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June 10, 2004

Senate, SAC Leaders Laud Retiree Health Plan but Object to Lack of Consultation

Pitt’s new medical insurance benefits program covering future retirees is a “humane” and sensible way to help hold down the University’s soaring health insurance premiums, members of the Staff Association Council (SAC) and the University Senate’s benefits and welfare committee agree.
It’s just too bad, they say, that Pitt’s Human Resources office and its medical insurance consultants didn’t consult with SAC or the Senate before announcing the new plan, which will take effect July 1.
“Shared governance did not play a part in the decision to adopt the new plan,” SAC President Rich Colwell told the University Times. “Whether the plan would have been changed in any way, shape or form if we’d had input, I have no idea. But we would have felt more confident about it if we’d had input.”
That said, Colwell called the plan “a very good deal” for the University. “If we had formed a committee and looked into [medical insurance options for retirees] we probably could not have come up with anything better than the plan that Human Resources came up with,” he said.
Herbert Chesler, co-chair of the Senate committee, told Faculty Assembly on June 1 that the new plan represents “an acceptable solution to a real problem confronting the University.” Pitt officials say the University will pay about $6.2 million in retiree and spouse medical premium costs during the current fiscal year, a 35 percent increase over last year. That commitment is expected to increase in future years with rising health care costs, a growing retiree population and longer life spans.
Announcement of the new plan – details of which were first made public in the May 24 Pitt Chronicle – “resolves a source of anxiety,” Chesler said. “We’ve been reading in the newspapers for the last several years that other employers have been eliminating their medical insurance programs for retirees. The law has been interpreted in such a way that employers were not obligated to provide medical insurance for retirees.”
After reading the Chronicle story, Chesler said, “you would have come away with the sense that Pitt’s Board of Trustees was exercising its fiduciary responsibility and was indeed behaving responsibly” in telling Human Resources to scale back on the University’s retirement medical benefits program.
“How nice it would have been,” the Senate benefits and welfare co-chair added, “if the board had instructed Human Resources to involve our committee” in its deliberations on the new plan.
The new plan includes new cost-sharing measures and a service eligibility requirement for new hires. Pitt staff and faculty who already are retired will continue to be covered by the current plan, under which Pitt pays the full cost of medical insurance for retirees and their spouses older than 65. For current retirees aged 62-65 and their spouses, the University covers 80 percent of those costs.
In addition to appearing in the Chronicle, plan details are available from Human Resources. Staff and faculty approaching retirement age will receive mailings from Pitt about the plan.
– Bruce Steele

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