Heads Up

UC to form group to study, make recommendations about retiree health benefits

Work pertains only to retiree health benefits and does not affect UC retirement plan pension benefits

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The University of California has a longstanding commitment to providing high quality health care benefits for its faculty, staff and retirees, and currently ranks in the top five among comparable universities for its contributions to retiree health care benefits.

However, current and projected cost increases of UC’s health benefits for retirees are greater than inflation and growing faster than the university’s budget. Under the current model, UC spends hundreds of millions of dollars annually for retiree health benefits, with future costs expected to rise which is not sustainable for the university.

In the face of continually rising health care costs, UC must evaluate options to ensure the long-term financial viability of the retiree health benefits program and manage costs.

In early 2018, the UC Office of the President will convene an advisory work group with representatives from a wide range of groups to explore potential strategies and develop options for UC leaders to consider. In formulating its recommendations, the work group is charged with considering plan and program design strategies to sustain the benefits, benefits offered by peer institutions, and the implications to both UC and retirees of different options. The work group is expected to begin its work early next year and deliver its recommendations by June 2018.

This work only pertains to retiree health benefits and does not affect UCRP pension benefits.

“While retiree health benefits aren’t vested or guaranteed, we know how important good health benefits are to our retirees and we are committed to continuing to provide them,” said Dwaine Duckett, vice president of systemwide human resources. “At the same time, we must consider potential adjustments in order to ensure their long-term viability — we look forward to the work group’s recommendations.”

No funding or programmatic changes regarding UC’s retiree health benefits will take place until 2019, at the earliest. UC’s current funding policy on retiree health benefits remains in effect for the 2018 benefits year, and the university will continue to contribute at least 70 percent of the cost of retiree health care benefits in 2018.

In order to be eligible for retiree health benefits, UC retirees must have 10 years or more of eligible service credit and meet certain age requirements.

Any proposed changes to the retiree health benefits program will be shared with the UC community.

For more information, click here.

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