Addendum 1_3.doc

Life Insurance Services #20-416CMS-BENF4-B-12595 and 20-416CMS-BENF4-B-14561 Addendum 1

The Illinois Department of Central Management Services (CMS) is issuing Addendum 1 to amend the original Request for Proposal (RFP) for the above referenced project as issued by this office on May 1, 2020 and is now considered a part thereof.

This addendum is to be acknowledged in accordance with the RFP, Subsection A.6, Bidder Questions and Agency Response. Vendors are instructed to read this entire package before attempting to complete the information required therein. All other terms and conditions of the RFP shall remain in full force and effect, unchanged except as amended hereby.

This addendum answers questions received by CMS on May 12, 2020 and May 15, 2020. Questions contained in this addendum are repeated word-for-word exactly as they were received.

1. Section 1, Part A.9.1 of the RFP indicates that “the Offeror shall respond to Section 1, Part D” in Packet 1 of their proposal. Subsequently, Section 1, Part C.8 of the RFP indicates that Packet 1 should include Offeror’s Proposed Solution to Meet the State’s Requirements (corresponding with Part D.6), Milestones and Deliverables (corresponding with Part D.4), Offeror/Staff Specifications (corresponding with Part D.5) and Where Services Are to Be Performed (corresponding with Part D.8). Is it the State’s intention that the Offeror respond to each item in Section 1, Parts D.1, D.2, D.3 and D.7 as well, and if so, should responses to these parts also be included in Packet 1?

Answer: Yes, Section D is to be completed and returned by the Vendor in Packet 1. In areas where a specific response from the Vendor is not required, the Vendor should acknowledge that it meets or exceeds any required mandatory requirements.

2. How long has the group been with Securian?

Answer: Securian has been under contract since July 1, 2011. The current contract has a total term of ten years.

3. What is the reason for marketing?

Answer: The current contract expires on June 30, 2021. The Illinois Procurement Code requires issuance of a competitive solicitation.

4. Is the term life coverage currently participating, or non-participating?

Answer: The current basic term life coverage is participating

5. Please confirm the State is not requesting non-participating rates for Basic Life Coverage.

Answer: The State is not requesting non-participating rates for Basic Life Coverage.

6. Please confirm the State is evaluating the Optional Life financial ranking for participating coverage by Total Premium instead of an Admin Fee %.

Answer: The State is requesting a proposal for the current participating arrangement for the Optional Life, Spouse and Children. The participating arrangement will be evaluated based upon Total Premium, Admin Fee % and Interest Rate %. The State has also requested an alternate non-participating, fully insured arrangement. The alternative non-participating arrangement will be evaluated based upon Total Premium. Please refer to the attached RFP revisions which reflect changes to the price evaluation as well as the appropriate language revisions. A revised pricing worksheet has been attached for Vendors to utilize when providing their pricing offer. Vendors are required to use the attached revised Pricing Worksheet to submit the pricing offer.

7. Please confirm what is being requested regarding the ‘Deficit carry-forward’ timeline for the participating quote, for instance, will the deficit carry-forward expire at the annual date the carrier would normally cut a dividend check?

Answer: The State desires to have Basic Life surpluses returned to it annually, and to have any deficits rolled forward into the next fiscal year, except that for the last year of the contract the State will make a payment to the vendor to cover a deficit should a deficit occur.

8. Please confirm what carry-forward terms are in place today.

Answer: Deficits and interest on deficits resulting from experience are carried forward and applied to the following year experience. The State currently requires an experience report as of each November 15th for the preceding policy year July 1 through June 30 using September 30 as the cutoff date.

9. Regarding the participating quote not requesting a Deficit carry-forward, would deficits be covered on a month to month basis?

Answer: Deficits shall be carried forward into the next fiscal year and applied to that fiscal years’ experience without limitations. If in the last year of the contract the Basic Program ends with a deficit, based on the end-of-year experience report, the State will remit payment in the amount of the deficit by the end of the calendar year in which the fiscal year ended (e.g., if the deficit occurs in the fiscal year ending June 30, 2030, then the State will remit a deficit payment to Vendor by December 31, 2030.)

