The Human Resources Department is recommending City Council authorize the contract with the Guardian Life Insurance Company/Stealth Partner Group for specific and aggregate stop loss coverage for the self-funded medical plan for period January 1, 2018 through December 31, 2018.

Beginning in 2012 and continuing through the present, the City has self-funded the medical plan. The main components of a self-funded medical plan are the administrative fees, access fees, stop-loss premiums and claims. Stop loss insurance provides protection for the City by serving as a reimbursement mechanism for catastrophic claims that exceed predetermined levels on both a plan member basis (specific) and the plan as a whole (aggregate).

As part of a comprehensive benefits RFP that was conducted in 2016, the City evaluated many elements of the benefits program, including stop loss. Through the RFP, the City requested the opportunity for up to a 5-year contract (2017-2021) with term guarantees for five, three, or one year(s) where the City would reserve the ability to renew or return to the market. Because long term rate guarantees are not available with stop loss, the City accepted a one-year contract with options for up to four one-year renewal options should we choose. As the City prepared for the 2018 plan year, the City’s benefits consultant benchmarked proposals from alternative carriers for our plan and determined that the renewal provided by our current carrier was beneficial to the City because of both cost and plan year transition.

Assuming the current $175,000 specific level of coverage, the Guardian/Stealth (incumbent) renewal proposal is a 0% change from current 2017 rates. Guardian/Stealth has issued what is called a laser deductible on one known catastrophic claimant which increases the specific level of coverage for this individual claimant from $175,000 to $600,000. This means the City would absorb the first $600,000 of claims before the stop loss carrier will assume payment on this individual claimant. At the same time, Guardian/Stealth has reduced the aggregate stop loss factor by approximately 7.6%, resulting in a plan/claims liability of approximately 2.9% under 2017.

IPS Advisors, our consultants evaluated our group size, demographics, industry and historical large claimant results along with stop loss premium savings and are not recommending any changes to our specific deductible of $175,000 at this time. Additionally, as stated above, IPS also benchmarked the renewal offer against proposals other stop loss carriers to confirm Guardian/Stealth is offering the most competitive renewal at this time.

This item was reviewed with the City Council Compensation Committee.  With that, staff recommends the City Council authorize the execution of all necessary documents relating to the award of a contract with the Guardian Life Insurance Company/Stealth Partner Group for the specific and aggregate stop-loss coverage for the City’s self-funded group medical plan. Fixed costs as stated in the proposal are projected based on employee and dependent assumptions. The actual cost will fluctuate with the number of employees on the plan at any given time.