Employee Benefits

Summary Report and Analysis

HEALTH INSURANCE

Issues:

1.	Mercer noted that the Foundation's medical plan costs are higher than comparable benchmarks.

2.	Issue further exacerbated when Foundation was notified health insurance premiums would increase 31% for 2001.

3.	Current indemnity type policy is an unusual and costly form of health insurance.

4.	Uncertainty if indemnity form of health insurance will be available in future years and, if available, at what cost.

Concerns:

The ability of the Foundation to obtain a cost effective health insurance program is complicated by the small group of covered employees and a negative experience rating due to the serious illnesses of a number of employees and family members. Changing healthcare plans can be very upsetting to employees, especially if they will incur higher out-of-pocket medical costs.

Desired Objective:

Implement a more cost effective but yet a comprehensive health insurance plan that requires employees to become more involved in their health care decisions and related costs. Facilitate transition and mitigate additional employee out-of-pocket costs by reinvesting a portion of the premium savings in certain supplementary benefits.

Recommendation:

1.	Adopt PPO type plan in 2001 with basically the same deductible/coinsurance amounts as the present plan. This change will save approximately $63,300 in premiums in 2001.

2.	In order to facilitate the change and minimize the inconvenience and additional cost to employees, it is also recommended to establish a Flexible Spending Account (FSA) plan and in the first year have the Foundation contribute to the FSA ($750 single coverage and $1,500 family coverage). The cost of this contribution for all employees is $20,000. Any of the unused FSA contributions made by the Foundation would revert back to the Foundation at the end of the year. The contribution would be "seed money" to launch the FSA and mitigate the potential transition costs to the employees from the PPO plan. The commitment for these contributions would be for one year, at which time future contributions would be reevaluated.

3.	The adoption of the FSA plan and proposed Foundation contribution is an essential component for employee morale and to sell the PPO concept.

OTHER EMPLOYEE BENEFITS:

1.	Do not adopt a long term care insurance benefit at this time.

2.	Evaluate alternative dental plans for possible adoption at the next plan year date of July 1, 2001. Preliminary analysis indicates savings are possible.

3.	Increase short-term disability maximum benefit from $350 per week to $700 per week. Additional annual cost to the Foundation is approximately $2,500.

4.	Adopt vision plan with a voluntary participation provision, a $10 deductible and an employee contribution of approximately 20% of the premium. Annual cost to Foundation would be $3,378, less the premiums for employees who do not wish to participate.