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HomeMy WebLinkAbout2.b. Health Care Savings Contribution (MANAGEMENT)CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR DISCUSSION COMMITTEE OF THE WHOLE: December 10, 2003 AGENDA ITEM: HEALTH CARE SAVINGS AGENDA NO: CONTRIBUTION (MANAGEMENT) , PREPARED BY: DAWN WEITZEL, HR/ COMMUNICATIONS COORD. ATTACHMENTS: HEALTH CARE SAVINGS PLAN APPROVED BY: POLICY 7 As part of the Minnesota Service Cooperatives VEBA Plan, additional funding into the Health Care Savings Account 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- Police • LELS- Sergeants • Non -union management employees (those with pay equity points greater than 500 points) • Non -union regular employees (those with pay equity points less than 500 points) The employees of the management group have determined that they would like to contribute $15 per pay period into their individual accounts in the Health Care Savings Plan. In addition to this, the employees would like to contribute severance based on accumulated but unused Vacation Leave in excess of 80 hours and severance based on accumulated but unused Sick Leave in excess of 40 hours (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 %0 of accumulated sick leave I l thru 15 yrs of service, 45 % of accumulated sick leave 16 yrs of service and above, 60 % of accumulated sick leave This policy also allows a cash. -out option of allowable accrued time one week prior to termination. By doing this, an employee is not forced to deposit money into the Health Care Saving Account when he /she may need it for other reasons. RECOMMENDED ACTION / NOTES: Plan Purpose The City of Rosemount is interested in establishing a means for v eligible employees to participate in a mandatory program to help Plan Purpose The City of Rosemount is interested in establishing a means for eligible employees to participate in a mandatory program to help " defray some of the costs of post - employment health related expenses, including health insurance premiums using pre-tax dollars. Participation in the Health Care Savings Plan (VEBA Account), administered by Blue Cross Blue Shield, is intended to provide an opportunity to accomplish that goal. Health Care The Health Care Savings Plan is an Employer- sponsored Savings Plan program that allows eligible employees to: • defer payment of a portion of unused vacation and sick leave as a severance payment at the time of termination to pay for eligible health insurance premiums and /or health expenses after separation from City service, and • defer a portion of an Employees' bi- weekly salary for deposit _ into their Health Care Savings Plan for the payment of qualified healthcare related expenses after separation from City service. Eligibility to Participation in the Health Care Savings Plan is mandatory for Participate all employees that meet the following requirements: • The Employee must be a member of the Rosemount Management Pay Classification Plan at the time of termination of employment, and • The Employee must have been continuously employed by the City of Rosemount for at least three (3) consecutive months. Contribution Mandatory in the Health Care Savings Plan shall be Formula in accordance with, 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 Health Care Savings Plan. Such contributions shall not exceed $15 per pay period. Severance Contribution Severance shall be paid in cash for the first 80 hours of accumulated` but unused Vacation Leave. Severance based on accumulated but unused Vacation Leave in excess of 80 hours shall be paid as a credit to the Employee's account in the Health Care Savings Plan. Severance shall be paid in cash for the first 40 hours of accumulated but unused Sick Leave in accordance with the following table. Severance based on accumulated but unused Sick Leave in excess of 40 hours shall be paid as a credit to the Employee's account in the Health Care Savings Plan in accordance with the following table. 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 For those employees choosing to "cash -out" accrued leave time (in lieu of credit to their Health Care Savings Plan) advanced notice of at least two weeks must be given and the check will be cut a week before termination. This cash -out option will only cover accrued amounts over 80 hours in Vacation Leave and 40 hours in Sick Leave. Contributions authorized under this Plan shall continue until such time as this policy is amended or repealed by the City of Rosemount. Health Care The Health Care Savings Plan is authorized under the Internal Savings Plan Revenue Code and is administered by Blue Cross Blue Shield. Administration