Wellness Newsletter

Self Funded Medical Plan

Are you aware that the District’s health and dental plan is self funded?

Annually, the District has to budget the amount of money it projects it will cost to pay for all the medical, pharmacy, dental bills and all other eligible health and dental expenses that will be incurred by all the District’s covered employees and dependents. The “insurance premiums” paid by employees on a monthly basis are pooled with an additional monthly “insurance” contribution from the District. From this pooled fund, the District, not an insurance company, pays for all the applicable health plan expenses. This practice is referred to as “Self-funding”. This differs from a conventionally insured plan where premiums are paid to an insurance company and the insurance company is responsible for paying the bills.

To administer the self-funded health plan, the District contracts with a Third Party Administrator (TPA). The TPA, currently American Administrative Group, has the expertise, personnel and access to the necessary resources to maintain eligibility, provide customer service, process claims, etc. The TPA is responsible for the administration of all aspects of the health plan on behalf of the District.

Here are two simplified examples of the types of eligible health care services, claim process and the role of the TPA in a self funded plan:

Consider a routine office visit. Covered members would expect to pay the applicable copay, at a minimum, depending of the nature of the visit. The provider then bills the balance of the office visit charge to the District through the District’s current TPA, American Administrative Group. The provider would be paid on behalf of the District by American Administrative Group from the pooled funds.
Similarly, when filling a prescription at a retail pharmacy, covered members would expect to pay the applicable prescription copay. The actual cost of the medication is considerably higher than the copay amount. Who is responsible for paying the balance? As the sponsor of the self funded plan, the balance of the prescription cost is paid by the District.

The District and all the employees share in the cost of the health plan because it is self-funded. We can all help contain the rising health care costs and its impact on the pool funding (premiums) by being informed health care consumers and practicing a health lifestyle.

UNUM Provident Disability Plan

Employees enrolled in the UNUM Provident Disability Plan recently received a letter at home from the servicing agent, Dennis Carruth. The servicing agent has brought it to the District’s attention that the letter incorrectly referred to Vision Plan coverage instead of the Disability Plan. Through the District’s self funded health plan, a vision exam is an eligible benefit once per calendar year but the District does not sponsor nor payroll deduct for a Vision Plan through this or any other agent. No action is required relating to the letter but if you have any questions, contact Dennis Carruth & Associates at 682-1023 or contact the Employee Benefits Office.

Visit the MISD Employee Benefits Department web site for up-to-date benefit forms and information.

Contact the Employee Benefits Office at 618-6007 for additional information.

Mr. Andres Silva is the Director of Employee Benefits/Risk Management