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HomeMy WebLinkAboutCMR- 472-02of Palo Alto C ty Manager's Repor TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: HUMAN RESOURCES DATE: SUBJECT: DECEMBER 16, 2002 CMR: 472:02. APPROVAL OF RESOLUTIONS AMENDING MEMORANDA OF AGREEMENT AND COMPENSATION PLANS IN ACCORDANCE WITH AGREEMENTS BETWEEN CITY AND EMPLOYEE GROUPS TO ADOPT CITY OF PALO ALTO'S PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR 2003 RECOMMENDATION This report recommends that the Council approve the attached resolutions amending the memorandum of agreement with each bargaining unit, and amending each of the City's compensation plans, to implement the City's agreements with each of the bargaining units and with management!confidential employees to adopt the City of Palo Alto's Public Employees' Retirement System (PERS) Choice / Peace Officers Research Association of California (PORAC) Medical Incentive Plan for calendar year 2003. DISCUSSION Earlier this year, CalPERS announced that as of January 1, 2003, health premiums would be increased significantly. Premiums for the Basic Health Maintenance Organization (HMO) Plans increased 25.9%, the Basic PERS Care Preferred Provider Organization (PPO) plan increased 22.1% and the Basic PERS Choice PPO plan increased 18.9%. The estimated impact on the City' s budget was estimated to be an increase of $1,700,000 for calendar year 2003. To address the immediate problem of skyrocketing health plan costs, the City held meetings with each of the employee bargaining groups. After evaluating several options, the City reached agreement with each of the employee groups to develop and implement a medical incentive plan in which employees currently enrolled in the most expensive PPO plan, PERS Care, would receive a cash incentive for electing a lower cost PPO health plan. Management and Confidential and Service Employees International Union, Local 715 (SEIU) employees enrolled in the PERSCare PPO option could elect to enroll in the lower cost PERS Choice PPO option during the Open Enrollment period and receive a cash incentive. Police and Fire employees enrolled in the PERSCare PPO option could CMR: 472:02 Page 1 of 3 elect the PERS Choice PPO or the PORAC PPO option and receive a cash incentive. The City also agreed to pay the annual PORAC dues in the amount of $21 for firefighters so they would be eligible for the PORAC medical plan. The following tables illustrate the differences in premiums between the PPO plans and the City's health cost avoidance per employee who elected to switch to a lower cost PPO plan: Monthly Savings for Management and Confidential / SEIU Empl~ PERSCare PERS Choice Difference Incentive Employee $ 548.00 $296.00 $252.00 $100.00 Two-Party $1,096.00 $592.00 $504.00 $200.00 Family $1,425.00 $770.00 $655.00 $275.00 ~yees Savings $152.00 $304.00 $380.00 Employee Two-Party Family Monthly Savin. PERSCare $ 548.00 $1,096.00 $1,425.00 s for Police and Firefighter Employees PORAC Difference Incentive $363.00 $185.00 $100.00 $667.00 $429.00 $200.00 $847.00 $578.00 $275.00 Savings $ 85.00 $229.00 $3O3.00 During the open enrollment period, employees currently enrolled in the more costly PERS Care PPO health plan were given the option of staying in that plan, with the City continuing to pay 100% of the premiums, or electing to enroll instead in an available lower cost PPO (PERS Choice PPO, in the case of management and SEIU, and either the PERS Choice or the PORAC PPO, in case of police and fire employees) and receive a cash incentive. The attached table (See Attachment 6) shows the total cost avoidance for the City of Palo Alto for calendar year 2003. RESOURCE IMPACT The City will have a cost avoidance for calendar year 2003 of approximately $820,000 POLICY IMPLICATIONS This request does not represent any change to existing City policy. ENVIRONMENTAL REVIEW This is not a project under the California Environmental Quality Act (CEQA). ATTACHMENTS Attachment 1 -Resolution amending Merit System Rules and Regulations regarding the Memorandum of Agreement between the City of Palo Alto and SEIU and likewise amending the related Compensation Plan CMR: 472:02 Page 2 of 3 Attachment 2 - Attachment 3 - Attachment 4 - Attachment 5 - Attachment 6 - Resolution amending Merit System Rules and Regulations regarding the Memorandum of Agreement between the City of Palo Alto and the Palo Alto Peace Officers' Association, and likewise amending the related Compensation Plan Resolution amending Merit System Rules and Regulations regarding the Memorandum of Agreement between the City of Palo Alto and Local 1319, International Association of Fire Fighters, and likewise amending the related Compensation Plan Resolution amending Merit System Rules and Regulations regarding the Memorandum of Agreement between the City of Palo Alto and the Palo Alto Fire Chief's Association, and likewise amending the related Compensation Plan Resolution Adopting an Amended Compensation Plan for Management and Confidential Personnel and Council-Appointed Officers Citywide Health Care Choice Option Analysis PREPARED BY Leonard Zucker, Benefits Manager DEPARTMENT HEAD:~~ LESLIE LOOMIS Director of Human Reso.u,~ CITY MANAGER APPROVAL~~ ~/~e~-~v ~ Assistant City Manager CMR: 472:02 Page 3 of 3 follows: RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMEkrDING THE COMPENSATION PLAN FOR. MANAGEMENT AND CONFIDENTIAL PERSONNEL AND COUNCIL APPOINTED OFFICERS ADOPTED BY RESOLUTION NO. 8194, AND AMENDED BY RESOLUTION NO. 8223, TO ADD THE CITY OF PAL0 ALTO'S PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Palo Alto does RESOLVE as SECTION !. