Benefits Plans for Toronto Public Service, Elected Officials & Accountability Officers

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1 Benefits Plans for Toronto Public Service, Elected Officials & Issue Toronto Public Service Benefit Plans are part of the total compensation package provided by the City of Toronto used to attract and retain staff. It is important that these plans are reviewed periodically to remain competitive while still being fiscally responsible and incorporating industry standards. Background Benefit plans are provided to employees and retirees based on collective agreements and City policies. The City of Toronto provides benefit plans to approximately 35,000 employees and 8,000 retirees. The benefit plans have been designed to incorporate the following principles: Comprehensive and competitive plan designs; Ensures fairness and equity amongst all employee groups; Incorporates industry standards and best practices; and Controls exposures to liabilities Changes to benefit plans for unionized staff, including any enhancements or cost containment measures, must be negotiated with the respective union / association. Changes to benefit plans for non-union staff, elected officials and the City's accountability officers are approved by City Council, through the Employee and Labour Relations Committee. The City of Toronto s extended health care, dental and long-term disability plans are provided through an Administrative Services Only (ASO) arrangement with a benefit carrier and the life insurance plans are provided through an insurance contract. The City of Toronto provides the following benefit plans: Sick Leave Plan (through a sick pay plan, short-term disability plan or illness or injury plan); Life Insurance; Accidental Death & Dismemberment; Line of Duty Death (FIRE); Long Term Disability; Extended Health Care; and Dental. TRANSITION TO TERM PAGE 1 COUNCIL BRIEFING VOL.1

2 The attached Appendix outlines the level of coverage provided to each employee group. Implications Increasing employee benefit costs is a concern for the City of Toronto. Industry standards in Canada reflects that on average, health care costs increase at a rate of 12% (2013) annually and dental costs increase at a rate of 8% (2013) annually. In 2013, the City of Toronto fell well below this range, with its health costs for active employees decreasing by 5.9% and its dental costs for active employees decreasing by 2.4%. Comparison to the Industry Average Table 1 below illustrates that in comparison to the industry trend in 2013 for both health and dental costs, the City is doing extremely well in terms of containing its benefit plan costs. Table Health & Dental Benefit Costs (Active Employees) Comparison City of Toronto vs. Industry Average** 2012 vs Percentage (Decrease) / Increase in Costs City of Toronto Industry Average City of Toronto vs. Industry Average Health Benefit (5.9%) 11.8% (17.7%) Dental Benefit (2.4%) 8.3% (10.6%) **2012 vs Industry average percentage increase in costs: Canadian Health Care Trend Survey Results 2013/Buck Consultants City Benefit Costs The employee benefit costs have been driven by an aging demographic, increased utilization of the plan, increased cost of drugs and services and de-regulation of government sponsored benefits which are transferred to private benefit plans. These cost drivers have been offset by the City's recent efforts to implement cost containment initiatives that have resulted in decreasing costs over the last two (2) years. TRANSITION TO TERM PAGE 2 COUNCIL BRIEFING VOL.1

3 Including the costs for retirees, the City achieved an overall decrease in its total benefit costs (including Health, Dental, Long Term Disability (LTD), Life Insurance) of $4.0 million (or -1.9%). Table 2, below, compares the City s benefit costs from 2011 to Overall, the City has reduced its benefit costs for active employees by $7.4 million (or -4.1%) since 2011 Table 2 Benefits Costs for Active Employees and Retirees (after administration fees & taxes) By Benefit Type: 2011 to Change Percentage Change ($ millions) Health $93.3 $82.9 ($10.4) (11.2%) Dental $46.5 $41.5 ($5.0) (10.8%) Sub-total (Health & Dental) $139.8 $124.4 ($15.4) (11.0%) LTD $31.1 $39.5 $ % Life Premiums Insurance *1 $11.4 $11.0 ($0.4) (3.5%) Sub Total Active Employees $182.3 $174.9 ($7.4) (4.1%) Retirees $24.2 $27.6 $ % Grand Total $206.5 $202.5 ($4.0) (1.9%) *1: Includes Group Life Insurance (GLI), Accidental Death & Dismemberment (AD&D), Line of Duty of Death (LODD) Staff have implemented many measures to control costs which include the following: Caps on all private duty nursing coverage; Generic Drug Plan; Elimination of Post-65 Benefit Coverage (grand-parenting provisions in place); Elimination of Sick Pay Plan for Union employees (replaced with a short-term disability plan); Elimination of Sick Pay Plan for and TCEU Local 416 employees hired after July 30, 2009 and one-time option for TRANSITION TO TERM PAGE 3 COUNCIL BRIEFING VOL.1

