Agenda Item 9
November 28, 2017
Public Hearing
MEMORANDUM
November 22, 2017
TO:
FROM:
County Council
0
Robert H. Drummer, Senior Legislative AttomeypvJ
SUBJECT:
Public Hearing:
Expedited Bill 33-17, Employees' Retirement Savings Plan-
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 Government
Operations and Fiscal Policy Committee worksession is tentatively scheduled for December 7 at
9:30 a.m.
Bill 33-17 would increase the age long term disability benefits end under the L TD2 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
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MCGEO, the Bill would increase the disability benefit for eligible non-represented employees,
including elected officials.
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 is tentatively scheduled for introduction on November 28 in Agenda
Item2A.
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:
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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
earnings.
The Council amended §33-131 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.
Fiscal Impact
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
estimate of the additional cost for the Bill includes the cost to make these benefits retroactive to
January 1, 2017.
LTDl v. LTD2
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 LTDl 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
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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 ofLTD2 benefits.
A comparison of the benefits under LTD 1 and LTD2 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 FYI 8 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
Percent
43.4%
40.0%
16.6%
FY18 Cost
$Amount
(millions)
$80.65
$20.40
$5.10
Percent
76.0%
19.2%
4.8%
Average
FY18 Cost/
Employee
$20,228
$5,557
$3,345
ERS
(Defined Benefit)
RSP
(Defmed Contribution)
GRIP
(Cash Balance)
3,987
3,670
1,526
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.
This packet contains:
Expedited Bill 33-17
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
LTD2 Plan Outline
Summary of LTD2 Plan Description
MOU with MCGEO
MCGEO Agreement, Section 44.5
Actuary Letter
Summary of LTD 1 Plan
Circle#
1
3
4
5
9
10
19
21
22
24
F:\LAW\BILLS\1733 Employees' Retirement Savings Plan-Disability Benefits Plan\PH Memo.Docx
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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.
Jfil_ ,
Laws of Mont. Co.
COUNTY COUNCIL
FO R MONTGOMERY COUNTY, MARYLAND
utive
Lead Sponsor: Council President at the request of the County Exec
AN EXPEDITED ACT
to:
and
ame nd the age for termination of long term disability benefits;
(1)
.
generally ame nd the laws governing the Disability Benefits Plan
(2)
By amending
Montgomery County Cod e
Chapter 33, Personnel and Human Resources
Section 33-133
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Head ing or defined term.
Add ed to existing law by original bill.
Dele tedfrom existing law by original bill.
Add ed by amendment.
Dele tedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
following Act:
The County Council for Montgomery County, Maryland approves the
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Ex.PEDITED BILL
No. 33-17
1
Sec.
1.
Section 33-133 is amended as follows:
2
3
4
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
attains age 70 [65], or a later age if required under federal law.
Public safety employee.
The administrator must terminate initial or
(3)
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.
5
6
7
8
9
1O
11
(b)
12
13
14
15
16
17
18
19
Sec. 2.
Expedited Effective Date.
The Council declares that this legislation 1s necessary for the immediate
protection of the public interest. This Act takes effect on January 1, 2017. The
amendments in Section
1
apply to all participants receiving benefits or entitled to
receive benefits on or after January 1, 2017.
Approved:
20
21
22
23
Roger Berliner, President, County Council
Date
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benefits plan\bill 1.docx
f:\law\bills\1733 employees' retirement savings plan-disability
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LEGISLATIVE REQUEST REPO RT
Expedited Bill 33-17
-
Emplo yees' Retirement Savings Plan
-
Disability Benefits Plan
-
Termination of Benefits
Amendments
DESCRIPTION:
The legislation would change the benefits provided under the Long
Tenn 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).
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
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 become disabled.
Montgomery County Employee Retirement Plans & the Office of
Human Resources
Office of Management and Budget
Department of Finance
PROBLEM:
GOA LSAN D
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPE RIEN CE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITIIlN
MUNICIPALITIES:
PENALTIES:
NIA
To be researched.
Montgomery County Employee Retirement Plans
Office of Huma n Resources
NIA
NIA
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1_i-·
.
