Agenda - Council Work Session - 08/25/2026

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CC Work Session Meeting Date: 08/25/2026 Primary Strategic Plan Initiative: Information 2.2. Title: Discuss Council Member Participation in a Health Care Savings Plan Purpose/Background: The purpose of this discussion is to review options for the City Council to participate in a Healthcare Saving Plan, which is an employer -sponsored program that allows Minnesota Public employees to invest money in a medical savings account while employed. This plan is administered by the Minnesota State Retirement System (MSRS). City councilmembers may participate in the Health Care Savings Plan. A recent change to law relates to how Councilmembers are able to be included. Prior to the law change in the pension omnibus bill, for an elected official to be included it had to be a part of a collective bargaining agreement or personnel policy. With the law change, they can now be included as defined by a participation plan or by a resolution of a governing body. It is important to note that healthcare savings plans do not allow for individual choice. (There are limited options for optioning out, as listed below.) All normal terms and conditions apply to councilmembers just as they would for non -union and union employees: there is no individual choice. HCSP agreements must be submitted to Minnesota State Retirement Systems (MSRS) for approval. Approved plans, for example, may be drafted to require a certain percentage of the monthly stipend be applied to the HCSP or potentially that all members must participate following one year on the City Council; there are many options for plan design, but once decided and approved, the plan must be followed as written. In the event the City Council desires to modify their compensation in an effort to contribute additional funds greater than the approved monthly stipend, any modifications must follow the City's Charter guidelines in the same fashion that was recently completed. Waiver ofPartieipation (Employee Opt Out) All employees must participate in the HCSP adopted by their employer or bargaining unit; however, an employee can opt out of the plan if they meet one of these conditions: • Eligible for TRICARE retiree benefits - Must be retired military (20 years of service), which make the employee eligible for retiree benefits now or in the future. • Eligible for VA medical benefits due to a service -connected disability - priority group 1, 2, or 3. • Is a foreign national who plans to return to their country of origin • Has comprehensive health care coverage through another documented source - must be provided until death and 70% of the cost covered by the employer. The insurance coverage must be provided by a source other than the current employer who is sponsoring the HCSP, such as a former employer or spouse's employer. Note: Medicare and VA insurance DO NOT qualify an employee to opt out of the HCSP. If approved, members are automatically enrolled and contribute to the Health Care Savings Plan (HCSP) as directed by the participation plan or the resolution. Members choose how their account balance is invested. After Councilmembers end employment, they may access the funds to reimburse eligible medical expenses for themselves, their spouse, legal tax dependents and adult children up to their 26th birthday. An administrative fee is charged to help pay for the cost of plan services. This fee is prorated and deducted monthly from the account balance. The following is an excerpt from the attached document: Article 11: Health Care Savings Plan Source: SF 4764 (Nelson)/HF 4630 (Cha), as amended by 54764-IABill Summary, 2026 Pension and Retirement Omnibus Bill (Chapter 106; HF 4074, 311 Engr.) Legislative Commission on Pensions and Retirement Article 11 consists of one section that amends section 352.98, subdivision 3, which applies to the Health Care Savings Plan (HCSP) administered by MSRS.