2009-27140 ResoRESOLUTION NO. 2009-27140
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE
CITY TO ENTER INTO AN AGREEMENT WITH HARTFORD
LIFE AND ACCIDENT INSURANCE COMPANY, FOR A GROUP
LIFE INSURANCE AND ACCIDENTAL DEATH AND
DISMEMBERMENT POLICY, COMMENCING ON JANUARY 1,
2010, AND ENDING ON DECEMBER 31, 2013, FOR AN
ANNUAL PREMIUM OF $170,000 FOR THE FIRST AND
SECOND YEARS, PURSUANT TO THE REQUEST FOR
PROPOSALS ISSUED BY GALLAGHER BENEFITS SERVICES,
THE CITY'S CONSULTANT OF RECORD.
WHEREAS, the City's current agreement with The Standard for group life
insurance and accidental death and dismemberment (AD&D) coverage expires on
December 31, 2009; and
WHEREAS, in order to continue providing a group life insurance and AD&D plan
to employees and retirees, the Administration worked with Gallagher Benefit Services
(Gallagher), the City's consultant of record, to issue a Request for Proposals (RFP); and
WHEREAS, in addition to a group life insurance and AD&D plan, the City
requested that the RFP include a life insurance plan for the spouses and dependent
children of the City's employees; and
WHEREAS, Gallagher issued Group Employee Benefits RFP No. 10-2589 on
behalf of the City for a group life insurance plan and AD&D plan for the City's employees
and retirees, and group life insurance for the spouse and dependent children of the
City's employees; and
WHEREAS, in response to this RFP, seven (7) vendors responded; and
WHEREAS, the Hartford Life and Accident Insurance Company's proposed
premium was 47.5°/a lower than the City's current premium; and
WHEREAS, the RFP also requested bids on products fully paid by the
employee, including supplemental employee life, spouse life, and dependent life
insurance; and
WHEREAS, the supplement group plans from the Hartford Life and Accident
Insurance Company provided the best overall value for cost; and
WHEREAS, after evaluating the respondents, Gallagher recommends the City's
Employee Group Life Insurance and AD&D policy for City's employees and their
dependents and the group life insurance for retirees be awarded to Hartford Life and
Accident Company, based on the value of the benefits provided and the cost.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby authorize the City to enter into an agreement with Hartford Life and
Accident Insurance Company, for a Group Life Insurance and Accidental Death and
Dismemberment policy, commencing on January 1, 2010, and ending on December 31,
2013, for an annual premium of $170,000 for the first and second years, pursuant to the
Request for Proposals issued by Gallagher Benefits Services, the City's consultant of
record.
PASSED and ADOPTED this 15th day of July , 2009.
MA O
Mattie Herrera Bower
TTEST:
CITY CLERK
Robert Parcher
APPROVED AS TO
FORM & LANGUAGE
t~ FOR EXECUTION
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T:\AGENDA\2009Uu1y 15\Regular\Basic Life Resolution.doc
' COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution authorizing the City to enter into an agreement with Hartford Life and Accident Insurance
Company for the City's Basic Group Life Insurance and Accidental Death and Dismemberment policy and
a Voluntary Life Insurance policy.
Intended Outcome Su
• Attract and maintain a quality workforce.
• Ensure ex enditure trends are sustainable over the Ion term.
Supporting Data (Surveys, Environmental Scan, etc.):
I. 2007 Employee Satisfaction Survey
• 68.8% of employee surveyed participate in medical benefits.
• 63.5% of employee surveyed ranked medical benefits as the most important benefit the City offers
II. 2007 Internal Support Functions Survey
• Overall satisfaction of benefits administration was rated 75.6% as excellent or good combined
III. 2008 Environmental Scan
Issue:
Should the City contract with Hartford Life and Accident Insurance Company for a basic group life
insurance and accidental death and dismemberment policy and a volunta group life insurance policy?
• Motivated and Skilled Workforce turnover rates = 13.86% for 2007 vs. 10.7% for 2006
Item Summary/Recommendation:
The City's current group basic life and accidental death and dismemberment policy for employees and
retirees with The Standard will expire on December 31, 2009. At the direction of the City Administration,
Gallagher Benefits Services issued their RFP No. 10-2589 on May 8, 2009 requesting proposals for a
basic group life and accidental death and dismemberment insurance policy, supplemental life insurance
policy and voluntary group life insurance policy for the non-public safety employees and retirees of the City
of Miami Beach.
