The East Baton Rouge Parish school system saved about $900,000 earlier this year after it audited more than 1,000 active and retired employees and found a number of spouses and children improperly participating in the employees’ medical insurance.
On Thursday, the School Board is prepared to green-light a second audit, which will examine double that number of active employees and retirees, potentially doubling the savings.
Mercer, a large multinational consulting firm that has long overseen the school system’s medical coverage, conducted the first audit at a cost of $25,000, plus an estimated $2,000 to $3,000 in postage.
The second audit would cost double that, at $50,000, and roughly double the postage costs.
A representative from the firm presented the results of that audit and the proposal for a second audit at the Oct. 4 School Board meeting.
“(The second audit) would not duplicate,” Mary Morrison with Mercer told the School Board. “So someone who was pulled f
or the previous audit would not be pulled again.”
Mercer said the “return on investment” from the first audit was about 35 to 1.
The 1,038 people Mercer audited in the first go-around represent 30 percent of active and retirees employees on medical insurance.
They collectively had more than 1,600 dependents on their insurance plans.
Mercer began with an amnesty period in March, and several employees came forward voluntarily and in the process 26 ineligible dependents were removed from the school system’s self-insured medical insurance program.
“People volunteered you know, ‘I’m not married anymore, please take my spouse off,’ ‘My child is not at home anymore, they have another job, please have him removed,’” Morrison explained.
The audit, which was conducted from mid-May until late June, identified many more ineligible dependents. The majority, 189, were removed because the employees didn’t provide requested documentation, while another 74 dependents were removed because of incomplete records.
In all, 318 dependents were removed. After factoring in the cost of the audit, the net savings amounts to about $900,000, Morrison said.
After hearing the presentation, the School Board recommended doing a second audit next spring to cover the remaining 70 percent of employees with dependents, or 2,076 people. The board is expected to formally authorize that second audit when it meets Thursday.
Morrison said there are no plans for a second amnesty period.
She also said employees whose dependents were removed have a chance to place dependents back on the school system’s medical plan if they can produce proper documentation. She said the best chance to re-enroll a dependent is later this month when the school system begins its open enrollment for employees to make changes to the medical coverage for 2013.
If the second audit identifies a similar number of ineligible dependents as the first one, the total amount of savings would be more than $2.5 million.
The savings could help limit potential future increases in premiums and medical benefits.
The School Board spent much of the summer trying to fill an estimated $6 million hole in its medical insurance budget. In late August, it agreed to raise monthly premiums for active employees by about 18 percent and many retirees could pay about 32 percent more.
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