R-94-11-22-10E - 11/22/1994 RESOLUTION NO.
WHEREAS, the City of Round Rock has duly advertised for bids
for re-insurance for the City' s self-funded health plan, and
WHEREAS, &U-`:� 665 LjW45S#IM) has submitted the
lowest and best bid, and
WHEREAS, the City Council wishes to accept the bid of bum UOSS/
,SLUE 5141ELD Dr TEXAS , YNG • Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,
TEXAS,
That the Mayor is hereby authorized and directed to execute on
behalf of the City an agreement with 8LU6 SOBS/bCllE SH/ELD O� YX _INC
for re-insurance for the City's self-funded health plan, a copy of
said agreement being attached hereto and incorporate .herein for all
purposes.
RESOLVED this 22nd day of November, 1994 .
L1, Al
CHARLES CU ER, Mayor
City of Round Rock, Texas
ATTEST:
J ?Eg�LAND, ity Secretary
KS/RESOLUTION
RS41122E
Stop-Loss Policy
(herein called the Policy)
between
Blue Cross and Blue Shield of Texas,Inc.
Dallas,Texas
(herein called BCBSTX)
and
CITY OF ROUND ROCK
Round Rock.TX 78664
(herein called the Stop-Loss Policyholder)
Account Number 36076
Effective: December 1. 1994
This Stop-Loss Policy covers those items of the Master Benefit Plan Document and any Supplemental Benefit
Plan Document as indicated in Item I of the Exhibit.
Article I—Definitions
As used in this Policy:
A. Claim Liability means the total amount of Paid Claims that are the responsibility of the Policyholder
each Policy Year. Claim Liability will be calculated for each Policy Year in accordance with the
formula indicated in Item III of the Exhibit.
B. Exhibit means the attached specifications setting out certain particulars of this Policy or any other
subsequent set of specifications supplied by BCBSTX as a replacement Exhibit. The specifications or
items of the Exhibit shall be applicable for the time periods indicated in the Exhibit,except that any item
of the Exhibit may be changed:
1. Any time the Master Benefit Plan Document or any Supplemental Benefit Plan Document is
modified or changed and such changes or modifications are approved by BCBSTX as provided in
Section D of this Article I;or
2. If there is a significant change in the number of Employees covered under the Master Benefit Plan
Document (a significant change being 10%or more over a one-month period or 25%or more over
a three-month period).
C. Expected Paid Claims means the total amount of Paid Claims that are actuarially expected to be paid
each Policy Year. Expected Paid Claims will be calculated for each Policy Year.
D. Master Benefit Plan Document means the document attached to and made a part of this Policy which
describes the benefits and provisions of the Plan, and any amendments or changes thereto which are
Form No.ASO-SLP-6(Rev.11/94) (Page 1)
approved by BCBSTX in writing. BCBSTX shall provide written notice to the Stop-Loss Policyholder
of any amendments or changes to the benefits and provisons of the Policy.
E. Paid Claims means the total of all benefits payable under the benefit provisions of those items of the
Master Benefit Plan Document and any Supplemental Benefit Plan Document indicated applicable in
Item I of the Exhibit which were paid (meaning checks issued and covering funds deposited into the
Plan's claims payment banking account)under the terms of this Policy during the Policy Year involved,
which are incurred during the Policy Year, and not paid by, billed to, reported to, or received by the
Employee,the Stop-Loss Policyholder,or the Stop-Loss Policyholder's agents,brokers or administrators,
prior to the effective date of this Policy. "Paid Claims"shall not include:
1. Claims incurred after the termination date of this Policy;or
2. Extra contractual damages of any nature, compensatory damages or any similar damages however
assessed, or any payments made as an exception to the Master Benefit Plan Document or any
Supplementary Benefit Plan Document,or as settlement of a lawsuit;or
3. Any payments made which are not provided for as benefits under the Master Benefit Plan or any
Supplementary Benefit Plan Document, or which are limited or excluded under such Documents;
or
4. Any payments of benefits which are interpreted by the Stop-Loss Policyholder as coming within the
terms of the Master Benefit Plan Document or any Supplementary Benefit Plan Document if
BCBSTX notifies the Stop-Loss Policyholder that it does not agree with that interpretation.
F. Participant means an individual Employee or Dependent whose coverage has become effective under
the Master Benefit Plan or Supplementary Benefit Plan Documents.
G. Plan means the program of benefits adopted by the Stop-Loss Policyholder on behalf of its Employees
and the eligible Dependents of such Employees as described in the Master Benefit Plan or
Supplementary Benefit Plan Documents.
H. Policy Ye az means each consecutive 12-calendar-month period during which this Policy is in effect,the
first period commencing with the effective date of this Policy.
I. SIM-Loss Claims means the amount of Paid Claims for which BCBSTX assumes responsibility and risk
for payment, which is the sum of Individual (Specific) Stop-Loss Claims and Aggregate Stop-Loss
Claims.
1. If, during any calendar month occurring within a Policy Year,Paid Claims for a Participant exceed
the amount indicated in Item IV A of the Exhibit, such excess, up to the maximum amounts
indicated,if any,shall be referred to in this Policy as Individual(Specific)Stop-Loss Claims.
2. If, during any Policy Year, Paid Claims paid during that Policy Year , less Individual (Specific)
Stop-Loss Claims,if any,exceed the Point of Attachment indicated in Item IV B of the Exhibit,such
excess,if any,shall be referred to in this Policy as Aggregate Stop-Loss Claims.
J. Stop-Loss Premium means the monthly consideration required by BCBSTX for the risk assumed for the
Stop-Loss Insurance in Item IV of the Exhibit, such amount to be due and payable to BCBSTX on or
before the first of each month—the first such month being the month during which this Policy becomes
Form No.ASO-SLP-6(Rev.11/94) (Page 2)
effective. Each Stop-Loss Premium amount is calculated in accordance with the formula indicated in
Item II of the Exhibit.
J. Subscriber Unit means the specific coverage issued for an individual Employee and his or her covered
Dependent(s),if any,under the Master Benefit Plan and Supplementary Benefit Plan Documents shown
in Item I of the Exhibit,which coverage is identified by a unique subscriber identification number.
K Supplementar�Benefit Plan Document means the document attached to and made a part of this Policy
which describes benefits and provisions of the Plan not included in the Master Benefit Plan Document,
and any amendments or changes thereto which are acknowledged in writing by BCBSTX.
L. Trust means the Trust established by the Stop-Loss Policyholder in regard to the Master Benefit Plan
and Supplementary Benefit Plan Documents.
M. Third PUjy Administrator means HealthCare Benefits,Inc.
Article II—Settlements
A. Remittance. BCBSTX shall bill the Stop-Loss Policyholder in advance for the Stop-Loss Premium
amount due each month and the Stop-Loss Policyholder shall remit payment on or before the first day
of each month. A daily charge equal to the lesser of the percentage amount shown in Item V of the
Exhibit, or the maximum rate permitted by state law,multiplied times the amount due,will be charged
for late remittance of any amounts owed by the Stop-Loss Policyholder. A remittance will be considered
received when actually delivered into the possession or control of BCBSTX at its Home Office in Dallas
County,Texas.
B. Individual (Specific) Ston-Loss Settlement. BCBSTX will furnish the Stop-Loss Policyholder an
Individual (Specific) Stop-Loss Claim report after the end of each full calendar month occurring within
a Policy Year, in which Individual (Specific) Stop-Loss Claims were incurred during the term of the
contract and paid during the Policy Year. Within 10 days after issuance of said report, BCBSTX will
settle with the Stop-Loss Policyholder for any Individual (Specific) Stop-Loss Claims involved;
provided, however, if the Plan, the Administrative Services Agreement between the Stop-Loss
Policyholder and the Third Party Administrator, or this Policy are terminated on a date other than the
end of a Policy Year, reports will be furnished and settlements will be made, as described herein, for
only those fiill calendar months occurring within that portion of any Policy Year immediately preceding
termination. Individual (Specific) Stop-Loss benefits shall not extend beyond the termination date of
this Policy, unless this Policy is terminated at the end of the Policy Year.
C. Aggregate Stop-Loss Settlement or Accounting.
1. Monthly Settlement and Accounting
a. Settlement.Where shown in Item III of the Exhibit to be applicable,BCBSTX will furnish the Stop-
Loss Policyholder with a Monthly Aggregate Stop-Loss settlement report within thirty (30) days
after the end of each month occurring within an Accounting Period in which Aggregate Stop-Loss
Benefits were paid. Within ten(10)days after issuance of such report,BCBSTX will settle with the
Stop Loss Policyholder for any Aggregate Stop-Loss Insurance involved. Based on any banking
arrangements in force and the settlement results,Aggregate Stop-Loss Insurance settlement amounts
reported will either be paid directly to the Stop Loss Policyholder by BCBSTX or credited to a
designated bank account.