As a result of this RFP, Gallagher Benefits Services and the City's Group Insurance Board has
recommended the City enter into an agreement with Hartford Life and Accident Insurance Company to
provide a basic life and accidental death and dismemberment plan for the non-public safety employees and
retirees of the City and a voluntary plan to provide supplemental employee, spouse and dependent
child(ren) life insurance.
Advisory Board Recommendation:
The Group Insurance Board recommends this action.
Financial Information:
Source of Amount Account
Funds: ~ $164,900 601.7000.22932 Life Insurance forActive Employees
2 $5,100 504.1791.000355 Life Insurance for Retirees
3
OBPI Total $170,000
Financial Impact Summary:
The lowest responding plan administrator, The Hartford Life and Accident Insurance Company, proposed a
premium rate of $.165 which is 45% below the City's current premium rate of $.30 per thousand dollars of
coverage, providing the City with an annual cost savings of approximately $68,000 for the group basic life
and accidental death and dismemberment policy.
There is no financial impact to the City for the Supplement Life Insurance benefits, including
supplemental employee life insurance and spouse and dependent life insurance. The City makes these
voluntary benefit programs available to employees, and does not make any contribution as these
volunta tans are full aid b the em to ee.
w werK~s Vttice Le islative Trackin
Sue Radig, Human Resources Administrator I
Si n-Offs:
Department Director .Assistant City Manager City Manager ~.
Ramiro Inguanzo,
Human Resources Director
BATE T~ -~
m MIAMIBEACH
City of Miami Beath, 1700 Convention Center Drive, Miami Beach, Florida 33139, veww.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the CityiCommission
FROM: Jorge M. Gonzalez, City Manager
DATE: July 15, 2009
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AUTHORIZING THE CITY TO ENTER INTO
AN AGREEMENT WITH HARTFORD LIFE AND ACCIDENT INSURANCE
COMPANY, FOR A GROUP LIFE INSURANCE AND ACCIDENTAL DEATH
AND DISMEMBERMENT POLICY FOR AN ANNUAL PREMIUM OF $170,000
FOR THE FIRST AND SECOND YEARS, PURSUANT TO THE REQUEST
FOR PROPOSALS ISSUED BY GALLAGHER BENEFITS SERVICES, THE
CITY'S CONSULTANT OF RECORD.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
BACKGROUND/ANALYSIS
The City's current policy with The Standard for basic group life and accidental death and
dismemberment insurance for the City's non-public safety employees and retirees expires on
December 31, 2009. In order to continue providing a group life and accidental death and
dismemberment insurance policy, the Administration worked with Gallagher Benefit Services
(Gallagher), the City's consultant of record, to issue a Request for Proposals (RFP).
On May 8, 2009, Gallagher issued their RFP No. 10-2589 for a basic group life and
accidental death and dismemberment insurance plan for the City's non-public safety
employees and retirees, and an employee funded (voluntary) supplement life insurance plan
for all employees, including public safety employees. Basic Life and Accidental Death and
Dismemberment Insurance provides each full-time non-public safety employee life insurance
coverage equal to one (1) times their annual salary, rounded to the next highest thousand
dollars, and one (1) times their annual salary to a maximum benefit of $20,000 in accidental
death and dismemberment coverage. The cost of basic life and accidental death and
dismemberment insurance is shared between the City and the employee, each paying fifty
percent (50%) of the cost of coverage.
In addition to the mandatory coverage for employees, the City included a request for an
employee funded group life insurance plan for the spouses and dependent children of the all
City's employees. Group term life insurance for spouses and dependents is cost neutral to
the employer, with the employees paying the full premium for the coverage. These
dependent benefits are often bundled, allowing employees to elect coverage for their spouse
Juiy 15, 2009 City Commission Meeting
Seiection of a Basic Group Life Insurance Administrator
Page 2 of 4
with automatic coverage provided for any dependent child(ren) via the spouse election.
Spouse coverage is sold in increments of $10,000 (coverage starts at $10,000 and
increases up to $50,000) with each child covered with $10,000 in life insurance benefits.
The employee is always the beneficary for these policies.
