BEDFORD — Taxpayers and some school district employees will get a $900,000 refund from Local Government Center for health and dental premiums paid in 2010.
For the district, the money will be received as a credit in the form of a premium holiday — a reduction in the amount the district has to pay for insurance. In addition, a small percentage of the refund will go to those employees who were insurance subscribers at that time, said Superintendent Tim Mayes.
"The money, what I call a credit, is from premiums the Local Government Center charged that were higher than what they needed to be," Mayes said.
Towns and school districts pay insurance premiums that are put into a pool overseen by the LGC, which then contracts with an insurance company. The district is billed monthly for employees' health and dental insurance policies, and the premium holiday rebate will reduce that monthly payment.
"It's going to make a difference in the money we have to raise in taxes next year," he said.
The district was also notified several months ago that it would be given a premium holiday in August as a refund for health and dental premiums paid in 2011. As a result, the board budgeted about $250,000 less for insurance premiums for the 2013-14 fiscal year.
School Board members voted unanimously to accept the $900,000 refund as a premium holiday rather than a lump-sum check at their Aug. 26 meeting. Mayes recommended taking a premium holiday to create a buffer in the budget for emergencies. This way, the refund would not create a spike in the school tax rate in fiscal year 2015 due to the one-time revenues, he said.
"The money will be returned to taxpayers for any part of the year-end balance to be used to reduce taxes for the 2014-2015 tax year," he said.
The percentage of money payable to the district and to employees who paid their share of dental and health premiums will be known in late October.
The refund for overpayment of premiums stems from litigation last year, when the Secretary of State's Office ruled the LGC had to refund $53 million to member cities and towns. The organization was also told to reorganize or lose its nonprofit status.
The LGC claimed it retained surplus money to help keep rates stable, but the surplus was used to start a workers compensation insurance program.
In the Aug. 16, 2012, ruling, the Secretary of State's hearings officer Donald Mitchell said the LGC wrongly created a business conglomerate and withheld funds that could have been used by member cities, towns and school districts to improve facilities, technology or buffer fund accounts.
The LGC appealed the ruling and lost. HealthTrust, an organization under the LGC, was reorganized into HealthTrust Inc., an independent not-for-profit corporation. The change was effective Sept. 1.
"The regulatory agencies have determined that the Local Government Center's premiums they were holding in member reserves were too high and told them to return health and dental premiums for 2010 and 2011," said Mayes.