Kirksville schools set health insurance rates, most employees to see premium decrease

The Kirksville R-III School District is racing to finalize its employee health insurance plan for 2020, all while facing criticism and concerns from employees over plan changes and monthly premium increases, the latter of which officials say was incorrectly released before numbers were finalized.

The matter came to a head Oct. 28, when plan details were presented to faculty and staff, and the following day when the district emailed a chart of monthly premiums to all employees. The district is planning a major shift in its insurance offerings, ending its self-funded insurance that offered four different plans and enacting a single high-deductible health plan (HDHP) with a health savings account (HSA) option.

Of utmost concern were the monthly premiums themselves. Rates initially – and incorrectly – presented listed increases between 39 and 81% for some district employees who add their spouse and/or children to their coverage.

Instead, all groups except those purchasing insurance for their entire family will see a decrease from whatever monthly premium they pay currently.

"It was a perfect storm of partial information and timing that caused a big part of this," Kirksville R-III Superintendent Robert Webb said of the monthly premiums. "Will there be an increase for some? Yes. Is it going to be a scary increase? No."

The actual premiums look like this: 12-month employees who add their spouse to coverage will pay $344.47 per month; employees who add children will pay $244.40 per month; and employees who add their entire family will pay $789.20 per month.

For 9-month employees the figures are $459.29, $325.87 and $1,052.27, respectively. The rates are actually identical for all employees on an annual basis, as the insurance plan covers employees throughout the year. However, the monthly premiums are different for 9-month employees because the total is split over nine months instead of 12.

The district will be paying an additional $584.75 per employee each month to reach the actual cost of the premiums. In the case of individual employees, that covers the entire premium, keeping in place what had been standard district practice.

It's a stark difference to what had previously been communicated with employees. The full family plan, for example, was incorrectly listed at $1,024 per month for 12-month employees, leading to what Webb said was "justifiable anger" amongst employees.

That would have been an increase in premiums of more than $500 per month for some employees. Instead, some families will see a decrease of more than $300 per month. Only those who were on the district's current HDHP Silver plan will be faced with a substantial increase ($222), something Webb said was part of every option the district considered and could not be avoided.

BackgroundThe school district has been closely examining its insurance plan and options for the last few months, as has been previously reported by the Kirksville Daily Express. Under its current format, the district is self-funded, which makes it the de facto insurance company. It pays out all insurance claims to up $85,000, after which an actual insurance provider picks up the bill.

The R-III has operated this way for the last three decades, making the move to become self-funded and maintaining that system because it had allowed the district to better control costs and keep insurance expenses reasonable for its employees.

The last few years, during which the district saw large increases in claims, have challenged the status quo. The district liked to keep the fund's available balance at $1 million. As of the end of September, that balance had been cut in half.

The district was considering a transfer of funds from its reserves to stabilize the balance, something it had done in the past. However, its current plan manager, GBS Insurance, was proposing both premium increases and a large hike in deductibles (Webb said $7,000 for individuals and $15,000 for families).

A committee that included Webb, Assistant Superintendent Tricia Reger, School Board member Adam Moore and several faculty representatives began conversations with several companies, seeking a more traditional arrangement that would get the district out of the insurance business and limit its overall liability. That committee settled on Assured Partners.

On Oct. 23, Webb and Reger presented information on the new plan to the School Board during the elected body's study session. The presentation focused on the structure of the plan itself and the utilization of an HSA. There was only a brief discussion of monthly rates for employees, brought about when Board member Mikey Bishop asked what cost families would incur under the new plan. He was given a price of $1,200 monthly with an HSA contribution and was told it was an increase from current prices between $800 and $1,100 per month.

What wasn't stated, however, and which Webb clarified during an interview Thursday was the $1,200 being an estimated cost and a combination of the employee's monthly payment and the district's monthly contribution.

There was no other rate discussion during the meeting and the School Board voted unanimously for the district to enter agreements with Assured Partners.

On Oct. 28, representatives from Assured Partners gave presentations to faculty and staff members. Webb said the intent was to explain only how the plans function, as the monthly premiums were still being determined. But after multiple requests from faculty and staff, numbers were presented. What wasn't made clear, Webb said, was that they were in-progress figures.

