Miami County staff recommends evaluating switch to self‑funded health plan; commissioners ask for funding options and actuarial analysis

Sarah Denney, interim human resources director, and benefits consultant Robert presented options for moving Miami County’s employee health plan from a fully insured Blue Cross renewal to a self‑funded (ASO) structure with stop‑loss reinsurance.

Denney introduced the topic and Robert described the differences between fully insured premiums and the self‑funding cash‑flow model. Robert said the county’s experience shows claims through the last several years are favorable relative to market trends but pharmacy inflation and specialty drugs remain a risk. He told the commission the actuarial projection used 7% medical and 12% pharmacy inflation assumptions and a conservative estimate produced roughly a 2% net increase in budgeted cost under the ASO option compared with Blue Cross’s fully insured renewal.

Robert explained stop‑loss options the county requested from Blue Cross of Kansas: two modeled options used a $100,000 and $125,000 specific (per‑individual) attachment with aggregate corridors (15–20%). He said higher specific attachments lower fixed reinsurance premiums but raise the county’s exposure to a single catastrophic claimant. He emphasized that Blue Cross’s current $300,000 pooling level (added this year) reduces exposure under fully insured proposals but that those pooled arrangements are more costly overall in the renewal Robert showed.

Tyler, a benefits consultant participating in the call, clarified that the fully insured pooling concept and the stop‑loss “specific” attachment are similar in function but use different terms in ASO language.

Staff reviewed administrative fee credits Blue Cross offered: a one‑time $55,000 administrative fee credit (applied against admin fees until exhausted) and an estimated pharmacy rebate credit equal to roughly 80% of projected rebates (about $189,000 in the model). Sarah Merley confirmed pharmacy rebates would be paid quarterly.

Commission discussion centered on: (1) recommended stop‑loss attachment and aggregate corridor; (2) the county reserve level to fund initial run‑out and cash‑flow; (3) timing and budgeting impacts from claim lags in the first months after conversion; and (4) operational limits in the Blue Cross bundled ASO model (notably, limited ability in year‑one to change PBM or stop‑loss carrier). Robert recommended funding between 100% and 105% of expected claims (with a practical budget target of roughly $3.0–3.1 million based on modeled liabilities) and offered to run a Monte Carlo (stochastic) analysis to show frequency/severity outcomes across scenarios.

Commissioners asked staff to bring refined options for funding levels, stop‑loss structure (including a recommended specific/aggregate balance), and actuarial Monte Carlo results back at the next meeting. Staff also noted a deadline for a final decision on plan design and county contribution levels of April 16 to meet open‑enrollment and implementation timelines.

No final formal vote was taken during the study session. Staff indicated they will return with modeled scenarios and funding options and that the expectation is to finalize plan design and contributions by the April 16 deadline.

Ending

Denney and Robert said they will return with the requested actuarial runs and funding scenarios. The commission flagged the April 16 deadline for final decisions and asked staff to provide clear contribution tables for employee tiers at the next meeting.