QUESTIONS & ANSWERS

THE NEED FOR CHANGE

Why are benefit plan changes necessary?

What goal is the University trying to achieve through the cost-sharing increases?

In such difficult economic times, why must employees pay more for health care?

Will these changes impact our ability to attract and retain qualified faculty and staff?

HEALTH CARE COST-SHARING

How will health care costs change?

How much will faculty and staff members contribute toward health coverage?

How will the costs be made more affordable for those earning lower wages?

When will the changes go into effect?

What are the new co-premium and co-pay rates?

When will 2010 rates for all U-M health plans be available?

Are prescription drug co-pay amounts changing?

Does the 70/30 cost-sharing ratio mean that individuals pay 30 percent of their total health care premiums once the changes are fully implemented?

If employees pay 30 percent of health care cost, would they pay 30 of the cost of hospitalization or other care?

Does the new cost-sharing ratio apply to current employees?

Will a part-time employee still be able to have health care coverage?

How many hours of work per week are required to be eligible for benefits?

Does the University have plans for using incentives to help reduce the growth of health care costs?

What considerations went into determining the health care co-pay and co-premium increases?

What can individual faculty and staff members do to help reduce or control our health care expenses?

Where can I find urgent care facilities when an emergency room visit is not necessary?

RETIREMENT SAVINGS PLAN

What changes will affect the Retirement Savings Plan?

Will current employees’ retirement savings plan contributions be affected?

When will the retirement savings changes go into effect?

UNDERSTANDING BENEFITS TERMS

What does “aggregate” employee contribution mean?

What are co-premiums?

What is a co-pay?

What is a deductible?

THE NEED FOR CHANGE

Why are benefit plan changes necessary?
Rising health care costs are threatening our ability to ensure long-term funding of our mission. Increasing at about 10 percent each year, health care is the fastest growing cost driver in the University budget, outpacing available funding and putting pressure on our ability to maintain the quality of our core programs. We must protect our ability to carry out our mission of providing world-class contributions to education, research, public service and patient care.

What goal is the University trying to achieve through the cost-sharing increases?
The core objective is to maintain our highly competitive health care benefit while helping to control the unsustainable growth in the University’s health care costs, which threatens our ability to carry out our core missions in education, research and patient care.

In such difficult economic times, why must employees pay more for health care?
We recognize adjustments such as these can be particularly challenging during a turbulent economic climate, and the challenge affects both individuals and the University. U-M’s annual rate of growth in health care costs has been about 10 percent a year, outpacing available funding and with no end in clear view. Without change, we will diminish our ability to carry out our missions in education, research, public service and patient care. A realistic approach was developed to balance the imperative to manage costs with our long-standing commitment to meeting the needs of our community and continue to offer highly competitive benefits.

Will these changes impact our ability to attract and retain qualified faculty and staff?
It is vital that we remain competitive to continue faculty and staff excellence. Our benchmarking work shows that we have room to make these adjustments and remain highly competitive with peer universities and health systems.

HEALTH CARE COST-SHARING

How will health care costs change?
Employees and retirees will contribute more to their health care costs than they do today to achieve the new aggregate ratio for cost sharing (i.e., the proportion the employee pays toward health care and the amount the University pays). Half of the increase in co-premium will occur in January 2010; the remainder in 2011. This cost-sharing change does not affect the coverage or types of health plans offered.

How much will faculty and staff members contribute toward health coverage?
We will not know the actual premium rates for 2010 until August, so we have created estimates to show what the employee and University contributions to U-M Premier Care would be if these changes were in place today. The estimates are available on the Stewardship of Benefits Web site.

How will the costs be made more affordable for those earning lower wages?
The new plan will be structured with three salary bands so that employee costs will differ somewhat across tiers and lower-paid employees will pay somewhat less.  The bands will be based on the four quartiles of salary so the exact salary ranges that fall within each band will automatically adjust each year. Estimates of the salaries that fall into each band using 2008 data are available on the Stewardship of Benefits Web site.

*When will the changes go into effect?

Health Care Cost Sharing:

Jan. 1 2010: Changes to co-pays for office visits and emergency room visits will be made, along with one-half of the planned increases to employee contributions to health insurance premiums.

Jan. 1, 2011: The remaining one-half of the premium contribution increase will become effective.

