Work group to be formed to study, make recommendations about health benefits for retirees
October 16, 2017 •
UC has a longstanding commitment to providing high quality health care benefits for its faculty, staff and retirees, and currently ranks in the top five among comparable universities for its contributions to retiree health care benefits.
However, current and projected cost increases of UC’s health benefits for retirees are greater than inflation and growing faster than the university’s budget. Under the current model, UC spends hundreds of millions of dollars annually for retiree health benefits, with future costs expected to rise which is not sustainable for the university.
In the face of continually rising health care costs, UC must evaluate options to ensure the long-term financial viability of the retiree health benefits program and manage costs.
In early 2018, UCOP will convene an advisory work group with representatives from a wide range of groups to explore potential strategies and develop options for UC leaders to consider. In formulating its recommendations, the work group is charged with considering plan and program design strategies to sustain the benefits, benefits offered by peer institutions, and the implications to both UC and retirees of different options. The work group is expected to begin its work early next year and deliver its recommendations by June 2018.
This work only pertains to retiree health benefits and does not affect UCRP pension benefits.
“While retiree health benefits aren’t vested or guaranteed, we know how important good health benefits are to our retirees and we are committed to continuing to provide them,” said Dwaine B. Duckett, vice president of systemwide Human Resources. “At the same time, we must consider potential adjustments in order to ensure their long-term viability — we look forward to the work group’s recommendations.”
No funding or programmatic changes regarding UC’s retiree health benefits will take place until 2019, at the earliest. UC’s current funding policy on retiree health benefits remains in effect for the 2018 benefits year, and the university will continue to contribute at least 70 percent of the cost of retiree health care benefits in 2018.
In order to be eligible for retiree health benefits, UC retirees must have 10 years or more of eligible service credit and meet certain age requirements.
Any proposed changes to the retiree health benefits program will be shared with the UC community.
There should be a similar group set up to look at benefits for UC employees assigned to sites outside of California.
Response from Vice President of Systemwide Human Resources Dwaine B. Duckett:
“Employees who work outside of the State are and have always been a factor of consideration in our annual benefits renewal and planning process. We realize there are differences in what we can provide given our reduced purchasing power outside of California, but we strive to offer benefits that are competitive in each of our locales and that are comparable to what we offer in California. We understand that there is not a perfect alignment due to geographic differences.”
I worked for two different UCs for nine years before moving to an out-of-state assignment. I was on at least three different plans during that time managing the same health conditions I’m currently managing. The plans may be competitive for my local area, but (in practice) they are certainly not comparable to what other UC employees are offered. My current plan doesn’t provide the option for a co-pay, unless I’m seeing a doctor in California. I pay at least 20% of my medical bill each time I go to an approved in-network doctor, and my monthly premium is higher. Additionally, 90-day prescriptions are not covered. For anyone with on-going or chronic health issues, it’s a significant financial burden. When I was transitioning from California I had the option to temporarily participate in another health plan that would likely be a viable and desirable option in my location that is no longer offered here (but is offered in CA). The other plan options I have are CORE and Health Savings Plan which severely lack basic necessary coverage and have exorbitant costs, respectively.
I am currently a UC retiree living in Calif and am enrolled in medicare and UC high option health plan. I pay $200 a month and my benefits are excellent for doctors and hospitalization. My prescriptions costs are $50 for a specialty drug. Should I leave Calif, I will be dropped from the UC plan and have to enroll in a health exchange program where the benefits are inferior to those of the UC plan and my costs for one drug will increase from 50 to 400 dollars a month. I cannot afford to stay in Calif, nor can I afford the $400 cost to control a chronic condition. UC’s decision to drop out of state retirees from the plan simply isn’t fair. Geography should not determine a retirees health care.