Benefit Plan Design Summary FY 2011

1. Benefit Plan Design SummaryFY 2011 Strategic Resource Planning Council Presentation April 21, 2010

2. Outline • Federal Health Care Reform Impacts • Benefit Coverages • No changes • With changes (+ or -) • Medical Insurance Rates • Requirement from Components • HR Recommendations • Next Steps B. Centeno - HR

3. IMPACT OF FEDERAL HEALTH CARE REFORM • UT Select Effective Date: Sept 1, 2011 • Coverage for children (regardless of marital/student status) to age 26 (previously 25) Effective Date: Sept 1, 2014 • Reduction of state mandated waiting period (new hires) from maximum 120 days to 90 days B. Centeno - HR

4. IMPACT OF FEDERAL HEALTH CARE REFORM (cont’d) • Payflex Effective Date: January 1, 2011 • Elimination of OTC (e.g. bandaids, allergy meds, etc) medicines/supplies (unless prescribed by an MD) B. Centeno - HR

5. IMPACT OF FEDERAL HEALTH CARE REFORM (cont’d) • Medical Flexible Spending Account Effective Date: September 1, 2012 • Reduction in maximum annual contribution • UT self imposed annual limit is $5000 • New federal maximum is $2500 (16% of System population elects >$2500) B. Centeno - HR

6. NO CHANGES(to plan design or premiums) • Assurant HMO Dental • Superior Vision • Short Term & Long Term Disability • Name Branding Change to Dearborn National Life • CNA Long Term Care B. Centeno - HR

7. Living Well Program • WebMD enhancing portal • http://www.livingwell.utsystem.edu/ • Wellness Incentive Model (WI) New: 8 hours of leave for health risk assessment & physical exam (if department can arrange) • UT System is developing model policy B. Centeno - HR

8. Enhancements • Life and AD&D • Contract awarded to Dearborn National • 11.2% decreasein current rates; guaranteed for 6 years • Plan re-design consideration(cost an additional 0.2% funding): • Benefit added: • Retiree spouse life - $3,000 ($1.83/mos) - EOI may be required • Basic Life Insurance for employees • $10,000 to $20,000 • Basic Life Insurance for retired employee • $3,000 to $6,000 B. Centeno - HR

9. UT Flex Flexible Spending Account • Administrative Fee - $1.00/month (per plan) • $12 deducted from the first month’s contribution • In addition to the $9 debit card fee (if opted) • UTSA PARTICIPANT LEVEL IN PAYFLEX ACCOUNTS B. Centeno - HR

10. UT Select Dental • No changes to plan design • Premium increase 3% or less (awaiting March experience) B. Centeno - HR

11. Medical Insurance Rates • Trend – costs have increased 9% per year • Current premium rate deficient by 5% therefore, a subsidy from contingency fund required for FY 10. • For 2011, rate increase of 14% to balance the budget is required • 10% rate increase in rates will require a 4.0% benefit reduction • 12% rate increase in rates will require a 2.0% benefit reduction PLUS • Basic life increase requires additional 0.2% B. Centeno - HR

12. REQUEST • OEB is requesting a recommendation from the campuses by early May, 2010 • HR has reviewed all scenarios presented 12% premium increase with changes that result in a 2.2% reduction in plan cost Our recommendations were based on: 1. Previous year’s increases2. Percent of population affected by each change 3. Information from BC/BS (according to their book of business, our deductibles and out of pocket maximums are low.) 4. Encourage employees to use free standing medical clinics (e.g. Texas Med Clinic - $35 co-pay includes lab/X-ray) B. Centeno - HR

13. Medical Cost Increase Projection (12%) • NOTE: • 62% of the enrollment in the UT SELECT plan is Employee Only Coverage • It is not permissible under state law to charge full-time employees for employee-only coverage. B. Centeno - HR

14. BENEFIT CHANGE COMPARISONS B. Centeno - HR

15. Benefit Reduction Recommendations by HR B. Centeno - HR

16. Next Steps • Deliver information to other groups/meetings B. Centeno - HR