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RESOLUTION NO. 4 5 7 7
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
AUBURN, WASHINGTON, APPROVING AND RATIFYING AN
UPDATED CITY OF AUBURN FLEXIBLE BENEFITS PLAN
WHEREAS, THE City of Auburn has approved and implemented a
flexible benefits plan; and
WHEREAS, minor administrative and operational changes occur over
time; and
WHEREAS, federal laws and regulations, such as the Health Insurance
Portability and Accountability Act (HIPAA), governing portions of the Flex-Plan
have recently changed; and
WHEREAS, the Flex Plan has not been formally updated since 2005;
and,
WHEREAS, integrating all previous Flex Plan changes and recent legal
changes into one legal document makes good sense for ease in interpreting the
Fiex Plan, and has been completed at no cost to the City.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. Purpose. The City Council hereby authorizes the adoption
of the updated City of Auburn Flexible Benefits Plan and Summary of Benefits,
in substantiai conformity with the Flex Plan and Summary Plan Description
Resolution No. 4577
March 5, 2010
Page 1
attached hereto and denominated as Exhibits "A" and "B" and incorporated
herein by reference.
Section 2. The Mayor is hereby authorized to implement such
administrative procedures as may be necessary to carry out the directives of
this legislation.
Section 3. This resolution shall be in full force and effect upon
passage and signatures hereon.
DATED and SIGNED this day of 2010.
CITY OF- RN
~
P TER B. LEWIS
MAYOR
ATTEST:
G K ~
~Danieile E. Dask m
City Clerk
APPROVED AS TO FORM:
/ / TA2ks
aniel B. eid
City Attorney
Resolution No. 4577
March 5, 2010
Page 2
CITY OF AUBURN FLEXIBLE BENEFITS PLAN
AND ALL SUPPORTING FORMS HAVE BEEN PRODUCED FOR
CITY OF AUBURN
Copyright 2009 SunGard
All Rights Reserved
Exhibit A 1 Resolution 4577
CITY OF AUBURN FLEXIBLE BENEFITS PLAN
Exhibit A 2
Resoiution 4577
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY ...................................................................................................................3
2.2 EFFECTIVE DATE OF PARTICIPATION .......................................................................3
2.3 APPLICATION TO PARTICIPATE .................................................................................4
2.4 TERMINATION OF PARTICIPATION ..................................................................:.........4
2.5 TERMINATION OF EMPLOYMENT ...............................................................................4
2.6 DEATH ...........................................................................................................................5
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 SALARY REDIRECTION ...............................................................................................5
3.2 APPLICATION OF CONTRIBUTIONS ...........................................................................6
3.3 PERIODIC CONTRIBUTIONS .......................................................................................6
ARTICLE N
BENEFITS
4.1 BENEFIT OPTIONS .......................................................................................................6
4.2 HEALTH FLEXIBLE SPENDING ARRANGEMENT BENEFIT ........................................6
4.3 DAY CARE FLEXIBLE SPENDING ARRANGEMENT BENEFIT 7
4.4 HEALTH INSURANCE BENEFIT ...................................................................................7
4.5 NONDISCRIMINATION REQUIREMENTS ....................................................................7
ARTICLE V
PARTICIPANT ELECTIONS
5.1 INITIAL ELECTIONS ......................................................................................................8
5.2 SUBSEQUENT ANNUAL ELECTIONS ..........................................................................8
5.3 FAILURE TO ELECT ......................................................................................................8
5.4 CHANGE IN STATUS ........................:........................................:..................................9
ARTICLE VI
HEALTH FLEXIBLE SPENDING ARRANGEMENT
6.1 ESTABLISHMENT OF PLAN .......................................................................................12
6.2 DEFINITIONS ..............................................................................................................12
Exhibit A ~ 3
Resolution 4577
6.3 FORFEITURES ............................................................................:...............................13
6.4 LIMITATION ON ALLOCATIONS .................................................................................13
' 6.5 NONDISCRIMINATION REQUIREMENTS ..................................................................13
6.6 COORDINATION WITH CAFETERIA PLAN ................................................................13
6.7 HEALTH FLEXIBLE SPENDING ARRANGEMENT CLAIMS .......................................14
6.8 DEBIT AND CREDIT CARDS 15
ARTICLE VII
DAY CARE FLEXIBLE SPENDING ARRANGEMENT
7.1 ESTABLISHMENT OF BENEFIT ..................................................................................16
7.2 DEFINITIONS ....................................................................................:.........................16
7.3 DAY CARE FLEXIBLE SPENDING ACCOUNTS .........................................................18
7.4 INCREASES IN DAY CARE FLEXIBLE SPENDING ACCOUNTS 18
7.5 DECREASES IN DAY CARE FLEXIBLE SPENDING ACCOUNTS ..............................18
7.6 ALLOWABLE DAY CARE REIMBURSEMENT ............................................................18
7.7 ANNUAL STATEMENT OF BENEFITS ........................................................................18
7.8 FORFEITURES ............................................................................................................18
7.9 LIMITATION ON PAYMENTS ......................................................................................18
7.10 NONDISCRIMINATION REQUIREMENTS .............:.............:......................................18
7.11 COORDINATION WITH CAFETERIA PLAN ................................................................19
7.12 DAY CARE FLEXIBLE SPENDING ARRANGEMENT CLAIMS ...................................19
ARTICLE VIII '
BENEFITS AND RIGHTS
8.1 CLAIM FOR BENEFITS ...............................................................................................20
8.2 APPLICATION OF BENEFIT PLAN SURPLUS ............................................................22
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATION ............................................................................................22
9.2 EXAMINATION OF RECORDS ................................................................:...................23 •
9.3 PAYMENT OF EXPENSES ...........:...................................:..........::.............:................23
9:4 INSURANCE CONTROL CLAUSE ...............................................................................23
9.5 INDEMNIFICATION OF ADMINISTRATOR ..:..............................................................23
ARTICLE X
AMENDMENT OR TERMINATION OF PCAN
10.1 AMENDMENT 23
Exhibit A 4 ~ -
Resolution 4577~
102 TERMINATION ............................................................................................................24
ARTICLE XI
MISCELLANEOUS
11.1 PLAN INTERPRETATION ............................................................................................24
11.2 GENDER AND NUMBER .............................................................................................24
11.3 WRITTEN DOCUMENT ...............................................................................................24
11.4 EXCLUSIVE BENEFIT ..............................................................................:..................24
11.5 PARTICIPANT'S RIGHTS ............................................................................................24
11.6 ACTION BY THE EMPLOYER .....................................................................................25
11.7 EMPLOYER'S PROTECTIVE CLAUSES .....................................................................25
11.8 NO GUARANTEE OF TAX CONSEQUENCES ............................................................25
11.9 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS ...........................................25
11.10 FUNDING ......................................................................................................:..............25
11.11 GOVERNING LAW ......................................................................................................26
11.12 SEVERABILITY ............................................................................................................26
11.13 CAPTIONS ...................................................................................................................26
11:14 FAMILY AND MEDICAL LEAVE ACT (FMLA) ......:.......................................................26
11.15 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)........... 26
11.16 UNIFORM SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
(IJSERRA) ...................................................................................................................26
11.17 COMPLIANCE WITH HIPAA PRIVACY STANDARDS .................................................26
11.18 COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS .......................28
- Exhibit A 5
Resolution 4577
CITY OF AUBURN FLEXIBLE BENEFITS PLAN
INTRODUCTION
The Employer has amended this Plan effective January 1, 2010, to recognize the
contribution made to the Employer by its Employees. Its purpose is to reward them by providing
benefits for those Employees who shall qualify hereunder and their Dependents and
beneficiaries. The concept of this Plan is to allow Employees to choose among different types of
benefits based on their own particular goals, desires and needs. This Plan is a restatement of a
Plan which was originally effective on May 1, 2005. The Plan shall be known as City of Auburn
Flexible Benefits Plan (the "Plan").
The intention of the Employer is that the Plan qualify as a"Cafeteria Plan" within
the meaning of Section 125 of the Internal Revenue Code of 1986, as amended, and that the
benefits which an Employee elects to receive under the Plan be excludable from the
Employee's income under Section 125(a) and other applicable sections of the Internal Revenue
Code of 1986, as amended.
The Employer also intends that, for purposes of the annual report requirement
(Form 5500), this document is considered a"wrap" plan and the terms of the underiying plans
for which Participants are making contributions through this Plan are hereby incorporated by
reference.
ARTICLE I
DEFINITIONS
1.1 "Administrator" means the individual(s) or corporation appointed by the
Employer to carry out the administration of the Plan. The Employer shall be empowered to
appoint and remove the Administrator from time to time as it deems necessary for the proper
administration of the Plan. In the event the Administrator has not been appointed; or resigns
from a prior appointment, the Employer shall be deemed to be the Administrator.
1.2 "Affiliated Employer" means the Employer and any corporation which is a
member of a controlied group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in Code Section 414(c)) with the Empioyer; any organization
(whether or not incorporated) which is a member of an affiliated service group (as defined in
Code Section 414(m)) which includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to Treasury regulations under Code Section 414(0).
1.3 "BenefiY" or "Benefit Options" means any of the optional benefit choices
available to a Participant as outlined in Section 4.1.
1.4 "Cafeteria Plan Benefit Dollars" means the amount availabie to Participants to
purchase Benefit Options as provided under Section 4.1. Each dollar contributed to this Plan
shall be converted into one Cafeteria Plan Benefit Dollar.
1.5 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.6 "Compensation" means the amounts received by the Participant from the
Employer during a Plan Year.
Exhibit A g
Resolution 4577
1.7 "DependenY' means any individual who qualifies as a dependent under an
Insurance Contract for purposes of that Contract or under Code Section 152 (as modified by
Code Section 105(b)).
1.8 "Effective Date" means May 1, 2005.
1.9 "Election Period" means the period immediately preceding the beginning of
each Plan Year established by.the Administrator, such period to be appiied on a uniform and
nondiscriminatory basis for all Employees and Participants. However, an Employee's initial
Election Period shall be determined pursuant to Section 5.1.
1.10 "Eligible Employee" means any Employee who has satisfied the provisions of
Section 2.1.
An individual shall not be an "Eligible Employee" if such individual is not reported
on the payroll records of the Empioyer as a common law employee. In particular, it is expressly
intended that individuals not treated as common law employees by the Employer on its payroli
records are not "Eligible Employees" and are excluded from Plan participation even if a court or
administrative agency determines that such individuals are common law employees and not
independent contractors.
1.11 "Employee" means any person who is employed by the Employer. The term
Employee shall include leased employees within the meaning of Code Section 414(n)(2).
1.12 "Employer" means City of Aubum and any successor which shall maintain this;
Plan; and any predecessor which has maintained this Plan. In addition, where appropriate, the
term Employer shall include any Participating, Affiliated or Adopting Employer.
1.13 "Grace Period" means, with respect to any Plan Year, the time period ending on
the fifteenth day of the third calendar month after the end of such Plan Year, during which Medical
Expenses and Employment-Relafed Day Care Expenses incurred by a Participant will be deemed
, to have been incurred during such Plan Year.
1.14 "Insurance Contract" means any contract issued by an Insurer underwriting a
Benefit.
1.15 "Insurance Premium Payment Plan" means the plan of benefits contained in
Section 4.1 of this Plan, which provides for the payment of Premium Expenses.
1.16 "Insurer" means any insurance company that underwrites a Benefit under this
Plan.
1.17 "Key Employee" means an Employee described in Code Section 416(i)(1) and
the Treasury regulations thereunder.
1.18 "ParticipanY" means any Eligible Empioyee who elects to become a Participant
pursuant to Section 2.3 and has not for any reason become ineligible to participate further in the
Pian.
1.19 "Plan" means this instrument, inciuding all amendments thereto.
Exhibit A 7 Resolution 4577
1.20 "Plan Year" means the 12-month period beginning January 1 and ending
December 31, except that the first Plan Year shall be a short Plan Year beginning May 1. The
Plan Year shall be the coverage period for the Benefits provided for under this Plan. In the event
a Participant commences participation during a Plan Year, then the initial coverage period shall
be that portion of the Plan Year commencing on such ParticipanYs date of entry and ending on
the last day of such Plan Year.
1.21 "Premiums" mean the ParticipanYs cost for the Benefits described in Section
4.L _
1.22 "Premium Expense Reimbursement BenefiY" means the Benefit established
for a Participant pursuant to this Plan to which part of his Cafeteria Plan Benefit Dollars may be
allocated and from which Premiums of the Participant shall be paid or reimbursed. If more than
one type of insured Benefit is elected, sub-accounts shall be established for each type of
insured Benefit.
1.23 "Salary Redirection" means the contributions made by the Employer on behalf
of Participants pursuant to Section 3.1. These contributions shall be converted to Cafeteria Plan
Benefit Dollars and allocated to the funds or accounts established under the Pian pursuant to
the Participants' elections made under Article V.
1.24 "Salary Redirection AgreemenY" means an agreement between the Participant
and the Employer under which the Participant agrees to reduce his Compensation or to forego
all or part of the increases in such Compensation and to have such amounts contributed by the
Employer to the Plan on the ParticipanYs behalf. The Salary Redirection Agreement shall apply
only to Compensation that has not been actually or constructively received by the Participant as
of the date of the agreement (after taking this Plan and Code Section 125 into Benefit) and,
subsequently does not become currently available to the Participant.
1.25 "Spouse" means "spouse" as defined in an Insurance Contract for purposes of
that Contract or the legally married husband or wife of a Participant, unless legally separated by
court decree.
ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder as of the date he
satisfies the eligibility conditions for the Employer's group medical plan, the provisions of which
are specifically incorporated herein by reference. However, any Eligible Employee who was a
Participant in the Plan on the effective date of this amendment shall continue to be eligible to
participate in the Plan.
2.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the first day of
the month coinciding with or next foliowing the date on which he met the eligibility requirements
of Section 2.1.
