2 c&hr – open – info 1-2 retiree medical study board of curators meeting june 25-26, 2015
TRANSCRIPT
C&HR – OPEN – INFO 1-2
June 25-26, 2015
Ensure retirees and university are getting the most for their dollar Retiree medical benefits have changed considerably Medicare Advantage plans are available with similar value at lower cost
Ensure university can continue retiree medical benefits over time By 2019, university estimates an unfunded liability of $1 billion for retiree
medical benefits Could impact university’s financial statements and credit rating—same as
for all employers—unless there is progress/plan
Total Rewards Task Force Recommendations
C&HR – OPEN – INFO 1-4
June 25-26, 2015
Retiree-related goalsPreserve benefit and UM subsidy for current retirees
and employees close to retirementReward long service
Financial goalsStop growth of long-term liabilityReduce short-term liability to the extent possibleEnsure stability of medical plan for retirees
Goals and Assumptions
C&HR – OPEN – INFO 1-5
June 25-26, 2015
Progress to Date
Jan 2015 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan 2017
UM Retiree Medical Study Timeline
Announce Study
Launch Dedicated Website
Review Current Plan
Conduct Benchmarking and Marketplace Review
Conduct Listening Tour
Develop Potential Designs
Conduct Focus Group Testing
Develop Implementation/ Communication Strategy
Finalize New Plan
Announce
Direction
Guiding Coalition Meetings Website Updates Educational Resources
New plan implemented
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C&HR – OPEN – INFO 1-6
June 25-26, 2015
Peer institutions:*• Indiana University• Iowa State University• Michigan State University• Ohio State University• Pennsylvania State University• Purdue University• University of Alabama• University of Florida
Benchmarking Process: Peer Universities
* Comparator list was used for other comparative studies such as the Benefit Index.
• University of Georgia• University of Illinois• University of Kentucky• University of Michigan• University of Minnesota• University of Texas• University of Wisconsin
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Reviewed comparative results between UM’s retiree medical program and that of peer institutions
Survey information was supplemented by website searches and review of annual financial reports, as available
C&HR – OPEN – INFO 1-7
June 25-26, 2015
UM’s eligibility (age and service) for subsidized benefits is generous compared to peers
Some peer institutions have moved toward Medicare Advantage arrangements for Medicare-eligible retirees
Pre-Medicare retirees still have limited viable options in the market
Benchmarking Findings
C&HR – OPEN – INFO 1-8
June 25-26, 2015
Only 6 million of 45 million Medicare retirees have coverage through an employer plan
Market plans for Medicare-eligible are robust and offer universal access
Significant federal subsidies are available to complement or replace Medicare
Enhanced Medicare pharmacy benefit by 2020 (provided through Affordable Care Act) will greatly reduce need for employer pharmacy benefits
Other Market Considerations
C&HR – OPEN – INFO 1-9
June 25-26, 2015
Retiree Listening Tour331 UM retirees out of 4,500 retiree medical
participants attended sessions throughout the stateEmployee Survey (age 60 and 10+ yrs of service)
690 out of 2,591 recipients (27%) responded to email survey
Focus Groups51 attended sessions
Listening Opportunities
C&HR – OPEN – INFO 1-10
June 25-26, 2015
Don’t take away my benefits Why now? Make sure it’s affordable The current plan is a motivator for staying long term I don’t understand how medical coverage works Give me a few clear options What happens to people who move or travel a lot? It’s fair to give a higher subsidy to long-service employees,
but not to give them better benefits Medicare Advantage is fair as a choice but don’t force me
Common Feedback Themes
C&HR – OPEN – INFO 1-11
June 25-26, 2015
Eligibility and/or vesting (who gets benefits?)Who receives the benefit (and for how long)?How much of a benefit do they receive?Are spouses covered; what about widow(er)s?
Plan design (what do they get?)Cost sharing for medical expenses
Coinsurance, Copays, DeductibleEmployer funding (how much does UM pay?)
The “Levers” for Retiree Medical Program
C&HR – OPEN – INFO 1-12
June 25-26, 2015
Eligibility:Preserve plans for current retirees and employees
closest to retirementConsider increasing service/age requirementsClose retiree plan to new hires and those not vested
Plan Design:Evaluate market-based plans for Medicare eligible
retireesExplore pre-Medicare plan options
Potential Solutions
C&HR – OPEN – INFO 1-14
June 25-26, 2015
Next stepsConsider all data and feedbackDetermine recommendationsVet potential recommendations with constituency
groups in August and SeptemberBring recommendations to Board of Curators at
October 2015 meetingAnnounce changes and begin education Fall 2015Changes effective January 2017
Next Steps