SR-602-004 (7)
PE:medical ins.umbrella MOU.stfrpt.2003.bancroft.pms Santa Monica, California
Council Meeting: December 16, 2003
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Resolution Authorizing the City Manager to Execute a Revised Memorandum
of Understanding Setting the Terms and Conditions of Medical Insurance
Coverage with Management Team Associates, Supervisory Team
Associates, Administrative Team Associates, Municipal Employees
Association, Public Attorneys? Union, United Transportation Union (Local
1785), Public Attorneys? Legal Support Staff Union and Executive Pay Plan
Participants and Establishing a Flexible Spending Account Plan
INTRODUCTION
This report requests that Council adopt the attached Resolution authorizing the City
Manager to execute a revised Memorandum of Understanding (MOU) setting the terms
and conditions of medical insurance coverage with the City's miscellaneous employee
(non-safety) bargaining units and establishing a flexible spending account plan for covered
employees.
BACKGROUND
A Memorandum of Understanding (umbrella agreement) sets forth the terms and
conditions of medical insurance coverage for the City?s non-safety bargaining units. The
term of the umbrella agreement is from July 1, 2001 through June 30, 2004. The umbrella
agreement currently provides for medical insurance coverage though the CalPERS
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HealthCare Program.
Due to unanticipated medical insurance premium increases under the CalPERS
HealthCare Program for the 2004 medical plan year, the composite medical insurance
premium will exceed the cap on City contributions towards the cost of medical insurance
for miscellaneous City employees by approximately $123.00 per month per employee as of
January 1, 2004. Through the meet and confer process, the City?s Health Insurance
Committee, comprised of representatives from the Citys miscellaneous employee (non-
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safety) bargaining units, and the City decided to replace the CalPERS HealthCare
Program with a City-provided medical insurance program that offers coverage through
Aetna and Kaiser. This change would result in reducing the cost of medical insurance
coverage for non-safety employees and eliminating an out-of-pocket medical insurance
premium contribution by employees. The parties also decided that the term of the
umbrella agreement should be extended to December 31, 2004, making the term of the
agreement the same as the medical plan year used by medical insurance companies.
Finally, the parties decided that a flexible spending account option should be established
to enable employees to use pre-tax dollars to pay for their out-of-pocket health care
expenses, with the flexible spending account to be administered by Aetna.
The revised umbrella agreement will retain the current cap on the City?s contribution
towards medical insurance premiums for active City employees and their eligible
dependents and will continue the current City contribution to a medical trust established by
the City?s miscellaneous employees. The changes to the current umbrella agreement are
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as follows: The term of the agreement will be from January 1, 2004 through December 31,
2004. The CalPERS HealthCare Program will be replaced with a City-provided medical
insurance program. A flexible spending account will be established, effective as of the
2004 calendar year.
BUDGET/FINANCIAL IMPACT
There is no increase in City expenditures associated with the revisions to the
Memorandum of Understanding between the City and its miscellaneous employee (non-
safety) bargaining units for the FY2003-2004 budget year.
RECOMMENDATION
It is recommended that Council adopt the attached Resolution authorizing the City
Manager to execute the revised Memorandum of Understanding (umbrella agreement)
setting the terms and conditions of medical insurance coverage for the City?s non-safety
employees and establishing a flexible spending account plan for covered employees.
Prepared By: Karen Bancroft, Director of Human Resources
See adopted Resolution No. 9919 (CCS)
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