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Agenda 09/08/2015 Item #16E 39/8/2015 16.E.3. 'EXECUTIVE SUMMARY Recommendation to approve the purchase of Group Life insurance, Accidental Death insurance, Long Term Disability insurance and Short Term Disability Claims Administration Services from Aetna in the estimated annual amount of $403,271, a savings of $194,567. OBJECTIVE: To provide a competitive, best value Group Life and Disability insurance program as part of the County's comprehensive group insurance package. CONSIDERATIONS: The Board of Commissioners through the Risk Management Division administers a Group Insurance Program for its eligible employees and participating constitutional officer employees. As part of this program, the County provides two times salary life and accidental death insurance and a 40% short and long term disability benefit. Employees can purchase additional short and long term disability coverage up to a maximum benefit of 66 2/3% of salary (a 26 2/3% buy -up benefit). The short term disability benefit is self funded. All other benefits are fully insured. Employees may also purchase additional voluntary life and accidental death coverage on themselves and their dependents. The current program is underwritten by Reliance Standard Life and expires on December 31, 2016. Willis, Inc., the County's benefits brokerage and actuarial firm, marketed the program in anticipation of this expiration. Willis received proposals from eight carriers including the incumbent, Reliance Standard Life. After reviewing the terms and pricing of each proposal, the list was narrowed to three carriers for further review. The carriers are Standard Life, Aetna and Reliance Standard Life. The price quotes are as follows: Carrier Total Annual Price Price Difference from Lowest Proposal Price Difference from the Expiring Program Standard $384,529 NA $213,309 Aetna $403,271 $18,742 $194,567 Reliance Standard (Incumbent) $446,321 $61,792 $151,517 All three carriers offered price quotes that will save the Board substantial program dollars while matching or exceeding existing benefit terms. However, to thoroughly assess claims capabilities, staff also interviewed each of the firms. Although the Aetna proposal is $18,742 higher than the Standard proposal, Willis and the Risk Management staff recommends Aetna due to the ability to procure value added services not offered by Standard, but currently utilized under the expiring program. Staff believes these value added services justify the recommendation. Aetna's value added services are as follows: 1) An electronic vs. paper claim notification process for Disability and Life claims which enhances both efficiency and accuracy. Once the claim is received, electronic notifications are forwarded to Risk and Human Resources staff to assure that financial and compliance requirements under the FMLA (Family Medical Leave Act) are managed appropriately. Standard does not offer an equivalent system, which will result in an erosion of service to the claimant and the employer. 2) A direct deposit feature which is important for persons on disability. This eliminates the need for the claimant to make manual deposits at their bank. The other firms did not offer this feature. 3) A dedicated Short and Long Term claims examiner to address claims matters efficiently. The other carriers offer a bank of examiners which is inherently inefficient and results in a reduction of customer service for both the claimant and the employer. Packet Page -1741- 9/8/2015 16.E.3. Finally, Aetna will transition those currently on disability to their program without interruption. An agreement for Short Term Disability claims administration has been reviewed by the County Attorney and is attached for approval. The program will commence effective January 1, 2016. FISCAL IMPACT: The total estimated annual cost of the Group Life and Disability insurance program is $403,271 based upon current reportable payroll. The estimated annual savings to the Board is $194,567 per year or $583,701 over the three year rate guarantee period. There are sufficient funds available in Fund 517, Group Health and Life, for this purchase. GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this item. LEGAL CONSIDERATIONS: This item has been approved as to form and legality and requires majority vote for approval. - CMG RECOMMENDATION: It is recommended that the Board approves the purchase of Group Life insurance, Long Term Disability insurance, Short Term Disability Administration Services, and Accidental Death Insurance from Aetna as outlined in the executive summary and authorizes the Chairman to execute the attached agreement. PREPARED BY: Jeffrey A. Walker, CPCU, ARM, Division Director, Risk Management Attachments: Bid Tabulation Short Term Disability Claims Administration Agreement Packet Page -1742- 9/8/2015 16.E.3. COLLIER COUNTY Board of County Commissioners Item Number: 16.16.E.16.E.3. Item Summary: Recommendation to approve the purchase of Group Life insurance, Accidental