Kalispell schools to self-fund insurance plan

To mitigate rate increases, the Kalispell Public Schools Board of Trustees has approved a self-funded structure for district employee health insurance.

The vote April 16 was 8-1, trustee Mary Ruby dissenting, to create a self-funded health insurance structure.    

Ruby said she was apprehensive about the move.

“It’s a little risky,” Ruby said. “It’s another thing to administer and oversee and we’ll have to rely on the [Health Insurance] Committee.”

The self-funded structure goes into effect July 1.

The district has about 600 employees currently enrolled in health insurance that may be affected by the switch. Karen Glasser, district human resources director,  said employees can expect little to no impact on current coverage. Glasser said the same plan options will be available to employees and the district will continue to use the same claims process.

First Choice Health Administrators will serve as a third-party administrator and Berkley Accident and Health as a stop/loss carrier for the 2013-14 year. The district will also join the Montana Association of Health Care and use URx, a prescription drug management program developed by the state.

Since 2005, the district’s health insurance has been provided through the Montana Unified School Trust. Glasser said 10 years of data were gathered to base a decision.

“There were several good years, some cost reductions, zeros [percent increases] and then we had what we referred to as the ‘bad times.’ In 2009-2010 we had a 20.7 percent increase and that went up to a 31 percent increase,” Glasser said.

Beginning in 2010, the school district offset premium increases by implementing a medical reimbursement plan that reduced actual renewal increases. The plan cuts costs by self-funding smaller claims, according to Glasser.

Glasser said a self-funded plan means that the district will be responsible for funding claims. Superintendent Darlene Schottle said the district also will carry the risk — the difference between expected and maximum costs. There is currently $1.6 million in reserves to cover risk.

For the 2014-15 year, Montana Unified School Trust was seeking a premium increase of 16.5 percent.

Under the self-funded model, rates will increase by just 5 percent next year. Michael Young, president of the consulting firm Consilium, said the district may save $590,000 by switching to self-funded health insurance if claims follow projected estimates.

The district’s Health Insurance Committee will provide an annual overview on items such as benefits, rates and expenditures. The committee has tiptoed into the self-funded arena, beginning with dental insurance implemented in 2007. Success didn’t happen overnight, Glasser said.

“For the first couple of years it lost money and needed some loans in order to keep it afloat,” she said. “Three years ago we began actively managing it, changed its structure and have not had to have plan increases and it has been solvent. This has given us some experience and success in self-funded plan management.”

Some trustees were concerned about all district groups being represented in the committee and that benefits wouldn’t disappear to save money.

“Every employee group in Kalispell School District 5 has a representative on the insurance committee,” said teacher Mike Thiel, who is on the committee and is president of the Kalispell Education Association.

“It will be the same thing [as] with the dental insurance. When we started off, we used the exact same plan and after a year started messing with it to try to make it fiscally conservative, if you will,” Thiel said. “I am not going to surrender benefits for my unit, not going to do it.”

Down the road, other school districts may join in negotiating better rates as a larger consortium and share in administrative rates but would not share risk.

Reporter Hilary Matheson may be reached at 758-4431 or by email at hmatheson@dailyinterlake.com.