Memorandum

City of Lawrence

Human Resources Division/City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Lori Carnahan, Human Resources Manager
CC:	Diane Stoddard, Assistant City Manager Michelle Spreer, Benefits Specialist
Date:	September 1, 2010
RE:	Voluntary Benefits RFP Follow Up Questions to Recommendation

This memo is in response to follow up questions pertaining to the August 5, 2010 memo recommending the selection of American General as the sole vendor for the City’s Voluntary Benefits Program. 

The recommendation of one provider offering a menu of voluntary benefit products vs. a menu of several vendors each offering one or two of the products was discussed at length by both Hays Companies (Hays) and United Benefit Systems (UBS) prior to bringing the top three selections to the City and again by the Human Resources division during the review and final selection process.  The decision to recommend a single source vendor with multiple product lines was based primarily on the following:

• When reviewing the Total Weighted Score for each respondent (weighted to allow for different combinations of product lines) American General had the highest score.
• American General’s individual total score was the highest among all respondents for Accident coverage and above the average score for Critical Illness, Short Term Disability, Universal Life and Vision. (Note: Long Term Care was an add on product offering by City request.)
• Significant weight given to product recognition and ease of employee access to review benefits, ask questions, make claims and add product lines with the use of one vendor.
• Some weight was given to ease of administration in coordinating one vendor to meet with employees on site, deliver product presentations, billing and relaying service requests.
• Single source vendor affords better opportunity to negotiate terms such as minimum participation levels and Guaranteed Issue levels.

American General did not offer the lowest product price of most of the lines of coverage; however in reviewing each product offering individually American General offered a more desirable total product than other respondents.  Examples of this include:

• Accident-
• American General offered a low minimum participation rate and a guaranteed issue as did many other respondents.
• Payment levels for most incidents were competitive and specific.
• Payment for repeated claims for the same type of incident was more generous than most respondents.
• Loss of Life benefit was equal to the highest amount offered and greater than most respondents.
• Critical Illness-
• While guarantee issue was a low amount, it was adequate for the average amount generally purchased. Minimum participation requirements were low and simplified issue amount was higher than all except one respondent.
• Restoration of benefits was greater than all respondents.
• Second Illness benefit as great as the highest response.
• Transplant benefit offered as it was with about ½ of the respondents.
• Initial diagnosis of cancer covered, some but few other respondents offered this benefit.
• Severe burns was covered which was only offered by two other respondents.
• Short Term Disability-
• Competitive product.
• Not a primary product offering in the evaluation process due to the City’s sick leave policy.  This product is primarily being made available to allow for coverage for new employees who have not had the opportunity to accumulate sick leave to cover short term disability types of illnesses/injuries.
• Universal Life-
• Same amount has highest respondents for guaranteed issue for both employee and spouse and competitive for children.
• Highest maximum benefit allowed to purchase.
• Vision-
• Eye exam co-pay equal to or greater than all respondents except one offering lower co-pay.
• Lens benefit was in the middle of the respondents.
• Standard and Premium Progressive Lens benefit superior to all but one respondent.
• Frame benefit superior to all respondents.
• Competitive Conventional and Disposable Contacts benefit

Please let me know if there are any further questions regarding the recommendation to use American General as the sole vendor for Employee Voluntary Benefit Products.