ExhibitA g
Resolution 4577
2.3 APPLICATION TO PARTICIPATE
An Employee who is eligible to participate in this Plan shall, during the applicable
Election Period, complete an application to participate and election of benefits form which the
Administrator shall furnish to the Employee. The election made on such form shall be
irrevocable until the end of the applicable Pian Year unless the Participant is entitled to change
his Benefit elections pursuant to Section 5.4 hereof.
An Eligible Employee shall also be required to execute a Salary Redirection
Agreement during the Election Period for the Plan Year during which he wishes to participate in
this Plan. Any such Salary Redirection Agreement shali be effective for the first pay period
beginning on or after the Employee's effective date of participation pursuant to Section 2.2.
Notwithstanding the foregoing, an Employee who is eligible to participate in this
Plan and who is covered by the Employer's insured Benefits under this Plan shall automatically
become a Participant to the extent of the Premiums for such insurance unless the Employee
elects, during the Election Period, not to participate in the Plan.
2.4 TERMINATION OF PARTICIPATION
A Participant shall no longer participate in this Plan upon the occurrence of any
of the following events:
(a) Termination of employment. The Participant's termination of
employment, subject to the provisions of Section 2.5;
(b) Death. The Participant's death, subject to the provisions of
Section 2.6; or
(c) Termination of the plan. The termination of this Plan, subject to
the provisions of Section 10.2.
2.5 TERMINATION OF EMPLOYMENT
If a Participant's employment with the Employer is terminated for any reason
other than death, his participation in the Benefit Options provided under Section 4.1 shall be
governed in accordance with the following:
(a) Insurance Benefit. With regard to Benefits which are insured, the
Participant's participation in the Plan shall cease, subject to the ParticipanYs right
to continue coverage under any Insurance Contract for which premiums have
already been paid.
(b) Day Care FSA. With regard to the Day Care Flexible Spending
Arrangement, the Participant's participation in the Plan shall cease and no further
Salary Redirection contributions shall be made. However, such Participant may
submit claims for employment related Day Care Expense reimbursements for
daims incurred through the remainder of the Plan Year in which such termination
occurs and submitted within 90 days after the end of the Plan Year, based on the
level of the Participant's Day Care Flexible Spending Arrangement as of the date
of termination.
(c) Health FSA. With regard to the Health Flexible Spending
Arrangement, the Participant may elect to continue his participation in the Plan.
Exhibit A 9
Resolution 4577
(1) If the Participant elects to continue participation in the Health
Flexible Spending Arrangement for the remainder of the Plan Year in
which such termination occurs, the Participant may continue to seek
reimbursement from the Health Fiexible Spending Arrangement. The
Participant shall be required to make contributions to the fund based on
the elections made prior to the beginning of the Plan Yeac
(2) If the Participant does not elect to continue participation in the
Health Flexible Spending Arrangement for the remainder of the Plan Year
in which such termination occurs, the Participant's participation in the
Plan shall cease and no further Salary Redirection contributions shall be
made. However, such Participant may submit claims for expenses that
were incurred during the portion of the Plan Year before the end of the
period for which payments to the Health Flexible Spending Arrangement
have already been made for claims incurred up to the date of termination
and submitted within 90 days after the end of the Plan Year.
(d) Health FSA treatment. In the event a Participant terminates his
participation in the Health Flexible Spending Arrangement during the Plan Year,
if Salary Redirections are made other than on a pro rata basis, upon termination
the Participant shail be entitled to a reimbursement for any Salary Redirection
previously paid for coverage or benefits relating to the period after the date of the
ParticipanYs separation from service regardless of the ParticipanYs claims or
reimbursements as of such date.
2.6 DEATH
If a Participant dies, his participation in the Plan shall cease. However, such
Participant's spouse or Dependents may submit ciaims for expenses or benefits for the
remainder of the Plan Year or until the Cafeteria Plan Benefit Dollars allocated to each specific
benefit are exhausted. In no event may reimbursements be paid to someone who is not a
spouse or Dependent.
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 SALARY REDIRECTION
Benefits under the Plan shall be financed by Salary Redirections sufficient to
support Benefits that a Participant has elected hereunder and to pay the ParticipanYs Premium
Expenses. The salary administration program of the Employer shall be revised to allow each
Participant to agree to reduce his pay during a Plan Year by an amount determined necessary
to purchase the elected Benefit Options. The amount of such Salary Redirection shall be
specified in the Salary Redirection Agreement and shall be applicable for a Plan Year.
Notwithstanding the above, for new Participants, the Salary Redirection Agreement shall only be
applicable from the first day of the pay period following the Employee's entry date up to and
including the last day of the Plan Year. These contributions shall be converted to Cafeteria Plan
Benefit.Dollars and allocated to the funds or accounts established under the Plan pursuant to
the Participants' elections made under Article V.
Any Salary Redirection shali be determined prior to the beginning of a Plan Year
(subject to initial elections pursuant to Section 5.1) and prior to the end of the Election Period
and shall be irrevocable for such Plan Year. However, a Participant may revoke a Benefit
ExhibitA 10
Resolution 4577
election or a Salary Redirection Agreement after the Plan Year has commenced and make a
new election with respect to the remainder of the Plan Year, if both the revocation and the new
election are on account of and consistent with a change in status and such other permitted
events as determined under Article V of the Plan and consistent with the rules and regulations
of the Department of the Treasury. Salary Redirection amounts shall be contributed on a
pro rata basis for each pay period during the Plan Year. All individual Salary Redirection
Agreements are deemed to be part of this Plan and incorporated by reference hereunder.
3.2 APPLICATION OF CONTRIBUTIONS
As soon as reasonably practical after each payroll period, the Employer shall
apply the Salary Redirection to provide the Benefits elected by the affected Participants. Any
contribution made or withheld for the Health Flexible Spending Arrangement or Day Care
Flexible Spending Arrangement shali be credited to such fund or Benefit. Amounts designated
for the ParticipanYs Premium Expense Reimbursement Benefit shall likewise be credited to such
Benefit for the purpose of paying Premium Expenses:
3.3 PERIODIC CONTRIBUTIONS
Notwithstanding the requirement provided above and in other Articles of this Plan
that Salary Redirections be contributed to the Plan by the Employer on behaif of an Employee
on a level and pro rata basis for each payroli period, the Empioyer and Administrator may
implement a procedure in which Saiary Redirections are contributed throughout the Plan Year
on a periodic basis that is not pro rata for each payroll period. However, with regard to the
Health Flexible Spending Arrangement, the payment schedule for the required contributions
may not be based on the rate or amount of reimbursements during the Plan Year. In the event
Salary Redirections to the Health Flexible Spending Arrangement are not made on a pro rata
basis, upon termination of participation, a Participant may be entitled to a refund of such Salary
Redirections pursuant to Section 2.5.
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS
Each Participant may elect any one or more of the following optional Benefits:
(1) Health Flexible Spending Arrangement
(2) Day Care Flexible Spending Arrangement
In addition, each Participant shall have a sufficient portion of his Salary
Redirections applied to the following Benefits unless the Participant elects not to receive such
Benefits:
(3) Health Insurance Benefit
4.2 HEALTH FLEXIBLE SPENDING ARRANGEMENT BENEFIT
Each Participant may elect to participate in the Health Flexible Spending
Arrangement option, in which case Article VI shall apply.
Ezhibit A 11 -
Resolution 4577 .
4.3 DAY CARE FLEXIBLE SPENDING ARRANGEMENT BENEFIT
Each Participant may elect to participate.in the Day Care Flexible Spending
Arrangement option, in which case Article VII shall apply.
4.4 HEALTH INSURANCE BENEFIT
(a) Coverage for Participant and Dependents. Each Participant
may elect to be covered under a health Insurance Contract for the Participant, his•
or her Spouse, and his or her Dependents.
(b) Employer selects contracts. The Employer may select suitable
health Insurance Contracts for use in providing this health insurance benefit,
which policies will provide uniform benefits for all Participants electing this
Benefit.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such health Insurance Contract shall be
determined therefrom, and such Insurance Contract shall be incorporated herein
by reference.
4.5 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory. It is the intent of this Plan to
provide benefits to a classification of employees which the Secretary of the
Treasury finds not to be discriminatory in favor of the group in whose favor
discrimination may not occur under Code Section 125.
(b) 25% concentration test. It is the intent of this Plan not to provide .
qualified benefits as defined under Code Section 125 to Key Employees in
amounts that exceed 25% of the aggregate of such Benefits provided for ail
Eligible Employees under the Plan. For purposes of the preceding sentence,
qualified benefits shail not include benefits which (without regard to this
paragraph) are includible in gross income.
(c) Adjustment to avoid test failure. If the Administrator deems it
necessary to avoid discrimination or possible taxation to Key Employees or a
group of employees in whose favor discrimination may not occur in violation of
Code Section 125, it may, but shall not be required to, reduce contributions or
non-taxable Benefits in order to assure compliance with this Section: Any act
taken by the Administrator under this Section shall be carried out in a uniform
and nondiscriminatory manner. If the Administrator decides to reduce
contributions or non-taxabie Benefits, it shall be done in the following manner.
First, the non-taxable Benefits of the affected Participant (either an employee
who is highly compensated or a Key Employee, whichever is applicable) who has
the highest amount of non-taxable Benefits for the Plan Year shall have his
non-taxable Benefits reduced until the discrimination tests set forth in this Section
are satisfied or until the amount of his non-taxable Benefits equals the
non-taxable Benefits of the affected Participant who has the second highest
amount of non-taxable Benefifs. This process shall continue until the
nondiscrimination tests set forth in this Section are satisfied. With respect to any
, affected Participant who has had Benefits reduced pursuant to this Section, the
reduction shall be made proportionately among Health Flexible Spending
Arrangement Benefits and Day Care Flexible Spending Arrangement Benefits,
and once all these Benefits are expended, proportionately among insured
Exhibit A 12 Resolution 4577 -
Benefits. Contributions which are not utilized to provide Benefits to any
Participant by virtue of any administrative act under this paragraph shall be
forfeited and deposited into the benefit plan surplus.
ARTICLE V
PARTICIPANT ELECTIONS
5.1 INITIAL ELECTIONS "
An Employee who meets the eligibility requirements of Section 2.1 on the first
day of, or during, a Plan Year may elect to participate in this Plan for ali or the remainder of
such Plan Year, provided he elects to do so on or before his effective date of participation
pursuant to Section 2.2.
Notwithstanding the foregoing, an Employee who is eligible to participate in this
Plan and who is covered by the Employer's insured benefits under this Plan shall automatically
become a Participant to the extent of the Premiums for such insurance unless the Employee
elects, during the Election Period, not to participate in the Plan.
5.2 SUBSEQUENT ANNUAL ELECTIONS
During the Election Period prior to each subsequent Plan Year, each Participant
shall be given the opportunity to elect, on an election of benefits form to be provided by the
Administrator, which Spending Arrangement Benefit options he wishes to select. Any such
election shall be effective for any Benefit expenses incurred during the Plan Year which follows
the end of the Election Period. With regard to subsequent annual elections, the following options
shall apply:
(a) A Participant or Employee who failed to initially elect to participate
may elect different or new Benefits under the Plan during the Election Period;
(b) A Participant may terminate his participation in the Plan by
notifying the Administrator in writing during the Election Period that he does not
want to paRicipate in the Plan for the next Plan Year;
(c) An Employee who elects not to participate for the Plan Year
following the Election Period will have to wait until the next Election Period before
again electing to participate in the Plan, except as provided for in Section 5.4.
5.3 FAILURE TO ELECT
With regard to Benefits available under the Plan for which no Premium Expenses
apply, any Participant who fails to complete a new benefit election form pursuant to Section 5.2
by the end of the appiicable Etection Period shall be deemed to have elected not to participate
in the Plan for the upcoming Plan Year. No further Salary Redirections shall therefore be
authorized or made for the subsequent Plan Year for such Benefits.
With regard to Benefits available under the Plan for which Premium Expenses
appiy, any Participant who fails to complete a new benefit election form pursuant to Section 5.2
by the end of the applicable Election Period shall be deemed to have made the same Benefit
elections as are then in effect for the current Plan Year. The Participant shall also be deemed to
have elected Salary Redirection in an amount necessary to purchase such Benefit options.
Exhibit A 13
Resolulion 4577 .
5.4 CHANGE IN STATUS
(a) Change in status defined. Any Participant may change a Benefit
election after the Plan Year (to which such election.relates) has commenced and
make new elections with respect to the remainder of such Plan Year if, under the
facts and circumstances, the changes are necessitated by and are consistent with
a change in status which is acceptable under rules and regulations adopted by the
Department of the Treasury, the provisions of which are incorporated by reference.
Notwithstanding anything herein to the contrary, if the rules and regulations r
conflict, then such rules and regulations shall control.
In general, a change in election is not consistent if the change in status is
the ParticipanYs divorce, annulment or legal separation from a Spouse, the death
of a Spouse or Dependent, or a Dependent ceasing to satisfy the eligibility
requirements for coverage, and the ParticipanYs election under the Plan is to
cancel accident or heaith insurance coverage for any individual other than the one
involved in such event. In addition, if the Participant, Spouse or Dependent gains
or loses eligibility for coverage, then a ParticipanYs election under the Plan to
cease or decrease coverage for that individual under the Plan corresponds with
that change in status only if coverage for that individual becomes applicable or is
increased under the family member plan.
Regardless of the consistency requirement, if the individual, the individual's
, Spouse, or Dependent becomes eligible for continuation coverage under the .
Employers group health plan as provided in Code Section 49806 or any similar
state law, then the individual may elect to increase payments under this Plan in
order to pay for the continuation coverage. However, this does not apply for ,
COBRA eligibility due to divorce, annuiment or legal separation.
