HomeMy WebLinkAbout2009-12-15 - Cafeteria PlanADOPTING RESOLUTION
The undersigned Principal of City of Riverside (the E ~p"toyer) her by certifie
that the following resolutions were duly adopted by the Employer on ~~S/ ~' Q~'
and that such resolutions have not been modified or rescinded as of the ate hereof
RESOLVED, that the form of amended Cafeteria Plan including a Dependent
Care Flexible Spending Account and Health Flexible Spending Account 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 Pian one or more counterparts of the Plana
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 shall act as soon
as possible to notify the employees of the Employer of the adoption of the Cafeteria Pian 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 Riverside ~iafeteria Plan as amended and restated and
the Summary Pian Description approved and ad ted in the fore of r lutions.
Prin ipal
Date: _ ~,~°>a °y~/
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CITY OF RIVERSIDE
CAFETERIA PLAN
PLAN DOCUMENT
Originally Effective January 15, 2001
Restated January 1, 2010
BMIFIex~J
Claims Administered by:
Benefit Management, Inc.
PO Box 1090
Great Bend, KS 67530
(888) 922-4622
(620) 793-1185
www.bmikansas.com
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 CHANGE OF EMPLOYMENT STATUS .................................................. ........................4
2.6 TERMINATION OF EMPLOYMENT ........................................................ ........................5
2.7 DEATH ..................................................................................................... ........................5
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 SALARY REDIRECTION .......................................................................... .......................6
3.2 APPLICATION OF CONTRIBUTIONS ..................................................... .......................6
3.3 PERIODIC CONTRIBUTIONS .................................................................. .......................6
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS .............................................................................................. ...........7
4.2 HEALTH FLEXIBLE SPENDING ACCOUNT BENEFIT ....................................... ...........7
4.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT BENEFIT .................... ...........7
4.4 ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNT BENEFIT ........... ...........7
4.5 HEALTH INSURANCE BENEFIT ......................................................................... ...........7
4.6 DENTAL INSURANCE BENEFIT ......................................................................... ...........8
4.7 OTHER INSURANCE BENEFIT ........................................................................... ...........8
4.8 NONDISCRIMINATION REQUIREMENTS .......................................................... ...........8
ARTICLE V
PARTICIPANT ELECTIONS
5.1 INITIAL ELECTIONS ................................................................ .......................................9
5.2 SUBSEQUENT ANNUAL EIECTIONS .................................... .......................................9
5.3 FAILURE TO ELECT ................................................................ .....................................10
5.4 CHANGE IN STATUS ............................................................... .....................................10
ARTICLE VI
HEALTH FLEXIBLE SPENDING ACCOUNT
6.1 ESTABLISHMENT OF PLAN ................................................................ .........................13
6.2 DEFINITIONS ....................................................................................... .........................13
6.3 FORFEITURES ..................................................................................... .........................14
6.4 LIMITATION ON ALLOCATIONS ......................................................... .........................14
6.5 NONDISCRIMINATION REQUIREMENTS .......................................... .........................14
6.6 COORDINATION WITH CAFETERIA PLAN ........................................ .........................15
6.7 HEALTH FLEXIBLE SPENDING ACCOUNT CLAIMS ......................... .........................15
6.8 DEBIT AND CREDIT CARDS ............................................................... .........................16
ARTICLE VII
DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
7.1 ESTABLISHMENT OF ACCOUNT ........................................................................ ........17
7.2 DEFINITIONS ........................................................................................................ ........18
7.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS ................................... ........19
7.4 INCREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS ......... ........19
7.5 DECREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS ....... ........19
7.6 ALLOWABLE DEPENDENT CARE REIMBURSEMENT ...................................... ........19
7.7 ANNUAL STATEMENT OF BENEFITS ................................................................. ........19
7.8 FORFEITURES ....................................................................................................... .......19
7.9 LIMITATION ON PAYMENTS ................................................................................. .......20
7.10 NONDISCRIMINATION REQUIREMENTS ............................................................ .......20
7.11 COORDINATION WITH CAFETERIA PLAN .......................................................... .......20
7.12 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS ........................ .......21
ARTICLE VIII
ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNT
8.1 ESTABLISHMENT OF FLEXIBLE SPENDING ACCOUNT ....................................... ....22
8.2 DEFINITIONS ............................................................................................................ ....22
8.3 ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNTS .............................. ....23
8.4 INCREASES IN ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNTS ... ....23
8.5 DECREASES IN ADOPTION ASSISTANCE FLEXIBLE SPENDING
ACCOUNTS ............................................................................................................... .... 23
8.6 ALLOWABLE ADOPTION ASSISTANCE REIMBURSEMENT ..:.............................. ....23
8.7 FORFEITURES .......................................................................................................... ....24
8.8 LIMITATIONS ON PAYMENTS ................................................................................. ....24
