HomeMy WebLinkAboutResolutions - 1985.09.12 - 1119903:niel Mor Xe7;Q:Ne
APPROVE THE FOREGON7 RESOLUTION
ERSONNEL COMM
Miscellaneous Resolution # 35232 August 8. 1985
BY: PERSONNEL COMMITTEE—John J. McDonald, Chairperson
IN RE: PERSONNEL DEPARTMENT—FRINGE BENEFIT RECOMMENDATIONS
FOR CHANGES IN ANNUAL LEAVE, LIFE INSURANCE, SICK LEAVE/
INCOME CONTINUATION INSURANCE, AND RETIREMENT PROVISIONS
To the Oakland County Board of Commissioners
Mr. Chairperson, Ladies, and Gentlemen:
WHEREAS a Study Committee comprised of representatives from the
Board of Commissioners' Office, Treasurer's Office, and County Executive
Departments of Personnel, Management and Budget, and Central Services
have been reviewing the fringe benefit areas of annual leave, life insurance,
and sick leave/income continuation insurance to identify any significant gaps
in benefit coverage, to evaluate employee expressed concerns with specific
benefit provisions, and to study increased cost liability to the County resulting
from current sick leave and annual leave banking provisions; and
WHEREAS the Study Committee has presented a final package of recommendations
which improve certain benefit provisions, fill the existing gaps in income
protection, and will reduce and eventually eliminate the present escalating
liability for banked sick leave days; and
WHEREAS a package of recommendations has been presented at Employee
Information and Input Meetings to interested employees, and notice of the
proposed changes was given to the various unions representing a portion
of the work force; and
WHEREAS the final report and recommendations of the Study ComMittee
provides an option to each non-represented employee to maintain current
benefit provisions or to elect to be covered by all the recommended benefit
provisions as a package and provides for discussions with the various unions
to consider similar options.
NOW THEREFORE BE IT RESOLVED that the report and recommendations
of the Fringe Benefit Study Committee as attached be accepted and adopted
for implementation :with the exclusion of the section referencing additional
employees as soon as practicable including the benefit design changes, awarding
of insurance contracts as recommended, and funding as recommended.
BE IT FURTHER RESOLVED that the Personnel Committee develop Merit
Rule changes for Board consideration consistent with these benefit revisions
in a timely manner to be effective with the implementation of these changes.
Mr. Chairperson, on behalf of the Personnel Committee, I move the
adoption of the foregoing resolution.
•-•
,It/Iteftedfrj
Dale Cain n gl lam 7,
Gerald F. Mathews (1/ enneth J
4tlet--1
lust' a
Russell M. Martin
Joyd\..1 Hampton
COUNTY OF OAKLAND
TO Oakland County Board of Commissioners
FROM: Fringe Benefit Study Committee
DATE: July 10, 1985
SUBJECT: Final Report and Recommendations - Phase
After many months of discussion, research, review and deliberation, we are pleased to present
our final report and recommendations covering annual leave, life insurance and sick leave/income
continuation insurance benefits. Two changes related to retirement are also being recommended.
This has been a difficult, complex review, particularly in relation to life insurance and
the sick leave/income continuation insurances. While there was much discussion and some compromise
of differing opinions, the committee Is unanimous on the need for the basic changes being recom-
mended and support the final product as a package. All committee members continue to have concerns
over future costs and, therefore, support both the concept of a cap on premium rates to be paid
and the establishment of an interest bearing account for retention of initial years savings for
possible later use
/1 ,.. .•
""/ 1 -•`." •••-__<A-' ,--'-' • ./ . ----. p '- e.--,--- -------___
z /James M. Brennan ( /
att"'"M C) . ues B. Dunkel, Jr. Glen M. Dick
C?]
Pang to i mTts
TABLE OF CONTENTS
• Section ,Pa e s
Background and Introduction 1 - 2
Executive Summary of .Recommendations 3 - 5
11.f. Detailed Cothpa ri son of Benefit Design Changes 6 - 20
IV Bid Review and Recommendations 21. - 26
V Cost & Funding Description , 27 - 33
Appendix
A Summary of Employee Input 37
•B Summary of Revisions from Original Recommendations 38 - 39
Support for Staffing ReCOMmenda Lions 40 - 41_
Suggested Board Resolution 42
SECT ION 1
BACKGROUND & INTRODUCTION
SECTION 1 - Background and introduction
These materials contain the final report and recommendations of the Fringe Benefit Reiew
Committee. Thc committee was asked to review three areas, two of which were viewed to be
building substantial liability accounts and the third as a source of significant employee
dissatisfaction. These areas were, respectively: annual leave banks for non-overtime
employees, sick leave/income continuation insurance and life insurance.
The committee consisted of the following members:
James Brennan - Director, Program Evalnation & Operations Analysis
James B. Dunkel, Jr. - Director of Personnel
Glen Dick - Director of Central Services
Russell Martin - Deputy Director Management .& Budget
Kenneth Vinstra - Manager Employee Relations
Thomas Eaton - Labor Relations Supervisor
Jerry Mathews - Insurance & Safety Coordinator
Jeff Pardee .- Manager of Budgeting
Dale Cunningham - Budget Analyst .
- Doug Williams - Chief Deputy Treasurer*
Lloyd Hampton - Retirement Board Member*
*Added to the committee when it became apparent the recommendations had retirement system
iMplicalions.
The committee received authorization from the Board of Commissioners to obtain the
assistance of fringe benefit consultants in the review. The firm of MercerMeidinger was
retained with William Lighthall and Joanne Janssen from the firm providing assistance with
benefit plan design and With reviewing cost data of present and proposed plans.
Draft recommendations of the committee were prepared and presented to the Personnel Committee
on September 19, 1984, and support obtained from the committee to hold employee informntional
meetings regarding the proposed changes. hill Board of Commissioners concurrence with the
concepts of the benefit design changes was .given on December 13, 1984 and the Fringe lienefit
Review • Committee was given the authority to prepare final benefit design recommendations
nod obtain proposals from in carriers. The Board also authorized the services of
a consultant to assist in preparing regnests for proposals and to evaluate the proposals
received. The firm el D.R.M. Stakor & Associates of Rochester was retained for this polti ,)11
of the review.
(1)
SECTION I - Background and Introduction (Con t i;
Employee Informatio it. 1. meetings were held in October, 1984 and input was received from 605
of the 1,230 employees who attended the meetings. A summary of the input is attached as
Appendix A. Several benefit design changes were made as a result of the employee meetings.
Requests for proposals were prepared and issued on February 4, 1985 with proposals due on
April 10.
Three companies submitted .proposals on a timely basis. They were The Equitable, Aetna,
and American Bankers .through Blue Cross/Blue Shield. The Equitable and Aetna submitted
complete proposals, American Bankers submitted a Proposal for life insurance and short term
di.sabili ty insurance hut not for long term disability insurance. Equitable is the current.
carrier for .short term bi ity insurance Aetna is the current carrier for the County
life insurance, and Blue Cross/13111e Shield the carrier for health and dental coverages.
One additional. company, Mutual. Benefit, submitted a late proposal t .hrough two different.
agen ts n-
Following a review of the proposals the Fringe Benefit Review Committee prepared final
--benefit design recommendations, funding recommendations and a recommendation for awarding
b nefit contracts to a carrier. The details of these recommendations inaV be found in
Sections IV and V, respectively. In order to obtain an overview of the recommendations.
an Executive Summary is presented in Section 1.1..
