Duke Trustees Change Contributions To Retirees' Health Insurance

DURHAM, N.C. - The Duke University Board of Trustees Friday approved insurance changes that will slightly reduce the percentage that Duke contributes to retirees' health coverage, although officials emphasized the plan remains generous compared to those of most large U.S. employers. The action reflects Duke's increased financial obligations that result from changes in national standards for accounting procedures. Beginning in 2003, current retirees covered by the plan will see Duke's contribution for coverage reduced from 85 percent to 80 percent. Currently, for example, a retiree enrolled in the Duke Select health plan pays a monthly premium of $26.95 and Duke contributes $152.72. Under the new plan, the retiree's monthly payment would increase by about $9, to approximately $36 a month. Future retirees will be covered through a multi-step system in which Duke's contributions will be based on their age and years of service, as follows:

• Current employees who meet the "Rule of 75" (their age plus their continuous years of service equals or exceeds 75) as of Jan. 1, 2002, will be treated the same as current retirees, with Duke covering 80 percent of their coverage when they retire.
• Employees who meet a new "Rule of 60" (age plus continuous years of service equals 60) as of Jan. 1, 2002, will have 70 percent of their premiums covered when they retire.
• All other current employees will have 60 percent of their premiums covered when they retire.

The changes result from accounting procedures that require Duke to increase substantially the amount it budgets for retirees' medical coverage. Duke currently pays between $5 million and $6 million annually for retirees medical coverage. Under the new rules, Duke must budget $25 million more annually for the same level of health benefits for future retirees, and that figure would escalate significantly in future years. The plan was developed by the Office of Human Resources in consultation with the Academic Council's Faculty Compensation Committee and the Staff Fringe Benefits Committee.