Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
JULY 14, 2021
Subject
SUBJECT: GROUP INSURANCE PLANS
Action
ACTION: APPROVE RENEWAL OF GROUP INSURANCE POLICIES
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to renew existing group insurance policies covering Non-Contract and AFSCME employees, including the life and disability coverage for Teamster employees, for the one-year period beginning January 1, 2022.
Background
BACKGROUND
Our health insurance plans are part of the total compensation package that helps attract and retain qualified employees, as well as provide existing employees 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
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. 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, a vehicle to pay for certain out-of-pocket healthcare and dependent care expenses on a pre-tax basis.
The overall premium cost is a 0.59% decrease for calendar year 2022. This reflects more than $2.5 million in negotiated reductions from the initial renewal quotes. The recommended medical, dental, and vision premiums are shown on Attachment A. As previously established by the Chief Executive Officer, 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.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Approval of this item will have no impact on the safety of our patrons or employees.
Financial_Impact
FINANCIAL IMPACT
Funding for the Non-Contract and AFSCME group insurance plans is included in each department’s FY22 budget and on the balance sheet for accrued retiree medical liabilities. Based on the current employee participation by plan, the estimated employer costs of $55.4 million are within the adopted budget.
The COVID-19 pandemic has fundamentally disrupted the very fabric of our daily lives. We are striving to avoid further disruption that would result from provider and service changes and are therefore not recommending medical and dental plan design changes at this time.
Equity_Platform
EQUITY PLATFORM
Metro’s group health insurance plans as discussed in this board report are part of a total compensation package offered by Metro. Employees who work 30 hours or more are eligible to enroll in a medical plan and other benefits. New employees are provided an orientation session and assistance in enrolling in their selected plan(s).
Currently 95.4% of employees in the Non-Contract and AFSCME classifications enroll in health benefits, with the remaining 4.6% choosing to waive coverage by providing proof they are covered under another plan. References are provided in the Benefits Enrollment Guide for CoveredCA.com and Healthcare.gov and we provide additional guidance on an individual basis when needed.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
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 Polices promote efficient use of health resources and are cost effective for the company and our employees.
Alternatives_Considered
ALTERNATIVES CONSIDERED
With the favorable renewal on the plans for 2022, it is recommended that the current plan designs be renewed, thereby avoiding provider access/disruption for 2022.
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
• Conduct annual open enrollment for Non-Contract and AFSCME employees during November 2021.
• Implement elections effective January 1, 2022.
Attachments
ATTACHMENTS
Attachment A - Monthly Premium Rates
Attachment B - Monthly Employee Contributions
Prepared_by
Prepared by: Jan Olsen, Director, Pension & Benefits (213) 922-7151
Teyanna Williams, Executive Officer, Labor & Employee Services
(213) 922-5580
Reviewed_By
Reviewed by: Patrice McElroy, Interim Chief Human Capital & Development
Officer (213) 418-3171
