Rising costs drive increases in employee health care contributions

Premiums, copayments and deductibles for employee health care plans are increasing Jan. 1 in what's likely the first phase of a multiyear effort to counteract rising costs. 

President Wendy Wintersteen, senior vice president for operations and finance Pam Cain and vice president for university human resources Kristi Darr announced the changes in an Oct. 7 message to faculty and staff. The increases in employee contributions to health care costs come after Wintersteen this summer directed the university benefits committee (UBC) to propose ways to balance the increasing expenses incurred by the university's self-funded health plan.

"The senior leadership team made these decisions carefully based in part on the UBC’s recommendations. We believe they are prudent steps to help support the long-term financial health of the university while maintaining our commitment to provide competitive employee benefits," Wintersteen, Cain and Darr said in the campus message.

What's changing

A summary of the changes shows monthly health plan premiums increasing by $20-25 for all coverage types on both the Wellmark PPO and Wellmark HMO options. The exception is the family double spouse plan, which is increasing by $60. 

Copayments for office visits will increase to $15 for the HMO and to $25 for the PPO, $5 more in both instances. Emergency room copayments will go up $25 to $125. Medical deductibles and out-of-pocket limits will increase by one-third across the board.

Under the Express Scripts prescription drug plan, retail pharmacy copayments are increasing by $5 or $10 for generics depending on the quantity purchased, and copayment limits for brand-name drugs will increase by 25%. A 90-day supply by mail order of a generic prescription still will be 100% covered, but mail order copayment limits for brand-name drugs will increase by 20%.

The changes mark the first increase to ISU Plan health care premiums since minor premium hikes for some plans in 2014. The university's rates have remained steady even as employee contributions have increased at other institutions and companies, in part because Iowa State's plans have performed well in holding down costs.

But in the past year, health care expenses have exceeded premium income by about $4 million, according to the Oct. 7 message. The 2021 increases are expected to make up about one-third of that shortfall, meaning additional incremental changes will be needed in coming years.

Even with the increased contributions from employees, Iowa State will cover more than 80% of the overall health care costs of most employees, Wintersteen, Cain and Darr noted.

Other changes

The Oct. 7 message also announced other changes to benefits beginning in 2021, including:

  • The deductible for restorative dental services such as filling a cavity will increase by $25, to $50 for the comprehensive plan and $25 for the basic plan.
  • The maximum benefit for the basic life insurance plan that pays twice an employee's annual salary will be capped at $250,000.
  • Employees who retire after June 30, 2021, will not receive the $4,000 retiree life insurance benefit.
  • For new entrants into the long-term disability plan, coverage will not include contributions to retirement funds or medical and dental plans. 

Open enrollment

Employees will have the opportunity to make changes to their benefits elections next month during the open enrollment period, Nov. 2-20.