1. I. Introduction to Business
A- Nature of Industry – Cosmopolitan inc. is a fortune 300 company that specializes
in the coffee import/export business. Cosmopolitan has signed contracts with coffee
grows in their global market. As cosmopolitan is a global company with offices in
the US, Brazil, Colombia, Ethiopia and Kenya it is a business that runs 24 hours a day
to accommodate and serve different customers from different parts of the world.
The head office is located in Los Angeles, CA.
B- How long has business been established – the business will be celebrating its 10th
year anniversary this December. The LA office has been open for 10 years before the
business expanded domestically to Seattle and Hawaii. Upon a profitable outcome in
the expansion to the domestic offices, the company expanded globally. The global
offices are celebrating their 5th year anniversary this coming December.
C- Financial Stability- Cosmopolitan has been enjoying a fruitful business and has
gotten to a net capital of 5 million dollars. The company has enjoyed a steady stable
growth.
D- Growth Projections: cosmopolitan has shown a promising growth. The company
has witnessed an average growth of 600, 000 dollars a year for the past 5 years and
is projected to reach up to 1 million a year within the next decade.
E- Locations: Los Angeles, Seattle, Hawaii, Brazil, Colombia, Ethiopia and Kenya.
F- Overview of Demographics: Cosmopolitan currently has 4000 employees’
worldwide. About 20% of the employees working in the head quarter office are
older than 40. About 5% of the 20% is getting closer to retirement age of 65. About
60% of the employees working in the US are female while the remaining 40 % are
male.
G- Rates and proposed increases: Cosmopolitan provides competitive salary and
health benefits package. In the past 2 years the company has given a 10% raise to all
the employees.
H- Employer contribution: Cosmopolitan provides a fully funded contributory plan
for all qualified employees. Cosmopolitan provides insurance that is compliant with
ERISA.
II. Objectives of RFP
A- What’s going wrong? (Rates, service, providers)
At the time the health plan was acquired from all of the insurance providers,
Cosmopolitan was relatively a small business with only 500 employees. At the time
the plan was acquired, premiums were set at a higher rate of 80% with only a 20%

2. deductible option to be paid for the employees in the form of co insurance, co
payments and annual deductibles. Employees weren’t given a wide array of options
as it relates to premium vs. deductible rates. Currently, United, Anthem BlueCross
and Cigna Health groups are the primary care providers for Cosmopolitan. Between
the three insurance providers, employees get 2 HMO and 1 PPO health plans.
The services provided by all the insurance plans are as follows
- Emergency Services
- Prescription Drugs
- Prenatal care
- Full coverage for dependents
- Preventative yearly medical checkups
- Hospitalization fees
- Immunization
- Pap smears
The numbers of preferred doctorsare fewer in number and the non-preferred
doctors are proving to be costly for employees. Many employees have been enrolled
in the PPO health plan, as they wanted the flexibility of not having PCP as in the plan
provided by the HMO providers. At the moment about 45% of the employees are
enrolled in the HMO plans combined with the remaining being enrolled in the HMO
plan.
Even though many of the employees are enrolled in the PPO plan, the UCR rate
provided for services rendered from a Non PPO health plan at the minimum
acceptable rate of 70%. This option has been proved to be costly to employees.
As a result, Cosmopolitan is interested in providing a more diverse health insurance
program. As the company is enjoying yet another year of success, the risk
assessment should be lowered and some rates should be adjusted. In addition, the
plans purchased from the current health care providers group is due to expire
within the next 12 months. Cosmopolitan is looking to purchase a new group health
package complete with a financially competitive advantage to both the employees
and the employer.
B- What’s working for the group?
With the current coverage, an employee is able to choose from and 2 HMO and 1
PPO plan. In addition, employees are able to choose benefits and fund them with
their pre tax dollars. The current plan provided is contributory which allows for
better group rate and the option choosing a better group insurance as well. In
addition, the current insurance plans provide a comprehensive coverage for
employees and their dependents. The current services also recognize the need and
importance of having pre natal health care option for expecting parents.

3. In addition, employees have the option of setting money aside to pay for health
benefits that are not covered under the HMO and PPO plan.
III. Current Plan of Benefits
A- Current Plan: HMO, PPO
B- Proposed Changes: As the company has grown exponentially since the current
insurance plan was put in effect. Cosmopolitan is requesting some changes but keep
some of the current structure in place.
- Cosmopolitan would like to offer employees with a plan that has
varying premium and deductible rates.
90% premium 10% deductible
80% premium 20% deductible
70% premium 30% deductible
- Provide the option of non-contributory coverage to allow for
employees to be enrolled without the need to show proof of
insurability.
C- Cafeteria Plan
The cafeteria plan allows employees to select benefits that are most applicable to
them. Employees have the option of selecting a salary reduction to fund premiums
for the elected. At cosmopolitan, employees have three options they could choose to
fund their selected plans.
a- POP: Employees get to have the option having a before salary reduction
allowing them to pay for the premium fees fro the elected plans. At
cosmopolitan, employees could choose to fund any combination of the
following plans.
 Medical
 Dependent care assistance
 Vacations
 Dental & Visual
b- HCRA: Employees get the option of setting money aside from their salary to
pay for qualified fees associated with medical expenses. HCRA allows
employees to pay for deductibles and premiums associated with selected
health care plans. Under HCRA, interested employees are required to select
ahead of time the plan they would like to allocate their money.
As the current plan provided is contributory employees should provide proof
of insurability and one they have been approved, they may select the plans
they want to fund.

4. Under HCRA choose from the following and get reimbursed for the incurred
fees:
 Contraceptive Pills
 Acupuncture
 Birthing Classes
 Infertility Treatments
 Medical Supplies for an injury
 Birth Control
 Vaccinations
c- DCRA: at time that employees enroll their dependents, they are eligible to get
reimbursed for incurred fees by the dependents. As defined by law, qualified
dependents are defined as follows.
 Child under age 13
 Spouse/ Partner who is incapable of caring for oneself
Under DCRA, employees may get a refund only when the services incurred by
dependents are qualified for reimbursement. Services may include but not
limited to:
 At home nursing care for adults
 Day care
 After school care
IV. Census
Total # of Full-time Employees: 2500
# of Employees to be on plan :1800
Current Insurance Company: United, Cigna Health & Anthem BlueCross
# of out-of-state employees to be covered : 700
Employee
ID
Employee Age
Marital
Status
# of
dependents
to be
covered
Gender
Nature of
Employment
1211 45 M 3 F FT
1212 35 S 0 F FT
1213 25 M 0 M FT
1214 55 M 2 M FT
1215 65 M 5 F FT
Table 1- Sample Census Data
*M= Married
S= Single
FT= Full Time

5. V. Historical Information
Cosmopolitan is strong on creating a safe and healthy work environment for
employees. Accordingly, every year the loss ration has shown tremendous
improvement.
Plan Year Carrie Claims Premium
collected
Loss Ratio
2010-2011 United 4,550,000 3,500,000 130%
2011-2012 Cigna 3,000,000 3,000,000 100%
2012-2013 Anthem Blue
Cross
2,450,000 3,500,000 70%
Table 2- Loss Ratio data
VI. Additional benefits
Cosmopolitan would also like to incorporate the following benefits to employees:
Life/AD&D
Include supplemental benefits such as EAP, Vision, Dental, Life/AD&D