Post Retirement Medical Benefits

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					Advisory Report



Post Retirement Medical Benefits




        University Benefits Advisory Council

                           September 29, 2010
                                                     Table of Contents
Executive Summary ................................................................................................................... 3
Introduction ................................................................................................................................ 4
Post Retirement Medical Benefits .............................................................................................. 4
Summer, 2010, Special Charge to the UBAC ............................................................................. 5
UBAC Process to Develop the Report ........................................................................................ 5
UVM‘s Business Case for Change ............................................................................................. 6
Change in Government Accounting Standards........................................................................... 7
Detailed Approaches Reviewed by UBAC .................................................................................. 8
   Overview of the University of Vermont‘s Retiree Medical Program ......................................... 8
   Defined Benefit versus Defined Cost Approach ...................................................................... 8
   Expected Cost to the University .............................................................................................10
   Projected University Share of Post-Employment Benefit .......................................................11
   Approach 1 – Retain a Defined Benefit Approach..................................................................12
   Approach 2 – Service Based University Spending Account ...................................................18
   Approach 3 – Pay and Service Based University Spending Account .....................................23
   Approach 4 – Cap on University‘s Annual Per Retiree Cost...................................................28
Prevalence Data for Peers and Aspirants..................................................................................33
      Peer and Aspirant Institutions Represented .......................................................................33
   Medical Coverage After Retirement .......................................................................................34
   Dollar Cap on University Expense .........................................................................................35
   Type of Medical Coverage Provided ......................................................................................37
Retiree Medical Savings ...........................................................................................................38
Summary of Public Comment....................................................................................................40
Need for Employee Education...................................................................................................41
Conclusion ................................................................................................................................41
ADDENDA ................................................................................................................................43
      ADDENDUM 1                 Memo from President Fogel ...................................................................44
      ADDENDUM 2                 Detailed Descriptions of Savings Options ...............................................47
      ADDENDUM 3                 Assumptions Used for Calculations ........................................................50
      ADDENDUM 4                 Faculty Compensation Data ...................................................................51
      ADDENDUM 5                 University of Maine and Dartmouth College ............................................53
      ADDENDUM 6                 Background, Hewitt Associates ..............................................................55
      ADDENDUM 7                 Statement: UA and UE ...........................................................................57
      ADDENDUM 8                 Verbatim, Unattributed Feedback ...........................................................58
      ADDENDUM 9                 Glossary of Terms ..................................................................................96




                                                                              2010-10-07 UBAC Advisory Report, Page 2
Executive Summary

In May, 2010, President Fogel asked the University Benefits Advisory Council (UBAC) to
convene a special study project culminating in an advisory report: to review and discuss the
projected long-term impact on the UVM budget of our existing post-retirement medical benefits
program, and to identify and examine options for adjustments to the program that reasonably
balance its financial impact on the University and the needs of future retirees. Specifically, the
UBAC was asked to consider possible benefit changes, to identify and discuss associated pros
and cons of each, including likely impact on retirees, current employees, and prospective
employees, and to understand how similar higher education institutions are addressing these
issues. In our May 2010 Charge, it was emphasized that ――neither the UBAC process of
deliberation and recommendation nor its outcomes are intended to…operate in a manner in
conflict or inconsistent with the collective bargaining rights of UVM or any certified bargaining
representative of UVM employees….‖
Increasing costs associated with factors such as the aging of our population, escalating health
care costs, and Governmental Accounting Standards Board (GASB) requirements all impact the
University‘s projected long-term budget. From financial data presented, UBAC members agreed
that it is appropriate to explore alternative approaches to post retirement medical insurance. The
Council worked diligently over the summer months, with assistance from our consultants and
UVM‘s Human Resource Services experts, and reviewed different models and scenarios,
including evaluation of their impact on different employee groups, and associated pros and
cons. At the request of UBAC members, consultants sequentially developed additional models
to provide scenarios consistent with UBAC Guiding Principles; in all, nine different scenarios
were studied and presented, in four general categories. Models explored had a moderate-to-
high potential impact on cost and looked specifically at the impact on retirees, current
employees, and prospective employees. In Council discussions, special attention was given to
changes in benefit delivery that would help preserve affordability of benefits for lower paid
employees and to protect specific groups, such as employees with longer service. Models to
extend lifetime benefits were also developed and discussed. In addition, the Council considered
and emphasized that extending benefits to include future employees and those with fewer years
of service is essential for recruitment and retention. A compelling need for employee education
related to retirement planning and health care was identified.
Throughout the study process, the UBAC provided a variety of opportunities for input from
faculty and staff, through representatives serving on the Council, as well as through public
comment periods during all meetings, a dedicated web page, e-mail comments, and two
informational sessions. The Council notes that it was not able to explore all possible options in
the time allotted for research and study; other institutions engaged in similar processes may
have identified approaches that could also be useful for UVM‘s consideration. At the conclusion
of research and study, Council members emphasized that although models and options
presented have associated pros and cons, they generally fit with the UBAC‘s overall goal and
Guiding Principles. Council members hope this information will help in future discussions and
decisions related to Post-Retirement Benefits at UVM.




                                                      2010-10-07 UBAC Advisory Report, Page 3
Introduction

The University Benefits Advisory Council (UBAC), formed in the summer of 2007, serves in an
advisory capacity to the administration concerning policies and decision-making processes that
bear on the full range of employee benefits programs at UVM. Its work is guided in part by the
UVM Parameters for Compensation which set faculty and staff salary and benefits within
institutional constraints of projected budget allocations and available resources. The UBAC‘s
Health Insurance Working Group (HIWG) develops recommendations to the full Council specific
to health insurance offerings, balancing the competing considerations of employee choice,
access, equity and value with institutional needs of competitiveness, stability, cost controls and
administrative simplicity. In order to develop consistency in its consideration of specific
employee benefits, the UBAC developed a template that is applied by the Working Groups to
guide their deliberations:
      Guiding Principles for Evaluating the Benefit
      Why the benefit is important
      Changing demographics
      Other relevant descriptive information/data
      Target Population(s)
      Delivery mechanism(s) – are these working?
      Demographic and Utilization data – Trends – are there gaps?
      Cost(s) and Cost Issues
      Other institutions for comparison? Other approaches?
      Options/Suggestions/Recommendations

Post Retirement Medical Benefits

A special working group, combining the HIWG and the Retiree Access to Benefits Working
Group (RWG), was formed in the spring of 2008, when the discussion of health benefits focused
on post-retirement medical insurance. In 2008-2009, this group discussed the importance of
developing goals and guiding principles to provide decision support to the University
administration in its consideration of accounting principles and cost management options related
to this important benefit. In its June, 2009, report to the President and Provost, the UBAC
recommended the goal of continuing to offer health insurance for retirees while also protecting
the financial status of the University.
After identifying numerous relevant discussion topics in 2009-2010, such as cost, access,
equity, competitiveness with other institutions, sustainability, simplicity and responsibility of
employees and retirees, the Council offered a set of Guiding Principles to be applied as specific
administrative options are being considered:
      Protect current retirees from undue financial burden.
      Sustain access to a retiree medical benefit for current employees.
      Educate employees and help them plan for their retirement, including medical care.
      Support active employee engagement in health, emphasizing prevention and
       management of chronic health conditions.
      Consider and continuously review contracts, plan design and/or vendor changes to
       ensure that UVM has an efficient, effective and high-quality program, including
       pharmaceuticals.
      Continue to offer benefits competitive with peer institutions.
The UBAC offered to review, in detail, specific proposals in comparison to these principles in its
2010-2011 operating year.



                                                      2010-10-07 UBAC Advisory Report, Page 4
Summer, 2010, Special Charge to the UBAC

In late May, 2010, following a discussion of Post-Retirement Medical Benefits by the UVM
Board of Trustees‘ Committee of the Whole, President Fogel asked the UBAC to reconvene
immediately in order to embark on a study process culminating in a report, to be delivered no
later than September 29, 2010 ―on the council‘s best thinking with respect to the question of the
sustainability of the current program of post-retirement medical benefits, including an evaluation
of the problem and approaches to program adjustments that the Council deems worthy of
consideration‖. Referencing the Trustees‘ May 2010 discussion, the President articulated a
detailed charge to the Council regarding the content of the report (see Addendum).
During the month of June, the membership of the Council was reviewed, and vacant slots were
filled to ensure representation of all University constituencies for this important undertaking.
Using the UBAC template, the Chair, Dr. Jan Carney, and administrators serving as support and
subject matter experts for the Council, identified initial data needs for the upcoming discussions,
which were forwarded to Hewitt Associates, a nationally respected actuarial firm engaged by the
University to conduct analyses related to the study of the post-retirement medical benefit.

UBAC Process to Develop the Report

After determining the importance of opening its past and current documents to the University
community, the Council announced its meeting schedule for the summer, including four
meetings of the full UBAC and at least three additional meetings of the HIWG. Public comment
was expanded to 20 minutes of each meeting‘s agenda. A dedicated web page was developed
and announced to the community, including a web address to which observations, questions
and concerns could be addressed. In addition, the Staff Council and other constituent groups
were invited to forward staff and faculty issues and ideas to the UBAC via the web page.
Throughout the summer, meeting agendas were posted in advance to encourage public
attendance for discussions of the materials, which were posted on the web page following each
session. Following development of the Draft Project Report, additional time would be allowed for
public comment, individually and in two open informational meetings, as well as in meetings of
any employee constituent groups represented in the Council. Public comments have been
gathered throughout to ensure that the UVM community has the opportunity to provide
comments during the process (see Summary of Public Comment, p. 5).
After considering the background of the broader post-retirement medical benefit, including
relevant business practices of private industry and higher education, broadly, and in response to
our Charge, the UBAC asked to see prevalence data regarding the benefit among its peer and
aspirant institutions (see details below, p.30).
Data regarding competitiveness of UVM‘s faculty and staff compensation among peers and
aspirants were also reviewed. UVM separates non-faculty employees into three distinct groups
for wage and salary analysis based on the differences in the local, regional and national job
markets that are used for recruitment and retention purposes. The University‘s highest level
professional salaries average 4% above the national market median, mid-level professional
salaries average 5% above the national market median, and non-exempt wages/salaries
average 4% above the local market median. Data provided by the UVM Office of Institutional
Research show that average faculty salaries by rank and discipline in AY09 are competitive with
those of other state universities and land-grant colleges (See Addendum).




                                                      2010-10-07 UBAC Advisory Report, Page 5
In August, the Council focused its review on two strategies, adjusting eligibility and premium
cost-sharing, which could have moderate to high impact on cost, while preserving a post-
retirement medical benefit, and the consultants created study models to illustrate a number of
approaches (see Plan Design Approaches). Each approach was evaluated in relation to the
Guiding Principles as the Council refined its understanding of the impact of changes to eligibility,
plan design and delivery, as well as the approach of moving from an unfunded defined benefit to
a ―defined cost‖ plan that would require a reduced or more time-limited long-term cost
commitment on the part of the University.
For each approach, the impact of any change was evaluated for five groups of employees:
      those already retired;
      those actively working, but eligible to retire;
      those with service greater than five years but not yet eligible to retire;
      those with less than five years of service; and
      future hires.
Data were provided describing the number of employees in each group and the cost to the
University of providing the benefit. Actuarial estimates of the future cost impact of each model,
compared to the future cost of continuing the current benefit enabled the group to evaluate
which variables created a desirable and balanced effect. The dollar figures used to model the
approaches are hypothetical, for the purpose of demonstrating the differences among the
approaches evaluated by the Council, and the premium costs are annualized, representing the
cost for one individual, only. Spousal or civil union partner coverage and cost-sharing under
UVM plans is currently the same as that of the retiring employee.

UVM’s Business Case for Change

As described by Richard Cate, UVM Vice President for Finance and Administration, in his May
21, 2010, discussion report to the Board of Trustees, the University currently has in place a
defined benefit post-retirement medical plan, with coverage guaranteed, regardless of cost. He
goes on to state that the benefit is currently unfunded, and that it represents an unsustainable
liability because the pool of retirees will continue to grow at a rate that makes the cost
unmanageable due to both the increasing life expectancy of retirees and the size of the baby
boom generation, which is retiring now and over the next two decades. While Health Care
Reform may offer greater selection of coverage, it includes insufficient cost containment to
mitigate the rapidly escalating cost of health care. A future actuarial projection of costs for
current retirees and employees rapidly approaches a cumulative cost of $1.3 billion if the
University continues its pay-as-you-go, defined benefit approach, and adding the cost of new
employees further escalates the cost. The cost of health insurance increases annually, and it
represents nearly half of the total cost of benefits provided to UVM employees (see below).
Weighed against revenue projections and other operating costs of the University, modification of
the post-retirement medical benefit will be required in order to afford meaningful coverage for
UVM retirees.
According to the University of Vermont Financial Report, about 55% of UVM‘s total operating
budget is spent on compensation for faculty and staff. The data show that the growth in benefit
costs has outpaced the growth in payroll costs by 135% over the past 10 years. Medical and
Dental Benefits comprise nearly half of the projected FY2011 Benefit Expense Budget (see
chart, below).




                                                       2010-10-07 UBAC Advisory Report, Page 6
Change in Government Accounting Standards

Another important factor in reconsidering the retiree medical benefit is the manner in which the
benefits are valued from an accounting perspective. As a state entity, UVM operates according
to business rules generated by the Government Accounting Standards Board (GASB). One
such rule, called GASB45, requires the University to recognize in its financial statement the
current value of the future liability represented by its unfunded retiree medical insurance
obligation. This accounting method has replaced ―pay-as-you-go‖ accounting for this benefit,
resulting in many private and public sector employers modifying or eliminating their retiree
medical benefits programs in order to reduce the cost reflected on their balance sheets,
including changes to plan design, eligibility requirements and prefunding strategies. In addition,
the new reporting and disclosure accounting requirements may hurt the credit ratings of
employers who do not take remedial action.
These standards have put pressure on public employers, such as UVM to examine the financial
impact of current retiree health plans. A possible alternative may be to change the nature of the
retiree health benefit promise from one that is a promise of continued coverage to one that
provides access to coverage with a fixed health care cost sharing model, no longer tied directly
to medical cost inflation. It is to be expected that employers who continue to offer a retiree
medical benefit will be required to increase both the amount of the premium cost-share and the
risk of financing post-retirement health care to employees and retirees.




                                                      2010-10-07 UBAC Advisory Report, Page 7
Detailed Approaches Reviewed by UBAC

Overview of the University of Vermont’s Retiree Medical Program
The University of Vermont provides faculty and staff with continued medical, prescription and
dental benefits after retirement. The cost of the benefit premiums are shared between the
retiree and the University based on the retiree‘s average pay at retirement. The percentage is
set at retirement, based on a graded schedule, with the retiree's share increasing as their pay
increases. For non-union retirees, the lowest contribution is 3% for anyone with average pay (3-
year average) below $30,507. The highest retiree contribution is 30% for anyone with pay over
$200,000. The concept is the same for the Union employees, except that for two of the Unions it
is based on their hourly rate rather than average pay. Prior to July 1, 1992, the criteria (or
eligibility) for continued benefits was to retire on or after age 55 with 10 or more years of service
with the University (55 and 10). In the 1990‘s, the University took steps to change the eligibility
for retirement.
      For those hired on or after July 1, 1997, the eligibility for benefits is age 60 or older with
       15 or more years of University service.
      For those hired prior to July 1, 1992, the eligibility for full benefits remained 55 and 10;
       however,
      For those hired between July 1, 1992 and July 1, 1997, there is a transition. They are
       still eligible to retire and receive benefits at 55 and 10; however, the full University
       contribution is only paid if the sum of their age and years of service equals 75 or more.
       For example: someone hired between July 1, 1992 and July 1, 1997 who retired at 55
       and 10 with $25,000 average earnings would pay 53% (3% plus 50%). If, instead, they
       wait 5 years to retire, their costs would only be 4% (assuming their average pay
       remained below $30,507).

Defined Benefit versus Defined Cost Approach
Two common approaches are used by universities and other employers for providing retiree
health care benefits. One is a defined benefit approach, where the benefit is defined in terms of
coverage provided rather than value. Typically, the retiree shares in the premium cost. This is
the current University approach.
The other approach is a defined cost design, where the university‘s benefit is defined by a dollar
level of commitment. The most common ways to do this are: (1) to define the cost going in, such
as with a pre-funded defined contribution arrangement, or (2) to define the cost going out with
lifetime maximums, premium sharing caps, and fixed retirement accounts. Using this second
method it is common to combine a defined benefit design with annual or lifetime limits on the
benefit cost commitment.




                                                       2010-10-07 UBAC Advisory Report, Page 8
Defined Benefit Approach                     Defined Cost Approach

Current University of Vermont approach       The University defines commitment; benefit
                                             is not ―open-ended‖
Pay-As-You-Go with associated liability
                                                Examples include hard/soft caps;
Risk of future cost increase is mostly the      service-based dollars; Access Only
University's responsibility                     (no premium sharing)

  The University's premium share ranges      Shifts risk of future cost increase to
  from 70% to 97% depending on the           participants
  retiree’s base salary at retirement
                                             Can be done with or without prefunding
Less participant incentive to choose more
cost-effective treatment options and/or to   Prefunding would require UVM to set aside
make more efficient health care choices      cash

University periodically reviews design       Without prefunding UVM establishes
strategy, vendors, and cost-sharing to       commitment and creates obligation
keep the benefit sustainable                 accounts

                                             Accounting entries exist to benefit
                                             participants, but do not require cash to be
                                             set aside

                                             Retirees draw on account on a tax-free
                                             basis to cover health plan premiums, out-
                                             of-pocket costs, and other qualified
                                             expenses




                                              2010-10-07 UBAC Advisory Report, Page 9
Expected Cost to the University
Based on typical actuarial assumptions for longevity, retirement patterns, pre-retirement
turnover, etc., the benefit cost to the University for the current plan population approaches $1.45
billion. This amount includes all current retirees and dependents along with all current faculty
and staff who are, or may become, eligible for these benefits in the future. It does not include
any future hires who under the current program may eventually become eligible for benefits
under the program. See the back of the report for more information on the assumptions used.
The chart below provides a breakdown of the $1.452 billion by segments of the plan‘s current
population. The left most (green) column is for those already retired and their eligible
dependents. For this group, the expected benefit cost to the University is $259.9 million which is
split as $104.3 million for those currently under age 65 and $155.6 for those over 65. For each
group we have provided the number of participants along with the average age.
The active population was segmented into faculty and staff who have met the eligibility to retire
(yellow) but are continuing to work at the University. For this segmentation, the age 55 and 10
years of service eligibility was used for employees hired prior to July 1, 1992. Those not yet
eligible to retire were divided into three service based groups, those with over 15 years of
service, those with between 10 and 15 years or service and those with less than 5 years of
service. For these segmentations, only service with the University was used. This is the same
service used under the plan for determining benefit eligibility.

                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $199.4M                        $422.0M                           $383.0M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




The graph below shows how the benefits are expected to be paid on a year-by-year basis.
Since it does not include those not yet hired, there is a ―run out‖ point when all the current
faculty and staff‘s life expectancy runs out. However, since the program is open and ongoing,
there will be new hires to replace future retirees and we would actually expect the payouts to
continue the slope upward after 2036. Therefore, while this closed group forecast tops out at
around $38 million, we would expect an open group forecast to continue to grow well past the
$38 million.
Consistent with the above segmentation chart, we have layered the costs by the six groups from
the chart. For this chart, each year we have layered the groups on top of each other to build to
the total benefit cost for the year. This differs from the other graphs in this report where we
―place‖ one approach against another.




                                                                                   2010-10-07 UBAC Advisory Report, Page 10
Projected University Share of Post-Employment Benefit


                                                          Projected University's Share of Postemployment Benefits

                                            $40
                                 Millions




                                                                                                                                       Actives not yet eligible to retire
                                                                                                                                       with less than 5 years of
                                            $30                                                                                        service
   University's Share Per Year




                                                                                                                                       Actives not yet eligible to retire
                                                                                                                                       with 5-15 years of service

                                                                                                                                       Actives not yet eligible to retire
                                                                                                                                       with 15+ years of service
                                            $20
                                                                                                                                       Actives Eligible to Retire


                                                                                                                                       Current Retirees under 65

                                            $10
                                                                                                                                       Current Retirees over 65




                                             $0

                                                  09 012 015 018 021 024 027 030 033 036 039 042 045 048 051 054 057 060 063 066 069
                                             20     2   2   2   2   2   2   2   2   2   2   2   2   2   2   2   2   2   2   2   2
                                                                                          Year




                                                                                                                    2010-10-07 UBAC Advisory Report, Page 11
Approach 1 – Retain a Defined Benefit Approach

Overview
Under Approach 1, the University retains a Defined Benefit approach but reduces the
University‘s share of the premium cost. Under Approach 1A, the program is temporary with a
transition to access only. For current retirees/beneficiaries and those already eligible to retire,
there is no change to the benefits or the pay based premium sharing arrangement. New hires
and those with less than 5 years of service with Vermont will have access to a group plan and
pricing when they retire. This will be provided at no benefit cost to the University.
At transition, those with 5 or more years of service but who are not yet eligible to retire will be
provided a transition benefit. The transition benefit will be based on how close someone is to
retirement. Those closest will be provided higher benefits than those farther from retirement.
Under the transition, the University retains the pay based sharing schedule but with an
additional reduction in the University's share based on how far the member currently is from
retirement eligibility. This avoids any significant "cliffs" with this segment of the University's
population since the closer a member is to retirement eligibility, the smaller this reduction will
be. Under the examples below, the member‘s share is increased by 2% for each year they have
remaining at transition to retirement eligibility.

Approach 1A Examples – Transition to Access Only

                Years to       Transition
  Age &       Retirement     Contribution         75% of     Pay-Based     Retiree Total    University’s
 Service       Eligibility    (using 2%)        Final Pay   Contribution   Contribution    Contribution
 60 & 14                1             2%         $30,000             8%            10%             90%
 52 & 20                8            16%         160,000            30%            46%             54%
 35 & 10               25            50%          75,000            18%            68%             32%
 62 & 25                0             0%          35,000            10%            10%             90%
 25 & 5                35            70%          95,000            22%            92%              8%


Under Approach 1B, the University continues an ongoing Defined Benefit approach. The
University retains the pay based sharing schedule but with a decrease in the University
contribution percentage and therefore an increase in the retiree contribution. The schedule
starts at a retiree contribution percentage of 25% with the percentage increasing 4% per year
for each increase in the current pay schedule. The schedule was also expanded to include
adjusted pay levels up to $180,000 (pre-retirement average pay of $240,000). For example, a
nonunion participant with a Post Adjusted Base Salary of $100,000 previously contributed 24%
of the annual premium. Under the new schedule, this participant would contribute 69%.




                                                      2010-10-07 UBAC Advisory Report, Page 12
Approach 1B Examples – Decrease in the University’s Premium Share
Example 1 – 65 Year Old Retiree with 25 Years of Service at Retirement and a $32,000 Final Average Pay at Retirement
                             Retiree Contribution %       Retiree Cost    Retiree Contribution %       Retiree Cost
          Current Gross               Under Current      Under Current                    Under              Under
 Year     Premium Cost                    Schedule           Schedule              Approach 1B         Approach 1B
 2010             $5,000                        4%                 $200                      29%              $1,450
 2011              5,400                        4%                  216                      29%               1,566
 2025             11,476                        4%                  459                      29%               3,328

Example 2 – 65 Year Old Retiree with 25 Years of Service at Retirement and a $113,000 Final Average Pay at Retirement
                             Retiree Contribution %       Retiree Cost    Retiree Contribution %       Retiree Cost
          Current Gross               Under Current      Under Current                    Under              Under
 Year     Premium Cost                    Schedule           Schedule              Approach 1B         Approach 1B
 2010             $5,000                       20%               $1,000                      61%              $3,050
 2011              5,400                       20%                1,080                      61%               3,294
 2025             11,476                       20%                2,295                      61%               7,000

Example 3 – 65 Year Old Retiree with 25 Years of Service at Retirement and a $210,000 Final Average Pay at Retirement
                             Retiree Contribution %       Retiree Cost    Retiree Contribution %       Retiree Cost
          Current Gross               Under Current      Under Current                    Under              Under
 Year     Premium Cost                    Schedule           Schedule              Approach 1B         Approach 1B
 2010             $5,000                       30%               $1,500                      89%              $4,450
 2011              5,400                       30%                1,620                      89%               4,806
 2025             11,476                       30%                3,443                      89%              10,214



Observations
    1. Approach 1A is a transition approach and therefore, the benefit is determined at a fixed
       point in time, for example, years to retirement eligibility as of July 1, 2011.
    2. This transition ties the member‘s future cost increase to how far they are from
       retirement. Those farther away have more time to adjust savings patterns to help cover
       their increased share of the premium cost.
    3. Examples for Approach 1A are based on 2%; however, the University could use a
       different percentage.
    4. The transition benefit is based on years until the member is eligible to retire which is a
       function of both age and service. However, the 5 year ―cut-off‖ is based on service only.
    5. The examples use age 60 and 15 for all. However, the University could instead use 55
       and 10 for those hired before 1997. The ―downside‖ is that for someone hired before
       1997 who chooses to work until age 60, their transition contribution will be lower than
       someone hired after 1997 who also retires at age 60.
    6. Approach 1B can be used to continue an ongoing program.
    7. Both approaches retain the intent of providing the same benefit for dependents as for
       retired faculty and staff. That is, a retired member with a covered spouse will receive
       twice the University benefit as someone with single coverage.
    8. Under Approach 1B, retirement windows could be offered in the future by lowering the
       retiree‘s premium share for those who accept the window.
    9. We would expect either approach to result in changes in retirement patterns since the
       active premium schedule would be more favorable than the retiree schedule under either
       approach.


                                                                    2010-10-07 UBAC Advisory Report, Page 13
  10. This design could be paired with multiple levels of coverage for retirees to choose from.
      For example, the current coverage and one with lower cost. The University‘s dollar share
      could be based on the current level with the retiree able to lower their dollar premium
      share by choosing the lower cost plan.

