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Sustainable Benefits Task Force Presentation
to USF Leadership Team
May 11, 2011
Cost Savings Options Based on
Best Practices and Market Trends
• The Sustainable Benefits Task Force has finalized its review of
USF’s current benefits and potential opportunities for cost savings
and/or changes in benefit design.
• The following twenty-two options are being submitted to the
Leadership Team and the Cabinet for consideration. Some are
broad with many variables that will require further investigation.
• Some of these options will require negotiation with USF’s various
collective bargaining groups (see appendix for statement).
USF 051111_SBTF Meeting Presentation.PPT 2
Outcomes of the Task Force’s Efforts
• USF benefits package exceeds or equals its peer group in most
areas.
• Feedback from the USF community showed that members highly
value their benefits and are highly sensitive to changes.
• Any changes to the existing benefit package will require
continued promotion and outreach.
• The opportunities outlined in this report are options not
recommendations and are based upon the over-arching mission
of the University and its financial profile.
USF 051111_SBTF Meeting Presentation.PPT 3
Outcomes of the Task Force’s Efforts
(cont’d)
• Interdependencies exist between benefits and market trends:
– Options must be reviewed in the broader total rewards context
not each benefit on its own;
– Level of coverage and choice of benefit design will influence
savings opportunities and migration/early adoption.
• Implementation strategies may include a phased approach to
change, grandfathering select benefits, etc.
• Health Care Reform adds a level of uncertainty to future benefit
design.
USF 051111_SBTF Meeting Presentation.PPT 4
Outcomes of the Task Force’s Efforts
(cont’d)
• Cost estimates are based on broad assumptions derived from
marketplace experience and industry practices including the
following summary reports:
– AON/Hewitt – peer review and benchmarking;
– Advisory Board’s University Collaborative – self-funded
utilization;
– Towers Watson – employer benefit benchmarking, industry
best practices.
• Many of these options will require future monitoring of utilization,
benefit expense and behavior change to determine actual
cost/savings.
• Savings may be short term, long term or one time.
USF 051111_SBTF Meeting Presentation.PPT 5
Options — Medical
Option — Account Based Health Plan (ABHP)
1
Add ABHP as a plan Employee Sensitivity University Impact Observations
option (Anthem
administers PPO and • In addition to HMO & PPO — • Savings for USF depends on • ABHPs are growing in the
provides more choice migration into the plan marketplace
ABHP options).
• Allows flexibility • Consumer-driven accountability • Adoption of this type of plan could
• Consumer- driven & efficiency help the university meet certain
accountability and efficiency • Education about health care future requirements under Patient
• Portable choices needed Protection and Affordable Care Act
• Additional administrative cost (PPACA)
• High deductible could be less
attractive for those with limited • Overall savings estimates can • Typically ABHPs have shown
funds be impacted by a variety of reductions in medical cost increases
design options and the amount of approximately 1%-2% over
• Education about health care extended periods of time (for those
choices needed of USF savings account
subsidization, if any. enrolled in ABHP)
• Could provide cost savings for • Some risk of anti-selection and its
some employees impact on existing plans (good risks
move from Blue Cross and Kaiser to
ABHP)
• The account-based portion of this
product is a sophisticated financial
Estimated vehicle, which requires participant
education
1st Year • Sample design provided in
Savings: Appendix
$10k - $20k
USF 051111_SBTF Meeting Presentation.PPT 7
Option — Add PPO Low Option
2
Create an additional Employee Sensitivity University Impact Observations
Anthem low option PPO
plan to provide more • Provides more choice • Increase in administrative • Many large employers offer more
• Lower cost plan = fewer plan burden than one PPO option
choice (in addition to
benefits • Cost savings for USF • Needs to be taken into
existing Anthem PPO consideration with ABHP strategy
plan) (additional plans may create too
much administrative burden and
confusion for employees)
• Sample design provided in
Appendix
Estimated
Savings:
$30k
USF 051111_SBTF Meeting Presentation.PPT 8
Option — Spouse/Legally Domiciled
Adult Surcharge
3
Implement a Employee Sensitivity University Impact Observations
Spouse/LDA surcharge
if Spouse/LDA has • Still allows access to USF • Cost savings for USF • Dependents are a driver of cost for
plan for spouse/LDA • May reduce overall USF the university, a surcharge helps
access to alternative recognize some of those costs and
• Higher cost for some medical claims
medical coverage employees (if spouse/LDA are • Increase in administrative shares it with those covering
is participating in benefit and burden dependents
