October 14, 2012

Maine schools await details of insurance mandate

By 2014, districts will have to cover all full-time workers or face penalties. Some could be hard-hit.

By MATT HONGOLTZ-HETLING Morning Sentinel

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

UNION UNSURE OF IMPACT

C.J. Betit, director of collective bargaining at the Maine Education Association, said the teachers union is taking a wait-and-see approach as details about implementation are determined in Washington.

“We haven’t figured out what the impact is yet,” he said. “That’s the big thing. We’re not quite sure because the rule-making hasn’t come out yet.”

Betit said that definitions of “full time” and “affordability” could shift, depending on how the government decides to enforce the law.

Employers and unions may not know how to handle a federal mandate on health insurance, a piece of the employee package that is traditionally negotiated.

“From a collective bargaining perspective, it creates different dynamics,” Betit said.

The net effect is likely to be mixed.

“From a worker’s perspective, that’s a benefit they don’t have now,” Betit said. “That’s a good thing from the worker’s level.”

However, Betit cautioned that the benefit comes with a potential cost of reduced flexibility in negotiations.

“The reality of it is we’re going to be balancing the cost of that and that’s going to come out of the bargaining table,” he said.

The law also protects full-time workers who have not been organized into collective bargaining units.

Betit said that the issue will raise questions and challenges, particularly in small districts with tight budgets.

– Matt Hongoltz-Hetling

While the exact impact on most Maine 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.

Teachers unions are unsure how the changes will impact 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 some Maine school districts are among those that 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.

Much is still unknown about the issue, which creating a sense of urgency among district administrators beginning work on next year's budget cycle, which includes the early 2014 deadline.

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

DIFFERENT DISTRICTS, DIFFERENT COSTS

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."

(Continued on page 2)

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