State lifts $2M cap on employee health care costs

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PIERRE, S.D. (AP) — South Dakota can no longer limit how much it pays out in health care coverage over the lifetime of state employees, but officials say for now that shouldn't raise costs.

Laurie Gill, the commissioner of the state's Bureau of Human Resources, briefed legislators this week on how changes mandated by the Affordable Care Act will affect the state's health plan.

The Affordable Care Act prohibits health care plans from capping the amount of benefits employees incur over a lifetime. South Dakota had capped lifetime expenses at $2 million per individual, meaning any health care costs incurred over that amount weren't covered.

The change means the state could end up paying out more, but Tom Steckel, the state's director of employee benefits, said in the past it's been rare for an employee to reach the $2 million limit. Steckel said his office has been looking into how many workers surpassed the cap. So far, he said, he wasn't aware that any had reached it last year.

"Even in today's world, where medical inflation has been rampant and costs have increased rapidly, it's pretty infrequent to have someone reach that $2 million threshold," he said.

But Steckel said it may not be that way forever.

As health care inflation continues to rise much quicker than overall inflation, Steckel said, the probability that someone exceeds the limit becomes more likely.

Removing the caps could mean employees will pay more, said Eric Ollila, the executive director of the South Dakota Employees Organization, which lobbies for state workers.

Ollila said if the state ends up with higher overall costs, some of the financial burden could be shifted to state workers.

"Once the caps are gone, it just increases the liability of the members," he said.

The state's plan had been grandfathered in from changes mandated by the health care law until the end of fiscal year 2014, but Steckel that status ended as of July.

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