In response to the RFP, the following seven (7) vendors responded with bids to provide a
group life insurance and accidental death and dismemberment and dependent life plan to
the employees of the City:
• CIGNA
• Hartford Life and Accident Insurance Company
• ING
• Lincoln Financial
• Minnesota Life
• The Standard
• Unum
All seven (7) vendors were able to quote coverage for the City's current life and disability
programs and quoted similar optional spouse and dependent benefit plans. Each of the
following vendors proposed a "best and final" monthly premium per each thousand dollars of
employee volume:
Plan Administrator Cost Per Each Thousand
Dollars of Covera e Rate Guarantee
CIGNA $.207 Two 2 ear
Hartford Life and Accident
Insurance Com an
$.165
Two (2) year
ING $.208 Three 3 ear
Lincoln Financial $.195 Two 2 ear
Minnesota Life $.185 Two 2 ear
The Standard $.30 Two 2 ear
Unum $.297 Three 3 ear
The Hartford Life and Accident Insurance Company has proposed premium rate that is 45%
below the City's current premium rate of $.30 per thousand dollars of coverage. This
proposed premium rate of $.165 by the Hartford Life and Accident Insurance Company
would create an annual basic life and accidental dental and dismemberment premium
savings to both the City and the employee.
Gallagher's RFP also requested bids on products fully paid by the employee including
supplemental employee life, spouse life and dependent life insurance. This coverage would
be fully funded by the employee and available on a voluntary basis. The City would make no
contributions to this voluntary employee benefit.
All respondents proposed similar programs of one (1) times to five (5) times the employee's
annual earnings for supplement employee life. In addition, all proposed a dependent life
benefit from $10,000 to $50,000 (in $10,000 increments) in spousal life which includes a
$10,000 benefit for each dependent child.
After thoroughly evaluating the responses, Gallagher Benefit Services recommends the
renewal of the City's Basic Life and Accidental Death and Dismemberment Insurance and
Juiy 15, 2009 City Commission Meeting
Selection of a Basic Group Life Insurance Administrator
Page 3 of 4
the Supplemental Life Insurance policy including a voluntary dependent life policy, with
Hartford Life and Accident Insurance Company (Hartford) for a period of three (3) years
(Attachment A) based on the following supporting factors:
• Hartford provided the lowest premium rates for the City's Basic Life and Accidental
Death and Dismemberment Insurance, Supplemental Life Insurance and Voluntary
Life Insurance
• Hartford provided the City with a three (3) year premium guarantee
The City's Group Insurance Board was convened to review and make a recommendation to
the City Manager on the selection of the City's Basic Group Life and Accidental Death and
Dismemberment Insurance plan administrator. The Group Insurance Board included:
• Jose Cruz, Budget Officer, Office of Budget and Performance Improvement
• Georgie Echert, Assistant Director, Finance Department
• John Gresham, Union Representative, Government Supervisors Association (GSA)
• Cliff Leonard, Risk Manager, Human Resources Department
• Richard McKinnon, President, Communication Workers of America (CWA)
• Sue Radig, HR Administrator I Employee Benefits, Human Resources Department
• Penman Terry, President, American Federation of State, County, and Municipal
Employees (AFSCME)
The Group Insurance Board met on July 7, 2009 and reviewed the "best and final"
proposals. The final recommendation of the Group Insurance Board was to award the
administration of the City's Basic Group Life and Accidental Death and Dismemberment
Insurance, Supplemental Life Insurance and Voluntary Life Insurance to Hartford Life and
Accident Company based on the overall cost savings provided.
FINANCIAL IMPACT
The lowest responding plan administrator, The Hartford Life and Accident Insurance
Company, proposed a premium rate of $.165, which is 45% below the City's current
premium rate of $.30 per thousand dollars of coverage. This proposed premium of $.165 by
the Hartford Life and Accident Insurance Company would create an annual basic life and
accidental death and dismemberment premium savings to the City of approximately
$68,000. This savings is based on the current cost sharing in which the City pays fifty
percent (50%) of the premium and the employee pays fifty percent (50%) of the premium for
Basic Group Life and Accidental Death and Dismemberment Insurance. The proposed
reduced premium to the City would be $.09 versus the current premium cost of $.158.
There is no financial impact to the City for the Supplement Life Insurance benefits, including
supplemental employee life insurance and spouse and dependent life insurance. The City
makes these voluntary benefit programs available to employees, and does not make any
contribution as these voluntary plans are fully paid by the employee.
July 15, 2Q09 City Commission Meeting
Selection of a Basic Group Life Insurance Administrator
Page 4 of 4
CONCLUSION
The Administration has reviewed the recommendations of the Group Insurance Board and
Gallagher Benefits Services and recommends the City award administration of the City's
Basic Group Life and Accidental Death and Dismemberment Insurance, Supplemental Life
Insurance and Voluntary Life Insurance to the Hartford Life and Accident Insurance
Company for a three (3) year period beginning January 1, 2010.
