HomeMy WebLinkAboutContract 1768~jfog
FLEX COMPENSATION, INC.
HIPAA Business Associate Addendum
This HIPAA Business Associate Addendum ("Addendum") supplements and. is made a part of
the administrative services agreement ("Agreement") by and between CITY OF COLUMBIA
HEIGHTS ("CE") and Flex Compensation, Inc. ("FCI"), and is effective as of February 17, 201.0
(the "Addendum Effective Date").
RECITALS.
Whereas, CE wishes to disclose certain information ("Information") to FCI pursuant to the terms
of the Addendum, some of which may constitute Protected Health Information ("PHI"); and.
Whereas, CE and FCI. intend to protect the privacy and provide for the security of PHl disclosed
to FCI pursuant to the Addendum in compliance with the Health Insurance Portability and
Accountability Act of 1996, Public Law 104-191 ("HIPAA") and regulations promulgated
thereunder by the U.S. Department of Health and Human Services (the "HIPAA Regulations")
and other applicable laws; and
Whereas, the purpose of this Addendum is to assure the privacy and security of individually
identifiable health information as required by 45 CFR Part 160 and 164 as well as to provide for
compliance with HIPAA privacy and security requirements as found in the American Recovery
and Reinvestment Act of 2009 which provides that a business associate is statutorily obligated to
comply with the HIPAA privacy and security rules.
Whereas, in consideration of the mutual promises below and the exchange of information
pursuant to this Addendum, the parties agree as follows:
AGREEMENT. The parties identified. above agree as follows:
I. Definitions.
(a) "ARRA" means subtitle D of the Health Information Technology for
Economic and Clinical Healt.". Aet provisions of the American P.ecovcry a~~d
Reinvestment Act of 2009, 29 U.S.C. Sections 17921-17954, and any and all
references in this Addendum to sections of ARRA wilt be deemed to include all
associated existing and future implementing regulations, when and as each is
effective.
(b) "Breach" will have the same meaning as the term "breach" in 45 CFR Section
164.402
(c) "CE" or "Covered Entity" for the purpose of this Addendum will mean
[Employer] Health Care Plan and the term will have the meaning given under the
HIPAA Regulations, including, but not limited to, 45 CFR Section 160.103.
(d) "Flex Compensation, Inc." or "FCI" is a business associate of the CE as that
term is defined under HIPAA and the HIPAA Regulations, including, but not
limited to, the Privacy Rule 45 CFR Section 160.103.
02/17/2010
(e) "Individual" will have the same meaning as given in 45 CFR 164.501 and will
include a person who qualifies as a personal representative in accordance with 45
CFR 502(8).
(f) "Privacy Rule" will mean the Standards for Privacy of Individually
Identifiable Health Information at 45 CFR. part 1.60 and 164, subparts A and E.
(~ "Protected Health Information" or "PHI" means any information, whether
oral or recorded in any form or medium: (i) that relates to the past, present or
future physical or mental condition of an individual; the provision of health care
to an individual; or the past, present or future payment for the provision of health
care to an individual, and (ii} that identifies the individual or with respect to
which there is a reasonable basis to believe the information can be used to identify
the individual, (iii) which is limited to the information created or received by FCI
from or on behalf of Covered Entity, and will have the meaning given to such
term under HIPAA and the HIPAA Regulations, including, but not limited to 45
CFR Section 164.501.
(h} "Required By Law" will have the same meaning as the term "required by law"
in 45 CFR 164.501.
(i) "Secretary" will mean the Secretary of the U.S. Department of Health and
Human Services or his designee.
(j) "Security Rule" will mean the Security Standards far the Protection of
Electronic Protected Health Information at 45 CFR parts 160 and 164 subparts A
and. C.
(k) "Unsecured PHI" will have the same meaning as the term "unsecured PHI" as
defined in 45 CFR Section 164.402.
II. Obligations of FCI.
(a) Permitted Vises and Disclosures. FCI may use and/or disclose PHI received
Ta~~ Fitr'T craarat to 4~ 1°d~end'u'iii ("~i E'$ PHi"~ solei" in aCCvrdanCe v/ith the
vy ~i purouuii~ w ~ its ~ u ~ ~ y
services set forth in the administrative services agreement in effect, as shown in
Exhibit A, which is incorporated herein by reference. In the event of any conflict
between this Addendum and such agreements, this Addendum will control.
(b) Nondisclosu~°e. FCI will not use or further disclose CE's PHI otherwise than
as permitted or required by this Addendum or as Required By Law.
(c) Safeguards. FCI will use appropriate safeguards to prevent use or disclosure
of CE's PHI in a manner other than as provided for by this Addendum. FCI. will
maintain a comprehensive written information privacy and security program that
includes administrative, technical and physical safeguards appropriate to the size
and complexity of FCI's operations and the nature and scope of its activities.
(d) Reporting of Disclosures. FCI will report to CE any use or disclosure of CE's
PHI otherwise than as provided for by this Addendum of which FCI becomes
aware, in accordance with section 2(i) of this Addendum.
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(e) FCI's Agents. FCI will ensure that any agents and/or subcontractors, to whom
it provides PHI received from (or created or received by FCI on behalf of) CE
agree to the same restrictions and conditions that apply to FCI with respect to
such PHI.
(f) Availability of Information to CE. FCI will make available to CE or
Individual. such information as CE may require to fulfill CE's obligations to
provide access to, provide a copy of, and account for disclosures with respect to
PHI pursuant to HIPAA and the HIPAA Regulations, including, but not limited
to, 45 CFR Sections 164.524 and 164.528.
(g} Amendment of PHI. FCI will make CE's PHI available to CE or to Individuals
as CE may require to fulfill CE's obligations to amend PHI pursuant to HIPAA
and the HIPAA Regulations, including, but not limited to, 45 CFR
Section 164.526 and FCI will incorporate any amendments as requested by CE or
individual to CE's PHI into copies of such PHI maintained by FCI.
(h) Internal Practices. FCI will make its internal practices, books and records
relating to the use and disclosure of PHI received from CE (or created. or received
by FCI on behalf of CE) available to the Secretary and CE for purposes of
determining FCI's compliance with HIPAA and the HIPAA Regulations.
(i) Notification of Breach. In the event of a Breach, FCI, without unreasonable
delay, and in any event no later than thirty (30} calendar days after discovery, will
provide CE with written notification that a Breach of unsecured PHI. has occurred.
The notification from FCI to the CE will include a description of the Breach and a
list of Individuals impacted by the Breach. Fallowing notification of a Breach by
FCI to CE, the CE and FCI will work together to determine the appropriate
content of a Breach notification as required by the HIPAA privacy regulations and
determine whether such breach notification will be issued by FCI or CE,.
(j) Minimum Necessary. FCI agrees that it will, in performing its functions,
activities, services and operatians specified above, make reasonable efforts to use,
disclose or request Protected Health Information in only the minimum amounts
necessary to accomplish the intended purpose of the use, disclosure or request,
except that FCI will not be obligated to comply with this minimum necessary
limitation if neither FCI nor CE is required to limit its use, disclosure or request to
the minimum necessary. FCI and CE acknowledge that the phrase "minimum
necessary" will be interpreted in accordance with ARRA and government
guidance on the definition.
(k) Document Retention. FCI will maintain PHI for a period of six years from
the date received or transmitted, unless CE agrees to receive and store the PHI
itself.
(1) Confidential Communications. FCI agrees to accommodate reasonable
requests by Individuals for confidential communications in accordance with 45
CFR Section 164.522(b) if (i) except as otherwise required by law, the disclosure
is to the Plan for purposes of carrying out payment or health care operations (and
is not for the purposes of carrying out treatment); and (ii) the Protected Health
02/17/2010
Information pertains solely to a health care item or service for which the health
care provider involved has been paid out-of-pocket in full by the Individual.
(m)Remuneration. FCI agrees to not directly or indirectly receive remuneration
in exchange for any Protected Health Information as prohibited by 42 U.S.C.
Section 17935(d).
(n) Fundraising. FCI. agrees not to make or cause to be made any written
fundraising communication that is prohibited by 42 U.S.C. Section 17936(b).
(o) Product or Service. FCI agrees not to make or cause to be made any
communication about a product or service that is prohibited by 42 U.S.C. Section
17936(a).
(p) Privacy and Security Officers. FCI, if it has not already done so, agrees that it
will appoint Privacy and Security Officers as provided in the Privacy and Security
Rules.
(q) Security Standards. On or before the required effective date, FCI agrees to
implement administrative, physical, and technical safeguards to protect the
confidentiality, integrity and availability of electronic Protected Health
Information (as defined in the Security Rule} that it creates, receives, maintains,
or transmits on behalf of the CE.
III.Obligations of CE.
(a) Disclosure of PHI in accordance with Privacy Rule. Pursuant to the teens of
this Addendum and The Privacy Rule, CE will disclose PHI to FCI in accordance
with the Privacy Rule and this Addendum. Disclosure under this Addendum may
also include disclosure directly to FCI from CE's agents or subcontractors, or
another covered entity or business associate of the CE (besides the health plan,
which may include but is not limited to a claims administrator, insurer, third party
administrator or health care provider or clearinghouse) which maintains and has
access to the CE's PHI, provided that such disclosure is in accordance with the
Privacy Rule ar~d any contracts regardi..g HIP,~,.~ disclosures entered into
between the CE and the agent, subcontractor, other covered entity or business
associate of the CE.
(b) Safeguards. CE will be responsible for using appropriate safeguards to
maintain and. ensure the confidentiality, privacy and security of PHI transmitted. to
FCI pursuant to this Addendum, in accordance with the standards and
requirements of HIPAA and the HIPAA Regulations, until such PHI is received
by FCI.
(c) Notice of Privacy Practices. CE will provide FCI with the notice of privacy
practices in accordance with the Privacy Rule that CE produces in accordance
with 45 CFR Section 164.520, as well as any changes or updates to such notice.
(d) Notice of Changes in Authorizations or Consents. CE will provide FCI with
any changes in, or revocation of, permission by Individual to use or disclose PHI,
if such changes affect FCI's permitted or required uses and disclosures.
02/17/2010
(e) Notice of Restrictions. CE will notify FCI of any restriction to the use or
disclosure of PHI that CE has agreed to in accordance with 45 CFR Section
1.64.522.
IV. Audits, Inspection and Enforcement.
From time to time upon reasonable notice, upon a reasonable determination by CE that FCI has
breached this Addendum, CE may inspect the facilities, systems, books and. records of FCI to
monitor compliance with this Addendum. FCI will promptly remedy any violation of any term
of this Addendum and will certify the same to CE in writing. The fact that CE inspects, or fails
to inspect, or has the right to inspect, FCI's facilities, systems and procedures does not relieve
FCI of its responsibility to comply with this Addendum, nor does CE's (i) failure to detect or (ii)
detection, but failure to notify FCI or require FCI's remediation of any unsatisfactory practices,
constitute acceptance of such practice or a waiver of CE's enforcement rights under this
Addendum.
V. Tenr~ination.
(a) Matea°ial Breach. A material breach by FCI or CE of any provision of this
Addendum will provide grounds for immediate termination. of the Agreement.
(b) Reasonable Steps to Cure Breach. If CE knows of a pattern of activity or
practice of FCI that constitutes a material breach or violation of FCI's obligations
under the provisions of this Addendum or another arrangement and does not
terminate this Addendum pursuant to Section 5(a}, then CE will take reasonable
steps to cure such breach or end such violation, as applicable. If CE's efforts to
cure such breach or end such violation are unsuccessful, CE will either (i)
terminate this Addendum, if feasible or (ii) if termination of this Addendum is not
feasible, CE will report FCI's breach or violation to the Secretary.
(c} Judicial or 14dministrative Proceedings. Either parry may terminate this
Addendum, effective immediately, if (i) the other party is named as a defendant in
a cruninal proceeding for a violation of the HIPAA Privacy or Security Rules or
(ii} a finding or stipulation that the other party has violated any standard or
requiretneiit of the IiIPAA Privacy ur Security Rules or other security or privacy
laws is made in any administrative or civil proceeding in which the party has been
joined.
(d) Effect of Termination. Upon termination of this Addendum for any reason,
FCI will return and/or destroy (unless subject to a court order prohibiting
destruction or requiring production) all PHI received from CE (or created or
received by FCI on behalf of CE} that FCI still maintains in any form, and will
retain no copies of such PHI or, if return or destruction is not feasible, it will
continue to extend. the protections of this Addendum to such information, and
limit further use of such PHI to those purposes that make the return or destruction
of such PHI infeasible.
VI. Indemnification.
Each party will indemnify, hold harmless and defend the other party to this Addendum from and
against any and. all claims, losses, liabilities, costs and other expenses incurred as a result of, or
02/17/2010
arising directly or indirectly out of or in connection with: (i) any misrepresentation, breach of
warranty or partial-fulfillment or non-fulfillment of any undertaking on the part of the party
under this Addendum; and (ii) any claims, demands, awards, judgments, actions and proceedings
made by any person or organization arising out of or in any way connection with. the party's
performance under this Addendum.
VII. Disclaimer.
CE makes no warranty or representation that compliance by FCI with this Addendum or the
HIPAA Privacy and. Security Regulations will be adequate or satisfactory for FCI's own purposes
or that any information in FCI's possession or control, or transmitted or received by FCI, is or
will be secure from unauthorized use or disclosure. FCI is solely responsible for all decisions
made by FCI regarding the safeguarding of PHI.
VIII. Certification.
To the extent that CE determines that such examination is necessary to comply with CE's legal
obligations pursuant to HIPAA relating to certification of its security practices, CE or its
authorized agents and/or subcontractors, may, at CE's expense, examine FCI's facilities, systems,
procedures and records as may be necessary for such agents or subcontractors to certify to CE
the extent to which FCI's security safeguards comply the HIPAA Privacy and Security
Regulations or this Addendum.
IX. Amendment.
(a) Amendment to Comply with Law. The parties acknowledge that state and federal laws
relating to electronic data security and privacy are rapidly evolving and that
amendment of this Addendum may be required. to provide for procedures to ensure
compliance with such developments in the Privacy and Security Rules and. other
applicable law. The parties specifically agree to take such action as is necessary to
implement the standards and. requirements of the HIPAA Privacy and Security
Regulations and other applicable laws relating to the privacy, security or
confidentiality of PHI. The parties understand and agree that CE must receive
satisfactory written assurance from FCI that FCI will adequately safeguard all PHI
that it receives or creates pursuant to this Addendum. Upon CE's request, FCI agrees
to promptly enter into negotiations with CE concerning the terms of an amendment to
this Addendum embodying written assurances consistent with the standards and
requirements of the HIPAA Privacy and Security Regulations or other applicable
laws. CE may terminate this Addendum upon 60 days written notice in the event that
(i) FCI does not promptly enter into negotiations to amend this Addendum when
requested. by CE pursuant to this Section or (ii) FCI: does not enter into an amendment
to this Addendum providing assurances regarding the safeguarding of PHI that CE, in
its sole discretion, deems sufficient to satisfy the standards and requirements of
HIPAA and the HIPAA Regulations.
(b) Amendment of Service Agreements. The agreement(s) shown in Exhibit A
may be modified or amended by mutual agreement of the parties at any time
without amendment of this Addendum.
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X. Assistance in Litigation or Administrative Proceedings.
FCI will make itself, and any subcontractors, employees or agents assisting FCI in the
performance of its obligations under this Addendum, available to CE, to testify as witnesses, or
otherwise, in the event of litigation or administrative proceedings being commenced against CE,
its directors, officers, or employees based upon claimed violation of the HIPAA Privacy and/or
Security Regulations or other laws relating to security and privacy, except where FCI or its
subcontractor, employee or agent is a named adverse party.
XI. No Third-Party Beneficiaries.
Nothing express or implied in this Addendum is intended to confer, nor will anything herein
confer, upon any person other than CE, FCI and their respective successors or assigns, any
rights, remedies, obligations or liabilities whatsoever.
XII. Effect on Agreement.
Except as specifically required to implement the purposes of this Addendum, or to the extent
inconsistent with this Addendum, all other terms of the Agreement will remain in force and
effect.
XIII. Interpretation.
This Addendum and the Agreement will be interpreted as broadly as necessary to implement and
comply with the HIPAA Privacy and Security Regulations and applicable state laws. All
references in this Addendum to a section in the Privacy or Security Rule means the section as in
effect or as amended, and for which compliance is required.
The parties agree that any ambiguity in this Addendum will be resolved in favor of a meaning
that complies and is consistent with the HIPAA Privacy and Security Regulations.
IN WITNESS WHEREOF, the parties hereto have duly executed this Addendum as of the
Addendum Effective Date.
)FLEX COMPENSATION, INC. CITY OF COLUMBIA HEIGHTS
-~`~'
By:
~, .~.
Name: Gary Bohline Name: _
O
Title: President Title: ~ /,' ~ ~- ~g
~~ d'
~~ ~' y~ f
Date: 2/ 12/2010 Date: ,. ` ~ .:~
p f q
02/17/2010
Exhibit A
"Services" Defined (check each statement below that applies, and provide information
for statements checked).
X As used in this Agreement, "Services" includes services provided by
Business Associate pursuant to the following agreements between Business
Associate and Covered Entity (insert agreement title(s)}:
Reimbursement Account Administration Services Agreement
As used in this Agreement, "Services" includes the following additional or
other services provided to or on behalf of the Covered Entity (describe in general
terms the services provided by Business Associate that are the subject of this
Agreement --this section-need-not be-used if all services are described-in agreements
named above):
02/17/2010 8
(-\
I Flex Icompensation, Inc.
P.O. Box 220
Minneapolis, MN 55440-0220
(952) 544-8332 (800) 333-5597 (952) 544-8287 Fax
LINDA MAGEE
City of Columbia Heights
590 40 AVE NE
COLUMBIA HTS, MN 55421-3878
September 28, 2006
Following is 2007 renewal information for the flexible spending account administration services
that Flex Compensation provides City of Columbia Heights. I'm pleased to communicate that
your annual support fees and participant fees for FSA administration will not increase for 2007.
Annual support fees will remain at $295 for Basic and $670 for Extended Support ($795
including Form 5500 preparation). A summary of2007 participant fees and projected costs is
shown below. There are currently 31 participants in your plan, with 30 health care accounts and
I dependent care accounts.
Monthly Fee Structure Avg. Per Participant Avg. Per Account Est. Monthly Bill
$5.25 first 100 part.
I $4.25 next 200 part. $ 5.25 $ 5.25 $ 163
~37'i ov~r 300 nA.rt
I -.- Y- - -. I I I
Participant means an employee participating in one or both accounts; employees participating in both
accounts are billed once.
Please note that the above fees do not include optional "Grace Period" administration following
the end of the plan year or the addition of a "Limited-Purpose" health FSA for employees who
participate in a qualifying High Deductible Health Plan (HDHP) and health savings account
(HSA). Grace Period administration is available for a one time implementation fee of $250 plus
an ongoing fee of $.25 per participant per month. The Limited Purpose health FSA is available
for a one time implementation fee of $250.
FeI's goal is to provide clients with the highest quality administration services available at a
competitive price. We appreciate your business and look forward to continuing to serve you.
Please don't hesitate to contact me or your Benefit Administrator if you have any questions or
comments.
Sil)cerely,
1'"1
i L
l\JtjJlJt/
~, 4
G~ry 130hline
President
ne"
FLEXIBLE BENEFIT PLAN DOCUMENT
9/1/2005v6
TABLE OF CONTENTS
ARTICLE I: INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
Section 1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 1
Section 1.2 Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 1
ARTICLE II: DEFINITIONS .......................................... 1
Section 2.1 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
Section 2.2 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
Section 2.3 Dependent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 1
Section 2.4 Dependent Care Account ................................ 1
Section 2.5 Dependent Care Expense ................................ 1
Section 2.6 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Section 2.7 Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 2
Section 2.8 Employer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Section 2.9 FMLA Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Section 2.10 Gainfully Employed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Section 2.11 Health Care Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Section 2.12 Health Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2
Section2.13 HighlyCompensatedEmployee . .. . . . ... .. . . . . . . . . . . . . . . .. 3
Section 2.14 Highly Compensated Individual. . . . . . . . . . . . . . . . . . . . . . . . . .. 3
Section 2.15 Key Employee ...................................... 3
Section 2.16 Optional Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3
Section 2.17 Pmiicipant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4
Section 2.18 Period of Coverage ................................... 4
Section 2.19 Plan ............................................. 4
Section 2.20 Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4
Section 2.21 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 4
Section 2.22 Qualified Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4
Section 2.23 Qualified Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4
Section 2.24 Qualifying Dependent ................................. 5
Section 2.25 Summary Pages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
Section 2.26 Student . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Section 2.27 USERRA Leave .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
ARTICLE III: ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . .. 6
Section 3.1 Eligibility .......................................... 6
Section 3.2 COlmnencement of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Section 3.3 Tennination ofPmiicipation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Section 3.4 Pmiicipation during Unpaid Leave . . . . . . . . . . . . . . . . . . . . . . . . .. 7
Section 3.5 Continuation of Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8
Section 3.6 Grace Period Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8
ARTICLE IV: CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9
Section 4.1 Salary Reduction Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9
Section 4.2 Benefit Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Section 4.3 Maximum Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
ARTICLE V: BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Section 5.1 Benefit Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
9/1/2005v6
Section 5.2 Benefit Descriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Section 5.3 Limitation of Benefits ................................. 10
Section 5.4 Claims Procedure .................................... 1 0
Section 5.5 Procedure for Filing a Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
Section 5.6 Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
Section 5.7 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 14
ARTICLE VI: ELECTION PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 14
Section 6.1 Election FOlm and Timing .............................. 14
Section 6.2 Elections In-evocable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
Section 6.3 Failure to Elect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
Section 6.4 Automatic Termination of Election. . . . . . . . . . . . . . . . . . . . . . . .. 18
Section 6.5 Requalifving Emplovees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
ARTICLE VII: PREMIUM CONVERSION AND HEALTH SAVINGS ACCOUNTS (HSA)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
Section 7.1 Applicability ofthis A1iicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
Section 7.2 Premium Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
Section 7.3 Health Savings Accounts (HSA) .......................... 19
ARTICLE VIII: HEALTH CARE FLEXIBLE SPENDING ACCOUNT. . . . . . . . . . . .. 19
Section 8.1 Applicability of this A1iicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19
Section 8.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19
Section 8.3 Health Care Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19
Section 8.4 Claims for Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19
Section 8.5 Claims for Reimbursement Using and Electronic Pavment Card. ..... 20
Section 8.6 Reimbursement of Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22
Section 8.7 Maximum Reimbursement ............ . . . . . . . . . . . . . . . . .. 22
Section 8.8 Minimum Election. .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22
Section 8.9 Revocation of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22
Section 8.10 Health Insurance Portability and Accountability Act of 1996. . . . . . ., 23
Section8.11 Limited-PurposeHealthFSA. ........................... 26
ARTICLE IX: DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT . . . . . . . . . .. 26
Section9.1 Applicability of this Article .............................. 26
Section 9.2 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2 6
Section 9.3 Dependent Care Account ............................... 27
Section 9.4 Claims for Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 27
Section 9.5 Reimbursement of Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 27
Section 9.6 Maximum Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 28
Section 9.7 Minimum Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 28
ARTICLE X: ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 28
Section 10.1 Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 28
Section 10.2 Powers of the Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . .. 28
Section 10.3 Actions of the Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . .. 29
Section 10.4 InfOlmation to be Fumished. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29
Section 10.5 Nondiscrimination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29
Section 10.6 Changes bv Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29
Section 10.7 RepOliing and Disclosure .............................. 30
Section 10.8 Indenmification of the Administrator. . . . . . . . . . . . . . . . . . . . . .. 30
ARTICLE XI: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 30
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Section 11.1 Amendment and Termination. . . . . . . . . . . . . . . . . . . . . . . . . . .. 30
Section 11.2 Plan Not a Contract of Emplovment ..... . . . . . . . . . . . . . . . . .. 30
Section 11.3 Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 0
Section 11.4 No Guarantee of Tax Consequences ... . . . . . . . . . . . . . . . . . . .. 31
Section 11.5 Plan Benefits May Not be Assigned ....................... 31
Section 11.6 Govel11ing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 31
FLEXIBLE BENEFIT PLAN
ARTICLE I: INTRODUCTION
Section 1.1 Purpose. The purpose of the Plan is to provide Pmiicipants with a choice
between cash and celiain "qualified benefits" as defined in Section 125 of the Code. The Plan is
intended to qualify as a "Cafetelia Plan" under Section 125 of the Code so that Optional Benefits
a Pmiicipant elects to receive under the Plan will be eligible for exclusion from the Pmiicipant's
gross income under Section l25(a) of the Code. The Employer intends Plan tenns, including
those relating to coverage and benefits, to be legally enforceable. The Plan shall be maintained
for the exclusive benefit of Qualified Employees.
Section 1.2 Rules of ConstlUction. The Plan shall be constlUed in accordance with the
following lUles:
(a) Headings at the beguming of miicles and sections are provided for convenience of
reference and shall not influence constmction of the Plan.
(b) Capitalized words and phrases shall have the meaning defmed in the Plan unless a
different meaning is plainly required by the context.
(c) Except as otherwise indicated by context, the masculine gender shall include the
feminine, the singular shall include the plural, and vice versa.
ARTICLE II: DEFINITIONS
Section 2.1 Code means the Internal Revenue Code of 1986, as amended, and its
regulations.
Section 2.2 Compensation means the total wages and salary, including salary reduction
amounts under Code sections 132(f), 125, 401(k), 403(b) 457(b), oveliime payments and bonus
payments, which are paid by the Employer to a Pmiicipant during the Plan Year.
Section 2.3 Dependent for purposes of Premium Conversion under A1iicle VII and
Health Care Flexible Spendulg Account (Health FSA) under A1iicle VIII means the spouse of a
Pmiicipant or any individual who is a dependent of the Pmiicipant as defined in Section 152 of
the Code (without regard to Section l52(b)(1), Section l52(b)(2) and Section l52(d)(1)(B)), and
any Alternate Recipient under a Qualified Medical Child SuppOli Order ("QMSCO") as defined
in ERISA Section 609.
Section 2.4 Dependent Care Account means the account established and maintained by
the Employer under A1iicle IX, to record a Pmiicipant's interest in the Plan.
Section 2.5 Dependent Care Expense for the purpose of Dependent Care Flexible
Spending Account (Dependent Care FSA) under A1iicle IX, means an amount paid or incurred
by the Pmiicipant for the cm'e of a Qualifying Dependent or for related household services, but
9/1/2005v6
only if such expenses were incun"ed to enable the Pmiicipant (and spouse if applicable) to be
Gainfully Employed during the period in which the expenses were incuned. Expenses for
services delivered outside of the Pmiicipant's home for a Qualifying Dependent described in
Section 2.22(b) shall be Dependent Care Expenses only if such Qualifying Dependent regulm"ly
spends at least eight (8) hours per day in the Pmiicipant's household. Expenses shall be
considered incuned on the date services are provided. Eligible expenses do not include: amounts
paid for food, clothing or education unless such expenses are incidental to and inseparable from
the care provided; educational expenses for a child in kindergmien or higher grade; or expenses
for services at a camp where the Qualifying Dependent stays ovemight.
Eligible expenses do not include aIllounts paid to:
(a) A dependent care facility or person providing care for more than six (6) nonresident
individuals which does not comply with all applicable laws and regulations of the state or
local govemment in which it is located; or
(b) A child of the Paliicipant under the age of nineteen (19) at the close of the Plan Year; or
(c) Any other individual which the Pmiicipant or the Participant's spouse may claim as a
dependent under Section 151 (c) of the Code.
Section 2.6 Effective Date means the Effective Date as shown in the Summary Pages.
Section 2.7 Election means an election pursuant to AIiicle VI by a Qualified Employee
to participate in the Plan and the allocation by the Pmiicipant of elective contributions made on
the Pmiicipant's behalf among Optional Benefits available under the Plan.
Section 2.8 Employer means the entity named as the Employer in the Summary Pages, or
any successor that agrees to continue the Plan and any affiliated employer which adopts the Plan.
Affiliated employer in this regard means another corporation which is a member of a controlled
group of corporations, any trade or business under common control or an affiliated service group.
Section 2.9 FMLA Leave means a leave of absence that the Employer is required to
extend to a Pmiicipant under the provisions of the Family and Medical Leave Act of 1993.
Section 2.10 Gainfully Employed for the purpose of Dependent Cm"e Reimbursement
under AIiicle IX, means the emTIing of income which is not nominal reimbursement for
volunteer work, or the period of active search for gainful employment.
Section 2.11 Health Care Account means the account established and maintained by the
Employer under AIiicle VIII, to record a Pmiicipant's interest in the Plan.
Section 2.12 Health Expense for the purpose of Health Care Flexible Spending Account
(Health FSA) under Aliicle VIII, means an expense incurred during a Period of Coverage by a
Pmiicipant or by the Dependent of a Pmiicipant for medical care as defined in Section 213(d) of
the Code, excluding any insurance premiums for health coverage, excluding expenses for long
9/1/2005v6
2
term care and excluding any specific expenses described in the exclusions section of the
Summary Pages. Expenses are considered incurred on the date services are rendered. Expenses
are eligible only to the extent such expense have not been reimbursed through insurance or some
other source and the pm1icipant agrees not to seek such reimbursement. Medical care generally
refers to the diagnosis, cure, treatment, or prevention of disease or for the purpose of affecting
any structure or function of the body and includes transp0l1ation expenses primarily for and
essential to medical care.
Section 2.13 Highly Compensated Employee means the following for each type of
benefit described below:
(a) a highly compensated employee for purposes of applicable nondiscrimination
requirements of Section 125 of the Code means an employee who is highly compensated
as defined in Section 125(e) of the Code,
(b) for Health Care Flexible Spending Account under A11icle VIII, a highly compensated
employee for purposes of applicable nondiscrimination requirements of Section 105 of
the Code means an employee who is highly compensated as defmed in Section 105(h) of
the Code,
(c) for Dependent Care Flexible Spending Account under A11icle IX, a highly compensated
employee for purposes of applicable nondisclimination requirements of Section 129 of
the Code means an employee who is highly compensated as defmed in Section 414( q) of
the Code.
Section 2.14 Highly Compensated Individual for purposes of Section 125 and its
nondiscrimination requirements as to eligibility shall include an officer, a shareholder owning
more than 5 percent of the voting power or value of all classes of stock of the Employer, a highly
compensated employee or a spouse or dependent of any of the above.
Section 2.15 Key Employee means any person who is a key employee as defined in
Section 416(i)(1) of the Code.
Section 2.16 Optional Benefits means the following employee benefit planes) offered by
the Employer if adopted by the Employer as shown in the Summmy Pages:
(a) Premium Conversion and Health Savings Accounts (HSA) as described in A11icle VII
(b) Health Care Flexible Spending Account (Health FSA) as described in A11icle VIII
(c) Dependent Care Flexible Spending AccOlmt (Dependent Care FSA) as described m
A11icle IX
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Section 2.17 Pmiicipant memlS a Qualified Employee who has satisfied the eligibility
requirements provided in A1iicle III and who makes an Election to pmiicipate in the Plan.
Section 2.18 Period of Coverage means the time period commencing on the first day of
the Plml Year except for:
(a) A new or requalifying Pmiicipant who satisfies the pmiicipation requirements of A1iicle
III during the Plan Year,
(b) A Pmiicipant who, during a Plan Year, satisfies the conditions of an exception to the
inevocability requirement, as such exceptions are described in Section 6.2, or
(c) A Pmiicipant whose pmiicipation in the Plan terminates during the Plan Year ill
accordance with Section 3.3,
in which case the Period of Coverage shall be the time period commencing on:
1) For a Pmiicipant described in subsection (a) above, the date of hire if the
Pmiicipant files an Election pursuant to Section 6.1 within a reasonable period of
time ending before Compensation for the first pay period is due unless an
altemate date is shown on the Summary Pages, or
2) For a Pmiicipant descIibed in subsection (b) above, the mid-year entIy date as
shown in the Summmy Pages following receipt by the Plan Administrator of an
Election by the Pmiicipant;
and ending on the date pmiicipation in the Plan terminates in accordance with Section 3.3.
Section 2.19 Plan memlS the Flexible Benefit Plan as set fOlih herein, and as amended
from time to time.
Section 2.20 Plan Aillninistrator means the Employer or such other person or persons
designated to administer the Plan pursuant to Article X.
Section 2.21 Plan Year means the period designated as the Plan Year as shown in the
Summmy Pages.
Section 2.22 Qualified Benefit means a benefit provided under an Employer sponsored
benefit plan that is a qualified benefit under sectionI25(t).
Section 2.23 Qualified Emplovee means an individual who receives Compensation from
the Employer and who meets the eligibility requirements shown in the SUnTIllmy Pages and who
is not 1) an owner-employee of the Employer as defined in Section401(c)(I)(B)(3) ofthe Code,
or 2) a shareholder if the Employer is a subchapter S corporation as defined in Section 1361(a) of
the Code.
9/l/2005v6
4
The tenll Qualified Employee does not include an individual who is a leased employee,
meaning any person who is an employee of the Employer and who provides services to an
Employer where: 1) such services are provided pursuant to an agreement between an Employer
and any other person (leasing organization); 2) such person has performed such services for the
Employer on a substantially full time basis for a period of at least one year pursuant to Code
Section 414(n)(2); and 3) such services are perfOlmed under primary direction or control by the
recipient.
Bargaining unit employees are eligible only if there was good faith bargaining about
cafeteria plan benefits between the Employer and the employees' representative regarding
participation in the Plan.
Section 2.24 Qualifying Dependent. For purposes of the Dependent Care Flexible
Spending Account under AJ.iicle IX means any individual who is,
(a) A dependent of the Paliicipant (as defmed in Code Section 152(a)(1)) under the age of
thiIieen (13), or
(b) A dependent or spouse of the Participant who is physically or mentally incapable of self-
Cal"e, who has the same principal place of abode as the Paliicipant for more than one-half
of the calendar year and, in the case of a non-spouse dependent, who does not have
income in excess of the exemption amount defmed in Code Section151 (d). An individual
shall not be treated as having the same principal place of abode if at any time during the
year the relationship between the individual and Paliicipant is in violation of local law.
(c) Where the parents are divorced, legally sepal"ated or separated under a written separation
agreement, a child (as defmed in Code Section l52(f)(1) of the Code) who:
1) is under age 13 or is physically or mentally incapable of self-care,
2) receives over half of his or her suppOli during the calendar year from his or her
parents who al"e divorced or legally separated under a decree of divorce or
separate maintenance or who al"e separated under a written separation agreement,
and
3) is in the custody of one or both of his or her pal"ents for more than one-half of the
calendar year,
is treated for any taxable year begimling in the calendar year as a QualifYing Dependent
of that parent with whom the child shared the same principal place of abode for the
greater portion of the calendar year. Accordingly, a child may be treated as the
QualifYing Dependent of a parent even though that parent is not entitled to a dependency
exemption for the child under Code Section 152. Only one parent may treat the child
as a QualifYing Dependent.
Section 2.25 Summary Pages means the elections made by a paliicular employer in
adopting this Plan, attached hereto as "SunIDlary Pages" and incorporated herein by reference.
9/I/1005v6
5
Section 2.26 Student means an individual who, during each of five (5) calendar months
during a taxable year, is a full-time student at an educational organization which nonnally
maintains a regular faculty and cuni.culum and nonl1ally has a regularly enrolled body of
students in attendance at the place where its educational activities are regularly cani.ed on.
Section 2.27 USERRA Leave means a leave of absence that the Employer is required to
extend to a Pmiicipant under the provisions of the Unifonl1ed Services Employment and
Reemployment Rights Act of 1994, as amended from time to time. A Pmiicipant returning to
employment with the Employer within sixty days of an honorable discharge from the militmy
under the terms of a USERRA Leave shall have elections and benefits restored to him at the
same level and type that were in effect at the time when the USERRA Leave began, as well as
any benefits that began during the leave of absence for which the Pmiicipant would have
reasonably become eligible.
ARTICLE III: ELIGIBILITY AND PARTICIPATION
Section 3.1 Eligibility. A Qualified Employee will become eligible to pmiicipate in the
Plan on the mid-yem" entry date shown in the SUllllllmy Pages. If there is a length of service
requirement shown in the Summmy Pages, time that a Qualified Employee spends on an FMLA
Leave or USERRA Leave will count toward fulfilling the length of such service requirement.
Section 3.2 Commencement of Paliicipation. Pmiicipation COllllllences on the first day
of a Period of Coverage for which an Election is filed in accordance with Aliic1e VI. Except as
provided below, an Election shall be effective on the first day of the next Plan Year.
If a new Qualified Employee (or a Qualified Employee who has an Election change as
provided in Section 6.2) files an Election during the Plan Year in accordance with Atiic1e VI,
such Election shall be effective as of the mid-yem" entry date shown in the SUllllllmy Pages.
Section 3.3 Tennination of Pmiicipation. A Pmiicipant will cease to be a Pmiicipant in
the Plan on the earliest of:
(a) the date on which any Optional Benefit with respect to which the Participant has ml
Election tenninates, but only to the extent of the Participant's paliicipation in that
Optional Benefit,
(b) the date the Pmiicipant is no longer a Qualified Employee,
(c) the first day of a Period of Coverage for which an Election is revoked pursuant to Section
6.2,
(d) the last day of the Plan Year for which an Election is filed subject to the Grace Period
Coverage described in Section 3.6,
( e) the date required Employee contributions cease, or
9/1/2005v6 6
(f) the date on which the Plan tenninates.
Tennination of pmiicipation in this Plan shall not prevent a fomler Pmiicipant from continued
coverage or benefits under respective Optional Benefit plans (as provided in Sections 3.4 and
3.5) if and to the extent provided by such plans or as authorized by any applicable state or federal
law.
Section 3.4 Pmiicipation during Unpaid Leave. A Pmiicipant who is not at work
because of an unpaid leave of absence (including an FMLA Leave or USERRA Leave), may, at
the Pmiicipant's option, continue any and all Optional Benefits under the Plan that such
Pmiicipant elected for the Plan Year during the period of the absence, provided that, the
Pmiicipant makes all required contributions for such Optional Benefits. Such Participant may
choose from among any of the payment options adopted in the Summary Pages, including the
following:
(a) PRE-PAY: At the Pmiicipant's request, paying the amounts thmugh salary reduction that
will become due dUling the leave out of one or more of the Pmiicipant's paychecks
preceding the leave;
(b) PAY AS YOU GO: Pre-tax salalY reduction contributions will be taken from payments
to the Pmiicipant (i.e., sick pay, wage continuation, short telm disability benefits or
vacation pay) during the leave, or if the Pmiicipant receives no such payments (or at the
time at which such payments cease) the Pmiicipant may remit after-tax payments to the
Employer on or before each pay period for which the contributions would have been
deducted from the Pmiicipant's paycheck if the leave had not been taken, provided that
any delinquent payments must be made within thiIiy (30) days of their due date;
(c) PAY ON RETURN: From paychecks following the leave provided that all contributions
are made within the Plan Year in which the Election occurs and provided that the
Pmiicipant and Employer agree to this payment option before the unpaid leave
commences. In addition, the Employer may enforce this catch-up Pay On Return option
for a Pmiicipant who fails to make agreed upon pay-as-you go payments, regardless of
whether or not an agreement was made in advance of the leave, to the extent pelmitted
under state law.
A Pmiicipant whose pmiicipation in the Plan telminated because of an Employer
approved unpaid leave of absence, and who retums from leave during the smne Plan Year shall
have their Election for that Plan Year automatically reinstated on the same telms and conditions
in effect prior to the unpaid leave of absence provided, however, that the Pmiicipant shall have
no greater right to benefits for the remainder of the Plan Year than a Pmiicipant who has not
taken an unpaid leave of absence, unless such Election is revoked in accordance with Section
6.2. A Paliicipant whose coverage under a FSA tenninates during an unpaid leave (either
because of election revocation or non-payment of premium) has two options: reinstate the
original amount elected prior to the leave, and make up the missed contributions through higher
pre-tax salary reductions after return from the leave, or reduce the original election amount by
the contributions missed during the leave, thereby maintaining the same payroll deduction
9/1/2005v6
7
amount each payroll period following retwn fi'om the leave. In either case, expenses incUlTed
while coverage was not in effect are not reimbursable.
Section 3.5 Continuation of Coverage. For purposes of the Health Care Flexible Spending
Account described in Article VIII only, a Pmiicipant whose coverage under such Optional
Benefit would otherwise temllnate may elect to continue coverage under tills Optional Benefit in
accordance with the lUles of Section 4980B of the Code. A Participant who elects to continue
coverage under tills Optional Benefit shall pay to the Employer an amount designated by the
Employer up to the maximum amount permitted under Section 4980B of the Code.
A Pmiicipant who takes an FMLA Leave may continue coverage under the provisions of
the Family and Medical Leave Act of 1993. For purposes of applying the provisions of Code
Section 4980B, a Participant who takes an FMLA Leave and who does not retum to service as a
Qualified Employee at the expiration of the FMLA Leave, will become subject to the provisions
of Section 4980B at the expiration of the FMLA Leave.
A Pmiicipant who takes a USERRA Leave for less than 31 days may continue on such
benefit plans on the same telIDS as active employees. A Pmiicipant who takes a USERRA Leave
for 31 days or more may continue coverage under the provisions of USERRA and Code Section
4980B, making contributions at the rate charged for continuation coverage for other Participants,
as detelIDined by the Employer up to the maximum amount pelmitted under Section 4980B of
the Code.
A Pmiicipant on FMLA Leave or USERRA Leave who does not elect to continue
participation in the Health Care Reimbursement Optional Benefit under tills Section 3.5 shall not
be entitled to payment or reimbursement of Health Expenses incurred during ills FMLA Leave or
USERRA Leave, nor shall such Participant be entitled to retroactively elect coverage of such
expenses under the Plan upon ills reinstatement in the Plan.
In lieu of the foregoing continuation coverage provisions, the Employer may establish a
policy whereby Pmiicipants can waive continuation of coverage and choose instead to extend
coverage by self paying the remaining premiums, at an amount detelmined by the Employer. In
addition to the foregoing, the Plan will pennit a Pmiicipant to continue coverage in accordance
with any other provision of applicable law requiting such continuation.
Tills Section 3.5 shall apply only the Health Care Reimbursement Optional Benefit
described in AIiicle VIII.
Section 3.6 Grace Period Coverage. Tills Section shall apply only if and to the extent
Grace Period Coverage is adopted by the Employer as shown in the Summary Pages. If so
elected, amounts remaimng in the Pmiicipant's flexible spending account(s) at the end of the
Plan Year can be used to reinlburse the Pmiicipant for eligible expenses that are inculTed dUling
the Grace Period defmed in the Summmy Pages under the following conditions:
911/2005v6
8
(a) Applicability - In order for a Pariicipant to be reimbursed for eligible expenses incurred
dUling the Grace Period from amounts remaining in their accoUllt at the end of the Plan
Year:
1) A Paliicipant must have coverage in effect on the last day of the Plan Year to
which the Grace Peliod applies, or
2) be a qualified beneficiary who has COBRA coverage as defined in Section 3.5 on
the last day of that Plan Year.
(b) No Cash-out or Conversion - Prior Plan Year FSA amoUllts may not be cashed out or
converted to any other taxable or non-taxable benefit.
