University of Arkansas To Pay Health Insurance Premium Increase for Many Employees

FAYETTEVILLE, Ark.-Many University of Arkansas employees will not be paying a larger monthly health insurance premium after all, Donald Pederson, vice chancellor for finance and administration, told a Staff Senate meeting this morning.

UA System officials had previously announced a 10 percent increase in the premiums beginning Jan. 1.

UA employees can choose between two health plans: the Classic Plan and the Point of Service Plan. Employees at the Fayetteville campus who are enrolled in the Classic Plan will not have to pay the increased premium, Pederson said. Instead, their payment will remain the same while the university itself picks up the increase.

"This was done upon the request of Chancellor John A.White in response to employee concerns," Pederson said. "Last week the chancellor assigned us the task of trying to find ways to reduce the burden of the higher premiums on as many employees as possible."

The planned increase in premiums for the Point of Service plan will remain in effect. However, employees may switch from one plan to the other during the university’s annual election period, said Richard Ray, payroll and benefits director.

This year’s election period has already started, Ray said, and will continue through Dec. 17. In addition, those employees who have dropped their insurance but are still covered until Jan. 1 may sign up again if they so desire, he said, but must do so by the Dec. 17 deadline.

The cash needed to cover the university’s increased share of the premiums will come out of campus reserve funds this year, Pederson said. He estimated this cost at $50,000.

The UA plan is self-funded, meaning it relies on premiums to support the plan. In the past year, the actual cost of benefits (money spent on medical services) has exceeded the amount of premiums paid by the faculty and staff. The monthly premiums from all UA System campuses are combined and deposited into a system-wide account from which medical claims are paid.

Employees enrolled in the Classic Plan and Point of Service Plan also will find that certain services that had been covered at 100 percent will have a 20 percent co-insurance payment.

The benefit structure in the plan is not something the Fayetteville campus controls, but is a design of the UA System to match premium revenue and medical expenses for the 11,000 members in the System pool.