GO Item 1 &2
November 30, 2017
Worksession
MEMORANDUM
November 28, 2017
TO:
FROM:
Government Operations and Fiscal Policy Committee
Robert H. Drummer, Senior Legislative Attorney
rvfv
0
Worksession:
Expedited Bill 33-17, Employees' Retirement Savings Plan-
SUBJECT:
Disability Benefits Plan-Termination of Benefits - Amendments
Expedited Bill 33-17, Employees' Retirement Savings Plan - Disability Benefits Plan -
Termination of Benefits - Amendments, sponsored by Lead Sponsor Council President Berliner
at the request of the County Executive, was introduced on October 31, 2017. A public hearing
was held on November 28.
Bill 33-17 would increase the age long term disability benefits end under the LTD2 Plan
from 65 to 70.
Background
County employees who are participants in the Retirement Savings Plan (RSP), the
Guaranteed Retirement Income Plan (GRIP), or the Elected Officials Plan are eligible for benefits
under the LTD2 Disability Benefits Plan (the Plan or LTD2).
1
The Plan provides long term
disability benefits for both service-connected and non-service connected disabilities. A service
connected benefit is 52.5% of salary for partial disability and 70% of salary for total disability. A
non-service connected benefit is 2% of salary per year of County employment with a minimum
benefit of 30% and a maximum benefit of 60% of salary.
The Plan requires the CAO to terminate disability benefits when a participant reaches the
age of 65. Bill 33-17 would extend eligibility for disability benefits from age 65 to age 70. 0MB
estimates that the County's annual cost to extend benefits to age 70 would be $420,000. The
annual total cost to all employees would be $140,000 or $2.22 per month per employee. See the
Fiscal Impact Statement at ©5. This increase in employee disability benefits was negotiated
between the Executive and the union representing most County employees other than police and
fire, the Municipal & County Government Employees Association (MCGEO). The MOU between
the Executive and MCGEO is at ©19-20.
In
addition to the eligible employees represented by
Employees participating in the defined benefit plans under the Employee's Retirement System are eligible for a
different long term disability plan and a disability retirement pension that would not be affected by Bill 33-17.
1
 PDF to HTML - Convert PDF files to HTML files
MCGEO, the Bill would increase the disability benefit for eligible non-represented employees,
including elected officials.
Public Hearing
The lone speaker, Linda Herman, Executive Director of the Retirement Plans, speaking on
behalf of the Executive, supported the Bill. See ©25. Ms. Herman pointed out that the termination
of disability benefits at age 65 forces a participant to accept a reduced Social Security Retirement
Benefit because the normal retirement age is now 66 for persons born after 1943.
Issues
1.
What is the Council's Role in Collective Bargaining Agreements?
Under the County Employees Labor Relations Law for County employees other than police
or fire (County Code §§33-101 through 33-112), the County Council must review any term or
condition of each final collective bargaining agreement requiring an appropriation of funds or
enactment, repeal, or modification of a County law or regulation. On or before May 1, unless the
Council extends this deadline, the Council must indicate by resolution its intention to appropriate
funds for or otherwise implement the agreement or its intention not to do so, and state its reasons
for any intent to reject any part of an agreement. The Council is not bound by the agreement on
those matters over which the Council has final approval. The Council may address contract items
individually rather than on an all-or-nothing basis. See County Code §33-108(g)-G).
If
the Council indicates its intention to reject or opts not to fund any item, it must designate
a representative to meet with the parties and present the Council's views in their further
negotiations. The parties must submit the results of any further negotiations, or impasse
procedures if the parties cannot agree on a revised contract, to the Council by May 10 (unless the
May 1 date was extended).
The Council approved a collective bargaining agreement with the union representing these
employees, MCGEO, last May. The Agreement runs from July 1, 2017 to June 30, 2019. The
MOU with MCGEO agreeing to submit this legislation to the Council is an out-of-cycle
amendment to the existing collective bargaining agreement. Section 33-108(n) provides:
(n)
Out-of-cycle amendments.
The process in subsections (i) and
G)
applies to
Council review of any amendment to a collective bargaining agreement that
the Council receives after May 15 of any year, but the deadlines in those
subsections do not apply. The Council President must set action deadlines
which result, to the extent feasible, in a similar timetable relative to the date
the Council received the amendment.
Although the timetable for Council review of an out-of-cycle amendment is different, the
Council must follow the same procedure used for reviewing a new collective bargaining
agreement. Therefore, to follow the statutory procedure, a resolution indicating the intent to
approve or reject the MOU was introduced on November 28. See ©26-27.
2
 PDF to HTML - Convert PDF files to HTML files
2. Would Bill 33-17 amend the current MCGEO Agreement?
Section 44.5 of the MCGEO Agreement provides for a disability plan benefit. A copy of
the current version of Section 44.5 is at ©21. Although Section 44.5 provides for a 66 2/3 percent
of salary benefit for all service connected disabilities, County Code §33-131 provides the
following benefits for a service-connected disability:
The annual amount of service-connected disability payments payable for total
incapacity equals 70% of the employee's final earnings, less any reductions
provided in Section 33-134. The annual amount of service-connected disability
payments payable for partial incapacity equals 52½% of the employee's final
earnmgs.
The Council amended
§
3 3-131 to establish different benefits for total and partial disability
in Bill 45-10, enacted on June 28, 2011 and signed into law on July 11, 2011. Section 44.5 of the
MCGEO Agreement has never been amended to correspond to the change in law. Similarly, the
MOU submitted by the Executive does not include an amendment to Section 44.5 of the MCGEO
Agreement to correspond with the change in law that would be enacted by Bill 33-17. Despite
these differences, the County Code provisions control over the conflicting provisions of the
MCGEO Agreement.
Although the LTD2 Plan follows the County Code and not the collective bargaining
agreement, the failure to amend the MCGEO Agreement to make it consistent with the actual
benefits available to a disabled employee leads to confusion and provides misinformation.
3. What is the fiscal impact of Bill 33-17?
The County contributes 75% of the cost of the LTD2 Plan ($13.82 per month, per
participant, annual total - $873,000) and each employee contributes 25% of the cost ($4.61 per
month, per participant, annual total - $291,000). See the basic outline of the Plan at ©9 and the
Summary of the Plan Description at ©10-18. These costs are based upon an actuarial evaluation
done every 2 years. The County's actuary estimated the increase in costs to accommodate Bill 33-
17 to be:
Continuing service connected disability until age 70
o Benefits
• Monthly disability payments would continue until age 70
• Health insurance benefits would continue, if eligible
o Estimated Cost increases
• County from $873,000 to $1.293 million - $420,00 annually
• Employees from $291,000 to $431,000 ($4.61 per month to $6.83) -
$140,000 annually
The Actuary's letter is at ©22-23. Bill 33-17 would apply this change retroactively to
January 1, 2017. The retroactive effective date would result in 3 disability beneficiaries currently
age 65 or older receiving back benefits and additional eligibility until age 70. The actuary's
3
 PDF to HTML - Convert PDF files to HTML files
estimate of the additional cost for the Bill includes the cost to make these benefits retroactive to
January 1, 2017.
4. What is the differenc e between the
LTDl
Plan and the
LTD2
Plan?
Public safety employees and employees hired before 1994 are eligible for the defined
benefit plan under the Employees Retirement System (ERS). All other County employees
participate in the defined contribution RSP, the cash balance GRIP, or the Elected Officials Plan.
Bill 33-17 would only affect RSP, GRIP, and Elected Officials Plan participants. ERS participants
are eligible for the LTD 1 Disability Plan and a defined benefit disability retirement pension. The
LTDl Plan is designed to pay benefits to a disabled employee for up to 36 months or until the
employee becomes eligible for a disability retirement pension under the ERS. The maximum age
for receiving LTDl benefits is currently age 70. See the LTDl Plan summary at ©24.
RSP, GRIP, and Elected Officials Plan participants are eligible for the LTD2 Plan that
would be amended by Bill 33-17. The LTD2 Plan benefits currently end at age 65 unless the
employee becomes disabled after age 65. An employee who becomes disabled after age 65 is
eligible for up to 12 months of LTD2 benefits.
A comparison of the benefits under LTD 1 and L TD2 is incomplete without considering
the significant differences between the retirement benefits under the ERS and the RSP/GRIP. The
difference in benefits can be seen by looking at the cost to the County to provide each retirement
plan. Here is a look at the difference:
Participation and Cost Comparisons:
A large disparity exists in the costs of the County Government
retirement plans.
The table below shows the number of employees participating in each of the retirement
plans and the total FY18 cost (excluding employee contributions) for each plan. The data show that while
43% of employees participate in the ERS, the ERS accounts for 76% of total County Government retirement
plan costs. The average cost per employee for an ERS participant
is
almost four times greater than the cost
per RSP participant and more than six times greater than the cost per GRIP participant.
Plan Participants
Employees
ERS
(Defined Benefit)
FY18 Cost
$Amount
(millions)
$80.65
$20.40
$5.10
Percent
43.4%
40.0%
16.6%
Percent
76.0%
19.2%
4.8%
Average
FY18 Cost/
Employee
$20,228
$5,557
$3,345
3,987
3,670
1,526
RSP
(Defined Contribution)
GRIP
(Cash Balance)
The FY18 contribution rates or "loads" (as a percentage of an employee's salary) are 22.1
%
(public
safety) and 45.1
%
(non-public safety) for the ERS, 8.0% for the RSP, and 5.5% for the GRIP.
Bill 33-17 would be a small step toward leveling the vastly different retirement benefits
between the defined benefit plans under the ERS with the defined contribution benefits for the
RSP, GRIP, and the Elected Officials Plan.
5. Should Bill 33-17 be enacted outside of the normal collective bargainin g timeline?
4
 PDF to HTML - Convert PDF files to HTML files
The County collective bargaining law mandates collective bargaining to begin in
November of the year before an agreement expires and to be completed on or before April 1 of the
year before the new fiscal year begins on July 1. This statutory timeline is designed to coincide
with the Council's deliberations on the operating budget because employee wages and benefits
generally represents approximately 80% of the County government's operating budget.
Negotiations between the Executive and MCGEO for a new Agreement are mandated to begin in
November 2018. Despite this statutory timeline for bargaining, §33-108(n) expressly authorizes
an out-of-cycle amendment to a collective bargaining agreement, such as the MOU between
MCGEO and the Executive that led to the submission ofBill 33-17 to the Council.
The Council explained the public policy behind the collective bargaining law as follows:
33-101. Declaration ofpolicy.
It is the public policy of Montgomery County to promote a harmonious,
peaceful, and cooperative relationship between the county government and its
employees and to protect the public by assuring, at all times, the responsive,
orderly, and efficient operation of county government and services. Since
unresolved disputes in public service are harmful to the public and to employees,
adequate means should be available for preventing disputes and for resolving them
when they occur. To that end, it is in the public interest that employees have the
opportunity to bargain collectively over wages, hours, and other terms and
conditions of employment, as authorized by Charter section 511, through a
representative oftheir choice, or to refrain from collective bargaining. It is also in
the public interest that the county government and a representative of county
employees bargain collectively in good faith without interference with the orderly
process of government and that they implement any agreements reached through
collective bargaining.
The county council also recognizes that employee organizations and the
county government each possess substantial means for initiating actions on wages,
hours, and working conditions of employees. Therefore, in order to preserve an
appropriate balance between labor and management in the public service, the
county council states that once the employees voluntarily select a representative,
collective bargaining shall be used in place of, and not in addition to, existing
means for initiating governmental action on subjects that are defined as
appropriate for like collective bargaining in this article.
The good faith negotiations required by the Collective Bargaining Law anticipates a give
and take process whereby the parties arrive at an agreement that provides reasonable wages and
benefits for the employees that are affordable under the anticipated restraints of the County's
operating budget.
It
normally involves concessions from both sides. If Bill 33-17 was the result
of a comprehensive negotiation over wages and benefits for these employees, it has significant
merit. The increase in disability benefits is modest as is the annual cost. In addition, Bill 33-17 is
a small step toward leveling the retirement benefits with those enjoyed by ERS participants.
However, Bill 33-17 as a stand-alone amendment to the collective bargaining agreement is simply
a modest increase in disability benefits without any corresponding concessions to the County. The
5
 PDF to HTML - Convert PDF files to HTML files
Executive transmission does not explain why it was necessary to negotiate these benefits in the
middle of the existing collective bargaining agreement.
6. Should the Bill be retroactive to January 1, 2017?
The actuary estimated the annual cost to the County for Bill 33-17 to be $420,000. This
estimate includes the cost to provide retroactive benefits to 3 employees whose benefits have or
will soon terminate as they reach age 65. The actuary did not estimate the additional cost to
provide these benefits retroactively to January 1, 2017. The Executive's transmission does not
explain why he felt it was important to provide retroactive benefits.
7. Should the termination age be increased to 70?
The Bill would increase the termination age for these disability benefits from 65 to 70. The
Executive pointed out that the normal retirement age for Social Security benefits has increased
from age 65 to age 66 for persons born after 1943. For persons born after 1960, the normal
retirement age is 67. However, the normal retirement age has not been raised to age 70. Normal
Social Security retirement benefits increase by approximately 8% each year a person waits to
request benefits up to age 70. A person who waits to request benefits until age 70 would receive
the maximum benefit available based upon the person's employment history. Bill 33-17 would
permit a disabled participant to continue receiving LTD2 benefits until reaching the maximum
Social Security retirement benefit.
This packet contains:
Expedited Bill 33-17
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
L TD2 Plan Outline
Summary of LTD2 Plan Description
MOU with MCGEO
MCGEO Agreement, Section
44.5
Actuary Letter
Summary of LTD 1 Plan
Testimony of Linda Herman
Resolution to approve MCGEO MOU
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefits Plan\GO Memo.Docx
Circle#
1
3
4
5
9
10
19
21
22
24
25
26
6
 PDF to HTML - Convert PDF files to HTML files
33-1 7
Expedited Bill No.
Retirement
Concerning: Employees'
Savings Plan - Disability Benefits
Plan - Termination of Benefits -
Amendments
Revised: October 18,
2017
Draft No.
_1
October
31, 2017
Introduced:
May
1, 2019
Expires:
[date]
Enacted:
[date signed]
Executive:
[date takes effect]
Effective:
Sunset Date: _N ~o n~ e~ --- ---
[year]
Ch.
JtR _,
Laws of Mont. Co.
CO UN TY COUNCIL
FO R MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the request of the Cou
nty Executive
AN EXP EDI TED ACT
to:
fits; and
amend the age for termination of long term disability bene
(1)
Plan.
generally amend the laws governing the Disability Benefits
(2)
Byam.ending
Montgomery County Code
Chapter 33, Personnel and Hum an Resources
Section 33-133
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Do uble boldface brackets]]
* * *
Hea ding or defined term.
Add ed to existing law by original bill.
Dele tedfrom existing law by orig inal bill.
Add ed by amendment.
Dele tedfrom existing law or the bill by amendment.
Existing law unqf fecte d by bill.
es the following Act:
The County Council for Montgomery County, Maryland approv
 PDF to HTML - Convert PDF files to HTML files
ExPEDITED BILL
No. 33-17
1
Sec.
1.
Section 33-133 is amended as follows:
2
3
4
5
33-133. Termination of Benefits.
(a)
Non-public safety employee.
The administrator must terminate initial or
continued disability benefits to a non-public safety employee if the
employee:
(1)
(2)
recovers from the disability, as determined by the administrator;
does not provide the administrator with information that the
administrator requires; or
(3)
(b)
attains age 70 [65], or a later age if required under federal law.
Public safety employee.
The administrator must terminate initial or
continued disability benefits to a public safety employee if the employee:
(1) recovers from the disability, as determined by the administrator;
(2)
does not provide the administrator with information that the
administrator requires; or
(3)
attains age 70 [65], or a later age if required under federal law, if
the benefit is for a non-service connected disability.
Expedited Effective Date.
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Sec. 2.
20
21
The Council declares that this legislation is necessary for the immediate
The
protection of the public interest. This Act takes effect on January 1, 2017.
to
amendments in Section 1 apply to all participants receiving benefits or entitled
receive benefits on or after January 1, 2017.
Approved:
22
23
Roger Berliner, President, County Council
Date
benefits plan\bill 1.docx
0
f:\law\bills\1733 employees' retirement savings plan-disability
 PDF to HTML - Convert PDF files to HTML files
LEGISLATIVE REQUEST REPORT
Expedited Bill 33-17
ination of Benefits
-
Emp loye es' Retirement Savings Plan
-
Disability Benefits Plan
-
Term
Amendments
The legislation would change the benefits provided under the Long
h
Term Disability Prog ram (LTD2) by extending the age at whic
benefits end from 65 to age 70. The change brings the L TD2
prog ram' s income replacement in line with the changes made to the
availability for full unreduced Social Security benefits. Full Social
Security benefits are not available to employees born after 1943 until
they reach the age of 66 or later (reduced benefits are still available at
age
62).
Stopping the benefits at age 65 forces participants receiving L TD2
benefits, who are not receiving Social Security disability benefits, to
apply for the reduced Social Security benefits when the L TD2 bene fit
ends at 65. Taking a reduction from the full benefit from Social
Security places an undu e hardship on the L TD2 participants. The bulk
of those participants receiving L TD2 benefits became disabled
performing their day-to-day County duties and were awarded service
connected disability benefits. Providing this increased benefit for the
approximately 6,000 employees covered by the program results in a
very minimal increase in the monthly premium paid by the County and
employees and results in a better alignment with benefits provided by
the Social Security Administration.
To provide income replacement to County and participating
employees who beco me disabled.
Montgomery County Employee Retirement Plans
&
the Office of
Human Resources
Office of Management and Budget
Department of Finance
DESCRIPTION:
PROBLEM:
GOA LSA ND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
NIA
To be researched.
Montgomery County Employee Retirement Plans
Office of Human Resources
NIA
WITHIN
MUNICIPALITIES:
PENALTIES:
NIA
ts Plan\LRR.Docx
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefi
 PDF to HTML - Convert PDF files to HTML files
.::-··._··:
·:~-:~---~-~;'i..--!
...
l-::·,
.···:.::.·.-----·
··. i
OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
October 16, 2017
TO:
Roger Berliner, President
Montgomery County Council
;
I.
FROM:
SUBJECT:
Isiah
Leggett, County Exewtiv~
Legislation to Amend Chapter 33, Personnel and Hmnan Resources
I am attaching for Council's consideration a bill that would amend the
County's law related to the payment of long-term disability benefits to participating
employees. The legislation would change the benefits provided under the Long Term
Disability Program (LTD2) by extending the age at which benefits end from 65 to age 70.
The change brings the LTD2 program's income replacement in line with the changes
made to the availability for full, unreduced Social Security benefits. Full Social Security
benefits are not available to employees born after 1943 until they reach the age of 66 or
later (reduced benefits are still available at age 62). On average, affected County
employees were born after 1943.
Stopping the benefits at age 65 forces participants receiving LTD2
benefits, who are not receiving Social Security disability benefits, to apply for the
reduced Social Security benefits when the LTD2 benefit ends at 65. Taking a reduction
from the full benefit from Social Security places an undue hardship on the LTD2
participants. The bulk of those participants receiving LTD2 benefits became disabled
performing their day-to-day County duties and were awarded service connected disability
benefits. Providing this increased benefit for the approximately 6,000 employees
covered by the program results in a minimal increase in the monthly premiwn paid by the
County and employees, and results in better alignment with benefits provided by the
Social Security Administration.
Thank you for your consideration of this matter.
Attachments
c:
Linda Herman, Executive Director, MCERP
Shawn Stokes, Director, Office of Human Resources
montgomerycountymd.gov/311
'ta,MhiHl:MH
(~311>
240-773-3556 TTY
(i)
 PDF to HTML - Convert PDF files to HTML files
:-:-_·_
-
-
i '
\
:
I
I
··.
Fiscal Impact Statement
Expedited
Bill XX-17
-Disability Benefits
Plan
i.
1. Legislative Summary
I
The biil would amend the age for termination of long term disability benefits from
age
65
to age 70, and generally
amend
the laws governing the County's Long Term Disability
Benefits
Plan
(LTD2).
2. An
estimate
of
changes
in
County revenues
and
expenditures regardless
of
whether
the revenues
or
expenditures are assumed in the recommended or approved budget.
Includes
source
.of
information, assumptions, and methodologies used.
This bill would change the benefits provided by LTD2 by extending the age at which
benefits end from 65 to 70.
An
actuarial analysis performed by the Fund's actuary, Aon,·
estimates the annual
cost
of
the County's
portion of
these
benefits to
increase
from
$873,000
to
$1,293,000,
an
increase of $420,000, The employee portion of
the
benefit
would increase from $291,000 to $431,000,
an
increase of $140,000. This charge is
administered
through
payroll, and would result in a
monthly
increase
of
$2.22 per
employee.
The
analysis assumes the current cost share arrangement between
the County
and
employees of75%/25%.
3.
Revenue
and
expenditure
estimates covering at least the next 6 fiscal years.
Assuming an increase of
$420,000
annually,
this bill
would have an estimated impact of
$2,520,000
in
increased expenditures
over the next 6
fiscal years.
There is no
anticipated
impact on revenues.
·
4. An actuarial analysis through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
See above.
5. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future
spending.
Not applicable.
6. An estimate of the staff time needed to implement the biH.
There are no additional costs for staff to implement the legislation.
7. An explanation of how the addition of new staff responsibilities would
affect
other
duties,
Not applicable.
 PDF to HTML - Convert PDF files to HTML files
-----': ~--~-;Y··-1
8. An estim ate of costs when an addit ional appro priat ion is needed.
Not applicable.
estimates.
9. A descr iptio n of any varia ble that could affect revenue and cost
Not applicable.
to prilject.
10. Rang es of reven ue or expe nditu res that are unce rtain or difficult
Not applicable.
11, If a bill is likely to have no fiscal impact, why that is the case,
Not applicable.
12. Othe r fiscal impacts or comments,
Not applicable.
13. The following contr ibute d to and conc urred with this analysis:
Corey Orlosky, Office of Management and Budget ·
t Plans
Linda Hennan, Executive Director, Montgomery County Employee Retiremen
 PDF to HTML - Convert PDF files to HTML files
....
·.·..:·---
-----·
. --. -_._._ .-:-=·-~.
..
. ·.,.-.-.-::··_·1
Economic Impact Statement
Expedited Bill
n-17,
Disability Benefits Plan
Background:
This legislation would amend Montgomery County Code Section
33~133,
Termination of
Benefits, to increase the age from
65
to
70
for
termination of long term disability
·
benefits,
1.
The sources of informat ion, assumpti.ons, and methodologies
used.
Source of information
is
the Montgomery County Long~Term Disability Benefits
Plan
(LTD2).
An
actuarial valuation is performed every two years for the program to
set the contribution rate for the County, participating agencies and employees. Based
on the actuarial analysis performed by the fund's actuary for Expedited Bill##~
17,
an
estimate of the increase
in
the annual cost of the County's portion would be
$420,000
from
$873,000
to
$1,293,000.
The employee portion of the benefit would increase
from
$291,000
to
$431,000,
an increase of
$140,000,
resulting in a monthly increase
of
$2.22
per employee. The analysis conducted by. the
actuary
assumes the current
cost share agreement between the County and employees of 75%/25%.
2. A descripti on of any variable that could affect the economic i~pact estimates.
The variables that could affect the economic impact estimates are the number of
recipients who reside
in
the County receiving long-tenn disability benefits, the total
amount of benefits or income received by those recipients, and the deduction from the
salary of County employees.
3. The
Bill's positive or negative effect, if
any
on employment, spending , savings,
investme nt, incomes, arid property values
in
the County.
Because of the lack of data on the number of recipients currently residing in the
County receiving long-tenn disability benefits,
it
is uncertain whether Expedited Bill
##-17 would have a significant effect on the County's economy and
total
personal
income. The increase in benefits would have a positive impact on an individual
recipient's personal income. ·However, since the estimated annual cost of the
County's portion of these benefits would increase by only
$420,000,
the economic
impact on the County's overall economy and income would be minimal. Finally,
since Expedited Bill ##-17 would change the employee benefit portion and result in
an increase or $2.22 per month or
$26.64
per year,
it
would also have a minimal
impact on the economy.
4.
If
a
Bill
is
likely to have no economic impact,
why is
that
the case?
Please see paragraph #3
Page 1 of2
(j)
 PDF to HTML - Convert PDF files to HTML files
___
•:-:
......
'.·.
----~.--.··
Economic Impac t Statem ent .
Expedi~ed Bill :xx-17, Disability Benefits Plan
5. The following contributed
to
or concu rred with this
analysis: David Platt, and
Rob Hagedoorn, Finance; Linda Herman and Robert Goff, MCERP.
Alexandre Espin osa,e ctor
Department of Finance
Date
1
Page2 of2
®
 PDF to HTML - Convert PDF files to HTML files
Montgome ry County
Long Term
Disability Benefits Plan {LTD2)
Background:
When the Retirement Savings Plan (RSP) was created in October 1994 for all non-unifor med
public safety and non-public safety employees, the LTD2 plan was also created.
o An actuarial analysis is performed every two years to set the contributio n rate for the
County, participating agencies and employees.
As part of collective bargaining with MCGEO, the County is required to make employer
contributio ns (8% of the LTD2 participant's salary) until the participant turns 62
The County pays the employer contributio n for insurance benefits for LTD2 participants
LTD2 participant's RSP or Guaranteed Retirement Income Plan (GRIP) account is frozen until age
62, if employer contributions are required
Covered employees:
All County employees hired after October 1994, who are non-unifor med public safety or non-
public safety, who participate in the RSP and GRIP
Total covered employees - approximately 6,000 (including participating agencies)
Benefits:
Service Connected
o 52.5% or 70% of salary until age 65
Non-Service Connected
o 2% per year of County employme nt with a minimum of 30% and a maximum of 60%
until age 65
Contributions:
FY 17/18
o 75% - County - $13.82 per month, per participant, annual total - $873,000
o 25% - Employees - $4.61 per month, per participant, annual total - $291,000
Recommended Change:
Continuing
service connected
disability until age 70
o
Benefits
• Monthly disability payments would continue until age 70
Health insurance benefits would continue, if eligible
Estimated Cost increases
• County from $873,000 to $1.293 million - $420,00 annually
• Employees from $291,000 to $431,000 ($4.61 per month to $6.83) - $140,000
annually
o
(j)
 PDF to HTML - Convert PDF files to HTML files
M ON TG OM ER Y CO UN TY
Disability Benefits P la n
Su m m ar y Plan Description
October 2016
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____.E)
,____ _
 PDF to HTML - Convert PDF files to HTML files
lcontentsl
Introduction ................................................................................................................................................... 3
Eligibility ....................................................................................................................................................... 3
Definition of Disability ................................................................................................................................. 3
Initial Disability ............................................................................................................................................. 3
Temporary Disability .................................................................................................................................... 4
Continuing Disability .................................................................................................................................... 4
Application Process ....................................................................................................................................... 4
Disability Review Panel ................................................................................................................................ 5
Benefits .......................................................................................................................................................... 5
Service-Connected ............................................................................................................................... 5
Non-Service-Connected ....................................................................................................................... 6
Public Safety Employee Cost of Living Adjustment... .................................................................................. 7
Reduction in Benefits .................................................................................................................................... 7
Payment Period .............................................................................................................................................. 8
Employer Contributions to the Retirement Plan............................................................................................ 8
Re-evaluations of Continuation of Payments ................................................................................................
8
Re-Employment Program .............................................................................................................................. 8
Appeals .......................................................................................................................................................... 9
Errors ............................................................................................................................................................. 9
Resources ....................................................................................................................................................... 9
2
 PDF to HTML - Convert PDF files to HTML files
Introduction
The purpose of this Summary Description is to provide you with an informal guide
to
the
key provisions of the Disability Benefits Plan (Long Term Disability (LTD) Plan), as
provided for in the Montgomery County Code, Chapter 33, Article VIII, Division 2
("County Code"). Every effort has been made to accurately summarize the LTD Plan.
However, in the event of a conflict between this Summary Description and the County
Code, the County Code will govern.
While Montgomery County Government (the "County") expects to continue the LTD
Plan, it is the County' s position that there is no implied contract between employees and
the County
to
do so. The County reserves the right to change or discontinue any of the
terms of the LTD Plan, subject to applicable laws and collective bargaining agreements.
In addition, the County may amend the LTD Plan, either prospectively or retroactively, as
required by Federal or State law.
The LTD Plan is sponsored by the County. Other government agencies and quasi-
government agencies elect to participate in the County's LTD Plan. If you are an
employee of one of those agencies, you participate under the same terms and conditions
as a County employee.
Eligibility
You are eligible for the LTD Plan if you are budgeted to work for the County or a
participating agency at least 20 hours a week and participate in the:
Retirement Savings Plan,
Guaranteed Retirement Income Plan, or
Elected Officials' Plan.
Your LTD coverage begins automatically on your date of retirement plan membership.
Definition of Disability
To qualify for LTD Plan benefits, you must meet the LTD Plan's definition of disability.
Disability is divided into two stages: initial disability and continued disability.
If
you
qualify for an initial disability, the County will re-evaluate you before the end of 36
months (12 months for a public safety employee who has a non-service-related disability)
to determine if you meet the requirements for a continuing disability.
Disability benefits are also divided into two categories:
service-connected, depending upon the disability.
non-service-connected and
Initial Disability
You are considered disabled if you cannot perform the job you held when you became
disabled. Your condition must be the result of an accident, illness or injury and not
3
@
 PDF to HTML - Convert PDF files to HTML files
caused by your willful misconduct or willful negligence. See non-service-connected and
service-connected for more information.
Tempor ary Disability
After you qualify for an initial disability, you may be approved for a temporary disability
for one or more one year periods. At the end of the period of the temporary disability, a
determination will be made as to whether you will continue to receive payments under
this LTD Plan.
Continuing Disability
If
you qualify for an initial disability, at the end of the initial period you are generally
considered disabled if:
• your condition has not changed;
• you cannot perform any job for which you are reasonably suited, based on your
education, training or retraining and experience; and,
• your condition is likely to be permanent.
If
you are a public safety employee, you
also must also be unable to earn substantially similar final earnings.
If
you qualify for service-connected benefits, you may be considered partially
incapacitated.
If
you are partially incapacitated, you are considered unable to perform
one or more of the essential functions of the job you held when you became disabled but
you may still perform other substantial gainful employment.
See non-service-connected and service-connected for more information.
Application Process
You (or your representative) may file an application for disability benefits with the Chief
Administrative Officer. Applications should be filed through the Montgomery County
th
Employee Retirement Plans (MCERP), 101 Monroe Street, 15 Floor, Rockville, MD
20850.
In applying for LTD benefits, MCERP will provide you with the proper forms and any
assistance you require with the application process.
In
addition to completing the forms
and submitting to MCERP, you will also need to provide copies of your medical records
to the MCERP Disability Manager. Your application and your medical records will be
forwarded to the Disability Review Panel.
In order to receive service-connected benefits for an accidental injury that does not cause
mental impairment, you must report the injury as soon as practicable, but within one year
of the injury or you must submit a timely claim for workers' compensation. You must
also file an application for benefits within one year of separation from County service.
These time periods do not begin if you have incapacitating injuries and are unable to
make a report due to the injuries.
For a non-service-connected disability, the disabling condition or mJury must have
occurred prior to termination of employment.
4
@
 PDF to HTML - Convert PDF files to HTML files
Disability Review Panel
The Disability Review Panel will review your application and medical records. Upon
completion of the review, the Panel will recommend to the Chief Administrative Officer
whether or not you are eligible to receive LTD benefits. When making its determination,
the Disability Review Panel may require you to undergo an independent medical
examination.
MCERP will notify you in writing of the Chief Administrative Officer's decision. The
effective date of your payments would be the earlier of the date by which you have
exhausted all accrued sick and compensatory leave in excess of 80 hours or the date of
the Chief Administrative Officer's decision.
Benefits
The monthly benefits (payments) you receive from the LTD plan replace a percentage of
your final earnings. Your final earnings are your highest average annual pay earned at the
County or participating agency (less shift pay differential) for any 18 consecutive-month
period. The amount you receive depends on whether your disability is service-connected
or non-service-connected. Employment taxes (FICA) will be withheld from your
payments for the first six months.
Service-Connected Disability
A service-connected disability is a condition due to an accident, illness, occupational
disease or condition which is aggravated while performing your duties as an employee.
Amount of Benefits
Partial Incapacity - You receive 52-1/2% of your final earnings (minus
any offset) if the Disability Review Panel determines that you do not
qualify for total incapacity.
If
you are partially incapacitated, you are
considered unable to perform one or more of the essential functions of
the job you held when you became disabled, but you may still perform
other substantial gainful employment.
Total Incapacity - You receive at least 70% of your final earnings
(minus any offsets) if the Disability Review Panel determines that the
disability meets the Social Security Administration's requirements for
disability. In order to be determined to be disabled by the Social
Security Administration, you must be unable to engage in any
substantial gainful activity because of a medically determinable
physical or mental impairment that can be expected to end in death, or
last for at least 12 months.
You do not have to actually have a Social Security determination in
order to be eligible for the 70% benefit.
Social Security Award - You will receive 70% of your final earnings
(minus any offsets) if you meet the following conditions:
5
@
 PDF to HTML - Convert PDF files to HTML files
(a) you are awarded Social Security disability benefits;
(b) you applied for Social Security benefits within 90 days of the
Coun ty's notification to you of the disability determination.;
(c) you submit the information within 60 days of receiving the
Social Security decision; and
(d) the Social Security benefits were based on the same impairment.
Ineligibility
fits until you
You are not eligible to receive service or non-service-connected bene
6 months
have been employed by the County (or participating agency) for at least
and you are a member of a County retirement plan.
fits if you
You are not eligible to receive service-connected disability bene
committed an offense that would justify termination for misconduct.
Alternative Position
ion in the
You may receive a 5% salary increase if you accept an alternative posit
alternative
County government for which you are qualified. Your salary in the
ned to the
position will not exceed the maximum salary of the pay grade assig
g Unit or
position. A member of the Office, Professional and Technical Bargainin
alternative
the Service, Labor and Trades Bargaining Unit who accepts an
disability
placement incentive is not eligible to apply for a service-connected
made.
benefit based on the disability for which the alternative placement was
Non-Service-Connected Disability
s that is not the
A non-service-related disability is a condition due to an accident or illnes
receive any benefits
direct result of performing your duties as an employee. You will not
willful negligence.
for an accident or illness caused by your own willful misconduct or
ely preceding the
You must have worked for the County for the six months immediat
disability.
your final earnings
If your disability is non-service-connected, you will receive 2% of
one or more of the
multiplied by the number of years you have been a member of
earnirtgs. You will
County's retirement plans, up to a maximum of 60% of your final
see Reduction in
receive a minimum benefit of 30% of your final earnings.
In
addition,
Benefits section.
Examples:
1.
, your
If
you have been a member of the Coun ty's retirement plan for 17 years
ce).
monthly payment is 34% of your final earnings (2% x 17 years of servi
hly
If
you have been a member of the retirement plan for 10 years, your mont
.
payment is 30% of your final earnings. The minimum payment is 30%
2.
6
@
 PDF to HTML - Convert PDF files to HTML files
Public Safety Employee Cost of Living Adjustment
If
you are a public safety employee, you will receive a cost of living adjustment each
year. This will equal 60% of the annual change in the cost of living index (as determined
by the Baltimore-Washington Area Consumer Price Index). The cost of living adjustment
is limited to 3% each year.
If
you receive a disability retirement benefit for a disability
occurring after June 30, 2011, as determined by the Disabil ity Review Panel, any
adjustment of your benefit payment will not exceed 2.5%.
Reduction in Benefits
Your benefits will be reduced for the following:
1. Other LTD Benefits
Your benefits will be reduced one dollar for each one dollar you receive from:
Social Security disability benefits (including benefits paid to your dependents
because of your disability)
any other government group income maintenance insurance coverage
any government disability plan
the Employees' Retirement System
the GRIP or RSP - any amount you are entitled to receive (i.e., your plan
account) for a public safety employee
A.
If
you receive any of these payments as a lump sum, your LTD benefit will be
adjusted as if the lump sum were being paid as an annuity.
B. You are required to apply for Social Security disability benefits.
If
you
receive retroactive benefits covering the period of time you received benefits from
the LTD Plan, you must reimburse the County.
C. The benefit calculated under this formula may be adjusted by benefits from
other sources and you may receive less than 30% of your final earnings.
2. Emplo yment
Your County disability benefit will be reduced one dollar for each three dollars of
your earnings or income you receive because of employment, including net
earnings from self-employment.
3. Worke rs' Compensation
The LTD payme nt you receive from the County is subject to a reduction by any
worker s' compensation award for which you may be eligible.
If
you are eligible
for both and your disability benefit is greater than what you are entitled to receive
from worker s' compensation, you will receive only the disability benefit. (Your
7
 PDF to HTML - Convert PDF files to HTML files
ation obligation.) You
LTD payment satisfies the Cou nty' s wor kers ' compens
mus t report any changes in your income to the MCERP.
Pay men t Period
disability benefits will generally
If
you are a non public safety employee, you r continued
last until:
• you recover from your disability (before age 65)
Officer with any necessary
• you fail to provide the Chi ef Administrative
or if you refuse to see a
information (such as any earnings or tax information),
doctor)
62), or
• you reach age 65 (unless you beca me disabled after age
• you r death.
as follows:
If
you are disabled at age 62 or older your benefits will last
service-connected, your benefit
If
you are a public safety employee and you r disability is
disabled and provide requested
will last for your lifetime (as long as you remain
n you turn 65.
information). Your benefits will not automatically end whe
Plan and Guaranteed Inco me
Em ploy er Contributions to the Retirement Savings
Ret irem ent Plan
me disabled, you may receive
If
you are a non-public safety employee and you beco
reach age 62. To qualify for
emp loye r contributions to your retirement plan until you
determined by the Disability
these employer contributions, your disability mus t be
tantial gainful activity by reas on
Rev iew Panel to make you unable to engage in any subs
ent which can be expected to
of any medically determinable physical or mental impairm
to last for a continuous peri od of
result in death or which has lasted or can be expected
ion of your account balance in
not less than 12 months. You may not receive a distribut
s.
the RSP or GRIP while you are receiving these contribution
Re-Evaluation of Continuation of Pay men ts
ical examination to determine
Afte r the initial disability period, you mus t undergo a med
fits.
If
you are found to be
if you are entitled to receive continued disability bene
end.
ineligible, the disability benefits under this LTD Plan will
Re- Em ploy men t Program
ugh a program for employees
The Chi ef Administrative Officer may offer you a job thro
ld assign you a job you could
who are on disability. The re-employment program wou
you base d on your training,
perform with you r disability, and whi ch is suited for
ies. You will be notified if you
education, experience and physical and mental capabilit
8
@
 PDF to HTML - Convert PDF files to HTML files
participate or you
qualify for this program.
If
you are selected for the program, you must
will forfeit your benefits.
Appeals
If
you disagree with
The Chie f Administrator has the full discretion to interpret the Plan.
ding a decision to
any decisions regarding your eligibility for disability benefits, inclu
of your receipt of
discontinue your benefits, you may appeal the decision within
20
days
an Resources at
101
written claim denial. The appeal should be sent to the Office of Hum
Arbitration Board
Monroe Street,
7
th
Floor, Rockville, Maryland
20850.
The Disability
a hearing.
will review your appeal and should issue a decision within
30
days after
Errors
to the County.
If
you receive any monetary amount due to an error, you must return it
Resources
MCE RP
th
101
Monroe Street,
15
Floor
Mail:
Rockville,
MD
20850
Retirement@montgomerycountymd.gov
Email:
Phone:
240-777-8230
301-279-1424
Fax:
www.montgomerycountvmd.gov/retirement
Web:
Disability Manager
th
l
0 1
Monroe Street,
15
Floor
Mail:
Rockville, MD
20850
Phone:
240-777-8238
9
@
 PDF to HTML - Convert PDF files to HTML files
·1.
MEMOR ANDUMO F UNDERS TANDING
BETWEEN THE MONTGOMERY COUNTY GOVERNMENT
AND THEMONICIPAL
&
COUNTY GOVERNMENT EMPLOYEES ORGANIZATION
UNITED FOOD
&
C01\1MERCIAL WORKERS, LOCAL 1994, AFL-CIO
The Montgome ry County Government (Employer) and the Municipal
&
County Government
Employees Organization, UFCW Local 1994, AFL-CIO (Union) (hereinafter parties) engaged
in
a collective
bargaining
mid-term change to the Long Term Disability Benefits
(L
ID2)
for
affected Montgome ry County bargaining unit employees hired after October 1994, who are non-
public safety and public safety employees who participate
in
the Retirenient Savings Plan or the
Guarantee d Retirement In.come Plan.
This Memorand um of Agreement is to address what the parties recognize is a needed change in
the Montgome ry County Code (Code), Sec.33-133 regarding Terminati on of Benefits, for non-
public safety and public safety employees who participate in the LTD2 program.
In
the Code, the
administra tor must terminate initial or continued disability benefits to
a
non-public safety or
public safety employee covered by the program
if
the.employee has attained the age of 65 or a
later age
if
required under federal law.
After discussions on the terminatio n of L TD2 benefits for affected employees turning
65,
the
parties have come to an agreement to recommen d amending the terminatio n date in the County
Code froID: age 65 to age 70.
This Agreemen t talces into account that
full
unreduced Social Security benefits are not available
to employees born after 1943 until the they reach the age of 66 or later (reduced benefits are still
available at age
62).
On
average affected County employees were born after 1943. The income
replacement, or monthly benefit, payable from the County's Long Term Disability Plan
(L
TD2)
stops at age 65 as defined in the Code. Stopping at age 65 forces participants receiving L1D2
benefits, who
are
not r:eceiving Social Security disability benefits, to apply for the reduced Social
Security benefits when the L
ID2
benefit ends ~t 65. Taking
a
reduction .from the full benefit
from
Social
Security places an undue
hardship
on
the
L TD2 participants. The bulk
·of those
participants receiving
LTD2
benefits became disabled performing their day-to-day County duties
and
were
awarded service connected disability benefits. Providing·
this
increased benefit for the
approxima tely
6,000
employees covered
by
the program results in a very minimal increase in the
monthly premium paid by the County and employees and results
in
a
better alignment with
benefits provided by the Social Security Administration.
However
minimum,
the parties recognize that there
is
an increased cost both to the County and
to the affected employees.
To
address
this
increase in LTD2 benefits, the parties agree that the
contributio n amount will increase for each party, but the cost sharing
will
remain
the same at the
current
75/25
percentage level, with the County's share at
75
percent and
the
affected employees
·
.at25%.
The parties will submit legislation to the County Council that would amend Montgomery County
Code
to
provide for
this
change in L
ID2
benefits. This change
to
the benefits
will
be effective
0
 PDF to HTML - Convert PDF files to HTML files
.,
January
1, 2017 and will
also apply
to individuals receiving benefits or entitled to benefits
as
of
that date.
IN WITNESS WHEREOF,
the parties hereto have
caused
their names to be subscribed
by
their
duly authorized officers and representatives this_ day of October 2017.
fl~ ~
Ul .
IsiaH
Leggett,
C
For
the
Union
JO-
Date
1(-}7
Gino
Renne, President
~~
l.
/,,_,,.;-f_.;c.
IJ/IJ/rt
Timoth yL Firestine, CAO
Chief
Admmistrative Officer
Date
 PDF to HTML - Convert PDF files to HTML files
MCGEO Agreement
44.5 Long Term Disability Benefit
The following constitute benefits provided under the long term disability component of the defined
contribution plan:
Basic Benefit:
(a)
Service connected: 66 2/3 percent of pay
(1)
Non-service connected: 2 percent of pay x yrs. service, mm1mum 30
(2)
percent, maximum 60 percent of pay.
Definition of Disability:
(b)
Service connected: your occupation for 3 years; after 3 years, any
(1)
occupation with similar earnings.
Non-service connected: your occupation for
1
year; any occupation
(2)
thereafter (see current LTD plan for longer definition).
Date Payment Ends:
(c)
Service connected: life (or until recovered prior to age 65).
(1)
Non-service connected: age 65 or until recovery.
(2)
Eligibility: All bargaining unit employees regularly scheduled to work 20 or more
(d)
hours (.5 work year or more).
Direct Offsets: Offset is dollar for dollar for actual payments received from Social
(e)
Security or Workers' Compensation. Lump sum Workers' Compensation payments
will be annuitized as is currently done. Offsets also made for lifetime annuitized
total defmed contribution account balances regardless of whether or not they are
annuitized or paid out.
Earnings Offset: Earnings reduce LTD benefits on a 1 for 3 basis. Earnings include
(f)
"Incorporation" income from a company controlled by a family member or due to
work performed. There is no specific limit to the sum of LTD benefit plus income.
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefits Plan\MCGEO Agreement 44-5.Docx
 PDF to HTML - Convert PDF files to HTML files
AON
Empower Results"'
November 21, 2017
Ms. Linda Herman
Executive Director
Montgomery County Employee Retirement Plans
101 Monroe Street
th
15 Floor
Rockville, MD 20850
RE:
Montgomery County Disability Benefits Plan
Dear Linda:
We have analyzed the Montgomery County Disability Benefits Plan (LTD2) for the impact of changes
from the current structure to extending benefits to a participant's age 70.
The expected total cost increase for the first year would be as follows and are inclusive of the RSP/GRIP
payment.
Expansion to Age 70
-
Total Annual Costs
$1,164,000
$560,000
..
$1,724';000
The following tables show the expected cost increase per employee per month. This assumes a population
of 5,264 actives consistent with the Long-Term Disability Plan Valuation as of July 2016 and Montgomery
County is responsible for 75% of costs while participants are responsible for the remaining 25% of costs.
Expansion to Age 70
-
Monthly Costs Per Employee Per Month
Total
Aon Hewitt
I
Retirement
&
Investment Consulting
259 N. Radnor-Chester Road, Suite 160
I
Radnor, PA 19087
t
+1.610.834.2197
I
f
+1.610.834.2176
I
aon.com
Proprietary
&
Confidential
@
 PDF to HTML - Convert PDF files to HTML files
AON
Empower Results®
Ms. Linda Herman
Montgomery County Employee Retirement Plans
November 21, 2017
Page 2 of2
This analysis assumes rates of disability and splits of service connected and non-service connected
disability as detailed in the Montgomery County Employees' Retirement System Actuarial Valuation as of
July 1, 2016 report and was based on the demographics of the plan consistent with the Montgomery County
Government Post-Employment Benefits (Other than Pensions) Actuarial Valuation Report for Fiscal Year
2017.
Sincerely,
~~~
Tom Vicente, FSA, EA
Partner
cc: Joe Romanies - Aon
@
 PDF to HTML - Convert PDF files to HTML files
LONG TERM DISABILITY (LTDl)
LTDl for full-time employees who are members of the optional or integrated plan under the
Employees' Retirement System (ERS):
If
you are a full-time employee and a member of the optional or integrated plan under the ERS,
you are required to have LTD 1 coverage (part-time employees who are members of the optional
or integrated plan under the ERS are not eligible for coverage). Your coverage becomes effective
after 6 months of continuous active service with the County. You are not eligible to participate
upon your 70th birthday.
The monthly income benefit under LTD 1 is 60% of your basic monthly earnings, up to a maximum
of $2,500. Your monthly income benefit will be reduced by certain other sources of income,
including amounts you and your dependents may be eligible to receive under Social Security due
to your disability.
While covered under LTDl, you are entitled to benefits if you become totally disabled from
performing the duties of your occupation due to sickness or accidental bodily injury and remain
totally disabled continuously throughout the benefit waiting period of 5 months. After the
expiration of the benefit waiting period, you will receive monthly income benefit payments during
the continuation of your disability, but for no longer than 12 months.
If
your monthly income benefit has been payable for 12 months and your disability completely
prevents you from engaging in any occupation for which you are qualified by training, education
or experience, you will continue to receive your monthly income benefit.
However, monthly income benefit payments will cease on the earlier of the following dates:
*
The date you receive retirement benefits under any pension plan to which your employer
contributes or makes payroll deductions, other than benefits which become payable solely because
of disability.
*
The date shown below, based on when your disability commences:
Age 61 or under- your 65th birthday or the day 36 payments have been made, whichever is later.
Age 62, 63 or 64- the date 36 payments have been made. Age 65, 66 or 67 - the date 24 payments
have been made. Age 68 or 69 - the date 12 payments have been made.
@
 PDF to HTML - Convert PDF files to HTML files
TESTIMONY ON BEHALF OF COUNTY EXECUTIVE LEGGETT ON
EXPEDITED BILL 33-17, LEGISLATION TO AMEND CHAPTER 33,
PERSONNEL AND HUMAN RESOURCES
Good afternoon. I am Linda Herman, Executive Director of the Montgomery
County Employee Retirement Plans, which oversees the assets and the administration of
the County's three retirement plans as well as the Long Term Disability Program (LTD2).
I am here today on behalf of the County Executive to testify in support ofBill 33-17.
The legislation would change the benefits provided under the Long Term
Disability Program (LTD2) by extending the age at which benefits end from 65 to age 70.
The change brings the LTD2 program's income replacement in line with the changes
made to the availability for full unreduced Social Security benefits. Full Social Security
benefits are not available to employees born after 1943 until they reach the age of 66 or
later (reduced benefits are still available at age 62). On average affected County
employees were born after 1943.
Stopping the benefits at age 65 forces participants receiving L TD2 benefits, who
are not receiving Social Security disability benefits, to apply for the reduced Social
Security benefits when the LTD2 benefit ends at 65. Taking a reduction from the full
benefit from Social Security places an undue hardship on the L TD2 participants. The
bulk of those participants receiving LTD2 benefits became disabled performing their day-
to-day County duties and were awarded service connected disability benefits. Providing
this increased benefit for the approximately 6,000 employees covered by the program
results in a very minimal increase in the monthly premium paid by the County and
employees and results in a better alignment with benefits provided by the Social Security
Administration.
We look forward to working with the Council in its deliberations on this legislation.
 PDF to HTML - Convert PDF files to HTML files
Resolution No.:
---------
1ntroduced:
November 28, 2017
Adopted:
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Government Operations and Fiscal Policy Committee
SUBJECT:
Amendment to the Collective Bargaining Agreement with the Municipal &
County Government Employees Organization
Background
1.
Section 511 of the County Charter authorizes the County Council to provide by law for
collective bargaining, with arbitration or other impasse resolution procedures, with
authorized representatives of County Government employees.
Chapter 33, Article VII of the County Code implements Section 511 of the Charter and
provides for collective bargaining by the County Executive with the certified
representatives of County employees and for review of the resulting contract by the County
Council.
On October 16, 2017, the County Executive submitted to the Council an out-of-cycle
amendment to the collective bargaining agreement between the County government and
Municipal and County Government Employees Organization effective July 1, 2017
through June 30, 2019. A copy of the Agreement is attached to this Resolution.
The Executive has submitted to the Council the Memorandum of Understanding (MOU)
that requires changes i~ a County law and Expedited Bill 33-17 implementing the MOU.
A Government Operations and Fiscal Policy Committee considered the Agreement and
made recommendations on November 30, 2017.
The County Council has considered these terms and conditions and is required by law to
indicate its intention regarding the appropriation of funds or any legislation or regulations
required to implement the MOU.
2.
3.
4.
5.
6.
 PDF to HTML - Convert PDF files to HTML files
Page2
Resolution No.:
Action
The County Council for Montgomery County, Maryland approves the following
resolution:
The County Council intends to approve/reject the amendments to the Long Term
Disability Plan made by Expedited Bill
33-17,
Employees' Retirement Savings
Plan-Disability Benefits Plan-Termination of Benefits -Amendments.
This is a correct copy of Council action.
