Health Insurance

School Board Approves Health Insurance Changes

The school board, in an unusual study session vote (Oct. 4), approved health benefit changes that were the product of negotiations held two weeks ago between the district and recognized representatives from teachers, nurses, custodial/maintenance and bus drivers.

The district agreed to increase its premium contribution to the self-funding plan from the current $319.25/month to $380/month for all employee-only health coverage. The district had not increased their premium contribution for several years, which greatly contributed to the fund's rapid depletion. The total increase in premium will cost the district approximately $1.5 million over the next six months.

Recent History of Health Benefit Trust Fund

The Health Benefit Trust Fund (HBT) - the "bank" for our self-funded insurance - has plummeted from a balance of $15 million in January 2008 to the current level of about $3 million. Without adjustments, projections showed the fund hitting zero by spring break. A combination of factors contributed to this situation, not the least of which is the continuing rise in healthcare costs.

The fund actually ran dry several years ago, and the board had to pony up $3 million from the operating budget to save it. In order to remedy the situation, the district then raised their premium contribution, and the fund - over a period of years - built a sizable balance. The district, worried that the fund balance was getting too large, then set out to lower the "surplus" by reducing their contributed premium. And what happened? Over the course of the last 5-6 years, the fund has plummeted to dangerously low levels. In short, the HBT has been an unmonitored roller coaster that was managed by reaction rather than anything resembling sustainable planning (my opinion). With that as a context, here's a summary of the new plan:

Off the Roller Coaster

Key non-monetary components of the agreement were intended to help us get off the roller coaster.

*The establishment of a Wellness Committee to explore premiums/cost breaks for employees who participate in a wellness program. This is common in some successful self-funding plans and offers the possibility of long-term sustainability by reducing claims. MSU and other local employers have wellness components.

*The district agreed to revisit the agreement with employee representatives in six months (rather than annually).

*The district also agreed to review proposals from fully-insured health insurance carriers that may offer better coverage and options for employees that our current self-funding plan cannot. Any changes in this area wouldn't take place until January 2013, but it's worth exploring now.

*There were no changes to deductible or co-pay, but two "tiers" will see increases in premiums as a reflection of disproportionate claims in those areas.

Employee - $380/month, no increase to employee.
Employee & Family - no increase
Employee & One Child - no increase - (this is a new tier for employee and one child)

Employee & Spouse - increase $23.75/month
Employee & Children - increase $29.50/month

We'll revisit all of this in six months . . . and will be meeting with the district by the end of November to discuss the wellness component. All of this, and more, will be items for discussion at our October 20 member meeting. I hope you can attend.

Ray

Ray Smith, President
Springfield NEA