(c) Reimbursement of Grace Period Expenses - Eligible expenses inculTed during a Grace
Peliod arId approved for reimbursement in accordance with the Plan's claim procedure
will be reimbursed and charged first against any amount available from prior Plan Year
(unless directed otherwise by the Pariicipant) and then against any amount available to
reimburse expenses that are incUlTed dUling the CUlTent Plarl Year. All claims for
reimbursement will be paid in the order in which they are approved. Once paid, a claim
will not be re-processed or otherwise re-characterized so as to pay it (or treat it as paid)
from amounts attributable to a different Plan Year or Period of Coverage.
(d) Run-out Period and F01feitures - Claims for reimbursement of eligible expenses incUlTed
during a Plan Year or its related Grace Period must be submitted on or before the claim
submission deadline specified in the Summary Pages. Any prior Plan Year" amounts that
remain after all reimbursements have been made for the Plan Year and its related Grace
Period shall not be calTied over to reimburse the Participant for expenses incUlTed after
the Grace Period ends. The Paliicipant will forfeit all lights with respect to such, which
will be subject to the Plan's provisions regarding forfeitures in Section 5.7.
ARTICLE IV: CONTRIBUTIONS
Section 4.1 Salary Reduction Contributions. A Pariicipant may elect in accordance with
the election procedures desclibed in AIiicle VI to receive his or her full Compensation for any
Period of Coverage in cash, or to have a pOliion of such Compensation applied by the Employer
toward the Pariicipant's share of the cost of Optional Benefits available under AIiicle V and as
elected by the Employer in the Summary Pages. If so elected, the Pariicipant's Compensation
will be reduced, and an amount equal to the reduction will be allocated by the Employer to the
Optional Benefits designated by the Pariicipant. Pro rata amounts of the total salary reduction
election will be deducted from a Pmiicipant's Compensation at least once per month but not more
frequently than once per pay period unless the Employer adopts a specific policy which provides
for contributions on a periodic basis other than level pro rata amounts.
9/1/2005v6
9
The amount of the salary reduction election for the premium conversion option described
in Section 7.2 shall be the Pmiicipant's share of the cost of Employer sponsored group health
coverage or other Qualified Benefits, as determined by the Employer and as permitted by
applicable law, taking into account any benefit credits available to the Pmiicipant under Section
4.2. If the employee's share of the cost for such benefit changes dming the Period of Coverage, a
Pmiicipant's salm)' reduction for such benefit(s) may be adjusted automatically in accordance
with the change in cost.
Section 4.2 Benefit Credits. The Employer may make available to Pmiicipmlts elective
Employer provided benefit credits which the Employer shall allocate to offset the cost of
Optional Benefits elected by the P miicip ant, or pay to the Pmiicipant as additional taxable
Compensation as defmed in the SUl11illm)' Pages. The amount of benefit credits available under
this Section, if any, is shown in the SUIDillm)' Pages and may change in subsequent Plan Years
provided that the new amount is detennined before the beginning of the Plan Year. Benefit
Credits shall be eamed in equal pro rata amounts on the last day of each payroll period
throughout the Period of Coverage.
Benefit Credits in excess of the cost of Optional Benefits elected by the Pmiicipant may
be forfeited or distributed in whole or in pmi to the Pmiicipant, as selected by the Employer in
the SUlmnal)' Pages.
Section 4.3 Maximum Contribution. The maximum amount of Employer contributions
under tIus Plan for any Participant for a Plan Year shall be the sum of the maximum salm)'
reduction contribution and benefit credits which are shown in the SUIDillm)' Pages.
ARTICLE V: BENEFITS
Section 5.1 Benefit Options. A Pmiicipant may allocate elective contributions as
provided in Aliicle IV between cash and the Optional Benefits in Aliicle II, as adopted by the
Employer as shown in the SUIDillm)' Pages.
Section 5.2 Benefit Descriptions. While the election to receive one or more benefits may
be made under this Plan, the benefits will be provided in accordance with the plan documents or
contracts govenring the respective benefits. The goveming documents which describe the types
and amounts of benefits available, the requirements for pmiicipation, procedures for subnutting
claims, and the other telIDS and conditions of coverage for each benefit are incorporated into this
Plan by reference.
Section 5.3 Limitation of Benefits. No Optional Benefits shall be paid to or on behalf of
a Pmiicipant in excess of the amount elected by the Pmiicipant under the Plan. In no case shall
the Plan allow a Pmiicipant to calTY over unused contlibutions from one Plan Year to a
subsequent Plml Year, or, with the exception of Grace Period Coverage described in Section 3.6
and Section 4.1, allow contributions from one Plan Year to purchase a Qualified Benefit incUlTed
in a subsequent Plan Yem',
Section 5.4 Claims Procedure. Clainls and reimbursements for Optional Benefits shall
9/J/2005v6
10
be administered consistent with the claims procedures for the applicable Optional Benefit, as set
forth in the plan documents and/or sunnnary plan description for the Optional Benefit. If a claim
for reimbursement under tIlis Plan is wholly or partially denied, clainls shall be administered in
accordance with the claims procedm-e set forth in Sections 5.5 and 5.6 below. A Claimant who
fails to utilize or complete the following claims procedures shall not have exhausted all
administrative remedies under the Plan and shall be baITed from asseliing the claim in any legal
proceeding.
Section 5.5 Procedure for Filing a Claim. The plan sponsor has established the following
procedures for bringing claims and appeals. Though it confOlIDs with ERISA's procedures, it
should not be interpreted to impose any other ERISA requirements on the plans offered here that
are not subject to ERISA. In order for a cormnunication from a Claimant (as defined in
paragraph (b) below) to constitute a valid claim, it must satisfy the following paragraphs (a) and
(b) of this Section 5.5.
(a) Any claim submitted by a Clainlant must be in writing on the appropriate claim fmID (or
in such other manner acceptable to the Plan Adnllnistrator) and delivered, along with any
supporting comments, documents, records and other information, to the Plan
Administrator in person, or by mail postage paid, to the address of the Plan Administrator
provided in the Summary Plan Description.
(b) Claims aIld appeals of denied claims may be pm-sued by a PaIiicipant or an authm1zed
representative of the PaIiicipant (each of whom will be refelTed to in this AIiicle as a
"Claimant"). However, the Plan Adnllnistrator may establish reasonable procedures for
detelmining whether an individual has been authorized to act on behalf of a Paliicipant.
Section 5.6 Review.
(a) Initial Claim Review - The initial claim review will be conducted by the Plan
Adnlinistrator, with or without the presence of the Claimant, as detelmined by the Plan
Administrator in its discretion. The Plan Adnlinistrator will consider the applicable telIDS
and provisions of the Plan and amendments to the Plan, infol1nation and evidence that is
presented by the Claimant and any other information it deems relevant. In reviewing the
Claim, the Plan AdmiIlistrator will also consider and be consistent with prior
detemlinations of claims from other Claimants who were similarly situated and which
have been processed through the Plan's claiIns and appeals procedm-es within the past 24
months, provided that the Plan Adnlinistrator will recognize any applicable advances in
medical technology or changes in tax law when making such comparisons.
(b) Initial Benefit Determination
1)
The Plan Administrator will notify the Claimant of the Plan Administrator's
detel1nination within a reasonable period of time, but in any event (except as
described in paragraph (2) below) witllin 30 days after receipt of the claim by the
Plan AdmiIlistrator.
2)
The Plan AdmiIlistrator may extend the period for making the benefit
determination by 15 days if it detelmines that such an extension is neceSSaIY due
9/1/2005v6
11
to matters beyond the control of the Plan and if it notifies the Claimant, prior to
the expiration of the initial-30 day period, of the circumstances requiring the
extension of time and the date by which the Plan Administrator expects to render
a decision. If such an extension is necessary due to a failure of the Claimant to
submit the information necessary to decide the claim, the notice of extension will
specifically desclibe the required infonnation, the Clainlant will be afforded at
least 45 days from receipt of the notice within which to provide the specified
information, and the peliod in which the Plan Administrator is required to make a
decision will be tolled fi"om the date on which the notification is sent to the
Claimant until the Claimant adequately responds to the request for additional
infmmation.
(c) Manner and Content of Notification of Adverse Benefit Determination
1) The Plan Administrator will provide a Claimant with written or electronic notice
of any adverse benefit detelmination, in accordance with applicable DepaIiment
of Labor regulations.
2) The notification will set fm1h in a mmer calculated to be understood by the
Claimant:
(i) the specific reason or reasons for the adverse benefit detelmination;
(ii) reference to the specific provision(s) of the Plan on which the
detelmination is based;
(iii) description of any additional matelial or infmmation necessary for the
Clainlant to perfect the claim and an explanation of why such material or
infmmation is necessary; and
(iv) a description of the Plan's review procedures and the time linlits applicable
to such procedures, including a statement of the Claimant's light to bring a
civil action under Section 502(a) of ERISA following an adverse benefit
detelmination on review.
(d) Procedure for Filing a Review of an Adverse Benefit Determination
1)
Any appeal of an adverse benefit detemlination by a Claimant must be brought to
the Plan Adnllnistrator within 180 days after receipt of the notice of the adverse
benefit detennination. Failure to appeal witllin such 180-day period will be
deemed to be a failure to exhaust all administrative remedies under the Plan. The
appeal must be in writing utilizing the appropriate form provided by the Plan
Adnlinistrator (or in such other maImer acceptable to the Plan Adlninistrator);
provided, however, that if the Plan Adnlinistrator does not provide the appropriate
fon11, no paIiicular fon11 is required to be utilized by the Claimant. The appeal
must be filed with the Plan Adnlinistrator at the address listed in the Summary
Plan Description.
2)
A ClaimaIlt will have the oppmiunity to SUblnit written comments, docunlents,
records and other information relating to the claim.
9/1/2005v6
12
( e) Revie"w Procedure for Adverse Benefit Determinations
1) The Plan Administrator will provide a review that takes into account all
comments, documents, records and other infom1ation submitted by the Claimant
without regard to whether such infonnation was submitted or considered in the
initial benefit detennination.
2) The Claimant will be provided, upon request and free of charge, reasonable access
to and copies of all relevant documents.
3) The review procedure may not require more than two levels of appeals of an
adverse benefit detelmination.
4) The review of the adverse benefit detelmination will not accord deference to the
initial detelmination made by the Plan Administrator.
5) The Plan Administrator must designate an individual to conduct the review
process who is neither the individual who made the adverse benefit detennination
that is the subject of the appeal nor the subordinate of such individual.
(f) Timing and Notification of Benefit Determination on Review - The Plan Administrator
will notify the Claimant within a reasonable period of time, but in any event within 60
days after the Claimant's request for review. If more than one appeal is required to make
a fmal benefit detelmination of a denied clain1, such notice will be provided, with respect
to anyone of such two appeals, not later than 30 days after receipt by the Plan
Administrator of the Claimant's request for a review.
(g) Manner and Content of Notification of Benefit Determination on Review
1) The Plan Administrator will provide a written or electronic notice of the Plan's
benefit detelmination on review, in accordance with applicable Depm1ment of
Labor regulations.
2) The notification will set f011h:
(i)
(ii)
the specific reason or reasons for the adverse benefit determination;
reference to the specific provision(s) of the Plan on which the
detelmination is based;
(iii)
a statement that the Claimant is entitled to receive, upon request and free
of charge, reasonable access to and copies of all relevant documents;
(iv)
a statement of the Claimant's right to bring a civil action under Section
502(a) of ERISA following an adverse benefit detemunation on review;
and
9/1/2005v6
13
(v) a statement that the Claimant may have other voluntary altemative dispute
resolution options, such as mediation and that the Claimant may contact
the local U.S. Department of Labor office and state regulatory agency to
fmd out what options are available.
(h) Limitation of Actions - Notwithstanding any statutory limitations peliod or conflict of
law provision to the contrary, no action with respect to any benefit under this Plan may
be brought more than six months following the date on which the notice of the adverse
benefit determination on review is sent to the Claimant.
Section 5.7 Forfeitures. If a Participant has not used all amounts available for benefits to
the Pariicipant under any Optional Benefit for a Period of Coverage in accordance with the tenns
thereof, with the exception of Grace Period Coverage desclibed in Section 3.6 and Section 4.1
any remaining balance shall be forfeited by the Pariicipant, who shall have no further claim
thereto. Such forfeitures shall be used to offset the reasonable administrative costs of the Plan.
ARTICLE VI: ELECTION PROCEDURES
Section 6.1 Election Form and Timing. Elections must be in writing, shall specify the
Optional Benefits to which elective contributions will be allocated and designate the amount, if
any, of reimbursement account contIibutions. The Plan Administrator shall make available to all
Qualified Employees a form in writing or electronic on which to make benefit elections dming
an election period. Except as described in subsections (a), (b) and (c) below, the election period
shall commence no earlier than the ninety (90) day period inul1ediately preceding the first day of
the Plan Year.
(a) The election period for a new Qualified Employee shall be a thiliy (30) consecutive day
period which commences on the date of satisfaction of the eligibility requirements as
defined in Section 3.1
(b) The election period for a Qualified Employee who makes an Election change as defined
in Section 6.2 shall be a thiliy (30) consecutive day period which COllTInences on the date
of the election change event.
(c) The election period for a Qualified Employee who retums to employment following a
FMLA Leave or USERRA Leave shall be a thiIiy (30) consecutive day peliod which
COlllinences on the date of retUln to employment. Qualified Employees who are on
FMLA or USERRA Leave during the annual open em-ollment period shall also have the
option of em-oIling dming such open em-ollment period for the next Plan Year.
The designated election fOlm must be received by the Plan Administrator prior to the first
day of the Plan Year. Except as desclibed in subsections (a), (b) and (c) above, Elections
received after the first day of the Plan Year shall be void.
Section 6.2 Elections IlTevocable. Once an Election becomes effective, such Election
shall be ilTevocable for the remainder of the Plan Year except under the following circumstances.
9/1/2005v6
14
(a) Special enrollment rights - A Participant may revoke an election under a group health
plan and make a new election to apply only for the remaining period of coverage that
cOlTesponds with the special enrollment rights provided by the Health Insurance
POliability and Accountability Act of 1996 (HIPAA), including the enrollment of both
new and pre-existing Dependents.
(b) Changes in status - A Pmiicipant may revoke an Election for a Qualified Benefit and
make a new Election for the remainder of the Plan Year if a change in status occurs and
the election change satisfies the consistency lUle defined below. A new election must be
filed with the Plan Administrator of this Plan, within thirty (30) days after the date of the
change in status. For purposes of this paragraph, a change in status means any of the
following:
1) Change in legal marital status of the Pmiicipant through marriage, divorce, death
of a spouse, legal separation and ammlment.
2) Change in number of Dependents of thePaliicipant through bilih, adoption,
placement for adoption, and death.
3) Change in the employment status of the Pmiicipant or Dependent including his or
her temlination or commencement of employment, loss of work due to strike or
lockout, commencement or retum from an unpaid leave of absence, change fi:om
full-time to pmi-time status or change in work site. In addition, if a Paliicipant or
Dependent has a change in employment status that affects eligibility under an
employer plan operated in conjunction with this Plan, that is a change in status
under this pm"agraph.
4) Events that cause a Dependent to satisfy or cease to satisfy eligibility
requirements of an employer plan, including achieving or losing student status,
reaching the limiting age for benefits or any similar circumstance.
5) Change in residence of the Pmiicipant or Dependent which renders the person
unable to use the qualified benefit plan (such as if one relocated outside of the
HMO service area).
6) Change in status shall also include other events as may be pelmitted under
regulations and lUlings of the Intemal Revenue Service.
The consistency lUle requires that Election changes must be due to and cOlTespond with a
change in status that affects eligibility for coverage under an employer's plan.
With respect to accident or health plans and group teml life insurance, a change in status
that affects eligibility is deemed to be consistent with the benefit change if it results in an
increase or decrease in the number of dependents who may benefit from coverage under
the plan. The consistency lUle as to adding or dropping coverage is satisfied only for an
individual who has gained or lost eligibility. Fmiher, an Election change to cancel
coverage for an individual who gains eligibility under another employer plan satisfies the
consistency lUle only if the Pmiicipant celiifies that the individual has actually become
covered under such plan.
With respect to group telID life insurance and disability coverage, either an Election
change which increases or decreases coverage as a result of a change in status complies
9/I/2005v6
15
with this consistency rule.
Notwithstanding this consistency lUle, if the Pmiicipant or Dependent becomes eligible
for continuation coverage under Section 4980B of the Code or any similar state law, the
Pmiicipant may increase the amount of Premium Conversion under A1iicle VII to pay
such premiums.
(c) Judgment, decree, or order - A Pmiicipant may change an Election with respect to an
accident or health plan as required to provide coverage for a dependent child pursuant to
a court judgment, order, decree or QMSCO as described in Section 2.3 resulting from a
divorce, legal separation, annulment or change in legal custody. A Pmiicipant may
cancel or tenninate accident or health plan coverage for a child if such comi order or
decree requires the Pmiicipant's fOlmer spouse or another person to provide coverage,
but only upon celiification by the Pmiicipant or another pmiy to the comi order that such
coverage has in fact been obtained.
(d) Entitlement to Medicare or Medicaid - If the Pmiicipant or a Dependent who is emolled
in an accident or health plan of the Employer becomes emolled under Part A or Pmi B of
Title XVIII of the Social Security Act (Medicare) or Title XIX of the Social Security Act
(Medicaid), other than coverage consisting solely of benefits under section 1928 of the
Social Security Act (Distribution of Pediatric Vaccines), the Pmiicipant may make a
corresponding Election change to cancel or reduce coverage for the Participant or
Dependent under the accident or health plan. FUliher, if Pmiicipant, spouse or dependent
who has been entitled to coverage under Medicare or Medicaid loses eligibility for such
coverage, the Pmiicipant may make a prospective election to commence or increase
coverage for the Pmiicipant or Dependent.
(e) Cost or coverage changes - If there is a change in the cost or coverage of a Qualified
Benefit as described below, a Pmiicipant may revoke an Election with respect to such
Qualified Benefit and make a new Election for the remainder of the Plan Yem'. This
paragraph does not apply to Health Care Flexible Spending Account benefits defined in
Section 2.16(b) and described in A1iicle VIII.
1)
Automatic changes - If the cost of a Qualified Benefit which is not a health FSA
increases or decreases during the Plan Year, and Pmiicipants are required to make
a cOlTesponding change in their contributions, the Employer may, on a reasonable
and consistent basis, automatically make a prospective increase or decrease in
affected Pmiicipants' Elections for the plan.
2)
Significant cost changes - If the cost charged to a Participant for a Qualified
Benefit option significantly increases or decreases during the Plan Year, the
Pmiicipant may make a conesponding prospective Election change. Through
such election, a Participant may conunence pmiicipation in a Plan option that
decreases in cost or a Pmiicipant may revoke an Election for a Plan option that
increases in cost and, if the Employer makes available another option that
provides similm' coverage, elect to receive coverage under such option.
Employees who have not previously elected to pmiicipate may elect mid-year and
9/1/2005v6
16
commence patiicipation on a prospective basis. Cost increase or decrease for this
paragraph means a change in the amount of the elective contributions required
under the Plan, and may result from actions taken by the Participant or the
Employer. With respect to dependent care as defmed in Section 2.6(c), this
paragraph only applies if the cost change is imposed by a dependent care provider
who is not a relative of the Patiicipant.
3) Significant cUliailment of coverage - If there is a significant cUliailment of
coverage under a Qualified Benefit option, a Patiicipant may revoke their Election
and receive coverage on a prospective basis under another option providing
similm coverage. If the cUliailment of coverage involves a loss of coverage, the
Participant may drop coverage if no other similar benefit option is available under
the Plan. Significant cUliailment with a resulting loss of coverage includes any of
the following: HMO not available in geographic area of residence, coverage not
helpful because lifetime or annual cap has been reached, a substantial decrease in
medical catOe providers in a PPO network or HMO, a hospital dropping out of the
plan or network, reduction in benefits for a celiain illness or injUlY in which a
patiicipant or family member is cUlTently in a course of treatment, an increase in
deductible, copay, out-of-pocket cost-sharing limit or any other similm
fundamental loss of coverage.
4) Addition or improvement of a benefit option - If the Plan adds a new Qualified
Benefit option or if coverage under an existing option is significantly improved
during the Plan Year, Patiicipants may revoke their Election and elect coverage
under the new or improved benefit option on a prospective basis.
5) Change in coverage Ullder another employer plan - A Patiicipant may make an
Election change that is on account of and cOlTesponds with a change made by a
Dependent or fmmer spouse under another employer plan if: i.) the circUl11stances
for the Dependent's or fornler spouse's election change is described in this Section
6.2, or ii.) the Dependent's or fmmer spouse's employer plan pelmits an election
for a period of coverage that is different from the Period of Coverage for this
Plan.
6) Loss of coverage under other group health coverage - A Participant may add
coverage on a prospective basis if the Patiicipant or Dependent loses coverage
under a group health plan sponsored by a governmental or educational institution.
(t) Special FMLA requirements - A Patiicipant who takes an FMLA Leave may revoke an
election of group health coverage and make such other election for the remaining pmiion
of the period of coverage as may be provided for under the Fanlily and Medical Leave
Act.
(g) Health Savings Account (HSA) election changes - Not withstanding the foregoing
election change lUles, a Patiicipant who elects to make Health Savings Account (HSA)
contributions under this Plan in accordance with Section 7.3 may stati or stop such
9/1/2005v6 17
Election or increase or decrease the Election at any time as long as the change is effective
prospectively (i.e., after the request for the change is received).
Section 6.3 Failure to Elect. A Pmiicipant who fails to retum the required Election fonn
for any Period of Coverage to the Plan Administrator before the first day of such Period of
Coverage shall be deemed to have elected to receive his or her full Compensation in cash, except
to the extent that an altemate default election for Premium Conversion, as described in AIiicle
VII, is contained in the Summary Pages.
Section 6.4 Automatic Telmination of Election. Elections made under this Plan shall
automatically telminate on the date the Pmiicipant ceases to be a Pmiicipant in the Plan in
accordance with Section 3.3, although coverage under Optional Benefits may continue if and to
the extent provided by such plans.
Section 6.5 Re-qualifving Emplovees. A Pmiicipant who retums to work as a Qualified
Employee within 30 days of termination of active employment will resume Plan pmiicipation
under the Pmiicipant's original election, provided there is no other intervening change in status
event as defined in Section 6.2. A Pmiicipant who retums to work more than 30 days after
termination of employment but within the same Plan Year, shall have the option of resuming the
original election or making a new election. To the extent that the Participant elects not to resume
the original election, the Pmiicipant shall not be a pmiicipant in this Plan during the period of
non-employment such that any premiums paid through AIiicle VII (Premium Conversion) must
be paid on an after-tax basis.
ARTICLE VII: PREMIUM CONVERSION AND HEALTH SAVINGS ACCOUNTS (HSA)
Section 7.1 Applicability of this AIiicle. The telms oftlus AIiicle VII apply only to the
extent that the Employer has adopted the Premium Conversion Optional Benefit in Section
2.16(a). The term "Election" as used in tlus Article VII refers to the Election made by a
Pmiicipant pursuant to AIiicle IV, to receive Optional Benefits described in such Section 2.16(a).
Section 7.2 Prenuum Conversion. Pmiicipmlts may elect as a benefit under this Article
pre-tax payment of the Pmiicipant's share of the cost for Employer sponsored Qualified Benefits
provided through an insured plan, a prefelTed provider organization, a health maintenance
orgaruzation or other group mTangement in accordance with the options made available through
the Employer. Once elected, tIus Optional Benefit shall be provided automatically, and as such,
no separate claim need be submitted to the Plan Administrator.
The Employer's liability for benefits provided by tIurd pmiies through this premium
conversion option shall be lilruted to the payment of required prenuums. The Employer does not
guarantee benefits payable under any insurance policy or other similm" contract. Such benefits
shall be the exclusive responsibility of the insurer or other entity that is required to provide the
benefits under the govelning policy or contract.
9/l/2005v6
18
Section 7.3 Health Savings Accounts (HSA). Pmiicipants who are eligible individuals as
defmed under Section 223(c)(1) of the Code may elect as a benefit under this Article pre-tax
contributions to a Health Savings Account (HSA) descIibed in Section 223 of the Code. The
Employer's responsibly for detennining eligibility under Section 223(c)(1) of the Code shall be
limited to:
(a) detennining whether the Participant is covered under an Employer sponsored HDHP (and
the deductible) or low deductible health plan or plans (including health FSAs mld HRAs);
and
(b) the Pmiicipant's age (for catch- up contIibutions). The Employer may rely on the
Paliicipant's representation as to his or her date ofbilih.
ARTICLE VIII: HEALTH CARE FLEXIBLE SPENDING ACCOUNT
Section 8.1 Applicability of this Aliicle. The telIDS of this Aliicle VIII apply only to the
extent that the Employer has adopted the Health Care Flexible Spending Account Optional
Benefit in Section 2.16(b) in the Smmnmy Pages. The tenn "Election" as used in this Aliicle VII
refers to the Election made by a Pmiicipant pursuant to Aliicle IV, to receive Optional Benefits
described in such Section 2.16(b).
Section 8.2 Purpose. The purpose of the Health Cm.e Flexible Spending Account
(Health FSA) described in this Aliicle is to provide Pmiicipants with the option of being
reimbursed for eligible Health Expenses. The Health FSA is intended to qualify as a medical
reimbursement plan under Section 105 of the Code so that payments received pursuant to this
Article and the Plan are excludable from the gross income of the Pmiicipant under Section
105(b) of the Code.
Section 8.3 Health Care Account. The Employer will establish and maintain for record
keeping purposes a Health Care Account for each Plan Year for each Pmiicipant fi-om whom an
Election is received. The account will be increased as of each date compensation is paid to the
Pmiicipant in an amou,'lt equal to the allocation, if any, which the Pmiicipant has elected. A
Pmiicipant's Health Care Account will be decreased from time to time in the amount of payments
made to the Pmiicipant for Health Expenses incurred during the PeIiod of Coverage. All
amounts added to a Health Cm"e Account remain the propeliy of the Employer until distributed to
the Pmiicipant in accordance with this Aliicle VIII.
Section 8.4 Claims for Reimbursement. A Pmiicipant who has made an Election for a
Plan Year may apply to the Plan Adlninistrator for reimbursement of Health Expenses incurred
dming such Period of Coverage by executing and sublnitting a claim f01ID which the Plan
Administrator prescribes setting f01ih:
(a) The amount, date and nature of the expense,
(b) The name of the person or entity to which the expense was paid,
9/1 /2005v6 19
(c) The Pmiicipant's statement that the expense has not been reimbursed and that the
Pmiicipant will not seek reimbursement under any other plan covering health benefits,
and
(d) Such other infOlmation as the Plan Administrator may require.
Such claim fonn shall be accompanied by bills, invoices, receipts, or other statements
from an independent third pmiy stating the Health Expense has been inculTed and the amount of
the expense. The Plan Administrator may, to the extent provided by law, rely on information
provided by Pmiicipants. Such claims must be submitted on or before the claim submission
deadline specified in the Summary Pages.
Section 8.5 Claims for Reimbursement Using an Electronic Payment Card. Not
withstanding the requirements of Section 8.4, this Section 8.5 shall apply to claims submitted
using an Electronic Payment Card to the extent that the Plan provides for such transactions. A
Pmiicipant who has made an Election for a Plan Year may apply to the Plan Administrator for
reimbursement of Health Expenses incuned during such Period of Coverage by using an
Electronic Payment Card specifically authorized for use by the Plan.
(a) Definitions
1) "Cm'dholder" means the Pmiicipant.
2) "Electronic Payment Card" means a card issued by the Plan to the PaIiicipant for
the purpose of electronically submitting requests for reimbursement pursuant to
this Section 8.5. Each Pmiicipant in the Health Care Flexible Spending Account
shall be issued all Electronic Payment Card upon emollment in the Health FSA.
The Cardholder's use of the Electronic Payment Card shall be limited to the
maximum dollar amount of coverage in the Cardholder's Health Care Account.
Use of the Electronic Payment Card shall be fllliher linlited to medical CaI"e
providers as identified by such provider's assigned Merchant Category Code.
3) "Merchant Category Code" means the code used to identify medical care
providers including but not limited to physicians, phaImacies, dentists, vision care
offices and hospitals. The Plan Administrator may elect to use Merchant
CategOlY Codes assigned by the Electronic Payment Card processing system, or
may elect to assign unique Merchant CategOlY Codes to each individual
providers. Electronic Payment Cards shall be used only for reimbursement of
Health Expenses incuned for goods and services rendered by providers using a
Merchant Category Code authorized by the Plan.
(b) Automatic Reimbursement shall occur when the Cardholder uses the Electronic Payment
Card at a medical care provider that has been assigned a qualifying Merchant CategOlY
Code and the amount of the Health Expense is less than or equal to the Cardholder's
Health Care Account balance. Each time a Health Expense is reimbursed using the
9/1/2005v6 20
Electronic Payment Card, the Cardholder's Health Care Account shall be
cOlTespondingly reduced.
(c) Participant Certification - Upon emolhnent in the Health FSA, the Cardholder must
celiify that the Electronic Payment Card will be used only for eligible Health Expenses
incun-ed by the Cardholder or a Dependent of the Cardholder as defIned in Section 2.3.
The Cardholder must fmiher certify that any expense paid with the Electronic Payment
Card has not been reimbursed and that the Cardholder will not seek reimbursement, or
cause any other individual to seek reimbursement, under any other plan covering health
benefIts. This certifIcation shall be re-affIrmed each time that the Electronic Payment
Card is used. In addition, the Cardholder shall agree to acquire and retain suffIcient
documentation to substantiate any Health Expense paid with the Electronic Payment Card
in accordance with Section 8.4.
(d) Claim Substantiation - The following transactions shall not require substantiation beyond
the ce11ifIcation described in subsection (c) above:
1) transaction amounts equal to the dollar amount of the co-payment for that service
under a health plan sponsored by the Plan Sponsor;
2) transaction amounts that match expenses previously approved for the Cardholder
as to the amount, provider and time period, as detelmined by the Plan
administrator; or
3) transaction amounts verifIed at the time and point of sale or retrospectively by the
provider or an independent third-party approved for such verifIcation by the Plan
Administrator. The verifIcation must include that the expense is a Health
Expense and that the expense was inculTed by the Cardholder or a Dependent of
the Cardholder. The verifIcation may be provided electronically.
( e) Conditional Reimbursements - Transactions other than those described in (d) above shall
be considered "conditional reimbursements" subject to the following lUles.
1)
The Cardholder must execute and subInit documentation as described in Section
8.4.
2)
In the event that the Cardholder does not submit required documentation within a
reasonable period of time or the Plan Administrator detennines that a
reimbursement has been made for an ineligible transaction, the Plan
AdIninistrator shall request reimbursement from the Cardholder.
3)
In the event that the Cardholder fails to make timely reimbursement to the Plan,
the Plan Administrator shall take action necessary to ensure that additional
improper reimbursements do not occur such as suspending access to the electronic
Payment Card and continuing to pursue appropriate collection actions, including
but not limited to:
9/1/1005v6
21
(i) withholding future reimbursements from the Cardholder's Health Care
Account in the amount of the improper payment until the Plan has
recouped the full amount of the improper payment, or
(ii) in the event that the Cardholder's Health Care Account balance is
insufficient to recoup the full amount of the improper payment,
withholding the remaining amount of the improper payment from the
Cardholder's Compensation, to the extent allowed by law.
Section 8.6 Reimbursement of Expense. The Employer shall reimburse the
Pm1icipant for Health Expenses inculTed during a Period of Coverage if the Pm1icipant
submits the documentation required under Sections 8.4 and 8.5. An amount up to the
Pm1icipant's total Election for the Plan Year (reduced as of any pm1icular time for prior
reimbursements for the same Period of Coverage) shall be available for reimbursement at
all times during the Plan Year. The Plan may not make advance reimbursements of
future or projected expenses. Claims must be submitted on or before the claim
submission deadline specified in the Summmy Pages.
The Plan Administrator shall make a detennmation on claims submitted for
reimbursement within 30 days of receipt unless such determination cannot be made due
to reasons beyond the control of the Plan Administrator. In this case a 15 day extension
is available if the Pa11icipant is notified of the extension within the initial 30 day period.
If a determination on a claim cannot be made because the Pm1icipant did not provide
sufficient information, the Pm1icipant has 45 days from receipt of a request to provide
such infOlmation. Eligible claims for reimbursement shall be paid within 30 days of
receipt, or when the total amount of claims to be paid reaches a reasonable minimum
designated by the Plan Administrator, such as $50. However, if a minimum amount is
specified, that amount will not be applicable for the fmal processing cycle of the Plan
Year or other interim processing cycles as detelmined by the Plan Administrator.
Section 8.7 Maximum Reimbursement. The maximum reimbursement which a
Pm1icipant may receive for a Plan Year under this A11icle VIII shall be the amount
designated in the Summmy Pages for health care reimbursement.
Section 8.8 Minimum Election. The minimum election which a Pm1icipant may
make for a Plan Year under this A11icle VIII shall be the amount designated in the
Smmnmy Pages for health care reimbursement.
Section 8.9 Revocation of Election. If a Pm1icipant revokes an Election during
the Plan Year as a result of a change in status or separation from service, the Employer
shall reimburse the Pm1icipant for any amount previously prepaid or contributed in
advance to the Optional Benefit on the Pm1icipant's behalf for coverage relating to a
period after the date of such Election revocation, regardless of the Pm1icipant's claims or
reimbursements as of that date. In no event may a Pm1icipant revoke an Election or make
a new Election in an amount which is less than the amount ahoeady reimbursed, or having
9/1/2005v6
22
been submitted and pending reimbursement, by the Pmiicipant dming the immediately
preceding Period of Coverage as of the date that the revocation or new Election would
become effective.
Section 8.10 Health Insurance Portability mld Accountability Act of 1996
(HIP AA) . Not withstanding any provision of this Plan to the contrary, the Plan shall be
operated and maintained in a manner consistent with HIP AA and regulations relating
thereto, to the extent they apply to the Plan.
(a) Effective Date - This Section 8.10 shall be effective as of the date compliance is
required by legislation or regulation promulgated by the Depmiment of Health
and Human Services pursuant to HIP AA.
(b) Definitions - The following definitions will apply to the provisions of tins Section
8.10 and will be interpreted in accordance with the Privacy Rule:
1) "Health InfOlmation" is any information that is created or received by a
health care provider, health plan, public health authOlity, employer, life
insurer, school or university, or health cmoe cleminghouse.
2) "Health Care Operations" includes activities related to plan operations and
administration.
3) "HIPAA Plivacy Rule" or "Plivacy Rule" refers to the privacy regulations
promulgated by the Depmiment of Health and Human Services pursuant to
HIP AA. The regulations are codified at 45 C.F.R. Pmi 164.
4) "Individually Identifiable Health InfOlmation" is Health InfOlmation
created or received by a Covered Entity or employer that:
(i) relates to: past, present or future physical or mental health or
condition of an individual; tile provision of health care to an
individual; or the past, present or future payment for the provision
of health cmoe to an individual; and,
(ii) identifies the individual directly or reasonably could be used to
identify the individual.
5)
"Payment" includes activities undeliaken to obtain contributions,
detelmine and fulfill responsibility for coverage and benefits, or to obtain
or provide reimbursement for health care expenses.
6)
"Plan Adnnnistration Functions" are administration functions perfOlmed
by the Plan Administrator, except that plan em-ollment and disem-ollment
activities and any other activities excluded from the definition of the tenll
in the Privacy Rule are not Plan Administration Functions.
9/1 /2005 v6
23
7) "Protected Health Information" or "PHI" is individually identifiable
infmmation that is transmitted or maintained in any fmm or medium by
the Plan.
8) "Security Rule" shall mean the Secmity Standards for the Protection of
Electronic Protected Health Information at 45 CFR pmis 160 and 164
subpalis A and C.
(c) Uses and Disclosures of Protected Health Information
1) The Plan Administrator will use or disclose PHI without authorization of
the subject individual for Payment or Health Care Operations or for other
reasons permitted by or required by the PIivacy Rule. All other uses or
disclosures of PHI will be pursuant to authmization of the subject
individual or his or her personal representative.
2) The Plan Administrator will only use PHI for Plan Administration
Functions.
3) The Plan Administrator will not use or fmiher disclose PHI other than as
pelmitted or required by the Plan documents or as required by law.
4) The Plan Administrator will ensure that any agents, including a
subcontractor, to whom it provides PHI received from the Plan, agree to
the same restrictions and conditions that apply to the Plan Sponsor with
respect to such infmmation.
5) The Plan Sponsor will not use or disclose PHI for employment-related
actions and decisions or in connection with any other Plan Sponsor benefit
or employee benefit plan decisions.
6) The Plan Administrator will repmi to the Plan any use or disclosure of
PHI of which it becomes aware that is inconsistent with HIPAA's
pennitted uses or disclosures.
(d) Certification Required to Disclose Protected Health Information to Plan Sponsor
- The Plan will disclose PHI to the Plan Sponsor only upon receipt of a
celiification by the Plan Sponsor that the plan documents have been amended as
required by the HIP AA Plivacy Rule.
(e) Subject Individual Rights With Respect to PHI
1) The Plan Administrator will make PHI available to subject
individuals in accordance with the HIP AA Privacy Rule.
2) The Plan Administrator will make available PHI for amendment
and incorporate any amendments to PHI in accordance with the
9/1 /2005v6 24
HIP AA Privacy Rule.
3) The Plan Administrator will provide to the subject individual an
accounting of disclosures of the subject individual's PHI in
accordance with the HIP AA PIivacy Rule.
(f) Provide Information to the Department of Health and Human Services -
The Plan Administrator will make its intemal practices, books, and
records relating to the use and disclosure of Protected Health InfOlmation
received fi"om the Plan available to the Secretary of the Depatiment of
Health and Human Services for purposes of detelmining compliance by
the group health plan with the HIP AA PIivacy Rule.
(g) Disclosure of SummalY Health Information - In accordance with the
PIivacy Rule, the Plan may disclose summary Health Infmmation to the
Plan Sponsor, if the Plan Sponsor requests the summary Health
Infornlation for the purpose of modifying, amending or terminating the
Plan. Summary Health Information may be Individually Identifiable
Health Infmmation which summarizes the claims histmy, claims
expenses, or the type of claims expelienced by individuals in the Plan, but
it excludes all identifiers that must be removed for the information to be
de-identified, except that it may contain geographic infonnation to the
extent that it is aggregated by zip codes of at least five digits.
(h) No Longer Needed PHI - When any PHI received from the Plan ceases to
be needed for the purpose for which it was disclosed, the Plan
Administrator will return or destroy such infonnation maintained in any
fmm and retain no copies of such infornlation, except that, if retum or
destmction is not feasible, the Plan Administrator will limit fm1her uses
and disclosures to those purposes that make the retum or destmction of
the infmmation infeasible.
(i) Adequate Separation Betlveen Plan and Plan Sponsor
1) The Plan Sponsor will provide adequate separation between the
Plan and itself when it serves in any capacity other than as Plan
Administrator.
2) Only those employees or classes of employees or other persons
under the control of the Plan Administrator who receive PHI
relating to Payment under, Health Catoe Operations of, or other
matters pe11aining to the Plan in the ordinmy course of business,
may have access to PHI.
3) Access to, and use of, PHI by the employees and other persons
described in paragraph (2) will be limited to the Plan
Administration Functions.
(j) Non-Compliance with this Article - Any individual who purposely or
negligently fails to comply with this Section 8.10 will be subject to
disciplinary action by the Plan Sponsor, up to and including telmination .
of employment or service assigmnent.
9/1/1005v6
25
(k) Security Standards - To the extent the Plan Sponsor has access to
electronic PHI other than summmy information and em-ollment
information, on or before the required effective date, the Plan Sponsor
will implement administrative, physical, and technical safeguards to
protect the confidentiality, integIity and availability of electronic
Protected Health Information (as defmed in the Security Rule) that it
creates, receives, maintains, or transmits on behalf of the Plan. In
addition, the Plan Sponsor will:
1.) Ensure that the adequate separation required by Section 8.10(i) is
suppOlied by reasonable and appropIiate security measures;
2.) Ensure that any agent, including a subcontractor, to whom it
provides this infOlmation agrees to implement reasonable and
appropriate security measures to protect the infOlmation; and
3.) RepOli to the Plan any secuIity incident of which it becomes
aware.
Section 8.11 Limited-Purpose Health FSA. If so elected in the Summmy Pages,
the Employer will make available a "Limited-Purpose" FSA. Limited-Purpose means
that the defmition of Health Expense in Section 2.12 shall be limited to dental, vision,
preventive care and other excepted medical expenses as defmed in Code Sections
223(c)(l)(B) and 223(c)(2)(C) that would otherwise be eligible under the Plan.
Participants covered by an Employer sponsored High Deductible Health Plan
(HDHP) as defmed under Section 223(c)(2)(A) of the Code who pmiicipate in a Health
Savings Account (HSA) described in Section 223 of the Code may only pmiicipate in the
Health Care Flexible Spending Account descIibed in this AIiicle on a "Limited-Purpose"
basis. Pmiicipants covered by a qualifying High Deductible Health Plan (HDHP) other
than an Employer sponsored HDHP who pmiicipate in a Health Savings Account (HSA)
may elect to pmiicipate in the Health Care Flexible Spending Account descIibed in tIllS
AIiicle on a "Limited-Purpose" basis.
ARTICLE IX: DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
Section 9.1 Applicability of tlllS AIiicle. The tenns ofthis AIiicle IX apply only to the
extent that the Employer has adopted the Dependent Care Flexible Spending Account
(Dependent Care FSA) in Section 2.l6( c) in the SUlmnmy Pages. The tenn "Election" as used in
this AIiicle IX refers to the Election made by a Pmiicipant pursuant to AIiicle IV, to receive
Optional Benefits described in such Section 2.l6(c).
Section 9.2 Purpose. The purpose of the Dependent Care Flexible Spending Account
described in this Article is to provide Pmiicipants with the option of being reinlbursed for
eligible Dependent Care Expenses. The Dependent Care FSA is intended to qualify as a
dependent care assistance program Ullder Section 129 of the Code so that payments received
pursuant to tIllS AIiicle and the Plan are excludable from the gross income of the Participant
under Section l29(a) of the Code.
9/1/2005v6
26
Section 9.3 Dependent Care Account. The Employer will establish and maintain for
record keeping purposes a Dependent Care Account for each Plan Year for each Pm1icipant from
whom an Election is received. The account will be increased as of each date compensation is
paid to the Pm1icipant with an amount equal to the allocation, if any, which the Pm1icipant has
elected.
A Pm1icipant's Dependent Care Account will be decreased from time to time in the
mllount of payments made to the Pm1icipant for Dependent Care Expenses inculTed during the
Period of Coverage. All amounts added to a Dependent Care Account remain the propelty of the
Employer until distributed to the Pal1icipant in accordance with this A11icle IX.
