West Virginia's Public Employee Health Fund Built a $345 Million Reserve. The Surcharge Went Up Anyway.

West Virginia's Public Employees Insurance Agency spent two plan years raising what teachers, correctional officers, DMV clerks, and every other covered public worker pay for health coverage — premiums up as much as 16%, out-of-pocket maximums up 40%, a spousal surcharge that has more than tripled.▸ The PEIA Finance Board approved those increases citing rising medical and drug costs. Its own numbers, presented to that same board on June 25, 2026, now show a plan that closed fiscal 2026 with a $128.4 million surplus and a reserve fund $222.7 million above what its actuaries say it needs to hold. The board raised the surcharge again anyway.

In December 2024, the PEIA Finance Board approved fiscal-2026 increases of 14% for state employees, 16% for local government employees, and 12% for retirees — roughly $113 million in combined premium and cost increases, on top of a 40% jump in out-of-pocket maximums and a monthly spousal surcharge that rose from $147 to $350.▸ Officials pointed to rising prescription-drug costs and to Senate Bill 268, a 2022 law that added roughly $70 million a year in payments to health care providers, as drivers of the increase. "Public employees are struggling," Elaine Harris, a state-worker representative with the Communications Workers of America, told the board that December, describing retirees "that have never seen any increases" now absorbing double-digit ones.

The rates took effect July 1, 2025.▸ By the time the board met again on December 4, 2025 to set fiscal 2027's rates, it approved a smaller 3% aggregate increase for employees and employers alike — plus another average $200-a-month increase to the family spousal surcharge, a $2.50 bump to the employer administrative fee, and a restructuring of the plan's cheapest option (PPB Plan D, renamed "WV Bronze") that cuts its premium 34% while raising its deductible 425% and its out-of-pocket maximum 55%. PEIA's chief financial officer confirmed in a February 27, 2026 letter to agency heads that all of it took effect July 1, 2026 — nine days before this article was reported.

The finance board's own June 25, 2026 presentation shows why fiscal 2026 ended in the black.▸ PEIA had budgeted for prescription-drug costs to rise 12.0% for the year; through May, they'd risen just 3.1%. Investment income came in $5.6 million ahead of plan. That more than offset an unfavorable surprise on the medical side — claims trended at 7.8% against a 5.5% budget assumption. Net of both, PEIA's ten-month actual results (through April 30, 2026) show $956.8 million in revenue against $832.8 million in expenses, a $123.9 million surplus that the board's actuaries project will reach $128.4 million by June 30.

State law requires PEIA to hold a minimum reserve, and its actuaries set a separate, higher target.▸ As of the June 2026 update, the plan's State Fund — covering state employees, college and university staff, and county boards of education — is projected to end fiscal 2026 with a $313.1 million reserve against an actuarial minimum of just $98.7 million: better than 3-to-1. The much smaller Non-State Fund, which covers county and municipal government workers, tells a tighter story: a $32.3 million reserve against a $24.0 million minimum, a cushion of only about 1.3-to-1. PEIA's own finance-board materials flag the difference directly, noting the State Fund is "projected to meet both the Legislative and Actuarial Required Reserves" through fiscal 2026, while for the Non-State Fund, "2027 reserve projections should continue to be monitored." The same table shows why: by the board's own fiscal 2027 projection, the Non-State Fund's reserve falls $1.4 million below its actuarial minimum, even as the State Fund stays $242.4 million above its own.

None of that reserve math slowed the spousal surcharge.▸ Dependents covered elsewhere but kept on a spouse's PEIA plan carry a monthly surcharge that has gone from $147, to $350 for fiscal 2026, to roughly $550 for fiscal 2027 — a board-approved "average" increase of $200 layered on top of the prior year's rate. Dale Lee, co-president of Education West Virginia, the state's newly merged teachers' union, told the finance board the surcharge falls the same on every income: "service personnel" pay the identical monthly amount "as the superintendent making $180,000 a year," he said, calling on lawmakers to restructure it by income rather than a flat rate.

The fiscal 2027 plan layers in more one-time money on top of the surplus, too: the board is increasing the retiree "Paygo" transfer from $10 million to $55 million and designating $30 million of fiscal 2025 investment gains as a retiree premium stabilization reserve — both funded from money the plan already has on hand, not new premium revenue.▸ Governor Patrick Morrisey's proposed fiscal 2027 budget separately increased the state's own share of PEIA costs by $35.1 million, according to the West Virginia Center on Budget & Policy's analysis of that budget — the general-fund contribution that let the board hold this year's premium increase to 3% instead of another double-digit hike. Even at just 3% growth and only $29.0 million in projected fiscal 2027 results, PEIA's own update shows the total reserve still climbing, to a projected $374.5 million by June 30, 2027.

Fiscal-year figures cited here are PEIA's own actuals and projections as presented to its Finance Board through June 25, 2026, and are subject to revision as the agency closes its books on fiscal 2026 later this summer. The $550 fiscal-2027 spousal surcharge figure is the board's stated "average" increase applied to the prior year's $350 rate, not a single uniform new rate for every plan.