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This story was supported by a statehouse coverage grant from the Corporation for Public Broadcasting.

Delaware is considering sweeping changes to the health benefits for current and retired state employees to counter significant unfunded liabilities.

The Retiree Healthcare Benefits Advisory subcommittee, chaired by Lt. Gov. Bethany Hall-Long, presented final recommendations for future hires and including current retirees to the Legislative Joint Health Committee earlier this week. The State Employee Benefits Committee also met to consider options to soften the blow of a 27% premium rate hike for current state employees.

The liability for Other Post-Employment Benefits, which are largely health benefits other than pensions, is $8.9 billion — of which $8.4 billion is unfunded. Officials said the net unfunded liability could grow to as much as $20.7 billion by 2042 if it’s not addressed.

The RHAS subcommittee was created in 2023 after an attempt by the state employee benefits committee to move 25,000 retirees to a Medicare Advantage Plan through Highmark Delaware. Some people who were upset by the planned change formed the advocacy group RiseDelaware and successfully sued the state to block the implementation.

Superior Court Judge Calvin Scott temporarily stayed the state’s decision in October 2022, saying, “This court cannot agree with the sentiment that the need for prior authorization for over 1,000 procedures and the use of only in-network doctors is the same level of benefits retirees obtained with the current policy.”

The subcommittee made several recommendations, including not utilizing a Medicare Advantage plan. It also proposed increasing OPEB pre-funding from 0.36% of payroll to 0.5%, then increasing it by an additional 0.25% of payroll each fiscal year until it reaches 10%. It also urged lawmakers to continue contributing 1% of the general fund from the prior year to the OPEB fund.

It also put forward changes to the length of service and the percentages paid by the state accordingly for Medicare-eligible retirees’ health care premiums hired on or after Jan. 1, 2025.

“I want Delaware to be the place people live, work, raise their families. And we want good state employees … because it’s our roads, it’s our schools. It’s our health system — every facet of daily life,” Hall-Long said. “Business is affected by how efficient our culture of excellence [is] in our status and our culture of excellence is only going to be as good as our employees. We need to make sure that we have the funding in place.”