HomeMy WebLinkAbout150-06 RESOLUTIONr
• RESOLUTION NO.150-06
A RESOLUTION APPROVING THE PLACEMENT OF
EMPLOYEE LIFE AND LONG TERM DISABILITY INSURANCE
COVERAGE WITH RELIANCE STANDARD; ACCIDENTAL
DEATH AND DISMEMBERMENT (AD & D) COVERAGE WITH
ACE -USA; AND THE ADMINISTRATION OF THE SECTION 125
CAFETERIA PLAN WITH DATAPATH FOR PLAN YEAR 2007.
BE IT RESOLVED ,• BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby approves the placement of Life and Long Term Disability insurance
coverage with Reliance Standard; Accidental Death and Dismemberment (AD &
D) coverage with Ace -USA; and the administration of the Section 125 Cafeteria
Plan with DataPath for Plan Year 2007.
PASSED AND APPROVED this 5th day of September, 2006.
APPROVED.
By:
DAN COODY, Mayor
ATTEST:
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By:
SONDRA SMITH, City Clerk
Michele Bechhold
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
9/5/2006
City Council Meeting Date
Human Resources
Division
Action Required:
9 I Sl ok
£hada t4,44/
71-66 -us,
Operations
Department
Approve placement of group life and long term disability insurance with Reliance Standard and placement of group
accidental death and dismemberment insurance with Ace -USA.
$4,700.00
Cost of this request
1010.1210.5108.03
Account Number
Project Number
Budgeted Item
XX
725,800.00
Category / Project Budget
557,578.00
Funds Used to Date
168,222.00
Remaining Balance
Budget Adjustment Attached
Personnel Services
Program Category / Project Name
Human Resources
Program / Project Category Name
General
Fund Name
.L 1�b
D` ment airector
r
City Attorney
Finance and Internal Service Director
Mayor
Date
nfoc
Date
Date
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
Received in C s Office
(ENTERED)aj a ug,
Comments:
Tare evi �le
ARKANSAS
City Council Meeting of September 5, 2006
CITY COUNCIL AGENDA MEMO
TO: Mayor Dan Coody and City Council
THRU: Gary Dumas, Operations Director,+
FROM: Michele Bechhold, Human Resources / ft
DATE: August 21, 2006
SUBJECT: Life, Long Term Disability Insurance and Voluntary Benefit
Renewals for Plan Year 2007
Recommendation
Staff recommends placing City -paid life insurance and long-term disability coverages with
Reliance Standard, accidental death and dismemberment, (AD&D), coverage with Ace -USA and
cafeteria plan administration with DataPath. Staff also recommends various changes to the
offering of voluntary benefits as outlined in this memo.
Discussion -
Hoffman -Henry, the City's benefit broker represented by Jeff Jackson, bid out all life and long
term disability benefits as well as all the voluntary benefits currently offered by the City. The bid
documents also allowed responding carriers to submit proposals for other product lines. Mr.
Jackson met with senior management staff to discuss the results of the bids and the
recommendations. These recommendations are summarized below by type of benefit.
CITY PAID GROUP BENEFITS
Group Life with AD&D — Reliance Standard bid 13.2 cents per $1,000 of coverage on the life
benefit and 3 cents per $1,000 of coverage on the AD&D portion of this policy. These rates
yield a projected annual premium savings of $8,789. Reliance also offers value added benefits
on this plan such as a phone -based employee assistance plan and a 10% critical illness benefit.
Group Long -Term Disability (LTD) — Reliance bid 31.2 cents per hundred dollars of coverage
which will yield an annual estimated premium savings of $12,947. The value added benefits on
this plan include a child care benefit and a worksite modification benefit.
$25,000 AD&D with voluntary buy up options — Through this policy the City provides an
additional $25,000 of AD&D coverage and employees can purchase additional coverage on
themselves or family coverage Ace -USA bid 3 cents per thousand dollars of coverage which
will generate an estimated premium savings of $6,087 for the City.
Annual premium savings referred to above are all based on a comparison with the rate offered
by the current carrier, USAble, through the bid process.
Section 125 Plan Administration
The Section 125 Plan allows employees to pay insurance premiums with pre-tax dollars; thus
reducing their taxable income. It also provides for flexible spending accounts for unreimbursed
medical and dependent care expenses. As a client of USAble Life, the City utilized Select Data
Service Administrators as the third party administrator for the Section 125 Cafeteria Plan. The
plan administration services were provided to the City at no cost. The replacement of USAble
Life with other carriers means that the services of Select Data Service Administrators will no
longer be available to the City without cost.
Hoffman -Henry also solicited bids for cafeteria plan administration services. DataPath is the
recommended vendor and their fee schedule is below.
