The state agency that manages the health insurance plans for public school and state employees recommended Wednesday that lawmakers increase annual funding for the plans by more than $19 million.

Under the recommendation by the Department of Finance and Administration’s Employee Benefits Division, state funding would increase by $10.5 million for the plan for teachers and other public school employees and by $8.9 million for the plan for state employees.

Mark Meadors, a consultant to the Employee Benefits Division, said the agency is also proposing that the state shift the administration of “cafeteria plan” options, such as life and dental insurance, from the school districts to the Employee Benefits Division.

That would allow the payroll tax savings generated by the health and cafeteria plan options to go to the public school health plans, instead of the districts, Meadors said. The tax savings from the health plans alone would be about $8.2 million annually, he said.

The measures, which would require state legislation, were among several recommendations Meadors outlined Wednesday at a meeting of the State and Public School Life and Health Insurance Program Legislative Task Force, which is studying possible changes to improve the finances of the plans covering teachers and public school employees.

The plans for public school employees and state employees are identical, but state employees pay lower premiums, which Employee Benefits Division officials have said is primarily because more state money goes toward the state employees’ plans.

Meadors said the Employee Benefits Division is recommending increased funding, along with cost-cutting measures, for both groups of plans. He noted that the State and Public School Life and Health Insurance Board, which sets the rates and establishes the benefits for the plans, has kept premiums for state employees low by spending money from the plans’ reserves.

“We can’t keep going in there and robbing these reserves to basically offset the member costs,” Meadors said.

Other measures proposed by the agency include charging significantly higher premiums to employees who fail to undergo an annual wellness exam and conducting an audit to determine whether the plans have been receiving all the drug company rebates for which they are eligible.

The agency also reiterated its support for measures that were also suggested by a consultant to the task force. One such measure, which would require legislation, is dropping part-time employees from the plans. The agency also supports increasing the premium for the lowest-priced plan, which is now $11 a month for individual coverage. The consultant to the task force also suggested excluding from coverage employees’ spouses who are eligible for insurance from their own employer.

Under a preliminary proposal, the monthly premium for the school employees’ gold plan, the most expensive option, would drop from $249.38 to $124.70 for individual coverage and from $1,132.96 to $566.48 for family coverage. The annual deductible for the plan would increase from zero to $1,000, but certain co-payments would be eliminated.

The silver plan, which currently has a deductible of $1,000 for an individual or $2,000 for family coverage, would be eliminated.

Meanwhile, the premium for the bronze plan would increase from $11 to $60 for an individual and from $269.50 to $347.66 for a family. The plan has a deductible of $2,000 for an individual or $3,000 for family coverage.

The task force is expected to vote on recommendations at its meeting on May 14. The State and Public School Life and Health Insurance Board is expected to set rates for 2015 by July 1.

The chairman, state Sen. Jim Hendren, R-Sulphur Springs, said he doubted that legislators would support additional state funding for the plans “without some very serious structural changes.”

He said he favored an option that would not require additional state funding along the lines of an example presented at the task force’s request by the Employee Benefits Division’s actuarial consultant, the Cheiron financial and actuarial consulting firm.

Under that scenario, the monthly premium for the gold plan would be higher - $178.06 for an individual, or $808.94 for family coverage - but it would have deductible of $750 instead of $1,000.

The annual deductible for the silver plan would increase by $1,000, but the premium would decrease from $173.32 to $123.76 for individual coverage and from $787.36 to $562.18 for family coverage.

The monthly premium for the bronze plan would increase to $85 for individual coverage and $420.42 for family coverage, and the deductible would increase to $3,000.

If coverage for part-time employees is eliminated, school districts would save money by not having to contribute to their premiums, he said. State law requires the districts to contribute at least $150 per employee each month.

Hendren said he is exploring whether the money that districts would have spent on coverage for the part-time employees - estimated to be $7.2 million - could be transferred to the health plans.

Mike Mertens, assistant director of the Arkansas Association of Educational Administrators, said the group would oppose shifting that money to the health plans.

He noted that, during a special session last year, the Legislature passed a law mandating that funding allocated by the state to districts to pay for teachers’ health insurance be spent on premiums or health savings account contributions. Districts had previously spent some of the money for other purposes.

“We will need the money to meet that mandate,” Mertens said.

Arkansas, Pages 9 on 05/01/2014