HomeMy WebLinkAbout8316RESOLUTION NO. 8316
A RESOLUTION APPROVING AND ADOPTING A
FLEXIBLE BENEFIT PLAN, ADOPTION AGREEMENT AND
REIMBURSEMENT SERVICES AGREEMENT AND
AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL
TO EXECUTE SAME
WHEREAS, City of Pueblo, a Municipal Corporation wishes to adopt a cafeteria plan within
the context of Section 125 of the Internal Revenue Code for the benefit of the eligible employees
of the City of Pueblo, NOW THEREFOR,
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
The Flexible Benefit Plan Document and component benefit plans and Policies, and the
Reimbursement Services Agreement, copies of which are on file in the office of the City Clerk, and
the Adoption Agreement, a copy of which is attached hereto and incorporated herein, having been
approved as to form by the City Attorney, are hereby approved and adopted.
SECTION 2.
The President of the City Council is authorized to execute in the name of the City of Pueblo
the Reimbursement Services Agreement and the Adoption Agreement and any related documents
or amendments which may be necessary or appropriate to adopt and maintain their compliance with
applicable federal, state and local law.
INTRODUCED January 12 1998
By Corinne Koehler ,
Councilperson
AT T EST: APPROVED:
•. ZLc -Gc-�-
City Clbk President of th ity/Council
,it • . W.
I'V 0
BACKGROUND INFORMATION
COUNCIL AGENDA
TITLE:
A Resolution Approving And Adopting A Flexible Benefit Plan,
Adoption Agreement And Reimbursement Services Agreement
And Authorizing The President Of The City Council To Execute
Same
DEPARTMENT: Personnel
ISSUE:
Agreement with AFLAC to provide cafeteria plan services
RECOMMENDATION:
That the City council approve and adopt the agreements
BACKGROUND:
This agreement with AFLAC was initially authorized in
resolution #8266. The current resolution, however, is required
to specifically approve and adopt the flexible benefit plan,
adoption agreement and reimbursement services agreement.
FINANCIAL IMPACT:
None
ADOPTION AGREEMENT FOR:
CITY OF PUEBLO, A MUNICIPAL CORPORATION
FLEXIBLE BENEFITS PLAN
iSTABLIS14MENT OF THE PLAN
The Employer named below established as set forth herein, a Flexible
Benefits Plan (the "Plan ") as of the. Effective Date consisting of this
Adoption Agreement, the Plan Document and the Benefit Plans and Policies
specifically referred to herein including the Dependent Care Expemse
Reimbursement Plan and /or a Medical Care Expense Reimbursement Plan. The
purpose of the Flexible Benefits Plan is to provide eligible Employees a
choice between cash and,the specified welfare benefits described in this
Adoption Agreement. Pre -tax Premium elections under the Plan are intended
to qualify for the exclusion from income provided in Section 125 of the
Internal Revenue Code of 1986.
EMPLOYER INFORMATION
1) Name and Address of Employer/ CITY OF PUEBLO, A MUNICIPAL CORP.
Plan Administrator: BETH S. VEGA
1 CITY. HALL PLACE
f PUEBLO, CO 81003
2) Employer Number: (719) 584 -0815
3) Employer's Federal Tax
Identification Number: 84- 6000615
4) Employer's Fiscal Year: 01/01 -12/31
5) Effective Date of this Plan: 01/01/98 {
6) Last Day of the First Plan Year: 12/31/98
Subsequent Plan Years: 01 /01 -12/31
7) Name and Address of the
Claims Processor:
CLAIMS PROCESSOR: FLEX ONE
1932 WYNNTON ROAD
COLUMBUS, GA 31999
8) Name and Address of any Trustee NONE
of the Plan:'
9) Name and Address of registered BETH S. VEGA
agent for service of legal DIRECTOR OF PERSONNEL
process:
1
10). Affiliated Employers which
will participate in the Plan:
11) Employer's type of business: OTHER
2
ELIGIBILITY
All Employees employed by the Employer shall be eligible to participate under the Plan except the
following: (Describe) TEMP.,PARTTIME& SEASONAL AS DEFINED CITY OF PUEBLO
An eligible Employee may become a Participant in the Plan:
( ) Immediately, upon his first day of employment (but not prior to the Effective Date of the Plan
( ) On the day following commencement of employment
( ) On the first day of the month following days of employment
( X) JANUARY 20 AFTER DATE OF HIRE
provided the Employee completes a Salary Redirection Agreement. However, eligibility for
coverage under any given Benefit Plan or Policy shall be determined by the terms of that
Benefit Plan or Policy, and reductions of the Employee's Compensation to pay Pre -tax or
After -tax Premiums shall commence when the Employee becomes covered under the
applicable Benefit Plan or Policy.
BENEFITS PROVIDED UNDER THE PLAN
The Employer elects to offer to eligible Employees the following Benefit Plans and Policies subject to
the terms and conditions of the Plan. These component' Benefit Plans and Policies are specifically
incorporated herein by reference. The maximum Pre -tax Premiums a Participant can contribute via the
Salary Redirection Agreement is the aggregate cost of the applicable Benefit Plans or Policies selected
minus any Nonelective Contribution made by the Employer. It is intended that such Pre -tax Premium
amounts shall, for tax purposes, constitute an Employer contribution, but may constitute Employee
contributions for state insurance law purposes.
( X) Group Medical Insurance.
( ) Vision Care Insurance.
( ) Disability Income -Short Term (A &S).
( X) Cancer Insurance.
( ) Accidental Death and Dismemberment.
( X) Group Dental Coverage.
( ) Group Term Life Insurance.
( ) Disability Income -Long Term (LTD).
( X) Intensive Care Insurance.
