CC SR 20231017 F - HSA 2024 Plan Year
CITY COUNCIL MEETING DATE: 10/17/2023
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA TITLE:
Consideration and possible action to increase the City’s contribution toward eligible
employee health savings accounts.
RECOMMENDED COUNCIL ACTION:
1) Authorize increasing the City’s contribution to eligible employee health savings
accounts (HSA) to $4,150 for individuals and $8,300 for family plans for the 2024
High Deductible PPO+HSA medical plan;
2) Approve Resolution No. 2023-__ increasing the City’s HSA contribution for all
eligible employees effective January 1, 2024 subject to meet and confer with the
City’s employee organizations for their respective represented employees; and
3) Approve Resolution No. 2023-__ approving, adopting, and implementing, and
thereby authorizing the City Manager to sign, a First Amendment to the City’s
Memorandum of Understanding with the Rancho Palos Verdes Employee
Association for the period July 1, 2022 through June 30, 2025, increasing the City’s
contribution to eligible employee health savings accounts.
FISCAL IMPACT: Increasing the City’s HSA contribution for all eligible employees will
cost the City an additional $18,500 for the 2024 plan year. The
additional funding is included in the adopted budget therefore, it will
not require an additional appropriation.
Amount Budgeted: $257,100
Additional Appropriation: None
Account Number(s): 101-400-XXXX-4206
(General Fund – various HSA contribution accounts) VR
ORIGINATED BY: Eileen Jacinto, Human Resources Analyst
REVIEWED BY: Karina Bañales, Deputy City Manager
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Resolution No. 2023-__ increasing the City’s HSA contribution for all eligible
employees effective January 1, 2024 (page A-1)
B. Resolution No. 2023-__ approving, adopting and implementing a First Amendment
to the City’s MOU with the Rancho Palos Verdes Employee Association for the
period between July 1, 2022 through June 30, 2025 (page B-1)
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RANCHO PALOS VERDES
BACKGROUND:
The City offers six medical plan options to employees: three health maintenance
organization (HMO) plans, one traditional preferred provider organization (PPO) plan, a
high deductible PPO plan with a health savings account (HSA), and an option of declining
City-provided health insurance. The City pays the entire premium for the employee and
50% of the dependent care premium. Employees who show proof of insurance elsewhere
and who do not enroll in the City's medical plan may receive up to 50% of the premium
cost of the least expensive medical plan on a monthly basis in lieu of City medical
coverage.
In 2007, in response to a rise in medical insurance premiums, the City Council introduced
a high deductible PPO medical plan with an HSA feature that the City partly funds. The
concept behind the HSA is to reduce the City’s healthcare costs over time. Moreover, the
City Council chose to contribute toward an employee’s HSA as an incen tive to increase
participation in this medical plan, which would decrease the cost in premiums incurred by
the City over time. Currently, the City's annual contribution to an employee's HSA plan is
$3,850 for single coverage or $7,750 for employee and dependent coverage. On a pre-
tax basis, employees can make additional contributions to their HSA through payroll
deductions up to Internal Revenue Service (IRS) limits based on their age (50+) and
coverage level.
If employees change their medical plan through unenrolling from the high deductible PPO
with HSA, the City would begin to see an increase in premium costs borne by the City.
Therefore, it is prudent for the City to continue to incentivize employees to retain or join
the PPO with HSA medical plan.
DISCUSSION:
Staff recommends the City Council approve increasing the City’s HSA contribution
amount from $3,850 for individuals and $7,750 for family plans to $4,150 for individuals
and $8,300 for families for the 2024 High Deductible PPO+HSA medical plan, which
complies with the limits set by the IRS.
As of January 1, 2023 the City had 70 benefit-eligible employees. However, only 58
employees were enrolled in one of the City’s medical plans (12 employees declined
medical insurance from the City). The table below summarizes the 2023 medical plan
selections enrolled by benefit-eligible employees. For the 2022 medical plan year, 30
participants were enrolled in the High Deductible PPO+HSA. In 2023, the number
increased to 33 participants enrolling in the High Deductible PPO + HSA medical plan.
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Medical Plan
No. of Participants
2022*
No. of Participants
2023*
HIGH DEDUCTIBLE PPO + HSA 30 33
PPO W ITHOUT HSA 1 3
KAISER HMO 13 13
PLATINUM ACCESS HMO 7 7
TRIO HMO 3 2
DECLINED HEALTH 12 12
66 70
*Data is based on January 1 enrollments.
