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Sparks City Council Meeting 6/11/2018

General Business: 9.6

Title: Consideration, discussion and possible approval to purchase stop loss insurance for the City's group health insurance self-funded plan with Gerber Life Insurance Company for Fiscal Year 2019 in the amount of $448,922 and authorization for the Contracts and Risk Manager to execute policy documents.
Petitioner/Presenter: Neil Krutz, ICMA-CM, Assistant City Manager/Jen McCall, HR Analyst Senior
Recommendation: To approve the purchase of stop loss insurance to protect the City’s self-funded group medical plan from catastrophic losses.
Financial Impact: This item is budgeted in FY19. The cost to the group health plan fund is $448,922.
Total Costs: $448,922.00
Fund: Group Insurance Self- Insurance    Account: 603070
Program: Provider Contracts in Group Health Fund (050436)
Amount: $448,922.00    Budget Status: Budget Exists
Business Impact (Per NRS 237):
    
A Business Impact Statement is not required because this is not a rule.
Agenda Item Brief:

The City of Sparks Group Health Insurance is self-funded.  In order to protect the City's self-funded group health insurance program from individual catastrophic medical and pharmacy claims, the program purchases stop loss (re-insurance) insurance which provides significant financial protection to the plan.

Stop Loss Insurance is automatically budgeted annually from the Group Health Insurance Fund.  Near the end of each fiscal year, the City's health insurance broker/consultant, LP Insurance will open a bid process for a provider of this type of coverage.

Stop loss providers will not bid until the end of the fiscal year in order to evaluate all medical and pharmacy claims impacting the plan.



Background:

Stop loss insurance is purchased to protect self-funded health plans against adverse claims experiences.  Competitive hospital and physician contracts makes the use of stop loss protection infrequent; however, the plan must be protected from large individual claims to protect the self-funded health plan from significant losses.

The City has had three (3) catastrophic claims over the last four (4) years.

Renewal of this insurance was accomplished with the assistance and advice of the City’s health insurance broker/consultant – L/P Insurance Services.



Analysis:

Thirteen (13) companies were sent offers to bid, with eleven (11) choosing not to bid or offer quotes. Gerber Life Insurance Company is recommended because they provided the most competitive renewal option.

Gerber Life provided a very competitive quote with an increase of 7.31% over last year's cost.  This is an expected increase based on industry trends and rising healthcare and pharmacy costs.  Our current provider Companion Life was not as competitive in their renewal, offering an increase of 9.75% over last year's cost.

By choosing Gerber Life Insurance, we will be under the anticipated twenty percent (20%) increase the City budgeted for this renewal.



Alternatives:

1.  The Council may choose to approve the proposed purchase with Gerber Life Insurance Company as outlined by staff and authorize the Contracts & Risk Manager to execute the policy documents.

2.  The Council may choose to direct the City Manager to extend the coverage offered by Companion Life, at additional cost.

3.  The Council may direct the City Manager to provide alternatives to staff to address the issue of large claims exposures.

 



Recommended Motion:

I move to approve the purchase of stop loss insurance with Gerber Life Insurance Company for the City’s self-funded group health plan program for Fiscal Year 19 in the amount of $448,922 and authorize the Contracts and Risk Manager to execute policy documents.



Attached Files:
     Analysis Stop Loss Insurance 6-11-2018.pdf

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