Office of the Vice President for Global Communications

Tuesday, September 8, 2009

Record Update First

Health plan, retirement savings changes discussed at campus forums

To help clarify upcoming benefits changes, the university hosted information forums Monday and Tuesday on the Ann Arbor, Dearborn and Flint campuses.

Monday’s forum in Ann Arbor included questions from the audience on a broad variety of topics including benefits for retirees, part-time workers and families with children.

For more information about these topics and more, along with streaming video from the Ann Arbor forum, go to

The forums were led by Associate Vice President for Human Resources Laurita Thomas. At the Ann Arbor forum she was joined by a panel including Tim Slottow, executive vice president and chief financial officer; Teresa Sullivan, provost and executive vice president for academic affairs; Deborah Childs, chief human resource officer, U-M Health System; and Kyle Grazier, head of the Committee on Sustainable Health Benefits (COSHB), and professor of health management and policy, School of Public Health, and professor of psychiatry, Medical School.

Thomas discussed the current challenge of increasing benefit costs and outlined the overall goals and charges put forth to the COSHB and the Committee to Study Retirement Savings Plan Vesting Options for future employees.

Many questions from the audience concerned employee health care contribution for part-time workers. Under the new plan, part-time, benefits-eligible employees will continue to have access to the full choice of U-M health plans, but the university will contribute 80 percent of the contribution it makes for full-time staff in the lowest of three salary bands.

COSHB established the three salary bands “to make sure cost increases wouldn’t fall on the lowest paid employees of the university,” Grazier said.

Regarding health care co-pays for families with children, Thomas said the difference between insuring one child and many is small. “The overall cost for children is significantly lower than adults,” she said.

After careful study of the committee reports, the university will adopt the following changes through a phased implementation beginning next year:

Retirement savings decisions
• U-M will maintain the current 10-percent-of-salary contribution amount the university makes toward this important retirement savings benefit.

• Faculty and staff hired on or after Jan. 1, 2010, must wait one year before they begin to receive university contributions toward the U-M Retirement Savings Plan.

Health care decisions
The university will continue to base the contribution formula for health care on the two lowest-cost comprehensive plans and will continue the current tiers of coverage — employee, employee plus adult, employee plus adult and child(ren), and employee plus child(ren).

Employees and retirees will contribute more to their health care costs than they do today to achieve the new aggregate ratio for cost sharing. Half of the increase will occur in January 2010; the remainder in 2011.

Although it is too soon to know premium rates for 2010, the university has created estimates of employee and university contributions to U-M Premier Care if these changes were in place today. The estimates are available at

The university's contribution to premiums will be greatest for employees and retirees, and greater for child dependents than for adult dependents.

The university will use three salary bands to help make costs more affordable to lower-wage employees. Estimates of the salaries that fall into each band using 2008 data can be viewed on the site.

University contributions to premiums for retirees and their dependents will be the same as its contributions for active full-time employees in the lowest wage band (Band 1).

The co-pay for an office visit will increase from $15 to $20, and emergency room co-pays will change from $50 to $75. (The co-pay is waived when admitted to the hospital for care.) Co-pay increases will become effective on Jan. 1, 2010.

The university will continue its commitment to creating a culture of health through MHealthy programs for prevention, early intervention and wellness.

Changes to come in two phases
Jan. 1, 2010: Changes to co-pays for office visits and emergency room visits will be made, along with one-half of the increase in employee premium contributions.

Jan. 1, 2011: The remaining one-half of the premium contribution increase will become effective.

Action to be deferred
COSHB recommended that the co-pay for name-brand prescription drugs in the third tier of the U-M Prescription Drug Plan be increased from $30 to $45. University officials say this change warrants further study and have deferred a decision on it until 2011.

Some audience members asked why benefits changes are needed now during a tough economic climate.

The university is examining all aspects of operations, Slottow said. ”After salaries, benefits are the second highest cost for the university,” he said. “We are trying to improve our cost efficiency.”

One question addressed the correlation between escalating health care costs and tuition rates.

Sullivan explained that health care costs also can affect tuition rates. This is because tuition accounts for 60 percent of the general fund, which pays for the majority of the university’s benefits and salaries. “We need to get benefits costs under control to control tuition costs,” she said.