Death insurance, Long Term Disability insurance and Short Term Disability Claims Administration Services from Aetna in the estimated annual amount of $403,271, a savings of $194,567. Meeting Date: 9/8/2015 Prepared By Name: WalkerJeff Title: Division Director - Risk Management, Administrative Services Department 7/28/2015 8:23:45 AM Submitted by Title: Division Director - Risk Management, Administrative Services Department Name: WalkerJeff 7/28/2015 8:23:46 AM Approved By Name: GreeneColleen Title: Assistant County Attorney, CAO General Services Date: 8/13/2015 11:58:34 AM Name: PriceLen Title: Department Head - Administrative Svc, Administrative Services Department Date: 8/24/2015 12:41:41 PM Name: GreeneColleen Title: Assistant County Attorney, CAO General Services Date: 8/24/2015 1:38:23 PM Name: IsacksonMark Title: Division Director - Corp Fin & Mgmt Svc, Office of Management & Budget Date: 8/24/2015 3:35:00 PM Packet Page -1743- Name: KlatzkowJeff Title: County Attorney, Date: 8/24/2015 4:23:52 PM 9/8/2015 16.E.3. Name: CasalanguidaNick Title: Deputy County Manager, County Managers Office Date: 8/25/2015 4:08:21 PM Packet Page -1744- 0 9/8/2015 16.E.3. 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J c J S = o • �, Packet Page -1745- 0 Co Collier County Government 9/8/2015 Disability Rate Summary Proposed Disability Rates Administrative Service Contract Per Employee Coverage Lives Per Month Monthly Fees Short Term Disability ASC 2,011 $2.547 $5,121 We have assumed an annual incidence rate of 3.71 %. Monthly Fees $5,121 Annual Fees $61,453 The above fees are subject to verification of lives as appropriate, if the actual amounts differ by more than 10% from our assumed amounts then we reserve the right to reevaluate the fees. March 2015 amArm Page 1 Packet Page -1746- 16.E.3. Collier County Government Fully Insured Long Term Disability 9/8/2015 16.E.3. Disability Rate Summary Long Term Disability Rate Per $100 Monthly of Monthly Lives Covered Payroll Covered Payroll Monthly Premium Core Only 953 4,147,062 $0.124 $5,138 Buy -Up 1,062 4,703,669 $0.396 $18,650 Monthly Total 2,015 8,850,731 $23,788 Annual Premium $285,457 The above fees are subject to verification of lives as appropriate. if the actual amounts differ by more than 10% from our assumed amounts then we reserve the right to reevaluate the fees. March 2015 Page 2 Packet Page -1747- P-n 9/8/2015 16.E.3. Collier County Government Short Term Disability Administrative Services Plan Administrative Services Contract Short Term Disability Schedule of Benefits Effective Date 01/01/2016 Contract Period 36 months ASC Short Term Disability Number of Eligible Employees 2,011 Eligibility Class 1: All Active FT excluding those defined in Class 2 Class 2: County Attorney and Board Aide Class 3: County Mgr Eligibility Waiting Period First of the month following Date of Hire Minimum Hours Per Week 30 hours Employee Contribution 100% for Buy -up Employer FICA Match Not included Participation Requirement None March 2015 Packet Page -1748- Page 3 v 9/8/2015 16.E.3. Collier County Government Short Term Disability Administrative Services Plan ASC Short Term Disability Schedule We will administer this plan in accordance with current plan specifications. Injury - Day Benefits begin 8th day Illness - Day Benefits begin 8th day Maximum Benefit Period 26 weeks Base rate of earnings exclusive of commissions, bonuses, Definition of Covered Earnings overtime or extra compensation. Class 1: Core: 40% of earnings, Buy -up: 66 2/3% of earnings; Benefit Percentage Class 2: 50% of earnings Class 3: 66 2/3% of earnings Percentage Cap N/A Class 1: $2,000 Maximum Weekly Benefit Class 2 & 3: $2,250 Minimum Benefit None Coverage Type Non - Occupational Inability to perform own occupation and have a 20% earnings Definition of Disability loss. Partial Disability Benefit included First Day Hospitalization Not Included Integration Method Not Applicable - LTD will still be affected by Offsets Rehabilitation Provision Voluntary Separate Periods of Disability Less than 15 consecutive days Pre - existing Condition Exclusion Not Included Does not cover any disability that: • Occupational disabilities • Self- inflicted injuries • Committing or attempting to commit a criminal act Exclusions • Act of war, driving while intoxicated • Insurrection • Rebellion • Taking art in a riot or civil commotion March 2015 Packet Page -1749- Page 4 D 9/8/2015 16. E.3. Collier County Government Administrative Services Administrative Services Contract Basic Services Self- Funded (ASC) Short Term Core Services and Programs included in Administrative Fees Eligibility Verification Included Clinical Model: Physician Review, Senior Nurse Review, Behavioral Health Unit, Case Management Included Intake (3 point contact) Included Claim Determination Included Contract Issuance Included W2s (included if Aetna pays benefit) included Standard Reporting Included Standard Portal included Standard Correspondence included Independent Medical Examination Included Vocational Rehabilitation (fee for external services) Included Social Security Assistance (fee for external services per event) included Physician Peer Review included Special Investigations Unit (fee for external services) Included Subrogation Not Included Appeals 1 Level Optional Services Reverse File Feed $10,000 per file Eligibility File requiring customization $150 per hour Dedicated 800 number $5,000 per line Customization of Communication Letters $150 per hour Customization of Intake Script $150 per hour Customization of Reports $150 per hour {Fee Based is direct billed back to the customer at Aetna's cost. [ *Aetna will not be fiduciary on non -ERISA plans March 2015 Packet Page -1750- Page 5 Collier County Government Long Term Disability Schedule of Benefits 9/8/2015 16.E.3. Long Term Disability Effective Date 01/01/2016 Contract Period 36 months Commission Level 10% Commissions on Buy -up Long Term Disability Number of Eligible Employees 2,015 Total Covered Payroll $8,850,731 Eligibility Class 1: EEs excluding Exec Mgr to Board, County Mgr & County Attorney; Class 2: Exec Mgr to Board & County Attorney; Class 3: County Mgr. Eligibility Waiting Period First of the month following Date of Hire Minimum Hours Per Week 30 hours Employee Contribution 100% Post -Tax for Buy -up Employer FICA Match included on Employer paid lines Evidence of insurability Included for Late Entrants on Buy -up Participation Requirement None March 2015 �1�r Packet Page -1751- Page 6 Collier County Government Long Term Disability Schedule 9/8/2015 16. E.3. Long Term Disability For additional details, refer to the LTD Plan Provisions and Glossary sections. Class 1: Core 40% of earnings; Buy -up 66 2/3% of earnings; Monthly Benefit Percent Class 2: 50% of earnings Class 3: 66 2/3% of earnings Class 1 & 2:$9,000; Monthly Maximum Benefit Class 3: $10,000 Monthly Minimum Benefit $100 Elimination Period 180 days Definition of Covered Earnings Base rate of earnings exclusive of commissions, bonuses, overtime or extra compensation. Own Occupation Period Class 1: 24 months; Class 2 & 3: Own Occupation Work Incentive Benefit Included, 12 months Partial Disability Benefit Proportional Loss Formula (See LTD Plan Provisions) Integration Method Direct Employee Only Zero Day Residual Included Maximum Benefit Period ADEA 1 with SSNRA (See LTD Plan Provisions) Rehabilitation Program Mandatory Rehabilitation Incentive Benefit Included Child Care Benefit Included Separate Periods of Disability During the Elimination Period: less than 30 consecutive days. After the Elimination Period: Less than 6 consecutive months. Mental /Nervous Limitation 24 months of benefit payments per occurrence Alcohol /Drug Umitation 24 months of benefit payments per occurrence Survivor Benefit 3 months of gross benefit payable in a lump sum Pre - existing Condition Exclusion 3/12 Cost of Living Adjustment Not Included Does not cover any disability that result from: • Self- inflicted injuries • Committing or attempting to commit a criminal act, • Act of war, Exclusions • Driving while intoxicated • Insurrection • Rebellion • Taking part in a riot or civil commotion • Pre-existing conditions. Conversion Not included Benefit Escalator Not Included Extended Disability Benefit included Accidental Personal Loss Indemnity included Benefit March 2015 Packet Page -1752- Page 7 Collier County Government Disability Glossary 9/8/2015 16.E.3. Disability Glossary Contribution Percentage The percentage of premium paid by the employee. The requirement disabled employees must meet to be eligible to Definition of Disability receive benefits. The amount of an employee's earnings used to calculate benefit Definition of Earnings payments. The continuous period of time the employee must be working before Eligibility Waiting Period becoming eligible for disability coverage. Eligible Class The group(s) of employees who are eligible for coverage. The period of time the employee must be disabled prior to receiving Elimination Period benefits. Satisfactory evidence of good health that is submitted in certain Evidence of Insurability situations. Completion of Aetna's Evidence of Insurability statement is required. Exclusions Those conditions for which benefits are not paid. Employer FICA match program applies only to taxes paid on the Employer FICA Match Employer portion of benefits. The United States of America, the Commonwealth of Puerto Rico, Home Area Guam, and the Virgin islands of the United States. Maximum Benefit The maximum disability benefit payable. The maximum period of time benefits are payable after satisfaction of Maximum Benefit Period the elimination period. Minimum Benefit The minimum disability Benefit payable. The minimum number of hours that employees regularly work each Minimum Hours week to be eligible for disability coverage. The method used to offset employment earnings during a period of Partial Disability Benefit disability. Physical, mental or vocational rehabilitation designed to maximize the Rehabilitation disabled employee's work capabilities. Scheduled