The university offers one benefits plan, which covers 640 employees under seven separate collective agreements. The plan offers extended health and dental benefits, group life insurance, long-term disability, optional life insurance, optional dependent life insurance, and an employee assistance program.
“A lot of our employees aren’t retiring at age 55 because people at universities don’t tend to exercise early retirement as much,” says Rose. “So we really do have that aging population until age 65.” Saint Mary’s—like plan sponsors across the country—is also struggling with escalating costs. The university has seen its premiums for drug coverage increase by 15% every year for the past several years.
“When I look at our renewal reports for benefits each year, one of the number one prescription drugs is for depression and anxiety,” says Rose. “And that continues to grow every year.”
The drug plan does have a special authorization component, whereby prescriptions for expensive drugs must be accompanied by a form filled out by the plan member’s physician. “That’s to determine if the drug is medically required or if there’s a substitute available that might not be so expensive to the plan,” says Rose.
RISING DRUG COSTS
The university surveyed plan members in 2003 about their knowledge of the plan. The results revealed a need for more education of plan members.
“Almost 50% of them aren’t really aware of the impact claims have on premiums,” says Rose. “There’s a gap there in terms of what drives premiums.”
The university recently launched an HR Web site, in part to help educate members about their coverage.Rose says the university hasn’t ruled out flex as a cost containment measure. “When we did our survey, one of the biggest things to come back was support for choice in the benefits plan,” she says. “Whether that’s through flex, I don’t know but it’s certainly something we do have to review.”
Another item coming under review is the governance of the benefits plan. While good plan governance is a widely accepted practice in the pensions world, it’s not something you hear much about when it comes to health benefits plans.
“We’re in the initial stages, but we’re basically reviewing the governance as it exists today and seeing if changes need to be made,” says Rose.
Her biggest challenge is maintaining that delicate balance between determining what employees need in benefits while keeping in mind cost containment. It’s a balancing act that all plan sponsors, regardless of geography, can relate to.
PENSION ISSUES
As for pension benefits, Saint Mary’s offers two defined contribution(DC)plans—one for administrative employees, the other for support staff. Combined, the plans have approximately 600 members. Each plan offers six investment options and five asset allocation portfolios.
As a DC plan sponsor, the university has spent much of the past year and a half gearing up for the Joint Forum of Financial Market Regulators’ Capital Accumulation Plan(CAP) Guidelines. Regulators expect all Canadian CAP sponsors to comply with the guidelines by Dec. 31, 2005.
Rose says she expects the Saint Mary’s plans will be compliant by the end of the year. The pension committee used a consultant’s CAP guidelines self-assessment questionnaire to determine what needed to be done to reach compliance.
“It has been some extra work but we were a step ahead of some industries because we had just completed a thorough governance review within the last three years,” she says.
The university’s pension committee meets about six times a year and is wellpositioned to address the challenges facing the plans. “Our pension committee takes their job very seriously and has kept up-todate on the information,” notes Rose.
Nevertheless, the self-assessment questionnaire revealed three areas that need to be strengthened: developing a communications strategy and policy, developing and documenting a pension document retention strategy, and establishing and documenting a formal process to assess plan members’ educational and informational needs as they relate to the plan.
All these things are currently done informally, says Rose, and these policies and strategies just need to be formalized and fully documented.
“We will definitely review our governance on an ongoing basis,” she says.
As for her overall impression of the guidelines, Rose views them as a process, not an end point. And she’s not disappointed the guidelines don’t offer safe harbour. “I see the guidelines as a starting point. They provide structure and flexibility to DC plans.”
Andrea Davis is a freelance writer in Guelph, Ont. andrea.davis@rogers.com.
