The Newport-Mesa Unified School District and its two employee unions are moving to avoid a $2.3-million tax the district predicted it would have to pay if it couldn't rein in healthcare costs.
Employees have agreed to take on higher individual costs to offset higher rates from the district's insurance provider.
The move could reduce what the district would owe in a new tax on premium policies starting in five years under the federal Affordable Care Act.
The school board signed off on the agreement Tuesday.
But the sides are still sparring over who will pick up a remaining increase in the price of the medical benefits in next year's contract.
"It is the biggest contention," said NMFT Executive Director Nicholas Dix.
The Newport-Mesa Federation of Teachers and California School Employees Assn. Chapter 18 say they will pay a deductible and higher co-pay on certain services to reduce an expected rate increase from 6% to 3%.
Teachers and all other school employees will pay more out of pocket to access emergency room, hospital or PPO services.
"These are drastic," Dix said. "I do want to underscore that these are really big changes, and that's the reason we were able to get the discount on the rate increase."
The new out-of-pocket costs are designed to push individuals toward cheaper options like the available HMO plan for routine visits or 24-hour urgent care instead of the emergency room, said John Caldecott, the district's executive director of human resources.
"At least this will begin to cause people to think more about how they utilize the plan," Dix said.
In exchange, the unions want the district to pick up the remaining 3% rate increase for medical benefits next year.
"This shows the commitment of all the employees in the district toward making these changes in an effort toward being a real partner with this district in these increased costs," Dix said.
Healthcare has been the toughest topic in this year's negotiations, according to Dix and Caldecott.
In May, Supt. Fred Navarro announced the district would probably be subject to a $2.3-million tax starting in 2018 if costs continued to grow as projected.
He noted that would be the equivalent of a 1.3% raise for all employees and warned they may end up feeling the pinch in their compensation.
That tax affects medical insurance with premiums over a certain threshold, penalizing "Cadillac" plans that are so generous that employees often don't realize the costs, experts say.
This new deal between the unions and district would slow premium growth, ultimately reducing what is owed under the tax.
"This is certainly a positive result that would lesson our obligation," Caldecott said.
Just how much money could be saved remains to be seen.
The district hasn't yet run the calculations to project what it would owe in 2018, Caldecott said, and the numbers could change even more by then.
"Obviously there's a lot a of years in between," he said.
With the school board's approval Tuesday night, all three sides agreed to include the agreement in next year's employee contract.