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Palm Coast staff recommend 10% health insurance increase; council asks for cost models before budget vote
Summary
City staff and Brown & Brown recommended a roughly 10% aggregate increase for the 2025–26 employee health plan, plan design changes favoring the HSA option, and closing the PPO to new enrollees; council asked staff to model budget impacts and alternatives before adopting final rates.
City staff and broker Brown & Brown presented the city’s 2025–26 employee health plan renewal and recommended a roughly 10% aggregate increase for the coming year, with plan-design changes intended to steer employees toward the HSA option.
Danielle Boyle of Brown and Brown told council, "the increase this year is looking at a 10% in aggregate," and described plan-level drivers: rising medical trend (7–10%), pharmacy trend (10–13%), and a small number of very large claimants. City staff and Brown and Brown said two members already exceeded the plan’s $175,000 stop‑loss threshold and that the stop‑loss carrier had reimbursed a little more than $100,000 through May.
The broker proposed three design changes to limit cost pressure: raise certain deductibles (one example cited was a deductible moving from $1,000 to $1,500), move emergency room coverage on the HSA plan to deductible-plus‑coinsurance, and close the PPO to new enrollments effective Oct. 1 while preserving existing participants. Staff said the city currently contributes $1,000 toward the HSA accounts it offers employees.
Council members asked for more modeling and comparison data. Several members said they value the PPO as a recruitment tool and did not support eliminating it immediately; others supported shifting new hires to the HSA to reduce future budget exposure. City Manager Johnson and the broker agreed to run scenarios showing (a) the budgetary impact of the proposed increase and (b) a model for the cost difference if new hires are required to enroll in the HSA. Staff said the current requested increase will be incorporated into the budget package due July 8 and that additional analyses could be produced within days for council review.
Discussion items that remain open include: whether to keep the PPO available for new hires, adding point‑solutions for complex cases (estimated at about $2 per employee per month), and finalizing the stop‑loss premium. Council asked staff to present a 3–5 year projection showing the savings or costs from requiring new employees to take the HSA, and to return before final budget adoption.
