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CC - Item 2A - Benefits ModificationROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: ANDREW C. LAZZARETTO, CITY MANAGER DATE: JUNE 12, 2007 SUBJECT: BENEFITS MODIFICATION DETAILS SUMMARY At our May 29, 2007 meeting (Attachment A), staff was directed to bring back additional details for City Council review as it relates to the proposed changes in the City's benefits package. In addition, staff was asked to provide a more detailed breakdown of the cost savings associated with the move. To comply with GASB 45, the City worked with Milliman Consultants and Actuaries, a firm that conducts actuarial valuations for a variety of jurisdictions. The valuation shows that the City's total liability for its retirement health benefit is $9,850,614 (Attachment B). Based on negotiations with the Rosemead Employee Association (REA), a new benefits package was agreed upon (Attachment C). The cost to implement this new benefits package is estimated to be around $1,632,167. As part of the agreement reached with the REA, retirement health care coverage would be eliminated for any employee hired after July 1, 2007. In addition, retirement health care coverage for existing employees would be limited. In speaking with our actuary, this means that our retirement health care liability would be significantly reduced. When taken together, this means that the City could potentially save around $8.2 million by implanting the new benefits plan. The true cost savings can be determined once an actuary completes a new valuation for the City's limited retirement health care package. Staff Recommendation Staff recommends that the City Council take the following action: ■ Approve the MOU with the REA (Attachment C). Direct staff to bring back for City Council approval all necessary authorizing resolutions to implement the provision contained in the MOU. APPROVED FOR CITY COUNCIL AGENDA: • 0 City Council Report June 12, 2007 Page 2 of 3 ANALYSIS Cost Analysis For New Benefits Program Based on City Council direction, staff has completed its analysis of the cost for implementing the new benefits plan. Those cost factors include: Proposed Benefit Plan 2.7%@55 $1,259,741.00 Reduced Annual PARS Costs $ (109,496.48) Single Highest Year $ 335,575.00 Deferred Compensation $ 66,347.76 Fitness Reimbursement $ 30,000.00 Tuition Reimbursement $ 50,000.00 TOTAL $1,632,167.28 The reason that staff began negotiations with the REA to implement this new benefits package was an attempt to limit or eliminate the City's retirement health care liability. Based on the actuarial analysis conducted by Milliman Consultants and Actuaries, the cost to the City for providing the retirement health benefit would be as follows: Existing Benefit Plan Retirement Health Benefit Cost $9,850,614.00 TOTAL $9,850,614.00 This illustration shows that the City could potentially save $8.2 million by implementing the new benefits package. Again, it is important to note that the true cost savings for implanting this program can be determined once an actuary completes a new valuation for the City's revised retirement health care package. Transitioning To New Health Care Providers As part of the new benefits package negotiated with the REA, the City took all of its benefits out to market to see if it would be possible to obtain better rates for the City's medical, dental, vision, and ancillary benefit programs. Based on the results of that exercise, the City was able to find insurance through new providers. These new providers offered very similar coverage when compared with the City's existing providers at a cost savings of around 20.12%. In total, by transitioning to the new health care providers, the City could save nearly $170,000 (Attachment D). A more detailed breakdown of these cost savings is included as Attachment E. At our meeting on May 291h, the City Council also requested additional information related to the coverage levels provided by these new insurance carriers. i 0 City Council Report June 12, 2007 Page 3 of 3 A comparative overview of the new health insurance package (Cigna) vs. the City's existing health insurance plan (CaIPERS) is included as Attachment F. A comparative overview of the new dental insurance package (Principal PPO) vs. the City's existing dental plan (Ameritas) is included as Attachment G. A comparative overview of the new vision insurance package (Eyemed) vs. the City's existing vision insurance package (VSP) is included as Attachment H. Another issue raised by members of the City Council related to the coverage areas for the new health plans and the new dental plans. If the City Council decided to move forward with these new plans, would employees have access to medical providers who accepted these insurance carriers? Provided as Attachment I are copies of geo-access reports for both the dental and the medical provider. These reports tell us how many of Rosemead's employees have access to providers. Specifically, there must be 2 providers within a 10 mile radius for an employee to be deemed as having adequate access. As it stands, the geo-reports indicate that all employees will have access to medical and dental providers. ALTERNATIVES TO STAFF RECOMMENDATION ■ Take no action and keep the City's existing benefits plan and benefits provider. ■ Approve a modified version of the negotiated benefits agreement with the REA. ■ Refrain from transitioning to a new benefits provider and stay with all of the City's existing health insurance carriers. ■ Decide to transition only some of the City's benefits to new health insurance providers. Submitted by: Oliver Chi Deputy City Manager Attachment A: Employee Benefits Modification Update Staff Report (May 29, 2007) Attachment B: Milliman Consultants and Actuaries Preliminary Retiree Health Actuarial Valuation Attachment C: 2007-2008 City of Rosemead - Rosemead Employee Association MOU Attachment D: Health Care Costs - Global Scenario Attachment E: Detailed Health Care Costs Breakdown Attachment F: Health Insurance Comparison - Cigna Coverage vs. CaIPERS Coverage Attachment G: Dental Insurance Comparison - Principal PPO Coverage vs. Ameritas Coverage Attachment H: Vision Insurance Comparison - Eyemed Coverage vs. VSP Coverage Attachment I: Geo-Access Reports For Dental & Medical E M F S p It. AV a ~ORPOq AiED ~Q11 0 ROSEMEAD CITY COUNCIL STAFF REPORT CONFIDENTIAL CLOSED SESSION ITEM TO: THE HONORABLE MAYOR AND CITY COUN L FROM: ANDREW C. LAZZARETTO, CITY MANAGE DATE: MAY 29, 2007 SUBJECT: EMPLOYEE BENEFITS MODIFICATION UPDATE SUMMARY Beginning on July 1, 2002, the City has offered fully paid retirement health coverage to all employees. This benefit was put into place via Resolution 01-20 (Attachment A) and stipulates that the City will pay the full cost of any health care coverage after retirement for all employees who are vested in PERS and who retire from the City. Over the past several months, staff has been working with the Rosemead Employee Association (REA) to discuss a potential change in employee benefits. This effort was started in response to the recent issuance of Governmental Accounting Standards Board (GASB) Statement 45, which mandates that all state and local governments determine actuarially the cost of retiree health and other benefits. It is important to emphasize that this effort was undertaken to make a change in employee benefits, not to impose a benefits takeaway. To comply with GASB 45, the City has been working with Milliman Consultants and Actuaries, a firm that conducts actuarial valuations for a variety of jurisdictions. The valuation shows that the City's total liability for its retirement health benefit is $9,850,614 (Attachment B). It is important to note that this actuarial estimate is the cost of providing retirement health care to 9 current retirees and 39 active participants. Several weeks ago, staff was able to reach a preliminary agreement with the REA on a new benefits package for employees (Attachment C). When compared to the current benefit package (Attachment D), the major provisions of the new benefits package include the following: ■ Transitioning to a cafeteria-style benefit program ■ Enhancing the base retirement plan to 2.7%@55 ■ Maintaining a retirement plan of 3%@55 (capped at 90%) for those 20+ year employees • Implementing an employer-paid deferred compensation program for employees ■ Eliminating retirement health care coverage for any employee hired after July 1, 2007. APPROVED FOR CITY COUNCIL AGENDA: Vy` 21L CONFIDENTIAL - CLOSED SESSION ITEM City Council Report May 29, 2007 Page 2 of 4 ■ Limiting retirement health care for existing full-time employees in the following manner: o 20+ years: $1,000/month retirement health care contribution o 12-19 years: $5001month retirement health care contribution This agreement with the REA has been formalized through an agreed upon Memorandum of Understanding (MOU), which has been included as Attachment D for your review. Staff Recommendation Staff recommends that the City Council take the following action: ■ Approve the MOU with the REA (Attachment D). ■ Direct staff to bring back for City Council approval all necessary authorizing resolutions to implement the provision contained in the MOU. ANALYSIS Background GASB is a nonprofit entity that sets accounting standards for state and local governments in the United States. The GASB is similar to the professional boards that set accounting standards for private sector entities and the federal government. Beginning in 2007, the provisions of GASB 45 will begin to take effect for state and local governments. Under GASB 45, over the next several years, state and local governments will be required - for the first time - to compile data about their retiree health and similar benefits and have an actuary calculate the unfunded liabilities that have been accrued to provide those benefits to retirees in future years. Governments already collect such information for their pension systems. Given this changing regulatory situation regarding retirement health benefits, staff began to gather information several months ago regarding what the City's potential liability could be. At that point in time, we were told by actuarial representatives that given our plan design, we were looking at a liability of somewhere between $6 million and $12 million. Ultimately, that figure was determined to be $9,850,614. With this liability looming on the horizon, staff began discussing a change in benefits with the employee association. Over the course of several months, we systematically met with both the REA and also with all employees in general session meetings. More recently, on January 22, 2007, February 15, 2007, and March 20, 2007, staff met with all employees in a variety of settings to describe the situation and the process that we were going to be undertaking. In between those sessions, staff met with and discussed on a number of occasions the specific details of a new benefits package with representatives from the REA. • • CONFIDENTIAL - CLOSED SESSION ITEM City Council Report May 29.2007 Page 3 of 4 Cost Analysis The two biggest cost items under the proposed new benefits package is upgrading our base retirement plan to 2.7%@55, converting to the single highest year calculation, and implementing an employer paid deferred compensation plan. We have received the actuarial valuation from PIERS regarding the cost of the 2.7%@55 plan and upgrading to the single highest year calculation. PERS has estimated that 2.7%@55 will cost $1,259,741 (Attachment E). In addition, PERS has estimated that going to the single highest year calculation will cost $335,575 (Attachment F). Also, the employer paid deferred compensation plan will cost approximately $70,000 per year. Under this proposed benefit, the City would contribute deferred compensation for each employee based on years of service. For those employees with 1-4 years, 1% of the employee salary would be contributed. Employees with 5-9 years would have 2% of their salary deferred, 10-14 year employees would have 3% of their salary deferred, 15-19 year employees would have 4% of their salary deferred, and 20+ year employees would have 5% of their salary deferred. Backup has also been provided to describe the total cost of hiring employees, including all benefits (Attachment G). Please keep in mind that the spreadsheets are all preliminary in nature and reflect a "wishlist" of funding requests from all departments. We are still in the process of finalizing the personnel budget proposal. Finally, it is important to note that under the new proposal, the City would also save money by eliminating one of our current PARS benefit tiers. As the Council may know, for employees who work for the City between 10-19 years, the City offers a PARS retirement enhancement to 2.5%@60. Based on the newly agreed upon benefit structure, that PARS tier would be eliminated, thereby saving the City a significant amount of money. That amount will be determined at a later date via an actuarial analysis. Cafeteria Health Benefits Plan One other component of the new benefits package is transitioning to a cafeteria style benefits plan. Under this proposal, each employee would be given an allocation of $1,200 per month to pay for health care coverage, dental care, and vision care. Any amount not used by the employee could be deposited into a deferred compensation account, taken as salary, or used to purchase additional insurance. As we have explored this proposal, one thing that staff has done is take our benefits out to market. This has meant using a benefits brokerage firm to find out how much other health providers would charge us for providing medical coverage, dental coverage, vision coverage, and other ancillary insurance coverage. Attachment H describes the potential total cost savings by going with different providers for our health, vision, dental, and ancillary benefits. As you can see from the attachment, we can save around $170,000 by pursuing this option. • • CONFIDENTIAL-CLOSED SESSION ITEM City Council Report May 29, 2007 Page 4 of 4 Additional Documentation Staff has also researched and compiled some other reading material for the City Council's consideration regarding retiree health care. Attachment I is a listing of Frequently Asked Questions regarding retiree health care that was produced by the Califomia Legislative Analyst's Office (LAO). Attachment J is a report prepared by the LAO titled "Retiree Health Care: A Growing Cost For Govemment." These two documents provide additional information related to the growing cost of retirement health care from an extremely reliable and completely non-partisan source in the LAO. The documents also further illustrate why we have been working to negotiate a robust and fair employee benefits package, but one which does not include fully paid retiree health care. City Council Requested Documents Members of the City Council have also requested additional documentation regarding this issue. Those documents have been included as Exhibit 2 and include the following: ■ Employee Handbook ■ PARS Related Documentation ■ PIERS Related Documentation ■ Current PERS Health Related Documentation Submitted by: Oliver Chi Deputy City Manager Exhibit 1: 2007-2008 City of Rosemead - Rosemead Employee Association MOU Exhibit 2: City Council Requested Documentation Attachment A: Resolution No. 01-20 Attachment B: Milliman Consultants and Actuaries Preliminary Retiree Health Actuarial Valuation Attachment C: Proposed Benefits Package Attachment D: Current Benefits Package Attachment E: PERS 2.7%@55 Cost Estimate Attachment F: PERS One-Year Final Compensation Cost Estimate Attachment G: Personnel Budget Worksheet - Total Cost To Hire Attachment H: Change In Benefit Provider Cost Savings Illustration Attachment I: Legislative Analyst's Office Frequently Asked Questions - Retiree Health Care Attachment J: Legislative Analyst's Office Report - Retiree Health Care: A Growing Cost For Government AFR-1.-1-C-AA7 16:P6 FRO11:CAL0 HEALTH BFNFT 9167951313 0 0:16262704289 8.2/11 ATTACHMENT A J RESOLUTION NO. 01-20 AC n4C_, ~S A RESOLUTION OF THE ROSEATEAD CITY COUNCIL. FIXING THE EMPLOYER'S CONTRIBUTIOX UNDER THE PUBLIC EMPLOYEES' MEDICAL AND HOSPITAL CARE ACT WHEREAS. Government Code Section 22825.6 provides that a local agency contracting under the Public Employees' Medical and Hospital Care Act shall £x the amount of the employer's contribution at an amount not less than the amount required under Section 22825 of the Act, and WHERE AS, the City of Rosemead is a local agency contracting under the Act: now therefore be it RESOL TED That the employer's contribution for each employee or annuitant shall be the amount necessary to pay the cost of his/ber enrollment, including the enrollment of his/her spouse and hisrher eligible family members, in a health benefit plan, up to a maximum of the rate for PERSCare for family enrollments, plus administrative fees and Contingency Reserve Fund .Assessments. FURTHER RESOLVED that this Resolution shall take effect on July 3, 2002. Approved and Adopted this 10th day of July, 2001 at a regular•meetinv of the Rosemead City Council. Q*f I VC-., ~ I 9 y T. Imperial, May Attest: • Nancy 'aldetrama, CMC City Clerk State of Califon a ) County of Los Angeles 1 SS City of Rosemead ) I hereby certitt the foregoing instrument Is a full, true and carrect copy of the original an tilt in this office. In svrt~:s::'fe*:. I have hereunto set my hand and ft 'gal of the city of ~i2oo • Rosemead, tk,s2,66y 0 APR-13-2007 1r : 08 FROM: CALF HEALTH BEIJFT 916791313 .1:16262704289 P.3/11 ar,` • STATE OF CALTFORN1A ) COUNTY OF LOS ANGELES ~ S5. CITY OF ROSENfEAD ~'4 'T4 ~t 0 ~4 R j 11, I, Nancy Valderrama, City Clerk of the City of Rosemead, do hereby certify that the foregoing Resolution No 01-30 being. A RESOLUTION OF THE ROSEMEAD CITY COUNCIL FDaNG EMPLOYERS CONTRTBUTJON UNDER THE PUBLIC EMPLOY`EES' MEDICAL AND HOSPITAL CARE ACT was duly adopted at a regular meeting of the Rosemead City Council on the 10'i' day of July , ^2001, by the following vote to wit: AYES: COUNCILME1v2BERS: BRUESCH, TAYLOR, IT PERIAL, CLARK, VA.SQUEZ NOES: NONE ABST.A.IN: NONE ABSENT: NONE I l NANCY V ERRAA_ CITY CLERK " of Califon I ) County of Los Angdea ) SS Cllr of Rosemead ) I hereby certity the foregoing instrument is s Lull, true and correct copy of the originat AGE11D.4*CER T U'1' on file in this office. • In witness wheroxr, I have hereunto set my hand and aft the I of the city of FILED: a~ 0' ftttscmead, tt:~s.ar of lea EFFEC IVfi DATE: ApppoVED: Putif Agency Coordmat = CkrM 0 • A A111.LIU.AN QIUOAI iii?V 19 Milliman Consultants and Actuaries 1921 Gallows Road. Subo900 YlenM VA 22162-3996 TN -1 703917D143 Fu { 1 703 927.9200 www.miliman.com May 7, 2007 Mr. Dennis Yu, CEBS Vice President, Consulting Public Agency Retirement Services 5141 California Avenue, Suite 150 Irvine, CA 92617-3069 Re: January 1, 2007 Actuarial Valuation for the City of Rosemead Post-Retirement Health Care Plan Dear Dennis: As requested, we have completed our valuation of the post-retirement healthcare plan as of January 1, 2007 for the City of Rosemead. The purpose of the valuation is to estimate the potential liabilities and expense under the GASB 45 accounting rules for post employment benefits other than pensions. This letter-report summarizes our results in aggregate for all employee and retiree groups. Our report is separated into the following five sections: 1. Summary of Results 2. Participant Data as of January 1, 2007 3. Plan Provisions 4. Actuarial Assumptions 5. Actuarial Methods As requested, we show the results under the 4.50% interest rate assumption. In general, the interest rate assumption would be a best estimate of the expected long- term rate of return on assets, which is largely driven by your current and future investment mix. If the plan has no assets, the assumption would be based on the rate of return of the City's assets. The demographic assumptions used in the calculations are consistent with those that were used in the July 1, 2006 supplemental pension valuation. We used employee and retiree data as of January 1, 2007, and the health plan premiums effective January 1, 2007. This work product was pri pwrad solely for Public Agency Retirement Services and the City of Rosemead for the purposes described herein and may not be appmprfated to use for other purposes. MRf an does not intend to benefit and assumes no duty or ffabdity to other parties who receive this work. ar MGF.A h M11IMr,l'AI cll c;l LVgg/0Wi9L • i Mr. Dennis Yu, CEBS 4D May 7, 2007 Page 2 The City has been funding the benefits since the plan's inception on a pay-as-you-go basis. We have not adjusted the costs for any liability the City may have on their financial statement for these benefits. If the City is carrying a liability for these benefits, it may be appropriate to reduce the costs to take into account the liability the City has already accrued. On the basis of the foregoing, we hereby certify that, to the best of our knowledge and belief, this report is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices which are consistent with the actuarial standards of Practice promulgated by the Actuarial Standards Board and applicable Guides to Professional Conduct, amplifying Opinions, and supporting Recommendations of the American Academy of Actuaries. We further certify that all costs, liabilities, rates of interest, and other factors for the Plan have been determined on the basis of actuarial assumptions and methods which are Individually reasonable, taking into account the experience of CalPERS and reasonable expectations. Nevertheless, the emerging costs will vary from those presented In this report to the extent actual experience differs from that projected by the actuarial assumptions. Actuarial computations presented in this letter-report are for purposes of determining the recommended funding amounts for the 2008 fiscal year. Actuarial computations under GASB Statement No. 45 are for purposes of fulfilling financial accounting requirements. The calculations in the enclosed report have been made on a basis consistent with our understanding of the Plan's funding goals and of GASB 45. Determinations for purposes other than meeting those requirements may be significantly different from the results contained in this report. Accordingly, additional determinations may be needed for other purposes. Milliman's work product was prepared exclusively for the management of the City of Rosemead and PARS for a specific and limited purpose. It Is a complex, technical analysis that assumes a high level of knowledge concerning the City of Rosemead operations, and uses City of Rosemead data, which Milliman has not audited. It is not for the use or benefit of any third party for any purpose. Any third party recipient of Milliman's work product who desires professional guidance should not rely upon Milliman's work product, but should engage qualified professionals for advice appropriate to its own specific needs. This W&* product was prepared soiey for PL&t Agency Retinsment Services and the cuy of Romnead for the purposes described herein and may not be appropriated to use for other purposes. MIIJIman does not intend to benefit and assumes no duty or liabNity to other parties who receive ft wafk 0101Ck, I.. OWYG.h%k cnitih, wnr+iawiac • i Mr. Dennis Yu, CEBS May 7, 2007 Page 3 We respectfully submit the following report, and we look forward to discussing it with you at your convenience. I, John C. Muehl, am a consulting actuary for Milliman, Inc. I am a member of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Please call me at your convenience with any questions about this letter or to discuss study results. Sincerely, Milliman, Inc. Jenny ung Actuarial Analyst ?Joh ehl, FSA, EA, MAAA Actuar y Cc: Kevin Murphy Robert Dezube JCM/IJFIPHA/92 P-.TH AV 1owmeed.2Ob7GAA5B. dOC This work product was prepared solely for Public Agency Retirement Services and the City of Rceemead for the purposes described heroin and may not be appropriated to use for other proposes. Milknan does not Intend to benefit and assumes no duty or hebNgy to other parties who receive this work. 0$# 1C1 to Ia $,"INC IPA% CIIIC 16 WORT DW-01 • Mr. Dennis Yu, CEBS May 7, 2007 Page 4 1. Summary of Results 1/1/2007 Valuation 4.50% 1. Present Value of Future Benefits: a. Actives $7,733,563 b. Terminated Vesteds 0 c. Retirees 2,117,051 d. Total $9,850,614 2. Present Value of Future Normal Costs a. Actives $4,302,999 b. Terminated Vesteds 0 c. Retirees 0 d. Total $4,302,999 3. Actuarial Liability [(1.) - (2.)] a. Actives $3,430,564 b. Terminated Vesteds 0 c. Retirees 21. 17.051 d. Total $5,547,615 4. Actuarial Value of Assets: $0 5. Unfunded Actuarial Liability [(3d.) - (4.)]: $5,547,615 6. Annual Required Contribution a. Normal Cost $361,959 b. Amortization of Unfunded Actuarial Liability' 223.857 c. Total $585,816: 7. Estimated Benefit Payments $110,769 i Based on a 30-year amortization period, with payments increasing 3.25% annually. This work product was prepared solely for Public Agency Retirement Servioes and the CHy of Rosemead for the purposes described heraln and may not be appropriated to use for other purposes. Addrnmen does not intend to benefit and assumes no duly or HaMW to other partlas who receive this work. urrie~s IN v"JNCIVA. c:rneg wgn,uw,uj • • Mr. Dennis Yu, CEBS May 7, 2007 ' Page 5 2. PaWc/pant Data as of January 1.2007 a. Active Participant Counts: Males 23 Females 16 Total 39 b. Overall Active Average Age: 48.2 c. Average Service (years): 11.1 d. Retired Participant Counts: Retirees Associated Spouses Males 7 0 Females 2 5 Total 9 5 e. Average Annual Retiree Benefit: $6,977 (Includes Spouses): Active Participants Years of service Age Under 5 5 to 9 10 to 14 15 to 19 20 to 24 25 to 28 30 to 34 36 to 39 40 & up Toteis Under 25 0 0 0 0 0 0 0 0 0 0 25 To 29 3 0 0 0 0 0 0 0 0 3 30 To 34 2 1 0 0 0 0 0 0 0 3 35 TO 39 3 2 0 1 0 0 0 0 0 6 40 To 44 0 1 0 1 0 0 0 0 0 2 45 To 49 4 1 1 1 0 0 0 0 0 7 30 To 54 0 2 1 0 1 1 0 0 0 5 55 To 59 1 0 1 1 0 0 0 0 0 3 60 To 64 2 1 1 2 0 0 0 2 0 8 65 To 69 0 0 0 0 0 0 1 0 0 1 70 s Up 0 0 0 0 0 1 0 0 0 1 Totals 15 8 4 6 1 2 1 2 0 39 This work product was prepared solely for ?ubffc Agency Retfrement SerWm and the city of Rosemead for the paposes described herein and may not be appropriated to use for other purposes. M1111man does not intend to benefit and assumes no duly or fiabi fty to other parties who reoelve this work. lNNcee rRr v~.i~µ C111rs w4n%nWIVI 0 • Mr. Dennis Yu, CEBS May 7, 2007 Page 6 3. Current Plan Provisions a. Health Plan Eligibility Miscellaneous employees, City Council Members and City Attorney must separate from City employment and concurrently retire under CalPERS. Retirees are eligible to choose one of the following health plans through PERS. Shown below are 2007 sample rates for employees only. Employee Only Employee Only Plan Pre-65 Post-65 Blue Shield (HMO) $356.17 $318.95 Kaiser Permanente (HMO) $329.14 $289.68 PERS Choice (PPO) $423.63 $341.75 PERSCare (PPO) $716.17 $371.68 PORAC (Association Plan) $439.00 $351.00 b. Health Plan Benefit The City will pay the retired employee's entire monthly medical premium which may include his/her spouse and/or dependents, up to the maximum rate for PERSCare family coverage ($1,862.04 for 2007). The benefit in future years will be adjusted based on the cost of coverage for the PERSCare option. The spouse of a retiree can continue coverage after the death of the retiree. c. Benefit Service Benefit service is credited from the date of hire with the City. d. Vesting Service Vesting service is credited from the date of hire with the City. e. Employee Contributions None. f. Disability Retirement Benefit The Plan does not include a special disability benefit. g. Death Benefit The Plan does not include a special pre-retirement death benefit. h. Withdrawal Benefit The Plan does not include a special withdrawal benefit. This mark product was prepared solely for Public Agency Retirement Servkes and the City of Rosemead for the purposes described hereln and may not be appropriated to use for other purposes. MBlbnan does riot Intend to benefit and assumes no duty or liability to other panYw mho reoelve this work. 0111cr+1n P"14C1Ph1 C111IA WOULDWIM • • Mr. Dennis Yu, CEBS ID May 7, 2007 Page 7 4. Actuarial Assumptions a. Valuation Date: b. Investment Return: January 1, 2007 4.50% c. Medical Trend: d. Coverage Elections: e. Pre-Retirement Mortality: Increases based on the following table: January 1, Annual Year Increase 2007 12.00% 2008 11.50% 2009 11.00% 2010 10.50% 2011 10.00% 2012 9.50% 2013 9.00% 2014 8.50% 2015 8.00% 2016 7.50% 2017 7.00% 2018 6.50% 2019 and later 6.00% 100% of new retirees elect coverage based on current elections. 40% of new retirees elect single coverage and 60% of new retirees elect dependent coverage. RP-2000 Combined Healthy mortality tables for males and females, with a 5-year setback. Sample rates are as follows: Age Male Female Age Male - Female 20 0.027% 7017% 50 6715 1% 0.112% 25 0.035% 0.019% 55 0.214% 0.168% 30 0.038% 0.021% 60 0.362% 0.272% 35 0.044% 0.026% 65 0.675% 0.506% 40 0.077% 0.048% 70 1.274% 0.971% 45 0.108% 0.071% This work product was prepared solely for Public Agency Retirement Services and the City of Rosemead for the purposea described here!? and may not be appropriated to use for other purposes. MOman does not Intend to benefit and assumes no duty or liability to other parties who receive this work. p.l if, wA 11: -414C IPA. LI III!, Wn"I DWI D4 • Mr. Dennis Yu, CEBS May 7, 2007 Page 8 L Post-Retirement Mortality: RP-2000 Combined Healthy mortality tables for males and females. Sample rates are as follows: Healthy Acme Male Female 50 0.21% 0.17% 60 0.67% 0.51% 70 2.22% 1.67% 80 6.44% 4.59% 90 18.34% 13.17% 100 34.46% 23.75% 110 100.00% 100.00% g. Withdrawal: Sample select and ultimate rates for participants are as follows: Years of Service - Males Hire Aee Under 1 1 to 2 2 to 3 3 to 4 4 to 5 30 6.60% 12.559/. 8.61 % 7.14% 5.81% 40 6.18% 10.48% 7.21% 5.54% 4.54% 50 5.79% 8.77% 6.11% 4.40% 3.69% Years of Service - Females Hire ,Age, Under 1 1 to 2 30 8.07% 15.320/. 40 7.66% 12.88% 50 7.25% 10.85% 2to3 3to4 4to5 11.23% 9.02% 7.20% 8.56% 6.63% 4.54% 6.59% 4.98% 2.98%: For participants with more than ten years of service: Attained Ac,cee Male Female 30 2.58% 3.86% 35 2.42% 3.55% 40 2.27% 3.29% 45 2.13% 3.05% This watt product was prepared solely for Public Agency ReOmment Services and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. MOrnan does not intend to benefit and assumes no duty or fiWity to other parties who mceive this work. at rmrs 111 ►4w iPik, G-nLA worm t1W1Di 0 0 Mr. Dennis Yu, CEBS May 7, 2007 Page 9 h. Retirement: For miscellaneous employees and the contract City Attorney: Retirement rate of 20% at ages 60 and older with between 10 and 20 years of service, and retirement rate of 30% at ages 55 and older with more than 20 years of service. For City Council members: Retirement rates of 30% per year after attaining age 60 with 10 years of service. For the City Manager and the Senior Planner, we assumed retirement at age 65. 1. Disability: Sample rates are as follows: Age Male Female 30 0.10% 0.07% 40 0.22% 0.15% 50 0.46% 0.32% j. Maximum Benefits: The maximum benefit is equal to the cost of the PERSCare coverage increased each year by the medical trend. k. Expenses: None are assumed. 