5.1.B. ERMUSR 10-11-2011Elk River
Municipal
ties
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330-0430
UTILITIES COA'IlbIISSION MEETING
Phone: 763.441.2020
Fax: 763.441.8099
TO: FROM:
Elk River Municipal Utilities Commission Theresa Slominski -Finance and Office
John Dietz -Chair Manager
Daryl Thompson -Vice Chair
Al Nadeau - Tmstee
MEETING DATE: AGENDA ITEM NUMBER:
October 11, 2011 5 lb
SUBJECT:
Review and Consider Insurance Options and Renewal
BACKGROUND:
Our broker has information on Long Term Care insurance that will be presented at our meeting. This is an
insurance that is an important component of retirement planning and yet often is not recognized unless
one has been involved with family members needing this care.
DISCUSSION:
Elk River Municipal Utilities desires to offer a Long Term Care (LTC) plan for our employees. A benefit
plan that does not include LTC insurance leaves the employees' life savings and quality of life at risk
from the high costs of care. A national figure we were provided with stated that LTC costs can average
$85,000 per year, and these costs are not covered by health insurance plans. By offering a base plan we
can help our employees and their families plan for a more secure future. AlI employees will be covered
under a "base plan" and if desired, may purchase additional coverage with their own funds. The base plan
insures all employees enroll with reduced underwriting. Reduced or "Simplified Underwriting" lessens
the risk that some employees may not be able to obtain the insurance. The plan is open to family
members on a voluntary basis.
FINANCIAL IMPACT:
The cost of a base plan varies from $1,039 to $1,539 per month, or $12,468 to $ 18,420 per year (the
monthly premium covers all eligible employees) The cost of offering an optional plan for employees to
join is $0 and needs a minimum of 10 employee participants to offer. It may be difficult to obtain the
minimum given our relatively small group of employees.
ACTION REQUESTED:
Management is requesting a decision to offer a LTC insurance benefit. If it is decided to offer such a
benefit, it needs to be determined if there will be a base plan offered or a strictly optional plan. (Our
recommendation is to offer a minimum base plan to insure reduced underwriting for all employees. Some
of our employees with health issues may not be able to obtain the coverage with reduced underwriting as
part of a group plan.
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P O W E R E D T O S E R V E