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HomeMy WebLinkAbout2007-369 Resolution No 2007-369 2 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT WITH MERCER HEALTH AND BENEFITS LLC 4 TO PROVIDE BROKER AND ADMINISTRATION SERVICES FOR THE CITY'S HEALTH CARE PROGRAM FOR A PERIOD OF THREE YEARS. 3 5 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF 6 SAN BERNARDINO AS FOLLOWS: 7 SECTION I: The City Manager of the City of San Bernardino is hereby authorized and 8 directed to execute on behalf of said City an Agreement with Mercer Health and Benefits LLC 9 to provide health, broker, and administration services for a period of three years, a copy of 10 which is attached hereto, marked Exhibit "A" and incorporated herein by reference as fully as 11 though set forth at length. 12 SECTION 2: The authorization to execute the above mentioned agreement is rescinded 13 if the parties to the agreement fail to sign it within sixty (60) days of the passage of this 14 resolution. 15 III 16 III 17 III 18 III 19 III 20 21 III 22 III 23 III 24 III 25 III RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF AN AGREEMENT WITH MERCER HEALTH AND BENEFITS LLC 2 TO PROVIDE BROKER AND ADMINISTRATION SERVICES FOR THE CITY'S HEALTH CARE PROGRAM FOR A PERIOD OF THREE YEARS. 3 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 4 5 the Common Council of the City of San Bernardino at a j oint regular meeting thereof, 6 held on day of 4th 7 8 COUNCILMEMBERS: ESTRADA 9 BAXTER 10 BRINKER 11 DERRY 12 KELLEY 13 JOHNSON MCCAMMACK 14 15 16 17 The foregoing resolution 18 September ,2007. 19 20 21 22 Approved as to form: 23 JAMES F. PENMAN, City Attorney 24 25 ,t~ H September ,2007, by the following vote, to wit: AYES NA YES ABSTAIN ABSENT x x X x X X -- x 1(~~. 0kvJu b 5<1tvnRa~~~Clerk is hereby approved this .6" ~ day of ~~~ Esther Estrada, Mayor Pro Tern City of San Bernardino , ._i._ 2007-369 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SERVICES AGREEMENT THIS AGREEMENT is made and entered into this 4th day of September, 2007 ("Effective Date"), by and between the CITY OF SAN BERNARDINO, a charter city ("City"), and MERCER HEALTH & BENEFITS LLC, a Delaware limited liability company ("CONSULTANT"). WITNESSETH: A. WHEREAS, CITY proposes to have CONSULTANT perform the servIces described herein below; and B. WHEREAS, CONSULTANT represents that it has that degree of specialized expertise contemplated within California Government Code, Section 37103, and holds all necessary licenses to practice and perform the services herein contemplated; and C. WHEREAS, CITY and CONSULTANT desire to contract for professional services as described in the Scope of Services, attached hereto as Exhibit "A"; and D. WHEREAS, no official or employee of CITY has a financial interest. within the provisions of California Government Code, Sections 1090-1092, in the subject matter of this Agreement. NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, the parties hereby agree as follows: 1.0. SERVICES PROVIDED BY CONSULTANT 1.1. Scope of Services. For the remuneration stipulated, CONSULTANT shall provide the professional services described in the Scope of Services attached hereto as Exhibit "A" and incorporated herein by this reference ("Services"). If a conflict arises between the Scope of Services document and this Professional Services Agreement (hereinafter "Agreement"), the terms ofthe Agreement shall govern. 2007-369 1.2. Professional Practices. All Services to be provided by CONSULT ANT pursuant 2 to this Agreement shall be provided by skilled personnel and in a manner consistent with the 3 standards of care, diligence and skill ordinarily exercised by professional consultants in similar 4 fields and circwnstances in accordance with sound professional practices. CONSULTANT 5 also warrants that it is familiar with all laws that may affect its performance of this Agreement 6 and shall advise CITY of any changes in any laws that may affect CONSULTANT's 7 performance of this Agreement if the CONSULTANT has actual knowledge of such changes. 8 CONSULT ANT and the CITY each represent that no CITY employee will provide any 9 Services under this Agreement. 10 1.3. Warranty. CONSULTANT warrants that it shall perform the Services required 11 by this Agreement in compliance with all applicable Federal and California employment laws 12 including, but not limited to, those laws related to minimwn hours and wages; occupational 13 health and safety; fair employment and employment practices; workers' compensation insurance 14 and safety in employment; and all other Federal, State and local laws and ordinances applicable 15 to the services required under this Agreement. CONSULTANT shall indemnify and hold 16 harmless CITY from and against all claims, demands, payments, suits, actions, proceedings, and 17 judgments of every nature and description including reasonable attorneys' fees and costs, or 18 recovered against CITY to the extent arising from CONSULTANT's violation of any such 19 applicable law. 20 1.4. Non-discrimination. In performing this Agreement, CONSULTANT shall not 21 engage in, nor permit its officers, employees or agents to engage in, discrimination in 22 employment of persons because of their race, religion, color, national origin, ancestry, age, 23 mental or physical disability, medical condition, marital status, sexual gender or sexual 24 orientation, except as permitted pursuant to Section 12940 of the Government Code. Violation 25 of this provision may result in the imposition of penalties referred to in Labor Code, Section 1735. 2 2007-369 1.5 Non-Exclusive Agreement. CONSULTANT acknowledges that CITY may enter 2 into agreements with other consultants for services similar to the Services that are subject to this 3 Agreement or may have its own employees perform services similar to those services 4 contemplated by this Agreement. 5 1.6. Delegation and Assignment. This is a personal service contract, and the duties 6 set forth herein shall not be delegated or assigned to any person or entity without the prior 7 written consent of CITY, which consent shall not be unreasonably withheld or delayed. 8 CONSULTANT may engage a subcontractor(s) as permitted by law and may employ other 9 personnel to perform services contemplated by this Agreement at CONSULTANT's sole cost 10 and expense. 11 1.7 Conflicts of Interest. During the term of this Agreement, CONSULTANT shall 12 at all times maintain a duty of loyalty as to the CITY and shall not accept payment from or 13 employment with any person or entity which will constitute a conflict of interest with the CITY. 14 1.8 CITY Business Certificate. CONSULTANT shall obtain and maintain during 15 the term of this Agreement, a valid CITY Business Registration Certificate pursuant to Title 5 16 of the City of San Bernardino Municipal Code and any and all other licenses, permits, 17 qualifications, insurance and approvals of whatever nature that are legally required of 18 CONSULTANT to practice its profession, skill or business. 19 20 2.0. COMPENSATION AND BILLING 21 2.1. Compensation. Except as provided herein, CONSULT ANT compensation shall 22 be as set forth in Exhibit "A". 23 2.2. Additional Services. CONSULTANT shall not receive compensation for any 24 services provided outside the scope of services specified in the Exhibit "A" unless the CITY, 25 prior to CONSULTANT performing the additional services, approves such additional services 3 2007-369 1 in writing. It is specifically understood that oral requests and/or approvals of such additional 2 services or additional compensation shall be barred and are unenforceable. 3 2.3. Method ofBillinl!.. CONSULTANT may submit invoices to CITY for approval. 4 Said invoice shall be based on the total of all CONSULTANTs services which have been 5 performed in accordance with the terms of this Agreement during the period covered by such 6 invoice. CITY shall pay CONSULTANT's invoice within thirty (30) days from the date CITY 7 receives said invoice. The invoice shall describe in detail, the services performed and the 8 associated time for completion. Any additional services approved and performed pursuant to 9 this Agreement shall be designated as "Additional Services" and shall identify the number of the 10 authorized change order, where applicable, on all invoices. 11 2.4. Performance Standard Guarantees. The CONSULT ANT shall reduce the total 12 cost of service related fees to the project, up to a maximum of 10%, if their services are not 13 satisfactory to the CITY as outlined in the chart (Exhibit "B"). 14 2.5. Records and Audits. Records of CONSULTANT's Services directly relating to 15 this Agreement shall be maintained in accordance with generally recognized accounting 16 principles and shall be made available to CITY for inspection and/or audit at mutually 17 convenient times for a period of three (3) years from the Effective Date. Any such inspection 18 shall be conducted at the CITY's expense, during normal business hours and upon reasonable 19 prior written notice to CONSULTANT. Such audit shall also be subject to the execution of a 20 confidentiality agreement regarding inadvertent access to confidential information not related to 21 the CITY. 22 23 3.0. TERM AND NOTIFICATION. 24 3.1. Term. This Agreement shall commence on the Effective Date and continue until 25 the third anniversary of the Effective Date unless the Agreement is previously terminated as 4 2007-369 provided for herein. 2 3.2 Termination. CITY or CONSULTANT may terminate the Services provided 3 under Section 1.1 of this Agreement upon thirty (30) days written notice to the other party. In 4 the event of termination, CONSULTANT shall be paid the reasonable value of Services 5 rendered to the date oftermination. 6 3.3 Documents. In the event of an early termination of this Agreement, all 7 documents prepared by CONSULTANT in its performance of this Agreement including, but not 8 limited to, finished or unfinished background investigations, shall be delivered to the CITY 9 within ten (10) days of delivery of termination notice to CONSULTANT, at no cost to CITY. 10 Any use of uncompleted documents without specific written authorization from 11 CONSULTANT shall be at CITY's sole risk and without liability or legal expense to 12 CONSULTANT. 13 14 4.0. INSURANCE 15 4.1. Scope and Limits of Insurance. CONSULTANT shall obtain and maintain 16 during the term of this Agreement all of the following insurance coverages: 17 (a) Commercial general liability, including premises-operations, 18 products/completed operations, broad form property damage, blanket 19 contractual liability, independent contractors, personal injury with a 20 21 22 23 24 25 (b) policy limit of One Million Dollars ($1,000,000.00), combined single limits, per occurrence and aggregate. Automobile liability for owned vehicles, hired, and non-owned vehicles, with a policy limit of One Million Dollars ($1,000,000.00), combined single limits, per occurrence and aggregate. Workers' compensation insurance as required by the State of California. (c) 5 2007-369 4.2. Endorsements. The commercial general liability insurance policy shall contain 2 or be endorsed, using general policy endorsements, to contain the following provisions: 3 (a) Additional insureds: "The City of San Bernardino and its elected and 4 appointed boards, officers, and employees are additional insureds with 5 respect to their vicarious liability arising out of CONSULTANT'S 6 performance of the Services hereunder." 7 (b) Other insurance: "Any other insurance maintained by the City of San 8 Bernardino shall be excess and not contributing with the insurance 9 provided by this policy with respect to claims arising solely and directly 10 from CONSULTANT's provision of the Services." II 4.3. Certificates of Insurance. CONSULTANT shall provide to CITY certificates of 12 insurance showing the insurance coverages and required endorsements described above, pnor 13 to performing any services under this Agreement. 14 4.4. Non-limiting. Nothing in this Section shall be construed as limiting in any way, 15 the indemnification provision contained in this Agreement, or the extent to which 16 CONSULTANT may be held responsible for payments of damages to persons or property. 17 4.5 Notice of Cancellation: CONSULTANT shall provide the CITY thirty (30) days 18 prior written notice of cancellation of or a material change in any of the required coverages. 19 20 5.0. GENERAL PROVISIONS 21 5.1. Entire Al!reement: This Agreement together with the Exhibits attached hereto 22 constitute the entire Agreement between the parties with respect to any matter referenced herein 23 and supersedes any and all other prior writings and oral negotiations. This Agreement may be 24 modified only in writing, and signed by the parties in interest at the time of such modification. 25 The terms of this Agreement shall prevail over any inconsistent provision in 6 2007-369 any other contract document appurtenant hereto, including exhibits to this Agreement. 2 5.2. Notices. Any notices, documents, correspondence or other communications 3 concerning this Agreement or the work hereunder may be provided by personal delivery, 4 deemed served or delivered: a) at the time of delivery if such communication is sent by personal 5 delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48 6 hours after deposit in the u.s. Mail as reflected by the official U.S. postmark if such 7 communication is sent through regular United States mail. 8 IF TO CITY: IF TO CONSULTANT: 9 Richard Hill, Principal Mercer Health & Benefits 4695 MacArthur Court, Suite 600 Newport Beach, CA 92660 Telephone (949) 222-1300 Linn Livingston, Human Resources Director City of San Bernardino 300 North "D" Street San Bernardino, CA 92418 Telephone: (909) 384-5161 Fax: (909) 384-5397 10 11 12 13 5.3. Attornevs' Fees: In the event that litigation is brought by any party in connection 14 with this Agreement, the prevailing party shall be entitled to recover from the opposing party all 15 costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the 16 exercise of any of its rights or remedies hereunder or the enforcement of any of the terms, 17 conditions, or provisions hereof. The costs, salary and expenses of the City Attorney and 18 members of his office in enforcing this contract on behalf of the CITY shall be considered as 19 "attorneys' fees" for the purposes of this Agreement. 20 5.4. Governing Law. This Agreement shall be governed by and construed under the 21 laws of the State of California without giving effect to that body of laws pertaining to conflict of 22 laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto 23 agree that the sole and exclusive venue shall be a court of competent jurisdiction located in San 24 Bernardino County, California. 25 5.5. Assignment: CONSULTANT shall not voluntarily or by operation oflaw 7 2007-369 assign, transfer, sublet or encumber all or any part of CONSULTANTs interest in this 2 Agreement to an unrelated third party without CITY's prior written consent, which consent shall 3 not be unreasonably withheld or delayed. Any attempted assignment, transfer, subletting or 4 encumbrance shall be void and shall constitute a breach of this Agreement and cause for 5 termination of this Agreement. Regardless of CITY's consent, no subletting or assignment shall 6 release CONSULTANT of CONSULTANTs obligation to perform all other obligations to be 7 performed by CONSULTANT hereunder for the term of this Agreement. 8 5.6. Indemnification and Hold Harmless. CONSULTANT shall protect, defend, 9 indemnify and hold harmless CITY and its elected and appointed officials, boards, 10 commissions, officers and employees from any and all claims, losses, demands, suits, 11 administrative actions, penalties, liabilities and expenses, including reasonable attorneys' fees, 12 damage to property or injuries to or death of any person or persons or damages of any nature 13 including, but not limited to, all civil claims or workers' compensation claims to the extent 14 directly arising from or in CONSULTANTs negligent or wrongful acts or omissions in 15 connection with the performance under this Agreement, except to the extent caused by an 16 indemnified party's negligent or wrongful acts or omissions. Notwithstanding anything 17 contained herein to. the contrary, in no event shall CONSULTANT be liable for any damages 18 not directly or proximately caused by CONSULTANT's negligent or wrongful acts or 19 omissions. 20 5.7. Indenendent Contractor. CONSULTANT, at all times while performing under 21 this Agreement, is and shall be acting at all times as an independent contractor and not as an 22 agent or employee of CITY. CONSULTANT shall secure, at his expense, and be responsible 23 for any and all payment of wages, benefits and taxes including, but not limited to, Income Tax, 24 Social Security, State Disability Insurance Compensation, Unemployment Compensation, and 25 other payroll deductions for CONSULTANT and its officers, agents, and employees, and all 8 2007-369 business licenses, if any are required, in connection with the Services to be performed 2 hereunder. Neither CONSULTANT nor its officers, agents and employees shall be entitled to 3 receive any benefits which employees of CITY are entitled to receive and shall not be entitled to 4 workers' compensation insurance, unemployment compensation, medical insurance, life 5 insurance, paid vacations, paid holidays, pension, profit sharing or social security on account of 6 CONSULTANT and its officers', agents' and employees' work for the CITY. This Agreement 7 does not create the relationship of agent, servant, employee partnership or joint ventore between 8 the CITY and CONSULTANT. 9 5.8 Conflict of Interest Disclosure: CONSULTANT or its employee may be subject 10 to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires 11 such persons to disclose financial interests that may be materially affected by the work 12 performed under this Agreement, and (2) prohibits such persons from making or participating in 13 making decisions that will have a foreseeable financial affect on such interest. 14 CONSULTANT shall conform to all requirements of the Act. Failure to do so 15 constitutes a material breach and is grounds for termination of the Agreement by CITY. 16 5.9. ReSTlOnsibilitv for Errors. CONSULTANT shall be responsible for its work and 17 results under this Agreement. CONSULTANT, when requested, shall furnish clarification 18 and/or explanation as may be required by the CITY's representative, regarding any services 19 rendered under this Agreement at no additional cost to CITY. In the event that an error or 20 omission attributable to CONSULTANT occurs, then CONSULTANT shall, at no cost to 21 CITY, provide all other CONSULTANT professional services necessary to rectify and correct 22 the matter to the sole satisfaction of CITY and to participate in any meeting required with 23 regard to the correction. CONSULTANT will assume the information supplied by the CITY, (or 24 on its behalf by third parties) is accurate and complete. CONSULTANT'S responsibilities (and 25 associated compensation) do not include independent verification of required information. 9 2007-369 1 Problems with information quality and/or delays in providing such information may result in a 2 delay in the performance of the Services or an increase in fees. 3 5.10. Prohibited Emnlovrnent. CONSULTANT shall not employ any current 4 employee of CITY to perform the work under this Agreement while this Agreement is in effect. 5 5.11. Costs. Each party shall bear its own costs and fees incurred in the preparation 6 and negotiation of this Agreement and in the performance of its obligations hereunder except as 7 expressly provided herein. 