Kenosha Unified hears options to curb retiree health costs as OPEB trust nears full funding

Kenosha Unified School District held a detailed review of retiree health benefits and other post-employment benefits (OPEB) during a Nov. special meeting, where consultants and district finance staff said the district's 2025 actuarial study shows an actuarial accrued liability of about $78,000,000 and plan assets of roughly $72,000,000, leaving the trust approximately 92% funded.

"Pre-65 retireesare using the plan, and they're using it a lot," said Chris Smessard, a consultant with Brown & Brown, as he walked the board through utilization data that separates active employees, pre-65 retirees and post-65 retirees in the fully insured UnitedHealthcare plan. Smessard said the overall plan-year loss ratio was about 95% but that the pre-65 retiree subgroup showed a 165% loss ratio, driven by roughly 298 subscribers in that cohort.

The consultant and district staff outlined the budgetary link between retiree utilization and active-employee premiums. Smessard summarized UnitedHealthcare modeling that priced retirees and active employees separately: under that one-time breakout the active groupwould see a projected increase fall from 9.9% to about 8.9%, while pre-65 retireeswould be priced at about a 23.1% increase. District staff and the presenter put those percentage changes in dollar context using plan-rate examples presented for different tiers: the employee-only plan in the packet was listed at $13,005.75 annually and the family package near $39,000; under those figures a 10% retiree contribution would be about $1,300 per year for single coverage and about $3,900 for family coverage.

Presenters emphasized options rather than recommending a single path. Those options included:

- asking the carrier to underwrite retirees separately (UnitedHealthcare indicated willingness to do a one-time breakout), - pursuing a formal HRA (health reimbursement arrangement) strategy that funds retirees to purchase coverage in the market or on exchanges (either via one-time buyouts or recurring contributions and vesting schedules), and - prospectively changing eligibility or contribution percentages for new hires while grandfathering current retirees and employees.

Smessard noted carriers are generally unwilling to offer fully insured, retiree-only policies because of adverse selection, and he described HRA funding as a mechanism some districts use to cap future OPEB liability by providing defined dollars rather than open-ended premium commitments.

District finance staff said the district currently contributes 3% of covered salaries (roughly $4.5 million annually based on $150 million of covered payroll) into the OPEB trust and that closing or changing the retiree plan could allow phased reductions in that contribution over several budget cycles. They emphasized actuarial and legal review would be needed to size buyouts or recurring HRA contributions and to design vesting, eligibility and qualifying-expense rules.

Board members asked targeted questions about immediate dollar impacts and retention implications. Presenters cautioned that design choices (for example, HRA dollar amounts or vesting rules) affect recruitment and retention dynamics, and they repeatedly recommended working with the district's actuarial partner and counsel to draft any formal policy.

The board did not adopt changes at this meeting. Staff outlined next steps: select a preferred path, engage actuaries and counsel, and, if changes are desired for the 2026 plan year, bring formal proposals back to the board in spring so policy and employee-handbook language can be finalized before a July 1 effective date.