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07-262 Resolution No. 07-262 RESOLUTION AUTHORIZING EXECUTION OF AN ADOPTION AGREEMENT AND AFFIRMATIVE STATEMENT FOR AMENDMENT OF THE VANTAGECARE RETIREMENT HEALTH SAVINGS (RHS) PLAN WITH THE INTERNATIONAL CITY MANAGEMENT ASSOCIATION RETIREMENT CORPORATION ("ICMA-RC") BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Olufemi Folarin,City Manager,and Diane Robertson,City Clerk,be and are hereby authorized and directed to execute an Affirmative Statement for Amendment of the VantageCare Retirement Health Savings(RHS)Plan with the International City Management Association Retirement Corporation ("ICMA")on behalf of the City of Elgin,a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: November 14, 2007 Adopted: November 14, 2007 Omnibus Vote: Yeas: 7 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk EMPLOII ER VANTAGECARE RETIREMENT HEALTH SAVINGS (RHS )PLAN ADOPTION AGREEMENT Amendment to Existing Plan Number 8 Employer Retirement Health Savings 'Ian Name: -�- I. Employer Name: s 1-1-1-1 ,5E' 5E T" S ' ✓1 State:_ .� �T H. The Employer hereby attests th it it is a unit of a state or local government or an agency or instrumentality of one or more units of a state or local government. III.Effective Date of the Amendme:it: IV. The Employer intends to utilize:the Trust to fund only welfare benefits pursuant to the following welfare benefit plan(s) established by the Employer: V. Eligible Groups,Participation:yid Participant Eligibility Requirements A. Eligible Groups The following group or grot.ps of Employees are eligible to participate in the VantageCare Retirement Health Savings Plan (check all applicable boxes): ❑ All Employees ❑ All Full-Time Employees ❑ Non-Union Employes ❑ Public Safety Employees—Police ❑ Public Safety Employe s—Firefighters ❑ General Employees ❑ Collectively-Bargained Employees (Specify unit(s)) 4 Other(specify group(s) Pc(1 -4,:_t_ PrAtrA Men The Employee group(s)specified must correspond to a group(s)of the same designation that is defined in the statutes,ordinances, rules,regulations,personne I manuals or other documents or provisions in effect in the state or locality of the Employer, B. Participation Mandatory Participation:All Employees in the covered group(s) are required to participate in the Plan and shall receive contributions pursuant to Section VI. C. Participant Eligibility Requirements I. Minimum service: Tl a minimum period of service required for participation is OA (write N/A if an Employee is eligible tc.participate or to elect to participate immediately upon employment). 1 Minimum age:The n inimum age required for eligibility to participate is. / (write N/A if no minimum age is required). VI. Contribution Sources and AT counts A. Definition of Earnings The definition of Earnings v'ill apply to all RHS Contribution Features that reference "Earnings", including Direct Employer Contributions(Section VI,B.1) and Mandatory Employee Compensation Contributions(Section V1.B.2.) Definition of earnings: A.I t) to`''. 0 t Qo 1 B. Direct Employer Contributio is and Mandatory Contributions 1. Direct Employer Contril,utions The Employer shall cont-iburc on behalf of each Participant ❑ %of Earnings ❑ $ each Plan Year ❑ A discretionary amc unt to be determined each Plan Year ❑ Other(describe): 2. Mandatory Employee Compensation Contributions The Employer will male:mandatory contributions of Employee compensation as follows: ❑ Reduction in Salary - %of Earnings or$ will be contributed for the Plan Year. ❑ Decreased Merit or Pay Plan Adjustment-All or a portion of the Employees'annual merit or pay plan adjustment will be contributed as fiMows: An Employee shall aol have the right to discontinue or vary the rate of Mandatory Contributions of Employee Compensation. 