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Management Compensation Plan, adopted by Resolution No. 8194, and amended by Resolution No. 8223, is hereby amended by adding the PERS Choice/PORAC Medical Incentive Plan for 2003, as set forth in Exhibit "!", attached hereto and incorporated herein by reference. SECTION 2. The Director of Administrative Services is authorized to implement the amended compensation plan as set forth in Section !. SECTION 3. The Council finds that this is not a project under the California Environmenta! Quality Act and, therefore, no environmenta! impact assessment is necessary. INTRODUCED AAID PASSED : AYES : NOES : ABSENT : ABSTENTIONS : ATTEST : City Clerk APPROVED AS TO FORM: Mayor APPROVED: Senior Asst. City Attorney City Manager Director of Administrative Services 021211 cl 8120306 Director of Human Resources 2003 MEDICAL INCENTIVE PLAN FOR MANAGEMENT & CONF!DENTLAL The following is a summary of the 2003 Medical Incentive Plan for active Management & Confidential employees. Be sure to refer to the PERSCare and PERS Choice Evidence of Coverage booklets for more detailed medical plan information. Active Management & Confidential employees currently enrolled in PERSCare or electing the PERSCare medical plan coverage for calendar year 2003 on or before October 15, 2003 may voluntarily elect PERS Choice coverage for 2003 and receive a cash incentive payment for each month they remain covered under the PERS Choice medical plan. The monthly incentive payment each member will receive will be equal to $100.00 for an employee with single coverage, $200.00 for an employee and one dependent coverage and $275.00 for family coverage. The cash incentive will paid biweekly, is taxable but not PERSable income. Exhibit RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMEAIDING THE COMPENSATION PLAN FOR FIRE CHIEFS' ASSOCIATION MANAGEMENT PERSONNEL ADOPTED BY RESOLUTION NO. 8125, TO ADD THE CITY OF PALO ALTO'S PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Paio Alto does RESOLVE as follows: SECTION i.Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Compensation Plan for Fire Chiefs' Association Management Personnel, adopted by Resolution No. 8125, is hereby amended by adding the PERS Choice/PORAC Medical Incentive Plan for 2003, as set forth in Exhibit ~A", attached hereto and incorporated herein by reference. SECTION 2. The Director of Administrative Services is authorized to implement the amended compensation plan as set forth in Section I. SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FO~M: Mayor APPROVED: Senior Asst. City Attorney City Manager Director of Administrative Services 021211 c! 8120310 Director of Human Resources SIDE LETTER TO MEMORANDUM OF AGREEMENT BETWEEN CITY OF PALO ALTO AND EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Palo A!to's Memorandum of "Agreement with each of its recognized bargaining units, including Local 715A, SEIU; Local 1319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, the City has agreed to pay the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Employers' Medical and Hospital Act (~PEMHCA") during the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for employee and dependent health insurance under the PEFIHCA plan options has increased by an average of 22% for the year commencing January !, 2003; WHEREAS, in view of the City's current budget picture and the large increases in employee health care costs the City faces in 20d3 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its employees and employee interests; WHEREAS, both the City and participating employees can benefit financially from the 2003 PERS Choice/PORAC medica! incentive plan, under which employees enrolled in the highest- cost PERS Care PP0 plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Employees, the PORAC PPO Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Palo Alto and each of its recognized bargaining units, including Local 715A, SEIU; Local 1319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Pa!o Alto Fire Chiefs' Association, have agreed to add to their respective Memorandum 021211 cl 8120295 !Exhibit "A" of Agreement and Compensation Alternate Medica! Benefit Plan, description applicable to the (Exhibit ! hereto). Plan the PERS Choice/PORAC as described in the plan respective bargaining group SEIU Representative Date Mayor Date IAFF Representative Date PAPOA Representative Date Paio Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 2 LOCAL 1319/PALO ALTO FIRE CHIEF'S ASSOCIATION 2003 MEDICAL INCENTIVE PLAN The following is a summar3, of the 2003 Medical Incentive Plan for active employees of the International Association Of Fire Fighters (IAFF, Local 1319) and Palo Alto Fire Chief's Association. Be sure to refer to the PERSCare, PERS Choice and/or PORAC Poiice and Fire Health Plan Evidence of Coverage booklets for more detailed medical plan information. For active members of the IAFF, Local 1319 and Palo Alto Fire Chief's Association enrolled in the PORAC Police & Fire Health Plan(PORAC) in calendar year 2003, the City shall self insure the difference in the "Maximum Calendar Year Copayment Responsibility"/Out-of-Pocket maximum between PERSCare Medical Plan and PORAC Prudent Buyer Plan. PERSCare's maximum copayment responsibility per calendar year is two thousand ($2,000) per plan member, not to exceed four thousand ($4,000) per family. PORAC's maximum copayment responsibility is $5,000 per person. Employees and dependents enrolled in PORAC may submit eligible expenses incurred during the 2003 calendar year that exceed $2000 per member/S4000 per family for covered services received from a preferred provider to the Human Resources Department for reimbursement. For example, Employee A is in PORAC as an individual member. He/she has to pay $4000.00 of covered out-of-pocket expenses during the 2003 calendar year under the PORAC plan. If Employee A had been in PERS Care, he/she would have reached his/her out-of-pocket maximum at $2000.00. Under the self insurance plan, Employee A shall submit to Human Resources the Explanation of Benefit from Blue Cross for the additional out-of-pocket services and this amount shall be reimbursed. The City agrees to pay the annual dues to PORAC in the amount of $21.00 to insure their eligibility in the PORAC medical plan. Exhibit i RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE COMPENSATION PLAN FOR CLASSIFIED PERSONNEL (SEIU)ADOPTED BY RESOLUTION NO.8056,AND AIVIENDED BY RESOLUTION NOS. 8059 AAID 8141,TO ADD THE CITY OF PALO ALTO'S PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Palo Alto does RESOLVE as follows: SECTION i. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto,the Compensation Plan for Classified Personnel, adoptedby Resolution No. 8056, and amended by Resolution Nos. 8059and 8141, is hereby amended by adding the PERS Choice/PORAC Medical Incentive Plan for 2003, as set forth in Exhibit "A", attached hereto and incorporated herein by reference. SECTION 2. The Director of Administrative Services is authorized to implement the amended compensation plan as set forth in Section i. SECTION 3. The Council finds that this is not a project under the California Environmenta! Quality Act and, therefore, no environmenta! impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO Senior Asst. City Attorney City Manager Director of Administrative Services 021211 c| 8120307 Director of Human Resources SIDE LETTER TO FfEMORANDUM OF AGREEMENT BETWEEN CITY OF PAL0 ALTO AND EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PAL0 ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Palo A!to's Memorandum of Agreement with each of its recognized bargaining units, including Local 715A, SEIU; Local 1319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, the City has agreed to pay the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Employers' Medical and Hospital Act ("PEMHCA") during~the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for employee and dependent health insurance under the PEFIHCA plan options has increased by an average of 22% for the year commencing January !, 2003; WHEREAS, in view of the City's current budget picture and the large increases in employ.ee health care costs the City faces in 2003 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its employees and employee interests; WHEREAS, both the City and participating employees can benefit financially from the 2003 PERS Choice/PORAC medical incentive plan, under which employees enrolled in the highest- cost PERS Care PP0 plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Emp!oyees, the PORAC PPO Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Palo Alto and each of its recognized bargaining units, including Local 7!5A, SEIU; Local 1319, International Association of Fire Fighters; the Pa!o Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, have agreed to add to their respective Memorandum 021211 cl 8120295 1 Exhibit ~A" of Agreement and Compensation Alternate Medical Benefit Plan, description applicable to the (Exhibit 1 hereto). Plan the PERS Choice/PORAC as described in the plan respective bargaining group SEIU Representative Date Mayor Date IAFF Representative Date PAPOA Representative Date Palo Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 2003 MEDICAL INCENTIVE PLAN FOR SEIU The following is a summary of the 2003 Medical Incentive Plan for Service Employees International Union, Local 715 (SEIU) employees. Be sure to refer to the PERSCare and PERS Choice Health Plan Evidence of Coverage booklets for more detailed medical plan information. Active SEIU employees currently enrolled in PERSCare or electing the PERSCare medical plan coverage for calendar year 2003 on or before October 15, 2003 may voluntarily elect PERS Choice coverage for 2003 and receive a cash incentive payment for each month they remain covered under the PERS Choice medical plan. The monthly incentive payment each member will receive will be equal to $100.00 for an employee with single coverage, $200.00 for an employee and one dependent coverage and $275.00 for family coverage. The cash incentive will paid biweekly, is taxable but not PERSable income. Exhibit 1 follows : RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE COMPENSATION PLAN FOR FIRE DEPARTMENT PERSONNEL (IAFF)ADOPTED BY RESOLUTION NO.8030,TO ADD THE CITY OF PALO ALTO'S PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Palo Alto does RESOLVE as SECTION !. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Compensation Plan for Fire Department Personne!, adopted by Resolution No. 8030, is hereby amended by adding the PERS Choice/PORAC Medical Incentive Plan for 2003, as set forth in Exhibit "A", attached hereto and incorporated herein by reference. SECTION 2. The Director of Administrative Services is authorized to implement the amended compensation plan as set forth in Section i. SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Senior Asst. City Attorney City Manager Director of Administrative Services Director of Human Resources 021211 cl 8120308 SIDE LETTER TO MEMORANDUM OF AGREEMENT BETWEEN CITY OF PALO ALTO AND EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Palo Alto's Memorandum of Agreement with each of its recognized bargaining units, including Local 7!5A, SEIU; Loca! !319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, the City has agreed to pay ~the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Employers' Medical and Hospita! Act ("PEMHCA") during the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for employee and dependent health insurance under the PEMHCA plan options has increased by an average of 22% for the year commencing January i, 2003; WHEREAS, in view of the City's current budget picture and the large increases in employee health care costs the City faces in 2003 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its employees and employee interests; WHEREAS, both the City and participating employees can benefit financially from the 2003 PERS Choice/PORAC medical incentive plan, under which employees enrolled in the highest- cost PERS Care PPO plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Employees, the PORAC PPO Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Palo Alto .and each of its recognized bargaining units, including Local 715A, SEIU; Local 13!9, International Association of Fire Fighters; the Paio Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, have agreed to add to their respective Memorandum 021211 cl 8120295 i Exhibit of Agreement and Compensation Alternate Medical Benefit Plan, description applicable to the (Exhibit 1 hereto). Plan the PERS Choice/PORAC as described in the plan respective bargaining group SEIU Representative Date Mayor Date IAFF Representative Date PAPOA Representative Date Palo Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 2 IAFF, LOCAL 1319/PALO ALTO FIRE CHIEF'S ASSOCIATION 