8.9 NONDISCRIMINATION REQUIREMENTS ................................................................ ...24
8.10 COORDINATION WITH CAFETERIA PLAN .................................................................25
8.11 ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNT CLAIMS ......................25
ARTICLE IX
BENEFITS AND RIGHTS
9.1 CLAIM FOR BENEFITS .................................................................................................25
9.2 APPLICATION OF BENEFIT PLAN SURPLUS .............................................................27
ARTICLE X
ADMINISTRATION
10.1 PLAN ADMINISTRATION ............................................................. .................................27
10.2 EXAMINATION OF RECORDS .................................................... .................................28
10.3 PAYMENT OF EXPENSES .......................................................... .................................28
10.4 INSURANCE CONTROL CLAUSE ............................................... .................................28
10.5 INDEMNIFICATION OF ADMINISTRATOR ................................. .................................28
ARTICLE XI
AMENDMENT OR TERMINATION OF PLAN
11.1 AMENDMENT ........................................................................................................:.......28
11.2 TERMINATION ..............................................................................................................29
ARTICLE Xil
MISCELLANEOUS
12.1 PLAN INTERPRETATION ....................................................................... ......................29
12.2 GENDER AND NUMBER ........................................................................ ......................29
12.3 WRITTEN DOCUMENT ........................................................................... ......................29
12.4 EXCLUSIVE BENEFIT ............................................................................. ......................29
12.5 PARTICIPANT'S RIGHTS ....:.................................................................. ......................29
12.6 ACTION BY THE EMPLOYER ................................................................ ......................30
12.7 EMPLOYER'S PROTECTIVE CLAUSES ................................................ ......................30
12.8 NO GUARANTEE OF TAX CONSEQUENCES ....................................... ......................30
12.9 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS ..................... ......................30
12.10 FUNDING ................................................................................................. ......................30
12.11 GOVERNING LAW ..................................................:............................... ......................31
12.12 SEVERABILITY ....................................................................................... ......................31
12.13 CAPTIONS ............................................................................................... ......................31
12.14 CONTINUATION OF COVERAGE (COBRA) .......................................... ......................31
12.15 FAMILY AND MEDICAL LEAVE ACT (FMLA) .......................................... .....................31
12.16 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)...........31
12.17 UNIFORM SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
(USERRA) .....................................................................................................................31
12.18 COMPLIANCE WITH HIPAA PRIVACY STANDARDS .................................................31
12.19 COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS .......................33
CITY OF RIVERSIDE CAFETERIA 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 Pian is a restatement of a
Plan which was originally effective on January 15, 2001. The Plan shall be known as City of
Riverside Cafeteria 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.
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 controlled 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 Employer; 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 "Benefit" 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 available 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.
1.7 "Dependent" 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 January 15, 2001.
1.9 "Election Period" means the period immediately preceding the beginning of
each Plan Year established by the Administrator, such period to be applied 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 Employer as a common law employee. In particular, it is expressly
intended that individuals not treated as common law employees by the Employer on its payroll
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.
However, Employees who are "leased employees" as defined in Code Section
414(n)(2) shall not be eligible to participate in this Plan.
However, any Employee who is a "part-time" Employee shall not be eligible to
participate in this Plan. A "part-time" Employee is any Employee who works, or is expected to
work on a regular basis, less than 30 hours a week and is designated as a part-time Employee
on the Employer's personnel records.
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 Riverside 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 Qualified Adoption 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(1)(1) and
the Treasury regulations thereunder.
1.18 "Participant" means any Eligible Employee who elects to become a Participant
pursuant to Section 2.3 and has not for any reason become ineligible to participate further in the
Plan.
1.19 "Plan" means this instrument, including all amendments thereto.
1.20 "Plan Year" means the 12-month period beginning January 1 and ending
December 31. 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 Participant's date of
entry and ending on the last day of such Plan Year.
1.21 "Premium Expenses" or "Premiums" mean the Participant's cost for the
Benefits described in Section 4.1.
1.22 "Premium Expense Reimbursement Account" means the account 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 Plan pursuant to
the Participants' elections made under Article V.
1.24 "Salary Redirection Agreement" 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 Participant's 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 account) 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 his date of
employment (or the Effective Date of the Plan, if later). 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 following the date on which he met the eligibility requirements
of Section 2.1.
