Broken Arrow City Council
Meeting of: October 21, 2025
Title:
title
Approval of and authorization to execute necessary documents with Tokio Marine HCC (HCC Life Insurance Company) to provide Stop Loss coverage for January 1, 2026 through December 31, 2026
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Background:
The City’s broker for health insurance services has reviewed renewals for stop loss coverage for employee health insurance. Stop loss coverage is an additional layer of protection for catastrophic or unpredictable losses. Stop loss coverage is purchased by employers who are self-insured under the employee benefit plan, but do not want to assume 100% of the liability for losses arising from the plan.
In mid-2023, staff and the insurance broker had an interest to change the current stop loss policy from a July 1 renewal date to a January 1 renewal date to align the stop loss alongside the medical plan. Accordingly, the City entered into a 6-month stop loss contract with Great Midwest Insurance Company (Skyward) on July 1, 2023, and subsequently renewed for calendar year 2024 and 2025.
For plan year 2026, quotes were reviewed for stop loss coverage by the Insurance Advisory Committee and staff (the parties). Changing from Skyward to Tokio Marine/HCC Life Insurance Company (Option 14) was recommended by the Insurance Advisory Committee and staff. Option 14 contract terms include a $225,000 specific deductible/individual stop loss coverage, changing from $175,000 from calendar year 2025. At each renewal, the stop loss carrier also reviews diagnoses and claims detail to assess any potential high-risk claimants that may exceed the stop loss deductible threshold in the coming year. At that time, the carriers reserve the right to increase the individual specific deductible to the plan for any unique individual member(s) with trigger diagnoses that could potentially exceed the base deductible of our desired amount. For Plan Year 2026, there is one individual laser that has a separate individual specific deductible set at $260,000.
Additionally, the parties found it necessary to add aggregate stop loss coverage to our policy in the amount of $2,000,000. Aggregate stop loss coverage kicks in when the health plan experiences an unexpected high volume of health claims across the entire participating population, rather than from a single, catastrophic individual claim. Aggregate coverage sets a ceiling on the total amount of money the city would have to pay out for all health claims combined during the policy year. If the total annual claims exceeds $11,332,976.64, TMHCC would reimburse the city for those excess costs.
Based off of the review of premiums and expected claims, the parties recommend we enter into an agreement with TMHCC with a $225,000 individual stop loss deductible, and $2,000,000 aggregate coverage, for calendar year 2026.
Cost: estimated $879,272 (premium only)
Funding Source: Group Health and Life Operational Budget Fund 661
Requested By: Kelly Cox, Human Resources Director
Approved By: City Manager’s Office
Attachments: Stop loss Renewal Spread
Recommendation:
recommend
Approval of and authorization to execute necessary documents with Tokio Marine HCC (HCC Life Insurance Company) to provide Stop Loss coverage for January 1, 2026 through December 31, 2026
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