Schools struggle to pay for health care mandate

Published 10:12 am Monday, July 21, 2014

By Catharine Richert

MPR News, 90.1 FM

Next year, some teaching assistants, counselors and nutrition workers in Minnesota schools will be offered health insurance for the first time.

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School officials, however, in Austin and across the state say that’s not as simple as it sounds.

Employers, including school districts, with more than 50 employees must extend benefits to anyone working 30 hours a week or they may face hefty fines under the federal Affordable Care Act. Most teachers get benefits now through their union contracts. But figuring out which newly eligible employees meet that 30-hour-per-week threshold is difficult because so many work part-time nine months out of the year.

Employees who work part-time but who also coach sports make it even more complicated. And then there’s the problem of substitute teachers who can work a wide range of hours.

“Some of them just barely make that cut,” Cook County superintendent Beth Schwarz said. “How do you offer health insurance to some of your substitutes but not all of your substitutes?”

The Obama administration cited the complicated nature of the employer mandate when it decided to delay it until 2015 instead of having it kick-in this year.

Critics say it will force employers, particularly those in retail and hospitality that hire many part-time workers, to trim hours or stall hiring all together — or come up with a lot more money to provide insurance.

That may be the case for the Montevideo Public School District. Superintendent Luther Heller is still crunching the numbers, but he says initial estimates show he will have to budget as much as $350,000 a year to cover the cost of offering health insurance to as many as 80 additional employees.

That’s a relatively small percentage of his district’s $16 million annual operating budget, “but it’s still a very sizeable increase,” he said. “We don’t have an extra $300,000 that we’re just not using for anything.”

It could be an expensive extra for many superintendents. Minnesota’s schools could end up spending about $200 million to cover more employees, according to Minnesota Management and Budget.

Officials say the cost could be lower, in part, because not every district employee who’s eligible for coverage will sign up for it.

That’s what the Austin Public Schools District is counting on.

Newly eligible employees will be offered insurance, but they will have to pay for all of it, said Mark Stotts, Austin’s director of finance and operations. Most of those employees are already getting coverage through a spouse or a cheaper plan on their own, he added.

It’s possible the district will face a fine in this scenario, but Stotts said that in the long run it will be cheaper for the district to pay the fine than to cover more employees.

Some districts are considering shifting their low-wage workers and retirees to the state’s new health insurance exchange, MNsure, said Dan Weir, a consultant helping Minnesota schools navigate the requirements of the Affordable Care Act.

If the employee’s income is low enough and they qualify for a government subsidy to buy insurance on the exchange, MNsure may actually offer a better deal, he added.

While the change would be subject to union bargaining, “If they’re low income or part-time people, they get a much better plan at a much lower cost than the district could ever even come close to,” Weir said. “It’s a win-win situation.”