Plan Document and Set up Fee
Monthly Fee/Flex Participant
Annual Plan Renewal Fee
Benefit Debit Cards
$500.00
$ 3.00; Minimum Fee of $350/Month
$250.00
$3.00 set up fee for one card, $5.00 set up fee for two card
family pack, $2.00 monthly fee per participant
The City would incur a $500.00 fee to set up the plan, including the cost of writing the plan
document. Currently there are eighty participants in the flexible spending accounts. Staff is
proposing that the City pay the monthly administration fee of $350.00; the minimum fee applies
since the fee per participant would yield an amount less than $350.00. At current participation
levels this would create an annual cost of $4,200. Together, the $500 set up fee and the
monthly participant fees total $4,700. Employees who want to utilize a debit card would be
responsible for the fees associated with the card.
The pre-tax deduction of premiums through the Section 125 plan creates a FICA savings for the
City. Based on estimates for 2006, the City will save approximately $77,500 in matching FICA
contributions due to the pre-tax deduction of premiums.
EMPLOYEE PAID VOLUNTARY BENEFITS
Vision Plan — Starmount, the current carrier, was selected in 2003. There will be no change in
premiums for 2007. Staff recommends renewing with Starmount for 2007
Group Term Life — The recommendation is to place this coverage with Reliance. Reliance has
offered guaranteed takeover of all existing policies. Rates are less for most age classes, none
are higher and the benefit reduction schedule is more favorable to policyholders.
Accidental Death & Dismemberment — Ace -USA has quoted rates that will reduce both the
employee only premium and the family premium. Employees will be able to maintain the same
coverage for a lesser premium.
Cancer Plan — Colonial is the carrier recommended to provide cancer coverage Colonial offers
plans comparable to existing coverages, but they will not be an exact match for existing cancer
policyholders. Employees will be able to keep their current policy with USAble Life if they
choose to. One of the advantages of the Colonial policy over the USAble policy is the rates are
locked in and will not increase. Employees have been faced with frequent rate increases on the
existing cancer plan.
•
•
•
NEW VOLUNTARY BENEFIT OPTIONS
In an effort to provide benefit enhancements, Staff recommends offering two new voluntary
benefit options.
Critical Illness — This policy pays a benefit directly to the policyholder if a covered person is
diagnosed with any of the covered illnesses. (EX: heart attack, stroke, permanent paralysis)
Accident Plan — This policy pays benefits directly to the policyholder according to a specific
schedule if a covered plan member suffers an accident. (EX: ground or air ambulance trip,
hospital admission, hospital intensive care, surgery)
Budget Impact
This renewal presents premium rate reductions for each City paid policy presented. The cost of
the cafeteria plan administrative services, estimated to be $4,700 can be funded through
premium savings.
Staff is available to answer any questions you may have.
RESOLUTION NO.
A RESOLUTION APPROVING THE PLACEMENT OF
EMPLOYEE LIFE AND LONG TERM DISABILITY INSURANCE
COVERAGE WITH RELIANCE STANDARD; ACCIDENTAL
DEATH AND DISMEMBERMENT (AD & D) COVERAGE WITH
ACE -USA; AND THE ADMINISTRATION OF THE SECTION 125
CAFETERIA PLAN WITH DATAPATH FOR PLAN YEAR 2007.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby approves the placement of Life and Long Term Disability insurance
coverage with Reliance Standard; Accidental Death and Dismemberment (AD &
D) coverage with Ace -USA; and the administration of the Section 125 Cafeteria
Plan with DataPath for Plan Year 2007.
PASSED AND APPROVED this 5th day of September, 2006.
ATTEST:
APPROVED:
Exclusions
Life / AD&D
!Value Added Eeneftis
Accelerated eenefd
Waiver of Premium
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Estimated Annual Premium
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Rates
Volume (monthly)
Life Rate (per $1,000)
AD&D Rate (per $1,000)
EAP Plan - PI
35% at 65, 50% at 70,
terminate at retirement
WorldNet 1 Travel Assistance
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Exclusions
Life / AD&D
Reduction Schedule
Accelerated eenefd
Waiver of Premium
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Rate Guarantee
Estimated Annual Premium
Other Monthly Carrier Fees !I
Estimated Monthly Premium
Rates
Volume (monthly)
Life Rate (per $1,000)
AD&D Rate (per $1,000)
Suicide, Felony, War, Substance
Abuse, Airplane, Dangerous Leisure
Activities
35% at 65, 50% at 70,
terminate at retirement
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$0.1500
$0 0300
Option 1
USAble
Group Life
Suicide, Felony. War, Substance
Abuse, Airplane, Dangerous Leisure
Activities
35% off original amount at 65,
additional 25% off at 70, additional
20% off at 75, Terminate at
retirement
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Option 6
Reliance Standard
Group Term Life
'This proposal is for illustration purposes only. For plan details, refer to your Certificate of Insurance
Conversion
Value Added Benefits
0
ON
ON
ON
ON
NO
WorldNet travel Assistance
Extended Disability Rider
0
a.
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Child Care benefit
Specific Indemnity Benefit
W2 & FICA Reporting
Conversion
Survivor Benefit
Preexisting Limitation
Chemical Dependency Coverage
Mental & Nervous Coverage
Social Security Integration
Residual Disability
Partial Disability
Benefit Duration
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Monthly Benefit Maximum
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Rate Guarantee
Estimated Annual Premium
Other Monthly Carver Fees
Estimated Monthly Premium
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12/6/24 Pre 6dsting
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To age 65 w/ RBD
Earnings AND Duties
Unable to make 80% of earnings
55.000
edo
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to
$2,247,827,.
