Human Resources Advisory Committee Report for Faculty Senate Meeting 6/4/08

Human Resources Advisory Committee (HRAC) met 5/8/08

1. At the time of the HRAC meeting, there was near certainty that, within the next one to two weeks, University Physicians’ Associates, along with the Hospital, would be be back in our health plan. NOTE: All University employees should have received an email that this was accomplished.

2. On another matter, the Aon consultant spoke about the effects of Government Accounting Standards Board statement 45. This new standard requires government-affiliated entities like U of L to recognize the costs of post-employment benefits, such as health care, during the working life of an employee, as he/she earns it, rather than waiting to recognize them after retirement as they are actually paid. This is good accounting policy, but will greatly increase (accelerate) employee fringe benefit costs that we must expense. The annual increase to the University’s expenses will be between $3.7 million and $5.9 million, depending upon various assumptions about future retirees and rates of economic growth.

In looking for ways to reduce this huge increase to expenses, one possibility is to require at least ten years of employment before one is eligible for retirement benefits. (Current eligibility accrues simply when age plus years of service totals 75.)

However, a course of action with greater promise, and a win-win, would be to offer a group Medicare Advantage policy, for which an RFP will be sent in the next few weeks. This would be an alternative to the current Medicare Supplement option offered through AARP, which U of L subsidizes. Medicare Supplement adds coverage to Medicare Part A (government-provided hospitalization), Part B (physician services), and Part D (prescription drugs).

Medicare Advantage, on the other hand, would be much more comprehensive, like our current employees’ coverage. The Advantage group plan, which would be offered through a company like Humana, would replace Medicare Part D and Medicare Supplement, and do it for less cost to both the employee and the University, while providing more complete coverage.

3. And finally, the frustrating processing delays endured by Anthem dental plan policyholders should be over. An error in the Anthem system had caused our claims to be held in pending status for months.

Respectfully submitted,

Pamela W. Feldhoff, Ph.D.

Alan S. Levitan, Ph.D.