Division of Administration - Kristy Nichols, Commissioner - State of Louisiana
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June 21, 2012
Contact: Michael DiResto, 225-342-7000

Streamlining effort helps achieve substantial savings for state employees, retirees, and school boards

OGB plan members receive notification of upcoming 7 percent premium rate reduction

BATON ROUGE – As the Jindal administration moves forward with a governmental streamlining effort, this week Office of Group Benefits (OGB) plan members began receiving notification by mail of an upcoming premium rate reduction of 7 percent.  OGB provides health coverage for government employees, retirees, and their dependents. 

In the coming weeks, state employees and retirees will begin paying 7 percent less in monthly premiums for health coverage through the state Office of Group Benefits.  OGB health plan premiums are deducted from employee paychecks a month in advance, so state workers’ July paychecks will reflect the change resulting from the lower premiums. Retirees’ benefit checks disbursed at the beginning of August also will reflect the change.

As a result of this premium reduction, for the remainder of the 2012 calendar year state employees and retirees will save almost $10 million, and school boards will save an estimated $20 million.  These lower premium levels will continue for calendar year 2013 as well, resulting in state employees and retirees receiving additional savings of $19.5 million, with school boards saving an additional $40.3 million.

An assessment of OGB by Morgan Keegan found that “premiums per member per month are fairly high in the PPO and HMO plans [which] results in higher funding requirements for the State and higher member premiums.”

“This premium reduction is also being done, in part, due to anticipated savings from the upcoming change to utilize third-party administration of the PPO plan along with the HMO plan, which is similar to how almost all other states administer state employee health coverage,” said Commissioner of Administration Paul Rainwater.  “With this effort, we are continuing to provide plan members with quality care and service in the most cost-effective way.”

The TPA would go into effect at the start of the 2013 calendar year on January 1, or midway through the upcoming fiscal year.  As such, the FY 13 budget recently signed by Governor Jindal reflects a conservative estimate of $13.25 million in savings for the second half of the fiscal year, with annualized (full year) savings after that of $26.5 million.  It will result in the reduction of 177 positions from OGB’s current level of 327 positions, beginning to align its size with other states, as the same office in Florida employs 23 people, while Mississippi employs 20.


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