University of South Alabama
Fringe Benefits Committee – Meeting Minutes
Date:
Time:
Place:
1
July 30, 2013
3:00 p.m.
HR Learning & Development Center
Members
Mr. Steve Simmons
Dr. Lanier S. Cauley
Ms. Janice Collins
Mr. M. Wayne Davis
Mr. Charles Dunnam
Ms. Cathy Faison
Ms. Amy Fleet
Dr. Susan Gordon-Hickey
Mr. Ronnie Hodges
Dr. David Johnson
Mr. Andy Lightbourne
Dr. Doug Marshall
Dr. Vaughn Millner
Dr. Mike Mitchell
Mr. John Pannelli
Ms. Kelly Peters
Dr. Victoria Rivizzigno
Ms. Barbara Shirvanian
Dr. J. Allan Tucker
Ms. Carolyn Williams
Financial Affairs
Mechanical Engineering
Radiology - UMC
President’s Office
Maintenance Department
Admitting - CWH
Marketing & E-Commerce
Chair, Faculty Senate Fringe Benefits Committee
Pharmacy - CWH
Academic Affairs
Computer Services Center
President, Faculty Senate
Continuing Education
Student Affairs, Dean of Students
COM Business Office
Business Office
Arts & Sciences
Student Affairs
Pathology - UMC
Medical Surgical - UMC
Present
Present
Absent
Present
Present
Present
Present
Present
Present
Present
Present
Absent
Absent
Present
Present
Present
Absent
Present
Present
Absent
Others Present
Mr. Gerald Gattis, Director, Human Resources, Benefits, Employee Relations
Ms. Tina Stalmach, Associate HR Manager, Employee Benefits
Mr. Ed Kahalley, Jr., Benefits Consultant, Secretary to the Committee
Call to Order and Meeting Minutes
Mr. Davis called the meeting to order and asked for approval of the May 7, 2013, meeting
minutes. A motion was made, seconded, and the vote unanimous to dispense with the reading of
the meeting minutes and approve same as prepared by the Secretary.
Mr. Davis introduced Mr. Steve Simmons stating that Mr. Simmons had recently been named
Vice President for Financial Affairs and is the new Chair of the Committee. Mr. Davis stated
that he would remain a member of the Fringe Benefits Committee. He thanked the members for
their cooperation and assistance over the years and turned the meeting over to Mr. Simmons.
University of South Alabama
Fringe Benefits Committee – Meeting Minutes 7/30/2013
2
Annual Valuation
Mr. Simmons stated that the annual valuation report had been submitted which is a review of the
USA Health & Dental Plan along with a projection of future cost. He asked Mr. Kahalley to
review that report with the Committee.
Mr. Kahalley distributed a summary of the valuation. His review started with an overview of the
Plan stating that it is an excellent benefit plan with a low employee contribution and benefits
which cover all but 11% of the medical costs. He reviewed last year’s projected cost as provided
in the Valuation report and the projection provided by Blue Cross and Blue Shield (BCBS)
comparing those to actual experience for the first five months of this year. He also reviewed the
projected cost for 2014 stating that BCBS estimates the cost at $44,457,490 as compared to the
Valuation at $45,180,947 for a difference of $723,457.
He explained how BCBS arrived at the estimate of health and dental costs and how those costs
are adjusted for other expenses including new taxes and fees required by the Affordable Care Act
(ACA). He explained that the projected cost also contains a margin for the reserve which is
usually 25% of the projected cost. He reminded the Committee that several years ago the
formula was set for developing the funding rates using a 25% reserve and the employee cost
sharing amount set at 25%. Because of unfavorable experience and additional costs due to ACA
compliance, he suggested reducing the reserve to 15%. He explained that this reduction would
take a lot of pressure off the resulting rates. He stated that during this time of added cost, more
revenue was needed for operating expenses. He suggested that the reserve at 15% was adequate.
He concluded the projected cost discussion with a review of the funding rates and cost-sharing
amounts. He stated that the employer and employee rates for the Base Plan are shown in the
following table.
