Group Life Insurance RFP Revisions 5-19-20.docx

The following Request for Proposal sections are revised to read as follows:

B.5. The total number of points for Price is 400. The Segal Company, Inc. will evaluate and score Pricing.

For the Basic Life program, the total number of points is 300. Distributed as follows:

For the Supplemental program the total number of points is 100. Distributed as follows:

The State will determine Price points using the following formula for Basic Life, Basic Life Administrative Fee, Supplemental Life Administrative Fee, Supplemental Optional Life, Supplemental Spouse Life, Supplemental Child Life and Supplemental AD&D:

Maximum Price Points X (Lowest Price/Offeror’s Price) = Total Price Points The State will determine Price points using the following formula for Basic Life and Supplemental Life Interest Rate:

Maximum Price Points X (Offeror’s Price/Highest Price) = Total Price Points The State will determine Price points using the following formula for Supplemental Optional Life:

(½ X Maximum Price Points) X (Offeror’s Price - Current Price)/(Lowest Price – Current Price) + (½ X Maximum Price Points) X (Lowest Price/Offeror’s Price) = Total Price Points Where “Price” equals the following:

For the Basic Life Premium Rate, it is the Total Annual Premium calculated in the Pricing Offer workbook.

For Basic Life Administrative Fee, it is the percentage of the Basic Life Premium Rate offered by the Offeror.

For Basic Life Interest Rate, it is the annual interest rate offered by the Offeror.

For Supplemental Life Administrative Fee, it is the percentage of the Supplemental Life Premium offered by the Offeror.

For Supplemental Life Interest Rate, it is the annual interest rate offered by the Offeror.

For Supplemental Optional Life it is the Total Annual Premium calculated in the Pricing Offer workbook.

For Supplemental Spouse Life it is the Total Annual Premium calculated in the Pricing Offer workbook.

For Supplemental Child Life it is the Total Annual Premium offered in the Pricing Offer workbook.

For Supplemental AD&D it is the Total Annual Premium offered in the Pricing Offer workbook.

D.2.2. Supplemental Life Program There is a contributory supplemental life insurance program paid entirely by participating employees, annuitants, and survivors. The Supplemental Life program consists of four components.

1) An optional life insurance program where eligible employees and eligible annuitants under the age of 60 can purchase additional life insurance of up to eight times their basic life amount. Eligible annuitants age 60 and over can purchase additional life insurance up to four times their basic life amount.

2) Eligible survivors of employees or annuitants may also elect optional life coverage. Survivors whose coverage began prior to September 22, 1979 may purchase up to eight times the basic life insurance amount. Survivors whose coverage began on or after September 22, 1979 may purchase optional coverage in the amount of $5,000.

2) A spouse life insurance program where eligible employees and eligible annuitants under the age of 60 can purchase $10,000 of life insurance on their spouse. For annuitants age 60 and over, the amount is $5,000.

3) An accidental death and dismemberment (AD&D) program. Eligible employees, annuitants, and survivors whose coverage began prior to September 22, 1979 may purchase AD&D coverage in an amount equal to life insurance coverage, basic plus optional, but not exceeding five time the basic life amount or $3,000,000, whichever is less.

4) A dependent (child) life insurance program, where eligible employees and annuitants can purchase $10,000 of life insurance on dependents other than their spouse.

When employees are first hired, they are given 30 days to enroll in any of the Supplemental Program components. Evidence of insurability is only required if the employee is enrolling in optional life coverage that is five to eight times his or her basic life amount.

After the initial enrollment period, employees may make changes to their life insurance coverage at any time. Evidence of insurability is required when increasing or adding optional life or adding spouse life, unless it is for a newly acquired spouse. Evidence of insurability is not required when selecting dependent (child) life.

When an employee retires, his or her coverage remains the same unless he or she is at least 60 years old, in which case the amounts would be reduced as described above. At the time of retirement, evidence of insurability is required if the new annuitant decides to add or increase optional life or add spouse life. After initially retiring, an annuitant can make changes to their coverage at any time. Evidence of insurability is required to add or increase optional life, or to add spouse life unless the spouse or civil union partner is newly acquired.

