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Item 4EItem 4E M E M O R A N D U M July 27, 2022 TO: Shana Yelverton, City Manager FROM: Stacey Black, Senior Director of Human Resources SUBJECT: Approve a contract renewal with Standard Insurance Company to provide employee long-term disability, life insurance, and accidental death and dismemberment insurance for the Plan Year October 1, 2022 to September 30, 2023. Action Requested: Approve a contract renewal with Standard Insurance Company to provide employee long-term disability, life insurance, and accidental death and dismemberment insurance for the Plan Year October 1, 2022 to September 30, 2023. Background Information: One of the City’s goals is to be an employer of choice to attract and retain top talent. Providing a competitive, attractive, and financially sustainable benefits package is an important component of this strategy. As part of the employee benefits package, the City provides all full-time employees with long-term disability (LTD) insurance, basic life insurance (Life), and accidental death and dismemberment (AD&D) insurance. Standard Insurance is the City’s current carrier for all three coverages and has been the carrier since October 1, 2019, following a competitive bidding process. The proposed renewal is the fourth renewal, and there is no rate change. In addition, Standard’s renewal guarantees the rates for two years until October 1, 2024. Standard Insurance provides the following levels of coverage to employees: LTD Life AD&D 60% of salary after a 90-day waiting period 1x annual salary up to $50,000 1x annual salary up to $50,000 Sworn public safety employees receive an additional 1x annual salary up to $50,000 Shana Yelverton, City Manager Item 4E July 27, 2022 Page 2 Below is a summary of the rates and the associated annual estimated premium costs. The City has had a favorable experience with Standard Insurance, and renewing the contract with Standard Insurance allows the City to maintain consistency in providers with the same rates. Financial Considerations: The estimated annual cost of LTD, Life and AD&D insurances is $75,160 annually. There is no rate increase for FY 2023 The proposed LTD, Life, and AD&D plan costs will be included in the proposed budget for Fiscal Year 2023. Strategic Link: Performance Management and Service Delivery: attract, develop and retain a skilled workforce. Citizen Input/ Board Review: N/A Legal Review: N/A Alternatives: Deny the contract with Standard Insurance Company and seek alternative options. Supporting Documents: The following supporting documents are attached: • Standard Insurance Company Proposal Staff Recommendation: Approve a contract renewal with Standard Insurance Company to provide employee long-term disability, life insurance, and accidental death and dismemberment insurance for the Plan Year October 1, 2022 to September 30, 2023. Monthly Annual LTD Rate / $100 $0.236 $2,011,707 $4,748 $56,972 AD&D Rate / $1,000 $0.025 $15,954,700 $399 $4,786 Basic Life Rate / $1,000 $0.070 $15,954,700 $1,117 $13,402 Total:$75,160 Coverage Rate Volume Estimated Cost City of Southlake 2022 Renewal Summary Policy 758490 Thank you for choosing Standard Insurance Company (The Standard) as your employee benefits partner since October 1, 2019. We appreciate your business and the opportunity to renew our commitment. We strive to provide City of Southlake and your employees outstanding value, expertise and personal service. As always, our goal is to help you take care of your business and your employees. Our team remains committed to helping you achieve strategic goals for your benefits program, streamline administration and increase employee satisfaction. In short — better results with less noise. Thank you again for your continued business. Our Approach to Renewals — Continued Partnership The renewal rates for your Group Life, Disability insurance will be effective October 1, 2022. In designing fair renewal pricing, we may review three components of rating: 1. The Manual Rate: We use your current census file demographics, plan design, industry and location to determine a rate for your coverage based on The Standard’s book of business of other similar customers. We do this for groups of all sizes. 