Council 2004-2005 Year-End Committee Reports
Committee on Personnel Benefits
The Committee will have met six times this year. Long-term Care, Retiree Benefits, and the elimination of Plan 100 (Indemnity Medical Insurance plan) were the dominant topics discussed. The Committee also discussed the Condition Management Program with Caremark, Long-term Disability Plan, total compensation statements, benefits administration, and the new Medicare drug act.
1. Long–term Care Insurance: The Committee had requested a review of the Long-term Care Program because of changes that have occurred in the industry since the program was introduced in 1998. At that time, there were University employees who already had individual policies with TIAA-CREF which has since sold their business to MetLife. CNA Insurance, the provider chosen in 1998, actively assisted the University in enrolling employees in the program, but participation has been around 2% of the total eligible groups, less than half that of other similar institutions. In the interim, CNA has attempted to sell the business to another company, but has not succeeded. CNA has also stopped giving the University educational support on the program. The Committee wanted to ensure that the program available carried value for Penn employees and would continue to do so in the future.
The Human Resources Benefits Office retained a consultant, Income and Benefits Solutions, which requested and received bids and proposals from Aetna, John Hancock, Prudential, Unum Provident and MetLife. After the consultant’s presentation and a lengthy discussion, the Committee decided that John Hancock’s proposal was most suitable for Penn employees especially with its competitive premiums. Other Ivy institutions have had good experiences with Hancock.
John Hancock gave a final lengthy presentation which answered further questions including those about the concept of lifetime maximum payments which are usually specified as a certain number of years at a certain maximum payment per day with a certain lifetime amount. If the daily payment is less than the daily maximum, such as would be if care is received at home, then those funds are left in the subscriber’s lifetime pool of funds and could actually fund lengthier care.
2. Retiree Medical: Olivia Mitchell, chair of the University’s Retiree Task Force, which was formed by the President and the Provost in the spring of 2004, gave an extensive presentation of the Task Force’s report which was followed by a long discussion and question and answer period. Basically, due to rising health care costs it has become apparent that retirees must share more of their healthcare costs. Even with the proposed changes, Penn will remain competitive with our peer institutions.
3. Condition Management with Caremark: One letter of complaint concerning privacy was received and Caremark agreed to change the letters they will send out to initiate contact. Only 2% of the 1,747 people who received letters decided to participate and further recruitment efforts will be attempted in the future.
4. Total Compensation Statements: The PBC has been asking for these statements for several years and they were issued in March 2005. As medical costs and other benefits become more costly, we think knowing just what the University is paying and its share in these costs will lead to better understanding of the steps that the University is taking.
5. Plan 100 (Indemnity Medical Insurance plan) Elimination: Currently there are 430 employees in this plan and Penn is one of only two employers that offer this plan in the region which makes administrative expenses extremely high. After extensive discussion, it was decided that it was in everyone’s best interest to eliminate Plan 100, particularly since the PENNCare/Personal Choice plan was an attractive option and would require a good deal less in premiums from the enrollees. To date, all three information sessions have been held on this subject and less than 10% of those affected have attended.
6. Long-term Disability (LTD): Due to differences in the University and UPHS LTD plans and basic fairness issues, the Committee supported changes proposed by the University Council that included an enhanced definition of disability for the first 24 months to be “own occupation” and after 24 months “any reasonable occupation” or the inability to earn more than 80% of pre-disability earnings. There would be continued coverage in the medical plan and other benefits during the six-month elimination period. These changes would go into effect July 1, 2005. Other questions of a less global nature were also answered.
7. New Medicare Prescription Drug Plan: Employers like Penn who have a retiree drug benefit will have to choose to take a subsidy and keep their own plan or become a provider under the law. Although the options are still being analyzed, Penn will probably do the former. Of interest is that to get the catastrophic benefit of the plan, the retiree has to spend $4,020 out of pocket first which includes the premium of $35 each month.
Initiatives for Fiscal Year 2006: To be determined at our April meeting.
It is a pleasure to acknowledge the support provided to the committee by the Human Resources staff, in particular by Leny Bader, executive director of Benefits; Helena Gibbons, senior benefits specialist; Janice Gaspari, administrative coordinator; and Geri Zima, manager of Benefits Administration who provided staff support to the Committee, and the sage advice and council of John Heuer, vice president of Human Resources.
2004-2005 Committee on Personnel Benefits Members
Chair: David B. Freiman (radiol/med); Faculty: Jere Behrman (econ), Kathleen Boesze-Battaglia (biochem/dent), David B. Freiman (radiol/med), Howard Goldfine (microbiol/med), Andrew Metrick (fin), Gerald J. Porter (math), Cynthia Scalzi (nursing), Ingrid Waldron (biology); Graduate/professional students: Noah Drezner; PPSA: Anna Loh (Wharton HR), Victoria Mulhern (SOM), Julie Vick (Career Svcs); WPSA: Candice Milbourne (Affirmative Action), Anne Rulinski (Dermatology); Ex officio: Elenita Bader (Dir, Benefits), Janice Bellace (Assoc Provost), John Heuer (VP, Human Resources).
Almanac, Vol. 52, No. 4, September 20, 2005
September 20, 2005
Volume 52 Number 4