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HomeMy WebLinkAboutR-2001-110 VEBA Medical Savings Account / Voluntary Employees’ Beneficiary Association Plan for managementRESOLUTION NO. R-2001- 110 A RESOLUTION authorizing the establishment of a Medical Savings Account/Voluntary Employees' Beneficiary Association ("MSA/VEBA") Plan for management employees. WHEREAS, the Internal Revenue Code, Section 501(c)(9) allows for the creation of a voluntary employee beneficiary association which is employee sponsored, tax- exempt health and welfare trust; and WHEREAS, such tax-exempt plans are available for public sector employees in the State of Washington; and WHEREAS, on October 21, 1992, there was established the "Voluntary Employees' Benefit Association for Public Service Employees in the State of Washington Trust" ("Trust"); and WHEREAS, on November 19, 1999, the Trust was amended and restated; and WHEREAS, the City of Yakima ("City") has determined that establishing a medical expense reimbursement plan, which provides a tax-free account for employees to pay for medical, dental, vision, and tax -qualified long term care expenses that are not paid by any other insurance plans, is in the best interest of the City and the management employees identified in the Yakima Municipal Code, Section 2.20.115(2); and WHEREAS, the City desires to establish a medical expense reimbursement plan for said employees; and WHEREAS, the City desires to use the services of MSA/VEBA Trust to administer such plan; and WHEREAS, such medical expense reimbursement plan established by the City will be administered in accordance with the plan documents provided by the MSA/VEBA Trust on file with the City, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: 1. Effective July 17, 2001, the City hereby elects to participate in the Trust as presently constituted or hereafter amended using the MSA/VEBA Trust as its plan administrator, and establishes the MSA/VEBA program for all eligible management employees. (1k)res/fire dept. Taff veba mar Ol.pm 2. The Plan will be funded by cashouts of eligible employee sick leave accounts upon retirement. 3. The plan will remain in effect indefinitely until 10% or more of the management group petition for a vote to withdraw from the plan. Changes in state law affecting sick leave cashout at retirement or changes in the Internal Revenue Service (IRS) tax code will also cause the plan to be reevaluated. 4. The City Manager of the City of Yakima is hereby authorized to take all necessary and appropriate actions to effect this Resolution. ADOPTED BY THE CITY COUNCIL this 17th day of July, 2001. ATTEST: /4krif a47 -,,,e/„/ -z -d) City Clerk (Nees/ fire dept. Taff veba mar Rl.pm yPlace, Mayor I/O SA I, A TAX-FREE MEDICAL SAVINGS ACCOUNT FOR PUBLIC EMPLOYEES IN THE NORTHWEST Flan Fen and. A A- Meir ersF iF Enrollment FaT m "What is the MSA VEBA Plan?" "What is a VEBA and what are the tax objectives of the Plan?" I The MSA VEBA Plan is a ��� SEB � Plan nt and nables youremployer to ment medical ake Se reimbursement account. The tax-free contributions into an MSA VERA Trust account on your behalf. The Plan is available to employees of counties, cities, towns and special purpose districts in Idaho, Oregon and Washington. - 1( VEBA is atax-exempto shauthorized lan�areernal Revenue Code Section o enable your employ to �01(c)(9). The tax objectives make tax-free deposits on your behalf to thePlan, for your account to be credited with tax-free investment earnings, and to enable you to obtain tax-free reimbursements for your medico expenses and insurance premium payments. MSA VEBA contributions are e ay for the ran MSA V'EBA account P °`vour spou$2eand your q alified ides a 'cax-fre source of funds todependents cost of healthcare expenses for Your MSA VEBA account may be used to pay any expenses (dedu ctibles, d pr co -payments, post-retirement ost r is ement medical, dental, or vision o co-insurance, etc.), plus post-retirement medical, dentale or vision plansrand long ance premiums, Medicare Part B premiums., term care insurance premiums. There are many potential funding sources of MSA VEBA deposits, such as: 1. Sick leave or other leave cash outs. 2. Employer benefit contributions on a periodic basis. 3. Contributions in lieu of salary increases, (or salary reductions) for a group of employees. 4. Pension contribution rate reduction savings (such as PERS savings). 