Members of the Mehlville School District’s Insurance Committee previewed last week what the district’s insurance program might look like — and cost — in the future.

In light of a $2.4 million shortfall the district faced in its self-insurance fund earlier this year, when crafting future plans Mehlville officials have to face the financial realities of a series of heavy claims years by district employees and soaring overall insurance costs, in addition to the impact of new federal regulations and mandates that will shape what the district can and can’t cover.

With the phase-in next year of the federal Affordable Care Act, school districts are now subject to the same mandates as other large employers on what plans can be offered, losing some autonomy over their coverage in the process.

“In the plan design, you’ve got a window of what you can offer,” Chief Financial Officer Marshall Crutcher told the Insurance Committee at its quarterly meeting Dec. 16. “You give too much, you get penalized. You give too little, you also get penalized.”

Crutcher and the district’s insurance adviser J.W. Terrill presented employees with an overview of the district’s current plan and how it compares to plans offered on the individual marketplace, to give some perspective on the district’s plan and the new federal mandates.

Two of Mehlville’s three insurance plans currently qualify as “Cadillac plans,” lavish insurance plans that will be penalized under the new law if it is not revised in the next few years, Crutcher noted.

If Mehlville’s insurance coverage is not changed, the district could face a $150,000 Cadillac tax in 2018.

“You can definitely bet we’re not going to pay a Cadillac tax,” Crutcher said. “Add two and two. The plans are not going to get richer. Deductibles are going to go up, and the coverage is going to go down. I’m not saying we’re going to go down to 60 percent. You just have to understand where the insurance industry is going.”

Compared to the individual plans found on the marketplace, Mehlville offers coverage that falls between the mid-range “Silver” and the higher-end “Platinum” tiers of coverage, which cover 70 percent to 90 percent of medical costs, respectively. No insurance companies are offering individual Platinum plans on the Missouri marketplace, and all coverage must exceed a “Bronze” plan, which covers 60 percent of a person’s costs.

The law requires individuals to buy insurance if their employer does not already provide it and mandates that insurance plans cannot discriminate based on pre-existing conditions and must carry minimum benefits, including maternity coverage and mental health service.

The district is already feeling the effects of the law through higher insurance rates this year. Since Mehlville self-insures for its insurance coverage, it can keep premiums lower than if it had full coverage from an outside insurance company.

However, self-insuring also puts the district at risk of depleting its insurance fund with large numbers of claims, as has happened each of the past two years.

The Board of Education voted this fall to change the district’s insurance administrator from Coventry to CIGNA to keep next year’s costs down by $500,000.

Even with that switch, however, the district’s cost for insurance will rise 13 percent, or $1.5 million, in part due to the mandates from the act.

Employees and the district will pay an extra $2 million this year through higher premium contributions, and the district will be able to keep $500,000 more in the fund by switching insurance carriers.

Combined, those efforts begin to replenish the fund and will make up for the rising cost of coverage for the upcoming year and the heavy claims years of the past.

The fund has declined each of the past five years due to the rising cost of claims, decreasing by $660,000 this year after an especially difficult claims period.

The new insurance advisory group the Board of Education established last month will learn about the district’s options for insurance, then make recommendations to the administration that could then be brought to the Insurance Committee.

The board’s delegate to the Insurance Committee, Elaine Powers, could not attend the meeting. In a written statement read by Superintendent Eric Knost’s executive assistant Sharon Peiffer, Powers outlined the goals of the new advisory group and said she and board member Lori Trakas will serve on the advisory group and recruit three residents with insurance expertise for the group, along with two employees from the district.

“The responsibility is still on the board to be educated on this,” board member Larry Felton said. “And then the board chose to adopt another set of expertise to help us.”

Not all district employees take full advantage of some benefits of the district plans, including health savings accounts, or HSAs, and flexible spending accounts, or FSAs, which use pre-tax dollars for health care expenses.

In the switch to CIGNA, employees with HSAs have had to pay an unexpected $25 fee to move their accounts to the new provider.

That is a smaller cost than employees would have faced if they had stayed with Coventry and had to pay $500,000 more in premiums, Crutcher said.

“I look at the numbers, and I’m thrilled to death that we’re able to save $500,000, but I know not everybody else is buried in the numbers,” he said. “We’re saving $500,000 by going to CIGNA. Can I deal with getting a second card mailed to me a couple weeks later? You bet.”