Windham, NH 03087

WEA Contract Concerns #3

The following letter was sent to the Windham School Board on August 26, 2015.

To the Windham School Board,

In my letter last week, I mentioned the cost of Windham School District (WSD) health and dental insurance exceeds $25,000 for a family plan.  I then estimated the district’s potential unfunded future liability to be ~$75,000,000 for WEA union retirees, based on a current union membership of ~200 WEA employees.  After receivomg the actial numbers, my estimate need to be recalculated upwards.

The amount the WSD pays towards family medical and dental insurance is $23,321, after adjusting for the WEA employee contribution of 6%.  The number of WEA employees also needs to be adjusted from ~200 to 235 employees.  After recalculating, the WSD’s potential unfunded future liability is ~$82,000,000. Please keep in mind this amount does not include the 40% Obamacare Cadillac Tax, which will be applied to all healthcare related payments for current and retired employees beginning in 2018.

The 40% Cadillac tax will be applied to the aggregate paid (employer and employee contributions) towards any health care premiums, Flexible Savings Arrangements (currently up to $2,550), and deductible related reimbursements (i.e. RX reimbursements, health and wellness programs, etc.) that exceed a certain threshold amount. Those thresholds are currently set at $10,200 for a single plan, and $27,500 for a two-person or family plan.  The actual threshold numbers for 2018 will be determined later – so they could go up or down.

SchoolCare (which provides Cigna Insurance) indicated in a recent article that everyone of its 53 NH School District clients would be subjected to the Cadillac tax. The small Pembroke school district estimated their Cadillac tax would be between $200,000 and $400,000.  The Manchester school district estimates their tax will cost ~$3 million.

Using my 26 years of experience in the insurance benefits industry as a Chartered Life Underwriter (CLU), Registered Health Underwriter (RHU), and Registered Employee Benefits Consultant (REBC), it appears the Windham School District has already exceeded the Obamacare Cadillac tax limit for some of the current health plans and benefits offered. The potential cost of the Obamacare Cadillac tax to the WSD could be immense, putting another huge burden on the taxpayers while at the same time providing absolutely no additional benefit to the district’s employees.

Please keep the above in mind as you negotiate a contract with our teachers on the town’s behalf.

Eileen Mashimo