In May 2023, the IRS announced that 2024 HSA contribution limits will rise to $4,150 for
individual single coverage and $8,300 for family coverage, which are increases of $300
and $550, respectively, from 2023.
In an effort to retain a high-quality workforce by enhancing the high deductible PPO with
HSA plan, Staff seeks City Council approval to increase the City's HSA contribution to the
full IRS allowed amount of $4,150 for individuals and $8,300 for family plans for the 2024
High Deductible PPO+HSA medical plan effective January 1, 2024.
ADDITIONAL INFORMATION:
Rancho Palos Verdes Employees Association
The City’s labor representatives offered to meet and confer with R ancho Palos Verdes
Employees Association (RPVEA) regarding increasing the City’s contribution to eligible
employee health savings accounts pursuant to the requirements of the Meyers -Milias-
Brown Act (MMBA). On October 5, 2023, RPVEA’s Board advised that it did not need to
meet and confer and had no objection to the City’s proposal. An MOU Amendment was
then circulated for execution to confirm this tentative agreement, subject to City Council
approval authorizing the City Manager to sign the Amendment to the MOU.
As a result, Staff requests the City Council approve, adopt and implement the First
Amendment to the City’s MOU with the RPVEA for the period July 1, 2022 through June
30, 2025, increasing the City’s contribution to eligible employee health savings
(Attachment B).
American Federation of State, County and Municipal Employees, District Council 36
The City is meeting and conferring with the American Federation of State, County and
Municipal Employees, District Council 36 (AFSCME), representing certain part-time City
classifications, regarding this benefit increase that currently applies to one employee.
Therefore, the attached resolution accounts for this benefit to the one eligible employee
but is subject to completion of those discussions before the increased City contribution
amounts will be available to the AFSCME represented part-time employee.
CONCLUSION:
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Based upon the above analysis, Staff recommends the City Council authorize increasing
the City’s contribution to the 2024 High Deductible PPO+HSA medical plan effective
January 1, 2024.
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative actions are available for
the City Council’s consideration:
1. Do not authorize the increase.
2. Identify a different amount to contribute toward an employee’s HSA within the
parameters established by the IRS.
3. Take other action, as deemed appropriate.
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RESOLUTION NO. 2023-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF RANCHO PALOS VERDES, CALIFORNIA,
INCREASING THE CITY’S HEALTH SAVINGS ACCOUNT
CONTRIBUTION FOR ALL ELIGIBLE EMPLOYEES
EFFECTIVE JANUARY 1, 2024
WHEREAS, Section 36506 of the California Government Code requires that a
city council fix the compensation of all appointive officers and employees by resolution
or ordinance; and
WHEREAS, the City of Rancho Palos Verdes (“City”), through City Council
action, provided eligible employees with a high deductible Preferred Provider
Organization (“PPO”) medical plan with a Health Savings Account (“HSA”) feature that
was partly funded by the City starting in 2007; and
WHEREAS, the City Council has increased its HSA contribution amounts over
the years since 2007 and expanded employee eligibility for the high deductible PPO +
HSA medical plan to include qualifying part-time employees pursuant to law; and
WHEREAS, the Internal Revenue Service (“IRS”) administers and enforces U.S.
federal tax laws and announced that eligible HSA contribution limits would be increased
for calendar year 2024 due to the recent inflation surge from $3,850 to $4,150 for self-
only coverage, and from $7,750 to $8,300 for family coverage; and
WHEREAS, the City’s labor relations representatives meet and conferred with
the Rancho Palos Verdes Employees Association (“RPVEA”), as the exclusive
employee organization for those City employees in the bargaining unit defined as non -
management, full-time employees in the classifications listed in Exhibit "A" to the
Memorandum of Understanding between the City and the RPVEA, and reached a
tentative agreement to implement an increase to the City’s HSA contributions to the new
limits allowed by the IRS for eligible employees for 2024 subject to City Council
approval by resolution and have prepared a First Amendment to the RPVEA MOU
2022-25 to reflect that change; and
WHEREAS, the City’s labor relations representatives are in the process of
negotiating with the American Federation of State, County and Municipal Employees,
District Council 36 (“AFSCME”), representing certain part-time City classifications,
regarding an increase to the City’s HSA contributions to the new limits allowed by the
IRS for eligible employees for 2024.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
A-1
Resolution No. 2023-
Page 2 of 2
Section 1: The City Council finds the above recitals are true and correct and
incorporated herein by this reference.
