HomeMy WebLinkAboutIR 9143 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9143
To the Mayor and Members of the City Council November 3, 2009
Page 1 of 2
SUBJECT; Retirement Health Reimbursement Account for Graduates of the
for% Fort Worth Police Academy
On November 11, 2008, the City Council approved M&C C-23176, ratifying the Meet and Confer
Agreement (City Secretary Contract No. 37936) between the City of Fort Worth and the Fort
Worth Police Officers Association. Article 14, Section 5.B. of the Agreement requires graduates
of the Fort Worth Police Academy who graduate on or after October 1, 2009 and graduates of all
subsequent classes to meet mandatory physical fitness standards.
The Meet and Confer Agreement further requires the City to establish a Health Savings Account
(HSA), or a retiree medical savings account or deferred compensation account for the benefit of
those graduates of the Fort Worth Police Academy on or after October 1, 2009 who are subject to
the mandatory fitness standards.
According to the Meet and Confer Agreement, this account is to be funded by the City in an initial
amount of$1,000.00. In each subsequent year, these graduates are required to meet the fitness
standards, and if they do so, the City is required to contribute $300.00 each year into the health
savings account of each successful graduate.
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m The purpose of this Informal Report (IR) is to inform the Council that Article 14, Section 5.8. of
the Meet and Confer Agreement has been implemented as described below, and no further
action is required on the part of the City Council.
To fulfill the City's commitment to establish a retiree medical savings account, the Human
Resources Department formed a committee to solicit and evaluate proposals. The committee
reviewed Internal Revenue Service requirements for medical savings accounts. Specifically
regarding a Health Savings Account (HSA), the IRS requires that an HSA be tied to a high
deductible health plan. The City does not offer a high deductible health plan, and the committee
determined that such a plan could not designed and implemented before the current police
academy graduates. Therefore, the committee ruled out an NSA as an option to fulfill the Meet
and Confer Agreement requirement.
The committee then solicited and received three proposals for an IRS-qualified Health
Reimbursement Account, or HRA, The proposals were evaluated based upon how the account
would be funded to pay qualified medical expenses as defined by the IRS; how assets would be i
held and invested for growth; eligibility and access to the funds by participants, and initial and on-
going expense to the City of Fort Worth to administer the fund,
The committee selected and recommended the plan offered by the International City County
Management Association - Retirement '°orporatior , Inc. ICMA-RC). The IC MA-RC plan is an
H. A that is a qualified medical reimbursement trust that conforms to Internal Revenu'e Sen lice
req irem nt -
ORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9143
To the Mayor and Members of the City Council November 3, 2009
Page 2 of 2
SUBJECT: Retirement Health Reimbursement Account for Graduates of the
b�� Fort Worth Police Academy
According to the ICMA-RC plan, City contributions into the trust account will be invested by
ICMA-RC's investment advisor subsidiary, Vantagepoint Investment Advisors, LLC. Funds
initially will be placed in a money market fund, but may be directed by plan participants into
various classes of actively managed funds. Plan participants cannot access the funds until after
the member retires, or becomes eligible due to disability, or the member dies. If a participant
leaves the City before retirement, the City will notify ICMA-RC in writing that the plan participant
has separated from City employment. Two signoffs by the City will be required to initiate any
participant change. The former plan participant's account balance is forfeited, remains in the
trust, and is reallocated to plan participants in accordance with plan requirements.
ICMA-RC will receive annual compensation equal to 0.3% of the assets in the trust. Based on
current and projected academy class sizes, the estimated cost (yearly asset management fee) for
ICMA-RC to administer the HRA plan will be $204.00 in calendar year 2010 and $469.00 in
calendar year 2011. ICMA-RC will not charge the City any plan participant fees until the plan
participant is eligible to retire under City policy for Police Officers.
r, Because of the low administration costs of the plan offered by ICMA-RC, the committee
recommended their plan as the best value for the City and for the graduates of the police
academy. The low administration cost of this plan does not require authorization by the City
Council.
With the concurrence of the Fort Worth Police Officers Association, the City of Fort Worth has
entered into an Administrative Services Agreement (City Secretary Contract No. 39073) with the
International City County Management Association - Retirement Corporation, Inc. (ICMA-RC) to
establish a retiree Healthcare Reimbursement Arrangement (HRA), effective August 28, 2009. A
copy of the Administrative Services Agreement can be provided upon request.
Ron Josselet, Acting Assistant Human Resources Director (phone: 817.392.8058) is the contact
for additional information.
Ai
i
o-a Aa Fisseler, P,E.
City Manager
FORT WOR'IrH, TEXAS
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