Strategic Updates to Medical Self Insurance Fund for Fiscal Stability

At a recent Board of Education meeting, discussions centered on updates to the Medical Self Insurance Fund (MSIF) as preparations for the next budget cycle begin. Glenys Salas, the Finance Director, presented a revised strategic plan aimed at addressing premium plans and ensuring equitable cost-sharing between employees and employers.

Since joining the Town, Salas has prioritized involving the BOE in pivotal decisions concerning the MSIF. She highlighted that the fund has been experiencing operational deficits, with the fiscal year 2024 ending in a deficit of $1,154,378, expected to grow to $3,537,071 in fiscal 2025. The main factor for this discrepancy is that revenues have not matched escalating expenses, primarily due to significant increases in medical costs—rising 48% over five years compared to a 25% inflation rate in 2020.

Impact of High-Dollar Claims on Medical Costs

A key contributor to rising costs is the surge in High-Dollar Claims (HDCs), which have increased by 94% over five years. These high claims, often exceeding $50,000, relate to conditions such as cancer, premature births, musculoskeletal issues, and behavioral health challenges. Non-HDCs have also climbed, with a 46% cost increase per member.

Strategic Financial Stabilization Measures

To counteract these financial challenges, the strategic plan introduces essential measures for financial stabilization. One immediate step is transferring $250,000 from the debt service fund to the MSIF in FY2025. Additionally, a six-year repayment plan will begin in FY2027 to eliminate debt and restore the fund balance, targeting a 20% of annual expenses.

Cost containment strategies include issuing a Request for Proposals for a new plan administrator to ensure competitive pricing. Other approaches involve standardizing health care plans to a single high-deductible health plan and encouraging wellness visits through HSA contributions. Ensuring full employer cost share contributions from all agencies and closely monitoring high-claim conditions are also priorities.

Emphasizing Regular Monitoring and Communication

Regular monitoring and communication are integral to the strategic plan, utilizing quarterly financial reviews and transparent updates to maintain oversight and accountability. During the public participation section, Trent Harrison, President of the Newtown Federation of Teachers, expressed concerns about the MSIF's long-term execution. He stressed the need for proper fund management to prevent deficits and their impact on teacher retention. Promoting transparency about premium adjustments is crucial for preserving stakeholder trust.