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05/12/93

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Stanford to offer 'flexible' benefits starting in 1994

STANFORD -- The term "open enrollment" will take on broader meaning at Stanford University in 1993.

The phrase refers to a period in late fall when university employees can make changes in their benefits options for the following calendar year. This year, for the first time, employees will be able to choose benefits "cafeteria-style," from a "menu."

The changes were endorsed by the University Cabinet and by President Gerhard Casper in early May.

According to Lori Lee, communications specialist in the office of Total Compensation (formerly Benefits), a flexible benefits program gives employees more options and more control over those options. The design being worked out for Stanford employees includes several new choices, such as additional levels of life insurance coverage, dependent life insurance, a long-term care plan and new medical plan options.

Jim Franklin, director of Total Compensation, and Barbara Butterfield, vice president for Faculty and Staff Services (which includes Total Compensation), said that the new program will not take any benefits away from, or increase costs to, employees.

"It does, however, allow employees to better fit their benefits to their needs," Franklin said. "The current benefits program does not allow for that flexibility."

The flexible benefits program also is designed to help control costs, short- and long-term, because employees are being asked to choose the options they need instead of being "passive" recipients of benefits. The university is expected to reduce overall costs by giving incentives to employees to drop unused coverages, some of which are provided, blanket- style, to all of its roughly 10,000 employees (faculty and non-Hospital staff.)

"The bulk of those savings will be passed on to employees, not the university," Franklin said.

Under the flexible benefits program, each employee will make elections for long-term disability coverage, medical and dental coverage and life insurance, among other benefits. Such benefits as the tuition grants for dependents will continue to be separate from the new package. Each option will come with a price tag, and employees who choose to receive fewer benefits than before can receive up to $50 per month in cash in lieu of those benefits.

Details will be published in monthly newsletters from Total Compensation, beginning in May. The office, Lee said, will send out information designed to "provide employees with the information they need to help them make their decisions this November."

The monthly newsletters will include information about the new medical choices that are currently being negotiated with health maintenance organizations (HMOs) and insurers such as Blue Shield, changes in vision coverage, new dental plan options, a new long-term care plan, life insurance, and other issues.

All must enroll this year

While many details of the new plan are falling into place, final information on medical options will not be available until a September publication from Total Compensation.

In late October, the open enrollment package will be sent out on the usual schedule, but with considerable differences from the past. Employees will make their choices in November, and choices will become effective on Jan. 1, 1994.

All employees will be required to enroll this year - in the past, only those making changes had to take part - and a telephone enrollment system will be used. Also, information to assist with enrollment will be available during open enrollment at various sites around campus and at SLAC.

The "flex" portions of the 1994 Open Enrollment are not designed to apply to the provisions of current collective bargaining agreements. Each of those agreements contains specific provisions concerning benefits. Employees covered by a collective bargaining agreement should refer to the benefits provisions in the agreement.

The plan was developed by the Total Compensation office with input from the Committee on Faculty/Staff Benefits and the Employee Roundtable, as well as 104 Stanford employees who participated in focus groups in the winter of 1992-1993, Lee said. Five of the focus groups included randomly selected faculty and staff. Another was with the roundtable, a standing focus group that regularly meets on human resources issues, and another was comprised of staff and faculty affairs officers.

Of the focus group participants, Lee said, 91 percent favored a flexible benefits program over the current program, and 76 percent said they would like a "full menu" program, such as is now being developed.

Praise for process

The process that led to Stanford's decision to offer flexible benefits to its employees spanned several months, involved numerous faculty and staff members, and was generally considered a positive effort by participants.

Of the 104 people who took part in focus groups staged by the Total Compensation department, 102 of them rated the focus group process "very good" or "excellent" in a post-meeting survey, Lee said.

"We came into this knowing that the sessions had to be useful for the people we invited," Lee said. "We wanted them to know that decisions weren't going to be made in a vacuum, and we were anxious to get input on our proposed design.

"We did make changes based on their input," she said.

Patricia Emslie, a staffer in Aeronautics and Astronautics, was one of the people invited to a focus group.

"We went over, bit by bit, what we have now (in terms of benefits), and then all of the options that were being looked at," Emslie said. "They were bouncing ideas off of us, to see how we reacted.

"Some of the discussions were very complicated," Emslie said, "but all of us learned at least something new about benefits that we didn't know before."

For instance, she said, in her group it was learned that one problem facing large employers is that some insurance companies still consider a "typical" family to include a working father, a housewife, and one or two children. Of the dozen people in her focus group, Emslie said, "I don't think that characterization applied to a single one of them."

Overall, "I don't know to what extent our input was considered, but I do feel that they listened, and that what we said gave them food for thought," Emslie said.

Elissa Hirsh, who is on the Employee Roundtable, said that group also was involved in the process.

"Jim Franklin (director of Total Compensation) came to the group at various stages, and put a lot of effort into educating us as to what was involved in putting together a flexible benefits package," Hirsh said. "We had some concerns that were shared.

"When a draft plan was finally presented to us, we were pretty impressed with the direction Human Resources was going," she said. "I think when the community at large sees the plan, they will be pleasantly surprised."

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