Retirement Savings Plan Waiting Period:

Faculty and staff hired on or after Jan. 1, 2010 will have a one-year waiting period before receiving the University contributions toward the U-M Retirement Savings Plan. We will maintain the current ten-percent-of salary University contribution toward this benefit.

* Effective dates may differ for staff covered by a collective bargaining agreement. Please refer to the terms of the current agreement.

What are the new co-premium and co-pay rates?
The co-pay amount for an office visit will change from $15 to $20 and emergency room visit co-pays will change from $50 to $75 (co-pay is waived when admitted to the hospital for care). Co-pay increases will become effective on Jan. 1, 2010.

It is too soon to know the actual premium rates for 2010, but estimates to give you and idea of what the employee and University contributions to U-M Premier Care would be if these changes were in place today will become available on the Stewardship of Benefits Web site on March 20.

When will 2010 rates for all U-M health plans be available?
Exact premium rates for all U-M plans will be available on the Benefits Office Web site by August 15, 2009. Health plan descriptions and rate information also will be published in Open Enrollment materials in October when faculty and staff choose their benefits for the following calendar year.

Are prescription drug co-pay amounts changing?
No. The Committee on Sustainable Health Benefits recommended a co-pay increase from $30 to $45 for name-brand prescription drugs in the third tier of the U-M Prescription Drug Plan. However, the University’s executive vice presidents have deferred a decision on this change until 2011 when further study can be done to ensure we safeguard patients who may require certain drugs in that tier.

Does the 70/30 cost-sharing ratio mean that individuals pay 30 percent of their total health care premiums once the changes are fully implemented?
Generally no. Thirty percent is an “aggregate” number that represents the total contribution from all faculty, staff and retirees toward the cost of their premiums, co-pays, and deductibles (if any). The University contributes a greater percentage toward the coverage of employees and a lesser percentage toward the coverage of dependents to arrive at the aggregate contribution amount of 70 percent from the University and 30 percent in the aggregate from employees.

The actual amount contributed by the individual faculty or staff member or retiree will be affected by the health plan he/she chooses (rates vary by plan), the level of coverage chosen and the number of adult and/or child(ren) dependents covered.

If employees pay 30 percent of health care cost, would they pay 30 of the cost of hospitalization or other care?
No. The aggregate contribution of 30 percent is for the cost of health care premiums, co-pays (for prescription drugs, office visits, etc.) and deductibles. The medical expenses covered by a hospital stay, for example, are determined by the health plan that you choose during Open Enrollment. If you choose U-M Premier Care, for example, and are admitted to an in-network hospital for necessary or emergency care, you are likely to have little or no out-of-pocket expenses for your care during that hospital stay. And that will not change based on our move to a 70/30 ratio for the aggregate cost of premiums, co-pays and deductibles.

Does the new cost-sharing ratio apply to current employees?
Yes. The cost-sharing ratio will apply to current employees, retirees and future employees.

Will a part-time employee still be able to have health care coverage?
Yes. Part-time benefits-eligible employees will continue to have access to the full choice of U-M health plans, but will receive a University contribution toward premiums that will be 80 percent of the University contribution made for full-time staff in the lowest of the three salary bands (Band 1). View sample salary bands by visiting the Stewardship of Benefits Web site on March 20.

How many hours of work per week are required to be eligible for benefits?
Regular appointments of 20 to 31.9 hours per week are eligible for benefits and will receive the University contribution amount for part-time employees (80 percent of the University contribution for full-time employees in salary Band 1). Appointments of 32 or more hours per week will be considered full-time, and will receive the full University contribution toward health care benefits. Both full- and part-time employees will have the same choice of U-M health plans and can cover eligible dependents.

Does the University have plans for using incentives to help reduce the growth of health care costs?
Yes, we’re very hopeful about the potential of some incentives. Through April 2009, for example, all faculty and staff are able to take part in voluntary MHealthy Wellness Assessments, which offer a convenient means of checking cholesterol, blood pressure, blood sugar and other measures and combining that information with health history and lifestyle information to get an overall picture of individual wellness and to plan for improvement. Cash incentives to those who complete the assessment have helped encourage benefits-eligible faculty and staff to take part because of the long-range potential for better containing costs that is possible by improving community health. Learn more at www.mhealthy.umich.edu. We’ll carefully consider more programs that utilize incentives in the future.

