Item F1
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: June 15,2005 '
Division: Management Services
Bulk Item: Yes
No .-lL
Department: Administrative Services - Benefits
Staff Contact Person: Sheila A. Barker
AGENDA ITEM WORDING: Discussion of Health Cap proposal and presentation by Interisk,
consultant for our Group Benefits Plan.
ITEM BACKGROUND: At the May, 2005 BOCC meeting, Michael J. Conway and Jeff A.
Reagan gave a presentation to the Board regarding their Health Cap program. Board directed
staff to prepare RFP and present further research on the program. Attached find initial review
of our Benefits Consultant.
PREVIOUS RELEVANT BOCC ACTION: None
CONTRACT/AGREEMENT CHANGES: None
STAFF RECOMMENDATIONS: Not Applicable
TOTAL COST:Not Applicable
BUDGETED: Yes
No
COST TO COUNTY:
SOURCE OF FUNDS:
REVENUE PRODUCING: Yes
No
AMOUNTPERMONTH_ Year
APPROVED BY: County Atty _ OMB/Purchasing _ Risk Management _
DIVISION DIRECTOR APPROVAL:
Sheila A. Barker
DOCUMENT ATION:
Included XX
Not Required_
DISPOSITION:
AGENDA ITEM #
Revised 2/05
Management Services
1100 Simonton Street
Key West, FL 33040
;,.~......,,~
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BOARD OF COUNTY COMMISSIONERS
Mayor Dixie M. Spehar, District 1
Mayor Pro Tern Charles "Sonny" McCoy, District 3
George Neugent, District 2
David P. Rice, District 4
Murray E. Nelson, District 5
OKYv~,rY ~o~~~E
(305) 294-4641
May 31,2005
Michael J Conway
9701 SW 63 CT
Miami, FL 33156
Jeff A. Reagan
Keys Insurance Agency, Inc,
805 Peacock Plaza
Key West, Fl, 33040
Gentlemen:
We have had our Insurance Consultant review your proposal and he has addressed a number of issues that require answers. I am
attaching his letter of May 25,2005, listing those items. Please respond to those questions by Friday, June lOth so I will have time
to furnish your response to the Commissioners.
Also, could you please advise how you arrived at the Employer's contribution as outlined in your Savings Estimate & Savings
Roadmap documents. Our department rate is $790 per month per employee and you are using a figure of$848.06. Is the
difference the employer's contribution to your plan?
Sincerely,
Sheila A. Barker
C: Thomas 1. Willi
Lawton Swan
lntelisk Corporation
Memorandum
To: Sheila Barker I Monroe County, Florida
From: Lawton Swan Ilnterisk Corporation
cc:
Date: May 25, 2005
Re: Health Cap Program
The Health Cap Program proposed by Benefits Cost Consultants has been reviewed and the following
comments are based on our review of the documents provided.
The program is offered through an organization known as Benefits Cost Consultants, Inc. shown with a
Miami, Florida telephone number. We located a corporate filing under that name listed with the Florida
Division of Corporations and the Florida Department of Financial Services. A search for an insurance
license listed in the name of Michael J. Conway reveals that he is currently licensed in the State of
Florida for the sale of life and health insurance.
The address listed in the sample Health Cap Plan Agreement for Services is: Benefits Cost
Consultants, Inc. Service Center, P. O. Box 568, Yankton, SD 57078, We have not located any
information confirming the status of that organization with the State of South Dakota.
The program has some similarity to a Health Reimbursement Account or a Health Savings Account but
does not require increased deductibles and requires the use of a Section 125 Cafeteria Plan linked to a
required new Health and Accident Medical Reimbursement Plan (referred to a the new Health Cap
Plan), It makes use of a bank issued (employer guaranteed) individual debit card for employees to pay
for benefits included in the new plan.
