City officials and their new benefits consultant told the City Council at an Aug. 5 budget workshop that San Angelo’s partially self‑funded health plan experienced several high‑cost claimants this year, producing an estimated $3.5 million shortfall the city must absorb for the current plan year.

Julian Fontana of HUB International, the city’s newly engaged benefits consultant, briefed the council on plan funding and claim trends. He said the plan’s stop‑loss arrangement shields the city from catastrophic claims but that this year the plan hit stop‑loss for more members than typical. “We usually hit about 4 to 5 hitting stop loss; this year we are at 9,” Fontana said.

Nut graf: The shortfall reflects both unusually high claims in the current plan year and longer‑standing underfunding of the plan’s liability, Fontana said. City staff and the consultant said they are working to rebalance funding, plan design and administrative protocols; staff signaled they may ask for a portion of plan costs to be borne by employees in next year’s design.

Kimberly Holly, assistant director of human resources and risk management, said the city solicited bids and HUB is reviewing responses; staff plans to return to council with recommended plan changes and a September 16 or 17 presentation to explain premium and design impacts. Finance staff told council they set aside funds this budget cycle to cover the current shortfall but warned the underlying funding model needs correction to avoid recurring gaps.

Fontana said market forecasts (Milliman/Segal) project medical and pharmacy inflation of roughly 8% and 12–13% respectively; he recommended verifying that premium equivalents (what the city charges or budgets) fully cover the plan liability, including administration and stop‑loss costs. Council members asked about potential co‑pooling with other local entities; HUB and staff said such arrangements are possible in limited cases but are complicated by governance and cost‑allocation issues.

No formal policy change was adopted at the workshop; staff said they will bring a formal recommendation for plan design and budget treatment in September.