Insurance strategies - when more is better
July 16, 2009
What do striking grocery workers, the longest school district strike in Washington state history, Chicago teachers taking a strike vote and an eagerly awaited report from Portland Public Schools all have in common?
The rising cost of health insurance.
Across the country, four consecutive years of double-digit increases in premiums are driving conversations at the bargaining table. In Portland, a labor-management group has been studying how to restructure salaries and benefits to control rising insurance costs.
OSBA has been using the following strategies to strike a balance between rising costs and quality, affordable health benefit plans. The best settlements involve several strategies according to OSBA Human Resource Development staff.
Cost sharing: Limiting the district contribution is the most direct way to protect against skyrocketing premiums. Establishing an annual “cap” is the strategy used most often. In 2002-2003 about 88 percent of Oregon school districts had caps; that number is increasing this year.
Higher deductible plans: Traditionally, boards move to plans with higher deductibles which lower premium costs. More employers are offering plans with $100, $200, $300, $500 deductibles, allowing tailoring of plans to licensed or classified group needs.
Integrated medical/dental: Incorporate medical and dental plans. The advantage? Employees can satisfy the plan deductible either through medical or dental charges or a combination. Premiums for combined plans are typically lower than for stand-alone plans.
Multiple plan offerings: Offer employees a choice between higher and lower-premium plans. The lower cost plans are usually covered by the district contribution. Employees choosing a higher-cost plan would pay the difference.
Section 125 plan: These plans allow employees to pay deductibles and other health care costs before taxes are taken out of their salaries – which lowers their tax burden.
Opt outs: Allowing employees to “opt out” of insurance coverage is commonly used in classified agreements, although it’s used across the board. This strategy has advantages:
- Most districts budget insurance for all eligible members of the bargaining unit; and
- Not all employees need coverage because their spouses are covered elsewhere.
While the district can’t use the savings to reimburse deductibles, savings could be pooled to increase the district contribution for the remaining bargaining unit members. This can ultimately reduce their out-of-pocket premium costs.
As boards scramble to cover funding losses and cost increases, OSBA can provide technical assistance when bargaining salaries and benefits.