Summary
Public Act 106 requires that school districts solicit four or bids when “establishing” a medical benefit plan. Our legal counsel advises us that any medical, dental, or vision benefit change that has not been ratified in a collective bargaining agreement before October 1, 2007, could be considered establishing a plan and therefore is subject to this bidding requirement.
The Act also requires that districts solicit four or more bids every three years when “renewing or continuing” a medical benefit plan. This means that if a district makes no benefit changes, it must still bid by October 1, 2010.
We believe the entire act refers to medical, dental, and vision benefits even when it only states medical. Life and Long-term Disability (LTD) benefits are not affected by this law.
How do I solicit bids?
Most likely, you will want to work with an employee benefits expert to solicit bids from various carriers. There are several reputable independent employee benefit consulting firms serving Michigan school districts. We encourage you to seek input from trusted peers and associations in order to help select this partner for your district. Some consultants charge a flat fee, others an hourly rate, and still others receive a commission for products that they sell. Some do all three.
SET SEG provides this service to schools without a fee and receives a sales commission if the school district chooses certain plans.
One topic of conversation in this area is the objectivity of the consultant and potential motivation for them to “steer” you in one direction or another based on a vested interest they may have in a certain course of action. We encourage districts to insist on full transparency related to how a consultant will be paid and other relationships they may have that could introduce undo bias into the decision.
Do I need to provide claim data to bid?
Yes. Public Act 106 requires that school districts “disclose the claims utilization and cost information…to any carrier or administrator it solicits.”
See the Claim Data topic for information about obtaining claim data from current carriers.
How am I supposed to get bids if I don’t have claim data?
If you are a school district with fewer than 100 employees enrolled in a plan, you will not have claims data. Carriers will use demographic information such as gender and age to determine an appropriate rate for your plan.
If you are a school district with more than 100 employees, you may not have claims data because it has not yet been released to you. Our advice is to proceed with bid solicitation while advising prospective carriers or service providers that you are still waiting for claim data. This way, you are showing clear intent to conform to PA 106.
See the Claim Data topic for information about obtaining claim data from current carriers.
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