Title:
Consider and take action on a resolution approving the employee stop-loss insurance with Sun Life for the period October 1, 2024, to September 30, 2025 for an estimated cost of $1,728,420 (Director of Human Resources and Civil Service)
Background:
Approval of this item will adopt stop loss insurance and authorize the City Manager to execute all contracts related to this program.
League City has retained HUB International to provide consulting for its health and welfare benefits plans.
Medical Plan Stop Loss Reinsurance RFP
In conjunction with Purchasing and Human Resources, HUB conducted an RFP for Stop Loss Reinsurance for the City’s medical and pharmacy plan. The RFP was publicly advertised and distributed to all available markets.
The current Stop Loss Reinsurance policy is with Blue Cross Blue Shield of Texas (BCBS). BCBS initial proposal was a +56.37% premium increase (revised BAFO +50.41%) and 0.10% aggregate attachment factor decrease for the current $125,000 specific stop loss deductible. Competitive proposals were received from Stealth Partners Group (HCC and Voya) and Sun Life, with Voya and Sun Life at +20.1% and +21.2% in premium increases respectively. The proposal from Voya included two lasers at $650,000 and $350,000 while the Sun Life proposal included two lasers at $250,000 each.
Proposals were also requested for higher specific deductible amounts of $150,000 and $175,000 for consideration of potential premium savings. The proposal from Sun Life at the $150,000 specific deductible provides the best alternative premiums and claim liability with an increase in premium of +6.28% ($102,122) and total plan cost liability of +5.60% ($12,951,188) inclusive of the lasers. In comparison the proposal from BCBS represents a total plan cost liability of +7.05% ($13,129,847).
Recommendation
Based on the combined premium and claims liability HUB recommends awarding the Stop Loss contract to Sun Life at a $150,000 individual specific deductible. The premium savings (-$246,054) for the increase to $150,000 specific deductible are not expected to be outweighed by the number of large claimants expected (between 5-8 at increase of $25,000 each, $125,000 - $200,000).
Attachments:
1. Proposed Resolution
2. Stop Loss Reinsurance BAFO Responses 8.8.24
FUNDING
{ x } Funds are available from the Employee Benefit Fund 4030, Health Insurance account 40301650-54650.
STRATEGIC PLANNING
{ x } Addresses Strategic Planning Critical Success Factor # 5 Trained, Valued, and Committed Workforce