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FOR COMMENT
Benefits Program of the University of Pennsylvania
1997 Review and Recommendations
To the University Community:
This report is published in Almanac so that all Penn faculty
and staff will be aware of the continuation of the benefits redesign process
and the rationale for the development of additional recommendations. It
also provides an opportunity for the community to give us feedback via
e-mail at benefits@pobox
or by campus mail to the committee chair.
The recommendations outlined in this report have been discussed and
endorsed by the Academic Planning and Budget Committee and the Personnel
Benefits Committee of the University Council.
We anticipate that the President, Interim Provost and Executive Vice
President will make a final decision with respect to these recommendations
in March 1998, with implementation effective July 1, 1998.
The Benefits Advisory
Committee
Dr. Barbara Lowery, Chair, Associate Provost
Mr. Alfred Beers, Associate Vice President for Finance
Debra Fickler, Esq., Associate General Counsel
Dr. David Hackney, Chair, Personnel Benefits Committee; Professor
of Radiology/Medicine
Dr. Robert Hornik, Professor of Communications, Annenberg School
Mr. Gavin Kerr, Vice President Human Resources and Strategic Planning,
University of Pennsylvania Health System
Dr. David Kozart, Past-Chair, Medical School Faculty Senate Steering
Committee; Associate Professor of Ophthalmology/Medicine
Mr. Michael Masch, Executive Director, Budget and Management Analysis
Dr. Olivia Mitchell, Professor of Insurance and Risk Management/
Wharton
Ms. Betty Thomas, A-3 Assembly; Administrative Coordinator, Office
of Student Financial Services
Dr. Michael Wachter, Interim Provost
Ms. Marie Witt, Penn Professional Staff Assembly; Associate Vice
President for Business Services
Contents
I.
Introduction and Executive Summary
II.
Detailed Description of Changes
A.
Health Care Insurance
Lifetime
Maximums
Mental
Health Benefits
B.
Retirement Benefits
C.
Long-Term Disability
D.
Long-Term Care
II.
Summary
Appendices
I. Introduction and Executive Summary
In order to conduct a careful, thorough review of Penn's benefits package
and to receive advice from the University community, a Benefits Advisory
Committee was appointed in 1996. In its first set of recommendations, which
were implemented on July 1, 1997, the Benefits Advisory Committee focused
on the following goals: maintaining an attractive benefits package that
meets the professional and personal needs of University employees; realizing
a competitive benefits package; adopting plans that conform to the best
practices of benefits design; maintaining affordable benefits for lower-wage
employees; retaining those benefits that are most valued by employees;
and simplifying and clarifying the benefits package. It attempted to achieve
these goals while at the same time contain costs of the program. Those
costs were averaging an annual 8.1% rate of growth and diverting resources
that might otherwise be used to maintain competitive salaries, invest in
Penn's strategic priorities, enable researchers to effectively compete
for sponsored research grants, and assure a competitive tuition policy.
The Committee recommended greater employee cost sharing over a wider
range of health insurance plans and introduction of prescription drug coverage
in the HMO plans; changes to life-insurance to provide one-times annual
benefits base pay and return of flex dollars to employees; a single paid-time-off
accrual schedule and elimination of reduced summer hours; retention of
undergraduate tuition benefits and graduate tuition benefits for employees
and development of special qualifying programs for employees whose admission
to Penn is deferred for academic reasons; and expansion of the options
for part-time employees to participate in the Health Care Pre-Tax Account.
These changes permit the University of Pennsylvania to continue to offer
an attractive and competitive employee benefits package that helps the
University to attract and retain excellent faculty and staff.
The Committee also recommended that consideration of changes to health
insurance lifetime maximums, retirement, long-term disability, and mental
health plans and additional options for long-term care, and vision care
be considered this year. Although the committee reviewed a voluntary vision
care benefit, there is not yet closure on such a plan. Thus, its implementation
will not occur in the next fiscal year. This report focuses on recommendations
regarding the other benefits listed.
Summary of Proposed Changes
Health Care Insurance
- PENNCare lifetime maximum benefit -The Committee recommends
replacing the $2,000,000 combined in-network and out-of-network lifetime
maximum benefit with an unlimited lifetime maximum for in-network care
and a $1,000,000 lifetime maximum benefit for out-of-network care.