1. Entry Age: Age at hire with City. This work product was prepared solely for Public Agency Retirement Services and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. MJlHman does not intend to benefit and assumes no duty or liability to other parties who receive this work. rfr.fces IN ♦4lNfar4{ C;111E\ Wn I1LO%%IDt Mr. Dennis Yu, CEBS 4D May 7, 2007 Page 10 5. Actuarial Methods Funding Method The cost method for valuation of liabilities used for this valuation is the entry age normal method. This is one of a family of valuation methods known as projected benefits methods. The chief characteristic of projected benefits methods is that the actuarial present value of all plan benefits is determined as of the valuation date and then allocated between the period before and after the valuation date. The present value of plan benefits earned prior to the valuation date is called the actuarial liability. The present value of plan benefits to be earned after the valuation date is called the present value of future normal costs. Under the entry age normal actuarial cost method, an individual entry age normal cost ratio is determined for each participant by taking the value, as of his entry age in the plan, of the participant's projected future benefits (assuming the current plan benefit provisions had always been in existence), and dividing it by the value, as of the participant's entry age, of his expected future salary. This ratio for each participant is then multiplied by the present value, as of the valuation date, of the participant's future salary. The sum of these values for all active participants is the plan's present value (as of the valuation date) of future normal costs. The excess of the present value of all plan benefits over the present value of future normal costs is the actuarial liability. The difference between the actuarial liability and the value of the plan assets as of the valuation date is the unfunded actuarial liability. The unfunded actuarial liability is amortized over a period of 30 years from January 1, 2007, with payments increasing by a payroll growth assumption of 3.25% per annum. Payments are assumed to be made throughout the year. Subsequent gains and losses and benefit improvements will be amortized over the same remaining period. Asset Valuation Method The plan is currently funded on a pay-as-yoti-go basis, and has no assets. This work product was prepared solely for Pubdc Agency Retirement Servtw and the City of Rosemead for the purposes described herein and may not be appropriated to use for other purposes. MRNman does not intend to benefit and assumes no duty or liability to other parties who receive this work. 11F-IQ Eli H OP. d4 CIVAI UFYI9,% W.,410"1 Ill • • 2007-2008 MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF ROSEMEAD AND THE ROSEMEAD EMPLOYEE ASSOCIATION • • CONTENTS ARTICLE 1. PREAMBLE. AGE 1 ARTICLE 2. RECOGNITION & EFFECTIVE DATES AGE 1 ARTICLE 3. CONSTITUTIONALITY.____________„ PAGE 1 ARTICLE 4. IMPLEMENTATION----------------------------- PAGE 1 ARTICLE 5. NON-DISCRIMINATION PAGE 1 ARTICLE 6. GENDER PAGE 1 ARTICLE 7. SALARIES PAGE 1 ARTICLE S. TRANSITION TO NEW HEALTH CARE PROVIDER PAGE1 ARTICLE 9. CAFETERIA-STYLE HEALTH, WELFARE, & SAVINGS BENEFIT PAGE 1 ARTICLE 10. RETIREMENT HEALTH PLAN PAGE 2 ARTICLE 11. RETIREMENT PROGRAM PAGE 2 ARTICLE 12. ENHANCED RETIREMENT PROGRAM PAGE 2 ARTICLE 13. DEFERRED COMPENSATION PROGRAM, PAGE 2 ARTICLE 14. VACATION LEAVE.. PAGE 2 ARTICLE 15. VACATION BUYBACK, PAGE 3 ARTICLE 16. CITY-RECOGNIZED HOLIDAYS PAGE3 ARTICLE 17. FLOATING HOLIDAYS-- .-.....PAGE 3 ARTICLE 18. OVERTIME / COMPENSATORY TIME PAGE 3 ARTICLE 19. ADMINISTRATIVE LEAVE PAGE 3 ARTICLE 20. FLEXIBLE SCHEDULING PAGE 4 ARTICLE 21. SICK LEAVE.......... PAGE 4 ARTICLE 22. BEREAVEMENT LEAVE PAGE 4 ARTICLE 23. JURY LEAVE PAGE 4 ARTICLE 24. PATERNITY LEAVE PAGE 4 ARTICLE 25. SHORT-TERM DISABILITY PAGE 4 ARTICLE 26. LONG-TERM DISABILITY PAGE 4 ARTICLE 27. LIFE INSURANCE„ PAGE 4 ARTICLE 28. TUITION REIMBURSEMENT PAGE 4 ARTICLE 29. WELLNESS PROGRAM PAGE 4 ARTICLE 30. EMPLOYEE ASSISTANCE PROGRAM PAGE 5 ARTICLE 31. RETIREMENT HEALTH SAVINGS ACCOUNT PAGE 5 ARTICLE 32. FLEXIBLE BENEFIT PLAN (SECTION 125)............ PAGE 5 ARTICLE 33. DIRECT DEPOSIT PAYROLL PAGE 5 ARTICLE 34. MEDICARE / SOCIAL SECURITY PAGE 5 ARTICLE 35. PERMANENT-PART TIME EMPLOYEES PAGE5 ARTICLE 36. MISCELLANEOUS COMMITMENTS PAGE 5 0 • ARTICLE 1: PREAMBLE This Memorandum of Understanding is prepared between representatives of the City Manager of the City of Rosemead and the Rosemead Employee Association. Full consideration has been given to salaries, employee benefits, and other terms and conditions of employment. Pursuant to the provisions of Section 3505.1 of the Government Code of the State of California, said parties agree to this Memorandum of Understanding effective July 1, 2007. ARTICLE 2: RECOGNITION & EFFECTIVE DATES This Memorandum of Understanding shall become effective July 1, 2007 and will continue in effect until such time that a new agreement is negotiated. The Rosemead Employee Association shall be officially recognized as the representative body for all employees of the City of Rosemead. This Memorandum of Understanding represents the full and complete understanding between the parties related to the subject matter set forth herein and all preliminary negotiations of whatever kind or nature are merged herein. ARTICLE 3: CONSTITUTIONALITY If any section, subsection, subdivision, sentence, clause, or phrase of this Memorandum of Understanding is for any reason held to be illegal or unconstitutional, such decision shall not affect the validity of the remaining portion of this Memorandum of Understanding. ARTICLE 4: IMPLEMENTATION This Memorandum of Understanding constitutes a mutual recommendation by the parties to the City Council that one or more resolution be adopted accepting this Memorandum of Understanding and effecting the changes enumerated herein relative to wages, benefits, and other terms and conditions of employment for the employees of the City of Rosemead. It is expressly intended that the duties, responsibilities, and functions of the City in the operation of its functions shall in no manner be impaired, subordinated, or negated by any provisions of this agreement. ARTICLE 5: NON-DISCRIMINATION It is agreed that neither the Rosemead Employee Association nor the City shall discriminate against any employee because of race, religious creed, national origin, age, sex, disability, sexual orientation, or any other legally protected status. ARTICLE 6: GENDER Whenever the masculine or feminine form of any word is used in this Memorandum of Understanding, it also includes the other gender unless clearly indicated in the context. ARTICLE 7: SALARIES All full-time, permanent part-time, part-time, and seasonal employees will receive the following across the board wage adjustments: Effective pay period including 7/1/07 - 4% ARTICLE 8: TRANSITION To NEw HEALTH CARE PROVIDER Beginning on July 1, 2007, the City will no longer offer health insurance benefits through CalPERS Health. Instead, the City will provide health insurance options through a private health insurance carrier. Beginning on July 1, 2007, the City will provide each employee with $1,200 per month for use towards enrolling in any of the City offered health plans, dental plans, and vision plans. Any unused remainder can be put into a deferred compensation plan, taken as a cash disbursement, or used for the purchase of any City sponsored insurance, long-term care, or long-term saving program. Employees can also choose to take the entire benefit as deferred compensation or cash, but must first show proof of health insurance through another source. Page 1 of 6 • • ARTICLE 10: RETIREMENT HEALTH PLAN For all full-time employees hired on or before July 1, 2007, who have 20 years or more of service with the City of Rosemead, and who retire from the City, an allocation of up to $1,000 / month will be given to pay for health care benefits for the duration of their retirement. If the health insurance program selected by the employee costs more than $1,000 / month, the City will only cover the first $1,000 / month of the cost of the selected program. Once employee reaches age 65 or becomes eligible for Medicare coverage, the employee will transition to Medicare coverage, with the City picking up the remaining cost of health insurance coverage up to a maximum of $1,000 ! month. For all full-time employees hired on or before July 1, 2007, who have 12-19 years of service with the City of Rosemead, and who retire from the City, an allocation of up to $500 / month will be given to pay for health care benefits for the duration of their retirement. If the health insurance program selected by the employee costs more than $500 / month, the City will only cover the first $500 / month of the cost of the selected program. The above retirement health contributions will only be in effect for full-time employees employed with the City as of July 1, 2007. When employee reaches 65 years of age, or becomes eligible for Medicare, said employees will transition to Medicare coverage and the City will continue to contribute towards the cost of health care coverage during the duration of the employees retirement according to the program as defined in Article 10. Furthermore, it is expressly noted that the retirement health contribution can be used towards health coverage for the employee, their spouse, and / or any eligible dependent. ARTICLE 11: RETIREMENT PROGRAM Employees will be enrolled in the City's retirement program through CaIPERS. Effective July 1, 2007, the City will begin providing the 2.7%@55 benefit with one-year final compensation option. In addition, the City will continue to contribute the employee's share to the retirement system. ARTICLE 12: ENHANCED RETIREMENT PROGRAM The City will continue offering an enhanced retirement package through PARS. Full-time employees who retire from Rosemead after working 20 years for the City will have their pension formula enhanced to 3%@55, with the provision that the maximum pension allowance that employee's can accrue through PARS will be 90% of their final pay. For all full-time employees, the City will set-up and begin contributing into a deferred compensation account a percentage of the employee salary based on years of service. That funding formula will be as follows: • 0 - 4 Years: 1 % of salary contributed into a deferred compensation account. • 5 - 9 Years: 2% of salary contributed to a deferred compensation account. • 10 - 14 Years: 3% of salary contributed to a deferred compensation account. • 15 -19 Years: 4% of salary contributed to a deferred compensation account. • 20+ Years: 5% of salary contributed to a deferred compensation account. ARTICLE 14: VACATION LEAVE All full-time employees will be entitled to a paid vacation of 100 hours (10 days) following one year of employment. Employees may begin taking your accrued vacation after six months on the job. From the second year of employment until completion of the thirteenth year, employees will be entitled to 140 (14 days) hours of paid vacation. Beginning with the fourteenth year, and every year thereafter, employees will be entitled to 160 hours (16 days) of vacation. Page 2of6 0 • ARTICLE 15: VACATION BUYBACK Any full-time employee who takes 40 consecutive hours of vacation during the course of the year will be eligible to have the City buyback up to 80 hours of vacation time. ARTICLE 16: CITY-RECOGNIZED HOLIDAYS The following days shall be recognized and observed as paid holidays: 1. New Year's Day (January 1s) 2. Martin Luther King's Birthday (the third Monday in January) 3. Presidents' Birthday (the third Monday in February) 4. Memorial Day (the last Monday in May) 5. Independence Day (July 4'h) 6. Labor Day (the first Monday in September) 7. Veteran's Day (November 11`h) 8. Thanksgiving Day 9. Christmas Day (December 25'h) ARTICLE 17: FLOATING HOLIDAYS Employees will receive 20 floating holiday hours per year. Those hours must be used before the end of the calendar year or they will be lost. ARTICLE 18: OVERTIME / COMPENSATORY TIME Beginning on July 1, 2007, compensatory time-off (CTO) will no longer be provided to any employee. Instead, non-exempt employees that work overtime shall be paid for those overtime hours at a rate of 1.5 times their regular pay rate. Those employees that have accrued CTO prior to July 1, 2007 shall be allowed to keep those hours. Use of CTO earned shall be granted so that it does not unduly disrupt the operations of the City. Terminating employees shall be compensated for accrued compensatory hours. Furthermore, employees who have accrued CTO may elect to sell back to the City up to 20 hours of CTO per year. Said sell back shall take place during the second pay period in December of each year and will be paid at the employee's hourly rate at the time the CTO is sold back to the City. In addition, accrued CTO for any terminating employee will be paid out at the employee's hourly rate at the time of termination. ARTICLE 19: ADMINISTRATIVE LEAVE On January 1, 2008, and every January 1 thereafter, employees working in a position classified as exempt or management will be allocated an allotment of Administrative Leave according the following schedule: Job Classification Administrative Leave Allocation Exempt 60 Hours Management 80 Hours Any Administrative Leave hours that have not been used by December 31 of a calendar year will be lost. However, any employee working in a position classified as exempt or management, and who has utilized or plans to utilize at least 'h of their allocated Administrative Leave by December 31, will be offered the opportunity to sell back to the City any of their remaining Administrative Leave hours. Said sell back shall take place during the second pay period in December of each year and will be paid at the employee's hourly rate at the time the administrative leave is sold back to the City. Furthermore, any Administrative Leave on the books for a terminating employee shall be paid out at the employee's hourly rate at the time of termination. For the purposes of participating in the City's Administrative Leave sell back program, those employees classified exempt must have utilized at least 30 hours of Administrative Leave, and those employees classified as management must have utilized at least 40 hours of Administrative Leave. Page 3of6 9 • ARTICLE 20: FLEXIBLE SCHEDULING Depending on an employee's area of assignment, an alternate work schedule may be arranged given supervisor approval. This could include the possibility of utilizing a flextime or telecommuting from an offsite location. ARTICLE 21: SICK LEAVE Employees will accrue ten hours of sick leave per month. In addition, any new employees may bring with them up to 200 hours of accrued sick leave from their previous agency, if the previous employer did not otherwise compensate the employee. ARTICLE 22: BEREAVEMENT LEAVE In the event of the death of a member of an employee's immediate family (defined as spouse, parent, grandparent, sibling, children, grandchildren, mother-in-law, father-in-law, sister-in-law, brother-in-law, step-relatives, or member of the household, domestic partner or child of a domestic partner), employees will be entitled to four (4) paid days off for bereavement leave. ARTICLE 23: JURY LEAVE Employees required to serve on a jury will be entitled to their regular compensation for up to 80 hours provided that fees for jury service are deposit with the finance department. ARTICLE 24: PATERNITY LEAVE New fathers wishing to do so may use up to 40 hours of accrued sick leave for paternity leave. ARTICLE 25: SHORT-TERM DISABILITY The City will provide employees with a short-term disability plan to protect against cases where a non-work-related illness or injury is sustained which results in an inability to work for a short period of time. In these cases, employees will receive 66% of their base salary after 14 days, and continued payment until the employee is medically able to return to work, or has to begin utilizing long term disability, or until the employee reaches the age of 65, whichever comes first. The maximum short-term disability benefit amount will be $8,000 per month. ARTICLE 26: LONG-TERM DISABILITY The City will provide employees with a long-term disability plan to protect against cases where a non-work-related illness or injury is sustained which results in an inability to work for a long period of time. In these cases, employees will receive 66% of their base salary after 45 days, and continued payment until the employee is medically able to return to work, or until the employee reaches the age of 65, whichever comes first. The maximum long-term disability benefit amount will be $8,000 per month. ARTICLE 27: LIFE INSURANCE Employees will receive an accidental death & dismemberment and life insurance policy of $100,000. ARTICLE 28: TUITION REIMBURSEMENT Full-time employees will be eligible for tuition reimbursement of up to $5,000 per fiscal. Reimbursable expenses must be approved by the City Manager and will include items such as registration, tuition, textbooks, and parking. ARTICLE 29: WELLNESS PROGRAM The City will reimburse full-time employees up to $500 per year toward the cost of a fitness/exercise or health related program, provided that the employee develops and submits to the personnel officer a personal wellness plan. Once submitted, the employee must engage in an exercise program on a regular basis and/or be involved in a program to improve health (i.e. weight reduction, smoking cessation, etc). Qualifying fitness and exercise activities include but are not limited to: nautilus, aerobics, tennis, racquetball, swimming, golfing, and bicycling. Equipment required for participation in these activities will be considered on a case by case basis. Page 4of6 0 ARTICLE 30: EMPLOYEE ASSISTANCE PROGRAM The City will provide employees with access to an Employee Assistance Program. ARTICLE 31: RETIREMENT HEALTH SAVINGS ACCOUNT Upon retirement, employees may convert accrued sick leave up to $20,000 for deposit in a retirement health savings account. This is an optional program for employees to consider. ARTICLE 32: FLEXIBLE BENEFIT PLAN (SECTION 125) The City will offer employees a flexible benefit plan which will allow individuals to pay for certain expenses (child care, unreimbursed medical expenses, insurance premiums) with pre-tax dollars. ARTICLE 33: DIRECT DEPOSIT PAYROLL Employees will be provided with an option to authorize the automatic deposit of each paycheck into an individuals checking, savings or credit union account. ARTICLE 34: MEDICARE/ SOCIAL SECURITY If Federal Medicare / Social Security is mandated by Congress, the contribution designated by law to be the responsibility of the employee shall be paid in full by the employee. ARTICLE 35: PERMANENT-PART TIME EMPLOYEES Employees designated as permanent-part time will receive all of the benefits accrued full-time employees with the following exceptions: • Cafeteria-Style Health Welfare & Savings Benefit A benefit amount of $600 per month will be provided. • Tuition Reimbursement A maximum reimbursement amount of $2,500 per year will be provided. ■ Wellness Plan A maximum reimbursement amount of $250 per year will be provided. • City Paid Deferred Compensation Permanent-Part Time Employees will not be eligible for this benefit. ■ Retirement Health Plan Permanent-Part Time Employees will not be eligible for this benefit. ARTICLE 35: MISCELLANEOUS COMMITMENTS The City commits to the following miscellaneous activities during the 2007-2008 fiscal year: • Create job descriptions for every position in the City. • Create a formalized Personnel Rules & Regulations Manual. • Create formalized Administrative Policies. • Conduct salary surveys to better determine pay rates. • Conduct an FLSA audit. • Conduct a PERS audit to determine employee eligibility for retirement benefits. Page 5of6 F ROSEMEAD EMPLOYEES ASSOCIATION BY: a G. REA REPRESENTATIVE BY: ' KIM P. BORIS REA REPRESENTATIVE BY: AN KAMAL S. BHATE REA REPRESENTATIVE BY: REA REPRESENTATIVE • CITY OF ROSEMEAD BY: OLIVER C. CHI DEPUTY CITY MANAGER BY: ANDREW C. R TTO CITY MA BY: /Z~, IRMA A. GALINDO REA REPRESENTATIVE BY: Cin~ CONCHITA T. ESCAL NA REA REPRESENTATIVE Page 6of6 *HRH Current plan designs Current employee conMbution amounts Medical: ►ERS CURRENT DerfttAmerOm $835.156 $835,156 100.0% 2006 Plan rear Vision: VSP LRe/ADiD: Aswront Short Term DbobRRy: Standord Long Term DbabRRy: Standard In81ol renewal w/ no change In employee contribution amounth Medical HMO ■ CIGNA INITIAL Medical FPO ■ CIGNA RENEWAL Dental ►PO • FRINCIPAL $667,106 2W7 Plan Year VWon = EYEMED Uhl/ADiD s PRINCIPAL Short Term DlsabI1Ry - PRINCIPAL Long Term DlsablMy • PRINCIPAL $667.106 100.0% -$168.050 -20.12% 0 3/27/2007 Global Budgel Summary City of Rosemead 2 b GLOBAL BUDGET SCENARIO SUMMARY Renewal Summary Medical - PERSCARE PPO 0.0% -38.3% Employee 6 $716.17 $716.17 $441.67 Employee+ 1 8 $1,432.34 $1,43234 $883.34 Family 9 $1,862.04 $1,86204 $1.148.34 Total Annual Premium $390,169 $390,169 $240,622 CIGNA Medical - Kaiser HMO 0.0% 9.7% Employee 33 $329.14 $329.14 $360.96 Employee + 1 0 $658.28 $658.28 $721.92 Family 4 $855.76 $855.76 $938.50 Total Annual Premium $171,416 $171,416 $187,988 CIGNA Medical - Blue Shield HMO 0.070 1.3% Employee 3 $356.17 $356.17 $360.96 Employee + 1 4 $712.34 $712.34 $721.92 Family 9 $926.04 $926.04 $938.50 Total Annual Premium $147,027 $147,027 $149,005 PRINCIPAL Dental - Ameritas PPO 0.0% -15.6% Employee 10 $50.68 $50.68 $37.55 Family 33 $123.64 $123.64 $104.36 Total Annual Premium $55,043 $55,043 $45,833 EYEMED Vision - VSP 0.070 -42.97o Employee 10 $14.98 $14.98 $8.04 Employee + 1 7 $21.72 $21.72 $15.18 Family 26 $38.95 $38.95 $2224 Total Annual Premium $15,774 $15,774 $9,179 PRINCIPAL Ancillary - Assurant/Standard 0.070 -38.17o Life insurance 78 $0.460 $0.460 $0.250 Accidental Death 8 Dismemberment 78 $0.040 $0.040 $0.046 Short Term Disability 41 $0.266 $0.266 $0.290 Long Term Disabitliy 41 $1.130 $1.130 $0.550 Total Annual Premium $55,727 $55,727 $34,480 Combined Current Totals $835,156 Combined Renewal Totals $835,156 is 0 ♦HRH March 2007 City of Rosemead HMO Medical Plan Comparison HMO MEDICAL Blue Shield Current Plan 0 0 March 2007 Annual Deductible Annual Out-of-Pocket Maximum Lifetime Maximum Benefit - None 1,000 per Individual - 2000 family Unlimited None 1,000 per Individual - $2,000 family Unlimited Office Visits $10/visit $10/visit Specialist Office Visit $101visit $10/v4it Maternity Office Visits $10/visit $10/visit Routine Physical Exams $101visit $10/visit Hospitalization Services $0 $0 Outpatient Surgery $0 $0 Lob & X-Roy $0 $0 Emergency Room $50 (waived if admitted) $50 (waived if admitted) Chiropractic Benefit Not Covered $101visit Visits N/A 20 per calendar year MENTAL HEALTH Inpatient Services $0 $5C/day Outpatient (severe conditions) $10/visit it i Outpatient (non-severe conditions) $20/visit - $30/v s Visits 20 per calendar year for Non-Severe Unlimited for Severe 20 per calendar year SUBSTANCE ABUSE Inpatient $0 $50/day Outpatient $10/visit $15/visit for first two visit! $30/visit thereafter PRESCRIPTION DRUGS Generic Formulary $5 $7 Brand-Nome-Formulary $15 $15 Non-Formulary $35 $35 - Mail Order (90-day supply) RATES Mrs Employee 3 Employee + 1 4 Family 9 Total Monthly Premium Total Annual Premium $10/$25/$75 $356.17 $71234 $926.04 $12,252 $147,027 $14/$30/$70 $360.96 $721.92 $938.50 $12,417 $149,005 Annual Variance from Current Annual % Variance from Current $1,978 1.3% DECLINE TO QUOTE - Aetna, Blue Cross. Kaiser. PacifiCare OHRH City of Rosemead HMO Medical Plan Comparison M F-I~ f--I March 2007 DECLINE TO QUOTE - Aetna, Blue Cross, Kaiser, PacifiCare City of Rosemead PPO Medical Plan Comparison 0 0 PPO MEDICAL Annual Deductible Annual Out-of-Pocket Maximum IN-NETWORK OUT-OF-NETWORK $..500 per Individual - $1,000 family $2,000 indfdduol-$4.000lomity Nom Option Cigna IN-NETWORK OUT-OF-NETWORK $500 per individual - $1,000 per family $2500 individual-$6.000lamry $HIM) el, tiv,1 ,:iM:I,:Ijy Lifetime Maximum Benefit Unlimited Unlimited Office Visits $20/visit 40% $2D/visit 40% Specialist Office Visit $20/visit 40% $20/visit 40% Maternity Office Visits $20/visit 40% $20/visR 40% Routine Physical Exams $0 Not covered $20/visit 40% Hospitalization Services 10%+ $250 Deductible , 40%+ $250 Deductible 10%+ $250 Deductible 40%+ $250 Deducible Outpatient Surgery - - 1096 + $250 Deductible 40%+ $250 Deductible 10%+ $125 Deductible 40%+ $125 Deductible Lab & X-Ray 10% 40% 10% 40% Emergency Room 10%+ $50 Deductible (WIA) 10%+ $1 W Deductible (WI.A( Chiropractic Benefit 10% 40% $20/visit Not i_.overe:: Visits 20 per calendar year $1,000 max per calendar year MENTAL HEALTH Inpatient Services 10%+ $250 Deductible 40%+ $250 Deductible 10%+ $250 Deductible 4D%+ $250 Deductible Outpatient (severe conditions) 10% 40% 5G% $50 + Outpatient (non-severe conditions( $20/visit 40% Outpatient Maximum SUBSTANCE ABUSE 30 per calendar year 20 oer calendar year Inpatient 10%+ $250 Deductible 40%+ $250 Deductible 10%+ $250 Deductible 40%+ $250 Deductible Outpatient 10% I 40% $20/visit 40% PRESCRIPTION DRUGS Generic Formulary Brand-Name Formulary - - Non-Formulary Mail Order (90-day supply) RATES UNrr_s $5 $15 Not covered $45 $10/$25/$75 $7 $15 Not Covered $35 $14/$30/$70 Employee 6 Employee+ I 8 Family 9 $716.17 $1.432.34 $1.862.04 $441.67 $883.34 $1,148.34 Total Monthly Premium Total Annual Premium $32,514 $390,169 $20,052 $240,622 Annual Variance ham Current Annual % Variance from Current -$149,548 -38.3% DECLINE TO QUOTE - Aetna, Blue Cross, Kaiser, PacifiCc March 2007 • • March 2007 City of Rosemead PPO Dental Plan Comparison DENTAL Amerkis Principal Current Man IN-NETWORK OUT-OF-NETWORK -PP-0 PLAN Annual Deductible $0 Individual/ $0 Family $50 Individual 1 $150 Family $O individual! $0 Family $50 Individual 1 $150 Family Annual Benefit Maximum $1,500/Indiv1dual $1.5001Individual Preventive Care 100% 100% Bask Services 80% 80% Major Services 50% 50% Orthodontk3 50% up to $I.ODO Adult b Chip 5096 up 10 $1.500 Adult & Child Orthodontia Walt" Period 12 Months rrone PerlodantIcs/Endodontics In Bask Services In Basic Services R b C Level (out-ot-network) 90th percentile 901h percentile Late Entrant Waiting Period None r is . Rate Guarantee I Year I Year RATES uNrrS Employee i0 Employee +FOmity 33 Total Monthly Premium Total Annual Premium - $50.68 $123.64 $4,587 $55,04 $37.55 $104.36 $3,819 $45,833 Annual Variance from Current Annual % Variance from Current 49,210 -16.77. Decline to Quote: N/A r-iFH • • Comparing network strength Reliable dental network information can make all the difference when choosing a dental carrier. We understand the importance of gathering objective data on network strength and provider counts. That's why we've contracted with an independent business intelligence company to provide the data you need to help clients make informed decisions about dental carriers and their provider networks. The Ignition Group, LLC uses a data mining system called NetMinder"m to collect provider information from dental carriers' online provider directories - the directories that each company makes available on its website. You could check all the websites yourself, however the NetMinder system does the legwork for you by counting each carrier's dental providers by location and providing a summary of results. NETWORK COMPARISON The network comparison shown here includes Principal Life Insurance Company and four top-tier national competitors, listing the number of dentists in each carrier's network by county. You can use this information to help you to decide where to place your dental business. Network Com arlson of Principal Plan Dental in Southern California County Assurant Premier Delta Dental Preferred Guardian MetLHe Principal Life imperial 29 21 13 11 21 In yo 0 0 1 1 0 Kern 220 192 240 285 238 Los Angeles 3580 4189 4690 4889 5241 Orange 1321 1639 1932 1910 2128 Riverside 538 752 790 840 891 San Bernardino 432 717 724 702 719 San Diego 952 1077 1480 1535 1312 San Luis Obis 20 75 34 36 25 Santa Barbara 114 122 106 114 116 Tulare 42 71 71 69 58 Ventura 281 348 349 371 320 Grand Total 7529 9203 10430 10763 11069 NetMinder Network Summary Report, February 2006, The Ignition Group, LLC For broker use only. The Ignition Group makes no warranty about this network data, including any express or implied warranty of merchantability, fitness for a particular purpose, satisfactory quality, accuracy, and non-infringement of third party rights. The Ignition Group also specifically disclaims any warranties regarding the performance of the data and the results that will be obtained by using the data. WF'I.I GIVE YOU AN Fl)t,F Principal Life lasurmree Cornpany Vrf., N15 DM unes, lA 50392, GP 53392-1 0 2006 Principal Financial Services, Inc 0412006 • From: Brno, Chris [mailto:Brno.Chris@pdncipal.com] Sent: Thursday, May 31, 2007 12:02 PM To: Chi, Oliver; Paul, Misty Subject: RE: City of Rosemead Oliver, I think the attached flyers should help out. u The first is a dental PPO comparison which should the size and strength of our network. I think it is also worth mentioning to Rosemead that we co-op our PPO Network with Ameritus.... their current vendor. This means that there will be very little disruption for their employees in making the switch. The second attachment is a Periodontal Voucher. This allows for employees that are pregnant, have heart disease or diabetes to get one additional cleaning per year. See the attached flyer for more details Will Preparation Services: this is a new feature to our Life contract and the reception from employers has been very positive. This is a free service unique to Principal Financial Group. Our Dental PPO product includes a free discount vision program offered via VSP. See last attachment for details. Let me know if you need anything further from me as we would love to write this account with you all! Chris Brno Principal Financial Group Vice President of Sales, Orange County 18101 Von Karman Avenue Suite 1170 Irvine, CA 92612 (949) 553-1616, ext. 220 (949) 553-1898 - fax cell: (949) 632-0425 WE'LL GIVE YOU AN EDGE"' City of Rosemead Vision Plan Comparison VISION Current Man Plan H - r / 50 IN-NETWORK OUT-OF-NETWORK IN-NETWORK OUT-OF-NETWORK Frequency of Service Exam - - - Every 12 Months Every 12 Months • Lenses _ _ - Every 12 Months Every 12 Months Frames Every 24 Months Every 24 Months Contact Lenses (In I1eu of tenses b flame) Every 12 Months Every 12 Months, Copayments Ewam - - $10 $10 - Moterlals $10 $o Covered Services Examination Covered In tug $45 Relrnbursemenl Covered In full $49 Reimbursemenr Single Vision Lenses f Covered In full $45 Retrnbursement Covered In full $35 Reimbursement Bnocol Lenses Covered In NN $65 Reimbursement Covered In full $49 Reimbursement Trflbcal Lenses Covered In fug $85 Re4r0bursement Covered In NI $74 Reimbursement Lentlcular Lenses Covered In full $125 Reimbursement Covered In NI $120 Reimbursement Rames Covered up to $120 $47 Reimbursement Covered up to $130 1 $60 Reimbursement 20% off balance over $120 10% off balance over $130 Contact Lenses (elective) -overed uo to $130 $104 Reimbursement Covered In full 1 $105 Reimbursement -1s% off naance over 130 1 _ Contact Lenses (medically necessary) Covered In furl $200 Reimbursement RATES UNITS Employee 10 14.98 8.04 EE + I 7 21.72 15.18 EE + Family 26 - - _ 38.95 22.24 Total Monthly ►rnmium - $1,315 $765 Total Annual Premium $15,774 $9,179 Annual Variance from Current $6,596 Annual % Variance from Current 41.x17. March 2007 EyeMedni~r V I S ION CARE,, EyeMed Vision Care brings you and your employees over 100 years of combined experience in vision care. As a result of our long and respected history in the vision care industry, we're well aware of the kind of program you need to offer your employees. That is why we've designed a vision care program combining unlimited choice with superior quality and value. Clients Desire EyeMed Delivers Provider Choice Unlike other vision programs that may restrict members to specific provider types, EyeMed members have access to over 30,000 independent and optical retail providers at over 16,000 locations. The EyeMed panel includes optometrists, ophthalmologists, opticians and many leading optical retailers including LensCrafters, Target Optical, Sears Optical, JCPenney Optical and most Pearle Vision locations. Product Choice Members enjoy unlimited choice of eyewear products, including designer frames by Luxottica, the world's leading frame manufacturer. Providers appreciate the freedom of lab and product choice, other programs may