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 Plan 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 shall 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 2.6;
(b) Change in employment status. The end of the Plan Year during
which the Participant became a limited Participant because of a change in
employment status pursuant to Section 2.5;
(c) Death. The Participant's death, subject to the provisions of
Section 2.7: or
(d) Termination of the plan. The termination of this Plan, subject to
the provisions of Section 11.2.
2.5 CHANGE OF EMPLOYMENT STATUS
If a Participant ceases to be eligible to participate because of a change in
employment status or classification (other than through termination of employment), the
Participant shall become a limited Participant in this Plan for the remainder of the Plan Year in
which such change of employment status occurs. As a limited Participant, no further Salary
Redirection may be made on behalf of the Participant, and, except as otherwise provided
herein, all further Benefit elections shall cease, subject to the limited Participant's right to
continue coverage under any Insurance Contracts. However, any balances in the limited
Participant's Dependent Care Flexible Spending Account may be used during such Plan Year to
reimburse the limited Participant for any allowable Employment-Related Dependent Care
incurred during the Plan Year. Subject to the provisions of Section 2.6, if the limited Participant
later becomes an Eligible Employee, then the limited Participant may again become a full
Participant in this Plan, provided he otherwise satisfies the participation requirements set forth in
this Article II as if he were a new Employee and made an election in accordance with Section
5.1.
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2.6 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. Wth regard to Benefits which are insured, the
Participant's participation in the Plan shall cease, subject to the Participant's right
to continue coverage under any Insurance Contract for which premiums have
already been paid.
(b) Dependent Care FSA. With regard to the Dependent Care
Flexible Spending Account, 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 Dependent Care Expense
reimbursements for claims incurred up to the date of termination and submitted
within 90 days after termination, based on the level of the Participant's
Dependent Care Flexible Spending Account as of the date of termination.
(c) Adoption Assistance FSA. Wth regard to the Adoption
Assistance Flexible Spending Account, 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 Qualified
Adoption Expense reimbursements for claims incurred up to the date of
termination and submitted within 90 days after termination, based on the level of
the Participant's Adoption Assistance Flexible Spending Account as of the date of
termination.
(d) COBRA applicability. With regard to the Health Flexible
Spending Account, the 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 Account have already been made.
Thereafter, the health benefits under this Plan including the Health Flexible
Spending Account shall be applied and administered consistent with such further
rights a Participant and his Dependents may be entitled to pursuant to Code
Section 49808 and Section 12.14 of the Plan.
2.7 DEATH
If a Participant dies, his participation in the Plan shall cease. However, such
Participant's spouse or Dependents may submit claims 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. If the Plan is subject to the provisions of Code Section 49808, then those
provisions and related regulations shall apply for purposes of the Health Flexible Spending
Account.
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 Participant's 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 shall 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
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 Account, Dependent Care
Flexible Spending Account or Adoption Assistance Flexible Spending Account shall be credited
to such fund or account. Amounts designated for the Participant's Premium Expense
Reimbursement Account shall likewise be credited to such account 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 behalf of an Employee
on a level and pro rata basis for each payroll period, the Employer and Administrator may
implement a procedure in which Salary 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 Account, the payment schedule for the required contributions may not
be based on the rate or amount of reimbursements during the Plan Year.
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS
Each Participant may elect any one or more of the following optional Benefits:
(1) Health Flexible Spending Account
(2) Dependent Care Flexible Spending Account
(3) Adoption Assistance Flexible Spending Account
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:
(4) Health Insurance Benefit
(5) Dental Insurance Benefit
(6) Other Insurance Benefit
4.2 HEALTH FLEXIBLE SPENDING ACCOUNT BENEFIT
Each Participant may elect to participate in the Health Flexible Spending Account
option, in which case Article VI shall apply.
4.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT BENEFIT
Each Participant may elect to participate in the Dependent Care Flexible
Spending Account option, in which case Article VII shall apply.
4.4 ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNT BENEFIT
Each Participant may elect to participate in the Adoption Assistance Flexible
Spending Account option, in which case Article VIII shall apply.
4.5 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) Individual Insurance Policy. In the event that any Participant
shall have existing health insurance protection or desires to obtain alternative
health insurance protection, the Administrator, in its sale discretion, may, upon
submission of satisfactory proof of payment by the Participant, reimburse the
Participant for the cost of the alternative insurance protection. This alternative
protection may not include the cost of coverage obtained through a Participant's
Spouse's employment.
(c) 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.
(d) 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.
4.6
DENTAL INSURANCE BENEFIT
(a) Coverage for Participant and/or Dependents. Each Participant
may elect to be covered under the Employer's dental Insurance Contract. In
addition, the Participant may elect either individual or family coverage under such
Insurance Contract.
