2011-02 RESOLUTION NO. 2011-02
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GRAND TERRACE, CALIFORNIA, ADOPTING A
HEALTH FLEXIBLE SPENDING ARRANGEMENT
WHEREAS, the City of Grand Terrace("City")desires to establish a self-insured
medical reimbursement plan as defined by Internal Revenue Code section 105(h)(6); and.
WHEREAS,the City desires to provide this plan as a health flexible spending
arrangement(HFSA) as defined by section 106(c)(2)of the Internal Revenue Code and allow
employees to participate in the HFSA; and
WHEREAS, the City desires to adopt a salary reductions plan as part of the HFSA that
complies with section 125 of the internal Revenue Code to enable employees to elect to
contribute toward the entire cost of the HFSA as a deduction from salary on a pre-tax basis; and
WHEREAS,the City has determined that the above actions are in the best interests of
the City and its employees;
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Grand
Terrace hereby:
Section 1. That the City Council adopts the Health Flexible Spending Arrangement
(consisting of a plan document substantially in the form of Attachment A of the staff report for
this Resolution);
Section 2. That all employee contributions made under the Health Flexible Spending
Arrangement will be made pursuant to elections as described in Attachment A;
Section 3. That the City Manager is authorized and directed, in the name and on behalf
of the City, to execute such documents and instruments and to take all such other and further
actions as may be necessary or appropriate to carry out the purpose and intent of the foregoing
resolutions.
PASSED AND ADOPTED by the City Council of the City of Grand Terrace, California
at a regular meeting held on the 8th day of February, 2011 by the following vote:
ATTEST:
City Clerk of the City of Grand Terrace Mayor of the City of Grand Terrace
and the City Council thereof and the City Council thereof
Resolution No. 2011-02
I, Brenda Mesa, City Clerk of the City of Grand Terrace, do hereby certify that the foregoing
Resolution was introduced and adopted at a regular meeting of the City Council of the City of
Grand Terrace held on the 8th day of February, 2011 by the following vote:
APES: Councilmembers McNaboe, Sandoval and flays; Mayor Pro Tem Garcia and
Mayor Stanckievitz
NOES: None
ABSENT: None
ABSTAIN: None
Brenda Mesa
City Clerk
Approved as to form:
John R. Harpe V
ty Attorney
Attachment A
Section 125 Flexible Benefit Plan Adoption
Agreement
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SECTION 125 FLEXIBLE BENEFIT PLAN
ADOPTION AGREEMENT
The undersigned Employer hereby adopts the Section 125 Flexible Benefit Plan for those
Employees who shall qualify as Participants hereunder. The Employer hereby selects the
following Plan specifications:
A. EMPLOYER INFORMATION
Name of Employer: City Of Grand Terrace
Address: 22795 Barton Rd
Grand Terrace, CA 92313-5295
Employer Identification Number: 95-3316135
Nature of Business: Muncipality
Name of Plan: City Of Grand Terrace Flexible Benefit Plan
Plan Number: 501
B. EFFECTIVE DATE
Original effective date of the Plan: May I,2003
If Amendment to existing plan,
effective date of amendment: February 1, 2011
C. ELIGIBILITY REOUIREMENTS FOR PARTICIPATION
Eligibility requirements for each component plan under this Section 125 document will
be applicable and, if different, will be listed in Item F.
Length of Service: First day of the month following
employment.
Minimum Hours: All employees with 20 for childcare
employees; 30 for City Hall employees
hours of service or more each week. An
hour of service is each hour for which an
employee receives, or is entitled to receive,
payment for performance of duties for the
Employer.
Age: Minimum age of none years.
D. PLAN YEAR The current plan year will begin on February
1, 2011 and end on December 31, 2011.
Each subsequent plan year will begin on
January I and end on December 31.
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�,. E. EMPLOYER CONTRIBUTIONS
Non-Elective Contributions: The maximum amount available to each
Participant for the purchase of elected
benefits with non-elective contributions will
be:
100%of medical for employee-only.
Toward all other levels of coverage,
including dental,vision, and voluntary
products,the employer will contribute the
cost of the single medical coverage plus
18.1%of salary.
The Employer may at its sole discretion
provide a non-elective contribution to
provide benefits for each Participant under
the Plan. This amount will be set by the
Employer each Plan Year in a uniform and
non-discriminatory manner. If this non-
elective contribution amount exceeds the
cost of benefits elected by the Participant,
excess amounts will not be paid to the
Participant as taxable cash.
Elective Contributions
(Salary Reduction): The maximum amount available to each
Participant for the purchase of elected
benefits through salary reduction will be:
100% of compensation per plan year.
Each Participant may authorize the
Employer to reduce his or her compensation
by the amount needed for the purchase of
benefits elected, less the amount of non-
elective contributions. An election for
salary reduction will be made on the benefit
election form.
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F. AVAILABLE BENEFITS: Each of the following components should be considered a
plan that comprises this Plan.
1. Group Medical Insurance-- The terms, conditions, and
limitations for the Group Medical Insurance will be as set forth in the
insurance policy or policies described below: (See Section V of the Plan
Document)
BlueCross PPO
BlueShield HMO
Kaiser HMO
American Fidelity Assurance Company Accident Only Plan
Eligibilitv Requirements for Participation if different than Item C.
2. Disability Income Insurance-- The terms, conditions, and limitations for the
Disability Income Insurance will be as set forth in the insurance policy or policies
described below: (See Section VI of the Plan Document)
N/A
Eligibility Requirements for Participation if different than Item C.
3. Cancer Coverage-- The terms, conditions, and limitations for the Cancer
Coverage will be as set forth in the insurance policy or policies described below:
�. (See Section V of the Plan Document)
American Fidelity Assurance Company C-12 and subsequent policies
Eligibility Requirements for Participation if different than Item C.
4. Dental/Vision Insurance-- The terms, conditions, and limitations for the
DentalNision Insurance will be as set forth in the insurance policy or policies
described below: (See Section V of the Plan Document)
Western Dental HMO
Safeguard (vision)
Eligibility Requirements for Participation if different than Item C.
lkw
5. Group Life Insurance which will be comprised of Group-term life insurance
and Individual term life insurance under Section 79 of the Code.
The terns, conditions, and limitations for the Group Life Insurance will be as set
forth in the insurance policy or policies described below: (See Section V II of the
Plan Document)
Individual life coverage under Section 79 is available as a benefit, and the face
amount when combined with the group-term life, if any, may not exceed $50,000.
N/A
Eligibility Requirements for Participation if different than Item C.
6. Dependent Care Assistance Plan -- The terms, conditions, and
limitations for the Dependent Care Assistance Plan will be as set
forth in Section IX of the Plan Document and described below:
Minimum Contribution - $0 per Plan Year
Maximum Contribution - $ 5000 per Plan Year
taw Recordkeeper: American Fidelity Assurance Company
Eligibility Requirements for Participation if different than Item C.
7. Medical Expense Reimbursement Plan -- The terms, conditions, and
limitations for the Medical Expense Reimbursement Plan will be as set
forth in Section VIII of the Plan Document and described below:
Minimum Coverage - $ 0 per Plan Year
Maximum Coverage- $2500 per Plan Year
Recordkeeper: American Fidelity Assurance Company
Restrictions: N/A
Grace Period: The provisions in Section 8.06 of the Plan to permit a Grace
Period with respect to the Medical Expense Reimbursement Plan ARE
elected.
HEART ACT: The provisions in Section 8.07 of the Plan to permit the
Qualified Reservist Distribution of the Heroes Earnings Assistance and
Relief Tax Act(HEART)ARE elected.
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Debit Card: The provisions in Section 8.05 of the Plan to permit the offer
of the Debit Card with respect to the Medical Expense Reimbursement
Plan ARE elected.
Eligibility Requirements for Particination if different than Item C.
8. Health Savings Accounts — The Plan permits contributions to be made to a
Health Savings Account on a pretax basis in accordance with Section X of the
Plan and the following provisions:
HSA Trustee—N/A
Maximum Contribution—As indexed annually by the IRS.
Limitation on Eligible Medical Expenses — For purposes of the Medical
Reimbursement Plan, Eligible Medical Expenses of a Participant that is eligible
for and elects to participate in a Health Savings Account shall be limited to
expenses for:
N/A
Eligibility Requirements for Particination if different than Item C.
(a) An Employee must complete a Certification of Health Savings Account
Eligibility which confirms that the Participant is an eligible individual who is
entitled to establish a Health Savings Account in accordance with Code
Section 223(c)(1).
(b) Eligibility for the Health Savings Account shall begin on the later of(i) first
day of the month coinciding with or next following the Employee's
commencement of coverage under the High Deductible Health Plan,or(ii)the
first day following the end of a Grace Period available to the Employee with
respect to the Medical Reimbursement Accounts that are not limited to vision
and dental expenses (unless the participant has a$0.00 balance on the last day
of the plan year).
(c) An Employee's eligibility for the Health Savings Account shall be determined
monthly.
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The Plan shall be construed, enforced, administered, and the validity determined in
accordance with the applicable provisions of the Employee Retirement Income Security
Act of 1974, (as amended) if applicable, the Internal Revenue Code of 1986 (as amended),
and the laws of the State of CA. Should any provision be determined to be void, invalid,or
unenforceable by any court of competent jurisdiction, the Plan will continue to operate,
and for purposes of the jurisdiction of the court only, will be deemed not to include the
provision determined to be void.
