Title
From the Director of Benefits, Department of Human Resources, requesting a waiver of MCGCO 56.30(9) and authorization to execute contract extensions with Voya to purchase a stop loss insurance policy for coverages effective January 1st, 2020 through December 31st, 2020 at an annual cost estimated at $2,543,152 per year.
Body
Issue/Background
Milwaukee County purchases stop loss insurance as a means of mitigating the risk exposure of catastrophic medical claims incurred under the County’s self-funded health plans. In terms of process, the stop loss component has been treated as an ancillary agreement to the total health care contract, as the health care contract controls the County's risk exposure related to excessive health care costs. Stop loss coverage is a separate component from the medical Third-Party Administration (TPA) contract because it is a purchased insurance policy, as opposed to a professional service contract. Stop loss policies are generally negotiated and written on an annual basis.
Historically, the market for stop loss insurance in general has been challenging. The County’s stop loss policies have been no exception. In the 2020 renewal process, Voya was the only firm to submit a quote for this coverage.
The market for stop loss insurance continues to be difficult for 2020 based on the aging retiree population which is included under this policy. Willis of Wisconsin Consulting Group negotiated a quote from Voya for a $500,000 deductible.
Voya’s 2020 Option
(1) $500,000 Deductible:
• Quoted rate of $31.57 per member per month (PMPM); a $661,364.76 decrease in premium from last years $350,000 deductible rate for 2019
• Adjusts the County’s risk exposure to keep pace with inflation
**If utilizing an external stop loss carrier other than UHC, the County’s current medical provider, UHC will charge and additional $1 per employee per month (PEPM) to send reports to another vendor for a total cost of $80,556. **
Summary of Request
The Benefits Division, the Budget Office and the Comptroller evaluated all options and recommendations presented by Willis Towers Watson that Milwaukee County should continue stop loss coverage with Voya. Consequently, the Benefits Division recommends approval for purchasing the stop loss insurance policy quoted by Voya with a $500,000 deductible effective January 1, 2020.