HomeMy WebLinkAbout6.h. VEBA Health Reimbursement Arrangement and MSRS Post Employment Health Care Savings Plans (Non-Union)AGENDA ITEM: VEBA Health Reimbursement
Arrangement and MSRS Post
Employment Health Care Savings Plans
(Non- Union)
AGENDA SECTION:
Consent
PREPARED BY: Emmy Foster, Assistant City
Administrator
AGENDA NO. b•YI.
ATTACHMENTS: Proposed VEBA and MSRS Policies
APPROVED BY:
DA)
RECOMMENDED ACTION:
Motion to Approve Changing the VEBA Health Reimbursement Arrangement Policy for
Non -Union Employees.
Motion to Approve the MSRS Post Employment Health Care Savings Plan Policy for Non
Union Employees.
9 ROSEMOUNT
BACKGROUND
ISSUE
CITY COUNCIL
City Council Meeting: December 15, 2009
On August 1, 2005, the City Council approved the VEBA (Voluntary Employees' Beneficiary Association)
Health Reimbursement Arrangement Plan for non -union employees. At this time, the non -union
employees have voted to make changes to that VEBA Health Reimbursement Arrangement Plan. Also,
the non -union employees have determined that they would like to participate in the NISRS (Minnesota
State Retirement Sy_ stem) Health Care Savings Plan. Staff is asking that Council consider approving these
modifications.
VEBA Health Reimbursement Arrangement Plan
EXECUTIVE SUMMARY
The current policy allows non union employees to contribute $15 per pay period into their individual
accounts under the VEBA Plan and also allows them 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, 150/ of accumulated sick leave
6 thru 10 yrs of service, 30% of accumulated sick leave
11 thru 15 vrs of service, 45 o of accumulated sick leave
16 vrs of service and above, 60 °'i) of accumulated sick leave
According to the guidelines of VEBA (Voluntary Employees' Beneficiary Association) accounts,
employees of each represented group must vote on changes to the plan. The non -union
employees voted on November 18, 2009 to do the following:
Only those employees who have elected the VEBA health insurance option will continue to
put $15 per paycheck into their VEBA accounts.
Years of Service Time with
the City of Rosemount*
0 -3 months
3 months to
9 years
Beginning 10`"
Year to 19 Years
Beginning of 20
Year Plus
Severance Contribution at
0
0
100% of eligible
100% of: eligible
Time of Retirement
sick leave and
100% of eligible
retirement pay
sick, eligible
retirement, and
eligible vacation
pay
*Anniversary date of full -time employment
is used to compute years of service with Rosemount
MSRS Health Care Savings Plan
Non -union employees are eligible to participate in the Minnesota State Retirement System's Post
Employment Health Care Savings Plan established under Minnesota Chapter 352.98 (2001) and as
outlined in the Minnesota State Retirement System's Trust and Plan Documents. All funds collected by
the employer on behalf of the employee will be deposited into the employee's post health care savings plan
account as follows:
Bi- Weekly Contribution
All non -union employees have determined that they will contribute $15 per pay period into their individual
accounts under the MSRS (Minnesota State Retirement System) plan.
Retirement Pay Out
Upon retirement, all employees eligible for the retirement payout as outlined in the City's personnel
policies (see sections below) will have the funds deposited into their Post Retirement Health Care Savings
Plan according to the table below:
Retirement Severance Contributions:
Section 46. Retirement Pay: In addition to severance pay, full-time employees retiring from the City
under the provisions of the State pension legislation will receive lump sum compensation equal to:
5 thru 9 years of service two weeks pay
10 years of service and above four weeks pay
Section 45. Severance Pay: Full-time employees voluntarily terminating their employment in good
standing with two weeks advance notice will receive payment at the employee's rate of pay at the time of
the employee's termination based on the following:
Vacation: Employee to receive accrued amount.
Sick Leave:
1 thru 5 years of service 15% of accumulated sick leave
6 thru 10 years of service 30% of accumulated sick leave
11 thru 15 years of service 45% of accumulated sick leave
16 years of service and above 60% of accumulated sick leave.
According to the MSRS (Minnesota State Retirement System) guidelines, employees of each
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represented group must vote to implement a plan. The non -union employees voted on November
18, 2009 to do the following:
All non -union employees have determined that they will contribute $15 per pay period into
their individual accounts under the MSRS (Minnesota State Retirement System) plan.