has access to alternative • Spousal surcharges are becoming
medical coverage) very common in the market place
• Note: Multiple definitions for LDA
currently exist within the various
CBA’s
Estimated
Savings:
$120k
USF 051111_SBTF Meeting Presentation.PPT 9
Option — Add 4th Tier to Benefits Coverage
4
Split current family tier Employee Sensitivity University Impact Observations
into Employee +
Children and Employee • Contributions based on family • Increase in administrative • Adds an additional 4th tier to current
size burden contribution structure to better meet
+ Spouse/LDA + family structure and changing family
• Contribution will decrease for
Children “employee + children” dynamics
• Contribution will increase for • Promotes equity in contribution
“employee + spouse/LDA + rates based on type of family
children” coverage
Estimated
Savings:
$0
USF 051111_SBTF Meeting Presentation.PPT 10
Option — Standardize Employee
Contribution
5
Simplify contribution
Employee Sensitivity University Impact Observations
structures by either
eliminating salary • Contributions will change, with • Administrative savings • Salary bands were created
some increasing and others • Requires working across approximately six years ago to
banding or create a decreasing create equity in contribution rates
multiple groups to bring the
single salary band for rates together across employee pay rates and
all employee groups faculty ranks in response to the
rising cost of health care
• Current structure is very
cumbersome and creates significant
administrative complexity across
university populations
Estimated
Savings:
TBD
USF 051111_SBTF Meeting Presentation.PPT 11
Option — Contribution Rate Increase
6
Increase monthly Employee Sensitivity University Impact Observations
employee contributions
for most employees to • Will increase contributions for • Cost savings for USF • Current employee contributions are
most employees • Could be potentially difficult to less than peer group
bring closer to peer
negotiate and may require • Could negatively impact recruitment
group extended time to implement and retention of employees
across bargained groups • Should be considered in conjunction
with other design changes, and
health plan offerings
• Consider subsidy for employees
below a certain level for single rate
method
Estimated
Savings:
$0 - $1m
USF 051111_SBTF Meeting Presentation.PPT 12
Option — Implement Higher Lab Copay
for Anthem Non Preferred Lab
7
Implement higher copay Employee Sensitivity University Impact Observations
for lab services at non-
preferred labs • Provides choice • Ability to leverage lab pricing • Various delivery systems deliver
• Consumer driven approach • Consumer driven approach services at different costs (i.e.,
• Can lead to savings for • Can lead to savings for USF Hospitals are more costly than
employee external labs)
• Administrative burden on USF
• Potential higher cost for to manage lab contract • Incents utilization of cost efficient
employee at non-preferred providers, while allowing choice in
labs providers at higher cost for
convenience
• Potential inconvenience for
those who opt to use non- • Copay differentials can help control
preferred labs costs
• Closest Quest Diagnostic Lab:
2198 15th St, San Francisco, CA
(0.7 miles from campus)
• Numerous other Quest Diagnostic
labs exist through out the Bay Area,
three total within 1 mile of campus
Estimated
Savings:
$15k
USF 051111_SBTF Meeting Presentation.PPT 13
Option — Revise Anthem Pharmacy Design
(formulary with copay differentials)
8
Add a formulary with Employee Sensitivity University Impact Observations
formulary/brand drug
copay differentials to • Education about plan is • Cost savings for USF • The marketplace has evolved to a
needed • Consumer-driven three tier copay/coinsurance
promote cost effective structure to provide better line of
• Employees and dependents • Employee education and
usage through may pay more for existing outreach is needed sight to cost variations that exist
drugs between different drugs, many of
which have lower cost alternatives
that are as efficacious
• Applies only to non-Kaiser medical
plans
Estimated
Savings:
$50k
USF 051111_SBTF Meeting Presentation.PPT 14
Option — Implement Anthem Pharmacy Step Therapy
Programs (w/MD ability to override use of generics)
9
Implement step therapy Employee Sensitivity University Impact Observations
program requiring
participant to begin • Potential to lower employee • Consumer-driven • The marketplace is broadly adopting
and USF costs • Potential to lower employee and clinical rules that help control costs
treatment with lower by limiting access to high cost drugs
• Education needed about plan USF costs
cost, most efficacious • Health impact for some — by • Education needed about plan by promoting lower cost alternatives
drugs. including more steps that are as efficacious. These rules
• Administrative cost associated allow access to high cost drugs if
with step therapy – to be the lower cost alternative does not
determined meet someone’s needs.
