Actuary RFP QUESTIONS ANSWERS.pdf

QUESTIONS & ANSWERS

PUBLIC EDUCATION EMPLOYEE INJURY COMPENSATION BOARD REQUEST FOR

PROPOSALS FOR CONSULTING ACTUARY

1. The first paragraph of the RFP indicates the plan will apply to full-time Alabama education employees and bus drivers. Why are part-time employees excluded as part-time employees are indeed subject to WC benefits?

A: The Act did not include part-time employees in this program. They still have to go through the Board of Adjustment for their claims.

2. Does this plan impact the WC self—insured plan in operation by the AL Dept. of Risk Management (DORM) for state employees?

A: This Program is separate from SEICTF which the education employees have never been part of.

3. Is the proposed plan to replace or simply to offer an alternative to the current educational employees’ WC coverage currently purchased, or via self-insured status as administered by the AL Dept. of Workforce?

A: I am not aware of any coverage for education employees currently in place through traditional WC.

4. Will coverage start on day 1 for all members/employers, or will they phase in over year 1 as current-coverage expiration dates are realized?

A: Effective 10/1 all full-time employees and adult bus drivers will be covered.

5. Will excess WC coverage be purchased for catastrophic loss exposure? If not, how will any shortfall in funding in the event of a catastrophic year/event be remedied?

A: We are currently trying to secure excess coverage. Budgetary shortfalls would have to be handled through additional appropriations.

6. Is the Enabling Legislation available that created the Plan?

A: https://alison.legislature.state.al.us/code-of-alabama?section=16-1A-1 §16-1A-1 thru § §16-1A-7 can be accessed on the Legislature's website.

7. We understand that the state provided capital/monies to start the Plan – can you confirm the amount of funding?

A: FY2026 - $15,600,000 FY2027 - $6,000,000

https://alison.legislature.state.al.us/code-of-alabama?section=16-1A-1

8. What premium estimates are available?

A: There are no premiums associated with this program, it is funded through appropriations from the Legislature.

9. What entity regulates the Plan? Is Statutory of GAAP accounting applicable?

A: The Public Education Employee Injury Compensation Board is the regulatory agency.

GAAP is not addressed in the Act.

10. Has an audit/accounting firm been selected for the audited financials?

A: Not at this point.

11. What is the timing for the actuarial work, and the WC coverage eff. Date?

A: The effective coverage date is 10/1 and we are hoping for the first actuarial work to be completed prior to the 2027 Legislative Session.

12. How quickly will actual WC data be available for use to update our estimates?

A: That data will begin to build starting on 10/1 when the program begins accepting claims.

13. Beyond limited data, are there specific characteristics of this new fund/exposure that lead you to believe that traditional actuarial methods may not be applicable for projecting future liabilities? If so, can you please share them?

A: The only specific characteristic that will differ from traditional WC is 86% of the covered employees fall under PEEHIP medical insurance which will also be paying for medical treatment associated with on-the-job injury claims at no cost to the program. The remaining 14% of the employees covered by the program on-the-job injury medical treatment will be paid by the fund.

14. Can you please clarify how a claim is classified as WC vs. simply medical reimbursement for employees covered under this plan?

A: For employees not covered by PEEHIP the claims will be handled much like traditional WC, but for PEEHIP covered employees the program will still manage the claim minus paying for the medical treatment other than reimbursing the claimant for copays and deductibles.

15. Does the Board ultimately handle the decision on appropriate funding for the liabilities, or is there another standard/entity that dictates a minimum threshold for funding?

A: The Board will need to be able to substantiate the amount of funding that the program will need to meet its liabilities when requesting appropriations from the Legislature.

16. Will the Board share the evaluation sheet and perform a debriefing if requested at the end of the process?

A: Evaluation sheets can be requested through an open records request through the Department of Finance once the contract has been fully awarded. A debrief can be scheduled with a participating supplier once the contract has been fully awarded.

17. The RFP requires electronic submission through Alabama Buys and identifies the

Disclosure Statement, W-9 and E-Verify documentation as required proposal materials.

The Standard Terms separately state that the proposal must include “one original Disclosure Statement” and that submission acknowledges amendments or new rounds.

For electronic submission through Alabama Buys, please confirm if an electronically signed Disclosure Statement satisfies the requirement for “one original Disclosure Statement.”

A: Yes

18. Section 16 requires a detailed fee proposal and Fees & Pricing represents 20% of the evaluation criteria; however, Fees & Pricing is not included in the RFP’s “Requirements of Submission” list. Please clarify whether it should be included within the technical proposal or submitted as a separate pricing attachment in Alabama Buys.

A: Fees & Pricing must be included within the proposal narrative.

19. RFP Standard Terms and Conditions, Section 31, Exception to Terms and Conditions:

Section 31 states that suppliers may include qualifications, exceptions, conditions, reservations, limitations or substitutions concerning the contract terms and conditions in their proposal. If a respondent takes exception to any of the RFP terms and conditions, is there a required section, format or location within the proposal where those exceptions should be identified?

A: This can be attached as a separate document labeled accordingly. Please note that the State is not obligated to accept any changes to the published terms and conditions of the solicitation.