Concerns
  1. Both approaches leave the University exposed to the long-term medical cost inflation
     pressures of a Defined Benefit approach.
  2. Failure to provide cost-sharing for retiree medical benefits of recent hires and future
     hires in approach 1A may impact recruitment and retention.
  3. Dramatic employee cost-sharing increases, as described in Approach 1B, do not
     significantly reduce the University‘s cost, over time.
  4. It is doubtful that adjustments to personal savings or retirement savings can be achieved
     to support the level of increased employee premium cost-sharing illustrated in Approach
     1B, creating a burden on employees.




                                                 2010-10-07 UBAC Advisory Report, Page 14
Approach 1 – Retain a Defined Benefit Approach


UBAC Guiding Principle               Ability of Approach 1 to Support Principle

Protect current retirees from        This alternative does not change the retiree medical program
undue financial burden               for current retirees and beneficiaries

Sustain access to a retiree          This alternative supports this principle
medical benefit for current
employees

Preserve a similar premium-          This alternative preserves a similar premium-sharing
sharing structure as for current     structure, though modifies it to decrease UVM cost sharing
employees                            support for actives who are not yet eligible to retire.
                                     Approach 1A removes the UVM financial commitment it for
                                     both actives with under 5 years of service with UVM and
                                     future hires

Educate employees and help           Employee education concerning the need to manage health
them plan for their retirement,      status during active employment, while saving sufficient
including medical care               funds for retiree medical is a critical communication
                                     component of all alternatives

Support active employee              Engaging active employees in managing overall health risk is
engagement in health,                an essential component of our active medical strategy and
emphasizing prevention and           critical to helping faculty and staff prepare for future
management of chronic health         postretirement medical needs. Approach 1 is focused on
conditions                           financing not plan design or health improvement initiatives.
                                     However, it does not constrain our ability to fulfill this
                                     principle and that we will leverage advances in Medicare, the
                                     private market, and University resources to fulfill these goals.

Consider and continuously            Aggressive due diligence for our active and retiree medical
review contracts, plan design        program transcends this specific project and is part of the
and/or vendor changes to             annual review and maintenance of our health care program
ensure that UVM has an
efficient, effective, and high-
quality program, including
pharmaceuticals

Continue to offer benefits           Approach 1 supports this principle and was developed in
competitive with peer institutions   recognition of where our peers and aspirants are along the
                                     Retiree Medical continuum (pre and post Medicare), as well
                                     as where the broader marketplace (especially institutions of
                                     higher education) is headed
                                     Currently the majority of our peers and aspirants utilize a
                                     Defined Benefit approach to retiree medical
                                     This percentage is expected to decrease in future years as
                                     institutions of higher education pursue strategies to manage
                                     expense and limit uncapped liability



                                                      2010-10-07 UBAC Advisory Report, Page 15
Approach 1 – Retain a Defined Benefit Approach
Current Program – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $199.4M                        $422.0M                           $383.0M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




Approach 1A – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $185.6M                        $354.4M                             $0M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




Approach 1B – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $124.5M                        $275.6M                           $237.8M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




                                                                                   2010-10-07 UBAC Advisory Report, Page 16
Approach 1 – Retain a Defined Benefit Approach



                                      Current Design vs Approach 1A & 1B


                                $40
                     Millions




                                $35

                                $30
University's Share




                                $25

                                                                                               Current Design
                                $20
                                                                                               Approach 1B
                                $15                                                            Approach 1A

                                $10

                                 $5

                                 $0
                                  09

                                  12

                                  15

                                  18

                                  21

                                  24

                                  27

                                  30

                                  33

                                  36

                                  39

                                  42

                                  45

                                  48

                                  51

                                  54

                                  57

                                  60

                                  63

                                  66

                                  69
                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20
                                                   Year




                                                                      2010-10-07 UBAC Advisory Report, Page 17
Approach 2 – Service Based University Spending Account

Overview
Under Approach 2, the University‘s benefit is based on an account at retirement. For current
retirees/beneficiaries and those already eligible to retire, there is no change to the benefits or
the pay based premium sharing arrangement. All other future retirees will be provided a
spending account to spend on medical benefits at retirement. The account will be based on a
set amount (for example, $5,000) times years of service with the University. Under this design,
retirees will retain the pay based sharing schedule. The account defines the University‘s lifetime
benefit cost and is ―University money with a promise to pay‖. The account is simply a way of
defining the University‘s benefit and therefore is unfunded with the same level of assurances as
the current arrangement, there are no rights of ownership for the retiree and, therefore, no
change in taxation and no portability. Unspent University money does not pass to the retiree‘s
beneficiary or estate. The account is a book entry and does not accrue interest.
Under Approach 2A the program is used as a transition to access only since those with less
than 5 years of University service and new hires would not be eligible for a benefit. Under
Approach 2B the program is offered to all faculty and staff as an ongoing replacement plan.
This type of approach is typically paired with multiple coverage levels (plans) for retirees to
choose from. For example, a low cost plan and a high cost plan. This will help a retiree manage
their University account ―spend down.‖ For example, retirees could choose to enroll in a lower
cost plan earlier in retirement, preserving more of their account balance in early years, and then
transition to a more costly plan with richer benefits later in retirement.

Examples

Example 1 – 20 Years of Service at Retirement and a $32,000 Final Average Pay at Retirement
                                Current Gross           Retiree                   Account at Year
   Year             Account     Premium Cost Contribution % University Cost                  End
    2010            $100,000            $5,000               4%            $4,800          $95,200
    2011              95,200             5,400               4%             5,184           90,016
    2023               7,000            10,400               4%             7,000                0

Example 2 – 20 Years of Service at Retirement and a $113,000 Final Average Pay at Retirement
   2010            $100,000             $5,000             20%            $4,000          $96,000
   2011               96,000             5,400             20%             4,320           91,680
   2025                5,400            11,500             20%               800             4600

Example 3 – 20 Years of Service at Retirement and a $200,000 Final Average Pay at Retirement
   2010            $100,000             $5,000             30%            $3,500          $96,500
   2011               96,500             5,400             30%             3,780           92,720
   2027                  800            12,700             30%               800                0




                                                    2010-10-07 UBAC Advisory Report, Page 18
Approach 2 – Service Based University Spending Account

Observations
   1. Since it‘s the same service based benefit for all, continuing to apply the cost sharing will,
      in effect, front load the University‘s benefits for the lower paid but may mean they would
      use up their account sooner.
   2. Offering the option of the account alternative will alleviate issues with anyone who may
      view this arrangement as preferable.
   3. Ad Hoc improvements could be provided by increasing the account credit. Retirement
      windows could be offered in the future by increasing the account multiplier and/or
      offering more service for those who accept the window.
   4. We would expect this to result in changes in retirement patterns since there is an
      incentive to continue to work and increase your retirement account. However, unlike
      Approach 1, where the continued employment may result from fear of a benefit reduction
      upon retirement, under this approach the continued employment results from a desire to
      increase their retirement account.
   5. Since the benefit is based on an account at retirement, retirees can outlive their account.
      At that point, the program essentially becomes "Access Only" with retirees paying the full
      cost of premiums.
   6. This design could be paired with multiple plans for retirees to choose from. For example,
      several lower cost options. This will help a retiree manage their University account
      ―spend down‖. For example, retirees could choose to enroll in a lower cost plan earlier in
      retirement, preserving more of their account balance in early years, and then transition
      to a more costly plan with richer benefits later in retirement.
   7. The University has the option of providing the same account multiplier for all (based on
      pay), or providing a larger account for those with eligible beneficiaries.

Concerns
   1. Using a fixed dollar, service-based multiplier in Approach 2A results in lower paid
      employees using up available spending account dollars sooner than more highly paid
      employees.
   2. Approach 2A fails to provide cost-sharing for retiree medical benefits of recent hires and
      future hires, which may impact recruitment and retention negatively.
   3. Available spending account dollars will not provide a lifetime benefit.




                                                    2010-10-07 UBAC Advisory Report, Page 19
Approach 2 – Service Based University Spending Account


UBAC Guiding Principle                   Ability of Approach 2 to Support Principle

Protect current retirees from undue      This alternative does not change the retiree medical
financial burden                         program for current retirees and beneficiaries

Sustain access to a retiree medical      This alternative supports this principle
benefit for current employees

Preserve a similar premium-sharing       This alternative does not accomplish this goal since it‘s
structure as for current employees       the same service based benefit for all. Continuing to
                                         apply pay based cost sharing will front load the
                                         University‘s benefits for the lower paid and may mean
                                         they would use up their account sooner.

Educate employees and help them          Employee education concerning the need to manage
plan for their retirement, including     health status during active employment, while saving
medical care                             sufficient funds for retiree medical is a critical
                                         communication component of all alternatives

Support active employee                  Engaging active employees in managing overall health
engagement in health, emphasizing        risk is an essential component of our active medical
prevention and management of             strategy and critical to helping faculty and staff prepare
chronic health conditions                for future postretirement medical needs

Consider and continuously review         Aggressive due diligence for our active and retiree
contracts, plan design and/or vendor     medical program transcends this specific project and is
changes to ensure that UVM has an        part of the annual review and maintenance of our health
efficient, effective, and high-quality   care program
program, including pharmaceuticals

Continue to offer benefits               Each alternative was developed in recognition of where
competitive with peer institutions       our peers and aspirants are along the Retiree Medical
                                         continuum (pre and post Medicare), as well as where the
                                         broader marketplace (especially institutions of higher
                                         education) is headed
                                         Currently the majority of our peers and aspirants utilize a
                                         Defined Benefit approach to retiree medical
                                         This percentage is expected to decrease in future years
                                         as institutions of higher education pursue strategies to
                                         manage expense and limit uncapped liability




                                                     2010-10-07 UBAC Advisory Report, Page 20
Approach 2 – Service Based University Spending Account

Current Program – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $199.4M                        $422.0M                           $383.0M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




Approach 2A – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $64.8M                         $108.7M                             $0M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




Approach 2B – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $64.8M                         $108.7M                           $76.9M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




                                                                                   2010-10-07 UBAC Advisory Report, Page 21
Approach 2 – Service Based University Spending Account


                                      Current Design vs Approach 2A & 2B


                                $40
                     Millions




                                $35

                                $30
University's Share




                                $25

                                                                                                Current Design
                                $20
                                                                                                Approach 2B
                                $15                                                             Approach 2A

                                $10

                                 $5

                                 $0
                                  09

                                  12

                                  15

                                  18

                                  21

                                  24

                                  27

                                  30

                                  33

                                  36

                                  39

                                  42

                                  45

                                  48

                                  51

                                  54

                                  57

                                  60

                                  63

                                  66

                                  69
                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20
                                                   Year




                                                                    2010-10-07 UBAC Advisory Report, Page 22
Approach 3 – Pay and Service Based University Spending Account

Overview
Under Approach 3, the University‘s benefit is based on an account at retirement. For current
retirees/beneficiaries and those already eligible to retire, there is no change to the benefits or
the pay based premium sharing arrangement. All others are provided a spending account to
spend on medical benefits at retirement. The account will be based on a scheduled amount
times years of service with the University. The initial account balance will be the product of
years of service with the University and an account multiplier based on pay. For example,
participants with final pay less than $32,000 will receive a multiplier of $6,000 while participants
with final pay in excess of $200,000 will receive a multiplier of $4,000.
The account defines the University‘s lifetime benefit cost and is ―University money with a
promise to pay‖. The account is simply a way of defining the University‘s benefit and therefore is
unfunded with the same level of assurances as the current arrangement, there are no rights of
ownership for the retiree and, therefore, no change in taxation and no portability. Unspent
University money does not pass to the retiree‘s beneficiary or estate. The account is a book
entry and does not accrue interest.
Under Approach 3A, the University combined the pay based multiplier with a fixed premium
share of 20%. However, the result was differences in the period over which the account would
last for those with similar service and retirement age. Under Approach 3B, retirees will also
retain the current pay based sharing schedule, but the retiree contributions are adjusted based
on the retiree‘s final average pay at retirement, in order to show how accounts might be
adjusted to last for a similar length of time.

Examples – Approach 3A
Example 1 – 20 Years of Service at Retirement and a $32,000 Final Average Pay at Retirement
                                 Current Gross           Retiree                   Account at Year
   Year              Account     Premium Cost Contribution % University Cost                  End
    2010              $120,000            $5,000             20%             $4,000         $116,000
    2011               116,000             5,400             20%              4,320          111,680
    2027                 6,600            12,700             20%              6,600                0

Example 2 – 20 Years of Service at Retirement and a $113,000 Final Average Pay at Retirement
   2010             $100,000             $5,000             20%            $4,000          $96,000
   2011                96,000             5,400             20%             4,320            91,680
   2025                 5,400            11,500             20%             5,400                 0

Example 3 – 20 Years of Service at Retirement and a $200,000 Final Average Pay at Retirement
   2010               $80,000            $5,000             20%            $4,000          $76,000
   2011                76,000             5,400             20%             4,320            71,680
   2023                 2,500            10,400             20%             2,500                 0




                                                      2010-10-07 UBAC Advisory Report, Page 23
Examples – Approach 3B

Example 1 – 20 Years of Service at Retirement and a $32,000 Final Average Pay at Retirement
                                 Current Gross           Retiree                   Account at Year
   Year              Account     Premium Cost Contribution % University Cost                  End
   2010              $120,000           $5,000               4%            $4,800         $115,200
   2011               115,200            5,400               4%             5,184          110,016
   2025                 6,500           11,500               4%             6,500                0

Example 2 – 20 Years of Service at Retirement and a $113,000 Final Average Pay at Retirement
   2010             $100,000             $5,000             20%            $4,000          $96,000
   2011                96,000             5,400             20%             4,320            91,680
   2025                 5,400            11,500             20%             5,400                 0

Example 3 – 20 Years of Service at Retirement and a $200,000 Final Average Pay at Retirement
   2010               $80,000            $5,000             30%            $3,500          $76,500
   2011                76,500             5,400             30%             3,780            72,720
   2024                 4,900            11,000             30%             4,900                 0


Observations
   1. This approach can be implemented as a transition to access only or offered to all and
      new hires as an ongoing program. Keeping it open helps with retention and recruitment.
      The cash projections (segment chart and graph) are based on continuing the program.
   2. Those already eligible to retire could be offered an account as an alternative. Offering
      this option will alleviate issues with anyone who views this as preferable.
   3. Ad Hoc improvements could be provided by increasing the account credit. Retirement
      windows could be offered in the future by increasing the account multiplier and/or
      offering more service for those who accept the window.
   4. We would expect this to result in changes in retirement patterns since there is an
      incentive to continue to work and increase your retirement account.
   5. Since the benefit is based on an account at retirement, retirees can outlive their account.
      At that point, the program essentially becomes "Access Only" with retirees paying the full
      cost of premiums.
   6. This design could be paired with multiple plans for retirees to choose from. For example,
      a low cost plan and a high cost plan. This will help a retiree manage their University
      account ―spend down‖. For example, retirees could choose to enroll in a lower cost plan
      earlier in retirement, preserving more of their account balance in early years, and then
      transition to a more costly plan with richer benefits later in retirement.
   7. The University has the option of providing the same account multiplier for all (based on
      pay), or providing a larger account for those with eligible beneficiaries.

Concerns
   1. Approach 3A results in differences in the period the account would last for employees
      with similar service and retirement age.
   2. Available spending account dollars will not provide a lifetime benefit.




                                                    2010-10-07 UBAC Advisory Report, Page 24
Approach 3 – Pay and Service Based University Spending Account


UBAC Guiding Principle                   Ability of Approach 3 to Support Principle

Protect current retirees from undue      This alternative does not change the retiree medical
financial burden                         program for current retirees and beneficiaries

Sustain access to a retiree medical      This alternative supports this principle
benefit for current employees

Preserve a similar premium-sharing       This alternative moves to an account based approach
structure as for current employees       that preserves a pay based benefit and premium-sharing
                                         structure that over time could transition to "Access Only"
                                         (depending on longevity of retiree)

Educate employees and help them          Employee education concerning the need to manage
plan for their retirement, including     health status during active employment, while saving
medical care                             sufficient funds for retiree medical is a critical
                                         communication component of all alternatives

Support active employee                  Engaging active employees in managing overall health
engagement in health, emphasizing        risk is an essential component of our Active Medical
prevention and management of             strategy and critical to helping faculty and staff prepare
chronic health conditions                for future postretirement medical needs

Consider and continuously review         Aggressive due diligence for our Active and Retiree
contracts, plan design and/or vendor     Medical program transcends this specific project and is
changes to ensure that UVM has an        part of the annual review and maintenance of our health
efficient, effective, and high-quality   care program
program, including pharmaceuticals

Continue to offer benefits               Each alternative was developed in recognition of where
competitive with peer institutions       our peers and aspirants are along the Retiree Medical
                                         continuum (pre and post Medicare), as well as where the
                                         broader marketplace (especially institutions of higher
                                         education) is headed.
                                         Many of our peers and aspirants utilized a Defined Cost
                                         approach or Access Only approach for Retiree Medical.
                                         This percentage is expected to grow in future years as
                                         institutions of higher education pursue strategies to
                                         manage expense and limit uncapped liability.




                                                     2010-10-07 UBAC Advisory Report, Page 25
Approach 3 – Pay and Service Based University Spending Account
Current Program – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $199.4M                        $422.0M                           $383.0M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




Approach 3A – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $66.7M                         $110.8M                           $77.7M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




Approach 3B – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65

           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of
               University's Share:   Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
                    $104.3M            Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                                     Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
                                        Projection of                Projection of                  Projection of                     Projection of
           Participant Count: 1082    University's Share:          University's Share:            University's Share:               University's Share:
           Beneficiary Count: 559          $187.7M                      $66.8M                         $110.8M                           $77.6M
             Average Age: 74.6

                 Projection of
               University's Share:
                    $155.6M




                                                                                   2010-10-07 UBAC Advisory Report, Page 26
Approach 3 – Pay and Service Based University Spending Account


                                      Current Design vs Approach 3A & 3B


                                $40
                     Millions




                                $35

                                $30
University's Share




                                $25

                                                                                                Current Design
                                $20
                                                                                                Approach 3B
                                $15                                                             Approach 3A

                                $10

                                 $5

                                 $0
                                  09

                                  12

                                  15

                                  18

                                  21

                                  24

                                  27

                                  30

                                  33

                                  36

                                  39

                                  42

                                  45

                                  48

                                  51

                                  54

                                  57

                                  60

                                  63

                                  66

                                  69
                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20
                                                   Year




                                                                    2010-10-07 UBAC Advisory Report, Page 27
Approach 4 – Cap on University’s Annual Per Retiree Cost

Overview
Provide a defined cost lifetime benefit based on an amount that is determined at retirement. For
current retirees/beneficiaries and those already eligible to retire, there is no change to the
benefits or the pay based premium sharing arrangement. For all others, the University‘s cost
would be determined by applying cost sharing to the premiums for a specified year (e.g., 2009
or 2010). Pay based cost sharing would be applied to this amount to determine the University
provided benefit. The remaining premium cost would be picked-up by the future retiree. Under
Approach 4A, the dollar amount is the same for all future retirees. The retiree is responsible for
the premium cost in excess of the fixed amount along with their pay based share.
Examples – Approach 4A
Example 1 – 20 Years of Service at Retirement and a $32,000 Final Average Pay at Retirement
             Current Gross          Premium               Retiree
 Year        Premium Cost           Cost Cap      Contribution %       University Cost                    Retiree Cost
 2010                $5,000            $4,500                  4%               $4,320                            $680
 2011                 5,400             4,500                  4%                4,320                           1,080
 2025                11,500             4,500                  4%                4,320                           7,180

Example 2 – 20 Years of Service at Retirement and a $113,000 Final Average Pay at Retirement
 2010                $5,000            $4,500                20%                $3,600                         $1,400
 2011                 5,400             4,500                20%                 3,600                          1,800
 2025                11,500             4,500                20%                 3,600                          7,900

Example 3 – 20 Years of Service at Retirement and a $200,000 Final Average Pay at Retirement
 2010                $5,000            $4,500                30%                $3,150                         $1,850
 2011                 5,400             4,500                30%                 3,150                          2,250
 2025                11,500             4,500                30%                 3,150                          8,350


Under Approach 4B, the amount of the defined cost is based on age and service at retirement
(points). The higher the points, the higher the University provided benefit. The maximum benefit
is for anyone with 90 or more points at retirement. For example, the maximum is 125% of the
2009 premium cost. For each point under 90, the defined cost is reduced by 2%. Therefore, if
the maximum amount is $5,750 for someone with 90 points, it would be $4,600 for someone
with 80 points. Pay based cost sharing is applied to this amount to determine the University
provided benefit. The retiree is responsible for the premium cost in excess of the fixed amount
along with their pay based share.
Examples – Approach 4B
Example 1 – 65 Year Old Retiree with 25 Years of Service at Retirement and a $32,000 Final Average Pay
                  Current Gross             Premium               Retiree
   Year           Premium Cost              Cost Cap       Contribution %       University Cost           Retiree Cost
   2010                  $5,000               $5,750                   4%                $4,800                   $200
   2011                    5,400               5,750                   4%                 5,184                    216
   2025                  11,500                5,750                   4%                 5,520                  5,980
Example 2 – 65 Year Old Retiree with 25 Years of Service at Retirement and a $113,000 Final Average Pay
   2010                   $5,000               $5,750                 20%                 $4,000               $1,000
   2011                    5,400                5,750                 20%                  4,320                1,080
   2025                   11,500                5,750                 20%                  4,600                6,900

Example 3 – 65 Year Old Retiree with 15 Years of Service at Retirement and a $113,000 Final Average Pay
   2010                   $5,000               $4,600                 20%                 $3,680               $1,320
   2011                    5,400                4,600                 20%                  3,680                1,720
   2024                   11,500                4,600                 20%                  3,680                7,820




                                                                   2010-10-07 UBAC Advisory Report, Page 28
Approach 4C is based on 4B but with annual increases to the University‘s Cost. The increases
are based on typical inflation rather than medical inflation which tends to be much higher. This
could be done with either a fixed increase percentage (for example, 3%) or tied to an external
inflation index such as CPI.
Examples – Approach 4C
Example 1 – 65 Year Old Retiree with 25 Years of Service at Retirement and a $32,000 Final Average Pay
                  Current Gross              Premium              Retiree
   Year           Premium Cost               Cost Cap      Contribution %       University Cost           Retiree Cost
   2010                  $5,000                $5,750                  4%                $4,800                   $200
   2011                    5,400                5,923                  4%                 5,184                    216
   2025                  11,476                 8,958                  4%                 8,600                  2,876

Example 2 – 65 Year Old Retiree with 25 Years of Service at Retirement and a $113,000 Final Average Pay
   2010                    $5,000               $5,750                 20%                $4,000               $1,000
   2011                     5,400                5,923                 20%                 4,320                1,080
   2025                    11,476                8,958                 20%                 7,167                4,310

Example 3 – 65 Year Old Retiree with 15 Years of Service at Retirement and a $210,000 Final Average Pay
   2010                    $5,000               $5,750                 30%                $3,500               $1,500
   2011                     5,400                5,923                 30%                 3,780                1,620
   2025                    11,476                8,958                 30%                 6,271                5,205


Observations
   1. Under this approach, the retiree is provided a lifetime benefit from the University which
      removes the risk that a retiree may "out live" his or her benefit.
   2. Applying the cap before cost sharing will continue to require those with higher pay to pay
      a greater amount for coverage.
   3. This approach may change future retirement patterns as, over time; the plan for actives
      will become relatively better than the retiree plan. Under Approaches 4B and 4C, much
      of that continued employment is to get to 90 points for the maximum benefit. However,
      4B and 4C may encourage faculty and staff to retire after attaining 90 points since there
      is no additional "credit" given for incremental age or years of service above 90 points.
   4. Retirement windows could be offered in the future by removing, or offering a higher cap
      for those who accept the window. Under Approaches 4B and 4C, it could also be done
      by providing extras points for those with less than 90.
   5. The University has the option of providing the same capped amount for all, or providing
      a higher cap for those with eligible beneficiaries.
   6. Since under approaches 4A and 4B the University‘s cost is a fixed amount, future
      retirees will be responsible for the full cost of inflation. Under 4C future retirees will be
      responsible for the ―excess‖ medical inflation that exceeds typical inflation.
   7. Under all four approaches, the initial cap could be set at a higher level, for example,
      125% of the 2009 premium cost. Under this option, a new retiree is not yet at the cap but
      will grow into reaching the cap in a few years.

Concerns
   1. The fixed dollar cap on University premium sharing, even with pay- and service-based
      differentials, results in unaffordable premium cost sharing for employees.
   2. For some faculty and staff 90 points may not be a realistic retirement age (e.g. Police
      Services).