2. The Experience Rate: In addition, we may use your past claims history to help us determine your renewal rates. Whether we use your claims history — or don’t include it — depends on the size of your group and the lines of coverage inforce. Especially for large groups, past claims experience can be a fair and useful predictor of future liability. 3. The Blended Rate: If applicable, we use a formula to determine how credible your Experience Rate is in predicting your future claims cost and blend it with your Manual Rate. This produces a Blended Rate that we use to determine your final renewal pricing. Please consider this renewal package the next step in our ongoing conversation about how we can best meet your needs. We may be able to work together to help you get more value out of your benefits program or reduce overall costs. We’d be happy to re-evaluate your plan design and benefits usage and discuss your options. Your Basic Life Renewal We understand that handling a Life insurance claim takes a special touch. Our Life benefits analysts complete annual grief training. This program helps them empathize with beneficiaries and recognize when they need special attention. We strive to help you make a tough time easier. Our goal is to provide support with easy claim filing, timely decisions, and prompt payment of approved claims. Census Demographics for Basic Life Categories Prior Calculation Current Calculation Change Female Lives 103 104 1 Male Lives 235 237 2 Benefit Volume $15,633,000 $15,954,700 $321,700 % Benefit Volume Age 50 + 26% 29% 3% Based on our thorough analysis, we’re offering the renewal rate[s] listed below. Renewal Date Current Rate * Renewal Rate * Monthly Premium Change ** October 1, 2022 $0.070 $0.070 $0 * Rate mode is Per $1000 of Benefit ** Final premium change will be determined based on your group’s composition at billing time Rate will be guaranteed for 2 years until October 1, 2024. The Standard is committed to helping you provide employees and their beneficiaries with the support they need. Below is a reminder of the additional services and tools offered with your Life plan. The Life Services Toolkit For employees, online services include estate planning and state-specific will preparation, identity theft prevention, financial calculators, wellness resources and more. For beneficiaries, the Life Services Toolkit offers grief and loss support by phone, online and face-to-face. They can also take advantage of access to financial counselors, legal consultation and other support services. This service is offered through a vendor that is not affiliated with The Standard. Travel Assistance Travel Assistance can provide a sense of security for your employees and their eligible family members anytime they travel with minimal restrictions. Available 24 hours a day — with access online or through a single phone call — Travel Assistance offers a full range of trip planning and travel support, including emergency evacuation services and medical, legal, and translation service referrals. This service is offered through a vendor that is not affiliated with The Standard. Your Additional Life Renewal Your Additional Life insurance from The Standard allows you to expand the benefit options you offer your employees. Your Additional Life plan can offer choice, flexibility, convenience and greater peace of mind for employees. Census Demographics for Additional Life Categories Prior Calculation Current Calculation Change Female Lives 41 41 0 Male Lives 123 128 5 Benefit Volume $21,435,000 $22,285,000 $850,000 % Benefit Volume Age 50 + 22% 27% 5% Based on our thorough analysis, we’re offering the renewal rate[s] listed below. Age Graded Rates for Additional Life: Age Band Current Rate * Renewal Rate * Volume Monthly Premium Change ** 0 – 29 $0.058 $0.058 $2,430,000 $0 30 – 34 $0.061 $0.061 $3,670,000 $0 35 – 39 $0.075 $0.075 $3,050,000 $0 40 – 44 $0.117 $0.117 $5,040,000 $0 45 – 49 $0.184 $0.184 $2,140,000 $0 50 – 54 $0.286 $0.286 $2,810,000 $0 55 – 59 $0.456 $0.456 $1,745,000 $0 60 – 64 $0.570 $0.570 $1,370,000 $0 65 – 69 $0.820 $0.820 $10,000 $0 70 – 74 $1.348 $1.348 $20,000 $0 75 and over $4.280 $4.280 $0 $0 Total Monthly Premium