The Supplemental Program is currently a participating program and will continue to be a participating program. Currently, for each component of the Supplemental Program, a monthly premium is paid to the vendor (the optional life premium is age-banded), with the vendor retaining a certain percentage of the premium for administering the program. The State does not wish to change that and is seeking bids for the current arrangement. Currently, annual surpluses are returned to the State and deficits are rolled forward into the next year of the contract (excluding the last year of the contract). The State has no desire to establish a Premium Stabilization Reserve or any similar type of fund. The State wishes to have Supplemental 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.

For the next contract, the State desires two proposals: a proposal to continue the current participating arrangement and, an alternate proposal for a non-participating arrangement where the State pays a monthly premium with the vendor assuming all risk (See Section E).

The tables below provide the number of covered lives for the most recent five fiscal years.

Optional Life

Optional AD&D

Spouse Life

Dependent (Child) Life

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

D.3.6. Program Experience and Rates Basic and Supplemental Program: As the current Basic and Supplemental Programs are participating programs, Vendor shall be responsible for preparing a year-end experience reports (see D.3.3.2.a).

Sections 3.6.2. Supplemental Program and D.3.6.3 Premium Rates are deleted in entirety.

Section 2. Pricing (Reminder: Pricing must be submitted on bid 20-416CMS-BENF4-B-14561)

D.3.6.3. Premium Rates: Each year, Vendor shall recommend to Agency any changes to premium rates, if Vendor believes changes are necessary. Vendor shall make its recommendation no later than November 30th for the following fiscal year.

In determining premium rates, Vendor will rely primarily upon the claims experience of the Program, utilizing at least the last three years of claims experience, yet must also take into account retention charge, margin (as agreed to by Agency), a load for the recovery of an existing deficit, IRS Section 79 Table 1, and demographic changes.

Agency may at any time initiate discussions with Vendor to revise the premium rates if Agency finds it necessary to revise premium rates.

The Parties shall discuss revising premium rates when any of the following conditions are met:

The participating Basic Life program has a surplus or deficit that is at least 4% of the premium for two consecutive years.

The participating Supplemental Life program has a surplus or deficit that is at least 4% of the premium for two consecutive years.

E.1.2. Pricing shall be submitted in the following format: Offeror shall complete the file attachment titled “Life Pricing Worksheet.xls” which is separate from this RFP document. The Agency will determine the option that is in the best interest of the State.

For the participating Basic Life program, Offeror shall provide three pricing components.

A fully loaded monthly premium rate, per $1,000 coverage covering, the Offeror’s expenses in administering the Basic Life program, payment of claims and any associated interest charges included in the experience report (see Section D.3.3.2.a).

An administrative fee as a percentage of the fully loaded monthly premium rate, per $1,000 coverage, that covers the Offeror’s expense in administering the Basic Life program.

An annual interest rate that shall be used to calculate any associated interest on surpluses or deficits carried forward into the next plan year. The minimum interest rate that shall be offered is 1%.

For the participating and non-participating Supplemental Life program, Offeror shall provide the following pricing components:

For Employee Supplemental Life, Offeror shall provide a fully loaded monthly premium rate, per $1,000 coverage, for each age band. Offeror must provide two sets of rates: one set for actives and annuitants grouped together, and a second set with separate rates for actives and annuitants.

For Spouse Life, Offeror shall provide a fully loaded monthly premium rate, for $10,000 coverage and $5,000 coverage.

For Child Life, Offeror shall provide a fully loaded monthly premium rate, for $10,000 coverage.

For AD&D, Offeror shall provide a fully loaded monthly premium rate, per $1,000 coverage.

Specific to the participating arrangement, in addition to the fully-loaded monthly supplemental life premium rates, Offeror shall provide an administrative fee as a percentage of the fully loaded monthly premium rate, per $1,000 coverage, that covers the Offeror’s expense in administering the Supplemental Life program; and, an annual interest rate that shall be used to calculate any associated interest on surpluses or deficits carried forward into the next plan year. The minimum interest rate that shall be offered is 1%.

In addition, Offeror shall propose what interest rate it will use to calculate interest charges and credits on the Basic Life and Supplemental Life experience report (Section D.3.3.2.a). The base interest rate shall be the average investment rate for 13-week Treasury bills sold on the first auction date in each month of the State's fiscal year as reported by the United States Department of the Treasury. Offeror shall propose an amount to either add to or subtract from the base rate.