Third-Party Administrator Services for Flexible Spending Accounts - Healthcare and Dependent Daycare

The State of Maryland Department of Budget and Management is requesting proposals for Third-Party Administrator services for the State's Healthcare Flexible Spending Account and Dependent Daycare Flexible Spending Account programs, with proposals due March 2, 2026 at 2:00 PM local time. An 18% Minority Business Enterprise subcontracting goal applies, with specific subgoals for African-American, Asian-American, Hispanic-American, and Woman-Owned MBEs, plus an additional 2% Veteran-Owned Small Business Enterprise participation goal.

The contractor will administer FSA plans for approximately 125,000 eligible State employees across both accounts, managing roughly $35.5 million in annual contributions. Services include comprehensive implementation beginning summer 2026, claims processing and reimbursement, participant communications, debit card administration, website and mobile app support, customer service operations via toll-free line (8:00 AM to 8:00 PM business days, with 24/7 automated access), and quarterly and annual reporting. All administrative functions must remain onshore. The contractor must maintain HIPAA and HITECH Act compliance, process claims within specified turnaround times, and meet performance guarantees with liquidated damages of up to 5% per subcomponent, capped at 10% of quarterly administration fees for unmet standards. The contractor must also absorb open enrollment material printing and mailing costs (approximately $25,000 annually per plan) and assume annual participant satisfaction survey costs.

The contract runs for a two-year base period with three one-year renewal options, commencing January 1, 2027. The contractor must complete implementation by December 15, 2026. This is a fixed unit price contract for indefinite quantities with weekly reimbursement invoicing for participant claims (State pre-funds up to 10% of projected annual contributions) and monthly invoicing for administrative fees based on enrolled participants. The State will assign a dedicated Account Executive and Account Service Representative, reserving the right to accept or decline assigned personnel. Questions were due February 12, 2026. The pre-proposal conference was held February 5, 2026 with nine companies attending. Amendments 1 through 5, issued January 23 through February 26, 2026, modified deadlines, added required attachments (Labor Resume Form, Prior State Contracts, Legal Action Summary, and Subcontractor List), and clarified personnel assignment requirements.