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The Riverside-Brookfield High School District 208 earlier this month voted unanimously to join a health insurance cooperative, cutting its ties with its insurance broker for the past 26 years.
The change has no effect on health insurance benefits for employees, which are governed by the collective bargaining agreement. Health insurance for staff members will still be provided by Blue Cross Blue Shield, and the benefits package and cost to employees will remain the same. The only difference is that there will be a new plan administrator.
"It's the same network of hospitals and doctors identical to what you have now," said Scott Baldwin, a senior vice-president of Gallagher Benefit Services, Inc. which runs the Educational Benefit Cooperative (EBC), which is made up of 87 Chicago area school districts. "This is a move from a Blue Cross stand alone to a Blue Cross cooperative program."
Employees will need to get new insurance cards, and a different company will be providing their prescription drug card. But other than that, employees should notice no changes in their insurance, Baldwin said.
District 208's health insurance has been and will continue to be self-funded. The main advantage of joining the cooperative is to protect the district against a spike in rates if the district has a bad claims year.
Because the district will now be part of a cooperative, rate increases and potential rate decreases, if the district has a good claims year, are more limited. Because the co-op has many members, it is able to limit rate changes for any one member. This year each district's premium rate change in the cooperative will vary by no more than 5 percent from the basic rate change.
"This does add in the protection against spiking rates," said District 208 board member Mike Welch.
Fellow board member Garry Gryczan agreed.
"What I like is the predictability of it," Gryczan said.
The change, which takes effect July 1, protects the district against a potential increase of $600,000 in a worst case scenario under its current stand-alone plan.
"The cooperative also provides more stability than our self-funded plan since it includes 84 school districts," said a memo from the school administration to the school board. "The co-op also pays for flu shots and wellness screenings for all employees, COBRA administration and online enrollment."
In the short term, the district may pay a little more next year.
If it had stayed with its current broker, Digital Benefit Advisors, the district was looking at a 4.5 percent rate increase for a cost of $2,336,424. However if claims were above that amount, the district could have been liable for as much as $600,000 more in claims, depending on how bad a year the district had.
The quote to join EBC is 0.5 percent lower than staying with the current broker but the district will have to pay about $140,000 in run-out claims from its current provider, so the total cost for premiums and claims next year is estimated to be $2,363.457, a 5.7 percent increase over the current year.
If District 208 had been part of EBC this year its increase for next year would have only been 3.8 percent.