- September 2010 >Be a Wise Healthcare Consumer
New Feature! Beginning this month, the UT System Office of Employee Benefits (OEB) is introducing a new feature to your monthly “A Matter of Health” newsletter. This new section will focus on providing expanded information about the UT System group insurance plans and programs that make up your UT Benefits package and help you be a proactive healthcare consumer. Being a well-informed healthcare consumer is an important step on the road to keeping yourself as healthy as possible and controlling your out-of-pocket costs for health care. To help you become a savvy consumer, your newsletter will now regularly include a section featuring in-depth articles, specific facts, and consumer tips that go beyond the basics to more fully examine the background and details of your benefits and how they fit into the health care system as a whole.
Timely information will help you understand exactly how your UT Benefits work, learn how you can use your coverage most wisely, and will identify steps that each of us can take to improve our own health and wellness. Making the most of your UT Benefits and making living well a priority will help to lower the overall cost of health care for you and your family and ultimately will help to keep down the costs of our UT Benefits for each of us participating in the program.
The first article of this new feature examines the direct relationship between the actual cost of providing medical and prescription benefits and your UT SELECT insurance premiums.
The UT System Office of Employee Benefits (OEB) places a high priority on providing a robust benefits plan design at an affordable rate. The long-term financial health of the Plan is one of the most important functions OEB undertakes on behalf of UT System and the nearly 200,000 employees, retirees and dependents participating in the group insurance plans.
The cost of health care nationwide continues to rise at record rates. The UT SELECT Medical plan (the Plan) has historically performed better than average, but claims cost for plan year 2009-2010 rose at levels close to the national trend. Because the Plan is a self-funded health insurance plan, its performance is monitored closely throughout the year taking into account the potential for higher plan utilization and increased claims experience. The total claims for the Plan during the 2009-2010 plan year increased by approximately 9%. Additionally, reserve funds were used to meet 5% of projected funding needs for 2009-2010 to minimize an increase to premium rates. Premium rates and plan design for the 2010-2011 year were adjusted by 14% in order to address the funding gap created by these two factors.
Setting Premium Rates for UT SELECT
The UT SELECT Medical plan is not a traditional fully insured plan in which risk is transferred to a commercial insurance company. Instead, in order to minimize cost, the Plan is self-funded and administered by OEB in partnership with a third-party administrator. Typically, a premium rate is set with up to 30% of premium being used for administrative cost. In comparison, OEB’s administration of the complete UT Benefits program is funded by only 3% of your medical plan premium which results in savings to the plan and to members. Currently, OEB contracts with Blue Cross Blue Shield of Texas (BCBSTX) to establish health care provider networks, pay claims and assist with a variety of communication and program initiatives. While BCBSTX handles these functions as the third party administrator for the Plan, UT System retains final authority regarding the Plan in accordance with state law.
The costs associated with the Plan are financed with a combination of employer, state and employee contributions deposited in the Medical Fund maintained by the System solely for the purpose of providing medical benefits for members. Each month, premiums are deposited in the Fund which earns income through investments until balances are needed to pay claims and administrative expenses. OEB requires Blue Cross and Blue Shield to pay claims before requesting reimbursement from the System. By minimizing third party administrator fees, managing costs through wellness programs, encouraging plan participants to make wise health care decisions (such as having annual physical exams) and maximizing investment income, self-funding allows premium rates to be set at the lowest level possible and insures a financially strong plan for years to come.
The distribution of the premium between the employer and the member is specified by the Legislature. For a number of years, including FY10 and FY11, the Legislature has specified that the employer will pay 100% of the cost of basic health coverage for a full-time employee or retiree and 50% of the cost of coverage for their dependents and that the employer will pay 50% of the cost of basic health coverage for a part-time employee and 25% of the cost of coverage for their dependents. Inflation, plan utilization (the cost and frequency of care) and legislative funding all impact the establishment of premium rates. Each year after OEB determines how much is needed to fund the Plan and the Legislature determines the level of funding to be provided, the premium rates are established.
In the coming months, visit this newsletter section for tips and information on being proactive with your health and your healthcare consumer habits. Together we can learn to be as healthy as possible and help keep the insurance plan affordable.
If you would like a specific topic discussed or have a question you would like answered in a future issue of this newsletter, please send your suggestions to firstname.lastname@example.org.
UT System Employee Benefits Website: www.utsystem.edu/benefits/
UT System Retirement Programs Website: www.utretirement.utsystem.edu
Your Local Benefits Office: www.utsystem.edu/benefits/contacts.asp#1