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Employee Benefits Trust update: city trustees report mostly net-neutral results but warn of potential 17—18% increase
Summary
Trust leaders explained how the self-funded Meridian Employee Benefits Trust works, reviewed 2020'2024 claims experience and reserves, described stop-loss and audit requirements, and said the trust expects a substantial premium increase next year; council asked staff to pursue an RFP and return with timing options.
Bill (chair of the Employee Benefits Trust) updated the council on the structure, experience and near-term outlook for the Meridian Employee Benefits Trust, the entity the city uses to manage medical, dental and vision benefits for most city employees.
Bill said the trust is governed by a separate board of trustees made up of city employees and works with Gallagher (benefits broker) and Blue Cross (carrier). The trust is a partially self-funded plan using a stop-loss arrangement; trustees described the aggregate stop-loss attachment at $225,000 per claim. The trust is audited annually and submits quarterly reports to the Idaho Department of Insurance.
Bill walked council through annual results: 2020 and 2021 had pandemic-related losses; 2022 and 2023 were positive years with some large claims; 2024 closed with a smaller loss and multiple large claims that in aggregate approached or hit stop-loss levels. He said the program has had a small net positive across the life of the trust but remains immature and therefore vulnerable to swings from several large claims.
"Employer maintains the risk, pays the claims out of the trust, and the reserves and the surplus are held by the trust," Bill said, explaining why the city pursued a self-funded trust model.
Council members asked about whether the trust had reduced premiums relative to a fully insured model. Staff and Gallagher said the trust has been roughly net neutral to date but provides greater plan flexibility and tools (telehealth, smart-shopper programs, coupon maximizer) that staff argued improve benefit value and marketability for recruitment and retention.
Staff told the council they have been advised to expect a significant premium increase for the next plan year (staff and the mayor's office briefed council that the projection in internal communications was roughly 17—18%). Council President asked staff to develop an RFP schedule and options for procurement to ensure the city explores market alternatives before the next budget decision; staff agreed to return with a recommended calendar for an RFP and potential timing for any contract award.
The presentation also covered appeals: Blue Cross handles initial appeals; staff and trustees can request an expedited third-party review in specific cases. HR said benefit satisfaction will be measured in the upcoming benefit survey and through exit interviews; exit interviews to date have not shown benefits as a frequent reason for leaving.
