Faculty, Staff Asked to Comment on Proposed Benefit Changes
University strives to equalize benefits, control cost increases
BU faculty and staff are being asked to comment on a proposal to revise health and retirement plans offered by the University. Photo by Cydney Scott
The University is inviting faculty and staff to comment on recommendations for potential changes to health and retirement benefits that are intended to slow a dramatic escalation of benefit costs, equalize benefits of employees across the wage spectrum, and guarantee that BU’s benefits are competitive with those offered by peer institutions. The recommendations, made by a task force that was established by President Robert A. Brown in April 2014, are described in a report released yesterday. The deadline for submitting comments is April 15. Final plan changes will be decided by the end of the spring semester, and the University will prepare for possible implementation of the changes in 2016.
“Faculty and staff will have the opportunity to attend meetings and town halls and provide feedback online,” says task force member Diane Tucker, BU’s chief human resources officer. Tucker says the recommendations “will impact faculty and staff differently, depending on their own circumstances.” Because those circumstances—including family size, health, and career level—differ, she says, “our goal is to communicate in a way that helps all faculty and staff understand the proposed changes. We look forward to the dialogue over the next few months.”
Tucker says many colleges and universities are conducting similar benefits reviews, prompted by several factors, including the so-called Cadillac tax that the federal health reform law will impose on pricier health plans. The task force estimates that BU’s current health plan would incur taxes of about $2.8 million in 2018, when the tax begins, and a total of $31.6 million during the six years after that.
The cost of benefits has risen faster than the cost of salaries. During the 10 years ending in 2014, the benefit cost per BU full-time-equivalent employee jumped 52 percent, from $16,583 to $25,084, rising at more than twice the inflation rate. In fiscal year 2014, BU paid $223.5 million for employee benefits.
At a time when universities are being asked to control the cost of higher education, moderating increases in benefits costs is essential to that goal, the task force report said.
Another impetus for the benefits review, Tucker adds, is a federal nondiscrimination requirement that retirement contributions by and for lower-paid employees are proportional to those by and for highly compensated employees.
Currently, the University offers three health plans: an HMO, a PPO, and a plan with a high deductible and a health savings account. The task force recommends replacing the HMO and PPO plans with a new PPO that would cut annual premiums and encourage lower-cost health care, while still offering beneficiaries a wide array of doctors and hospitals. The University’s share of employee premiums would be the same as it contributes to the current HMO and more than it contributes to the current PPO.
To get the PPO’s premiums low enough to avoid the Cadillac tax, the new plan, while still covering the same services as are now covered, would require employees to pay deductibles and coinsurance (a percentage of a medical service’s cost on top of the deductibles) at the point of service, Tucker says. For employees making less than $100,000 a year, the University will mitigate the deductible by contributing to eligible employees’ Flexible Spending Accounts.
Regarding retirement, BU currently offers two plans—a defined contribution plan funded by University and employee contributions, and a supplemental plan funded by employees. The task force recommends changes that would increase employee savings, adjust the University contribution to be more equitable between age and salary ranges, and eliminate current refunds of University contributions to some employees (which are taxable) due to the federal discrimination concern.
The recommendations also retain and/or modify the University’s tuition assistance and long-term disability benefits for employees and dependents.
The task force spent “many hours examining complex benefit designs and considering the employee impact of various options,” says Robert Meenan (MED’72, GSM’89), chairman of the task force. He is a special assistant to Brown and the former dean of the School of Public Health.
“The faculty, staff, and administrators on the task force brought a range of perspectives to the effort,” he says, making it all the more gratifying that “we were able to achieve a strong consensus on all of the recommendations.”
“Our goal,” says Brown, “is to ensure that Boston University continues to offer an attractive set of benefits, when measured against our peer institutions, so that we can continue to recruit and retain world-class faculty and staff. We also must take into account the changing regulatory landscape so that our programs make optimal use of University resources.”
The other task force members are Stephen Brady, a School of Medicine associate professor of psychiatry; Amy Bronson, Development and Alumni Relations director of recruitment and training; Peter Fiedler (COM’77), vice president for administrative services; Fred Foulkes, a School of Management professor of organizational behavior; Nimet Gundogan, Human Resources executive director of benefits; Derek Howe, vice president for budget and capital planning; Maria O’Brien Hylton, a School of Law professor of law; Natalie McKnight, dean of the College of General Studies; Patricia O’Brien, assistant provost for graduate enrollment management; and Julie Sandell, associate provost for faculty affairs and a MED professor of anatomy and neurobiology.
Comments & Discussion
Boston University moderates comments to facilitate an informed, substantive, civil conversation. Abusive, profane, self-promotional, misleading, incoherent or off-topic comments will be rejected. Moderators are staffed during regular business hours (EST) and can only accept comments written in English. Statistics or facts must include a citation or a link to the citation.