Sustainable Benefits Task Force Presentation to USF Leadership Team May 11, 2011.

Sustainable Benefits Task Force Presentation to USF Leadership Team

Sustainable Benefits Task Force Presentation to USF Leadership Team

May 11, 2011

USF 051111_SBTF Meeting Presentation.PPT 2

Cost Savings Options Based on Best Practices and Market TrendsCost Savings Options Based on Best Practices and Market Trends

• The Sustainable Benefits Task Force has finalized its review of USF’s current benefits and potential opportunities for cost savings and/or changes in benefit design.

• The following twenty-two options are being submitted to the Leadership Team and the Cabinet for consideration. Some are broad with many variables that will require further investigation.

• Some of these options will require negotiation with USF’s various collective bargaining groups (see appendix for statement).


Outcomes of the Task Force’s EffortsOutcomes of the Task Force’s Efforts

• USF benefits package exceeds or equals its peer group in most areas.

• Feedback from the USF community showed that members highly value their benefits and are highly sensitive to changes.

• Any changes to the existing benefit package will require continued promotion and outreach.

• The opportunities outlined in this report are options not recommendations and are based upon the over-arching mission of the University and its financial profile.


Outcomes of the Task Force’s Efforts (cont’d)Outcomes of the Task Force’s Efforts (cont’d)

• Interdependencies exist between benefits and market trends:– Options must be reviewed in the broader total rewards context

not each benefit on its own;– Level of coverage and choice of benefit design will influence

savings opportunities and migration/early adoption.

• Implementation strategies may include a phased approach to change, grandfathering select benefits, etc.

• Health Care Reform adds a level of uncertainty to future benefit design.


Outcomes of the Task Force’s Efforts (cont’d)Outcomes of the Task Force’s Efforts (cont’d)

• Cost estimates are based on broad assumptions derived from marketplace experience and industry practices including the following summary reports:– AON/Hewitt – peer review and benchmarking;– Advisory Board’s University Collaborative – self-funded

utilization;– Towers Watson – employer benefit benchmarking, industry

best practices.• Many of these options will require future monitoring of utilization,

benefit expense and behavior change to determine actual cost/savings.

• Savings may be short term, long term or one time.

Options — MedicalOptions — Medical


Option — Account Based Health Plan (ABHP)Option — Account Based Health Plan (ABHP)

Add ABHP as a plan option (Anthem administers PPO and ABHP options).

• In addition to HMO & PPO — provides more choice

• Allows flexibility• Consumer- driven

accountability and efficiency• Portable• High deductible could be less

attractive for those with limited funds

• Education about health care choices needed

• Could provide cost savings for some employees

• Savings for USF depends on migration into the plan

• Consumer-driven accountability & efficiency

• Education about health care choices needed

• Additional administrative cost• Overall savings estimates can

be impacted by a variety of design options and the amount of USF savings account subsidization, if any.

• ABHPs are growing in the marketplace

• Adoption of this type of plan could help the university meet certain future requirements under Patient Protection and Affordable Care Act (PPACA)

• Typically ABHPs have shown reductions in medical cost increases of approximately 1%-2% over extended periods of time (for those enrolled in ABHP)

• Some risk of anti-selection and its impact on existing plans (good risks move from Blue Cross and Kaiser to ABHP)

• The account-based portion of this product is a sophisticated financial vehicle, which requires participant education

• Sample design provided in Appendix

1

Estimated 1st Year Savings:

$10k - $20k

Employee Sensitivity University Impact Observations


Option — Add PPO Low OptionOption — Add PPO Low Option

Create an additional Anthem low option PPO plan to provide more choice (in addition to existing Anthem PPO plan)

• Provides more choice• Lower cost plan = fewer plan

benefits

• Increase in administrative burden

• Cost savings for USF

• Many large employers offer more than one PPO option

• Needs to be taken into consideration with ABHP strategy (additional plans may create too much administrative burden and confusion for employees)

• Sample design provided in Appendix

2

Estimated Savings:

$30k



Option — Spouse/Legally Domiciled Adult SurchargeOption — Spouse/Legally Domiciled Adult Surcharge

Implement a Spouse/LDA surcharge if Spouse/LDA has access to alternative medical coverage

• Still allows access to USF plan for spouse/LDA

• Higher cost for some employees (if spouse/LDA are is participating in benefit and has access to alternative medical coverage)

• Cost savings for USF• May reduce overall USF

medical claims• Increase in administrative

burden

• Dependents are a driver of cost for the university, a surcharge helps recognize some of those costs and shares it with those covering dependents

• Spousal surcharges are becoming very common in the market place

• Note: Multiple definitions for LDA currently exist within the various CBA’s

3

Estimated Savings:

$120k



Option — Add 4th Tier to Benefits CoverageOption — Add 4th Tier to Benefits Coverage

Split current family tier into Employee + Children and Employee + Spouse/LDA + Children

• Contributions based on family size

• Contribution will decrease for “employee + children”

• Contribution will increase for “employee + spouse/LDA + children”

• Increase in administrative burden

• Adds an additional 4th tier to current contribution structure to better meet family structure and changing family dynamics

• Promotes equity in contribution rates based on type of family coverage

4

Estimated Savings:

$0



Option — Standardize Employee ContributionOption — Standardize Employee Contribution

Simplify contribution structures by either eliminating salary banding or create a single salary band for all employee groups

• Contributions will change, with some increasing and others decreasing

• Administrative savings• Requires working across

multiple groups to bring the rates together

• Salary bands were created approximately six years ago to create equity in contribution rates across employee pay rates and faculty ranks in response to the rising cost of health care

