Hillsborough County Public Schools is considering switching to a self-insured or self-funded insurance plan in 2026, saying it will reduce costs in the long run.
The school board will discuss the issue Tuesday and reconsider it in June.
The discussion was sparked by an increase in the health insurance premiums the school district pays to its current insurance company, Aetna.
For the current fully insured plan, premium costs are projected to increase from $186.1 million in 2024 to $266.7 million in 2026.
“So every time an employee goes to the doctor, it’s going to cost more and likely cause premiums to go up as well,” said Laurie Penry, president of Aon, a health insurance consultant in the area.
With a self-funded plan, the district would take on more of the potential risk associated with higher charges, Penley said, while other districts would have more flexibility to control costs.
Essentially, in a self-funded plan, the employer (in this case the district) is directly responsible for paying for the employee’s benefits, such as medical services and prescription drugs.
This means that instead of paying a fixed premium to an insurance company, premiums are becoming more expensive.
Projections say the district could ultimately save money this way. For self-funded plans, costs in 2026 are estimated to be approximately $247.6 million, approximately $20 million less than fully insured plans.
“My hope is that we move toward self-funded insurance in 2026,” Superintendent Van Ayers said.
Aon noted in his workshop presentation that other large school districts in the state, including Miami-Dade, Palm Beach and Pinellas, operate self-funded insurance programs.
Ultimately, Penley explained, self-insuring allows companies to offer more tailored benefits to their employees.
“Being fully insured limits what an employee can bring in beyond what the carrier provides,” Penley says.
Self-funding gives the district more flexibility in the programs and services it provides to staff, Penley said.
However, this results in school districts taking on more administrative responsibilities. But Penley says it will save on administrative costs in the long run.
Under the self-funding plan, school districts would not have to pay state taxes on fully insured premiums and would retain rebates under the drug prescription program.
“That will help mitigate the rising cost of the plan, and at the same time, you’re trying to keep your employees healthy,” Penley said. “So we’re giving them better options to improve their health.”
Board member Stacey Hahn was among the majority who said they wanted to move forward with the self-funded plan.
“Premiums are going to continue to go up significantly every year, and I think the only way to control costs for employees is to have some flexibility to do that,” Hahn said. .
Hahn also expressed concern about the requirement that school districts keep 60 days worth of reserves. It is the state’s responsibility to show that the school district has the ability to pay the insurance premiums.
“I hope they come up with some kind of financial savings plan,” Hahn said.
Board member Lynn Gray questioned the district’s ability to absorb the potential higher bill.
“We all try to pretend we’re healthy, but our customers and staff aren’t feeling well. When COVID-19 hit, we saw a dramatic increase in serious and high-cost bills.” Mr. Gray said.
“We know our fund balance is between 14 and 19%, and that would erode that fund balance,” Gray continued. “We are listening to the experts, but we need to adjust to take into account the absolute fiscal realities.”
Aon said districts have the option of purchasing stop-loss insurance to protect against catastrophic losses or if claims exceed a certain amount.
Patty Rendon, director of the Hillsboro School Board, said if the district continues with the fully insured plan, it will be “taking money out of teachers’ pockets.”
Superintendent Ayers also disputed the issue of reserves, saying the district has a financial plan.
“We’ve been working for the last few years to keep those reserves where they are and be able to move in this direction,” Ayers said.
District 4 Representative Patti Rendon spoke in favor of a self-funded plan, but also said the district needs to take a holistic approach by considering various insurance companies and even consultants. I emphasized.
Still, Rendon said if districts don’t make the switch, “they’ll be taking money out of teachers’ pockets.”
“We’re going to have to pay some form of additional insurance. The rent will go up,” Rendon said.
Several board members expressed a desire to continue discussing the financial implications until the next meeting on the issue in June.
