2007 Medical Plan Rates FAQs
For your convenience, here are the answers to some of the most frequently asked questions about the 2007 Medical Plan Rates. For more details, see At Your Service in Related Information or contact Campus Human Resources, Benefits Services.
Actually, employees in the lower pay bands will have lower dollar-cost increases in 2007 and will continue to pay lower premiums. UC believes that pay bands help keep medical coverage more affordable for employees in the lower pay bands. Take a look at the chart below. You can see that Pay Band 1 employees with single coverage in Health Net pay only 5.6% of the total premium, while Pay Band 4 employees pay 26.3% of the total premium. This shows that UC pays more toward the health care of lower-paid employees, and less toward the health care of those who earn more.
2007: Single Coverage in Health Net
Your Monthly Contribution in $
UC’s Monthly Contribution in $
|Pay Band 1: $43,000 or less|
|Pay Band 2: $43,001–$86,000|
|Pay Band 3: $86,001–$129,000|
|Pay Band 4: $129,001 and up|
It’s important to look at the big picture when evaluating health care cost increases. Here’s an example that may help. Someone in Pay Band 1 with employee-only coverage in the Health Net HMO will see a rate increase from $12.49 to $20.64, which does work out to over a 60% increase. However, in dollars that’s $8.15 per month, or $97.80 for the year. Now, let’s say the same person earned $40,000 in 2006. With a 3% salary increase, his or her 2007 salary will rise to $41,200—$1,200 more. So this person receives a salary increase of $1,200—more than the annual health care cost increase. Since health care payroll deductions are pretax, the net effect on take-home pay will actually be less than $97.80.
UC is committed to providing competitive total compensation, including pay, benefits and retirement. UC’s 2006–2007 salary program is in line with the Regents’ 10-year plan to bring salaries, on average, up to market levels and to help rebalance UC’s total compensation package. To that end, UC will pay much more in 2007 to fund medical benefits—about $50 million more than in 2006. Finally, unlike many other employers who are trying to keep up with the rising cost of health care, UC is not cutting benefits.
If you don’t already participate in the Health Care Reimbursement Account (HCRA), you should think about doing so. It can help you save money by lowering your taxes, and it’s a convenient way to budget and pay for certain health care expenses—your annual deductible, copayments, prescription and some over-the-counter drug costs, even eyeglasses! The result? You are reimbursed with tax-free money, and your taxable income is lower too.
HCRA is the University’s health care “flexible spending account (FSA),” and IRS rules require the forfeiture of unused account funds that remain after the closing date for the plan year. You can use your 2007 account for eligible health care expenses that you incur through March 15, 2008. You have until June 15, 2008, to file claims for these expenses. Any money left in your account after June 15, 2008, will be forfeited. In accordance with IRS regulations, UC uses forfeited funds to help pay HCRA Program administrative expenses.
Carefully estimate the amount of eligible expenses that you will have—you may want to underestimate these costs instead of overestimating them. To help you estimate your contribution amount for 2007, use the special “FSA Calculator” tool in Related Information. For expensive procedures that you may be considering, such as LASIK eye surgery, be sure you are medically qualified for the procedure before including it when you estimate the amount of your spending account.
Your main two sources of information are your local Benefits Office and At Your Service. In addition, materials were distributed to campuses and mailed to employees' homes.