• Current structure is very cumbersome and creates significant administrative complexity across university populations

5

Estimated Savings:

TBD



Option — Contribution Rate IncreaseOption — Contribution Rate Increase

Increase monthly employee contributions for most employees to bring closer to peer group

• Will increase contributions for most employees

• Cost savings for USF• Could be potentially difficult to

negotiate and may require extended time to implement across bargained groups

• Current employee contributions are less than peer group

• Could negatively impact recruitment and retention of employees

• Should be considered in conjunction with other design changes, and health plan offerings

• Consider subsidy for employees below a certain level for single rate method

6

Estimated Savings:$0 - $1m



Option — Implement Higher Lab Copay for Anthem Non Preferred LabOption — Implement Higher Lab Copay for Anthem Non Preferred Lab

Implement higher copay for lab services at non-preferred labs • Provides choice

• Consumer driven approach• Can lead to savings for

employee• Potential higher cost for

employee at non-preferred labs

• Potential inconvenience for those who opt to use non-preferred labs

• Ability to leverage lab pricing• Consumer driven approach• Can lead to savings for USF• Administrative burden on USF

to manage lab contract

• Various delivery systems deliver services at different costs (i.e., Hospitals are more costly than external labs)

• Incents utilization of cost efficient providers, while allowing choice in providers at higher cost for convenience

• Copay differentials can help control costs

• Closest Quest Diagnostic Lab: 2198 15th St, San Francisco, CA(0.7 miles from campus)

• Numerous other Quest Diagnostic labs exist through out the Bay Area, three total within 1 mile of campus

7

Estimated Savings:

$15k



Option — Revise Anthem Pharmacy Design (formulary with copay differentials)Option — Revise Anthem Pharmacy Design (formulary with copay differentials)

Add a formulary with formulary/brand drug copay differentials to promote cost effective usage through

• Education about plan is needed

• Employees and dependents may pay more for existing drugs

• Cost savings for USF• Consumer-driven• Employee education and

outreach is needed

• The marketplace has evolved to a three tier copay/coinsurance structure to provide better line of sight to cost variations that exist between different drugs, many of which have lower cost alternatives that are as efficacious

• Applies only to non-Kaiser medical plans

8

Estimated Savings:

$50k



Option — Implement Anthem Pharmacy Step Therapy Programs (w/MD ability to override use of generics)Option — Implement Anthem Pharmacy Step Therapy Programs (w/MD ability to override use of generics)

Implement step therapy program requiring participant to begin treatment with lower cost, most efficacious drugs.

• Potential to lower employee and USF costs

• Education needed about plan• Health impact for some — by

including more steps

• Consumer-driven• Potential to lower employee and

USF costs• Education needed about plan• Administrative cost associated

with step therapy – to be determined

• The marketplace is broadly adopting clinical rules that help control costs by limiting access to high cost drugs by promoting lower cost alternatives that are as efficacious. These rules allow access to high cost drugs if the lower cost alternative does not meet someone’s needs.

• Applies only to non-Kaiser medical plans since this is already standard practice for Kaiser today

9

Estimated Savings:

$25k - $40k


Step therapy programs encourage the use of cost-effective therapeutically equivalent drugs first, when appropriate. An employee will need to try an alternative drug before other drugs prescribed by his/her doctor will be covered. The physician can decide to write a new prescription or submit a written request for the employee to continue medication as prescribed (e.g., No Substitution Allowed/Dispense as Written).


Option — Review Health Plan WaiverOption — Review Health Plan Waiver

Review health plan waiver amount ($) and consider increasing or eliminating to further incent people with other coverage options to waive USF's plans

• Currently 75 people receive the $40/month opt out waiver; eliminating the waiver will impact these employees

• Increasing waiver could incent more employees who have access to other plans to opt of USF’s plan

• Savings through migration to other plans

• Could reduce cost of claims in future

• Some options require initial USF costs until break even point

• Not clear that additional waiver amount would induce more employees to drop USF coverage

• Additional education and outreach required

• Waiver credits were offered to help employees who preferred to elect medical coverage through other means (e.g., spouse coverage)

• Waiver credits have been losing their popularity overtime with larger employers

• Financial impact of having current opt outs returning to the plan has not been factored into the cost/savings analysis

• Employees who opt out of coverage one year can re-enroll if they have a qualifying event during the year or during the following year’s open enrollment

• Employee is required to provide documentation of alternative coverage

• Will need to evaluate waiver once exchanges are available in 2014

10


Estimated Cost/Savings:$36k - ($150k)

Options — DentalOptions — Dental


Option — Implement Monthly ContributionsOption — Implement Monthly Contributions

Implement employee cost share for dental coverage • Employee contribution will be

required to participate in plan• Cost savings for USF • Current contribution subsidy (100%

employer paid) is inconsistent with the market

• Different subsidy levels should be evaluated and considered

11

Estimated Savings:

$150k - $300k



Option — Modify Plan to Create High and Low Plan Options Option — Modify Plan to Create High and Low Plan Options

Modify plan to create a high and a low plan option (Delta Dental administers both)

• Provides more choice• Implement employee

contributions — richer plan design

• Provider network restricted under low plan option

• Add benefit while controlling USF costs

• Administratively complex

• Allows employees to have a choice of dental designs to choose from to fit their individual situation

• Different subsidy levels will be evaluated and considered for both plans

• 90% dental network utilization with current network, less than 10% of employee would be impacted

