From introduction to passage

Senate Bill 426 created the Oregon Educators Benefit Board (OEBB). The bill was introduced January 22, 2007, by Sen. Ryan Deckert (D-Beaverton) at the request of the governor. The Senate passed the bill on March 8 with passage by the House on March 13. The bill declared an emergency and was effective when the governor signed it into law on March 21, 2007. 

What it does

• Oregon Educators Benefit Board (OEBB) creates a mandatory insurance pool and contract for health, dental and other insurance programs for employees of school districts and education service districts.
  
• It requires districts and ESDs to purchase insurance benefits through OEBB. The bill excludes districts and ESDs with independent health insurance trusts (i.e., Portland Association of Teachers Health and Welfare Trust) or self-insurance programs as of January 1, 2007. The bill does not require community colleges to join OEBB but authorizes them to participate should they elect to do so.

Time lines: When districts must join OEBB

• OEBB must begin offering insurance programs starting October 1, 2008.
  
• If collective bargaining agreements expire before July 1, 2008, districts and unions may purchase insurance programs from a source other than OEBB if new agreements are reached before that date, or by October 1, 2008 at the latest.
  
• If collective bargaining agreements expire after July 1, 2008, and before October 1, 2010, districts and unions must purchase employee insurance programs from OEBB upon expiration of their collective bargaining agreements.
  
• OEBB participation exceptions end October 1, 2010 - unless the district is self-insured or has an independent health insurance trust (see next paragraph). 
  
• The only exception to mandated participation in OEBB is for districts and ESDs with independent health insurance trusts or self-insurance plans. To remain exempt from OEBB participation after October 1, 2010, premium cost for benefit plans must be equal to or less than the cost of comparable plans offered by OEBB.
  
• These same time lines and exceptions explained above apply in two more cases: 1) if a district contracts for health insurance directly with an insurance company (called "direct write" which is most common in very large districts, e.g., Salem-Keizer and Beaverton. And 2), in districts that do not have collecting bargaining contracts but do contract directly with a carrier for health insurance.

Programs offered by OEBB

• OEBB must offer a range of benefit plans that are comparable in design and not more expensive than the benefit plans being provided by districts and ESDs immediately prior to purchasing OEBB plans.

Groups affected

• Employees not covered by collective bargaining agreements will participate in OEBB starting October 1, 2008. Generally, this includes confidential and supervisory staffs, administrators and superintendents.
  
• In rare cases, employees covered by an individual employment contract signed prior to March 21, 2007, may stay out of OEBB until their contract expires. For a current employment contract to effectively keep an employee out of OEBB, it must clearly identify the plan agreed to by the parties (employee and district). The employee must also establish that any plan provided by OEBB would result in a substantial impairment compared to the plan negotiated with the district or ESD. In evaluating "substantial impairment," courts will look at the actual damage experienced by employees due to insurance changes (deductibles, out-of-pockets, co-pays, covered services).
  
• Employees with appropriate individual employment contracts (described above) would enter the OEBB upon expiration of their employment contract.
  
• Employees covered by collective bargaining agreements will be drawn into the OEBB depending upon the expiration dates of their collective bargaining agreements or based on specific provisions in the collective bargaining agreement (see Time lines).

Effects of salary and benefit re-openers

• Obligations to bargain over salary and insurance during the term of the collective bargaining agreement could trigger an obligation to begin participation in OEBB.

What constitutes an eligible employee

• The law allows OEBB to determine by rule what constitutes an "eligible employee." Currently, most districts and ESDs rely on the rules and regulations of the insurance carrier to determine eligibility (e.g., employee must work 15 hours a week). This reliance has resulted in almost no language in collective bargaining agreements identifying the level of employment necessary to receive an employer contribution toward the purchase of insurance premiums.
  
• Given the fact this will now be determined by OEBB, which may follow in the footsteps of the Public Employees Benefit Board and extend coverage to employees working less than half-time, districts and ESDs will need to define eligibility in the parties' collective bargaining agreements.

Administrative costs

• OEBB may charge districts and ESDs up to two percent of monthly premiums to cover administrative and other costs of the insurance program. It is unclear how this administrative fee will be assessed and collected; consequently, it is important for the collective bargaining agreement to clearly address this issue and determine whether districts and ESDs will pay the two percent in addition to the contribution to employee insurance premiums or if employers' contributions to insurance premiums cover all program costs, including the administrative fee.

Insurance premium rate structures

• For years, districts and ESDs have negotiated their contributions based on a composite insurance premium rate (i.e., one flat rate for all employees).
  
• It is probably safe to assume OEBB will develop a rate structure similar to PEBB's. The rate structure of PEBB does not include a composite rate for singles, employees and children, employees and spouses and families. There is a different rate associated with each of the insurance coverage tiers or steps.
  
• If OEBB uses a similar rate structure, districts and ESDs need to negotiate the employer contribution differently. It will be appropriate to negotiate contributions based on the coverage tiers.

Access to other insurance programs

• OEBB benefit options available to employees may be significantly broader than currently provided by school districts and ESDs. The array of benefits could include long-term-care programs, short-term disability, cancer insurance, etc.
  
• Due to the significant increase in choices in plans and benefits, it is recommended districts and unions bargain which benefits can be purchased through employer contributions. For instance, the district's bargaining proposal may seek to purchase medical, dental and vision insurance only.

Impact on flexible savings accounts

• The bill allows OEBB to pass on some or all of the costs of administering flexible savings accounts (FSAs) to school districts and ESDs.
  
• It is unknown how these administrative costs will compare to districts' current FSA administrative costs.
  
• It is possible that districts will not have access to funds left in FSAs at the end of the plan year. These funds may revert to OEBB for its use in administering its benefits program.

Pooling

• Districts currently pooling their insurance dollars that end up with an excess could lose those dollars to OEBB; "unused employer contributions," yet to be defined, could revert to OEBB.

Note: This is not the official OEBB site provided through the State of Oregon. Our site provides updates on the OEBB to keep our members informed about this new program. The official OEBB Web site is now online.