HomeMy WebLinkAbout125-99 RESOLUTIONRESOLUTION NO 125-99
A RESOLUTION AUTHORIZING THE MAYOR AND CITY
CLERK TO ENTER INTO CONTRACTS WITH USABLE LIFE,
INC., TO PROVIDE LIFE, AD&D, AND LTD COVERAGE; AND
TO PROVIDE THIRD PARTY ADMINISTRATION FOR AN
I.R.S. SECTION 125 FLEXIBLE SPENDING ACCOUNT.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,
ARKANSAS.
Section 1. That the City Council hereby authorizes the Mayor and City Clerk to enter
into contracts with USAb1e Life, Inc., to provide Life, AD&D, and LTD coverage; and to provide
third party administration for an I.R.S. Section 125 flexible spending account.
PASSED AND APPROVED this day of October , 1999.
APPROVED.
By. //d
Fred Hanna, Mayor
ATTEST:
By ).54 sem,_ 2141,
=-••_ ;; . Heather Wo' druff, City Jerk
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USAble Life
P. 0. Box 1650
Little Rock, AR 72203
GROUP INSURANCE APPLICATION
TYPE OR PRINT IN BLACK INK
1. Legal Name of Policyholder
CITY OF FAYETTEVILLE R-2467
Taxpayer ID#
STD
2. Mailing
113
Address of Policyholder
WEST MOUNTAIN
FAYETTEVILLE
City
State
ARKANSAS
Zip+4
72701
3. Street
$150,000
Address of Policyholder (if different from above)
City
State
Zip+4
0 other (give details):
4. Name of CEO, President or Owner of Company
Name
of Insurance
DON
Contact at Company
M. BAILEY
Telephone Number of Policyholder
501-521-7700
5. Name of Subsidiary or Affiliate Companies to be Covered
N/A
Fax Number of Policyholder
501-575-8257
6. Nature of Business
CITY/MUNICIPALITY
Effective as of
Qb— Mo.
12:01 a.m.
01
Day2000Yr.
Number of
Eligible Employees
528
Number Enrolled
for Coverage
528
7. Waiting
a. Present
b. Future
Period
Employees 30 DAYS
Employer Contribution
Life and AD&D
STD
100
% Dep.
%
Life
% Hosp. Indemnity
%
Employees 30 DAYS
Other
8. Eligible Employees
SEE ATTACHED ADDENDUM NO. 1
Retired Employees Insured
Present 0 Yes 0 No
Future 0 Yes 0 No
9. Employee Classes
SCHEDULE OF INSURANCE
Description
Life and AD&D
STD
Other*
SEE ATTACHED ADDENDUM NO.
1
• Indicate other benefits sold.
10. Guaranteed Issue
Changes in benefit amounts in accordance with the Schedule shown above will become effective on:
0 the first day of the policy month following the date of change; or
$150,000
$a the policy anniversary date coincident with or next following the date of change; or
(Life and AD&D amounts over Guaranteed Issue
are subject to evidence of insurability.)
0 other (give details):
11. Reductions & Termination (Benefit reduction due to age will be effective on the insured's birthday.)
O Employee Life and AD&D benefits reduce 33 1/3% of the pre -age 65 amount at ages 65 & 70. Terminate at retirement.
❑ Dependent Life benefits reduce 50% at the spouse's age 65. Terminate at the employee's retirement.
O STD benefits reduce 33 1/3% of the pre -age 65 amount at ages 65 & 70. Terminate at retirement.
$S Other: SEE ATTACHED ADDENDUM NO. 1
GPOL-APP (2-98)
(over)
Page 2 of Application
12. Extended Life Insurance Benefits
R$ Yes ❑ No
If Yes, indicate type of coverage desired: X8 Standard Coverage
0 One-year Extension
13. Dependent Life Insurance
❑ Yes %% No
If Yes, indicate correct plan:
Spouse
Each child over days to months
Each child
months to
years (students to age
0 Plan I
$2,000
100
1,000
0 Plan II 0 Other
$5,000
200
2,000
14. Short Term Disability Accident Benefits
(non -occupational)
0 Yes fl No Begin Day
Sickness Benefits
Begin Day
Maximum Period
Weeks
Benefits Begin on
First Day Hospitalized
0 Yes 0 No
❑ Yes fl No
UNITS Available: 0 1 unit only or 0 1 or 2 units as elected by employee
Dependent Coverage Available: 0 Yes 0 No Employer Contribution:
16. Voluntary Group Life
❑ Yes %% No
0 STANDARD, or 0 SELECT Guaranteed Issue: 0 No 0 Yes $
# Enrolled
If Yes, required employee participation
17. Supplement Hospital Benefit
.❑ Yes l8 No
Optional Cancer Benefit? 0 Yes 0 No
# Enrolled Employer Contribution:
18. Voluntary Accidental Death & Dismemberment
fl Yes 0 No # Enrolled
Employer Contribution:
REMARKS OR SPECIAL PROVISIONS ORIGINAL LIFE AND AWED POLICY WAS EFFECTIVE APRIL 15, 1988. ORIGINAL
VOL. AD&D POLICY WAS EFFECTIVE JUNE 1, 1991 — THIS APPLICATION
REFLECTS CHANGES EFFECTIVE 1-1-2000. THEREFORE POLICIES #2467-000 S
2467-001 ARE BEING REISSUED UNDER R-2467.
It Is understood and agreed that this application shall be made a part of the policy or policies applied
for and that no insurance shall be effective until approved by the Company at its Home Office.
COMPLIANCE NOTICE: USAble Life does not provide legal or tax advice. Based upon information you have provided us about your group, we will notify
you if we perceive any obvious deficiency in your plan, but you must consult your own legal counsel for definitive advice and opinions regarding your plan's
compliance.
INSURANCE FRAUD WARNING - Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false
information in an application for insurance may be guilty of a crime and subject to fines and confinement in prison.
FAYETTEVILLE ARKANSAS
Dated at (City, St
Signature of Marketing
OCTOBER 11, 1999
Date
Signature of Policyholder and Title
MAYOR
'L._ '
epresentativeid"
Signature o arketing anager Signature of Broker, if applicable
Addendum No. 001 to be attached to and made part of Application, GPOL-APP (2-98)
Application By: City of Fayetteville
GROUP LIFE INSURANCE
The following questions of the application are addended as follows:
Questions #8, #9 and #11.
Effective: January 1, 2000
The `Basic Life and AD&D Benefits for eligible employees shall be determined by the following schedule:
CLASSIFICATION
;LIFE AND AD&D
= ,"
Class
working
Class
time
works
regular
1: All
at
2: Any
who is
an average
basis.
least
a
full-time employees
40 hours per
Employee previously
designated staged
of 20 Hours
customarily
week.
employed
retiree and
per week on
full-
who
a
1 1 Times Annual Salary,
1 ,h Times Annual Salary
Working Full -Time, Maximum
*Insurance amount will
higher thousand.
Maximum
Last Earned
$150,000
be rounded to the
$150,000*
When
next
The Reductions, Terminations and Special Provisions as shown on page 2 are deleted and the following sha 1 apply:
REDUCTIONS, TERMINATIONS AND SPECIAL PROVISIONS
Class 1: Employee Life and Accidental Death & Dismemberment: Benefits reduce 33 1/3 % of the pre -
age 67 amount at ages 67and 70 and terminates at retirement.
Class 2: Employee Life and Accidental Death & Dismemberment: Benefits reduce 33 1/3 % of the pre -
age 67 amount at ages 67and 70 and terminates the earlier of age 75 or retirement.
Group Life to include Accelerated Benefit Rider.
Group AD&D to include Accidental Death Seat Belt Rider.