Section 9.4 Claims for Reinlbursement. A Pm1icipant who has made an Election for a
Period of Coverage may apply to the Plan Administrator for reimbursement of Dependent Care
Expenses incUlTed during such Period of Coverage by executing and submitting a claim f01TI1
which the Plan Administrator prescribes setting f011h:
(a) The amount, date and nature of the expense,
(b) The name of the person or entity providing the services, and if different, the name of the
person or entity to which the expense was paid,
(c) The Pm1icipant's statement that the expense has not been reimbursed, and that the
Pm1icipant will not seek reimbursement under any other plan coveling dependent care
benefits, and
(d) Such other inf01mation as the Plan Administrator may require.
Such claim form shall be accompanied by bills, invoices, receipts, or other statements
from an independent third pmty stating the Dependent Care Expense has been inculTed and the
amount of the expense. The Plan Administrator may, to the extent provided by law, rely on
inf01TI1ation provided by Participants.
Section 9.5 Reimbursement of Expense. The Employer shall reimburse the Pm1icipant
from the Pm1icipant's Dependent Care Account for Dependent Care Expenses incurred during the
Period of Coverage for which the Participant submits the documentation required under Section.
9.4. In no case shall a payment be made which exceeds the balance in the Pm1icipant's
Dependent Care Account at the time reimbursement is requested. The Plan may not make
advance reimbursements of future or projected expenses. Claims must be submitted on or before
the claim submission deadline specified in the SUlllmmy Pages.
Clainls for reimbursement shall be paid at least monthly, or when the total amount of
claims to be paid reaches a reasonable minimum designated by the Plan Administrator, such as
$50. However, if a minimum amount is specified, that amount will not be applicable for the final
processing cycle of the Plan Year or other interim processing cycles as detelTI1ined by the Plan
Administrator.
9/1/2005v6
27
Section 9.6 Maximum Reimbursement. The maximum reimbursement which a
Pmiicipant may receive in a tax year under this Article IX shall be the least of:
(a) The Participant's eamed income for the tax year;
(b) The actual or deemed eamed income of the Pmiicipant's spouse for the tax year; or
(c) $5,000, or in the case of a Pmiicipant who is malTied and filing a sepm"ate income tax
retum foml his or her spouse, $2,500.
In the case of a spouse who is a full-time student, or is physically or mentally incapable
of self-care, such spouse shall be deemed to have eamed income of $250 per month if the
Paliicipant has one Dependent and $500 per month if the Pmiicipant has two or more
Dependents.
Section 9.7 Minimum Election. The minimum election which a Pmiicipant may make
for a Plan Year under tlus A1iicle IX shall be the amount designated in the SUlllIDmy Pages for
dependent care reinlbursement.
ARTICLE X: ADMINISTRATION
Section 10.1 Plan Administrator. The Employer is hereby designated as the Plan
Administrator. The Employer may delegate its duties under the Plan to one or more officers or
employees, or to individuals or entities independent of the Employer provided that such
delegation is in writing.
Section 10.2 Powers of the Plan Administrator. The Plan Administrator shall have sole
and complete authority necessmy to administer the Plan, including but not limited to the
following:
(a) To interpret the provisions of the Plan, decide questions of eligibility and detemline
amounts of benefits due under the Plan. Benefits under this Plan will be paid only if the
Plan Administrator decides in his discretion that the Pmiicipant or applicant is entitled to
them.
(b) To establish and revise the method of accounting for the Plan and to maintain the
accounts.
(c) To establish lUles and prescribe any forms necessmy or desirable for the admilustration
of the Plan.
Except as provided in Section 10.6, the Plan Adnunistrator shall have no power to add to,
subtract from or modify any of the tenns of the Plan, or to change or add to any benefits
9/1 /2005 v6
28
provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit
under the Plan.
Section 10.3 Actions of the Plan Administrator. All determinations, interpretations, rules
and decisions of the Plan Administrator shall be conclusive and binding upon all persons having
or claiming to have any interest or light under the Plan. All decisions and actions by the Plan
Administrator shall be applied uniformly and consistently to all Participants so that all persons
similarly situated will receive substantially the same treatment.
Section 10.4 Infomlation to be Fumished. Participants shall provide the Plan
Administrator with such information and evidence, and shall sign such documents as may
reasonably be requested fi'om time to time for the purpose of administration of the Plan. The
Plan Administrator may, to the extent provided by law, rely on iufonnation provided by
Pmiicipants.
Section 10.5 Nondisclimination. The Plan shall not discriminate in favor of Highly
Compensated Individuals as to eligibility to pmiicipate. Optional Benefits provided to Key
Employees under the Plan shall not exceed 25% of the aggregate of such benefits provided for all
Paliicipants in any Plan Year. In addition, Optional Benefits shall comply with any
nondiscrimination rules which apply to those plans separately. Specifically,
(a) if the Employer has adopted the Health Care Flexible Spending Account described in
AIiicle VIII, the plan pursuant to such AIiicle VIII shall not discliminate in favor of
Highly Compensated Individuals as to eligibility to pmiicipate or in favor of Highly
Compensated Employees as to benefits and shall meet the discrin1ination tests of Section
105(h) of the Code; and
(b) if the Employer has adopted the Dependent Care Flexible Spending Account described in
Article IX, not more than 25% of the amounts paid by the Employer for dependent care
assistance during the Plan Year shall be provided to Pmiicipants who are shareholders or
owners (or their spouses or dependents) of more than 5% of the stock or of the capital or
profit interest in the Employer. Benefits provided under AIiicle IX shall not discliminate
in favor of Highly Compensated Individuals with respect to eligibility or in favor of
Highly Compensated Employees with respect to contIibutions or benefits. The average
dependent care reimbursement paid pursuant to Article IX to non-highly compensated
employees for Dependent Care Expenses shall be at least 55% of the average Dependent
Care Expenses paid to Highly Compensated Employees.
If the Plan fails any of the requirements of this Section 10.5, benefits provided under the
Plan will become taxable to Highly Compensated and Key Employees to the extent required by
law.
Section 10.6 Changes by Administrator. If the Plan Administrator determines, before or
dming any Plan Year, that the Plan may fail to satisfy for the Plan Year any nondiscrimination
requirement imposed by the Code or any linlitation on benefits provided to Key Employees, the
9/l/2005v6
29
Plan Administrator may reject or reduce Elections by Highly Compensated Employees or Key
Employees with or without the consent of such employees.
Any limitation imposed by the Plan Administrator shall apply on a unifonn basis
pursuant to lUles applicable equally to all Pm1icipants who are Highly Compensated Employees
or Key Employees.
To the extent practicable, such adjustments shall be made before the commencement of
the Plan Year for which the Election is effective.
Section 10.7 RepOl1ing and Disclosure. Promptly after the Plan, or any Optional Benefit
thereunder, is adopted, the Plan Administrator will notify all Qualified Employees of the
availability and telms of the Plan. The Plan Administrator shall be responsible for complying
with all rep011ing, filing and disclosure requirements for the Plan.
If the Employer has adopted a Dependent Care Flexible Spending Account pursuant to
Ar1icle IX, on or before Janumy 31, the Plan Administrator will furnish each Pm1icipant who has
received payments under Ar1icle IX with a written statement showing the amount of Dependent
Care Expenses reimbursed by the Plan for the previous calendar year. The Plan Administrator
will provide required infOlmation on the applicable TreasUlY Form W-2.
Section 10.8 Indemnification of the Administrator. Any individual acting in the capacity
of Plan Administrator shall be indell1l1ified by the Employer against any and all liabilities arising
by reason of any act or failure to act made in good faith pursuant to the provisions of the Plan,
including expenses reasonably incurred in the defense of such claim.
ARTICLE XI: MISCELLANEOUS
Section 11.1 Arnendment and Ternunation. The Employer may amend or terminate the
Plan, or any Optional Benefit offered thereUllder, at any time by a duly adopted resolution of its
Board of Directors (or appropriate goveming body) or written instlUment executed by a duly
authorized individual. Unless otherwise specifically provided, amendments shall be only
prospective in impact. No amendment or ternunation shall deprive a Pm1icipant of any benefits
to which he or she is entitled under this Plan with respect to contributions previously made.
Section 11.2 Plan Not a Contract of Employment. The Plan is not an employment
agreement and does not assure the continued employment of any employee or Pm1icipant for any
period of time. Notlung contained in the Plan shall interfere with the Employer's light to
discharge an employee or Pm1icipant at any time, regardless of the effect such discharge will
have upon that individual as a Pm1icipant in this Plan.
Section 11.3 Funding. The Plan provides a means of making Elections concelning
Optional Benefits but has no assets per se. Nothing contained in the Plan shall require the
Employer to maintain a separate fund or tlUSt for the benefit of Pm1icipants unless otherwise
911/2005v6
30
required by law. No Patiicipant shall, by viliue of this Plan, have any right or interest in the
assets of the Employer. A Participant has only an unsecured contract right to receive benefits in
accordance with the Plan.
Section 11.4 No Guarantee of Tax Consequences. The Employer makes no commitment
or guarantee that any amounts paid to a Patiicipant under any A11icle of this Plat1 will be
excludable from the Pat1icipant's gross income for federal or state income tax purposes. It shall
be the obligation of each Pat1icipant to detennine whether each payment is excludable from the
Patiicipant's gross income for federal and state income tax purposes, and to notify the Employer
if the Pat1icipant has reason to believe that any such payment is not so excludable.
Any Optional Benefit provided to a Pat1icipant that is includable in the Pat1icipant's gross
income shall be treated as if it were a distribution of cash under this Plan.
Section 11.5 Plan Benefits Mav Not be Assigned. No Pat1icipant may assign, pledge, or
otherwise dispose of any benefit under the Plan prior to actual receipt thereof.
Section 11.6 Governing Law. This Plan shall be constmed and enforced according to the
laws the jurisdiction named in the SummalY Pages except to the extent preempted by federal law.
9/1I2005v6
31
SECOND AMENDMENT TO THE
CITY OF COLUMBIA HEIGHTS
FLEXIBLE BENEFIT PLAN DOCUMENT
WHEREAS, Section 11.1 of the City of Columbia Heights Flexible Benefit Plan
authorizes the Employer (City of Columbia Heights) to amend the Plan at any time by a duly
adopted resolution of its Board of Directors (or appropriate goveming body) or written
instmment executed by a duly authorized individual,
WHEREAS, City of Columbia Heights believes it is necessary and desirable to amend
the Plan to: 1.) incorporate certain plan design altematives (year-end Grace Period coverage, pre-
tax Health Saving Account contributions and a limited-purpose health FSA) which may be
implemented either now or at some time in the future as specified in the Plan's Summary Pages,
and 2.) include the security provisions required by the Health Insurance Portability and
Accountability Act of 1996 (HIP AA),
NOW, THEREFORE, BE IT RESOLVED that the City of Columbia Heights Flexible
Benefit Plan is hereby amended and re-stated effective January 1, 2006 as follows:
1. The definition of Optional Benefits is expanded to include Health Savings Accounts
(HSA) as follows:
Section 2.16 Optional Benefits means the following employee benefit plane s) offered by
the Employer if adopted by the Employer as shown in the Summary Pages:
(a) Premium Conversion and Health Savings Accounts (HSA) as described in Article VII
(b) Health Care Flexible Spending Account (Health FSA) as described in Article VIIl
(c) Dependent Care Flexible Spending Account (Dependent Care FSA) as described in
Article IX
2. The Plan's termination provisions are modified to accommodate Grace Period
coverage asfollows:
Section 3.3 Termination of Participation. A Participant will cease to be a Participant in
the Plan on the earliest of:
(a) the date on which any Optional Benefit with respect to which the Participant has an
Election tenninates, but only to the extent of the Participant's participation in that
Optional Benefit,
1
(b) the date the Participant is no longer a Qualified Employee,
(c) the first day of a Period of Coverage for which an Election is revoked pursuant to Section
6.2,
(d) the last day of the Plan Year for which an Election is filed subject to the Grace Period
Coverage described in Section 3.6,
( e) the date required Employee contributions cease, or
(f) the date on which the Plan tenninates.
Tennination of participation in this Plan shall not prevent a fonner Participant from continued
coverage or benefits under respective Optional Benefit plans (as provided in Sections 3.4 and
3.5) if and to the extent provided by such plans or as authorized by any applicable state or federal
law.
3. The following new Section 3.6 describing Grace Period coverage is added to
Article III Eligibility and Participation:
Section 3.6 Grace Period Coverage. This Section shall apply only if and to the extent
Grace Period Coverage is adopted by the Employer as shown in the Summary Pages. If so
elected, amounts remaining in the Participant's flexible spending account(s) at the end of the
Plan Year can be used to reimburse the Participant for eligible expenses that are incurred during
the Grace Period defined in the Summary Pages under the following conditions:
(a) Applicability - In order for a Participant to be reimbursed for eligible expenses incurred
during the Grace Period from amounts remaining in their account at the end of the Plan
Year:
1) A Participant must have coverage in effect on the last day of the Plan Year to
which the Grace Period applies, or
2) be a qualified beneficiary who has COBRA coverage as defined in Section 3.5 on
the last day of that Plan Year.
(b) No Cash-out or Conversion - Prior Plan Year FSA amounts may not be cashed out or
converted to any other taxable or non-taxable benefit.
(c) Reimbursement of Grace Period Expenses - Eligible expenses incurred during a Grace
Period and approved for reimbursement in accordance with the Plan's claim procedure
?
will be reimbursed and charged first against any amount available from prior Plan Year
(unless directed otherwise by the Participant) and then against any amount available to
reimburse expenses that are incurred during the current Plan Year. All claims for
reimbursement will be paid in the order in which they are approved. Once paid, a claim
will not be re-processed or otherwise recharacterized so as to pay it (or treat it as paid)
from amounts attributable to a different Plan Year or Period of Coverage.
(d) Run-out Period and FOlieitures - Claims for reimbursement of eligible expenses incurred
during a Plan Year or its related Grace Period must be submitted on or before the claim
submission deadline specified in the Summary Pages. Any prior Plan Year amounts that
remain after all reimbursements have been made for the Plan Year and its related Grace
Period shall not be carried over to reimburse the Participant for expenses incurred after
the Grace Period ends. The Participant will forfeit all rights with respect to such, which
will be subject to the Plan's provisions regarding forfeitures in Section 5.7.
4. The second paragraph in Section 4.1 Salmy Reduction Contributions is amended
as follows to clarify that salary reduction contributions for premium conversion benefits
deducted in the prior plan year can be used for grace period coverage in the subsequent plan
year:
The amount of the salary reduction election for the premium conversion option described
in Section 7.2 shall be the Participant's share of the cost of Employer sponsored group health
coverage or other Qualified Benefits, as determined by the Employer and as permitted by
applicable law, taking into account any benefit credits available to the Participant under Section
4.2. If the employee's share of the cost for such benefit changes during the Period of Coverage, a
Participant's salary reduction for such benefit(s) may be adjusted automatically in accordance
with the change in cost.
5. Section 5.3 is amended as follows to clarify that Grace Period coverage is an
exception to the general rule that prohibits the carry-over of contributions from one plan year to
the next:
Section 5.3 Limitation of Benefits. No Optional Benefits shall be paid to or on behalf of
a Participant in excess of the amount elected by the Participant under the Plan. In no case shall
the Plan allow a Participant to carry over unused contributions from one Plan Year to a
subsequent Plan Year, or, with the exception of Grace Period Coverage described in Section 3.6
and Section 4.1, allow contributions from one Plan Year to purchase a Qualified Benefit incurred
in a subsequent Plan Year.
6. Section 5.7 is amended as follows to clarify that Grace Period coverage is an
exception to the general rule which requires fOlfeiture of unused contributions for a plan year:
~
Section 5.7 Forfeitures. If a Participant has not used all amounts available for benefits to
the Participant under any Optional Benefit for a Period of Coverage in accordance with the terms
thereof, with the exception of Grace Period Coverage described in Section 3.6 and Section 4.1
any remaining balance shall be forfeited by the Participant, who shall have no further claim
thereto. Such forfeitures shall be used to offset the reasonable administrative costs of the Plan.
7. The following new subparagraph (g) is added to Section 6.2 Elections Irrevocable
to clarifY that a Participant's election to make pre-tax contributions to a Health Savings
Accounts is not subject to the Cafeteria Plan election change rules:
6.2(g) Health Savings Account (HSA) election changes - Not withstanding the foregoing
election change rules, a Participant who elects to make Health Savings Account (HSA)
contributions under this Plan in accordance with Section 7.3 may start or stop such
Election or increase or decrease the Election at any time as long as the change is effective
prospectively (i.e., after the request for the change is received).
8. Thefollowing new Section 7.3 describing Health Savings Account contributions is
added to Article VII and the Article is re-named Premium Conversion and Health Savings
Accounts (HSA):
Section 7.3 Health Savings Accounts (HSA). Participants who are eligible individuals as
defined under Section 223(c)(1) of the Code may elect as a benefit under this Article pre-tax
contributions to a Health Savings Account (HSA) described in Section 223 of the Code. The
Employer's responsibly for determining eligibility under Section 223(c)(1) of the Code shall be
limited to:
(a) detennining whether the Participant is covered under an Employer sponsored HDHP (and
the deductible) or low deductible health plan or plans (including health FSAs and HRAs);
and
(b) the Participant's age (for catch- up contributions). The Employer may rely on the
Participant's representation as to his or her date of birth.
9. The final sentence in the last paragraph of Section 8.4 Claims for Reimbursement
(health care account) is deleted and replaced with the following sentence to explicitly reference
the claim submission deadline defined in the SummalY Pages:
. .. Such claims must be submitted on or before the claim submission deadline specified
in the Summary Pages.
L1
10. The following sentence is added at the end of the first paragraph of Section 8.6
Reimbursement of Expense (health care account) to explicitly reference the claim submission
deadline defined in the Summmy Pages:
. . .. Claims must be submitted on or before the claim submission deadline specified in the
Summary Pages.
11. Section 8.10 Health Insurance Portability and Accountability Act of 1996
(HIPAA) is amended to include a new sub-paragraph (b)8 which defines the HIPAA Security
Rule and a new sub-paragraph (k) which describes the Security Standards as follows:
8.1 0(b)8 "Security Rule" shall mean the Security Standards for the Protection of Electronic
Protected Health illfonnation at 45 CFR parts 160 and 164 subparts A and C.
8.10(k) Security Standards - To the extent the Plan Sponsor has access to electronic PHI
other than summary information and enrollment information, on or before the
required effective date, the Plan Sponsor will implement administrative, physical,
and teclmical safeguards to protect the confidentiality, integrity and availability of
electronic Protected Health hlformation (as defined in the Security Rule) that it
creates, receives, maintains, or transmits on behalf of the Plan. ill addition, the
Plan Sponsor will:
1.) Ensure that the adequate separation required by Section 8.10(i) is
supported by reasonable and appropriate security measures;
2.) Ensure that any agent, including a subcontractor, to whom it provides this
information agrees to implement reasonable and appropriate security
measures to protect the information; and
3.) Report to the Plan any security incident of which it becomes aware.
12. A new Section 8.11 describing the Limited-Pwpose Health FSA is added to
Article VIII Health Care Flexible Spending Account asfollows:
Section 8.11 Limited-Purpose Health FSA. If so elected in the Summary Pages, the
Employer will make available a "Limited-Purpose" FSA. Limited-Purpose means that the
definition of Health Expense in Section 2.12 shall be limited to dental, vision, preventive care
and other excepted medical expenses as defined in Code Sections 223(c)(1)(B) and 223(c)(2)(C)
that would otherwise be eligible under the Plan.
Participants covered by an Employer sponsored High Deductible Health Plan (HDHP) as
defined under Section 223(c)(2)(A) of the Code who participate in a Health Savings Account
(HSA) described in Section 223 of the Code may only participate in the Health Care Flexible
Spending Account described in this Article on a "Limited-Purpose" basis. Participants covered
by a qualifying High Deductible Health Plan (HDHP) other than an Employer sponsored HDHP
who participate in a Health Savings Account (HSA) may elect to participate in the Health Care
Flexible Spending Account described in this Article on a "Limited-Purpose" basis.
13. The following sentence is added at the end of the first paragraph of Section 9.5
Reimbursement of Expense (dependent care account) to explicitly reference the claim submission
deadline defined in the Summary Pages:
. .. Claims must be submitted on or before the claim submission deadline specified in the
Summary Pages.
14. The Summary Pages for the City of Columbia Heights Flexible Benefit Plan are
deleted and replaced in their entirety with the attached Summmy Pages dated January 1, 2006.
:::OfC~z2/
Its 61;; #'/""7' /
Date: l~p"2005
SUMMARY PAGES
Definitions
Employer:
City of Columbia Heights
Optional Benefits means those components checked below:
-2L Premium Conversion as described in Article VII
Health Savings Account (HSA) as described in Article VII
X Health Care Reimbursement as described in Article VIII
-2L Dependent Care Reimbursement as described in Article IX
Effective Date of Plan: February 1, 1993
of Restatement: January 1, 2006
Plan Year: The Period beginning on January 1 st and ending on the subsequent December 31 st and
the 12 month period ending on each December 31 st thereafter.
Eligibility and Waiting Periods
The following employees are eligible to participate in the Plan. New employees may begin
participation on the new employee Mid-Year Entry Date. (Check all that apply.)
X
X
X
X
Permanent full-time employees.
Permanent part-time employees.
Mayor and City Council members.
Bargaining unit employees are eligible.
AND
X Eligible employees as indicated above are eligible to participate in all Optional
Benefits adopted by the Employer to be included in the Plan.
OR
The following employee classifications are eligible for only the following
Optional Benefits adopted by the Employer to be included in the Plan:
Premium Conversion
Health Savings Accounts
Health Care Reimbursement
Dependent Care Reimbursement
The Mid-Year Entry Date for a new employee is:
First day of the month following ( ) days of service as a Qualified Employee
First day of employment as a Qualified Employee
X Other: Date of hire.
9/1/2005v6
The Mid-Year Entry Date for a Participant with an Election change event as defined in Section
6.2 or returning from a FMLA or USERRA Leave is:
First day of the payroll period following receipt of an Election
First day of the month following receipt of an Election
X Other: Date election is received by the administrator.
Salary Reduction Contributions
Maximum Salary Reduction Contribution:
$7,600 plus the amount required to fully pay the Participant's share of the cost for benefits
under any Premium Conversion Optional Benefit available through the Plan.
Other:
Maximum Health Care Reimbursement in any Plan Year: $2,600
Minimum Health Care Reimbursement in any Plan Year: $260
Maximum Dependent Care Reimbursement in any Plan Year: $5,000
Minimum Dependent Care Reimbursement in any Plan Year: $0
Health FSA Exclusions
The definition of eligible Health Expense in Section 2.12 shall not include the following
expenses (check all that apply):
Transportation expenses
Over-the-counter medication available without a prescription
Other:
Limited-Purpose Health FSA
The Limited-PUlpose Health FSA described in Section 8.11 will be available asfollows (check
all that apply):
-.L A Limited-Purpose Health FSA will not be available
A Limited-PUlpose Health FSA will be administeredfor Participants who elect
coverage under an Employer Sponsored HDHP/HSA
A Limited-PUlpose Health FSA will be available to Participants covered by an
HDHP/HSA other than an Employer sponsored plan.
If elected above, the Limited-Purpose Health FSA will cover the following eligible expenses
(check all that apply):
Dental
Vision
Over the counter drugs/supplies
Other:
9/1/2005v6
,..,
Elective Employer Contributions
Benefit Credits available under Section 4.2 (check all that apply):
X No Benefit Credits are available under the Plan. Benefits under the Plan are
provided solely through Salary Reduction contributions.
Benefit Credits are provided in the following amount:
Benefit Credits shall be allocated by the Employer to offset the Participant's cost
for Optional Benefits elected pursuant to Article VI in the following order:
Benefit Credits in excess of a Participant's cost for Optional Benefits will
be paid to the Participant as additional taxable cash Compensation.
In equal amounts on each paycheck
Other:
OR
Benefit Credits in excess of a Participant's cost for Optional Benefits will
be forfeited by the Participant and are not available as additional taxable
cash Compensation.
Participation During Unpaid Leave (Section 3.4)
A Participant on an unpaid leave of absence (including an FMLA Leave or USERRA
Leave), may choose to pay for Optional Benefits elected under any of the options checked
below (select all that apply):
PRE-PAY: Paying pre-tax before the leave begins the amounts that will
become due during the leave out of payroll checks;
X PAY AS YOU GO: Pre-tax salary reduction contributions will be taken
from payments to the Participant (i.e., sick pay, wage continuation, short
term disability, or vacation pay). If the Participant is not receiving
payments, or when payments are exhausted, the Participant remits after-tax
payments to the Employer.
PAY ON RETURN: From paychecks following the leave on a pre-tax
basis. Participant must make up all amounts owing for Plan Year, must
elect this payment option before the Unpaid Leave commences and
Employer must approve.
Continuation of Coverage (Section 3.5)
X Continuation coverage is available to all Participants and Qualified
Beneficiaries in the Health Care Reimbursement Optional Benefit,
regardless of account balance.:
9/1/2005v6
"
Continuation coverage in the Health Care Reimbursement Optional
Benefit will be made available only if the amount of required payments for
the remainder of the Plan Year does not exceed the maximum amount
available to the Participant or Qualified Beneficiary for reimbursement for
the remainder of the Plan Year.
Grace Period Coverage
Grace Period Coverage (Section 3.6) shall be administered for the flexible spending accounts
available under the Plan as follows:
~ Grace Period Coverage shall not apply to the flexible spending accounts.
Grace Period Coverage for expenses incurred during the period
to following the end of the Plan Year shall apply to:
Health Care Flexible Spending Account (Article VIII)
Dependent Care Flexible Spending Account (Article IX)
Default Elections for Premium Conversion
Default Election to be applied in Section 6.3 (check all that apply):
-X- Participant deemed to have elected to receive his full Compensation in cash.
Newly eligible Qualified Employee deemed to have elected Premium Conversion
to the extent covered by applicable Employer sponsored Qualified Benefits unless
such Qualified Employee has timely made an affirmative election to waive
Premium Conversion participation in the manner prescribed by the Plan
Administrator.
Participant deemed to have elected to receive the same Premium Conversion
election as existed on the last day of the immediately preceding Period of
Coverage, if applicable.
Participant deemed to have elected the following coverage under Employer
sponsored accident and health, disability and group term life benefits:
Employee only medical coverage
Other:
Flexible Spending Account Claim Submission Deadline
The flexible spending account claim submission deadline referenced in Sections 8.6 and
9.5 shall be 90 days following the end of the Plan Year.
9/1I2005v6
Governing Law
Jurisdiction: --L Milmesota
Other:
Date of Execution
If) /d-l/0b
,
9/1/2005v6
City of Columbia Heights
ByX
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FIRST AMENDMENT TO THE
CITY OF COLUMBIA HEIGHTS
FLEXIBLE BENEFIT PLAN DOCUMENT
WHEREAS, Section 11.1 Amendment and Tennination of the Flexible Benefit Plan
authorizes the City of Columbia Heights ("Employer") to amend the Plan, at any time by a duly
adopted resolution of its Board of Directors (or appropriate goveming body) or written
instrument executed by a duly authorized individual; and
WHEREAS, the Working Families Tax Relief Act of 2004 created a uniform definition
of dependent for purposes of celiain employer sponsored employee benefit plans;
NOW, THEREFORE, BE IT RESOLVED that the City of Columbia Heights Flexible
Benefit Plan is hereby amended effective January 1,2005 as follows:
1. The definition of Dependent in Section 2.3 is deleted and replaced with the following:
Section 2.3 Dependent for purposes of Premium Conversion under Article VII and
Health Care Flexible Spending Account (Health FSA) under Article VIII means the spouse of a
Participant or any individual who is a dependent of the Participant as defined in Section 152 of
the Code (without regard to Section 152(b)(1), Section 152(b)(2) and Section 152(d)(1)(B)), and
any Alternate Recipient under a Qualified Medical Child Support Order ("QMSCO") as defined
in ERISA Section 609.
2. The definition of Qualifying Dependent in Section 2.24 is deleted and replaced with the
following:
Section 2.24 Qualifying Dependent for purposes of the Dependent Care Flexible
Spending Account under Aliicle IX means any individual who is,
(a) A dependent of the Participant (as defined in Section 152(a)(1)) under the age ofthilieen
(13), or
(b) A dependent or spouse of the Participant who is physically or mentally incapable of self-
care who has the same principal place of abode as the Participant for more than one-half
of the calendar year and, in the case of a non-spouse dependent, who does not have
income in excess of the exemption amount defined in Code SectionI51(d). An individual
shall not be treated as having the same principal place of abode if at any time during the
year the relationship between the individual and Participant is in violation of local law.
(c) Where the parents are divorced, legally separated or separated under a written separation
agreement, a child (as defined in Section 152(f)(1) of the Code) who:
1) is under age 13 or is physically or mentally incapable of self-care,
2) receives over half of his or her support during the calendar year from his or her
parents who are divorced or legally separated under a decree of divorce or
separate maintenance or who are separated under a written separation agreement,
and
3) is in the custody of one or both of his or her parents for more than one-half of the
calendar year,
is treated for any taxable year beginning in the calendar year as a Qualifying Dependent
of that parent with whom the child shared the same principal place of abode for the
greater portion of the calendar year. Accordingly, a child may be treated as the
Qualifying Dependent of a parent even though that parent is not entitled to a dependency
exemption for the child under Code Section 152. Only one parent may treat the child as a
Qualifying Dependent.
BE IT FURTHER RESOLVED, that the appropriate officers are authorized and
directed to take such action as may be necessary or advisable to effect the adoption and
implementation of the this amendment.
r+b-
Dated this-==- day of
0~lA-0-7
,2005.
City of Columbia Heights
By:
:}:;/ ,/1 ...~/'jt--
/.. ,/ - ,. /.' /,
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h~J!i7~ I/C/~i, / I . .'
Walter R. F ehst
Its:
City Manager
CITY OF COLUMBIA HEIGHTS
FLEXIBLE BENEFIT PLAN
SUMMARY PLAN DESCRIPTION
.lanuary 1, 2004
9/1/2003v5
TABLE OF CONTENTS
INTRODUCTION ......................................................................................................................... 1
ELIGIBILITY ................................................................................................................................ 1
CONTRIBUTIONS: SALARY REDUCTION ............................................................................ 1
Social Security Impact ....................................................................................................... 1
PREMIUM CONVERSION .......................................................................................................... 1
HEALTH CARE FLEXIBLE SPENDING ACCOUNT ............................................................... 2
Eligible Health Care Expenses .......................................................................................... 2
Health FSA Limits ............................................................................................................. 2
Termination of Employment and Leave of Absence ......................................................... 3
COBRA Continuation Notice ................................................................................... : ........ 3
Notice of Privacy Practices ................................................................................................ 5
DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT ....................................................... 8
Eligible Dependent Care Expenses .................................................................................... 8
Dependent Care FSA Limits .............................................................................................. 8
Termination of Employment .............................................................................................. 9
Dependent Care Tax Credit ............................................................................................... 9
ENROLLMENT AND ADMINISTR_AT!ON ............................................................................. 10
Election Process ............................................................................................................... 10
Election Changes ............................................................................................................. 10
FSA Accounts and Forfeitures ......................................................................................... 12
Submitting FSA Claims ................................................................................................... 12
FSA Claim Denial ............................................................................................................ 13
Unpaid Leave of Absence ................................................................................................ 14
Plan Amendment and Termination ........................................ ; ......................................... 14
GENERAL INFORMATION ...................................................................................................... 16
9/1/2003v5
INTRODUCTION
Many employees don't view their benefits as compensation. They see pay and benefits as two
separate programs. Actually, your pay and benefits together form your total compensation.
With the Flexible Benefit Plan, you receive more choices in your benefit program and more flexibility in
how your total compensation is allocated between pay and benefits. The Plan allows you to elect
certain optional nontaxable benefits as alternatives to cash compensation that would be taxable. As a
result, your total compensation is delivered more tax effectively.
ELIGIBILITY
Fmployees are not automatically eligible for the Flexible Benefit Plan. Rules regarding eligibility and
participation are defined below. Sole proprietors, partners in a partnership arrangement and owners
of 2% or more of the shares of a Sub-S corporation are not eligible to participate.
Eligible Employee
Any permanent full-time or part-time employee of the Employer, Mayor, and City
Council members.
Bargaining Unit employees are eligible.
Waiting Period
Eligible Employees may begin participation on their date of hire.
CONTRIBUTIONS: SALARY REDUCTION
The Flexible Benefit Plan allows you to elect to have a portion of your pay set aside (before any taxes
have been deducted) to be applied to the payment of your share of the cost for the Optional Benefits
you select. The legal term for this process is "salary reduction." The advantage is that it reduces your
federal and state income taxes and social security taxes (FICA).
Maximum Salary Reduction Contribution
$7,600 plus the amount necessary to fully pay the participant's portion of the cost for
benefits under the Premium Conversion benefit option.
Social Security Impact
Tt should be noted that because the amount of your salary reduction is not subject to FTCA taxes, it is
also not included in determining your average wages for Social Security benefit purposes. For
example, if you reduce your salary in one year from $20,000 to $18,000 through use of this Plan, the
salary included in your Social Security wage history for that year would be $::[8,000 rather than
$20,000. The exact effect this will have on your Social Security benefits is based on your pay history
throughout your working career, your marital status, and other factors. One potential effect is that
your Social Security benefits may be reduced.
PREMIUM CONVERSION
This benefit allows you to use before-tax dollars to pay the employee share of the premiums for
certain employer-sponsored benefit plans as defined below. If you decide to use this option, your
portion of premiums will be deducted from your pay before taxes.
9/1/2003v5 1
Premium Conversion
You may elect to use Premium Conversion to pay for the cost of the following benefits:
Nedical, Dental.
Your share of the cost will be determined annually by the Employer. ]If there is an increase or
decrease in your share of the cost during the plan year, the Employer may on a reasonable and
consistent basis automatically make a prospective increase or decrease in your salary reduction
contribution.
HEALTH CARE FLEXIBLE SPENDING ACCOUNT
If you elect to participate in the Health Care Flexible Spending Account ("Health FSA"), contributions
you designate will be credited to a bookkeeping account on your behalf. This account will be used to
reimburse you for eligible health care expenses for you and your dependents that are not reimbursed
by insurance.
Eligible Health Care Expenses
You may use your Health FSA to be reimbursed for most of the "out-of-pocket" expenses you incur for
medical care,
Hedical expenses that are reimbursed by insurance, insurance premiums, and expenses for long-term
care are not eligible, insurance premiums your spouse pays through his/her employer will not be
reimbursed through this account. Expenses for which you are reimbursed through your FSA may not
be claimed as deductions for income tax purposes.
Allowable expenses for medical care include: · Medical and dental expenses which are covered but not paid by insurance (deductible amounts
paid before benefits begin and the percentage of charges not covered)
· Vision and hearing expenses including examinations, eyeglasses, contact lenses, laser eye
surgery, hearing aids and seeing-eye dog
· Fees paid to doctors, chiropractors and hospitals
· Dental care including orthodontia
· Routine physical examinations, x-rays and lab fees
· Prescription drugs including insulin and birth control pills
· Non-prescription over-the-counter (OTC) drugs taken for a medical condition exdudinq toiletries
(e.g. toothpaste), cosmetics (e.g. face cream) and dietary supplements taken for general health
reasons (e.g. vitamins).
· Special equipment bought or rented because of a physical problem (wheelchairs, crutches, etc.)
· Ambulance service and other transportation costs necessary to receive medical care
Health FSA Limits
The amount available for reimbursement is limited to the amount that you designated as your
contribution for the Plan Year and is not limited to contributions that have been made to your FSA at
the time of reimbursement.
Maximum Election
You can allocate any amount you wish up to a maximum of $2,600.
Minimum Election
Participation is voluntary, but if you do choose to participate, you must allocate at
least $260 per Plan Year.
9/1/2003v5 2
Termination of Employment and Leave of Absence
If your employment terminates or you take an unpaid leave of absence, eligible expenses incurred
prior to your separation will be reimbursed up to the amount remaining of your annual election.
Eligible expenses incurred after your separation will be reimbursed only if you elect to continue
contributions and benefits. Your rights to legally mandated continuation coverage are described in the
COBRA Continuation Notice found in the next section. If you elect to continue benefits, you must
make the required payments in a timely manner.
rj regardless of account balance.
Health FSA Continuation Coverage is available to all Health FSA participants,
If you take an unpaid leave of absence under the provisions of the Family and Hedical Leave Act
("FMLA") and do not return to employment following the end of the leave, your coverage will
terminate at the end of the FHLA leave. At that time, you may have the right to continue benefits as
described in the following COBRA Continuation Notice. If your leave of absence is due to a period of
duty in the Uniformed Services of the United States and lasts more than 31 days, you may also
continue this coverage.
COBRA Continuation Notice
This Notice contains important information about your right to COBRA Continuation coverage, which is
a temporary extension of coverage under the Health FSA benefit. The right to COBRA continuation
coverage was created by a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985
{COBRA). COBRA continuation coverage can become available to you and to other members of your
family who are covered by a Health FSA when you would otherwise lose Health FSA coverage. This
notice generally explains COBRA continuation coverage~ when it may become available to
you and your family, and what you need to do to protect the right to receive it. This notice
gives only a summary of your COBRA continuation coverage rights. For more information about your
rights and obligations under the Health FSA benefit and under federal law, you should either review
this Summary Plan Description or get a copy of the Plan Document from the Plan Administrator.
The Plan Administrator is named in the General Information page of this Summary Plan Description.
COBRA Continuation Coverage
COBRA continuation coverage is a continuation of Health FSA coverage when coverage would
otherwise end because of a life event known as a "qualifying event." Specific qualifying events are
listed later in this Notice. COBRA continuation coverage must be offered to each person who is a
"qualified beneficiary." A qualified beneficiary is someone who will lose coverage under the Health
FSA because of a qualifying event. Depending on the type of qualifying event, employees, spouses of
employees, and dependent children of employees may be qualified beneficiaries. Under the Plan,
qualified beneficiaries who elect COBRA continuation coverage must pay for COBRA continuation
coverage.
Tf yOU are an employee, you will become a qualified beneficiary if you will lose your Health FSA
coverage because either one of the following qualifying events happens:
1. Your hours of employment are reduced below the level required for eligibility under the Plan,
or
2. Your employment ends for any reason other than your gross misconduct.
Tf you are the spouse of an employee, you will become a qualified beneficiary if you will lose your
Health FSA coverage because any of the following qualifying events happens:
1. Your spouse dies;
2. Your spouse's hours of employment are reduced below the level required for eligibility under
the Plan;
3. Your spouse's employment ends for any reason other than his or her gross misconduct;
9/1/2003v5 3
4. Your spouse becomes enrolled in Medicare (Part A, Part B, or both); or
$. You become divorced or legally separated from your spouse.
Your dependent children will become qualified beneficiaries if they will lose coverage under the Health
FSA because any of the following qualifying events happens:
1. The parent-employee dies;
2. The parent-employee's hours of employment are reduced below the level required for
eligibility under the Plan;
3. The parent-employee's employment ends for any reason other than his or her gross
misconduct;
4. The parent-employee becomes enrolled in Medicare (Part A, Part B, or both);
5. The parents become divorced or legally separated; or
6. The child stops being eligible for coverage under the Health FSA as a "dependent child."
The Plan will offer COBRA continuation coverage to qualified beneficiaries only after the Plan
Administrator has been notified that a qualifying event has occurred. When the qualifying event is the
end of employment or reduction in hours of employment, death of the employee, or enrollment of the
employee in Medicare (Part A, Part B, or both), the employer must notify the Plan Administrator of the
qualifying event within 30 days of any of these events.
For the other qualifying events (divorce or legal separation of the employee and spouse or a
dependent child's losing eligibility for coverage as a dependent child), you must notify the
Plan Administrator. The Plan requires you to notify the Plan Administrator within 60 days
after the qualifying event occurs, You must send this notice in writing to the Plan
Administrator at the address listed in the General Information page of this Summary Plan
Description.
Once the Plan Administrator receives notice that a qualifying event has occurred, COBRA continuation
coverage will be offered to each of the qualified beneficiaries. For each qualified beneficiary who
elects COBRA continuation coverage, COBRA continuation coverage will begin on the date that health
FSA coverage would otherwise have been lost.
COBRA continuation coverage for the Health FSA is a limited and temporary continuation of coverage.
You will have the right to continue coverage until the end of the plan year in which your termination of
coverage occurred.
The monthly cost for continuation coverage may not exceed one-twelfth of your election to the Health
FSA plus a two percent administrative surcharge. For example, if you elected $600, your monthly
continuation cost would be $51.00 [(600/12) x :L02]. The Plan Administrator will provide you with the
appropriate cost information if you become eligible for continuation coverage.
zf You Have Questions
Tf you have questions about your COBRA continuation coverage, you should contact the Plan
Administrator or you may contact the nearest Regional or District Office of the U.S. Department of
Labor's Employee Benefits Security Administration (EBSA). Address and phone numbers of Regional
and District EBSA Offices are available through EBSA's website at www.dol.qov/ebsa.
Keep Your Plan Informed of Address Changes
Tn order to protect your family's rights, you should keep the Plan Administrator informed of any
changes in the addresses of family members. You should also keep a copy, for your records, of any
notices you send to the Plan Administrator.
You may also have rights under state law to continuation coverage under medical, dental and group
term life insurance plans offered by the Employer, if any. Please see the medical, dental and group
term life insurance plan Summary Plan Description(s) for more detailed information.
9/1/2003v5 4
Notice of Privacy Practices
This Notice describes how medical information may be used or disclosed, and how you can get access
to this information. This Notice applies to the Health FSA and does not apply to any other benefits
provided under the Flexible Benefit Plan. The Plan is required to maintain the privacy of your
protected health information (PHI) and to provide you with this Notice about its legal duties and
privacy practices. The Plan Sponsor, Plan Administrator and third party providers understand the
sensitivity of privacy issues and recognize that protecting the privacy and security of your PHI is an
important responsibility.
Protected Health Information ("PHI") includes a combination of: · Medical information about you and
· Individually identifiable information such as your name, address, phone number and social
security number (or other identification number).
The Plan Administrator will follow the privacy practices described in this Notice, although the Plan
Administrator and Plan Sponsor reserve the right to change the privacy practices and the terms of this
Notice. If the practices or terms are changed, a new Notice will be provided to Health FSA participants
prior to making a significant change. These changes apply to all information, including PHI created or
received before the Notice is changed.
PH! Safeguards
The Plan Administrator is committed to maintaining the security and confidentiality of information
received from you relating to the Health FSA. Physical, electronic, and procedural safeguards will be
maintained that comply with Federal and State laws to protect information against unauthorized
access and use.
The Plan's Privacy Officer has the overall responsibility of implementing and enforcing policies and
procedures to safeguard your PHI against inappropriate access, use, and disclosure. Information on
the Privacy Officer is contained on the General Information page of this Summary Plan Description.
Permitted Uses and Disclosures of PHT
PHI can be used or disclosed in a number of different ways. The following are only a few of the types
of uses and disclosures of your PHI that are permitted by law to be made without your authorization:
Treatment - PHI may be disclosed to health care providers (e.g., doctors, dentists, pharmacies,
hospitals, etc.) who request it in connection with your treatment. PHI may also be disclosed to health
care providers in connection with preventative health, early detection and disease and 'case
management programs.
Payment - PHI will be used and disclosed to administer your Health FSA which may involve
determination of:
· Eligibility
· Reimbursement
· Utilization review and management
· Medical necessity review
· Coordination of care benefits and other services, and
· Responding to complaints, appeals and external review requests.
