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02-A Health Insurance Plan3-11-04 MEMO TO: MAYOR CURTIS FENDLEY FROM:GENE ANDERSON RE: INSURANCE PROPOSALS In the way of further information for the Council to consider, my criteria for recommending either Capps Insurance (Humana) or TML for consideration were (1) proposal met the specifications and (2) lowest cost. If the Council desires to consider other factors not listed in the proposal, they could do so, but would need to make the new criteria lmown to all vendors who met the specifications so that all might have an equal opportunity to amend their proposal. I would refer you to the attached Section 252.042(b) and Section 252.043(h) of the Local Government Code. I wish to correct a misstatement that I made at the last Council meeting by stating that upon review of the self funded plans, Combined Insurance Associates had the second lowest cost followed Grizzaffi Dazby. thod described ; a better value iat expenditure hapter and the ,d described in penditure. 1, 1987. Amend- ff. Aug. 28, 1989; g. 28, 1989; Acts 1991; Acts 1993, Acts 1993, 73rd )95, 79th Leg., ch. Ith Leg., ch. 796, , ch. 126, $ 1, eff. 70, 4 3, eff. Sept. eff. Sept. 1, 1999; apL 1, 2001; Acts 1, 2001. c seq. Aes: id applies only W a Is or proposals on or !rendum Provi- ibed by SecUon :hat are payable: : amount of the aicipality for all ,ar year exceeds: )pulaUOn is 5,000 's population is ,'s population is y's population is rt. 1, 1987. Amend- , eff. Aug. 26, 1991. che natice esemptione ent Code, applies only st solicited on or after hich bide ur propoeale ' by the law in etfect at ; is continued in etfxt PROPERTY ACQUISITION OR SALE 252.024. Selection of Insurance Broker This chapter does not prevent a municipality from selecting a licensed insurance broker as the sole bro- ker of record to obtain proposals and coverages for excess or surplus insurance that provides necessary coverage and adequate limits of coverage in structur- ing layered excess coverages in all areas of risk requiring special consideration, including public offi- cial liability, police professional liability, and airport liability. The broker may be retained only on a fee basis and may not receive any other remuneration from any other source. Acts 1987, 70th Leg., ch. 199, § 1, eff. Sept. 1, 1987. [Sections 252.025 to 252.040 reserved for expansion] SUBCHAPTER C. PROCEDURES § 252.041. Notice Requirement (a) If the competitive sealed bidding requirement applies to the contract, notice'of the time and place at which the bids will be publicly opened and read aloud must be published at least once a week for two eonsecutive weeks in a newspaper published in the municipality. The date of the first publication muat be before the 14th day before the date set to publicly open the bids and read them aloud. If no newspaper is published in the municipality, the notice must be posted at the city hall for 14 days before the date set to publicly open the bids and read them aloud. (b) If the competitive sealed proposals requirement applies to the contract, notice of the request for proposals must be given in the same manner as that prescribed by Subsection (a) for the notice for compet- itive sealed bids. (c) If the contract is for the purchase of machinery for the construction or maintenance of roads or streets, the notice for bids and the order for purchase must include a general specification of the machinery desired. (d) If the governing body of the municipality in- tends to issue time warrants for the payment of any part of the contract, the notice must include a state- ment of: (1) the governing body's intention; (2) the maximum amount of the proposed time warrantindebtedness; (3) the rate of interest the time wazrants will bear; and § 252.043 (4) the maximum maturity date of the time war- rants. Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987. Amend- ed by Acts 1991, 72nd Leg., ch. 109, § 2, eff. Aug. 26, 1991; Acts 1993, 73rd Leg., ch. 749, § 9, eff. Sept. 1, 1993; Acts 1993, 73rd Leg., ch. 757, § 6, eff. Sept. 1,1993. § 252.0415. Procedures for Electronic Bids or Pro- posals (a) A municipality may receive bids or proposals under this chapter through electronic transmission if the governing body of the municipality adopts rules to ensure the identification, security, and confidentiality of electronic bids or proposals and to ensure that the electronic bids or proposals remain effectively un- opened until the proper time. (b) Notwithstanding any other provision of this chapter, an electronic bid or proposal is not required to be sealed. A provision of this chapter that applies to a sealed bid or proposal applies to a bid or proposal received through electronic transmission in accor- dance with the rules adopted under Subsection (a). Added by Acts 2001, 77th Leg., ch. 1063, § 6, eff. Sept. 1, 2001. Requests for Proposals for Certain Pro- curements (a) Requeats for proposals made under Section 252.021 must solicit quotations and must specify the relative importance of price and other evaluation fac- to (b) iscussions in accordance with the terms of a request for proposals and with regulations adopted by the governing body of the municipality may be con- ducted with offerors who submit proposals and who are determined to be reasonably qualiTied for the award of the contract. Offerors shall be treated fairly and equally with respect to any opportunity for discus- sion and revision of proposals. To obtain the best final offers, revisions may be permitted after submis- sions and before the award of the contract. • Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept 1, 1957. Amend- ed by Acts 1989, 71st Leg., ch. 1, § 66(c), eff. Aug. 28, 1989; Acts 1995, 74th Leg., ch. 45, $ 2, eff. May 5, 1996. § 252.043. Award of Contract (a) If the competitive sealed bidding requirement applies to the contract for goods or services, the contract must be awarded to the lowest responsible bidder or to the bidder who provides goods or services at the best value for the municipality. 553 § 252.043 OV LOCAL GOVERNMENT CODE (b) In determining the best value for the municipal- ity, the municipality may consider: (1) the purchase price; (2) the reputation of the bidder and of the bid- der's goods or services; (3) the quality of the bidder's goods or services; (4) the extent to which the goods or services meet the municipality's needs; (5) the bidder's past relationship with the munici- palitY; '(6) the impact on the ability of the municipality to comply with laws and rules relating to contracting with historically underutilized businesses and non- profit organizations employing persons with disabili- ties; (7) the total long-term wst to the municipality to acquire the bidder's goods or services; and (8) any relevant criteria specifi'cally listed in the request for bids or proposals. (c) Before awarding a contract under this section, a municipality muat indicate in the bid specifications and requirements that the contract may be awazded either to the ]owest responsible bidder or to the bidder who provides goods or servicea at the best value for the municipality. (d) The contract must be awarded to the lowest responsible bidder if the competitive sealed bidding requirement applies to the contract for construction of: (1) highways, roada, streets, bridges, utilities, wa- ter supply projects, water plants, wastewater plants, water and wastewater distribution or conveyance facilities, wharves, docks, airport runways and taxi- ways, drainage pmjects, or related types of projects associated with civil engineering construction; or (2) buildings or atructures that are incidental to projects that aze primari]y civil engineering con- struction projects. (e) If the competitive sealed bidding requirement applies to the contract for construction of a facility, as that term is defined by Section 271.111, the contract must be awarded to the lowest responsible bidder or awarded under the method described by Subchapter H, Chapter 271. (f) The governing body may reject any and all bids. (g) A bid that has been opened may not be changed for the purpose of correcting an error in the bid price. This chapter does not change the common ]aw right of a bidder to withdraw a bid due to a material miq}yke in the-bid. ~ ,(h~R'the competitive sealed proposals requirement ~ to the contract, the wntract must be awazded to the responsible offeror whose proposal is deten mined to be the most advantageoua to the municipality considering the relative importance of price and the other evaluation factors included in the request for proposals. (i) This section does not apply to a contract for profeasional services, as that term is defined by Sec- tion 2254.002, Government Code. Acts 1987, 70th Leg., eh, 149, § 1, eff. SepL 1, 1987. Amend- ed by Acta 1997, 75th Leg„ ch. 1370, § 4, eff, Sept. 1, 1997; Acts 2001, 77th Leg., eh. 1409, § 3, eff. Sept. 1, 2001, Seetion 15(a) of Acfs 2001, 77th Leg., ch. 1909 providea: "The changes in ]aw made by this qct aPPlY onlv W a rnntract for which requesis far bida, requeetv for proposale, or requeets for qualifl'eaUona are published or distributed after September I, 2001." Secdon 15(b) ot Acte 2001, TTth Leg., ch. 1409 provides: "1'he change in law made by this Act to S¢ction 252.043, Locel Government Code, applies only to a contract awarded on or aRer the effeetive date of thie AcG" Section 5 of Acts 1997, 75th Leg., eR 1370 provides: "Thie Act takes ettM September 1, 1997, and appliee only to a mntract tor which a municipality Fvst eolicife bids or proposals on or after that da[e." § 252.0435. Safety Record of Bidder Considered In determining who is a responsible bidder, the governing body may take into account the safety record of the bidder, of the firm, corporation, partner- ship, or institution represented by the bidder, or of anyone acting for such a firm, corporation, partnyr_ ship, or institution if: (1) the governing body has adopted a written definition and criteria for accurate]y determining the safety record of a bidder; (2) the governing body has given notice W pro- spective bidders in the bid specifications that the safety record of a bidder may be considered in determining the responsibility of the bidder; and (3) the determinations are not arbitrary and ca- pricious. Added by Acts 1989, 71st Leg., ch. 1, § Sg(b), eff. Aug. ZS, 1959. Section 58(a) of the 1989 Act providee: "This Sectjon amende the Lo¢al (`,pvernment Code fq mn}'orm tq Sections 3 through 5, Chapter 722, Aets of the 70th Legislature, Regular Session, 1987." 554 ¢ 252.0436. C (a) A munici lationa permitt into a contrac indebted to thc (b) It ia not pality, under (a), to refuse - Uansaction wii proposer that 1 (c) In this : sole proprietoi partnershiP, J' and any other to enter into : municipality r( of the municip Added by Acts 2003. $ 252.044. C- (a) If the c, works, the bii must execute must be: (1) in the (2) condit perform the (3) execu Governmem to do busine (b) Repeale ef£ Sept. 1, lf (c) The goc by ordinance and Chapter tractors' aurei vision in the n Acts 1987, 70th ed by Acts 199 Acts 1995, 74t1 Sectlon 3 of the "Thia AM take rnntract entered before the effecti when the wntrac in efteM for that I DRAFT F:\Attorney\Lisa\Resolutions\CiJRRENT\IIealth Insurance Award Res.wpd March 12, 2004 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, APPROVING AND AUTHORIZING THE AWARD OF A CONTRACT FOR MEDICAL, DENTAL, VISION, LIFE, AND LONG-TERM DISABILITY FOR THE EMPLOYEES AND EMPLOYEE DEPENDENTS OF THE CITY OF PARIS; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Paris, Paris, Texas, previously created a City Council Subcommittee to review and study benefits provided to City employees, including medical and associated insurance benefits; and, WHEREAS, the aforesaid City Council Subcommittee recommended that the City solicit proposals from interested and qualified