Chapter 4.42
EMPLOYEE BENEFIT PLAN AND FUND

Sections:

4.42.010    Creation and purpose.

4.42.020    Definitions.

4.42.030    Employees benefit plan--Payments--Termination.

4.42.040    Administration of plan and fund.

4.42.050    Source of funds.

4.42.060    Use of fund.

4.42.070    Rights in fund.

4.42.080    Investment of fund.

4.42.090    Payroll deductions.

4.42.100    Procedures when employee on leave of absence.

4.42.110    Procedures in event of suspension of compensation due to labor dispute.

4.42.120    Nonreversion of fund.

4.42.130    Attachment/assignment.

4.42.140    Amendment of plan.

4.42.150    Severability.

4.42.200    Self-insurance - program established.

4.42.210    Self-insurance - financial structure and funding mechanism.

4.42.220    Self-insurance - program financial management policies.

4.42.230    Self-insurance - administrator.

4.42.240    Self-insurance - third party administrator.

4.42.250    Self-insurance - claims administration.

4.42.260    Self-insurance - appeal procedures.

4.42.270    Self-insurance - risk management.

4.42.280    Self-insurance - termination.

4.42.010 Creation and purpose.

Pursuant to RCW 36.32.400 and 41.04.180, an employee benefit plan and an internal service fund are hereby created. The purpose of the plan and fund, as defined herein, is to provide and maintain life and health benefits, including specific hospitalization, medical, surgical, and major medical benefits, and/or other insurance benefits such as dental, accident, and short and long term disability income, and/or to provide health enhancement activities which contribute to the goal of providing health care for employees and their dependents at the lowest possible cost, all as may be determined from time to time by the county council, for the benefit of employees, as defined herein, and their dependents. The county executive is hereby authorized to provide benefit plans for retirees pursuant to RCW 41.04.235 and 41.05.080. The county executive is further authorized to develop and propose benefit plans for employees of other units of local government which, upon approval of the county council, may be provided to such employees pursuant to interlocal agreement, chapter 39.34 RCW.

(Added Ord. 84-086, § 5, Aug. 6, 1984; Amended Ord. 85-065, § 1, July 24, 1985; Amended Ord. 89-011, § 1, Mar. 8, 1989; Amended Ord. 89-044, § 1, May 24, 1989).

4.42.020 Definitions.

(1) "Contract" or "contracts" means such contract or contracts, if any, as are in effect at any time between the county and any designated, regularly constituted insurance carrier and/or health care service contractor as defined in chapter 48.44 RCW as hereafter amended.

(2) "Employees" means all permanent employees of Snohomish county who regularly work 20 or more hours per week, and all elected officials of Snohomish county to the extent permissible under the constitution and laws of this state. "Employees" does not include temporary or "extra help" employees.

(3) "County contributions" means payments by the county to the "fund", as defined herein.

(4) "Employee contributions" means payments by the employees to the "fund", as defined herein.

(5) "Fund" means the internal service fund created by this chapter, and all assets therein.

(6) "Plan" means the employee benefit plan established by SCC 4.42.030.

(Added Ord. 84-086, § 5, Aug. 6, 1984; Amended Ord. 89-011, § 2, Mar. 8, 1989).

4.42.030 Employees benefit plan--Payments--Termination.

The county shall:

(1) Pay all or part of the premiums for group life, health, and/or other insurance benefits of an employee covered by a collective bargaining agreement, and/or the spouse and/or dependent children of such employee, as required by the employee’s last effective collective bargaining agreement; and pay all or part of the premiums for group life, health, and/or other insurance benefits of an employee not covered by a collective bargaining agreement, and/or the spouse and/or dependent children of such employee, in amounts not less than the maximum amount provided in any last effective collective bargaining agreement with any union employee, as determined by the county council pursuant to the recommendation of the county executive;

(2) Make necessary payroll deductions, as authorized by employees who elect to participate in one or more benefits under the plan, to cover any portion of premiums not paid by the county, except that any contributions required of an employee for participating in the plan during times when he or she is not on the county payroll shall be made pursuant to SCC 4.42.100 and 4.42.110.

(3) Maintain membership rolls and related records as required by the contract(s);

(4) Transmit the total premium payment required under the contract(s) in accordance with the number of employees and dependents covered each month to the designated, regularly constituted insurance carrier or health care service contractor;

(5) Make the necessary budgetary provision for the county contribution to premiums and/or benefits payable under the contract(s), and for defraying the necessary costs of administration of this plan;

(6) Participate in this plan on a year to year basis, with years running from January 1st to December 31st unless different dates are provided by a collective bargaining agreement and/or the contract(s); PROVIDED, That this section shall create no obligation on the part of the county to make any payment, or be subject to any other obligation on behalf of an employee covered by a collective bargaining agreement beyond the terms of his or her last effective agreement, or on behalf of any non-union employee, upon the amendment or repeal of this section.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.040 Administration of plan and fund.

