The meeting’s primary concern was the significant rise in health insurance claims, which has placed substantial financial pressure on Hackensack’s budget. The city operates a self-insured health plan, meaning it covers actual claims rather than paying fixed premiums. This approach has led to difficulties as claims have escalated dramatically in recent years. The city pays up to $175,000 per claim, with Sun Life Insurance covering costs beyond that threshold through a stop-loss policy. However, the city’s claims surpassed $9 million this year against a $5 million premium, resulting in a 200% loss ratio.

Jim Mangan, designated to provide insights, shared that the city experienced favorable years from 2014 to 2021, which allowed for the accumulation of surplus funds in a health benefits trust fund. This reserve has been depleted to approximately $300,000 due to increased claims since 2022, influenced by deferred medical procedures during the COVID-19 pandemic and general medical inflation. Mangan explained, “We had to go to the trust again in 2022, increase the budget in 2023,” highlighting the financial strain.

The council discussed the implications of out-of-network claims, identified as a factor in the city’s financial challenges. These claims allow providers to charge higher, unregulated fees, exacerbating costs. The city introduced Zealus, a company managing out-of-network claims, which adjusted reimbursement rates to curb excessive billing. Further suggestions were made to engage Evokor, a service to pre-certify claims, potentially managing costs more effectively.

The city had previously seen reimbursements delayed, affecting cash flow and interest income projections. It was acknowledged that while the city was not in deficit, the cash flow issue posed challenges. Budget transfers from over-budgeted areas, such as excess funds from a retirement in the tax collector’s office, were suggested as temporary solutions to cover shortfalls.

Discussions on the potential transition from self-insurance to public insurance plans were also explored. While Hackensack currently opts for self-insurance, many New Jersey municipalities are moving away from state health benefits due to rising costs. The possibility of creating a health insurance fund with other municipalities was mentioned but not pursued due to logistical challenges.

The council also considered the impact of Chapter 78 legislation on employees hired after 2010 and the implications for retirees. It was reiterated that retirees’ insurance coverage remains unchanged for life, a point emphasized during the discussion.

Resolution 508-25, authorizing Sun Life Insurance to renew the city’s stop-loss policy, was a agenda item. This resolution ensures the continuation of health insurance coverage into 2026. The council approved the resolution, recognizing it as essential to maintain coverage despite ongoing issues.