CITY MANAGER’S OFFICE
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3120
CUPERTINO.GOV
CITY COUNCIL STAFF REPORT
Date: October 6, 2026
Subject
Approval of 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. 26-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 through a resolution adopted by the City Council. Under the Public Employees’ Medical and Hospital Care Act (PEMHCA), the City is subject to the equal contribution rule pursuant to Government Code section 22892(b)(1), which provides that the City’s contribution toward health insurance premiums for eligible retirees hired with the City of Cupertino prior to August 2004 must be equal to the contribution provided for active employees. Adoption of the draft resolution (Attachment A) fulfills reporting requirements associated under the Act, which provides 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, the City Council approved Memorandum of Understanding (MOU) agreements revising the salary and benefits for the Operating Engineers, Local Union No. 3 and the Cupertino Employees’ Association/IFPTE Local 21 groups. The 3- year agreements specify that the City’s maximum contributions shall be tied to the CalPERS Kaiser Permanente plan increases and shall be capped at no more than 20% of any such total increase in aggregate during the course of the 2025-2028 MOU. The City's health contribution for employee medical equal to the Kaiser Permanente premiums, is shown below:
• Employee Only - $1,187.63/month
• Employee plus one dependent - $2,375.26/month
• Employee plus 2 or more dependents - $3,087.84/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, significantly reducing the City’s health contribution premiums.
For example, 2027 Retiree Kaiser under the CalPERS Basic Plan is $1,187.63 per month whereas the CalPERS Medicare Kaiser Senior Advantage premium is $333.93 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 proposed adjustment will increase the City’s retiree annuitant medical contribution by approximately $4,300 in Fiscal Year 2026-27 and $8,600 for calendar year 2027. Through the Agreements approved by Council on September 3, 2025 and October 21, 2025, the City’s contribution to employee health coverage offered by Kaiser will remain at 100%, including a
1.61% increase in Kaiser premium rates from calendar year 2026.
No additional General Fund appropriation or budget adjustment is requested.
City Work Program (CWP) Item/Description
None
Council Goal:
None
TBD Item:
No
California Environmental Quality Act
The proposed action does not constitute a project subject to CEQA. _____________________________________
Prepared by: Anna Tang-Sam, Human Resources Analyst II
Reviewed by: Jonathan Orozco, Director of Finance
Kirsten Squarcia, Deputy City Manager
Approved for Submission by: Tina Kapoor, City Manager
Attachments:
A – Draft Resolution Employees and Annuitants Hired Prior to August 1, 2004