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Board hears spike in stop-loss costs, pharmacy claims as insurance renewal rises 49%
Summary
Board members were briefed on a 49% increase in the city’s excess insurance renewal tied to a large stop-loss claim and rising pharmacy costs; staff said the city remains self-funded and will pursue options but did not propose a change at the meeting.
Forest Bridge city staff told the Board of Directors on Oct. 21 that the city’s excess insurance (stop-loss) renewal has increased by about 49 percent amid a recent high-dollar claim and rising pharmacy expenditures.
Director comments during the meeting flagged the insurer listed as Everest Reinsurance Company and asked whether the board had alternatives to consider. Eric Garvin, the city’s director of human resources, said the renewal process is handled annually by a broker who solicits market bids and that the existing stop-loss provider was among the lowest priced offers this year.
Garvin told the board the city experienced a single claim in excess of $2,000,000 during the policy period; the city expects most of that amount back under the stop-loss contract but still faces the timing issue of paying the claim until reimbursement arrives. He also said pharmacy expenditures for the city’s self-funded plan have risen about 35 percent and that those costs are a significant driver of the premium increase.
Board members discussed options such as wellness incentives and plan design changes that might mitigate future increases, and staff said the city’s brokers and third-party administrator evaluate options each year. No formal change to the insurance program was proposed or approved at the meeting; the item remained on the consent agenda and was approved as part of the consent items the board adopted that night.
