Health insurance: ‘a moving target’

The Redding Board of Education is proposing a 1.1% increase for its health insurance budget for the 2013-14 fiscal year with a focus on replenishing the reserve fund, which is currently in a deficit.

This increase would replenish the health insurance reserve by $162,169 and claims are projected to increase by an estimated 8% for a total budget of $2,710,609.

Peggy Sullivan, director of finance and operations for Easton, Redding and Region 9, said determining health insurance claims is a “moving target.”

Central office and the Redding, Easton and Region 9 school districts are self-insured and all pooled together into one account, said Ms. Sullivan.

Through Anthem, “we pay all actual claims and administration fees to manage the claims,” she said. “We take advantage of Anthem’s rates and discounts,” she added.

For at least the past 20 years, Ms. Sullivan said, ER9 has been self-insured.

“When fully insured you pay the premium and they assume the risk,” she said. “We’re saving about $600,000 a year by remaining self-insured, and the benefit increases by going forward.”

Under the new Affordable Health Care Act, the fees the districts would pay are less than if they were fully insured, she said.

“Next year we’d pay an extra $400,000 in fees if we were fully insured,” she said.

As of Jan. 17, Redding’s health reserve fund had a deficit of $56,000, but after December’s claims came in lower than predicted, Ms. Sullivan said, there will be a small reserve balance.

The first six months of claims for the 2012-13 school year came out to be 52% of  the entire year’s worth of claims, leaving a small reserve balance and removing the deficit, she said.

Since the three districts and central office are in the same pool and money comes from the same account, the districts may borrow from one another, Ms. Sullivan said.

“The cash is in one account but each district is responsible for their own reserve fund,” said Ms. Sullivan. “But in unusual circumstances and if claims rise, they can borrow with the understanding that claims be repaid as soon as possible and with interest.”

Redding borrowed about eight years ago and Easton borrowed about four years ago, she said.

“Redding had to borrow this past year,” she said. “We go through cycles. Some years have high claims and some don’t.”

Each individual has a $150,000 stop loss limit.

“Once an individual’s claims exceed $150,000 per illness per year, then we’re fully insured,” said Ms. Sullivan.

She said each year the board looks at the stop loss limit to see if it is too low or too high. For the 2011-12 year, six people across the pool reached the stop loss limit.

“This year is better. Claims are back down,” she said. “No one in Redding has reached $75,000 in claims for the first six months of the year. One person in Region 9 has, but none in Redding.”

Claims in July and August are the highest of the year, she said.

“Summer is always high,” she said. It’s the time when people go for their annual checkups, get preventative tests and shots and go for elective surgeries, she said.

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