This Plan is hereby adopted this day of ,2011.
City Of Grand Terrace
(Name of Employer)
Witness: By:
Title: Title:
APPENDIX A
Related Employers that have adopted this Plan
Name(s):
THIS DOCUMENT IS NOT COMPLETE WITHOUT SECTIONS I THROUGH XIII
PD0710 Created on 01/12/11 8:23 AM
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SECTION 125 FLEXIBLE BENEFIT PLAN
SECTION I
PURPOSE
The Employer is establishing this Flexible Benefit Plan in order to make a broader range of benefits available to
its Employees and their Beneficiaries. This Plan allows Employees to choose among different types of benefits
and select the combination best suited to their individual goals, desires, and needs. These choices include an
option to receive certain benefits in lieu of taxable compensation.
In establishing this Plan, the Employer desires to attract, reward, and retain highly qualified, competent
Employees, and believes this Plan will help achieve that goal.
It is the intent of the Employer to establish this Plan in conformity with Section 125 of the Internal Revenue
Code of 1986, as amended, and in compliance with applicable rules and regulations issued by the Internal
Revenue Service. This Plan will grant to eligible Employees an opportunity to purchase qualified benefits
which,when purchased alone by the Employer, would not be taxable.
SECTION II
DEFINITIONS
The following words and phrases appear in this Plan and will have the meaning indicated below unless a
different meaning is plainly required by the context:
2.01 Administrator The Employer unless another has been designated in writing by the
Employer as Administrator within the meaning of Section 3(16) of ERISA
(if applicable).
2.02 Beneficiary Any person or persons designated by a participating Employee to receive
any benefit payable under the Plan on account of the Employee's death.
2.03 Code Internal Revenue Code of 1986, as amended.
2.04 Dependent Any of the following:
(a) Tax Dependent: A Dependent includes a Participant's spouse and
any other person who is a Participant's dependent within the
meaning of Code Section 152, provided that, with respect to any
plan that provides benefits that are excluded from an Employee's
income under Code Section 105, a Participant's dependent (i) is
any person within the meaning of Code Section 152, determined
without regard to Subsections (b)(1), (b)(2), and (d)(1)(B)
thereof, and (ii) includes any child of the Participant to whom
Code Section 152(e) applies (such child will be treated as a
dependent of both divorced parents).
[
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(b) Student on a Medically Necessary Leave of Absence: With
respect to any plan that is considered a group health plan under
Michelle's Law (and not a HIPAA excepted benefit under Code
Sections 9831(b), (c) and 9832(c)) and to the extent the Employer is
required by Michelle's Law to provide continuation coverage, a
Dependent includes a child who qualifies as a Tax Dependent
(defined in Section 2.04(a)) because of his or her full-time student
status, is enrolled in a group health plan, and is on a medically
necessary leave of absence from school. The child will continue to
be a Dependent if the medically necessary leave of absence
commences while the child is suffering from a serious illness or
injury, is medically necessary, and causes the child to lose student
status for purposes of the group health plan's benefits coverage.
Written physician certification that the child is suffering from a
serious illness or injury and that the leave of absence is medically
necessary is required at the Administrator's request. The child will
no longer be considered a Dependent as of the earliest date that the
child is no longer on a medically necessary leave of absence, the
date that is one year after the first day of the medically necessary
leave of absence, or the date benefits would otherwise terminate
under either the group health plan or this Plan. Terms related to
Michelle's Law, and not otherwise defined, will have the meaning
provided under the Michelle's Law provisions of Code Section
9813.
(c) Adult Children: With respect to any plan that provides benefits
that are excluded from an Employee's income under Code Section
105, a Dependent includes a child of a Participant who as of the end
of the calendar year has not attained age 27. A `child' for purpose
of this Section 2.04(c) means an individual who is a son, daughter,
stepson, or stepdaughter of the Participant, a legally adopted
individual of the Participant, an individual who is lawfully placed
with the Participant for legal adoption by the Participant, or an
eligible foster child who is placed with the Participant by an
authorized placement agency or by judgment, decree, or other order
of any court of competent jurisdiction. An adult child described in
this Section 2.04(c) is only a Dependent with respect to benefits
provided after March 30, 2010 (subject to any other limitations of
the Plan).
Dependent for purposes of the Dependent Care Reimbursement Plan
is defined in Section 9.04(a).
2.05 Effective Date The effective date of this Plan as shown in Item B of the Adoption
Agreement.
2.06 Elective Contribution The amount the Participant authorizes the Employer to reduce
compensation for the purchase of benefits elected.
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g 2.07 Eligible Employee Employee meeting the eligibility requirements for participation as shown
` in Item C of the Adoption Agreement.
2.08 Employee Any person employed by the Employer on or after the Effective Date.
2.09 Employer The entity shown in Item A of the Adoption Agreement, and any Related
Employers authorized to participate in the Plan with the approval of the
Employer. Related Employers who participate in this Plan are listed in
Appendix A to the Adoption Agreement. For the purposes of Section
11.01 and 11.02, only the Employer as shown in Item A of the Adoption
Agreement may amend or terminate the Plan.
2.10 Employer Contributions Amounts that have not been actually received by the Participant and are
available to the Participant for the purpose of selecting benefits under the
Plan. This term includes Non-Elective Contributions and Elective
Contributions through salary reduction.
2.11 Entry Date The date that an Employee is eligible to participate in the Plan.
2.12 ERISA The Employee Retirement Income Security Act of 1974, Public Law 93-
406 and all regulations and rulings issued thereunder, as amended (if
applicable).
2.13 Fiduciary The named fiduciary shall mean the Employer, the Administrator and
other parties designated as such, but only with respect to any specific
duties of each for the Plan as may be set forth in a written agreement.
2.14 Health Savings Account A "health savings account' as defined in Section 223(d) of the Internal
Revenue Code of 1986, as amended established by the Participant with
the HSA Trustee.
2.15 HSA Trustee The Trustee of the Health Savings Account which is designated in Section
F.8 of the Adoption Agreement.
2.16 Highly Compensated Any Employee who at any time during the Plan Year is a "highly
compensated employee" as defined in Section 414(q) of the Code.
2.17 High Deductible Health A health plan that meets the statutory requirements for annual deductibles
Plan and out-of-pocket expenses set forth in Code section 223(c)(2).
2.18 HIPAA The Health Insurance Portability and Accountability Act of 1996, as
amended.
2.19 Insurer Any insurance company that has issued a policy pursuant to the terms of
this Plan.
2.20 Key Employee Any Participant who is a "key employee" as defined in Section 416(i) of
the Code.
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2.21 Non-Elective A contribution amount made available by the Employer for the
Contribution purchase of benefits elected by the Participant.
2.22 Participant An Employee who has qualified for Plan participation as provided in Item
C of the Adoption Agreement.
2.23 Plan The Plan referred to in Item A of the Adoption Agreement as may be
amended from time to time.
2.24 Plan Year The Plan Year as specified in Item D of the Adoption Agreement.
2.25 Policy An insurance policy issued as a part of this Plan.
2.26 Preventative Care Medical expenses which meet the safe harbor definition of"preventative
care" set forth in IRS Notice 2004-23, which includes, but is not limited
to, the following: (i) periodic health evaluations, such as annual physicals
(and the tests and diagnostic procedures ordered in conjunction with such
evaluations); (d) well-baby and/or well-child care; (iii) immunizations for
adults and children; (iv) tobacco cessation and obesity weight-loss
programs; and (v) screening devices. However, preventative care does
not generally include any service or benefit intended to treat an existing
illness, injury or condition.
2.27 Recordkeeper The person designated by the Employer to perform recordkeeping
and other ministerial duties with respect to the Medical Expense
Reimbursement Plan and/or the Dependent Care Reimbursement Plan.
2.28 Related Employer Any employer that is a member of a related group of organizations with
the Employer shown in Item A of the Adoption Agreement, and as
specified under Code Section 414(b), (c) or(m).
SECTION III
ELIGIBILITY,ENROLLMENT,AND PARTICIPATION
3.01 ELIGIBILITY: Each Employee of the Employer who has met the eligibility requirements of Item C of
the Adoption Agreement will be eligible to participate in the Plan on the Entry Date specified or the
Effective Date of the Plan, whichever is later. Dependent eligibility to receive benefits under any of
the plans listed in Item F of the Adoption Agreement will be described in the documents governing
those benefit plans. To the extent a Dependent is eligible to receive benefits under a plan listed in Item
F, an Eligible Employee may elect coverage under this Plan with respect to such Dependent.
Notwithstanding the foregoing, life insurance coverage on the life of a Dependent may not be elected
under this Plan.
`, 3.02 ENROLLMENT: An eligible Employee may enroll (or re-enroll) in the Plan by submitting to the
Employer, during an enrollment period, an Election Form which specifies his or her benefit elections for
the Plan Year and which meets such standards for completeness and accuracy as the Employer may
establish. A Participant's Election Form shall be completed prior to the beginning of the Plan Year, and
shall not be effective prior to the date such form is submitted to the Employer. Any Election Form
submitted by a Participant in accordance with this Section shall remain in effect until the earlier of the
following dates: the date the Participant terminates participation in the Plan; or, the effective date of a
subsequently filed Election Form.
