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ICMA -RC Retiree Health Savings Plan November 28, 2011 Page 2 In the Memorandum of Understanding between the City and The Santa Ana Police Management Association ( "PMA ") for fiscal year 2004 - 2008, the City agreed to establish a voluntary program for employees to contribute unused sick leave, vacation, or other employee benefits on a pre -tax basis. Since that time, the City and PMA have explored various alternatives to address this issue and determined that converting the subsidy plan to a retiree health savings plan would benefit both the City by eliminating the unfunded liability associated with retiree medical plans pursuant to Governmental Accounting Standards Board (GASB) reporting requirements for "Other Post Employment Benefits" (OPEB) and benefit the PMA members. The PMA has requested the City proceed with implementation steps required to adopt the ICMA - RC "Vantage Care" retiree health savings plan. All other bargaining groups are aware of this plan and the City would make this plan accessible to all bargaining units on a voluntary basis. Under this plan, bargaining unit members are allowed to accumulate assets to pay for health insurance and out -of- pocket medical expenses at retirement. An bargaining unit member may contribute unused sick leave, vacation, and other benefits to an account, which is tax -free at deposit and tax free at withdrawal when used to pay for medical expenses. Additionally, the existing medical retirement subsidy funds for participating bargaining units will be deposited into the trust and distributed equitably to current and retired bargaining unit members. Each bargaining unit will determine how the existing funds will be split among their membership. Any future negotiated City contributions for participating bargaining units will be deposited into the trust. The plan will be administered by ICMA -RC at no cost to the City. Therefore, the City proposes the creation of a trust to be administered by ICMA -RC, a 39- year -old company that provides retirement savings plans, products and services to over 8,700 public sector agencies with more than 900,000 participants. ICMA -RC will assess to participant accounts an annual account fee of $25 ($6.25 1quarter) and an Asset fee of 40 basis points (0,40% of the account) quarterly. Reimbursement requests will be handled directly by a third -party administrator and no longer handled by the City of Santa Ana. FISCAL IMEACT There is no fiscal impact associated with this item 1�4: a Executive Director Personnel Services Agency 55 -