HomeMy WebLinkAbout17-Human Resources ORIGINAL
CITY OF SAN BERNARDINO- REQUEST FOR COUNCIL ACTION
From: Linn Livingston Subject: RESOLUTION OF THE CITY
OF SAN BERNARDINO
Dept: Human Resources AUTHORIZING THE EXECUTION OF
AN AGREEMENT WITH MERCER
Date: August 29, 2007 HEALTH AND BENEFITS LLC TO
PROVIDE BROKER AND
ADMINISTRATION SERVICES FOR
THE CITY'S EMPLOYEE HEALTH
CARE PROGRAM FOR A PERIOD OF
THREE YEARS.
M/CC Meeting Date: Sept. 4, 2007
Synopsis of Previous Council Action:
On July 16, 2007, Mayor and Common Council authorized the City Manager to negotiate the
terms of the contract with Mercer Health& Benefits for broker and health administration
services.
Recommended Motion:
1. Adopt Resolution.
2. Authorize the Director of Finance to amend the FY 2007-08 adopted budget to reflect all
employee health costs in the appropriate Departmental budget and to budget the
administrative and broker fees in the General Government Contractual Se ices budget.
ryL�14'-- ifx
Signature
Contact person: Linn Livingston Phone: 384-5161
Supporting data attached: Yes Ward:
FUNDING REQUIREMENTS: Amount: $327,000 annually
Source: (Acct. No.) 001-092-5502
(Acct. Description) Health& Life Insurance
Finance:
Council Notes: �s—c� o20D7 3 9
Agenda Item No.
olwt / u
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
SUBJECT
Resolution of the City of San Bernardino authorizing the execution of an agreement with Mercer
Health and Benefits LLC to provide broker and administration services for the City's employee
Health Care Program for a period of three years.
BACKGROUND
On July 16, 2007, the Human Resources Department presented the Mayor and Common Council
a summary of the selection process used to assist in determining the best candidate for health
broker and administration services. Included in the report was a unanimous recommendation by
the evaluation committee to appoint Mercer Health& Benefits and authorize the City Manager to
negotiate the terms of the contract.
Mercer Health& Benefits is a wholly owned subsidiary of Marsh& McLennan Companies, Inc.,
a Fortune 500 diversified financial services company. They are the largest benefit consulting
firm in the world, yet they deliver local services with experienced and expert staff. Mercer has
extensive experience working with public sector employers and labor organizations.
Mercer's health benefits consulting/broker and administration fees are very competitive. They
have guaranteed their annual consulting/broker fees for three years, at$140,000 per year.
Additional fees for administrative on-line services, retiree medical, open enrollment and
COBRA, will be approximately $187,000 annually. In addition, Mercer is placing a significant
amount of their consulting/broker fees at risk(10%) to guarantee they deliver the most
appropriate and valuable service to the City's satisfaction (As outlined in the Performance
Standard Guarantees, attached as Exhibit"B").
Effective August 1, 2007, Mercer assumed the responsibility as the City's Broker of Record.
Broker Service fees are currently included in the 2007 health plan year premiums, which have
now been transferred to Mercer. Mercer will receive the commissions that are currently in place
through December and monthly payments are anticipated to begin in January 2008. Future
annual payments of$327,000 should be divided evenly and paid over a 12 month period, a
portion of which shall be paid by the Water Department.
On behalf of the City, Mercer has already requested proposals and negotiated medical programs
beginning January 1, 2008. Overall, the City's medical carrier renewal premiums for PacifiCare
will reflect an increase of 4.5% and a Kaiser increase of 1.7%, with no changes in service levels.
This compares to rate increases that were projected by the previous broker of 10% for PacifiCare
and 4% for Kaiser, resulting in an annual net saving of approximately $200,000 in broker fees
and premiums over previous broker estimates.
The Human Resources Department is requesting this agreement be approved to provide health
care benefits for City of San Bernardino employees, effective August 1, 2007.
FINANCIAL IMPACT
The cost of these services is approximately $327,000 annually. The City's FY 2007-08 adopted
budget includes funds in each departmental budget to cover the anticipated health care costs for
all employees. An additional $646,000 was included in the General Government budget to cover
health care increases and MOU negotiated increases for each bargaining group.
Upon approval of the new contract with Mercer Health & Benefits and the finalization of the
2008 health insurance premium rates, the Finance Department will amend the FY 2007-08
budget and move the funds to the various departments. Funds to pay for broker and
administrative services will remain in the General Government Department budget. The budget
amendment motion, included as part of this item, authorizes the Finance Department to make the
necessary budget adjustments for FY 2007-08.
RECOMMENDATION
1. Adopt Resolution.
2. Authorize the Director of Finance to amend the FY 2007-08 adopted budget to reflect all
employee health costs in the appropriate Departmental budget and to budget the
administrative and broker fees in the General Government Contractual Services budget.
MAgenda Items:SR.MERCER.2007
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1 Resolution No lJ
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.
5
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF
6 SAN BERNARDINO AS FOLLOWS:
7 SECTION 1: 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
to 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.
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9 X07
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1 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
Now EXECUTION OF AN AGREEMENT WITH MERCER HEALTH AND BENEFITS LLC
2 TO PROVIDE BROKER AND ADMINISTRATION SERVICES FOR THE CITY'S
3 HEALTH CARE PROGRAM FOR A PERIOD OF THREE YEARS.
4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and
5 the Common Council of the City of San Bernardino at a meeting thereof,
6 held on day of 2007, by the following vote, to wit:
7
8 COUNCILMEMBERS: AYES NAYES ABSTAIN ABSENT
ESTRADA
9
BAXTER
10 BRINKER
11 DERRY
12 KELLEY
13 JOHNSON
MCCAMMACK
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15
16 Rachel G. Clark, City Clerk
17
The foregoing resolution is hereby approved this day of
18
2007.
19
20 Patrick J. Morris, Mayor
21 City of San Bernardino
22 Approved as to form:
23 JAMES F. PENMAN,
City Attorney
24
25 By:
HR Benda Items:Reso.Mercer.2007
EXHIBIT A
1 SERVICES AGREEMENT
2 THIS AGREEMENT is made and entered into this 1 st day of August, 2007 ("Effective
Date"), by and between the CITY OF SAN BERNARDINO, a charter city ("City"), and
4 MERCER HEALTH & BENEFITS LLC, a Delaware limited liability company
5 ("CONSULTANT").
6 WITNESSETH :
7 A. WHEREAS, CITY proposes to have CONSULTANT perform the services
8 described herein below; and
9 B. WHEREAS, CONSULTANT represents that it has that degree of specialized
10 expertise contemplated within California Government Code, Section 37103, and holds all
11 necessary licenses to practice and perform the services herein contemplated; and
12 C. WHEREAS, CITY and CONSULTANT desire to contract for professional
i 1,
services as described in the Scope of Services, attached hereto as Exhibit "A"; and
14 D. WHEREAS, no official or employee of CITY has a financial interest, within the
15 provisions of California Government Code, Sections 1090-1092, in the subject matter of this
16 Agreement.
17 NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
18 contained herein, the parties hereby agree as follows:
19
20 1.0. SERVICES PROVIDED BY CONSULTANT
21 1.1. Scope of Services. For the remuneration stipulated, CONSULTANT shall
22 provide the professional services described in the Scope of Services attached hereto as Exhibit
223 "A" and incorporated herein by this reference ("Services"). If a conflict arises between the
24 Scope of Services document and this Professional Services Agreement (hereinafter
25 "Agreement"), the terms of the Agreement shall govern.
