TITLE
Recommendation to authorize City Manager to execute an agreement with VOYA, for healthcare specific stop-loss reinsurance coverage with a $500,000 deductible level, at a cost of $843,360 for a 12-month period effective January 1, 2016; and execute any subsequent amendments necessary to maintain current benefit levels and remain in compliance with state and federal laws. (Citywide)
DISCUSSION
Since 2008, the City has purchased stop-loss insurance for large claims that exceed $500,000 for individual claims within a plan year to support the City’s self-funded medical and prescription drug programs. On September 15, 2015, the City Council approved health and life insurance agreements for the plan year that begins on January 1, 2016; however, at that time, the stop-loss insurance rates had not yet been finalized and staff committed to return to the City Council for authorization to contract for the specific stop-loss insurance.
Alliant Insurance Services, the City’s current health insurance consultant, conducted a competitive bid process based on the City’s current rate and historical large claims experience. Of the 14 carriers who participated in the bid process, 12 declined to submit a quote, and two quotes were received. VOYA, the City’s current stop-loss carrier, proposed the most competitive rate with an 8.99 percent increase from the 2015 plan year cost of $773,783.
The specific stop-loss agreement with VOYA will run concurrently with the City’s benefit plan carrier contracts, from January 1, 2016 through December 31, 2016.
This matter was reviewed by Deputy City Attorney Linda T. Vu on November 20, 2015 and by Budget Management Officer Victoria Bell on November 23, 2015.
TIMING CONSIDERATIONS
City Council action is requested December 22, 2015, so that the stop-loss carrier will be in place as close to the start of the benefit year, effective January 1, 2016.
FISCAL IMPACT
The estimated annual cost for the City’s stop-loss reinsurance coverage with VOYA for the 12-month 2016 plan year is $843,360, which is budgeted in the Employee Benefits Fund (IS 391) in the Citywide Activities Department. There is no local job impact associated with this recommendation.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
Alejandrina R. Basquez, DIRECTOR
DEPARTMENT OF HUMAN RESOURCES
APPROVED:
PATRICK H. WEST
CITY MANAGER