PROPOSAL:
Adopt Resolution for Voluntary Employee Medicare Participation
SYNOPSIS:
Three-year labor contracts approved by the Board in January 2006
included an agreement to recommend the Board adopt a resolution that would
enable employees currently not paying Medicare taxes to elect, on a
voluntary basis, to do so. This action is to adopt such a resolution,
requesting the State of California Public Employees Retirement System (CALPERS),
as agents for the Federal Social Security system, to conduct a Medicare
election. The election would be open to all full-time regular employees
not currently subject to Medicare taxes, and Medicare tax deductions would
begin April 9, 2007. Based on employee survey results and current tax
rates, staff anticipates AQMD’s annual cost would not exceed $35,000.
COMMITTEE:
Administrative, April 14, 2006, Recommended for Approval
RECOMMENDED ACTION:
Adopt the attached CALPERS-provided Resolution requesting CALPERS to
conduct an election to allow employees voluntarily to become subject to
Medicare tax deductions beginning April 9, 2007.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
In January 2006, the Board approved three-year labor contracts that
included a provision to recommend the Board adopt a resolution that would
enable full-time, regular employees currently not paying Medicare taxes to
elect, on a voluntary basis, to pay such taxes. This action implements
this provision of the labor agreements and extends the provision to
non-represented employees.
Proposal
AQMD employees hired prior to April 1, 1986, do not pay Medicare taxes
and, thus, do not earn Medicare credits. Survey results indicate a small
number of these employees are interested in paying Medicare taxes in order
to earn sufficient credits to participate in the program when eligible. The
attached Resolution requests CALPERS to conduct an election so employees who
choose to participate in Medicare may begin paying Medicare taxes April 9,
2007. Those hired on or after April 1, 1986, currently pay Medicare taxes
and will not participate in this election.
Resource Impacts
Current rates require participating employees and employers each to pay
1.45% of salary in Medicare taxes. As noted above, this tax is currently
paid for employees hired since April 1, 1986. Based on a survey results,
staff anticipates AQMD’s annual cost for allowing pre-1986 employees the
option of participating will not exceed $35,000. CALPERS has indicated it
will waive any costs associated with the election.
Attachment
Resolution
ATTACHMENT
RESOLUTION NO. 06-
A Resolution of the South Coast Air Quality Management District Board to
establish a “deemed” retirement system pursuant to Section 218(d)(6) of the
Federal Social Security Act to enable employees hired before March 31, 1986,
to elect “Medicare only” coverage.
WHEREAS, the Governing Board of the South Coast Air Quality Management
District, State of California, hereinafter designated as “Public Agency,” in
regular session assembled on May 5, 2006, wishes to establish a “deemed”
retirement system pursuant to Section 218(d)(6) of the Federal Social
Security Act composed of positions of members of the San Bernardino County
Employees’ Retirement Association, hereinafter designated “Present
Retirement System,” desiring “Medicare-Only” coverage, and to include
services performed by individuals employed by the Public Agency in positions
covered by said “deemed” retirement system, as members of a coverage group
established by Section 218(d)(4) of said Act, in the California State Social
Security Agreement of March 9, 1951, providing for the coverage of public
employees under the Health Insurance system established by said Act as
amended; and
WHEREAS, State and Federal law and regulations require, as a condition of
such coverage, that a division be authorized by the Board of Administration,
California Public Employees’ Retirement System; and
WHEREAS, it is necessary that the Public Agency now designate any
services which it desires to exclude from coverage with respect to such
coverage group under said Health Insurance system; and
WHEREAS, it is necessary for the Public Agency to set forth the
modification, if any, of the benefits and contributions under the Present
Retirement System that may result from coverage under the said insurance
system with respect to such coverage group.
THEREFORE, BE IT RESOLVED, that the Board of Administration, California
Public Employees’ Retirement System, be and hereby is requested to authorize
the foregoing division; and
BE IT FURTHER RESOLVED, that upon receipt of authorization from the
Board of Administration, a division shall be conducted in accordance with
the requirements of Section 218(d) of the Social Security Act and applicable
State and Federal laws and regulations; that each eligible member of the
Present Retirement System at the time of the division shall be furnished a
form to permit the member to elect whether or not his services should be
excluded from or included under the said California State Social Security
Agreement as hereinbefore provided; with such “Medicare-Only” coverage
effective as to services performed on or after April 9, 2007; and
BE IT FURTHER RESOLVED that the following services with respect to said
coverage group of the Public Agency shall be excluded from coverage under
said agreement:
- All services excluded from coverage under the agreement by Section 218
of the Social Security Act; and
- Services excluded by option of the SCAQMD:
|
x |
a. |
No optional exclusions desired. |
|
o |
b. |
Service performed. |
BE IT FURTHER RESOLVED, that with respect to the said coverage group,
the benefits and contributions of the Present Retirement System shall not be
modified in any way; and
BE IT FURTHER RESOLVED that notice of the division shall be given to
members of the Present Retirement System not less than ninety (90) days
prior to the date of the division; provided, however, that notice shall be
given to employees becoming members of the Present Retirement System after
the date of such notice up to and including the date of the division on the
date on which they attain membership in the system, and that Human Resources
Manager Ronald Portnoy is hereby designated and appointed to conduct such
division on behalf of the Public Agency in accordance with law, regulations,
and this resolution, including the fixing of the date and the giving of
proper notice thereof to members of the Present Retirement System and to all
such eligible employees; and
BE IT FURTHER RESOLVED that the SCAQMD will pay and reimburse the State
at such time and in such amounts as may be determined by the State the
approximate cost of any and all work and services relating to such division.
_________________________ _____________________________________
Date Clerk of the Board
South Coast Air Quality Management District
|