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1 1.2. Professional Practices. All Services to be provided by CONSULTANT 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 circumstances 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 CONSULTANT 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 minimum 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.
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1 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.
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20 2.0. COMPENSATION AND BILLING
21 2.1. Compensation. Except as provided herein, CONSULTANT 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
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I 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 of Billing. CONSULTANT may submit invoices to CITY for approval.
4 Said invoice shall be based on the total of all CONSULTANT's 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 CONSULTANT 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.
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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
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2 3.2 Termination. CITY or CONSULTANT may terminate the Services provided
3 under Section 1.1 of this Agreement upon thirty(3 0) 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 of termination.
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.
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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 policy limit of One Million Dollars ($1,000,000.00), combined single
21 limits, per occurrence and aggregate.
22 (b) Automobile liability for owned vehicles, hired, and non-owned vehicles,
23 with a policy limit of One Million Dollars ($1,000,000.00), combined
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single limits, per occurrence and aggregate.
21 (c) Workers' compensation insurance as required by the State of California.
1 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
1 4 appointed boards, officers, and employees are additional insureds with
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5 respect to their vicarious liability arising out of CONSULTANT'S
6 performance of the Services hereunder."
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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."
11 4.3. Certificates of Insurance. CONSULTANT shall provide to CITY certificates of
12 insurance showing the insurance coverages and required endorsements described above, prior
13 to performing any services under this Agreement.
9 Ar 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.
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20 5.0. GENERAL PROVISIONS
21 5.1. Entire Agreement: 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
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i 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 CONSULTANT: IF TO CITY:
9 Richard Hill, Principal Linn Livingston,
Mercer Health & Benefits Human Resources Director
10 4695 MacArthur Court, Suite 600 City of San Bernardino
Newport Beach, CA 92660 300 North "D" Street
11 Telephone (949) 222-1300 San Bernardino, CA 92418
12 Telephone: (909) 384-5161
Fax: (909) 384-5397
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5.3. Attorneys' : In the event that litigation is brought by any party in connection
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with this Agreement, the prevailing party shall be entitled to recover from the opposing party all
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costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the
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exercise of any of its rights or remedies hereunder or the enforcement of any of the terms,
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conditions, or provisions hereof. The costs, salary and expenses of the City Attorney and
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members of his office in enforcing this contract on behalf of the CITY shall be considered as
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"attorneys' fees" for the purposes of this Agreement.
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5.4. Governing Law. This Agreement shall be governed by and construed under the
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laws of the State of California without giving effect to that body of laws pertaining to conflict of
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laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
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agree that the sole and exclusive venue shall be a court of competent jurisdiction located in San
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Bernardino County, California.
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5.5. Assignment: CONSULTANT shall not voluntarily or by operation of law
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t 1 assign, transfer, sublet or encumber all or any part of CONSULTANT's 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
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6 release CONSULTANT of CONSULTANT's obligation to perform all other obligations to be
7 performed by CONSULTANT hereunder for the term of this Agreement.
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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 CONSULTANT's 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
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omissions.
20 5.7. Independent 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
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1 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 venture between
8 the CITY and CONSULTANT.
9 5.8 Conflict of Interest Disclosure: CONSULTANT or its employee may be subject
to 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. Responsibility 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.
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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 Employment. 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 CONSULTANT 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.
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• 1 5.16. Severability. If any provision of this Agreement is determined by a court of
2 competent jurisdiction to be invalid or unenforceable for any reason, such determination shall
3 not affect the validity or enforceability of the remaining terms and provisions hereof or of the
4 offending provision in any other circumstance, and the remaining provisions of this Agreement
5 shall remain in full force and effect.
6 5.17. Counterparts: This Agreement may be executed in one or more counterparts,
7 each of which shall be deemed an original. All counterparts shall be construed together and
8 shall constitute one agreement.
9 5.18. Corporate Authority. The persons executing this Agreement on behalf of the
10 parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said
11 parties and that by doing so, the parties hereto are formally bound to the provisions of this
12 Agreement.
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I IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
2 and date first above shown.
3 ATTEST: CITY OF SAN BERNARDINO
4 Municipal Corporation and
Charter City
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6 Rachel Clark, City Clerk Fred Wilson, City Manager
7 CONSULTANT:
8 By:
9 Approved as to form:
10 JAMES F. PENMAN
11 City Attorney
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By:
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HR/Agenda Items:MERCER.2007
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1 SERVICES AGREEMENT
2 THIS AGREEMENT is made and entered into this 4th day of September, 2007
3 ("Effective Date"), by and between the CITY OF SAN BERNARDINO, a charter city ("City"),
4 and MERCER HEALTH & BENEFITS LLC, a Delaware limited liability company
5 ("CONSULTANT").
6 WITNESSETH :
7 A. WHEREAS, CITY proposes to have CONSULTANT perform the services
8 described herein below; and
9 B. WHEREAS, CONSULTANT represents that it has that degree of specialized
10 expertise contemplated within California Government Code, Section 37103, and holds all
11 necessary licenses to practice and perform the services herein contemplated; and
12 C. WHEREAS, CITY and CONSULTANT desire to contract for professional
13 services as described in the Scope of Services, attached hereto as Exhibit "A"; and
14 D. WHEREAS, no official or employee of CITY has a financial interest, within the
15 provisions of California Government Code, Sections 1090-1092, in the subject matter of this
16 Agreement.
17 NOW, THEREFORE, for and in consideration of the mutual covenants and conditions
18 contained herein, the parties hereby agree as follows:
19
20 1.0. SERVICES PROVIDED BY CONSULTANT
21 1.1. Scope of Services. For the remuneration stipulated, CONSULTANT shall
22 provide the professional services described in the Scope of Services attached hereto as Exhibit
23 "A" and incorporated herein by this reference ("Services"). If a conflict arises between the
24 Scope of Services document and this Professional Services Agreement (hereinafter
25 "Agreement"), the terms of the Agreement shall govern.
1
1 1.2. Professional Practices. All Services to be provided by CONSULTANT 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 circumstances 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 CONSULTANT 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 minimum hours and wages; occupational
13 health and safety; fair employment and employment practices; workers' compensation insurance
I.
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
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1 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.
S 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.
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20 2.0. COMPENSATION AND BILLING i
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21 2.1. Compensation. Except as provided herein, CONSULTANT compensation shall
22 be as set forth in Exhibit "A".