Any new election shail be effective at such time as the Administrator shall
prescribe, but not earlier than the first pay period beginning after the election form
is completed and returned to the Administrator. For the purposes of this
subsection, a change in status shali only include the following events or other
events permitted by Treasury regulations:
(1) Legal Maritai Status: events that change a ParticipanYs legal
marital status, including marriage, divorce, death of a Spouse, legal
separation o[ annulment;
(2) Number of Dependents: Events that change a Participant's number
of Dependents, including birth, adoption, placement for adoption, or death
of a Dependent;
(3) Employment Status: Any of the following events that change the
empioyment status of the Participant, Spouse, or Dependent: termination
or commencement of employment, a strike or lockout, commencement or
return from an unpaid leave of absence, or a change in worksite. In
addition, if the eligibility conditions of this Plan or other empioyee benefit
plan of the Empioyer of the Participant, Spouse, or Dependent depend on
the employment status of that individual and there is a change in that
individual's employment status with the consequence that the individual
becomes (or ceases to be) eligible under the plan, then that change
constitutes a change in employment under this subsection;
ExhibitA 14
ResoWtion 4577
(4) Dependent satisfies or ceases to satisfy the eligibility requirements:
An event that causes the Participant's Dependent to satisfy or cease to
satisfy the requirements for coverage due to attainment of age, student
status, or any similar circumstance; and
(5) Residency: A change in the piace of residence of the Participant,
Spouse or Dependent, that would lead to a change in status (such as a
loss of HMO coverage).
For the Day Care Flexible Spending Arrangement, a Dependent becoming
or ceasing to be a"Qualifying DependenY' as defined under Code Section 21(b)
shall also qualify as a change in status.
(b) Special enroliment rights. Notwithstanding subsection (a), the
Participants may change an election for accident or health coverage during a •
Plan Year and make a new election that corresponds with the special enrollment
rights provided in Code Section 9801(fl. Such change shall take place on a
prospective basis, unless otherwise required by Code Section 9801(0 to be
retroactive
(c) Qualified Medical Support Order. Notwithstanding subsection
(a), in the event of a judgment, decree, or order (including approval of a property
settlement) ("order") resulting from a divorce, legai separation, annulment, or
change in legal custody which requires accident or health coverage for a
ParticipanYs child (including a foster child who is a Dependent of the Participant):
(1) The Pian may change an election to provide coverage for the child
if the order requires coverage under the Participant's plan; or
(2) The Participant shall be permitted to change an election to cancel
coverage for the child if the order requires the former Spouse to provide
coverage for such chiid, under that individual's plan and such coverage is
actually provided.
(d) Medicare or Medicaid. Notwithstanding subsection (a), a
Participant may change elections to cancel accident or health coverage for the
Participant or the ParticipanYs Spouse or Dependent if the Participant or the
Participanfs Spouse or Dependent is enrolled in the accident or health coverage of
the Employer and becomes entitled to coverage (i.e., enroiled) under Part A or Part
B of the 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 SecuYity Act (the program for distribution of pediatric
vaccines). If the Participant or the ParticipanYs Spouse or Dependent who has
been entitled to Medicaid or Medicare coverage loses eligibility, that individual may
prospectively elect coverage under the Plan if a benefit package option under the
Plan provitles similar coverage.
(e) Cost increase or decrease. If the cost of a Benefit provided
under the Plan increases or decreases during a Pian Year, then the Plan shall
" automatically increase or decrease, as the case may be, the Salary Redirections
of all affected Participants for such Benefit. Alternatively, if the cost of a benefit
package option increases significantly, the Administrator shall permit the affected
Participants to either make corresponding changes in their payments or revoke
their elections and, in lieu thereof, receive on a prospective basis coverage under
Exhibit A ' 15 .
ResoWtion 4577
another benefit package option with similar coverage, or drop coverage
prospectively if there is no benefit package option with similar coverage.
A cost increase or decrease refers to an increase or decrease in the
amount of elective contributions under the Plan, whether resulting from an action
taken by the Participants or an action taken by the Empioyer.
(f) Loss of coverage. If the coverage under a Benefit is significantly
curtailed or ceases during a Plan Year, affected Participants may revoke their ~
elections of such Benefit and, in lieu thereof, elect to receive on a prospective
basis coverage under another plan with similar coverage, or drop coverage
prospectively if no similar coverage is offered.
(g) Addition of a new benefit. If, during the period of coverage, a
new benefit package option or other coverage option is added, an existing benefit
package option is significantly improved, or an existing benefit package option or
other coverage option is eliminated, then the affected Participants may elect the
newly-added option, or elect another option if an option has been eliminated
prospectively and make corresponding election changes with respect to other
benefit package options providing similar coverage. In addition, those Eligible
Employees who are not participating in the Plan may opt to become Participants
and elect the new or newly improved benefit package option.
(h) Loss of coverage under certain other plans. A Participant may
make a prospective election change to add group health coverage for the
Participant, the Participant's Spouse or Dependent if such individual loses group
health coverage sponsored by a governmental or educational institution,
including a state children's health insurance program under the Social Security
Act, the Indian Health Service or a health program offered by an Indian tribal
government, a state health benefits risk pool, or a foreign government group
health plan.
(i) Change of coverage due to change under certain other plans.
A Participant may make a prospective election change that is on account of and
corresponds with a change made under the plan of a Spouse's, former Spouse's
or DependenYs employer if (1) the cafeteria pian or other benefits plan of the
Spouse's, former Spouse's or Dependent's empioyer permits its participants to
make a change; or (2) the cafeteria plan permits participants to make an election
for a period of coverage that is different from the period of coverage under the
cafeteria plan of a Spouse's, former Spouse's or DependenYs employer.
Q) Change in Day Care provider. A Participant may make a
prospective election change that is on account of and corresponds with a change
by the Participant in the DayCare provider. The availability of Day Care services
from a new childcare provider is similar to a new benefit package option
becoming available. A cost change is allowable in the Day Care Flexible
Spending Arrangement only if the cost change is imposed by a Day Care provider
who is not related to the Participant, as defined in Code Section.152(a)(1)
through (8).
(k) Health FSA cannot change due to insurance change. A
Participant shall not be permitted to change an election to the Health Flexible
Spending Arrangement as a result of a cost or coverage change under any health
insurance benefits.
ExhibitA 15 ,
Resolution 4577 .
ARTICLE VI
HEALTH FLEXIBLE SPENDING ARRANGEMENT
6.1 ESTABLISHMENT OF PLAN
This Health Flexible Spending Arrangement is intended to qualify as a medical
reimbursement plan under Code Section 105 and shall be interpreted in a manner consistent
with such Code Section and the Treasury regulations thereunder. Participants who elect to
participate in this Health Flexible Spending Arrangement may submit claims for the
reimbursement of Medicai Expenses. All amounts reimbursed shall be periodicaily paid from
amounts allocated to the Health Flexible Spending Arrangement. Periodic payments
reimbursing Participants from the Health Flexible Spending Arrangement shall in no event occur
less frequently than monthly.
6.2 DEFINITIONS
For the purposes of this Article and the Cafeteria Plan, the terms below have the
following meaning:
(a) "Health Flexible Spending ArrangemenY" means the Benefit
established for Participants pursuant to this Plan to which paR of their Cafeteria
Plan Benefit Dollars may be allocated and from which all allowable Medical
Expenses incurred by a PaRicipant, his or her Spouse and his or her Dependents
may be reimbursed.
(b) "Highly Compensated Participant" means, for the purposes of
this Article and determining discrimination under Code Section 105(h), a
participant who is
(1) one of the 5 highest paid officers;
(2) a shareholder who owns (or is considered to own applying the
rules of Code Section 318) more than 10 percent in value of the stock of
the Employer; or
(3) among the highest paid 25 percent of all Employees (other than
exclusions permitted by Code Section 105(h)(3)(B) for those individuals
who are not Participants).
(c) "Medical Expenses" means any expense for medical care within
the meaning of the term "medical care" as defined in Code Section 213(d) and as
allowed under Code Section 105 and the rulings and Treasury regulations
thereunder, and not otherwise used by the Participant as a deduction in
determining his tax liability under the Code. "Medical Expenses" can be incurred
by the Participant, his or her Spouse and his or her Dependents. "Incurred"
- means, with regard to Medical Expenses, when the Participant is provicied with
the medical care that gives rise to the Medical Expense and not when the
Participant is formally billed or charged for, or pays for, the medicai care.
A Participant may not be.reimbursed for the cost of other health coverage
such as premiums paid under plans maintained by the employer of the
ParticipanYs Spouse or individual policies maintained by the Participant or his
Spouse or Dependent.
Exhibit A »
Resoiulion 4577
A Participant may not be reimbursed for "qualified long-term care
services" as defined in Code Section 77026(c).
(d) The definitions of Article I are hereby incorporated by reference to
the extent necessary to interpret and apply the provisions of this Health Flexible
Spending Arrangement.
6.3 FORFEITURES
The amount in the Health Flexible Spending Arrangement as of the end of any
Plan Year (and after the processing of all claims for such Plan Year pursuant to Section 6.7
hereoo shall be forfeited and credited to the benefit plan surpius. In such event, the Participant
shall have no further claim to such amount for any reason, subject to Section 8.2.
6.4 LIMITATION ON ALLOCATIONS
Notwithstanding any provision contained in this Health Flexible Spending
Arrangement to the contrary, no more than $3,600 may be ailocated to the Health Flexible
Spending Arrangement by a Participant in or on account of any Plan Year.
6.5 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory. It is the intent of this Health
Flexible Spending Arrangement not to discriminate in violation of the Code and
the Treasury regulations thereunder.
(b) Adjustment to avoid test failure. If the Administrator deems it
necessary to avoid discrimination under this Health Flexible Spending
Arrangement, it may, but shall not be required to, reject any elections or reduce
contributions or Benefits in order to assure compliance with this Section. Any act
taken by the Administrator under this Section shall be carried out in a uniform
and nondiscriminatory manner. If the Administrator decides to reject any
elections or reduce contributions or Benefits, it shall be done in the following
manner. First, the Benefits designated for the Health Flexible Spending
Arrangement by the member of the group in whose favor discrimination may not
occur pursuant to Code Section 105 that elected to contribute the highest amount
to the fund for the Plan Year shall be reduced until the nondiscrimination tests set
forth in this Sectiom or the Code are satisfied, or until the amount designated for
the fund equals the amount designated for the fund by the next member of the
group in whose favor discrimination may not occur pursuant to Code Section 105
who has elected the second highest contribution to the Health Flezible Spending
Arrangement for the Plan Year. This process shall continue until the
nondiscrimination tests set forth in this Section or the Code are satisfied.
Contributions which are not utilized to provide Benefits to any Participant by
virtue of any administrative act under this paragraph shall be forfeited and
credited to the benefit plan surplus.
6.6 COORDINATION WITH CAFETERIA PLAN
All Participants under the Cafeteria Plan are eligible to receive Benefits under
this Heaith Flexible Spending Arrangement. The enrollment under the Cafeteria Plan shall
constitute enroliment under this Health Flexible Spending Arrangement. In addition, other
matters concerning contributions, elections and the like shall be governed by the general
provisions of the Cafeteria Plan.
Exhibit A 18
Resolution 4577 '
6.7 HEALTH FLEXIBLE SPENDING ARRANGEMENT CLAIMS
(a) Expenses must be incurred during Plan Year. AII Medical
Expenses incurred by a Participant, his or her Spouse and his or her Dependents
shall be reimbursed during the Plan Year subject to Section 2.5, even though the
submission of such a claim occurs after his participation hereunder ceases; but
provided that the Medical Expenses were incurred during the applicable Plan
Year. Medical Expenses are treated as having been incurred when the
Participant is provided with the medical care that gives rise to the medical
expenses, not when the Participant is formally billed or charged for, or pays for
the medical care.
(b) Reimbursement available throughout Plan Year. The
Administrator shall direct the reimbursement to each eligible Participant for all
allowable Medical Expenses, up to a maximum of the amount designated by the
Participant for the Health Flexible Spending Arrangement for the Plan Year.
Reimbursements shall be made available to the Participant throughout the year
without regard to the level of Cafeteria Plan Benefit Dollars which have been
allocated to the fund at any given point in time. Furthermore, a Participant shall
be entitled to reimbursements only for amounts in excess of any payments or
other reimbursements under any health care plan covering the Participant and/or
his Spouse or Dependents.
(c) Payments. Reimbursement payments under this Plan shall be
made directly to the Participant. However, in the Administrator's discretion,
payments may be made directly to the service provider. The application for
payment or reimbursement shall be made to the Administrator on an acceptable
form within a reasonable time of incurring the debt or paying for the service. The
application shali include a written statement from an independent third party
stating that the Medicai Expense has been incurred and the amount of such
expense. Furthermore, the Participant shall provide a written statement that the
Medical Expense has not been reimbursed or is not reimbursable under any
other health plan coverage and, if reimbursed from the Health Flexibie Spending
Arrangement, such amount will not be claimed as a tax deduction. The
Administrator shall retain a file of all such applications.
(d) Grace Period. Notwithstanding anything in this Section to the
contrary, Medical Expenses incurred during the Grace Period, up to the
remaining Benefit balance, shall also be deemed to have been incurred during
the Plan Year to which the Grace Period relates.
(e) Claims for reimbursement. Claims for the reimbursement of
Medical Expenses incurred in any Plan Year shall be paid as soon after a claim
has been filed as is administratively practicable; provided however, that if a
Participant fails to submit a claim within 90 days after the end of the Pian Year,
- those Medical Expense claims shall not be considered for reimbursement by the
Administrator.
Exhibit A . 19
Resolution 4577
6.8 DEBIT AND CREDIT CARDS
Participants may, subject to a procedure established by the Administrator and
applied in a uniform nondiscriminatory manner, use debit and/or credit (stored value) cards
("cards") provided by the Administrator and the Plan for payment of Medical Expenses, subject
to the foliowing terms:
(a) Card only for medical expenses. Each Participant issued a card
shall certify that such card shali only be used for Medical Expenses. The
Participant shall also certify that any Medical Expense paid with the card has not
aiready been reimbursed by any other plan covering health benefits and that the
Participant will not seek reimbursement from any other plan covering health
benefits.