Form No.ASO-SLP-6(Rev.11/94) (Page 3)
b. Accounting. BCBSTX will furnish the Stop Loss Policyholder an Accounting Period Settlement
Report within ninety(90)days ager the end of each Accounting Period. If the report reflects that
the amount (calculated using the factor shown in Item III of the Exhibit multiplied by the total
number of employees and dependents participating in the plan),if any,exceeds Aggregate Stop Loss
benefits paid (less any Specific Stop Loss benefits paid, if any), the difference between the two
amounts shall be termed the Aggregate Stop Loss Accounting Period Surplus; if the reverse is true,
the difference between the two amounts shall be termed the Aggregated Stop Loss Accounting
Period Deficit.
c. Based on the report provided for in the preceding paragraph,the following applies:
(1) If the report reflects an Aggregated Stop Loss Monthly Accounting Period Deficit, such deficit
shall be combined with any deficits carried forward from previous Accounting Periods and shall be
termed the Aggregate Stop Loss Standing Deficit. The resulting Aggregate Stop Loss Standing
Deficit shall then be carred forward to apply to future Monthly Account Periods;
(2) If the report reflects an Aggregate Stop Loss Accounting Period Surplus,such surplus shall first
be applied against any Aggregate Stop Loss Standing Deficit. Any remaining surplus shall then be
carried forward to future Monthly Account Periods.
2. Year-End Settlement and Accounting
a. BCBSTX will furnish the Stop-Loss Policyholder an Annual Aggregate Stop-Loss settlement report
or accounting of claims annually within 45 days following the end of each Policy Year during which
this Policy was in effect, as described in this Section C; provided, however, if the Plan, the
Administrative Services Agreement between the Stop-Loss Policyholder and the Third Party
Administrator, or this Policy are terminated on a date other than the end of a Policy Year, no
Aggregate Stop-Loss benefits will exist for that portion of any Policy Year immediately preceding
termination and all Stop-Loss benefits previously paid in such portion of the Policy Year shall be
refunded to BCBSTX,no settlement report or accounting will be provided,any Aggregate Stop-Loss
Premium already paid will not be refunded.
b. If a settlement is required to be made under Section B of this Article 11,above,Aggregate Stop-Loss
Claims under this Section C shall not include any such Individual Stop-Loss Claims.
c. Depending on the Banking Arrangement applied for, an Aggregate Stop-Loss settlement may be
required. If the settlement report reflects that Paid Claims for the Policy Year involved exceed the
Point of Attachment, the amount of such excess, less any amounts paid or obligated by BCBSTX
shall be payable to the Stop-Loss Policyholder. If the reverse is true,Aggregate Stop-Loss benefits
shall not be due and no payment will be made under this Section C. Aggregate Stop-Loss benefits
shall not exceed a maximum of$1,000,000 in any Policy Year or any combined final Policy Year.
Article III—Audits and Adjustments
A. Audits. BCBSTX, or its duly authorized agent, shall have the right, upon reasonable notice given, to
audit the relevant books and records of the Stop-Loss Policyholder (and any agents, brokers, or
administrators of the Stop-Loss Policyholder)during normal working hours,or to require that copies of
pertinent documents be provided,in order to verify the validity of any benefits payable under the Master
Benefit Plan or Supplementary Benefit Plan Documents which will result in payments being made under
this Policy.
Form No.ASO-SLP-6(Rev.11/94) (Page 4)
B. Retroactive Adjustment. To the extent that later occurring events such as those resulting from
coordination of benefits,subrogation,audits or other legal or administrative actions or causes necessitate
adjustments to payments made under the benefit provisions of the Master Benefit Plan Document,
appropriate adjustments shall also be made to any payments or settlements made under this Stop-Loss
Policy to reflect said benefit payment adjustments. The Stop-Loss Policyholder is required to
immediately notify BCBSTX of any such recoveries or benefit payment adjustments as soon as they are
known to the Stop-Loss Policyholder,it agents or its Third Party Administrator and to pay to BCBSTX
immediately upon receipt any funds recovered from such later occurring events which would have the
effect of decreasing past,present, or future Stop-Loss benefit payments. Any resulting adjustments to
Stop-Loss Policy payments shall routinely be made at the time of the next Stop-Loss settlement
occurring after notification provided for under this Policy and shall be reflected in the Settlement Report;
provided,however, BCBSTX reserves the right to make such adjustments at any time after notification
is received from the Stop-Loss Policyholder. Should the notice necessitating an adjustment occur after
all settlements provided for in this Policy have been made, or should BCBSTX elect to make an off-
cycle adjustment, an Adjustment Report will be provided by BCBSTX within 30 days after receipt of
notification by the Stop-Loss Policyholder and a settlement will be made by the parties within ten days
thereafter.
Article V—General Provisions
A. Arbitration. In the event the parties fail to agree with respect to any matter covered by this Policy,the
question in dispute shall be submitted for arbitration. The arbitrator shall be selected as follows: upon
declaration by one of the parties hereto that a deadlock exists,the parties shall select an arbitrator; if no
appointment is made within 10 days after the deadlock is declared and the amount in contest is in excess
of$200, the American Arbitration Association shall be the arbitrator. The AAA shall submit a list of
the five names to BCBSTX and the Stop-Loss Policyholder. Each party may alternately strike two
names from the list. BCBSTX shall make the first strike from the list submitted by the AAA. The
person remaining on the list is to be the arbitrator. If the amount in question is$200 or less,BCBSTX
shall select an independent third party to be the arbitrator. The arbitrator will submit a decision within
10 days after appointment and such decision shall be binding on the parties hereto. Expenses incurred
in the arbitration process shall be borne equally by the parties.
B. Assignment. No part of this Policy, or any rights, duties, or obligations described herein, shall be
assigned or delegated without the prior express written consent of both parties. BCBSTX's standing
contractual arrangements for the acquisition and use of facilities, services, supplies, equipment and
personnel from other parties shall not constitute an assignment under this Policy.
C. CMtions. Captions appearing in this Policy and its exhibits are provided for convenience only and in
no way define,limit,construe or describe the scope of sections or paragraphs to which they are inserted.
D. Enforcement. Any delay or inconsistency in the enforcement of any part of this Policy shall not
constitute a waiver of any rights with respect to the enforcement of this Policy at any future date nor
shall it limit any remedies which may be sought in any action to enforce any provision of this Policy.
E. Entire . This Policy and any exhibits or amendments shall constitute the entire agreement between the
parties for the purposes of this Policy and shall supersede any and all prior agreements or
understandings,either oral or in writing,between the parties respecting the subject matter herein.
F. Forces Majeure and Majesture. Neither party shall be liable for failure to perform its obligations under
this Policy if prevented from doing so by a cause or causes beyond its commercially reasonable control
Form No.ASO-SLP-6(Rev.11/94) (Page 5)
including,but not limited to,acts of God or nature,fires,floods,storms,earthquakes,riots,strikes,wars
or restraints of government.
G. Gender and Mode. The use herein of a personal pronoun in the masculine or feminine gender or in the
singular or plural mode, shall be deemed to include the opposite gender or mode unless the context
clearly indicates the contrary.
H. Governing Law. This Policy shall be governed by,and shall be construed in accordance with,the laws
of the State of Texas. All obligations created hereunder are performable in Dallas County, Texas and
all disputes arising out of this Policy will be resolved in Dallas County,Texas.
I. Indemnification Agreement. In the event either party, its officers, directors, employees or agents are
made parties to any judicial or administrative proceeding arising in whole or in part out of any function
performed by one or more of them under this Policy, the other party shall hold them harmless for all
judgments, settlements, and costs (including attorney's fees) which they incur or pay in connection
therewith,except that the fist party shall not reimburse such other party for the amount of any judgment
or award (or attorney's fees with respect thereto) if the court rendering the judgment or the agency
making the award determines that the liability underlying the judgment or award was caused by the
willful misconduct or gross negligence of such other party, its officers,directors, employees or agents.
J. Legal Construction. Should any provision(s) contained in this Policy be held to be invalid, illegal, or
otherwise unenforceable, the remaining provisions of the Policy shall be construed in their entirety as
if separate and apart from the invalid,illegal or unenforceable provision(s)unless such construction were
to materially change the terms and conditions of the Policy.
K. Limitation of Liability. Liability for any errors or omissions by BCBSTX (or its officers, directors,
employees,agents,or independent contractors)in the administration of this Policy,or in the performance
of any duty of responsibility contemplated by this Policy, shall be limited to the maximum benefits
which should have been paid under the Policy had the errors or omissions not occurred (including
BCBSTX's share of any arbitration expenses incurred under the Policy), unless any such errors or
omissions are adjudged to be the result of willful misconduct or gross negligence by BCBSTX.
L. Modification. Except as provided for in Section D of Article I, this Policy shall not be amended or
modified in any manner other than by an instrument in writing executed by the parties.
M. Notice and Satisfaction. The Stop-Loss Policyholder agrees to give BCBSTX specific notice in writing
of any complaint or concern the Stop-Loss Policyholder may have about the performance of this Policy
and to allow BCBSTX 30 days in which to make necessary adjustments or corrections to satisfy any
such complaint or concern prior to taking any further action with regard to the complaint or concern.
N. Right to Terminate. This Policy will terminate if the Plan terminates or the Administrative Services
Agreement between the Stop-Loss Policyholder and the Third Party Administrator terminates, or may
be terminated at the end of any Policy Year by either party pursuant to written notice given by either
party to the other not less than 30 days in advance of the termination date. Upon such termination,final
settlements shall be effected in accordance with the provisions of Article II hereof. BCBSTX reserves
the right to terminate this Policy, with 10 days prior written notice, for failure of the Stop-Loss
Policyholder to pay Stop-Loss Premiums as required herein.
