Health Insurance Premium Increase to Affect University Budget, But Not Employee Paychecks

FAYETTEVILLE, Ark. – The University of Arkansas will be paying more than $600,000 extra cost for faculty and staff health coverage, the university announced at its most recent board of trustees meeting.

The University of Arkansas System is a self-insurer, and the system office sets the premiums for all campuses, based on past claims and projected future costs. 

Each campus has the option of absorbing the entire increase as part of the employer share, or passing part of the increase on to employees. The University of Arkansas is choosing to absorb the increase, an estimated cost of $607,066.60 for the year. Faculty and staff will not see an increase for health coverage premiums at this time.

Richard Ray, director of benefits for the university, said that the University of Arkansas System has done well at preventing increases in health coverage premiums when compared against national rates. The university saw increases at the beginning of the fiscal year in 2003, 2004 and this year, but nothing as large as the double-digit increases that many health coverage plans have sustained.

Having a second premium increase in a single year is rare, Ray said, but appears to have happened this year because of an increase in catastrophic claims over the past year. The higher number of catastrophic claims forced each of the campuses in the system to raise premiums about 2.8 percent.

The Fayetteville campus has several wellness programs in place to help reduce the cost of medical care overall, such as smoking-cessation classes, a diabetes management program and efforts to increase annual physicals for all employees.

“In these difficult economic times, with the cost of everything going up, we don’t want to do anything that will cut into the paychecks of the people who work so hard for this university,” said Chancellor G. David Gearhart. “At the same time, this is another operating expense the university will have to absorb, and it is yet another example of why full funding of the adopted state funding formula for higher education is of increasingly critical importance.”