- Mental health benefits in Plan 100, PENNCare and the UPHS/Keystone
POS-The Committee recommends that annual and lifetime mental health
benefit limits be expressed in days rather than dollars and that separate
lifetime limits on outpatient mental health benefits be eliminated.
Retirement Plan
Penn's Tax-Deferred Annuity Plan has passed IRS nondiscrimination testing
this year using a methodology appropriate to 403(b) plan testing that excludes
pre-tax employee contributions from the testing. However, the Plan must
be amended effective July 1, 1998 to restrict eligibility to employees
who are at least age 21 and have completed at least one year of service.
The Committee also reviewed certain cash-out features of the retirement
plans.
The Committee recommends that:
- The TDA plan be made available to employees who are at least age 21
and have completed at least one year of service. Current participants with
less than one year of service should be grandfathered.
- TDA plan participants who terminate prior to age 55 be permitted to
withdraw the full balance in their Tax-Deferred Annuity accounts (including
University matching contributions).
- The mandatory cash-out amount from the Retirement Allowance Plan be
increased from $3,500 to $5,000.
Long-Term Disability
The Committee recommends:
- Increasing the maximum monthly benefit to $7,500.
- Eliminating the three-year waiting period for A3 and certain A1 employees
so that all benefits eligible faculty and staff will participate on their
first day of employment. (As is currently the case, benefits will begin
after six months of continuous disability).
- Setting the amount the University pays for medical coverage at the
HMO premium for individual or family coverage depending upon the employee's
coverage at the time of disability. (Disabled employees who want to remain
in a plan other than an HMO may do so by contributing the premium differential.
Employees who are currently disabled will be grandfathered under the old
policy.)
Long-Term Care Insurance
The Committee recommends that the University offer to employees, retirees,
spouses/domestic partners, parents, parents-in-law, grandparents and grandparents-in-law
the option to purchase individual long-term care coverage.
II. Detailed Description of Changes
A. Health Care Insurance
Overview
The range of Penn's health care options and the flexibility those options
provide is an important and highly valued component of Penn's benefits
package. For the 1998 fiscal year, the Benefits Advisory Committee expanded
the range of plan choices, implemented a prescription drug plan in the
HMOs, expanded UPHS discounts and revised an errant employee contribution
system.
In keeping with the principles of the Committee, Penn will continue
to simplify and clarify health and welfare plans to help employees better
understand their benefits and use them wisely. Penn will also continue
the ongoing review and benchmarking of its medical plan options to improve
cost management, maintain affordable benefits, and ensure that the plans
remain competitive.
The medical plan options and benefit levels will remain largely unchanged
in FY 99, with two exceptions. PENNCare's lifetime maximum benefits will
be revised and mental health benefits under PENNCare, Plan 100 and UPHS/Keystone
POS will be modified to comply with the Mental Health Parity Act of 1996.
There will be no change in the design of the dental plan.
Lifetime Maximums
Background and Issues
Medical plans typically have lifetime maximums to control costs and
limit an organization's catastrophic risks. For most participants and plan
sponsors, lifetime maximums have little impact because participants infrequently
reach the maximum and those approaching the maximum in one plan may switch
to another.
HMO and POS plans generally do not impose lifetime maximums when the
care is managed by a network or provider. In industry, a plurality of plans
(41%) impose a $1,000,000 lifetime maximum; 40% of plans have no maximum;
the remaining 19% report under $1,000 or other arrangements. Seventy-one
percent of indemnity and PPO plans have a lifetime maximum of $1,000,000
or more while 51% of POS plans impose a limit of $1,000,000 or more.
Among peer institutions, most indemnity plans have a $1,000,000 to $2,000,000
lifetime maximum. HMO and POS plans surveyed had unlimited in-network benefits;
POS plans generally had a $1,000,000 out-of-network limit.
Care is unlimited in all of Penn's in-network plans except PENNCare.
That plan has a $2,000,000 lifetime maximum for in-network and out-of-network
care combined. The POS plan has a $1,000,000 maximum on out-of-network
care only. Plan 100 has a $1,000,000 limit on Major Medical claims with
unlimited Blue Cross and Blue Shield claims.
The Committee considered the results of the benchmarking, the need for
plan members to have access to care, and the use of lifetime maximums to
encourage in-network care.
Recommendations
The Committee recommends:
- No change in Plan 100's Major Medical $1,000,000 lifetime maximum.
If a Plan 100 participant were to exhaust the $1,000,000 Major Medical
allowance, the participant could switch to another plan during open enrollment
and be eligible for benefits.