riot offer. Quality When it comes to quality products, neither members nor providers are limited to lesser brands or "special selections." All EveMed providers must meet NCQA credentialing standards and are monitored through our Quality Assurance Program and recredentialing process. Value Thanks to our Unique relationship with recognized vision care leaders Luxottica and LensCrafters, Evetvled can offer the most appealing value in the industry. In addition to great savings on initial purchases, EyeMed members realize a 40% discount on additional complete pair eyeglass purchases after the funded benefit has been used; a value no other vision care company can provide. Service Service support is available online with easy-to-access information at www.eyemedvisioncare.com. Members also have daily access to the knowledgeable staff at the EyeMed Customer Care Center, who are available more hours than anyone in the industry. www.eyemedvisIoncare.com 888-4-EVEMED DF0105 • EyeMed VISION CANC. Why EyeMed? The choice is clear. More Choices. Better Quality. • With over 100 years of combined experience, EyeMed knows and understands the type of program member's desire. That is why we have designed a vision care program combining ultimate choice, high quality, unmatched value and service excellence that exceeds customer expectations. Some of EyeMed's key differentiators include: Choice The freedom to choose from an extensive network of private practice optometrists, ophthalmologists, opticians or from the nations top optical retailers including: LENSCRAFTERS' E)TMGIET OPUS 0,Z,-& AwR§elilnll6l. ptical Quality Reliable, high quality eye care services delivered by a network dedicated to the vision health and welfare of our members combined with the ability to choose from any product available. Value Affordable pricing without sacrificing quality due to our corporate structure with Luxottica, the world's leading frame manufacturer and LensCrafters, the nation's leading optical retailer. Service Online administrative capabilities offering easy, hassle-free administration, and customer service hours that are the best in the industry, with representatives available 7 days a week, including evenings. Commitment to Ensuring Americans are educated about the importance of vision Vision Wellness care is our top priority. We partner with the Vision Council of America through the Check Yearly. See Clearly. campaign to help communicate this message. • EyeMed . VISION CARE. • Comprehensive Vision Care Plans Each EyeMed plan is flexible and customizable to more closely fit each client's needs. The type of plans available include: • Fully Funded Exam, Contact Lens Fit and Follow-up, and Materials • Fully Funded Exam and Materials • Funded Exam with Discounted Materials • Discount-Only Plan • Materials-Only Plans The EyeMed Access plans feature: • Access to one of the largest networks available, including private practice and optical retail providers • Up to 40% overall savings • Additional savings beyond plan coverage • Choice of any product eyewear • Customized copays and allowance levels • Replacement Contact Lens by Mail program • Discount from the largest laser vision panel, U.S. Laser Network More Choices. Better Quality. EyeMed Vision Care is one of the leading managed vision care organizations in the industry. Its unique relationship with recognized vision care leaders Luxottica Group , the world's leading eyeglass frame manufacturer, and its corporate owned leading optical retailers such as LensCrafters and Pearle Vision, provide stability and financial support that lead to continued growth year after year. With over 100 years of combined experience, EyeMed knows and understands the type of program members' desire. That is why we offer a vision care program that combines Ultimate Choice, Quality, Value and Service Excellence that over 120 million members count on for their vision care needs. • PROPOSED BENEFITS General Full-Time Employees Hired Prior To July 1, 2007 Benefits: Employee Choice (Cafeteria Plan) HEALTH, WELFARE, AND SAVINGS BENEFIT The City will provide you with $1,200 per month, which may be used to enroll in any CalPERS offered health plan, dental plan, and a vision plan. Any unused remainder can be put into a deferred compensation plan, taken as a cash disbursement, or used for any City sponsored insurance, long-term care, or long-term saving program. HEALTH INSURANCE The City offers a number of health plans through CalPERS. Current rates are as follows: 2007 CaIPERS Health Care Rates Plan Employee Only Plan Code Employee & t Plan Code Emplyee & 2+ Dependent Dependents Plan Code HMO Kaiser $ 329.14 3061 - - $ 855.76 3063 Blue Shield $ 356.17 3021 $ 712.34 _ 3022 $ 926.04 3023 PPO PERSChoice $ 423.63 3211 $ 847, $ 1,101.44 3213 PERSCare $ 716.17 3261 $ 1,432.34 3 $ 1,862.04 3263 DENTAL INSURANCE Currently, the City offers dental coverage through Ameritas Dental Program. Single coverage is $50.68 / month, and family coverage is $123.64 / month. VISION INSURANCE The City offers enrollment for you and your dependents in a vision plan provided through VSP. The program allows for a vision examination each year and lenses and frames or contacts every year. Current cost for enrollment is $24.97 / month. • • Benefits - City Provided RETIREMENT HEALTH PLAN For all full-time employees hired on or before July 1, 2007, who have 20 years or more of service with the City of Rosemead, and who retire from the City, an allocation of up to $1,000 / month will be given to pay for health care benefits for the duration of their retirement. For all full-time employees hired on or before July 1, 2007, who have 12-19 years of service with the City of Rosemead, and who retire from the City, an allocation of up to $500 / month will be given to pay for health care benefits for the duration of their retirement. LIFE INSURANCE Employees will receive a life insurance policy of $100,000 on themselves. There are also optional insurance programs which can be taken with you if you leave City service. VACATION / VACATION BUYBACK You are entitled to a paid vacation of 100 hours (10 days) following one year of employment (you may take your accrued vacation after six months). From the second year of employment until completion of the thirteenth year, you are entitled to 140 (14 days) hours of paid vacation. Beginning with the fourteenth year, and every year thereafter, you are entitled to 160 hours (16 days) of vacation. Also, any employee who takes 40 consecutive hours of vacation during the course of the year will be eligible to have the City buyback up to 80 hours of vacation time. SICK LEAVE You will accrue ten hours of sick leave per month. Also, any new employees may bring with them up to 200 hours of accrued sick leave from their previous agency, if the previous employer did not otherwise compensate the employee. CITY PAID BEREAVEMENT LEAVE In the event of the death of a member of an employee's immediate family (defined as spouse, parent, grandparent, sibling, children, grandchildren, mother-in-law, father-in- law, sister-in-law, brother-in-law, step-relatives, or member of the household, domestic partner or child of a domestic partner), employees will be entitled to four (4) paid days off for bereavement leave. JURY LEAVE If you are required to serve on a jury, you are entitled to your regular compensation for up to 80 hours providing you deposit your fees for service with the finance department. 0 HOLIDAYS You will receive 90 holiday hours per year for the following days: New Year's Day (January 1) Martin Luther King's Birthday (The third Monday in January) Presidents' Birthday (The third Monday in February) Memorial Day (The last Monday in May) Independence Day (July 4th) Labor Day (The first Monday in September) Veteran's Day Thanksgiving Day Christmas Day (December 25th) FLOATING HOLIDAYS You will receive 20 floating holiday hours per year, which must be used before the end of the calendar year. RETIREMENT We offer enrollment in the California Public Employees' Retirement System (PERS). In addition to the employer's share, the City will also contribute 8% of your salary into the retirement system. Our contract is for the 2.7% at 55 plan. Our contract with PERS also includes: ONE YEAR FINAL COMPENSATION PROVISION When calculating retirement benefits, the period for determining the average monthly pay rate is the 12 highest paid consecutive months. SURVIVOR BENEFITS OPTION, THIRD LEVEL This benefit provides a monthly allowance to survivors of members who die prior to retirement. SICK LEAVE CREDIT BENEFIT Upon retirement, any unused sick leave you have may be converted to PERS service credit based on a PERS established formula. In addition, Rosemead offs PERS retirement program. plan that enhances the Employees who retire from Rosemead after working 20 years for the City are eligible to enhance their retirement benefit to 3% at 60. • ! CITY PAID DEFERRED COMPENSATION ■ 0 - 4 Years: 1 % of salary contributed into a deferred compensation account. ■ 5 - 9 Years: 2% of salary contributed to a deferred compensation account. ■ 10 - 14 Years: 3% of salary contributed to a deferred compensation account. ■ 15 - 19 Years: 4% of salary contributed to a deferred compensation account. ■ 20+ Years: 5% of salary contributed to a deferred compensation account. SHORT TERM DISABILITY The City provides a short-term disability plan. This benefit is in case you sustain a non- work-related illness or injury that results in your inability to work for a short period of time. In this event, you will receive 66% of your base pay of your salary after 14 days, and continued payment until you are medically able to return to work, or have to begin utilizing long term disability, or until you reach the age of 65, whichever comes first (maximum of $8,000 per month). LONG TERM DISABILITY The City also provides a long-term disability plan. This benefit is in case you sustain a non-work-related illness or injury that results in your inability to work for a long period of time. In this event, you will receive 66% of your base pay of your salary after 45 days, and continued payment until you are medically able to return to work, or you reach the age of 65, whichever comes first (maximum of $8,000 per month). PATERNITY LEAVE New fathers wishing to do so may use up to 40 hours of accrued sick leave for this purpose. ADMINISTRATIVE LEAVE For Exempt Employees, Administrative Leave of 60 hours per calendar year is granted in recognition of the frequent requirement to work evenings, weekends and holidays in excess of 40 hours per week. Any of the 60 leave hours not taken will be lost at the end of each calendar year. An administrative leave buyback program will also be provided. TUITION REIMBURSEMENT As a Rosemead employee, you may also take advantage of a tuition reimbursement program. The amount of reimbursement will be up to $5,000 per fiscal year. Reimbursable items include registration, tuition, textbooks, and parking. 0 0 HEALTH/FITNESS REIMBURSEMENT BENEFIT The City will reimburse up to $500 per year toward the cost of a fitness/exercise or health related program. To qualify for this benefit, you must engage in an exercise program on a regular basis and/or be involved in a program to improve health (i.e. weight reduction, smoking cessation, etc). Qualifying fitness and exercise activities include but are not limited to: nautilus, aerobics, tennis, racquetball, swimming, golfing, and bicycling. Equipment required for participation in these activities will be considered on a case by case basis. EMPLOYEE ASSISTANCE PROGRAM (EAP) The City cares about the emotional and physical well-being of its employees and their families. If you or one of your family members is experiencing emotional difficulties, financial concerns, marital problems or problems with drug abuse, contact the City's EAP provider. • 0 Benefits - Optional DEFERRED COMPENSATION PLAN As a City of Rosemead employee, you have the opportunity to participate in a supplemental retirement savings plan offered through the International City Management Association (ICMA) Retirement Corporation. Participation in this program: • shelters a portion of your salary from income taxes; ■ invests in high-performing funds yielding tax-deferred earnings; ■ provides a superior tool for retirement planning and savings. You may defer a maximum of 50% of your gross income or $15,000 per year, whichever is less. Informational brochures on the plan are available in personnel. You may contact ICMA directly for more information at (800) 669-7400. 401 (a) PLAN As a City employee, you have the opportunity to participate in this tax deferred retirement saving tool. You may defer compensation up to $42,000 annually or 100% of income, which ever is less. CREDIT UNION MEMBERSHIP You are eligible for membership in the F & A Federal Credit Union. F&A offers a wide variety of services, including checking and savings accounts, all types of loans (automobile, vacation, personal, first and second home mortgages, and more!). Additional information is available in personnel, or by calling the credit union toll free at (800) 232-1226. FLEXIBLE BENEFIT PLAN (SECTION 125) The City offers a flexible benefit plan which will allow you to pay for certain expenses (child care, unreimbursed medical expenses, and insurance premiums) with pre-tax dollars. RETIREMENT HEALTH SAVINGS ACCOUNT Upon retirement, you may convert accrued sick leave up to $20,000 for deposit in a retirement health savings account. This is an optional program and you may continue to convert sick leave to PERS service credit at retirement. Alternatively, you may also convert some of your accrued leave to a retirement health savings account and some to PERS service credit. DIRECT DEPOSIT PAYROLL You may authorize the automatic deposit of your paycheck into your checking, savings or credit union account. ATTACHMENT D • CURRENT BENEFITS As a City of Rosemead employee, you are entitled to the following benefit package: HEALTH INSURANCE The City contracts with the CalPERS Health Benefits Program, and pays for the full cost of any health care plan that you select. RETIREMENT HEALTH PLAN Any employee who is vested in PIERS and who retires from the City will have their health care benefits paid for by Rosemead for the duration of their retirement. DENTAL INSURANCE The City pays for full dental insurance coverage for you and your dependents. VISION INSURANCE The City offers enrollment for you and your dependents in a vision plan, which provides a vision examination each year and lenses and frames or contacts every year. • LIFE INSURANCE The City provides all employees with a life insurance policy of $100,000. VACATION / VACATION BUYBACK From the first year of employment until the completion of the tenth year, you are entitled to a paid vacation of 80 hours (8 days) per year*(you may take your accrued vacation after one year on the job). Beginning in year eleven, you are entitled to 120 hours (12 days) of paid vacation per year. Also, any employee who takes 40 consecutive hours of vacation time during the course of the year will be eligible to have the City buyback up to 80 hours of vacation time. SICK LEAVE / SICK LEAVE BUYBACK You will accrue eight hours of sick leave per month. Once you accumulate over 160 hours of sick leave, you are required to participate in the City's Sick Leave Buy-back program by selling back any unused hours JURY LEAVE • If you are required to serve on a jury, you are entitled to your regular compensation for up to 80 hours providing you deposit your fees for service with the finance division. 6. i • HOLIDAYS You will receive 80 holiday hours per year for the following days: New Year's Day (January 1) Presidents' Birthday (The third Monday in February) Memorial Day (The last Monday in May) Independence Day (July 4th) Labor Day (The first Monday in September) Veteran's Day Thanksgiving Day Christmas Day (December 25th) FLOATING HOLIDAYS You will receive 10 floating holiday hours per year, which must be used before the end of the calendar year. RETIREMENT We offer enrollment in the California Public Employees' Retirement System (PERS). In addition to the employer's share, the City will also contribute 7% of your salary into the retirement system. Our contract is for the 2% at 55 plan. • Our contract with PERS also includes: THREE-YEAR FINAL COMPENSATION PROVISION When calculating retirement benefits, the period for determining the average monthly pay rate is the 36 highest paid consecutive months. SURVIVOR BENEFITS OPTION, THIRD LEVEL This benefit provides a monthly allowance to survivors bf members who die prior to retirement. SICK LEAVE CREDIT BENEFIT Upon retirement, any unused sick leave you have may be converted to PERS service credit based on a PERS established formula. In addition, Rosemead offers a PARS supplemental retirement plan that enhances the PERS retirement program. Employees who retire from Rosemead after working 20 years for the City are eligible to enhance their retirement benefit to 3% at 55. Employees who retire from Rosemead after working at least 10 and no more than 20 • years for the City are eligible to enhance their retirement benefit to 2.5% 60. 0. 0 SHORT TERM DISABILITY The City provides a short-term disability plan. This benefit is in case you sustain a non- work-related illness or injury that results in your inability to work for a short period of time. In this event, you will receive 60% of your base pay of your salary after 14 days, and continued payment until you are medically able to return to work, or have to begin utilizing long term disability, or until you reach the age of 65, whichever comes first (maximum of $6,000 per month). LONG TERM DISABILITY The City also provides a long-term disability plan. This benefit is in case you sustain a non-work-related illness or injury that results in your inability to work for a long period of time. In this event, you will receive 60% of your base pay of your salary after 90 days, and continued payment until you are medically able to return to work, or you reach the age of 65, whichever comes first (maximum of $5,000 per month). LONG TERM CARE The City provides long-term care coverage to help pay for care in your own home, assisted living, nursing home, adult day care, respite care, or other types of assistance should you become unable to engage in two of the six activities of daily living. Our program provides three years of coverage with a $150 daily benefit amount. is DEFERRED COMPENSATION PLAN As a City of Rosemead employee, you have the opportunity to participate in a supplemental retirement savings plan offered through the International City Management Association (ICMA) Retirement Corporation. Participation in this program: ■ shelters a portion of your salary from income taxes; • invests in high-performing funds yielding tax-deferred earnings; ■ provides a superior tool for retirement planning and savings. You may defer a maximum of 50% of your gross income or $15,000 per year, whichever is less. Informational brochures on the plan are available in personnel. You may contact ICMA directly for more information at (800) 669-7400. CREDIT UNION MEMBERSHIP You are eligible for membership in the F & A Federal Credit Union. F&A offers a wide variety of services, including checking and savings accounts, all types of loans (automobile, vacation, personal, first and second home mortgages, and more!). Additional information is available in personnel, or by calling the credit union toll free at • (800) 232-1226. ATTACHMENT E • Actuarial Office P.O. Box 1494 Sacramento, CA 95812 Telecommunications Device for the Deaf - (916) 795-3240 CaIPERS (888) CalPERS (225-7377) FAX (916) 795-3005 CONTRACT AMENDMENT REQUEST To initiate an amendment to contract, complete and return this form to the address above. The necessary documents will be prepared and mailed to you within 30 days of the date this request is received in our office. Employer Name: CITY OF ROSEMEAD Employer Number: 1595 Member Group or Plan: MISCELLANEOUS PLAN Coverage Group(s) affected by the Amendment : 70001 Description of Benefit Provisions and Section(s): Section 21354.5, 2.7% @ 55 Supplemental Formula (applies to all local active miscellaneous members only) CaIPERS Valuation ID# Proposal - 282058 Please initiate the amendment to this employer's contract with CalPERS: • Name and Title: (Please Print): Date: Signature: Mailing Address: Street Address: City/State/Zip: Telephone Number: E-mail Address: N4mber. 0 CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 Benefit Description: Section 21354.5, 2.7% @ 55 Supplemental Formula (applies to all local active miscellaneous members only) Actuarial Cost Estimates in General What will this amendment cost? Unfortunately, there is no simple answer. There are two major reasons for the complexity of the answer: • First, all actuarial calculations, including the ones in this cost estimate are based on a number of assumptions about the future. There are demographic assumptions about the percentage of employees that will terminate, did, become disabled, and retire in each future year. There are economic assumptions about future salary increases for each active employee, and the assumption with the greatest impact, future asset returns at CalPERS for each year into the future until the last dollar is paid to current members of your plan. While CalPERS has set these assumptions as our best estimate of the real future of your plan, it must be understood that these assumptions are very long term predictors and will surely not be realized each year.as we go forward. For example, the asset earnings for the past 15 years at CaIPERS have ranged from -7.2% to 20.1% while the 15 year compound return has been 9.7%, well-above our assumption. Second, ,the very nature of actuarial funding produces the answer to the question of amendment cost as the sum of two separate pieces: 1. The increase in Normal Cost (i.e., the increase in future annual premiums in the absence of surplus or unfunded liability) expressed as a percentage of total active payroll, and 2. The increase in Past Service Cost (i.e., Accrued Liability - representing the current value of the increased benefit for all past service of current members) which is expressed as a lump sum • dollar amount. • The cost is the sum of a percent of future payroll and a lump sum dollar amount (the sum of an apple and an orange if you will). To communicate the total cost, either the increase in Normal Cost (i.e., future percent of payroll) must be converted to a lump sum dollar amount (in which case the total cost is the increase in the present value of benefits), or the Past Service Cost (i.e., the lump sum) must be converted to a percent of payroll (in which case the total cost is expressed as the increase. in the employer's rate, part of which is permanent and part temporary). Converting the Past Service Cost lump sum to a percent of payroll requires a specific amortization period. So, the new employer rate can be computed in many different ways depending on how long,one will take to pay for it. And as the first bullet point above states; all of these results depend on all assumptions being exactly realized. Assets for Pooled Plans Pooled plans at CalPERS share assets within the pool. Therefore, the concepts of a plan's assets and surplus/unfunded liability are no longer valid, with two exceptions. The first exception is the need to determine superfunded status and the second exception is the need to transfer assets between pools when a plan changes benefit formulas and must transfer from one pool to another. This transfer process is described in the section below. Replacing the concept of a plan's assets and a plan's surplus/unfunded liability are the pool's assets and surplus/ unfunded liability and the concept of tl<ie plan's side fund. The potential change to each meaningful measurement for the plan due to this potential plan amendment will be disclosed in the remaining sections of this communication. • Transfers between Pools Plans at CalPERS are assigned to pools based on the service retirement formula for which they contract. Therefore, a request to amend from one service retirement formula to another requires a transfer of the plan November 21, 2006 Pooled Formula Change ~y~ 0. • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 Benefit Description: Section 21354.5, 2.7% @ 55 Supplemental Formula (applies to all local active miscellaneous members only) from its current pool, call it Pool A, to a new pool, call it Pool B. When such an amendment occurs, the transfer between pools will be deemed to have occurred as of the first annual rate setting actuarial valuation that recognizes the new contract amendment. In this case that will be the June 30, 2006 actuarial valuation. So, if this proposed amendment is adopted, the plan will "cash out" of pool A and "buy into" pool B as of June 30, 2006. When the plan "cashes out" of Pool A, the plan will receive a prorated share of pool A's assets (excluding side funds) based on the ratio of the plan's liabilities to pool A's liabilities. The plan's remaining unamortized side fund as of June 30, 2006 will be added to this share of Pool A's assets to form the plan's total assets to cover the new higher liabilities that the plan brings into pool B as of June 30, 2006. The difference between total assets brought by the plan into pool B and the amount needed for the plan to "buy into" pool B will form the plan's new side fund. • Changes in Rate Volatility As is stated above, the cost estimates supplied in this communication are based on a number of assumptions about very long term demographic and economic behavior. Unless these assumptions (terminations, deaths, disabilities, retirements, salary growth, and investment return) are exactly realized each year, there will be differences on a year to year basis. The year to year differences between actual experience and the assumptions are called actuarial gains and losses and serve to raise or lower the employer's rates from year to year. So, the rates will bounce around, especially due to the ups and downs of investment returns. The volatility in annual employer rates will be affected by this amendment. The reason is that this amendment will require your plan to transfer into a pool with higher benefits and earlier retirement ages. This will in turn require the accumulation of more assets per member earlier in their careers. Rate volatility can be measured by the ratio of assets to active member payroll. Higher asset to payroll ratios produce more volatile employer rates. To see this, consider two pools, one with assets that are 4 times active member payroll, and the other with assets that are 8 times active payroll. In a given year, consider what happens when assets rise or fall 10% above or below the actuarial assumption. For the pool with a ratio of 4, this 10 percent gain or loss in assets is the same in dollars as 40% of payroll and for the pool with a ratio of 8; this is equivalent to 80% of payroll. If this gain or loss is spread over 10 years (and we oversimplify by ignoring interest on the gain or loss), then the first pool's rate changes by 4% of pay while the second pool's rate changes by 80/0 of pay. For all pools, the desired state is to be 100% funded (i.e., to bring assets to equal accrued liability). Therefore, we disclose the ratio of accrued liability to payroll rather than assets to payroll as a measure of the pool's potential future rate volatility. The higher the ratio, the more volatile the future rate may be. The table below contains these measures of potential future rate volatility for the plan's current pool and the new pool into which it would transfer. It should be noted that these ratios increase over time but generally tend to stabilize as the plan matures. Pre-Amendment Pool As of 06/30/2005 Pool's Accrued Liability Pool's Payroll Volatility Index • 2,891,460,651 755,046,679 3.8 Post-Amendment Pool As of 06/30/2005 872,346,612 203,995,039 4.3 November 21, 2006 Pooled Formula Change Page 2of7 i • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 Benefit Description: Section 21354.5, 2.7% @ 55 Supplemental Formula (applies to all local active miscellaneous members only) Changes in the Present Value of Benefits The table below shows the change in the plan's total present value of benefits for the proposed plan amendment. The present value of benefits represents the total dollars needed today to fund all future benefits for current members of the plan (i.e., without regard to future employees). The increase in this amount must be paid by increases in future employer and perhaps future employee contributions. As such, the change in the present value of benefits due to the plan amendment represents the total "cost" of the plan amendment. Some of this total cost may be covered by additional employee contributions and/or current side fund surplus. Pre-Amendment Change Post-Amendment As of 06/30/2005 As of 06/30/2005 As of 06/30/2005 1,259,741 14,094,529 Plan's Present Value of Benefits 12,834,788 Change in Superfunded Status A plan with actuarial value of assets (AVA) in excess of the total present value of benefits is called super-funded, and neither future employer nor employee contributions are required. Of course, events such as plan amendments and investment or demographic gains or losses can change a plan's condition from year to year. For example, a plan amendment could cause a plan to move from being super-funded to being in an unfunded position. It is CalPERS policy to retain a plan's superfunded status throughout a • fiscal year based on the most recently completed actuarial valuation regardless of plan amendments. So, superfunded status would change only on the subsequent valuation date, for the 2008/2009 fiscal year. The projected superfunded status for fiscal 2008/2009 with and without this plan amendment is shown below. Pre-Amendment Post-Amendment Fiscal Year 2008/2009 Fiscal Year 2008/2009 Plan's Superfunded Status No No Changes in Accrued Liability it is not required, nor necessarily desirable, to be superfunded. Instead, the actuarial funding process calculates a regular contribution schedule of employee contributions and employer contributions (called normal costs) which are designed to accumulate with interest to equal the total present value of benefits by the time every member has left employment. As of each June 30, the actuary calculates this "desirable" level of funding as of that point in time. The accrued liability is equal to the present value of benefits less the present value of scheduled future employee contributions and future employer normal costs. That is, the present value of benefits represents the funding level needed if there is to be no future contributions and the accrued liability represents the funding level if there is to be future contributions (employee contributions and future employer normal costs). When a plan is "on schedule", only future employee contributions and future employer normal costs are needed.. A plan that is "behind schedule" must temporarily increase contributions to get back on schedule and a plan that is "ahead of schedule" can temporarily reduce future contributions. The change in your plan's accrued liability as of 3une 30, 2005 as if the amendment were recognized in that actuarial valuation is shown below. • I Plan's Accrued Liability Pre-Amendment As of 06/30/2005 10,397,703 Change As of 06/30/2005 776,096 Post-Amendment As of 06/30/2005 11,173,799 Pooled Formula Change Page 3 of 7 November 21, 2006 CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1545 0 lies to all local active @ 55 Supplemental Formula (app Benefit Description: Section 21354.5, 2.7% nuon-m mamhers onlv) Changes in the Plan's Side Fund As stated in the section on transfers between pools, if this amendment is adopted in time to be recognized in the June 30, 2006 actuarial valuation, the plan will be deemed to change pools on that valuation date. In this case, the plan's side fund will be adjusted as necessary as of this date. Shown below is the development of the plan's projected assets to be "cashed out" of the pool it is leaving as of June 30, 2006. Pre-Amendment • • Amounts as of 06/30/2006 1. Plan's projected Accrued Liability without the plan amendment 11,289,490 136,032,306 3 2. Current Pool's projected Accrued Liability f current Pool's projected Accrued Liability (1) / (2) ' h , 0.360% 3. 