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HomeMy WebLinkAboutOrdinance 3000 ' FOR ORDINANCE NO . � 8y 40OA MICROFMAED 9 /� d AN ORDINANCE WAIVING THE REQUIREMENTS OF 'COMPHTITIVE BIDDING FOR THE PURCHASE OF EMPZfOYEE GROUP4 rLPH 200 INSURANCE . CIR 4 ^ !e " CO BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE FAYETTEVILLE , ARKANSAS : Section 1 , That the Board of Directors hereby waives the requirements of competitive bidding for the purchase of ` employee group health insurance for the reason that said M requirements are not practical as there is only one potential bidder meeting bid specifications . Section 2 . That the Board of Directors hereby authorizes " a the purchase of employee group health insurance plan from v Blue Cross Blue Shield of Arkansas in accordance with the recommendation of the city ' s insurance consultant , a copy of which is attached hereto , marked Exhibit "A " , and made a part hereof , Section 3 . The Board of Directors hereby determines that the City must provide employee group health insurance benefits in order to attract capable employees and provide efficient administration of city government ; that efficient administration of city government is essential to the public welfare ; and that the immediate passage of this ordinance is necessary to provide employee group health insurance benefits . Therefore , an emergency is hereby declared to exist and this ordinance being necessary for the public welfare shall be in full force and effect from and after its passage and approval . PASSED AND APPROVED this 3rd day of April , 1984 . ON ` AAPPROVED : ayor V ` AT,7EST : ,.� . ' BOOK1166PAGE619 o ty lerk HALL CONSULTING , INC. EMPLOYEE BENEFITS - RISK MANAGEMENT ' BOB E. HALL, PH.D., CPCU/CLU 503A Mellroy Plaza DALE K. RAMSEY, MBA P. O. Box 1025 WILLIAM C. CAMPBELL, AB/CPCU March 12 , 1984 Fayetteville, Arkansas 72702-1025 Phone: (501) 521-7531 Mr . Sturman Mackey Purchasing Officer City of Fayetteville P . O . Drawer F Fayetteville , _ AR 72702 RE : CITY OF FAYETTEVILLE GROUP HEALTH INSURANCE Dear Sturman : I have reviewed the information submitted by Blue Cross/Blue Shield regarding the loss exceeding the premiums for 1983 - 84 by $ 77 ; 380 . 00 , which is charged against the stabilization reserve . • Blue Cross/Blue Shield further recommended a 24 . 3 % increase in rates in order to : ( 1 ) Replenish the reserve ; and ( 2 ) Help to offset possible losses exceeding premiums for 1984 - 85 year ( as there have been no rate increases for 3 years ) . As you know , this is a Retrospective Rating Plan whereby the City ' s liability is limited to the premiums paid . If losses exceed premiums , the losses are charged to the Stabilization Reserve and if losses are less than premiums , the excess is refunded to the City as was done in 1981 ; 1982 ; and 1983 ; for a total of $ 174 , 083 . 44 refunds . I recommend the following : ( 1 ) Not go for bids as this is a one year case where losses exceeded premiums vs . three years of refunds ; ( 2 ) The required additional premiums for the purposes mentioned earlier , not be passed on to the City as Employer or Employee premiums but rather that the additional amount � BooK1106P�;�E620 I Dir . Sturman ' Mackey Diarch 12 , ' 1 '934 Page 2 • be paid from the refunds now held in escrow ( $ 174 , 038 . 44 plus estimated interest should now total approximately $ 200 , 456 . 32 ) . . . In the event the same type benefits are retained , the $ 5 , 408 . 18 additional per month would be taken from the escrow account . Then , if at the end of the year , the losses were less than anticipated , any excess would be refunded to the City . If losses are worse than predicted , the City owes nothing else as recommended premiums were paid . ( 3 ) It is further recommended that we consider changing the plan benefits from what is now called a Wrap Around Major Medical to a Comprehensive Plan ( the type almost all Employers now use) . It will also be on the present Retrospective Self Insured basis . What the employee gives up is that he or she would not have the 100 % miscellaneous hospital expense but , rather , pay • 20 % until all employee out of pocket expenses ( in addition to the deductible ) reaches $ 500 , thereafter the Plan pays 100 % . In return the employee receives the following advantages : ( a) $ 1OO . deductible per year vs . present $ 100 deductible per admission ; ( b) Supplemental Accident of $ 500 , with no deductible or 20 % co- insurance payment vs . no such benefit at present ( only pays hospital charges ) ; ( c ) Stop Loss ( out of pocket expenses ) of $ 500 plus deductible vs . present $ 1 , 000 out of pocket expenses after deductible . Further , the recommended rate increase is about ; of present plan recommended rate increase . EXAMPLE : In place of paying out of escrow the $ 5 , 408 . 