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HomeMy WebLinkAbout2006/12/05 Item 8 COUNCIL AGENDA STATEMENT ITEM 8 MEETING DATE 12/05/06 ITEM TITLE: RESOLUTION Adopting the City of Chula Vista Cafeteria Benefits Plan for 2007 REVIEWED BY: DIRECTOR OF HU7 RESOURCES CITY MANAGER i !f1.!kL- SUBMITTED BY: (4/5th Vote: Yes_ No X) The Internal Revenue Code requires that employers offering cafeteria plans under Section 125 have a written plan document, and that the employer adopt the plan document annually. This resolution will fulfill this requirement. RECOMMENDATION: That Council adopt the resolution. BOARD/COMMISSION RECOMMENDATION: N/A DISCUSSION: In June 1998, Council authorized updates to the City's flexible benefit plan in compliance with Internal Revenue Service (IRS) guidelines. The document presented here contains the health, dental, vision, life and flexible spending account options for Plan Year 2007. The medical, dental and vision packages have been reviewed by all of the City's recognized employee groups. DECISION MAKER CONFLICTS: Not applicable Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500 foot rule found in California Code of Regulations section 18704.2(a)(1) is not applicable to this decision. FISCAL IMPACT: None with this action. Attachment: A - City of Chula Vista Cafeteria Benefits Plan 2007 H:\Home\Personnel\Margarita\2001 cafetriaplanA113.doc 8-1 City of Chula Vista CAFETERIA BENEFITS PLAN YEAR 2007 J:\EdithaQ\Editha\AGENDA STATEMENT\Plan Document\2007Plan Document.doc Page 1 of 12 8-2 City of Chula Vista Cafeteria Benefits Plan This is a Cafeteria Plan of benefits for City of Chula Vista employees and is intended to qualify under Section 125 of the Internal Revenue Code. ELIGIBILITY FOR PARTICIPATION This Plan is for the exclusive benefit of employees of the City of Chula Vista. Eligible employees are defined as individuals who are: 1. Directly employed by the City of Chula Vista, and 2. Working in a part-time or full time benefited status. Hourly employees are not eligible for this plan except for School Site Coordinators under the STRETCH Program. 3. Retired City of Chula Vista employees rehired by the City as active employees may participate ONLY in the group medical insurance premium pre-tax option under Section 125 Premium Only Plan. Other Cafeteria benefit coverage will not be available. Coveraqe under Familv and Medical Leave Act Employees who are on approved leave, with or without pay, under the provisions of the Family Medical Leave Act (FMLA), are entitled to full access to their flexible benefit plan during their absence. If an employee fails to return to work after such leave for any reason other than the serious illness of the employee or the family member for whom the leave was granted or through no fault of the employee, they will be required to pay all flexible benefit plan monies paid to them, or on their behalf during the absence. Coveraqe While on Leave of Absence with Benefits Employees who are authorized to take leave with benefits (e.g., Military Leave as approved by the City Council and disability leave pursuant to memoranda of understanding provisions) will continue to be covered under the flexible benefit plan until expiration of leave. Employees who are on an approved unpaid leave of absence for their own disability or illness, beyond the 12 weeks allowed under the FMLA will continue to have their health insurance and their basic life insurance premiums paid by their Flexible Benefit Plan. J:\EdithaQ\Editha\AGENDA STATEMENT\Plan Document\2007Plan Document.doc Page 2 of 12 8-3 Coveraqe While on Leave of Absence without Benefits The City of Chula Vista does not pay for an employee's benefits if the employee is in an unpaid status for any reason than those indicated above. The employee may choose to continue their health, and certain optional benefits coverage at their own cost through the COBRA continuation plan until they return to work or for the designated length of time as determined by the City of Chula Vista. If the premiums are not paid, the coverage will be canceled the first day of the month following the employee's last paid time. Coverage will be reinstated immediately upon the employee's return to work, or the first of the month after their return 'if premiums were not paid during the employee's absence. PLAN YEAR The Plan Year is from January 1 to December 31 of each year. ELECTIONS Election of benefits must occur during the open enrollment period prior to the start of each Plan Year or, in