Consultants present 2026 health-plan renewal options; pharmacy changes and fund balance shape board choices

Consultants for the district presented a renewal analysis for the district’s self‑funded health plan, showing an actuarial funding need of 14.49 percent for the 2026 plan year that the consultants say can be netted down to a 7.35 percent increase after pharmacy savings and applied opt‑out funding. The presentation covered medical and pharmacy claims through June, stop‑loss reimbursements, catastrophic claimant counts, and the effect of a recently enacted Florida PBM transparency law on administrative fees.

Why it matters: a larger funding increase would raise the total monthly funding rate paid to the plan and could push more of the cost onto employees or into the district’s general operating funds; a smaller increase relies on one‑time or recurring internal offsets such as opt‑out funding and available fund balance.

Consultant Allison Prophet walked the board through claims and budget metrics. “Your current month expense to budget is running at 79.4%, and your plan year expense to budget is 96%,” Prophet said, citing the report through June. She told the board the first six months showed plan funding of roughly $16 million versus $15.37 million in actual plan costs, leaving about $630,000 of favorable variance for that period.

The consultants emphasized pharmacy as a major driver. Mark Dilling told the board, “it’s very important for us to focus on the pharmacy because it does account for a third of your overall expenses.” Dilling described a PBM market review and said Express Scripts was the most competitive finalist; he and the district’s consulting coalition negotiated a new arrangement that raised projected rebates and lowered ingredient costs, but the Florida Legislature’s SB 1550 (PBM transparency) requires pass‑through of margins and produced a new visible administrative line item of roughly $457,000 in the consultant’s analysis. Dilling said the final negotiated position produced a 26.6 percent reduction in pharmacy costs on the snapshot utilization used for the bid, but that specialty drug launches and other trends could change future spend.

The consultants also reviewed stop‑loss and catastrophic claims. Prophet said catastrophic claims in 2024 (claims above half the specific deductible) totaled about $4.5 million across 16 claimants, representing roughly 13 percent of trend; stop‑loss recoveries on those items were about $164,000. For 2025 the fund had two claimants above the $400,000-specific deductible at the time of the report, including one at about $480,000 with roughly $80,000 recovered so far; Prophet also noted about 11 claimants between $100,000 and $200,000 in the first six months.

Actuarial renewal and funding options: the actuaries calculated a straight renewal increase of 14.49 percent to meet projected claims and expenses through 2026. Consultants explained how the district applies opt‑out funding (funds the district accrues for eligible but unenrolled individuals) and other offsets to reduce the immediate rate increase. Prophet said the opt‑out funding was $375 per eligible person on the consultant’s last data, projected across roughly 508 eligibles to produce about $2.286 million of additional funding. When that funding is applied, the consultants presented a net funding‑rate increase recommendation of about 7.35 percent instead of the 14.49 percent actuarial result.

The consultants presented scenarios showing alternatives: taking the full 7.35 percent would avoid drawing down fund balance; taking a lower increase (for example 5 percent) would create a projected plan shortfall that would require a fund balance drawdown (the consultants showed a shortfall of roughly $752,000 under a 5 percent increase scenario). Consultants reminded the board that the Office of Insurance Regulation filing requires a minimum reserve (the consultants said the statutory minimum is 60 days of claims and that, in their view, six months of claims is a prudent buffer for a plan exposed to high specialty‑drug risk).

Public comment and board reaction: Carmen Ward, who identified herself as chair of the district insurance committee, urged no increase. “The union portion of the insurance committee is promoting a 0% increase because of the vast fund balance in the insurance program,” Ward said during public comment. Crystal Tessman echoed that request, noting contract language and the importance of maintaining a no‑cost employee plan for lower‑paid staff. Several board members said they were weighing the tradeoffs: preserving fund balance and buffering employees for one year versus the risk of deeper mid‑term increases if the plan is underfunded.

Information requests and next steps: committee and board members asked staff to provide historical rolling‑12 and multi‑year data, a medical‑only trend breakout (excluding pharmacy savings), and a clearer line‑item view of the new PBM pass‑through fees and coalition fees. Consultants said they would supply additional historical reports and a more detailed medical‑only projection. No formal board vote or binding action was taken in the workshop.

Ending note: consultants recommended the board consider the actuarial result, the impact of pharmacy market changes and SB 1550, and the district’s appetite for drawing down reserves when choosing a funding strategy for 2026. The board scheduled follow‑up information requests before any final decision was listed on a subsequent agenda.