18 per month for 1984 - 85 -- only $ 2 , 918 . 60 need be paid to replenish the reserve and head off any possible adverse loss experience in 1984 - 85 . 04 BOOK 1106P��EDal Mr . Sturman Mackey March T2 , '1984 Page 3 • ( 4 ) Possibly the following steps might be taken : ( a) Meet with employee representatives or Department Heads and get the employee preference on the change of benefits ; then ( b) Present recommendations to the Board . Please letme know if I may be of further assistance . Sincerely , Bob E . Hall , Ph . D . , CLU/CPCU BEH/ch • CERTIFICATE OF RECORD State of Arkansas ( SS CERTIFICATE OF RECORD City of Fayetteville ( STATE OF ARKANSAS ) SS. I, Suzanne C. Kennedy, City Cleric and Washington County ) Ex-Officio recorder for the City of Fayetteville, 1 , Alma L. Circuit CLrk and Ex-Officio Recorder for do hereby certify that the annexed or fore- Washington Cmmty, -lo hereby certify that the annexed or fore- going, is of record in my office and the same ap- . g ' g instrument was fil(a�d1 for recorr' I in my fico on the-nay pears in Ordinance E2 Resoluti:an hook of _19 dFa Oo'^lorl:ri 1hand the sama i �e � duly recorded record Id ai page )(Vill_at pages Jto-- • �`�i nnss my yytness my hand and sea s day o} rV hand and seal tl,:s — i^ d of _ t y Circuit Clerk and Ex-Officio Rewrded ... y Cierk ar_d Deputy Clerk • BOOK IlUOPAGE622 04 - 17 -84 ARKANSAS BLUE CROSS AND BLUE SHIELD , INC . Retention Agreement for CITY OF FAYETTEVILLE and FAYETTEVILLE PUBLIC LIBRARY GROUPS 290041 and 290042 This Retention Agreement applies to the above Group . The Agreement is a retrospective refund calculation , and will be determined using earned premiums and incurred claims of Blue Cross , Blue Shield , and Extended Benefits coverage . The effective date of the Agreement is to be April 1 , 1984 . Each contract year constitutes a period for accountability of premiums and incurred claims , and hereafter will be referred to as a refund period . The refund will be calculated one hundred and eighty ( 180 ) days after the end of each contract year . The composition of the formula used to determine the refund amount and the definition of each item contained in the formula are as follows : EARNED PREMIUM : Blue Cross , Blue Shield , and Extended Benefits income for the refund period . RETENTION : The amount retained by Arkansas Blue Cross and Blue Shield for claims administration expense , general administration expenses , general contingency , insurance risk , and large claim pool charge . The retention used in establishing the refund amount is 14 . 0% of earned premium . CLAIMS COST : Claims cost is the amount of earned . premium required to pay contract benefits for claims incurred during the refund period . LARGE CLAIM ADJUSTMENT : The Large Claim Pool base agreed to by the Carrier and the Group is $ 30 , 000 . 00 per member per contract year . At the time of settlement , only the $ 30 , 000 . 00 per member per contract year will be applied toward the determination of the Retrospective Refund and Stabilization Reserve Fund . RATE STABILIZATION RESERVE : The amount of earned premium maintained in reserve for the Group by Arkansas Blue Cross and Blue Shield to offset unusual fluctuations in claims . This will be 13 . 0/6 of earned premium for the contract year beginning April 1 , 1984 . Once the reserve is established , it will be credited with interest earned during subsequent periods . If an underwriting loss is incurred during the refund period , it will be charged against the rate stabilization funds . Negative balances in the rate stabilization fund will be carried forward to the next refund period . REFUND : The retrospective refund shall be earned premium , less retention , minus claims cost , less large claim adjustment , minus the adjustment to the stabilization fund . The formula is illustrated as follows : ( EARNED PREMIUM - RETENTION ) - ( CLAIMS COST - LARGE CLAIM ADJUSTMENT ) - ADJUSTMENT TO STABILIZATION FUND = REFUND . The refund shall be paid to City of Fayetteville