City Council
Report
City Council Meeting: October 10, 2023
Agenda Item: 5.G
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To: Mayor and City Council
From: Lori Gentles, Chief People Officer, Human Resources Department Subject: Approval of Agreement with Trustmark for Long Term Care Insurance Coverage
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Authorize the City Manager to negotiate and execute an agreement with Trustmark for Long-Term Care (LTC) insurance coverage for a period of 5 years with one additional one-year option for the Human Resources Department. This is a no cost contract to the City with an estimated value of $240,000. All services are paid by the plan participants, who are employees that voluntarily elect to obtain LTC coverage.
Summary
AB 567 (Calderon, Chapter 746, Statutes of 2019) established the Long-Term Care (LTC) Insurance Task Force (Task Force) in the California Department of Insurance to explore the feasibility of developing and implementing a culturally competent statewide insurance program for long-term care services and support. As part of the City’s employee benefits program, the City would like to provide Long-Term Care coverage to staff to address the need for accessible and comprehensive eldercare services due to an aging population with limited assets and significant Long-Term Care needs. All premiums and fees relating to the services are voluntary and borne by plan participants, not the City. Health and disability insurance exclude LTC services, Medicare offers minimal coverage, and Medicaid typically requires individuals to be below a certain 2 of 3
income to qualify. Very few people own private LTC coverage, and many carriers have exited the market.
Discussion
The state of California is considering legislation to mandate long term care insurance through a state-run program with funding from taxes (e.g., payroll tax). In 2021, Washington became the first state to adopt a mandatory, State-run LTC insurance program. California’s LTC Task Force mission is to explore a statewide insurance program for LTC services and support. Plan participants who elect to receive this benefit may have the opportunity to opt out of the payroll tax. These benefits may be used for a range of services, including professional care at home or at a licensed facility; training, pay and support for family members who provide care; memory care; home-delivered meals; rides to a health care provider; adaptive equipment and technology; home safety evaluation; and emergency alert devices.
Due to many insurers having exited the LTC market, there are few carriers who provide this benefit. As a result, The City worked with its broker, Alliant, to assess available carriers’ customer base, pricing, and solvency. Of those carriers, the City looked at its employee base and cost of premiums to determine the best long-term option. Trustmark provides two-tiers offering greater affordability and equity based on varying benefits, including a guaranteed issue LTC benefit available for employer groups in California.
Trustmark gives employees the most cost-effective option and a Universal Life Policy that builds equity. The fund will be supported by a premium paid by employees only.
This procedure is consistent with the City’s informal bidding process as set forth in Santa Monica Municipal Code Section 2.24.210. The informal bidding process is appropriate due to the estimated value of the contract not exceeding $250,000. Staff has elected to present this agreement to the City Council for approval to ensure maximum transparency due to the nature of the services that will result in additional employee benefits on a voluntary basis.
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Environmental Impact
The agreement for Long-Term Care insurance coverage is exempt pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines, which states that CEQA does not apply, where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The agreement would provide administrative services to the City and would not result in physical effects. No further environmental review is necessary.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of recommended action. All premiums and fees relating to the services are voluntary and borne by plan participants, not the City.
Prepared By: Sasha Sargent, Executive Administrative Assistant Approved Forwarded to Council
Attachments:
A. OAKS INITIATIVE FORM 10.04.2023