O. Subsidiaries. BCBSTX and its subsidiaries and affiliates have reciprocal agreements under which they
will allocate funds between its corporations resulting from any settlements, and the Stop-Loss
Policyholder shall have no responsibility for,or interest in,such allocation.
Form No.ASO-SLP-6(Rev.11/94) (Page 6)
P. Taxes. Any premium amounts due under this Policy will automatically be increased by the amount of
any taxes imposed, increased or adjudged due by any lawful authority on or after the effective date of
this Policy,which directly pertain to this Policy and which BCBSTX is required to pay or remit,whether
relating to fees,services,benefits,payments or any other aspect of this Policy,the Master Benefit Plan
or Supplementary Benefit Plan Documents.
For Blue Cross and Blue Shield of Teas,Inc.(BCBSTX)
f
By: /o-/7- 9�
Rog .Coleman,President Date
By: _ /o- '5;7 9�
S Date
(Seal)
For CITYfflF ROUND ROCK(Stop-Loss Policyholder)
By:
Title: 0 A—I Date
By: C /V0 V" 1, 19q5
q5
�O AM]6A q 1 r--*, 9 44� Date '
eke J%W A keilAiz, A-W. c�Ty c eETq py
(Seal)
Form No.ASO-SLP-6(Rev.11/94) (Page 7)
Exhibit No.1
Schedule of Specifications
to
Stop-Loss Policy
CITY OF ROUND ROCK
Account Number 36076
These specifications shall apply to the Stop-Loss Policy between BCBSTX and the above Stop-Loss
Policyholder for the current Policy Year beginning December 1, 1994,and ending November 30, 1995.
Item I—Statement of Benefits
The benefits which shall be covered under this Stop-Loss Policy are those described in the attached Master
Benefit Plan Document and Prescription Drug Program Supplemental Benefit Plan Document.
All exclusions and limitations contained in the Master Benefit Plan Document and the Prescription Drug
Program Supplementary Benefit Plan Document shall apply, including specifically those described in the
Limitations and Exclusions Section(s)of such Document.
Item 11—Stop-Loss Premium
The Stop-Loss Premium is the sum of the Individual Stop-Loss Premium and Aggregate Stop-Loss Premium
amounts calculated as follows(amounts shown are applicable for the current Policy Year). In order for Policy
benefits shown below to be available,Stop-Loss Premium must be paid for the entire Policy period.
A. Individual Stop-Loss Premium shall be calculated monthly and shall be equal to the sum of the amounts
obtained by multiplying the number of Employees covered for a particular month by:
$-22.17 for each Employee only Subscriber Unit
$ 59.85 for each Employee/child(ren)Subscriber Unit
$_59.85 for each Employee/spouse Subscriber Unit
$_19.85 for each Employee/family Subscriber Unity
B. Aggregate Stop-Loss Premium shall be calculated monthly and shall be equal to the sum of the amounts
obtained by multiplying the number of Employees covered for a particular month by:
$-L54 for each Employee only Subscriber Unit
$-2.54 for each Employee%hild(ren)Subscriber Unit
$2.54 for each Employeetspouse Subscriber Unit
$1.54 for each Employeelfamily Subscriber Unity
Form No.ASO-SLP-6(Rev.11/94) (Page 8)
Item III—Claim Liability Factors
Claim Liability(Monthly Maximum)shall be calculated monthly and shall be equal to the sum of the amounts
obtained by multiplying the number of Subscriber Units covered for a particular month by the following
factors:
$-L55.00 for each Employee only Subscriber Unit
$ 155.00 for each Employeetchild(ren)Subscriber Unit
$-L55.00 for each Employee/spouse Subscriber Unit
$_155.00 for each Employee/family Subscriber Unit
Item IV—Ston-Loss Insurance Options
A. Individual Stop-Loss Insurance
✓ Applied For.
For (insert names of Participants or "Not Applicable"). the amount of Paid Claims during the current
Policy Year in excess of the Point of Attachment of$N/A per Participant. Individual Stop-Loss benefit
payments shall not exceed a maximum of$N/A per Participant for the indicated Policy Year.
2. For each other Participant,the amount of Paid Claims during the current Policy Year in excess of the
Point of Attachment of$ 30,000 per Participant. Individual Stop-Loss benefit payments shall not
exceed a maximum of$970,000 per Participant for the indicated Policy Year.
Not Applied For.
B. Aggregate Stop-Loss Insurance
✓ Applied For.
O The amount of Paid Claims during the indicated Policy Year which exceeds 125% of Expected Paid
Claims. Such percentage shall apply for 12 months for the indicated Policy Year. Aggregate Stop-Loss
benefit payments shall not exceed a maximum of$1,000,000 for the indicated Policy Year. (12/12 w/%
no run-off,monthly cap)
Not Applied For:
Form No.ASO-SLP-6(Rev.11/94) (Page 9)
Item V—Daily Charge
The daily charge rate shall be.05%per day(which would equate to an annual percentage rate of 18%).
For Blue Cross and Blue Shield of Texas,Inc.(BCBSTX)
By:
Rogj k.Coleman,President Date
For CITY F ROUND ROCK(Employer)
By //oy. i, /99
Title:�1( �,a� Date
Form No. ASO-SLP-6(Rev.11/94) (Page 10)
City of Round Rock Self—Funded Health Plan, Analysis of Bids
ISL ISL Total Annual Total
Rate Rate ASL Annual Attachment City Cost/
Company Emp Family Rate Premium Cost Point Liability
Delaware American $25.30 $60.72 $2.44 $146,065.44 $698,855.04 844,920.48
John Alden 21.81 53.38 1.96 126,682.80 884,070.72 1,010,753.52
Transamerica 17.85 44.02 2.48 107,311.92 750,850.56 858,162.48
Commercial Union 18.71 46.50 2.66 113,152.56 906,800.40 1,019,952.96
Life of Georgia 19.16 47.61 2.50 115,041.12 759,846.96 874,888.08
Blue Cross 22.17 59.85 2.00 135,776.88 569,160.00 704,936.88
Notes:
ISL Rate Emp—The Individual Stop Loss Insurance Premimum per employee per month
ISL Rate Family—The Indivival Stop Loss Insurance Premium per family unit per month
ASL Rate—the Aggregate Stop Loss Insurance Premium per Employee/Family per month
Annual Attachment Point—the Maximum liability to the City for the year covered by this bid.
Totals are based on 306 employees
health95
DATE: November 18, 1994
SUBJECT: City Council Meeting, November 22, 1994
ITEM: 10. E. Consider a resolution accepting the bid and authorizing the Mayor to enter
into an agreement for re—insurance for the City's self—funded health plan.
STAFF RESOURCE PERSON: David Kautz
NARRATIVE AND STAFF RECOMMENDATION:
The City partially self—funds the health and dental benefit plan offered to the employees.
Partial self—funding means that,up to a certain level,the City pays for all medical claims covered
by the plan. Beyond that funding level the City purchases insurance to protect against
catastrophic financial risk. This insurance is known as Re—insurance or Stop Loss insurance.
Bids for re—insurance were received from 6 insurance providers as summarized on the attached
page.
The apparent lowest and best bid is that of Blue Cross Blue Shield. Staff is currently
analyzing the bids and,subject to the City Attorney approval of contractual documents,will make
a recommendation to the Council at the meeting.
EXECUTED
DOCUMENT
FOLLOWS
VIC;Hq "4001jubbi
02/09/95 14:29 HBI.
PAGE 02!04
Proposal of Stop-Lose Insurance from Slue Cross and Blue Shield Of Texas,Irle.
is hereby made for thea program of health cure benefits to the employees of
City of hound Rook
Rou»d�Ro k.k,TVXes ��„ ,• i
which is to be funded by the employer so named,and administered by Health Benefits, Inc.,
1001 E.Campbell Road, Richardson Texas 75081,for a policy term beglnnin' IPi1/9_5
and ending 11/30/96 .or upon termination of contract between the employer?and the
administrator(whichever is first).
This proposal is for Irlsuranoe as marked hereunder:
(x) IndlviduAt Stop-LOSS for claims per participant in excess of $30,000
but not exceeding 1$970,POD over the term of the policy,andlor
(x) Aggregate ftp-Loss for average claims per covered employee in:
excess of $168.45 plus average claims per dependent unit:of n/a
per monih over the farm of the policy(whldh c-Ansfltutet� ng oi-
of the insurer's expectation.of aggregate average claims),
with consideration of only those CIAIMS for (x) hospital,mec lcal,and surgicat,
(x) p►*acription drug, (x) dented,and/or ( ) vialeilt
berlsfits
( ) paid during the terra of cite policy, and incurred within _ mos.prior
to the beginning of such term.
•{x) paid and Incurred during the term of the policy.
