1. Faculty Benefits Committee Minutes Sept 9, 2014

2. PPO BLUE Plan= traditional plan PPO Saving Plan = high deductible plan.

3. - On steep salary indexing Matthew Woessner walked the committee through a series of calculations about the likely impact of indexing by multiplying the number of employees in each income class.
- By multiplying the net change in individual benefit contributions as reported on the HR website ( by the total number of non-union employees in each income category, it is possible to make rough projections of the contributions lost to employees making under $50,000 a year against those gained by those making over $50,000 a year.
It appears that funds raised by increasing rates greatly exceeds funds lost by lowering rates for employees needing relief.

4. If this is true, it was suggested that while HR was highlighting the reduction in insurance contributions to select employees, it instituted a large scale increase overall in employee contribution.
It was asked if HR was aware that the benefits indexing might lead to substantial increase in employee health contributions.
HR said this is one part of larger benefits package – presentation of complete package will be presented to committee.
HR stated that the PPO Savings plan was in employee’s best interest and by raising rates of PPO Blue, the university was helping employees make the right decision.

5. Revenue was lost with TCYHI cancellation ($1,063,000 in bonuses and $266,00/month surcharges).
It was asked if changes in benefits indexing was tied to loss in revenue of TCHYI.
HR claims salary indexing in place before cancellation of TCYHI
How did HR account for lost revenue?
HR did not have relevant information at hand to answer question.
HR was to present to committee how benefits indexing impact Penn State in October.

6. WHAT HAPPENED TO EXCESS FUNDS?
OCTOBER 21ST MEETING FOR FACULTY BENEFITS COMMITTEE
(minutes still not available on faculty senate website)
L. Aronne receives from colleague who received from someone attending October 21st meeting for faculty benefits committee. This person not on committee, just someone who attended.
What follows is information from that .

7. HR provided data which showed that half of the revenue from increased contributions was not used to support employees <$50K but to subsidize higher-income employees who decided to opt out of PPO BLUE.
True cost of PPO BLUE only slightly higher than PPO Saving but university intentionally charging % more in employee contributions for PPO Blue to force faculty and staff into signing up for PPO Saving.

8. “In the meeting, HR acknowledged that, in order to promote the PPO Savings plan, they have temporarily underpriced the plan to “wake up” the employees to “the opportunities of the high deductible plan.” Under questioning, the university benefits consultants Towers-Watson acknowledged that the current pricing is not, in the long run, sustainable. Once the university has managed to coax enough employees out of the traditional PPO Blue insurance, the administration will, of necessity institute a substantial increase in employee contributions to sustain the new PPO Savings plan. “

9. TW said that promoting high deductible plans with artificially low rates is standard in corporate world.
Committee questioned the ethics of what HR was doing.
TW admitted that some employees would be financially harmed by PPO Savings plan but that the PPO Savings plan was good for most of the university and moving away from PPO Blue was in the university’s long-term interest.

10. Questions? Thoughts?