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HomeMy WebLinkAbout2007-204 Council ResolutionCouncil Member Carlson introduced the following resolution and moved its adoption: CITY OF LINO LAKES RESOLUTION NO. 07- Lo`-/ RESOLUTION AMENDING AND RESTATING THE CITY OF LINO LAKES FLEXIBLE SPENDING ACCOUNTS PLAN, (the "Plan ") WHEREAS, WHEREAS, the plan was adopted per Resolution No. 78 -90 with the effective date of January 1, 1991, and the plan was amended and restated per Resolution No. 95 -156 with an effective date of January 1, 1996, and again per Resolution No. 00 -119 with an effective date of January 1, 2001 and again per Resolution No. 03 -07 with an effective date of January 1, 2003, and again per Resolution No. 05 -181, WHEREAS, the City of Lino Lakes wishes to amend the plan document effective January 1, 2008, to include the following; •The Plan shall make available to Eligible Employees the health savings account (HSA) benefit on a pre -tax basis. NOW THEREFORE BE IT RESOLVED, by the City Council of the City of Lino Lakes that: 1. The City of Lino Lakes Flexible Spending Accounts Plan be amended and adopted in the form presented to the City council effective as of January 1, 2008. 2. That any authorized persons of the Employer are hereby authorized to make such contributions from the funds of the Employer as are necessary to carry out the provision of said plan at any time. 3. That in the event any conflict arises between the provisions of said Plan and the Employee Retirement Income Security Act of 1974 (ERISA) or any other applicable law or regulation (as such law or regulation may be interpreted or amended), the City shall resolve such conflict in a manner which complies with ERISA or such law or regulation. Adopted by the Lino Lakes City Council this 10th day of December 2007. Julie :: rtell, Cit Cler Adopt d by th,i Lino Lakes City Council this 10th day of December 2007. The motion for the adoption of the foregoing resolution was duly seconded by Council Member Stoltz and upon a vote being taken thereon the following voted in favor thereof: Carlson, Stoltz, Reinert, O'Donnell, Bergeson The following voted against same: none Whereupon said resolution was declared duly passed and adopted. • • CONSENT AGENDA ITEM 1 STAFF ORIGINATOR: Al Rolek MEETING DATE: December 10, 2007 TOPIC: Resolution 07- , Resolution Amending the City of Lino Lakes Flexible Spending Accounts Plan (the "Plan') VOTE REQUIRED: Simple Majority (3/5 Vote) BACKGROUND: It is recommended that the city's Flexible Spending Accounts Plan be amended to incorporate any changes that may have occurred. The last plan document was updated in 2006. The following resolution incorporates one change to the current plan document. It is: • The Plan shall make available to Eligible Employees the health savings account (HSA) benefit on a pre -tax basis OPTIONS: 1. Approve Resolution 07- . 2. Return to Staff for further review. 2. Deny Resolution 07- RECOMMENDATION: Option 1. • • PLAN AMENDMENT TO THE City of Lino Lakes Flexible Benefit Plan Pursuant to the authority retained by the Employer under Section 8.1 of the Flexible Benefit Plan (the "Plan"), the Plan is hereby amended as follows: Effective January 1, 2008: • the provisions of the Plan referencing the Section 1.2 Purpose. The purpose of the Plan is to increase the social insurance protection of Eligible Employees by making available to those employees different combinations of accident and health care benefits, dental care benefits, health care reimbursement benefits, dependent care reimbursement benefits, Health Savings Account (HSA) benefits, and direct compensation. The Plan is intended to comply with the provisions of Sections 79, 104, 105, 125, 129, and 223 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder. Section 2.1 Definitions (k) "Health Savings Account" or "HSA" means a health savings account established under Code Section 223. Such arrangements are individual trusts or custodial accounts, each separately established and maintained by an Employee with a qualified trustee or custodian. (1) "High Deductible Health Plan" or "HDHP" means, generally, a health insurance plan established by the Employer with an annual deductible of not less than $1,000 for self -only coverage and twice that amount for family coverage, as indexed for cost -of- living adjustments. The definition of HDHP shall be consistent with Section 223(c)(2) of the Code. Section 4.3 Employer Contributions. In its discretion, the Employer may make contributions to the Plan on behalf of the Participants. Any such contributions shall be made at such rates and subject to such conditions as are established and applied on a uniform basis by the Employer. Such contributions shall be contributed on such date or dates during the Plan Year as the Employer determines in its sole discretion. Employer contributions shall be made only on behalf of Participants who are currently employed by the Employer on the date that the contribution is made. Employer contributions shall be automatically applied to pay the Participant's cost of any benefits elected by the Participant. Employer Contributions that are intended for a Participant's HSA may only be contributed by the Participant to the HSA. They may not be allocated towards other benefits under the Plan. Participants shall be informed prior to the commencement of each Plan Year of the amount, if any, of such employer contributions to be made during the Plan Year. Section 4.5 Revocation or Changes in Benefit Elections. A Participant's benefit election for any Plan Year