Signature and Title
OCTOBER 11, 1999
Date
USAble Life
P 0 Box 1650
Little Rock, AR 72203-1650
APPLICATION FOR GROUP LONG TERM
DISABILITY INSURANCE
1. LEGAL NAME OF POLICYHOLDER
CITY OF FAYETTEVILLE
R-2467-100
2. MAILING ADDRESS OF POLICYHOLDER
113 WEST MOUNTAIN FAYETTEVILLE, AR 72701
3. STREET ADDRESS OF POLICYHOLDER (if different from above)
4. NAME OF SUBSIDIARIES, DIVISIONS OR AFFILIATES TO BE COVERED
N/A
5. NATURE OF BUSINESS
CITY/MUNICIPALITY
6. EFFECTIVE DATE 12:01 A.M.
MONTH jAwARy
7. ELIGIBLE CLASSES
Describe Below
DAY 01
YEAR 2000
WILL EMPLOYEES CONTRIBUTE 0 YES
TOWARDS COSTS? X® NO
(The insurer reserves the right to review and terminate all classes insured under this policy if any class ceases to be covered.)
CLASS ALL FULL—TIME EMPLOYEES
CLASS
WORKING A MINIMUM OF 40 REGULARLY SCHEDULED HOURS PER WEEK.
8. ELIGIBILITY WAITING PERIOD (Should an employee enter another eligible class, he will not be eligible for any additional benefits until he has
completed a 30 -day waiting period, and has been actively at work one full day in the new class.)
A. PRESENT EMPLOYEES (None, unless specified)
B. NEW EMPLOYEES 90 DAYS
9. NUMBER OF EMPLOYEES
A. ELIGIBLE 528
528
B. ENROLLED
MAXIMUM COVERED
PAYROLL PER EMPLOYEE: $ 10,000 PER MONTH
10. AMOUNT OF INSURANCE
60 % (Benefit Percentage) OF BASIC MONTHLY EARNINGSNOTTO EXCEED A MAXIMUM MONTHLY BENEFIT OF
$ 6,000
OR
% OF THE FIRST $ OF BASIC MONTHLY EARNINGS PLUS % OF THE NEXT
$ OF BASIC MONTHLY EARNINGS NOT TO EXCEED A MAXIMUM MONTHLY BENEFIT OF
LESS OTHER INCOME BENEFITS STATED IN THE POLICY INCLUDING
❑ PRIMARY SOCIAL SECURITY fl PRIMARY AND FAMILY SOCIAL SECURITY 0 PRIMARY AND FAMILY SOCIAL
0 BACKDOOR INTEGRATION SECURITY WITH 70% ALL SOURCES
THE MINIMUM MONTHLY BENEFIT IS $ 50.00
11. ELIMINATION
PERIOD 180 DAYS
12. PRE-EXISTING CONDITIONS EXCLUSION
❑ 12/6/24 XX3/6/12 ❑ 12/12 ❑ 5 DAY 0 OTHER
GLTD-MAPP (2-98)
13. MAXIMUM BENEFIT PERIOD
XCREDUCING BENEFIT DURATION
BENEFIT DURATION
TO AGE 65
60 MONTHS
48 MONTHS
42 MONTHS
36 MONTHS
30 MONTHS
24 MONTHS
21 MONTHS
18 MONTHS
15 MONTHS
12 MONTHS
AGE AT DISABILITY
LESS THAN 60
60
61
62
63
64
65
66
67
68
69 (AND OVER)
O 65/5/70
AGE AT DISABILITY
LESS THAN 60
60-64
65-69
(70 AND OVER)
❑ TO AGE 70
AGE AT DISABILITY
LESS THAN 69 •
69 AND OLDER
BENEFIT DURATION
TO AGE 65
5 YEARS
TO AGE 70 BUT
NOT LESS THAN
1 YEAR
1 YEAR
BENEFIT DURATION
TO AGE 70
1 YEAR
OTHER
O 5 YEARS OR AGE 70
WHICHEVER FIRST OCCURS
O 10 YEARS OR AGE 70
WHICHEVER FIRST OCCURS
❑ TO•AGE65
❑ 5 YEARS OR AGE 65
WHICHEVER FIRST OCCURS
O 10 YEARS OR AGE 65
WHICHEVER FIRST OCCURS
❑ OTHER
NONE OF THE ABOVE OPTIONS
EXTEND THE MAXIMUM BENE-
FIT PERIOD BEYOND THE AGE
SELECTED EXCEPT FOR A MINI-
MUM ONE-YEAR BENEFIT.
14. POLICY FEATURES
Ig NO
NO
A. O YES
B. O YES
C. 0 YES XX NO
D. O YES fl NO
E. O YES id NO
F. %I YES ONO
G. r YES ONO
H. O YES %% NO
L ki YES NO
J. %I YES ONO
K. COLA
❑ YES XX NO
O YES %l NO
L. O YES XX NO
M. O YES .fl NO
N. %1 YES ONO
PARTIAL DISABILITY
EDGE
EDGE 1 % INDEXATION
EXTENSIVE OWN OCCUPATION BENEFIT
60 MONTH OWN OCCUPATION BENEFIT •
36 MONTH OWN OCCUPATION BENEFIT
THREE MONTH SURVIVOR BENEFIT
YEAR FAMILY INCOME BENEFIT
MENTAL ILLNESS LIMITATION
PROGRESSIVE PARTIAL DISABILITY
ADJUSTMENTS -OPTION I
END OF MAXIMUM BENEFIT PERIOD -OPTION II
ADDITIONAL PENSION CONTRIBUTION
401K CONTRIBUTION BENEFIT
2 YEAR RATE GUARANTEE
0. ❑'YES f NO ADDITIONAL FEATURES.
REMARKS ORIGINAL LONG TERM DISABILITY POLICY EFFECTIVE DATE MAY 1, 1990.- THIS APPLICATIO
REFLECTS CHANGES EFFECTIVE 1-1-2000. THEREFORE POLICY 2467-100 IS BEING REISSUED
UNDER R-2467-100
15. IS THIS A REPLACEMENT
OF SIMILAR COVERAGE
❑ YES
%% NO
PRIOR INSURANCE 0 YES
CREDIT INCLUDED %%NO
(If yes. a copy of prior carrier's plan is required for PIC administration)
16. PREVIOUS COMPANY
TERMINATION DATE
OF PRIOR PLAN
17. PREMIUM MONTHLY
(unless otherwise specified)
DEPOSIT OF $ TO APPLY ON THE FIRST PREMIUM
It is understood and agreed that this application shall be made Section I, part of the Policy applied for and that no insurance shall be effective until approved
by the Insurance Company at its Home Office.
Insurance Fraud Warning — Any person who knowing y presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false
information in an application for insurance may be guil y of a crime and subject to fines and confinement in prison.
MARKETING REPRESENTATIVE
BY: SIG URE LE
MAYOR
FAYETTEVILLE, ARKANSAS
TELEPHONE NUMBER
(501) 575-8314
DATE
OCTOBER 11, 1999
GLTD-MAPP (2-98)
Agreement for Administrative Services
This agreement specifies the services to be provided to City of
Fayetteville hereinafter referred to as "Company" in the ongoing
administration of the Company's Section 125 Cafeteria Plan, and the
specified responsibilities of the Company.
Administrator
City of Fayetteville shall be the Plan Administrator and USAble Life,
hereinafter referred to as the "Third Party Administrator", shall be
engaged as a subcontractor in the performance of administrative services
for the plan.
Administrative services to be provided by USAble Life:
1. Design a Cafeteria Plan Document, Dependent Care Assistance Plan
and Medical Reimbursement Plan to be reviewed by the Company
and Company's legal counsel.
2. Design a Prototype Summary Plan Description. City of Fayetteville
is responsible for printing the plan description and distributing it
to employees.
3. Conduct informational seminars to explain the Cafeteria Plan to
the employees if flexible spending accounts are involved
4. Provide participant election forms to be used during the enrollment
process.
5. Process initial enrollment forms and revocation forms to initiate
the administration function.
6. Provide an employee list to payroll once all elections have been
received and keyed into administration software for verification of
elections and amounts.
7. Provide claim for reimbursement forms to be used to claim flexible
spending account elections.
8. Provide reimbursement checks to employees on a bi weekly basis.
9. Provide a check register for all checks printed (or to be printed) on
a bi-weekly basis.
10. Provide each participant a Statement of Account on a quarterly
basis for the first, second and third quarters, and monthly for the
fourth quarter.