and Fayetteville Public Library . TERMINATION : In the event the Group terminates Blue Cross and Blue Shield coverage during the contract year , any refund or rate stabilization reserve due the Group will be considered liquidated damages . If the termination occurs at the end of a contract year , any refund or rate stabilization reserve due the Group will not be settled until twelve ( 12 ) months following the Group ' s termination . -2- This Agreement may be terminated by either the Contract Holder or the Plan at the end of the contract year by thirty ( 30 ) days prior notice in writing . ARKANSAS BLUE CROSS AND BLUE SHIELD , INC . . • /� 1 � e.e MsLq 25. 0841 Signe�s B . House , C . H . C . Date : Vice President , Marketing CITY OF FAYETTEVILLE and FAYETTEVILLE PUBLIC LIBRARY (It � , wa" Signed Mayor Date City C erk .3- Lear ars 'tNt RCOVIR�aAtB�/Kt o�lt ..�'!e�,.r�. • s : :.:M:.+v � ., . .. .« . CO.OPtTlTIVO •IDOIAO «s- 'la ye.yFUMrr .r '^. r '. ^ "'w i 'V t - f. s '. : ... ' Sit ` ;•�•p„a,a,;,l C TNt r'1f{14T'teA�Q d QAtPIOr Ot WYv • tal •a. 14 tax, VM ^1.4e NQALTN IN:URAMCt. ' v A . N! [ +rr• . 1 t:¢p� aW «t • Lfma n«ns tt 11 ORDAIOMD tr 1Nt =strs+ ai+ r+:n��cevftt to :.Y a .•v rt / 1�v •.r% t:r. a . cry to A eWezmru n. .a0wr tOARD OP Ottecrons OF l TN9 city dI F^TIIT - for rtwm am a ;sef el of :Arnr rhuntnf. rf:rulatr3 And dUltiutinrfT rzvrn r.a TQVILLQ,"ARI[AM3Aa:^ ” . Mtabilslr`d place of hustnrst to tubf.cnbeM and rraden teneeaDTd aD tuar* Sftlldn T. That the Baan W In the ClIv and CUnnty for a definiterice for each direefert here" waiv" ted D cop)'. or • flteU twice pre rApuirement . of compotulw annum. which price was fixed at what is considered the value al IflepelbilrAnd4 bidding for the perrcnate W ba sed upon the news value and ser% ice value• itcontains, thatal Mast flfIvperrrelt employee for he re on m incur- of the subscribers thereto hare aid cash for their subscriptions to the newspaper emp for me reason mar said P D requiremems are not practical or its agents or through recognized news dealers over a period of at least six as there is only one potential months; and that the said newspaper publishes an average of more than forty bidder .meeting bid specifica. tiods. percent news matter. Seciton 2. That the Beard of the pbrs ase o au nloyee I further certify that the legal notice hereto attached in the matter of the purchase s employee Y g group health insurance plan from Blue in a Blue ce w tof h _ Arkansas in ar�otion o with the recummeRtlalion of the " F--��-� >f �t-'>f- Z � �(/ e ����✓ city's insurance consultant, a copy of which is attached / hereto, marked. Exh;biti "A.., was published in the regular dailyissue ofsaid newspaperfor — and made'a pan hereof. consecutive insertions as follows: Section 3. The Board of - Directors hereby determines / r that the city must provide The first insertion on the day of ` If 19 �� employ" group haalth insur- ance benefits in order to attract capable employees and provide the second insertion on the day of 19 efficient administration of city government; that efficient administration Of city govern- the third insertion on the dal' of 19 ment is essential to thepub6c passage and that i mance is and the fourth insertion 0 h di�y't Of 1 passage of this ordinance is ^ necessary to provide employee / 'group nealth insurance benefits . Therefore, an emergency is declared to exist and mis ordinance being nec Sworn to and subscribed before me on this -� ��r_ essary for the public welfare 1 day of snail be in NII force and effect / Q from and after its passllgc and i approval. I ✓ PASSED AND APPROVED Mis3rdday of Pp61, 198E - ✓ A13PRO%4ED: \otar ' 1Ib11C Paul R. Noland } Mayor ATTEST : My Commission Expires: Suzanne Gr Kennedy Exhibit A is on file at The City Clerks Oflice. 113 W Mountain, Fayenliyule; Ar. 1 Foes for Prinlini: COc1 01 P:aei - µ rwt.Jt, .frS Flfrr,., _ MANE CHECKS PAYABLE TO: I+< No . �_.y � ,_ = y QASSINV INVOICE "'. 21387 NORTHWEST ARKANSAS TIMES LINES TIMES AMOUNT P. O. DRAWER D FAYETTEVILLE, ARKANSAS 72701 c64L 0-1 �p 212 NORTH EAST AVENUE PHONE (501 ) 442-6242 YOUR CLASSIFIED INVOICE IS NOW DUE. IF NOT PAID WITHIN 10 DAYS AMOUNT DUE WILL BE _ PHONE CLERK INDEXING TERMS: C itu of Fatiett -%-- ; bra AD GIVEN BY CLASSIFICATION {� {� .� I C.= I•Bwav i' COD LIE SOLICITED BY OPERATOR raisette •:' LIIe 72102 _ START DATE STOP DATE '< SKIP SCHEDULE PLEASE PAY PROMPTLY A IV 1" MiFETITIVc< ` 7 FAYE