New Bedford may have paid for the health insurance of former or deceased employees

NEW BEDFORD — The City of New Bedford and its public school district are both undertaking internal audits after finding they had been paying for the health insurance of former employees — such as employees who may have passed away.

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Already the city has found “several inaccuracies in the provision of employee health insurance benefits” within the public school district, according to an emailed statement from José Gouveia, the city’s personnel director. 

Gouveia added, “The School Department has begun partnering with the Personnel Office to make the necessary corrections. Going forward, the School Department will be conducting a monthly audit to ensure accuracy in all transactions.”

Barry Rabinovitch, the school district’s acting finance manager, recently told School Committee members that the district will run its own audit to “double check the work of the city” at a finance subcommittee meeting earlier this month. He said that the district could be eligible for reimbursement from its insurance company, BlueCross BlueShield, if an audit finds overpayment. 

In addition to former employees who may have passed away, other potential cases of overpaid health insurance could include retirees who have aged out of full or partial coverage (which can happen once a person qualifies for Medicare) or employees who may have recently resigned or changed jobs. At this time, it’s not known if such cases have occurred. 

Costs for health insurance have been an increasing burden for the schools, with $31 million budgeted for health insurance this fiscal year (which began in July). The more than 2,000 employees in the schools constitute by far the largest department under the city’s purview.

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Neither the district nor city could confirm how many cases there may be of unnecessary payment for health insurance. At the December School Committee meeting, Mayor Jon Mitchell answered questions from The Light and said there may be “a handful” of such cases in departments outside of the public schools. Mitchell said he believed there could be more cases in the school department. 

Heather Emsley oversees the school district’s Human Capital Services (its name for Human Resources) and was recently assigned to oversee the district’s review of health insurance costs. Speaking over the phone, Emsley said that she had no information about how the district previously reviewed its health insurance costs, but said the current effort represents a new strategy. 

“This is something that will be done on a regular basis,” Emsley said. “It’s a new and improved way to make sure that health insurance records are accurate.”

The scope of this error — and how much it may have cost the city — are as of yet unknown. Overpayment for health insurance has happened to other cities and towns in the Commonwealth. In 2023, Chicopee officials said that about 1% of their $15 million insurance budget was lost to similar overpayments, according to Northeast Public Radio WAMC. Those officials blamed an outdated, paper-based management system. 

“It will take a while, but the schools will have a report on it,” Rabinovitch told School Committee members. Emsley said she believed a report would be completed by January and presented to School Committee members. 

To complete their audits, city and district employees will comb through up to five separate lists, including internal staffing records and insurance lists across several departments, Rabinovitch said.

Meanwhile, the school district projects spending about $2.5 million per month on health insurance. So far this year, actual costs have ranged from $1.9 million to $2.5 million per month.

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Email Colin Hogan at [email protected]