BENEFITS ADVISORY COMMITTEE

MINUTES OF THE MEETING

JUNE 16, 2005

[In these minutes: Employee Benefits Announcements; Lifetime Maximum Insurance Report/Update; Health Insurance Waiver Report/Update; Review of Committee Charge/Membership; Benefits Options for U Plan 2006: Presentation by Professor Fred Morrison.]

[These minutes reflect discussion and debate at a meeting of a committee of the University Senate or Twin Cities Assembly; none of the comments, conclusions, or actions reported in these minutes represent the view of, nor are they binding on the Senate or Assembly, the Administration, or the Board of Regents.]

PRESENT: Gavin Watt (chair), William Roberts, Pam Wilson, Karen Wolterstorff, Peter Benner, Ronald Enger, Rita McCue, Joseph Jameson, Michael Marotteck, Carla Volkman-Lien, Penelope Morton, Fred Morrison, Peh Ng, Theodore Litman, Rodney Loper, Jody Ebert, Joe Kelly, Don Cavalier

REGRETS: Carl Anderson, Richard McGehee, Amos Deinard, Linda Aaker, Dann Chapman

ABSENT: Keith Dunder, George Green

OTHERS: Curtis Swenson, Eric Miller, Nancy Fulton, Stephani Levi, Bob Altman

I. Gavin Watt called the meeting to order.

II. Employee Benefits Announcements:

• Ruth Rounds announced that the Farmer’s Market will be starting on July 13th along Church Street, on the East Bank. The market will run from 11 a.m. to 2 p.m. on Wednesdays through August 24.

• Lifetime Maximum Insurance Report/Update: Karen Chapin brought a report for committee members, in order to update them on lifetime maximum insurance. There is currently a $5 million lifetime maximum on all of the UPlan options; this amount is the maximum that is available in the marketplace.

It was agreed that the BAC would receive an update on some of the high individual claims every few years. The report, distributed to committee members for review, listed claims that exceeded $300,000 in benefits paid out by the UPlan through 2004, and indicated the major diagnostic categories of each claim.

Since none of the claims are near $5 million, and since higher amounts are not available in the marketplace, it is the intent that the UPlan will stay with the $5 million lifetime maximum. The BAC will continue to receive updates on this issue every few years.

• Health Insurance Waiver Report/Update: Ms. Chapin also provided committee members with an update on employees who have elected to waive their health coverage. It was agreed that the BAC would receive periodic reports detailing the number of employees who have elected to waive coverage. This number is currently 1,043; however, 287 of these people are receiving coverage through a spouse or partner who is also employed at the University. The true number of people who are waiving coverage is 796. This is an increase from last year.

III. Review of Committee Charge/Membership

Gavin Watt led committee members through proposed changes to the committee charge. The charge was originally written in 2001, and updates are necessary to reflect changes that have taken place. The President will ultimately approve the changes.

Mr. Watt explained the following proposed changes:

• Delete obsolete language about SEGIP.
• Delete language about graduate students, since they have not joined and are not anticipated to join the UPlan.
• Under ‘specific charges’ (item 8), delete: ‘Nominate from among the BAC membership the persons to be appointed to represent University non-bargaining employees on the Joint Labor Management Committee for the State Employee Group Insurance Plan (SEGIP)’ and replace with ‘Nominate from among the BAC membership at least two persons to be appointed to the Health Care Administrative Working Group’. The BAC currently has two members on this working group; these changes would make this explicitly part of the charge.
• Make changes to the section on membership to restrict membership of the committee to staff, faculty, and retirees of the University who are eligible for benefits.
• Make changes to clarify that there will be one non-voting seat for each of the following bargaining units, which would be the only bargaining units represented: AFSCME Technical, AFSCME Clerical, AFSCME Health Care, Teamsters, and UEA.

After explaining the above changes, Mr. Watt asked for comment from committee members. There was some discussion regarding membership, including guests, ex-officios, and the number of retiree members.

Joe Kelly raised a concern about Law Enforcement Labor Services (LELS) representation. After some discussion, committee members agreed that there were no objections to having another bargaining unit seat at the table. It was decided that Mr. Kelly will speak with LELS and will report back to Mr. Watt.

Aside from potential LELS representation, the committee approved all changes. The charge will be finalized after discussion with LELS.

VI. Benefits Options for UPlan 2006: Presentation by Professor Fred Morrison

Professor Morrison brought four issues to the committee for their decision. These are issues that were discussed at the previous meeting, and are some of the smaller details at the end of the process.

