Proposed Changes in Faculty Health Benefits August/September 2016 CCA Campus Meetings

Timeline CCA and district discussions on health benefits began in fall 2015 due to declining reserves in the self-funded plan. The contract requires employees to be responsible for “excess premium costs” if the reserves fall below 32.5 percent of prior year health claims. This language was approved by CCA members in the 2011-14 contract when health insurance reserves were robust. This is still current contract language.

Timeline During Fall 2015, CCA negotiators began work to determine if we could remain self-funded or if we would have to join the larger SISC pool. In Spring 2016, CCA surveyed faculty and faculty retirees. The majority of working faculty said they wished to remain self-funded. Retirees, many on fixed incomes, agreed with staying self-funded but voiced concerns about paying for a district plan when they already were paying for Medicare. In spring elections, CCA members were asked if they were willing to pay $190 a month to remain self-funded. A strong majority approved of this. .

Timeline In April 2016, CCA negotiators made a proposal to remain self-funded. The Board of Trustees rejected this proposal saying it was too expensive for the district. In summer 2016, when it became apparent that CSEA was exploring joining the SISC pool, CCA negotiators studied the possibility of faculty staying self-funded on their own if classified and management employees joined the pool. We learned that no one, including SISC, would recommend this option because a small, self-funded group faces higher risks of increased health costs should a few large claims occur.

Timeline In July 2016, CCA announced we had reached a one-year agreement with the district based on the assumption that CSEA and management would join the pool. Later that month, CSEA held meetings and an election on its proposal to join the pool. The majority of members voted to join the pool. Management employees will join it as well. Our meeting today is to explain CCA’s proposal to join the pool. While only CCA members as of Sept. 14th can vote on this proposal, the outcome of the election will determine the direction of faculty health benefits.

Election Outcomes If the CCA proposal, or Memorandum of Understanding (MOU), fails to be ratified, the district could charge faculty members “excess premium costs” for the current self-funded health plan. CCA estimates this cost would be $425 per month, a cost few working and retired faculty could afford. If the MOU is ratified, faculty and retirees will be asked to choose from six possible plans in the Kern SISC pool by Oct. 1. Changes will take effect on Nov. 1, 2016 and continue through September 30, 2017.

Pros of Joining the Pool You can pick a health plan you can afford rather than paying $425 a month for the existing self-funded plan. (An equivalent plan in the pool costs $255 a month.) CCA negotiated a basic plan with no monthly out-of-pocket costs other than co-pays and deductibles. Five of the six plans offered many of the same benefits as the current self-funded plan. The sixth plan, Kaiser, offers low-cost benefits to those who live near a Kaiser Center. Payroll deductions for more expensive plans would be made on a pre-tax basis for working employees, which may help some at tax time. KCCD joins the larger 300,000-member SISC pool, which means no health reserve is required to be maintained.

Cons of Joining the Pool KCCD employees have to pay for health plans that exceed the cost of the basic plan. For many, this will be the first time they have to compare plans and pay for health benefits. Retirees will be expected to make payments for their health benefits, too. Co-pays, deductibles, and prescription costs also may be higher depending upon the plan selected. KCCD employees lose autonomy and must agree to SISC pool-mandated changes in benefits and costs. We are unlikely to go back to being self-funded once KCCD joins the pool due to high costs of creating a reserve and a lack of health claims history. Employees may be directed more often to SISC for information rather than rely solely on the district office. They may encounter more bureaucracy.

Important MOU Details Failure to select a plan by Oct. 1 will result in the base plan being selected for you. Retirees under 65 will choose from the same plans as working faculty. Retirees over 65 will choose from 3-tiered plans.** Retirees, but not working faculty, can opt out of district health insurance. Retirees who opt out may re-enroll during the next open enrollment period. Faculty who retired before July 1, 1983 will continue to receive paid health benefits from the district per contract language. The MOU is only a one-year agreement. We start negotiations on the new contract in fall, and we expect health benefits, and the district’s contribution, to be a major area of negotiations. ** While not in the MOU, retirees over age 65 with eligible dependents, such as children under the age of 26, will be able to choose between health plans for working faculty and the 3-tiered plans to find the most inexpensive family rate, according to SISC and district HR officials.

What Does a “Yes” Vote Mean? Faculty and retirees would move over to the SISC Pool starting on Nov. 1. Faculty and retirees would choose a health plan and submit their choice to the district office no later than Oct 1. It would be highly unlikely that faculty would be able to return to a SISC self-funded plan in the future. The MOU would last until Sept 30, 2017.

What Does a “No” Vote Mean? Negotiators would have to reach a new agreement with the district on health benefits. Faculty would pay $425/month for their self-funded health benefits until a new agreement is reached. Almost all retirees would pay $425/month for their self-funded benefits until a new agreement is reached.

Proposed Pool Plans CCA hands out copies of a chart listing the plans and costs for working and retired faculty. SISC representative discusses proposed plans and KCCD enrollment process.