Exhibit M - City of Madison Needs Analysis.pdf

Exhibit M

Life & Wage Insurance Needs Analysis Report

Background

This report aims to assess the current state of life and wage insurance for the City of Madison, highlighting opportunities for improvement and key areas of focus in the program and to help guide in carrier selection. This document is intended to be a high-level summary, not an exhaustive recap of the program.

Life Insurance:

The City of Madison currently offers a life insurance program based on multiples of salary for employees and flat dollar amounts for dependents. Dependents are defined as children up to the age of 21 or 25 if enrolled as full-time students along with spouses until age 65. This coverage is primarily funded by employees with coverage being provided at no cost for active employees aged 70 or older.

Life insurance is also available for retirees subject to age reductions. Accidental Death and

Dismemberment benefits are included in the existing contract but are not currently being offered to employees or dependents. Evidence of insurability is not needed for elections made within 31 days of eligibility and is required for all increases outside of that period. Premiums are based on age groupings. There are several value-added services embedded in the life insurance offering, including estate guidance, will preparation, travel and identity theft assistance, along with funeral assistance and beneficiary support services. Hartford is the current administrator of this program.

Life Insurance: Needs

➢ Financially stable claims administration o Ensure the insurance provider has a strong financial rating o Proven track record of meeting claims obligations

➢ High-quality, responsive customer service o 24/7 customer support availability o Multiple contact channels (phone, email, chat, online portal) o Dedicated account manager for the City of Madison o Regular performance reviews and service level guarantees

➢ Rapid payment of life insurance claims o Quick turnaround time for claim decisions (e.g., within 5-10 business days) o Option for expedited payments in cases of financial hardship o Regular updates on claim status to beneficiaries

➢ Easy enrollment process and a high guarantee issue amount for employees and dependents o User-friendly online enrollment platform o Clear and concise enrollment materials and instructions

➢ Robust, easy to understand benefit offerings o Clear explanation of coverage options and amounts o Illustrative examples of how benefits work in various scenarios o Employee education materials on life insurance benefits should be provided in a variety of formats and channels

➢ Portability and conversion options o Clear guidelines for continuing coverage after leaving employment o Competitive rates for converted policies

➢ Support for beneficiaries o The plan should offer assistance for beneficiaries and surviving family members dealing with the loss of a loved one

Life Insurance: Considerations and Recommendations

➢ Change age of dependents covered by the plan to age 26 for ease of administration

➢ Outsource administration of retiree life insurance premium collection

➢ Offer employees the chance to purchase Accidental Death and Dismemberment coverage in amounts matching the life insurance election

➢ Consider offering life insurance in dollar increments for employees as well as spouses and dependents o Increase the amount of coverage available for spouses & dependents

➢ Consider offering employer paid life insurance for active employees, potentially as an alternative to free retiree life insurance

Wage Insurance:

The City of Madison provides wage insurance in the form of short and long-term disability coverage, also known as income continuation insurance. This program is funded by a mix of employer and employee money dependent on use of sick leave in the prior 12-month calculation period and accumulated sick leave balance. Taxation of benefits is impacted by the source of the premium. The short-term plan offers a weekly benefit of 65% of pre-disability earnings or $1,875. Short term disability benefits are payable after sick leave has been exhausted on the 1st day for injury and the 8th day for sickness and are payable for up to 156 weeks. The long-term disability plan pays out a 65% benefit to a monthly maximum of $8,175. Benefits are payable after a 156-week elimination period and are paid until Social Security Normal Retirement Age. Evidence of insurability is not needed for elections made within 31 days of eligibility and is required for all elections outside of that period.

Hartford is the current administrator of this program.

Wage Insurance: Needs

➢ Financially stable claims administration o Strong financial ratings and adequate reserves o Regular financial audits and transparency in financial reporting

➢ High-quality, responsive customer service o Dedicated claims representative familiar with the City's plan o Multiple communication channels for claim inquiries o Proactive outreach to claimants throughout the claims process o Backed by financial performance guarantees

➢ Streamlined options for claims submission o User-friendly online claims portal o Option for paper claims for those who prefer it o Clear instructions and support for claim documentation requirements

➢ Appropriate income replacement o Regular review of benefit levels to ensure they meet employee needs o Consideration of cost-of-living adjustments for long-term claims o Options for employees to purchase additional coverage if desired

➢ Transparency in decision making o Clear communication of claim decisions and rationale o Transparent appeals process with defined timelines o Regular reporting on claim approval rates and reasons for denials

➢ Strong contractual coverage provisions o Clear definitions of disability and covered conditions o Favorable provisions for partial disability and return-to-work scenarios o Minimal exclusions and limitations o Regular review and updates of policy language to align with industry best practices

➢ Robust coverage for mental health related disabilities o Parity in coverage for mental health and physical health conditions o Access to mental health resources and support services o Specialized claims handling for mental health-related disabilities o Collaboration with mental health professionals in claim evaluations

➢ Integration with absence management o Coordination with FMLA and other leave programs o Single point of contact for all absence-related matters

➢ Return-to-work support o Proactive case management to facilitate return to work o Coordination with City's HR department on return-to-work planning

➢ Data analytics and reporting o Regular reporting on claim trends and utilization o Benchmarking o Insights to help improve program design and employee health outcomes

Wage Insurance: Considerations and Recommendations

➢ Short-Term Disability:

o Consider moving to a more standard benefit duration o Evaluate the feasibility of a base/buy-up approach to benefit amount or elimination period o Evaluate a simpler structure for determining employer/employee cost o Consider alternative benefit percentage - 66 & 2/3rd, 70% o Evaluate transitioning to a partial definition of disability from the current total disability definition o Evaluate the first and second order impact of removing the requirement to use sick leave prior to receiving STD benefits

▪ Based on current benefits Hartford projects a 105% increase to STD costs if the need to use sick leave were removed entirely with no other benefit changes

▪ This drops to 30% if the requirement was dropped exclusively for maternity claims o Evaluate interaction between Duty Disability coverage provided by the state and city

➢ Long-Term Disability:

o Consider moving to a more standard benefit elimination period o Evaluate the feasibility of a base/buy-up approach to benefit amount or elimination period o Evaluate a simpler structure for determining employer/employee cost o Consider alternative benefit percentage - 66 & 2/3rd, 70%