( X) Accident Insurance
( X) Hospital Indemnity Insurance (HIP)
( X) Medical Care Expense Reimbursement described in Section 5.01(b) of the Plan, not to exceed
1,800 per Plan Year pursuant to the
CITY OF PUEBLO, A MUNICIPAL CORPORATION
Medical Care Expense Reimbursement Plan.
( X) Dependent Care Expense Reimbursement described in Section 5.01(c) of the Plan not to
exceed $5,000 per Plan Year or $2,500 for married filing separate returns pursuant to the
CITY OF PUEBLO, A MUNICIPAL CORPORATION
Dependent Care Expense Reimbursement Plan.
THE FUNDING AGENT
The Employer selects the following Funding Agent for the Plan (check one):
A The Employer, which will comply with the requirements of Section 7.02 of the Plan.
❑ The Flexible Benefits Trust created concurrently with the execution of the Plan, which
shall receive contributions under the Plan in accordance with Section 7.03 of the Plan.
ADMINISTRATIVE EXPENSES
Administrative Expenses incurred in operating the Plan shall be paid by (check one):
❑ The Employer, except as otherwise noted in the Plan.
The Participants, except as otherwise noted in the Plan.
EMPLOYER'S ACKNOWLEDGEMENT
As evidenced by the formal execution of this Adoption Agreement, the undersigned Employer adopted
and established this Plan on, the Effective Date as the Flexible Benefits Plan of the undersigned
Employer. In doing so, the undersigned Employer acknowledges that this Adoption Agreement and this
Plan are important legal instruments with significant legal and tax implications.
The Employer also acknowledges that it has read this Adoption Agreement and the Plan in their entirety,
has consulted independent legal and tax counsel other than representatives of American Family. Life
Assurance Company of Columbus (AFLAC), to the extent considered necessary, and accepts full
responsibility for participation of Employees hereunder and the operation of the Plan. The Employer
acknowledges that as sponsor, it and the Plan Administrator (if different from the Employer) shall have
sole responsibility to comply with all filing, reporting, and disclosure requirements imposed by the
Department of Labor, Internal Revenue Service, or any other government agency, specifically including,
but not limited to creating, filing, and distributing Summary Annual Reports, Form 5500's, and Summary
Plan Descriptions. Furthermore, the Employer further acknowledges that it shall bear sole responsibility
for amending the Plan as necessary to ensure compliance with applicable tax, labor, and other laws and
regulations.
It is also understood and agreed that American Family Life Assurance Company of Columbus (AFLAC),
and its Subsidiaries, agents, and representatives, are not providing legal or tax advice to the
undersigned Employer in connection with this Plan and that no representations are made . by it with
respect to the operation of the Flexible Benefits Plan pursuant to the sample documents provided by
American Family Life Assurance Company of Columbus (AFLAC) to the Employer.
This Plan shall be construed and enforced according to the Internal Revenue Code of 1986, as
amended from time to time, the applicable regulations thoreto and tho laws of the state of the principal
place of business of the Employer.
PROUP.3
IN WITNESS WHEREOF, the Employer has caused this Plan and Adoption
Agreement to be executed on the day of , 19 to ratify the
adoption of the Plan adopted and effective as of the Effective Date.
WITNESS:
CITY OF PUEBLO, A MUNICIPAL CORP.
Employer:
By:
Title: Preside ft of City Council
Date:
—0 - - -�w",
City Cl k
A
TABLE OF CONTENTS
FLEXIBLE BENEFITS PLAN
PREAMBLE
ARTICLE I - DEFINITIONS
1.01 "Affiliated Employer"
1.02 "After -tax Premium(s)"
1.03 "Anniversary Date"
1.04 "Benefit Plan(s) or Policy(ies)"
1.05 "Board of Directors"
1.06 "Change in Family Status"
1.07 "Code"
1.08 "Compensation"
1.09 "Dependent"
1.10 "Dependent Care Expense Reimbursement"
1.11 "Earned Income"
1.12 "Effective Date"
1.13 "Eligible Employment Related Expenses"
1.14 "Eligible Medical Expenses"
1.15 "Employee" t
1.16 "Employer"
1.17 "ERISA"
1.18 "Highly Compensated Individual"
1.19 "Key Employee"
1.20 "Medical Care Expense Reimbursement"
1.21 "Nonolective Contributions"
1.22 "Participant"
1.23 "Plan"
1.24 "Plan Administrator"
1.25 "Plan Year"
1.26 "Pre -tax Premium(s)"
1.27 "Qualified Benefit"
1.28 "Qualifying Employment- Rolatod Expenses"
1.29 "Qualifying Individual"
1.30 "Qualifying Services"
1.31 "Reimbursement Account(s) or Account(s)"
1.32 "Salary Redirection Agreement"
1.33 "Spouse"
1.34 "Student"
1.35 "Trustee"
ARTICLE 11 - ELIGIBILITY AND PARTICIPATION
1
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
3
4
4
4
4
4
5
5
5
5
5
2.01 Eligibility to Participate 5
2.02 Entry Date 5
2.03 Termination of Participation 5
2.04 Eligibility to Participate in Reimbursement Benefits 6
PROUPI.4
ARTICLE 111 - PREMIUM ELECTIONS
6
3.01
Election of Premiums 6
3.02
Initial Election Period 6
3.03
Annual Election Period 7
3.04
Change of Premium Election 7
3.05
Termination of Election 8
ARTICLE IV - PREMIUM PAYMENTS AND CREDITS
AND DEBITS TO ACCOUNTS
8
4.01
Source of Premium Payments 8
4.02
Allocations Irrevocable During Plan Year 8
4.03
Reduction of Certain Elections to Prevent Discrimination 8
4.04
Modification of Amount Withheld duo to Premium Increases 8
4.05