Linda M. Lauer, Clerk of the Council
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefits Plan\Resolution-MCGEO MOU.Docx
2
-0)
 PDF to HTML - Convert PDF files to HTML files
GO Item 1 &2
November 30, 2017
Worksession
MEMORANDUM
November 28, 2017
TO:
FROM:
Government Operations and Fiscal Policy Committee
Robert H. Drummer, Senior Legislative Attorney
rvfv
0
Worksession:
Expedited Bill 33-17, Employees' Retirement Savings Plan-
SUBJECT:
Disability Benefits Plan-Termination of Benefits - Amendments
Expedited Bill 33-17, Employees' Retirement Savings Plan - Disability Benefits Plan -
Termination of Benefits - Amendments, sponsored by Lead Sponsor Council President Berliner
at the request of the County Executive, was introduced on October 31, 2017. A public hearing
was held on November 28.
Bill 33-17 would increase the age long term disability benefits end under the LTD2 Plan
from 65 to 70.
Background
County employees who are participants in the Retirement Savings Plan (RSP), the
Guaranteed Retirement Income Plan (GRIP), or the Elected Officials Plan are eligible for benefits
under the LTD2 Disability Benefits Plan (the Plan or LTD2).
1
The Plan provides long term
disability benefits for both service-connected and non-service connected disabilities. A service
connected benefit is 52.5% of salary for partial disability and 70% of salary for total disability. A
non-service connected benefit is 2% of salary per year of County employment with a minimum
benefit of 30% and a maximum benefit of 60% of salary.
The Plan requires the CAO to terminate disability benefits when a participant reaches the
age of 65. Bill 33-17 would extend eligibility for disability benefits from age 65 to age 70. 0MB
estimates that the County's annual cost to extend benefits to age 70 would be $420,000. The
annual total cost to all employees would be $140,000 or $2.22 per month per employee. See the
Fiscal Impact Statement at ©5. This increase in employee disability benefits was negotiated
between the Executive and the union representing most County employees other than police and
fire, the Municipal & County Government Employees Association (MCGEO). The MOU between
the Executive and MCGEO is at ©19-20.
In
addition to the eligible employees represented by
Employees participating in the defined benefit plans under the Employee's Retirement System are eligible for a
different long term disability plan and a disability retirement pension that would not be affected by Bill 33-17.
1
 PDF to HTML - Convert PDF files to HTML files
MCGEO, the Bill would increase the disability benefit for eligible non-represented employees,
including elected officials.
Public Hearing
The lone speaker, Linda Herman, Executive Director of the Retirement Plans, speaking on
behalf of the Executive, supported the Bill. See ©25. Ms. Herman pointed out that the termination
of disability benefits at age 65 forces a participant to accept a reduced Social Security Retirement
Benefit because the normal retirement age is now 66 for persons born after 1943.
Issues
1.
What is the Council's Role in Collective Bargaining Agreements?
Under the County Employees Labor Relations Law for County employees other than police
or fire (County Code §§33-101 through 33-112), the County Council must review any term or
condition of each final collective bargaining agreement requiring an appropriation of funds or
enactment, repeal, or modification of a County law or regulation. On or before May 1, unless the
Council extends this deadline, the Council must indicate by resolution its intention to appropriate
funds for or otherwise implement the agreement or its intention not to do so, and state its reasons
for any intent to reject any part of an agreement. The Council is not bound by the agreement on
those matters over which the Council has final approval. The Council may address contract items
individually rather than on an all-or-nothing basis. See County Code §33-108(g)-G).
If
the Council indicates its intention to reject or opts not to fund any item, it must designate
a representative to meet with the parties and present the Council's views in their further
negotiations. The parties must submit the results of any further negotiations, or impasse
procedures if the parties cannot agree on a revised contract, to the Council by May 10 (unless the
May 1 date was extended).
The Council approved a collective bargaining agreement with the union representing these
employees, MCGEO, last May. The Agreement runs from July 1, 2017 to June 30, 2019. The
MOU with MCGEO agreeing to submit this legislation to the Council is an out-of-cycle
amendment to the existing collective bargaining agreement. Section 33-108(n) provides:
(n)
Out-of-cycle amendments.
The process in subsections (i) and
G)
applies to
Council review of any amendment to a collective bargaining agreement that
the Council receives after May 15 of any year, but the deadlines in those
subsections do not apply. The Council President must set action deadlines
which result, to the extent feasible, in a similar timetable relative to the date
the Council received the amendment.
Although the timetable for Council review of an out-of-cycle amendment is different, the
Council must follow the same procedure used for reviewing a new collective bargaining
agreement. Therefore, to follow the statutory procedure, a resolution indicating the intent to
approve or reject the MOU was introduced on November 28. See ©26-27.
2
 PDF to HTML - Convert PDF files to HTML files
2. Would Bill 33-17 amend the current MCGEO Agreement?
Section 44.5 of the MCGEO Agreement provides for a disability plan benefit. A copy of
the current version of Section 44.5 is at ©21. Although Section 44.5 provides for a 66 2/3 percent
of salary benefit for all service connected disabilities, County Code §33-131 provides the
following benefits for a service-connected disability:
The annual amount of service-connected disability payments payable for total
incapacity equals 70% of the employee's final earnings, less any reductions
provided in Section 33-134. The annual amount of service-connected disability
payments payable for partial incapacity equals 52½% of the employee's final
earnmgs.
The Council amended
§
3 3-131 to establish different benefits for total and partial disability
in Bill 45-10, enacted on June 28, 2011 and signed into law on July 11, 2011. Section 44.5 of the
MCGEO Agreement has never been amended to correspond to the change in law. Similarly, the
MOU submitted by the Executive does not include an amendment to Section 44.5 of the MCGEO
Agreement to correspond with the change in law that would be enacted by Bill 33-17. Despite
these differences, the County Code provisions control over the conflicting provisions of the
MCGEO Agreement.
Although the LTD2 Plan follows the County Code and not the collective bargaining
agreement, the failure to amend the MCGEO Agreement to make it consistent with the actual
benefits available to a disabled employee leads to confusion and provides misinformation.
3. What is the fiscal impact of Bill 33-17?
The County contributes 75% of the cost of the LTD2 Plan ($13.82 per month, per
participant, annual total - $873,000) and each employee contributes 25% of the cost ($4.61 per
month, per participant, annual total - $291,000). See the basic outline of the Plan at ©9 and the
Summary of the Plan Description at ©10-18. These costs are based upon an actuarial evaluation
done every 2 years. The County's actuary estimated the increase in costs to accommodate Bill 33-
17 to be:
Continuing service connected disability until age 70
o Benefits
• Monthly disability payments would continue until age 70
• Health insurance benefits would continue, if eligible
o Estimated Cost increases
• County from $873,000 to $1.293 million - $420,00 annually
• Employees from $291,000 to $431,000 ($4.61 per month to $6.83) -
$140,000 annually
The Actuary's letter is at ©22-23. Bill 33-17 would apply this change retroactively to
January 1, 2017. The retroactive effective date would result in 3 disability beneficiaries currently
age 65 or older receiving back benefits and additional eligibility until age 70. The actuary's
3
 PDF to HTML - Convert PDF files to HTML files
estimate of the additional cost for the Bill includes the cost to make these benefits retroactive to
January 1, 2017.
4. What is the differenc e between the
LTDl
Plan and the
LTD2
Plan?
Public safety employees and employees hired before 1994 are eligible for the defined
benefit plan under the Employees Retirement System (ERS). All other County employees
participate in the defined contribution RSP, the cash balance GRIP, or the Elected Officials Plan.
Bill 33-17 would only affect RSP, GRIP, and Elected Officials Plan participants. ERS participants
are eligible for the LTD 1 Disability Plan and a defined benefit disability retirement pension. The
LTDl Plan is designed to pay benefits to a disabled employee for up to 36 months or until the
employee becomes eligible for a disability retirement pension under the ERS. The maximum age
for receiving LTDl benefits is currently age 70. See the LTDl Plan summary at ©24.
RSP, GRIP, and Elected Officials Plan participants are eligible for the LTD2 Plan that
would be amended by Bill 33-17. The LTD2 Plan benefits currently end at age 65 unless the
employee becomes disabled after age 65. An employee who becomes disabled after age 65 is
eligible for up to 12 months of LTD2 benefits.
A comparison of the benefits under LTD 1 and L TD2 is incomplete without considering
the significant differences between the retirement benefits under the ERS and the RSP/GRIP. The
difference in benefits can be seen by looking at the cost to the County to provide each retirement
plan. Here is a look at the difference:
Participation and Cost Comparisons:
A large disparity exists in the costs of the County Government
retirement plans.
The table below shows the number of employees participating in each of the retirement
plans and the total FY18 cost (excluding employee contributions) for each plan. The data show that while
43% of employees participate in the ERS, the ERS accounts for 76% of total County Government retirement
plan costs. The average cost per employee for an ERS participant
is
almost four times greater than the cost
per RSP participant and more than six times greater than the cost per GRIP participant.
Plan Participants
Employees
ERS
(Defined Benefit)
FY18 Cost
$Amount
(millions)
$80.65
$20.40
$5.10
Percent
43.4%
40.0%
16.6%
Percent
76.0%
19.2%
4.8%
Average
FY18 Cost/
Employee
$20,228
$5,557
$3,345
3,987
3,670
1,526
RSP
(Defined Contribution)
GRIP
(Cash Balance)
The FY18 contribution rates or "loads" (as a percentage of an employee's salary) are 22.1
%
(public
safety) and 45.1
%
(non-public safety) for the ERS, 8.0% for the RSP, and 5.5% for the GRIP.
Bill 33-17 would be a small step toward leveling the vastly different retirement benefits
between the defined benefit plans under the ERS with the defined contribution benefits for the
RSP, GRIP, and the Elected Officials Plan.
5. Should Bill 33-17 be enacted outside of the normal collective bargainin g timeline?
4
 PDF to HTML - Convert PDF files to HTML files
The County collective bargaining law mandates collective bargaining to begin in
November of the year before an agreement expires and to be completed on or before April 1 of the
year before the new fiscal year begins on July 1. This statutory timeline is designed to coincide
with the Council's deliberations on the operating budget because employee wages and benefits
generally represents approximately 80% of the County government's operating budget.
Negotiations between the Executive and MCGEO for a new Agreement are mandated to begin in
November 2018. Despite this statutory timeline for bargaining, §33-108(n) expressly authorizes
an out-of-cycle amendment to a collective bargaining agreement, such as the MOU between
MCGEO and the Executive that led to the submission ofBill 33-17 to the Council.
The Council explained the public policy behind the collective bargaining law as follows:
33-101. Declaration ofpolicy.
It is the public policy of Montgomery County to promote a harmonious,
peaceful, and cooperative relationship between the county government and its
employees and to protect the public by assuring, at all times, the responsive,
orderly, and efficient operation of county government and services. Since
unresolved disputes in public service are harmful to the public and to employees,
adequate means should be available for preventing disputes and for resolving them
when they occur. To that end, it is in the public interest that employees have the
opportunity to bargain collectively over wages, hours, and other terms and
conditions of employment, as authorized by Charter section 511, through a
representative oftheir choice, or to refrain from collective bargaining. It is also in
the public interest that the county government and a representative of county
employees bargain collectively in good faith without interference with the orderly
process of government and that they implement any agreements reached through
collective bargaining.
The county council also recognizes that employee organizations and the
county government each possess substantial means for initiating actions on wages,
hours, and working conditions of employees. Therefore, in order to preserve an
appropriate balance between labor and management in the public service, the
county council states that once the employees voluntarily select a representative,
collective bargaining shall be used in place of, and not in addition to, existing
means for initiating governmental action on subjects that are defined as
appropriate for like collective bargaining in this article.
The good faith negotiations required by the Collective Bargaining Law anticipates a give
and take process whereby the parties arrive at an agreement that provides reasonable wages and
benefits for the employees that are affordable under the anticipated restraints of the County's
operating budget.
It
normally involves concessions from both sides. If Bill 33-17 was the result
of a comprehensive negotiation over wages and benefits for these employees, it has significant
merit. The increase in disability benefits is modest as is the annual cost. In addition, Bill 33-17 is
a small step toward leveling the retirement benefits with those enjoyed by ERS participants.
However, Bill 33-17 as a stand-alone amendment to the collective bargaining agreement is simply
a modest increase in disability benefits without any corresponding concessions to the County. The
5
 PDF to HTML - Convert PDF files to HTML files
Executive transmission does not explain why it was necessary to negotiate these benefits in the
middle of the existing collective bargaining agreement.
6. Should the Bill be retroactive to January 1, 2017?
The actuary estimated the annual cost to the County for Bill 33-17 to be $420,000. This
estimate includes the cost to provide retroactive benefits to 3 employees whose benefits have or
will soon terminate as they reach age 65. The actuary did not estimate the additional cost to
provide these benefits retroactively to January 1, 2017. The Executive's transmission does not
explain why he felt it was important to provide retroactive benefits.
7. Should the termination age be increased to 70?
The Bill would increase the termination age for these disability benefits from 65 to 70. The
Executive pointed out that the normal retirement age for Social Security benefits has increased
from age 65 to age 66 for persons born after 1943. For persons born after 1960, the normal
retirement age is 67. However, the normal retirement age has not been raised to age 70. Normal
Social Security retirement benefits increase by approximately 8% each year a person waits to
request benefits up to age 70. A person who waits to request benefits until age 70 would receive
the maximum benefit available based upon the person's employment history. Bill 33-17 would
permit a disabled participant to continue receiving LTD2 benefits until reaching the maximum
Social Security retirement benefit.
