Committee advances limited sick‑time cash‑out policy to replace lost HRA benefit

Hendersonville’s General Committee discussed and forwarded Resolution 2025‑39 on Oct. 14, a policy that would permit certain full‑time employees to convert portions of accrued sick time into taxable cash payments to help cover qualifying out‑of‑pocket medical expenses.

Staff explained the change as an attempt to backfill benefits lost when the city moved to the state's health insurance plan, which staff said does not permit a city‑offered Health Reimbursement Account (HRA). Administrative Services Director Jason Gallo and other staff described the policy as an alternative that would make some funds available to employees who face higher out‑of‑pocket costs under the state plan.

Key features discussed in the meeting: - Eligible employees: full‑time employees enrolled in employer medical coverage (staff said part‑time employees do not receive medical benefits and therefore are not eligible). Committee discussion stated that employees receive 12 sick days annually (96 hours for an 8‑hour employee). - Trigger and limits: staff described the mechanism as tied to documented qualifying medical out‑of‑pocket expenses for a calendar year (staff cited $3,000 as an example threshold discussed during the meeting). The policy as discussed would require employees to maintain a minimum balance in their sick‑time bank after any cash‑out. - Administration and oversight: staff said the program would use verifiable documentation such as insurer year‑to‑date out‑of‑pocket totals or EOBs. Payroll would process payments (staff proposed limiting disbursements to twice per year to limit administration burden). Staff also compared the proposal to flexible spending accounts (FSAs) and noted differences in administrative costs and the city's financial risk under an FSA model.

Committee members asked detailed questions about oversight, appeal processes for denials, the potential fiscal impact to the city and employees, and whether the policy could unintentionally encourage employees to work while sick. Staff said the city had historically spent roughly $80,000 year‑to‑year on HRA dollars for eligible plans, and that total potential exposure if every eligible individual maxed benefits could be higher; they described $80,000 as the recent annual amount and noted the unknowns tied to employee plan choices under the state's offerings.

After discussion and clarifying questions about administration and equity, the committee voted to forward the resolution to BOMA with a neutral recommendation (committee members recorded a voice vote). Staff said they would continue refining administration details for BOMA review.

Next steps: BOMA will consider Resolution 2025‑39; staff said implementation would require further policy detail, oversight procedures and budgeting.