- Replacing PENNCare's combined in- and out-of-network lifetime maximum
benefit of $2,000,000 with unlimited in-network care and a $1,000,000 out-of-network
lifetime maximum benefit.
Mental Health Benefits
Background and Issues
The Mental Health Parity Act of 1996, requires employers to eliminate
annual or lifetime dollar limits for psychiatric benefits that are more
restrictive than limits for other medical services. The Act does not require
that plans cover mental health services, nor does it prohibit the use of
limits on the number of covered days or visits. The law also does not address
treatment of substance abuse. If compliance causes an employer's total
health plan cost to increase by more than one percent, the plan is exempt.
Penn's health plans must comply with the new law by July 1, 1998.
A survey of mental health benefits indicated that Penn's mental health
benefits are, for the most part, competitive with peer institutions. It
also revealed that there is no trend among local employers or peer institutions
to increase mental health benefits to comply with the Act. Most employers
are replacing dollar limits with restrictions on the number of days of
care or the number of covered visits.
Limits and maximums in health-related benefits are often established
in the areas of plan design where conditions are chronic or care is maintenance
oriented. Examples of non-mental health care limits include chiropractic
treatment, immunizations, therapy services, hospice care and private duty
nursing. Such limits are designed to encourage efficient utilization of
services and to help control cost. Almost all employer plans apply limits
to mental health and substance abuse treatment that are more restrictive
than for medical care. Penn's HMO plans impose day and visit limits but
contain no dollar limits and thus are in compliance with the Mental Health
Parity Act. Plan 100, PENNCare and UPHS/Keystone Point of Service (POS)
currently contain annual and lifetime dollar limits for outpatient visits
and inpatient treatment. The dollar limits must be removed to comply with
the Act. (See Figures 1
and 2
).
Analysis of use indicated that only a small proportion of plan participants
(7%) use mental health services, while the costs associated with this type
of treatment are very high. The total cost of mental health treatment in
Plan 100, PENNCare and the Comprehensive Plan for FY 97 was about $1,000,000,
or 5% of total claims cost. Further analysis of mental health utilization
indicated that the majority of mental health claims (74%) were for treatment
performed on an outpatient basis. Less than .04% of all inpatient claims
in the medical plans were for mental health treatment.
The Committee examined the cost of amending current mental health benefits
to create full parity. An estimate of the projected cost of full parity,
which would have to be shared by everyone in the plan and not just those
using mental health benefits, indicated that current mental health expenditures
would double; however the full cost of parity could not be accurately quantified
because there are no plans on record with full parity. Several studies
attribute the substantial cost increase of full parity to the increased
benefit value and the increase in utilization.
Recommendations
The Committee recommends:
- No changes in annual limits for inpatient and outpatient care or lifetime
limits for inpatient care, other than to comply with the Mental Health
Parity Act-i.e., a cost-neutral conversion of dollar limits to day/visit
limits as illustrated in Figures 1
and 2
.
- Elimination of the lifetime outpatient visit limits since annual limits
will prevent a significant cost increase to Plan 100, PENNCare and UPHS/Keystone
POS.
Figure 1: Current mental health benefits
(non-complying are in boldface) |
|
Plan 100 |
PENNCare |
UPHS/Keystone POS |
Inpatient |
|
In-network |
Out-of-network |
In-network |
Out-of-network |
Deductible |
None |
None |
$200 |
None |
$200 |
Reimbursement |
100% |
100% |
80% |
100%
$120 copay |
80% |
Annual Limit |
30 days (reset each year) |
30 days |
35 days |
35 days |
Lifetime Maximum |
$25,000 Major Medical combined in- & out-patient paid at 50%
outpatient |
$90,000 |
None |
$100,000 combined in- & out-patient |
Outpatent |
|
|
|
Deductible |
$200 |
None |
$200 |
None |
$200 |
Reimbursement |
50% |
80% |
50% |
$25.00 |
50% |
Annual Limit |
$2,000 |
$1,250 |
20 visits |
$1,500 |
Lifetime Maximum |
$25,000 Major Medical combined in- & out-patient paid at 50%
outpatient |
$10,000 |
None |
$100,000 combined in- & out-patient |
Figure 2: Proposed
changes to comply with the Mental Health Parity Act
(proposed changes are in boldface) |
|
Plan 100 |
PENNCare |
UPHS/Keystone POS |
Inpatient |
|
In-network |
Out-of-network |
In-network |
Out-of-network |
Deductible |
None |
None |
$200 |
None |
$200 |
Reimbursement |
100% |
100% |
80% |
100%
$120 copay |
80% |
Annual Limit |
30 days (reset each year) |
30 days |
35 days |
35 days |
Lifetime Maximum |
40 days Major Medical paid at 80% outpatient |
150 days |
None |
150 days |
Outpatent |
|
|
|
Deductible |
$200 |
None |
$200 |
None |
$200 |
Reimbursement |
50% |
80% |
50% |
$25.00 |
50% |
Annual Limit |
30 visits |
30 visits |
20 visits |
30 visits |
Lifetime Maximum |
Same as medical |
Same as medical |
None |
Same as medical |
Note: Above charts reflect individual benefits that are based on UCR
rates and may be subject to pre-certification.
