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<br />REPORT <br /> <br />36 <br /> <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />January 14, 2000 <br /> <br />Subject <br />Approve new long term disability (ilL TO") policy with Lincoln National Reassurance Company for the Redwood City <br />Management Association (RCMEA) and Executive Summary Plan employees and terminate the existing policy with <br />Unum Provident Corporation. <br /> <br />Recommendation <br />That the City Council by motion approve the L TO policy with Lincoln National Reassurance Company and terminate <br />the existing policy L TO policy with Unum Provident Corporation. <br /> <br />Background <br />Pursuant to the Redwood City Management Employees' Association (RCMEA) Memorandum of Understanding <br />and the Executive Management Benefits Summary, adopted by Council on November 20, 1995, the City is to <br />provide Long Term Disability benefits to management employees. <br />Currently, the City has an agreement with Unum Provident Corporation to provide Long Term Disability <br />Insurance to employees in the RCMEA and Executive Management groups. This Long Term Disability Plan <br />provides financial protection for management and executives by paying a portion of their income should <br />become disabled. There are two parts to the plan: <br />The Basic plan rate, which is paid for by the City was raised effective January 1, 2000, from 31 % to <br />38%. <br />The Buy-Up plan rate, paid for by the employee, was raised effective January 1, 2000, from 68% to <br />82%. <br />Realizing the significant increase in cost for both the City and the employees, a request for quotes on this Long <br />Term Disability Insurance Plan was sent to several competing insurance companies. Of the three that <br />responded, (Standard Insurance Company, Fortis Benefits Insurance Company and Lincoln National <br />Reassurance Company), only one was competitive in meeting both the criteria of the current plan benefits and <br />at a lower cost. <br /> <br />Listed below is a comparison of the two plans: <br /> <br />UNUM <br /> <br />Lincoln National Reassurance <br /> <br />Basic - 38% rate per $100 payroll Basic - 28% rate per $100 payroll <br />Buy-up option - 82% rate per $100 payroll Buy-up - 39%* rate per $100 payroll <br />*requires 25% participation <br />(City currently has 43% participating in'the Buy-up plan) <br /> <br />In continuing to provide a comprehensive benefit package for our employees and effectively manage the costs <br />of these benefits, we feel that it is in our best interests to change the carrier for the Long Term Disability plan <br />from Unum Provident Insurance Company to Lincoln National Reassurance Company. <br /> <br /> <br />Maria Rivera Peña <br />Human Resources Director <br /> <br />Ed Everett <br />City Manager <br /> <br />,~""'."., "'~-'T' <br />