The MUS Benefits Program Fact Sheets
(Prepared for General Faculty/Staff Meetings, April 13, 1998)
1. The FY 1998 and 1999 Budgets:
A. FY 1998
Fund Balance on January 31, 1998 $2,026,041
Revenue
Estimated Insurance Premiums 2/l/98-6/30/98
$8,033,785
Expenditures
Estimated Health Claims 2/l/98-6/30/98
$9,187,764
Increase in Incurred Claims Reserve at 6/30/98
$214,744*
(*Incurred Claims Reserve 1/31/97 - $2.2 million; needed 6/30/98 - $2.4 million)
Fund Balance on June 30,1998 $657,288
State Mandated Fund Balance $1,000,000
Funding Shortfall at 6/30/98
$342,712
B. FY 99
Current Annual Funding
$21,279,978
Required Funding 7/l/98-6/30/99
$25,773,143
Total Increase
$3,993,407
Total State Contribution Incr (5,580 x $25 x 12)
$1,674,000
FY 99 Shortfall $2,319,407
C. Total Funding Shortfall at 6/30/99
$2,662,119
11. Recent Claims History
A. Trends
Medical claims are increasing at annual rate of 9.72%., a 3% increase over last year's 6.75% trend. Pharmacy costs are increasing at a 20-86 % annual rate and now represent 23 % of total claims. A 12-15 % range is standard for most plans like ours. Vision claims increased at a 2.19 % rate and dental claims are essentially flat. The Life Insurance and the Long Term Disability programs are in balance with income closely matching claims costs.
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B. Medical Claims History February 1997 - January 1998
Month Income
Claims Gain/Loss Expense
Ratio
Feb. 1997 $1,595,908
$1,814,761 ($218,853) 113.71%
Mar. 1997 $1,600,918
$2,332,549 ($731,631) 145.70%
Apr. 1997 $1,606,705
$1,989,741 ($383,036) 123.84%
May 1997 $1,609,919
$2,217,335 ($607,416) 137.73%
Jun. 1997 $1,615,887
$2,557,177 ($941,290) 158.25%
July 1997 $1,696,794
$1,896,457 ($199,663) 111.77%
Aug. 1997 $1,753,651
$1,463,810 $289,841 83.47%
Sep. 1997 $1,744,934
$1541,207 $203,727 88.32%
Oct. 1997 $1,751,922
$1,993,547 ($241,625) 113.79%
Nov. 1997 $1,747,043
$1,641,144 $105,899 93.94%
Dec. 1997 $1,768,115
$1,874,074 ($105,959) 105.99%
Jan. 1998 $1,765,473
$1,883,487 ($118,014) 106.68%
Totals $20,257,269
$23,205,289 ($2,948,020) 114.55%
III. Suggested Reasons for the $2.7 Million Dollar Shortfall
1. Last spring's open enrollment added 400 dependents - possible adverse selection.
2. Total claims cost exceeded projections: predicted 7% inflation; experiencing 10%.
3. Drug costs exceeded projections: predicted 0% increase (due to doubling of co-payments); experiencing 21 % increase.
4. Built no margin into projections when setting Choices premiums for the first time.
5. Legislature mandated a reserve minimum of $1 million dollars after Choices was designed.
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IV. InterUnits Executive Committee Proposals for Resolving Shortfall
Funding Needed $2,662,000
Benefits Changes Total Cost Savings
1. Eliminate Vision Program $424,000 $424,000
2. Reduce Wellness Program
$445,000
$200,000
(Charge for activities)
3. Reduce screening benefits
$160,000
$40,000
(Longer intervals, modest fees)
4. Modify Rx Plan ($100 deductible,
$250,000
10% copay on generics, 30% on brand names)
5. Reduce co-insurance from 80% to 75% $238,000
$0
(Voted down - will not do)
6. Eliminate FSAP $129,000 $129,000
7. Make under 65 retirees
a $500 deductible plan
$46,000
8. Make over 65 retirees
a $350 deductible plan
$112,000
Total Savings $1,201,000
Balance Required from Premium Increases $1,461,000
V. Suggested Premium Rates for FY 99 -
The Executive Committee developed two scenarios for premium increases
to meet the $1,461,000 shortfall and build in a small margin. Plan
I increases the employee rate $10 per month , the spouse's rate $30/mo.,
the children's coverage $10/mo. , and the family rate $40/mo. for both
the $350 and the $500 plans. Plan 2 makes the $350 plan relative
more expensive by increasing the spouse's rate $40/mo. and the children's
rate $20/mo. but the $500 plan relatively less expensive by not increasing
the employee rate, increasing the spouse's rate $30/mo. and the children's
rate $10/mo. Plan 1 will meet the $1,461,000 shortfall and generate
a $381,712 margin. Plan 2 will meet the shortfall and generate a
$468,513 margin.
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Proposed FY 99 Premiums
Current Premium Plan 1
Plan 2
$350 Plan
Employee only
$0
$10 $10
Emp. + Spouse
$79
$119 $139
Emp. + Children $73
$93 $103
Family
$153
$193 $203
$500 Plan
Employee only
$-32
$-22 $-32
Emp. +Spouse
$18
$58 $48
Emp. + Children $35
$55 $45
Family
$73
$113 $103
Retiree under 65
Employee only
$220
$225 $225
Emp. + Spouse
$308
$333 $333
Emp. + Children $397
$422 $422
Family_
$397
$422 $422
Retiree over 65
Employee only
$138
$146 $146
Emp. + Spouse
$224
$237 $237
Emp. + Children $313
$331 $331
Family
$209
$221 $221
VI. Timetable
Mercer reported shortfall on March 24. The Executive Committee was appointed on April 2 and met on April 8. MSU members are Coffey, Roloff, Lingenfelter. The full InterUnits Committee will meet Friday, April 17 to make final recommendations. MSU members are Coffey, Roloff, Lingenfelter, Emerson, and Gunderson. You may continue to call ext 7744 and leave a voice mail or e-mail us at benefits@montana.edu with your suggestions. We will continue to compile your recommendations through late Thursday. Annual Choices enrollment must begin by May 1.
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