(b) Card issuance. Such card shall be issued upon the ParticipanYs
Effective Date of Participation and reissued for each Plan Year the Participant
remains a Participant in the Health Flexible Spending Arrangement. Such card
shall be automatically cancelled upon the ParticipanYs death or termination of
employment, or if such Participant has a change in status that results in the
ParticipanYs withdrawal from the Health Flexibie Spending Arrangement.
(c) Maximum dollar amount available. The dollar amount of
coverage available on the card shall be the amount elected by the Participant for
the Plan Year. The maximum dollar amount of coverage available shall be the
maximum amount for the Plan Year as set forth in Section 6.4.
(d) Only available for use with certain service providers. The
cards shall only be accepted by such merchants and service providers as have
been approved by the Administrator.
(e) Card use. The cards shall only be used for Medical Expense
purchases at these providers, including, but not limited to, the following:
(1) Co-paymehts for doctor and other medical care;
(2) Purchase of drugs;
(3) Purchase of inedical items such as eyeglasses, syringes,
crutches, etc.
(o Substantiation. Such purchases tiy the cards shall be subject to
substantiation by the Administrator, usually by submission of a receipt from a
service provider describing the service, the date and the amount. The
Administrator shall also follow the requirements set forth in Revenue Ruling
2003-43 and Notice 2006-69. All charges shall be conditional pending
confirmation and substantiation. .
(g) Correction methods. If such purchase is later determined by the
Administrator to not qualify as a Medical Expense, the Administrator, in its
discretion, shall use one of the following correction methods to make the Plan
wfiole. Until the amount is repaid, the Administrator shail take further action to
ensure that further violations of the terms of the card do not occur, up to and
including denial of access to the card.
(1) Repayment of the improper amount by the Participant;
Euhibit A 20
- Resolution 4577
(2) Withholding the improper payment from the ParticipanYs wages or
other compensation to the extent consistent with applicable federal or
state law;
(3) Claims substitution or offset of future claims until the amount is
repaid; and
` (4) if subsections (1) through (3) fail to recover the amount, consistent
with the Employer's business practices, the Employer may treat the
amount as any other business indebtedness.
ARTICLE VII
DAY CARE FLEXIBLE SPENDING ARRANGEMENT
7.1 ESTABLISHMENT OF BENEFIT
This Day Care Flexible Spending Arrangement is intended to qualify as a
program under Code Section 129 and shall be interpreted in a manner consistent with such
Code Section. Participants who elect to participate in this program may submit claims for the
reimbursement of Employment-Related Day Care Expenses. All amounts reimbursed shall be
paid from amounts allocated to the ParticipanPs Day Care Flexible Spending Arrangement.
7.2 DEFINITIONS
' For the purposes of this Article and the Cafeteria Plan the terms below shall have
the following meaning:
(a) "Day Care Flexible Spending Arrangement" means the Benefit
established for a Participant pursuant to this Article to which part of his Cafeteria
Plan Benefit Dollars may be allocated and from which Employment-Related Day
Care Expenses of the Participant may be reimbursed for the care of the
Qualifying Dependents of Participants.
(b) "Earned Income" means earned income as defined under Code
Section 32(c)(2), but excluding such amounts paid or incurred by the Employer
for Day Care assistance to the Participant.
Exhibit A 21
Resolution 4577 .
(c) "Employment-Related Day Care Expenses" means the
amounts paid for expenses of a Participant for those services which if paid by the
Participant would be considered employment related expenses under Code
Section 21(b)(2). Generally, they shall include expenses for household services
and for the care of a Qualifying Dependent, to the extent that such expenses are
incurred to enabie the Participant to be gainfully employed for any period for
which there are one or more Qualifying Dependents with respect to such
Participant. Employment-Related Day Care Expenses are treated as having been
incurred when the Participant's Qualifying Dependents are provided with the Day
Care that gives rise to the Employment-Related Day Care Expenses, not when
the Participant is formaily bilied or charged for, or pays for the Day Care. The
determination of whether an amount~qualifies as an Employment-Related Day
Care Expense shall be made subject to the following rules:
(1) If such amounts are paid for expenses incurred outside the
Participant's household, they shall constitute Employment-Related Day
Care Expenses only if incurred for a Qualifying Dependent as defined in
Section 7.2(d)(1) (or deemed to be, as described in Section 7.2(d)(1)
pursuant to Section 7.2(d)(3)), or for a Qualifying Dependent as defined in
Section 7.2(d)(2) (or deemed to be, as described in Section 7.2(d)(2)
pursuant to Section 7.2(d)(3)) who regularly spends at least 8 hours per
day in the Participant's household;
(2) If the expense is incurred outside the Participant's home at a
facility that provides care for a fee, payment, or grant for more than 6
individuals who do not regularly reside at the facility, the facility must
comply with all applicable state and local laws and regulations, including
licensing requirements, if any; and
(3) Employment-Related Day Care Expenses of a Participant shall
not include amounts paid or incurred to a child of such Participant who is
under the age of 19 or to an individual who is a Dependent of such
Participant or such Participant's Spouse.
(d) "Qualifying DependenY' means, for Day Care Flexible Spending
Arrangement purposes,
(1) a Participant's Dependent (as defined in Code Section 152(a)(1))
who has not attained age 13;
(2) a Dependent or the Spouse of a Participant who is physically or
mentally incapable of caring for himself or herself and has the same
principal place of abode as the Participant for more than one-half of such
taxabie year; or
(3) a child that is deemed to be a Qualifying Dependent described in
paragraph (1) or (2) above, whichever is appropriate, pursuant to Code
Section 21(e)(5).
(e) The definitions of Article I are hereby incorporated by reference to
the extent necessary to interpret and apply the provisions of this Day Care
Flexible Spending Arrangement.
Exhibit A yZ
ResoWtion 4577 -
7.3 DAY CARE FLEXIBLE SPENDING ACCOUNTS
The Administrator shall establish a Day Care Flexible Spending Arrangement for
each Participant who elects to apply Cafeteria Plan Benefit Dollars to Day Care Flexible
Spending Arrangement benefits.
7.4 INCREASES IN DAY CARE FLEXIBLE SPENDING ACCOUNTS
A Participant's Day Care Flexible Spending Arrangement shall be increased each
pay period by the portion of Cafeteria Plan Benefit Dollars that he has elected to apply toward
his Day Care Flexible Spending Arrangement pursuant to elections made under Article V
hereof.
7.5 DECREASES IN DAY CARE FLEXIBLE SPENDING ACCOUNTS
A ParticipanYs Day Care Flexible Spending Arrangement shall be reduced by the
amount of any Employment-Related Day Care Expense reimbursements paid or incurred on
behalf of a Participant pursuant to Section 7.12 hereof.
7.6 ALLOWABLE DAY CARE REIMBURSEMENT
Subject to limitations contained in Section 7.9 of this Program, and to the extent
of the amount contained in the ParticipanYs Day Care Flexible Spending Arrangement, a
Participant who incurs Employment-Related Day Care Expenses shall be entitled to receive
from the Employer full reimbursement for the entire amount of such expenses incurred during
the Plan Year or portion thereof duririg which he is a Participant.
7.7 ANNUAL STATEMENT OF BENEFITS
On or before January 31st of each calendar year, the Employer shall furnish to
each Employee who was a Participant and received benefits under Section 7.6 during the prior
calendar year, a statement of all such benefits paid to or on behalf of such Participant during the
prior calendar year.
7.8 FORFEITURES
The amount in a Participant's Day Care Flexible Spending Arrangement as of the
end of any Plan Year (and after the processing of all claims for such Plan Year pursuant to
Section 7.12 hereoo shall be forfeited and credited to the benefit plan surplus. In such event,
the Participant shall have no further claim to such amount for any reason.
7.9 LIMITATION ON PAYMENTS
Notwithstanding any provision contained in this Article to the contrary, amounts
paid from a ParticipanYs Day Care Flexible Spending Arrangement in or on account of any
taxable year of the Participant shall nof exceed the lesser of the Earned Income limitation
described in Code Section 129(b) or $5,000 ($2,500 if a separate tax return is filed by a
Participant who is married as determined under the rules of paragraphs (3) and (4) of Code
Section 21(e)).
7.10 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory. It is the intent of this Day Care
Flexible Spending Arrangement that contributions or benefits not discriminate in
Exhibit A 23
Resolution 4577 '
favor of the group of employees in whose favor discrimination may not occur
under Code Section 129(d).
(b) 25% test for shareholders. It is the intent of this Day Care
Flexible Spending Arrangement that not more than 25 percent of the amounts
paid by the Employer for Day Care assistance during the Plan Year will be
provided for the class of individuals who are shareholders or owners (or their
Spouses or Dependents), each of whom (on any day of the Plan Year) owns
more than 5 percent of the stock or of the capital or profits interest in the
Employer.
(c) Adjustment to avoid test failure. If the Administrator deems it
necessary to avoid discrimination or possible taxation to a group of employees in
whose favor discrimination may not occur in violation of Code Section 129 it may,
but shall not be required to, reject any elections or reduce contributions or
non-taxable benefits in order to assure compliance with this Section. Any act
taken by the Administrator under this Section shall be carried out in a uniform
and nondiscriminatory manner. If the Administrator decides to reject any
elections or reduce contributions or Benefits, it shall be done in the following
manner. First, the Benefits designated for the Day Care Flexible Spending
Arrangement by the affected Participant that elected to contribute the highest
amount to such Benefit for the Plan Year shall be reduced until the
nondiscrimination tests set forth in this Section are satisfied, or until the amount
designated for the Benefit equais the amount designated for the Benefit of the
affected Participant who has elected the second highest contribution to the Day
Care Flexible Spending Arrangement for the Plan Year. This process shall
continue until the nondiscrimination tests set forth in this Section are satisfied.
Contributions which are not utilized to provide Benefits to any Participant by
virtue of any administrative act under this paragraph shall be forfeited.
7.11 COORDINATION WITH CAFETERIA PLAN
All Participants under the Cafeteria Plan are eligible to receive Benefits under
this Day Care Flexible Spending Arrangement. The enrollment and termination of participation
under the Cafeteria Plan shall constitute enrollment and termination of participation under this
Day Care Flexible Spending Arrangement. In addition, other matters concerning contributions,
elections and the like shall be governed by the general provisions of the Cafeteria Plan.
7.12 DAY CARE FLEXIBLE SPENDING ARRANGEMENT CLAIMS
The Administrator shali direct the payment of all such Day Care ciaims to the
Participant upon the presentation to the Administrator of documentation of such expenses in a
form satisfactory to the Administrator. However, in the Administrator's discretion, payments inay
be made directly to the service provider. In its discretion in administering the Plan, the
Administrator may utilize forms and require documentation of costs as may be necessary to
verify the claims submitted. At a minimum, the form shall include a statement from an
independent third party as proof that the expense has been incurred and the amounfof such
expense. In addition, the Administrator may require that each Participant who desires to receive
reimbursement under this Program for Employment-Related Day Care Expenses submit a
statement which may contain some or all of the following information:
(a) The Dependent or Dependents for whom the services were
performed;
Exhibit A 24
Resolution 4577
(b) The nature of the services performed for the Participant, the cost
of which he wishes reimbursement;
(c) The relationship, if any, of the person performing the services to
the Participant;
(d) If the services are being performed by a child of the Participant,
the age of the child;
(e) A statement as to where the services were performed;
(fl If any of the services were performed outside the home, a
statement as to whether the Dependent for whom such services were performed
spends at least 8 hours a day in the ParticipanYs househoid;
(g) If the services were being performed in a day care center, a
statement:
(1) that the day care center complies with all appiicable laws and
regulations of the state of residence,
(2) that the day care center provides care for more than 6 individuals
(other than individuals residing at the center), and
(3) of the amount of fee paid to the provider.
(h) If the Participant is married, a statement containing the following:
(1) the Spouse's salary or wages if he or she is employed, or
(2) if the ParticipanYs Spouse is not employed, that
(i) he or she is incapacitated, or
(ii) he or she is a full-time student attending an educational
institution and the months during the year which he or she
attended such institution.
(i) Grace Period. Notwithstanding anything in this Section to the
contrary, Employment-Related Day Care Expenses incurred during the Grace
Period, up to the remaining Benefit balance, shall also be deemed to have been
incurred during the Plan Year to which the Grace Period relates.
(j) Claims for reimbursement. If a Participant fails to submit a claim
within 90 days after the end of the Plan Year, those ciaims shall not be
. considered for reimbursement by the Administrator.
ARTICLE VIII
BENEFITS AND RIGHTS
8.1 CLAIM FOR BENEFITS
(a) Insurance claims. Any claim for Benefits underwritten by
Insurance Contract(s) shall be made to the Insurer. If the Insurer denies any
Exhibit A 25
Resolution 4577
claim, the Participant or beneficiary shall follow the Insurer's claims review
procedure.
(b) Day Care Flexible Spending Arrangement or Health Flexible
Spending Arrangement claims. Any claim for Day Care Flexible Spending
Arrangement or Health Flexible Spending Arrangement Benefits shall be made to
the Administrator. For the Health Flexible Spending Arrangement, if a Participant
fails to submit a claim within 90 days after the end of the Plan Year, those claims
shall not be considered for reimbursement by the Administrator. For the Day
Care Flexible Spending Arrangement, if a Participant fails to submit a claim
within 90 days after the end of the Plan Year, those ciaims shall not be
considered for reimbursement by the Administrator. If the Administrator denies a
ciaim, the Administrator may provide notice to the Participant or beneficiary, in
writing, within 90 days after the claim is filed unless speciai circumstances
require an extension of time for processing the claim. The notice of a denial of a
claim shall be written in a manner calculated to be understood by the claimant
and shall set forth:
(1) specific references to the pertinenY Plan provisions on which the
denial is based;
(2) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation as to why such
information is necessary; and
(3) an explanation of the Plan's claim procedure.
(c) Appeal. Within 60 days after receipt of the above material, the
claimant shall have a reasonable opportunity to appeal the claim denial to the
Administrator for a full and fair review. The claimant or his duly authorized
representative may:
(1) request a review upon written notice to the Administrator;
,
(2) review pertinent documents; and
(3) submit issues and comments in writing.
