Subject: Medical Coverage for Children Under A Guardianship Arrangement
Approval of an ordinance amending Section 3.28.1980 of Chapter 3.28 of Title 3 of the San Jose Municipal Code (Federated City Employees’ Retirement System) to permit surviving spouses to continue medical coverage for children under a guardianship arrangement.
BACKGROUND
The Federated City Employees’ Retirement System provides paid medical insurance coverage for retirees, their spouses and children. A retiree may include a minor child for whom the retiree is a guardian. When the retiree dies, the surviving spouse can elect to continue medical insurance coverage for the spouse and the retiree’s surviving children. However, under the current provisions of the Plan the surviving spouse can not continue coverage for those minor children who are under guardianship. The proposed ordinance would allow the surviving spouse to continue coverage for those children by electing family coverage and paying the increased costs of the medical insurance premiums.
The issue was brought before the Federated Retirement Board. The Board commissioned an actuarial study to determine the financial impact of offering a family health insurance option to survivors in guardianship cases. The Board’s actuary, Watson Wyatt Worldwide, reported that offering this option would add no additional cost to the Plan.
The rationale supporting the actuary’s conclusion is as follows:
Ø If there is an increase in the premiums because of continued coverage of the affected minor children, the increase would be entirely paid by the surviving spouse, not by the City or the Retirement Plan;
Ø The medical insurance premiums are the same as those that would be charged to cover the retiree’s eligible surviving children; and
Ø The health coverage provider deems the family coverage premiums to be sufficient to cover these children in advance of the retired member’s death.
Not applicable.
This memorandum has been coordinated with the City Attorney’s Office and the Office of Employee Relations. The Office of Employee Relations has provided a copy of the proposed ordinance to all of the bargaining groups that are covered under the Plan. The bargaining units have not objected to this Plan change.
The actuary concluded that providing the family health insurance option would not create a cost to the Plan.
Not applicable
EDWARD F. OVERTON
Secretary, Board of Administration