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Rate
hikes drive U.Va. to seek new disability vendor
Staff
Report
In
light of significant premium increases announced by Unum Provident
Corp. for its optional long-term disability coverage, the University
has begun looking for a new vendor on behalf of employees who
have chosen this insurance. The UNUM contract with the University
expires July 1, 2002, but the new rates, some doubling or tripling,
are effective this month.
Although
this plan is not a University-sponsored benefit, the University
has historically secured group rates (typically more reasonable
than individual rates) and permitted employees to pay premiums
through payroll deduction as a service to those who wish to purchase
this type of insurance. The University’s attempts to negotiate
lower increases with UNUM were thwarted by the plan’s declining
enrollment and rising claims.
The
UNUM plan is an entirely employee-paid, optional coverage that
was first offered to U.Va. employees before University-sponsored
programs such as the Virginia
Sickness and Disability Program (VSDP) were made available
in 1999. As more and more employees have opted for employer-paid
coverage, the pool of U.Va. employees with UNUM has dwindled to
about 500.
In
addition, University employees have not paid enough in premiums
to cover their claims. The local UNUM agent, Barry Stokes, stated
that $1.38 in claims has been paid out for every dollar of premium
received, even with steady premium increases the last two years.
The
University plans to issue a Request for Proposal early in 2002
to try to find another vendor. University officials are not optimistic,
however, about the ability to secure reduced rates. “With
our employees’ claims record and the relatively small pool
of participants, we don’t know what kind of bids we’ll
see,” said Linda Way-Smith, U.Va.’s director of employee
benefits. “We’ll do our best to get a reasonable group
rate as an option for our employees.”
Open
enrollment for VSDP, which would allow employees to select coverage
under that employer-provided plan, is governed by state law and
requires General Assembly approval.
“We
approached the VSDP about extending an open enrollment period
for our employees in light of these rate increases, but legislation
will be required,” explained Way-Smith.
See
Human Resources
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