--··-:-:
·;··:..:·-:·~--:~--:
---
,-::
.--
.···:.:~---··-·
OFFICE OF THE COUNTY EXECUTIVE
ROCKVlLLE, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
October 16, 2017
TO:
Roger Berliner, President
Montgomery County Council
Isiah
Leggett, County Executiv~
Legislation to Amend Chapter 33, Personnel and Human Resources
FROM:
SUBJECT:
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. Tiling 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 premium 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
Linda Herman, Executive Director, MCERP
c:
Shawn Stokes, Director, Office of Human Resources
montgomerycountymd.gov/311
<;~311>
240·773-3556 TTY
HWihiHl:lidll
(i)
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.::-:.·...
···1
\
I'
,.
Fiscal lmpact Statement
Expedited
Bill XX-17
-
Disability
Benefits
Plan
1.
Legislative Summary
1\
The bill would amend the age
foi'
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
tbe 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
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 p01tion 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 a11.alysis assumes the current cost share arrangement between the County
and employees of75%/25%.
oS
3. Revenu e 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 i.ncreased expenditures over the next6 fiscal years. There is no anticipated
impact on revenues,
·
4. An actuarial analysis thtough 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 bill,
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.
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8. An estimate of costs when an additional appro priati on
is
needed.
Not applicable.
9. A description of any varia ble that could affect revenue and cost estimates.
Not applicable.
ct.
10. Rang es of revenue or expenditures that are uncer tain or difficult to proje
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
foUowing
contr ibute d to and concu rred with this analysis:
Corey Orlosky, Office of Management and Budget
Linda Hennan, Executive Director, Montgomery County Employee Retirement Plans
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i
.1
·,
,-
Economic Impact Statement
Expedited
Bill
xx-17,
Disability Benefits Plan
Background:
This legislation would amend Montgomery County Code Section
33-133,
Tennination of
Benefits,
to
increase the age from
65
to 70
for
termination of long term disability
·
benefits.
1.
The sources of information, assumptlons, and methodologies ·used.
Source
of
information is the Montgomery County Long-Tenn 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 description
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-term 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,
investment,
incomes,
arid
property
v~lues
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 ben~fits 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)
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.
· 1
Economic Impact Statement .
Expedi_ted Bill
xx.-17,
Disability Benefits
Plan
5. The following
contributed to
or concurred with this analysis:
David Platt, and
Rob Hagedoorn, Finance; Linda Herman and Robert Goff, MCERP.
Alexandre Espin~.~ctor
Department of Finance
Date
Page2of2
®
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Montgomery County
Long Term Disability Benefits Plan (LTD2)
Background:
When the Retirement Savings Plan (RSP) was created in October 1994 for all non-uniformed
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 contribution rate for the
County, participating agencies and employees.
As part of collective bargaining with MCGEO, the County is required to make employer
contributions (8% of the LTD2 participant's salary) until the participant turns 62
The County pays the employer contribution 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-uniformed 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 employment 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)
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MONT GOME RY COUN TY
Disability Benefits Plan
Summ ary Plan Description
October 2016
~-- ---- ---- ---- ---- ---- --€ )
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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
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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
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caused by your willful misconduct or willful negligence. See non-service-connected and
service-connected for more information.
Temporary 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
Employee Retirement Plans (MCERP), 101 Monroe Street, 15
th
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
QI
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 injury must have
occurred prior to termination of employment.
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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:
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(a) you are awarded Social Security disability benefits;
(b) you applied for Social Security benefits within 90 days of the
County'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
You are not eligible to receive service or non-service-connected benefits until you
have been employed by the County (or participating agency) for at least 6 months
and you are a member of a County retirement plan.
You are not eligible to receive service-connected disability benefits if you
committed an offense that would justify termination for misconduct.
Alternative Position
You may receive a 5% salary increase if you accept an alternative position in the
County government for which you are qualified. Your salary in the alternative
position will not exceed the maximum salary of the pay grade assigned to the
position. A member of the Office, Professional and Technical Bargaining Unit or
the Service, Labor and Trades Bargaining Unit who accepts an alternative
placement incentive is not eligible to apply for a service-connected disability
benefit based on the disability for which the alternative placement was made.
Non-Service-Connected Disability
A non-service-related disability is a condition due to an accident or illness that is not the
direct result of performing your duties as an employee. You will not receive any benefits
for an accident or illness caused by your own willful misconduct or willful negligence.