PHI may also be used and disclosed for purposes of obtaining premiums, underwriting, rate-making
and determining cost sharing amounts.
Health Care Operations - PHI may be used and disclosed to perform the Health FSA's functions as a
9/1/2003v5 5
health plan. This may include:
· Health improvement or health care cost reduction through population-based programs
· Competence and qualification review of healthcare professionals
· Fraud and abuse detection, and compliance programs
· Quality assessment and improvement activities assessment, health claims analysis, and health
services outreach
· Case management, disease management, and care coordination services.
PHI may also be disclosed to affiliates and third party "business associates" that perform payment or
health care operations activities for the Health FSA on your behalf,
Tn addition, the law permits use or disclosure of your PHT in the following situations without your
authorization:
Required by Law - PHI may be used or disclosed to the extent that required by State or Federal law.
Public Health - PHI may be disclosed to an authorized public health authority for purposes of public
health activities. The information may be disclosed for such reasons as disease, injury or disability.
Abuse or Neglect - PH! may be disclosed to government authorities concerning abuse, neglect or
domestic violence.
Health Oversight - PH! may be disclosed to a government agency authorized to oversee the
healthcare system or government programs, including audits, examinations, investigations,
inspections and licensure activity.
Legal Proceedings - PH! may be disclosed in the course of any legal proceeding, in response to an
order of a court or administrative judge and, in certain cases, in response to a subpoena, discovew
request or other lawful process.
Law Enforcement - PH! may be disclosed under limited circumstances to law enforcement officials.
For example, disclosures may be made in response to a warrant or subpoena or for the purpose of
identifying or locating a suspect, witness or missing persons or to provide information concerning
victims of crimes.
Coroners and Medical Examiners - PH! may be disclosed in certain instances to coroners and medical
examiners.
Research - PHI may be disclosed to researchers, provided that certain established measures are taken
to protect your privacy.
Threat to Health or Safety - PHI may be disclosed to the extent necessary to avert a serious or
immediate threat to your health or safety or to the health or safety of others.
Military Activity and National Security - PH! may be disclosed to Armed Forces personnel under certain
circumstances and to authorized federal officials for the conduct of national security and intelligence
activities.
Correctional Institutions - :If you are an inmate in a correctional facility, PHI may be disclosed to the
correctional facility for certain purposes, including provision of health care to you or the health and
safety of you or others.
Workers' Compensation - PH! may be disclosed to the extent required by workers' compensation laws.
Any uses and disclosures not described in this Notice will require your written authorization. !f you
provide an authorization, you may cancel it in writing at any time.
Your Rights Concerning Your PH!
9/1/2003v5 6
You have additional rights with respect to your PHi:
Right to Request Restrictions - You have the right to ask that restrictions be placed on the use or
disclosure of your PHI. However, the law does not require that the Plan agree to these restrictions.
the Plan Administrator does agree to a restriction, the Plan may not use or disclose your PHI in
violation of that restriction unless it is needed for an emergency.
If
Confidential Communication - The Plan Administrator will accommodate reasonable requests to
communicate with you about your PHI to an alternative location.
Access to PHI - You have the right to receive a copy of PHI about you that is contained in the
"designated record set," with some specified exceptions.
A "designated record set" means a group of records that are used by or for us to make decisions about
you, including: enrollment, payment, reimbursement and case or medical management records.
You must make your request in writing to access copies of your records, and provide the Plan
Administrator with the specific information needed to fulfill your request.
Amendment ofPH£ - You have the right to ask that any PHI in a "designated record set" be amended.
All requests for amendment must be in writing. The Plan Administrator will not amend records in the
following situations:
· The Plan does not have the records you are requesting be amended.
· The Plan did not create the records that you are requesting be amended.
· The Plan Administrator has determined that the records are accurate and complete.
· The records have been compiled in anticipation of a civil, criminal or administrative action or
proceeding.
· The records are covered by the Clinical Laboratory Improvement Act.
All denials will be made in writing. You may respond by filing a written statement of disagreement
with the Plan Administrator, and the Plan Administrator would have the right to rebut that statement.
The Plan Administrator will respond to a request to amend within 30 days of receipt of a written
amendment request.
Accounting of Certain Disclosures - You have the right to an accounting of times when your PHI has
been disclosed for any purpose other than the following:
· Treatment, payment or healthcare operations as described in this Notice;
· Disclosures that you or your personal representative have authorized; and
· Certain other disclosures, such as disclosures for national security purposes.
All requests for an accounting must be in writing. You must provide the Plan Administrator with the
specific information needed to fulfill your request. This accounting requirement applies for 6 years
from the date of disclosure, beginning with disclosures occurring after April :[4, 2004.
Disclosures to Family Members
Your PH! will be shared with your family members or authorized representatives in one of two ways:
· You are present, either in person or on the telephone, and give us permission to talk to the
other person, or
· You sign an authorization form.
Additional Znformation
For additional information, questions about this Notice, or if you want another copy, please write or
call the Privacy Officer or Plan Administrator. Contact information is contained on the General
Information page of this Summary Plan Description.
9/I/2003v5 7
If you believe that your privacy rights have been violated, or if you disagree with a decision made by
the Plan Administrator about access to your PHI, you may either: · Call or write to the Privacy Officer.
· Notify the appropriate State regulatory agency to file a complaint.
· Notify the Secretary of the U.S. Department of Health and Human Services (HHS). Send your
complaint to: Medical Privacy, Compliant Division Office for Civil Rights, U.S. Department of
Health and Human Services, 200 Independence Avenue SW, Room 509F, HHH Building,
Washington, DC 20201.
If it is determined that your privacy rights have been violated, the Plan Sponsor will take appropriate
disciplinary action against the individual or entity causing the violation.
The Plan Sponsor and Plan Administrator will not use or disclose PHI for employer-related actions or
decisions or in connection with any other Plan Sponsor benefit or employee benefit plan. The Plan
Sponsor will not take retaliatow action against you if you file a complaint about these privacy
practices either with the Plan Sponsor, appropriate State agency or HHS.
DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
If you elect to participate in the Dependent Care Flexible Spending Account ("Dependent Care FSA"),
contributions you designate will be credited to a bookkeeping account on your behalf. Expenses for
dependent care that are considered employment-related expenses are eligible for reimbursement from
your Dependent Care FSA.
Eligible Dependent Care Expenses
Eligible dependent care expenses are those costs that you incur for care of your dependents (i.e. day
care) that enable you and your spouse if you are married, to worE. If you are married, your spouse
must be gainfully employed, a full-time student, or incapable of self-care.
Eligible dependents are:
· your dependent children under age :[3; or
· a spouse or other dependent whose principal residence is your home, who is dependent on
you for more than half of his or her support and who is mentally or physically unable to care
for himself or herself.
Your eligible dependents may receive care from a babysitter, dependent care center or someone who
comes to your home. However, expenses for care of a dependent outside the home are eligible only if
the qualifying individual normally spends at least 8 hours per day in your household. If you utilize a
care provider which cares for more than six nonresident persons, the care provider must be licensed
and comply with all applicable state and local laws.
The types of expenses that are not reimbursable include care that is primarily educational or medical
in nature, education at the kindergarten level or higher, the cost of transportation to and from the
care facility and any portion of the cost for overnight camp. Household service expenses for food,
clothing or entertainment (unless they are incidental to care) are not eligible. Also, services provided
by your child under age :[9 (or someone you can claim as a dependent on your tax return) are not
reimbursable.
Dependent Care FSA Limits
Dependent care reimbursements are paid to you on a pre-tax basis (without income tax or FICA
withholding). However the tax benefit from these reimbursements is subject to limitations. You will
be required to declare on your income tax return the amount of reimbursement, if any, that exceeds
certain limits that are imposed by the tax laws. For example, the maximum reimbursement in a
calendar year is $5,000 or $2,500 if you are married and file a separate return. In addition, your tax-
free amount may not be more than whichever of the following limitations apply to you:
9/1/2003v5 8
· if you are single, your earned income (after salary reduction) for the year the expenses were
incurred; or
· :If you are married and your spouse is working, your earned income (after salary reduction), or
the earned income of your spouse, whichever is less, for the year the expenses were incurred.
For purposes of applying the earned income limit, earned income generally means income from
employment (such as wages, salaries, tips, etc.). Tf you are married and your spouse is either a full-
time student or is physically or mentally incapable of caring for himself or herself, you must assume
an earned income of no more than $250 in any one month if you have only one qualified dependent,
or $500 in any one month if you have more than one qualified dependent.
Maximum Election
You can allocate any amount you wish up to a maximum of $5,000 per Plan Year,
subject to the limitations described above.
Termination of Employment
if your employment terminates or you take an unpaid leave of absence, you may submit requests for
reimbursement through the end of the Claims Run-out Period described in the FSA Accounts and
Forfeitures section. Eligible dependent care expenses incurred after your separation but before the
end of the Plan Year will be reimbursed up to the amount remaining in your FSA.
Dependent Care Tax Credit
Tn general, the Dependent Care Tax Credit allows you to reduce the amount of federal income taxes you
owe by giving you a credit against your tax liability. The amount of the credit is a percent of eligible
dependent care expenses. The percentage varies from 20% to 35% depending on your adjusted gross
income. The amount of eligible expenses toward which the credit can be applied is limited to the lesser
of: 1) $3,000 for one child ($6,000 for two or more children), or 2) the earned income of the lower
earning spouse.
You cannot claim a Federal Dependent Care Tax Credit on your income tax return for dependent care
expenses reimbursed from your Dependent Care FSA. Also, amounts reimbursed through your
Dependent Care FSA will reduce, dollar for dollar, the maximum expenses available for determining
the tax credit.
In certain cases, it may be more advantageous for you to claim a tax credit for your dependent care
expenses rather than pay for those expenses through a dependent care reimbursement account. You
may want to consult your tax advisor. Following are some very rough "rules of thumb."
If you are married filing a joint return, do not qualify for the Federal Earned income Credit and
have two or more qualifying dependents, your family adjusted gross income will probably need
to exceed $41,000 before the Dependent Care FSA will yield greater tax savings than the tax
credit. If you qualify for the Federal Earned Tncome Credit, the Dependent Care FSA may
yield greater tax savings even at lower incomes. Also remember that because the limit on
eligible expenses for the tax credit is $6,000 if you have two or more qualifying dependents,
many individuals who use the Dependent Care FSA for the full $5,000 will be able to use the
tax credit on qualifying expenses in excess of $5,000 (up to the $6,000 limit).
if you have only one qualifying dependent and your eligible expenses exceed $3,000, or you
qualify for the Federal Earned income Credit, the Dependent Care FSA may yield greater tax
savings, even at lower income levels. Eligible dependent care expenses for one dependent are
limited to $3,000 for purposes of the tax credit and $5,000 for purposes of the Dependent
Care FSA.
9/I/2003v5 9
Finally, you should be aware that you will be required to report the name, address and tax
identification number of your dependent care provider on your tax return if you use either the tax
credit or the Dependent Care FSA.
ENROLLMF~NT AND ADMINISTRATION
Election Process
Each year you will have the opportunity to re-enroll in the Plan, Health and Dependent Care FS^
elections do not carry forward from one year to the next, Elections must be in writing on the form
provided and received prior to the first day of the period of coverage,
If you are a new employee, you may file an election after meeting the Waiting Period, If you have
been on an FHLA Leave or have been absent due to a period in the Uniformed Services, the leave time
will count toward your satisfaction of the service requirement, New employees must make elections
within 30 days of the satisfaction of the Waiting Period or they will receive the Default Premium
Conversion Election.
A new Eligible Employee who fails to return the required enrollment form will be
deemed to have elected to receive all of his or her compensation in cash. Any
premiums will be paid on an after-tax basis.
Election Changes
Once an election becomes effective, it stays in effect until the following Plan Year. You may not
change your election during the Plan Year except under the following circumstances.
:L) You may revoke an election and make a new election for the remainder of the Plan Year if a
change in status occurs and the election change satisfies the consistency rule defined below. A
new election must be filed within thirty (30) days after the date of the change in status and will be
effective on the Status Change date defined below. A change in status means any of the
following:
· Change in your legal marital status due to marriage, divorce, death of a spouse, legal
separation or annulment.
· Change in the number of your dependents because of birth, adoption, placement for adoption,
or death.
· Change in the employment status of you or your dependent such as termination or
commencement of employment, strike or lockout, commencement or return from an unpaid
leave of absence, change in work site. 'In addition, if you or your dependent has a change in
employment status that affects eligibility under an employer plan, that is a change in status.
· Events that cause a dependent to satisfy or cease to satisfy eligibility requirements of an
employer plan such as gain or loss of student status, reaching the limiting age for benefits or
any similar circumstance.
· Change in residence of you or your dependent.
The consistency rule requires that any election change must be due to and correspond with a
change in status that affects eligibility for coverage under this plan or another employer's plan.
With respect to accident or health plans, a change in status that affects eligibility includes a
change in status that results in an increase or decrease in the number of dependents who may
benefit from coverage under the plan. The consistency rule requires that coverage be added or
dropped only for an individual who has gained or lost eligibility. Further, an election change to
cancel coverage for an individual who gains eligibility under another employer plan satisfies the
9/1/2003v5 10
2)
consistency rule only if that individual actually becomes covered under such plan. Tf you or one of
your dependents becomes eligible for continuation coverage under COBRA or any similar state
law, you may increase the amount of your Premium Conversion election to pay such premiums.
You may revoke an election under a group health plan and make a new election on a prospective
basis that corresponds with the special enrollment rights provided by the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), including the enrollment of both new and pre-
existing dependents.
3)
If you take an FMLA Leave, you may revoke an election for group health coverage and make
another election for the remaining portion of the period of coverage as may be provided for under
the Family and Medical Leave Act.
4)
S)
You may change your election with respect to an accident or health plan if you are required to
provide coverage for a child due to a court order, judgment or decree resulting from a divorce,
legal separation, annulment, or change in legal custody. You may cancel or terminate coverage
for the child under the plan if the court order or decree requires your former spouse or another
person to provide coverage for the child but only if you or your former spouse or another person
subject to the order certifies that such coverage is in fact provided.
If you or a dependent becomes enrolled for Medicare or Medicaid benefits (other than coverage
limited to benefits for distribution of pediatric vaccines), you may make a corresponding election
change to cancel accident or health plan coverage under this Plan for yourself or the dependent.
Conversely, if you or your dependent is not enrolled in an employer-sponsored accident or health
option under this Plan because you were enrolled to receive Medicare or Medicaid benefits and
later become ineligible for such benefits, you may make a corresponding election change to elect
coverage for yourself or your dependent.
6)
If there is a change in the cost or coverage of a benefit (excluding the Health FSA), you may
revoke your election with respect to that benefit and make a new election for the remainder of the
plan year. Changes in cost or coverage include the following:
Automatic changes - If the cost of a benefit you are purchasing with Premium Conversion
increases (or decreases) during the plan year and you are required to make a corresponding
change in your election, the Employer may, on a reasonable and consistent basis,
automatically make a prospective increase (or decrease) in your elections.
Significant cost changes - If the cost of a benefit option significantly increases or decreases
during the plan year, you may make a corresponding prospective election change. You may
commence participation in an option that decreases in cost. You may revoke an election for
an option that increases in cost and, if another option that provides similar coverage is
available under the plan, elect to receive coverage under that option. Cost increase or
decrease for this purpose means a change in the amount of the elective contributions required
under this plan, and may result from actions taken by you or the Employer. With respect to
the dependent care reimbursement only, a dependent care provider who is not your relative
may impose a change in cost which permits you to make a new election. Tn addition, if your
dependent care costs change due to an increase or decrease of hours, you may make a
corresponding change to your dependent care election.
Significant curtailment of coverage - If there is a significant curtailment of coverage under a
benefit option, you may revoke your election and receive coverage on a prospective basis
under another option providing similar coverage. If the curtailment of coverage involves a
loss of coverage, you may drop coverage if no other similar benefit option is available under
the plan. A significant curtailment with a resulting loss of coverage includes: HMO not
available in geographic area of residence, coverage not helpful because lifetime or annual cap
has been reached, a substantial decrease in medical care providers in a PPO network or HMO,
a hospital dropping out of the plan or network, reduction in benefits for a certain illness or
injury for which a participant or family member is currently in a course of treatment, an
9/1/2003v5 1 1
increase in deductible, co-pay, out-of-pocket cost-sharing limit or any other similar
fundamental loss of coverage.
Addition or improvement ora benefit option - Tf a new benefit option is added to the plan, or if
coverage under an existing option is significantly improved during the plan year, you may
revoke your election and elect coverage under the new or improved benefit option on a
prospective basis.
Change in coverage under another employer plan - You may make an election change that is
on account of and correspbnds with a change made by your dependent or former spouse
under another employer plan if: a.) the dependent's or former spouse's election change would
be allowed under this plan, or b.) the dependent's or former spouse's employer plan permits
an election for a plan year that is different from the plan year for this plan.
Loss of coverage under other group health coverage - You may add coverage on a prospective
basis if you or your dependent loses coverage under a group health plan sponsored by a
governmental or educational institution.
Although some of the above events will permit you to revoke or change a Health FSA election, in no
case will you be allowed to reduce your Health FSA election below the amount you have already been
reimbursed (or have claimed and are awaiting reimbursement) for the Plan Year.
Status Changes
An election made as the result of a status change will be effective on the date that the
election form is received by the Plan Administrator. However, an election change
made due to a HTPAA special enrollment right will be effective as of the date required
by HTPAA.
FSA Accounts and Forfeitures
Each time you are paid, contributions you allocate for Health F$^ or Dependent Care FSA are recorded
in a health care account or dependent care account on your behalf. Note these accounts are for
bookkeeping purposes only; no money is actually held in the accounts.
You may submit claims incurred during a Plan Year through the end of the Claims Run-out Period.
Any balance remaininq in your account(s) after the close of the Claims Run-out Period cannot be paid
to you or carried forward into the next Plan Year. You should, therefore, carefully anticipate your
needs for the year before determininq the amount of your election. These forfeitures will be used to
offset the reasonable administrative expenses of the Flexible Benefit Plan.
Claims Run-out Period
You may submit claims for reimbursement from your Health or Dependent Care FSA
for up to 90 days following the end of the Plan Year.
Submitting FSA Claims
In order to be reimbursed, eligible reimbursement account expenses must have been incurred during
the Plan Year and while you are a participant in the FSA. Expenses are considered incurred on the
date the services were provided. You may not receive advance reimbursement for future or projected
expenses. Eligible health care claims will be reimbursed up to the full amount of your election,
reduced by previously paid claims. Eligible dependent care claims will be reimbursed up to the
balance in your Dependent Care FSA at the time reimbursement is requested.
9/1/2003v5 12
You request reimbursement from your FSA by submitting a claim form and documentation showing
the amount, date the expense was incurred, nature of the expense and the name of the provider. You
must include bills, invoices, receipts, or other statements from an independent third party verifying
expenses. Tn addition, you must certify that the expense has not been reimbursed and that you will
not seek reimbursement under any other plan. To be reimbursed for health care expenses, if the
expense is covered by medical insurance, you must first submit the expenses to your insurance
company to obtain whatever reimbursement is available from that source.
The Claims Administrator will make a determination on claims submitted for reimbursement within 30
days of receipt unless a determination cannot be made due to reasons beyond the control of the
Claims Administrator. Tn this case a :LS-day extension is available if you are notified of the extension
within the initial 30-day period. If a determination on a claim cannot be made because you did not
provide sufficient information, you have 45 days from receipt of a request to provide the required
information.
Requests for reimbursement may be submitted through the end of the Claims Run-out Period. You
will be reimbursed directly. Your Employer does not guarantee that the amounts reimbursed through
your Health or Dependent Care FSA will be excludable from gross income for federal or state income
tax purposes. It is your responsibility to determine whether or not each payment you receive is a
qualified excludable expense. You may wish to consult a tax advisor for assistance.
FSA Claim Denial
If you (or your dependent, if any) disagree with the determination of your benefit, you may file a
written appeal with the Claims Administrator. The Claims Administrator is responsible for evaluating
all benefit claims under the Plan. Accordingly, to obtain benefits, you must complete, sign, and
submit to the Claims Administrator a written claim on the Administrator's claim form, available from
the Claims Administrator. Failure to utilize or complete the following claims procedures will result in
you being barred from asserting the claim in any legal proceeding.
Within 30 days after you file your appeal, the Claims Administrator will notify you whether your claim
has been upheld or denied. This period may be extended one time for up to 15 days if the Claims
Administrator determines that such an extension is necessary and provides an extension notice during
the initial 30 day period. Tf an extension is necessary, a decision shall be made within 45 days after
you file your claim, if you fail to provide sufficient information to determine whether benefits are
covered or payable under the Plan, the Claims Administrator will notify you within 30 days after
receipt of the claim and you will have at least 45 days to complete the claim.
Tf the Claims Administrator denies the claim, you will be provided with written or electronic notification
of the following:
· A description of any additional material or information necessary for you to complete your
claim and an explanation of why such material or information is necessary;
· The specific reasons for the denial;
· The specific reference to the Plan provisions on which the denial is based; and,
· An explanation of the claims review procedure for appeal of the denial.
Within 180 days after you receive notice that your claim has been denied, you or your representative
may file a written request to the Claims Administrator to have the Claim Administrator's denial
reviewed by a new decision-maker, the Plan Administrator, who is not a subordinate of the initial
decision-maker. You are entitled to a new decision on appeal, not simply a review of whether the
initial decision was reasonable.
You or your representative may also submit comments, documents, records, and other information
after the filing of the appeal that will be considered even if this information was not submitted or
considered during the initial decision. You or your representative will be entitled to review a copy of
the Plan and any other pertinent documents in the possession of the Employer upon request and free
of charge. The Plan Administrator will render a decision upon review of a claim and communicate
such decision to you within 60 days of the request.
9/~/2OO3v5 13
If the Plan Administrator denies your appeal, you shall be provided with the following information:
· The specific reason or reason for the denial;
· The specific references to the Plan provisions on which the denial is based;
· A statement describing your right to file suit pursuant to ERISA Section 502(a);
· A statement that you are entitled upon request to receive, free of charge, all documents and
records relating to your denial; and
· A statement that "You and your Plan may have voluntary alternative dispute resolution
options, such as mediation. One way to find out what may be available is to contact your local
U.S. Department of Labor Office and your state insurance regulatory agency."
Notwithstanding any. statutory limitations period or conflict of law provision to the contrary, no action
with respect to any benefit under this Plan may be brought more than six months following the date
on which the notice of the adverse benefit determination on review is sent to you.
Unpaid Leave of Absence
If you take an unpaid leave of absence (including an FHLA Leave or USERRA Leave), at your option
you may continue any or all of your benefits under the Plan as long as you make the required
contributions, You have the option of making contributions in the following ways:
Payment Option During a Leave of Absence
PAY AS YOU GO: You can make pre-tax payments during your leave out of any
payments you receive during your leave such as vacation pay, sick pay or wage
continuation. If you are not receiving payments during your leave, or if the payments
end during the leave, you can make payments directly to the Employer on an after-tax
basis. You must make any after-tax payments on or before each pay period during
the unpaid portion of your leave, with all delinquent payments to be made within 30
days of their due date; or
The Employer may enforce a catch-up Pay On Return option if you fail to make agreed upon pay-as-
you go payments, regardless of whether or not an agreement was made in advance of the leave, to
the extent permitted by state law.
If your participation in the Plan terminates during an unpaid leave of absence and you return from
leave during the same Plan Year, your election for that Plan Year will be automatically reinstated on
the same terms and conditions in effect prior to the unpaid leave of absence unless you revoke it in
accordance with election change rules described above. However, you will have no greater right to
benefits for the remainder of the Plan Year than a Participant who has not taken an unpaid leave of
absence. If your coverage under an FSA terminates during an unpaid leave (either because of election
revocation or non-payment of premium) you have two options: reinstate the original amount elected
prior to the leave, and make up the missed contributions through higher salary reductions for each
remaining payroll period during the plan year, or reduce the original election amount by the
contributions missed during the leave, maintaining the same level of salary reduction for subsequent
payroll periods, in either case, expenses incurred while coverage was not in effect are not
reimbursable.
These same options apply if your leave of absence is due to a period of duty in the Uniformed Services
of the United States and that duty lasts more than 3:[ days.
Plan Amendment and Termination
The Flexible Benefit Plan has been designed to comply with all current laws regarding flexible benefit
plans. The Employer may change, amend or terminate the Plan, or any portion thereof, at any time.
If the Plan is terminated, you will not lose your right to benefits accrued prior to Plan termination.
9/1/2003v5 14
This Summary Plan Description merely summarizes the benefits provided pursuant to the Plan, and is
not the legally controlling document. All determinations regarding benefit entitlement and Plan
provisions are based upon the actual Plan documents, which are available for inspection at the office
of the Plan Administrator.
9/1/2003v5 1 5
GENERAL INFORMATION
Name of Plan:
City of Columbia Heights Flexible Benefit Plan
Plan Sponsor:
City of Columbia Heights
590 - 40th Avenue Northeast
Columbia Heights, MN 55421-3878
Plan Administrator:
City of Columbia Heights
590 - 40th Avenue Northeast
Columbia Heights, MN 5542:[-3878
(763) 706-3609
Employer Identification Number: 4:[-6005069
Claims Administrator:
Flex Compensation, Inc.
P.O. Box 220
Minneapolis, MN 55440-0220
(952) 544-8332 / (800) 333-5597
Privacy Officers:
Assistant to the City Manager,
Human Resources Director
City of Columbia Heights
590 - 40th Avenue Northeast
Columbia Heights, MN 5542:[-3878
(763) 706-3609
Plan Number: 590
Type of Plan: The Flexible Benefit Plan is a cafeteria plan under Section :[25 of the internal Revenue
Code, allowing a choice between cash and certain qualified benefits.
The Plan is unfunded, with contributions and benefits paid out of the general assets of the Employer
and therefore has no trustee.
Plan Year: .lanuary 1 through December 3:[
Funding: FSA benefits are entirely self-funded by the Employer, through salary reduction
contributions. The medical and dental insurance coverage purchased through the Premium
Conversion option of this Plan is provided through insurance contracts, though the Premium
Conversion benefit under this Plan is not insured.
For questions or service of legal process contact the Plan Administrator at:
Attn: City Manager
City of Columbia Heights
590 - 40th Avenue Northeast
Columbia Heights, MN 5542:L-3878
(763) 706-3609
9/1/2003v5 16
FLEXIBLE BENEFIT PLAN DOCUMENT
9/1/2003v5
TABLE OF CONTENTS
ARTICLE I: INTRODUCTION ......................................... Section 1.1 Purpose ............................................
Section 1.2 Rules of Construction ...................................
ARTICLE II: DEFINITIONS ........................................... Section 2.1 Code ..............................................
Section 2.2 Compensation ........................................
Section 2.3 Dependent ...........................................
Section 2.4 Dependent Care Account .................................
Section 2.5 Dependent Care Expense .................................
Section 2.6 Effective Date ........................................
Section 2.7 Election ............................................
Section 2.8 Employer ...........................................
Section 2.9 FMLA Leave .........................................
Section 2.10 Gainfully Employed ...................................
Section 2.11 Health Care Account ...................................
Section 2.12 Health Expense .......................................
Section 2.13 Highly Compensated Employee ............................
Section 2.14 Highly Compensated Individual ............................
Section 2.15 Key Employee .......................................
Section 2.16 Optional Benefits .....................................
Section 2.17 Participant ..........................................
Section 2.18 Period of Coverage ....................................
Section 2.19 Plan ..............................................
Section 2.20 Plan Administrator ....................................
Section 2.21 Plan Year ..........................................
Section 2.22 Qualified Benefit .....................................
Section 2.23 Qualified Employee ....................................
Section 2.24 Qualifying Dependent ..................................
Section 2.25 Summary_ Pages ......................................
Section 2.26 Student ............................................
Section 2.27 USERRA Leave ......................................
ARTICLE III: ELIGIBILITY AND PARTICIPATION Section 3.1 Eligibili _ty ...........................................
Section 3.2 Commencement of Participation ............................
Section 3.3 Termination of Participation ...............................
Section 3.4 Participation during Unpaid Leave ...........................
Section 3.5 Continuation of Coverage .................................
ARTICLE IV: CONTRIBUTIONS .......................................
Section 4.1 Salary Reduction Contributions .............................
Section 4.2 Benefit Credits ........................................
9/1/2003v5
Section 4.3 Maximum Contribution ..................................
ARTICLE V: BENEFITS .............................................
Section 5.1 Benefit Options .......................................
Section 5.2 Benefit Descriptions .....................................
Section 5.3 Limitation of Benefits ...................................
Section 5.4 Claims Procedure ..................................... :t. 0
Section 5.5 Procedure for Filing a Claim .............................. :1. 0
Section 5.6 Review ............................................ ~_0
Section 5.7 Forfeitures .......................................... 13
ARTICLE VI: ELECTION PROCEDURES ................................ 13
Section 6.1 Election Form and Timing ............................... 13
Section 6.2 Elections Irrevocable ................................... :1.4
Section 6.3 Failure to Elect .......................................
Section 6.4 Automatic Termination of Election ......................... :1. 7
Section 6.5 Requalifying Employees ................................ 17
ARTICLE VII: PREMIUM CONVERSION ................................ ~. 7
Section 7.1 Applicability of this Article .............................. :1. ?
Section 7.2 Premium Conversion ................................... :1. 7
ARTICLE VIII: HEALTH CARE FLEXIBLE SPENDING ACCOUNT ..............
Section 8.1 Applicabili _ty of this Article ..............................
Section 8.2 Purpose ........................................... 18
Section 8.3 Health Care Account ................................... 1
Section 8.4 Claims for Reimbursement ............................... ~_ 8
Section 8.5 Claims for Reimbursement Using and Electronic Payment Card ....... :1_ 9
Section 8.6 Reimbursement of Expense ............................... 2
Section 8.7 Maximum Reimbursement ............................... 2
Section 8.8 Minimum Election ..................................... 21
Section 8.9 Revocation of Election ................................. 2
Section 8.10 Health Insurance Portability and Accountabili _ty Act of 1996 ........ 2
ARTICLE IX: DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT ............ 24
Section 9.1 Applicabili _ty of this Article .............................. 24
Section 9.2 Purpose ........................................... 24
Section 9.3 Dependent Care Account ................................ 2 5
Section 9.4 Claims for Reimbursement ............................... 2 5
Section 9.5 Reimbursement of Expense .............................. 2 5
Section 9.6 Maximum Reimbursement ............................... 2 6
Section 9.7 Minimum Election ....................................
ARTICLE X: ADMINISTRATION ...................................... 2 6
Section 10.1 Plan Administrator ................................... 2
Section 10.2 Powers of the Plan Administrator .......................... 2
Section 10.3 Actions of the Plan Administrator ......................... 2 7
Section 10.4 Information to be Furnished ............................. 2 7
9/1/2003v5
Section
Section
Section
Section
ARTICLE XI:
Section
Section
Section
Section
Section
Section
10.5 Nondiscrimination .................................... 2 7
10.6 Changes by Administrator .............................. 2 8
10.7 Reporting and Disclosure ............................... 2 8
10.8 Indemnification of the Administrator ....................... 2 8
MISCELLANEOUS ...................................... 2 8
11.1 Amendment and Termination ............................ 2 8
11.2 Plan Not a Contract of Employment ........................ 2 9
11.3 Funding .......................................... 2 9
11.4 No Guarantee of Tax Consequences ........................ 2 5
11.5 Plan Benefits May Not be Assigned ........................ 2 9
11.6 Governing Law ...................................... 2 ~
9/1/2003v5
FLEXIBLE BENEFIT PLAN
ARTICLE I: INTRODUCTION
Section 1.1 Purpose. The purpose of the Plan is to provide Participants with a choice
between cash and certain "qualified benefits" as defined in Section 125 of the Code. The Plan is
intended to qualify as a "Cafeteria Plan" under Section 125 of the Code so that Optional Benefits
a Participant elects to receive under the Plan will be eligible for exclusion from the Participant's
gross income under Section 125(a) of the Code. The Employer intends Plan terms, including
those relating to coverage and benefits, to be legally enforceable. The Plan shall be maintained
for the exclusive benefit of Qualified Employees.
Section 1.2 Rules of Construction. The Plan shall be construed in accordance with the
following rules:
(a)
Headings at the begilming of articles and sections are provided for convenience of
reference and shall not influence construction of the Plan.
(b)
Capitalized words and pltrases shall have the meaning defined in the Plan unless a
different meaning is plainly required by the context.
(c)
Except as otherwise indicated by context, the masculine gender shall include the
feminine, the singular shall include the plural, and vice versa.
ARTICLE II: DEFINITIONS
Section 2.1 Code means the Internal Revenue Code of 1986, as amended, and its
regulations.
Section 2.2 Compensation means the total wages and salary, including salary reduction
amounts under Code sections 132(f), 125, 401(k), 403(b) 457(b), overtime payments and bonus
payments, which are paid by the Employer to a Participant during the Plan Year.
Section 2.3 Dependent for purposes of Premium Conversion under Article VII and
Health Care Flexible Spending Account (Health FSA) under Article VIII means the spouse of a
Participant or any individual who is a dependent of the Participant as defined in Section 152 of
the Code and any Alternate Recipient under a Qualified Medical Child Support Order
("QMSCO") as defined in ERISA Section 609.
Section 2.4 Dependent Care Account means the account established and maintained by
the Employer under Article IX, to record a Participant's interest in the Plan.
Section 2.5 Dependent Care Expense for the purpose of Dependent Care Flexible
Spending Account (Dependent Care FSA) under Article IX, means an amount paid or incurred
by the Participant for the care of a Qualifying Dependent or for related household services, but
9/1/2003v5 1
only if such expenses were incurred to enable the Participant (and spouse if applicable) to be
Gainfully Employed during the period in which the expenses were incurred. Expenses for
services delivered outside of the Participant's home for a Qualifying. Dependent described in
Section 2.22(b) shall be Dependent Care Expenses only if such Qualifying Dependent regularly
spends at least eight (8) hours per day in the Participant's household. Expenses shall be
considered incurred on the date services are provided. Eligible expenses do not include: amounts
paid for food, clothing or education unless such expenses are incidental to and inseparable from
the care provided; educational expenses for a child in kindergarten or higher grade; or expenses
for services at a camp where the Qualifying Dependent stays overnight.
Eligible expenses do not include amounts paid to:
(a)
A dependent care facility or person providing care for more than six (6) nonresident
individuals which does not comply with all applicable laws and regulations of the state or
local government in which it is located; or
(b) A child of the Participant under the age of nineteen (19) at the close of the Plan Year; or
(c)
Any other individual which the Participant or the Participant's spouse may claim as a
dependent under Section 151(c) of the Code.
Section 2.6 Effective Date means the Effective Date as shown in the Summary Pages.
Section 2.7 Election means an election pursuant to Article VI by a Qualified Employee
to participate in the Plan and the allocation by the Participant of elective contributions made on
the Participant's behalf among Optional Benefits available under the Plan.
Section 2.8 Employer means the entity named as the Employer in the Summary Pages, or
any successor that agrees to continue the Plan and any affiliated employer which adopts the Plan.
Affiliated employer in this regard means another corporation which is a member of a controlled
group of corporations, any trade or business under common control or an affiliated service group.
Section 2.9 FMLA Leave means a leave of absence that the Employer is required to
extend to a Participant under the provisions of the Family and Medical Leave Act of 1993.
Section 2.10 Gainfully Employed for the purpose of Dependent Care Reimbursement
under Article IX, means the earning of income which is not nominal reimbursement for
volunteer work, or the period of active search for gainful employment.
Section 2.11 Health Care Account means the account established and maintained by the
Employer under Article VIII, to record a Participant's interest in the Plan.
Section 2.12 Health Expense for the purpose of Health Care Flexible Spending Account
(Health FSA) under Article VIII, means an expense incurred during a Period of Coverage by a
Participant or by the Dependent of a Participant for medical care as defined in Section 213(d) of
9/1/2003v5 2
the Code, excluding any insurance premiums for health coverage, excluding expenses for long
term care and excluding any specific expenses described in the exclusions section of the
Summary Pages. Expenses are considered incurred on the date services are rendered. Expenses
are eligible only to the extent such expense have not been reimbursed through insurance or some
other source and the participant agrees not to seek such reimbursement. Medical care generally
refers to the diagnosis, cure, treatment, or prevention of disease or for the purpose of affecting
any structure or function of the body and includes transportation expenses primarily for and
essential to medical care.
Section 2.13 Highly Compensated Employee means the following for each type of
benefit described below:
(a)
a highly compensated employee for purposes of applicable nondiscrimination
requirements of Section 125 of the Code means an employee who is highly compensated
as defined in Section 125(e) of the Code,
(b)
for Health Care Flexible Spending Account under Article VIII, a highly compensated
employee for purposes of applicable nondiscrimination requirements of Section 105 of
the Code means an employee who is highly compensated as defined in Section 105(h) of
the Code,
(c)
for Dependent Care Flexible Spending Account under Article IX, a highly compensated
employee for purposes of applicable nondiscrimination requirements of Section 129 of
the Code means an employee who is highly compensated as defined in Section 414(c0 of
the Code.
Section 2.14 Highly Compensated Individual for pm-poses of Section 125 and its
nondiscrimination requirements as to eligibility shall include an officer, a shareholder owning
more than 5 percent of the voting power or value of all classes of stock of the Employer, a highly
compensated employee or a spouse or dependent of any of the above.
Section 2.15 Key Employee means any person who is a key employee as defined in
Section 416(i)(1) of the Code.
Section 2.16 Optional Benefits means the following employee benefit plan(s) offered by
the Employer:
(a) Premium Conversion as described in Article VII
(b) Health Care Flexible Spending Account (Health FSA) as described in Article VIII
(c)
Dependent Care Flexible Spending Account (Dependent Care FSA) as described in
Article IX
if adopted by the Employer as shown in the Summary Pages.
9/1/2003v5 3
Section 2.17 Participant means a Qualified Employee who has satisfied the eligibility
requirements provided in Article III and who makes an Election to participate in the Plan.
Section 2.18 Period of Coverage means the time period commencing on the first day of
the Plan Year except for:
(a)
A new or requalifying Participant who satisfies the participation requirements of Article
III during the Plan Year,
(b)
A Participant who, during a Plan Year, satisfies the conditions of an exception to the
in'evocability requirement, as such exceptions are described in Section 6.2, or
(c) A Participant whose participation in the Plan terminates during the Plan Year in
accordance with Section 3.3,
in which case the Period of Coverage shall be the time period commencing on:
1)
For a Participant described in subsection (a) above, the date of hire if the
Participant files an Election pursuant to Section 6.1 within a reasonable period of
time ending before Compensation for the first pay period is due unless an
alternate date is shown on the Summary Pages, or
2)
For a Participant described in subsection (b) above, the mid-year entry date as
shown in the Summary Pages following receipt by the Plan Administrator of an
Election by the Participant;
and ending on the date participation in the Plan terminates in accordance with Section 3.3.
Section 2.19 Plan means the Flexible Benefit Plan as set forth herein, and as amended
from time to time.
Section 2.20 Plan Administrator means the Employer or such other person or persons
designated to administer the Plan pursuant to gn-ticle X.
Section 2.21 Plan Year means the period designated as the Plan Year as shown in the
Summary Pages.
Section 2.22 Qualified Benefit means a benefit provided under an Employer sponsored
benefit plan that is a qualified benefit under section 125(f).
Section 2.23 Qualified Employee means an individual who receives Compensation from
the Employer and who meets the eligibility requirements shown in the Summary Pages and who
is not 1) an owner-employee of the Employer as defined in Section 401(c)(1)(B)(3) of the Code,
or 2) a shareholder if the Employer is a subchapter S corporation as defined in Section 1361(a) of
9/1/2003v5 4
the Code.
The term Qualified Employee does not an individual who is a leased employee, meaning
any person who is an employee of the Employer and who provides services to an Employer
where: 1) such services are provided pursuant to an agreement between an Employer and any
other person (leasing organization); 2) such person has perfonx~ed such services for the Employer
on a substantially full time basis for a period of at least one year pursuant to Code Section
414(n)(2); and 3) such services are performed under primary direction or control by the recipient.
Bargaining unit employees are eligible only if there was good faith bargaining about
cafeteria plan benefits between the Employer and the employees' representative regarding
participation in the Plan.
Section 2.24 Quali_fying Dependent. For purposes of the Dependent Care Flexible
Spending Account under Article IX means any individual who is,
(a)
A child of the Participant under the age of thirteen (13) and for whom the Participant is
entitled to an exemption under Section 151(c) of the Code, or
(b)
A dependent or spouse of the Participant who is physically or mentally incapable of self-
care.
(c)
Where the parents are divorced, legally separated or separated under a written separation
agreement, a child (as defined in Section 151 (c)(3) of the Code) who:
1) is under age 13 or is physically or mentally incapable of self-care,
2)
receives over half of his or her support during the calendar year from his or her
parents who are divorced or legally separated under a decree of divorce or
separate maintenance or who are separated under a written separation agreement,
and
3)
is in the custody of one or both of his or her parents for more than one-half of the
calendar year,
is treated for any taxable year beginning in the calendar year as a Qualifying Dependent
of that parent who has custody for a longer period during the calendar year than the other
parent. Accordingly, a child may be treated as the Qualifying Dependent of a parent even
though that parent is not entitled to a dependency exemption for the child under Code
Section 152. Only one parent may treat the child as a Qualifying Dependent.
Section 2.25 Summary Pages means the elections made by a particular employer in
adopting this Plan, attached hereto as "Summary Pages" and incorporated herein by reference.
Section 2.26 Student means an individual who, during each of five (5) calendar months
during a taxable year, is a full-time student at an educational organization which normally
9/1/2003v5 5
maintains a regular faculty and curriculum and normally has a regularly enrolled body of
students in attendance at the place where its educational activities are regularly carried on.
Section 2.27 USERRA Leave means a leave of absence that the Employer is required to
extend to a Participant under the provisions of the Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended from time to time. A Participant returning to
employment with the Employer within sixty days of an honorable discharge from the military
under the terms of a USERRA Leave shall have elections and benefits restored to him at the
same level and type that were in effect at the time when the USERRA Leave began, as well as
any benefits that began during the leave of absence for which the Participant would have
reasonably become eligible.
ARTICLE III: ELIGIBILITY AND PARTICIPATION
Section 3.1 Eligibili _ty. A Qualified Employee will become eligible to participate in the
Plan on the mid-year entry date shown in the Summary Pages. If there is a length of service
requirement shown in the Summary Pages, time that a Qualified Employee spends on an FMLA
Leave or USERRA Leave will count toward fulfilling the length of such service requirement.
Section 3.2 Commencement of Participation. Participation commences on the first day
of a Period of Coverage for which an Election is filed in accordance with Article VI. Except as
provided below, an Election shall be effective on the first day of the next Plan Year.
If a new Qualified Employee (or a Qualified Employee who has an Election change as
provided in Section 6.2) files an Election during the Plan Year in accordance with Article VI,
such Election shall be effective as of the mid-year entry date shown in the Summary Pages.
