Title
Employee Health Insurance Renewal FY2026
History
2026 Benefit Renewal Proposals (based on expected costs)
MMA *MMA **IPBC
(VOP covers (VOP Covers (VOP covers
first $100,000 first 125,000 first $50,000
per claim) per claim) per claim)
Net% Increase: 13.56% 10.75% 7.1%
Total Medical: $6,881,895 $6,737,777 $6,406,063
Total Ancillary: $482,466 $482,466 $453,562
Combined Total: $7,364,361 $7,220,243 $6,859,625
*Marsh McClennan Agency recommends increasing the initial cost that the Village is responsible for from $100,000 to $125,000 with no change to current employee benefits with an overall net increase equal to 10.75% over 2025.
**Intergovernmental Personnel Benefit Cooperative PPO plan is self-insured up to $2 million and then commercial stop loss is purchased for any claims over $2 million. The HMO plan is one group pool that is self-insured up to $500,000 and then commercial stop loss is purchased for any overage. IPBC offers no change to current employee medical plans; Dental changes from BC to Delta Dental; Vision changes from BCBS to VSP; Life changes from Dearborn to Securian; Disability Admin to be determined at a later date for overall net increase equal to 7.1% over 2025.
History
For the pending fiscal year 2026 employee health insurance renewal, the Village requested quotes from The Marsh McClennan Agency (MMA) who acquired the Horton Group in August 2024, and the Intergovernmental Personnel Benefit Cooperative (IPBC). Both agencies conducted a competitive market analysis for health insurance and all benefit lines for the Village of Orland Park’s (VOP) 2026 plan year.
In both cases, the results showed the Health Insurance market has high volatility due to several high-cost claimants as well as higher hospital, provider, and pharmacy costs. In addition, patient risk has also escalated. There continues to be a greater use of specialty drugs which accounts for approximately 68% of the plan’s overall pharmacy spend. Humira, an autoimmune drug, is the top spend for the third benefit year in a row. In addition, GLP-1 drug use (Ozempic, Mounjaro) is also prevalent for treatment associated with diabetes. These drugs cost on average $1k+ per month and their use is ongoing.
Due to high-cost claimants causing pressure to the whole plan and current market negatives, the VOP plan is running above the expected target this year by several percentage points resulting in a deficit in BCBS projections.
All existing benefits, carriers and plan designs were examined, and programs of choice include:
- Medical and Rx
- Dental Administration
- Vision
- Life and AD&D/Voluntary Life and AD&D
- Short Term Disability Administration
- Flexible Spending Account (FSA)
- Employee Assistance Program (EAP)
- Biometric Screenings (Wellness Initiatives)
- Health Benefit Navigation Program (Healthjoy; optional)
Marsh McClennan Renewal Details
Marsh McClennan’s (MMA) preliminary medical renewal was released with an overall increase of 16.88% or $1,027,027. After continued negotiations and market comparisons, the revised and final renewal came in at +$824,468 or 13.56%. This assumes no change in benefit plan design, stop loss, or network. Several reasons for higher trend and increases are advances in treatments, increased utilization returning to pre-pandemic rates, increased mental health services, and new high- cost drugs.
A request for an additional stop loss alternative to lower monthly fixed cost was provided. It would increase the potential liability for the Village for claims over the current $100k threshold up to $125K. This reduced the increase from revised renewal to $653,959 or 10.75%.
Based on claims through 7.31.2025, the Village would have paid $141K in claims through July. Annual fixed stop loss savings for changing to $125K from current $100K are $351,000.
MMA Rx Solutions reviewed current BCBS offering and finds the contract falls short an estimated $80,000, which is not included in the above cost analysis.
The MMA summary of results is as follows:
I. 2026 Medical Market Analysis & Recommendations
i. Marketing for 2025 showed no improvement in cost or benefits for the Village. The Village continues to have multiple on going large cost claimants impacting marketing results. Review of a small potential cooperative did not prove beneficial for the Village given current and past claim history. Cooperative review can be done again for 1.1.2027. Aetna and UHC RFP requests are pending.
2. Ancillary Market Analysis & Recommendations
i. Marketing for 2025 showed no improvement for the Village.
ii. There was no change in premium rates for life, voluntary life and vision plans for 2026.
iii. There is no change in the dental administration fee for 2026 with a slight increase of .3% to the dental claim value. The 2026 total dental administrative and claim cost is $366,644 or .26% over 2025 projected cost.
iv. BCBS continues to provide bundling discounts for the Village by retaining the vision, dental and life benefits. The discount on administrative cost and stop loss is $26,861.