                                                                  2010-10-07 UBAC Advisory Report, Page 29
Approach 4 – Cap on University’s Annual Per Retiree Cost


UBAC Guiding Principle                   Ability of Approach 4 to Support Principle

Protect current retirees from undue      This alternative does not change the retiree medical
financial burden                         program for current retirees and beneficiaries

Sustain access to a retiree medical      This alternative supports this principle
benefit for current employees

Preserve a similar premium-sharing       This alternative preserves a similar premium-sharing
structure as for current employees       structure, though UVM service based cost share is
                                         capped

Educate employees and help them          Employee education concerning the need to manage
plan for their retirement, including     health status during active employment, while saving
medical care                             sufficient funds for retiree medical is a critical
                                         communication component of all alternatives

Support active employee                  Engaging Active employees in managing overall health
engagement in health, emphasizing        risk is an essential component of our Active Medical
prevention and management of             strategy and critical to helping faculty and staff prepare
chronic health conditions                for future postretirement medical needs

Consider and continuously review         Aggressive due diligence for our Active and Retiree
contracts, plan design and/or vendor     Medical program transcends this specific project and is
changes to ensure that UVM has an        part of the annual review and maintenance of our health
efficient, effective, and high-quality   care program
program, including pharmaceuticals

Continue to offer benefits               Each alternative was developed in recognition of where
competitive with peer institutions       our peers and aspirants are along the Retiree Medical
                                         continue (pre and post Medicare), as well as where the
                                         broader marketplace (especially institutions of higher
                                         education) is headed
                                         Many of our peers and aspirants utilized a Defined Cost
                                         approach or Access Only approach for Retiree Medical
                                         This percentage is expected to grow in future years as
                                         institutions of higher education pursue strategies to
                                         manage expense and limit uncapped liability




                                                     2010-10-07 UBAC Advisory Report, Page 30
Approach 4 – Cap on University’s Annual Per Retiree Cost
Current Program – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65
           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of       Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
               University's Share:     Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                    $104.3M          Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
           Participant Count: 1082      Projection of                Projection of                  Projection of                     Projection of
           Beneficiary Count: 559     University's Share:          University's Share:            University's Share:               University's Share:
             Average Age: 74.6             $187.7M                      $199.4M                        $422.0M                           $383.0M

                 Projection of
               University's Share:
                    $155.6M



Approach 4A – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65
           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of       Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
               University's Share:     Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                    $104.3M          Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
           Participant Count: 1082      Projection of                Projection of                  Projection of                     Projection of
           Beneficiary Count: 559     University's Share:          University's Share:            University's Share:               University's Share:
             Average Age: 74.6             $187.7M                      $53.5M                         $105.4M                           $78.4M

                 Projection of
               University's Share:
                    $155.6M



Approach 4B – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65
           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of       Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
               University's Share:     Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                    $104.3M          Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
           Participant Count: 1082      Projection of                Projection of                  Projection of                     Projection of
           Beneficiary Count: 559     University's Share:          University's Share:            University's Share:               University's Share:
             Average Age: 74.6             $187.7M                      $58.9M                         $107.1M                           $76.4M

                 Projection of
               University's Share:
                    $155.6M



Approach 4C – Projected University Benefit Cost by Population Segment
                Current Retirees &                                                           Actives Not Yet Eligible to Retire
                  Beneficiaries      Actives Eligible to Retire   Over 15 Years of Service          Between 5 and 15               Under 5 Years of Service   Future Hires
Demographics
 Pre-65
           Participant Count: 329
           Beneficiary Count: 207
             Average Age: 60.3

                 Projection of       Participant Count: 560       Participant Count: 401       Participant Count: 1086            Participant Count: 1184
               University's Share:     Average Age: 60.6            Average Age: 49.6            Average Age: 47.1                  Average Age: 39.6
                    $104.3M          Average Service: 24.5        Average Service: 21.4         Average Service: 9.0               Average Service: 2.5
 Post-65
           Participant Count: 1082      Projection of                Projection of                  Projection of                     Projection of
           Beneficiary Count: 559     University's Share:          University's Share:            University's Share:               University's Share:
             Average Age: 74.6             $187.7M                      $102.4M                        $196.1M                           $150.7M

                 Projection of
               University's Share:
                    $155.6M




                                                                                             2010-10-07 UBAC Advisory Report, Page 31
Approach 4 – Cap on University’s Annual Per Retiree Cost


                                      Current Design vs Approach 4A, 4B & 4C


                                $40
                     Millions




                                $35

                                $30
University's Share




                                $25
                                                                                                  Current Design
                                $20                                                               Approach 4C
                                                                                                  Approach 4B
                                $15
                                                                                                  Approach 4A
                                $10

                                 $5

                                 $0
                                  09

                                  12

                                  15

                                  18

                                  21

                                  24

                                  27

                                  30

                                  33

                                  36

                                  39

                                  42

                                  45

                                  48

                                  51

                                  54

                                  57

                                  60

                                  63

                                  66

                                  69
                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20

                                20
                                                     Year




                                                                       2010-10-07 UBAC Advisory Report, Page 32
    Prevalence Data for Peers and Aspirants

    As part of this project, the University Benefits Advisory Council (UBAC) and the Health
    Insurance Working Group (HIWG) reviewed retiree medical prevalence data for the University of
    Vermont (UVM) peer and aspirant institutions. Given that any change to the UVM retiree
    medical program could have an impact on attraction and/or retention of faculty and staff, we
    wanted to be sure to understand what our peers and aspirants were already doing in this area.
    The UBAC reviewed data on 20 of our peer and aspirant institutions, which represents
    approximately 60% of this group. The retiree medical data is from Plan Years 2009 and 2010.
    We obtained this data from a database of benefit specifications maintained by our benefits
    consultants, Hewitt Associates, and directly from our peers and aspirants. We reviewed data for:
           8 of 13 public peers;
           5 of 7 public aspirants; and
           7 of 14 private competitors.

    Peer and Aspirant Institutions Represented

           Boston College (private competitor)
           Boston University (private competitor)
           Cornell University (private competitor)
           Dartmouth College (private competitor)
           Kansas State (public peer)
           Penn State (public aspirant)
           SUNY—Albany/Binghamton1 (public peer)
           Syracuse University (private competitor)
           Tufts University (private competitor)
           University of Connecticut (public peer)
           University of Delaware (public peer)
           University of Maine (public peer)
           University of Massachusetts (public peer)
           University of Michigan (public aspirant)
           University of New Hampshire (public peer)
           University of North Carolina at Chapel Hill (public aspirant)
           University of Rhode Island (public peer)
           University of Rochester (private competitor)
           University of Virginia (public aspirant)
           University of Wisconsin (public aspirant)




1
    Represented by data for SUNY—Buffalo


                                                         2010-10-07 UBAC Advisory Report, Page 33
Medical Coverage After Retirement
The chart below shows the percent of peers and aspirants that extend medical coverage to their
retired faculty and staff. It also shows whether or not peers and aspirants share in the cost of
the coverage.




Among the 20 peers and aspirants that we analyzed, 17 organizations (85%) currently offer
retiree medical coverage of some type to Pre-65 and Post-65 retirees. One organization only
offers coverage to Post-65 retirees, while two organizations do not offer any type of retiree
medical coverage.
Among the 17 that offer some type of retiree medical coverage:
      Eleven organizations (or 55%) subsidize the cost of the coverage through cost sharing
       with retirees;
      Four organizations (20%) offer ―Access Only‖ (i.e., they offer access to retiree medical
       coverage, but do not cost share, in any way); and
      Two organizations (10%) cost share with retirees for either Pre-65 coverage or Post-65
       coverage, but not both.Pre-65 Retirees: Defined Dollar Approach for Employer Cost
       Sharing




                                                   2010-10-07 UBAC Advisory Report, Page 34
Dollar Cap on University Expense

Pre-65 Retirees: Defined Dollar Cap Approach for Employer Cost-Sharing
The table below shows whether or not peers and aspirants are using a defined dollar approach
to cap their cost share for retiree medical premiums. The caps may freeze the cost share at
current costs or a stated flat dollar amount or freeze their cost share at a level to be reached
sometime in the future.



                                                              11.8%



                                                                         5.9%




                     53.0%


                                                                           29.4%




        Defined Dollar Approach                         Defined Dollar Approach with Indexed Limit
        Retiree pays 100% of cost                       No Defined Dollar Cap



Among the 17 peers and aspirants that offer Pre-65 retiree medical coverage, 9 organizations
have no cap on the cost sharing.
The other 47% of the peers and aspirants have some sort of defined dollar cap on the amount
of cost sharing provided toward the cost of Pre-65 retiree medical coverage.
      Five organizations (29%) require retirees to pay the full cost of the coverage (i.e.,
       ―Access Only‖).
      Three organizations (18%) use a defined dollar cap that limits the amount of cost sharing
       that the institution is willing to provide towards the cost Pre-65 coverage. One
       organization has a defined dollar cap that has an indexed limit that increases over time.
       The other two have defined dollar caps that are fixed.Pre-65 Retirees: Defined Dollar
       Approach for Employee Cost Sharing




                                                     2010-10-07 UBAC Advisory Report, Page 35
Post-65 Retirees: Defined Dollar Cap Approach for Employer Cost-Sharing
The table below shows whether or not peer and aspirants are using a defined dollar approach to
cap their cost share for retiree medical premiums. The caps may freeze the cost share at
current costs or a stated dollar amount or freeze their cost share at a level to be reached
sometime in the future.

                                                            5.6%
                                                                     5.6%




                                                                                27.8%



                         61.1%




           Defined Dollar Approach                          Defined Dollar Approach with Indexed Limit
           Retiree pays 100% of cost                        No Defined Dollar Cap




Among the 18 peers and aspirants that offer Post-65 retiree medical coverage, a larger number
have no defined dollar cap on the cost sharing (11 organizations representing 61%), as
compared to the prevalence data for Pre-65 coverage.
The remaining 39% of the peers and aspirants have some sort of defined dollar cap on the
amount of cost sharing provided towards the cost of Post-65 retiree medical coverage.
      Five organizations (28%) require retirees to pay the full cost of the coverage (i.e.,
       ―Access Only‖).
      Two organizations (11%) use a defined dollar cap that limits the amount of cost sharing
       that the institution is willing to provide towards the cost of Post-65 coverage. One
       organization has a defined dollar cap that has an indexed limit that increases over time
       and one has a defined dollar cap that is fixed.




                                                     2010-10-07 UBAC Advisory Report, Page 36
Type of Medical Coverage Provided

Pre-65 Retirees

The table below shows whether Pre-65 retirees are offered the active medical plan or a special
retiree medical plan upon retirement.

                                 0%       0%




                                   100%
                              Same as Active Plan



All 17 peers and aspirants that offer Pre-65 retiree medical coverage, simply continue the Active
Medical program for these retirees.

Post-65 Retirees

The table below shows whether Post-65 retirees are offered the active medical plan or a special
retiree medical plan upon retirement.



                                                               33%




                                 67%                      0%


           Same as Active Plan     Active Plan, with Modifications   Special Retiree Plan


For peers and aspirants that offer Post-65 coverage, only one-third continue the Active medical
program for these retirees. Instead, two-thirds of our peers and aspirants offer a special Post-65
retiree medical plan.



                                                      2010-10-07 UBAC Advisory Report, Page 37
These Post-65 plans are offered with the understanding that Post-65 retirees will also be
enrolled in Medicare coverage and, therefore, the plans are specifically designed to work
together with the retiree‘s Medicare coverage. In addition, some of these special Post-65 plans
take advantage of specific products that insurance carriers have developed for the Post-65
retiree marketplace.

Retiree Medical Savings

As the UBAC discussed the various issues associated with retiree medical at UVM, it became
clear that employee education will continue be a critical component of any retiree medical
program, going forward.
In particular, the UBAC acknowledged two critical areas of education and communication that
are both captured in our Guiding Principles:
      Support active employee engagement in health, emphasizing prevention and
       management of chronic health conditions.
      Educate employees and help them plan for their retirement, including medical care.
With respect to the latter principle, UVM faculty and staff will increasingly require a better
understanding of the financial resources needed at retirement in order to fund their portion of
the cost associated with retiree medical during retirement. The UBAC explored a variety of
savings vehicles that could assist faculty and staff in achieving their goals.




                                                    2010-10-07 UBAC Advisory Report, Page 38
Alternative Approaches for Retiree Medical Savings

                       Personal                              Employee               Health Savings
  Key Element                             403 (b)
                       Savings                             Benefits Trust              Account
 Contributions In      After tax          Pre-tax             After tax                  Pre-tax

                                      Accumulates tax-    Accumulates tax-
Earnings Build-up       Taxable                                                   Accumulates tax-free
                                           free                free

                     Generally tax-
  Withdrawals,       free (depends                       Tax-free, if used for     Tax-free, if used for
                     on underlying        Taxable        health care related       health care related
  Use of Funds         investment                             expenses                  expenses
                        strategy)

                                                                                         Limited
                                                                                 Must be used for health
                                                                                 care related expenses
                                        High degree                                (to avoid penalty).
                                                               Limited              Subject to annual
                                       Funds can be
                                        used for any      Must be used for          contribution limits
                     High degree
                                      retiree expense.    stated purpose of       ($3,050 for Individuals
                     Funds can be                              the trust.        and $6,150 for Families
                      used for any    Subject to annual                                 in 2010).
   Flexibility of
                    retiree expense. contribution limits    Contribution
    Approach                         ($16,500 in 2010). parameters set           "Make-up" contributions
                      No limits on                       when trust created.     allowed for participants
                         savings         "Make-up"                                  age 55 and older.
                        potential.      contributions        Complex
                                         allowed for       administrative            Must be used in
                                      participants age     requirements.         conjunction with a High
                                        50 and older.                            Deductible Health Plan
                                                                                 (minimum deductible in
                                                                                   2010 is $1,200 for
                                                                                 Individual or $2,400 for
                                                                                   Family coverage).




                                                    2010-10-07 UBAC Advisory Report, Page 39
Summary of Public Comment

In addition to comments of public attendees at Council and HIWG meetings, written feedback
from individuals as reported by the Staff Council and from the UBAC web page contains several
themes:
      Strong desire to keep the benefit unchanged for individuals who have already retired, as
       well as those with long service, whether eligible to retire or not;
      The retiree medical benefit was cited by many as a ―term or condition‖ of employment
       which affected their decision to stay at UVM, even during years when pay increments
       have been low;
      Some feel it is more desirable to reduce or otherwise change the benefit for future hires;
      A few people commented on issues of equity between lower and higher paid employees
       with respect to their differing ability to afford medical care with a reduced benefit;
      At least one person noted that younger people are not necessarily healthy, nor are they
       planning for their medical costs in retirement;
      Some requested educating people to save for retirement, including medical care.

Two information sessions on September 27, 2010, were attended by more than 300 people. At
these sessions, the Council heard feedback, including the following additional themes:
      Ensure that benefits are in place to protect retirees from catastrophic illness or other
       events.
      Concern by unrepresented staff that they will not be consulted in the process and that
       they do not have the same standing as represented faculty and staff.
      Need for a glossary of terms.
      Concern about the timing of any future change and whether people will have sufficient
       time to make a prudent decision about their personal choices.
      Interest in the comparative budget impact of changes to the retiree medical benefit
       compared to other possible budget adjustments.
      Insufficient information in the study to guide people‘s thinking as they try to evaluate their
       personal situation.
      Concern about the continuation of spousal and dependent medical benefits in
       retirement.
      Concern about the future reliance on the Medicare system to provide 80% of needed
       coverage.
      A desire for the University to participate through appropriate channels to support health
       care reform that will advantage retirees.
The Council has concluded that the public comment affirms the importance of its Guiding
Principles for evaluating the benefit (see Verbatim Feedback in the Addenda).




                                                     2010-10-07 UBAC Advisory Report, Page 40
Need for Employee Education

Throughout its deliberations, the Council repeatedly cited the importance of employees‘
understanding the coordination of the employer-provided benefit with coverage through
Medicare, Parts A and B. Failure to do so in considering the impact of some of the models
considered in its earliest meetings resulted in some employees misunderstanding the true
impact of proposed changes to the post-retirement medical benefit. Specifically, it is important to
recognize that Medicare covers 80% of health care costs for most people, with the employer‘s
plan acting as supplemental coverage. HIWG members frequently referred to additional
coverage options for medical insurance to be created by the new ―exchanges‖ that will result
from Health Care Reform in future years. As these options become available, the employer‘s
role may shift to one of creating a benefit that provides ready cash for retirees to purchase
health care in the market place, rather than limit coverage options to employer-based insurance.
As it concludes its consideration of this benefit, Council members have noted the complexity of
integrating the various concepts into a comprehensive study, which underscores the Council‘s
guiding principle regarding the importance of employee retirement planning and education as
part of the University‘s commitment to contribute toward a secure future for UVM retirees.

Conclusion

In summary, the UBAC has worked since May 2010 to provide this report, in keeping with the
President‘s charge and our Guiding Principles. As a result of our review and discussions, we
feel it is important to emphasize the following:
      Factors such as the aging of our population, rising health care costs, and Governmental
       Accounting Standards Board (GASB) requirements all impact the University‘s projected
       long-term budget.
      Although the greatest modification of the retiree medical insurance benefit has been
       seen in the private sector and selected higher education institutions, it is expected that
       more changes will be seen in higher education institutions in the near future.
      From financial data presented, we agree that it is appropriate to explore alternative
       approaches to post retirement medical insurance.
The Council‘s special project studied the projected long-term impact on the UVM budget of our
existing post-retirement medical benefits program and identified options for adjustments to the
program that reasonably balance its financial impact on the University and the needs of future
retirees; other financial aspects outside of this context were beyond the scope of the Council‘s
work.
With assistance from our consultants and UVM‘s Human Resource Services subject matter
experts, the UBAC reviewed different models and scenarios, including evaluation of their impact
on different employee groups, and associated pros and cons.
Models explored had a moderate-to-high potential impact on cost and looked specifically at the
impact on retirees, current employees, and prospective employees. In addition, we considered
the impact on recruitment and retention, and other issues such as the compelling need for
employee education related to retirement planning and health care.
In our discussions, special attention was given to changes in benefit design to help preserve
affordability of benefits for lower paid employees and to specific groups, such as employees
with longer service.
Extending benefits to include future employees and those with fewer years of service is
essential for recruitment and retention.



                                                    2010-10-07 UBAC Advisory Report, Page 41
      The UBAC provided a variety of opportunities for input from faculty and staff, through
       representatives on the Council, as well as through public comment periods during all
       meetings, a dedicated web page, email comments, and two informational sessions.
       Public comments reinforced the importance of the UBAC‘s Guiding Principles.
      All models were reviewed with the UBAC‘s goal of continuing to offer health insurance
       for retirees while also protecting the financial status of the University, and our charge to
       ―identify and examine options for adjustments to the program that reasonably balance its
       financial impact on the University and the needs of future retirees.‖
Council members noted that several scenarios could potentially result in substantial financial
hardship on retirees, through exhaustion of book accounts or increasing costs of premiums
shares, and that scenarios presented focused on individuals only.
      We were reminded in our May 2010 Charge from the President that our work is advisory
       in nature and that ―neither the UBAC process of deliberation and recommendation nor its
       outcomes are intended to…operate in a manner in conflict or inconsistent with the
       collective bargaining rights of UVM or any certified bargaining representative of UVM
       employees….‖
      Although models and options presented have associated pros and cons, all models
       presented generally fit with the UBAC‘s overall goal and Guiding Principles.
      The UBAC was not able to explore all options in the time allotted for our research and
       study. We note that other institutions engaged in similar processes may have identified
       approaches that could be useful for UVM‘s consideration (see U. of Maine, Dartmouth
       College in Addendum).
      Members of the University Benefits Advisory Council hope this information will help in
       future discussions and decisions related to Post-Retirement Benefits at UVM.




                                                    2010-10-07 UBAC Advisory Report, Page 42
ADDENDA

1. Memorandum from President Fogel, Charge to UBAC, UBAC Membership List
2. Detailed Descriptions of Savings Options
3. Assumptions Used for Calculations
4. Faculty Compensation Data from UVM Fact Book
5. University of Maine and Dartmouth College Results from Consideration of Post-Retirement
   Medical Benefits
6. Background, Hewitt Associates (Consultants to UVM/UBAC)
7. Statement, United Academics, United Electrical, Radio and Machine Workers
8. Verbatim, Unattributed Feedback from Faculty and Staff
9. Glossary of Terms




                                                 2010-10-07 UBAC Advisory Report, Page 43
ADDENDUM 1                                                         Memo from President Fogel
                                                           Charge to UBAC, UBAC Membership List


Office of the President, May 29, 2010
From: Daniel Mark Fogel
To:    Members of the University Benefits Advisory Council
       University Governance Leaders
       Presidents of UVM Collective Bargaining Units
Re:    University Benefits Advisory Council and Post-Retirement Medical Benefits
Since its initial appointment in the summer of 2007, the University Benefits Advisory Council
(UBAC) has brought together faculty, staff, and students—including members designated by
collective bargaining units under provisions of the collective bargaining agreements—in order to
provide an advisory forum concerning policies and decision-making processes that bear on the
full range of employee benefits programs at UVM. I am now asking that the UBAC convene as
soon as possible to embark on a process culminating in a report to me no later than September
29, 2010 on the Council‘s best thinking with respect to the question of the sustainability of our
current program of post-retirement medical benefits, including an evaluation of the problem and
approaches to program adjustments that the Council deems worthy of consideration (the formal
charge to the UBAC on this matter is appended).
I am also appending a list of the current members of the Council. I ask that all appointing
authorities—including governance bodies and the labor unions—review and revise their
appointments as they deem appropriate, informing me of any changes in representation no later
than Monday, June 7. I may appoint additional members thereafter to fill out the roster. In
addition, the UBAC may seek participation from faculty and staff members with relevant
expertise to assist in its deliberations. I will also consider any request that the UBAC may make
for the ser-vices of expert consultants.
As a reminder, because certain UVM employees are represented by certified bar-gaining
units—with contract provisions cognizant of the UBAC—neither the UBAC process of
deliberation and recommendation nor its outcomes are intended to, or will, operate in a manner
in conflict or inconsistent with the collective bargaining rights of UVM or any certified bargaining
representative of UVM employees, nor shall the discussions and exchanges of which the
processes are comprised constitute collective bargaining with any group, organization, or
individuals on benefits matters.
For an overview of the post-retirement medical benefits issue, please see the discussion
materials for the May 2010 Board meeting (pp. 71-73 of the PDF linked here). It is critically
important that the University administration be able to bring to the Board for continuing
consideration at the October Board meeting a recommendation on post-retirement medical
benefits informed by the best thinking of the community through the work of the UBAC as well
as by the advice of external experts. Please act promptly on the process of appointing new
members to the Council so that its work can get under way as soon as possible. Thank you.
cc: UVM Faculty and Staff, Board of Trustees




                                                     2010-10-07 UBAC Advisory Report, Page 44
Charge from President Fogel to the UBAC re: Post-Retirement Benefits
1) Review and discuss the projected long-term impact on budget of our existing post-retirement
   medical benefits program (―the program‖), including Governmental Accounting Standards
   Board (GASB) requirements;
2) Identify and examine options for adjustments to the program that reasonably balance its
   financial impact on the University and the needs of future retirees;
3) Generate an advisory report that includes possible program adjustment scenarios, with
   associated pros and cons of each. The report should articulate and discuss the impact of
   various options on the University, not only monetarily, but also in terms of our human
   resource philosophy and principles (please see the attached document ―Parameters for
   Compensation at The University of Vermont‖) and of projected effects on recruitment,
   retention, and employee morale, along with any other issues identified by the Committee.
   The scenarios should:
       a. Include the likely impact on retirees, current employees, and prospective employees
          respectively;
       b. Be informed by what other similarly situated higher education institutions are doing
          (i.e., those that have programs that are not associated with, or administered through,
          a state retirement program).
Please submit this report to me in writing no later than September 29, 2010.
Parameters for Compensation at The University of Vermont
UVM‘s approach to compensation supports and advances our vision of being among the
nation‘s premier small research universities, committed to providing an exceptional educational
experience to our students and to fulfilling our research and service missions. All that we do,
including compensating employees, must serve these purposes. Recruiting and retaining
outstanding faculty and staff and assessing and rewarding their performance are essential
elements of our ability to succeed. UVM is committed to compensating employees competitively
and equitably, always with attention to student affordability and within the scope of available
resources.UVM compensation is guided by these parameters:
Compensation should be determined based on the following factors:
      Performance, including advancement of University and unit vision, mission, and goals
      Market competitiveness
      Equity, including attention to basic needs
      Recognition of the role of collective bargaining for unionized employees
Compensation equity encompasses several important factors, including awarding salary and
benefits in a lawful, non-discriminatory manner. It also includes acknowledgment of the costs of
living in this geographic area and the institutional interest in assisting employees, especially
lower-paid employees, in meeting their basic needs. In doing so, we also recognize, and
address where feasible, the differing impacts that required employee contributions to benefits
have on employees at various compensation levels.
Compensation will be viewed as salary/wages plus benefits (total compensation). In determining
total compensation, the University recognizes that compensation rates for employees who are
unionized are set through a collective bargaining process. As part of that process, the union has
the right and obligation to bargain for compensation levels that reflect the needs and priorities of
the employees it represents. Although the University can, during bargaining, express its own
goals and priorities regarding compensation, the bargaining process resolves differences in
perspective through negotiations and the resulting bargaining agreement.


