The University Record, September 19, 1994

University’s new benefit plans face challenges in acceptance

This week the Record is unveiling two of the four new benefit plans being offered to University staff during open enrollment—vision care and an enhanced dental care plan.

Benefits Office Manager Craig Jorgeson spoke recently with the Record about these new benefits and some of the concerns expressed to his office by faculty and staff.

“We understand these plans will not be embraced by all,” Jorgeson commented, “but we also believe they are the first step toward becoming a valuable benefit package.” Jorgeson also pointed out that flexible benefits is an evolving process and additional changes in benefits may be expected in future years. He went on to answer some questions posed by the Record:

Record: Who determined the benefits of the plans?

Jorgeson: Experts were consulted about the design of the plans and many companies were interviewed before the final vendors were accepted. The main thrust of the Flexible Benefits Committee was to design the richest plan our staff members could afford to buy. We were also encouraged when the earlier Record article outlining flexible benefits produced no comments about the level of benefits.

Record: Why didn’t you design a richer plan?

Jorgeson: We didn’t feel staff members wanted to pay for a richer plan; however, if there is a general demand, we can offer one in future years. These benefits are typical of plans offered by other employers.

Record: Why is the provider list so small?

Jorgeson: Candidly, it is because the idea of preferred provider (PPO) plans is new. The Ann Arbor area was very resistant 10 years ago to medical HMOs and PPOs. Now they are the norm. Today, area dentists and vision providers are hesitant to join a PPO. We’re opening the door for them, and we expect more providers in the future.

Record: Why did you choose to offer a PPO?

Jorgeson: The best way to get more “bang for the buck” is to use the group purchasing power of the University to get significant discounts from providers. That’s what a PPO does. It contracts with a limited number of providers who agree to give substantial discounts in return for an increase in clients. But remember, staff members’ premiums have to cover the providers’ expenses, or the plan fails.

Record: What if staff members don’t want to join because their providers are not members of the PPO?

Jorgeson: That’s fine. A PPO isn’t for everyone just as an HMO isn’t for everyone. We will never have every dentist and optometrist signed up. That would mean we had not obtained significant discounts, and the plan would be more expensive. And, frankly, we’re not expecting most people who have established relationships with their dentists and optometrists to change. Some will change, however, and many new staff members will sign up for the PPOs.

Record: Why didn’t you go with a different dental company? Don’t they offer a better program?

Jorgeson: One or two other dental programs offer more dentists, but also pay the dentists more, and that means higher premiums for staff members.

Record: Why aren’t some of the national chain vision programs being offered?

Jorgeson: Our vendor, DavisVision, contracts with individual optometrists, not national chains. The chains offer only modest group discounts.

Record: Why doesn’t the School of Dentistry or the Kellogg Eye Center participate?

Jorgeson: Discussions were held with these providers, but the decision was made not to participate at this time.

Record: Why must staff members hired in 1994 wait until 1996 to participate in the plans?

Jorgeson: Originally, our intent was to offer the plans to one-year staff members and new hires in 1995. Unfortunately, a number of technical and systems problems made this impractical, so we decided to wait until 1996 when additional benefits and systems support were available to ensure the smooth operation of flexible benefits.

Record: What happened to the life insurance plan that was proposed in the earlier Record article?

Jorgeson: The Group Universal Life Insurance Plan (GULP) with the “side fund” option that permitted tax-deferred accumulations cannot, by law, accept contributions from an employer. Our present group life plan is over-funded and moratoriums (periods where no contributions are required) are expected to continue for several years. Since University contributions are included in the over-funding, moratoriums would not be available to GULP participants.

Record: Why isn’t the short-term disability plan available to cover other short periods of sickness or injury?

Jorgeson: We considered this in great detail. We discovered that offering coverage for other short periods of sickness or injury would be extremely difficult to administer and prohibitively expensive for our staff members to buy.

Record: Why isn’t a full flexible benefits program with flex dollars being offered in 1995?

Jorgeson: The desire of the Flexible Benefits Committee and University administration to receive detailed input from staff members through written surveys, focus groups and phone surveys delayed decisions on the final design of the flexible benefits programs. These delays meant that flexible dollars and some of the flex programs could not be offered in 1995 because there was not enough time to make system changes, select vendors, etc.

Record: Any other comments regarding flex issues or open enrollment this fall?

Jorgeson: We realize it has been difficult for some people to get through to our office in recent months and apologize for this. The volume of calls has increased substantially and we have tried several different approaches to solving the problem. Our phone system will be changed again this coming weekend in an effort to provide better service.

Since we will experience a surge in activity during open enrollment, I would strongly encourage people to try alternative approaches before calling us. Read the open enrollment materials carefully, attend the fairs and presentations, and request departmental presentations. Experiment with the benefit enrollment line without actually recording your changes. If you then need to call our office, the best time is early in the morning (we open at 7:30) and early in the enrollment process.

If you wait until the last week of open enrollment to call, you will experience a delay in getting service.

We look forward to seeing you at the fairs and presentations and hope you will find the open enrollment materials and new benefits attractive.