HomeMy WebLinkAbout2005-25903 Reso
RESOLUTION NO. 2005-25903
A RESOLUTION OF THE MA YORAND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE
RECOMMENDATION OF THE CITY MANAGER RELATIVE TO THE
RANKING OF THE PROPOSALS RECEIVED FOR GROUP
EMPLOYEE LONG TERM DISABILITY COVERAGE FOR
PARTICIPANTS IN THE CITY'S DEFINED CONTRIBUTION 401(a)
PLAN, PURSUANT TO THE REQUEST FOR PROPOSALS ISSUED ON
JANUARY 14, 2005, BY ARTHUR J. GALLAGHER AND CO., THE
CITY'S BROKER FOR GROUP EMPLOYEE BENEFITS;
AUTHORIZING THE ADMINISTRATION TO ENTER INTO
NEGOTIATIONS WITH THE TOP RANKED FIRM, JEFFERSON
PILOT FINANCIAL INSURANCE COMPANY; AND, SHOULD SUCH
NEGOTIATIONS BE SUCCESSFUL, AUTHORIZING THE MAYOR
AND CITY CLERK TO EXECUTE AN AGREEMENT WITH SAID
FIRM, NOT TO EXCEED AN ESTIMATED ANNUAL PREMIUM OF
$75,000, EFFECTIVE JUNE 1, 2005, FOR A PERIOD OF TWO YEARS.
WHEREAS, on January 14, 2005, a Request for Proposals for Group Employee Long Term
Disability Coverage was issued by Arthur J. Gallagher & Co, the City's broker for group employee
benefits, with eight (8) vendors responding; and
WHEREAS, on February 24,2005, Arthur 1. Gallagher & Co. began meeting with the City
Administration to present its evaluation of the proposals received in response to the Request For
Proposals; and
WHEREAS, Arthur 1. Gallagher & Co. subsequently recommended that the City accept the
proposal of Jefferson Pilot Financial Insurance Company, as the top ranked proposer; and
WHEREAS, the City Administration concurs and, additionally, the City Manager has reviewed
and concurs with the Administration and Gallagher & CO.'s recommendation.
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 accept the ranking recommendation of the City Manager relative to the ranking of
the proposals received for Group Employee Long Term Disability Coverage for participants in the City's
Defined Contribution 40 1 (a) plan, pursuant to the Request for Proposals issued on January 14, 2005, by
Arthur J. Gallagher and Co., the City's broker for Group Employee Benefits; authorizing the
Administration to enter into negotiations with the top ranked firm, Jefferson Pilot Financial Insurance
Company; and, should such negotiations be successful, authorizing the Mayor and City Clerk to execute
an Agreement with said firm not to exceed an estimated annual premium of $75,000, effective June 1,
2005, for a period of two years.
PASSED AND ADOPTED this 18th
,2005
ATTEST: ~t ~~
CITY CLERK Robert Parcher
BAGENDA\200SIMay1805lRegularlGroup EmPlo)<e LTD Reso #2,doc
MAYOR DASTO
David Dermer FORM & LANGUAGE
& FOR EXECUTION
CITY OF MIAMI BEACH
COMMISSION ITEM SUMMARY
m
Condensed Title:
Group Employee Long Term Disability coverage for participants in the City's 401 (a) defined contribution
plan as required in Ordinance No. 92-2813 as a result of RFP 03-04/05 issued January 14, 2005 for plan
year beginning June 1, 2005.
Issue:
Should the City accept the recommendations from the City Manager and Gallagher Benefits Services, the
City's broker for employee benefits, as a result of the RFP Issued on January 14, 2005 for Group Employee
Long Term Disability coverage, authorizing the Administration to enter into negotiations and if successful
executing an Agreement with Jefferson Pilot Financial Insurance Company to provide such benefit for the
participants of the City's 401 (a) defined contribution plan?
Item Summary/Recommendation:
The City Administration recommends that the Commission accept the recommendations of Gallagher
Benefits Services to award the Agreement for Group Employee Long Term Disability coverage to Jefferson
Pilot Financial Insurance Company based on rates offered, contract provisions and benefits offered. The
City's estimated annual cost is estimated not to exceed approximately $75,000, allowing for growth of
covered payroll.
IAdVISOry Board Recommendation:
Financial Information:
Finance Dept.
Accoont
L TD insurance 011.9611.000375
Approved
Source of
Funds:
D
Ci Clerk's Office Le islative Trackin
Mayra D. Buttacavoli
n-Offs:
Department Director
Assistant City Manager
City Manager
AGENDA ITEM --R 1 F
DATE S-Jg-O~
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
www.miamibeachfl.gov
To:
From:
Subject:
COMMISSION MEMORANDUM
Mayor David Dermer and
Members of the City Commis~on I
Jorge M. Gonzalez J J ~ ~
City Manager \
Date: May 18, 2005
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF
THE CITY MANAGER RELATIVE TO THE RANKING OF THE
PROPOSALS RECEIVED FOR GROUP EMPLOYEE LONG TERM
DISABILITY COVERAGE FOR PARTICIPANTS IN THE CITY'S DEFINED
CONTRIBUTION 401 (a) PLAN, PURSUANT TO THE REQUEST FOR
PROPOSALS ISSUED ON JANUARY 14, 2005, BY ARTHUR J.
