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TO: Mayor John Laesch
FROM: Elizabeth Coronado Abrego, Director of Human Resources
DATE: August 27, 2025
SUBJECT:
A Resolution Authorizing Agreement for Administrative Services with Blue Cross Blue Shield of Illinois(BCBSIL) for HMO, PPO and Value HSA(HDHP) Group Health, and Stop Loss Plan Administration for period January 1, 2026 through December 31, 2026.
PURPOSE:
To authorize an agreement for administrative services with Blue Cross Blue Shield of Illinois for the City's HMO, PPO and Value HSA(HDHP) health insurance plans and stop loss insurance coverage.
BACKGROUND:
The City of Aurora purchases stop loss protection from Blue Cross Blue Shield of Illinois so that one large claim does not disrupt the health plan’s budget. The current Individual Stop Loss level is $325,000 per claimant. Once a claimant’s cost exceed $325,000 during the plan year BCBSIL pays the claim not the city’s self-insured account. The city has had a $325,000 ISL deductible for over 10 years yet treatment cost continues to rise resulting in increasing premium cost.
The Stop Loss is required to be with BCBSIL on the HMO, thus if the Stop Loss was marketed in year 2 of the BCBSIL plan, this would allow BCBSIL to change the three year commitment/guarantees provided under the 2025 plan change. The Stop Loss renewal is in line with the overall insurance market for 2026.
DISCUSSION:
BCBSIL renewal for the Individual Stop Loss (ISL) is 23.9% for an estimate annual premium of $2,246,601 for the HMO, PPO and HDHP plans. The city can reduce the renewal to a 3.7% increase, an estimated annual premium of $1,880,869, by increasing the ISL to $375,000. This will result in a $365,732 savings. Increasing the ISL to $375,000 will result in the city being responsible for claims between $0 to $375,000 instead of $0 to $325,000. Based on historical data below, the city will, on average, benefit by approximately $165,000 annually when factoring the increase in claim expense against the savings in ISL premium.
|
Year |
2024 |
2023 |
2022 |
2021 |
|
Savings moving to $375k ISL* |
$365,732 |
$365,732 |
$365,732 |
$365,732 |
|
Number of claims affected |
9 |
4 |
1 |
4 |
|
Increase in claim cost |
$354,525 |
$200,000 |
$50,000 |
$200,000 |
|
Net Savings |
$11,207 |
$165,732 |
$315,732 |
$165,732 |
*Savings assumed based on 2026 enrollment projections
IMPACT STATEMENT:
No impact.
RECOMMENDATIONS:
The HR team and Assured Partners recommends the city renew the Individual Stop Loss with BCBSIL at the $375,000 deductible. The rates are as follows:
HMO PEPM: $70.58
PPO/HDHP PEPM*: $140.89
*Per Employee, Per Month
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing Agreement for Administrative Services with Blue Cross Blue Shield of Illinois (BCBSIL) for HMO, PPO and Value HAS (HDHP) Group Health, and Stop Loss Plan Administration for period January 1, 2026 through December 31, 2026.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, it is in the best interests of the City of Aurora to enter into a contractual relationship by and between the City of Aurora and Blue Cross Blue Shield of Illinois(BCBSIL) for administration of HMO, PPO and Value HSA(HDHP) Group Health and Stop Loss Plan Administration;
WHEREAS, the 2026 proposed City budget will provide funding for this item in employee health account numbers 602-0000-410.28-02; 602-0000-410.28-04; 602-0000-410.28-21; and retiree health account numbers 704-0000-410.28-52; 704-0000-410.28.54; 704-0000-410.28-62; 704-0000-410.28-64; 704-0000-410.28-72 and 704-0000-410.28-74.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows:
I. That the Mayor is hereby authorized to enter into an administration contract with Blue Cross Blue Shield of Illinois(BCBSIL).
II. That said contract is for the period January 1, 2026, through December 31, 2026.