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3-5-2004 MEMO TO: MICHAEL E. MALONE, CITY MANAGER FROM:GENE ANDERSON SUBJECT: INSURANCE PROPOSALS The City of Paris received proposals for medical, dental, vision, life, and long term disability coverage on February 17, 2004 in both fully insured and self insured formats. The basis for the proposals was a set of benefit levels discussed by the City Council in last yeaz's budget workshops and also reviewed and approved later by the Council's Benefit Committee. I also allowed providers to propose alternate plans with the understanding that those plans would only be considered if no proposals were received which matched the proposal specifications and had a reasonable cost. The reasoning being these alternates might prevent the necessity oF a second ronnd of proposals. This is clearly stated in the proposal document. The City received 12 variations of fully funded plans. Two of these proposals matched our specifications, and 10 did not in a significant way. The City received 48 variations of self funded plans. Four of these proposals cleazly met specifications. Twelve proposals lacked enough information for me to verify that they met specifications, but for comparison purposes I assumed they did meet our criteria. Thirty-two self funded proposals did not meet specifications in a significant way. The City received both fully funded and self funded proposals which met the requested specifications and fall within the amounts budgeted for this coverage. Of the fully funded proposals that met specifications, the Capps Insurance Agency proposed option one represents the best combination of price and coverage. Of the self funded proposals that met specifications, the Texas Municipal League proposed option one represents the best combination of price and coverage. A copy of their complete packets would be too bulky to distribute in the Council's packet, but attached is a copy of cost summaries for both the recommend proposals. I will bring to the Council meeting all of the proposals received. My recommendation is that Council decide which type of plan they prefer, and direct the staff to go forward with implementation of that choice. The following is a list of things that the Council should consider in making its decision. 1. The cost of a fully funded plan is a known amount assuming that the employee and dependent census does not change. Under the Capps proposal, the City knows that it will spend $2,116,800 (392 x$450 x 12). Employees will pay another $456,855 for dependent coverage. 2. The cost of a self funded plan is unknown because it has both fixed and variable costs. Under the TML proposal, the fixed costs total $410,811. This total consists of $309,181 for stop loss reinsurance and $ 101,630 for plan administration.