|Resolution - Health Benefits: Consider a resolution authorizing and directing the City Manager to purchase, for and on behalf of the City of Lubbock, Individual Stop Loss insurance coverage from Blue Cross Blue Shield of Texas, for the City's health benefits program, in an amount not to exceed $14.79 per member, per month.
|The purpose of Individual Stop Loss (ISL) coverage is to protect the City's health plan fund from excessive claim activity in a calendar year. Our current stop loss contract is with Blue Cross & Blue Shield of Texas (BCBSTX), with a $700,000 specific individual deductible. BCBSTX reimburses the City for individual claims in excess of $700,000. Reimbursement is based on the claims incurred in a 12-month period, and paid within a 15-month period. Current monthly premiums are $13.93 per member, per month - approximately $411,381 annually. The current contract expires December 31, 2021.
ISL coverage is experience rated. In 2020, two claimants exceeded the $700,000 threshold and the City was reimbursed $194,494. As of August 2021, sixty claimants had claims greater than $50,000, for a total paid of $7,217,682. BCBSTX proposed a 10% increase for 2022 due to high claimant costs.
The City's benefit consultant, Travis Sartain of Marsh & McLennan Agency, bid the stop loss coverage based on a $500,000, $600,000 and $700,000 maximum, and received responses from HCC, Anthem, American Fidelity, UNUM, and BCBSTX.
The BCBSTX bid reduced the increase from 10% to 6% on the $700,000 ISL, which will result in ISL rates increasing from $13.92 to $14.79 per member, per month. This is an approximate annual increase of $25,000 over 2021. However, along with the 6% increase, BCBSTX offered a $26,000 administrative credit, resulting in zero net effect to the City.