6.6.B. SR 12-05-2005
Item 6.6. B.
MEMORANDUM
TO: Mayor and City Council
FROM: Lauren Wipper
Human Resource Representative
DATE: December 5, 2005
SUBJECT: Flexible Benefits Plan Amendment
Staff is requesting amendments to the City's Flexible Benefits Plan document to include a grace
period for incurring expenses and an increase the maximum allowed contribution for the Health
Flexible Spending Arrangement.
This year the Internal Revenue Service issued Notice 2005-42 allowing a two and one-half month
grace period extending beyond the end of the plan year to incur expenses. This grace period allows
participants to incur expenses through February 15th and apply them to the previous year's plan.
Adoption of the attached resolution allows the City to provide this option to plan participants
beginning with the 2006 plan year.
In addition, a number of employees have inquired about increasing the maximum dollar amount in
the Health Flexible Spending Arrangement plan. The amount has not increased for many years even
though medical costs have increased and some employees now elect a health insurance plan that
carries a high out of pocket cost. Staff's recommendation is to increase the amount from $2,000 to
$3,000.
As well, the amended Flexible Benefits Plan will include regulatory changes that have been made
since it was last updated January 1,2004.
Action Requested
The Council is asked to approve a resolution allowing a two and one-half month grace period and
increasing the maximum to $3,000 for the Health Flexible Spending Arrangement.
RESOLUTION 05-_
RESOLUTION OF THE CITY OF ELK RIVER
AMENDING THE CITY'S FLEXIBLE BENEFITS PLAN
The undersigned, Joan Schmidt, serving as Clerk of the City Council of the City of Elk River, (the
"City"), duly organized and existing under the laws of the State of Minnesota, does hereby certify
that at a meeting of the City Council, held on the 5th day of December, 2005, at which a quorum was
present, the City Council unanimously adopted the following resolution:
WHEREAS, the City of Elk River previously adopted the City of Elk River Flexible Benefits Plan
("Plan") on June 6, 1988;
WHEREAS, the City of Elk River desires to amend and restate the Plan in the following manner:
. Include IRS Notice 2005-42 provisions to allow a 2 1f2 month grace period for
health care claims incurred after the Plan Year has ended;
· Health Flexible Spending Arrangement maximum $3,000;
. Amend and restate the Plan to incorporate all previous Summary of Material
Modifications and to comply with the most recent and relevant regulatory changes
since the last Plan modification, which was on January 1, 2004.
NOW, THEREFORE, BE IT RESOLVED, that the City of Elk River Flexible Benefits Plan be
amended & restated effective January 1,2006;
BE IT FURTHER RESOLVED, that any authorized persons of the City are hereby authorized to
make such contributions from the funds of the City as are necessary to carry out the provisions of
said plan at any time.
Passed and adopted by the City Council of the City of Elk River this 5th day of December 2005.
Stephanie Klinzing, Mayor
ATTEST:
Joan Schmidt, City Clerk
S :\Resolutions\2005 Resolutions\FlexPlan.doc