( ) inct,rred during the term of the policy,and paid within mos.
following such term, It administered by the adminlstrator designate*d above,
Subject to the following qualifications:
(1)the submission of satisfactory application for stoploss Insurance,and
(2)the timely recelpt of the Initial premiums due to the insurer,and
(3)the execution-and return of a stoploss policy by the polls yholder prior to the policy tertn,and
(4)the following specific qualifications:
*Pai_d Contract
"'Monthly Cap - -
Slue Crar:Z ana Blue Shield of Texus, Inc.,prop000s to provide the lnsuranee a�ttined
above by means 6f said poliC;, for the rn*MMv ptarnium amount of:
$23.44 per employee,and $39.84 �pior dependent unit for indlvidueii stop-10-04:
$z.54 "per emplvyve,am $0.00 par dependent unit for atogtegme stop-h-vsLe.
a•.��.hmiitA o' J• � M-0,grf In..-
These premlurri amounts are reser]on tiaie pi'fr1%rirv6•r p...,....,,,,�,inrniuiriyj an....,,...__ ....._$.
peinicipation of 333 employees and _ 107d4endents, requiring an initial
premium of $12,814,22 ;deposit In this amount, to be applfed to actual initial premiurrra,
must accompany the application for stop-loss insurance.
The terms of thls proposal are subject to modification based on the final and enact specifications
of the program of benefits to be Insured,as given Dy the documents required as part of the
application for this insurance.
Thle proposal Is valid until 12/1/95 ,
Prepared Dy: 1 1� wlS. ►ry\ n►n
Actuarial Division, Blue Cross and Blue Shield of Texas. Inc.
'c.<r 1Ur 177tr GL;4n L14bbyWbbJ
02/09/'9G 14:29 �,��` ✓HBI
PAGE @3/@q
r
Application for Stop-toss Insurance
from
Blue Cross and Blue Shield of Texas,Inc
is hereby made for lite program of health care benefits to the employees of
City of Round Rock
Round Rack,Texas
which is to be funded by the employer so named,and administered by Health Care Benefits,Irrc..
1001 E. CampWI Road,Richardson Texas 75081,for a policy tern beginning. 12/1/88
and ending 11/30/86 ,or upon termination of contract between the employer`and the
administrator(whichever is first).
Toward the acceptance at this appiicetion,the following documdnis(trr tr;;e orit,196;thereof)are
�ita0h6d:
(1)the Benefit Plan Documents pertaining to the health care benefits programa)Do insured,and
specifying,at a rnlnlmurn,the actual benefits to be administered,and the complete and exact
eligibility requirements for coverage by such program;
(2)a complete and accurate census of those employees to be covered by the program at the
beginning of the policy term,together with proof of their eligibility;
(3)a complete and accurate census of those employees ineligible,or eligible qut not covered by
such program,together with verifled explanation for their lack of coverage;
(4) a duty completed 'Stop-Lots Applicant Questionnaire'Issued by the Insurer to conjunction with
this application.
In addition,anOosed with this application is the deposit toward Initial premium#stipulated by the
proposal for which this application Is submitted, in the amount of $')2,914.22
It Is understood and agreed that nalthar the approval of this application nor ani proposal by the
Insurer constitutes a contract;pmpavai3 and application are only Instruments df agreement
toward the execution of a policy of Insurance,which,It executed,will contain toe avis controlling
and binding language of a contract of insurance.
Sworn and Sub 'bad to by Receipt Aokdowleged by
RepresentaUv fA dont:
Repros u►"ve f insurer:
Signature Signature
r Yr
Date 'o�g'4� Date t�,r-21---`l�
Title I�Y1 �/Dry
Application and required documents reviewed and approved(disapproved on.
by _
Actuarial Division/Underwriting Division
Blue Gross and Blue Shield of Texas, Inc.
•ULA lU/1 7'p UY:40 Y14bbJGbb3
►r�/0+ /96 44:2 HBI
PACE 04104
Stop-Lose Applicant Questionnaire
for the Application of
City of Round Rook
Round Rock,Texas
t, is any eligible employee currently disabled,on leave of absenoa,or not actively at work?
( )No; ( ) Yes(Provide names and details for each)
2. Did any program participant have health benefits olalms totalling$5000 or i;o-re;Ince this data
last year? ( )No; ( ) Yes(Provide names,dates of services,charges,diainosis and
prognosis for es-Ch)
r
3.Has anyont+oiigible iv partIolpate had heart disease,aetnoer,organ transplant,kidney
disorder,stroke,or other major disease,injury,or curgery?( )No; ( j Yea;(Pravlde names,
dates of services,diagiiosls and prognosis for each)
4. is any eliigible depondent incaptebt3 of set!-support due to a phyalc,-tl or menial disabiiHy9
( } No; ( ) Yes(Provide name,diagnosls and prognosis f*r each)
d. Is n iyune.eligible to psrticip8te.currently hospitalized or known to be in nabd of hospital
admission within the next 60 days?( NO; { )Yea (Provide r:ame, dato ot'adrnlssion, and
diagnosis for each)
6. is any program participant claiming eligibility UtWor federal or stote law along?( ) No; ( )Yes
(Provide name and dente eligibility expires for each)
$worn and Sub• t ed to by R ipt Ack4owleged by
Representativ Ap is t; Repro nt ties o neuron:
Signature Signature
Date �'a g-9(0 Date
Title m A
ADMINISTRATIVE SERVICES AGREEMENT
HBI-ASA/11-93
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made and entered into by and between HealthCare Benefits, Inc., a corporation
organized, existing and doing business under and by virtue of the laws of the State of Texas (hereinafter
referred to as "Contractor") and City of Round Rock (hereinafter referred to as "Purchaser").
WITNESSETH:
WHEREAS,Contractor is in the business of providing independent third-party administration of employee
welfare benefit programs; and
WHEREAS, Purchaser desires to engage the service of a third-party administrator for a welfare benefit
program (hereinafter referred to as "Benefit Program") to be provided to Purchaser's employees and their
eligible dependents (hereinafter collectively referred to as "Participants"); and
WHEREAS, Contractor is willing to provide such services to Purchaser and other parties on an
independent contract basis.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and Agreements
hereinafter set forth, the parties hereto agree as follows:
SECTION ONE
OBLIGATION OF PURCHASER
1.01 Purchaser shall furnish Contractor with a detailed description of the Benefit Program to
be administered.
1.02 Purchaser, in consultation with Contractor, shall determine the administrative practices and
procedures to be followed in the processing and payment of claims.
1.03 Purchaser shall provide to Contractor a complete and current listing of all Participants
eligible to receive benefits prior to their date of eligibility--making timely changes to the
listing on a periodic basis.
1.04 Purchaser shall obtain the consent of Participants for the release of confidential medical
information required for administration and to process claims for the payment of fees for
medical services rendered to patients, including any fees for mental or emotional health
services performed by professionals, as may be required by state or federal law.
1.05 Purchaser shall establish and maintain a suitable banking arrangement to effectuate the
provisions of Section Six herein.
1.06 At Contractor's request, or at Purchaser's option, Purchaser shall make the final
determination of eligibility of Participants to receive benefits and any special issues
arising in the course of administration.
1
1.07 Purchaser shall designate in writing a contact person who will be empowered to act on
behalf of Purchaser with regard to the terms of the Agreement and with whom Contractor
can coordinate and resolve all questions arising in the course of administration.
SECTION TWO
OBLIGATION OF CONTRACTOR
2.01 Contractor shall administer Purchaser's Benefit Program in accordance with the benefit
plan description provided and the administrative practices and procedures established by
the Purchaser.
2.02 Contractor shall provide or arrange for suitable facilities, equipment and personnel
necessary for proper administration of the Benefit Program.
2.03 Contractor shall, upon request, assist Purchaser in establishing appropriate banking
arrangements for program administration.
2.04 Contractor shall provide standard administrative materials, including enrollment forms,
participant and provider claim forms and two identification cards for each participant in
the Benefit Program on the Effective Date of the Plan. The cost of reprinting additional
identification cards shall be the obligation of the Purchaser.
2.05 Contractor shall, upon request, assist Purchaser in incorporating the Benefit Program
description and design into a plan document and booklet for Participants. The Contractor
will provide one benefit booklet per participant enrolled in the Benefit Program on the
Effective Date of the Plan. The cost of reprinting additional benefit booklets shall be the
obligation of the Purchaser.
2.06 Contractor shall supply the initial check stock, thereafter the cost of additional checks
shall be the obligation of the Purchaser.
2.07 Contractor shall provide claims processing services to include:
a. Review and validation of all claims submitted for payment;
b. Determination of benefits in accordance with the specification of the Benefit
Program;
C. Coordination of benefits with other plans, where appropriate;
d. Preparation and mailing of explanation of benefit forms; and
e. Preparation and mailing of claim drafts drawn on Purchaser's bank account as
provided in Section Six herein.
2.08 Contractor shall establish liaison with Purchaser's designee, providers and Participants,
as required,to obtain and follow-up on additional service information, to verify eligibility
of Participants and to assist in resolving claims problems.
2
2.09 Contractor shall provide periodic written reports to include:
a. Monthly check reconciliation report;
b. Monthly benefit experience reports; and
C. Those reports specified in Item Four of the current Exhibit to this Agreement, if
any.
d. Other reports as set forth in Bid Specifications.
2.10 Contractor will provide Purchaser copies of specific claim payment drafts upon request.
2.11 Contractor shall evaluate late applicants for evidence of good health on behalf of
Purchaser.
2.12 Contractor shall maintain current individual benefit records on all Participants and shall
maintain the confidentiality of any medical information contained in such records.
2.13 Contractor shall prepare IRS form 1099 reports on medical provider fees.
2.14 Contractor shall keep Purchaser informed with respect to non-routine "shock"claims and
matters of general interest, including recurring administration problems, local situations
meriting review and possible misuses of benefits.
