It's been an active semester for members of the Employee Benefits Advisory Committee and university human resources team. They share four summaries of recent discussions and steps taken on future considerations for employee benefits.
No plan design changes for 2025; premium process continues
What's new: In February and March, the Employee Benefits Advisory Committee (EBAC) reviewed preliminary information on variables affecting ISU health care costs, including trend and market information. As a result, EBAC will not be considering plan design changes for 2025. The only decisions to be made relate to premium increases for both employer and employee.
Who's impacted: All benefit-eligible employees will be impacted by premiums set for 2025. They can anticipate the same plan design as 2024.
Next steps: This month, EBAC will review premium increase options for 2025. The committee will provide feedback to senior leaders, who will review and make a final decision in June. Then preparations are made for the proposal to be considered by the state Board of Regents, which will take final action at its September meeting. Prior to board approval, a university communication will be shared on the proposal. Open enrollment information and resources will be available Oct. 1 for an open enrollment window of Nov. 1-22.
Learn more: A new Employee Benefits Advisory Committee website keeps employees informed with the latest updates on the work of EBAC. The website features a communications and resources section with important documents and articles. It also includes committee membership, meeting agendas and the EBAC charter, which outlines the committee's charge to advise the president through the senior vice president of operations and finance.
New free service for health care options upon separation
What's new: ISU has partnered with When Insurance to offer a free service to help employees or their dependents with a recent loss of health care coverage. The service will help them understand their options and find a new plan suited to their situation.
Who's impacted: Employees who are separating or retiring, those whose dependents are turning age 26 (i.e., aging out of university coverage), those whose position is less than half-time and new hires who did not enroll in benefits within the prescribed time window.
Benefits/advantages: COBRA coverage still is offered to those who qualify (COBRA is the federal act that requires employers to extend health benefits in certain situations). The When Insurance service will help employees determine whether COBRA is the right fit or other coverage options may potentially save them money.
Next steps: A task has been added to the Workday offboarding process that includes information on both the When Insurance service and COBRA coverage.
Learn more: Benefits Upon Separation (see Health, Dental and Vision coverage section).
Exploring pay-based contributions to health plans
What's new: Last year some ISU employees inquired about an option to set premiums based on salary levels. Recently, EBAC members learned more about pay-based contributions for health care coverage from ISU's benefits consultant.
Some key considerations: Pay-based contributions can make health care more affordable by increasing take-home pay for lower-paid workers, contributing to equity within the organization. However, not everyone perceives that approach as equitable -- especially those who are just above the threshold in a higher pay category. An employer can only reasonably count the “pay” coming from its organization; some employees may be in a household with much higher total income and end up contributing less than those in a lower-income household. There will be situations when an employee gets a promotion or raise, subsequently moving into a higher pay category with higher health care contributions -- a potentially dissatisfying result from what should be a positive experience. Lastly, these types of programs are more difficult to administer and take extra time and effort to communicate.
Assessing affordability: As part of EBAC’s information-gathering, an external benefits consultant provided an analysis of affordability risk among ISU employees. Examining multiple factors and data points, the analysis found 95% of ISU employees were considered low risk for affordability concerns, primarily due to their low contributions for medical coverage (88% of health care premiums are paid by the university, 12% by employees).
Status: Because affordability of health care plans is a high priority nationally for public-sector and education employers, EBAC’s goal was to explore the idea of pay-based premiums and discern affordability issues -- not to develop a recommendation or move toward a new kind of premium-setting structure. The committee noted that while pay-based contributions may be a fit for some employers, currently they are more prevalent in the financial services and hospitals/health care industries and less so in other industries, including the public sector and education. EBAC members will continue to review new information and monitor different premium structures that could benefit the university and its employees.
Exploring high deductibles and health savings accounts
What's new: ISU employees also inquired about these options last year, so EBAC members recently reviewed information about high-deductible health plans and health savings accounts.
In a nutshell: High deductible health plans and health savings accounts are linked. High deductible plans are subject to IRS regulations that change annually. In 2024, maximum out-of-pocket expenses for high deductible health plans were set at $8,050 for individuals and $16,100 for families (ISU’s current plan deductibles are $250 for individual/$500 for family for HMO; and $400 individual/$800 family for PPO). High-deductible plans add complexity, and the financial implications would require significant employee education. Advantages may include lower employer costs and potential savings for some employees. High deductibles might be welcomed by employees who have the financial means, but not all employees would have the ability to absorb higher costs without the risk of going into debt. A significant caution: Under this option, employees may be tempted to make decisions solely based on cost, rather than what’s best for their health.
HSA versus FSA: A health savings account (HSA) is very different from a flexible savings account. (ISU offers two FSAs, one for health care, one for dependent care.) While both apply pretax dollars to pay out-of-pocket expenses, an HSA can only be offered in conjunction with a high-deductible health plan. An FSA can be offered regardless of plan type. An FSA limits how much can be carried forward into the next plan year; HSAs can be rolled over -- and grow -- year after year, and they stay connected to employees even if they leave the university.
Status: EBAC members have become more knowledgeable about advantages and disadvantages of high deductible health plans and health savings accounts and will continue to monitor whether further exploration of this option would be beneficial to the university and its employees.
Learn more: Flexible Spending Accounts that are part of ISU Plan benefits.
