HomeMy WebLinkAboutD-1378-98 Disability Plan 2-40Ordinance D- 1378-98
AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF CARMEL, INDIANA
CREATING A DISABILITY INSURANCE PLAN FOR CITY EMPLOYEES
WHEREAS, a benefits program is an increasingly important part of attracting and
retaining qualified employees; and
WHEREAS, the City provides disability coverage for its police officers and firefighters
through the Public Employees Retirement Fund, but no equivalent insurance coverage for its
civilian employees; and
WHEREAS, the City's current paid time off program does not provide adequate income
replacement for a civilian employee who experiences a short-term or long-term disability; and
WHEREAS, the City desires to enable the continuity of employee income should a civilian
employee become disabled.
NOW, THEREFORE, BE IT ORDAINED by the Common Council of the City of
Carreel, Indiana, as follows:
That Chapter 2, Article 3, Division IV, Sections 2-66 through 2-71, inclusive, are hereby
repealed in their entirety; and
o
That Chapter 2, Article 3, Division II, Section 2-40, entitled "Disability Insurance," is
hereby added to the Carreel City Code and shall read as follows:
"SECTION 2-40 Disability Insurance
(a) Short-term Disability
The City shall contribute one hundred percent (100%) of the premium for a
short-term disability plan. All full-time civilian employees shall be eligible
for coverage under this plan after 30 days of employment with the City.
(2)
Full-time employees hired by the Carmel-Clay Parks Board shall also be
eligible for coverage under the City's short-term disability plan after 30
days of employment provided the following conditions are met:
The insurance provider, or third party administrator in the event the
City is self-insured, shall agree in writing on all new plan inception
dates and plan renewal dates that Carreel-Clay Park Board
employees shall be included for such coverage.
b)
The entity responsible for administering the Carreel-Clay Parks
Board funds shall reimburse the Clerk-Treasurer of the City in a
timely manner pursuant to the premium payment provisions of the
short-term disability insurance plan.
(b) Long-term Disability
The City will make available to eligible City employees, on an optional
basis, long-term disability coverage. Availability of the plan is contingent
upon a specified level of employee participation. All full-time civilian
employees shall be eligible for coverage after 30 days of employment with
the City.
(2)
Employees who elect long-term disability insurance' coverage shall pay
100% of the cost of the coverage through payroll deduction, or on other
payment terms acceptable to the City.
(3)
Full-time employees hired by the Carreel-Clay Parks Board shall also be
eligible for such insurance coverage after 30 days of employment, provided
the following conditions are met:
a)
The insurance provider, or third party administrator in the event the
City is self-insured, shall agree in writing on all new plan inception
dates and plan renewal dates that Carreel-Clay Park Board
employees shall be eligible for coverage.
b)
All such employees shall contribute 100% of the premium currently
in effect for eligible City employees.
c)
The entity responsible for administering the Carmel-Clay Parks
Board funds shall reimburse the Clerk-Treasurer of the City in a
timely manner pursuant to the premium payment provisions of the
long-term disability insurance plan.
o
This Ordinance shall be in full force and effect on and after the later of: (a) the date of its
passage, execution by the Mayor and publication as required by law; or (b) the execution
by the City of an insurance contract providing the insurance coverage authorized herein.
o
All prior Ordinances or parts thereof inconsistent with any provisions of this Ordinance are
hereby repealed as of the effective date of this Ordinance.
ing Officer
COMMON CO~IL FOR TFIE CITY OF CARMEL
J ed - y~ ~}~ '
nald E. Carter
Yder~'
Bill
· , asurer
Pre. sented by me to the Mayor of the City of Carreel, Indiana the ~, day of
O~ ,,V~// .,h, ,-~' ,1998. ~&
o~7~~2e' ' , . - asurer
,1998.
l:, dTBrain d, May "'
ATTEST:
Diana L. Cordray I~urer
Human Resources
M
ITiO
To:
FroIll:
Date:
Re:
Carreel Common Council
Barbara Lamb, Director of Human Resources
Mayor James Brainard
Clerk-Treasurer Diana Cordray
July 27, 1998
Ordinances D-1376-98, D-1377-98, D-1378-98
You have already been bdefed on these three ordinances, which will be on the Council agenda for a
first reading on August 3, so I will only summarize here. Please call me if you have misplaced the
odginal handouts or would like additional information.
Ordinance D-1376-98 This ordinance concerns (civilian only) sick leave. Sick leave accruals are
reduced from 7.5 hours per month to 5 hours per month (from 12 days to 8 days annually). Average
use is 5.5 days annually.
Allowable carry-over is increased from 30 days to 40 days. Altematively, employees may cash in time
in excess of 30 days at a 3:1 ratio. Since this payout was not included in the 1999 budget, excess
time in 1999 will be converted to vacation time (rather than cash) at a 3:1 ratio. Cash payouts will
begin in the year 2000.
The fiscal impact in 2000 is estimated to be less than $20,000. The operational impact of reducing
unscheduled time off is favorable, as is the effect on morale for employees who seldom use sick
leave.
Ordinance D-1378-98 This ordinance creates a (civilian only) disability plan. It is a companion to
the above ordinance, with the overall goal being a balance between short-term and long-term sick/
disability benefits.
The City will pay 100% of the cost of a short-term disability (STD) insurance plan. Benefits will begin
after a 30 day elimination pedod (dudng which time sick is used) and may continue for 13 weeks.