Medical Expense Reimbursement 9
4.06
Dependent Care Expense Reimbursement 9
ARTICLE V - BENEFITS
10
5.01
Qualified Benefits
10
5.02
Cash Benefit
12
5.03
Repayment of Excess Reimbursements
12
5.04
Termination of'Reimbursement Benefits
12
5.05
COBRA Coverage
12
5.06
Coordination of Benefits Under Health FSA
12
ARTICLE VI - PLAN ADMINISTRATION
13
6.01
Allocation of Authority
13
6.02
Provision for Third -Party Plan Service Providers
13
6.03
Fiduciary Liability 1
14
6.04
Compensation of Plan Administrator
14
6.05
Bonding
14
6.06
Payment of Administrative Expenses
14
6.07
Funding Policy
14
6.08
Disbursement Reports
14
6.09
Reporting and Disclosure Obligations
14
6.10
Indemnification
14
6.11
Substantiation of Expenses
15
6.12
Reimbursement
15
6.13
Annual Statements
15
ARTICLE VII
- FUNDING AGENT
15
7.01
Funding of the Plan
15
7.02
The Employer as Funding Agent
15
7.03
Trust as Funding Agent
15
PROUPI.4
ARTICLE VIII - CLAIMS PROCEDURES
16
8.01
Application to Plan Benefits
16
8.02
Procedure if Benefits are Denied Under the Plan
16
8.03
Requirement for Written Notice of Claim Denial
16
8.04
Right to Request Hearing on Benefit Denial
17
8.05
Disposition of Disputed Claims
17
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
17
9.01
Permanency
17
9.02
Employer's Right to Amend
17
9.03
Employer's Right to Terminate
17
9.04
Determination of Effective Date of Amendment or Termination
17
ARTICLE X - GENERAL PROVISIONS
18
10.01
_ Not an Employment Contract
18
10.02
Applicable Laws
18
10.03
Post- Mortem Payments
18
10.04
Nonalienation of Benefits
18
10.05
Mental or Physical Incompetency
18
10.06
Inability to Locate Payee
18
10.07
Requirement fof Proper Forms
18
10.08
Source of Payments
18
10.0.9
Multiple Functions
19
10.10
Tax Effects
19
10.11
Gender and Number
19
10.12
Headings
19
10.13
Incorporation by Reference
19
10.14
Severability
19
10.15
Effect of Mistake
19
10.16
Provisions Relating to Insurers 1
20
ARTICLE XI - CONTINUATION COVERAGE UNDER COBRA
20
11.01
Continuation Coverage After Termination of Normal Participation
20
11.02
Who is a "Qualified Beneficiary"
20
11.03
Who is not a "Qualified Beneficiary"
20
11.04
What is a "Qualifying Event"
20
11.05
What Benefit is Available Under Continuation Coverage
21
11.06
Notice Requirements
21
11.07
Election Period
22
11.08
Duration of Continuation Coverage
22
11.09
Automatic Termination of Continuation Coverage
22
PROCFPt.4
Fj
PREAMBLE
The Employer hereby establishes a Flexible Benefits Plan ( "Plan ") for its Employees for purposes of
providing eligible Employees with the opportunity to choose from among the fringe benefits available under the
Plan. The Plan is intended to qualify as a cafeteria plan under the provisions of Code Section 125. The
Dependent Care Expense Reimbursement Plan ( "DCR ") is intended to qualify as a Code Section 129
dependent care assistance plan, and the Medical Care Expense Reimbursement Plan is intended to qualify as a
Code Section 105 medical expense reimbursement plan. Although printed within this document, the DCR and
Medical Care Expense Reimbursement Plans are separate written plans for purposes of administration and all
reporting and nondiscrimination requirements imposed by Sections 105 and 129 of the Code and all applicable
provisions of ERISA.
PROCFPI.4
FLEXIBLE BENEFITS PLAN
ARTICLE I
DEFINITIONS
1.01 "Affiliated Employer" means any Employer within the context of Code Section 414(b), (c), (m), or
(n) of the Code which will be treated as single employer for purposes of Code Section 125.
1.02 "After -tax Premium(s)" means amounts withheld from an Employee's Compensation pursuant to
a Salary Redirection Agreement to purchase coverages available under the Adoption Agreement on an after -tax
basis.
1.03 "Anniversary Date" means the first day of any Plan Year.
1.04 "Benefit Plan(s) or Policy(ies)" means those coverages available to a Participant under the
Adoption Agreement.
1.05 "Board of Directors" means the Board of Directors of the Employer.
1.06 "Change in Family Status" moans, and is limited to, a Participant's marriage or divorce; the
death of a Participant's spouse or child; the birth or adoption of a Participant's child; the termination of
employment (or commencement of employment) of the Participant's spouse; a change in employment status
from full -time to part -time (or vice versa) by the Participant or the Participant's spouse; an unpaid leave' of
absence by either the Participant or the Participant's spouse; a significant change in the health coverage of the
Participant or the Participant's spouse's attributable to the spouse's employment; or such other events as may
be described by the Internal Revenue Service from time to time as a Change in Family Status.
1.07 "Code" means the Internal Revenue Code of 1986, as amended.
1
1.08 "Compensation" means the cash wages or salary paid to an Employee by the Employer.
1.09 "Dependent" means any individual who is a dependent of the Participant within the purview of
Code Sec. 152(a), except for the Dependent Care Expense Reimbursement Plan, in the case of an Employee
who has been divorced, Dependent shall be dofined as set forth in Section 21(e)(5) (e.g., dependent of the
custodial parent).
1.10 "Dependent Care Expense Reimbursement" shall have the meaning assigned to it by Section
5.01(c) of the Plan.
