Osseo Area Schools plan move to self-funded insurance

Premium increase of 10.6 percent triggered change

When HealthPartners told Osseo Area Schools its insurance premiums would increase 10.6 percent next year, the district said that was unacceptable.

Now the district plans to follow a slew of Minnesota districts moving away from traditional health insurance plans.

In the next two years the district expects to transition to a fully self-funded insurance platform for some of its employee groups. Instead of paying premiums to a carrier, the district will eventually set aside money into its own trust fund that will be used to pay claims.

“When you’re under the self-funded umbrella, there’s flexibility, and you realize a lot of savings,” Executive Director of Human Resources Judy McDonald said.

Although the district will still need to work with an insurance carrier, such as HealthPartners, to manage its health plans and claims, it will avoid the risk charge carriers usually impose because claims will be paid from the district’s trust fund. Taxes and other fees will also decrease, and the district will have more control over the plans it offers.

“We just think it’s the right strategy,” McDonald said. “We anticipate that we have the greatest opportunity to positively affect escalating premiums … and also potentially escalating claims.”

She said many districts, including Anoka-Hennepin, Bloomington, Hopkins, Minnetonka, Richfield and St. Paul, have already gone to self-funded models

According to McDonald, moving to a fully self-funded platform requires one to two years.

In the meantime, the district has come to an agreement with HealthPartners for a transition plan that operates on a jointly self-funded platform. Instead of paying premiums to HealthPartners, the district pays a fund through the Minnesota Public Partners Alliance, which is a pool of insured school districts that have a jointly self-funded plan. HealthPartners manages health plans for the alliance, but the alliance pays the cost of claims.

Under this plan, premiums will remain approximately flat next year. The school board unanimously approved the new plan May 7.

The new plan includes custodians, communications personnel, directors, principals and others, but it does not apply to teachers, Kidstop instructors, ESPs, administrative ESPs or nurses

Why not? The district had no say in the matter.

Under state statute, public employee groups have the right to vote to use the Public Employee Insurance Program (PEIP) health plan.

“When we got the renewal of 10.6 percent … (the teachers and others) voted to go to PEIP because they thought that would be best for their membership,” McDonald said.

She said the PEIP plan is very similar to the district’s current plan.

Jay Anderson, the president of Education Minnesota, Osseo, spoke at the May 7 board meeting urging board members not to approve the deal with HealthPartners but to consider PEIP.

In the end, the district may not have a choice. The legislature is considering changes to PEIP, including the possibility of making the program mandatory for all districts. The Osseo district doesn’t support the idea of making it mandatory, but McDonald said the district will have to see what happens when the dust settles at the Capitol.


Contact Jonathan Young at jonathan.young@ecm-inc.com