What considerations went into determining the health care co-pay and co-premium increases?
Like most U.S. employers, the University of Michigan faces 8-10 percent or more annual increases in health care costs, resulting in larger amounts of resources being devoted to health care insurance. This creates upward pressure on student tuition and makes resources less available for salaries and other important priorities.

The Committee on Sustainable Health Benefits operated with a set of principles and objectives to:

• Maintain a choice of comprehensive health care plans plans with excellent levels of coverage.
• Devise the means to achieve a new health care cost-sharing ratio of an aggregate 70 percent University contribution and 30 percent employee/retiree contribution.
• Preserve access to U-M plans for those currently eligible.
• Help make the costs more affordable for those earning lower wages.
• Protect access to care and affordability for the coverage of children
• Continue to provide health care benefits that offer equal or greater value to our faculty and staff community than the averages for those offered by our peer universities and health systems.

What can individual faculty and staff members do to help reduce or control our health care expenses?
There are many helpful actions you can take. First, take an active role in Open Enrollment. As you might consider your life or homeowners insurance each year to make sure your coverage meets changing needs, consider the health plan you elect as well, to be sure you select the lowest cost plan that fully meets your current needs. Utilize primary care physicians or urgent care facilities before an emergency room in cases where the treatment need is not an emergency. Choose FDA-approved generic medications instead of brand-name drugs – the cost difference can be enormous.

The MHealthy program was created to support our commitment to creating a community of health through programs of prevention, early intervention and wellness. HealthSense is a new Web site that offers health cost information and advice on how individuals can save money and be prudent purchasers of health care products and services to help meet the challenge.

For more information about MHealthy, visit: www.mhealthy.umich.edu
For more information about HealthSense, visit: www.healthsense.umich.edu

Where can I find urgent care facilities when an emergency room visit is not necessary?
There are numerous participating urgent care centers in Southeast Michigan, and hours of operation vary by clinic. The following table provides specific information on office hours, member cost and plan participation for urgent care centers in Washtenaw County. For center in other area counties, please consult your health insurance plan's website.

RETIREMENT SAVINGS PLAN

What changes will affect the Retirement Savings Plan?
Future employees hired after Jan. 1, 2010 will wait one year to receive University contributions to their retirement savings accounts. They can contribute their own dollars toward retirement savings from their first day of employment.

Will current employees’ retirement savings plan contributions be affected?
No. The retirement savings plan waiting period has no impact on current faculty and staff. A one-year waiting period for receiving University contributions will apply to future faculty and staff hired after Jan. 1, 2010. And the University is maintaining its current ten-percent-of-salary rate of contribution to the retirement savings plan for all participants.

When will the retirement savings changes go into effect?
Faculty and staff hired on or after Jan. 1, 2010 will have a one-year waiting period before receiving the University contributions toward the U-M Retirement Savings Plan. We will maintain the current ten-percent-of salary University contribution toward this benefit.

UNDERSTANDING BENEFITS TERMS

What does “aggregate” employee contribution mean?
The aggregate employee contribution is the total average percentage of costs paid by employees toward premiums, co-pays and deductibles. If the goal is 30 percent aggregate contribution from employees, the sum total of employee and retiree payments toward premiums, co-pays and deductibles will equal 30 percent of the total cost of health care premium cost. The University contributes the remaining 70 percent of the total cost. The University will contribute a greater percentage toward the coverage of employees and retirees than it does toward the cost of coverage of dependents, but the aggregate University contribution will be 70 percent.

What are premiums and co-premiums?
The premium is the total amount paid each month to the insurance company for the cost of your health insurance. The University covers most of this cost. The co-premium (also called employee contribution) is the amount you contribute each month toward the cost of the health insurance plan you select during Open Enrollment. In most cases, your co-premium is deducted on a pre-tax basis from your paycheck.

What is a co-pay?
Co-pays are the amounts you pay toward health services when you visit the doctor or physical therapist, for example, or fill a prescription at the pharmacy.

What is a deductible?
A deductible is a set amount patients must pay before further medical expenses are covered by their health insurance plan. The Comprehensive Major Medical (CMM) plan is currently the only U-M plan that requires a deductible. However, the CMM plan currently requires no co-premium for employee-only coverage.