High Design: • Requires paycheck contribution• Current plan w/$2K annual max +

adult orthodontia and dental implant benefits

Low Design:• No paycheck contribution• Current plan w/$1.5K annual max

(no change)• Narrower network

12

Estimated Cost:$175k


Options — Wellness & InsuranceOptions — Wellness & Insurance


Option — Expand Wellness OfferingsOption — Expand Wellness Offerings

Expand university’s wellness offerings

• Encourages engagement in healthy behavior

• Encourages engagement in healthy behavior

• Long-term savings through better employee health

• Few short-term savings• Cost of incentives• Added administration costs

• Wellness plans are increasing in popularity with larger employers

• Program needs to be designed to help promote participation (carrots vs. sticks)

• Requires buy-in from senior leadership and acceptance by employees

• Return On Investment (ROI) builds over time as programs build momentum

• Program costs can offset gains if people do not maintain engagement levels

• Integrated wellness and care management programs typical ROI is estimated at 1.5x – 2.0x, and driven by employee engagement levels

13

Estimated1st Year Savings:

$25k - $50k



Option — Life Insurance CoverageOption — Life Insurance Coverage

Consider increasing life insurance coverage, as this benefit can be purchased more cost efficiently by the university than employees

• Additional coverage for employee

• Additional cost to USF• USF can take advantage of

volume pricing

• Recent survey data suggest the university’s overall benefits are significantly above average but life insurance was one area that USF scored at the same level as other comparators

14

Estimated Cost:

$125k - $250k


Options — Tuition RemissionOptions — Tuition Remission


Option — Implement Benefit Waiting Period and Remove PaybackOption — Implement Benefit Waiting Period and Remove Payback

Implement waiting period before individual is eligible for tuition remission and remove current payback provision

• Eligibility is delayed by wait period

• Would allow employee to leave USF immediately upon completion without penalty

• Promotes stability/longevity prior to benefit

• Removing payback — administratively easier, but USF loses investment

• Would align USF with other institutions and their practices regarding tuition remission for competitiveness

• Savings predominately achieved in first year, with some savings continuing into the future as turnover occurs

• Actual savings realized can be difficult to determine

• Impacts FACHEX, Tuition Exchange and USF’s tuition remission programs; design and eligibility definitions must be the same for both graduate and undergraduate population to minimize required adjustments to other programs

15

Estimated Savings*:

$600k


*Tuition revenue will also decrease; savings amount to be determined.


Option — Limiting EligibilityOption — Limiting Eligibility

Limit eligibility for employees and dependents through various plan design changes

• Could influence employee retention

• Cost savings to USF• Brings USF in line with peer

institutions• May negatively impact

recruitment and retention of employees

• Options include limiting remission % to something less than 100%, limiting allowable programs for dependents (eg. U/G programs only), capping the total number of degrees allowed (eg. 2 per employee)

• Would align University with other major institutions and their practices regarding remission

• Savings projections will have some impact on revenue budget as enrollment is reduced (impact not included in this analysis)

• Additional review required to evaluate current program utilization to balance impact on general community

16

Estimated Savings*:

$180k-$1.8M


*Tuition revenue will also decrease; amount of revenue reduction to be determined.

Options — Child Care SubsidyOptions — Child Care Subsidy


Option — Change Income Basis to Household IncomeOption — Change Income Basis to Household Income

Change eligibility basis to household income from employee salary • Some employees could lose

benefit• Could influence retention and

recruitment• Concerns regarding privacy

and administration

• May negatively influence recruitment and retention of employees

• Highly sensitive area for some employees

• Provides benefit to those with the least household income.

• Would distribute benefit to lowest income households

• Child care subsidy was not included in the employee survey.

• Subsequently, numerous responses received during town hall presentations

17

Estimated Savings:

$50k



Option — Decrease Child Care Funding AmountOption — Decrease Child Care Funding Amount

Decrease child care benefit provided by USF • Reduction of benefit for

employee• Cost savings for USF *Child care subsidy was not included

in the employee survey.• Subsequently, numerous responses

received during town hall presentations

• Highly sensitive benefit for some employees and linked to family life

• Savings directly impacted by final subsidy level

18

Estimated Savings:

$150k- $250k



Option — Fund Secondary CaregivingOption — Fund Secondary Caregiving

Provide additional funding for employees in need of alternative care

• Added coverage for employee • Cost to USF • Consider in conjunction with other child care options

• Offered at other institutions

19

Estimated Cost:$385k


Options — Commuter BenefitsOptions — Commuter Benefits


Option — Direct Deposit to Clipper CardOption — Direct Deposit to Clipper Card

Engage vendor to deposit directly to employee Clipper Card and offset expense by requiring employee contribution

• More efficient• Aligns benefit with use• Employee must participate

through pre-tax payroll deduction

• More efficient• USF cost to administer

• Direct deposit of funds is very common for most benefit areas

• $65/month currently• Surcharge may apply to Clipper

Card participants (Clipper Card is pretax, prepaid commuter card for BART, Bus, etc.)

• No net cost impact if Clipper Card used and $5 participation is required

• Required contribution may decrease participation

20

Estimated Cost:

$0 - $22k


Options — Retirement BenefitsOptions — Retirement Benefits


Option — Add Automatic Enrollment into 403b PlanOption — Add Automatic Enrollment into 403b Plan

Automatically enroll employee into voluntary 403b plan • Savings for employee

• Employee will need to opt- out to stop contribution

• More employee participation• Administrative costs

• Current practice at many not for profit institutions, and at 14% of higher education institutions

• Could include auto escalation feature

21

Estimated Savings:

$0


Automatic enrollment in the 403b Plan provides employees the opportunity to save; industry experience indicates that once enrolled few individuals opt out of the plan.