11. Provide discrimination reports on a semi-annual basis.
12. Provide forms to the Company for use by the Company in
communicating participant termination's and changes of family
status.
13. Provide quarterly Company statements of participation by plan by
participant.
14. Provide annual preparation of Form 5500 for City of Fayetteville to
review, sign and mail to the IRS.
15. Provide participant election forms at the end of each year for use in
making elections for the following year.
16. Provide guidance to the Company as to the operation of the Plan
and to maintaining the tax qualification of the Plan as set by the
Internal Revenue Code of 1986, as amended from time to time,
and successor tax laws.
17. Maintain all Cafeteria Plan documents and files for six months
following the end of each plan year, which after that time will be
returned to the Company .
Communication services to be provided by USAble Life:
1. Present informational seminar to the employee group.
2. Survey the group and analyze for individual savings.
3. Meet with each employee to discuss their individual savings and
personal needs.
Responsibilities of the City of Fayetteville:
1. Report participant termination's and changes of family status to
Administrative Firm to be effective 2 weeks after receipt.
2. Reconciliation of payroll amount redirected to the Cafeteria Plan
based on reports provided each month by USAble Life.
3. Distribution of participant statements of account to Company
employees.
4. Initiate any action required in the event plan(s) become
discriminatory.
5. Secure legal review of the Cafeteria Plan Document and Summary
Plan Description from Company's legal counsel.
6. Review, sign and mail the annual Form 5500 to the IRS.
7. Maintain all Cafeteria Plan documents following the end of each
plan year in the event the Plan is audited
Fees and Terms of Payment
The Schedule of Services/Fees is to be attached and made a part of this
Agreement. USAble Life has the right to change the Schedule of
Services/Fees by giving at least 60 days notice to the Company.
Reports and Data
All reports and data remain the property of the Company. USAble Life
will provide the Company all data, upon request, used by USAble Life in
its administration procedures.
City of Fayetteville
Section 125 Cafeteria Plan
Schedule of Fees
The fees for City of Fayetteville have been waived. This waiver will remain
with the continual enrollment of USAble Life products. If product
solicitation is terminated, then USAble Life will re-evaluate the fee
structure at that time.
One time set-up fee:
Monthly fee for Premium Only Participant:
Monthly fee for Flexible Spending Participant:
Minimum Monthly Charge:
$ 0.00
$ 0.00
$ 0.00
$ 0.00
Terms of this Agreement
This Agreement will be effective from the date both parties execute this
agreement until it is terminated. Either party may terminate this
Agreement with 30 days written notice.
By_
By
af
Julie
rshall, Senior Vice President
Date: OCTOBER 11,. 1222
Date:
STAFF REVIEW FORM
XX Agenda Request
Contract Review
Grant Review
FOR THE FAYE 1 EVILLE CITY COUNCIL MEETING OF
October 5, 1999
FROM:
Don Bailey
Name
Personnel Admin. Services
Division Department
ACTION REQUESTED: Purchase employee group policies from U S ABLE LIFE to provide Life,
AD&D, and LTD coverage plus contract to provide third party administration for an IRS
Sec. 125 Flexible Spending Account The contracts effective dates are 1-1-2000 for a
one year term with four one year options for renewal by agreement of both parties.
COST TO THE CITY:
$155,117 Est. Year 2000
Cost of this request
Various
Account Number
Project Number
$203,277 Est. Year 2000 Life/AD&D, LTD Ins.
Category/Project Budget Category/Project Name.
0 City Wide
Funds used to date
Program Name
$203,277 City Wide
Remaining Balance Fund
BUDGET REVIEW:
Budgeted Item
BddgCdordinator
get Adjustment Attached
Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW:
GRANTING AGENCY:
9-a/-99 t //�o�e�mdD t -Xu.Qdo 1-ZR-tt
Date brie mal Auditor Date
Purchasing Officer
9-a\-99
Date
ADA Coordinator
Date
STAFF RECOMMENDATION:
Approve request.
Division Head
D partment Di�ctor
A minis r -five Services Director
f�-
Mayo
Date
Date
zha
Date
Date
Cross Reference
New Item: Yes No
Prev Ord/Res #.
Orig. Contract Date
REVIEW POPE
Description
Conents:
Budget Coordinator
Acccuntfng Manager
City Attorney
Purchasing Officer
AOA Coordinator
Internal Auditor
Reference Conents:
Meeting Date
Page 2
a.
FAYETTEVILLE
THE CITY Of FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
TO: Mayor Fred Hanna and The City Council
THRU: Kevin Crosson, Administrative Services Director
FROM: Don Bailey, Personnel Director
DATE: September 13, 1999
SUBJECT:
Employee Group life, AD&D, LTD Voluntary AD&D and Cancer Coverage
Policy Renewal
The expiration date for each of the above listed employee group insurance policies is -12-31-99.
Periodically the City elects to re -bid its coverages to take advantage of either more favorable
pricing or to improve its employee benefits. An RFP requesting bids on the above coverages
plus the addition of an IRC Section 125 Flexible Spending Account Proposal (Cafeteria plan)
was sent to selected insurance companies and advertised on July 18, 1999. The RFP permitted
bids to be submitted on the insurance plans, or the Flexible Spending Account Plan or both. Our
group insurance RFP specified a one year contract with four one year options to renewal. Five
proposals were received and evaluated by the Selection Committee on September 2, 1999.
US Able Life was the clear choice of the Committee by having met the RFP requirements for
coverage to be provided and offering the best rates with a two year rate guarantee. A comparison
of our 1999 rates and the year 2000 rates follows:
1999 2444
LIFE (per $1,000 coverage) .31 .21
AD&D (per $1,000 coverage) .07 .05
LTD (per $100 of covered payroll) .46 .46
Vol. AD&D* (per $25,000 coverage) 3.75 1.50 employee only
" 994.00 2.00 family
Cancer* Various No change
Cafeteria Plan -0- No cost
* Employer pays for $25,000 of Voluntary AD&D coverage on each employee. The employee
pays 100% of premium for coverage above $25,000 or for family coverage. The employee pays
100% of premium for Cancer coverage he or she may elect.
Based on August 1999 enrollments a conservative estimate of annualized premium reduction for
the year 2000 as compared to 1999 is $35,000.
Note also that reduction in Voluntary AD&D rates apply to any amount the employee has elected
over the $25,000 employee coverage paid by the City This provides a significant savings in
premium cost to the employee.
Enhancements have also been incorporated in the Life policy. Coverage provisions will now
permit full payment of the coverage amount to age 67. Previously, a reduction occurred at age
65. A Group Life Accelerated Benefits Rider has been added to make an advance payment of
50% of the eligible benefit in the event of a terminal illness Also, an Accidental Death Seat Belt
Benefit Rider has been included into the AD&D Policy. This rider will pay an additional benefit
equal to the lesser of the employees full AD&D benefit or $25,000 in the event of a vehicle
accident causing death if the seat belt was in use at the time of the accident.
US Able, in consideration of employee participation in two of their voluntary group plans
(Cancer and Voluntary AD&D) , will at no cost establish and serve as a third party administrator
for a Section 125 Cafeteria Plan. Internal Revenue regulations permit group premiums,
employee and dependent unreimbursed medical care expense, deductibles and co -payments and
dependent care for eligible children and other dependents to be incurred on a pre-tax basis
through payroll contributions to a flexible spending account. These expenses are reimbursed to
the employee as projected expenses occur. A pre-tax limit of $2,000 on unreimbursed medical
expenses for each participant account has been set for the initial plan year
Employees must make an annual calendar year election as to expense categories and amounts to
be contributed pre-tax. The initial group presentations and enrollments must be completed by
November 14 to effect a January 1, 2000 enrollment. Thus to permit installation of this plan on
January 1, the Group Renewal/Cafeteria Plan Agenda item has been moved forward to the
October 5 meeting in order to allow a 4-5 week enrollment period.
Further information pertaining to each of the plans is contained in policy resumes attached
hereto.
