2015 Health & Welfare Pool Shortfall FAQs
When does a decision have to be made about the Health and Welfare Pool shortfall?
- There is no set date or deadline, but there are dates that we need to keep in mind. For example, the Open Enrollment period for faculty to change their plan or switch to cash in lieu is September 14th through October 9th. In addition, if members end up voting for H&W payroll deductions, the deductions can be pre taxed by signing up for a Section 125 account. Note: Faculty should sign up for all other Section 125 eligible medical and child care deductions during the regular September Section 125 plan open enrollment period. The District will arrange for the Section 125 plan provider to return to campus to sign up faculty in October if additional payroll deductions for H&W if necessary.
What is the process to come to a decision on what to do about the shortfall? Will the membership get to vote on the decision?
- Yes, after several all faculty meetings with rich discussion, the COCFA leadership will make a recommendation to the faculty.
What exactly is the shortfall? Why is it not a specific amount? Why does the district’s and COCFA’s differ?
- The shortfall is currently calculated at $255,668.80. It is not a firm amount because it is a snapshot of the faculty H&W choices based upon decisions made in the last open enrollment period and assuming that members will continue to choose the same plan in the next open enrollment period. Should members choose different plans, the shortfall would change (increase or decrease). As of October 2015 the shortfall has been reduced to approximately $215,000.
How is the H&W Pool determined?
- As per the COCFA contract the district contributes $12,800 per full time faculty member to the H&W pool. The amount per faculty member has increased significantly over the years as changes to the contract has been negotiated. The total amount of $12,800 is multiplied by the number of full time faculty as of June 1st. The amount of health care for the coming year may be more than this total amount (positive pool balance) or less than this amount (negative pool balance) depending on the actual amount of specific costs of the plans each member chooses.
Why do we have a H&W Pool Shortfall?
- The rising costs of our H&W pool have outpaced what is contributed to the pool.
When new full time faculty members are hired does the district increase the pool balance?
- Yes, when full time faculty are hired the H&W Pool is increased by $12,800 per full time hire as long as they are approved by the BOT as of June 1st. If they are hired later, the District covers the cost and the new hire(s) appear in the pool the following year.
- When a member leaves the faculty the pool balance is decreased.
Why can’t the district just cover the shortfall? The district seems to have a lot of money and the administration chooses to spend it on a whole bunch of less important things than employee health care. Don’t we keep hearing that this is the best budget we have ever had?
- This is a good question and is being followed up at the table in negotiations. Because H&W are part of our Total Compensation, when the district increases our Total Compensation by a percentage, the Negotiation Team at the direction of the Executive Board based upon faculty responses to surveys completed before negotiations started, decide how to allocate funds. Total Compensation includes full time faculty salary, overload, intersession, head coaches stipends, and H&W.
What is Total Comp? If the district covers the shortfall why is that part of Total Comp?
- Total Compensation is the total amount of money the district contributes to full time faculty salaries, overload, intersession, head coaches stipends, and H&W. Some compensation is not included in Total Comp like department chair reassign time and supplementary services (thus my question). Currently the full time faculty total compensation is approximately $22,000,000.
- H&W are part of our Total Compensation. The H&W Pool Shortfall is $255,688.80 or about 1.1% of Total Comp.
Who would make the decision to use an increase in Total Comp to cover the H&W Pool short fall?
- The Negotiations Team surveys the faculty before negotiations begin to determine the most important issues and concerns of members.
- When the district increases our Total Compensation by a percentage, the Negotiations Team, at the direction of the Executive Board, decides how to allocate funds.
What are the H&W benefits of other employee groups? What do they contribute to their H&W pools? Do they have payroll deductions?
- Other groups are not part of CalPers. They are part of CISC, a broker negotiated plan. The other groups have had payroll deductions for several years. Other employee groups have differed from faculty regarding how the shortfall is handled.
- It is our understanding that the Classified have chosen a different model than the full time faculty. The Classified keep each member’s benefit whole and then charge two-party’s or families the increase in payroll deductions, rather than pooling their H& While this may seem more fair, the question becomes what happens to any additional monies not used by the pool? Does the district absorb them? Or can the Classified unit use those monies for other aspects of total compensation?
What are some possible solutions to pay for the H&W Pool Shortfall?
- Use part of total compensation to cover shortfall (at the expense of other items like salary)
- Begin monthly payroll deductions (potential tax savings)
- Reduce faculty compensation in other ways to off set H&W costs (reduce hourly rate for Supplementary Services and take the savings and apply it to the pool)
Will everyone contribute equally to the shortfall?
