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Flexible Benefit Cash Payout Changes Coming in July – Plan Your Personal Budgets Accordingly!

All City employees need to prepare for a major change coming this July in the way the City pays out Flex benefit cash. This will only affect employees who receive Flex cash payments because they don’t “spend” all of their Flex allotment on health benefits and/or 401(k) contributions.

Currently this Flex cash is paid out to employees over the course of the year in 26 payments each payday. That payout schedule has been in place since 2009. Before then, however, the City paid out Flex cash in two lump sum payments, and the City is going back to that twice-annual payout schedule for the new Fiscal Year beginning this July.

So beginning this July, any Flex dollars you allocate to cash during open enrollment will be paid out in two chunks, the first in December 2016 (covering the period from July 1st) and your second lump sum payout in July 2017 (covering the remaining months from December through June 30, 2017). These two larger cash payouts will replace the current system whereby you get a little piece of your Flex cash each payday.

If you have been counting on this extra Flex cash being available to spend each payday, you need to make budgeting changes before July. Beginning in July, those Flex cash dollars will be “banked”; they will not be paid out in small increments each payday but “saved” up for a larger lump sum payout twice a year. You will still receive every penny of Flex cash that you are due –and in fact your total Flex allotment is increasing next year by $1,500 to over $10,000 because of MEA’s new labor contract. But the timing of the payouts will affect how much money you have available to spend each payday.

You should plan your personal budgets to account for this change back to the City’s original pre-2009 methodology of paying out Flex cash only twice a year. If you retire or leave City employment, your “banked” Flex cash will be paid out as part of your final paycheck.

The City’s insistence on this change in timing from every payday to twice a year results from a legal opinion from City Attorney Jan Goldsmith and is being implemented for all City employees regardless of contract status beginning this July. MEA fought this change when the City proposed it last year, and in fact we were successful in delaying the implementation of the change until next Fiscal Year (some non-MEA-represented City employees are already under the new payout schedule this year). But at the end of the day, this payout schedule change is happening whether we like it or not and may require budget planning changes on your part.