(b) Employer selects contracts. The Employer may select suitable
dental Insurance Contracts for use in providing this dental .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 dental Insurance Contract shall be
determined therefrom, and such dental Insurance Contract shall be incorporated
herein by reference.
4.7
OTHER INSURANCE BENEFIT
(a) Employer selects contracts. The Employer may select additional
health or other policies allowed under Code Section 125 or allow the purchase of
additional health or other policies by and for Participants, which policies will
provide uniform benefits for all Participants electing this Benefit.
(b) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from any additional Insurance Contract shall
be determined therefrom, and such Insurance Contract shall be incorporated
herein by reference.
4.8
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 all
Eligible Employees under the Plan. For purposes of the preceding sentence,
qualified benefits shall 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
8
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-taxable 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 Benefits. 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
Account Benefits, Dependent Care Flexible Spending Account Benefits and
Adoption Assistance Flexible Spending Account Benefits, and once all these
Benefits are expended, proportionately among insured 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 all 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 account 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 participate 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
Wth 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 applicable Election 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
apply, 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.
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
conflict, then such rules and regulations shall control.
In general, a change in election is not consistent if the change in status is
the Participant's 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 Participant's election under the Plan is to
cancel accident or health 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 Participant's 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 49808 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, annulment or legal separation.
10
Any new election shall 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 shall only include the following events or other
events permitted by Treasury regulations:
(1) Legal Marital Status: events that change a Participant's legal
marital status, including marriage, divorce, death of a Spouse, legal
separation or 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
employment 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 employee benefit
plan of the Employer 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;
(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 place 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 Dependent Care Flexible Spending Account, a Dependent
becoming or ceasing to be a "Qualifying Dependent" as defined under Code
Section 21(b) shall also qualify as a change in status.
(b) Special enrollment 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(f). Such change shall take place on a
prospective basis, unless otherwise required by Code Section 9801 (f) 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, legal separation, annulment, or
change in legal custody which requires accident or health coverage for a
Participant's child (including a foster child who is a Dependent of the Participant):
(1) The Plan may change an election to provide coverage for the child
if the order requires coverage under the Participant's plan; or
11
(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 child, 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 Participant's Spouse or Dependent if the Participant or the
Participant's Spouse or Dependent is enrolled in the accident or health coverage of
the Employer and becomes entitled to coverage (i.e., enrolled) 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 Security Act (the program for distribution of pediatric
vaccines). If the Participant or the Participant's 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 provides similar coverage.
(e) Cost increase or decrease. If the cost of a Benefit provided
under the Plan increases or decreases during a Plan 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
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 Employer.
(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
12
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 Dependent's employer if (1) the cafeteria plan or other benefits plan of the
Spouse's, former Spouse's or Dependent's employer 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 Dependent's employer.
(j) Change in dependent 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 dependent care provider. The availability of dependent
care services from a new childcare provider is similar to a new benefit package
option becoming available. A cost change is allowable in the Dependent Care
Flexible Spending Account only if the cost change is imposed by a dependent
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 Account as a result of a cost or coverage change under any health
insurance benefits.
ARTICLE VI
HEALTH FLEXIBLE SPENDING ACCOUNT
6.1 ESTABLISHMENT OF PLAN
This Health Flexible Spending Account 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 Account may submit claims for the reimbursement of
Medical Expenses. All amounts reimbursed shall be periodically paid from amounts allocated to
the Health Flexible Spending Account. Periodic payments reimbursing Participants from the
Health Flexible Spending Account 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 Account" means the account
established for Participants pursuant to this Plan to which part of their Cafeteria
Plan Benefit Dollars may be allocated and from which all allowable Medical
Expenses incurred by a Participant, his or her Spouse and his or her Dependents
may be reimbursed.
13
(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; ar
(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 provided 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 medical 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
Participant's Spouse or individual policies maintained by the Participant or his
Spouse or Dependent.
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 acid apply the provisions of this Health Flexible
Spending Account.
6.3 FORFEITURES
The amount in the Health Flexible Spending Account as of the end of any Plan
Year (and after the processing of all claims for such Plan Year pursuant to Section 6.7 hereof)
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, subject to Section 9.2.
6.4 LIMITATION ON ALLOCATIONS
Notwithstanding any provision contained in this Health Flexible Spending
Account to the contrary, no more than $$3,000 may be allocated to the Health Flexible
Spending Account 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 Account not to discriminate in violation of the Code and the
Treasury regulations thereunder.
