From
Lisa Norris, Human Resources Director
Title
Award Navia Benefit Solutions a one-year agreement for Flexible Spending and Dependent Care Account Administration Services (at a contracted rate of $4.75 per participant per month; estimated at $17,100 per year, approximately $85,500 for five years) effective January 1, 2019 through December 31, 2019 with the option to renew annually unless terminated by either party, and authorize the City Manager to execute up to five annual renewal options for this agreement with aggregate price fluctuations of the lesser of up to $50,000 or 25% of the original contract value so long as sufficient funding is appropriated by the City Council to satisfy the City’s obligation during the renewal terms (renewal options beyond the five specified can be authorized however will require additional City Council approval)
Presenter
Lisa Norris, Human Resources Director
Recommended Action
Approve
Analysis
Conexis is the current provider of administrative services for our Flexible Spending Account (FSA) and Dependent Care Account (DCA) under a contract that expires December 31, 2018. These programs have federal regulations in administration and participation limits. The administrator issues each participant a debit card loaded with funds for which the employee chooses to contribute annually on a pre-tax basis to either (or both) the FSA and/or DCA. Card funds are 100% employee dollars. The FSA allows for reimbursement of eligible, out-of-pocket medical, dental, vision or prescription costs as allowed by federal guidelines. Employees are issued a debit card once enrolled and use that card at the time of transaction to pay their portion of costs. The vendor then requires submission of proof for certain expenses (dental or vision) to justify card use as appropriate and compliant with law. Dependent Care reimburses eligible day care or elder care expenses so long as they meet required federal statutes and such care is required in order for the individual to be able to work. Conexis follows all required federal mandates and has easy to follow procedures, electronic notices to participants, and keeps track of accounts online for members via a secured network.
Since the contract was expiring this year, the city issued RFP #18077 to assess services and vendors in the market. The proposal was issued in early spring and due back to Purchasing by May 2018. Thirty-four vendors viewed the proposal with nine responses submitted to the City for analysis and consideration. Proposals were reviewed and scored by Human Resources and our Benefits Consultant, Holmes Murphy. The City found Navia to be the best value for the city following assessment of Plan Benefits/Services, Contract Terms, References, and Fees/Renewals as shown on the attached scorecard. Navia has agreed to the cost quoted per participant per month (PPPM) of $4.75 for the lifetime of the contract. This contract provides for annual renewals available effective January 1st annually until either party chooses to terminate the agreement. Our benefit consultant indicated Navia is a well established, respected vendor for these services. We have approximately 280 participants in the plan currently and project an average of 300 participants per year as we grow. The estimated annualized cost of the contract is $17,100.
Although the contract is beneath the $50,000 threshold initially for a single contract year period, the total contract cost, over time, will exceed $50,000. For that reason, we felt it would be best to present it to you for approval and request approval for the City Manager to execute up to five annual renewal options (estimated at approximately $85,500) for this agreement with aggregate price fluctuations of the lesser of up to $50,000 or 25% of the original contract value so long as sufficient funding is appropriated by the City Council to satisfy the City’s obligation during the renewal terms. We ask members of the Finance and Government Sub-Committee to support and City Council to approve the contract beginning January 1, 2019.
Financial Consideration
Funding is currently available in the FY 2018/2019 Employee Insurance Fund (213010-64040) for admin fees, which include this service. Of the $473,372 budgeted for Admin Fees (various vendors), we typically allocate $25,000 for FSA/DCA administration. As a result, the $17,100 is beneath the current allocated amount and no additional funding is necessary.