BENTONVILLE -- Officials said NorthWest Arkansas Community College could realize significant savings by switching to a partially self-insured health plan, a move the Board of Trustees approved Monday.
The college will pay Blue Cross Blue Shield a fee to administer the plan. The college will keep the premiums paid by employees and pay a maximum of $100,000 in claims annually for each employee. Claims beyond that threshold will be covered by a reinsurance provider.
At A Glance
Premiums Vs. Claims
Here’s how much NorthWest Arkansas Community College employees have paid in premiums and how much they’ve made in claims on the college’s health insurance policy the past few years.
Year*Premiums*Claims*Excess Premiums Over Claims
2011*$3,552,146*$3,111,669*$440,477
2012*$3,648,079*$4,206,833*-$558,755
2013*$4,058,205*$3,236,283*$821,922
2014*$2,408,030*$1,671,069*$736,961 (year to date)
Source: NorthWest Arkansas Community College
The college has not chosen that provider. It would insure the college's annual liability at a maximum of about $5 million.
The board unanimously approved the proposal. Amy Forrest was the only board member absent.
Evelyn Jorgenson, college president, said the community college in Missouri where she formerly worked used a partially self-insured plan for several years.
"We found it to be very beneficial," Jorgenson said. "Yes, occasionally, yearly costs will exceed premiums, but by far we found we accumulated money in that reserve, because we were paying ourselves the premiums, rather than paying the insurance companies the premiums."
The new plan will take effect Jan. 1. The college runs on a fiscal year that starts July 1. Officials said there is a chance the new plan could cost the college up to $107,000 more this fiscal year than it paid for health care last fiscal year. But the college also could see savings of up to $546,000, according to Wendi Cadle, director of human resources.
Health care costs represent about $3.8 million, or 9.3 percent of the college's operating budget. Premiums have increased 42 percent for college employees in the last five years, Cadle said.
Premiums will not change with the implementation of the new plan, she said.
One drawback to the plan is a high-risk employee could be "laser" targeted, meaning the reinsurance amount for that individual could be raised significantly.
Debi Buckley, chief financial officer, didn't have an exact number of employees who use the college's health plan, but said it was between 400 and 500. The college won't have to hire additional staff to administer the new plan, Buckley said.
Once employees meet their individual deductibles, the college may experience months of higher claims, Cadle said.
Dan Shewmaker, a board trustee, said he'd like to see the college emphasize its health and wellness program for employees.
"The places that have adopted this kind of self-insured program, they seem to take it personally, and try to be healthier and try to be better," Shewmaker said.
In other business, Jorgenson said enrollment for this fall semester, which began Aug. 25, is looking good.
"It certainly is looking as if we will not be down to the extent that we had prepared for," Jorgenson said.
The college built its budget for this fiscal year on the assumption enrollment would decrease by 3 percent from last fall. The college is expected to make an announcement about enrollment today, which is the 11th day of classes. Eleventh-day numbers are used by the state to compare enrollment from year to year.
NW News on 09/09/2014