ITEM:		CONSENT CALENDAR
3.	CONSIDER RESOLUTION INITIATING AN AGREEMENT TO PROVIDE MEDICARE-ONLY COVERAGE FOR DISTRICT EMPOLOYEES HIRED BEFORE APRIL 1, 1986.
Meeting Date:			May 18, 2015	Budgeted:	Not in the FY 2014-2015 Budget
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Cynthia Schmidlin	Cost Estimate:	$3,879 - $10,969
General Counsel Approval: N/A
Committee Recommendation: N\A
CEQA Compliance: N/A

SUMMARY: Four District employees who are members of the General Bargaining Unit, the Management Bargaining Unit, and the Confidential Bargaining Unit, respectively, have asked the Board consider a resolution initiating the “218 Agreement” process to provide Medicare-only coverage for District employees hired before April 1, 1986.

This resolution would allow the retirement group of four District employees without Medicare coverage to vote, individually, on whether to join Medicare-only coverage or stay out, as is required in the process. The resolution would also set the effective date of the Medicare-only coverage. That date could be going forward from the date of the completed 218 Agreement, or retroactive for any period of time up to five years.

The 218 Requestors have identified three optional retroactive start dates of December 1, 2014, July 1, 2015, or December 1, 2015 in order of their preference. The entire process, including review by both the State Administrator at CalPERS and the Social Security Administrator in San Francisco can take up to one year from the Board’s adoption of the Initiating Resolution.

RECOMMENDATION: That the Board determine if they wish to approve a 218 Agreement Initiating Resolution and, if so, determine the effective date. Exhibit 3-A is Resolution 2015-06.

IMPACTS TO STAFF/RESOURCES: Both the employer and employees pay 1.45% of salary for Medicare coverage. Costs for any period of time after June 30, 2016 are unknown, as the current Memorandums of Understanding only determines salaries through fiscal Year 2015-2016. However, using that fiscal year’s salaries, 12 months of Medicare coverage going forward from a projected July 1, 2016 date of the completed 218 Agreement would be approximately $3,879 for the three requestors who would still be employed at that time. The cost to the District would be as follows for retroactive coverage for the requestors, or a projected start date of July 1, 2016.

a) December 1, 2014 through a 218 Agreement date of June 30, 2016 – $7,108

b) July 1, 2015 through a 218 Agreement date of June 30, 2016 – $3,979

c) December 1, 2015 through a 218 Agreement date of June 30, 2016 – $2,263

d) Projected date of July 1, 2016 to June 30, 2017 - $3,879

BACKGROUND: In 1978, when the Monterey Peninsula Water Management District was formed, all State and local government agencies had the ability to choose whether to provide Social Security and Medicare coverage for their employees. The District chose not to participate in either. After April 1, 1986, all new State and local government employees became subject to mandatory Medicare Hospital Insurance. However, those who had been in continuous employment with the same agency since March 31, 1986 were exempt from mandatory Medicare. Four current District employees were in this group. At the time of the new law, these employees were asked to sign a District form indicating whether they wished to join Medicare or remain exempt. All four wished to stay out.

In the past several years, several of the employees have inquired as to their ability to join Medicare. In 2011 and 2012, the Human Resources Analyst requested information on this subject from the Social Security Administration, which administers Medicare. On both occasions, Social Security representatives indicated that there was no provision to simply begin Medicare participation for government employees who had not been covered in their positions. The representatives stated there was a complex process by which uncovered employees could join. However, years of back payments by both the agency and the employees would be required, at a prohibitive cost. This information was duly passed on to the affected employees.

During Confidential Bargaining Unit negotiations in the fall of 2013, one of the employees not covered by Medicare requested that District administrative staff again research the Medicare issue. She relayed conflicting information she had received, herself, from Social Security Administration representatives on the issue. One had said she could not join and one had said she could, but provided no details. In early 2014, the Human Resources Analyst decided to bypass the Social Security Administration and began an extensive search of the internet to find any information available on rejoining Medicare. One reference was discovered that mentioned “State Administrators” involved with the process. Contact with the listed California State Administrator determined that this individual was not an employee of Social Security, but of the California Public Employees Retirement System (CalPERS).

The Administrator stated that Social Security handled all aspects of Medicare, with the exception of the “218 Agreement” process by which a state or local agency could provide Medicare-only for employees hired before April 1, 1986. This information had never been provided in multiple contacts with Social Security. Neither was it mentioned on the Social Security or Medicare websites. The Human Resources Analyst inquired about retroactive time, since the Confidential Employee had indicated she was interested in that possibility. The Administrator stated that up to five years retroactive time could be purchased, and provided information on the costs. This information was given to the Confidential employee, who distributed copies to the other affected staff members.

There were no additional questions or requests for follow-up until April, 2015. At that time, a detailed description of the 218 Agreement process was requested. The Human Resources Analyst developed a description and an updated costing for retroactive purchase. These materials were given to all four employees. Those employees have now requested that the Board consider initiating the 218 Agreement process.

EXHIBIT

3-A Resolution 2015-06 – Regarding Division of Retirement System for Medicare Coverage

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