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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
Human Resources Department
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DATE:
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September 21, 2009
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BOARD MEETING DATE:
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October 6, 2009
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Donna Vaillancourt, HR Director
Peter Bassett, Benefits Manager
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SUBJECT:
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Agreement with Benesyst for Flexible Spending Account and COBRA administration services
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RECOMMENDATION:
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Adopt a resolution:
1. Authorizing the Human Resources Director to execute an agreement with Benesyst to administer the County’s Flexible Spending Account and Consolidated Omnibus Budget Reconciliation Act (COBRA) programs for County employees for the period from January 1, 2010 through December 31, 2013 in an amount not to exceed $350,000; and
2. Authorizing the Human Resources Director or the Director's designee to execute contract amendments which modify the County's maximum fiscal obligation by no more than $25,000 (in aggregate), and/or modify the contract term and/or services so long as the modified term or services is/are within the current or revised fiscal provisions.
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BACKGROUND:
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Flexible Spending Account (FSA) Program
The County’s FSA benefit is an IRS regulated program that allows employees to set aside up to $10,000 pre-tax dollars from their paychecks to pay for eligible healthcare and dependent care expenses ($5,000 maximum for each program). This benefit provides significant tax savings for employees who, on average, save $35 per each $100 set aside in an FSA account. Approximately 20% of County employees participate in the FSA program (925 healthcare FSA participants; 226 dependent care FSA participants).
The County has provided a dependent care FSA benefit to employees for over 20 years, and until 2008, this benefit was administered in-house. In 2004, the County implemented the healthcare FSA benefit through a contract with Mangrove Employer Services (formerly BenefitOne). Mangrove Employer Services (Mangrove) assumed administrative responsibility of the dependent care FSA benefit in 2008.
COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 is a federal law that gives former employees and their dependents the right to temporarily continue their County health coverage at group rates if they lose coverage. Since implementation of the law, the County has administered COBRA benefits in-house. There are approximately 350 former employees receiving COBRA benefits through the County. An operational review of the Benefits Office in 2008 recommended that a third party administrator assume responsibility for COBRA administration to maximize efficiency of the Benefits Office and to ensure legal compliance with the ever-changing and complex COBRA rules.
Prior to 2009, a Request for Proposals for an FSA administrator had not been conducted in over six years. In an effort to consolidate FSA and COBRA administration through a single third-party administrator, the County conducted a formal Request for Proposal (RFP) this summer.
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DISCUSSION:
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As a result of the RFP process, the Human Resources Department is recommending the selection of Benesyst as the County’s FSA and COBRA administrator. Based on the RFP responses, Benesyst has the most user-friendly online system, dedication to customer service, and highly polished communication materials. Benesyst also has significant experience in supporting California governmental agencies.
Benesyst will offer employees more robust FSA website services including online claims processing, simplified individual FSA expense tracking, enhanced marketing of the FSA program, and increased customer service through Benesyst’s Call Center.
The contractor has assured compliance with the County's Contractor Employee Jury Service Ordinance, as well as all other contract provisions that are required by County ordinance and administrative memoranda, including but not limited to insurance, hold harmless, non-discrimination and equal benefits.
County Counsel has reviewed and approved the Resolution and Agreement as to form.
Approval of this Agreement contributes to Shared Vision 2025 of a Prosperous Community by providing cost-effective FSA and COBRA services to County employees.
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Performance Measures:
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Measure
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FY 2008-09
Actual
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FY 2009-10
Projected
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% off employees who participate in the County’s FSA program
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20%
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25%
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Calls to Benesyst’s Call Center are answered within 30 seconds
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N/A
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90%
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% of FSA claims processed within 2 days
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N/A
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90%
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FISCAL IMPACT:
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There is no impact to the net County cost associated with this agreement. FICA savings, trust fund interest, and forfeited FSA funds will offset the maximum contract amount of $350,000.
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