                                                     2010-10-07 UBAC Advisory Report, Page 45
UNIVERSITY BENEFITS ADVISORY COUNCIL 2010

Faculty Senate Representatives
        Larry Kost, Senior Lecturer, Mathematics and Statistics
        Gary Mawe, Associate Professor, Anatomy/Neurobiology, Pharmacology
        Tim Murad, Associate Professor, Romance Languages
United Academic Representatives
        Beth Mintz, Professor, Sociology
        David Shiman, Professor, Education
United Academic Representative – Part Time
        Elizabeth Haggart, Lecturer II, Art
Student Government Representative
        David Maciewicz, VP, SGA
Graduate Student Senate Representative
        Dustin Evatt (2010/2011)
Teamsters Representatives
        Michael Blow, Police Officer
        Sharon Patenaude, Dispatcher
        William Sioss, Police Officer
UE Representatives
        Carmyn Stanko, Utilities Tradesperson Senior, Physical Plant
        David Hamilton, Sr., Building Access Specialist
Staff Council Representatives
        Debra Stern, Office Program Support Genl, COM Microbiology and Molecular Genetics
        Kelly Circe, Office Program Support Sr, CESS Dean‘s Office
Others
        Dr. Jan Carney, Research Professor and Associate Dean for Public Health, COM
        Jean Held, Professor Emeritus, College of Nursing and Health Science
        Jackie Gribbons, Assistant Professor Emeritus Education
        Michael Gurdon, Professor, Associate Dean, School of Business Administration
        Claude Nichols, Professor and Chairperson, Orthopaedics and Rehabilitation
        Claire Burlingham, Controller, Controller‘s Office
        Deane Dudley, Non-Represented Staff, Retired
Non-Voting
        Richard Cate, VP Finance and Admin
        Barbara Johnson, AVP HRS
Staff Support
        Lee Stewart, Director, HRS Operations
        Greg Brown, Manager, HRS Operations
        Aleta Sweeney, Administrative Support HRS




                                                    2010-10-07 UBAC Advisory Report, Page 46
ADDENDUM 2                                       Detailed Descriptions of Savings Options

Three savings options were discussed by the UBAC, in addition to individuals maximizing their
personal savings:

403(b) Retiree Medical Account
The 403(b) plan, is currently the primary method of savings for retirement income for UVM
faculty and staff, could be a place to not only save for general retirement income needs, but also
as a place to save for retiree medical needs.. Faculty and staff can already make pre-tax
contributions to the 403(b) and any associated earnings growth is on a tax-advantaged basis.
As part of ongoing retirement planning, faculty and staff could be educated about the cost
associated with their share of retiree medical costs during retirement. The 403(b) Faculty and
staff could be encouraged to maximize 403(b) savings to the extent they are not already doing
so and to the extent they are financially able.
      Main Focus: faculty and staff education with the possibility of establishing a new savings
       account.
           o   Education will introduce the concept of funds needed to purchase Retiree
               Medical coverage (either through UVM or the external market) to the existing
               messages about general retirement income planning.
      Mechanics: encourage faculty and staff to increase retirement savings.
           o   Can include creating a ―separate‖ 403(b) account for Retiree Medical.
           o   However, as a 403(b) it will still be a retirement account.
           o   Therefore, the overall annual 403(b) limit on participant contributions would still
               apply.
           o   This limit is $16,500 in 2010.
           o   Participants age 50 and older can contribute an additional $5,500.
           o   As an example, a contribution of $5,000 to the ―403(b) Retiree Medical Account‖
               would limit the allowable contribution for the ―general account‖ to $11,500.
      Advantages: 403(b) infrastructure already in place and UVM faculty and staff are familiar
       with this savings vehicle.
           o   Tax-advantaged contributions and investment growth.
           o   Make-up contributions allowed for participants age 50 and older.
      Concerns: strategy is not applicable to faculty and staff already ―maxing-out‖ their 403(b)
       savings.
           o   Withdrawals are taxed, even if used for Retiree Medical.

Employee Benefit Trust (VEBA)
A Voluntary Employee Benefit Association (VEBA) would be a new, additional alternative for
retiree medical savings; however, there is some risk that it would compete with the existing
403(b) for incremental savings.
      Main Focus: establish new savings vehicle along with associated faculty and staff
       education.
           o   Similar to prior approach, would require faculty and staff education regarding
               need to save for Retiree Medical, along with the details of this new vehicle.

                                                     2010-10-07 UBAC Advisory Report, Page 47
      Mechanics: University of Vermont (UVM) would create a voluntary employee beneficiary
       association (VEBA).
          o   Need to establish savings limits and other trust parameters (e.g., eligibility, timing
              of contributions, statements for participants, etc.).
          o   As an example, UVM could establish a ―Retiree Medical Account‖ with $5,000
              annual limit funded with monthly, after-tax employee contributions and an interest
              credit of one-year Treasury securities plus 1%.
      Advantages: new savings vehicle with increased limits, as compared to the existing
       403(b).
          o   Tax-advantaged savings growth and tax-free withdrawals, if used for Retiree
              Medical.
      Concerns: increased administration and communication.
          o   Ongoing legal and accounting requirements, including discrimination testing.
          o   Contributions are made on an after-tax basis.
          o   VEBA competes for savings dollar with the 403(b) plan.
          o   Relatively few employers offer these accounts.
          o   Generally low employee participation and appreciation.

Health Savings Account (HSA)
A Health Savings Account (HSA) + High Deductible Health Plan (HDHP) approach is primarily
an active employee medical strategy and any retiree medical savings opportunity is a secondary
benefit. If UVM elects to pursue HSA + HDHP as an active medical strategy, at some point in
the future, this approach may have some incremental benefit to retiree medical savings.
      Main Focus: establish a new savings vehicle attached to a new High Deductible Health
       Plan (HDHP) and provide associated faculty and staff education.
          o   Would require education regarding new Active plan option (HSA + HDHP) and
              Retiree Medical needs.
      Mechanics: UVM would establish new Active health plan (HSA + HDHP) with an account
       (HSA) that could be used by faculty and staff to accumulate Retiree Medical savings.
          o   As an example, HDHP option would need to have a minimum of a $1,200
              Individual deductible and a $2,400 Family deductible in order to be eligible for an
              HSA account.
      Advantages: ―Triple Tax-Advantaged‖—Tax-advantaged contributions, growth, and
       withdrawals (if used for medical).
          o   New savings vehicle with increased limits, as compared to the existing 403(b).
          o   HSA Contribution limits of $3,050 for individuals and $6,150 for families in 2010.
          o   Make-up contributions allowed for participants age 55 and older ($1,000 per
              year).
          o   Increased use among employers, as an Active health care strategy (usually as
              one of the Active health options).
      Concerns: increased administration and communication.



                                                    2010-10-07 UBAC Advisory Report, Page 48
o   Requires Active participants to enroll in HDHP (minimum deductible of
    $1,200/$2,400 in 2010).
o   Build-up of funds difficult because HSA can be used for ongoing Active medical
    needs.
o   Generally low participation by employees in HSA + HDHP option (unless offered
    as ―full replacement‖ plan).
o   HSA account competes for savings dollars with the 403(b) plan.




                                        2010-10-07 UBAC Advisory Report, Page 49
ADDENDUM 3                                                  Assumptions Used for Calculations

Below is a summary of the key assumptions used for benefit cost projections.


Valuation Date            July 1, 2009

Salary Scale              Compensation is assumed to increase by 4.00% per year.

                                                               Post-Medicare
                                      Pre-Medicare Rate                            Dental Rate
                           Year                                     Rate
                           2010            8.50%                      8.00%          8.00%
                           2011            7.75%                      7.50%          7.50%
Health Care Trend Rates    2012            7.25%                      7.00%          7.00%
                           2013            6.50%                      6.50%          6.50%
                           2014            6.00%                      6.00%          6.00%
                           2015            5.50%                      5.50%          5.50%
                           2016+           5.00%                      5.00%          5.00%
                                Age         Medical          Dental

Expected Age Based               55         $6,527           $452
Health Care Costs                60          7,831            452
                                 65          3,298            452
                                 70          3,936            452

Mortality Rates           RP-2000 Combined Mortality Table.

                              Age           Number per 1,000
                                55                    100
                                60                    100
Sample Retirement Rates
                                65                    400
                                66                    350
                                70                   1,000

                              Age           Number per 1,000
                                30                    199
Sample Withdrawal Rates         35                    131
                                40                     64
                                45                     23
                                50                     23
Coverage Election Upon
Retirement

- Medical and RX          95%

- Dental                  100%

                          70% of employees electing medical and Rx coverage at retirement are
- Dependent Coverage
                          assumed to be married and elect spouse coverage.




                                                      2010-10-07 UBAC Advisory Report, Page 50
ADDENDUM 4              Faculty Compensation Data
                               from the UVM Fact Book




             2010-10-07 UBAC Advisory Report, Page 51
2010-10-07 UBAC Advisory Report, Page 52
ADDENDUM 5                                     University of Maine and Dartmouth College
                                   Results from Consideration of Post-Retirement Medical Benefits


University of Maine System
A multi-year study (Retiree Health Plan Task Force, I, II and III) resulted in the following
changes, which focus on eligibility rules and premium cost-sharing. It should be noted that
University of Maine does not provide any pre-65 cost-sharing, although there is access to the
group health plan:
Effective 7/1/07:
Retirees must have 10 years of continuous, full-time, regular University service AFTER AGE 45
and immediately preceding retirement in order to qualify for retiree health insurance coverage.
They include some special treatment to assist benefit eligible part-time employees to reach the
10 year service milestone.
Effective 4/1/08:
Pre-65 retirees have the one-time option to cease coverage under the UMS health plan with an
opportunity to reenroll, provided that the election to reenroll occurs no later than 90 days after
reaching Medicare eligibility, and provided the retiree documents continuous alternative
coverage for self and dependents during the opt-out period.
For retirements on or after July 1, 2010:
Medicare eligible retirees contribute toward premiums on a revised, service-based schedule:
15% for 10-19 years of service; 10% for 20-29 years of service; 7% for 30 or more years of
service.
Medicare eligible retirees pay 50% of premium for eligible dependents.
Retirees on or after age 65 with less than 10 years of completed, continuous, full-time regular
service: no coverage.

Dartmouth College
Changes also focused on eligibility and premium cost-sharing, with some plan design changes:
As of a 7/1/2009 effective date:
Grandfathering in the then-current plan for those eligible under old "rule of 75", and those who
retired by 7/1/2009.
Formula-based "subsidy" (employer cost share) based on age and years of service.
Access only for all new hires on or after 7/1/2009.
Established a dedicated savings vehicle (401c), with employer retirement savings match up to a
dollar cap of $3,000.
Plan design changes included increases in deductibles and co-insurance and increased out-of-
pocket maximum.

Additional Thoughts from Gary Mawe, University Benefits Advisory Council Member
Most of the data that were available to this committee with regard to peer/aspirant institutions
are related to the general approaches they took to post retirement medical benefits, rather than
to the specific plans that they chose. Toward the end of our deliberations, we received
descriptions of the plans that have been implemented in the University of Maine system and at
Dartmouth College.


                                                      2010-10-07 UBAC Advisory Report, Page 53
It should be noted that these plans take an approach that is different from the scenarios that
have been evaluated by this committee, and they may merit further evaluation. For example, the
University of Maine system limits enrollment to individuals with at least ten years of employment
at the time of retirement, and to those 65 and older. However, eligible retirees receive an
indefinite post-retirement healthcare benefit, and contribute from 7 to 15% of their premium
depending on the duration of their employment. This plan would limit eligibility, but it would have
significantly less impact than the scenarios we examined on individuals with at least 10 years of
service to the University, who are retiring at the age of 65 or later. In other words, this plan
should not affect the recruitment of younger individuals, and it would provide a solid benefit to
long-term employees of UVM. It would be worth further investigation off the effect of this type of
plan on post-retirement medical benefit costs to the University.




                                                    2010-10-07 UBAC Advisory Report, Page 54
ADDENDUM 6                                                  Background, Hewitt Associates
                                                                      Consultants to UVM/UBAC


Selected Background of Hewitt Associates
Hewitt has a long and valued heritage of service to some of the nation‘s most significant private
and public institutions of higher education. The national university and college consulting
practice serves more than 175 major private and public institutions and systems, providing us
with a wealth of experience with a wide range of shared governance models and in resolving the
complex challenges facing university human resources and benefits leadership. Hewitt‘s
commitment to higher education is further demonstrated by the establishment and ongoing
support of University Pathfinder Group and University Roundtable, two national learning and
best practice development consortia that serve as vehicles for studying common issues and
concerns facing our nation‘s institutions of higher education.
Perhaps most importantly, Hewitt offer university clients unparalleled access to the nation‘s
largest and most comprehensive database of unique, university-specific survey and comparator
data. This information (and the ability to gather additional information from comparator
institutions as needed) is unavailable from any other source and is founded on the strong,
trusted advisor relationships with the 75 member institutions currently comprising the above
mentioned learning consortia and university and college clients across the United States and
around the world.

The University’s Lead Consultants

Steven M. Mendelsohn, FCA, EA, MAAA—Retirement Plan Strategy Consultant
Steve is one of the Actuarial practice leaders for Hewitt in New York City. He consults with
clients on a broad range of benefit issues including the design, administration, compliance, and
financing of employee financial security plans. As the retirement strategy leader for the
University of Vermont, he is responsible for the quality, clarity, and timing of all retirement
consulting services.
Steve brings more than 25 years of pension actuarial consulting and compliance experience to
the University of Vermont team. He has served as the lead consultant and enrolled actuary for a
variety of large and midsize pension plans. He has experience working with a variety of
nonprofit organizations, including higher education, banking associations, and state and local
public plans. He has served on the Board of Contributors for the monthly newsletter ―Employee
Benefits for Nonprofits‖ and he currently serves on the committee that develops the Joint
Board‘s Enrollment Exam sequence for all U.S. pension actuaries.
Steve‘s current clients include Garan, General Chemical, Moody‘s, University System of New
Hampshire, and University of Vermont. He received a bachelor of arts in mathematics from New
York‘s University at Albany (SUNY Albany). He is an enrolled actuary, a fellow of the
Conference of Consulting Actuaries, and a member of the American Academy of Actuaries and
the American Society of Pension Professionals and Actuaries.

Christopher P. Kardos—Health Management Strategy Consultant
Chris is a senior benefits consultant in Hewitt‘s Health Management practice and a member of
the Hewitt Leadership Group. He has fifteen years experience in health and welfare benefits
strategy, design, pricing, and implementation.
During his tenure at Hewitt, Chris has worked with many large organizations to develop and
implement successful Health and Welfare benefits strategies, reduce costs, and improve
program efficiencies. Particular areas of focus include health improvement strategies,
consumer-centric designs, measurement, vendor bidding and selection, Taft-Hartley funds, and

                                                   2010-10-07 UBAC Advisory Report, Page 55
retiree medical strategy. Prior to joining Hewitt, he was a financial underwriter for a Fortune™
500 health care organization. Chris earned a B.A. degree from Syracuse University.
Chris‘s clients include: Liberty Mutual Insurance Company, Massachusetts Mutual Life
Insurance Company, The Hanover Insurance Group, Inc., Harvard University, Dartmouth
College, The Stop & Shop Supermarket Company, C&S Wholesale Grocers, and Keane, Inc.

Robert H. Kennedy—Health Management Strategy Consultant
Robert is a senior benefits consultant and a member of the Hewitt Leadership Group. He is the
Health & Welfare Market Manager for Hewitt‘s New England market. He works with
organizations on the strategic design of their health and welfare programs. He has experience
working with clients on a wide range of business issues including program assessment and
benchmarking, plan design and pricing, vendor selection and negotiation, employee
engagement and productivity, and retiree health care design and implementation. Robert has
more than twenty years of experience in the employee benefits field.
Prior to joining Hewitt, Robert was a financial underwriter for a major insurance company,
having successfully completed a three-year management training program in their managed
care and employee benefits division.
Robert earned a B.A. in applied mathematics from Brown University and has attained the
Certified Employee Benefits Specialist (CEBS) designation.
Some of Robert‘s clients include: The Boston Consortium for Higher Education, CVS Caremark
Corporation, Harvard University, and The Thomson Corporation.




                                                    2010-10-07 UBAC Advisory Report, Page 56
ADDENDUM 7                                                            Statement: UA and UE
                                 United Academics/United Electrical, Radio and Machine Workers


―United Electrical, Radio and Machine Workers of America and United Academics very much
appreciate the hard work of the University Benefits Advisory Council in considering the issue of
post-retirement medical benefits. Our participation on the committee, of course, cannot be
interpreted as an endorsement of anything outlined in the committee report, since any change in
benefits for bargaining unit members is subject to negotiation.‖




                                                   2010-10-07 UBAC Advisory Report, Page 57
ADDENDUM 8                                                   Verbatim, Unattributed Feedback
                                                UVM Faculty and Staff Comments and Suggestions


Feedback Received Prior to the 9/29 Informational Meetings through ubac@uvm.edu
As a 30+ year employee of UVM, I have some great concern over the PRMB issue, specifically
the limited "grandfathering" of a small group of employees. Even though I have over 30 years of
service, I am not eligible for retirement yet. Thus according to the example quoted below, I
stand to lose a benefit that I have worked long and hard for over the past 30+ years. On page
14 of the Hewitt presentation, I read:
Adding Benefit Flexibility As part of the switch to a defined cost model, employers also look for
ways to sustain higher employee benefit levels.
A common place to look is limiting the grandfathering for those already eligible to retire.
Typical approaches for those who are active but eligible to retire:
Do not provide grandfathered benefits to this group – Focus full grandfathering on those already
retired
Provide defined cost benefits but at a higher level than those not yet eligible to retire
Grandfather a smaller subset and include the others in the new plan – For example, those age
60 or older with 25 or more years of service will be grandfathered
Grandfather the entire group but with time limits, for example: Those already eligible to retire will
remain under the current plan if they retire within xx months from the effective date of the
change
From what I see here, I, and all employees in similar circumstances to mine, lose on every one
of these scenarios.
Scenario # 1 - I lose all the post retirement medical benefits that I was promised through my 30
years of employment. Time and time again, we have heard from Ginnie Gude and others: "Total
compensation is made up of salary PLUS benefits. The pay may not be equal to market, but you
have these great benefits now and when you retire..." I t was my belief that part of my
compensation (fringe) was going to cover my benefits. If Administration neglected to properly
invest this compensation to cover these post retirement benefits, that is not my fault.
Administration needs to be accountable for their mistakes and find a way to come up with the
funds to cover their commitments.
Scenario # 2 - Once again, I lose because I will now be required to pay an additional cost for
something I already paid for in fringe. Consider this: What would happen if you went to Cook
Commons and bought a take-out sandwich for $6.50. As you left the building, the chef stopped
you and said: "We goofed on the price. The cost is $15.00. You don't get the sandwich unless
you pay the extra $8.50, but if you don't pay the extra, you are out of luck because we don't give
refunds. Could they do that?
Scenario # 3 - I lose again. I do not fit the "over 60" subset as I am only 54. I may have put in
my 30+ years of service, but I do not get the benefit because I am too young. Even though I
have put in more years of service than a 25 year employee, they get a better retirement benefit.
Scenario # 4 - I would lose again if I was forced to retire in XX months. Even though I have 30+
years of service, I am young and healthy and would like to continue to work at UVM. I have a lot
to offer the University. Besides, I have to ask myself: "Why would UVM require someone to
retire, which in turn would cause the former employee to start collecting post retirement
benefits?" Wouldn't it make more sense to keep them employed so that the benefits do not start
until a later time?


                                                      2010-10-07 UBAC Advisory Report, Page 58
Really, when looking at it all, what it should boil down to is total years of service, plain and
simple. Age should not be a factor. The more years an employee works, the greater the benefit
package after retirement. After 10 years of service, you get a certain percentage towards
PRMB. After each successive year of employment, the percentage goes up a another point or
two or three. By the time the employee has 50 years of service, 100% of their PRMB is paid by
UVM.
For example:
    10 years - 10%                    35 years - 70%
    15 Years - 25%                    40 years - 80%
    20 years - 40%                    45 years - 90%
    25 years - 50%                    50 years - 100%
    30 years - 60%
Think about it; the longer a person remains employed, the shorter the time that the employee
will live after retirement and thus the post retirement payout will most likely be less.
It is a win-win situation. The university gets more service out of the employee, so there is more
longevity and less turn-over. The employee gets a better benefit package from the University,
and the University has a shorter payout period after retirement. Wow - what a concept. I
welcome your comments. Thanks for your consideration.
-----------------------------------
I am aware that the committee has met several times this summer to discuss options regarding
the post-retirement benefits. And I am sure you have received many letters like this one but I
feel I cannot stand back without voicing my concerns.
I feel very very strongly that the terms and conditions that employees were offered when they
signed on to work for the University should remain intact.* It is completely reasonable to stop
offering post retirement benefits to new hires, they will have all the information they need to
make an informed decision of whether to work for the University. But to take away a benefit that
has been promised on the time of hire is inconceivable.
I have been at UVM for 20 years and I am 45 years old. For 20 years I have relied on this
benefit, I have remained here because of this benefit and I have planned my future around this
promised benefit. When I first signed on to UVM they offered a retirement plan that was more
generous than the one they have now. Over the years they have slowly reduced this benefit,
upping the age and service requirement. The administration must have known in 1992 when
they started changing things that this was a costly benefit but chose to still offer to new hirers.
I have based my retirement planning on receiving these benefits. If I were to retire at 55 years, I
will have served the University for 30 years. If I am required to wait until I am 65, I will have 40
years service to UVM.
The University has been resourceful in the past. Please stand firm against taking this away.
Thank you.
-----------------------------------
I have been teaching at UVM for the past 43 years and feel at this stage it would be
inappropriate to change the policy regarding medical support after retirement. This was one of
the main reasons for devoting my life to this University and was counting on this element after
retirement. Several years of productive teaching still remain and I plan to stay on board for a few
more years.
Looking for your continuing support.
-----------------------------------


                                                        2010-10-07 UBAC Advisory Report, Page 59
Hello,
I appreciate the communication and meetings from staff council to ensure we have a voice in
the process of the university officials examining our benefit package.
First, let me say I am a very proud University of Vermont employee. I have worked in
Undergraduate Admissions at UVM since 1986 and have stayed at UVM because of my love
and connection with the University of Vermont. I graduated from UVM in 1982, my parents
graduated from UVM in the 1940s after WW2 and my grandparents graduated from UVM in the
early 1900s so my roots and affection for the university are long and deep.
I have made decisions and planned for retirement and medical benefits over the last 24 years
with the understanding of the University's retirement plan. While I understand the economic
situation is such that everything is being looked at, I would hope that any changes made will be
done thoughtfully and carefully and consider an employee's length of service to the university. I
understand the need for some scaling back perhaps but ask that our benefits are not drastically
cut or eliminated.
I also have been planning for our daughter's higher education with the understanding of the
tuition remission policy in place and we have made financial decisions on the basis of that
benefit and she's gone about her college search with this in mind. As she is about to enter her
senior year of high school this fall , I am concerned that there may be changes to the tuition
remission policy. I can understand perhaps a longer minimum number of years of employment
to receive this benefit but am asking to please keep this benefit intact. I'm sure the council is
looking at other models at schools where there are graduated scales or percentages and I
strongly urge the council to consider these options over drastic cuts.
I plan to attend the August 10 meeting and appreciate work of the University Benefits Advisory
Council as they review and evaluate the University's benefits programs and make
recommendations to the President and Provost.
-----------------------------------
Hi,
I just want to put in my personal plea for those of us who have 10 years of service to UVM. I
have been at UVM since Oct. 1999. I had 20 years of service with University Health
Center/FAHC before moving to UVM and one of the appealing aspects of transferring to UVM
was that my benefits would go with me. I had been contracted to the University for part of my
time for around 4 years prior to that time and the only thing that changed when I switched to
UVM was my clinical location to the Center for Health and Wellbeing. I realize that these are 2
separate organizations, but I am hoping that I will not be penalized for making a switch at that
point in my career. I have no intention of retiring before age 65 or later, but I do want to be able
to count on supplemental benefits for me and my husband after I do retire. Perhaps a provision
of 10 years minimum now and requirement of minimum service at retirement of 20 years and
then have it contingent on the individual picking up the cost of Medicare Part B as outlined in the
current retirement plan?
Thanks for keeping those of us with a significant commitment to UVM (10 years), who plan to
stay for another 10 years or more.
Thanks for your consideration.
Please keep folks age in mind as well as length of service when determining any ―cut off‖ lines.
I‘ll offer up myself as the example.
I am 52 with 7 years of service (will be starting my 8th year in November). I had worked at IBM
prior to coming to UVM.I see where an 8 year mark was being explored, I do hope that not only
does the group look at length of service, but also age. For some of us, the age will be the more


                                                     2010-10-07 UBAC Advisory Report, Page 60
critical factor in working to attain those benefits in retirement. I also agree with one statement
that I read, that folks have come to UVM forgoing pay to gain in the benefits arena.
Thanks for ―listening.‖
-----------------------------------

Feedback Received through the Staff Council Office, September 9, 2010
The Staff Council has collected the following comments, questions, and concerns from UVM
staff and retirees regarding the upcoming review of Post-Retirement Medical Benefits by the
University Benefits Advisory Council. These comments are in their original form. All names and
further identifying information have been removed for confidentiality purposes. It is the hope of
the Staff Council that these comments will further highlight the points we have made regarding
the need for transparency, open dialogue, and further outreach and education to all current and
retired employees.

