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Teacher insurance benefits on a ‘death spiral’

Posted on Friday, March 29, 2013 at 10:26 am


The board of supervisors heard a proposal from the school board on Monday to combine their health insurance plans in order to provide better benefits to Richmond County Public Schools’ (RCPS) employees.

David Rowe, a benefits consultant with Bankers Insurance, said that combining the plans would bring the school board’s policy up to par with other districts around the state.

Under the Commonwealth of Virginia plan known as Local Choice, Richmond County schools currently offer only one option to staff, Key Advantage 1000.

Rowe said that while the school board’s current plan features a $1,000 deductible for individuals or $2,000 for families, it has an expense limit of $4,000 for single coverage and $8,000 for the family policy per year after the deductibles are met.

He pointed out that RCPS had several employees who were pregnant.

“Before they’ve ever gone in to have the baby, they’re going to have to come out-of-pocket with that $1,000 deductible,” said Rowe, who added that once they went in to have their babies, they would owe 20 percent of their costs.

According to Rowe, if an employee had her baby and the two of them were discharged at the same time, they would both be included under one in-patient hospital stay.

However, if something went wrong and the baby had to stay longer, said Rowe, then that child would start his or her own in-patient hospital stay.

“This could really be devastating to someone to have to come out-of-pocket for this kind of money,” Rowe said.

“The costs [for Key Advantage 1000] are so high, many people go out to Farm Bureau and buy their own coverage,” he added.

District 3 Supervisor John Haynes said that the plan was on a “death spiral,” to which Rowe agreed.

The county, on the other hand, offers two plans to its employees: the Key Advantage Expanded and the high-deductible health plan, which is a Health Savings Account (HSA)-compatible plan.

For the Expanded plan, the annual out-of-pocket maximum is $1,000 a person.

“It’s an extremely rich benefit program…four times richer than Key Advantage 1000,” Rowe said, adding that 70 percent of statewide groups enrolled in the Local Choice program offer the Expanded plan.

Enrolled entities include city and county governments, school groups, water and sewer authorities and the Northern Neck Regional Jail.

Rowe also revealed to the supervisors that only 4.8 percent of statewide enrollment offers the benefits that are at the school board’s level.

“Therefore, 95.2 percent of all the groups that offer plans in this program throughout the state offered better benefits than your school board,” Rowe told the supervisors.

Should the school board join with the county, they would be able to offer two options to teachers and staff: the Key Advantage 500 as well as the Expanded plan.

The combination would push the pool of people covered by the plan over 100 and allow the county to offer a 500-deductible plan to its employees.

But by joining together, the county would need to pay $59,000 for the upcoming fiscal year.

To prevent county employees from being negatively impacted by the joint health insurance program, the school board offered to cover the county’s costs.

“They’ve overpaid [for their current plan] by paying in ten-month payments versus twelve-month payments,” said Rowe.

Therefore, school employees will have overpaid what they owe by the time they time they terminate their plan.

“That’s the money they will use to pay the $59,000 that it would cost the county to allow these folks to join with you all,” Rowe told the supervisors.

But he was unsure about how the cost would change in future years.

Haynes said the demographics for the plan could soon change and, possibly, offset the difference of $59,000 that the school board would pay during the 2013-14 fiscal year.

“I feel pretty strongly that, with the change of the demographics….we have 30 teachers at or near retirement…that average age is going to drop very rapidly,” said Haynes.

Rowe agreed that there were several teachers at the top of the salary scale in Richmond County.

“As we move forward, as we’re able to add younger folks, hopefully we’ll also improve the demographics of the plan and help our overall program as well,” said Rowe.

Haynes clarified that his statement was not a criticism.

“These are excellent teachers,” he added. “I’d rather see the money go into instruction.”