The plan shall be administered by the director of human resources, or his designee, who shall administer the plan and the day-to-day business of the plan in accordance with this chapter and chapter 200-110 WAC and as the same may be hereafter amended.

The fund shall be administered by the director of finance or his designee, who shall be the only persons authorized to approve disbursements from the fund. The director of finance shall administer the fund in accordance with this chapter and chapter 200-110 WAC and as the same may be hereafter amended; and shall:

(1) Execute in the name of the county all documents, other than contracts of insurance or for services and documents relating to investments, necessary to operate the plan and fund;

(2) Provide or obtain any actuarial services or, at the direction of the executive and on approval of the council, any consulting services necessary for the continued cost effective operation of the plan.

The directors of finance and human resources shall prepare specifications for group life, health, and/or other insurance benefits as directed by the council, negotiate with brokers of record and/or health care service contractors, and recommend placement of contracts of insurance and/or for services with health care service contractors.

(Added Ord. 84-086, § 5, Aug. 6, 1984; Amended Ord. 85-065, § 1, July 24, 1985; Amended by Ord. 13-115, Jan. 15, 2014, Eff date Jan. 27, 2014).

4.42.050 Source of funds.

The fund shall be funded with county and/or employee contributions made at such intervals and in such amounts and manner, through payroll deductions or otherwise, as prescribed in the plan, together with interest earned thereon. In the event, and to the extent such contributions are not sufficient from time to time to cover the benefits payable and other payments from the fund authorized pursuant to SCC 4.42.060, the county shall contribute or cause to be paid to the fund such amount or amounts as may be necessary to cover the deficiency.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.060 Use of fund.

The fund created herein shall be used only to pay, or provide for the payment of all or part of the premiums due and/or benefits payable under the plan, or to pay, or provide for the payment of all reasonable and necessary expenses of collecting the county and/or employee contributions to the plan and administering the plan and fund including, without limitation, all expenses which may be incurred in connection with the establishment and administration of the plan and fund, and the employment of such administrative, legal, accounting, or other expert assistance as shall be deemed necessary or appropriate including, without limitation, the services of health care contractors and necessary supplies, equipment and awards to provide health education, health promotion, or health incentive programs and be obtained in accordance with the provisions of this chapter.

(Added Ord. 84-086, § 5, Aug. 6, 1984; Amended Ord. 85-065, § 1, July 24, 1985; Amended Ord. 89-044, § 2, May 24, 1989).

4.42.070 Rights in fund.

No employee nor any person claiming by or through such employee by reason of having been named a beneficiary or as a dependent as defined in the plan, nor the county, nor any other person, partnership, corporation or association shall have any right, title or interest in the fund or any part thereof.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.080 Investment of fund.

The fund shall be managed, invested and reinvested by the finance director or his designee in accordance with applicable state law and administrative regulations.

(Added Ord. 84-086, § 5, Aug. 6, 1984; Amended by Ord. 13-115, Jan. 15, 2014, Eff date Jan. 27, 2014).

4.42.090 Payroll deductions.

Payroll deductions shall be made in accordance with the plan as provided in SCC 4.42.030.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.100 Procedures when employee on leave of absence.

Whenever an employee is on leave of absence or other approved non-pay status, he or she may pay to the finance director or his designee the premium for employee and dependent coverage for such benefits as are provided under the plan. The finance director or his designee shall transmit the premium payment in accordance with the contract(s). The county shall pay benefit premiums for employees on industrial leave from fund reserves.

(Added Ord. 84-086, § 5, Aug. 6, 1984; Amended Ord. 89-044, § 2, May 24, 1989; Amended by Ord. 13-115, Jan. 15, 2014, Eff date Jan. 27, 2014).

4.42.110 Procedures in event of suspension of compensation due to labor dispute.

Any employee whose compensation is suspended or terminated directly or indirectly as a result of a strike, lockout or other labor dispute may pay the premiums for health, life, and other insurance benefits provided under the plan as they become due directly to the designated insurance carrier or health care service contractor insofar as allowed by, and in accordance with the terms of the contract(s). When the employee’s compensation is so suspended or terminated, the county shall endeavor to notify the employee immediately, in writing, either by mail addressed to the employee’s address last of record with the county, or by mail addressed to the employee’s bargaining representative under the last effective collective bargaining agreement covering such employee, that the employee must pay the premiums as they become due as provided in this section in order to preserve his or her coverage under the plan.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.120 Nonreversion of fund.

