Q&A: Why health care will cost employees more


Following the Sept. 18 announcement regarding salary increases and health care benefits changes for 2024, faculty and staff have raised a number of questions. Here are answers to some of the most common questions about these topics.


Explain again why employees will pay more for health care benefits in 2024?

The big picture is that health care costs continue to rise significantly. The premiums paid by you and the university aren't enough to cover expenses. According to the American Hospital Association, hospital expenses increased 17.5% between 2019 and 2022. Add into that national inflation, workforce shortages and sustained demand for hospital care. Nationally, the Kaiser Family Foundation's 24th Employer Health Benefits Survey found that the average family coverage premium increased 20% over the past five years and 43% during the past 10 years.

At the university level, the planned 2024 benefits changes will be the fourth year of a multiyear effort to counter rising costs, after seven years without changes to premiums. In recent years, premiums collected haven't been enough to cover claims costs. The university has worked to minimize the impact on employees by covering the shortfall with one-time funds from other sources. As costs have continued to rise, this is not a sustainable solution. Premium increases and plan design changes are necessary to maintain a financially viable benefits program. In 2024, premiums paid by ISU employees will cover approximately 12% of costs and the university will cover the remaining 88%.

How do ISU employee premiums compare to the national average?

ISU employee premiums remain far below the 2022 national average of $1,327 per year for employer-sponsored single coverage (all plans) and $6,106 per year for family coverage (all plans). In 2024, an ISU employee will pay $396 per year for BlueHMO single coverage or $2,808 per year for BlueHMO family coverage. ISU employees in BluePPO will pay $660 per year for single coverage or $5,100 for family coverage.

How do our employee premiums compare to what employees pay at other colleges and universities around the country?

In 2024, ISU employees in BlueHMO single coverage will pay $33 per month, compared to $128 monthly median premium paid at other colleges and universities (2023 College and Universities Professional Association for Human Resources benefits survey). ISU employees in BlueHMO family coverage will pay $234 per month, compared to $449 per month at other colleges and universities. See more on CUPA-HR comparisions.

Is coverage for mental health and substance abuse treatment changing?

No. No changes are being made to ISU's overall health care coverage. Your health care benefits will continue to include mental health and substance abuse services. What is changing is that now you will pay a copay each time you visit a provider for these services. If you're in the HMO plan, the copay is $15 per visit. If you're in the PPO plan, the copay is $25 per visit. Beyond the copay, you will not pay additional expenses for these services. Every copay counts towards your annual out-of-pocket maximum. If you reach your out-of-pocket maximum at any time in 2024, you'll no longer pay a copay the rest of the calendar year. Note: With the addition of preventive services now being offered with no cost-share to employees, multiple mental health screenings are available at no cost to you.

I'm in the HMO and coinsurance is new to me. How does it work?

Coinsurance is your share of the costs of a covered medical care service, calculated as a percentage (for example, 10 percent) of the allowed amount for the service. Coinsurance begins after you've met the amount of your deductible. For example, if your health plan's allowed amount for medical care service is $500 and you've met your deductible, then your coinsurance payment of 10 percent would be $50. The health plan pays the rest of the allowed amount. Once you reach your out-of-pocket maximum, then 100% of costs are covered by your plan.

Other health care terms are new or unfamiliar, too. Where can I get up to speed?

Two new educational tools are available as a first step in helping to understand plan changes. On the UHR Benefits website, Medical Insurance Glossary and Understanding Your Medical Coverage Costs video help define plan elements, such as a deductible, coinsurance and out-of-pocket maximum, as well as how these elements interact and apply to care received. UHR Benefits will release additional resources on Oct. 2.

Can't the university budget for larger salary increases to offset new health care costs?

The university priority of retaining excellent employees through competitive compensation and benefits must always be balanced with fiscal realities. For fiscal year 2024, the university budgeted for a 1% salary increase, effective July 1, for employees who received satisfactory performance evaluations. The same employees are eligible for a differential 3% increase, effective Jan. 1. While the Jan. 1 salary increase will be differential based on performance, a 3% spend is the expected target across divisions. This allocation represents the extent of the university's budgeted resources for salary increases for FY24. Merit staff (excluding public safety bargaining unit members) received a 3% increase on July 1 as a part of the collective bargaining agreement. Merit staff with satisfactory performance will receive 1% on their merit review date in accordance with Merit Regent System Rules.

How does the university make decisions about health care benefits changes?

Decisions regarding the university's health care benefits program follow an established process. Each year, the university works with vendors, external consultants and the Employee Benefits Advisory Committee (EBAC) to review and assess opportunities to maintain a competitive benefits package. EBAC, which consists of faculty and staff representatives, is charged with making recommendations that support competitive offerings while maintaining financial sustainability. As part of this process, all members of EBAC have the opportunity to comment and provide input. Final recommendations are advanced to senior leaders by a majority vote of the committee. This year, the majority of committee members voted in favor of a balanced approach to address rising costs. Rather than a significant hike in monthly premiums, employees will pay an increase in monthly premium and a portion of the cost share when they or dependents use health care services.

Am I able to see the total annual investment the university makes in me, both wages and benefits?

A more comprehensive view of ISU's investment in an employee can be found in Workday. Under the menu in the top left corner of the Workday homepage, follow the Benefits and Pay link to reach the Benefits and Pay Hub. On the overview page, the Annual Total Rewards Package summarizes the contributions paid on your behalf by the university on a rolling 12-month total based on the date you visit the hub. The chart displays your base pay and the cost of your ISU benefits. It also displays the dollar amount of allowances, variable pay and summer pay, if applicable. The combined value is presented as the total rewards package. From the hub, on the Benefit Elections page, you also can view your current benefit elections and your monthly costs, including the university's contributions.