San Luis council approves $3.7 million allocation after consultant recommends 32% medical-plan funding increase

San Luis City Council on a 5‑1 roll call vote approved a cost‑sharing plan and a $3.7 million allocation to the city’s employee benefit trust to cover a projected 32% increase in funding for the city’s self‑funded medical plan.

Dave Madden, a benefits consultant with CBIS, told the council the city’s medical plan is the biggest cost driver and that actuarial analysis shows a recommended 32% funding increase for plan year 2025–26. “We arrived at a recommended 32% increase in funding for your medical plan,” Madden said, citing catastrophic claimants and inflationary pressures on medications and provider services.

The increase follows actuarial findings that a small number of high‑cost claimants are driving most plan costs. Madden said the stop‑loss (catastrophic) insurance that protects the city has risen sharply and that several members of the plan have generated very large claims in the past year, including one claimant notified in March with more than $700,000 in claims.

Rola Encinas, director of finance, presented the trust‑level numbers behind the recommendation. Encinas said the new fiscal‑year need is about $4.3 million in total. She said employee contributions currently total roughly $417,000–$418,000 and will increase by $252,000 to about $670,000; the city’s contribution was described in the presentation as increasing from its current contribution to $3,700,000, bringing the combined total to the roughly $4.3 million figure presented to the trust.

Adela Cortes, director of human resources, described how the change will affect individual payroll deductions for the most expensive plan (the U.S. plan). “Employee alone currently pays 0% and the increase is gonna go up to $79.84 per month or about $40 per paycheck,” Cortes said. She said employee‑plus‑spouse (or children) and family tiers will also see increases and that the administration will distribute a table of the new rates to staff.

Council members asked about how common large claimants are and whether the stop‑loss insurance is working as intended. Madden said it is common for employers of San Luis’s size to have several claimants above the stop‑loss threshold and that the very large catastrophic events typically occur every three to five years; he said smaller exceedances happen almost every year. Madden noted that stop‑loss reimbursement has already covered much of a recent large claim, saying approximately $600,000 of a roughly $750,000 claim will be reimbursed under the policy.

Council member Javier Vargas moved to approve the trust recommendation and the $3.7 million allocation; the motion was seconded (second not identified on the record) and passed on roll call: Council member Lizette Cervin — aye; Council member Maria Cecilia Cruz — aye; Council member Esteban Rosales — aye; Council member Javier Vargas — aye; Vice Mayor Thaddeus Saild de LaBoya — nay; Mayor Nieves Rydell — aye. The motion carries.

Encinas and Cortes clarified benefit details: the council was told dental implant coverage, if added, would apply to anyone enrolled on the plan and that dependent braces are currently covered at 50% up to age 19 after one year of enrollment. Cortes said the city will send the council and staff the rate table and comparative information from other local employers so employees receive consistent information.

During discussion council members noted employees had not been required to contribute to premiums for about eight years and expressed concern about the financial impact on workers; council members also emphasized the need to manage risk and explore plan‑administration efficiencies. Madden said CBIS will continue working with city staff on strategies to manage utilization and long‑term plan costs.

The council’s action was procedural: it approved the trust recommendation and the allocation to cover the projected funding shortfall for the coming fiscal year; no changes to plan design or benefit eligibility were adopted at the meeting beyond the staff clarifications noted above. The administration will implement the contribution changes and distribute rate tables to employees.