1
PROUPI.4
1.11 "Earned Income" means all income derived from wages, salaries, tips, self - employment, and
other Employee Compensation (such as disability or wage continuation benefits), but does not include (a) any
amounts received pursuant to any dependent care assistance program under Section 129 of the Code, (b) any
amount received as a pension or annuity, or (c) workers compensation.
1.12 "Effective Date" means the effective date of the Plan specified in the Adoption Agreement.
1.13 "Eligible Employment Related Expenses" means those Qualifying Employment - Related
Expenses (as defined below) paid or incurred incident to maintaining employment after the date of the
Employee's participation in the Dependent Care Expense Reimbursement Plan and during the Plan Year, other
than amounts paid to:
(a) an individual with respect to whom a Dependent deduction is allowable under Code Sec. 151(a)
to the Participant or his Spouse;
(b) the Participant's Spouse; or
(c) a child of the Participant who is under 19 years of age.
1.14 "Eligible Medical Expenses" means those expenses incurred by the Employee, or the
Employee's Spouse or Dependents, after the date of the Employee's participation in the Medical Care Expense
Reimbursement Plan and during the Plan Year otherwise allowable as deductions under Code Sec. 213 (without
regard to the limitations contained in Sec. 213(a)), but shall not include an expense incurred for the payment of
premiums under a health insurance plan. For purposes of this Plan, an expense is "incurred" when the
Participant or beneficiary is furnished the medical care or services giving rise to the claimed expense.
1.15 "Employee" means any individual who is considered to be in a legal employer - employee
relationship. with the Employer for federal withholding tax purposes. Such term includes "former employees" for
the limited purpose of allowing continued eligibility for benefits hereunder for the remainder of the Plan Year in
which an employee ceases to be employed by the Employer. The term "Employee" shall not include any
self - employed individual who receives from the Employer "net earnings from self employment" within the
meaning of Code Section 401(c)(2) unless such individual is also an Employee.
1.16 "Employer" means the organization(s) named in the Adoption Agreement, provided, however,
that when the Plan provides that the Employer has a certain power (e.g., the appointment of a Plan
Administrator, entering into a contract with a third party insurer, or amendment or termination of the plan) the
term "Employer" shall mean only that entity named on the first line of the Adoption Agreement, and not any
Affiliated Employer. Affiliated Employers who sign the Adoption Agreement shall be bound by the Plan as
adopted and subsequently amended unless they clearly withdraw from participation herein.
PROUP 1.4
1.17 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.
1.18 "Highly Compensated Individual" means an individual defined under Code Section 125(e),
129(d)(2), or 105(h)(5), as amended, as a "highly compensated individual" or a "highly compensated
employee."
1.19 "Key Employee" means an individual who is a "key employee" as defined in Code Section
125(b)(2), as amended.
1.20 "Medical Care Expense Reimbursement" shall have the meaning assigned to it by Section
5.01(b) of the Plan.
1.21 "Nonelective Contribution (s)" means any amount which the Employer in its sole discretion may
contribute on behalf of each Participant to provide benefits for such Participant and his or her Dependents, if
applicable under the Plan. The amount of Nonolective Contribution for each Participant may be adjusted
upward or downward in the contributing Employer's sole discretion. The amount shall be calculated for each
Plan Year in a uniform and nondiscriminatory manner based upon the Participant's dependent status,
commencement or termination date of the Participant's employment during the Plan Year, and such other
factors as the Employer shall prescribe. In no event will any Nonelective Contribution be disbursed to a
Participant if the cost of the benefit(s) elected is less than the Nonolective Contribution allocable thereto. Any
excess shall be returned to the Employer.
1
1.22 "Participant" means an Employee who becomes a Participant pursuant to Article II.
1.23 "Plan" means the Adoption Agreement, the Flexible Benefits Plan and (if applicable) the related
Trust created by this document.
1.24 "Plan Administrator" means the person(s) appointed by the Employer with authority and
responsibility to manage and direct the operation and administration of the Plan. If no such person is named,
the Plan Administrator shall be the Employer.
1.25 "Plan Year" means the twelve month period specified in the Adoption Agreement provided,
however, that a period of less than twelve months may be a Plan Year for the initial Plan Year, the final Plan
Year, and a transition period to a different Plan Year.
1.26 "Pre -tax Premium(s)" moans any amount withhold from the Employee's Compensation pursuant
to a Salary Redirection Agreement which is intended to be paid on a pre -tax basis. This amount shall not
exceed the amount specified in the Adoption Agreement, and for purposes of Code Section 125, shall be
treated as an Employer contribution (this amount may, however, be treated as an Employee contribution for
purposes of state insurance laws).
3
PROUP1.4
1.27 "Qualified Benefit" means any benefit excluded from the Employee's taxable income under
Chapter 1 of the Code (other than Sections 117, 124, 127, or 132), and any other benefit permitted by the
Income Tax Regulations (i.e., group -term life insurance coverage that is includable in gross income by virtue of
exceeding the dollar limitation on nontaxable coverage under Code Sec. 79).
1.28 "Qualifying Employment - Related Expenses" means those expenses that would be considered
to be employment - related expenses under Section 21(b)(2) of the Code (relating to expenses for household and
dependent care services necessary for gainful employment) if paid for by the Employee to provide Qualifying
Services.
1.29 "Qualifying Individual" means:.
(a) a Dependent of the Participant who is under the ago of thirteen (13);
(b) a Dependent of a Participant who is mentally or physically incapable of caring for himself or herself;
or
(c) the Spouse of a Participant who is mentally or physically incapable of caring for himself or herself.