•
2000 Budget Summary By Account - Estimated
Long Term Disability (LTD)
Accidental Death & Dismemberment (ADD)
- Life Insurance
Fund
General (1010)
Street (2100)
Community Development (2180)
Parks Development (2250)
Drug Law Enforcement (2930)
Water & Sewer (5400)
Solid Waste (5500)
Airport (5550)
Shop (9700)
CADATA 123-DATA\OOADDLTD. W K4
LTD
Budget
ADD
Budget
Life Insurance
Budget
52,050 $ 17,142 $
3,458 1,440
606 203
710 315
414 149
7,757 3,309
3,470 1,530
1,020 363
1,775 675
71,260 $
25,126 $
78,075
5,187
909
1,065
621
11,636
5,206
1,530
2,662
106,891
•
•
•
•
Enhanced Benefit Option
Group Term Life/AD&D
Proposal
Presented to
City of Fayetteville
by
Barbara Lovin
August 11, 1999
USAble Life
USAble Life is Rated "A-" (Excellent) by the A.M. Best Company
•
•
Presented to: City of Fayetteville
USAble Life Facts
•
USAble Life was originally chartered in December of 1980 as Life of Arkansas to write Life
and Accident and Health insurance.
During the past 18 years, USAble Life has grown to be a highly successful insurance
company involved in both group and individual payroll deduction products.
Highlights
• The company insures over 500,000 individuals
• The company has more than $4.4 billion of insurance in -force
• The company has extensive experience in the implementation and enrollment of
voluntary payroll deduction products and administration of Section 125 Cafeteria Plans
in commercial accounts and educator groups.
We offer a complete innovative choice of products, from employer-sponsored group plans to
employee -paid supplemental coverage, all at competitive rates. Our portfolio of products
includes:
• Group and Individual Life
• Group AD&D
• Short Term and Long Term Disability
• Dependent Life
• • Voluntary Term Life
• Universal Life
• Supplemental Hospital Benefits
• Cancer coverage and Accident coverage
• Voluntary Disability Coverages, both Short Term and Long Term
Management and key staff have years of experience working with employers and
employees. This experience, along with our state of the art administration system, enables
smooth enrollments and administration for all product lines.
•
USAble Life is rated "A-" (Excellent) by the A.M. Best Company and stands behind a stiong
commitment to superior products and customer service.
COMPANY HEADQUARTERS:
USAble Life
USAble Corporate Center
320 W. Capitol, Suite 700
P.O. Box 1650 (72203)
Little Rock, Arkansas 72201
Toll Free: 800-648-0271 Telephone: (501) 375-7200 Fax: (501) 378-3333
Page 2
Presented to: City of Fayetteville
A Plan of Group Insurance
Schedule of Benefits
Classification of Employees
Class 1
All full time employees who customarily
work at least 40 hours per week
Class II
Any employees previously employed
full time who is a designated staged
retiree and who works an average of
20 hours per week on a regular basis
Amount of Life Amount of AD&D
1.5 Times Salary, 1.5 Times Salary,
Maximum $150,000 Maximum $150,000
1.5 Times Salary, 1.5 Times Salary,
Maximum $150,000 Maximum $150,000
[Wates, Life Insurance Volume and Monthly Premium Calculations
Rates for Group Insurance
Life per $1,000 $0.24
AD&D per $1,000 $0.05
Volume of Insurance
Life Insurance $21,689,000
AD&D Insurance $21,689,000
Monthly Premium
Life Insurance $5,205.36
AD&D Insurance $1,084.45
TOTAL MONTHLY COST $6,289.81
Reductions, Terminations and Assumptions
Reductions and Terminations
Class I- Life and Accidental Death and Dismemberment benefits will reduce 33 1/3 percent of the pre -
age 67 amount at age 67 and at age 70. Benefits terminate at retirement.
Class 11- Life and Accidental Death and Dismemberment benefits will reduce 33 1/3 percent of the pre -
age 67 amount at age 67 and at age 70. Benefits terminate the earlier of age 75 or retirement.
Assumptions
Eligible Employees: 528
The foregoing rates are based on employee data submitted with respect to the number of employees
listed above in the assumptions section. Actual rates will be based on enrollment. The final rates will
be guaranteed for 2 year(s) from the group's effective date.
Proposal prepared: August 11, 1999: and expires November 11, 1999 unless renewed.
Page 3
•
Presented to: City of Fayetteville
Life Insurance
•
•
Death Benefit
The face amount of the policy, as determined by the schedule, is payable to the employee's
beneficiary in the event of his death from any cause. The life insurance will be paid in a lump
sum or in installments as specified by the employee or the beneficiary.
Active Work or Actively at Work
The Insured reports for work at his usual place of employment and is able to perform all the
duties of his regular occupation for the entire normal work day.
Beneficiary
Each employee may name anyone he desires except the employer, as the beneficiary or
beneficiaries to whom the insurance is to be paid. This designation may be changed by the
employee at any time.
Right of Conversion
The employee's life insurance automatically ceases 31 days after termination of employment.
During this 31 -day period and subject to the terms of the group policy, he may convert his group
life insurance without evidence of insurability to an individual life insurance policy (except term
insurance) without disability benefits.
Total Disability Benefit
• If the employee becomes totally disabled from any cause before reaching age 60, the life
insurance is continued, subject to the terms of the group policy, for the duration of his total
disability without payment of further premiums. If the employee dies before the total disability
ceases, the face amount of the life insurance is payable to his beneficiary.
•
Suicide
If an Insured Person, whether sane or insane, dies by suicide within one year of his effective
date of insurance, the death benefit will be limited to the amount of premiums paid for this
insurance.
With respect to employees insured on the effective date of this policy:
(1) If this policy replaces another group life policy, the one-year limitation for death
by suicide shall be reduced by the number of months an insured employee was
continuously insured by the prior plan; and
(2) The benefit payable shall be the lesser of the amount otherwise payable under
this policy or the amount provided by the prior policy.
Page 4
Presented to: City of Fayetteville
Life Insurance
Termination of Insurance
Insurance will terminate automatically on the earliest of the following dates:
(a) the last day of the period for which a premium payment is made, if the next
payment is not made;
(b) the date the insured becomes a member of the armed forces;
(c) the date the policy or a specific benefit terminates;
(d) the date the insured ceases to be a member of an eligible class; or
(e) the date the insured ceases to be actively at work.
Page 5
Presented to: City of Fayetteville
Group Accidental Death & Dismemberment
Benefit
An amount, as determined by the Schedule of Benefits, is payable in the event of loss of life or
dismemberment through accidental means, Accidental Death and Dismemberment Insurance
provides protection for losses occurring on or off the job. Payment will be made if the loss is
suffered within 365 days of the date of the accident. However, we will pay no more than the full
amount shown on the Schedule of Benefits for losses resulting from any one injury. The
amounts payable are as follows:
FULL AMOUNT OF INSURANCE FOR ACCIDENTAL LOSS OF:
Life (in addition to any amount of Group Life Insurance).
Both Hands or Both Feet.
Sight of Both Eyes.
One Hand and One Foot.
One Hand and Sight of One Eye.
One Foot and Sight of One Eye.
ONE HALF AMOUNT OF INSURANCE FOR ACCIDENTAL LOSS OF:
One Hand.
One Foot.
• Sight of One Eye.
Limitations
We will not pay a benefit for loss caused directly or indirectly by disease, bodily or mental
infirmity of infection (except bacterial infection of a visible injury); suicide or intentionally self-
inflicted injury, whether sane or insane; participation in a riot or insurrection, or commission of
an assault or felony; war or any act of war, declared or undeclared; or use of any drug,
hallucinogen, controlled substance or narcotic unless prescribed by a physician. Also not
covered are losses caused by travel or flight in, or descent from, any aircraft unless as a fare
paying passenger on a commercial airline flying between established airports on (a) a
scheduled route; or (b) a charter flight seating 15 or more people; or losses caused by
participation in parachute or hang gliding sports, or any organized race or speed contest.
•
c.
