Future Duke retirees will be paying more in medical costs if a health care plan currently under consideration is passed.
Former employees are currently reimbursed 85 percent of their medical costs, but, if the Board of Trustees approve a plan later this year, that could be reduced to 60 percent over the next five years because of a need to reduce expenses. Retirees' spouses will continue to pay 50 percent of their costs.
New requirements mandate that Duke must pay ahead for the benefits instead of paying them as they go, resulting in the need to restrict $210 million over the past five years, said Tallman Trask, executive vice president.
"The big push is the change in the actuary rules, where we have to create a liability for future need," Trask said.
The average difference for employees will be about $9 per month, he added.
The plan will be discussed at today's Academic Council meeting, and could undergo changes before being approved by the Board of Trustees, possibly in December. The issue has been discussed at length over the past several months by the Faculty Compensation Committee.
"I think we were interested in making sure that all the different options were discussed, but accounting principles require you to take into account future financial costs for retirees if you provide those benefits," said Thomas Metzloff, professor of law and FCC chair. "One of the options would have had to been to just eliminate the benefit, but we thought it was essential for Duke to continue to make that commitment."
To balance out the cost of the future expenditures, the University could try different ways to adjust the health care benefits. Metzloff said he thought the committee came up with the best solution possible to allow salaries and other benefits to continue increasing.
The changes will not affect current Duke retirees, and the drop from 85 to 60 percent will take place over about five years. Employees from the University and Duke University Health System will be affected.
Still, other professors, who have studied the situation, see Duke's hands tied in having to cut money from somewhere to cover the liabilities, and that the cut in benefits will have minimal effect on retirees.
"At the moment those numbers are very reasonable, even low," said Richard Burton, a professor in the Fuqua School of Business and member of the FCC. "They will go up, but will not go up substantially, and the new plan would still be low."
Get The Chronicle straight to your inbox
Signup for our weekly newsletter. Cancel at any time.