(2)
SECTION II
EXECUTIVE SUMMARY OF RECOHMENDATIONS
srcT[ON It - EXECUME SUMMARY
The Executive Summary of Proposed Employee Benefit Changes which follows is based on one
V ery in element:. IL is Tro,poscd that e achiiresent non-represented emple_yee be_nlven
the one lime individunl option of ILL those benefit . provisions recommended for
charl.ge as theK ate today or accepting asa Eackge niL the recommended new p_rovjs,.ion.s.._
Discussions will he held with union representatives regardinT offering the em.p 7loyees they.
represent a similar oTtion. IL is also proposed that employees hired after the formal
approval of benefit plan revisions be covered by the new benefit provisions.
in order to provide the necessary st,.rvices to employees and their families for the new
insurance coverages and to closely monitor insurance company administration of the plans,
it is recommended that the equivalent of two full time positions be established in the
-Personnel Department, it is anticipated that the employees involved will be available to
„assist in further Fringe Benefit Committee Review efforts in the areas of health care cost
containment and dental insurance to monitor such programs on a continuing basis, and to
be the principal source of employee in on fringe benefits.
-
Financial estimates indicate a significant first year cost savings on items other than the
retirement change. Al.! indications are, however, that future year costs will be higher
and the revisions, excluding the retirement change, are expected to result in a near balance.
Early year savings will be used to fund. the balance required for the two new staff positions
as well as establish an interest bearing disability insurance account which wilt he used
for future premium payments. Should future year costs exceed the plan change savings,
employees may eventually be required to contribute to the coverage unless the disability
insurance account can cover the increased costs or the County elects to increase its con-
tributions or modify benefits.
(3)
CURRENT
Annual Leave
thrtiinited accumulation of annual leave da y s for
employees in classifications desi g nated as "no
overtime." All other emplo y ees able to accumulate
Limes annual accrual rate. •
PROPOSED EMPLOYEE BENEFIT CHANGES
EXECU17VE SUMMARY
Life Insurance
Co-pa y/paid up and term polic y which provides a
benefit equal to 1.5 times an emplo y ee's annual
_salar y . Comit y provides term insurance while
,employee contribution g oes to purchase "paid up"
polic y . Emplo yee currentl y pa ys 70/thousand of
strai g ht salar y , to next hi g hest. thousand.
RECOMMENDED
Maximum accumulation eq ual to three times annual acrtnal
rate for emplo yees in classifications desi g nated as "no
overtime." No chan ge for other emplo y ees.
Count y paid. term polic y with benefits e q ual. to 1.5 ties
an employ ee's annual salar y . Emplo yee to he g iven opti on
of retainin g paid-up life insurance polic y with or without.
continuin g contributions, with possibility of cash-in it
100% of cash value if emplo yee later resi gns froM Crnint:v ;
or to cash-in paid up insurance at time of inulnuen chnng,-
over at less than 100% of cash value (presentl y 027).
Count y to supplement when necessar y to assate cash-in is
at least equal to 100% of emplo y ee contributions.
Sick Leave/Income Continuation Insurance
13 da y s annuall y - nnlimited accumulation plus a
short term disabilit y pro g ram which provides 50%
to. 70% Of salar y based on len g th of service.
Covera ge be g ins after 70% of possible earnin g s of
sick da y s since hire date or most recent eli g ible
disabiW y have i nissed, but in no case before the
8th calendar da y folloOn g accident or illness
and to after 20 weeks.
(4 )
Five personal da y s annuall y cumulative to a tom nl of 15
with no cash-in value. Short term disability begins en
8th calendar da y for all emplo y ees followin g air dint T
illness and continues for 26 weeks. Lon g term disability
would be g in at 26 weeks and continue to a ge 65. Pot ii pay
60% of salar y offset by an y social security or retirement_
disuhilit y pa y ments, rind ma y be supplemented wills ;WV
"Frozen" sick leave banks. The County would hind the ret
of both short and lon g term covera g e up to a T-;Itr et doahle
the first y ears premium rate. Limits on pre-existin g
conditions, mental and nervous illness and chronic alcohol
or dru g abuse related disorders. Elected oil cimtis lad
officials appointed for a definite term will !In! f,
•
CURRENT RECOMENDFD
PROPOSED EMPLOYEE BENEFIT CHANGES
EXECUTIVE SUMMARY
Retiremept
Benefit formula of F.A.C. (final average
(_-,ompensation) x years of service x .018.
Employees retiring directly or on deferred
-retirement are eligible for fully paid family
4ealth care coverage.
Benefit formula changed to F.A.C. x years o
x .020.
service
New employees will be eligible for paid health care
coverage only if they have the appropriate years oI
County service according to a deferred retirement or
direct retirement eligibility chart. Current ocLivn
and deferred employees will continue to be eliRihlo Hr
paid health care upon retirement.
NOTE: Possible suvingF; to employees resulting from elimination of contributory paid-up insurance is $5()6,7715
in after tax dollars.
(5 )
SECHON III
COMPARISON OF
CURRENT AND RECOMMENDED PROVISIONS
OF
BENEFIT AREAS RECOMMENDED FOR CHANGE
FRINGE BENEFIT REVISIONS OPTION FEATURE
As mentioned in earlier sections of these recommendations, there are four different fringe benefit areas whore
elements of the benefit are being recommended for changes. The four benefit areas are
Annual Leave
Life insurance
Sick Leave/income Continuation Insurance
Retirement
The material in this section describes in some detail primarily the benefit design elements that are being recommended
for change. - In a few instances, benefit design el6ments that are not being recommended for change are .inctridcd where it was
e It it would assist in understanding other elements that were being recommended for 'change.
The recommendations which follow are all based on each employee being given the individual one-time choice of hetfrel:
n. to remain covered by all current benefit provisions in the areas listed; OR
o become b. to elinme coverage
recommended;
covered by all of the benefit element changes being
Ali employees hired following formal Board of Commissioner and County Executive approval of the benefit chanaes will net
have the option given to current employees and will he covered by the new benefit provisions.
The option for current employees will be offered to nil eligible non-represented emplovees upon formal adoption of the
changes. Discussions will be held with union representatives to discuss offering the option of new benefit provisions le the
employees they represent.
Current part Lime eligihle employees will be given the same package choice as that offered to Inn time emuloyees•epl
!hose port time eligible employees electing the new benefit provisions will also be affected by several. other benefil chanr ,,es
related to their part time:employment. These changes arc fisted in the material which follows.
(6)
ANNUAL LEAVE — MAXIMUM ACCUMULATION
Current Proposed
1. No change from the current program. 1. Employees earn annual leave from date of hire
according to years of service, ranging from 10
working days for the first year to a maximum
- of 24 days at 25 years service.
2. Employees eligible to earn overtime may "bank"
annual leave days to .a maximum of 11 times
. their annual' earnings rate.
2. No change from the current program.
3. Employees not eligible to earn overtime
are not limited in the number of annual
• leave days they may "bank."
3. A maximum accumulation of three times the annual _
earnings rate would be established for employees .-
not eligible to earn overtime. This is the mill
change proposed related to annual leave.
Those with over two years of annual leave in their
bank when the proposal is implemented will have the
excess over two years placed in a "reserve" bank
to be used at the employee's option (still subject
to current annual leave usage rules).
4. Annual leave balances at time of separation
for any reason are paid at current value.
• At retirement, employees hired prior to
1/1/78 have the cash,An added to Final
Average Compensation for retirement
benefit calculations.
4. No change from the current policy.
(7 )
LIFE INSURANCE
Current •
Combination paid-up and term life coverage in an amount
equal to one times annual County salary rounded to the
next highest thousand.
Tire employee contributes 70V- per thousand per month of
this coverage toward paid-up insurance. The County
pays the cost of the term coverage. Double indemnity
is provided on this portion of the insurance.
