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Germantown schools adopt revised insurance plan

Employee deductibles, contributions increase

Aug. 23, 2011

Germantown - Right up against the deadline, Germantown schools made a landmark set of decisions, changing insurance carriers and plans for employees not currently under union contracts.

It took more than three hours and a slew of motions to make decisions never before made by the board alone. The result was the acceptance of newly competitive Wisconsin Education Association Insurance Trust bid where design changes alone would save the district an estimated $1 million.

Deductibles for employees would jump for a single person from $100 to $500, while generic prescription drugs with certain qualifications may not be free. Family coverage increases from $200 to $1,000.

Germantown decided at its previous meeting to engage with a consultant to guide the district in making a decision. Greg Kamps, a Germantown resident and consultant with Gallagher Benefit Services, suggested that despite the perception that WEA Trust had been taking the district for a ride, it was actually the users of the insurance plan who had been a strain on the system.

Kamps mentioned a number of times that if Germantown employees had been under a typical insurance provider, that provider would have found a way to drop the district because usage was so high, well above where a company would prefer a client to be.

"Your employees are taking advantage of WEA," Kamps told the board Monday.

"To say 'Cadillac plan' (is wrong); it's more like a Porsche."

Ultra-low deductibles, out of pocket caps, and small employee contributions had all been issues the board wanted to address in a cost-cutting effort to save money.

Kamps suggested the WEA plan over the Humana plan, in part due to a $234,000 credit WEA could offer as part of a federal program to lower insurance costs.

Approving the WEA plan barely passed the board with a 4-3 vote, a motion that wasn't made until late into the evening. A group of a dozen or so teachers were on hand for the discussion and one retired teacher, Jan Weinhold, interjected that if the district were to go away from WEA that her long-term care - which is also through WEA - would jump from $78 a month to $650.

Weinhold said she'd only found that out after calling WEA to confirm that, although Business Director Rick Ericksen said WEA told him no other benefits would change if the district left the trust.

The long-term care benefits are not something the district pays any part of, but are rather part of a package given to retired teachers so long as the district remains with WEA Trust.

However, out of pocket costs for employees will go up significantly, something the board actually saw as a plus since it could act as a deterrent to people who may be excessively using their insurance given the relatively low costs.

Deductibles will jump five fold for singles and yearly caps, previously as that $100 level for singles, would jump to $1,700 a year. For family plans, the new cap is $3,500.

Finding more savings

A second point of contention was employee contribution. Previously at 3 percent, the district said any additional percentage increase in employee contributions would save the district $60,000. On the other hand, Superintendent Sue Borden reminded the group that the district must also remain competitive in what is now a decidedly different labor market for teachers.

Furthermore, making the employee contribution much higher may cause a number of employees to opt out the plan, which could change rates for those choosing to stay. Finding a middle ground is important, Kamps explained, because he believes many Germantown employees had spouses and family members out of their own insurance to use the district's plan.

Kamp's suggested adding higher rates for families where spouses could have insurance through their employer but opt out to be on the district's coverage.

A motion to raise employee contributions by 15 percent was defeated by a 6-1 margin, as was a 10 percent contribution. Finally, it was decided on a 4-3 vote to set the employee contribution at 5 percent, just a 2 percent increase from the current rate, but saving the district an additional $500,000.

Total savings with the changes would be around $1.5 million, or about double what the district had initially hoped to save.

"The taxpayers have been carrying the burden for this Porsche plan," board member Diana Kline said. "I think they need a break."

No decision was made regarding the former "cafeteria plan," allowing employees to opt out of the insurance coverage and take additional money in their paycheck instead. A special board meeting was set for next Monday.

At that meeting, the board will be presented with data regarding the scope and costs of that program in order to decide whether to have such a plan moving forward, and how that potential plan would look.

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