The City's medical and dental insurance plans are self-funded. The claims are processed by a third party administrator (TPA). A TPA is an organization that processes insurance claims. This is viewed as "outsourcing" the administration of the claims processing, since the TPA is performing a task traditionally handled by an insurance company. The contract for the City's third party administrator expires on December 31, 2018. Therefore, Gallagher Benefit Services, Inc., in conjunction with the City, conducted a Request for Proposals (RFP) in June 2018. Three vendors met the minimum requirements of the RFP, and on July 19, 2018, a Health Insurance subcommittee met to select the City's Third Party Administrator, effective January 1, 2019. Employee Benefit Management Services, LLC (EBMS) was selected to continue providing this valuable service to the City.

City Council may:

• Approve; or
• Disapprove the agreement.

The City has paid $409,000 and $417,000 in fees the past two years to Employee Benefit Management Services for the following services:

• Medical claims administration
• Dental claims administration
• Prescription drug/network administration
• Medical network access and administration
• FSA and HSA plan administration
• 6055/6056 ACA reporting
• Other services as deemed necessary by the City

The administrative fees will increase 3.5% in 2019, and will remain the same for 2020 and 2021. In 2022, the fees will increase 2.5% and in 2023, fees will increase 2%. The health insurance budget has adequate funding to cover the administrative fees.

Staff recommends approval of the contract with Employee Benefit Management Services, LLC, to continue as the City's Third Party Administrator for medical and dental claims processing.