Section 2: The City Council hereby approves, adopts and implements
increased City contributions to the City’s high deductible PPO medical plan with HSA to
the IRS allowed limits of $4,150 for self-only coverage and $8,300 for family coverage
for eligible employees commencing January 1, 2024 for all City employees subject to
any required meet and confer with the respective employee organizations for
represented employees.
Section 3: The City Council hereby approves, adopts and implements the First
Amendment to the RPVEA MOU 2022-25 which incorporates the increased City
contributions to the City’s high deductible PPO medical plan with HSA to the IRS
allowed limits of $4,150 for self-only coverage and $8,300 for family coverage for
eligible RPVEA represented employees commencing January 1, 2024.
Section 4: This resolution shall be effective upon adoption though
implementation shall occur at a later date as specified herein. The City Clerk shall
certify the adoption of this Resolution.
PASSED, APPROVED and ADOPTED this 17th day of October 2023.
_____________________________
John Cruikshank, Mayor Pro Tem
Attest:
____________________________
Teresa Takaoka, City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss
CITY OF RANCHO PALOS VERDES )
I, Teresa Takaoka, City Clerk of the City of Rancho Palos Verdes, hereby certify that the
above Resolution No. 2023-__ was duly and regularly passed and adopted by the said
City Council at a regular meeting thereof held on October 17, 2023.
__________________________
Teresa Takaoka, City Clerk
A-2
RESOLUTION NO. 2023-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF RANCHO PALOS VERDES, STATE OF CALIFORNIA,
ACCEPTING, APPROVING AND ADOPTING THE FIRST
AMENDMENT TO THE MEMORANDUM OF
UNDERSTANDING BETWEEN THE CITY AND THE
RANCHO PALOS VERDES EMPLOYEES ASSOCIATION
2022-2025 TO INCREASE THE CITY’S CONTRIBUTION
TO REPRESENTED EMPLOYEE HEALTH SAVINGS
ACCOUNTS
WHEREAS, Section 36506 of the California Government Code requires that a
city council fix the compensation of all appointive officers and employees by resolution
or ordinance; and
WHEREAS, the City of Rancho Palos Verdes (“City”) continues to recognize the
Rancho Palos Verdes Employees Association (“RPVEA”) as the exclusive employee
organization for those City employees in the bargaining unit defined as non-
management, full-time employees in the classifications listed in Exhibit "A" to the
Memorandum of Understanding between the City and the RPVEA covering the period
July 1, 2022 through June 30, 2025 adopted on June 20, 2023 by City Council
Resolution No. 2023-32 (“RPVEA MOU 2022-25”), a copy of which is attached hereto
as Exhibit "1"; and
WHEREAS, pursuant to the provisions of the Meyers-Milias-Brown Act
(Government Code § 3500 et seq.), the City’s labor representatives and RPVEA have
met and conferred and reached a tentative agreement regarding increasing the City’s
contributions to employee Health Savings Accounts for individual employees and
employee family plans provided unde r the RPVEA MOU 2022-25 to further incentivize
employees to remain in or join the City’s high deductible medical plan, in return keeping
premium insurance costs lower for the City; and
WHEREAS, the City Council has determined that it desires to further incentivize
employees to remain in or join the City’s high deductible medical plan by matching the
IRS increases to the contribution amounts for such HSA plans for calendar year 2024;
and
WHEREAS, the City Council and RPVEA desire to amend the current RPVEA
MOU 2022-25 by accepting, adopting and implementing the attached First Amendment
to the RPVEA MOU 2022-25 to reflect the aforementioned changes.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
Section 1: The City Council finds the above recitals are true and correct and
incorporated herein by this reference.
B-1
Section 2: The City Council approves and adopts the attached First Amendment
to the RPVEA MOU 2022-2025 provided herewith as Exhibit “1” thereby increasing the
City's Health Savings Account contribution for individual employees and employee
family plans starting calendar year 2024.
Section 3: This resolution shall be effective on October 17, 2023. The City Clerk
shall certify the adoption of this Resolution.
