HomeMy WebLinkAboutRevised Schdule B - Flexible Spending Plan - CouncilmembersCITY OF PALM DESERT
OFFICE OF THE CITY MANAGER
STAFF REPORT
REQUEST: Adopt revised "Schedule B" amending the City's Flexible
Spending Plan to provide a new reduced level of benefits
for City Council Members.
SUBMITTED BY: Lori Carney, Human Resources Manager
DATE:
Recommendation:
December 13, 2012
Adopt the revised "Schedule B" of the City's IRS Section 125 Flexible
Benefits Plan (Cafeteria Plan), providing a reduced level of benefits for
City Councilmembers, providing premium conversion for individual
coverage only, and allowing a cash conversion for "opting out" of
coverage, effective January 1, 2013.
Background
In April 2012 the City Council established and selected a Council Compensation
Committee made up of community members. The committee was charged
with developing a recommendation for Councilmember's compensation and
benefits. The committee held numerous public meetings and requested and
received information from staff, sitting Councilmembers and the public. They
made a recommendation for salary and benefits changes. The committee's
recommended salary of $22,500 annually was adopted at the August 23, 2012,
council meeting and the benefits structure was continued pending a request for
information from the Fair Political Practices Commission. At the November 15,
2012, council meeting the Council adopted the committee's recommendations
for Councilmember benefits and directed staff to make the necessary
amendments to the Section 125 Flexible Benefits Plan (Cafeteria Plan) to be
effective January 1, 2013.
City Council Compensation - Benefits — Staff Report
Date: December 13, 2012
Page 2 of 4
The committee recommendation is restated here:
Insurance Benefits shall not exceed $7,500 annually for each
Councilmember, such amount to be adjusted as needed to provide
individual coverage at the premium rate for the second -highest rate plan
(this amount being based on the 2012 costs for individual coverage in
the City's Health, Dental & Vision plans); or,
In the case where a Councilmember declines coverage he/she can
receive the equivalent of the premium contributions converted to cash as
taxable income.
Effective January 1, 2013, Councilmember's will be eligible to enroll in any of
the City's health insurance plans. The City will contribute an amount not to
exceed the current premium for an individual (up to the second highest cost
health plan). In other words, if a Councilmember elects to cover their
dependents and/or enroll in the highest cost plan, they will be responsible for
the difference in premiums, to be deducted monthly from their council stipend.
The City offers a single dental insurance plan and Councilmembers are eligible
to participate. Again the City will contribute an amount equal to individual
coverage and if a Councilmember elects to enroll dependants, they will be
responsible for the difference in premiums, to be deducted monthly from their
council stipend.
The City offers a single Vision insurance plan, and Councilmembers are eligible
to participate. This plan currently has a composite premium rate, so there is no
increase in premium for family coverage. If the City adopts a family size -based
rate structure, the individual premium will be used for Councilmembers.
If a Councilmember decides not to enroll in the City's health, dental or vision
plans he/she will be eligible to receive a "cash in lieu of premium" benefit equal
to the amount of the individual premium for the plan.
City Council Compensation - Benefits — Staff Report
Date: December 13, 2012
Page 3 of 4
Within these guidelines there are numerous combinations of benefits and opt
outs possible. I've provided two examples:
Councilmember John Doe Married elects to participate and cover his spouse:
Councilmember Jane Smith, Single, opts out of coverage:
Adopting the attached amended "Schedule B" is the final step necessary in
making the recommended changes to the benefits plan structure. These
changes will become effective January 1, 2013.
City Council Compensation - Benefits — Staff Report
Date: December 13, 2012
Page 4 of 4
Fiscal Analysis
Adoption of the plan will result in reduced costs for Councilmember benefits;
however the extent of those reductions depends on the family sizes of the
current Council Members. For example, if each of the Council Members were
covering one dependent the annual savings would be approximately $35,000.
Submitted By:
ZLodrney�, Human Resources Manager
Approval:
Paul Gibson, Director of Finance
n M. Wohlmuth, City Manager
CITY COUNCIL ACTION
APPROVED DENIED
RECEIVED OTHER
MEETING DATE /cL/2-20/9-
NOES: kinhe-
ABSENT: -1406
ABSTAIN: _
VERIFIED BY ED Kra
Original on File with City Clerk's OTfice
SCHEDULE B
Flex Dollar Allowance Schedule
Full Time Employees
With Health Insurance Coverage
Premium Coverage
Employee Only
Actual premium rate up to 2"d highest cost plan
Employee + 1
Actual premium rate up to 2"d highest cost plan
Employee + 2 or More
Actual premium rate up to 2"d highest cost plan
Without Health Insurance Coverage
Cash in lieu of premium
Employee Only
$150.00
Employee + 1
$150.00
Employee + 2 or More
$150.00
Dental & Vision
Flex Dollars
Employee Only
Actual Premium
$50.00
Employee + 1
Actual Premium w/dependants
$50.00
Employee + 2 or More
Actual Premium w/ dependants
$50.00
Part Time Employees (Work between 20 and 40 hours per week)
With Health Insurance Coverage
Premium Coverage
Employee Only
50% of current premium paid for employees with
regular full-time status
Employee + 1
Employee + 2 or more
Without Health Insurance Coverage
Cash in lieu of premium
Employee Only
$75.00
Dental & Vision
Flex Dollars
Employee Only
50% of actual Premium
$25.00
Employee + 1
50% of actual Premium
$25.00
Employee + 2 or More
50% of actual Premium
$25.00
Council Members (effective January 1, 2013)
With Health Insurance Coverage
Premium Coverage
Individual Only (No Dependents)
Actual premium Rate up to 2"d highest cost plan
Without Health Insurance Coverage
Cash in Lieu of Premium
Individual Only (No Dependents)
Cash benefit equal to the amount of the individual premium
for the 2"d highest cost plan, including dental & vision
premiums.
Dental & Vision
Flex Dollars
Employee Only
Actual Premium - individual only
$50.00
Amended on 12/13/2012 for an effective date of January 1, 2013