Utah Retirement Systems’ Increasing Funded Ratio Could Result in Future Employer Contribution Rate Deductions
Utah Retirement Systems (URS) Director, Dan Anderson, reported that the 2018 funding status for the entire system was 84.3%; analysts estimate that the ratio at the end of 2019 was roughly 88%. Director Anderson explained that the funded ratio shows the “relative strength of the system” and impacts how much employers contribute to the plan.
Policy states that URS cannot completely cease employer contributions until the system reaches 110% funded status; however, they can decrease the amount employers contribute as the system nears that threshold. URS has created a long-term plan establishing “triggers” to lower the employer contribution rate (see chart). If the mandatory employer contributions decrease, that money is made available to potentially fund to other employee compensation enhancements. Anderson stated that this is a long-term projection and URS does not anticipate any immediate changes.
PEHP reports customer satisfaction rate increase from 76% to 92% since 2011
The Public Employee Health Plan (PEHP) is a “self-funded system” that administers insurance benefits to the state of Utah. The Director of PEHP, Chet Loftis, presented priority updates and short/long term goals before the Retirement and Independent Entities Appropriations Subcommittee on February 5, 2020. PEHP currently offers a Traditional plan and two Health Saving Account (HSA) qualified plans to its members, with three networks: Advantage, Summit, and Preferred.
Each year medical trends are observed for health care cost increases. This year’s estimated renewal rate of 4.35%, calculated to $14.2 million, is needed to maintain current benefits for the risk pool of 63,322 state employees and 11,291 employees of other government entities. PEHP maintains 50 to 90 days of reserve funding to cover claims that are higher than expected. When there is excess in the contingency reserve it is returned to the state. This year, $30 million is being refunded, reducing the reserve by 30 days.
Satisfied PEHP customers have grown from 76% to 92% since 2011. Director Loftis presented on goals they have formulated in order to see this trend continue. Their top priority is reducing the risk of adverse coverage events from members, while providing tools, advice, and support to make good health care related decisions. PEHP is aligning their direction resources to best manage healthcare and operational costs.
UPEA is lobbying the legislature to fund the 4.35% renewal rate so members won’t see an increase in premiums or in the benefit plan. Staff will continue to update our members on the proposed State budget and what is included.