Exhibit 1 - Agenda Information SheetCity of Denton
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AGENDA INFORMATION SHEET
DEPARTMENT: Procurement
ACM: Cassey Ogden
DATE: September 19, 2023
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation,
authorizing the City Manager to execute a contract with United Healthcare Services, Inc., for the
administration of Flexible Spending Accounts (FSA) for medical care and dependent care for City
employees for the Human Resources Department; providing for the expenditure of funds therefor; and
providing an effective date (RFP 8241 – awarded to United Healthcare Services, Inc., for three (3) years,
with the option for two (2) additional one (1) year extensions, in the total five (5) year not-to-exceed amount
of $123,237.47).
STRATEGIC ALIGNMENT
This action supports Key Focus Area: Pursue Organizational Excellence and Collaborative and Respectful
Leadership.
INFORMATION/BACKGROUND
The City requested competitive proposals for the administration of Flexible Spending Accounts (FSA) for
medical care and dependent care as part of the City’s comprehensive benefits package. The City pays 100%
of the cost for FSA administrative services; however, employees pay 100% of the account contributions in
the FSA accounts they elect.
FSA services have been provided through WEX (formerly Discovery Benefits) since January 1, 2019.
While WEX has been a good partner during this time period, the last of the City’s one-year renewals ends
on December 31, 2023. Due to the expiration of the current contract, RFP #8241 was issued to the FSA
administration market.
An Employee Benefits Survey was conducted in early 2023. Employee feedback included comments that
the current FSA coverage for medical care required too many substantiation requests, which caused
confusion and issues with the loss of use of member FSA debit cards.
The City received responses to the RFP from eight (8) FSA administration companies, including WEX, the
incumbent vendor. Table 1 below lists the companies that responded, as well as the comparison of the
proposed prices for the FSA services as compared to the current cost through WEX:
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
Table 1 – Proposed FSA Fees
Company Increase (Decrease) to Current Fees
Ameriflex (12.50%)
David K. Young Consulting 52.78%
Flores & Associates 9.72%
MetLife (17.78%)
TASC (8.33%)
United Healthcare/Optum – BAFO (19.44%)
Voya (9.72%)
WEX – Incumbent – BAFO (15.28%)
All proposals were reviewed and scored by an evaluation team that included staff from the City’s Employee
Insurance Committee (EIC), Human Resources, and other departments.
Based on the evaluation of the proposals, both staff and the City’s benefits consultant, McGriff, Seibels, &
Williams, recommend awarding the contract for FSA administrative services to United Healthcare
Insurance Company (United Healthcare). United Healthcare’s proposal provides a 19.44% annual savings
on administrative fees compared to the incumbent vendor, which means savings for the City. United
Healthcare also proposed a three (3) year rate guarantee which will hold the rates through the end of 2026.
While United Healthcare’s fee savings are not the lowest, the FSA integration with our current health and
prescription insurance carrier will provide an improved member experience for employees covered on a
City health plan by reducing substantiation requests and reducing strain on members to provide additional
information to meet reimbursement requirements.
Project Description Rate Increase
10% YOY
Years 4 & 5 Only
Estimated 5-Year
Expenditure
FSA Administration – Year 1 $19,627.20
FSA Administration – Year 2* (564 plus 5% =
592 count)
$20,608.56
FSA Administration – Year 3
(592 plus 5% = 622 count)
$21,638.99
FSA Administration – Year 4
(622 plus 5% = 653 count)
$1,134.60 5% EE increase
$1,119.60 5% Rate increase
$23,856.98
FSA Administration – Year 5
(653 plus 5% = 686 count)
$1,267.20 5% EE increase
$1,234.80 5% Rate increase
$26,302.33
Contingency (10% of Total) $11,203.41
Total $123,237.47
*5% employee increase each year, starting with the 2024 average count
Requests for Proposals were sent to 115 prospective suppliers of this item, including two (2) Denton firms.
In addition, specifications were placed on the Procurement website for prospective suppliers to download
and advertised in the local newspaper. Eight (8) proposals were received and evaluated based on published
criteria, including compliance with specifications, probable performance, and price. Based upon this
evaluation, United Healthcare was ranked the highest and determined to be the best value for the City.
NIGP Code Used for Solicitation: 953 - (Service Only) - Insurance and
Insurance Services, (All Types)
Notifications sent for Solicitation sent in IonWave: 115
Number of Suppliers that viewed Solicitation in IonWave: 14
HUB-Historically Underutilized Business Invitations sent out: 10
SBE-Small Business Enterprise Invitations sent out: 23
Responses from Solicitation: 8
RECOMMENDATION
Award a contract with United Healthcare Services, Inc., for the administration of Flexible Spending
Accounts (FSA) for medical care and dependent care for City employees for the Human Resources
Department, in a three (3) year, with the option for two (2) additional one (1) year extensions, in the total
five (5) year not-to-exceed amount of $123,237.47.
PRINCIPAL PLACE OF BUSINESS
United Healthcare Services, Inc.
Hartford, CT
ESTIMATED SCHEDULE OF PROJECT
This is a three (3) year contract, with the option to renew for two (2) additional one (1) year periods, with
all terms and conditions remaining the same. Services under this contract will begin on January 1, 2024.
FISCAL INFORMATION
These services will be funded from the Health Insurance Fund account 850500.7714. A requisition will be
entered into the Purchasing software system in the amount of $21,589.92 after October 1, 2023. The
budgeted amount for this item is $21,589.92.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Pricing Evaluation
Exhibit 3: Ordinance and Contract
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Linda Kile, 940-349-8388.
Legal point of contact: Marcella Lunn at 940-349-8333.