The University is updating the medical plan, pharmacy vendor, and the Wellbeing Program incentive. These updates take effect January 1, 2027.
Why Benefits Are Changing
Like many higher education institutions, the University is facing a challenging financial landscape, plus rising medical and pharmacy costs. At the same time, medical and drug costs are projected to increase with double-digit inflation nationally for 2027 and beyond.
The University is self-insured, which means it does not pay an insurance company to cover employees’ medical expenses. Instead, the University funds the medical plan and is responsible for paying all of the healthcare costs not covered by employees through their premiums/rates, deductibles, copays, and coinsurance. Although Medica manages the networks and helps administer the claims, the University ultimately pays the cost of covered care.
Over time, the University has absorbed an increasing share of employee medical costs to help offset the impact on employees. The University has postponed the changes for as long as possible, but the financial realities mean it can no longer keep paying the same portion of costs.
These adjustments are part of a long-term effort to:
- Keep our benefits competitive while ensuring the sustainability of the medical plan
- Maintain a strong range of plan options
- Support employees and their families with quality coverage
This marks the first major update of the health plans since 2014. After these updates, the University's benefits will remain competitive with those of other large employers and higher education institutions.
Changes Effective Jan. 1, 2027
Medical Plan Updates
The University will make adjustments to medical plan cost sharing beginning January 1, 2027. While you have the same plan options available, the amount you pay when you use care may increase. Costs vary depending on the plan you choose and how you use your benefits.
- Medica has a tip sheet available to learn more about copays, coinsurance, and deductibles, and how they determine your out-of-pocket costs.
- 2027 medical plan rates (Google Sheet) are now available.
- Employees represented by AFSCME, LELS, and Teamsters should review their 2027 medical rates, including the CBA Base Plan (Google Sheet) that will be available for them to select during open enrollment this year.
- More detailed plan comparison charts will be shared leading into open enrollment.
Category | Description |
|---|---|
| Copays | HSA Plan: Not applicable All Other Plans: Moving to standardized $15 walk-in clinic or virtual care, $25 office visit, $35 specialist, $50 MRI or CT scan, $100 emergency care Pharmacy: copay structure is not changing, but will be subject to the combined OOP maximum below |
Deductibles | HSA Plan: Increasing to $2,000 individual / $4,000 family (up from $1,700/$3,400). All Other Plans: Increasing to $500 individual / $1,000 family (up from $100/$200 on most plans). Out-of-Network: Deductibles will be set at twice the in-network rate across all plans. |
Coinsurance | Moving to 15% coinsurance after the deductible is met (up from 0% on most plans). Note: coinsurance does not apply to all medical services. If you are not on the HSA plan, many care options—such as urgent care visits—only require a flat copay, even after you have met your deductible. |
Out-of-Pocket (OOP) Maximums | Medical and pharmacy OOP maximums will be combined for a total maximum of $4,000 individual / $8,000 family (previously $3,000/$6,000 for HSA and $2,500/$4,000 for other plans). The previous separate pharmacy OOP maximum was $750 per person / $1,500 per family for other non-HSA plans. |
How the Updated Medical Coverage Works
Healthcare costs move through three distinct stages during the plan year, separated by two main spending limits:
1. Employee-Paid Phase (Starting at $0)
At the beginning of the plan year, you are responsible for 100% of copays and out-of-pocket costs until you reach your annual deductible. Note: Preventative services remain covered at 100% by the plan throughout the year.
2. Employee and University Cost-Sharing Phase (Coinsurance)
Once you meet your deductible, you enter the cost-sharing stage. Instead of paying the full amount, eligible expenses are split between you and the medical plan:
- Your Share (Coinsurance): You pay 15% of covered medical costs.
- UMN Plan Share: The medical plan covers the remaining 85% of costs.
Coinsurance does not apply to all medical services. If you are not on the HSA plan, many care options—such as urgent care visits—only require a flat copay, even after you have met your deductible.
3. Plan-Paid Phase
As you pay your copays and 15% coinsurance, these payments accumulate toward your annual out-of-pocket (OOP) maximum. The OOP maximums are $4,000 for individuals and $8,000 for families.
- Once you reach your out-of-pocket maximum, the medical plan pays 100% of any additional covered charges for the rest of the year.
Prescription Drug Coverage
The University will transition to AffirmedRx as the new pharmacy benefits manager (PBM) on January 1, 2027.
The pharmacy network will remain broad and the current prescription copay structure will also continue up until the new combined medical/pharmacy out-of-pocket maximum.
Most prescriptions will continue to be covered. We anticipate a small percentage may experience some disruption and are currently working with the new PBM to identify the extent of that impact. The Office of Human Resources has a strong partnership with a long-time faculty advisor from the College of Pharmacy and we will actively review the new formulary and advocate for University employees.
Any employees whose medications are impacted will receive direct communication this fall and our new PBM. They will work with you, your healthcare provider, and/or your pharmacy to support a smooth transition.
More information will be shared as soon as possible ahead of open enrollment.
2028 Wellbeing Discount
Beginning January 1, 2028, the Wellbeing Program discount will be reduced.