Benefit The gross disability benefit payable. The maximum amount of time a disabled employee can return to work Separate Periods of and have it considered the same period of disability. The periods of Disability disability must be due to the same or related condition. The determination of whether disabilities occurring on or off the job Types of Disabilities are covered. March 2015 > W w Packet Page -1753- Page 8 9 9/8/2015 16.E.3. Collier County Government Long Term Disability Plan Provisions 't-1 LTD Plan Provisions March 2015' Packet Page -1754- Page 9 Any day that an individual is unable to perform the material duties of his /her own occupation; or while unable to perform the material duties of his /her own occupation, is performing at least one of the material duties of any occupation on a part-time or full -time basis and has lost at least 20% of his /her indexed pre - Own Occupation Test disability earnings due to a disabling condition. Please note: The loss of a professional or occupational license or certification that is required by your own occupation does not mean you meet the test of disability. You must meet the plan's test of disability to be considered disabled. Any day that an individual is unable to perform the material duties of any occupation for which he /she is or may become fitted, based on training, education or experience; or while unable to perform the material duties of any reasonable Any Occupation Test occupation, is performing at least one of the material duties of any occupation on a part-time or full -time basis and has lost at least 20% of his /her indexed pre - disability earnings due to a disabling condition. During the disabled employee's active participation in an Aetna Approved Rehabilitation Program, Aetna will pay an additional Rehabilitation Incentive Benefit 10% net monthly benefit, but not more than $500 per month. This incentive will be paid up to 6 consecutive months for each period of disability. An additional monthly benefit paid for child care expenses for a Child Care Benefit disabled employee participating in an approved rehabilitation program of $250 per month per dependent child under age 13 with a maximum of $500 payable up to 24 months. Benefit Escalator Not Included A benefit paid to an eligible survivor if the employee dies while benefits are payable. The amount of the benefit is equal to the gross monthly benefit multiplied by the number of months Survivor Benefit shown in the Schedule of Benefits. An eligible survivor is defined as the spouse and /or unmarried dependent children under age 25. March 2015' Packet Page -1754- Page 9 Collier County Government 9/8/2015 16.E.3. Long Term Disability Plan Provisions March 2015 Packet Page -1755- Page 10 Other income sources which are used to reduce the monthly benefit. This includes but is not limited to: • 50% of the Jones Act /Maritime Doctrine. • Statutory disability, retirement, or unemployment benefits. • Automobile no- fault; Social Security, Railroad Retirement, Canada Pension Plan, Quebec Pension Plan. other Income Benefits . Other Disability benefits arranged for by the employer. • Disability Payments resulting from membership in any association, union, or other organization. • Retirement and Pension benefits. • 3rd Party Liability payments. • Group Mortizage or Group Credit disability benefits. If while monthly benefits are payable, an individual has employment income from any occupation which is greater than 20% of indexed pre - disability earnings, the monthly net benefit will be adjusted as follows: Work incentive Benefit During the first 12 months the employee has such employment income, the monthly benefit will be reduced only to the extent the amount of that employment income plus the gross monthly benefit exceeds 100% of indexed pre-disability earnings. After 12 months, the adjusted benefit will be determined as Proportional Loss Formula follows: (A divided by B) x C where: A = Indexed pre - disability earnings minus such employment income. B = Indexed pre - disability earnings. C = The monthly net benefit. This is your predisability earnings plus any increase made on each January 1, starting on the January 1 following 12 months of Adjusted Predisabliity Earnings a period of disability. The increase on each such January 1 will be (Indexing) by the percentage increase in the Consumer Price Index, rounded to the nearest tenth; but not by more than 10%. March 2015 Packet Page -1755- Page 10 Collier County Government 9/8/2015 16.E.3. Long Term Disability Plan Provisions There is no period of time where you have to be 'totally disabled' (including during the elimination period). Residual test of disability: An insured is considered to be disabled if: • from the date that the insured becomes disabled until the end of the own occ period: the insured is unable to perform Day Residual the material duties of their own occupation solely because dual Test of Disability) of disease or injury and the insured's work earnings are no more than 80% of their adjusted