As school districts prepare for the new school year, hundreds of thousands of Texas teachers and staff will be making their annual benefit elections during what is typically an open enrollment period.
This time, however, employees in 115 public school and charter districts will have choices that don’t include TRS-ActiveCare because of a change last year that allowed school districts across Texas to opt out of the state’s health care plan. The law also stipulates that districts that choose to remain within TRS-ActiveCare cannot offer any alternative group health coverage beginning Sept. 1, 2022.
“I believe a major goal of the law was to provide districts with some flexibility, while also trying to ensure the long-term stability of TRS-ActiveCare,” said Trent Toon, director of operations for First Public, which administers the TASB Benefits Cooperative that provides benefit services to participating Texas school districts. “So, districts must either be all-in with TRS-ActiveCare with no competing plans — or completely out. There’s no in between.”
Toon said the decision to stay or go is not always straightforward and is dependent on the unique circumstances of each district.
“What makes financial sense for one district may not make sense for another one,” he explained. “It’s important for districts to look at their claims and contribution data and do their homework.”/
One District’s Decision to Change
After last year’s law change, Spring ISD in north Houston did just that, analyzing five years of claims data before bringing a recommendation to its board of trustees in December to leave TRS-ActiveCare in favor of a self-funded medical plan.
Spring ISD’s Chief Financial Officer Ann Westbrooks said the decision wasn’t easy, especially since Senate Bill 1444 doesn’t allow districts that opt out of TRS-ActiveCare to rejoin for a total of five plan years. Districts that do choose to leave must make the decision by Dec. 31 of the year “preceding the first day of the plan year in which the election will be effective.” For most school districts, that’s Sept. 1.
“When we compared our contributions to claims, what we saw was a surplus,” Westbrooks said. She said that information, combined with TRS moving to regional rates for its health care plans, helped inform the recommendation to leave. The Spring ISD Board of Trustees approved the change last December, as did dozens of other districts across the state.
This fall, more districts are expected to start analyzing their claims and contribution data to determine their future with TRS-ActiveCare.
In April, Gov. Greg Abbott announced the allocation of $435 million in CARES Act funding to help keep TRS-ActiveCare rates flat for the 2022-23 school year. That money was in addition to the $286 million in American Rescue Plan funds already committed by state lawmakers to TRS to help defray COVID-19-related health care costs.
Future Pricing Uncertain
But what pricing for TRS-ActiveCare will look like in future years remains to be seen. The TRS Board votes each April to set the rates for the coming plan year — four months after the December deadline for districts to notify the state of their intent to leave.
“I still think it was the right decision to leave,” said Alison Sims, Abilene ISD’s associate superintendent for Human Resources. Sims noted that the district already had experience providing an alternative health care option and a three-year cap on premium increases with their newly selected plan. That added to their confidence when recommending the district leave TRS-ActiveCare — a decision unanimously supported by the board of trustees.
“We started by really looking at what our stakeholders want,” she said. “For everyone, it’s good coverage and low rates.”
Before You Decide
As you’re considering whether to leave TRS-ActiveCare, here are some tips to help you make this important decision:
Do Your Homework
TRS is required to provide districts with their contribution/claims information, so districts should take a deep dive into that data. If a district doesn’t have the expertise to do this analysis in-house, there are third-party vendors and consultants, including some available through the TASB Benefits Coop, that will provide that evaluation.
Understand the Risks of Being Self-Funded
As Westbrooks notes, there are no guarantees that future years will provide savings, so be prepared to weather the possible consequences, including unbudgeted expenses. “Insurance is insurance,” Westbrooks said. “Every year something could come up that could make you go in the red.”
Be Careful About the Administrative Burden
Expect additional work with regards to approving related expenses with claims, prescription drugs, and the cost of a clinic, if your district is running one. In Abilene ISD, the district has contracted with a company to help manage that work.
Get Employee Feedback Before Making Any Decision
Survey employees about what they like or don’t like about the current health plans, including available prescription coverage. Some districts that had been providing alternate plans during the 2021-22 school year or earlier may find their employees are more receptive to possibly leaving TRS-ActiveCare. It’s essential, however, that employees are given an opportunity to provide authentic feedback as part of the decision-making process.
Keep Employees Informed and Engaged
Don’t wait for the traditional open enrollment period to start letting employees know about possible changes to benefits. It’s no secret that many employees simply let their benefit elections roll over each year without much thought. But if a district is moving out of TRS-ActiveCare, regular communication is essential to helping employees make informed choices. Some districts have been experimenting with a May open enrollment period before teachers go off contract to engage them before the summer break, when many don’t check emails.
Be Transparent About the Costs of Health Insurance
Regardless of whether a district stays in TRS-ActiveCare or decides to leave, employees should be aware of the rising costs of health insurance and how those expenses are shared among the state, the district, and the employee. At a minimum, employers must contribute $225 per month per employee to premiums, which includes a $75 contribution from the state and $150 from the district. Some districts choose to go above and beyond that amount, including Abilene ISD, which contributes $410 monthly per employee. Regardless of the amount, it’s important to let employees know how districts are sharing the burden.
A version of this article was first published in the August 2022 issue of Texas Lone Star.