Presented to: City of Fayetteville
Accidental Death Seat Belt Benefit
We will pay an additional Accidental Death benefit equal to the lesser of the insured employee's
full amount of AD&D coverage or $25,000. We will pay this benefit if an insured employee suffers
loss of life as the result of a covered accident which occurs while he is driving or riding in a Private
Passenger Car, if:
1. the car is equipped with seat belts; and
2. the seat belt was in actual use and properly fastened at the time of the accident; and
3. the position of the seat belt is certified in the official report of the accident or by the
investigating officer. A copy of the police accident report must be submitted with the claim.
If such certification
is not available, and it is
unclear whether
the insured
person was properly
wearing a seat belt,
we will pay a fixed benefit
of $1,000 to the
designated
beneficiary.
"Private Passenger
Car"
means
a validly
registered four-wheel
private passenger car (including
Policyholder -owned
car),
station
wagons,
jeeps, pick-up trucks
and van -type cars.
"Seat Belt" means those belts that form an occupant restraint system.
•
•
Page 7
Presented to: City of Fayetteville
•
•
ial Education Benefit
We will pay "Special Education Benefits" if the insured employee:
1. is covered under the Plan; and
2. dies as a result of a covered accident; and
3. is survived by a spouse and/or one or more dependent children.
CHILD BENEFIT
"Dependent Child" means a child insured under the Plan who has not attained the maximum age
stated in the Dependent definition of the policy at the time of the insured employee's death.
A "Special Education Benefit" will be payable for each child who qualifies as follows:
1. is enrolled at the time of the insured employee's death, or enrolls within one year of the
insured employee's death as a full-time student at a school above the twelfth grade level
before reaching age 23; and
2. incurs expense for tuition, fees, books, room and board, transportation, and any other
costs payable directly to, or approved and certified by such school.
We will pay the cost of such incurred expense for not more than:
1. 4 straight years after enrollment begins; and
2. 3% of the insured employee's Voluntary Accidental Death and Dismemberment full benefit
or $3,600 whichever is less, each year per child.
SPOUSE BENEFIT
A "Special Education Benefit" will be payable for the insured employee's surviving spouse who:
1. enrolls within one year after the insured employee's death in any accredited school for the
purpose of retaining or refreshing skills needed for employment; and
2. incurs expenses payable directly to, or approved and certified by such school. We will pay
the cost of such incurred expense for not more than:
1. 4 straight years after enrollment begins; and
2. 3% of the insured employee's Voluntary Accidental Death and Dismemberment full benefit
or $3,600 whichever is less.
If, at the time of accident, Family Plan coverage is in force but there is no dependent or dependent
child who is or could become eligible for "Special Education Benefits," we will pay an additional
benefit of $1,500 to the insured employee's designated beneficiary.
Payment will be in addition to all other policy benefits.
If the City of Fayettevile elects this coverage, the rider will be filed with the Department of
Insurance. No coverage will be available until the rider is approved by the Department of
Insurance.
Presented to: City of Fayetteville
Accelerated Benefits Rider
Accelerated Benefit Plan
The accelerated benefit is advance payment of the insured's amount of life insurance under the
group policy, subject to the maximum and minimum benefit requirements stated below. An
insured may request payment of an accelerated benefit in the event that he is diagnosed with a
terminal illness which is expected to result in his death within 6 months, and from which he is not
expected to recover.
The receipt of accelerated benefit payments may adversely affect the insured's eligibility for
Medicaid or other government benefits or entitlements.
Notice of possible Tax Consequences
The payment of an accelerated benefit may result in a taxable event. The insured should consult a
tax advisor before requesting such benefit payment.
Cost of Providing the Accelerated Benefit
The accelerated benefit amount will be discounted to reflect the cost of providing the benefit. The
discount will be based on the current yield on a 90 day Treasury Bill. We will calculate the
discount on the date we receive the request for payment of the accelerated benefit in our Home
Office.
• Illustration of Cost Calculation Assumptions
• An employee is insured for $30,000 of group term life insurance
• On the date of the request for payment of the accelerated benefit, the current yield
on a 90 day Treasury Bill is 5.4%.
Calculation:
$30,000 the employee's life insurance amount
x .50 the accelerated benefit %
$15,000 the accelerated benefit for which the employee is eligible
x(1 - .027 the discount factor calculated on the basis of a 5.4%1
Treasury Bill calculated for a 6 month period on a simple
interest basis.
$14,595 the accelerated benefit to be paid
Due to fluctuation of the current yield on a 90 day Treasury Bill, the discount factor on the date
of request may be different from that shown in the illustration. Interest for the discount factor
will be calculated for a 6 month period.
If death occurs more than 6 months after the date of calculation, an additional2 interest charge,
based on this same rate of interest, will be deducted from the balance of the proceeds.
Difference between 6 months and actual number of months policy remained in force following
payment of accelerated benefit, not to exceed 24 months
•
Page 9
Presented to: City of Fayetteville
Accelerated Benefits Rider (Continued)
Amount of Accelerated Benefit
The accelerated benefit will be paid once and in one lump sum to the insured. The maximum
accelerated benefit will be the lesser of:
1. 50% of the insured's life insurance amount as shown in the Schedule of Benefits of the
certificate, less the discount; or
2. $150,000 less the discount.
If the insured's life insurance amount is scheduled for a reduction within 6 months after the date
he requests the payment of the accelerated benefit, the maximum accelerated benefit will be
limited to the lesser of:
1. 50% of the life insurance amount which will be in effect after the scheduled reduction,
less the discount; or
2. $150,000 less the discount.
The minimum accelerated benefit for the insured member or insured dependent will be $7,500
less the discount.
Effect of Payment of An Accelerated Benefit Payment On Group Policy Provisions
The amount of life insurance under the group policy will be reduced by the amount of an
• accelerated benefit paid to you, plus the discount. As a result, the following will be based on such
reduced life insurance amount:
1. the amount of insurance payable to the beneficiary when the insured dies;
2. the amount of life insurance you can convert under the group policy; and
3. the premiums payable for the insured's life insurance under the group policy after an
accelerated benefit is paid, if such premiums are not waived.
The payment of an accelerated benefit will not affect the amount of your Accidental Death and
Dismemberment Benefits under the group policy, if any.
Exclusions
We will not pay an accelerated benefit if:
1. The insured has made an absolute assignment of your life insurance under the group
policy;
2. all or part of the life insurance under the group is to be paid to the insured's child(ren)
or former spouse as part of a court approved divorce agreement;
3. we do not receive written consent by an irrevocable beneficiary; or
4. the terminal illness is a result of intentional self-inflicted injury or attempted suicide.
Date Insurance Ends Under The Rider
Insurance will end at the earliest of:
1.
the
date the accelerated benefit
is paid to the insured or on his behalf;
2.
the
date the insured's life insurance
ends under the group policy; or
• 3.
the
policy anniversary on which
the insured is age 70.
Page 10
Presented to: City of Fayetteville
General Provisions
Master Policy and Individual Certificates
The complete terms of the insurance are contained in a Master Policy issued to the
Policyholder. Each employee receives a Certificate which outlines his benefits under the plan.
Eligible Employee
All permanent, active, full-time employees who have completed the waiting period established
by the Policyholder are eligible unless limited by conditions pertaining to their employment. The
term "employees" includes all persons who work for the Policyholder at least the minimum
number of hours per week shown on the group application.
No director or officer of the Employer will be considered an Employee unless he meets the
above conditions.
Eligible Dependents
(If Dependent's Life included) An employee's spouse and unmarried children under 19 years of
age (or age 23 if the dependent is a full-time student).
Effective Date of Coverage
EMPLOYEES - All eligible employees actively at work on the effective date of the plan may be
insured immediately. New employees will become insured following completion of the waiting
• period specified on the group application. If an Employee is not actively working on the date his
insurance or any increase in insurance is scheduled to take effect, it will take effect on the day
he returns to active work. If the Employee's insurance is scheduled to take effect on a non-
working day, his active work status will be based on the last working day before the scheduled
effective date of his insurance.
DEPENDENTS - Insurance on dependents will not become effective until the employee's
insurance is effective. Dependents who are totally disabled on the effective date will be insured
when the disability ceases and the dependent resumes normal activities.
If the employee pays part of the premium and does not apply for insurance within 31 days after
becoming eligible, satisfactory evidence of insurability is required.