predisability earnings. after the end of the own occ period: the insured is unable to work at any reasonable occupation (which includes that the insured's work earnings be no more than 60% of their adjusted predisability earnings) solely because of disease or Integration Method Direct Social Security Type The method used to offset other income benefits. Our quote includes the following: Under direct integration, offsets are subtracted from the Scheduled Monthly Benefit Other income benefit sources include those which are payable to the employee's spouse, children and dependents. A period of disability will end after the number of months listed in the Schedule of Benefits are payable if it is determined that the disability is primarily caused by: • a Mental Health or Psychiatric condition, including physical manifestations of these conditions, but excluding those conditions with demonstrable, structural brain damage; or • Alcohol and /or Drug Abuse. There are two exceptions which apply if you are confined as an Mental /Nervous Limitation inpatient in a hospital or treatment facility for treatment of that Alcohol /Drug Limitation condition at the end of such period: • If the inpatient confinement lasts less than 30 days, the period of disability will cease when you are no longer confined. • if the inpatient confinement lasts 30 days or more, the period of disability may continue until 90 days after the date you have not be so continuously confined. The Separate Periods of Disability section does not apply beyond such period to periods of disability which are subject to the above. March 2015 Packet Page -1756- Page 11 Collier County Government 9/8/2015 16.E.3. Long Term Disability Plan Provisions March 2015 Packet Page -1757- Page 12 These employees are not covered since they are not active Employees on COBRA, lay -off, employees and they also do not meet the minimum hours leave of absence or severance worked requirement. No benefit is payable for any disability that is caused by or contributed to by a "pre - existing condition" and starts before the end of the first 12 months following your effective date of coverage. A disease or injury is a pre - existing condition if, during the 3 Pre - Existing Condition Exclusion months before your effective date coverage: • it was diagnosed or treated; or • services were received for the diagnosis or treatment of the disease or injury; or • you took drugs or medicines prescribed or recommended by a physician for that condition. A reduced disability benefit may be payable for up to 60 months beyond the maximum duration if disabled employee is confined or receiving home health care and requires substantial assistance Extended Disability Benefit to perform 2 or more ADLs or substantial supervision due to cognitive impairment. Benefit is reduced to 85% of the monthly benefit after offsets applied, up to $5000 /month Subject to the elimination period, a set number of benefit Accidental Personal Loss payments will be made if an employee suffers a covered Indemnity Benefit accidental personal loss according to the following schedule: Personal Loss Benefit Payments Both hands; Both feet; Entire sight of both eyes; Hearing in both ears; Speech; One hand & one foot; One hand and 46 Months entire sight in one eye; One foot and entire sight in one eye One arm; One leg 35 Months One hand; One foot 23 Months Entire sight in one eye; Entire 15 Months hearing in one ear Employees who enroll for any contributory LTD coverage more Evidence of insurability than 31 days later than the date they are first eligible must provide medical evidence of insurability. Cessation of employment, contract termination, ineligible class, Termination of Coverage failure to make contribution. March 2015 Packet Page -1757- Page 12 9/8/2015 16.E.3. Collier County Government Long Term Disability Plan Provisions Maximum Benefit Period Benefits are payable while disabled according to the following schedule or until the 1983 amended Social Security Normal Retirement Age, if later. Age when disability occurs Benefits period 61 or younger continue to end of month age 65 62 42 months 63 36 months 64 30 months 65 24 months 66 21 months 67 18 months 68 15 months 69+ 12 months The 1983 Normal Retirement Age (NRA) amendment to the Social Security Act results in the following schedule: i Ctlf {Jf DOW L11 ivormai Ketirement Age (NKA) 1937 or earlier 65 1938 65 & 2 months 1939 65 & 4 months 1940 65 & 6 months 1941 65 & 8 months 1942 65 & 10 months 1943 -1954 66 1955 66 & 2 months 1956 66 & 4 months 1957 66 & 6 months 1958 66 & 8 months 1959 66 & 10 months 1960 and later 67 March 2015 Packet Page -1758- Page 13 9/8/2015 16.E.3. IN WITNESS WHEREOF, authorized representatives of the parties have confirmed the agreement of the parties to the foregoing terms by affixing their signatures below: By: Name: Title: Date: I�7 By: Name: Eric Bunce Title: Sales Executive Date: Packet Page -1759- ATTEST DWIGHT E. BROCK, Clerk By: Approved a to foam and kpiity &16' AWatant Cm" Attorney Page 14 G