Page 21 - CPAAC_Fall2016

Flores v. City of San Gabriel: What Your Agency Needs to Know

County Personnel Administrators Association of California (CPAAC) Fall Conference | September 29, 2016
Presented by: Lisa S. Charbonneau

Example Bona Fide / Incidental
Analysis

• City has 350 employees and four bargaining
groups. City participates in the CalPERS medical
program governed by PEMHCA.

• All employees are provided an allowance under a
Section 125 Cafeteria plan of up to $1300 per
month to purchase medical, dental, and vision
coverage.

• If an employee provides alternate proof of medical
coverage, the employee can opt out of medical and
receive $1150.

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Example Bona Fide / Incidental
Analysis: Relevant Data

Enrollment # of EE’s Employer Employer Employer Employee
Level Paid Paid Paid Paid
40
EE Only 64 Medical Dental & Opt Out Premiums
EE + 1 136 Premiums Vision Payments for all 3
Family 110 plans
Opt Out Premiums

$22,406 $2,082 $0 $0
$76,468 $4,732 $0 $10,477
$176,800 $0 $20,601
$0 $126,500
$0 $6,364* $0

Total 350 $275,674 $13,178 $126,500 $31,078

17 *Employees could only opt out of medical, so the
Agency still paid vision/dental for opt-outs.

Example Bona Fide / Incidental 6
Analysis, Cont.

• Step 1: Identify the plan and who is covered.

– All 350 employees are covered by the City’s Sec. 125 plan.

• Step 2: Identify total plan payments.

– $275,674 + $13,178 + $126,500 = $415,352
– Employee contributions are excluded from this analysis.

• Step 3: Calculate cash in lieu as a % of the total.

– $126,500/$415,352 = 0.3045

• Step 4: What is the percentage?

– Cash in lieu is 31% of the total plan payments.

Is 31% incidental?

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