DATE: October 13, 2015
TO: Mayor and City Council
FROM: Director of Human Resources
SUBJECT
Title
Adoption of a Resolution Approving a Side Letter Agreement between the City of Hayward and the Hayward Fire Officers Association 1909 ("HFOA") to revise Current Contributions to the Voluntary Employee Beneficiary Association (VEBA) Plan
End
RECOMMENDATION
Recommendation
That the City Council adopts the attached Resolution (Attachment I) authorizing a side letter agreement between the City of Hayward and the Hayward Fire Officers Association 1909 ("HFOA") for an increase in current contributions to the Voluntary Employee Beneficiary Association (VEBA) Plan.
Body
BACKGROUND AND DISCUSSION
VEBA is an entity established as a tax-exempt trust under Section 501(c)(9) of the Internal Revenue Service (IRS) Code. The purpose of the VEBA program is to provide employees with the ability to plan for future health care expenses. Participants, their spouses, and eligible dependents are able to receive reimbursement for qualified medical expenses while actively employed, following separation of employment, and during retirement.
The City of Hayward contracts with California Government Voluntary Employee Beneficiary Association (CALGOVEBA) to provide a healthcare funding vehicle for employees to make tax-free contributions to a trust for accumulating funds for the reimbursement of health care costs. Employees who participate in the VEBA program realize a tax benefit because both eligible contributions and the reimbursed expenses are tax-exempt.
In 2011, the City of Hayward restructured its Plan to comply with the existing law that stated all employees within a bargaining group must contribute equally. The amount is predetermined based on the terms of the agreement with that group. While participation in the Plan is up to the bargaining unit, should the bargaining unit opt to participate, cont...
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