This packet contains:
Expedited Bill 33-17
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
L TD2 Plan Outline
Summary of LTD2 Plan Description
MOU with MCGEO
MCGEO Agreement, Section
44.5
Actuary Letter
Summary of LTD 1 Plan
Testimony of Linda Herman
Resolution to approve MCGEO MOU
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefits Plan\GO Memo.Docx
Circle#
1
3
4
5
9
10
19
21
22
24
25
26
6
 PDF to HTML - Convert PDF files to HTML files
33-1 7
Expedited Bill No.
Retirement
Concerning: Employees'
Savings Plan - Disability Benefits
Plan - Termination of Benefits -
Amendments
Revised: October 18,
2017
Draft No.
_1
October
31, 2017
Introduced:
May
1, 2019
Expires:
[date]
Enacted:
[date signed]
Executive:
[date takes effect]
Effective:
Sunset Date: _N ~o n~ e~ --- ---
[year]
Ch.
JtR _,
Laws of Mont. Co.
CO UN TY COUNCIL
FO R MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the request of the Cou
nty Executive
AN EXP EDI TED ACT
to:
fits; and
amend the age for termination of long term disability bene
(1)
Plan.
generally amend the laws governing the Disability Benefits
(2)
Byam.ending
Montgomery County Code
Chapter 33, Personnel and Hum an Resources
Section 33-133
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Do uble boldface brackets]]
* * *
Hea ding or defined term.
Add ed to existing law by original bill.
Dele tedfrom existing law by orig inal bill.
Add ed by amendment.
Dele tedfrom existing law or the bill by amendment.
Existing law unqf fecte d by bill.
es the following Act:
The County Council for Montgomery County, Maryland approv
 PDF to HTML - Convert PDF files to HTML files
ExPEDITED BILL
No. 33-17
1
Sec.
1.
Section 33-133 is amended as follows:
2
3
4
5
33-133. Termination of Benefits.
(a)
Non-public safety employee.
The administrator must terminate initial or
continued disability benefits to a non-public safety employee if the
employee:
(1)
(2)
recovers from the disability, as determined by the administrator;
does not provide the administrator with information that the
administrator requires; or
(3)
(b)
attains age 70 [65], or a later age if required under federal law.
Public safety employee.
The administrator must terminate initial or
continued disability benefits to a public safety employee if the employee:
(1) recovers from the disability, as determined by the administrator;
(2)
does not provide the administrator with information that the
administrator requires; or
(3)
attains age 70 [65], or a later age if required under federal law, if
the benefit is for a non-service connected disability.
Expedited Effective Date.
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Sec. 2.
20
21
The Council declares that this legislation is necessary for the immediate
The
protection of the public interest. This Act takes effect on January 1, 2017.
to
amendments in Section 1 apply to all participants receiving benefits or entitled
receive benefits on or after January 1, 2017.
Approved:
22
23
Roger Berliner, President, County Council
Date
benefits plan\bill 1.docx
0
f:\law\bills\1733 employees' retirement savings plan-disability
 PDF to HTML - Convert PDF files to HTML files
LEGISLATIVE REQUEST REPORT
Expedited Bill 33-17
ination of Benefits
-
Emp loye es' Retirement Savings Plan
-
Disability Benefits Plan
-
Term
Amendments
The legislation would change the benefits provided under the Long
h
Term Disability Prog ram (LTD2) by extending the age at whic
benefits end from 65 to age 70. The change brings the L TD2
prog ram' s income replacement in line with the changes made to the
availability for full unreduced Social Security benefits. Full Social
Security benefits are not available to employees born after 1943 until
they reach the age of 66 or later (reduced benefits are still available at
age
62).
Stopping the benefits at age 65 forces participants receiving L TD2
benefits, who are not receiving Social Security disability benefits, to
apply for the reduced Social Security benefits when the L TD2 bene fit
ends at 65. Taking a reduction from the full benefit from Social
Security places an undu e hardship on the L TD2 participants. The bulk
of those participants receiving L TD2 benefits became disabled
performing their day-to-day County duties and were awarded service
connected disability benefits. Providing this increased benefit for the
approximately 6,000 employees covered by the program results in a
very minimal increase in the monthly premium paid by the County and
employees and results in a better alignment with benefits provided by
the Social Security Administration.
To provide income replacement to County and participating
employees who beco me disabled.
Montgomery County Employee Retirement Plans
&
the Office of
Human Resources
Office of Management and Budget
Department of Finance
DESCRIPTION:
PROBLEM:
GOA LSA ND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
NIA
To be researched.
Montgomery County Employee Retirement Plans
Office of Human Resources
NIA
WITHIN
MUNICIPALITIES:
PENALTIES:
NIA
ts Plan\LRR.Docx
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefi
 PDF to HTML - Convert PDF files to HTML files
.::-··._··:
·:~-:~---~-~;'i..--!
...
l-::·,
.···:.::.·.-----·
··. i
OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
October 16, 2017
TO:
Roger Berliner, President
Montgomery County Council
;
I.
FROM:
SUBJECT:
Isiah
Leggett, County Exewtiv~
Legislation to Amend Chapter 33, Personnel and Hmnan Resources
I am attaching for Council's consideration a bill that would amend the
County's law related to the payment of long-term disability benefits to participating
employees. The legislation would change the benefits provided under the Long Term
Disability Program (LTD2) by extending the age at which benefits end from 65 to age 70.
The change brings the LTD2 program's income replacement in line with the changes
made to the availability for full, unreduced Social Security benefits. Full Social Security
benefits are not available to employees born after 1943 until they reach the age of 66 or
later (reduced benefits are still available at age 62). On average, affected County
employees were born after 1943.
Stopping the benefits at age 65 forces participants receiving LTD2
benefits, who are not receiving Social Security disability benefits, to apply for the
reduced Social Security benefits when the LTD2 benefit ends at 65. Taking a reduction
from the full benefit from Social Security places an undue hardship on the LTD2
participants. The bulk of those participants receiving LTD2 benefits became disabled
performing their day-to-day County duties and were awarded service connected disability
benefits. Providing this increased benefit for the approximately 6,000 employees
covered by the program results in a minimal increase in the monthly premiwn paid by the
County and employees, and results in better alignment with benefits provided by the
Social Security Administration.
Thank you for your consideration of this matter.
Attachments
c:
Linda Herman, Executive Director, MCERP
Shawn Stokes, Director, Office of Human Resources
montgomerycountymd.gov/311
'ta,MhiHl:MH
(~311>
240-773-3556 TTY
(i)
 PDF to HTML - Convert PDF files to HTML files
:-:-_·_
-
-
i '
\
:
I
I
··.
Fiscal Impact Statement
Expedited
Bill XX-17
-Disability Benefits
Plan
i.
1. Legislative Summary
I
The biil would amend the age for termination of long term disability benefits from
age
65
to age 70, and generally
amend
the laws governing the County's Long Term Disability
Benefits
Plan
(LTD2).
2. An
estimate
of
changes
in
County revenues
and
expenditures regardless
of
whether
the revenues
or
expenditures are assumed in the recommended or approved budget.
Includes
source
.of
information, assumptions, and methodologies used.
This bill would change the benefits provided by LTD2 by extending the age at which
benefits end from 65 to 70.
An
actuarial analysis performed by the Fund's actuary, Aon,·
estimates the annual
cost
of
the County's
portion of
these
benefits to
increase
from
$873,000
to
$1,293,000,
an
increase of $420,000, The employee portion of
the
benefit
would increase from $291,000 to $431,000,
an
increase of $140,000. This charge is
administered
through
payroll, and would result in a
monthly
increase
of
$2.22 per
employee.
The
analysis assumes the current cost share arrangement between
the County
and
employees of75%/25%.
3.
Revenue
and
expenditure
estimates covering at least the next 6 fiscal years.
Assuming an increase of
$420,000
annually,
this bill
would have an estimated impact of
$2,520,000
in
increased expenditures
over the next 6
fiscal years.
There is no
anticipated
impact on revenues.
·
4. An actuarial analysis through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
See above.
5. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future
spending.
Not applicable.
6. An estimate of the staff time needed to implement the biH.
There are no additional costs for staff to implement the legislation.
7. An explanation of how the addition of new staff responsibilities would
affect
other
duties,
Not applicable.
 PDF to HTML - Convert PDF files to HTML files
-----': ~--~-;Y··-1
8. An estim ate of costs when an addit ional appro priat ion is needed.
Not applicable.
estimates.
9. A descr iptio n of any varia ble that could affect revenue and cost
Not applicable.
to prilject.
10. Rang es of reven ue or expe nditu res that are unce rtain or difficult
Not applicable.
11, If a bill is likely to have no fiscal impact, why that is the case,
Not applicable.
12. Othe r fiscal impacts or comments,
Not applicable.
13. The following contr ibute d to and conc urred with this analysis:
Corey Orlosky, Office of Management and Budget ·
t Plans
Linda Hennan, Executive Director, Montgomery County Employee Retiremen
 PDF to HTML - Convert PDF files to HTML files
....
·.·..:·---
-----·
. --. -_._._ .-:-=·-~.
..
. ·.,.-.-.-::··_·1
Economic Impact Statement
Expedited Bill
n-17,
Disability Benefits Plan
Background:
This legislation would amend Montgomery County Code Section
33~133,
Termination of
Benefits, to increase the age from
65
to
70
for
termination of long term disability
·
benefits,
1.
The sources of informat ion, assumpti.ons, and methodologies
used.
Source of information
is
the Montgomery County Long~Term Disability Benefits
Plan
(LTD2).
An
actuarial valuation is performed every two years for the program to
set the contribution rate for the County, participating agencies and employees. Based
on the actuarial analysis performed by the fund's actuary for Expedited Bill##~
17,
an
estimate of the increase
in
the annual cost of the County's portion would be
$420,000
from
$873,000
to
$1,293,000.
The employee portion of the benefit would increase
from
$291,000
to
$431,000,
an increase of
$140,000,
resulting in a monthly increase
of
$2.22
per employee. The analysis conducted by. the
actuary
assumes the current
cost share agreement between the County and employees of 75%/25%.
2. A descripti on of any variable that could affect the economic i~pact estimates.
The variables that could affect the economic impact estimates are the number of
recipients who reside
in
the County receiving long-tenn disability benefits, the total
amount of benefits or income received by those recipients, and the deduction from the
salary of County employees.
3. The
Bill's positive or negative effect, if
any
on employment, spending , savings,
investme nt, incomes, arid property values
in
the County.
Because of the lack of data on the number of recipients currently residing in the
County receiving long-tenn disability benefits,
it
is uncertain whether Expedited Bill
##-17 would have a significant effect on the County's economy and
total
personal
income. The increase in benefits would have a positive impact on an individual
recipient's personal income. ·However, since the estimated annual cost of the
County's portion of these benefits would increase by only
$420,000,
the economic
impact on the County's overall economy and income would be minimal. Finally,
since Expedited Bill ##-17 would change the employee benefit portion and result in
an increase or $2.22 per month or
$26.64
per year,
it
would also have a minimal
impact on the economy.
4.
If
a
Bill
is
likely to have no economic impact,
why is
that
the case?
Please see paragraph #3
Page 1 of2
(j)
 PDF to HTML - Convert PDF files to HTML files
___
•:-:
......
'.·.
----~.--.··
Economic Impac t Statem ent .
Expedi~ed Bill :xx-17, Disability Benefits Plan
5. The following contributed
to
or concu rred with this
analysis: David Platt, and
Rob Hagedoorn, Finance; Linda Herman and Robert Goff, MCERP.
Alexandre Espin osa,e ctor
Department of Finance
Date
1
Page2 of2
®
 PDF to HTML - Convert PDF files to HTML files
Montgome ry County
Long Term
Disability Benefits Plan {LTD2)
Background:
When the Retirement Savings Plan (RSP) was created in October 1994 for all non-unifor med
public safety and non-public safety employees, the LTD2 plan was also created.
o An actuarial analysis is performed every two years to set the contributio n rate for the
County, participating agencies and employees.
