UC faculty and staff are now receiving 2004 health benefits information in preparation for November's Open Enrollment, a 30-day period in which employees have the annual opportunity to make changes to their benefits plans.

The most noteworthy change -- except for health benefit rate increases -- is that the process for making changes is now entirely online. There will be no telephone enrollments, and paper forms will be eliminated. Beginning Nov. 1, employees are directed to review the new rate information and make their changes at http://atyourservice.ucop.edu.

Other highlights of the UC health benefits plans for 2004 include:

• A special salary-based approach to help keep health insurance affordable for lower-paid employees;
• No increases in deductibles and co-pays;
• UC will also continue to provide dental and vision coverage, and basic life and disability insurance at no cost to employees;
• Supplemental disability rates are expected to decrease more than 30 percent; and
• Supplemental life insurance rates are expected to decrease 26 percent.

"The good news for employees is that the university is still offering many choices in medical plans with no major benefit changes or increases in co-payments and deductibles," said Dennis Shimek, associate vice chancellor for human resources.

Higher rates and costs

Like other large organizations, UC Davis is facing the challenge of finding the most affordable health care for its employees -- no easy task in the current health-care marketplace.

Health-care premiums for families in employer-sponsored plans soared 13.9 percent in 2003 -- the third year of double-digit growth and the biggest spike since 1990, according to a study by the Kaiser Family Foundation and the Health Research and Educational Trust (see http://www.kff.org/content/2003/20030909a/). Meanwhile, the managed-care industry is poised for another year of strong gains in 2004, with profits projected to increase at least 16 percent, according to data from the Corporate Research Group.

UC employees will face higher health care costs in the year ahead -- the gross cost for UC's 2004 HMO premiums amounts to an overall 15 percent increase over 2003 levels.

The university points out that employees everywhere are seeing double-digit increases and that the UC system is faring better than some other sizable institutions.

"On the issue of health care plans, the UC system is highly competitive with other large institutional employers," said Shimek. "For example, the California Public Employees' Retirement System has announced an average 18 percent increase in cost for their HMO plans in 2004 while the UC system is facing a 15 percent increase."

Shimek also noted that the state will increase co-payments for prescription drugs and emergency room visits while the UC system will hold those costs steady.

UC is introducing a salary-based employee contribution structure for 2004. Employee contributions will be based on four salary scales -- under $40,000, $40,000-$80,000, $80,000-$120,000, and over $120,000. Last year contributions were based on just two scales -- under or over $40,000. This allows UC to protect employees in lower salary ranges from the impact of medical premium increases.

Rate increases vary among the different carrier options. An employee signed up with Health Net for a two-adult plan and making less than $40,000 in 2004 will now pay a $25.81 monthly premium, a 27 percent increase from $20.25 in 2003. A single employee with no family benefits making under $40,000 will pay $12.84 to PacificCare, a 27 percent increase from $10.12 the year before.

Meanwhile, a UC Davis employee making $40,000 to $80,000 and signed up through PacificCare for family benefits can expect to pay a $89.69 monthly premium, up from $52.55 last year, a 71 percent increase.

Some of the rate jumps are most noticeable at the higher salary levels. An employee earning between $80,000 and $120,000 and enrolled in Health Net's family plan will now pay $140.78, up 175 percent from $51.15.

UC continues to pay for the majority of the costs for 2004 employee health insurance. For example, for the majority of employees in UC HMO plans, the university pays about 95 percent of the total premium cost, and 65-80 percent of the total premium cost for employees in POS and PPO plans.

Also, UC recently announced that it has selected the ARAG Group to administer the group legal program.

All Open Enrollment changes must be made by midnight, Sunday, Nov. 30, and will be effective Jan. 1, 2004.