• Applies only to non-Kaiser medical
plans since this is already standard
practice for Kaiser today
Estimated Step therapy programs encourage the use of cost-effective therapeutically equivalent drugs first, when
Savings: appropriate. An employee will need to try an alternative drug before other drugs prescribed by his/her doctor
will be covered. The physician can decide to write a new prescription or submit a written request for the
$25k - $40k employee to continue medication as prescribed (e.g., No Substitution Allowed/Dispense as Written).
USF 051111_SBTF Meeting Presentation.PPT 15
Option — Review Health Plan Waiver
10
Review health plan Employee Sensitivity University Impact Observations
waiver amount ($) and
consider increasing or • Currently 75 people receive • Savings through migration to • Waiver credits were offered to help
the $40/month opt out waiver; other plans employees who preferred to elect
eliminating to further eliminating the waiver will medical coverage through other
• Could reduce cost of claims in
incent people with other impact these employees future means (e.g., spouse coverage)
coverage options to • Increasing waiver could incent • Some options require initial USF • Waiver credits have been losing
more employees who have costs until break even point their popularity overtime with larger
waive USF's plans access to other plans to opt of employers
• Not clear that additional waiver
USF’s plan amount would induce more • Financial impact of having current
employees to drop USF opt outs returning to the plan has
coverage not been factored into the
• Additional education and cost/savings analysis
outreach required • Employees who opt out of coverage
one year can re-enroll if they have a
qualifying event during the year or
during the following year’s open
enrollment
• Employee is required to provide
Estimated documentation of alternative
coverage
Cost/Savings: • Will need to evaluate waiver once
exchanges are available in 2014
$36k - ($150k)
USF 051111_SBTF Meeting Presentation.PPT 16
Options — Dental
Option — Implement Monthly Contributions
11
Implement employee Employee Sensitivity University Impact Observations
cost share for dental
coverage • Employee contribution will be • Cost savings for USF • Current contribution subsidy (100%
required to participate in plan employer paid) is inconsistent with
the market
• Different subsidy levels should be
evaluated and considered
Estimated
Savings:
$150k - $300k
USF 051111_SBTF Meeting Presentation.PPT 18
Option — Modify Plan to Create High and
Low Plan Options
12
Modify plan to create a Employee Sensitivity University Impact Observations
high and a low plan
option (Delta Dental • Provides more choice • Add benefit while controlling • Allows employees to have a choice
• Implement employee USF costs of dental designs to choose from to
administers both) fit their individual situation
contributions — richer plan • Administratively complex
design • Different subsidy levels will be
• Provider network restricted evaluated and considered for both
under low plan option plans
• 90% dental network utilization with
current network, less than 10% of
employee would be impacted
High Design:
• Requires paycheck contribution
• Current plan w/$2K annual max +
adult orthodontia and dental implant
benefits
Low Design:
• No paycheck contribution
• Current plan w/$1.5K annual max
(no change)
Estimated • Narrower network
Cost:
$175k
USF 051111_SBTF Meeting Presentation.PPT 19
Options — Wellness & Insurance
Option — Expand Wellness Offerings
13
Expand university’s Employee Sensitivity University Impact Observations
wellness offerings
• Encourages engagement in • Encourages engagement in • Wellness plans are increasing in
healthy behavior healthy behavior popularity with larger employers
• Long-term savings through • Program needs to be designed to
better employee health help promote participation (carrots
• Few short-term savings vs. sticks)
• Cost of incentives • Requires buy-in from senior
• Added administration costs leadership and acceptance by
employees
• Return On Investment (ROI) builds