23 2.2. Additional Services. CONSULTANT shall not receive compensation for any
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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
I 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.
2.3. Method of Billing. CONSULTANT may submit invoices to CITY for approval.
4 Said invoice shall be based on the total of all CONSULTANT's 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 CONSULTANT 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.
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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
1 provided for herein.
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 of termination.
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.
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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 policy limit of One Million Dollars ($1,000,000.00), combined single
21 limits, per occurrence and aggregate.
22 (b) Automobile liability for owned vehicles, hired, and non-owned vehicles,
23 with a policy limit of One Million Dollars ($1,000,000.00), combined
24 single limits, per occurrence and aggregate.
25 (c) Workers' compensation insurance as required by the State of California.
5
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• 1 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."
11 4.3. Certificates of Insurance. CONSULTANT shall provide to CITY certificates of
12 insurance showing the insurance coverages and required endorsements described above, prior
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 Agreement: 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
1 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
i
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 CONSULTANT: IF TO CITY:
9 Richard Hill, Principal Linn Livingston,
Mercer Health & Benefits Human Resources Director
10 4695 MacArthur Court, Suite 600 City of San Bernardino
Newport Beach, CA 92660 300 North "D" Street
11 Telephone (949) 222-1300 San Bernardino, CA 92418
12 Telephone: (909) 384-5161
Fax: (909) 384-5397
13
5.3. Attorneys' 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
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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
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members of his office in enforcing this contract on behalf of the CITY shall be considered as
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"attorneys' fees" for the purposes of this Agreement.
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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
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laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto
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agree that the sole and exclusive venue shall be a court of competent jurisdiction located in San
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Bernardino County, California.
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5.5. Assignment: CONSULTANT shall not voluntarily or by operation of law
7
• 1 assign, transfer, sublet or encumber all or any part of CONSULTANT's 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 CONSULTANT's 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,
I 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 CONSULTANT's 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. Independent 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
I 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 venture 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.
Lu
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. Responsibility 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
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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
'-3 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
I
15 associated compensation) do not include independent verification of required information.
9
I 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 Employment. 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 Partv Beneficiary Rights. This Agreement is entered into for the sole
9 benefit of CITY and CONSULTANT 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.
I
10
1 5.16. Severability. If any provision of this Agreement is determined by a court of
2 competent jurisdiction to be invalid or unenforceable for any reason, such determination shall
3 not affect the validity or enforceability of the remaining terms and provisions hereof or of the
4 offending provision in any other circumstance, and the remaining provisions of this Agreement
5 shall remain in full force and effect.
6 5.17. Counterparts: This Agreement may be executed in one or more counterparts,
7 each of which shall be deemed an original. All counterparts shall be construed together and
8 shall constitute one agreement.
9 5.18. Corporate Authority. The persons executing this Agreement on behalf of the
10 parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said
11 parties and that by doing so, the parties hereto are formally bound to the provisions of this
12 Agreement.
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25
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I IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
'- and date first above shown.
ATTEST: CITY OF SAN BERNARDINO
4 Municipal Corporation and
Charter City
5
6 Rachel Clark. City Clerk Fred Wilson, City Manager
7 CONSULTANT:
8 By:
9 Approved as to form:
10 JAMES F. PENMAN
11 City Attorney
12
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By:
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15 V
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HR/Agenda Items:MERCER.2007
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.
r
• 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
emphasis 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:
• Mercer will provide annual creative services through its Benefits Publishing
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.
• Mercer will provide its annual series of wellness materials, called the Healthy
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
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 behalf with 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 financial 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
• 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
C. Employee Benefit Programs
• 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 of Billing. 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
CITY OF SAN BERNARDINO (CITY) EXHIBIT B
PERFORMANCE STANDARD GUARANTEES
Health and Welfare Plans and Programs
MERCER HEALTH & BENEFITS, LLC (MERCER)
Performance Standard Performance Standard Methodology Financial
Description Amount at
Risk
Timely response to City to receive verbal response within two (2) 2% of the cost
verbal inquiries City business 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 (10%) 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
project.
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
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.
,I
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
personnel.
i Total Financial 10% of the
Liability per Contract
total cost of
Year Not to Exceed services per
plan year
3
* 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.
. I
CITY OF SAN BERNARDINO
InOF
e
1101'
�M Where History and the Future Meal
Response to Request for
Employee Benefits Consulting and Broker
Proposal
June 19, 2007
MERCER
Health & Benefits.—:
17
.7Where History and the Future 9i
M990
9
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
F
urn"
iM Where History and the Future Mee
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 §125, FMLA, CFRA, ADA, Medicare, and Discrimination Testing.
I 0 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.
' 0 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
IN Where History and the Future Mee'q
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 Required Services
Services Outlined by the City of San Bernardino are:
1. Developing long-range employee benefit goals and strategies for the City of San
IBernardino.
Mercer will assist the City in developing long range employee benefit goals by facilitating the
development of such goals and
recommending strategies in partnership CORE SERVICES
with your Benefits Committee.
Once such goals have been identified in
concrete terms, Mercer will recommend
appropriate strategies. Benefit Strategy
We will employ experts in plan administration;
actuarial, financial, and data analysis;
performance measurement and audit; flexible, Renewal Management f
and self-directed plans; health, behavioral J
health, clinical quality improvement, employee
absence, disability, and productivity consulting.
We will provide expert bidding, evaluation, rate Bid Specifications/Analysis
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. Day-to-Day Assistance
Our Health &Welfare Core Services are
comprised of seven key service components,
illustrated in the flowchart. If you do not have Regulatory Compliance
effective support in these key areas, you are
likely to be underserved or to miss potential
savings opportunities.
Reporting Financial Results j
We realize that needs vary depending on size.
An 800-employee organization may not have the
same priorities as one with 20,000. But that
doesn't mean you should forego the right Employee Communications
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.
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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
Al 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.
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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
° voicemail 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 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, 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.
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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, HRKnownow.com (being renamed
Mercer Select).
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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 Experience Data Analysis
A significant differentiator between
Mercer and our competitors is the A.
sheer volume of resources we employ
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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, Cost Trends by Incurred Month
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arrangements
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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, Efficiency, and Accuracy
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 multiple 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).
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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. '"•"•�"• 2003 "� •..._.m.....~�_��__....»-,
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the right), an interactive proprietary Mercer tool, .MO��a�1,.w_12 t/� -
can quickly estimate the potential value and •.U••It.m
cost impact of basic and advanced approaches.
MedForecastT"' allows "what-if" scenarios
based on multiple changes, and/or shows the °°m""T"` •�"�••'°°"I • �. a
impact of making no change at all. You will "°° � °"°"°••"�' °"°°'"E"�"' �" �� " `"
quickly have a one-, three- and five-year
financial forecast based on your choices.
Most importantly, MedForecastTM 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
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• 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
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Renewal Report
• Provides a rate history including the renewal offers, stop-loss detail based on the
renewal and alternatives, claims 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.
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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, performance 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 systems
• 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.
