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Employees ask questions about flexible benefit options, costs

STANFORD -- * How much is the university really contributing to the cost of an employee's benefits?

  • Why will the same benefits cost me more in 1994 than in 1993?
  • Why aren't there more dentists available under the new dental plan?

These were some of the questions that employees put to Jim Franklin, director of Personnel Services' Total Compensation office, on Monday, Nov. 1, at the first in a series of information sessions on Stanford's new cafeteria-style benefits program.

The office of Total Compensation recently mailed 56-page workbooks and personalized worksheets to all non-union Stanford employees, who must sign up by Nov. 30 for next year's benefits. (Members of the United Stanford Workers' union have benefits provisions included in a three-year contract that expires in 1994.)

About three dozen employees came to the session in the CERAS conference room to ask questions they hadn't yet found answers to in the booklet. Questions generally centered around medical and dental insurance options and how the university contribution to medical benefits has changed or would change in future years.

Questions on costs

Franklin explained that Stanford's total contribution to medical insurance for employees remains the same on a pro rata basis in 1994 as in 1993: The university is still willing to pay 90 percent of the total cost of the least expensive comprehensive plan for the individual employee who is working 3/4 time or more.

The difference in 1994, he said, is that the employee can take approximately half of that contribution ($37.50 per pay period or $75 per month) in cash and benefits other than medical insurance if he or she prefers.

Franklin conceded that one group was not getting the same level of university benefits as before. Those are approximately 240 married couples who both work at Stanford and who were able to combine their benefits in the past so that many had to pay nothing out of pocket. Under the new plan, they can use both sets of benefits, but they cannot combine them to buy one benefit package, Franklin said.

As for years after 1994, Franklin said, "As far as I know, there's no intention to cut back Stanford's commitment to cover 90 percent of the cost of an individual's coverage with the lowest cost plan. That's Kaiser [health maintenance organization]. I do have to say, like everything else, I can't promise down the road that at some point we won't have a budget crunch that will change this, but that was true in the past, and that's true in the future."

Franklin also gave these details on the financing of the new program:

  • The university's contribution to benefits will be broken down into two categories - "dedicated dollars" of $38 per pay period and "choice dollars" of a minimum of $45 per pay period for 3/4 to full-time employees. Together these equal a minimum university contribution of $166 a month.
  • The choice dollars were previously dedicated to specific benefits in the following way for 3/4 to full-time employees: $37.50 per pay period for medical insurance, $7.50 for dental insurance, and an amount that varied with each employee's age and income for long-term disability insurance.

This latter amount, in the range of $2 or less per pay period, is enough to allow an employee to buy back long-term disability insurance equal to two-thirds of his or her salary, the level of insurance that was required in previous years. Dedicated dollars now will cover long-term disability insurance for one-half of an employee's salary only, and the employee must decide if he or she wants to use choice dollars or cash to purchase the larger coverage.

'Some are confused'

Some employees at the first information session said they were confused by this breakdown in choice dollars. The breakdown is simply to give employees an idea of where the money was previously allocated, Franklin said, and is not a limit on how it can be spent. For example, an employee who wanted to buy family coverage in a health maintenance organization could spend his or her entire choice dollars on the premium, he said, forgoing dental insurance entirely.

Employees cannot take out more than $25 per pay period in cash, however. Because of this, employees who are getting most of their insurance through a spouse's employment, for example, might wish to take choice dollars above $25 in the form of a health care spending account, which could be applied against deductibles in the other coverage, Franklin said.

Several employees wanted to know the rationale behind allocating only $37.50 of the university's medical insurance costs to "choice" rather than "dedicated" dollars.

The amount of medical choice dollars, Franklin said, is "an arbitrary number. It's our best guess of what we can afford to let people take out of the plan." The ratio between choice and dedicated dollars could change in future years, he said, depending upon the university's experience.

Franklin also reminded employees that the switch-over in benefit plans means that no one will have a payroll deduction for medical insurance coverage next month.

"We currently pay for our medical plan a month in advance. In 1994, we pay everything concurrently in every pay period, starting in January. What happens in December? Nothing - a premium holiday."

Coverage options

Other employees were interested in understanding how the university's new "triple option" health plan compared to health maintenance organization plans. Several also complained that the new Prudential dental health maintenance organization, an alternative to the Delta Dental Plan, offered too few dentists in their communities.

Franklin said the number of dentists was determined by the plan provider. "They tell us a dentist can handle an enormous volume of patients" compared to a medical doctor.

The triple option plan provides three levels of coverage so that people in the plan have "more flexibility" to seek medical services outside their regular medical group practice than those who sign up for coverage with a single health maintenance organization. Triple option tends to provide less coverage of pharmaceuticals and mental health services than the HMO-only options, he said, and it is useful for families who have a member living out of state, because it covers more than emergency services out of the area.

Franklin referred employees to the folded "medical comparison chart" in the back pocket of their workbooks for detailed comparisons of the medical plans.



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