HomeMy WebLinkAboutStaff Report 2501-3983CITY OF PALO ALTO
CITY COUNCIL
Regular Meeting
Monday, March 17, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
7.Approval of Professional Services Contract Number C25191558 with Life Insurance
Company of North America, a wholly owned subsidiary of New York Life Insurance
Company, in an Amount Not to Exceed $2,369,216 to Provide Group Life Insurance,
Accidental Death and Dismemberment and Long-Term Disability to City of Palo Alto
Employees for a Period of Three Years; CEQA Status - Not a Project.
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Human Resources
Meeting Date: March 17, 2025
Report #:2501-3983
TITLE
Approval of Professional Services Contract Number C25191558 with Life Insurance Company of
North America, a wholly owned subsidiary of New York Life Insurance Company, in an Amount
Not to Exceed $2,369,216 to Provide Group Life Insurance, Accidental Death and
Dismemberment and Long-Term Disability to City of Palo Alto Employees for a Period of Three
Years; CEQA Status - Not a Project.
RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or their designee to
execute Contract No. C25191558 (Attachment D) with Life Insurance Company of North
America, a wholly owned subsidiary of New York Life Insurance Company, to provide Group Life
Insurance, Accidental Death and Dismemberment and Long-Term Disability to City of Palo Alto
employees for a term of three years and total not-to-exceed $2,369,216.
BACKGROUND
As part of the employee benefits package, the City of Palo Alto contracts with a third-party
administrator to provide Group Life Insurance, which includes Basic and Voluntary Life
Insurance, Long-Term Disability (LTD) and Accidental Death and Dismemberment (AD&D)
insurance. The current provider that the City contracts with is New York Life Insurance
Company (NYL).
•Life Insurance and AD&D benefits provide financial security to employee’s families in the
event an employee passes away.
•LTD benefit provides income replacement to employees if they are injured and unable
to work due to a non-job-related injury.
Existing agreements with City employee bargaining units provide for maintaining these
standard benefit policies. A summary of current benefit levels is shown in Attachment A. The
provider of this benefit underwrites the City’s basic and voluntary life insurance, AD&D, and
LTD benefits. While the City pays for basic life insurance coverage for its employees, employees
can choose to purchase voluntary life insurance plan. For LTD, employees and the City
contribute towards the cost of the plan. The cost share for LTD is based on agreements
between City and bargaining units.
ANALYSIS
Table 1: Summary of Request for Proposal
Proposal Description Request for Proposal for Life Insurance, AD&D
and LTD Benefit
Proposed Length of Project
Number of Vendors Notified
Number of Proposal Packages Downloaded
Total Days to Respond to Proposal
Pre-Proposal Meeting
Pre-Proposal Meeting Date
Number of Proposals Received
Proposal Price Range
Voluntary Life Insurance
four providers submitted quotes for spousal and children voluntary life insurance. While the
maximum coverage amounts were consistent across all providers, NYL presented the most
competitive overall quotes for both spousal and children’s coverage.
Attachment B for a detailed summary of the current benefits and the proposed
enhancements to the voluntary life insurance program.
Long Term Disability (LTD)
Attachment C provides details on
current benefit levels. To enhance this benefit, the City explored options to reduce the waiting
period before benefits start and to increase the maximum monthly amount that the LTD benefit
pays out to employees. The City does not have a Short-Term Disability program, nor does it pay
into State Disability (SDI) insurance. Lack of these two programs was a driving factor in
decreasing the waiting period for benefits to begin from 60 days to 45 days. Two of the four
providers submitted quotes that decreased the waiting period from 60 to 45 days before
benefit payments start, and to raise the maximum monthly benefit amount. Voya, and Lincoln
declined to provide a quote that decreased the waiting period from 60 days to 45 days. NYL
presented the most competitive quote, providing a 20% cost reduction while enhancing the
benefits compared to the current offerings.
Attachment C for a detailed summary of the current benefits and the proposed
enhancements to the Long-Term Disability program.
FISCAL/RESOURCE IMPACT
The rates for group life, AD&D, and LTD insurance policies are based on the number of City
employees, and on the current salary of employees. With a three-year rate guarantee, the
annual rate would not increase, however the total annual premium for group life, AD&D and
LTD will vary based on changes to employee salaries and enrollment numbers. Cost for
Voluntary Life Insurance plans will be paid by employee via payroll deductions. Cost of LTD
plans will be a shared cost between employees and the City.
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY: