MARGATE — After several weeks of consideration, the Board of Education has selected an employee health insurance plan that provides “equal to or better than” coverage for employees.
School officials estimate that the plan will save the school district more than $130,000 a year.
After a 45-minute executive session Wednesday, Nov. 29, the board heard from three brokers — Mary Hlywiak of Doyle Alliance Group, Sean Gormley of Innovative Risk Solutions Inc., and Vaughn Reale of HUB International — before passing a resolution to withdraw from the state School Employees Health Benefit Program Direct 10 and Direct 15, which carry a 13.01 percent increase in premium for 2018.
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The board then voted 6-0 with one abstention to select Innovative Risk Solutions of Egg Harbor Township to provide an 18-month AmeriHealth plan that was previously offered by another broker. The plan would in effect be a 17-month plan, since the district will not enroll until Feb. 1, 2018. The rate will be held until June 30, 2019.
Board member Joanne Kulzer abstained from both votes, saying she did not know enough about the plans.
The three brokers who submitted proposals did so in response to the district’s request for proposals after the board considered two other plans offered Oct. 11 by the district’s broker of record, Gary Goldfarb of Brown and Brown Benefit Advisors, and Gormley of Innovative Risk Solutions.
At that time, Goldfarb said his 18-month “trust” plan would be the best option for the district. He said it is a proprietary plan that only his company can offer.
Since the district has fewer than the 100 employees, a trust plan would allow the district to get a rate based on its favorable claims experience, and be put into a risk pool with other districts that also have favorable claims experience, thereby reducing the risk of large cost increases down the road, he said.
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Both plans offered identical coverage through AmeriHealth. Goldfarb’s commission would be 5 percent, and Gormley’s commission would be 2 percent, they said.
After lengthy discussion at a special meeting Oct. 24, the board decided to go out for a request for proposal. State law does not require it to do so.
Gormley said that after that meeting, Goldfarb contacted him and agreed to allow Innovative Risk Solutions to offer the proprietary plan to the district.
“But it wasn’t competitive, so he offered a 1 percent break on the rate overall,” Gormley said.
Goldfarb’s plan originally carried a 7.13 percent premium increase over the district’s current NJ Direct 10 plan, but through Gormley's negotiation the trust rate was reduced to 6.03 percent, Gormley said.
The two firms will split the brokerage commission, he said.
“We will get 2.5 percent, while B&B will get 1.5 percent as a general agent,” Gormley said.
“This is saving the city at least $50,000,” board member Joel Frankel said. “And we are still getting quality health care. In this case, the process worked out.”
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According to a summary provided by Gormley, the district’s insurance cost for 2017 is $1,871,543 under the state plan. If the district did not withdraw, the premium would go up to $2,115,055 in 2018.
Cost savings for the 12-month plan would have been $143,308 in 2018, but the 18-month plan’s annual savings is $130,570 in 2018, with continued savings in the first half of 2019.
"Ultimately, the RFP process was the way to go," board President Jim Olivo said. "It gave us three solid bids that included flat fees and lower commissions, and the best plan was offered at a better rate."
In a statement before the executive session, Olivio said doing the RFP provided "transparency" and ensured the the board "the best value for the dollars it spends."
He said the switch would have "minimum impact" on employees.
The employees will contribute 30 percent of the premium amount through payroll deductions.