the case of a newly hired employee, within 30 days from eligibility date. Enrollment Forms Elections must be made in writing on forms/workbooks provided by the Human Resources Department!. An authorization form must be signed by employees to allow for necessary deductions from their paychecks to provide the benefit coverage selected. In addition to the benefit election form (if applicable), the employee must also complete and sign all appropriate applications and enrollment forms for the specific benefits selected. Default Enrollment Miscellaneous Employees If an employee fails to enroll their elections via Employee Online and complete the necessary forms during open enrollment priorto the start of the Plan Year, that employee's current medical insurance will be automatically continued in the next year. All other options including dental and vision coverage will be stopped and the remainder of the Flexible Benefits Allotment will be placed in the taxable Cash Payment Option. Life insurance coverage will be continued in the next year. In the case of a new hire or newly eligible employee, failure to turn in the completed forms within 30 days from eligibility date will result in automatic enrollment in the least costly health plan made available by the City and the remaining funds will be placed in the taxable Cash Payment option. Safety Employees If Police Officers Association (POA) and International Association of Firefighters (IAFF) represented employees do not enroll via Employee Online and complete the necessary forms within the open enrollment period, they will be enrolled in Kaiser Employee Only J:\EdithaQ\Editha\AGENDA STATEMENT\Plan Document\2007Plan Document.doc Page 3 of 12 8-4 coverage in the next year. All other options including dental and vision coverage in the current year will be stopped. Life insurance coverage will be continued in the next year. New hires or newly eligible employees who fail to submit required benefit election forms within 30 days of their date of eligibility will automatically be enrolled in the Kaiser Employee Only plan. Effective Date of Coveraqe The elections are effective for the period of January 1 to December 31 of each year. For employees hired after January 1 of a Plan Year, elections are effective for the remainder of the Plan Year following eligibility date. Benefits are prorated for employees hired after January 1 of each Plan Year. Termination of Coveraqe Upon Separation Benefits terminate at the time an employee terminates employment except for medical, dental and vision, which terminate on the last day of the month in which the employee terminates his/her employment. An eligible employee who terminates and is rehired within 30 days will be reinstated to his or her prior benefit elections at termination unless another qualifying event has occurred that allows a change. An employee who is reinstated after 30 days may make new elections. Qualified Chanqe in Familv Status Elections are irrevocable except to accommodate changes in family status as defined in the Income Tax Regulations, 26 CFR Part 1, orto accommodate any significant curtailment or reduction of coverage under any given benefit plan, or in the case of any significant premium increase or decrease imposed by a third-party insurer. Participants who experience a change in family status may be allowed to change or revoke elections. Several examples, although not all inclusive, of the types of events that constitute a change in family status are as follows: CJ The marriage, legal separation or divorce of the employee CJ The birth or adoption of a child o The death of the employee's spouse or dependent o Court-order with specific requirement to cover dependent o Significant cost change or coverage change CJ Termination or commencement of employment by employee's spouse o Unpaid leave of absence by the employee or the employee's spouse Changes are also permitted in the event of significant changes in health coverage of the employee or the employee's spouse that are related to the spouse's employment or are subject to the Special Enrollment Period as described in the Health Insurance and Portability and Accountability Act (HIPAA). J:\EdithaQ\Editha\AGENDA STATEMEN1\Plan Document\2007Plan Document.doc Page 4 of 12 8-5 Changes to benefit elections will be permitted only to the extent that they are consistent with and appropriate to the reason the change is requested. Proof will be required for all changes in family status. The employee must submit the request to