Section 3.3 Termination of Participation. A Participant will cease to be a Participant in
the Plan on the earliest of:
(a)
the date on which any Optional Benefit with respect to which the Participant has an
Election terminates, but only to the extent of the Participant's participation in that
Optional Benefit,
(b) the date the Participant is no longer a Qualified Employee,
(c)
the first day of a Period of Coverage for which an Election is revoked pursuant to Section
6.2,
(d) the last day of the Plan Year for which an Election is filed,
(e) the date required Employee contributions cease, or
(f) the date on which the Plan terminates.
9/1/2003v5 6
Termination of participation in this Plan shall not prevent a former Participant from continued
coverage or benefits under respective Optional Benefit plans (as provided in Sections 3.4 and
3.5) if and to the extent provided by such plans or as authorized by any applicable state or federal
law.
Section 3.4 Participation during Unpaid Leave. A Participant who is not at work
because of an unpaid leave of absence (including an FMLA Leave or USERRA Leave), may, at
the Participant's option, continue any and all Optional Benefits under the Plan that such
Participant elected for the Plan Year during the period of the absence, provided that, the
Participant makes all required contributions for such Optional Benefits. Such Participant may
choose from among any of the payment options adopted in the Summary Pages, including the
following:
(a)
PRE-PAY: At the Participant's request, paying the amounts through salary reduction that
will become due during the leave out of one or more of the Participant's paychecks
preceding the leave;
(b)
PAY AS YOU GO: Pre-tax salary reduction contributions will be taken from payments
to the Participant (i.e., sick pay, wage continuation, short term disability benefits or
vacation pay) during the leave, or if the Participant receives no such payments (or at the
time at which such payments cease) the Participant may remit after-tax payments to the
Employer on or before each pay period for which the contributions would have been
deducted from the Participant's paycheck if the leave had not been taken, provided that
any delinquent payments must be made within thirty (30) days of their due date;
(c)
PAY ON RETURN: From paychecks following the leave provided that all contributions
are made within the Plan Year in which the Election occurs and provided that the
Participant and Employer agree to this payment option before the unpaid leave
commences. In addition, the Employer may enforce this catch-up Pay On Return option
for a Participant who fails to make agreed upon pay-as-you go payments, regardless of
whether or not an agreement was made in advance of the leave, to the extent permitted
under state law.
A Participant whose participation in the Plan terminated because of an Employer
approved unpaid leave of absence, and who returns from leave during the same Plan Year shall
have their Election for that Plan Year automatically reinstated on the same terrns and conditions
in effect prior to the unpaid leave of absence provided, however, that the Participant shall have
no greater right to benefits for the remainder of the Plan Year than a Participant who has not
taken an unpaid leave of absence, unless such Election is revoked in accordance with Section
6.2. A Participant whose coverage under a FSA terminates during an unpaid leave (either
because of election revocation or non-payment of premium) has two options: reinstate the
original amount elected prior to the leave, and make up the missed contributions through higher
pre-tax salary reductions after return from the leave, or reduce the original election amount by
the contributions missed during the leave, thereby maintaining the same payroll deduction
9/1/2003v5 7
amount each payroll period following return from the leave. In either case, expenses incurred
while coverage was not in effect are not reimbursable.
Section 3.5 Continuation of Coverage. For purposes of the Health Care Flexible Spending
Account described in Article VIII only, a Participant whose coverage under such Optional
Benefit would otherwise terminate may elect to continue coverage under this Optional Benefit in
accordance with the rules of Section 4980B of the Code. A Participant who elects to continue
coverage under this Optional Benefit shall pay to the Employer an amount designated by the
Employer up to the maximum amount permitted under Section 4980B of the Code.
A Participant who takes an FMLA Leave may continue coverage under the provisions of
the Family and Medical Leave Act of 1993. For purposes of applying the provisions of Code
Section 4980B, a Participant who takes an FMLA Leave and who does not return to service as a
Qualified Employee at the expiration of the FMLA Leave, will become subject to the provisions
of Section 4980B at the expiration of the FMLA Leave.
A Participant who takes a USERRA Leave for less than 31 days may continue on such
benefit plans on the same terms as active employees. A Participant who takes a USERRA Leave
for 31 days or more may continue coverage under the provisions of USERRA and Code Section
4980B, making contributions at the rate charged for continuation coverage for other Participants,
as determined by the Employer up to the maximum amount permitted under Section 4980B of
the Code.
A Participant on FMLA Leave or USERRA Leave who does not elect to continue
participation in the Health Care Reimbursement Optional Benefit under this Section 3.5 shall not
be entitled to payment or reimbursement of Health Expenses incurred during his FMLA Leave or
USERRA Leave, nor shall such Participant be entitled to retroactively elect coverage of such
expenses under the Plan upon his reinstatement in the Plan.
In lieu of the foregoing continuation coverage provisions, the Employer may establish a
policy whereby Participants can waive continuation of coverage and choose instead to extend
coverage by self paying the remaining premiums, at an amount determined by the Employer. In
addition to the foregoing, the Plan will permit a Participant to continue coverage in accordance
with any other provision of applicable law requiring such continuation.
This Section 3.5 shall apply only the Health Care Reimbursement Optional Benefit
described in Article VIII.
ARTICLE IV: CONTRIBUTIONS
Section 4.1 Salary Reduction Contributions. A Participant may elect in accordance with
the election procedures described in Article VI to receive his or her full Compensation for any
Period of Coverage in cash, or to have a portion of such Compensation applied by the Employer
toward the Participant's share of the cost of Optional Benefits available under Article V and as
elected by the Employer in the Surmnary Pages. If so elected, the Participant's Compensation
9/1/2003v5 8
will be reduced, and an amount equal to the reduction will be allocated by the Employer to the
Optional Benefits designated by the Participant. Pro rata amounts of the total salary reduction
election will be deducted from a Participant's Compensation at least once per month but not more
frequently than once per pay period unless the Employer adopts a specific policy which provides
for contributions on a periodic basis other than level pro rata amounts.
The amount of the salary reduction election for the premium conversion option described
in Section 7.2 shall be the Participant's share of the cost of Employer sponsored group health
coverage or other Qualified Benefits, as determined by the Employer, taking into account any
benefit credits available to the Participant under Section 4.2. If the employee's share of the cost
for such benefit changes during the Period of Coverage, a Participant's salary reduction for such
benefit(s) may be adjusted automatically in accordance with the change in cost.
Section 4.2 Benefit Credits. The Employer may make available to ~Participants elective
Employer provided benefit credits which the Employer shall allocate to offset the cost of
Optional Benefits elected by the Participant, or pay to the Participant as additional taxable
Compensation as defined in the Summary Pages. The amount of benefit credits available under
this Section, if any, is shown in the Surmr~ary Pages and may change in subsequent Plan Years
provided that the new amount is determined before the beginning of the Plan Year. Benefit
Credits shall be earned in equal pro rata amounts on the last day of each payroll period
throughout the Period of Coverage.
Benefit Credits in excess of the cost of Optional Benefits elected by the Participant may
be forfeited or distributed in whole or in part to the Participant, as selected by the Employer in
the Summary Pages.
Section 4.3 Maximum Contribution. The maximum amount of Employer contributions
under this Plan for any Participant for a Plan Year shall be the sum of the maximum salary
reduction contribution and benefit credits which are shown in the Summary Pages.
ARTICLE V: BENEFITS
Section 5.1 Benefit Options. A Participant may allocate elective contributions as
provided in Article IV between cash and the Optional Benefits in Article II, as adopted by the
Employer as shown in the Summary Pages.
Section 5.2 Benefit Descriptions. While the election to receive one or more benefits may
be made under this Plan, the benefits will be provided in accordance with the plan documents or
contracts governing the respective benefits. The governing documents which describe the types
and amounts of benefits available, the requirements for participation, procedures for submitting
claims, and the other terms and conditions of coverage for each benefit are incorporated into this
Plan by reference.
Section 5.3 Limitation of Benefits. No Optional Benefits shall be paid to or on behalf of
a Participant in excess of the amount elected by the Participant under the Plan. In no case shall
9/1/2003v5 9
the Plan allow a Participant to carry over unused contributions from one Plan Year to a
subsequent Plan Year, or allow contributions from one Plan Year to purchase a Qualified Benefit
incurred in a subsequent Plan Year.
Section 5.4 Claims Procedure. Claims and reimbursements for Optional Benefits shall
be administered consistent with the claims procedures for the applicable Optional Benefit, as set
forth in the plan documents and/or summary plan description for the Optional Benefit. If a claim
for reimbursement under this Plan is wholly or partially denied, claims shall be administered in
accordance with the claims procedure set forth in Sections 5.5 and 5.6 below. A Claimant who
fails to utilize or complete the following claims procedures shall not have exhausted all
administrative remedies under the Plan and shall be barred from asserting the claim in any legal
proceeding.
Section 5.5 Procedure for Filing a Claim. The plan sponsor has established the following
procedures for bringing claims and appeals. Though it conforms with ERISA's procedures, it
should not be interpreted to impose any other ERISA requirements on the plans offered here that
are not subject to ERISA. In order for a cormuunication from a Claimant (as defined in
paragraph (b) below) to constitute a valid claim, it must satisfy the following paragraphs (a) and
(b) of this Section 5.5.
(a)
(b)
(a)
(b)
Any claim submitted by a Claimant must be in writing on the appropriate claim form (or
in such other manner acceptable to the Plan Administrator) and delivered, along with any
supporting comments, documents, records and other information, to the Plan
Administrator in person, or by mail postage paid, to the address of the Plan Administrator
provided in the Summary Plan Description.
Claims and appeals of denied claims may be pursued by a Participant or an authorized
representative of the Participant (each of whom will be referred to in this Article as a
"Claimant"). However, the Plan Administrator may establish reasonable procedures for
determining whether an individual has been authorized to act on behalf of a Participant.
Section 5.6 Review.
Initial Claim Review - The initial claim review will be conducted by the Plan
Administrator, with or without the presence of the Claimant, as determined by the Plan
Administrator in its discretion. The Plan Administrator will consider the applicable terms
and provisions of the Plan and amendments to the Plan, information and evidence that is
presented by the Claimant and any other information it deems relevant. In reviewing the
Claim, the Plan Administrator will also consider and be consistent with prior
determinations of claims from other Claimants who were similarly situated and which
have been processed through the Plan's claims and appeals procedures within the past 24
months, provided that the Plan Achuinistrator will recognize any applicable advances in
medical technology or changes in tax law when making such comparisons.
Initial Benefit Determination
9/1/2003v5 10
(c)
(d)
1)
The Plan Administrator will notify the Claimant of the Plan Administrator's
determination within a reasonable period of time, but in any event (except as
described in paragraph (2) below) within 30 days after receipt of the claim by the
Plan Administrator.
2)
The Plan Administrator may extend the period for making the benefit
determination by 15 days if it determines that such an extension is necessary due
to matters beyond the control of the Plan and if it notifies the Claimant, prior to
the expiration of the initial-30 day period, of the circumstances requiring the
extension of time and the date by which the Plan Administrator expects to render
a decision. If such an extension is necessary due to a failure of the Claimant to
submit the information necessary to decide the claim, the notice of extension will
specifically describe the required information, the Claimant will be afforded at
least 45 days from receipt of the notice within which to provide the specified
information, and the period in which the Plan Administrator is required to make a
decision will be tolled from the date on which the notification is sent to the
Claimant until the Claimant adequately responds to the request for additional
information.
Manner and Content of Notification of Adverse Benefit Determination
1) The Plan Administrator will provide a Claimant with written or electronic notice
2)
of any adverse benefit determination, in accordance with applicable Department
of Labor regulations.
The notification will set forth in a manner calculated to be understood by the
Claimant:
(i) the specific reason or reasons for the adverse benefit determination;
(ii) reference to the specific provision(s) of the Plan on which
determination is based;
(iii)
(iv)
Procedure for
the
description of any additional material or information necessary for the
Claimant to perfect the claim and an explanation of why such material or
information is necessary; and
a description of the Plan's review procedures and the time limits applicable
to such procedures, including a statement of the Claimant's right to bring a
civil action under Section 502(a) of ERISA following an adverse benefit
determination on review.
Filing a Review of an Adverse Benefit Determination
1)
Any appeal of an adverse benefit determination by a Claimant must be brought to
the Plan Administrator within 180 days after receipt of the notice of the adverse
benefit determination. Failure to appeal within such 180-day period will be
deemed to be a failure to exhaust all administrative remedies under the Plan. The
appeal must be in writing utilizing the appropriate form provided by the Plan
Administrator (or in such other manner acceptable to the Plan Administrator);
9/1/2003v5 11
(e)
(f)
(g)
provided, however, that if the Plan Administrator does not provide the appropriate
form, no particular form is required to be utilized by the Claimant. The appeal
must be filed with the Plan Administrator at the address listed in the Summary
Plan Description.
2)
A Claimant will have the opportunity to submit written comments, documents,
records and other information relating to the claim.
Review Procedure for Adverse Benefit Determinations
1)
The Plan Administrator will provide a review that takes into account all
comnaents, documents, records and other information submitted by the Claimant
without regard to whether such infonnation was submitted or considered in the
initial benefit detemfination.
2)
The Claimant will be provided, upon request and free of charge, reasonable access
to and copies of all relevant documents.
3)
The review procedure may not require more than two levels of appeals of an
adverse benefit determination.
4)
The review of the adverse benefit deterrnination will not accord deference to the
initial determination made by the Plan Administrator.
5)
The Plan Administrator must designate an individual to conduct the review
process who is neither the individual who made the adverse benefit determination
that is the subject of the appeal nor the subordinate of such individual.
Timing and Notification of Benefit Determination on Review - The Plan Administrator
will notify the Claimant within a reasonable period of time, but in any event within 60
days after the Claimant's request for review. If more than one appeal is required to make
a final benefit determination of a denied claim, such notice will be provided, with respect
to any one of such two appeals, not later than 30 days after receipt by the Plan
Administrator of the Claimant's request for a review.
Manner and Content of Notification of Benefit Determination on Review
1)
The Plan Administrator will provide a written or electronic notice of the Plan's
benefit determination on review, in accordance with applicable Department of
Labor regulations.
2) The notification will set forth:
(i) the specific reason or reasons for the adverse benefit determination;
(ii) reference to the specific provision(s) of the Plan on which the
determination is based;
9/1/2003v5 12
(iii)
a statement that the Claimant is entitled to receive, upon request and free
of charge, reasonable access to and copies of all relevant docmr~ents;
(iv)
a statement of the Claimant's right to bring a civil action under Section
502(a) of ERISA following an adverse benefit determination on review;
and
(v)
a statement that the Claimant may have other voluntary alternative dispute
resolution options, such as mediation and that the Claimant may contact
the local U.S. Department of Labor office and state regulatory agency to
find out what options are available.
(h)
Limitation of Actions - Notwithstanding any statutory limitations period or conflict of
law provision to the contrary, no action with respect to any benefit under this Plan may
be brought more than six months following the date on which the notice of the adverse
benefit determination on review is sent to the Claimant.
Section 5.7 Forfeitures. If a Participant has not used all amounts available for benefits to
the Participant under any Optional Benefit for a Period of Coverage in accordance with the terms
thereof, any remaining balance shall be forfeited by the Participant, who shall have no further
claim thereto. Such forfeitures shall be used to offset the reasonable administrative costs of the
Plan.
ARTICLE VI: ELECTION PROCEDURES
Section 6.1 Election' Forna and Timing. Elections must be in writing, shall specify the
Optional Benefits to which elective contributions will be allocated and designate the amount, if
any, of reimbursement account contributions. The Plan Administrator shall make available to all
Qualified Employees a form in writing or electronic on which to make benefit elections during
an election period. Except as described in subsections (a), (b) and (c) below, the election period
shall commence no earlier than the ninety (90) day period immediately preceding the first day of
the Plan Year.
(a)
The election period for a new Qualified Employee shall be a thirty (30) consecutive day
period which cmm~aences on the date of satisfaction of the eligibility requirements as
defined in Section 3.1
(b)
The election period for a Qualified Employee who makes an Election change as defined
in Section 6.2 shall be a thirty (30) consecutive day period which cormr~ences on the date
of the election change event.
(c)
The election period for a Qualified Employee who returns to employment following a
FMLA Leave or USERRA Leave shall be a thirty (30) consecutive day period which
commences on the date of return to employment. Qualified Employees who are on
FMLA or USERRA Leave during the annual open enrollment period shall also have the
option of enrolling during such open enrollment period for the next Plan Year.
9/1/2003v5 13
The designated election form must be received by the Plan Administrator prior to the first
day of the Plan Year. Except as described in subsections (a), (b) and (c) above, Elections
received after the first day of the Plan Year shall be void.
Section 6.2 Elections Irrevocable. Once an Election becomes effective, such Election
shall be irrevocable for the remainder of the Plan Year except under the following circumstances.
(a)
Special enrollment rights - A Participant may revoke an election under a group health
plan and make a new election to apply only for the remaining period of coverage that
corresponds with the special em'ollment rights provided by the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), including the em'ollment of both
new and pre-existing Dependents.
(b)
Changes in status - A Participant may revoke an Election for a Qualified Benefit and
make a new Election for the remainder of the Plan Year if a change in status occurs and
the election change satisfies the consistency rule defined below. A new election must be
filed with the Plan Administrator of this Plan, within thirty (30) days after the date of the
change in status. For purposes of this paragraph, a change in status means any of the
following:
1)
2)
3)
4)
5)
6)
Change in legal marital status of the Participant through marriage, divorce, death
of a spouse, legal separation and annulment.
Change in number of Dependents of the Participant through birth, adoption,
placement for adoption, and death.
Change in the employment status of the Participant or Dependent including his or
her termination or commencement of employment, loss of work due to strike or
lockout, commencement or return from an unpaid leave of absence, change from
full-time to part-time status or change in work site. In addition, if a Participant or
Dependent has a change in employment status that affects eligibility under an
employer plan operated in conjunction with this Plan, that is a change in status
under this paragraph.
Events that cause a Dependent to satisfy or cease to satisfy eligibility
requirements of an employer plan, including achieving or losing student status,
reaching the limiting age for benefits or any similar circumstance.
Change in residence of the Participant or Dependent which renders the person
unable to use the qualified benefit plan (such as if one relocated outside of the
HMO service area).
Change in status shall also include other events as may be permitted under
regulations and rulings of the Internal Revenue Service.
The consistency rule requires that Election changes must be due to and correspond with a
change in status that affects eligibility for coverage under an employer's plan.
With respect to accident or health plans and group term life insurance, a change in status
that affects eligibility is deemed to be consistent with the benefit change if it results in an
9/1/2003v5 14
(d)
(e)
increase or decrease in the number of dependents who may benefit from coverage under
the plan. The consistency rule as to adding or dropping coverage is satisfied only for an
individual who has gained or lost eligibility. Further, an Election change to cancel
coverage for an individual who gains eligibility under another employer plan satisfies the
consistency rule only if the Participant certifies that the individual has actually become
covered under such plan.
With respect to group term life insurance and disability coverage, either an Election
change which increases or decreases coverage as a result of a change in status complies
with this consistency rule.
Notwithstanding this consistency rule, if the Participant or Dependent becomes eligible
for continuation coverage under Section 4980B of the Code or any similar state law, the
Participant may increase the amount of Premium Conversion under Article VII to pay
such premiums.
dudgment, decree, or order - A Participant may change an Election with respect to an
accident or health plan as required to provide coverage for a dependent child pursuant to
a court judgment, order, decree or QMSCO as described in Section 2.3 resulting from a
divorce, legal separation, annulment or change in legal custody. A Participant may
cancel or terminate accident or health plan coverage for a child if such court order or
decree requires the Participant's former spouse or another person to provide coverage,
but only upon certification by the Participant or another party to the court order that such
coverage has in fact been obtained.
Entitlement to Medicare or Medicaid - If the Participant or a Dependent who is enrolled
in an accident or health plan of the Employer becomes enrolled under Part A or Part B of
Title XVIII of the Social Security Act (Medicare) or Title XIX of the Social Security Act
(Medicaid), other than coverage consisting solely of benefits under section 1928 of the
Social Security Act (Distribution of Pediatric Vaccines), the Participant may make a
corresponding Election change to cancel or reduce coverage for the Participaut or
Dependent under the accident or health plan. Further, if Participant, spouse or dependent
who has been entitled to coverage under Medicare or Medicaid loses eligibility for such
coverage, the Participant may make a prospective election to commence or increase
coverage for the Participant or Dependent.
Cost or coverage changes - If there is a change in the cost or coverage of a Qualified
Benefit as described below, a Participant may revoke an Election with respect to such
Qualified Benefit and make a new Election for the remainder of the Plan Year. This
paragraph does not apply to Health Care Flexible Spending Account benefits defined in
Section 2.16(b) and described in Article VIII.
1)
Automatic changes - If the cost of a Qualified Benefit which is not a health FSA
increases or decreases during the Plan Year, and Participants are required to make
a corresponding change in their contributions, the Employer may, on a reasonable
9/1/2003v5 15
and consistent basis, automatically make a prospective increase or decrease in
affected Participants' Elections for the plan.
2)
Significant cost changes - If the cost charged to a Participant for a Qualified
Benefit option significantly increases or decreases during the Plan Year, the
Participant may make a corresponding prospective Election change. Through
such election, a Participant may commence participation in a Plan option that
decreases in cost or a Participant may revoke an Election for a Plan option that
increases in cost and, if the Employer makes available another option that
provides similar coverage, elect to receive coverage under such option.
Employees who have not previously elected to participate may elect mid-year and
commence participation on a prospective basis. Cost increase or decrease for this
paragraph means a change in the amount of the elective contributions required
under the Plan, and may result from actions taken by the Participant or the
Employer. With respect to dependent care as defined in Section 2.6(c), this
paragraph only applies if the cost change is imposed by a dependent care provider
who is not a relative of the Participant.
3)
Significant curtailment of coverage - If there is a significant curtailment of
coverage under a Qualified Benefit option, a Participant may revoke their Election
and receive coverage on a prospective basis under another option providing
similar coverage. If the curtailment of coverage involves a loss of coverage, the
Participant may drop coverage if no other similar benefit option is available under
the Plan. Significant curtailment with a resulting loss of coverage includes any of
the following: HMO not available in geographic area of residence, coverage not
helpful because lifetime or mmual cap has been reached, a substantial decrease in
medical care providers in a PPO network or HMO, a hospital dropping out of the
plan or network, reduction in benefits for a certain illness or injury in which a
participant or family member is currently in a course of treatment, an increase in
deductible, copay, out-of-pocket cost-sharing limit or any other similar
fundamental loss of coverage.
4)
Addition or improvement of a benefit option - If the Plan adds a new Qualified
Benefit option or if coverage under an existing option is significantly improved
during the Plan Year, Participants may revoke their Election and elect coverage
under the new or improved benefit option on a prospective basis.
5)
Change in coverage under another employer plan - A Participant may make an
Election change that is on account of and corresponds with a change made by a
Dependent or former spouse under another employer plan if: i.) the circumstances
for the Dependent's or former spouse's election change is described in this Section
6.2, or ii.) the Dependent's or former spouse's employer plan permits an election
for a period of coverage that is different from the Period of Coverage for this
Plan.
9/1/2003v5 16
6)
Loss of coverage under other group health coverage - A Participant may add
coverage on a prospective basis if the Participant or Dependent loses coverage
under a group health plan sponsored by a governmental or educational institution.
(f)
Special FMLA requirements - A Participant who takes an FMLA Leave may revoke an
election of group health coverage and make such other election for the remaining portion
of the period of coverage as may be provided for under the Family and Medical Leave
Act.
Section 6.3 Failure to Elect. A Participant who fails to return the required Election fonu
for any Period of Coverage to the Plan Administrator before the first day of such Period of
Coverage shall be deemed to have elected to receive his or her full Compensation in cash, except
to the extent that an alternate default election for Premium Conversion, as described in Article
VII, is contained in the Summary Pages.
Section 6.4 Automatic Termination of Election. Elections made under this Plan shall
automatically terminate on the date the Participant ceases to be a Participant in the Plan in
accordance with Section 3.3, although coverage under Optional Benefits may continue if and to
the extent provided by such plans.
Section 6.5 Requali _fying Employees. A Participant who returns to work as a Qualified
Employee within 30 days of termination of active employment will resume Plan participation
under the Participant's original election, provided there is no other intervening change in status
event as defined in Section 6.2. A Participant who returns to work more than 30 days after
tennination of employment but within the same Plan Year, shall have the option of resuming the
original election or making a new election. To the extent that the Participant elects not to resume
the original election, the Participant shall not be a participant in this Plan during the period of
non-employment such that any premiums paid through Article VII (Premium Conversion) must
be paid on an after-tax basis.
ARTICLE VII: PREMIUM CONVERSION
Section 7.1 Applicability of this Article. The tenus of this Article VII apply only to the
extent that the Employer has adopted the Premium Conversion Optional Benefit in Section
2.16(a). The term "Election" as used in this Article VII refers to the Election made by a
Participant pursuant to Article IV, to receive Optional Benefits described in such Section 2.16(a).
Section 7.2 Premium Conversion. Participants may elect as a benefit under this Article
pre-tax payment of the Participant's share of the cost for Employer sponsored Qualified Benefits
provided through an insured plan, a preferred provider organization, a health maintenance
organization or other group arrangement in accordance with the options made available through
the Employer. Once elected, this Optional Benefit shall be provided automatically, and as such,
no separate claim need be submitted to the Plan Administrator.
9/1/2003v5 17
The Employer's liability for benefits provided by third parties through this premium
conversion option shall be limited to the payment of required premiums. The Employer does not
guarantee benefits payable under any insurance policy or other similar contract. Such benefits
shall be the exclusive responsibility of the insurer or other entity that is required to provide the
benefits under the governing policy or contract.
ARTICLE VIII: HEALTH CARE FLEXIBLE SPENDING ACCOUNT
Section 8.1 Applicabili _ty of this Article. The terms of this Article VIII apply only to the
extent that the Employer has adopted the Health Care Flexible Spending Account Optional
Benefit in Section 2.16(b) in the Summary Pages. The term "Election" as used in this Article VII
refers to the Election made by a Participant pursuant to Article IV, to receive Optional Benefits
described in such Section 2.16(b).
Section 8.2 Purpose. The purpose of the Health Care Flexible Spending Account
(Health FSA) described in this Article is to provide Participants with the option of being
reimbursed for eligible Health Expenses. The Health FSA is intended to qualify as a medical
reimbursement plan under Section 105 of the Code so that payments received pursuant to this
Article and the Plan are excludable from the gross income of the Participant under Section
105(b) of the Code.
Section 8.3 Health Care Account. The Employer will establish and maintain for record
keeping purposes a Health Care Account for each Plan Year for each Participant from whom an
Election is received. The account will be increased as of each date compensation is paid to the
Participant in an amount ~equal to the allocation, if any, which the Participant has elected. A
Participant's Health Care Account will be decreased from time to time in the amount of payments
made to the Participant for Health Expenses incurred during the Period of Coverage. All
amounts added to a Health Care Account remain the property of the Employer until distributed to
the Participant in accordance with this Article VIII.
Section 8.4 Claims for Reimbursement. A Participant who has made an Election for a
Plan Year may apply to the Plan Administrator for reimbursement of Health Expenses incurred
during such Period of Coverage by executing and submitting a claim form which the Plan
Administrator prescribes setting forth:
(a) The amount, date and nature of the expense,
(b) The name of the person or entity to which the expense was paid,
(c)
The Participant's statement that the expense has not been reimbursed and that the
Participant will not seek reimbursement under any other plan covering health benefits,
and
(d) Such other infornaation as the Plan Administrator may require.
9/1/2003v5 18
Such claim form shall be accompanied by bills, invoices, receipts, or other statements
from an independent third party stating the Health Expense has been incurred and the amount of
the expense. The Plan Administrator may, to the extent provided by law, rely on information
provided by Participants. Such claims must be submitted within such time periods as the Plan
Administrator may reasonably require.
Section 8.5 Claims for Reimbursement Using an Electronic Payment Card. Not
withstanding the requirements of Section 8.4, this Section 8.5 shall apply to claims submitted
using an Electronic Payment Card to the extent that the Plan provides for such transactions. A
Participant who has made an Election for a Plan Year may apply to the Plan Administrator for
reimbursement of Health Expenses incurred during such Period of Coverage by using an
Electronic Payment Card specifically authorized for use by the Plan.
(a) Definitions
1) "Cardholder" means the Participant.
2)
"Electronic Payment Card" means a card issued by the Plan to the Participant for
the purpose of electronically submitting requests for reimbursement pursuant to
this Section 8.5. Each Participant in the Health Care Flexible Spending Account
shall be issued an Electronic Payment Card upon enrollment in the Health FSA.
The Cardholder's use of the Electronic Payment Card shall be limited to the
maximum dollar amount of coverage in the Cardholder's Health Care Account.
Use of the Electronic Payment Card shall be further limited to medical care
providers as identified by such provider's assigned Merchant Category Code.
3)
"Merchant Category Code" means the code used to identify medical care
providers including but not limited to physicians, pharmacies, dentists, vision care
offices and hospitals. The Plan Administrator may elect to use Merchant
Category Codes assigned by the Electronic Payment Card processing system, or
may elect to assign unique Merchant Category Codes to each individual
providers. Electronic Payment Cards shall be used only for reimbursement of
Health Expenses incurred for goods and services rendered by providers using a
Merchant Category Code authorized by the Plan.
(b)
Automatic Reimbursement shall occur when the Cardholder uses the Electronic Payment
Card at a medical care provider that has been assigned a qualifying Merchant Category
Code and the amount of the Health Expense is less than or equal to the Cardholder's
Health Care Account balance. Each time a Health Expense is reimbursed using the
Electronic Payment Card, the Cardholder's Health Care Account shall be
correspondingly reduced.
(c)
Participant Certification - Upon enrollment in the Health FSA, the Cardholder must
certify that the Electronic Payment Card will be used only for eligible Health Expenses
incurred by the Cardholder or a Dependent of the Cardholder as defined in Section 2.3.
9/1/2003v5 ! 9
(d)
(e)
The Cardholder must further certify that any expense paid with the Electronic Payment
Card has not been reimbursed and that the Cardholder will not seek reimbursement, or
cause any other individual to seek reimbursement, under any other plan covering health
benefits. This certification shall be re-affirmed each time that the Electronic Payment
Card is used. In addition, the Cardholder shall agree to acquire and retain sufficient
documentation to substantiate any Health Expense paid with the Electronic Payment Card
in accordance with Section 8.4.
Claim Substantiation - The following transactions shall not require substantiation beyond
the certification described in subsection (c) above:
1)
transaction amounts equal to the dollar amount of the co-payment for that service
under a health plan sponsored by the Plan Sponsor;
2)
transaction amounts that match expenses previously approved for the Cardholder
as to the amount, provider and time period, as determined by the Plan
administrator; or
3)
transaction amounts verified at the time and point of sale or retrospectively by the
provider or an independent third-party approved for such verification by the Plan
Administrator. The verification must include that the expense is a Health
Expense and that the expense was incurred by the Cardholder or a Dependent of
the Cardholder. The verification may be provided electronically.
Conditional Reimbursements - Transactions other than those described in (d) above shall
be considered "conditional reimbursements" subject to the following rules.
1)
The Cardholder must execute and submit documentation as described in Section
8.4.
2)
In the event that the Cardholder does not submit required documentation within a
reasonable period of time or the Plan Administrator determines that a
reimbursement has been made for an ineligible transaction, the Plan
Administrator shall request reimbursement from the Cardholder.
3)
In the event that the Cardholder fails to make timely reimbursement to the Plan,
the Plan Administrator shall take action necessary to ensure that additional
improper reimbursements do not occur such as suspending access to the electronic
Payment Card and continuing to pursue appropriate collection actions, including
but not limited to:
(i)
withholding future reimbursements from the Cardholder's Health Care
Account in the amount of the improper payment until the Plan has
recouped the full amount of the improper payment, or
9/1/2003v5 20
(ii)
in the event that the Cardholder's Health Care Account balance is
insufficient to recoup the full amount of the improper payment,
withholding the remaining amount of the improper payment from the
Cardholder's Compensation, to the extent allowed by law.
Section 8.6 Reimbursement of Expense. The Employer shall reimburse the Participant
for Health Expenses incurred during a Period of Coverage if the Participant submits the
documentation required under Sections 8.4 and 8.5. An amount up to the Participant's total
Election for the Plan Year (reduced as of any particular time for prior reimbursements for the
same Period of Coverage) shall be available for reimbursement at all times during the Plan Year.
The Plan may not make advance reimbursements of furore or projected expenses.
The Plan Administrator shall make a determination on claims submitted for
reimbursement within 30 days of receipt unless such determination cannot be made due to
reasons beyond the control of the Plan Administrator. In this case a 15 day extension is available
if the Participant is notified of the extension within the initial 30 day period. If a determination
on a claim cannot be made because the Participant did not provide sufficient information, the
Participant has 45 days from receipt of a request to provide such information. Eligible claims for
reimbursement shall be paid within 30 days of receipt, or when the total amount of claims to be
paid reaches a reasonable minimum designated by the Plan Administrator, such as $50.
However, if a minimum amount is specified, that amount will not be applicable for the final
processing cycle of the Plan Year or other interim processing cycles as determined by the Plan
Administrator.
Section 8.7 Maximum Reimbursement. The maximum reimbursement which a
Participant may receive for a Plan Year under this Article VIII shall be the amount designated in
the Summary Pages for health care reimbursement.
Section 8.8 Minimum Election. The minimum election which a Participant may make
for a Plan Year under this Article VIII shall be the amount designated in the Summary Pages for
health care reimbursement.
Section 8.9 Revocation of Election. If a Participant revokes an Election during the Plan
Year as a result of a change in status or separation from service, the Employer shall reimburse
the Participant for any amount previously prepaid or contributed in advance to the Optional
Benefit on the Participant's behalf for coverage relating to a period after the date of such Election
revocation, regardless of the Participant's claims or reimbursements as of that date. In no event
may a Participant revoke an Election or make a new Election in an amount which is less than the
amount already reimbursed, or having been submitted and pending reimbursement, by the
Participant during the immediately preceding Period of Coverage as of the date that the
revocation or new Election would become effective.
Section 8.10 Health Insurance Portabili _ty and Accountability Act of 1996 (HIPAA). Not
withstanding any provision of this Plan to the contrary, the Plan shall be operated and maintained
9/1/2003v5 2 1
in a mmmer consistent with HIPAA and regulations relating thereto, to the extent they apply to
the Plan.
(a)
Effective Date - This Section 8.10 shall be effective as of the date compliance is required
by legislation or regulation promulgated by the Department of Health and Human
Services pursuant to HIPAA.
(b)
Definitions - The following definitions will apply to the provisions of this Section 8.10
and will be interpreted in accordance with the Privacy Rule:
1)
"Health Information" is any information that is created or received by a health
care provider, health plan, public health authority, employer, life insurer, school
or university, or health care clearinghouse.
2)
"Health Care Operations" includes activities related to plan operations and
administration.
3)
"HIPAA Privacy Rule" or "Privacy Rule" refers to the privacy regulations
promulgated by the Department of Health and Human Services pursuant to
HIPAA. The regulations are codified at 45 C.F.R. Part 164.
4)
"Individually Identifiable Health Information" is Health Information created or
received by a Covered Entity or employer that:
(i)
relates to: past, present or future physical or mental health or condition of
an individual; the provision of health care to an individual; or the past,
present or future payment for the provision of health care to an individual;
and,
(ii)
identifies the individual directly or reasonably could be used to identify
the individual.
5)
"Payment" includes activities undertaken to obtain contributions, determine and
fulfill responsibility for coverage and benefits, or to obtain or provide
reimbursement for health care expenses.
6)
"Plan Administration Functions" are administration functions performed by the
Plan Administrator, except that plan enrolhnent and disenrollment activities and
any other activities excluded from the definition of the term in the Privacy Rule
are not Plan Administration Functions.
7)
"Protected Health Information" or "PHI" is individually identifiable information
that is transmitted or maintained in any form or medium by the Plan.
(c) Uses and Disclosures of Protected Health Information
9/1/2003v5 22
1)
The Plan Administrator will use or disclose PHI without authorization of the
subject individual for Payment or Health Care Operations or for other reasons
permitted by or required by the Privacy Rule. All other uses or disclosures of PHI
will be pursuant to authorization of the subject individual or his or her personal
representative.
2) The Plan Administrator will only use PHI for Plan Administration Functions.
3)
The Plan Administrator will not use or further disclose PHI other than as
permitted or required by the Plan documents or as required by law.
4)
The Plan Administrator will ensure that any agents, including a subcontractor, to
whom it provides PHI received from the Plan, agree to the same restrictions and
conditions that apply to the Plan Sponsor with respect to such information.
5)
The Plan Sponsor will not use or disclose PHI for employment-related actions and
decisions or in connection with any other Plan Sponsor benefit or employee
benefit plan decisions.
6)
The Plan Administrator will report to the Plan any use or disclosure of PHI of
which it becomes aware that is inconsistent with HIPAA's permitted uses or
disclosures.
Certification Required to Disclose Protected Health Information to Plan Sponsor - The
Plan will disclose PHI to the Plan Sponsor only upon receipt of a certification by the Plan
Sponsor that the plan documents have been amended as required by the HIPAA Privacy
Rule.
(e)
(0
Subject Individual Rights Wi& Respect to PHI
1) The Plan Administrator will make PHI available to subject individuals in
accordance with the HIPAA Privacy Rule.
2) The Plan Administrator will make available PHI for amendment and
incorporate any amendments to PHI in accordance with the HIPAA
Privacy Rule.
3) The Plan Administrator will provide to the subject individual an
accounting of disclosures of the subject individual's PHI in accordance
with the HIPAA Privacy Rule.
Provide Information to the Department of Health and Human Services - The Plan
Administrator will make its internal practices, books, and records relating to the
use and disclosure of Protected Health Information received from the Plan
available to the Secretary of the Department of Health and Human Services for
purposes of detenuining compliance by the group health plan with the HIPAA
9/1/2003v5 23
(g)
(h)
(i)
(J)
Privacy Rule.
Disclosure of Summary Health Information - In accordance with the Privacy
Rule, the Plan may disclose summary Health Information to the Plan Sponsor, if
the Plan Sponsor requests the summary Health Information for the purpose of
modifying, amending or terminating the Plan. Summary Health Information may
be Individually Identifiable Health Information which summarizes the claims
history, claims expenses, or the type of claims experienced by individuals in the
Plan, but it excludes all identifiers that nmst be removed for the information to be
de-identified, except that it may contain geographic information to the extent that
it is aggregated by zip codes of at least five digits.
No Longer Needed PH! - When any PHI received from the Plan ceases to be
needed for the purpose for which it was disclosed, the Plan Administrator will
return or destroy such information maintained in any form and retain no copies of
such information, except that, if returu or destruction is not feasible, the Plan
Administrator will limit further uses and disclosures to those purposes that make
the return or destruction of the information infeasible.
Adequate Separation Between Plan and Plan Sponsor
1) The Plan Sponsor will provide adequate separation between the Plan and
itself when it serves in any capacity other than as Plan Administrator.
2) Only those employees or classes of employees or other persons under the
control of the Plan Administrator who receive PHI relating to Payment
under, Health Care Operations of, or other matters pertaining to the Plan
in the ordinary course of business, may have access to PHI.
3) Access to, and use of, PHI by the employees and other persons described
in paragraph (2) will be limited to the Plan Administration Functions.
Non-Compliance with this Article - Any individual who purposely or negligently
fails to comply with this Section 8.10 will be subject to disciplinary action by the
Plan Sponsor, up to and including termination of employment or service
assignment.
ARTICLE IX: DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
Section 9.1 Applicability_ of this Article. The ternas of this Article IX apply only to the
extent that the Employer has adopted the Dependent Care Flexible Spending Account
(Dependent Care FSA) in Section 2.16(c) in the Summary Pages. The term "Election" as used in
this Article IX refers to the Election made by a Participant pursuant to Article IV, to receive
Optional Benefits described in such Section 2.16(c).
Section 9.2 Purpose. The purpose of the Dependent Care Flexible Spending Account
described in this Article is to provide Participants with the option of being reimbursed for
eligible Dependent Care Expenses. The Dependent Care FSA is intended to qualify as a
9/1/2003v5 24
dependent care assistance program under Section 129 of the Code so that payments received
pursuant to this Article and the Plan are excludable from the gross income of the Participant
under Section 129(a) of the Code.
Section 9.3 Dependent Care Account. The Employer will establish and maintain for
record keeping purposes a Dependent Care Account for each Plan Year for each Participant from
whom an Election is received. The account will be increased as of each date compensation is
paid to the Participant with an amount equal to the allocation, if any, which the Participant has
elected.
A Participant's Dependent Care Account will be decreased from time to time in the
amount of payments made to the Participant for Dependent Care Expenses incurred during the
Period of Coverage. All amounts added to a Dependent Care Account remain the property of the
Employer until distributed to the Participant in accordance with this Article IX.
Section 9.4 Claims for Reimbursement. A Participant who has made an Election for a
Period of Coverage may apply to the Plan Achuinistrator for reimbursement of Dependent Care
Expenses incurred during such Period of Coverage by executing and submitting a claim form
which the Plan Administrator prescribes setting forth:
(a) The amount, date and nature of the expense,
(b)
The name of the person or entity providing the services, and if different, the name of the
person or entity to which the expense was paid,
(c)
The Participant's statement that the expense has not been reimbursed, and that the
Participant will not seek reimbursement under any other plan covering dependent care
benefits, and
(d) Such other information as the Plan Administrator may require.
Such claim form shall be accompanied by bills, invoices, receipts, or other statements
from an independent third party stating the Dependent Care Expense has been incurred and the
amount of the expense. The Plan Administrator may, to the extent provided by law, rely on
information provided by Participants.
Section 9.5 Reimbursement of Expense. The Employer shall reimburse the Participant
from the Participant's Dependent Care Account for Dependent Care Expenses incurred during the
Period of Coverage for which the Participant submits the documentation required under Section
9.4. In no case shall a payment be made which exceeds the balance in the Participant's
Dependent Care Account at the time reimbursement is requested. The Plan may not make
advance reimbursements of future or projected expenses. Such claims must be submitted within
such time periods as the Plan Administrator may reasonably require.
9/1/2003v5 25
Claims for reimbursement shall be paid at least monthly, or when the total amount of
claims to be paid reaches a reasonable minimum designated by the Plan Administrator, such as
$50. However, if a minimum amount is specified, that amount will not be applicable for the final
processing cycle of the Plan Year or other interim processing cycles as determined by the Plan
Administrator.
Section 9.6 Maximum Reimbursement. The maximum reimbursement which a
Participant may receive in a tax year under this Article IX shall be the least of:
(a) The Participant's earned income for the tax year;
(b) The actual or deemed earned income of the Participant's spouse for the tax year; or
(c)
$5,000, or in the case of a Participant who is married and filing a separate income tax
return form his or her spouse, $2,500.
In the case of a spouse who is a full-time student, or is physically or mentally incapable
of self-care, such spouse shall be deemed to have earned income of $250 per month if the
Participant has one Dependent and $500 per month if the Participant has two or more
Dependents.
Section 9.7 Minimum Election. The minimum election which a Participant may make
for a Plan Year under this Article IX shall be the amount designated in the Summary Pages for
dependent care reimbursement.