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1) Your Consultant will review, assist, and recommend solutions to your current
materials and provide their recommendations.
2) Benefits Publishing
• 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 large employer groups 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
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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 carriers/vendors 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.
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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 CalPERS.
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 EasyEnroll
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
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Where History and the Fatgre
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 24/7 access to view existing
benefits and related subject matter.
16
So in Where History and the Future Me
• 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/limits/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 ID 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 voicemail availability for callers to leave messages with return
17
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;I■ Where History and the Future Meet
• 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 Billing
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
I 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 (active/retiree). 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 EasyEnroll.
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.
S. 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
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7i' m ere History and the Future MeeQ
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
• Group account activity—year to date
• 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
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Tr
• Electronic
• 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 COBRA/HIPAA compliance risks
• Allow you to focus on core HR issues
• Provide superior customer service
Our CONEXIS Solution services include:
• Premium Billing and Collection
• COBRA/HIPAA 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
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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
Obesity Acute Illness/ Chronic Illness
well At Risk I : I Catastrophic
Discretionary Care
Diabetes
No Disease Doctor or .
Head Injury
High Cholesteroi 11 1 Cancer
E-ergency Visits Disease L
• Prevention Health risk ? Nurse advice line Disease • case management
• Screenings assessment Web tools management g
: Decision support
• Targeted risk- Consumer-directed Incentive design Predictive modeling
reduction programs health plan Self-management
• Risk modeling training
i
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
N Where History and the Future .8
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 faster/better 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.$), 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
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wWhere History and the Future Meetlr
• 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.
Project Cost Allocation
Core Consulting&Administrative Services
Requested by The City of San Bernardino
Basic Annual Benefits Consulting Services $ 152,000
Retiree Administration and Outsourcing $ 27,710
continued with EBS
On line enrollment services with Mercer Easy $ 60,500
Enroll- Mercer Administration
Consolidated Billing Services (Mercer $ 56,000
ra Administration
Call Center Services Mercer Administration $ 24,500"
COBRA Outsourcing CONEXIS $ 11,340
Communications Services—Creative Fees $ 7,000
Mercer Benefits Publishing)
Communications Large Employer To be Determined if Needed
Subtotal $ 339,050
Value Added Services
Printing of Communication materials To be Determined if needed
Consulting projects under Additional Services To be Determined if needed
for Health and Productivity, Wellness,
Consumerism Behavioral Health, Absent
Management, and Managed Pharmacy
Other $
Total: $ 339,050
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10 Where History and the Future Meet!
Retiree Administration Outsourcing:
Annual Re-enrollment fee $ 350
Annual Administration $27,360
Enrollment Services (Paper) $0
(Other methods available for an additional cost)
Total $27,710
"Enhanced Call Center Services $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
, Where History and the Future Meet)
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 Consultant/Vali 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 Mr. Walt Jerz
Contact Number (714) 765-5198
• Client for 20 years
D) 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
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Where History and the Future Meetl
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 world 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
I 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, Eastern 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
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M Where History and the Future Me
Marsh & McLennan Companies (MMC)
Oliver
Wyman
Group
and Technology
Oliver
Lippincott Wyman
Health HR
Benefits Services
N ERA
...
Economic
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
iM Where History and the Future MeeU
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.
H&B Core Tears
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
Actuarial Health & Productivity Legal/ Market Business
Advisor Management Compliance Leader
Tim Upson Steven Noeldner Mike Sinkeldam 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 OCTA 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
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�M Where History and the Future Meett�;
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
SWRTHMI
iN Where History and the Future 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 global 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
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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, and has served as a reviewer for the Journal of Cardiopulmonary Rehabilitation and
for the Canadian Journal of Sports Medicine.
31
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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 **Advisory ***Enterprise
Practice Leader Practice Leader Practice Leader
Tim Upson Richard Hill Andy Griffin
■
Co-Consultant Co-Consultant Consultant Specialty
Richard Hill Kristine Dopera Susan Tamanaha Practices
as needed
Benefit Analysts)
Francesca Redshaw
Administrative Assistant(s)
r
*Consulting Practice–Groups of 5000 and above
`"Advisory Practice–Groups of 500-5000
—Enterprise Practice–Groups of 50-500 32
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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
Contract/Summary 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.
If
a
33
�� II •
M Where History and the Future Meep
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
Employee Benefits Objective setting
Establish short term&long term plan objectives
• Financial/Budgetary i {'
• Plan Design/Benefit Level
• Cost Sharing
• Communication
Evaluation
• Compare final enrolknent and financial
results with EB objectives established in Employee Benefits Program Review
Phase I and III • Compare current plan with EB ot)jeChveS
• Coordinate carrier admiri
`° • Review Mercer and local
• Review camer/verrdor • Establish timeline for
Renewal/Market Strategy Setting
• Funding alternatives
Recommendations and Impleamentation Product&benefit level options
• Present results and recanmendaticns Carriers/Markets
• Facilitate decisions on carrier(s),funding Cost sharing options
product and plan designs,cost sharing a,, ' Enrollment process
communication Communication stmt
• Assist with open enrolrnent,as,
Marketing and Carrier Negotiations
• Prepare and distribute specifications
• Optimize market leverage for price .
and plan design to achieve
• Obtain renewal
Negotiate with inasrtbm*
34
Where History and the Future Mee
Process: Your designated consultant meets with appropriate Human
�laS@ 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
aSe 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.
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
DAM Where History and the Future Meet
"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.
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
IM's
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�M Where History and the Future Meetl
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
� iN Where History and the Future Meeil
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 Meaningful and timely reporting
employee benefit programs, self-funded Viable short- and long-term strategies for health &
plans, claims management, cost containment welfare program
strategies, actuarial services, vendor Creative and innovative approaches to ensure
procurement, consumerism and wellness quality programs, best-in-class
initiatives, and communication carriers/network/providers, optimal coverage
Substantial clout in the marketplace Skilled assistance with provider negotiations
Industry's largest group of experts, Confidence in services provided by the only
including local team for the City of San consulting/brokerage business with a complete set
Bernardino focused on helping employers of advisory and transactional services for every
and employees with their benefits needs segment of the marketplace
Competitive benefit program for local market
Best practices employed to ensure cost effective,
quality program
Seasoned client team with public-sector Access to unparalleled health & welfare talent
experience with unmatched National and technology
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 Health care plans that are representative of best
Sophisticated medical claim tracking and practices in the industry
projection tools Largest database in country of health care cost
Leading-edge consumerism tools and and design trends
approaches 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.
Transparency initiatives and full disclosure No contingent commissions or hidden charges
All elements of placement process detailed in
writing
38
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Where History and the Future Meet!
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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
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1�k
Profile report MERCER
p Health & Benefits
Los Angeles Employers
A special report Total health benefit cost rose by 6.1% in 2006,the same pace as last
from the Mercer year,to an average of$7,523 per employee.This represents the end
of a three-year period in which employers succeeded in reducing the
National SUrvey of rate of growth in health benefit costs, which hit a 12-year high of
Emplover-Sponsored 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
Health Plans 2006 was a faster rate than last year. Employers predict another 6.1%
increase in average cost for 2007.