A Participant's right to elect certain benefit coverage shall be limited hereunder to the extent such rights
are limited in the Policy. Furthermore, a Participant will not be entitled to revoke an election after a
period of coverage has commenced and to make a new election with respect to the remainder of the
period of coverage unless both the revocation and the new election are on account of and consistent
with a change in status, or other allowable events, as determined by Section 125 of the Internal Revenue
Code and the regulations thereunder.
3.03 TERMINATION OF PARTICIPATION: A Participant shall continue to participate in the Plan until the
earlier of the following dates:
(a) The date the Participant terminates employment by death, disability, retirement or other
separation from service; or
(b) The date the Participant ceases to work for the Employer as an eligible Employee;or
(c) The date of termination of the Plan; or
(d) The first date a Participant fails to pay required contributions while on a leave of absence.
3.04 SEPARATION FROM SERVICE: The existing elections of an Employee who separates from the
employment service of the Employer shall be deemed to be automatically terminated and the Employee
will not receive benefits for the remaining portion of the Plan Year.
3.05 QUALIFYING LEAVE UNDER FAMILY LEAVE ACT: Notwithstanding any provision to the
contrary in this Plan, if a Participant goes on a qualifying unpaid leave under the Family and Medical
Leave Act of 1993 (FMLA), to the extent required by the FMLA, the Employer will continue to
maintain the Participant's existing coverage under the Plan with respect to benefits under Section V and
Section VIII of the Plan on the same terms and conditions as though he were still an active Employee.
If the Employee opts to continue his coverage, the Employee may pay his Elective Contribution with
after-tax dollars while on leave (or pre-tax dollars to the extent he receives compensation during the
leave), or the Employee may be given the option to pre-pay all or a portion of his Elective Contribution
for the expected duration of the leave on a pre-tax salary reduction basis out of his pre-leave
compensation (including unused sick days or vacation) by making a special election to that effect prior
to the date such compensation would normally be made available to him (provided, however, that pre-
tax dollars may not be utilized to fund coverage during the next plan year), or via other arrangements
agreed upon between the Employee and the Administrator (e.g., the Administrator may fund coverage
during the leave and withhold amounts upon the Employee's return). Upon return from such leave, the
Employee will be permitted to reenter the Plan on the same basis the Employee was participating in the
Plan prior to his leave,or as otherwise required by the FMLA.
SECTION IV
CONTRIBUTIONS
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4.01 EMPLOYER CONTRIBUTIONS: The Employer may pay the costs of the benefits elected under the
Plan with funds from the sources indicated in Item E of the Adoption Agreement. The Employer
Contribution may be made up of Non-Elective Contributions and/or Elective Contributions authorized
by each Participant on a salary reduction basis.
4.02 IRREVOCABILITY OF ELECTIONS: A Participant may file a written election form with the
Administrator before the end of the current Plan Year revising the rate of his contributions or
discontinuing such contributions effective as of the first day of the next following Plan Year. The
Participant's Elective Contributions will automatically terminate as of the date his employment
terminates. Except as provided in this Section 4.02 and Section 4.03, a Participant's election under the
Plan is irrevocable for the duration of the plan year to which it relates. The exceptions to the
irrevocability requirement which would permit a mid-year election change in benefits and the salary
reduction amount elected are set out in the Treasury regulations promulgated under Code Section 125,
which include the following:
(a) Change in Status. A Participant may change or revoke his election under the Plan upon the
occurrence of a valid change in status, but only if such change or termination is made on account of,
and is consistent with, the change in status in accordance with the Treasury regulations promulgated
under Section 125. The Employer, in its sole discretion as Administrator, shall determine whether a
requested change is on account of and consistent with a change in status,as follows:
(1) Change in Employee's legal marital status, including marriage, divorce, death of spouse, legal
separation, and annulment;
[ (2) Change in number of Dependents, including birth, adoption, placement for adoption, and death;
(3) Change in employment status, including any employment status change affecting benefit
eligibility of the Employee, spouse or Dependent, such as termination or commencement of
employment, change in hours, strike or lockout, a commencement or return from an unpaid
leave of absence, and a change in work site. If the eligibility for either the cafeteria Plan or any
underlying benefit plans of the Employer of the Employee, spouse or Dependent relies on the
employment status of that individual, and there is a change in that individual's employment
status resulting in gaining or losing eligibility under the Plan, this constitutes a valid change in
status. This category only applies if benefit eligibility is lost or gained as a result of the event.
If an Employee terminates and is rehired within 30 days, the Employee is required to step back
into his previous election. If the Employee terminates and is rehired after 30 days, the
Employee may either step back into the previous election or make a new election;
(4) Dependent satisfies, or ceases to satisfy, Dependent eligibility requirements due to attainment
of age,gain or loss of student status, marriage or any similar circumstances; and
(5) Residence change of Employee, spouse or Dependent, affecting the Employee's eligibility for
coverage.
(b) Special Enrollment Rights. If a Participant or his or her spouse or Dependent is entitled to special
enrollment rights under a group health plan (other than an excepted benefit), as required by HIPAA
under Code Section 9801(t) or Section 2701(f) of the Public Health Service Act, then a Participant
may revoke a prior election for group health plan coverage and make a new election, provided that
the election change corresponds with such HIPAA special enrollment right. As required by HIPAA,
a special enrollment right will arise in the following circumstances: (i) a Participant or his or her
4W spouse or Dependent declined to enroll in group health plan coverage because he or she had
coverage, and eligibility for such coverage is subsequently lost because the coverage was provided
under COBRA and the COBRA coverage was exhausted, or the coverage was non-COBRA
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coverage and the coverage terminated due to loss of eligibility for coverage or the employer
contributions for the coverage were terminated; (ii) a new Dependent is acquired as a result of
marriage, birth, adoption, or placement for adoption; (iii) the Participant's or his or her spouse's or
Dependent's coverage under a Medicaid plan or under a children's health insurance program (CHIP)
is terminated as a result of loss of eligibility for such coverage and the Participant requests coverage
under the group health plan not later than 60 days after the date of termination of such coverage; or
(iv) the Participant, his or her spouse or Dependent becomes eligible for a state premium assistance
subsidy from a Medicaid plan or through a state children's insurance program with respect to
coverage under the group health plan and the Participant requests coverage under the group health
plan not later than 60 days after the date the Participant, his or her spouse or Dependent is
determined to be eligible for such assistance. An election change under(iii) or(iv)of this provision
must be requested within 60 days after the termination of Medicaid or state health plan coverage or
the determination of eligibility for a state premium assistance subsidy, as applicable. Special
enrollment rights under the health insurance plan will be determined by the terms of the health
insurance plan.
(c) Certain Judgments, Decrees or Orders. If a judgment,decree or order resulting from a divorce, legal
separation, annulment or change in legal custody (including a qualified medical child support order
[QMCSOJ) requires accident or health coverage for a Participant's child or for a foster child who is
a dependent of the Participant, the Participant may have a mid-year election change to add or drop
coverage consistent with the Order.
(d) Entitlement to Medicare or Medicaid. If a Participant, Participant's spouse or Participant's
Dependent who is enrolled in an accident or health plan of the Employer becomes entitled to
Medicare or Medicaid (other than coverage consisting solely of benefits under Section 1928 of the
Social Security Act providing for pediatric vaccines), the Participant may cancel or reduce health
coverage under the Employer's Plan. Loss of Medicare or Medicaid entitlement would allow the
Participant to add health coverage under the Employer's Plan.
(e) Family Medical Leave Act. If an Employee is taking leave under the rules of the Family Medical
Leave Act,the Employee may revoke previous elections and re-elect benefits upon return to work.
if) COBRA Oualifving Event. If an Employee has a COBRA qualifying event(a reduction in hours of
the Employee, or a Dependent ceases eligibility), the Employee may increase his pre-tax
contributions for coverage under the Employer's Plan if a COBRA event occurs with respect to the
Employee, the Employee's spouse or Dependent. The COBRA rule does not apply to COBRA
coverage under another Employer's Plan.
(g) Changes in Eligibility for Adult Children. To the extent the Employer amends a plan listed in Item
F of the Adoption Agreement that provides benefits that are excluded from an Employee's income
under Code Section 105 to provide that Adult Children (as defined in Section 2.04(c)) are eligible to
receive benefits under the plan, an Eligible Employee may make or change an election under this
Plan to add coverage for the Adult Child and to make any corresponding change to the Eligible
Employee's coverage that is consistent with adding coverage for the Adult Child.
(h) Notwithstanding anything to the contrary in this Section 4.02, the change in election rules in this
Section 4.02 do not apply to the Medical Expense Reimbursement Plan, or may not be modified
with respect to the Medical Expense Reimbursement Plan if the Plan is being administered by a
460 Recordkeeper other than the Employer, unless the Employer and the Recordkeeper otherwise agree
in writing.