As part of collective bargaining with MCGEO, the County is required to make employer
contributio ns (8% of the LTD2 participant's salary) until the participant turns 62
The County pays the employer contributio n for insurance benefits for LTD2 participants
LTD2 participant's RSP or Guaranteed Retirement Income Plan (GRIP) account is frozen until age
62, if employer contributions are required
Covered employees:
All County employees hired after October 1994, who are non-unifor med public safety or non-
public safety, who participate in the RSP and GRIP
Total covered employees - approximately 6,000 (including participating agencies)
Benefits:
Service Connected
o 52.5% or 70% of salary until age 65
Non-Service Connected
o 2% per year of County employme nt with a minimum of 30% and a maximum of 60%
until age 65
Contributions:
FY 17/18
o 75% - County - $13.82 per month, per participant, annual total - $873,000
o 25% - Employees - $4.61 per month, per participant, annual total - $291,000
Recommended Change:
Continuing
service connected
disability until age 70
o
Benefits
• Monthly disability payments would continue until age 70
Health insurance benefits would continue, if eligible
Estimated Cost increases
• County from $873,000 to $1.293 million - $420,00 annually
• Employees from $291,000 to $431,000 ($4.61 per month to $6.83) - $140,000
annually
o
(j)
 PDF to HTML - Convert PDF files to HTML files
M ON TG OM ER Y CO UN TY
Disability Benefits P la n
Su m m ar y Plan Description
October 2016
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____.E)
,____ _
 PDF to HTML - Convert PDF files to HTML files
lcontentsl
Introduction ................................................................................................................................................... 3
Eligibility ....................................................................................................................................................... 3
Definition of Disability ................................................................................................................................. 3
Initial Disability ............................................................................................................................................. 3
Temporary Disability .................................................................................................................................... 4
Continuing Disability .................................................................................................................................... 4
Application Process ....................................................................................................................................... 4
Disability Review Panel ................................................................................................................................ 5
Benefits .......................................................................................................................................................... 5
Service-Connected ............................................................................................................................... 5
Non-Service-Connected ....................................................................................................................... 6
Public Safety Employee Cost of Living Adjustment... .................................................................................. 7
Reduction in Benefits .................................................................................................................................... 7
Payment Period .............................................................................................................................................. 8
Employer Contributions to the Retirement Plan............................................................................................ 8
Re-evaluations of Continuation of Payments ................................................................................................
8
Re-Employment Program .............................................................................................................................. 8
Appeals .......................................................................................................................................................... 9
Errors ............................................................................................................................................................. 9
Resources ....................................................................................................................................................... 9
2
 PDF to HTML - Convert PDF files to HTML files
Introduction
The purpose of this Summary Description is to provide you with an informal guide
to
the
key provisions of the Disability Benefits Plan (Long Term Disability (LTD) Plan), as
provided for in the Montgomery County Code, Chapter 33, Article VIII, Division 2
("County Code"). Every effort has been made to accurately summarize the LTD Plan.
However, in the event of a conflict between this Summary Description and the County
Code, the County Code will govern.
While Montgomery County Government (the "County") expects to continue the LTD
Plan, it is the County' s position that there is no implied contract between employees and
the County
to
do so. The County reserves the right to change or discontinue any of the
terms of the LTD Plan, subject to applicable laws and collective bargaining agreements.
In addition, the County may amend the LTD Plan, either prospectively or retroactively, as
required by Federal or State law.
The LTD Plan is sponsored by the County. Other government agencies and quasi-
government agencies elect to participate in the County's LTD Plan. If you are an
employee of one of those agencies, you participate under the same terms and conditions
as a County employee.
Eligibility
You are eligible for the LTD Plan if you are budgeted to work for the County or a
participating agency at least 20 hours a week and participate in the:
Retirement Savings Plan,
Guaranteed Retirement Income Plan, or
Elected Officials' Plan.
Your LTD coverage begins automatically on your date of retirement plan membership.
Definition of Disability
To qualify for LTD Plan benefits, you must meet the LTD Plan's definition of disability.
Disability is divided into two stages: initial disability and continued disability.
If
you
qualify for an initial disability, the County will re-evaluate you before the end of 36
months (12 months for a public safety employee who has a non-service-related disability)
to determine if you meet the requirements for a continuing disability.
Disability benefits are also divided into two categories:
service-connected, depending upon the disability.
non-service-connected and
Initial Disability
You are considered disabled if you cannot perform the job you held when you became
disabled. Your condition must be the result of an accident, illness or injury and not
3
@
 PDF to HTML - Convert PDF files to HTML files
caused by your willful misconduct or willful negligence. See non-service-connected and
service-connected for more information.
Tempor ary Disability
After you qualify for an initial disability, you may be approved for a temporary disability
for one or more one year periods. At the end of the period of the temporary disability, a
determination will be made as to whether you will continue to receive payments under
this LTD Plan.
Continuing Disability
If
you qualify for an initial disability, at the end of the initial period you are generally
considered disabled if:
• your condition has not changed;
• you cannot perform any job for which you are reasonably suited, based on your
education, training or retraining and experience; and,
• your condition is likely to be permanent.
If
you are a public safety employee, you
also must also be unable to earn substantially similar final earnings.
If
you qualify for service-connected benefits, you may be considered partially
incapacitated.
If
you are partially incapacitated, you are considered unable to perform
one or more of the essential functions of the job you held when you became disabled but
you may still perform other substantial gainful employment.
See non-service-connected and service-connected for more information.
Application Process
You (or your representative) may file an application for disability benefits with the Chief
Administrative Officer. Applications should be filed through the Montgomery County
th
Employee Retirement Plans (MCERP), 101 Monroe Street, 15 Floor, Rockville, MD
20850.
In applying for LTD benefits, MCERP will provide you with the proper forms and any
assistance you require with the application process.
In
addition to completing the forms
and submitting to MCERP, you will also need to provide copies of your medical records
to the MCERP Disability Manager. Your application and your medical records will be
forwarded to the Disability Review Panel.
In order to receive service-connected benefits for an accidental injury that does not cause
mental impairment, you must report the injury as soon as practicable, but within one year
of the injury or you must submit a timely claim for workers' compensation. You must
also file an application for benefits within one year of separation from County service.
These time periods do not begin if you have incapacitating injuries and are unable to
make a report due to the injuries.
For a non-service-connected disability, the disabling condition or mJury must have
occurred prior to termination of employment.
4
@
 PDF to HTML - Convert PDF files to HTML files
Disability Review Panel
The Disability Review Panel will review your application and medical records. Upon
completion of the review, the Panel will recommend to the Chief Administrative Officer
whether or not you are eligible to receive LTD benefits. When making its determination,
the Disability Review Panel may require you to undergo an independent medical
examination.
MCERP will notify you in writing of the Chief Administrative Officer's decision. The
effective date of your payments would be the earlier of the date by which you have
exhausted all accrued sick and compensatory leave in excess of 80 hours or the date of
the Chief Administrative Officer's decision.
Benefits
The monthly benefits (payments) you receive from the LTD plan replace a percentage of
your final earnings. Your final earnings are your highest average annual pay earned at the
County or participating agency (less shift pay differential) for any 18 consecutive-month
period. The amount you receive depends on whether your disability is service-connected
or non-service-connected. Employment taxes (FICA) will be withheld from your
payments for the first six months.
Service-Connected Disability
A service-connected disability is a condition due to an accident, illness, occupational
disease or condition which is aggravated while performing your duties as an employee.
Amount of Benefits
Partial Incapacity - You receive 52-1/2% of your final earnings (minus
any offset) if the Disability Review Panel determines that you do not
qualify for total incapacity.
If
you are partially incapacitated, you are
considered unable to perform one or more of the essential functions of
the job you held when you became disabled, but you may still perform
other substantial gainful employment.
Total Incapacity - You receive at least 70% of your final earnings
(minus any offsets) if the Disability Review Panel determines that the
disability meets the Social Security Administration's requirements for
disability. In order to be determined to be disabled by the Social
Security Administration, you must be unable to engage in any
substantial gainful activity because of a medically determinable
physical or mental impairment that can be expected to end in death, or
last for at least 12 months.
You do not have to actually have a Social Security determination in
order to be eligible for the 70% benefit.
Social Security Award - You will receive 70% of your final earnings
(minus any offsets) if you meet the following conditions:
5
@
 PDF to HTML - Convert PDF files to HTML files
(a) you are awarded Social Security disability benefits;
(b) you applied for Social Security benefits within 90 days of the
Coun ty's notification to you of the disability determination.;
(c) you submit the information within 60 days of receiving the
Social Security decision; and
(d) the Social Security benefits were based on the same impairment.
Ineligibility
fits until you
You are not eligible to receive service or non-service-connected bene
6 months
have been employed by the County (or participating agency) for at least
and you are a member of a County retirement plan.
fits if you
You are not eligible to receive service-connected disability bene
committed an offense that would justify termination for misconduct.
Alternative Position
ion in the
You may receive a 5% salary increase if you accept an alternative posit
alternative
County government for which you are qualified. Your salary in the
ned to the
position will not exceed the maximum salary of the pay grade assig
g Unit or
position. A member of the Office, Professional and Technical Bargainin
alternative
the Service, Labor and Trades Bargaining Unit who accepts an
disability
placement incentive is not eligible to apply for a service-connected
made.
benefit based on the disability for which the alternative placement was
Non-Service-Connected Disability
s that is not the
A non-service-related disability is a condition due to an accident or illnes
receive any benefits
direct result of performing your duties as an employee. You will not
willful negligence.
for an accident or illness caused by your own willful misconduct or
ely preceding the
You must have worked for the County for the six months immediat
disability.
your final earnings
If your disability is non-service-connected, you will receive 2% of
one or more of the
multiplied by the number of years you have been a member of
earnirtgs. You will
County's retirement plans, up to a maximum of 60% of your final
see Reduction in
receive a minimum benefit of 30% of your final earnings.
In
addition,
Benefits section.
Examples:
1.
, your
If
you have been a member of the Coun ty's retirement plan for 17 years
ce).
monthly payment is 34% of your final earnings (2% x 17 years of servi
hly
If
you have been a member of the retirement plan for 10 years, your mont
.
payment is 30% of your final earnings. The minimum payment is 30%
2.
6
@
 PDF to HTML - Convert PDF files to HTML files
Public Safety Employee Cost of Living Adjustment
If
you are a public safety employee, you will receive a cost of living adjustment each
year. This will equal 60% of the annual change in the cost of living index (as determined
by the Baltimore-Washington Area Consumer Price Index). The cost of living adjustment
is limited to 3% each year.
If
you receive a disability retirement benefit for a disability
occurring after June 30, 2011, as determined by the Disabil ity Review Panel, any
adjustment of your benefit payment will not exceed 2.5%.
Reduction in Benefits
Your benefits will be reduced for the following:
1. Other LTD Benefits
Your benefits will be reduced one dollar for each one dollar you receive from:
Social Security disability benefits (including benefits paid to your dependents
because of your disability)
any other government group income maintenance insurance coverage
any government disability plan
the Employees' Retirement System
the GRIP or RSP - any amount you are entitled to receive (i.e., your plan
account) for a public safety employee
A.
If
you receive any of these payments as a lump sum, your LTD benefit will be
adjusted as if the lump sum were being paid as an annuity.
B. You are required to apply for Social Security disability benefits.
If
you
receive retroactive benefits covering the period of time you received benefits from
the LTD Plan, you must reimburse the County.
C. The benefit calculated under this formula may be adjusted by benefits from
other sources and you may receive less than 30% of your final earnings.
2. Emplo yment
Your County disability benefit will be reduced one dollar for each three dollars of
your earnings or income you receive because of employment, including net
earnings from self-employment.
3. Worke rs' Compensation
The LTD payme nt you receive from the County is subject to a reduction by any
worker s' compensation award for which you may be eligible.
If
you are eligible
for both and your disability benefit is greater than what you are entitled to receive
from worker s' compensation, you will receive only the disability benefit. (Your
7
 PDF to HTML - Convert PDF files to HTML files
ation obligation.) You
LTD payment satisfies the Cou nty' s wor kers ' compens
mus t report any changes in your income to the MCERP.
Pay men t Period
disability benefits will generally
If
you are a non public safety employee, you r continued
last until:
• you recover from your disability (before age 65)
Officer with any necessary
• you fail to provide the Chi ef Administrative
or if you refuse to see a
information (such as any earnings or tax information),
doctor)
62), or
• you reach age 65 (unless you beca me disabled after age
• you r death.
as follows:
If
you are disabled at age 62 or older your benefits will last
service-connected, your benefit
If
you are a public safety employee and you r disability is
disabled and provide requested
will last for your lifetime (as long as you remain
n you turn 65.
information). Your benefits will not automatically end whe
Plan and Guaranteed Inco me
Em ploy er Contributions to the Retirement Savings
Ret irem ent Plan
me disabled, you may receive
If
you are a non-public safety employee and you beco
reach age 62. To qualify for
emp loye r contributions to your retirement plan until you
determined by the Disability
these employer contributions, your disability mus t be
tantial gainful activity by reas on
Rev iew Panel to make you unable to engage in any subs
ent which can be expected to
of any medically determinable physical or mental impairm
to last for a continuous peri od of
result in death or which has lasted or can be expected
ion of your account balance in
not less than 12 months. You may not receive a distribut
s.
the RSP or GRIP while you are receiving these contribution
Re-Evaluation of Continuation of Pay men ts
ical examination to determine
Afte r the initial disability period, you mus t undergo a med
fits.
If
you are found to be
if you are entitled to receive continued disability bene
end.
ineligible, the disability benefits under this LTD Plan will
Re- Em ploy men t Program
ugh a program for employees
The Chi ef Administrative Officer may offer you a job thro
ld assign you a job you could
who are on disability. The re-employment program wou
you base d on your training,
perform with you r disability, and whi ch is suited for
ies. You will be notified if you
education, experience and physical and mental capabilit
8
@
 PDF to HTML - Convert PDF files to HTML files
participate or you
qualify for this program.
If
you are selected for the program, you must
will forfeit your benefits.
