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<br /> liquidity and the County's ability to pay claims if the total cost of claims exceeds the total funding
<br /> generated by the premium equivalents.
<br /> A reserve policy or the fund ratio target should range between 1.5 and 3.0 over IBNR to ensure
<br /> the ability to pay for future claims based on current claims experience. This means that the
<br /> County's reserve target should be between $1.3 million and $2.7 million based currently on the
<br /> January 2025 IBNR liability of$898,348.
<br /> The County's current fund ratio is 0.5 through January 2025. A reserve amount of two times the
<br /> expected IBNR liability is recommended as a target to build a strong reserve position. Based on
<br /> January 2025 IBNR liability, this equates to building reserves to $1,796,696.
<br /> JAN 2025 IBNR FUNDS NEEDED Reserve Target
<br /> $898,348 $490,481 0.5
<br /> $898,348 $898,348 1.0 1X
<br /> $898,348 $1,347,522 1.5 1.5X
<br /> $898,348 $1,796,696 2.0 2X
<br /> $898,348 $2,695,044 3.0 3X
<br /> Overview of Renewal Drivers for FY2025-26
<br /> The overall plan continues to show increases in medical and pharmacy claims as well as growth
<br /> in plan enrollment.
<br /> Gross Claims Comparison
<br /> Gross claims are defined as the total costs of claims incurred before any reinsurance or risk
<br /> sharing is applied and directly correlate with the need to increase premium equivalent rates. The
<br /> table below shows the costs of gross claims, both for medical and pharmacy services, over the
<br /> last five (5) fiscal years.
<br /> FY Med Claims Rx Claims Total Claims %Change Med Claims Rx Claims
<br /> 2020 $7,132,341 $3,490,917 $10,623,258
<br /> 2021 $10,717,277 $3,311,343 $14,028,620 32.06% 50.26% -5.14%
<br /> 2022 $8,673,153 $3,760,867 $12,434,020 -11.37% -19.07% 13.58%
<br /> 2023 $10,275,362 $4,661,882 $14,937,244 20.13% 18.47% 23.96%
<br /> 2024
<br /> $9,804,063 $5,773,466 $15,577,529 4.29% -4.59% 23.84%
<br /> Some notable factors contributing to increased claims costs are:
<br /> • Significant change in medical claims from 2021 to 2022 suggests a rebound from
<br /> employees delaying medical services during COVID. In subsequent years, claims indicate
<br /> that usage is beginning to stabilize.
<br /> • Pharmacy claims are increasing at faster rates than medical claims. A contributing factor
<br /> is the increasing costs and usage of GLP-1 medications prescribed for type 2 diabetes and
<br /> weight loss. Approximately 80% of the increase in pharmacy claim costs is attributable to
<br /> these medications. Although the medications are costly at this time, employees have
<br /> access to services that show positive impact to their health.
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