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During the term of this Agreement, the City reserves the right to propose changes to the plan designs and co-pay structure in order to reduce costs to the City and employees. Changes to plan design shall be by mutual agreement. The City agrees to provide up to three (3) health plan options for employees and eligible dependents. At least two (2) options will be HMOs and the other option will be a PPO option. For the term of this agreement, the City agrees to continue to offer Kaiser as one of the HMO options. 16.2 Health and Medical Care—Retired Employees A. Spousal Continuation of Benefits In the case where the employee eligible for two-party coverage is deceased, the amount the City is obligated to pay shall be reduced by one half(1/2). If the spouse remarries,the obligation by the City shall terminate. Domestic partners shall be treated in the same manner as spouses for continuation of benefits. B. Plan Design Employees who retire on or after July 1, 2009, will have the same benefit co-pay and plan design as provided to active employees in accordance with Section 16.1.0 and are subject to the 15%premium cap provisions of Section 16.1.B. C. Vesting Schedule for Employees Hired Before July 1, 2012 1. Service Retirement For all employees who retire with service from the City of Pleasanton, the City shall pay four percent (4%) for each year of service of the City's contribution toward the monthly premium for employee and one dependent. 2. Disability Retirement For all employees who retire due to rdisability, the City shall pay a percentage of the City's contribution toward the monthly premium for employee plus and—one dependent (two-party rate) for the lowest cost HMO plan in accordance with the schedule set forth below: Years of Service City's Contribution 10 20% 11 25% 12 30% 13 35% 14 40% 34