Focus Area: Exceptional Services
Staff Contact: Erin Vader/Leslie Fortney
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title:
title
Consideration of three-year contract renewal with WEX for administration of the City’s employee medical spending account programs and direct billing services.
Body
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recommended motion:
Motion to approve a three-year contract renewal with WEX to provide administration of the City’s employee medical spending account programs (COBRA, FSA, VEBA) and direct billing services for the City of Olathe through January 1, 2030.
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Summary:
Lockton Companies, the City’s benefits consultant, was engaged in early 2026 to conduct a marketing process for the City’s COBRA, Flexible Spending Account (FSA), Voluntary Employees’ Beneficiary Association (VEBA), and direct billing services. The objective was to identify the best vendor positioned to:
• Explore possible financial discounts and simplify plan administration
• Deliver high-quality customer service and responsive support to both employees and City Human Resources personnel
• Effectively manage the City’s current VEBA and FSA account structure
Requests for proposals were distributed to four major vendors. Two vendors declined to submit proposals, citing an inability to administer the City’s existing VEBA structure. Following a comprehensive review of vendor responses, financial analysis, and service capabilities conducted by Lockton, the City determined that the incumbent vendor, WEX, presented the most competitive proposal. In addition to providing a financially favorable solution, WEX agreed to contractual enhancements that grant the City the flexibility to terminate the agreement annually through January 1, 2030, if warranted.
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Financial Information:
|
|
Per participant per month |
Estimated Annual Total |
|
VEBA Fees |
$4.50 |
$47,952 |
|
FSA Fees |
$3.25 |
$9,126 |
|
COBRA Fees |
$0.47 |
$5,984 |
|
Direct Bill Fees |
$4.00 |
$6,000 |
|
Estimated Combined Annual Total |
$69,062 |
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Attachment(s):
42544 - City of Olathe - COBRA and Direct Billing
43547 - City of Olathe - VEBA