David Lindberg has been spending a lot of time on health insurance issues lately.
The St. Francis School District 15 human resources director has been working with the district’s health insurance provider on the upcoming premiums and figuring out the impact of the federal Affordable Care Act (ACA) to the district’s health care coverage.
Over the last two years, health insurance premiums have only increased 1.6 percent.
In 2011, the increase was 1.6 percent, but there was no increase to employees in 2012 because the school district switched to a self-funded health insurance plan, Lindberg said.
But in the 2013-2014 school year, employee health insurance premiums will be increasing a minimum of 13.8 percent, which would bring the district in line with the rate of health insurance inflation, Lindberg said.
“Over the years, the cost of medical inflation outpaced everything else, including wages, food costs and other consumables,” he said.
For teachers with a $5,000 deductible, the single coverage premium is likely to increase from $492.21 to $560.13 per month.
The district will continue to pay $492.21 per month toward the coverage, but the employee with single coverage will be paying the additional $67.92, Lindberg said.
Premiums for teachers with the family plan with a $5,000 deductible are expected to increase from $1,375.74 to $1,565.59, he said.
The district will continue to pay $1,200 per month toward the family premiums, but the employee will likely see an increase from $175.74 to $365.59 a month.
The amount the district pays toward the premiums was determined during collective bargaining for the 2011-2013 contracts, Lindberg said.
Affordable Care Act
Part of the reason that Lindberg cannot give employees a definitive answer on what they will be paying in health insurance premiums is the ACA.
“It could cost the district $1 to $2 million to become compliant with the ACA or $1.5 to $2 million if it does not,” Lindberg said.
In addition to the financial burden, the ACA also creates a large administrative burden on the district, including requiring it to calculate taxes, fees and construct reports with an unprecedented amount of detail as required by the regulating agencies, the IRS and the federal health and human services agency, he said.
After 2014, the district will have to pay fees toward the Patient-Centered Outcomes Research Institute (PCORI).
The district will have to pay $1 per person covered on any insurance plan offered by the district in 2013 and $2 per person in the following years to fund the operations of the PCORI, an agency formed by the federal health reform legislation to improve the delivery of health care, Lindberg said.
The district will also have to pay transitional reinsurance fees under the ACA.
This is a temporary fee for 2014-2016 and it will cost the district $63 for each person covered under the district insurance plan.
“The fee assists the federal insurance exchange with its initial operations,” Lindberg said.
Non-compliance could cost up to $1.5 million in fines, based on the 660 employees that are eligible for benefits, he said.
The district is scrambling to understand the ACA requirements and to come into compliance, he said.
The ACA law itself is 2,005 pages and there are thousand of pages of rules that the regulating agencies expect the district to comply with immediately once they are published, Lindberg said.
The problem is not all of the regulations have been created yet and the agencies overseeing the ACA have provided little guidance on what to expect from rules, he said.
Federal agencies rarely give more than 30 days for people to come into compliance and the U.S. Health and Human Services Department is still in the rule-making process with no expected completion date, Lindberg said.
While a lot of the details surrounding the requirements of the ACA are unclear, what is clear is that the ACA has two large penalties for non-compliance.
If the district does not offer health insurance to all benefit-eligible employees, it could be fined $2,000 per benefit-eligible employee each year, Lindberg said.
For employees to be eligible for district insurance coverage, they must work a minimum of 1,020 hours a year, he said.
If one of the district’s employees goes to the insurance exchange seeking an insurance subsidy, he/she would have to work a minimum of 1,500 hours a year, Lindberg said.
If the insurance exchange finds the employee to be eligible for the subsidy, the district would then have to do an analysis all of its benefit-eligible employees, who work 1,500 hours, and pay a $3,000 fine for each of employee eligible for the subsidy, he said.
The district’s health insurance plan must be considered affordable, costing less than 9.5 percent of the household income, and sufficient, meaning 60 percent or more of the medical expenses are paid for by the plan.
How that is determined is still being investigated, according to Lindberg.
The 40-page federal document detailing what goes into the sufficiency aspect was released Feb. 28 and he is still analyzing it, Lindberg said.
It will be up to an yet-to-be named federal agency to determine if the insurance offered by the district is sufficient and affordable, Lindberg said.
Whether the district complies with the soon-to-be set rules or not, ACA is still going to cost the district money, he said.
“If the district complies with the rules to avoid the penalties, it still results in a tax burden for the district,” Lindberg said.
Unlike the private sector or some government agencies, the district is not able to raise its income without voter approval, he said.
The district will have to finalize its health insurance plan to comply with ACA by Jan. 1, 2014.
Tammy Sakry is at [email protected]