1. Medical Plan Changes Effective July 1, 2007

2. Why Change? HealthNet claims trends over the last three years in excess of budgeted levels and national trends: 16% in FY2004, 23% in FY2005 and 21% in FY2006; HealthNet claim expenses doubled between 2001 and 2006; University has absorbed increases exceeding budgets by $5 million during these years without passing on as additional costs to employees; 2005-06 claim expenses exceeded budget by almost $3 million; Have not marketed the medical plan in nine years since we implemented with HealthNet in April 1998; Commitment to continuing to provide access to quality healthcare options while maintaining affordability to both employees and to Pace; 2007 POS renewal rates increased 21.7%.

3. Medical Plan Review Objectives for New Medical Plan –Ensure continuation of comprehensive medical plan –Give Faculty and Staff Choice and Freedom to go out of network –Access to quality networks, providers, facilities –Affordability –Cost containment for Pace at 2006-2007 budget levels (reduce $3 million of University’s excessive, unplanned expense) –Quality medical management excellence –Quality Client Service and Claims Payment Processes –Sub-committee and Benefits Advisory Committee would assist in shaping the recommendations that would result from the medical plan review process

4. Changes 1.New Plan Administrator 2.Funding Option 3.New Plan Design Platform 4.New Contribution Strategy 5.Annual Medical Waiver Option 6.Additional Benefit Program Modifications

5. Plan Administrator – Oxford/United Healthcare Oxford/United Healthcare is has the largest network of providers both locally and nationally; Faculty and staff would have access to the Oxford Freedom Network (locally) of as well as United HealthCare Choice Plus network (nationally); Oxford/United Healthcare had the highest match (89%) of current providers/hospitals in comparison to HealthNet and Aetna; Oxford/United Healthcare’s network contracts and plan design options yields higher financial savings based upon consolidation of medical plans; Improved utilization of technology and quality medical management in comparison to HealthNet; Oxford/United Healthcare will consider us a premier client and as such National Centers of Excellence will be in-network for the entire plan design including, Sloan Kettering (New York), Mayo Clinics (Minnesota, Florida), and St. Jude (Tennessee);

6. Plan Administrator – Oxford/United Healthcare Oxford/United Healthcare is ranked 9 th by New York State Insurance Board and is ranked better than Aetna and HealthNet in areas such as complaints, decision reversals, satisfaction, etc. Received highest accreditation outcome demonstrating levels of service and clinical quality that meet or exceed NCQA’s (National Committee for Quality Assurance) rigorous requirements for consumer protection and quality improvement in the following categories. –Access and Service –Qualified Providers –Staying Healthy –Getting Better –Living with Illness

7. Funding Option Fully Insured –Consolidation with one carrier; risk unknown for experience with HMOs –Risk is assumed by carrier –Easier to budget since responsibility is limited to monthly premium paid; –Need to comply with all state mandates

8. Oxford Health Plans A United Healthcare Company

9. New Contribution Strategy

10. Projected Per Paycheck Contributions in 2008 CoverageCurrent POS Contribution (since 1/1/06) 2007 POS Contribution * 2008 POS Contribution Projected Ind-Pre 2004 $20.92$49.67$57.95 Individual- Post 2004 $43.22$52.50$57.95 Employee + 1 $191.61$232.73$257.17 Family$257.12$312.50$345.09 *Rate Increases absorbed by Pace as of 1/07

11. Employee Per Paycheck Contributions (eff. 7/1/07) CoverageCurrent/2007* POS Contribution Option 1- EPO Option 2- POS 90/70 Option 3- POS 100/70 Ind-Pre 2004$20.92/ $49.67$31.62$44.14$66.76 Individual-Post 2004 $43.22/ $52.50$31.62$44.14$66.76 Employee + 1$191.61/ $232.73 $143.66$171.88$233.97 Family$257.12/ $312.30 $214.71$256.89$349.70 *Rate Increases absorbed by Pace as of 1/07 POS - Point of Service; EPO – Experience Rated HMO

12. Annual Medical Waiver Option Provide a cash incentive of $750/year to employees to waive medical coverage at Pace University;

13. Retirees Current Retirees: –Have access to either the EPO or 90/70 POS plan at no or minimal cost for individual coverage; –If current retirees wish to elect the 100/70 POS plan, they would pay the difference (i.e., buy up) Future Retirees: –Have access to all of the medical plan options including the 100/70 plan; –Will contribute at the same premium cost share level as immediately prior to retirement

14. Additional Benefits Modifications Eliminate the non-counseling services of the Employee Assistance Program; Reduce basic life insurance maximum coverage from $150,000 to $100,000 (voluntary life insurance purchasing still available) Limit Mental and Nervous disorder coverage under long term disability policy to 24 months; Eliminate University paid for Annuity Benefits Waiver under long-term disability (Note changes to long-term disability are very consistent with competitive plans available in the market. We are looking at self- insuring this option as an alternative or offering it as a voluntary benefit.)