4 employees to switch to this plan which resulted in a 40% take-up of the plan; Switch from 6-month to 9-month dental recall for all unionized, management/non-union employees and Elected Officials; Benefit containments: dispensing fee cap of $9.00; changes to paramedical benefits; one year lag on the Ontario Dental Fee Guide; $2,000 cap for physiotherapy expenses; Reduced administrative fees to a new benefits contract with the insurance carrier; and Elimination of the grand-parented post-65 lifetime retiree benefit plans for the former City of North York and former City of Toronto fire fighters and the introduction of a new 10-year health care spending account. The net cost savings from all these measures is $58.1 million (including savings to be achieved for 2014 to 2016) and $343.1 million in liability reductions. Staff will continue to monitor the trends and issues and recommend proposals to manage benefit costs as appropriate. Changes in benefit plans must be negotiated through the collective bargaining process. These efforts must continue in order to ensure the long-term sustainability of the benefit plans. Current Status and Next Steps In 2013, the City of Toronto spent approximately $203 million providing this coverage to its employees, retirees and eligible dependants. In addition, the Public Sector Accounting Board (PSAB) handbook requires that a municipality report liabilities that relate to its post-employment benefits which includes: post-retirement benefits, sick leave benefits, income benefits, continuation of benefits to disabled employees and WSIB benefits. The liability associated with these benefits, as at December 31, 2013 is $1.7 billion (excluding the City's agencies and corporations). The total benefit liabilities including the Toronto Police Service and other agencies (i.e., Exhibition Place, Toronto Zoo, Toronto Public Library, Sony Centre, Yonge & Dundas Square, Association of Community Centres and Arena Boards of Management) is $2.4 billion. Staff are currently working with the City's benefits carrier and the City's Legal Division to develop a framework for a Preferred Provider Network (PPN) to retain pharmacists who are interested in agreeing to a set of terms and conditions when dispensing drugs for City employees. A PPN is a TRANSITION TO TERM PAGE 4 COUNCIL BRIEFING VOL.1

5 network of pharmacies for which employees/retirees could voluntarily go to for the dispensing of drugs and where the pharmacies agree to conditions that would assist the City in containing its drug costs. Since this PPN would be voluntary, there would be no negative impact to employees in utilizing the PPN. It is anticipated the PPN will be implemented towards the end of 2014 or early In addition, City staff will continue to monitor the City's drug costs and utilization trends, and work with the City's benefit carrier and industry experts to monitor trends to help identify further areas of improvement and emerging best practices to be considered for the City's benefit plans. Staff will report back through the Employee & Labour Relations Committee by Q with the results of this review. Staff will continue to implement measures to contain the growth in benefit plan costs through employee education initiatives and negotiations with each of the unions/associations. Contact Mike Wiseman Director, Pension, Payroll & Employee Benefits , TRANSITION TO TERM PAGE 5 COUNCIL BRIEFING VOL.1

6 Appendix A City of Toronto Active Benefit Plans Benefit LIFE INSURANCE: Coverage 2x annual salary 2x annual salary 2x annual salary 2x annual salary Optional Life Yes Yes Yes Yes Dependent Life Yes Yes Yes Yes ACCIDENTAL DEATH & DISMEMBERMENT LINE OF DUTY DEATH (LODD) SICK LEAVE PLAN 2x annual salary 2x annual salary 2x annual salary 2x annual salary (non-occupational death) N/A N/A N/A 3x annual salary Illness or Injury Plan (if hired after July 30, 2009) 130 days (75%/100%) or 1.5 sick pay credit days accumulation/month for employees hired prior to July 30, 2009 who did not elect the IIP *1 Illness or Injury Plan (if hired after July 30, 2009) 130 days (75%/100%) or 1.5 sick pay credit days accumulation/month for employees hired prior to July 30, 2009 who did not elect the IIP *1 Short Term Disability Plan 130 days (75%/100%) 1.5 sick pay credit days accumulation/month TRANSITION TO TERM PAGE 6 COUNCIL BRIEFING VOL.1

7 Benefit LONG TERM DISABILITY (LTD) Coverage % of earnings, to 75% of earnings, to 75% of earnings, to 75% of earnings, to age 70 age 70 age 65 age 65 Tax Status Taxable/no COLA Taxable/no COLA Taxable/no COLA Taxable/no COLA DENTAL Ontario Dental Association (ODA) Fee Guide One year lag One year lag One year lag Current year Basic Coverage 100%, Unlimited, adult recall every 9 months 100%, Unlimited, adult recall every 9 months 100%, Unlimited, adult recall every 9 months 100%, Unlimited, adult recall every 9 months Major Coverage 60% major restorative, 70% Dentures (combined $4,000/year) 60% major restorative, 70% for dentures (combined $4,000/year) 80% major restorative and dentures (combined $5,000/year) 80% major restorative and dentures ( combined $2,000/year) Ortho Coverage 50%, $5,000/life 50%, $4,000/life 50%, $5,000/life 50%, $4,000/life TRANSITION TO TERM PAGE 7 COUNCIL BRIEFING VOL.1