2. in addition, supplemental term coverage equal to half
the amount in "1" above is provided by the County
which provides for a total coverage of 1.5 x salary.
3. . At time of separationonly, employees may receive
- contributions back in the form of cash or may
convert to a private pay policy or "freeze" as a
paid-up policy.
Proposed
1. The County will purchase term life insurance equal
to 1.5 x salary for covered employees. This would
be non-contributory coverage. In addition, employees
would be given the following options in regard to
their present contributory paid-up life coverage:
a. Retain their present paid-up coverage on a
contributory basis of 70V. per thousand per month
Of annual salary. The amount of paid-up insurance
in force will be in addition to the 1.5 x salary
term insurance purchased by the County. Employees
selecting this option would be covered for a total
of $12,000 combined, paid-up and term insurance
after retirement. By retaining present pa-id-up
coverage on a contributory basis an employee
would have retiree life insurance coverage
identical to current plan retiree coverp.-
b. Discontinue the contribution for paid-rip life
as of the plan conversion date. Retain a paid-
up policy at the value existing on the plan
conversion date. This paid-up level of coverage
would be in addition to the 1.5 x salary term
insurance purchased by the County. The amount
of the paid-up policy would be the only coverage
for the •employee after retirement'.
c. Discontinue the contributory paid-up life CO'VeT;10
and request a cash refund. The total amount of
the cash refund shall be equal to 100% of the
amount contributed by the employee or the amount
of cash value refunded by the insurance company
.(Aetna), whichever is greater. The County wilt
supplement the amount of insurance company cash
value refund if it is less than 100% of the amount .
contributed by the employee.
Those employees choosing this option have no
insurance coverage alter retirement.
(8)
LIFE INSURANCE
—2—
n
Proposed
2. Accidental death and dismemberment insurance coverogo
will be provided for an amount equal to one times
salary.
3. The County would remove the present $75,000 maximum
limitation on the term life coverage. All employees
would be covered for 1.5 x their actual salary.
4. The amount of life insurance shall continue to be
based on salary plus any service increment.
5. Life Insurance would be continued for disabled
employees.
6. All new hires, after the plan conversion date, will
be covered by the 1.5 x salary term instiranc and
1.0 x salary accidental death and dismemberment
insurance purchased by the County. This coverage
will apply during their period of employment and no
coverage would be provided after retirement.
(9)
FRINGE BENEFIT COMMITTEE
PHASE 1
FINAL REPORT AND RECOMMENDAT IONS
JULY 10, 1985
2. While drawing on the sick leave bank, a full-time
employee receives full salary (100%).
3. In addition to personal illness or incapacity, an
• employee may use sick leave for medical or dental
appOintments, care of ill minor dependent children,
• • and with advance permissiontwo days per year may
• be used for personal business. .
4.• Sick. leave -banks may be cashed-in under the
following conditions:
a. While still an employee if the bank is in
excess of LOU days - annually employees have
the option to Cash-in for one-half pay the
days in excess of 100.
b. Separation due to death or retirement - half
pay for current value of all days paid to
beneficiary or retiring employee.
SICK LEAVE/INCOME CONTINUATION INSURANCE
Current •
I,. Provides from date of hire for unlimited accumu-
lation of sick leave days in a "bank," to be
accumulated at the rate of 13 days per year.
Proposed
1. Replace the present 13 day per year sick leave plan
and retain existing sick leave accumulations as of
the plan conversion date in a sick leave reserve
bank. No additional days could be accumulated, how-
ever,- the value would continue to increase or decrease
with salary adjustments.
2. The present cash-in .options would remain for sick leave
"reserve" banks as described in Part 4 of the current
plan.
3. Replace the current sick leave program with the
following:
a. Personal Leave Plan - employees would receive five
personal leave days per work year. These days
could accumulate to a maximum of 15 days. They
Would have no cash-in value. They could not be
used to supplement short or long term disability
insurance. They could be used for personal ill-
ness, personal business, etc. For all practical
purposes they would be treated the same as annual
leave days. New employees would receive the five
days at the completion of their probationary period
and five more days would be added after completinp,
12 months of work.
c. Separation for reasons other than death or
retirement -.employee receives payment for
half of unused accumulated days in excess
of 75.
( 10)
In addition, the employee will be able to use up
to a total of 10 leave without pay days per
calendar year without.affecting his or her benefit
date. The benefit date would continue to hr
adjusted for any days over 10 unless the employee
is receiving short term disability benefits (see
below). •
SICK LEAVE/INCOME CONTINUATION INSURANCE
-2-
Current
5. Employees with six months eligible service are also
covered with Short-Term Income Protection
Insurance which provides the following level of
benefit for up to 26 weeks:
Years of Service Percent of Earnings*
0 - 4
5 - 9
10 and up
*Up to a maximum benefit of $240 per week
at 50%, $288 at 60% and $337 at 70%.
6. Short-Term income protection benefits begin
• after a continuous workday disability absence
- • equal to 70% of the number of sick days earned
since hire date or most recent eligible (Ifs-
' ability have passed. In no case do benefits
- •• begin prior to the 8th calendar day of
disability.
7. Employees may draw from their sick leave bank
to supplement the current short term
insurance coverage.
8. No long-term disability income insurance
coverage is presently provided. Employees are •
eligible for work related retirement disability
benefits and those with 10 or more years service
are elipible for non-work related •retirement
disability benefits.
Proposed
b. Short Term Disability Income Insurance - the Comity
would provide short term coverage at 607 of salary
for a period of 26 weeks beginning with the eighth
calendar day of illness or injury, Eligibility for
this short term insurance coverage would only apply
to those employees that have completed their six
month probationary period.
The benefit date for employees receiving short term
disability will not be adjusted for a maximum
number of work days equal to six months in a twelve
month period (130 work days). An employee off on
several short periods of disability would not have
an adjustment to their benefit date unless the
aggregate time off on short term disability ..
exceeded six months (130 work days) in the twelve
month period.
The County continues to provide health, dentai and
life insurance coverage. during this period, OH
the employee continues to earn retirement credits,
annual leave and other credits based on length of
service.
Coverage will be non-contributory for employees
unless the combined short and long term disability
premium rates exceed 200% of the first year premium
rate for these coverages. Should the premium rate
in future years exceed 200% of the first year rate,
the employee maybe required to contribute for the
cost in excess of 200% of first. year premium rate.
Pre-existing conditions will be eligible for coverago
under . the short term disability insurance for curt -ow
employees but will be excluded for employees hired
after the plan conversion date.
Absences from work due to chronic alcohol or drug
abuse related illnesses will be covered subject to
a lifetime cumulative total benefit of six months.
.50%
60%
70%
(1 1)
SICK LEAVEANCOME CONTINUATION INSURANCE
-3-
Proposed
.Absences from work due to mental conditions
not clearly related to a physical cause will he
covered subject to a lifetime cumulative total
benefit of six months. Those conditions
with a clear physical origin or with clear physical
impairment (such as epilepsy or premature senility)
will be covered and not subject to the six months
lifetime cumulative total benefit.
The weekly benefit amount will be limited to $923.08
($4,000 monthly).
Employees will be permitted to draw from their SiCk
Leave Reserve Bank hours which were accumulated under
the present sick leave plan to supplement the short
term disability income up to 100% of salary, provided
the employee has hours remaining in their sick leave
reserve bank.
Benefits will be offset by any Social Security, Oakland
County Retirement,' Worker's Compensation and/or any
other work related income.