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4.03 OTHER EXCEPTIONS TO IRREVOCABILITY OF ELECTIONS. Other exceptions to the
irrevocability of election requirement permit mid-year election changes and apply to all qualified
benefits except for Medical Expense Reimbursement Plans, as follows:
(a) Change in Cost. If the cost of a benefit package option under the Plan significantly increases during
the plan year, Participants may (i) make a corresponding increase in their salary reduction amount,
(ii) revoke their elections and make a prospective election under another benefit option offering
similar coverage, or (iii) revoke election completely if no similar coverage is available, including in
spouse or dependent's plan. If the cost significantly decreases, employees may elect coverage even
if they had not previously participated and may drop their previous election for a similar coverage
option in order to elect the benefit package option that has decreased in cost during the year. If the
increased or decreased cost of a benefit package option under the Plan is insignificant, the
participant's salary reduction amount shall be automatically adjusted.
(b) Significant curtailment of coverage.
(i) With no loss of coverage. If the coverage under a benefit package option is significantly
curtailed or ceases during the Plan Year, affected Participants may revoke their elections for the
curtailed coverage and make a new prospective election for coverage under another benefit
package option providing similar coverage.
(ii) With loss of coverage. If there is a significant curtailment of coverage with loss of coverage,
affected Participants may revoke election for curtailed coverage and make a new prospective
election for coverage under another benefit package option providing similar coverage, or drop
coverage if no similar benefit package option is available.
(c) Addition or Significant Improvement of Benefit Package Option. If during the Plan Year a new
benefit package option is added or significantly improved, eligible employees, whether currently
participating or not, may revoke their existing election and elect the newly added or newly improved
option.
(d) Change in Coverage of a Spouse or Dependent Under Another Employer's Plan. If there is a
change in coverage of a spouse, former spouse, or Dependent under another employer's plan, a
Participant may make a prospective election change that is on account of and corresponds with a
change made under the plan of the spouse or Dependent. This rule applies if(1) mandatory changes
in coverage are initiated by either the insurer of spouse's plan or by the spouse's employer, or (2)
optional changes are initiated by the spouse's employer or by the spouse through open enrollment.
(e) Loss of coverage under other group health coverage. If during the Plan Year coverage is lost under
any group health coverage sponsored by a governmental or educational institution, a Participant may
prospectively change his or her election to add group health coverage for the affected Participant or
his or her spouse or dependent.
4.04 CASH BENEFIT: Available amounts not used for the purchase of benefits under this Plan may be
considered a cash benefit under the Plan payable to the Participant as taxable income to the extent
indicated in Item E of the Adoption Agreement.
4.05 PAYMENT FROM EMPLOYER'S GENERAL ASSETS: Payment of benefits under this Plan shall be
made by the Employer from Elective Contributions which shall be held as a part of its general assets.
15
4.06 EMPLOYER MAY HOLD ELECTIVE CONTRIBUTIONS: Pending payment of benefits in
accordance with the terms of this Plan, Elective Contributions may be retained by the Employer in a
separate account or, if elected by the Employer and as permitted or required by regulations of the
Internal Revenue Service, Department of Labor or other governmental agency, such amounts of Elective
Contributions may be held in a trust pending payment.
4.07 MAXIMUM EMPLOYER CONTRIBUTIONS: With respect to each Participant, the maximum
amount made available to pay benefits for any Plan Year shall not exceed the Employer's Contribution
specified in the Adoption Agreement and as provided in this Plan.
SECTION V
GROUP MEDICAL INSURANCE BENEFIT PLAN
5.01 PURPOSE: These benefits provide the group medical insurance benefits to Participants.
5.02 ELIGIBILITY: Eligibility will be as required in Items F(1), F(3), and F(4)of the Adoption Agreement.
5.03 DESCRIPTION OF BENEFITS: The benefits available under this Plan will be as defined in Items F(I),
F(3), and F(4) of the Adoption Agreement.
5.04 TERMS CONDITIONS AND LIMITATIONS: The terms, conditions and limitations of the benefits
offered shall be as specifically described in the Policy identified in the Adoption Agreement.
5.05 COBRA: To the extent required by Section 4980B of the Code and Sections 601 through 607 of
ERISA, Participants and Dependents shall be entitled to continued participation in this Group Medical
Insurance Benefit Plan by contributing monthly (from their personal assets previously subject to
taxation) 102% of the amount of the premium for the desired benefit during the period that such
individual is entitled to elect continuation coverage, provided, however, in the event the continuation
period is extended to 29 months due to disability, the premium to be paid for continuation coverage for
the I 1 month extension period shall be 150%of the applicable premium.
5.06 SECTION 105 AND 106 PLAN: It is the intention of the Employer that these benefits shall be eligible
for exclusion from the gross income of the Participants covered by this benefit plan, as provided in
Code Sections 105 and 106, and all provisions of this benefit plan shall be construed in a manner
consistent with that intention. It is also the intention of the Employer to comply with the provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985 as outlined in the policies identified in
the Adoption Agreement.
5.07 CONTRIBUTIONS: Contributions for these benefits will be provided by the Employer on behalf of a
Participant as provided for in Item E of the Adoption Agreement.
5.08 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT:
Notwithstanding anything to the contrary herein, the Group Medical Insurance Benefit Plan shall
comply with the applicable provisions of the Uniformed Services Employment and Reemployment
Rights Act of 1994 (Public Law 103-353).
( il
SECTION VI
16
DISABILITY INCOME BENEFIT PLAN
6.01 PURPOSE: This benefit provides disability insurance designated to provide income to Participants
during per of absence from employment because of disability.
6.02 ELIGIBILITY: Eligibility will be as required in Item F(2) of the Adoption Agreement.
6.03 DESCRIPTION OF BENEFITS: The benefits available under this Plan will be as defined in Item F(2)
of the Adoption Agreement.
6.04 TERMS CONDITIONS AND LIMITATIONS: The terms, conditions and limitations of the Disability
Income Benefits offered shall be as specifically described in the Policy identified in the Adoption
Agreement.
6.05 SECTION 104 AND 106 PLAN: It is the intention of the Employer that the premiums paid for these
benefits shall be eligible for exclusion from the gross income of the Participants covered by this benefit
plan, as provided in Code Sections 104 and 106, and all provisions of this benefit plan shall be
construed in a manner consistent with that intention.
6.06 CONTRIBUTIONS: Contributions for this benefit will be provided by the Employer on behalf of a
Participant as provided for in Item E of the Adoption Agreement.
4W SECTION VII
GROUP AND INDIVIDUAL LIFE INSURANCE PLAN
7.01 PURPOSE: This benefit provides group life insurance benefits to Participants and may provide certain
individual policies as provided for in Item F(5)of the Adoption Agreement.
7.02 ELIGIBILITY: Eligibility will be as required in Item F(5)of the Adoption Agreement.
7.03 DESCRIPTION OF BENEFITS: The benefits available under this Plan will be as defined in Item F(5)
of the Adoption Agreement.
7.04 TERMS CONDITIONS, AND LIMITATIONS: The terms, conditions, and limitations of the group
life insurance are specifically described in the Policy identified in the Adoption Agreement.
7.05 SECTION 79 PLAN: It is the intention of the Employer that the premiums paid for the benefits
described in Item F(5) of the Adoption Agreement shall be eligible for exclusion from the gross income
of the Participants covered by this benefit plan to the extent provided in Code Section 79, and all
provisions of this benefit plan shall be construed in a manner consistent with that intention.
7.06 CONTRIBUTIONS: Contributions for this benefit will be provided by the Employer on behalf of a
Participant as provided for in Item E of the Adoption Agreement. Any individual policies purchased by
the Employer for the Participant will be owned by the Participant.
4W
SECTION VIII
17
4 MEDICAL EXPENSE REIMBURSEMENT PLAN
8.01 PURPOSE: The Medical Expense Reimbursement Plan is designed to provide for reimbursement of
Eligible Medical Expenses (as defined in Section 8.04)that are not reimbursed under an insurance plan,
through damages, or from any other source. It is the intention of the Employer that amounts allocated
for this benefit shall be eligible for exclusion from gross income, as provided in Code Sections 105 and
106, for Participants who elect this benefit and all provisions of this Section Vill shall be construed in a
manner consistent with that intention.
8.02 ELIGIBILITY: The eligibility provisions are set forth in Item F(7)of the Adoption Agreement.
8.03 TERMS CONDITIONS AND LIMITATIONS:
(a) Accounts. The Reimbursement Recordkeeper shall establish a recordkeeping account for each
Participant. The Reimbursement Recordkeeper shall maintain a record of each account on an on-
going basis, increasing the balances as contributions are credited during the year and decreasing the
balances as Eligible Medical Expenses are reimbursed. No interest shall be payable on amounts
recorded in any Participant's account.
(b) Maximum benefit. The maximum amount of reimbursement for each Participant shall be limited to
the amount of the Participant's Elective Contribution allocated to the program during the Plan Year,
not to exceed the maximum amount set forth in Item F(7) of the Adoption Agreement.
(c) Claim Procedure. In order to be reimbursed for any medical expenses incurred during the Plan
Year, the Participant shall complete the form(s) provided for such purpose by the Reimbursement
Recordkeeper. The Participant shall submit the completed form to the Reimbursement
Recordkeeper with an original bill or other proof of the expense acceptable to the Reimbursement
Recordkeeper. No reimbursement shall be made on the basis of an incomplete form or inadequate
evidence of expense as determined by the Reimbursement Recordkeeper. Forms for reimbursement
of Eligible Medical Expenses must be submitted no later than the ninetieth (90th) day following the
last day of the Plan Year during which the Eligible Medical Expenses were incurred.
