UA employees to pay more for health plans
Posted on Saturday, November 22, 2008
The University of Arkansas System has devised a comprehensive fix for its beleaguered employee health insurance plan, including increasing its campuses’ share of employee premiums for a second time this fiscal year.
The system is self-insured, meaning the roughly 15, 000 UA employees statewide and another 15, 000 family members are the only insurance customers using and paying in to the plan.
Aside from the 6. 5 percent premium increases the plan will add for the employers’ shares beginning Jan. 1, employees will pay more for costs to use the plan — such as the deductible, outof-pocket maximum and several co-payments — also beginning Jan. 1.
Later in the fiscal year that ends June 30, system officials will re-evaluate the plan’s performance.
At that time, they’ll determine whether the employees’ share of their premiums will go up, said Graham Gillis, the system’s associate vice president of employee benefit and risk management services.
The UA board of trustees, meeting in Little Rock on Friday, heard a report on the system’s decision from its vice president of administration, Ann Kemp. The changes did not require a board vote.
At the trustees’ last regular meeting Sept. 19, Kemp had briefed them on the plan’s worsening financial state and offered hope that there was plenty of time to shore it up.
During the fiscal year that ended June 30, the health plan suffered an unusually high level of “catastrophic” claims — roughly $ 10 million worth, she said. The primary causes were cancer treatments and premature births, including one of the latter that cost the plan about $ 1. 8 million.
System officials offered the cost of the 6. 5 percent premium increase for 10 of its 18 universities, colleges, schools and institutes for the last half of the current fiscal year: $ 1. 8 million from Jan. 1 to June 30.
That figure doesn’t break out the cost to the campus’s publicly funded educational and general budgets alone.
“It will follow the salary,” said Barbara Goswick, the system’s vice president of finance and chief financial officer. That means if the salary is paid through tuition and state appropriations, then so are the benefits. The same goes for salaries paid out of athletic revenues or other self-supporting “auxiliary” departments that don’t operate off of public funds, she said.
The first employer-side premium rise this fiscal year was a 4 percent increase that went into effect Sept. 1.
“Campuses had the discretion of absorbing the increases, or applying it across the board [to employees ],” Gillis said. There’s no option for employers to do that with the second one.
With the two increases in place, the UA employers will pay anywhere from 65 percent to 79 percent for the employees’ premiums. The employee rates and employer matches vary somewhat by campus, the type of health plan, how many other people the employee’s insurance covers and whether the employee has a nineor 12-month appointment.
On July 1, the employees began paying a 3 percent increase in their premiums — the first increase they’d experienced in three years, Gillis said.
Employees of the UA System, its flagship Fayetteville campus, and a handful of small schools currently pay $ 63. 59 a month in single coverage for the classic plan. A single person at those campuses would pay $ 99. 10 a month for the point-of-service plan.
While those employee rates won’t rise Jan. 1, when the employer matches do, that single employee paying the $ 63. 59 monthly premium will get a 78 percent employer match and the single employee paying $ 99. 10 will get a 69 percent employer match.
This is not the first time the system has shored up its health plan — it also faced shortfalls in 2004 and 1999.
In July 2004, the system raised health insurance premiums 12 percent, with most campuses bearing the increase equally with employees. At that time, the system campuses paid between 62 percent and 75 percent of the premiums.
The system rectified the $ 5. 3 million shortfall in 1999 by raising premiums 10 percent and altering benefits in January 2000.
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