HELENA - The state employee unions say they have secured a guarantee that employee health insurance premiums won't go up in 2012 even as they continue to fight the state over a pay freeze imposed by the Legislature.

The unions said Thursday that employees were facing a 5 percent cut in take-home pay if employee premiums would have increased as expected in 2012.

"For members with families, this was going to be a huge hit," said Quinton Nyman, executive director of the Montana Public Employees Association. "This new deal will be enormous."

The unions are separately fighting the state over a pay freeze that they argue was imposed by the Legislature in bad faith after they negotiated a raise with the administration. An October hearing is scheduled in that unfair labor practice charge. An investigator has so far found "probable merit" in the claim.

The unions told members in an open letter earlier this week that the freeze in health care costs will help make up a little bit for the "outrageous" pay freeze.

The deal was reached earlier this week, but the governor's office says details still need to be finalized.

Since the state's share of health insurance costs is set by the Legislature, and won't be going up, the inflationary costs will mostly be paid for by dipping into the state's health insurance reserves.

The governor's office said reserves for the state's self-insured account are running at about $60 million. It will take perhaps up to $19 million to pay for the deal not to increase health care costs for the employees.

There will also be some measures aimed at increasing cost-savings in the program, such as more managed care for high certain high-risk patients, the governor's office said.

The state workers sought to avoid the cut in take-home pay that would have done little to appease state workers disgruntled over the way the Legislature killed a small pay increase they had negotiated with the governor.

Gov. Brian Schweitzer will have the final say on the deal to freeze health care costs.

"The unions negotiated hard for state employees," Schweitzer spokeswoman Sarah Elliott said. "The administration values the hard work state employees do every day."

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