School district makes changes to health insurance plan

Facing a funding shortfall, the Whitefish School District has switched to a fully-insured healthcare plan for its employees.

The district is moving from a self-insured plan to the Montana Unified School Trust, a self-funded, non-federal benefits provider. The Whitefish School Board unanimously approved the change during its April 14 meeting.

Lucie Shea, District Business Director, said the switch comes out of necessity, as the district’s cash reserves for its health-care fund have been shrinking for the last three years.

“In the last three years we saw significant declines in cash reserves in the fund, so much so that went from $800,000 in 2017 to $50,000 to $60,000 on June 30, 2019,” Shea said, adding that as of March 31 of this year the fund was $95,000 short of budget.

Shea said in order to make up shortfalls and save the fund without dipping into the district’s general fund, employees were looking at 24% premium increase, which she said is “not doable” for most people.

In switching to MUST, she said, there will be an aggregate increase in premiums, but only at a 9% jump and with similar benefits.

In a self-insured plan, employers operate their own health plan rather than purchasing a fully-insured plan from an insurance carrier. The positives of a self-insured plan can be a savings on the premium that an insurance carrier would charge, but such a plan can open employers to more risk if more claims need to be paid than expected.

Mike Young, the district’s health insurance consultant, said there’s positives to both sides.

“There are a number of advantages and disadvantages to being [either] fully insured or self insured. The two reasons to be self insured are long term, the costs are lower ... and you have control over your plan in terms of the benefits, the premium structure, in ways that you can influence your costs over time,” he said. “The reasons to be fully-insured is you have fixed premiums, you know what your costs are, and you don’t lose sleep at night wondering about the large claims and the impact on school finance. Rarely does one leave a self-funded plan and go back to fully insured, but this is the right decision at this time for Whitefish.”

Shea said she talked over the potential changes with a number of the district’s retirees before making a recommendation, and while the calls weren’t easy, she was happy with the feedback.

“Even though delivering grim health insurance news is not my favorite thing to do, I have to tell you I was pleasantly surprised by the feedback that we got from those virtual meetings,” she said. “People were very understanding.”

Kelly Haverlandt, teacher at Whitefish High School and chair of the committee that looked at the different plans, said the increases are tough, but the better of the two rate increase options.

“The last couple years have been tough, we’ve faced some tremendous increases and it’s really hit our families and our district hard,” she said. “While this is still a tremendous increase for some of our members, it was the least of all evils in looking at all the possibilities that we had for insuring next year.”

Shea and Young added that they’re looking at whether MUST’s future premium increases will be manageable for the district, and while they tried to get a guarantee on future rate increases from MUST, they could not.

It’s the reality of insurance, Shea said.

“Even though the idea of lower premiums sounds great and logical, it just won’t happen because they’re in it to make money and that’s the reality of it,” she said. “What we can hope for is to have sustainable increases.”