Number of participants In 2006,cost-shifting to employees was less of a factor in reducing
health benefit cost increases than in past years. Average deductibles,
Los Angeles 500+ 54 copays and out-of-pocket maximums, which rose rapidly from
West 500+ 253 2000-2005, showed only modest growth last year. However,
National 500+ 1845 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. In addition,enrollment in consumer-
directed account-based health plans,the least expensive type of
Geographic regions used in survey medical plan by far, is increasing. Finally,employers continued to
add care management features to their plans in 2006—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 scientific 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 unweiahted.
TOTAL •
Average total health benefit cost* per employee
■ 2005
$6,808 $7,162
$7,364 $7,851 $7,379 $7,832 I] 2006
Los Angeles 500+ West 500+ National 500+
Total health benefit cost includes medical,dental,Rx,and specialty benefits
Expected average increase in total health benefit cost for 2007:
Los Angeles National
500+ West 500+ 500+
Before making changes' 9.3% 9.2% 8.8%
After making changes' 7.4% 6.6% 6.4%
` 'To plan design or health plan vendor
Average total health benefit cost as a percentage of payroll for 2005
16.3%
15.4%
13.5%
Los Angeles 500+ West 500+ National 500+
Mercer H&B
_EMPLOYER - •
Demographics
Los Angeles National
500+ West 500+ 500+
Average employee age 42 41 41
% of female employees 51% 52% 54%
% of union employees 36% 23% 18%
MEDICAL PLAN PREVALENCE
Type of medical plan offered
Percent of employers offering each type of medical plan
Los Angeles National
500+ West 500+ 500+
Indemnity 13% 11% 13%
PPO 98% 86% 86%
POS 19% 15% 15%
HMO 93% 56% 40%
Consumer-directed health plan (CDHP)' 11% 6% 11%
ncludes both HRA-and HSA-based CDHPs.
Employee enrollment
Percent of all covered employees enrolled in each type of medical plan
❑ Indemnity 0 PPO M POS ❑ HMO N CDHP
Los Angeles 500+ West 500+ National 500+
2%1% 2% 2% 3% 2%
25%
26%
41%
5% 50%
68% 8% 61%
6%
Mercer H&B
EMPLOYEE • •
Individual coverage
Average monthly contribution for individual coverage(S)
Los Angeles National
500+ West 500+ 500+
Indemnity $77 $90 $101
PPO $103 WC0 $85
POS $35 $84 $83
HMO $56 $64 $76
CDHP $61 ID $50
Dental $12 $14 $15
Average contribution for individual coverage(%of premium)
Los Angeles National
500+ West 500+ 500+
Indemnity 21% 21% 24%
PPO 23% 24% 23%
POS 11% ID 25%
HMO 20% 23% 23%
CDHP 16% ID 18%
Dental 32% 46% 48%
Family coverage*
Average monthly contribution for family coverage($)
Los Angeles National
500+ West 500+ 500+
Indemnity $259 $271 $248
PPO $364 $345 $289
POS $280 $318 $284
HMO $218 $304 $278
CDHP $174 $245 $207
Dental $42 $45 $44
Average contribution for family coverage(%of premium)
Los Angeles National
500+ West 500+ 500+
Indemnity 21% 24% 29%
PPO 30% 36% 31%
POS 29% 41% 31%
HMO 26% 35% 31%
CDHP 16% 31% 27%
Dental 40% 53% 53%
Family coverage is defined as coverage for employee,spouse,and two children
Mercer H&B
COVERAGE •
Los Angeles National
500+ West 500+ 500+
% of employees waiving own coverage 10% 14% 17%
% of employers offering incentive to waive coverage 26% _ 18% 19%!
Part-time employees
Offer coverage to part-time employees 62% 70% 57%
Average number of hours/week needed to qualify 24 23 _ 22'
Benefits, contributions are same for PTEs, FTEs (when PTE
coverage is provided) 50% 62% 50%
Dependent coverage
Include spousal coverage provisions 6% 3% 8%
Offer same-sex domestic partner coverage 80% 51% 29%
% of employees electing dependent coverage 57%° 57% 54%
STRATEGIC PLANNING
Use salary-based cost-sharing
■ Deductible
■ Employee contribution
11% ❑ Out-of-pocket maximums
9%
8%
6%
4%
3% 3%
2% 2%
Los Angeles 500+ West 500+ National 500+
Strategy will be significant or very significant* in cost-management efforts over next
five years
Los Angeles National
500+ West 500+ 500+
Consumerism 63% 63% 64%
Care management 80% 69% 71%
Data transparency 35% 27% 34%
High-performance networks 33% 32% 41%
Collective purchasing 28% 38% 37%
Cost-shifting/cutting benefits 30% 36% 37%
'On"significance"scale of 1-5,1 being"not at all significant'and 5 being"very significant,"selected 4 or 5.
Mercer H&B
STRATEGIC PLANNING, CONTINUED
Actions taken to promote employee consumerism
Los Angeles National
500+ West 500+ 500+
Provide website with info on health conditions 76 72% _ _74%'
Provide website with info on health care providers 59% 43% _47%
Provide tool that helps members select plan based on expected
utilization 35% 29% 24%
Replaced copays with coinsurance 39% 28% 27%
Other long-term cost-management tactics
Los Angeles National
500+ West 500+ 500+
Participate in collective purchasing 9% 13% 13%
Offer limited or tiered networks 22% 23% 17%
Likely* to offer account-based CDHP
■ By 2007
D By 2008
19%
15% 15% 15% 14/o°
10%
Los Angeles 500+ West 500+ National 500+
*On likeliness"scale of 1-5, with 5 being"very likely,"selected 5.Includes those already offering CDHP in 2006.