Reimbursement payments shall only be made to the Participant, or the Participant's legal
representative in the event of incapacity or death of the Participant. Forms for reimbursement shall
be reviewed in accordance with the claims procedure set forth in Section XII.
(d) Fundin . The funding of the Medical Reimbursement Plan shall be through contributions by the
Employer from its general assets to the extent of Elective Contributions directed by Participants.
Such contributions shall be made by the Employer when benefit payments and account
administrative expenses become due and payable under this Medical Expense Reimbursement Plan.
(e) Forfeiture. Any amounts remaining to the credit of the Participant at the end of the Plan Year and
not used for Eligible Medical Expenses incurred during the Participant's participation during the
Plan Year shall be forfeited and shall remain assets of the Plan. With respect to a Participant who
terminates employment with the Employer and who has not elected to continue coverage under this
Plan pursuant to COBRA rights referenced under Section 8.03(f) herein, such Participant shall not
be entitled to reimbursement for Eligible Medical Expenses incurred after his termination date
regardless if such Participant has any amounts of Employer Contributions remaining to his credit.
Upon the death of any Participant who has any amounts of Employer Contributions remaining to his
credit, a dependent of the Participant may elect to continue to claim reimbursement for Eligible
19
Medical Expenses in the same manner as the Participant could have for the balance of the Plan Year.
(f) COBRA. To the extent required by Section 4980B of the Code and Sections 601 through 607 of
ERISA (`COBRA"), a Participant and a Participant's Dependents shall be entitled to elect continued
participation in this Medical Expense Reimbursement Plan only through the end of the plan year in
which the qualifying event occurs, by contributing monthly (from their personal assets previously
subject to taxation) to the Employer/Administrator, 102% of the amount of desired reimbursement
through the end of the Plan Year in which the qualifying event occurs. Specifically, such
individuals will be eligible for COBRA continuation coverage only if they have a positive Medical
Expense Reimbursement Account balance on the date of the qualifying event. Participants who
have a deficit balance in their Medical Expense Reimbursement Account on the date of their
qualifying event shall not be entitled to elect COBRA coverage. In lieu of COBRA, Participants
may continue their coverage through the end of the current Plan Year by paying those premiums out
of their last paycheck on a pre-tax basis.
(g) Nondiscrimination. Benefits provided under this Medical Expense Reimbursement Plan shall not be
provided in a manner that discriminates in favor of Employees or Dependents who are highly
compensated individuals, as provided under Section 105(h) of the Code and regulations
promulgated thereunder.
(h) Uniform Coverage Rule. Notwithstanding that a Participant has not had withheld and credited to his
account all of his contributions elected with respect to a particular Plan Year, the entire aggregate
annual amount elected with respect to this Medical Expense Reimbursement Plan, shall be available
L at all times during such Plan Year to reimburse the participant for Eligible Medical Expenses with
fir' respect to this Medical Expense Reimbursement Plan. To the extent contributions with respect to
this Medical Expense Reimbursement Plan are insufficient to pay such Eligible Medical Expenses,
it shall be the Employer's obligation to provide adequate funds to cover any short fall for such
Eligible Medical Expenses for a Participant; provided subsequent contributions with respect to this
Medical Expense Reimbursement Plan by the Participant shall be available to reimburse the
Employer for funds advanced to cover a previous short fall.
(i) Uniformed Services Employment and Reemployment Rights Act Notwithstanding anything to the
contrary herein, this Medical Expense Reimbursement Plan shall comply with the applicable
provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 (Public
Law 103-353).
0) Proration of Limit. In the event that the Employer has purchased a uniform coverage risk policy
from the Recordkeeper, then the Maximum Coverage amount specified in Section F.7 of the
Adoption Agreement shall be pro rated with respect to (i) an Employee who becomes a Participant
and enters the Plan during the Plan Year, and (ii) short plan years initiated by the Employer. Such
Maximum Coverage amount will be pro rated by dividing the annual Maximum Coverage amount
by 12, and multiplying the quotient by the number of remaining months in the Plan Year for the new
Participant or the number of months in the short Plan Year, as applicable.
(k) Continuation Coverage for Certain Dependent Children. In the event that benefits under the
Medical Expense Reimbursement Plan does not qualify for the exception from the portability rules
of HIPAA,then, effective for Plan Years beginning on or after October 9, 2009, notwithstanding the
foregoing provisions, coverage for a Dependent child who is enrolled in the Medical Expense
19
Reimbursement Plan as a student at a post-secondary educational institution will not terminate due
4W to a medically necessary leave of absence before a date that is the earlier of:
the date that is one year after the first day of the medically necessary leave of absence;or
• the date on which such coverage would otherwise terminate under the terms of the Plan.
For purposes of this paragraph, "medically necessary leave of absence" means a leave of absence of
the child from a post-secondary educational institution, or any other change in enrollment of the
child at the institution, that: (i) commences while the child is suffering from a serious illness or
injury; (ii) is medically necessary; and (iii) causes the child to lose student status for purposes of
coverage under the terms of the Plan. A written certification must be provided by a treating
physician of the dependent child to the Plan in order for the continuation coverage requirement to
apply. The physician's certification must state that the child is suffering from a serious illness or
injury and that the leave of absence (or other change in enrollment) is medically necessary.
8.04 ELIGIBLE MEDICAL EXPENSES:
(a) Eligible Medical Expense Defined. The phrase `Eligible Medical Expense' means any expense
incurred by a Participant or any of his Dependents (subject to the restrictions in Sections 8.04(b) and
(c))during a Plan Year that (i) qualifies as an expense incurred by the Participant or Dependents for
medical care as defined in Code Section 213(d) and meets the requirements outlined in Code
Section 125, (ii) is excluded from gross income of the Participant under Code Section 105(b), and
(iii) has not been and will not be paid or reimbursed by any other insurance plan, through damages,
or from any other source.
(b) Expenses Incurred After Commencement of Participation. Only medical care expenses incurred by
a Participant or the Participant's Dependent(s) on or after the date such Participant commenced
participation in the Medical Expense Reimbursement Plan shall constitute an Eligible Medical
Expense.
(c) Eligible Expenses Incurred by Dependents. For purposes of this Section, Eligible Medical Expenses
incurred by Dependents defined in Section 2.04(c) are eligible for reimbursement if incurred after
March 30, 2010; Eligible Medical Expenses incurred by Dependents defined in Sections 2.04(a)and
(b) are eligible for reimbursement if incurred either before or after March 30, 2010 (subject to the
restrictions of Section 8.04(b)).
(d) Health Savings Accounts. If the Employer has elected in Item F.8 of the Adoption Agreement to
allow Eligible Employees to contribute to Health Savings Accounts under the Plan, then for a
Participant who is eligible for and elects to contribute to a Health Savings Accounts, Eligible
Medical Expenses shall be limited as set forth in Item F.8 of the Adoption Agreement.
8.05 USE OF DEBIT CARD: In the event that the Employer elects to allow the use of debit cards ("Debit
Cards") for reimbursement of Eligible Medical Expenses under the Medical Expense Reimbursement
Plan,the following provisions shall apply:
(a) Substantiation. The following procedures shall be applied for purposes of substantiating claimed
Eligible Medical Expenses after the use of a Debit Card to pay the claimed Eligible Medical
46, Expense:
20
(i) If the dollar amount of the transaction at a health care provider equals the dollar amount
of the co-payment for that service under the Employer's major medical plan of the
specific employee-cardholder, the charge is fully substantiated without the need for
submission of a receipt or further review.
(ii) If the merchant, service provider, or other independent third-party (e.g., pharmacy
benefit manager), at the time and point of sale, provides information to verify to the
Recordkeeper(including electronically by e-mail, the internet, intranet, or telephone)that
the charge is for a medical expense,the charge is fully substantiated without the need for
submission of a receipt or further review.
(b) Status of Charges. All charges to a Debit Card, other than co-payments and real-time substantiation
as described in Subsection (a) above, are treated as conditional pending confirmation of the charge,
and additional third-party information, such as merchant or service provider receipts, describing the
service or product, the date of the service or sale, and the amount, must be submitted for review and
substantiation.
(c) Correction Procedures for Improper Payments. In the event that a claim has been reimbursed and is
subsequently identified as not qualifying for reimbursement, one or all of the following procedures
shall apply:
(i) First, upon the Recordkeeper's identification of the improper payment, the Eligible
Employee will be required to pay back to the Plan an amount equal to the improper
payment.
4 (ii) Second, where the Eligible Employee does not pay back to the Plan the amount of the
improper payment, the Employer will have the amount of the improper payment withheld
from the Eligible Employee's wages or other compensation to the extent consistent with
applicable law.
(iii) Third, if the improper payment still remains outstanding, the Plan may utilize a claim
substitution or offset approach to resolve improper claims payments.
(iv) If the above correction efforts prove unsuccessful, or are otherwise unavailable, the
Eligible Employee will remain indebted to the Employer for the amount of the improper
payment. In that event and consistent with its business practices, the Employer may treat
the payment as it would any other business indebtedness.
(v) In addition to the above, the Employer and the Plan may take other actions they may
deem necessary, in their sole discretion, to ensure that further violations of the terms of
the Debit Card do not occur, including, but not limited to, denial of access to the Debit
Card until the indebtedness is repaid by the Eligible Employee.
