NORWALK, Conn. — Switching to the state’s health insurance plan, CT Partnership 2.0, could solve the Norwalk Board of Education’s financial dilemma, BoE members said Tuesday.
Not switching would mean more than 75 Norwalk Public Schools employees would be out of a job, they said.
“Our single source of expenses is head count. It could result in a head count reduction on the order of 75-plus employees if it came to that,” BoE Vice Chairman Mike Barbis said at Tuesday’s BoE meeting.
“It’s over a school building of personnel,” BoE Finance Committee Chairman Bryan Meek said at the Committee meeting that preceded the full BoE meeting.
Norwalk Federation of Teachers leaders were not available for comment.
The funding allocated by the city to NPS assumed a savings from switching to CT Partnership 2.0. That budget is a done deal.
The actual shortfall from health insurance expenses is lower than was estimated in November, with updated numbers showing “roughly $2 million” less than projected, Norwalk Public Schools Chief Financial Officer Thomas Hamilton told the Finance Committee.
Hamilton presented information to show that NPS employees would save money under CT Partnership 2.0, with an estimated savings of $131.92 a year for a teacher with an employee-only plan, and a savings of $399.38 for a year on a family plan.
Employees enrolled in CT Partnership 2.0 are eligible for free preventative screenings; if they get the screenings they are eligible for they don’t have a deductible for the year, Hamilton’s figures show.
The calendar deductible for the current Lumenos Health Savings Account is $2,000 for a single employee or $4,000 for a family; under CT Partnership 2.0 the calendar deductible would be $350 for a single, waived HEP member or $1,400 for a family waived HEP member, in network.
Copays for prescription drugs are significantly less under CT Partnership 2.0; “The copays are extraordinarily low for chronic conditions and maintenance medications,” Hamilton said.
NPS would no longer be funding Health Savings Accounts (HSAs), and balances accrued by employees should be able to be used for eligible expenses, or turned into an IRA (Individual Retirement Account) at age 65, he said.
The BoE pays $1.9 million a year into HSA, Hamilton said. This “self-insurance” is a minimum premium plan through Anthem, with stop-loss coverage kicking in when expenses for an employee hit $250,000.
“To the extent that we have a bad year… that falls on us,” Hamilton said, describing the unpredictable nature of self-insurance versus the fixed amount CT Partnership 2.0 would cost.
“You know what you are going to spend, all you have to do is project your employee population and plug in numbers, and you have a figure,” Hamilton said.
CT Partnership 2.0 would cost NPS $3.15 million less than the existing plan, he said. The BoE could then roll its insurance fund into the budgetary shortfall; with $500,000 expected in savings in transportation a $800,000 gap would be left, which would not require cutting employees, he said.
Hamilton hedged on predicting how many positions would have to be eliminated if NPS’ bargaining units refuse to jump onboard CT Partnership 2.0, as it depends on what level of employee were eliminated.
If you assume a $65,000 a year salary, with benefits adding up to $90,000, then it would be 73-75 positions, he said, calling this something that “would have very negative consequences for the school system.”
“I don’t even want to think about going down this route,” BoE member Erik Anderson said, mentioning the elimination of “100 teachers.”
“My understanding, correct me if I am wrong, if it were to come down to cuts it would be the newest additions to the ranks, correct?” Anderson said.
“Right,” Hamilton said.
It would be the newer teachers, Hamilton repeated.
“It’s painful,” Meek said.
“It’s a significant issue,” Hamilton said.
He went on to explain why CT Partnership 2.0 would save Norwalk money – and it’s possibly a short-lived benefit.
The state is basing its charges for CT Partnership 2.0 on a on statewide book of business, but expenses in Fairfield County are higher than average, Hamilton said.
“Our experience is apparently not as favorable as the statewide book of business,” Hamilton said. “Because the 2.0 Partnership is charging one rate… it produces savings for us that normally would not be the case. If it was any other insurance company, frankly, they would look at our actual claims experience. They would get five years of claim data and then they would give us a rate that would be reflective of our claims experience.”
The rates are locked in for the next fiscal year, Hamilton said. So, it would start July 1 and continue to June 30.
Anderson asked if there is a chance that the CT Partnership 2.0 pool could change in the future, given the uncertainty on the state level.
“Yes, over time, we would not think that this is necessarily going to continue forever but for at least right now, whether that’s for the next year or the two or three year, or four or five years, we don’t know,” Hamilton said. “But at some point, could the state change the rules on this? Certainly, that’s a possibility, that’s why the district in presenting this to our collective bargaining groups has indicated that we do need a memorandum of agreement with those bargaining groups, that would provide that the event you just described happens, the recognition of all the parties is the district would go back to the old plan and the old plan design.”
Barbis said Greenwich put that language into its deal with its bargaining groups, and Hamilton said that language was being offered by Norwalk.
“This plan, and this plan design, provides the employees with a richer and what would otherwise be a more expensive benefit plan than our current plan,” Hamilton said. “It’s only because of the fact that the state is using that state-wide pool average that this produces what is in effect a win-win. It produces a health plan that is better for the employees; it saves the district more than $3 million a year.”
At the following BoE meeting, Anderson said that obviously the Board is looking not to cut the workforce, “but we have some discussions to go on that.”
BoE Finance CT Insurance 20170418
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