University Faculty Senate

Faculty Economic Benefits Committee (FEBC)
2010-2011

INDIANA STATE UNIVERSITY
Nobel Corey, Chair
2010-2011
November 19th, 2010

Indiana State University
Faculty Senate 2010-11

Correction to minutes from Meeting #4 (11-4-2010): Mr. Green is collecting data on salary instead of summer pay (four quartiles).

Candice Barton reported challenges in administering health benefits to ISU employees. Currently ISU’s medical plan is self insured. ISU pays 3 different companies to administer coverage. In 2009, ISU spent $22 million on health benefits. In 2010, the $22 mill includes administrative costs; overall 85-90% costs cover claims alone. AON consultant estimates that ISU’s costs will increases by $2 million each year so, to ensure that health benefits do not exceed 10% of the total budget, alternatives will have to be considered. In order to effectively administer employees’ health benefits, ISU needs to have $22-24 million in the account.

Right now ISU employees’ pay their portion of their health insurance coverage based on a three-tiered system. If employees increased their monthly contribution for 2011 by $9-21/month for those making below $27,000/year (depending on coverage level), $10-26/month for those making $27,000-76,999/year (depending upon coverage level); $13-29/month for those making above $77,000 (again, depending upon their coverage level) then ISU would be able to cover the costs of administering the plan at the $22-24 million mark. Ms. Barton provided the subcommittee members with a table outlining the current 2010 rates and the proposed increase for 2011.

Ms. Barton informed the subcommittee members that one major expense associated with administering health benefits in the in administering health benefits is the insurance policy that ISU purchases to cover any medical expenses incurred by ISU employees over $225,000/year (costs between $300,000-400,000/year). Ms. Barton said that ISU solicits bids from companies that provide the coverage and that those bids are quite expensive as the average age of ISU employees is now over 50. Expenses are also increasing as a result of medical inflation. The AON consultant estimated that ISU’s expenses would increase by upwards of 11%/year (9% for 2011); a check by Chip Rogers brought the estimate down to 7.5% which is the basis for the proposed monthly increases outlined above. There are also some increases associated with the new health reforms, e.g., some employees will be able to insure their adult children up to age 26; the amount spent on medical expenses/individual employee is no longer capped; most people will be covered regardless of pre-existing conditions immediately upon signing up for the plan (except for adult children ages 19-26 who will have to wait one year for coverage to begin re: any pre-existing condition). Retirees will be asked to pay an additional $5/month.

With the proposed increase, the coverage will not change. As costs go up, there will be increased emphasis by Cigna and ISU on employees staying (or getting) healthy. Mr. McGivern asked whether there would be any changes made to the flexible spending account. Ms. Barton said, yes, that people who use it will now need to get a doctor’s prescription for any over the counter medications they purchase with monies in their account (this change was made b/c it was found that 7% of flexible spending dollars were spent in the last month of the year for over the counter medications and supplies as people tried to use up surplus they had not spent on co-pays and out-of-pocket expenses earlier in the year).

Mr. Mulkey initiated a discussion about Cigna’s service, saying Cigna was very slow to process claims, asked for receipts more than once. Ms. Barton said she’d heard of other complaints, the Staff Council (chaired by Debbie Huckabee) is soliciting comments from ISU employees about their experiences and will generate a report, hopefully in early January, which Ms. Barton can use when she meets with Cigna representatives in late January. Ms. Barton also talked about Medco, the company that administers prescriptions for ISU employees. Employees can go to mycigna.com and click on “how to get cheaper prescriptions,” which, Ms. Barton has heard, has helped tremendously. Medco will call people and suggest ways people can save.

Mr. Corey asked how long is ISU contracted with Cigna? Ms. Barton replied, year by year. She said that Diane McKee indicated that, if there were lots of complaints, ISU might consider changing plans.

FEBC is to review the proposed increase and make its recommendation to the Senate Exec. Committee so that the Board of Trustees can vote in it at its Dec 17th meeting.

Mr. Corey asked Ms. Barton to give the subcommittee some insight on post retirement life insurance. Right now, retired employees’ families receive $5000 when he/she dies. There is talk of reviewing that policy since it hasn’t been changed since 1985 and since the average burial costs between $7000-15,000. Ms. Barton said there’s also been discussion about reviewing the policy for current ISU employees whose families now receive 2x their salary (up to $100,000) when they die to increasing that to 3x their salary (up to $150,000). Mr. Green asked about full time employees over 65? Ms. Barton said their families receive $65,000 when they die (i.e., there’s drop from the $100,000 payment once one turns 66 and is still fully employed).

Ms. Barton informed the committee that there had been some discussion of ISU’s three tier system. The goal, she says, is to make sure people making under $27,000 pay less, people making over $76,999 pay more. The people in Tier 2, she says, are paying the actual costs (tier 2 is by far the largest tier). There has been a proposal for ISU to move the state’s insurance plan but, although the coverage is a bit better, it costs much more.

Mr. Bolinger reported that Senate Executive Committee dropped the dismissal language from the proposal re: changes in performance review. There will be two separate proposals going up for a vote to the full Senate (the first: the proposed changes to the performance review policy and the second the proposal to adopt a pay-for-performance/merit pay system).

Mr. Corey and subcommittee members thanked Ms. Barton for her time.

The FEBC’s next meeting is scheduled for Dec. 3. Mr. Bolinger suggested the subcommittee vote on the proposed changes to the handbook at the Dec. 3 meeting.

Mr. Corey will distribute handbook changes to subcommittee members before Dec. 3 meeting.

Meeting adjourned at 10:10.

Respectfully submitted,

Lisa Phillips

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