The California Public Employees’ Retirement System (CalPERS) offers health plans that cover over 1.5 million active and retired public employees and their dependents. These plans effectively meet the needs of many California public agencies. However, more than 1,000 public agencies contract health insurance directly with health plans or through Joint Powers Authorities like GSRMA.

Why do some employers prefer alternatives to CalPERS?

Flexibility. It is the leading reason employers select an alternative to CalPERS. The structure and policies of the CalPERS health benefits system are defined by the Public Employees’ Medical & Hospital Care Act (PEMHCA). Compared to employer and health plan policies and procedures, PEMHCA’s rules are not negotiable, nor can they be adjusted to adapt to each employer’s needs.

Below are some of the flexibility characteristics of non-CalPERS plans that can help employers reduce employer and employee healthcare costs:

  1. There is no minimum contribution for any category of employees as required by PEMHCA.
  2. CalPERS health plans can be expensive for employers, especially for smaller public agencies. Non-CalPERS plans can offer more affordable options.
  3. While CalPERS offers many health plans, non-CalPERS plans can offer a broader range of options. More options mean employers can compare plans and providers to find the best fit for their employees and budget.
  4.  Employers may contribute differently toward premium costs for active and retired employees.
  5. Employers may offer HMO and PPO benefits identical to CalPERS at the same or lower rates.
  6. Employers may offer different and less expensive benefit plan designs with higher or lower deductibles, co-insurance, or other provisions. For example, an employer may have a predominantly younger and healthier staff and select a plan with higher deductibles and lower premiums. Whereas an employer with a relatively older workforce may opt for a plan with more comprehensive coverage, even if it means paying higher monthly premiums.
  7. Changes can be made to eligibility for coverage, especially for retirees.
  8. Administration of health and ancillary (dental, vision, etc.) benefit plans can be consolidated under one administrator.
  9. CalPERS has a large customer service team, but some employers may prefer to work with a smaller, more personalized provider that can offer more individualized attention and support.

While CalPERS may be the right choice for many California public employers, there are alternatives for those employers seeking more flexibility, cost savings, customization, and personalized help in managing their healthcare costs.

For more information, please contact our Employee Benefits Team or call 530-361-9610.