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July 21, 2019

Early Faculty Retirees Bet on Medicare for Life, But Now Face “Inferior” Private Plan


Levi Hall houses the office of the provost.

Courtesy of University of Chicago

When emeriti faculty members signed their early retirement agreements, they thought they would stay on Medicare for life.

But the University switched to a private health-care plan on January 1, angering many early retirees who say they were not consulted before the switch and that the new plan includes more red tape that could make them pay more out of pocket. Some say they’ve faced steep bills while awaiting reimbursements for procedures under the new plan, which did not occur with the former plan.

The University has responded to their concerns, establishing a working group of faculty members to formally assess the new plan. Many early retirees, however, feel that change needs to occur faster as they seek medical services increasingly often in retirement.

A little over a week ago, 185 retired and soon-to-retire faculty members from every division of the University sent a letter to the working group and top University administrators expressing the urgency of their concerns.

The conflict stems from the University’s roll out of a blanket change in health care for all retired staff and faculty, despite the fact that early retirees face unique retirement circumstances. The University has said the new plan allows all retirees to pay smaller premiums than before. Faculty members who retired early, however, have not had to pay premiums because the University promised to waive their premiums for life to incentivize early retirement.

As a result, the early retirees are experiencing a shakeup to their health-care coverage while not deriving any benefit from the lower premiums brought by the new plan.

What early retirees were promised

Faculty members between the ages of 65 and 70 who have been tenured for at least 10 years are eligible for early retirement, according to the section in the University’s handbook on early retirement. To incentivize faculty members to retire early, before 70, the University promises to grant benefits such as bonuses upon retiring and waived health-care premiums for life for retirees and their partners.

Bruce Lincoln, an emeritus professor in the Divinity School who retired three years ago, said that he believes the waived premium is the primary incentive for most faculty members to retire early.

“The salary bonus is nice, but if you continue to teach you would continue to collect salary,” he said, “whereas health insurance for the duration of your life is a huge incentive and reduces a lot of anxiety as people get older.”

Prior to this year, the University had offered retirees a plan that consisted of basic Medicare with additional procedures covered by a private company—a “Medigap” plan. Though the early retirement agreement does not explicitly guarantee that a retiree’s plan will stay the same in the future, early retirees assumed the type of plan they received upon retiring would remain the same throughout retirement.

“We had no idea that the University would change it,” said Rebecca West, an emeritus professor in Romance languages and literature who retired six years ago.

That was why early retirees were startled to see a notice in their inboxes last fall stating that their health-care plan would soon switch—and without previous consultation.

“No reasonable person signs on contractually to an unknown or a hypothetical, but that is in fact what we FRIP [early] retirees did, since we now know that the University can and did change our coverage with no input from us or consultation with us to get our views on such a change,” West said.

Lincoln said he felt similarly frustrated immediately after hearing about the switch.

“There are retired people who gave the bulk of their working life to this institution, and expect to be treated decently and that the University would handle things in good faith with us,” he said.

How the new plan plays out

The new health-care plan is a “Medicare Advantage” plan, in which a private company covers at least all the services that basic Medicare covers. The plan that the University has switched to, which is administered by Anthem Health Insurance, covers vision and hearing care services not covered by basic Medicare.

Unlike Medicare, though, a Medicare Advantage plan distinguishes between medical providers who are “in-network”—within a network of hospitals and doctors approved by the company—and providers who are “out-of-network.” Additionally, fewer medical providers accept Medicare Advantage plans than they do Medicare.

The University’s handbook on the new plan says that Anthem covers costs of procedures provided by in-network providers to the same extent as procedures provided by out-of-network providers. However, Anthem must approve procedures done by out-of-network providers before covering them.

Early retirees say that this approval process can take a while, meaning many retirees have had medical bills of up to several thousand dollars hanging over their heads for several weeks or months.

“An out-of-network provider can require upfront payment and then the patient has to request reimbursement from Anthem, which involves red tape and paperwork,” West said. “This is not how regular Medicare works. If a doctor takes regular Medicare, there is never any upfront payment demanded.”

Early retirees say they have also encountered late reimbursements for procedures provided by in-network providers.

The wife of a faculty member who has been retired for 17 years said that Anthem was slow to reimburse her bills on procedures she’s been receiving regularly for over a decade at Northwestern Hospital, an in-network provider. She asked not to be named due to privacy concerns about her medical procedures.

She said that she used to pay, at maximum, $50 for mammograms and ovarian ultrasounds. This year, she received a bill of $1600 that was due in May, and after multiple phone calls, Anthem paid over a month later.

Lincoln said that when his wife fell in February and broke her wrist, she underwent surgery at UChicago Medicine, an in-network provider. The surgery’s bill was $55,334.82. Anthem has approved to pay $5,845.60 and has so far paid $5,261.04, according to Lincoln’s most recent statement from Anthem.

Hieu Nguyen, a spokesperson with Anthem, said in a statement to The Maroon, “Our team is always working with our clients – in this case the University of Chicago – and our members to help them address their individual health care needs and to ensure they have a positive health care experience.”

What the University is doing now

Some faculty members believe the University made an honest mistake in overlooking the early retirees when switching the health-care plan across the board, and say the University has taken steps to hear their concerns.

Gerald Rosenberg, a political science and law professor who signed the early retirement agreement shortly before the health-care switch, said he believes the University was aiming to have all other retirees pay lower premiums.

“As far as I can tell,” Rosenberg said, “the University made a good faith effort to help retired staff and faculty.”

West said the University has taken concrete steps to consider faculty sentiments, noting that in early July, the provost formed a working group of early retirees, regular retirees, and soon-to-retire faculty members that will make a recommendation on what the retiree health-care plan should be.

“The provost has heard our protests,” she said.

When asked to comment on faculty concerns, University spokesperson Jeremy Manier provided e-mails that Provost Daniel Diermeier and Vice Provost Melina Hale have sent to faculty members.

An e-mail sent by Diermeier on July 2 announcing the formation of a working group said, “It is clear that as we revisit the move to Anthem, and consider alternative options, faculty and retiree input is crucial.”

Hale, in an e-mail sent on July 11 announcing the specific members of the working group, said the group “will review retirees’ experience with Anthem, including service, network reach and other features,” and will consider the possibility of offering both the previous Medigap plan and the current Medicare Advantage plan.

Hale’s email also said the provost’s office has created a new website for the working group on which faculty members can submit feedback about the new plan, and that the group will submit a recommendation to Diermeier and Chief Financial Officer Ivan Samstein by early September.

Some faculty members remain skeptical about the administration’s response. Lincoln’s perspective remains affected by the University’s initial move to make the switch without having consulted faculty in advance.

“It’s a very serious problem, not just because retirees were shifted to an inferior plan, but because it was done in peremptory fashion,” he said. “We’re encouraged that the administration has acknowledged the seriousness of the situation and has charged a working group with finding ways to straighten things out, but that will not be easy, for the problem isn’t just restoring the former level of coverage.”

“Steps also have to be taken that ensure that the administration can’t take unilateral action that has such adverse consequences for faculty who have given their lives to this institution.”

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