The cost of teacher and support staff healthcare
Let’s continue the review of the cost and the benefits of the VEHI health plans….
The last blog post focused mainly on the cost share for the premium and out-of-pocket costs between the employee and the employer. I want to dig into the out-of-pocket costs a little bit more because their structure and funding, as determined by the arbitrator in the first round of bargaining, have a significant influence on the overall cost of the plans.
The out-of-pocket costs are covered by a Health Reimbursement Account or HRA. HRA’s are employer funded plans that reimburse employees for qualified medical expenses. Any unspent monies in an HRA revert back to the employer at the end of the year. If an employee switches jobs they cannot take the money with them. HRAs can be setup to cover either first-dollar expenses or last-dollar expenses. A first-dollar HRA means that employees have access to the HRA money immediately. A last-dollar HRA means that an employee needs to meet a certain threshold in qualified health care expenses with their own money first before they can gain access to the employer provided funds in the HRA. The arbitrator’s decision awarded the employees a last-dollar HRA.
In our last blog post we shared that the maximum out of pocket costs for licensed employees (i.e. teachers) on the single CDHP Gold Plan is $2,500. To help teachers with those out-of-pocket costs schools supply them with an $2,100 first-dollar HRA. Similarly, for an unlicensed employee (i.e. support staff), the HRA is funded at $2,200. The employee’s responsibility, the amount that they would need to contribute out of their own pocket, is the difference between the out-of-pocket maximum and the amount of the HRA.
Those are annual numbers.
There’s another way to look at this as well. The total amount of healthcare available to the employee for that $300 or $400 contribution. For an unlicensed employee here’s what that looks like for the same CDHP Gold Single plan:
Put another way, for a support staff employee on the single plan $3,800 is covered by the HRA and VEHI before any employee contribution. Then the employee pays 20% of the costs until they meet the $300 obligation. At that point the employee will have received $5,300 in medical and prescription benefits for $300. All remaining medical and prescription benefits are covered 100% by VEHI for the remainder of the year.
But why does the HRA funding and first dollar setup matter? It turns out that they have a dramatic impact on the cost of the health care plans and that will be the subject of our next blog post. Stay tuned!
P.S. If you really want to dig into this in a bit more detail you should view testimony delivered by Laura Soares in Senate Education on March 9th (Laura’s testimony begins at 30:33)