ABOUT LACERA

INSURANCE, BENEFITS & LEGISLATIVE COMMITTEE MINUTES 12-10-09

PRESENT

• Simon S. Russin, Vice Chair
• Edward L. Blecksmith
• Ed C. Morris
• James P. Harris, Alternate

ABSENT

• William de la Garza, Chair

ALSO ATTENDING:

BOARD MEMBERS AT LARGE

• Sadonya Antebi
• Yves Chery
• Les Robbins

STAFF, ADVISORS, PARTICIPANTS

• Lita Payne
• Cassandra Smith

• Mercer Human Resource Consulting
• Clay Levister
• Laurie Silva

The meeting was called to order by Chairman Russin at 11:30 a.m.

1. APPOINTMENT OF VOTING MEMBER(S) IN THE EVENT ONE OR MORE REGULAR COMMITTEE MEMBERS ARE ABSENT

   The Chair appointed Mr. Harris a voting member of the Committee.

2. APPROVAL OF THE MINUTES OF THE SPECIAL MEETING OF NOVEMBER 5, 2009

   A motion was made by Mr. Morris, seconded by Mr. Harris, to approve the minutes of the special meeting of November 5, 2009.

   The motion passed unanimously.

3. ACTION ITEMS
   1. Recommendation as submitted by Lita Payne, Director, Retiree Health Care: Recommend that the Board of Retirement request the Board of Supervisors to support and adopt California Government Code Section 31696.1(b). (Memo dated December 2, 2009)

      LACERA sponsors a comprehensive Long Term Care (LTC) product through MetLife for retired county employees. Providing this Long Term Care product to the active employees of Los Angeles County would facilitate a seamless transition into retirement and could increase employee participation, as well as providing lower premiums and increased eligibility. The coordination and participation of active employees in the LACERA Long Term Care program would require the Board of Supervisors to adopt the County Employees Retirement Law (CERL) Section 31696.1(b). To date, the Board of Supervisors has not made this section operative.

      Any and all administrative expenses incurred would be borne by MetLife. Further, the LTC program would be an extension of the current agreement LACERA has already established. The County would not have to formally sponsor the program nor incur any risk of financial liability.

      A motion was made by Mr. Morris, seconded by Mr. Harris, to approve the recommendation. The motion passed unanimously.

4. FOR INFORMATION
   1. Missing Department Number Project

      While compiling data to be included in the first actuarial valuation of the retiree medical, dental/vision, and life insurance benefits, findings revealed that there were approximately 7,175 records that did not have the County department number that members had been employed in prior to retirement. The department numbers are a necessary component of the member record due to the employer’s liability associated with healthcare costs. While there is no impact to our members, there may be an impact to the County and/or the outside district(s).

      Up to this point, the employer’s portion had been fully paid by the County. However, some accounts were paid incorrectly by the County. This project was undertaken to ensure that the employer’s portion on the identified accounts was being billed to the appropriate party.

      All of the 7,175 records have been researched and are now in the process of being updated. Of the total records researched only two of the outside districts were actually affected, for a total of 81 employees. The findings were communicated to the two districts and to the County CEO staff. Per the County’s request, for members found to be a retiree of one of these outside districts, the employer portion of the billing is being transferred from the County to the outside district on a time forward basis. An accurate reflection of the employer portion for the 81 employees identified is in the process of being made and will now be appropriately billed to the responsible agency.

   2. Staff Activities Report for November, 2009

      The staff activities report was discussed.

   3. CIGNA & Anthem Blue Cross Claims Experience

      The CIGNA & Anthem Blue Cross Claims Experience reports through October, 2009 were discussed.

   4. Health Care Reform

      Clay Levister discussed the November 17 Mercer webcast on health care reform. Topics included employer reactions to proposed mandates on excise taxes on generous plans, and a special focus on retiree health care.

      The 40% excise tax on “generous” coverage (e.g. $8,000/single coverage and $21,000/family coverage) would be based on the Consumer Price Index (CPI), which is significantly lower than the cost of inflation. Based on Mercer’s national surveys, 25% of all employers will be subject to a surcharge in 2013. Over time that number will grow, depending on size and benefits. When asked how they would respond to an excise tax, almost two-thirds of employers would cut benefits to avoid paying the tax, increasing deductibles and co-insurance. About one-fourth would shift the tax to their employees. Virtually none of the employers would absorb the higher cost themselves.

      Additional issues that will only affect retiree coverage offered by employers are:

      • Benefit offerings
      • Limitations on plan cuts
      • Part D changes
      • Medicare Advantage
      • Excise tax on Cadillac plans
      • Pre-Medicare retirees

      A larger number of participants are enrolled in Medicare Advantage programs. Currently, capitation payments that CMS makes to Medicare HMOs are, on average, greater than the cost of Medicare fee-for-service. Reduction in subsidies to Medicare Advantage plans could lead to large increase in premiums or benefit reductions. There could also potentially be reductions in service areas.

   5. Federal Legislation
      • Weekly Highlights – November 30, 2009
      • Weekly Highlights – November 23, 2009
      • Weekly Highlights – November 16, 2009
      • Weekly Highlights – November 9, 2009
      • Weekly Highlights – November 2, 2009
5. MISCELLANEOUS
6. PUBLIC COMMENT
7. GOOD OF THE ORDER

   (For discussion purposes only)

8. ADJOURNMENT

The Board of Retirement has adopted a policy permitting any member of the Board to attend a standing committee meeting open to the public. In the event five or more members of the Board of Retirement (including members appointed to the Committee) are in attendance, the meeting shall constitute a joint meeting of the Committee and the Board of Retirement. Members of the Board of Retirement who are not members of the Committee may attend and participate in a meeting of a Board Committee but may not vote on any matter discussed at the meeting. The only action the Committee may take at the meeting is approval of a recommendation to take further action at a subsequent meeting of the Board.

Documents distributed to members of the Committee less than 72 hours prior to the meeting will be available for public inspection at LACERA at the time they are distributed to a majority of the Committee, provided the documents are subject to public disclosure and relate to an open session of the Committee. Such documents may be viewed Monday through Friday during normal 9:00 a.m. to 5:00 p.m. business hours. LACERA is located at 300 N. Lake Avenue, Suite 820, Pasadena, California.

Persons requiring an alternative format of this agenda pursuant to Section 202 of the Americans with Disabilities Act of 1990 may request one by calling Cynthia Guider at (626)-564-6000, from 8:30 a.m. to 5:00 p.m. Monday through Friday, but no later than 48 hours prior to the time the meeting is to commence. Assistive Listening Devices are available upon request. American Sign Language (ASL) Interpreters are available with at least three (3) business days notice before the meeting date.

12/10/09