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ADOPTED | BUDGET

Overview of the Self Insurance Fund

The Self-Insurance Fund is an internal service fund established July 27, 1987. This fund pays for
city-wide expenses related to medical coverage for employees, retirees and dependents, workers’
compensation coverage, property and casualty coverage, life insurance and all administrative
expenses associated with the City’s self-insurance program. Revenues come from charges to
other City funds, employee and retiree insurance premiums, and reimbursement from insurance
carriers such as medical stop loss or for property losses.

The total Self-Insurance Fund budget for 2022/2023 is $15,228,074 of the total, 76.5% is for health
and medical expenses including prescription costs, 4.4% for personnel expenses, 3.4% for
workers’ compensation expenses, and 15.7% for other insurance related expenses.
The City’s health insurance expenses continue to remain well below budget projections even
without increasing the City’s health insurance expenses budget for a third straight year. Two
contributing factors for this reduction include fewer than normal catastrophic claims (those claims
over $25,000) and a reduction in the total number of retirees on the City’s health plan since the
changes made in 2018. Prior to the implementation of the new Retiree Health Plan in 2018, the
City had 158 retirees (not including dependents) on our retiree health plan. Currently there are 85
retirees (not including dependents) on our health plan which is a 46% reduction in the number of
participants. Impacting the enrollment in the retiree health plan since 2018 has been the changes
in eligibility requirements and the cost-sharing arrangements. Over the last 2 years, approximately
30% of our employees have enrolled in the pre-65 retiree health plan (the rest either weren’t
eligible or chose to drop our health coverage). All savings will be transferred into the City’s self-
insurance reserve account.

The City will continue to monitor our health insurance expenses as well as the overall state of the
health insurance industry and will take appropriate action with regards to the City’s self-insurance
fund should the need arise. In addition, we will continue to emphasize to our employees the
importance of making healthy life-style choices and encourage participation in the City’s wellness
initiatives which include, skin cancer screenings, biometric screenings, a weight loss and fitness
program, health and benefits fair, and annual flu shots for employees, retirees and dependents.

167 NRH | TEXAS