(d) Review of appeal. A decision on the review by the Administrator
will be made not later than 60 days after receipt of a request for review, unless
special circumstances require an extension of time for processing (such as the
need to hold a hearing), in which event a decision should be rendered as soon as
possible, but in no event later than 120 days after such receipt. The decision of
the Administrator shall be written and shall include specific reasons for the
decision, written in a manner calculated to be understood by the ciaimant, with
specific references to the pertinent Plan provisions on which the decision is
based.
(e) Forfeitures. Any balance remaining in the ParticipanYs Day Care
Flexible Spending Arrangement or Health Flexible Spending Arrangement as of
the end of the time for claims reimbursement for each Plan Year and Grace
Period (if applicable) shall be forfeited and deposited in the benefit plan surplus
of the Employer pursuant to Section 6.3 or Section 7.8, whichever is aPplicable,
unless the Participant had made a claim for such Plan Year, in writing, which has
been denied or is pending; in which event the amount of the claim shall be held
Exhibit A 26
Resolution 4577
in his Benefit until the claim appeal procedures set forth above have been
satisfied or the ciaim is paid. If any such claim is denied on appeai, the amount
held beyond the end of the Plan Year shall be forfeited and credited to the benefit
plan surplus.
8.2 APPLICATION OF BENEFIT PLAN SURPLUS
Any forfeited amounts credited to the benefit plan surpius by virtue of the failure
of a Participant to incur a qualified expense or seek reimbursement in a timely manner may, but
need not be, separately accounted for after the close of the Plan Year (or after such further time
specified herein for the filing of claims) in which such forfeitures arose. In no event shall such
amounts be carried over to reimburse a Participant for expenses incurred during a subsequent
Plan Year for the same or any other Benefit available under the Plan; nor shall amounts
forfeited by a particular Participant be made avaiiable to such Participant in any other form or
manner, except as permitted by Treasury regulations. Amounts in the benefit plan surplus shall
be used to defray any administrative costs and experience losses or used to provide additional
benefits under the Plan.
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATION
The operation of the Plan shall be under the supervision of the Administrator. It
shall be a principal duty of the Administrator to see that the Plan is carried out in accordance
with its terms, and for the exclusive benefit of Employees entitled to participate in the Plan. The
Administrator shall have full power to administer the Plan in all of its details, subject, however, to
the pertinent provisions of the Code. The Administrator's powers shall include, but shall not be
limited to the following authority, in addition to all other powers provided by this Plan:
(a) To make and enforce such rules and regulations as the
Administrator deems necessary or proper for the efficient administration of the
Plan;
(b) To interpret the Plan, the Administrator's interpretations thereof in
good faith to be final and conclusive on all persons claiming benefits by operation
of the Plan;
(c) To decide all questions concerning the Plan and the eligibility of
any person to participate in the Plan and to receive benefits provided by
operation of the Plan;
(d) To reject elections or to limit contributions or Benefits for certain
highly compensated participants if it deems such to be desirable in order to avoid
. discrimination under the Plan in violation of applicable provisions of the Code;
(e) To provide Employees with a reasonable notification of their
benefits available by operation of the Plan;
(fl To approve reimbursement requests and to authorize the payment
of benefits;
(g) To appoint such agents, counsel, accountants, consultants, and
actuaries as may be required to assist in administering the Plan.
ExhibitA 27
-
Resolution 4577
Any procedure, discretionary act, interpretation or construction taken by the
Administrator shall be done in a nondiscriminatory manner based upon uniform principles
consistently applied and shall be consistent with the intent that the Plan shall continue to comply
with the terms of Code Section 125 and the Treasury regulations thereunder.
9.2 EXAMINATION OF RECORDS
The Administrator shall make available to each Participant, Eligible Employee
and any other Employee of the Employer such records as pertain to their interest under the Plan
for examination at reasonable times during normal business hours.
9.3 PAYMENT OF EXPENSES
Any reasonable administrative expenses shall be paid by the Employer unless
the Employer.determines that administrative costs shall be borne by the Participants under the
Plan or by any Trust Fund which may be established hereunder. The Administrator may impose
reasonable conditions for payments, provided that such conditions shall not discriminate in favor
of highly compensated employees.
9.4 INSURANCE CONTROL CLAUSE
In the event of a conflict between the terms of this Plan and the terms of an
Insurance Contract of an independent third paRy Insurer whose product is then being used in
, conjunction with this Plan, the terms of the Insurance Contract shall control as to those
Participants receiving coverage under such Insurance Contract. For this purpose, the Insurance
Contract shall control in defining the persons eligible for insurance, the dates of their eligibility,
the conditions which must be satisfied to become insured, if any, the benefits Participants are
entitled to and the circumstances under which insurance terminates.
9.5 INDEMNIFICATION OF ADMINISTRATOR
The Employer agrees to indemnify and to defend to the fullest extent permitted
by law any Employee serving as the Administrator or as a member of a committee designated
as Administrator (inciuding any Employee or former Employee who previously served as
Administrator or as a member of such committee) against all liabilities, damages, costs and
expenses (including attorney's fees and amounts paid in settlement of any claims approved by
the Employer) occasioned by any act or omission to act in connection with the Plan, if such act
or omission is in good faith.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.7 AMENDMENT
The Employer, at any time or from time to time, may amend any or ail of the
provisions of the Plan without the consent of any Employee or Participant. No amendment shall
have the effect of modifying any benefit election of any Participant in effect at the time of such
amendment, unless such amendment is made to comply with Federal, state or local laws,
statutes or regulations.
Exhibit A 28
Resoiution 4577
10.2 TERMINATION
The Employer is establishing this Plan with the intent that it will be maintained for
an indefinite period of time. Notwithstanding the foregoing, the Employer reserves the right to
terminate this Plan, in whole or in part, at any time. In the event the Plan is terminated, no
further contributions shall be made. Benefits under any Insurance Contract shall be paid in
accordance with the terms of the Insurance Contract.
No further additions shall be made to the Health Flexible Spending Arrangement
or Day Care Flexible Spending Arrangement, but all payments from such fund shall continue to
be made according to the elections in effect until 90 days after the termination date of the Plan.
Any amounts remaining in any such fund or Benefit as of the end of such period shall be
forfeited and deposited in the benefit plan surplus after the expiration of the filing period.
ARTICLE XI
MISCELLANEOUS
11.1 PLAN INTERPRETATION
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. This Plan shall be read in its entirety and not severed except as
provided in Section 11.12.
11.2 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender in all cases
where they would so apply, and whenever any words are used herein in the singular or plural
form, they shall be construed as though they were also used in the other form in all cases where
they would so apply.
11.3 WRITTEN DOCUMENT
This Plan, in conjunction with any separate written document which may be
required by law, is intended to satisfy the written Pian requirement of Code Section 125 and any
Treasury regulations thereunder relating to cafeteria plans.
11.4 EXCLUSIVE BENEFIT
This Plan shall be maintained for the exclusive benefit of the Employees who
participate in the Plan.
11.5 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute an employment contract between the
Employer and any Participant or to be a consideration or an inducement for the employment of
any Participant or Employee. Nothing contained in this Plan shali be deemed to give any
Participant or Empioyee the right to be retained in the service of the Employer or to interfere
with the right of the Employer to discharge any Participant or Employee at any time regardless
of the effect which such discharge shall have upon him as a Participant of this Plan.
Exhibit A 29 Resolution 4577
11.6 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required to
do or perform any act or matter or thing, it shall be done and performed by a person duly
authorized by its legally constituted authority.
11.7 EMPLOYER'S PROTECTIVE CLAUSES
(a) Insurance purchase. Upon the failure of either the Participant or
the Employer to obtain the insurance contemplated by this Plan (whether as a
result of negligence, gross negiect or otherwise), the ParticipanYs Benefits shali
be limited to the insurance premium(s), if any, that remained unpaid for the
period in question and the actual insurance proceeds, if any, received by the
Employer or the Participant as a result of the Participant's claim.
(b) Validity of insurance contract. The Employer shall not be
responsible for the Validity of any Insurance Contract issued hereunder or for the
failure on the part of the Insurer to make payments provided for under any
Insurance Contract. Once insurance is applied for or obtained, the Employer
shall not be liable for any loss which may result from the failure to pay Premiums
to the extent Premium notices are no4 received by the Employer.
11.8 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Administrator nor the Employer makes any commitment or guarantee
that any amounts paid to or for the benefit of a Participant under the Plan will be excludable
from the ParticipanYs 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. It shall be the
obligation of each Participant to determine whether each payment under the Plan is excludable
from the ParticipanYs 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.
Notwithstanding the foregoing, the rights of Participants under this Pian shall be legally .
enforceable.
11.9 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS
If any Participant receives one or more payments or reimbursements under the
Plan that are not for a permitted Benefit, such Participant shall indemnify and reimburse the
Employer for any liability it may incur for failure to withhold federal or state income tax or Social
Security tax from such payments or reimbursements. However, such indemnification and
reimbursement shall not exceed the amount of additional federal and state income tax (plus any
penalties) that the Participant would have owed if the payments or reimbursements had been
made to the Participant as regular cash compensation, plus the ParticipanYs share of any Social
Security tax that would have been paid on such compensation, less any such additional income
and Social Security tax actuaily paid by the Participant.
11.10 FUNDING
Unless otherwise required by law, contdbutions to the Plan need rtot be placed in
trust or dedicated to a specific Beriefit, but may instead be considered general assets of the
Employer. Furthermore, and unless otherwise required by law, nothing herein shall be
construed to require the Employer or the Administrator to maintain any fund or segregate any
amount for the benefit of any Participant, and no Participant or other person shall have any
claim against, right to, or security or other interest in, any fund, Benefit or asset of the Employer
from which any payment under the Plan may be made.
. ExhibitA 30
Resolution 4577 .
11.11 GOVERNING LAW
This Plan is governed by the Code and the Treasury regulations issued
thereunder (as they might be amended from time to time). In no event shall the Employer
guarantee the favorable tax treatment sought by this Plan. To the extent not preempted by
Federal law, the provisions of this Plan shall be construed, enforced and administered according
to the laws of the State of Washington.
11.12 SEVERABILITY
If any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability shali not affect any other provisions of the Plan, and the Plan shall be
construed and enforced as if such provision had not been included herein.
11.13 CAPTIONS
The captions contained herein are inserted only as a matter of convenience and
for reference, and in no way define, limit, enlarge or describe the scope or intent of the Plan, nor
in any way shall affect the Plan or the construction of any provision thereof.
11.14 FAMILY AND MEDICAL LEAVE ACT (FMLA)
Notwithstanding anything in the Plan to the contrary, in the event any benefit
under this Plan becomes subject to the requirements of the Family and Medical Leave Act and
reguiations thereunder, this Plan shall be operated in accordance with Regulation 1.125-3.
11.15 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)
Notwithstanding anything in this Plan to the contrary, this Plan shall be operated in
accordance with HIPAA and regulations thereunder.
71.16 UNIFORM SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
(USERRA)
Notwithstanding any provision of this Plan to the contrary, contributions, benefits
and service credit with respect to qualified military service shall be provided in accordance with
the Uniform Services Employment And Reemployment Rights Act (USERRA) end the regulations
thereunder.
11.17 COMPLIANCE WITH HIPAA PRIVACY STANDARDS
(a) Application. If the Health Flexible Spending Arrangement under
, this Cafeteria Plan is subject to the Standards for Privacy of Individually
Identifiable Health Information (45 CFR Part 164, the "Privacy Standards"), then
this Section shall appiy.
(b) Disclosure of PHI. The Plan shall not disclose Protected Health
Information to any member of the Employer's workforce unless each of the
conditions set out in this Section are met. "Protected Health Information" shall
have the same definition as set forth in the Privacy Standards but generally shall
mean individually identifiable information about the past, present or future
physical or mental health or condition of an individual, including information about
treatment or payment for treatment.
ExhibitA 31 .
Resolution 4577 •
(c) PHI disclosed for administrative purposes. Protected Health
Information disclosed to members of the Employer's workforce shall be used or
disclosed by them oniy for purposes of Pian administrative functions. The Plan's
administrative functions shall include all Plan payment functions and health care
operations. The terms "payment" and "health care operations" shall have the
same definitions as set out in the Privacy Standards, but the term "payment"
generally shall mean activities taken to determine or fulfill Plan responsibilities
with respect to eligibility, coverage, provision of benefits, or reimbursement for
health care.
(d) PHI disclosed to certain workforce members. The Plan shall
disclose Protected Health Information only to members of the Employer's
workforce who are authorized to receive such Protected Health Information, and
only to the extent and in the minimum amount necessary for that person to
perform his or her duties with respect to the Plan. "Members of the Employer's
workforce" shail refer to all empioyees and other persons under the control of the
Employer. The Employer shall keep an updated list of those authorized to receive
Protected Heaith Information.
(1) An authorized member of the Employer's workforce who receives
Protected Health Information shall use or disclose the Protected Health
Information only to the extent necessary to perform his or her duties with
, respect to the Plan.
(2) In the event that any member of the Employer's workforce uses or
discloses Protected Health Information other than as permitted by this
Section and the Privacy Standards, the incident shall be reported to the
Plan's privacy officec The privacy officer shali take appropriate action,
including:
(i) investigation of the incident to determine whether the
breach occurred inadvertently, through negligence or deliberately;
whether there is a pattern of breaches; and the degree of harm
caused bythe breach;
(ii) appropriate sanctions against the persons causing the
breach which, depending upon the nature of the breach, may
include oral or written reprimand, additional training, or termination
of employment;
(iii) mitigation of any harm caused by the breach, to the
extent practicable; and
(iv) documentation of the incident and all actions taken to
resolve the is§ue and mitigate any damages.
