Flexible Spending Accounts

Request for Proposal No. 200000001275, issued by the State of Michigan Department of Technology, Management and Budget on behalf of the Michigan Civil Service Commission, seeks a third-party administrator to provide comprehensive Flexible Spending Account (FSA) services for approximately 50,000 eligible active state employees across Grand Traverse County and multiple Lansing City jurisdictions. The procurement encompasses administration of Health Care FSA plans (including a Limited Purpose option for dental and vision expenses) with approximately 12,700 enrollments, Dependent Care FSA plans with approximately 1,650 enrollments, and combined HC/DC FSA plans with approximately 1,272 enrollments. Deliverables include eligibility management via bi-weekly electronic file transfers, claims processing and adjudication within specified timeframes, Health Care FSA credit/debit card administration with 99.98% monthly uptime availability, web-based participant portal access, customer service with extended hours (8:00 a.m. to 8:00 p.m. business days) and 24-hour interactive voice response capabilities, quarterly participant statements, and comprehensive monthly, quarterly, and annual reporting. The contractor must comply with IRC Section 125, HIPAA privacy and security requirements, Payment Card Industry standards, State of Michigan data security standards (AES 256-bit encryption), WCAG 2.0 Level AA accessibility standards, and conduct annual SOC 1 Type 2 and SOC 2 Type 2 audits. The contract is effective August 1, 2020, through December 31, 2023, with an implementation and transition period from August 1 through December 31, 2020 (unpaid), and full service delivery commencing January 1, 2021. Technical evaluation criteria include General Requirements and Acceptance (40 points), Staffing and Project Management (10 points), Reporting and Audit Functions (25 points), Service Level Agreements (10 points), and Company Background and Experience (15 points), with proposals scoring 80 or more points advancing to price evaluation. Critical deadlines include the optional pre-proposal meeting on March 24, 2020, bidder questions deadline of March 27, 2020 at 1:55 p.m. Eastern, and proposal submission deadline of April 16, 2020 at 1:55 p.m. Eastern in electronic and hard copy formats with file sizes limited to 6 MB per document. Service level agreements include eligibility processing within 24 hours, claim turnaround of 5 business days for 90 percent of claims and 10 business days for 99 percent, claims accuracy rates of 99 percent in year one and 99.3 percent in subsequent years, call abandonment rates not exceeding 3 percent, average speed of answer within 20 seconds for 95 percent of calls, and 90 percent first call resolution.

The State of Michigan reserves consideration for qualified disabled veteran-owned and service-disabled veteran-owned businesses, prior State performance, Michigan employment impact, and capital investment, though no explicit set-aside designations or enterprise restrictions are identified in the documentation. The incumbent vendor is WageWorks, operating under contract 071B1300275 with a total annual spend of $4,536,593.00, and the successful contractor must integrate with the State's Human Resource Management Network system and existing healthcare partners including BCBSM and OptumRx. The contractor must implement state-defined unique participant identifiers and utilize state-defined file transfer protocols including the FSA Deduction Remittance File (ZR124), FBMC Adjudication File (ZB609D01), and FSA Enrollment File (ZB607D01) formats, all with fixed-format specifications provided in technical schedules. An initial pre-funding amount of $700,000.00 will be provided to the contractor at least 15 days prior to January 1, 2021, for claims and card transactions, with the full amount returned within 30 days of contract conclusion. Administrative costs are funded on a fixed monthly per-participant basis, with pricing to be submitted using a per-participant-per-month (PPPM) model across three plan years, and performance guarantees of up to 15 percent of ongoing annual administrative fees are at risk based on service level agreement compliance. Contracts equal to or exceeding $500,000 require State Administrative Board approval, and the State reserves the right to award multiple contracts, conduct site visits, require oral presentations, and negotiate terms during evaluation.