8 5.12. No Third Party Beneficiary Rights. This Agreement is entered into for the sole 9 benefit of CITY and CONSULT ANT and no other parties are intended to be direct or incidental 10 beneficiaries of this Agreement and no third party shall have any right in, under or to this 11 Agreement. 12 5.13. Headings Paragraphs and subparagraph headings contained in this Agreement 13 are included solely for convenience and are not intended to modifY, explain or to be a full or 14 accurate description of the content thereof and shall not in any way affect the meaning or 15 interpretation of this Agreement. 16 5.14. Amendments. Only a writing executed by all of the parties hereto or their 17 respective successors and assigns may amend this Agreement. 18 5.15. Waiver. The delay or failure of either party at any time to require performance 19 or compliance by the other of any of its obligations or agreements shall in no way be deemed a 20 waiver of those rights to require such performance or compliance. No waiver of any provision 21 of this Agreement shall be effective unless in writing and signed by a duly authorized 22 representative of the party against whom enforcement of a waiver is sought. The waiver of any 23 right or remedy with respect to any occurrence or event shall not be deemed a waiver of any 24 right or remedy with respect to any other occurrence or event, nor shall any waiver constitute a 25 continuing waiver. 10 I I 2007-369 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day HR/Agenda Items:MERCER.2007 12 2007-369 Exhibit A 1. Services. Mercer is engaged as the Client's exclusive employee benefits insurance broker/consultant and shall perform the following services for the Client with respect to the lines of coverage listed below. These services provide benefits for active and retired employees of the City of San Bernardino and the Water Department. Mercer's ability to provide you the following services is conditioned upon Mercer's receipt of accurate and timely information related to you and the plans and products subject to our services. Mercer will not independently verify or authenticate information not originating from Mercer. Client shall be solely responsible for the accuracy and completeness of such information and other documentation furnished to Mercer. The Client understands that the failure to provide all necessary information to an insurer, employee benefit provider and third party vendor, whether intentional or by error, could result in the impairment or voiding of coverage or service. A. Consulting Services Mercer will: . Conduct strategic planning sessions to review current performance of Client's current employee benefits coverage and establish future objectives and strategies to manage Client's employee benefit coverages to which this agreement applies. . Meet with the Client's key people designated by the Client's Human Resources Director, on an annual basis, to discuss strategy and open items. . Develop a mutually agreeable renewal action plan and timeline that meets the Client's stated objectives. Details provided in the renewal services plan developed by Mercer and the Client. . Keep the Client informed of significant changes and/or trends in the employee benefits marketplace. . Benchmark medical plan costs and employee contributions to industry, size and regional standards on an annual basis. . Analyze factors driving Client's plan costs if experience data is available. In connection with such analysis, Mercer will review utilization reports to determine possible causes of identified cost increases. Assist Client in managing risks and costs of its employee benefits coverages. "" 2007-369 . Establish comprehensive claims reports for identified coverages if available from carrier: Carrier medical/prescription drug detailing paid claims (and reimbursements if applicable), premium/funding and enrollment summaries. Mercer will review these reports with Client periodically and will identify and discuss trends and potential problems. . Provide cost projections and funding analysis (review of funding methodology with en:phasis on employer costs and the tier structure of the contribution.) . When marketing your plans, prepare an analysis comparing current costs, plan designs, administration costs, network discounts and network accessibility. . With respect to the renewal process of Client's employee benefit program, Mercer will conduct an annual review during the renewal process to include negotiations, on Client's behalf, with current vendors/carriers, as per Client's request. . Upon the request of Client, Mercer will assist Client in the preparation of a RFP for purposes of obtaining competitive quotes from the marketplace. Mercer will be the primary point of contact during the bidding process. . Upon request of Client, evaluate and assist in the management of voluntary benefit products offered to Client's employees. . Assist Client in the implementation of the benefit program by dealing with vendor/carriers and performing contract and SPD review for purposes of determining conformity to agreed-upon plan provisions and costs. . Advise Client with respect to available technology platforms to support delivery and administration of its employee benefit plans. Support implementation and maintenance of the Mercer Administration suite of services purchased. . Assist Client in the development of paper and/or web-based communication strategies. . Provide Client access to HRKnowHow/Mercer Select Basic service. Also, will have access to Mercer seminars, roundtables, executive forums, and webcasts. . Other Services: o Mercer will provide annual creative services through its Benefits Publishinl! Product. Communications Brochures development is included within the quoted fees. Printing fees will be billed separately or alternatively the Client may use its own printer for printing of the benefits brochures. o Mercer will provide its annual series of wellness materials, called the Healthv Habits Newsletter within the quoted fees. These newsletters will be provided in PDF format only, but may be printed by the Client at its own expense. 2 ,N' 2007-369 o All other services as listed in Mercer's proposal dated June 19,2007 as attached. B. Placement Services . Identify and negotiate on the Client's behalfwith insurers and other benefit program providers and keep the Client informed of significant developments. Mercer shall be authorized for purposes of this Agreement to represent and assist the Client in all discussions and transactions with all insurers/providers, provided that Mercer shall not place any insurance or vendor programs on behalf of the Client unless so authorized by the Client. . Assist with documentation and other steps to obtain commitments for and implement insurance policies and other services selected by the Client regarding its employee benefits program upon the Client's instructions, it being understood that Mercer will not independently verify or authenticate information not originating from Mercer necessary to prepare proposals or underwriting submissions and other documents relied upon by insurers/providers, and the Client shall be solely responsible for the accuracy and completeness of such information and other documents furnished to Mercer and/or insurers/providers and shall sign any application for coverage. The Client understands that the failure to provide all necessary information to an insurer, employee benefit provider or third party vendor, whether intentional or by error, could result in the impairment or voiding of coverage or service. . Provide Client access to the national insurance marketplace and related services marketplace and use Mercer's commercially reasonable efforts to place insurance policies and other services selected by the Client regarding its employee benefit program on behalf of the Client, if so instructed by the Client. . Mercer will not be responsible for the solvency of any insurance carrier or its ability or willingness to pay claims, return premiums or other financial obligations. Insurance carriers with whom the Client's risk have been placed, will be deemed acceptable to the Client, in the absence of contrary instructions from the Client. . Mercer does not monitor published fmancial information for non-insurance providers and Mercer will not be responsible for the solvency of any employee benefit provider or third party vendor who provides products or services to the Client. Employee benefit providers or third party vendors who offer products or services to the Client will be deemed acceptable to the Client in the absence of contrary instructions from the Client. . Act as a liaison between the Client and insurers/providers for the lines of coverage and services that Mercer has placed or obtained on behalf of Client or for which Mercer is named as the broker of record. 3 2007-369 . Provide the Client with detailed invoices, except in the case of direct billing by insurers or employee benefits providers. . In certain cases, placements which Mercer makes on the Client's behalf may require the payment of insurance premium taxes (including U.S. federal excise taxes), sales taxes, use taxes, surplus or excess lines and similar taxes and/or fees to federal, state regulators, boards or associations. The Client will pay such taxes and fees whenever assessed. To the extent practicable and where Mercer invoices, such taxes and fees will be identified by Mercer on invoices covering these placements. Any such taxes and fees collected by Mercer will be promptly remitted by Mercer to the appropriate authority. . Mercer may utilize the services of other intermediaries to assist in the marketing of the Client's program (including brokers in the London and other markets), when in Mercer's professional judgment those services are necessary or appropriate. Such intermediaries may be affiliates of Mercer or not related to Mercer. The compensation of such intermediaries is not included in Mercer's compensation under this Agreement and will be paid by insurers/providers out of paid premiums. . Following any such placement, deliver confirmation of coverages as promptly as practicable. . Follow up with insurance carriers/providers for timely issuance of policies and endorsements/contracts. . Follow up with insurance carriers/providers with respect to the payment or return premiums. . Review policies, contracts and endorsements for accuracy and conformity to specifications provided by Client and the related negotiated coverages. . Assist the Client in connection with issues relating to interpretation of insurance policies/contracts placed by Mercer. . Provide information/coverage summaries for all new coverages and updates on changes to existing coverages. Mercer does not speak for any insurer or other vendor, is not bound to utilize any particular insurer or vendor, and does not have the authority to make binding commitments on behalf of any insurer or vendor. Mercer does not guarantee or make any representation or warranty that employee benefits programs can be placed on terms acceptable to the Client. 4 2007-369 C. Emolovee Benefit Prol!lllll1S . Group Life . Group AD&D . Long Term Disability . Short Term Disability . Medical Plans . Prescription Drugs . Dental Plans . Vision Plan . Flexible Benefits and FSA Accounts D. Broker and Administrative Fees. Broker fees will be established at $140,000 per year for a term of three years. Administrative fees have been established at $187,000 annually. At the sole discretion of the City, additional services may be requested at added cost. Mercer is also placing 10% of their broker fees at risk by guaranteeing they deliver the most appropriate and valuable service to the City's satisfaction. E. Method ofBillinl!. CONSULTANT may submit invoices to CITY for approval. Said invoice shall be based on the total of all CONSULTANT's services which have been performed in accordance with the terms of this Agreement during the period covered by such invoice. CITY shall pay CONSULTANT's invoice within thirty (30) days from the date CITY receives said invoice. The invoice shall describe in detail, the services performed and the associated time for completion. Any additional services approved and performed pursuant to this Agreement shall be designated as "Additional Services" and shall identify the number of the authorized change order, where applicable, on all invoices. 5 2007-369 CITY OF SAN BERNARDINO (CITY) PERFORMANCE STANDARD GUARANTEES Health and Welfare Plans and Programs MERCER HEALTH & BENEFITS, LLC (MERCER) EXlDBIT B Performanee Standard Performance Standard Methodology Financial Description Amonnt at Risk Timely response to City to receive verbal response within two (2) 2% of the cost verbal inquiries City bnsiness days of verbal inquiry of the service related to each inquiry. Penalty to be assessed at the end of each quarter. Timely response to City to receive written response within 2 City 2% of the cost written inquiries business days of receipt of inquiry of the service related to each inquiry. Penalty to be assessed at the end of each Quarter. Projects completed by Mercer shall reduce the total cost of the service 2% of the cost predetermined deadline related to the specific project or project phase (for of the project or * multiple-phase projects) by two percent (2%) for project phase each business day that the service is delinquent (for multiple- with a maximum penalty not to exceed ten phase projects) percent (l0%) of the project cost for each City business day If the service related to the project or project that the service phase is delayed by the City, the number of days related to a the project or project phase is delayed will be project or added to the original due date) project phase is delayed. Penalty to be assessed at the end of each oroiect. Account management An account management satisfaction score of '3' 2% of the total satisfaction or better on a "1-5" scoring system based on a cost of services survey tool mutually agreed upon by the City and for the quarter consultant. The survey tool will be completed on being rated. a Quarterly basis 2007-369 Consulting team If a key personnel is no longer employed by Timing of continuity Mercer, Mercer shall notify the City within 72 replacement of hours of the person leaving and shall promptly key personnel- replace such person with a reasonably acceptable I % of the total replacement. City shall have the option to cost of services interview up to 2 Mercer employees before for the three selecting a replacement. The replacement shall months be assigned to the City within three weeks of following the either the notification date if no interviews are change in key conducted or one week from the City selecting personnel. from interviewed employees. A City "key personnel transition" satisfaction Satisfaction score of "3" or better on a 1-5 scoring system with key based on criteria mutually agreed upon by the personnel City and Mercer, to be assessed at the end of transition - 1% three months following the change in key of the total cost personnel. of services for the three months following the change in key nersonnel. Total Financial 10% ofthe Liability per Contract total cost of Year Not to Exeeed services per Dlan vear * Penalties will be waived or reduced if project delays are due to extenuating circumstances outside of the control of Mercer as determined by the City. These situations will be reviewed on a "case-by-case" basis. - ~ ~ a ~ all ' 11"1 " III SaDB e a ~ c e c c ~ c ~ c ~ I ,a ~ 2007-369 CITY OF SAN BERNARDINO Response to Request for Employee Benefits Consulting and Broker Proposal June 19, 2007 '"' --< "-> MERCER~~ !@ Hea Ith & B~;;efits2:; 'J ~Jo ..~ -] ~'. - :J c;j; L::> ...'1 ~:: -. ..." .b ~ ::: ...... , .1 7:1 ""J <= tn -.~ - c San Bernardinfji Where History and the Future Meell ( ~ -In --- ~111~i'-~- _--'"--'" ...' ~. 11 . "" i;- . . ..r ,,-'r. ~_,.~_.I , ......-: Contents 1. Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 2. Scope of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3. Additional Mercer Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4. Pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 5. References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 6. Company Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7. Resumes of Team. . .. .. . . . .. .. .. . . . . . . . . . .. .. . . . . . . .28 8. Answers to Your Specific Questions. . . . . . . . . . . . . . . . . . . . . 34 Appendix 1 . Mercer National Survey 2. Benefits Publishing 3. Health and Benefit California License 4. Certificate of Insurance 5. Suite of Services and COBRA Administration 6. Call Center Administration 7. Retiree Outsourcing Administration -~I '~~~ ..-g. . . . . . . . . . . . . . . . . . . . ~::'JJr/; . . ,;'...... ~ ~ ASarf'lrtfuIM&' Where History and the Future Meel! Mercer Health & Benefits is pleased to respond to the City of San Bernardino's Request for Proposal Insurance Broker/Consultant. Our proposal has been structured to respond specifically to each of your proposal questions and requirements outlined in your recent request. Additional information is also included in the Appendix section. Based on the knowledge provided to us by the City of San Bernardino, we understand that the City of San Bernardino is looking for a benefit broker/consultant who would: . Be a pro-active long term "partner" in their dealings with the City of San Bernardino and your Benefits Committee . Have the experience of working with municipalities and a diverse population . Assist with your current benefit plans as well as recommend other programs . Provide sound creative advice and technical help with your renewal and marketing activities through claims analysis, effective plan design options, rate and carrier negotiations, communications, and benchmarking trends. . Provide professional support with legislative compliance issues, in particular with COBRA, HIPAA, IRS 9125, FMLA, CFRA, ADA, Medicare, and Discrimination Testing. . Provide a suite of Administrative Outsourcing Services which permits you to continue to fully outsource the bulk of your administrative services for your active, COBRA, and retiree population. . Assist with implementation, open enrollment meetings and health fairs. Most of all, we are eager to demonstrate our high level of commitment and creative ability to the City of San Bernardino to help you continue to achieve and maintain a benefit plan which will meet the coverage needs of your employees within the budgetary structure established by the City of San Bernardino. We believe we can also enhance your programs during our long term relationship we envision to have with the City of San Bernardino, your Benefits Committee, and your Employee Associations. 