Employees at the University of Nebraska will see a little more cash in their paychecks just in time for the holidays.
In an email sent to all employees in the NU system Friday, interim President Susan Fritz said health claims were in line with projections this year, allowing the university to offer a one-time "premium holiday" in December.
Put simply, NU employees won't pay medical and dental insurance premiums next month, allowing employees with individual plans to pocket an extra $166 next month. Employees with basic family plans will see savings of about $344 before taxes.
Premiums for vision insurance plans will still be taken out of employees' paychecks next month, NU said.
Instead of paying the savings realized in the December holiday forward in an effort to hold increases to premiums down in the future, Fritz said it was best to provide a one-time benefit to employees.
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"The plan's reserves, which have accumulated over a number of years, are one-time resources, somewhat similar to a savings account," Fritz wrote. "The plan's expenses, primarily medical claims, are a recurring expense that continue to increase year after year."
Using the plan's savings to pay recurring costs could create a "fiscal cliff" in the future once the savings are drawn down, Fritz added.
"If reserves were depleted, the plan would likely be required to implement significant premium increases to get it back to sustainability," she said. "It would not be prudent to knowingly expose you or the university's budget to this risk."
The one-time premium holiday will also save the university system $6.7 million in payments. Those funds will be redirected into an internal lending program NU created through a massive recent bond refinancing that freed up $50 million.
NU has previously diverted money saved through insurance premium holidays for other facilities projects.
Five years ago, NU used the $4.8 million it saved in a premium holiday to help fund six projects on campus, including a renovation to Love Library North, the purchase of land near Ak-Sar-Ben Village in Omaha, as well as health-related research at the University of Nebraska Medical Center.
In 2016, employees were offered a three-month premium holiday, which in addition to saving employees between $430 and $920 in premium payments, allowed NU to reinvest funding to deferred maintenance projects.