All full-time non-represented employees and full time
represented employees eligible under the terms of their
labor agreement shall be eligible for this coverage,
excluding elected officials and officials who are
appointed for a specific term of office. Similarly
situated part-time eligible employees shall be eligible
for n pro-rated coverage as defined in the section
describing benefits for part-time employees.
c. Long Term Disability Income Coverage - the County wonld
provide long term coverage for all employees at 60%
of salary at the time of disability to age 65, beginnine
with the 27th week of illness or injury.
SICK LEAVE/INCOME CONTINUATION INSURANCE
-47
Proposed
Benefits will be offset against any Social Security
benefits received, Oakland County Retirement, Worker's
Compensation and/or any other work related incOme but
not by any sick or annual leave supplements.
Disability will be defined as not being able to perform
the employee t s own occupation for two years or any
occupation thereafter.
Eligibility for long term insurance coverage will only
apply to those employees that have completed their six
month probationary period and have exhausted any short
term disability insurance benefits.
Employees will continue to be eligible for current
work related or non-work related retirement di!;ability
benefits. Current employees who receive retirpment
disability benefits will have health and medical
insurance provided. New employees will have health and
medical insurance provided for work related retirement
disabilities and will have coverage provided for non-
work related retirement diSabilitly only according to
years of Oakland County service as described in the
retirement section of these recommendations for direct
retirements.
As a partial offset for inflation, if an employee is
also receiving retirement disability or social secnrily
payments while receiving long term disability, the long
term disability insurance payments will not be reduced
as a result of an increase in social security or
retirement disability income.
The monthly benefit amount will be limited to
$4,000/month.
(13)
SICK LEAVE/INCW . .01TINUATION INSURANCE
-5-
Proposed
Coverage will be non-contrihutory for employees unless the
combined short and long term disahility premium Nit ('5
exceed 200% of the first year premium rate for these
coverages. Should the premium rate in future yeats exceed
200% of the first year rate, the employee may he required
Upcontribute .for the cost in excess of 2007 of the first
year premium rate. Separate experience ratings will be
maintained for non-represented employees and for each
participating union group.
Pre-existing conditions will be excluded from this coverage
until after an employee has become eligible for long tetm
disability coverage and has worked 12 continuous months
since becoming eligible. A pre-existing condition is a
disease or injury for which an employee received !tealmeul,
services or prescribed drugs during the three monlbs
immediately before coverage begins.
All full-time non-represented employees and full-time
represented employees eligible under the terms or L.heil-
labor agreement shall be eligible for this covera
excluding elected officials and appointed officials t.,1 .m
are appointed for a definite term. Similarly situated
part-time eligible employees shalt be eligible for a pi 0--
rated coverage as defined in the section describing hone!
ror part-time employees.
Chronic alcohol or drug abuse related illnesses are
ONCIIIded.
Absences from work due to mental . and nervous conditions not
clearly related to a physical cause are excluded.
The County •will not continue to make dental premium pay-
ments during the long term disability period nor hflalth
insurance payments -unless the employee qualifies for health
coverage under disability retirement provisions. Vmployees
will not earn retirement credits 9 . annual leave or other
credits based on length of service. Life insurance will be
continued through the premium waiver method. Cmplovees
continue on the roster will he permMod to continuo
nnd dental insurance in force by making the requited moullilv
( 1 4 )
SICK LEAVE/INCOME CONTINUATION INSURANCE
-6-
Proposed
L Employees will be allowed to use accumulated sick leave
days from their sick leave reserve bank to supplement the
short and long term insurance coverage either for any
period of void prior to insurance coverage starting or to
supplement insurance income up to 100% of regular salary.
4. The value of accumulated sick days for persons employed prior
to 1/1/78 will continue to be added to the employee's final
•
average computation for retirement benefits as it is under
the current plan.
(15)
CURRENT
I. The straight life retirement formula provides:
VAC x years service x .018.
Paid — Health Care
Coverage
None
Single Person*
Family Policy
Total Actual
Service with
Oakland County
Less than 15 years
15 - 19 years
20 years or more
Total Actual
Service with
Oakland County
Paid
Health Care
Coverage
Less than 8 years
8 - 14 years
15 years or more
None
Single Person*
Family Policy
RETIREMENT
There are numerous elements of the retirement plan. Only those recommended for change are described below:
2. Deferred Retirement - all employees receiving a
retirement allowance under deferred retirement
provisions are eligible for full County payment
of family health care coverage.
PROPOSED
1. The straight life formula be improved to provide: [AC x
years service x .020.
2. Deferred Retirement - all employees hired after the apprme
of this plan (this change will not affect present employee
regardless of whether they elect to be covered under the
new benefit provisions) who receive a retirement allowance
under deferred retirement provisions will be eligible for
health care coverage only as provided below:
-*Retiree to have option to pay the difference for a
family policy.
3, Direct Retirement - all employees retiring from the
County directly from active employment with the
County are eligible for full County payment of
health care coverage.
3. Direct Retirement - all employees hired after the approval
of this plan (this change will not affect present employee ,
regardless of whether they elect to be covered under the
new benefit provisions) who retire from the County directl
from active employment with the County will be eligible lot
health care coverage only as provided below:
*Retiree to have the option to pay the difference for
(16) family policy.
RETIREMENT
-2-
CURRENT PROPOSED
• 4. Part time employees - receive retirement credit
for one month if they work 10 days in a month
and for a full year if they have 10 months of
credit in a year.
4. Part time employees - receive retirement credit
only On •a pro-rated basis (based only on the number
of hours actually worked in 'a year).
- INFORMATIONAL NOTE: Should alternate health care plans other than Blue Cross/Blue Shield be made
available to retirees, the County will fund the alternate health care plan up to
• the level being paid for the Blue Cross/Blue Shield coverage for which the
•- employee is eligible. .Retirees also continue to have the option to purchase •
riders at their own expense that are being offered to active employees. . This
note is applicable for employees who remain under current plan provisions and
those who elect the proposed provisions.
(17)
FRINGE BENEFITS FOR PAR1 -TIME ELIGIBLE EMPLOYEES
• Fringe Benefit Current Proposed
Sick Leave Pro-rated based on number of hours worked in Ineligible for sick leave days.
current pay period divided by 10, equals hours
credited. ._
Annual Leave Same as sick leave. Same as current.
Floating Holiday Full eight hours floating holiday. Four hours floating holiday time.
_
Regular Holidays Pro-rated baSed on number of hours worked in the Same as current
pay period prior to pay period in which holiday
• fell, divided by 10 equals hours credited.
Personal Leave Sixteen hours personal leave available to be Twenty hours of new type "Personal Leave"
subtracted from sick leave, each year (21 days or half the five days
credited to full time employees).
Short Term Disability Average hours worked in previous pay period times - Six calendar months waiting period for _
hourly rate multiplied by 50%, 60%, or 70%, eligibility (same as full time) but'the 60%
depending upon length of service, benefit would be computed on an amount equal
to one-half salary.
Long Term Disability Not Available -Ineligible for coverage.
,
Blue Cross/Blue. Shield Full coverage 100% paid by employer. Full coverage available with 50% paid by
employer.
Dental Insurance Ineligible for any dental coverage. I Full coverage available with 50% paid by
I employer. .
Retirement Must work 10 days in 3 month for credit. FAG Retirement credit based on number of hours
determined using same formula as full time worked provided revisions are acceptable to
employees. .state retirement authority. Formula
increased from 1.8 to 2.0 (same-as full timu
Life Insurance Covered as if full time employee. Term . coverage based on one and one-half time
an amOnnt equivalent to one-half salary.
Employees who also elect to continue con-
tributing for paid-up insurance will con-
tribute based on one-half salary.