I have worked for the University of Vermont for 22 years (+1 year as a temporary employee). I
am 41 years old and am a UVM graduate. I could have easily found work in the private sector
with a degree in Economics. However, I decided to stay at UVM.
I feel fortunate to work here and love my job. I am thankful for the many benefits that UVM has
given me (including professional development opportunities, completing my own degree for free
and medical benefits to have my children). I chose to stay because of the special place UVM
is...not because of the pay (definitely not the pay!). I have also given back to the UVM
community in many ways including advising countless students in Arts and Sciences, recruiting
thousands of new students (many ALANA students), volunteering and organizing many
community service activities that enrich the Burlington and UVM communities, representing staff
on the Staff Council and chairing the Benefits/Salary Committee.
My work, my colleagues, the students all make we want to stay at UVM. However, it is the
benefits that definitely keep me here. I have two children (ages 15 and 12) whom we hope will
attend UVM in the future. They are each working very are hard in school. We are counting on
them being able to attend UVM tuition free. Also, I would certainly hope that after 37+ (probably
a lot more!) years of work that I am able to retire with medical insurance.
For the first time since I have worked here, I am seriously thinking that the unrepresented staff
are in need of a union. As a staff member, I feel our benefits are in jeopardy. I remember when
talk of a union came up before, I was very hesitant. I felt that the administration was supportive
and would look out for our best interests. I can see now that was a mistake on my part. I do not
feel that way now. I feel as an unrepresented member of the staff that I am the scapegoat for
financial concerns. At this time, I would whole-heartedly support a union.
-----------------------------------
In regards to potential changes to retirement health care benefits; count me among the very
concerned. I have been full time at the University since 1996. I changed jobs within the
University almost 3 years ago and am now in a grant-funded position. I took this new position
knowing that the grant expires on April 30, 2011. One large consideration in the decision to take
this position is the knowledge that, if we are not successful in our application for a new grant, I
would be over 55 years of age, and able to retire with benefits. Since my employment began
there has been a change to retirement benefits, but all hired before that date were
grandfathered in. I am among those many who feel it is only fair that any changes to retirement
benefits be from the decision date forward. When I was hired, I was presented a staff handbook
detailing, among many other things, my retirement benefits. I have been basing my retirement
plans on what I had been promised by the University.
-----------------------------------


                                                      2010-10-07 UBAC Advisory Report, Page 61
I retired in 2001 after 32 years of employment. I retired and am living in CT and haven't received
anything from UVM about ongoing discussions. I read the Staffline and the Staff Council
minutes to keep myself knowledgeable about the happenings at UVM. I would echo what others
have written that we retirees are "voiceless" in this current discussion. I "hold my breath" every
time I receive information from Human Resources and worry about what the message inside will
tell me and what it will mean financially. I find it difficult to comprehend that the Administration
hasn't sent information to those of us who are no longer at UVM. As a long term employee, I
loved working at the University and felt I was part of a "family". Staff were always told that the
lower salaries we earned were in part because of the wonderful benefits we received. And so,
we remained faithful to UVM. I now am hopeful that UVM will remain faithful to its retirees. I
served on the Staff Council Benefits and Salary Committees for a long period of time and know
how time-consuming it is for those who serve. I wish to express my appreciation to each and
every one of the staff who are currently working on this current situation.
-----------------------------------
I am greatly concerned with the possibility of reductions to non-unionized post-retirement staff
benefits. While I understand the fiscal responsibility faced by the university, many of we, retired
staff members will be negatively impacted should benefits be changed at this time. Staff
members were told for decades that their lower than market wages were balanced out by the
benefit packages we received. Indeed this was true and a significant population of staffers
committed to UVM through their most productive years because of these benefits. Should the
task force assigned to review this issue determine that the cost savings gained by changing
post-retirement benefits; a large portion of people who made UVM what it is today will be
adversely affected.
My main concern however, is that I have heard nothing about including retirees in these
conversations. More to the point, if I didn‘t read the trustee meeting recaps and the Staffline, I
would not have had any indication that something that will undoubtedly impact my family‘s
financial health was being discussed. Retired should not mean voiceless!
-----------------------------------
I appreciate your time and effort to attend the University Benefits Advisory Council meetings and
writing up the review for Staffline. As an off campus employee, I feel like this issue has come
out of no where and hit me like a ton of bricks. I, like many others have chosen to live off from
less with the thought of the reward being medical benefits when I would likely need them most.
As I read your review, I wondered if I would be in a better position if I were to throw in the towel
and retire soon (in Sept. 2010) or continue on with the hope that the final decision of UVM would
put me in the best possible position. Had I ever thought my medical benefits would not be there
as described when I was hired, I would have left when I became aware of better opportunities of
employment. As a matter of fact, I did turn down at least two positions while working for UVM
because I felt I was solidifying my retirement benefits by staying with UVM. For people in the
category I am in, if our benefits are cut, then I hope at least we are given a heads up and the
opportunity to retire early and move into the retiree category if the benefits are spared from the
cut for retirees....
-----------------------------------
I just received an e-mail from somebody at UVM asking me to look at the Post Retirement
Medical Benefits and the anticipated changes to that program. I retired 2 years ago and I am a
person that benefits from the post retirement medical benefits. I went to work for the University
of Vermont in 1985 and working there for 23 years. I stayed at the University for those year
because of the Medical benefits and of course the post retirement benefits. I had many
opportunities to work elsewhere at a higher salary but I chose to stay at UVM because I knew
that we would need these benefits when we retired. If the University decides not to give us
these benefits, it would be financially devastating to us. We planned our retirement based on


                                                     2010-10-07 UBAC Advisory Report, Page 62
our finances and to take this away would mean that we would have to go back to work at 62 and
67 years old. My husband had cancer 3 years ago and we need the insurance. We presently
reside in Florida and to get insurance here would be very expensive.
I understand that there is a committee to look into this. The economy is not good anywhere and
we understand that insurance premiums are continually going up but I am asking you to please
take into consideration the employees that have based their life decisions on the fact that we
would have insurance for the duration of our life. Perhaps going forward for new employees
some changes need to be made to the benefit package offered but employees would know this
up front. To take something away after it has been given is very difficult for you and the
employee. It would be easier for a person to make and educated employment decision when
they are totally informed.
-----------------------------------
I have been listening and waiting to hear what proposal administration will have for any change
in retirement benefits. I believe I am "grandfathered" in as I was hired in 1989, but whether or
not this holds true with any upcoming revisions leaves me feeling some angst, and it does
concern me as to how this will all play out for my eventual retirement. It would be very helpful to
have regular email updates from Staff Council on this matter, in clear and concise language, so
we can know how it will affect each of us. One would hope after 20+ years of service that the
retirement benefits will not be substantially eliminated or too cost prohibitive to pursue. I am not
sure the specific questions to ask, not knowing exactly what changes UVM is considering.
-----------------------------------
I would like to input my concerns about eliminating post retirement medical benefits for
employees that have been at UVM for less than 15 years. To look back and arbitrarily select a
cut off date diminishes the contribution that employees with less than 15 years of service have
made at UVM. The last 10 years has been especially challenging at UVM, perhaps more that
since the Great Depression. UVM was faced with decreasing enrollment and no clear vision 10
years ago when the president at UVM was replaced. What followed was a vigorous growth
campaign to make UVM the premier small public university in the USA. It was a good idea;
however, the expansion was so fast that the university's financial position was put into a
precarious position. This was accompanied by implementing People Soft along with a large
price tag, insufficient testing before going into production, and substantial subsequent cost
overruns due to the consultants. Then, the world banking industry and stock markets went into a
tailspin, further exacerbating the financial problems. All along, UVM employees worked together
to fix all of these problems. To select some employees and say that their service was more
important during the difficult times, and therefore deserve better retirement benefits is at the
least, offensive. If anybody should be excluded, then it would be new hires going forward.
Remember that staff and others are actively getting UVM out of this financial predicament. We
did not get UVM into it. The comprehensive benefits package is part of our total compensation.
The salaries are really not that large and the benefits make up for the difference. People
selected UVM, in part because of the package and it was a life event. To change this now runs
contrary to what UVM extended to potential employees.
I urge the Board of Trustees to leave the compensation package alone for existing employees
and to look elsewhere to improve the university's financial health. Thank you for the ability to
input.
-----------------------------------
I have grave concerns about the "fiddling" with retirees benefits. While the entire nation was
undergoing the corporate swindling of pension plans converting their full value to cash value
and suggesting that people put their money into the market just as it was crashing, and also
reducing the health care benefits of it's retirees, my husband was involved in challenging Big


                                                     2010-10-07 UBAC Advisory Report, Page 63
Blue (IBM) on these issues. And I'm proud to say that David slew Goliath. This small group of
employees set the precedence in court winning using age discrimination.
Yes, UVM is in dangerous waters should it decide to change the benefits of its retirees. This is a
case for a class action lawsuit. UVM must honor the pension plans and benefits packages of its
retirees and of those close to retirement. They can only change pensions and benefits for those
outside of so many years to retirement or under a certain age.
While I have never supported a union, this is one area that they could surely help the staff. One
would need to do extensive research on the Erysa (sp?) laws and the Eric (sp?)lobbying groups.
**Don't forget IBM LOST their case and no other corporation has since been allowed to convert
pensions to cash balance programs or renege on healthcare benefits to retirees.**
-----------------------------------
I have a suggestion for the retiree health care benefits:
UVM, as a large group, provides a health care policy that replaces Medicare Part A, B, C and D,
similar to the Medicare advantage plan. This plan would be all inclusive. Employees would pay
a percentage of the premium cost and UVM would pay a percentage of the premium cost, not
unlike the cost is shared with employees now. As a large group, this option may be cheaper
than the health plan as we have it now. Also – there are some things that wouldn‘t need to be
covered in a retiree plan, such as pregnancy and fertility, which might lower costs.
For new hires change the benefit package so retirement health benefits are available to those
who are at least 65 years old with 10 years of service. This will mean that future retirees are
eligible for Medicare.
-----------------------------------
I am greatly concerned with the possibility of reductions to non-unionized post-retirement staff
benefits. While I understand the fiscal responsibility faced by the university, many of we, retired
staff members will be negatively impacted should benefits be changed at this time.
Staff members were told for decades that their lower than market wages were balanced out by
the benefit packages we received. Indeed this was true and a significant population of staffers
committed to UVM through their most productive years because of these benefits. Should the
task force assigned to review this issue determine that the cost savings gained by changing
post-retirement benefits; a large portion of people who made UVM what it is today will be
adversely affected.
My main concern however, is that I have heard nothing about including retirees in these
conversations. More to the point, if I didn‘t read the trustee meeting recaps and the Staffline, I
would not have had any indication that something that will undoubtedly impact my family‘s
financial health was being discussed. Retired should not mean voiceless!
I just received an e-mail from somebody at UVM asking me to look at the Post Retirement
Medical Benefits and the anticipated changes to that program.
I retired 2 years ago and I am a person that benefits from the post retirement medical benefits. I
went to work for the University of Vermont in 1985 and working there for 23 years. I stayed at
the University for those year because of the Medical benefits and of course the post retirement
benefits. I had many opportunities to work elsewhere at a higher salary but I chose to stay at
UVM because I knew that we would need these benefits when we retired. If the University
decides not to give us these benefits, it would be financially devastating to us. We planned our
retirement based on our finances and to take this away would mean that we would have to go
back to work at 62 and 67 years old. My husband had cancer 3 years ago and we need the
insurance. We presently reside in Florida and to get insurance here would be very expensive.



                                                     2010-10-07 UBAC Advisory Report, Page 64
I understand that there is a committee to look into this. The economy is not good anywhere and
we understand that insurance premiums are continually going up but I am asking you to please
take into consideration the employees that have based their life decisions on the fact that we
would have insurance for the duration of our life. Perhaps going forward for new employees
some changes need to be made to the benefit package offered but employees would know this
up front. To take something away after it has been given is very difficult for you and the
employee. It would be easier for a person to make and educated employment decision when
they are totally informed.
Will any change to our retirement medical benefits affect people who are already retired? If not,
if anyone currently working who chooses to retire before any changes go in effect, would they
be allowed to retire if they are over 55 and meet the guidelines (age and years of service)?
-----------------------------------
I would like to add my voice to the discussion about post-retirement medical benefits.
I think important to acknowledge the fact that the cost of this benefit will exceed UVM's ability to
pay. As current and future retirees, we need to starting thinking about how we can assist UVM
in providing REASONABLE post-retirement medical benefits at a price the institution can
support. We also need to keep in mind that if the cost of medical benefits decreases, the
premiums current and past employees also will decrease.
To that end, I have a few suggestions.
1. Take responsibility for of our health.
Participate in whatever wellness plans are available. Quit smoking. Use diet and exercise to
control health problems (like cholesterol and diabetes) whenever possible. Healthier people
lower medical costs.
2. Take responsibility for the cost of our medical care.
Is it really necessary to demand the newest (and more expensive) prescription drug because
you saw the ad on TV? Is a regular x-ray sufficient, instead of a CAT scan or MRI? Is that x-ray
really necessary at all? Is that doctor visit really necessary because you or your child has a
stuffy nose? We need to become educated, and I hate to use the term, health care consumers.
3.Support UVM's REASONABLE steps to reduce the cost of medical care. I remember the last
time there was a need to reduce the cost of health care, there was a discussion about changing
the limit of Physical Therapy visits covered for a calendar year from something like 25 to
something 15, which would have resulted in significant savings. It wasn't done, because
somebody was very vocal in their complaints. Is it really necessary to cover the cost of infertility
treatments? Ask for only what everybody really needs, not just what a few people want.
-----------------------------------
I have worked for the University of Vermont for 22 years (+1 year as a temporary employee). I
am 41 years old and am a UVM graduate. I could have easily found work in the private sector
with a degree in Economics. However, I decided to stay at UVM. I feel fortunate to work here
and love my job. I am thankful for the many benefits that UVM has given me (including
professional development opportunities, completing my own degree for free and medical
benefits to have my children). I chose to stay because of the special place UVM is...not because
of the pay (definitely not the pay!). I have also given back to the UVM community in many ways
including advising countless students in Arts and Sciences, recruiting thousands of new
students (many ALANA students), volunteering and organizing many community service
activities that enrich the Burlington and UVM communities, representing staff on the Staff
Council and chairing the Benefits/Salary Committee.




                                                     2010-10-07 UBAC Advisory Report, Page 65
My work, my colleagues, the students all make we want to stay at UVM. However, it is the
benefits that definitely keep me here. I have two children (ages 15 and 12) whom we hope will
attend UVM in the future. They are each working very are hard in school. We are counting on
them being able to attend UVM tuition free. Also, I would certainly hope that after 37+ (probably
a lot more!) years of work that I am able to retire with medical insurance.
For the first time since I have worked here, I am seriously thinking that the unrepresented staff
are in need of a union. As a staff member, I feel our benefits are in jeopardy. I remember when
talk of a union came up before, I was very hesitant. I felt that the administration was supportive
and would look out for our best interests. I can see now that was a mistake on my part. I do not
feel that way now. I feel as an unrepresented member of the staff that I am the scapegoat for
financial concerns. At this time, I would whole-heartedly support a union.
If you make changes to health benefits on those nearing retirement, it will greatly affect people
who have had a spouse that retired from his job several years ago and we did not enroll in his
company benefits because UVM offering an option and reward for working here. So, we already
considered that when we chose NOT to enroll in his company insurance. This is not fair to have
lost his insurance because we did not know I might lose mine too. After working here many
years, I don‘t feel like I am getting thanked for being loyal and dedicated servant to UVM.
Please don‘t take away this one benefit that is more important to me than any other benefit.
-----------------------------------
I have worked for UVM for over 24 years and have enjoyed my job. One of the reasons why I
came to UVM was for the great benefits. I‘m looking forward to retirement next year and I would
hate to think my benefits would change now. Thanks again for all your hard work.
-----------------------------------
I have worked at the University for over 20 years now, dedicating many years, working hard to
receive my full retirement benefits and now, when I am so close to retirement those same
benefits that drew me to work here are in jeopardy. Most employees of the University choose
less pay than many other positions because of the medical benefits, retirement options, tuition
remission etc.
Please fight to keep these in place for University employees, it is the right thing to do.
If we are to recruit and maintain the quality of workers that we currently employ I feel that these
benefits should continue & be non-negotiable. Thank you for continued hard work .
I have been working for UVM 17+ years. I have really enjoyed my years here; however, I stayed
mainly because of the benefits, not the pay scale. I now fear I will lose my medical benefits
when I retire, which is very upsetting since I carry the benefits for myself and my husband.
Regarding the upcoming decisions to be made concerning health insurance benefits for current
UVM employees and for UVM retirees, it is my view that all UVM employees should receive the
same health insurance benefits that a UVM president receives when s/he retires.
I am concerned that, in order to spend less money, the current employees and retirees will be
pitted against each other. In my view, both groups deserve equal access to health insurance
benefits. Both groups either have given or are giving, service to the University of Vermont
-----------------------------------
I have been working at UVM since July, 1986 (just shy of 24 years.) I started out as a 50%
employee, and moved to 75% in 1989. I have always appreciated the way UVM has contributed
to the balance of work and home for me: giving me full benefits at 75% has been a Godsend.
And tuition remission put my 2 children through UVM. The free week off for employees between
Christmas and New Year's is much appreciated. So, UVM is doing a lot right for us non-
represented staff!


                                                      2010-10-07 UBAC Advisory Report, Page 66
That said, I am married to a self-employed business person who has been on my wonderful
UVM insurance. We have appreciated the great medical benefits we had, especially in the last
few years when he had a health crisis. But I have been planning for years to retire somewhere
between 55 (my current age) and 62. I have always planned that based on knowing I would
have the retirement benefits I currently am eligible for; the ones I worked very hard for all these
years. I love my job, and have always felt supported at UVM in the benefits arena. Please don't
take that away from us long-term employees! We have earned less money over the long run
because we had these wonderful benefits, and were willing to accept that based on the perks of
early retirement and tuition remission.
Thank you for the opportunity to express my thoughts!
-----------------------------------
As a UVM retiree each time I get a letter from the University I am afraid that we are going to
lose our medical benefits. (I retired 15 years ago at age 62.) At the time we worked for the
University our wages were lower than we could have made in the private sector (I earned more
actual $ working for Sears as a part time employee.) I chose to go to work for UVM because it
was considered a great place to work and the benefits package. We were limited in what could
be put into our retirement package, we were raising four children - consequently we don't get
that much per monthly retirement.
We put our faith in the promises the University made ---- now we wonder if the University is
going to keep faith with us!!!!!!!!!!!
-----------------------------------
First, thank you for all you do as the voice of the UVM staff, all the hard work and extra hours
spent on our behalf. I respect the difficult financial times and the hard choices we all have to
make.
It is deeply concerning that Post-Retirement Medical Benefits for non represented staff are
under the microscope of the financial bottom line. It remains to be seen if our salary increase for
FY 11 will cover recent increases and upcoming increases in our medical benefits we now pay.
If increases like this continue, retired benefit costs will also increase. I do believe it is a privilege
to enjoy post retirement medical benefits and one that is rightly earned by many years of service
to UVM. Please do express concern to the committee on behalf of all staff.
-----------------------------------
I'm not sure what benefits are being reviewed, but right now I believe that If I work here till I'm
60, I'm eligible to get medical benefits for life at the same price I will be paying as an employee.
If that is going to change - I need to know sooner rather than later. Also, it is my opinion that
people already hired under that agreement should be grandfathered in - if they need to change
things, it should be for new hires only.
-----------------------------------
As the university becomes more corporate in its structure and business processes, could the
Staff Council please recommend the administration conduct an analysis on the corresponding
rising costs of hiring and training so that we aren‘t blind-sided again by "unforeseen expenses"
and forced to lose something else? Traditionally colleges and universities had a much higher
rate of retention with many staff members retiring after decades of service. The primary factors
for retention included: retirement benefits, tuition remission, and working in higher education.
Corporations also had a much higher rate of retention in part because of benefits and in part
because of a less mobile job market. Today it is not unusual for people to change jobs and even
careers every 2 to 5 years for a better offer; there remains no compelling reason to remain loyal.
The University will also experience this it hasn‘t already; which will dramatically increase
expenditures in HRS and impact all student services areas.


                                                        2010-10-07 UBAC Advisory Report, Page 67
I urge the Staff Council to also request an analysis and negotiation of the total staff
compensation package during this post-retirement benefits policy changes. A significant part of
our compensation comes from medical and tuition remission benefits so if they are
stripped/reduced, increased salary compensation needs to be part of that equation to offset that
reduction. In other words, if the university projects a certain dollar amount of savings/reduced
spending through a proposed reduction in post-retirement medical benefits, a percentage of that
should be reallocated to increase staff salaries for partial compensation of an overall lower
compensation package. This would create a more equitable process that would increase morale
and retention rates. Other creative solutions should also be explored such as AFLAC for
supplemental insurance for long-term care.
I would also urge the Staff Council to challenge any Peer/Aspirant studies; which are highly
subject to interpretation; as their narrow focus does not include other financial or demographic
variables among those institutions. It‘s the old apples to oranges scenario. We continue to be
told, ―This is what other universities and businesses are doing, or XX University laid off more
employees than UVM.‖This message says, ―You‘re lucky to have a job.‖ which is insulting,
degrading and flies in the face of our mission/vision. I could enter the private sector right here in
Vermont doing the exact same thing I‘m doing now and earn significantly more than I‘m
currently making at UVM including medical compensation, 401K, etc. The University justifies the
salaries and bonuses of its administration as needed to recruit, hire and maintain a high level of
expertise. Why aren't the same values and principles apply to its staff? Another way of thinking
about this is; consider the impact on the university if the entire administration did not work for
three weeks compared to the entire staff not working for three weeks. Changes the perspective
doesn't it?
As advisory boards only, UBAC and Staff Council may have little or no impact on the final
outcome which may already be decided. (My trust and faith in the administration is justifiably
shaken.) This may be the defining moment at UVM to tip the scale for a staff union where
negotiations are indeed negotiated. Right now we are given lip service and receive policy
mandates emailed to us at 4:29pm on Fridays.
-----------------------------------
I'm very concerned as to what happens with Post-Retirement Medical Benefits, this is one major
reason why I have stayed at UVM for over 25 years and I can't believe there's talk about this
benefit going away. I look forward to retiring some day, but a change like this, if this benefit is
taken away, could be a tremendous hardship.
-----------------------------------
As a newer UVM staff member, I have to admit that I wasn't even aware that we had post-
retirement medical benefits until the latest edition of Staff Council. I think this is a generous
benefit, and I am hopeful that it will still exist when I get an opportunity to take advantage of it in
approximately 30 years. I can certainly understand the deep concern of staff members who are
closer to retirement age and who have counted on this benefit in planning for their futures. I
would hope these staff members are treated fairly and UVM honors its commitment to this
benefit if at all possible. As the process continues, I would simply ask for as much transparency
as possible from all sides. Most of us (UVM staff) are level-headed and understand the many
competing priorities that must be paid out of a tighter and tighter budget. If changes occur, will
current staff be "grandfathered in" to the current policy? Or will changes affect all staff at the
time a decision is made? I don't expect an answer to these questions from Staff Council, but
please feel free to count them among the undoubtedly numerous questions and concerns you
are receiving. As always, thanks for all you do to represent the staff at UVM.
-----------------------------------
When I initially started working at UVM in 1993, I was told that I could expect great benefits
when I retired and so have relied heavily on that promise. To tell us now that they will be

                                                       2010-10-07 UBAC Advisory Report, Page 68
changed is unfair and definitely unUVM whose word I have relied on to help when I retire. If they
want to change benefits they should do it for new employees not for people who have devoted
years to UVM at a salary which could have been improved on by moving to another position
outside of UVM. This was one of the great attractions for me to work at the University and we
definitely do not expect it to be taken away from us. It will certainly not do UVM's reputation any
good. It is certainly a very sad decision if we lose what we have come to rely on.
-----------------------------------
Thanks! Here are some of my thoughts...... Though I'm a few years away from retirement
(maybe more depending on the medical coverage) and though I understand the financial strain
for UVM with regard to post-retirement medical benefits I am nervous about the kind of medical
care I will be able to afford once I leave UVM if the benefit is taken away. I am fortunate to be
healthy now and the coverage is great! When I'm older and retire I will expect to need a bit more
medical care and perhaps the coverage won't be there and that's scary. On the other hand, I
think we've grown to expect the coverage from UVM when we retire but to be honest it seems
as if it's a bigger issue and one that UVM should not be totally responsible for? I really
understand both perspectives but to be quite selfish, I would love to have the coverage when I
retire. I think we also need to consider other areas where UVM may be overspending and not
that I can pinpoint any but it seems there should be a more comprehensive review of UVM
spending when addressing the question of retirement benefits. Thanks for being our
representative.
-----------------------------------
Try to leave the retirees benefits alone. They are on a fixed income not going up very much if
any and need the benefits even more than working folks.
-----------------------------------
Suggestions: Considering the ostensible necessity (or inevitability of the benefits being
restructured or even removed) I am especially vulnerable for two reasons:
(1) I was hired after 1992 (Post-Retirement Benefits for Those Hired Before July 1, 1992) "Post
Retirement Benefits: Eligibility for Benefits After Retirement - UVM retains the right to amend,
alter, or terminate post-retirement benefits at any time for prospective and existing retirees."
http://www.uvm.edu/hrs/?Page=info/staffhandbook/benefits.html#Post-Retirement
(2) I remain unrepresented Please consider this option before addressing medical retirement
benefits cuts: Adjusting the vested retirement percentage (currently for every 2% I put in, UVM
puts in 10%) to a ratio of 2% : 8%. This is still a rather generous retirement agreement that is far
above the private industry standard of approximately 2:5. (From what I have been told IBM's
retirement package is 2:2). Not only does this give us some flexibility (say that we agreed to a
yield that would allow the ratio to drop to 2:4 as the lowest fixed rate) this reduction is not
regressive (affecting the lowest paid employees the most) in addition to it being proportionate to
each individual's pay grade. In other words, this reduction works like a flat tax, those that make
more would lose the same amount (proportionately) to those that make less. I would like to see
someone crunch the numbers on, say, for example, the 2:8 ratio and see if the total saved (I
assume it could be near a million dollars annually) would balance the projected losses of the
medical retirement benefits. This model could be used to could calibrate the costs, adjusting the
rate annually, (remember 2:8 could go as low as 2:4) to meet the retirement needs as they
arise.
Here is a simple sample example of the savings (at 2:5 instead of 2:10) just based upon the
upper echelon 2007-2008 salary data: Group A: 265 employees earning = > $100,000 Group B:
16 employees earning = > $200,000. Group A under the 2:5, savings = 1.3 million + /per yr. (5%
saved) Group B under the 2:5, savings = 160,0000 + /per yr. (5% saved) Total savings to the
university annually = $ 1.46 million* *and these totals do not even reflect the majority of the