(d) Intent to Comply with Rev. Rul. 2003-43. It is the Employer's intent that any use of Debit Cards to
pay Eligible Medical Expenses shall comply with the guidelines for use of such cards set forth in
Rev. Rul. 2003-43, and this Section 8.05 shall be construed and interpreted in a manner necessary to
comply with such guidelines.
` 8.06 GRACE PERIOD: If the Employer elects in Section F.7 of the Adoption Agreement to permit a Grace
Period with respect to the Medical Reimbursement Plan, the provisions of this Section 8.06 shall apply.
Notwithstanding anything to the contrary herein and in accordance with Internal Revenue Service
21
Notice 2005-42, a Participant who has unused contributions relating to the Medical Reimbursement Plan
from the immediately preceding Plan Year, and who incurs Eligible Medical Expenses for such qualified
benefit during the Grace Period, may be paid or reimbursed for those Eligible Medical Expenses from
the unused contributions as if the expenses had been incurred in the immediately preceding Plan Year.
For purposes of this Section, `Grace Period' shall mean the period extending to the 15" day of the third
calendar month after the end of the immediately preceding Plan Year to which it relates. Eligible
Medical Expenses incurred during the Grace Period shall be reimbursed first from unused contributions
allocated to the Medical Reimbursement Plan for the prior Plan Year, and then from unused
contributions for the current Plan Year, if participant is enrolled in current Plan Year.
8.07 QUALIFIED RESERVIST DISTRIBUTIONS: Notwithstanding anything in the Plan to the
contrary, an individual who, by reason of being a member of a reserve component(as defined in
37 U.S.C. § 101), is ordered or called to active duty for a period in excess of 179 days or for an
indefinite period may elect to receive a distribution of all or a portion of the unused Elective
Contributions in his or her Account relating to the Medical Expense Reimbursement Plan if the
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 under the Plan for the Plan Year that
includes the date of such order or call. If the distribution is for the entire amount of unused
Elective Contributions available in the Medical Expense Reimbursement Plan,then no additional
reimbursement requests will be processed for the remainder of the Plan Year.
SECTION IX
DEPENDENT CARE REIMBURSEMENT PLAN
9.01 PURPOSE: The Dependent Care Reimbursement Plan is designed to provide for reimbursement of
certain employment-related dependent care expenses of the Participant. It is the intention of the
Employer that amounts allocated for this benefit shall be eligible for exclusion from gross income, as
provided in Code Section 129, for Participants who elect this benefit, and all provisions of this Section
IN shall be construed in a manner consistent with that intention.
9.02 ELIGIBILITY: The eligibility provisions are set forth in Item F(6) of the Adoption Agreement.
9.03 TERMS CONDITIONS, AND LIMITATIONS:
(a) Accounts. The Reimbursement Recordkeeper shall establish a recordkeeping account for each
Participant. The Reimbursement Recordkeeper shall maintain a record of each account on an on-
going basis, increasing the balances as contributions are credited during the year and decreasing the
balances as Eligible Dependent Care Expenses are reimbursed. No interest shall be payable on
amounts recorded in any Participant's account.
(b) Maximum Benefit. The maximum amount of reimbursement for each Participant shall be limited to
the amount of the Participant's allocation to the program during the Plan Year not to exceed the
maximum amount set forth in Item F(6) of the adoption agreement.
(c) For purpose of this Section IX, the phrase "earned income" shall mean wages, salaries, tips and
other employee compensation, but only if such amounts are includible in gross income for the
taxable year. A Participant's spouse who is physically or mentally incapable of self-care as
described in Section 9.04(a)(ii) or a spouse who is a full-time student within the meaning of Code
Section 21(e)(7) shall be deemed to have earned income for each month in which such spouse is so
22
disabled (or a full-time student). The amount of such deemed earned income shall be $250 per
month in the case of one Dependent and $500 per month in the case of two or more Dependents.
Claim Procedure. In order to be reimbursed for any dependent care expenses incurred during the Plan Year,the
Participant shall complete the forms) provided for such purpose by the Reimbursement
Recordkeeper. The Participant shall submit the completed form to the Reimbursement
Recordkeeper with an original bill or other proof of the expense from an independent third party
acceptable to the Reimbursement Recordkeeper. No reimbursement shall be made on the basis of an
incomplete form or inadequate evidence of the expense as determined by the Reimbursement
Recordkeeper. Claims for reimbursement of Eligible Dependent Care Expenses must be submitted
no later than the ninetieth (90th) day following the last day of the Plan Year during which the
Eligible Dependent Care Expenses were incurred. Reimbursement payments shall only be made to
the Participant, or the Participant's legal representative in the event of the incapacity or death of the
Participant. Forms for reimbursement shall be reviewed in accordance with the claims procedure set
forth in Section XII.
(e) Funding. The funding of the Dependent Care Reimbursement Plan shall be through contributions by
the Employer from its general assets to the extent of Elective Contributions directed by Participants.
Such contributions shall be made by the Employer when benefit payments and account
administration expenses become due and payable under this Dependent Care Expense
Reimbursement Plan.
(f) Forfeiture. Any amounts remaining to the credit of the Participant at the end of the Plan Year and
not used for Eligible Dependent Care Expenses incurred during the Plan Year shall be forfeited and
remain assets of the Plan.
(g) Nondiscrimination. Benefits provided under this Dependent Care Reimbursement Plan shall not be
provided in a manner that discriminates in favor of Highly Compensated Employees (as defined in
Code Section 414(q)) or their dependents, as provided in Code Section 129. In addition, no more
than 25 percent of the aggregate Eligible Dependent Care Expenses shall be reimbursed during a
Plan Year to five percent owners, as provided in Code Section 129.
9.04 DEFINITIONS:
(a) "Dependent" (for purposes of this Section IX)means any individual who is:
(i) a Participant's qualifying child (as defined in Code Section 152 (c)) who has not attained
the age of 13;or
(ii) a dependent (qualifying child or qualifying relative, as defined in Code Section 152 (c)
and (d), respectively)or the spouse of a Participant who is physically or mentally
incapable of self-care, and who has the same principal place of abode as the taxpayer for
more than half of the taxable year. For purposes of this Dependent Care Reimbursement
Plan, an individual shall be considered physically or mentally incapable of self-care if, as
a result of a physical or mental defect, the individual is incapable of caring for his or her
hygienic or nutritional needs, or requires full-time attention of another person for his or
her own safety or the safety of others.
(b) "Dependent Care Center" (for purposes of this Section IX) shall be a facility which:
23
(i) provides care for more than six individuals (other than individuals who reside at the
facility);
(ii) receives a fee, payment, or grant for providing services for any of the individuals
(regardless of whether such facility is operated for profit);and
(iii) satisfies all applicable laws and regulations of a state or unit of local government.
(c) "Eligible Dependent Care Expenses" (for purposes of this Section IX) shall mean expenses incurred
by a Participant which are:
(i) incurred for the care of a Dependent of the Participant or for related household services;
(ii) paid or payable to a Dependent Care Service Provider;and
(iii) incurred to enable the Participant to be gainfully employed for any period for which there
are one or more Dependents with respect to the Participant.
"Eligible Dependent Care Expenses" shall not include expenses incurred for services outside the
Participant's household for the care of a Dependent unless such Dependent is (i) a qualifying
child (as defined in Code Section 152 (c)) under the age of 13, or (ii) a dependent (qualifying
child or qualifying relative, as defined in Code Section 152 (c) and (d), respectively)), who is
physically or mentally incapable of self-care, and who has the same principal place of abode as
the Participant for more than half of the taxable year, or (iii) the spouse of a Participant who is
physically or mentally incapable of self-care, and who has the same principal place of abode as
the Participant for more than half of the taxable year. Eligible Dependent Care Expenses shall
be deemed to be incurred at the time the services to which the expenses relate are rendered.
(d) "Dependent Care Service Provider" (for purposes of this Section IX)means:
(i) a Dependent Care Center, or
(ii) a person who provides care or other services described in Section 9.04(b) and who is not
a related individual described in Section 129(c)of the Code.
SECTION X
HEALTH SAVINGS ACCOUNTS
10.01 PURPOSE: If elected by the Employer in Section F.8 of the Adoption Agreement, the Plan will permit
pre-tax contributions to the Health Savings Account, and the provisions of this Article X shall apply.
10.02 BENEFITS: A Participant can elect benefits under the Health Savings Accounts portion of this Plan by
electing to pay his or her Health Savings Account contributions on a pre-tax salary reduction basis. In
addition, the Employer may make contributions to the Health Savings Account for the benefit of the
Participant.
10.03 TERMS, CONDITIONS AND LIMITATION:
(a) Maximum Benefit. The maximum annual contributions that may be made to a Participant's Health
[ Savings Account under this Plan is set forth in Section F.8 of the Adoption Agreement.
fir' (b) Mid-Year Election Changes. Notwithstanding any to the contrary herein,a Participant election with
respect to contributions for the Health Savings Account shall be revocable during the duration of the
24
Plan Year to which the election relates. Consequently, a Participant may change his or her election
E with respect to contributions for the Health Savings Account at any time.
