Res 63-14 i
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RESOLUTION NO. 63-14
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF DELRAY
BEACH, FLORIDA, APPROVING A CONTINUITY OF SERVICES AND
AGREEMENT WITH.GALLAGHER BENEFIT SERVICES, INC. TO PROVIDE
FOR THE CONTINUATION OF EMPLOYEE BENEFITS SERVICES
CONSULTANT; WHILE THE CITY ENGAGES IN A COMPETITIVE BID
SOLICITATION, DECLARING BY A FOUR-FIFTHS AFFIRMATIVE VOTE
THAT THE CITY'S SEALED COMPETITIVE METHOD OR WRITTEN
QUOTATIONS PROCUREMENT METHOD IS NOT IN THE BEST INTEREST
OF THE CITY;PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City of Delray Beach Human Resources Depattment seeks approval to renew
its contract with Gallagher Benefit Services, Inc. as Employee Benefits Services Consultant fora period
of not more than five months commencing October 1, 2014, for the current rate of $9,166.67 per
month for a total fee of$45,834; and
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WHEREAS, Gallagher Benefit Services, Inc. is in the business of Consulting Municipalities in
the area of Group Health Benefits management, to include assistance in operating the City's Wellness
Center, and to provide actuarial projections for future medical costs. Gallagher Benefit Services, Inc.
also provides expertise regarding the new Affordable Care Act Gallagher Benefit Services, Inc. has
provided such services to the City since 2008, and staff has determined that Gallagher Benefit Services
is the provider to best serve the City's interests while the City engages in a competitive bid process; and
WHEREAS, the Agreement with Gallagher Benefit Ser vices, Inc. which commenced on April
1, 2008 and expired on September 30, 2011, and at which time a purchase order was approved by the
Purchasing Division from October 1, 2011 through September 30, 2013. The previous City Manager
approved continuous service from October 1, 2013 through September 30, 2014;and
WHEREAS, during the continuation of services period the City has engaged in a competitive
bid solicitation for vendors that provide Group Health Benefits Consulting services with an estimated
completion date no later than January 30, 2015, which will then be presented to the City Commission
for consideration and approval of vendor selection;and
WHEREAS, Section 36.02 (C)(11) of the City Code of Ordinances provides that the City may
acquire or contract for non teal property, goods, or services without utilizing a Sealed Competitive
Method or the Written Quotations Method where the City Commission declares by a least a four fifths
(4/5) affirmative vote that the Sealed Competitive method or the Written Quotations Method is not in
the best interest of the City.
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OF DELRAY BEACH, FLORIDA,AS FOLLOWS:
Section 1. That the foregoing"WHEREAS" clauses are ratified and confirmed as being
true and correct factual findings and are made a specific part of this Resolution.
Section 2. The Commission of the City of Delray Beach hereby declares, by a.minimum
four-fifths affirmative vote, that the City's Sealed Competitive Method or Written Quotations
Procurement Method is not in the best interest of the City. The City Commission declares that the
attached agreement between the City of Delray Beach and Gallagher Benefit Services, Inc. which
provides for the uninterrupted continuation of Group Health Benefit Consulting Services is in the best
interest of the City.
Section 3. The City Commission of the City of Delray Beach hereby approves the
continuation of services with Gallagher Benefit Services, Inc. as stipulated in the attached service
agreement at the current rate of $9,166.67 per month. The renewal period well remain in effect until
such time that a competitive bid solicitation is completed and the City will exercise its option to
terminate the agreement with or without cause upon (30) days written notice to Gallagher Benefit
Services, Inc.
Section 4. The City Manager is authorized to do all things necessary and expedient to
carry out the aims of this Resolution.
Section.5. This Resolution shall take effect immediately upon adoption.
PASSED AND ADOPTED by the City Commission of the City of Delray Beach this 9`f'day
of December, 2014.