ARTICLE X: ADMINISTRATION
Section 10.1 Plan Administrator. The Employer is hereby designated as the Plan
Administrator. The Employer may delegate its duties under the Plan to one or more officers or
employees, or to individuals or entities independent of the Employer provided that such
delegation is in writing.
Section 10.2 Powers of the Plan Administrator. The Plan Administrator shall have sole
and complete authority necessary to administer the Plan, including but not limited to the
following:
(a)
To interpret the provisions of the Plan, decide questions of eligibility and determine
amounts of benefits due under the Plan. Benefits under this Plan will be paid only if the
Plan Administrator decides in his discretion that the Participant or applicant is entitled to
them.
(b)
To establish and revise the method of accounting for the Plan and to maintain the
accounts.
9/1/2003v5 26
(c)
To establish rules and prescribe any forms necessary or desirable for the administration
of the Plan.
Except as provided in Section 10.6, the Plan Administrator shall have no power to add to,
subtract from or modify any of the tenrts of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit
under the Plan.
Section 10.3 Actions of the Plan Administrator. All determinations, interpretations, rules
and decisions of the Plan Administrator shall be conclusive and binding upon all persons having
or claiming to have any interest or right under the Plan. All decisions and actions by the Plan
Administrator shall be applied uniformly and consistently to all Participants so that all persons
similarly situated will receive substantially the same treatment.
Section 10.4 Infonuation to be Furnished. Participants shall provide the Plan
Administrator with such information and evidence, and shall sign such documents as may
reasonably be requested from time to time for the purpose of administration of the Plan. The
Plan Administrator may, to the extent provided by law, rely on information provided by
Participants.
Section 10.5 Nondiscrimination. The Plan shall not discriminate in favor of Highly
Compensated Individuals as to eligibility to participate. Optional Benefits provided to Key
Employees under the Plan shall not exceed 25% of the aggregate of such benefits provided for all
Participants in any Plan Year. In addition, Optional Benefits shall comply with any
nondiscrimination rules which apply to those plans separately. Specifically,
(a)
if the Employer has adopted the Health Care Flexible Spending Account described in
Article VIII, the plan pursuant to such Article VIII shall not discriminate in favor of
Highly Compensated Individuals as to eligibility to participate or in favor of Highly
Compensated Employees as to benefits and shall meet the discrimination tests of Section
105(h) of the Code; and
(b)
if the Employer has adopted the Dependent Care Flexible Spending Account described in
Article IX, not more than 25% of the amounts paid by the Employer for dependent care
assistance during the Plan Year shall be provided to Participants who are shareholders or
owners (or their spouses or dependents) of more than 5% of the stock or of the capital or
profit interest in the Employer. Benefits provided under Article IX shall not discriminate
in favor of Highly Compensated Individuals with respect to eligibility or in favor of
Highly Compensated Employees with respect to contributions or benefits. The average
dependent care reimbursement paid pursuant to Article IX to non-highly compensated
employees for Dependent Care Expenses shall be at least 55% of the average Dependent
Care Expenses paid to Highly Compensated Employees.
9/1/2003v5 27
If the Plan fails any of the requirements of this Section 10.5, benefits provided under the
Plan will become taxable to Highly Compensated and Key Employees to the extent required by
law.
Section 10.6 Changes by Administrator. If the Plan Administrator determines, before or
during any Plan Year, that the Plan may fail to satisfy for the Plan Year any nondiscrimination
requirement imposed by the Code or any limitation on benefits provided to Key Employees, the
Plan Administrator may reject or reduce Elections by Highly Compensated Employees or Key
Employees with or without the consent of such employees.
Any limitation imposed by the Plan Administrator shall apply on a uniform basis
pursuant to rules applicable equally to all Participants who are Highly Compensated Employees
or Key Employees.
To the extent practicable, such adjustments shall be made before the commencement of
the Plan Year for which the Election is effective.
Section 10.7 Reporting and Disclosure. Promptly after the Plan, or any Optional Benefit
thereunder, is adopted, the Plan Administrator will notify all Qualified Employees of the
availability and terms of the Plan. The Plan Administrator shall be responsible for complying
with all reporting, filing and disclosure requirements for the Plan.
If the Employer has adopted a Dependent Care Flexible Spending Account pursuant to
Article IX, on or before January 31, the Plan Achuinistrator will furnish each Participant who has
received payments under Article IX with a written statement showing the amount of Dependent
Care Expenses reimbursed by the Plan for the previous calendar year. The Plan Administrator
will provide required information on the applicable Treasury Form W-2.
Section 10.8 Indemnification of the Administrator. Any individual acting in the capacity
of Plan Administrator shall be indemnified by the Employer against any and all liabilities arising
by reason of any act or failure to act made in good faith pursuant to the provisions of the Plan,
including expenses reasonably incurred in the defense of such claim.
ARTICLE XI: MISCELLANEOUS
Section 11.1 Amendment and Termination. The Employer may amend or terminate the
Plan, or any Optional Benefit offered thereunder, at any time by a duly adopted resolution of its
Board of Directors (or appropriate governing body) or written instrument executed by a duly
authorized individual. Unless otherwise specifically provided, amendments shall be only
prospective in impact. No amendment or termination shall deprive a Participant of any benefits
to which he or she is entitled under this Plan with respect to contributions previously made.
9/1/2003v5 28
Section 11.2 Plan Not a Contract of Employment. The Plan is not an employment
agreement and does not assure the continued employment of any employee or Participant for any
period of time. Nothing contained in the Plan shall interfere with the Employer's right to
discharge an employee or Participant at any time, regardless of the effect such discharge will
have upon that individual as a Participant in this Plan.
Section 11.3 Funding. The Plan provides a means of making Elections concerning
Optional Benefits but has no assets per se. Nothing contained in the Plan shall require the
Employer to maintain a separate fund or trust for the benefit of Participants unless otherwise
required by law. No Participant shall, by virtue of this Plan, have any right or interest in the
assets of the Employer. A Participant has only an unsecured contract right to receive benefits in
accordance with the Plan.
Section 11.4 No Guarantee of Tax Consequences. The Employer makes no commitment
or guarantee that any amounts paid to a Participant under any Article of this Plan will be
excludable from the Participant's gross income for federal or state income tax purposes. It shall
be the obligation of each Participant to determine whether each payment is excludable from the
Participant's gross income for federal and state income tax purposes, and to notify the Employer
if the Participant has reason to believe that any such payment is not so excludable.
Any Optional Benefit provided to a Participant that is includable in the Participant's gross
income shall be treated as if it were a distribution of cash under this Plan.
Section 11.5 Plan Benefits May Not be Assigned. No Participant may assign, pledge, or
otherwise dispose of any benefit under the Plan prior to actual receipt thereof.
Section 11.6 Governing Law. This Plan shall be construed and enforced according to the
laws the jurisdiction named in the Summary Pages except to the extent preempted by federal law.
9/1/2003v5 29
SUMMARY PAGES
Definitions
Employer:
City of Colulnbia Heights
Optional Benefits means those components checked below: X Premium Conversion as described in Article VII
X Health Care Reimbursement as described in Article VIII
X Dependent Care Reimbursement as described in Article IX
Effective Date of Plan: February 1, 1993
of Restatement: January 1, 2004
Plan Year: The Period begilming on January 1st and ending on the subsequent December 31st
and the 12 month period ending on each December 31st thereafter.
Eligibility and Waiting Periods
The following employees are eligible to participate in the Plan. New employees may begin
participation on the new employee Mid-Year Entry Date. (Check all that apply.)
X
X
X
X
Permanent full-time employees.
Permanent part-time employees.
Mayor and City Council members.
Bargaining unit employees are eligible.
AND
X
Eligible employees as indicated above are eligible to participate in all Optional
Benefits adopted by the Employer to be included in the Plan.
OR
The following employee classifications are eligible for only the following
Optional Benefits adopted by the Employer to be included in the Plan:
Premium Conversion
Health Care Reimbursement
Dependent Care Reimbursement
The Mid-Year Entry Date for a new employee is:
X
First day of the month following ( ) days of service as a Qualified Employee
First day of employment as a Qualified Employee
Other: Date ofhire.
9/1/2003v5
The Mid-Year Entry Date for a Participant with an Election change event as defined in Section
6.2 or returning from a FMLA or USERRA Leave is:
X
First day of the payroll period following receipt of an Election
First day of the month following receipt of an Election
Other: Date election is received by the administrator.
Salary Reduction Contributions
Maximum Salary Reduction Contribution:
$7,600 plus the amount required to fully pay the Participant's share of the cost for
benefits under any Premium Conversion Optional Benefit available through the
Plan.
Other:
Maximum Health Care Reimbursement in any Plan Year: $2,600
Minimum Health Care Reimbursement in any Plan Year: $260
Maximum Dependent Care Reimbursement in any Plan Year: $5,000
Minimum Dependent Care Reimbursement in any Plan Year: $0
Health FSA Exclusions
The definition of eligible Health Expense in Section 2.12 shall not include the following
expenses (check all that apply):
Transportation expenses
Over-the-counter medication available without a prescription
Other:
Elective Employer Contributions
Benefit Credits available under Section 4.2 (check all that apply):
X
No Benefit Credits are available under the Plan. Benefits under the Plan are
provided solely through Salary Reduction contributions.
Benefit Credits are provided in the following amount:
Benefit Credits shall be allocated by the Employer to offset the Participant's cost
for Optional Benefits elected pursuant to Article VI in the following order:
Benefit Credits in excess of a Participant's cost for Optional Benefits will
be paid to the Participant as additional taxable cash Compensation.
In equal amounts on each paycheck
Other:
OR
9/1/2003v5
Benefit Credits in excess of a Participant's cost for Optional Benefits will
be forfeited by the Participant and are not available as additional taxable
cash Compensation.
Participation During Unpaid Leave (Section 3.4)
A Participant on an unpaid leave of absence (including an FMLA Leave or USERRA
Leave), may choose to pay for Optional Benefits elected under any of the options
checked below (select all that apply):
X
PRE-PAY: Paying pre-tax before the leave begins the amounts that will
become due during the leave out of payroll checks;
PAY AS YOU GO: Pre-tax salary reduction contributions will be taken
from payments to the Participant (i.e., sick pay, wage continuation, short
term disability, or vacation pay). If the Participant is not receiving
payments, or when payments are exhausted, the Participant remits after-
tax payments to the Employer.
PAY ON RETURN: From paychecks following the leave on a pre-tax
basis. Participant must make up all amounts owing for Plan Year, must
elect this payment option before the Unpaid Leave commences and
Employer must approve.
Continuation of Coverage (Section 3.5)
X
Continuation coverage is available to all Participants and Qualified
Beneficiaries in the Health Care Reimbursement Optional Benefit,
regardless of account balance.
Continuation coverage in the Health Care Reimbursement Optional
Benefit will be made available only if the amount of required payments for
the remainder of the Plan Year does not exceed the maximum amount
available to the Participant or Qualified Beneficiary for reimbursement for
the remainder of the Plan Year.
Default Elections for Premium Conversion
Default Election to be applied in Section 6.3 (check all that apply):
X Participant deemed to have elected to receive his full Compensation in cash.
Newly eligible Qualified Employee deemed to have elected Premium Conversion
to the extent covered by applicable Employer sponsored Qualified Benefits unless
such Qualified Employee has timely made an affirmative election to waive
Premium Conversion participation in the maturer prescribed by the Plan
Administrator.
Participant deemed to have elected to receive the same Premium Conversion
election as existed on the last day of the immediately preceding Period of
Coverage, if applicable.
9/1/2003v5
Participant deemed to have elected the following coverage under Employer
sponsored accident and health, disability and group term life benefits:
Employee only medical coverage
Other:
Governing Law
Jurisdiction: X
Minnesota
Other:
Date of Execution
City of Columbia Heights
Its
9/1/2003v5
4
Reimbursement Account Administration Services
AGREEMENT BY AND BETWEEN
City of Columbia Heights
(hereinafter referred to as "Employer")
and
Flex Compensation, Inc.
(hereinafter referred to as "FCI")
WHEREAS, Employer has presently arranged to provide employee benefits for its respective
employees and their dependents under certain plans which it may wish in the future to continue,
supplement or modify, and
WHEREAS, it is desired that FCI provide service with respect to such plans, in accordance with
the terms and conditions set forth:
NOW THEREFORE, in consideration of the mutual covenants contained herein, Employer and
FCI agree as follows:
I. DEFINITIONS
(a)
"Code" shall refer to the Internal Revenue Code of 1986, as originally enacted or
as amended from time to time, and the regulations issued thereunder.
(b)
"ERISA" shall refer to the Employee Retirement Income Security Act of 1974, as
origina!ly enacted or as amended from time to time, and the regulations issued
thereunder.
(c)
"HIPAA" means the Health Insurance Portability and Accountability Act of 1996,
as amended, and the regulations promulgated thereunder.
(d)
"Initial Period" shall refer to the period January 1, 2004 tltrough December 31,
2004.
(e)
"Participant" shall refer to an individual enrolled in the Plan or any part of the
Plan.
(g)
"Plan" shall refer to the Health Care and Dependent Care Reimbursement
Accounts, with respect to which FCI is to provide certain services in accordance
with this Agreement, as such Plans are constituted from time to time by
Employer.
"Successive Period" shall refer to a successive twelve (12) month period,
follOwing the Initial Period or any Successive Period.
II. CLAIMS PROCESSING
Participants shall transmit claims for benefits to FCI for processing. FCI shall have the
responsibility for determining each claimant's eligibility under the Plan and applicable law based
upon the information provided by Employer. FCI shall review each claim and shall compute
benefits payable, if any, on each claim in accordance with benefits information set forth in the
Plan and subject to the provisions and conditions set forth below.
(a)
All contested or questionable claims or charges for benefit amounts after review
by FCI shall be referred to Employer for its determination of liability. Employer
may authorize an investigation at its own expense (including medical
examination, consultation with an independent physician, or review by an outside
service bureau), to determine whether benefits are payable under the Plan.
"Contested and questionable claims or charges" shall mean all claims or charges
whose requirements are unclear either as to eligibility or specifics with respect to
determination of liability or instruction to FCI.
(b)
FCI shall assist Employer in establishing a claims appeal procedure for handling
disputes regarding claims for benefits or payment of benefits, in accordance with
the Plan, ERISA and the Code. It is understood that Employer shall have sole and
final discretion as to the denial or payment of a claim on appeal.
(c)
Payment of claims by FCI, other than contested or questionable claims, and
payment of approved contested or questionable claims after completion of claims
appeal procedure, is hereby authorized and shall be made from the Disbursements
Account in accordance with Section IV hereof.
III. CLAIMS SERVICE
FCI's claim personnel shall be qualified to perform the services hereunder and shall examine
each claim and the associated documentation, take reasonable steps to verify its validity and
ascertain the amount payable. FCI's claim service under this Agreement shall include the
following:
(a)
examination of claims for required documentation and expense eligibility, and
computation of benefits;
(b) accounting of payments to Employer as set forth in Section IV hereof;
(c)
furnishing explanation of benefit forms, claim forms and return envelopes to
Participants along with reimbursement checks or direct deposit reimbursement;
(d)
(e)
(f)
within a reasonable period of time following the Initial or each Successive Period,
furnishing to Participants a summary of all claim transactions during such Period,
including the number and amount of claims;
reasonable control of claim abuses;
accumulation of basic statistics.
IV.
ACCOUNTING FOR CLAIM PAYMENT
During the continuance of FCI's claim processing under this Agreement and for ninety (90) days
thereafter, FCI shall render a periodic accounting based on the time periods described below
unless otherwise agreed upon by FCI and Employer in writing. Such accounting shall in general
include the following:
(a)
Check Register
FCI shall provide Employer with a check register each time payments are issued.
The check register is a list of claim payments, showing each covered employee by
name, the check number, the amount of each claim payment, and the total of
payments for each processing period.
(b)
Deposit Summary_
FCI will provide a summary of system-generated or imported deposits each time
deposits are processed, which will be used by Employer for reconciliation
purposes.
(c)
Balance Summary_ Report
On a monthly basis, FCI will provide a summary of each participant's annual
election, accrued deposits, paid claims, accrued balance and available balance.
(d)
Annual Activity Summary
At the request of Employer, within a reasonable period of time following the
Initial or each Successive Period, or other periOd specified by Employer, FCI
shall furnish a summary of all deposit and claim transactions during such Period,
including the number and amount of claims.
go
DUTIES OF EMPLOYER
(a)
Employer shall provide FCI with all information relating to the Plan and its
Participants necessary to establish Participant records and perform the claim
processing function and other services in accordance with this Agreement.
3
(b)
(c)
On a per-processing basis, Employer shall provide FCI with account deposit
information and a listing of those Participants added to or deleted from the Plan.
Employer shall provide all participants with Summary Plan Descriptions (SPD)
and Summary of Material Modifications (SMM) in accordance with ERISA, and
make claim forms available to all Participants.
VI. FEES
For all services to be rendered by FCI, Employer agrees to make payments to FCI as follows.
Employees who participate in one or both of the reimbursement accounts will be billed at the
rate of $5.25 per Participant per month up to 100 Participants, $4.25 for the next 200 Participants
and $3.75 over 300 Participants. In addition, Employer agrees to pay any banking charges that
result from stop-payments placed on Participant checks. The preceding fees are to be billed
monthly.
FCI reserves the right to change the required Employer payments set forth under this Agreement:
(a)
as of the first of the month following completion of the Initial Period or as of the
first of the month following any Successive Period;
(b)
as of the date of any benefit change or other material change in the obligation of
FCI hereto.
VII. SPECIAL SERVICES
Upon request of Employer, FCI shall perform Services in addition to the other services and
duties outlined in this Agreement. Such services and fees shall be those contained in written
proposals from FCI and agreed upon by Employer, incorporated herein by reference.
VIII. COMMENCEMENT, DURATION AND TERMINATION OF AGREEMENT
(a)
This Agreement shall become effective on the first day of the Initial Period and,
unless and until terminated as provided herein shall continue in effect throughout
the Initial and each Successive Period.
(b) This Agreement shall be terminated at the earliest time specified below:
(i)
(ii)
(iii)
as of any date agreed to between the parties;
as of the last day of the Initial Period or any Successive Period by either
party giving at least sixty (60) days written notice by registered mail to
that effect to the other party;
as of the date FCI has a material failure to provide the services required in
Section III above, including failure to evaluate and pay claims within a
(c)
(d)
(e)
(iv)
reasonable period of time, provided Employer gives written notice to FCI
and FCI fails to correct such breach within ninety-six (96) hours of receipt
of such notice;
as of the termination of the Plan.
At Employer's election, FCI will sign a written agreement with Employer to
provide the following services following termination of this Agreement and will
be entitled to the following compensation for said services: (a) for processing of
claims arising before the effective date of the termination of this Agreement, but
not submitted until after such date, FCI shall be paid at the rate of $5.00 per check
issued; (b) for preparation of Form 5500 following the effective date of
termination of this Agreement FCI shall be paid $150.00.
Notwithstanding the foregoing, however, the indemnity and hold harmless
provisions of Section IX oft his Agreement shall survive any termination of this
Agreement until the expiration of the longest statute of limitations that applies to
the subject matter of any of said indemnities.
Employer's Allocable Share of the Disbursements Account, if any, will be
returned to Employer within ninety (90) days following the final payment
processing date.
GENERAL PROVISIONS
(a)
It is understood that the legal and tax status of the Plan under applicable law is a
matter of determination by and the responsibility of Employer and not FCI. It is
further understood that FCI is neither the "Plan Administrator" nor a "Named
Fiduciary" of the Plan as these terms are defined in ERISA.
(b)
In the event that an audit by an independent qualified public accountant is
required under Section 103(b) of ERISA, or under any other provision of law, it is
understood that the cost of such audit shall be borne by Employer. In addition, all
other responsibilities for compliance with all administrative rulings and
requirements of either ERISA or the Code shall be the sole responsibility of
Employer.
(c)
FCI shall hold and possess as the property of Employer all papers, books, files,
correspondence and records of all kinds which at any time shall come into its
control relating only to service performed by FCI under this Agreement, and shall
surrender them to Employer upon termination of this Agreement or prior request;
however, with respect to basic claim payment records, FCI may furnish Employer
with a historical claim listing which will include all information pertinent to the
payment of each claim. Employer shall have the right at all reasonable times to
(d)
(e)
(f)
(g)
(h)
(i)
inspect, at the office of FCI, all books and documents belonging to Employer or
the Plan relating to the provisions of Services to the Plan under this Agreement.
It is understood FCI shall have reasonable access to any and all records
surrendered to Employer by FCI upon termination of this Agreement for a period
of seven (7) years following the date of such termination.
If the Plan is subject to the HIPAA privacy regulations, this Agreement shall
include provisions subjecting the parties to the terms of the Business Associate
Addendum. Such provisions shall be effective no sooner than the later of the
required effective date under the HIPAA Privacy Rules 45 CFR §164.501 et al.,
as amended, or the effective date of tlfis Agreement.
It is understood that in the event that Employer or the Plan is investigated or
audited by any state or federal governmental agency, FCI shall fully cooperate
with such agency's reasonable and lawful requests for information. It is further
understood that any and all costs to FCI, of such investigation or audit, including
FCI's reasonable fees, shall be borne by Employer, except to the extent such
investigation of audit relates to wrongful acts or omissions, negligence, breach of
fiduciary duty, failure to abide with Laws, or breach of this Agreement by FCI, its
officers, agents or employees.
Failure by Employer or FCI to insist upon compliance with any provision of this
Agreement at any given time or under any given set of circumstances shall not
operate to waive or modify such provision or in any manner render it
unenforceable, as to any other time or as to any other occurrence, whether the
circumstances are, or are not the same, and no waiver of any of the terms or
conditions of this Agreement shall be valid or of any force or effect unless
contained in a written memorandum specifically expressing such waiver and
signed by a person duly authorized to sign such waiver.
No alteration or modification of the terms and conditions of this Agreement shall
be valid or of any force or effect unless it is expressed in a written amendment
executed for the parties by persons duly authorized so to do.
Any assignment of this Agreement or of any of its rights shall be void and of no
force or effect, except that Employer may assign the agreement in connection
with a merger, reorganization, sale or transfer of substantially all of Employer's
assets or capital stock.
FCI shall have no power to add to, subtract from or modify, any terms of the Plan,
or to change or add any benefit provided under the Plan or to waive or fail to
apply any requirement for eligibility for a benefit under the Plan.
(J)
(J)
Liability and Indenmity:
It is agreed and understood that FCI does not insure or underwrite the
liability of Employer under the Plan. Employer retains the ultimate
responsibility for claims made under the Plan and all authorized expenses
incident to this Plan other than those which are incurred by FCI in the
discharge of its obligations under this Agreement.
It is understood that the expense of and defense of any legal action against
Employer involving a claim dispute under the Plan shall not be the
obligation or responsibility of FCI unless such legal action relates to FCI's
error or omission, negligence or breach of this Agreement.
o
FCI shall use ordinary care and reasonable diligence in the exercise of its
powers and performance of its duties hereunder, and shall be liable for any
mistake of judgment, incorrect determination of any benefit payable or not
payable under the provisions of the Plan when ordinary care and
reasonable diligence is not taken. FCI shall not be liable for any incon'ect
determination of any benefit payable or not payable under the provisions
of the Plan, or other action taken in good faith at the direction of, or with
the consent of, Employer.
°
Employer agrees to indemnify and hold FCI, its officers, agents or
employees hanuless against any and all loss, damage, interest, costs, and
expense, (including reasonable attorney's fees) occasioned by claims,
demands, or lawsuits brought against FCI, arising out of FCI's
performance of its duties in connection with this Agreement, except to the
extent such claims, demands or lawsuits brought against FCI relate to
wrongful acts or omissions, negligence or breach of this Agreement by
FCI, its officers, agents or employees.
Governing Law
The rights and obligations of all Employers and FCI under this Agreement shall
be governed by the laws of the State of Minnesota.
For FCI:
G~ry Bohline, President
Flex Compensation, Inc.
For Employer:
City of Colurribia Heights
Date:
Date:
FLEX COMPENSATION, INC.
HIPAA Business Associate Addendum
This HIPAA Business Associate Addendum ("Addendum") supplements and is made a part of
the achninistrative services agreement ("Agreement") by and between Covered Entity ("CE") and
Flex Compensation, Inc. ("FCI"), and is effective as of April 14, 2004 (the "Addendum Effective
Date").
RECITALS.
Whereas, CE wishes to disclose certain information ("Information") to FCI pursuant to the terms
of the Addendum, some of which may constitute Protected Health Information ("PHI"); and
Whereas, CE and FCI intend to protect the privacy and provide for the security of PHI disclosed
to FCI pursuant to the Addendum in compliance with the Health Insurance Portability and
Accountability Act of 1996, Public Law 104-191 ("HIPAA") and regulations promulgated
thereunder by the U.S. Department of Health and Human Services (the "HIPAA Regulations")
and other applicable laws; and
Whereas, the purpose of this Addendum is .to satisfy certain standards and requirements of
HIPAA and the HIPAA Regulations, including, but not limited to, Title 45, Section 164.504(e)
of the Code of Federated Regulations ("CFR"), as the same may be amended from time to time;
and
Whereas, in consideration of the mutual promises below and the exchange of information
pursuant to this Addendum, the parties agree as follows:
AGREEMENT. The parties identified above agree as follows:
I. Definitions.
(a)
"CE" or "Covered Entity" for the purpose of this Addendum shall mean City of
Columbia Heights Health Care Reimbursement Account and the term shall have the
meaning given under the HIPAA Regulations, including, but not limited to, 45 CFR
Section 160.103.
(b)
(c)
(d)
"Flex Compensation, Inc." or "FCI" is a business associate of the CE as that term is
defined under HIPAA and the HIPAA Regulations, including, but not limited to, the
Privacy Rule 45 CFR Section 160.103.
"Individual" shall have the same meaning as given in 45 CFR 164.501 and shall
include a person who qualifies as a personal representative in accordance with 45
CFR 502(g).
"Privacy Rule" shall mean the Standards for Privacy of Individually Identifiable
Health Information at 45 CFR part 160 and 164, subparts A and E.
1505381vl
"Protected Health Information" or "PHi" means any information, whether oral or
recorded in any form or medium: (i) that relates to the past, present or future physical
or mental condition of an individual; the provision of health care to an individual; or
the past, present or future payment for the provision of health care to an individual,
and (ii) that identifies the individual or with respect to which there is a reasonable
basis to believe the information can be used to identify the individual, (iii) which is
limited to the information created or received by FCI from or on behalf of Covered
Entity, and shall have the meaning given to such term under HIPAA and the HIPAA
Regulations, including, but not limited to 45 CFR Section 164.501.
(f) "Required By Law" shall have the same meaning as the term "required by law" in 45
CFR 164.501.
(g) "Secretary" shall mean the Secretary of the U.S. Department of Health and Human
Services or his designee.
II. Obligations of FCI.
Permitted Uses and Disclosures. FCI may use and/or disclose PHI received by FCI
pursuant to this Addendum ("CE's PHI") solely in accordance with the services set
forth in the administrative services agreement in effect, as shown in Exhibit A, which
is incorporated herein by reference. In the event of any conflict between this
Addendum and such agreements, this Addendum shall control.
(b) Nondisclosure. FCI shall not use or further disclose CE's PHI otherwise than as
permitted or required by this Addendum or as Required By Law.
(c)
Safeguards. FCI shall use appropriate safeguards to prevent use or disclosure of CE's
PHI otherwise than as provided for by this Addendum. FCI shall maintain a
comprehensive written information privacy and security program that includes
administrative, technical and physical safeguards appropriate to the size and
complexity of FCI's operations and the nature and scope of its activities.
(d)
Reporting of Disclosures. FCI shall report to CE any use or disclosure' of CE's PHI
otherwise than as provided for by this Addendum of which FCI becomes aware, in
accordance with section 2(i) of this Addendum.
(e)
FCI's Agents. FCI shall ensure that any agents and/or subcontractors, to whom it
provides PHI received from (or created or received by FCI on behalf of) CE agree to
the same restrictions and conditions that apply to FCI with respect to such PHI.
(f)
Availability of Information to CE. FCI shall make available to CE or individual such
information as CE may require to fulfill CE's obligations to provide access to, provide
a copy of, and account for disclosures with respect to PHI pursuant to HIPAA and the
HIPAA Regulations, including, but not limited to, 45 CFR Sections 164.524 and
164.528.
(g) Amendment of PHI. FCI shall make CE's PHI available to CE or to individuals as CE
may require to fulfill CE's obligations to amend PHI pursuant to HIPAA and the
1505381vl 2
III.
(i)
(J)
HIPAA Regulations, including, but not limited to, 45 CFR Section 164.526 and FCI
shall incorporate any amendments as requested by CE or individual to CE's PHI into
copies of such PHI maintained by FCI.
Internal Practices. FCI shall make its internal practices, books and records relating
to the use and disclosure of PHI received from CE (or created or received by FCI on
behalf of CE) available to the Secretary and CE for purposes of determining FCI's
compliance with HIPAA and the HIPAA Regulations.
Notification of Breach. During the term of this Addendum, FCI shall notify CE
within forty-eight (48) hours or if later, by the end of the next business day of any
suspected or actual breach of security, intrusion or unauthorized use or disclosure of
PHI and/or any actual or suspected use or disclosure of data in violation of this
Addendum or any applicable federal or state laws or regulations. FCI shall (i) take
prompt corrective action to cure any such deficiencies, (ii) mitigate to the extent
praticable any harmful effect that is known to FCI of any use or disclosure in
violation of the requirements of this Addendum, and (ii) take any action pertaining to
such unauthorized use or disclosure required by applicable federal and state laws and
regulations.
Document Retention. FCI shall maintain PHI for a period of six years from the date
received or transmitted, unless CE agrees to receive and store the PHI itself.
Obligations of CE.
(a)
Disclosure of PHI in accordance with Privacy Rule. Pursuant to the terms of this
Addendum and The Privacy Rule, CE shall disclose PHI to FCI in accordance with
the Privacy Rule and this Addendum. Disclosure under this Addendum may also
include disclosure directly to FCI from CE's agents or subcontractors, or another
covered entity or business associate of the CE (besides the health plan, which may
include but is not limited to a claims adminiStrator, insurer, third party administrator
or health care provider or clearinghouse) which maintains and has access to the CE's
PHI, provided that such disclosure is in accordance with the Privacy Rule and any
contracts regarding HIPAA disclosures entered into between the CE and the agent,
subcontractor, other covered entity or business associate of the CE.
(b)
Safeguards. CE shall be responsible for using appropriate safeguards to maintain and
ensure the confidentiality, privacy and security of PHI transmitted to FCI pursuant to
this Addendum, in accordance with the standards and requirements of HIPAA and the
HIPAA Regulations, until such PHI is received by FCI.
(c)
Notice of Privacy Practices. CE shall provide FCI with the notice of privacy
practices in accordance with the Privacy Rule that CE produces in accordance with 45
CFR 164.520, as well as any changes or updates to such notice.
(d)
Notice of Changes in Authorizations or Consents. CE shall provide FCI with any
changes in, or revocation of, permission by Individual to use or disclose PHI, if such
changes affect FCI's permitted or required uses and disclosures.
1505381vl 3
(e) Notice of Restrictions. CE shall notify FCI of any restriction to the use or disclosure
of PHI that CE has agreed to in accordance with 45 CFR 164.522.
IV. Audits, Inspection and Enforcement.
From time to time upon reasonable notice, upon a reasonable determination by CE that FCI has
breached this Addendum, CE may inspect the facilities, systems, books and records of FCI to
monitor compliance with this Addendum. FCI shall promptly remedy any violation of any term
of this Addendum and shall certify the same to CE in writing. The fact that CE inspects, or fails
to inspect, or has the right to inspect, FCI's facilities, systems and procedures does not relieve
FCI of its responsibility to comply with this Addendum, nor does CE's (i) failure to detect or (ii)
detection, but failure to notify FCI or require FCI's remediation of any unsatisfactory practices,
constitute acceptance of such practice or a waiver of CE's enforcement rights under this
Addendum.
V. Termination.
(a) Material Breach. A material breach by FCI or CE of any provision of this
Addendum shall provide grounds for immediate termination of the Agreement.
(b)
Reasonable Steps to Cure Breach. If CE knows of a pattern of activity or practice of
FCI that constitutes a material breach or violation of FCI's obligations under the
provisions of this Addendum or another arrangement and does not terminate this
Addendum pursuant to Section 4(a), then CE shall take reasonable steps to cure such
breach or end such violation, as applicable. If CE's efforts to cure such breach or end
such violation are unsuccessful, CE shall either (i) terminate this Addendum, if
feasible or (ii) if termination of this Addendum is not feasible, CE shall report FCI's
breach or violation to the Secretary.
(c) Judicial or Administrative Proceedings. Either party may terminate this Addendum,
effective immediately, if (i) the other party is named as a defendant in a criminal
proceeding for a violation of HIPAA or (ii) a finding or stipulation that the other
party has violated any standard or requirement of HIPAA or other security or privacy
laws is made in any administrative or civil proceeding in which the party has been
joined.
(d)
Effect of Termination. Upon termination of this Addendum for any reason, FCI shall
return and/or destroy (unless subject to a court order prohibiting destruction or
requiring production) all PHI received from CE (or created or received by FCI on
behalf of CE) that FCI still maintains in any form, and shall retain no copies of such
PHI or, if return or destruction is not feasible, it shall continue to extend the
protections of this Addendum to such information, and li~nit further use of such PHI
to those purposes that make the return or destruction of such PHI infeasible.
VI. Indemnification.
Each party will indenmify, hold harmless and defend the other party to this Addendum from and
against any and all claims, losses, liabilities, costs and other expenses incurred as a result of, or
arising directly or indirectly out of or in connection with: (i) any misrepresentation, breach of
~ 1505381vl 4
warranty or partial-fulfillment or non-fulfillment of any undertaking on the part of the party
under this Addendum; and (ii) any claims, demands, awards, judgments, actions and proceedings
made by any person or organization arising out of or in any way connection with the party's
performance under this Addendum.
VII. Disclaimer.
CE makes no warranty or representation that compliance by FCI with this Addendum, HIPAA or
the HIPAA Regulations will be adequate or satisfactory for FCI's own purposes or that any
information in FCI's possession or control, or transmitted or received by FCI, is or will be secure
from unauthorized use or disclosure. FCI is solely responsible for all decisions made by FCI
regarding the safeguarding of PHI.
VIII. Certification.
To the extent that CE determines that such examination is necessary to comply with CE's legal
obligations pursuant to HIPAA relating to certification of its security practices, CE or its
authorized agents and/or subcontractors, may, at CE's expense, examine FCI's facilities, systems,
procedures and records as may be necessary for such agents or subcontractors to certify to CE
the extent to which FCI's security safeguards comply with HIPAA, the HIPAA Regulations or
this Addendum.
IX. Amendment.
(a)
Amendment to Comply with Law. The parties acknowledge that state and federal laws
relating to electronic data security and privacy are rapidly evolving and that
amendment of this Addendum may be required to provide for procedures to ensure
compliance with such developments in the Privacy Rule and other applicable law.
The parties specifically agree to take such action as is necessary to implement the
standards and requirements of HIPAA, the HIPAA Regulations and other applicable
laws relating to the security or confidentiality of PHI. The parties understand and
agree that CE must receive satisfactory written assurance from FCI that FCI will
adequately safeguard all PHI that it receives or creates pursuant to this Addendum.
Upon CE's request, FCI agrees to promptly enter into negotiations with CE
concerning the terms of an amendment to this Addendum embodying written
assurances consistent with the standards and requirements of HIPAA, the HIPAA
Regulations or other applicable laws. CE may terminate this Addendum upon 60
days written notice in the event that (i) FCI does not promptly enter into negotiations
to amend this Addendum when requested by CE pursuant to this Section or (ii) FCI
does not enter into an amendment to this Addendum providing assurances regarding
the safeguarding of PHI that CE, in its sole discretion, deems sufficient to satisfy the
standards and requirements of HIPAA and the HIPAA Regulations.
(b)
Amendment of Service Agreements. The agreement(s) shown in Exhibit A may be
modified or amended by mutual agreement of the parties at any time without
amendment of this Addendum.
1505381vl 5
Assistance in Litigation or Administrative Proceedings.
FCI shall make itself, and any subcontractors, employees or agents assisting FCI in the
performance of its obligations under this Addendum, available to CE, to testify as witnesses, or
otherwise, in the event of litigation or administrative proceedings being commenced against CE,
its directors, officers, or employees based upon claimed violation of HIPAA, the HIPAA
Regulations or other laws relating to security and privacy, except where FCI or its subcontractor,
employee or agent is a named adverse party.
XI. No Third-Party Beneficiaries.
Nothing express or implied in this Addendum is intended to confer,, nor shall anything herein
confer, upon any person other than CE, FCI and their respective successors or assigns, any
rights, remedies, obligations or liabilities whatsoever.
XII. Effect on Agreement.
Except as specifically required to implement the purposes of this Addendum, or to the extent
inconsistent with this Addendum, all other terms of the Agreement shall remain in force and
effect.
XIII. Interpretation.
This Addendum and the Agreement shall be interpreted as broadly as necessary to implement
and comply with HIPAA, HIPAA Regulations and applicable state laws. All references in this
Addendum to a section in the Privacy Rule means the section as in effect or as amended, and for
which compliance is required.
The parties agree that any ambiguity in this Addendum shall be resolved in favor of a meaning
that complies and is consistent with HIPAA and the HIPAA Regulations.
IN WITNESS WHEREOF, the parties hereto have duly executed this Addendum as of the
Addendum Effective Date.
CE: City of Columbia Heights
Health Care Reimbursement Account
On behalf of th~ Plar~ Admimstrator of CE
By
FLEX COMPENSATION, INC.
PrintName: Walter R. Fehst
Print Name: Gary_ Bohline
Title: City Manager
Title: President
City of Columbia Heights
Name of Plan Administrator
Date: May 18, 2004
Date:
1505381vl 6
Exhibit A
"Services" Defined (check each statement below that applies, and provide information for
statements checked).
X
As used in this Agreement, "Services" includes services provided by Business
Associate pursuant to the following agreements between Business Associate and
Covered Entity (insert agreement title(s)):
Reimbursement Account Administration Services Agreement
As used in this Agreement, "Services" includes the following additional or other
services provided to or on behalf of the Covered Entity (describe in general terms the
services provided by Business Associate that are the subject of this Agreement - this section
need not be used if all services are described in agreements named above):
~5o538~v~ A-1
FLEXIBLE BENEFIT PLAN DOCUMENT
10'OL2012 Ver.'b
TABLE OF CONTENTS
ARTICLE I: INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 11: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.3 Dependent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.4 Dependent Care Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.5 Dependent Care Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.6 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.7 Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.8 Employer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.9 FMLA Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.10 Gainfully Employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.11 Health Care Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.12 Health Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.13 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.14 Highly Compensated Individual . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.15 Key ployee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.16 Optional Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.17 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.18 Period of Coverag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.19 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.20 Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.21 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.22 Qualified Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.23 Qualified Employe e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.24 Qualifying Dependent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.25 SummM Pages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.26 Student . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.27 USERRA Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III: ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Commencement of Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.4 Participation during Unpaid Leave . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 Continuation of Coverage 8
Section 3.6 Grace Period Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV: CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.1 Salary Reduction Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.2 Benefit Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.3 Maximum Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.4 After-Tax Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 11
10/'0 1.2012 Ver.7b
ARTICLE V: BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.1 Benefit Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.2 Benefit Descriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.3 Limitation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.4 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.5 Procedure for Filing a Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.6 Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.7 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI: ELECTION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.1 Election Form and Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.2 Elections Irrevocable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.3 Failure to Elect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.4 Automatic Termination of Election . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.5 Requalifying_Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII: PREMIUM CONVERSION AND HEALTH SAVINGS ACCOUNTS (HSA)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1 Applicability of this Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.2 Premium Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.3 Health Savings Accounts(HSA) . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII: HEALTH CARE FLEXIBLE SPENDING ACCOUNT . . . . . . . . . . . . . 20
Section 8.1 Applicability of this Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.2 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.3 Health Care Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.4 Claims for Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.5 Claims for Reimbursement Using and Electronic Payment Card. . . . . . 21
Section 8.6 Reimbursement of Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.7 Maximum Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.8 Minimum Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.9 Revocation of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.10 Health Insurance Portability and Accountability Act of 1996. . . . . . . . 24
Section 8.11 HSA Compatible Health FSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.12 Qualified Reservist Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IX: DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT . . . . . . . . . . . 28
Section 9.1 Applicability of this Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.2 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.3 Dependent Care Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.4 Claims for Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.5 Reimbursement of Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.6 Maximum Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.7 Minimum Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X: ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.1 Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.2 Powers of the Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.3 Actions of the Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.4 Information to be Furnished. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1 0/01'2012 V er.7b
Section 10.5 Nondiscrimination . ' ' ' ' . . . . . . . . . . . . . . . . . . . . . . ' . . . ' . . . ]I
Section 10.6 Changes by Administrator . . ' . . . . . . . . ' . . . . . . . . . . . . ' . . . . . 31
Section ' ' . . . ' . . . ' . . . . . . . . . . . . ' . . . . . ' ' 32
Section . . . . . . . ' . . . . . . . . . . . . . . . 32
ARTICLE XI: MISCELLANEOUS ' . . . ' . . . . . . ' . ' ' . ' ' ' . . . ' . . . . . . . ' . . . . . . 32
Section 11.1 Amendment and Termination. . . . . . . . . . . . . ' ' . . ' . . . . . . . . . . 32
Section 11.2 Plan Not a Contract of Eml2loMen . . . . . ' . . ' . ' . . . . . . . . . . . . 32
Section 11.3 Funding ' ' ' ' ' . . ' ' . . . . . . . . . . . . ' . . ' . . . ' . . , . ' . . . . . . . . 32
Section 11.4 No Guarantee of Tax Consequences . . . . . . . . . ' . . . ' . . . ' . . . . . 33
Section ' . ' . ' . . . . . ' . . . . , . . . . ' ' ' 33
Section 11.6 Governing Law ' ' ' ' ' ' ' ' ' ' . . , . . . . ' . . . . . . . . . ' . . . ' . . . . . 33
FLEXIBLE BENEFIT PLAN
ARTICLE 1: INTRODUCTION
Section 1.1 Purpose. The purpose of the Plan is to provide Participants with a choice
between cash and certain "qualified benefits" as defined in Section 125 of the Code. The Plan is
intended to qualify as a "Cafeteria Plan" under Section 125 of the Code so that Optional Benefits
a Participant elects to receive under the Plan will be eligible for exclusion from the Participant's
gross income under Section 125(a) of the Code. The Employer intends Plan terms, including
those relating to coverage and benefits, to be legally enforceable. The Plan shall be maintained
for the exclusive benefit of Qualified Employees.
Section 1.2 Rules of Construction. The Plan shall be construed in accordance with the
following rules:
(a) Headings at the beginning of articles and sections are provided for convenience of
reference and shall not influence construction of the Plan.
(b) Capitalized words and phrases shall have the meaning defined in the Plan unless a
different meaning is plainly required by the context.
(c) Except as otherwise indicated by context, the masculine gender shall include the
feminine, the singular shall include the plural, and vice versa.
ARTICLE 11: DEFINITIONS
Section 2.1 Code means the Internal Revenue Code of 1986, as amended, and its
regulations.
