HomeMy WebLinkAbout6.h. VEBA / Post Retirement Health Care Funding Plan (Non-Union)AGENDA ITEM: VEBA/Post Retirement Health Care
Funding Plan (Non- Union)
AGENDA SECTION:
Consent
PREPARED BY: Dawn, Weitzel, Assistant City
Administrator°
AGE
,e
ATTACHMENTS: None
APPROVED BY: ik)
RECOMMENDED ACTION: Motion to Approve Changing the VEBA Policy for Non-Union
Employees.
4 ROSEMOUNT
CITY COUNCIL
City Council Meeting: August 1, 2005
EXECUTIVE SUMMARY
BACKGROUND
As part of the Minnesota Service Cooperatives VEBA (Voluntary Employees' Beneficiary Association)
Plan, additional funding into health care savings accounts must be made by the employer or by the
employer on behalf of the employee. When making supplementary contributions into the plan it is
mandatory that each employee group must uniformly follow contribution rates Employee groups within
the City have been divided into the following units:
Teamsters
AFSCME
LELS -Pohce
LELS Sergeants
Employees not represented by a collective bargaining unit (non -union)
The employees of the non -union group have determined that in addition to contributing $15 per pay
period into their individual accounts under the VEBA Plan they would hke to contribute retirement
severance based on accumulated but unused vacation, retirement leave, and accumulated but unused sick
leave (in accordance with the following table as currently written in personnel policy).
1 thru 5 yrs of service, 15% of accumulated sick leave
6 thru 10 yrs of service, 30% of accumulated sick leave
11 thru 15 yrs of service, 45% of accumulated sick leave
16 yrs of service and above, 60% of accumulated sick leave
The policy changes were requested by those employees who may be retiring within the next year or two.
All employees within the non -union group have been given an opportunity to ask questions and comment
on the changes. The plan has also been reviewed by Darcy Hitesman, attorney for Haynes Hitesman, as
well as legal representatives for Blue Cross Blue Shield
According to the guidelines of VEBA accounts, employees of each represented group must vote on
changes to the plan. The non -union employees voted on July 12, 2005 on the new structure of the VEBA
contribution. The resulting policy is attached
ISSUE
According to VEBA guidelines, the employer must make any contributions on behalf of the employee. By
changing this policy there will be no increase to the overall retirement severance costs paid by the City
funds to the account will be provided by the employee. Because of its "tax -free in /tax -free out" design
this approach is very beneficial to the retiring employee.
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O F F I C I A L P O L I C Y
Policy: VEBA/POST RETIREMENT HEALTH CARE FUNDING
PLAN (NON -UNION REGULAR EMPLOYEE)
Section:
Approved by: City Council
Page: 1 of 2
Effective date: August 2, 2005
Plan purpose
Health Care
Savings Plan
Eligibility to
participate
Contribution
formula
The City of Rosemount has established a means for eligible employees to
participate m a mandatory program to help defray some of the costs of current
year or post employment health related expenses by using pie -tax dollars.
Participation in the VEBA or health care reimbursement arrangement,
administered by Blue Cross Blue Shield, is intended to provide an opportunity to
accomplish that goal
The VEBA /health care reimbursement arrangement is an employer
sponsored program that allows eligible employees to defer a portion of their
biweekly salary for deposit into a VEBA account. This money can only be used
for the payment of quahfied healthcare related expenses during of after
separation from City service.
Participation m the VEBA Plan is mandatory for all employees that
meet the following requirements.
The employee must be a current full-tune member of the Rosemount non-
union pay classification plan, and
The employee must have been continuously employed full-tune by the City
of Rosemount for at least three (3) consecutive months.
Mandatory participation in the VEBA Plan shall be in accordance with,
and limited to the following formulas for contributions.
Bi- weekly Contribution: An ehgible employee must contribute $15 per pay
period to the employee's account m the VEBA /Post Retirement Health Care
Funding Plan. Such contnbutions shall not exceed $15 per pay penod (twenty -six
pay periods). Contributions authonzed under this plan shall continue until such
time as this policy is amended or repealed by the City of Rosemount,
and
Years of
Service Time
with the City
of
Rosemount*
0 -3
months
3
months
to 9
years
Beginning
10t Year to
19 Years
Beginning of
20` Years
Plus
per payroll
contribution
0
$15
$15
$15
Severance
0
0
50% of
100 of:
Contribution
at Time of
ehgible sick
leave and
eligible sick,
eligible
Retirement
100% of
eligible
retirement
pay
retirement,
and ehgible
vacation pay
*Anniversary date of full-time employment
is used to compute years of service with Rosemount
Retirement Severance Contributions:
The contnbution levels will be reviewed by the non -union employees every two
years beginning July 2005.
VEBA/Post The VEBA /Post Retirement Health Care Funding Plan is authonzed
Retirement under the Internal Revenue Code and is administered by Blue Cross
Health Care Blue Shield.
Funding
Account
Administration
2