Montana § 20-3-367 - District Withdrawal -- Procedures

§ 20-3-367. District Withdrawal -- Procedures

District withdrawal -- procedures. (1) Except as provided in subsection (2), a district or an employee group of a district that voluntarily joins the trust must participate in the trust for at least 5 consecutive school fiscal years before becoming eligible to withdraw from the trust. To complete its withdrawal effective not earlier than the completion of at least 5 consecutive school fiscal years, the district shall notify the trust prior to withdrawing from participation pursuant to the contractual terms of coverage and membership in the district health insurance trust. (2) (a) On or before January 1 of each plan year beginning after the second full year of providing health benefits to the members of the trust, the trust shall prepare a report for each of its participating districts and employee groups that includes the following: (i) a per-member cost for the immediately preceding plan year calculated by dividing the total cost to the trust of providing member benefits to the district or employee group by the total number of members in the district or employee group for the applicable year. This calculation is referred to as the "cost rate" in this section. (ii) a calculation of what the per-member contribution rates would be for the district or employee group for the current plan year using the same number of members in each of the plans offered by the trust in the immediately preceding plan year. This calculation is referred to as "the contribution rate" in this section. (iii) a percentage rounded to the nearest tenth, calculated by dividing the contribution rate calculated as provided in subsection (2)(a)(ii) by the cost rate calculated as provided in subsection (2)(a)(i), subtracting 1, and multiplying by 100 to produce a percentage. This calculation is referred to as "the adjusted contribution inflation rate" in this section. (iv) the annual inflation rate for medical care derived from the medical care index of the United States bureau of labor statistics for July 1 of the current plan year, converted to a percentage. This rate is referred to as "the medical care index rate" in this section. (v) a computation and the resulting number rounded to the nearest tenth that is yielded from dividing the adjusted contribution inflation rate of the district or employee group by the medical care index rate. The resulting number is referred to as "the inflation gap factor" for the district or employee group in this section. (b) A district or an employee group with an inflation gap factor equal to or greater than 1.5 may withdraw from the trust upon the conclusion of the plan year in which the trust reports an inflation gap factor to the district or employee group above 1.5. To complete its withdrawal, the district shall notify the trust prior to withdrawing from participation pursuant to the contractual terms of coverage and membership in the district health insurance trust. (3) A district that has withdrawn from a district health insurance trust under subsections (1) or (2): (a) is ineligible to rejoin the trust for at least 5 full school fiscal years following the year in which the district withdraws; (b) is ineligible for receipt of any portion of the net assets or reserve balance of the trust attributable to the distribution of funds under 20-3-369 (3) on withdrawal. The portion of the net assets and reserve balance attributable to the distribution of state funds referenced under this subsection (3) must be determined by an actuarial reserve balance analysis conducted by the trust's contracted actuary; and (c) shall reimburse the trust for the run-off liability of the withdrawing district or employee group, consisting of all claims of the withdrawing district or employee group that were incurred by the members of the district or employee group prior to the effective date of the district's or employee group's withdrawal.