Change: $0 * Rate mode is Per $1000 of Benefit Age Graded Rates for Spouse Life: Age Band Current Rate * Renewal Rate * Volume Monthly Premium Change ** 0 - 29 $0.093 $0.093 $320,000 $0 30 - 34 $0.093 $0.093 $490,000 $0 35 - 39 $0.114 $0.114 $540,000 $0 40 - 44 $0.164 $0.164 $545,000 $0 45 - 49 $0.247 $0.247 $290,000 $0 50 - 54 $0.392 $0.392 $555,000 $0 55 - 59 $0.630 $0.630 $280,000 $0 60 - 64 $0.966 $0.966 $240,000 $0 65 - 69 $1.638 $1.638 $10,000 $0 70 - 74 $3.108 $3.108 $20,000 $0 75 and over $6.278 $6.278 $0 $0 Total Monthly Premium Change: $0 * Rate mode is Per Thousand ** Final premium change will be determined based on your group’s composition at billing time Rate will be guaranteed for 2 years until October 1, 2024. Your Long Term Disability Renewal The Standard’s Long Term Disability insurance helps your employees protect a portion of their incomes. Our holistic approach can also support productivity by helping employees stay at or return to work. This coverage includes a Reasonable Accommodation Expense Benefit, which reimburses employers for approved workplace modifications of up to $25,000 that enable disabled employees to return to or remain at work. The Reasonable Accommodation Expense Benefit is separate from the LTD benefit payment. Census Demographics for Long Term Disability Categories Prior Calculation Current Calculation Change Female Lives 103 104 1 Male Lives 235 237 2 Benefit Volume $1,876,659 $2,011,707 $135,048 % Benefit Volume Age 50 + 28% 33% 5% Based on our thorough analysis of the plan and future expected claim experience, we’re offering the renewal rate[s] listed below. Renewal Date Current Rate * Renewal Rate * Monthly Premium Change ** October 1, 2022 $0.236 $0.236 $0 * Rate mode is Percent of Insured Earnings ** Final premium change will be determined based on your group’s composition at billing time Rate will be guaranteed for 2 years until October 1, 2024. The Standard is committed to offering services that help employees feel successful at work and at home. To make sure you’re aware of what’s offered with your LTD plan, we’ve highlighted key services below. Employee Assistance Program The Employee Assistance Program (EAP) can help employees and managers resolve personal and workplace issues. The EAP provides 24/7 support from masters-degreed clinicians by phone, online, live chat, email and text. Employees and family members can receive referrals to support groups, a network counselor, community resources and face-to-face counseling sessions. EAP services can help with depression, family issues, life improvement, addictions, financial concerns, workplace conflicts and more. The EAP can also be connected to your health plan and other benefits you offer. This service is offered through a vendor not affiliated with The Standard. Thank You and Next Steps We appreciate the opportunity to continue our partnership with City of Southlake. A summary of our Renewal Offer is in the chart below. Thank you for allowing Standard Insurance Company the opportunity to support your insurance needs. Product & Services * Through 09/30/22 Effective 10/01/22 Basic Life $0.070 Per $1000 of Benefit $0.070 Per $1000 of Benefit Travel Assistance Included in Rates for Life Included in Rates for Life Basic AD&D $0.025 Per $1000 of Benefit $0.025 Per $1000 of Benefit Additional Life Rate Varies Rate Varies; No Change Spouse Dependent Life Rate Varies Rate Varies; No Change Member AD&D $0.030 Per $1,000 of Benefit $0.030 Per $1,000 of Benefit Spouse AD&D $0.030 Per $1,000 of Benefit $0.030 Per $1,000 of Benefit Child AD&D $0.030 Per $1,000 of Benefit $0.030 Per $1,000 of Benefit Child Dependent Life $0.200 Per $1000, Elective $0.200 Per $1000, Elective LTD $0.236 Percent of Insured Earnings $0.236 Percent of Insured Earnings Employee Assistance Program Included in Rates for LTD Included in Rates for LTD *The above shown rates are monthly. You can count on us to help you retain and attract employees by providing the benefits and services they value – now and for years to come. We’re always available to address any questions you have about this renewal or for any service needs. Please reach out to the Dallas group office at (800) 727-7112 and we’ll be happy to help.