South Dakota’s top human resource official told the Joint Appropriations Committee that state employees could see their health insurance premiums increase in the future.
Darin Seeley is the Commissioner of the Bureau of Human Resources and Administration. He said the state opted to increase out-of-pocket maximums instead of premiums for Fiscal Year 2027.
“So, it’s a reasonable move, and it’s only for those folks who get to that level. It’s not everybody. The reason we didn’t do that is because with premiums everybody pays more. And when you don’t have a salary increase and everybody pays more in premium, you’re taking home less money in your pocket," Seeley said. "This way only people who have to use the system and the service have to pay more.”
Seeley acknowledged the Governor’s budget outline, which provides a 0% increase for state employee salaries, along with a 0% increase to employee premiums on the health plan.
Numbers provided by Marsh MacLennan during the agency showed that South Dakota state employees have remained lower than the historic market trend from FY 2019-2025. The average commercial customer has seen a 7-8% increase in premium rates year-over-year. State employees have averaged 4.4% over the same period.
He said this year the state is eating into a health insurance reserve fund to keep costs low.
“We think one time you can do this. If you we go with this budget this year, this probably won’t be the recommendation next year because you’re not going to want to get below where we’re comfortable...you certainly don't want to rely on this reserve to be how you pay for things going long-term," Seeley said. "Long-term, I would expect we're going to have to increase the employer rate to have more revenue for the plan.”
Seeley told appropriators that because the state uses federal dollars, they are allowed to keep reserves close to one month's worth of incurred but not paid claims in the state's Employee Benefit Plan Fund. That figure is around $21-22 million in the fund. Under the proposed FY 27 budget, the fund would be at $26.4 million.
SDPB employees are state employees.
