Medical Plan FAQs

The University is what we call “self-insured”.  This means that the University, with help from our benefits consultants – Marsh McLennan Agency (MMA), creates and administers its own health plan with Cigna as its medical plan administrative partner. The University utilizes Cigna’s network of doctors and providers. We pay Cigna a fee for utilizing their billing, administrative, and adjudication (approval) services, as well as access to their network of providers. Cigna is responsible for all claim decisions in accordance with our plan provisions.  The University follows the claim appeal process as outlined in the Affordable Care Act, which includes a final binding decision from an outside independent claim review organization. The University is assuming financial risk for providing medical benefits to all full-time employees.

By being self-insured, the University can better manage costs, direct wellness programs, and save for the future, while providing medical coverage and options for our employees.

The University absorbs the risk for paying employee medical claims, rather than purchasing a traditional medical insurance policy. We pay for the actual medical claims incurred by employees, rather than a fixed premium. If claims are higher than expected, the University covers the cost. If claims are lower than expected, we save money which then becomes part of reserves to address future employee medical expenditures. These reserves can create a financial cushion to offset expenses in a year where the University pays more because of unexpected higher claim costs, while ensuring that our employees don’t have to absorb dramatic increases to keep our costs more competitive.

What does that mean for me?

The University pays for all claims as our employees use the plan. Your health care premium that comes out of your paycheck goes into an account that the University uses to pay for medical and pharmacy claims as they occur. They are also used to pay Cigna for the administrative overhead.

• Risk - In our current medical plan set-up, the University is absorbing a majority of the risk of paying for employee healthcare costs. In a Fully insured model, the insurance company takes on that risk, and passes the cost associated with the risk onto the company and the individual.
• Claims – claims are pooled with other like companies. In some years, the cost of the premium (your payment) may go up to cover higher than expected costs in the pool.
• Limited Flexibility – The University would have less flexibility in the design of our medical and wellness program options under a fully-insured plan.
• Administrative, taxes and regulatory costs – Fully insured plans have these costs built into the pricing so that the insurance carrier will cover them for the employer. Under the University’s current structure, the University takes on many of these tasks instead of relying on Cigna to compete? to lower administrative costs and avoid federal and state premium taxes.

Just as you have seen cost grow in other areas of your life, costs for medical care have risen. Healthcare trends, an aging population, higher utilization of services, trend of healthcare provider consolidation in the market all contribute to increasing costs. The cost of doing business (administrative costs, regulatory compliance that requires more oversight) also plays a role.

Prescription (Rx) costs have increased more significantly than healthcare services for a number of reasons. The process of developing new drugs can be complex and expensive. Pharmaceutical companies invest significant resources in research, clinical trials, and obtaining regulatory approvals. These costs are often passed on to consumers. Moreover, there is limited competition for certain drugs, where there are no generics or alternatives available, which can keep prices higher.

The increased use of specialty medications may be costly, but it may keep someone out of the ER or hospital with acute concerns.

As the cost of living has risen, so have the prices of medical services, supplies, and drugs. Healthcare providers often pass these increased costs onto the consumer and employers.

Inflation has affected labor and wage costs. Healthcare inherently is a labor-intensive and labor-sensitive industry. Increased labor costs affect healthcare expenses.

Economic uncertainty can lead consumers to delay or avoid medical care, which can result in more severe health issues and higher costs in the long run. Make sure you are getting your preventive care!

There has been an increase in the prevalence of chronic diseases, and the University has been impacted just as other companies and workplaces have been. Chronic illnesses can lead to higher healthcare utilization and costs.

Pharmaceutical costs have increased and significantly impact overall healthcare expenses when employees require expensive (often life-changing) medications.

For example, an employee taking a new high-cost specialty medication that can cost between $200,000 - $250,000 annually has a significant impact on the University’s claim experience.  If 4 to 5 members begin taking these new high-cost medications in the same year (which is not unusual for a plan the size of the University), the University’s health plan will see an increase of approximately $1,000,000 annually. A $200,000 drug may only cost the employee $800 up to their deductible and cost sharing, but the University is absorbing the majority of the cost for these medications and treatments.

The University negotiates its prescription drug financial contract plan each year to ensure   that we are obtaining favorable pricing for our employees and plan members.  

• Choose the right plan for you and your family.
• Make sure you are seeing an in-network provider. Just as you are paying less to see this doctor, the University also is able to pay a lower agreed-upon amount through our relationship with Cigna.
• Get preventive care check-ups. These are covered by all plans at 100% and can potentially identify medical issues early. Choose a PCP if you don’t already see one.
• Use our virtual medicine service. Using MDLive can be a cost-effective way to see a doctor for common illnesses such as sinus infections or coughs.
• Understand your costs. If you are anticipating a procedure, call our Cigna hotline to get an estimate of cost in advance. Ensure that you are pre-authorized if a PA is needed for your procedure or prescription.
• Use your HSA, if you are enrolled in one of the two HDHPs
  • Don’t forget the University contributes to your HSA.
• Price check your prescriptions. Not every pharmacy charges the same amount. Use our Cigna tools to see if you can get your prescription at a lower cost at a different pharmacy.
• Use a generic drug if this works for you and your personal situation.

Being a better healthcare consumer means being proactive, informed and engaged with your benefits and your healthcare journey.