UNM will save about $1.5 million by switching its employees over to a self-insurance plan, according to the University.
The Board of Regents voted March 20 to move the University's health benefits to a self-insurance plan, with the goal of maintaining current standards of care for faculty and staff and keeping health care premiums low.
The decision to switch to self-insurance was a financial move, done to save UNM money, said Helen Gonzales, vice president for Human Resources. It will not affect employees' current coverage, she said.
Gonzales said the medical providers and hospitals will remain the same as those offered in the current UNM medical plan.
"We want to emphasize to faculty and staff that they will not have to change providers," she said.
The change comes in how claims will be paid. Rather than being covered by a private insurance company, UNM will foot the bill using funds from the premiums University employees already pay.
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Gonzales said that within the next year, the new self-insurance plan will cost $4.9 million less than the $51.4 million the University would have paid if they had stayed with a private insurance carrier.
This savings means a zero percent increase in employee health premiums.
Loyola Chastain, Staff Council president, said this couldn't have come at a better time for UNM employees.
"We won't be getting any raises this year, so if our premiums had gone up, we would have taken a hit in our paychecks. It would have been the same as a salary decrease," she said. "This way, that isn't going to happen."
Along with the switch to self-insurance, UNM prescription drug coverage will now be offered through Express Scripts. This prescription drug carrier allows faculty and staff to get their prescriptions from their regular retail pharmacy. However, Express Scripts also offers an incentive to purchase mail-order generic prescriptions by reducing the co-payment by half.
Another feature of Express Scripts is no co-payment on diabetic supplies. The savings the University will receive by switching to Express Scripts totals about $725,000, Gonzales said.
Regent Mel Eaves said the Board of Regents has been working toward this switch for nearly three years.
"The goal is always to find ways to cut costs for the upcoming year," he said.
Self-insurance takes time to develop, he said, because there has to be money saved in a reserve fund to be used in the event that claim costs exceed the amount paid in premiums.
Gonzales said the University has purchased $300,000 in catastrophic coverage. This insurance would cover expenses after the University has paid $50 million in claims. Gonzales said this would only be necessary in extreme circumstances and that the premiums UNM employees pay now should cover most medical needs.
Howard Snell, Faculty Senate president, said the changing insurance plan could benefit all UNM constituents.
"This has been a discussion for a long time, and it is important, one, the benefits for employees and staff don't change - which is a very positive thing - and the savings on premiums is something everyone will welcome," he said.
Snell said there might be suspicion among employees as to how sustainable the self-insurance will be.
"Faculty and staff are appreciative of good benefits, and we are appreciative of low premiums. We just want to work with the administration to make sure the self-insurance program continues to save money in the future," he said.
Gonzales said this decision was made to save money and that the program will be evaluated by how much it continues to save.
