Title
Consider/Discuss/Act on a Resolution Authorizing the City Manager to Enter into Contracts/Agreements with Cigna Health and Life Insurance Company (Cigna) for Individual Stop Loss and Aggregate Stop Loss Reinsurance Coverage
Summary
COUNCIL GOAL: Operational Excellence
MEETING DATE: December 5, 2017
DEPARTMENT: Human Resource and Risk Management
CONTACT: Ike Obi, Director of Human Resources
RECOMMENDED CITY COUNCIL ACTION:
* Approval of Resolution
ITEM SUMMARY:
* This Resolution authorizes a contract with Cigna to provide Individual Stop Loss (ISL) and Aggregate Stop Loss (ASL) reinsurance coverage for the City of McKinney's group health plans (medical and prescription drug claims).
BACKGROUND INFORMATION:
* The City of McKinney's group health benefits program is self-funded. Under this funding structure, the City owns the claims risk, but has greater flexibility for plan design. To limit the City's cost exposure, we purchase secondary insurance products to cap City's risks at both the individual and aggregate claims levels.
* Staff rebid stop loss and received proposals from vendors to provide both ISL and ASL coverage.
* Seven companies submitted proposals (Arbor Benefits, Berkshire Hathaway, Cigna, Frates, Liberty, Partners Re and Optum/Stealth). Holmes Murphy, our health plan consultant, reviewed the proposals and selected four vendors (Arbor Benefits, Berkshire Hathaway, Cigna and Partners Re) for further evaluation.
* Cigna's proposal offers the most comprehensive and cost-effective coverage for the City (see "Exhibit A: 2018 Stop Loss Options and Costs"). The projected cost in 2018, based on enrollment, is estimated at $1,092,495. This represents a 7.2% increase over current year's cost. In addition to being the lowest overall cost, Cigna's proposal does not "laser" (set a separate higher ISL deductible) for certain claimants with serious ongoing large claims. It also offers ease of claims reporting by eliminating the cost o...
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