07-14-2025 - Agenda Packet City Council - regular meeting

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AGENDA ITEM Date: July 14, 2025 Title: Paid Family Medical Leave Administrator Presenter: Maggie Jin, Finance Director Section: Finance Report Item: 18 Purpose: The purpose of this council item is to gain approval to designate an administrator for the Paid Family Medical Leave. 2. Background: Beginning January 1, 2026, Minnesota Paid Leave law will go into effect and create a state - administered paid family and medical leave insurance program. Minnesota is the 13th state to launch a statewide paid leave program. The City will have responsibilities under the Minnesota Paid Leave program including notification requirements, reporting wages and paying premiums to fund the program and coordinating benefits and leaves during an absence. 3. Cost: Employers are required to contribute a minimum of 50% of the total premium, up to 100% of the premium. The remainder not covered by the employer will be deducted from the employee's pay, up to a maximum of 50% of the premium. The City of Orono will cost share with the employees and cover 50% of the premium. This will be a cost of approximately $27,000 to $31,000 that will be budgeted for 2026 in personnel cost. 4. Process: The City can choose to provide paid leave benefits through an equivalent plan instead of using the state -administered program. The benefits of going through an equivalent plan and choosing an administrator for the plan outweighs using the state -administered program. The benefits that an equivalent plan administrator could provide includes a well established system already in place, quick and defined turnaround times for claims and integration with other ancillary benefits. Additionally, going with an equivalent plan administrator allows the City's ancillary benefit broker to act as an advocate on the City's behalf. The City published notice of the Request for Proposal (RFP) in the newspaper on May 3, 2025 and ended the RFP on May 27, 2025 at 3PM. There were 6 quotes received. One quote came in significantly higher than the rest, thus is not included in the attachment. MetLife was the lowest bid with a savings of $5,534 for the 2026 (premium savings of $6,034 less state filing fee of $500). Future years saving are indeterminable at this time due to the continuous updates to the state law. Additionally, MetLife has the longest history with administering paid leave programs, has a well establish and reliable system and quickest claims turnaround time. The City of Orono uses MetLife for dental and supplemental health insurance benefits and will be switching to MetLife for short-term disability leave in 2026 and thus adding on the paid leave program guarantees a more streamlined process and a 2-year rate guarantee. 149