Regents Award Employee Medical Insurance Contract to United Healthcare, Approve Changes to Employee Benefits

CAPE GIRARDEAU, Mo.,

Oct. 22, 2010 – The Southeast Missouri State University Board of Regents today awarded a contract to United Healthcare to provide employee medical insurance in 2011 and approved several other changes to the benefits package for University employees.

The Regents also adopted a Paid Time Off concept for vacation and energy conservation leave time, eliminated a vacation buyback program and revamped the University’s paid sick leave program. In total, it is projected these benefit changes will save the University $1.15 million, according to Kathy Mangels, vice president for finance and administration.

The Regents adopted the changes after requesting in March that a benefit consultant evaluate and recommend changes to the employee compensation/benefit package. Southeast hired J.W. Terrill Company to review and analyze the offerings against benchmarked employers for their family friendliness, cost effectiveness and competitiveness in this marketplace.

J.W. Terrill presented their recommendations to the Benefits Subcommittee of the Budget Review Committee in September. The Budget Review Committee, in turn, made recommendations to Southeast President Kenneth W. Dobbins.  

The contract with United Healthcare will begin Jan. 1, with two optional one-year renewal periods. Mangels said the University received three bids, with the current provider quoting a six percent increase. The other two bidders proposed premiums less than rates being paid under the current contract. United Healthcare’s current network provides comparable coverage in the Cape Girardeau market as the University’s current provider, she said.

United Healthcare will offer two plans with the same deductible and cost share levels as the current medical plans. The Regents approved converting Medical Plan B (the higher deductible plan) into the base health plan for employees with the University continuing to pay 100 percent of the employee premium. An accelerated Plan A (the lower deductible plan), will be available and will require an employee premium contribution based on salary level.

With the change to United Healthcare as the medical insurance provider for 2011, Southeast expects to experience about a 13 percent weighted average cost decrease.

The new plan design also calls for providing prescription copays after employees meet the deductible in the Base Plan B and immediate prescription copays for the Accelerated Plan A.

Mangels says cafeteria plan dollars will continue to be provided to employees at 50 percent of plan deductibles.  Thus, employees enrolling in the Base Plan B will receive $750 in cafeteria plan dollars, and those enrolling in the Accelerated Plan A will receive $250 in cafeteria plan dollars.

J.W. Terrill recommended the University consider family-friendly medical plan options to encourage the expansion of younger, healthier members into the covered group and promote consumer driven health decisions, Mangels said. Therefore, a portion of the savings from reduced employee premiums will be used to supplement premiums for spouses, children and family in the Base Plan B, she said. Supplementing dependent premiums should encourage more enrollments in the University’s plan, helping long term to reduce use, she said.

The new medical insurance rates reduce pre-Medicare retiree premiums to the active employee rates, resulting in an approximate 43 percent premium cost decrease to these retirees. Currently, the University subsidizes premiums for pre-age 65 retirees, covering one percent of premium for every year of service to Southeast up to a maximum 20 percent subsidy. Because retiree premiums are reduced by more than 40 percent under the new bid, the Regents voted to discontinue this subsidy for future retirees and to grandfather current retirees into the plan.

The Regents also approved implementing a sick leave accrual system. Under the system, current employees will have a starting bank of verified sick leave based on the past 10 years’ actual sick leave usage, up to a maximum of 1,040 hours. Staff will continue to receive eight unverified sick leave days per year, and faculty will accrue 6.64 days annually, Mangels said. Each year, unused unverified sick leave will carry over into employees’ verified sick leave bank. Upon retirement, employees may receive up to six months of additional service credit under MOSERS, the state retirement system, for accrued sick leave with no cost to Southeast or the employee, Mangels said.

In addition, the Board approved implementing a short-term disability plan to be administered by a third party administrator and adopted a Paid Time Off (PTO) concept combining vacation and other paid leave time for employees.

Mangels says the University will continue its dental insurance contract with Delta Dental of Missouri for 2011. The plan will have the same coverage levels as it did previously, she said, adding there will be a 6.6 percent premium increase with a one-year rate guarantee for employees.

Southeast also will continue its contract with Vision Service Plan (VSP) for its vision insurance for 2011. The plan will offer the same coverage levels as in the past, she said, adding employees will see about a six percent premium increase with a four-year rate guarantee, Mangels said.