4. are o s s Plan Current Pool's projected Actuarial Value of Assets excluding side funds 3,102,983,857 518 170 11 5. Plan's share of Current Pool's projected non-side fund Assets (3) x (4) , , (2 970,414) 6. Plan's projected side fund without plan amendment 8 104 198 7. Plan's projected total asset "cash out" of current pool at actuarial value , , (5) + (6) Shown below is the plan's "buy in" to the new pool and the change in the plan's side fund projected as of June 30, 2006. Post-Amendment Amounts As of 06/3012006 1. Plan's projected Accrued Liability with plan amendment 12,198,284 2. New Pool's projected funded ratio 97.2% 3. Projected assets needed to "buy into" new Pool (1) x (2) 11,856,366 104 4. Plan's projected total Assets Available (from (7) in table above) 8(3,198 658,,104 5. Plan's projected new side fund (4) - (3) Changes in the Initial Employer Contribution Rate CalPERS' policy is to implement rate changes due to plan amendments immediately on the effective date of the change in plan benefits. This change is displayed as the "Change to Total Employer Rate" below. If the contract amendment effective date is on or before June 30, 2007, the change in the employer contribution rate will be added to the employer's rate for the current fiscal year. In general, CalPERS' policy provides that, upon a plan amendment, the side fund will be broken into two components. The first component is the change in the side fund due to the plan amendment. This component will be separately amortized over 20 years. The second component of the side fund is the remaining unamortized portion of side fund as though no amendment had occurred. This pre-existing component will continue to be amortized as it was prior to the plan amendment. Finally, these two components will be added together to form a single side fund amount. The amortization period of this combined single side fund will be set to produce a single side fund payment that is as close as possible to the payment that would have resulted had the two side fund components not been combined. CalPERS amortization policies may require a further change in the amortization period known as a fresh start. These policies are contained in Appendix A of Section 2 of your 2005 annual actuarial report. November 21, 2006 Pooled Formula Change E • C7 0 CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD Employer Number: 1595 Benefit Description: Section 21354.5, 2.7% @ 55 Supplemental Formula (applies to all local active miscellaneous members only) The table below shows the change in your plan's employer contribution rate for fiscal 2007/2008 due to the plan amendment. The post-amendment information shown is the actual initial contribution rate that will apply during fiscal 2007/2008 if you adopt the amendment prior to fiscal 2007/2008. The change in normal cost may be much more indicative of the long term change in the employer contribution rate due to the plan amendment. The plan's amortization of its side fund is a temporary adjustment to the employer contribution to "get the plan back on schedule" over the amortization period shown. Pre-Amendment Change Post-Amendment Fiscal Year to Total Fiscal Year 2007/2008 Rate Employer Rate 2007/2008 Rate 2007/2008 Employer Rate Pool's Net Employer Normal Cost 7.646% 1.812% 9.458% Pool's Payment on the Unfunded Liability 0.245% 0.484% 0.729% Surcharge for Class 1 Benefits Phase out of Normal Cost Difference (0.299%) 0.00011/0 (0.299%) Amortization of Side Fund 12.210% 2.520% 14.730% Total Employer Rate 19.802% 4.816% 24.618% Side Fund Amortization Period 12 13 2008/2009 Estimated Employer Rate 19.8% 4.8% 24.6% The table below shows the change in your plan's employee contribution rate (if any) for fiscal 2007/2008 due to the plan amendment. Pre-Amendment Change to Post-Amendment Fiscal Year Total Employee Fiscal Year 2007/2008 Rate Rate 2007/2008 Rate 7.000% 2007/2008 Employee Rate 1.000% 8.000% • Additional Disclosure if your agency is requesting cost information for two or more benefit changes, the cost of adopting more than one of these changes may not be obtained by adding the individual costs. Instead, a separate valuation must be done to provide a cost analysis for the combination of benefit changes. If the proposed plan amendment applies to only some of the employees in the plan, the rate change due to the plan amendment still applies to the entire plan, and is still based on the total plan payroll. Please note that the cost analysis provided in this document may not be relied upon after August 1, 2007. If you have not taken action to amend your contract by this date, you must contact our office for an updated cost analysis. Descriptions of the actuarial methodologies, actuarial assumptions, and plan benefit provisions may be found in the appendices of the June 30, 2005 annual report. Only mandated benefit improvements included in the June 30, 2005 annual report have been incorporated into this cost analysis. Please note that the results shown here are subject to change if any of the data or plan provisions differ from what was used in this study. November 21, 2006 Pooled Formula Change °yC J VI 0 • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 Benefit Description: Section 21354.5, 2.7% @ 55 Supplemental Formula (applies to all local active micrallanvnus members only) Certification This actuarial valuation for the proposed plan amendment is based on the participant, benefits, and asset data used in the June 30, 2005 annual valuation, with the benefits modified if necessary to reflect what is currently provided under your contract with CalPERS, and further modified to reflect the proposed plan amendment. The valuation has been performed in accordance with standards of practice prescribed by the Actuarial Standards Board, and the assumptions and methods are internally consistent and reasonable for this plan, as prescribed by the CalPERS Board of Administration according to provisions set forth in the California Public Employees' Retirement Law. Kung-pei Hwang, A.S.A., M.A.A.A. Senior Pension Actuary, CalPERS E • Fin Process Ids: Type: A Annual-279574 Base - 282057 Proposal - 282058 November 21, 2006 Pooled Formula Change r my~ w W. 0 • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD Employer Number: 1595 Benefit Description: Section 21354.5, 2.7% @ 55 Supplemental Formula (applies to all local active miscellaneous members only) Summary of Plan Amendments Valued COVERAGE GROUP 70001 Pre-Amendment This group of members is required to contribute 7% of reportable earnings. (Members with a modified formula contribute 7% of reportable earnings in excess of $133.33 per month). The Service Retirement benefit calculated for service earned by this group of members is a monthly allowance equal to the product of the 2% @ 55 benefit factor, years of service, and final compensation. (Final compensation is reduced by $133.33 per month for members with a modified formula). The benefit factors for retirement at integral ages are shown below: Retirement 2% at 55 Retirement 2% at 55 Age Factor Age Factor SD 1.426% 57 0 2.104° 51 1.522% 58 2.156% 52 1.628% 59 2.210° ° 53 1.742% 60 2.262% ° 54 1.866% 61 2.314% ° 55 2.000% 62 2.366% ° 56 2.052% 63 and older 2.418% • Post-Amendment This group of members is required to contribute 8946 of reportable earnings. (Members with a modified formula contribute 8% of reportable earnings in excess of $133.33 per month). • The Service Retirement benefit calculated for service earned by this group of members (applying to active members only) is a monthly allowance equal to the product of the 2.7% @ 55 benefit factor, years of service, and final compensation. (Final compensation is reduced by $133.33 per month for members with a modified formula). The benefit factors for retirement at integral ages are shown below: Retirement 2.7% at 55 Age Factor • 50 2.000% 51 2.140% 52 2.280% 53 2.420% 54 2.560% 55 and older 2.700% November 21, 2006 Pooled Formula Change pljc 1 - I 0 0 • . • ATTACHMENT F • Actuarial Office P.O. Box 1494 Sacramento, CA 95812 Telecommunications Device for the Deaf - (916) 795-3240 CaIPERS (888) CalPERS (225-7377) FAX (916) 795-3005 CONTRACT AMENDMENT REQUEST To initiate an amendment to contract, complete and return this form to the address above. The necessary documents will be prepared and mailed to you within 30 days of the date this request is received in our office. Employer Name: CITY OF ROSEMEAD Employer Number: 1595 Member Group or Plan: MISCELLANEOUS PLAN Coverage Group(s) affected by the Amendment : 70001 Description of Benefit Provisions and Section(s): Section 20042, One-Year Final Compenstion CalPERS Valuation ID# Proposal - 281988 Please initiate the amendment to this employer's contract with CalPERS: Name and Title: (Please Print): • Date: Signature: Mailing Address: Street Address: City/State/Zip: Telephone Number: E-mail Address: Number: 0 • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 Benefit Description: Section 20042, One-Year Final Compenstion Actuarial Cost Estimates in General What will this amendment cost? Unfortunately, there is no simple answer. There are two major reasons for the complexity of the answer: First, all actuarial calculations, including the ones in this cost estimate are based on a number of assumptions about the future. There are demographic assumptions about the percentage of employees that will terminate, die, become disabled, and retire in each future year. There are economic assumptions about future salary increases for each active employee and the assumption with the greatest impact, future asset returns at CalPERS for each year into the future until the last dollar is paid to current members of your plan. While CalPERS has set these assumptions as our best estimate of the real future of your plan, it must be understood that these assumptions are very long term predictors and will surely not be realized each year as we go forward. For example, the asset earnings for the past 15 years at CalPERS have ranged from -7.2% to 20.1% while the 15 year compound return has been 9.70/c, well above our assumption. • Second, the very nature of actuarial funding produces the answer to the question of amendment cost as the sum of two separate pieces: • 1. The increase in Normal Cost (i.e., the increase in future annual premiums in the absence of surplus or unfunded liability) expressed as a percentage of total active payroll, and 2. The increase in Past Service Cost (i.e., Accrued Liability - representing the current value of the increased benefit for all past service of current members) which is expressed as a lump sum dollar amount. • The cost is the sum of a percent of future payroll and a lump sum dollar amount (the sum of an apple and an orange if you will). To communicate the total cost, either the increase in Normal Cost (i.e., future percent of payroll) must be converted to a lump sum dollar amount (in which case the total cost is the increase in the present value of benefits), or the Past Service Cost (i.e., the lump sum) must be converted to a percent of payroll (in which case the total cost is expressed as the increase in the employer's rate, part of which is permanent and part temporary). Converting the Past Service Cost lump sum to a percent of payroll requires a specific amortization period. So, the new employer rate can be computed in many different ways depending on how lorig one will take to pay for it. And as the first bullet point above states, all of these results depend on all assumptions being exactly realized. Assets for Pooled Plans Pooled plans at CalPERS share assets within the pool. Therefore, the concepts of a plan's assets and surplus/unfunded liability are no longer valid, with two exceptions. The first exception is the need to determine superfunded status and the second exception is the need to transfer assets between pools when a plan changes benefit formulas and must transfer from one pool to another. Replacing the concept of a plan's assets and a plan's surplus/unfunded liability are the pool's assets and surplus/unfunded liability and the concept of the plan's side fund. This particular proposed amendment is for a change in either: Class 1 benefits which will add a permanent additional surcharge to your plan's on-going normal cost for the future service of your employees and also require a change in your plan's side fund (and a corresponding increase in employer rate over your plan's amortization period) to cover the cost of this amendment due to the past service of your employees, or • Class 2 benefits which do not add a permanent change in normal cost for future service, but does require a change in your plan's side fund (and a corresponding increase in employer rate over your plan's amortization period). November 21, 2006 Pooled Non-Formula Change Page 1 of 6 • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • • • Employer Number: 1595 Benefit Description: Section 20042, One-Year Final Compenstion The potential change to each meaningful measurement for your plan due to this potential plan amendment will be disclosed in the remaining sections of this communication. Changes in the Present Value of Benefits The table below shows the change in the plan's total present value of benefits for the proposed plan amendment. The present value of benefits represents the total dollars needed today to fund all future benefits for current members of the plan (i.e., without regard to future employees). The increase in this amount must be paid by increases in future employer and perhaps future employee contributions. As such, the change in the present value of benefits due to the plan amendment represents the total "cost" of the plan amendment. Some of this total cost may be covered by additional employee contributions and/or current side fund surplus. Plan's Present Value of Benefits Change in Superfunded Status A plan with actuarial value of assets (AVA) in excess of the total present value of benefits is called superf unded, and neither future employer nor employee contributions are required. Of course, events such as plan amendments and investment or demographic gains or losses can change a plan's condition from year to year. For example, a plan amendment could cause a plan to move from being super-funded to being in an unfunded position. It is CalPERS policy to retain a plan's superfunded status throughout a fiscal year based on the most recently completed actuarial valuation regardless of plan amendments. So, superfunded status would change only on the subsequent valuation date, for the 2008/2009 fiscal year. The projected superfunded status for fiscal 2008/2009 with and without this plan amendment is shown below. Pre-Amendment Post-Amendment Fiscal Year 2007/2008 Fiscal Year 2008/2009 Plan's Superfunded Status No No Changes in Accrued Liability It is not required, nor necessarily desirable; to be superfunded. Instead, the actuarial funding process calculates a regular contribution schedule of employee contributions and employer contributions (called normal costs) which are designed to accumulate with interest to equal the total present value of benefits by the time every member has left employment. As of each June 30, the actuary calculates this "desirable" level of funding as of that point in time. The accrued liability is equal to the present value of benefits less the present value of scheduled future employee contributions and future employer normal costs. That is, the present value of benefits represents the funding level needed if there is to be no future contributions and the accrued liability represents the funding level if there is to be future contributions (employee contributions and future employer normal costs). When a plan is "on schedule", only future employee contributions and future employer normal costs are needed. A plan that is "behind schedule" must temporarily increase contributions to get back on schedule and a plan that is "ahead of schedule" can temporarily reduce future contributions. The change in your plan's accrued liability as of June 30, 2005 as if the amendment were recognized in that actuarial valuation is shown below. Pre-Amendment Change Post-Amendment As of 06/30/2005 As of 06/30/2005 As of 06/30/2005 Plan's Accrued Liability 10,397,703 255,116 10,652,819 Pre-Amendment Change Post-Amendment As of 06/30/2005 As of 06/30/2005 As of 06/3012005 • November 21, 2006 Pooled Non-I-ormula t-nange . -1 • • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 Benefit Description: Section 20042, One-Year Final Compenstion Changes in the Plan's Side Fund The increase in the accrued liability of your plan represents the additional cost of your plan due to the application of this amendment to the past service of the employees and/or former employees who will receive additional benefits due to this amendment. You will recall that the plan's side fund is that portion of the plan's liability/surplus that is not to be shared with the pool. Since the change in accrued liability due to this proposed amendment is not to be shared with the pool, that change in accrued liability will be added, as a liability, to your plan's side fund and result in increased contributions through the amortization of the side fund. This change in side fund will be implemented as necessary as of the June 30, 2006 actuarial valuation date. Shown below is the projected change to your plan's side fund as of June 30, 2006. as of 06/30/2006 1. Plan's projected side fund without the plan amendment (2,972,414) (283,279) 2. Projected change in plan's side fund 3. Plan's new side fund (1) + (2) (3,255,693) Changes in the Initial Employer Contribution Rate CalPERS' policy is to implement rate changes due to plan amendments immediately on the effective date of the change in plan benefits. This change is displayed as the "Change to Total Employer Rate" on the following page. • If the contract amendment effective date is on or before June 30, 2007, the change in the employer contribution rate will be added to the employer's rate for the current fiscal year. In general, CalPERS' policy provides that, upon a plan amendment, the side fund will be broken into two components. The first component is the change in the side fund due to the plan amendment. This component will be separately amortized over 20 years. The second component of the side fund is the remaining unamortized portion of side fund as though no amendment had occurred. This pre-existing component will continue to be amortized as it was prior to the plan amendment. Finally, these two components will be added together to form a single side fund amount. The amortization period of this combined single side fund will be set to produce a single side fund payment that is as close as possible to the payment that would have resulted had the two side fund components not been combined. CalPERS amortization policies may require a further change in the amortization period known as a fresh start. These policies are contained in Appendix A of Section 2 of your 2005 annual actuarial report. The table on the following page shows the change in your plan's employer contribution rate for fiscal 2007/2008 due to the plan amendment. The post-amendment information shown is the actual initial contribution rate that will apply during fiscal 2007/2008 if you adopt the amendment prior to fiscal 2007/2008. The change in normal cost may be much more indicative of the long term change in the employer contribution rate due to the plan amendment. The plan's amortization of its side fund is a temporary adjustment to the employer contribution to "get the plan back on schedule" over the amortization period shown. C7 November 21, 2006 Pooled Non-Formula mange , _7, 0 • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 One-Year 0042 Final Compenstion , Benefit Description: Section 2 Pre-Amendment Post-Amendment Fiscal Year Change to Total Fiscal Year 2007/2008 Rate Employer Rate 2007/2008 Rate 2007/2008 Employer Rate 646% 7 o 0.000/o 7.646% Pool's Net Employer Normal Cost . o 000% 0 0.245% Pool's Payment on the Unfunded Liability 0.245% . Surcharge for Class 1 Benefits o 505% 0 0.505% a) FAC 1 ff 0.000% 299%) (0 . 0.000% (0.299%) erence Phase out of Normal Cost Di . ° 340/o 1 13.550% Amortization of Side Fund 12.210% . 8450/0 1 21.647% Total Employer Rate 19.802% . Side Fund Amortization Period 12 12 2008/2009 Estimated Employer Rate 19.8% 0 1.9% 21.7% The table below shows the change in your pl an's employee contribution rate (if any) for fiscal 2007/2008 due to the plan amendment. Pre-Amendment Change t Total Post-Amendment Fiscal Year • Fiscal Year Employee Rate 2007/2008 Rate 2007/2008 Rate )mm/)n4 Fmnlovee Rate 7.000% 0.0000/0 7.000% Additional Disclosure the cost of adopting more if your agency is requesting cost information for two or more benefit changes, than one of these changes may not be obtained by addigg the individual costs. Instead, a separate valuation must be done to provide a cost analysis for the combination of benefit changes. If the proposed plan amendment applies to only some of the employees in the plan, the rate change due to the plan amendment still applies to the entire plan, and is still based on the total plan payroll. . If Please have note that takeneactcost ion to amend yr your contract by this date, you must contact our office for an upda ed7cost you analysis. Descriptions of the actuarial methodologies, actuarial assumptions, and plan benefit provisions may be found in the appendices of the June 30, 2005 annual report. Only those mandated benefit improvements included in the June 30, 2005 annual valuation have been incorporated into this cost analysis. Please note that the results shown here are subject to change if any of the data or plan provisions differ from what was used in this study. • Pooled Non-Formula Change Page 4 of 6 November 21, 2006 • • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 npnPfr nescriotion: Section 20042, One-Year Final Compenstion Certification This actuarial valuation for the proposed plan amendment is based on the participant, benefits, and asset data used in the June 30, 2005 annual valuation, with the benefits modified if necessary to reflect what is currently provided under your contract with CalPERS, and further modified to reflect the proposed plan amendment. The valuation has been performed in accordance with standards of practice prescribed by the Actuarial Standards Board, and the assumptions and methods are internally consistent and reasonable for this plan, as prescribed by the CalPERS Board of Administration according to provisions set forth in the California Public Employees' Retirement Law. l~ Kung-pei Hwang, A.S.A., M.A.A.A. Senior Pension Actuary, CalPERS .7 • Fin Process Ids: Annual - 279574 Type: B Base - 281987 Proposal - 281988 November 21, 2006 Pooled Non-Formula Change rays • CONTRACT AMENDMENT COST ANALYSIS - VALUATION BASIS: JUNE 30, 2005 MISCELLANEOUS PLAN FOR CITY OF ROSEMEAD • Employer Number: 1595 Benefit Description: Section 20042, One-Year Final Compenstion Summary of Plan Amendments Valued COVERAGE GROUP 70001 Pre-Amendment • The final compensation is calculated as the monthly average of the member's highest 36 consecutive months' full-time equivalent monthly pay (no matter which CalPERS employer paid this compensation). Post-Amendment The final compensation is calculated as the monthly average of the member's highest 12 consecutive months' full-time equivalent monthly pay (no matter which CalPERS employer paid this compensation). • • November 21, 2006 Pooled Non-Formula Change rage 0 Ul 0 livt h 1 Sr 7 vi j CIGNA A Business of Caring. 00 f~ 1 ■ Learn how hospitals rank by number of procedures performed, patients' average length of stay, and cost. Get estimated average cost ranges for a procedure, including total charges and your out-of-pocket expense, based on a CIGNA I lealth(are benefit plan. Create a personalized report and share it with your doctor. ■ Take a brief questionnaire with the I lealthQuotient'rm health risk assessment tool. Get recommendations based on your health profile to help you enhance your health and well-teing, as well as links to other interactive tools. ■ Record and store personal health information in a central, secure location. 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I~ anfI w1 vi! % au• plovi!ie+I Iry' IIIce -,III %Idiaiw% an!i noI by MMA f nlpuialiun. Ihr'se snbsidlarirs it it lllll(' I UIIII!Y 111 nt ld'llerdl I Ill' 1nsU1aIIR' l idilpolTy, If] Dlnll, IIF. all'I Its aIIlllall's, I KMA Bohavitltal I I+'alIII, Ills III IIaI (itp, atlll 11i,M(} or serviic lompany subm(fialleS ul (I(,NA IINIIII ( orp0latiUn,11x111(NA Dental I Ivalth, Ini . III AN/011d I EMI I pIdI I% M ulte11 I by( IGNA Ik~allM.air of Arimia. lilt III( all(urnia, II O plaits JIc offm by (IGNA 14-al Ih( ateuf falilwnia. In(. In Vil(lima. IIMO plain am ufk't+vl by UTA Ilealthl die ul Vnllinia. If If. a1x1(1611A IIvalIIif air Mill-Atlanlii. Irn. In Nul111(atolina. IIMO plain are otfri(NI lily ULNA Ilealthfar( ut With (a1!ilina, If I( All ofIrI 111fiili al platy, if there "I,IIrS aw Imllnrd or alllillIINewd by (Mi)llet Ili I I I Grll+'lal 111+' 111sLlldlIle (ollipatiY- Quick FaCtS About the CIGNA Tel-DrugHome Delivery Pharmacy Program Who can order from CIGNA Tel-Drug? You can conveniently track the progress of CIGNA Tel-Drug is designed especially for your order 24 hours a day. individuals who take prescription medications ■ Call 1.800.Tel.Drug (835.3784) Option 2. on an ongoing basis. These include medications taken for allergies, birth control, diabetes, asthma, heart conditions and other medicinal uses. The CIGNA Tel-Drug Home Delivery Pharmacy Program is convenient in many ways. There are three ways to order your prescription medications. Choose the method that works best for you: Mail: 1.Request a mail-order prescription from j your prescriber for a 90-day supply with refills. k 2.Complete and mail your order form, h original prescription(s) and payment to CIGNA Tel-Drug P.O. Box 1019 Horsham, PA 19044-9805 Phone: Call 1.800.285.4812 option 1 ext. 508 and be sure to have your medication information, the prescriber's name and telephone number, and credit card f information available. I' Web: Log on to myCIGNA.com and follow the online instructions. You may also choose from the following payment options: ■ Credit Card (American Express, Discover, MasterCard, VISA) ■ Check or Money Order ■ Log onto myCIGNA.com. CIGNA Tel-Drug refills may be ordered in the following ways (with Rx number and member IDI: ■ You may order refills 24 hours a day by calling 1.800.Tel.Drug (835.3784) Option 1. ■ You may use QuickClick`"' to order refills online. ■ To refill your prescriptions by mail, complete order form, enclose payment and return in the envelope provided in your last order. CIGNA Tel-Drug is dedicated to quality service. ■ FDA-approved medications. ■ Refill reminders if you forget to reorder. ■ Licensed pharmacists on call 24 hours a day to answer prescription medication questions. ■ Standard delivery to your home at no additional cost. If your medication requires refrigeration, it is shipped to you overnight in special packaging at no additional cost. ■ All new prescription medications orders are packaged with a patient advisory leaflet that describes your medication, tells you how to take it and lists possible side effects. `CIGNA Healthcare" or CIGNA are registered service marks and refer to various operating subsidiaries of CIGNA Corporation. Products and services are provided by these subsidiaries and not by CIGNA Corporation. These subsidiaries include Connecticut General Life Insurance Company, Tel-Drug, Inc. and its affiliates, CIGNA Behavioral Health, Inc., Intracorp, and HMO or service company subsidiaries of CIGNA Health Corporation and CIGNA Dental Health, Inc. In Arizona, HMO plans are offered by CIGNA Healthcare of Arizona, Inc. In Cafifomio, HMO plans are offered by CIGNA HeohhCore of California, Inc. In Virginia, HMO plans ore offered by CIGNA HealthCare of Virginia, Inc. and HeohhCore Mid-Atlantic, Inc. In North Carolina, HMO plans are offered by CIGNA HeolthCme of North Carolina, Inc. All other medical plans in these states are insured or administered by Connecticut General Life Insurance Company. "CIGNA T6Dmg" refers to Tel-Drug, Inc. and Tel-Drug of Pennsylvania, L.L.C. "QuickClick" is a registered trademark of CIGNA Intellectual Property, Inc. 589609 08/06 ©2006 CIGNA Reason #1- Superior Health Advocacy Through our Health Advocacy programs, we are committed to Improving the health of your employees and dependents. Their improved health will provide a more productive work force - and an improved bottom line. Our combined Health Advocacy programs have delivered our customers an additional savings of 8% to 11% over and above their normal discounts. These programs include Case Management, Utilization Management, Disease Management, Health Advisor and Health Risk Assessments. Reason #2 - Integration with CIGNA Pharmacy CIGNA Pharmacy provides: • National Access to more than 57,000 participating pharmacies, using Argus as our claim engine; • Industry leading MAC listing - 97% of all drugs are adjudicated at MAC pricing yielding an equivalent of a 63% discount; • Delivery of the highest possible generic utilization for your employee resulting in a 1% decrease in overall pharmacy spend for every 1% increase in generic utilization; • Automatic CIGNA Pharmacy data feed into our predictive modeling engine to achieve a 25% enhanced Case Management identification through Predictive Modeling; • Additional 1% medical trend deflection through integration of CIGNA Pharmacy with CIGNA Medical. Reason #3 -Highest Industry Member Identification/Engagement On a monthly basis, we identify all members who have a 701'6 chance of incurring $10,000 or more in claims, which is the lowest threshold in the industry. We then work to engage them in programsthat will help change their behaviors and improve their health. CIGNA engages 30% of our members in some sort of health improvement program and 15% are actively managed. Reason #4 -Best Medical Outcomes CIGNA overall access, discounts and quality are excellent - a 99% match for both primary care physicians and hospitals through CIGNA Networks. Our in-network percentage is 97%. CIGNA will achieve an overall discount of 56% for you based upon your recently repriced claims through CIGNA. CIGNA's networks will also deliver the highest quality for members - industry leading, extemally validated HEDIS results with CIGNA leading all national carriers for six consecutive years. No carrier can deliver the discounts, access and quality that CIGNA will provide for City of Rosemead. Reason #5 - Superior Service - Seasoned Account Team Behind every great plan is a great team, and CIGNA will certainly deliver a great service team to City of Rosemead. With Matt Bernhard New Business Manger and Melissa Reno as your Account Manager, you'll get health care experts who are locally based in Southern Cal Matt and Melissa know your benefit needs and are ready to provide you and your employees with an extraordinary benefits plan. And when you pair them with the CIGNA Healthcare Member Service call centers, you can't go wrong. Our service centers have been recognized by J.D. Power and Associates Certified Call Centers for providing "an outstanding customer service experience,'and we are the only national carrier in the U.S. to receive this certification. With Its Industry leading capabilities in the areas of predictive modeling, health advocacy, patient care and service and reporting. CIGNA can truly differentiate itself from the competition, making us an ideal partner for City of Rosemead and its employees and families - now and In the future. Why would you choose CIGNA? Why wouldn't you? CIGNA WELLNESS PROGRAMS When we look at a population of employees we see its health potential. We ask ourselves, "What are the opportunities for driving improvement?" We understand the bottom line and the impact employee health can have on it. CIGNA Wellness Programs make the most of these opportunities. It's basic wellness is the practice of supporting consumer behaviors that improve health. And improved health lowers cost. That's what we believe and that's what we do. This approach links the two drivers of consumer health improvment: Consumerism: consumers claim a greater stake in health care decisions by means of education, incentives, web tools and more. Health management: consumers are guided to the most appropriate, high-quality care and advice by means of a wide range of resources - including proactive care management and health coaches. lFJ CIGNA From information and education to tools and support, CIGNA Wellness Programs promote healthy, productive behavior. For people with a range of health risks-from the healthiest to those with chronic and severe conditions. Our mission is to improve health. CIGNA Wellness Programs focus our commitment to health across a wide range of clinical, demographic and employer-specific categories: ■ Children's Health ■ Complementary Medicine ■ Disease Prevention ■ Ergonomics ■ Exercise & Fitness ■ First Aid & Safety ■ Immunizations ■ Maternity & Prenatal Care ■ Nutrition ■ Oral Health ■ Preventive Health Screenings/ Exams ■ Self-Care ■ Smoking/Tobacco Cessation ■ Stress Management ■ Weight Management ■ Women's Health ■ Men's Health ■ Vision & Hearing HOW DO WELLNESS PROGRAMS WORK? The central focus of CIGNA Wellness Programs is consumer engagement. Our programs guide consumers through a process that promotes health: ■ Information that results in knowledge ■ Knowledge that empowers choice ■ Choice that improves health Growing out of our industry-leading health management strategy, our broad range of Wellness offerings addresses the needs of the whole person through an approach we call 360° Consumer Engagements" FACT Smoking is associated with a 21 % increase in inpatient and outpatient spending, and a 28% increase in medications. Source: "The Effects of Obesity, Smoking and Drinking on Medical Problems and Costs," Health Affairs. FACT Health care for overweight and obese individuals costs an average of 37% more than for people of normal weight. Source: Centers for Disease Control study. FACT Stress costs U.S. businesses more than $300 billion annually - or $1,500 per worker per year - in lost productivity, absenteeism, accidents and workers' compensation awards. Sources; American Psychological Association. 