over time as programs build
momentum
• Program costs can offset gains if
people do not maintain engagement
levels
• Integrated wellness and care
management programs typical ROI
is estimated at 1.5x – 2.0x, and
driven by employee engagement
Estimated levels
1st Year
Savings:
$25k - $50k
USF 051111_SBTF Meeting Presentation.PPT 21
Option — Life Insurance Coverage
14
Consider increasing life Employee Sensitivity University Impact Observations
insurance coverage, as
this benefit can be • Additional coverage for • Additional cost to USF • Recent survey data suggest the
employee • USF can take advantage of university’s overall benefits are
purchased more cost significantly above average but life
volume pricing
efficiently by the insurance was one area that USF
university than scored at the same level as other
comparators
employees
Estimated
Cost:
$125k - $250k
USF 051111_SBTF Meeting Presentation.PPT 22
Options — Tuition Remission
Option — Implement Benefit
Waiting Period and Remove Payback
15
Implement waiting Employee Sensitivity University Impact Observations
period before individual
is eligible for tuition • Eligibility is delayed by wait • Promotes stability/longevity • Would align USF with other
period prior to benefit institutions and their practices
remission and remove regarding tuition remission for
• Would allow employee to • Removing payback —
current payback leave USF immediately upon administratively easier, but USF competitiveness
provision completion without penalty loses investment • Savings predominately achieved in
first year, with some savings
continuing into the future as
turnover occurs
• Actual savings realized can be
difficult to determine
• Impacts FACHEX, Tuition Exchange
and USF’s tuition remission
programs; design and eligibility
definitions must be the same for
both graduate and undergraduate
population to minimize required
adjustments to other programs
Estimated
Savings*: *Tuition revenue will also decrease; savings amount to be determined.
$600k
USF 051111_SBTF Meeting Presentation.PPT 24
Option — Limiting Eligibility
16
Limit eligibility for Employee Sensitivity University Impact Observations
employees and
dependents through • Could influence employee • Cost savings to USF • Would align University with other
retention • Brings USF in line with peer major institutions and their practices
various plan design regarding remission
institutions
changes • May negatively impact • Savings projections will have some
recruitment and retention of impact on revenue budget as
employees enrollment is reduced (impact not
• Options include limiting included in this analysis)
remission % to something less • Additional review required to
than 100%, limiting allowable evaluate current program utilization
programs for dependents (eg. to balance impact on general
U/G programs only), capping community
the total number of degrees
allowed (eg. 2 per employee)
Estimated
Savings*: *Tuition revenue will also decrease; amount of revenue reduction to be determined.
$180k-$1.8M
USF 051111_SBTF Meeting Presentation.PPT 25
Options — Child Care Subsidy
Option — Change Income Basis to
Household Income
17
Change eligibility basis Employee Sensitivity University Impact Observations
to household income
from employee salary • Some employees could lose • May negatively influence • Would distribute benefit to lowest
benefit recruitment and retention of income households
• Could influence retention and employees • Child care subsidy was not included
recruitment • Highly sensitive area for some in the employee survey.
• Concerns regarding privacy employees • Subsequently, numerous
and administration • Provides benefit to those with responses received during town hall
the least household income. presentations
Estimated
Savings:
$50k
USF 051111_SBTF Meeting Presentation.PPT 27
Option — Decrease Child Care Funding
Amount
18
Decrease child care Employee Sensitivity University Impact Observations
benefit provided by USF
• Reduction of benefit for • Cost savings for USF *Child care subsidy was not included
employee in the employee survey.