The assets of the fund shall be held for the exclusive purpose of paying premiums and plan benefits and defraying reasonable expenses as described in this chapter and shall never inure or revert to the benefit of the county, with the exception that the county may recover contributions paid by a mistake of fact if recovery is sought within one year following the mistaken payment to the fund.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.130 Attachment/assignment.

The benefits, payments, proceeds, claims, rights or privileges of any employee or his beneficiaries hereunder shall not be subject to attachment or garnishment or other legal process by any creditor of any such employee or dependent, nor shall any employee or dependent have any right to alienate, anticipate, commute, pledge or encumber any of the benefits or payments or proceeds which he may expect to receive, contingently or otherwise, under the plan.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.140 Amendment of plan.

The county shall have the right to amend the plan and this chapter at any time and to any extent deemed necessary or advisable, with the following exceptions:

(1) No amendment shall result in the diversion of the fund’s assets, as then constituted, or any part thereof, to any purpose other than those set forth in SCC 4.42.010;

(2) SCC 4.42.120 shall not be amended; and

(3) No amendment shall affect an employee’s rights under this chapter if said amendment is inconsistent with the terms of any collective bargaining agreement then in effect between the county and the employee’s union.

(Added Ord. 84-086, § 5, Aug. 6, 1984)

4.42.150 Severability.

If any provision of this chapter, or its application to any person or circumstance is held invalid, the remainder of the chapter, or the application of the provisions to other persons or circumstances is not affected.

(Added Ord. 84-086, § 5, Aug. 6, 1984).

4.42.200 Self-insurance - program established.

There is hereby established a self-insurance program to fund certain employee medical and vision benefits. This program shall be administered in accordance with chapter 200-110 WAC and as the same may be hereafter amended. This program will fund those employee medical and vision benefits plans and revisions thereto recommended by the department of human resources and approved by the county council by motion. Medical and vision benefits for retirees may be included in this program, pursuant to RCW 41.04.235 and 41.05.080. Medical and vision benefits for employees of other units of local government may be included in this program through interlocal agreements approved pursuant to chapter 39.34 RCW.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007, Eff date Feb. 25, 2007; Amended by Ord. 13-115, Jan. 15, 2014, Eff date Jan. 27, 2014).

4.42.210 Self-insurance - financial structure and funding mechanism.

The financial activities of the self-insurance program will be administered through the employee benefit plan and fund, as established by and pursuant to this chapter. Existing and available assets within the employee benefit plan and fund and other sources will be used to fund this program, as provided in SCC 4.42.050.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007, Eff date Feb. 25, 2007; Amended by Ord. 13-115, Jan. 15, 2014, Eff date Jan. 27, 2014).

4.42.220 Self-insurance - program financial management policies.

The department of finance shall be responsible for the financial management of the self-insurance program. The department of finance is hereby directed to use the following guidelines in its financial administration of this program:

(1) Contract with a third party administrator where appropriate for management of the self-insurance program;

(2) Contract for expert insurance advice in assessing alternative self-insurance strategies;

(3) Use full accrual in accounting for the self-insurance program including accounting for incurred but not reported (IBNR) claims as a liability;

(4) Pursue the development of a fund balance in the fund equal to two months of claim liabilities. This fund balance will serve as a contingency reserve for the self-insurance program;

(5) Adjust financing through premiums or other funding mechanisms for this program as needed to ensure that the program remains actuarially sufficient and able to meet its financial obligations as they become due;

(6) Develop a schedule of appropriate claims audits and benefit reviews in conjunction with the county’s insurance advisor; and

(7) Invest the assets of the program pursuant to SCC 4.42.080.

(8) No financial plan of this self insurance program shall permit interfund loans from assets held against liabilities for unpaid claims and claim adjustment expenses except for those amounts which are clearly inactive or in excess of liabilities for unpaid claim and claim adjustment expenses.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007, Eff date Feb. 25, 2007).

4.42.230 Self-insurance - administrator.

The director of human resources shall be the administrator of the non-financial aspects of the self-insurance program. The human resources department’s duties include:

(1) Implementation of approved benefits plan designs;

(2) Management of the enrollment of qualified personnel into the benefits plans;

(3) Communication of benefits plans, plan eligibility and plan changes to participants;

(4) Coordination of the provision of enrollee-related data and changes to the third party administrator and health plan providers; and

(5) Development of a plan for establishing mechanisms for receiving input regarding the structure of the program.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007, Eff date Feb. 25, 2007).

4.42.240 Self-insurance - third party administrator.

(1) The county may contract with a third party administrator, in accordance with the standards and procedures set forth in subsections (2) and (3) of this section, to handle the claims administration process as defined in WAC 200-110-120 and as the same may be hereafter amended.