B. Retirement Plan Benefits
Background and Issues
Internal Revenue Service (IRS) Nondiscrimination Requirements
The IRS requires that retirement plans do not discriminate in favor
of highly compensated employees (i.e., those earning at least $80,000 a
year in 1997). For discrimination testing purposes, the entire University
controlled group, including the UPHS (the Hospital, Presbyterian Hospital,
Clinical Care Associates and any other hospitals the Health System acquires)
must be included in the test. After study of testing alternatives with
advice from TIAA-CREF and legal counsel a testing methodology, widely used
by other educational institutions with 403(b) plans, was employed. This
methodology excludes pre-tax employee contributions from the test. Using
this method, Penn's Tax-Deferred Annuity Plan passed the nondiscrimination
test. In addition, absent unusual circumstances, the University can rely
on this test for at least the next two years. However, the testing method
assumed that the plan would be amended to require faculty and staff to
be at least 21 years of age and to have completed at least one year of
service to be eligible to participate in the plan.
Another issue with Penn's Tax-Deferred Annuity Plan is that participants
in the plan who leave Penn before age 55 are currently permitted to withdraw
only their own contributions to the Plan. The University's matching contributions
may only be withdrawn after age 55. The current trend among universities
is to allow the withdrawal of both employee and employer contributions
following termination of employment.
The third issue on retirement applies to the staff Retirement Allowance
Plan and a provision of the Taxpayer Relief Act of 1997. This provision
permits plans to increase the threshold for mandatory cash-outs from $3,500
to $5,000. Change to conform with this act benefits mobile employees and
reduces administrative costs and premiums paid to the Pension Benefit Guaranty
Corporation.
Recommendations
The Committee recommends the following:
- Effective July 1, 1998, faculty and staff must be at least age 21 and
have completed at least one year of service to be eligible to participate
in the Tax-Deferred Annuity Plan. (The staff Retirement Allowance Plan
currently has a one-year eligibility requirement in place.)
- Effective July 1, 1998, employees in the Tax-Deferred Annuity Plan
who leave Penn should have full withdrawal rights over their TDA benefits.
- Effective July 1, 1998. the mandatory cash-out from the Retirement
Allowance Plan will increase from $3,500 to $5,000. Any participant who
leaves Penn, receives a lump sum cash-out and is subsequently re-employed,
will become a participant upon re-employment. However, no credit for service
before termination of employment will be reinstated. Benefits payable on
later termination will be based on service after the rehire date.
- The Committee also recommends that discussions on the retirement plans
continue from perspectives other than compliance. This will include examining
long-term objectives for the plans, concerns of faculty and staff, and
benchmarking studies.
C. Long-Term Disability
Background and Issues
Penn provides a Long-Term Disability (LTD) Plan for eligible faculty
and staff who become totally disabled. "Total disability" means
the inability to perform the duties of any occupation, as confirmed by
Penn's Disability Board. The LTD plan in combination with other sources
of income provides 60% of base salary up to a maximum benefit of $5,000
a month. Other sources of income that may comprise the 60% of base salary
include social security; workers compensation; other government disability,
retirement or unemployment plans; any settlement or damage award received
from the University related to the disability; 50% of income from part-time
or rehabilitative employment and income from any other employer. Non-exempt
(A3) and certain exempt (A1) staff must complete a three-year service requirement
to be eligible for the LTD plan.
LTD benefits begin after Penn's Disability Board determines that the
criteria for disability have been met; all sick pay, paid time off and
extended sick leave/short-term disability allowances have been used; and
the disability has been continuous and total for six months. Penn pays
the full cost of the LTD plan, making benefits subject to income taxes.
