ADMINISTRATIVE SERVICES DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3220 • FAX: (408) 777-3109
CUPERTINO.GOV
CITY COUNCIL STAFF REPORT
Date: October 21, 2025
Subject
Adopt a resolution increasing the employer's contribution for medical and hospitalization insurance consistent with the Public Employees’ Medical and Hospital Care Act (“PEMHCA” or the “Act”) for retired annuitants hired with the City of Cupertino prior to August 2004.
Recommended Action
Adopt Resolution No. 25-XXX increasing the employer's contribution for medical and hospitalization insurance for retired annuitants hired with the City of Cupertino prior to August 2004.
Background
Each year, CalPERS requires public agencies to notify them of any employer health contribution by an adopted resolution by City Council. One of the requirements of the PEMHCA is the equal contribution rule pursuant to Government Code section 22892(b)(1). This rule requires a PEMHCA employer to contribute the same amount toward health insurance premiums for its retirees hired with the City of Cupertino prior to August 2004 as it does for its active employees. Health Premium Adoption of the attached resolution fulfills reporting requirements associated with the Act that “a contracting agency shall perform the functions necessary to enroll its employees and submit reports as may be required by the board.” On September 3, 2025 and October 21, 2025, City Council approved tentative agreements revising the salary and benefits for the Operating Engineers, Local Union No. 3 and the Cupertino Employees’ Association/IFPTE Local 21 groups. The tentative agreements included an increase in the City's health contribution for employee medical equal to the Kaiser Permanente premiums, as shown below:
Employee Only - $1,168.86/month
Employee plus one dependent - $2,337.72/month
Employee plus 2 or more dependents - $3,039.04/month
The same benefit has been extended to the Unrepresented, Appointed, Elected Official, and Retiree Annuitants hired with the City of Cupertino prior to August 2004.
Retiree Annuitants who reach age 65 and are Medicare eligible, are placed in the CalPERS Supplement/Managed Medicare health program. Under this program, Medicare becomes primary for health coverage, therefore, significantly reducing the City’s health contribution premiums. For example, 2026 Retiree Kaiser under the CalPERS Basic Plan is $1,168.86 per month whereas the CalPERS Medicare Kaiser Senior Advantage premium is $356.83 per month.
Reasons for Recommendation and Available Options
Adoption of the attached resolution fulfills CalPERS reporting requirements associated with the Act.
Sustainability Impact
No sustainability impact.
Fiscal Impact
The adjustment will increase the City’s retiree annuitant medical contribution by approximately $45,000 in Fiscal Year 2025-26. Through the Tentative Agreements approved by Council on September 3, 2025 and October 21, 2025, City’s contribution to employee health coverage offered by Kaiser will be 100%, including a 7.94% increase in Kaiser premium rates.
No additional budget adjustments from the General Fund are requested as the adjustment will be paid out of the retiree health 115 trust fund.
City Work Program (CWP) Item/Description
None
Council Goal:
None
California Environmental Quality Act
No California Environmental Quality Act impact.
_____________________________________
Prepared by: Anna Tang-Sam, Human Resources Analyst II
Reviewed by: Kristina Alfaro, Director of Administrative Services Floy Andrews, Interim City Attorney (As needed)
Approved for Submission by: Tina Kapoor, Interim City Manager Attachments:
A – Draft Resolution Employees and Annuitants Hired Prior to August 1, 2004