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Lancaster staff recommend renewing Blue Cross medical plan, switch dental to Blue Cross to save about $5,000
Summary
At a July 15 work session, HUB International recommended renewing the city’s medical plan with Blue Cross Blue Shield at an effective 4.2% increase and moving dental coverage from Equitable to Blue Cross Dental, which HUB said would lower dental premiums by about 3.1% and save nearly $5,000 for the city.
Lancaster City Council heard a benefits presentation July 15 from Andrew Weager, a senior account executive with HUB International, who recommended renewing the city’s medical plan with Blue Cross Blue Shield of Texas at a negotiated 4.2% increase and switching the city’s dental coverage from Equitable to Blue Cross Dental.
Weager said the city’s year‑to‑date loss ratio with Blue Cross ran to about 111.4%, driven largely by several catastrophic claims (claims exceeding $100,000), including serious circulatory conditions, some cancers and a birthing complication. He told council that HUB had projected a roughly 14–15% increase but was able to negotiate the medical renewal down to 4.2%, an estimated $134,000 increase to the city’s costs compared with current premiums. “The current loss ratio is at a 111.4%,” Weager said during the presentation. “We were able to negotiate that roll down to a 4.2% increase.”
The consultant outlined the city’s three plan designs—a lower‑deductible PPO, an HMO and a higher‑deductible HSA plan—reporting that about 180 employees are enrolled in the HSA plan, 48 in the HMO and 29 in the PPO. He said the city’s total health‑care premium (city plus employee contributions) is roughly $3.1 million annually.
On dental, Weager said Equitable’s renewal proposal would have raised dental premiums by about 14.9%, so the city issued an RFP for dental insurance. HUB recommended Blue Cross Dental as a replacement, saying the benefit design is similar to Equitable’s and that the Blue Cross dental proposal would reduce dental premiums by about 3.1%, saving “almost $5,000” compared with Equitable. Because the lines would be bundled with medical, HUB negotiated a 1% medical discount tied to bundling and a $25,000 wellness allowance from Blue Cross for 2024–25. Weager said the negotiated rates are guaranteed for one year and that HUB obtained a 6% cap on increases for the 2025–26 dental renewal as an added protection.
Weager also noted one required plan design change unrelated to the vendor: IRS rules will raise the minimum HSA individual deductible from $3,000 to $3,200 for the next plan year; he said the IRS has signaled that deductible minimums will rise again in future years.
Council members pressed HUB on whether staff had sought market bids from other large carriers (Aetna, Cigna, UnitedHealthcare). Weager said HUB used internal projections and expects an RFP next year; he cautioned that some vendors may present competitive first‑year rates but follow with steep increases the next year, which can be disruptive for employees. The city manager confirmed the existing contract allowed a one‑year renewal now and obligates the city to go to RFP next year under the contract’s five‑year cycle.
Weager reviewed several cost‑management measures already in place or recommended to continue, including a spousal surcharge of $50 per month for spouses with employer coverage, an $80 monthly surcharge for employees who do not complete an annual physical or who use tobacco, and a new wellness provider (Wellable) offering health risk assessments and workforce wellness tools.
The presentation concluded without council action; HUB’s recommendation will be returned to the council as an action item at a future regular meeting for formal approval.
