health Plan steering more patients their way.
Trustees voted today to approve UNC Health and Novant Health as preferred providers. Iredell Health Systems is also a preferred provider. State employees can find doctors in “preferred” providers here, but trustees said there will be a new preferred provider search tool launching in August.
Trustees acknowledged that not every provider will be “preferred,” especially those in rural areas who can’t afford to give discounts for care. They say those providers will fall into the second tier, called “access,” which will have the same out-of-pocket costs as this year’s “in-network” rates, though they are higher than “preferred” rates.
Trustees said today they are negotiating deals with Duke Health and WakeMed as “access” providers.
Then there’s the “non-preferred” tier, which has costs upwards of three times higher than those in the “preferred” tier. These are providers typically located in urban areas where competition is high, but who decide not to opt in to the “preferred” program, according to State Treasurer Brad Briner, who oversees the State Health Plan.
“If your current provider is ultimately not in the preferred tier, it will be because your provider does not sufficiently value your business. They chose not to compete for it,” Briner said.
The final tier is the standard “out-of-network” group, which comes with much higher costs across the board.
Other changes on the way
Trustees also voted Friday to revert operations of the State Health Plan back to Blue Cross Blue Shield of North Carolina, starting in 2028.
Blue Cross had operated the State Health Plan until 2025, when Aetna took over. It’s not yet clear how the change might affect premiums, out-of-pocket costs or network providers.
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