Hackensack council renews Sun Life stop-loss coverage after multi‑year spike in claims

Hackensack City Council on Dec. 29 approved Resolution 508‑25 to renew the city’s stop‑loss (reinsurance) contract with Sun Life, a decision council members said was necessary to preserve health coverage continuity after several years of unusually high claim payouts.

The vote, taken at a special meeting, was 4–0 with Councilman Carroll abstaining. Deputy Mayor Toomey, Councilwoman Clark‑Collins, Councilman Diaz and Mayor Gaines voted yes. The resolution, amended on the record before the vote, clarifies that the city’s $175,000 retention applies per claim (per medical condition/occurrence), not “per employee.”

City officials and the city’s insurance broker described the background for the renewal. Jim Mangan, who led the staff briefing, said Hackensack is self‑insured: the city pays claims up to a set retention and a stop‑loss carrier reimburses amounts above that threshold. He told council the city’s health benefits trust fund, established in 2018, peaked at about $1.5–$1.6 million but has been drawn down over multiple bad years and currently holds roughly $300,000.

“Because the budget ran out, we used the trust,” Mangan said, describing transfers into health benefits late in the year. Officials said the city made two transfers into the health benefits account — one for about $1 million and another for roughly $900,000 — to cover shortfalls while stop‑loss reimbursements were pending.

Christopher Berzano, the city’s insurance consultant and broker from Accusure, described the 2025 stop‑loss results that shaped the council’s decision. He said Sun Life reimbursed approximately $9 million in stop‑loss claims in 2025 while the stop‑loss premium for 2025 was about $5 million, producing an estimated loss ratio near 200%. Sun Life’s proposed 2026 renewal was reported at about $7.5 million (roughly a 46–47% increase). Berzano said several other carriers, when solicited, declined to quote because Hackensack’s recent claims experience made the risk unattractive.

“We got a 47% renewal; other carriers wouldn’t bid,” Berzano said, describing why staff recommended renewal with Sun Life rather than leaving the city uninsured for catastrophic claims.

Council members asked detailed questions about why the claims rose and which parts of the plan were driving costs. Officials pointed to a post‑COVID spike in elective procedures beginning mid‑2022 and persistent medical inflation; they also singled out out‑of‑network reimbursements as a major driver because out‑of‑network providers can bill without the limits of in‑network contracts.

To address those drivers, staff outlined three cost‑control tools already put in place: Zelis (a claims‑repricing and review vendor) was implemented July 1, 2024; the city changed its out‑of‑network reimbursement to a Fair Health national fee schedule (June 2025); and officials said they will add a pre‑authorization and medical‑necessity review process with Evicore (referred to in the meeting as “Evercore”) effective Jan. 1, 2026. Council was told preliminary July–October 2025 data showed monthly claims down roughly $161,000 versus the same period in 2024, but staff cautioned that more months of data are required before declaring the trend secure.

The council also discussed options for altering benefits or joining a Health Insurance Fund (HIF) or the State Health Benefits Plan. Staff and the city’s broker said some changes — for example, reducing out‑of‑network coverage or changing plan design — would require collective bargaining with unions, and that earlier market options narrowed as the city’s claims history worsened.

City auditor Steve Wilcott asked whether earlier action in 2023 or 2024 could have eased the city’s options; staff responded that much of the market appetite evaporated after claims escalated and that the city had to simultaneously pursue immediate cost controls and preserve coverage for 2026.

The resolution passed after the mayor and council clarified the language to reflect that the $175,000 retention applies per claim, not per employee. Council members emphasized the renewal was a near‑term step to avoid interruption in coverage and said they expect to revisit longer‑term structural options after the first quarter of 2026 when additional claims data is available.

The council adjourned after brief closing remarks urging continued oversight and follow‑up work on plan design and bargaining considerations.