5. Other miscellaneous sources. by When you are eligible, you become p yourant benefits' ffice.the aYoured Membership Enrollment Form and delivering -it MSA VEBA account w lll n then opened when your employer sends funds to the MSA VEBA Plan A or. You may submit an MSA VEBA Medical Claim Form for your quadut- of-pocket medical, dental, or vision expenses incurred byyourself, yourspouse, and/or your qualified dependents. You may file claims for any amount. Benefits will be paid until your account is j used up. You may also arrange ioPayment ve rtouanceremudependentssiy using the MSA VEBA Systematic � monthly Ifyour p use their insurance premiums can also be are covered by different medical plans, went is efficient and hassle free. paid for out of this account. Claims payment For more information call the VEBA Service Group, LLC. Western Washington 1-300-4224073 • Eastern Washington 1-800-888-VEBA To order brochures or forms call 1-800-VEBA101 or (509)534-0600 thy should I participate the VISA VEBA Plan?" "What funding sources are available for MSA VEBA deposits?" How do I become a participant in the Plan?" "How do I get money out of my MSA VEBA lccount?" MSA VEBA forms may be obtained from your benefits' department or: by calling: 1-800-VEBA101 or (509) 534-0600 by e-mail: adist@veba.org i VEBA Plan A�austrator by writing' Icc/�So REHN 8c Associates Spokane, W A 99205-0433 ` P.O. Box 5433, �t� bor e,�-ro.,..o� ., incincurredd :after NOTE: Reimbursable health related bene, must e en� , your MSA VEBA account is first opened. Withdrawals provision your expenses/ BA tG 'i account may be made only for qualified , - Qualified menden premiums Qualified expenses are outlined in IRS Publication You may obtain IRS publications bu cairn; i- 1 are outlined in IRS Publication 501. at „ �„U-�v.irs.:�st�'eas.;ov.' 800-T ORNI or on the Internet "http://urarx.irs.ustreas.gov." _ you elect to use after retue- I l Les The cost of any (=mantled medical plan thisaccount. � "Can the cosi of any retiree meat can be paid for ou-+ of 'i medical plan be paid from my MSA VEBA account. i ds you don't withdraw this year Your account is always 100°% vested. Fun "What happensmoney 1 don't will continue to be available untilulbrn expenses. paid out to you and/or your account this from any dependents or heirs, for qualifiedP • account year, or if I quit my job or take a leave of absence?" estimates an average retired couple spends plus "How much medicaled expense ii Based on current cost get you may also : approximately $400 per month �� vision arer their 1CA plan dolder related retirees will money will I need during facec on-going costs exp for den term nursing home care. Many retirement?" � potential expenses for long need over $50,000 for their post-retirement medical care. die before �f you are survivedbv a spouse or dependent children en (or other receive medical "What happens if 1 dependents as defined by the IRS), account is used un?" benefits until your account is used up. If you have no eligible dependents , myn your account will be paid as medical benefits to the the funds remairuri�gi, heir(s) of your estate. "Who is the MSA VEBA Plan Administrator?•, jl "Who is th� Plan?'for managing HN & Associates in Spokane, WA is the MSA VEBA Plan administrator Administrator. REHN is an experienced employee benefits specializing in the administration of benefitS health and welfare plans. All ayment services are provided by correspondence, accounting, andP REHN & Associates. ,this -- VEBA T_.-, is a non-profit, tax-exempt health and welfare trust , who are elected by, authorized by T.RC 501(c)(9). It is managed by Trustees the Plan participants. iat are the Trustee's i The Trustees are fiduciaries and have a duty to act prudently and in the responsibilities?" I best interest of you and all other Plan participants and beneficianes. "Will 1 receive a statement of my account?" "Will my account grow?" "How is the MSA VEBA money invested?" pw are expenses paid?" "How do I find out more about this Plan?" You will receive a semi-annual statement in January and July detailing activity in your account. You may also call and request additional statements at any time. If you have questions about your MSA VEBA account, or about a pending claim, or need claim forms, contact the MSA VEBA Plan Administrator. The net investment earnings (after expenses are deducted) are credited tax-free to your account on a monthly basis he Trust offers you three fund options. You may choose to allocate your MSA VEBA account in any of the following funds: • Stable Value Fund (Conservative) • Balanced Fund (Moderate) • Growth Fund (Aggressive) Investments in the Balanced and Growth Funds will fluctuate in value. Please carefully study the Investment Fund Information and Investment's Summary on the back of this brochure or contact the MSA VEBA Plan Administrator and ask tor the Investment Fact Sheets. All expenses of administering the Plan are paid by reductions of investment earnings or, if there are no earnings, charged as a deduction to a participant's account. Contact the VEBA Service Group, LLC's regional office nearest you at the phone number listed below. Plan Consultants - VEBA Service Group, LLC: Eastern Washington Regional Office S. 400 Jefferson, Suite 301 Spokane, WA 99204-3143 1-800-888-VEBA (509) 838-5571 Fax (509) 838-5613 Mark R. Wilkerson, Lt.? - mark@veba.org Richard Dickman - rich@veba.org Western Washington Regional Office 11627 62nd Ave. E. 