2 - Where History and the Future Meet! Proposal Form and Content A) A written description of services to be provided. Include both services we have outlined in this request, as well as additional services that you would recommend to us. Scope of Reauired Services Services Outlined by the City of San Bernardino are: 1. Developing long-range employee benefit goals and strategies for the City of San Bernardino. Mercer will assist the City in developing long range employee benefit goals by facilitating the development of such goals and recommending strategies in partnership with your Benefits Committee. Once such goals have been identified in concrete terms, Mercer will recommend appropriate strategies. We will employ experts in plan administration; actuarial, financial, and data analysis; performance measurement and audit; flexible, and self-directed plans; health, behavioral health, clinical quality improvement, employee absence, disability, and productivity consulting. We will provide expert bidding, evaluation, rate negotiation, and plan account and reporting services to achieve best-in-class service delivery for the City of San Bernardino at the lowest achievable cost. MERCER'S HEALTH AND WELFARE CORE SERVICES Benefit Strategy l l " Renewal Management ... Bid Specifications/Analysis Day-to-Day Assistance J l ... Our Health & Welfare Core Services are comprised of seven key service components, illustrated in the flowchart. If you do not have effective support in these key areas, you are likely to be underserved or to miss potential savings opportunities. We realize that needs vary depending on size. An BOO-employee organization may not have the same priorities as one with 20,000. But that doesn't mean you should forego the right expertise or advice. Our Core Services give you ... the flexibility you need to meet your goals and strategies, with the appropriate tools for your situation. Regulatory Compliance ... Reporting Financial Results J Employee Communications 3 'I,~~~ ~-~ ....~5.~~_.~1 .;~~~'. . . ........ 'Slifi~B~11ffrWI1ttr: Where History and the Future Meell: 2. Assisting in administering group insurance plans identified above, settling disputes and other issues with carriers, analyzing the effectiveness of programs and offering creative solutions to problems. We believe our clients are best served by qualified and experienced consultants. Our core team for the City of San Bernardino is staffed with senior consultants and analysts who have substantial experience working with public-sector clients including cities. Your Mercer team will provide year round support to answer questions, assist with your group insurance plans. resolve issues regarding employee benefits, claims, provider issues, administration and billing, service provisions, assist with billing audits, monitor service of carriers, third party administrators, and other vendors. We will analyze the effectiveness of your current programs and offer creative out "Out of the Box" solutions. 3. Monitoring ongoing contracts, including plan administration, provider compliance with contracts, booklets and employee education materials. Although Mercer is not a law firm and is not licensed to provide legal advice, Mercer does employ lawyers all over the country who provide consulting advice including interpretation and application of relevant laws and statutes and regulations impacting the District's employee benefit plans. Mercer has two (2) full-time lawyers in our local office. Mike Sinkeldam is a Benefits attorney and will be the lead attorney on all health and welfare matters. These legal consultants, in conjunction with the practice consultants, will be responsible for communicating regulatory and legislative developments to the City of San Bernardino at both the state and federal leveL The consultants on your team will work with these attorneys to provide the following compliance-related services: . Developing benefit change announcements for delivery both in print and in person . Rewrite Booklets and Summary Plan Descriptions (SPDs) . Rewrite, amend plan documents and summary of material modification documents to comply with regulations . Revise employee education materials in accordance to regulations Your Mercer service team will access in-house Mercer benefit attorneys for assistance in answering your day-to-day questions concerning HIPAA, MHPA, COBRA, Medicare Secondary Provision, FMLA, ADA, ADEA, etc. When needed you may also have direct access to these legal resources through your benefits consultant. This is in addition to free access to your "virtual benefit assistant" at our website, HRKnowhow.com (being renamed Mercer Select). 4. Responding promptly and accurately to questions from our representatives and employees. The Mercer team will respond promptly and accurately to questions from representatives and employees of the City of San Bernardino. The City of San Bernardino will have access to any of its Mercer service team members by telephone or e-mail at any time should billing, contract, or other such issues arise. 4 Where History and the Future Meel! Our Newport Beach office hours are from 8:00 a.m. to 5:00 p.m. Monday through Friday. Each team member has a direct dial number that is accessible 24 hours a day, 7 days per week for voicemail messages. Mercer's professional standards require team members to modify their voice mail greeting on a daily basis so that callers know the team-member's availability for that day. In addition, team members can be reached via e-mail, cell phone or PDA's when out of the office or through their Administrative Assistant. We also have a Disaster Recovery Plan in place at all our locations permitting us to recover and be operational within hours. We are there when you need us and not just during the renewal season. 5. Compliance assistance with applicable laws and regulations; advising our staff of changes in the laws and recommending solutions. As stated in item # 3, Mercer does employ lawyers all over the country who provide consulting advice including interpretation and application of relevant laws and statutes and regulations impacting the City of San Bernardino's employee benefit plans. We have two (2) full-time lawyers in our Newport Beach office. Mike Sinkeldam is a Benefits attorney and will be the lead attorney on all health and welfare matters. These legal consultants, in conjunction with the practice consultants, will be responsible for communicating regulatory and iegislative developments to the City of San Bernardino at both the state and federal level. The consultants on your team will work with these attorneys to provide the following compliance-related services: . Developing benefit change announcements for delivery both in print and in person . Rewrite, amend plan documents and summary of material modification documents to comply with regulations Mercer also maintains a national resource to Mercer lawyers and consultants in its Washington Resource Group (WRG). The WRG is a US legal resource group of over 35 lawyers, legal professionals, and information specialists. The WRG assists Mercer clients and consultants in developing innovative plan designs, addressing technical legal issues, assuring operational compliance, and providing government relations expertise on a wide range of retirement, health, compensation, and other human resource topics. The core strength of the WRG is its people - experienced, knowledgeable, practical, and service-oriented problem-solvers. WRG professionals understand the crucial role that legal and legislative expertise plays in providing employers and other plan sponsors with high-quality consulting assistance. The WRG works with Mercer clients and consultants to assure that employee benefit and compensation plan designs, operations, and transactions comply with the law. Areas of expertise include tax, ERISA. and other legal issues related to defined benefit plans (e.g., cash balance and pension equity plans), defined contribution plans (e.g. 401 (k) plans and ESOPS), nonqualified deferred compensation plans, stock compensation programs, cafeteria plans, health plans, retiree health plans, disability plans, Social Security, Medicare, early retirement programs, and mergers and acquisitions. The WRG develops and assesses innovative plan strategies and designs to assist Mercer clients achieve their business and human resource objectives within applicable legal parameters. 5 - Where History and the Future Meel! Also, the WRG participates in retirement plan, health plan, and employment program operational reviews to assure legal compliance, with follow-on correction activities, closing agreement submissions to the IRS, plan redrafting, and operational training. The WRG produces several information services to help Mercer consultants and clients stay current on major legal and legislative issues. Those that are available to Mercer clients and others include: . Legal Info Service (LIS) - The WRG regularly publishes GRIST articles on major legislative, regulatory, and judicial issues and developments. LIS members have access to GRIST and similar in-depth articles via the WRG's LIS membership website. . GRIST Analyses and Perspectives - News, reports and analyses of legislative, regulatory, and judicial developments and issues affecting retirement, health, compensation, employment, and other human resource programs. Available to LIS members via the Web. . Weekly Highlights - Weekly roundup of notable retirement, health, compensation, employment and other human resource developments and issues. Available via e-mail and the Web. 6. Acting as a broker/consultant on related issues such as IRS ~125 and related discrimination testing, COBRA, Health Insurance Portability and Accountability Act (HIPAA), Medicare, Family and Medical Leave Act (FMLA), California Family Rights Act (CFRA), and Americans with Disabilities Act (ADA). Mercer will review and evaluate coverage drafts and plan descriptions, assists with drafting plan documents, including Section 125 plan documents, and prepare or review plan amendments as needed. Additionally, when warranted, we coordinate insurance contracts with the City of San Bernardino's policies and procedures, and will review Employee Handbook and Policies & Procedures Manual for compliance. Your Mercer service team will access in-house Mercer benefit attorneys for assistance in answering your day-to-day questions concerning HIPAA, CFRA, COBRA, Medicare Secondary Provision, FMLA, ADA, ADEA, Discrimination Testing, etc. When needed you may also have direct access to these legal resources through your benefits consultant. This is in addition to free access to your "virtual benefit assistant" at our website, HRKnowhow.com (beinq renamed Mercer Select). 6 - Saltll~AI'lftbtt' Where History and the Future Meel! 7. Reviewing and analyzing claims experience data, claims service, efficiency and accuracy of claims administration to ensure that we are receiving optimum service and benefit from all carriers and vendors. Mercer analyzes claims experience data using a number of proprietary tools in addition to the usual reports that other firms generate. Besides the usual Claims Loss Ratio reports and Utilization Reports, Mercer employs other analytic tools and reports as well: Claims EXDerience Data Analvsis A significant differentiator between Mercer and our competitors is the sheer volume of resources we employ in the area of data analysis - in terms of consulting tools as well as people. As the largest employer of actuaries in the world, we also employ numerous individuals with backgrounds in underwriting, statistics, and financial analysis. Your local service team includes individuals with both underwriting and statistical experience and access to all of Mercer's global resources. Our propriety technologies and tools will benefit the City of San Bernardino by efficiently and effectively delivering accurate answers, examples of which include: Consumer-driven health plan (CDHP) financial modeling projects plan costs based on assumed enrollment, discounts, utilization impact and other CDHP related variables and projecting financial impact of CDHP programs Demographic analysis examines employee census data to provide a deeper understanding of the demographic make.up of the employee workforce, as well as providing a high level health plan service area match L TD pricing model projects the cost increase/decrease in L TD rates, on either a self.insured or fully insured basis Medforecast is a strategic forecasting tool designed to model the cost implications of basic tactics and advanced strategies over a five year period Medprice evaluates the impact of design changes and gauges the impact of managed care and different contracting practices Pharmacy financial modeling tool compares two or more PBM or health plan pricing arrangements . . . . . . --IJ -~i_.~ Q. :m::HgH~~~i::if: - '- ~ mgim~~~~l::~~:' r -" 10. ...-.............'... :::~:..... ::: ::." .iWI. .. I .~lm.I..i.,II~ "I 1- t-'ttmI.,,~ ..n" -J :::~ _ ~_ ~::~c~_ ~ dI~dIolnI:""" .... ""Nlp~_ . -.lGr-. u.... wI_-'__ -~?'-" t.'T~'-':i1' :~. " .\~~..... .._,...t. e:.J!J ,... ltDnoll_ .p ....-. I "'0 .."-*""- ........... ~ Cost Trends by Incurred Month ~ I'" Employ.. Statlll D.I..P"~ ""...,h:J....1Im , ~....~ IAle.-uu... .:J1f.....l!m .'ftlbno I"" c-. rypH ;J'H ",..)Ill ~.;. -.:J~ Aj,,2Cl\3 I ~ ;;; 31,5017 I.:"~I ;JII....lllD 'lJ.ll'Y )1,Jl1 """ ,,,.. 1l.1I\lll,6191l7911.(11(1/J.1'1Vlll.6.Y> 31.J37 11,09)5912l'OO~R.2:~7 31.l711 '1419,l16 ti,9n.!ilB 1OO7,ial 11-..s5'm.~,".9XI)91Vl5J7) 1RIl1'i mill Ill'll ml'l 19117 L'5~ mill PHil 11,<;.t7 5'.91.871' 13,I&;.918lf[l1j.18S "OOF L'5'i2 )1!>5S 11511)olll "\I62~I.'W.;l]~ 110011 m12 11,581 'I.56!ipro13PSI.r0917!iO.m ~'1l $1315 lL5ll:l II S~~fl'jI; f,32I1!iJ'1 1791.915 ITo:! 29 L'5(J1 l'l.!lll II.li6I,t>I (J)9l~I."'$J10 ,'N!>] I."~ 31.DlII,59?~f3.3U,89'JtlII6~~ 'I(SIll' 1261O ~1~ IIAI.678 f3,22Ull tlI37.4.l9 ,'mro 1333 lJ2'll IIl.a.lRl11;J.':l,t;l 1R;>I.715 'lmn 1.'713 , s...v- !IltMISkttlI L ICuol~~11 I:Jool:m3 :~nu I:"''''' I."''''' .."" """" '." "'" '"'' ... 'I.Dl 31.Q<l4 ",,' 7 - Mercer utilizes our NetPic database to analyze provider discounts and network comparisons. We also evaluate the quality of health plans by using standard metrics provided through HEDIS, Leapfrog Group and other independent agencies. Mercer's Chief Medical Director on staff, was instrumental in helping develop these measurements. In addition, Mercer also maintains a national carrier database that gathers information on all carriers in each geographic region. Claims Service. Efficiencv. and Accuracv Mercer also monitors the service you receive from your insurance carriers and third party administrators with respect to the efficiency and the quality of such services. Mercer monitors this ongoing service on your behalf by requiring performance metrics and Performance Guarantees of the vendors when applicable such as in the area of medical claims. Additionally Mercer maintains a Claims Auditing practice based in our Los Angeles office. This team of specialists has years of claims background and routinely perform audits of all the major medical carriers as well as a number of Third Party Administrators and PPO networks. They identify a statistically acceptable sampling of the claims and then review those claims in depth. Their focus is on procedural aspects, accurate coding, financial accuracy, as well as overall service of the claims operation. From the audit results this team then will meet initially with the carrier to share the finding and get their feedback. They incorporate carrier comments and then arrange to meet with the client to present a complete audit report along with actionable recommendations to improve the process and appropriate measures to monitor progress. 8. Determining and recommending the most economical and efficient funding methods for various benefit programs. One of Mercer's core services and areas of expertise is providing financial review, evaluation, and analysis of funding alternatives, as well as managing self-funded plans. We have two full- time H&B actuaries on staff in our office, in addition to a number of underwriters, and four other H&B actuaries in other offices within the state of California. Actuarial Certification can be a very time-consuming process. Mercer has the resources available to produce actuarial certifications on a timely basis. The selection of plan funding method(s) is an important one. Mercer will assist the City of San Bernardino in evaluating the appropriateness of multi pie funding alternatives (pooled, insured/experience-rated, partially insured, self-funded) for each line of coverage. We will provide the City of San Bernardino with: 1. An overview of funding alternatives available by line of coverage. 2. A projection of total cost, including ongoing reserve requirements, potential cash flow impact, retention (fixed cost) analysis, fiduciary liability exposure, legislative/compliance impact analyses and comparative risk/retention analysis. 3. Cost of risk analysis, comparing the exposure of optional risk retention through pooling and/or stop loss levels to the cost of insuring the risk (including projected exposure to shock losses based on historical data analysis). 8 "S' ''''',r.----,' '1"'-' - , "'"',!51"b1i' " ~ "''''''"''8'''-" ' , I.', ' afr er r 1~' , l' Where History and the Fulure Meet! - ~~"'''''''1or_ ~-t:;h""A ( ,',', t j- ,.11 ~~., -... _:... " ~~~.""'..._}I .....::.;.~.,. --=-~-- ~r .r. ....~ ~"Q' ~. .-2,--, -=- Mercer has the resources and is prepared to review the feasibility for alternative funding every year to make sure the City of San Bernardino's plan has the right combination of risk retention and risk protection to meet the needs of the plans and the participants in the plans. 9. Apprising City of San Bernardino benefits representatives of local and national benefit trends, innovative ideas and recommending new products, programs and services to ensure a competitive benefits program. In addition to the tactical expertise in plan administration, Mercer also provides strategic consulting advice regarding future trends and assisting our clients to develop long-range action plans to address rising health care costs. Medical costs continue to drive employers' benefit decisions, Unfortunately, there is no single "silver bullet" response to double-digit medical cost inflation. However, based on the City of San Bernardino's goals and current situation, Mercer can help evaluate basic and advanced approaches to maximize short-term and long-term health care cost savings. The resulting strategy could become the foundation for a three- to five-year action plan that incorporates a broad, comprehensive look at your overall benefit delivery objectives in the context of your specific environment and financial constraints. Mercer also has a variety of proprietary technologies to support our work. Several come into play for setting your benefit strategy and other core services. For example, MedForecast™ (chart shown on the right), an interactive proprietary Mercer tool, can quickly estimate the potential value and cost impact of basic and advanced approaches. MedForecast™ allows "what-if" scenarios based on multiple changes, and/or shows the impact of making no change at all. You will quickly have a one-, three- and five-year financial forecast based on your choices. 'I.......Fon.uost ~~- . ----.------... __IuD.. -- T........,_~-_.~. _.....<f~ -.- '....li"""'""~ (.Ml_.....<t_e.. ""'~ "".= .~~, $14,840,000 A....."... ~~ ~"'~ ~...,.[joO'I----, ~.-- I .-_1 ~~-, ("j;f;j~.~ ....----- --.....""'- --...-... ---....."'" .-----_.1 __IIl<:<OO1boo*w'_ _ ..~!~...,_I....Ul,"" -~..,,_....- _"'ll!"'" .. ..._ -........ ..~.."... ......- .. ...,.... . ~.- "'.- "- ''',- ,,- - ~ .....IlIl...._ ."'........ ---- ..,....- .....- .......<DIg_ .,.,.,""".,.- - ~- - Il._ ~- ..- - -~ ~ .......... "'.'''