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File #: RES 2019-101    Version: 1 Name:
Type: Resolution Status: Consent Calendar
File created: 9/23/2019 In control: Town Council
On agenda: 10/1/2019 Final action:
Title: Resolution Approving a Contract between the Town of Castle Rock and Aetna Life Insurance Company (Award of Contract for 2020 Healthcare Plan Stop Loss)
Attachments: 1. Attachment A: Resolution, 2. Exhibit 1: Agreement for Stop Loss Coverage with Aetna Life Insurance Company

To:                     Honorable Mayor and Members of Town Council

 

From:                     Sue Morgan, Human Resources Manager

 

 

Title

Resolution Approving a Contract between the Town of Castle Rock and Aetna Life Insurance Company (Award of Contract for 2020 Healthcare Plan Stop Loss)

Body

________________________________________________________________________________

 

Executive Summary

 

As part of the Town’s total compensation package, Castle Rock provides a self-insured

health care plan for Town staff.

The Town has successfully utilized a self-insured business model to provide health care coverage for Town staff and is continuing this practice for 2020. Being self-insured has many benefits, two of which are having greater flexibility and control over our health plan, and the ability to manage plan dollars when we are having both good claims years and challenging claims experience with the plan.

 

As part of a self-insured plan, the Town purchases “stop loss” coverage, also referred to as “reinsurance,” to protect the organization from large-dollar claims. This provides the Town a guarantee, or “safety net,” from bad years, which we know do happen from time to time. The health of any organization is cyclical, as are corresponding medical claims. The Town’s 2020 stop loss deductible is set at $100,000 per employee per year. Any medical claims exceeding that amount is covered by the stop loss insurance.

 

Our 2020 contract renewal for stop loss coverage with Aetna totals $1,754,580, requiring Town Council approval.

 

Discussion

 

This year, we have seen an increase in claims activity that are driving renewal costs. Claims also have an impact on the renewal of our stop loss coverage. The 2019 contract rate for stop loss coverage was $1,433,607. Due to the aforementioned dynamics driving our experience and an increase in the number of Town staff on the plan, the contract amount for stop loss coverage with Aetna for 2020 will be $1,754,580. After careful evaluation of this premium rate, our assessment is the rate for 2020 is within market parameters.

 

Conclusion

 

Moving forward with stop loss coverage with Aetna for 2020 allows us to continue to manage the Town’s health care plan in a manner where both the Town and employees are able to realize the best overall stop loss renewal rate for the 2020 plan year, which protects the Town and its employees from large catastrophic claims costs.

 

Budget Impact

 

The expenditure will come from the Employee Benefit Trust Fund in an amount not to exceed $1,754,580 for stop loss (reinsurance) coverage for the 2020 benefits plan year.

 

Staff Recommendation

 

It is recommended that Council authorize staff to enter into an agreement with Aetna Life Insurance Company for its stop loss coverage for the Town’s 2020 self-insured health care plan.

 

Proposed Motion

 

I move to approve a Resolution approving a contract between the Town of Castle Rock and Aetna Life Insurance Company for stop loss insurance services.

 

Attachments

 

Attachment A:  Resolution

Exhibit 1:  Agreement for Stop Loss Coverage with Aetna Life Insurance Company