City of Alpine reviews employee health benefits, directs staff to issue insurance RFP

City of Alpine staff and their insurance broker reviewed the city's employee health benefits and renewal options at a workshop session, and staff said they will issue a request for proposals for the October 1 renewal and budget a 10% placeholder for next-year premiums.

The discussion centered on the city's current plan design, comparative offerings in the area and the trade-offs between staying fully insured and moving to a partially self-funded model. Megan (staff member) summarized employee feedback from a recent compensation study and said some employees asked for "more" on insurance even though the city currently pays the full employee-only premium and contributes toward dependent coverage and an HRA.

Riley Deering, West Texas region leader for Hotchkiss Insurance, described the city's recent renewal history and market context. "I will be the first to say I'm a big proponent of being partially self funded if it makes sense," Deering said, then explained the city moved from partial self-funding to a fully insured plan in 2020 after negotiating a two-year rate guarantee. He told the workshop that Blue Cross is the incumbent carrier and that recent annual increases have been about 5% for the city, while many other employers have seen higher increases.

Why it matters: employee benefits are the single largest per-employee cost in the city budget and a potential recruiting tool. Workshop participants discussed the plan's relative generosity (employee-only premiums paid by the city, a $1,000 deductible with a $500 HRA contribution that effectively lowers the net deductible, and a PPO network through Blue Cross) and whether alternatives such as adding an HMO option, offering a high-deductible HSA-eligible plan, or returning to a partially self-funded design are feasible.

Key facts and figures surfaced during the meeting. Megan reported an employee-only premium around $703.55 per month (about $8,442.60 annually) and a 12-month total premium spend near $737,000 (March 2024'Feb 2025). The city currently pays roughly 50% of dependent premiums; staff clarified the city covers 50% for spouse and 50% for children when employees enroll dependents. The city also contributes $500 per enrolled employee to an HRA. The workshop heard a comparison to Alpine ISD, whose lowest-cost plan shows an employee premium of about $95 per month but, according to the broker, does not contribute to dependents.

Broker analysis and options: Deering recommended evaluating both fully insured and partially self-funded proposals in the upcoming RFP. He described the advantages of partial self-funding (flexibility to design benefits, pick stop-loss carriers and pharmacy benefit managers, and pursue cost-containment strategies) and the primary downside (concentrated exposure if a very large claim occurs in a small population). "You guys are right there on the edge of, like, do we have enough employees to spread that risk?" he said.

Other discussion items included dental and vision access (staff reported local dentists/optometrists sometimes decline insurance and said the city should evaluate carrier options to improve access), retirement benefits (the city participates in the Texas Municipal Retirement System ' TMRS ' with a 5% employee contribution and a roughly 2-to-1 match), COBRA and retiree coverage (the city does not provide post-retirement insurance; retirees typically transition to Medicare at 65 or to COBRA if under-age), and employee demographics (the employee average age on the plan was given as 42; the average age on the overall plan dataset was reported as 36.3 for dependents and 42 for employees in the prepared summary).

Decisions and next steps: workshop participants agreed on three staff directions: issue an RFP to solicit alternatives before the October 1 renewal window, ask the broker to include partially self-funded scenarios and HSA/HRA structure options in the RFP materials, and budget a 10% placeholder for next-year insurance costs while actual bids are collected. Megan said the broker will prepare the marketing packet and claims data for prospective carriers. Staff also said they will ask legal counsel for written guidance on structuring HRA/HSA arrangements.

No formal council vote was recorded at the workshop; the workshop produced staff directions and clarifications to inform the competitive procurement and next budget cycle.

A final note: staff emphasized that the current plan is "rich" compared with many local employers (free employee-only premiums, low net deductible for employees using the HRA and a broad PPO network) and that any change involves trade-offs between wages, premium cost-sharing and benefit designs.