Mercer H&B
Average PPO cost per employee, for active employees
■ 2005
❑ 2006
$7,396 $7,732 $7,003
$6,721 $6,518 $7,029
Los Angeles 500+ West 500+ National 500+
PPO funding method
❑ Conventionally insured
■ Experience-rated
■ Self-funded with stop-loss
■ Self-funded without stop-loss
Los Angeles 500+ West 500+ National 500+
17% 23% 6% 16% 8% 10%
24%
46%4W 33%
5 ° 25% 58%
Mercer H&B
PPO plan design and administration
In-network physician visit cost-sharing
Los Angeles National
500+ West 500+ 500+
% requiring copay 72% 73% 82%
% requiring coinsurance 36% 30% 20%
No cost-sharing is required 0% 2% 2%
Median copay amount $20 $20 $20
Out-of-network physician visit cost-sharing
Los Angeles National
500+ West 500+ 500+
% requiring copay 11% 17% 16%
% requiring coinsurance 89% 89% 86%
No cost-sharing is required 4% 2% 3%
Median coinsurance amount 30% 40% 30%
Deductibles
Individual deductible
Los Angeles National
500+ West 500+ 500+
% requiring for in-network services 90% 79% 74%
Median in-network deductible $300 $300 $300
% requiring for out-of-network services 91% 91% 94%
Median out-of-network deductible $400 $500 $500
Family deductible
Los Angeles National
500+ West 500+ 500+
% requiring for in-network services 92% 79% 73%
Median in-network deductible $750 $750 $750
% requiring for out-of-network services 91% 90% 93%
Median out-of-network deductible $1,000 $1,000 $1,100
Out-of-pocket maximums for individuals
Los Angeles National
500+ West 500+ 500+
Median for in-network services $2,000 $2,000 $2,000
Median for out-of-network services $4,000 $3,000 $3,000
Mercer H&B
CONSUIVIER-DIRECTED HEALTH PLANS
Average CDHP cost per employee, for active employees 2005
❑ 2006
$5,714 $5,968
$4,650 $4,257
ID ID
Los Angeles 500+ West 500+ National 500+
Average % of eligible employees enrolled*
Los Angeles National
500+ West 500+ 500+
HRA-based CDHP 5% ID 32%
HSA-based CDHP 26% ID 11%
when CDHP is offered as an option
Plan design
HRA-based CDHP
Los Angeles National
Employee-only coverage 500+ West 500+ 500+
Median employer contribution to account $750 ID $500
Median deductible for overlaying insurance $1,750 ID $1,250
Median out-of-pocket maximum $4,250 ID $2,500
Family coverage
Median employer contribution to account $1,250 ID $1,500
Median deductible for overlaying insurance $3,500 ID $3,000
Median out-of-pocket maximum $8,500 ID $5,000
HSA-based CDHP
Los Angeles National
Employee-only coverage 500+ West 500+ 500+
% of employers making an account contribution 40% ID 57%
Median employer contribution to account* $1,125 ID $500
Median deductible for overlaying insurance $1,500 ID $1,500
Median out-of-pocket maximum $3,500 ID $3,000
Family coverage
Median employer contribution to account* $1,125 ID $800
Median deductible for overlaying insurance $3,000 ID $3,000
Median out-of-pocket maximum $7,500 ID $6,000
'among employers making an account contribution
Mercer H&B
• • • • • COST AND FUNDING
Average POS plan cost per employee, for active employees
■ 2005
❑ 2006
$7,0 $7,433 $7,178
02 $6,709
ID ID
Los Angeles 500+ West 500+ National 500+
POS plan funding method
■ Insured
❑ Self-funded
78%
68%
51%
48%
32%
22%
Los Angeles 500+ West 500+ National 500+
Mercer H&B
- • • • •
POS plan design and administration
In-network physician visit cost-sharing
Los Angeles National
500+ West 500+ 500+
% requiring copay 88% 91% __ 94%.
%requiring coinsurance 13% 13%- 7%
No cost-sharing is required 0% 0%�� 0%
Median copay amount $15 $15:__ $15
Out-of-network physician visit cost-sharing
Los Angeles National
500+ West 500+ 500+
% requiring copay 0% 14% 18%
% requiring coinsurance 100% 91%° 87%
No cost-sharing is required 0% 0% 2%
Median coinsurance amount 30% 30% 30%
Deductibles
Individual deductible
Los Angeles National
500+ West 500+ 500+
% requiring for in-network services 50% 41% 43%
Median in-network deductible $250 ID $300
% requiring for out-of-network services 100% 99% 93%
Median out-of-network deductible $500 $500 $500
Family deductible
Los Angeles National
500+ West 500+ 500+
% requiring for in-network services 50% 41% 44%
Median in-network deductible $500 ID $800
% requiring for out-of-network services 100% 99% 94%
Median out-of-network deductible $1,000 $900 $1,000
Out-of-pocket maximums for individuals
Los Angeles National
500+ West 500+ 500+
Median for in-network services $1,750 $2,000 $1,500
Median for out-of-network services $3,400 $4,000 $3,000
Mercer H&B
HEALTH MAINTENANCE • - • •
Average HMO cost per employee, for active employees
■ 2005
$7,058 $6,658 $7,004 11 2006
$5,748
$5,977 $6,228
Los Angeles 500+ West 500+ National 500+
HMO funding method ❑ Insured-community-rated
■ Insured-experience-rated
■ Self-funded
Los Angeles 500+ West 500+ National 500+
10% 15% 20%
35% 38%
45%
45%
50% 43%
Average%of employees enrolled in HMO*
Los Angeles National
500+ West 500+ 500+
57% 55% 51%
'among employers offering HMO(s)
HMO copays and deductibles
Los Angeles National
Physician copay 500+ West 500+ 500+
% requiring physician copay 100% 97% 97%
Median copay amount $15 $15 $15
Los Angeles National
Emergency room visit copay 500+ West 500+ 500+
% requiring emergency room visit copay 98% 98% 96%
Median copay amount $50 $75 $75
Los Angeles National
Hospital deductible 500+ West 500+ 500+
% requiring hospital deductible 41% 54% 56%
Median deductible amount $250 $250 $250
Mercer H&B
TRADITIONAL
Average traditional indemnity plan cost per employee, for active employees
■ 2005
$7,351 ❑ 2006
$6,463 $6,630
$5,564
ID ID
Los Angeles 500+ West 500+ National 500+
Traditional indemnity plan design
Comprehensive plan coinsurance
Los Angeles National
500+ West 500+ 500+
None required 14% 4% 10%
Less than 20% 0% 23% 18%
20% 71% 70% 66%
More than 20% 14% 3% 5%
Deductible for individual coverage
Los Angeles National
500+ West 500+ 500+
Median amount $250 $300 $250
% with no deductible 14% 16% 12%
Median out-of-pocket limit for individuals
$2,000 $2,000
$1,500
'`6
Los Angeles 500+ West 500+ National 500+
Mercer H&B
PRESCRIPTION
Cost change for prescription drug benefit
■ At last renewal
9.9% 10.3% ❑ Expected at
9.5°o
.4°a 8.2 next renewal
8.4°0 8 %
Los Angeles 500+ West 500+ National 500+
Offer a prescription drug plan
Los Angeles National
500+ West 500+ 500+
Retail card 53% 70% 67%
Mail-order 96% 91% 92%
Employee cost-sharing requirements for prescription drug plans
Los Angeles National
Retail card 500+ West 500+ 500+
Same level for all drugs 8% 4% 3%
f 2 levels: generic, brand 15% 20% 17%
3 levels: generic, formulary, non-formulary 77% 64% 72%