insurance providers to review and consider in determining whether or not the City should change its insurance program and plan; and, WHEREAS, based on the recommendations ofthe aforesaid subcommittee, the City Council authorized the City Finance Director to solicit proposals from qualified insurance providers for medical, dental, vision, life, and long-term disability insurance for the employees and the employee dependents of the City of Paris; and, WHEREAS, City Council likewise instructed the City Finance Director to solicit proposals that would include both self-funded coverage and fully-funded coverage for such insurance; and, WHEREAS, the City Finance Director has received said proposals, reviewed same for compliance with the City's specifications, identified those proposals which met the minimum requirements of the City's specifications, and has recommended to the City Council a potential provider for said insurance as a fully-funded plan and a potential provider for said insurance as a self- funded plan; and, WHEREAS, based on said recommendations, the City Council desires to award a contract for medical, dental, vision, life, and long-term disability insurance for the City's employees and their dependents; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the proposal of , to provide medical, dental, vision, life, and long-term disability insurance for the employees and employee dependents of the City of Paris, shall be, and is hereby, accepted. Section 3. That the Mayor of the City of Paris be, and he is hereby, authorized to execute and the City Clerk to attest to a contract for medical, dental, vision, life, and long-term disability insurance for the City's employees and their dependents, said contract to be with , containing such terms and provisions as are consistent with the aforesaid provider's proposal, and in such form as shall be acceptable to the Mayor, City Finance Director, and City Attorney. Section 4. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this 15th day of March, 2004 Curtis Fendley, Mayor ATTEST: Mattie Cunningham, City Clerk APPROVED AS TO FORM: Larry W. Schenk, City Attorney. 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. In the way of explanation, two types of stop loss reinsurance are typically used. Specific Stop Loss coverage protects the City for plan year claims on an individual which exceed a ceRain limit. In this case that limit is $75,000. If claims exceed this amount on any individual, the reinsurance company reimburses the City for those claims. Aggregate Stop Loss coverage puts a limit on the City's liability for all eligible claims in a plan year. If that limit is exceeded, the reinsurance company reimburses the City for those claims. Under a self funded arrangement, the City would hold in reserve the funds it has budgeted for its shaze of insurance costs ($2,116,800) as well as City employee contributions for dependent coverage ($456,855). Over the course of the plan yeaz, the City would pay TML $101,630 for administration (processing claims, billing, Cobra administration, etc.) and pay the reinsurance company $309,181 for both types of stop loss coverage. As TML approves and processes claims, the City pays them. In this case there would be $2,162,844 available to pay claims. Because ofthe aggregate stop loss coverage, the maximum liability For claims would be $2,689,912. This leaves the City with a potential additional liability of $527,068 in a worse case scenario. TML used an expected claims amount of $2,151,930 in calculating its rates. Claims paid through the first 8 months of the current plan yeaz are $996,512. Annualized this number would be $1,494,783. If City claims next yeaz equaled that same $1,494,783, the City would profit by $668,061. The advantages of a self funded plan are (1) The City controls its own reserves. Any reserves not used represent savings to the City. This number will be $2,162,8441ess actual claims paid. (2) Claims