The Brainerd School District will see a 5 percent hike in health insurance premiums for 2015-16.
The Brainerd School Board Monday approved the health insurance premium increase and agreed to keep Medica as the district's health insurance provider.
The health insurance Plan B approved is as follows:
• District paid $593 on the single plan in 2014-15 and $1,274 on the family plan per month.
• Employee paid $31 on the single plan in 2014-15 and $243 on the family plan per month.
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• District will pay $622 on the single plan in 2015-16 and $1,338 on the family plan per month.
• Employee will pay $33 on the single plan in 2015-16 and $255 on the family plan per month.
The insurance companies submitting bids were Medica, HealthPartners, Blue Cross Blue Shield and Preferred One. Medica had the lowest bid. The companies all had the same monthly premiums, but charged different administrative service charge rates.
Medica's total bid for the school district's health insurance plan is $894,738 in 2015-16, or a $315,910 decrease from 2014-15. The reason for the decrease is the number of claims is anticipated to go down.
Steve Lund, director of business services for the school district, said the premiums pay the claims each year and claims were higher in April. Lund said year-to-date results, through March 31 of this year, show the district's claims and costs exceed premium revenues, paid by both the district and employees.
The school district maintains its own self-insurance fund for employee health benefits. The premiums, comprised of contributions from both the district and participating employees, are paid into the health insurance fund, which then covers the claims and expenses associated with the administration of the plan.
There are currently about 845 employees and retirees with coverage. The plan covers 2,300 people counting employees and their dependents.
Based on the current membership composition and contractual provisions, the 5 percent increase will result in an increased cost to the general fund of $435,400.
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The district has a $175,000 stop-loss reinsurance policy, which means claims in excess of $175,000 are paid by the reinsurance policy. The $175,000 is on a per diagnosis/related injury basis.
For instance, Lund said if a participant is in treatment for cancer, the first $175,000, less the employee's deductible of medical expenses, is paid by the district's insurance pool for this person, for this diagnosis. If this same person is in a car accident, the first $175,000 of the medical expenses associated with the care and treatment from this injury will be paid from the district's insurance pool, Lund said.
Premiums paid that exceed claims and expenses would add to the self-insurance fund reserve balance. If claims and expenses exceed the amount of premiums paid, it depletes the fund reserve balance.
Insurance industry guidelines recommend self-insurance funds have three months of average claims and expenses in a fund reserve balance at all times. Lund said the level of reserves has seen much fluctuation over the time when the payment of claims is processed to when medical services are received.
The fund balance for year-end 2015 is estimated to be $4,986,584, which represents 44 percent of the annual costs and claims for the current year. Lund said with a 25 percent minimum target for the balance or $2,852,954, there are excess funds in reserve of more than $2 million to mitigate the risk of claims exceeding projections for 2016.
JENNIFER STOCKINGER may be reached at jennifer.stockinger@brainerddispatch.com or 855-5851. Follow on Twitter at www.twitter.com/jennewsgirl
