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August 2010 Issue

Featured - Health Plan Benefit Proposals

Health Plan Benefit Proposals

The USG employee health-plan recommendations approved by the Board of Regents at its August meeting focus on providing affordable, quality health care coverage for USG employees. The board also approved changes in all health benefit premiums for the upcoming calendar year.

“These changes will help us to control costs for both employees and the System while remaining competitive in the current market environment,” said Tom Scheer, Associate Vice Chancellor for Life & Health Benefits.

Key changes approved by the board include new alternative networks, a tobacco use surcharge, new wellness provisions and the seeding of the health savings account for a second year.

The USG’s combined health plans represent a large investment for the system. Enrollment in the System’s current health plans stands at 36,000 active employees, 12,000 retirees and 46,000 dependents. Currently, the USG and its employees spend approximately $437 million annually on health care premiums and benefits.

Changes in rates for the upcoming year vary from an increase $43 for a family on the PPO plan to an increase of about $7 for a family on the High Deductible plan. For an individual on the PPO plan, the increase will be approximately $15 and about $3 for an individual on the High Deductible plan.

Here are the other key changes to the USG’s health plans approved by the regents.

Implement a voluntary alternative network for both the PPO and High Deductible PPO – This is a more restrictive network than the current PPO and High Deductible plans offer. While the new alternative network offers fewer providers, the advantage is that it provides greater discounts for USG employees and dependents enrolled in the plans.

Establish a “Tobacco Use” surcharge of $50 per month – This surcharge will be waived if an employee quits smoking. Cessation programs will be offered to help employees. Scheer said the intent of the tobacco use surcharge is to promote healthy lifestyle choices and reduce medical claim trends.

Implement wellness provisions for current plans – Such plans, noted Scheer, offer a low-to-no-cost alternative to improve overall employee health that will have far-ranging financial implications for both the System and employees. Elements of these wellness provisions include a smoking cessation program, the expansion of communication and education efforts on wellness and prevention, and discounted weight management programs. In addition, the System will provide incentives for generic and continued prescription regimens.

Continue seeding the health savings account – For the upcoming year, the health savings account will be seeded at one-half of the 2010 levels for existing participants and for new enrollees.

Self-fund Blue Cross/Blue Shield high deductible plans and HMO and Kaiser HMO.

Changes in retiree plans – After January 1, 2011, all retirees and spouses will pay the full cost of insurance (both employer and employee costs) for not enrolling in Medicare Part B when they become eligible. Current retirees over 65 are grandfathered at a $100 per month surcharge.

The regents also approved minor changes to the prescription plan, including adding $5 to brand name prescription co-pays, establishing a co-pay holiday for switch to generic from brand name prescriptions, and limiting specialty drugs to a specialty pharmacy.

The recommendations presented to the regents and approved by them were developed over the past eight months under the direction of the board’s Personnel and Benefits committee, chaired by Regent Wanda Yancey Rodwell and including regents Frederick E. Cooper, Larry R. Ellis, James R. Jolly and Kessel D. Stelling, Jr.

The System’s Human Resources department provided Staff support. A number of meetings were held, including a presentation to the committee by a number of USG presidents.

In addition, the committee’s work was informed by results of a 2009-2010 survey, conducted by outside actuary and consultant Mercer, that indicate the USG’s plan design is competitive with other large higher education institutions and state agencies in terms of co-pays, deductibles, and plan offerings, noted Scheer.

Additionally the survey indicated that the System’s cost sharing structure is less competitive for USG faculty and staff. Employees are currently paying a greater percentage and dollar amount for their health benefits via their employee paycheck contributions than employees of other large higher education institutions and state agencies.

Open enrollment is scheduled for October 25 – November 19, 2010.

Posted by Sonja Roberts on August 31, 2010
Published in: Board of Regents

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