                                                     2010-10-07 UBAC Advisory Report, Page 69
vested UVM employee pool (under $100,000.oo annual salary or President Fogel's salary).
Furthermore, those not vested are not affected, which makes this reduction rather progressive
(for represented and unrepresented employees alike).
-----------------------------------
My hope is that the retirement benefits will be grandfathered, for those of us who are
approaching having enough years to receive the retirement benefits, at some point when we
retire.
One of the reasons I initially came on board at UVM was for the great benefits, and retirement
benefits, definitely, one of the top reasons to accept the position. The compensation was very
low, but I decided that the tradeoff was well worth it. It would be a hardship if my retirement
benefits are taken away.
-----------------------------------
I do not mind the benefit being reviewed, but it makes me suspicious when there are few other
means of financial savings being looked at as well. I took a job here at a very low hourly rate
because the benefits made the total package fair. If I will have to pay more for health insurance
later, than I want more compensation now to invest and plan for future expense. I feel that the
benefits are a large part of my wage, and I see no recommendation for decreasing the salaries
of other University employees. This issue has a huge impact on those of us that struggle to
make ends meet in this economic boondoggle. I hope that you can represent us fairly to the
University so an equitable decision can be made. Thanks for your support
-----------------------------------
I am deeply concerned about the issue of staff potentially loosing medical benefits upon
retirement. Many staff members, myself included have remained as University employees only
because of this benefit. With only a few years remaining Is there a chance that the University
could grandfather in those employees with say 10 or more years of service? It seems that
because of the faculty union the topic of their medical benefits is a talking point and little more,
with the staff, many of whom make only a small percentage of what a faculty person does, that
threatening to decrease benefits is no more than a push to get the staff to also unionize. Two
years ago I was diagnosed with cancer and as a single parent my health insurance is a very
high priority. Please as Staff Council try to protect the health care benefit that is so critical to so
many of us.
Thank you.
-----------------------------------
I was dismayed recently to hear that the University is planning to change health care benefits for
retirees. I expect to retire in a few years and have made my financial plans with the current
benefit structure in mind. After working here for a quarter of a century, I would be very
disappointed if UVM followed through with this plan in a way that inflicts major financial hardship
on current retirees or on future retirees with records of long service. I hope that the Staff Council
will represent our interests thoughtfully and with resolve as plans progress.
-----------------------------------
Once again the unrepresented staff are being targeted by the administration. Post retirement
medical benefits are the reason that people work and stay at UVM for so many years. I've been
here for almost 30 years and have based my retirement planning on receiving these benefits. I
have changed my retirement plans over the years as the medical benefits have been degraded.
This is not the way to get and retain competent and dedicated staff.
-----------------------------------



                                                       2010-10-07 UBAC Advisory Report, Page 70
Thank you for featuring the upcoming review of Post-Retirement Medical Benefits in this
month's staff line, and also for writing to the president and administration about informing
employees about the proposal of changes to these benefits. I am one of the staff people who
did not know this was under review, so I am very grateful to you for your publicity on this matter.
I am considering an earlier [than age 66] retirement, and have taken great comfort and great
confidence in the existence of health benefits for retirees with 15 or 10 years of service, at age
55+ [this is just a generalization of the published benefits] at a co-payment cost comparable to
current employee co-payments. This existence of this benefit also gave me some security and
some peace of mind during the budget crisis/layoff period of Fall 2008/Spring 2009, when so
many of our jobs were under the possibility of being cut.
I would like to do whatever I could to keep this benefit for myself and other staff members.
Thank you for alerting us to the possibility of changes or elimination of this important benefit,
and please keep us informed about upcoming open information sessions, discussions, etc.
-----------------------------------
I would just like to feel secure that whatever changes may made that current employees remain
on the same post-retirement benefit plan as they were when hired, or grand-fathered in under
the same plane. If changes have to be made and are unavoidable, I would like it to effect only
new hires beginning in FY'11 or '12, for instance. This is probably a given, but thought I'd
mention it. I am also willing to help with any added duties that may be imposed on the Staff
Council or Benefits Committee related to this issue. Thank you!
-----------------------------------
Just my 2-cents worth on the retirement medical benefits issue: It sure seems as if this expense
is being investigated by the university, and it's natural to think that decreasing this benefit may
be a way to save the university money. I would encourage those doing the investigating to be
creative about it. For instance, I'm sure that there are retirees who don't really need the
insurance (they are in excellent health, they have a spouse whose benefits cover them, they
have long term care insurance, they are retired from UVM but work elsewhere and receive
benefits through that employer, etc.). So, why not ask who would be willing to forgo this benefit?
You might be surprised as to how many would give it up if it meant continuing to provide it for
those who really need it. Other ideas:
Work on some sort of tiered system so retirees can decide at what level they wish to be covered
- not at all, only for catastrophic illness/injury, medical but not dental, Rx only, etc.
How about a trade of retirement benefits with current benefits? A current employee could
choose to give up a portion of his/her normal vacation time and/or sick leave over time in
exchange for medical benefits during retirement. You may even find some employees who
would take a pay cut now in order to "buy" themselves medical coverage in their retirement.
Bottom line: Be flexible. Don't limit your thinking to options that exist now and don't omit
possibilities because they may be difficult to arrange. Instead of broad-stroke policies that limit
entire groups of people (e.g., those who retired after a certain date), allow some individual
choice.
-----------------------------------
Blue Cross/Blue Shield through UVM is my secondary medical insurance. Is UVM going to
remove this option for me? Will they provide other choices that increase the premium I currently
pay? Will I be able to continue with BCBS but at a higher rate? Obviously I am very concerned
about this issue. Medicare and BCBS are the only medical coverage I have. So far I have had
no medical issues except routine check-ups but that situation won't continue forever. I would be
willing to pay a higher premium or have a higher deductible (within reason) but I certainly hope
UVM does not eliminate medical coverage options to its retirees altogether.


                                                      2010-10-07 UBAC Advisory Report, Page 71
-----------------------------------
I am concerned with the potential change in post retirement benefits. I have been working at
UVM for 20 years and even though I haven't used this benefit yet, I have been counting on
having it. I have read the report about the liability providing this benefit is to the University, but it
is valuable to each employee also, and an important part of our compensation. I would like to
know if this potential benefit change will be made in a tiered approach, will it be grandfathered
in, or will it be simply be eliminated. Will the Staff Council be making any calculations as to the
cost to the employee to procure this coverage on their own? Thank you so much for
communicating this potential change to us and for all you do on our behalf.
-----------------------------------
I would like to see a copy of the May 29th communication which President Fogel sent to the
University Benefits Advisory Council and which was copied to all staff and faculty, but
apparently not to retired staff and faculty. As a retiree, I would like to be kept informed about
anything which might affect my retirement benefits. Please let me know how retirees like myself
can see the May 29th communication. I thank the Staff Council for sending notification of the
current "Staffline" and other information to my email.
-----------------------------------
What changes are proposed or being discussed for current retirees?
--------------------------------
Post-Retirement Medical Benefits: I am a current (2006) retiree (although still occasionally
working as a temporary part-time UVM employee!) after having worked for the University for 28
years. I have great concerns about post-retirement medical benefits. Since I am too young to
qualify for Medicare, my UVM health benefits are VERY IMPORTANT to me. This is my (and my
husband's) only health insurance. I cannot afford to be without it since I have Type 1 diabetes--it
is my lifeline! If I had to apply for any other health insurance, I could very well be disqualified
due to a pre-existing condition! I have been and am very grateful to pay to have this benefit and
want to see it continued. Please do all possible to keep retirees covered.
-----------------------------------
It is with great interest and concern that I write to you regarding the potential changes to
retirement health benefits. I realize the need for cutting costs, but also realize that many people
that this will impact have no other options with these changes. As some of us are nearing
retirement and looking at the benefits that we earned over the years it is quite stressful to think
that our retirement health benefits would not be there. I hope that Staff Council will have a loud
voice around these discussions and bring our voices to the table.
-----------------------------------
I appreciate the memo you sent to President Fogel regarding the discussion of post-retirement
medical benefits. In the first paragraph you write that 'some employees are unaware or have
little understanding of this matter.' I would suggest that staff have largely been unaware that
action might be taken on this issue within this very tight time frame without formal
communication to the community (as you correctly note).
The University certainly faces challenges regarding benefits - as does every campus, every
large institution in the country. I am not suprised that the issue has been raised, but I am
dismayed that there has been no dialogue to date. It is a relief that Staff Council is attentive to
this now, and I appreciate your work on our behalf. I just wanted to add my name to the list of
those concerned about the transparency of the process.
-----------------------------------



                                                        2010-10-07 UBAC Advisory Report, Page 72
After reading the Burlington Free Press yesterday and having conversations with other UVM
employees, I am extremely anxious regarding the future of medical benefits for retirees. I have
worked for UVM for 16 years, am almost 63 years of age and qualify for these benefits should I
retire today. This benefit has been one of the reasons that I have remained at the University. I
hope that in your discussions with the Board that proposals are not "all or nothing". I understand
that the financial instability of the University is concerning, however, to focus on this one area,
especially affecting a more vulnerable population (those nearing retirement), is a strategy that
minimizes the high standards that the University has stood for during my tenure. I am willing to
assist in any way possible in an effort to maintain these benefits.
-----------------------------------
Dear President and Representatives of Staff Council, I am deeply concerned about the possible
changes to retirement health benefits for UVM employees. I know that costs need to be
contained but I also know how important it is to preserve those benefits in order to recruit and
retain a highly functioning, strong and productive community of UVM employees. Please, speak
loud and clear on this issue; do not let this simply get pushed through without full input from the
UVM community and full and thoughtful representation around the table. I have grave concerns
about the speed with which this is being managed and hope very much that your collective
voices will be heard and that you will consider retaining the expertise of an expert team who can
speak to the importance of retaining our current benefits. Any compromise must take into full
account the interests of UVM staff. Hundreds of UVM staff, many of whom have given years of
service to the University have built not only their current budget but their future hopes, dreams
and goals for retirement on the current model and any compromise must take that into account.
There must be fairness and equity in all decisions and the needs of those with 10 years of
service like myself must be weighed against the needs of those with 30 years of service. The
burden must be shared between those earning a high salary, those earning far less and the
current retirees themselves. Please make sure that all voices are heard around the table; do not
let this just happen without strong support for the needs of the UVM staff. How will any future
compromise impact those many UVM staff members in the upper divisions who earn a strong 6-
figure salary? To put it mildly, I am scared...very scared and I know I'm not alone.
-----------------------------------
Dear President and Representatives of Staff Council,
I am greatly interested in - and concerned about - potential changes to retirement health
benefits for UVM employees. I appreciate the need to contain costs. I also appreciated the
importance of preserving anticipated benefits at a level that helps maintain a productive,
collaborative community.
I appeal to you to have a strong voice in the discussion around this issue. If compromise is
required, as no doubt it will, I hope you will bring strong, informed - if possible, expert -
representation to the table to ensure that compromise takes into full account the interest of UVM
staff. I also hope a solution will be complex - considering length of service to UVM, age, access
to other coverage, etc., and other important factors. I hope you will gather and share facts about
the benefits administrative officers will maintain. Overall, I hope any agreement will spread
responsibly the burden - among current staff and perhaps also current retirees. I welcome an
opportunity to help Staff Council address this important issue.
-----------------------------------
PLEASE don't let them take away the 10% match for non-represented staff! since i get no tuition
remission benefit for children (don't have any), the 10% is really the only benefit that's worth
much to me... although the medical benefits are excellent, with only a 2% raise each year,
increases in medical premiums these last few years are already decreasing "total
compensation" every year; meaning, our salaries are continually going DOWN, not UP... being


                                                     2010-10-07 UBAC Advisory Report, Page 73
fairly close to retirement, i need that extra 10% because i can't afford to play "catch-up" ~ thanks
for listening.
-----------------------------------
I'm responding to the recent e-mail message concerning Post-Retirement Medical Benefits. This
is such a major benefit. I know that times are tough right now, but why is staff being targeted as
a means to save money. It's tough enough not knowing if you are going to have a job or not.
What can be done to help staff keep this benefit?
As far as health insurance is concerned, now I am just trying to breathe and not panic. Certainly,
I have been counting on this benefit since I started at UVM in the early 90s. Despite a couple of
years out due to grants ending, I have always returned to UVM as I love my work as a research
nurse and appreciate my benefits. I am 63 this year do the medical benefit question looms.
Thanks!
-----------------------------------
I understand that hard economic times make for hard decisions by organizations like UVM. The
retirement health benefit is one of the main reasons I remain working at UVM. I am completing
my thirteenth year at UVM this month. I worked commercial construction for ten years previously
where the money was excellent but the benefits poor. Benefits are why I am working at UVM.
Please do all you can to ensure that a fair and equitable solution is reached as the talks on
benefits progress.
-----------------------------------
I have worked at UVM for 27 years for fairly low pay but very good benefits. I have 6 more years
of employment at UVM until I am 55 and have the option of partaking of my post-retirement
benefits. That is one of the biggest reasons why I chose to continue working here instead of
taking a job offer from the state a few years ago. I will not stand still and let post-retirement
medical benefits be taken away from me. I do not like unions and have ignored their attempts to
unionize staff for many years; however, if our benefits continue to be whittled away, I will have
second thoughts about championing a unionization of currently unrepresented staff. Thanks for
listening. I appreciate the efforts Staff Council makes on our behalf.
-----------------------------------
I am saddened by President Fogel charging the University Benefits Advisory Council (UBAC)
with reviewing Post-Retirement Medical Benefits. I am one year away from the magic number of
75 and hope consideration will be made for those of us who either could have retired sooner
and taken advantage of the post-retirement medical benefits or who are close. If changes are to
be made, I certainly hope a grandfather clause will be also established to cover those of us who
have given so many years to UVM.
-----------------------------------
I am a retired secretary who worked in the ACCESS office for more than 10 years. I worked
part-time, half days. I did get health benefits at 50%, I paid one half and UVM paid one half. At
this time the cost for me is $542.10 for three months. If this benefit is eliminated it will be a
catastrophic hardship for me as I no longer am able to work and my husband is deceased. I
have been able to keep up with the premiums in the past but do not know what I would do if I
am no longer eligible for the insurance. Thank you for allowing me to express my concerns.
-----------------------------------
As a retiree of 5 years, I just want to say how much I appreciate our medical benefits, and while
I am now using Medicare as my primary, the J Carve-out with BC/BS has been very, very
helpful, Having been widowed within 2 years of my retirement, this has been a significant help to
me. Anything that might be done to continue this coverage will be most appreciated.

                                                     2010-10-07 UBAC Advisory Report, Page 74
-----------------------------------
As a retired staff/faculty member who has reached medicaid eligibility a year ago, I need to say
that our BC/BC "gap" insurance benefit as well as our Delta Dental coverage is enormously
important to both my wife and I. I accepted early retirement six years ago after 30 years at UVM
with the assurance that the benefits would continue. Please do everything possible to continue
these benefits --to those of us that were assured of their continuation. Thanks very much for
your help and support.
-----------------------------------
Hello, I recently read the June Staffline and learned about the post-retirement medical benefits
issue. I may be naive about the issue -- honestly it was the first time I had even heard about it --
but it seems clear that it will undoubtedly put tremendous pressure on us, unrepresented staff!
especially those with less than 15 years. While I appreciate Beth Walsh's call for transparency
and open discussion, I am not optimistic that University administration will share and/or discuss
this issue any more than any other financial issue... I'm sad to say that I've come to distrust the
administration and do not feel they have staff's best interests in mind. Basically, without a union
-- like the faculty and some staff have -- we are sitting ducks. Yes, there is no guarantee that
having a union will ensure any benefit, but at least the unionized employees are not at the whim
of administration's quick decisions. As fellow staff, you know that UVM is a wonderful place to
work -- and that staff really do make a difference to make this university a top notch institution.
And you know how dedicated staff are, regardless of often being under-appreciated and often
under-paid... for many, we continue our employment at UVM because of pride in our institution
and our work, and overlook / tolerate little/no salary increases because of the other benefits the
University provides (and claims as part of our salary/benefits package). As these benefits
continue to erode/disintegrate/be threatened, so too does my sense of security, my morale, and
my goodwill (i.e. donating countless hours to the university over these past 20 years). To me,
the post-retirement medical benefit issue is just another indication of administration's disregard
for its dedicated staff. I do hope Staff Council can help administrators hear our voices... but
honestly, at this point, I'm not convinced that University administrators are listening...
-----------------------------------
After reading the memo from President Fogel regarding the post-retirement medical benefits
(PRMB) issue, I am a bit nervous. I have been a long term UVM employee - over thirty (30)
years. I am still not eligible to retire from UVM due to the 55 year old age requirement. I have
two young children that I support. I have been counting on the PRMB for a long time now. UVM
has always prided itself in its benefits package that it delivers to its employees. As employees,
we have been told time and time again that compensation is made up of salary PLUS benefits.
As employees, we have accepted below market salaries with the promise of the great benefits.
Since I have worked here I have slowly watched our "great" benefits erode away. Yes, times
have changed and costs are going up. When I started working at UVM, it cost $5.00 (five
dollars) per year, to park a car on campus. Health care was free to employees AND their
families during employment and after retirement. Neither is the case anymore. And now, UVM is
looking at reducing the benefit package even more? I can see reducing PRMB for new
employees, ones that can plan for the future and set something aside if they choose. But to
change/drop a benefit that has been counted on through many, many years of dedicated service
is a very bad decision. I have always been under the impression that money was being set
aside from my benefits package to cover my post-retirement medical benefits. Wasn't this the
case? If it wasn't, it should have been. For many years now, UVM has been actively promoting
wellness, not only for the employee's benefit, but also for the university's benefit. A "well"
employee means fewer sick days and greater longevity, both of which translate into lower costs
for the university. However, the increase in longevity is a dual edged sword. Since employees
are now living longer, the PRMB premiums are paid for a longer time. So yes, it costs more for
the University, but long term employees also cost the university less in the long run. What is the


                                                     2010-10-07 UBAC Advisory Report, Page 75
answer? I don't know. Should the PRMB be on a sliding scale? The more years of service one
gives the university, the better PRMB package they receive? Think about it, why should the
employee who retires while minimally meeting the requirements receive the same benefit as
one who far exceeds the minimum retirement requirements? I would be happy to come to one of
your meetings and talk about the situation. I served many years on the Staff Council until I
relocated to White River Junction. Due to the long distance, I have not felt that I could justify
traveling to the meetings on a regular basis, thus I have not run for Staff Council in many years.
I look forward to you representing us in this very important issue. Thank you.
-----------------------------------
One good option for us to look into for retirement health benefits would be a defined dollar
benefit that individuals could apply to a menu plan of health coverage.
-----------------------------------
I have sixteen years of employment with UVM and hold the opinion that the medical benefits
available in retirement are of great value. I hope everything possible is done to continue to make
this benefit available to retirees. At the very least, if changes must occur, I am in hopes it will be
phased out with current staff and retirees being grandfathered to retain the benefit. Then new
hires would know from the start of their employment that they need to plan for the change in
coverage. I believe loss of this benefit will significantly impact me as well as other employees
who work for UVM and do not earn six digit figures. At a point in my life when I am most likely to
need the benefit, I may be facing the possibility of not having it.
-----------------------------------
Thank you for your letter to President Fogel, et al regarding the study on post-retirement
medical benefits. It appears that those who will be affected now and in the future might not be
part of the process without your intervention.
May I suggest that the Staff Council advocate that a retiree (more than one, perhaps) be
included when the task force is formed? It is necessary to have the perspective of someone who
is paying for Medicare B and supplemental Blue Cross/Blue Shield from their retirement. This is
especially true if that retiree is someone who was in a lower pay grade throughout their career
at UVM and now does not have a lot of money coming in each month. Again, thank you and the
Staff Council for being ever vigilant!!

Feedback Received after the Morning 9/27 Information Session:
Thank you for today's open forum. I have a few comments/concerns I would like to mention:
1. There was a mention of employees saving towards their medical benefits to help them in
retirement. This might work for younger employees who have many years ahead of them and
could contribute over the years. I have been employed at UVM for 22 years and am 61 years of
age. I am eligible by years and age, but would like to work at least until I am 65. I do not have
time to save much more towards my retirement medical coverage.
2. Since I have been @UVM, I have had coverage for my family and my current plan covers
myself and my spouse. I am worried that my spouse may not be covered by the UVM plan after
retirement. He is self-employed and does not have an option for coverage by his employer. It
would be very expensive for us to obtain coverage for him after I retire, especially when we are
on a lower income. I hope there will be an option for him to be included in the UVM coverage.
3. I am happy to hear that everyone will have the same coverage across the board, whether
they are administration, unrepresented staff, and union represented employees.
Thank you for the opportunity to ask questions and give comments and concerns.
-----------------------------------


                                                      2010-10-07 UBAC Advisory Report, Page 76
I am thinking about retiring in 5 years. I will be 62 with 40 years of service. I was looking at the
1B draft with having to pay 29% of my medical insurance. I could not afford to retire at that
time....
-----------------------------------
When I started at UVM in 1982, the staff handbook declared that I (and my spouse) would
receive full and free medical benefits up to and through retirement. Since then, medical costs
have risen, and the "free" plan is no longer. We have continued to pay increases in premiums,
increases in co-pays, increases in prescriptions. I understand the need for fiscal responsibility,
but now that I am close to retirement and have worked at UVM close to 30 years, I am feeling
betrayed, fearful and angry. I have planned carefully for retirement and hopefully have put aside
enough, but it is unconscionable that UVM would care more about the bottom line than about
long time dedicated employees. I certainly hope that President Fogel would consider plans that
grandfather in long term employees and graduate the increases for those with considerable
years of employment. UVM has plenty of money for buildings, vice presidents, and landscaping
but seem to cry poverty when it comes to the welfare of the workers.
A concern was raised at the forum today about whether current employees who have met
requirements to retire should do so quickly to avoid being caught up in a change. The best way
to address this issue would be to add a guiding principle stating that all such currently eligible
employees will be treated identically with current retirees. This will remove the uncertainty and
the incentive to retire precipitously.
-----------------------------------
I didn't want to ask this publicly at the meeting for fear of not making it back to my office (only
kidding) at the suggestion. Can you tell me if you've evaluated increasing the minimum
retirement age from 55? It is so generous compared to other areas that I'm wondering if
increasing it even a little would result in cost savings? Thanks for the consideration,
-----------------------------------
One component of healthcare costs that institutions and, indeed the entire country, need to
address to a much greater extent involves "lifestyle-associated illnesses". Depending on what
report one wishes to quote, lifestyle associated illnesses represent anywhere from 40-80% of all
healthcare expenditures in the US.
Many institutions (both private and public) are encouraging healthy lifestyles as a way to reduce
healthcare costs. Some institutions now provide financial incentives for individuals to engage in
healthy behaviors.
With the above in mind, has the UBAC considered financial incentives for employees (both
active and retired) who live healthy lifestyles and, conversely, assign penalties to individuals
who do not (eg: people who smoke, etc). Yes, it is hard to do, but just as it is "unfair" for UVM
employees to continue to depend upon heavily indebted students to indefinitely pay their
healthcare costs, so too is it "unfair" for people who work very hard to maintain good health to
pay the same premiums as individuals who engage in lifestyles that objectively lead to higher
healthcare costs (some would argue that the former are in actuality subsidizing the latter).
I realize the difficulty of implementing what I have suggested but, as with President Obama's
new healthcare legislation, unless individuals accept greater responsibility for maintaining their
own health (to the best of their ability), no healthcare reform is likely to control out of control
healthcare costs.
-----------------------------------
In your presentation, you indicated that the Medicare Part B premium is $100 in 2010. It is
actually $110.50 per month for people who first joined Medicare in 2010.


