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/ 1 ,- S EN HILLS MEMORANDUM DATE: November 9, 2005 Agenda Item 3.F. TO: Honorable Mayor and City Council Members Michelle Wolfe, City Administrator FROM: Schawn Johnson, Assistant to the City Administrator SUBJECT: Motion to Approve Policy Changes to the City's Short Term Disability, Long Term Disability, and Life Insurance Policies for Non-Union City Staff Members Background After the City Council approved the appointment of Financial Concepts, Inc. in May, City staff requested their assistance in reviewing the City's current short term disability, long term disability, group life insurance, and supplemental life insurance policies. After completing their review of our existing policies, Financial Concepts and City staff noticed that the City had overlapping short term disability and long term disability insurance policies. The City's current short term disability policy is a maximum weekly benefit of$200.00 per week for a period of 26 weeks. The City's long term disability policy is a benefit that pays 60% of a disabled employee's salary. The long term disability insurance would be enacted after three months. Financial Concepts and City staff have been reviewing different short term disability plan options that are available to the City in order to eliminate this overlap in disability coverage. The intent of this change was to review potential ways in which the City could maintain or reduce premium costs and potentially increase the benefit value to City staff. Financial Concepts, Inc. has been working closely with our current short term and long term disability policy holder and was able to obtain a price quote for a 13 week short term disability benefit with a maximum weekly benefit of$1,000. The projected cost for this increased benefit would be $147.00 per month ($1,764.00 annually). At this time, the City currently pays $220.50 per month ($2646.00 annual fee) for a 26 week short term disability insurance benefit. Through the elimination of the overlap in the short term and long term disability policies, the City will be able to save approximately $882.00 per year in premium costs and increase the value of the short term disability benefit to staff members. City staff is also recommending an increase in the City's current group term life insurance policy. The City currently offers City staff members a $10,000 insurance benefit. City staff is proposing that the insurance benefit be raised to $20,000 per staff member. The proposed \\Metro-inet.us\ArdenHills\Admin\Assistant City Administrator\Memo's and Letters\2005\Life and Disability Insurance Benefits Memo-11-14-05.DOC