• Subsequently, numerous responses
received during town hall
presentations
• Highly sensitive benefit for some
employees and linked to family life
• Savings directly impacted by final
subsidy level
Estimated
Savings:
$150k- $250k
USF 051111_SBTF Meeting Presentation.PPT 28
Option — Fund Secondary Caregiving
19
Provide additional Employee Sensitivity University Impact Observations
funding for employees
in need of alternative • Added coverage for employee • Cost to USF • Consider in conjunction with other
child care options
care
• Offered at other institutions
Estimated
Cost:
$385k
USF 051111_SBTF Meeting Presentation.PPT 29
Options — Commuter Benefits
Option — Direct Deposit to Clipper Card
20
Engage vendor to Employee Sensitivity University Impact Observations
deposit directly to
employee Clipper Card • More efficient • More efficient • Direct deposit of funds is very
• Aligns benefit with use • USF cost to administer common for most benefit areas
and offset expense by
• Employee must participate • $65/month currently
requiring employee through pre-tax payroll • Surcharge may apply to Clipper
contribution deduction Card participants (Clipper Card is
pretax, prepaid commuter card for
BART, Bus, etc.)
• No net cost impact if Clipper Card
used and $5 participation is required
• Required contribution may decrease
participation
Estimated
Cost:
$0 - $22k
USF 051111_SBTF Meeting Presentation.PPT 31
Options — Retirement Benefits
Option — Add Automatic Enrollment into
403b Plan
21
Automatically enroll Employee Sensitivity University Impact Observations
employee into voluntary
403b plan • Savings for employee • More employee participation • Current practice at many not for
• Employee will need to opt- out • Administrative costs profit institutions, and at 14% of
to stop contribution higher education institutions
• Could include auto escalation
feature
Estimated
Savings: Automatic enrollment in the 403b Plan provides employees the opportunity to save; industry experience
indicates that once enrolled few individuals opt out of the plan.
$0
USF 051111_SBTF Meeting Presentation.PPT 33
Option — Add Employee Contribution
and/or Employer Match
22
Incent employee Employee Sensitivity University Impact Observations
participation in
retirement savings by • Higher balance for employee • Could result in savings or higher • Many institutions require employee
• Increases contributions for cost for University depending on participation of some level
adding a required matching formula and employee
employees • May decrease employer
employee contribution • Could result in lower USF elections contribution for those employees
and/or employer match contributions for some receiving 12% contribution on
employees wages over the social security
• May change SSI wage base wage base
for some employees
Estimated
Cost/
Savings:
$TBD
USF 051111_SBTF Meeting Presentation.PPT 34
Areas for Further Investigation
• Further explore on-campus health care service options for
students and opening access to faculty/staff
• Investigate other cost efficient retirement vendors and consider
reducing the number of investment options
• Systematically continue to review health plan designs, options,
provider network, and industry trends (e.g., ABHP)
• Review LDA definitions for consistency across all USF groups
• Analyze all administrative costs for HR activities and services
(e.g., outsourcing cost vs. benefit)
• Review other institution’s current health & welfare experiences
(e.g., Implementation of their ABHP and its success at achieving
their objectives)
USF 051111_SBTF Meeting Presentation.PPT 35
Appendix
Statement from USFFA and OPE Local 3
• The USFFA would like to append this addendum to the final report of the Sustainable
Benefits Task Force, which met from January – May 2011. We appreciated the inclusion of
five Policy Board members who participated in all deliberations and decisions. The Task
Force was made up of administrators, staff and members of various other constituencies at
USF, some of us who are covered by collective bargaining agreements. In other words,
some of us had to deliberate on two levels, first with the interest of the economic health of
USF as an institution in mind, but second, in terms of the material interests of our unionized
members. At times, this dual loyalty made the decision making process difficult. The final
report contains a series of options that, if implemented, could help USF contain costs over
time in the aggregate, while offering sustainable, competitive benefits. In principle we might
agree to any combination of these options. However, the key: the final decision would very
much depend on a total package of salary and benefits to be determined at the negotiating
table. Therefore, we wish to state unequivocally that we oppose, on principle, any option in
the final report that would raise costs and/or cut benefits to our members, and, when viewed
in isolation, would amount to a reduction in our salary and benefits. We emphasize that we
will take seriously all and any of the options in this report, but since they are all subject to
collective bargaining, we can not endorse any option that would imply prior consent or
approval to a reduction in salary and benefits before actual negotiations begin.
