5.4. ERMUSR 06-14-2011 - Laserfiche WebLink

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Elk River ^~ Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING Phone: 763.441.2020 Fax: 763.441.8099 TO: FROM: Elk River Municipal Utilities Commission Theresa Slominski -Finance Director John Dietz Daryl Thompson Allan Nadeau MEETING DATE: AGENDA ITEM NUMBER: June 14, 2011 5.4 Flexible Benefits Plan Revisions SUBJECT: U dated Plan Document BACKGROUND: With Legislative changes in 2010 due to health care reform, certain items impact our Flexible Benefits Plan Document necessitating revisions to the document. Those revisions can be addressed through an amendment to our plan, as proposed below. DISCUSSION: The Patient Protection and Affordable Care Act ("PPACA") imposed new rules regarding the reimbursement ofover-the-counter ("OTC") drugs and medicines (other than insulin) under health flexible spending accounts ("health FSAs"). Under the new rules, a participant must obtain a prescription for the OTC drug or medicine (other than insulin) for it to be reimbursable. If a health FSA includes OTC drugs and medicines (other than insulin) as eligible expenses, the plan must be amended to incorporate the new rules. The new rules generally became effective January 1, 2011. Plan amendments generally must be adopted prior to the effective date of new laws. However, the IRS has provided transition relief regarding plan amendments to incorporate the new OTC drug and medicine rules. Under this special transition relief, plan sponsors have until June 30, 2011, to amend their plans to incorporate the new rules. If the plan sponsor adopts an amendment before the expiration of this transition relief period, and the amendment is effective retroactively back to January 1, 2011, the plan will not be out of compliance with the requirements of the Internal Revenue Code. Another rule, effective 2013, states that a health FSA will have a maximum reimbursement amount of $2,500. Currently it is at the employer's discretion, and has been $3,000 since the plan's inception at ERMU. We have decided to incorporate this change along with this amendment rather than amending the plan again at a later date. ACTION REQUESTED: Staff recommends adopting the proposed amendment to the Flexible Benefits Plan Document.