With costs for health insurance continuing to rise, the Cumberland County Board of Education is gathering information on how changing the benefits paid for by the school system could impact the budget and impact employees.

School system employees currently choose between three types of insurance plans. If the school system were to cover the cost of one insurance premium, Director of Schools Aarona VanWinkle has estimated the school system could save $361,119 each year if the system paid only the cost toward the point of service insurance option.

"The board's responsibility is to provide the best coverage with the best price," said Dan Schlafer, 9th District representative, during a work session Monday. "In Cumberland County, our benefits package is what attracts teachers. But the bottom line is, we have to watch every single penny. We are teetering on the brink every year. We need to take a look and see if we can save some money."

If such a plan were implemented, it was noted at previous meetings employees could keep their current plan if they paid the difference. It was noted the earliest the Cumberland County School System could change its insurance benefits would be January 2011. Insurance uses a calendar year for benefits, while the school system operates on a July 1-June 30 fiscal year. Benefits are already in place for the coming year, with open enrollment beginning Oct. 15.

Brian Haile, deputy director of the Tennessee Department of Finance and Administration Benefits Administration, explained differences between the three insurance options available to state employees.

"Insurance is complicated, sometimes needlessly so," Haile said. "The difference boils down to: do you pay a percentage of what your doctor charges or do you pay a flat copay?"

Employees currently choose between a preferred provider organization plan (PPO), point of service plan (POS) or health maintenance organization plan (HMO). While each plan is administered by a different insurance carrier, with different provider networks, each plan is overseen by the state benefits administration, which developed each plan offering.

Under the PPO plan, employees pay a percentage of each hospital or physician office visit. They have a yearly deductible, $350 per individual or $875 for a family, that must be met before benefits kick in and there is a yearly out-of-pocket maximum, $1,350 per individual or $2,700 for a family, they are responsible for. After the yearly out-of-pocket maximum, they are not responsible for additional medical expenses covered under the plan. The PPO plan is administered by Blue Cross/Blue Shield and currently costs $460.56 per month per employee for single coverage and $977.82 for family coverage.

With the POS plan, employees pay a set amount, or copay, for office visits, hospital admissions and other medical services. There is no deductible for in-network providers. The POS plan is administered by Cigna and premiums are $422.90 for individual coverage and $896.17 for family coverage. This is the plan previously noted by VanWinkle as the one she would recommend the school system fund, if insurance benefit changes are approved.

With the HMO plan, employees also pay a set copay amount, but there are additional restrictions on providers. Referrals to specialists are required from a primary care physician. There is no annual deductible or out-of-pocket maximum. Premiums are currently $448.19 per month for individual coverage and $951.56 for family coverage. The plan is administered by United Health Care.

Both the PPO and POS plan have a six-month waiting period for pre-existing conditions, while there is no waiting period for the HMO plan. The six months is waived if the employee had prior credible coverage immediately before becoming eligible for insurance benefits, with a break in coverage of no more than 63 days.

If the employee did not have health insurance, including a private insurance plan or other group health insurance, their condition would not be covered under the plan until they had been covered for six months. After six months, the plan would begin paying for treatment.

"Let's not go down that road if we don't have to," Haile said. "Let's make sure that when someone comes to work we get them signed up on day one so they don't have a 63-day break in coverage."

If an employee or family member wishes to change their network, but one of the covered members has an ongoing illness or condition, Hale recommended contacting the state to set up a transition plan a few weeks early.

"If it's medically necessary care in one plan, it should be medically necessary in the other plan," Haile said. "However, we have to go through the motions and documenting that with a new plan. Contact us and we'll get in touch with the carrier to get a seamless transition in place when coverage starts."

If current doctors were not in the network of the new plan, they may need to seek a new provider, have a change in their medical cost sharing or apply for a unique case exception.

Teachers present questioned Haile on the differences in the networks and if there is anything the carriers can do to entice providers to join the networks.

Haile said insurance carriers typically negotiate payment levels for three-year terms. During that time, the in-network provider agrees to accept the negotiated amounts for treatment. If a provider decides to end its contract earlier than the contract term, there are provisions in place to help patients make a smooth transition to a new provider.

Haile explained that while different companies administer the three different plans, the state pays the medical expenses. The individual companies are not liable for medical costs of the employees. They are, however, paid a per customer administrative fee, so they have an incentive to offer a robust network for customers to utilize.

"Most of the doctors are in both the Cigna and Blue Cross/Blue Shield network," Haile said. "But that doesn't mean that most of the doctors in Cumberland County are in both networks. You will want to find out with your doctor or check with the carriers to see if your doctors are in the network."

Changes are in store for state employee insurance in 2011, Haile said. One change would be to do away with one carrier administering each of the three plans. Employees could choose if they prefer a PPO, POS or HMO plan and then choose a carrier network.

Also, there will be four levels of premiums — individual employee, individual and child coverage, individual and spouse and family coverage.

Another change is in prescription drug coverage. Each of the three plans will have the exact same benefits and formulary for preferred name brand drugs and the same copay levels.