8 Benefit 5.12 HEALTH Reimbursement 100% 100% 100% 100% Deductible Nil Nil Nil Nil Drug Coverage Generic Prescription Generic Prescription Generic Prescription Generic Prescription Dispensing Fee $9.00 $9.00 $9.00 $9.00 Cap Hospital Semi-Private Semi-Private Semi-Private Semi-Private Vision Benefit $450/24 months, may borrow following period s entitlement for laser vision surgery, max $900 $450/24 months, may borrow following period s entitlement for laser vision surgery, max $900 Hearing Aids Out of Country Paramedical $1,600 per person every 3 years Yes Emergency Only Yes - Services of a licensed chiropractor, osteopath, podiatrist, chiropodist, speech $1,600 per person every 3 years Yes Emergency Only Yes - Services of a licensed chiropractor, speech therapist, osteopath, podiatrist, $450/24 months $450/24 months, may borrow following period s entitlement for laser vision surgery, max $900. In addition, $80.00 for eye exam every 24 months. $1,600 per person every 3 years Yes Emergency Only Yes - Services of a licensed psychologist, chiropractor, osteopath, podiatrist, speech $1,800 per person every 3 years Yes Emergency Only Yes - Services of a licensed chiropractor, osteopath, podiatrist, chiropodist, TRANSITION TO TERM PAGE 8 COUNCIL BRIEFING VOL.1

9 Benefit therapist or masseur to a of $400 per person per practitioner per year. Alternatively, eligible persons will have the option of combining cost toward one particular benefit to a of $800 per person per benefit year. Services of the above mentioned masseur will require a prescription from a physician, Surgeon or Osteopath in order to be eligible for reimbursement. $2,000 per year chiropodist or masseur to a of $400 per person per benefit year. Alternatively, eligible persons will have the option of combining cost toward one particular benefit to a of $800 per person per benefit year. Services of the above mentioned masseur will require a prescription from a physician, Surgeon or Osteopath in order to be eligible for reimbursement. $2,000 per year therapist or masseur to a of $500 per person per practitioner per year acupuncturist, naturopath or masseur to a of $500 per person per practitioner per year, to an overall of $2,000. Physiotherapy $2,000 per year Unlimited Private Duty Up to $25,000 Up to $25,000 Up to $25,000 every Up to $60,000 TRANSITION TO TERM PAGE 9 COUNCIL BRIEFING VOL.1

10 Benefit 5.12 Nurse every 3 years every 3 years 3 years every 3 years Psychologist $300 per person per $300 per person per $500 per person per benefit year benefit year benefit year Laboratory Tests Orthotics Orthopaedic Shoes Prostate Specific Antigen (PSA) & Ovarian Cancer (CA125) to a of $40/person/year 1 pair per person/per year (administrative guidelines apply) One pair of orthopaedic devices per person every 2 benefit years for persons over 18 years of age (for persons 18 and under, there is no change in the entitlement). In addition, off-the- Prostate Specific Antigen (PSA) & Ovarian Cancer (CA125) to a of $30/person/year 1 pair per person/per year (administrative guidelines apply) One pair of orthopaedic devices per person every 2 benefit years for persons over 18 years of age (for persons 18 and under, there is no change in the entitlement). Prostate Specific Antigen (PSA) & Ovarian Cancer (CA125) to a of $40/person/year 1 pair per person/per year (administrative guidelines apply) One pair of orthopaedic devices per person every 2 benefit years for persons over 18 years of age (for persons 18 and under, there is no change in the entitlement). In addition, off-the- $1,000 per person per benefit year (including Masters of Social Work) Lab tests & x-rays not covered by OHIP excluding other forms of imaging 1 pair per person/per year (administrative guidelines apply) 1 pair per person/per year (administrative guidelines apply) TRANSITION TO TERM PAGE 10 COUNCIL BRIEFING VOL.1

11 Benefit Survivor Benefits shelf orthopaedic devices will only be allowed if there is a custom made modification and reimbursement of expenses will be limited to the cost of such modification. If eligible to retire at time of death, coverage for spouse until employee would have turned age 65 If eligible to retire at time of death, coverage for spouse until employee would have turned age 65 shelf orthopaedic devices will only be allowed if there is a custom made modification and reimbursement of expenses will be limited to the cost of such modification. If eligible to retire at time of death, coverage for spouse until employee would have turned age years of coverage (regardless of age of employee) LODD Survivor Benefits Health Care Spending Account N/A N/A N/A Coverage provided until the employee would have turned 65 N/A N/A $50 Single / $100 N/A Family *1: Employees given one-time option to either remain in the sick leave accumulation plan or transfer to the new Injury or Illness Plan effective January 1, TRANSITION TO TERM PAGE 11 COUNCIL BRIEFING VOL.1