( 1 Ft )
' FRINGE BENEFITS FOR FART TIME ELIGIBLE EMPLOYEES
-2-
Fringe Benefit Current Proposed
Service Increment Must work hours equivalent to 7-10-13-16-19 years Same as current.
to become eligible. Increment paid on hourly
rate. Persons hired after 7/1/84 are ineligible.
Tuition Reimbursement Same as full time employees. Same as current.
NOTE: Present part time eligible employees would have the choice between current and proposed coverages.
All new part time eligible employees will be covered by proposed provisions.
(19)
The material contained • in this section is intended to be a general
description of the benefits recommended for change. This is not a
contract. Every effort has been made to ensure the accuracy and
completeness of this description of benefits. However, if state-
ments in this description require further definition in the
applicable contracts, certificates and riders, or if the description
in the contracts, certificates or riders differ, then the terms and
conditions of those contracts, certificates and riders will prevail.
(20)
SECTION IV
BID REVIEW AND RECOMMENDATIONS
The intent of this report is to review briefly an "acid test" of the
results received with the bid openings.
The following information is a series of premium illustrations designed
to compare the competing companies performance. It should be noted that
data included in this comparison is for all eligible non—represented
employees, or 1,700 of the 2,800 employees that could be eligible for
coverage. As the plan is recommended to be offered to all employees on an
optional basis, non—represented and represented alike, the exact numbers
of employees and the exact volume of new coverages will not be known until
after employees have exercised their -options. It is felt that a review of
data for all non—represented positions is appropriate for purposes of com-
paring competing companies,
(21)
LIFE INSURANCE
.Company. Rate/$1,000 Volume 1.)
$10,993
$ 2,665 $163,80
$17,790
$ 2,665 S245,4C0
American
Eankers $.20 $66,629,090 $13,325
$.05 $66,629,000 $ 3 ;331
Ritual Benefit $.27 S66,629,000 $17,990
$.03 $66,629,000 $ 1,996
Total
Monthly Annual
Premium Premium
S192,72
'4-.23 0 ,666
$.040
• P.,?.tna
$.040
$.165 .$56,629,000
$66,629,000
Equitable $65,629,000
$66,629,000
Aetna • EQuitable American Bankers . MOtual PEnefiL
---------
($274,344) $16,287 $16,289 $40,756
1.) Easel on average oT carrier's reporting volume
2.) Five year average
( 22 )
Witual Benefit
$55,191
SHORT TERM DISABILITY COVERAGE
Company
Total
Monthly Annual
Rate/$10 Volume I.) Premium Premium
Aetna
Equitable
$.32 $511,657 $16,373 $196,476
$.61 $511,687 $31,212 $374,51 4
Afr.lcrican
Bankers
rOtual Benefit $.61
$511,687 • $29,677 $356,124
$511,687 $31,212 $374,554
$.58
Retention CorTarison2.)
Aetna Equitable Priican B-,:Ankers
$6,627 $45,533 $37,154
I.)• Based on average carrier's reporting volume
2.) Five year average
(23)
$2,186,623
$3,700.035
$29,519
$29,970
$354,229
$359,640
LONG TERM DISABILITY COVERAGE
Company Rate/$100 1.) Vo I ume 2.)
Total
Monthly Annual
Premium Premium
Aetna
(Benefit) $1.35
(Payroll) $
Equitable
(Benefit) $1.70
(Payroll) N/A
American Bankers
Mutual Benefit •
(Ecnefit) $1.10
(Payroll) $ .66
Retentien Comparison 3.)
$2,186,623 $37,172 $446,066
—NO QUOTE-
$2,186,623 $ 24,052 $288,631
$3,700,035 $- 24,420 $293,040
Aetna
$(-8,622)
Equitable
$ NONE SliC,111,
American Bankers Mutual.
$ N/A $47,995
1.) Specification plan only 2.) Based on average carrier's reporting volume • 3,) Five year average
Calpany Total Annual Premium Total Retention
COMBINED ANALYSIS
Aetna
Life-8 ADD $163,896 . $(-) 274,344
Short Term DiFability 1 ) $196,476 • 6,627 . . Long Term Disability $354,229 • $(-) 8,622
Total $714,601 ..- $(-) 276,539
I.)
Equitable
Life & ADD
Short Term Disability
Long Term Disability
Total
$245,460 $ 16,287 .
$574,544
$446,066 None Shown
$1,066,070 $ 61,820 •
American Bankers
Life & ADD $199,872 $ 16,289
- Short Term Disability $356,124 $ 37,154
No Long Term Disability - 3.) -
53,443 3.) Total $555,996 $
1.)
MAtual. Benefit
Life & ADD
Short Term Disability
Long Term Disability
• Total
$239,866 $ 40,756
$374,554 $ 55,191
$788,631 $ 47,995
$903,051 $ 143,942
1.) Benefit basis
un retention shown for leng term disability
3.) Life, ADD, Short Term Disability ONLY
(25)
CONCLUSION
' The results of the bidding process. were both expected and typical.
The number of carriers willing to underwrite political subdivisions is .
diminishing and reliance on existing carriers is important.
Based on the bid opening results, one carrier was consistently less
expensive — Aetna Life Insurance Company, -Hartford, Connecticut. The Aetna
quote was substantially lower than the only other full. quotation (32.968
percent less than Equitable).i .
The review of quotations was difficult in the interpretation of the
financial, design, and administrative questions asked as the carriers
were less than deliberate in responses. The one exception was Aetna Life.
Further, only one carrier fully addressed the financial alternatives —
again, Aetna Life.
For these reasons, Aetna Life should be considered for the underwriting
of the package requested. •
Special care will be exercised in detailing (an(' documenting). the financial,
design, and administrative provisions, and consideration will be given
to use of the numerous design, funding, and claim administration alter-
natives presented by Aetna.
(26)
The following section is divided into three parts. Part A deals with
the original fringe benefit areas under study by the Fringe Benefit
Review Committee: Annual Leave, Life Insurance and Sick Leave/Dis-
ability Income Insurance. These areas were considered as a package
with the objective of filling voids in benefit coverage, eventually
eliminating the increas'ing liability of sick leave banks and making
other changes which would result in overall benefit plan improvements
without increased cost.
Part B deals with the offering of the same retirement formula improvement
to other County employees that was awarded to Sheriff Department
employees as a result of an Act 312 Police/Fire Arbitration Award.
Part C describes the costs involved in adding two staff positions
that will result in a more cohesive approach to fringe benefit
administration and that should result in the spending of fewer benefit
dollars through monitoring of the new income continuation insurance
program as well as futu're health care cost containment efforts. •
SECTION V
COST AND FUNDING DESCRIPTION
PART •A
LIFE INSURANCE, ANNUAL LEAVE,. AND
SICK LEAVE/DISABILITY INCOME INSURANCE PLAN CHANCES
OAKLAND COUNTY FRINGE BENEFIT PACKAGE FIRST YEAR COST ESTIMATES
EFFECT OF PROGRAM CHANGES ON FIRST YEAR COSTS
AETNA BID
INCREASE (DECREASE) OVER BUDGET .
PARTICIPATION APPROPRIATION CHANGES
50% 75% 100% Fund Account
A. Life Insurance
1. 1.5 x Salary Term
Insurance $75,000
maximum including coverage o
present retirees (Mercer)
$(59,500) $ (89,250) $ (119,000) Fringe Benefit Group Life
Fund (73500) Insurance
2. Cost of Term Coverage for Fringe Benefit Group Life
retirees under each Option (25% Fund (73500) Insurance
of Mercer)
3. Cost of eliminating $75,000 . -- -- -- Fringe Benefit Group Life
- - maximum from Term Coverage Fund (73500) Insurance
(330,000 additional volume x 1.5
495,000 x .22)
4. Change in coverage for disabled
employees
NOTE: Savings to employees -
elimination of contributory paid-up
insurance $566,735
B. Sick Leave, Short-Terrn Disability
and Long-Term Disability Plans
1. Increase In liability for newly
banked days (@ 50) .
