Broken Arrow City Council
Meeting of: 06-20-2016
To: Mayor and City Council
From: Office of the City Manager
Title:
title
Approval of and authorization to execute a subsequent Policy Period Offer with Optum to provide specific and aggregate re-insurance coverage for the employee health plan for fiscal year 2016-17
End
Background:
The City has provided employee health benefits through self-insurance since 1989. To protect the financial integrity of the plan, stop loss insurance is obtained to prevent significant loss for catastrophic claims on both an individual and aggregate basis. EmployerAdvocates, the City’s benefit consultant, annually seeks proposals from re-insurance companies to determine the most competitive and comprehensive coverage available. Proposals for fiscal year 2016-17 were received from Optum, HCC and HIIG.
Currently, stop loss coverage is provided by Optum. Optum’s current policy and proposal includes an Experience Refund which allows for a refund of 25% of net profit provided the stop loss coverage continues for a subsequent policy period and is in force at the time of refund. The anticipated refund for fiscal year 2015-16 is $50,468; however, it is only payable if coverage continues through Optum for fiscal year 2016-17. Due to this refund program, Optum’s proposal provides the lowest overall cost for specific and aggregate re-insurance coverage.
Based upon the proposals submitted, it is recommended that re-insurance protection be renewed with Optum. Option 1 of the subsequent policy period offer is the recommended coverage.
Optum is predicting the plan’s medical expected paid claims at $6,477,854. The proposed premium for specific and aggregate re-insurance is $543,748.56.
Cost: $543,748.56
Prepared By: Jannette McCormick, Acting Human Resources Director
Reviewed By: Finance Department
Acting Assistant City Manager - Administration
Legal Department
Approved By: Michael L. Spurgeon, City Manager
Attachments: Optum Subsequent Policy Period Offer
Recommendation:
To approve the subsequent policy period offer from Optum to provide re-insurance coverage for the employee health plan and authorize its execution.