Please Note: The answers provided here are for planning and information purposes only. School districts should seek their own legal counsel before making any final decisions.


1. When did the legislation take effect?
The law took effect October 1, 2007, and provides that claims experience data is to be made available by providers beginning 60 days after theeffective date.

2. Who is affected by the law?
All “public employers” including school districts, public school academies, intermediate school districts, community colleges, public universities and any city, village, township, county, or other political subdivision in Michigan.

3. What triggers the need to bid a school district’s insurance?
Insurance must be bid every three (3) years or when a change of plan design, underwriter or TPA occurs. Examples would include changing Rx co-pays, deductibles, or covered services. However, a change in employee contributions to monthly premiums does not constitute a change of plan design and does not trigger the bidding requirement. Four (4) bids must be solicited and at least one must be from a Voluntary Employee Benefit Association (VEBA). MESSA and SET SEG are examples of VEBA’s.

4. How do I get my district’s claims data?
A district must send a letter of intent indicating interest in pooling or self-insuring and requesting this data from your provider. Click here to obtain asample letter of intent. The law requires that up to 36 months of data be provided, if available.

5. Does signing a letter of intent obligate my district to form a pool or self-insure?
No. A letter of intent should be written with several conditions so that it merely indicates that you and other districts named in the letter are considering the possibility of pooling. After receiving the claims data you are free to make whatever decision is in the best interest of the district.

6. What size does the group of employees need to be in order to get claims data?
A district with 100 or more insured employees can its get claims data. Claims data will be supplied for an aggregate of 100 employees from one or more districts considering a pool.

7. Will claims data for a potential pool be broken down by individual district?
Only for those school districts with at least 100 insured employees. Otherwise, the claims data will be supplied in the aggregate.

8. Does my district need to bid if it just changes dental or vision coverage?
Yes. Any such change in dental, vision or medical insurance triggers the bid requirement for whichever product line is being changed.

9. Can a district request that claims data be supplied by separate groups such as
teachers, support personnel, administration, etc.? 
A district can request this, but it is unlikely that a carrier will break a group claim data down into segments. See "Breaking News" and "Requesting Claims Data" for more details.

10. Does PA 418 have any impact on collective bargaining?
No. Employee insurance plan designs and employee costs are still subject to the collective bargaining process. However, a school district can prepare and implement the solicitation of bids independent of collective bargaining.

11. Is the bidding process triggered if plan designs change in future contract years?
Yes, but any changes in carriers would still be subject to collective bargaining.

12. Are the preparation and solicitation of bid specifications mandatory subjects of collective bargaining?
A school district can prepare and solicit bids independent of the collective bargaining process.

13. How does a district solicit bids if it does not yet have claims data because a provider has not supplied the information?
Until claims data becomes available a district may have to solicit bids based on general demographics such as age, gender, geographic location, and the size of the employee group.

14. What happens if a group of districts planning to form a pool receive their claims data and determines plan designs and premiums, but then one or more of those districts decide not to join the pool?
It may depend on the overall size of the potential pool. If the districts deciding not to join the pool constitute a small percentage of the pool, say 15 percent or less, the remaining districts may decide to go ahead and form the pool based on the information they have. However, if the new pool size changes by 20 to 25 percent, then the plan designs and premiums may have to be reevaluated based on the size of the new pool.

15. How many different plan designs can or should a pool have?
In theory, a pool can establish as many different plan designs as it desires. Practically speaking, however, the choices should be limited to a number that is easily comprehended by employees, limits administrative costs and produces the optimum combination of costs, coverage, and outcomes. A range of examples might include a high deductible health plan (HDHP) along
with two or three variations of deductible and co-pay choices for employees. An underwriter, consultant, or actuary can assist with these decisions.

16. Why is a school district required to stay in a pool for a minimum of three years and prohibited from rejoining the pool for two years if it leaves?
This requirement helps provide stability, predictability, and improved outcomes for pool participants. If one or more school districts finds that their claims experience is better than others and decides to leave the pool, the result will be a premium increases for the remaining districts. This is known as "adverse selection". Such districts also need to realize that their claims experience may be good for one or two years and then be bad in the third year. The real objective of pooling is to share and manage costs by implementing pool-wide incentives and risk management controls that produce constantly improving employee health and lower plan costs.

17. Are community colleges and universities included in PA 418?
Yes, all K-12, community colleges and universities are covered.

18. What if my district solicits the required four bids but only receives responses from three of the carriers?
Your district will have satisfied the bidding requirement which states only that four bids must be "solicited". If one or more carrier does not respond there is no need to solicit replacement bids. Also, remember that there is no requirement that a district select the lowest bid, only that at least four bids be solicited.

19. Should a school district go to a neutral third-party or consultant to prepare and solicit bids?
Transparency and methods of compensation should be the primary considerations. Some consultants or agents may charge a fee to a school district and collect a commission from among various providers. Others may only collect a commission. Thus, the selection process may be biased in favor of one provider over another depending on pre-existing relationships. Just make sure your district knows who is being paid and how they are being paid in the bidding process.

20. What are the case management and disease management standards required by PA 418 for districts that want to form pools or self-insure?
These three sets of standards refer to quality and process measures commonly used by hospitals and health care professionals. They are established by (1.) the National Committee on Quality Assurance, (2.) the Joint Commission. Health Care Organizations and (3.) the Utilization Review Accreditation Commission. See the "Case Management Standards" topic for more information. They are intended to produce better patient outcomes and cost efficiencies and must be adhered to by providers and third-party administrators. The standards should be referenced in all bid specifications.

21. What is the definition of a covered life when calculating the “100 covered lives” for obtaining claims data or “250 covered lives” in forming a pool?
Each insured employee constitutes a covered life in a plan. Employee spouses and dependents are not counted as covered lives.

22. How can school districts coordinate labor contracts to form a pool?
This is one of the most complex aspects of forming a multi-district health insurance pool and will require advanced planning during the bargaining process to provide for assimilation of different groups as existing contracts expire. Some administrators intend to bring non-bargaining employee groups of employees into pools first. This will allow districts to demonstrate the advantages of pooling and establish a precedent to use in collective bargaining.

23. What options other than pooling does PA 106 provide to school districts?
Actually, school districts may consider four different options: (1) self-funded pools, (2) fully insured pools, (3) self-funded single district plans or (4) insured single district plans. See the "<span class="Head" id="dnn_ctr970_Router_ctl00_lblPageTopic"><font color="#333333">Pooling Presentation" topic for some presentations that discuss the advantages and disadvantages of each option.