City Council awarded a one (1) year contract on December 7, 2021  to Hays Companies using Aetna for Stop Loss Insurance.  Stop loss is bid out on an annual basis.

The Human Resources staff has held stop loss coverage for its health plan for at least 12 years to protect the plan against the liability of any large claim.  The City’s stop loss coverage provides protection for any individual claim that exceeds $250,000.  This is particularly important coverage in light of the passage of the Affordable Care Act in 2010 which removed coverage for pre-existing conditions as well as any caps on lifetime maximum.

Stop loss insurance provides a vital safety net for the total risk the City could incur for health care expenses of the City's self-insured health plan. Stop loss carriers will only quote one year of coverage at a time because of the volatility of healthcare costs and change in membership of the health plan.  Carriers are provided the City’s claims experience through October and provide quotes based upon current information.

Hays Companies, Inc. was awarded contract 2017-0019-AC authorizing them to act as the City of Plano broker.  As such, Hays received quotes from thirteen stop loss insurance providers. After the evaluation, it was determined the best value was to award to Hays Companies using Aetna. The contract will be in the estimated amount of $2,656,561. This is an estimated increase of 15% which was an anticipated increase due to the large number of claimants in 2022 that exceeded the stop loss threshold of $250,000.

If the City does not award this contract, the City would have risk exposure for claims that exceed $250,000.  When the Affordable Care Act was enacted in 2010, the law eliminated the ability for a plan to have a lifetime maximum on the amount of a medical claim.  In years prior to the ACA, health plans could have a maximum benefit that it would pay towards a claim (typically $1 million) and the member would be responsible for paying any amount over that limit.  While the ACA’s change positively affected the member from financial bankruptcy in the event of a large catastrophic claim, this removal of the limit, vastly increased the risk to the health plans in the U.S. and added a larger cost employers have spent subsequently on stop loss coverage as the potential claim exposure has gone from $1 million to any dollar amount.

Funding for this item is available in the Health Claims and 115 Trust Funds. This item approves a contract for stop loss coverage to provide insurance for catastrophic claims, in the total estimated amount of $2,656,561 ($1,992,420 in FY 2022-23 and $664,141 in FY 2023-24) and will be funded via regular employee, retiree, and city contributions to the City's Health Claims Fund and 115 Trust Fund.

Approval of this agenda item will support the City's Strategic Plan Critical Success Factor of being an Excellent, Innovative, and Accountable City Government.