School board boosts insurance cost by $1 million
By: JEAN L. KAESS
CENTERVILLE — The St. Mary Parish School Board voted Thursday to approve group health insurance with no additional premium cost to its employees but an additional cost of about $1 million annually to the system.
The plan voted for by 39 percent of employees, the majority in this case, was “Option C” which has a $2,000 deductible, $40 office co-pay, 60/40 co-insurance which leaves $4,000 out-of-pocket expenses and a $100 prescription deductible.
The differences between this plan and what is currently in place are an increase in deductible from $1,500 and a decrease in co-insurance from 70/30 coverage.
This change cost employees nothing because the school board agreed to kick in $1 million toward premiums. Had they not, total premiums would have increased 8.2 percent, with the employee picking up the difference, from $192.03 to $232.75 per month for a single employee with no dependents.
The school board is facing a budget crunch this year with an anticipated shortfall of $500,000 before the $1 million it put forward Thursday night. It is unclear how that money will affect the coming fiscal year’s budget.
“The additional contribution from the school board of $1 million to offset health insurance premium increases will need to be accounted for in the 2012-13 budget. (Chief Financial Officer) Alton Perry and I anticipated the possible expenditure and are working through our considerations list to present at the June 12 budget workshop,” Superintendent Donald Aguillard said via email this morning.
Costs rise on the school system’s health insurance regularly because Blue Cross pays out more money annually on claims than the system pays in premiums.
From March 2011 to February 2012, the company paid over 100 percent in claims versus premiums five months and over 90 percent for six months. In June the loss ratio was 89.15 percent.
Another figure included in the insurance packets at the meeting was the amount of prescription benefits utilized by school board employees. Billed charges equaled $50.9 million between March 2011 and February 2012. Between network discounts, contract benefits and other reductions, paid claims amounted to $12.2 million.
A majority of the system’s healthcare costs come from the number of retirees versus active employees on the healthcare plan, explained insurance consultant James Perez.
Some 40 percent are retirees. As they age, their healthcare costs increase. Because the school system has never had a vesting schedule, many employees would use a spouse’s insurance until shortly before retirement and then both switch to school board insurance to live out their golden years.
This puts pressure on the system’s insurance both when the employee is working, as her premiums will never support older retirees; and as a retiree who is on a system she has never supported, Perez said.
The insurance committee recommended adopting a 10-year vesting schedule, but there still are several conflicts that must be worked out with regulations within the school system before it can be put into place. The matter was tabled by the full board.
The board, however, did approve other recommendations by the committee including removal of the late applicant provision which will now require that employees only enroll in insurance at certain times of the year or when there is a qualifying event such as loss of other coverage.
The plan renewal is effective June 1.