DEPARTMENT: Human Resources
DEPARTMENT HEAD: Lori Steward
COUNCIL DISTRICTS IMPACTED: City-wide
SUBJECT:
Stop Loss Insurance Policy
SUMMARY:
This ordinance authorizes the City Manager or her designee to approve execution of the application to HM Life Insurance Company for the purchase of a Stop Loss Insurance Policy to cover City civilian employees, non-Medicare eligible civilian retirees, uniformed employees, and their dependents who are covered under the City's medical insurance plans. The purpose of the policy is to protect the City from catastrophic claims expenses. The term of this policy is for claims incurred since December 1, 2017, but paid during the ten (10) months beginning March 1, 2018 and ending December 31, 2018.
BACKGROUND INFORMATION:
The City of San Antonio offers seven self-insured medical benefit plans to approximately 26,000, civilian employees, uniformed employees, non-Medicare eligible retired civilian employees, and dependents. The adopted budget to cover expenses for medical and pharmacy claims for FY 2018 is approximately $136,000,000.
Stop-loss insurance is a risk-mitigation product that provides protection for self-insured employers such as the City of San Antonio. Without stop-loss insurance, the self-insured employer is responsible for the full cost of any catastrophic claim. With stop-loss insurance, employers receive reimbursement for payments made for claimants in excess of pre-determined deductible levels such as $500,000 or $1,000,000.
A study by insurance company Sun Life found that the number of million-dollar plus claimants increased by 68% during a four year study period of 2013 to 2016. The City's Benefits Consultant, Gallagher, has seen catastrophic claims over the past two years in their Texas book of business ranging from $2 million to $14 million. Additionally, Human Resources staff attending a Texas HR conference last year heard from a smaller Texas city that had experienced a $12 million catastr...
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