You must have worked for the County for the six months immediately preceding the
disability.
If
your disability is non-service-connected, you will receive 2% of your final earnings
multiplied by the number of years you have been a member of one or more of the
County's retirement plans, up to a maximum of 60% of your final earnings. You will
receive a minimum benefit of 30% of your final earnings. In addition, see Reduction in
Benefits section.
Ex,amples:
1.
If
you have been a member of the County's retirement plan for 17 years, your
monthly payment is 34% of your final earnings (2% x 17 years of service).
If
you have been a member of the retirement plan for 10 years, your monthly
payment is 30% of your final earnings. The minimum payment is 30%.
2.
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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 Disability 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. Employment
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. Workers' Compensation
The LTD payment you receive from the County is subject to a reduction by any
workers' 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 workers' compensation, you will receive only the disability benefit. (Your
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LTD payment satisfies the County's workers' compensation obligation.) You
must report any changes in your income to the MCERP.
Payment Period
If
you are a non public safety employee, your continued disability benefits will generally
last until:
• you recover from your disability (before age 65)
• you fail to provide the Chief Administrative Officer with any necessary
information (such as any earnings or tax information), or if you refuse to see a
doctor)
• you reach age 65 (unless you became disabled after age 62), or
• your death.
If
you are disabled at age 62 or older your benefits will last as follows:
If
you are a public safety employee and your disability is service-connected, your benefit
will last for your lifetime (as long as you remain disabled and provide requested
information). Your benefits will not automatically end when you turn 65.
Employer Contributions to the Retirement Savings Plan and Guaranteed Income
Retirement Plan
If
you are a non-public safety employee and you become disabled, you may receive
employer contributions to your retirement plan until you reach age 62. To qualify for
these employer contributions, your disability must be determined by the Disability
Review Panel to make you unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. You may not receive a distribution of your account balance in
the RSP or GRIP while you are receiving these contributions.
Re-Evaluation of Continuation of Payments
After the initial disability period, you must undergo a medical examination to determine
if you are entitled to receive continued disability benefits.
If
you are found to be
ineligible, the disability benefits under this LTD Plan will end.
Re-Employment Program
The Chief Administrative Officer may offer you a job through a program for employees
who are on disability. The re-employment program would assign you a job you could
perform with your disability, and which is suited for you based on your training,
education, experience and physical and mental capabilities. You will be notified if you
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qualify for this program.
If
you are selected for the program, you must participate or you
will forfeit your benefits.
Appeals
The Chief Administrator has the full discretion to interpret the Plan.
If
you disagree with
any decisions regarding your eligibility for disability benefits, including a decision to
discontinue your benefits, you may appeal the decision within 20 days of your receipt of
written claim denial. The appeal should be sent to the Office of Human Resources at 101
Monroe Street, 7
th
Floor, Rockville, Maryland 20850. The Disability Arbitration Board
will review your appeal and should issue a decision within 30 days after a hearing.
Errors
If
you receive any monetary amount due to an error, you must return it to the County.
Resources
MCERP
101 Monroe Street, 15
th
Floor
Mail:
Rockville,
MD
20850
Retirement@montgomerycountymd.gov
Email:
Phone:
240-777-8230
301-279-1424
Fax:
www.montgomerycountymd.gov/retirement
Web:
Disability Manager
IO
1 Monroe Street, 15
th
Floor
Mail:
Rockville,
MD
20850
Phone:
240-777-8238
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MEMORANDUMOF UNDERSTANDING
BETWEEN THE MONTGOMERY COUNTY GOVERNMENT
AND THEMUNICIPAL
&
COUNTY GOVERNMENT EMPLOYEES ORGANIZATION
UNITED FOOD
&
COMMERCIAL WORKERS, LOCAL 1994, AFL-CIO
The Montgomery 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 Tenn Disability Benefits (LTD2) for
affected Montgomery County bargaining unit employees hired after October 1994, who are non-
public safety and public safety employees who participate in the Retirement Savings Plan or the
Guaranteed Retirement Income Plan.
This Memorandum of Agreement is to address what the parties recognize is a needed change in
the Montgomery County Code (Code), Sec.33-133 regarding Termination of Benefits, for non-
public safety and public safety employees who participate in the LTD2 program.