Rate Comparison
Current Rates –
2013
Employer
Single
Family
$ 405 $ 756
Projected Rates–
2014
$
419
$
845
$
100
$
319
$
519
$
14
$
89
$
3
$
32
$
17
Includes Non-Tobacco Incentive
$
Difference – Increase
%
Difference – Increase
3.5%
11.8%
Employee
Single
Family
$
97
$ 287
Total
Single
Family
$ 502
$ 1,043
3.1%
11.1%
3.4%
$ 1,164
$
121
11.6%
He specifically noted that the employer cost would increase by $14 for single and $89 for family
coverage. The employee cost would increase by $3 for single and $32 for family coverage.
He also discussed the Standard Plan which applies to new employees hired on and after
1/1/2013. He reviewed the benefits of that Plan, noted that the employee cost sharing is 30% and
discussed the funding rates and employee contribution amounts.
He proceeded to review the remainder of the report which deals with population, utilization and
cost factors by major line of coverage.
University of South Alabama
Fringe Benefits Committee – Meeting Minutes 7/30/2013
3
The Committee asked several questions concerning the report. A member asked about the
change in the reserve amount and if it would be sufficient to provide for the future.
The Consultant stated that the projected cost includes an allowance of $592,967 to bring the
reserve amount to the 15% target. He stated that it was his opinion that the reserve would be
sufficient for the coming year.
He stated that although ACA adds about $787,360 to the projected cost, compliance would have
been much more costly had the “Employer Mandate” not been deferred to 1/1/2015. He stated
that the Employer Mandate which eliminates all conditions on the definition of a full-time
employee, other than that the employee must work on average 30 hours per week, would have
been a significant cost factor. The deferral allows more time for the University to study the
impact of this new rule.
Mr. Kahalley noted that within the industry many predict that the cost of health care will reduce
due to ACA. He stated that he hoped this would come to fruition but that the trend factor used
should be sufficient to cover emerging costs.
Mr. Kahalley finished his review and thanked the Committee for the opportunity to serve.
Mr. Simmons stated that the review was in good order and asked the Committee for an opinion.
A motion was made, seconded and the vote unanimous approving the recommended funding
rates and employee/employer cost sharing for both the Base Plan and Standard Plan of benefits:
Funding rates effective 1/1/2014
Coverage
Base Plan
Standard Plan
Employee cost sharing effective 1/1/2014
Coverage
Base Plan
Standard Plan
Single
$ 519
$ 517
Family
$ 1,164
$ 1,159
Single
$ 100
$ 120
Family
$ 319
$ 383
Add $25 to the rates
for tobacco use.
Mr. Simmons thanked the Committee for their efforts and stated that the recommendation would
be presented to the President for final action.
Employee Benefits Matrix
Ms. Tina Stalmach distributed a Benefits Eligibility Matrix which provides a summary of the
benefits provided based on faculty and staff status. The color coded chart lists 20 benefits for 32
job classifications. Ms. Stalmach reviewed the information with the Committee.
University of South Alabama
Fringe Benefits Committee – Meeting Minutes 7/30/2013
4
USA HCM LLC/PEEHIP Health Plan Coverage
Mr. Davis discussed the creation of USA HealthCare Management LLC (HCM) and the
advantages it provides to the University. He stated that in establishing that entity it was not
anticipated that the PEEHIP Retiree Health Plan employer contribution would be required for
those who transitioned to HCM since they would be covered by HCM’s group health plan. He
stated that the PEEHIP rules in fact require that contribution which is $356 per retiree per month
for this year or about $1.3 million. This undue consequence of the PEEHIP Retiree Health Plan
requires two employer contributions with the University paying the retiree subsidy and HCM
paying the employer cost of its plan. Going forward, new HCM employees would be required to
forgo coverage under PEEHIP if they desire to transition to HCM. He stated that current HCM
employees, who retired with TRS benefits, are grandfathered in with their existing benefits.
Tuition Reimbursement
Mr. Gattis explained a minor change to the tuition reimbursement program. The program would
now credit the tuition up front instead of the employee paying first and waiting for
reimbursement. This change is required to avoid confusion for federal financial aid programs.
USA Health Fair
The University and HCM plans to sponsor a health fair again this year on August 16, 2013 with
many opportunities for employees and their families to take part in an excellent program of
events.
Adjourn
There being no other business to come before the Fringe Benefits Committee, the meeting was
adjourned at 4:30 p.m.