FDCSD rejects Wellmark for self-funding

The Fort Dodge Community School District board has rejected Wellmark as its health insurance provider in favor of self-funding through UMR, under United Healthcare.

In a special meeting Thursday, Doug Van Zyl, FDCSD superintendent, explained the benefits of changing health insurance providers.

“Wellmark’s current premium is $5.5 million,” Van Zyl said. “Their renewal to us was going to be a 3.5 percent increase, making it $5.7 million.”

Working with CBIZ Benefits and Insurance Services Inc., the district found a better, more efficient option, Van Zyl said, including being fully insured with United Healthcare or being self-funded through UMR.

The district will have the same benefits and providers through self-funding, Van Zyl said. Deductibles and out-of-pocket expenses will also carry forward to UMR.

“One of the big issues also facing us is the federal health care act and the fees that get charged with that,” he said. “That’s an ongoing concern for us. CBIZ has pointed out that, out of our premium, $15 per employee is going to be getting paid to that, and that is likely to increase every year.”

He added, “Our cost of insurance is going to do nothing except continue to increase.”

Another concern, Van Zyl said, is administrative costs. Out of the $5.5 million the district pays to Wellmark, $2.2 million goes directly toward their administrative costs. On average, fees run from 15 to 20 percent.

“It doesn’t go to our premium, it doesn’t impact our employees, it does not help any of us in the school district other than to cover some of the administrative costs they have there,” he said. “We’re paying at least 19 percent over what the national average is.”

By self-funding through UMR, those administrative fees of $2.2 million is brought down to $921,000 – a difference of $1.3 million.

“With these administrative savings, we can take those dollars and put them into an account that we manage and use those to cover what would be the possible liabilities of running a self-funded program,” Van Zyl said. “And we have to have that money in an account to be able to make sure that we are able to cover that.”

The benefit, Van Zyl said, is the district becomes able to control “our own destiny, when it comes to health insurance.”

“We’re no longer just part of a pool,” he said. “If we run a good year, like we did this year, CBIZ was saying we probably should have had a 10 percent decrease. But because of what was legislated by the federal government, and just because in my opinion Wellmark has never had anybody to compete with them, that’s why our administrative costs are so far out of line.”

Board member Bill Kent, a financial advisor, affirmed that switching to a self-funded plan is a smart choice. Kent said Wellmark should be able to provide a more competitive plan, but isn’t.

“It’s inconceivable to me they’ll charge three times more for this fee when they can spread that over so many groups,” he said. “They’re obviously not passing that forward.”

According to Van Zyl, severing from Wellmark has been met with support among district employees.

“Any employees I met with will tell you they’re not overly happy with Wellmark,” he said. “We’ve had some issues ever since I’ve been here and even prior to that with service, and getting the answers they need. They’re comfortable with this. They’re happy the benefits will be identical.”

The school board unanimously approved switching from Wellmark to self-funding through UMR. Van Zyl said the savings of more than $300,000 from the switch will return to the district’s general fund.