Paducah staff warn rising self-funded health plan costs; adviser recommends roughly $921,000 budget increase

TJ Story, benefit adviser with HUB International, told the Paducah Board of Commissioners on Oct. 21 that the city—s self-funded health plan is facing higher-than-expected claims and that the city should increase 2026 budget allocations to avoid drawing down its reserves.

Story said the city is responsible for the first $175,000 of any individual claim under the plan and that higher-frequency and higher-cost claims have pushed the city—s projected net cost for 2025 to roughly $2,750,000. "The city's health plan is self funded," Story said. "For the most part ... the majority of the cost come from the claims that the employees and their dependents actually have within the health plan." He recommended increasing the city's funding from about $3,000,000 to about $3,600,000 to better cover projected administrative, stop-loss and claim expenses.

Why it matters: Paducah funds the plan largely from city allocations and employee premiums; Story said the city—s net liability is roughly 75% of total plan cost, with employee premiums and stop-loss reimbursements reducing…