Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
SEPTEMBER 19, 2024
Subject
SUBJECT: GROUP INSURANCE PLANS
Action
ACTION: APPROVE RECOMMENDATION
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer (CEO) to renew existing group insurance policies covering Non-Contract and AFSCME employees, including long-term disability coverage for Teamster employees, and life insurance for all full-time Metro employees, for the one-year period beginning January 1, 2025.
Issue
ISSUE
Existing group insurance policies covering Non-Contract and AFSCME employees, including long-term disability coverage for Teamsters and life insurance for all full-time Metro employees, end on December 31, 2024, and must be renewed on an annual basis. Renewal of the existing group insurance plan coverage, for the one-year period must be approved and in effect on January 1, 2025, to provide seamless group insurance coverage for Metro employees.
Background
BACKGROUND
The Non-Contract Group Insurance Plan, a flexible benefits program, was implemented in August 1994. Roughly 99% of the employees covered by the benefit plans are PTSC employees. Metro’s health insurance plans are part of the total compensation package that helps attract and retain qualified employees, as well as provide existing employees with a foundation to maintain or improve health. Los Angeles County Metropolitan Transportation Authority (LACMTA), including the Public Transportation Services Corporation (PTSC), seeks to offer benefit plans that promote efficient use of health resources and are cost-effective for the company and our employees.
Discussion
DISCUSSION
Employees who work 30 hours or more are eligible to enroll in a medical plan and other benefits. On an annual basis, employees are encouraged to review their enrollment and may choose medical, dental, vision, supplemental life, long-term disability, and accidental death and dismemberment plans that meet their needs. Alternatively, employees may opt to waive medical and/or dental coverage and receive a taxable cash benefit, provided proof of other medical coverage is submitted, and the employee does not obtain subsidized coverage from an exchange. Employees may also participate in the flexible spending accounts, and a vehicle to pay for certain out-of-pocket healthcare and dependent care expenses on a pre-tax basis. New employees are provided an orientation session and assistance in enrolling in their selected plan(s).
The overall health and dental premium cost will increase by 6.2% for calendar year 2025. Factors contributing to increased premium cost include a higher number of claims and specialty high-cost prescriptions drugs within the industry. In addition, inflation, supply chain disruptions, and labor shortages are also impacting cost.
The recommended medical, dental, and vision premiums are shown in Attachment A. Non-Contract and AFSCME employees contribute 10% of the actual premium for each medical and dental plan selected. The monthly employee contributions are shown in Attachment B. The life insurance for all full-time Metro employees and long-term disability plans for Teamster employees rates are guaranteed until January 1, 2026.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Approval of this recommendation will positively impact the safety of our workforce. The group insurance plans offer employees cost-effective and efficient access to health resources, ultimately contributing to their overall well-being.
Financial_Impact
FINANCIAL IMPACT
Funding for the Non-Contract and AFSCME group insurance plans, along with life insurance for all full-time Metro employees and long-term disability plans for Teamster employees, is included in each department’s FY25 budget and on the balance sheet for accrued retiree medical liabilities. Based on the current employee participation by plan, estimated employer costs of $76 million are within the adopted budget. Costs are allocated and funded via Metro’s Federally approved Indirect Cost Allocation Plan and do involve the use of operating eligible funds.
Impact to Budget
Sources of funds will parallel the projects charged agency wide and will include operating and capital eligible funds encompassing sales tax, fares, federal, state and local funds.
Equity_Platform
EQUITY PLATFORM
Currently, 96% of employees in the Non-Contract, AFSCME, and Teamster classifications enroll in health benefits, with the remaining 4% choosing to waive coverage by providing proof they are covered under another plan. References are provided in the Benefits Enrollment Guide for CoveredCA.com <http://coveredca.com/> and Healthcare.gov <http://healthcare.gov/>, and staff provides additional guidance on an individual basis when needed.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The recommendation supports strategic plan goal #5 “Provide responsive, accountable, and trustworthy governance within the LA Metro organization.” The responsible administration of Metro’s Group Insurance Policies promotes efficient use of health resources and are cost effective for the company and our employees.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board could decide to self-insure and self-administer health benefits. However, this is not recommended due to the resources required to establish the medical expertise and operational infrastructure required to review and process claims, as well as the liability that would be assumed.
Next_Steps
NEXT STEPS
Metro will hold annual open enrollment during November 2024 and implement benefit elections effective January 1, 2025.
Attachments
ATTACHMENTS
Attachment A - Proposed Monthly Premium Rates
Attachment B - Proposed Monthly Employee Contributions
Prepared_by
Prepared by: Kyle Vong, (Interim) Manager, Pension & Benefits
213-922-7178
Don Howey, Executive Officer, Administration, (213) 922-8867
Reviewed_By
Reviewed by: Ilyssa DeCasperis, Chief People Officer (213) 922-3048
