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City Council Agenda Request
September 18, 2018
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AGENDA REQUEST NO: VI.B.
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| | AGENDA OF: City Council Meeting |
| | INITIATED BY: Sharon Maddings, Human Resources Manager |
| | PRESENTED BY: Paula Kutchka, Director of Human Resources |
| | RESPONSIBLE DEPARTMENT: Human Resources |
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| | | | | | | | | AGENDA CAPTION: | | Consideration of and action on authorizing execution of Contract with Dearborn National in the amount of $128,765.00 for life and disability insurance benefits for January 1, 2019 through December 31, 2019. |
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| | | | | | | | | RECOMMENDED ACTION: | Authorize the City Manager to execute all necessary documents to enter into a three-year contract, renewable annually, with Dearborn National in the amount of $128,765 for life and disability insurance benefits for year one for January 1, 2019 through December 31, 2019.
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| | | | | | | | | EXECUTIVE SUMMARY: | The Human Resources Department is recommending City Council authorize the City Manager to sign the application and all necessary documents to enter into a three-year contract, renewable annually, with Dearborn National for life and disability insurance benefits in an amount of $128,765 for year one for January 1, 2019 through December 31, 2019.
The City provides each full-time employee with the following benefits: basic life/accidental death and dismemberment insurance (1x Base Annual Salary or minimum $50,000 policy) and long-term disability (up to $7,500 per month). In turn, full-time employees have the option to elect supplemental life/accidental death and dismemberment insurance (up to $200,000), spouse life/accidental death and dismemberment (up to $50,000), and child life/accidental death and dismemberment ($10,000 per child) as well as short-term disability.
Previously, the City entered into a three-year contract with Symetra for these benefits which began January 1, 2016. That contract will come to an end on December 31, 2018. Therefore, an RFP was conducted in the summer to gather proposals for basic and supplemental life/accidental death and dismemberment insurance coverage, and short-term and long-term disability coverage. We received proposals from six (6) responders: Symetra Life (current vendor), Dearborn National, AFLAC, AXS, Mutual of Omaha, and Ochs.
The City’s benefits consultant provided staff with an analysis of the initial costs and financial stability of each company. Based on their initial proposals, two (2) companies were asked to submit a best and final quote for consideration. After a thorough review of the best and final information, Dearborn National was selected.
Dearborn National's proposal included an overall increase of 9.3% based on current plan costs, but is almost 15% less than the current incumbent vendor’s renewal quote. Dearborn National's proposal allows the City to continue to maintain life and disability benefits for employees and provide additional benefits options. The increase is a result of the cost of Basic Life Insurance costs increasing to $0.06 per $1,000 coverage (from $0.041). Long-Term Disability, Short-Term Disability and Supplemental Life/AD&D Insurance rates will remain the same as currently in effect. Dearborn National provided rates guaranteed for three (3) years.
Staff recommends City Council authorize the City Manager to execute the application and all necessary documents related to contracting with Dearborn National. Budgetary projections are based on employee and dependent count assumptions. The actual cost will fluctuate with the number of full-time employees, supplemental plan elections chosen by employees and the number of dependents on the plan at any given time, and future years of the contract will be brought back to Council for approval.
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| BUDGET |
| | EXPENDITURE REQUIRED: $128,765 |
| | CURRENT BUDGET: $11,608,905 FY19 |
| | ADDITIONAL FUNDING: N/A |
| | FUNDING SOURCE:EMPLOYEE BENEFITS FUND |
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