Adopt Resolution #15-08-214 Authorizing a Long Tern Disability (LTD) Carrier Change and a Non-union Employee LTD Benefit Change

The purpose of this case is to consider changing long term disability carriers and revising the non-union long term disability benefit, effective January 1, 2016.  The City carries two long term disability benefit plans with Madison National Insurance; a voluntary and a non-voluntary plan.  The City does not make a contribution  to either plan, nor will it as a result of this case.   Currently, non-union employees and AFSCME employees are included in the voluntary plan.   LELS Patrol, LELS Sergeants, and fulltime non-union public safety employees are included in the non-voluntary plan.    The key difference between the two plans is the cost of the premiums and the maximum benefit period.   The voluntary plan is age-rated whereas the non-voluntary plan is fixed at .09 cents per $100 of coverage.   Age rated premiums range from .26 cents to $2.63 per $100 of coverage.  The maximum benefit period under the voluntary plan is through normal retirement age whereas the non-voluntary plan is two years.  The maximum benefit period information was shared with non-union employees and the level of interest remains very high.  

As a result of the age-rated voluntary plan design, the City is seeing more mature employees drop off the plan due to the high costs.   This is unfortunate since history has proven that this is the demographic most likely to utilize the benefit.   Consequently, staff initiated discussions to explore options to switch non-union employees to the non-voluntary plan.  The quote from Sun Life came back at 10% less than the current carrier, plus Sun Life is a better rated carrier with a richer benefit plan and they will include a two-year rate guarantee. 

Staff polled all twenty-one non-union employees (this number excludes the 5 non-union fulltime public safety employees already participating in the non-voluntary plan and one employee who is leaving the City).   All but two non-union employees are very interested in the change.  Staff has obtained a waiver for the two employees not interested in enrolling in the plan so they would not be forced to participate.  If approved, all current non-union employees (excluding the two current employees allowed to waive coverage) and all future non-union employees would be required to participate in the non-voluntary plan at their own cost.




 

As an example of the significant cost savings, a 50-54 year old voluntary plan participant with $5000 of coverage per month would realize a cost reduction from $103.00 per month to $3.91 per month under the non-voluntary plan.

 

Option #1:   To change long term disability carriers from Madison National Insurance to Sun Life Insurance effective January 1, 2016 and switch all current non-union employees (excluding the two employees allowed to waive) and all future non-union employees to the non-voluntary long term disability (LTD) plan, effective January 1, 2016, at their own costs.

Option #2:  To change long term disability carriers from Madison National Insurance to Sun Life Insurance effective January 1, 2016 only -- not making a change to the non-union plan design.  This option is not recommended.

Option #3:  Seek a quote from the current carrier to add the non-union group to the non-voluntary plan.  This option is not recommended.

Not applicable.

To authorize staff implement option #1 above to do the following:  1) change long term disability carriers from Madison National Insurance to Sun Life Insurance effective January 1, 2016, and 2)  switch all current non-union employees (excluding the two employees allowed to waive) and all future non-union employees to the non-voluntary long term disability plan, effective January 1, 2016, at their own cost.

Motion to adopt resolution #15-08-214 to authorize staff to do the following: 1) change long term disability carriers from Madison National Insurance to Sun Life Insurance effective January 1, 2016, and 2)  switch all current non-union employees (excluding the two employees allowed to waive) and all future non-union employees to the non-voluntary long term disability plan, effective January 1, 2016, at their own cost.