In
the Code, the
administrator 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 termination of LTD2 benefits for affected employees turning 65, the
parties have come to an agreement to recommend amending the termination date in the County
Code fro~ age 65 to age 70.
This Agreement talces into accotmt 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 (LTD2)
stops at age 65 as defined in the Code. Stopping at age 65 forces participants receiving LTD2
benefits, who are not :i;eceiving Social Security disability benefits, to apply for the reduced Social
Security benefits when the L TD2 benefit ends ~t 65. Talcing 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 perfonning 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.
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
contribution 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 th~ affected employees
.at25%.
.
The parties will submit legislation to the County Council that would amend Montgomery County
Code to provide for this change
in
LID2 benefits. This change to the benefits
will
be effective
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,,
,
•. 1._,
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.
For the Union
~...A1.:s-
VJ_~·
s,.
Jo-
,t-J
7
Date
Gino
Renne, President
~~
l.
/,1-Mf..,.,.:.<.
IJ/JJ/rf
TimothyL
Firestine, CAO
Chief Administrative Officer
Date
®
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MCGEO Agreement
44.5 Long Term Disability Benefit
The following constitute benefits provided under the long term disability component of the defined
contribution plan:
(a)
Basic Benefit:
(1)
Service connected: 66 2/3 percent of pay
(2)
Non-service connected: 2 percent of pay x yrs. service, mm1mum 30
percent, maximum 60 percent of pay.
(b)
Definition of Disability:
(1)
Service connected: your occupation for 3 years; after 3 years, any
occupation with similar earnings.
(2)
Non-service connected: your occupation for 1 year; any occupation
thereafter (see current LTD plan for longer definition).
(c)
Date Payment Ends:
(1)
Service connected: life (or until recovered prior to age 65).
(2)
Non-service connected: age 65 or until recovery.
(d)
Eligibility: All bargaining unit employees regularly scheduled to work 20 or more
hours (.5 work year or more).
(e)
Direct Offsets: Offset is dollar for dollar for actual payments received from Social
Security or Workers' Compensation. Lump sum Workers' Compensation payments
will be annuitized as is currently done. Offsets also made for lifetime annuitized
total defined contribution account balances regardless of whether or not they are
annuitized or paid out.
(f)
Earnings Offset: Earnings reduce LTD benefits on a 1 for 3 basis. Earnings include
"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
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AON
Empower Results'"
November 21, 2017
Ms. Linda Herman
Executive Director
Montgomery County Employee Retirement Plans
101 Monroe Street
15
th
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
County
Portion
$873,000
$420,000
$1,293,0Q0·
Employee
Portion
$291,000
$140,000
$431,000
Total
$1,164,000
$560,000
$1,724,000
Current
Increase for expansion to age 70
Total
-
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
County
Portion
$13.82
$6.65
$20A7;
Employee
Portion
$4.61
$2.22
$6.83
Total
$18.43
$8.87
$27.30
rotaP~-
Current
Increase for expansion to age 70
:-:
c_-·
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
@
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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,
~Jl~
Tom Vicente, FSA, EA
Partner
cc: Joe Romanies - Aon
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LONG TERM DISABILITY (LTD l)
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 LTDl coverage (part-time employees who are members of the option
al
or integrated plan under the ERS are not eligible for coverage). Your coverage becomes effect
ive
after 6 months of continuous active service with the County. You are not eligible to partic
ipate
upon your 70th birthday.
The monthly income benefit under LTD 1 is 60% of your basic monthly earnings, up to a maxim
um
of $2,500. Your monthly income benefit will be reduced by certain other sources of incom
e,
including amounts you and your dependents may be eligible to receive under Social Secur
ity due
to your disability.
While covered under LTD 1, 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 comp
letely
prevents you from engaging in any occupation for which you are qualified by training, educa
tion
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:
contributes or makes payroll deductions, other than benefits which become payable solely becau
se
of disability.
*
The date you receive retirement benefits under any pension plan to which your employer
*
The date shown below, based on when your disability commences:
Age 61 or unde r-you r 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 paym
ents
have been made. Age 68 or 69 - the date 12 payments have been made.