Page 11
Presented to: City of Fayetteville
Word About Compliance
We are all well aware that many federal laws and regulations affect the structure and provisions
of employee fringe benefit programs. Applicable federal laws include the Age Discrimination in
Employment Act ("ADEA"), Section 79 of the Internal Revenue Code ("Code") and other Code
provisions, and the Employee Retirement Income Security Act of 1974 ("ERISA") to name a few.
There are many potential problems created by failure to comply with these laws including
adverse tax consequences, penalties and other sanctions.
The ADEA appears to require that older employees continue to be covered by insurance plans
as long as they remain in employment, on the same basis as other employees. However, it
does appear that employers may reduce benefits to the extent justified by the increased cost of
covering the older employees. ADEA regulations provide that reductions can be based upon
cost comparisons of adjacent five year age brackets.
Code Section 79 prohibits discrimination in favor of key employees as defined in the Code.
While the IRS will not give pre -approval to any plan, it has indicated that schedules providing
benefits based on a uniform percentage of salary or a level benefit for all employees will not be
considered discriminatory.
ERISA contains several requirements concerning reporting and disclosure of benefits to
employees as well as requirements that a plan be in writing and employees be advised of
changes which are made. We will provide you with annual financial information which you may
use in filing financial reports if you are required to do so.
• USAble Life cannot serve as your tax or legal advisor and does not represent that the plan
provisions described in this proposal will satisfy all requirements of these complex laws and
regulations. Your plan should be reviewed by your tax and legal advisors for their opinion as to
whether your plan is in compliance with applicable laws and regulations.
•
Page 12
• Current Benefits
LONG TERM DISABILITY
Proposal
presented to
• City of Fayetteville
•
by
Barbara Lovin
August 11, 1999
USAble Life
USAble Life is Rated "A-" (Excellent) by the A.M. Best Company
•
DRMS-LTD-96-1
C
WHY BUY GROUP LONG TERM
DISABILITY?
Imagine... your employees have plenty of protection for medical, life, home and auto insurance. Their
life insurance provides for last expenses, the family's future income needs, their home mortgage and
even the kids' education.
With everything in order, they might settle back into their everyday lives, forgetting the foremost
threat... disability.
At age 32, disabilities lasting three months or longer are
more likely to occur than death.
Loss of income due to sudden disability is often overlooked. Without the proper protection, the
consequences can be devastating to the employee and the employer. For example, 45-50% of all
mortgage foreclosures result from disabilities.
Group Long Term Disability coverage, provided by you as the employer is especially designed to
replace a portion of an employee's income, this surprisingly affordable protection will help you or
your employees maintain your standard of living even under the most difficult of circumstances.
• Today, there's no need to be without Long Term Disability coverage. Select the plan that best suits the
needs of you and your employees and add it to your insurance portfolio. Then settle back and relax.
--- Advantages of Group LTD ---
*Eases the often difficult decisions regarding
how to handle disabled employees.
*Valuable recruiting tool
*Maintains and rewards long term key
employees and valuable staff
*Tax deductible benefit
*Low cost/budgetable/easy to administer
*Fills in the large gap in social security',
Disability Benefits
*Protects your firm against the loss of a key
employee
*In most cases physical and health questions
are not required
Group LTD: the solution to a tough problem.
*American Society of Actuaries
DBMS -LTD -96-2
•
Features of This Plan
* ACCUMULATION OF ELIMINATION PERIOD
* COST OF LIVING FREEZE
* MATERNITY
* PARTIAL DISABILITY
* PRIOR INSURANCE CREDIT
*RECURRENT DISABILITY
* 3 -MONTH SURVIVOR BENEFIT
OPTIONS AVAILABLE UNDER THIS PLAN (If "yes" is not indicated these options do not
apply)
* C.O. L. A ..........................
INCLUDED
..............0....................... NO
*DEFINITION OF DISABILITY:
36 Month Own Occupation.............................................................. YES
Extensive Own Occupation.............................................................. NO
*MENTAL ILLNESS LIMITATION WAIVED .................................. NO
*PARTIAL DISABILITY BENEFITS
BENEFIT CALCULATION METHODS:
Employee Disability Group Enhancement ............................... NO
Employee Disability Group Enhancement I ............................. NO
Progressive Partial Disability ................................................... YES
*PENSION CONTRIBUTION BENEFIT .......................................... NO
*SURVIVOR INCOME BENEFIT
1 Year Survivor Benefit.......................................................... NO
2 Year Survivor Benefit.......................................................... NO
* 401(K) CONTRIBUTION BENEFIT ..............................................NO
NO
ORMS-LTD-96-3
I
Schedule Of Benefits And Cost Summary
PREPARED FOR: City of Fayetteville
PRESENTED BY: Barbara Lovin
Eligibility:
Number of Employees Rated:
Employer Contribution Required:
All Full -Time Active Employees
528
100%
Benefit Replacement Percentage ................................ 60%
Maximum Monthly Benefit ........................................ $6,000
Elimination Period .....................................................
BenefitDuration.........................................................
Integration Approach ...............................................
MinimumBenefit.......................................................
Pre-existing Conditions ..............................................
Total Monthly Covered Payroll .................................
PremiumRate............................................................
Monthly Premium ....................................................
180 DAYS
RBD
Primary/Family
$50
3/6/12
$1,190,582
$0.46
$5,476.68
The final rate will be guaranteed for 2 year(s) from the group's effective date.
L
Proposal August 11, 1999; expires November 11, 1999, unless renewed.
DBMS -LTD -964
•
•
Assumptions and Underwriting
This Proposal is conditional on the following:
*If the plan is contributory on the part of the employees, at least 75 % of those eligible must
participate.
*All eligible employees must be covered if the plan is noncontributory. (Employer pays all
premiums.)
*This proposal is intended to summarize certain
portions of the
group LTD plan.
It does not
constitute a contract. Your group contract will
be the binding
and authoritative
document.
*This proposal is based on census data received. Final costs and rates for the employees to be
insured under this plan on the effective date must be approved and accepted by the Home
Office.
*Only permanent full-time employees are eligible for insurance. "Full-time" means working
40 hours a week during the regular work week.
DBMS -LTD -v6-5
C
•
General Provisions
Accumulation of Elimination Period
During the Elimination Period, a total disability can temporarily cease for up to seven days and not
require the beginning of a new elimination period for plans with a 90 day elimination period or less.
On plans with elimination periods of more than 90 days, we will allow up to 14 days of temporary
cessation of total disability. The days worked will not count toward the satisfaction of the elimination
period.
Basic Monthly Earnings or Pre -Disability Earnings
Basic monthly earnings means that the Insured's monthly rate of earnings from the employer in effect
immediately prior to the date total disability begins. Basic monthly earnings include all earnings
before any deductions. It does not include bonuses, overtime pay or other extra compensation other
than commissions. Commissions will be averaged over the 12 month period prior to the date total
disability begins.
Benefits
When the company receives proof that the insured is totally disabled due to sickness or injury and
requires the regular attendance of a physician, the company will pay the insured a monthly benefit in
accordance with the Schedule of Benefits page of this proposal.
DBMS -LTD -96-6
General Provisions
Benefit Duration Reducing Benefit Duration
Age at Disability Maximum Benefit Period.
Less than age 60
To age 65
60
60 months
61
48 months
62
42 months
63
36 months
64
30 months
65
24 months
66
21 months
67
18 months
68
15 months
69 and older
12 months
This benefit duration is in compliance with ADEA.
• Note: Employees who remain at work full-time at age 70 and beyond will
continue to be eligible for coverage.
Benefit LTD is a relatively low cost employee benefit. The intent of LTD is to replace a
Reductions reasonable portion of a disabled employee's salary, not to make being disabled
more attractive than working. In order to prevent overinsurance, which increases
the chance for malingering, certain offsets must be taken. LTD benefits will be
reduced by any disability benefits that the claimant is entitled to receive from the
following sources: U.S. Social Security and Canada and Quebec Pension'Plan
payments, Workers Compensation Benefits, State Disability Plan payments
(U.C.D., D.B.D., T.D.B., etc.), and other employer -sponsored group disability
income plans, and any disability benefits or retirement benefits received by the
employee from any pension plan provided through his employer.