Attachment A
Gallagher Benefits Services
Letter of Recommendation
y~~ Gallagher Benefit Services, Inc.-- - --- ----
June 30, 2009 A Subsidiary of Arthur J. Gallagher ~ Co.
Ramiro Inguanzo, Human Resources Director
City of Miami Beach
1700 Convention Center Drive
Miami Beach, Florida 33139
Re: Employee Benefits Recommendations
Dear Mr. Inguanzo,
At the City of Miami Beach's request, we released Request for Proposals (RFP's) for all
City employee benefits including Medical, Dental, Life, Accidental Death and
Dismemberment, Voluntary and Dependent Life, Statutory Accidental Death and
Dismemberment, Employee Assistance Program, Vision, Short and Long Term
Disability. A vendor list has been provided illustrating what carriers were supplied the
RFP's and those that responded by product (See exhibit A). Recommendations will be
discussed briefly below.
Medical proposals were requested for claims administration and network access. We
requested both duplication of existing benefits and alternate benefit schedules. Responses
were received from the incumbent carrier Humana, AvMed, Cigna Healthcare, Aetna
United and Blue Cross & Blue Shield of Florida. We recommend renewal with Humana
based on the following:
1) Humana offered the lowest administrative fee's to the City including a reduction
of current costs
2) Retaining Humana will cause no disruption to member provider relations
3) Physician and hospital reimbursement analysis revealed Humana's strong South
Florida discounts
Life and Accidental Death and Dismemberment Request for Proposal resulted in thirteen
responses including the incumbent carrier, Standard. Short listing and continued
negotiations results in the recommendation of Hartford Life for the Basic Life and
AD&D, Dependent Life, Retiree Life and Voluntary Life. Reasons are as follows:
1) Lowest Basic Life, AD&D and Retiree cost to City and employees
2) Thirty six month rate guarantee
Statutory Accidental Death and Dismemberment Benefit Request for Proposal resulted in
two responses, the incumbent Hartford Life and Ace USA. We recommend renewal with
Hartford.
1) Hartford offered lowest cost including a 25% reduction in current annual
premium
2) No change to current benefits
3) Three year rate guarantee
One Boca Place
2255 Glades Road, Suite 400 E
Boca Raton, FL 33431
561.995.6706
Fax 561.995.6708
www.ajg.com
Currently Dental coverage (Indemnity/PPO and DMO) are purchased by the City on a
fully insured basis for the DMO and self insured for the Indemnity and PPO. In addition
to the incumbent response from Comp Benefits, eight addition proposals were received.
We recommend awarding MetLife the fully insured DMO plan and self funding the
Indemnity/PPO dental coverage. Factors supporting this recommendation are as follows:
DMO
1) MetLife offered lowest DMO cost (16% reduction annually) while
improving benefits to members
2) Large network of general dentists, Periodontists, Endodontic and
Orthodontists.
3) Two year rate guarantee.
Indemnity/PPO
1) Lowest annual administrative fee's
2) Improved benefits to participating members
3) Thirty six month rate guarantee
The Employee Assistance Program is currently provided by Ceridian. Six additional
proposals were received and reviewed for cost, benefits provided and Medical Plan
integration opportunities resulting from the recent Federal Benefits Law changes
impacting Mental Health Parity. Humana is the recommended vendor for the following
reasons:
1) Improved benefits via increased face to face visits
2) Low cost relative to benefits provided
3) Medical plan savings opportunity as a result of common vendor coordination
The Vision benefits Request for Proposal resulted in eight responses. Similar to the
Dental benefits, both fully insured and self insured proposals were received. We are again
recommending this benefit be self funded based on the low claims risk and trend
predictability. EyeMed is the recommended vendor based upon:
1) Lowest administrative services fee
2) Comprehensive exam and hardware benefits
3) Large tri-county provider network
Short and Long Term Disability Benefits RFP's responses were evaluated by vendors
offering both coverage's. For continuity of coverage and a seamless transition from short
term to long term disability, the objective is to provide continuity of coverage and a
seamless transition from short to long term disability with no disruption due to
differences in disability definition, medical evaluation and benefits offered. Unum is the
recommended carrier.
1) Minimal participation requirement and no termination feature
2) Low overall cost
3} Family Medical Leave Act administration for all employees
4) Twenty four month rate guarantee for Long Term Disability and FMLA
Administration
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We appreciate the opportunity to work with the City and staff and would be happy to
answer any questions you may have.
Sincerely,
Richard G. Schell
Area Vice Preside