San Angelo health plan faces $3.5 million shortfall; new consultant outlines causes and fixes

HUB International, which took over benefits consulting for the city in April, told the council the city’s health insurance fund ran a roughly $3.5 million shortfall this year because plan funding had not matched total plan liability and the fund experienced more high claims than usual.

Julian Fontana of HUB said the city is on a partially self‑funded medical plan with stop‑loss reinsurance and that “the total plan liability is not being realized with what the budget amount put in place is,” making the plan vulnerable to high claimants. He told council that historically the plan hit four to five stop‑loss events in a year but that this year the city logged nine, a major factor in the shortfall.

Fontana said forecasting tools show medical inflation near 8% and pharmacy inflation in the low double digits, and HUB will recommend plan design changes and clearer premium equivalents so that the funding rates better match projected liabilities. Staff said they received 13 bids to the insurance RFP and expect to bring recommendations to council in mid‑September.

Council members asked whether the city could aggregate coverage with other local entities to lower premiums; HUB explained pooling is possible but often complicated by control and subsidy allocation issues. Staff said the city already partners with the chamber and Tom Green County in some areas of benefits where feasible.

No formal contract changes were approved at the workshop; staff said a recommendation on plan contracts and funding will return to council in September.