1.30 "Qualifying Services" means services relating to the care of a Qualifying Individual that enable
the Participant or his Spouse to remain gainfully employed which are performed:
(a) in the Participant's home; or
(b) outside the Participant's home for (1) the care of a Dependent of the Participant who is under age
13, or (2) the care of any other Qualifying Individual who resides at least eight (8) hours per day in the
Participant's household. If the expenses are incurred for services provided by a dependent care center
(i.e., a facility that provides care for more than G individuals not residing at the facility), the center must
comply with all applicable state and local laws and regulations.
1
1.31 "Reimbursement Account(s) or Account(s)" shall be the funding mechanism by which amounts
are withheld from an Employee's Compensation and retained for future Medical Care Expense Reimbursement
or Dependent Care Expense Reimbursement. These amounts may either be retained by the Employer, sent to
a third party plan administrator, and /or kept in trust for Employees. No money shall actually be allocated to any
individual Participant Account(s); any such Account(s) shall be of a memorandum nature, maintained by the
Administrator for accounting purposes, and shall not be representative of any identifiable trust assets. No
interest will be credited to or paid on amounts credited to the Participant Account(s).
PROCFPI.4
1.32 "Salary Redirection Agreement" means the form by which an eligible Employee or Participant
enrolls in the specific component Benefit Plans or Policies and elects Pre -tax Premiums or After -tax Premiums
in accordance with Article 111.
1.33 "Spouse" means an individual who is legally married to a Participant, but for purposes of the
Dependent Care Expense Reimbursement Plan provisions, shall not include an individual legally separated from
the Participant under a divorce or separate maintenance decree, nor shall it include an individual who, although
married to the Participant, files a separate federal income tax return, maintains a separate, principal residence
from the Participant during the last six months of the taxable year, and does not furnish more than one -half of
the cost of maintaining the principal place of abode of the Qualifying Individual.
1.34 "Student" means an individual who, during each of five (5) or more calendar months during the
Plan Year, is a full time student at any college or university, the primary function of which is the conduct of
formal instruction, and which routinely maintains a regular faculty and curriculum and normally has an enrolled
student body in attendance at the location where its educational activities are regularly presented.
1.35 "Trustee" (if applicable) means the person(s) or institution (and their successors) named on the
signature page attached hereto, who have assented to being so named by their signature to this Agreement,
otherwise empowered to hold and disburse the funds that are created hereunder.
ARTICLE II.
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility to Participate. Each Employee who meets the criteria set forth in the Adoption
Agreement shall be eligible to participate in the Plan as of any applicable Entry Date. Eligibility for the benefits
elected in the Adoption Agreement shall be subject to the additional requirements, if any, specified in the
applicable Benefit Plan or Policy. The provisions of this Article are not intended to override any eligibility
requirement(s) or waiting period(s) specified in the applicable Benefit Plans or Policies.
2.02 Entry Date. Each eligible Employee shall become a Participant in the Plan on the Entry Date
specified in the Adoption Agreement provided that he-has satisfied the requirements of the Adoption Agreement.
2.03 Termination of Participation. Participation shall terminate on the earliest of: i) the date an
Employee ceases to be an Employee; ii) when an Employee ceases to meet the eligibility requirements of
Section 2.01 of this Agreement Plan; iii) the date a participant revokes a Salary Redirection Agreement pursuant
to Section 4.02; or iv) the date the Plan terminates. Provided, however, that a former Employee who makes
required contributions for coverage under the Company's Benefit Plans or Policies shall be deemed to continue
his participation in the Plan (to the extent thereof) as long as such contributions are made.
5
PROUPI.4
Subject to any specific limitations for any particular benefit which the Participant has elected, (a)
participation shall be continued during a leave of absence for which the Participant continues to receive a salary
from his or her employer and (b) participation shall be suspended during an unpaid leave of absence, provided
that nothing in this Section shall prevent a Participant on unpaid leave from utilizing any available
Reimbursement Account benefits, as provided below, as if such Participant were otherwise actively employed
by the Company.
2.04 Eligibility to Participate in Reimbursement Benefits. An Employee, who is otherwise an
Eligible Participant pursuant to Sections 2.01 and 2.02 shall be eligible to receive Medical and /or Dependent
Care Expense Reimbursements (if selected by the Employer in the Adoption Agreement) if a Salary Redirection
Agreement is properly executed and submitted on which the aforementioned benefits) have been selected.
ARTICLE III
PREMIUM ELECTIONS
3.01 Election of Premiums. A Participant may elect any combination of Pre -tax Premiums or After -tax
Premiums to fund any Benefit Plan or Policy available under the Adoption Agreement, provided however, that
only Qualified Benefits (other than group term life insurance coverage in excess of $50,000) may be funded with
Pre -tax Premiums.
3.02 Initial Election Period.
(a) Currently Eligible Employees. An Employee who is eligible to become a Participant in this Flexible
Benefits Plan as of the Effective Date must complete, sign and file a Salary Redirection Agreement with 'the
Plan Administrator during the election period (as specified by the Plan Administrator) immediately preceding the
Effective Date in order to become a Participant on the Effective Date. The elections made by the Participant on
this initial Salary Redirection Agreement shall be effective, subject to Section 3.04, for the Plan Year beginning
on the Effective Date.
