Study: States Struggle in Different Ways to Pay for Health Care

May 2, 2003 ( - In an era when spiraling health care costs are one of the most vexing problems facing employers, it's no surprise that state governments are also struggling with the issue.

According to the 2003 State Employee Benefits Survey, a 50-state poll published by Workplace Economics Inc., a Washington, DC-economics consulting firm, health-coverage limits vary widely around the country, Washington-based legal publisher BNA reported.

State workers in 12 states pay more than $900 per month to cover their families, according to the survey. Employees in 16 states do not pay a penny for their health coverage while six states pick up the tab for family coverage.The survey found that the amount paid by both employee and the state in most instances depends on the health plan and level of coverage selected by the employee. But in Illinois, Kansas, New Mexico, and West Virginia, the portion of the premium paid by the employee varies by salary.

Meanwhile, all 50 states make health insurance available to retirees up to the age of 65, and 48 states – except Indiana and Nebraska -provide coverage for retirees age 65 or older. Indiana reported that retirees might purchase a Medicare complement plan through the state. Twelve states pick up the whole bill for individual coverage for retirees under age 65 who are not yet eligible for Medicare.

Seventeen states pay the full premium for Medicare for eligible retirees over the age of 65. In several states, the retiree’s share of health care premiums depends upon when they were hired, when they retired or how many years of credited service they had when they retired, the survey said.

The poll found that pre-tax dependent care accounts are the main way that states help employees pay for the care of their children or elderly parents while the employees are at the office. All 50 states offer such accounts, which allow employees to set aside a portion of their income on a pre-tax basis. The funds are then used to pay for qualified child care and other eligible expenses as designated by the Internal Revenue Service. Two states – California and New York – make contributions to these accounts for certain low-income employees, and Maine, Tennessee, and Vermont additionally subsidize offsite day care for certain income-eligible state employees. Onsite day care facilities are available for state employees in 22 states, but these are generally limited to certain work locations.

Alternative Schedules

When it comes to other HR issues, 50 states offer flexible work schedules that allow employees to adjust their start and leave times, according to the survey report. Forty-three states reported an option for a compressed workweek, such as a four-day week or completing an 80-hour work schedule in less than 10 days. Telecommuting is available in 35 states. However, in many cases, these flexible work options are not universally available to state employees, but are offered only on a case-by-case basis, depending on the needs of the employee and the state agency, the report said.

Other findings about state HR policies include:

  • South Carolina added Confederate Memorial Day as a state holiday in 2003, joining Alabama, Georgia and Mississippi.
  • The average number of paid holidays enjoyed by state workers is 11.2 days per year.
  • Most states offer between 12 and 15 days of paid sick leave per year, and 40 states place no limit on accumulation of sick days.
  • Only 10 states compensate employees for unused sick leave upon termination, but 44 states compensate employees for unused sick leave upon retirement, either by providing service credit toward retirement income, using the leave to pay for health or life insurance premiums, or making a cash payment.
  • All states offer paid military leave, with 47 states providing full pay for the initial leave period (typically 15 days). After the initial leave period, most states pay the difference between any military pay and the employee’s regular state salary.
  • Forty-seven states provide leave to allow employees to pursue educational goals, and 45 states provide some form of tuition assistance as well.

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