360° Consumer Engagement is the cornerstone of our commitment to improve health, a commitment we measure through a patent-pending reporting tool called the CIGNA Health Improvement Score'" system. A SCORE° A key measure of Hr Score is consumer engagement - including the tracking of healthy behaviors such as the use of available wellness services and programs (available 1/06). WHAT IS AVAILABLE? CIGNA Wellness Programs were developed to address a wide range of needs, from education to clinical intervention. Many of our Wellness programs and services are included at no charge to the employer or member. These include: ■ Health risk assessment tools (WebMD1 HealthQuotient`" ■ Decision support tools (Hospital quality comparison tool, provider locator and quality assessment, web and telephonic health library) ■ Clinical outcome improvement programs (Member and Provider Outreach) ■ Worksite member education program (Workplace Partners) ■ Nurse hotline (CIGNA 24-Hour Health Information Line"') ■ Maternity education (CIGNA Health Care Healthy Babies') ■ Targeted health education ■ Preventive health guidelines & reminders ■ In-home member magazine (Well-Being) • Member discount program (Healthy Rewards")* ■ Member assistance program** ■ Enrollment education Employers looking to tailor Wellness Programs to specific health conditions and improvement opportunities can do so by purchasing additional programs targeted to their populations' needs: ■ New in 2006: Comprehensive weight loss program ■ New in 2006: Disease management programs for depression, high risk obesity and targeted conditions ■ Disease management** (CIGNA Well Aware for Better Health"' for Asthma, Cardiac, COPD, Diabetes, and Low Back Pain) ■ Health screenings & health fairs ■ Lifestyle behavior modification programs (Weight Management, Stress Management, Tobacco Cessation) ■ Health coach (CIGNA Health Advisors")*** ■ Employee assistance program ■ Oral health programs and education ■ Worksite member education program (Workplace Partners - tailored with additional onsite programs) WHO BENEFITS FROM IT THE MOST? ■ Employers looking for opportunities to improve the health and wellness of their populations in order to drive down medical costs. ■ Consumers looking for ways to help improve their health and lower their medical costs. ■ Providers looking for additional support and resources to help them maintain the health of their patients. For more information, contact your CIGNA Sales Representative. * Not all discounts available in all states. *A va ilable at no charge with purchase of fnully insured HMO product. ***Available to companies with 10,000 or more employees "CIGNA" and "CIGNA Healthcare" refer to various operating subsidiaries of CIGNA Corporation. Products and services ure provided by these subsidiaries and not by CIGNA Corporation. These subsidiaries include Connecticut General Insurance Company, Tel-Drug, Inc. and its affiliates, CIGNA Behavioral Health, Inc., Introcorp, and HMO or ,ice company subsidiaries of CIGNA Health Corporation and CIGNA Dental Health, Inc. In Arizona, HMO plans ufe offered by CIGNA Healthfare of Arizona. Inc. In Calforniu, HMO plans are offered by CIGNA HealthCare of CIGNA California, Inc. In Virginia, HMO plans ore offered by CIGNA Heahhfare of Virginia, Inc. and CIGNA Healthcare PAid-Atlantic, Inc. In North Carolina, HMO plans are offered by CIGNA HealthCare of North Carolina, Inc. All other A Business of CarirtS. medical plans in these states are insured or administered by Connecticut General Life Insurance Company. 5947750 03%05 O 2005 CIGNA sr, 00 p, ►ri ; r ~ ~i ,fir fit ~ r I'll - It's quick and easy to search for participating providers, Manageyour health using specialists, dentists, pharmacies, hospitals and facilities closest to home and work. a number of interactive tools. You can: select "Provider Directory" from "Popular Links" ■ Learn how hospitals rank by number of procedures performed, patients' average length of stay, and cost. Get estimated average cost ranges for a procedure, including total charges and your out-of-pocket expense, based on a CIGNA HealthCare benefit plan. Create a personalized report and share it with your doctor. ■ Take a brief questionnaire with the I IealthQuotientTM health risk assessment too]. Get revommendations based on your health profile to help you enhance your health and well-being, as well as links to other interactive tooK. ■ Record and store personal health information in a central, secure location. Include current conditions, medications, allergies, surgeries, and immunizations. Your lab results from certain facilities can be automati- cally entered into your Personal Health Record. ■ Track your progress on key health indicators, such as blood pressure, blood sugar, cholesterol, fitness, height and weight. You can display results in charts, edit past data easily, and share information with your doctor. ■ Check your prescription drug out-of-pocket costs, listed by specific pharmacy and location (including CIGNA Tel-Drug). Review your prescription claim history, including number of claims and cost. Learn about condition-specific drug treatments and compare side effects and drug interactions for more than 200 commonly prescribed medications. ■ Research medical content on a wide range of topics, including specific illnesses, first aid and medical exams. ■ Get answers to frequently asked questions, verify plan details such as copayments, order a new CIGNA I-IealthCare ID card, check claims status, and more. on the cigna.com home page. Enter your criteria - search by name for a specific provider, or by location and distance to find one close by. Indicate your plan and the type of doctor you ne'e'd. This helps ensure [fiat you set: just what you're looking for. Review the results. Get a complete profile including education, languages spoken, hospital affiliations, and a detailed map with directions. Find hospitals that earn the "Centers of Excellence" designation based on effectivenE-,s in treating selected procedures/conditions and cost. CIGNA.com - I'lie answers to your health questions are as close as your phone, 24 hours a day, nationwide. Speak with a registered nurse any hour of the day or night for: Detailed answers to your health questions. Helpful home care suggestions. CIGNA Healthy Rewards' Help in choosing the most appropriate care. Help in locating nearby participating providers. Expandyour health options - at discounted prices. Through Healthy Rewards®, CIGNA I lealthCare members get access to a range of health and wellness programs and services often not covered by many traditional benefits plans. Healthy Rewards also can save you money whenever you use Healthy Rewards participating providers. To find them, visit myCIGNA.com. You also can learn more about hundreds of health topics - everything from bumps, bug bites and back pain to elder care and cardiology - through our library of audio tapes. Programs are updated regularly and are based on current medical research and treatments. You can listen to as many programs as you like, and the library is available 24 hours a day, every day. You or any covered family member, even children at school away from home, can call. Calls are toll free from anywhere in the U.S. Programs include: ■ Weight Watchers" ■ Massage therapy ■ Jenny Craig ■ Eye exams, frames ■ 10,(X)O steps exercise and lenses program ■ laser vision correction ■ Fitness club membership% ■ Hearing care ■ QuitNet* and Tobacco ■ Magazine discounts Solutions`' smoking ■ Natural supplements cessation programs ■ Anti-cavity products ■ Chiropractic care ■ And much more! ■ Acupuncture Some Iiealrhy Rewards die not available in all states. A discount program is NOT insurance and the member must pay the entire discounted charge. If your (16NA I leallh(are plan includes (overage for dny of these services, this progrdm is in Alilion to, not instead of, your plan benefits. Healthy Rewards programs are separate 1101111 your medical benefits. It's especially helpful if you're traveling or on vacation. Simple menus guide you to the information you need. Just call the toll-free number on your CIGNA IlealthCare ID card. CIGNA HealthCare 24-Hour Health Information Linesm 9^3 ua CIGNA A Business of Cw-in,lsl. I(,NA"acid °I IMA Iledift are" wIm to various olxtatin+l mINil mi(-, of ( I(,NA l olpowhnn. Puxliit is and t0 0W, dtr' 111100kyl by ItRNv Ylb%illimw and not by (KMA ( oipoidtion. !lase xibtiidiaric-~ in little ( olilm tit, III (wix'Idl I He Insuldn r t ranpJlly, IVI DIIIq IIV . and ifs alllllates, I IGNA Miavuxal Ileallh, In Inira4 oip, arnl I IMO (u wrvi(v Company sultwhatit-% of( MA Neal111(rxixgationatltl(I(,NAI)imdlliealth,Int.Iit Animia,IIMOplamawoffemIbOI(iNAIlealtif ancn(At ilnnl.lte Int ililrnnia,H~lOplamdreu(iru•Ilef(I(NAIIvalIli(ateof(alifolnil, Ins. In Vii(litim, I IMO plan,, are oflewd by( ILNA health( are of Vnginia, In. and (l(,NA I It ,itIIV an Mid Ailanti , lit(. In Nol th i molina. I IMO plam me olliv,(I by( IGNA Ilralifi( ale of Not III (molina, In All ollwi mr'tlkit plan, in Ihcv statv%aly insIurd III admini"IrnoI by (outirr Ii, N (wovial I ifr Inslxance (nnlpdny • • CIGNA HealthCare Accessibility Analysis A report encompassing the providers from CIGNA HealthCare HMO/POS for: City of Rosemead m 0 O cr 0 x ~ m L Q _Z U U Q 0 • • 0"- W.v 00 00 0 08 00 0 r h m O Cl E - 00 - ° S - 0 0 - 0 8 - - ° m r r r ~ r a ~ - L Y in U r~r ) LO l, r~c r-n o CIO vv 00 v 0 ro M co n n cD ~ cD O O ~ ~ CO 0 pp 0 ~ pd N N N ~ m ~ ' r M c~ l'A O j E o c o. ~ W M O W M O W M O C O m i7 o E E L) L) U ~ d CL N d n ( C C 0 C > m l9 m U V m U r a a n. a ` m N m U U U I . n ~ N m y Uf 2 ~ " Z cu m R ' 1p V ? c E g CL 3 E 0 0 L 0 rJ Q da av ~cnw =x = v m C t N m m • o N N N m • N N • 0 (D a, (D in a) rn E E E E E ~ _ E E E y CD CO r Ln0 N r Ln 0 M O Ln Ln m c c c c c C N N ~ V -E :E L -E L .c :E C C C a ~ a ~i X 3 3 3 m m u 0 m L- ' oo o o ' O o o 0 0 CL a a a n. a .L L L N N N N N N ~ r' to o E a w T o a o E w o o E a w T o c w ww ~w w L11 ii c: -Fo -F w ~('n c~ c)m C'nn cc QQ QQ Qa Qa Q i E CIGNA HealthCare HMO/POS - City of Rosemead 2 Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 108,375 providers at 35,002 locations (based on 108,375 records) Employee group: All Urban Employees in the Service Area 78 employees Access standard: 2 providers within 8 miles Employees with desired access: 78 (100 0~a> Average distance to a choice of providers for employees with desired access Number of providers 1 2 3 4 5 Miles 0.6 0.7 0.8 0.8 0.9 Key geographic areas Employees with desired access Total number of Average distance city employees Number Percent to 2 providers ROSEMEAD, CA 28 28 100 04 SAN GABRIEL, CA 9 9 100 0.6 ALHAMBRA, CA 5 5 100 0.5 COVINA, CA 4 4 100 1.4 MONROVIA, CA 3 3 100 1.2 TEMPLE CITY, CA 3 3 100 0.6 ARCADIA, CA 2 2 100 0.8 BALDWIN PARK, CA 2 2 100 1.1 CLAREMONT, CA 2 2 100 1.4 EL MONTE, CA 2 2 100 0.7 • • CIGNA HealthCare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 108,375 providers at 35,002 locations (based on 108,375 records) Employee group: All Urban Employees in the Service Area 78 employees Access standard: 2 providers within 8 miles Employees without 0(0.0%) desired access: Number of 1 2 3 4 5 providers Miles Key geographic areas Employees without desired access Total number of Average distance city employees Number Percent to 2 providers i E G • s CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 108,375 providers at 35,002 locations (based on 108,375 records) Employee group: All Suburban Employees in the Service Area 3 employees Access standard: 2 providers within 10 miles Employees with desired access: 3 (100.0' ) Average distance to a choice of providers for employees with desired access Number of providers 1 2 3 4 5 Miles 0.8 1.0 1 2 1.2 1 2 Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 2 providers SAN DIMAS, CA DIAMOND BAR, CA 2 1 2 1 100 100 1.3 0.4 s L 7 S 4 • • CIGNA HealthCare HMO/POS - City of Rosemead 5 Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 108,375 providers at 35,002 locations (based on 108,375 records) Employee group: All Suburban Employees in the Service Area 3 employees Access standard: 2 providers within 10 miles Employees without 0(0 0%1) desired access: Number of providers 1 2 3 4 5 Miles - Key geographic areas Employees without desired access Total number of Average distance city employees Number Percent to 2 providers t CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 108,375 providers at 35,002 locations (based on 108,375 records) Employee group: All Rural Employees in the Service Area 0 employees Access standard: 2 providers within 25 miles Employees with desired access: Number of 1 2 3 4 5 providers Miles Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 2 providers CIGNA Healthcare HMO/POS - City of Rosemead 7 Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 108,375 providers at 35,002 locations (based on 108,375 records) Employee group: All Rural Employees in the Service Area 0 employees Access standard: 2 providers within 25 miles Employees without desired access: Number of 2 3 4 5 providers Miles - - - Key geographic areas Employees without desired access Total number of Average distance city employees Number Percent to 2 providers 0 E t CIGNA HealthCare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: specialists 388,787 providers at 64,120 locations (based on 388,787 records) Employee group: All Urban Employees in the Service Area 78 employees Access standard: 2 providers within 10 miles Employees with desired access: 78 (1000%) Average distance to a choice of providers for employees with desired access Number of providers 1 2 3 4 5 Miles 0.6 0.7 0.8 0.9 0.9 Key geographic areas Employees with desired access Total number of Average distance city employees Number Percent to 2 providers ROSEMEAD. CA 28 28 100 0 SAN GABRIEL, CA 9 9 100 0.4 ALHAMBRA, CA 5 5 100 0.2 COVINA, CA 4 4 100 0.9 MONROVIA, CA 3 3 100 1.1 TEMPLE CITY, CA 3 3 100 0.6 ARCADIA, CA 2 2 100 0.8 BALDWIN PARK, CA 2 2 100 1.0 CLAREMONT, CA 2 2 100 2.1 EL MONTE, CA 2 2 100 0.7 -s • • CIGNA HealthCare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: specialists 388,787 providers at 64,120 locations (based on 388,787 records) Employee group: All Urban Employees in the Service Area 78 employees Access standard: 2 providers within 10 miles Employees without desired access: 0(00%) Number of 1 2 3 4 5 providers Miles - - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers F i r • , CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: specialists 388,787 providers at 64,120 locations (based on 388,787 records) Employee group: All Suburban Employees in the Service Area 3 employees Access standard: 2 providers within 15 miles Employees with 3(100,0%) desired access: Number of 1 2 3 4 5 providers Miles 0.8 0.9 0.9 0.9 0.9 Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 2 providers SAN DIMAS, CA DIAMOND BAR, CA 2 1 2 1 100 100 1.1 0.4 i i Y 10 0 • CIGNA Healthcare HMO/POS - City of Rosemead 11 Accessibility summary Accessibility analysis specifications Provider group: specialists 388,787 providers at 64,120 locations (based on 388,787 records) Employee group: All Suburban Employees in the Service Area 3 employees Access standard: 2 providers within 15 miles Employees without desired access: 0 (n o°,(,) Number of 1 2 3 4 5 providers Miles Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers r • CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary 12 Accessibility analysis specifications Provider group: Specialists 388,787 providers at 64,120 locations (based on 388,787 records) Employee group: All Rural Employees in the Service Area 0 employees Access standard: 2 providers within 30 miles Employees with desired access: Number of providers 1 2 3 4 5 Miles Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 2 providers • , CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary 13 Accessibility analysis specifications Provider group: Specialists 388,787 providers at 64,120 locations (based on 388,787 records) Employee group: All Rural Employees in the Service Area 0 employees Access standard: 2 providers within 30 miles Employees without desired access: Number of providers 1 2 3 4 5 Miles - - - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers 0 0 CIGNA HealthCare HMO/POS - City of Rosemead Accessibility summary 14 Accessibility analysis specifications Provider group: Hospitals 2,604 providers at 2,051 locations (based on 2,604 records) Employee group: All Urban Employees in the Service Area 78 employees Access standard: 1 hospital within 20 miles Employees with 78 (100 0%~,) desired access: Number of 1 2 3 4 5 providers Miles 2.1 2.9 3 5 4.2 4.7 Key geographic areas Employees with desired access Total number of Average distance city employees Number Percent to 1 provider ROSEMEAD, CA 28 28 100 2.2 SAN GABRIEL, CA 9 9 100 1.2 ALHAMBRA, CA 5 5 100 0.7 COVINA, CA 4 4 100 1.8 MONROVIA, CA 3 3 100 1.4 TEMPLE CITY, CA 3 3 100 2.3 ARCADIA, CA 2 2 100 1.7 BALDWIN PARK, CA 2 2 100 2.6 CLAREMONT, CA 2 2 100 4.2 EL MONTE, CA 2 2 100 3.8 1 y • 0 CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: Hospitals 2,604 providers at 2,051 locations (based on 2,604 records) Employee group: All Urban Employees in the Service Area 78 employees Access standard: 1 hospital within 20 miles Employees without desired access: o (0.0%) Average distance to a choice of providers for employees without desired access Number of providers 1 2 3 4 5 Miles - - - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 1 provider Y 15 0 0 CIGNA HealthCare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: Hospitals 2,604 providers at 2,051 locations (based on 2,604 records) Employee group: All Suburban Employees in the Service Area 3 employees Access standard: 1 hospital within 25 miles Employees with desired access: 3 (t 00.0;,,) Number of providers 1 2 3 4 5 Mites 2.8 4 3 4 8 54 54 Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 1 provider SAN DIMAS. CA DIAMOND BAR, CA 2 1 2 1 100 100 1.5 5.3 16 0 0 CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary 17 Accessibility analysis specifications Provider group: Hospitals 2,604 providers at 2,051 locations (based on 2,604 records) Employee group: All Suburban Employees in the Service Area 3 employees Access standard: 1 hospital within 25 miles Employees without desired access: 0 (0 00,,.,) Number of providers 1 2 3 4 5 Miles - - - Key geographic areas Employees without desired access Total number of Average distance city employees Number Percent to 1 provider Y X k • • CIGNA Healthcare HMO/POS - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: Hospitals 2,604 providers at 2,051 locations (based on 2,604 records) Employee group: All Rural Employees in the Service Area 0 employees Access standard: 1 hospital within 45 miles Employees with desired access: Number of 1 2 3 4 5 providers Miles - - - - Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 1 provider Y 18 • • CIGNA HealthCare HMO/POS - City of Rosemead Accessibility summary 19 Accessibility analysis specifications Provider group: Hospitals 2,604 providers at 2,051 locations (based on 2,604 records) Employee group: All Rural Employees in the Service Area 0 employees Access standard: 1 hospital within 45 miles Employees without desired access: Number of 1 2 3 4 5 providers Miles Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 1 provider • Y • t~ Accessibility Detail Adult Primary Care Physicians • • CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes meeting the access standard 20 All Urban Employees in the Service Area Employees with desired access ZIP Total number of Total number of Average distance to providers city Code employees providers Number Pct 1 2 ALHAMBRA, CA 91801 91803 4 1 47 7 4 1 100 100 0.3 0.4 5 0 2 0 ARCADIA, CA 91006 91007 1 1 23 43 1 1 100 100 . . 0.1 1.0 0 7 0 7 AZLISA, CA BALDWIN PARK CA 91702 91706 1 2 8 7 1 2 100 100 . . 0.4 0.4 8 1 1 0 , BELL, CA BURBANK CA 90201 91504 1 1 31 2 1 1 100 100 . . 0.4 0.5 7 0 0 0 , CLAREMONT, CA COVINA CA 91711 91722 2 1 6 2 2 1 100 100 . . 1.4 1.4 6 12 0 , 91724 90242 3 1 1 5 3 1 100 100 . 11 1.5 0 6 0 6 DOWNEY, CA EL MONTE, CA GLENDORA CA 91732 91740 2 1 7 19 2 1 100 100 . . 0.6 0 0 4 0 4 , LA VERNE. CA 91750 1 10 1 100 I . . 0.5 0 > LOS ANGELES, CA 90002 1 1 1 100 0.8 0.8 90022 1 26 2 1 3 100 100 0.1 0.' 2 1 z 1 MONROVIA, CA MONTEBELLO, CA MONTEREY PARK CA 91016 90640 91754 3 2 2 53 63 2 2 100 100 . 0.8 0 8 6 I 07 0 , PASADENA, CA RIALTO CA 91103 92377 1 2 5 0 1 2 100 100 . 0.3 0" 5 I 2 2 5 , ROSEMEAD, CA 91770 28 24 28 100 100 . . 0.4 0 -1 8 0 5 0 SAN GABRIEL, CA 91775 91776 1733 4 5 1 0 43 23 4 5 1 100 100 I . . 0.4 01 0 I 1 0 1 SOUTH EL MONTE, CA TEMPLE CITY, CA 9 91780 3 9 3 100 . . 0.5 O.E I 1 5 1 WALNUT, CA WEST COVINA, CA 91789 91790 1 1 .jor- 4 56 1 1 100 100 . .3 0.1 01 Access standard: 2 providers within 8 miles Provider group: Primary Care Physicians • • CIGNA HealthCare HMO/POS - City of Rosemead 21 ZIP Codes not meeting the access standard Access standard: 2 providers within 8 miles Provider group: Primary Care Physicians • CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes meeting the access standard 22 All Suburban Employees in the Service Area Employees with desired access ZIP Total number of Total number of Average distance to providers city Code employees providers Number Pct 1 2 DIAMOND BAR. CA SAN DIMAS, CA 91765 91773 1 2 25 12 1 2 100 100 0.4 1.0 0.4 1.3 Access standard: 2 providers within 10 miles Provider group: Primary Care Physicians 0 0 CIGNA HealthCare HMO/POS - City of Rosemead 23 ZIP Codes not meeting the access standard All Suburban Employees in the Service Area Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS Y Access standard: 2 providers within 10 miles Provider group: Primary Care Physicians 0 • CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes meeting the access standard 24 Access standard: 2 providers within 25 miles Provider group: Primary Care Physicians 0 • CIGNA HealthCare HMO/POS - City of Rosemead 25 ZIP Codes not meeting the access standard All Rural Employees in the Service Area Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS c k Access standard: 2 providers within 25 miles Provider group: Primary Care Physicians 0 Accessibility Detail OB/GYNS E 0 CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes meeting the access standard 26 All Urban Employees in the Service Area Employees with desired access ZIP Total number of Total number of Average distance to providers city Code employees providers Number Pct 1 2 ALHAMBRA, CA 91801 91803 4 1 89 12 4 1 100 100 0.2 0 2 0-2 0 2 ARCADIA, CA 91006 91007 1 1 37 100 1 1 100 100 . 0.8 0 6 . 0.9 7 I 0 AZUSA, CA BALDW N PARK CA 91702 91706 1 2 3 11 1 2 100 100 , 1.2 1 0 . 1.2 1 0 I , BELL, CA 90201 91504 1 1 21 2 1 1 100 100 . 0.4 0 0 . 0.5 0 0 BURBANK, CA CLAREMONT, CA COVINA CA 91711 91722 2 1 7 10 2 1 100 100 . 1.7 0 8 . 21 1 1 , 91724 90242 3 1 3 9 3 1 100 100 . 0.7 0 6 . 0.8 0 6 DOWNEY, CA EL MONTE, CA 91732 91740 2 1 6 46 2 1 100 100 . 0.6 0 3 . 0.7 0 3 GLENDORA, CA LA VERNE, CA CA LOS ANGELES 91750 90002 1 1 7 0 1 1 100 100 . 0.4 0 5 . 0.5 8 0 , 90022 1016 1 3 28 22 1 3 100 100 . 0.1 1 0 . 0.2 1 1 MONROVIA, CA MONTEBELLO, CA MONTEREY PARK CA 9 90640 91754 2 2 117 135 2 2 100 100 . 0.9 0 3 . 0.9 0 9 , PASADENA. CA 91103 92377 1 2 1 1 1 2 100 100 . 0.9 2 0 . 0.9 5 2 RIALTO, CA ROSEMEAD, CA AN GABRIEL CA 91770 91775 28 4 20 0 28 4 '100 100 . 0.4 0 5 . 0.5 0 6 , S 91776 73 5 1 73 15 5 1 100 100 . 0.3 1 0 . 0.4 1 0 SOUTH EL MONTE, CA TEMPLE CITY, CA ~ 91 3 91780 91789 3 1 15 9 3 1 100 100 . 1 0.5 1 31 . I 0.6 1 6 WALNUT, CA WEST COVINA, CA 91790 1 136 1 100 . 0.1 j . 01 Access standard: 2 providers within 10 miles Provider group: Specialists 0 • CIGNA HealthCare HMO/POS - City of Rosemead 27 ZIP Codes not meeting the access standard Access standard: 2 providers within 10 miles Provider group: Specialists 0 • CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes meeting the access standard 28 All Suburban Employees in the Service Area Employees with desired access ZIP Total number of Total number of Average distance to providers city Code employees providers Number Pct 1 2 DIAMOND BAR, CA SAN DIMAS, CA 91765 91773 1 2 25 39 1 2 100 100 03 1.0 04 1.1 I Access standard: 2 providers within 15 miles Provider group: Specialists • • CIGNA HealthCare HMO/POS - City of Rosemead 29 ZIP Codes not meeting the access standard All Suburban Employees in the Service Area Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS 4 Access standard: 2 providers within 15 miles Provider group: Specialists 0 i CIGNA HealthCare HMO/POS - City of Rosemead 30 ZIP Codes meeting the access standard All Rural Employees in the Service Area Employees with desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS r Access standard: 2 providers within 30 miles Provider group: Specialists CIGNA HealthCare HMO/POS - City of Rosemead 31 ZIP Codes not meeting the access standard All Rural Employees in the Service Area Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS Y Access standard: 2 providers within 30 miles Provider group: Specialists Accessibility Detail Hospitals • • CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes meeting the access standard 32 All Urban Employees in the Service Area Employees with desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider ALHAMBRA, CA 91801 91803 4 1 0 0 4 1 100 100 0.7 0 8 ARCADIA, CA 91006 91007 1 1 0 1 1 1 100 100 . 2.0 1 4 AZUSA, CA 91702 91706 1 2 0 0 1 2 100 100 . 2.4 2 6 BALDWIN PARK, CA BELL, CA BURBANK A 90201 91504 1 1 0 0 1 1 100 100 . 3.0 8 2 , C CLAREMONT, CA 91711 91722 2 1 0 0 2 1 100 100 . 4.2 1 1 COVINA, CA 91724 2 3 1 0 0 3 1 100 100 . 2.1 7 1 DOWNEY, CA EL MONTE, CA A 9024 91732 91740 2 1 0 1 2 1 100 100 . 3.8 4 0 GLENDORA, C LA VERNE, CA L ELES C 91750 90002 1 1 0 0 1 1 100 100 . 28 1 9 OS ANG , A 90022 91016 1 3 0 0 1 3 100 100 . 1.8 1 4 MONROVIA, CA MONTEBELLO, CA ONTEREY PARK CA 90640 91754 2 2 1 2 2 2 100 100 . 1.9 0 9 M , PASADENA, CA T 91103 92377 1 2 0 0 1 2 100 100 . 2.6 5 8 RIAL O, CA ROSEMEAD, CA SAN GABRIEL CA 91770 91775 28 4 0 0 28 4 100 100 . 2.2 3 1 , 91776 5 1 0 5 1 100 100 . 1.2 1 3 SOUTH EL MONTE, CA TEMPLE CITY, CA 91733 91780 7 1 3 1 0 0 3 1 100 100 . 23 4 2 WALNUT, CA WEST COVINA, CA 91 89 91790 1 2 1 100 . 