The Roaring Fork School District could face a loss of $4 million to $6 million after moving to a self-insured health plan in 2023, Superintendent Anna Cole told the school board at Wednesday’s meeting. Ta.
Mr. Cole presented an update on the district’s health insurance program. The report highlighted significant challenges with the current self-insured health plan, Think Health, and the possibility of switching to the district’s former managed care plan, Colorado Employer Benefits Trust (CEBT).
Discussions focused on financial risks, decision-making processes, and potential changes that could impact the 2024-2025 school year and beyond.
Current state of Think Health
RFSD currently utilizes a self-insured plan called Think Health, which was introduced in the summer of 2023. Cole said the district underestimated the true cost of administering and funding the plan. As a result, RFSD could incur a loss of $4 million to $6 million this fiscal year.
Mr. Cole “underestimated the true cost of self-insured plans, both in terms of the ability to manage the required funds and the funds needed to implement the plans without significant financial risk.” said. “Therefore, to address this issue, school districts should now consider mid-year conversion to a managed insurance plan to reduce risk and potential financial loss.”
Think Health plans give school districts more control over plan options and premiums, which in theory should lead to cost savings. But school districts are facing unexpectedly high bills and expenses, leaving them in a financially vulnerable position. In addition, managing the plan requires skilled supervision, cash reserves to cover claims, and stop-loss insurance to mitigate further risks.
Cole explained that managing a self-insured plan requires an internal management team, something the district wasn’t fully prepared for. The district did not properly calculate future risks when setting premiums, leading to the current financial instability.
Managed Care Option: CEBT
Before switching to Think Health, RFSD was using CEBT, a managed care plan. With CEBT, all costs were built into the premium and there was no additional risk for the district. However, this option also had drawbacks, including limited control over plan options and premiums, and annual increases that school districts could not regulate.
“Prior to the fall of 2023, health insurance for our employees was provided by a managed care plan through our nonprofit trust CEBT,” Cole said. “This meant that there were limited options for how to structure benefits and how to minimize annual costs. Our experience was that CEBT It increased costs, sometimes significantly, with little control over the district.”
Although CEBT provides greater financial predictability, school districts have less flexibility to control employee health care costs. However, due to the increasing financial risks associated with Think Health, Cole and the district’s finance team are seriously considering pivoting to CEBT.
economic concerns
Cole painted an alarming picture of the district’s financial situation. Continuing with Think Health without making major changes could lead to financial hardship. Switching to CEBT mid-year could provide stabilization but would require additional funding beyond the original budget for 2024-2025.
“Right now, we’re projecting that our losses this year could be between $4 million and $6 million,” Cole said. “Whatever option we choose now, whether we move to a managed plan or continue with our current self-insured plan, will require additional funding beyond our 2024-2025 budget. The available unallocated fund balance exceeds the minimum fund balance required by district policy. Masu. ”
The decision to continue with Think Health or switch to CEBT is not an easy one. Think Health’s projected costs are adjusted to “de-risk” the plan, which can result in significantly higher premiums. For example, staying with Think Health can increase an employee’s individual coverage premium from $875 to $1,330. With CEBT, the equivalent rate would be $1,077. For employees with family coverage, Think Health could see premiums increase from $1,900 to $2,888, while CEBT’s comparable plan rate would be $2,693.
decision making process
The district’s decision-making process is divided into two stages. The first phase, currently underway, is focused on whether districts should continue with Think Health or return to CEBT mid-year. This phase includes input from staff and a variety of leadership teams, including certified, confidential, and managed interest-based bargaining (IBB) teams. The district is gathering feedback through staff surveys, virtual Q&A sessions, and public comments at upcoming board meetings.
Cole and her team plan to make a recommendation to the school board at its Oct. 23 meeting, which is the deadline to decide whether to change the plan. The timeline is urgent because open enrollment for the new plan must begin by November if it switches.
“We are targeting the Oct. 23 board meeting as the deadline for the administration to appear before the school board and make recommendations to the school board regarding the 2024-2025 health insurance plan and a possible mid-year change of direction. ,” Cole said.
Dealing with funding shortages
The second stage of the decision-making process will focus on how the district will pay for health insurance premiums for the 2024-2025 school year, regardless of which plan is selected. Both options will incur additional costs beyond your budget. School districts are exploring several solutions, including using reserve funds, reallocating budget funds, and adjusting plan elements such as copays and deductibles.
To help meet these challenges, school districts hire legal advisors, benefits experts, and actuarial consultants. The company also consulted with former RFSD Chief Financial Officer Shannon Pelland to review its financial position.
“We maintained a very strong team to support us in decision-making and analysis,” Cole said.
Cole also emphasized the importance of involving employees in the decision-making process. The district is sharing a video of staff explaining the situation and holding briefing sessions to gather opinions. Cole acknowledged that this year has been a difficult year for employees navigating the challenges of self-insured plans.
I’m looking forward to it
Mr. Cole expressed the district’s commitment to finding solutions that minimize financial risk while ensuring continued access to quality health care for employees. Cole emphasized that employee well-being is a top priority and that the district’s financial stability is closely tied to how this issue is resolved.
“This is a challenge that hits at our key priorities,” Cole said. “We are committed to working with our staff and school board to find a way to move through this quickly and transparently.”
The board is expected to make a final decision on October 23, with further updates on the financing strategy to follow.
