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School Districts to Remain in Experience-Rated Health Insurance Plan
Monday, January 11, 2016
The New York State Legislature recently passed legislation that effects how NYS interprets the Affordable Care Act as it pertains to employers with fewer than 100 employees.
Prior to the passage of the Affordable Care Act (ACA), New York State Law allowed employers with 50 or more eligible individuals to join together in various forms to purchase experienced rated health insurance coverage for their employees. Currently, in the WSWHE region, 28 school districts and the BOCES participate in a not-for-profit, experience-rated health insurance trust. For certain employers, experienced rated health plans can be more cost effective than community rated plans. This is the case for school districts in the WSWHE BOCES region.
Upon passage of the ACA, each state was required to define a number of health insurance related business rules, including the development of a definition of a “small group employer.” In New York State, rules were established which defined the term “small group employer” to now mean 2-100 employees. According to the rules, among other restrictions, any employer falling below the 100 employee threshold no longer has the ability to participate in an experienced rated health insurance plan, and must participate in a community rated plan.
In the spring of 2015, updated federal guidance was released about certain elements of the ACA. The guidance clarified the methodology for calculating an “employee count,” and further specified that retirees covered under an employer’s policy could not be used in the calculation of the total number of employees.
Upon learning of the federal rules, 10 school districts within the BOCES region determined that they would fall under the 100-employee threshold, or could reasonably fall under the threshold in the near future. A professional consultant researched the community rated options. Based upon available data, converting the 10 districts to a community rated plan would increase health insurance premiums significantly, with an estimated aggregate year one cost of $2,297,114.00. This amount represents approximately three times the 2015-2016 tax cap for these districts.
In June of 2015, school districts of the WSWHE BOCES region approached members of the New York State Legislature to seek a legislative solution. Failure to obtain legislation would have required districts to budget for a significant increase in their 2016-2017 budgets (for both active employee and retiree health insurance).
Working with the area superintendents, members of the New York State Legislature from both parties worked diligently to draft and pass Bills to postpone the impact of the current law for a period of two years. The Bills were recently signed into law by Governor Andrew Cuomo.