14
(b) Adjustment to avoid test failure. If the Administrator deems it
necessary to avoid discrimination under this Health Flexible Spending Account, 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 Account 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 Section 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 Flexible Spending Account 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 forteited 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 Health Flexible Spending Account. The enrollment under the Cafeteria Plan shall constitute
enrollment under this Health Flexible Spending Account. In addition, other matters concerning
contributions, elections and the like shall be governed by the general provisions of the Cafeteria
Plan.
6.7 HEALTH FLEXIBLE SPENDING ACCOUNT CLAIMS
(a) Expenses must be incurred during Plan Year. All 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 2.6, 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 Account 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
15
form within a reasonable time of incurring the debt or paying for the service. The
application shall include a written statement from an independent third party
stating that the Medical 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 Flexible Spending
Account, 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 account 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 Plan Year,
those Medical Expense claims shall not be considered for reimbursement by the
Administrator. However, if a Participant terminates employment during the Plan
Year, claims for the reimbursement of Medical Expenses must be submitted
within 90 days after termination of employment.
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 andlor credit (stored value) cards
("cards") provided by the Administrator and the Plan for payment of Medical Expenses, subject
to the following terms:
(a) Card only for medical expenses. Each Participant issued a card
shall certify that such card shall only be used for Medical Expenses. The
Participant shall also certify that any Medical Expense paid with the card has not
already 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 Participant's
Effective Date of Participation and reissued for each Plan Year the Participant
remains a Participant in the Health Flexible Spending Account. Such card shall
be automatically cancelled upon the Participant's death or termination of
employment, or if such Participant has a change in status that results in the
Participant's withdrawal from the Health Flexible Spending Account.
(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.
16
(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-payments for doctor and other medical care;
(2) Purchase of drugs;
(3) Purchase of medical items such as eyeglasses, syringes,
crutches, etc.
(f) Substantiation. Such purchases by 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
whole. Until the amount is repaid, the Administrator shall 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
(2) Withholding the improper payment from the Participant's 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
DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
7.1 ESTABLISHMENT OF ACCOUNT
This Dependent Care Flexible Spending Account 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 Dependent Care Expenses. All amounts reimbursed
shall be paid from amounts allocated to the Participant's Dependent Care Flexible Spending
Account.
17
7.2 DEFINITIONS
For the purposes of this Article and the Cafeteria Plan the terms below shall have
the following meaning:
(a) "Dependent Care Flexible Spending Account" means the
account 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 Dependent 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 dependent care assistance to the Participant.
(c) "Employment-Related Dependent 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 enable 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 Dependent Care Expenses are treated as
having been incurred when the Participant's Qualifying Dependents are provided
with the dependent care that gives rise to the Employment-Related Dependent
Care Expenses, not when the Participant is formally billed or charged for, or pays
for the dependent care. The determination of whether an amount qualifies as an
Employment-Related Dependent 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
Dependent 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 Dependent 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 Dependent" means, for Dependent Care Flexible
Spending Account purposes,
(1) a Participant's Dependent (as defined in Code Section 152(a)(1))
who has not attained age 13;
18
(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
taxable 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 Dependent Care
Flexible Spending Account.
7.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
The Administrator shall establish a Dependent Care Flexible Spending Account
for each Participant who elects to apply Cafeteria Plan Benefit Dollars to Dependent Care
Flexible Spending Account benefits.
7.4 INCREASES INDEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
A Participant's Dependent Care Flexible Spending Account shall be increased
each pay period by the portion of Cafeteria Plan Benefit Dollars that he has elected to apply
toward his Dependent Care Flexible Spending Account pursuant to elections made under Article
V hereof.
7.5 DECREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
A Participant's Dependent Care Flexible Spending Account shall be reduced by
the amount of any Employment-Related Dependent Care Expense reimbursements paid or
incurred on behalf of a Participant pursuant to Section 7.12 hereof.
7.6 ALLOWABLE DEPENDENT CARE REIMBURSEMENT
Subject to limitations contained in Section 7.9 of this Program, and to the extent
of the amount contained in the Participant's Dependent Care Flexible Spending Account, a
Participant who incurs Employment-Related Dependent 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 during 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 Dependent Care Flexible Spending Account as of
the end of any Plan Year (and after the processing of all claims for such Plan Year pursuant to
Section 7.12 hereof) 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.