2003 ~ICAL INCENTIVE PLAN The following is a summary of the 2003 Medical Incentive Plan for active employees of the International Association Of Fire Fighters (IAFF, Local 1319) and Palo Alto Fire Chief's Association. Be sure to refer to the PERSCare, PERS Choice and/or PORAC Police and Fire Health Plan Evidence of Coverage booklets for more detailed medical plan information. For active members of the IAFF, Local 1319 and Palo Alto Fire Chief's Association enrolled in the PORAC Police & Fire Health Plan(PORAC) in calendar year 2003, the City shall self insure the difference in the "Maximum Calendar Year Copayment Responsibility"/Out-of-Pocket maximum between PERSCare Medical Plan and PORAC Prudent Buyer Plan. PERSCare's maximum copayment responsibility per calendar year is two thousand ($2,000) per plan member, not to exceed four thousand ($4,000) per family. PORAC's maximum copayment responsibility is $5,000 per person. Employees and dependents enrolled in PORAC may submit eligible expenses incurred during the 2003 calendar year that exceed $2000 per member/S4000 per family for covered services received from a preferred provider to the Human Resources Department for reimbursement. For example, Employee A is in PORAC as an individual member. He/she has to pay $4000.00 of covered out-of-pocket expenses during the 2003 calendar year under the PORAC plan. If Employee A had been in PERS Care, he/she would have reached his/her out-of-pocket maximum at $2000.00. Under the self insurance plan, Employee A shall submit to Human Resources the Explanation of Benefit from Blue Cross for the additional out-of-pocket services and this amount shall be reimbursed. The City agees to pay the annual dues to PORAC in the amount of $21.00 to insure their eligibility in the PORAC medical plan. Exhibit 1 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PAL0 ALTO AMENDING THE COMPENSATION PLAN FOR POLICE NON-MANAGEME/qT PERSONNEL ADOPTED BY RESOLUTION NO. 8082, TO ADD THE CITY OF PALO ALTO'S PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Paio Alto does RESOLVE as follows: SECTION !. Pursuant to the provisionsof Section 12 of Article III of the Charter of the City of Palo Alto, the Compensation Plan for Police Non-Management Personnel, adopted by Resolution No. 8082, is hereby amended by adding the PERS Choice/PORAC Medical Incentive Plan for 2003, as set forth in Exhibit "A", attached hereto and incorporated herein by reference. SECTION 2. The Director of Administrative Services is authorized to implement the amended compensation plan as set forth in Section i. SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FO~M: Mayor APPROVED: Senior Asst. City Attorney City Manager Director of Administrative Services Director of Human Resources 021211 cl 8120309 SIDE LETTER TO MEMORANDUM OF AGREEMENT BETWEEN CITY OF PALO ALTO AND EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Palo A!to's Memorandum of Agreement with each of its recognized bargaining units, including Local 715A, SEIU; Local 1319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, the City has agreed to pay the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Emp!oyers' Medical and Hospital Act (~PEMHCA") during the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for employee and dependent health insurance under the PEMHCA plan options has increased by an average of 22% for the year commencing January i, 2003; WHEREAS, in view of the City's current budget picture and the large increases in emp!oyee health care costs the City faces in 2003 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its emp!oyees and employee interests; WHEREAS, both the City and participating emp!oyees can benefit financially from the 2003 PERS Choice/PORAC medical incentive plan, under which emp!oyees enrolled in the highest- cost PERS Care PPO plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Employees, the PORAC PPO Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Palo Alto and each of its recognized bargaining units, including Local 7!5A, SEIU; Local 1319, International Association of Fire Fighters; the Pa!o Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Associationl have agreed to add to their respective Memorandum 021211 cl 8120295 of Agreement and Compensation Alternate Medical Benefit Plan, description applicable to the (Exhibit i hereto). Plan the PERS Choice/PORAC as described in the plan respective bargaining group SEIU Representative Date Mayor Date IAFF Representative Date PAPOA Representative Date Palo Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 2 PAPOA 2003 MEDICAL INCENTIVE PLAN The following is a summary of the 2003 Medical Incentive Plan for active employees of the Palo Alto Police Officers Association. Be sure to refer to the PERSCare, PERS Choice and/or PORAC Police and Fire Health Plan Evidence of Coverage booklets for more detailed medical plan information. For active members of the Palo Alto Police Officers Association (PAPOA) enrolled in the PORAC Police & Fire Health Plan (PORAC) in calendar year 2003, the City shall self fund the difference in the "Maximum Calendar Year Copayment Responsibility" /Out-of-Pocket maximum between PERSCare Medical Plan and PORAC Prudent Buyer Plan. PERSCare's maximum copayment responsibility per calendar year is two thousand ($2,000) per plan member, not to exceed four thousand ($4,000) per family. PORAC's maximum copayment responsibility is $5,000 per person. Employees and dependents enrolled in PORAC may submit eligible expenses incurred during the 2003 calendar year that exceed $2000 per member/S4000 per family for covered services received from a preferred provider to the Human Resources Department for reimbursement. As an alternative to the above described PORAC plan, PAPOA members currently enrolled in PERSCare or electing the PERSCare medical plan coverage for calendar year 2003 on or before October 15, 2003 may elect PERS Choice coverage for 2003 and receive a cash incentive payment for each month they remain covered under the PERS Choice medical plan. The monthly incentive payment each member will receive will be equal to $100.00 for an employee with single coverage, $200.00 for an