Laserfiche WebLink
DEPARTMENT OF FINANCIAL MANAGEMENT <br /> RISK MANAGEMENT DIVISION <br /> MEMORANDUM NO. 2005-051 <br /> September 8, 2005 <br /> TO: Honorable M yor and City Council <br /> FROM: Steve Ga ity Manager <br /> Ron Neuf ld irector of Financial Management <br /> J. Barry Leon d, Risk Manager � <br /> SUBJECT: FLEXIBLE SPENDING ACCOUNT AMENDMENT <br />� Staff recommends we increase the maximum allowance for medical expenses from the <br /> current $3000 to $4500 per plan year, to be effective January 1, 2006. The new non-represented <br /> employee health plan enables those employees to take on more risk which can be balanced by <br /> use the FSA program. <br /> The Internal Revenue Service has recently amended the Code to allow employers to add <br /> an extended period for medical claims to be incurred. The new ruling will allow participants to <br /> incur claims for an additional2 '/2 months after the plan year. <br /> For example: Plan year currently January 1 to December 31. New regulation: Medical <br /> expenses incurred from January 1 - March 15. The new regulation will lessen the "use it or lose <br /> it" aspect of Flex Spending. If an individual has money left in their account on December 31, <br /> under the current plan, the money goes toward administrative expenses. Under the new plan, <br /> they can use the leftover money toward medical expenses incurred through March 15th. <br /> The new regulation should encourage greater participation in Flex Spending. <br /> In order for our employees to take advantage of these changes, Council must admend the <br /> Ctiy's Flexible Benfits Plan Adoption Agreement. <br />