Common use of Cafeteria Plan Benefits Clause in Contracts

Cafeteria Plan Benefits. New hires are eligible for Cafeteria Plan benefits and health insurance beginning on the first day of the month following their start date. The following insurance benefits are provided through a cafeteria plan adopted in accordance with the provisions of Internal Revenue Code § 125: medical insurance, dental insurance, and optical insurance. For employees who are absent as a result of being injured on duty, the City shall pay its contribution for employees and dependents, if any, for health and welfare benefits during the continuous period of an employee's absence up to a maximum accumulated time of one year. 1. City Contribution to the Cafeteria Plan The City will contribute to the cafeteria plan on behalf of each employee an amount (which includes the PERS statutory minimum) determined annually by the method established herein. The total City contribution amount for each year will be determined by adding to the prior year’s contribution amount an amount equal to 80% of the net increase, if any, in the total cost of the monthly premiums for the following plans: (a) the employee plus family category of the PORAC medical insurance plan available through PERS, (b) the employee plus family category of the “Safety Standard” Guardian dental plan and (c) the employee plus family category of the “Safety Standard” optical VSP. The cafeteria plan contribution is used to purchase the optional benefits of medical insurance, dental insurance and optical insurance. Should the total premium cost of these three benefits decrease from one year to the next, the City will reduce its contribution for the three benefits by 80% of the net decrease and the employees will reduce their contribution for the three benefits by 20% of the net decrease. Assuming the cost of the three benefits increase, whatever amount employees pay (if any) will be carried over to the following year. Once the 80% amount is determined each year, that will determine the maximum amount the City will pay for the cafeteria plan for that year. In order to illustrate how this is calculated, the following explains the calculation of the 2019 contribution based upon the actual premiums: The City’s Cafeteria Plan contribution for 2018 was $2,081.26. In 2018, the employee contribution was $132.58 for a total cost of the benefits of $2,213.84. For 2019, the cost of the three benefits increased by a total of $109.91 to $2,323.75. The City paid 80% of the net increase. Thus, for 2019, the City’s Cafeteria Plan contribution increased from $2,081.26 to $2,169.19. For 2019, the employee contribution increased by 20% of the net increase of the three benefits from $132.58 to $154.56. For years in which the cost of the three benefits increase, the same calculation to determine increases in the contribution will apply on a year-to-year basis throughout the term of this MOU by comparing the premiums from one calendar year to the next year of the MOU. In the example above comparing 2018 to 2019, the amount paid by the employees in 2019, will also be paid by the employees in future years as well as any additional employee costs determined by future insurance cost increases. For years when the cost of the three benefits decrease, the City will reduce its contribution by 80% of the net decrease and the employees will reduce their contribution by 20% of the net decrease. This is illustrated with the following example for 2020 as the cost of the three benefits for 2020 has decreased. For 2020, the cost of the three benefits decreased from $2,323.75 to $2,136.62 for a decrease of $187.13. The City’s contribution for 2020 is therefore decreased from $2,169.19 to $2,019.49 and the employees’ contribution is decreased from $154.56 to $117.13. If the 2021 or 2022 cost of the benefits increase, the City and employee increases will be determined as described in the previous paragraph.