�y 10.04 RESTRICTIONS ON MEDICAL REIMBURSEMENT PLAN: If the Employer has elected in Section
F.8 of the Adoption Agreement both Health Savings Accounts under this Plan and the Medical Expense
Reimbursement Plan, then the Eligible Medical Expenses that may be reimbursed under the Medical
Reimbursement Plan for Participants who are eligible for and elect to participate in Health Savings
Accounts shall be limited as set forth in Section F.8 of the Adoption Agreement.
10.05 NO ESTABLISHMENT OF ERISA PLAN: It is the intent of the Employer that the establishment of
Health Savings Accounts are completely voluntary on the part of Participants, and that, in accordance
with Department of Labor Field Assistance Bulletin 2004-1, the Health Savings Accounts are not
"employee welfare benefit plans"for purposes of Title I of ERISA.
SECTION XI
AMENDMENT AND TERMINATION
11.01 AMENDMENT: The Employer shall have the right at any time, and from time to time, to amend, in
whole or in part, any or all of the provisions of this Plan, provided that no such amendment shall change
the terms and conditions of payment of any benefits to which Participants and covered dependents
otherwise have become entitled to under the provisions of the Plan, unless such amendment is made to
comply with federal or local laws or regulations. The Employer also shall have the right to make any
amendment retroactively which is necessary to bring the Plan into conformity with the Code. In
addition, the Employer may amend any provisions or any supplements to the Plan and may merge or
combine supplements or add additional supplements to the Plan, or separate existing supplements into
an additional number of supplements.
11.02 TERMINATION: The Employer shall have the right at any time to terminate this Plan, provided that
such termination shall not eliminate any obligations of the Employer which therefore have arisen under
the Plan.
SECTION XII
ADMINISTRATION
12.01 NAMED FIDUCIARIES: The Administrator shall be the fiduciary of the Plan.
12.02 APPOINTMENT OF RECORDKEEPER: The Employer may appoint a Reimbursement Recordkeeper
which shall have the power and responsibility of performing recordkeeping and other ministerial duties
arising under the Medical Expense Reimbursement Plan and the Dependent Care Reimbursement Plan
provisions of this Plan. The Reimbursement Recordkeeper shall serve at the pleasure of, and may be
removed by,the Employer without cause. The Recordkeeper shall receive reasonable compensation for
its services as shall be agreed upon from time to time between the Administrator and the Recordkeeper.
L 12.03 POWERS AND RESPONSIBILITIES OF ADMINISTRATOR:
�✓ 25
(a) General. The Administrator shall be vested with all powers and authority necessary in order to
amend and administer the Plan, and is authorized to make such rules and regulations as it may deem
necessary to carry out the provisions of the Plan. The Administrator shall determine any questions
arising in the administration (including all questions of eligibility and determination of amount,time
and manner of payments of benefits), construction, interpretation and application of the Plan, and
the decision of the Administrator shall be final and binding on all persons.
(b) Recordkeeoine. The Administrator shall keep full and complete records of the administration of the
Plan. The Administrator shall prepare such reports and such information concerning the Plan and
the administration thereof by the Administrator as may be required under the Code or ERISA and
the regulations promulgated thereunder.
(c) Inspection of Records. The Administrator shall, during normal business hours, make available to
each Participant for examination by the Participant at the principal office of the Administrator a
copy of the Plan and such records of the Administrator as may pertain to such Participant. No
Participant shall have the right to inquire as to or inspect the accounts or records with respect to
other Participants.
12.04 COMPENSATION AND EXPENSES OF ADMINISTRATOR: The Administrator shall serve without
compensation for services as such. All expenses of the Administrator shall be paid by the Employer.
Such expenses shall include any expense incident to the functioning of the Plan, including, but not
limited to, attorneys' fees, accounting and clerical charges, actuary fees and other costs of administering
the Plan.
12.05 LIABILITY OF ADMINISTRATOR: Except as prohibited by law,the Administrator shall not be liable
personally for any loss or damage or depreciation which may result in connection with the exercise of
duties or of discretion hereunder or upon any other act or omission hereunder except when due to
willful misconduct. In the event the Administrator is not covered by fiduciary liability insurance or
similar insurance arrangements, the Employer shall indemnify and hold harmless the Administrator
from any and all claims, losses, damages, expenses (including reasonable counsel fees approved by the
Administrator) and liability (including any reasonable amounts paid in settlement with the Employer's
approval) arising from any act or omission of the Administrator, except when the same is determined to
be due to the willful misconduct of the Administrator by a court of competent jurisdiction.
12.06 DELEGATIONS OF RESPONSIBILITY: The Administrator shall have the authority to delegate, from
time to time, all or any part of its responsibilities under the Plan to such person or persons as it may
deem advisable and in the same manner to revoke any such delegation of responsibilities which shall
have the same force and effect for all purposes hereunder as if such action had been taken by the
Administrator. The Administrator shall not be liable for any acts or omissions of any such delegate.
The delegate shall report periodically to the Administrator concerning the discharge of the delegated
responsibilities.
12.07 RIGHT TO RECEIVE AND RELEASE NECESSARY INFORMATION: The Administrator may
release or obtain any information necessary for the application, implementation and determination of
this Plan or other Plans without consent or notice to any person. This information may be released to or
obtained from any insurance company, organization, or person subject to applicable law. Any
individual claiming benefits under this Plan shall furnish to the Administrator such information as may
4W be necessary to implement this provision.
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12.09 CLAIM FOR BENEFITS: To obtain payment of any benefits under the Plan a Participant must comply
with the rules and procedures of the particular benefit program elected pursuant to this Plan under which
the Participant claims a benefit.
12.09 GENERAL CLAIMS REVIEW PROCEDURE: This provision shall apply only to the extent that a
claim for benefits is not governed by a similar provision of a benefit program available under this Plan
or is not governed by Section 12.10.
(a) Initial Claim for Benefits. Each Participant may submit a claim for benefits to the Administrator as
provided in Section 12.08. A Participant shall have no right to seek review of a denial of benefits,
or to bring any action in any court to enforce a claim for benefits prior to his filing a claim for
benefits and exhausting his rights to review under this section.
When a claim for benefits has been filed properly, such claim for benefits shall be evaluated and the
claimant shall be notified of the approval or the denial within (90) days after the receipt of such
claim unless special circumstances require an extension of time for processing the claim. If such an
extension of time for processing is required, written notice of the extension shall be furnished to the
claimant prior to the termination of the initial ninety (90) day period which shall specify the special
circumstances requiring an extension and the date by which a final decision will be reached (which
date shall not be later than one hundred and eighty (180) days after the date on which the claim was
filed.) A claimant shall be given a written notice in which the claimant shall be advised as to
whether the claim is granted or denied, in whole or in part. If a claim is denied, in whole or in part,
the claimant shall be given written notice which shall contain (a) the specific reasons for the denial,
(b) references to pertinent plan provisions upon which the denial is based, (c) a description of any
additional material or information necessary to perfect the claim and an explanation of why such
material or information is necessary, and (d)the claimant's rights to seek review of the denial.
(b) Review of Claim Denial. If a claim is denied, in whole or in part, the claimant shall have the right
to request that the Administrator review the denial, provided that the claimant files a written request
for review with the Administrator within sixty (60) days after the date on which the claimant
received written notification of the denial. A claimant (or his duly authorized representative) may
review pertinent documents and submit issues and comments in writing to the Administrator.
Within sixty (60) days after a request is received, the review shall be made and the claimant shall be
advised in writing of the decision on review , unless special circumstances require an extension of
time for processing the review, in which case the claimant shall be given a written notification
within such initial sixty (60) day period specifying the reasons for the extension and when such
review shall be completed (provided that such review shall be completed within one hundred and
twenty (120) days after the date on which the request for review was filed.) The decision on review
shall be forwarded to the claimant in writing and shall include specific reasons for the decision and
references to plan provisions upon which the decision is based. A decision on review shall be final
and binding on all persons.
(c) Exhaustion of Remedies. If a claimant fails to file a request for review in accordance with the
procedures herein outlined, such claimant shall have no rights to review and shall have no right to
bring action in any court and the denial of the claim shall become final and binding on all persons
for all purposes.
12.10 SPECIAL CLAIMS REVIEW PROCEDURE: The provisions of this Section 12.10 shall be applicable
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to claims under the Group Medical Reimbursement Plan and the Group Medical Insurance Plan,
effective on the first day of the first Plan Year beginning on or after July 1, 2002, but in no event later
than January 1,2003,provided such plans are subject to ERISA.
(a) Benefit Denials: The Administrator is responsible for evaluating all claims for reimbursement under
the Medical Expense Reimbursement Plan and the Group Medical Insurance Plan.
The Administrator will decide a Participant's claim within a reasonable time not longer than 30 days
after it is received. This time period may be extended for an additional 15 days for matters beyond
the control of the Administrator, including in cases where a claim is incomplete. The Participant
will receive written notice of any extension, including the reasons for the extension and information
on the date by which a decision by the Administrator is expected to be made. The Participant will
be given 45 days in which to complete an incomplete claim. The Administrator may secure
independent medical or other advice and require such other evidence as it deems necessary to decide
the claim.
