Offers from five carriers pave way for 4% reduction in health-care premium for 2014-15 school year
Earlier this year, Humana informed the Port Washington-Saukville School District it could expect its heath insurance premium to increase 13%— nearly double the 7.5% increase administrators had allowed for in the preliminary 2014-15 budget.
That increase wasn’t necessarily unreasonable, the district’s consultant said, given the district’s claims experience over the last two years and industry trends, but that didn’t mean the district had to accept it.
Humana chipped away at the increase, then earlier this month submitted a bid that instead of increasing the district’s insurance cost would cut it by 2%.
That still wasn’t good enough to retain the district’s business.
On Monday, the Port Washington-Saukville School Board approved a recommendation from its consultant and administrators to drop Humana as its health insurance provider and return to WEA Trust, the company it left two years ago.
The result — a 4% decrease in health insurance costs.
Instead of paying an additional $500,000 for health insurance, the district and its employees, who contribute between 10% and 13% to the premium, will save $176,000 next school year, officials said.
Several factors explain the district’s roller coaster ride through the health insurance industry, including the fact its long-term health risk outlook has improved, but the savings it was able to reap is due primarily to the number of health insurance providers who vied for the district’s $4.4 million of business, Director of Business Services Jim Froemming said.
“The market is very competitive right now, and that was advantageous for us,” he said.
Five carriers bid for the district’s business, with four of those companies submitting final bids that offered to cut insurance premiums by between 1.1% and 4%.
Working behind the scenes was Hays Companies, the employee benefit consulting firm the district hired two years ago to oversee its insurance portfolio.
The district pays Hays $25,000 a year, and district officials said the decision to hire a consultant to represent the district’s interest in the complex realm of health insurance has paid off.
“We are looking at several insurance carriers instead of just one, and that’s thanks to Hays,” Supt. Michael Weber told the School Board.
Because the district was able to leverage the competitive nature of the health insurance industry, it did not have to significantly change benefits to save money, officials said. The deductibles will remain at $500 for individual coverage and $1,000 for family coverage, although the maximum out-of-pocket costs for employees will increase from $1,000 and $2,000 for an individual and family, respectively, to $1,500 and $3,000. Office visit co-pays will also increase slightly, from $20 to $25 in network.
WEA Trust sweetened its bid by offering a maximum 8% increase guarantee on a second year of coverage and is giving the district a $25,000 grant to promote employee wellness.