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HomeMy WebLinkAbout1971-016 Memo - LOC - Insurance Benefits Increase j K . ~A SALEM EUGENE 270 Cottage N.E., Salem 97301 P. O. Boz 3177, Eugene 97403 J Telephone: (503) 565-6987 Telephone: (503) 686-5232 I' ' i H-j I'D 0 MEMBER, NATIONAL LEAGUE OF CITIES • OFFICIAL PUBLICATION "WESTERN CITY" Salem, Oregon ~1M( April 1, 1971 ~Y t TO: City Nanagers and~City Recorders in Cities Participating in the League of Oregon Cities Group Health and Life Insurance Program- i SUBJ: Increase in Group Insurance Benefits and Monthly Premiums Last week the trustees of the League of Oregon Cities Insurance Trust completed a review of the present benefits of the program in terms of present costs and general financial experience. To keep pace with increasing inflationary costs and also with health insurance and fringe benefits being provided in private and other public employment, the trustees have taken action to increase sub- stantially the benefits of the League program. The new benefits and the continuing increases in hospital and medical costs will require an increase in monthly program premiums. Both the new benefits and new monthly rates will become effective July 1, 1971. The expanding size of the group currently 115 cities with over 3,000 employes and 6,000 dependents are enrolled and the relatively good claim experience compared to smaller group programs, has enabled the trustees to negotiate substantial program benefit improvements at comparatively low premium increases. As you may recall, no premium changes have been made in the program since July 1, 1969, while at the same time program improvements have been made. Again, the size of the group and the comparatively good claim experience enabled this flexibility. However, a proportional increase in the use of health and medical benefits during the past year as well as increased costs of certain types of benefits has resulted in a depletion of the reserves previous- ly established, For example, reserves in the amount of approximately $70,000 are being paid by the trust to help make up the difference between claims and premiums for the current contract year. Therefore, to keep pace with other health insurance programs, and to help pay for the benefits provided in a system where physicians fees have increased 58 percent and medical costs have increased 52 percent since 1961, requires a premium increase to keep the program stable and equal to or better than other group health insurance programs. It should be pointed out that the rates continue to be very favorable as compared to other programs providing the same broad scope of program benefits.for both employes and dependents, OFFICERS: Mayor James R. Moore, Beaverton, president DIRECTORS: Mayor Lester E. Anderson, Eugene, immediate past president Lloyd E. Anderson, comrnds- Francis J. Ivancie, commissioner of public affairs, sioner of public works, Portland Mayor Gerold Ll. Barrett, Redmond • Leonard L. Cams, ceuaoilman, Portland, ciao pra.idoot • Robert S. Moore, city manager, Ontario Mayor Donald W. Grad, Milx'aukie • D. Lorin Jacobs, councilman, Medford • Mayor Merry M1'. Sa:em, treaswer • Donald L. Jones, vzccutivo secretary Stainbock, Astoria • Robert L. Thomas, city nllorney, North Bend • Mayor Dr::ey W. West. Jr., Boardman April 1, 19_71 Page 2 Program History The League's group program was established in 1958 in recognition of the need of the city employes of smaller cities for some form of insurance to finance hospital-medical-surgical costs. In private employment an increasing number of industries were providing both health and life insurance coverage as a fringe benefit either under a plan sponsored by the industry group or by a labor union. City employes felt the need for similar coverage and many of them were individually purchasing coverage for themselves and their families. However, individual coverage was both meager and costly in comparison with group programs. The League's objective was to establish a group which would make it possible for every city to provide for its employes the lower rates and greater benefits available to large groups. Although the program was originally established for smaller cities, in recent years many of the larger cities in Oregon have also elected to participate because of the advantages of a large group. The present trustees of the League insurance program are Edward C. Harms, Jr., city attorney and former mayor of Springfield; Arnold C. Swanson, city council- man, Astoria; and J. 1.7. Barney, city manager, Hillsboro. It has been the objective of'the trustees to maintain a program which provides adequate coverage in view of actual costs and which enables cities to maintain a competitive re- lationship with benefits being provided by private employers through their own - programs or through labor unions. Health Insurance Program Benefits ,I Under the improved program to take effect July 1, 1971, the following benefits will be increased or added: i 1. HOSPITAL 80011 RATE. The basic hospital room rate will be increased from j $36 to $40. The optional rate will be increased from $40 to $46. Each city should advise the League office in Salem as to the option selected. j 2. SURGICAL SCHEDULE. A 25 percent increase in the surgical schedule under l the program, i.e., an increased surgical schedule from $800 to $1,000. 3. ASSISTANT SURGEON BENEFITS. A 25 percent increase in payments for an assistant surgeon; the exact payment will depend in each case on the pay- ment made in relation to the higher general surgical schedule. 