employee and one dependent coverage and $275.00 for family coverage. The cash incentive will paid biweekly, is taxable but not PERSable income For example, Employee A is in PORAC as an individual member. He/she has to pay $4000.00 of covered out-of-pocket expenses during the 2003 calendar year under the PORAC plan. If Employee A had been in PERS Care, he/she would have reached his/her out-of-pocket maximum at $2000.00. Under the self insurance plan, Employee A shall submit to Human Resources the Explanation of Benefit from Blue Cross for the additional out-of-pocket services and this amount shall be reimbursed. Exhibit 1 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING SECTION 1401 OF THE MERIT SYSTEM RULES AND REGULATIONS REGARDING THE M~MORANDUM OF AGREF21ENT BETWEEN THE CITY OF PALO ALTO AND LOCAL 715A, SEIU, AFL-CIO, CLC, TO ADD THE CITY OF PAL0 ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Palo Alto does RESOLVE as follows: SECTION i. Section 1401 of the Merit System Rules and Regulations is hereby amended as fol!ows: 1401. Memorandum of agreement incorporated by reference° That certain memorandum of agreement by and between the City of Palo Alto and Local 715A, SEIU, AFL-CIO, CLC, consisting of a Preamble and Articles I through XXVII and Appendices A through E, for a term commencing May I, 2001, and expiring Apri! 30, 2004, as amended to add the City of Palo Alto PERS Choice/PORAC Medical Incentive Plan for Calendar Year 2003, is hereby incorporated into these Merit System Rules and Regulations by reference as though fully set forth herein. Said memo- randum shall apply to all employees in classifications represented by said Local 715A, SEIU, AFL-CIO, CLC, except where specifically provided othe~Nise herein. In the case of conflict with this chapter and any other provisions of the Merit System Rules and Regulations, this chapter will prevail over such other provisions as to employees represented by said Local 715A,SEIU, AFL-CIO, CLC. SECTION 2. The Memorandum of Agreement (~MOA") incorporate~ into the Merit System Rules and Regulations ("Merit Rules") by Section ! is a revision of the MOA incorporated into the Merit Rules by Resolution No. 8084, and adds an Appendix G to that MOA as set forth in Exhibit "A~, attached hereto and incorporated herein by reference. 021211 cl 8120311 1 SECTION 3. The changes provided for in this resolution shall not affect any right established or accrued, or any offense or act committed, or any penalty of forfeiture incurred, or any prosecution, suit, or proceeding pending or any judgment rendered prior to the effective date of this resolution. SECTION 4. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmenta! impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: .ABSTENTIONS: ABSENT: ATTEST: City Clerk A2PROV~D AS TO FOI%M: Mayor APPROVED: Senior Assistant City Attorney City Manager Director of Administrative Services Director of Human Resources 021211 cl 8120311 2 SIDE LETTER TO !{EMORANDUM OF AGREEMENT BETWEEN CITY OF PALO ALTO AND EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Pa!o Alto's Memorandum of Agreement with each of its recognized bargaining units, including Loca! 715A, SEIU; Loca! 1319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Pa!o Alto Fire Chiefs' Association, the City has agreed to pay the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Employers' Medical and Hospital Act (~PEM~CA~) during the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for em_o!oyee and dependent health insurance under the PEFfHCA plan options has increased by an average of 22% for the year commencing January i, 2003; WHEREAS, in view of the City's current budget picture and the large increases in employee health care costs the City faces in 2003 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its employees and employee interests; WHEREAS, both the City and participating employees can benefit financially from the 2003 PERS Choice/PORAC medical incentive plan, under which employees enrolled in the highest- cost PERS Care PPO plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Employees, the PORAC PPO Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Palo Alto and each of its recognized bargaining units, including Local 715A, SEIU; Local 1319, International Association of Fire Fighters; the Pa!o Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, have agreed to add to their respective Memorandum 0212]I cl 8120295 1 Exhibit '~A" of Agreement and Compensation Alternate Medical Benefit Plan, description applicable to the (Exhibit ! hereto). Plan the PERS Choice/PORAC as described in the plan respective bargaining group SEIU Representative Date Mayor Date IAFF Representative Date PAPOA Representative Date Pa!o Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 2003 MEDICAL INCE~VFIVE PLAN FOR SEIU The following is a summary of the 2003 Medical Incentive Plan for Service Employees International Union, Local 715 (SEIU) employees. Be sure to refer to the PERSCare and PERS Choice Health Plan Evidence of Coverage booklets for more detailed medical plan information. Active SEIU employees currently enrolled in PERSCare or electing the PERSCare medical plan coverage for calendar year 2003 on or before October 15, 2003 may voluntarily elect PERS Choice coverage for 2003 and receive a cash incentive payment for each month they remain covered under the PERS Choice medical plan. The monthly incentive payment each member will receive will be equal to $100.00 for an employee with single coverage, $200.00 for an employee and one dependent coverage and $275.00 for family coverage. The cash incentive will paid biweekly, is taxable but not PERSable income. Exhibit 1 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PAL0 ALTO AMENDING SECTION 1801 OF THE MERIT SYSTEM RULES AND REGULATIONS REGARDING THE MEMORANDUM OF AGREEMENT BETWEEN THE CITY OF PALO ALTO AND THE PALO ALTO FIRE CHIEFS' ASSOCIATION, TO ADD THE CITY OF PAL0 ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Palo Alto does RESOLVE as follows: SECTION !. Section 1801 of the Merit System Rules and Regulations is hereby amended as follows: 1801o Memorandum of agreement incorporated by