LTD benefits are not reduced by: individual disability income plans, distributions
from profit sharing plans, 401 (K) plans, IRA's, TSA's, stock ownership plans or
nonqualified plans of deferred compensation, military disability benefits,
professional franchise or association plans not purchased through the employer,
or no-fault automobile insurance benefits.
•
DBMS -LTD -96-7
• General Provisions
Cost of Living After the initial deduction for each of the respective other income benefits
Freeze reflected previously under BENEFIT REDUCTIONS, the monthly LTD
benefit will not be further reduced due to any cost of living increases payable
under any of these other income benefits. This provision does not apply to
increases received from partial disability employment.
Definition of Total disability means that because of injury or sickness, the insured cannot
Total Disability perform all of the material and substantial duties of his regular occupation, and
after benefits have been paid for 36 months, the insured cannot perform all of
the material duties of any gainful occupation for which he is reasonable fitted
by training, education, experience, age and physical and mental capacity.
With respect to employees employed as pilots, co-pilots and crew of aircraft,
"total disability" means that because of injury or sickness, the insured cannot
• perform all of the material and substantial duties of any gainful occupation for
which he is reasonable fitted by training, education or experience. The loss of
a pilot's license for any reason, does not in itself, constitute total disability.
•
DMIS-LTD-96-8
0
•
•
Definition
of Total
Disability
General Provisions
The provision checked below applies to this proposal (as indicated in the
"Optional Provisions").
✓ 36 Month Own Occupation
All Full-time Active Employees
Total disability means that because of injury or sickness, the insured cannot
perform all of the material and substantial duties of his/her regular occupation.
After benefits have been paid for 36 months, Total Disability means that the
insured cannot perform all of the material duties of any gainful occupation for
which he/she is reasonably fitted by training, education, experience, age and
physical and mental capacity.
DBMS -LTD -96-9
• General Provisions
Exclusions Disabilities which arise from intentionally self-inflicted injuries, war or parti-
cipation in a riot, or committing a felony are excluded from coverage.
Integration with The total disability Benefit will be directly reduced by Primary and Family
Primary and Benefits the employee is eligible to receive from Social Security. Primary
Family Social Benefits are those Social Security benefits which the employee is eligible to
Security receive because of disability and/or retirement. Family benefits are those
Social Security benefits which the insured employee's spouse, child or
children are eligible to receive as a result of the insured employee's eligibility
for Social Security benefits.
Also see: Benefit Reductions
•
•
DBMS -LTD -96-10
General Provisions
Maternity Total disability caused by pregnancy or complications of pregnancy will be
covered on the same basis as any other illness.
Mental Illness Benefits for a disability due to mental illness will be payable for up to 24
Limitations months. After 24 months of benefit payments, benefits will be payable if the
insured satisfies one of the following situations:
I. If the insured is in a hospital or institution at the end of the 24 month
period, the monthly benefit will be payable during the confinement.
If the insured is still disabled when discharged, the monthly benefits
will be payable for a recovery period of up to 90 days.
If the insured becomes reconfined during the recovery period for at
least 14 days in a row, benefits will be payable for the confinement and
another recovery period up to 90 more days.
• 2. If after 24 months of benefit payments, the insured continues to be disabled
and becomes confined for at least 14 days in a row, the monthly benefit
will be payable during the confinement.
The monthly benefit will not be payable beyond the maximum benefit period.
"Hospital" or "institution" means facilities licensed to provide care and
treatment for the condition causing your disability.
"Mental illness" means mental, nervous or emotional diseases or disorders of
any type.
CI
DBMS-1TD.96-11
• General Provisions
Minimum Benefit Disabled employees will never receive less than $50 per month under the plan
regardless of income received from other sources.
Partial Many employees who receive total disability benefits desire to return to work
Disability but are not able to resume all of their former duties on a full-time basis. This
benefit is designed to assist partially disabled employees to return to work by
providing financial security during this difficult period.
Employees will be able to qualify for this benefit if they are:
1. able to perform one or more, but not all, of the material and substantial
duties of his/her own or any other occupation on a full-time basis, or
2. able to perform all of the material and substantial duties of their own or
any occupation on a part-time basis.
To qualify for the benefit, the insured must be earning less than 80% of
his/her pre -disability income at the time partial disability employment begins.
The Partial Disability Benefit will be the lesser of:
1. the benefit percentage multiplied by the insured's pre -disability income, or
2. 100% of the insured's pre -disability income less other income benefits,
which include earnings from partial employment.
The Partial Disability Benefits are payable to the end of the benefit duration or
until the disabled employee's partial earnings exceed 85% of his/her pre -
disability earnings.
Progressive With the inclusion of Progressive Partial Disability, an insured can receive a
Partial Disability partial disability benefit after satisfying the elimination period which consists
of a period of total disability, or a combination thereof.
•
Progressive/Partial
DBMS -LTD -95-12
General Provisions
Pre-existing This policy will not cover any total disability:
Condition
Limitation 1. which is caused or contributed to by, or results from a pre-existing
condition; and
2. which begins in the first 12 months after the insured's effective date, unless
no treatment was received for 6 consecutive months after the insured's
effective date.
"Treatment" means consultation, care or services provided by a physician
including diagnostic measures and taking prescribed drugs and medicines.
"Pre-existing Condition" means a diagnosed sickness or injury for which the
insured received treatment within 3 months prior to the insured's effective date.
Prior Insurance In order to prevent loss of coverage for an employee because of a transfer of
Credit insurance carriers, this policy will provide coverage for certain employees as
follows:
Failure to be in active employment due to injury or sickness
• This policy will cover, subject to premium payments, employees:
1. insured with the prior carrier at the time of transfer; and
2. who are not in active employment due to injury or sickness.
The benefit payable will be that which would have been paid by the prior
carrier had coverage remained in force, less any benefit for which the prior
carrier is liable.
Disability due to a pre-existing condition
Benefits may be payable for a total disability due to a pre-existing condition
for an employee who:
1. was insured by the prior carrier at the time of transfer; and
2. was in active employment and insured under this policy on its effective date.
The benefits will be determined as follows:
1. USAble Life will apply this policy's pre-existing condition exclusion. If the
employee qualifies for benefits, he/she will be paid according to this policy's
benefit schedule.
2. If the employee cannot satisfy this policy's pre-existing exclusion, the prior
carrier's pre-existing condition exclusion will be applied.
a. If the employee satisfies the prior carrier's pre-existing condition exclusion,
giving consideration towards continuous time insured under both policies,
• he/she will be paid according to the prior carrier's benefit schedule.
b. If he/she cannot satisfy the pre-existing condition exclusion of this policy or
that of the prior carrier, no benefit will be paid
3/6/12 Pre -X
ORMS-LTD-96-U
• General Provisions
Recurrent Recurrent Disability means a disability which is related to or due to the same
Disability cause or causes of a prior disability for which a monthly benefit was payable.
A recurrent disability will be treated as part of the prior disability if, after
receiving disability benefits under this policy, an insured returns to his regular
occupation on a full-time basis for less than six months and performs all the
material duties of his occupation. Benefit payments will be subject to the
terms of this policy for the prior disability.
Survivor If an employee dies after having been disabled for a minimum of 180 days and
Benefit was receiving benefits under the policy, we will pay the eligible survivor a
lump sum benefit equal to three times the last monthly LTD benefit.
Waiver Premium payments for an employee who is totally disabled are waived during
of Premium any period for which benefits are payable.
•
•
3 Mo. Survivor
Dft S -LTD- 6 14
l
o
1_
PROPOSAL
CITY OF FAYETTEVILLE
VOLUNTARY ACCIDENTAL DEATH AND DISMEMBERMENT
Current Benefits
Voluntary Accidental Death and Dismemberment (VAD&D) is available either as an Employee
Plan or Family Plan in Benefit Amounts of $25,000 units to a maximum of $100,000.
