School districts combine for insurance

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The switch to a self-funded health insurance structure is now a cooperative effort between Kalispell Public Schools and the Whitefish School District.

Kalispell and Whitefish entered into a contract effective July 1 to jointly purchase stop-loss insurance and third-party administrative services. The move helps the districts negotiate better rates and reduce fixed costs, according to consultant Michael Young of Consilium.

The switch impacts about 600 employees and retirees in Kalispell and 159 in Whitefish. No changes to benefits are expected for the 2013-14 year.

Young estimates the joint purchases and transition to a self-funded structure from the previous insurance carrier, Montana Unified School Trust, will save Kalispell Public Schools about $700,000 and Whitefish roughly $115,000.

He said these are conservative estimates based on anticipated claims. The measure also mitigates high insurance premium increases.

Kalispell Public Schools will see premiums go up by 5 percent compared to a proposed 16.5 percent increase by the former insurance carrier. Whitefish School District clerk Danelle Reisch said there shouldn’t be a change in premiums for her district.

“MUST offered a zero percent increase to us and our self-funded rates will remain the same. So there was no difference for the 2013-14 year, but we hope to save future costs by self-funding,” Reisch said.

Whitefish staffers can expect to pay between $165 and $330 for health insurance with a district contribution of $675 a month. Kalispell staffers will pay between $69 and $420 with a district contribution of $525. What an employee pays depends on the insurance plan he or she chooses.

Reisch said the district had a great relationship with the trust, but self-funding made sense. Reisch said if the district has a particularly good year with low claims, the extra money stays in the district and is saved in reserves.

“We can use it to provide additional benefits, reduce costs or offset future increases,” Reisch said.

In a “bad year,” if a district hits its maximum costs with an unusually high number of claims, then it would have to dip further into reserves, Young said. What would help offset premium increases in a self-funded structure are the lower costs associated with administrative services and stop-loss coverage.

School districts will not share claim costs or risk. Each district, rather than an insurance carrier, is now responsible for covering claims.

“The group has the risk, but they manage that risk by stop-loss coverage which reduces the impact of large claims by putting a cap,” Young said.

While there is not a minimum amount the districts are required to have in reserves, Young advises them to maintain enough to cover at least three months of claims. Kalispell currently has  $1.6 million in reserves and Whitefish has roughly $500,000.  

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 in both districts. MedImpact will manage prescriptions.

Initially, Kalispell Public Schools had planned to join the Montana Association of Health Care and use URx, a relatively new prescription drug management program developed by the state. Young said there were concerns about disruptions in prescription services, so Kalispell will wait to watch how other districts fare using URx.

 Each district has previous experience with self-funding smaller insurance claims to mitigate premium increases under the trust. Whitefish has done so for the past six or seven years and Kalispell the past two. Kalispell also began self-funding dental insurance in 2007.

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

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