- lulU" Most importantly, MedForecast™ provides the background for a balanced discussion about the potential changes and their implications for the City of San Bernardino. You will have the right information for making the best decisions and the technology to communicate those decisions to management. Program Design . Assisting with long-term and short-term benefits strategy development . Comparing basic features of your program against other employer groups and school districts . Advising about health care marketplace developments/changes . Advising about industry developments/changes . Proposing plan design changes and enhancements 9 . Facilitating discussions on emerging trends and potential impact to the City of San Bernardino . Helping assess employee and retiree benefits priorities/needs . Providing Mercer national annual benchmark survey data (a sample profile report from the Mercer National Survey of Employer-Sponsored Health Plans is included in Appendix (1) 10. Providing an annual review and summary of employee benefits including analysis of the quality of benefits provided, cost effectiveness, competitiveness, recommendations, etc. Your Mercer team will provide an annual review and encompass an employee benefits strategy that identifies the short- and long-term goals and objectives for the City of San Bernardino. We will review the financial status. plan design and policy provisions of in-force programs with the City of San Bernardino and benchmark them to determine the competitiveness of the plan costs. plan design and employee cost sharing strategy. Benchmarking data will be based upon number of plan participants, geographic location from the annual employee benefit plan survey, and from comparable public entities, as requested by the City of San Bernardino. We will provide you with a report that will provide an overview of the current market trends and environment, compared to current cost and benefit levels; recommendations for alternative financial, product and benefit levels to be reviewed, and agree on timeline to achieve employee benefits objectives. We will analyze various financial and plan design options based upon expected renewal pricing and market conditions. Dialogue includes paid claim summary review, carrier service satisfaction, network satisfaction, marketing necessity and available alternatives, which are consistent with the employee benefits objectives. Employee cost sharing, member communication, and enrollment strategies are also incorporated. 11. Meet with and provide reports and updates to our representatives as needed. Provide estimates of renewal rates to assist us in forecasting and budgeting. Our custom reports distinguish our services from others. We provide reports to assure that there are no surprises at renewal time. A brief overview of our core financial reports includes: Claims Experience Report . Month-by-month experience for enrollment, claims, fixed costs, large claimants, and stop loss reporting . Allows the employer to compare the current plan year with their own historical experience by providing year-to-date totals, monthly averages, and costs per employee per month 10 I - Renewal Report . Provides a rate history including the renewal offers, stop-loss detail based on the renewal and alternatives, c1airns projections for each self-funded line of coverage, cost projections, and fully-insured equivalent rates . As needed, contribution analysis and plan design pricing will be included . All marketing efforts will be shown as alternatives with the pricing impact Marketing Report . Includes detailed comparisons, as well as a listing of all participating carriers with the resulting offers . We provide complete transparency to allow you to control and understand the bid process Benchmarking Report . This report uses the Mercer National Survey of Employee Benefits to provide detailed comparisons in areas such as plan cost, contributions, plan designs, and latest trends . This is a tool to help the employer gauge the status of their benefit offerings compared to their competitors Demographic Report . Based on the City of San Bernardino's census data, we will be able to provide information about your population, including gender, age, membership, and benefit enrollment . This will assist you in determining what benefits are appropriate and needed by their unique population 12. Representing us in all negotiations with providers on all issues, including those related to premiums, service, benefit levels, plan design, special terms and conditions, etc. Negotiate all changes and additions to contracts. Mercer will conduct an annual review and marketing process on the City of San Bernardino's behalf, in preparation for the annual employee benefit plan renewal process, We will negotiate changes with the carriers and review all resulting contracts and documents. As needed, we will solicit proposals from new carriers, vendors or providers and will provide recommendations for selection of plan design, funding, and carriers/vendors. Based on our understanding of the City of San Bernardino's goals with respect to the employee benefit plan, we will work with you to develop a renewal and marketing strategy. Your overall goals and objectives for the coming plan year will guide us in preparing detailed specifications for presentation to insurance carriers. Our bid specifications are developed to present your plan to the market in a favorable light-to "sell you" to the market. This results in maximized opportunities and a greater number of choices available to you. 11 - Where History and the Future Meet! 13. Soliciting bids from insurance markets, which specialize in group insurance plans. Evaluate bids and bidders, including claims procedures, abilities, experience and history, service, financial policies and stability, and identifying the most beneficial package for our needs. Selecting insurance carriers and service providers for our clients is a very important service we provide. Mercer has extensive knowledge of insurers' capabilities, perlormance reputations, and internal systems. The benefit to the City of San Bernardino is our ability to pair your needs with the policies and services of the best insurers and service providers for your specific needs. Characteristics we evaluate in selecting insurers and service providers include: . Financial stability . Provider network that satisfies the City of San Bernardino's employee locations . Provider contract arrangements . National presence . Recognized long-term player with stable underwriting policies . Competitive pricing . Sensitivity to the City of San Bernardino's corporate culture . Excellent service reputation in administration and eligibility processing . Technology-driven and efficient claim processing systerns . Competitive and innovative plan design offerings Mercer's leverage in the marketplace and an extensive intelligence network on market capabilities service, trends, etc., will assure that the City of San Bernardino is insured and serviced by the best companies for the need being addressed. 14. Assisting with the creation and implementation of communication materials (pamphlets, brochures, presentations, etc.) for new or changed programs, including materials for Open Enrollment and Health Fairs. Attend Open Enrollment meetings and Health Fairs, and provide enrollment support as needed. Provide fulfillment services for retirees and COBRA participants. Mercer can assist the City of San Bernardino with a wide range of communication and marketing materials and tools. We believe that these elements require a focus on both marketing communications to the member districts and employee benefit communications that support the plans and highlight the advantages of the network and the health management features. In order to meet these objectives, Mercer has three different strategies available. Included in the cost for our services would be communication strategy under # 1 and # 2. However, the 3rd level of service may require additional fees. 12 1) Your Consultant will review, assist, and recommend solutions to your current materials and provide their recommendations. 2) Benefits Publishinq . Benefits Publishing is designed to bring quality benefits communications to mid size employer groups by building on the principle that there is no need to "reinvent the wheel" every time. The City of San Bernardino can choose from a set of format templates that includes much of the information that employers will want to have in their employee benefit materials and select one of the many graphic design styles. . The City of San Bernardino will be able to add their colors, logo, and name to the template to make the communication materials have the look and feel of the City of San Bernardino's culture. Please see Appendix (2) for samples. . The standard turnaround process is 7-8 weeks for completion of the communication materials. . The cost of Benefits Publishing is provided at no additional cost. 3) Communication Services for larqe em plover qroups looking for highly customizable materials. There are three phases to this communication strategy which is described below. First Phase - Detailed Plan and Visual Identity The first step is to work with you to confirm the best communication tools, determine the needs of each audience, and tailor the messaging and marketing tactics, and branding to exactly meet the needs of the City of San Bernardino. In this initial core step we will create a detailed plan that will: . Clearly explain the value of the City of San Bernardino as it should be presented in the communication tools . Identify key audiences, communication goals and key messages . Review existing communication and marketing processes and channels . Give a detailed description of the contents of each tool, how it should be produced and how it should be used . Review the major risks that would create unsuccessful communication, and include a mitigation plan for each risk We will also focus on the branding of the City of San Bernardino plans and services by creating a visual identity covering the overall theme and look for all materials. This visual identity will include: . Theme and tagline concepts which convey the spirit, depth and differentiation of the City of San Bernardino offerings . Visual directions, each consisting of a typographic treatment, color palette exploration, photographic treatment, and design of any graphic elements (e.g. bullets, icons, and artwork) appropriate to marketing and communicating the offering Final deliverables will be a written communication and marketing plan, as well as a Visual Identity Guideline outlining visual direction and usage of design elements. The communication and marketing plan would include the tactics to be used in conjunction with the City of San 13 . - Where History and the Future Meel! Bernardino plans and services. Specific tactics would be determined based on the detailed plans, but would include items similar to those in the following phases. Second Phase - Creating Tools for Marketing to Member Districts and Prospective Districts Mercer will develop and provide the marketing tools, which were identified in the detailed plan, to promote the City of San Bernardino. The tools will be designed to attract and retain the districts and will suggest a dynamic campaign that differentiates the City of San Bernardino's offerings from those of its competition. We suggest the following core materials be included in an effective campaign: . Sales brochure to promote the City of San Bernardino's offerings, for either distribution or as a leave-behind at meetings . Sales presentation (PowerPoint) for presenting the offerings to member districts in meetings . Benefit plan comparison chart for member districts to review when choosing their plans, for use when choosing the right plan for a district Deliverables for the Second Phase will include two drafts of these documents for review as well as two versions of the documents in layout/design when appropriate. Third Phase - Plan Communication Materials To ensure employees understand the benefits available to them, the City of San Bernardino will need resources that allow them to quickly and easily share information about the plans they choose to offer. In addition to communicating about the benefits, providing tools to encourage employees to be responsible for making better, more engaged decisions about their benefits and their health. To accomplish this, we recommend core communication elements such as: . Announcement Letter - We can develop a one- to two-page letter to announce open enrollment dates, introduce changes, and promote cost-saving items like the advantages of using network providers or generic drugs. . Decision kit/enrollment package - We recommend creating an open enrollment decision-making kit that would reflect the City of San Bernardino's web resources and health management programs, messages about wellness, decision-making tips and information on how to enroll. This standard package would include a pocket for inserting plan descriptions from carrierslvendors and rate sheets, and an envelope to mail the packages. The booklets also can be written with a new hire section so that it can be used throughout the year and/or for recruiting purposes. . Enrollment meeting PowerPoint presentation template - Mercer can develop a generic 20-25 page Power Point presentation providing an overview of benefits and enrollment instructions for the City of San Bernardino to use in employee meetings during open enrollment. The final deliverables to you for all of the above would be Word documents, PDFs, or PowerPoint. Some items may be best to deliver via e-mail, in which case they would use the Word document to create this e-mail. We can deliver these files to you for printing or we can manage the printing and distribution process. Alternatively, you may choose to post these documents, as appropriate, on a Website as clickable PDFs to be downloaded by plan participants. 14 - Beyond these communication services, Mercer will assist and attend Open Enrollment meetings and Health Fairs. Fulfillment materials will be provided for COBRA and Retirees as well. Please see Retiree and COBRA sections # 16 and # 17 respectively. 15. Identifying, investigating, analyzing and implementing efficiency measures such as employer partnerships, electronic benefits administration, and other concepts that have the effect of reducing the cost associated with employee benefit programs without reducing services to employees. Mercer identifies, investigates, analyzes, and implements efficiency measures through the following services: 1. Employer Partnerships Mercer consults to a number of employer partnerships formed to purchase employee benefits. In this regard, Mercer consults to JPAs (Joint Power Authorities) in various parts of California as well as to several larger School Trusts (CVT and MEBA) and is a consultant to CaIPERS. Additionally, on a national level Mercer advises Pharmacy Purchasing Collectives which we were instrumental in forming and also has negotiated national Pharmacy Pricing Arrangements for our clients. More recently, Mercer has championed the establishment of a Care Focused Purchasing Collective with the objective of developing industry standard provider metrics. Such metrics involve aggregation of non.financial claims data in order to apply performance metrics, leveraging provider relations and education, managing network development, and expanding consumer decision support tools. To date, over 50 employers of various sizes have joined the Care Focused Purchasing Collective which now has over 2 million enrolled members. 2. Administrative Suite of services to include online maintenance system, consolidated billing/collection/reconciliation and remittance services Mercer Administration has a full service, proprietary, administrative platform that is highly flexible and competitively priced. We will describe this solution below: A. Mercer EasvEnroll Mercer Administration's Online and IVR Enrollment Solution is a comprehensive offering with flexible options to meet the diverse needs of a wide variety of employer groups. We provide the most capable and cost effective self.service automation that: . Educates and enrolls employees into benefit programs, and . Administers and manages benefit programs, all while facilitating maximum participation at minimal cost. Mercer Administration has collaborated with Innovative Process Administration, LLC (IPA), a highly regarded and experienced provider of benefits administration technology, to offer an integrated Employee Self.Service Web and Interactive Voice Response (IVR) solution for 15 - Mercer H&B clients. The IPA suite of technology tools powers our solution and comprises a comprehensive offering to address your challenges. Empower employees and build their appreciation of company benefits programs. We create a centralized source for all enrollment information. Our enrollment transaction engine is configured for the browser and telephone to be easy to use and to include all benefit choices and rules. Designed to communicate with employees in terms they can understand, traditional benefits materials transform into an easy-to-navigate, user-friendly transactional website and/or telephone interface. Only provide benefits for which an employee qualifies. When employees see only the information and benefit choices for which they qualify, all in an easy to use format, traditional administrative errors are radically reduced or eliminated. This allows Human Resources personnel to focus where they have maximum impact - contributing to strengthening the skills of the organization. Instantly expand hours when information is available. Employees and their families can work with a "virtual HR department" 24 hours a day, seven days a week. From work or home, employees simply need Internet access to have comprehensive benefits information and the ability to review their benefit programs. To maximize broad-based usage, benefit enrollment can also be conducted using any touch-tone telephone. Push data electronically to carriers and payroll. Our system takes the benefit enrollment data (whether from Open Enrollment or Qualifying Event changes) and seamlessly/electronically pushes data to the various plan carriers and the payroll entity(ies). Mercer Administration staff have extensive backgrounds in benefit administration and enrollment. You can rest assured that you are getting the best-in-class provider of self-service administrative tools, along with proven, reliable technology. Mercer Administration's EasyEnroll's core service offering includes the following: . Employee Self-Service web site, with employer logo, to facilitate new hire enrollment, open enrollment, as well as family and work status changes throughout the year. . Easy-to-use Interactive Voice Response (IVR) system (Optional). . Rules-based process to ensure employees see only the benefits for which they are eligible. . Scheduled and accurate enrollment and eligibility data transmissions to HRIS systems, insurers, payroll and other vendors. . Integrated Benefits Communications Portal allowing 24fT access to view existing benefits and related subject matter. 