• The OPEIU Local 3 stands in agreement and solidarity with the above statement made by the USFFA.
USF 051111_SBTF Meeting Presentation.PPT 37
Cost Savings Assumptions
• The table below provides the assumptions used to estimate cost savings for
initiatives
Medical
# Initiative Projected Annual Savings Assumptions
Actuarial plan value of Account Based Health Plan equivalent to the
PPO style plan (i.e., the level of coverage for both plans are
comparable); USF provides an employer seed of $650 single coverage
Account Based Health / $1,300 family coverage
1 $10K $20K
Plan (ABHP) 5% migration from the PPO plan to the Account Based Health Plan; no
migration from the Kaiser CA plan
There is a 3.0% savings associated with consumption efficiency with
the Account Based Health Plan
PPO Low Option has an actuarial plan value that is 6% less than the
PPO High Option (current plan design)
Rates for the PPO Low Option are 6% lower than the PPO High
Option
2 PPO Low/High Option $30K
Employee paycheck contributions for the PPO Low Option are 6%
lower than the PPO High Option
10% of employees enrolled in the current PPO Plan migrate to the
PPO Low Option
$50 / month spousal surcharge
90% of employees enrolled in the (EE + 1) and (EE + 2 or more) tier
cover a spouse / domestic partner
50% of spouses / domestic partners enrolled in the USF medical plan
3 Spouse/LDA Surcharge $120K has coverage through their own employer and will pay the $50 monthly
spousal surcharge
No spouse / domestic partner will drop off from USF’s medical plan;
there are additional savings associated with spouses / domestic
partners dropping coverage
USF 051111_SBTF Meeting Presentation.PPT 38
Cost Savings Assumptions
Medical
Projected
# Initiative Assumptions
Annual Savings
The enrollment tiers will be as follows: EE Only, EE + SP/LDA,
EE + Child(ren), and EE + Family
The rate relationship (or tier ratio) is as follows:
EE Only = 1.0
4 Add 4th Tier to Benefits Coverage $0K EE + SP/DP = 2.1
EE + Child(ren) = 1.8
EE + Family = 2.9
90% of employees enrolled in the (EE + 1) tier cover a spouse;
100% of employees enrolled in the (EE + 2) tier cover a spouse
Contribution Methodology TBD Assumed there will be administrative savings realized internally
5 (standardize across employee Administrative at USF; savings TBD
groups) Savings Only
$1M savings
Increase EE cost share from 6% (average across all employee
groups and pay bands) to 17%
Increase dependent cost share from 14% (average across all
Contribution Rate Increase employee groups and pay bands) to 23%
6 $0 to $1M
(closer to market value) $500K savings
Increase EE cost share from 6% (average across all employee
groups and pay bands) to 11.5%
Increase dependent cost share from 14% (average across all
employee groups and pay bands) to 18.5%
Implement Higher Lab Copay for Savings estimate provided by the advisory board
7 $15K
non preferred lab
USF 051111_SBTF Meeting Presentation.PPT 39
Cost Savings Assumptions
Medical
Projected
# Initiative Assumptions
Annual Savings
Increase pharmacy co-pay for Kaiser plan from the current
$10 generic / $20 brand to $10 generic / $25 brand
Implement three tier co-pay for the PPO plan from the current
$10 generic / $20 brand to $10 generic / $25 brand formulary /
Pharmacy Design $50 brand non-formulary
8 (formulary with copay $50K Savings estimate calculated based on USF’s utilization of
differentials) pharmacy drugs
Savings estimate provided by the Advisory Board
Pharmacy Step Therapy Programs
9 (w/ MD ability to override use of $25K to $40K
generics)
Decreasing the waiver credit from $40 / month to $0 / month
yields $36K in savings assuming no employees enroll in a
medical plan as a result of this change
Increasing the waiver credit from $40 / month to $150 / month
will cost $150K assuming no employees drop coverage as a
10 Health Plan Waiver $36K to ($150K) result of this change; 10 additional waivers are need to