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City Clerk
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Res No. 63-14
Coversheet Page 1 of 2
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MEMORANDUM
TO: Mayor and City Commissioners
FROM: Edward DeMicco, Risk Manager
Shirley O'Neal McKennon, Human Resources Director
THROUGH: Terry Stewart, Interim City Manager
DATE: November 14, 2014
SUBJECT: AGENDA ITEM 9.C. - REGULAR COMMISSION MEETING OF DECEMBER 9, 201
RESOLUTION NO. 63-141GALLAGHER BENEFIT SERVICES
BACKGROUND
Gallagher Benefits Services, Inc. is in the business of consulting services designed to address
the needs and to assist in Group Health Benefits planning. Gallagher Benefits Services, Inc.
specializes in Human Resources consulting, actuarial calculations, and helps administer
voluntary benefits. As consultants, they understand the economics of healthcare from a health
plan or insurance company perspective, which allows them to better negotiate services and
pricing on their client's behalf. Gallagher Benefit Services Inc. brings unique and creative
ideas to employee benefit planning that help develop and implement a comprehensive and
well-managed employee benefit plan.
Gallagher Benefit Services, Inc. has provided employee benefit consulting services to the City
of Delray Beach since 2008. The City Commission voted to approve (5-0) an agreement
between Gallagher Benefit Services, Inc. and the City of Delray Beach as a regular agenda
item on February 19, 2008. The agreement commenced on April 1, 2008. The City entered
into discussions to renew the agreement with Gallagher Benefit Services, Inc. on June 1,
2010. The City Commission approved this agreement on September 21, 2010, with an
effective date of June 1, 2010 through September 30, 2011. A purchase order was approved
by the Purchasing Division from October 1, 2011 through September 30, 2013. The previous
City Manager approved continuous service from October 1, 2013 through September 30,
2014.
On August 5, 2013, the City solicited an RFQ for Employee Benefit Consultant Services.
During this process, it was agreed upon that soliciting a potentially new Consultant was not in
the best interest of the City due to the fact that the City was also soliciting an RFP for Group
Health Carriers. Coupled with the fast approaching Open Enrollment period, it was
determined that it would be too onerous on the City to proceed with the Consultant RFQ at
that time. On November 15, 2013, the former City Manager approved suspension of the
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Employee Benefits Consultant RFQ and agreed to extend the purchase order for Gallagher
Benefit Services, Inc. through September 30, 2014 in order to pay monthly service fees until
the City revisited a competitive bid solicitation.
FINANCIAL DEPARTMENT REVIEW
This is a simple five months extension of the existing agreement to permit the City time to
complete an RFP. Finance recommends approval.
DISCUSSION
The item before the Commission is the approval of the continuation of services with Gallagher
Benefit Services, Inc. for Employee Benefit Consultant for a period of five months,
commencing on October 1, 2014 through February 28, 2015, at $9,166.67 per month, for a
total of $45,834.00. The City of Delray Beach is currently engaged in RFQ No. 2015-12 for
Employee Benefit Consultant Services. Staff estimates the bid process to be completed no
later than January 30, 2015.
TIMING OF THE REQUEST
The Gallagher Benefits Services, Inc. Purchase Order expired on September 30, 2014. Staff is
requesting that this Purchase Order be extended until February 2015. The renewal period of
the Purchase Order shall remain in effect until such time that a competitive bid solicitation is
completed and the City will exercise its option to terminate the agreement with or without
cause upon (30) days written notice to Gallagher Benefit Services, Inc.
FUNDING SOURCE
Funding is available from the Risk Management Professional Services account number 551-
1576-591-31.90
RECOMMENDATION
By motion, approve the agreement between the City and Gallagher Benefit Services, Inc. from
October 1, 2014 through December 31, 2014, with an option of a month to month extension,
effective January 1, 2015.
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CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made by and between ,Gallagher Benefit
Services,lnc.�("Gallagher")and,City of Delray Beach(the"Client").
The Client wishes to enter into a consulting relationship with Gallagher on the terms and
conditions set forth in this Agreement,and Gallagher is willing to accept such a consulting relationship.
In consideration of and in reliance upon the previous paragraph and the terms and conditions
contained in this Agreement, the Client and Gallagher agree as follows:
1. Engagement
The Client engages Gallagher as an employee benefits consultant as stated in this Agreement and
Gallagher accepts this engagement. During the time that Gallagher is performing services for the Client
under this Agreement, and for all purposes outlined in this document, Gallagher's status will be that of an
independent contractor of the Client.
