The University Record, April 24, 1995

Phase II of flex calls for flex dollars, opt-downs and opt-outs

Phase II of flex calls for flex dollars, opt-downs and opt-outs

By Jane R. Elgass

The implementation of phase II of the University's shift to a flexible benefits plan is a "win-win situation for the employees and the University that includes making clear for the first time the true costs of health care and other benefits," Kent Syverud told Senate Assembly members last week.

Addressing the group on behalf of Jackie McClain, chair of the Flexible Benefits Implementation Committee, he briefed members on the changes and additions that will be made to the 1996 benefits package.

Under the new program, individuals will be given "flex dollars" with which to purchase various benefits and will know up front the cost of the benefits. They will select those they want and will receive cash if the total cost is less than their flex dollars. They will pay any cost over their flex allocation via a pretax deduction.

In planning for this year's changes, Syverud explained that his committee worked within several restraints imposed by the first flex committee:

--No "losers" at least until 1998. Everyone will be able to take flex dollars and buy what they have now unless prices increase.

--Flex accounts must be included in the design of the program and kept separate from prices of benefits. Follow a principle of true pricing, with any adjustments identified and explained so employees can tell what has been changed.

--No "take-away" of programs.

--Maintain medical coverage at the one-person level at no cost to the employee.

--Add programs for prepaid legal services, group auto and home insurance and long-term care for 1996.

--Get community input before implementation.

--Work within a $2.2 million budget (additional appropriation).

--Reach decisions by May 1.

New for 1996:

--Flex dollars.

--New benefits.

--Cash in lieu of benefits.

--Cash for "opting down"--selecting a less expensive plan--in health care.

--Default benefits: everyone must participate in the enrollment process.

What won't change:

--Cost-sharing. Employees will know up front the amount of the University's contribution, which will be part of their flex dollars allocation.

--Health care options.

--Dental options: regular and enhanced.

--Life insurance benefits levels.

--Long-term disability.

--Worker's compensation.

--Leave benefits.

--Faculty and Staff Assistance Program.

--Retirement plan.

Changes:

--Life insurance: individuals may opt out and get credits based on their age and salary.

--Dental: individuals may opt out of regular coverage and get a $60 credit, or use credits from other benefits to buy enhanced coverage.

--Medical: individuals may opt out and receive an $800 credit, or opt down to comprehensive major medical and get credit based on coverage level, ranging from $200 to $400.

--Auto insurance: pay premiums on an after-tax basis or with credits.

Syverud, a professor of law, said the default has been included as "an incentive to encourage people to make their own choices in an educated manner."

Those who do not enroll at all will, by default, be enrolled in one-person comprehensive major medical coverage with no credits and will forfeit their flex appropriation for life and dental coverage.

Those who make partial elections will, by default, be enrolled in their current elections and forfeit excess credits in areas they do not elect.

In response to an audience comment, Syverud noted that the default is there because "we assume we have intelligent employees, we will give them the information to make decisions, treat them like adults. It's odd," he added, "that we've let employees make mistakes [in the past] and we bear the costs. That's one of the reasons why health care costs are so high."

One Assembly member, noting the number of decisions employees must make, proposed expansion of the open enrollment period, adding that the Benefits Office staff "was not informed last year."

Syverud said McClain, who is executive director of Human Resources/Affirmative Action, is aware of the need for better communication and, in fact, that the committee held an additional meeting to address that issue. "We know there were a lot of complaints this past year."