4 or more levels 0% 12% 6%
Use coinsurance for 1 or more drug categories 31% 24% 21%
Mail-order
Same level for all drugs 6% 4% 7%
2 levels: generic, brand 24% 27% 17%
3 levels: generic, formulary, non-formulary 57% 60% 70%
4 or more levels 10% 8% 4%
Use coinsurance for 1 or more drug categories 25% 13% 14%
Copayments in prescription drug plans
Average copayment among employers with three-tier plans
Los Angeles National
Retail card 500+ West 500+ 500+
Generic $9 $10 $10
Brand-name formulary $22 $21 $24
Brand-name non-formulary $38 $40 $40
Los Angeles National
Mail-order 500+ West 500+ 500+
Generic $19 $18 $19
Brand-name formulary $43 $40 $44
Brand-name non-formulary $70 $73 $75
Offered to employees enrolled in the largest medical plan of any We
Mercer H&B
SPECIALTY MEDICAL BENEFITS*
Infertility coverage provided
Los Angeles National
500+ W est 500+ 500+
Evaluation by a specialist 68% 49% 61%
Drug therapy 38% 32% 37%
In vivo fertilization 17% 16% 23%
In vitro fertilization 23% 16% 24%
Advanced reproductive procedures 9% 5% 11%
Infertility services are not covered 30% 49%° 35%
Alternative medicine therapies coverage provided
Los Angeles National
500+ West 500+ 500+
Acupressure/Acupuncture 57% 54% 33%
Biofeedback 13% 14% 7%
Chiropractic 89% 86% 91%
Homeopathy 11% 22% 13%°
Massage therapy 13% 30% 20%
Alternative therapies are not covered 11% 13% 8%
Disease management programs offered
Los Angeles National
500+ West 500+ 500+
Asthma/COPD 77% 51% 50%
Cancer 54% 42% 41%
Depression 40% 35%° 34%
Diabetes 82% 63% 60%
Heart disease/Hypertension 76% 52% 54%
Low-back pain 43% 26% 29%
Obesity 36% 32% 30%
Rare disease 24% 19% 24%
Renal disease 35% 30% 31%
Any disease management program 86% 68% 65%
Offered to employees enrolled in the largest medical plan of any type
Mercer H&B
SPECIALTY MEDICAL BENEFITS, CONTINUED
Care management programs offered
Los Angeles National
500+ West 500+ 500+
Catastrophic case management _ 68% 61% 63%
Complex case management 73% 63% 63%
End-of-life case management _56% 38% 40%
Health advocate services 47% 43% 35%
Health risk assessment (HRA) 55% 51% 53%
Health website 86% 75% 77%
Nurse advice line 72% 68% 67%
Targeted behavior modification 39% 30% 30%
Use incentives to encourage participation in care management program(s)
Los Angeles National
500+ West 500+ 500+
20% 21% 19%
DENTAL BENEFITS
Average cost of dental coverage, per employee
■ 2005
$713 $717 ❑ 2006
$614
$654 $600 $629
Los Angeles 500+ West 500+ National 500+
Type of dental plan offered ■ Open-ended PPO
❑ Dental HMO
■ Discount card
° 80%
67%
57%
29%
17%
4% 3% 2%
Los Angeles 500+ West 500+ National 500+
Mercer H&B
0
CONTINUED DENTAL BENEFITS,
How dental coverage is provided
Los Angeles National
500+ West 500+ 500+
Part of medical plan 8°0 18% 17%.
Freestanding plan 92% 82%; 83
Dental plan design
Los Angeles National
500+ West 500+ 500+
Median deductible $50 $50 $50
Median maximum, annual benefit $1,500 $1,500 $1,500
OTHER
Provide employee assistance program
Los Angeles National
500+ West 500+ 500+
86% 81% 76%
Offer vision coverage
Los Angeles National
500+ West 500+ 500+
81% 70% 66%
Long-term care coverage
Offer LTC coverage to:
Los Angeles National
500+ West 500+ 500+
Active employees 38% 30% 29%
Retired employees 8% 7% 7%
Parents of actives or retirees 15% 14% 14%
No LTC coverage offered 62% 70% 71%
Flexible spending accounts (FSA)
Health care FSA
Los Angeles National
500+ West 500+ 500+
% offering health care FSA 90% 83% 81%
Average employee participation 20% 20% 20%
Dependent care FSA
Los Angeles National
500+ West 500+ 500+
% offering dependent care FSA 90% 86% 83%
Average employee participation 7% 6% 7%
t Mercer H&B
:RETIREE HEALTH CARE
Offer retiree coverage*
■To pre-Medicare-eligible retirees
❑ To Medicare-eligible retirees
28% 29%
24%
19%
17°0 17%
Los Angeles 500+ West 500+ National 500+
'to most retirees,on an ongoing basis(new hires will be eligible)
Contribution requirements for retiree-only coverage
■ Employer pays all
❑ Cost is shared
■ Retiree pays all
Pre-Medicare-eligible retirees
Los Angeles 500+ West 500+ National 500+
13%
20% 13%
40%
43%
60% 20%
48% r44%
Medicare-eligible retirees
Los Angeles 500+ West 500+ National 500+
°
/O 14% 12%
35%
19% 41%
57%It 67% r47%
Mercer H&B
r
CONTINUED RETIREE HEALTH CARE,
C_j Average contribution* as a percent of premium, when cost is shared
Los Angeles National
500+ West 500+ 500+
Pre-Medicare-eligible retirees 27% 39% 39%-
Medicare-eligible retirees 37% ID 39
'for retiree-only coverage
Coverages provided
Los Angeles National
500+ West 500+ 500+
Outpatient prescription drug—pre-Medicare-eligible 100% 92% 93%
Dental -- pre-Medicare-eligible 56% 64% 56%
Dental -- Medicare-eligible 38% 56% 47%
Vision -- pre-Medicare-eligible 44% 57% 41%
Vision Medicare-eligible 31% 46% 33%
Current approach to Medicare Part D Prescription Drug Benefit
Los Angeles National
500+ West 500+ 500+
Receive 28% subsidy for all/most covered retirees 509/6 38% 51%
Offer a plan that wraps around a PDP 17% 17% 13%
Contract with vendor to offer PDP or MA-PD plan 0% 2% 3%
Contract with CMS to become a PDP 0% 1% 1%
Terminate drug coverage, continue to offer medical 8% 5% 5%
Continue to provide drug coverage through standard plan and do
not receive subsidy 25% 37% 25%
Mercer H&B
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.
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Mercer H&B
MERCER
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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.
glum
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Faces Design Quad Design
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Illustrations Design Silhouettes Design
PLEASE NOTE: These two design options can only be used with the BENEFITS OVERVIEW III format.
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Grid Design 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 attractve benefits piece
exclusMly for you.
BENEFITS OVERVIEWS
When should an Overview I or II be chosen? When should an Overview III be chosen?
• To review many plans or communicate significant ■ You need a smaller brochure that can be mailed in
changes to one or two plans. a standard#10 envelope.
• To introduce a benefit for the first time. ■ You have 500 or fewer employees or have a limited
• A brief overview of benefits for recruiting purposes. budget.
• A brochure that can be produced quickly and ■ You want a brochure that can be produced quickly
inexpensively. and inexpensively.
