HomeMy WebLinkAbout1996 09 23 Consent Item A
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COMMISSION AGEN.DA
ITEM A
REGULAR
CONSENT X
INFORMATIONAL
September 23. 1996
Meeting
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REQUEST: The General Services Department requests that the City Commission consider
contracting with an Employee Benefits Consultant to implement a Section 125
"Premium Only Plan." .
PURPOSE:
The purpose of this agenda item is to allow the City Commission to decide:
I. Whether to implement a Section 125 Premium Only Plan.
2. If so, select a consultant to implement the plan.
CONSIDERATIONS:
1. Currently, employees pay for Family Health Insurance coverage with post
tax dollars.
2. A Section 125 Premium Only Plan would enable the employee to pay for
Family Health coverage with pre-tax dollars.
3. The effect of this would reduce the total dollars required by employee to
pay for health coverage by an amount equivalent to the employees marginal
tax rate.
4. A Section 125 Premium Only Plan would also reduce the City's FICA tax
on the pre-tax payment. The total annual savings to the City is estimated
to be $12,100 at 100% participation of the fifty (50) employees with
dependent coverage.
5. The total cost to implement the Section 125 Premium Only Plan ranges
between $1,412.50 and $1,500.00, depending upon which consultant the
City selects.
September 23, 1996
AGENDA ITEM
Page 2
ISSUES:
FUNDING:
6. It would take the City approximately 1.4 to 1.5 months to recover the cost
of implementing the Premium Only Plan. Each year thereafter, the City
would save approximately $12,100 a year escalated at the salary rate
increase per year, plus future value of money.
1. Does the City Commission want to provide the Section 125 Premium Only
Plan as an employer benefit reducing the employee's premium payment for
medical coverage by the employees marginal tax rate?
2. If so, does the City Commission want to make the Premium Only Plan
mandatory or voluntary? The administration does not know how many
employees would participate voluntarily. Input from Department Heads
indicates there is strong interest on the part of employees to participate in a
Section 125 Premium Only Plan.
The Premium Only Plan would cost the City between $1,412.50 and $1,500.00,
depending upon which consultant it chooses. A "Consulting Linecode" would
have to be established in the Fiscal Year 1997 General Services Department
Budget to pay for consulting services for this fee.
IMPLEMENTATION SCHEDULE:
Fiscal Year 1997 and 1998.
RECOMMENDA TIONS:
That the City Commission consider entering into a two-year contract, subject to
legal review and sign-off, with Programmed Employee Benefits, Inc. of Orlando,
Florida, as the lowest responsive proposer for $1,037.50 for Fiscal Year 1997, for
first year setup seminar and administration, and $375.00 for Fiscal Year 1998 for
seminar and administration, subject to Fiscal Year 1998 appropriations by the City
Commission.
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September 23, 1996
AGENDA ITEM
Page 3
ATTACHMENTS:
1. Programmed Employee Benefits, Inc, fee schedule for
Premium Only Plan - Section 125.
COMMISSION ACTION: