Summary Sheet- RFCA SUMMARY

CITY OF TEMPE
Meeting Date: 1/8/2026  
REQUEST FOR COUNCIL ACTION
Agenda Item: 8A2
ACTION:  Approve a one-year contract renewal with Humana to provide group Medicare Advantage 
plans to eligible City retirees and their eligible dependents.
FISCAL IMPACT:  The total cost of the contract will not exceed $3,000,000. The source of funds 
include both City and retiree contributions. Sufficient funds have been appropriated in the Health Fund, 
Cost Center 4168 (Retirees), for the anticipated expenditures in the current fiscal year and next fiscal 
year, contingent upon City Council approval of the City’s annual budget.
RECOMMENDATION:  Approve the contract renewal.
 
BACKGROUND INFORMATION:  (T25-011-01) On September 19, 2024, City Council awarded a 
contract to Humana to provide Medicare Advantage plans to eligible City retirees and their eligible 
dependents.  The initial contract was for a period of one year, with four, one-year renewal options.  If 
approved, this will be the first of four renewal options.  
The City subsidizes the cost of Medicare plan coverage at 100% for the retiree and 70% for the 
dependent for the majority of retirees. Those employees who had 10 years of service as of June 30, 
2009, and retired after July 1, 2009 are subsidized at a maximum of $394/month for retirees and 
dependent(s). The City receives a subsidy from the Arizona State Retirement System for providing these 
plans to its retirees; currently $100/month for the retiree or $170/month for the retiree and dependent.
There are approximately 422 enrollees receiving a Health Reimbursement Account (HRA) benefit from 
the City who will eventually transition to Medicare coverage. The City also continues to provide both 
pre-Medicare and Medicare retiree benefits to current employees who had at least 10 years of 
continuous service as of June 30, 2009, and who retire from the City (must be eligible to receive a 
retirement benefit from either the PSPRS or ASRS plans upon leaving City service).  The current 
enrollment is noted in the following table.
Plan Option
Description of the Plan
Enrollment
Medical Plan 
Option 1
Fully insured Medicare Advantage 
PPO Low Plan with RX
2
Medical Plan 
Option 2
Fully insured Medicare Advantage 
PPO Medium Plan with RX
175
Medical Plan 
Option 3
Fully insured Medicare Advantage 
PPO High Plan with RX
399
Contractor Performance
Performance of the Contractor has been evaluated by City staff as shown in the following table:
Criteria
Meets Contract 
Requirements
Does NOT Meet 
Contract 
Requirements

2
Contract personnel are responsive
X
 
Quality of products or services
X
 
Timeliness of performance                             
X
 
Resolving complaints or problems
X
 
Accuracy of pricing on submitted invoices.
X
 
Renewal Pricing 
Humana has requested a 12.75% increase to premiums for calendar year 2026.  Major factors 
attributing to the increase include continued higher trends for medical and pharmacy use and new 
biosimilar and brand medications to market, and uncertainty tied to Part D funding because of the IRA 
Part D changes in 2025.  Based on consultation with the City’s employee benefits consultant, Brown 
and Brown, staff considers the increase to be fair and reasonable based on market conditions.  
ATTACHMENTS: N/A   
STAFF CONTACT(S): Rebecca Strisko, Human Resources Director, (480) 350-8423
Department Director:  Laura Calder, Financial Services Director  
Legal review by:  Dave Park, Senior Assistant City Attorney
Prepared by:  Eric Kraenzle, Senior Procurement Officer