Montgomery Co. schools could owe millions to former staff over prepaid insurance premiums

Former employees of Montgomery County Public Schools could be owed millions of dollars after a report found that they forfeited prepaid health insurance premiums when leaving the Maryland school system.

Anywhere from $3 million to $13.5 million in overpaid premiums were kept from retiring and departing staff at Montgomery County Public Schools over the course of two-plus decades, according to a new report from the county’s Office of Inspector General.

The overpayments were neither refunded to eligible employees nor remitted to health insurance providers.

The OIG said that the practice has been going on for at least 22 years, and that the school system first became aware of it about seven or eight years ago.

“A senior manager estimated that refunds due to individual retirees would likely range from $200 to $900 depending on the insurance plan they selected,” the report reads.

Over the last three years, the OIG said an average of 683 employees either retired or resigned from working with Montgomery County schools.

Those numbers helped shape the OIG’s estimates that the school system kept between $136,000 and $615,000 annually, and between $3 million and $13.5 million over the course of the, at least, 20-plus years that this practice has been in effect.

A complainant originally reached out about the overpayments on the OIG hotline. The complainant knew of a retiring colleague who mentioned the overpayments to the school system. The school system then offered that colleague a refund for the prepaid premiums.

Certain Montgomery County schools employees are paid on 10-month cycles to line up with the school calendar; however, their health insurance coverage covers all 12 months in a year.

Those employees pay more toward their insurance coverage to bridge the two-month gap in their pay cycle. That creates the possibility for overpayments if an employee either retires or leaves the school system for work elsewhere by the end of the school year in June.

The OIG said that Montgomery County schools updated its process to allow employees who either retire or resign in June to maintain their benefits through the end of September. Those that retire have the option of signing up for a retiree benefits plan that would start in October.

According to the OIG, the school system will make the option for refunds available to retirees going forward, but did not discuss if that option is available to resigning employees.

The OIG recommended that Montgomery County schools figure out the extent of the overpayments, including how long they had been going on, who was impacted and the amount owed to each person.

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