Health Benefits Update Introduces Higher Premiums

UPDATED: September 16, 2015, at 2:56 am

Faculty and nonunion staff members on Harvard’s health plans will see an average 7.3 percent increase in their insurance premiums next year, a hike administrators announced Tuesday and attributed to rising health costs.

The jump in premiums comes after the University revamped its nonunion health benefits policy after faculty and staff members overwhelmingly criticized last year’s changes, which introduced an out-of-pocket deductible and coinsurance for the first time. In announcing the 2016 options, Harvard officials once again cited the rising cost of healthcare as the major impetus for increasing health insurance costs. Health care spending jumped 4.8 percent in Massachusetts last year, according to the state Center for Health Information and Analysis.

Provost Alan M. Garber '76. By Gladys M Kisela

Concerns expressed by faculty over the past year influenced officials, as Provost Alan M. Garber ’76 wrote in an August email, to improve the reimbursement system and create a new health insurance option that offers no deductible or coinsurance at the point of care for those who “seek more predictable out-of-pocket costs at the point of care.” There are nine health insurance choices for nonunion staff members from either the Harvard University Group Health Plan or Harvard Pilgrim Health Care.

The new benefits options also offer an updated reimbursement program, which allows lower income workers on most of the available plans to be reimbursed dollar-for-dollar for out-of-pocket expenses at the point of care, above a certain threshold. Individuals earning under $30,000 can apply for reimbursements for out-of-pocket costs above $600; employees earning between $30,000 and $39,999 can be reimbursed over $800; and individuals earning between $40,000 and $69,999 can be reimbursed over $900.

Vice President for Human Resources Marilyn Hausammann fleshed out the new plans to nonunion staff members in an email on Tuesday, allowing employees to assess their health care costs for the next year before open enrollment begins on Nov. 9. The sign-up period runs through Nov. 23.

This year’s premium increase is a stark contrast to the fall in premiums last year, when the University’s changes had employees pick up more of the bill in the form of coinsurance and deductibles. University administrators attribute the premium increase to rising healthcare costs, including the rise of specialty drugs—or expensive prescriptions including drugs to treat Hepatitis C and cancer—that are putting pressure on healthcare vendors across the nation.

Harvard will cover in-network diagnostic labs and x-rays for nonunion employees on some plans, without deductibles or coinsurance. The University will charge higher copayments for office visits on these plans—an increase from $20 to $30.

Harvard’s newest option for 2016—the Point of Service Plus plan—offers no deductibles or coinsurance for in-network services but has a higher monthly premium, either $128 or $140 for individuals in the lowest salary tier, and $344 or $379 for families in that tier, depending on whether an employee chooses the Harvard University Group Health Plan or Harvard Pilgrim Health Care. The in-network out-of-pocket maximum for the Plus plan is $2,000 for individuals and $6,000 for families.

“We did not acknowledge the strength of people’s anxiety about any level of risk, and so recognizing that anxiety we will reintroduce a plan that enables people to say, ‘I would rather be absolutely certain and pay more in order to be absolutely certain that I don’t have to have coinsurance or deductibles,’” Faust said of the new Point-of-Service Plus option.

Harvard will continue to offer its standard Point-of-Service plan—available from HUGHP and HPHC—with an in-network $250 deductible for individuals and $750 for families. After the deductible is met, Harvard covers 90 percent of costs and the employee covers 10 percent of costs before they reach the out-of-pocket maximum of $1,500 for individuals and $4,500 for families.

When coupled with the increase in office visit copayments, Harvard projects reducing the number of services on which coinsurance and deductibles are required to be cost neutral.

—Staff writer Mariel A. Klein can be reached at mariel.klein@thecrimson.com. Follow her on Twitter@mariel_klein.