recuperate the projected $150K annual cost
USF 051111_SBTF Meeting Presentation.PPT 40
Cost Savings Assumptions
Dental
Projected
# Initiative Assumptions
Annual Savings
Assumed all employees currently enrolled in a dental plan will
pay contributions, not change to design or network
10% EE cost share / 15% dependent cost share yields $150K
in annual savings
20% EE cost share / 30% dependent cost share yields $300K
11 Implement Monthly Contributions $150K to $300K
in annual savings
Benefits enhanced for the current dental plan (High Option)
Annual maximum and orthodontia lifetime maximum increased
from $1,500 to $2,000
Dental implants covered at 50% subject to a lifetime maximum
High Plan requires employee contributions
12
Modify Plan to Create a High/Low $175K Low Plan does not require employee contributions
Option Cost The $175K cost can be offset by employee contributions
USF 051111_SBTF Meeting Presentation.PPT 41
Cost Savings Assumptions
Other
Projected
# Initiative Assumptions
Annual Savings
Assumed 30% of employees participate in wellness programs
Assumed the cost of wellness programs is $8 PEPM
Projected a 1.0% savings to high cost claims due to better
care and case management
Savings are for PPO plan only
13 Wellness $25K to $50K
Assumed increasing the amount of basic life insurance from
1x pay to either 2x or 3x pay
$125 to $150K
14 Life Insurance Coverage
Cost
USF 051111_SBTF Meeting Presentation.PPT 42
Cost Savings Assumptions
Other Tuition Remission
Projected
# Initiative Assumptions
Annual Savings
The following is the annual tuition savings based on each reward
based on current utilization:
2 year eligibility period: $600,000
Benefit Waiting Period and
15 $600K
Remove Payback
The following is the annual tuition savings based on each reward
based on current utilization:
Dependent UG tuition remission only: $1.8 Million
Limiting degrees to 2 per family: $180,000
16 Limiting Eligibility $180K - $1.8M
USF 051111_SBTF Meeting Presentation.PPT 43
Cost Savings Assumptions
Childcare Subsidy
Projected
# Initiative Assumptions
Annual Savings
The household limits were calculated by doubling the
Associate salary level at Step 5 and Step 8 and adding 10%
Change Income Basis to Assumed 10% of employees will become ineligible for the
17 $50K childcare subsidy with the household limit requirement
Household Income
Assumed no change in utilization
Assumed a 15%-30% reduction in the monthly subsidy amount
18 Decrease Child Care Funding $150K-$250K across all employee groups
Assumed there is 1.5 child per employee who are currently
receiving the child care subsidy
Assumed the primary care giver is on vacation or is ill 20 days
in a year
19 Secondary Caregiver
$385K Assumed the rates for a secondary care giver is $25 / hour
Cost Assumed benefit is only available to Faculty / Librarians
USF 051111_SBTF Meeting Presentation.PPT 44
Cost Savings Assumptions
Commuter Benefits
Projected
# Initiative Annual Assumptions
Savings
Assumed no change in utilization of benefits
The monthly stipend for employees who do not have a parking
20 Monthly Checks $22K permit is reduced from the current $65 / month to $60 / month
USF 051111_SBTF Meeting Presentation.PPT 45
Cost Savings Assumptions
Retirement Benefits
Projected Annual Savings
# Initiative Assumptions/Caveats
(Cost)
New offering
No savings/cost as impact only to employee deferrals
unless match formula implemented
Need to determine recipient vendor and change nature of
relationship (employer vs. employee)
21 Automatic Enrollment $0 May offer on a selective non-discriminatory basis
Need to determine default election %
Participant notice requirement applies
New offering
No savings/cost as impact only to employee deferrals
unless match formula implemented
May offer as an opt-in program
TBD, If elected as an automatic feature, need to determine % of
