HomeMy WebLinkAboutAgenda Report - March 6, 1985 (74)Council approve self-insuring the third through the sixth month
of City's long term disability plan.
BACKGROUND
As part of our efforts to control costs of various types of
insurance, we have explored means of reducing costs of long term
disability insurance.
Our present plan costs 1.07% per month of payroll for all
employees except Police and Fire sworn personnel. The plan pays
two-thirds of the first $2,250 and ona-half of the next $1,000
of monthly salary with a maximum benefit of $2,000 per month.
The plan is coordinated with any other employee benefits for
which the employee is eligible, i.e., Workers Compensation,
Social Security, and PERS. The plan begins paying after 60 days
of disability.
Our present monthly cost based on February 1, 1985 payroll is
$4,053.
By self insuring the 61st to 180th day, we can reduce premiums
to $2,587 per month, a saving of $1,466 per month of premium or
$17,592 per year.
Since we began this program on July 1, 1977, only 5 employees
have triggered the 60 day limit and their average monthly
benefit was $1,230 per month. Based on February payroll
figures, the average liability would be $1,283 per month.
In order to show potential savings, assuming we have one person
per year who would be off work from 61 - 180 days, our annual
liability would be $5,132. Our savings of premium would
therefore be $12,460 ($17,592 premium savings, less $5,132
potential liability) per year.
Because of our low utilization of this plan, we feel we can
self-administer the plan until the 180 day limit is reached.