COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Employee and Public Services

 

DATE:

November 21, 2002

BOARD MEETING DATE:

December 17, 2002

 

TO:

Honorable Board of Supervisors

FROM:

Mary Welch, EPS Director

Paul Hackleman, Benefits Manager

   

SUBJECT:

Approval of a resolution to contract with ING for the provision of life insurance, supplemental life insurance and short term disability benefits.

 

Recommendation

Approve a resolution authorizing the EPS Director to sign a contract with ING for the provision of life insurance, supplemental life insurance and short-term disability benefits for Employees upon approval by County Counsel.

 

Background

The County pays for group term life insurance benefits for County employees based on negotiated agreements. The County also offers supplemental life insurance and short term disability benefit coverage to employees on an employee-paid basis.

The County's current coverage for these benefits has been provided through Standard Life Insurance in a three-year agreement that expires December 31, 2002.

 

Discussion

The County initiated a Request for Proposal process in September to solicit proposals to continue the coverage, without change. The Request for Proposal was sent to 67 life insurance companies through the United States. Six responses were received. The reasons many companies did not respond is because they:

· Would not offer minimum premium coverage (where the employer reaps the advantage of low claims payments),

· Do not underwrite public sector coverage,

· Are unable to offer the different types of coverage for life and disability benefits and/or

· Recognize they are not competitive with the County's current rates.


Of the six respondents, three were eliminated because they did not offer disability coverage or had very high rates. Of the remaining three, the incumbent provider (Standard) had higher basic and supplemental rates, and the other finalist had higher supplemental life rates. ING was the most competitive because it offered lower basic and supplemental rates and comparable short-term disability rates.

The ING proposal also conforms to the Internal Revenue Code Section 79 rates which assures that supplemental life insurance benefits are not assessed as imputed income. ING will comply with both the Equal Benefits and non-discrimination.

The life insurance industry has recently begun to offer domestic partner benefits. As a result, the life insurance renewal will include coverage for domestic partners, children of domestic partners and young adult dependents in conformity with other County employee benefits.

 

Vision Alignment

The contract with ING represents Vision Statement #20 which focuses on careful consideration of future impact and #21 incorporating the County's vision and goals into delivery of services.

 

Fiscal Impact

The County's cost is impacted only by the basic life insurance change that represents a reduction in net County cost of $4,500. The aggregate cost for employee-paid supplemental life will decrease and employee-paid short-term disability benefit will be comparable to the current rates.

Exhibit A

1.

General Description of RFP

The RFP solicited proposals to provide coverage for the County's life insurance, supplemental life insurance and short-term disability benefits.

2.

List key evaluation criteria

The key criteria were to replicate current benefits and provide the lowest cost in each of the benefit areas.

3.

Where advertised

The proposal was sent to companies through the United States

4.

In addition to any advertisement, list others to whom RFP was sent

The proposal was sent to all major providers of employer life and disability coverage.

5.

Total number sent to prospective proposers

Six-seven companies received the Request for Proposal.

6.

Number of proposals received

Six companies responded.

7.

Who evaluated the proposals

Benefits Manager

8.

In alphabetical order, names of proposers (or finalists, if applicable) and location

Fort Dearborn Life Insurance Company

ING ReliaStar Insurance Company

Minnesota Mutual Life Insurance Company

Standard Insurance Company (incumbent)

Sun Life Insurance Company

United HealthCare Insurance Company