Local Government Center to keep insurance surplus
LGC, which administers several forms of insurance coverage for public entities throughout the state, will provide nearly $270,000 to itself from returns of surplus from its health insurance risk pool, HealthTrust. Interim Executive Director George Bald has said the agency is entitled to the return because, “we’re a member,” whose employees are insured by HealthTrust and because a state hearings officer mandated that returns go to members.
At a July 11 meeting of the HealthTrust Board of Directors, board members and LGC attorney David Frydman repeatedly referred to the move as a “wash” of funds, as LGC would not actually keep any money itself, but would ultimately return the money to members when surplus funds from HealthTrust are returned.
Bald said LGC had, in the past, used surplus returns to reduce LGC’s payments for health insurance coverage through premium holidays that were extended to every member. He said another recent return of about $55,000 was used “to defray costs.”The return in question now stems from $33.2 million that a state Bureau of Securities Regulation hearings officer ordered LGC give back to members of its health insurance pool. LGC was ordered to return the funds to entities that were members of its HealthTrust program as of 2010 and plans to issue checks on Aug. 27 to meet a Sept. 1 deadline. LGC’s cut is about $144,000.
The board, though, agreed to proceed with the return and issue letters to members explaining what would happen with the money.
Primex, which provides workers’ compensation coverage to 445 communities and other public entities, also participates in its own risk pools and provided itself with premium holidays as a part of returns of surplus funds. The agency returned a total of $6,842.29 to itself in 2012 and 2013 in the forms of premium holidays, said Ty Gagne, Primex’s executive director.
Primex and another provider of public health insurance, SchoolCare, negotiated agreements with the Bureau of Securities Regulation in 2011 for returns of surplus funds. LGC, on the other hand, fought the BSR process through a lengthy hearing process that culminated in the order handed down in August 2012 that calls for LGC to return a total of $53 million to taxpayers.
Like LGC and Primex, SchoolCare also participates in the risk pool it manages. Unlike LGC and Primex, however, SchoolCare did not give itself any returns of surplus.
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