shall be irrevocable during the Plan Year, except that (a) the Employer may limit or reduce a Participant's contributions allocable to certain benefits in accordance with Section 4.9, and (b) if there is a Status Change, a Participant shall be entitled to change the • • • Participant's election of benefits on a prospective basis in a manner that is consistent with the Status Change; (c) as further described in Section 4.6, an election to contribute to an HSA may be changed at any time on a prospective basis. Notwithstanding the foregoing, a Participant may switch from Limited - Purpose Health Care Reimbursement Coverage to General - Purpose Health Care Reimbursement Coverage at any time during a Period of Coverage up to and including the last day of the Plan Year; provided, that a Participant may not make a corresponding Election Change to increase or decrease Pretax Contributions for Health Care Reimbursement Coverage, unless the Election Change is consistent with a Change in Status. If a Participant changes from Limited - Purpose Health Care Reimbursement Coverage to General - Purpose Health Care Reimbursement Coverage, his or her Pretax Contributions and reimbursements under the Limited - Purpose plan shall be taken into account in determining the amount of coverage available under the General - Purpose plan for the balance of the Plan Year. Medical Care expenses incurred prior to the date that a Participant changes from the Limited - Purpose plan to the General - Purpose plan, but not previously reimbursed, shall be payable from the General- Purpose plan (if sufficient coverage remains in the Limited Purpose plan at the time of reimbursement), and a corresponding reduction shall be made to the coverage available under the General Purpose plan. Section 4.6 Election Change for HSA Benefits. A Participant who has enrolled in the HDHP and is an eligible individual under Section 223(c)(1) of the Code may start or stop an election to contribute to an HSA, or increase or decrease the amount of the election, as long as the change is effective in the following month. Rules that govern election changes following a "Change in Status" or a "change in Cost or Coverage" do not apply to Employer contributions or Pretax Contribution to HSAs. 5.2.2 Health Care Reimbursement Coverage. A Participant may elect to receive health care reimbursement coverage under one of two separate plans: (1) a plan for General - Purpose Health Care Reimbursement Coverage, or (2) a plan for Limited - Purpose Health Care Reimbursement Coverage. General - Purpose Health Care Reimbursement Coverage shall be available to Participants who do not intend to contribute to an HSA and are not "eligible individuals" under Section 223(c)(1) of the Code. Limited - Purpose Health Care Reimbursement Coverage shall be available to Participants who have elected coverage under the HDHP and intend to contribute to an HSA. Limited - Purpose Health Care Reimbursement Coverage shall also be available to Participants whose spouses are covered under an HDHP of another employer, so that those spouses remain eligible to contribute to an HSA. Both General - Purpose and Limited Purpose Health Care Reimbursement Coverage plans are governed by the terms and conditions of this paragraph 5.2.2. (a) Maximum Coverage Amounts. Participants receiving General Purpose Health Care Reimbursement Coverage may elect to receive medical reimbursement coverage of up to a maximum coverage of Three Thousand Dollars ($3,000) per Plan Year. Participants receiving Limited - Purpose Health Care Reimbursement Coverage may elect to receive medical reimbursement coverage of up to a maximum coverage of Three Thousand Dollars ($3,000) per Plan Year. • (b) Health Care Reimbursement Charge. Prior to the commencement of each Plan Year, the Employer shall determine and communicate to Participants the annual rate of the Health Care Reimbursement Charge for each dollar of health care reimbursement coverage for the forthcoming Plan Year. A Participant's Health Care Reimbursement Charge shall be payable from the Participant's available Employer Contributions or Pretax Contributions on a monthly or other periodic basis during the Plan Year as determined by the Employer and communicated to Participants. (c) Health Care Reimbursement Benefits. Subject to limitations contained in other provisions of this Plan, a Participant receiving General- Purpose Health Care Reimbursement Coverage who incurs expenses for Medical Care attributable to the Participant or the Participant's spouse or Dependents during the Participant's Period of Coverage for a Plan Year shall be entitled to receive from the Employer full reimbursement for the entire amount of such expenses to the extent of the maximum amount of coverage elected by the Participant for that Plan Year. A Participant receiving Limited - Purpose Health Care Reimbursement Coverage who incurs expenses attributable to the Participant or the Participant's spouse or Dependents for [dental expenses, vision expenses, preventative care expenses that fall within the safe harbor described in IRS Notice 2004 -23, and Medical Care expenses that are incurred after the HDHP deductible has been satisfied], shall be entitled to receive from the Employer full reimbursement for the entire amount of such expenses to the extent of the maximum amount of coverage elected by the Participant for that Plan Year. The Employer shall pay all such expenses to the Participant upon the presentation of documentation of such expenses in a form prescribed by the Employer, which shall include