West Bend board hears plan to shift pharmacy and health premiums while keeping core benefits

Assistant Superintendent Lenny Hanson told the West Bend School District board on July 13 that district leaders are recommending several changes to pharmacy and medical benefits intended to slow long-term cost growth while keeping the district’s overall compensation competitive.

Hanson, who led the presentation, said pharmacy is ‘‘the fastest growing health insurance cost that we face’’ and that a very small share of claims drives outsized expense. He stated that about 2% of pharmacy claims drive roughly half the district’s pharmacy costs and that the district received 10 PBM proposals narrowed to three finalists in an RFP process.

On pharmacy, Hanson proposed keeping current minimum copay amounts for generic ($10), brand ($30) and specialty ($45) drugs but adding a coinsurance structure for high-cost fills: "It would be an 80% coinsurance above that minimum up to a certain maximum cost per fill," Hanson said, adding that the district will work with potential PBM partners to set a cap so "no single prescription can be allowed to become unaffordable because the employee's cost would be capped." He said 88% of prescriptions filled in 2025 would see no change under the recommendation.

On medical insurance design, the administration recommended no immediate change to out-of-pocket maximums for 2027 and then indexing those amounts to the ACA standard in later years. Hanson said West Bend’s most common family out-of-pocket maximum is $7,500 compared with a county norm of $8,500 and framed indexing as a way to preserve plan value while allowing gradual alignment with market changes.

The board was also asked to move from a flat-dollar premium approach to a percentage cost-share. For the district’s most-popular plan (plan 2), Hanson recommended a 90% district / 10% employee split; for plan 1 he said actuarial work yielded an approximate 82% district / 18% employee share. Hanson offered illustrative 2027 combined premium numbers during the presentation and said final actuarial figures would be provided by the broker’s team.

To ease the transition, the district would provide every affected employee a one-time stipend that would offset the first six months of any premium increase in 2027. Hanson called the stipend ‘‘a significant investment’’ that recognizes timing of contract signings and helps staff adjust gradually rather than seeing the full increase on Jan. 1.

Finally, Hanson recommended a spousal carve-out tied to the district’s existing family savings program: spouses who have access to employer coverage would be asked to enroll in their employer’s plan while the employee and children could remain on the district plan; the spouse who leaves would be eligible for the family savings plan, in which the district reimburses out-of-pocket costs and pays a premium differential. Hanson said the family savings plan is structured to reimburse actual claims and is more protective and tax-efficient than a cash-in-lieu payment.

Board members largely praised the approach as generous and protective of staff, while pressing for clarity in communications and for careful actuarial review. One member called the package ‘‘very attractive’’ and urged clear messaging that the changes aim to address unsustainable cost trends. Hanson said the recommendations will be refined with PBM partners and the broker, then returned to the board for action before open enrollment; any changes would be effective Jan. 1, 2027.

The administration stressed that the board is not being asked to shift to an ICRA model that would eliminate district-provided insurance. Instead, Hanson said, these are measured steps to preserve a valuable plan while stabilizing costs.

Next steps: the administration will finalize PBM and actuarial details, bring specific vendor recommendations and final premium numbers to the board in the coming month and present a formal action item later this year before open enrollment.