When an employee retires, the value of unused sick time may be applied toward the payment of continuing health insurance by one of the approved methods. The Village may offer three (3) different options to the retiree on how the premiums can be paid.
Option 1: The retiree can stay on the Village's health insurance plan and the monthly premium will be deducted from the value of the retiree's sick bank.
Option 2: The retiree can choose an outside vendor sponsored by IMRF and the Village will pay IMRF/Vendor directly and deduct the month premium from the value of the retiree's sick bank. The maximum the Village will pay is equal to the amount the Village would pay under Option 1 based upon the coverage the employee has at the time of retirement.
Option 3: The retiree would receive the Village equivalent of the insurance they had upon leaving the Village in a monthly cash payment. The maximum the Village will pay is equal to the amount the Village would pay under Option 1 based upon the coverage the employee has at the time of retirement. The retiree would be responsible for any taxes associated with the monthly payment they receive. The sick bank balance paid out monthly is not eligible for the match that is offered per the MAP contract or employee handbook for union and non-union sworn officers.
The Village may offer the retiring employee four types of coverage: (1) Retiree only, (2) Retiree and spouse, (3) Retiree and child(children) and (4) Retiree and family. The premium charged will be reviewed by the Village on an annual basis, and if there are any changes to be made, the retiree will be notified.
Once the employee and/or spouse reach age 65 and are Medicare qualified, they must enroll in the Village's carve out plan for Medicare retirees only. The premium can be paid from your sick bank if you have not depleted it, or the retiree pays the company directly.
In the event the retired employee dies prior to becoming 65 years of age, the surviving spouse shall be eligible coverage based on the option the retiree was participating in at the time of his/her death. The surviving spouse is only eligible if they are receiving a monthly pension from the retirement system in which the employee participated.
Calculating the Value of Sick Time at Retirement
For employees hired prior to January 01, 2023, the value of unused sick hours is equivalent to the employee's ending rate of pay multiplied by total unused sick time hours up to the maximum allowed.
For employees hired after January 1, 2023, the value of unused sick hours is calculated using the employee's pay rate at the time the employee accrued the sick time, using the first-earned, first-used valuation method.
First-earned, first-used means the employee uses the sick hours that are earned from start of employment first for the valuation of ending balance purposes. First-earned, first-used values the balance by applying the pay rate and sick time earned closest to retirement and going back using the appropriate pay rate and earned rate until remaining hours balance is fully calculated.
Example valuation table
Employee retires with 575.64 balance at end of year 30 of employment with a pay rate of $50
Employee earned 191.88 hours during year 30 at $50/hr = $9,594.00
Employee earned 191.88 hours during year 29 at $40/hr = $7,675.20
Employee earned 191.88 hours during year 28 at $30/hr = $5,765.40
Employee earned 191.88 hours during year 27 at $29/hr = $0 (available hours balance past 575.64 ending balance, stop further calculation)
(Ord. 23-1853, passed 5-3-23)