05-04-12-Resolution-Blue Cross Bule Shield Trust Agreement-05/07/2012Statement of Understanding
Between
Blue Cross and Blue Shield of Texas
The City of Sanger
Respecting
Premiums Excluded from State Insurance Taxes
WHEREAS, the City of Sanger ("City") has establislxed a single nonprofit trust (the "Trust") within
the meaning of section 222,002(c)(5) of the Texas Insurance Code regarding health benefits coverage
for its employees and has delivered to Health Care Service Corporation, A Mutual Legal Reserve
Company d/b/a Blue Cross and Blue Shield of Texas ("BCBSTX") a copy of the Single Nou-Profit
Trust Fund Agreement ("Trust Agreement") executed by the City and the Trustee establishing the
Trust;
WHEREAS, the Tnist Agreement establishes the Trust far the sole purpose of paying policy premiums
for group health, life and accident insurance;
WHEREAS, BCBSTX has reviewed the Trust Agreement and determined that it meets the
requirements of section 222.002(c)(5) of the Texas Insurance Code;
'1 'Hl✓REAS, the Ttust will pay the full amount of premiums and revenues due for any given month to
BCBSTX for group health insurance coverage from the bank account of the Trust;
WHEREAS, BCBSTX will utilize the Ttltst Agreement as well as the payment of the premiums and
revenues by the Trust fi ora the Trust's bank account as support and evidence as to the exclusion of
these collected premiums and revenues from the preinium and maintenance taxes assessed by the State
of Texas; and
WHEREAS, while under uo obligation to do so, BCBSTX has detetYnined to return to the Trust those
premiums and revenues that were paid to BCBSTX by the Trust which would no longer be required to
be remitted to the State of Texas by BCBSTX in the form of Premium and Maintenance taxes as a
result of the formation of the Trust;
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Statement of Understanding (Continued)
NOW THEREFORE, the understanding between IICBSTX and the City is as follows:
Premiuttz and Maintenance Tax Refund
1. Upon the conclusion of the current contract (10/31/2012), BCBSTX will calculate the amounts
of premium tax and maintenance tax, utilizing the most current tax rates, which would have
been due on the collected premiums for the months of 07/01/2012 through 10/31/2012 which
are related to the contract which ceases on 10/31/2012. Additionally, BCBSTX will calculate
the tax refund to include retroactive premiums billed over the 60 day period following the end
of the contract, through 12/31/2012. BCBSTX will then create an adjustment to the City's
account in BlueStar. Subsequently, BCBSTX will issue a premium refund to the Trust in order
to offset the premium and maintenance tax adjustments,
2. The premiutn tax refiind calculation will apply to the collected premium associated with the
s current contract in place which ends on 10/31/2012, and will not apply to collected premium
for subsequent contract terms. Subsequent contract rates will be reflective of the tax exemption.
Statement of Understanding (Continued)
Signatures
BCBSTX and the Ciiy have executed this Agreement in multiple copies, each of which is an
original.
Ciry Secretary
3
BLUE CROSS BLUE SHIELD OF TEXAS:
Name
i!'GG 7r- X 8r CD t i RH GC
'Titleyy Q 2
v r / /
Date
CITY OF SAl i GER, TEXAS
Signed by:
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Nauze c ., l. t t r.- '
Title "'
Date