Option — Add Employee Contribution and/or Employer Match Option — Add Employee Contribution and/or Employer Match

Incent employee participation in retirement savings by adding a required employee contribution and/or employer match

• Higher balance for employee• Increases contributions for

employees• Could result in lower USF

contributions for some employees

• May change SSI wage base for some employees

• Could result in savings or higher cost for University depending on matching formula and employee elections

• Many institutions require employee participation of some level

• May decrease employer contribution for those employees receiving 12% contribution on wages over the social security wage base

22

Estimated Cost/

Savings:$TBD



Areas for Further InvestigationAreas for Further Investigation

• Further explore on-campus health care service options for students and opening access to faculty/staff

• Investigate other cost efficient retirement vendors and consider reducing the number of investment options

• Systematically continue to review health plan designs, options, provider network, and industry trends (e.g., ABHP)

• Review LDA definitions for consistency across all USF groups

• Analyze all administrative costs for HR activities and services (e.g., outsourcing cost vs. benefit)

• Review other institution’s current health & welfare experiences (e.g., Implementation of their ABHP and its success at achieving their objectives)

AppendixAppendix


Statement from USFFA and OPE Local 3Statement from USFFA and OPE Local 3• The USFFA would like to append this addendum to the final report of the Sustainable

Benefits Task Force, which met from January – May 2011. We appreciated the inclusion of five Policy Board members who participated in all deliberations and decisions. The Task Force was made up of administrators, staff and members of various other constituencies at USF, some of us who are covered by collective bargaining agreements. In other words, some of us had to deliberate on two levels, first with the interest of the economic health of USF as an institution in mind, but second, in terms of the material interests of our unionized members. At times, this dual loyalty made the decision making process difficult. The final report contains a series of options that, if implemented, could help USF contain costs over time in the aggregate, while offering sustainable, competitive benefits. In principle we might agree to any combination of these options. However, the key: the final decision would very much depend on a total package of salary and benefits to be determined at the negotiating table. Therefore, we wish to state unequivocally that we oppose, on principle, any option in the final report that would raise costs and/or cut benefits to our members, and, when viewed in isolation, would amount to a reduction in our salary and benefits. We emphasize that we will take seriously all and any of the options in this report, but since they are all subject to collective bargaining, we can not endorse any option that would imply prior consent or approval to a reduction in salary and benefits before actual negotiations begin.

• The OPEIU Local 3 stands in agreement and solidarity with the above statement made by the USFFA.

• The USFFA would like to append this addendum to the final report of the Sustainable Benefits Task Force, which met from January – May 2011. We appreciated the inclusion of five Policy Board members who participated in all deliberations and decisions. The Task Force was made up of administrators, staff and members of various other constituencies at USF, some of us who are covered by collective bargaining agreements. In other words, some of us had to deliberate on two levels, first with the interest of the economic health of USF as an institution in mind, but second, in terms of the material interests of our unionized members. At times, this dual loyalty made the decision making process difficult. The final report contains a series of options that, if implemented, could help USF contain costs over time in the aggregate, while offering sustainable, competitive benefits. In principle we might agree to any combination of these options. However, the key: the final decision would very much depend on a total package of salary and benefits to be determined at the negotiating table. Therefore, we wish to state unequivocally that we oppose, on principle, any option in the final report that would raise costs and/or cut benefits to our members, and, when viewed in isolation, would amount to a reduction in our salary and benefits. We emphasize that we will take seriously all and any of the options in this report, but since they are all subject to collective bargaining, we can not endorse any option that would imply prior consent or approval to a reduction in salary and benefits before actual negotiations begin.

• The OPEIU Local 3 stands in agreement and solidarity with the above statement made by the USFFA.


Cost Savings AssumptionsCost Savings Assumptions• The table below provides the assumptions used to estimate cost savings for

initiativesMedical

# Initiative Projected Annual Savings Assumptions

1 Account Based Health Plan (ABHP) $10K $20K

Actuarial plan value of Account Based Health Plan equivalent to the PPO style plan (i.e., the level of coverage for both plans are comparable); USF provides an employer seed of $650 single coverage / $1,300 family coverage5% migration from the PPO plan to the Account Based Health Plan; no migration from the Kaiser CA planThere is a 3.0% savings associated with consumption efficiency with the Account Based Health Plan

2 PPO Low/High Option $30K

PPO Low Option has an actuarial plan value that is 6% less than the PPO High Option (current plan design)Rates for the PPO Low Option are 6% lower than the PPO High OptionEmployee paycheck contributions for the PPO Low Option are 6% lower than the PPO High Option10% of employees enrolled in the current PPO Plan migrate to the PPO Low Option

3 Spouse/LDA Surcharge $120K

$50 / month spousal surcharge90% of employees enrolled in the (EE + 1) and (EE + 2 or more) tier cover a spouse / domestic partner50% of spouses / domestic partners enrolled in the USF medical plan has coverage through their own employer and will pay the $50 monthly spousal surchargeNo spouse / domestic partner will drop off from USF’s medical plan; there are additional savings associated with spouses / domestic partners dropping coverage