Penn also pays the full cost of medical and dental premiums for employees
on long-term disability and continues to make contributions to the Tax
Deferred Annuity Plan (TDA), whether or not the disabled employee contributes.
The overall annual cost of the LTD plan is approximately $1.2 million.
Because a comprehensive review was not possible given the time constraints
in FY 1996, the Committee recommended that the Long-Term Disability Plan
and the various components that impact it (sick time, short-term disability,
integration with other Penn and external benefits) be studied in FY 1998.
A thorough review of Penn's Long-Term Disability Plan was conducted and
the Plan was evaluated against the plans of the Ivy League universities
and seven local employers. When compared to these organizations in the
areas of eligibility, income replacement levels, benefit amount, employer
subsidy and benefit flexibility, Penn's plan ranked above the mean. However,
there are specific provisions that are generally inconsistent with prevalent
employer practices, including the three-year waiting period for non-exempt
(A3) and certain exempt (A1) employees; the $5,000 maximum monthly benefit;
and Penn's full subsidy for health care coverage and continuing contributions
to the Tax-Deferred Annuity Plan without requiring employee contributions.
Most employers and peer institutions treat disabled employees the same
as active employeesi.e., disabled employees continue to share in the
cost of medical, dental coverage and retirement plans at the same rate
as active employees.
Recommendations
The recommended changes described below are designed to ensure that
the plan helps to ease the hardship created by a long-term disability bring
it in line with competitive practice.
- Retain the current income replacement level of 60% of base salary.
- Eliminate the three-year eligibility waiting period for non-exempt
(A3) and certain exempt (A1) employees by extending coverage to all full-time
employees on date of hire. The six-month waiting period before LTD benefits
begin will continue to apply.
- Increase the monthly maximum benefit from $5,000 to $7,500. The current
maximum benefit is significantly below the average benefit level of peer
institutions.
- For employees receiving LTD benefits, continue to pay the full cost
of the dental benefit and set the amount the University pays for medical
coverage at the HMO premium. (Premiums will be paid at the individual or
family level depending on enrollment at the time of disability.) Disabled
employees who elect coverage other than an HMO will pay the premium differential.
Employees who are currently disabled are grandfathered under the old policy.
- Continue University contributions for employees in the Tax-Deferred
Annuity plan whether or not the disabled employee continues to contribute.
D. Long-Term Care Insurance
Background and Issues
Changes in society and family life, longer life expectancies, and the
rising cost of health care make long-term care (LTC) insurance a growing
part of financial planning. Three out of five people age 65 and over may
need some form of long-term care in their lifetime. However, the need for
long-term care is not limited to the elderly. While 57% of long-term care
recipients are elderly (7 million), 40% are working age adults (5 million).
The cost of long-term care has risen dramatically a year of nursing
home care is projected to climb to $48,200 in 2001. In the Philadelphia
area, daily nursing home rates range from $110 to $200 or more, and the
average length of stay is more than four years.
Group medical plans and Medicare pay for some long-term care expenses
on a very limited basis and may not pay for any day-to-day custodial care.
Home health care offers an alternative to institutional care and, if certain
criteria are met, may be reimbursed by Medicare on a limited basis. Medicare
does not reimburse adult day care, care in an assisted living facility,
or care in an Alzheimer's care facility. Medicaid provides benefits at
Medicaid-approved facilities but only for individuals who are impoverished
or who have depleted their savings and income. Children of long-term care
recipients are affected, as well. In the last six months of a parent's
life, 31% of families report spending their life savings to provide for
their parent's care.
Long-term care insurance provides an opportunity to protect a family's
assets and increase the options available for care. A Health Insurance
Association survey reports that individuals purchased long-term care insurance
to avoid dependence (25%); to avoid losing savings and assets (23%); to
protect their standard of living (15%); to guarantee affordable services
(12%); and for other reasons (25%).
Seven of the 13 peer universities surveyed have long-term care plans,
all of which are fully paid by employees, and several others are considering
implementing programs in the next year. The survey also revealed that the
percentage of participants enrolled in long-term care is small, averaging
only 5%.
Long-Term Care Insurance Provisions
Long-term care insurance plans generally include the following:
- Non-forfeiture of benefitsthe plan continues to provide some benefits
even if the insured stops paying the premiums. This feature provides the
flexibility to tailor continued participation in accordance with specific
economic and health needs. However, it costs more than a plan with a forfeiture
provision.