16 . A broad range of activity, management, and billing administration reports providing access to election and life event data. . Full enrollment audit trail with date/time stamps and confirmation numbers. . Standard confirmation statements included for both web and IVR enrollment activity (can be printed from system by employee or HR). . Real-time, hot site backup and single (Oracle) database for all inputs. . Optional services are also available. . Paper fulfillment services including enrollment worksheets, confirmation statements and new hire letters that can be mailed to employees' homes. . Call Center services for employees via a dedicated toll-free line for benefit-related inquiries. This service provides support for the client's HR department by assisting with employee benefit questions in such areas as: coverage /Iimits/ co-pays, verification of networks, open enrollment periods, facilitate eligibility verification, and claims issues and also supplying carrier telephone numbers or directly connecting the caller with appropriate carrier contact when necessary. Services are HIPAA compliant. All calls are recorded and a toll free telephone number is provided for employee inquiries. B. Call Center Basic Service/Employee Assistance . Answer basic inquiries and provide direction to callers . Provide coverage information from the schedule of benefits . Supply carrier/vendor contact information . Direct callers for 10 card requests . Assist with employee questions during enrollment . Confirm employee contribution amounts . Provide forms supplied by the client Enhanced Services of the Call Center/Advocacy . All basic services included . Provide advocacy between employee and carrier/vendor Call Center Overview Service & Technology . Dedicated toll-free number with knowledgeable Customer Service . Representatives available . Monday- Friday 8:00 a.m. to 5:00 p.m. central time . Customized greeting available . After hours voice mail availability for callers to leave messages with return 17 . call on next business day . Translation services available through Language Line for non-English . speaking callers . Calls are recorded with random monitoring for quality assurance . Calls are tracked in web-based call tracking system . Reporting of call center statistics available . HIPAA compliant C. Consolidated Billina Premium Calculation and Vendor Disbursements Services - Full Service For employers looking to streamline the premium remittance process, Mercer Administration provides a premium calculation and vendor disbursement service. This service allows employers to reduce time spent preparing and remitting premium payments to multiple vendors. Employers can cut one check to Mercer Administration for all lines of coverage and Mercer Administration will issue remittance to all venders. In coordination with the Mercer Administration's EasyEnroll application, Mercer Administration's Consolidated Billing Service acts as another vendor where the online enrollment system sends a data feed to the BEST system for premium calculation services. The BEST application will calculate the appropriate premium for current and retroactive activity in accordance with the plan administration guidelines. Invoices are sent monthly to clients for premium remittance. Invoicing can be created in a variety of formats such as list, summary, by accounting department, facility or plan {activelretiree}. Upon receipt of premium remittance, premium reports are generated in list or summary format and disbursements are generated and sent. Mercer Administration disburses premiums in accordance with vendor requirements and timelines. Scope of Services 1 . Electronically accept and load eligibility feed from EasyEnroil. 2. Determine the load frequency from EasyEnroll to the BEST system. 3. Review and resolve any data discrepancies from EasyEnroll's eligibility feed. 4. Identify all premium remittance guidelines and due dates. 5. Calculate premiums and adjustments for each coverage month and invoice client accordingly. 6. Upon receipt of premiums, generate carrier reports for each line of coverage. a. Self accounting policies - generate reports and issue payment. b. List bill policies - manually reconcile carrier statements to BEST premium calculations and issue payment. Monitor carrier list bills for discrepancies and resolve discrepancies 18 Reconciliation of list bill policies requires ability to adjust premiums due and is subject to an additional charge. 16. Retiree Administration to include communication, open enrollment, maintenance, and billing services. Mercer is able to work with your current Retiree Outsourcing vendor, Employee Benefits Specialists, (EBS), with Mercer covering the cost. Additionally, we are more than happy to market this service if the City wishes for us to do so. While Mercer administration can provide these services, EBS appears to provide a level closer to your current service level in this area. As you are aware, EBS offers benefit administration services to groups offering Retiree Benefits, including reimbursements of premiums, management of eligibility, premium collection, invoice payment services and other necessary tasks, depending on plan requirements. Retiree Administration Services include: . Collection of premiums from individuals where there is premium sharing . Reimbursement of premiums to retirees from employer . Payment of premiums to insurance carrier . Recording and tracking of eligibility and payment history . Interaction with retirees and carriers to deal with individual retiree benefits issues . Fulfillment services during open enrollments or benefit changes Plan Implementation Services . Plan design assistance and documentation . System setup scheduled to meet client's needs . Electronic (soft) copies of forms Administration Services . Receive and process new elections, changes and terminations . Receive and process plan contribution information o Electronically o Manually, additional fees apply . Benefit reimbursement processing o Check o Direct deposit . Monthly employer reporting o Group account activity - year to date o Disbursement reports Customer Service . Toll-free live customer service . Customer service available via e-mail . Dedicated plan administrator at client level Renewal Service . Update plan design . Update plan year/funding schedule in systems . Update benefits and rate structures . Annual enrollment system update 19 Where History and the Future Meet! o Electronic o Manual (paper - additional fees apply) Optional Services (additional fees apply) . Custom or divisional reports . Custom programming or data mapping . Open enrollment fulfillment . Printed enrollment materials . Annual statement fulfillment (stuffing and mailing) . Welcome letter or plan election confirmation letters . Enrollment assistance On-line On-site Paper 17. COBRA administration to include communication, enrollment, maintenance, and billing services. Administration of COBRA and HIPAA requirements has been made easier with Mercer Administration's CONEXIS Solution. Mercer has partnered with CONEXIS to design a portfolio of services has been designed around a common theme: reduce the burden on Human Resource Professionals. The City of San Bernardino will need to keep us informed of new hires, plan enrollees, and terminations. From there, we will manage your compliance and billing services automatically, effectively and efficiently. Our CONEXIS Solution will: . Assist you in implementing an effective COBRA administrative solution . Reduce COBRAlHIPAA compliance risks . Allow you to focus on core HR issues . Provide superior customer service Our CONEXIS Solution services include: . Premium Billing and Collection . COBRAlHIPAA Initial Rights Communications . Qualifying Event Notification of COBRA Eligibility . COBRA Rate and Benefit Change Communications . Compliance Database Should the City of San Bernardino prefer another COBRA vendor, Mercer can market for those services. Additional Mercer Services These services can be provided as an additional project with separate fees, or on a very limited scope within the quoted fees. Alternatively, if you wish to incorporate one of these projects into your core services, we can arrange to do so. 20 1. Health and Productivity Management The Health and Productivity Management group helps clients support employees in maintaining health and productivity, making wise use of health care services, and limiting health-related benefit expenses. Health Management specialists (including 12 MDs and RNs) work closely with major corporations, health plans, and other provider organizations, to develop strategies tailored to the employee or enrollee population. With the right strategy, corporations, health plans, and providers can avoid some problems before they occur. A health and productivity management strategy combines the best benefit design and coverage, with health promotion, disease prevention, self-care management, and disease management to avoid or minimize the effects of poor health. Proactive management acknowledges that employee or enrollee health is a necessary asset for a highly productive work environment and community. By managing health, companies, health plans and providers invest in a future of better performance and avoid costs, truly using the power of people to enhance business success. 2. Wellness Management Programs Risk mitigation should be a cornerstone of today's health care strategies. Population-based health improvement focuses on reducing risk for the development of disease and the improvement of health status regardless of where an individual resides on the health risk continuum. The idea is to move individuals toward the low-risk side or, at minimum, prevent them from progressing toward catastrophic illness. Our Health and Productivity specialists can help the City of San Bernardino support employees and enrollees in maintaining health and productivity, making wise use of health care services, and limiting health-related benefit expenses. Health Risk Continuum Well No Disease At Risk ObeSity High Cholesterol Acute Illness! Discretionary Care Doctor VISits Emergency VISits Chronic Illness Diabetes Coronary Heart Disease CatastrophIC Head InjUry Cancer Prevention Health risk Nurse advice line Disease Case management Screenings assessment Web lools management Decision support T argeled risk- Consumer.directed Incentive design Predictive modeling reduction programs health plan Self-management Risk modeling training 3. Consumerism Following the pattern of increasing consumer stewardship in retirement benefits, health care has become the latest arena in which consumer involvement is expanding. Consumer-directed plans give employees better access to health information, improved resources for making health care decisions, and more control over their health care dollars. Mercer understands that change often generates resistance. But effective education and communication of health care issues and options can help promote success and employee commitment. One of the more unfortunate consequences of managed care has been a weakening of the relationship between the consumer and the doctor. Consumers have become passive participants in their health care; for the small price of a copayment, they can access care without fully considering the ramifications of certain treatments. With the proper 21 - assistance, benefit plans can engage employees more actively in making prudent, informed decision regarding their health. Mercer recommends a measured approach to implementation, introducing employees to better medical information and tools, improving access to specialized services, and expanding consumer directed coverage as regulatory, risk, and technical environments mature. In fact, we are pioneers in developing this new health care arena. We can help you find the most effective path to employee health empowerment for your organization. 4. Behavioral Health Management The Behavioral Health Management group provides expert, professional judgment in designing, measuring, and strengthening the performance of employee assistance programs (EAPs) and managed behavioral health programs. This national group consists of experienced behavioral health consultants, including four clinicians, three former managed care executives, and five former state department directors/program administrators. These consultants bring experience on a broad array of behavioral health issues, including mental health, addictions, child welfare, and developmental disabilities. 5. Integrated Absence Management The Absence Management Group can help the City of San Bernardino achieve cost reduction and productivity improvement through the implementation of effective solutions addressing time-off, FMLA, disability, and broader employee absence problems. Consulting specialists collaborating with local practitioners enhance Mercer's ability to deliver consulting services and intellectual capital around absence management. The City of San Bernardino's savings will come from fasterlbetter claims intake, more effective case management, rationalized return to work programs, better vendor negotiations and redesigned program features, plan incentives, and performance measures. Projects may include diagnostic and analytic work, strategy development, program design, vendor selection, program implementation, and ongoing evaluation. 6. Managed Pharmacy The Managed Pharmacy Group (MPG) consists of 18 specialists (including PharmDs and RPh.s), with diverse health care, actuarial, government, health policy, and industry-related backgrounds. Six consultants are clinicians with a clinical pharmacy background. As a result, this group has the experience and skills needed to address almost any pharmacy management issue: clinical, operational, or performance-related, both nationally and internationally. Managed Pharmacy consulting services target the implementation of effective pharmacy benefit programs and integrated health care solutions. Core consulting services include: . Rx plan design . Rx audit . Rx program diagnostic . Benchmarking and renewal negotiations . Competitive bidding and implementation 22 - "'s....,-',. '~B1' ,.<'c;- ~'-".. I'~'~" an '(~ritarulilul Where History and the Future Meet! . Collective purchasing alternatives . Pharmacy program director . On-site pharmacy (if location concentration) . Public sector and government program strategy Compared to our competitors, the Mercer MPG is unique in that the same specialists provide extensive advice to government program sponsors, managed care organizations, the leading PBM providers in the US, and the largest international pharmaceutical companies. This in- depth understanding of all facets of the pharmaceutical value chain ultimately leads to more creative and up-to-date solutions with measurable value for Mercer clients. B) A comprehensive, specific statement indicating how you would handle the pricing of our account and the estimated annual cost of your services. Please indicate if it is based on an annual fee, commission, or combination of both. Include any commissions and fees that you would expect to receive from the existing programs, for services we have requested herein, as well as additional services that you are recommending. Please identify the costs, if any, associated with the administrative suite of services. Cost Allocation $ 152,000 $ 27,710' $ 60,500 $ 56,000 $ 24,500" $ 11,340 $ 7,000 To be Deterrnined if Needed Subtotal $ 339,050 Vallie Added Services Printin of Communication materials Consulting projects under Additional Services for Health and Productivity, Wellness, Consumerism Behavioral Health, Absent Mana ement, and Mana ed Pharmac Other To be Determined if needed To be Determined if needed $ Total: $ 339,050 23 ,; Where History and the Future Meell . Retiree Administration Outsourcing: Annual Re-enrollment fee Annual Administration Enrollment Services (Paper) (Other methods available for an additional cost) Total "Enhanced Call Center Services $ 350 $27,360 $0 $27,710 $38,000 We estimate that the current compensation arrangement generates over $354,000 annually in commissions. Mercer's estimated total fees for the bundle of services both consulting and administrative requested by The City of San Bernardino are: $339,050 24 C) A list of current and former clients, preferably municipalities, of similar size for whom you have provided group insurance services to in the past five years. Include the name of client, contact person, telephone number and email address (if available). Mercer has extensive experience working with public agencies. Name of the client City of Riverside (Marsh/Mercer) Contact Name Mr. Leonardo Gonzalez Contact Number (951) 826-5646 . Public Entity Client from 2003-2005 . Richard Hill Senior ConsultanWali Nourishad, Consultant Name of the client County of Orange Contact Name Ms. Patti Gilbert Contact Number (714) 834-2564 . Client for 20 years . Mike Wilson Senior Consultant/Kristine Dopera, Consultant Name of the client City of Anaheim Contact Name Contact Number Mr. Walt Jerz (714) 765-5198 . Client for 20 years 0) Evidence that your company carries all applicable business insurance coverage and licenses. We have provided a copy of our Health and Benefit California License in Appendix (3). and our Certificate of Insurance in Appendix (4). 25 San Bernardinfii Where History and the Future Mee\! ... -~. I;~ -!"(.IV ..,..~... ~t.1 ) ..:::-:~ ~ t ,~..... ..' '" j ( .t1 i .:.____--'''' ~;;. i i ;:: ~, _ . ,,-.,.-.'- ,- .. ...,.. rl6IIIfIIIiiIt-':~ E) A brief description of your company's history, growth, philosophy/culture, number of employees, and number of years in business under the same name. Our parent company, Marsh & McLennan Companies (MMC), has evolved from its beginnings in 1871 into a Fortune 500 company with revenues of $10 billion. Today, some 58,000 employees provide analysis, advice, and transactional capabilities to clients in more than 100 countries. Marsh is the worid leader in delivering risk and insurance services and solutions. Marsh offers the total range of services to identify, value, control, transfer, and finance risk for business, public entity, and professional service organizations. Mercer HR Consulting and Mercer Health & Benefits are a wholly owned subsidiary of Marsh & McLennan Companies, Inc. Started in the United States in 1937 as the employee benefits department of Marsh & McLennan, Inc., our company took the name of 'William M. Mercer" in 1959, when Marsh & McLennan acquired William M. Mercer Limited, a Canadian firm founded by William Manson Mercer in 1945. In 1975, Mercer became a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. In 2002, we changed our corporate name to Mercer Human Resource Consulting (recognizing its similar yet different client base, "Mercer Investment Consulting" was simultaneously created as a separate entity). The 1990s marked William M. Mercer's expansion into Latin America, Eastem Europe, and the Far East as the firm continued to strengthen operations in Europe, Australia, and the U.S. In 1997, our merger with A. Foster Higgins & Co. enhanced our presence in the U.S., and mergers with Sedgwick Noble Lowndes and Corporate Resources Group in 1998 contributed to further expansion globally, primarily in Europe and Asia. In January 2004, Mercer entered into an agreement to acquire Synhrgy HR Technologies, Inc. Synhrgy, was a leading provider of human resource technology and outsourcing services to large public-sector organizations and Fortune 1000 companies. In 2005, Mercer Health and Benefits entered into a long term relationship with Innovative Process Administration, LLC (IPA) to develop Mercer's Administration EasyEnroll Services. Mercer has been providing employee benefits consulting services for over 67 years. In the U.s., Mercer serves more than 5,000 clients in all industries, and more than 800 public-sector entities. During 2005, MMC merged the practices of its Marsh Employee Benefit Services unit and Mercer Health & Group into a new entity, Mercer Health & Benefits (Mercer). This new entity combined the brokerage approach of Marsh with the intellectual capital of Mercer. These resources are now available for groups of all sizes, from a 50 life firm to large Fortune 500 and public entity programs. The consolidation was completed in early 2006. 26 (1 '<', ~B-" J..:,..:.,_ ..".> " $f,.'r' ~alr @flIarftlhtf Where History and the Future Meell . Mercer also has several consulting units operating under the umbrella of Oliver Wyman Group. They help enterprises develop, build, and operate strong businesses that deliver shareholder value growth. Oliver Wyman is a leader in financial services and risk management consulting. Delta Organizational Consulting works with CEOs, executive teams, and boards of directors on issues of leadership, organization, and change. NERA Economic Consulting advises corporations, law firms, courts, and other government entities on the economics of competition, regulation, and finance. Lippincott helps clients create, develop and manage their corporate identity and brands. 