08-Insurance consultant's report

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= FYRST - ~ GROU P ~L _ M M OFAMfERICA Ftrst itt Service aniC :Expertise John Rahlfs, Jr. Benefit Consultant November 2, 2009 Mr. Gene Anderson, Finance Director City of Paris P. O. Box 9037 Paris, TX 75460 Reference: 2009 Results of RFP for Medical, Dental, Vision, Life & LTD Benefits Dear Mr. Anderson: An RFP for fully insured medical, dental, vision, coverage and life/AD&D and long term disability for the City of Paris was issued in September. The City received the renewal response from TML for its fully insured medical program, dental, vision, life/AD&D and LTD; and one additional proposal for vision coverage from Block Vision. While several other carries and an insurance agency requested RFP material, no other proposals were received. One medical carrier declined to offer a proposal on the City's medical plan; and, this may be attributed to the fact that the City just changed the medical benefit structure on 7-1- 09 to a three-benefit schedule program, and there was no definitive claim experience for this program. Additionally, the City of Paris is in the TML medical risk pool, which provides very competitively priced coverage due to their managed care network (United Healthcare) and the structure of the program itself; and TML participates in the PEBA (Public Employer Benefit Alliance) that offers other benefits such as the dental, vision, life/AD&D and LTD coverage at very competitive pricing due to the co-op arrangement. Therefore, with respect to these other benefits, a principle reason that more proposals were not received would be that carriers felt their products were not competitive with the existing coverage. A review of the medical renewal proposal was performed. The renewal for the Standard plan was -0- % increase; the Core Plan renewal was a 10% increase; and the High Plan was a 3% increase. An inquiry to TML was made to obtain an explanation for the increases in the Core and High plans. Being the incumbent, TML had one month's of claim data for the new benefit structure; and the Core plan had a 116% loss ratio, thus the 10% increase in the premium. The Standard plan showed an 82% loss ratio; and the High plan an 86% ratio. TML's renewals for the dental, vision, life/AD&D and LTD were -0- % increases. Block Vision provided the only alternative proposal for vision care. Block's premiums are lower than TML, because they utilize a restricted network that has five providers in Paris, including Wal-Mart and Texas State Optical. The TML vision plan is a discount plan with total open access to all providers. The Block rates are employee-$6.50; and family-$16.35. The TML rates are $9.38 and $18.76. The decision far this benefit would be an open network versus a restricted one. Should there be any questions, please contact me. Cordially, John RahCfs, ,7r. John Rahlfs, Jr. Benefit Consultant 2