Plan cuts health care, tuition benefits

A proposed replacement for the University's employee benefit package aims for a "competitive and efficient" plan. A new proposed University benefits plan will require employees to contribute to health care premiums and eliminate graduate tuition benefits for spouses and dependents of employees. The plan -- developed by a benefits advisory committee and the Academic Planning and Budget Committee -- makes few changes to current part-time worker benefits, despite four years of lobbying by part-time employees. A series of proposals aim to maintain a competitive benefits package while eliminating certain inefficiencies and extra costs in the current plan, according to Associate Provost Barbara Lowery, who co-chaired the committee. The costs of the benefits plans -- which have not been completely reviewed in 15 years -- have doubled over the last decade and now comprise 12 percent of the University's budget, according to Lowery. Officials decided to review the packages in conjunction with other efforts to reign in costs across the University, like administrative restructuring. Executive Vice President John Fry said he could not estimate how much the new plans will save, although he admitted that savings are "not significant with respect to the total benefits budget." Fry added that although the committee began its review in the interest of cost-cutting, its focus shifted towards designing a competitive and efficient benefits package. The plan will make significant changes to health care benefits. The current system employs "a formula that malfunctioned" to calculate employee contributions to health care premiums, Deputy Provost Michael Wachter said. This formula didn't take changes in the health care market into account, causing havoc when the costs of the University's partial benefits health care plans fell several years ago, he said. By 1994, falling costs allowed workers in all but one health plan to avoid paying anything toward their premiums. By next year, the current system would require the University to pay 92 percent of all health care costs, a figure which prompted the Benefits Committee to reinstate employee payroll contributions. The proposal retains an assortment of health care options, while adding a "point of service health care plan" -- which is a cross between a health maintenance organization and a traditional insurance plan. The current HMO plans will also add prescription drug coverage. Additionally, the proposal will revamp the tuition package, eliminating graduate tuition benefits for spouses and dependent of employees by 2002. In the past, the University provided 50 percent of tuition for spouses and 100 percent for dependent children in most of the University's graduate programs. But the University will continue to pay 100 percent of an employee's own graduate education. Undergraduate education will also be covered as in years past -- 100 percent for employees, 75 percent for dependents and 50 percent for spouses. The plan alters life insurance benefits so that the University will only provide benefits equal to an employees salary, abandoning an age-based benefits system. Wachter explained that the Internal Revenue Service taxes all life insurance benefits over $50,000, forcing the employees to pay a total of approximately $350,000 in taxes last year. With the change, however, employees will save on taxes, while having the option to purchase life insurance benefits up to four times their pay for a maximum of $750,000. The proposal also calls for the elimination of reduced summer work hours, since several departments have already phased the program out, and no other employer surveyed by the Benefits Committee offered this feature. But A-3 Assembly Chairperson Karen Wheeler said the loss of this program -- although less upsetting than other cutbacks, such as those in graduate tuition -- would disappoint A-3 workers who had looked forward to summer hours. "That was one of those benefits that was attractive to people," Wheeler said. "That helped out in terms of child care or to be able to do other things in the summer. It's a small thing but it was something that a lot of people enjoyed." New employees will be allowed to request paid time off after 120 days on the job, rather than waiting an entire year, as under the current system. Current part-time worker benefits will be maintained, while allowing employees of more than two years to place $1,000 of pre-tax income in an account to cover health care costs. The Committee did not examine retirement benefits or disability plans, slating those programs to be reviewed over the next year. Although the plans will be published in full in today's Almanac to allow comments from the University community, Lowery said she does not expect any "surprises." "I believe that as people look over the plans they'll find them fair," Lowery said. "They are very reasonable, in particular, in terms of health care costs. They are certainly as reasonable as we could be." But Fry said he expects some initial concerns, although those problems should subside once employees understand the proposals. "I anticipate a lot of criticism because any time you touch people's benefits or compensation you are naturally going to incur a lot of concern and suspicion about the process," he said. "Once people take the time to look into what we are talking about they will realize how balanced and reasonable we are being." Wachter conceded that the plans did not satisfy some requests. "Not everybody got everything they wanted, but in terms of the total package it was something that everybody was willing to sign on to," he said.

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