The University of California is currently reviewing proposals for its 2014 medical plans solicited from both current and new medical plan vendors. This comprehensive review is intended to lower costs and provide employees with more distinctive choices.
UC currently has 13 vendors providing medical, dental and vision insurance at a cost of $1.86 billion for 2013. The university covers 86 percent of that cost, or about $1.5 billion. UC periodically conducts a comprehensive review of its medical plans. The last such review was seven years ago, and the health care landscape has changed significantly in that time.
UC will finalize the 2014 plans offered by mid-summer, according to Michael Baptista, executive director of systemwide benefits programs and strategy. Premiums will be announced prior to open enrollment this fall, but Baptista said that UC employees and retirees can be confident that the university will continue to offer a wide choice of plan types offering comprehensive coverage and high quality medical care to meet the needs of faculty and staff.
Kaiser Permanente and Western Health Advantage as well as mental health provider Optum will remain among the plans offered in 2014. UC decided against re-bidding the Kaiser and Western Health plans, Baptista said, because they are unique products and their costs are not likely to improve through a bid process. Optum was not required to re-bid because the university is generally pleased with the mental health plan. "More important," said Baptista, "given the special patient-provider relationships that develop around mental health benefits, we want to avoid disruption for our employees and retirees."
Employees will see a mix of options in next fall’s open enrollment. In addition to Kaiser, Western Health and Optum, offerings might include a tailored HMO, a PPO with a Health Reimbursement Account (HRA) or a Health Savings Account (HSA), and UC Care, a new self-insured plan offering care that is provided by UC’s five nationally renowned medical centers.
HMO and PPO options
UC intends to offer an HMO plan similar to the current Health Net Blue & Gold plan. Blue & Gold offers a tailored network of the most cost-efficient providers, and plan members may receive health care at all five UC medical centers. Members pay small copayments for office visits, hospital stays and other services. The HMO also could be a tiered plan, in which members pay lower copays when they use doctors and hospitals in the select network and higher copays for providers in the plan’s larger network. In effect, said Baptista, it would be like having Blue & Gold’s narrow network and the full Health Net HMO network in one product.
UC sought bids for Lumenos-like plans that offer either a UC-funded HRA or an employee-funded HSA,which are designed to allow members to become better consumers in managing their health care needs. In both cases, the plans would likely have low premiums and high deductibles, with the premium savings and HRA or HSA accounts used to cover some out-of-pocket costs.
An advantage of the health reimbursement account is that the university funds a reimbursement account to help cover a portion of the deductible. If you don’t use all of the HRA, the funds roll over to the next year, but if you leave the plan, any remaining money in the HRA returns to the university.
An advantage of the employee-funded HSA is that contributions are pre-tax, which lowers your taxable income and monies withdrawn for medical expenses are tax-free. All contributions and earnings from the account belong to you. So, if you leave UC employment or retire, the money goes with you and can be used to pay for future out-of-pocket medical expenses.
UC Care
The university is also considering offering a new plan named UC Care, a university-funded medical plan that would include UC medical centers and doctors among its providers. It would be most similar to Anthem Blue Cross PLUS in that it would have tiered out-of-pocket costs. For Tier 1 (preferred providers, including UC providers), you would pay a small copayment; for Tier 2 (network doctors not in the preferred tier) and Tier 3 (out-of-network providers), you would pay higher co-insurance amounts.
An integral component of UC Care would be a wellness program with incentives and rewards to promote healthy actions such as preventive care visits, online programs and campus wellness activities.
Other health care bids that UC is considering are from specialty vendors who focus on a certain aspect of care, such as pharmacy benefits, wellness or disease management. If any of these vendors are selected, the benefits would be offered alongside the medical plans, not integrated within them. This structuring is similar to that of UC’s current Optum mental health and StayWell wellness benefits.
For more information and updates, see Benefit News column at UC's At Your Service webpage.