The purpose of this Mayor and Council Communication is to seek authorization from the City Council to enter into a new Agreement with Minnesota Life Insurance Company. The Human Resources Department will use this contract to provide basic life and accidental death and dismemberment (AD&D) insurance and access to voluntary life and AD&D insurance products for employees, their spouses and dependent children. The City will pay premiums for basic life and AD&D in the amount of $298,000.00 the first year.
The City issued a Request for Proposal (RFP) on April 13, 2018. This RFP was advertised in the Fort Worth Star - Telegram. Nine responses were received. The proposals were evaluated by an evaluation team. The evaluation team was provided with resources and assistance by the City's benefits consultant, Holmes Murphy, and by staff in the Human Resources and Purchasing Divisions.
The evaluation team ranked the proposals based on the following factors: technical proposals, qualifications and references, adherence to the terms and conditions of the RFP, financial stability and ability to obtain insurance and bonding, and intangibles (value-added services).
The proposed contract will allow the City to provide its employees with basic life and AD&D insurance in an amount equal to one times annual salary (up to a maximum of $500,000.00) and to offer employees the option to purchase voluntary life and AD&D insurance up to five times annual salary. With this initial offering, the employees will be provided the opportunity to enroll with guaranteed acceptance, meaning no medical questions will be asked. Minnesota Life has agreed to provide a rate guarantee for the first three years.
PRICE ANALYSIS: The winning bid is priced at .034 cents per $1,000.00 coverage for life and .025 cents per $1,000.00 for AD&D which is a decrease of fifty-five percent (55%).
The cost for the first year will be $298,000.00. Building an additional 3% increase per year to account for annual pay increases gives three-year total of $993,000.00. Under our current contract the City paid $508,000.00 for one year of coverage.
The premiums for voluntary benefits are also lower than the current vendor. For example, a member who is aged 36 is currently paying $.122 per $1,000.00 of coverage. The rate for Minnesota Life for the same age bracket is $.11 per $1,000.00.
ADMINISTRATIVE CHANGE ORDER: An administrative change order or increase may be made by City Manager in the amount of up to $50,000.00 and does not require specific City Council approval as long as sufficient funds have been appropriated.
AGREEMENT TERMS: Upon City Council approval, the initial three-year term of this contract shall begin on January 1, 2019 and expire on December 31, 2021.
RENEWAL OPTIONS: This contract may be renewed for up to two additional one-year periods at the City's sole discretion. This action does not require specific City Council approval provided that sufficient funds are appropriated for the City to meet its obligations during the renewal period.
M/WBE OFFICE: A waiver of the goal for the MBE/SBE subcontracting was received by the Purchasing Division and approved by the M/WBE Office, in accordance with the BDE Ordinance, because the purchase of goods or services from sources where subcontracting or supplier opportunities is negligible.