Title
Consider a memorandum/resolution awarding RFP 22-30 to United Health Care for an excess risk policy (stop-loss insurance) for medical and pharmacy claims under the City health insurance plan, effective October 1, 2022 in the amount of $648,405.
Summary
DATE: September 6, 2022
TO: Kent Cagle, City Manager
FROM: Eva Bark, Executive Director of Human Resources
SUBJECT: AWARD RFP 22-30 FOR AN EXCESS RISK POLICY (STOP-LOSS INSURANCE) FOR MEDICAL AND PHARMACY CLAIMS UNDER THE CITY HEALTH INSURANCE PLAN TO UNITED HEALTH CARE IN THE AMOUNT OF $648,405
BACKGROUND AND FINDINGS:
On June 28, 2022, Council approved United Healthcare as the City’s Group Employee Medical and Pharmaceutical benefit provider, effective October 1, 2022. The City will need to purchase stop-loss insurance in the event of high claims to support the self-insured health care and pharmaceutical plan in FY23.
Stop-loss insurance protects the City against catastrophic or unpredictable losses. The City of Killeen will protect its plan with both specific and aggregate stop-loss coverage. Specific Stop-loss insurance protects the City against a high claim on any one individual. Aggregate stop-loss provides a ceiling on the dollar amount of expenses that the City would pay, in total, during a contract period.
In partnership with the City’s Employee Benefit Consultant, Lockton Dunning, on July 3, 2022, the City initiated a Request for Proposal (RFP) for firms experienced in stop-loss insurance coverage for the City of Killeen employees and retirees. Staff received and reviewed proposals from United Health Care ($648,405), Symetra ($1,077,732), HM ($1,240,705), and Sun Life ($1,297,159). The review and evaluation of the proposal was based on product offerings, reputation of the vendor, and cost savings for the City and the employees.
After a thorough analysis of the stop-loss insurance proposal and options, staff recommends entering into an agreement with United Health Care for the plan year 2023 for a term of one year in an amount of $648,405. Stop-loss insurance with United Health Care provides cost-effective insurance for the City.
THE ALTERNATIVES CONSIDERED:
(1) Do not award RFP 22-30 to United Health Care for stop-loss insurance for FY23.
(2) Award RFP 22-30 to United Health Care for stop-loss insurance for FY23.
Which alternative is recommended? Why?
Staff recommends the City award RFP 22-30 to United Health Care for stop-loss insurance for medical and pharmacy claims under the City health insurance plan because it provides the most cost-effective stop-loss insurance for the City.
CONFORMITY TO CITY POLICY:
Yes
FINANCIAL IMPACT:
What is the amount of the expenditure in the current fiscal year? For future years?
The cost for FY 2022 is $648,405.
Is this a one-time or recurring expenditure?
Recurring
Is this expenditure budgeted?
Yes, funds are included in the FY 2023 Proposed Budget in the Health Insurance Fund, account 615-2305-418.50-59.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this expenditure?
Yes, upon approval of the FY 2023 Proposed Budget.
RECOMMENDATION:
Staff recommends the City Council award RFP 22-30 to United Health Care for an excess risk policy (stop-loss insurance) for medical and pharmacy claims under the City health insurance plan effective October 1, 2022 in the amount of $648,405, and authorize the City Manager or his designee to execute the contract and any necessary change orders in accordance with state and local law.
DEPARTMENTAL CLEARANCES:
Purchasing
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Evaluation Matrix