(2) The director of finance shall select a third party administrator utilizing the following competitive selection process:

(a) In advance of any negotiation on any contract for third party administrator services, the finance department shall publish an announcement stating concisely the general scope and nature of the services which are required and the address of the finance department to which inquiries for further details can be directed.

(b) Prior to award of a contract with a third party administrator, the finance department shall solicit and evaluate statements of qualifications and performance data submitted by potential contractors regarding the proposed contract.

(c) The finance department and the human resource department shall select from the interested potential contractors, the potential contractor deemed most highly qualified to provide the services required for the proposed contract.

(d) The finance department shall then attempt to negotiate the terms of a contract with the most qualified potential contractor at a price which the finance department determines is fair and reasonable. In making its determination, the finance department shall take into account the estimated value of the services to be rendered as well as the scope, complexity, and professional nature thereof.

(e) If the finance department is unable to negotiate a satisfactory contract with a potential contractor selected at a price the finance department determines to be fair and reasonable, negotiations with that potential contractor shall be formally terminated and the finance department shall select other potential contractors in accordance with subsections (2)(b) and (c) of this section and continue in accordance with this subsection until an agreement is reached or the process is terminated.

(f) After negotiating the terms of a contract acceptable to the finance department with a potential contractor selected as provided above, the finance department shall refer the contract to the executive together with a record of the negotiations conducted with any other potential contractor. The executive may then approve or reject the contract or refer it back to the finance department for further negotiations or for any other reason. An approved contract shall be signed by the executive.

(3) Any contract with a third party administrator shall:

(a) Include, among other provisions, a written description of the services to be provided, the remuneration levels to be paid the administrator and the contract period;

(b) Provide for the confidentiality and ownership of the information, data and other intellectual property developed or shared during the course of the contract;

(c) Provide for the express authorization of the county to enter the third party administrator’s premises to inspect and audit the records and performance of the third party administrator which pertains to the self-insurance program; and

(d) Require that the third party administrator comply with all applicable local, state and federal laws.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007, Eff date Feb. 25, 2007; Amended by Ord. 13-115, Jan. 15, 2014, Eff date Jan. 27, 2014; Amended by Ord. 13-115, Jan. 15, 2014, Eff date Jan. 27, 2014).

4.42.250 Self-insurance - claims administration.

Claims shall be filed in accordance with the terms of those employee health benefit plans approved by the county council pursuant to SCC 4.42.200 for inclusion in the self-insurance program. The processing of claims will be managed by the third party administrator subject to terms and conditions of the county’s administrative services contract. The third party administrator will process and pay claims subject to the provisions of each employee health benefit plan included in the self-insurance program, ensuring that the claims paid do not exceed the maximum benefits payable for each medical service rendered and that claims submitted for ineligible medical services are not honored for payment. The third party administrator will provide claims and claims adjustment expense reports to the county in compliance with terms and conditions of the administrative services contract.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007, Eff date Feb. 25, 2007).

4.42.260 Self-insurance - appeal procedures.

For each employee medical or vision benefit plan included in the self-insurance program, the director of finance shall prepare and obtain written confirmation by the state risk manager of its compliance with WAC 236-22-050(1)(b), a written claim appeal procedure which contains, at a minimum, a time limit for filing an appeal of a claim determination, a time limit for a response to the appeal by the claims administrator and a provision for a second level of review of the appeal. Subject to confirmation of compliance with WAC 236-22-050(1)(b) by the state risk manager, a claim appeal procedure may be modified from time to time to conform to the current provisions of an employee medical or vision benefit plan.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-005, Feb. 14, 2007, Eff date Feb. 25, 2007).

4.42.270 Self-insurance - risk management.

To protect the county from catastrophic financial loss, the department of finance is directed to procure stop loss insurance, with terms and limits to be determined in consultation with the third party administrator, plan carriers, benefits consultant and/or any other risk management specialist.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007 Eff date Feb. 25, 2007).

4.42.280 Self-insurance - termination.

Upon termination of this program, assets of the program will be reserved to settle all its liabilities for unpaid claims and claims adjustment expenses. Any excess assets after settlement of all liabilities of the program will remain in the fund, to be used exclusively for employee benefit related programs of the county. If liabilities of the program exceed the assets of the program, net liabilities will be settled by charging all affected county funds a prorated share of the net liabilities based on the number of full time equivalent employees (FTEs) paid under those county funds at the date of termination.

(Added Emergency Ord 01-025, March 28, 2001, Eff date March 28, 2001; Re-enacted by Ord 07-006, Feb. 14, 2007, Eff date Feb. 25, 2007).