INDIANAPOLIS — The emergency management firm operating the Gary Community School Corp. won state approval Monday for a health insurance contract that minimizes premium increases and potentially eliminates $2.3 million in debt.
The Indiana Distressed Unit Appeals Board voted 4-0 to authorize Gary Schools Recovery, Inc., to maintain Cigna as the health insurance provider for the cash-strapped district's 380 employees.
They'll see a 5.9 percent premium increase in January compared to 2017 rates. Though that's lower than the 8.94 percent rate hike Cigna initially proposed.
Perhaps more importantly, Cigna agreed to waive $1.3 million owed by the district because recent school employee health care costs significantly exceeded the premiums paid.
The health insurance company also pledged to reduce by $1 million the district's $2.8 million in overdue premium payments if the district signed a two-year contract, continues paying $150,000 a month toward the debt and does not miss any payments over the next year.
"We must be timely with our payments, including the $150,000 payback on what would now be $1.8 million," said Peggy Hinckley, the district's emergency manager. "If we miss the $150,000 in any month then the $1 million comes back as a judgment."
In addition, Cigna promised not to increase 2019 rates by more than 10 percent compared to 2018.
DUAB Chairman Micah Vincent noted that Cigna's total two-year cost of $12,009,060 exceeded Anthem's bid by $1,142,795.
But with Cigna's concessions on rates and past due amounts — which still would be owed if the district switched providers — he said Cigna will end up being $1,157,205 less expensive for the district, which regularly relies on state loans to fund operations.
"When you go through that calculation, Cigna becomes the better option for Gary Community Schools," said Eric Parish, executive vice president of MGT Consulting Group, parent company of the Gary emergency management firm.
New DUAB members
Also on Monday, Gov. Eric Holcomb named former state Rep. Rebecca Kubacki, R-Syracuse, as his representative on the Distressed Unit Appeals Board that's overseeing the state takeover of the Gary Community School Corp.
Kubacki served two terms in the Indiana House between 2010 and 2014. She was defeated by state Rep. Curt Nisly, R-Goshen, in the 2014 Republican primary, in part because Kubacki voted against a proposed state constitutional amendment banning same-sex marriage.
This year's Senate Enrolled Act 567 gave the governor a direct appointment to DUAB, replacing a member formerly selected by Indiana House and Senate leadership.
In addition to Kubacki, the other voting members are: Micah Vincent, DUAB chairman, Indiana Office of Management and Budget; Wesley Bennett, Department of Local Government Finance; Paul Joyce, State Board of Accounts; and Kent Hatcher, Department of Education.
Legislative leaders now pick advisory members for the board. Last month, state Sen. Eric Bassler, R-Washington, replaced state Sen. Ryan Mishler, R-Bremen, after Mishler was named chairman of the budget-writing Senate Appropriations Committee.
The other legislative advisers are state Rep. Milo Smith, R-Columbus; and state Sen. Eddie Melton, D-Merrillville.
Former DLGF Commissioner Courtney Schaafsma is DUAB's executive director.