Section 2.2 Compensation means the total wages and salary, including salary reduction
amounts under Code sections 132(f), 125, 401(k), 403(b) 457(b), overtime payments and bonus
payments,which are paid by the Employer to a Participant during the Plan Year.
Section 2.3 Dependent for purposes of the Health Care Flexible Spending Account
(Health FSA) under Article VIII means the spouse of a Participant or any individual who is a
dependent of the Participant as defined in Section 152 of the Code (without regard to Section
152(b)(1), Section 152(b)(2) and Section 152(d)(1)(13)), effective January 1, 2011 any child (as
defined in Code Section 152(f)(1)) who as of the end of the taxable year has not attained age 27
as further defined in the Summary Pages and any Alternate Recipient under a Qualified Medical
Child Support Order ("QMSCO") as defined in ERISA Section 609. For purposes of Premium
Conversion under Article VII, dependent shall be determined under the terms of each Employer
provided accident or health plan under Code Sections 105(b) and 106.
Section 2.4 Dependent Care Account means the account established and maintained by
the Employer under Article IX, to record a Participant's interest in the Plan.
10/01/2012 Ver.7b 1
Section 2.5 Dependent Care Expense for the purpose of Dependent Care Flexible
Spending Account (Dependent Care FSA) under Article IX, means an amount paid or incurred
by the Participant for the care of a Qualifying Dependent or for related household services, but
only if such expenses were incurred to enable the Participant (and spouse if applicable) to be
Gainfully Employed during the period in which the expenses were incurred. Expenses for
services delivered outside of the Participant's home for a Qualifying Dependent described in
Section 2.22(b) shall be Dependent Care Expenses only if such Qualifying Dependent regularly
spends at least eight (8) hours per day in the Participant's household. Expenses shall be
considered incurred on the date services are provided. Eligible expenses do not include: amounts
paid for food, clothing or education unless such expenses are incidental to and inseparable from
the care provided; educational expenses for a child in kindergarten or higher grade; or expenses
for services at a camp where the Qualifying Dependent stays overnight.
Eligible expenses do not include amounts paid to:
(a) A dependent care facility or person providing care for more than six (6) nonresident
individuals which does not comply with all applicable laws and regulations of the state or
local government in which it is located; or
(b) A child of the Participant under the age of nineteen(19) at the close of the Plan Year; or
(c) Any other individual which the Participant or the Participant's spouse may claim as a
dependent under Section 151(c) of the Code.
Section 2.6 Effective Date means the Effective Date as shown in the Summary Pages.
Section 2.7 Election means an election pursuant to Article VI by a Qualified Employee
to participate in the Plan and the allocation by the Participant of elective contributions made on
the Participant's behalf among Optional Benefits available under the Plan.
Section 2.8 Employer means the entity named as the Employer in the Summary Pages, or
any successor that agrees to continue the Plan and any affiliated employer which adopts the Plan.
Affiliated employer in this regard means another corporation which is a member of a controlled
group of corporations, any trade or business under common control or an affiliated service group.
Section 2.9 FMLA Leave means a leave of absence that the Employer is required to
extend to a Participant under the provisions of the Family and Medical Leave Act of 1993.
Section 2.10 Gainfully Employed for the purpose of Dependent Care Reimbursement
under Article IX, means the earning of income which is not nominal reimbursement for
volunteer work, or the period of active search for gainful employment.
Section 2.11 Health Care Account means the account established and maintained by the
Employer under Article VIII, to record a Participant's interest in the Plan.
1010V2012 Ver.7b 2
Section 2.12 Health Expense for the purpose of Health Care Flexible Spending Account
(Health FSA) under Article VIII, means an expense incurred during a Period of Coverage by a
Participant or by the Dependent of a Participant for medical care as defined in Section 213(d) of
the Code, excluding any insurance premiums for health coverage, excluding expenses for long
term care and excluding any specific expenses described in the exclusions section of the
Summary Pages. Expenses are considered incurred on the date services are rendered. Expenses
incurred for a medicine or drug after December 31, 2010 shall be treated as an eligible Health
Expense only if such medicine or drug is a prescribed drug (determined without regard to
whether such drug is available without a prescription), is insulin, or as permitted by law.
Expenses are eligible only to the extent such expenses have not been reimbursed through
insurance or some other source and the participant agrees not to seek such reimbursement.
Medical care generally refers to the diagnosis, cure, treatment, or prevention of disease or for the
purpose of affecting any structure or function of the body and includes transportation expenses
primarily for and essential to medical care.
Section 2.13 Highly Compensated Employee means the following for each type of
benefit described below:
(a) a highly compensated employee for purposes of applicable nondiscrimination
requirements of Section 125 of the Code means an employee who is highly compensated
as defined in Section 125(e) of the Code,
(b) for Health Care Flexible Spending Account under Article VIII, a highly compensated
employee for purposes of applicable nondiscrimination requirements of Section 105 of
the Code means an employee who is highly compensated as defined in Section 105(h) of
the Code,
(c) for Dependent Care Flexible Spending Account under Article IX, a highly compensated
employee for purposes of applicable nondiscrimination requirements of Section 129 of
the Code means an employee who is highly compensated as defined in Section 414(q) of
the Code.
Section 2.14 Highly Compensated Individual for purposes of Section 125 and its
nondiscrimination requirements shall include an officer, a shareholder owning more than 5
percent of the voting power or value of all classes of stock of the Employer, a highly
compensated employee (based on the compensation amount described Section 414(q)(1)(B) for
the preceding Plan Year, or for the current Plan Year in the case of the first year of employment)
and, if the Employer so elects, was also in the top-paid group as described in Section 414(q)(3)
or a spouse or dependent of any of the above.
Section 2.15 Key Employee means any person who is a key employee as defined in
Section 416(i)(1) of the Code.
Section 2.16 Optional Benefits means the following employee benefit plan(s) offered by
the Employer if adopted by the Employer as shown in the Summary Pages:
10."01,2012 Ven 7b 3
(a) Premium Conversion and Health Savings Accounts (HSA) as described in Article VII
(b) Health Care Flexible Spending Account(Health FSA) as described in Article VIII
(c) Dependent Care Flexible Spending Account (Dependent Care FSA) as described in
Article IX
Section 2.17 Participant means a Qualified Employee who has satisfied the eligibility
requirements provided in Article III and who makes an Election to participate in the Plan.
Section 2.18 Period of Coverage means the time period commencing on the first day of
the Plan Year except for:
(a) A new or requalifying Participant who satisfies the participation requirements of Article
III during the Plan Year,
(b) A Participant who, during a Plan Year, satisfies the conditions of an exception to the
irrevocability requirement, as such exceptions are described in Section 6.2, or
(c) A Participant whose participation in the Plan terminates during the Plan Year in
accordance with Section 3.3,
in which case the Period of Coverage shall be the time period commencing on:
1) For a Participant described in subsection (a) above who is a new employee, the
date of hire if the Participant files an Election pursuant to Section 6.1 within 30
days of the date of hire (provided that salary reduction amounts used to pay for
such Election are from Compensation not yet currently available on the date of
the Election),unless a later date is shown on the Summary Pages, or
2) For a Participant described in subsection (b) above, the mid-year entry date as
shown in the Summary Pages following receipt by the Plan Administrator of an
Election by the Participant;
and ending on the date participation in the Plan terminates in accordance with Section 3.3.
Section 2.19 Plan means the Flexible Benefit Plan as set forth herein, and as amended
from time to time.
Section 2.20 Plan Administrator means the Employer or such other person or persons
designated to administer the Plan pursuant to Article X.
Section 2.21 Plan Year means the period designated as the Plan Year as shown in the
Summary Pages.
10,'01/2012 Ver.7b 4
Section 2.22 Qualified Benefit means a benefit provided under an Employer sponsored
benefit plan that is a qualified benefit under section 125(f).
Section 2.23 Qualified Employee means an individual who receives Compensation from
the Employer as a common law employee and who meets the eligibility requirements shown in
the Summary Pages and who is not 1) an owner-employee of the Employer as defined in Section
401(c)(1)(B)(3) of the Code, or 2) a shareholder if the Employer is a subchapter S corporation as
defined in Section 1361(a)of the Code.
The term Qualified Employee does not include an individual who is a leased employee,
meaning any person who is an employee of the Employer and who provides services to an
Employer where: 1) such services are provided pursuant to an agreement between an Employer
and any other person(leasing organization); 2) such person has performed such services for the
Employer on a substantially full time basis for a period of at least one year pursuant to Code
Section 414(n)(2); and 3) such services are performed under primary direction or control by the
recipient.
Bargaining unit employees are eligible only if there was good faith bargaining about
cafeteria plan benefits between the Employer and the employees' representative regarding
participation in the Plan.
Section 2.24 Qualifying Dependent. For purposes of the Dependent Care Flexible
Spending Account under Article IX means any individual who is,
(a) A dependent of the Participant (as defined in Code Section 152(a)(1)) under the age of
thirteen(13), or
(b) A dependent or spouse of the Participant who is physically or mentally incapable of self-
care, who has the same principal place of abode as the Participant for more than one-half
of the calendar year and, in the case of a non-spouse dependent, who does not have
income in excess of the exemption amount defined in Code Sectionl5l(d). An individual
shall not be treated as having the same principal place of abode if at any time during the
year the relationship between the individual and Participant is in violation of local law.
(c) Where the parents are divorced, legally separated or separated under a written separation
agreement, a child (as defined in Code Section 152(f)(1) of the Code) who:
1) is under age 13 or is physically or mentally incapable of self-care,
2) receives over half of his or her support during the calendar year from his or her
parents who are divorced or legally separated under a decree of divorce or
separate maintenance or who are separated under a written separation agreement,
and
3) is in the custody of one or both of his or her parents for more than one-half of the
calendar year,
10'01/2012 Ver.7b 5
is treated for any taxable year beginning in the calendar year as a Qualifying Dependent
of that parent with whom the child shared the same principal place of abode for the
greater portion of the calendar year. Accordingly, a child may be treated as the
Qualifying Dependent of a parent even though that parent is not entitled to a dependency
exemption for the child under Code Section 152. Only one parent may treat the child
as a Qualifying Dependent.
Section 2.25 Summary Pages means the elections made by a particular employer in
adopting this Plan, attached hereto as "Summary Pages" and incorporated herein by reference.
Section 2.26 Student means an individual who, during each of five (5) calendar months
during a taxable year, is a full-time student at an educational organization which normally
maintains a regular faculty and curriculum and normally has a regularly enrolled body of
students in attendance at the place where its educational activities are regularly carried on.
Section 2.27 USERRA Leave means a leave of absence that the Employer is required to
extend to a Participant under the provisions of the Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended from time to time. A Participant returning to
employment with the Employer within the required time after an honorable discharge from the
military under the terms of a USERRA Leave shall have elections and benefits restored to him at
the same level and type that were in effect at the time when the USERRA Leave began, as well
as any benefits that began during the leave of absence for which the Participant would have
reasonably become eligible.
ARTICLE III: ELIGIBILITY AND PARTICIPATION
Section 3.1 Eligibility. A Qualified Employee will become eligible to participate in the
Plan on the mid-year entry date shown in the Summary Pages. If there is a length of service
requirement shown in the Summary Pages, time that a Qualified Employee spends on an FMLA
Leave or USERRA Leave will count toward fulfilling the length of such service requirement.
Section 3.2 Commencement of Participation. Participation commences on the first day
of a Period of Coverage for which an Election is filed in accordance with Article VI. Except as
provided below, an Election shall be effective on the first day of the next Plan Year.
If a new Qualified Employee (or a Qualified Employee who has an Election change as
provided in Section 6.2) files an Election during the Plan Year in accordance with Article VI,
such Election shall be effective as of the mid-year entry date shown in the Summary Pages.
Section 3.3 Termination of Participation. A Participant will cease to be a Participant in
the Plan on the earliest of:
(a) the date on which any Optional Benefit with respect to which the Participant has an
Election terminates, but only to the extent of the Participant's participation in that
Optional Benefit,
10/01 2012 e'er.;'b 6
(b) the date the Participant is no longer a Qualified Employee,
(c) the first day of a Period of Coverage for which an Election is revoked pursuant to Section
6.2,
(d) the last day of the Plan Year for which an Election is filed subject to the Grace Period
Coverage described in Section 3.6,
(e) the date required Employee contributions cease, or
(f) the date on which the Plan terminates.
Termination of participation in this Plan shall not prevent a former Participant from continued
coverage or benefits under respective Optional Benefit plans (as provided in Sections 3.4 and
3.5) if and to the extent provided by such plans or as authorized by any applicable state or federal
law.
Section 3.4 Participation during Unpaid Leave. A Participant who is not at work
because of an unpaid leave of absence (including an FMLA Leave or USERRA Leave), may, at
the Participant's option, continue any and all Optional Benefits under the Plan that such
Participant elected for the Plan Year during the period of the absence, provided that, the
Participant makes all required contributions for such Optional Benefits. Such Participant may
choose from among any of the payment options adopted in the Summary Pages, including the
following:
(a) PRE-PAY: At the Participant's request, paying the amounts through salary reduction that
will become due during the leave (but only through the end of the current Plan Year) out
of one or more of the Participant's paychecks preceding the leave, with the remaining
amounts to be paid as set forth below;
(b) PAY AS YOU GO: Pre-tax salary reduction contributions will be taken from payments
to the Participant (i.e., sick pay, wage continuation, short term disability benefits or
vacation pay) during the leave, or if the Participant receives no such payments (or at the
time at which such payments cease) the Participant may remit after-tax payments to the
Employer on or before each pay period for which the contributions would have been
deducted from the Participant's paycheck if the leave had not been taken, provided that
any delinquent payments must be made within thirty(30) days of their due date;
(c) PAY ON RETURN: From paychecks following the leave provided that all contributions
are made within the Plan Year in which the Election occurs and provided that the
Participant and Employer agree to this payment option before the unpaid leave
commences. In addition, the Employer may enforce this catch-up Pay On Return option
for a Participant who fails to make agreed upon pay-as-you go payments, regardless of
whether or not an agreement was made in advance of the leave, to the extent permitted
under state law.
10/01.'2012`°er.7b 7
A Participant whose participation in the Plan terminated because of an Employer
approved unpaid leave of absence, and who returns from leave during the same Plan Year shall
have their Election for that Plan Year automatically reinstated on the same terms and conditions
in effect prior to the unpaid leave of absence provided, however, that the Participant shall have
no greater right to benefits for the remainder of the Plan Year than a Participant who has not
taken an unpaid leave of absence, unless such Election is revoked in accordance with Section
6.2. A Participant whose coverage under a FSA terminates during an unpaid leave (either
because of election revocation or non-payment of premium) has two options: reinstate the
original amount elected prior to the leave, and make up the missed contributions through higher
pre-tax salary reductions after return from the leave, or reduce the original election amount by
the contributions missed during the leave, thereby maintaining the same payroll deduction
amount each payroll period following return from the leave. In either case, expenses incurred
while coverage was not in effect are not reimbursable.
Section 3.5 Continuation of Coverage. For purposes of the Health Care Flexible Spending
Account described in Article VIII only, a Participant whose coverage under such Optional
Benefit would otherwise terminate may elect to continue coverage under this Optional Benefit in
accordance with the rules of Section 4980B of the Code. A Participant who elects to continue
coverage under this Optional Benefit shall pay to the Employer an amount designated by the
Employer up to the maximum amount permitted under Section 4980B of the Code.
A Participant who takes an FMLA Leave may continue coverage under the provisions of
the Family and Medical Leave Act of 1993. For purposes of applying the provisions of Code
Section 4980B, a Participant who takes an FMLA Leave and who does not return to service as a
Qualified Employee at the expiration of the FMLA Leave, will become subject to the provisions
of Section 4980B at the expiration of the FMLA Leave.
A Participant who takes a USERRA Leave for less than 31 days may continue on such
benefit plans on the same terms as active employees. A Participant who takes a USERRA Leave
for 31 days or more may continue coverage under the provisions of USERRA and Code Section
4980B, making contributions at the rate charged for continuation coverage for other Participants,
as determined by the Employer up to the maximum amount permitted under Section 4980B of
the Code.
A Participant on FMLA Leave or USERRA Leave who does not elect to continue
participation in the Health Care Reimbursement Optional Benefit under this Section 3.5 shall not
be entitled to payment or reimbursement of Health Expenses incurred during his FMLA Leave or
USERRA Leave, nor shall such Participant be entitled to retroactively elect coverage of such
expenses under the Plan upon his reinstatement in the Plan.
In lieu of the foregoing continuation coverage provisions, the Employer may establish a
policy whereby Participants can waive continuation of coverage and choose instead to extend
coverage by self paying the remaining premiums, at an amount determined by the Employer. In
addition to the foregoing, the Plan will permit a Participant to continue coverage in accordance
with any other provision of applicable law requiring such continuation.
10/01,2012 Ver.7b 8
This Section 3.5 shall apply only the Health Care Reimbursement Optional Benefit
described in Article VIII.
Section 3.6 Grace Period Coverage. This Section shall apply only if and to the extent
Grace Period Coverage is adopted by the Employer as shown in the Summary Pages. If so
elected, amounts remaining in the Participant's flexible spending account(s) at the end of the
Plan Year can be used to reimburse the Participant for eligible expenses that are incurred during
the Grace Period defined in the Summary Pages under the following conditions:
(a) Applicability— In order for a Participant to be reimbursed for eligible expenses incurred
during the Grace Period from amounts remaining in their account at the end of the Plan
Year:
1) A Participant must have coverage in effect on the last day of the Plan Year to
which the Grace Period applies, or
2) be a qualified beneficiary who has COBRA coverage as defined in Section 3.5 on
the last day of that Plan Year.
(b) No Cash-out or Conversion — Prior Plan Year FSA amounts may not be cashed out or
converted to any other taxable or non-taxable benefit.
(c) Reirnbursernent of Grace Period Expenses — Eligible expenses incurred during a Grace
Period and approved for reimbursement in accordance with the Plan's claim procedure
will be reimbursed and charged first against any amount available from prior Plan Year
(unless directed otherwise by the Participant) and then against any amount available to
reimburse expenses that are incurred during the current Plan Year. All claims for
reimbursement will be paid in the order in which they are approved. Once paid, a claim
will not be re-processed or otherwise re-characterized so as to pay it (or treat it as paid)
from amounts attributable to a different Plan Year or Period of Coverage.
(d) Run-out Period and Forfeitures—Claims for reimbursement of eligible expenses incurred
during a Plan Year or its related Grace Period must be submitted on or before the claim
submission deadline specified in the Summary Pages. Any prior Plan Year amounts that
remain after all reimbursements have been made for the Plan Year and its related Grace
Period shall not be carried over to reimburse the Participant for expenses incurred after
the Grace Period ends, The Participant will forfeit all rights with respect to such, which
will be subject to the Plan's provisions regarding forfeitures in Section 5.7.
ARTICLE IV: CONTRIBUTIONS
Section 4.1 Salary Reduction Contributions. A Participant may elect in accordance with
the election procedures described in Article VI to receive his or her full Compensation for any
Period of Coverage in cash, or to have a portion of such Compensation applied by the Employer
10/01,'2012 Ver.7b 9
toward the Participant's share of the cost of Optional Benefits available under Article V and as
elected by the Employer in the Summary Pages. Salary reduction amounts used to pay for
Elections under this Plan must be from Compensation not yet currently available on the date of
the Election. If so elected, the Participant's Compensation will be reduced, and an amount equal
to the reduction will be allocated by the Employer to the Optional Benefits designated by the
Participant. Pro rata amounts of the total salary reduction election will be deducted from a
Participant's Compensation at least once per month but not more frequently than once per pay
period unless the Employer adopts a specific policy which provides for contributions on a
periodic basis other than level pro rata amounts.
For Plan Years beginning after December 31, 2012, the maximum salary reduction
contribution to the Health Care Flexible Spending Account (Health FSA) as described in Article
VIII shall not exceed the amount specified in Section 125(1) as indexed for inflation. Employer
provided Benefit Credits that the Participant could elect to receive as cash or as a taxable benefit
shall be considered salary reduction contributions for purposes of applying this limit. If a Plan
Year is less than 12 months, this amount shall be prorated based on the number of months in the
short Plan Year.
The amount of the salary reduction election for the premium conversion option described
in Section 7.2 shall be the Participant's share of the cost of Employer sponsored group health
coverage or other Qualified Benefits, as determined by the Employer and as permitted by
applicable law, taking into account any benefit credits available to the Participant under Section
4.2. If the employee's share of the cost for such benefit changes during the Period of Coverage, a
Participant's salary reduction for such benefit(s) may be adjusted automatically in accordance
with the change in cost.
Section 4.2 Benefit Credits. The Employer may make available to Participants elective
Employer provided benefit credits which the Employer shall allocate to offset the cost of
Optional Benefits elected by the Participant, or pay to the Participant as additional taxable
Compensation as defined in the Summary Pages. The amount of benefit credits available under
this Section, if any, is shown in the Summary Pages and may change in subsequent Plan Years
provided that the new amount is determined before the beginning of the Plan Year. Benefit
Credits shall be earned in equal pro rata amounts on the last day of each payroll period
throughout the Period of Coverage.
Benefit Credits in excess of the cost of Optional Benefits elected by the Participant may
be forfeited or distributed in whole or in part to the Participant, as selected by the Employer in
the Summary Pages.
Section 4.3 Maximum Contribution. The maximum amount of Employer contributions
under this Plan for any Participant for a Plan Year shall be the sum of the maximum Health Care
FSA and Dependent Care FSA elections which are shown in the Summary Pages plus the
amount required to fully pay the Participant's share of the cost for benefits under any Premium
Conversion Optional Benefit available through the Plan as defined in annual benefit enrollment
material,plus contributions to the Participant's HSA (if any).
10;01/2012 Ver.7b 10
Section 4.4 After-Tax Employee Contributions. If the Employer provides a Qualifying
Benefit to a domestic partner or a person who is considered to be a dependent by the Employer
but does not meet the definition of "Dependent," as described in Section 2.3, the cost of such
coverage shall be deducted from the Employee's Compensation on an after-tax basis.
ARTICLE V: BENEFITS
Section 5.1 Benefit Options. A Participant may allocate elective contributions as
provided in Article IV between cash and the Optional Benefits in Article II, as adopted by the
Employer as shown in the Summary Pages. This Plan shall be considered a "premium-only-
plan"to the extent the sole Optional Benefit is an Election between salary reduction and payment
of the employee share of the Employer provided accident and health insurance premium.
Section 5.2 Benefit Descriptions. While the election to receive one or more benefits may
be made under this Plan, the benefits will be provided in accordance with the plan documents or
contracts governing the respective benefits.
Section 5.3 Limitation of Benefits. No Optional Benefits shall be paid to or on behalf of
a Participant in excess of the amount elected by the Participant under the Plan. With the
exception of the HSA, in no case shall the Plan allow a Participant to carry over unused
contributions from one Plan Year to a subsequent Plan Year, or, with the exception of Grace
Period Coverage described in Section 3.6, allow contributions from one Plan Year to purchase a
Qualified Benefit incurred in a subsequent Plan Year.
Section 5.4 Claims Procedure. Claims and reimbursements for Optional Benefits shall
be administered consistent with the claims procedures for the applicable Optional Benefit, as set
forth in the plan documents and/or summary plan description for the Optional Benefit. If a claim
for reimbursement under this Plan is wholly or partially denied, claims shall be administered in
accordance with the claims procedure set forth in Sections 5.5 and 5.6 below. A Claimant who
fails to utilize or complete the following claims procedures shall not have exhausted all
administrative remedies under the Plan and shall be barred from asserting the claim in any legal
proceeding.
Section 5.5 Procedure for Filing; a Claim. The plan sponsor has established the following
procedures for bringing claims and appeals. Though it conforms with ERISA's procedures, it
should not be interpreted to impose any other ERISA requirements on the plans offered here that
are not subject to ERISA. In order for a communication from a Claimant (as defined in
paragraph (b) below) to constitute a valid claim, it must satisfy the following paragraphs (a) and
(b) of this Section 5.5.
(a) Any claim submitted by a Claimant must be in writing on the appropriate claim form (or
in such other manner acceptable to the Plan Administrator) and delivered, along with any
supporting comments, documents, records and other information, to the Plan
Administrator in person, or by mail postage paid, to the address of the Plan Administrator
provided in the Summary Plan Description.
10/01/2012 Ver.7b 11
(b) Claims and appeals of denied claims may be pursued by a Participant or an authorized
representative of the Participant (each of whom will be referred to in this Article as a
"Claimant"). However, the Plan Administrator may establish reasonable procedures for
determining whether an individual has been authorized to act on behalf of a Participant.
Section 5.6 Review.
(a) Initial Claim Review - The initial claim review will be conducted by the Plan
Administrator, with or without the presence of the Claimant, as determined by the Plan
Administrator in its discretion. The Plan Administrator will consider the applicable terms
and provisions of the Plan and amendments to the Plan, information and evidence that is
presented by the Claimant and any other information it deems relevant. In reviewing the
Claim, the Plan Administrator will also consider and be consistent with prior
determinations of claims from other Claimants who were similarly situated and which
have been processed through the Plan's claims and appeals procedures within the past 24
months, provided that the Plan Administrator will recognize any applicable advances in
medical technology or changes in tax law when making such comparisons.
(b) Initial Benefat Determination
1) The Plan Administrator will notify the Claimant of the Plan Administrator's
determination within a reasonable period of time, but in any event (except as
described in paragraph (2) below) within 30 days after receipt of the claim by the
Plan Administrator.
2) The Plan Administrator may extend the period for making the benefit
determination by 15 days if it determines that such an extension is necessary due
to matters beyond the control of the Plan and if it notifies the Claimant, prior to
the expiration of the initial-30 day period, of the circumstances requiring the
extension of time and the date by which the Plan Administrator expects to render
a decision. If such an extension is necessary due to a failure of the Claimant to
submit the information necessary to decide the claim, the notice of extension will
specifically describe the required information, the Claimant will be afforded at
least 45 days from receipt of the notice within which to provide the specified
information, and the period in which the Plan Administrator is required to make a
decision will be tolled from the date on which the notification is sent to the
Claimant until the Claimant adequately responds to the request for additional
information.
(c) Manner and Content of Not fication of Adverse Benefit Determination
1) The Plan Administrator will provide a Claimant with written or electronic notice
of any adverse benefit determination, in accordance with applicable Department
of Labor regulations.
2) The notification will set forth in a manner calculated to be understood by the
Claimant:
(i) the specific reason or reasons for the adverse benefit determination;
10.01/2012 Ver.76 12
(ii) reference to the specific provision(s) of the Plan on which the
determination is based;
(iii) description of any additional material or information necessary for the
Claimant to perfect the claim and an explanation of why such material or
information is necessary; and
(iv) a description of the Plan's review procedures and the time limits applicable
to such procedures, including a statement of the Claimant's right to bring a
civil action under Section 502(a) of ERISA following an adverse benefit
determination on review.
(d) Procedure for Filing a Review of an Adverse Benefit Determination
1) Any appeal of an adverse benefit determination by a Claimant must be brought to
the Plan Administrator within 180 days after receipt of the notice of the adverse
benefit determination. Failure to appeal within such 180-day period will be
deemed to be a failure to exhaust all administrative remedies under the Plan. The
appeal must be in writing utilizing the appropriate form provided by the Plan
Administrator (or in such other manner acceptable to the Plan Administrator);
provided, however, that if the Plan Administrator does not provide the appropriate
form, no particular form is required to be utilized by the Claimant. The appeal
must be filed with the Plan Administrator at the address listed in the Summary
Plan Description.
2) A Claimant will have the opportunity to submit written comments, documents,
records and other information relating to the claim.
(e) Review Procedure for Adverse Benefit Determinations
1) The Plan Administrator will provide a review that takes into account all
comments, documents, records and other information submitted by the Claimant
without regard to whether such information was submitted or considered in the
initial benefit determination.
2) The Claimant will be provided,upon request and free of charge, reasonable access
to and copies of all relevant documents.
3) The review procedure may not require more than two levels of appeals of an
adverse benefit determination.
4) The review of the adverse benefit determination will not accord deference to the
initial determination made by the Plan Administrator.
5) The Plan Administrator must designate an individual to conduct the review
process who is neither the individual who made the adverse benefit determination
that is the subject of the appeal nor the subordinate of such individual.
10/01/2012 Ver.7b 13
(f) Timing and Notification of Benefit Determination on Review - The Plan Administrator
will notify the Claimant within a reasonable period of time, but in any event within 60
days after the Claimant's request for review. If more than one appeal is required to make
a final benefit determination of a denied claim, such notice will be provided, with respect
to any one of such two appeals, not later than 30 days after receipt by the Plan
Administrator of the Claimant's request for a review.
(g) Manner and Content ofNotifi.cation ofBenefztDetermination on Review
1) The Plan Administrator will provide a written or electronic notice of the Plan's
benefit determination on review, in accordance with applicable Department of
Labor regulations.
2) The notification will set forth:
(i) the specific reason or reasons for the adverse benefit determination;
(ii) reference to the specific provision(s) of the Plan on which the
determination is based;
(iii) a statement that the Claimant is entitled to receive, upon request and free
of charge,reasonable access to and copies of all relevant documents;
(iv) a statement of the Claimant's right to bring a civil action under Section
502(a) of ERISA following an adverse benefit determination on review;
and
(v) a statement that the Claimant may have other voluntary alternative dispute
resolution options, such as mediation and that the Claimant may contact
the local U.S. Department of Labor office and state regulatory agency to
find out what options are available.
(h) Limitation ofActions - Notwithstanding any statutory limitations period or conflict of
law provision to the contrary, no action with respect to any benefit under this Plan may
be brought more than six months following the date on which the notice of the adverse
benefit determination on review is sent to the Claimant.
Section 5.7 Forfeitures. If a Participant has not used all amounts available for benefits to
the Participant under any Optional Benefit for a Period of Coverage in accordance with the terms
thereof, with the exception of Grace Period Coverage described in Section 3.6 any remaining
balance shall be forfeited by the Participant, who shall have no further claim thereto. Such
forfeitures shall be used to offset the reasonable administrative costs of the Plan or retained by
the Employer.
ARTICLE VI: ELECTION PROCEDURES
Section 6.1 Election Form and Timing. Elections must be in writing, shall specify the
Optional Benefits to which elective contributions will be allocated and designate the amount, if
1WO U2012 e'er.7b 14
any, of reimbursement account contributions. Elections must be made before the earlier of the
date when taxable benefits are currently available or the first day of the Plan Year or other Period
of Coverage, except as provided for newly hired Qualified Employees as described in subsection
(a)below.
The Plan Administrator shall make available to all Qualified Employees a form in writing
or electronic on which to make benefit elections during an election period. Except as described
in subsections (a), (b) and (c) below, the election period shall commence no earlier than the
ninety(90) day period immediately preceding the first day of the Plan Year.
(a) The election period for a newly hired Qualified Employee shall be a thirty (30)
consecutive day period which commences on the date of satisfaction of the eligibility
requirements as defined in Section 3.1
(b) The election period for a Qualified Employee who makes an Election change as defined
in Section 6.2 shall be a thirty(30) consecutive day period which commences on the date
of the election change event.
(c) The election period for a Qualified Employee who returns to employment following a
FMLA Leave or USERRA Leave shall be a thirty (30) consecutive day period which
commences on the date of return to employment. Qualified Employees who are on
FMLA or USERRA Leave during the annual open enrollment period shall also have the
option of enrolling during such open enrollment period for the next Plan Year.
The designated election form must be received by the Plan Administrator prior to the first
day of the Plan Year. Except as described in subsections (a), (b) and (c) above, Elections
received after the first day of the Plan Year shall be void.
Section 6.2 Elections Irrevocable. Once an Election becomes effective, such Election
shall be irrevocable for the remainder of the Plan Year except under the following circumstances.
(a) Special enrollment rights - A Participant may revoke an election under a group health
plan and make a new election to apply only for the remaining period of coverage that
corresponds with the special enrollment rights provided by the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), including the enrollment of both
new and pre-existing Dependents.
(b) Changes in status - A Participant may revoke an Election for a Qualified Benefit and
make a new Election for the remainder of the Plan Year if a change in status occurs and
the election change satisfies the consistency rule defined below. A new election must be
filed with the Plan Administrator of this Plan, within thirty (30) days after the date of the
change in status. For purposes of this paragraph, a change in status means any of the
following:
1) Change in legal marital status of the Participant through marriage, divorce, death
of a spouse, legal separation and annulment.
10.'0112012',er.7b 15
2) Change in number of Dependents of the Participant through birth, adoption,
placement for adoption, and death.
3) Change in the employment status of the Participant or Dependent including his or
her termination or commencement of employment, loss of work due to strike or
lockout, commencement or return from an unpaid leave of absence, change from
full-time to part-time status or change in work site. In addition, if a Participant or
Dependent has a change in employment status that affects eligibility under an
employer plan operated in conjunction with this Plan, that is a change in status
under this paragraph.
4) Events that cause a Dependent to satisfy or cease to satisfy eligibility
requirements of an employer plan, including achieving or losing student status,
reaching the limiting age for benefits or any similar circumstance.
5) Change in residence of the Participant or Dependent which renders the person
unable to use the qualified benefit plan (such as if one relocated outside of the
HMO service area).
6) Change in status shall also include other events as may be permitted under
regulations and rulings of the Internal Revenue Service.
The consistency rule requires that Election changes must be due to and correspond with a
change in status that affects eligibility for coverage under an employer's plan.
With respect to accident or health plans and group term life insurance, a change in status
that affects eligibility is deemed to be consistent with the benefit change if it results in an
increase or decrease in the number of dependents who may benefit from coverage under
the plan. The consistency rule as to adding or dropping coverage is satisfied only for an
individual who has gained or lost eligibility. Further, an Election change to cancel
coverage for an individual who gains eligibility under another employer plan satisfies the
consistency rule only if the Participant certifies that the individual has actually become
covered under such plan.
With respect to group term life insurance and disability coverage, either an Election
change which increases or decreases coverage as a result of a change in status complies
with this consistency rule.
Notwithstanding this consistency rule, if the Participant or Dependent becomes eligible
for continuation coverage under Section 4980B of the Code or any similar state law, the
Participant may increase the amount of Premium Conversion under Article VII to pay
such premiums.
(c) Judgment, decree, or order — A Participant may change an Election with respect to an
accident or health plan as required to provide coverage for a dependent child pursuant to
a court judgment, order, decree or QMSCO as described in Section 2.3 resulting from a
divorce, legal separation, annulment or change in legal custody. A Participant may
cancel or terminate accident or health plan coverage for a child if such court order or
decree requires the Participant's former spouse or another person to provide coverage,
10,0112012 Ver.7b 16
but only upon certification by the Participant or another party to the court order that such
coverage has in fact been obtained.
(d) Entitlement to Medicare or Medicaid— If the Participant or a Dependent who is enrolled
in an accident or health plan of the Employer becomes enrolled under Part A or Part B of
Title XVIII of the Social Security Act (Medicare) or Title XIX of the Social Security Act
(Medicaid), other than coverage consisting solely of benefits under section 1928 of the
Social Security Act (Distribution of Pediatric Vaccines), the Participant may make a
corresponding Election change to cancel or reduce coverage for the Participant or
Dependent under the accident or health plan. Further, if Participant, spouse or dependent
who has been entitled to coverage under Medicare or Medicaid loses eligibility for such
coverage, the Participant may make a prospective election to commence or increase
coverage for the Participant or Dependent.
(e) Cost or coverage changes - If there is a change in the cost or coverage of a Qualified
Benefit as described below, a Participant may revoke an Election with respect to such
Qualified Benefit and make a new Election for the remainder of the Plan Year. This
paragraph does not apply to Health Care Flexible Spending Account benefits defined in
Section 2.16(b) and described in Article VIII.
1) Automatic changes - If the cost of a Qualified Benefit which is not a health FSA
increases or decreases during the Plan Year, and Participants are required to make
a corresponding change in their contributions, the Employer may, on a reasonable
and consistent basis, automatically make a prospective increase or decrease in
affected Participants' Elections for the plan.
2) Significant cost changes - If the cost charged to a Participant for a Qualified
Benefit option significantly increases or decreases during the Plan Year, the
Participant may make a corresponding prospective Election change. Through
such election, a Participant may commence participation in a Plan option that
decreases in cost or a Participant may revoke an Election for a Plan option that
increases in cost and, if the Employer makes available another option that
provides similar coverage, elect to receive coverage under such option.
Employees who have not previously elected to participate may elect mid-year and
commence participation on a prospective basis. Cost increase or decrease for this
paragraph means a change in the amount of the elective contributions required
under the Plan, and may result from actions taken by the Participant or the
Employer. With respect to dependent care as defined in Section 2.6(c), this
paragraph only applies if the cost change is imposed by a dependent care provider
who is not a relative of the Participant.
3) Significant curtailment of coverage - If there is a significant curtailment of
coverage under a Qualified Benefit option, a Participant may revoke their Election
and receive coverage on a prospective basis under another option providing
similar coverage. If the curtailment of coverage involves a loss of coverage, the
Participant may drop coverage if no other similar benefit option is available under
the Plan. Significant curtailment with a resulting loss of coverage includes any of
101101'2012 Ver.7b 17
the following: HMO not available in geographic area of residence, coverage not
helpful because lifetime or annual cap has been reached, a substantial decrease in
medical care providers in a PPO network or HMO, a hospital dropping out of the
plan or network, reduction in benefits for a certain illness or injury in which a
participant or family member is currently in a course of treatment, an increase in
deductible, copay, out-of-pocket cost-sharing limit or any other similar
fundamental loss of coverage.
4) Addition or improvement of a benefit option - If the Plan adds a new Qualified
Benefit option or if coverage under an existing option is significantly improved
during the Plan Year, Participants may revoke their Election and elect coverage
under the new or improved benefit option on a prospective basis.
5) Change in coverage under another employer plan - A Participant may make an
Election change that is on account of and corresponds with a change made by a
Dependent or former spouse under another employer plan if: i.) the circumstances
for the Dependent's or former spouse's election change is described in this Section
6.2, or ii.) the Dependent's or former spouse's employer plan permits an election
for a period of coverage that is different from the Period of Coverage for this
Plan.
6) Loss of coverage under other group health coverage - A Participant may add
coverage on a prospective basis if the Participant or Dependent loses coverage
under a group health plan sponsored by a governmental or educational institution.
(f) Special FMLA requirements - A Participant who takes an FMLA Leave may revoke an
election of group health coverage and make such other election for the remaining portion
of the period of coverage as may be provided for under the Family and Medical Leave
Act.
(g) Health Savings Account (HSA) election changes — Not withstanding the foregoing
election change rules, a Participant who elects to make Health Savings Account (HSA)
contributions under this Plan in accordance with Section 7.3 may start or stop such
Election or increase or decrease the Election at any time as long as the change is effective
prospectively(i.e., after the request for the change is received).
(h) Newly eligible dependent — Not withstanding the foregoing election change rules, a
Participant may make a new election for Premium Conversion under Article VII and
Health FSA coverage under Article VIII of the Plan during the 30-day enrollment period
designated by the Employer that is on account of and corresponds with his or her child
(as defined in Code Section 152(f)(1)) becoming newly eligible for coverage (or eligible
for coverage beyond the date on which coverage would otherwise have been lost)
pursuant to the Health Care and Education Reconciliation Act of 2010.
Section 6.3 Failure to Elect. A Participant who fails to return the required Election form
for any Period of Coverage to the Plan Administrator before the first day of such Period of
Coverage shall be deemed to have elected to receive his or her full Compensation in cash, except
10.01.'2012 Ver.7b 18
to the extent that an alternate default election for Premium Conversion, as described in Article
VII, is contained in the Summary Pages.
Section 6.4 Automatic Termination of Election. Elections made under this Plan shall
automatically terminate on the date the Participant ceases to be a Participant in the Plan in
accordance with Section 3.3, although coverage under Optional Benefits may continue if and to
the extent provided by such plans.
Section 6.5 Re-qualifying Employees. A Participant who returns to work as a Qualified
Employee within 30 days of termination of active employment will resume Plan participation
under the Participant's original election, provided there is no other intervening change in status
event as defined in Section 6.2. A Participant who returns to work more than 30 days after
termination of employment but within the same Plan Year, shall have the option of resuming the
original election or making a new election. To the extent that the Participant elects not to resume
the original election, the Participant shall not be a participant in this Plan during the period of
non-employment such that any premiums paid through Article VII (Premium Conversion) must
be paid on an after-tax basis.
ARTICLE VII: PREMIUM CONVERSION AND HEALTH SAVINGS ACCOUNTS (HSA)
Section 7.1 Applicability of this Article. The terms of this Article VII apply only to the
extent that the Employer has adopted the Premium Conversion Optional Benefit in Section
2.16(a). The term "Election" as used in this Article VII refers to the Election made by a
Participant pursuant to Article IV, to receive Optional Benefits described in such Section 2.16(a).
Section 7.2 Premium Conversion. Participants may elect as a benefit under this Article
pre-tax payment of the Participant's share of the cost for Employer sponsored Qualified Benefits
provided through an insured plan, a preferred provider organization, a health maintenance
organization or other group arrangement in accordance with the options made available through
the Employer. If so designated in the Summary Pages, Qualified Benefits for this purpose shall
include COBRA premiums for Employer sponsored health plans that are deductible under Code
Section 106. Once elected, this Optional Benefit shall be provided automatically, and as such,
no separate claim need be submitted to the Plan Administrator.
The Employer's liability for benefits provided by third parties through this premium
conversion option shall be limited to the payment of required premiums. The Employer does not
guarantee benefits payable under any insurance policy or other similar contract. Such benefits
shall be the exclusive responsibility of the insurer or other entity that is required to provide the
benefits under the governing policy or contract.
Section 7.3 Health Savings Accounts(HSA). Participants who are eligible individuals as
defined under Section 223(c)(1) of the Code may elect as a benefit under this Article pre-tax
contributions to a Health Savings Account(HSA) described in Section 223 of the Code. The
Employer's responsibly for determining eligibility under Section 223(c)(1) of the Code shall be
limited to:
10,01,`2012 Ver.7b 19
(a) determining whether the Participant is covered under an Employer sponsored HDHP (and
the deductible)or low deductible health plan or plans(including health FSAs and HRAs);
and
(b) the Participant's age (for catch- up contributions). The Employer may rely on the
Participant's representation as to his or her date of birth.
ARTICLE VIII: HEALTH CARE FLEXIBLE SPENDING ACCOUNT
Section 8.1 Applicability of this Article. The terms of this Article VIII apply only to the
extent that the Employer has adopted the Health Care Flexible Spending Account Optional
Benefit in Section 2.16(b) in the Summary Pages. The term "Election" as used in this Article VII
refers to the Election made by a Participant pursuant to Article IV, to receive Optional Benefits
described in such Section 2.16(b).
Section 8.2 Purpose. The purpose of the Health Care Flexible Spending Account
(Health FSA) described in this Article is to provide Participants with the option of being
reimbursed for eligible Health Expenses. The Health FSA is intended to qualify as a medical
reimbursement plan under Section 105 of the Code so that payments received pursuant to this
Article and the Plan are excludable from the gross income of the Participant under Section
105(b) of the Code.
