Starting in September, insurance claims for employees of Flagler schools will be paid by the district rather than by a private insurance company. Benefits should remain the same, but employees will see an increase in premiums depending on their plans and may need to switch doctors.
The Flagler County School Board voted unanimously Tuesday to switch from a fully-funded insurance plan to a self-funded insurance plan. Under this plan, the district will pay a fee to United Healthcare to manage employee claims.
The move came after the district watched insurance premiums increase significantly over the last several years. Board member Colleen Conklin cited increases at 20% to 30% in the past. The change is an attempt to reduce future rate increases by capitalizing on long-term cost savings that come with a self-funded system. Other school districts, including Orange County, use a self-insurance model.
An insurance committee of 13 people who will be impacted by the change spent six months weighing options for employee benefits. Tuesday night, representatives from the committee recommended that the School Board move to self-funded insurance.
“I think that for the first time, we might finally get a handle on this beast and do something about these rates,” Conklin said. “But it’s going to take a change in mindset, too, so really, the work is just beginning. The bottom line is, we’re going to get to the point where we just can’t afford this (fully-funded) plan.”
The district will save money on its insurance in the long term, Conklin said. Under the new system, the district will set aside employee and employer contributions in a fund for claims. The School Board also decided Tuesday to increase its contribution by 5% annually per employee. It also plans to offer a free walk-in clinic for employees and their dependants to help offest claims costs.
School Board member Trevor Tucker asked what would happen if, for some reason, there were an unusually high number of expensive claims made, especially at first, when the district would be building its fund.
“Do we have money set aside somewhere that we can pull from if needed?” he asked.
Estimates from Jay Miniati Actuarial Services showed sufficient breathing room for handling claims. Additionally, Sun Life will provide stop-gap coverage for claims higher than $200,000.
Tom Tant, chief financial officer for the district, also said that he could defend against any unexpected coverage by increasing the district’s tax anticipation note. There is also $7.4 million in the board’s fund balance that could be used if necessary, he said.
“Through whatever means, we will have the cash flow needed to pay claims,” Tant said.
The School Board will begin collecting premiums on Sept. 1, when the new plan takes effect.
“This is a motion of approval that just comes with a heavy heart,” Chairman Andy Dance said. “Knowing that people are going to have to drop (and) move providers and dig deeper in their pockets is significant. I will applaud us for at least taking control of the reins and positively moving forward.”