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Yuma County told health plan costs could rise about 19.7% for FY26; high-cost claims flagged as main driver
Summary
Actuaries presented a preliminary FY25–26 projection showing a near‑20% increase in county self‑funded health plan costs, driven largely by an uptick in high‑cost claimants and pharmacy trend; board discussed contribution scenarios and reserves.
Debbie Donaldson, a senior actuary with Siegel, told the Yuma County Board of Supervisors on Feb. 19 that the county’s self‑funded medical and pharmacy plans face a projected overall cost increase of about 19.7% for fiscal year 2026.
The projection, based on claims and enrollment from Dec. 2022 through Nov. 2024 and using a pharmacy trend of 11.4% and medical trend just under 8%, calculates a per‑employee per‑month cost of roughly $1,328 and includes a recommended $66.67 monthly HSA employer contribution and a $75,000 wellness allowance.
Donaldson said the county’s stop‑loss attachment is $150,000 and that stop‑loss reimbursement mitigates only the very largest claim “tail.” She told the board that “about half” of the projected increase is explained by a higher number of high‑cost claimants—particularly in the county’s richest plan, PPO A—while pharmacy cost trends and utilization also add upward pressure.
Board members pressed for detail on plan drivers and alternatives. Donaldson noted that PPO A experienced a 52.5% year‑over‑year increase driven by a larger number of expensive claims below the $150,000 stop‑loss threshold. The high‑deductible health plan showed a projected rate reduction of about 14% in the modeling, prompting staff to offer two contribution scenarios: (1) pass through the actuarial increase broadly, or (2) preserve the existing contribution strategy while directing larger increases toward PPO A and modest increases for PPO B to encourage migration to the high‑deductible plan.
Human Resources Director Jessica Rodriguez described how a proposed temporary rehiring program (Item 13 on the agenda) would be structured if approved: retirees would contract through an external employer (ESI), be paid at a reduced percentage of prior salary while filling a temporary role, and the county would not fill the retired employee’s vacancy during the contract period. Rodriguez said the county would aim to use those contracts for succession planning while avoiding added cost to the county’s payroll.
Supervisors asked how reserves would be affected. Donaldson said the county’s fund balance and incurred‑but‑not‑reported reserves are sized to absorb volatility and that the current projections were priced so the increase “is not eating into your reserves.” A supervisor noted the plan’s roughly $5.25 million in reserves and asked whether more gradual multi‑year increases would reduce employee pushback; Donaldson said the 2025 spike is chiefly experience driven and reflects unpredictable high‑cost cases.
The presentation included technical explanations of trend drivers (utilization vs. unit price), pharmacy rebate offsets, and the role of stop‑loss and aggregate attachments; Donaldson referenced national trends such as rising use of specialty drugs. She recommended continued monitoring and member education, and supervisors discussed options to steer enrollment toward the high‑deductible plan with HSA incentives to reduce overall cost exposure.
The board did not take a final rate or contribution action during the meeting; staff said the analysis would inform forthcoming budget and rate decisions.
