HomeMy WebLinkAbout6.v. VEBA/POST Retirement Health Care Funding Plan (LELS Supervisory Unit)AGENDA ITEM: VEBA /Post Retirement Health Care
Funding Plan (LELS Supervisory Unit)
AGENDA SECTION:
Consent
PREPARED BY: Emmy Foster, Assistant City
Administrator
AGENDA NO. ID,v,
ATTACHMENTS: VEBA/Post Retirement Health Care
Funding Plan Policy for LELS
Supervisory Employees
APPROVED BY:
RECOMMENDED ACTION: Motion to Approve the VEBA Policy for LELS Supervisory Unit
4 ROSEMOUNT
CITY COUNCIL
City Council Meeting. December 19, 2006
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 contnbution rates. Employee groups within
the City have been divided into the following units:
Teamsters
AFSCME
LELS -Ponce
LELS Sergeants
Employees not represented by a collective bargaining unit (non- union)
The employees of the LETS Supervisory group have determined that they would like to contnbute $100
per pay penod into their individual accounts under the VEBA Plan.
According to the guidelines of VEBA accounts, employees of each represented group must vote on
changes to the plan. The LELS Supervisory employees voted earlier this month on the new structure of
the VEBA contnbution.
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 employee.
CONCLUSION
Staff is requesting the Council make a motion to approve the VEBA policy for LELS Supervisory Unit
O F F I C I A L P O L I C Y
Policy: VEBA/POST RETIREMENT HEALTH CARE FUNDING
PLAN (LELS SUPERVISORY EMPLOYEES)
Section:
Approved by: City Council
Page: 1 of 2
Effective date: December 19, 2006
The City of Rosemount has established a means for eligible employees to
participate in a mandatory program to help defray some of the costs of current
year or post employment health related expenses by using pre -tax dollars.
Participation to the VEBA or health care reimbursement arrangement,
administered by Blue Cross Blue Shield, is intended to provide an opportunity to
accomplish that goal.
Health Care The VEBA /health care reimbursement arrangement is an Employer
Savings Plan sponsored program that allows eligible employees to defer a portion their
biweekly salary for deposit into a VEBA account. This money can only be used
for the payment of qualified healthcare related expenses dunng or after
separation from City service.
Eligibility to Participation in the VEBA Plan is mandatory for all employees that
participate meet the following requirements:
-The Employee must be a member of the Rosemount LELS Supervisory
Unit, and
•The Employee must have been continuously employed 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 eligible Employee must contribute $100 per pay
period to the Employee's account in the VEBA /Post Retirement Health Care
Funding Plan. Such contributions shall not exceed $100 per pay penod (twenty
six pay periods). Contnbutions authorized under this plan shall continue until
such time as this policy is amended or repealed by the City of Rosemount
The contribution levels will be reviewed by the LELS Supervisory employees
every two years beginning January 2007.
The VEBA /Post Retirement Health Care Funding Plan is authorized under the
Intemal Revenue Code and is administered by Blue Cross Blue Shield.
Plan purpose
VEBA/Post
Retirement
Health Care
Funding
Account
Administration