PASSED, APPROVED and ADOPTED this 17th day of October 2023.
_____________________________
John Cruikshank, Mayor Pro Tem
Attest:
____________________________
Teresa Takaoka, City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss
CITY OF RANCHO PALOS VERDES )
I, Teresa Takaoka, City Clerk of the City of Rancho Palos Verdes, hereby certify that the
above Resolution No. 2023-__ was duly and regularly passed and adopted by the said
City Council at a regular meeting thereof held on October 17, 2023.
__________________________
Teresa, Takaoka, City Clerk
B-2
FIRST AMENDMENT TO
MEMORANDUM OF UNDERSTANDING
City of Rancho Palos Verdes
and
Rancho Palos Verdes Employees Association
July 1, 2022 - June 30, 2025
DocuSign Envelope ID: 0FD7E889-922F-4732-AE4C-8414E3C3F655
B-3
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FIRST AMENDMENT TO MEMORANDUM OF UNDERSTANDING
between the City of Rancho Palos Verdes and the
Rancho Palos Verdes Employees Association
for the Period of July 1, 2022 through June 30, 2025
Pursuant to the requirements of the Meyers-Milias-Brown Act (“MMBA,” commencing at
California Government Code § 3500 et seq.), the City of Rancho Palos Verdes (“CITY”) has
recognized the Rancho Palos Verdes Employees Association (“RPVEA”) as the majority or
exclusive representative, as those terms are interchangeably used under the MMBA, for those
CITY employees in the bargaining unit defined as non-management, full-time employees in the
classifications listed on Exhibit “A” to the Memorandum of Understanding between the CITY
and RPVEA for the period July 1, 2022 through June 30, 2025 (“RPVEA MOU 2022-25”), and
adopted by Resolution No. 2023-032 on June 20, 2023. This First Amendment to the RPVEA
MOU 2022-25 is entered into this 9th day of October 2023, by and between the CITY and
RPVEA. This First Amendment shall only become effective upon City Council adoption and
makes only those changes reflected herein below, all other terms and conditions of the RPVEA
MOU 2022-25 remaining in full force and effect.
RPVEA MOU 2022-25, ARTICLE VII Benefits, Section A, subsection 1, currently provides as
follows:
A. Medical Insurance and Opt-Out
1. Medical Insurance
The City has five (5) medical plans available to employees (3 HMO’s, 1
traditional PPO, and a high deductible PPO).
The high deductible PPO plan comes with a Health Savings Account
(HSA) that is funded by the Cit y. The City’s annual contribution to an
employee’s HSA plan for the 2023 calendar year is $3,850 for single
coverage or $7,750 for employee and dependent coverage. Employees can
make additional contributions, on a pre-tax basis, to their HSA account
through payroll deductions, up to the IRS limits, based on their ages (50+)
and coverage level.
ARTICLE VII Benefits, Section A, subsection 1, shall be superseded and replaced in full with
the following language upon City Council approval of this First Amendment to the RPVEA
MOU 2022-25:
A. Medical Insurance and Opt-Out
1. Medical Insurance
The City has five (5) medical plans available to employees (3 HMO’s, 1
traditional PPO, and a high deductible PPO).
The high deductible PPO plan comes with a Health Savings Account
(HSA) that is funded by the City. The City’s annual contribution to an
DocuSign Envelope ID: 0FD7E889-922F-4732-AE4C-8414E3C3F655
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employee’s HSA plan for the 2023 calendar year is $3,850 for single
coverage or $7,750 for employee and dependent coverage. Effective for
the 2024 calendar year and going forward, the City’s annual contribution
to an employee’s HSA plan will increase to $4,150 for single coverage or
to $8,300 for employee and dependent coverage. Employees can make
additional contributions, on a pre-tax basis, to their HSA account through
payroll deductions, up to the IRS limits, based on their ages (50+) and
coverage level.
IT IS SO AGREED:
City of Rancho Palos Verdes Rancho Palos Verdes Employee
Association
Ara M. Mihranian – City Manager
Matt Waters – President
Karina Bañales – Deputy City Manager
Robert Nemeth – Vice President
Eileen Jacinto – Acting Human Resources
Manager
DocuSign Envelope ID: 0FD7E889-922F-4732-AE4C-8414E3C3F655
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