change plan benefits within 30 days of the chance in familv status to Human Resources. If the request is made after 30 days, the change must wait until the next open enrollment period. CONTRIBUTIONS Employer contributions are a fixed amount provided by the City to each eligible employee on a non-elective basis. Salary reduction agreements are provided for in this Plan for Health Insurance premiums in excess of the employer's contributions. In the event payroll deductions for reimbursement accounts are selected and subsequently stopped due to an eligible family status change, the reactivation of the account will not be permitted until the next plan year if elected during open enrollment. FLEXIBLE ALLOTMENTS FOR MISCELLANEOUS EMPLOYEES Eligible employees are allotted funds based on their bargaining groups. These amounts are prorated for non-full-time benefited employees. The allotments are as follows: EMPLOYEE GROUP AMOUNT Confidential $ 9,726 CVEA $ 9,226 Executive $12,626 Middle Managers $10,226 Senior Managers $11,226 WCE $ 10,226 Mavor $12,626 Council Members $12,626 CITY CONTIRIBUTION FOR SAFETY EMPLOYEES (IAFF and POA) The City will pay the full cost of the Kaiser Permanente Plan premium for Safety employees and their dependents. In a non-Kaiser Health Maintenance Organization (HMO) plan, the City will pay the cost of the annual premium less $600. The employee will pay the $600 premium. J:\EdithaQ\Editha\AGENDA STATEMENTlPlan Document\2007Plan Document.doc Page 5 of 12 8-6 If the employee is enrolling in a non-Kaiser Preferred Provider Organization (PPO) plan, the City will pay an amount equal to the City's share of the non-Kaiser HMO premium. The employee through payroll deductions will pay any difference between the City's share of the medical HMO premium and the full PPO premium cost. For dental coverage, the City will pay an amount equal to the pre-paid dental plan premium. For a PPO dental plan, the Safety employee wUl pay any difference between the pre-paid dental plan premium and the PPO dental plan premium through payroll deductions. In those cases where the employee pays a portion of the premiums for medical and/or dental insurance, they will be deducted from the employee's paycheck on a pre-tax basis. If the City does not meet IRS requirements, or if IRS regulations change for any reason, this benefit may be discontinued. BENEFIT PLANS Each employee must select a medical insurance coverage, unless married to another City employee and is covered under the spouse's policy. The Mayor and Councilmembers have the option to waive medical insurance coverage. The options in this plan are as follows: 1. Health Insurance (mandatory coverage) a. Kaiser Permanente Health Plan b. PacifiCare PPO Plan c. PacifiCare (HMO) Low Option d. PacifiCare (HMO) High Option e. Spouse of City employee coverage 2. Dental Insurance (optional coverage) a. Delta PMI (HMO) b. Delta Dental PPO 3. Vision Insurance (optional coverage) a. Spectera Vision 4. For Miscellaneous Employees, any remaining Flexible Allotment money may be used for: 1 . Dependent health insurance 2. Employee and/or dependent group dental insurance J:\EdithaQ\Editha\AGENDA STATEMENT\Ptan Document\2007Plan Document.doc Page 6 of 12 8-7 3. Employee and/or dependent group vision insurance 4. Cash Payment (taxable) 5. Dental/MedicalNision reimbursement 6. Dependent/Child Care (daycare) reimbursement Each of these benefits is described in more detail in the Summary Highlights of Employee Benefits and in the respective Plan Documents or insurance contracts, which are incorporated here by reference. BASIC LIFE INSURANCE AND ACCIDENTAL DEATH AND DISMEMBERMENT (AD&D) The City provides $50,000 group term life insurance and AD&D at no cost to employees. In addition to basic life insurance, an employee may elect to purchase additional life insurance at group rates. Premiums are deducted from the employee's paycheck. FLEXIBLE SPENDING ACCOUNTS A Flexible Spending Account (FSA) is a way to pay eligible health and dependent care expenses with tax-free dollars. An eligible employee may set aside money on a pre-tax basis from the Flex Allotment and/or from his/her paycheck to fund FSA accounts as follows: Miscellaneous Employees: · Cafeteria Dental/MedicalNision (D/MN) Spending Account; . Cafeteria Dependent/Child Care Spending Account; · MyFund Dental/MedicalNision (D/MN) Spending Account; and/or . MyFund Dependent/Child Care Spending Accounts Safety Employees: · MyFund Dental/MedicalNision (D/MN) Spending Account; and/or · MyFund Dependent/Child Care Spending Accounts When the participant incurs an eligible expense, the participant may submit a claim form to Human Resources for reimbursement. In accordance with IRS Notice 2005-42, the City will extend the deadline for reimbursement of health and dependent care expenses up to 2% months after the end of the Plan Year. Expenses for qualified benefits incurred during the 2% -month grace period may be reimbursed from the benefits or contributions remaining unused at the end of the Plan Year. The effect of the grace period is that the participant may have as long as 14 months and 15 days to use the contributions before the unused amounts are forfeited. An eligible employee may elect up to $2,500 for a Payroll Deduction (MyFund) Dental/MedicalNision (D/MN) Spending Account. Single or married (filing a joint return), J:\EdithaQ\Editha\AGENDA STATEMENT\Plan Document\2007Plan Document.doc Page 7 of 12 8-8 eligible employees may also set aside up to $5,000, from all sources, per plan year for a Payroll Deduction (MyFund) Dependent IChild Care Reimbursement Account. A married employee filing returns separately may set aside up to $2,500 per plan year. HIPAA PRIVACY POLICY FOR HEALTH FSA ACCOUNTS The City's HIPAA Privacy Policy is in compliance with the regulations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), restricting the City's use and disclosure of protected health information (PHI) obtained from the City's self-administered Cafeteria Dental/MedicalNision (DMV) Care and MyFund Health Flexible Spending Accounts. Scope This policy applies to all plan participant protected information obtained through the City's administration of health care flexible spending accounts (FSAs). Definition The Health Insurance Portability and Accountability Act of 1996 and its implementing regulations restrict the City's ability to use and disclose protected health information. HIPAA is the "Health Insurance Portability and Accountability Act of 1996". This legislation was designed to improve the portability of health coverage, reduce health care costs by standardizing the processing of health care transactions, increase the security and privacy of health care information and to make other changes to the health care delivery system. This policy is to comply with HIPAA's privacy requirements. Plan as referred to in this policy is the City's Health Care Flexible Spending Accounts (FSA): (1) Cafeteria Dental/MedicalNision (D/MN) and (2) MyFund Payroll Deduction Health FSA. Plan Participant is a benefited employee who is participating in one or both of the City's Health Care FSAs. Protected Health Information is information that is created or received by the City and relates to the past, present, or future physical or mental health condition of a participant; the provision of health care to a participant; and that identifies the participant or for which there is a reasonable basis to believe the information can be used to identify the participant. PHI includes information related to persons living or deceased. Procedure Employees submit claims to Human Resources and eligible expenses are reimbursed via the employees' paycheck. J:\EdithaQ\Editha\AGENDA ST A TEMENT\Plan Document\2007Plan Document.doc Page 8 of 12 8-9 Employee Benefits staff of Human Resourceshave access to the individually identifiable health information of Plan participants to perform administrative functions of the Plan. The City's Responsibilities as Covered Entity I. Privacy Officer and Contact Person The Employee Benefits Manager is designated to act as Privacy Officer for the "Plan". The Privacy Officer is responsible for the deVelopment and implementation of policies and procedures relating to privacy. The Privacy Officer will also serve as the contact person for participants who have questions, concerns, or complaints about the privacy of their PHI. II. Workforce Training The City will train Employee Benefits staff on its privacy policies and procedures. The Privacy Officer is charged with developing training schedules and programs so that all Employee Benefits staff receive the training necessary and appropriate to permit them to carry out their functions within the Plan. III. Technical and Physical Safeguards and Firewall The City will establish on behalf of the Plan appropriate technical and physical safeguards to prevent PHI from intentionally or unintentionally being used or disclosed in violation of HIPAA's requirements. Technical safeguards include limited access to