HomeMy WebLinkAbout03.j. Amend 125 Cafeteria PlanRM
D4 Ith,
Central Contra Costa Sanitary District •
BOARD OF DIRECTORS
POSITION PAPER
Board Meeting Date: October 21, 2010
subject: ADOPT AMENDED AND RESTATED SECTION 125 CAFETERIA PLAN
DOCUMENTS TO MEET NEW CHANGES IN INTERNAL REVENUE SERVICE
CODE
Submitted By. Initiating Dept /Div.:
Debbie Ratcliff, Controller Administrative / Finance & Accounting
REVIEWED AND RECOMMENDED FOR BOARD ACTION.
D. Ratcliff graves
ames M. 1011y,
General Manager
ISSUE: Board approval is required to adopt revisions to the District's Cafeteria Plan
documents.
RECOMMENDATION: It is recommended that the Board adopt the revisions to the
District's Cafeteria Plan documents to meet new Internal Revenue Service (IRS) Code
requirements.
FINANCIAL IMPACTS: None
ALTERNATIVES /CONSIDERATIONS: None. These revisions are required by the IRS
and if the revisions are not approved by the Board, the District's Cafeteria Plan would
be in violation of the IRS Code.
BACKGROUND: Per the existing Memoranda of Understanding, the three employee
groups receive a fixed amount each month to spend on a variety of benefit options
offered in the Cafeteria Plan. This Cafeteria Plan is governed by Section 125 of the
IRS Code. The Plan allows employees the option of spending their monthly benefit
allowance on a variety of taxable and non - taxable benefits.
The law firm of Trucker Huss, who specializes in benefit law, has been asked to review
the Cafeteria Plan documents annually to ensure compliance with any changes in IRS
Code. The Internal Revenue Service has issued new regulations which become
effective January 1, 2011. The last revision to the Cafeteria Plan document was
effective April, 2006.
On September 3, 2010, the Internal Revenue Service issued guidance regarding
changes under the Patient Protection and Affordable Care Act (PPACA) on the use of
Health Flexible Spending Arrangements (FSA's) in a Section 125 Cafeteria Plan.
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POSITION PAPER
Board Meeting Date: October 21, 2010
subject ADOPT AMENDED AND RESTATED SECTION 125 CAFETERIA PLAN
DOCUMENTS TO MEET NEW CHANGES IN INTERNAL REVENUE SERVICE
CODE
Effective January 1, 2011, the following changes are required:
The cost of an over - the - counter medicine can no longer be reimbursed from the
FSA unless a prescription is provided. This change does not include other
health care expenses such as medical devices, eye glasses, contact lenses, co-
pays, and deductibles.
• Health and dental care costs (deductibles, co -pays, and out of pocket costs)
incurred by a participant's child who has not attained the age of 26 will be eligible
for reimbursement through the FSA. This is only reimbursable, if the participant
is paying the health plan premiums for their child.
• There are new special enrollment rights for an employee and /or dependent who
becomes eligible for a premium subsidy under Medicaid or the Children's Health
Insurance Program. This change is not applicable to District employees as their
dependents are covered by the District's Health Plans.
Effective January 1, 2013, the following change is required:
• The total amount of annual salary reduction that can be credited to a
participant's FSA will be reduced from the current $5,000 to $2,500.
Additional copies of the revised plan documents were distributed to and reviewed by the
Human Resources Committee. Proposed revisions to the Cafeteria Plan documents
are available in the Secretary of the District's office.
RECOMMENDED BOARD ACTION: It is recommended that the Board adopt the
revisions to the District's Cafeteria Plan documents to meet new Internal Revenue
Service Code requirements.
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