close
close

Hillsborough schools aim to reduce costs with a self-funded health insurance plan

Hillsborough schools aim to reduce costs with a self-funded health insurance plan

Hillsborough County Public Schools plans to transition to a self-insured, or self-funded, insurance plan in 2026, which they believe will lower costs in the long run.

The school board discussed the issue Tuesday and will take it up again in June.

The discussion was sparked by rising health insurance premiums the district pays to its current carrier, Aetna.

Under the current full coverage plan, the cost of insurance premiums is projected to increase from $186.1 million in 2024 to $266.7 million in 2026.

“So every time your employees go to the doctor, they will see an increase in costs and probably an increase in premiums as well,” said Lorrie Penley, a representative of district health insurance consultant Aon.

WITH self-financed planthe district takes on more of the potential risk of high claim costs, but there is more flexibility to keep costs low elsewhere, Penley explained.

Generally, with a self-funded plan, the employer – in this case, the district – is directly responsible for covering its employees’ claims, such as medical services and prescription drugs.

Instead of paying the insurer a fixed premium, which is becoming more and more expensive.

According to forecasts, the district will ultimately save money this way. For the self-funded plan, costs for 2026 are estimated at approximately $247.6 million, approximately $20 million less than for the fully insured plan.

“My wish is to move to self-funded insurance for 2026,” said Superintendent Van Ayres.

Other counties use self-funded insurance

In a workshop presentation, Aon pointed out that other large school districts in the state, such as Miami-Dade, Palm Beach and Pinellas, operate under a self-funded insurance program.

Penley said that ultimately, self-insurance could provide workers with more tailored benefits.

“When you are fully insured, you have limited options to offer your employees beyond what the carrier offers,” Penley said.

According to Penley, self-funding gives the district more flexibility in the programs and services it offers to employees.

As a result, the district will take over more administrative responsibilities. But Penley says they would save on administrative costs in the long run.

Under the self-financing plan, the district will no longer have to pay state tax on fully insured premiums and will retain rebates under the drug prescribing program.

“This would help curb the rising costs of plans. At the same time, you’re trying to keep your employees healthy,” Penley said. “So you give them better opportunities to improve their health.”

Hillsborough board member speaking at the meeting

Hillsborough Schools board member Patti Rendon said if the district continues with its full insurance plan, it will “take money out of teachers’ pockets.”

Board member Stacy Hahn was among the majority who expressed a desire to continue with the self-funded plan.

“We will see premiums increase dramatically every year,” Hahn said. “I think the only way to control costs for employees is to give them some kind of flexibility.”

Hahn also expressed some concern about the requirement requiring the district to maintain reserve funds for 60 days. The state requirement is to demonstrate that the district can cover the claim.

“I would like to see some kind of financial savings plan,” Hahn said.

Handling high cost claims

Board member Lynn Gray questioned the district’s ability to absorb potential, costly claims.

“We try to think that we are all healthy, but our clientele and our employees are not in the best physical condition. We had Covid, which dramatically increased the number of serious, high-cost claims,” Gray said.

“I know the fund balance is 14-19%, but this will dilute that fund balance,” Gray continued. “We hear the experts, but we need to temper that with our absolute fiscal reality.”

Aon said the district has the option to purchase stop-loss insurance to protect against catastrophic losses or if claims exceed a certain amount.

Superintendent Ayres also addressed the reserves issue, saying the district does have a financial plan.

“We have been working over the last few years to have these reserves at the current level and to be able to move in that direction,” Ayres said.

District 4 Rep. Patti Rendon spoke in favor of the self-financing plan, but also emphasized that the district needs to take a holistic approach, taking into account various insurers and even consultants.

Still, Rendon said if the district doesn’t change, “they’re going to take money out of teachers’ pockets.”

“We’re going to have to pay these extra premiums anyway, the rent is going up,” Rendon said.

Several board members expressed a desire to continue discussing the financial implications before the next meeting on the matter in June.