Benefits Town Hall Meeting September 15, 2010 2:00-3:30 p.m. Music Recital Hall
Agenda
I. Budget Overview- Reductions since 2008
II. Multi-Year Projection: 2011 - 14
III. Projected Year End Balance
IV. Rising Health Care Costs
V. Benefits Subcommittee Recommendations
VI. Questions
2011-14 Budget
Planning2011-12 2012-13 2013-14
Preliminary Budget Projected Projected
Difference between ongoing Revenues & Expenses (Structural Deficit) ($1,886,000) ($3,586,000) ($5,606,000)
Increase in State Revenue Anticipated 0 0 0
Net Reduction in Revenue 0
Annual Anticipated Expenditure increases to date (1,700,000) (2,020,000) (1,925,000)
Budget Reductions ? ? ?
Ongoing Shortfall* (3,586,000) (5,606,000) (7,531,000)
One-time Bridge Funds 1,250,000
Net Deficit (2,336,000)
*Estimates will change as more information becomes available
Are benefit changes enough to
cover the deficit?
• 2011-12 Budget Reduction Target: $2.4 million
• 2011-12 Projected benefit increase: $700,000.
• 2011-12 Projected Deficit assuming benefit plan
changes/cost sharing: $1.7 million
Employee Only $8,774
Employee + 1 $16,971
Employee + 2 or more $23,363
The Cabrillo stipend funds medical, dental, income protection,
life insurance
Benefits Committee Goals
• Cost Containment
• Recommend “baseline medical plan”
• Develop a cost sharing model to allocate benefit cost increases between Cabrillo and employees using a formula
• Provide information to help employees maximize use of the medical plan with the least cost to the employee and Cabrillo
• Develop a survey instrument to help Cabrillo assess employee needs and determine employee preferences with regard to cost containment and allocation of cost increases.
Baseline Medical Plan
• Definition-an acceptable plan that would not be
significantly modified each year.
• Benefits committee recommends Alternative HMO
Plan Option as baseline plan for 2011-12
• Note: Employees may need to pay more of the cost
to maintain the baseline plan over time.
• Reminder: out of pocket premium costs can be paid
using pre-tax earnings.
Traditional Cost Containment
Strategies
Areas to focus on:
Plan Design
Plan Choices
Employer
Contribution
Eligibility Audit
Educate Consumers
Cabrillo 2010-11 Plan Designs
2010-11 Cabrillo Funded Low HMO Plan
• $25 co-pay
• 15.19 % increase in 2010-11
Alternative HMO Plan Option
• $30 co-pay
• 5.14% increase in 2010-11
Impact of Plan Design Change
• If employee groups agree to change plan
design in 2011-12, we expect the base line
plan cost to be less than the current plan
design cost increase.
• In 2012-13 (year 2 and beyond) the cost
increases may go back up to double-digit
increases.
Cost Sharing
Alternatives
What is a cost sharing model?
• A model that allocates benefit cost increases to
employees or employees and Cabrillo using a
formula:
• Review examples of cost sharing options
Other components of the
benefits package
• Consider changing life insurance maximums to $25,000 for all employees. Costs would be reduced from $68,000 annually to $32,211.
Current maximums are:
• $75,000 - Faculty/Classified/Confidentials
• $100,000 - Administrators• $250,000 - President
• Employees would have the option to purchase life insurance via a payroll deduction.
Retiree Benefits
• We still need to evaluate current plans and
costs associated with retiree benefits.
Communication Plan• Cabrillo will continue to utilize wellness
programs as a long term strategy for cost
reductions.
• However, no significant short term cost
savings associated with wellness programs.
Health Insurance
Online Resources
• Blue Shield of California: Learn about your medical benefits with quick access to
membership information, benefit overview, and physician services. Register at
www.blueshieldca.com
• Medco prescription drug program (PPO high and medium plans): A easy way to get
the most value from your prescription drug benefit. Quick access to medications, refills,
side effects and cost comparisons. Register at www.medco.com
• PrimeMail prescription drug program (HMO mail order): Provides information and tools
to help you use your mail-service benefit. PrimeMail is dedicated to providing
convenience, savings, and service. Register at www.myprimemail.com
• Delta Dental program: Provides information about dental benefits with quick access to
membership information, benefit overview and dentists. Register at
www.deltadentalca.com
Next Steps
• Contracts and agreements have re-openers on salaries and benefits
• Tentative timeline for negotiations - Fall 2010
for October, 2011 Plan Year
• Please complete the benefits survey
Special Thanks
to the
Benefits Subcommittee
• Deborah Bone
• Leah Hlavaty
• Sue Torres
• Kathie Welch
• Loree McCawley
• Graciano Mendoza
• Tatiana Bachuretz