2.15 Contractor shall refer to Purchaser any claim or class of claims Purchaser may specify for
consideration and final decision, to include:
a. Claims for services which do not appear to qualify for payment under the Benefit
Program;
b. Claims in which there is a question on the amount of payment due;
C. Claims involving any matter in controversy; and
d. Those claims or classes of claims specified in Item Three of the current Exhibit
to this Agreement, if any.
2.16 Contractor shall assist Purchaser in the analysis and resolution of disputed claims,
provided, however, that such assistance shall in no way include or be considered to
include or constitute legal advice or opinions.
2.17 Underwriting services will not be provided unless specifically identified in Item Two of
the Exhibit to this Agreement, if any. Any such services provided will include required
certifications by a qualified actuary.
2.18 Contractor shall also provide those services specified in Item Two of the current Exhibit
to this Agreement, if any.
3
SECTION THREE
RELATIONSHIP OF PARTIES
3.01 Contractor shall not be construed, represented or held out to be a partner, associate,joint
venturer or employee of Purchaser nor shall the Contractor be construed, represented or
held out to be an agent of the Purchaser or agent of any insurance company. Contractor
shall at all times have the status of an independent contractor.
3.02 Contractor shall, upon request, assist purchaser in obtaining Stop Loss Reinsurance. If
Stop Loss reinsurance is purchased, Contractor shall not be responsible for claims not
timely filed and not included within the Stop Loss coverage. Contractor shall attempt to
assist Purchaser in encouraging providers to file claims timely but Contractor assumes no
responsibility for the timely filing of such claims, and Purchaser commits not to sue
contractor regarding any claims arising out of Stop Loss reinsurance coverage so
purchased.
3.03 Contractor is not a statutory fiduciary of Purchaser's Benefit Program nor is Contractor
a plan administrator within the meaning of the Employee Retirement Income Security Act
of 1974, Public Law 93-406.
3.04 This Agreement is not a contract of insurance, and Contractor is not an insurer or
underwriter of Purchaser's liability under the Benefit Program. Purchaser has and retains
the ultimate responsibility for payment of claims and other expenses under the Benefit
Program.
SECTION FOUR
TERM AND TERMINATION
4.01 The term of this Agreement shall be for the period of one (1) year commencing on the
Effective Date specified herein and may be renewed for two (2) additional periods of time
not to exceed one(1) year each provided both parties to this agreement agree in writing.
4.02 This Agreement may be terminated as follows:
a. By either party on any anniversary of the Effective Date of this Agreement
following sixty (60) days' prior written notice to the other;
b. By Contractor upon Purchaser's failure to fund the bank account as provided for
in Paragraph 6.02 of Section Six below;
C. By Purchaser for cause, upon fifteen(15)days' prior written notice, if Contractor
fails to correct any deficiency in the performance of its obligations under the
Agreement within fifteen (15) working days after notice of such deficiency is
given to Contractor by Purchaser in writing; or
d. By both parties on a mutually agreeable date.
4
4.03 If this Agreement is terminated by Purchaser, except as provided in Paragraph 4.02,
above, Purchaser agrees to pay to Contractor a termination fee in an amount equal to
twice the average of the monthly administration fee due for all months immediately
preceding termination. Such termination fee is due and payable within thirty (30) days
after notice of termination, or immediately upon termination if no notice is given, and is
in addition to any monthly administration fee, or portion thereof, or any other monies due
and payable to Contractor under this Agreement.
4.04 If this Agreement is terminated for cause by Purchaser under Paragraph 4.02, above, the
Purchaser shall not be liable for any termination fees or charges. Moreover, Purchaser
may withhold from the current administration fees due Contractor, the costs incurred by
Purchaser in attempting to gain Contractor's performance of the Agreement.
SECTION FIVE
ADMINISTRATION FEES AND REIMBURSEMENT
5.01 Purchaser agrees to pay Contractor a monthly administration fee, as described in
EXHIBIT NUMBER ONE attached hereto,within thirty (30) days after the day on which
a correct invoice for the services is received.
a. The fee shall be due and payable as of the first of each month beginning with the
first month of this Agreement. Any adjustments to the monthly fee shall be
added to the next months invoice.
b. If the fee remains unpaid after thirty one (3 1) days from the receipt of a correct
invoice, the Contractor may charge a late fee equal to ten percent (10%)per
annum of the past due amount or the maximum amount permitted by state law
whichever is less.
C. After the forty-first(41 st)day the Contractor may suspend its performance under
this agreement and terminate this Agreement for non-payment of Fees with (10)
days prior written notice.
5.02 The amount of the administration fee shall be determined in accordance with the
specifications contained in Item One of the current Exhibit to this Agreement, if any.
5.03 The administration fee shall be subject to change by Contractor as follows:
a. On each anniversary of the Effective date of this Agreement, upon ninety (90)
days prior written notice to purchaser;
b. On the implementation date of any changes in the Benefit Program which would
increase Contractor's cost of administration;
C. On any date that increased expenses are incurred by Contractor because of
changes imposed by governmental entities--limited to increases sufficient to
recover the additional expenses; or
5
d. On any date that Benefit Program enrollment changes by an amount equal to ten
percent (10%) or more of total enrollment.
5.04 Purchaser shall reimburse Contractor for the direct actual cost of any special supplies or
forms provided by Contractor for Purchaser--such reimbursement to be in addition to the
monthly administration fee.
5.05 Purchaser will reimburse Contractor for any taxes imposed or adjudged due by any lawful
authority with respect to the Benefit Program or its administration. In the case of
imposition of such tax liability, Purchaser may elect to terminate this Agreement upon
thirty (30) days' prior written notice without incurring liability for termination fees or
charges.
SECTION SIX
CLAIMS PAYMENT AND BANKING ARRANGEMENT
6.01 Purchaser shall establish a bank account on which Contractor shall write drafts for the
payment of Benefit Program claims and expenses. Purchaser agrees and is obligated to
arrange for sufficient funds to be available in such account to cover all drafts validly
issued against the account. Contractor shall notify Purchaser, simultaneous with the
release of checks, the amount that is required to be deposited by Purchaser to cover the
checks issued.
6.02 Contractor shall have the right to terminate this Agreement upon notice to Purchaser in
the event that Purchaser fails to fund such account within three (3) banking days after
notice is given by Contractor that such funds are required to be deposited.
6.03 Notice by Contractor, as contemplated in paragraph 6.02, above, shall be sufficient if
given by telephone, fax or by United States mail, delivery services or personal delivery
to Purchaser's designee at the telephone number or address specified in Item Five of the
current Exhibit to this Agreement, if any. Any telephonic notice given will be confirmed
in writing within twenty-four (24) hours.
SECTION SEVEN
NOTICES
7.01 All notices given under in this Agreement, unless otherwise provided for herein, must be
in writing and shall be deemed to have been given for all purposes when personally
delivered and received or when deposited in the United States mail, first-class postage
prepaid, certified or registered, return receipt requested and addressed to the parties as set
forth in Item Five of the current Exhibit to this Agreement, if any.
6
SECTION EIGHT
INDEMNIFICATION AND HOLD HARMLESS
8.01 To the extent permitted by applicable law, Purchaser shall covenant not to sue Contractor,
its officers, directors, employees and agents regarding all claims or actions based upon,
arising out of, or in any way connected with the services rendered by Contractor pursuant
to the terms of this Agreement except for willful misconduct or gross negligence on the
performance of said services by contractor, its officers, directors, employees or agents.
SECTION NINE
GENERAL PROVISIONS
9.01 ASSIGNMENT. No part of this Agreement, or any rights, duties or obligations described
herein, shall be assigned or delegated without the prior express written consent of both
parties,except for the use of a third party for printing and mailing services. Contractor's
acquisition and use of facilities, services, supplies, equipment and the use of temporary
personnel on site shall not constitute an assignment under this Agreement; provided,
however, that the supervision of all services provided under this Agreement will be
performed by Contractor's regular employees.
9.02 GOVERNING LAW. This contract shall be governed by and shall be construed in
accordance with the laws of the State of Texas.
9.03 MODIFICATION. This Agreement shall not be amended or modified in any manner
except by an instrument in writing executed by the parties.
9.04 CAPTIONS. Captions appearing in this Agreement and its Exhibits, if any, are provided
for convenience only and in no way define, limit, construe or describe the scope of
sections or paragraphs to which they are inserted.
9.05 GENDER AND MODE. The use herein of a personal pronoun in the masculine or
feminine gender or in the singular or plural mode, shall be deemed to include the opposite
gender or mode unless the context clearly indicates the contrary.
9.06 EXMBIT. "Exhibit"means the attached document(s) setting out certain particulars of this
Agreement, or any replacement document(s) mutually agreed to by the parties.
7
9.07 LEGAL CONSTRUCTION. Should any provision(s) contained in this Agreement be held
to be invalid, illegal or otherwise unenforceable, the remaining provisions of the
Agreement shall be construed in their entirety as if separate and apart from the invalid,
illegal or unenforceable provision(s), subject to renegotiation by the parties if a material
change in the terms of the Agreement were to result.
9.08 ENFORCEMENT. Any delay or inconsistency in the enforcement of any part of this
Agreement shall not constitute a waiver of any rights with respect to the enforcement of
this Agreement at any future date, nor shall it limit any remedies which may be sought
in any action to enforce any provision of this Agreement.
