Appendix S

4/25/17

SENATE COMMITTEE ON FACULTY BENEFITS

2018 Medical and Prescription Drug Plan Design and Cost Sharing

(Informational)

Introduction

This report is being presented to provide an overview of the medical and prescription drug plans that will be provided to eligible employees of The Pennsylvania State University effective January 1, 2018.

This report and accompanying slides highlight several considerations used for plan development, as well as important features and changes of the 2018 medical and prescription drug plans. In addition, the presentation will include brief explanations of how self-funded health care plans work; how each of the PPO plans work; specific plan design changes for each of the PPO plans; cost sharing for each of the PPO plans; employee premium contributions under each of the PPO plans; and, total out-of-pocket costs under each of the PPO plans.

Overview of Decision-Making Process

Human Resources, in collaboration with the Joint Committee on Insurance and Benefits, the Committee on Faculty Benefits, and the Health Care Advisory Committee prepared and reviewed several scenarios, being mindful of adherence to the Six Guiding Principles, which include:

  1. Choice of health care plans
  2. Overall cost sharing of 75% University/25% employees
  3. Affordability and equity in both premium contributions and total out-of-pocket costs
  4. Informed utilization through a data warehouse and cost transparency tools
  5. Quality, accessibility, transparency, and cost effectiveness
  6. Fostering and promoting a culture of health

The committees were very sensitive to the first three guiding principles and developed plan design and cost sharing recommendations that include the following changes:

PPO Blue Plan

  1. A four-tiered deductible structure based on salary bands
    1. Deductibles will decrease or remain the same for employees earning less than or equal to $60,000
    2. Deductibles will increase for employees earning greater than $60,000
  2. Lower employee premium contribution percentages
  3. All other plan provisions the same as 2017

PPO Savings Plan

  1. A four-tiered HSA seed contribution schedule based on salary bands
    1. Seed will increase or remain the same for employees earning less than or equal to $60,000
    2. Seed will decrease or remain the same for employees earning greater than $60,000
  2. Slight increases to employee premium contribution percentages
  3. All other plan provisions the same as 2017

Summary

The Joint Committee on Insurance and Benefits, the Committee on Faculty Benefits, and the Health Care Advisory Committee concur that the Six Guiding Principles have been maintained in developing health care plan design and cost sharing considerations that are reasonable. Specifically, the medical and prescription drug plans address concerns regarding lower income employees facing higher deductibles whiles maintaining comparable percent salary costs across all salary tiers. The plans adhere to the Guiding Principle of 75% / 25% cost sharing under each of the PPO Blue and PPO Savings plans. While employees will notice some changes to their current health care plans, the changes should be manageable, as there was great effort in plan development to avoid complexity. All eligible employees will continue to have a choice between a traditional plan and a plan that includes a health saving account and higher deductibles. The committees concur that the University should continue to devote time and resources to focus on education to create understanding of the operations of the health care plans so that all employees are able to make an informed decision regarding the best health care plan for themselves and their families. The committees also agree that Penn State should continue to foster and promote a culture of health (Guiding Principle Six) in an effort to improve the overall community health and decrease the cost of health care for the University and its employees.

SENATE COMMITTEE ON FACULTY BENEFITS

  • Susan McGarry Basso
  • Renee L. Borromeo, Chair
  • Kenneth Brentner
  • Victor W. Brunsden
  • Amy R. Dietz
  • Peter C. Jurs
  • Cassandra Kitko
  • James Miles
  • Jamie Myers
  • Willie K. Ofosu
  • Erica Smithwick, Vice-Chair
  • Gregory Stoner