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Council directs staff to pursue partially self‑funded health plan with stop‑loss coverage; vendors named
Summary
After receiving quotes, council directed staff to pursue a partially self‑funded employee health plan using Aetna (Meritaine), SmithRx for pharmacy management and Pareto captive stop‑loss via Sun Life with a $75,000 individual deductible; staff will prepare contracts for council signature.
Copperas Cove — City officials received proposals Thursday that compared the city’s current fully insured renewal with options for a partially self‑funded health plan, and council directed staff to proceed with contracting steps for a self‑funded model using specified vendors and stop‑loss protection.
Jeff Davis, director of human resources, and consultant Tad Doro of BKCW presented cost illustrations and vendor recommendations. The fully insured renewal from Baylor Scott & White showed an 8.5% increase, bringing the annual premium to about $1.95 million. The consultants presented self‑funded scenarios that modeled administrative costs, stop‑loss premiums and claims volatility.
Recommendation and rationale
The consultant recommended a partially self‑funded structure using Aetna (Meritaine TPA) for administration, SmithRx for the pharmacy benefit, and Pareto captive stop‑loss membership with Sun Life for risk protection. The proposed individual stop‑loss deductible is $75,000. The illustrative funding scenarios showed a "great" year at approximately $1.68 million, a typical scenario near $1.9 million and a worst case toward $2.28 million. The consultant and HR director recommended funding plan reserves at or near the renewal level given the city’s existing reserves.
Why it matters: Council heard that a partially self‑funded plan can give the city more control of pharmacy savings and benefit design while still protecting the city from catastrophic claims with stop‑loss insurance. Jeff Davis said current pharmacy pass‑throughs and discounts are retained under the proposed model and estimated pharmacy savings of roughly $42,000 annually from the proposed PBM arrangement.
Council direction and next steps
Councilmembers expressed support for moving forward. City Manager Ryan and HR staff said they would begin contract negotiations and return to council for signatures. The city will fund the initial transition from existing reserves; consultants noted the city currently has reserves available to dampen volatility in the first months of the plan.
Decision vs. action
Council gave staff direction to pursue the recommended partially self‑funded plan and to bring final contracts and implementation details back for council approval. No final contract was signed at the workshop.
Ending
Staff will negotiate agreements with the recommended vendors and prepare the documents for council consideration and signature prior to the start of the new plan year.