Cost Savings AssumptionsCost Savings Assumptions


4 Add 4th Tier to Benefits Coverage $0K

The enrollment tiers will be as follows: EE Only, EE + SP/LDA, EE + Child(ren), and EE + FamilyThe rate relationship (or tier ratio) is as follows:EE Only = 1.0EE + SP/DP = 2.1EE + Child(ren) = 1.8EE + Family = 2.990% of employees enrolled in the (EE + 1) tier cover a spouse; 100% of employees enrolled in the (EE + 2) tier cover a spouse

5Contribution Methodology (standardize across employee groups)

TBDAdministrative Savings Only

Assumed there will be administrative savings realized internally at USF; savings TBD

6Contribution Rate Increase(closer to market value)

$0 to $1M

$1M savingsIncrease EE cost share from 6% (average across all employee groups and pay bands) to 17%Increase dependent cost share from 14% (average across all employee groups and pay bands) to 23%$500K savingsIncrease EE cost share from 6% (average across all employee groups and pay bands) to 11.5%Increase dependent cost share from 14% (average across all employee groups and pay bands) to 18.5%

7 Implement Higher Lab Copay for non preferred lab $15K

Savings estimate provided by the advisory board

Medical




8Pharmacy Design

(formulary with copay differentials)

$50K

Increase pharmacy co-pay for Kaiser plan from the current $10 generic / $20 brand to $10 generic / $25 brand

Implement three tier co-pay for the PPO plan from the current $10 generic / $20 brand to $10 generic / $25 brand formulary / $50 brand non-formulary

Savings estimate calculated based on USF’s utilization of pharmacy drugs

9Pharmacy Step Therapy Programs

(w/ MD ability to override use of generics)

$25K to $40K

Savings estimate provided by the Advisory Board

10 Health Plan Waiver $36K to ($150K)

Decreasing the waiver credit from $40 / month to $0 / month yields $36K in savings assuming no employees enroll in a medical plan as a result of this change

Increasing the waiver credit from $40 / month to $150 / month will cost $150K assuming no employees drop coverage as a result of this change; 10 additional waivers are need to recuperate the projected $150K annual cost

Medical



# InitiativeProjected

Annual SavingsAssumptions

11 Implement Monthly Contributions $150K to $300K

Assumed all employees currently enrolled in a dental plan will pay contributions, not change to design or network

10% EE cost share / 15% dependent cost share yields $150K in annual savings

20% EE cost share / 30% dependent cost share yields $300K in annual savings

12Modify Plan to Create a High/Low

Option$175KCost

Benefits enhanced for the current dental plan (High Option) Annual maximum and orthodontia lifetime maximum increased

from $1,500 to $2,000 Dental implants covered at 50% subject to a lifetime maximum High Plan requires employee contributions Low Plan does not require employee contributions The $175K cost can be offset by employee contributions

Dental





13 Wellness $25K to $50K

Assumed 30% of employees participate in wellness programs Assumed the cost of wellness programs is $8 PEPM Projected a 1.0% savings to high cost claims due to better

care and case management Savings are for PPO plan only

14 Life Insurance Coverage$125 to $150K

Cost

Assumed increasing the amount of basic life insurance from 1x

pay to either 2x or 3x pay

Other





15Benefit Waiting Period and

Remove Payback$600K

The following is the annual tuition savings based on each reward based on current utilization:

2 year eligibility period: $600,000

16 Limiting Eligibility $180K - $1.8M

The following is the annual tuition savings based on each reward based on current utilization:

Dependent UG tuition remission only: $1.8 Million Limiting degrees to 2 per family: $180,000

Other Tuition Remission





17Change Income Basis to

Household Income$50K

The household limits were calculated by doubling the Associate salary level at Step 5 and Step 8 and adding 10%

Assumed 10% of employees will become ineligible for the childcare subsidy with the household limit requirement

18 Decrease Child Care Funding $150K-$250K

Assumed no change in utilization Assumed a 15%-30% reduction in the monthly subsidy amount

across all employee groups

19 Secondary Caregiver$385KCost

Assumed there is 1.5 child per employee who are currently receiving the child care subsidy

Assumed the primary care giver is on vacation or is ill 20 days in a year

Assumed the rates for a secondary care giver is $25 / hour Assumed benefit is only available to Faculty / Librarians

Childcare Subsidy



Commuter Benefits


Annual Savings

Assumptions

20 Monthly Checks $22K

Assumed no change in utilization of benefits The monthly stipend for employees who do not have a parking

permit is reduced from the current $65 / month to $60 / month



Retirement Benefits

# InitiativeProjected Annual Savings

(Cost)Assumptions/Caveats

21 Automatic Enrollment $0

New offeringNo savings/cost as impact only to employee deferrals unless match formula implementedNeed to determine recipient vendor and change nature of relationship (employer vs. employee)May offer on a selective non-discriminatory basisNeed to determine default election %Participant notice requirement applies

22Adding Employer Match and/or Employer Contribution

TBD,Addn. Cost if Employer

Match Added

New offeringNo savings/cost as impact only to employee deferrals unless match formula implementedMay offer as an opt-in programIf elected as an automatic feature, need to determine % of increase and timingParticipant notice requirement applies if automatic feature



Employer Match andEmployer Contribution**Current Employer Contribution is a Money purchase pension employer contribution of 10% up to and 12% above Social Security Wage Base

A. USF contributes 10%, plus matches 50% of 1st 2% of pay deferred

B. USF contributes 8%, plus matches 40% of 1st 5% pay deferred

C. USF contributes 10%, plus matches 100% of 1st 2% of pay deferred

D. USF contributes 8%, plus matches 100% of 1st 2% of pay deferred

A. Cost: $513,000

B. Savings: $875,000

C. Cost: $1,190,000

D. Savings: $775,000

Employer Match New offering Immediate eligibility (same as employee deferrals) Alternatives A, C, & D: 67% saving >=1% increase to save

