4.11 SR 05-06-2024The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community
engagement that encourages and inspires prosperity
Request for Action
To
City Council
Item Number
4.11
Meeting Date
May 6, 2024
Prepared By
Lauren Wipper, Human Resources Manager
Item Description
Post Employment Health Care Savings Plan
Reviewed by:
Lauren Wipper
Cal Portner
Tina Allard
Action Requested
Approve, by motion, the addition of a Post Employment Health Care Savings Plan policy for retiring
department directors and city administrator.
Background/Discussion
Post-Employment Health Care Savings Plans (HCSP) are authorized for public employees under Minnesota
State Statute 352.98. These are tax-free medical savings accounts which are frequently utilized by union
employee groups. The statute requires a defined employee group and all members of that group must
participate according to the terms of the policy.
Upon the next Personnel Policy Manual update, the attached policy will be incorporated into the General
Benefits section of the policy.
Financial Impact
Severance Pay is currently paid directly to the employee as gross income. Because HCSP contributions are
pre-tax, there is actually a savings to the city for the employer's share of Medicare and Social Security
contributions.
Mission/Policy/Goal
N/A
Attachments
1. Directors and CA PEHCSP
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Post Employment Health Care Savings Plan
Upon retirement, Department Directors and City Administrator shall contribute 100% of their
Severance Pay, as paid according to policy, to their Post Employment Health Care Savings Plan
unless the Employee has opted out of the program which is approved due to a qualified exemption
rule: this provision is irrevocable as set forth by law. Should an Employee choose this opt-out
provision, it will be paid to the Employee as severance.
Upon the death of an Employee, contributions can no longer be made to the HCSP. Any payments
owed but not yet paid into the HCSP will be paid out as regular income in accordance with state and
federal law.
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