The non -union group has voted to discontinue the VEBA retirement severance
contribution and all non -union employees will put their retirement severance into a Post
Employment Health Care Savings Plan through the Minnesota State Retirement System
(MSRS).
By making the proposed changes, 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.
SUMMARY
Staff recommends that the Council make a motion to Approve Changing the VEBA Policy for Non
Union Employees and a motion to approve the MSRS Post Employment Health Care Savings Plan Policy
for Non -Union Employees.
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Policy: VEBA HEALTH REIMBURSEMENT ARRANGEMENT PLAN
(NON -UNION REGULAR EMPLOYEE)
Section:
Approved by: City Council
Page: 1 of 1
Effective Date: December 15, 2009
Plan Purpose
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 in the VEBA or health reimbursement
arrangement, administered by Blue Cross Blue Shield, is intended to
provide an opportunity to accomplish that goal.
The VEBA Health Reimbursement Arrangement is an employer
sponsored program that allows eligible employees to defer a portion of
their bi- weekly salary for deposit into a VEBA account. This money can
only be used for the payment of qualified healthcare related expenses
during 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 Non -Union
Pay Classification Plan,
The Employee must be enrolled in the VEBA health insurance
option, and
The Employee must have been continuously employed by the City
of Rosemount for at least three (3) consecutive months.
Contribution Mandatory participation in the VEBA Plan shall be in accordance with,
Formula and limited to the following formulas for contributions:
Bi-weeklv Contribution: An eligible Employee must contribute $15 per
pay period to the Employee's account in the VEBA Health
Reimbursement Arrangement. Such contributions shall not exceed $15
per pay period (twenty -six pay periods per year). Contributions
authorized under this plan shall continue until such time as this policy is
amended or repealed by the City of Rosemount.
The contribution levels may be reviewed by the non -union employees
every two years.
Account The VEBA Health Reimbursement Arrangement is authorized
Administration under the Internal Revenue Code and is administered by Blue Cross
Blue Shield.
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Policy: MSRS POST EMPLOYMENT HEALTH CARE SAVINGS
PLAN (NON -UNION REGULAR EMPLOYEE)
Section:
Approved by: City Council
Page: 1 of 2
Effective Date: December 15, 2009
Plan Purpose
Health Care
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 post- employment health related expenses by using pre -tax dollars.
Participation in this plan is intended to provide an opportunity to
accomplish that goal.
Non -union employees are eligible to participate in the Minnesota State
Retirement System's Post Employment Health Care Savings Plan
established under Minnesota Chapter 352.98 (2001) and as outlined in
the Minnesota State Retirement System's Trust and Plan Documents.
All funds collected by the employer on behalf of the employee will be
deposited into the employee's post employment health care savings
plan account as follows:
The MSRS Post Employment Health Care Savings Plan is an employer
sponsored program that allows eligible employees to defer a portion of
their bi- weekly salary for deposit into an MSRS account. This money
can only be used for the payment of qualified healthcare related
expenses after separation from City service.
Eligibility to Participation in the MSRS Plan is mandatory for all employees that
Participate meet the following requirements:
The Employee must be a member of the Rosemount Non -Union
Pay Classification Plan,
The Employee must have been continuously employed by the City
of Rosemount for at least three (3) consecutive months.
Contribution Mandatory participation in the MSRS Plan shall be in accordance with,
Formula and limited to the following formulas for contributions:
Bi- weekly Contribution: An eligible Employee must contribute $15 per
pay period to the Employee's account in the MSRS Health Care
Savings Plan. Such contributions shall not exceed $15 per pay period
(twenty -six pay periods per year). Contributions authorized under this
plan shall continue until such time as this policy is amended or
repealed by the City of Rosemount.
and
5
Years of Service Time with the
City of Rosemount*
0 3
months
3 months to
9 years
Beginning 10`"
Year to 19 Years
Beginning of 20`"
Year Plus
Dollar Amount Per Payroll
Contribution into MSRS Account
0
$15
$15
$15
Severance Contribution at Time
of Retirement
0
0
100% of eligible
sick leave and
100% of eligible
retirement pay
100% of: eligible
sick, eligible
retirement, and
eligible vacation
pay
*Anniversary date of full -time employment
is used to compute years of service with Rosemount
Retirement Severance Contributions:
The contribution levels may be reviewed by the non -union employees
after two years and significant changes are allowed at on -going two year
intervals.
Account All funds collected by the employer on behalf of the employee will be
Administration deposited into the employee's post employment health care savings
plan and
administered by MSRS.
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