2%, 33% of non-savers join and save 2% Alternative B: 67% saving >=3% increase to save 5%, 33%

of non-savers join and save 5% Annual compliance testing required Employer Contribution No change to eligibility Removal of additional contribution on pay over the Social

Security Wage Base for all employees Reduction of benefits would require 204(h) notice

# InitiativeProjected Annual Savings

(Cost)Assumptions/Caveats

Retirement Benefits


Out-of-Network Coinsurance

70% up to OOP Max

$5,950 per individual$11,900 per family

Illustrative Account-Based Plan with Health Savings AccountIllustrative Account-Based Plan with Health Savings Account

In-NetworkCoinsurance

90% - 100% up to OOP Max


100% coverage after OOP Max

100% Medical Preventive Care

Deductible(In & Out-of-Network, cross-applied)


• 100% coverage for preventive care provides a generous up-front benefit

• More substantial deductible encourages member accountability for health care choices

• Deductible can be offset by HSA funds (including incentive dollars for wellness program participation)

• Employees have ownership over HSA dollars and tend to use them more judiciously– Offers triple-tax advantage– Balance rolls over to next year– Savings component allows employees to

plan for the future and invest excess funds, if they wish

• 90 - 100% in-network coverage after deductible & out-of-network Out of Pocket Maximum offers protection to those with serious health conditions. OOP Maximums represent 2011 Maximum allowed out of pocket limits

100% Rx Preventive

Care

Deductible, Coinsurance

and Rx costs can be

offset by HAS funds

(with or without

employer seed) &

Incentives


Plan Designs PPO (High and Low) and ABHPPlan Designs PPO (High and Low) and ABHP

Plan Feature In-Network Out-of-Network3 In-Network Out-of-Network3 In-Network Out-of-Network3

Deductible and Out-of-Pocket

Annual Deductible -- Individual

Annual Deductible -- Family

Annual Out-of-Pocket Maximum -- Individual $8006 $2,4006

Annual Out-of-Pocket Maximum -- Family $2,4006 $7,2006

Lifetime Maximum

Health Savings Account (HSA)2

Annual USF HSA Contribution

- Single Employee Only Coverage

- Other Coverage Level

Preventive Care

Well-Child Exams 10% (deductible waived) 30% after deductible 30% (deductible waived) 50% after deductible 10% (deductible waived) 30% after deductibleWell-Adult Exams No charge No charge No charge No charge No charge No chargeMedical Benefits

Primary Care Physician Office Visit $20/visit7 (deductible waived) 30% after deductible $20/visit7 (deductible waived) 50% after deductible $20/visit7 (deductible waived) 30% after deductible

Specialist Office Visit 10% after deductible 30% after deductible 30% after deductible 50% after deductible 10% after deductible 30% after deductible

Outpatient Lab and X-Ray (office visit copay may apply)

10% after deductible 30% after deductible 30% after deductible 50% after deductible 10% after deductible 30% after deductible

Therapies (physical, speech, occupational, cardiac)

10% after deductible(24 visits maximum per year)

30% after deductible(limited to $25/visit)





Hospital Benefits

Emergency Care (copay waived if admitted)$50 copay per visit, then 10% after

deductible$50 copay per visit, then 10% after



deductible$50 copay per visit, then 10%

after deductible$50 copay per visit, then 30%

after deductible

Urgent Care 10% after deductible 30% after deductible 30% after deductible 50% after deductible 10% after deductible 30% after deductible

Inpatient Hospital 10% after deductible 30% after deductible5 30% after deductible 50% after deductible5 10% after deductible 30% after deductible5

Outpatient Surgery 10% after deductible 30% after deductible5 30% after deductible 50% after deductible5 10% after deductible 30% after deductible5

Mental Health/Substance Abuse

Inpatient 10% after deductible 30% after deductible 30% after deductible 50% after deductible 10% after deductible 30% after deductible

Outpatient $20/visit7 (deductible waived) 30% after deductible $20/visit7 (deductible waived) 50% after deductible $20/visit7 (deductible waived) 30% after deductible

Prescription Drugs(Retail and Mail Order)

Generic $10 copay for generic drugs$10 copay plus 50% of the maximum

amount allowed4 $10 copay for generic drugs$10 copay plus 50% of the maximum

amount allowed4 $10 copay for generic drugs$10 copay plus 50% of the

maximum amount allowed4

Brand-name8 $20 copay for brand-name drugs$20 copay plus 50% of the maximum

amount allowed4 $20 copay for brand-name drugs$20 copay plus 50% of the maximum

amount allowed4 $20 copay for brand-name drugs$20 copay plus 50% of the

maximum amount allowed4

Plan Value 9

3 All out-of-network care is subject to reasonable and customary (R&C) charges to the portion of the amount charged by a health care provider that the plan will consider for payment. You pay any amounts that exceed the R&C charge.

92.7% 86.7% 92.7%

9 Plan value represents the percentage of the allowable cost covered by the plan.

4 Including costs in excess of the maximum amount

8Drugs indicated as non-preferred on the preferred Drug Program list may be dispensed when the physician has specified "dispense as written" (DAW) or when it has been determined that the brand name drug is medically necessary for the member.