2. Terra and Termination
The Effective Date of this Agreement is 1 ctober 1, 2014. The term of Gallagher's engagement under this
Agreement (the "Consulting Period") will begin as of the Effective Date and will remain in effect until
December 31, 2014, with the option of month to month effective January 1, 2015. Either party may
terminate this Agreement by giving the other party at least thirty (30) days written notice of its intent to
terminate. In the event such termination is effective during the Consulting Period (including any renewed
Consulting Period), Client shall be responsible to Gallagher for any services performed prior to the date
of termination and Gallagher shall be responsible to Client to continue to provide services until the date of
termination of this Agreement.
3. Services
Gallagher will provide employee benefits management consulting services to the Client and
consult with its employees, representatives, agents and contractors as to such matters as more fully
described in Exhibit A attached to this Agreement and incorporated herein. Gallagher will perform other
services as the Client and Gallagher mutually agree in writing.
4. Compensation
Subject to any changes as may be mutually agreed by the parties, Gallagher will receive, as
compensation for its services under this Agreement, fees in the amount of $110,000; per year, which
amount will be billed in equal installments of 9166.61 and paid on a monthly basis.
For additional information regarding Gallagher compensation, please see the Gallagher revenue
disclosure policy and schedule set forth in Exhibit B.
In the event an insurance company cancels or refuses to renew an insurance coverage that had
been placed by Gallagher, on behalf of the Client, Gallagher will use its best efforts to obtain appropriate
replacement coverage from another insurance company.
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5. Performance and Scope
(a) Gallagher Not a Fiduciary Under ERISA. To the extent that one or more of the Client's
employee benefit plans are subject to the Employee Retirement Income Security Act, as amended
("ERISA") and in spite of any other provision of this Agreement to the contrary, the parties agree and
acknowledge that:
(i)Gallagher's services under this Agreement are not intended in any way to impose on Gallagher
or any of its affiliates a fiduciary status under the Employee Retirement Income Security Act of 1974,as
amended("ERISA"); and
(ii)this Agreement does not provide Gallagher, and the Client will not cause or permit Gallagher
to assume,without prior written consent of Gallagher,any:
(A) discretionary authority or discretionary control respecting management of any
"employee benefit plan"within the meaning of Section 3(3)of ERISA(an"ERISA Plan"),
(B)authority or control respecting management or disposition of the assets of any ERISA
Plan,or
(C) discretionary authority or discretionary responsibility in the administration of any
ERISA Plan.
(b) Reliance. In the performance of its duties, Gallagher may rely upon, and will have no
obligation to independently verify the accuracy, completeness, or authenticity of, any written instructions
or information provided to Gallagher by the Client or its designated representatives and reasonably
believed by Gallagher to be genuine and authorized by the Client.
(c) No Practice of Law. Gallagher will not be obligated to perform, and the Client will not
request performance of, any services which may constitute unauthorized practice of law. The Client will
be solely responsible for obtaining any legal advice, review or opinion as may be necessary to ensure that
its own conduct and operations, including the engagement of Gallagher under the scope and terms as
provided herein, conform in all respects with applicable State and Federal laws and regulations (including
ERISA, the Internal Revenue Code, State and securities laws and implementing regulations) and, to the
extent that the Client has foreign operations, any applicable foreign laws and regulations.
(d) Subcontractors. Gallagher may cause another person or entity, as a subcontractor of
Gallagher, to provide some of the services required to be performed by Gallagher hereunder; provided,
that Gallagher shall remain responsible for all acts and omissions of any such subcontractors (each of
which shall be bound by Gallagher's obligations under this Agreement). Gallagher shall seek prior written
approval from Client for any subcontractors providing substantive consulting, professional or managerial
services. Prior written approval shall not be required for clerical, office, secretarial, IT back-up,
administrative or similar support services,
(e) Conflict of Interest. Gallagher's engagement under this Agreement will not prevent it
from taking similar engagements with other clients who may be competitors of the Client. Gallagher will,
nevertheless, exercise care and diligence to prevent any actions or conditions which could result in a
conflict with Client's best interest.