" (e) Certification. The Employer must provide certification to the Plan
that it agrees to:
(1) Not use or further disclose the information other than as permitted
or required by the Plan documents or as required by law;
(2) Ensure that any agent or subcontractor, to whom it provides
Protected Health Information received from the Plan, agrees to the same
Ezhibit A 32
Resolution 4577 -
restrictions and conditions that apply to the Employer with respect to such
information;
(3) Not use or disclose Protected Health Information for employment-
related actions and decisions or in connection with any other benefit or
employee benefit plan of the Employer;
(4) Report to the Plan any use or disclosure of the Protected Health
Information of which it becomes aware that is inconsistent with the uses
or disclosures permitted by this Section, or required by law;
(5) Make available Protected Health Information to individual Plan
members in accordance with Section 164.524 of the Privacy Standards;
(6) Make available Protected Health Information for amendment by
individual Plan members and incorporate any amendments to Protected
Health Information in accordance with Section 164.526 of the Privacy
Standards;
(7) Make available the Protected Health Information required to
provide an accounting of disclosures to individual Plan members in
accordance with Section 164.528 of the Privacy Standards;
(8) Make its internal practices, books and records relating to the use
and disclosure of Protected Health Information received from the Plan
available to the Department of Health and Human Services for purposes
of determining compliance by the Plan with the Privacy Standards;
(9) If feasible, return or destroy all Protected Health Information
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
purpose for which disclosure was made, except that, if such return or
destruction is not feasible, Iimit further uses and disclosures to those
purposes that make the return or destruction of the information infeasible;
and
(10) Ensure the adequate separation between the Plan and members
of the Employer's workforce, as required by Section 164.504(f)(2)(iii) of
the Privacy Standards and set out in (d) above.
11.18 COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS
Under the Security Standards for the Protection of Electronic Protected Health
Information (45 CFR Part 164.300 et. seq., the "Security Standards"):
(a) Implementation. The Employer agrees to implement reasonable
and appropriate administrative, physical and technical safeguards to protect the
confidentiality, integrity and availability of Electronic Protected Health Information
that the Employer creates, maintains or transmits on behalf of the Plan.
"Electronic Protected Health Information" shall have the same definition as set
out in the Security Standards, but generally shall mean Protected Health
Information that is transmitted by or maintained in electronic media.
1 (b) Agents or subcontractors shall meet security standards. The
Employer shall ensure that any agent or subcontractor to whom it provides
Exhibit A 33
Resolulion 4577
Electronic Protected Health Information shall agree, in writing, to implement
reasonable and appropriate security measures to protect the Electronic Protected
Health Information.
(c) Employer shall ensure security standards. The Employer shall
ensure that reasonable and appropriate security measures are implemented to
comply with the conditions and requirements set forth in Section 11.17.
ExhibitA 34 .
Resolution 4577
IN WITNESS WHEREOF, this Plan document is hereby executed this
5'1-1~- day of 10
City u um
By '
EMP YER
Exhibit A 35 ~
Resolution 4577 -
ADOPTING RESOLUTION
The undersigned Principal of City of Auburn (the Employer) hereby certifies that
the following resolutions were duly adopted by the Empioyer on , and
that such resolutions have not been modified or rescinded as of the date hereof:
RESOLVED, that the form of amended Cafeteria Plan including a Day Care
Flexibie Spending Arrangement and Health Flexible Spending Arrangement effective January 1,
2010, presented to this meeting is hereby approved and adopted and that the duly authorized
agents of the Employer are hereby authorized and directed to execute and deliver to the
Administrator of the Plan one or more counterparts of the Plan.
RESOLVED, that the Administrator shall be instructed to take such actions that
are deemed necessary and proper in order to implement the Plan, and to set up adequate
accounting and administrative procedures to provide benefits under the Plan.
RESOLVED, that the duly authorized agents of the Employer shali act as soon
as possible to notify the employees of the Employer of the adoption of the Cafeteria Plan by
delivering to each employee a copy of the summary description of the Plan in the form of the
Summary Plan Description presented to this meeting, which form is hereby approved.
The undersigned further certifies that attached hereto as Exhibits A and B,
respectively, are true copies of City of Auburn Flexible Benefits Plan as amended and restated
and the Summary Plan Description approved and adopted in the foregoing resolutions.
Principal
Date:
Exhibit A 36 -
Resolulion 4577
CITY OF AUBURN FLEXIBLE BENEFITS PLAN
SUMMARY PLAN DESCRIPTION
. Exhibit B
Resolution 4577
TABLE OF CONTENTS
I
ELIGIBILITY
~
1. When can I become a participant in the Plan? .......................................................................1
2. What are the eligibility requirements for our Pian? ................................................................2
3. When is my entry date? .........................................................................................................2
4. What must I do to enroll in the Plan? ......................................................:..............................2
11
OPERATION
1. How does this Plan operate? ................................................................................................2
III
CONTRIBUTIONS
1. How much of my pay may the Employer redirect? .................................................................2
2. What happens to contributions made to the Plan? ................................................................2
3. When must I decide which accounts I want to use? ..............................................................3
4. When is the election period for our Plan? ....:....................................................................:...:3
5. May I change my elections during the Plan Year? .................................................................3
6. May I make new elections in future Plan Years? ...................................................................4
IV
BENEFITS
1. What benefits are available? 4
V
BENEFIT PAYMENTS
1. When will I receive payments from my accounts? 6
2. What happens if I don't spend all Plan contributions during the Plan Year? ...........................6
3. Family and Medical Leave Act (FMLA) ..............................................................:...................7
4. Uniformed Services Employment and Reemployment Rights Act ..........................................7
5. What happens if I terminate employment? 7
6. Will my Social Security benefits be affected? ...................................................:.....................8
VI ~
HIGHLY COMPENSATED AND KEY EMPLOYEES
1. Do limitations apply to highly compensated employees? .......................................................8
Exhibit B 2
Resolution 4577 -
VII
PLAN ACCOUNTING
1. PeriodicStatements ..............................................................................................................8
VIII
GENERAL INFORMATION ABOUT OUR PLAN
1. General Plan Information ......................................................................................................9
2. Employerlnformation ......................................................................:.....................................9
3. Plan Administrator Information ..............................................................................................9
4. Service of Legal Process .......................................................................................................9
5. Type of Administration ...........................................................................................................9
6. Claims Submission..............................................................................................................10
IX
ADDITIONAL PLAN INFORMATION
1. Claims Process ...................................................................................................................10
X
SUMMARY
Exhibit B 3
Resolution 4577
CITY OF AUBURN FLEXIBLE BENEFITS PLAN
INTRODUCTION
We have amended the "Flexible Benefits Plan" that we previously established for you
and other eligible employees. Under this Plan, you will be able to choose among certain benefits
that we make available. The benefits that you may choose are outlined in this Summary Plan
Description. We will also tell you about other important information concerning the amended
Plan, such as the rules you must satisfy before you can join and the laws that protect your
rights.
One of the most important features of our Plan is that the benefits being offered are
generally ones that you are already paying for, but normally with money that has first been
subject to income and Social Security taxes. Under our Plan, these same expenses will be paid
for with a portion of your pay before Federal income or Social Security taxes are withheld. This
means that you will pay less tax and have more money to spend and save.
Read this Summary Plan Description carefully so that you understand the provisions of
our amended Plan and the benefits you will receive. This SPD describes the Plan's benefits and
obligations as contained in the legal Plan document, which governs the operation of the Plan.
The Plan document is written in much more technical and precise language. If the non-technical
language in this SPD and the technical, legal language of the Plan document conflict, the Plan
document always governs. Also, if there is a conflict between an insurance contract and either
the Plan document or this Summary Plan Description, the insurance contract will control. If you
wish to receive a copy of the legal Plan.document, please contact the Administrator.
This SPD describes the current provisions of the Plan which are designed to comply with
applicable legal requirements. The Plan is subject to federal laws, such as the Internal Revenue
Code and other federal and state laws which may affect your rights. The provisions of the Plan
are subject to revision due to a change in laws or due to pronouncements by the Internal
Revenue Service (IRS) or other federal agencies. We may also amend or terminate this Plan. If
the provisions of the Plan that are described in this SPD change, we wiil notify you.
We have attempted to answer most of the questions you may have regarding your
benefits in the Plan. If this SPD does not answer ali of your questions, please contact the
Administrator (or other plan representative). The name and.address of the Administrator can be
found in the Article of this SPD entitled "General Information About the Plan."
I
ELIGIBILITY
1. When can I become a participant in the Plan?
Before you become a Plan member (referred to in this Summary Plan Description as a
"ParticipanY'), there are certain rules which you must satisfy. First, you must meet the eligibility
requirements and be an active employee. After that, the next step is to actually join the Plan on
the "entry date" that we have established for all employees. The "entry date" is defined in
Question 3 below. You will also be required to complete certain application forms before you
can enroll in the Health Flexible Spending Arrangement or Day Care Flexible Spending
Arrangement.
Exhibit B q
Resolution 4577
2. What are the eligibility requirements for our Pian?
You will be eligible to join the Plan once you have satisfied the conditions for coverage
under our group medical plan. Of course, if you were aiready a participant before this
amendment, you will remain a participant.
3. When is my entry date?
Once you have met the eligibility requirements, your entry date wili be the first day of the
month coinciding with or following the date you met the eligibility requirements.
4. What must I do to enroll in the Plan?
Before you can join the Plan, you must complete an application to participate in the Pian.
The application includes your personai choices for each of the benefits which are being offered
under the Plan. You must also authorize us to set some of your earnings aside in order to pay
for the benefits you have elected.
However, if you are already covered under any of the insured benefits, you will
automatically participate in this Plan to the extent of your premiums unless you elect not to
participate in this Plan.
II
OPERATION
1. How does this Plan operate?
Before the start of each Plan Year, you will be able to elect to have some of your
upcoming pay contributed to the Plan. These amounts will be used to pay for the benefits you
have chosen. The portion of your pay that is paid to the Plan is not subject to Federal income or
Social Security taxes. In other words, this allows you to use tax-free dollars to pay for certain
kinds of benefits and expenses which you normally pay for with out-of-pocket, taxable dollars.
However, if you receive a reimbursement for an expense under the Plan, you cannot claim a
Federal income tax credit or deduction on your return. (See the Article entitled "General
Information About Our Plan" for the definition of "Plan Year.")
III
CONTRIBUTIONS
1. How much of my pay may the Employer redirect?
Each year, we will automatically contribute on your behalf enough of your compensation
to pay for the insurance coverage provided unless you elect not to receive any or all of such
coverage. You may also elect to have us contribute on your behalf enough of your
compensation to pay for any other benefits that you elect under the Plan. These amounts will be
deducted from your pay_over the course of the year.
2. What happens to contributions made to the Plan?
Before each Plan Year begins, you wiil select the benefits you want and how much of
the contributions should go toward each benefit. It is very important that you make these
choices carefully based on what you expect to spend on each covered benefit or expense
Exhibit B , 5 Resolution 4577
during the Plan Year. Later, they will be used to pay for the expenses as they arise during the
Plan Year.
3. When must I decide which accounts I want to use7
You are required by Federal law to decide before the Pian Year begins, during the
election period (defined below). You must decide two things. First, which benefits you want and,
second, how much should go toward each benefit.
If you are already covered by any of the insured benefits offered by this Plan, you will
automatically become a Participant to the extent of the premiums for such insurance unless you
elect, during the election period (defined below), not to participate in the Plan.
4. When is the election period for our Plan?
You wili make your initial election on or before your entry date. (You should review
Section.l on Eligibility to better understand the eligibility requirements and entry date.) Then, for
each following Plan Year, the election period is established by the Administrator and applied
uniformly to all Participants. It will normally be a period of time prior to the beginning of each
Plan Year. The Administrator will inform you each year about the election period. (See the
Article entitled "General Information About Our Plan" for the definition of Plan Year.)
5. May I change my elections during the Plan Year?
Generally, you cannot change the elections you have made after the beginning of the
Plan Year. However, there are certain limited situations when you can change your elections.
You are permitted to change elections if you have a"change in status" and you make an
election change that is consistent with the change in status. Currentiy, Federal law considers
the following events to be a change in statux
Marriage, divorce, death of a spouse, legal separation or annulment;
- Change in the number of dependents, including birth, adoption, piacement for adoption,
or death of a dependent;
Any of the following events for you, your spouse or dependent: termination or
commencement of employment, a strike or lockout, commencement or return from an
unpaid leave of absence, a change in worksite, or any other change in employment status
that affects eligibility for benefits;
One of your dependents satisfies or ceases to satisfy the requirements for coverage due
to change in age, student status, or any similar circumstance; and
A change in the place of residence of you, your spouse or dependent that would lead to
a change in status, such as moving out of a coverage area for insurance.
~
In addition, if you are participating in the Day Care Flexible Spending Arrangement, then
there is a change in status if your dependent no longer meets the qualifications to be eligible for
Day Care.
There are detailed rules on when a change in election is deemed to be consistent with a
change in status. In addition, there are laws that give you rights to change health coverage for
you, your spouse, or your dependents. If you change coverage due to rights you have under the
Exhibit B 6 .
Resolution 4577
law, then you can make a corresponding change in your elections under the Plan. If any of
these conditions apply to you, you should contact the Administrator.
If the cost of a benefit provided under the Plan increases or decreases during a Plan
Year, then we will automatically increase or decrease, as the case may be, your salary
redirection election. If the cost increases significantly, you will be permitted to either make
corresponding changes in your payments or revoke your election and obtain coverage under
another benefit package option with similar coverage, or revoke your election entirely.
If the coverage under a Benefit is significantly curtailed or ceases during a Plan Year,
then you may revoke your elections and elect to receive on a prospective basis coverage under
another plan with similar coverage. In addition, if we add a new coverage option or eliminate an
existing option, you may elect the newly-added option (or elect another option if an option has
been eliminated) and make corresponding election changes to other options providing similar
coverage. If you are not a Participant, you may eiect to join the Plan. There are also certain
situations when you may be able to change your elections on account of a change under the
plan of your spouse's, former spouse's or dependenYs employer.
