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October 7, 2010
Nationally, health care costs are expected to rise 8% or more.
[www.indystar.com/article/201009300245/business03/9300428]
Nationally, workers are expected to pay average premiums of $2,209 in 2011. This is an increase of 12.4%.
Indiana employers are seeing premium increases of 10-13%.
Nationally, the average premiums that employers pay on behalf of each worker expected to rise nearly 9% to $7,612.
Employers are replacing co-pays with coinsurance for all services including prescriptions, office visits, and urgent care.
Major consulting firms expect costs to rise by 9% for 2011 after a 9.5% increase this year.
Other state schools are making adjustments to benefits
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One state school’s deductible increased 50% on their PPO plan. Coinsurance percent rose from 25% to 30%. Prescription drug deductible and insurance increased along with the maximum out-of-pocket on prescriptions increasing from $1,000 to $1,500.
Health Plan Advisory Committee Discussions◦ Strategies shared under consideration but not yet implemented:
Spousal surcharge if the spouse had access to other employer provided coverage
Surcharge for smokers Charging for the number of dependent children covered 30-day waiting period for benefit eligibility Merging the Purdue Incentive and Co-Pay Plans with corresponding plan
changes Incentives and disincentives for participation in health improvement programs Multiple salary tiers for setting employee premiums Possible new networks and programs through providers like Clarian, American
Health Network, etc.
Blue Ribbon Healthcare Committee◦ Established to recommend short-term and long-term changes to achieve both
immediate and longer-term cost containment Feasibility of an on-site pharmacy/medical clinic Benefit plan design, including plan design strategies Health improvement programs for Purdue faculty, staff, and families
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Pam Aaltonen, Nursing (Chair) Steve Abel, Pharmacy Practice John Beelke, Human Resources-Staff Benefits Bart Collins, Health Communications Mike Campion, Management Jenny Coddington, Nursing; North Central Nursing Clinics Jim Dworkin, Regional Representative, North Central Joan Fulton, University Senate – Chair (Agricultural Economics) Luis Lewin, Human Resources Carol Sternberger, Nursing; Regional Representative, Ft. Wayne Philip Troped, Health & Kinesiology Susan White, Pharmacy David Williams, Senate: Faculty Affairs Chair (Med Illust/Vet Med) Steve Witz, Regenstrief Center
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Charge: Focus on health care containment for the long term while continuing to provide high quality care to Purdue employees and eligible dependents.
Recommendations Due by March 1, 2011
All Purdue medical plans are self-insured and administered by CIGNA. There are 3 options:
1. Purdue Choice Fund is a consumer-driven health plan. Enrollment:1,023 employees
2. Incentive PPO plan is a preferred provider plan. Enrollment: 4,201 employees
3. Co-Pay plan is a plan with HMO benefits featuring co-pays for all services, including inpatient and outpatient hospital treatment. Enrollment: 6,113 employees
Purdue has a total of 11,337 employees covered by these plans, including 14,663 dependents for a total of 26,000 lives.
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Expected cost for 2010◦ Total Cost = $132.3 million (3rd largest budget)
◦ Purdue Contributions = $115 million (87%)
◦ Employee Contributions = $14.1 million (11%) [pre-tax basis]
◦ Other * Contributions = $3.2 million (2%) *disabled, former employees and pre-65 retirees
Claims expenses for medical and pharmacy for 2010 are expected to be at $127 million. Other plan expenses include vision claims, CIGNA fees, COBRA fees, and some staff costs.
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Contributions 2010 Budget
2011 Projected Budget
Increase over 2010
Budget
Percent Increase
over 2010 Budget
Purdue $115,000,000
$121,500,000
$6,500,000 6%
Employees 14,100,000 14,900,000 800,0006%
Inactive Employees
3,200,000 3,450,000 250,0006%
Total $132,300,00
0$139,850,00
0$7,550,000
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Eliminate providing money in the form of an opt out credit to those who do not take Purdue’s medical benefits.
Part-time faculty and staff will have their premiums based on their full-time equivalent salaries beginning with 2011.
Purdue’s contribution will increase by 6% and employee premiums (overall) will increase by 6%.
Salary tier for faculty/staff premiums will go from $40,000 to $44,000.
Premiums based on salary will only change on January 1, and not with other salary changes during the year.
Dependents up to age 26 will be covered as required by law.
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These services will be covered without limits at 100% when in-network providers are used for all three medical plans.
Annual Physical Examinations
Preventive imaging services: e.g., mammograms and osteoporosis screening
Immunizations for infant, child, adolescent, and adult
Preventive laboratory services: e.g., cholesterol, pap tests, and PSAs
Screening procedures: e.g., colonoscopies
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Purdue Choice Fund: no changes
In-network deductible: $1,300 per person per year and $2,600 per family per year
Out-of-network deductible: $2,600 per person per year and $4,600 per family per year
Coinsurance after deductible: 20% in-network and 50% out-of-network
Preventive services: 100%, not subject to deductible
Purdue HSA contribution: $650/employee and $1,300/family
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Incentive PPO plan changes to current benefits:
Deductible: Current is $400; Proposed is $500 Coinsurance for primary care: Current is 10%;
Proposed is 15% (still not subject to deductible) Maximum out of pocket: Current is $1,800; Proposed
is $2,000 per person per year and $4,000 per family per year
Pharmacy maximum out of pocket: Current is $1,000; Proposed is $1,300 per person per year and $2,600 per family per year
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Co-Pay plan changes to current benefits
Establish a $250 deductible
Establish a 15% coinsurance
Both deductible and coinsurance for inpatient and outpatient hospital services only
Maximum out of pocket of $1,200 per person per year and $2,400 per family per year
Pharmacy maximum out of pocket: Increased from $1,000 to $1,300 per person per year and $2,600 per family per year
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Q & A’s
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October 7, 2010
