HomeMy WebLinkAboutAGENDA REPORT 2009 0701 CC REG ITEM 10H ITEM 10.H.
CITY OF MOORPARK.CALIFORNIA
City Council Meeting
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MOORPARK CITY COUNCIL
AGENDA REPORT
BY:
TO: Honorable City Council
FROM: Deborah S. Traffenstedt, Administrative Services Director
Prepared by: Teri Davis, Senior Management Analyst
DATE: June 23, 2009 (CC Meeting of 7/1/09)
SUBJECT: Consider Amending Resolution No. 2004-2249 Concerning the
Vantagecare Retirement Health Savings Program
BACKGROUND AND DISCUSSION
In October 2004, the City Council of the City of Moorpark(City) adopted Resolution 2004-
2449 to establish a Vantagecare Retirement Health Savings (RHS) Program. The RHS
was an excellent resource for the City to, as a conscientious employer, provide employees
with a vehicle by which a percentage of their paychecks could be placed in accounts on a
non-taxable basis. The monies saved in these RHS accounts could only be used for
eligible medical expenses upon retirement. The intent was to assist employees as they
cope with the high cost of health care facing retirees.
Internal Revenue Service (IRS) Publication 969 allows employers to provide Health
Reimbursement Arrangements (HRA) under which the RHS is established. After the City
adopted the RHS, new IRS restrictions were placed on HRAs. An example of one of the
new restrictions is that HRAs now require all employees to participate if a RHS is offered
(previously, the RHS was voluntary). City employees found this and other restrictions to be
undesirable and ultimately, employees requested that the City discontinue the RHS and
delete the RHS from future Memoranda of Understanding as well as future Management
Benefit Resolutions.
Staff researched the necessary procedures to rescind the RHS benefit and found that
when an employer rescinds this benefit, all monies must be returned to employees who
participated. The monies returned would be considered taxable. Staff found that the City
has the option of suspending the RHS so that it is no longer offered to employees but
allows current participants to maintain their accounts to be utilized in retirement, as
intended and the City will have the option to terminate the RHS once all of the account
balances are zero. There are five (5) retired employees, one (1)former employee (who is
working elsewhere), and two (2) employees presently participating in the RHS.
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Honorable City Council
July 1, 2009 Regular Meeting
Page 2
The RHS benefit does not appear in the current Memorandum of Understanding or the
current Management Benefit Resolution (2008-2735). Employees may not currently apply
for or enroll in the RHS Program. City employees who participated in the RHS prior to the
new IRS restrictions wish to maintain their accounts, with the understanding that no
additional deposits will be made. Therefore, the City wishes to amend Resolution 2004-
2449 to suspend the RHS plan, allow current participants to maintain their accounts, and
refrain from offering the benefit to other employees.
STAFF RECOMMENDATION
Adopt Resolution No. 2009- consistent with the agenda report.
Attachment: Draft Resolution
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RESOLUTION NO. 2009-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MOORPARK, CALIFORNIA, AMENDING RESOLUTION NO.
2004-2249 SUSPENDING THE VANTAGECARE
RETIREMENT HEALTH SAVINGS (RHS) PROGRAM WITH
THE ICMA RETIREMENT CORPORATION
WHEREAS, the Internal Revenue Service (IRS) Publication 969 grants authority for
employers to establish Health Reimbursement Arrangements (HRA); and
WHEREAS, the RHS is a HRA developed for public agencies; and
WHEREAS, Resolution No. 2004-2249 adopted on October 6, 2004, previously
established a RHS; and
WHEREAS, since the adoption of Resolution No. 2004-2249, the IRS has placed
new requirements on HRAs; and
WHEREAS, City employees consider the new HRA requirements to be restrictive to
such an extent that City employees requested the RHS plan be suspended and removed
from any future Memorandum of Understanding between the City and employees and any
Management Benefit Resolution; and
WHEREAS, the City no longer offers the RHS plan to any City employees; and
WHEREAS, the City is required to return all monies to participants, should the City
rescind the RHS plan; and
WHEREAS, City employees who participated in the RHS plan are desirous of
maintaining their benefits, or keeping the monies already in the account, even though no
additional funds are deposited to the account to allow the funds to be distributed to them in
their retirement, as intended.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES
HEREBY RESOLVE AS FOLLOWS:
.SECTION 1. Resolution 2004-2249 is hereby amended to suspend the RHS
Program to prohibit new enrollments and all new deposits; however, those City employees
who have already deposited funds into the Vantagecare RHS Plan may retain their funds
already on deposit with ICMA Retirement Corporation.
.SECTION 2.. The City Clerk shall certify to the adoption of this resolution and shall
cause a certified resolution to be filed in the book of original resolutions.
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Resolution No. 2009-
PASSED AND ADOPTED this 1 st day of July, 2009.
Janice Parvin, Mayor
ATTEST:
Deborah S. Traffenstedt, City Clerk
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