These rules on change due to cost or coverage do not apply to the Health Flexible
Spending Arrangement, and you may not change your election to the Health Flexible Spending
Arrangement if you make a change due to cost or coverage for insurance.
You may not change your eiection under the Day Care Flexible Spending Arrangement if
the cost change is imposed by a Day Care provider who is your relative.
6. May I make new elections in future Plan Years?
Yes, you may. For each new Plan Year, you may change the elections that you
previously made. You may also choose not to participate in the Plan for the upcoming Plan
Year. If you do not make new elections during the election period before a new Plan Year
begins, we will assume you want your elections for insured benefits only to remain the same
and you will not be considered a Participant for the non-insured benefit options under the Plan ,
for the upcoming Plan Year.
IV
BENEFITS
1. What benefits are available?
Under our Plan, you can choose to receive your entire compensation or use a portion to
pay for the following benefits or expenses during the year:
Health Flexible Spending Arrangement:
The Heaith Flexible Spending Arrangement enables you to pay for expenses ailowed
under Sections 105 and 213(d) of the Internal Revenue Code which are not covered by our
insured medical plan and save taxes at the same time. The Health Flexible Spending
Arrangement aliows you to be reimbursed by the Employer for out-of-pocket medical, dental
and/or vision expenses incurreci by you and your dependents.
Drug costs, including "over-the-counter" drugs may be reimbursed. You may not,
however, be reimbursed for the cost of other health care coverage maintained outside of the
Exhibit B 7 Resolution 4577
Plan, or for long-term care expenses. A list of covered expenses is available from the
Administrator.
The most that you can contribute to your Health Flexibie Spending Arrangement each
Plan Year is $3,600. In order to be reimbursed for a health care expense, you must submit to
the Administrator an itemized bill from the service provider. We will also provide you with a debit
or credit card to use to pay for medical expenses, such as co-pays, deductibles, medical
equipment and drug costs. The Administrator will provide you with further details. Amounts
reimbursed from the Plan may not be claimed as a deduction on your personal income tax
return. Reimbursement from the fund shall be paid at least once a month. Expenses under this
Plan are treated as being "incurred" when you are provided with the care that gives rise to the
expenses, not when you are formally billed or charged, or you pay for the medical care.
Newborns' and Mothers' Health Protection Act: Group health plans generally may not,
under Federal law, restrict benefits for any hospital length of stay in connection with childbirth
for 4he mother or newborn child to less than 48 hours following a vaginal delivery, or less than
96 hours following a cesarean section. However, Federal law generally does not prohibit the
mother's or newborn's attending provider, after consulting with the mother, from discharging the
mother or her newborn earlier than 48 hours (or 96 hours as applicable). In any case, plans and
issuers may not, under Federal law, require that a provider obtain authorization from the plan or
the issuer for prescribing a length of stay not in excess of 48 hours (or 96 hours).
Day Care Flexible Spending Arrangement:
The Day Care Flexible Spending Arrangement enables you to pay for out-of-pocket,
work-related dependent day-care cost with pre-tax dollars. If you are married, you can use the
Benefit if you and your spouse both work or, in some situations, if your spouse goes to school
full-time. Single employees can also use the Benefit.
An eligible dependent is someone for whom you can claim expenses on Federal Income
Tax Form 2441 "Credit for Child and Day Care Expenses." Children must be under age 13.
Other dependents must be physically or mentally unable to care for themseives. Day Care
arrangements which qualify include:
(a) A Dependent (Day) Care Center, provided that if care is provided by the facility
for more than six individuals, the facility compiies with applicable state and locai laws:
(b) An Educational Institution for pre-schooi children. For older children, only
expenses for non-school care are eligible; and
(c) . An "Individual" who provides care inside or outside your home: The "Individuai"
may not be a child of yours under age 19 or anyone you claim as a dependent for
Federal tax purposes. •
You should make sure that the Day Care expenses you are currently paying for qualify
under our Plan. The law places limits on the amount of money that can be paid to you in a
calendar year from your Day Care Flexible Spending Arrangement. Generally, your
reimbursements may not exceed the lesser of: (a) $5,000 (if you are married filing a joint return
or you are head of a household) or $2,500 (if you are married filing separate teturns); (b) your
taxable compensation; (c) your spouse's actual or deemed earned income (a spouse who is a
full time student or incapable of caring for himself/herself has a monthiy earned income of $250
for one dependent or $500 for two or more dependents). Also, in order to have the
reimbursements made to you from this Benefit be excludable from your income, you must
Exhibit B g
Resolution 4577
provide a statement from the service provider including the name, address, and in most cases,
the taxpayer identification number of the service provider on your tax form for the year, as well
as the amount of such expense as proof that the expense has been incurred. In addition,
Federal tax laws permit a tax credit for certain Day Care expenses you may be paying for even
if you are not a Participant in this Plan. You may save more money if you take advantage of this
tax credit rather than using the Day Care Flexibie Spending Arrangement under our Plan. Ask
your tax adviser which is better for you.
Premium Conversion Benefit:
A Premium Conversion Benefit allows you to use tax-free dollars to pay for certain
Premiums under various insurance programs that we offer you. These Premiums include:
Health care premiums under our insured group medical plan.
Long Term Care (Buy Up)
These premiums are deducted from your paycheck pretax, and cannot be claimed under
the Health Care FSA.
The Administrator may terminate or modify Plan benefits at any time, subject to the
provisions of any insurance contracts providing benefits described above. We will not be liable
to you if an insurance company fails to provide any of the benefits described above. Also, your
insurance will end when you ieave employment, are no longer eligible under the terms of any
insurance policies, or when insurance terminates.
Any benefits to be provided by insurance will be provided only after (1) you have
provided the Administrator the necessary information to apply for insurance, and (2) the
insurance is in effect for you. "
V
BENEFIT PAYMENTS
1. When will I receive payments from my accounts?
During the course of the Plan Year, you may submit requests for reimbursement of
expenses you have incurred. Expenses are considered "incurred" when the service is
performed, not necessarily when it is paid for. The Administrator will provide you with
acceptable forms for submitting these requests for reimbursement. If the request qualifies as a
benefit or expense that the Plan has agreed to pay, you will receive a reimbursement payment
soon thereafter. Remember, these reimbursements which are made from the Pian are generally
not subject to federal income tax or withholding. Nor are they subject to Social Security taxes.
Requests for payment of insured benefits should be made directly to the insurer. You wiil only
be reimbursed from the Day Care Flexible Spending Arrangement to the extent that there are
sufficient funds in the Benefit to cover your request.
2. What happens if I don't spend all Plan contributions during the Plan Year? .
If you have not spent ail the amounts in your Health Flexible Spending Arrangement or
Day Care Flexible Spending Arrangement by the end of the Plan Year, you may continue to
incur claims for expenses during the "Grace Period." The "Grace Period" extends 2 1/2 months
after the end of the Plan Year, during which time you can continue to incur claims and use up all
amounts remaining in your Health Flexible Spending Arrangement or Day Care Flexible
Spending Arrangement.
- Exhibit B 9
ResoWtion 4577
Any monies left at the end of the Plan Year and the Grace Period will be forfeited.
Obviously, qualifying expenses that you incur late in the Plan Year or during the Grace Period
for which you seek reimbursement after the end of such Plan Year and Grace Period will be
paid first before any amount is forfeited. For the Health Flexible Spending Arrangement, you
must submit claims no later than 90 days after the end of the Plan Year. For the Day Care
Flexible Spending Arrangement, you must submit claims no later than 90 days after the end of
the Plan Year. Because it is possible that you might forfeit amounts in the Plan if you do not fully
use the contributions that have been made, it is important that you decide how much to place in
each Benefit carefully and conservatively. Remember, you must decide which benefits you want
to contribute to and how much to place in each Benefit before the Plan Year begins. You want
to be as certain as you can that the amount you decide to place in each Benefit will be used up
entirely.
3. Family and Medical Leave Act (FMLA)
If you take leave under the Family and Medical Leave Act, you may revoke or change your
existing elections for health insurance and the Heaith Flexible Spending Arrangement. If your
coverage in these benefits terminates, due to your revocation of the benefit while on leave or due
to your non-payment of contributions, you will be permitted to reinstate coverage for the remaining
part of the Plan Year upon your return. For the Health Flexible Spending Arrangement, you may
continue your coverage or you may revoke your coverage and resume it when you retum. You
can resume your coverage at its original level and make payments for the time that you are on
leave. For example, if you elect $1,200 for the year and are out on leave for 3 months, then return
and elect to resume your coverage at that level, your remaining payments will be increased to
cover the difference - from $100 per month to $150 per month. Alternatively your maximum
amount wiil be reduced proportionately for the time that you were gone. For exampie, if you elect
$1,200 for the year and are out on leave for 3 months, your amount will be reduced to $900. The
expenses you incur during the time you are not in the Health Flexible Spending Arrangement are
not reimbursable.
If you continue your coverage during your unpaid leave, you may pre-pay for the
coverage, you may pay for your coverage on an after-tax basis while you are on leave, or you and
your Employer may arrange a schedule for you to "catch up" your payments when you return.
4. Uniformed Services Employment and Reemployment Rights Act (USERRA)
If you are going into or returning from military service, you may have special rights to
health care coverage under your Health Flexible Spending Arrangement under the Uniformed
Services Employment and Reemployment Rights Act of 1994: These rights can include extended
health care coverage. If you may be affected by this law, ask your Administrator for further details.
5. What happens if I terminate employment?
If you terminate employment during the Plan Year, your right to benefits will be
determined in.the following manner.
(a) You will remain covered by insurance, but only for the period for which premiums
have been paid prior to your termination of employment.
(b) You wiil stiil be able to request reimbursement for qualifying Day Care expenses
for the remainder of the Plan Year from the balance remaining in your Day Care Benefit
at the time of termination of employment. However, no further salary redirection
. Exhibit B 10
Resolution 4577
contributions will be made on your behalf after you terminate. You must submit claims
within 90 days after the end of the Plan Year in which termination occurs.
(c) You may elect to continue your participation in the Health Flexible Spending
Arrangement for the remainder of the Plan Year.
(d) If you elect to continue your participation in the Health Flexible Spending
Arrangement, you must continue to make any required contributions to the Plan.
(e) If you elect not to continue participation in the Health Flexible Spending
Arrangement, participation will cease and no further salary redirection contributions will
be contributed on your behalf. You will be able to submit claims for health care
expenses. However, you wili be able to submit ciaims for health care expenses that were
incurred before the end of the period for which payments to the Health Fiexible Spending
Arrangement have already been made. You must submit claims within 90 days after the
end of the Plan Year in which termination occurs.
6. Will my Social Security benefits be affected?
Your Social Security benefits may be slightly reduced because when you receive
tax-free benefits under our Plan, it reduces the amount of contributions that you make to the
Federal Social Security system as well as our contribution to Social Security on your behalf.
VI
HIGHLY COMPENSATED AND KEY EMPLOYEES
1. Do limitations apply to highly compensated employees?
Under the Internal Revenue Code, highly compensated employees and key employees
generally are Participants who are officers, shareholders or highly paid. You will be notified by
the Administrator each Plan Year whether you are a highly compensated employee or a key
employee.
if you are within these categories, the amount of contributions and benefits for you may
be limited so that the Plan as a whole does not unfairly favor those who are highly paid, their
spouses or their dependents. Federai tax laws state that a plan wiil be considered to unfairly
favor the key employees if they as a group receive more than 25% of all of the nontaxable
benefits provided for under our Plan.
Plan experience will dictate whether contribution limitations on highly compensated employees or key employees will appiy. You will be notified of these limitations if you are
affected.
VII
PLAN ACCOUNTING
1. Periodic Statements The Administrator will provide you with a statement of your Benefit periodically during
the Plan Year that shows your Benefit balance. It is important to read these statements carefully
so you understand the balance remaining to pay for a benefit. Remember, you want to spend all
the money you have designated for a particular benefit by the end of the Plan Year.
Exhibit B 11
Resolution 4577
VIII
GENERAL INFORMATION ABOUT OUR PLAN
This Section contains certain general information which you may need to know about the
Plan.
1. General Plan Information
City of Auburn Flexible Benefits Plan is the name of the Plan.
Your Employer has assigned Plan Number 501 to your Plan.
The provisions of your amended Plan become effective on January 1, 2010. Your Plan
was originally effective on May 1, 2005.
Your Plan's records are maintained on a twelve-month period of time. This is known as
the Plan Year. The Plan Year begins on January 1 and ends on December 31, except for the
first Plan Yearwhich began on May 1.
2. Employer Information
Your Employer's name, address, and identification number are:
City of Aubum
25 West Main St
Auburn, Washington 98001
91-6001228
3. Plan Administrator Information
The name, address and business telephone number of your Plan's Administrator are:
City of Auburn
25 West Main St
Aubum, Washington 98001
(253) 931-3040
The Administrator keeps the records for the Plan and is responsible. for the
administration of the Plan. The Administrator will also answer any questions you may have
about our Plan. You may contact the Administrator for any further information about the Plan.
4. Service of Legal Process
The name and address of the Plan's agent for service of legal process are:
City of Auburn _
25 West Main St
Auburn, Washington 98001
5. Type of Administration
The type of Administration is Empioyer Administration.
.
Exhibit B 12
Resolution 4577 -
6. Claims Submission
Claims for expenses should be submitted to:
Flex-Plan Services, Inc
PO Box 53250
Bellevue, WA 98015
IX
ADDITIONAL PLAN INFORMATION
1. Claims Process
You should submit all reimbursement claims during the Plan Year. For the Health
Flexible Spending Arrangement, you must submit claims no later than 90 days after the end of
the Plan Year. For the Day Care Flexible Spending Arrangement, you must submit claims no
later than 90 days after the end of the Plan Year. Any claims submitted after that time wiil not be
considered.