19
7.9 LIMITATION ON PAYMENTS
Notwithstanding any provision contained in this Article to the contrary, amounts
paid from a Participant's Dependent Care Flexible Spending Account in or on account of any
taxable year of the Participant shall not 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 Dependent
Care Flexible Spending Account that contributions or benefits not discriminate in
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 Dependent Care
Flexible Spending Account that not more than 25 percent of the amounts paid by
the Employer for dependent 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 Dependent Care Flexible Spending
Account by the affected Participant that elected to contribute the highest amount
to such account 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
account equals the amount designated for the account of the affected Participant
who has elected the second highest contribution to the Dependent Care Flexible
Spending Account 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 Dependent Care Flexible Spending Account. The enrollment and termination of participation
under the Cafeteria Plan shall constitute enrollment and termination of participation under this
Dependent Care Flexible Spending Account. In addition, other matters concerning contributions,
elections and the like shall be governed by the general provisions of the Cafeteria Plan.
20
7.12 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS
The Administrator shall direct the payment of all such Dependent Care claims 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
may 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 amount of such
expense. In addition, the Administrator may require that each Participant who desires to receive
reimbursement under this Program for Employment-Related Dependent 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;
(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;
(f) 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 Participant's household;
(g) If the services were being performed in a day care center, a
statement:
(1) that the day care center complies with all applicable 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 Participant's 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.
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(i) Claims for reimbursement. 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. However, if a Participant
terminates employment during the Plan Year, claims for reimbursement must be
submitted within 90 days after termination of employment.
ARTICLE VIII
ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNT
8.1 ESTABLISHMENT OF FLEXIBLE SPENDING ACCOUNT
This Adoption Assistance Flexible Spending Account is intended to qualify as a
program under Code Section 137 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 "Qualified Adoption Expenses" All amounts reimbursed under this Adoption
Assistance Flexible Spending Account shall be paid from amounts allocated to the Participant's
Adoption Assistance Flexible Spending Account.
8.2 DEFINITIONS
For the purposes of this Article and the Cafeteria Plan the terms below shall have
the following meaning:
(a) "Adoption Assistance Flexible Spending Account" means the
account established for a Participant pursuant to this Article to which part of his
Cafeteria Plan Benefit Dollars may be allocated and from which "Qualified Adoption
Expenses" for the adoption of an "Eligible Child" may be reimbursed.
(b) "Child With Special Needs" means any child if:
(1) a State has determined that the child cannot or should not be
returned to the home of such child's birth parents, or
(2) such State has determined that there exists with respect to the child
a specific factor or condition (such as the child's ethnic background, age, or
membership in a minority or sibling group, or the presence of factors such
as medical conditions or physical, mental, or emotional handicaps) because
of which it is reasonable to conclude that such child cannot be placed with
adoptive parents without providing adoption assistance, and
(3) such child is a citizen or resident of the United States.
(c) "Eligible Child" means, for Adoption Assistance Flexible Spending
Account purposes, any individual who--
(1) has not attained age 18, or
(2) is physically or mentally incapable of caring for himself or herself, or
(3) is a Child with Special Needs.
(d) "Highly Compensated Employee" means an Employee who is a
highly compensated employee within the meaning of Code Section 414(q) and
the Treasury regulations thereunder.
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(e) "Qualified Adoption Expenses" means reasonable and necessary
adoption fees, court costs, attorney fees, and other expenses:
(1) which are directly related to, and the principal purpose of which is
for, the legal adoption of an Eligible Child by a Participant;
(2) which are not incurred in violation of state or federal law or in
carrying out any surrogate parenting arrangement;
(3) which are not expenses in connection with the adoption by a
Participant of a child who is the child of such Participant's Spouse;
(4) which are not paid using funds received from any federal, state or
local program; and
(5) which are not reimbursed under any other employer program or
otherwise or by any tax credit under any other provision of the Code.
(f) The definitions of Article I are hereby incorporated by reference to
the extent necessary to interpret and apply the provisions of this Adoption
Assistance Flexible Spending Account.
8.3 ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNTS
The Administrator shall establish an Adoption Assistance Flexible Spending
Account for each Participant who elects to apply Cafeteria Plan Benefit Dollars to Adoption
Assistance Flexible Spending Account benefits.
8.4 INCREASES IN ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNTS
A Participant's Adoption Assistance Flexible Spending Account shall be increased
each pay period by the portion of Cafeteria Plan Benefit Dollars that the Participant has elected to
apply toward his Adoption Assistance Flexible Spending Account pursuant to elections made
under Article V hereof.
8.5 DECREASES IN ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNTS
A Participant's Adoption Assistance Flexible Spending Account shall be reduced
by the amount of any Qualified Adoption Expense reimbursements paid or incurred on behalf of a
Participant pursuant to Section 8.11 hereof.
