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The city of Roseville has been made aware of its ability to provide certain former employees with reimbursement for certain medical expenses incurred after termination of employment with the city. In addition, the city is aware of its ability to establish an associated funding vehicle. (e.g., trust) for the purpose of providing funds for reimbursement. It is presently understood that the IRS recognizes HIAs with the following characteristics: Employer funded, including but not limited to employer funding determined through collective bargaining. Such employer funding includes conversion of other employer funds (e.g., sick leave, severance, early retirement subsidies) and mandatory employee contributions through salary redaction. b Employer contributions are not taxable under Section 106 of the Code. Reimbursements made to the employee are not taxable under Section 105 of the code, provided certain requirements are met including but not limited to reimbursement is limited to qualified medical expenses and applicable nondiscrimination requirements are satisfied. It is fu rthe r' qnd erstood that the IRS recognizes associate investment vehicles with the following characteristics: • Funds may be ingested on behalf of the employee with no tax on the investment yield. • The H FAA is considered "'funded" for purposes of GAS B 34 to the extent deposited funds offset the future liability of the city, • Once deposited, the funds must be used for the sole purpose of providing benefits and may not revert to the city. • Depending upon the type of investment vehicle, an IFS determination letter may be required. City Census Informationk The city has a total of 165 eligible possible participants within 5 employee groups. Of those employees, 73 are represented by one or more bargaining groups. LOUM��M I Z-T. I ( I I t:+,;p To the extent the city has specialized requests beyond what is contained to the Summary of Requested Information and Proposal Questionnaire, such requests shall be desc6bed in Appendix B for your review and analysis. Page 10