Appeals
If
you disagree with
The Chie f Administrator has the full discretion to interpret the Plan.
ding a decision to
any decisions regarding your eligibility for disability benefits, inclu
of your receipt of
discontinue your benefits, you may appeal the decision within
20
days
an Resources at
101
written claim denial. The appeal should be sent to the Office of Hum
Arbitration Board
Monroe Street,
7
th
Floor, Rockville, Maryland
20850.
The Disability
a hearing.
will review your appeal and should issue a decision within
30
days after
Errors
to the County.
If
you receive any monetary amount due to an error, you must return it
Resources
MCE RP
th
101
Monroe Street,
15
Floor
Mail:
Rockville,
MD
20850
Retirement@montgomerycountymd.gov
Email:
Phone:
240-777-8230
301-279-1424
Fax:
www.montgomerycountvmd.gov/retirement
Web:
Disability Manager
th
l
0 1
Monroe Street,
15
Floor
Mail:
Rockville, MD
20850
Phone:
240-777-8238
9
@
 PDF to HTML - Convert PDF files to HTML files
·1.
MEMOR ANDUMO F UNDERS TANDING
BETWEEN THE MONTGOMERY COUNTY GOVERNMENT
AND THEMONICIPAL
&
COUNTY GOVERNMENT EMPLOYEES ORGANIZATION
UNITED FOOD
&
C01\1MERCIAL WORKERS, LOCAL 1994, AFL-CIO
The Montgome ry County Government (Employer) and the Municipal
&
County Government
Employees Organization, UFCW Local 1994, AFL-CIO (Union) (hereinafter parties) engaged
in
a collective
bargaining
mid-term change to the Long Term Disability Benefits
(L
ID2)
for
affected Montgome ry County bargaining unit employees hired after October 1994, who are non-
public safety and public safety employees who participate
in
the Retirenient Savings Plan or the
Guarantee d Retirement In.come Plan.
This Memorand um of Agreement is to address what the parties recognize is a needed change in
the Montgome ry County Code (Code), Sec.33-133 regarding Terminati on of Benefits, for non-
public safety and public safety employees who participate in the LTD2 program.
In
the Code, the
administra tor must terminate initial or continued disability benefits to
a
non-public safety or
public safety employee covered by the program
if
the.employee has attained the age of 65 or a
later age
if
required under federal law.
After discussions on the terminatio n of L TD2 benefits for affected employees turning
65,
the
parties have come to an agreement to recommen d amending the terminatio n date in the County
Code froID: age 65 to age 70.
This Agreemen t talces into account that
full
unreduced Social Security benefits are not available
to employees born after 1943 until the they reach the age of 66 or later (reduced benefits are still
available at age
62).
On
average affected County employees were born after 1943. The income
replacement, or monthly benefit, payable from the County's Long Term Disability Plan
(L
TD2)
stops at age 65 as defined in the Code. Stopping at age 65 forces participants receiving L1D2
benefits, who
are
not r:eceiving Social Security disability benefits, to apply for the reduced Social
Security benefits when the L
ID2
benefit ends ~t 65. Taking
a
reduction .from the full benefit
from
Social
Security places an undue
hardship
on
the
L TD2 participants. The bulk
·of those
participants receiving
LTD2
benefits became disabled performing their day-to-day County duties
and
were
awarded service connected disability benefits. Providing·
this
increased benefit for the
approxima tely
6,000
employees covered
by
the program results in a very minimal increase in the
monthly premium paid by the County and employees and results
in
a
better alignment with
benefits provided by the Social Security Administration.
However
minimum,
the parties recognize that there
is
an increased cost both to the County and
to the affected employees.
To
address
this
increase in LTD2 benefits, the parties agree that the
contributio n amount will increase for each party, but the cost sharing
will
remain
the same at the
current
75/25
percentage level, with the County's share at
75
percent and
the
affected employees
·
.at25%.
The parties will submit legislation to the County Council that would amend Montgomery County
Code
to
provide for
this
change in L
ID2
benefits. This change
to
the benefits
will
be effective
0
 PDF to HTML - Convert PDF files to HTML files
.,
January
1, 2017 and will
also apply
to individuals receiving benefits or entitled to benefits
as
of
that date.
IN WITNESS WHEREOF,
the parties hereto have
caused
their names to be subscribed
by
their
duly authorized officers and representatives this_ day of October 2017.
fl~ ~
Ul .
IsiaH
Leggett,
C
For
the
Union
JO-
Date
1(-}7
Gino
Renne, President
~~
l.
/,,_,,.;-f_.;c.
IJ/IJ/rt
Timoth yL Firestine, CAO
Chief
Admmistrative Officer
Date
 PDF to HTML - Convert PDF files to HTML files
MCGEO Agreement
44.5 Long Term Disability Benefit
The following constitute benefits provided under the long term disability component of the defined
contribution plan:
Basic Benefit:
(a)
Service connected: 66 2/3 percent of pay
(1)
Non-service connected: 2 percent of pay x yrs. service, mm1mum 30
(2)
percent, maximum 60 percent of pay.
Definition of Disability:
(b)
Service connected: your occupation for 3 years; after 3 years, any
(1)
occupation with similar earnings.
Non-service connected: your occupation for
1
year; any occupation
(2)
thereafter (see current LTD plan for longer definition).
Date Payment Ends:
(c)
Service connected: life (or until recovered prior to age 65).
(1)
Non-service connected: age 65 or until recovery.
(2)
Eligibility: All bargaining unit employees regularly scheduled to work 20 or more
(d)
hours (.5 work year or more).
Direct Offsets: Offset is dollar for dollar for actual payments received from Social
(e)
Security or Workers' Compensation. Lump sum Workers' Compensation payments
will be annuitized as is currently done. Offsets also made for lifetime annuitized
total defmed contribution account balances regardless of whether or not they are
annuitized or paid out.
Earnings Offset: Earnings reduce LTD benefits on a 1 for 3 basis. Earnings include
(f)
"Incorporation" income from a company controlled by a family member or due to
work performed. There is no specific limit to the sum of LTD benefit plus income.
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefits Plan\MCGEO Agreement 44-5.Docx
 PDF to HTML - Convert PDF files to HTML files
AON
Empower Results"'
November 21, 2017
Ms. Linda Herman
Executive Director
Montgomery County Employee Retirement Plans
101 Monroe Street
th
15 Floor
Rockville, MD 20850
RE:
Montgomery County Disability Benefits Plan
Dear Linda:
We have analyzed the Montgomery County Disability Benefits Plan (LTD2) for the impact of changes
from the current structure to extending benefits to a participant's age 70.
The expected total cost increase for the first year would be as follows and are inclusive of the RSP/GRIP
payment.
Expansion to Age 70
-
Total Annual Costs
$1,164,000
$560,000
..
$1,724';000
The following tables show the expected cost increase per employee per month. This assumes a population
of 5,264 actives consistent with the Long-Term Disability Plan Valuation as of July 2016 and Montgomery
County is responsible for 75% of costs while participants are responsible for the remaining 25% of costs.
Expansion to Age 70
-
Monthly Costs Per Employee Per Month
Total
Aon Hewitt
I
Retirement
&
Investment Consulting
259 N. Radnor-Chester Road, Suite 160
I
Radnor, PA 19087
t
+1.610.834.2197
I
f
+1.610.834.2176
I
aon.com
Proprietary
&
Confidential
@
 PDF to HTML - Convert PDF files to HTML files
AON
Empower Results®
Ms. Linda Herman
Montgomery County Employee Retirement Plans
November 21, 2017
Page 2 of2
This analysis assumes rates of disability and splits of service connected and non-service connected
disability as detailed in the Montgomery County Employees' Retirement System Actuarial Valuation as of
July 1, 2016 report and was based on the demographics of the plan consistent with the Montgomery County
Government Post-Employment Benefits (Other than Pensions) Actuarial Valuation Report for Fiscal Year
2017.
Sincerely,
~~~
Tom Vicente, FSA, EA
Partner
cc: Joe Romanies - Aon
@
 PDF to HTML - Convert PDF files to HTML files
LONG TERM DISABILITY (LTDl)
LTDl for full-time employees who are members of the optional or integrated plan under the
Employees' Retirement System (ERS):
If
you are a full-time employee and a member of the optional or integrated plan under the ERS,
you are required to have LTD 1 coverage (part-time employees who are members of the optional
or integrated plan under the ERS are not eligible for coverage). Your coverage becomes effective
after 6 months of continuous active service with the County. You are not eligible to participate
upon your 70th birthday.
The monthly income benefit under LTD 1 is 60% of your basic monthly earnings, up to a maximum
of $2,500. Your monthly income benefit will be reduced by certain other sources of income,
including amounts you and your dependents may be eligible to receive under Social Security due
to your disability.
While covered under LTDl, you are entitled to benefits if you become totally disabled from
performing the duties of your occupation due to sickness or accidental bodily injury and remain
totally disabled continuously throughout the benefit waiting period of 5 months. After the
expiration of the benefit waiting period, you will receive monthly income benefit payments during
the continuation of your disability, but for no longer than 12 months.
If
your monthly income benefit has been payable for 12 months and your disability completely
prevents you from engaging in any occupation for which you are qualified by training, education
or experience, you will continue to receive your monthly income benefit.
However, monthly income benefit payments will cease on the earlier of the following dates:
*
The date you receive retirement benefits under any pension plan to which your employer
contributes or makes payroll deductions, other than benefits which become payable solely because
of disability.
*
The date shown below, based on when your disability commences:
Age 61 or under- your 65th birthday or the day 36 payments have been made, whichever is later.
Age 62, 63 or 64- the date 36 payments have been made. Age 65, 66 or 67 - the date 24 payments
have been made. Age 68 or 69 - the date 12 payments have been made.
@
 PDF to HTML - Convert PDF files to HTML files
TESTIMONY ON BEHALF OF COUNTY EXECUTIVE LEGGETT ON
EXPEDITED BILL 33-17, LEGISLATION TO AMEND CHAPTER 33,
PERSONNEL AND HUMAN RESOURCES
Good afternoon. I am Linda Herman, Executive Director of the Montgomery
County Employee Retirement Plans, which oversees the assets and the administration of
the County's three retirement plans as well as the Long Term Disability Program (LTD2).
I am here today on behalf of the County Executive to testify in support ofBill 33-17.
The legislation would change the benefits provided under the Long Term
Disability Program (LTD2) by extending the age at which benefits end from 65 to age 70.
The change brings the LTD2 program's income replacement in line with the changes
made to the availability for full unreduced Social Security benefits. Full Social Security
benefits are not available to employees born after 1943 until they reach the age of 66 or
later (reduced benefits are still available at age 62). On average affected County
employees were born after 1943.
Stopping the benefits at age 65 forces participants receiving L TD2 benefits, who
are not receiving Social Security disability benefits, to apply for the reduced Social
Security benefits when the LTD2 benefit ends at 65. Taking a reduction from the full
benefit from Social Security places an undue hardship on the L TD2 participants. The
bulk of those participants receiving LTD2 benefits became disabled performing their day-
to-day County duties and were awarded service connected disability benefits. Providing
this increased benefit for the approximately 6,000 employees covered by the program
results in a very minimal increase in the monthly premium paid by the County and
employees and results in a better alignment with benefits provided by the Social Security
Administration.
We look forward to working with the Council in its deliberations on this legislation.
 PDF to HTML - Convert PDF files to HTML files
Resolution No.:
---------
1ntroduced:
November 28, 2017
Adopted:
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Government Operations and Fiscal Policy Committee
SUBJECT:
Amendment to the Collective Bargaining Agreement with the Municipal &
County Government Employees Organization
Background
1.
Section 511 of the County Charter authorizes the County Council to provide by law for
collective bargaining, with arbitration or other impasse resolution procedures, with
authorized representatives of County Government employees.
Chapter 33, Article VII of the County Code implements Section 511 of the Charter and
provides for collective bargaining by the County Executive with the certified
representatives of County employees and for review of the resulting contract by the County
Council.
On October 16, 2017, the County Executive submitted to the Council an out-of-cycle
amendment to the collective bargaining agreement between the County government and
Municipal and County Government Employees Organization effective July 1, 2017
through June 30, 2019. A copy of the Agreement is attached to this Resolution.
The Executive has submitted to the Council the Memorandum of Understanding (MOU)
that requires changes i~ a County law and Expedited Bill 33-17 implementing the MOU.
A Government Operations and Fiscal Policy Committee considered the Agreement and
made recommendations on November 30, 2017.
The County Council has considered these terms and conditions and is required by law to
indicate its intention regarding the appropriation of funds or any legislation or regulations
required to implement the MOU.
2.
3.
4.
5.
6.
 PDF to HTML - Convert PDF files to HTML files
Page2
Resolution No.:
Action
The County Council for Montgomery County, Maryland approves the following
resolution:
The County Council intends to approve/reject the amendments to the Long Term
Disability Plan made by Expedited Bill
33-17,
Employees' Retirement Savings
Plan-Disability Benefits Plan-Termination of Benefits -Amendments.
This is a correct copy of Council action.
Linda M. Lauer, Clerk of the Council
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefits Plan\Resolution-MCGEO MOU.Docx
2
-0)