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Home My WebLink About5C Health Insurance Broker Report Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: DECEMBER 3, 2018 AGENDA #: 5C PREPARED BY: LORI OLSON, ASSISTANT CITY MANAGER PRESENTED BY: LORI OLSON AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO ENTER INTO THE CITY’S STANDARD PROFESSIONAL SERVICES AGREEMENT WITH NFP FOR BENEFITS CONSULTING SERVICES IN AN AMOUNT NOT TO EXCEED $19,500 ANNUALLY GOAL AREA AND OBJECTIVE: High-Value City Services 3. Ensure sufficient resources and staffing to meet service demands. 4. Attract, retain and train a high caliber workforce to ensure high-quality services. DISCUSSION: Introduction This agenda item seeks approval to enter into an agreement with a benefits consultant/insurance broker, NFP, to provide the city with benefits administration services. The City currently offers fully insured health and dental programs to our employees as well as a variety of ancillary benefits including flexible spending and health savings accounts, voluntary life insurance, long-term disability and accident/critical incident insurance for 95.5 full and part-time employees. Approximately 20 retired or disable employees receive COBRA/Minnesota Continuation of Care benefits through the City as well. History The City of Prior Lake uses a benefits consultant/insurance broker to navigate the city’s benefits program, including health, dental and ancillary benefits. This is necessary due to the complex nature of benefits administration, especially health care. The benefits consultant is a licensed agency that helps the city work through our annual health and other benefits renewal process, including negotiating rates and developing plan designs with insurers. The benefits consultant also assists the city and individual employees with issues related to insurance billing discrepancies, reimbursement delays, or claims questions. City staff does not have the expertise nor the capacity to solely administer such a program. Most cities engage a benefits consultant to work on their behalf. Health care and other benefits/mandates comprise 7% of the General Fund budget, so it’s important to work with a benefit consultant who provides plan design options, has experience negotiating rates, and is a partner in our long- range planning. Along with these attributes, we need our benefit consultant to help us meet employee demands for satisfactory benefits and customer service. A competitive benefits package is considered an essential component of recruiting and retaining employees. Current Circumstances The city currenlty works with the Bearance Management Group for our benefits administration. The city does not have a contract with Bearance and it is unclear how long this relationship has existed, though documents show the city has worked with Bearance since at least 2011. Given the length of time the city has worked with one vendor, staff felt it was prudent to assess the market to solicit the most advantageous benefits consultant relationship. In addition, the city’s labor agreements approved for years 2018-2020 have an ‘open rider’ for health insurance benefits in 2020. The selected vendor will work with city staff starting in January 2019 to assess options and preferences for health care negotiations with the bargaining units in the summer of 2019 in anticipation of the 2020 budget. The city issued a Request for Proposals (RFP) from benefits consultants/insurance brokers seeking highly professional and proactive employee benefit consulting services related to the City’s selection and management of employee benefit programs, including health, dental and ancillary benefit products beginning fiscal year 2020. The required employee benefit consulting services include the full range of services related to selection, design, implementation, maintenance, communication, analysis and strategic improvement of the City’s health and wellness group benefits that are consistent with and directly support the City’s mission and strategic objectives. In September, the city sent the RFP to five vendors and posted a notice of intent to solicit proposals in the Prior Lake American. The city received three proposals in response to the RFP, including one from our current vendor, Arthur J. Gallagher & Co., and NFP. A staff team comprised of the City Manager, Assistant City Manager and Finance Director reviewed and rated the proposals and selected two for an interview. All three proposals can be provided upon request to Assistant City Manager Olson. Based upon the feedback and proposal ratings, the staff team unanimously selected NFP as the recommended benefits consultant/insurance broker. NFP was selected for a variety of reasons, including: • Price. NFP was the lowest bid by guaranteeing a rate of $19,500 per year for three years. The fee will be built into the premium cost, which means increases or decreases to the premiums are shared by both the city and the employee. If premiums increase dramatically, any percentage over the agreed upon fee of $19,500 will be returned to the city. • Public sector experience. NFP has over 17 municipal clients of similar size to Prior Lake, including the city of Shakopee and the Shakopee Mdewakanton Sioux Community (SMSC). They are a member of the League of Minnesota Cities Business Leadership Council as well. This public sector experience is critical to ensure that the city is properly following the state laws that are unique to the public sector (MN Continuation of Care, PERA disability, auditing requirements unique to local government, etc.) • Financial forecasting and modeling. NFP offers impressive analytic capacity and demonstrated within the proposal how they would use trends to help the city forecast future costs for a long-range financial plan for health care. This should provide some stability for city financial planning around employee benefits. • Compliance knowledge and assistance. From filing annual ACA reports to assuring HIPPA compliance, NFP provides an annual compliance calendar and staff support to make sure the city is meeting our federal and state regulatory compliance obligations. • Customer service. Within the proposal, NFP provide a detailed annual calendar of meetings and client ‘touch points’ to assess current year spending, trends and other factors that could impact rates. • Wellness. The city does not have currently an employee wellness program. NFP provides as part of the fee a full-time wellness consultant to work with city staff on conducting employee surveys and developing a meaningful wellness program that meets employees interests as well as addresses claim trends. FINANCIAL IMPACT: Because the fee for this service is built within the insurance premiums, there is no immediate financial impact to the city. The fee is absorbed through the premiums, so no direct budget expenditure is required for this item. Rather, it will be included as part of the annual budget request for personnel benefits costs. The city and the employee share in the cost of any increase or decrease to the premium. ALTERNATIVES: 1. Motion and second as part of the consent agenda to approve a resolution authorizing entering into a professional services agreement with NFP for benefits consultant services in an amount not to exceed $19,500 annually. 2. Motion and second to remove this item from the consent agenda for additional discussion. RECOMMENDED MOTION: Alternative #1 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 18-___ A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO EXECUTE THE CITY’S STANDARDIZED PROFESSIONAL SERVICES AGREEMENT WITH NFP FOR BENEFITS CONSULTANT SERVICES IN AN AMOUNT NOT TO EXCEED $19,500 ANNUALLY Motion By: Second By: WHEREAS, The City of Prior Lake uses a benefits consultant/insurance broker to navigate the city’s benefits program, including health, dental and ancillary benefits; and WHEREAS, Health care and other benefits comprise 7% of the General Fund budget, so it’s important to work with a benefit consultant who provides plan design options, has experience negotiating rates, and is a partner in our long-range planning; and WHEREAS, A competitive benefits package is considered an essential component of recruiting and retaining employees; and WHEREAS, It was prudent to assess the market to solicit the most advantageous benefits consultant relationship for the city; and WHEREAS, The city’s labor agreements approved for years 2018-2020 have an ‘open rider’ for health insurance benefits in 2020; and WHEREAS, The city issued a Request for Proposals (RFP) from benefits consultants/insurance brokers seeking highly professional and proactive employee benefit consulting services related to the City’s selection and management of employee benefit programs; and WHEREAS, The city received three proposals in response to the RFP; and WHEREAS, Based upon the feedback and proposal ratings, NFP was selected for a variety of reasons, including price, public sector experience, financial forecasting and modeling, compliance knowledge and assistance, customer service, and wellness. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. The Mayor and City Manager are hereby authorized to enter into a professional services agreement with NFP in an amount not to exceed $19,500 annually for three years commencing 2020. Passed and adopted by the Prior Lake City Council this 3rd day of December 2018. 2 VOTE Briggs McGuire Thompson Braid Burkart Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐☐ ☐ ☐ ☐ Absent ☐☐ ☐ ☐ ☐ ______________________________ Frank Boyles, City Manager