UPDATED: September 3, 2014, at 8:50 p.m.
Acknowledging the burden of rising healthcare costs, the University announced Wednesday afternoon that it will significantly restructure the benefit plans it offers to non-union employees, cutting premiums but introducing, for the first time, a deductible at the point of care.
As required by the Patient Protection and Affordable Care Act of 2010, the various health plans sponsored by the University will continue to cover 100 percent of costs associated with preventative care, such as regularly scheduled doctor visits, which will carry the same $20 co-payment they do now. Emergency room visits will now incur a copayment of $100, up from $75.
If required care extends beyond routine visits and tests, individuals insured by Harvard will now pay a $250 deductible out of pocket before their insurance kicks in. After the $250 threshold—or up to $750 for a family—the University benefit plans will shoulder 90 percent of the costs, and the patient 10 percent. This cost sharing, called coinsurance, is also new to the Harvard plans.
“The aim is to curb cost growth and, just as important, to improve our incentives for becoming better consumers of health care so that more significant changes can be averted in the longer term,” wrote Marilyn Hausammann, Harvard’s vice president for human resources, in a letter to those affected by the changes. She noted that health benefits account for about 12 percent of the University’s budget.
Though the introduction of a deductible is one of the most significant changes, the new plans feature a number of alterations that may benefit the insured. In materials distributed on Wednesday, the University said that it expects premiums across the board to be lower under the new plans. For lower salaried individuals, there were be a reimbursement program to cover some costs incurred at the point of care, and premiums will be tiered based on salary.
The out-of-pocket maximum—the most an insured patient or family will have to pay for care each year—will also be lowered, to $1,500 for individuals and up to $4,500 for an insured family. After this threshold is met, the University will pay 100 percent of further costs.
“This is a more generous plan than most employers offer,” read a selection in the materials discussing the out-of-pocket maximum. “It provides Harvard faculty and staff with a simpler way to understand which expenses count towards the maximum they will be expected to pay and provides an important financial safeguard.”
Additionally, the University will create a new high-deductible, low-premium plan for those who do not anticipate significant healthcare costs. That plan will include a health savings account to which the University will make an initial contribution—$500 for an individual or $1,000 for a family—as well as a deductible of $1,500 for individuals and $3,000 for an insured family for in-network care. The out-of-pocket maximum for the high-deductible plan will be $3,000 annually for an individual and up to $6,000 for families for in-network care.
Another change comes in dental coverage, which will no longer end after a $3,000 annual threshold is met.
Michael E. Chernew, a professor at Harvard Medical School and a member of the University Benefits Committee, which was involved with the changes, praised the dental plan in a press release.
“The new dental plan still has cost sharing, but we’ve added a catastrophic component to provide additional coverage.”
To be eligible for a University health plan, employees must work at least 17.5 hours per week or earn at least $15,000 per year, with some exceptions. The plan includes faculty members.
As is typical of institutional insurance plans, the headline costs listed are for care received in the insurer’s network of providers. Harvard’s insurance plans support care at providers outside of the network, but at a higher deductible burden, greater out-of-pocket maximum, and lower coinsurance rate.
—Staff writer Matthew Q. Clarida can be reached at firstname.lastname@example.org. Follow him on Twitter @MattClarida.
—Staff writer Mariel A. Klein can be reached at email@example.com. Follow her on Twitter @mariel_klein.