3. Mandatory Employee Leave Contributions The Employer will mal,e mandatory contributions of accrued leave as follows(provide formula for determining Mandatory Employee Leave contril.utions): _ j ] f �/ Accru dySick Lcav�, .l",J�--l4+t'� 40 C'Q� ItrL- C! b'`tilrtt'i.t1?c"' `"irtte/rte''1 -1- i .I °7 ❑ Accrued Vacation rave ❑ Other(specify typ:of leave)Accrued Leave An Employee shal nu have the right to discontinue or vary the rate of mandatory leave contributions. C. Limits on Total Contribui ions(check one box) The total contribution by tie Employer on behalf of each Participant(including Direct Employer and Mandatory Employee Contributions) for each Pla n Year shall not exceed the following limit(s)below. )1 Co There is no Plan-defin:d limit on the percentage or dollar amount of earnings that may be contributed. ❑ %of earnings' *Definition of earning:: ❑ Same as Section VIA., ❑ Other ❑ $ for the Plan year. See Section V.B. fora discussion of nondiscrimination rules that may apply to non-collectively bargained self-insured Plans. 2 VII.Vesting for Direct Employer Co,.trib utio ns A. Vesting Schedule(check one box) ❑ The account is 100%ve:ted at all times. ❑ The following vesting sc tedule shall apply to Direct Employer Contributions as outlined in Section VIA.1.: Years of;iervice Vesting Comp eted Percentage % B. The account will become 100%vested upon the death,disability,retirement*,or attainment of benefit eligibility(as outlined in Section IX)by a Participant. `Definition of retirement(c teck one box): ❑ Retirement as defined i1 the primary retirement plan of the Employer Separation from service ❑ Other C. Any period of service by a Participant prior to a rehire of the Participant by the Employer shall not count toward the vesting schedule outlined in A above. VIII.Forfeiture Provisions Upon separation from the,ervice of the Employer prior to attainment of benefit eligibility(as outlined in Section IX),or upon reversion to the Trust of a Participant's account assets remaining upon the participant's death (as outlined in Section XI), a Participant's non-vested flu ds shall (check one box): ❑ Remain in the Trust tt be reallocated among all remaining Employees participating in the Plan as Direct Employer Contributions for the Next and succeeding contribution cycle(s). ❑ Remain in the Trust tc be reallocated on an equal dollar basis among all Plan Participants. ❑ Remain in the Trust tt be reallocated among all Plan Participants based upon Participant account balances. ❑ Revert to the Employ(r. 3 IX. Eligibility Requirements to Rece:ve Medical Benefit Payments from the VantageCare Retirement Health Savings Plan A. A Participant is eligible to receive benefits: ❑ At retirement only(also complete Section B.) Definition of retirement: ❑ Same as Section VII.B. ❑ Other At s aration from service with the following restrictions -�10 restrictions ❑ Other ❑ At age only ❑ At retirement and age(a so complete section B) Definition of retirement ❑ Same as Section VI .B. ❑ Other ❑ At retirement or age D:finition of retirement: ❑ Same as Section VI(.B. ❑ Other ❑ Other,specified as folio ws(also complete Section B if applicable): B. Termination prior to gene:al benefit eligibility: In the case where the general benefit eligibility as outlined in Section ILA includes a retirement comp►onent,a Participant who separates from the service of the Employer prior to retirement will be eligible to receive benefits: XImmediately upon sept ration from service. ❑ At age . C. A Participant that becomes totally and permanently disabled ❑ as defined by the Social Security Administration ❑ as defined by the Emp Dyer's prim ry retirement plan other Ci6 C1Fc; 4tt"ai0 ii,),•..p5. ioll f"-' ► will become immediately e igible to receive medical benefit payments from his/her VantageCare Retirement Health Savings Plan account. D. Upon the death of the Pan icipant,benefits shall become payable as outlined in Section XI. 4 X. Permissible Medical Benefit Pays.tents Bene ts eligible for reimbursement consist of All Medical Expenses eligible .inder IRC Section 213* other than direct long-term care expenses,and including non- prescription medications allm red under IRS guidance. ❑ The following Medical Expenses(select only the expenses you wish to cover under the VatstageCare Retirement Health Savings Plan): ❑ Medical Insurance Premiums ❑ Medical Out-of-Pocket Ixpenses* ❑ Medicare Part B Insuran;e Premiums ❑ Medicare Part D Insurar ce Premiums ❑ Medicare Supplemental .nsurance Premiums ❑ Prescription Drug Insun.nec Premiums ❑ COBRA Insurance Prat iums ❑ Dental Insurance Premiums ❑ Dental Out-of-Pocket Expenses* ❑ Vision Insurance Premiums ❑ Vision Out-of-Pocket E Tenses* ❑ Qualified Long-Term Cue Insurance Premiums ❑ Non-Prescription medi<ations allowed under IRS guidance* ❑ Other qualifying medic tl expenses (describe)* *Nondiscrimination rules may apj dy to non-collectively bargained,self-insured Plans. XL Benefits After the Death of the Participant In the event ofa Participant's de:.th, the following shall apply: A. Surviving Spouse and/or Surviving Dependents The surviving spouse and/o surviving eligible dependents(as defined in Section XII.D.)of the deceased Participant are immediately eligible to mai stain the account and utilize it to fund eligible medical benefits specified in Section X above. Upon notification of a Participant's death,the Participant's account balance will be transferred into the Vantagepoinr Money Market Fund*(or another I surd selected by the Employer). The account balance may be reallocated by the surviving spouse or dependents. *Please read the current liar,tagepoinr Mutual Funds prospectus carefully prior to investing.An investment in this fund is neither insured nor guaranteed and here can be no assurance that the Fund will be able to maintain a stable net asset value of$1.00 per share. Vantagepoint Mutual Funds are distributed by ICMA-RC Services, LLC,a wholly-owned broker-dealer affiliate of ICMA Retirement Corporation.Me wirer NASD/SIPC. If a Participant's account b;lance has not been fully utilized upon the death of the eligible spouse, the account balance may continue to be utilized to lay benefits of eligible dependents.Upon the death of all eligible dependents, the account will revert to the Plan to be applied as s1 ecified in Section VIII. B. No Surviving Spouse or 1 urviving Dependents If there are no living spous z or dependents at the time of death of the Participant,the account will revert to the Plan to he applied as specified in Section VIII. .5 • XII.The Plan will operate according t o the following provisions: A. Employer Responsibilities 1. Thelrrmpl oyerwillsubmita'1VantageCareRetirementHealthSavingsPl ancontributiondataviaelecrronicsubmission. 2. The Employer will submi:all VantageCare Retirement Health Savings Plan Participant status updates or personal information updates via a ectronic submission. This includes but is not limited to termination notification and benefit eligibility notification. B. Participant account administr Orion and asset-based fees will be paid through the redemption of Participant account shares, unless agreed upon otherwise .n the Administrative Services Agreement. C. Assignment of benefits is not permitted.Benefits will be paid only to the Participant,his/her Survivors,the Employer, or an insurance provider(as allowed by the claims administrator). Payments to an third-party payee(e.g., medical service provider)are not permitted w i c h the exception of reimbursement to the Employer or insurance provider(as allowed by the claims administrator). D. An eligible dependent is the Participant's lawful spouse and any other individual who is a person described in IRC Section 152(a),as clarified by Internal Revenue Service Novice 2004-79. E. The Employer will be respon Bible for withholding, reporting and remitting any applicable taxes for payments which are deemed to be discriminatory under IRC Section 105(h),as outlined in the VantageCare Retirement Health Savings Plan Employer Manual, XIII.Employer Acknowledgements A. The Employer hereby acknowledges it understands that failure to properly fill out this Employer VantageCare Retirement Health Savings Plan Adoption Agreement may result in the loss of tax exemption of the Trust and/or loss of tax-deferred status for Employer contribt.dons. B. Check this box if you are in:luding supporting documents that include plan provisions. ❑ EMPLOYER S RE 1114 By: ,-- Date: November 14, 2007 Tide: Olufemi