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ATTACHMENT C = Changes in TIAA Life Insurance & Disability Programs and Accidental Death and Dismemberment Program

TIAA DISABILITY PROGRAM

The University offers its faculty a long term disability plan that provides, in the event of disability, salary continuation of 60% of an individual's salary up to a maximum of $3,000 per month. The Faculty Benefits Committee recommends that the percentage of salary be increased from 60% to 66-2/3% and the monthly cap be raised from $3,000 to $6,000. This program enhancement will be more reflective of the salary structure at the University and will ensure income continuation at a reasonable level for disabled faculty. The increased premium cost is approximately $.30 per $100 of benefits which is an increase of $4,200 per month of additional premium. We concur with the Committee's proposal and recommend the changes become effective January 1, 1989.

INCLUSION OF SUMMER INCOME IN DETERMINING BASE SALARY FOR TIAA DISABILITY

The Faculty Benefits Committee further proposes that 9-month faculty should be insured for summer income that is paid through the University payroll system exclusive of overload payments. Payroll statistics indicate that approximately 57% of the 9-month faculty earn summer income. They proposed that the median salary of the last three summers serve as the formula for determining summer income. Summer salaries are not included in determining base salary at this time since the costs associated with modifying the TIAA retirement formulas to comply with the requirements of the Tax Reform Act of 1986 are as yet undetermined.

TIAA LIFE INSURANCE FOR RETIREES

The University currently provides faculty retirees a $2,000 death benefit under the TIAA Life Insurance Program. Survey data and discussions with the University's benefit consultants indicate that conventional burial expenses exceed $2,000. The Faculty Benefits Committee proposes an increase to $8,000.

There are approximately 150 retirees with TIAA Life Insurance and the $8,000 death benefit level would increase our premium cost approximately $2,150 per month. Over the years, our claims experience has been very good, which has resulted in reduced premium rates. The proposed $8,000 death benefit, however, is "sum certain" and will be reflected in our future claims experience and, in turn, will impact our premiums.

Because the costs associated with modifying the TIAA retirement formulas, as mentioned earlier, are not yet finalized, it is proposed that the death benefit be increased to $5,000 rather than the proposed $8,000. This change would increase our premiums by $1,000 per month. This change should become effective April 1, 1989.

ELIGIBILITY FOR RETIREE TIAA LIFE INSURANCE

Historically, faculty retirees have been eligible for the death benefit provision of the TIAA life insurance program if they were age 65 and had at least ten years of service.

The Faculty Benefits Committee believes this eligibility criteria is overly restrictive and punitive toward faculty younger than age 65 but with several years of service, i.e., age 63 and 25 years of service. We concur with their conclusion, and we support their proposal to establish eligibility to be "at least age 55 and five or more years of service if the sum of the age and service is 70 or greater." We recommend this become effective April 1, 1989.

ACCIDENTAL DEATH AND DISMEMBERMENT PROGRAM

For several years the University has offered faculty an option to participate in an Accidental Death and Dismemberment Plan. The insurance is available in increments of $5,000 from a minimum of $25,000 to a maximum of $200,000. The University contributes a portion of the premium costs ($1,000 per month) for the approximately 780 participants.

The Faculty Benefits Committee recommends that the program be continued because of its popularity but that the University's contribution be discontinued. We concur with the Committee's proposal and recommend that the University's contribution be discontinued effective April 1, 1989.

• In conclusion, the following items should be presented at the January Board meeting.
• 1. TIAA Disability Program: The percentage of salary continuation should be increased from 60% to 66-2/3% and the monthly cap should be raised from $3,000 to $6,000. These changes should be effective January 1, 1989.
• 2. TIAA Life Insurance for Faculty Retirees: The insurance should be increased from $2,000 to $5,000 effective April 1, 1989.
• 3. Eligibility for Faculty Retiree Life Insurance: Eligibility for the TIAA Life Insurance program should be changed to cover retirees at least age 55 with five or more years of service if the sum of the age and service is 70 or greater. This change should be effective April 1, 1989.
• 4. Accidental Death and Dismemberment: University contributions to the program should be discontinued effective April 1, 1989.