Title
Consider a memorandum/resolution awarding RFP 27-11 to Blue Cross 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, 2026, in the amount of $1,509,582.
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DATE: September 15, 2026
TO: Kent Cagle, Interim City Manager
FROM: Kate McDaniel, Executive Director of Human Resources
SUBJECT: AWARD RFP 27-11 FOR AN EXCESS RISK POLICY (STOP-LOSS INSURANCE) FOR MEDICAL AND PHARMACY CLAIMS UNDER THE CITY HEALTH INSURANCE PLAN TO BCBSTX IN THE AMOUNT OF $1,509,582.
BACKGROUND AND FINDINGS:
On June 2, 2026, Council approved Blue Cross Blue Shield of Texas (BCBSTX) as the City’s Group medical and pharmaceutical benefit provider, effective October 1, 2026. The City must purchase stop-loss insurance in the event of high claims to support the self-insured health care and pharmaceutical plan in FY27.
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 provided 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 August 2, 2026, 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 two proposals. The review and evaluation of the proposals were based on product offerings, the reputation of the vendor, and cost.
After a thorough analysis of the stop-loss insurance proposals, staff recommend entering into an agreement with BCBSTX for FY27 for a term of one year in the amount of $1,509,582. Stop-loss insurance with BCBSTX provides cost-effective insurance for the City.
THE ALTERNATIVES CONSIDERED:
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Which alternative is recommended? Why?
Staff recommend the City award RFP 27-11 to BCBSTX for stop-loss insurance for medical and pharmacy claims because it provides the most cost-effective stop-loss coverage for the City
CONFORMITY TO CITY POLICY:
Yes, this item conforms to state and local policies.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
The cost for FY27 is $1,509,582.
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, sufficient funds are included in the FY 2027 Budget in the Health Insurance Fund, account 615-55430-170-171-000000.
RECOMMENDATION:
Staff recommend the City Council award RFP 27-11 to BCBSTX for an excess risk policy (stop-loss insurance) for medical and pharmacy claims under the City health insurance plan effective October 1, 2026, in the amount of $1,509,582 and authorize the City Manager or his designees 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