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COUNTY OF SAN MATEOInter-Departmental Correspondence |
Employee and Public Services |
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DATE: |
October 1, 2003 |
BOARD MEETING DATE: |
October 21, 2003 |
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TO: |
Honorable Board of Supervisors |
FROM: |
Mary Welch, EPS Director Paul Hackleman, Employee Benefits Manager |
SUBJECT: |
Approval of BenefitOne Contract for Flexible Spending Account (FSA) Services |
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Recommendation |
Adopt a resolution: 1. Authorizing the EPS Director to sign a contract with BenefitOne for the period from January 1, 2004 through December 31, 2008 for administrative services for the County's Health Care Flexible Spending Account upon approval by County Counsel, 2. Creating an interest-bearing FSA Trust Fund account within the Benefits Trust Fund, 3. Authorizing the annual transfer of FICA savings to the FSA Trust Fund Account, 4. Authorizing payment from the FSA Trust Fund to BenefitOne for reimbursement of eligible health care expenses and administrative services and 5. Authorizing the Employee and Public Services Director to sign a formal plan document complying with federal provisions for this type of plan upon approval by County Counsel.
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Background |
In the 2002 negotiations with employee organizations, the County agreed to implement a Health Care Flexible Spending Account effective January 1, 2004.
Health Care Flexible Spending Accounts permit employees to pay for eligible health care expenses (e.g. medical, dental, vision and prescription drug deductibles and co-pays) on a pre-tax basis. Eligible expenses can also include other services like laser surgery, orthodontia, weight watcher programs and other preventive services. Like the Dependent Care Assistance Plan (DCAP) accounts currently available to employees, these Health Care FSAs are defined by Internal Revenue requirements under Code Section 125.
Like DCAPs, FSA participants must pre-elect their amounts to a maximum of $5,000 annually. Unexpended funds at the end of the calendar year are not allowed to be returned to the individual.
Unlike DCAPs, FSA participants may obtain reimbursement at any time during the year up to the annual maximum they have designated. This means that employees may take from their "accounts" more than they have deposited. The employer is at risk if the employee leaves before contributing their full amount as the employer is prohibited by law from legally enforcing payment. Despite this risk, employers and administrators of this benefit indicate that this provision has historically represented little employer loss. |
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Discussion |
BenefitOne was selected through a competitive Request for Proposal process by a joint Labor-Management Committee because they: 1. demonstrated expertise in administering these types of plans for public and private sector employers nationwide, 2. offered lower initial and ongoing administrative fees, 3. accommodated the County's banking and payroll systems 4. provided an array of reimbursement options (by check, direct deposit or debit card) and 5. offered assistance in drafting plan documents and conducting program training. Under their proposal, BenefitOne is responsible for providing on-site informational meetings, drafting a formal plan document which complies with Internal Revenue Code provisions, developing print and website information material, determining eligibility and making payments or direct deposits for submitted claims and providing a debit card for users to minimize their out-of-pocket expenses. They are also responsible for providing regular and year-end statements to employees and summary reports for the County. |
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Vision Alignment |
The contract with BenefitOne represents Vision Statement #20 which focuses on careful consideration of future impact and #21 incorporating the County's vision and goals into delivery of service. |
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Fiscal Impact |
Administrative expenses are $3.10 per participant per month for three years and $3.50 in years 4 and 5. The contract specifies a one-time set-up fee of $1,000 and an annual enrollment fee of $3.00 per participant. The contract also specifies a $1.50 monthly fee for those individuals who elect a debit card. Although the actual total cost will depend on the number of employees who enroll, the program is estimated to be revenue neutral to the County as FICA savings, forfeited amounts and Trust Fund interest are expected to offset annual administrative expenses. The program will be reviewed annually to assure it remains revenue neutral. |
Exhibit A |
1. |
General Description of RFP |
The RFP requested administrative services for a Health Care Flexible Spending Account within the guidelines established in the Internal Revenue Code. |
2. |
List key evaluation criteria |
Responses were primarily evaluated on cost and the respondent's flexibility in coordinating their services with the County's payroll system and Trsut Fund requirements. |
3. |
Where advertised |
No advertising was conducted. Flexible Spending Account administrators are identified in the Benefit's source book. |
4. |
In addition to any advertisement, list others to whom RFP was sent |
The RFP was sent to 12 companies (Aetna, AFLAC, BASIC, BenefitOne, Benefits Outsource Group, BenSoft, Inc., Ceridian, Flex Compensation Inc., Lumenos, P + W Software, ProBusiness and Travis) |
5. |
Total number sent to prospective proposers |
12 |
6. |
Number of proposals received |
5 |
7. |
Who evaluated the proposals |
Labor-Management Committee including labor representatives from AFSCME and SEIU. |
8. |
In alphabetical order, names of proposers (or finalists, if applicable) and location |
Aetna, San Francisco, California BenefitOne, St. Petersburg, Florida Benefits Outsource Group, Santa Ana, California Ceredian, St. Petersburg, Florida ProBusiness, Pleasanton, California |