• (325,000) (487,500) . (650,000) Fringe Benefit Accumulated Sick/
Fund (73500) Annual Leave
( 28)
50% 75% 100% Fund Account
8. Short-term disability premium
9. Short-term disability supplement
(face value)
10. Bank reserve release for short-
.
term disability supplement (50% .
of face value)
-7 . Increase in liability for salary (13,000) (19,500)
increases
3. Accumulated sick leave bank (23,500) (35,250)
cash-ins (death, retirement, days
over 100, termination) Cash Paid
. (226,000) (339,000)
4. Decrease in payroll for time off
not paid sick leave
5. Sick leave supplement (face 278,500 417,750
value paid to employees)
6. Liability decrease for sick leave (139,500) (209,250)
supplement (50% of face value)
7. Decrease in payroll for time off (300,000) (450,000)
not paid short-term disability
(see note)
(26,000)
(47,000)
(452,000)
557,000
(279,000)
(600,000)
124,000
131,500
(72,500)
186,000
197,250
(108,750)
248,000
263,000
(145,000)
-OAKLAND COUNTY FRINGE IMINEFIT PACKAGE FIRST YEAR COST ESTIMATES
. EFFECT OF PROGRAM CJIANGES ON FIRST YEAR COSTS
AETNA BID
INCREASE (DECREASE) OVER BUDGET
PARTICIPATION APPROPRIATION CHANGES
Fringe Benefit
Fund (73500)
Fringe Benefit
Fund (73500)
General Fund
Non-Dept. (10100)
General Fund
Non-Dept. (10100)
Fringe Benefit
Fund (73500)
General Fund
Non-Dept. (10100)
Fringe Benefit
Fund (73500)
General Fund
Non-Dept. (10100)
Fringe Benefit
Fund (73500)
Accumulated Sick/
Annual Leave
Sick/Annual
Leave Cash-Ins
Personnel
Turnover
Personnel
Turnover
Accumulated Sick/
Annual Leave
Personnel
Turnover
Short-Term
Disability
Personnel
Turnover
Accumulated Sick/
Annual Leave
5(116,000) $ (174,000) 5 (232,000)
$(601,000)
(23,500)
(59,500)
$ (901,500)
(35,250)
(89,250)
$(1,202,000)
(47,000)
(119,000)
OAKLAND COUNTY FRINGE BENEFIT PACKAGE FIRST YEAR COST ESTIMATES.
EFFECT OF PROGRAM CilANGES ON FIRST YEAR COSTS
AETNA BID
INCREASE (DECREASE) OVER BUDGET
PARTICIPATION APPROPRIATION CflANGES
50% 75% 100% Fund Account
11. Long-term disability premium
12. Time off not paid for long-term
disability
251,000 376,500 502,000 Fringe Benefit Long-Term
Fund (73500) Disability
C. Annual Leave Changes
Reduction in growth of annual leave (51,000) (76,500) (102,000) Fringe Benefit Accumulated Sick/
accumulated days (Mercer) Fund (73500) Annual Leave
SUB-TOTAL (425,000) (637,500) (850,000)
D. Reserve
Establish a reserve for 425,000 637,500 S50,000 Fringe Benefit Reserve
possible disability , Fund (73500)
premium increases.
•oTAL -0- -a- -0-
GENERAL FUND NON-
DEPARTMENT (10100)
Personnel Turnover
FRINGE BENEFIT FUND (73500)
Accumulated Sick/Annual Leave
Sick/Annual Leave Cash-Ins
Group Life Insurance
(30)
248,000
502,000
850,000
$ 232,000
• OAKLAND COUNTY FRINGE BENEFIT PACKAGE FIRST YEAR COST ESTIMATES
EFFECT OF PROGRAM CHANGES ON FIRST YEAR COSTS
AETNA BID
. INCREASE (DECREASE) OVER BUDGET
PARTICIPATION APPROPRIATION CHANGES
50% 75% 100% Fund Account
Short Term Disability 124,000 186,000
Long Term Disability 251,000 376,500
Reserve 2 5 0 0 0 637,500
T OTAL FRINGE BENEFIT $ 116,000 $ 174,000
FUND
. GRAND TOTAL -0- -0-
NOTE: William M. Mercer-Meidinger,
Inc., fringe benefit consultants, estimate
that the potential decrease in payroll for
time off not paid while employees are on
the short-term disability program could
run as high as $1,200,000., A Budget
Mechanism would be required to move •
these savings from Departmental
Budgets to the Fringe Benefit Fund to
establish a reserve for possible disability
premium increases.
(31)
1.53%
0.72%
$62.8 million $ 961,485
62.8 million 452,463
Normal Cost
Unfunded Actuarial
Accrued Liability
PART B
RETIREMENT CHANGE
Recommendation
Increase multiplier in benefit formula from 1.8% to 2.0% of final
average compensation times years of credited service.
Cost of Benefit Change
Based on an amortization period of twenty (20) years and 100%
participation, Gabriel, Roeder, Smith & Company computes the increase
in annual employer contribution to cover the normal cost as well as
the unfunded actuarial accrued liability as follows:
Payroll Valuation Employer
(Excl. Sheriff Dept.) Contribution
Total Cost 2.25% 62.8 million $19413,948
(32)
PART C
STAFFING CHANGES
Cost of recommended addition of two staff positions to continue
coordination of future fringe benefit reviews, monitor new insurance
coverages on a continuing basis, and servo as the principal source
of employee information on fringe benefits.
Salary Fringe Total
1 Sr. Personnel Tech. 33,115 11,921 45,036 .
1 Clerk III 15,538 5,594 21,132
66,168
(33)
APPLl ,
A A
SUMMARY OF EMPLOYEE INPUT
REGARDING PROPOSED FRINGE BENEFIT REVISIONS
It is important to note that the employee input and
the attached summary was made in November, 1984, prior to
modifications being made to the original recommendations.
In fact, several of the modifications were made as a result
of the discussion at the employee meetings and the input
received later from the employees.
While only a limited number of modifications could be
made to the package, it is reasonable to assume that there
would be an improvement in a significant number of employee
ratings as a result of the changes.
As only half of the employees who attended the meetings
took advantage of the opportunity , to provide input, and of
the half that did provide input nearly 70% rated the original
package "Acceptable" or "Like Very Much," it is felt we
certainly have at this time a package that will be reasonably
well received by employees. .
1
2
3_7
83*
34**
66
183
SUN.'1ARY OF EgPLOYEE INPUT
PECARDINC PROPOSED FRINGE BENEFIT REVISIONS
I. Overall Ey3luaon
Nineteen Employee Information and Input Meetings were conducted by the Personnel
Department from October 24 through November 2. Of approximately 2 ,1400 fulJ-:me
elipible emnlovees (this excludes OCEU employees) that could have attended the
meetings, 1230 employees attended and received inout .documents. Of the 1230
employees who attended the meetings, 605, or iON oi those who attended returned
inout documents.
The evaluation sheet (Attachment A) contained a scale of 1-10 for employees to
indicate their overall evaluation of all proposed changes as a package. Ratings
1-3 were to reflect an evaluation of "Don't Like At All;" 4-7 indicated an •
."Acceptable" evaluation; and 8-10 reflected "Like Very Much." Some employees
-marked between the numbers and they were reflected accordingly. Ratings of 3.5
and 7.5 were included in the "Acceptable" category. . Sixteen employees did not
include an evaluation rating and five split their ratings between parts of the
package and could not be counted.