reference° That certain memorandum of agreement by and between the City of Palo Alto and the Paio Alto Fire Chiefs' Association, consisting of a Preamble and Articles I through XX, for a term commencing July i, 2000, and expiring June 30, 2003, as amended to add the City of Palo Alto PERS Choice/PORAC Medical Incentive Plan for Calendar Year 2003, is hereby incorporated into these Merit System Rules and Regulations by reference as though fully set forth herein. Said memorandum shal! apply to all employees in classifications represented by said Palo Alto. Fire Chiefs' Association, except where specifically provided otherwise herein. In the case of conflict with this chapter and any other provisions of the Merit System Rules and Regulations, this chapter will prevail over such other provisions as to employees represented by said Palo Alto Fire Chiefs' Association. SECTION 2.The Memorandum of Agreement ("MOA") incorporated into the Merit System Rules and Regulations ("Merit Rules") by Section ! is a revision of the MOA incorporated into the Merit Rules by Resolution No. 8126, and adds a Section XXII to that MOA as set forth in Exhibit "A", attached hereto and incorporated herein by reference. 021211 cl 8120313 ! SECTION 3. The changes provided for in this resolution shall not affect any right established or accrued, or any offense or act committed, or any penalty of forfeiture incurred, or any prosecution, suit, or proceeding pending or any judgment rendered prior to the effective date of this resolution. SECTION 4. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: City Clerk APPROVED AS TO FORM: Mayor APPROVED: Senior Assistant City Attorney City Manager Director of Administrative Services Director of Human Resources 021211 cl 8120313 2 SIDE LETTER TO MEMORANDUM OF AGREEMENT BETWEEN CITY OF PALO ALTO AND EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Pa!o Alto's Memorandum of Agreement with each of its recognized bargaining units, including Loca! 715A, SEIU; Loca! 1319, International, Association of Fire Fighters; the Pa!o Alto Peace Officers' Association; and the Paio Alto Fire Chiefs' Association, the City has agreed to pay the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Emp!oyers' Medical and Hospital Act (~PF!KHCA") during the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for employee and dependent health insurance under the PEMHCA plan options has increased by an average of 22% for the year commencing January i, 2003; WHEREAS, in view of the City's current budget picture and the large increases in employee health care costs the City faces in 2003 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its employees and emp!oyee interests; WHEREAS, both the City and participating employees can benefit financially from the 2003 PERS Choice/PORAC medical incentive plan, under which employees enrolled in the highest- cost PERS Care PPO plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Employees, the PORAC PPO Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Palo Alto and each of its recognized bargaining units, including Local 7i5A, SEIU; Local 1319, International Association of Fire Fighters; the Pa!o Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, have agreed to add to their respective Memorandum 0212]! d 8120295 1 Exhibit ~A" of Agreement and Compensation Alternate Medical Benefit Plan, description applicable to the (Exhibit 1 hereto). Plan the PERS Choice/PORAC as described in the p!an respective bargaining group SEIU Representative Date Mayor Date !AFF Representative Date PAPOA Representative Date Palo Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 IAFF, LOCAL 1319/PALO ALTO FIRE CHIEF'S ASSOCIATION 2003 IVlFf)ICAL INCEI~q~IVE PLAN The following is a summary.of the 2003 Medical Incentive Plan for active employees of the International Association Of Fire Fighters (IAFF, Local 1319) and Palo Alto Fire Chief's Association. Be sure to refer to the PERSCare, PERS Choice and/or PORAC Police and Fire Health Plan Evidence of Coverage boo "~ets for more detailed medical plan information. For active members of the ~FF, Local 1319 and Palo Alto Fire Chief's Association enrolled in the PORAC Police & Fire Health Plan(PORAC) in calendar year 2003, the City shall self insure the difference in the "Maximum Calendar Year Copayment Responsibility"/Out-of-Pocket maximum between PERSCare Medical Plan and PORAC Prudent Buyer Plan. PERSCare's maximum copayment responsibility per calendar year is two thousand ($2,000) per plan member, not to exceed four thousand ($4,000) per family. PORAC's maximum copayment responsibility is $5,000 per person. Employees and dependents enrolled in PORAC may submit eliNble expenses incurred during the 2003 calendar year that exceed $2000 per member/S4000 per family for covered services received from a preferred provider to the Human Resources Department for reimbursement. For example, Employee A is in PORAC as an individual member. He/she has to pay $4000.00 of covered out-of-pocket expenses during the 2003 calendar year under the PORAC plan. If Employee A had been in PERS Care, he/she would have reached his/her out-of-pocket maximum at $2000.00. Under the self insurance plan, Employee A shall submit to Human Resources the Explanation of Benefit from Blue Cross for the additional out-of-pocket services and this amount shall be reimbursed. The City agrees to pay the annual dues to PORAC in the amount of $21.00 to insure their etiNbitity in the PORAC medical plan. Exhibit 1 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PAL0 ALTO AMENDING SECTION 1501 OF THE MERIT SYSTEM RULES AND REGULATIONS REGARDING THE MEMORANDUM OF AGREEMENT BETWEEN THE CITY OF PALO ALTO AND LOCAL 1319,INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS,TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Pa!o Alto does RESOLVE as follows: SECTION i. Section 1501 of the Merit System Rules and Regulations is hereby amended as follows: 1501. Memorandum of agreement incorporated by reference. That certain memorandum of agreement by and between the City of Palo Alto and Local 1319, International Association of Fire Fighters, consisting of a Preamble and Articles I through XLIII, for