Fo1ar =nager Accepted:VANTAGE OI r• 1 R AGENTS,LLC?) 1 61-4 By: .6,:/1/1.1- C' Date: Assistanecreta ry 6 AFFIRMATIVE STATEMENT FOR AMENDMENT OF THE VANTAGECARE RETIREMENT HEALTH SAVINGS (RHS) PLAN Plan Number: 8 Name of Employer: City of Elgin, Illinois Affirmative Statement of the above-named Employer (the "Employer"): WHEREAS, the Employer has employees rendering valuable services; and WHEREAS, the amendment of its existing retiree health savings plan serves the interests of the Employer and its Employees; and NOW THEREFORE, as a duly authorized agent of the Employer, I hereby: AMEND the Employer's Plan in the form of the ICMA Retirement Corporation's VantageCare Retirement Health Savings program. DATE: NI� L- 14, aoo4 CITY OF ELGIN By: I _ Olufemi ' olarin, ' y Manager F:ALegal Dept\ORD&RES\ORD&RES 2007\U-City Council Meeting-November 14,2007\R-Agr-ICMA-AmendVantageCare-GC-.doc , • E L • 14, MI October 19, 2007 G I ,s Lau. I N go'TO: Mayor and Members of the City Council ; E 1 , �0 FINANCIALLY STABLE CITYGOVEINMENT EFFICIENT SERVICES, FROM: Olufemi Folarin, City Manager AND OUALITY INFRASTRUCTURE Gail Cohen, Human Resources and Purchasing Director SUBJECT: Amendment to ICMA RC Vantage Care Retirement Health Savings Plan PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to consider an amendment to the ICMA RC Vantage Care Retirement Health Savings Plan. RECOMMENDATION It is recommended that the City Council approve an amendment to the ICMA RC Vantage Care Retirement Health Savings Plan. BACKGROUND At its August 24, 2005 meeting, Council approved an agreement with ICMA for a Post Retirement Health Benefit Plan (PEHB) for police officers. The collective bargaining agreement for the period January 1, 2004 through December 31, 2006 provided that the City would implement a PEHB for police officers which would allow officers to convert unused sick leave and vacation time into a dollar equivalent at time of retirement, as well as make annual contributions, to be placed into a health benefit plan that would permit retired officers to use the funds for health related expenses. The plan allowed officers the choice of participating, however, only one officer enrolled. Subsequent to the plan's execution, the IRS determined that the elective (optional enrollment) part of this plan violated the tax code. Therefore, contributions to the current plan shall end on December 31, 2007. Elgin was one of many nationwide public employers forced to terminate the program. During the last round of negotiations, the City and the Police Union agreed upon a sick leave conversion plan that would give officers payment for all unused sick days in excess of ninety (90) on an annual basis and payment for all unused sick days upon retirement. The payments would be made as tax free contributions to a post retirement health plan. Participation in the plan Amendment to ICMA RC Retirement Health Savings Plan October 19, 2007 Page 2 is mandatory, thereby passing IRS scrutiny. Officers can invest the money in any number of ICMA funds and the contributions will grow on a tax free basis. The monies are not taxable when withdrawn for qualified medical expenses after retirement. Human Resources staff and Police Union officers met with ICMA to discuss roll out of the new plan. ICMA indicated that the current ICMA Retirement Health Savings Plan can be amended to meet the contractual requirements of the 2007—2009 collective bargaining agreement. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None. FINANCIAL IMPACT There is no financial impact beyond the cost of the sick time buy back plan as negotiated by the City and the Police Union. LEGAL IMPACT An amendment to current Adoption Agreement will need to be approved by Council. ALTERNATIVES 1. The City Council may choose to approve an amendment to the ICMA RC Vantage Care Retirement Health Savings Plan. 2. The City Council may choose not to approve an amendment to the current Retirement Health Savings Plan and require an alternative Retirement Health Savings Plan be adopted. Respectfully submitted for Council consideration.