Of the 584 responses received and which could be counted, 183 employees, or 3]-37,
rated the packaae "Don't Like At All." The remaining 401 employees, or 68.71 rated
the paekae "Acceptable" or "Like Very Much." The 183 employees who returned
ratings of "Don't Like At All represent 14.9% of the 1230 employees who attended
the meetings and 7.6% of all 2400 employees who could have attended the meetings.
A more detailed listing of the evaluations may be found below:
Scale of
Value Employees
3.5 11
4, 115
5 63
5.5 3
6 46
6.5 1
7 80
7.5 4
8 45
9 17
10 16
584 ***
(35 )
323
78
SUARY OF le!'i?LOLE ir
REGARDING PROPOSED FRINCE BENEFIT REVISIONS
*Includes 3 employees rating below a value of 1.
**Includes 1 employee circling 1, 2 and 3.
'""In addition, 5 employees split ratings between life insurance and sick
leave/income insurance and could not be counted, and 16 employees returned
input documents without evaluating the package.
II. Summary of_Sur,,,ested Chnnnes to Proposals
A. Life Insurance
Of the 605 responses received, by far the most frequent suggested change to
the Study Committee recommendations related to the new cash-in option
while still employed projected to be at 85% of actual cash value. There
were 184 responses indicating the cash-in amount should be higher, virtually
all suggesting the cash-in should be 1007.. The suggestion was made by 13
employees that the County cover the difference to 100% of cash value.
Several different suggestions were made concerning life insurance at
retirement. A number (28) indicated there should be some life insurance
coverage at retirement even for those who elected the cash-in options.
Some (11) also expresseft concern over the present level of coverage at
retirement, indicating in various ways that the level should be greater
under the current or proposed plan.
Fifty-four (54) different types of suggestions were received related to
life insurance. With the exception of the suggestions referred to above,
most other suggestions were made by one individual with some suggestions
made by up to 8 employees. Ten (10) employees specifically suggested
the current life insurance package should be left alone.
A detailed listing of the 54 different types of suggestions submitted is
available. from theEmployee Relations Division.
B. Sick Leave/Income Continuation Insurance
The most frequent suggestion received from the 605 employees in this
category was made by 279 employees to increase the proposed 5 personal
leave days to some greater number. The most frequently mentioned (50
respondents) number of days suggested was S.
A significant number (95) of respondents also suggested that some
accumulation of unused personal leave days be permitted rather than lose .
the days at the end of the allocated year. The suggestions to permit a
limited accumulation generally did not contain any cash-in Provisions
for unused days. An additional 12 employees suggested transferring unused
personal leave days to the employees annual leave bank.
(3.6)
sunApy 07 EnrLoY:E INPUT
REGARDINC PROPOSED ITINU BENEFIT REVISIONS
Just over SF of the respondents .(37) suggested that the percentage level
of benefit paid under either or both short term or long term disability
insurance be increased.
A number of employees (37) who in most cases did not suggest accumulation
of unused personal leave days, did suggest some type of cash-in for unused
days each year.
Sixteen employees suggested that Blue Cross/Blue Shield should be paid
for employees on long term disability insurance.
A total of 69 different type of responses were received. Other
than the ones mentioned above, most were suggested by one employee with
a few suggested by as many as 5 or 6 employees. Eleven employees
specifically suggested leaving the current_ program alone.
A detailed listing of the 69 different suggestions is available from
the Employee Relations Division.
11/84
(37.•
Q7 pr;-7QT,,-
FPO OPTOTNAL RECTNENDATTOS 70 TL I BOATT
In December, 1984 the Board approved in concept a backagc of fringe benefit
changes covering changes in the areas of annual leave, life insurance and sick
leave/income continuation insurance.
Since that time a number of modifications and clarifications have been
made to the recommendations. These changes are in addition to the changes that
were recommended following the employees information meetings. Those earlier
changes were included in the material reviewed by the Board in November and
December. The most significant of the changes in recommendations from the
material reviewed by the Board are listed below:
1. Providing employees the option to remain with the current benefit
provisions or elect to be covered by all the new recommended provisions.
. 2. Adding a retirement improvement factor from .018 to .020 to the overall
package of. changes.
3. New employees will not be eligible for health care insurance covcrane
upon either a deferred or direct retirement without working a minimum
number of years (see the recommendations for details).
4. - Assuring that an employee who elects to cash-in their current paid
up life insurance will receive an amount equal to 100% of the amount
contributed by the employee for life insurance. This does not assure
100% of cash value in an employee's account. Current estimates are
that Aetna will refund 92% of cash value although this could change
due to bond market fluctuations. The County will supplement if the
Aetna refund is less than 100% of the amount contributed.
_5. Addition of a „capon what the County will pay for short and long term
disability insurance of 200% of the first year premium rate.- initial
premiums appear to be low and the package initially will result in
budget savings. Creation of an interest bearing account to hold these
savings is recommended. Should future year premium rates increase
beyond the 2007 and eliminate the savings and resulting in an overall
cost, the County would have the option of funding the additional costs
from the interest bearing account or require some employee
contributions.
6. Pre-existing conditions will be covered by short term insurance but
' not under long term insurance until the employee has workbd a
continuous 12 month period after becoming covered under the plan.
This is not a change but .a clarification of recommendations.
7. Limits on chronic alcohol and drug abuse, and mental and nervous
condition related illnesses have been spelled out.
( 38 )
SUA1;Y OF PVS OS
OT:T7,INn-77.77-(=:NDATTO>:S TO THT BOATT
8, A monthly benefit amount of $4,000 is
and long term coverage.
recommended under both short
9. •Elected officials and appointed officials appointed for a definite
term are excluded under short and long term coverages. This is a
clarification.
10. Some modifications in part—time eligible employee benefits are being •
recommended,
(39)
1 Senior Personnel Technician
1 Clerk III
APPENDIX C
COUNTY NONITNINt OF 'INSURANCE CARRIER
ADMINISTERED DigABIITY INCOME INSURANCE
The shifting of income benefits for extended illness or injury absences
from sick leave and leave without pay to disability income continuation
will eventually eliminate the liability of sick leave banks. however, it
results in the addition of approximately $1,000,000 in premiums to provide this
insurance coverage for the first year. It also places much of the responsi-
bility for verifying the legitimacy of the absences and administering the
program on the insurance carrier. Over a period of time the County benefits
from or pays for the quality of administration of the program through experience
rating of future premiums.
In order to begin the program on solid footing with fair but carefully
supervised administration of benefit provisions, it is recommended that the
County assume certain functions at the outset of the program. These are mainly
aimed at assisting the employee and insurance carrier in promptly processing
claims, closely monitoring the insurance carrier performance and also becoming
directly involved in difficult cases or cases of frequent usage by individuals.
Both clerical and professional functions are involved. A partial listing of
possible functions is attached.
Inasmuch as this is a new benefit program and the amount of time required to
monitor the program and the performance level of the insurance .carrier are both
uncertain, it is recommended that weapproach County monitoring and adminis-
trative involvement in the program on a trial basis. Further, it is fully
expected that we will be actively pursuing health care cost containment options
and dental insurance funding in the near future as well as reviewing remaining
fringe benefit areas, and staff assistance will be required for those activities.
It is recommended that the coordination of future benefit reviews continue
te be assigned to the Personnel Department and that monitoring of the new dis-
ability insurance programs also be assigned there.
