Title
Approve amending the County's Internal Revenue Code Section 125 Plan terminating the Alternative Benefit Option (ABO) Program as described under Section 2.2 of the Plan effective June 30, 2015. (ADDED VIA ADDENDUM ON JUNE 19, 2015)
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Approve amending the County's Internal Revenue Code Section 125 Plan terminating the Alternative Benefit Option (ABO) Program as described under Section 2.2 of the Plan effective June 30, 2015.
SUMMARY/DISCUSSION:
In 2002, the County of Monterey (the County) established an Alternative Benefit Option Account (ABO) as a part of the County's IRC Section 125 Flexible Benefit Plan. Under the terms of the ABO, an eligible employee can fund payment for privately owned individual medical care policies elected in lieu of participating in County-sponsored group health plans. Based on the terms of its various bargaining agreements, the County has agreed to provide flex credits to all eligible employees to use for the purchase of both County-sponsored plans and the individually-owned medical care policies. Again, based on plan choices, the participating employee makes additional contributions toward the cost of these plans/policies. The participant makes these employee contributions on a pre-tax basis unless the employee is receiving coverage under his/her spouse's employer-provided group health plan. In that situation the employee contributions must be made on a post-tax pursuant to IRS rules.
IRS Notice 2015-17 (2/18/15) provides subsequent guidance addressing employer payment plans originally disallowed under the IRS Notice 2013-54 (9/13/13). The original Notice states that employer payment plans are group health plans which fail to comply with the Affordable Care Act (ACA) market reforms. It defines an employer payment plan as a group health plan under which the employer reimburses an employee for some or all of the premium expenses incurred for...
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