6.3. ERMUSR 05-10-2007~/
Elk River ^-~
Municip al Utilitie s
13069 Orono Parkway
Elk River, MN 55330
May 1, 2007
To: Elk River Municipal Utilities commission
Jerry Takle
Jim Tralle
Jerry Gumphrey
From: Theresa Slominski
Subject: 2007 Dental, Life, <D Insurance
hone: 763.441.2020
~: 763.441.8099
Currently, our Dental, Life, and Long Term Disability insurance is all -with Principal
Financial Group. Elk River Utilities switched from Delta dental to Principal dental in
2003, and combined it with the other products of Life and LTD insurance already placed
with Principal. This year, we went out for bid with all these products to nine additional
carriers. Assurant came back with the best proposal, and it was reviewed with the
insurance task group. It represents a savings of $11,500 (split 75% / 25% with the
employees for the dental only), with no change in benefits provided (with the exception
of the item noted below), and maintaining the same dental network. I have attached a
spreadsheet summarizing the cost savings, and a dental rate history summarization for the
time period 2001-2006.
One change that we discussed in the task group, and would like to include, is related to
the LTD insurance. We have the option of recognizing a "taxable bonus" on this
insurance with each pay period, which eliminates the payouts being taxed (if and when)
they are distributed when one becomes disabled. The "bonus" amount is determined at
$.72 for every $100 of payroll for the employee. It is included in the taxable calculation
with each paycheck and reported on the W2s (very similar to the Group Term Life
taxation.) A calculation is included at the bottom of the cost summary sheet attached. The
group felt this was a worthy option to incorporate for the $.O1 in premium increase to the
employer (or approximately $205.00 per year.)
Staff recommends the Assurant proposal for Life, LTD, and Dental insurances.
Elk River Municipal Utilities
Cost Summary
June 1, 2007
Current Proposed Alternative
Principal Assurant $25 Ded
Estimated Premium Current Renewal
Life/AD&D $847.05 $847.05 $686.34
LTD* $1,653.03 $1,505.73 $1,178.40
Dental $2,791.20 $2,930.78 $2,465.67
Combined Monthly $5,291.27 $5,283.55 $4,330.41
Combined Annual $63,495.26 $63,402.63 $51,964.86
$ Difference From Current ($93) ($11,530)
Difference From Current -0.15% -18.16%
LTD* This is the taxable premium, where tax is paid upfront by the employee. Then, when one is disabled,
the taxes are not withheld out of the payments. The tax is based on the rate of $.72 for every one hundred
dollars of salary. For example, $50,000 annual salary would be paying tax on 50,000/100'`.72, or $360 (or
$13.85 per pay period.)
David Martin Agency, Inc.
Total wDental 07 \ Total wDental
04/26/07
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