EASTON, Pa. — Easton Area School District will let employees opt out of health insurance, in the hopes the measure will save the cash-strapped district some vital funding.
The cash-in-lieu-of-healthcare option, which would pay out $6,000 for employees to buy their own insurance as opposed to the employer option, was approved during the school board’s Tuesday meeting.
"When you're looking at $25,000 a person who buys out, if you can get 40 people, that’s a million dollars you saved right there."Easton Area School District Chief Financial Officer Jack Trent
EASD Chief Financial Officer Jack Trent said there are no firm numbers on interested parties for the buyout yet, but he said there was plenty of interest.
And with plenty of employees who have options for coverage via a spouse, military coverage or other means, $6,000 can go a long way toward supplementing another plan while providing significant benefits to the district, Trent said.
“A family [health insurance plan] here costs maybe $34,000 in benefits," Trent said. "So that's a huge gap. We save about $8,000 because they get their contributions back.
"When you're looking at $25,000 a person who buys out, if you can get 40 people, that’s a million dollars you saved right there."
How it will work
Under the option, an employee would provide proof to the district that he or she has an employer-sponsored healthcare plan offered by any employer other than EASD.
Benefits in the non-EASD-provided plan must include medical, hospitalization and prescription drug benefits.
The employee would disenroll from district-sponsored coverage, along with their spouse and family members.
“I just heard tonight, from executives at one of our meetings, that there seems to be quite a lot of interest from our teachers’ union.”Easton Area Schools Superintendent Tracy Piazza
District employees who disenroll and take the cash payment cannot re-enroll until a new open enrollment period, or during a change in family status.
If they choose to re-enroll, they must repay any amount in excess of what was due at the time of re-enrollment.
For example, if an employee gets 24 allotted payments per year, and gets one in excess of the amount owed for the time period of disenrollment, he or she will owe 1/24th of the total payment, or $250.
Trent said that such buyout plans are common in most school districts.
“So it just seems like a natural progression for us here to try and save some money,” he said.
Superintendent Tracy Piazza said the buyout was written into the newest teachers’ contract. Piazza said the union voted on a memorandum of understanding Tuesday, with a final vote on the contract set for Wednesday.
Piazza concurred with Trent’s statement that actual number of employees who will take the buyout is uncertain.
“I just heard tonight, from executives at one of our meetings, that there seems to be quite a lot of interest from our teachers’ union,” Piazza said.
As the district works toward finalizing a budget, the savings will not be considered, but there's some confidence it could help shore up future gaps.