- There are many solutions to resolving the shortfall. Ultimately as a group, the faculty will decide how to pay for the shortfall.
- If the faculty decide to cover the shortfall with total compensation funds, then that money cannot go to increase our salaries, which means not only would our salaries be lower than they could, but so will our retirement. Payroll deductions are a benefit to help lower taxable income if used with a Section 125 plan. The H&W deductions would be taken off a faculty member’s salary before being taxed. If the faculty decide to cover the shortfall with total compensation funds, then that money cannot go to resolve important equity issues like lecture lab parity.
- If the faculty decide to pay for the shortfall inequitably, then some faculty may pay more. Other groups on campus make members pay different amounts depending upon if they were single, two-party, or families. While at first this seems reasonable, it is shortsighted because over the course of one’s time at COC, faculty may be single, then two-party, family, and finally will be back to two-party. At this time we cannot calculate a suggested cost for single, two-party, families because the total amount of the pool is in flux.
Comparison of cost to H&W Pool for discussion purposes – Cash-in-Lieu vs. Kaiser
|Cash-in-lieu (Two-Party)||Receive cash, dental, vision, and life||$5,745|
|Cash-in-lieu (Family)||Receive cash, dental, vision, and life||$6,568|
|One Party with Kaiser||Kaiser, dental, vision, and life||$7,033|
|Two Party with Kaiser||Kaiser, dental, vision, and life||$13,890.02|
|Family with Kaiser||Kaiser, dental, vision, and life||$18,277.65|
Can the shortfall be reduced?
- Yes, if members choose to receive cash-in-lieu ($400/month paid tenthly), or less expensive health plans, during the annual open enrollment period the shortfall will be reduced. Conversely, if a member changes to a more expensive plan the shortfall can increase. Again, the projected shortfall is a snapshot based on assumptions of past members’ choices.
- September is the only open enrollment period for H&W benefits. Faculty need to make changes now if they want to make any changes for the next year.
- A detailed summary of plans is available at https://www.calpers.ca.gov/docs/forms-publications/2016-health-benefit-summary.pdf
If a member selects cash-in-lieu during open enrollment can they switch to a health plan at a later date?
- Yes, during the next annual open enrollment.
Does Cash-in-Lieu include dental and vision? Or are these benefits relinquished too?
- It is in lieu of medical only; members can keep dental and vision.
If I select cash-in-lieu and the faculty vote to have payroll deductions to pay for the H&W Pool shortfall would I have deductions too? Why?
- Everyone receives a benefit from the college. Some of these benefits include H&W and other include cash in lieu. For years the District prohibited newly hired faculty from having the choice of cash in lieu if the faculty received healthcare from another source such as a spouse. Keeping cash in lieu is important, but just like having a H&W plan, this is a benefit from the college. We are all paying for the benefit, regardless if it is a H&W plan or if it is cash in lieu.
- When we moved to CalPERS, the district was required to offer cash-in-lieu. This remains a stipulation of joining the CalPERS pool.
If the faculty vote to cover the H&W Pool Shortfall with payroll deductions, how much would the deductions be? And are the deductions taxed?
- An estimate of monthly deductions would be approximately $125 per faculty member per month for 10 months, October – July if the cost of the shortfall is distributed among all members equally.
- For members receiving H&W benefits from the District, they can set up a Section 125 Savings account and contribute the amount of H&W deductions at a pre-tax rate.
What is a “Health Savings Account”? How does it differ from a Section 125. Several members are interested in this option. Can we get it?
- A health savings account is for people enrolled in a high deductible health plan, which this district doesn’t offer.
Can a cap of costs be established so that we are not facing this problem over and over every year?
- CalPERS negotiates on behalf of 3.5 million members. For this reason, they are able to keep the costs of their plans extremely competitive and offer so many choices. This buying power is substantial. We are probably not going to see better rates with such “rich” plans. Plans decrease in cost as the costs shift to the consumer – higher deductibles, higher coinsurance rates (negotiated percentages), etc. So when you see cheaper plans, you have to delve deeper and look into each plan design to make sure you are comparing apples to apples.
The decision regarding the Health & Welfare Pool shortfall will be made after faculty have time to review their options and ask questions. Next there will be an all faculty vote deciding what to do about this year’s Health and Welfare Pool shortfall.
We anticipate the vote taking place in late September/early October. There may be two ideas included in an all faculty vote. First is whether we will use payroll deductions, total compensation, or some other way to cover the shortfall. Second, if the faculty agree to use payroll deductions, how will the shortfall be divided up? In equal deductions among all faculty or based on the cost of the member’s plans?