Loading...
HomeMy WebLinkAbout2007/12/04 Item 10 CITY COUNCIL AGENDA STATEMENT DECEMBER 4, 2007, Item /0 SUBMITTED BY: REVIEWED BY: RESOLUTION ADOPTING THE CITY OF CHULA VISTA CAFETERIA BENEFITS PLAN FOR 2008 /7 I . DIRECTOR OF HUMAN R SOURCES,,1{ I~ CITY MANAGER ASSISTANT CITY ANAGER9{k9 4/STHS VOTE: YES D NO 0 ITEM TITLE: BACKGROUND 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. ENVIRONMENTAL REVIEW Not applicable RECOMMENDATION That Council adopt the resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable. 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 medical, dental, vision, life and flexible spending account options for Plan Year 2008. The medical, dental and vision packages have been reviewed by all City recognized employee groups. 10-1 DECEMBER 4, 2007, Item~ Page 2 0[2 DECISION MAKER CONFLICT: 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. ATTACHMENTS Attachment: A - City of Chula Vista Cafeteria Benefits Plan 2008 Prepared by: Edith Quicho, Benefits Manager, Human Resources 10-2 City of Chula Vista CAFETERIA BENEFITS PLAN YEAR 2008 C:\DoC1..IITlenls and Setlings\annak\Local Setungs\TelTllorary Internet Files\OlKB\2008P1an DoCtlment.doc Page 1 of 9 10-3 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. Eligible dependents may be enrolled in medical, dental, vision and optional dependent life insurance. The employee's eligible dependents are: . Employee's legal spouse as defined by California law . Unmarried children who are dependent upon the employee for support if they are under 25 years of age (for medical, dental and vision coverage) and under 23 years of age (for life insurance coverage); . Unmarried children of any age if they are incapable of self-support due to mental or physical handicap and such handicap began before age 25 (medical, dental and vision only); . Domestic partner as defined by the State of California (not eligible to use Flexible Allotment) Coveraoe 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. C:\Docurnenls and Seltings\annak\Local Settings\Temporary Internet Files\OLKB\200BPlan Dccument.doc Page 2 of 9 10-4 Coveraoe 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) will continue to be covered under the flexible benefit plan until expiration of leave. Coveraoe 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 priorto 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 via Employee Online within the Open Enrollment period. In addition to enrolling online, the employee must also complete and sign all appropriate applications and enrollment forms for the specific benefits selected. A newly eligible employee must complete and return the Election Form and appropriate forms to Human Resources within 30 days of hire date. Default Enrollment For Miscellaneous Employees If an employee fails to enroll their elections via Employee Online within the Open Enrollment period, the employee's current medical and life insurance will automatically be continued in the next year as if the employee elected to keep them. All other coverage, including dental, vision and Flexible spending Accounts, will stop. Any remaining Flex Allotment funds will be placed in the taxable Cash Payment Option. In the case of a 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. C:\Oocuments and Seltings\annak\local Settings\Temporary Internet Fi\es\OlKB\200SPlan Document.doc Page 3 of 9 10-5 For 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 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. Life insurance coverage will remain in force 30 days from the employee's last paid day on City payroll. 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: o The marriage, legal separation or divorce of the employee o 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 o Termination or commencement of employment by employee's spouse o Unpaid leave of absence by the employee or the employee's spouse C:\Documents and Settings\annak\Local Setlings\Temporary Internet Files\OLKB\2008Plan Document.doc Page 4 of 9 10-6 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). 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 change in family 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 Mayor $12,626 Council Members $12,626 C:\Documenls and Settlngs\annak\local Settings\Temporary Internet Files\OLKB\200BPlan Document.doc Page 5 of 9 10-7 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. 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 will 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 Care USA (HMO) b. Delta Dental PPO 3. Vision Insurance (optional coverage) a. Spectera Vision C:\Documents and Setllngs\annak\Local Settlngs\Temporary Internet Files\QLKB\20Q8Plan Document.doc Page 6 of 9 10-8 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 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 Employee Benefits employee booklet 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 of employees and their eligible dependents, with tax-free dollars. An eligible employee may set aside money on a pre-tax basis from the Flexible 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, deadline for reimbursement of health and dependent care expenses is extended 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. C:\Documenls and Settings\annak\Local Settings\TerTl>Orary Internet Files\QLKB\2008Plan DocumenLdoc Page 7 of 9 10-9 An eligible employee may elect up to $5,000 for a Payroll Deduction (MyFund) Dental/MedicalNision (D/MN) Spending Account. Single or married (filing a joint return), 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. 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. 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 right to continued employment. C:\Documenls and Settings\annak\Local Setllngs\TefTl>Orary Internet Files\OLKB\2008Plan Document.doc Page 8 of 9 10-10 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. C:\Oocuments and SetUngs\annak\LocaJ Settlngs\Temporacy Internet Flles\OLKB\2008Plan Document.doc Page 9 of 9 10-11 RESOLUTION NO. 2007- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE CITY OF CHULA VISTA CAFETERIA BENEFITS PLAN FOR 2008 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 to this resolution as Exhibit A for formal adoption is the result of the meet and confer process and the 2008 Plan Document ("Plan") presented contains the health, dental, vision, life and flexible spending account options for Plan Year 2008; and WHEREAS, the Plan has been updated to reflect the 2008 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 2008 as set forth in Exhibit A. Presented by Approved as to form by Marcia Raskin Director of Human Resources ~roJ\~~~ Ann Moore City Attorney J:\AtlorneyIRESOIBENEF1TSICafelena Pla1l2008.doc 10-12