FixFlex Top 10 Burning Questions (and Answers)
To: Sue Buckley, Richard Saunders, and the UI Benefits Office
From: FixFlex
We kindly request that you provide answers to the following 10 Burning Questions. The questions are ranked by order of importance. Please send answers when they are available—there is no need to wait until answers to all 10 questions are available.
1. Please fill in the following enrollment numbers (we filled in the one number we received from the Benefits Office). New enrollment figures are not necessary—we would be happy to receive the numbers used when developing (or evaluating) the FRIC proposal.
- _____ single
_____ employee-spouse (where just the employee takes UI insurance)
_____ employee-spouse (where both employee and spouse take UI insurance)
_____ employee-spouse (dual-employee couples)
_____ employee-spouse (where the employee and spouse take non-UI insurance)
_415_ employee-child
_____ employee-family (where just the employee takes UI insurance)
_____ employee-family (where the entire family takes UI insurance)
_____ employee-family (dual-employee couples with children)
_____ employee-family (where the family takes non-UI insurance)
Answer: “For data please see our web site.”
– Richard Saunders, 6/9/08
Note: Demographic data is posted on the HR website, here.
2. According to the HR website “Over the past five years the Flexible Benefit credits provided under the current structure to support health insurance have increased 70%.” According to HR, “the recent rate of increase cannot be sustained.” A 70% increase over 5 years is equivalent to an increase of approximately 11.2% per year. In the last 5 years, health care costs have increased annually by 9.6% on average1. In this context, it seems that Flexible Benefits credits are largely tracking increases in the cost of health care. Is this correct? If so, could you tell us more about why Flexible Benefit credits are putting the University at great financial risk?
Answer: “Still working on this one.” — Richard Saunders, 6/9/08
3. The FRIC plan is described as “cost neutral”. Ignoring the unknown cost of increases in health premiums next year, will this plan save more than $500,000 in benefits expenditures in the first year? If so, will the university commit to using these savings to help employees with modest incomes deal with any financial burden the FRIC plan will place on them?
Answer: “Based on a number of assumptions on what options faculty and staff will select, the projected savings the first year of the FRIC proposal is approximate $890,000. This is a projection and until the end of the year there would be no way to state what the actual savings with certainty. For example, if more than 50% of the employees migrate from external health insurance coverage back to the University, then the $890,000 decreases. ” — Richard Saunders, 6/9/08
4. What percentage of faculty and P&S staff will receive a reduction in benefits under the new plan? Is it 10%? 20%? Greater than 30%?
Answer: “Without doing a comprehensive analysis of each and every employee, this question cannot be answered with precision. The current program offers a great deal of choice with the flex credits, so everyone who uses any of the flex credits to purchase any insurance product differently than for what the credits were originally intended could be affected. ” — Richard Saunders, 6/9/08
5. In his 5/23 guest opinion in the Press Citizen, Sheldon Kurtz said, “some of the university’s 11,000 covered employees would receive a reduction of flex credits attributable to health insurance estimated to range from about $1,800 to $4,000.” Will some employees see a reduction in total benefits-related compensation greater than $4000?
Answer: “The maximum credits someone could earn at the University under the current program is $19,894. . It would take a married person, over 5 years, with a salary of over $500,000 to accumulate that much. A person would have to spend at least $5178 on the required benefits, life & LTD, leaving $14,716 in credits to reallocate. Under the FRIC proposal their extra credits would drop to $4260.” — Richard Saunders, 6/9/08
6. Was FRIC asked to cut benefits spending by a specific dollar amount? If so, what was the dollar amount, how was this amount determined, and who gave this charge to UI and/or FRIC?
Answer: “No dollar amount was specified. The issue of increasing cost was first brought by to FRIC by Interim President Fethke. FRIC was formally asked to review the FLEX program during the academic year 2007/08.” — Richard Saunders, 6/9/08
7. Will there be an allocation of credits for Dental under the new plan? Or will employees simply pick an option? How much money will the restructuring of the Dental plan save the university?
Answer: “Dental will be treated the same as health under the FRIC proposal. The premium sharing will be no cost for the employee for single coverage under either plan or 80% of the other family statuses premiums will be paid by the University. A Sharing Credit of $25 will be given to the employee who does not participate in dental insurance. If 50% of the current non participants migrate back, we have estimated a savings of $1,400,000.” — Richard Saunders, 6/9/08
8. Will the general credit be linked to any particular index? Inflation? A percentage of health care costs?
Answer: “No. The amount of credits will be determined on an annual basis by the University and will be based on available funding.” — Richard Saunders, 6/9/08
9. Will the 60% LTD coverage offered be pre-tax or post-tax?
Answer: “Pre-tax. Since the University as the employer is funding this mandatory program for all employees the IRS requires that the program be pre-tax.” — Richard Saunders, 6/9/08
10. Will people with a chronic or terminal illness have the option of keeping their life insurance at the current coverage level?
Answer: “Under the FRIC proposal there is no change in the options offered under either the Group or the Supplemental Life insurance programs. The proposal does reduce the maximum covered salary from $400,000 to $200,000.”
– Richard Saunders, 6/9/08
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1Kaiser Family Foundation
