AIS - Amendment 3City of Denton
______________________________________________________________________________
AGENDA INFORMATION SHEET
DEPARTMENT: Procurement
DCM: David Gaines
DATE: May 3, 2022
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation,
authorizing the approval of a third amendment to a contract between the City of Denton and Labor First,
LLC dba Retiree First, LLC, amending the contract approved by City Council on October 16, 2018, in the
not-to-exceed amount of $2,440,000.00; amended by Amendments 1 and 2 approved by Purchasing; said
third amendment to continue to provide the Medicare supplement coverage, including medical services and
prescription services for the City’s post-65 retirees; providing for the expenditure of funds therefor; and
providing an effective date (RFP 6807 – providing for an additional third amendment expenditure amount
not-to-exceed $610,000.00, with the total contract amount not-to-exceed $3,050,000.00).
INFORMATION/BACKGROUND
As part of the City’s comprehensive benefits program, City employees can elect retiree health insurance
and remain on the City’s self-funded health plan. Once a retiree reaches 65 years of age and becomes
Medicare eligible, they transition to a fully insured Medicare Supplement health plan that includes
provisions to cover services not covered by Medicare, including a prescription plan (Group Medicare Part
D plan).
Since the retiree pays for the Medicare Supplement premium (except for a City subsidy based on years of
service as detailed below), this transition saves the City approximately $2.107 million annually, based on
not funding 140 post-65 retirees (who do not have any dependents on the UHC plan) for the City’s self-
funded health plan, and in health claims. The retiree transition to the Medicare Supplement health plan also
reduces any potential GASB 75 liability the City may have.
Retiree First, LLC (Retiree First) administers the plan through a retiree medical plan offered by United
American. United American has been the retiree medical plan carrier since January 1, 2019, and no plan
benefits changes have been made since implementation to the base plan or the Group Medicare Part D plan
(prescription drugs).
As stated above, the premiums for the Medicare Supplement plan are paid by retirees, except for a City-
paid subsidy based on years of service.
Years of Service City Paid Subsidy per Month
Fewer than 5 years $40
5 to 9 years $80
City Hall
215 E. McKinney
Street
Denton, Texas
www.cityofdenton.co
m
10 to 14 years $120
15 to 19 years $160
20+ years $200
While the one-year estimated cost of the Retiree First plan is $903,872.00, the City’s contribution will be
approximately $325,080.00.
In 2020, 34 post-65 employees chose to retire through the Voluntary Separation Program (VSP), increasing
the enrollment in the Medicare Supplement plan through Retiree First. Additionally, there continue to be
employees retiring; at this time, 42 retirees and 21 dependent spouses have reached Medicare age and
enrolled in the City’s Medicare Supplement plan since the inception of the Retiree First contract on January
1, 2019. The City’s contract with Retiree First expires on December 31, 2023; however, due to the
expectation that the NTE amount will be exhausted by May 2022, the City will be going out for a Request
for Proposal (RFP) for benefits to be effective January 1, 2023. The additional funding requested by this
amendment will help finish out the remainder of the contract and be able to continue the Medicare
supplement coverage, including medical services and prescription services for the City’s post-65 retirees.
PRIOR ACTION/REVIEW (Council, Boards, Commissions)
On October 16, 2018, City Council approved a contract with Labor First, LLC dba Retiree First, LLC, in
the not-to-exceed amount of $2,440,000 (Ordinance 18-1659).
RECOMMENDATION
Award Amendment No. 3 with Labor First, LLC dba Retiree First, LLC, to continue to provide the Medicare
supplement coverage, including medical services and prescription services for the City’s post-65 retirees,
in a not-to-exceed amount of $610,000, for a total amended contract amount of $3,050,000.
PRINCIPAL PLACE OF BUSINESS
Labor First, LLC dba Retiree First, LLC
Mount Laurel, NJ
ESTIMATED SCHEDULE OF PROJECT
This contract will expire on December 31, 2023.
FISCAL INFORMATION
The costs associated with the administration of the Post-65 Retiree Medicare Supplement plan are funded
from the Health Insurance Fund.
EXHIBITS
Exhibit 1: Agenda information Sheet
Exhibit 2: Original Ordinance and Contract
Exhibit 3: Amendment 1
Exhibit 4: Amendment 2
Exhibit 5: LLC Members
Exhibit 6: Ordinance and Amendment 3
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Linda Kile, 940-349-8388.
Legal point of contact: Marcella Lunn at 940-349-8333.