11-28-2018 Council Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Keis and Members of City Council FROM: Chris Heineman, City Administrator Sharon Provos, Finance Director Heidi Heller, City Clerk DATE: November 21, 2018 RE: Proposed Personnel Policy Amendments: Short Term Disability, PTO Maximum Accrual, PTO Conversion Policy & Miscellaneous Short Term Disability Plan Amendments Currently the City provides Short Term Disability (STD) and Long Term Disability (LTD) coverage to all regular full-time and part-time employees who accrue benefits as a supplement to the PTO program. The LTD plan has been offered for many years, but the STD went into effect in 2014 when the City switched from sick & vacation time to Personal Time Off (PTO). Both plans are currently paid for by the employees. The intent of STD is to bridge the gap between banked PTO or deferred sick time, and the 90th day when an employee may qualify for LTD. The STD benefit is provided through an employee- paid City account and the cost to full-time employees is $10 per month (post-tax dollars) with that cost pro-rated for eligible part-time employees. The STD benefits currently begin on day 15 of continuous disability, and employees are paid 2/3 of their base salary. This benefit is paid on a post-tax basis since the employee is paying the premium with post-tax dollars. The STD benefits run from the 15th calendar day through the 89th calendar day of absence. Our LTD plan from Unum then begins on day 90. The STD plan has been used three times over the past five years, which is more than was anticipated, and the fund balance has gone negative more than once. The personnel policy was amended in 2016 to state that if the STD balance was depleted, the City would contribute funds to bring the balance back to $0.00. The balance has been depleted more than once, but to date, the City has not contributed any funds to the STD account. Due to the time and difficulties that we have had with administering our current STD plan, staff is proposing to change the employee-paid self-administered STD insurance policy to a City paid STD policy from Unum. Having an outside plan administrator (Unum) means that City Staff would no longer have to decipher medical records and determine when and for how long an employee qualifies for STD. The city-paid proposal is also more affordable since a self-funded STD plan is almost twice the cost due to insurance underwriting policies. The cost of the plan increases substantially from a benefit start day 30 ($1,701.65/year) to a benefit start day 15 ($3,025.15/year). Unum has agreed to hold our base life insurance and LTD rates with no increase for two more years if we add a STD policy with them. For 2019, this would be a savings of $202.80.