The fund, which is used to help pay retirees' Other Post Employment Benefits (OPEB) like health insurance, is $82 million ahead of its 2013 budget through May, including a $34.2 million jump in investments.
Officials expected to bring in only $28.9 million in investment income. Through May, the trust fund had earned $63 million in investments.
PEIA director Ted Cheatham told board members the agency would use that surplus money, as well as savings from its general revenue fund, to create a "premium stabilization fund."
PEIA has traditionally kept all interest earned on its investments within the Retiree Benefit Trust Fund. But Cheatham said the state is expected to finish the year with $20 million to $30 million more than its expected $63 million income.
Instead of spending that money or dumping it into the trust fund, Cheatham said PEIA could form a separate fund that would allow the agency to offset future premium or benefit changes.
"This is a very standard practice in the insurance industry," he said. "It's sort of a rainy day fund."
In December 2011, the PEIA finance board voted to cut health benefits by $18.4 million and raise co-payment requirements on certain medical procedures.
The board likely would have had to cut benefits or raise premiums again in December 2012, but Gov. Earl Ray Tomblin pledged the agency an additional $4 million to stave off changes.
Cheatham said the current downward trend for medical and prescription drug charges will not continue. Health care costs generally increase by about 5 percent each year.
By creating the premium stabilization fund, Cheatham said the agency could avoid or at least minimize future changes to members' health care plans.