The plan provides full 24 -hour protection against accidents anywhere in the world. It also provides
coverage while flying as a passenger in any licensed civilian aircraft or in military transport aircraft
operated by the Military Aircraft Command or similar foreign service.
Monthly Cost
Employee Plan: $1.50 per $25,000 Benefit Amount
Family Plan: $2.00 per $25,000 Benefit Amount
Benefit
Loss of Life Full Benefit Amount
Loss of Two or More Members Full Benefit Amount ("Member" means hand,
foot or eye)
Loss of One Member One -Half Benefit Amount
Loss of Thumb and Index Finger
of same hand One -Quarter Benefit Amount
"Member" means hand, foot or eye.
Family Plan
Spouse and Children may also be insured for covered losses under a VAD&D Family Plan. The
amount of insurance applicable under the Family Plan is based on the Employee's Benefit Amount
and the composition of the family at the time of loss as follows:
Composition of Family At Time of Loss
1) Employee, Spouse and Children
Employee 100% of Employee's Benefit Amount
Spouse 40% of Employee's Benefit Amount
• Each Child 5% of Employee's Benefit Amount
• Voluntary Cancer Coverage
Premium: Employee paid by payroll deduction
Response: USAble Life's CancerCare Policy is offered as
an employee paid product by payroll deduction.
Coverage: Benefits paid directly to the insured to include but not
Limited to:
(1) Multiple levels of coverage for hospital
confinement due to cancer.
Response: USAble Life's CancerCare Policy offers
the following levels of coverage for daily hospital
confinement
BASIC
SELECT
ULTRA
$100 Per Day 1 thru 601
$250 Per Day 1 thru 601
$300 Per Day 1 thru 60th
Day
Day
Day
$200 Per Day After the
$500 Per Day After the
$600 Per Day After the
60th Day
60th Day
60th Day
Children
Children
Children
$200 Per Day 1 thru 601
$500 Per Day I thru 601
$600 Per Day 1 thru 60th
Day
Day
Day
$400 Per Day After the
$1,000 Per Day After
$1,200 Per Day After
60th Day
the 601 Day
the 60th Day
(2) Cancer Diagnosis Benefit Rider, multiple levels of
coverage.
Response: USAble Life's CancerCare Policy offers the
following levels of coverage:
$1,000
$ 2,000
$ 3,000
$4,000
$ 5,000
(3) Coronary Care or Intensive Care Benefit Rider,
multiple levels of coverage.
1 Response: USAble Life's CancerCare Policy offers
the following levels of ICU/CCU coverage.
$200
$400
$600
(4) Cancer Disability Benefit Rider
Response: USAble Life's CancerCare Policy offers
the following levels of disability.
$250 Monthly
$500 Monthly
Eligible Class: All regular full time employees
Response: All regular full time employees are
eligible to apply for the CancerCare.
Waiting Period: First day of the month following 90 days of
employment or eligibility.
Response: USAble Life's CancerCare Policy does
not have a waiting period.
CancerCareSeries
Monthly Premiums
I Parent
Full
I Parent
Full
PolicyBenefits:
Individual
Family
Family
Individual
Family
Family
Basic
$10.44
$12.40
$19.08
Daily CCU/ICU Rider
(Not available in Tennessee or Idaho):
Select
19.84
23.80
36.44
$200
$2.00
$2.40
$ 3.74
Ultra
26.24
31.60
48.94
$400
4.00
4.80
7.50
$600
6.00
7.20
11.24
Cancer Diagnosis Rider:
$1,000
$1.00
$1.14
$1.60
Monthly
Disability
Rider for 1 year:
$2,000
2.00
2.28
3.20
$250
$1.44
$1.44
$2.64
$3,000
3.00
3.42
4.80
$500
2.88
2.88
5.28
$4,000
4.00
4.56
6.40
$5,000
5.00
5.70
8.00
i
Agreement for Administrative Services
This agreement specifies the services to be provided to City of
Fayetteville hereinafter referred to as "Company" in the ongoing
administration of the Company's Section 125 Cafeteria Plan, and the
specified responsibilities of the Company.
Administrator
City of Fayetteville shall be the Plan Administrator and USAble Life,
hereinafter referred to as the "Third Party Administrator", shall be
engaged as a subcontractor in the performance of administrative services
for the plan.
Administrative services to be provided by USAble Life:
1. Design a Cafeteria Plan Document, Dependent Care Assistance Plan
and Medical Reimbursement Plan to be reviewed by the Company
and Company's legal counsel.
2. Design a Prototype Summary Plan Description. City of Fayetteville
is responsible for printing the plan description and distributing it
to employees.
3. Conduct informational seminars to explain the Cafeteria Plan to
the employees if flexible spending accounts are involved.
4. Provide participant election forms to be used during the enrollment
process.
5. Process initial enrollment forms and revocation forms to initiate
the administration function.
6. Provide an employee list to payroll once all elections have been
received and keyed into administration software for verification of
elections and amounts.
7. Provide claim for reimbursement forms to be used to claim flexible
spending account elections.
8. Provide reimbursement checks to employees on a bi-weekly basis.
9. Provide a check register for all checks printed (or to be printed) on
a bi-weekly basis.
10. Provide each participant a Statement of Account on a quarterly
basis for the first, second and third quarters, and monthly for the
fourth quarter.
11. Provide discrimination reports on a semi-annual basis.
12. Provide forms to the Company for use by the Company in
communicating participant termination's and changes of family
status.
13. Provide quarterly Company statements of participation by plan by
participant.
14. Provide annual preparation of Form 5500 for City of Fayetteville to
review, sign and mail to the IRS.
15. Provide participant election forms at the end of each year for use in
making elections for the following year.
16. Provide guidance to the Company as to the operation of the Plan
and to maintaining the tax qualification of the Plan as set by the
Internal Revenue Code of 1986, as amended from time to time,
and successor tax laws.
17. Maintain all Cafeteria Plan documents and files for six months
following the end of each plan year, which after that time will be
returned to the Company .
Communication services to be provided by USAble Life:
1. Present informational seminar to the employee group.
2. Survey the group and analyze for individual savings.
3. Meet with each employee to discuss their individual savings and
personal needs.
Responsibilities of the City of Fayetteville:
1. Report participant termination's and changes of family status to
Administrative Firm to be effective 2 weeks after receipt.
2. Reconciliation of payroll amount redirected to the Cafeteria Plan
based on reports provided each month by USAble Life.
3. Distribution of participant statements of account to Company
employees.
4. Initiate any action required in the event plan(s) become
discriminatory.
5. Secure legal review of the Cafeteria Plan Document and Summary
Plan. Description from Company's legal counsel.
6. Review, sign and mail the annual Form 5500 to the IRS.
7. Maintain all Cafeteria Plan documents following the end of each
plan year in the event the Plan is audited.
Fees and Terms of Payment
The sEhedule of Services/Fees is to be attached and made a part of this
Agreement. USAble Life has the right to change the Schedule of
Services/Fees by giving at least 60 days notice to the Company.
Reports and Data
All reports and data remain the property of the Company. USAble Life
will provide the Company all data, upon request, used by USAble Life in
its administration procedures.
2
Terms of this Agreement
This Agreement will be effective from the date both parties execute this
agreement until it is terminated. Either party may terminate this
Agreement with 30 days written notice.
By..+Juli�rshaltl,lSrenior
--------------------- Date:
By -
Date:
------------ Vice President
City of Fayetteville
Section 125 Cafeteria Plan
Schedule of Fees
The fees for City of Fayetteville have been waived. This waiver will remain
with the continual enrollment of USAble Life products. If product
solicitation is terminated, then USAble Life will re-evaluate the fee
structure at that time.
One time set-up fee:
$ 0.00
Monthly fee for Premium Only Participant: $ 0.00
Monthly fee for Flexible Spending Participant: $ 0.00
Minimum Monthly Charge: $ 0.00
V
FAYETTEVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
To: Don Bailey, Personnel Director
From: Heather Woodruff, City Clerk
Date: October 11, 1999
Attached is a copy of the resolution approving the contracts with USABLE Life for your records.
The original will be microfilmed and filed with the City Clerk.
cc. Yolanda Fields, Internal Auditor