_.. .50.3600 ,
Option 1
USAble
Long Tenn Disability
No but can add In
3/12 Pre Existing
n
Full Family
Yes
To age 65 Ext. SSNRA
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180 day
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Option 7
Reliance Standard
Long Term Disability
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Exclusions
AD&D
Reduction Schedule
AD&D Amount
Rate Guarantee
Estimated Annual Premium
Other Monthly Carrier Fees
Estimated Monthly Premium
Rates
Volume (monthly)
AD&D Rate (per $1,000)
his proposal is for illustration purposes only. For olan details. refer to your Certificat
Suicide, Felony, War. Substance Suicide, Felony, War, Substance
Abuse, Airplane, Dangerous Leisure Abuse, Airplane, Dangerous Leisure
Activities Activities, etc.
33 1/3% of original amount at 65, 33
1/3% additional at 70,
terminate at retirement
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Option 1
USAble
Employer Paid,
65% or original amount at 70, 45%
o1 original amount at 75, 30% of
original amount at 80, 15% of
original amount at 85
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$18,825 000
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Option 8
Ace -USA
Employer Paid
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AD&D Amount —
Rate Guarantee
Rates
Employee Only
Family
for illustration ourooses onlv. For Dian details. refer to your Certifica
Suicide, Felony, War, Substance
Abuse, Airplane, Dangerous Leisure
Activities
33 1/3% of original amount at 65, 33',
1/3% additional at 70,
terminate at retirement
Increments 01525,000
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0090.0S '
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Option 1
USAble
Voluntary AD&D
Suicide, Felony, War, Substance
Abuse, Airplane, Dangerous Leisure
Activities, etc.
65% of original amount at 70,
45% of original amount at 75, 30%
of original amount at 80, 15% of
original amount al 85
Increments of 525,000
2 years
$0.0300 ryti.
$0.0500 +
Option 4
Ace -USA
Voluntary AD&D
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53,000 per calendar year
5200 per day
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510,000 per calendar year
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Actual Charges', No Maximum
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55.000 Penpheral Stem Cell.
310,000 Bone Marrow Stem
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5100 a day for 30 days,
Nen 5200 a day
3300 a day; $10,000 lifetime
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Vision Cost Analysis
Rates Counts
Single
Employee + Spouse
Employee + 1 Child
Family
Option 1
Siarmount
Group Vision
In -Network- ; Out -or -Network
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$15 52
11-415.52
_='$2156 1. ..4.
Estimated Monty Premium
- '_ $0
Other Monthly Carrier Fees
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Estimated Annual Premium
- - - $0'-
Percentage Change
-
Dollar Charge
Rate Guarantee
Lenses
Single
Bifocal
Trifocal
Lenticular Lens
Progressive Lens
100%
100%
100%
To $8O
To $50
To $25
To$40
To $50
To 550
To $40
Contact Lenses
Elective
Medically Necessary
_
To $130 To 5130
To $210 To $210
Frames
To $74/To $100 : To 540
Exams
I
$10 copay To 530
Frequency
Exams
Lenses
Contact Lenses
Frames
12 Months
12 Months
12 Months
24 Months
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Cafeteria Plan/ Section 125
City of Fayetteville
M 41� W'UT'll�
'Qafgteria Plan Ad niivatr•� `�,
.
, DataPath
PERIODIC FEES '
Full Flex Doctiinent:Set up Fee4.?".:
$500
Jlonthly Admin Fee/Per. FlexPariicipan
$3.00*
INITIAL'SETUP FEE INCLUDES-::),
Preparation of Documents
Electronic Enrollment Imports
Provide Administrator's Guide
Provide Employee communication pieces
Send participant election confirmation letters
Perform Discrimination Testing
Process and Maintain Change of Status elections
Provide updates on legislative and regulatory
changes
MONTHLY FEE INCLUDES.
- -
24 Hour reimbursement Schedule
Contribution reporting by payroll
Reimbursement by check direct deposit or debit
card (add fees apply)
24 hour account access by website
Toll free customer service with dedicated account
representatives
ADDITIONAL FEES "
Plan renewal fee $250 per year
Benefit debit card $3 set up fee for single card, $5
set up fee for 2 card family pack, $2 monthly fee
per participant**
• This is for discussion and demonstration purposes only. Refer to your SPD or contract for detailed expl'
•
'Minimum Monthly fee MO
'Other charges and fees may apply as stated in carcl
holder credit disclosure. Bank fees are subject to change.
Clarice Pearman - Res. 150-06 Page 1
From: Clarice Pearman
To: Bechhold, Michele
Date: 9.12.06 4:06PM
Subject: Res. 150-06
Michele,
Attached is a copy of the above resolution passsed by City Council, September 5, 2006. If anything else is
needed please let me know.
Thanks.
Clarice
CC: Audit
•
Y