'uyallup, WA 98373-4339 .300-422-4023 (253) 435-8835 Fax (253) 435-8850 Peter J. Laney, COY - peter@veba.org John Fulbright - john@veba.org MSA VEBA Plan Administrator: REHN Sr Associates P.O. Box 5433 Spokane, WA 99205-0433 1-800-VEBA101 (509) 534-0600 Fax (509) 535-7883 Tim Yeager - admin@veba.org Legal Counsel: Liebman-Mimbu, PLLC 3223 3rd Ave. So., Ste. 200 Seattle, WA 98132 (206) 381-3375 Henry Liebman - legal@veba.org MSA VEBA Investment Fund Infonnation Investment Risk • Accourss invested in the Balanced and Growth Funds are not guaranteed. and will fluctuate in value on a ' ithdrawals from these funds may be worth more or less than your original deposit. monthly basis. Benefit wg, guaranteed investment • The Stable Value Fund does not fluctuate in value and is invested in interest bearing contracts your Membership Enrollment Form, please carefully review your selected investment notifye • Prior to submitting in$ - Y should reevaluate your fund se_ection(. , fund choice; sj. Should your objectives change, youvestment Which contains stock market e Plan Administrator in writing of any changes. Remember, any m particularly over investments entails the risk of loss, and there have been ne mea t lossperiods the past in these types of inve� �� funds and there wills, othershighly inthe endo n o We rend ss investment and should not be used for short game horizons, are rsghly dependent on trends in various Lnvesa-hent markets. Thus, the Balanced shorter gar term and Growth Funds are suitable primarily a., lord_ tern investing Using Multiple Funds ou have your MSA VEBA account allocated to a single fund, two funds, or to all three funds • Y may ITransfers r T r nests Tst abreceived in writing by the fere VEBA s are • You may transfer among the three funds monthly by using a Fund Transfer .nstruc+son Form, transfers s effective the 1st business day of each month. Transfer q_ 1 Plan Administrator by the 25th of each month in order to be effective on the 1st business day of the following month. 1 11 Withdrawals • If you have multiple funds, withdrawals made from your account will be withdrawn, prorata based on your fund allocation percentage on file with the MSA VEBA Plan Administrator. CONTRIBUTIONS are held in a short term investment fund (STIF) and credited with monthly interest until the 1st Contributions participants' current allocation instructions. • of the month following receipt when they will be allocated per the artic. Investment Advice vestunent funds from their personal financial Participants are encouraged to seek advice regarding these in advisor. The MSA VEBA Trustees do not give investment advice. EXPENSES Trust assets grow. Administrative expenses vary administrative expenses have averaged 2.5 to 2.7% and are expressed as an annual percent ofaverage • neteust osta e, auditing, assets. These expenses are expected to decline as � fees, local servicing, printing, postage, slightly month to month and include legal fees, consulting claims payment, etc. • adviso expenses for services provided by The Vanguard Group are .18% for the Balanced Fun d Investment rY and 06% for the Growth Fund. The effect of the expenses is reflected in the return of each fund the participant has selected. QUALIFIED USES FOR YOUR VESA ACCOUNT must request the VERA Plan Administrator to reimburse you for qualified expenses/premiums. Qualified expenses/premiums are outlined in !RC Section 213 and IRS Publication 502. (You can order IRS Publication 502 by calling 1 -800 -TAX -FORM or download from the IRS Website at http:Uwww.irs.gov.) "Medical care" expenses include amounts paid for the diagnosis, treatment, or prevention of disease, and for treatments affecting any part of or function of the body. The expenses must be to alleviate or prevent a physical defect or illness. Expenses for solely cosmic reasons generally are not expenses for medical care. Examples include face lifts, hair transplants, and hair removal (electrolysis). Also, expenses that are merely beneficial to your general health (for