|University of Minnesota Health Plan Task Force||January 14, 1998|
|Comparison of Health Insurance Purchasing Alternatives|
|Executive Summary||Introduction||Current Shortcomings||Trends||Alternative Models||Profiles||Retirees||Further Analysis||Summary|
|Appendices: 1, 2, 3, 4, 5, 6, 7, 8||Glossary|
University of Minnesota retirees not eligible for Medicare are required to pay the total premium if they want to continue their health insurance coverage. This University policy is also followed at several large research universities around the country. Other universities do continue to subsidize the health insurance of faculty and staff upon retirement. The universities that are compared include the University of Washington, the University of Michigan, Purdue University, the University of Illinois, Penn State University, the University of Wisconsin, and the University of Iowa. The Toro company is a local employer that was also included because of its novel retiree premium policy.
The University of Washington offers nine health plans to retirees who are not yet eligible for Medicare. These are the same plans available to active University employees. Retirees are responsible for the total premium which ranges from $118.47 to $162.43 per month for single coverage and from $317.82 to $438.71 per month for family coverage. See Appendices 7 and 8 for more comparisons of retiree premiums.
The University of Wisconsin and Purdue University make available several health plans to their retirees, but provide no premium subsidy. Retirees are required to pay the total premium themselves if they choose to continue their coverage. The University of Wisconsin offers an indemnity plan, an HMO plan, and a PPO (preferred provider organization) plan. Total premiums are $185.00, $135.00, and $153.00 for single coverage, respectively. Total premiums are $483.00, $330.00, and $360.00 for family coverage, respectively. Purdue University offers an indemnity plan and an HMO plan. The total premiums for single coverage are $146.00 and $123.00, and $292.00 and $146.00 for family coverage.
The University of Michigan, Pennsylvania State University, the University of Illinois and the University of Iowa do subsidize the total premium for retirees. The University of Michigan offers an indemnity plan, an HMO plan, and a PPO plan. The total premiums for single coverage are $57.00, $116.00, and $150.00, and employee premiums for the three plans are $0.00, $47.00, and $81.00. At Penn State University, retirees can enroll in an indemnity or an HMO plan. The total premiums are $124.00 and $54.00 for single coverage, and $250.00 and $112.00 for family coverage. The employee premiums for the two plans are $6.00 for single coverage and $14.00 for family coverage. The University of Illinois has an indemnity plan, an HMO plan, and a PPO plan. The total premiums for single coverage are $249.00, $170.00, and $182.00, and do not have any employee premium. The total premiums for family coverage are $596.00, $430.00, and $430.00. The employee premiums are $155.00, $108.00, and $108.00, respectively.
The University of Iowa offers three indemnity plans, primarily because managed care plans do not have significant market penetration in Iowa. The first indemnity plan covers 90% of all medical costs. The second indemnity plan covers 90% of all costs, but also has an $800 deductible. The third indemnity plan covers 80% of all costs. Total premiums for these plans range from $69.00 to $194.00 for single coverage, and $69.00 to $388.00 for family coverage. The University contributes $85.00 towards single and family coverage premiums.
Toro, a local employer, was also included because it has a hybrid retiree premium policy this is notable. Toro employees who have work at least 10 years are eligible for health benefits upon retirement. Until they reach age 62, retirees are responsible for paying the entire total premium of the health plan they choose. Between ages 62 and 65, retirees are required to pay only the employee premium contribution and Toro pays the employer portion as they would for active employees.
To remain competitive with other large research universities, the University may want to consider subsidizing health premiums for retirees across the board or using some variant of Toro’s hybrid policy. See Appendices 7 and 8 for more comparison information on retiree premiums at other major universities.
|Next Section: Further Analysis|