0.5 y Y Access standard: 1 hospital within 20 miles Provider group: Hospitals • • CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes not meeting the access standard 33 All Urban Employees in the Service Area Employees without desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider NO EMPLOYEES MEET THE SPECIFICATIONS Access standard: 1 hospital within 20 miles Provider group: Hospitals • • CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes meeting the access standard 34 All Suburban Employees in the Service Area Employees with desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider DIAMOND BAR, CA 91765 1 0 1 100 53 SAN DIMAS, CA 91773 2 1 2 100 1.5 x x Access standard: 1 hospital within 25 miles Provider group: Hospitals CIGNA HealthCare HMO/POS - City of Rosemead ZIP Codes not meeting the access standard 35 All Suburban Employees in the Service Area Employees without desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider NO EMPLOYEES MEET THE SPECIFICATIONS 0 z Access standard: 1 hospital within 25 miles Provider group: Hospitals 0 9 CIGNA HealthCare HMOIPOS - City of Rosemead 36 ZIP Codes meeting the access standard All Rural Employees in the Service Area Employees with desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider NO EMPLOYEES MEET THE SPECIFICATIONS a Access standard: 1 hospital within 45 miles Provider group: Hospitals 0 9 CIGNA HealthCare HMO/POS - City of Rosemead 37 ZIP Codes not meeting the access standard All Rural Employees in the Service Area Employees without desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider NO EMPLOYEES MEET THE SPECIFICATIONS } Access standard: 1 hospital within 45 miles Provider group: Hospitals • • CIGNA HealthCare Accessibility Analysis A report encompassing the providers from CIGNA HealthCare Open Access Plus for: City of Rosemead • • v co m E m V) O O U m C. m U) U U Q C m CL m f0 U N m Q Z C7 U 3 m W O U U Q r7 7 , 0 0 0 0 0 0$ r 0 0 0 o m m ■ o 0 m 0 CL E -p O - ° - 0 O - p 0 O O a ~ v W 0 0 W ~ cO t G tD ~O c0 O ~ - ` m o b t[ N N 2 N ~7 r to In U ) E Q CL c o^oto oa^ or~o arot~ o C o m .0~ oa o ' U E a ~ u E c m 4) C. N 3 a~ m C c N c U U O 32 > ` L L a a L a n. w m m N1 C) U U ' n N u~ i N m of Z Z' ` ~ W m ~ 19 m V ~ c (D c a D- C 0 0 L 0- 0 U Q aCL ac ncncn z= z v a ~ C N ~ N m m m N fn m N E E E _ o, E O N O O E E E co r N r C 7 O N 0 m C C c C C C V Q L_ L_ L L_ L L ~ C C r t C r 3~ 3 3 3 3 ~ 3 N N m N ~ 0 a n oo o o o o 0 0 O O o O E a a a s o . r m (V N N N N N r r 0 ui O G E O a W O c a- E r- C L c E O w W W W S W w W W -2 t o m DV )IrD co cr D0) ~ Z << < Qa a • CIGNA HeahhCare Open Access Plus - City of Rosemead 2 Accessibility summary i Accessibility analysis specifications Provider group: Primary Care Physicians 265.380 providers at 71,132 locations (based on 265,380 records) Employee group: All Urban Employees 78 employees Access standard: 2 providers within 8 miles Employees with desired access: 78(1000%) Average distance to a choice of providers for employees with desired access Number of providers 1 2 3 4 5 Miles 0.5 03 0.8 0.8 0.9 Key geographic areas Employees with desired access Total number of Average distance city employees Number Percent to 2 providers ROSEMEAD, CA 28 28 100 0.4 SAN GABRIEL, CA 9 9 100 0.7 ALHAMBRA, CA 5 5 100 0.3 COVINA, CA 4 4 100 1.1 MONROVIA, CA 3 3 100 1.3 TEMPLE CITY, CA 3 3 100 0.6 ARCADIA, CA 2 2 100 0.8 BALDWIN PARK, CA 2 2 100 1.1 CLAREMONT, CA 2 2 100 1.4 EL MONTE, CA 2 2 100 0.7 • • CIGNA Healthcare Open Access Plus - City of Rosemead 3 Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 265,380 providers at 71,132 locations (based on 265,380 records) Employee group: All Urban Employees 78 employees Access standard: 2 providers within 8 miles Employees without desired access: 0(0.0%) Number of 1 2 3 4 5 providers Miles - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers r a • • CIGNA Healthcare Open Access Plus - City of Rosemead 4 Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 265,380 providers at 71,132 locations (based on 265,380 records) Employee group: All Suburban Employees 3 employees Access standard: 2 providers within 10 miles Employees with desired access: 3 (100.0"bl Number of 1 2 3 4 5 providers Miles 0.3 0.4 0.8 0.9 0.9 Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 2 providers SAN DIMAS, CA DIAMOND BAR, CA 2 1 2 1 100 100 0.4 0.4 M Y t PJ CIGNA Healthcare Open Access Plus - City of Rosemead Accessibility summary E Accessibility analysis specifications Provider group: Primary Care Physicians 265,380 providers at 71,132 locations (based on 265,380 records) Employee group: All Suburban Employees 3 employees Access standard: 2 providers within 10 miles Employees without desired access: 0(0.0%) Number of 1 2 3 4 5 providers Miles I I I I I i Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers • • CIGNA Healthcare Open Access Plus - City of Rosemead b Accessibility summary Accessibility analysis specifications Provider group: Primary Care Physicians 265,380 providers at 71,132 locations (based on 265,380 records) Employee group: All Rural Employees 0 employees Access standard: 2 providers within 25 miles Employees with desired access: Number of 1 2 3 4 5 providers Miles - - Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 2 providers CIGNA Healthcare Open Access Plus - City of Rosemead Accessibility summary 0 Accessibility analysis specifications Provider group: Primary Care Physicians 265,380 providers at 71,132 locations (based on 265,380 records) Employee group: All Rural Employees 0 employees Access standard: 2 providers within 25 miles Employees without desired access: ~ I MMM - - Number of 1 2 3 4 5 providers Miles Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers Y • 9 CIGNA Healthcare Open Access Plus - City of Rosemead 8 Accessibility summary Accessibility analysis specifications Provider group: specialists 714,689 providers at 122,378 locations (based on 714,689 records) Employee group: All Urban Employees 78 employees Access standard: 2 providers within 10 miles Employees with desired access: 78 (100.0%) Number of providers 1 2 3 4 5 Miles 0 6 07 08 0.9 1.0 Key geographic areas Employees with desired access Total city number of employees Number Percent Average distance to 2 providers ROSEMEAD, CA 28 28 100 0.5 SAN GABRIEL, CA 9 9 100 0.5 ALHAMBRA, CA 5 5 100 0.3 COVINA, CA 4 4 100 0.9 MONROVIA, CA 3 3 100 1.1 TEMPLE CITY, CA 3 3 100 0.6 ARCADIA, CA 2 2 100 0.8 BALDWIN PARK, CA 2 2 100 1.1 CLAREMONT, CA 2 2 100 2.2 EL MONTE, CA 2 2 100 0.8 E CIGNA HeafthCare Open Access Plus - City of Rosemead 9 Accessibility summary Accessibility analysis specifications Provider group: specialists 714,689 providers at 122,378 locations (based on 714,689 records) Employee group: All Urban Employees 78 employees Access standard: 2 providers within 10 miles Employees without desired access: o (o o'x>) Number of providers 1 2 3 4 5 Miles - - - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers E • CIGNA HealthCare Open Access Plus - City of Rosemead Accessibility summary 10 Accessibility analysis specifications Provider group: specialists 714,689 providers at 122,378 locations (based on 714,689 records) Employee group: All Suburban Employees 3 employees Access standard: 2 providers within 15 miles Employees with desired access: 3 (100.0%) Number of providers 1 2 3 4 5 Miles 08 0 9 09 0 9 1 0 Key geographic areas Employees with desired access Total number of Average distance city employees Number Percent to 2 providers SAN DIMAS, CA 2 2 100 1.1 DIAMOND BAR, CA 1 1 100 0.6 • • 9 CIGNA Healthcare Open Access Plus - City of Rosemead Accessibility summary 11 Accessibility analysis specifications Provider group: specialists 714,689 providers at 122,378 locations (based on 714,689 records) Employee group: All Suburban Employees 3 employees Access standard: 2 providers within 15 miles Employees without desired access: o (0,0%') Number of providers 1 2 3 4 5 Miles I - - • CIGNA Healthcare Open Access Plus - City of Rosemead Accessibility summary Accessibility analysis specifications Provider group: specialists 714,689 providers at 122,378 locations (based on 714,689 records) Employee group: All Rural Employees 0 employees /Access standard: 2 providers within 30 miles Employees with desired access: 12 0 CIGNA Healthcare Open Access Plus - City of Rosemead Accessibility summary 13 Accessibility analysis specifications Provider group: specialists 714,689 providers at 122,378 locations (based on 714,689 records) Employee group: All Rural Employees 0 employees Access standard: 2 providers within 30 miles Employees without desired access: Number of 1 2 3 4 5 providers Miles - - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 2 providers a Y • • CIGNA HealthCare Open Access Plus - City of Rosemead Accessibility summary 14 Accessibility analysis specifications Provider group: Hospitals 5,675 providers at 4,860 locations (based on 5,675 records) Employee group: All Urban Employees 78 employees Access standard: 1 hospital within 20 miles Employees with desired access: 78 (100.09%) Average distance to a choice of providers for employees with desired access Number of ' 2 3 4 5 providers Miles 2.1 2.9 3.6 4.3 5.4 Key geographic areas Employees with desired access Total number of Average distance city employees Number Percent to 1 provider ROSEMEAD, CA 28 28 100 2.2 SAN GABRIEL, CA 9 9 100 1.2 ALHAMBRA, CA 5 5 100 0.9 COVINA, CA 4 4 100 1.8 MONROVIA, CA 3 3 100 1.4 TEMPLE CITY, CA 3 3 100 2.3 ARCADIA, CA 2 2 100 1.7 BALDWIN PARK, CA 2 2 100 2.6 CLAREMONT, CA 2 2 100 4.2 EL MONTE, CA 2 2 100 3.8 • • CIGNA HealthCare Open Access Plus - City of Rosemead 15 Accessibility summary Accessibility analysis specifications Provider group: Hospitals 5,675 providers at 4,860 locations (based on 5,675 records) Employee group: All Urban Employees 78 employees Access standard: 1 hospital within 20 miles Employees without desired access: o (00%) Average distance to a choice of providers for employees without desired access Number of providers 1 2 3 4 5 Miles - - - - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 1 provider r K • CIGNA HeafthCare Open Access Plus - City of Rosemead Accessibility summary 16 Accessibility analysis specifications Provider group: Hospitals 5,675 providers at 4,860 locations (based on 5,675 records) Employee group: All Suburban Employees 3 employees Access standard: 1 hospital within 25 miles Employees with desired access: 3 (100.0%) Average distance to a choice of providers for employees with desired access Number of 1 2 3 4 5 providers Miles 2.8 4.3 4.8 5.4 5.4 Key geographic areas Total Employees with desired access city number of employees Number Percent Average distance to 1 provider SAN DIMAS, CA DIAMOND BAR, CA 2 1 2 1 100 100 1.5 5.3 i • CIGNA HealthCare Open Access Plus - City of Rosemead 17 Accessibility summary Accessibility analysis specifications Provider group: Hospitals 5,675 providers at 4,860 locations (based on 5,675 records) Employee group: All Suburban Employees 3 employees Access standard: 1 hospital within 25 miles Employees without desired access: 0(0.0%) Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 1 provider • 0 CIGNA HealthCare Open Access Plus - City of Rosemead Accessibility summary • Accessibility analysis specifications Provider group: Hospitals 5,675 providers at 4,860 locations (based on 5,675 records) Employee group: All Rural Employees 0 employees Access standard: 1 hospital within 45 miles Employees with desired access: Number of 1 2 3 4 5 providers Miles - - - Key geographic areas Employees with desired access Total number of Average distance city employees Number Percent to 1 provider Y 18 • CIGNA HealthCare Open Access Plus -City of Rosemead 19 Accessibility summary Accessibility analysis specifications Provider group: Hospitals 5,675 providers at 4,860 locations (based on 5,675 records) Employee group: All Rural Employees 0 employees Access standard: 1 hospital within 45 miles Employees without desired access: _ Number of 1 2 3 4 5 providers Miles - - Key geographic areas Total Employees without desired access city number of employees Number Percent Average distance to 1 provider • • • Accessibility Detail Primary Care Physicians 0 CIGNA HealthCare Open Access Plus - City of Rosemead ZIP Codes meeting the access standard • 20 All Urban Employees Employees with desired access ZIP Total number of Total number of Average distance to providers city Code employees providers Number Pct 1 2 ALHAMBRA, CA 91801 91803 4 1 56 5 4 1 100 100 0.2 0 2 0.2 I 0 5 ARCADIA. CA 91006 91007 1 1 32 69 1 1 100 100 . 0.1 7 0 . j 0.9 I 0 7 AZUSA, CA BALDWIN PARK CA 91702 91706 1 2 7 12 1 2 100 100 . 0.4 1 0 . 0.6 1 1 , BELL, CA BURBANK CA 90201 91504 1 1 25 2 1 1 100 100 . 0.4 0 0 . 0.5 0 6 , CLAREMONT, CA COVINA CA 91711 91722 2 1 11 4 2 1 100 100 . 1.4 0 6 . 1.4 I 1 0 , 91724 3 1 0 5 3 1 100 100 . 1.0 0 6 . 1.2 I 0 6 DOWNEY, CA EL MONTE. CA GLENDORA CA 90242 91732 91740 2 1 6 24 2 1 100 100 . 0.6 0 3 . 0.7 4 0 . LA VERNE, CA LOS ANGELES CA 91750 90002 1 1 9 1 1 1 100 100 . 0.5 0 8 . 0.5 ( 0 9 , N 90022 0 6 1 3 22 2 1 3 100 100 . 0.1 1 2 . 0.5 1 3 MO ROVIA, CA MONTEBELLO, CA MONTEREY PA K CA 91 1 90640 91754 2 2 82 83 2 2 100 100 . 0.8 0 7 . 0.8 8 0 R , PASADENA, CA RIALTO CA 91103 92377 1 2 2 0 1 2 100 100 . 0.3 5 2 . 1.0 I 2 5 , ROSEMEAD, CA SAN GABRIEL CA 91770 91775 28 4 21 2 28 4 100 100 . 03 0 5 . 0.4 7 I 0 , E 91776 91733 5 1 47 17 5 1 100 100 . 0.4 1 0 I . 0.6 1 1 SOUTH EL MONT , CA TEMPLE CITY, CA T A = 91780 91789 3 1 10 5 3 1 100 100 . 0.5 9 I 0 . 0.6 1 3 WALNU , C . WEST COVINA, CA 91790 1 75 1 100 . 0.1 ! . 0.1 Access standard: 2 providers within 8 miles Provider group: Primary Care Physicians 0 CIGNA HealthCare Open Access Plus - City of Rosemead ZIP Codes not meeting the access standard • 21 All Urban Employees Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS G 7 Access standard: 2 providers within 8 miles Provider group: Primary Care Physicians • • CIGNA HeafthCare Open Access Plus - City of Rosemead 22 ZIP Codes meeting the access standard All Suburban Employees Employees with desired access ZIP Total number of Total number of Average distance to providers city Code employees providers Number Pct 1 2 DIAMOND BAR. CA SAN DIMAS, CA 91765 91773 1 2 22 16 1 2 100 100 0.4 0.4 0.3 0.4 Access standard: 2 providers within 10 miles Provider group: Primary Care Physicians 0 CIGNA HealthCare Open Access Plus - City of Rosemead ZIP Codes not meeting the access standard • 23 All Suburban Employees Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 i 2 NO EMPLOYEES MEET THE SPECIFICATIONS 2 k Access standard: 2 providers within 10 miles Provider group: Primary Care Physicians i 0 CIGNA HeahhCare Open Access Plus - City of Rosemead 24 ZIP Codes meeting the access standard All Rural Employees Employees with desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS 3 Y Access standard: 2 providers within 25 miles Provider group: Primary Care Physicians • CIGNA HeafthCare Open Access Plus - City of Rosemead 25 ZIP Codes not meeting the access standard All Rural Employees Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS 0 Access standard: 2 providers within 25 miles Provider group: Primary Care Physicians 0 Accessibility Detail Specialists 0 • 0 CIGNA HealthCare Open Access Plus - City of Rosemead ZIP Codes meeting the access standard 26 All Urban Employees Employees with desired access ZIP Total number of Total number of Average distance to providers city Code employees providers Number Pct 1 2 ALHAMBRA, CA 91801 91803 4 1 86 19 4 1 100 100 0.2 0.2 5 2 0 0 ARCADIA, CA 91006 91007 1 1 37 130 1 1 100 100 . . 0.6 0.9 61. 0 7 0 AZUSA, CA BALDWIN PARK CA 91702 91706 1 2 5 7 1 2 100 100 . . 0.6 1.2 1 1 0 I 1 , BELL, CA BURBANK CA 90201 91504 1 1 12 3 1 1 100 100 . . 0.5 0.5 0 I 0 0 0 , CLAREMONT, CA COVINA CA 91711 91722 2 1 10 7 2 1 100 100 . . 1.8 2.2 8 I 1 0 0 , 91724 02 3 1 4 9 3 1 100 100 . . 0.8 0.8 0 8 0 9 DOWNEY, CA EL MONTE. CA DOR CA 9 42 91732 91740 2 1 5 70 2 1 100 100 . . 0.7 0.8 3 0 0 3 GLEN A, LA VERNE, CA LOS ANGELES CA 91750 90002 1 1 9 0 1 1 100 100 . . 0.4 0.5 0 8 0 8 , 90022 16 91 1 3 18 17 1 3 100 100 . . 0.1 0.2 1 1 0 1 MONROVIA, CA MONTEBELLO, CA MONTEREY PARK CA 0 90640 91754 2 2 115 136 2 2 100 100 . . 0.8 0.8 4 I 0 6 0 , PASADENA. CA RIALTO CA 91103 92377 1 2 2 0 1 2 100 100 . . 0.9 0.9 5 I 3 2 2 , ROSEMEAD, CA A RIEL A 91770 91775 28 4 21 2 28 4 100 100 . . 0.4 0.5 0 4 6 0 B , C SAN G b 91776 73 5 69 4 5 1 100 100 . . I 0.3 0.4 0 1 0 1 UTH EL MONTE, CA TEMPLE CITY. CA WALNUT CA 91 3 91780 91789 1 3 1 1 13 8 3 1 100 100 . . 0.5 0.6 1 6 1 7 , WEST COVINA, CA 91790 1 114 1 100 . . 0.1 0.1 I Access standard: 2 providers within 10 miles Provider group: Specialists • • CIGNA HeaffhCare Open Access Plus - City of Rosemead 27 ZIP Codes not meeting the access standard All Urban Employees Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS Access standard: 2 providers within 10 miles Provider group: Specialists L J CIGNA HeafthCare Open Access Plus - City of Rosemead ZIP Codes meeting the access standard • 28 All Suburban Employees Employees with desired access ZIP Total number of Total number of Average distance to providers City Code employees providers Number Pct 1 2 DIAMOND BAR, CA SAN DIMAS, CA 91765 91773 1 2 24 37 1 2 100 100 0.4 1.0 0.6 1.1 Access standard: 2 providers within 15 miles Provider group: Specialists • • CIGNA HeahhCare Open Access Plus - City of Rosemead 29 ZIP Codes not meeting the access standard All Suburban Employees Employees without desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS Access standard: 2 providers within 15 miles Provider group: Specialists CIGNA HeafthCare Open Access Plus - City of Rosemead 30 ZIP Codes meeting the access standard All Rural Employees Employees with desired access Total Total Average distance ZIP number of number of to providers city Code employees providers Number Pct 1 2 NO EMPLOYEES MEET THE SPECIFICATIONS Access standard: 2 providers within 30 miles Provider group: Specialists 0 • CIGNA HeafthCare Open Access Plus - City of Rosemead 31 ZIP Codes not meeting the access standard Access standard: 2 providers within 30 miles Provider group: Specialists 0 Accessibility Detail Hospitals • CIGNA HeafthCare Open Access Plus - City of Rosemead ZIP Codes meeting the access standard 32 All Urban Employees Employees with desired access Total Total Average distance city ZIP Code number of employees number of providers Number Pct to a choice of 1 provider ALHAMBRA, CA 91801 91803 4 1 0 0 4 1 100 100 0.9 1 3 ARCADIA, CA 91006 91007 1 1 0 1 1 1 100 100 . 2.0 1 4 AZUSA, CA DWIN PARK CA 91702 91706 1 2 0 0 1 2 100 100 . 2.4 2 6 BAL , BELL. CA BURBANK CA 90201 91504 1 1 0 0 1 1 100 100 . 3.0 2 8 , CLAREMONT, CA 91711 91722 2 1 0 0 2 1 100 100 , 4.2 1 1 COVINA, CA 91724 2 3 0 0 3 1 100 100 . 2.1 1 7 DOWNEY, CA EL MONTE, CA LENDORA CA 9024 91732 91740 1 2 1 0 1 2 1 100 100 . 3.8 0 4 . G LA VERNE, CA LOS ANGELES CA 91750 90002 1 1 0 0 1 1 100 100 . 2.8 1 9 , 90022 1 0 0 1 3 100 100 . 1.8 1 4 MONROVIA, CA MONTEBELLO, CA 91016 90640 91754 3 2 2 1 2 2 2 100 100 . 1.9 9 0 MONTEREY PARK, CA PASADENA, CA 91103 92377 1 2 0 0 1 2 100 100 . 2.6 5 8 RIALTO, CA ROSEMEAD, CA 91770 28 4 0 0 28 4 100 100 . 2.2 1 3 SAN GABRIEL, CA T 91775 91776 5 1 5 1 100 100 . 1.2 3 1 SOUTH EL MON E, CA TEMPLE CITY. CA WALNUT CA 91733 91780 91789 1 3 1 0 0 0 3 1 100 100 . 2.3 42 , WEST COVINA, CA 91790 1 2 1 100 0.5 Access standard: 1 hospital within 20 miles Provider group: Hospitals 0 CIGNA HealthCare Open Access Plus - City of Rosemead ZIP Codes not meeting the access standard • 33 All Urban Employees Employees without desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider NO EMPLOYEES MEET THE SPECIFICATIONS 0 Access standard: 1 hospital within 20 miles Provider group: Hospitals CIGNA HealthCare Open Access Plus - City of Rosemead ZIP Codes meeting the access standard • 34 All Suburban Employees Employees with desired access city ZIP Code Total number of employees Total number of providers Number Pct Average distance to a choice of 1 provider DIAMOND BAR. CA SAN DIMAS, CA 91765 91773 1 2 0 1 1 2 100 100 5.3 1.5 s Access standard: 1 hospital within 25 miles Provider group: Hospitals • • CIGNA HealthCare Open Access Plus - City of Rosemead 35 ZIP Codes not meeting the access standard Access standard: 1 hospital within 25 miles Provider group: Hospitals • CIGNA HeafthCare Open Access Plus - City of Rosemead ZIP Codes meeting the access standard 1] 36 All Rural Employees Employees with desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider NO EMPLOYEES MEET THE SPECIFICATIONS Y Access standard: 1 hospital within 45 miles Provider group: Hospitals 0 CIGNA Healthcare Open Access Plus - City of Rosemead ZIP Codes not meeting the access standard 37 All Rural Employees Employees without desired access Total Total Average distance ZIP number of number of to a choice of city Code employees providers Number Pct 1 provider NO EMPLOYEES MEET THE SPECIFICATIONS s Access standard: 1 hospital within 45 miles Provider group: Hospitals Retiree Health Frequently Asked LAO,, •ject Areas Retiree Health Care ATTACENENT I Frequently Asked Questions Retiree Health Care News and Reports Main 1. What are retiree health or OPEB benefits for public employees? Retiree Health Overview 2. Why are retiree health costs an issue now? Articles by Category 3. What is GASB 45? 4. What is an unfunded liability. Recent Publications 5. What can governments do about retiree health costs? States 6. What about issuing bonds to address retiree health liabilities? Counties 7. Will health care reform solve the problem? Cities 8. How does LAO select news and reports for the Web site? School Districts Community Colleges Other Local Governments Universities What are retiree health or OPEB benefits for public employees? Private Sector U.S. Government When they retire, public employees in California typically receive monthly International pension payments, as well as health, dental, or other benefits that are Cross Jurisdiction funded in part by their former employer. These health, dental, and other contact LAO benefits are called "other post-employment benefits" (OPEBs) by financial experts. There is no standard pension or OPEB benefit package for retired FAQs public employees. Employees of different governmental entities (the • state, universities, cities, counties, school districts, and other public entities) receive different levels of benefits. In some cases, governments offer no OPEB benefits to their retirees. On this Web site, we refer to OPEBs as retiree health benefits. Retiree health benefits are the most expensive OPEBs. Why are retiree health costs an issue now? Nearly all governments pay for health benefits for their retired employees on a pay-as-you-go basis each year. Generally, no funds have been set aside to address future benefit obligations. In California and across the country-in both the public and private sectors--employers' costs for these retiree health benefits have been rising rapidly. There are two main reasons for these cost increases. First, health care premiums have been rising faster than inflation for many years. Second, the aging of the "baby boom" generation, as well as lengthening life expectancy, have increased the number of retirees receiving these benefits. In California, recent changes in public pension systems also have increased incentives for public employees to retire earlier, and this has contributed to an increase in the number of retirees receiving health benefits. • For governments, when retiree health costs rise faster than the rate of growth of tax revenues, a larger and larger percentage of governmental revenues must be devoted to providing retiree health benefits. This means that a smaller percentage of revenues is available to provide services to the general public and to pay current governmental employees. http://www.lao.ca.gov/Retireehealth/RetFAQ.aspx Page of 3 5/3/2007 Products Other Resources Ballot/ Initiatives Careers About Us Retiree Health Frequently Asked 0stions - Legislative Analyst's Office • Page 2 of What is GASB 45? is The Governmental Accounting Standards Board (GASB) is a nonprofit entity that sets accounting standards for state and local governments in the United States. The GASB is similar to the professional boards that set accounting standards for private sector entities and the federal government. Beginning in 2007, the provisions of GASB Statement 45 (GASB 45) will begin to take effect for state and local governments. Under GASB 45, over the next several years, state and local governments will-for the first time-compile data about their retiree health and similar benefits and have an actuary calculate the unfunded liabilities that have been accrued to provide those benefits to retirees in future years. Governments already collect such information for their pension systems. The GASB 45 is an accounting standard-not a legal requirement for governments to change anything about current public retiree health benefits or their funding. Nevertheless, under state and local laws, as well as bond agreements, most governments must release financial statements that comply with GASB rules, such as GASB 45, each year. Therefore, most governmental entities will release financial statements that include a valuation of unfunded retiree health liabilities at some point during the next few years. What is an unfunded liability? • An unfunded liability exists when a governmental or corporate entity has an obligation to provide payments or benefits to groups of individuals, but has set aside no money to fund all or a part of that obligation. Unfunded liabilities for retirement systems are estimated by actuaries. Actuaries make assumptions about a pension system's investment returns, the life expectancy of public employees, and future public employee salary increases to estimate the future costs of benefits that have been earned by current and past public employees. In very simplified terms, the unfunded liability is the amount of extra money that would need to be set aside today and invested by the pension system to cover the future costs of all promised benefits earned to date by members of that pension system. Under Governmental Accounting Standards Board Statement 45 (GASB 45), governments will calculate unfunded retiree health liabilities for the first time. Because most governments have never had to set aside any funds to address future retiree health obligations, unfunded retiree health liabilities generally will be massive-often much larger than governments' unfunded pension liabilities. What can governments do about retiree health costs? Under Governmental Accounting Standards Board Statement 45 (GASB • 45), most governments will report very large unfunded retiree health liabilities. Left unfunded, these liabilities may continue to result in rapidly growing costs each year for the foreseeable future. Over time, addressing the costs of these liabilities will tend to consume a larger and larger percentage of governmental revenues. http://www.lao.ca.gov/Retireehealth/RetFAQ.aspx 5/3/2007 Retiree Health Frequently Asked ~ stions - Legislative Analyst's Office Page 3 of 3 1 heTLs are two basic ways for governmentsleaddress unfunded retiree health liabilities. Governments can either (1) set aside money and invest it in order to address part or all of the future costs of retiree health benefits (sometimes called "prefunding") or (2) change retiree health • benefits in some way so as to reduce future costs. Because unfunded retiree health liabilities often will be very large, neither of these options represents an easy choice for many public entities. Eliminating retiree health liabilities, for example, may require setting aside large amounts of money or implementing large cuts in benefits for some or all retirees. What about issuing bonds to address retiree health liabilities? Some governments have adopted a strategy that involves issuing bonds and depositing the proceeds of those bonds into an investment account to reduce unfunded retiree health liabilities. In some cases, this may be a viable option, but the approach carries some risks. If, for example, investment returns are weak in some years and reduce the value of this investment account, the government generally will still be obligated to pay for benefits, as well as the debt service on the bonds (including interest). Will health care reform solve the problem? Some point out that health care reform efforts at the state or national level may be sufficient to address retiree health liabilities. Undoubtedly, any health care reform effort that reduces the growth of employer health premiums would be helpful in containing unfunded liabilities. Nevertheless, most retiree health actuarial valuations assume a long-term • rate of growth for health premiums at about 4 percent or S percent per year-much lower than has actually occurred recently. For this reason, if health care reforms are successful in reducing premium growth, the unfunded retiree health liabilities that soon will be reported under the actuarial valuations are more likely to be accurate. If, on the other hand, health care reforms are not successful in reducing premium growth, then the problem of future retiree health costs may be much worse than indicated in these initial actuarial valuations. How does the LAO select news and reports for the Web site? Our goal is to provide Web site users with a steady stream of noteworthy news, reports, articles, and commentaries concerning retiree health issues. We intend generally to emphasize news related to California governments. Determining what is noteworthy is, to some extent, a subjective matter. In summaries of news and reports included on the Web site, we hope to emphasize points of view described in those published articles that come from each side of the issue (labor, management, and others). In addition, we welcome suggestions and submissions of noteworthy news, reports, and commentaries published on the Web by parties on all sides of the retiree health issue. We will update the site periodically as our staffing resources allow. We plan to continue maintaining this portion of the LAO Web site through 2007 and evaluate the project for continuation in 2008 and beyond based on user interest, the availability of noteworthy content and available staffing resources. • http://-A-w-w.lao.ca.gov/Retireehealth/RetFAQ.aspx 5/3/2007 E • ATTACHMENT J (Note: In April 2007, the Legislative Analyst's Office launched a web site, Retiree Health Care News and Reports, which features February 17, 2006 noteworthy items concerning public sector retiree health benefits • and costs across the country.) 411 The costs of providing health care to retired state employees and their dependents-now approaching $1 billion per year-are in- creasing significantly. Many other public employers (including the University of Califor- nia, schoo) districts, cities, and counties) face similar pressures. This report discusses health benefits provided to retired public employees, focusing on state retirees. We find that the current method of funding these benefits defers payment of these costs to future gen- erations. Retiree health liabilities soon will be quantified under new accounting standards, but state government liabilities are likely in the range of $40 billion to $70 billion-and perhaps more. This report describes actions that the Legislature could take to address these costs. ■ 40 ELIZABETH G. HILL • LEGISLATIVE ANALYST • i AN LAO REPORT • • Acknowiedgments LAO Publications This report was prepared by Jason Dickerson, To request publications call (916) 445-4656. and reviewed by Michael Cohen. The Legislative This report and others, as well as an E-mail Analyst's Office (LAO) is a nonpartisan office ■ subscription service, are available on the which provides fiscal and policy information LAO's Internet site at www.loo.co.gov. The and advice to the Legislature. LAO is located at 925 L Street, Suite 1000, • Sacramento, CA 95814. LEGISLATIVE ANALYST'S OFFICE • AN LAO REPORT L is • INTRODUCTION Background. Like many employers, govern- ments in California often pay for health and dental insurance for their employees and eligible family members after retirement. Costs for re- tiree health benefits have been rising rapidly-in- creasing faster than both inflation and the overall growth rate of government spending. Retiree Health Benefits Are Not Prefunded...Unlike Pensions. Almost all public entities in the United States pay for retiree health benefits in the year the benefits are used by re- tirees. This is sometimes called the "pay-as-you- go" approach, and it differs from the prefunding model used for most pension benefits-where most costs are funded in advance during em- ployees' working years and invested until paid to retirees. The pay-as-you-go approach has led to • the accumulation of massive financial liabilities to pay for future retiree health benefits. These liabilities will be quantified under new govern- ment accounting rules that come into effect in 2007-08. Structure of This Report. This report focuses on the state's costs for providing benefits to its own retired employees, while also discussing similar issues for the University of California (UC), local governments, and school districts. The report first describes existing benefits for retirees and then outlines the new accounting rules. We then discuss the magnitude of finan- cial liabilities for retiree health benefits and offer policy recommendations and options for govern- ments to address these liabilities. STATE RETIREE HEALTH BENEFITS History In 1961, the Legislature for the first time appropriated funds to the State Employees' Retirement System-the predecessor to the California Public Employees' Retirement System (CalPERS)-to provide health benefits to state employees and retirees. The state paid most of the costs of a basic employee and retiree health plan-with state contributions per employee set at $5 per month in 1961-62. Total costs at that time were $4.8 million (then under 0.3 percent of General Fund spending). The $5 state con- tribution mirrored the provisions of the new federal employee health program, which began operations in 1960. Figure 1 (see next page) lists key events in the evolution of the state's retiree health program over the past half century. Since LEGISLATIVE ANALYST'S OFFICE 1974, the state has paid a percentage of health costs, rather than a fixed amount. The 100/90 Formula Current law provides state contributions for retiree health benefits on the basis of a "100/90 formula." Under the formula, the state's contri- butions are equal to 100 percent of a weighted average of retiree health premiums and 90 per- cent of a similar weighted average for additional premiums necessary to cover eligible family members of retirees. The formula bases pay- ments on the weighted average of premium costs for single enrollees in the four basic health plans with the largest state employee enrollment during the prior year. The formula applies to all eligible retirees, including those from the Califor- nia State University system. 