a term commencing July i, 2000, and expiring June 30, 2003, as amended to add the City of Palo Alto PERS Choice/PORAC Medical Incentive Plan for Calendar Year 2003, is hereby incorporated into these Merit System Rules and Regulations by reference as though fully set forth herein. Said memorandum shall apply to all employees in classifications represented by said Local 1319, International Association of Fire Fighters, except where specifically provided otherwise herein. In the case of conflict with this chapter and any other provisions of the Merit System Rules and Regulations, this chapter will prevail over such other provisions as to employees represented by said Local 1319, International Association of Fire Fighters. SECTION 2.The Memorandum of Agreement ("MOA") incorporated into the Merit System Rules and Regulations ("Merit Rules") by Section ! is a revision of the M0A incorporated into the Merit Rules by Resolution No. 8029, and adds a Section XLV 021211 cl 8120312 to that MOA as set forth in Exhibit "A", attached hereto and incorporated herein by reference. SECTION 3. The changes provided for in this resolution shall not affect any right established or accrued, or any offense or act committed, or any penalty of forfeiture incurred, or any prosecution, suit, or proceeding pending or any judgment rendered prior to the effective date of this resolution. SECTION 4. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: City Clerk APPROVED AS TO FOI~M: Mayor APPROVED: Senior Assistant City Attorney City Manager Director of Administrative Services Director of Human Resources 021211 cl 8120312 2 SIDE LETTER TO MEMORANDUM OF AGREEMENT BETWEEN CITY OF PALO ALTO ~ EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Palo Alto's Memorandum of Agreement with each of its recognized bargaining units, including Local 7!5A, SEIU; Loca! 1319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Pa!o Alto Fire Chiefs' Association, the City has agreed to pay the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Employers' Medical and Hospital Act ("PEM~CA") during the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for employee and dependent health insurance under the PEMHCA plan options has increased by an average of 22% for the year commencing January !, 2003; WHEREAS, in view of the City's current budget picture and the large increases in employee health care costs the City faces in 2003 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its emp!oyees and employee interests; WHEREAS, both the City and participating employees can benefit financially from the 2003 PERS Choice/PORAC medical incentive plan, under which employees enrolled in the highest- cost PERS Care PPO plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Emp!oyees, the PORAC PPO Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Palo Alto and each of its recognized bargaining units, including Local 715A, SEIU; Loca! 1319, Internationa! Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, have agreed to add to their respective Memorandum 021211 cl 8120295 !F_~ibit '~An of Agreement and Compensation Alternate Medical Benefit Plan, description applicable to the (Exhibit ! hereto). Plan the PERS Choice/PORAC as described in the plan respective bargaining group SEIU Representative Date Mayor Date IAFF Representative Date PAPOA Representative Date Palo Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 2 IAFF, LOCAL 1319/PALO ALTO FIRE CI-IIF_~'S ASSOCIATION 2003 MEDICAL INCENTIVE PLAN The following is a summary of the 2003 Medical Incentive Plan for active employees of the International Association Of Fire Fighters (IAFF, Local 1319) and Palo Alto Fire Chief's Association. Be sure to refer to the PERSCare, PERS Choice and/or PORAC Police and Fire Health Plan Evidence of Coverage booklets for more detailed medical plan information. For active members of the IAFF, Local 1319 and Palo Alto Fire Chief's Association enrolled in the PORAC Police & Fire Health Plan(PORAC) in calendar year 2003, the City shall self insure the difference in the "Maximum Calendar Year Copayment Responsibility"/Out-of-Pocket maximum between PERSCare Medical Plan and PORAC Prudent Buyer Plan. PERSCare's maximum copayment responsibility per calendar year is two thousand ($2,000) per plan member, not to exceed four thousand ($4,000) per family. PORAC's maximum copayment responsibility is $5,000 per person. Employees and dependents enrolled in PORAC may submit eliNble expenses incurred during the 2003 calendar year that exceed $2000 per member/S4000 per family for covered services received from a preferred provider to the Human Resources Department for reimbursement. For example, Employee A is in PORAC as an individual member. He/she has to pay $4000.00 of covered out-of-pocket expenses during the 2003 calendar year under the PORAC plan. K Employee A had been in PERS Care, he/she would have reached his/her out-of-pocket maximum at $2000.00. Under the self insurance plan, Employee A shall submit to Human Resources the Explanation of Benefit from Blue Cross for the additional out-of-pocket services and this amount shall be reimbursed. The City agrees to pay the annual dues to PORAC in the amount of $21.00 to insure their eliNbility in the PORAC medical plan. Exhibit 1 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING SECTION 1601 OF THE MERIT SYSTEM RULES AND REGULATIONS REGARDING THE MEMORANDUM OF AGREEMENT BETWEEN THE CITY OF PALO ALTO AND THE PAL0 ALTO PEACE OFFICERS'ASSOCIATION,TO ADD THE CITY OF PALO ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR CALENDAR YEAR 2003 The Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. Section 1601 of the Merit System Rules and Regulations is hereby amended as follows: 1601o Memorandum of agreement incorporated by reference° That certain memorandum of agreement by and between the City of Pa!o Alto and Palo Alto Peace Officers' Association, consisting of Preamble and Sections i through 50, and Appendix A, for a term commencing July i, 2001, and expiring June 30, 2007, as amended to add an the City of Palo Alto PERS Choice/PORAC Medical Incentive Plan for Calendar Year 2003, is hereby incorporated into these Merit System Rules and Regulations by reference as though fully set forth herein.Said memorandum shal! apply to all employees in classifications of police officer trainee, police officer, police agent, and police sergeant, except where specifically provided otherwise herein. In the case of conflict with this chapter and any other provisions of the Merit System Rules and Regulations, this chapter will prevail over such other provisions as to employees represented by said Palo Alto Peace Officers' Association. SECTION 2.The Memorandum of Agreement ("MOA") incorporated into the Merit System Rules and Regulations ("Merit Rules") by Section ! is a revision of the MOA incorporated into the Merit Rules by Resolution No. 8083, and adds a Section 52 to that MOA as shown on Exhibit "A", attached hereto and incorporated herein by reference. 