8.6 ALLOWABLE ADOPTION ASSISTANCE REIMBURSEMENT
Subject to limitations contained in Section 8.8 of this Program, and to the extent of
the amount contained in the Participant's Adoption Assistance Flexible Spending Account, a
Participant who incurs Qualified Adoption 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 while a Participant.
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8.7 FORFEITURES
The amount in a Participant's Adoption Assistance Flexible Spending Account as
of the end of any Plan Year (and after the processing of all claims for such Plan Year pursuant to
Section 8.11 hereof) 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.
8.8 LIMITATIONS ON PAYMENTS
(a) Code limit. Notwithstanding any provision contained in this Article to
the contrary, the maximum amount which can be contributed to a Participant's
Adoption Assistance Flexible Spending Account in or on account of any Plan Year
shall not exceed $10,000. Such amount shall be adjusted for cost-of-living
increases in accordance with Code Section 137(b) as modified by Code Section
137(f), except that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such calendar year.
(b) Limit phaseout. The limit in (a) above shall be reduced if the
Participant has adjusted gross income (as defined in Code Section 137(b)(3)) in
excess of $150,000 as adjusted. A Participant's limit phases out ratably between
levels of adjusted gross income asset forth in Code Section 137(b)(2).
8.9 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory. It is the intent of this Adoption
Assistance Flexible Spending Account that contributions or benefits not
discriminate in favor of Highly Compensated Employees or their Dependents, as
prohibited by Code Section 137.
(b) Shareholder test. It is the intent of this Adoption Assistance
Flexible Spending Account that not more than 5 percent (5%) of the amounts paid
by the Employer for adoption 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 (5%) 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 Highly Compensated
Employees defined under Section 8.2(d) or to shareholders or owners as set forth
in this Section, 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 Adoption Assistance Flexible
Spending Account by the Highly Compensated Employee or shareholder or owner
that elected to contribute the highest amount to such account 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 account equals the amount designated for the
account of the Highly Compensated Employee or shareholder or owner who has
elected the second highest contribution to the Adoption Assistance Flexible
Spending Account far 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.
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8.10 COORDINATION WITH CAFETERIA PLAN
All Participants under the Cafeteria Plan are eligible to receive Benefits under this
Adoption Assistance Flexible Spending Account. The enrollment and termination of participation
under the Cafeteria Plan shall constitute enrollment and termination of participation under this
Adoption Assistance Flexible Spending Account. In addition, other matters concerning
contributions, elections and the like shall be governed by the general provisions of the Cafeteria
Plan.
8.11 ADOPTION ASSISTANCE FLEXIBLE SPENDING ACCOUNT CLAIMS
(a) Submission of claims. The Administrator shall direct the payment
of all such Adoption Assistance claims to the Participant upon the presentation to
the Administrator of documentation of such expenses in a form satisfactory to the
Administrator. 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 of the Eligible
Child's name, age, and Taxpayer Identification Number (if known) and the amount
of such expense.
(b) Grace Period. Notwithstanding anything in this Section to the
contrary, Qualified Adoption Expenses incurred during the Grace Period, up to
the remaining account balance, shall also be deemed to have been incurred
during the Plan Year to which the Grace Period relates.
(c) Claims for reimbursement. 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. However, if a Participant terminates
employment during the Plan Year, claims for reimbursement must be submitted
within 90 days after termination of employment.
ARTICLE IX
BENEFITS AND RIGHTS
9.1 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
claim, the Participant or beneficiary shall follow the Insurer's claims review
procedure.
(b) Dependent Care Flexible Spending Account, Adoption
Assistance Flexible Spending Account or Health Flexible Spending
Account claims. Any claim for Dependent Care Flexible Spending Account,
Adoption Assistance Flexible Spending Account or Health Flexible Spending
Account Benefits shall be made to the Administrator. For the Health Flexible
Spending Account, 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. However, if a Participant terminates employment during the
Plan Year, claims for the reimbursement of Medical Expenses must be submitted
within 90 days after termination of employment. For the Dependent Care Flexible
Spending Account, 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
25
the Administrator. However, if a Participant terminates employment during the
Plan Year, claims for reimbursement must be submitted within 90 days after
termination of employment. For the Adoption Assistance Flexible Spending
Account, 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. However, if a Participant terminates employment during the Plan
Year, claims for reimbursement must be submitted within 90 days after
termination of employment. If the Administrator denies a claim, the Administrator
may provide notice to the Participant or beneficiary, in writing, within 90 days
after the claim is filed unless special 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 pertinent 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 claimant, with
specific references to the pertinent Plan provisions on which the decision is
based.
