Executive Director

#


Dr. Michael S. Dulaney
800-793-6272
402-476-8055
mike@ncsa.org

Click to view:
EHA Memo to Members 9/16/07
[Download]


TO:  NCSA Members

FROM:  Dr. Michael Dulaney, NCSA Executive Director

DATE:  September 16, 2007

RE:  Educators Health Alliance (EHA) Cash In Lieu (CIL), Underwriting Rules, and 4-Tier Rate Structure

The purpose of this communication is to clarify issues regarding EHA action to date relevant to Cash In Lieu (CIL), Underwriting Rules, and a 4-Tier Rate Structure.  After nearly 18 months of discussion and study the EHA Board adopted a position that will allow School Districts to elect to offer CIL of insurance while maintaining a strong insurance pool for the future.

The EHA Board has asked for feedback, and has been pleased with your response.  It is my hope that this communication creates an increased understanding of these complex issues.

  1. Cash in Lieu.  The decision to offer cash in lieu of insurance is a local decision governed by the district and potentially the locally negotiated employment contract.  It is not an EHA decision.  However, the EHA Board has obtained legal opinions and suggests that a district that offers CIL should consult with their legal or tax advisor.  The tax implications to a group and to a member could be devastating if a proper Section 125 document is not in place.  It should also be noted that having a proper Section 125 document does not exempt a group from the changes to the Underwriting Rules.

  2. Effective September 1, 2008 any EHA subgroup that has less then 75% enrollment, (excluding those covered under a spouse's plan) shall remain eligible under the EHA and be subject to a 5% premium rate surcharge.  Under the previous rule, EHA had no other option but termination of coverage if a group did not meet the 75% enrollment.  Therefore, the rule had not been enforced.  This change will allow the EHA Board to enforce this rule with a 5% surcharge without taking the most drastic measures of dismissing a group that does not meet the 75% threshold.  This rule change will not require additional reporting by schools.

  3. Effective September 1, 2008 any EHA subgroup that has less than 50% enrollment, (excluding only those covered by EHA under a spouse's plan), shall remain eligible under the EHA and be subject to a 5% premium surcharge.  This is a change to EHA Underwriting Rules, however; it is not new to the insurance industry.  It is very important for continued success of the insurance pool that we maintain a large stable pool of members.  The 50% enrollment rule has been initiated by group insurance carriers to help minimize the risk of adverse selection (i.e., to help protect our insurance pool from any unnecessary risk).  Schools will be responsible for providing the additional waiver information on the subgroup application.

  4. Effective September 1, 2008 any EHA subgroup where the employer contribution to the premium is less than 50% of the single rate shall remain eligible under the EHA and be subject to a 5% premium rate surcharge.  The employer minimum contribution must be exclusively for health insurance premiums with no options to pay for other benefits and/or conversion to cash.  This is not a new underwriting rule, but similar to the change in item #2.  EHA rules have always stated that a group is responsible for a minimum of 50% of the single premium.  However, as before, if a group did not meet this rule, the only recourse available to EHA was termination of the subgroup.  The 50% of single premium is common to all group insurance.  Blue Cross Blue Shield of Nebraska requires that all insured groups meet this requirement.  This rule update will require no additional reporting by the group.

  5. Effective September 1, 2008 any EHA subgroup where the employer contribution is made exclusively for health insurance premiums only, with no options, and such contribution is in the amount of 100% of the single premium and 100% of the family premium, rates shall be subject to a 5% premium rate reduction.  The term "with no options" has caused many questions to be asked about this change.  The EHA Board will meet in September and discuss this matter and come to final resolution on the definition for "with no options."

  6. Four-Tier Rate Structure (Proposed for September of 2008)

    • The EHA Board has discussed moving to a 4-tier structure to include, Employee only, Employee & Spouse, Employee & Child(ren) and Family.  This item is included on the September 2007 EHA Board meeting agenda at which time a vote may occur to determine if the 4-tier rate structure will be implemented in 2008.

    • The EHA Board has requested that BCBSNE share with school groups an example of the 4-tier rate structure.  This information was presented at the Spring Bookkeeper meetings.

    • A 4-tier rate structure will not cause an overall shift in the total premium amount.  It has been suggested that moving to a 4-tier structure will cause group rates to decrease.  This is not accurate as any change would be premium neutral and the overall rate charged to EHA would remain unchanged.  The total premium cost for a district will be dependent upon the revised rate structure and the actual enrollment within the four tiers.

The aforementioned subgroup underwriting changes are scheduled to become effective in September 2008.  Each school will receive communication from BCBSNE notifying you of the status of your subgroups.  The initial notification sent to schools was based on the 2006/2007 subgroup applications.  An additional letter will be sent to each subgroup based on the 2007/2008 enrollment data that was recently submitted.  Any subgroup that does not meet the Underwriting Guidelines regarding surcharges will have the opportunity to file an appeal with BCBSNE.

It is the EHA Board's goal to maintain strong viable plan for educators today and in the future.
General Report, November 11, 2007


NCSA Text Alert System:  We are proud to partner with New Digital Group based in Lincoln, Nebraska to provide a new service for NCSA members.  The new text alert system empowers NCSA members to receive timely, important information in the quickest way possible.  We plan to use this system to notify members of important legislative events or training and development updates.  Members may sign up to receive alerts via text messaging, email, and/or voice delivery.

NCSA Legal Briefs Newsletter:  On November 1, 2007, we launched a new service designed to inform members on current legal issues.  The NCSA Legal Briefs Newsletter will be published as needed throughout the school year.  The first edition included contributions by attorneys Greg Perry and Kelley Baker.  The first edition included articles on compliance with the New Hire Reporting Act and changes in the state withholding tables.

NCSA Membership Directory:  We are excited to unveil the first-ever NCSA Membership Directory in November 2007.  Thanks to the contributions of our own members, this new benefit of membership will surely be a useful addition to each member's library.  The membership directory will be a useful resource for our members to keep track of fellow administrators and to learn more about their colleagues.  Of course, it also serves as a guide for contacting fellow school administrators.  We are grateful to Ameritas represented by Mr. Al Eveland for sponsoring the 2007-08 NCSA Membership Directory.

Membership Count:  As of November 11, 2007, our membership roster includes 1,278 active members, 40 associate members, 520 retired members, and 11 student members.

Finance and Membership Coordinator:  We are pleased to welcome the most recent addition of the NCSA staff.  Cami Cumblidge was recently hired to fill the position of NCSA Finance and Membership Coordinator upon the resignation of Julie Anshasi, who held the position for the past six years.

2,649,459