CC MEETING: December 2, 2025
DATE: November 21, 2025
TO: Erin Rinehart, City Manager
FROM: Samantha Dean, Director of Workforce Services
Chrystal Davis, Assistant City Manager
Title
Consider Authorizing The City Manager To Enter Into An Agreement With Cigna Health and Life Insurance Company Pursuant To RFP 25-056 For Stop Loss Insurance In An Amount Not To Exceed $1,293,855.00.
Body
BACKGROUND:
The City’s stop loss insurance is currently provided through Cigna Healthcare. Plan year to date through September, the City has experienced a significant increase in catastrophic claims over the $225,000.00 individual stop loss deductible level for the health plan. The City has paid approximately $767,000.00 in premiums to Cigna and received reimbursements totaling $3.45 million.
In coordination with the Benefits Consultant, HUB International, the City released RFP 25-056 in August for stop loss insurance. The City received one quote and 23 declines from the market due to the City’s substantial loss history and risk of on-going claims. After review and analysis of the submission, staff recommends awarding stop loss insurance to Cigna for the 2026 plan year.
Cigna released a 44% or $447,384.00 adjustment to its individual and aggregate stop loss premium rates for the 2026 plan year. It is important to note that the City retains a contract with a maximum renewal rate cap of 45% for individual stop loss. This cap prevented a much larger increase from Cigna.
Staff and HUB have reviewed savings analysis from alternative deductible levels and are recommending increasing the deductible from $225,000.00 to $275,000.00 in 2026. It is projected the City will save $102,036.00 from this change, which includes the additional claims liability the plan would assume from the higher deductible.
Additionally, it is recommended the City discontinue its Aggregate stop loss coverage at a savings of $37,035.00 annually. The Aggregate coverage reimburses the City if total claims payments for the plan (less individual stop loss reimbursements) exceed a deductible of 125% of projected claims at year end. Since inception of the self-funded health plan, the City has not incurred an aggregate claim reimbursement and has reached a covered population size where many municipalities consider dropping the aggregate coverage due to increased accuracy when predicting claims expense. Over the past 5 years, the City’s paid claims have run at 76% of the aggregate deductible and is substantially aligned with the carrier’s prediction of 75%.
Overall, the projected savings from the adjustments to the individual and aggregate coverage are projected to save the City $139,071.00 for the 2026 plan year.
FINANCIAL IMPLICATIONS:
Based upon current enrollment, Cigna’s final quote for stop loss insurance will cost the City $1,176,232.00 annually and represents a 15.5% or $158,312.00 annual increase over current premium cost. This cost includes increasing the Specific deductible level from $225,000.00 to $275,000.00 and elimination of Aggregate coverage.
Staff is recommending approval in an amount not to exceed $1,293,855.00 for stop loss insurance which includes a 10% contingency for enrollment growth. Funds for stop loss will be paid out of the Employee Health Fund, which is funded by employer and employee contributions.
Participation in the agreements for Cigna guarantees rates for 1 year with a 45% rate cap, no new lasers at renewal and includes 2 two-year renewal options. This agreement begins January 1, 2026.
STAFF RECOMMENDATION/ACTION DESIRED:
Staff recommends that City Council authorize the City Manager to enter into an agreement with Cigna Health and Life Insurance Company pursuant to RFP 25-056 for Stop Loss Insurance in an amount not to exceed $1,293,855.00 annually.