(e) Forteitures. Any balance remaining in the Participant's
Dependent Care Flexible Spending Account, Health Flexible Spending Account
or Adoption Assistance Flexible Spending Account 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, Section 7.8 or Section 8.7, 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 in his
account until the claim appeal procedures set forth above have been satisfied or
the claim is paid. If any such claim is denied on appeal, the amount held beyond
the end of the Plan Year shall be forfeited and credited to the benefit plan
surplus.
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9.2 APPLICATION OF BENEFIT PLAN SURPLUS
Any forfeited amounts credited to the benefit plan surplus 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 available 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 X
ADMINISTRATION
10.1 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;
(f) 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.
Any procedure, discretionary act, interpretation or construction taken by the
Administrator shall be done in a nondiscriminatory manner based upon uniform principles
27
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.
10.2 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.
10.3 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.
10.4 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 party 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.
10.5 INDEMNIFICATION OFADMINISTRATOR
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 (including 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 XI
AMENDMENT OR TERMINATION OF PLAN
11.1 AMENDMENT
The Employer, at any time or from time to time, may amend any or all 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.
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11.2 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 Account,
Dependent Care Flexible Spending Account or Adoption Assistance Flexible Spending Account,
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
account 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 XII
MISCELLANEOUS
12.1 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 12.12.
12.2 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.
12.3 WRITTEN DOCUMENT
This Plan, in conjunction with any separate written document which may be
required bylaw, is intended to satisfy the written Plan requirement of Code Section 125 and any
Treasury regulations thereunder relating to cafeteria plans.
12.4 EXCLUSIVE BENEFIT
This Plan shall be maintained for the exclusive benefit of the Employees who
participate in the Plan.
12.5 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 shall be deemed to give any
Participant or Employee 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.
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12.6 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.
12.7 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 neglect or otherwise), the Participant's Benefits shall
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 not received by the Employer.
12.8 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 Participant's gross income for federal or state income tax purposes, or that any other
federal or state tax treatment will apply to or be available to any Participant. It shall be the
obligation of each Participant to determine whether each payment under the Plan is excludable
from the Participant's gross income for federal and state income tax purposes, and to notify the
Employer if the Participant has reason to believe that any such payment is not so excludable.
Notwithstanding the foregoing, the rights of Participants under this Plan shall be legally
enforceable.
12.9 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 Participant's share of any Social
Security tax that would have been paid on such compensation, less any such additional income
and Social Security tax actually paid by the Participant.
12.10 FUNDING
Unless otherwise required by law, contributions to the Plan need not be placed in
trust or dedicated to a specific Benefit, 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, account or asset of the Employer
from which any payment under the Plan may be made.
30
12.11 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 Missouri.
12.12 SEVERABILITY
If any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability shall 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.
12.13 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.
12.14 CONTINUATION OF COVERAGE (COBRA)
Notwithstanding anything in the Plan to the contrary, in the event any benefit
under this Plan subject to the continuation coverage requirement of Code Section 49808
becomes unavailable, each Participant will be entitled to continuation coverage as prescribed in
Code Section 49808, and related regulations. If during the Plan Year, the Employer employs
fewer than twenty (20) employees on a typical business day, this Section shall not apply.
12.15 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
regulations thereunder, this Plan shall be operated in accordance with Regulation 1.125-3.
12.16 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.
12.17 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) and the regulations
thereunder.
12.18 COMPLIANCE WITH HIPAA PRIVACY STANDARDS
(a) Application. If the Health Flexible Spending Account 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 apply.
31
(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.
(c) PHI disclosed foe administrative purposes. Protected Health
Information disclosed to members of the Employer's workforce shall be used or
disclosed by them only for purposes of Plan 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" shall refer to all employees and other persons under the control of the
Employer. The Employer shall keep an updated list of those authorized to receive
Protected Health 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 officer. The privacy officer shall 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 by the 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 issue and mitigate any damages.
32
(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
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 heeded for the
purpose for which disclosure was made, except that, if such return or
destruction is not feasible, limit further uses and disclosures to those
purposes that make the return or destruction of the information infeasible;
and
(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.
12.19 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
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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.
(b) Agents or subcontractors shall meet security standards. The
Employer shall ensure that any agent or subcontractor to whom it provides
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 12.18.
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~~ ~~ IN WIT ESS WH EOF, this Plan document is hereby executed this
lr-,~ day of ~ C~> ~L~a ~~
City of R_iv~e./rs~i~de~ ~ ~) ~ry
BY ~LdU'.'.C.~/~ U
EMPLOYER
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