27 San Bernardi n6~: Where History and the Future Meell F) A brief resume of the education and experience of those persons who will actually be serving our account. Include experience with similar projects or municipalities and specify the number of years they have been with your firm. Unique or specialized capabilities should be identified. We believe our clients are best served by qualified and experienced consultants. Our proposed core team will be staffed with senior consultants and analysts who have substantial experience working with joint labor management boards and benefit committees for both large school districts and public-sector clients. In addition, our firm supports a "best-in-front" model that enables a client team to access resources and expertise from other offices and national resources when a unique client need arises. Actuarial Advisor Tim Upson H&B Core Team Richard Hill, CEBS,CLU, ChFC- Principal, H&B Consultant, Co-Leader Kristine Dopera, GBA - Principal, H&B Consultant, Co.Leader Susan Tamanaha - Senior Associate, H&B Business Development Francesca Redshaw - Associate, H&B Analyst Health & Productivity Management Steven Noeldner Legal/ Compliance Mike Sinkeldam Market Business Leader Mike Wilson H&B Core Team Richard Hill, a Principal in Newport Beach who is also our Advisory Practice Leader, will serve as co-Consultant for the City of San Bernardino. Richard joined the firm in February 1996. He works with both public and private sector organization with particular areas of focus including financial analysis of plans, including self-funded projections, negotiations with carriers and providers, objective/strategy setting, prescription drugs, vendor selection, and implementation and contribution modeling. Richard has experience working with school pools, individual school districts, public agencies, and cities. He currently works with OCT A and Metrolink Public Agencies. Richard also was a high school Algebra teacher at an earlier stage of his career and has taught classes to adults at Chapman University and University of California, Riverside. Richard has more than 15 years of consulting experience and over 30 years benefits/HR experience. Richard has worked for a large Insurance Carrier, for a Hospital Management company, for a Retirement Plan Administrator, for a Third party Administrator, and for a 28 Regional Broker that specialized in working with Public Sector, K-12 Schools, Community Colleges, and JPAs prior to joining Mercer. Richard attended St. Mary's College and has a Bachelor of Arts from Oblate College, as well as a Masters in Counselor Psychology. He also has his CEBS (Certified Employee Benefit Specialist), CLU (Chartered Life Underwriter), and ChFC (Chartered Financial Consultant) designations. Kristine Dopera, a Principal in the Newport Beach office of Mercer Health & Benefits and joined Mercer in October 2002. Kristine has ten years of consulting experience and 15 years of benefits experience. Prior to joining Mercer, she was responsible for managing the delivery of health plan management services to four national, multi-state Fortune 500 clients - including consulting on all phases of design, implementation, and administration of health plan offerings. Kristine has been engaged in several Health and Welfare vendor marketing proposal evaluations. She recently was involved in the comprehensive assessment of claims administration and benefits administration outsourcing vendors for a national client. Kristine works with both public sector and private clients across many industries, including retail, hospitals and high tech corporations. Kristine currently works with the County of Orange. Kristine received her Bachelor of Science degree from Pennsylvania State University and an MBA from St. Joseph's University in Philadelphia, PA. She has achieved the specialty designation of Group Benefits Associate (GBA). Mike Wilson, a Worldwide Partner and the Health and Benefits Business Leader for Mercer Health & Benefits Newport Beach office. He has been working with the County of Orange since 1989. Mike joined Mercer in 1989 and has over 23 years of experience in the employee benefits field. Mike holds a BA from California State University, San Bernardino. He is also a Fellow of the Life Management Institute. Susan Tamanaha, a Senior Associate in Newport Beach, serves as a business development consultant. Prior to joining Mercer, Susan was the Regional Director for Optum, a division within UnitedHealth Group which specializes in Health Management Services. She worked with Large National employer groups throughout the Western Region. Her responsibilities were to assist companies with health management strategies and solutions by analyzing their claims data and incorporating programs. Susan's experience at Aetna in the Santa Ana office allowed her to engage with small to mid size companies focusing on health and benefits strategies. Susan attended California State Polytechnic University, Pomona, and has a Bachelor of Science in Business Administration. 29 - San BernardjnU~ Where History and the Fulure Meet! Francesca Redshaw, a Benefit Analyst, brings five years of industry benefits/HR experience working for large, multi-state, publicly traded companies, and has worked for Mercer for one year. In her most recent role as Benefits Specialist for a globai environmental services company with several thousand employees and retirees, Francesca was chiefly responsible for overseeing the day-to-day administration and operation of a $25M comprehensive employee benefits program. In this role, she successfully partnered with numerous bargaining groups to manage multiple benefits programs. Francesca holds a BA and MA degrees in communications from Marietta College and Ohio University, respectively. Francesca has completed additional graduate-level human resources coursework from Robert Morris University Tim Upson, a Principal and Senior Consultant based in Newport Beach, is an Actuary and will be an actuarial advisor to the District. Tim has over 18 years of experience in health care benefits strategy development, cost analysis and allocation, and extensive knowledge of the factors driving health care costs. He has done extensive work in helping large employers and public sector clients evaluate their long-term health care strategy in light of the changing U.S. health care environment, including retiree medical plan issues. Prior to joining Mercer, Tim worked for another major consulting firm and a leading accounting firm. Tim holds a Bachelor of Science degree in Mathematics and Quantitative Methods/ Computer Science from the University of St. Thomas. He is also a Fellow of the Society of Actuaries and a Member of the Academy of Actuaries. Mike Sinkeldam, based in Newport Beach is Principal and an attorney in Mercer's Health & Benefits practice. Mike's 19 year of consulting expertise includes consulting with employers on income tax, ERISA, ADA, FMLA, COBRA, cafeteria plans and compliance and risk management issues. Mike is also designated as one of Mercer's national HIPAA privacy experts. In that role, he is responsible for providing consulting expertise on privacy issues and overseeing the assessment and implementation aspect of the comprehensive HIPAA compliance reviews being performed for Mercer clients in the Southern California region. Mike is the West Unit representative on Mercer's U.S. Professional Affairs Committee. Prior to joining Mercer, Mike was a practicing attorney in Southern California in the business law field for ten years. Mike is currently a member of the United States Court of Appeal for the Ninth Circuit, the United States District Court for the Central District of California, and the State Bar of California. He received his J.D. degree from California Western School of Law in San Diego. Steven Noeldner, based in Newport Beach is a Principal and PhD in Mercer's Health & Benefits practice. Dr. Noeldner is a Senior Consultant in the Health and Productivity Management (HPM) specialty practice of Mercer Health & Benefits. He works in the West Unit and is a national resource and expert in the areas of strategic planning, program design, behavior change, and evaluation. With over 20 years in HPM, Dr. Noeldner's experience includes clinical practice in cardiac and pulmonary rehabilitation, hospital administration, university teaching, research, consulting, wellness programming, corporate HPM, and senior management. 30 S U' ., - a'" hi an . er'nafui'Uu: Where History and the Future Meel! Prior to joining Mercer, Dr. Noeldner was President of MindStrength Consulting, which specialized in behavior change consulting. He also managed HPM and employee benefits for Capital One Financial Services. Dr. Noeldner was previously the President and COO of the Mid-Atlantic Fitness Network, which provided health promotion consulting and services to corporations, managed care organizations, governments, and associations. While a hospital administrator, he developed a comprehensive Health and Wellness Center and managed the Orthopedic Services Program which included orthopedic nursing, rehabilitative services (OT, PT, and SLP), sports medicine clinics, and an Orthopedic Research Laboratory. Dr. Noeldner's education includes a M.S. in Adult Fitness - Cardiac Rehabilitation, and a Ph.D. in Exercise Science, with concentrations in Sport Psychology, Exercise Physiology, and Biomechanics. He is certified by the American College of Sports Medicine as a Program Director,m, and has served as a reviewer for the Journal of Cardiopulmonary Rehabilitation and for the Canadian Journal of Sports Medicine. 31 G) A complete description of the organizational structure of your company, and the method by which work is done. An organization of work flow chart with description of duties of the persons working on our account is useful, as well as the size and/or total number of accounts or clients each individual handles. Market Business Leader Newport Beach Mike Wilson 'Consulting Practice Leader Tim Upson ... Enterprise Practice Leader Andy Griffin .. Advisory Practice Leader Richard Hill Co-Consultant Richard Hill Co-Consultant Kristine Dopera Specialty Practices "R needed Consultant Susan Tamanaha Benefit Analyst(s) Francesca Redshaw Administrative Assistant(s) "Consulting Practice - Groups of 5000 and above "'Advisory Practice - Groups of 500.5000 u*Enterprise Practice - Groups of 50-500 32 San Bernardin1i~' Where History and the Future Meell Co-Consultant, Richard Hill and Kris Dopera, Responsibilities include overall strategic involvement in all aspects of the City of San Bernardino's health and group renewal process, providing consulting and project management support for various phases and types of client projects and identifying, recommending and implementing efficient solutions to achieve client objectives. Consultant, Susan Tamanaha, Responsibilities include overall strategic involvement in all aspects of the City of San Bernardino's health and benefits to achieve the City of San Bernardino's goals and objectives. Benefit Analyst, Francesca Redshaw, Responsibilities include day-to-day support to the client and the Mercer team regarding administrative issues, contract language, claims support, billing issues, and general carrier/vendor inquiries. The benefit analyst supports plan administration, compliance research, and coordination of the marketing and renewal process. They also provide market and compliance intelligence, and research of emerging benefit options that may have client specific application. In addition, the benefit analyst provides ContracVSummary Plan Description Review, ongoing industry benchmarking and is the point person for all carrier/vendor marketing and renewals. Administrative Assistant(s), Responsibilities include day-to-day support to consultants by completing project assignments, calendar management, meeting setups, prepare presentations and client deliverables, client invoicing and time keeping support, and exercise judgment to promote smooth workflow to meet the needs of our clients. Our local Mercer office works with public and private sector organizations. The size of our Advisory Practice clients typically ranges from 500 to 5000 employees. Each consultant and benefit analyst handles approximately 7- 12 accounts. 33 San BerIiarfff06i Where History and the Future MeeU' H) Answers to the following specific questions: 1. What process does your firm use to handle carrier renewal and negotiations? Our renewal/negotiation project management process includes six phases as illustrated and explained in the following pages. Phase I Emplavee Benef"rts Objective Setting Establish short term & long tenn plan obje~~5: Financial/Budgetary Plan Design/Benefit LeveJ Cost: Sharing Corrmunica~on -----, I Phase IV Marketing and Carrter Negotiations . Prepare i'J'ld dstrib.rte specificaions. . Op;mize mai(et leverage for P-!jte and plan design to achie-- ~ . Ottain renewal . . Negotiate; vf!. I 34 ~'IIf'Be.rnarftiii Where History and the Future Meell EI Process: Your designated consultant meets with appropriate Human Resources staff to establish the short-term goals and to review long-term objectives of the City of San Bernardino. Outcome: An employee benefits strategy that identifies the short- and long- term goals and objectives for the plan year, the requisite competitiveness of the program and the City of San Bernardino's financial objectives. ~ Process: Mercer reviews the financial status, plan design and policy lias provisions of in-force program with the City of San Bernardino and benchmarks them to determine the competitiveness of the plan costs, plan design and employee cost sharing strategy. - Phase III Benchmarking data will be based upon number of plan participants, geographic location from the annual employee benefit plan survey, and from comparable public entities, as requested by the City of San Bernardino. Outcome: A report that will provide an overview of the current market trends and environment, compared to current cost and benefit levels; recommendations for alternative financial, product and benefit levels to be reviewed in Phases III and IV; agreed on timeline to achieve employee benefits objectives established in Phase I. Process: Our discussions build upon the results of Phase II, modeling various financial and plan design options based upon expected renewal pricing and market conditions. Dialogue includes paid claim summary review, carrier service satisfaction, network satisfaction, marketing necessity and available alternatives, which are consistent with the employee benefits objectives established in Phase I and II. Employee cost sharing, member communication, and enrollment strategies are incorporated. Outcome: Identify the objectives of the marketing and renewal, to include product and plan design options, carriers/vendors, networks and financial funding alternatives. In addition, open enrollment and member communication strategy (including process, materials, and scheduling) will be solidified. 35 San Bernardin& Where History and the Future Meell' . -- Phase IV "Mercer Goes to Work!" Process: The renewal/marketing objectives established in Phase III serve as the basis for the specifications that Mercer will create and distribute to the marketplace. Mercer will answer carrier questions. evaluate the proposals. meet with the carriers. maximize its negotiating leverage to secure aggressive rates. review administrative services. analyze network adequacy. and proposed benefit level and plan options. Outcome: A comprehensive report providing an executive summary. recommendations. negotiated rates with the incumbent and proposed carriers. plan and carrier options. cost sharing strategy analysis. and marketing and analytical support data. ~ Process: The Mercer Team presents the renewal/marketing report. . . Discussion focuses on negotiation results, plan options, cost sharing strategy. . and recommendations. This report will allow the City of San Bernardino to develop their negotiation strategy with associations. - Phase VI Outcome: Renewal decisions and decision-making to include carrier selection. plan design. financial arrangement. premium rates. and cost sharing strategy. Member communication materials are developed and open enrollment is completed. Process: Mercer assists in the transition to a new carrier(s). if needed. by reviewing administrative issues, plan documents, and contracts. Mercer reviews the enrollment outcomes relative to plan design and rates. Outcome: Reviewed plan documents and contracts are presented for signature. Transition to a new carrier(s) and implementation of any plan changes are completed. A report is presented in which the final financial results and implemented plan designs are evaluated against the employee benefits objectives identified in Phases I, II, and III. 36 San Betnardinoi Where History and the Future Meell . 2. What support staff is available through your company, such as Legal Counsel, Underwriting/Actuarial Specialists, Communications Department, and/or other available specialists or departments? While Mercer Health & Benefits is the largest employee benefits consulting firm in the world which gives us the depth of knowledge and experience that no other company can provide, the real advantage to the City of San Bernardino is our depth and breadth of our resources locally which brings the full range of Mercer resources to the City of San Bernardino. Our local office employs over 100 employees of which approximately 60 are Health and Benefits consultants. A breakdown of our local staff includes the following specialists: . 9 Underwriters . 2 Legal Consultants . 2 Health and Productivity Management specialists . 3 Absence Management specialists . 2 Healthcare Actuaries (FSA/ASA) . 1 Consumer Health Care specialist . 2 Communications consultants . 25 Retirement consultants In addition to the core team, the City of San Bernardino will have access to our senior management should a need arise. The office head is Chuck Longiotti and the H&B Market Business leader is Mike Wilson, who manages the County of Orange. In addition, Richard Hill is our Advisory Practice Leader who will be on the core team for the City of San Bernardino. 