Health Insurance CommitteesKeys for Success

Presented by

Caryn CossCTA NODD Specialist, Region 2

Angela Marese BoyleCTA NODD Specialist, Region 3

Dan VaughnRegional UniServ Staff, Region 3

What Effective Health Benefit Committees Should Know --

Types of purchasing models

Strategies for success

Committee roles and responsibilities

Fiduciary and ethical responsibilities

How to work effectively with brokers and consultants

Common School District Insurance Purchasing Models

Health insurance for school employees is purchased through one of the following delivery models:• Jointly Managed Trust (JMT)• Joint Powers Authority (JPA)• Direct Purchase• Large Group Purchasers

Jointly Managed Trust (JMT)

• Labor and management are represented on the trust and each group gets one vote

• Each group selects their representatives

• Contract directly with provider for services including consultants and third party administrators (TPAs)

• Trustees have specific fiduciary responsibilities that govern their conduct

Jointly Managed Trust (JMT)

All money contributed to the JMT must be used for the exclusive benefit of covered participantsExamples in California:

CVT (California’s Valued Trust) VEBA (Voluntary Employees’

Beneficiary Association), MEBA (Metropolitan

Employees’ Benefits Association),

SCEET (South Counties Employer Employee Trust)

HDIEET (High Desert and Inland Employee/Employer Trust)

Joint Powers Authority (JPA)

• Final decision making authority rests with the management representatives to JPA

• Surplus revenue is returned to the school districts

An entity formed and operated by two or more public agencies to spread risk among them for the purpose of establishing, operating, and maintaining a joint program for medical, dental, vision and other employee benefits

Joint Powers Authority (JPA)

JPA may operate with representatives from the employee organizations in an advisory role to the board of directors

JPAs establish their operating rules (data sharing, opting in or opting out of the JPA)

JPAs contract with providers through consultants hired by the JPA

California examples are Riverside Employer/Employee Partnership for Benefits (REEP) and Self Insured Schools of California (SISC)

Direct Purchase

Districts directly purchase from insurance companies for benefits

Districts directly contract with consultants or brokers to provide advice and services

Districts are self-rated on their own experience

Direct Purchase

Stand alone districts do not have clout and may suffer wide swings in claims Each bargaining unit negotiates benefits and may result fragmented benefits

Large Group Purchasers

• Districts contract with larger purchasing pools to provide insurance for health, dental, vision and other benefits

• Large group purchasers negotiate with insurance providers for best rates

• Premium share is negotiated locally

• Examples are the JMT’s JPA’s, and CalPERS

Roles and Functions

District Administrators– Advocate for the district– Communicate to

superintendent and boardDistrict Bargaining Team Members

– Understand the process and information

– Communicate to respective bargaining teams

Union Members– Advocate for the units– Communicate to respective

boardsUnion Bargaining Team Members

– Understand the process and information

– Communicate to respective bargaining teams

NOT!

Roles and Functions

District Insurance Committees Understand: – Changes in laws and

regulations affecting insurance plans

– The need to coordinate with other insurance pools

– The needs of district staff– Competitive conditions;

district priorities and constraints

– Education– Communication

Responsibilities of the Committee

“It is not enough to have good heart and an empty head”

District Health Insurance Committees

• Mgt/Labor make their own appointment to the Committees

• Brokers/consultants do not “run” the meeting

• Mgt/Labor should alternate the “Chair” position

• Always attend• Ask questions

District Health Insurance Committees

• What is the long and short-term agenda?

• Have a work plan• All information and

recommendations go to both Parties

• Insist that both Union and Management have access to professionals

• If disputes arise, how are they resolved?

District Health Insurance Committees

• Develop open enrollment procedures to minimize negative enrollment consequences

• Require the incorporation of Wellness Programs

• Incorporate a good communications strategy

• Regularly review the financial status of benefit programs ensuring financial and fiscal stability

• Monitor the benefit plans to assure high quality and avoid unnecessary costs

District Health Insurance Committees

Advantages:1. Interaction among

district management, unions, and healthcare professionals

2. Opportunity to ascertain where $$ are being spent

3. Get familiar with insurance plans

4. Get to know the “players”

5. Getting everyone on the same page

6. Group expertise

District Insurance Committees

Advantages:– Interaction among district

management, unions and healthcare professionals

– Opportunity to ascertain where $$ are being spent

– Get familiar with insurance plans

– Get to know the “players”– Getting everyone on the

same page – Group expertise

District Insurance Committees

Pitfalls:1.Brokers/consultants can take

over leadership of the Committee, and push their own agendas

2.The parties receive only partial information

3.Can be considered a precedent for bargaining for either labor or management

4.Agreement in kind without input from the bargaining teams

The Most Important Thing You Should Know About Your Broker…

He works for you!

Brokers and Consultants

The Role of the Broker

• Provide relevant information to the Committee • Be an advisor to the Committee• Provide options regarding plan designs, deductibles, out of pocket costs, etc.• Be knowledgeable of funding mechanisms• Negotiate rates for premiums• Understand how the plan operates• Know plan design issues

The Broker/Advisor should:

Other Broker Considerations

Labor and management should consider these questions and judge for themselves: Are they selling a product or service? Are they working for labor and management to achieve the goals and objectives of both parties? Is the broker/consultant paid a commission, retainer, or fee for a particular job?

Other Broker Considerations

Do some real digging:Has the district entered into an agreement already. If so, what is the current fee agreement (fixed dollar or %)?If premium goes up, does commission go up?Does your broker’s firm receive any overrides from the products placed?Brokers/consultants should be paid a set fee for work, within the scope of the submitted proposalWhat happens in a commissioned arrangement?

Basic Underwriting Guidelines

Four basic principals to health plan underwriting --

1. Young Participants2. Old Participants3. Well Participants4. Sick Participants

If you upset the cart, it will tilt!

Opting Out

Good or

Bad?

10 Questions To Determine If You AreFulfilling Your Fiduciary Responsibility

Does your Health Benefits Committee:

Keep abreast of changes in laws and regulations affecting insurance plans?

Consider the needs of your plan participants (employee + dependants)?

Consider competitive conditions; district priorities, and constraints?

Regularly review the financial status of the benefit programs – financial and fiscal stability?

Monitor the Benefit plans to assure high quality?

Create a fair bidding system by excluding people who have an interest in the outcome?

10 Questions To Determine If You AreFulfilling Your Fiduciary Responsibility

Does your Health Benefits Committee:

Require that members abstain from voting when there are conflicts of interest?

Develop open enrollment procedures to minimize negative enrollment consequences, for example, major changes which do not include deaths in family, divorce, dependent age maximums?

Require the incorporation of Wellness Programs?

Incorporate a good communications strategy?

Keys for Success

• Knowledge & Training

• Time• Representation• Roles &

Responsibilities• Clear Governance

Lines• Trust• Commonality• Clear Plan• Transparency• Communications