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Benefits consultant: 2025 'flood year' of high‑cost claims drove multi‑million dollar reimbursements; plan options presented
Summary
Holmes Murphy reported unusually large high‑cost medical claims in 2025 that produced nearly $5 million in stop‑loss reimbursements and left the employee benefits fund under pressure; the consultant recommended deductible adjustments, ER copay changes, telemedicine promotion and exploring an on‑site clinic via an RFP.
Julie Rickman of Holmes Murphy reviewed the city’s employee health plan performance and told council that 2025 was a “flood year” for high‑cost claims. She said the plan saw roughly $11 million in claims from members with individual claims over $100,000 and nearly $5 million in stop‑loss reimbursements to the city for FY2025.
Rickman explained the city’s stop‑loss attachment point is $275,000 for an individual claimant; claims above that threshold trigger reimbursement from the stop‑loss policy and reduce the net cost to the city in extreme years. “You had almost $5,000,000 of reimbursements” in 2025, she said, which helped offset the high claimant year.
Holmes Murphy presented current year‑to‑date figures showing a much lower high‑cost total and forecasted a gross premium trend in the 8–11% range depending on medical and pharmacy drivers. To control future exposure, the consultant recommended several measures: modest increases in employee deductibles (multiple incremental options were modeled), raising emergency‑room copays to discourage nonemergency ER use, stronger promotion of telemedicine (currently a $5 co‑pay), and issuing an RFP to evaluate clinic or near‑site care models that could reduce expensive utilization over time.
Rickman noted that the city’s average per‑employee per‑month (PEPM) costs remain above some municipal benchmarks because the plan’s generosity and the $1,000 deductible are on the lower end of comparable municipal plans. She said a $250 increase in deductible would save roughly $104,000 annually and that raising employee contributions modestly would offset part of the projected premium growth.
She also recommended stop‑loss renewal marketing ahead of the renewal window to reflect current claims experience and explore plan design changes that can reduce ER utilization; Holmes Murphy offered to help structure a promotional campaign so employees use telemedicine and urgent care rather than the ER for nonemergency issues.
Next steps: staff will take the consultant’s options under advisement, return with stop‑loss renewal timing and renewal scenarios, and provide any recommended plan design changes as part of the budget process.
