01-22-2013 Regular School Board Meeting
Agenda Item #24


Title
2013 Healthcare Trust Stop-Loss Renewal

Discussion

Brevard Public Schools purchases stop-loss insurance coverage for the self-funded group health plan to limit the financial exposure for any individual member incurring a catastrophic claim. The Specific Deductible for expiring plan year 2012 is $400,000 per individual, with an additional one-time annual deductible (Advantage Deductible) of $387,000. 

The current stop-loss insurance coverage is provided through Symetra Financial. A renewal quote for the existing coverage was provided with a 14.6% rate increase. However, after identifying and removing all broker commissions paid and increasing the Specific Deductible by $25,000, we are able to renew coverage at a slight decrease in premiums.

Based on our analysis, we believe the District has the potential to save money by taking additional risk on the claims. The following represents the number of claimants over $400,000 for the past four (4) plan years:
 
2012:  2 (YTD) 
2011:  2 
2010:  1
2009:  2


Our 2013 claims experience would require three (3) individuals to incur more than $425,000 each in paid claims to have a negative impact to our self-funded plan. While this is possible, we believe the benefit of a premium reduction exceeds the risk of having more than 4 catastrophic claimants in 2013. 



Recommendation

Renew the stop-loss coverage with Symetra Financial effective January 1, 2013 as follows: 

Assumed subscriber count: 7,615

Current

2013 Renewal

Difference

Claims Basis

12/18

12/18

 

Specific Deductible per Individual

$400,000

$425,000

$25,000

Advantage Deductible (Adv Ded)

$387,000

$387,000

$0

Estimated Annual Fixed Premium

$662,376

$607,124

-$55,252

Maximum Premium w/Adv Ded*

$1,049,376

$994,124

-$55,252

Number of claimants needed to have adverse impact of raising Specific Deductible $25,000 based on additional risk per claimant:

3

*If there are no claimants over $425,000, then the maximum premium is $607,124.


Financial Impact:
 
Contingent upon actual claims experience in 2013, the District has the potential to save up to $55,252.  If there are more than 3 individuals with paid claims in excess of $425,000, there is a potential cost up to $25,000 for each of those individuals.
  


Meeting Date(s)
Information - 12/11/2012
Consent after Information1/22/2013

Authority for Action
F.S. 768.28; 1001.42

Involves Expenditure of Funds Directly in the Classroom
No

Source of Funding
Other Sources

FY
Amount
Budgeted
Fund
Cost Center
Project
Function
Object
Program
12-13$607,124Yes7XX98500010027500772000

Contact
Susan Standley, Director of Compensation & Benefits x216