The program essentially is an accounting transaction and works on the amount of tax reduction on the
amount of employee copays, deductibles, coinsurance amount and other medical related costs
including over-the-counter drugs as well as some additional medical related services. It makes
individual employees responsible for paying benefits from a bank account funded by employer and
employee tax sheltered contributions. The expectation is that the benefits can be greater by the
amount of tax shelter. Several sample calculations were included in the proposal. The bank account is
monitored and administered by the employer. The employer through future payroll deductions collects
errors or abuses by employees from improper use of the debit card,
The Service Agreement requires the employer to bear the setup cost including attorney, actuary,
accounting and other services. No estimate of these costs was included in the Benefits Cost
Consultant's proposal. Additional services required are: bank account administration; IRS filing
requirements; internal and external auditing costs, staff involvement in creating, administering and
monitoring the combination of plans. This includes expected increase in customer service activity to
explain the plans, assist with enrollment and answer questions about the proportioning of medical
benefits both to employees and providers. Initially this activity could be significant and require
responding to employee and provider complaints. The new privacy requirements of the HIPAA Law
must be followed.
Additional cost is expected from customer service involvement in explaining the effects and operations
of the new plan and the function of the debit card.
Fees are to be paid to Benefit Cost Consultants, Inc. for services for the Health Cap Program, The
amounts shown in the proposal are: $20.00 per employee for a one-time setup and a monthly
administrative fee of $20.00 per employee. Based upon the current enrollment, the amount will be
approaching $400,000 annually. The one-time setup fee equates to $32,000 based on 1600
employees.
The County's current self-insured plan should be reviewed with actuaries to determine the financial
effect and funding level prior to beginning a Health Cap type plan.
The following are open questions and items that should be resolved prior to the decision to create a
Health Cap type program.
1. Additional information about Benefits Cost Consultants, Inc. and Benefits Cost Consultants,
Inc, Service Center should be provided. How long have they been in business? How many
employees do they have? How many of these type programs have they installed in Florida?
How many Florida governmental bodies have installed this type program? Will they provide
references and contact names and telephone numbers?
2. The same questions apply separately to Benefit Cost Consultants, Inc. Service Center in
South Dakota. They should provide evidence of incorporation and current status of licensing in
South Dakota as well as responses to all of the other questions above,
3. Financial information about both Benefits Cost Consultants should be provided. They will be
the fiduciaries for a considerable amount of the County and employee's money. They should
provide the most recent income statement and balance sheets and evidence that they have
sufficient fiduciary liability insurance to protect against loss from mishandling or misuse of client
monies.
4. Details and cost of the banking arrangement should be provided. Which bank will be used?
What are the bank requirements for opening such accounts? What minimum balances must
be maintained? Does the employer have to guarantee payments if employees misuse or
misapply the funds? Is there a cost to the County for opening and monitoring the accounts?
How are employee terminations handled so that further use of the debit cards cannot be
made? Who is responsible for notification to the bank in the event of employee terminations?
What are the specific responsibilities of the bank? What are the specific responsibilities of the
County? How much information is the County entitled to on an individual employee's account
(debit card)? Are there any interest charges and how will they apply?
5. The expected cost for attorneys, actuaries, consultants and others needed to assist in creation
of the new plan should be developed and the cost added to the Benefits Cost Consultants, Inc.
fee structure to properly evaluate the overall cost to the County. The expected annual cost
savings may need to be in excess of $500,000 - $700,000 or higher to provide any significant
results to the County and its employees.
6. What is the claim monitoring process under the proposed Health Cap Plan? No specific claim
monitoring flow chart was included in the proposal. Benefits Cost Consultants, Inc. Service
Center should develop a flow chart showing their process for monitoring use of the Health Cap
Plan. The schedule attached to the proposal only lists seven items and refers to monitoring as
the responsibility of the Service Center.
7. Sample management reports will help to evaluate the type and amount of information available
to the County. Benefits Cost Consultants indicates that they will provide this information,
8. Further information about both Benefits Cost Consultants, Inc. and the Service Center will be
helpful in evaluating the experience and depth of their staff, Current staffing levels in both
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offices and resumes of key personnel along with an organization chart and a description of
what their services are will assist in determining the value of their fee structure. It is also
worthwhile to determine if they have experienced staff members who can answer questions
from the County and the bank as well as individual employee members.
We are continuing to review the information and develop further information about Benefits Cost
Consultants, Inc, and their Service Center and will provide that upon receipt We will be glad to assist
you in developing specific cost for the items mentioned above and can assist in negotiations with
Benefits Cost Consultants, Inc.
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