Benefits election: Before you choose, do the math

P&S staff and faculty who have signed up at the self-service site can enroll on line now: http://hris.uiowa.edu/selfservice/index.php.

For faculty and P&S staff, most of the choices in the enrollment package are fairly easy to understand, such as the amount of life insurance, or which of the two levels of dental coverage to carry. The choices in health care are much more complex and require detailed comparisons. There are many variables, including the monthly premiums, the deductible to be paid before insurance benefits are payable, and the maximum out-of-pocket expense before the plan pays 100 percent of covered health expenses.

The University offers faculty and P&S employees a choice among five health insurance programs: UICare, UISelect, and the three CHIP plans. UICare and UISelect are managed health plans that require the insured to use a selected group of providers. UI Care generally requires use of University of Iowa Health Care providers and facilities, except in emergencies. UI Select allows, in addition to the UIHC providers, a select group of community providers and clinics and is most attractive to people who live outside the immediate Iowa City area. The CHIP plans allow a much wider range of providers.

“The decision to buy either managed care or the CHIP plans is largely determined by how much choice you want in selecting your providers,” says Sheldon Kurtz, co-chair of the Funded Retirement Insurance Committee (FRIC). “To choose among the CHIP plans, take into account how much you are willing to spend for premiums and how much financial risk you’re willing to assume.”

In October, Richard Saunders, assistant director of Human Resources for benefits, sent a memo to all staff and faculty currently enrolled in the CHIP I plan urging enrollees to “do the math,” comparing premiums and out-of-pocket maximums to determine the actual cost.

“It makes no economic sense to remain in the CHIP I program,” Saunders has said several times to various campus groups. “The program is simply too expensive.”

Saunders, on the advice of FRIC, has recommended doing away with the program in another year because it is no longer economically beneficial to staff and faculty, particularly when all three CHIP plans offer essentially identical benefits.

In his letter, Saunders illustrates the savings to be had in choosing CHIP III over CHIP I by comparing total premium costs and out-of-pocket maximums, which together represent the most participants would ever pay for health care over a year.

“The same calculation can be used to measure the cost to you of each of the UI health programs in those cases where you assume that total expenses will exceed the maximum out- of-pocket amount” says Kurtz.

“On the other hand, if you think you probably won’t use insurance and are comfortable with that, then choose your plan based on premiums and your willingness to give up some choice of provider.

“Most people fall somewhere in between. They know they’ll use their insurance, but probably not the maximum. They don’t want to overspend on premiums, but they don’t want to have too little coverage. It’s a crapshoot, and comparison is more complex.”

To compare the expenses for each plan if users don’t expect to hit the maximum, the difference in co-payments, deductibles, and premiums must be taken into account and assumptions must be made about the expected health care costs, Kurtz says.

For example, Figure A (right) is a comparison of the total cost of each of the CHIP plans for a single person with $1,000 in covered health care expenses. CHIP I has a 10 percent co-payment, and CHIP III has a 20 percent co-payment. The example assumes that all of the expense is for physician visits. Both CHIP I and CHIP III have separate deductibles for medicines ($150) and hospital stays ($500). CHIP II has a 10 percent co-payment after a $1,000 deductible.

“No calculation can foretell your medical future, but these examples give you a method to help you decide which plan to buy when you don’t expect to exceed the maximum out-of-pocket,” Kurtz says.

Article by Charles S. Drum