GALLAGHER AND CO., THE CITY'S BROKER FOR GROUP EMPLOYEE
BENEFITS; AUTHORIZING THE ADMINISTRATION TO ENTER INTO
NEGOTIATIONS WITH THE TOP RANKED FIRM, JEFFERSON PILOT
FINANCIAL INSURANCE COMPANY; AND, SHOULD SUCH
NEGOTIATIONS BE SUCCESSFUL, AUTHORIZING THE MAYOR AND
CITY CLERK TO EXECUTE AN AGREEMENT WITH SAID FIRM, NOT TO
EXCEED AN ESTIMATED ANNUAL PREMIUM OF $75,000, EFFECTIVE
JUNE 1, 2005, FOR A PERIOD OF TWO YEARS.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
The City is obligated to purchase a Long Term Disability policy for employees in the City's
401 (a) defined contribution plan. Jefferson Pilot Financial Insurance Company (or by a
company now owned by Jefferson Pilot) has provided this coverage for over 10 years.
Jefferson Pilot had maintained their rates, with no increase, for five years, however the City
felt that it may be possible to obtain a more competitive rate. The City, through Arthur J.
Gallagher & Co., issued an RFP for Group Employee Long Term Disability Coverage on
January 14, 2005.
The Request for Proposals was forwarded to fifteen (15) vendors of which eight (8)
responded. Gallagher & Co. reviewed the responses from both a financial and benefits
view. (Attachment A). Gallagher recommended that the City accept the proposal of
Jefferson Pilot Financial Insurance Co. due to rates offered, contract provisions and
benefits offered.
Jefferson Pilot offered a reduced rate of $0.34 per $1 00 of covered payroll (currently $0.44
per $100 of covered payroll) for a benefit equal to two-thirds of the employee's annual
earnings, not to exceed $5,000 a month (for salaries up to $90,000), as defined in
Ordinance No. 92-2813. Jefferson Pilot's rate is guaranteed for two years.
Jefferson Pilot also presented a proposal that allows up to a maximum monthly benefit of
$10,000 (covering salaries up to $180,000). The rate for this increased level of coverage is
$ .36 per $100 of covered payroll, less than the current rate of $ .44.
The Administration has calculated that if the $5,000 monthly maximum was increased by
the cost of living increases given to City employees over the last 13 years (based on the
amount given to Unclassified employees), the maximum covered benefit would have
increased to $7,700 covering $140,000 of salary.
The administration recommends increasing the maximum monthly covered amount to
$10,000 to include the cost of living allowances provided since the inception ofthe Plan in
1992 and allowing for cost of living increases in the next three years.
The City's projected annual cost for the Plan year June 1, 2005 through May 30, 2006 is
estimated to not exceed $75,000, allowing for growth of covered salaries during the plan
year.
CONCLUSION
The City Administration recommends that the Commission accept the ranking and
recommendations of Gallagher Benefits Services, the City's consultant for Group
Employee Benefits, to award the Long Term Disability coverage to Jefferson Pilot Financial
Insurance Company with a guaranteed rate for two consecutive years.
JMG:MDB:ph
T:\AGENDA\2005\May1805\Regular\Group Employee L TO memo--05.ooc
A- T T Ac t-\ rl,H:l/\1T A
G
Gallagher Benefit Services, Inc.
A Subsidiary of Arthur J. Gallagher.. Co.
March 7, 2005
Ms. Mayra D. Buttacavoli, Director of Human Resources & Risk Management
City of Miami Beach
1700 Convention Center Drive
Miami Beach, Florida 33139
Re: Disability Benefits
Dear Mayra,
At the request of the City, Arthur J. Gallagher prepared a Request for Proposal (RFP) for
Long Term Disability (L TD) coverage for employees currently participating in the 401 (a)
pension plan. The purpose of this RFP was to ensure the pricing and benefits of the plan
currently in place with Jefferson Pilot are competitive. In addition, a request was made to
quote several Short Term Disability (STD) plan options.
The request for proposal was forwarded to fifteen vendors, (Exhibit A) of which, eight
responded including the incUfilbent. Both a fmancial and benefits comparison were
prepared and presented to the City on February 24, 2005 for their review. Upon
completion of this review, our recommendation to the City is to renew coverage with the
incumbent carrier, Jefferson Pilot. Reasons are as follows:
1) Jefferson Pilot reduced the current rate of .44 per $100 of covered payroll to .34
per $100 of covered payroll saving the City's $18,122.16 annually. In addition, a
two-year rate guarantee was provided.
2) Alternate carriers would not waive the actively at work provision. This is a key
contract issue in the replacement on Long Term Disability coverage.
Please note that rates for an alternate L TD Plan reflecting a 5-year eligibility waiting
period with no elimination period were also requested. None of the respondents provided
quotes for this plan, citing that a plan design without an elimination period was not
feasible. One of the purposes of the elimination period is to protect the integrity of the
plan and prevent employees from entering and leaving the plan with too much frequency.
Removal of the elimination period would increase the incidence, cost and administration,
adversely affecting the plan.
One Boca Place
2255 Glades R:>ad. Suite 400 E
Boca Raton, FL 33431
561.995.6706
Fax 561,995,6708
www.ajg.com
A decision is yet to be made regarding the Short Term Disability, however we would
recommend placing this coverage with Jefferson Pilot as well for reasons of competitive
pricing and ease of benefit coordination between the Short Term and Long Term
Disability benefits.
We appreciate the opportunity to work with the City of Miami Beach, and would be
happy to answer any questions you may have.
Richard G. ScheU-
Area V ice Presi6ent
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