PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      4c 
ACTION ITEM 
Date of Meeting      June 14, 2016 
DATE:    June 2, 2016 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Tammy Woodard, Assistant HR Director 
SUBJECT:  Contract to provide Flexible Spending and Health Savings Account Administration
Services 
Amount of This Request:         $983,000   Source of Funds:       General Fund,
individual department
budgets 
ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute a contract to
provide Flexible Spending and Health Savings account plan administration services with a
contract duration of up to 10 years and four months (five years and four months with five oneyear
options for renewal) for a total amount of $983,000. 
SYNOPSIS 
Flexible Spending Accounts (FSA) permit employees to set aside funds on a tax-free basis to use
for eligible health care (medical, dental and vision) and child or other dependent care costs.
Health Savings Accounts (HSA) similarly permit employees enrolled in qualified medical plans
to set aside tax free funds to use for qualified health care costs. Employee contributions to these
plans are also excluded from the Port's contribution to Social Security and Medicare taxes. Both
plans are subject to significant internal revenue code regulations, the HSA more than the FSA.
HSAs differ from FSAs in that HSA funds carry over from year to year without limit and
employees may take their accounts with them when they leave the Port. 
All Port employees, represented and non-represented, are eligible to enroll in the health care or
dependent care FSA.  Employees, represented and non-represented, enrolled in the Portsponsored
qualified High Deductible Health Plan are eligible to enroll in the HSA. 
The new contract will also ensure that the vendor has capability and capacity to administer a
Health Reimbursement Account (HRA) in the future if the Port determines it is appropriate to
add this feature to the healthcare options offered to employees.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 2, 2016 
Page 2 of 4 
BACKGROUND 
The FSAs are a valued benefit available to both represented and non-represented employees.
These plans permit employees to use tax-free funds to pay for qualified health care (medical,
dental and vision) or dependent care (child or other dependent) costs. Employees enroll in these
plans during the open enrollment period each year, contribute to their accounts through payroll
deduction, and seek reimbursement from the plan administrator for qualified expenses. An
important feature of these plans is the availability of a debit card linked to employees' FSA 
account that permit immediate access to funds available in their FSA. Employees have three
months after the end of any plan year to request reimbursement for qualified costs incurred
during the previous year. Because of this grace period the contract duration will include an
additional four months for employees to request reimbursement during the grace period and the
plan administrator to process the requests. In 2016 approximately 450 employees are taking
advantage of the health care FSA and about 75 are taking advantage of the dependent care FSA. 
Similar to the FSA, the HSA is an important benefit available to qualified participants in the
Port's High Deductible Health Plan. Non-representedand some represented employees are
eligible to participate in this plan. The HSA permits employees to set aside tax-free funds to
cover the out of pocket costs associated with their High Deductible Health Plan including
deductibles, coinsurance, and copays. Like the FSA, the HSA offers a debit card associated with
employees' accounts. When funds remain in their HSA account at the end of the year they carry
forward, without limit, for employees to use in subsequent years. The HSA account is also
portable so any account balances employees have when they leave the Port goes with them. In
addition, HSAs offer investment options to employees when their accounts reach a predetermined
threshold. In 2016 about 350 employees have elected to enroll in an HSA. 
The Port does not currently include an HRA in the Port-sponsored health care options available
to employees. These plans are similar to HSAs but are not portable. Offering these plans can
add flexibility to some of the health plan options employers offer to employees. As Port staff
continues to monitor health care and health plan trends, offering an HRA may support our
ongoing healthcare cost containment efforts. As a result the ability and capacity to administer an
HRA is included in the procurement effort for the FSA and HSA plan administrator and a
provision for the cost of this option has been included in the value of the contract. 
FINANCIAL IMPLICATIONS 
Budget Status and Source of Funds 
Anticipated cost of the 10 year contract is $983,000. These costs are included in the Port-wide
benefits budget that is developed annually and allocated to individual departments. 
Account enrollment and employee contribution data is electronically transmitted to the plan
administration vendor. If a new vendor is selected as a result of the procurement, the vendor
data interfaces will need to be updated. The cost of the work to update the interfaces has  a
potential cost of more than $100,000. This cost is not budgeted as it is not known that this work

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 2, 2016 
Page 3 of 4 
will be needed, or what the magnitude of the work to update the interfaces will be if updates are
needed. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Contract with a vendor to provide plan administration services for a maximum
duration of five years. 
Cost Implications: The cost of a five year contract would be about half that of a 10 year contract,
though the total cost for 10 years of plan administration services will likely be more with two
contracts as the Port would not have as much financial leverage with two contracts as it would 
have with one 10 year contract. 
Pros: 
(1)  This alternative may provide a greater opportunity for more vendors to do business
with the Port. 
Cons: 
(1)   Potential $100,000 plus cost to update vendor interfaces would be incurred more
frequently thus increasing total costs. 
(2)   Twice as many procurement processes would be required, each requires staff time
to complete, and that time cannot be devoted to other important work, so the total
staff time to procure two contracts over 10 years will be approximately twice the
time required to procure one 10 year contract. 
This is not the recommended alternative. 
Alternative 2  Administer the plans in-house. 
Cost Implications: A conservative estimate to administer the plans in-house is one FTE with a
current annual pay and benefits costs of $115,000 plus $2000 in annual training costs to ensure
our administration remains compliant with the ever-changing regulatory requirements. Over 10
years, using a conservative 3% annual pay increase, the cost of this one FTE is approximately
$1,338,000 or about $355,000 more than the estimated cost of a 10 year contract. 
Pros: 
(1)  No need to go through a procurement process to select a vendor thus freeing staff to
focus on other important work. 
(2)  No need to develop interfaces with vendors so the $100,000 cost will not be
incurred. 
Cons: 
(1)  Would require an increase to current staffing levels, as well as the acquisition of
knowledge and skills current staff does not possess. 
(2)  Would be more expensive than contracting with a vendor specializing in
administering these types of plans.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 2, 2016 
Page 4 of 4 
(3)  Would shift the liability for errors in processing employee reimbursements from the
vendor to the Port. 
(4)  With a self-administered plan the ability of the Port to continue offering the debit
card options and investment options for HSA account holders is questionable. I f
the Port could offer these options with a self-administered plan it would require
contracting with vendors to provide these services. 
This is not the recommended alternative. 
Alternative 3  Contract with a specialized vendor to provide plan administration services for up
to 10 years. 
Cost Implications: Approximately $983,000 for 10 years. 
Pros: 
(1)  The possible cost of updating data interfaces, estimated at $100,000, is allocated
over 10 years rather than the shorter five year alternative. 
(2)  Staff time to conduct the procurement process and possibly oversee the transition to
a new vendor is half what it would be with the shorter five year alternative. 
Cons: 
(1)  A 10 year contract might limit the opportunity for different vendors to do work with
the Port. 
This is the recommended alternative. 

ATTACHMENTS TO THIS REQUEST 
None. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
None.