(b) Now Employees and Employees Who Have Not Yet Satisfied The Flexible Benefit Plan's Waiting
Period. An Employee who becomes eligible to become a Participant in this Flexible Benefits Plan after the
Effective Date must complete, sign and file a Salary Redirection Agreement with the Plan Administrator during
the sixty (60) day period prior to the day the Employee first becomes eligible to participate in this Plan. If an
Employee is eligible to participate in this Flexible Benefits Plan on the date he is first hired, a Salary Redirection
Agreement must be completed, signed, and filed with the Plan Administrator within thirty (30) days from the date
of hire. The elections made by the Participant on this initial Salary Redirection Agreement shall be prospectively
effective as of the first pay period coinciding with or immediately following the date that the Salary Redirection
Agreement is filed (or if later, the date of the employee's eligibility under the Flexible Benefits Plan) and, subject
to Section 3.04, ending on the last day of the Plan Year in which such participation began. Coverage under the
component Benefits Plan or Policies will be effective in accordance with the eligibility requirements contained in
such Benefits Plans or Policies.
PROUP1.4
(c) An eligible Employee who fails to complete, sign and file a Salary Redirection Agreement with the
Plan Administrator in accordance with paragraph (a) or (b) above during an initial election period may become a
participant on a later date in accordance with Section 3.03 or 3.04.
3.03 Annual Election Period. Each Employee who is a Participant or who is eligible to become a
Participant may complete, sign and file a Salary Redirection Agreement during the election period (as specified
by the Plan Administrator) preceding each Anniversary Date to be effective for the entire Plan Year beginning on
the Anniversary Date. A Participant who fails to complete, sign and file a Salary Redirection Agreement as
required by this Section 3.03 shall be deemed to have elected to continue the same coverages under the
Benefit Plans or Policies funded by the same election (e.g., either Pre -tax Premiums or After -tax Premiums
adjusted to reflect any increase or decrease in premium /cost) then in effect for such Participant.
Notwithstanding the foregoing, annual elections for participation in the Medical Caro and Dependent Care
Expense Reimbursement Plans must be made by submitting a Salary Redirection Agreement prior to the
beginning of each Plan Year -- no deemed elections shall occur under such Plans.
3.04 Change of Premium Election.
(a) A Participant may change or terminate his or her Pre -tax Premiums elected on the Salary
Redirection Agreement within thirty (30) days of the occurrence of a Change in Family Status, but only if such
change or termination is made on account of, and is consistent with, the Change in Family Status. An
Employee who is eligible to become a Participant but failed to complete a Salary Redirection Agreement during
the initial election period pursuant tot Section 3.02(a) or (b) may become a Participant and file a Salary
Redirection Agreement with respect to Pre -tax Premiums within thirty (30) days of the occurrence of a Change
in Family Status, but only if the election under the new Salary Redirection Agreement is made on account of
and is consistent with, the Change in Family Status. Elections made pursuant to this Section 3.04 shall be
effective for the balance of the Plan Year in which the election is made beginning on the first day of the pay
period next following the day the new Salary Redirection Agreement is filed with the Plan Administrator, other
than as provided in'Section 3.04(b), below.
(b) A Participant may revoke a prior election with respect to Pre -tax Premiums and in lieu thereof,
receive on a prospective basis, coverage under another health plan with similar coverage if any independent,
third -party provider of medical benefits previously elected by the Participant either significantly increases the
premiums for such coverage, or significantly curtails the coverages available under such plans, during the Plan
Year coverage period. A Participant otherwise entitled to make an alternate election under this Section must do
so within 30 days of receipt of a written notice from the Plan Administrator of the significant change in cost or
composition of the benefit originally elected. Such revocation and new election shall be effective on the first
day of the payroll period coincident with or immediately following the date the Participant files his now Salary
Redirection Agreement with the Plan Administrator.
7
PROCFPI.4
'
3.05 Termination of Election. Except as otherwise provided in Section 2.03, Termination of
employment shall automatically revoke any Salary Redirection Agreement. If revocation occurs under this
Section 3.05, no new election with respect to Pre -tax Premiums may be made by such Participant during the
remainder of the Plan Year.
ARTICLE IV
PREMIUM PAYMENTS AND CREDITS AND DEBITS TO ACCOUNTS
4.01 Source of Premium Payments. The Employer shall withhold from a Participant's Compensation
on a Pre -tax or After -tax basis (as elected on the Salary Redirection Agreement) an amount equal to the
contributions required from the Participant (less any applicable Nonelective Contribution) for coverage of the
Participant, or the Participant's spouse or dependents, under the Benefit Plans or Policies elected by the
Participant and maintained by the Employer as noted in the Adoption Agreement. Amounts withheld from a
Participant's Compensation as Pre -tax Premiums or After -tax Premiums shall be forwarded to the appropriate
insurer as soon as administratively feasible (or kept by the Employer or kept in trust in the event of a
self - insured plan). The maximum amount of Pre -tax Premiums plus any Nonelective Contribution made
available by the Employer for the benefit of each Plan Participant shall not exceed the aggregate amount set
forth in the Adoption Agreement.
4.02 Allocations Irrevocable During Plan Year. Except as provided in Sections 3.04, 3.05, 4.03, and
4.04, neither (i) the insurance coverages nor amounts withheld therefor elected under Section 5.01(a), nor (ii)
the amount to be credited to a Participant Account during the Plan Year pursuant to Sections 4.05 and 4.06, nor
(iii) the allocation of such amounts to the appropriate Account(s) of the Participant, can be changed during the,
Plan Year.
4.03 Reduction of Certain Elections to Prevent Discrimination. If the Plan Administrator
determines,. before or during any Plan Year, that the Plan may fail to satisfy for such Plan Year any requirement
imposed by the Code or any limitation on Pre -tax Premiums allocable to Key Employees or to Highly
Compensated Individuals, the Plan Administrator shall take such action(s) as he deems appropriate, under rules
uniformly applicable to similarly situated Participants; to assure compliance with such requirement or limitation.
Such action may include, without limitation, a modification or revocation of a Highly Compensated Individual's or
Key Employee's Salary Redirection Agreement without the consent of such Employee.