IPBC Renewal Details
The Intergovernmental Personnel Benefit Cooperative (IPBC) will be comprised of 180 members in FY26. The Village expressed interest in joining the IPBC for all benefits including medical, life, dental, and vision benefits and provided all required demographic and census information for an accurate quote to be prepared. IPBC’s presented proposal includes no changes to plan design, network, or carrier for our current medical plans. The medical insurance renewal was released with an increase of 9.0% to the PPO and HDHP Plans, and an increase of 3.1% to the HMO plan for a subtotal overall renewal increase of 7.1% to medical. There is a 90-day implementation period to enroll in the IPBC pool.
These costs are reflective of the Village being responsible for the first $50,000 of claims and any overage becomes an IPBC wide claim. The IPBC Stop Loss breaks down as follows: the PPO plan is self-insured up to $2 million and then commercial stop loss is purchased for any claims over $2 million. The HMO plan is one group pool that is self-insured up to $500,000 and then commercial stop loss is purchased for any overage.
The IPBC summary of results is as follows:
I. 2026 Medical Market Analysis & Recommendations
i. Due to the larger member pool, negotiated rates are lower (9%/PPO and 3.1%/HMO), but our high claimant costs pose added risk similar to the stand-alone plan that we currently have.
ii. All funds are professionally managed and invested. A required fund balance of two months is necessary after six full years of participation in the pool.
2. Ancillary Market Analysis & Recommendations
i. The 2026 IPBC dental premium equivalent rates are at a 4.9% increase over 2025. IPBC proposes continuing the current plan design through Delta Dental on an administrative service only (ASO) basis.
ii. The 2026 IPBC vision premium decreases by 8.4% over 2025. IPBC proposes a similar fully insured vision benefit plan through VSP at a multi-year rate lock.
iii. The Village offers basic life and AD&D benefits through Dearborn National (now BCBS) to employees. IPBC proposes to offer the same benefits through Securian. Additional supplemental life benefits are available for purchase through IPBC.
iv. Short-term disability was not quoted by the IPBC at this time and will need to be administered by a stand-alone third-party vendor as selected by the Village at a later date.
This agenda item is being considered by the Village Board of Trustees on September 22, 2025.
Financial Impact
The FY2026 budget will include the amount necessary to fully fund the various benefits listed above.
ORIGINAL MOTION (IPBC was selected)
Select One (1) Option.
MMA Option
I recommend the Village Board approve an increase to the Stop Loss liability threshold from $100,000 to $125,000, and employee annual medical premium in the amount $6,737,777, an increase of $653,959 or 10.75% from $6,057,427 in 2025. Also to recommend the employee ancillary spend for Dental, Vision, Life and Disability Administration in the amount of $482,466 increase which is a 9.0% increase on Dental, 0% increase on Vision, Disability Administration and Core Life and AD&D, and optional Health Benefit Navigation Program in the program in the amount of $50,000, adjusting employee contribution equivalents to the increase in premium cost, effective January 1, 2026;
OR
IPBC Option
I recommend the Village Board approve an ordinance to move the employee insurance benefit program from a stand-alone plan to participate in the Intergovernmental Personnel Benefit Cooperative (IPBC), effective January 1, 2025. Also to recommend the approval of the employee medical annual premium in the amount of $6,406,063, an increase of 7.1% or $348,636, from $6,057,427 in 2025. Lastly, to recommend the employee ancillary spend for Dental, Vision, and Life Administration in the amount of $413,562, which is a 4.9% increase on Dental, 8.4% decrease on Vision, and 40.2% decrease on Core Life and AD&D, with the Village pursuing Disability Administration from a stand-alone carrier in the approximate amount of $40,000, and optional Health Benefit Navigation Program in the program in the amount of $50,000, adjusting employee contribution equivalents to increase the premium costs, effective January 1, 2026;
AND
Authorize the Village Manager to execute said agreements, subject to Village Attorney review.
Recommended Action/Motion
I recommend the Village Board approve an ordinance to move the employee insurance benefit program from a stand-alone plan to participate in the Intergovernmental Personnel Benefit Cooperative (IPBC), effective January 1, 2025. Also to recommend the approval of the employee medical annual premium in the amount of $6,406,063, an increase of 7.1% or $348,636, from $6,057,427 in 2025. Lastly, to recommend the employee ancillary spend for Dental, Vision, and Life Administration in the amount of $413,562, which is a 4.9% increase on Dental, 8.4% decrease on Vision, and 40.2% decrease on Core Life and AD&D, with the Village pursuing Disability Administration from a stand-alone carrier in the approximate amount of $40,000, and optional Health Benefit Navigation Program in the program in the amount of $50,000, adjusting employee contribution equivalents to increase the premium costs, effective January 1, 2026;
AND
Authorize the Village Manager to execute said agreements, subject to Village Attorney review.