satisfactory third party evidence of the amount of the expense and the date(s) incurred. In addition, upon presentation of a claim, a Participant shall expressly represent that the item for which a claim is made is not subject to reimbursement under any policy described in paragraph 5.2.2(d) or from any other source. In its discretion, the Employer may pay any of such expenses directly, in which event it shall be relieved of all further responsibility with respect to that particular expense. These expenses shall be paid periodically during the Plan Year upon receipt during the prior month of a claim complying with Plan requirements and totaling at least Ten Dollars ($10), and by following the close of the Plan Year upon receipt no later than of a claim (no minimum) complying with Plan requirements. (d) Limitations on Health Care Reimbursement Benefits. Anything in the Plan to the contrary notwithstanding, no Participant shall be entitled to benefits under this paragraph 5.2.2: • • (i) In the event and to the extent that, the reimbursement or payment is covered under any insurance policy or policies, whether paid for by the Employer or the Participant, or under any other health and accident plan by whomever maintained. If there is such a policy or plan in effect providing for reimbursement or payment, in whole or in part, then to the extent of the coverage under that policy or plan, the Plan shall be relieved of any liability; or (ii) To the extent that the expense has been submitted for reimbursement from the Participant's Dependent Care Reimbursement Account or under any similar program or plan maintained by some other person or entity. Notwithstanding the foregoing, however, in the event that an expense for Medical Care could be reimbursed from either a Participant's Health Care Reimbursement Coverage or a Participant's HSA, the Participant's Health Care Reimbursement Coverage shall pay first, until such coverage is exhausted, unless the Participant directs that the HSA pay first. In no event may the same expense be reimbursed under both Health Care Reimbursement Coverage and an HSA. (e) Unused Benefits. If following the final payment of reimbursement benefits for eligible expenses incurred during the Period of Coverage for any Plan Year, any amount remains in a Participant's Health Care Reimbursement Account for that Plan Year, such amount shall be returned to the Plan, and Participant shall have no further claim to that amount. (f) Separate Written Plan. For purposes of the Code, paragraph 52.2 shall constitute a separate written plans providing for the reimbursement of Medical Care expenses. To the extent necessary, other provisions of the Plan are incorporated by reference in paragraph 5.2.2. 5.2.8. HSA Benefits. (a) Employee Pretax Contributions. A Participant who has enrolled in the HDHP and is an eligible individual under Section 223(c)(1) of the Code may elect to have a portion of his or her compensation forwarded by the Employer to an HSA established with one or more designated trustees or custodians (an "eligible HSA "). If a Participant elects to contribute to an eligible HSA, the employee's cash compensation will be reduced, and an amount equal to the reduction will be forwarded to the employee's HSA. (b) Employer contributions. The Employer may contribute directly to the HSA of a Participant, outside of the Plan; subject to the comparability rules under Code section 4980G. In the alternative, the Employer may • DATED: contribute an amount through the Plan that is intended for the HSA of a Participant, without regard to the comparability rules, and the Participant may choose between the HSA contribution and taxable cash compensation. The Employer reserves the right to change the amount or timing of contributions at any time, and from time to time, whether made to the Plan or directly to the Participant's HSA. (c) Limitation on Employer Involvement. The terms of individual HSAs will be governed by an agreement between employees and a trustee or custodian. The Employer will not impose conditions on the use of HSA funds, restrict the ability of employees to move HSA funds to other HSA providers make or influence investment decisions with respect to funds contributed to an HSA, or receive any payment or compensation in connection with an HSA. The Employer may limit the forwarding of payroll contributions to designated HSA trustees or custodians. However, the employer does endorse any particular HSA provider, and has no authority or control over funds deposited in an HSA. (d) Contribution Limitations. In no event shall Participant Pretax Contributions to an HSA, when combined with Employer contributions to the HSA, exceed, (i) the statutory maximum amount for HSA contributions applicable to the Participant's HDHP coverage option (i.e., single or family) for the calendar year in which the Contribution is made, as adjusted each year for cost -of- living increases ($2,900 for single and $5,800 for family in 2008 If you elect to be covered for an HSA eligible plan in a month other than January you can choose to contribute the statutory maximum of that plan year. The election will be based on coverage in the last month of the plan year, unless the participants chooses not to continue on the HSA plan for the 12 subsequent months following the last month of the year of the first year of eligibility. An additional catch -up contribution ($800 for 2007, increasing by $100 each year until it reaches $1,000 in 2009) may be made by Participants who are age 55 or older. City of Lino Lakes City Council By Its •