- Coverage for nursing home care, adult day care, care in an assisted
living facility, community based care and custodial care. Community based
care is provided by homemaker agencies and consists of non-medical services,
such as light housekeeping, shopping, meals and companionship. Custodial
care can be received in the home or an institution and is performed by
skilled or unskilled medical personnel, such as therapists or aides. Personal
care, such as bathing and dressing or assistance with medical equipment
are considered custodial care. Long-term care insurance provides benefits
toward the daily cost of care in a facility or about four hours of daily
care at home, but it does not provide for the cost of 24-hour home care.
- Additional benefitsmay include an "alternate plan of care"
that provides coverage for home alterations (e.g., a ramp or stair lift);
a "bed-reservation benefit" to reserve space in a nursing home
if a participant is hospitalized for a brief period; "waiver of premium"
that frees the participant from having to pay the premium when receiving
plan benefits; and "respite care" which provides for a substitute
care giver for a family member needing a rest from providing care.
- Long-term care premiums are based on the amount of coverage elected
and age at entry and generally remain stable. Coverage may include inflation
protection. Other factors which may affect premium rates, include the daily
maximum benefit, the waiting period for benefits, and the lifetime maximum
benefit.
The daily nursing home benefit options generally range from $50 to $150
a day. Lesser types of care, such as adult day care, are usually covered
at 50% of the nursing home benefit. The waiting period for benefits is
typically 90 days. The lifetime maximum benefit is generally a dollar amount
equivalent to five years of the full daily nursing home benefit.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA)
clarified the tax treatment of long-term care coverage. The long-term care
premiums are by employees with after-tax dollars. However, the law provides
that benefits of up to $175 a day are nontaxable. Long-term care premiums
are treated, for tax purposes, the same as medical expenses. A participant
can deduct them if all deductions in that category exceed 7.5% of adjusted
gross income.
Many vendors, including TIAA-CREF, sell individual long-term care policies,
which can be tailored to meet individual needs. A group plan offers many
advantages, including:
- case management
- premium payment by payroll deduction
- availability to individuals of all ages
- higher benefit levels at a lower price
- guaranteed insurability for active employees during open
- enrollment (no medical evidence required).
The Committee acknowledged that there are saving devices that are superior
to buying long-term care insurance, but it concluded that the implementation
would make Penn more competitive in the market place. For a small subset
of employees wanting such insurance, it would support work/life initiatives
and help address the needs of an aging population.
To determine the features of the plan, the Committee analyzed the long-term
care plans of peer institutions and local employers. The Committee also
used benchmarking and best practice advice from knowledgeable consultants.
Quotes were requested from several long-term care industry leaders. The
Committee recommends CNA Insurance. CNA offers guaranteed insurability
for employees who are actively at work and who enroll during open enrollment
and competitively priced coverage.
Recommendations
The Committee recommends introducing a voluntary, employee-paid long-term
care plan with an optional non-forfeiture feature. An overview of the proposed
plan's features is in Appendix
A. A chart of proposed monthly premiums is in Appendix
B. (See also addendum
to appendix B)
III. Summary
It is the consensus of the Committee that the proposed changes to current
benefits and the addition of a new optional benefits will provide Penn
employees with a strong, competitive benefits package while at the same
time help to contain the cost of benefits to the University. We believe
that the Committee's recommendations satisfy the articulated principles
of the benefits redesign process and that they will ultimately advance
the University's mission as well as the quality of life and well-being
of its employees.
Appendices
A. Long-Term Care Plan Design
Eligibility -- Regular full-time, part-time and limited service
faculty and staff, their spouses, domestic partners, parents, parents-in-law,
grandparents, grandparents-in-law, retirees and spouses of retirees. Coverage
is guaranteed for actively at work employees during open enrollment; all
others must provide proof of good health.
Benefit Commencement -- Eligibility for benefits commences when
a member can no longer perform two out of six of the following activities
of daily living: bathing, dressing, toileting, transferring, continence,
and eating; or when severely cognitively impaired.
Benefit Options -- Daily maximum benefit options of $125, $150
and $175.
Benefit Waiting Period -- 90 days
Inflation Protection -- Guaranteed option to elect inflation
protection every three years on average, compounded for the last three
years.
