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October 19, 2001
Volume 39, No. 5

features

Playful to the bone
Coleman says proposed cuts serious, but the University will do its share
Minutes Matter gets UI employees up and at 'em
Remembering November 1: A University tragedy 10 years later
"Quote....Endquote"

news and briefs

News Briefs
Benefits election: Before you choose, do the math
Staff Longevity Awards presented for October

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Bulletin Board
Calendar
Deaths

Offices and Awards

Ph.D. Thesis Defenses
Pubs. and Creations
IOWA: It's about quality
Applications due for tuition programs

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TIAA Cref Unit Values

Staff Development Courses

The University of Iowa Homepage


Benefits election: Before you choose, do the math

UI employees will receive benefit enrollment packages in October, allowing open enrollment in medical, dental, and other insurance programs for the year beginning Jan. 1. The deadline for enrollment is Nov. 30.

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.

CHIP I
CHIP II
CHIP III
Premium
$4,644
$2,388
$3,492
Deductible
0
$1,000
0
Co-payment
$100
0
$200
Total
$4,744
$3,388
$3,692

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.

Premiums
Family Status
UI Care
UI Select
CHIP I
CHIP II
CHIP III
Single
$2,544
$2,292
$4,644
$2,388
$3,492
Employee/spouse
$5,040
$6,600
$10,476
$4,860
$8,832
Employee/children
$4,212
$4,512
$9,000
$3,432
$5,712
Family

$5,724

$7,836

$12,300

$4,896

$7,776

Out-of-Pocket Maximums (OPM)
Family Status
UI Care
UI Select
CHIP I
CHIP II
CHIP III
Single
$2,000
$2,500
$1,600
$3,800
$1,900
All other plans

$2,500

$4,000

$2,400

$5,700

$2,900

Total Potential Cost (Premiums + OPM)
Family Status
UI Care
UI Select
CHIP I
CHIP II
CHIP III
Single
$4,544
$4,792
$6,244
$6,188
$5,392
Employee/spouse
$7,540
$10,600
$12,876
$10,560
$11,732
Employee/children
$6,712
$8,512
$11,400
$9,132
$8,612
Family
$8,224
$11,836
$14,700
$10,596
$10,676

To see the total amount you could spend on covered health care costs for each plan, see the total potential cost table at the bottom. To calculate how much salary money you would spend in each plan, subtract from the total potential cost the amount of flexible benefits dollars you would apply to health care through premiums and flexible spending account contributions.

Article by Charles S. Drum

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