20. No file-size restriction is identified, which could be relevant because Section 12 asks for multiple examples of reports and models. Are there any individual file-size, total upload-size or number-of-attachment limitations in Alabama Buys that respondents should consider when submitting the requested reporting and model samples?

A: Individual file sizes are limited to less than 300 MB. There are no maximum number of files that can be uploaded.

21. Section 12 asks respondents to provide examples of seven types of work product, including interactive financial models. The Standard Terms prohibit website links from being used to satisfy requirements and state that procurement information generally becomes a public record. What format should respondents use to demonstrate "interactive financial modeling" capabilities given the prohibition on website links in solicitation responses?

A: Firms may provide screenshots, sample reports, or written descriptions demonstrating their interactive financial modeling capabilities. An active or website-linked interactive model is not required.

22. The Alabama Buys portal includes a required Unit Price field within the item section. Page 7, Section 16, Fees & Pricing, of the RFP requests a detailed fee proposal, including hourly rates, expenses, flat fees and other pricing information. Please clarify what amount should be entered in the Unit Price field.

A: Please include the total overall price in the unit field. Please note that pricing must be submitted within the proposal as outlined in the RFP.

23. There is an Excel file available within the Alabama Buys portal's item section. Please clarify whether this file is intended to serve as the fee proposal referenced in Page 7, Section 16, Fees & Pricing, of the RFP, or whether pricing should be included only within the proposal narrative.

A: Fees & Pricing must be included within the proposal narrative.

24. The fields within the item section appear to correspond to the fields included in the Excel file. Please clarify whether respondents are expected to submit the Excel file as well as fill in the out the required fields on the portal, or whether it is sufficient to complete only the required fields within the portal.

A: It is sufficient to complete only the required fields within the portal.

25. Has PEEICB engaged a third-party claims administrator? If not, does it plan to?

A: Yes

26. Has PEEICB engaged an insurance broker? If not, does it plan to?

A: PEEICB has not engaged an insurance broker, but if need arises it will.

27. Has there been consideration by the Board in only retaining losses up to per-claim limit with excess insurance purchased for losses above that the limit? If so, do you have range (or the exact number) for what that limit will be?

A : Yes, we are currently trying to secure excess coverage, but the threshold has not been set at this point.

28. Assuming that the Board incepts in 2026 or 2027, will any accidents that occurred prior to 2026 be covered by the Board?

A: Only accidents occurring on or after 10/1/2026 are covered by the Board.

29. In section 14, what Legacy claims are being referred to? If we are able to receive prior loss runs from these school districts, how many school districts are there, how many loss run sources are there, and how many years would be included in those loss runs? This is one type of project if it is a brand new insurance program with no historical losses. It is a different type if it can be viewed as a merging of multiple other school district programs that all have a loss run history. In the second type of program, there is less uncertainty but a higher project cost.

A: The program will not assume legacy claims. Section 14 is intended to address how the actuary would account for the lack of historical claims experience and other incomplete historical information when developing projections for this new program.

30. If there are Legacy claims, what circumstances would give rise to unknown open claims, unknown litigation, or unknown reserve adequacy as discussed in item 14?

A: The program will not have legacy claims. The intent is for the actuary to explain how uncertainty resulting from limited or unavailable historical claims information would be reflected in the program’s projections.

31. In section 12, what is meant by Legislative Report? What creates the need for it?

A: The Board will need to substantiate the amount of funding necessary for the program to meet its liabilities when requesting appropriations from the Legislature.

32. In section 3, what is meant by Legislative Presentation Support? What creates the need for it?

A: Legislative Presentation Support means providing actuarial analysis and assistance to the Board, as needed to explain and substantiate the program’s projected funding needs, liabilities, and other actuarial matters when presenting information to the Legislature.

The need may arise in connection with requests for legislative appropriations or other legislative inquires regarding the program.

33. In section 12, what type of interactive financial model is envisioned? What would that model do? The scope does not seem to require an interactive financial model.

A: The intent is for respondents to provide examples of interactive financial models they have used or developed for similar programs. The Board has not prescribed a specific interactive financial model, nor is the development of such a model specifically required by the scope of services.

34. In Item #2 Program Overview, how were the estimates of 1800 medical-only claims and 700 lost-time claims derived?

A: Through an actuary study conducted by an excess carrier.

35. Section 10 references funding corridors. Do you believe that the insurance program will include funding corridors? They seem unusual for a new program.

A: The Board has not determined that the program will include funding corridors. Section

10 is intended to request the actuary’s evaluation and recommendation as to whether funding corridors are appropriate for the program.

36. In Section 11, there are 8 scenarios requested. Is the expectation that the actuary would provide each of these 8 scenarios for both reserves and projected funding?

A: Yes, the expectation is that each of the 8 scenarios will address both projected reserves and projected funding needs.

37. With regard to fees, are we able to give one fee estimate for the first year and then revise it in the second year? Or do we need to give fees estimates for the whole potential five year period with no ability to change?

A: The contract is for an initial two years, and you can give a different rate in the proposal for each year.

38. With regard to fees, if we provide hourly rates for the five year period, can there be a different set of rates for each year?