If the Administrator denies the claim, in whole or in part, the Participant will be furnished with a
written notice of adverse benefit determination setting forth:
1. the specific reason or reasons for the denial;
2. reference to the specific Plan provision on which the denial is issued;
3. a description of any additional material or information necessary for the Participant to
L; complete his claim and an explanation of why such material or information is necessary,
4/ and
4. appropriate information as to the steps to be taken if the Participant wishes to appeal the
Administrator's determination, including the participant's right to submit written
comments and have them considered, his right to review (on request and at no charge)
relevant documents and other information, and his right to file suit under ERISA with
respect to any adverse determination after appeal of his claim.
(b) Aooealine Denied Claims: If the Participant's claim is denied in whole or in part, he may appeal to
the Administrator for a review of the denied claim. The appeal must be made in writing within 180
days of the Administrator's initial notice of adverse benefit determination, or else the participant
will lose the right to appeal the denial. If the Participant does not appeal on time, he will also lose
his right to file suit in court, as he will have failed to exhaust his internal administrative appeal
rights, which is generally a prerequisite to bringing suit.
A Participant's written appeal should state the reasons that he feels his claim should not have
been denied. It should include any additional facts and/or documents that the Participant feels
support his claim. The Participant may also ask additional questions and make written
comments, and may review (on request and at no charge) documents and other information
relevant to his appeal. The Administrator will review all written comment the Participant
submits with his appeal.
iiw (c) Review of Appeal: The Administrator will review and decide the Participant's appeal within a
reasonable time not longer than 60 days after it is submitted and will notify the Participant of its
decision in writing. The individual who decides the appeal will not be the same individual who
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decided the initial claim denial and will not be that individual's subordinate. The Administrator
may secure independent medical or other advice and require such other evidence as it deems
necessary to decide the appeal, except that any medical expert consulted in connection with the
appeal will be different from any expert consulted in connection with the initial claim. (The identity
of a medical expert consulted in connection with the Participant's appeal will be provided.) If the
decision on appeal affirms the initial denial of the Participant's claim, the Participant will be
famished with a notice of adverse benefit determination on review setting forth:
1. The specific reasons) for the denial,
2. The specific Plan provision(s)on which the decision is based,
3. A statement of the Participant's right to review (on request and at no charge) relevant
documents and other information,
4. If the Administrator relied on an "internal rule, guideline, protocol, or other similar
criterion" in making the decision, a description of the specific rule, guideline, protocol,
or other similar criterion or a statement that such a rule, guideline, protocol, or other
similar criterion was relied on and that a copy of such rule, guideline, protocol, or other
criterion will be provided free of charge to the Participant upon request," and
5. A statement of the Participant's right to bring suit under ERISA § 502(a).
12.11 PAYMENT TO REPRESENTATIVE: In the event that a guardian, conservator or other legal
representative has been duly appointed for a Participant entitled to any payment under the Plan, any
such payment due may be made to the legal representative making claim therefor, and such payment so
made shall be in complete discharge of the liabilities of the Plan therefor and the obligations of the
Administrator and the Employer.
12.12 PROTECTED HEALTH INFORMATION. The provisions of this Section will apply only to those
portions of the Plan that are considered a group health plan for purposes of 45 CFR Parts 160 and 164.
The Plan may disclose PHI to employees of the Employer, or to other persons, only to the extent such
disclosure is required or permitted pursuant to 45 CFR Parts 160 and 164. The Plan has implemented
administrative, physical, and technical safeguards to reasonably and appropriately protect, and restrict
access to and use of, electronic PHI, in accordance with Subpart C of 45 CFR Part 164. The applicable
claims procedures under the Plan shall be used to resolve any issues of non-compliance by such
individuals. The Employer will:
• not use or disclose PHI other than as permitted or required by the plan documents and permitted or
required by law;
• reasonably and appropriately safeguard electronic PHI created, received, maintained, or transmitted
to or by it on behalf of the Plan, in accordance with Subpart C of 45 CFR Part 164;
• implement administrative, physical, and technical safeguards that reasonably and appropriately
protect the confidentiality, integrity, and availability of the electronic PHI that it creates, receives,
maintains, or transmits on behalf of the Plan;
• ensure that any agents including a subcontractors to whom it provides PHI received from the Plan
agree to the same restrictions and conditions that apply to the Employer with respect to such
information;
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• not use or disclose PHI for employment-related actions and decisions or in connection with any
other employee benefit plan of the Employer;
• report to the Plan any use or disclosure of the information that is inconsistent with the permitted
uses or disclosures provided for of which it becomes aware;
• make available PHI in accordance with 45 CFR Section 164.524;
• make available PHI for amendment and incorporate any amendments to PHI in accordance with 45
CFR Section 164.526;
• make available the information required to provide an accounting of disclosures in accordance with
45 CFR Section 164.528;
• make its internal practices, books, and records relating to the use and disclosure of PHI received
from the Plan available to the Secretary of Health and Human Services or his designee upon request
for purposes of determining compliance with 45 CFR Section 164.504(f);
• if feasible, return or destroy all PHI received from the Plan that the Employer still maintains in any
form and retain no copies of such information when no longer needed for the purposes for which the
disclosure was made, except that, if such return or destruction is not feasible, limit further uses and
disclosures to those purposes that make the return or destruction of the information infeasible; and,
• ensure that the adequate separation required in paragraph (f)(2)(iii) of 45 CFR Section 164.504 is
established.
For purposes of this Section, "PHI" is "Protected Health Information" as defined in 45 CFR Section
160.103, which is means individually identifiable health information, except as provided in paragraph
(2) of the definition of"Protected Health Information" in 45 CFR Section 160.103, that is transmitted
by electronic media; maintained in electronic media; or transmitted or maintained in any other form or
medium by a covered entity, as defined in 45 CFR Section 164.104.
SECTION XIII
MISCELLANEOUS PROVISIONS
13.01 INABILITY TO LOCATE PAYEE: If the Plan Administrator is unable to make payment to any
Participant or other person to whom a payment is due under the Plan because it cannot ascertain the
identity or whereabouts of such Participant or other person after reasonable efforts have been made to
identify or locate such person, then such payment and all subsequent payments otherwise due to such
Participant or other person shall be forfeited following a reasonable time after the date any such
payment first became due.
13.02 FORMS AND PROOFS: Each Participant or Participant's Beneficiary eligible to receive any benefit
hereunder shall complete such forms and furnish such proofs, receipts, and releases as shall be required
by the Administrator.
13.03 NO GUARANTEE OF TAX CONSEQUENCES: Neither the Administrator nor the Company makes
any commitment or guarantee that any amounts paid to or for the benefit of a Participant or a Dependent
under the Plan will be excludable from the Participant's or Dependent's gross income for federal or
state income tax purposes, or that any other federal or state tax treatment will apply to or be available to
any Participant or Dependent.
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13.04 PLAN NOT CONTRACT OF EMPLOYMENT: The Plan will not be deemed to constitute a contract
t of employment between the Employer and any Participant nor will the Plan be considered an
4/ inducement for the employment of any Participant or employee. Nothing contained in the Plan will be
deemed to give any Participant or employee the right to be retained in the service of the Employer nor
to interfere with the right of the Employer to discharge any Participant or employee at any time
regardless of the effect such discharge may have upon that individual as a Participant in the Plan.
13.05 NON-ASSIGNABILITY: No benefit under the Plan shall be liable for any debt, liability, contract,
engagement or tort of any Participant or his Beneficiary, nor be subject to charge, anticipation, sale,
assignment,transfer, encumbrance, pledge, attachment, garnishment, execution or other voluntary or
involuntary alienation or other legal or equitable process, nor transferability by operation of law.
13.06 SEVERABILITY: If any provision of the Plan will be held by a court of competent jurisdiction to be
invalid or unenforceable,the remaining provisions hereof will continue to be fully effective.
13.07 CONSTRUCTION:
(a) Words used herein in the masculine or feminine gender shall be construed as the feminine or
masculine gender,respectively where appropriate.
(b) Words used herein in the singular or plural shall be construed as the plural or singular, respectively,
where appropriate.
13.08 NONDISCRIMINATION: In accordance with Code Section 125(b)(1), (2), and (3), this Plan is
intended not to discriminate in favor of Highly Compensated Participants (as defined in Code Section
125(e)(I)) as to contributions and benefits nor to provide more than 25%of all qualified benefits to Key
Employees. If, in the judgment of the Administrator, more than 25%of the total nontaxable benefits are
provided to Key Employees, or the Plan discriminates in any other manner (or is at risk of possible
discrimination), then, notwithstanding any other provision contained herein to the contrary, and, in
accordance with the applicable provisions of the Code, the Administrator shall,after written notification
to affected Participants, reduce or adjust such contributions and benefits under the Plan as shall be
necessary to insure that, in the judgment of the Administrator,the Plan shall not be discriminatory.
13.09 ERISA. The Plan shall be construed, enforced, and administered and the validity determined in
accordance with the applicable provisions of the Employee Retirement Income Security Act of 1974 (as
amended), the Internal Revenue Code of 1986 (as amended), and the laws of the State indicated in the
Adoption Agreement. Notwithstanding anything to the contrary herein, the provisions of ERISA will
not apply to this Plan if the Plan is exempt from coverage under ERISA. Should any provisions be
determined to be void, invalid, or unenforceable by any court of competent jurisdiction, the Plan will
continue to operate, and for purposes of the jurisdiction of the court only will be deemed not to include
the provision determined to be void.
PD 0710
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