4.3. ERMUSR 11-15-2011Elk River,
Municipal Utilities
13069 Orono Pazkway • P.O. Box 430
Elk River, MN 55330-0430
UTILITIES COMMISSION MEETING
Phone: 763.441.2020
Fax: 763.441.5099
TO: FROM:
Elk River Municipal Utilities Commission Theresa Slominski -Finance Director
John Dietz, Chair
Daryl Thompson, Vice Chair
Allan Nadeau, Trustee
MEETING DATE: AGENDA ITEM NUMBER:
November 15, 2011 4.3
SUBJECT:
Review and Consider Lon Term Care Insurance O tion
BACKGROUND:
At our October Commission we presented information on the possibility of providing Long Term
Care (LTC) insurance for employees. Discussion followed and staff was directed to determine if
the employees wanted this additional insurance. Gary Marx, the insurance representative for
LTC, presented information to staff for purposes of educating them on the advantages and
disadvantages of LTC insurance. They were presented with a range of $20 to $120 for the
possible premium. The employees are interested in the insurance; however they were hesitant to
say yes or no without better pricing information. Premium is based on age, health status and
plan design. Under the proposed program, each employee's LTC plan's is tailored to the
financial needs and budget of the employee and employee's family. The Insurance
representative, if a program is implemented, will meet individually with each employee and
family to assess and develop a plan design and pricing that fits their individual needs.
DISCUSSION:
The pricing for the LTC insurance is provided. There are two options presented, and it is based
on the age census of our current staff. The two options are employer paid for a base plan, where
the employee can buy up more coverage at the employee's expense (Corporate Advantage) and
employee paid (Employee Advantage), which is an all Voluntary plan. The pricing assumes that
we would have full participation. Obviously, if there is less participation there is less cost.
As you can see, there is a greater employer pricing discount for the Corporate Advantage
program (15% vs. 10%). The pricing shown for both options also assumes the married employee
is the only one applying for coverage. If an employee's spouse applies, an additional IS%
discount applies to the employee. So the total monthly premium will be affected by the number
of spouses who apply. (Spouses who qualify for Preferred Health will also receive an additional
I S% discount.)
As presented last month, it is desirable to obtain the "simplified underwriting" (which allows the
applicants to complete a three or six question form to enroll, rather than a detailed 20 page
enrollment form along with a nurse phone call). There are minimum participation requirements
for simplified underwriting.
For Corporate Advantage (employer paid base plan with buy up), 14 applications are
needed. This should not be an issue if an employer paid base plan is offered.
For Employee Advantage (all voluntary), a minimum of 10 employee applications is
needed.
Gary Marx will be available for questions and clarification at the meeting.
ACTION REQUESTED:
Staff is requesting a decision to implement the LTC insurance plan, starting the enrollment the
first week of December.
Elk River
Municipal Utilities
Long Term Care Insurance Proposal
REVISED
Carrier
Product
Benefit Method
Benefit Amount
Pool of Money
Inflation Protection
Elimination Period
Riders Included
Discount Included
Underwriting -Employees
Underwriting -Spouse
Premium Payment
Transamerica
Employee Advantage Transamerica
Corporate Advantage
TransCare II TransCare II
Reimbursement Hybrid Reimbursement Hybrid
$SO/Day
3 years $SO/Day
3 years
$54,750 $54,750
3%Compound 3%Compound
90 Days 90 Days
None None
Employer-10%
Marital - 15% Employer-15%
Marital - 15%
Simplified Simplified
Simplified Simplified
Lifetime Lifetime
Empioyees Age State Total Monthly Premium Total Monthly Premium
34 Transamerica Transamerica
Employee 63 MN $58.55 $55.30
Employee 58 MN $43.47 $41.05
Employee 57 MN $40.17 $37.93
Employee 56 MN $38.86 $36.70
Employee 55 MN $38.10 $35.97
Employee 53 MN $36.10 $34.10
Employee 53 MN $36.10 $34.10
Employee 52 MN $34.62 $32.70
Employee 51 MN $34.04 $32.13
Employee qg MN $32.20 $30.40
Employee q9 MN $37.88 $35.78
Employee qg MN $31.60 $29.83
Employee q6 MN $35.02 $28.12
Employee q6 MN $29.78 $28.12
Employee q6 MN 529.78 $33.07
Employee 46 MN $35.02 $33.07
Employee 46 MN $29.17 $27.57
Employee q5 MN $29.17 $27.57
Employee 43 MN $27.94 $26.38
This proposal is for illustrative purposes only and is not a contract.
Elk River ,~
Municipal Utilities
Employees Age
34
State Long Term Care Insurance Proposal
Total Monthly Premium Total Monthly Premium
Transamerica Transamerica
Employee 43 MN $27.94
$26.38
Employee 42 MN $27.34 $25
83
Employee q0 MN $25.53 .
$24.10
Employee 39 MN $24.29
$22.95
Employee 37 MN $23.69 $22,37
Employee 36 MN $22.49 $21.23
Employee 35 MN $22.49 $21.23
Employee 34 MN $21.$$ $20.67
Employee 30 MN $21.88 $20.67
Employee 30 MN $21.8$ $20.67
Employee 27 MN $25.74
$24.31
Employee 26 MN $25.74 $24.31
Employee 26 MN $21.$8 $20.67
Employee 23 MN $25.74
$24.31
Employee 21 MN $25.74 $2q,31
TOTAL C~ nn~ o~ ~...... ,...
This proposal is for illustrative purposes only and is not a contract. 2