HomeMy WebLinkAbout74-91 RESOLUTION•
RESOLUTION NO. 74-91
A RESOLUTION AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE A CONTRACT WITH BLUE
CROSS/BLUE SHIELD FOR EXTENSION OF INSURANCE
BENEFITS.
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BE IT: RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. _ That the Mayor and City Clerk are hereby
authorized and,directed to execute a contract with Blue Cross/Blue
Shield for a one year extension of the group medical, life, and
long termdisability insurancecontract for the, period of May 1,
1991 -April 30, 1992. •A copy'•of the 'contract authorized for
execution' hereby, is attached hereto marked Exhibit "A" and made a
part hereof.
PASSED AND APPROVED this 7th day of May , 1991.
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ATTEST:
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APPROVED:
By 4FeSAr
ARKANSAS BLUE CROSS AND BLUE SHIKLY
A MUTUAL INSURANCE COMPANY
Retention Agreement for
CITY OF FAYETTEV LLE and FAYETFEVILLE PUBLIC LIBRARY
Group Numbers 090041 and 090042
This Retention Agreement applies to the above group.
The Agreement is a retrospective refund calculation, and will be determined using earned
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premiums and incurred claims of Blue Cross, Blue Shield, and Extended Benefits coverage. The
effective date of the Agreement is to be May 1, 1991. Each policy 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 policy 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. The retention used in establishing the refund amount is 17.1% of
earned premium.
CLAIMS COST: Claims cost is the amount of earned premium required to pay policy
benefits for claims incurred during the refund period. Provided, however, that large claim
adjustments shall be based on those amounts actually. paid per covered person during the term
of the Agreement, whether those paid amounts were incurred before or during the term of the
agreement. See Paragraph LARGE CLAIM ADJUSTMENT.
,LARGE CLAIM ADJUSTMENT: The Large Claim Pool base agreed to by the Carrier and
the Group is $ 50,000.00 per covered person per policy year. At the time of settlement, only
the $ 50,000.00 per covered person per policy 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
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for %he, Group by Arkansas . Blue
claims. This will be 13.4% ofsearned
Cross and Blue Shield to offset unusual fluctuations in
premium for the policy year beginning May 1, 1991.
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.
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TERMINATION: In the event the. Group terminates Blue Cross and Blue Shield
coverage during the policy year, any refund or rate stabilization reserve due the Group will
be considered liquidated damages. If the termination occurs at the end of a policy year, any
refund of rate stabilization reserve due the Group will not be settled until twelve (12)
months following the group's termination.
This Agreement may be terminated by either the Policy Holder or the Plan at the end of
the policy year byLthirty (30) days prior notice in writing.
ARKANSAS BLUE CROSS AND BLUE SHIELD, A MUTUAL INSURANCE COMPANY
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Signed •David E. Henderson, Date:
Senior Vice President,
Group Services
CITY OF FAYET!'EVILLE and FAYETTEVILLE PUBLIC LIBRARY
ate:
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