3. What unique brokerage/consulting services can your company bring to us? We believe that Mercer is unique in that the depth, size, and experience of our local office enable us to provide a team almost exclusively housed in Newport Beach. This allows the flexibility to meet face-to-face with the City of San Bernardino, and to respond quickly when needed. We have a support team and resources unparalleled in our business. Our local office employs underwriters, actuaries, attorneys, communication specialists, health and productivity 37 San Bernardinfii Where History and the Future Meell - management specialists, and consumerism experts. We also have claims audit, outsourcing and other specialties on the ground in Southern California. Our intranet and suite of technological tools bring all the intellectual capital and resources of Mercer globally into our local office. We believe that the clearest way to articulate Mercer's unique characteristics is to present them in the context of the benefits the City of San Bernardino can realize from working with Mercer. We are eager to place at your disposal the full depth and breadth of Mercer's considerable resources and to leverage these for the benefit of the District. This chart summarizes those benefits to the City of San Bernardino: Mercer Characteristics Benefits to the City of San Bernardino Extensive experience with all types of employee benefit programs, self-funded plans, claims management, cost containment strategies, actuarial services, vendor procurement, consumerism and wellness initiatives, and communication Substantial clout in the marketplace Industry's largest group of experts, including local team for the City of San Bernardino focused on helping employers and employees with their benefits needs Seasoned client team with public-sector experience with unmatched National Specialty Practices some of whom work primarily out of Newport Beach such as, Managed Pharmacy, Performance Audit, Health Management (Newport Beach office), Behavioral Health, Absent Management (Newport Beach office), and Consumerism (Newport Beach office). State-of-the-art tools and processes Sophisticated medical claim tracking and projection tools Leading-edge consumerism tools and approaches Transparency initiatives and full disclosure Meaningful and timely reporting Viable short- and long-term strategies for health & welfare program Creative and innovative approaches to ensure quality programs, best-in-class carriers/network/providers, optimal coverage Skilled assistance with provider negotiations Confidence in services provided by the only consulting/brokerage business with a complete set of advisory and transactional services for every segment of the marketplace Competitive benefit program for local market Best practices employed to ensure cost effective, quality program Access to unparalleled health & welfare talent and technology Health care plans that are representative of best practices in the industry Largest database in country of health care cost and design trends A healthier community Only benefit consulting firm represented on national health policy and quality groups including MedPac, NCQA, JCAHO, AMA, CMS, Leapfrog Group, and National Quality Forum initiatives. No contingent commissions or hidden charges All elements of placement process detailed in writin 38 '8"""B" "'.:e .'d'. "..' an erna:r "tDul Where History and the Future Meell ~t;l ~ ' , . _..,~... .. 'H'~;' 'f ~~~:~Ii"-i"u .:.__---~...,;i..1 ..~::'~-~ ~ 4. Provide a timeline for the implementation of your vendor's administrative suite of services. Please see the following implementation timelines in the following Appendixes: Suite of Services and COBRA Administration - Appendix (5) Call Center Administration- Appendix (6) Retiree Administration- Appendix (7) 39 C 1:1 C C C Ia C C II Ia C Ia ~ C ~ 1:1 1:1 1:1 Ia C C '1 t t i ~ i :e /- \ ., I .....'. " , I C II Profile report ~ C C C C A special report 11 from the Mercer National Survey of a Employer-Sponsored Health Plans 2006 13 [1 Number of participants Los Angeles 500+ 54 ~ West 500+ 253 National 500+ 1845 iJ 13 Geographic regions used in survey 1:1 ~ C C C C C ~ MERCER Health & Benefits Total health benefit cost rose by 6.1 % in 2006, the same pace as last ycar, to an average of $7,523 pcr employee. This represents tbe end of a three-year period in which employers succeeded in reducing the rate of growth in health benefit costs, which hit a 12-year high of 14.7% in 2002 and slowed to 6.1% by 2005. Employers with fewer than 500 employees saw costs rise by 7.0% in 2006, however, which was a faster rate than last year. Employers predict another 6.1 % increase in average cost for 2007. In 2006, cost-shifting to employees was less of a factor in reducing health benefit cost increases than in past years. Average deductibles, copays and out-of-pocket maximums, which rose rapidly from 2000-2005, showed only modest growth last year. However, employers applied downward pressure in other areas. Prescription drug benefit cost increases for large employers continued to slow in response to provisions encouraging employees to buy generic or preferred brand-name drugs. tn addition, enrollment in consumer- directed account-based health plans, the least expensive type of medical plan by far, is increasing. Finally, employers continued to add care management features to their plans in 2oo6-and to add incentives for employees to use the program. Asked to rate the importance of six cost management strategies to their organization over the next five years, care management and consumerism were each rated important or very important by 43% of all employers (and about two-thirds of those with 500 or more employees). Using a scienti!ic random sample and supplemental convenience sample, we collected data from 2,930 employers with 10 or more employees. The national and regional results are based on the random sample only and are weighted to be projectable. However, results from city, state and other special employer groups include the convenience sample and are unweighted. a a c ~ a a ~ ~ a t1 C ,..., .. c c a a c c c c c - TOT AL HEALTH BENEFIT COST Average total health benefit cost' per employee $7,851 $7,162 Los Angeles 500+ West 500+ .Total health benefit cost includes medical, dental, Rx, and specialty benefits $7,832 National 500+ . 2005 E:l2006 Expected average increase in total health benefit cost for 2007: Before making changes' After making changes' ~T 0 plan design or health plan vendor Average total health benefit cost as a percentage of payroll for 2005 15.4% 13.5% Los Angeles 500+ West 500+ 16.3% National 500+ Mercer H&B ~ a ~ c t1 C t1 a c c c c c !;J IJ Ia Ia -= 12 C c EMPLOYER PROFILE Demographics Average employee age % of female employees % of union employees Los Angeles 500+ VVest500+ National 500+ 42 41 41 51% 52% 54% 36% 23% 18% MEDICAL PLAN PREVALENCE Type of medical plan offered Percent of employers offering each type of medical plan Indemnity PPO POS HMO Consumer-directed health plan (CDHPr .includes both HAA -and HSA -based CDHPs. Los Angeles 500+ VVest500+ National 500+ 13% 11% 13% 98% 86% 86% 19% 15% 15% 93% 56% 40% 11% 6% 11% Employee enrollment Percent of all covered employees enrolled in each type of medical plan o Indemnity . PPO . POS [J HMO. CDHP r - r Los Angeles 500+ ~2%1% 25% 5% 68% VV est 500+ National 500+ 2% 2% 3% 2% 41% .'ar 50% . . . . . <(, . . .' 6% --~ L Mercer H&B a Ia g C C ~ a ~ II C c c c c c c c c c c c - EMPLOYEE CONTRIBUTIONS Individual coverage Average monthly contribution for individual coverage (S) Los Angeles 500+ VVest500+ National 500+ Indemnity PPO POS HMO CDHP Dental $77 $90 $101 $103 $90 $85 $35 $84 $83 $56 $64 $76 $61 ID $50 $12 $14 $15 Average contribution for individual coverage (% of premium) Los Angeles 500+ VVes1500+ National 500+ Indemnity PPO POS HMO CDHP Dental 21% 21% 24% 23% 24% 23% 11% ID 25% 20% 23% 23% 16% ID 18% 32% 46% 48% Family coverage. Average monthly contribution for family coverage (S) Los Angeles 500+ VVest500+ National 500+ Indemnity PPO POS HMO CDHP Dental $259 $271 $248 $364 $345 $289 $280 $318 $284 $218 $304 $278 $174 $245 $207 $42 $45 $44 Average contribution for family coverage (% of premium) Los Angeles 500+ VVest500+ National 500+ Indemnity PPO POS HMO CDHP Dental 21% 24% 29% 30% 36% 31% 29% 41% 31% 26% 35% 31% 16% 31% 27% 40% 53% 53% 'Family coverage is defined as coverage for employee, spouse, and two children Mercer H&B c . ~ 12 c c c a c c c D c c - COVERAGE ELIGIBILITY, ELECTION % of employees waiving own coverage % of employers offering incentive to waive coverage Part-time employees Offer coverage to part-time employees Average number 01 hours/week needed to qualify Benefits, contributions are same for PTEs, FTEs (when PTE coverage is provided) 62% 70% 57% 24 23 22 50% 62% 50% Dependent coverage Include spousal coverage provisions Offer same-sex domestic partner coverage % of employees electing dependent coverage 6% 3% B% BO% 51% 29% 57% 57% 54% STRATEGIC PLANNING Use salary-based cost-sharing . Deductible . Employee contribution o Out-aI-pocket maximums 11% 9% 8% Los Angeles 500+ West 500+ National 500+ C Strategy will be significant or very significant' in cost-management efforts over next five years c 1:1 c c c c Los Angeles 500+ west 500+ National 500+ Consumerism Care management Data transparency High-performance networks Collective purchasing Cost-shifting/cutting benefits 63% 63% 64% BO% 69% 71% 35% 27% 34% 33% 32% 41% 2B% 3B% 37% 30% 36% 37% 'On 'significance" scale of 1-5, 1 being "nol at all significant" and 5 being 'very significant,' selected 4 or 5. Mercer H&B 1:3 a STRATEGIC PLANNING, CONTINUED Actions taken to promote employee consumerism n - Los Angeles 500+ West 500+ National 500+ c Provide website with info on health conditions Provide website with info on health care providers Provide tool that helps members select plan based on expected utilization Replaced copays with coinsurance 76% 72% 74% 59% 43% 47% 35% 29% 24% 39% 28% 27% a c Other long-term cost-management tactics Los Angeles 500+ VVest500+ National 500+ C Participate in collective purchasing Offer limited or tiered networks 9% 13% 13% 22% 23% 17% 12 Likely' to offer account-based CDHP c c . By 2007 o By 2008 19% c 15% 15% 15% 14% c 10% D c Los Angeles 500+ Wes1500+ National 500+ c 1:1 'On 'likeliness' scale of 1-5, with 5 being 'very likely,' selected 5. Includes those already offering CDHP in 2006. c c c c c Mercer H&B ~ EI ~ c II II ~ c ~ c c c IJ C a ~ ~ c ~ c c PREFERRED PROVIDER ORGANIZATION (PPO) -- COST AND FUNDING Average PPO cost per employee, for active employees $7,732 Los Angeles 500+ . 2005 o 2006 PPO funding method o Conventionally insured . Experience-rated . Self-funded with stop-loss . Self-funded without stop-loss Los Angeles 500+ .. . . 1 West 500+ National 500+ ll- I West 500+ 6% 16% J National 500+ 8% 10% ~24% 58_ Mercer H&B a a c D E2 a E1 Ie ~ C t1 C c c c ~ c ., ... c !c c PREFERRED PROVIDER ORGANIZATION (PPO) -- PLAN DESIGN PPO plan design and administration In-network physician visit cost-sharing % requiring co pay % requiring coinsurance No cost-sharing is required Median co pay amount Out-ol-network physician visit cost-sharing % requiring copay % requiring coinsurance No cost-sharing is required Median coinsurance amount Los Angeles 500+ West 500+ National 500+ 72% 73% 82% 36% 30% 20% 0% 2% 2% $20 $20 $20 Los Angeles 500+ West 500+ National 500+ 11% 17% 16% 89% 89% 86% 4% 2% 3% 30% 40% 30% Deductibles Individual deductible % requiring lor in-network services Median in-network deductible % requiring for out-of-network services Median out-at-network deductible Family deductible % requiring tor in-network services Median in-network deductible % requiring tor out-at-network services Median out-ai-network deductible Los Angeles 500+ West 500+ National 500+ 90% 79% 74% $300 $300 $300 91% 91% 94% $400 $500 $500 Los Angeles 500+ West 500+ National 500+ 92% 79% 73% $750 $750 $750 91% 90% 93% $1,000 $1,000 $1,100 Out-of-pocket maximums for individuals Median lor in-network services Median lor out-ai-network services Mercer H&B a a c ~ a ~ c ~ c (J c ~ c g C II I:J D ~ c c CONSUMER-DIRECTED HEALTH PLANS Average CDHP cost per employee, for active employees $4,650 10 10 . 2005 o 2006 Los Angeles 500+ West 500+ National 500+ Average % of eligible employees enrolled' HRA-based COHP HSA-based COHP .when CDHP is offered as an option Los Angeles 500+ 5%1 26% National 500+ 32%1 11% West 500+ :gl Plan design HRA-based CDHP Employee-only coverage Median employer contribution to account Median deductible lor overlaying insurance Median out-ol-pocket maximum Family coverage Median employer contribution to account Median deductible lor overlaying insurance Median out-ol-pocket maximum HSA.based CDHP Employee-only coverage % 01 employers making an account contribution Median employer contribution to account' Median deductible lor overlaying insurance Median out-ol-pocket maximum Family coverage Median employer contribution to account' Median deductible lor overlaying insurance Median out-ol-pocket maximum "among employers making an account contribution Los Angeles 500+ National 500+ West 500+ $750 10 $500 $1,750 10 $1,250 $4,250 10 $2,500 $1,250 10 $1,500 $3,500 ID $3,000 $8,500 10 $5,000 Los Angeles 500+ West 500+ National 500+ 40% 10 57% $1,125 10 $500 $1,500 10 $1,500 $3,500 10 $3,000 $1,125 10 $800 $3,000 ID $3,000 $7,500 10 $6,000 Mercer H&B c a c c c g c ~ D C C C C D ~ ~ C D a c c - POINT-OF-SERVICE PLANS (POS) -- COST AND FUNDING Average POS plan cost per employee, for active employees $7,433 10 10 West 500+ National 500+ Los Angeles 500+ . 2005 o 2006 POS plan funding method 78% 68% 51% 32% 48% 22% Los Angeles 500+ West 500+ National 500+ . Insured o Self-funded Mercer H&B ~ c c c c c c c c c c g c c C II a c ~ c c POINT-OF-SERVICE PLANS (POS) -- PLAN DESIGN POS plan design and administration In-network physician visit cost.sharing % requiring copay % requiring coinsurance No cost-sharing is required Median copay amount Los Angeles 500+ West 500+ National 500+ 88% 91% 94% 13% 13% 7% 0% 0% 0% $15 $15 $15 Out-ai-network physician visit cost-sharing Los Angeles 500+ Wes1500+ % requiring copay % requiring coinsurance No cost-sharing is required Median coinsurance amount National 500+ 0% 14% 18% 100% 91% 87% 0% 0% 2% 30% 30% 30% Deductibles Individual deductible % requiring lor in-network services Median in-network deductible % requiring lor out-ai-network services Median out-aI-network deductible Family deductible % requiring lor in-network services Median in-network deductible % requiring lor out-at-network services Median out-ai-network deductible Los Angeles 500+ West 500+ National 500+ 50% 41% 43% $250 ID $300 100% 99% 93% $500 $500 $500 Los Angeles 500+ VVest500+ National 500+ 50% 41% 44% $500 ID $800 100% 99% 94% $1,000 $900 $1,000 Out-of-pocket maximums for individuals Median tor in-network services Median lor out-ai-network services Mercer H&B D D C c c c [] ...., ... c c C D C D D Ia C c a a C2 'I HEALTH MAINTENANCE ORGANIZATION (HMO) Average HMO cost per employee, for active employees $5,977 Los Angeles 500+ . 2005 o 2006 $7,058 $7,004 West 500+ National 500+ HMO funding method Los Angeles ~ 10% ()45% 45% L El Insured - community-rated . Insured - experience-rated . Self-funded West 500+ National 500+ 15% ~" 50% 2~ ~'" 43% Average % of employees enrolled in HMO' Los Angeles 500+ 57%1 "among employers offering HMO(s) National 500+ 51%1 West 500+ 55%1 HMO co pays and deductibles Physician copay % requiring physician copay Median copay amount Emergency room visit copay % requiring emergency room visit copay Median co pay amount Hospital deductible % requiring hospital deductible Median deductible amount Mercer H&B CJ C C D D D a c c c c c c c c ..-, ... c c ~ c IQ TRADITIONAL INDEMNITY PLANS Average traditional indemnity plan cost per employee, for active employees $6,463 Los Angeles 500+ $7,351 ID ID . 2005 r:J 2006 West 500+ National 500+ Traditional indemnity plan design Comprehensive plan coinsurance None required Less than 20% 20% More than 20% Los Angeles 500+ West 500+ National 500+ 14% 4% 10% 0% 23% 18% 71% 70% 66% 14% 3% 5% Deductible for individual coverage Median amount % with no deductible Median out-of-pocket limit for individuals $2.000 Los Angeles 500+ $2.000 $1.500 West 500+ National 500+ Mercer H&B a c c c D r-'I .., [J r-I ~ c [J c o c c c ~ c c c c c - PRESCRIPTION DRUG (RX) BENEFITS' Cost change for prescri ption drug benefit 9.5% 9.9% 10.3% . At last renewal o Expected at next renewal 8.4% 8.4% Los Angeles 500+ West 500+ National 500+ Offer a prescription drug plan Retail card Mail-order Employee cost-sharing requirements for prescription drug plans Retail card Same level for all drugs 2 levels: generic, brand 3 levels: generic, formulary, non-formulary 4 or more levels Use coinsurance for 1 or more drug categories Mail-order Same level for all drugs 2 levels: generic, brand 3 levels: generic, formulary, non-formulary 4 or more levels Use coinsurance for 1 or more drug categories Los Angeles 500+ West 500+ National 500+ 8% 4% 3% 15% 20% 17% 77% 64% 72% 0% 12% 6% 31% 24% 21% 6% 4% 7% 24% 27% 17% 57% 60% 70% 10% 8% 4% 25% 13% 14% Co payments in prescription drug plans Average copayment among employers with three-tier plans Retail card Generic Brand-name formulary Brand-name non-formulary Mail-order Generic Brand-name formulary Brand-name non-formulary "Offered 10 employees enrolled in the largest medical plan of any type Los Angeles 500+ VVest500+ National 500+ $9 $10 $10 $22 $21 $24 $38 $40 $40 Los Angeles 500+ West 500+ National 500+ $19 $18 $19 $43 $40 $44 $70 $73 $75 Mercer H&B 1:1 12 ~ c c -., ~ SPECIAL TV MEDICAL BENEFITS' Infertility coverage provided Evaluation by a specialist Drug therapy In vivo fertilization In vitro fertilization Advanced reproductive procedures Infertility services are not covered Los Angeles 500+ West 500+ National 500+ 68% 49% 61% 38% 32% 37% 17% 16% 23% 23% 16% 24% 9% 5% 11% 30% 49% 35% Acupressu rei Acupunctu re Biofeedback Chiropractic Homeopathy Massage therapy Alternative therapies are not covered ..., Alternative medicine therapies coverage provided ... Los Angeles 500+ VVest500+ National 500+ 57% 54% 33% 13% 14% 7% 89% 86% 91% 11% 22% 13% 13% 30% 20% 11% 13% 8% Asthma/CaPO Cancer Depression Diabetes Heart disease/Hypertension Lovv-back pain Obesity Rare disease Renal disease Any disease management program C Disease management programs offered c c c c c Los Angeles 500+ VVest5oo+ National 500+ c c I;J c [J c c c 77% 51% 50% 54% 42% 41% 40% 35% 34% 82% 63% 60% 76% 52% 54% 43% 26% 29% 36% 32% 30% 24% 19% 24% 35% 30% 31% 86% 68% 65% 'Offered 10 employees enrolled in the largest medical plan of any type Mercer H&B c D C c c c c ~ c c c D c c C D C c c c c:I SPECIAL TV MEDICAL BENEFITS, CONTINUED Care management programs offered Catastrophic case management Complex case management End-ot-life case management Health advocate services Health risk assessment (HRA) Health website Nurse advice line Targeted behavior modification Los Angeles 500+ VVes1500+ National 500+ 68% 61% 63% 73% 63% 63% 56% 38% 40% 47% 43% 35% 55% 51% 53% 86% 75% 77% 72% 68% 67% 39% 30% 30% Use incentives to encourage participation in care management program(s) Los Angeles 500+ 20%1 West 500+ 21%1 National 500+ 19%1 DENTAL BENEFITS Average cost of dental coverage, per employee $654 $713 $717 Los Angeles 500+ Wes1500+ $629 National 500+ . 2005 o 2006 Type of dental plan offered 4% Los Angeles 500+ 80% Wes1500+ 67% 3% National 500+ . Open-ended PPO o Dental HMO . Discount card 2% Mercer H&B c g ~ c !;;J ..., ... c c c (J c c c c c II c c c c c - DENTAL BENEFITS, CONTINUED How dental coverage is provided Part of medical plan Freestanding plan Dental plan design Median deductible Median maximum, annual benefit OTHER BENEFITS Provide employee assistance program Los Angeles National 500+ West 500+ 500+ 86%1 81%1 76%1 Offer vision coverage Los Angeles National 500+ West 500+ 500+ 81%1 70%1 66%1 Long-term care coverage Offer LTC coverage to: Los Angeles National 500+ West 500+ 500+ Active employees Retired employees Parents of actives or retirees No LTC coverage offered 38% 30% 29% 80/0 70/0 70/0 15% 14% 14% 62% 70% 71% Flexible spending accounts (FSA) Health care FSA % offering health care FSA Average employee participation Dependent care FSA % offering dependent care FSA Average employee participation Mercer H&B c c ~ c c ~ II 1:2 c r-I .- .... .. c c .:J I;J c c ~ c c c RETIREE HEALTH CARE Offer retiree coverage- 28% 17% Los Angeles 500+ 29% 24% 17% West 500+ National 500+ *to most retirees. on an ongoing basis (new hires will be eligible) . To pre-Medicare-eligible retirees E::I To Medicare-eligible retirees 19% Contribution requirements for retiree-only coverage Pre-Medicare-eligible retirees Los Angeles 500+ 13% 40%" VB% Medicare-eligible retirees I Los Angeles 500+ 9% 57% ./!,~ ..W 35% West 500+ 20% ""'e,,% 1 West 500+ 14% "'I~ . . 