SUMMARY OF PROPOSED REVISIONS TO THE BENEFITS DECLARATION OF TRUST (BOS AGENDA EXHIBIT B).PDF

Exhibit B
SUMMARY OF PROPOSED REVISIONS TO THE BENEFITS DECLARATION OF TRUST
Title & Recitals
• Revises recital of history of establishment of Benefits Trust to be appropriate for a
revised and restated declaration of trust
• Removes unnecessary recitation of actions authorized by A.R.S. § 11-981
Article 1. General Terms (n/k/a “Article 1: Definitions”)
• Removes unnecessary and/or duplicative definitions
• Separates sections for “Definitions” and “Purpose and Application of the Benefits Trust”
in order to streamline document and provide more user-friendly review and reference
• Moves “Reservation of Authority” and “Entire Agreement” provisions to Article 10
• Removes references to an appointed Trust Administrator because the appointment of a
Trust Administrator is not necessary, given the duties and authority delegated to the
Trustees, Plan Administrator, Benefits Finance Manager, the County, and third parties
Article 2. The Benefits Trust Fund (n/k/a “Article 2: Purpose and Application of the Benefits
Trust”)
• Moves sections 1.8 (equal opportunity) and 1.9 (procurement) to Article 2
• Updates, for accuracy, the provisions covering establishment of the Benefits Trust;
duties of County Treasurer; holdings and investments; and purpose of the Benefits Trust
• Moves “Manner of Financing” to revised Article 6, which covers contributions to and
distributions from the Benefits Trust
Article 3. The Board of Trustees (n/k/a “Article 3: Organization and Operation of the
Trustees”)
• Revises provisions governing organization and operation of the Trustees to provide
more streamlined, user-friendly reference
• Updates and simplifies provisions regarding appointment and terms of service
• Includes provisions covering non-liability, exclusion, and indemnification of Trustees
(moved up from Article 8); and eliminates duplicative provisions on this subject and
streamlines text
• Adds provision regarding Trustees’ obligation to seek legal advice, consistent with
similar provision in the County’s Risk Trust Declaration of Trust
• Adds subheadings to each provision to provide more user-friendly reference
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Articles 4 and 5: Duties of the County; Duties of the Board of Trustees (n/k/a “Article 4:
Powers and Duties of the Trustees”)
• Revises provisions outlining responsibilities and authority of the Trustees to provide
more streamlined, user-friendly reference
• Updates responsibilities and authority of Trustees to accurately reflect historical duties
performed, and removes duties that have historically been carried out by the County or
that are not duties but prescriptions for the use of the Benefits Trust funds, including
sections 5.2 (use of funds); 5.6 (employing professionals to provide services ); 5.7
(causing staff to prepare financial statements for audit); 5.9 (maintaining annual report);
5.12 (ensuring self-insured programs comply with the law); 5.16 (providing for
investment of trust monies); 5.17 (making arrangement for payment of benefit claims);
5.18 (paying taxes, assessments, expenses, insurance premiums); 5.23 (causing the
administrator to be provided with financial reports/statements)
• Clarifies authority of Trustees to make recommendations to the Board of Supervisors on
financial issues relating to the Benefits Plan, including total Plan premiums
• Clarifies standard to be applied to duty to determine funding levels and reserve
requirements for the self-insured plans so there is a minimum threshold of estimated
claims incurred but not reported
• Clarifies the responsibilities that are not the responsibility of the Trustees but rest with
either the Board, County, or other authorized individuals, including making design
changes to the Benefits Plan and the Health and Welfare Benefits Program, and
determining what portion of premiums should be paid by participants and what portion
should be paid by the County
• Moves provision covering day-to-day operations to Article 5
• Moves handling of contributions and funding of Benefits Trust to Article 6
• Removes provision regarding vacancies, which is covered in Article 3
• Increases authority of the Trustees to settle actions, claims, or proceedings for the
protection of the Benefits Trust from range of $50,000 to $100,000 to range of $100,000
to $200,000.
• Adds provision covering authority to recommend premium holidays, subsidies, and
refunds, given past experience of the Trustees’ review and input on these items
Article 6. Standard of Care of Board of Trustees
• Removes recitation of standard of care for Trustees, as the provision was not necessary
or consistent with the County’s Risk Trust Declaration of Trust and trust declarations of
other local government agencies. Conflicts of interest are covered under Section 3.9
Article 7. Powers and Duties of Administrator (n/k/a “Article 5: Management of the Benefits
Trust”)
• Updates and identifies, where needed, responsibilities and authority for the
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administration and management of the Benefits Trust as between the County’s staff,
Plan Administrator, and Finance Manager
• Increases delegated authority of the Plan Administrator to compromise claims for
reimbursement of the cost of medical care and treatment up to $100,000 less than the
amount the County or its authorized agent has demanded in reimbursement (previously
$50,000); and added authority of Plan Administrator to direct the prosecution of actions
for the recovery of the cost of medical care and treatment paid under the Plan after
consulting with the Trustees
• Adds authority of Finance Manager to submit claims in class actions by similar self-
insured plans and to accept settlements of such submitted claims up to $100,000, where
the class action reaches a settlement approved by a court of law
*New* “Article 6: Contributions to and Distributions from the Benefits Trust”
• Moves the “Manner of Financing” section to the new Article 6
• Organizes provisions covering contributions and distributions of the Benefits Trust,
including the previous sections of 5.2, 5.13, 5.14, 5.15, 5.17, and 5.18, and revises
language of provisions to be more practical, user-friendly
• Adds “Event of Underfunding” provision to assure that the Benefits Trust will receive
funding from the County in the event of underfunding (similar to the assurance provided
by the County in the Board of Supervisor’s approval of prior premium holidays)
*New* “Article 7: Settlement Authority”
• Moves reservation of authority to settle claims that is set forth in Schedule A to new
Article 7
Article 8. Stop-Loss Insurance and Indemnification (n/k/a “Statutory Requirements”)
• Addresses statutory requirements of stop-loss, audit, and risk management
consultant/insurance administrator under a single Article
• Moves provisions covering non-liability, indemnification, and exclusion to Article 3
Article 9. Dissolution and Termination
[No change]
Article 10. Miscellaneous
• Adds minor revisions to streamline previous miscellaneous provisions
• “Reservation of Authority” and “Entire Agreement” provisions are now under Article 10
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