Meridian health trust runs a deficit; trustees ask council for up to $937,926 to cover year-end shortfall

Meridian — City staff and the employee benefits trust’s consultant told the Meridian City Council on Oct. 14 that the city’s self‑insured employee health trust is operating in a deficit and asked the council to provide additional funding to carry the plan through the rest of 2025.

Scott, a consultant with Gallagher, told the council that the trust’s second‑quarter financial filing showed a deficit of $733,063 and that claims through August pushed the plan’s loss ratio to 116.55 percent — meaning claims and administrative costs have exceeded funding by about 16.5 percent so far this year.

The consultant attributed the shortfall primarily to a sharp increase in high‑cost claims, especially cancer cases. “Cancer is the leading diagnosis of those large claimants,” Scott said. He told the council the trust recorded roughly $2.4 million in cancer‑related claims over the past 18 months and that the number of large claimants in 2025 was up about 31 percent compared with the same period in 2024; the cost of those large claims rose about 51 percent.

Why it matters

The trust covers Meridian employees and their dependents. When a self‑insured trust experiences a spike in high‑cost claims, the city — as plan sponsor — faces choices about whether to increase funding, change plan design, or seek alternate carriers. Those decisions affect both the city’s budget and employees’ out‑of‑pocket costs.

What trustees asked for

Scott told the council the trust projects an additional $411,000 deficit in third quarter 2025 and about $343,000 in fourth quarter 2025 if current trends continue. The trust’s request, he said, is for roughly $937,926 to fund the remainder of 2025; when combined with a prior council credit of $550,075 approved earlier in the year, the total funding applied to 2025 deficits would reach about $1,488,000.

Scott said the $550,075 approved earlier this year was credited in July and will appear on third‑quarter financials; it is not reflected in the June (second‑quarter) filing. He also said the trust has filed 2026 rates with the Idaho Department of Insurance that are higher than 2025: 17 percent for medical, 11.2 percent for dental and no change for vision. The trust also approved a small benefit change for 2026 that raises the individual out‑of‑pocket maximum from $2,250 to $2,500 (family from $4,500 to $5,000), which Scott said reduces the projected cost increase by about 1 percentage point.

Council reaction and next steps

Several council members voiced concern about the volatility of self‑insurance and the human impact of serious illnesses. “Sometimes things we get too caught up in the numbers and we forget the people,” Councilman Overton said, noting the impact of cancer diagnoses on city employees and their families.

Council members asked for more regular updates. The prevailing direction from the council was to return to the council with a budget amendment; staff was asked to bring a proposed budget amendment back the following week and to provide quarterly financial updates on the trust going forward. No funding appropriation was approved on Oct. 14.

Other details discussed

- The trust’s actuaries completed rate work in August–September 2024 and used the prior 24 months of claims experience to set 2025 funding levels. Scott said the claims experience worsened beginning in November 2024, after 2025 rates were filed.
- The trust recorded a rise in both the number of large claims and the aggregate cost of large claims through August 2025 compared with 2024. Scott said cancer has been the largest driver of the increased cost.
- The Department of Insurance requires an equivalent of three months of contributions in surplus for the trust; Idaho Administrative Procedure Act section 18.0405026 permits the regulator to allow up to 90 days for a plan to restore required surplus before additional actions may be taken.
- Trustees are evaluating targeted programs for cancer care management; Scott said the trust is exploring third‑party programs that may provide better outcomes and value for cancer patients, although no cancer‑specific benefit was added for 2026.

What the city said it would do next

Council members asked for regular reporting and more employee communication about how to access trust resources. Staff said the trust will bring quarterly updates to council and will return with a draft budget amendment proposal the following week. Council members also discussed adding trust funding considerations to the city’s 2026 budget conversations.

Context and constraints

Speakers repeatedly noted that self‑insurance reduces long‑term cost compared with fully insured arrangements, but carries short‑term volatility. Scott said fully insured options smooth those costs but typically include carrier margins and fees that often make them more expensive over time for an employer of Meridian’s size.

No ordinance, contract award or appropriation was adopted during the Oct. 14 discussion; the council’s next formal step was to ask staff to prepare a budget amendment for council consideration.