aze paid only as they aze presented rather than as part of fully funded premiums. (3) City retains control over benefits, appeals, and the network. (4) The City's plan is not an ERISA plan which results in some claims cost savings. (5) Employees know that their current providers are in the network. Not all local providers aze in the Humana network. Capps Insurance has indicated that Humana will attempt to recruit local providers requested by the City but there is no obligation of the provider to join the network. Capps Insurance Agency Recommendations for the City of Paris Option 1 Fully-Insured Medical, Dental, Life, Vision & LTD With Voluntary Long Term Care Option Medical Humana $414.25 lZate $61.00 $150.00 $240.00 Dental Humana 18.19 16.90 22.76 4031 Life Ft. Dearborn .101,000 2.70 AD&D Ft. Dearbom .03/$1,000 .45 Dependent Life Ft. Dearbom Retiree Life Ft. Dearborn ' Vision Guardian 7.25 5.20 4.96 12.45 LTD * Mutual of Omaha 7.16 * Total $450 $83.10 $17746- $292.76 i Optional Long Rates vary as to age & are medically Ternt Care Unum $7.85 undenvritten FULLYINSURED RATES ARE FIRM • Medical Plan -$500 deductible, 80/50 coinsurance; $2,000 OOP; 10/25/45/25% RX • Dental Plan -$50 deductible (waived on Preventative); 100/80/50 coinsurance; $1,000 annual max; Ortho not quoted, but available. • • Life -$15,000 active employees, $5,000 retired employees; (See Reduction features & Buy-Up rates for Voluntary Life in Proposal) • AD&D -$15,000 active employees, $0 retired employees • Vision - Plan B; 12/12/24 (Exam every12 months, Lenses every 12 months, Frames every 24 months) • Long Term Disability - Per specifications, rates vary with payroll. CAPPS AGENCY CAN ASSUME CURRENT LTD PLAN WITH UNUM CITY OF PARIS PLAN YEAR 04-05 rrEnt Aggrcgate Srop Lov (ASG) I5111-!ncludes Medical & Rx Composite IndividualStop Loss(ISL) /S/Il - Includea Medica! & Rc EE Dependen[ Total ISL TotslStop Lau STANDARD FIXED COSTS Americart Stop Loss StandardSecuAry RATE EE MONTHLY ANNUAL $3.68 393 $1,446 S17,355 575,000 Deducrib(e $3224 393 512,670 5152,044 E44.46 262 $11,649 E139,782 . $24.319 E291.826 $35,765 5309,181 ASO FEE MEDICAL • $12.85 393 $5,050 560,601 ASOFEEDENTAL $2.10 393 E825 $9,904 ASOFEEVISION E0.00 393 SO EO U.R.FEE•• $2.75 393 S1,081 $12,969 PPNFEE•• E3.85 393 $1,513 $18,157 TOTALADWNI57RATION 521.55 - - E8,469 5101,630 7ota1 Fi:ed Cosb $8,469 5101,630 EXPEC7EDINEDCLAMIS-Comp E456.30 393 Y179,327 E2,151,930 Expechd QaLn. Smp Lmf & Admin. Liability 5179.327 52.151,930 tv1EDA7TACFUIEMPOINT-Comp S570.38 393 E224,159 22,689,912 Maximum Claim, Srop Lmf A Admin. Liabiliry 5234.159 $2,689,912 LT,O?'~'AL_,,,,y,L~W~1~TY'..,,. -13,562. 'S2,3627QJ 5'O'I L~'E~~ TACHti1F,~. .~OI~'P1~I:iAB.~7TY~ 5894.: ~~3"+~M•%„'Q;%23~.~ OPTIONAL FIXED COSTS WCADMINISI'RATION 50.50 393 S197 $2,358 TO7AL OP710NAL FLCED COSTS 50.50 S197 E2,358 NOTE • SEE MGU QU07E SHEET FOR ANY QUALIFICATIONS 70 OFFER 1. AetlwlyaFwoAandprxla0n9cond17ona,Xepplha0le,mayMxalwtluponracNp4nNewanOamepdnct el+siynWWaclwun5nbmant Pleaam Illl ouf Ne Wscbrun Sbhment unhlly M eoniulfafbn wWr yuui LNims AOminRlnrorantl xch o1 yourmWlnl manaDemrnt wntloa, fl+ppiapNb, antllnelutle all appllnDh pmons ~n HNqxsnpnvlously npoMd b/ISL oidlne0y M Me, Grtlv. l. Nwtl Ebpnwls/prvDnoib on wI brye. PomntlaItyHrye, engolnp orymLlnD cldma aa hlDhwtlWUCHbIw (tuai) m+yapply. J. NNalmonMlypaltlel~fma,onrollmmfNnughApr1170,2001. baumutlupllutlono/eumntplsnranEmfworks. 5. N"dcummt wpmporMPHn tlaeumenqi) antl all amentlmonb. f. NwtlupWNtlnnawuolme Uhcflvrdlb. 7. TPA Ir Ne 7ML IEBP. t Accw hu an noteowrea. D. PropoaSluMumwMMeanlapNmarybrnOmsapo 65antloltlw. 10. Cowrage lorCbaClWantlCOBRAqNClqntrqaublect rotlkcbsunandnrtiwappievaL . H. ROMmOaIbehmmtherooansubJMror►ntlnpMonnllmortehanyx6ymonManfO%. 7I. SwaftcMOaAtlitlomlcontlngeneluM1nmSfanCaNSwuAtye/NowYorfr. 13. M oNO pmaun aeeuney, aII Wb ahou106a traromMW In an Nacbonh Mmat Suean Smith, Executive Dircctor Date Authoriud Signaturc of Acceptance ' Date