3 C~ AN LAO REPORT • 11 • 4 Vesting Requirements for State Contribu- tions. Most state employees hired since 1985 receive full state contributions only after a period of vesting. Retirees and their eligible fam- ily members generally receive no state health contributions with less • (PPO), and the PERS Choice PPO. This results in a 2006 required state contribution of $394 per month for a single retiree, $738 per month for a retiree and a family member, and $933 per month for a retiree family, as shown in Figure 2. than ten years of service. Figure 1 They receive 50 percent State Retiree Health Benefits-Key Historical Events of the contribution with Year Event ten years of service, in 1961 State contributions of $5 per month begin. creasing 5 percent annu 1967 Local agencies begin contracting with CaIPERS for health benefits. ally until the 100 percent 1974 State pays 80 percent of employee/retiree and 60 percent of dependent level is earned after 20 costs. or more years of employ- . 1978 State pays 100 percent of employee/retiree and 90 percent of dependent ment. State employees costs. 1984 State costs exceed $100 million. Legislature increases years required for hired prior to 1985 are employees to vest in retiree health benefits. fully vested for health 1991 State begins to pay less than 100/90 formula for current employees. The benefits upon retire- 100/90 formula continues for retirees. 2006 The 2006-07 Govemor's Budget projects that costs will exceed $1 billion. ment. 2006 State Contribu- tion Levels. Legislative approval of funding for retiree health and dental benefits occurs in the budget act, following CalPERS' negotiation of health plan rates for the upcoming calendar year. For 2006, the 100/90 formula contributions are based on the premium costs for the four largest CAPERS health plans: Blue Shield's health maintenance organiza- tion (HMO), Kaiser Permanente's HMO, the PERSCare preferred provider organization Figure 2 2006 Monthly State Contributions For Retiree Health Care $1,000 900 800 700 600 500 400 300 200 100 Single Two-Party Family LEGISLATIVE ANALYST'S OFFICE • AN LAO REPORT • • • State Benefits and the Individual Retiree Retirees Under Age 65. A retiree's vested state contribution amount may or may not cover the entire prernium cost for a desired health care plan. For instance, for a fully vested 60-year- old retiree with a spouse or domestic partner of the same age, the 100/90 formula results in state contributions of $738 per month. In 2006, the state contribution for this couple covers all premiums for the Kaiser Permanente HMO plan. To join a Blue Shield HMO plan in 2006, the couple must pay $33 extra per month above the state contribution. To join PERSCare-with its flexible PPO options, including the ability to switch physicians or see specialists without refer- ral-the family must pay $609 extra per month. (The 2006 monthly premiums for selected health plans administered by CalPERS are listed in Fig- ure 3. Retirees under age 65 enroll in the basic plans listed in the top part of the figure.) For many retirees from state service who are between the ages of 50 and 65, retirement brings no immediate change in health plans or coverage. These persons can remain in the same Figure 3 2006 Monthly Premiums for Selected State Employee Health Plans CalPERS basic health plan they had when they worked for the state. Rather, the changes they experience after retirement are largely financial. During their working years, these individuals and their family members probably received health benefits under 80/80 or 85/80 state contribution formulas included in collective bargaining agree- ments between the state and employee bargain- ing units. After retirement, the new retirees and their families typically receive benefits under the more generous 100/90 formula. Upon retirement, therefore, an individual may experience a reduc- tion in the premium expenses he or she pays- with the state contributing an increased share. Retirees, Age 65 and Over. Upon reaching age 65, most state retirees receive coverage under the federal government's Medicare Part A program (for hospital and similar benefits). Eligible state retirees must join Medicare Part A and Part B (for outpatient benefits), and at that time, they become eligible for coverage under one of CaIPERS' Medicare health plans. These CaIPERS plans supplement the federal govern- ment's health coverage and reduce the out-of- pocket costs required under Medicare-includ- ing premiums, deduct- ibles, and copayments. Because the federal Single Two-Party Family Basic Plan Premiums Kaiser Permanente Basic HMO $365 $730 $949 Blue Shield Basic HMO 386 771 1,003 PERS Choice Basic PPO 401 801 1,042 PERSCare Basic PPO 674 1,347 1,752 Medicare Plan Premiums Kaiser Permanente HMO Medicare Advantage $219 $437 $656 Blue Shield HMO Medicare Supplement 286 573 859 PERS Choice PPO Medicare Supplement 322 644 966 PERSCare PPO Medicare Supplement 347 694 1,042 HMO = Health Maintenance Organization. PPO = Preferred Provider Or ganization. LEGISLATIVE ANALYST'S 0 FFICE government covers a significant portion of health costs for retirees on Medicare, the premi- ums for CalPERS' Medi- care plans are lower than those of CaIPERS' basic health plans for current state employees and retirees under age 65. 5 AN LAO REPORT • • • 6 Monthly premiums in 2006 for some of CalPERS' Medicare plans are listed in the bottom part of Figure 3. Retirees over age 65 and eligible family members receive the same monthly state contri- bution for health premiums as younger retirees. For a fully vested 67-year-old state retiree with a spouse or domestic partner of the same age, for example, this means that the state contribution for 2006 covers all monthly premium costs for the four CalPERS Medicare plans listed in Fig- ure 3. After providing for these premium costs, $301 of the state contribution is unused if the couple enrolls in the Kaiser Permanente Medi- care Advantage plan, and $44 is unused if the couple enrolls in the PERSCare Medicare Sup- plement plan. State law provides that this unused portion of the state contribution may be used to pay all or part of Medicare Part B premiums for retirees and eligible fam- ily members. (In 2006, monthly Medicare Part B premiums are just under $89.) If any portion of the state contribution $1.240 remains unused after paying these costs, it will 1.000 remain unused since the retiree does not receive 800 a refund for any remain- ing amount. 600 Some state retir- ees-including some who 400 were first hired before 1986, when Medicare 200 taxes became mandatory for most state and local government employees- are not automatically eligible for Medicare Part A coverage when they reach the age of 65. These retirees and some oth- ers can remain in CaIPERS' basic health plans. Soaring Costs Figure 4 shows that state costs for retiree health and dental benefits have increased rapidly in recent years. They have more than tripled in the last nine years, reaching $895 mil- lion in 2005-06. The 2006-07 Governor's Budget projects that retiree health and dental costs will exceed $1 billion in 2006-07. Since 2000-01, retiree health expenditures have increased an av- erage of 17 percent annually, or more than five times the rate of growth of state spending. Why Are Costs Increasing? Health Care Costs Have Risen Rapidly. For the last four decades, national health expendi- Figure 4 State Spending for Retiree Health and Dental Benefits (In Millions) C~ AN LAO REPORT J • tures consistently have grown at a faster rate than the overall economy. Since 1999, health spend- ing has increased by more than three times the rate of inflation. Federal data show that the cost drivers in California's health care system mirror those of the nation as a whole: principally, pre- scription drugs, physicians and other professional services, and hospital care. The bargaining power of hospitals has increased in recent years, and a limited supply of nurses has also contributed to cost increases. Employer Health Premiums Rising Even Faster. In recent years, employer health premi- ums-such as those negotiated for the state by CaIPERS-have risen even faster than the rate of overall medical expenditures. Employers' expen- ditures to purchase health coverage reflect the general costs of medical care, other costs associ- ated with a private insurance market (insurer re- Figure 5 Increases in Employer Health Insurance Premiums Annual Percent Change 30% 25 20 15 10 5 • LEGISLATIVE ANALYST'S OFFICE serves, the pricing of pooled risk, and a return on capital), and the health care industry's shifting of costs not paid by the large, but typically unprofit- able, Medicare and Medicaid programs. As shown in Figure 5, the state's premiums in most recent years have risen faster than the national average for public and private employers. The growth each year, which is determined by annual negotiations with health plans, can be quite volatile. Some recent years have seen double-digit increases. Research shows that trends in the rate of growth of employer premiums follow a cyclical pattern, characterized by some experts as an insurer underwriting cycle. Many, if not most, researchers believe that U.S. health insurers are entering a lull in this underwriting cycle, when annual premium growth will be slower than in recent years. Recent cost containment actions of CAPERS (summarized in Figure 6, see next page) and other purchasers of health coverage seem to have contributed to a slowdown in premium growth since 2004. In WO Premiums our fiscal outlook for the APO Premiums state, we project that CAPERS premiums will continue to grow through 2010-11, but moderate and move closer to the overall rate of medical inflation over time. More Retirees: The Other Cost Driver. The number of retirees that the state covers in its health programs contin- ues to rise. Californians are living longer, and 7 1999 2000 2001 2002 2003 2004 2005 2006 • AN LAO REPORT • • • 8 the large "baby boom" generation has begun to retire. Consequently, state employees are en- tering retirement faster than prior retirees and Figure 6 Selected CaIPERS Cost Saving Measures Since 2002 Action Comment Ended relationship with Health Net and Avoided $77 million cost increase for PacifiCare Health Maintenance state and local health programs. Organizations (HMOs) in 2003. family members are dy Raised office visit copayments to $10 in First changes in copayments for HMO ing. Figure 7 shows that 2002, as well as other copayment members since 1993. the number of retirees increases. covered by state health Eliminated high-cost hospitals from Blue Saved an estimated $45 million. lans has increased an Shield provider network beginning in p 2005. average of 3.6 percent Adopted regional pricing. Prevented large-scale exodus of local annually since 1998. participants in Southern California, We estimate that which would have diminished health ' s bargaining power. plan 35 percent to 45 per- Provided incentives to purchase over- Saved an estimated $27 million. cent of the state's the-counter drugs and refill active workforce will prescriptions by mail. retire within the next Moved certain age 65 and older Saved an estimated $19 million. ten years. Assuming members from basic to Medicare plans. this level of retirements Building large purchaser coalition, May produce uniform standards for Partnership for Change, to enhance bar- hospital quality and pricing. and retirees' increasing gaining power. longevity, we forecast Encouraging health plan partners' May produce savings and improved that the number of re- disease management programs. care for conditions like diabetes and tirees and dependents asthma. covered by the state's health program will continued double-digit growth in the cost of increase by almost 4 percent annually through state retiree health and dental benefits. We proj- 2010-11. This trend, combined with continued ect that these costs will increase from $1.0 bil- premium growth, results in our projection of lion in 2006-07 to $1.6 billion in 2010-11. OTHER PUBLIC RETIREE HEALTH BENEFITS In addition to state health benefit programs provided through CaIPERS, other public agen- cies in California offer a wide variety of health benefit programs for current employees, retirees, and eligible family members. Some offer cover- age until retirees (and, in some cases, family members) reach the age of eligibility for Medi- care-usually age 65. Some provide benefits to supplement Medicare after age 65. Below, we summarize selected characteristics of sorne of these plans. LEGISLATIVE ANALYST'S OFFICE t- I. 0 AN LAO REPORT E • • Figure 7 Retirees and Dependents With State Health Benefits 225,000 200,000 175,000 150,000 125,000 100,000 75,000 50,000 25,000 University of California The UC administers its employee and retiree health program separately from CalPERS. As a result, there are some differences in plan options and premiums. One difference is that, unlike CalPERS, UC benefit plan documents explicitly state that retiree health benefits are not vested or accrued entitlements and that the Regents may change or stop benefits altogether. 2006 UC Contributions. The UC's maximum retiree health contribution-provided based on years of service-covers most premium costs. For single UC retirees in California under age 65, UC's maximum 2006 health plan contribu- tions cover all but $18 to $27 of monthly HMO premiums and all but $70 to $75 of monthly PPO and point of service (POS) plan premiums. The UC also offers a high-deductible fee-for-ser- vice plan-for which the maximum UC contri- LEGISLATIVE ANALYST'S OFFICE bution covers all pre- mium costs-designed to provide some protection in the event of a cata- strophic illness. For UC retirees over age 65 and on Medicare, UC's sup- plement plans generally have premiums that are entirely covered by the maximum UC contribu- tion (which also typically pays all Medicare Part B premiums). Costs Growing Rapidly. In 2004-05, UC retiree health and den- 2004 2005 2006 tal benefit costs totaled LEstimate -J $193 million, or 1 percent of total university rev- enues. Between 1997-98 and 2004-05, as illustrated in Figure 8 (see next page), these costs grew an average of 12 percent annually. The UC retiree population grew at a rate of 2.2 percent annually during this period. K-14 Education A Wide Variety of Benefit Packages. Hun- dreds of California school districts and commu- nity college districts offer varying levels of health benefits to employees and retirees. Premiums, employer contributions, copayment levels, de- ductibles, covered services, and retiree benefits differ based primarily on collective bargaining agreements with certificated employees (that is, teachers and other licensed staff) and classi- fied employees. In contrast to the standardized management of pension benefits offered to school employees-through the California State 9 1998 1999 2000 2001 2002 2003 • AN LAO REPORT • • • 10 Teachers' Retirement System (CaISTRS) and CalPERS-administration of school district health plans varies widely. As of 2004, 114 school and community col- lege districts (out of a total of almost 1,100) con- tracted with CalPERS for employee and retiree health coverage. About 265 districts purchased coverage through 11 benefit trusts, which allow multiple districts to join together to achieve economies of scale. In addition, the Kern County Office of Education administers the Self-Insured Schools of California joint powers agency, which provided benefits to more than 250 school em- ployers in 31 counties, as of 2004. The remain- ing districts either secure health benefits on their own or do not provide these benefits. CaISTRS Survey of Benefits. A survey con- ducted by CaISTRS in 2003 revealed more information about the variety of health ben- efits offered to retired teachers. The CaISTRS Figure 8 estimated that districts covering 57 percent of retired teachers state- wide pay all or a por- $250 tion of retirees' health insurance premiums. The survey, however, showed that only about 7 percent of districts offer lifetime benefits, such as those offered by the state, UC, and by some of the largest school districts, including the Los Angeles Unified School District. In more than half of responding districts retired teach- ers were required to pay all of their own health insurance premiums beginning at age 65. Legislative Actions to Enhance Retired Teachers' Benefits. Since 1985, the Legislature has taken several actions to enhance health benefits of retired teachers. Districts that provide health or dental benefits for current teachers must permit retired teachers and their spouses to enroll in the same plan, pursuant to a series of laws that began with enactment of Chapter 991, Statutes of 1985 (AB 528, Elder). Chapter 991 does not include a requirement for districts to contribute to retirees' coverage, and the law also allows plans to set higher premiums for retired members (compared to current employees) based on retirees' typically higher utilization of medical services. Many districts offer only the minimum required benefits to retirees under Chapter 991 and subsequent legislation. A UC Retiree Medical and Dental Benefit Costs Increasing (!n Millions) 200 150 100 50 97-98 98-99 99-00 00-01 01-02 Source: UC Annual financial Reports. 02-03 03-04 04-05 LEGISLATIVE ANALYST'S OFFICE • AN LAO REPORT • • • CaISTRS program authorized by Chapter 1032, Statutes of 2000 (SB 1435, Johnston), also pays Medicare Part A premiums for 6,000 retired teachers not automatically eligible for this fed- eral program. Counties, Cities, and Special Districts Counties, cities, and special districts offer a wide variety of retiree health benefits. Most ap- pear to offer some type of health benefit to re- tired employees through a publicly administered health program also offered to current employ- ees. Many offer benefits through CaIPERS. In September 2005, the California State Asso- ciation of Counties surveyed county officials on retiree health benefits. Of 49 counties respond- ing (including eight of the ten largest counties), 48 reported that retired employees are eligible for some type of health benefits. (Modoc Coun- ty was the only one reporting that retirees re- ceived no health benefits.) An estimated 117,000 retired employees of responding counties cur- rently receive health benefits at a combined cost of around $600 million per year. In more than two-thirds of counties, retirees pay the same pre- mium rates as active county employees. Of the 49 counties, 43 continue to offer health benefits to retirees after the age of 65, and 44 extend coverage to retirees' dependents. Of the total cost for county retiree health benefits, about half is paid directly from county operating budgets, and another one-fourth is paid from funds of retirement systems or county trusts. Almost all counties use a pay-as-you-go approach for part or all of their retiree health benefits. We did not locate similar surveys of cities or special districts during our research. GASB 45: NEW ACCOUNTING RULES The rules that govern how governments account for retiree health benefits are in the pro- cess of changing. The Governmental Accounting Standards Board (GASB) establishes account- ing rules for state and local governments (and related entities, such as public universities and retirement plans). Audited financial statements of governments prepared according to GASB rules are most closely scrutinized by investors in state and local bonds and the rating agencies that make judgments on the likelihood those bonds will be paid off as required. The board was created in 1984 as a parallel to a similar board that governs corporate accounting. In that same year, the Legislature enacted a law requir- ing the state's financial statements to comply with GASB's rules. To bring governmental accounting standards more into line with those of private companies, GASB has implemented a series of accounting rules, known as statements, concerning govern- mental liabilities related to retirement benefits. In 2004, GASB released Statement 45 (GASB 45) concerning health and other non-pension ben- efits for retired public employees. These benefits, collectively, are known as "other postemploy- ment benefits," or OPEB. Retiree health programs are, by far, the most costly of these benefits. The GASB has no power to change how gov- ernments fund retiree health, pension, and other benefits. Instead, the GASB governs the rules LEGISLATIVE ANALYST'S OFFICE • AN LAO REPORT • C7 • 12 that auditors must follow in providing opinions on the reliability of government financial statements. What Is Required to Comply With GASB 45? The new accounting rule dramatically increases the amount and quality of informa- tion included in government financial reports with respect to retiree health and other retiree benefits. State and local governments-working with their accountants and actuaries-must take a series of steps that include quantifying the unfunded liabilities associated with retiree health benefits. Results of the actuarial valuations must be reported in government audits and updated regularly. The accounting standard sets deadlines requiring large governments (including the state, most counties, many cities, and some school districts) to comply beginning with release of their 2007-08 financial reports. (The state's financial reports usually are released in February or March following the end of the fiscal year.) Smaller governments will implement GASB 45 in the following two years. Under GASB 45, government financial state- ments will list an actuarially determined amount known as an annual required contribution. This contribution, with regard to health and related benefits, is comprised of the following two costs: The "normal cost"-the amount that needs to be set aside in order to fund future retiree health benefits earned in the current year. A Unfunded liability costs-the amount needed to pay off existing unfunded retiree health liabilities over a period of no longer than 30 years. New Rules Similar to Existing Pension Requirements Retiree health benefits, like pension benefits, are a form of deferred compensation-that is, compensation earned by employees during their working years, but paid to (or used by) individu- als after they retire. Pension systems typically are funded by governments paying normal costs each year-as employees earn this type of deferred compensation-and the funds are invested so that they generate returns and grow until required to be paid to the employees after retirement. This is known as "prefunding," and pension accounting standards focus on how well retirement systems are prefunded. To the extent that funds set aside each year (with assumed, future investment earnings) are insufficient to cover projected benefit costs, the system has an "unfunded liability." Retiree health programs now will have accounting standards that are very similar. GASB 45 will result in calculation of an unfunded liability for retiree health programs similar to the comparable figure for pension systems. For governments that fund retiree health benefits on a pay-as-you-go basis (such as the state), 100 percent of retiree health liabilities will be unfunded. (In contrast, the average state pension system currently has about a 20 percent unfunded liability. Although this unfunded liabil- ity totals tens of billions of dollars in the cases of CaIPERS and CaISTRS, more than 80 percent of their liabilities have been funded in advance from investment returns and contributions by employees and employers.) The liabilities for retiree health benefits-like those for pension systems-will be determined by actuaries and accountants based on certain assumptions of future health care cost inflation, LEGISLATIVE ANALYST'S OFFICE • AN LAO REPORT • 17J • retiree mortality, and investment returns. This unfunded liability can be characterized as an amount which, if invested today, would he suf- ficient (with future investment returns) to cover the future costs of all retiree health benefits already earned by current and past employees. GASB 45 and Other States All 50 states offer health benefits to their retirees in some or all age groups. As of 2003, 17 states, including California, covered up to 100 percent of health benefit costs for some retirees. Only 11 states reported any prefunding of retiree health benefits at all (most of these with only a tiny amount of funds set aside). The GASB 45 accounting requirements likely will lead to an increase in the number of states prefunding these benefits. Only a few states have completed the actuarial valuations needed to determine unfunded retiree health and other liabilities, as well as the annual contributions, required by GASB 45. We discuss the status of two states below and corporate responses to similar rules in the box on the next page. Maryland: Considering How to Finance a Large Liability. The State of Maryland-which has a AAA bond rating (the highest possible)- assessed its situation relative to the GASB 45 requirements through a valuation completed in October 2005. The state's unfunded liability under GASB 45, principally for retiree health benefits, was valued at $20 billion, or about twice the size of the state's general fund budget. Maryland currently pays $311 million per year for retiree health benefits on a pay-as-you-go basis. Maryland's state workforce and retirees number about one-fourth of California's, and the state annually pays about one-third of the amount California pays for retiree health ben- efits. Maryland's annual retiree health contribu- tion under GASB 45, according to the October 2005 valuation, is just under $2 billion. (This consists of $634 million in annual normal costs for retiree health benefits earned each year and more than $1.3 billion in annual costs to amor- tize Maryland's existing unfunded liabilities.) Ohio: Already Prefunding Some Retiree Health Liabilities. The State of Ohio generally has been recognized as a leader in address- ing retiree health liabilities. A portion of public employers' retirement system contributions is set aside for funding of retiree health care. The sys- tem's actuarial accrued liability for retiree health and similar benefits was pegged at $19 billion, as of December 31, 2002. The Ohio system already has set aside $10 billion to fund these benefits, significantly reducing the unfunded portion of the liability that eventually will be reported un- der GASB 45. CALIFORNIA'S LIABILITIES: LARGE AND GROWING As discussed above, the state and many oth- er public entities (in California and elsewhere) have made retiree health benefits an important part of the overall compensation package of- fered to government workers. These benefits, however, have become significantly more costly than they used to be. LEGISLATIVE ANALYST'S OFFICE Policy Makers Need Much More Information Up until recently, policy makers have had little information with which to evaluate key characteristics of retiree health benefit programs. These characteristics include the programs' 13 i i AN LAO REPORT • long-term costs, how benefits compare with the State Government Liabilities: vast array of retiree health plans offered by other Likely $40 Billion to $70 Billion ...Or More governments, and how other public agencies are addressing these costs. The GASB's new ac- counting rules will result in important new tools for policy makers to use in evaluating retiree health programs. • • Over the next year or two; actuaries and accountants will be the experts making complex calculations concerning the size of GASB 45 li- abilities for the state and local governments. Our educated guess is that unfunded retiree health Corporate America's Retiree Health Liabilities Sharp Decline in Retiree Health Coverage. Since corporations began to account for retir- ee health liabilities in 1990 (due to a change in business accounting standards), investors have pressured them either to fund the liabilities or drop the benefits altogether. The percentage of large private U.S. firms offering health benefits to retirees has dropped from about 66 percent in 1988 to about 33 percent in 2005. The trend among California companies has been similar, with 32 percent of large firms here continuing to offer retiree benefits. Even companies continuing to offer benefits have cut costs in some cases by: imposing caps on the amount they will pay toward retiree health care; increasing copayments, deduct- ibles, and drug costs paid by retirees; aggressively bargaining with health insurers and provid- ers; and making many other changes. Companies also may seek bankruptcy protection to restructure retirement benefits. (Local governments and school districts also can do this under state law.) General Motors Corporation (GM). The second largest purchaser of employer health benefits in the United States, GM ranks behind the U.S, government and ahead of CaIPERS (the third largest purchaser). As of September 2004, GM reported in financial statements that its unfunded retiree health and related liabilities exceeded $61 billion. Retiree health expenses add significantly to the costs of GM cars and trucks and are believed to have contributed to a decline in the company's finances. Ratings of GM bonds have dropped to junk status, and some have speculated that a bankruptcy filing may be inevitable. In October 2005, GM and the United Auto Workers (UAW) reached agreement to cut retiree health liabilities by $15 billion. The company agreed to start a new defined contribu- tion health plan to offset other reductions in the health benefits provided to retired workers. While UAW's rank-and-file employees approved the agreement, implementation awaits a U.S. District Court review of objections from a retiree claiming that UAW lacks the authority to negotiate concessions of retiree health benefits. The retiree claims the benefits are vested contractual rights. 14 LEGISLATIVE ANALYST'S OFFICE AN LAO REPORT • • • liabilities for state government will total in the range of $40 billion to $70 billion and perhaps more. (This is based on the results of other liabili- ty valuations.) The unfunded retiree health liability may exceed the combined unfunded liabilities of CaIPERS' and CaISTRS' pension systems-which were $49 billion, as of June 30, 2004. Using Maryland's valuation as a potentially comparable example, we can make a rough guess about the state's annual contribution for retiree health benefits, as defined by GASB 45. This amount might be in the range of $6 billion. This would consist of about $2 billion in normal costs (the value of retiree health benefits esti- mated to be earned by current employees each year) and around $4 billion more in yearly pay- ments to retire the unfunded retiree health liabili- ty over 30 years. Compared to the state's current funding of $1 billion, the normal costs under this scenario would be about twice the amount the state now spends each year for benefits under a pay-as-you-go system. Other Public Liabilities: Very Large We expect that UC, most local governments, and school districts also will obtain actuarial valuations of their retiree health liabilities. Com- bined, their liabilities could exceed those of the state itself, but there will be significant variation among governments. Some local governments and school districts will have relatively small liabilities and others will have very large ones. (The significant liabilities of the school districts in Los Angeles and Fresno, as an example, are discussed in the box on the next page.) LEGISLATIVE ANALYST'S OFFICE State and Other Public Entities Defer Costs to Future Years Retiree health benefits, like salaries, are earned during an employee's working years. The benefits, however, are paid out after retirement. Unless enough funds (with assumed, future in- vestment earnings) are set aside to cover normal costs of benefits while an employee is working, future taxpayers pay all or a part of the costs of the employee's health care after retirement. An Example of Shifting Liabilities to Future Generations. For example, take a state employ- ee earning a $25,000 salary in 1985. In addi- tion to this salary compensation, the employee was promised in 1985 that the state would pay 100 percent of his or her health benefits dur- ing retirement (if the employee worked at least 20 years). The state, however, did not set aside any funds for those future health costs in 1985 or in any year thereafter. If that employee retires this year, taxpayers of today and the future must pay about $5,000 per year for the employee's retirement health costs. While these benefits were earned doing work for the prior generation of taxpayers, the current generation of taxpayers will bear the financial burden of paying for them. In the same way, today's state workforce is earn- ing future retirement health benefits. While pay- ing for current retirees' health costs, the state is not setting aside any money for future costs. The next generation of taxpayers will be left paying this bill. Because health care costs are rising and retirees are living longer than ever before, the future costs will be much higher than the current $5,000 per year. In this way, each generation shifts a growing liability to the next generation. 