Many of you have noticed a shift in the company that administers health insurance claims for the School District No. 1 Health and Welfare Trust. This fall, claims processing will shift from Providence and Regence to Cigna. The Kaiser “plan” is still administered by Kaiser. Understandably, some of you are worried about what that might mean for you.
Our PAT/PPS CBA does not allow the Trust to change any benefit levels (unless required by law). The “maintenance of benefits” clause in Article 13 and in Appendix E bar the plan from any possible changes.
This means that shifting administration to Cigna will not alter the terms of your medical plan. All of your benefits from last year are exactly the same under Cigna. This isn’t simply because of the maintenance of benefit clauses in our contract. The other reason is that, because of how the Trust works. PAT members don’t have a Providence or Regence “plan,” these insurance companies simply process claims which are paid directly by our Health and Welfare Trust, a process known as self-funding. Cigna is now taking over the claims-processing function that was being carried out by Providence and Regence.
If you have a doctor who does not currently work with Cigna, the Trust will work with your provider to find ways to ensure your claims can get processed. Keep in mind that since you don’t really have a Cigna “plan”, the in-network doctors on the Cigna website don’t represent the providers who are in the Trust’s network.
More information about the change to Cigna will come from the Trust over the next few months. Look for those emails and mailings so you stay fully informed.
If you’re interested in more details on how the Trust operates, keep reading.
Understanding How Our Health and Welfare Trust Operates
The Trust is a formal partnership, separate from PPS, PAT, PFSP, DCU or ATU (the organizations who participate in it). As an independent legal entity, the Trust works to meet the needs of the members represented by the participating unions, all of whom are (or were) employed by PPS. It is required to follow the terms of the individual collective bargaining agreements of each participating union, and is governed by its own Trust Bylaws, as well as by federal and state insurance, tax, and other laws. Trustees from each participating organization oversee the financial well-being of the Trust’s plans, so that members receive the highest level of benefit at the lowest cost.
Our Trust has been in existence for over forty years. Over time, the Trust decided that for the benefit of members, the Trust would be primarily self-funded. That means that the Trust no longer purchases insurance plans to offer members. Instead, the Trust itself pays each insurance claim made by any covered member or their dependents. By doing this, any employer contributions or individual premiums not directly used to pay a claim can be invested, and the profits from those investments used to reduce the cost of next year’s insurance premiums.
With over 9,000 people covered by the Trust, there are so many claims each year that it is necessary to hire an insurance company (sometimes more than one) to simply process these claims. Insurance companies are willing to sell this service to the Trust because they get a very small fee with zero risk, since the Trust is paying the costs of each claim.
After Providence and Regence refused to reduce their administrative fees for next year, the Trust put the job of administering its claims out for an open bid. After many meetings, and presentations from many different insurance companies, the Trust selected Cigna as our new claims processor.
Over the years, this system of self-funded insurance has provided PAT members with the most stable benefits at the lowest costs of any school system in Oregon. In fact, many times over the years the Trust has been required by OEBB to prove that our benefits were better than the OEBB plans at a comparable or a lower cost. If the Trust failed to meet this standard, the State would have required the Trust to dissolve and PAT members would have had to become part of OEBB. Thankfully, the Trust has performed so well that we have always been able to meet the State’s test, and we continue to enjoy some of the most comprehensive, lowest-cost benefits in the state.