Health care rates on the rise for New Kent Public Schools

NEW KENT — New Kent County Public School employees will pay an increase for heath insurance next year, but just how much has yet to be determined.  

Currently, the New Kent School Board pays 83 percent of the premiums while the school employees pay 17 percent.

The School Board will host a special called meeting Monday, July 14, at 5 p.m. in the historic courthouse to discuss health care plan options, all of which include at least a 14 percent increase over last year's rates. It is not known yet how this will directly affect employees.

BB&T Insurance Services Senior Vice President Matt Davis presented the board with the grim news Monday, and prefaced the conversation by saying: "I hate to be the bearer of bad news, but we are proposing an option that will have the least negative impact on school employees."

Nearly 300 New Kent school employees currently participate in a self-funded Anthem health care plan, which took a financial hit last year when 19 claims totaling $983,151, including $217,562 in prescription drugs, resulted in a 12-month 76.46 Medical Loss Ratio (MLR).

According to the Centers for Medicare and Medicaid Services, the MLR is the percentage of insurance premium dollars spent on reimbursement for clinical services. It is a basic financial requirement of the Affordable Care Act designed to encourage health plans to provide enrollees with value.

The provision requires that small groups, such as New Kent Public Schools, spend at least 80 percent of premium dollars on claims and healthcare quality.

"Although we aren't quite there yet, it seems startling because we had such an amazing year last year," said Executive Director of Administration Cynthia Pitts.

For example, since Anthem is using 74.46 cents out of every premium dollar to pay its customers' medical claims and activities that improve care quality, New Kent schools have a MLR of 74.46 percent. 

Because of the increase in claims this year and the high MLR, Davis is proposing that schools consider three health care plan options:

Option 1: The renewal of the current plan, with a $500 individual and $1,000 family deductible and no copays, would cost employees an additional 23.61 percent. The School Board paid 83 percent of the premium costs and the employees paid 17 percent during the 2013-14 school year.

This means the entire plan would go from $2.9 million to $3.5 million and employees with a level 5 wellness family plan would pay $97 more per month. Individuals with a level 5 wellness plan would pay $3.31 per month.

Option 2: The division would pay a 14.20 percent increase. Rates for employees have not been determined. The individual deductible would go from $500 to $1,000 and the $1,000 family deductible would increase to $2,000.

The plan also adds copays — $30 for primary care and $50 for specialists, and prescription prices would rise from $10/30/50 to $15/40/75. The out-of-pocket max would also increase to $3,500 for an individual (up from $2,500) and $7,000 for a family (up from $5,000).

The total plan would rise from $2.9 million to $3.3 million. The School Board has not set the rates for the 2014-15 school year.

Option 3: The same medical plan as Option 2, but with a Health Reimbursement Arrangement in which employees will be reimbursed for the second half of the $1,000 deductible.

There would be added costs for the third party controlling the HRA, including a $500 set up fee and $3.75 per participant per month.

However, Davis recommended that the board adopt Option 3 because it will "soften the blow" to employees to have half of the $1,000 deductible reimbursed.

"Not to oversimplify things, but you don't want to kick someone while they're down," Davis told the board.

He added that having a HRA would also "give New Kent schools a competitive edge."

Davis is also proposing that the Delta Dental PPO plan deductible increase from $25 to $50 for individuals to offset an 83 percent loss ratio incurred last year. Also, the DHMO dental plan, which currently has 141 members enrolled, would increase its premium by 0.75 percent.

There are no proposed changes to the current vision plan, provided by United Healthcare. UHC is proposing that the schools renew the contract with a 36-month rate guarantee.

While school board members acknowledged that any health care increases will burden school employees, the board admitted that an increase is inevitable and vowed to adopt the most financially responsible option.

"This is a big decision, and we need to review this carefully," School Board member Dr. Gail Hardinge said.

Martin can be reached by phone at 804-885-0040.