Benefits April 18, 2001

CalPERS Healthcare Vote Offers 2002 Preview

April 18, 2001 (PLANSPONSOR.com) - Plan sponsors across the country could get a peek ahead at next year's healthcare costs, through the eyes of the nation's largest public pension system.
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The California Public Employees Retirement System (CalPERS) votes today on a recommendation calling for a 6% increase in premiums and a change in co-payments for office visits and prescriptions. 

The Health Benefits Committee  has recommended a health premium package to the Board of Administration which includes:

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  • a line up of eight health maintenance organizations (HMOs)
  • a 6% premium increase
  • a future enrollment freeze for Health Net, one of the system’s largest carriers
  • an increase to $10/office visit copay from $5/visit
  • changes in prescription drug copays

If adopted by the Board of Administration tomorrow, the package would cost $1.758 billion, compared to $1.65 billion for the 2001 rates.

 

Tiered Structure

The prescription drug plan was modified to encourage the use of generic drugs and mail order purchasing. It also aligned the HMO benefit with the CalPERS preferred provider organizations, which switched to the three-tiered benefit earlier this year.

Under the proposed three-tier prescription drug plan, members purchasing a 30-day supply from retail pharmacies would pay:

  • $5 for generics
  • $10 for brand name drugs
  • $15 for nonformulary drugs

Those who purchase 90-day prescriptions by mail would pay

  • $10 for generics
  • $15 for brand name drugs
  • $30 for nonformulary drugs

Currently, members pay a $5 copay on all prescriptions.

Investing April 17, 2001

S&P: Equity Income Funds May Offer Stability

April 17, 2001 (PLANSPONSOR.com) - Equity income funds may provide a safe harbor in the current market turbulence, according to Standard & Poor's Fund Services Research.
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In an article published today in the Select Fund Bulletin, the researchers say that equity income funds try to provide a high level of current income typically by investing at least 65% of its assets in dividend-paying stocks.

The total return for an equity income fund should be viewed as the combination of receiving high dividend payments and the capital appreciation earned on the stocks held in the portfolio.

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Mature Perspective

The S&P researchers said that stocks paying high dividends tend to represent companies in the mature stage of their lifecycle with a stable growth rate.

While they may not provide large upside potential, there is a large degree of downside protection. In a downward market, the downside protection is invaluable, the researchers said.

According to S&P, equity income funds should be considered within the large cap value style category. Using three- and five-year rolling periods over 10 years through January 31, 2 001, it was found that equity income funds have a 99% correlation to large cap value funds.

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