10. Are annuitants allowed an enrollment period into the Optional Life Coverage prior to being an annuitant if they were not already enrolled in Optional Life Coverage as an Active member?

Answer: Enrollment is optional life coverage can be done at any time. A qualifying event does not have to be present. The member must undergo underwriting if the request is outside the new hire enrollment.

11. Are annuitants allowed to increase benefits in the Optional Life Coverage, either during any annuity enrollment period or while being an annuitant.

Answer: Yes, however, they will have to undergo underwriting for approval.

12. Are annuitants subject to Statement of Health for any Optional Life Coverage benefits prior to enrolling as an annuitant, and if so what EOI level are they subject to (for instance, guaranteed issue amounts of one-time basic life insurance amount, etc.).

Answer: Any additional life insurance not carried forward from employment is subject to underwriting. All requests for Optional Life Coverage from annuitants not currently enrolled in the Optional Life Coverage are deemed late entrants and are subject to underwriting by the life insurance carrier. There are no guaranteed issue amounts for late entrants.

13. Are Optional Life Coverage participants allowed to increase coverage annually at enrollment, and if so, what EOI level are they subject to?

Answer: All requests to increase life insurance either during open enrollment or any other time in the year are subject to underwriting by the life insurance carrier.

14. Are late entrants allowed to enroll in the plan without providing Statement of Health?

Answer: An employee that does not enroll in optional life through a new hire event will be required to submit an EOI.

15. Are ‘survivors’ billed and allotted to the Retiree or Dependent Spouses experience?

Answer: Survivors are billed and allotted to the Dependent Spouses experience.

16. How does the State bill and administer Survivor coverage?

Answer: Survivor benefits are administered by the appropriate retirement system and any premium due is deducted from the monthly annuity payment issued to the survivor.

17. Please highlight the aircraft crew members on the census or provide the total Basic Term Coverage amounts, Optional Term Coverage amounts, and Optional AD&D Coverage Amounts.

Answer: Crew member 1 – basic coverage only amount $89,900

Crew member 2 – basic coverage, optional and ad&d amount $90,200

Crew member 3 – basic coverage only amount $101,400 Crew member 4 – basic coverage and ad&d amount $101,400, optional coverage amount $202,800 Crew member 5 – basic coverage only amount $96,900 Crew member 6 – basic coverage only amount $81,000

18. In order to properly evaluate the non-participating pricing request, we require additional experience detail for the Optional Life, and if the group would like a non-participating Basic Life quote, then we would require updated experience from Basic Term Coverage as well.

a. Please provide the experience split between Actives & Retirees.

b. Please provide the Dependent experience split between Actives, Retirees, & Survivors.

c. Please provide five years of split experience through March of 2020 or most recently available, by plan year, to include average lives, volume, paid claims, premium, and pending claims.

d. Please provide a paid claims listing separated by coverage for the updated experience report.

Answer: See attached files for available data.

Question 18 - Act vs Ret.pdf

Question 18 - Financial Experience July 2019 through March 2020.xlsx

Question 18 - Optional Life Split.docx

19. Please provide the active employees’ work location on the census so that we can evaluate concentration risk.

Answer: See attached excel file CountyCode.xlsx for a listing of county location codes.

20. Our understanding of Item 3 in D.2.2 is that AD&D coverage is only available to those who had coverage prior to 9/22/1979. Please confirm whether this is the case.

Answer: Incorrect. AD&D coverage is available to all employees and retirees that are eligible under the State Group Insurance Program regardless of start date.

21. D.3.1.7 discusses sending out conversion privileges. How is the carrier notified that the termination has happened?

Answer: The successful vendor will receive eligibility files from the Custom Benefit Solution vendor, currently Morneau Shepell.

22. How are individuals informed of their rights to port or convert?

Answer: The carrier sends the terminated employee or retired employee who has reached age 60 a packet with instructions on how to request to convert or port the coverage. Currently the member must make the selection within 31 days from the date of termination or age 60.