Section 8.3 Health Care Account. The Employer will establish and maintain for record
keeping purposes a Health Care Account for each Plan Year for each Participant from whom an
Election is received. The account will be increased as of each date compensation is paid to the
Participant in an amount equal to the allocation, if any, which the Participant has elected. A
Participant's Health Care Account will be decreased from time to time in the amount of payments
made to the Participant for Health Expenses incurred during the Period of Coverage. All
amounts added to a Health Care Account remain the property of the Employer until distributed to
the Participant in accordance with this Article VIII.
Section 8.4 Claims for Reimbursement. A Participant who has made an Election for a
Plan Year may apply to the Plan Administrator for reimbursement of Health Expenses incurred
during such Period of Coverage by executing and submitting a claim form which the Plan
Administrator prescribes setting forth:
(a) The amount, date and nature of the expense,
(b) The name of the person or entity to which the expense was paid,
(c) The Participant's statement that the expense has not been reimbursed and that the
Participant will not seek reimbursement under any other plan covering health benefits,
and
10,'0 L'2012 Ver.7b 20
(d) Such other information as the Plan Administrator may require.
Such claim form shall be accompanied by bills, invoices, receipts, or other statements
from an independent third party stating the Health Expense has been incurred and the amount of
the expense. Self substantiation and self certification is not permitted, however the Plan
Administrator may, to the extent provided by law, rely on information provided by Participants.
Such claims must be submitted on or before the claim submission deadline specified in the
Summary Pages.
Section 8.5 Claims for Reimbursement Using an Electronic Payment Card. Not
withstanding the requirements of Section 8.4, this Section 8.5 shall apply to claims submitted
using an Electronic Payment Card to the extent that the Plan provides for such transactions. A
Participant who has made an Election for a Plan Year may apply to the Plan Administrator for
reimbursement of Health Expenses incurred during such Period of Coverage by using an
Electronic Payment Card specifically authorized for use by the Plan.
(a) Definitions
1) "Cardholder"means the Participant.
2) "Electronic Payment Card" means a card issued by the Plan to the Participant for
the purpose of electronically submitting requests for reimbursement pursuant to
this Section 8.5. Each Participant in the Health Care Flexible Spending Account
shall be issued an Electronic Payment Card upon enrollment in the Health FSA.
The Cardholder's use of the Electronic Payment Card shall be limited to the
maximum dollar amount of coverage in the Cardholder's Health Care Account.
Use of the Electronic Payment Card shall be further limited to medical care
providers as identified by such provider's assigned Merchant Category Code.
3) "Qualifying Merchant Category Code" means the code used to identify medical
care providers including but not limited to physicians, pharmacies, dentists, vision
care offices and hospitals. The Drug Stores and Pharmacies merchant category
code will be a Qualifying Merchant Category Code only if ninety percent of the
particular store's gross receipts during the prior taxable year consisted of items
which qualify as expenses for medical care described in Code Section 213(d).
Merchants and service providers will be deemed to have a Qualifying Merchant
Category Code only if the provider has implemented a compliant Inventory
Information Approval System (IIAS). The Plan Administrator may elect to use
Merchant Category Codes assigned by the Electronic Payment Card processing
system, or may elect to assign unique Merchant Category Codes to each
individual providers. Electronic Payment Cards shall be used only for
reimbursement of Health Expenses incurred for goods and services rendered by
providers using a Merchant Category Code authorized by the Plan.
(b) Automatic Reimbursement shall occur when the Cardholder uses the Electronic Payment
Card at a medical care provider that has been assigned a Qualifying Merchant Category
10.01/2012 Ver.7b 21
Code and the amount of the Health Expense is less than or equal to the Cardholder's
Health Care Account balance. Each time a Health Expense is reimbursed using the
Electronic Payment Card, the Cardholder's Health Care Account shall be
correspondingly reduced.
(c) Participant Certification - Upon enrollment in the Health FSA, the Cardholder must
certify that the Electronic Payment Card will be used only for eligible Health Expenses
incurred by the Cardholder or a Dependent of the Cardholder as defined in Section 2.3.
The Cardholder must further certify that any expense paid with the Electronic Payment
Card has not been reimbursed and that the Cardholder will not seek reimbursement, or
cause any other individual to seek reimbursement, under any other plan covering health
benefits. This certification shall be re-affirmed each time that the Electronic Payment
Card is used. In addition, the Cardholder shall agree to acquire and retain sufficient
documentation to substantiate any Health Expense paid with the Electronic Payment Card
in accordance with Section 8.4.
(d) Claim Substantiation - The following transactions shall not require substantiation beyond
the certification described in subsection (e) above:
1) transaction amounts from providers with a Qualifying Merchant Category Code
equal to the dollar amount of the co-payment for that service under a health plan
sponsored by the Plan Sponsor, and exact multiples of that co-pay amount to five
times including combinations of tiered co-pay amounts fro the same benefit;
2) transaction amounts from providers with a Qualifying Merchant Category Code
that match expenses previously approved for the Cardholder as to the amount,
provider and time period, as determined by the Plan Administrator; or
3) transaction amounts from providers with a Qualifying Merchant Category Code
verified at the time and point of sale or retrospectively by the provider or an
independent third-party approved for such verification by the Plan
Administrator. The verification must include that the expense is a Health
Expense and that the expense was incurred by the Cardholder or a Dependent of
the Cardholder. The verification may be provided electronically; or
4) transaction amounts from providers that have implemented a compliant Inventory
Information Approval System (IIAS).
(e) Conditional Reimbursements - Transactions other than those described in (d) above shall
be considered "conditional reimbursements" subject to the following rules.
1) The Cardholder must execute and submit documentation as described in Section
8.4.
2) In the event that the Cardholder does not submit required documentation within a
reasonable period of time or the Plan Administrator determines that a
10/01/2012 e'er.7b 22
reimbursement has been made for an ineligible transaction, the Plan
Administrator shall request reimbursement from the Cardholder.
3) In the event that the Cardholder fails to make timely reimbursement to the Plan,
the Plan Administrator shall take action necessary to ensure that additional
improper reimbursements do not occur and shall suspend access to the electronic
Payment Card and shall continue to pursue appropriate collection actions,
including but not limited to:
(i) withholding the amount of the improper payment from the employee's pay
or other compensation, to the extent allowed by applicable law, or
(ii) withholding future reimbursements from the Cardholder's Health Care
Account in the amount of the improper payment until the PIan has
recouped the full amount of the improper payment, or
(iii) in the event the above procedures are insufficient to recoup the full
amount of the improper payment, the employee remains indebted to the
Employer and the Employer, consistent with its business practice will treat
the improper payment as it would any other business indebtedness.
Section 8.6 Reimbursement of Expense. The Employer shall reimburse the
Participant for Health Expenses incurred during a Period of Coverage if the Participant
submits the documentation required under Sections 8.4 and 8.5. An amount up to the
Participant's total Election for the Plan Year (reduced as of any particular time for prior
reimbursements for the same Period of Coverage) shall be available for reimbursement at
all times during the Plan Year. The Plan may not make advance reimbursements of
future or projected expenses. Claims must be submitted on or before the claim
submission deadline specified in the Summary Pages.
The Plan Administrator shall make a determination on claims submitted for
reimbursement within 30 days of receipt unless such determination cannot be made due
to reasons beyond the control of the Plan Administrator. In this case a 15 day extension
is available if the Participant is notified of the extension within the initial 30 day period.
If a determination on a claim cannot be made because the Participant did not provide
sufficient information, the Participant has 45 days from receipt of a request to provide
such information. Eligible claims for reimbursement shall be paid within 30 days of
receipt, or when the total amount of claims to be paid reaches a reasonable minimum
designated by the Plan Administrator, such as $50. However, if a minimum amount is
specified, that amount will not be applicable for the final processing cycle of the Plan
Year or other interim processing cycles as determined by the Plan Administrator.
Section 8.7 Maximum Reimbursement. The maximum reimbursement which a
Participant may receive for a Plan Year under this Article VIII shall be the amount
designated in the Summary Pages for health care reimbursement.
10,'01'2012 e'er.7b 23
Section 8.8 Minimum Election. The minimum election which a Participant may
make for a Plan Year under this Article VIII shall be the amount designated in the
Summary Pages for health care reimbursement.
Section 8.9 Revocation of Election. If a Participant revokes an Election during
the Plan Year as a result of a change in status or separation from service, the Employer
shall reimburse the Participant for any amount previously prepaid or contributed in
advance to the Optional Benefit on the Participant's behalf for coverage relating to a
period after the date of such Election revocation, regardless of the Participant's claims or
reimbursements as of that date. In no event may a Participant revoke an Election or make
a new Election in an amount which is less than the amount already reimbursed, or having
been submitted and pending reimbursement, by the Participant during the immediately
preceding Period of Coverage as of the date that the revocation or new Election would
become effective.
Section 8.10 Health Insurance Portability and Accountability Act of 1996
(HIPAA). Not withstanding any provision of this Plan to the contrary, the Plan shall be
operated and maintained in a manner consistent with HIPAA and regulations relating
thereto, to the extent they apply to the Plan.
(a) Effective Date - This Section 8.10 shall be effective as of the date compliance is
required by legislation or regulation promulgated by the Department of Health
and Human Services pursuant to HIPAA.
(b) DefhlitiWIS - The following definitions will apply to the provisions of this Section
8.10 and will be interpreted in accordance with the Privacy Rule:
1) "Health Information" is any information that is created or received by a
health care provider, health plan, public health authority, employer, life
insurer, school or university, or health care clearinghouse.
2) "Health Care Operations" includes activities related to plan operations and
administration.
3) "HIPAA Privacy Rule" or"Privacy Rule" refers to the privacy regulations
promulgated by the Department of Health and Human Services pursuant to
HIPAA. The regulations are codified at 45 C.F.R. Part 164.
4) "Individually Identifiable Health Information" is Health Information
created or received by a Covered Entity or employer that:
(i) relates to: past, present or future physical or mental health or
condition of an individual; the provision of health care to an
individual; or the past, present or future payment for the provision
of health care to an individual; and,
10101/2012 Ver.7b 24
(ii) identifies the individual directly or reasonably could be used to
identify the individual.
5) "Payment" includes activities undertaken to obtain contributions,
determine and fulfill responsibility for coverage and benefits, or to obtain
or provide reimbursement for health care expenses.
6) "Plan Administration Functions" are administration functions performed
by the Plan Administrator, except that plan enrollment and disenrollment
activities and any other activities excluded from the definition of the term
in the Privacy Rule are not Plan Administration Functions.
7) "Protected Health Information" or "PHI" is individually identifiable
information that is transmitted or maintained in any form or medium by
the Plan.
8) "Security Rule" shall mean the Security Standards for the Protection of
Electronic Protected Health Information at 45 CFR parts 160 and 164
subparts A and C.
(c) Uses and Disclosures of Protected Health Information
1) The Plan Administrator will use or disclose PHI without authorization of
the subject individual for Payment or Health Care Operations or for other
reasons permitted by or required by the Privacy Rule. All other uses or
disclosures of PHI will be pursuant to authorization of the subject
individual or his or her personal representative.
2) The Plan Administrator will only use PHI for Plan Administration
Functions.
3) The Plan Administrator will not use or further disclose PHI other than as
permitted or required by the Plan documents or as required by law.
4) The Plan Administrator will ensure that any agents, including a
subcontractor, to whom it provides PHI received from the Plan, agree to
the same restrictions and conditions that apply to the Plan Sponsor with
respect to such information.
5) The Plan Sponsor will not use or disclose PHI for employment-related
actions and decisions or in connection with any other Plan Sponsor benefit
or employee benefit plan decisions.
6) The Plan Administrator will report to the Plan any use or disclosure of
PHI of which it becomes aware that is inconsistent with HIPAA's
permitted uses or disclosures.
10/01/2012 Ver.7b 25
(d) Certification Required to Disclose Protected Health Information to Plan Sponsor
- The Plan will disclose PHI to the Plan Sponsor only upon receipt of a
certification by the Plan Sponsor that the plan documents have been amended as
required by the HIPAA Privacy Rule.
(e) Subject Individual Rights With Respect to PHI
1) The Plan Administrator will make PHI available to subject
individuals in accordance with the HIPAA Privacy Rule.
2) The Plan Administrator will make available PHI for amendment
and incorporate any amendments to PHI in accordance with the
HIPAA Privacy Rule,
3) The Plan Administrator will provide to the subject individual an
accounting of disclosures of the subject individual's PHI in
accordance with the HIPAA Privacy Rule.
(f) Provide Information to the Department of Health and Hunan Services -
The Plan Administrator will make its internal practices, books, and
records relating to the use and disclosure of Protected Health Information
received from the Plan available to the Secretary of the Department of
Health and Human Services for purposes of determining compliance by
the group health plan with the HIPAA Privacy Rule.
(g) Disclosure of Summary Health Information - In accordance with the
Privacy Rule, the Plan may disclose summary Health Information to the
Plan Sponsor, if the Plan Sponsor requests the summary Health
Information for the purpose of modifying, amending or terminating the
Plan. Summary Health Information may be Individually Identifiable
Health Information which summarizes the claims history, claims
expenses, or the type of claims experienced by individuals in the Plan, but
it excludes all identifiers that must be removed for the information to be
de-identified, except that it may contain geographic information to the
extent that it is aggregated by zip codes of at least five digits.
(h) No Longer Needed PHI- When any PHI received from the Plan ceases to
be needed for the purpose for which it was disclosed, the Plan
Administrator will return or destroy such information maintained in any
form and retain no copies of such information, except that, if return or
destruction is not feasible, the Plan Administrator will limit further uses
and disclosures to those purposes that make the return or destruction of
the information infeasible.
(i) Adequate Separation Between Plan and Plan Sponsor
1) The Plan Sponsor will provide adequate separation between the
Plan and itself when it serves in any capacity other than as Plan
Administrator.
2) Only those employees or classes of employees or other persons
10/0 1/2012 e'er.7b 26
under the control of the Plan Administrator who receive PHI
relating to Payment under, Health Care Operations of, or other
matters pertaining to the Plan in the ordinary course of business,
may have access to PHI.
3) Access to, and use of, PHI by the employees and other persons
described in paragraph (2) will be limited to the Plan
Administration Functions.
(j) Nola-Coinpliance with this Article - Any individual who purposely or
negligently fails to comply with this Section 8.10 will be subject to
disciplinary action by the Plan Sponsor, up to and including termination
of employment or service assignment.
(k) Security Standards — To the extent the Plan Sponsor has access to
electronic PHI other than summary information and enrollment
information, on or before the required effective date, the Plan Sponsor
will implement administrative, physical, and technical safeguards to
protect the confidentiality, integrity and availability of electronic
Protected Health Information (as defined in the Security Rule) that it
creates, receives, maintains, or transmits on behalf of the Plan. In
addition, the Plan Sponsor will:
1.) Ensure that the adequate separation required by Section 8.10(1) is
supported by reasonable and appropriate security measures;
2.) Ensure that any agent, including a subcontractor, to whom it
provides this information agrees to implement reasonable and
appropriate security measures to protect the information; and
3.) Report to the Plan any security incident of which it becomes
aware.
Section 8.11 HSA Compatible Health FSA. If so elected in the Summary Pages,
the Employer will make available a "HSA Compatible" FSA in the form of a "Limited-
purpose" and/or "Post-deductible" Health FSA. Limited-Purpose means that the
definition of Health Expense in Section 2.12 shall be limited to dental, vision, preventive
care and other excepted medical expenses as defined in Code Sections 223(c)(1)(B) and
223(c)(2)(C) that would otherwise be eligible under the Plan. Post-deductible means that
the Plan will only reimburse medical expenses for preventive care or medical expenses
incurred after the annual HDHP deductible under the Employer sponsored HDHP plan
has been satisfied.
Participants covered by an Employer sponsored High Deductible Health Plan
(HDHP) as defined under Section 223(c)(2)(A) of the Code who participate in a Health
Savings Account (HSA) described in Section 223 of the Code may only participate in the
Health Care Flexible Spending Account described in this Article on a "HSA Compatible"
basis. Participants covered by a qualifying High Deductible Health Plan (HDHP) other
than an Employer sponsored HDHP who participate in a Health Savings Account (HSA)
may elect to participate in the Health Care Flexible Spending Account described in this
Article on a"Limited-Purpose" basis.
10;01!2012 Ver.7b 27
Section 8.12 Qualified Reservist Distribution. If so elected in the Summary
Pages, eligible employees may receive a Qualified Reservist Distribution. A Qualified
Reservist Distribution is any distribution to an individual of all or a portion of the balance
in the employee's Health FSA account if
(a) such employee was ordered or called to active duty for a period in excess of 179
days or for an indefinite period, and
(b) such distribution is made during the period beginning on the date of such order or
call and ending on the last date that reimbursements could otherwise be made for
the Plan Year which includes the date of such order or call.
ARTICLE IX: DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
Section 9.1 Applicability of this Article. The terms of this Article IX apply only to the
extent that the Employer has adopted the Dependent Care Flexible Spending Account
(Dependent Care FSA) in Section 2.16(c) in the Summary Pages. The term "Election" as used in
this Article IX refers to the Election made by a Participant pursuant to Article N, to receive
Optional Benefits described in such Section 2.16(c).
Section 9.2 Purpose. The purpose of the Dependent Care Flexible Spending Account
described in this Article is to provide Participants with the option of being reimbursed for
eligible Dependent Care Expenses. The Dependent Care FSA is intended to qualify as a
dependent care assistance program under Section 129 of the Code so that payments received
pursuant to this Article and the Plan are excludable from the gross income of the Participant
under Section 129(a) of the Code.
Section 9.3 Dependent Care Account. The Employer will establish and maintain for
record keeping purposes a Dependent Care Account for each Plan Year for each Participant from
whom an Election is received. The account will be increased as of each date compensation is
paid to the Participant with an amount equal to the allocation, if any, which the Participant has
elected.
A Participant's Dependent Care Account will be decreased from time to time in the
amount of payments made to the Participant for Dependent Care Expenses incurred during the
Period of Coverage. All amounts added to a Dependent Care Account remain the property of the
Employer until distributed to the Participant in accordance with this Article IX.
Section 9.4 Claims for Reimbursement. A Participant who has made an Election for a
Period of Coverage may apply to the Plan Administrator for reimbursement of Dependent Care
Expenses incurred during such Period of Coverage by executing and submitting a claim form
which the Plan Administrator prescribes setting forth:
10/01'2012 Ver.7b 28
(a) The amount, date and nature of the expense,
(b) The name of the person or entity providing the services, and if different, the name of the
person or entity to which the expense was paid,
(c) The Participant's statement that the expense has not been reimbursed, and that the
Participant will not seek reimbursement under any other plan covering dependent care
benefits, and
(d) Such other information as the Plan Administrator may require.
Such claim form shall be accompanied by bills, invoices, receipts, or other statements
from an independent third party stating the Dependent Care Expense has been incurred and the
amount of the expense. The Plan Administrator may, to the extent provided by law, rely on
information provided by Participants.
Section 9.5 Reimbursement of Expense. The Employer shall reimburse the Participant
from the Participant's Dependent Care Account for Dependent Care Expenses incurred during the
Period of Coverage for which the Participant submits the documentation required under Section
9.4. In no case shall a payment be made which exceeds the balance in the Participant's
Dependent Care Account at the time reimbursement is requested. The Plan may not make
advance reimbursements of future or projected expenses. Claims must be submitted on or before
the claim submission deadline specified in the Summary Pages. Eligible Dependent Care
Expenses incurred after the date participation in the Plan ceases in accordance with Section 3.3
and through the last day of that Plan Year (or Grace Period if applicable) will be reimbursed
from unused contributions.
Claims for reimbursement shall be paid at least monthly, or when the total amount of
claims to be paid reaches a reasonable minimum designated by the Plan Administrator, such as
$50. However, if a minimum amount is specified, that amount will not be applicable for the final
processing cycle of the Plan Year or other interim processing cycles as determined by the Plan
Administrator.
Section 9.6 Maximum Reimbursement. The maximum reimbursement which a
Participant may receive in a tax year under this Article IX shall be the least of:
(a) The Participant's earned income for the tax year;
(b) The actual or deemed earned income of the Participant's spouse for the tax year; or
(c) $5,000, or in the case of a Participant who is married and filing a separate income tax
return form his or her spouse, $2,500.
In the case of a spouse who is a full-time student, or is physically or mentally incapable
of self-care, such spouse shall be deemed to have earned income of $250 per month if the
10/01;2012 Ver,7b 29
Participant has one Qualifying Dependent and $500 per month if the Participant has two or more
Qualifying Dependents.
Section 9.7 Minimum Election. The minimum election which a Participant may make
for a Plan Year under this Article IX shall be the amount designated in the Summary Pages for
dependent care reimbursement.
ARTICLE X: ADMINISTRATION
Section 10.1 Plan Administrator. The Employer is hereby designated as the Plan
Administrator. The Employer may delegate its duties under the Plan to one or more officers or
employees, or to individuals or entities independent of the Employer provided that such
delegation is in writing.
Section 10.2 Powers of the Plan Administrator. The Plan Administrator shall have sole
and complete discretionary power and authority necessary to administer the Plan, including but
not limited to the following:
(a) To interpret the provisions of the Plan, decide questions of eligibility and determine
amounts of benefits due under the Plan. Benefits under this Plan will be paid only if the
Plan Administrator decides in his discretion that the Participant or applicant is entitled to
them.
(b) To establish and revise the method of accounting for the Plan and to maintain the
accounts.
(c) To establish rules and prescribe any forms necessary or desirable for the administration
of the Plan.
Except as provided in Section 10.6, the Plan Administrator shall have no power to add to,
subtract from or modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit
under the Plan.
Section 10.3 Actions of the Plan Administrator. All determinations, interpretations, rules
and decisions of the Plan Administrator shall be conclusive and binding upon all persons having
or claiming to have any interest or right under the Plan. All decisions and actions by the Plan
Administrator shall be applied uniformly and consistently to all Participants so that all persons
similarly situated will receive substantially the same treatment.
Section 10.4 Information to be Furnished. Participants shall provide the Plan
Administrator with such information and evidence, and shall sign such documents as may
reasonably be requested from time to time for the purpose of administration of the Plan. The
Plan Administrator may, to the extent provided by law, rely on information provided by
Participants.
10,01,"2012 Ver.7b 30
Section 10.5 Nondiscrimination. The Plan shall not discriminate in favor of Highly
Compensated Individuals as to eligibility to participate, as to Highly Compensated Individuals
who are Participants as to contributions and benefits, or as to operation of the Plan. Optional
Benefits provided to Key Employees under the Plan shall not exceed 25% of the aggregate of
such benefits provided for all Participants in any Plan Year. For purposes of applying the
contributions and benefits tests described in Code Section 125(c), at the Employer's option, non-
elective Employer contributions to Optional Benefits shall be included to the extent that such
contributions would not be made but for an Election under this Plan. Nondiscrimination testing
will be performed as of the last day of the Plan Year, taking into account all non-excludable
employee (or former employees) who were employees on any day during the Plan Year.
In addition, Optional Benefits shall comply with any nondiscrimination rules which apply
to those plans separately. Specifically,
(a) if the Employer has adopted the Health Care Flexible Spending Account described in
Article VIII, the plan pursuant to such Article VIII shall not discriminate in favor of
Highly Compensated Individuals as to eligibility to participate or in favor of Highly
Compensated Employees as to benefits and shall meet the discrimination tests of Section
105(h) of the Code; and
(b) if the Employer has adopted the Dependent Care Flexible Spending Account described in
Article IX, not more than 25% of the amounts paid by the Employer for dependent care
assistance during the Plan Year shall be provided to Participants who are shareholders or
owners (or their spouses or dependents) of more than 5% of the stock or of the capital or
profit interest in the Employer. Benefits provided under Article IX shall not discriminate
in favor of Highly Compensated Individuals with respect to eligibility or in favor of
Highly Compensated Employees with respect to contributions or benefits. The average
dependent care reimbursement paid pursuant to Article IX to non-highly compensated
employees for Dependent Care Expenses shall be at least 55% of the average Dependent
Care Expenses paid to Highly Compensated Employees.
(c) if the Employer makes contributions to an HSA described in Section 7.3 under this Plan,
such contributions will be subject to the nondiscrimination rules in Section 125 and are
not subject to the comparability rules in Section 4980G.
If the Plan fails any of the requirements of this Section 10.5, benefits provided under the
Plan will become taxable to Highly Compensated and Key Employees to the extent required by
law.
Section 10.6 Changes by Administrator. If the Plan Administrator determines, before or
during any Plan Year, that the Plan may fail to satisfy for the Plan Year any nondiscrimination
requirement imposed by the Code or any limitation on benefits provided to Key Employees, the
Plan Administrator may reject or reduce Elections by Highly Compensated Employees or Key
Employees with or without the consent of such employees.
10,01!2012 Ver.7b 31
Any limitation imposed by the Plan Administrator shall apply on a uniform basis
pursuant to rules applicable equally to all Participants who are Highly Compensated Employees
or Key Employees.
To the extent practicable, such adjustments shall be made before the commencement of
the Plan Year for which the Election is effective.
Section 10.7 Reporting and Disclosure. Promptly after the Plan, or any Optional Benefit
thereunder, is adopted, the Plan Administrator will notify all Qualified Employees of the
availability and terms of the Plan. The Plan Administrator shall be responsible for complying
with all reporting, filing and disclosure requirements for the Plan.
If the Employer has adopted a Dependent Care Flexible Spending Account pursuant to
Article IX, on or before January 31, the Plan Administrator will furnish each Participant who has
received payments under Article IX with a written statement showing the amount of Dependent
Care Expenses reimbursed by the Plan for the previous calendar year. The Plan Administrator
will provide required information on the applicable Treasury Form W-2.
Section 10.8 Indemnification of the Administrator. Any individual acting in the capacity
of Plan Administrator shall be indemnified by the Employer against any and all liabilities arising
by reason of any act or failure to act made in good faith pursuant to the provisions of the Plan,
including expenses reasonably incurred in the defense of such claim.
ARTICLE XI: MISCELLANEOUS
Section 11.1 Amendment and Termination. The Employer may amend or terminate the
Plan, or any Optional Benefit offered thereunder, at any time by a duly adopted resolution of its
Board of Directors (or appropriate governing body) or written instrument executed by a duly
authorized individual. Unless otherwise specifically provided, amendments shall be only
prospective in impact. No amendment or termination shall deprive a Participant of any benefits
to which he or she is entitled under this Plan with respect to contributions previously made.
Section 11.2 Plan Not a Contract of Employment. The Plan is not an employment
agreement and does not assure the continued employment of any employee or Participant for any
period of time. Nothing contained in the Plan shall interfere with the Employer's right to
discharge an employee or Participant at any time, regardless of the effect such discharge will
have upon that individual as a Participant in this Plan.
Section 11.3 Funding. The Plan provides a means of making Elections concerning
Optional Benefits but has no assets per se. Nothing contained in the Plan shall require the
Employer to maintain a separate fund or trust for the benefit of Participants unless otherwise
required by law. No Participant shall, by virtue of this Plan, have any right or interest in the
assets of the Employer. A Participant has only an unsecured contract right to receive benefits in
accordance with the Plan.
10/01!2012 Ver.7b 32
Section 11.4 No Guarantee of Tax Consequences. The Employer makes no commitment
or guarantee that any amounts paid to a Participant under any Article of this Plan will be
excludable from the Participant's gross income for federal or state income tax purposes. It shall
be the obligation of each Participant to determine whether each payment is excludable from the
Participant's gross income for federal and state income tax purposes, and to notify the Employer
if the Participant has reason to believe that any such payment is not so excludable.
Any Optional Benefit provided to a Participant that is includable in the Participant's gross
income shall be treated as if it were a distribution of cash under this Plan.
Section 11.5 Plan Benefits May Not be Assigned. No Participant may assign, pledge, or
otherwise dispose of any benefit under the Plan prior to actual receipt thereof.
Section 11.6 Governing Law, This Plan shall be construed and enforced according to the
laws the jurisdiction named in the Summary Pages except to the extent preempted by federal law.
10,012012 Ver.?b 33
AMENDMENT TO THE
CITY OF COLUMBIA HEIGHTS
FLEXIBLE BENEFIT PLAN
Pursuant to the authority retained by City of Columbia Heights (the "Employer") in Section
11.1 of the City of Columbia Heights Flexible Benefit Plan, amended and restated effective
January 1, 2009, and
Because the Employer believes it is prudent and necessary to amend the plan with respect
to the Health Care flexible spending account maximum election in accordance with the
Patient Protection and Affordable Care Act, City of Columbia Heights hereby amends the
Plan in the following respects, effective January 1, 2013:
1. Section 4.1 Salary Reduction Contributions in the Plan document is
hereby amended by the addition of the following language as the second paragraph in said
section:
"For Plan Years beginning after December 31, 2012, the maximum salary
reduction contribution to the Health Care Flexible Spending Account (Health FSA)
as described in Article VIII shall not exceed the amount specified in Section 125(i)
as indexed for inflation. Employer provided Benefit Credits that the Participant
could elect to receive as cash or as a taxable benefit shall be considered salary
reduction contributions for purposes of applying this limit. If a Plan Year is less than
12 months, this amount shall be prorated based on the number of months in the
short Plan Year."
2. Section 4.3 Maximum Contribution in the Plan document is hereby
amended by deleting the section in its entirety and adding the following language:
Section 4.3 Maximum Contribution. The maximum amount of Employer
contributions under this Plan for any Participant for a Plan Year shall be the sum of
the maximum Health Care FSA and Dependent Care FSA elections which are
shown in the Summary Pages plus the amount required to fully pay the Participant's
share of the cost for benefits under any Premium Conversion Optional Benefit
available through the Plan as defined in annual benefit enrollment material, plus
contributions to the Participant's HSA (if any).
3. The Summary Pages to the Plan Document are hereby amended as
follows:
(a) The section on Maximum Salary Reduction Contributions on Page 2 is
deleted in its entirety.
(b) The language on Maximum Health Care FSA Election on Page 2 is amended to
read as follows:
Maximum Health Care FSA Election in any Plan Year.
X $2,500 per Plan Year
The amount specified in Section 125(i) as indexed for inflation
A copy of the Amended Page 2 of the Summary Pages is attached hereto as reference.
CITY OF COLUMBIA HEIGHTS
By
Its 4
Date: —/ -7 2012
SUMMARY PAGES
Page 2—as amended effective 1/1/2013
The Mid-Year Entry Date for a Participant with an Election change event as defined in Section
6.2 or returning from a FMLA or USERRA Leave is:
First day of the payroll period following receipt of an Election
First day of the month following receipt of an Election
X Other: Date election is received by the administrator.
Maximum Health Care FSA Election in any Plan Year:
X $2,500 per Plan Year
The amount specified in Section 125(1), as indexed for inflation
Minimum Health Care Reimbursement in any Plan Year: $260
Maximum Dependent Care Reimbursement in any Plan Year: $5,000
Minimum Dependent Care Reimbursement in any Plan Year: $0.00
Health FSA Exclusions
The definition of eligible Health Expense in Section 2.12 shall not include the following
expenses (check all that apply):
Transportation expenses
Over-the-counter medication available without a prescription
Other:
HSA Compatible Health FSA (Section 8.11)
The HSA Compatible Health FSA will be available as follows (check all that apply):
A HSA Compatible Health FSA will not be available
X A HSA Compatible Health FSA will be administered for Participants who elect
coverage under an Employer Sponsored HDHP/HSA
X A HSA Compatible Health FSA will be available to Participants covered by an
HDHP/HSA other than an Employer sponsored plan.
If elected above, the HSA Compatible Health FSA will cover the following eligible expenses
(check all that apply):
X Dental
X Vision
X Over the counter drugs/supplies
Preventive care
Post-deductible medical expenses
Other:
10/01/2012 Ver.7b
2
City Amendment to the
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Benefit plan
Benefit p E( AS� l�ursu�t to Section
appropriate gover Ing body ime by o dull 1 Employer rna
Y) r writte y adopted Y amend or terminate the Flexible
RHEAS, the n Instrument executed lotion of its Board of Directors
Act pect to eligible de Employer believ by a duly authorized individual; and r
Of 2010 and dependent'
in accordance es it Is
Protection and necessary and
Afford main allowable nce with the desirable to amend the Plan with
able Cale health care Health Care
amendeN®W' THEREF Act; expenses in co fodrmEan Education Reconciliation
with the Patient
as follows: ®�9 BE IT RESp
1. L�'ED that the
The definition ®f Flexible Beneft Plan is hereby
'DePendent in Section 2.3
Section 2.
(Health FSA 3 De endent plan is
) under ®f the p
dependent Article VIII for purposes of rePlacedl with the following:
152 t Se the Participant as deans the s spouse Health Care(b)(1 ctio
p use Flexible S
1520(1)) who n 152(b)(2 defined in Section lof a Participant pending Account
Summary pages and the end nand �ction 152(dio 2 of the Code °r any individual who is a
("QMSCV any Alte taxable year )(B))' any child (�tlthout regard to Section
Benefitavailaas defined in E mate I? . i has not attai (as defined in
this Ptn b e through PISA Section bent under a ned age 27 as further defined n the Code Section
Preference remiurn 09. The de finQ Qualified Medical Child Su
2. Conversion under n(s) of Dependent
pport Order
ne Article VII her y for each Qualified
Depen�t w Sects®n IS added to th are hereby Incorporated into
for e Definitions section of
is furtlxe fnepd as fo Of the health Care the Sun,m
Vows: Flexible S incorporated
Pages as follows:
Elmite
d pending Account described in Sectio only to an ind- i-n Article VIII
152 n 152 of the Idual who
(b)(2) and Section lode (without is a re tax dependent of
the
re addition t n (d)(1)(g)). Bard to Section l S2(b�(�Ipant as defined
' do o a individu Section
'Id Sec 152 of the Co al who is a to
d of tion 152(d de (without x dependent
he taxable )(1)(B))' a child regard to Section 152) PaI Part as defined in
Pendent effectiv ear has (as define (b)(l
not attained a d in section l o )' Section 152(b)(2)
e January 1, 2011
age 27 shall ben 152(e(1)) who as of the
red an eligible
3. The definition of Health Expense in Section 2.12 of the Plan is replaced with the
following:
Section 2.12 Health Expense for the purpose of Health Care Flexible Spending Account
(Health FSA) under Article VIII, means an expense incurred during a Period of Coverage by a
Participant or by the Dependent of a Participant for medical care as defined in Section 213(d) of
the Code, excluding any insurance premiums for health coverage, excluding expenses for long
term care and excluding any specific expenses described in the exclusions section of the
Summary Pages. Expenses are considered incurred on the date services are rendered. Expenses
incurred for a medicine or drug after December 31, 2010 shall be treated as an eligible Health
Expense only if such medicine or drug is a prescribed drug(determined without regard to
whether such drug is available without a prescription) or is insulin. Expenses are eligible only to
the extent such expenses have not been reimbursed through insurance or some other source and
the participant agrees not to seek such reimbursement. Medical care generally refers to the
diagnosis, cure, treatment, or prevention of disease or for the purpose of affecting any structure
or function of the body and includes transportation expenses primarily for and essential to
medical care.
4. A new subsection (h) is added to Section 6.2 of the Plan regarding irrevocable
elections as follows:
(h) Newly eligible dependent-Not withstanding the foregoing election change rules, a
Participant may make a new election for Premium Conversion under Article VII and
Health FSA coverage under Article VIII of the Plan during the 30-day enrollment period
designated by the Employer that is on account of and corresponds with his or her child
(as defined in Code Section 152(f)(1)) becoming newly eligible for coverage (or eligible
for coverage beyond the date on which coverage would otherwise have been lost) as a
result of a change to the definition of Dependent in Article II of the Plan pursuant to the
Health Care and Education Reconciliation Act of 2010.
FURTHER RESOLVED, that the appropriate officers be, and they hereby are,
authorized and directed to establish and to take such other action as may be necessary or
advisable to effect the adoption and implementation of this Amendment.
City of Columbia Heights
By: ,•�,ZX �i lZW4—
Name: 6)6) 1��-r i3 , Flees S�
Title: (4 a e-,(-
{
Date:?C 6, e-f- o U
Flex Compensation, Inc.-
P.O. Box 220
Minneapolis, MN 55440-0220
(952) 544-8332 (800) 333-5597 (952) 544-8287 Fax
September 24, 2013
LINDA MAGEE
City of Columbia Heights
590 40 AVE NE
COLUMBIA HTS, MN 55421-3878
Following is 2014 renewal information for the flexible spending account administration services
that Flex Compensation provides City of Columbia Heights. I'm pleased to communicate that
your annual support fees and participant fees for FSA administration will not increase for 2014.
Your annual support fee will continue to be $295 for Basic Support or $670 for Extended
Support($795 including Form 5500 preparation). A summary of fees and projected charges are
shown below. There are currently 12 participants in your plan with 13 accounts (6 health care
accounts, 5 limited purpose health care accounts and 2 dependent care accounts).
Monthly Fee Structure Avg. Per Participant Avg. Per Account Est. Monthly Bill
$5.40 first 100 part.
$4.40 next 200 part. $10.42 $ 9.62 $125
$3.85 over 300 part.
($125 per month minimum)
Participant means an employee participating in one or both accounts;employees participating in both
accounts are billed once.
FCI's goal is to provide clients with the highest quality administration services available at a
competitive price. We appreciate your business and look forward to continuing to serve you.
Please don't hesitate to contact me at 952-541-6335 if you have any questions.
Sincerely,
Gary Bohline
President
RECEIVED FEB 1 12019
Dear Client:
Enclosed is your monthly invoice for services provided by ThrivePass which were previously billed by Flex Compensation,
Inc. Please contact Donna Wetterlin - donna.wetterlin@thrivepas.s.com — for questions related to COBRA, FSA, HSA or HRA; and
Nicole Kennedy — Nicole.Kennedy @thrivepass.com — for questions related to tuition and wellbeing. We truly appreciate your
business.
Donna Wetterlin
Manager of Accounting & Compliance 1 952.541.6339
TMrivePass
Courageous I Authentic I Resourceful j Excellent
Vendor Add /Change Request Form
Vendor name: Wellness by Wishlist dba ThrivePass (formerly Flex Compensation, vendor # 005020)
Address (actual location):
Address (pay to):
Phone Number:
Requested by:
N. Becker
3801 Franklin Street
Denver, CO 80205
PO Box 220
Minneapolis, MN 55440 -0220
Date: 02/1112019
Please attach W-9 form signed by the vendor and submit to Finance.
e-
Request for Taxpayer
Give Form to the
Form MI
Identification Number and Certification
requester. Do not
(Rev. OClober2016)
Department of the Treasury
send to the IRS.
Wernal Revenue Semdce
► Go to www.irs.gov /FormW9 for instructions and the latest information.
I None Can shown on your rncoeew tax ruivir ;.}erne to retfuim(l an lolls hrle: On nul te1Ne ibis kern bhnel4
Wellness By Wlsh,llsl, Inc
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ThrivePass
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3 Check appropriate box for federal tax classification of the person whose name is entered on fine 1. Check only one of the
P Y
4 Exemptions codes apply on to
P ( PP Y N
m
following seven boxes.
certain entitles, not Individuals; sae
Q.
instructions on page 3):
o
❑ Indlviduairsole proprietor or ❑'' C Corporation ❑ S Corporaliorl ❑Partnership ❑ Trust/estate
2
single - member LLG
Exempt payee code Of any)
u❑
United liability company. Ester the tax classification (C =C corporation, S =S corporation, P= Partnership) ►
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Note: Check pre appropNala box in iho Ine aW" for the lux cliff sagcalion or the singla,mambre owner. Do not 0acx
Exemption from FATCA reporting
w
U.-C d the LLC Is classliied as a singio- member LLC that is disiagarded from the owner unless the owner of the LLC is
code if an
another LLC: that is oat CUMOardod from the owner for 11.5. tetderal tax purposes, otherwise, a sanglu-marnDsr LLG Itr.,t
a a;
is diuvriordad from the owner should check the appropriate box too the lax cla69iltcatlon of 115 Owner.
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3 Arklress (number, street, ones apt„ or surhr no.) See Instructions,
naquo5ler's name md-rrrkhems (q]lienal)
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3001 Franklin Street
6 Cdly, stale, and 2fP cafe
Denver, CO 80205
7 Lot account txuflbivW horn (opUarnifj
Pre -Tax division address: 12755 Hwy 55 Suite J200, Plymouth, MN 55441
Taxpayer ldiatttifieatlon Number IN
Enter your TIN In the appropriate box, The TIN provided must match the name given on line 1 to avoid
I Social" ty number
_
m
-
I I 1 I d
backup n withholding. For individuals, this is generally you sexist security number g55ter. However. fora
resident alien, solo proprietor, or disregarded entity, Sea the instructions for Part I, later. For other
—tu Lae it La .,n r, am 6—r IrfnntifInatim numbas [EINI. if you do not have a number. see How to oef it
TIN, later.
Note: If the account Is in more than one name, see the instructions for line 1. Also see What Name and
Number To Give the Requester for guidelines on whose number to enter.
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and
2.1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that f am
no longer subject to backup withholding; and
3. f am a U.S. citizen or other U.S. parson (defined below); and
4. The FATCA code(s) entered an this form (if any) indicating that I am exempt from FATCA reporting is correct.
Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because
you have failed to report all interest and dividends on your tax return, For real estate lransacifom, item 2 does not apply. For mortgage interest paid,
acquWtWn or abandonment of secured property. cancellation of debt. Contributions to an individual relirernent arrangement (1RA), and generally. payments
other than [merest and dividends, you are not required to gk,3n the certificallon, but you crnust provide your ccrrtrct T1N. See the insiruetions for Part )), later.
SignHer1 Signature of /11I % ��
l U.S.atureo► (1. `j!L Dole 11 l 4
General Instructions
Section references are to the Internal Revenue Code unless otherwise
noted.
Future developments. For the latest information about developments
related to Form W -9 and its instructions, such as legislation enacted
after they were published, go to wwwJrs.gov 1FormW9.
Purpose of Form
An individual or entity (Form W -9 requester) who is required to file an
information return with the IRS must obtain your correct taxpayer
identification number (TIN) .which may be your socfsT security number
(SSN), individual taxpayer identification number (ITIN), adoption
taxpayer identification number (ATIN), or employer Identification number
(EA, to report on an information return the amount paid to you, or other
amount reportable on an information return. Examples of information
returns include, but are not limited to, the following.
• Form 1099 -INT (interest earned or paid)
• Form 1099 -DIV (dividends, including those Imm stocks or mutual
funds)
• Form 1099 -MISC (various types of income, prizes, awards, or gross
proceeds)
• Form 1099 -B (stock or mutual fund sales and certain other
transactions by brokers)
• Form 1099 -S (proceeds from real estate transactions)
•
Form 1099 -K (merchant card and third party network transactions)
•
Form 1098 (home mortgage interest), 1098 -E (student loan interest),
1098 -T (tuition)
• Form 1099 -C (canceled debt)
• Form 1099 -A (acquisition or abandonment of secured properly)
Use Form W -9 only if you are a U.S. person (including a resident
alien), to provide your correct TIN.
If you do not return Form W -9 to the requester with a TIN, you might
be subject to backup withholding. See What is backup withholding,
later.
Cal. No. 10231X Form W -`J (Rev. 10 -2018)