example, vacations) are not expenses for medical care. One fact or circumstance that often — but not always — indicates that medical care involves the treatment or prevention of disease is whether the care is prescribed by a physician. A mere suggestion by a physician probably is not enough. In addition, there should be a doctor -patient relationship between you and the physician prescribing the care. The following is a list of the more common allowable claims. (This is not a complete list) COMMON QUALIFIED CLAIMS Premiums: Medical insurance Dental Insurance Vision insurance Health Maintenance Organizations (HMO) Long Term Care insurance (Tax Qualified) Medicare Part B Medicare Supplement `common Expenses: surance Plan Deductibles .t,nsurance Plan Co-insurance Office Visit Copays Physician Services Copays Prescription Copays Miscellaneous Expenses: Abortion Adoption (medical expenses incurred before adoption is finalized) Air conditioning and air filters used for alleviating illness Alcoholism and Drug Treatment Center costs Ambulance hire Artificial limbs and teeth Automobile modifications (hand controls, special equipment, mechanical lifts) Birth control pills Braille books & magazines Childbirth classes (birth preparation classes, not child rearing classes) Contact Lenses Crutches - purchased or rented Dental treatments Earplugs - for a specific medical condition Elastic hose, medically prescribed Eyeglasses or Prescription Sunglasses Fertility treatments Fluoridation devise Food & beverages, for specific diseases Genetic testing (to determine possible defects) Halfway house residency Hearing devices & batteries infertility treatment Leaming disability (special school or specially trained educator for learning disabled children recommended by doctor) Lifetime care at medical facility Meoical Supplies Norplant insertion or removal Obstetrical expense Occlusal Guards - to prevent grinding of teeth Operations Optometrist Organ Transplants Oxygen equipment, rental of medical or healing equipment Physical Therapy Private Hospital Room Radial Keratotomy Retirement home fees, costs allocable to medical care Sanitarium or rest home Seeing -eye dog Services & Fees: Acupuncture Anesthetist Chiropractor Christian Science Dentist Diathermy Gynecologist Laboratory Medical info plan Osteopath Psychiatrist Physiotherapist Surgeons Exam, physical Eye Exam Healing services Hospital Lip Reading Services for the Deaf Nursing Oral Surgery Physician Practitioners Psychoanalyst Psychologist Sex therapist Specialists Special television set to receive closed captions Speech training for a child with dyslexia or other disability Sterilization Student health fee Support for corrective devices (Including special mattress and board for arthritis) Telephone for deaf Therapy treatments • Transportation expense relative to illness Vaccines Vasectomy Viagra Wheelchair X-rays For specific questions about your claims, please call the VEBA Plan Administrator at 1-800-VEBA-101 or e-mail at rehn©ior.com. 0J:wheel Uses Rewired 11188 MSA VEBA. PARTICIPATION LIST AS OF MAY 9, 2000 Special Purpose Districts (continued) King County Water Distnct No. 83 Kitsap County Sewer District No. 5 Klickitat County PUD (*Pending) Lake Roosevelt Development Assoc. Lakehaven Utility Dtsmct Mason County PUD #3 Midway Sewer District Mukilteo Water District North Perry Ave. Water Dtstrict Okanogan County PUD Olympic View Water & Sewer Distnct Pend Oreille County PUD (*Pending) Pierce County Fire Distnct No. 8 Port of Bremerton Port of Centralia Port of Ephrata Port of Longview Port of Port Angeles Port of Skarnanta County Port of Vancouver Silver Lake Water Distnct Skamama County PUD Snohortush County Fire District No 26 Snohomish County Fire District No. 5 Southwest Suburban Sewer District Spokane County NOXIOUS Weed Board Spokane Firelighters Thurston County Fire District No U Thurston County Fire No. 14 Valley Water Distnct Valvae Sewer Distnct Water Distnct No. 111 Whitworth Water Distnct No. 2 Counties/Cities/Towns Benton County City of Airway Heights City of Arlington City of Cashmere City of Grandview City of Palouse City of Post Falls City of SeaTac City of Select' City of Sutmystde City of Tacoma Franklin County Kittrtas County Kootenai County Town of Odessa Special Purpose Districts Annapolis Water Dtstnct Benton County PUB (*Pending) Cascade Valley Hospital Cedar River Water & Sewer Districts Chelan County PUD Covington Water Distnct Douglas County PUD Ferry County PUD Franklin County PUD (*Pending) Grant County PUD King County Water Distnct No 108 King County Water District No. 111 Kinn County Water District No. 20 King County