A: The contract is for an initial two years, and you can give a different rate in the proposal for each year.

39. There is a fairly broad scope in the RFP. Is it important that we specify a total fixed fee or not-to-exceed fee in this proposal?

A: Specify a total fixed fee, a fee cap will be part of the contract between the PEEICB and the actuarial firm.

40. Please confirm which of the following the Board wishes the actuarial projections to present as liabilities of the Trust Fund, and which should be presented separately as costs borne outside the Fund:

(a) salary and fringe benefit continuation provided by employers under Section 16-1-f18.1(d)(3), and any employer extension of that period under Section 16-1-18.1(d)(4);

A: Cost borne outside the Trust Fund

(b) substitute personnel costs reimbursed to employers under Section 16-1-18.1(d)(5);

A: Cost borne outside the Trust Fund

(c) compensation payable from the Fund under Section 16-1A-5(b)(2);

A: Trust Fund liability

(d) medical benefits paid by PEEHIP under Section 16-1A-5(c)(1);

A: PEEHIP Cost

(e) medical benefits paid by the Board for employees not covered by PEEHIP under Section 16-1A-5(c)(2), and copayment and deductible reimbursements;

A: Trust Fund liability

(f) program administration, third-party administrator, review board, hearing officer, legal and independent medical examination costs.

A: Trust Fund liability

41. Is PEEHIP reimbursed by the Trust Fund for medical payments it makes under Section 16- 1A-5(c)(1), or does that cost remain with PEEHIP? Section 16-1A-5(i) refers to the Fund and PEEHIP recovering their respective payments, and we wish to avoid either omitting or double-counting this component.

A: Medical payments made by PEEHIP remain the responsibility of PEEHIP. The Trust Fund does not reimburse PEEHIP for those payments. PEEHIP and the Trust Fund may each seek recovery for their respective payments as provided by law.

42. Section 16-1A-2(3) defines employer to include city and county boards of education, public charter schools, the Alabama Community College System, the Alabama Institute for Deaf and Blind, and the several specialty schools, while the RFP cover page refers to public education employees and adult bus drivers. Please confirm the full set of employers to be included in the study.

A: The study should include all employers covered by Section 16-1A-2(3), including city and county boards of education, public charter schools, the Alabama Community College System, the Alabama Institute for Deaf and Blind, and the specialty schools identified in the statue.

43. Section 2 of the RFP states an estimated annual volume of 1,800 medical-only and 700 lost-time claims. What is the source of these estimates, and how is a lost-time claim defined for that purpose - any claim involving absence from work, or only a claim in which absence extends beyond the salary continuation period provided under Section 16-1- 18.1(d)(3)? The two definitions produce materially different projections.

A: The potential claim volume was based off an actuarial study conducted by an excess carrier. A claim is considered lost-time if the claimant is injured on the job and cannot return to work as a result of the injury, and salary continuation begins.

44. Please indicate whether each of the following will be made available to the selected actuary, and in what form:

(a) State Board of Adjustment records of on-the-job injury claims filed by public education employees, including period covered and fields captured;

A: Yes, but it contains very limited data.

(b) PEEHIP or Blue Cross and Blue Shield of Alabama utilization data for covered employees;

A: Yes, through the TPA. We will work with the firm to determine the most useful form.

(c) claim-level extracts from the third-party administrator, and at what frequency;

A: Yes, through the TPA. We will work with the firm to determine the most useful form.

(d) employee counts and payroll by employer, job classification and county, and what the Board considers the authoritative source.

A: This level of detail per employer will probably not be available.

45. Section 16-1A-7(a) caps expenditures at the annual appropriation while Section 16-1A- 3(b) permits balances to carry forward and be invested. Should the funding recommendation be expressed as a recommended annual appropriation, as a target Fund balance, or as both, and does the Board have a preferred confidence level? Will the resulting estimates be used in the State's financial reporting, and does the Board expect a signed statement of actuarial opinion?

A: The actuary should provide recommendations for both the annual appropriation and an appropriate target Fund balance. The Board has not established a preferred confidence level and seeks the actuary’s recommendation. The estimates are intended primarily for program funding and planning purposes. A signed statement of actuarial opinion is not specifically required.

46. Does the Board prefer quarterly or semiannual monitoring in the first year, and what valuation date should be used for the initial study and each annual update? How many on-site presentations are expected annually, at what locations, may any be delivered remotely, and does legislative presentation support contemplate the actuary appearing before committees?

A: The State’s fiscal year runs from October 1, 2026, through September 30, 2027.

For the first year we will need an actuarial analysis for the 1st quarter of FY27 and more than likely a quarterly analysis through September 2027. Meetings can be conducted Virtually and it will be unlikely that a Legislative presentation would be necessary.

47. Is there a page limit for the proposal, should it be uploaded to Alabama Buys as a single combined document or as separate files matching the required sections, and should the fee proposal be uploaded separately from the technical proposal?

A: Individual file sizes are limited to less than 300 MB. There are no maximum number of files that can be uploaded. It is preferred that suppliers upload their proposal as one single combined document, but separate files for each section will suffice.