9.09 FORCE MAJEURE. Neither party shall be liable for any failure to perform its
obligations under this Agreement if prevented from doing so by a cause or causes beyond
its commercially reasonable control, including, but not limited to, acts of God or nature,
fires, floods, storms, earthquakes, riots, strikes and wars or restraints of government.
9.10 ENTIRETY. This Agreement and any Exhibits or amendments and advertisement for
bids shall constitute the entire Agreement between the parties and shall supersede any and
all prior Agreements or understandings, either oral or in writing, between the parties
respecting the subject matter herein.
9.11 DISCLOSURE STATEMENT. Purchaser acknowledges that a disclosure of all payments
to be made to Contractor has been made to Purchaser and such disclosure statement is
incorporated herein by reference.
IN WITNESS HEREOF, the parties hereto have executed this Agreement for an Effective Date of
December 1, 1995.
YFORITY OF ROUND ROCK, PURCHASER:
3- as-9t�
Title: (Date)
FOR HEALTHCARE BENEFITS,INC., CONTRACTOR:
� 3'st 19
Roma Dixon (Date)
Vice-President - HealthCare Benefits, Inc.
2
Secre of Corporation (Date)
8
EXHIBIT NUMBER ONE
Specifications For
ADMINISTRATIVE SERVICES AGREEMENT
Between
HEALTHCARE BENEFITS,INC. (CONTRACTOR)
and
CITY OF ROUND ROCK (PURCHASER)
These specifications are to apply beginning with the Effective Date of the Agreement between the parties
to which this Exhibit is attached and shall continue in force and effect until the Agreement is terminated
or this Exhibit is superseded in whole or in part by a later executed exhibit.
ITEM ONE
ADMINISTRATION FEE
As provided in Paragraph 5.02 of Section Five of the Agreement, for the first (1st) year this Agreement
is in effect, the monthly administration fee shall be an amount equal to nine and 50/100 dollars ($9.50)
multiplied by the number of Participants enrolled in the Benefit Program on the first (1st) day of each
month.
ITEM TWO
OTHER SERVICES
As provided in Paragraph 2.18 of Section Two of the Agreement, the following additional services shall
be furnished:
A. Inpatient Certification Program will be administered by Blue Cross Blue Shield of Texas, Inc.
acting as agent of Contractor.
B. Prescription Drug Program by arrangement with Blue Cross Blue Shield of Texas, Inc. acting as
agent of Contractor to provide benefits substantially the same as its insured Prescription Drug
Program. Your billing will include applicable dispensing fees, discounted pricing and one and
50/100 dollars ($1.50) per prescription filled payable to the drug card company.
ITEM THREE
SPECIAL CLAIMS PROCESSING
As provided in Paragraph 2.15d of Section Two of the Agreement, the following special claims
handling procedures shall be followed: None.
1
ITEM FOUR
OTHER REPORTS
As provided in Paragraph 2.09c of Section Two of the Agreement, the following additional
reports shall be furnished: None.
ITEM FIVE
NOTICE ADDRESS
As provided in Paragraph 7.01 of Section Seven of the Agreement, notice to Contractor shall
be delivered or mailed to:
HealthCare Benefits, Inc.
1001 E. Campbell Rd.
Richardson, Texas 75081
Written notice to Purchaser shall be delivered or mailed to:
Contact Person:
City of Round Rock
221 East Main Street
Round Rock, TX 78664
Fax notice to Purchaser shall be made to the following number:
(512) 218-7097
FOR CITY OF ROUND ROCK, PURCHASER:
J''144.., 3-as-94P
Title: (Date)
FOR HEALTHCARE BENEFITS, INC., CONTRACTOR:
S
Roma Dixon (Date
Vice-President - HealthCare Benefits, Inc.
Sec of Corporation (Date)
2
CONTACT PERSON
Purchaser shall designate in writing a contact person who will be empowered to act on behalf
of Purchaser with regard to the terms of the Agreement and with whom Contractor can
coordinate and resolve all questions arising in the course of administration.
FOR C TY OF ROUND ROCK, PURCHASER:
Title: (Date)
DESIGNATED PERSON EMPOWERED TO ACT ON BEHALF OF PURCHASER:
Title: (Date)
1
EMPLOYEE BENEFIT PLAN
DISCLOSURE FORM
For
City of Round Rock
The agent and/or HealthCare Benefits, Inc. will contract with or represent the insurance carrier
in conjunction with the sale of certain group insurance polices. This disclosure does not limit
the agent's ability to recommend the products of other insurance companies or other funding
organizations, but is intended to disclose the financial interest of the parties as to the
Employee Benefit Plan. HealthCare Benefits, Inc. is a wholly-owned subsidiary of Blue Cross
Blue Shield of Texas, Inc. As requested by the Purchaser, HealthCare Benefits, Inc. has
solicited bids from Stop Loss Carriers, Life Carriers, etc., and the Purchaser, after reviewing
the proposals, has selected certain coverage. The relationship and dealings of those
companies are on file with the State Board of Insurance. .If insurance is purchased through
an insurance company, HealthCare Benefits, Inc. may contract to facilitate the payment of
insurance premiums, claims and eligibility and may receive compensation for its services, but
HealthCare Benefits, Inc. is not an agent of the insurance company and does not receive
commissions.
The following persons or companies are entitled to commissions as agents on the insurance
contract issued to you:
Product: Administration
Name of Broker: The Romine Group Commission: $0.00
Product: Stop Loss
Name of Broker: The Romine Group Commission: 15%
HealthCare Benefits, Inc., in addition to its administrative charge as indicated in the
Administrative Services Agreement, is entitled to the following payments and marketing
allowances for its services:
Product: NA Administrative Charge: NA
FOR 9fTY OF ROUND ROCK, PURCHASER:
(Z/ e
lattal—I 348-%
Title: (Date)
1
The undersigned acknowledges receipt of the information contained herein prior to any
purchase and approves the proposed transaction on behalf of the plan without receiving, either
directly or indirectly, any personal compensation in connection with the purchase of policies
under this Plan.
FOZTYOFOUND ROCK, PURCHASER:
q
Title: (Date)
FOR HEALTHCARE BENEFITS, INC., CONTRACTOR:
Roma Dixon (Date)
Vice-President - HealthCare Benefits, Inc.
Se tary of Corporation (Date)
2
Stop-Loss Policy
(herein called the Policy)
between
Blue Cross and Blue Shield of Texas,Inc.
Dallas,Texas
(herein called BCBSTX)
and
City of Round Rock
Round Rock,Texas 78664
(herein called the Stop-Loss Policyholder)
Account Number 36076
Effective: December 1. 1995
This Stop-Loss Policy covers those items of the Master Benefit Plan Document and any Supplemental
Benefit Plan Document as indicated in Item I of the Exhibit.
Article I—Definitions
As used in this Policy:
A. Claim Liability means the total amount of Paid Claims that are the responsibility of the Policyholder
each Policy Year. Claim Liability will be calculated for each Policy Year in accordance with the
formula indicated in Item III of the Exhibit.
B. Exhibit means the attached specifications setting out certain particulars of this Policy or any other
subsequent set of specifications supplied by BCBSTX as a replacement Exhibit. The specifications
or items of the Exhibit shall be applicable for the time periods indicated in the Exhibit, except that
any item of the Exhibit may be changed:
1. Any time the Master Benefit Plan Document or any Supplemental Benefit Plan Document is
modified or changed and such changes or modifications are approved by BCBSTX as provided
in Section D of this Article I;or
2. If there is a significant change in the number of Employees covered under the Master Benefit
Plan Document (a significant change being 10% or more over a one-month period or 25% or
more over a three month period).
C. Expected Paid Claims means the total amount of Paid Claims that are actuarially expected to be paid
each Policy Year. Expected Paid Claims will be calculated for each Policy Year.
D. Master Benefit Plan Document means the document attached to and made a part of this Policy which
describes the benefits and provisions of the Plan,and any amendments or changes thereto which are
approved by BCBSTX in writing.
Form No.ASO-SLP-6(Rev.10/95 12/12)
E. Paid Claims means the total of all benefits payable under the benefit provisions of those items of the
Master Benefit Plan Document and any Supplemental Benefit Plan Document indicated applicable
in Item I of the Exhibit which were paid (meaning checks issued and covering funds deposited into
the Plan's claims payment banking account) under the terms of this Policy during the Policy Year
involved, which are incurred and paid during the current Policy Year; and not paid by, billed to,
reported to, or received by the Employee, the Stop-Loss Policyholder, or the Stop-Loss
Policyholder's agents, brokers or administrators, prior to the effective date of this Policy. "Paid
Claims" shall not include:
1. Claims incurred after the termination date of this Policy; or
2. For Stop Loss Claims purposes, claims incurred during one Policy Year but paid in another
Policy Year;
3. Extra contractual damages of any nature, compensatory damages or any similar damages
however assessed, or any payments made as an exception to the Master Benefit Plan Document
or any Supplementary Benefit Plan Document,or as settlement of a lawsuit; or
4. Any payments made which are not provided for as benefits under the Master Benefit Plan or any
Supplementary Benefit Plan Document, or which are limited or excluded under such
Documents;or
5. Any payments of benefits which are interpreted by the Stop-Loss Policyholder as coming within
the terms of the Master Benefit Plan Document or any Supplementary Benefit Plan Document if
BCBSTX notifies the Stop-Loss Policyholder that it does not agree with that interpretation.