information by creating computer firewalls. Physical safeguards include locking doors and filing cabinets. IV. Privacy Notice The Privacy Officer is responsible for developing and maintaining a notice of the Plan's privacy practices. The notice will inform participants that the City will have access to PHI in connection with the Plan's administrative functions. The privacy notice will also provide a description of the City's complaint procedures, the name and telephone number of the contact person for further information. The notice will be mailed to all participants at the beginning of each Plan Year. V. Complaints The Privacy Officer is responsible for creating a process for individuals to file complaints about the Plan's privacy procedures. Sanctions for using or disclosing PHI in violation of this Privacy Policy will be imposed in accordance with the City's discipline policy, up to and including termination. No employee may intimidate, threaten, coerce, discriminate against, or retaliate against individuals for exercising their rights, filing a complaint, participating in an investigation, or opposing any improper practice under HIPAA. No individual shall be required to waive his or her privacy rights under HIPAA as condition of receiving FSA reimbursements. J:\EdithaQ\Editha\AGENDA STATEMENT\Plan Document\2007Plan Document.doc Page 9 of 12 8-10 VI. Mitigation of Inadvertent Disclosures of Protected Health Information The City shall mitigate, to the extent possible, any harmful effects that become known to it of a use of, or disclosure of an individual's PHI in violation of the policies and procedures set forth in this Policy. If an employee becomes aware of a disclosure of protected health information, either by an employee of the Plan or an outside consultant/contractor, that is not in compliance with this Policy, immediately contacts the Privacy Officer so that the appropriate steps to mitigate the harm to the participant can be taken. VII. Plan Document and Documentation The Plan Document shall include provisions describing the use and disclosure of PHI by the City for plan administrative purposes. The City shall document and maintain authorizations, requests for information, sanctions, and complaints relating to an individual's privacy rights for six (6) years. VIII. Use and Disclosure of PHI The following employees have access to PHI: D Human Resources staff assigned to process Flexible Spending Account reimbursements and maintain FSAs. D Human Resources Director, Assistant Human Resources Director and Employee Benefits Manager who have access to PHI on behalf of the City of Chula Vista for its use in "plan administrative functions". These employees may not disclose PHI to other employees unless an authorization is in place. PHI may be disclosed for the Plan's own payment purposes, and PHI may be disclosed to another covered entity for the payment purposes of that covered entity. The amount of PHI disclosure must be reviewed on an individual basis with the Privacy Officer to ensure that the amount of information disclosed is the minimum necessary to accomplish the purpose of the disclosure. Mandatorv Disclosures of PHI A participant's PHI must be disclosed as required by HIPAA to: D The individual who is the subject of the information D The Secretary of Health and Human Services for purposes of enforcement of HIPAA Permissive Disclosures of PHI PHI may be disclosed in the following situations without a participant's authorization, upon approval of Privacy Officer: D Disclosures about victims of abuse, neglect or domestic violence D Disclosures for judicial and administrative proceedings D Disclosures for law enforcement purposes D Disclosures for public health activities J:\EdithaQ\Editha\AGENDA ST A TEMENT\Plan Oocument\2007Plan Document.doc Page 10 of 12 8-11 o Disclosures is about decedents o Disclosures to avert a serious threat to health or safety o Disclosures that relate to workers' compensation programs Disclosures of PHI to an Authorized Recipient PHI may be disclosed for any purpose if the participant provides a valid authorization. All uses and disclosures made pursuant to a signed authorization must be consistent with the terms and conditions of the authorization. De-Identified Information The Plan may freely use and disclose de-identified information. De-identified information is health information that does not identify an individual. This information may be used for statistical analysis, research, public policy or health care operations. Individual