St. Paul Public Schools no longer faces a costly penalty from its health insurance provider after the teachers union agreed to wait until 2021 to leave the district’s health plan.

Teachers and teacher aides voted in spring to leave the district’s HealthPartners plan next year for the state-run Public Employees Insurance Program (PEIP), which charges lower premiums.

But with the two-year HealthPartners contract running through 2020, the departure of 4,500 employees would have put the district on the hook for a $4 million early termination fee. The unions have said they didn’t know about the fee at the time of the vote.

Their exit also would have raised premiums for the remaining 1,500 district employees on the HealthPartners plan.

Leaders with the school district and the St. Paul Federation of Educators and Teamsters Local 320 traded lawsuit threats in recent weeks before signing an agreement Friday that will keep the teachers on the district health plan through the end of the HealthPartners contract.

“The parties have come together to discuss the issues and options in order to find the most beneficial resolution for the students, the employees and the District. We all appreciate the parties’ willingness to work together in reaching a solution, avoiding any early termination fees,” district and union leaders said in a joint statement.

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According to the signed memorandum, the teachers, teaching and educational assistants and school and community service professionals will join PEIP on Jan. 1, 2021. The district agreed to remain neutral in its communications about that move.

Further, when the district solicits proposals for its next health plan, it will not seek coverage for the bargaining units participating in PEIP.

Teachers union president Nick Faber and school district spokesman Kevin Burns would not answer questions about the deal.