1 Deductible and out-of-pocket expenses shown here follow the 2011 IRS requirements of minimum annual deductible of $1,200 for individual and $2,400 for family, and maximum out-of-pocket expenses of $5,950 for individual and $11,900 for family.2 Figures are based on the 2011 IRS requirements for maximum annual HSA contributions of $1,200 for individual coverage and $2,400 for family coverage. These limits include both employee and employer contributions.

5 For California facilities, a discount applies if the facility has a contract with Anthem Blue Cross for fee-for-service business. For California facilities without a contract, covered expense for non-emergency hospital services and supplies is reduced by 25%, resulting in higher out-of-pocket costs for members.6 Out-of-pocket maximums: $8,000 in total Anthem Blue Cross payments per individual. The following do not apply to out-of-pocket maximum: the member remains responsible for deductible listed above, for non-PPO providers and other health care providers, and costs in excess of the covered expense.7The dollar copay applies only to the visit itself. Additional 10% coinsurance applies for any services performed in office (i.e, X-ray, lab, surgery)

$250

$750

$500

$1,500

$2,100

$6,300

PPO Plan Low (Proposed)

$2,700 (including deductible)

$5,400 (including deductible)

$650

$1,300

Unlimited

2012 Plan Year

Unlimited

PPO Plan High (Current)Account Based Health Plan (ABHP)

High Deductible Health Plan with Health Savings Account1

$1,200

$2,400

Unlimited

Illustrative Example

* See next slide for comparable Kaiser benefit coverage.


Kaiser HMO - Benefit PlanKaiser HMO - Benefit PlanKaiser HMO

Plan Feature In-Network OnlyDeductible and Out-of-Pocket

Annual Deductible -- Individual NoneAnnual Deductible -- Family NoneAnnual Out-of-Pocket Maximum -- Individual $1,500 per calendar yearAnnual Out-of-Pocket Maximum -- Family $3,000 per calendar yearLifetime Maximum NonePreventive Care

Well-Child Exams1 $5 copay per visit

Well-Adult Exams $15 copay per visitMedical Benefits

Primary Care Physician Office Visit $15 copay per visitSpecialist Office Visit $15 copay per visitOutpatient Lab and X-Ray (office visit copay may apply)

No charge

Therapies (physical, speech, occupational, cardiac)

$15 copay per visit

Hospital Benefits

Emergency Care (copay waived if admitted) $50 copay per visitUrgent Care $15 copay per visitInpatient Hospital No chargeOutpatient Surgery $15 copay per procedureMental Health/Substance Abuse

Inpatient No charge

Outpatient $15 copay per individual visit

$7 copay per group visitPrescription Drugs(Retail and Mail Order)Generic $10 copayBrand-name $20 copaySupply Up to 100-day supply1 Through age 23 months

Contribution Scenario

Annual SalaryCurrent 2011

Monthly Contributions

Proposed 2011 Monthly

Contributions*

$ Increase / (Decrease)

Current 2011 Monthly

Contributions


Contributions*



Contributions


Contributions*


EE Only 33.48$ 39.20$ 5.72$ 49.60$ 39.20$ (10.40)$ 35.96$ 39.20$ 3.24$ EE + 1 137.65$ 138.56$ 0.91$ 121.53$ 138.56$ 17.03$ 143.85$ 138.56$ (5.29)$ EE + 2 246.77$ 247.35$ 0.58$ 163.69$ 247.35$ 83.66$ 259.17$ 247.35$ (11.82)$ EE Only 29.70$ 31.04$ 1.34$ 41.58$ 31.04$ (10.54)$ 27.32$ 31.04$ 3.72$ EE + 1 117.61$ 120.79$ 3.18$ 108.10$ 120.79$ 12.69$ 124.73$ 120.79$ (3.94)$ EE + 2 161.56$ 166.59$ 5.03$ 130.67$ 166.59$ 35.92$ 173.44$ 166.59$ (6.85)$

EE Only 48.36$ 49.79$ 1.43$ 53.32$ 49.79$ (3.53)$ EE + 1 178.57$ 180.79$ 2.22$ 187.25$ 180.79$ (6.46)$ EE + 2 274.05$ 286.71$ 12.66$ 305.05$ 286.71$ (18.34)$ EE Only 36.83$ 37.16$ 0.33$ 35.64$ 37.16$ 1.52$ EE + 1 131.86$ 133.77$ 1.91$ 138.99$ 133.77$ (5.22)$ EE + 2 190.07$ 187.38$ (2.69)$ 201.95$ 187.38$ (14.57)$

EE Only 54.56$ 53.66$ (0.90)$ 58.28$ 53.66$ (4.62)$ EE + 1 192.21$ 192.99$ 0.78$ 230.65$ 192.99$ (37.66)$ EE + 2 301.33$ 309.21$ 7.88$ 372.02$ 309.21$ (62.81)$ EE Only 43.95$ 43.00$ (0.95)$ 41.58$ 43.00$ 1.42$ EE + 1 146.12$ 148.41$ 2.29$ 180.57$ 148.41$ (32.16)$ EE + 2 204.33$ 215.27$ 10.94$ 247.09$ 215.27$ (31.82)$

Blue Cross PPO

Kaiser HMO

Blue Cross PPO

Kaiser HMO

100,000.00$

130,000.00$

N/A

Administrative StaffProfessor

N/A

OPE

Blue Cross PPO

Kaiser HMO

Administrative Staff

Associate Professor Administrative StaffOPE

Associate Librarian OPE

65,000.00$

Scenario 5A: Keep current pay band structure and eliminate differentiation across groups; keep current subsidy level and tier structure; no projected savings


* Proposed contribution formula applied to 2011 plan cost to illustrate impact of formula change