(f) Acknowledgements. In connection with Gallagher's services under this Agreement,
Client agrees that:
0) Although Gallagher will apply its professional judgment to access those
insurance companies it believes are best suited to insure the Client's risks, there can be no
assurance that the insurance companies Gallagher has accessed are the only or are the best suited
ones to insure the Client's risks.
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(ii) Any compensation of the types described above and disclosed to it does not constitute a conflict of interest
and the Client expressly waives any claims alleging any such conflict of interest.
(iii) The final decision to choose any insurance company has been made by the Client in its sole and absolute
discretion. The Client understands and agrees that Gallagher does not take risk, and that Gallagher does not
guarantee the financial solvency or security of any insurance company.
(iv) The compensation payable to Gallagher is solely for the services set forth under this Agreement, including
Exhibit A. Any additional administrative, claims representative or other services (collectively, "Additional
Services")will be governed by the terms of a separate agreement covering the Additional Services.
(v) The Client is responsible for immediate payment of Gallagher's fees (if applicable) and payment of
premiums for all insurance placed by Gallagher on Client's behalf. If any amount is not paid in full when due,
including premium payments to insurance companies, that nonpayment will constitute a material breach of this
Agreement that will allow Gallagher to terminate this Agreement, at its option after a 30 day notice to the Client,
and may allow an insurance company for the Client's risks to cancel any applicable policies in accordance with
the terms of such policies.
6. Confirlendalify
(a) Client Information. Gallagher recognizes that certain confidential information may be furnished by the Client
to Gallagher in connection with its services pursuant to this Agreement ("Confidential Information"). Gallagher
agrees that it will disclose Confidential Information only to those who, in Gallagher's reasonable determination,
have a need to know such information. Confidential Information will not include information that (i) is in the
possession of Gallagher prior to its receipt of such information from the Client, (ii) is or becomes publicly
available other than as a result of a breach of this Agreement by Gallagher, or (iii) is or can be independently
acquired or developed by Gallagher without violating any of its obligations under this Agreement. However,
disclosure by Gallagher of any Confidential Information pursuant to the terms of a valid and effective subpoena or
order issued by a court of competent jurisdiction, judicial or administrative agency or by a legislative body or
committee will not constitute a violation of this Agreement.
(b) HIPAA Privacy. Gallagher and the Client will each comply with any prohibitions, restrictions, limitations,
conditions, or other requirements to the extent they apply to them directly or indirectly pursuant to the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA") and its implementing regulation concerning
privacy of individually identifiable health information as set forth in 45 CFR Parts 160-164, as amended from
time to time. Where required, the Client, as a representative of the health plans and Gallagher will enter into a
separate Business Associate Agreement.
(c) Use of Names; Public Announcements. No party will use, in any commercial manner, the names, logos,
trademarks or other intellectual property of the other party without its prior written consent. Except as may be
required by law, no party will issue any press releases or make any public announcements of any kind regarding
the relationship between the parties without the other party's prior consent.
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7. Indentniftcation Rights and Limitation of Liability
Gallagher will promptly defend, indemnify and hold the Client harmless from and against
any and all claims, suits, actions, liabilities, losses, expenses or damages, including reasonable
attorneys fees, which the Client may incur as a result of any violation by Gallagher or any of its
agents, including a subcontractor, of any law, or any loss or expense to the Client caused by the
negligent act or omission of Gallagher or any of its agents, including a subcontractor, or any
breach of this Agreement. However, notwithstanding any other term or provision of this
Agreement, Gallagher shall not be liable to the Client for any exemplary, special, indirect,
incidental, consequential or punitive damages (including but not limited to lost profits) which
may result from Gallagher's or any of its agents', including a subcontractor's action or its failure
to perform any term or condition of this Agreement or whether such liability is based upon tort,
strict liability, breach of warranties, failure of essential purpose or otherwise and if advised of the
possibility of such damages. Furthermore, the aggregate liability under this Agreement, if any,
of either party to the other for claimed losses or damages shall not exceed $20,000,000. This
provision applies to the fullest extent permitted by applicable law.
