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Consider a memorandum/resolution awarding RFP 25-42 to Blue Cross and Blue Shield of Texas (BCBSTX), for an excess risk policy (stop loss insurance) for medical and pharmacy claims under the City health insurance plan, effective October 1, 2025, in the amount of $1,356,969.00.
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DATE: September 16, 2025
TO: Kent Cagle, City Manager
FROM: Kate McDaniel, Executive Director of Human Resources
SUBJECT: Award RFP 25-42 for an excess risk policy (stop loss insurance) for medical and pharmacy claims under the City health insurance plan with Blue Cross and Blue Shield of Texas
BACKGROUND AND FINDINGS:
On June 3, 2025, Council approved Blue Cross Blue Shield of Texas (BCBSTX) as the City’s Group Employee Medical and Pharmaceutical benefit provider, effective October 1, 2025. The City must purchase stop-loss insurance in the event of high claims to support the self-insured health care and pharmaceutical plan in FY26.
Stop-loss insurance protects the City against catastrophic or unpredictable losses. The City of Killeen will protect its plan with both specific and aggregate stop-loss coverage. Specific Stop-loss protects the City against a high claim on any one individual. Aggregate stop-loss provides a ceiling on the dollar amount of expenses that the City would pay, in total, during a contract period.
In partnership with the City’s Employee Benefits Consultant, Lockton Dunning, on July 28, 2025, the City initiated a Request for Proposal (RFP) for firms experienced in stop-loss insurance coverage for the City of Killeen employees and retirees. Staff received and reviewed a proposal from BCBSTX, ($1,356,969), the sole bidder. The review and evaluation of the proposal were based on product offerings, the reputation of the vendor, and cost savings for the City and the employees.
After a thorough analysis of the stop-loss insurance proposal and option, staff recommends entering into an agreement with BCBSTX for FY26 for a term of one year in the amount of $1,356,969. Stop-loss insurance with BCBSTX provides cost-effective insurance for the City.
THE ALTERNATIVES CONSIDERED:
N/A
Which alternative is recommended? Why?
Staff recommends the City award RFP 25-42 to BCBSTX for stop-loss insurance for medical and pharmacy claims under the City health insurance plan because it provides the most cost-effective stop-loss insurance for the City.
CONFORMITY TO CITY POLICY:
Yes.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
The cost for FY26 is $1,356,969.
Is this a one-time or recurring revenue/expenditure?
Recurring.
Is this revenue/expenditure budgeted?
Yes
If not, where will the money come from?
N/A.
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
Yes. The FY 2026 Health Insurance Fund budget includes $1,342,087 for Stop Loss Insurance (account 615_55430_170_171_000000). The estimate used during the budget process was slightly lower than the actual premium, resulting in a $14,822 shortfall. The fund is capable of covering this minimal difference, with the claims account expected to be the likely funding source in the next fiscal year. Should an appropriation of fund balance be necessary, it will be addressed in the FY 2026 Year-End Budget Amendment; however, this is not anticipated.
RECOMMENDATION:
Staff recommends the City Council award RFP 25-42 to BCBSTX for an excess risk policy (stop loss insurance) for medical and pharmacy claims under the City health insurance plan effective October 1, 2025, in the amount of $1,356,969 and authorize the City Manager or his designee to execute the contract and any necessary change orders in accordance with state and local law.
DEPARTMENTAL CLEARANCES:
Purchasing
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Evaluation Tabulation
Presentation