15 i. • AN LAO REPORT • • • 16 Current Taxpayers Should Pay for Current Expenses. The state (and nearly every other pub- lic entity nationwide) does not pay its current (or normal) costs for retiree health benefits each year. Consequently, the state fails to reflect in its budget the true costs of its current workforce. Since 1961, the state has been shifting costs to future taxpayers. The tens of billions of dollars in unfunded liabilities now owed by the state is the result of this approach. For this reason, the pay-as-you-go approach to retiree health care conflicts with a basic principle of public finance-expenses should be paid for in the year they are incurred. This principle requires deci- sion makers to be accountable-through current budgetary spending-for the costs of whatever future benefits may be promised. Retiree Health in Two School Districts Los Angeles Unified School District (LAUSD). The LAUSD is one of the few districts offer- ing comprehensive lifetime health benefits to its retirees. The LAUSD health program covers 32,000 retirees and 18,000 of their family members. The cost to the district is about $200 mil- lion annually. Like the state, LAUSD pays retiree health benefits on a pay-as-you-go basis. Retiree health benefits have grown from 2.6 percent to 3.9 percent of general fund spending since 2001-02. A July 1, 2004 actuarial valuation pegged the unfunded retiree health liability of the district at $4.9 billion. Normal costs-the amount needed to keep the liability from growing-were esti- mated to be $326 million per year. The actuarial valuation estimated that annual spending of $529 million would be needed to pay off the unfunded liability within 30 years. Currently, this would raise retiree health expenditures by 8 percent of general fund spending. Fresno Unified School District (FUSD). The FUSD -had an unfunded retiree health and other benefits liability of approximately $1.1 billion before the district ratified a new agree- ment with the Fresno Teachers Association in August 2005. Previously, retirees with at least 16.5 years of service received premium-free benefits, which continued as supplemental cover- age to Medicare after age 65. The new agreement includes various employee concessions, such as a new requirement for retirees under age 65 to pay the same portion of their benefit costs as active employees-reportedly $40 to $80 per month-and a cap on the amount FUSD will pay in the future for benefits. A group of FUSD retirees has indicated that it may file suit regarding the health benefit changes. The group says it was not invited to participate in negotiations on the new agreement. LEGISLATIVE ANALYST'S OFFICE ! AN LAO REPORT • ADDRESSING RETIREE HEALTH COSTS: RECOMMENDATIONS AND OPTIONS In this section of the report, we: 9 First discuss the need for the Legislature to take action to ensure that the vast amount of information about retiree health liabilities soon to be released un- der the new accounting rules is disclosed publicly. By doing so, the Legislature will improve the information available to it (and to local and school district leaders) as these issues are considered over the next few years. Next, we recommend prefunding retiree health benefits in order to begin address- ing the state's massive unfunded liabili- ties. Finally, we discuss a range of options that the Legislature may consider if it wishes to reduce future cost increases in retiree health benefits. • More Disclosure and Planning Needed Currently, the Legislature-and other elected officials throughout the state-lack much of the information needed to develop a concrete, long- term strategy for addressing retiree health care liabilities. We recommend the Legislature take several actions to make information on these liabilities easily accessible to policy makers, re- searchers, and the public, Legislative actions also should promote efforts by governments to plan for payment of future retiree health costs. Actuarial Valuation. The State Controller has requested $252,000 in the 2006-07 Budget LEGISLATIVE ANALYST'S OFFICE Bill to obtain a retiree health actuarial valuation for the state, consistent with GASB 45's require- ments. The valuation would provide important information for the Legislature on the magnitude of the state's unfunded liabilities and possible funding options. We recommend approving the State Controller's funding request. Inventory of Retiree Health Liabilities State- wide. As state officials begin the process of eval- uating state government's retiree health liabili- ties, local officials also are beginning the process of complying with GASB 45's requirements. As discussed earlier, GASB 45 will result in govern- ment financial statements having information on retiree health liabilities similar to the information already provided for pension systems. The State Controller already compiles au- dited reports of state and local pension systems. We believe it would be valuable to have GASB 45 liabilities publicly disclosed in a similar fash- ion. For this reason, we recommend enactment of legislation requiring governmental entities in California to submit their actuarial valuations to the State Controller. We also recommend that the State Controller be required to post the valu- ations on the Internet (if governments choose to submit them electronically) and produce a report annually on retiree health liabilities similar to the one produced on the finances of public pension systems. (Any reimbursable state mandated costs under this proposal should be minimal because local governments voluntarily obtain valuations.) School District Recommendations. For some school districts, the size of retiree health 17 0. • AN LAO REPORT • • .7 18 benefit liabilities will be so large that unless steps are taken soon to address the issue, it seems likely that districts will eventually seek financial assistance from the state. For this reason, we reit- erate our recommendations in the Analysis of the 2005-06 Budget Bill (please see page E-50) that the Legislature require county offices of educa- tion (COEs) and school districts to take steps to address school districts' long-term retiree health liabilities. Specifically, we recommend that the Legislature enact legislation to require districts to provide COEs with a plan to address retiree health liabilities. We also recommend that the state's school district fiscal oversight process (the AB 1200 process) be modified to require COEs to review whether districts' funding of retiree health liabilities adequately covers likely costs. We will discuss this issue further in the Educa- tion chapter of the upcoming Analysis of the 2006-07 Budget Bill. UC Recommendations. The UC, indepen- dently of the state, negotiates with its employ- ees concerning compensation and retirement benefits. Historically, the Legislature has opted to appropriate funds to UC to cover increased health benefits costs. Like the state, UC is ex- pected to release its own retiree health valuation (under the terms of GASB 45) by 2008. We rec- ommend that the Legislature request UC-upon completion of the valuation-to propose a long- term plan for addressing unfunded retiree health liabilities. Such a plan would provide the Legis- lature with information regarding the long-term costs of the existing benefits and any measures UC plans to take to lower these costs. Upon receipt of such a plan, the Legislature would be in a much better position to consider whether additional General Fund resources should be provided to address any portion of UC's future retiree health costs. Recommend Creation of Working Group on State Retiree Health Funding. Just as we rec- ommend increased planning and disclosure by school districts and UC, we also recommend the state plan for how it might fund retiree health benefits in the future. Consequently, we recom- mend that the Legislature establish a working group-consisting of representatives from key state agencies-to advance the state's planning. Tasks for this working group might include con- sideration of and recommendations concerning: the types of prefunding vehicles available under state law and federal tax law, possible choices for a state agency or other entity to manage these funds, investment guidelines, the viability of issuing bonds to reduce retiree health liabili- ties, strategies to increase the funding for retiree health benefits paid from federal funds, and op- tions to reduce state costs. We would suggest that the working group pro- vide an interim report to the Legislature on these subjects by January 1, 2008 and a final report by January 1, 2010-following its consideration of the state's first actuarial valuation. In considering the valuation, the working group should review the actuarial assumptions used (for health care inflation and retiree mortality, for example). Rosy assumptions about future health care inflation or investment return could result in a valuation that understates the true magnitude of state liabilities by tens of billions of dollars. For this reason, in its final report, the working group should be required to provide its opinions to the Legislature on the valuation's overall reliability, considering the actu- arial assumptions that are used. LEGISLATIVE ANALYST'S OFFICE • AN LAO REPORT • • • Funding Retiree Health Benefits As discussed above, the state (and almost all other governmental entities in California) pays for the health benefits of retired employees on a pay-as-you-go basis. This means that retiree health services are funded when retirees use them. The alternative is to prefund benefits. If the state and other governments were starting from scratch today and offering retiree health benefits for the first time, prefunding could be accomplished by paying the normal costs each year-the estimated amount that needs to be set aside and invested to pay for health services after employees enter retirement. However, since the state and other governments have offered these benefits for decades and have not set aside funds, they would have to pay considerably more to fully prefund all benefits. As noted previously, GASB 45 requires the cal- culation of a full prefunding annual contribution consisting of: (1) estimated normal costs and (2) an amount needed to retire the unfunded liability for unpaid past normal costs within 30 years. Prefunding is the Approach Used for Pen- sion Systems. Prefunding is the approach the state uses for its current pension systems. The board of CalPERS, for example, requires the state to pay an amount each year that is set aside and invested to prefund future retiree benefits. This annual amount paid to CalPERS is similar to the full prefunding annual contribution that will be calculated under GASB 45. There is virtually no dispute that prefunding is the best way to fund a pension system. The Legislature-and California's voters-have man- dated a prefunding policy for state employee pensions for decades. In 1947, the Legislature adopted a prefunding policy for state employee LEGISLATIVE ANALYST'S 0 FFICE C pensions. At that time, the Legislature enacted laws that began to require actuarially deter- mined contributions to the Public Employees' Retirement Fund. In 1972, the Legislature passed a statute that began to prefund CaISTRS pension benefits under a long-range plan. Reasons to Prefund Retiree Health Benefits. As noted earlier, a pay-as-you-go approach to funding retiree health benefits is problematic in that it shifts current costs to future taxpayers. The alternative-prefunding benefits-not only avoids this problem, but also results in the following: More Economical Over Time. Over the long term, investment earnings would supplement state and any employee or retiree contributions for retiree health costs. This would allow the state to pay for a given level of benefits with fewer budgetary resources and retire unfunded liabilities for retiree health care. Figure 9 (see next page) illustrates the long-term benefits of fully prefunding retiree health benefits by contributing the full annual contributions (normal costs and costs to retire unfunded,liabilities) specified by GASB 45. Paying more now can dramati- cally reduce costs over the long term- Helps Secure the Benefits Expected by Employees. Prefunding creates a pool of assets with which to support future benefits that public employees expect to receive. These assets would strengthen the state's ability to provide these ben- efits over the long term. Contributes to Higher Bond Ratings. Bond rating agencies, whose evaluations help determine the interest rates paid on 19 • AN LAO REPORT • r~ • 20 state debt, monitor the funding status of the retiree health program. There is no indication that rating agencies will rush to downgrade ratings once GASB 45 reveals large retiree health liabilities. However, unfunded pension and retiree health obligations are viewed by bond analysts as similar to debt. For rating agencies and bond investors, more debt can be a nega- tive consideration. As more states and local governments address retiree health liabilities, rating agencies may compare those governments that have acted with others that have not. Partially Prefunding Retiree Health Ben- efits Is an Option. As noted earlier, our rough guess of the state's cost for full prefunding under GASB 45 is in the range of $6 billion annu- ally. That amount would cover the future costs of today's employees, plus pay off the state's unfunded liability over 30 years. Clearly, given the state's budget situa- tion, immediately mov- ing to this level of fund- ing is unrealistic. Another option is funding part of the GASB 45 annual con- tribution. Any amount of prefunding reduces the exposure of the state to future increases in health costs. Investment earn- ings from funds set aside today would help reduce future budget pressures. LAO Recommendation. For the reasons discussed above, we recommend that the Legislature-after receiving the state's actuarial valuation-begin partially prefunding retiree health benefits. Recognizing the state's current fiscal condition, we recommend that the state ramp up to an increased level of contributions over a period of several years. The near-term target should be the state's normal cost level under GASB 45-the amount estimated to cover the cost of future retiree health benefits earned each year by current employees. This amount might be in the range of about $1 billion above what the state spends under the current pay- as-you-go approach. Funding a minimum of the normal cost each year would help reduce the burden of future taxpayers to pay for benefits earned today. Over the much longer term, the Figure 9 Hypothetical Prefunding Scenario Depending on investment returns, _ health care inflation, and other actuarial factors, full prefunding could be less than pay-as-you-go funding 15 to 30 years in the future. Pay-As-You-Go Funding - - Full Prefunding Years LEGISLATIVE ANALYST'S OFFICE 0 AN LAO REPORT • • • state could then begin to address the unfunded liability that has been accumulated over the past half century. Options to Reduce Future Retiree Health Costs The Legislature and other public policy mak- ers-confronted with an accurate accounting of the long-term costs of retiree health benefits under GAS13 45-may wish to consider options to reduce costs. In this section, we discuss such options. Some options would allow continuation of current benefit levels, but perhaps require that employees or retirees bear more of the costs of the benefits. Other options involve reduced benefits. Whether the Legislature would want to pursue these options would depend on a variety of factors, such as: (1) the desired level of com- pensation provided to state employees, (2) the amount of the unfunded liability, and (3) other funding priorities. Consequently, at this point, we make no recommendations as to these options. For Current and Past Employees, Options May Be Limited. The ability of companies and governments to cut retiree health benefits for current and past workers is an evolving area of law, according to sources we consulted dur- ing our research. To the extent that the state has promised employees-in statute, collective bargaining agreements, or elsewhere-that it will pay a portion of their health care during retire- ment as deferred compensation, these benefits may be a vested contractual right of the em- ployee, just as pensions are. The Legislature may have little or no ability to unilaterally alter such vested benefits. For Future Employees, Extensive Options. The Legislature has much more extensive op- LEGISLATIVE ANALYST'S OFFICE tions within the law to reduce or alter retiree health benefits for employees that begin state service in the future. There are many such op- tions, including: )i- Changing the current 100/90 formula for retiree health benefits for future hires and their dependents. Increasing the share of retiree health benefit costs paid by employees (dur- ing their working years) and retirees (through premiums, copayments, deduct- ibles, and similar mechanisms). A Raising the number of years required to vest in retiree health benefits. Establishing a defined contribution pro- gram, to which the state would agree to contribute a set amount of money. This would eliminate the risk of unfunded state liabilities, but shift financial risk to retirees. These types of actions would reduce the state's normal costs for retiree health benefits. Reducing benefits forfuture hires, however, would not change the unfunded liability already incurred for current and past state employees. Moreover, if the state continued paying for retiree health benefits on a pay-as-you-go basis, changing benefits for future hires would only result in savings decades into the future. Reducing state costs by taking the types of actions discussed above may create a "two tier" system of retiree benefits (where one group of state retirees receives a richer benefit package than the other). Such systems can be difficult to administer and can cause conflicts between groups of employees and retirees. In addition, 21 0 AN LAO REPORT • 0 since providing retiree health benefits has been the state's ability to recruit and retain employees an important component of the state's com- in the future without offsetting compensation pensation package for its employees, actions to increases. significantly reduce these benefits could affect CONCLUSION Unfunded retiree Figure 10 health care liabilities of Summary of LAO Findings and Recommendations the state and other public On Retiree Health Liabilities agencies in California are significant, and over the next several years, these Unfunded Liabilities liabilities will be quantified State government retiree health liabilities are likely $40 billion to $70 billion by actuaries and accoun- and perhaps more. tants pursuant to GASB Combined liabilities for the University of California (UC), local governments, and school districts could exceed those of state government. 45. Because of the recent, rapid rise of health care ✓ More Disclosure and Planning • costs, this category of state Recommend approving State Controller's request for $252,000 in 2006-07 to obtain a retiree health actuarial valuation for the state, consistent with liabilities has been grow- GASB 45. ing very rapidly in recent Recommend requiring public entities choosing to obtain valuations to years. Figure 10 summa- submit them to the State Controller. rizes our recommenda- Recommend requiring State Controller to report on retiree health benefits, costs, and liabilities statewide. tions for the Legislature Recommend requiring school districts to develop plans to address retiree to develop a strategy that health liabilities. will begin to address these Recommend requesting UC to propose a plan to address its retiree health unfunded liabilities and re- liabilities. duce costs imposed upon Recommend establishing state working group to report to the Legislature on options for funding and reducing costs of retiree health benefits. future taxpayers. ✓ Funding Retiree Health Benefits Recommend beginning to partially prefund retiree health benefits after receipt of state's retiree health actuarial valuation, ramping up to an increased level of contributions over several years. ✓ Options to Reduce Future Retiree Health Costs Extensive options exist to reduce costs for state employees hired in the future. For costs related to current and past employees, options may be limited. • 22 LEGISLATIVE ANALYST'S OFFICE • • City of Rosemead Managed Care Accessibility Analysis May 30, 2007 A report on the accessibility of the The Principal Plan Dental PPO for the Employees of City of Rosemead The Principal Plan Dental PPO - City of Rosemead i Table of Contents Summary of General Family Dentists . . . . . . . . . . . . . . . . . . . . . . . . 1 All Employees General/Family Providers 2 Dentists within 10 miles With Summary of General Family Dentists . . . . . . . . . . . . . . . . . . . . . . . . 2 All Employees General/Family Providers 2 Dentists within 10 miles Without General and Family Dentists All Employees General/Family Providers 2 Dentists within 10 miles All Summary of Other Specialists All Employees Specialists 2 Specialists within 10 miles With Summary of Other Specialists All Employees Specialists 2 Specialists within 10 miles Without 3 4 5 Other Specialists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 All Employees Specialists 2 Specialists within 10 miles All ZIP Code radius information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 All Employees GeneraVFamily Providers ZIP Code radius information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 All Employees Specialists • i The Principal Plan Dental PPO - City of Rosemead ii Table of Contents County Dentist count detail information . . . . . . . . . . . . . . . . . . . . . . . . 9 All Employees General/Family Providers Orthodontics Specialists Total # of Providers 0 The Principal Plan Dental PPO - City of Rosemead Summary of General Family Dentists • Accessibility analysis specifications Dentist group: General/Family Providers 11,383 Dentists at 6,466 locations (based on 11,383 records) Employee group: All Employees 73 Employees Access standard: 2 Dentists within 10 miles Employees with desired access: 73(100.0%) Average distance to a choice of Dentists for Employees with desired access Number of Dentists 1 2 3 4 5 Miles 03 08 09 1.0 1 1 Key geographic areas Employees with desired access Total number of Average distance city Employees Number Percent to 2 Dentists ROSEMEAD. CA 23 23 100 06 SAN GABRIEL, CA 7 7 100 0.5 ALHAMBRA, CA 5 5 100 06 COVINA, CA 3 3 100 1.4 MONROVIA, CA 3 3 100 1.8 TEMPLE CITY, CA 3 3 100 0.5 ARCADIA, CA 2 2 100 1.1 BALDWIN PARK, CA 2 2 100 0.9 CLAREMONT, CA 2 2 100 1.8 EL MONTE CA 2 2 100 08 's y i • The Principal Plan Dental PPO - City of Rosemead Summary of General Family Dentists Accessibility analysis specifications Dentist group: General/Family Providers 11,383 Dentists at 6,466 locations (based on 11,383 records) Employee group: All Employees 73 Employees Access standard: 2 Dentists within 10 miles Employees without 0(0.0%) desired access: Number of 1 2 3 4 5 Dentists Mines - - - - Key geographic areas Total Employees without desired access city number of Employees Number Percent Average distance to 2 Dentists • The Principal Plan Dental PPO - City of Rosemead General and Family Dentists • All Employees All Employees ZIP Total number of Total number of pct Average distance to Dentists County/City Code Employees Dentists w wo 1 I 2 LOS ANGELES - CA ALHAMBRA 91801 91803 4 1 34 6 100 100 0 0 0.4 0 8 0.4 1 0 ARCADIA 91006 9100 1 1 26 22 100 100 0 0 . 1.1 7 0 . 1.3 0 9 AZUSA 7 91702 91706 1 2 12 26 100 100 0 0 . 0.2 0 9 . 0.8 0 9 BALDWIN PARK BELL 90201 91 04 1 1 27 5 100 100 0 0 . 04 0 7 + . 04 7 0 BURBANK CLAREMONT 5 91711 91722 2 1 8 10 100 100 0 0 . 1.2 9I 0 . 1.8 0 9 COVINA 91724 2 1 100 0 . 13 0 0 . 16 3 0 DIAMOND BAR DOWNEY EL MONTE 91765 90242 91732 1 1 2 21 9 26 100 100 100 0 0 0 . I 05 I 0 7 . 0 E 8 0 GLENDORA 91740 91750 1 1 15 12 100 100 0 0 . 11 4 I 0 . 12 4 0 LA VERNE LOS ANGELES 90002 90022 1 1 0 30 100 100 0 0 . 16 1 0 . 18 1 0 MONROVIA E EL 91016 90640 3 2 8 51 100 100 0 0 . I 1.6 0 3 . 1.8 0 3 MONT B LO MONTEREY PARK PASADENA 91754 91103 2 1 29 2 100 100 0 0 . 02 2 2 . 0.4 2 2 ROSEMEAD 91770 91773 23 2 29 8 100 100 0 0 . 0.5 1 2 . 0.6 1 8 SAN DIMAS SAN GABRIEL 91775 91776 2 5 4 38 100 100 0 0 . 0.6 4 0 . 0.7 5 0 SOUTH EL MONTE EMPLE CITY 91733 91780 1 3 11 14 100 100 0 0 . 03 0 4 . 07 0 5 T WALNUT WEST COVINA - 91789 91790 1 1 15 54 100 100 0 0 . 1.2 0 1 . 1.2 0 7 SAN BERNARDINO - CA . . RIALTO 92377 2 2 100 0 23 23 TOTALS 73 666 100 0 0.7 0.8 Access standard: 2 Dentists within 10 miles Dentist group: General/Family Providers 9 The Principal Plan Dental PPO - City of Rosemead Summary of Other Specialists Accessibility analysis specifications Dentist group: specialists 3,789 Dentists at 1,628 locations (based on 3,789 records) Employee group: All Employees 73 Employees Access standard: 2 specialists within 10 miles Employees with desired access: 73(100.0%) Number of 1 2 3 4 5 Dentists IWles 1.3 1 4 1.6 1 7 1.8 Key geographic areas Employees with desired access Total number of Average distance city Employees Number Percent to 2 Dentists ROSEMEAD, CA 23 23 100 1 3 SAN GABRIEL, CA 7 7 100 0.8 ALHAMBRA, CA 5 5 100 08 COVINA, CA 3 3 100 1,9 MONROVIA, CA 3 3 100 3.1 TEMPLE CITY, CA 3 3 100 1 3 ARCADIA, CA 2 2 100 1.3 BALDWIN PARK CA 2 2 100 2.1 CLAREMONT, CA 2 2 100 1.4 EL MONTE, CA 2 2 100 0.8 The Principal Plan Dental PPO - City of Rosemead Summary of Other Specialists I* Accessibility analysis specifications Dentist group: specialists 3,789 Dentists at 1,628 locations (based on 3,789 records) Employee group: All Employees 73 Employees Access standard: 2 specialists within 10 miles Employees without desired access: 0(0.0%) Number of 1 2 3 4 5 Dentists mks Key geographic areas Total Employees without desired access city number of Employees Number Percent Average distance to 2 Dentists 0 9 The Principal Plan Dental PPO - City of Rosemead 6 Other Specialists All Employees All Employees Total Total Average distance 2IP number of number of Pct to Dentists County/City Code Employees Dentists w wo 1 2 LOS ANGELES - CA ALHAMBRA 91801 91803 4 1 10 0 100 100 0 0 0.5 1 0 03 1 5 ARCADIA 91006 91007 1 1 7 6 100 100 0 0 . 1.3 0 9 . 13 I 1 2 AZUSA 91702 91706 1 2 2 2 100 100 0 0 . 1.9 1 0 . 1.9 2 1 BALDWIN PARK BELL 90201 91504 1 1 3 0 100 100 0 0 . 1.2 1 1 . 1.7 1 1 BURBANK CLAREMONT 91711 91722 2 1 17 8 100 100 0 0 . 1.0 1 4 . 14 1 4 COVINA 91724 9176 2 1 0 16 100 100 0 0 . 21 0 5 I . 2.1 0 5 DIAMOND BAR DOWNEY 5 90242 17 1 2 1 100 0 0 . 04 0 8 . 14 0 8 EL MONTE GLENDORA L VERNE 32 9 91740 91750 1 1 5 0 3 100 100 100 0 0 . 1.6 0 4 . 1.6 0 5 A LOS ANGELES 90002 90022 1 1 0 12 100 100 0 0 . 2.4 6 0 . 2.6 6 0 MONROVIA M EBELLO 91016 90640 3 2 1 23 100 100 0 0 . 2.3 1 7 . 31 0 2 ONT MONTEREY PARK N 91754 91103 2 1 3 0 100 100 0 0 . 0.6 3 0 . 10 1 3 PASADE A ROSEMEAD AN DIMAS ? 91770 91773 23 2 9 13 100 100 0 0 . 1.3 1 7 . 13 1 7 S SAN GABRIEL 91775 2 3 100 0 . 07 0 6 . 09 SOUTH EL MONTE 91776 91733 7 9 5 1 10 3 1 100 100 0 0 0 . 13 1 0 0.7 13 1 3 TEMPLE CITY WALNUT E A 1 80 91789 91 90 3 1 1 1 32 100 100 100 0 0 . 26 1 0 . 2.6 1 ST COVIN W SAN BERNARDINO - CA 7 . ( .1 RIALTO 92377 2 0 100 0 24 24 TOTALS 73 191 100 0 1.3 1.4 Access standard: 2 Specialists within 10 miles Dentist group: Specialists 0 0 The Principal Plan Dental PPO - City of Rosemead ZIP Code radius information Geographic Center Point Analysis Total number of Total number of Dentists within x miles county" aP Code Employees Dentists 8.0 10.0 16.0 20.0 LOS ANGELES - CA ALHAMBRA 91801 91803 4 1 34 6 472 474 746 I 803 1.555 1 709 2,305 427 2 ARCADIA 91006 91007 1 1 26 22 323 365 465 462 , 897 969 , 1,681 ` 1 848 AZUSA P 91702 91706 1 2 12 26 212 373 328 493 737 967 , I 1,242 1 903 BALDWIN ARK BELL URB NK 90201 91504 1 1 27 5 496 368 I 732 604 1,827 1 306 , 2.913 1 912 B A CLAREMONT 91711 91722 2 1 8 10 212 251 287 402 , 470 798 1 , 758 1 420 COVINA 91724 9176 2 1 1 21 234 134 3,47 280 752 807 , 1 1.341 1 563 DIAMOND BAR DOWNEY ELMONTE 5 90242 91732 1 2 9 26 548 433 813 595 1 1,617 1 130 , 2,841 223 2 GLENDORA LA VER E 91740 91750 1 1 15 12 181 153 285 259 , 664 538 , 1,218 876 N LOS ANGELES 90002 90022 1 1 0 30 432 536 777 875 1,872 1 791 2.718 2 852 MONROVIA 91016 906 0 3 2 8 51 267 432 429 764 , 799 1 707 1 , 1,424 774 2 MONTEBELLO MONTEREY PARK 4 91754 91103 2 1 29 2 519 306 832 485 1 , 1,758 1 136 , 2,614 050 2 PASADENA ROSEMEAD SAN DIMAS 91770 91773 23 2 29 8 454 191 659 327 , 1,541 657 , 2,355 082 1 SAN GABRIEL 91775 91776 2 5 4 38 407 478 522 590 1,246 1 495 , 2,055 2 245 SOUTH EL MONTE E T 91733 91780 1 3 11 14 484 393 622 605 , 1,324 1 206 + , 2,428 076 2 TEMPL CI Y WALNUT WEST COVINA 91789 91790 1 1 15 54 236 304 377 450 , 892 957 + , 1,806 1 819 SAN BERNARDINO - CA , RIALTO 92377 2 2 84 130 320 519 Employee group: All Employees Dentist group: General/Family Providers 0 0 The Principal Plan Dental PPO - City of Rosemead ZIP Code radius information Geographic Center Point Analysis Total Total Dentists within x miles number of number of County/city 21P Code Employees Dentists 8.0 10.0 15.0 20.0 LOS ANGELES - CA ALHAMBRA 91801 91803 4 1 10 0 176 164 222 241 511 580 806 850 ARCADIA 91006 91007 1 1 7 6 115 123 164 141 342 I 341 I 585 633 AZUSA L 91702 91706 1 2 2 2 92 127 I 127 165 I 308 372 445 639 BA DWIN PARK BELL N 90201 91504 1 1 3 0 177 111 269 161 616 397 978 595 BURBA K CLAREMONT C V NA 91711 91722 2 1 17 8 93 110 127 155 + 218 298 306 546 I O I 91724 9 6 2 1 0 16 107 74 165 136 268 320 512 610 AMOND BAR D DOWNEY MO E TE 17 5 90242 91732 1 2 1 5 226 146 319 194 557 424 984 793 L N GLENDORA LA VERNE 91740 91750 1 1 0 3 88 69 141 127 252 248 468 333 LOS ANGELES 90002 90022 1 1 0 12 139 152 I 261 300 625 608 929 964 MONROVIA MONTEBELLO 91016 90640 3 2 1 23 101 152 I 165 288 I 300 584 529 930 MONTEREY PARK ADENA PA 91754 91103 2 1 3 0 191 110 I 248 159 I 600 348 897 651 S ROSEMEAD SAN DIMAS 91770 91773 23 2 9 13 167 100 237 160 526 273 I 816 399 SAN GABRIEL 91775 91776 2 5 3 10 I 136 155 I I 158 189 417 510 720 783 SOUTH EL MONTE TEMPLE CITY 91733 91780 1 3 3 1 142 129 I 204 219 451 431 841 733 WALNUT 91789 0 1 1 1 32 132 109 I 160 164 I I 339 326 676 6 6 WEST COVINA SAN BERNARDINO - CA 9179 5 RIALTO 92377 2 0 27 35 128 209 Employee group: All Employees Dentist group: Specialists 0 The Principal Plan Dental PPO - City of Rosemead County Dentist count detail information 40 County detail County Total number of Employees Total number of Dentists Grp.1 Grp.2 Grp.3 Grp.4 LOS ANGELES - CA SAN BERNARDINO - CA 71 2 3,851 472 912 597 61 146 5 236 805 TOTALS 73 4,448 533 1,058 6,041 Dentist group: 1 - General/Family Providers 4 - Total # of Providers Employee group: 2 - Orthodontics All Employees 3 - Specialists