09-26-2007 Council Agenda - Laserfiche WebLink

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MAYOR Bill Blesener COUNCIL Rick Montour Barbara Allan John Keis Michael McGraw 515 Little Canada Road, Little Canada, MN 55117 -1600 ADMINISTRATOR (651) 766 -4029 / FAX: (651) 766 -4048 Joel R. Hanson www.cilittle-canada.mn.us MEMORANDUM TO: Mayor Blesener and Members of the City Council FROM: Kathy Glanzer, City Clerk DATE: September 20, 2007 RE: Medical & Dependent Care Flexible Spending Account Cap The City has had a Medical & Dependent Care Flexible Spending Plan in place for the past few years. Regular full -time and regular part-time City employees, as well as elected officials, have the ability to set aside pre -tax dollars to pay for out -of- pocket medical and dental costs under this plan as well as dependent care costs. At the present time, the annual maximum amount employees can set aside for medical /dental care from their wages is $4,200, and elected officials are able to set aside $3,000. The cap for dependent care is $5,000. City staff is recommending that the cap for medical /dental expenses for employees be increased to $5,000. This amount would then be equal to the dependent care cap. The $3,000 cap for elected officials is recommended to remain the same (limited to the annual stipend paid to Council Members). This plan is administered for the City by a third party administrator, the cost of which is offset by the FICA savings that the City realizes on the wage amounts that employees withhold. It should be noted that the risk to the City is that employees draw down their entire election amount early in the year and then leave the City's employment before bi- weekly withholdings catch up. In that case, the City has no recourse to collect its loss. Alternatively, the City would gain on any unused withholding balances that an employee may have at the end of employment.