Adding Employer Match and/or
22 Addn. Cost if Employer increase and timing
Employer Contribution
Match Added Participant notice requirement applies if automatic feature
USF 051111_SBTF Meeting Presentation.PPT 46
Cost Savings Assumptions
Retirement Benefits
Projected Annual Savings
# Initiative Assumptions/Caveats
(Cost)
Employer Match and A. USF A. Cost: Employer Match
Employer Contribution* contributes $513,000 New offering
*Current Employer Contribution is 10%, plus B. Savings: Immediate eligibility (same as employee deferrals)
a Money purchase pension matches $875,000 Alternatives A, C, & D: 67% saving >=1% increase to save
employer contribution of 10% up to 50% of 1st C. Cost: 2%, 33% of non-savers join and save 2%
and 12% above Social Security 2% of pay $1,190,000 Alternative B: 67% saving >=3% increase to save 5%, 33%
Wage Base deferred D. Savings: of non-savers join and save 5%
B. USF $775,000 Annual compliance testing required
contributes Employer Contribution
8%, plus No change to eligibility
matches Removal of additional contribution on pay over the Social
40% of 1st Security Wage Base for all employees
5% pay Reduction of benefits would require 204(h) notice
deferred
C. USF
contributes
10%, plus
matches
100% of 1st
2% of pay
deferred
D. USF
contributes
8%, plus
matches
100% of 1st
2% of pay
deferred
USF 051111_SBTF Meeting Presentation.PPT 47
Illustrative Account-Based Plan with
Health Savings Account
• 90 - 100% in-network coverage after
deductible & out-of-network Out of Pocket
Maximum offers protection to those with 100% coverage
serious health conditions. OOP Maximums after OOP Max
represent 2011 Maximum allowed out of
In-Network Out-of-Network
pocket limits
Coinsurance Coinsurance
• More substantial deductible encourages 90% - 100% up to 70% up to OOP Max Deductible,
member accountability for health care Coinsurance
OOP Max
choices and Rx
$5,950 per individual $5,950 per individual
• Deductible can be offset by HSA funds $11,900 per family $11,900 per family costs can be
(including incentive dollars for wellness offset by
program participation) HAS funds
• Employees have ownership over HSA (with or
dollars and tend to use them more Deductible without
judiciously (In & Out-of-Network, cross-applied) employer
$1,200 per individual seed) &
– Offers triple-tax advantage
Incentives
– Balance rolls over to next year $2,400 per family
– Savings component allows employees to
plan for the future and invest excess
funds, if they wish
100% Rx
• 100% coverage for preventive care provides 100% Medical Preventive Care Preventive
a generous up-front benefit Care
USF 051111_SBTF Meeting Presentation.PPT 48
Illustrative Example
Plan Designs PPO (High and Low) and ABHP
USF 051111_SBTF Meeting Presentation.PPT 49
* See next slide for comparable Kaiser benefit coverage.
Kaiser HMO - Benefit Plan
USF 051111_SBTF Meeting Presentation.PPT 50
Illustrative Example
Contribution Scenario
Scenario 5A: Keep current pay band structure and eliminate differentiation across groups; keep current subsidy level and tier structure;
no projected savings
* Proposed contribution formula applied to 2011 plan cost to illustrate impact of formula change
Illustrative Example
Contribution Scenario
Scenario 5B: Standardize employee contributions across all employee groups (salary levels and positions); keep current subsidy level and
tier structure; no projected savings
* Proposed contribution formula applied to 2011 plan cost to illustrate impact of formula change
Illustrative Example
Contribution Scenario
Scenario 6A: Keep current pay band structure and eliminate differentiation across groups; move contributions closer to overall peer group
subsidy level (maintain three tier structure). Projected annual savings to USF: $1,000,000
* Proposed contribution formula applied to 2011 plan cost to illustrate impact of formula change