8. Notices
Any notices, requests and other communications pursuant to this Agreement will be in writing
and will be deemed to have been duly given, if delivered in person or by courier or sent by express,
registered or certified mail,postage prepaid, addressed as follows:
If to the Client: ;City of Delray Beach
Attention: Shirley McKennotl
1100 NW 1 s`Avenue
Delray Beach, FL 33444;
If to Gallagher: �Gallagher Benefit Services, lnc 1
Attention: Jodie Petrone
x.031 Vista Parkway, Suite 300
West Palm Beach, FL 334111
Either party may, by written notice to the other, change the address to which notices to such party are to
be delivered or mailed.
9. Miscellaneous
(a) Severability. The various provisions and subprovisions of this Agreement are severable
and if any provision or subprovision or part thereof is held to be unenforceable by any court of competent
jurisdiction, then such enforceability will not affect the validity or enforceability of the remaining
provisions or subprovisions or parts thereof in this Agreement.
(b) Entire Agreement, Amendment. This Agreement, including all exhibits hereto,
constitutes the entire agreement between the parties and supersedes all prior agreements and
understandings, whether oral or written, between the parties regarding the subject matter hereof, Except
for changes in carriers and/or lines of coverage noted in Exhibit B which may occur upon unilateral
approval of the Client, this Agreement may be modified or amended only by a written instrument
executed by both parties.
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(c) Governing Law, of Construction. This Agreement will be construed, interpreted and
enforced in accordance with the laws of the State of Florida without giving effect to the choice of law
principles thereof or any canon,custom or rule of law requiring construction against the drafter.
(d) Successors.This Agreement shall be binding upon and shall inure to the benefit of all
assigns,transferees and successors in the interest of the parties hereto.
(e) Counterparts.This Agreement may be executed by the parties in several counterparts,
each of which shall be deemed to be an original copy.
(f) Survival of Provisions. Sections 5(a),6 and 7 will survive the termination of this
Agreement.
10. Public Records
Gallagher shall comply with all public records laws in accordance with Chapter 119, Fla. Stat. in
accordance with state law, Gallagher agrees to:
(a) Keep and maintain all records that ordinarily and necessarily would be required by the
Client.
(b) Provide the public with access to public records on the same terms and conditions that
the City would provide for the records and at a cost that does not exceed the costs
provided in Chapter 119,Fla. Stat. or as otherwise provided by law.
(c) Ensure that public records that are exempt or confidential and exempt from public
records disclosure are not disclosed except as authorized by law.
(d) Meet all requirements for retaining public records and transfer, at no cost, to the Client
all records in possession of Gallagher at the termination of the contract and destroy
any public records that are exempt or confidential and exempt from public records
disclosure requirements. All records stored electronically must be provided to the City
in a format that is compatible with the information technology systems of the Client. All
records shall be transferred to the Client prior to final payment being made to Gallagher,
(e) If Gallagher does not comply with this section, the Client shall enforce the contract
provisions in accordance with the contract and may unilaterally cancel this contract in
accordance with state law.
11. Ltspector General
Gallagher is aware that the Inspector General of Palm Beach County has the authority to
investigate and audit matters relating to the negotiation and performance of this contract, and may
demand and obtain records and testimony from Gallagher and its subcontractors and lower tier
subcontractors.
Gallagher understands and agrees that in addition to all other remedies and consequences
provided by law,the failure of Gallagher or its subcontractor or lower tier subcontractors to fully
cooperate with the Inspector General when requested may be deemed by the Client to be a
material breach of this Agreement justifying its termination.
[The remainder of this page intentionally left blank.
The parties' signatures appear on the following page.]
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IN WITNESS WHEREOF,the parties hereto have caused this Consulting Agreement to be duly executed
on the date first written above.