The discount earned during the September 2026–August 2027 program year will be applied to 2028 medical rates at these new levels:
- $250 (employee or employee + children)
- $375 (employee + spouse, with or without children)
Employees will continue to have access to the Wellbeing Program. This includes the opportunity to earn a discount, but at a reduced amount beginning in 2028.
2028 Under-65 Retiree Medical Rates
Beginning January 1, 2028, medical plan rates are expected to more than double for retirees under age 65. Exact rates for 2028 will be finalized and shared ahead of open enrollment in fall 2027. We are sharing this information well in advance so you have time to prepare for the increase and consider all of your options
What You Need to Do
Like previous years, no direct action is required if you plan to keep your current benefit selections. The only exception to this is a flexible spending account (FSA). Due to IRS regulations, you must elect an FSA every year. If you’d like to make changes to your benefit selections for 2027, open enrollment is your opportunity to do so.
Before Open Enrollment
- Review upcoming plan changes
- Estimate your healthcare expenses for the next year
- Attend an information session (more information below)
During Open Enrollment
- Compare medical plan options
- Review dependent coverage needs
- Consider contributions to health savings accounts (HSA) or flexible spending accounts (FSA)
- Make your benefit elections that work best for your situation by the deadline
After Open Enrollment
- Watch for confirmation of your elections
- Review any updates to ID cards or vendor information if applicable
- Keep a copy of your confirmation for reference
Information Sessions
Information sessions will be offered to help you understand the changes and how they may affect you. Register for and attend a session that works with your schedule.
Sessions will include:
- Overview of benefits changes
- Pharmacy transition details
- Overview of available resources
Share Your Thoughts
We know not everyone will be able to attend an information session. If you have questions or concerns, you can share them using our online form. While we may not be able to respond to every submission individually, we'll use what we hear to identify common questions and shape future communications, FAQs, and resources.
Additional Benefit Resources
You can access tools and support to help you make informed decisions:
Frequently Asked Questions
Why are benefits changing?
Like other employers, the University is seeing ongoing increases in medical and pharmacy costs in addition to broader financial pressures. These changes are intended to help maintain a sustainable benefits program while continuing to offer comprehensive coverage.
When do the changes take effect?
Most changes take effect January 1, 2027.
The updated Wellbeing Program incentive for medical rate reduction takes effect January 1, 2028. The 2028 rate reduction is based on points earned in the 2026-2027 Wellbeing Program year.
Do I need to take action?
Most employees will not need to take action during open enrollment.
If you’d like the same benefit selections for 2027, no action is needed. If you’d like to change your benefit selections or you would like a flexible spending account in 2027, then you need to take action during open enrollment this fall.
Even if you are satisfied with your current coverage, it is encouraged to review your options. Now is a good time to learn more about if an FSA is right for you.
Will my medical rates increase?
Yes, medical rates are increasing for 2027. View the medical plan rates per biweekly pay period (Google Sheet).
Employees represented by AFSCME, LELS, and Teamsters should view the medical plan rates with the CBA Base Plan (Google Sheet).
Are all medical plans changing?
Yes. Cost-sharing changes apply across all medical plan options. The impact of these changes will vary by plan.
Does coinsurance mean I will pay 15% of all my medical bills?
No, employees pay 15% coinsurance on certain medical services only after they’ve met their plan's deductible and before they reach their out-of-pocket (OOP) maximum for the plan year (see graphic below).
Note: coinsurance does not apply to all medical services. If you are not on the HSA plan, many care options—such as urgent care visits—only require a flat copay, even after you have met your deductible.
OOP maximums are $4,000 individual / $8,000 family. Once the OOP maximum is met, the plan covers 100% of all eligible medical expenses for the rest of the year. Individuals and families will not pay more than $4,000 or $8,000, respectively, for eligible medical expenses in a calendar year.
Is preventive care still covered?
Yes. Preventive care continues to be covered according to plan provisions.
Will my prescriptions still be covered?
Most prescriptions will continue to be covered. We anticipate a small percentage may experience some disruption and are currently working with AffirmedRx to identify the extent of that impact. The Office of Human Resources has a strong partnership with a long-time faculty advisor from the College of Pharmacy and we will actively review the new formulary and advocate for University employees.
Any employees whose medications are impacted will receive a letter this fall from AffirmedRx. They will work with you, your healthcare provider, and/or your pharmacy to support a smooth transition.
More information will be shared as soon as possible ahead of open enrollment.
Do I need to change pharmacies or doctors?
In most cases, no. You can continue seeing your current providers as long as your doctors do not opt out of the Medica network from year to year.
AffirmedRx has a nationwide network of more than 65,000 pharmacies, allowing most members to continue using their current pharmacy. If a network change does affect your pharmacy, our new PBM can help you identify a convenient in-network option.
Why is the Wellbeing Program incentive changing?
It is part of the overall effort to balance benefit costs while continuing to support employee health and engagement.
Where can I get help choosing a plan?
- Use the plan comparison tools available during open enrollment
- Attend an information session
- Use the HSA savings calculator available from HSA Bank
- View Medica’s deductibles, copayments, and coinsurance tip sheet to learn more about these terms and how they impact your out of pocket costs.
What support is available if I’m worried about costs?
Employees have access to several resources to help manage costs and stress, including:
Stay Informed
This page will be updated with additional information, tools, and resources as they become available.
For the latest updates, check back regularly or attend an information session.