“To boldly go where no man has gone before.”
-Captain Kirk/ Starship Enterprise

The SEBB held an all-day meeting on 3/15/18 that covered a great deal of information including preliminary impacts on the state and local school districts. The caveat is that David Iseminger, the Director of the Employee and Retiree Benefit Division (ERB) stated, “Because this change is new, we are not going to get everything right.” At this point, without enrollment figures, claims history, etc. ERB is involved in making educated guesses with assumptions that may come to be or not.

There was an extensive packet distributed and discussed at the meeting.

View Packet | PDF

So, what is the SEB Board and how do I find out more information?
Check out an overview of the program. Links to a Q & A section would be a good place for an orientation. There is an option on that page to also sign up for electronic notices of actions taken by SEB Board.

A reminder that on January 1, 2020, all school employee health, vision, dental, life insurance, short and long-term disability and accidental death/dismemberment plans will be shifted to and purchased from the SEB Board.

What legislation established this?
Two pieces of legislation laid out this change.

1. EHB 2242, effective 10/19/2017, laid out the basics of the program.
2. ESSB 6241, which is currently before the Governor for action passed during the recent legislative session. This was agency request legislation to clarify and make some substantive and also technical changes to the original legislation. The Legislature did make additional changes to the bill during session that were not originally proposed by the Health Care Authority (HCA), e.g. Sections 33/34.

What are the plans and costs of the various plans?
Based on input from the SEB Board, HCA will be issuing a Request for Information (RFI) from interested carriers for non-binding cost and plan design proposals for fully insured medical plans. These responses are due back to HCA in late April the so that SEB Board can have a rough idea of potential costs and the ‘richness’ of various plans as they move to eventually establish the parameters of the plans they wish to offer to school employees. A reminder that the out of pocket cost for full family coverage cannot exceed three times the premium out of pocket cost for individuals.

What impact on school districts and on the state budget would this change have?
First, it is important to remember the caveat given in the introductory paragraph.

The legislation mandates that all employees who are anticipated to work 630 hours or more will qualify for benefits. These hours can be accumulated throughout the year or if an employee is expected/anticipated to meet the minimum, he/she would qualify. For example, a substitute who transitions to become a long-term substitute may qualify at some point in the school year.

Questions were raised over employees working supplemental contracts such as advisers, coaches. Do they need to track time that may result in their qualifying for benefit? What about retirees who are already in PEBB who may exceed 630 hours. Do they qualify for SEBB benefits also? How does the state adjust benefit payments to districts as new ‘qualifiers’ come onto the payroll? Answers to these questions are yet to come.

The most impactful change is that the legislation (See Section 33 of ESSB 6241) changes present district practices of pro-rating benefits based on one’s percentage of FTE-ness to a head count system. Full benefits are offered to all qualified employees based on head count, not FTE status. Tab 7 in the board packet shows in 2016–17 there were 94,400 state funded FTE’s in school districts; 15,500 additional FTE’s were locally funded.

Tab 8 of the board packet presented by Megan Atkinson, CFO, hypothesizes that adjusting state funding for a headcount basis increases the state contribution in excess of $200 million, and perhaps as high as $300 million. District excess costs would be in the neighborhood of $30-$40 million. Wayne Leonard, member of the board from Mead School District estimates the excess cost to Mead would be $750,000. The recently adopted supplemental budget also allocated $28 million to the HCA for administrative costs to implement this transition. (Staff, IT infrastructure, etc.) These dollars will be repaid to the state with interest by school districts. The mechanics of this are still unknown.

Are there other items of note?
A review of the packet will cover the entire agenda. This summary report is just some highlights. One interesting resolution by the board concerns dependent eligibility. Under the SEBB program, domestic partners are eligible dependents only if they are registered with the state. For example, same sex couples must be married for the spouse to have dependent eligibility (unless at least one of them is over 62 in which case they could be in a state-registered domestic partnership with the Secretary of State’s Office. This was pointed out is different than many current district practices. For example, some districts allow for a signed declaration that two people of the opposite or same sex are in a domestic partnership. The board is also looking at when coverage would become effective and the length of the period for electing benefits. The Board may be voting on these policy topics at its April 30th, 2018 meeting. See tabs 10 and 11.

So, what’s next?
EHB 2242: Part VIII: Starting in Sections 801–819 lays out the process. Beginning in July, 2018, and in even numbered years, negotiations with the Governor’s office and “one coalition of all the exclusive bargaining representatives impacted by benefit purchasing with SEBB” will begin to determine/negotiate employee/employer costs. The current state employee contract has an 85/15 split on benefits with employees responsible for 15% of the benefit costs. This split, however, has been negotiated by the state employee representatives and the Governor’s office and is not valid for SEBB members. Negotiations have yet to establish any employee/employer contributions.

This is just a summary. As indicated earlier, a review of the board packet materials would be wise and a refresher on the legislation may also be in order.

If you have any questions, feel free to contact me.

Fred Yancey
Nexus Group, LLC