TITLE
Recommendation to authorize City Manager, or designee, to execute an agreement with VOYA, for healthcare specific stop-loss reinsurance coverage with a $500,000 deductible level, at an estimated cost of $1,821,136 for a 12-month period effective January 1, 2021; and, execute any subsequent amendments necessary to maintain current benefit levels and remain in compliance with state and federal laws. (Citywide)
DISCUSSION
The Human Resources Department administers the Employee Benefits Program (Program) for active and retired City employees and their qualified dependents. The Program includes a self-insured PPO medical plan option and stop-loss insurance to protect the City against large claim losses. The stop-loss insurance reimburses the Program in the event an individual plan participant has medical claims that exceed $500,000 within a plan year. Industry trend for coverage at this level is at or above 25 percent.
On September 1, 2020, the City Council approved health and life insurance agreements for the plan year that begins on January 1, 2021; 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 seven carriers who were solicited to provide stop-loss coverage, five carriers declined to quote due to not being able to offer a competitive rate based on the City’s ongoing high cost claimant risk concerns and high cost claimant loss ratio for 2020. VOYA, the City’s current stop-loss carrier, proposed the most competitive rate with an 18 percent increase from the current 2020 plan year actual cost of $1,543,404. The estimated annual cost for the City’s stop-loss reinsurance coverage with VOYA for the 12-month 2021 plan year ...
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