County insurance broker reports low claims trend and offers stop-loss options for county's health plan

Clark Nelson, the county's account manager for employee health benefits, presented the carrier/broker renewal analysis and recommended the board consider adjusting the stop-loss attachment point to reduce premium expense.

Nelson told supervisors the county's plan performance through the recent measurement period was favorable: claims have run well below benchmark and the plan had stop-loss credits available at the end of the last contract period. He summarized the actuarial underwriting and showed that current paid claims year-to-date were lower than the underwriter's estimated range; the broker's model produced a suggested overall rate change in the mid-single-digit range and, after underwriting adjustments and pharmacy contract changes (new PBM terms), an illustrative net increase of about 0.58 percent on suggested rates.

Nelson explained stop-loss alternatives and the trade-offs: moving the specific stop-loss attachment from the county's current $50,000 to $60,000, $75,000 or $100,000 would reduce annual stop-loss premium but increase the county's retained risk on each large claim by the corresponding amounts. He provided example figures: a move to $60,000 reduced stop-loss premium materially in the broker's model (the packet compared the estimated premium at each attachment level). Nelson noted the county had only a small number of claimants currently over the $50,000 level, and that shifting some premium into retained claim exposure could be financially advantageous given current claim experience.

On pharmacy, Nelson said the county's new PBM contract (CVS) and formulary changes are expected to lower pharmacy trend assumptions; he summarized that generic utilization was high (near 90 percent) and that specialty drug counts had decreased since the prior period. He also described manufacturer rebate mechanics and offered the board an option: take monthly crediting of guaranteed pharmacy rebates or wait for periodic reconciliations based on manufacturer payments. “It's going to take a little longer,” Nelson said of the manufacturer-rebate timing, adding that groups can elect immediate monthly credits or delayed reconciliations depending on their cash-management preference.

Nelson recommended that the board consider moving at least to the $60,000 stop-loss level, or at minimum review the stop-loss options before final rate adoption. He offered to return with more targeted quotes and to work with county staff to finalize a recommendation after supervisors reviewed financial tolerance for retained claim risk.

Speakers quoted or referenced: Clark Nelson, account manager (stop-loss and benefits broker).

Why it matters: The county's choice of stop-loss attachment point and acceptance of pharmacy rebate crediting methods affect employer premium expense, retained risk and cash-flow for the county employee health plan.