Retiree Health Care Task Force Report and Recommendation Elaine Phelps, Benefits & Employee Services

Retiree Health Care Environment at UNM Approximately 600 early retirees with dependents are covered on UNM medical plan. Early retiree premiums mirror active employee contributions – Retiree medical claims cost far exceed those of active employees Governmental Accounting Standards Board (GASB) – Requires postemployment benefits to be reported on financial statements In 2007, liability was $92.3 million By 2009, liability was $131.9 million

Task Force Charge Consider alternatives for addressing rising health care costs for UNM’s retiree population. Evaluate retiree health care eligibility criteria. Analyze the ratio of premium to claims for early retirees. Recommend health care options that more closely reflect the cost of health care for the retiree population. The Task Force was asked to:

Process and Alternatives Process Faculty, staff, retiree, and administrative representatives discussed and reviewed relevant information and options. Alternatives Healthcare Analytics provided cost projections for 14 options in three categories. – Benefit Eligibility – Premium Contributions – Policy Changes and Clarifications

Recommendations Benefit Eligibility Establish new eligibility rules for individuals hired after July 1, – Age requirement of 60 years & 20 years of service or 65 years & 7 years of service A ‘safe harbor’ will protect individuals who must retire early due to a disability (as determined by the ERB).

Recommendations Premium Contribution Premium contributions will shift 5% effective July 1, Typical contribution: Premiums will incrementally shift 1% per year for FY13-FY17. – Premium shift is not associated with any potential increases attributable to rising premium costs. By FY 2017, a typical premium contribution will be 50/50. Employer PaidRetiree Paid Current Allocation60%40% Fiscal Year %45%

Recommendations Policy Changes and Clarifications Effective July 1, 2016, employees must be enrolled in UNM’s Medical Insurance five consecutive years immediately preceding retirement. Employees must enroll within 60 days from retirement and maintain continuous coverage thereafter to remain eligible.