The following day the district emailed all employees a list of rates, stating $510 monthly for employee and spouse, $394 for employee and children and $1,024 for employee and family. Webb said that email should not have been sent, as the rates were still being finalized.

Liability shiftThe end difference between those early figures and the final numbers came in factoring liability. Initially, potential vendors had provided costs that assumed their own maximum liability, setting premiums at levels where the district would not have to pay any amount of the claims.

That was a beginning point for the district, which then worked to determine an acceptable liability level that would better control its costs and limit risk. Ultimately it arrived at a point where the district will pay up to $65,000 on each claim (down $20,000 from the current liability level).

A final sticking point in the process was determining monthly premiums for full family coverage. Webb said the district worked to keep the increase as reasonable as it could, while not in exchange placing too much of the burden on the rest of the insurance users.

Webb said he believed it was a matter of fairness.

"I don't want this to sound crass or be insensitive...we're not in this to have to take care of families," Webb said. "Our responsibility is to the employees of the district, and we're sensitive to the families. We really are. I just wish every employee had their spouse that worked at that district. Then we wouldn't have this conversation.

"That's where the tipping point kind of is. Is it really the school's responsibility to have to also provide family insurance," Webb said. "Some are expecting government agencies to take care of everything for them. A school is a government agency. I get that. I also know that with my own sons and daughters who work outside of schools, they don't have it that way. They have to pay the bill or they don't get it. Again, I don't want that to be insensitive. It's just the reality of where we're at in insurance."

Webb said many of those employees could ultimately find more affordable options elsewhere, either through the health insurance exchange or various state programs. He said faculty and staff would be provided opportunities to speak to experts one-on-one to determine which path is best.

How the new plan worksAside from the premiums is a shift in plan structure for any employee who wasn't under one of the district's current HDHP options.

Individual deductibles will be set at $6,500, and those adding a spouse and/or children will be set at $13,000. But the district is offering some creative ways to assist in meeting those deductibles and lowering the overall out-of-pocket cost.

The first piece is the HSA. Employees who opt in will have a dollar-for-dollar match of contributions from the district up to $700. And to further assist employees the district will provide its share up front.

"The district is going to front load its $700 match if the employee contributes as little as $1 per month as their willingness to participate in an HSA program," Webb said.

For employees who insure only themselves, they'll be responsible for the first $1,400 of the deductible. From that point to the $6,500 maximum, the district will match all claims 50-50. That could reduce the maximum out-of-pocket employee expense to $3,250.

For those with a spouse and/or children on their plan, they'll be responsible for the first $2,800 before the 50-50 match kicks in. That could reduce the employee's contribution toward the deductible to $7,200.

Both scenarios assume participation in the HSA. Those who do not, and thus do not receive the match, would be responsible for another $700.

While HDHPs are becoming more common, they remain unfamiliar to some and aren't what would be considered "typical" health insurance. They can save users money by shifting responsibility of the first dollar.

As an example, the district currently offers what it calls a "buy-up" plan, which for families carries a monthly premium of $1,145. The deductible is $3,000, after which the insurance company would cover 90% of costs. The maximum annual out-of-pocket expense would be $10,000.

Under the new high-deductible plan, the family's premium is $789.20. If they participate in the HSA, they'd pay $7,200 to hit their deductible, and beyond that the insurance company covers all costs 100%.

"Not very many people use the insurance close to its potential, so they get really nothing out of it," Webb said. "Money goes to the insurance company. The premiums go directly to them. That's the shifting in what was happening with Assured Partners.

"To me, it's an evolution of, how do I make myself and my family able to utilize the total dollars that are out of my pocket in a combination that will allow me to keep more of that money if I don't use it," Webb said. "About 70% of our staff really don't use insurance enough to benefit from it. ... Who's getting the benefit? Whoever the insurance company is."

The plan also has a chance to save the district some money that could be returned to employees in a variety of ways. While the actual budget figure for its total insurance in 2020 will be higher than in 2019, that amount assumes the district will pay its maximum liability for each employee. If it doesn't, that money comes back to the district, instead of being paid to the insurance company.

District officials said that could provide opportunities for salary increases and/or additional support to employees' HSAs.

The district is also under a time crunch, needing to wrap up open enrollment by mid-November in order to have coverage ready to go Jan. 1.

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