4.04 Modification of Amounts Withheld due to Premium Increases. If the cost of a health plan
provided by an independent, third party provider increases or decreases during a Plan Year, then any Participant
who has elected to participate in such health plan shall be required to make a corresponding change in his or
her premium payments, and the Plan Administrator shall increase or decrease, as the case may be, the Pre -tax
Premiums or After -tax Premiums (as applicable) under each affected Participant's Salary Redirection
Agreement.
8
PROCFPIA
4.05 Medical Care Expense Reimbursement.
(a) Debiting and Crediting of Accounts. Each Participant's Medical Care Expense Reimbursement
Account ( "Account ") will be credited with amounts withheld from the Participant's Compensation for Medical
Care Expense Reimbursement pursuant to the Salary Redirection Agreement. The Account will be debited for
reimbursement amounts disbursed to the Participant in accordance with Article V of this document. The entire
amount elected by the Participant on the Salary Redirection Agreement as an annual amount for the Plan Year
for Medical Care Expense Reimbursement less any reimbursements already disbursed shall be available to the
Participant at any time during the Plan Year without regard to the balance in the Account (provided that the
periodic premiums have been paid). Thus, the maximum amount of Medical Care Expense Reimbursement at
any particular time during the Plan Year will not relato to the amount which a Participant has had withheld up to
that time. In no event will the amount'of medical expense reimbursement benefits in any Plan Year exceed the
annual amount specified for the Plan Year in the Salary Redirection Agreement for Medical Care Expense
Reimbursement. Any amount allocated to the Account shall be forfeited by the Participant and restored to the
Employer if it has not boon applied to provide Medical Care Expense Reimbursement by the ninetieth (901h) day
following the end of the Plan Year for which the election was effective. Amounts so forfoited shall be used to
offset administrative expenses.
(b) Source of Payments. All Medical Care Expense Reimbursement benefits derived hereunder shall
be paid exclusively from the amounts in each Employee's Medical Care Expense Reimbursement Account
funded by amounts withheld from the Employee's wages pursuant to the Salary Redirection Agreement for
Medical Care Expense Reimbursemerit and any Nonelective Contributions allocated thereto. In the event that
an Employee's reimbursement for Medical Care Expense Reimbursement benefits exceeds the amount
currently available in the Employee's Medical Care Expense Reimbursement Account, the Employer shall pay
the excess amount up to the amount elected by the Participant on the Salary Redirection Agreement for Medical
Care .Expense Reimbursement less any reimbursements already disbursed. Future premium payments by the
Employee shall then go to the Employer as reimbursement for the money so advanced on behalf of the
Employee..
(c) Employer Risk. If an Employee terminates employment before the Employer has been reimbursed
for the money it has advanced on behalf of the Employee, the entire unreimbursed portion shall be deemed to
be an "administrative expense" to be refunded to the Employer by any unused Account balance(s) (if any) as
provided in Section 4.05(a).
4.06 Dependent Care Expense Reimbursement.
0
PROUPI.4
(a) Crediting and Debiting of Accounts. Each Participant's Dependent Care Expense
Reimbursement Account ( "Account ") will be credited with amounts withheld from the Participant's
Compensation for Dependent Care Expense Reimbursement pursuant to the Salary Redirection Agreement.
The Account will be debated for reimbursement amounts disbursed to the Participant in accordance with Article
V of this document. In the event that the amount in the Account is less than the amount of reimbursable benefit
requests at any time during the Plan Year, the excess part of the reimbursement will be carried over into
following months (within the same Plan Year), to be paid out as the Account balance becomes adequate. In no
event will the amount of Dependent Care Expense Reimbursement benefits exceed the amount withheld
pursuant to the Salary Redirection Agreement for any Plan Year. Any amount allocated to the Account shall be
forfeited by the Participant and restored to the Employer if it has not been applied to provide Dependent Care
Expense Reimbursement for the Plan Year by the ninetieth (901h) day following the end of the Plan Year for
which the election was effective. Amounts so forfeited shall be used to offset administrative costs.
(b) Source of Payments. All Dependent Care Expense Reimbursement benefits derived hereunder
shall be paid exclusively from the amounts in each Employee's Dependent Care Expense Reimbursement
Account funded by amounts withheld from the Employee's wages pursuant to the Salary Redirection Agreement
for Dependent Care Expense Reimbursement, and any Nonelective Contributions allocable thereto.
ARTICLE V
BENEFITS
5.01 Qualified Benefits. The' Qualified Benefits available for election are one or more of the following:
(a) Insurance Premium Payment. The Employer shall withhold from a Participant's Compensation'an
amount equal to the contributions required from the Participant (less any applicable Nonelective contribution) for
coverage of the Participant, or the dependent coverage of the Participant's spouse or Dependents, under the
Benefit Plans or Policies elected by the Participant and maintained by the Employer as noted in the Adoption
Agreement., The benefits are subject to the terms and conditions of the applicable Benefit Plans or Policies
specifically referred to in the Adoption Agreement and incorporated herein into this Plan.
1
(b) Medical Care Expense Reimbursement. If pursuant to the Adoption Agreement, the Employer
has elected to maintain a Medical Care Expense Reimbursement Plan, payment shall be made to the Participant
in cash as reimbursement for Eligible Medical Expenses incurred by the Participant or his Dependents while he
is an Employee, during the Plan Year for which the Participant's election is effective. These expenses must
also be expenses which --
(I) are not covered, paid or reimbursed from any other source; and
(2) meet the criteria of tax - deductibility as a medical or dental expense under Section 213 of the
Code, as amended and the regulations thereunder, and
10
PROUPI.4
(3) meet any limitations imposed by applicable regulations promulgated under Code Section
125; and
(4) will not be taken as a deduction from income on the Participant's federal income tax return in
any tax year; and
(5) do not exceed the lesser of (a) the maximum annual amount allocable to Medical Care Expense
Reimbursement specified in the Adoption Agreement, or (b) the annual amount that the
Employee has elected to have withheld for Medical Care Expense Reimbursement; less
previous Medical Care Expense Reimbursements made during the Plan Year; and
(6) are verified in writing * to the satisfaction of the Administrator that a covered expense has
occurred and the reimbursement for which meet the substantiation requirements of Section
6.11.