1. Co-pay structure for Insights

Last year in PatientChoice there were different premiums for different levels. This year, there will be a standard premium for all Patient Choice Insights levels, with different co-pays for different providers in the system. Questions related to this first issue include:

a. Should the hospital inpatient and outpatient rates be held constant in the upper two levels, or should they be tiered for all three levels? It will cost the individual $1 more per pay period ($2 more for families) to keep the hospital admission costs down. Committee members felt that the sick people should not be penalized, and voted to keep costs down.

b. What should office visit co-pays be? Co-pays can be raised from a $10-$25-$40 tier to a $20-$30-$50 tier; this would save individuals $4 per pay period and save families $9 per pay period. However, there are some parts of the metro area that do not have Tier I clinics nearby; so keeping the co-pays lower would essentially allow for another base plan equivalent. Committee members agreed that accessibility to low-cost clinics is important, and voted for the $10-$25-$40 structure.

c. Next, Professor Morrison gave committee members the option of a $50 or a $75 Tier II Emergency Room (ER) co-pay. Committee members discussed concerns about accessibility, particularly for situations where patients have little control over which ER they use. Because of this, committee members voted to have a $50 Tier II ER co-pay.

2. The second issue dealt with the deductible structure for Medica Direct, which is the Definity replacement. Medica Direct will be split into two different plans: one a Health Reimbursement Account (HRA), and the other a Health Savings Account (HSA). They should look as much alike as is possible.

There were concerns raised at the last meeting that these accounts might be very competitive with the base plan, in terms of the bi-weekly charge, and that this plan should not be anything like the low-cost plan, but should be priced like a premium plan.

Professor Morrison explained that there are two ways that this can be done:

• Increasing the deductible.
• Increasing the amount of money that is deposited into the HRA/HSA.

Both of these changes will result in higher bi-weekly charges to the employee. Given the high number of variables, it is difficult to give accurate estimates of these two proposals, so Professor Morrison gave the committee some general examples.

Committee members noted that employees would most likely first consider how much money is going into their account before they consider their liability.

The vote on this issue went as follows: 0 people for a lower deductible; 6 people for an increased amount; 7 people for letting others figure out which is the best option and 2 people for leaving the premium lower. Another potential option is to make the HSA and HRA plans different. It was decided that Gavin Watt will check in with Richard McGehee and Linda Aaker. The committee will revisit this issue at its August meeting.

3. Since medical and pharmacy have been split, there is a glitch with diabetes test strips. These are currently charged as ‘durable medical equipment’ with a 20% co-pay; however, they are neither durable nor are they equipment.

These test strips are typically purchased from the pharmacy. Professor Morrison proposed that these could be charged as a ‘generic plus product’ with a $10 co-pay. This way, they will count against an employee’s pharmacy maximum rather than their overall out-of-pocket maximum. This would be an advantage for diabetic employees, as they would reach their pharmacy maximum earlier. In addition, glucometers (the device that reads the test strips) would continue to be ‘durable medical equipment’, but would be covered under pharmacy benefits, rather than medical.

Committee members agreed to these changes.

4. Another issue that stems from the separation of medical and pharmacy is the infertility maximum. Currently, there is a $10,000 lifetime maximum for infertility treatments, which covers both the medical procedure and its associated pharmacy costs; typically it is 50% medical costs and 50% pharmacy costs.

Professor Morrison explained one reason to review this maximum is that number ($10,000) was inherited from the state plan; the number has not been changed, even though costs have risen. Secondly, the split of medical and pharmacy will make administering a plan that includes medical and pharmacy charges together very difficult. It is much easier, administratively, to split up the charges.

Professor Morrison proposed that the $10,000 lifetime maximum for infertility charges be changed to a $5,000 annual maximum. This is the plan that Medica uses. This would additionally allow couples to try the treatment more than one time (if they would like another child or if the treatment was unsuccessful the first time).

Committee members agreed to this change.

Finally, Karen Chapin passed out copies of a draft open enrollment plan comparison. This handout did not include the changes made at today’s meeting; it is very much a work in progress.

Professor Morrison noted that the real rates and final conclusions, including a plan for Duluth, will be brought back to the committee at its August meeting.

VII. Other Business: Gavin Watt thanked committee members for their service this year.

VIII. Hearing no further business, Gavin Watt adjourned the meeting.

Rebecca Wienbar

University Senate