State of California
   
   M E M O R A N D U M
   
   REFERENCE CODE:
   PML 97-003
   
   DATE:
   January 27, 1997
   
   TO:
   Personnel Officers
   Personnel Transactions Staff
   Personnel Transactions Supervisors
   
   
   FROM:
   Department of Personnel Administration
   Benefits Division
   
   SUBJECT:
   Group Term Life Insurance--Update on Implementation of New
   Premiums
   
   CONTACT:
   Desi Rodrigues, Personnel Management Technician
   (916) 324-0533 or CALNET 454-0533
   Office Vision: DPA(DXRodrigues)
   INTERNET: DXRODRIGUES@SMTP.DPA.CA.GOV 
   
   
   In an earlier PML dated December 18, 1996 (reference code
   96-063), the Department of Personnel Administration
   advised you of new premiums for the basic and supplemental
   life insurances that would become effective on January 1,
   1997 (December pay period).
   
   The new premiums for the basic life insurance program were
   implemented on schedule by the State Controller's Office
   (SCO).  However, for the supplemental life insurance
   program, Metropolitan Life Insurance Company (the plan
   provider) was unable to produce an electronic tape in the
   appropriate time frame for the SCO to make the necessary
   premium deduction updates.  Therefore, the supplemental
   insurance premium deduction on employees' December pay
   check (dated January 1, 1997)did not reflect the new
   premium rates.
   
   A number of steps are being taken by MetLife and the SCO
   to rectify this problem.  MetLife has forwarded to the SCO
   a tape that includes the premium data that should have
   been provided in December.  The data includes deduction
   changes which are a result of the annual age updates as
   well as applicable rate reductions consistent with the new
   contract.  The employees' January paycheck (February 1,
   1997), therefore, will reflect their accurate premium
   deduction.  In February, MetLife will provide the SCO with
   a tape that adjusts for the incorrect premium that was
   paid by the employees in their December paycheck.  The
   premium paid in the February paycheck will be the new 
   premium amount (January deduction), plus or minus the
   differential between the amounts taken in December and
   January.  In the majority of cases, the employee's
   February premium deduction will represent a reduction from
   the January amount (unless the employee experienced an age
   update which would result in a higher premium effective
   January 1, 1997).  In March, the employee's premium will
   revert back to the new, correct amount and will continue
   at that amount for the remainder of the calendar year
   (unless the employee changes the amount of their
   supplemental coverage).  Two examples are shown below to
   illustrate how premiums will be adjusted. 
   
   Example 1 -- Employee has $40,000 supplemental coverage
   and has an age update (moving from age 39 to age 40)
   effective January 1:
   
   -December deduction taken =$5.00
   -Actual 1/1/97 premium owed =$8.84
   -January paycheck deduction =$8.84
   -February deduction (adjusted) =$12.68($8.84+$3.84)
   -March deduction =$8.84
   
   Example 2--Employee is 51 years of age and has $100,000 of
   supplemental coverage:
   
   -December deduction taken =$61.20
   -Actual 1/1/97 premium owed =$59.50
   -January paycheck deduction =$59.50
   -February deduction (adjusted) =$57.80($59.50-$1.70)
   -March deduction =$59.50
   
   MetLife also recently converted from a manual to an
   automated recordkeeping system.  This system automatically
   calculates supplemental premium deductions based on an
   individual's age and amount of insurance.  It will correct
   any miscalculations or data entry errors that occurred in
   the past.  As a result, MetLife has identified
   approximately 100 employees who have had incorrect
   deductions taken from their paychecks over the years.  The
   majority of these employees have been under-paying while
   only 19 have been over-paying.  MetLife and the DPA have
   agreed that no attempt will be made to collect from those
   employees who have been under-paying their monthly
   premium.  For those individuals who have been over-paying,
   MetLife will be refunding them as soon as an audit of
   their individual pay history is completed and the amount
   of refunds due has been calculated.  Effective February 1,
   1997 (January pay period) the premiums of these
   individuals will be decreased or increased to reflect the
   appropriate premium amount.  MetLife will be notifying
   these employees directly by mail of their premium change. 
   
   
   MetLife and the DPA apologize for any inconvenience this
   situation has caused and we are confident that appropriate
   steps are being taken to resolve the problems in a
   satisfactory manner.
   
   If you have any questions regarding this memo, please
   contact Vallita Lewis at (916) 324-9362 or Calnet 454-9362
   or Desi Rodrigues at (916) 324-0533 or Calnet 454-0533.
   
   
   
   
   Patricia Pavone, Chief
   Benefits Division