BENEFITS OVERVIEW I BENEFITS OVERVIEW II BENEFITS OVERVIEW III
8.5" x 11" four-panel brochure 8.5" x 11" six-panel brochure 3.75" x 8.5" six-panel brochure
(front and back) (front and back) (front and back)
BENEFITS HIGHLIGHTS
When should a Highli;hts be chosen? ® If benefits vary according to employee group or
• To differentiate between core and fringe benefits or location.
benefits affected by open enrollment and those that ® To introduce a benefit for the first time.
are not. ■ To include information that will not change and some
• If your company only offers fringe benefits to certain information that will change from year to year.
employee groups.
BENEFITS HIGHLIGHTS I BENEFITS HIGHLIGHTS I BENEFITS HIGHLIGHTS II
WITHOUT pocket WITH pocket WITH pocket and inserts
8.5" x 11" eight-panel brochure 9" x 12" eight-panel brochure with one 9" x 12" eight-panel brochure with one
(front and back) 4" pocket on the center right-hand 4 "pocket on the center right-hand
panel (front and back) panel and up to four inserts sheets
(front and back)
BENEFITS HANDBOOK
When should a Handbook be chosen? ■ When benefits are not likely to change and/or you do
• To communicate an entire benefits program. not mind reprinting if there are plan changes.
• When benefits need to be fully explained ■ When you want a comprehensive alternative to
(for example to new hires or for a new program). "SPD-only"communication.
BENEFITS HANDBOOK I BENEFITS HANDBOOK I
16, 20 or 24 pages plus cover, NO pocket 16, 20 or 24 pages plus cover.WITH pocket
8.5" x 11" handbook that includes 16 pages plus cover. 9" x 12" handbook that includes 16 pages plus cover
(page count depends on how much information will be included) 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? ■ When benefits need to be fully explained in detail.
• Your company benefits change often. ■ When you want a comprehensive alternative to
• To communicate an entire benefits program. "SPD-only"communication.
• You offer many benefit options. ■ Your benefits vary according to employee group
or location.
BENEFITS FOLDER I BENEFITS FOLDER II BENEFITS FOLDER III
1 pocket- and 6 inserts ; pockets and 10 inserts 2 pockets and 6 inserts
9" x 12" pocket folder with 9" x 12" pocket folder with two 4" 9"x 12" pocket folder with
one 4" pocket. Six 8.5" x 11" inserts pockets. Ten 8.5" x 11" inserts stagger two 4" pockets.Six 8.5" x 11" inserts
stagger down in half-inch increments. down in half-inch increments,two of stagger down in half-inch increments.
All printed double sided, collated and each size.All printed double sided, All printed double sided, collated
inserted into folders. collated and inserted into folders. and inserted into folders.
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. - t
EBView's online benefits communica- Learning Center-Access to helpful
tions website is a one-stop solution planning tools and calculators to
that provides employees with quick help make decisions about benefits
and easy access to all of their Modifications fi
benefits-related information,while
relieving the HR department of all the Human resources administrators
benefits-related inquiries they get on can effectively manage site ti �ti
functionality with just a click
a daily basis.By providing this type
of employee benefits self-service of a button.
solution,HR call volume can be Availability -•- --
reduced by as much as 75 percent. Employees and their dependents
(Workforce Magazine 2003) can access EBView anytime, any L"... - .-.. ....
Customization where,through their company's -: - -
The robust customization capability Personalized web address. Login
requirements include a Username 1�fexten
allows companies to personalize the q
site with their own company's look &Password.The site is available
and feel. 24/7,365 days a year. V '!
Customization includes: Access Security
•Company Logo The website will personalize each
•Company Color Scheme employee's web session based on
P Y x�
•Key Messages the employee's eligibility group
•Graphics so that the online menu will only
•Calendar display the benefit plans for which
•Contacts the employee is eligible. • • - • , +
•FAQs Application Service Provider • + -•+
•Forms (ASP) Model
•Links • •••
■Benefits Information The site is provided through an _
Application Service Provider(ASP) - • + • '
• SPDs model.Users gain access through • • • •
Scope of Content the intemet using a standard web +
The EBView Website is designed browser,without the need to load
to host a range of company-specific
software or maintain infrastructure • ' ' ' ' ' •
information to help educate to run the software.Employees and • • • •
employees about their benefits HR administrators will be able to • _- ••
program.It compiles the most access the site in two ways:
h • ••• •
essential elements that employees 1) Through g a YP erlink on a
need to make informed decisions. company's intranet - •The site's user-friendly format will 2) Through the internet
help employees become more - "
self-sufficient. - _ , • + _
The main menu options include
Benefits-Information about - + •_ • ■ • -
your benefit plans and providers, ` w
including plan detail,contributions
$ j • . - . . • • ••
and eligibility
Company-Company information I' ' •
and calendar,including events = -- f .• •
and holidays ==-----
FAQs -Answers to common HR and Implementing an effective benefit
benefits questions '•
communications strategy can
Forms°-Limbs-Print/vievr company- provide employees with the oppor- -. . • - - + •-
specific forms/documents/SPDs,and tunity to understand their benefit
provide links to more information options as well as help them make •
Contacts-Company and provider informed decisions.Let EBView help
contact information you provide your employees with a
quality benefits program online. • • -
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NIERCER HEALTH do BENEFITS,LLC
Is licensed to engage in Ise business of insurance in the State o•`Califorcia in the capacity staled te!
Fire and Casualty Broker-Agent
Life Agent
License Number: OE7/5483
Expiration Date: 08-31-2,107
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MERCER HEALTH&BENEFITS, LLC
777 S. Figueroa St. Suite 2900
Los Angeles, CA 90017
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MERCER HEALTH & BENEFITS, LLC
License 1'Vrnnber: OE75483
Pursuant to the requirements of the State of California insurance Code,MERCER HEALTH&BENEFITS.LLC is licensed to conduct the business
of insurance in the following capacity.
Effective Date Expiration Date
Resident Insurance Producer 08-02-2005 08-31-2007
Qualified As:
FIRE AND CASUALTY BROKER-AGENT 08-02-2005
LIFE.AGENT 08-02-2005
SEA OF T
P . •EOnES�•..yE'
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John Garamendi,Insurance Commissioner
CERTIFICATE OF INSURANCE
INSURED: Mercer Health & Benefits LLC.
INSURER: Epsilon Insurance Company, Ltd.
POLICY NUMBER: EO06070930
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 M E N
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.
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
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MERCER
Mercer Administration Call Center
mplementation
.\
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
For more information, Employee list containing demographical information
Call Center agreement
contact your Mercer Determine effective date
Health & Benefits & Discuss communication method
representative. IF Discuss phone reporting
-VA
Y T 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
1,-
'7" WEEK 4
Mercer Administration
is Customer Service training
VMON
t, Test phone programming
..
ONGOING
.G.
Mercer Administration, Consultant, and Client
Obtain feedback from client
Phone reports to client
i
j MW Marsh&McLennan Companies Mercer Health&Benefits LLC
•
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 P p p ing 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 DOB
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
1
9. EBS will bill employer once per month for all activity(QE notices and administration)
10. EBS will report monthly all QE notices sent,all carrier payments made,all funds received,all
participants terminated.
2