F. Participant means an individual Employee or Dependent whose coverage has become effective
under the Master Benefit Plan or Supplementary Benefit Plan Documents.
G. Plan means the program of benefits adopted by the Stop-Loss Policyholder on behalf of its
Employees and the eligible Dependents of such Employees as described in the Master Benefit Plan
or Supplementary Benefit Plan Documents.
H. Policy Year means each consecutive 12-calendar-month period during which this Policy is in effect,
the first period commencing with the effective date of this Policy.
1. Ston-Loss Claims means the amount of Paid Claims for which BCBSTX assumes responsibility and
risk for payment, which is the sum of Individual (Specific) Stop-Loss Claims and Aggregate Stop-
Loss Claims.
1. If, during any calendar month occurring within a Policy Year, Paid Claims for a Participant
exceed the amount indicated in Item IV A of the Exhibit, such excess, up to the maximum
amounts indicated, if any, shall be referred to in this Policy as Individual (Specific) Stop-Loss
Claims.
2. If, during any Policy Year, Paid Claims, less Individual (Specific) Stop-Loss Claims, if any,
exceed the Point of Attachment indicated in Item IV B of the Exhibit., such excess, if any, shall
be referred to in this Policy as Aggrregate Ston-Loss Claims.
J. Stop-Loss Premium means the monthly consideration required by BCBSTX for the risk assumed for
the Stop-Loss Insurance in Item IV of the Exhibit, such amount to be due and payable to BCBSTX
Form No.ASO-SLP-6(Rev.10/95 12/12)
on or before the first of each month—the first such month being the month during which this Policy
becomes effective. Each Stop-Loss Premium amount is calculated in accordance with the formula
indicated in Item II of the Exhibit.
K. Trust means the Trust established by the Stop-Loss Policyholder in regard to the Master Benefit
Plan and Supplementary Benefit Plan Documents.
L. Third Party Administrator means HealthCare Benefits,Inc.
Article H—Settlements
A. Remittance. BCBSTX shall bill the Stop-Loss Policyholder in advance for the Stop-Loss Premium
amount due each month and the Stop-Loss Policyholder shall remit payment on or before the first
day of each month. A daily charge equal to the lesser of the percentage amount shown in Item V of
the Exhibit, or the maximum rate permitted by state law, multiplied times the amount due, will be
charged for late remittance of any amounts owed by the Stop-Loss Policyholder. A remittance will
be considered received when actually delivered into the possession or control of BCBSTX at its
Home Office in Dallas County,Texas.
B. Individual (Specific) Stop-Loss Settlement. BCBSTX will furnish the Stop-Loss Policyholder an
Individual (Specific) Stop-Loss Claim report after the end of each full calendar month occurring
within a Policy Year, in which Individual (Specific) Stop-Loss Claims were reported. Within 10
days after issuance of said report, BCBSTX will settle with the Stop-Loss Policyholder for any
Individual(Specific) Stop-Loss Claims involved;provided,however, if the Plan, the Administrative
Services Agreement between the Stop-Loss Policyholder and the Third Party Administrator, or this
Policy are terminated on a date other than the end of a Policy Year, reports will be furnished and
settlements will be made, as described herein, for only those full calendar months occurring within
that portion of any Policy Year immediately preceding termination. Individual (Specific) Stop-Loss
benefits shall not extend beyond the termination date of this Policy, unless this Policy is terminated
at the end of the Policy Year.
C. Aggregate Stop-Loss Settlement or Accounting.
1. Monthly Settlement and Accounting.
a. Settlement. Where shown in Item III of the Exhibit to be applicable,BCBSTX will furnish the
Stop-Loss Policyholder with a Monthly Aggregate Stop-Loss settlement report within thirty (30)
days after the end of each month occurring within an Accounting Period in which Aggregate
Stop-Loss Benefits were paid. Within ten (10)days after issuance of such report,BCBSTX will
settle with the Stop-Loss Policyholder for any Aggregate Stop-Loss Insurance involved. Based
on any banking arrangements in force and the settlement results,Aggregate Stop-Loss Insurance
settlement amounts reported will either be paid directly to the Stop-Loss Policyholder by
BCBSTX or credited to a designated bank account.
b. Accounting. BCBSTX will furnish the Stop-Loss Policyholder an Accounting Period Settlement
Report within ninety (90)days after the end of each Accounting Period. If the report reflects
that the amount(calculated using the factor shown in Item III of the Exhibit multiplied by the
total number of employees and dependents participating in the plan), if any,exceeds Aggregate
Stop-Loss benefits paid(less any Specific Stop-Loss benefits paid,if any), the difference
between the two amounts shall be termed the Aggregate Stop-Loss Accounting Period Surplus
Form No.ASO-SLP-6(Rev.10/95 12/12)
if the reverse is true,the difference between the two amounts shall be termed the Aggregated
Stop-Loss Accounting Period Deficit.
c. Based on the report provided for in the preceding paragraph,the following applies:
(1) If the report reflects an Aggregated Stop-Loss Monthly Accounting Period Deficit, such
deficit shall be combined with any deficits carried forward from previous Accounting Periods
and shall be termed the Aggregate Stop-Loss Standing Deficit. The resulting Aggregate Stop-
Loss Standing Deficit shall then be carried forward to apply to future Monthly Account Periods;
(2) If the report reflects an Aggregate Stop-Loss Accounting Period Surplus, such surplus shall
first be applied against any Aggregate Stop-Loss Standing Deficit. Any remaining surplus shall
then be carried forward to future Monthly Account Periods.
2. Year-End Settlement and Accounting.
a. BCBSTX will furnish the Stop-Loss Policyholder an Aggregate Stop-Loss settlement report or
accounting of claims annually within 45 days following the end of each Policy Year during
which this Policy was in effect, as described in this Section C; provided, however, if the Plan,
the Administrative Services Agreement between the Stop-Loss Policyholder and the Third Party
Administrator, or this Policy are terminated on a date other than the end of a Policy Year, no
Aggregate Stop-Loss benefits will exist for that portion of any Policy Year immediately
preceding termination, no settlement report or accounting will be provided, and any Aggregate
Stop-Loss Premium already paid will not be refunded.
b. If a settlement is required to be made under Section B of this Article 11, above, Aggregate Stop-
Loss Claims under this Section C shall not include any such Individual Stop-Loss Claims.
c. Depending on the Banking Arrangement applied for,an Aggregate Stop-Loss settlement may be
required. If the settlement report reflects that Paid Claims for the Policy Year involved exceed
the Point of Attachment, the amount of such excess, less any amounts paid or obligated by
BCBSTX shall be payable to the Stop-Loss Policyholder. If the reverse is true,Aggregate Stop-
Loss benefits shall not be due and no payment will be made under this Section C. Aggregate
Stop-Loss benefits shall not exceed a maximum of $ 1,000,000) in any Policy Year or any
combined final Policy Year.
Article III—Audits and Adjustments
A. Audits.BCBSTX,or its duly authorized agent, shall have the right, upon reasonable notice given, to
audit the books and records of the Stop-Loss Policyholder (and any agents, brokers, or
administrators of the Stop-Loss Policyholder)during normal working hours,or to require that copies
of pertinent documents be provided, in order to verify the validity of any benefits payable under the
Master Benefit Plan or Supplementary Benefit Plan Documents which will result in payments being
made under this Policy.
B. Retroactive Adjustment. To the extent that later occurring events such as those resulting from
coordination of benefits, subrogation, audits or other legal or administrative actions or causes
necessitate adjustments to payments made under the benefit provisions-of the Master Benefit Plan
Document, appropriate adjustments shall also be made to any payments or settlements made under
this Stop-Loss Policy to reflect said benefit payment adjustments. The Stop-Loss Policyholder is
required to immediately notify BCBSTX of any such recoveries or benefit payment adjustments as
Form No. ASO-SLP-6(Rev.10/95 12/12)
soon as they are known to the Stop-Loss Policyholder, it agents or its Third Party Administrator and
to pay to BCBSTX immediately upon receipt any funds recovered from such later occurring events
which would have the effect of decreasing past,present, or future Stop-Loss benefit payments. Any
resulting adjustments to Stop-Loss Policy payments shall routinely be made at the time of the next
Stop-Loss settlement occurring after notification provided for under this Policy and shall be
reflected in the Settlement Report; provided, however, BCBSTX reserves the right to make such
adjustments at any time after notification is received from the Stop-Loss Policyholder. Should the
notice necessitating an adjustment occur after all settlements provided for in this Policy have been
made, or should BCBSTX elect to make an off-cycle adjustment, an Adjustment Report will be
provided by BCBSTX within 30 days after receipt of notification by the Stop-Loss Policyholder and
a settlement will be made by the parties within ten days thereafter.