Non-forfeiture Protection -- One-time option to elect non-forfeiture
protection effective in the fourth year of participation. A percentage
of the lifetime maximum is accrued each year the non-forfeiture protection
is in effect.
Waiver of Premium -- Once the waiting period is met, premium
payments will be waived while the insured is receiving benefits.
Lifetime Maximum -- Lifetime maximum benefit is equal to a factor
of 1825 (365 days times 5 years) times the daily maximum benefit selected,
or at least five years of benefits. The lifetime benefit will exceed 5
years if lesser amounts of benefits are paid daily.
Institutional Care -- Skilled nursing home, intermediate care,
assisted living facility or hospice care will be paid at 100% up to the
daily maximum.
Community-based Care -- Home health care, adult day care, adult
foster care, or home hospice care will be paid at 50% of the daily maximum
benefit.
Companion Care -- Will be paid at 25% of the daily maximum benefit
for up to 30 days per year.
Alternate Plan of Care -- Special needs considered; plan can
pay for caregiver services, modifications to the home at 100% up to the
daily maximum benefit.
Bed Reservation Benefit -- Up to 21 days.
Termination of Employment -- Coverage will be completely portable.
Benefit Payments -- The Plan will reimburse you or the providers
directly.
B. Long-Term Care Monthly Premium Rates
|
Rate A (Without a Non-Forfeiture provision) |
Age |
$125 Daily NHC Benefit |
$150 Daily NHC Benefit |
$175 Daily NHC Benefit |
<25 |
$6.78 |
$8.14 |
$9.49 |
25-29 |
$7.95 |
$9.53 |
$11.13 |
30-34 |
$9.61 |
$11.54 |
$13.46 |
35-39 |
$13.03 |
$15.64 |
$18.25 |
40 |
$15.89 |
$19.06 |
$22.24 |
45 |
$21.78 |
$26.13 |
$30.48 |
50 |
$28.95 |
$34.74 |
$40.53 |
55 |
$43.43 |
$52.12 |
$60.81 |
60 |
$66.71 |
$80.06 |
$93.40 |
65 |
$95.72 |
$114.87 |
$134.01 |
70 |
$143.95 |
$172.75 |
$201.53 |
75 |
$243.20 |
$291.85 |
$340.49 |
80 |
$412.42 |
$494.90 |
$577.37 |
85 |
$652.62 |
$783.14 |
$913.65 |
Rate B (With Non-Forfeiture provision) |
<25 |
$11.07 |
$13.29 |
$15.50 |
25-29 |
$12.71 |
$15.24 |
$17.78 |
30-34 |
$15.04 |
$18.05 |
$21.07 |
35-39 |
$19.91 |
$23.90 |
$27.88 |
40 |
$23.89 |
$28.66 |
$33.44 |
45 |
$31.73 |
$38.08 |
$44.42 |
50 |
$40.34 |
$48.40 |
$56.46 |
55 |
$57.17 |
$68.60 |
$80.03 |
60 |
$84.77 |
$101.74 |
$118.69 |
65 |
$119.74 |
$143.69 |
$167.64 |
70 |
$177.92 |
$213.51 |
$249.10 |
75 |
$295.00 |
$354.01 |
$413.02 |
80 |
$490.86 |
$589.02 |
$687.18 |
85 |
$761.74 |
$914.08 |
$1,066.41 |
NHC = Nursing Home Care benefit
The above rates should be used along with the information on plan inclusions
and exclusions before enrollment in the plan. |
Addendum to Rate B:
% of lifetime maximum paid to qualifying members is reflected in the chart
below.
|
Duration (years) |
% lifetime maximum |
3 - Jan |
0.00% |
4 |
2.00% |
5 |
2.50% |
6 |
3.00% |
7 |
3.50% |
8 |
4.00% |
9 |
4.50% |
10 |
5.00% |
11 |
5.50% |
12 |
6.00% |
13 |
6.50% |
14 |
7.00% |
15 |
7.50% |
16 |
8.00% |
17 |
8.50% |
18 |
9.00% |
19 |
9.50% |
20 |
10.00% |
21 |
11.00% |
22 |
12.00% |
23 |
13.00% |
24 |
14.00% |
25 |
15.00% |
26 |
16.00% |
27 |
17.00% |
28 |
18.00% |
29 |
19.00% |
30+ |
20.00% |
Return to:Almanac, University of Pennsylvania, February
10, 1998, Volume 44, Number 21 |