PAT Council reviews proposed retirement benefit changes

By Lori Wright, Media Relations

The PAT Council reviewed a proposal change to retirement medical benefits at its March meeting that would increase the contribution level required for certain retirees who have the Medicare Complimentary Plan.

USNH employees have one of two retirement medical benefits: the Medicare Complimentary Plan (MCP) or the Additional Retirement Contribution (ARC) plan.

Only faculty and staff hired prior to 1994 would have been eligible to choose MCP. When a retiree reaches 65, the plan, which provides different coverage than the active employee USNH medical plan, is designed to supplement Medicare and cover medical costs that may not be covered by Medicare.

All USNH employees who have 10 years of active status service and who are age 62, are eligible to retire and continue their active employee USNH medical coverage at the normal employee contribution rates for up to three years, or until the employee reaches age 65 (whichever comes first). This is true whether the employee has the MCP or ARC plan.

There is no proposal to change this benefit.

The majority of UNH employees have the ARC plan, which provides them an additional 1 percent in retirement contributions. At age 65, retirees with this plan are expected to use the money gained from ARC to purchase a medical plan to supplement Medicare.

The proposed change affects only those retirees who reach age 65, are now eligible for MCP coverage but who have spouse or family members who need to be covered by the active employee USNH medical plan for more than three years because they are not eligible for Medicare. The proposal would increase in the contribution levels for active employee USNH medical plans for these retirees.

Systemwide, 672 employees have MCP and could be potentially impacted by the change.

Under the current MCP, when a retiree reaches 65, his or her spouse/family are still covered by the USNH medical plan. They pay the annual contribution that current UNH employees pay until the spouse reaches age 65 and dependents reach age 18 or 24 if a full-time student. The current employee HMO rate is 4 percent for the single person plan, 8 percent for the two-person plan and 12 percent for the family plan.

The proposed change to the MCP benefit would provide medical coverage for spouses/dependent children at the same premium contribution as active employees for a maximum of three years. Retirees or spouse/dependent children of retirees eligible for coverage beyond three years will contribute 50 percent of the cost of coverage. At the current HMO benefits level the new proposal would mean the single plan would cost $2,236 a year vs. $179 a year, a two-person plan would cost $4,472 a year vs. $716 a year, and a family plan would cost $6,708 a year vs. $1,610 a year.

The spouses/dependent children of employees who chose ARC do not receive USNH medical coverage after the retired employee reaches 65, regardless of the age of the spouse/dependent children.

Potential savings are estimated to be approximately $6.7 million over the next 20 years. The proposed change must be approved by the Board of Trustees. If approved, it would be effective Jan. 1, 2006.

Council members discussed the pros and cons of the proposed plan. District 13 Rep. Jahnay Pickett said that the university made a commitment to these employees when they asked them to choose between the MCP and ARC plans. “This is a question of integrity,” she said.

Other council members said benefit costs continue to rise and UNH employees have been asked over the last several years to pay more for their medical care, whether in yearly premiums or out-of-pocket co-pay increases. District 20 Rep. Paula Galvin said that the university’s integrity also includes being committed to providing current employees annual salary increases.

“Over that 10 years, things have changed. How can we not look at everybody’s benefits, especially since we are active employees? Now we are talking about dependents – I’m not saying that we kick people out, but there is a line between being a competitive business and a social service agency,” Galvin said.

District 2 Rep. Tracy Doyle, who serves on the council’s compensation and benefits committee, noted that when MCP was offered to employees, no guarantee was made regarding the cost of the plan. She cited a copy of the original MCP coverage election form, which did not specify that retiree dependents would pay the same costs as current UNH employees. “There is a stipulation in there saying that it can be changed as needs and funding dictates,” she said.

Sharon Demers, assistant vice president of Human Resources, said the issue of the rising cost of medical benefits is a national issue. However, some UNH departments are not filling open positions because of the costs associated with paying the dependent benefits of those who recently retired under last year’s separation incentive plan.

Pickett also noted that if staff are asked to pay more for their retirement benefits, so should faculty. Of the 672 people who have MCP, more than half – 367 – are AAUP faculty systemwide. Demers said the issue is a negotiable item with the faculty union.
In other business, the council discussed the results of an information survey regarding cost options for the proposed PAT Family Friendly Plan. Because of differences in benefits, a separate Family Friendly proposal is being developed for operating staff.

The council is expected to provide comments to Joan Tambling, director of USNH Human Resources, by the end of April.

The PAT proposal seeks to improve paid time-off benefits to better support employees in meeting a variety of family-related needs. The proposal calls for PAT staff to be allowed to use 10 days of accrued sick leave per year for illness of an immediate family member and medical needs including medical appointments for an immediate family member, prenatal and postnatal care of a spouse or significant other, caring for a new baby or adoptive/foster child after placement, and extended bereavement time, with supervisor notification, upon the death of an immediate family member.

Creating this new option creates a cost to the employer. As a result the council representatives have been contacting and surveying members of their district about the two options available.

Option one limits the maximum accumulation of annual leave to 35 days per year, instead of the current 36 days. The annual payout at the time of leave from the university would remain at a maximum of 30 days. Option two affects the current separate category of bereavement time by merging it with sick time for PAT staff. When using bereavement leave, time would be deducted from accrued sick time days. The number of days allowed per family relationship will remain the same as current policy.

Option one was the overwhelming choice by UNH PAT staff.