,CITY OF DELRAY BEACI,
By:
Name:
Title: j
Date: ]
GALLAGHER BENEFIT SERVICES,INC J
By:
Name:
Title:
Date:
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EXHIBIT A
SCOPE OF SERVICE
Subject to any changes and additions as may be mutually agreed by the parties in writing, availability and
delivery of data from the insurance carrier and other third party vendors, Gallagher will provide the
following services:
CONSULTING SERVICES PROVIDED ON AN"AS NEEDED"BASIS
[]RENENVAL ANALYSIS:
• Review and evaluate carrier projections
• Prepare"shadow"renewal projection
• Create financial modeling reports using proprietary Apex software
• Coordinate carrier negotiations
• Create employee contribution modeling reports
• Review identified benchmarks of projected plan costs
• Develop"working"rates for Client analysis and approval
• Assist with budget projections
• Provide renewal alternatives with cost impact of benefit plan changes
PERIODIC PLAN FiNAN'CIAL REPORTS:(FREQUENCY TO BE MUTUALLY AGREED UPON)
• Summary of plan costs
• Analysis of actual vs. budget
• Employee contributions
• Large claims tracking
• Identification of costs for specific line of coverage
• Comparison of plan costs to aggregate stop-loss projections,if applicable
• Utilization review
• Comparison to prior claim period
• Plan trends
ANNUAL FINANCIAL REPORTS(END OF YEAR ACCOUNTING):
• Executive summary of program expenses
• Comparison of current costs to renewal costs
+ Incurred But Not Reported(IBNR)claims analysis
• Overview of specific Stop-loss projections
• Future plan costs projections
• Dollars saved by contract negotiation
• Percent of benefit dollars paid by employee
• Claims by size
• Physician visit details
• Benefits paid by type of service
• Plan funding/budget comparison
• Fixed expense comparison
(LEGISLATIVE AND CORPORATE COMPLIANCE SUPPORT:
• Provide legislative updates, including Technical Bulletins and Directions newsletters
• Evaluate plan design to assist with compliance with state and federal regulations
• Review benefit plan documents, including summary plan descriptions,contracts, employee
summaries, and policies/procedures
• Conduct periodic seminars on regulatory issues
• Assist with the review and evaluation of COBRA and HIPAA compliance procedures
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• Provide general information and guidance to assist with compliance with ERISA, FMLA,
USERRA,Medicare Part D and other Federal legislation that directly affects the administration
of plan benefits
• Provide template or sample compliance notices, certificates of creditable coverage and
enrollment forms as reasonably requested by Client
CARRIER MARKETING AND NEGOTIATIONS,AS DIRECTED BY CLIENT:
e Work with Client to develop a strategy to identify goals,analyze program costs and review both
current and alternative funding arrangements
• Manage the renewal process with the current carrier to control costs
• Implement carrier renewal strategies with Client
. Develop timeline covering every aspect from RFP preparation to the delivery of employee
communications
• Provide analysis of employee disruption report and preparation of geo-access report
• Provide analysis of discounts offered by various carriers by using CPT codes and carrier pricing
data
• Manage RFP development that tailors the RFP to the desires,needs and financial directions
provided by Client
e Explore alternative funding solutions
e Evaluate vendor responses to track variations in coverage and costs as they are identified
• Conduct finalist interviews to investigate and document intangibles such as personalities,
service orientation and responsiveness
• Draft renewal analysis report, based on renewal negotiation,covers program and claims cost
projections as well as complete information on benefit designs
• Facilitate decision process by coordinating close collaboration and discussions among the
Gallagher team and Client
DAY TO DAY ADIMINISTRATIVE ASSISTANCE
EMPLOYEE EDUCATION PROGRAMS:
e Facilitate focus groups
• Monthly benefit communication directed to employees
• Educational meetings on coverage and trends
COMMUNICATION MATERIALS:
• Assist with the drafting and distribution of participant Satisfaction Surveys
• Assist with the drafting and distribution of Open Enrollment-New Member Orientation
summary information and any other communications pertaining to the health and welfare
program
e Provide annual open enrollment guidance and employee meeting materials
e Assist with marketing and oversight of Customized Enrollment Materials(if elected)
• Assist with participant wellness initiatives, as directed by Client
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!BENEFIT ADIIIiVISTRr1TION ASSESSitIENT:
