Town hears Anthem plan update, insurance consultants warn of stop‑loss pressure

The Board of Selectmen heard a midyear review of the town’s self‑insured health plan on Jan. 28, when Larry Kershner of Epic Online summarized six months of claims and urged conservative budgeting ahead of July’s stop‑loss renewal. Kershner said the plan’s year‑to‑date total cost is tracking slightly below the current fiscal year budget but the first six months ran hotter than prior years because several claimants hit large thresholds early in the plan year.

Kershner told the board the town currently covers about 197 active employees, plus roughly 469 covered lives total. He said the plan’s per‑capita cost has been around $2,400 per month over recent years and was about $2,700 month‑to‑date over the first six months of the plan year — a figure he described as “a hotter start” that often smooths in the second half of the year because the aggregate stop‑loss deductible resets in July.

Why it matters: the town is self‑insured, so higher claims show up directly in the town’s fund rather than to an insurer’s shareholders. That makes stop‑loss pricing, the deductible the town chooses, and specialty drug trends important drivers of next year’s budget and reserves.

Kershner emphasized that large specialty pharmacy and catastrophic medical claims are the main drivers of recent volatility. “We’re seeing some very, very high‑cost specialty medications pierce into the deductible,” he said, and noted the plan has not yet experienced cell or gene therapy claims but that such claims can be “in the millions.” He also described a recent reinsurance market shift: the town moved its stop‑loss coverage to Sun Life last July and, he said, that marketing saved the town about $500,000 on the renewal that year.

Board members asked technical questions about the plan design and historical experience. A selectman asked whether pharmacy costs are pushing claimants into stop‑loss; Kershner replied they are contributing. Another member asked for a 12‑month rolling average of per‑capita trend data; Kershner agreed a 12‑month average “is a better way to look at it.”

Kershner said the town’s aggregate stop‑loss deductible is currently $150,000 per person, a level the town moved to from a lower deductible a few years earlier because the premium to obtain a lower deductible became uneconomic. He noted that a number of members had already reached six‑figure claim levels in the first six months and described the upcoming July renewal as a key decision point: the town must decide whether to keep the $150,000 deductible, move it higher to lower premium, or buy a lower stop‑loss point to reduce volatility. “There’s going to be continued pressure because that’s going to be the conversation as we get closer to July,” he said.

Budget guidance and next steps: staff and the board discussed the recommended planning assumption for FY26. Finance staff told the board they are using an assumption near 5% for premiums and benefits expense; Kershner said that estimate is within the reasonable range of what he projects if trend continues. He also noted a positive cash position this fiscal year and that the town historically has run modest surpluses in the employee benefits internal service fund.

Board members asked staff to provide a stop‑loss experience comparison across the town and the Board of Education — specifically how many claimants hit stop‑loss over a longer historical period — to inform the July renewal and whether cost‑sharing or stop‑loss changes are preferable. Kershner and staff agreed to bring more detailed trend and stop‑loss hit history to future budget meetings ahead of the renewal.