Watchdog report finds MCPS kept $3M to $13.5M in insurance premiums

Watchdog report finds MCPS kept M to .5M in insurance premiums
Watchdog report finds MCPS kept M to .5M in insurance premiums

This story was updated at 2:45 p.m. June 10, 2022, to include more comments from MCPS.

A report from the county’s inspector general has found that Montgomery County Public Schools owes from $3 million to $13.5 million in prepaid health insurance premiums to hundreds of employees who have either retired or resigned.

The inspector general started investigating the matter after receiving a tip through its hotline in March. The tipster explained that MCPS teacher salaries are paid over a 10-month period and cannot be spread out over 12 months. Because of this, health insurance premiums are prorated over a 10-month cycle in order for coverage to continue throughout the entire year. 

“When a teacher retires, their health insurance coverage through the active employee health insurance plan is terminated and they must obtain coverage under a separate retiree plan,” the report reads. “Upon retirement, the prepaid insurance premium is forfeited.”

After interviewing multiple senior managers, the inspector general found that the healthcare insurance premiums practice has been occurring since at least 2000, but that MCPS Interim Superintendent Monifa McKnight and her administration were only recently notified of the issue.

Refunds have been given to employees during the last three years, ranging from $200 to $900 depending on the insurance plan, the report stated. An employee would request the refund after they retire or resign from the system.  

Efforts to give refunds before that did not occur that time have not appeared to occur, the report stated.

The inspector general estimated that if the practice has continued for the last 22 years, then MCPS retained about $136,000 to $615,000 per year. That means in total, the district  has held on to about $3 million to $13.5 million in health insurance premiums that should have been refunded to employees.

“A senior manager told us that MCPS had discussions with the Montgomery County Education Association about the issue roughly seven or eight years prior but could not provide any other specifics other than to say that the matter was not pursued,” the report reads.

Megan Limarzi, the county’s inspector general, could not immediately be reached for comment Friday.

MCPS spokesman Chris Cram declined to comment via email Friday morning. He said the district will send a message to the community later in the day that will serve as its  statement on the matter.

In that message, MCPS officials wrote that they were implementing “a state-of-the-art human capital management software system to better manage the payment of benefit premiums,” and that they would take further measures to address and correct the impact that the system had on previous employees who retired or resigned from the district.

The inspector general recommended that MCPS officials identify the extent of overpayments, including during the period of time when they occurred. The report added that MCPS should “develop an equitable and effective plan” to compensate affected employees and create policies to ensure the issue doesn’t continue.

In a response letter, McKnight wrote that her administration became aware of the issue in December 2021. They then took multiple steps to address the problem, ending with providing information to  staff members that they are entitled to a refund for prepaid health insurance premiums via a “For Your Benefit” publication, when they start working for the district.

McKnight also wrote that new software is being installed and will be in place by January 2023, allowing MCPS officials to collect health insurance premiums for 10-month employees over a 12-month period.

Staff writer Caitlynn Peetz contributed to this report.

Steve Bohnel can be reached at [email protected]