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Health care expenses to increase for Duluth school district

Duluth school district health insurance costs will jump substantially next year, following years of decreases or smaller increases after a 2010 switch to a statewide managed-care plan.Costs will rise by 6.9 percent, and add about $165,000 in expe...

Duluth school district health insurance costs will jump substantially next year, following years of decreases or smaller increases after a 2010 switch to a statewide managed-care plan.
Costs will rise by 6.9 percent, and add about $165,000 in expenses for health care that weren’t budgeted for next year. The district projected and planned for a 6.5 percent increase.
The increase in expenses comes at a time when the district is working to trim more than $3 million from its annual budget of about $100 million.
Since joining the Minnesota Public Employees Insurance Program, health insurance increases have been much smaller than when the district used a private health care insurer, the district’s business services director Bill Hanson told the School Board at a Monday committee meeting.
The switch, he said, “has had quite a positive impact for us.”
But expenses have gone up, he said.
Last year, the increase was less than 1 percent and less than 2 percent the year before. Not having to spend as much on health care helped offset last year’s deficit.
The program in 2010 was chosen in part because it spreads risk over a much larger group. Last year, the plan included 68 school districts.
Of the $165,000 unbudgeted, the majority - $125,000 - will go toward the health reimbursement accounts of the 1,059 employees who are part of the plan. The rest will go toward plan increases. The district’s contributions toward those accounts will increase by $100 for single users and $200 for family coverage. Single employees currently receive $1,900 and families $3,800 per year. Out-of-pocket expenses such as deductibles and co-payments for prescriptions are increasing, which is why that amount is going up, Hanson said. The accounts were added because of higher deductibles and co-payments under the state plan. The district experienced years of double-digit cost increases under prior plans.

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