021211 cl 8~2031#1 SECTION 3. The changes provided for in this resolution shall not affect any right established or accrued, or any offense or act committed, or any penalty of forfeiture incurred, or any prosecution, suit, or proceeding pending or any judgment rendered prior to the effective date of this resolution. SECTION 4. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmenta! impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT : City Clerk A~HROV~D AS TO FO~: Mayor APPROVED: Senior Assistant City Attorney City Manager Director of Administrative Services Director of Human Resources 021211 cl 8120314 2 SIDE LETTER TO MEMORANDUM OF AGREEMENT BETWEEN CITY OF PALO ALTO AND EACH OF ITS RECOGNIZED BARGAINING UNITS, TO ADD THE CITY OF PAL0 ALTO PERS CHOICE/PORAC MEDICAL INCENTIVE PLAN FOR 2003 WHEREAS, under the terms of the City of Palo Alto's Memorandum of Agreement with each of its recognized bargaining units, including Local 7!5A, SEIU; Local 1319, International Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, the City has agreed to pay the health premiums for employees' and eligible family members' choice of health insurance plan offered under the Public Employers' Medical and Hospital Act ("PEMHCA") during the term of each respective Memorandum of Agreement; WHEREAS, the cost of monthly premiums to be paid by the City for employee and dependent health insurance under the PEMHCA plan options has increased by an average of 22% for the year commencing January i, 2003; WHEREAS, in view of the City's current budget picture and the large increases in employee health care costs the dity faces in 2003 and beyond, the City sought to reach agreement with its employee groups to limit the City's 2003 health care expenditure increases, where this could be done consistent with law, the City's obligations to its employees and employee interests; WHEREAS, both the City and participating employees can benefit financially from the 2003 PERS Choice/PORAC medica! incentive plan, under which employees enrolled in the highest- cost PERS Care PPO plan for the year commencing in January 2003 can choose to enroll instead in the PERS Choice PPO Plan, or, in the case of Police and Fire Employees, the PORAC PP0 Plan, for calendar year 2003, thereby greatly reducing the City's premium expenses for their health insurance, and receive incentive payments of approximately 35% of the City's reduced expenses. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: The City of Pa!o Alto and each of its recognized bargaining units, including Local 715A, SEIU; Local 1319, Internationa! Association of Fire Fighters; the Palo Alto Peace Officers' Association; and the Palo Alto Fire Chiefs' Association, have agreed to add to their respective Memorandum 021211 cl 8120295 1 Exhibit of Agreement and Compensation Alternate Medical Benefit Plan, description applicable to the (Exhibit ! hereto). Plan the PERS Choice/PORAC as described in the plan respective bargaining group SEIU Representative Date Mayor Date IA_~F Representative Date PAPOA Representative Date Palo Alto Fire Chiefs' Date Association Representative 021211 cl 8120295 2 PAPOA 2003 MEDICAL INCENTIVE PLAN The following is a summary of the 2003 Medical Incentive Plan for active employees of the Palo Alto Police Officers Association. Be sure to refer to the PERSCare, PERS Choice and/or PORAC Police and Fire Health Plan Evidence of Coverage booklets for more detailed medical plan information. For active members of the Palo Alto Police Officers Association (PAPOA) enrolled in the PORAC Police & Fire Health Plan (PORAC) in calendar year 2003, the City shall self fund the difference in the "Maximum Calendar Year Copayment Responsibility" /Out-of-Pocket maximum between PERSCare Medical Plan and PORAC Prudent Buyer Plan. PERSCare's maximum copayment responsibility per calendar year is two thousand ($2,000) per plan member, not to exceed four thousand ($4;000) per family. PORAC's maximum copayment responsibility is $5,000 per person. Employees and dependents enrolled in PORAC may submit eliNble expenses incurred during the 2003 calendar year that exceed $2000 per member/S4000 per family for covered services received from a preferred provider to the Human Resources Deparanent for reimbursement. As an alternative to the above described PORAC plan, PAPOA members currently enrolled in PERSCare or electing the PERSCare medical plan coverage for calendar year 2003 on or before October 15, 2003 may elect PERS Choice coverage for 2003 and receive a cash incentive payment for each month they remain covered under the PERS Choice medical plan. The monthly incentive payment each member will receive will be equal to $100.00 for an employee with single coverage, $200.00 for an employee and one dependent coverage and $275.00 for family coverage. The cash incentive will paid biweekly, is taxable but not PERSable income For example, Employee A is in PORAC as an individual member. He/she has to pay $4000.00 of covered out-of-pocket expenses during the 2003 calendar year under the PORAC plan. K Employee A had been in PERS Care, he/she would have reached his/her out-of-pocket maximum at $2000.00. Under the self insurance plan, Employee A shall submit to Human Resources the Explanation of Benefit from Blue Cross for the additional out-of-pocket services and this amount shall be reimbursed. ¯ Exhibit 1