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Merging insurance may save in future

Merging insurance plans to save taxpayers money is a high priority for Halifax County Board of Supervisors and Halifax County School Board members who rolled up their sleeves and got down to business Monday evening during a joint meeting held in the Mary Bethune Office Complex in Halifax.

Consolidation of health care for county employees and school board members under the same Anthem insurance umbrella could potentially occur within the next year.

County Administrator Jim Halasz took the lead on updating supervisors and school board members on the latest insurance discussions taking place Feb. 18 and June 3 with insurance consultant Patsy Akridge who evaluated opportunities and mapped a path ahead for the potential merger of insurance plans.

At the onset of discussion, Halasz made it clear that financial constraints may prevent consolidation of the county and school insurance plans from being accomplished in one year.

However, he did lay groundwork for the process to begin during the Monday night joint session.

According to the numbers, enrollment in the school’s insurance plan totals 815 employees, while 191 are enrolled in the county’s plan for a total of 1,006 employees should the plan be consolidated at this time.

Participation in the school’s insurance plan is much larger than the county’s which is represented in the total annual insurance costs for both entities.

Annual insurance cost for the county totals $1.65 million while the school’s total cost is $6.4 million for a total of $8.05 million for both groups.

With claims driving the cost of insurance plans, Halasz said current claims experience indicates schools have an 82.7 percent loss ratio that he described as “fairly acceptable.”

The county’s loss ratio for the past year was much higher at 111.6 percent.

“The county has had some bad claims experiences the last few years. The carrier is going to get that back from us by charging us in arrears. They can’t lose money. They’re going to make claims, plus overhead, plus administration costs, plus profit, because if they don’t, they won’t be in business. That’s just the way it is.”

However, should the two plans be combined, the school’s lower loss ratio would offset the county’s for a combined 88.6 percent loss ratio.

Major differences in the two insurance plans include the school’s open enrollment that begins Oct. 1 and the county’s start date of July 1.

Premiums also reflect differences for the same plan, according to Halasz.

For example, the KeyCare 2000, employee only plan currently costs schools $574, but the county pays $719 for the same plan.

The schools offer a voluntary dental plan where employees can choose to participate at their own cost, and the county sponsors a dental plan at a cost of $26 per month that is included in the county’s $719 premium difference.

As the employer, schools currently pay $521 of the employee’s monthly insurance premium, while the county pays $679 for a difference of $158.

Annually the school pays $6,252 for an individual employee’s insurance, and the county pays $8,148 for a difference of $1,896.

In order to consolidate the plans and make them the same, Halasz said the schools “will either have to pay more for each of their participants so we will be apples to apples with each participant getting the same coverage for the same dollar or the county will have to make our employees pay more to equal both of those numbers out.”

The cost of that $1,896 difference would either come out of the employees’ pockets or from the taxpayers as the schools’ share of the premium rises, the county administrator explained.

If the two plans were to merge, $1,385,976 would be needed as the budget differential.

“That’s the amount of money we are going to need to merge these two plans or that we are going to have to cut somehow from costs,” he added.

The first savings would be realized from plan cost, and the other would be from the premium differential.

“Anything the county saves, realistically, to make this plan work would have to go into the pot to help pay for the increase to the school because we’re in this together. We can’t take those savings and accrue them to the county and then have the schools try to find $1.4 million. That won’t work,” Halasz said.

Other savings will be realized in administrative and overhead costs. 

With over more lives to be insured, he said more carriers may be interested in insuring county and school employees.

“We’ve overcome most of these things just by agreeing to things that we can handle and things that we can absorb if we were to be able to merge where there would be no disadvantage to either entity, no additional cost,” Halasz said.

The schedule going forward calls for the release of a joint health care request proposal on Dec. 18 with bid opening set for Jan. 27.

A joint bid analysis will take place on Feb. 12 and both the supervisors and school board would meet later in February or March to offer recommendations.

On April 1 the successful carrier will be notified to proceed, and open enrollment would start May 1 with the joint contract set to start July 1.

“I do want to stress that I’m not sure we can get that $1.4 million this year,” Halasz said.

 If the two entities are unable to make the consolidation of insurance plans work this year, the schools will need to incrementally raise the amount they are paying for their employees, and the county will have to cap their payments in order to narrow that gap and decrease the $1.4 million.

“My view is we are all in this together. We all will benefit from having a joint plan. It’s the taxpayers’ money, it’s our community, it’s our local schools, it’s our local government. We’ve got to figure out a way to make the dollars work. We will be working very hard with all of you to make it happen. I think it will be wise to try and move down that road as we weigh all of our costs as we always do,” Halasz concluded.

Also during the joint meeting, Halasz offered a brief update on the state budget explaining the General Assembly has not cut into the county or school budgets as it currently stands.

“At this point in time it looks pretty optimistic, but they are still talking, so damage can be done,” he added.

Halasz anticipates the county and schools will not know until mid-July the final status of the county and school budgets for the coming fiscal year that begins July 1.

In other matters, the county received good news last week when the Virginia Public School Authority notified Halasz of a change in the debt service loan schedule that will allow the county to receive credits for South Boston and Cluster Springs elementary schools totaling a $1.8 million savings. 

“That’s money we will have available to us that otherwise would have been paid for debt service,” he explained, noting it will be available in the budget July 1.