Riqhts HIPAA gives participants the right to access and obtain copies of their protected health information that the plan maintains. HIPAA also provides that participants may request to have their PHI amended. An individual also has the right to obtain an accounting of certain disclosures of his or her own PHI, made in the last six (6) years. The Plan shall respond to an accounting request within sixty (60) days. The first accounting in any 12-month period shall be provided free of charge. The Privacy Officer may impose reasonable production and mailing costs for subsequent accountings. Responsible Partv - Director of Human Resources, Benefits Manager CONSTRUCTION If this Plan contains contradictory provisions or if there appears to be a conflict between its provisions, the following rules apply: a. The interpretation that favors the Plan as a tax-free plan over any interpretation that might render the Plan taxable. b. Subject to paragraph (a), the rules established by the Supreme Court of California for the construction of like instruments will apply. PLAN PARTICIPATION RIGHTS As a participant in the plan, you are entitled to examine, without charge, at the Plan Administrator's office all plan documents including insurance contracts; obtain copies of all Plan Documents (at a reasonable cost) and other Plan information upon request to the Administrator. J:\EdithaQ\Editha\AGENDA STATEMENT\Plan Document\2007Plan Document.doc Page 11 of 12 8-12 PLAN IS NOT AN EMPLOYMENT CONTRACT This plan document is not a contract of employment. Neither the creation of the Plan nor any amendment to it gives any legal or equitable right to any person against the employer. Participation in the Plan does not give any member any rig'flt to continued employment. PLAN ADMINISTRATOR The Plan Administrator is the Director of the Human Resources Department or his/her designees. The address of the Plan Administrator is: 276 Fourth Avenue Chula Vista, CA 91910 Telephone: (619) 691-5096 PLAN AMENDMENT OR TERMINATION The City of Chula Vista reserves the right to amend the Plan from time to time if deemed necessary or appropriate to meet the requirements of the Internal Revenue Code and any similar provision of subsequent revenue or other laws or pursuant to negotiations with the Employee groups; provided that no such modification or amendment shall make it possible for any benefit contributions or payment to be used for, or directed to purposes other than for the exclusive benefit of participating employees and their beneficiaries under the Plan. The City reserves the right to discontinue or terminate the Plan at the end of any Plan Year or in accordance with negotiations with the Employee Groups. Any such amendment, discontinuance or termination shall be effective on January 1 of any given year or such date that is agreed upon by the City and Employee Groups. No amendment, discontinuance or termination shall allow the return of funds to the City or the use of any funds for any purpose other than for the exclusive benefit or participating employees and their beneficiaries. J:\EdithaQ\Editha\AGENDA STATEMENT\Plan Oocument\2007Plan Document.doc Page 12 of 12 8-13 RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE CITY OF CHULA VISTA CAFETERIA BENEFITS PLAN FOR 200'7 WHEREAS, the Internal Revenue Code requires that employers offering cafeteria plans under Section 125 have a written plan document and that the employer adopt the plan document annually; and WHEREAS, in June 1998, Council authorized updates to the City's flexible benefit plan in compliance with Internal Revenue Service guidelines; and WHEREAS, the document attached for formal adoption is the result of the meet and confer process and the 2007 Plan Document ("Plan") presented contains the health, dental, vision, life and flexible spending account options for Plan Year 2007; and WHEREAS, the Plan has been updated to reflect the 2007 beginning Flex Plan amounts, current health, dental and vision care plan options, and other changes to comply with current IRS regulations related to Section 125 Plans (i.e., definition of qualified change in family status and access to Plan while on FMLA). NOW, THEREFORE, BE IT RESOLVED the City Council of the City ofChula Vista does hereby adopt the City of Chula Vista Cafeteria Benefits Plan for 2007 as set forth in Attachment A. Presented by Approved as to form by Marcia Raskin Director of Human Resources ~~~~ Ann Moore City Attorney J:\Attomey\RESOIBENEFITS\Cafeteri. Plan 2007.doc 8-14