• Periodic evaluation of internal plan enrollment and benefit termination processes
• Review, coordinate and implement Client agreed upon plan"best practices"to help limit plan
liability and increase participant satisfaction
• Help identify opportunities for streamlining and improving administration procedures
MARKET BENCIINIARKING STUDIES:
• Local Area Surveys
• Industry Surveys
MERGER AND ACQUISITION:
• Project of claim liability and cost implications of active employee health welfare benefits plan
integration or consolidation, as requested by Client
• Provide coverage comparison analysis and recommendations as to plan design,carrier
selections and funding mechanisms
• Provide disruption analysis reports
• Assist with employee meetings to introduce integrated program(s)or plan changes
BENEFIT PLAN DESIGN(OR REDESIGN):
• Help Client identify business and HR objectives that impact benefits
• Review with Client possible benefit strategies to meet their objectives
• Help Client evaluate/review current scope of benefits package---e.g.,types& levels of
coverage
• Work with Client to develop funding and contribution strategies
• Assist with budget projections for design alternatives j
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EXHIBIT B
COMPENSATION DISCLOSURE STATEMENT
What follows is the disclosure of our actual fees and/or commissions related to Client's Group Health
Plan(s) and any relationships, or agreements Gallagher has with the insurance company involved in this
transaction. Gallagher, as agent of record, will receive the following initial and renewal sale commissions
expressed as percentage of gross premium payments, or fees as agreed upon by Client:
Effective CmmnnissiontlSupplemental a
Line of Coverage Insurance Company Date Conipensationi Direct Fees
,Consulting Services I ;NIA 110101/2014 done ; 110,000/yr
xx/xx/20xx f
It should also be noted that:
• Gallagher is not an affiliate of the insurer whose Contract is recommended.This means the insurer
whose contract is recommended does not directly or indirectly have the power to exercise a controlling
influence over the management or policies of Gallagher.
• Gallagher's ability to recommend other insurance contracts is not limited by an agreement with the
Insurance Carrier.
• Gallagher is effecting the transaction for the Plan(s)in the ordinary course of Gallagher business.
• The transaction set forth is at least as favorable to the Plan(s)as an arm's length transaction with an
unrelated party.
• Gallagher is not a trustee of the Plan(s) and is neither the Plan Administrator of the Plan(s), a fiduciary
of the Plan(s),nor an employer which has employees in the Plan(s).
For Employers and Plan Sponsors Subject to ERISA; This Disclosure Statement is being given to the Client (1)to make
sure Client knows about Gallagher's and Gallagher affiliates' income before purchasing the insurance product and (2) for
plans subject to ERISA, to comply with the disclosure, acknowledgment and approval requirement of Prohibited Transaction
Class Exemption No. 84-24`', which protects both Client and Gallagher 5, Disclosure must be made to an independent plan
fiduciary for the ERISA Plan(s),and Client acknowledges and confirms that this is a reasonable transaction in the best interest
of participants in its ERISA Plan(s).
For more information on Gallagher's compensation arrangements, please visit
www.a' .coln/com pens ation. In the event a client wishes to register a formal complaint regarding
compensation Gallagher receives, please send an email to Compensation_Complaints @ajg.com or send a
letter to: AVC Compliance Officer, c/o Internal Audit Department,Arthur J. Gallagher&Co.,Two
Pierce Place, Itasca, IL 60143,
' Commissions include all commissions fees paid to Gallagher that are attributable to a contract or policy between a plan and an insurance
company,or insurance service.This includes indirect fees that are paid to Gallagher paid by a third party,and includes,among other things,the
payment of"tinders'fees"or other fees to Gallagher for a transaction or service involving the plan.
a Gallagher companies may receive supplemental compensation referred to in a variety of terms and definitions,such as contingent commissions,
additional commissions and supplemental commission.
Direct Fees include compensation to Gallagher paid for directly by the plan sponsor.
4.Which allows an exemption from a prohibited transaction under Section 408(a)of the Employee Retirement income Security Act of 1474
(ERISA).
5 In making these disclosures,no position is taken,nor is one to be inferred,regarding the use of assets of a plan subject to ERISA to purchase
such insurance.
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