Clearwater benefits committee: 2021 claims rose, city readies rebid amid 12–15% projection

Sean Fleming of the Garen Group told the Clearwater Benefits Committee on Feb. 9 that the city’s self‑funded health plan finished 2021 with about $19.8 million in net claims and finished roughly $1.6 million better than expected overall.

Fleming explained the plan’s financing: the city sets funding based on projected claims, pays an administration fee (about $935,000 in 2021 to Cigna) and purchases stop‑loss reinsurance that covers individual claims above a $300,000 attachment point. "The city pays the first 300,000 of any individual's claims, and anything beyond that is picked up by the reinsurance," Fleming said.

Committee members pressed for drivers; Fleming cited a cluster of catastrophic claims in 2021 (including individual claims of roughly $1.1 million, $660,000 and $520,000) and a broad rise in medical and pharmacy utilization. He gave year‑over‑year figures: medical costs rose about 20.4% and pharmacy about 9.1% (roughly a 17.5% overall increase), and noted a December spike that was nearly $500,000 over budget for that month.

On forward budgeting, Fleming said early projections based on current trend data would place pressure on plan costs "somewhere in the 12 to 15% range" for a near‑term rate adjustment, though he emphasized the projection could change as more months of claims are incorporated.

Because the city is self‑funded, Fleming explained, most carriers cannot materially change underlying claim levels; rebidding mainly affects administration fees, stop‑loss pricing and network discounts. He urged an evaluation of total disruption versus marginal savings, warning that modest admin savings (for example, $100,000) can be small relative to a roughly $20 million claim pool.

Fleming outlined a tentative procurement timeline and said staff aim to present a recommendation to city council in early August, while continuing to monitor monthly claims and keep the committee informed. No formal action or vote was taken at the meeting.

Next steps: staff and Garen Group will continue monthly claims monitoring, complete the administration/reinsurance bid, and return to the committee with updated claims trends and the finalized procurement schedule.