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Funded Retirement and Insurance Committee Minutes December 02, 2011, 11:30 am 302 USB Funded Retirement and Insurance Committee (FRIC) Meeting
Funded Retirement and Insurance Committee Minutes from December 2, 2011
Meeting was called to order at 11:30 am in 302 USB.
Members in attendance: Nancy Davin, Katherine Dudley, Matthew Glasson, Daniel Katz, Heather Schnoebelen, Katherine Tachau, Anand Vijh, Lynn Vining, Michael Wichman, Steve Bernholtz
Members absent: Jon Garfinkel, Sheldon Kurtz, Bernard Sorofman, Victoria Sharp
Administrative Officers present: Sue Buckley, Richard Saunders
Guests present: Dan Fick, Suzanne Hilleman, Debra Hughes, Susan Klatt, Christine Miller, Gerald Rose, Julie Sexton, Joni Troester
- Committee members, administration representatives, and guests introduced themselves.
- The minutes of meeting from November 4, 2011, were approved unanimously.
- Richard Saunders updated the committee on the status of long-term care insurance. During previous meetings he had informed the committee that John Hancock, the existing insurance provider, has a pending application with Iowa Insurance Commissioner for a rate increase on existing policies. At present 941 employees from the University of Iowa are covered through their policies (out of about 15,000 who are eligible). John Hancock is also not taking on new cases effective 1/1/12 (except for new employees if they so choose within first 30 days of their joining), which makes it necessary to shop for a new provider. However, a new provider will not be available until July 2012 at the earliest. Employees covered by John Hancock could choose to stay with it or move to the new provider.
- The discussion moved on to the topic of whether the health plan should cover vitamins. There are pros and cons of it, and proponents and opponents of it within the committee. Proponents (Dan Katz) say that vitamins are as important as some prescription drugs and can save very expensive procedures such as hip fractures or heart transplants at a later date. He pointed out that we cover expensive wigs, which are mostly of cosmetic value, whereas vitamins are essential to good health. Opponents point out that most vitamins are over-the-counter and cheap, coverage may shift employees to more expensive brand names, their benefits are not certain, and most plans by other employers do not cover them. The more necessary prescription vitamins are already covered by the UI plan in any case. To this Richard Saunders pointed out that administration could also pose challenges. If WellMark is not set up to routinely cover vitamins, then they would charge $25 to process each claim. He will check with them and inform the committee. No formal vote was taken on this issue.
- Next Richard Saunders took up the issue of DAW (Dispense As Written) code relating to coverage of (cheap) generic vs. (expensive) brand name versions of the same drug when both exist. During October 2011 meeting the committee had discussed this issue. There are three codes: DAW=1, when doctor considers brand name necessary and prescribes it, DAW=2 when doctor prescribes brand name but does not consider them necessary, and DAW=0 the default code in absence of an explicit code. At present the plan covers DAW=1 cases like any other brand name prescription drug (i.e., subject to only the appropriate coinsurance). In interests of fairness to all employees, Richard Saunders proposed that we should modify the rules relating to DAW=0 or 2 cases. In such cases the plan will pay only the cost of the generic and the employee will be required to pay the difference between the brand name and generic drug in addition to the appropriate tier coinsurance. This happens now in many cases, but is not consistently handled that way by the prescriber or the pharmacy. The new policy will also save $150,000 a year to the health plan. In addition, it would remove certain ambiguities arising from many doctors not knowing the DAW codes or the difference between generic and brand name prices. A motion was passed and unanimously approved by the committee to adopt this proposal.
- Richard Saunders informed the committee that the existing provider of long-term disability coverage has raised the issue of limiting coverage due to mental disability to two or three years. This lesser period (compared to physical disability) seems to be the norm with most employer plans. The provider has suggested that this could lower the long-term disability insurance rates for everyone. A motion was made to not support the proposal to restrict mental health claims for LTD. The motion passed unanimously.
- Last, Richard Saunders informed the committee that the provider of supplemental life insurance has expressed some discomfort with providing coverage up to 3.5 times salary without any cap as at present. In cases where an employee has a very large salary it exposes the provider to excessive risk with a result of increasing the premiums for the employees. Notice at present the group-life insurance is capped at $400,000. It is not even clear that very large coverage is in the employee’s interest as there is a heavy tax penalty on coverage in excess of $50,000. The committee considered this issue sympathetically. However, no decision was taken. The committee asked how it benefits the employees at large since no rate reduction is proposed by the provider if we reduce their risk of very large policies. Richard will gather some additional data for a future meeting.
- The next committee meeting will be in February 2012 when the existing and new topics will be taken up.
- The meeting adjourned around 12:45 p.m., earlier than scheduled.
Recorder: Anand M. Vijh