Article IV—General Provisions
A. Arbitration. In the event the parties fail to agree with respect to any matter covered by this Policy,
the question in dispute shall be submitted for arbitration. The arbitrator shall be selected as follows:
upon declaration by one of the parties hereto that a deadlock exists, the parties shall select an
arbitrator;if no appointment is made within 10 days after the deadlock is declared and the amount in
contest is in excess of $200, the American Arbitration Association shall be the arbitrator. If the
amount in question is $200 or less, BCBSTX shall select an independent third party to be the
arbitrator. The arbitrator will submit a decision within 10 days after appointment and such decision
shall be binding on the parties hereto. Expenses incurred in the arbitration process shall be borne
equally by the parties.
B. Assignment. No part of this Policy, or any rights, duties, or obligations described herein, shall be
assigned or delegated without the prior express written consent of both parties. BCBSTX's standing
contractual arrangements for the acquisition and use of facilities, services, supplies, equipment and
personnel from other parties shall not constitute an assignment under this Policy.
C. Captions. Captions appearing in this Policy and its exhibits are provided for convenience only and
in no way define, limit, construe or describe the scope of sections or paragraphs to which they are
inserted.
D. Enforcement. Any delay or inconsistency in the enforcement of any part of this Policy shall not
constitute a waiver of any rights with respect to the enforcement of this Policy at any future date nor
shall it limit any remedies which may be sought in any action to enforce any provision of this Policy.
E. Entirety. This Policy and any exhibits or amendments shall constitute the entire agreement between
the parties for the purposes of this Policy and shall supersede any and all prior agreements or
understandings,either oral or in writing,between the parties respecting the subject matter herein.
F. Forces Majeure and Malesture. Neither party shall be liable for failure to perform its obligations
under this Policy if prevented from doing so by a cause or causes beyond its commercially
reasonable control including, but not limited to, acts of God or nature, fires, floods, storms,
earthquakes, riots, strikes, wars or restraints of government.
G. Gender and Mode. The use herein of a personal pronoun in the masculine or feminine gender or in
the singular or plural mode, shall be deemed to include the opposite gender or mode unless the
context clearly indicates the contrary.
Form No.ASO-SLP-6(Rev.10/95 12/12)
H. Governing Law. This Policy shall be governed by, and shall be construed in accordance with, the
laws of the State of Texas. All obligations created hereunder are performable in Dallas County,
Texas and all disputes arising out of this Policy will be resolved in Dallas County,Texas.
I. Indemnification Agreement. In the event BCBSTX, its officers, directors, employees or agents are
made parties to any judicial or administrative proceeding arising in whole or in part out of any
function performed by one or more of them under this Policy, the Stop-Loss Policyholder shall hold
them harmless for all judgments, settlements, and costs (including attorney's fees) which they incur
or pay in connection therewith,except that the Stop-Loss Policyholder shall not reimburse BCBSTX
for the amount of any judgment or award (or attorney's fees with respect thereto) if the court
rendering the judgment or the agency making the award determines that the liability underlying the
judgment or award was caused by the willful misconduct or gross negligence of BCBSTX, its
officers,directors,employees or agents.
J. Legal Construction. Should any provision(s) contained in this Policy be held to be invalid, illegal,
or otherwise unenforceable, the remaining provisions of the Policy shall be construed in their
entirety as if separate and apart from the invalid, illegal or unenforceable provision(s) unless such
construction were to materially change the terms and conditions of the Policy.
K. Limitation of Liability. Liability for any errors or omissions by BCBSTX (or its officers, directors,
employees, agents, or independent contractors) in the administration of this Policy, or in the
performance of any duty of responsibility contemplated by this Policy, shall be limited to the
maximum benefits which should have been paid under the Policy had the errors or omissions not
occurred (including BCBSTX's share of any arbitration expenses incurred under the Policy), unless
any such errors or omissions are adjudged to be the result of willful misconduct or gross negligence
by BCBSTX.
L. Modification. Except as provided for in Section D of Article I, this Policy shall not be amended or
modified in any manner other than by an instrument in writing executed by the parties.
M. Notice and Satisfaction. The Stop-Loss Policyholder agrees to give BCBSTX specific notice in
writing of any complaint or concern the Stop-Loss Policyholder may have about the performance of
this Policy and to allow BCBSTX 30 days in which to make necessary adjustments or corrections to
satisfy any such complaint or concern prior to taking any further action with regard to the complaint
or concern.
N. Right to Terminate. This Policy will terminate if the Plan terminates or the Administrative Services
Agreement between the Stop-Loss Policyholder and the Third Party Administrator terminates, or
may be terminated at the end of any Policy Year by either party pursuant to written notice given by
either party to the other not less than 30 days in advance of the termination date. Upon such
termination,final settlements shall be effected in accordance with the provisions of Article R hereof.
BCBSTX reserves the right to terminate this Policy, without prior notice, for failure of the
Stop-Loss Policyholder to pay Stop-Loss Premiums as required herein.
O. Subsidiaries. BCBSTX and its subsidiaries and affiliates have reciprocal agreements under which
they will allocate funds between its corporations resulting from any settlements, and the Stop-Loss
Policyholder shall have no responsibility for, or interest in,such allocation.
Form No. ASO-SLP-6(Rev.10/95 12/12)
P. Taxes. Any premium amounts due under this Policy will automatically be increased by the amount
of any taxes imposed, increased or adjudged due by any lawful authority on or after the effective
date of this Policy, which directly pertain to this Policy and which BCBSTX is required to pay or
remit, whether relating to fees, services, benefits, payments or any other aspect of this Policy, the
Master Benefit Plan or Supplementary Benefit Plan Documents.
For Blue Cross nd Blue Shield of Texas,Inc.(BCBSTX)
By: September 6, 1996
Rogers oleman,President Date
For City o (Stop-Loss Policyholder)
By.
Title: Date
! , J /-t�/ �/
Form No.ASO-SLP-6(Rev.10/95 12/12)
Exhibit No.1
Schedule of Specifications
to
Stop-Loss Policy
City of Round Rock
Account Number 36076
These specifications shall apply to the Stop-Loss Policy between BCBSTX and the above Stop-Loss
Policyholder for the current Policy Year beginning December 1, 1995,and ending November 30, 1996.
Item I—Statement of Benefits
The benefits which shall be covered under this Stop-Loss Policy are those described in the attached
Master Benefit Plan Document.
All exclusions and limitations contained in the Master Benefit Plan Document shall apply, including
specifically those described in the Limitations and Exclusions Section(s)of such Document.
Item II—Stop-Loss Premium
The Stop-Loss Premium is the sum of the Individual Stop-Loss Premium and Aggregate Stop-Loss
Premium amounts calculated as follows (amounts shown are applicable for the current Policy Year). In
order for Policy benefits shown below to be available, Stop-Loss Premium must be paid for the entire
Policy period.
A. Individual Stop-Loss Premium shall be calculated monthly and shall be equal to the sum of the
amounts obtained by multiplying the number of Employees covered for a particular month by:
$ 23.44 for each Employee only
$ 63.28 for each Employee/child(ren)
$ 63.28 for each Employee/spouse
$ 63.28 for each Employeelfamily
B. Aggregate Stop-Loss Premium shall be calculated monthly and shall be equal to the sum of the
amounts obtained by multiplying the number of Employees covered for a particular month by:
$ 2.54 for each Employee only
$ 2.54 for each Employee/child(ren)
$ 2.54 for each Employee/spouse
$ 2.54 for each Employee/family
Form No. ASO-SLP-6(Rev.10/95 12112)
Item III—Claim Liability Factors
Claim Liability (Monthly Maximum)for medical claims shall be calculated monthly and shall be equal to
the sum of the amounts obtained by multiplying the number of Employees covered for a particular month
by the following factors:
$ 168.45 for each Employee only
$ 168.45 for each Employee/child(ren)
$ 168.45 for each Employee/spouse
$ 168.45 for each Employee/family
Item IV—Stop-Loss Insurance Options
A. Individual Stop-Loss Insurance
Applied For.
1. For N/A, the amount of Paid Claims (claims incurred and paid during the current Policy Year, as
defined in the Stop Loss Policy) in excess of the Point of Attachment of$ N/A per Participant.
Individual Stop-Loss benefit payments shall not exceed a maximum of $ N/A for N/A for the
indicated Policy Year.
2. For each other Participant, the amount of Paid Claims (claims incurred and paid during the
current Policy Year, as defined in the Stop Loss Policy) in excess of the Point of Attachment of
$30,000 per Participant. Individual Stop-Loss benefit payments shall not exceed a maximum of
$970,000 per Participant for the indicated Policy Year.
Not Applied For.
B. Aggregate Stop-Loss Insurance
4 Applied For.
The amount of Paid Claims (claims incurred and paid during the current Policy Year, as defined in the
Stop Loss Policy) which exceeds 125% of Expected Paid Claims. less claims paid under the Individual
(Specific) Stop Loss. Such percentage shall apply for 12 months for the indicated Policy Year.
Aggregate Stop-Loss benefit payments shall not exceed a maximum of $1,000,000 for the indicated
Policy Year.
Not Applied For.
Form No.ASO-SLP-6(Rev.10/95 12/12)
Item V—Daily Chargee
The daily charge rate shall be .05%per day (which would equate to an annual percentage rate of 18%).
For Blue Cross and Blue Shield of Texas,Inc.(BCBSTX)
By: September 6, 1996
Rogers oleman,President Date
For City o (Stop-Loss Policyholder)
B
Date
Title:
Fonn No. ASO-SLP-6(Rev.10/95 12/12)