WISE — After grappling with ever rising employee health insurance costs in order to cobble together a budget in the face of a projected $3.5 million shortfall for next fiscal year, the Wise County School Board on Tuesday confronted the next health insurance cost issue: the Affordable Care Act, or Obamacare.
Schools Superintendent Jeff Perry on Tuesday said preliminary cost estimates to the division as a whole for having health care coverage in the first place will be “well over” $100,000 in new federal taxes assessed by Obamacare — possibly in the $150,000 range, if not more — when the program fully kicks in next year.
Perry said the division may as well start coping with higher costs now.
Besides the more than $100,000 in new taxes on a health insurance premium, there is a pharmaceuticals fee, “which is nothing more than a tax,” Perry said, and a medical device tax, a patient center research tax, a health industry tax, a transitional insurance tax and a 40 percent penalty for “Cadillac” insurance plans, or really good employer plans for employees.
“We probably have what would be considered a ‘Cadillac’ plan,” Perry said.
He said another part of Obamacare stipulates that employers must provide health coverage for part-time employees if they work 30 or more hours a week.
Perry said while he thinks Obamacare will have “some good impacts” there will certainly be “bad impacts” as well, and one of those will be limiting part timers to 29 hours a week or less. The school division simply cannot afford to add more employees to its health care plan, he said, let alone even think about a 40 percent penalty just for offering health insurance to employees it does cover.
Perry noted the commonwealth of Virginia and other school divisions have already cut hours, and Wise County has little choice.
“It’s a sad situation and we really hate to do this,” he said, “but at this point I can see no other option.”
Perry asked for administrative action to limit hours for all part-time employers to fewer than 30 hours, probably beginning with the start of the new fiscal year in July, to be applied to all employees currently not enrolled in the school division’s health care plan. The board agreed to hand the task to Perry.
In other matters, the board agreed to apply a $200,000 payment from the county Board of Supervisors to a Virginia Retirement System option rather than spread the money across the board to all its employees.
The board considered three options: giving all employees a one-time stipend payment of around $185 each; add the funds to the VRS and a percentage pay increase; or give a 0.5 percent pay increase.
No employees will see any pay increase in actual terms with the VRS option, Perry stressed, because it is all being applied to required increases in VRS payments. In effect, employees are coming out even in that regard.
Chairman Nolan Kilgore said employees at the lowest end of the pay scale could use a $185 stipend, and are the ones always hurt most by insurance premium increases and the like. However, the VRS option “is for the long haul,” he said, and the rest of the board was in support of that option.