23. Please provide details regarding why the State prefers Evidence of Insurability to be completed via paper forms, rather than online.

Answer: The EOI can be completed online; however, we do not require the completion be done online as not all our population has internet access capabilities.

24. Section D.2.1. of the RFP notes that the Basic Life program is currently a participating program and will continue to be a participating program. Section D.2.2 of the RFP notes that the Supplemental life Program is currently a participating program, but the State desires to change this to a retrospective premium arrangement with a target loss ratio. D.3.6.2 discusses the new supplemental life financial approach in more detail. The Life Pricing Worksheet E-3 and E-4 includes rate requests for “Optional Life (par)” which is defined as Participating, Dividend Eligible, Deficit carry-forward. The Life Pricing Worksheet also includes requests for ”Optional Life (non-par)”.

· Is the State still considering the current par structure for supplemental coverage going forward, as requested in the Life Pricing Worksheet?

· If so, should this be captured in the “par” Optional Life pricing sheets?

· The Optional Life par pricing sheets do not include a request for an Admin Fee %. Will the sheets be updated with this request?

· Will additional information around the current supplemental participating structure be provided?

· Will the supplemental admin fee be considered in the RFP scoring if this option is maintained?

· Should the supplemental life pricing described in D.2.2 and D.3.6.2 of the RFP be entered into the non-par tabs E-5 and E-6 of the pricing sheets?

· Please confirm the State is not requesting a traditional non-par supplemental life quote which does not include a premium refund based on target loss ratio.

Answer: The State is requesting a proposal for the current participating arrangement for the supplemental coverage going forward. As an alternative, the State is also requesting a proposal for a non-participating arrangement for supplemental coverage. Please see attached Group Life Insurance RFP Revisions 5-19-20.doc, eliminating the request for a retrospective premium arrangement and providing additional clarification.

The Offeror’s proposal for the participating arrangement should be provided in the “Par” supplemental pricing tabs in the pricing worksheet. A revised Life Pricing Worksheet has been provided that will permit the Offeror to record their proposed Administration Fee % and Interest Rate % for the Supplemental Life program. The Supplemental Life Administration Fee % and Interest Rate % will be considered in the price evaluation as provided for in the RFP revision document attached.

25. Please confirm if all of Section D (D.1-D.8) needs to be included in the proposal submittal. If only certain subsections of Section D are required, please clarify which subsections to include.

Answer: Yes, Section D is to be completed and returned by the Vendor in Packet 1. In areas where a specific response from the Vendor is not required, the Vendor should acknowledge that it meets or exceeds any required mandatory requirements.

26. Please provide surplus and/or deficit balances by coverage as of full year ending June 30, 2019.

Answer: Refer to Section D.2.3 of the Request for Proposal. The Basic Life experience surplus credit was $1,215,826 and the Supplemental surplus credit was $7,072,310.

27. Please confirm claims incurred prior to 7/1/21 will be paid by prior carrier.

Answer: Confirmed. Claims incurred prior to 7/1/21 will be paid by the prior carrier.

28. Please confirm any recordkeeping services being requested, or that are in place today. For instance, does Securian direct bill employees on premium pay (disability) or dependent survivors?

Answer: No additional recordkeeping services are being requested. Any required billing will be conducted by the Custom Benefit Solution vendor.

29. Regarding the Claims Paid calculation in Section D.3.6.2.3 does claims paid include costs for Conversion or Portability? If not, can you describe how these claims are accounted for?

Answer: Portability charges to the State of IL plan are not included in the claim totals. Paid claims also do not include the conversion charges. The conversion charges for supplemental coverage for each year are as follows:

2018-2019 = $74,630

2017-2018 =$122,432

2016-2017 = $41,250

2015-2016 = $112,711

2014-2015 = $39,368

As an additional resource for Vendors to submit their proposals through the Bidbuy system, the Chief Procurement Office has provided video instructions. Please view the link below for guided instructions on submissions.

https://www.youtube.com/watch?v=6LSsA8VsMwg