Contributions*



Contributions


Contributions*



Contributions


Contributions*


EE Only 33.48$ 46.08$ 12.60$ 49.60$ 46.08$ (3.52)$ 35.96$ 46.08$ 10.12$ EE + 1 137.65$ 179.03$ 41.38$ 121.53$ 179.03$ 57.50$ 143.85$ 179.03$ 35.18$ EE + 2 246.77$ 283.83$ 37.06$ 163.69$ 283.83$ 120.14$ 259.17$ 283.83$ 24.66$ EE Only 29.70$ 34.15$ 4.45$ 41.58$ 34.15$ (7.43)$ 27.32$ 34.15$ 6.83$ EE + 1 117.61$ 129.93$ 12.32$ 108.10$ 129.93$ 21.83$ 124.73$ 129.93$ 5.20$ EE + 2 161.56$ 178.38$ 16.82$ 130.67$ 178.38$ 47.71$ 173.44$ 178.38$ 4.94$

EE Only 48.36$ 46.08$ (2.28)$ 53.32$ 46.08$ (7.24)$ EE + 1 178.57$ 179.03$ 0.46$ 187.25$ 179.03$ (8.22)$ EE + 2 274.05$ 283.83$ 9.78$ 305.05$ 283.83$ (21.22)$ EE Only 36.83$ 34.15$ (2.68)$ 35.64$ 34.15$ (1.49)$ EE + 1 131.86$ 129.93$ (1.93)$ 138.99$ 129.93$ (9.06)$ EE + 2 190.07$ 178.38$ (11.69)$ 201.95$ 178.38$ (23.57)$

EE Only 54.56$ 46.08$ (8.48)$ 58.28$ 46.08$ (12.20)$ EE + 1 192.21$ 179.03$ (13.18)$ 230.65$ 179.03$ (51.62)$ EE + 2 301.33$ 283.83$ (17.50)$ 372.02$ 283.83$ (88.19)$ EE Only 43.95$ 34.15$ (9.80)$ 41.58$ 34.15$ (7.43)$ EE + 1 146.12$ 129.93$ (16.19)$ 180.57$ 129.93$ (50.64)$ EE + 2 204.33$ 178.38$ (25.95)$ 247.09$ 178.38$ (68.71)$

Kaiser HMO

Blue Cross PPO

Blue Cross PPO

Kaiser HMO

Blue Cross PPO

Kaiser HMO

N/A


N/A

OPE

65,000.00$

100,000.00$

130,000.00$

Associate Librarian Administrative Staff


OPE

Scenario 5B: Standardize employee contributions across all employee groups (salary levels and positions); keep current subsidy level and tier structure; no projected savings







Contributions*



Contributions


Contributions*



Contributions


Contributions*


EE Only 33.48$ 109.23$ 75.75$ 49.60$ 109.23$ 59.63$ 35.96$ 109.23$ 73.27$ EE + 1 137.65$ 248.04$ 110.39$ 121.53$ 248.04$ 126.51$ 143.85$ 248.04$ 104.19$ EE + 2 246.77$ 415.98$ 169.21$ 163.69$ 415.98$ 252.29$ 259.17$ 415.98$ 156.81$ EE Only 29.70$ 79.90$ 50.20$ 41.58$ 79.90$ 38.32$ 27.32$ 79.90$ 52.58$ EE + 1 117.61$ 192.28$ 74.67$ 108.10$ 192.28$ 84.18$ 124.73$ 192.28$ 67.55$ EE + 2 161.56$ 285.35$ 123.79$ 130.67$ 285.35$ 154.68$ 173.44$ 285.35$ 111.91$

EE Only 48.36$ 138.74$ 90.38$ 53.32$ 138.74$ 85.42$ EE + 1 178.57$ 323.64$ 145.07$ 187.25$ 323.64$ 136.39$ EE + 2 274.05$ 482.17$ 208.12$ 305.05$ 482.17$ 177.12$ EE Only 36.83$ 95.65$ 58.82$ 35.64$ 95.65$ 60.01$ EE + 1 131.86$ 212.94$ 81.08$ 138.99$ 212.94$ 73.95$ EE + 2 190.07$ 320.96$ 130.89$ 201.95$ 320.96$ 119.01$

EE Only 54.56$ 149.52$ 94.96$ 58.28$ 149.52$ 91.24$ EE + 1 192.21$ 345.48$ 153.27$ 230.65$ 345.48$ 114.83$ EE + 2 301.33$ 520.01$ 218.68$ 372.02$ 520.01$ 147.99$ EE Only 43.95$ 110.68$ 66.73$ 41.58$ 110.68$ 69.10$ EE + 1 146.12$ 236.25$ 90.13$ 180.57$ 236.25$ 55.68$ EE + 2 204.33$ 368.73$ 164.40$ 247.09$ 368.73$ 121.64$

Blue Cross PPO

Kaiser HMO

Blue Cross PPO

Kaiser HMO

N/A

Kaiser HMO

Blue Cross PPO


N/A

OPE

65,000.00$

100,000.00$

130,000.00$

Associate Librarian Administrative Staff


OPE

Scenario 6A: Keep current pay band structure and eliminate differentiation across groups; move contributions closer to overall peer group subsidy level (maintain three tier structure). Projected annual savings to USF: $1,000,000



Sustainable Benefits Task Force Presentation to USF Leadership Team May 11, 2011.

Documents

Transcript of Sustainable Benefits Task Force Presentation to USF Leadership Team May 11, 2011.