                                                      2010-10-07 UBAC Advisory Report, Page 77
Feedback Received following the Afternoon 9/27 Information Session.
I was reading one of the recent reports on line .. and have a question. The table I was studying ,
notes the eligibility of retirement age to be 60 yrs. My understanding currently is that that age is
55… + required years of service. Is this a piece of the current plan that will change? Will the
eligible age rise from 55 to 60?
-----------------------------------
What is the earliest effective date that these (if any) changes will go into effect?
-----------------------------------
I attended the 2pm session today and wanted to make a comment about the discussion that any
change to retirement benefits might cause a mass-exodus of faculty and staff who are eligible
for retirement. It seems logical that a pending change in retirement benefits, esp. when current
retiree's benefits are not being touched, will cause an increase in retirement in the next few
years of those eligible for retirement.
My comment is, that I hope that this loss of experienced faculty and staff is considered as a
'con' and not a fiscal 'pro' in the opportunity to hire new (lower salaried, but less experienced)
employees who will have to start with the new diminished medical benefits.
Thank you for the opportunity to comment,
-----------------------------------
I'd like to follow up on my questions at the meeting today.
The scenario to which I was referring is on p. 11 of the document. For example 2, "65 Year Old
Retiree with 25 Years of Service at Retirement and a $113,000 Final Average Pay at
Retirement," I wish to know
a) whether the following formula for arriving at the costs for UVM as well as the retiree are
correct:
UVM: cost of premium for Medicare supplement as well as prescription drug coverage, minus
retiree's share of cost Retiree: cost of premium for Medicare coverage, plus share of cost of
premium for Medicare supplement as well as for prescription drug coverage, plus out of pocket
expenses;
b) whether current (2010) actual figures can be estimated for this scenario, and what they are
(average annual figures for 2010).
-----------------------------------
I was just at the 2:00 meeting this afternoon and realize the hard work that must have gone into
your proposals. My personal concern is that I have worked at UVM for 25 years and the benefit
that I thought I had is going to be taken away from me or changed. One of the considerations
was "extending" benefits to hew hires. It seems unfair to cut benefits from those of us close to
retirement age and extend the benefits to those who you are about to hire. One figure that was
brought up was that currently the retiree may be paying 24% of the premium cost and, under
one possible scenario, they would be paying 69%. That seems quite unfair.
-----------------------------------
Unfortunately, I am unable to attend today‘s sessions regarding potential changes in post-
retirement benefits but I did have a chance to review the slide presentation. Admittedly, I don‘t
understand all the details presented in these slides, but I do have some concerns about some of
the options that I would like to share:




                                                      2010-10-07 UBAC Advisory Report, Page 78
1. If I understand the slides correctly, one option is to cap the lifetime insurance amounts per
person/household. I would imagine that this might work in much the same way as our current
Delta Dental Insurance works.
If this is, indeed, what the slide means, I think that this option would present a financial hardship
for many staff members, especially those who retire at a lower salary. None of us know what the
future holds but working in healthcare, myself, I do know that medical costs can consume a
great deal of a person‘s finances when an illness strikes. The older we get, the more likely it is
that we will get sick. That‘s why we seek jobs that offer medical insurance. The cost of medical
care is overwhelming in this country. I think a plan that sets lifetime maximums for people would
be detrimental to UVM staff member and their families, especially at a time when a family is
struggling with an overwhelming medical diagnosis.
2. I think the points system that was presented seems very complicated. Wonder if it would
really save UVM money.
3. I think the idea of allowing current staff members the option of sticking with the old plan or
opting for a new plan is more equitable than just switching for a new post-retirement plan. I have
always been proud of the fact UVM administration includes staff members in the decision
making process, provides us with a voice. I think giving current staff members the choice of
whether to keep their current benefits in place or to switch to a new options supports that
tradition. At the same time, new hires coming in could be offered only the new post-retirement
benefits. Changing the rules (regardless of the reason) without giving staff any options to
choose for themselves seems to support the private corporation model—top down management
style.
Many of us have worked at UVM for a substantial amount of time. Over the years we have
accepted a lower salary than that which we might have received in the private sector. UVM‘s
explanation for lower salaries has always been that the benefits package makes up for the lower
salary. For those of us who could be within 10 to 15 years of retirement, to have the rules
change is very concerning. While I understand UVM needs to stay financially competitive with
other institutions, it is upsetting to think that an institution we have dedicated ourselves to for
many years is suddenly changing the rules for us near the end of the game.
If you are offering other information sessions, I would very much like to attend to learn more
about these potential changes.
As a new employee with one year of service, I am concerned about the impact of proposed
changes to the post-retirement medical benefits. Thank you for your consideration and looking
out for the best interest of those new to UVM and those who will be coming in the future.
-----------------------------------
I am grateful to the Advisory Council for conducting the informational meetings held earlier
today and greatly appreciate the vast amount of information gathered and presented. It is
understandable that the University will be unable to sustain the current post-retirement benefit
structure for the long term. Just a couple of comments related to the discussions surrounding
this important issue. It seems to me that the retirement pool has grown, not only because
individuals are living longer, but also in part because of the long term commitment many
employees have made to the University over the years.
I am a strong proponent of protecting the status of current retirees. I would also entreat the
Council to give similar consideration to active long term employees who are fast approaching
retirement status, including those of us with 25 - 30+ years of service who might fall into the
Pre-65 retirement category.
Thank you for your kind considerations.
-----------------------------------


                                                     2010-10-07 UBAC Advisory Report, Page 79
I addressed my comments / questions to UBAC this morning. As I was talking to other people
who approached me after this morning's meeting, they agreed with my statement, that it looks
like people that have worked here from 5 years on are going to be entered into this plan X, and
those people that are recent hires, and up to 5 years, may have a whole different scenario.
In this case, it means that people who have been here for 30 years, or more, or a little less, are
going to be categorized with people who have only been here for 6 years, and we are all going
to be put into the same plan (which will be selected for staff).
It appears there will be no seniority, based on # of years served, and no grandfathering of the
current plan for people who have worked here and committed most of their lives to this place,
which seems unfair.
People who have worked here for 30 years are treated exactly like people who have worked
here for 6 years. That doesn't seem right at all.
And with the money you save by doing this, you say you will increase salaries....
We don't see that happening, and again, the higher paid people get higher salary raises (except
for the past couple of years), and there are always ways to get around that.
Like I mentioned in today's meeting, I would be willing to forgo a 1% (or higher) raise in order for
you to be able to take that money and put it toward paying the post retirement medical benefits,
and from what I hear, other people would be willing to do that too, and if that was mandatory for
everyone, you would save money every year.
-----------------------------------
As you know, the economy is already bad, and speaking for myself, I am a single person, and
paying extra for benefits when I retire would be a hardship, since I am not making $100,000 a
year (or even close).
Also, please do not change the benefits of the people who are currently retired, or discontinue
benefits for their spouses if the UVM employee were to die, that would be a huge burden to
current retirees, who can't afford more of a strain on their limited incomes.
I received a wonderful letter from Richard Cate saying how much he valued my years of service,
please show us exactly how much you value them, by grandfathering the people who have been
here for a while 20 or more years, etc...
We have worked hard for UVM and shouldn't be put into the category as people who have only
been here for 6 years, etc.
I believe that -- upset a lot of your long term employees this morning, and the fact that staff is
unrepresented in any union, leads us to think that we will not get the best plan for us, and that
the staff will absorb the blunt of these charges, yet again.
A lot of people on campus already feel that faculty gets better raises than staff as it is, and that
doesn't seem fair either.
Anyway, thank you for listening, and there are places that grandfathered their long term
employees, into their current post medical benefits plan, and that seems fitting for UVM to do
also, in order to literally
thank us and acknowledge us for our years of service.
Some of our families (including mine), have worked here for generations, and came here for the
benefits, and worked hard to get them, it would be a shame not to be considerate and sensitive
to your long term employees. I can see all of the long term employees retiring soon, just so they
can get the benefits they deserve.




                                                      2010-10-07 UBAC Advisory Report, Page 80
I cannot, because I am too young, and I am disappointed that seniority or long terms of service
are not going to count for anything in this case, it is unfair to us, you say you appreciate all of
our years of service, and then you don't acknowledge them, during a huge decision like this.
Thank you! :-)
Three suggestions:
1) UVM could provide more financial literacy and investing education (perhaps even as a
contingency to get the UVM retirement match) so that employees are more prepared to face the
rising costs of medical care and retirement
2) The UBAC Post -Retirement Medical Benefit report listed employees increasing contributions
to the 403b account as a potential savings vehicle for post retirement medical costs...true...but
the chart did not note that an employee could contribute to a Roth 403b...a post tax investment
that would not be taxed when withdrawn (this applies to the employee contribution only, not
available for the first 2% per UVM rule).
2a) UVM currently requires that and employee contribute 2% or 3% of income to receive the
UVM match...UVM could ( and should) require the minimum contribution to get the match but
allow the employee to elect the Roth if they wish (note that employer contributions would still be
in the regular 403b and taxed at w/d).
-----------------------------------
I am 55 years old & have been employed at UVM for 21.5 years, therefore qualify for retirement.
Before Fogel's decision is made about the change in post retirement health care, will you offer
opportunities for employees such as myself to investigate retiring early - such as individual
meetings, providing an actual schedule of what our benefits/premium payments will be on old
plan vs new according to our current pay level, etc?
-----------------------------------
Will the non-represented staff be exploited in the benefits change in receiving a burden that
other (represented) staff will have an opportunity to negotiate? Will staff be further exploited by
bearing the financial burden as the uvm contribution shifts to 'increase salaries and improve
classrooms'? (Cate, BFP 9/26)
The potential benefit-related financial apocalypse being predicted (if prmb status quo is kept) is
being addressed via performing surgery on retirement benefits, even as the university continues
to bleed dollars into equally unsustainable salaries of added administrative positions and
financial aid/discounted tuition rates for recruited students. Is UVM perpetuating/adding some
outwardly popular features to recruit/ retain students at a cost of corroding a core benefit which
has served to recruit/retain quality staff?
Are UVM's overall resources in line with our ambitions? Is the post-retirement benefit the source
of current focus because it affects a largely more vulnerable/less vocal population than other
areas of unsustainable costs (e.g. higher-end salaries, financial aid)?
The work of Dr. Carney et al is to be commended--the daunting task of sugaring off so much
information and input into clear, concise, and mission-conforming strategies has been
accomplished in short order.
The Staff Council reps, too--with a special nod to the efforts of Ida Russin, have done a great
job in communicating to staff and encouraging input.
-----------------------------------




                                                     2010-10-07 UBAC Advisory Report, Page 81
Dear UBAC Representatives,
Thank you for your work on this important issue. I am sending my comments and questions,
made in the Monday September 27th morning forum open to staff, for inclusion in your report to
the UVM Board of Trustees.
I asked if the committee would provide a specific example of one person from each group
('ready to retire', 'not eligible to retire and more than 5 years at UVM' and 'less than 5 years at
UVM'), and show what happens to each through the 4 different plans. I did check the materials
from Hewitt consulting, and they do indeed have examples on the UBAC webpage, but they do
not spell out the fact that for example, under plan 2 or any "book account" plan a typical person
in my category (over 5 years at UVM not eligible to retire) will use up all their UVM retirement
medical benefits in about 5 years and then would be on their own. That example came out in
one of the summer sessions, but it did not make it into the material from the consultants; one
would have to figure it out for themselves. This level of detail would help readers understand the
impact of the changes on their personal retirement situations.
I also made the point that the GBAC 45 "requirements" are not required by law. My sources
below show that the GBAC 45 guidelines are being used as the accounting measure to justify
these cuts. Although the use of a nationally recognized standard is good practice, the guidelines
are not required and certainly should not be used to justify benefit cuts in such uncertain times.
My final question to the committee yesterday was--would the UBAC provide an example of how
a Vice President's benefits would look, or are their benefits separately negotiated with the Board
of Trustees? Mr. Cate did make clear that the reductions in retirement benefits will apply to
everyone, including himself and President Fogel. However, I also would like to note that at their
salary ranges, they have more retirement planning options available than those of us in the
middle class; those of us who will pay most toward the medicare and private coverage enjoyed
by current and eligible UVM retirees.
RESOURCES: from www.gasb.org. Governmental Accounting Standards Board = GASB
The GASB is not a government entity; instead, it is an operating component of the FAF, which is
a private sector not-for-profit entity. Funding for the GASB comes in part from sales of its own
publications and in part from state and local governments and the municipal bond community.
Its standards are not federal laws or regulations and the organization does not have
enforcement authority. Compliance with GASB’s standards, however, is enforced
through the laws of some individual states and through the audit process, when auditors
render opinions on the fairness of financial statement presentations in conformity with GAAP.
Note: I checked the Vermont statutes online and could not locate any statute requiring
GASB 45 based accounting.
Why Has the GASB Issued New Standards for OPEB? [other postemployment benefits (OPEB)]
…However, most governments report their cash outlays for OPEB in a given year, rather than
the cost to the employer of OPEB earned by employees in that year; these two amounts may be
vastly different. In the absence of standards similar to those the GASB enacted for pensions,
most governments do not report the full cost of the OPEB earned by their employees each year.
The purpose of the new standards—GASB Statement No. 43, Financial Reporting for
Postemployment Benefit Plans Other Than Pension Plans, and GASB Statement No. 45,
Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than
Pensions—is to address these shortcomings.
-----------------------------------




                                                    2010-10-07 UBAC Advisory Report, Page 82
Thank you for tackling this massive task, accepting input from staff and sorting the concerns.
I have been at UVM for less than 2 years and I am 55yrs old. I hope that I can stay here for at
least 10 more years. From my mindset, it is hard to imagine retiring at my age. I still have a lot
of life in me.
I would like to address the principle regarding "Educating Employees....." I think we need to
begin training people in our culture for a different mindset regarding retirement age and how to
plan and what to expect. We are living longer lives and 55 is still quite young. What has been
the response to raising the retirement age.
Is there a way to provide incentives for living a healthy lifestyle. IE: GE Healthcare has instituted
parameters for health benefits based on employees maintaining healthy lifestyles.
Another suggestion: Since the COM is part of UVM, would it be possible to have a UVM clinic
for staff/retirees to provide immediate care (blood pressure checks, strep test, etc) and wellness
checks? Would this save on health care costs?
-----------------------------------
I will be retiring in less than 2 years, I was hired in 1995 so I must follow the rule of 75. This is
my plan or it was my plan until all these recent talks. I will have 16 years of service and be 59
when I retire, I hope that I will have the benefits that I have been planning on.
-----------------------------------
In addition to making no changes to the current plan for employees who have already retired -
Offer the same benefit package to current long-term employees who are eligible to retire.
If the new plan designates that these employees must retire within a certain period of time, grant
them sufficient time to ensure their financial security. Thanks for your consideration.
-----------------------------------
In reading the UBAC report, there was no mention of impact on total compensation, especially
for those earning less than $45,000.
As an unrepresented staff member with 2 years of employment, I would need a salary
adjustment to offset: a.) the loss of benefits I was extended at date of hire; and b.) to account for
the additional out of pocket costs to buy into a group retirement plan. We do not have a merit-
based compensation plan tied into a annual review process and the 2% flat rate increase over
the past 2 years has not even matched the growing rate of inflation. Any reduction of salary will
create an even greater financial burden.
There are hundreds of staff members who work here because of their love for higher education
AND for the benefits. A loss of benefits among staff members with no salary adjustments will
most likely result in a lower retention rate of staff, and bolster the staff union efforts.
-----------------------------------
Please don‘t forget the people in the active but eligible to retire group. These people may feel
the need to work another 5-10 years because they can‘t afford to retire. These same people
don‘t have the time to build a health savings acct. for extra costs to meet their future health care
cost needs. These people seem to be getting squeezed in the middle, and will be hurt the most.
Thank you for your time,
-----------------------------------
My comments regarding the post retirement benefits issue are attached. Thank you for
representing all faculty and staff comments in the advisory report.
-----------------------------------



                                                       2010-10-07 UBAC Advisory Report, Page 83
The non-represented staff at UVM already feels like the university is balancing the books on
their shoulders. We watch as the faulty gets a 5% raise when we get 2%. We watch as the
faculty enjoys generous family leave policies that we are not entitled to. And now we have to
wonder whether our non-represented status will affect out retirement benefits. Richard Cate
expressed confidence that he would not support a tiered implementation of the new benefit
package. I sincerely hope that this is true. Despite the need for negotiations with the campus
unions, I would strongly suggest that no action be taken until ALL off the UVM employees can
be included equally in the transition.
-----------------------------------
Thanks for an informative report and meeting. My question is will the information that President
Fogel and the Trustees use for making their decision for a new plan be available for employees
to see, so they know what factors are considered in the process.

Additional Feedback Received through the Staff Council Office
I had the pleasure of attending the Staff Appreciation Dinner as a guest on Friday evening. It
was a lovely occasion, and it was an honor to be sitting among so many long-time UVM
employees. They were honored in a special way and were so deserving. It seems sad and
unfair to think that after all these years of service that these people should now have to face
changes in their long promised Retirement Health Care benefits. Please remember their
dedication and support of the University of Vermont (for not very high wages generally), and
honor the agreement that you made with them to provide benefits in their Retirement years.
Thank you for all your work on this critically important issue.
-----------------------------------
I've worked at UVM for three years (two as a temporary employee and now one as a full time
staff member). While retirement is literally decades away for me, I've followed the discussion
about changing benefits closely. The majority of comments and concern seems to be from those
who have retired or are very near to retiring. While their concerns are most immediate and
certainly valid, it doesn't lessen the concern of those of us who are in the "5 years of service and
under" bracket. This cohort stands to be the most affected under any of the proposed scenarios
and is the group whose collective voice is being heard the least. Just as those who came to
UVM 30, 20, 10, or even 6 years ago, more recent hires came to work here with the
understanding that salary was only one part of total compensation and was offset by generous
benefits during and after retirement. And just like employees with more years of service, our
commitment to UVM and its goals and mission is strong. We represent UVM's future: as more
and more of those eligible to retire do so, those of us will less years of service step up to fill the
void and continue UVM's long tradition of excellence. It is especially demoralizing to think that
UVM will create a multi-layered structure that values someone with 6 years of service
disproportionately more than someone with 5 years of service, or someone with 11 years more
than someone with 10 years. I strongly urge the Committee and President Fogel to honor its
commitments to all current employees and to make changes to post-retirement benefits
effective at a particular date moving forward for all new hires.
-----------------------------------
I chose to pursue a job at UVM 15 years ago. I‘m a UVM alum, having received my BS, M.Ed
and CAS here, and had always planned to come back to work at UVM someday. I received an
excellent education, met many dedicated and caring faculty and staff, and looked forward to
returning to the UVM ―family‖, contributing my expertise and love of the institution.
One must realize that there are many reasons as to why individuals work here and just as many
ways that they contribute to the heart and soul of UVM. We volunteer on Move In Day, we
volunteer to help with graduation, we donate money to UVM fund raising efforts, we join the
Victory Club and support athletics, we happily answer questions from visiting parents who

                                                      2010-10-07 UBAC Advisory Report, Page 84
appear lost as they walk around our campus, we monetarily support student fund raisers when
they sell cupcakes, plants or crafts.
If we now have to hunker down to save even more of our income for post –retirement medical
benefits, I for one, won‘t be able to donate at the level I have been, if at all. If I have to take a
second job in order to put more money toward retirement, I won‘t be able to volunteer as much,
if at all. I wonder if the administration has thought about the ramifications of losing staff support
to both calls for donations and volunteerism. President Fogel‘s September 20th letter to last
year‘s donors states, in part, ―With fall semester now in full swing, I write with sincere gratitude
for all you have done to make this University the vibrant institution it is today. As a member of
the UVM faculty and staff, you chose to back your hard work and dedication last year with the
added gift of financial support. It is my distinct honor to thank you for your exemplary
commitment, generosity and service. UVM cannot succeed without the continued hard work and
support of our greatest assets: you, the faculty and staff. ―
For the majority of staff, like me, who will never realize a 6-figure income, the question becomes
– do we have to work more years in order to put away more money to be able to afford to cover
more of our benefits come the day we CAN retire, or will the university consider our proximity to
retirement and grandfather us in to the existing formula.
I would hope that in recognizing our contributions and support in the form of time and money,
the administration would consider supporting US in our retirement years with a comprehensive
benefits package.
-----------------------------------
I am grateful to the Advisory Council for conducting the informational meetings held earlier
today and greatly appreciate the vast amount of information gathered and presented. It is
understandable that the University will be unable to sustain the current post-retirement benefit
structure for the long term. Just a couple of comments related to the discussions surrounding
this important issue. It seems to me that the retirement pool has grown, not only because
individuals are living longer, but also in part because of the long term commitment many
employees have made to the University over the years.
-----------------------------------
I am a strong proponent of protecting the status of current retirees. I would also entreat the
Council to give similar consideration to active long term employees who are fast approaching
retirement status, including those of us with 25 - 30+ years of service who might fall into the
Pre-65 retirement category.
As a new employee with one year of service, I am concerned about the impact of proposed
changes to the post-retirement medical benefits. Thank you for your consideration and looking
out for the best interest of those new to UVM and those who will be coming in the future.
-----------------------------------
I addressed my comments / questions to UBAC this morning. As I was talking to other people
who approached me after this morning's meeting, they agreed with my statement, that it looks
like people that have worked here from 5 years on are going to be entered into this plan X, and
those people that are recent hires, and up to 5 years, may have a whole different scenario. In
this case, it means that people who have been here for 30 years, or more, or a little less, are
going to be categorized with people who have only been here for 6 years, and we are all going
to be put into the same plan (which will be selected for staff). It appears there will be no
seniority, based on # of years served, and no grandfathering of the current plan for people who
have worked here and committed most of their lives to this place, which seems unfair. People
who have worked here for 30 years are treated exactly like people who have worked here for 6
years. That doesn't seem right at all. And with the money you save by doing this, you say you
will increase salaries.... We don't see that happening, and again, the higher paid people get

                                                      2010-10-07 UBAC Advisory Report, Page 85
higher salary raises (except for the past couple of years), and there are always ways to get
around that. Like I mentioned in today's meeting, I would be willing to forgo a 1% (or higher)
raise in order for you to be able to take that money and put it toward paying the post retirement
medical benefits, and from what I hear, other people would be willing to do that too, and if that
was mandatory for everyone, you would save money every year. As you know, the economy is
already bad, and speaking for myself, I am a single person, and paying extra for benefits when I
retire would be a hardship, since I am not making $100,000 a year (or even close). Also, please
do not change the benefits of the people who are currently retired, or discontinue benefits for
their spouses if the UVM employee were to die, that would be a huge burden to current retirees,
who can't afford more of a strain on their limited incomes. I received a wonderful letter from
Richard Cate saying how much he valued my years of service, please show us exactly how
much you value them, by grandfathering the people who have been here for a while 20 or more
years, etc... We have worked hard for UVM and shouldn't be put into the category as people
who have only been here for 6 years, etc. I believe that -- upset a lot of your long term
employees this morning, and the fact that staff is unrepresented in any union, leads us to think
that we will not get the best plan for us, and that the staff will absorb the blunt of these charges,
yet again. A lot of people on campus already feel that faculty gets better raises than staff as it is,
and that doesn't seem fair either. Anyway, thank you for listening, and there are places that
grandfathered their long term employees, into their current post medical benefits plan, and that
seems fitting for UVM to do also, in order to literally thank us and acknowledge us for our years
of service. Some of our families (including mine), have worked here for generations, and came
here for the benefits, and worked hard to get them, it would be a shame not to be considerate
and sensitive to your long term employees. I can see all of the long term employees retiring
soon, just so they can get the benefits they deserve. I can not, because I am too young, and I
am disappointed that seniority or long terms of service are not going to count for anything in this
case, it is unfair to us, you say you appreciate all of our years of service, and then you don't
acknowledge them, during a huge decision like this.
-----------------------------------
I have worked here 31 years still making under 35,000 and sometimes find it a challenge to
make ends meet without having my insurance premiums put on my shoulders and not UVM's
Please stress to Fogel and HR our benefits were called for years part of our TOTAL
RENUMERATION package and that is why we do NOT work in corporate sector or move to
another industry when we were still young. I knew attempt to cut health insurance would arrive
some day but speak up for us. Not all of us could attend the forum.UVM should not break its
promises to its employees.
-----------------------------------
I don't think UVM should keep using Non-Represented Staff to fix all of their problems by taking
away and/or cutting our benefits. I keep being told by HR that our paychecks may not be big,
but "look at the TOTAL compensation." Well, from the get-go, my compensation has not been
as big as other staff's compensation because I don't have children who can use Tuition
Remission. And my raises aren't as big as the ones that Represented Staff get (i.e., FACULTY).
And now, guess who will "pay" by having their retirement benefits reduced; certainly, not
FACULTY, and probably not any other Represented Staff. It will continue to be Non-represented
staff who will bear the brunt. It's bad enough that some departments were cut back on staff quite
some years ago, even though work has increased, and they have a hard time keeping up even
with overtime.
-----------------------------------
Re: post-retirement medical benefits - A reminder that when the University livable pay issue has
arisen in the press, the University's response has included benefits as total compensation to
offset the low wages. Will a raise in wages, 403B contribution or something help


                                                      2010-10-07 UBAC Advisory Report, Page 86
employees/future retirees to meet any additional financial burdens caused by a decrease in
medical benefits, if those benefits are decreased?

Additional Feedback Received through ubac@uvm.edu
I have read the UBAC draft report in order to try to write an informed opinion. My head is still
reeling from trying to decipher the differences in the myriad of plans. I have a few comments.
The first is that despite the end of the document stating the following "Throughout its
deliberations, the Council repeatedly cited the importance of employees understanding the
coordination of the employer-provided benefit with coverage through Medicare, Parts A and B.
Failure to do so in considering the impact of some of the models considered in its earliest
meetings resulted in some employees misunderstanding the true impact of proposed changes
to the post-retirement medical benefit.", there is actually nothing in the document that actually
states how the various plans might interact with Medicare!!! I heard from one of the panel
members that the main problem that UVM was facing was the cost of covering people from the
time they retired until they hit the Medicare age. If this is indeed the problem, then shouldn't the
remedy address this problem specifically? Also, it would seem to be a worthwhile option to add
some new post age 65 plan like some institutions have as were discussed on page 36 of the
document ("These Post-65 plans are offered with the understanding that Post-65 retirees will
also be enrolled in Medicare coverage and, therefore, the plans are specifically designed to
work together with the retiree‘s Medicare coverage. In addition, some of these special Post-65
plans take advantage of specific products that insurance carriers have developed for the Post-
65 retiree marketplace.")
Second, as regards the plans:
I think 1A won't go over well with the faculty/staff as one of the reasons people work here for
lower pay etc. is the benefits. I don't think 1B really saves much money. 2A has the same
problem as 1A. Plan 3A seems to shaft the lower paid and 3B seems unfair to the higher paid.
All of the Plan 2 and 3 options shaft people who are married as their costs are not $5,000 but
$10,000 and those account dollars will disappear very quickly. Plans 4A, 4B and 4C seem the
most reasonable as they still give some benefit to all but give the University a fixed cost (4A and
4B) or nearly fixed (4C) amount to plan on. 4C is of course the nicest as it gives some small
amount of security to retirees but does cost UVM twice as much. 4B has the benefit of keeping
folks working longer to accrue the higher cap. Plus, lining up the graphs, 4C looks like it saves
more money than 1A anyway.
Before making a final decision, I think UVM should narrow it down to maybe three options and
give cost details for say 20 average employees of different ages at retirement, salaries, years of
service, married and unmarried and show the costs of each plan and how Medicare impacts it.
Consider a post-65 insurance option as well. Without this information, it is really impossible to
evaluate these plans.
-----------------------------------
After reading the various scenarios for change in the retirement medical benefits I am a bit
distressed. I am a 5 year employee and do not like the fact that 5 years and under was a
common theme for not being included in the benefits package at the same rate as those with
longer service. I believe from 5 years on that an employee has made a commitment to the
university and deserves consideration. I could see new hires or even those here 3 years or less
but 5 years is a commitment that is acknowledged by the university with a certificate of years
served. I also believe represented or non-represented should not be a deciding/ dividing factor
either. It is bad enough that staff have no representation but then to use that against us in our
retirement packages as well is just insult to injury. I can fully understand in your cost projections
the worry for sustainability...but there has to be a way to balance a budget and honor your
dedicated staff and faculty at the same time. People after all are your investment and future.


