October 14, 2012

School districts brace for unknown insurance costs

By Matt Hongoltz-Hetling mhhetling@centralmaine.com
Staff Writer

School districts that do not offer health insurance to full-time employees will need to change next year, under a phased-in requirement of the federal Affordable Care Act.

While the exact impact on most area districts has yet to be determined, at least one district, Phillips-based School Administrative District 58, will have to insure at least 24 additional employees or face a penalty of nearly $300,000.

While some districts are unaffected by the health insurance requirement, others may have to find the money to offer insurance for educators, coaches and full-time substitute teachers who are currently uninsured.

Teacher unions are unsure how the changes will affect future labor negotiations, one of several variables about the way in which the law will be implemented.

Under the act, most school districts in Maine are defined as "large employers," those with 50 or more workers.

More than 96 percent of large employers across the nation offer health insurance, according to the U.S. Department of Health and Human Services.

But area school districts are among those who do not insure all of their workers.

In January 2014, they will be required to provide affordable health insurance to each employee working 30 or more hours.

The issue, about which much is still unknown, is taking on a sense of urgency for anxious district administrators beginning work on next year's budget cycle, which includes the early 2014 deadline.

Different costs for different districts

School districts don't agree on what the effects of the new law will be.

School Administrative District 58 administrators say they will be hard-hit by the change.

That district, which operates schools in Avon, Eustis, Kingfield, Phillips and Strong, will have to add 24 employees to the insurance rolls, or face a stiff penalty.

Currently, the district provides coverage for 152 of its 176 full-time employees, according to Luci Milewski, business manager.

"My understanding is if we do not offer it to those people who are eligible, the penalty is about $2,000 per year, per employee that is eligible," she said.

With 176 eligible employees, the first 30 of which are exempted from the penalty assessment, the total cost for choosing not to insure would be $292,000.

"Obviously, we want to offer the insurance to stay within the law," Milewski said.

The district will also have to decide whether to make the insurance option affordable for their employees, a term the law defines as costing no more than 9.5 percent of an employee's income.

If the plan is not offered at an affordable rate, the district will have to pay a penalty of $3,000 for each worker who decides to forgo the school's plan in favor of insurance offered in an exchange system that will be established that year.

"Do we choose to make it affordable or do we choose to pay the penalty per employee?" Milewski asked. "These are the questions that are going to affect every large employer in the state."

While some superintendents say the unknown details could have an impact on nearly every district in the state, others see clearly defined local effects that range from negligible to dramatic.

Many districts already provide insurance to all of their full time employees, as is the case in Alternative Organizational Structure 92's schools in Waterville, Vassalboro and Winslow.

"A lot of people have asked about this but I don't believe this is going to be a serious impact for us," said Superintendent Eric Haley. "We have in all of our negotiated contracts a lower threshold than 30 hours for health care coverage."

Business Manager Chris Pottle said she doesn't foresee an effect on the Mt. Blue School District, which includes Farmington, Wilton and seven other Franklin County towns.

(Continued on page 2)

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors

Further Discussion

Here at OnlineSentinel.com we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)