Claims that are insured wili be handled in accordance with procedures contained in the
insurance poticies. All other general requests should be directed to the Administrator of our
Plan. If a Day Care or medical expense claim under the Plan is denied in whole or in part, you
or your beneficiary wili receive written notification. The notification will include the reasons for
the denial, with reference to the specific provisions of the Plan on which the denial was based, a
description of any additional information needed to process the claim and an explanation of the
claims review procedure. Within 60 days after denial, you or your beneficiary may submit a
written request for reconsideration of the denial to the Administrator.
Any such request shouid be accompanied by documents or records in support of your
appeal. You or your beneficiary may review pertinent documents and submit issues and
comments in writing. The Administrator will review the claim and provide, within 60 days, a
written response to the appeal. (This period may be extended an additionai 60 days under
certain circumstances.) In this response, the Administrator will explain the reason for the
decision, with specific reference to the provisions of the Plan on which the decision is based.
The Administrator has the exclusive right to interpret the appropriate pian provisions. Decisions
of the Administrator are conclusive and binding.
X
SUMMARY
The money you earn is important to you and your family. You need it to pay your bills,
enjoy recreational activities and save for the future. Our flexible benefits plan will help you keep
more of the money you earn by lowering the amount of taxes you pay. The Plan is the result of
our continuing efforts to find ways to help you get the most for your earnings.
If you have any questions, please contact the Administrator.
ExhibitB 13 Resolution 4577
APPENDIX I TO THE FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION
We understand that medical information about you and your health is personal. We are
committed to protecting medical information about you. This summary applies to all of
the personal health information we maintain with regard to the Plan. Your doctor or
health care provider will have different policies or notices regarding the doctor's use and
disclosure of your medical information created in the doctor's office or clinic. During the
course of providing you with coverage under the Plan, the Plan will have access to
information about you that is deemed to be "protected health information", or PHI, by the
Health Insurance Portability and Accountability Act of 1996, or HIPAA. The following is a
summary of procedures adopted by the Employer to ensure that both Employer and any
third party service providers treat your PHI with the level of protection required by
HIPAA.
This summary will provide you with a general overview of the ways in which we may use and
disclose medical information about you. We aiso describe your rights and certain obligations
we have regarding the use and disclosure of inedical information.
We are required by law to:
• make sure that medical information that identifies you is kept private;
• give you this notice of our legal duties and privacy practices with respect to medical
information about you; and
• follow the terms of the notice that is currently in effect.
Your PHI will be disclosed to certain employees of Employer who assist in administration of the
Pian. These individuals may only use your PHI for Plan administration functions inctuding those
described below, provided they do not violate the provisions set forth herein. Any employee of
Employer who violates the rules for handling PHI established herein wili be subject to adverse
disciplinary action. Employer will establish a mechanism for resoiving privacy issues and will
take prompt corrective action to cure any violations.
By adoption of the SPD, Employer has certified that it will comply with the privacy procedures
summarized herein and detailed in any separate privacy notice. Employer may not use or
disclose your PHI other than as summarized herein or as required by law. Any agents or
subcontractors who are provided your PHI must agree to be bound by the restrictions and
conditions concerning your PHI found herein. Your PHI may not be used by Employer for any
employment-related actions or decisions or in connection with any other benefit or employee
benefit plan of Employer. Employer must report to the Plan any uses or disclosures of your PHI
of which the Employer becomes aware that are inconsistent with the provisions set forth herein.
HOW WE MAY USE AND DISCLOSE MEDICAL INFORMATION ABOUT YOU.
The following categories describe different ways that we use and disciose medical information
for purposes of Plan administration. For each category of uses or disclosures we will explain
what we mean and try to give some examples. Not every use or disclosure in a category will
be listed. However, ail of the ways we are permitted to use and disclose information will fall
within one of the categories.
Exhibit B 14
- Resolution 4577
For Pavment (as described in applicable requlations) We may use and disclose medical
information about you to determine eligibility for Plan benefits, to facilitate payment for the
treatment and services you receive from health care providers, to determine benefit
responsibility under the Plan, or to coordinate Plan coverage.
For Health Care Ooerations (as described in aoplicable requlations). We may use and disclose
medical information about you for other Plan operations. These uses and disclosures are
necessary to run the Plan.
As Required Bv Law. We will disclose medical information about you when required to do so by
federal, state, or local faw.
To Avert a Serious Threat to Health or Safetv. We may use and disclose medical information
about you when necessary to prevent a serious threat to your health and safety or the health
and safety of the pubiic or another person. Any disclosure, however, would oniy be to someone
able to help prevent the threat.
SPECIAL SITUATIONS
Disclosure to Health Plan Sqonsor. Information may be disclosed to another health plan ,
maintained by Employer for purposes of facilitating claims payments under that plan. In
addition, medical information may be disclosed to Employer personnel solely for purposes of
administering benefits under the Plan.
Or4an and Tissue Donation. If you are an organ donor, we may release medical information to
organizations that handle organ procurement or organ, eye, or tissue transplantation or to an
organ donation bank, as necessary to facilitate organ or tissue donation and transplantation.
MilitaN and Veterans. If you are a member of the armed forces, we may release medical
information about you as required by military command authorities.
Workers' Compensation. We may release medical information about you for workers'
compensation or similar programs.
Public Health Risks. We may disclose medical information about you for public health activities
(e.g., to prevent or control disease, injury, or disability).
Health Oversi4ht Activities. We may disclose medical information to a health oversight agency
for activities authorized by law.
Lawsuits and Disputes. If you are invoived in a lawsuit or a dispute, we may disclose medical
information about you in response to a court or administrative order. We may also disclose
medical information about you in response to a subpoena, discovery request, or other lawful
process by someone else involved in the dispute, but only if efforts have been made to tell you
about the request or to obtain an order protecting the information requested.
Law Enforcement. We may release medical information if asked to do so by a law enforcement
official for law enforcement purposes.
Exhibit B 15
. Resolution 4577
Coroners, Medical Examiners and Funeral Directors. We may release medical information to a
coroner or medical examiner. We may also release medical information about patients of the
hospital to funeral directors as necessary to carry out their duties.
National Securitv and Intelliqence Activities. We may release medical information about you to
authorized federal officials for intelligence, counterintelligence, and other national security
activities authorized by law.
Inmates. If you are an inmate of a correctional institution or under the custody of a Iaw
enforcement official, we may release medical information about you to the correctional
institution or law enforcement official.
YOUR RIGHTS REGARDING MEDICAL INFORMATION ABOUT YOU.
You have the following rights regarding medical information we maintain about you:
Riaht to Insoect and Coqv. You have the right to inspect and copy medical information that may
be used to make decisions about your Pian benefits. To inspect and copy medical information
that may be used to make decisions about you, you must submit your request in writing to
Personnel/Benefits Office, except as otherwise set forth in any separate Privacy Notice
provided to you by Empioyer. If you request a copy of the information, we may charge a fee for
the costs of copying, mailing or other supplies associated with your request.
We may deny your request to inspect and copy in certain very limited circumstances. HIPAA
provides several important exceptions to your right to access your PHI. For example, you will
not be permitted to access.psychotherapy notes or information compiled in anticipation of, orfor
use in, a civil, criminal, or administrative action or proceeding. Employer wiil not allow you to
access your PHI if these or any of the exceptions permitted under HIPAA apply. If you are
denied access to medical information, you may request that the denial be reviewed.
Riqht to Amend. If you feel that medical information we have about you is incorrect or incomplete,
you may ask us to amend the information. You have the right to request an amendment for as
long as the information is kept by or for the Plan.
To request an amendment, your request must be made in writing and submitted to your human
resources department. In addition, you must provide a reason that supports your request.
We may deny your request for an amendment if it is not in writing or does not include a reason
to support the request. In addition, we may deny your request if you ask us to amend
information that:
• Is not part of the medical information kept by or for the Plan;
• Was not created by us, unless the person or entity that created the information is no
longer available to make the amendment;
. Is not paR of the information which you would be permitted to inspect and copy; or
• Is accurate and complete.
Exhibit B 16
Resolution 4577
Employer must act on your request for an amendment of your PHI no later than 60 days after
receipt of your request. Employer may extend the time for making a decision for no more than
30 days, but it must provide you with a written expianation for the delay. If Employer denies
your request, it must provide you a written explanation for the denial and an explanation of your
right to submit a written statement disagreeing with the denial.
. Riqht to an Accountinq of Disciosures. You have the right to request an "accounting of
disclosures" (other than disclosures you authorized in writing) where such disclosure was made
for any purpose other than treatment, payment, or health care operations. You wili be notified of
where you can obtain an accounting of disclosure in the separate Privacy Notice. Your request
must state a time period that may not be longer than six years and may not inciude dates before
Aprii 2003. Your request should indicate in what form you want the list (for example, on paper
or electronically). The first list you request within a 12-month period will be free. For additional
lists, we may charge you for the costs of providing the list. We will notify you of the cost
involved and you may choose to withdraw or modify your request at that time before any costs
are incurred.
Note that HIPAA provides several important exceptions to your right to an accounting of the
disclosures of your PHI. For example, Employer does not have to account for disclosures of
your PHI (i) to carry out treatment, payment or healthcare operations, (ii) to correctional
institutions or law enforcement officials, or (iii) for national security or intelligence purposes.
Employer will not include in your accounting any of the disclosures for which there is an
exception under HIPAA. Employer must act on your request for an accounting of the
disclosures of your PHI no later than 60 days after receipt of the request. Employer may extend
the time for providing you an accounting by no more than 30 days, but it must provide you a
written explanation for the delay. You may request one accounting in any 12-month period free
of charge. Employer will impose a fee for each subsequent request within the 12-month period.
Riqht to Request Confidential Communications. You have the right to request that we
communicate with you about medical matters in a certain way or at a certain location. For
example, you can ask that we only contact you at work or by mail.
To request confidential communications, you must make your request in writing to your human
resources department. We will not ask you the reason for your request. We will accommodate
all requests we deem reasonable. Your request must specify how or where you wish to be
contacted.
When Employer no longer needs PHI disclosed to it by the Plan, for the purposes for which the
PHI was disclosed, Employer must, if feasible, return or destroy the PHI that is no longer
needed. If it is not feasible to return or destroy the PHI, Employer must limit further uses and
disclosures of the PHI to those purposes that make the return or destruction of the PHI
infeasibie.
CHANGES TO THIS SUMMARY AND THE SEPARATE PRIVACY NOTICE
We reserve the right to change this summary and the separate Privacy Notice that may be
provided to you. We reserve the right to make the revised or changed notice effective for
medical information we already have about you as well as any information we receive in the
future. The notice will contain the effective date on the front page.
Exhibit B 17
Resolution 4577
COMPLAINTS
If you believe your privacy rights have been violated, you may file a complaint with the Plan or
with the Secretary of the Department of Health and Human Services. To file a complaint with
the Plan, contact your human resources department except as otherwise provided in any
separate Privacy Notice. All complaints must be submitted in writing.
You will not be penalized for filing a complaint.
OTHER USES OF MEDICAL INFORMATION.
Other uses and disclosures of inedical information not covered by this notice or the laws that
apply to us will be made oniy with your written permission. If you provide us permission to use
or disclose medical information about you, you may revoke that permission, in writing, at any
time. If you revoke your permission, we will no longer use or disclose medical information about
you for the reasons covered by your written authorization. We are unable to take back any
disclosures we have already made with your permission and that we are required to retain our
records of the care that we provided to you.
Exhibit B 18
Resolution 4577
CITY OF AUBURN FLEXIBLE SPENDING ARRANGEMENT
CLARIFYING AMENDMENT
ARTICLE I OF 1'I� CLARIFYING AMENDMENT
PREAMBLE
T.1 Adovtion and efFective date of amendment. The Employer adopts this Amendment to the
CITY OF AUBURN FLEXIBLE SPENDING ARRANGEMENT (the "Plan") to clarify
processes, procedures, and timelines of the claims appeal process. This Amendment shall
be effective upon the effecuve date.
1.2 �nression of inconsistent nrovisions. This Amendment shall supersede the provisions
of the Plan to the extent those.provisions aze inconsistent with the pmvisions of this
Amendment.
ARTICLE II
OF THE GLARIFYING AMENDMENT
EFFECTIVE DATE
2.1 Effective Date. This Amendment is effective the date signed.
ARTICLE III
OR THE CLARIFYING AMENTMENT .
GEIVERAL RULES
3_i Clarification of Flexible Snending Arrangement Anneals Process, Procedures, and �
Timelines.
The language below,supplied in this clarifying amendment, replaces Article 8.1 in the
Plan.Document and Section IX in the Summary Plan Descripflon
If a day caze or health caze flexible spending azrangement claun is denied in whole or in -
part, the participant will receive written notification. The notification will include the reason(s)
for the denial, a description of any addirional information needed to process the claim, and an
explanation of the claims procedure. The participant has 180 days after receipt of the denial to
submit a written request for recbnsideration of the denial to the claims administrator.
Any request may include documents or records in support of tfie appeal and the participant may
review pertinent documents and submit issaes and coaunents in writing. The claims
administrator will review the appeal and proyide, within 30 days, a written response(extended
by reasonable time if necessary). In this response, the claims administrator will explain the
reason for the decision,with reference to_ the provisions of thePlan on which the decision is
based, if necessary. If the participant�sagrees with the level one appeal decision they may
submit a request for a level two appeal to be determined by the Employer. The request for level
two appeals must be submitted within 60 days of receipt of the level one denial notice. Tkie
participant will be notified with the final decision within 30 days after the Employer receives the
'
appeal (extended by reasonable time if necessary). The Employer has the exclusive right to
interpret the appropriate Plan provisions. Decisions of the Employer aze conclusive and binding.
Both level one and level two appeals must be submitted by written request by email, fax, or mail
to F1ax-Plan, The participant must indicate either level one or two appeal on the email, fax, or
letter:
Email: claims@flex-plan.com
Fax: 425-451-7002 or866-535-9227
Mail to: F1ex=Plan Services,PO Box 53250, Bellevue WA 98015.
This Amendment has been executed � � �a (date signed)
Name of Emplo er: City of Au6um
� � _� _
By:
SIGNATURE OF EMPLOYER WITH AUTHORITY TO ADOPT
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