Memorandum                                    

City of Lawrence

Human Resources

TO:	Tom Markus, City Manager Casey Toomay, Assistant City Manager
FROM:	Michelle Spreer, Benefits Specialist Lori Carnahan, Human Resources Manager
CC:	Diane Stoddard, Assistant City Manager Bryan Kidney, Finance Director
Date:	October 3, 2017
RE:	Stop-Loss Insurance 2018

The Human Resources division requests approval to proceed with contract negotiations for 2018 stop-loss coverage for the Employee Healthcare Plan with Aetna; which will also be the third party administrator for the City’s Healthcare Plan beginning January 2018. We request the following action be placed on the October 17^th City Commission agenda.

Authorize the City Manager to execute the necessary agreements with Aetna to provide stop-loss coverage at the current levels for the City’s Employee Healthcare Plan for 2018 with a total annual premium of $1,018,206.  

Stop-loss coverage is insurance that protects employers who self-fund their healthcare plans against catastrophic losses.  The stop-loss carrier becomes liable for losses in excess of specified limits. Specific coverage insures the City for claims over a certain threshold relating to any one individual.  Currently the city’s specific limit is set at $125,000. Aggregate coverage insures the City over a certain threshold related to all claims incurred. 

Hays Companies, the City’s benefits consultants, sent out a Request for Proposal (RFP) on behalf of the City. Four companies responded.  Aetna (3.7% increase over current rates), Sun Life (36.9% increase), Berkley Accident & Health (23.2% increase) and SwissRe (14.7% increase).  

The Human Resources division budgeted for a 20% increase to stop loss premiums for 2018.  The recommended renewal is well below budgeted parameters for both premium and maximum claim liability. Aetna’s quote equates to a total premium increase of $36,325 over 2017.   

Attachment: Hays Companies Stop Loss Marketing Comparison.