                                                      2010-10-07 UBAC Advisory Report, Page 87
-----------------------------------
I have been an employee at the University of Vermont for 15 years and will be eligible for
retirement in 2 years. My husband had to take a job in another state and I chose to stay behind
to work. I am close to getting vested and we needed to have insurance for both me and my
spouse. I'm sure there are other dedicated employees that need to have the insurance for their
spouse as well. I would rather have UVM match less of a % in our retirement than to have our
insurance benefits changed. Thank you for your consideration.
-----------------------------------
I have worked at UVM full time for over 17 years, and have another job 1/2 time for 15 years.
Had I known that my retirement medical benefits might be taken away, I would have chosen a
different path since the medical retirement was a very important reason for working at UVM.
In another year or so, I will be eligible to retire if I choose to. I feel like all the dreams and goals I
have had have been ripped out from under me. Please do not take this benefit away. I think it's
fair that I have to pay more for this benefit, please don't take the medical away. Maybe you
could put less in for my retirement 401K, but the MEDICAL is very important to me.
I need to have a reason to feel I have dedicated my life to UVM all these years.
Please don't give up on us older employees. A lot of us baby boomers love our jobs and still
have a lot of positive years to work, hoping to be rewarded with what was promised when we
were first hired. I LOVE UVM, and I LOVE my job. Thanks for listening.
-----------------------------------
For those of us who make $34,000 a year, saving for both living expenses and health care costs
will be a challenge. I currently contribute as much possible to my 403b for living expenses after
retirement. The only way I would also be able to save for health care costs is if my salary were
increased. Does the University administration have any plans to increase salaries for staff?
-----------------------------------
As a UVM employee for the past 22 years and eligible to retire at any time, I wish to comment
on the reevaluation of the retiree health benefit.
My understanding is that the plans under current consideration keep the benefit intact for myself
and other retirement-eligible employees. Upon reading the comments of other employees, I am
concerned that there are some who ask you to change this stated goal in order to extend
benefits to others. I am concerned that these proposed changes are pitting employees against
each other.
I support keeping the benefit intact for current retirees, those currently eligible to retire, and
those who are close to retirement with substantial years of employment at UVM. To change the
promised benefits for these groups, a substantial hardship will be placed on these individuals
already coping with the economic downturn , including the loss of valuable assets in retirement
investment accounts.
Many of us settled for lower salaries at UVM for years with little or no increases over long
periods of time. I personally declined other opportunities with much higher salaries, but felt
confident that I have a good medical benefit in retirement; in effect a form of deferred
compensation. It would be bad faith on the part of UVM to change this benefit when it has
already been earned. It seems that the committees studying this issue are currently in
agreement with this philosophy. Please keep this commitment to your valued employees as you
formulate your decision in this important matter. Failure to do so will cause an abrupt departure
of many faculty and employees eligible for retirement.
-----------------------------------


                                                        2010-10-07 UBAC Advisory Report, Page 88
You were given a difficult charge. There are multiple considerations and you have developed
understandably complex options. Good questions and thoughtful feedback require an
understanding of the plan.
My review of the explanations and graphs this evenings has not significantly increased my
understanding of the options. I, too, would have gained from a second review of the basic option
differences. In that, or the initial options review, explanation of the graphs and figures correlating
to the options, would have been beneficial to me. I therefore have only basic comments, which
may not be very useful.
Efforts to encourage employees to exercise preventative health i.e. exercise and work-life-
balance are strained when budgets are cut and workdays are longer and more pressured.
Increased education regarding 403B savings, medical or regular, are important, but no amount
of "options" help when salaries are not keeping up with inflation and savings allocations
diminish.
The "scale" used to "graduate" premiums based on earnings at retirement does not seem
sufficient, with a difference between the premium cost of someone earning $32,000 at
retirement compared to someone earning $116,000 at retirement seemingly dis-proportionate.
This is compounded by the on-going capacity of those-higher-salaried to save in their 403B
plans, or other instrument.
Those employees not yet hired can be hired under a whole "new deal", in what we know is a
whole new health care and benefits environment. Their compensation, their perception of the
university's climate and work environment, the sense that they are valued, their satisfaction with
their work, as well as their benefits package, must compare favorably in the future marketplace,
in which all industries are impacted. Just as students "sign-on" to the requirements of a certain
major, employees need to be able to "hire-on" to an understanding of their work description and
compensation package.
Gladly the options include options that acknowledge a big difference between those who have
worked in the current plan several years versus those that have spent many years at the
University. The crux of the issue is how do you make equitable and sustainable changes to
benefits packages as necessitated by changing economics. I suggest there may be other
equitable industry models outside the university arena that are worth looking at. Just because
we must compete against other universities to draw faculty and staff does not mean we should
stay within the industry to find useful, resourceful models.
I regret not having a better understanding of the options to make better comments and hope you
find these useful. If I had to "vote" at this juncture it would be for option 1A.
Again, thank you.
-----------------------------------
Two fairness concerns: (1) How much more per year does UVM pay per pre-age-65 retiree
versus each post-age-65 retiree? It seems to me that this is an equity issue in which, regardless
of years of service, pre-65 retirees are accessing a monetary level of benefit that never is
tapped by post-65 retirees. What would be the net effect of providing pre-65 retirees with only
the same dollar amount of subsidy for insurance as is provided for post-65 retirees? It seems
like the dollar amount of savings would be significant, and would be a fair way of reducing the
cost burden on the university. Probably all encouragements to early retirement should be
eliminated.
(2) Regardless of the years at UVM, any change needs to take into account that some people
have been and may continue to be recruited to UVM in middle age or later and a key part of the
recruitment package is the prospect of retiree health care benefits. In my case, for example, I
came here at age 53. The university I left had much better 403B benefits than UVM (e.g., 14.5%


                                                      2010-10-07 UBAC Advisory Report, Page 89
university contribution) as well as other superior benefits, but no health insurance benefits for
retirees. With the prospect that I would probably work at UVM for 15 years and qualify for the
retiree health insurance benefit, the tradeoff was attractive. If that benefit is significantly capped,
I will consider it a breach of the offer that brought me here. And future efforts to recruit mid-
career scholars and professionals to UVM will be handicapped.
-----------------------------------
Dear Staff Council and UBAC Members,
Thank you for your combined efforts in addressing impeding changes to PRMB on behalf of The
University of Vermont‘s non-represented population.
I attended the 2:00 pm meeting in Memorial Lounge yesterday, September 27, 2010. As I stated
at the meeting, ―any of the 9 options, once in place, would be a hardship on future retirees.‖
I encourage the two Councils to urge President Fogel to critically consider Nancy Welch‘s
comment regarding the big picture, that is, the trend of lowering financial effort for those closest
to serving the mission of The University, i.e., faculty and staff, from 53% in 2005 (peer standard
53%-58%) to 48% in 2010. The charge to UBAC from President Fogel, to ―reasonably balance
its financial impact on the University and the needs of future retirees‖ could include looking at
other ways to cut spending within The University rather than from those who have already
experienced a 5%. Another council should be formed and charged with looking at multiple ways
to cut cost.
Short of accepting Nancy Welch‘s comments and leaving the current benefit in place, I believe
that any changes - be it the nine options, or a hybrid version - should take affect for new hires.
The newly hired employees may have less medical coverage in their retirement years, but could
be compensated on a financial scale in line with ―minimal impact‖ on The University. In other
words, create an equitable new plan for new hires rather than alter the existing one for everyone
already serving at UVM.
The caveat ―UVM retains the right to amend, alter, or terminate post-retirement benefits at any
time for prospective and existing retirees.‖ as stated Non-Represented Faculty and Officers of
Administration under Eligibility for Benefits After Retirement certainly grants The University a
default position. However, removing the benefit, as current employees understood it at the time
of their hire, should not happen until all other cost-saving measures are exhausted.
Respectfully submitted by someone who likes working for The University of Vermont and
appreciates the many benefits in lieu of a higher salary.
-----------------------------------
Thank you for your time in effort in addressing President Fogel's charge to the UBAC regarding
post-retirement benefits.
The Staff Benefits Handbook www.uvm.edu/hrs/?Page=info/staffhandbook/benefits.html#Post-
Retirement states "UVM retains the right to amend, alter, or terminate post-retirement benefits
at any time for prospective and existing retirees." As described, UBAC's proposed Approaches
(1A - 4C) have no impact on current UVM retirees, rather, under the proposal, current
employees will shoulder the entire burden of any changes made necessitated from reducing the
University's postretirement financial liability. This approach creates "the haves" and the "have
nots" at the expense of prospective retirees, unfairly setting aside (only) the University's right to
impact existing retirees. Could not the guiding principle "to protect current retirees from undue
financial burden" be met without a complete no-impact approach?
Lumping all prospective retirees across all hire-dates into one group for post-retirement eligibility
purposes is contrary to the preservation of three distinct categories established in decades past.
Attention should be paid to the existing three categories of post-retirement benefits eligibility: 1)
those hired before July 1, 1992; 2) those hired after June 30, 1992, but before July 1, 1997; and

                                                       2010-10-07 UBAC Advisory Report, Page 90
3) those hired after July 1, 1997. Aside from Observation #5 in relation to Approach 1B, the
proposed Approaches ignore these existing categorizations. Attention should be given to those
with requisite years of service in the respective hire-date categories, especially if graduated
levels of benefits are to be established, or if existing benefits are grandfathered.
Thank you for your consideration.
-----------------------------------
I was just reviewing the 9/24/10 draft report for Post Retirement Benefits, I am in the class of
staff who was hired in June, 1995, so I fall into the group of After June 30, 1992 but before July
1, 1997. In your report on page 6(see attachment) there is a section "Overview of the University
of Vermont's Retiree Medical Program", I am assuming that these are the current requirements
for retiring with benefits. As stated above I am in that group between July 1, 1992 and July 1,
1997, this statement indicates that "full benefits are only paid if they retire after 60 and 15". I
have also attached a page from the online Staff Handbook which states Under the Rule of 75 ,
that "you will not be entitled to the University's maximum contribution toward your and your
dependent's health care premiums, unless the sum of your age at retirement plus your total
years of service is 75 or more.
Has there been a change in this Rule of 75 or am I missing something on the website? This
could really have an impact on retirement plans for those of us who are this group.
-----------------------------------
I first wanted to say how I appreciate all the hard work that went into this report—thanks to the
members!
My question is whether or not when you refer to "currently eligible" employees, you are taking
into account people 55. Or are you using 60 as the cut-off? I was somewhat confused by
differences I saw in the report. As a 55 year-old with 24 years in, I know I could retire right now
with the benefits, so if you could clarify this point, that would really help.
-----------------------------------
Sustainability of a University and cutting costs instead of people is important. Reducing health
or other post-retirement benefits would not affect my happiness with my job, however it would
certainly affect a decision to accept other job opportunities that paid better or had better
incentives - retirement and otherwise.
-----------------------------------
While I very much understand the need to save money but feel that the fair thing would be to
make changes going forward (for newly hired faculty). It would seem that UVM certainly could
win more trust of faculty by not changing benefits after the fact.
-----------------------------------
There has been a great deal of discussion on the cost end of the debate but not the quality end
of it. I happen to have family members with some serious medical issues who would not be with
us now(or we would be destitute) were it not for the Blue Cross/ Blue Shield Plan and the ability
to go out of state at will for real medical expertise.
We have seen no assurances that this program will not be dropped due to cost. We are too
small a community with limited medical expertise to let that happen to ourselves. We must not
lose sight of this in the discussion.
Also, can you please advise as to where we can view all of the calculation for these benefits
options that are being discussed? What I have seen so far do not include all of the details.
-----------------------------------


                                                     2010-10-07 UBAC Advisory Report, Page 91
I have been at the University of Vermont for 32 plus years so far; 16 years with the Department
of Surgery and, presently, with the Department of Pathology in the Microscopy Imaging Center
(core imaging facility that serves COM, UVM, outside educational/research institutions and
businesses).
I am a Laboratory Research Technician Senior and had obtained my B.A. in Zoology at the
University of New Hampshire, Durham New Hampshire. My years of versatility has created a
renaissance background at the University of Vermont expanding 32+ years of biological
research to include large and small animal surgery, microsurgical techniques, tissue culture,
kidney preservation, medical photography and illustration, computer graphic illustration, and
most recently, a self-made ‗bionaut‘ utilizing atomic force microscopy to image molecular events
via landing and guiding probes on the surfaces of lipid model membranes and the proteins that
interact with such surfaces. My main focus is teaming with my colleague and director of
University of Vermont‘s Microscopy Imaging Center Dr. Douglas J. Taatjes, PhD and
collaborators Dr. Jacob H. Rand, MD, FACP (Director of Hematology Laboratory and Professor
of Pathology) and Dr. Xiao Xuan Wu, MD of Montefiore Medical Center and Albert Einstein
College to work on the mechanisms of what causes thrombotic events and fetal loss associated
with the anti-phospholipid antibody syndrome. In addition I am a support person for the facility
that includes nerve procurement for ultrastructural analysis via electron microscopy for clinical
diagnosis by a pathologist.
So, it is of concern that benefit(s) that had enticed myself as well as others to remain and
dedicate our services to a teaching institution may be reduced during pre- and/ or post
retirement. I was very cognizant of how valuable benefits are when contemplating career
choices…when one decides to work at an educational and research institution, it is not for the
salary. It is for the whole package - great learning environment, growth and service; as well as a
rewards for a job well done - benefits!. I was laid off (for 9 months) from the Surgery department
in the early 90's due to a change in management philosophy that resulted in my position and job
title being dissolved. I was hired back at UVM (within the 2 year window) by the Pathology
department at a reduced salary; but the benefits at that time with pre-school twin boys out-
weighed the reduced cash flow. And projecting into the future, I realized the worth of the
benefits from medical to tuition remission (my boys will be graduating from UVM in May 2011-
one in Mech. Engr and the other in Business/MIS).
I have made great contributions and hope my retirement will be rewarded with the benefits I had
planned on receiving - hope some grandfather clause is established for the long-term
employees!
-----------------------------------
I was unable to attend the sessions due to work commitments, it would be helpful if these were
offered outside of regular working hours. I haven't had time to thoroughly review the 78 page
report, but one item that seemed to be glossed over that I think would have a significant
(negative) impact on current long time employees is that the examples appear to do away with
the 55 retirement age (for those hired before 1997). It is unclear whether this is under
consideration, because it isn't discussed in the document that I was able to find. However, all
the examples show retirees at age 60 or above. If the retirement age is also on the table it
should be presented more clearly to all current employees, because it is separate and distinct
from the cost sharing issue. If changing the retirement age is not under consideration, I think the
communications should be clearer in this regard to reassure employees.
-----------------------------------
Thank you for setting up the open forums to discuss the retirement benefits issue. When the
faculty/staff are given the opportunity to provide input, the changes are more readily accepted.
Thank you.



                                                    2010-10-07 UBAC Advisory Report, Page 92
My one comment is this: PLEASE make every effort to insure that faculty and staff equally
affected by these changes. I understand the faculty and staff union contracts, I have to
administer many of the faculty contract items such as workload forms, etc. The staff that have
not yet chosen to unionize have been taking the brunt of many financial difficulties, have been
given very poor raises compared to faculty, and feel like second class citizens here on campus.
To have the staff retirement benefits change and not the faculty will demoralize us even more.
Again, thank you for the opportunity to express our concerns. The committee has worked hard
and I sincerely appreciate the hard work.
-----------------------------------
Thank you for extending the comment period on Post - Retirement Medical Benefits.
As I started to review the options developed by the Advisory Council, I noticed that the charts
and examples used a retirement age of 65. Currently UVM has a retirement plan of age 55 (10
years of service) for employees hired before 07/01/92 and a plan of age 60 (15 years of service)
for employees hired after 07/01/97.
Is the Council offering models with retirement age still at 55 and or 60? My concern is that a
retirement plan of age 65 or even age 60 is not practical for some UVM employees. Police
Officers in particular and possibly even some Physical Plant positions.
I would ask that consideration be given for those employees that have some very unique
responsibilities and job tasks.
-----------------------------------
I attended one of the sessions regarding post-retirement benefits, and I too sincerely thank the
committee for the hours of work that has gone into the review of current benefits as well as the
options for possible change.
I noted that several times during the meeting that a 3% inflation rate was mentioned, and I was
confused how that relates to the 2% raises that most staff have been receiving. It seems as if
we are already going backwards in salary, and now our benefits that are 'a large part of our
compensation' are being attacked as well. In the spring '09, my job was targeted in the phase 2
cuts, and I went through an entire semester unnerved that my job would end. I am nearing
retirement, so I would have been better off than some of those targeted in some ways. I am also
very aware that my retirement benefit will be severely affected by the low salary I have received
in the 32 years (in total) I have worked here, and I just hit mid-range for my 'generalist' category,
while the retirement money I have managed to put away also disappears at a shocking rate! I
frankly do not have the years left to be able to build up a retirement fund that will be able to
support a large chunk of health insurance costs, and I would hope that any plan that might be
adopted would take into consideration the amount of time left before retirement.
Thanks again to the committee for their tireless work.
-----------------------------------
Observations on data presented in UBAC report:
1) It is important to separate peer and aspirant institutions with and without medical schools
when comparing salary data and total compensation packages. Do the data represented reflect
that difference?
2) The salaries at UVM have been previously recognized as below the national average with
discipline by discipline comparison at comparable research universities. The total compensation
package, including post-retirement medical benefits, was the approach to ensure competitive
positions. Faculty joined UVM and stayed at UVM under this total compensation agreement not
on a salary basis.


                                                      2010-10-07 UBAC Advisory Report, Page 93
3) The models provided in the draft document do not appear to address the recruitment of
midcareer faculty and staff to UVM. The elimination of a total compensation package would
need to be offset by a substantial change to the salary structure to be competitive and allow
new hires to contribute to a structured health savings account. What would be the impact on
recently hired midcareer faculty and staff who would not have either the time before retirement
nor the salary structure to establish these accounts? Midcareer and/or senior hires may often be
between 45 and 55 and at UVM for less than 5 years.
4) It is unclear as to how the new federal health care policies are taken into consideration in this
analysis. For example, what would be the impact on the post-retirement medical benefits
expenditures if Vermont adopted a single payer system within the next 5 years?
-----------------------------------
I attended the first session and wanted to add the following food for thought. I have only been at
UVM for nine years but I am 57 years old. I have been in the work force since the age of 19 and
have lived and worked in NY State/Vermont/Illinois/and Vermont again. I was hired at UVM
because of my experiences. I do not like being compared to someone who has worked at UVM
for a very long time because their personal lives did not take them elsewhere. I have also raised
three children while my husband climbed the corporate ladder and moved us around. I came to
UVM to work for two reasons, tuition remission for dependents and the benefits. I would like to
see all UVM employees regarded as equals regardless of their status or unit of definition as
related to retirement. What was clear to me at the meeting and in your project is that this is
personal and very important to each of us regardless of how many years we have worked at
UVM. Thank you for your time and efforts.
-----------------------------------
Here is my suggestion to reduce not only health care costs but the University's operating costs.
Use an outside firm to identify employees who aren't doing their jobs and fire them. Health care
companies use private investigators to detect fraudulent claims. UVM could use the same
technique to identify fraudulent workers.
Let me be clear, I'm not talking about layoffs where low "man" on the totem pole is first to go
due to union rules. I'm talking targeting people who collect a paycheck while doing minimal
work. I have witnessed many people at UVM who drive around and sit in vehicles all day long,
take extremely extended breaks, and work far less than a full 40 hour week.
Hiring a firm like the health care companies do requires an investment, but the short and long
term cost savings will be significant.
-----------------------------------
First of all, I want to thank the committee for all of your hard work on this project. I know that it
has taken a tremendous amount of time.
I recognize and understand the need for the university to address, in a proactive manner, the
financial issues surrounding post-retirement benefits.
I support a continued defined benefit approach. This is the only way to ensure coverage
throughout one's lifetime. I also think that the length of time of employment at UVM should be a
critical factor examined in terms of eligibility for benefits as they are currently offered. Those of
us who have devoted many years of service to the university have done so with the
understanding that health benefits would be there for us upon retirement, at an affordable cost.
As a single woman, with no children, I have not received the tuition remission benefit that many
of my colleagues have received and I wonder if there are any cost savings to be garnered from
an examination of that benefit in order to help fill the gap related to health care benefits. I am not
suggesting elimination of the tuition remission benefit but I am suggesting an examination of
how much savings might be possible with an adjustment to that benefit. I also question full

                                                       2010-10-07 UBAC Advisory Report, Page 94
coverage of spouses in post-retirement, at the expense of those of us who do not have a
spouse and thus will not depend on the university to cover an additional person under our health
care coverage. Perhaps spouses should be covered at a higher cost than is currently the case.
In summary, I think that the university should retain the current eligibility for retirement for
employees with the current defined benefit plan. I think that longevity should be a critical factor
in the discussion and that cost savings related to tuition remission and full spousal coverage
should be examined. The university can consider Plan 1A or B for employees with less than 10
years of employment at UVM, with the same for new hires (a plan that seems more in line with
other institutions).
-----------------------------------
Are there other ways to make cuts, say, to look objectively at all the other costs of doing UVM
business such as executive compensation and the seeming insatiability of this institution's need
for VPs? Just because this particular budget item is large (and therefore ripe for the picking),
doesn‘t mean those other areas previously addressed during the economic crisis are off the
roster for consideration of cutbacks.
It was rather telling, during the 10 am session on Monday, when Mr Cate admitted that any
savings from cutbacks to the retirement medical premium program could go into pay increases
and/or academic development, that we are still dealing with basic budget management issues.
It's too easy to target this large expense without really scrutinizing other large outlays of UVM
expenditures, e.g. executive compensation. The disparity between the haves and have-lots-less
is facing increased scrutiny in the larger culture. It's time we do the same here in our corporate-
leaning microcosm of academia. Trimming from the top IS an option. Thank you.
-----------------------------------
First let me say that I do understand the need to take action on the rising costs of medical
coverage and the budgetary problems this creates for the University.
I have been a UVM employee for 37 years and have tolerated the lower salaries because of the
generous benefits during my employment and counting on having good medical benefits upon
retirement. I am an unrepresented staff member who is feeling a little concerned that I have no
one who is standing up and protecting my interests.
I have been a widow for 7 years so I have no one to help financially as I had counted on and
now I may not be able to count on my employer to help ease my way into retirement. I was
hoping to retire in a couple of years at 62 but if my health benefits are going to be affected
unless I'm a "current retiree" I may have to choose to retire earlier with lower retirement income.
I have to figure which is more lucrative. With so many uncertainties it is hard to plan out my
retirement years. I would also hate to retire before the health care decision is made thinking my
health care will be unchanged and then find out that those retired but under 65 will be affected. I
hope we are given substantial time to find out what direction will be taken before it is put into
place so we have time to act.




                                                     2010-10-07 UBAC Advisory Report, Page 95
ADDENDUM 9                                                                     Glossary of Terms

access only: Allowing employees or retirees to participate in a UVM group benefit plan by
paying the full cost of the plan‘s premium. The University group plan would typically cost less
than buying an individual plan outside of UVM.
actuarial: Techniques used to quantify future events or risks.
aspirant institution: A college or university with which the University seeks to become
comparable in the future, with respect to a variety of measures of academic quality and
programs.
approach: A method of illustrating benefit design elements.
book account/spending account: An amount of money, based on age and/or years of service,
that will be used by the University to pay the University‘s share of the premium after retirement.
There are no rights of ownership of this money for the retiree and, therefore, no change in
taxation and no portability. The account is simply a way for the University to define and account
for its share of the cost of the benefit. It does not pass to the retiree‘s beneficiary or estate, and
it does not accrue interest.
carve-out: A benefit plan that is separated from the basic contract with an insurer and paid
under a different arrangement.
cliff: A pre-determined eligibility requirement or premium-sharing arrangement after which no
benefit is available.
eligibility: A set of criteria, such as a combination of age and years of service, that define
whether an employee is qualified to receive a benefit.
defined benefit approach: The benefit is defined in terms of the coverage provided, rather
than the dollar value of the coverage. This is the current UVM approach.
defined contribution approach: The benefit is defined by a ―set‖ dollar level of commitment by
the University, such as setting the amount of premium sharing available at retirement.
defined cost approach: The benefit is defined by a dollar level of employer commitment. The
most common ways to do this are: (1) to define the cost going in, such as with a pre-funded
defined contribution arrangement, or (2) to define the cost going out with lifetime maximums,
premium sharing caps, and fixed retirement accounts. Using this second method it is common
to combine a defined benefit design with annual or lifetime limits on the employer‘s benefit cost
commitment.
defined dollar cap: A specific limit on the dollar amount someone pays for their share of the
premium.
GASB 45: Governmental Accounting Standards Board Statement No. 45, which requires public
universities and other public employers to account for the cost of post-retirement medical
benefits as an expense against income over the working lifetimes of employees.
grandfathering: Allowing a defined population to operate under prior rules and requirements
following a change in benefits.
hypothetical scenario: An example illustrating the specific application of benefit design
principles that is not based on ―real-life‖ numbers. Frequently ―round figures‖ are used for ease
of representing the example.
Medicare: A federal program that provides insurance for people 65 and older and for people
under 65 who have certain disabilities. Medicare Part A, provided at no cost to the member,
covers hospital, home health care, hospice and skilled nursing facility costs; Medicare Part B


                                                      2010-10-07 UBAC Advisory Report, Page 96
covers physician and outpatient hospital care as well as some other services, such as lab and
radiology tests. The cost for Part B is between $96.40 and $110.50 per month.
Medicare Wrap-Around insurance: Insurance that acts as a supplement to Medicare in that it
pays deductibles and coinsurance amounts that the Medicare recipient would otherwise be
responsible for paying. Some wrap-around policies pay amounts for hospital and nursing home
expenses after Medicare limits have been reached.
Medigap: A private, supplemental health insurance plan that provides coverage for medical
expenses not covered or partially covered by Medicare.
model: An illustration of a set of criteria, demonstrating both structure and effect of the specified
elements.
pay-based cost sharing: Premium Cost Sharing that reflects different levels of sharing that are
based on pay. Under the University‘s medical plan, those with higher pay are required to pay a
higher share of the premium than those with lower pay.
points: The combination of age plus service worked with the employer. For example, someone
age 52 who has worked for the University for 20 years could have 72 points. If they work
another year, they would have 74 points, since both their age and service will increase by one.
pre-funding: setting money aside now into an account or trust to pay for future costs. Typically,
the account grows with interest or other earnings.
premiums: the monthly amount changed by an insurance company for providing the plan or
contractual benefits.
prevalence data: A set of measures that illustrates the quality of being widespread or having
general applicability.
retiree accounts: An account owned by, or earmarked for a retiree.
service-based cost sharing: Premium Cost Sharing that reflects different levels of sharing
based on years worked for the employer. For example, an employer premium share of X% per
year of service.




                                                     2010-10-07 UBAC Advisory Report, Page 97

				
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