Benefits are 60% of base pay, to a maximum of $750 per week (taxable).
An employee may elect to purchase optional long-term disability (LTD) insurance. These benefits will
begin when short-term disability benefits run out and may continue to age 65. Benefits am 60% of
base pay, to maximum of $5,000 per month (non-taxable).
This ordinance also eliminates the Catastrophic Medical Leave Plan, which duplicates the benefit of
the short-term disability plan and which is too subjective to be effective. Employees cannot count on
receiving benefits from the plan under any given set of circumstances, and the plan administrator is
· Page I
placed in the difficult situation of faidy and consistently distributing benefits in the absence of firm
guidelines.
The fi~t. year STD premium is approximately $30,000. This sum is available in the 1998 Board of
Works insurance account, so I would like to begin coverage as soon as we get a signed contract.
Future year premiums will be based on plan experience. The premiums for 1999 are already included
in the department budgets. The entire cost of optional LTD is borne by employees,
Ordinance D-1377-98 This ordinances creates a plan to pay a portion of the medical insurance
premiums for employees (civilian and swom) who have at least 20 years of active seNice with the
City. As a result of the feedback we received from the initial briefings, we have scaled back the
benefits to start at 50% after 20 years of service and increase by 1% for each additional six (6) months
of service, to a maximum of 75% of the employee-spouse premium. Benefits are currently capped by
the ordinance at $350 per month or $4200 per year.
The fiscal impact for 1999 is approximately $24,000, which is included in department budgets.
However, to fully fund the cost of retiree benefits for 20 years over a pedod of 15 years will require an
estimated annual contribution of $202,000 beginning in the year 2000 (see attached cost projections
and funding estimates), While this is a conservative estimate, we will need to monitor our costs
closely from year to year and make adjustments as necessary. The benefit for employees disabled or
killed in action will be calculated separately because it is impossible to predict. That amount will be
added to the appropriate department's health insurance budget each year.
This is an exceptionally valuable benefit, particularly for swom police officers and firefighters, who
tend to retire long before they are eligible to enroll in Medicare. Swom personnel and civilians alike
are appreciative of your consideration of this ordinance.
Please call me at 571-2471 if you have questions pdor to the August 3 Council meeting. The
committee that developed the retiree insurance premium plan will be at that meeting to make a brief
presentation. i will be able to speak to the other two ordinances, if requested.
Thank you for your support on these important employee benefits issues.
· Page 2
Sunanary of Retiree Insurance Premimn Payment Plan
Benefit
· City pays 50% of employee-spouse premium after 20 years of active service
· City pays additional 1% for each additional 6 months of active service
· Maximum payment is 75% of employee-spouse premium
· Benefit is capped at $350 per monte $4200 per year
Assumptions
· Current employees with more than 12 years longevity will remain employed for 20 years;
75% probability that employees with less than 12 years longevity will remain
· All employees will be married at time of retirement
· Average retirement age is 52 for sworn personnel, 63 for civilians; employees will actually
retire at these average ages
· Coverage ends at age 65
· Premiums increase 5% annually
· Council does not act to raise benefit cap
Cost
· 1st year: $23,930 ($23,930 cumulative)
· 5th year: $49,383 ($167,987 cumulative)
· 10th year: $146,321 ($704,669 cumulative)
· 15th year: $271,028 (1,910,838 cumulative)
· 20th year: $402,087 ($3,594,816 cumulative)
· requires approximately $202,000 annual contribution to fully fund in 15 years
Page 3
City of Carmel
Potential Retiree Insurance Benefit
Funding Proposal
Employee-Spouse Premium Contribution from 50% to 75%
Only up to $350 per Month
Assumes Sworn Employees Retire at 52, Civilian Employees at 63
5% Annual Interest Rate
Identical Annual Contributions
First 20 Years of Spending Funded by 2013
Beginning
Balance
1999 0
2000 0
2001 181,661
2002 361,771
2003 551,282
2004 735,278
2005 918,716
2006 1,074,850
2007 1,228,509
2008 1,361,226
2009 1,486,358
2010 1,585,821
2011 1,654,752
2012 1,674,867
2013 1,676,130
2014 1,689,182
2015 1,695,239
2016 1,667,558
2017 1,628,436
2018 1,537,464
Annual
Input
23,930
202,000
202,000
202,000
202000
202.000
202000
202 000
202 000
202000
202000
202 000
202 000
202,000
202,000
202,000
202,000
202,000
202,000
202,000
Annual
Ou~ow
23,930
24,770
35,144
34,759
49 383
58 904
94 489
104 521
132 447
146 321
177 468
212 108
263,095
282,469
271,028
278,490
311,701
321,512
370,189
402,087
Ending
Interest Balance
0 0
4,431 181,661
13,254 361,771
22,270 551,282
31,380 735,278
40,341 918,716
48,624 1,074,850
56,179 1,228,509
63,164 1,361,226
69,453 1,486,358
74,931 1,585,821
79,038 1,654,752
81,210 1,674,867
81,732 1,676,130
82,081 1,689,182
82,547 1,695,239
82,019 1,667,558
80,390 1,628,436
77,217 1,537,464
71,871 1,409,248
RETINS.XLS, Option 3 7/27/98, 10:00 AM