Water Distnct No. 49 King County Water Dtstnct.No .15 (*pending means the employer hots adopted the Plan but has trot yet made u contribution to the Trust) purpose tax districts are ellglble to participate. If Employees of cities, counties, towns, and special Pure an NIS A VEBA plan to your benefits you have any questions, or would like to discuss adding package, please give us a call. VERA SERVICE GROUP REGIONAL OFFICES: Eastern Washington: Richard Dickman Mark Wilkerson, CFP Phone: (509)838-5571 or 1-800-888-VEBA Fax: (509)838-5613 E-mail: wilkersnt@.ior.com 400 S. Jefferson, Suite 301 Spokane, WA 99204 Western Washington: John Fulb fight Peter Laney, CFP Phone: (253)435-8835 or 1-800422-4023 Fax: (253)435-8850 E-mail: pjlaney@msn-cpm 11627 62nd Ave. E Puyallup, WA 98373 MSAWEBA MEMBERSHIP E1 Oi , I Ni1 FORM Participant Information (Please print dearly.) IApplicant's Name MSA VEBA Plan Administrator ci o REHN & Associates P.O. Box 3433 Spokane, WA 99205-0433 1-800-VEBA101 • (509) 534-0600 Fax (509) 535-7883 Email: admin©veba.org Social Security Number Address State Zip Code City ( )iDate of Birth Phone No. Spouse's Name Inves'- . tent Fund Selection Please choose the investment fund or fund(s) for your MSA VEBA account. Stable Vaiue Fund (Conservative) % Balanced Fund (Moderate) Growth Fund (Aggressive) Total must equal 100 % _'lease use whole numbers, we cannot account for fractions. If you do not choose an investment fund, the total value of your MSA VERA account will be allocated to the Stable Value Fund. Benefit withdrawals from your funds will be made proportionately. Hold Harmless Agreement & Required Signature I hereby become a Member of the MSA VEBA Plan & Trust for Public Employees in the Northwest. I acknowledge that this Plan will provide benefits payable to me, my spouse, my qualified dependents, or to my heirs, and that benefits will be paid until the account is used up. I hereby acknowledge that my employer is providing no tax advice regarding participation in this Plan. There- fore, I hereby agree to waive any claims against my Employer relating to participation in this Plan or to taxation of Plan benefits, and to indemnify and hold the Employer harmless for any taxes, assessments, damages or other costs that may be incurred. Signed this day of Signature of Employee To the Employee: Please make a copy of this form for your personal records. Your employer will also keep a copy for their records. Your employer will send this form to the MSA VEBA Plan Administrator, along with their check for your MSA VEBA contribution. Upon receipt of the funds, the MSA VEBA Plan Administrator, REHN & Associates, will send you a welcome letter confirming the deposit, plus an initial MSA VEBA Claim Form, an MSA VEBA Systematic Payment Form and a Summary Plan Description. Please use your social security number whenever communicating with the MSA VEBA Plan Administrator. To the Employer Personnel/Benefits' Department Please mail this form to the MSA VEBA Plan Administrator along with the contribution made payable to the MSA VEBA Trust. Employer Contact Person: Phone: E-mail: To order brochures or forms: e-mail adrnin@veba.org or call 1-800-VEBA101 or (509) 534-0600 (Spokane). (PSE03 Rev 4/00 BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 4- 11 For Meeting Of 7/17/01 ITEM TITLE: Consideration of a Resolution authorizing the Establishment of a Medical Savings Account/Voluntary Employee's Beneficiary Association ("MSA VEBA") Plan SUBMITTED BY: Dick Zais, City Manager; Cindy Epperson, Accounting Manager; and Sheryl M. Smith, Deputy Human Resources Manager CONTACT PERSON/TELEPHONE: Sheryl Smith, x6665 SUMMARY EXPLANATION: The attached resolution authorizes the establishment of a Medical Savings Account/Voluntary Employee's Beneficiary Association ("MSA VEBA") Plan as allowed by IRS regulations. This matter was has been under consideration by the management group of employees for over a year. The management employees voted recently to implement a VEBA plan for sick leave cashouts only at the time of retirement. Individual employee sick leave cashouts will be deposited in the VEBA Trust account for the specific use for unreimbursed medical expenses such as insurance premiums, prescription drug co -pays, deductibles, and other unreimbursed medical expenses. This program will result in payroll tax savings for the City and income tax savings for the employee. Resolution X Ordinance Other (Specify) Contract Mail to (name and address): Funding Source APPROVED FOR SUBMITTAL City Manager STAFF RECOMMENDATION: Pass resolution. BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2001-110