Agenda Item No. VI. B. 1.

Washburn University Board of Regents







SUBJECT: University Health Plan





BACKGROUND:



The University's Health Programs plan year with Blue Cross Blue Shield (BCBS) of Kansas is from November 1 to November 1 each year. After significant rate increases last year and facing the likelihood of further increases this year, the Benefits Committee, with the aid of a Health Insurance consultant, Michael Eichten, solicited bids from health insurance providers for the upcoming plan year. Although eight bids were solicited, only four bids were received. One of the four, Delta Dental, is for dental coverage only. Two of the remaining three bidders, Epoch and BMI, provide self-funding options only, and the last one, BCBS, provides both fully-insured and self-funding options.



The Benefits Committee and the Health Insurance consultant reviewed the bids submitted, then consulted with others on campus, prior to making a recommendation to the administration.





DESCRIPTION:



After reviewing all bids submitted, the Benefits Committee and the Health Insurance consultant also reviewed a number of options for the purpose of minimizing the increase in costs for both the University and employees. These efforts resulted in the recommendations contained in the attached memorandum (Attachment 1) dated June 22, 2002 from Allen Easley to President Farley.



The recommendations include:



The University should convert to a self-funding plan.

The University should obtain umbrella coverage with a $100,000 deductible.

The University should contract with BCBS as the third party administrator for the self-funding plan.

The University should change from its current three-plan system to a two-plan system.

The University should change from its current two-tiered system (single and family) to a four-tiered system (single, employee and children, employee and spouse, full family).

The University should make no change in dental coverage.

The University should continue to contribute a larger amount toward the total cost of coverage for low-salaried employees.

The University should adopt further revisions to its prescription drug plan to encourage use of generic drugs and help reduce utilization.



Premium costs are based upon continuation of the University paying the single premium at the Base Plan rate, and a portion of the family, employee/spouse, and employee/children health premiums for those employees with annual salaries less than or equal to $45,750. (See Attachment 2 for details.)







FINANCIAL IMPLICATIONS:



The estimated FY 2003 costs are approximately $3,542,000 (including the reserve), and the amount budgeted is adequate to fund the change from fully-insured to self-funded.





RECOMMENDATION:



President Farley recommends Board of Regents approval to contract with Blue Cross Blue Shield of Kansas to be the third party administrator of a self-funded University health plan.





________________________ __________________________

(date) Jerry B. Farley, President


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