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School Districts Wrestle With Rising Insurance Rates

Inflation in insurance premiums grabbed the attention of all school administrators in Door County this spring. Those rising costs sent school administrators and business managers scrambling to inform employees of their cost-sharing obligations as the school officials negotiated with providers for better rates.

At Sevastopol, outgoing superintendent Kyle Luedtke emphasized that the district will have additional costs with no direct help from the state government. And the costs come just as the school board prepares for a November operational referendum, which covers costs for educational programming beyond the revenue limit set by the state. Luedtke, who took a job starting July 1 at Frederic in northwestern Wisconsin, emphasized that he will assist the next superintendent in the transition as well as explaining the insurance costs.

The four schools on the Door County peninsula seek and buy insurance together through a consortium with M3 Insurance as the current broker, but the plans the schools offer from the chosen insurance provider differ, said Jason Melotte, Southern Door County School Business Manager. Many insurance companies, other than Prevea, did not submit bids for the next two years. 

Washington Island school is not in the consortium; the district made adjustments to limit premium increases to 4%, said business manager Sue Cornell. 

Melotte said Southern Door is looking at a 32.07% increase for the first year of health insurance and 18.9% for year two. 

“If the same people took the same plans, we are looking at an increase of $570,424 for year one and $1,014,357 for year two over current,” Melotte said. “Most of our plans are already high-deductible so there is no major change for our employees except cost.”

Sturgeon Bay schools business manager Jacob Holtz said if the district chose the exact same plan designs as are in place right now, the increase in the cost of premiums would be 37.9%. 

“Obviously, an increase like that is not doable for Sturgeon Bay’s budget, nor would it be good for our staff,” he said. “So we worked with our staff on updating our plan designs and we were able to get the effective increase down to the 25-27% range for both the district and the staff (the final number will depend on which plans our staff chooses).”

Graphics from M3 Insurance, a broker for Door County schools, showed rising trends for premiums prior to greater increases projected in 2024. M3 Insurance graphic.

Part of the large increase results from ways the district reduced health-plan spending in recent years.

“Our total health plan costs (premiums and max out-of-pocket costs) for this coming school year are just getting back to where we were at in 2016,” Holtz wrote to the Peninsula Pulse via email. “That’s not to say a 25% increase doesn’t stink for our employees but it does shed some light on the savings we have been able to enjoy as a district and as a staff.

“Our staff deserves a ton of credit for working with us,” he said, referring to their flexibility allowing the district “to retain the great staff.”

The Gibraltar school district does not anticipate an increase in insurance costs, but had to change the plans that the district made available to teachers and staff as well as the amount they ultimately must contribute. To avoid a 38% increase in costs, the district had to change the point-of-service options and make some other tweaks.

“​​This year, 107 employees took our insurance,” Stousland said. “Our total costs for insurance (employees pay 12% towards the costs, plus deductibles) was just over $1.9 million.

“We did have a very nice plan for our staff and in the eyes of the insurance company we had a plan that encouraged people to go to the doctor,” Stousland wrote of the old plan in an emailed response. 

At Sevastopol, Luedtke said if the district stuck with the exact plan it has this school year, the first-year premium increase would cost the district $525,000 and the second year would cost the district $1 million more for insurance.

Sevastopol has 89 staff members on the plan, but the number of families on the plan can change, Luedtke said. The district had to increase deductibles to $4,000 and reduce copays to limit the insurance cost increase to the district to $70,000 in 2024-25 and $306,000 in 2025-26.