The consensus of the Study Committee is that continued coordination of
- fringe benefit reviews as well as monitoring of the new insurance coverages
• are expected to require the equivalent of two full time staff. The following
is recommended for placement in the Employee Relations Division to be effective
with formal approval of the benefit revisions.
Salary Fringe To ,-22
33,115 11,921 - 45,036
15,538 5,594 21,132
566,16S
*Based on full time for twelve months.
The Study Committee recommends that the Personnel Department report to
the Personnel Committee on frinse benefit staff utilization at Six month
intervals following approval of the benefit revisions.
(40)
P OS Ir., -7. e.'CTIONSJCD
I StJR:CL CARPI:CR --e------- e“eeeee.ee.
Clerical Prof.
X X Explain detailed benefit provisions to individual employees or close -
relatives of emPloyees such as eligibility reQuerements, levels of
benefits, benefit offsets, benefit date adjustments, use of sick leave
days to supplement insurance and fringe benefit continuation provisions.
X • Assist employees or close relatives in the completion of claims forms be
explaining the claims procedure, providing claims forms, completing any
employer required information on the claim form and forwarding the elai:
to the insurance carrier.
X Verify employee eligibility for all claims.
Monitor insurance company reports and processing of claims to determine
that payments are for covered employees, are for periods covered by
physicians' statements and are for the appropriate amounts. .
X Monitor promotness of insurance company review of eligible illnesses
and, where delays are encountered or Physician statements are unclear,
verify Physician statements by directly contacting the physician or
schedule the employee for a second Physician's opinion with a County
paid physician.
X Discuss Questionable claims with insurance carrier benefit service
representatives and contact employees immediately if claims are to be
denied.
X Monitor income insurance benefit usage and identify frecuent users
for closer monitoring and review.
X Develop and implement procedures in cooneration with the insurance
carrier for Monitoring cases of frequent income insurance users
including contacts with department supervision and use of second
physician's opinions.
X Assure that employees or their families are making application for all
other income benefits to which the employee may be entitled such as
social security and retirement and that appropriate offsets are being
made to the County income insurance amounts for any other such benefit
being received. Assist the employee and or employee's close family to
make application fer other disability benefits, where appropriate.
X Develop criteria for evaluating insurance carrier performance of
benefit administration, prepare performance evaluations, and if
necessary•work closely with the insurance carrier to improve benefit
administration services.
X
( '1)
FISCAL NOTE
BY: FINANCE COMMITTEE, DR. G. WILLIAM CADDELL, CHAIRPERSON
IN RE: FRINGE BENEFIT RECOMMENDATIONS FOR CHANGES IN ANNUAL LEAVE,
LIFE INSURANCE, SICK LEAVE/INCOME CONTINUATION INSURANCE, AND
RETIREMENT PROVISIONS - MISCELLANEOUS RESOLUTION #85232
TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Mr. Chairperson, Ladies and Gentlemen:
Pursuant to Rule XI--C of this Board, the Finance Committee has reviewed
Miscellaneous Resolution #85232 and finds:
1. Annual Leave, Life Insurance and Sick Leave/Disability income Insurance areas
were considered as a package with the objective of filling voids in benefit
coverage, eventually eliminating the increasing liability of such leave banks and
making other changes which would result in overall benefit plan improvements
without increased cost. The following annual fiscal implications are predicated
on 100% participation.
Current Proposed Increase/
Description Budget Amendment (Decrease)
Short-term Disability $ 99,600 $ 347,600 $ 248,000
Long-term Disability — 502,000 502,000
Group Life Insurance 313,938 194,938 (119,000)
Sick/Annual Leave 1,369,870 120,870 (1,249,000)
Personnel Turnover -- (232,000) (232,000)
Reserve* — 850,000 850,000
TOTAL $1,783,408 $1,783,408 $ -0-
*First year savings will be used to establish reserve for potential future premium increases
and for supplementary payments to employees ensuring 100% refund of Life Insurance
contributions.
2. Implementation of the Annual Leave, Life Insurance and Sick Leave/Disability
Income Insurance changes effective December 7, 1985 requires the following
budget amendment:
Increase/
(Decrease)
Short-term Disability $19,100
Long-term Disability 38,600
Group Life Insurance (9,200)
Sick/Annual Leave (96,100)
Personnel Turnover (17,800)
Reserve 65,400
TOTAL $ -0-
3. The recommended fringe benefit changes include the same retirement formula
improvement to other County employees that was awarded to Sheriff
. Department employees as a result of an Act 312 Police/Fire Arbitration Award,
i.e., increasing the multiplier in the benefit formula from 1.8% to 2.0% of final
average compensation times years of credited service.
$62.8 Million $ 961,485
$62.8 Million
$62. 8 Million
452,463
$1,413,948
4. Based on an amortization period of twenty (20) years and 100% participation,
Gabriel, Roeder, Smith <1.: Company computes the increase in annual eriH oyc
contribution to cover the normal cost as well as the unfunded actuarial accrued
liability as follows:
% of Payroll Valuation Employer
Payroll (Excl. Sheriff Dept.) Contribution
Normal Cost 1.53%
Unfunded Actuarial
Accrued Liability 0.72%
TOTAL 2 . 25%
5. The Oakland County Employee's Retirement Commission has reviewed the Fringe
Benefit Committee Report and Recommendations and concurs with the 2%
benefit formula; and further finds that there will be sufficient funds available in
the Special Reserve and Interest to transfer the $452,463 each year necessary to
cover the cost of the unfunded actuarial accrued liability.
6. Implementation of the change in the retirement formula effective December 7,
1985 requires the following budget amendment:
4-10100-909-01-00-9900 Contingency
4-10100-909-01-00-9906 Fringe Benefits
7. All of the foregoing changes in fringe benefits will be an integral part of the
compensation package for new employees, however, current employees will be
offered the one time option to continue the present benefit package (Option A)
or select the revised benefit package (Option B)
8. To cover the cost of Sick/Annual Leave accumulation ($10,489,448), the actuary
currently includes .4% payroll ($251,200) and recommends an additional .2% of
payroll ($125,600) in calculating retirement liability resulting from increased
Final Average Compensation. Implementation of the recommended Fringe
Benefit Package will eventually eliminate the escalating liability for banked
sick/annual leave days, thereby resulting in an annual cost savings of .4% and a
cost avoidance of .2% of payroll for employer contribution to the Retirement
Fund.
$ (73,960)
73,960
-0-
FINANCE COMMITTEE
B 10
12th day of September 19 85
_ALLEN
County Clerk/Regir of Deeds
September 12, 1985 #85232
Moved by McDonald supported by Skarritt the resolution, with Fiscal Note
attached, be adopted.
Discussion followed.
AYES: R. Kuhn, S. Kuhn, Law, McConnell, McDonald, McPherson, Moffitt, Nelson,
Page, Price, Rewold, Skarritt, Webb, Wilcox, Aaron, Caddell, Doyon, Fortino, Gosling,
Hobart. (20)
NAYS: Lanni, Moore, Perinoff, Pernick, Calandro. (5)
A sufficient majority having voted therefor, the resolution, with Fiscal Note
attached, was adopted.
STATE OF MICHIGAN)
)
COUNTY OF OAKLAND)
I, Lynn D. Allen, Clerk of the County of Oakland and having a seal,
do hereby certify that I have compared the annexed copy of the attached
Miscellaneous Resolution adopted by the Oakland County Board of Commissioners
at their meeting held on September" 12, 1985
with the orginial record thereof now remaining in my office, and
that it is a true and correct transcript therefrom, and of the
whole thereof.
In Testimony Whereof, 1 have hereunto set my hand and affixed the
seal of said County at Pontiac, Michigan
this