|
Claims Administrative
Services, Inc.
To: Texas School Districts
From: Barry Jones, Licensed Risk Manager
Re: HB 3343 Texas School Employees Uniform Group Health Coverage
Act
Impact
on Your District
I. Implementation date: September 1, 2002.
II. What can my district do to control rates and obtain coverage until
September 1, 2002?
It is anticipated that many carriers will have substantial rate increases because
of their realization that they will no longer write schools with under 500 employees
after next September. Recommendations for controlling your cost for this upcoming
renewal are:
Districts with 500 or less Employees
A. Many
schools currently have only 50% of their employees on their health plan. This
causes the insurance carrier to charge, in most instances, substantially higher
than normal rates. Increasing your district’s contribution will increase your
percentage of participation, which should have a positive impact on keeping
your rates as low as possible.
B. Contact your current carrier for renewal pricing early
to determine if you should go out for bids.
C. Should
you decide to go out for bids, go out as early as possible. There will be a
tremendous number of schools seeking renewals and quotes this year and the earlier
you go out, the better chance you have for obtaining quotes.
D. Obtain your prior years’ loss history from your insurance
carrier for at least the past 3 years. Also, determine the status of any claims
that are over $10,000 in total cost. This information is important for the insurance
carrier to give you their most competitive pricing or, in many instances, to
even give you a quote.
E. Consider
joining with other schools to purchase coverage. Group buying power will pay
off in a one-year purchase.
Schools with 500 Employees, but not more than 1000 Employees
A.
You must notify the TRS if you want to participate in the State
plan next year. This may be difficult for schools in this category
to have enough data to make this decision. I suggest you contact
the TRS immediately for all the information they can provide your
district about the plan and your requirements.
B.
Suggest following the same recommendations as for schools
500 Employees or less (items A through E) if you plan on joining
State plan in 2002.
C.
Should you decide not to join the State plan we would
recommend you:
1.
Set long-term goals for the district and the employees regarding
health insurance. These goals should be in writing and reviewed
semi-annually at a minimum to ensure you are meeting or exceeding
the goals you have set.
2.
Develop plans that will mirror the State plan, and we
recommend offering optional plans in addition to the two plans
the State will offer.
3.
Develop a long-term strategy for the type plan your
district wants to use:
4.
Establish a long-term relationship and commitment based upon
the type plan you select such as with the insurance carrier,
third party administrator, or member schools in a purchasing
group. This long-term commitment and focus will better assure
you of providing a long-term solution for your district and
your employees at the most competitive price. Shopping your
insurance every year will in almost every instance increase
your annual cost.
5.
Districts should contribute enough funds annually to ensure
100% participation by all employees in your health plan. This
will give your district the best opportunity to have the most
competitive rates.
6.
Health insurance is one of the largest annual expenditures the
district will make except for salaries. Assign a person or
a team to provide oversight to this important budgetary item
and, equally important, to provide service to your employees.
Health Risk Pools
A.
You must as a group and as individual schools determine if you wish to remain
a pool or join the State Plan. Each individual district must notify the TRS
how you wish to be considered—as an individual district or as part of the pool.
Contact the TRS for exact rules regarding this notification and your requirements.
B.
Should you decide to remain a pool and not join the
State plan it is suggested you follow item C above for schools in the 500 employees,
but not more than 1000 employee category overview.
Self-Funded Plan
A.
You should determine if you
wish to join the State plan or remain self-funded.
B.
Should you decide to join the
State Plan you must be aware that you face some potential liabilities from:
1.
Run-Out or Tail Claims – Claims that occur prior
to your policy expiration, but have not been paid. You may
face two separate issues:
a.
Time frame in which your excess insurance policy will pay
for both Specific and aggregate claims. You should contact
your broker/TPA and obtain in writing your exact dates of
coverage. It is very common to have hundreds of thousands
of dollars that could fall outside your insurance policy period.
This typically is not a problem when you continue to renew,
but when you terminate being a self-funded employer this can
create some significant financial responsibilities for the
district that may not be covered by excess insurance.
b.
Review your plan document to determine your employees’ filing
deadline for submitting a claim for payment. Often this time
frame for filing a claim is much longer than your excess policy
will cover. Once again, this issue normally would not come
into play if you continue to renew your plan, but can become
an issue when you terminate being a self-funded employer.
c.
Develop a plan to handle the conclusion of your self-funded
policy including notifying employees and medical care providers
and for handling the tail or run out claims along with a method
of payment of any potentially non-covered claims.
III. Cafeteria Plans
Another important part of the new law is the type of Cafeteria Plan required
or providing the appropriate method for paying active employees supplemental
income from the $1,000 state contribution for the employee. The State plan
requires:
A.
If an active employee is covered by a cafeteria plan,
the state contribution ($1,000 annually) shall be deposited in the cafeteria
plan. The cafeteria plan may have a medical savings account option and must
include:
a.
A health care reimbursement account;
b.
A qualified benefit under Section 125, Internal Revenue
Code;
c.
Option for the employee to receive the state contribution
as supplemental compensation; or
d.
Option to divide the state contribution amount among
two or more of the other options provided under the section.
B. If
an active employee is not covered by a cafeteria plan, the state contribution
shall be paid directly to the active employee as supplemental compensation.
It is important your district comply with this
portion of the law regardless whether you choose to join the State plan or not.
For additional information please feel free
to contact Bob Mitchell at 1-800-765-2412 or e-mail bjones@hhcccas.com.
|