19% ~I I J ~ . Employer pays all o Cost is shared . Retiree pays all National 500+ 13% 430,'0~ U4% National500+ I 12% 41%~ U7% Mercer H&B II II c ~ c c c c c c c c c c c c c c c c c RETIREE HEALTH CARE, CONTINUED Average contribution' as a percent of premium, when cost is shared Pre-Medicare-eligible retirees Medicare-eligible retirees 'for reliree-only coverage Los Angeles 500+ West 500+ National 500+ 27% 39% 39% 37% ID 39% Coverages provided Outpatient prescription drug - pre-Medicare-eligible Dental -- pre-Medicare-eligible Dental -- Medicare-eligible Vision -- pre-Medicare-eligible Vision -- Medicare-eligible Los Angeles 500+ West 500+ National 500+ 100% 92% 93% 56% 64% 56% 38% 56% 47% 44% 57% 41% 31% 46% 33% Current approach to Medicare Part D Prescription Drug Benefit Receive 28% subsidy for all/most covered retirees Offer a plan that wraps around a PDP Contract with vendor to offer PDP or MA-PD plan Contract with CMS to become a PDP Terminate drug coverage, continue to offer medical Continue to provide drug coverage through standard plan and do not receive subsidy Los Angeles 500+ West 500+ National 500+ 50% 38% 51% 17% 17% 13% 0% 2% 3% 0% 1% 1% 8% 5% 5% 25% 37% 25% Mercer H&B c a c [] c c c c c c c [J ~ [J c c c c a c c 1 Total health benefit cost per employee is the total gross cost for all medical, dental, prescription drug, MH/SA, vision and hearing benefits for all active employees and their covered dependents, divided by the total number of covered employees only. Total gross annual cost includes employee contributions but not employee out-of-pocket expenses. 2 Medical plan cost per employee is the total gross cost for medical plans, divided by the total number of covered employees. Prescription drug, mental health, vision and hearing benefits for all active employees and their covered dependents are included if part of the plan. Dental benefits, even if a part of the plan, are not included in these costs. 3 In a Consumer-Directed Health Plan, employees use spending accounts (a Health Reimbursement Account or Health Savings Account) to purchase routine health care services directly. Non-routine expenses are covered by traditional insurance after members meet a generally high deductible. Online health and financial tools are generally provided. In this report, unless otherwise specified, CDHP results include both HRA. and HSA-based CDHPs. Mercer H&B a c MERCER Health & Benefits 13 ~ Benefits Publishing 13 Communicating your success Benefits Publishing was designed to bring quality benefits communications to the employers who need them most-small- to mid-sized employers who often have to fight with the big boys to recruit and retain employees. We provide you with top-quality communication tools. Benefits Publishing Tools . Professionally crafted text and design that have been written with you in mind . A technology-based process that makes communications projects run efficiently . Technical knowledge that ensures that the people working on your project can speak your language . Products that have been used by more than 100 of our clients, so we know what works - and what doesn't . Personalized versions of our Benefits Publishing products that are written and designed especially for your company Benefits Publishing Products . Benefits Booklets and Folders to give employees information specific to their benefits and choices . Universal Enrollment Forms we work directly with your carriers so you can dispense with unnecessary and redundant forms . Enrollment Kits including color- and style- coordinated postcards, posters, letterhead, paycheck stuffers, mailing envelopes, and much more How We Work We don't reinvent the wheel. How many ways are there to explain life insurance anyway? Or an EAP? Or COBRA? And who ever said that you have to start with a blank piece of paper every time? We didn't. And we don't. We have spent years communicat- ing benefits the old-fashioned way. We've learned what works and what doesn't. We've learned to explain the difference between a pas and a PPO in a way that is understandable and highlights the advantages of both plans. And we have combined those years of best practices into Benefits Publishing. Where do you start? Together, you and your benefits representative will select which option best suits your company's unique needs. c a a a ~ II . . a c g c c c c c c 1:1 c c c - Helping you brand your benefits and your company... Choose a Design Select a design that best represents your company. We will combine it with the format you choose and create an attractive benefits piece exclusively for you. I );..( , ., 'Pr-. ',~.. .'l f.~. '. '.~ ~_ -."l,- ~ Your Beneflls Guide ~.'1!"'<."c... ..... ',.. ....t_ I ."" _ p,. ~ II -- :~~:, .._.i~. . . .:~ ~ ''"..,,1:_ _ ~;O ;"C' Faces Design ~'.....~, J:t.'rTlb..~ Ernplay_ _ li~~ ~~. ---'- ---- ...-.-- -....- ~._.- - .--. &;~~.r y ,..0..- ' _.n_ _ ~._._. -,.'-- ..___ h____ .. --,.. '.'-- --", ......_~ .--.. . ~ .-- . .--- . Illustrations Design . 'C"'. =. ~~ ~~~ ,"~~~ -'. ~~::-;c~~ .;:.? f;: ,.. I ~~::':h :::._ "::!:"!:;~ il!! ---- - ---- ..- - - .-. -- -~. ~-- . - --. - - _..~. -..-- . -- ~ ~-,.""!i't:':"l or _.__...._ Quad Design Silhouettes Design PLEASE NOTE: These two design options can only be used with the BENEFITS OVERVIEW III format. -. n-- .I!J!I :-.=,: -- - , . . ., "ii~. =~~." ~f [j ."~ ., '.' >>!iI,...""",,, ',,~r.=' "";:: tt,',~. Q-,,-,,--- .~...- ~ ~~. .~=~'- 'ill"#~~, .-:-:;.. .a. .~'iti~:C t{'iU: 11II .~~ i~~i"[ ......,Jc"',u, Grid Design h . ~ -;?., \ \ .:0 ~. I' 1.,;<,( ~,,:Of~ .. ., ., .. . - ._u welton ---~ .. .. ..c C"":::"':-_:t".,. f~;.~'~' -k-- ~~ -'~ ~:::. :::- S~~..;.", _. ~!~ ~- =----- .;.;. Close-ups Design Choose a Format Select a format based on the amount of benefits materials you want to cover with your employees. Then select a graphic design style. We will combine the two into an attracti\e benefits piece excl usi\ely for you. BENEFITS OVERVIEWS When should an Overview I or II be chosen? . To review many plans or communicate significant changes to one or two plans. . To introduce a benefit for the first time. . A brief overview of benefits for recruiting purposes. . A brochure that can be produced quickly and inexpensively, When should an Overview III be chosen? . You need a smaller brochure that can be mailed in a standard #10 envelope. . You have 500 or fewer employees or have a limited budget. . You want a brochure that can be produced quickly and inexpensively. BENEFITS OVERVIEW I 8.5" x 11" four.panel brochure (front and back) BENEFITS OVERVIEW II 8.5" x 11" six'panel brochure (front and back) BENEFITS OVERVIEW III 3.75" x 8.5" six-panel brochure (front and back) ~ ~ 12 ~ c ~ c ~ c c c c D c c ~ c c c C ID BENEFITS HIGHLIGHTS When should a Highlights be chosen? . To differentiate between core and fringe benefits or benefits affected by open emoUment and those that are not. . If your company only offers fringe benefits to certain employee groups. 1 . If benefits vary according to employee group or location. . To introduce a benefit for the first time. . To include information that wiU not change and some information that will change from year to year. I I ~ J I BENEFITS HIGHLIGHTS I WITHOUT pocket 8.5" x 11" eight-panel brochure (front and back) BENEFITS HIGHLIGHTS I WITH pocket 9" x 12" eight-panel brochure with one 4" pocket on the center right-hand panel (front and back) BENEFITS HIGHLIGHTS II WITH pocket and inserts g" x 12" eight-panel brochure with one 4 "pocket on the center right-hand panel and up to four inserts sheets (front and back) BENEFITS HANDBOOK When should a Handbook be chosen? . To communicate an entire benefits program. . When benefits need to be fuUy explained (for example to new hires or for a new program). . When benefits are not likely to change and/or you do not mind reprinting if there are plan changes. . When you want a comprehensive alternative to "SPD-only" communication. BENEFITS HANDBOOK I 16, 20 or 24 pages plus cover, NO pocket 8.5" x 11" handbook that includes 16 pages pluscover. (page count depends on how much information will be included) "\ BENEFITS HANDBOOK I 16, 20 or 24 pages plus cover, WITH pocket g" x 12" handbook that includes 16 pages plus cover and a 4" pocket inside the front or back cover. (page count depends on how much information will be included) BENEFITS FOLDER When should a Folder be chosen? . Your company benefits change often. . To communicate an entire benefits program. . You offer many benefit options. . When benefits need to be fully explained in detail. . When you want a comprehensive alternative to "SPD-only" communication. . Your benefits vary according to employee group or location. ." ~ .- BENEFITS FOLDER I 1 pocket and 6 inserts g" x 12'" pocket folder with one 4" pocket. Six 8.5" x 11" inserts stagger down in half-inch increments. All printed double sided, collated and inserted into folders. BENEFITS FOLDER II 2 pockets and 10 inserts g'" x 12"' pocket folder with two 4"' pockets. Ten 8.5'" x II"' inserts stagger down in half-inch increments, two of each size. All printed double sided, collated and inserted into folders. \ BENEFITS FOLDER III 2 pockets and 6 inserts g" x 12" pocket folder with two 4" pockets. Six 8.5" x 11"' inserts stagger down in half-inch increments. All printed double sided, collated and inserted into folders. ~ c ~ D ~ D c a c D c c c c c c c c IJ c c Don't forget the Web EBView (our custom Website specialists) will help you streamline your benefits communications, cut printing costs, improve employee satisfaction, and reduce HR time spent on benefits-related inquiries. EBView's online benefits communica- tions website is a one-stop solution that provides employees with quick and easy access to all of their benefits-related information, while relieving the HR department of all the benefits-related inquiries they get on a daily basis. By providing this type of employee benefits self-service solution, HR call volume can be reduced by as much as 75 percent. (Workforce Ma~zitle 2003) Customization The robust customization capability allows companies to personalize the site with their own company's look and feel. Customization includes: . Company Logo . Company Color Scheme . Key Messages . Graphics . Calendar . Contacts . FAQs . Forms . Links . Benefits Information . SPDs Scope of Content The EBView Website is designed to host a range of company-specific information to help educate employees about their benefits program. It compiles the most essential elements that employees need to make informed decisions. The site's user-friendly format will help employees become more self-sufficient. The main menu options include Benefits - Information about your benefit plans and providers, including plan detail, contributions and eligibility Company - Company information and calendar, including events and holidays FAQs - Answers to common HR and benefits questions Fonns & Links - Print/view company- specific forms/documents/SPDs, and provide links to more information Contacts - Company and provider contact infonnation Learning Center - Access to helpful planning tools and calculators to help make decisions about benefits Modifications Human resources administrators can effectively manage site functionality with just a click of a button. Availability Employees and their dependents can access EBView anytime. any. where, through their company's personalized web address. Login requirements include a Usemame & Password. The site is available 24/7,365 days a year. Access Security The website will personalize each employee's web session based on the employee's eligibility group so that the online menu will only display the benefit plans for which the employee is eligible. Application Service Provider (ASP) Model The site is provided through an Application Service Provider (ASP) model. Users gain access through the internet using a standard web browser, without the need to load software or maintain infrastructure to run the software. Employees and HR administrators will be able to access the site in two ways: 1) Through a hyperlink on a company's intranet 2) Through the internet - ----- ---- ---.. ------- - -- ::.::...--- Implementing an effective benefit communications strategy can provide employees with the oppor- tunity to understand their benefit options as well as help them make informed decisions. Let EBView help you provide your employees with a quality benefits program online. c c c c ~ ~ ~ ~ c c c IJ c c C1 c c D D t1 D l.I'"li,i'".,..i" 'fI"'1"~~"'''''\ "i' 1'''"",,,11,,, "iijo,'If./lI,,-,,V ''-'1.. "'.,>v..lIiMiiii.~ -,,,, ~~#'O!~~1t MEnCEI{ flEALTH k BENEFITS. LLC IslicensedIOl!llqagei~~ebusinesso(in!illranceilllheStateo!C"forniainlhet~adty5taledbelcw Fire find C1SUi'llty Broker-Agent Li(eAgent Ucense Number: Expiration Date: 0E75.l83 00-31.2007 ~:;<J~:.'~ ~". i' ' ,~ ~ ,. ~~. ~J _c;...........'-~ MERCER HEALTH & BENEFITS, LLC 777 S, Figueroa SI. Suite 2900 Los Angeles, CA 90017 .(1Itt fi'r ~1' '&.i..t.,.. ... -'"...~ .J. ./.111;;' . il ~l !If .1Jl1!'ll1tU!l!Q .. . 'oitt ..... ~,t -t,\",I.t> . . r =, . 'N\"'.. ~ J) '0.",..,- :w t>'ll.f'd'l'lll~'I1'r :!:J"~r""''' ............... MERCER HEALTH & BENEFITS, LLC License Number: OE75483 Pursuant to lhe requirements of the State of Califoml8 Insurance Code. MERCER HEALTH & BENEFITS. LLC is licensed to conduct the bU$Il'ICSS of insurance in the following capaCity. Resident Insurance Producer Qualified As: FIRE AND CASUALTY BROKER.AGENT LIFE AGENT Effective Date 08.02.2005 Expiration Date 08-31-2007 08..02-2005 08-02-2005 ~J 10M GaramelX1i luu:nnce Commissioner c C2 II C ~ ~ ~ 1:3 ~ ~ C C C C C C D C D D C CERTIFICATE OF INSURANCE ********************************************************************** INSURED: Mercer Health & Benefits LLC, INSURER: Epsilon Insurance Company, Ltd. POLICY NUMBER: E006070930 POLICY PERIOD: September 30, 2006 - September 30, 2007 LIMIT OF LIABILITY: Each Claim Aggregate $20,000,000 $20,000,000 TYPE OF INSURANCE: Professional Liability ********************************************************************** CERTIFICATE HOLDER: S P E C I MEN Should the above described policy be cancelled before the expiration date thereof, the Insurer will endeavor to mail XX days written notice to the certificate holder named above, but failure to mail such notice shall impose no obligation or liability of any kind upon the Insured, the Insurer, their manager, agents or representatives. Epsilon Insurance Company, Ltd. {jJ {11 /rL- Joel R. Hughes Authorized Representative Date: September 20, 2006 PLEASE REFER ALL INQUIRIES TO MARSH & MCLENNAN COMPANIES, INC., RISK MANAGEMENT DEPT., 1166 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10036 a .. en IJ~ en .. t- el " e C~ t- e .......0 ..i .. e " c:! oS c c g g c C D D C . a (/) " >< - a .. u W ~ " 0 ~ D Z .. ~ c 0 0 C E " U .c ~ ~ c l: o +:: Gl Gl "Q'Oi EO o () ; jl Gl :ii '0 ~ l:t: I~ ~ 01 Gl a: 01 :::I - .. - CIl E Gl = .. 'tl l: ~ c( Gl 01 .. .s::. Q. 1: .!!! U Ul x w Z o u Cl Z o z ii: .... o < u. C Z < Z o t= () :> c o c: .... ~ ~ W rJl < :l: a. ~ '" o~ .~ ~ (J) .~ ~ ~ ~ ~ Du c: '" <ii " <.> - " ::> <.>" c: Ql Ql g 2 c c: . o Ql <.> c: -0,= .S ~ Qi '';::; " c: E .Q ~ro 01: - Ql g E " Ql e7" E E (fJ x w Z o u 1: !!! Q (fJ (fJ x x w w Z Z o 0 u u :;; .C: '" () c: . o c: +:: 0 ro: '';::; ~ ~ E " Ql- c..E E ~ "n: 2" 2 c: 0.'" 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'" '" '" '" z o fi I- Z UJ ~ UJ ..J 0.. ~ "- o z o t= UJ ..J 0.. ~ o u ~ UJ III <( ::t: 0.. .. '" 5 0 ~~ ~ .~ ffi 'E :J~ 00 X UJ Z o o o j U C .9 '" C .12 13 Q) a; u C '" '" E " E " i5. "E '" 1: o "- .. .. 00 X UJ Z o U c " .s "0 c Q) Q) .<: C o <( 00 "- s u o .~ C " .s "0 c Q) " '" o o EE .~ .9:? 00 ~ :c g " u C '" '" to ~ " g .in '" " " o 1; ~ '5 s .~ 0; C " al C .Q '5 "0 > UJ 9 ~ .~ :c :~ ~ w ~ :~ } .~ }~eID .9:? ,.., UJC g >:5 ... ~ :: :<== Q. ro.QZ"E .S"'5 ~ ctI u.u.U)u 00 00 X X UJ UJ Z Z o 0 o 0 >- c c Q) al '" u (iju o~ , C Eo co "- alo Q) Q) fAtii ",0 <: " g? .~ E~ E::= UJUJ <I:t 'I:t 'I:t 'I:t 'I:t' M '0 N ~ '" ~ 0.. UJ !;;: C UJ > t= u UJ ... ... W I- 00 o 0. ,;; UJ III <( ::t: 0. .... II c ~ c: ~ 0 :;:; I Q) - .. '" d E 0 0 u " I c 0 j: [~ .. ~ c " -e L!! II. .5 . . j/ . ~ Q) Ia :c 'iij I~ c: g en C III Q. X Q) w a: z 0 0 C III ::I - '" - Ul a E Q) E Q) Q) c a, <( '" 1lo .~ ~ Q) en" E ,," Q) '" Q) Sc = u Q) Q) E '" x ::> 'tl w u .0 c: ~o !~ ." " (!) '" c:( " a: .Q ~ ~ 2: <;; ::> .c: en "E S " .- <tg Q) " - Q) E E "C Q) ~~ Q) III '" '" ..c: Q. '" '0 '" Q) '" ~ c 12 c c a c c ...... ... 1"""'1 .. ,..., ... -', ....... ... .... ... "'.'" '.. '. D ~ c ..., .. ~ For more information, contact your Mercer Health & Benefits representative. .... ... c ....., ..., .., ... c '; ~ Marsh & Mclennan Companies MERCER Mercer Administration Call Center q WEEK 1 Mercer Administration, Consultant, and Client . Informational gathering conference call . Define level of Call Center support . Determine process and timeline . Client contact information . CarrierNendor contact information . Benefit information . Employee Jist containing demographical information . Call Center agreement . Determine effective date . Discuss communication method . Discuss phone reporting 99 WEEK 2 & 3 Mercer Administration . Assign toll-free number . Program phone messaging . Link benefit summaries and carrier/vendor contact information to the intranet when received from client m WEEK 4 Mercer Administration . Customer Service training . Test phone programming ffFR ONGOING Mercer Administration, Consultant, and Client . Obtain feedback from client . Phone reports to client C Mercer Health & Benefits LLC m c I:J c ~ ~ c EJ a c [J c a c c c c c a c c Implementation Timeline for Retiree Services 3-4 day turnaround time 1. Employer will need to provide EBS with a list of all current Retiree participants including the following information: Participant Information: a. Name of former employee and address b. Name of all covered dependents c. Social security number of covered participants (employee and dependents) d. Dates of Birth of all covered participants (employee and dependents) e. Effective date of Retiree coverage f. Type of Coverage and Level for all participants (ex. medical for employee only, or employee plus one, or family) g. Current Payment information (what has been paid to date and what is outstanding) Carrier Information: a. List of all plans, carrier names, addresses, contact names and numbers b. Rates for all plans Employer Information: a. Contact name and number for client b. Policy on late enrollments, late pays and reinstatements for both COBRA and Retirees 2. EBS will load all Retiree information into our plan management systems 3. Once loaded in the system EBS will send all participants welcome letters and coupons 4. Employer will have carriers redirect bills to EBS for Retirees if possible, otherwise EBS will send all funds collected to the employer for inclusion with payment for active employees. 5. Any payments received by employer for coverage after the takeover date will be sent to EBS for processing (EBS will contact participant and remind them to forward all payments to EBS.) Payments received by the Employer for coverage prior to the takeover date, will be processed by the Employer. 6. Employer will notify EBS of all retirements from the start date of the administration going forward. The information will include: . Name of the Retiree . Address . Date of Retirement . Date of Birth . Date of Hire . Retiree Coverage Elected . Dependent coverage o Name of deps. o SSN o DaB o Coverage type 7. EBS will verify receipt of termination reports and send e-mail notice of date of QE notice sent. EBS will process the QE notices within required timeframe. 8. EBS will pay carrier bills monthly ~ Ia 9. C 10. e c c g c ~ c c c ~ c c c c c c c C n EBS will bill employer once per month for all activity (QE notices and administration) EBS will report monthly all QE notices sent, all carrier payments made, all funds received, all participants terminated. 2