04-23-1990 Council Packet - Laserfiche WebLink

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42090.1 IS TO: Mayor and City Council FROM: Mark E. Bernhardson, City Adrainistrato' DATE? April 20, 1990 SUBJECT: Flexible Benefit Plan Attachment: A. DCA Flexible Benefit Outline ®««aiMEETO8 APR 23 1990 OF OROHO ISSUE - Presentation of Information to Council regarding the basics of flexible benefit plan. INTRODUCTION - Over the past couple years staff has discussed with Council the undertaking of flexible spending accounts in conjunction with the pre-tax provisions allowed by IRS Section 125. Under this, it allows an employee to deduct from pre-tax dollars certain amounts for child care, health premiums, health and dental expenses and other types of qualified plans together with coordinating that plan with their deferred compensation. Even though this has been a longterm goal to present to the Council for some time. Section 89, that was a discrimintatlon test, made certain elements and design of the plan more expensive. This has subsequently been repealed by the Congress. (I would like to thank Councilraerabers who pursuaded staff to wait on going through and doing a Section 89 compliance in January of *89 since the repeal made it no longer necessary.) DISCUSSION - Flexible pre-tax benefit programs are provided by a number of organizations to their employees in both public and private sectors in the metro area. The DCA Stanton group has done it in most municipalities who havwe adopted such programs. Subsequent to indicating that the cost of the plan would be about $1,500 to design it in our January 16, 1990 memo I have done further exploration and the total cost at this point looks to be about $2,250 for plan design and $1,700 for plan communciatlons and introduction. (We budgeted about $7,500 for both IRS 125 and 87 for 1990.) The information is presented to Council at this time so that you may peruse the information to see what questions or issues you have prior to a decision as to whether staff should initiate the work with DCA Stanton. While the City could solicite alternate quotations from other areas, it is not required nor felt that the expense involved would net a substantial savings, particularily since DCA will be working from plans developed for the municipalities. (The only unknown expense at this point is the legal review. d CA's master documents have been reviewed by the Gray, Plant law firm. These cost factors will be presented at the next meeting.)