4. MAJOR IMDICAL BENEFITS. The major medical maximum was increased for each employe and each dependent front $20,000 to $25,000. j 5, MATERNITY HOSPITAL BENEFITS. An increase from $125 to $150 for basic hospital maternity costs. i 6. PSATEWITY DOCTOR BENEFITS. An increase from $75 to $100 for basic doctor maternity costs. April 1, 1971 Page 3 Life Insurance Each employe has $1,000 of life insurance and $1,000 of accidental death and dis- memberment insurance under the basic group program. Any city may provide an in- creased life insurance benefit under supplementary schedules. In the past, increased coverage could be provided on a flat basis for all employes, or on a graduated basis related to the salary of the employe. One nee:! option has been added. A city may now elect to provide additional life -insurance ti7rough the program on the basis of gross annual salary for each employe rounded to the nearest $1,000. For example, an employe with an annual salary of $6,600 could purchase $7,000 in life insurance; an employe earning $8,400 could purchase $8,000, etc. Each of these three options is available only on a group basis, city by city. In each case, each additional $1,000 life insurance and $1,000 accidental death and II dismemberment insurance is available at $.55 per month. Again, a summary of the three options each city has for additional employe life insurance (the basic $1,000 life and $1,000 AD&D is a part of the basic plan) is as follows: Option 1: Add additional amounts up to $10,000 per employe (in $1,000 increments) Option 2: Add additional amounts on a graduated basis related to the salary of the employe as follows: Additional Basic Monthly Earnings Life Insurance Additional AD&D, Under. $500 $1,000 $1,000 500-699 3,000 3,000 700-899 5,000 5,000 900-1,100 7,000 7,000 Over 1,100 9,000 9,000 Option 3: Add additional amounts equal to the annual gross salary of each employe rounded to the nearest $1,000 of salary. A city should advise the League office one month in advance when desiring, to purchase additional life insurance under one of the three options now available. Please indicate on the enclosed questionnaire if your city plans to exercise one of the options as of July 1, 1971. Dependent's Life Insurance No changes have been made in the.. dependent's life insurance program option which went into effect last year. The rate for $1,000 of dependents life insurance will continue to be $.58 per month per employe, i.e., all dependents enrolled in the program obtain $1,000 life insurance for a total monthly premium of $.50 per month per employe. April 1,.1971+ Page 4 f This coverage is available on a city by city basis; a more detailed explanation of the dependents life insurance coverage is outlined in the enclosed summary. Retirement Benefits Employe retirement benefits will continue to be provided through the group pro- gram. The retirement benefits were added to the program in 1967. As you know, retired employes 65 years of age and over and their dependent's 65 years of age and over are required to su;)plement the League-sponsored program by subscribing to Nedicare Plan B which provides certain minimal medical and surgical benefits. It is only on this basis that the premiums can be continued at the same level for retired employes as active employes. All other health insurance benefits remain the same for retired employes as those provided active employes. Premium Rates As indicated above, to provide the increased benefits and to meet rising medical and hospital costs, new monthly premium rates will become effective July 1, 1971, for the 1971-72 fiscal year. The new basic rates for hospital and medical benefits, for the $1,000 surgical schedule benefits, for major medical coverage up to $25,000 for each employe and each covered dependent, and for $1,000 life insurance and $1,000 AMD for the employe are indicated below: Rates Effective July 1, 1971 $40.00 $46.00 Employe only $10.43 $10.82 Employe and one dependent 26.72 27.53 Employe and two or more dependents 33.93 34.85 The enclosed pink sheet is a form for the selection of options for the League group health and life insurance program benefits to be effective July 1, 1971. We would appreciate having you complete and return the form at your earliest convenience. Every city will need to complete one copy of the form and return it to the League office in Salem. The trustees hope that your city and your employes will be pleased with the benefit improvements that have been made to the program. If you have any questions regarding the insurance program, please contact 1,rs. Gerry Hart or me in the League office in Salem. Sincerelv,+yours, K Karl Van Asselt, Administrator i:;mV: lv League of Oregon Cities Insurance Trust Enclosures cc: Individual who prepares monthly health plan statement Selection of Options for League Croup Insurance Program 3enefits to be Effective July 1, 1971 Please check the options listed below and return one copy of this form to the League office as soon as possible.~ Glue Cross will prepare new identification cards for employes and covered dependents. 1. Hospital Room Rate. Each city should determine. the hospital room rate in its area-as a basis for selecting one of the options below: $40 per day room rate $46 per day room rate 11. Life Insurance and Accidental Death and Dismemberment. The group program provides a nsic $1,000 life insurance and an additional $1,000 accidental death and dismemberment coverage for each employe. Additional insurance may be purchased for employes either -on a flat basis, on a schedule re- lated to monthly salary, or on the basis of annual salary rounded to the nearest $1,000. Please indicate the choice of your city: 1. t ~~f3asic $1,000 which is included in the group plan. 2. Additional flat amount for each employe (please circle) I $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 3. Per insurance schedule related to monthly salary (see schedule in letter). 4. _ Per annual salary of each employe rounded to nearest $1,000. / i; , /_:7-- Submitted by Title City - Return to: League of Oregon Cities 270 Cottage Street N. E. Salem, Oregon 97301 DEPENDENTS LIFE INSURANCE OPTION The League of Oregon Cities insurance trustees in early 1970, approved a dependents life insurance program option for cities participating in the League group health and life insurance program. Every city participating in the group program may exercise the option of adding dependents life Insurance coverage. This coverage will be avail- able on the following basis: 1. Each city determines individually if it wishes to add dependents life insurance coverage to their group program; 2. All employes with dependents enrolled in the group program must participate in the dependents life, i.e., all employes in the category of employe and one dependent and in the category of employe and two or more dependents; 3. The rate for $1,000 of dependents life insurance is $.53 per month per employe, i.e., all dependents enrolled in the program obtain $1,000 life insurance for a total monthly rate of $.53 per month per employe. Cities interested in additional information on the dependents life insurance coverage should advise the League office in Salem. The underwriter for tha dependents life insurance is Standard Insurance Company, the carrier for the employe life insurance portion of the League group health and life in- surance program.