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ICMA-RC Retiree Health Savings Plan <br />November 28, 2011 <br />Page 2 <br />In the Memorandum of Understanding between the City and The Santa Ana Police Management <br />Association ("PMA") for fiscal year 2004 - 2008, the City agreed to establish a voluntary program <br />for employees to contribute unused sick leave, vacation, or other employee benefits on a pre-tax <br />basis. Since that time, the City and PMA have explored various alternatives to address this issue <br />and determined that converting the subsidy plan to a retiree health savings plan would benefit both <br />the City by eliminating the unfunded liability associated with retiree medical plans pursuant to <br />Governmental Accounting Standards Board (GASB) reporting requirements for "Other Post <br />Employment Benefits" (OPEB) and benefit the PMA members. <br />The PMA has requested the City proceed with implementation steps required to adopt the ICMA- <br />RC "Vantage Care" retiree health savings plan. All other bargaining groups are aware of this plan <br />and the City would make this plan accessible to all bargaining units on a voluntary basis. Under <br />this plan, bargaining unit members are allowed to accumulate assets to pay for health insurance <br />and out-of-pocket medical expenses at retirement. An bargaining unit member may contribute <br />unused sick leave, vacation, and other benefits to an account, which is tax-free at deposit and tax <br />free at withdrawal when used to pay for medical expenses. Additionally, the existing medical <br />retirement subsidy funds for participating bargaining units will be deposited into the trust and <br />distributed equitably to current and retired bargaining unit members. Each bargaining unit will <br />determine how the existing funds will be split among their membership. Any future negotiated City <br />contributions for participating bargaining units will be deposited into the trust. <br />The plan will be administered by ICMA-RC at no cost to the City. <br />Therefore, the City proposes the creation of a trust to be administered by ICMA-RC, a 39-year-old <br />company that provides retirement savings plans, products and services to over 8,700 public sector <br />agencies with more than 900,000 participants. ICMA-RC will assess to participant accounts an <br />annual account fee of $25 ($6.25/quarter) and an Asset fee of 40 basis points (0.40% of the <br />account) quarterly. Reimbursement requests will be handled directly by a third-party administrator <br />and no longer handled by the City of Santa Ana. <br />FISCAL IMPACT <br />There is no fiscal impact associated with this item. <br /> <br />Executive Director <br />Personnel Services Agency <br />55B-2