(c) Dependent Care Expense Reimbursement. If pursuant to the Adoption Agreement, the
Employer has elected to maintain a Dependent Care Expense Reimbursement Plan, payment
shall be made to the Participant in cash as reimbursement for Eligible Employment Related
Expenses incurred by him or her while an Employee, during the Plan Year for which the
Participant's election is effective, provided that the substantiation requirements of Section 6.11
have boon complied with. No payment otherwise due a Participant hereunder shall exceed the
smallest of: 1
(1) the Participant's Earned Income for the applicable month; or
(2) the Earned Income of the Participant's Spouse for such month (Note: a Spouse of a Participant
who is not employed during a month in which the Participant incurs Eligible Employment
Related Expenses and who is either incapacitated or a Student shall be doomed to have Earned
Income in the amount of $200 per month per Qualifying Individual for whom the Participant
incurs Eligible Employment Related Expense(s), up to a maximum amount of $400 per month);
or
(3) the annual amount the Participant has elected to have withheld from his Compensation for
Dependent Care Expense Reimbursement less any prior Dependent Care Expense
Reimbursements during the Plan Year; or
(4) Five Thousand Dollars ($5,000), or, it the Participant is married and files a separate tax return,
Two Thousand Five Hundred Dollars ($2,500) (or any future aggregate limitations promulgated
under Code Section 129) less any prior reimbursements during the Plan Year.
11
PROUPI.4
5.02 Cash Benefit. To the extent that a Participant does not elect under a Salary Redirection
Agreement to have the maximum amount of his Compensation contributed as a Pre -tax Premium or After -tax
Premium hereunder, such amount not elected shall be paid to the Participant in the form of normal
Compensation payments; provided however, that Nonelective Contributions may not be received in the form of
cash compensation.
5.03 Repayment of Excess Reimbursements. If, as of the end of any Plan Year, it is determined that
a Participant has received payments under this Plan that exceed the amount of Eligible Reimbursement
Expenses that have been substantiated by such Participant during the Plan Year, the Plan Administrator shall
give the Participant prompt written notice of any such excess amount, and the Participant shall repay the
amount of such excess to the Employer within sixty (GO) days of receipt of such notification.
5.04 Termination of Reimbursement Benefits. Coverage under the Medical Care Expense
Reimbursement and /or Dependent Care Expense Reimbursement Plan(s) shall cease as of the first day of the
month immediately following the month in which a Participant is no longer employed by the Company or when a
premium payment has not been made for any reason. Such Participant shall have the right to submit a Request
for Reimbursement for any Eligible Medical or Employment - Related Expense arising during the Plan Year before
the date of separation from service at any time until ninety (90) days after the end of the Plan Year for which
the election had been in effect, and to receive reimbursement hereunder. The Participant shall not be entitled
to receive reimbursement for expenses incurred after coverage ceases under this Section, and any unused
reimbursement benefits at the expiration of the 90 -day period following the close of the Plan Year shall be
treated in accordance with Sections 4. or 4.06.
5.05 COBRA Coverage. Each Benefit Plan or Policy made available under Article V that is considered
to be a "group health plan" under Code Sec. 162(1), because employees and their families are provided with
health care benefits within the meaning of Code Sec. . 212(d)(1), including the Medical Care Expense
Reimbursement Benefit, shall contain the necessary provisions required by Code Sec. 4980B and ERISA 601,
to assure that such benefits may be continued on or after the occurrence of the qualifying events defined in
Code Sec. 49806(f)(3).
i
5.06 Coordination of Benefits Under Heakh FSA. The Health FSA is intended to pay benefits solely
for otherwise unreimbursed medical expenses. Accordingly, it shall not be considered a group health plan for
coordination of benefits purposes, and its benefits shall not be taken into account when determining benefits
payable under any other plan.
12
PROUPI.4
ARTICLE VI
PLAN ADMINISTRATION
6.01 Allocation of Authority. Except as to those functions reserved within the Plan to the Employer,
the Plan Administrator appointed pursuant to the Adoption Agreement shall control and manage the operation
and administration of the Plan. The Plan Administrator shall have the exclusive right to interpret the Plan and to
decide all matters arising thereunder, including the right to remedy possible ambiguities, inconsistencies, or
omissions. All determinations of the Plan Administrator with respect to any matter hereunder shall be
conclusive and binding on all persons. Without limiting the generality of the foregoing, the Plan Administrator
shall have the following powers and duties:
(a) To require any person to furnish such reasonable information as he may request for the
purpose of the proper administration of the Plan as a condition to receiving any benefits
under the Plan;
(b) To make and enforce such rules and regulations and prescribe the use of such forms
as he shall deem necessary for the efficient administration of the Plan;
(c) To decide on questions concerning the Plan and the eligibility of any Employee to
participate in the Plan and to make or revoke elections under the Plan, in accordance
with the provisions of the Plan
(d) To determine the amount of benefits which shall be payable to any person in
accordance with the provisions of the Plan; to inform the Employer, insurer or Trustee
if any), as appropriate, of the amount of such benefits; and to provide a full and fair
review to any Participant whose claim for benefits has been denied in whole or in part;
(e) . To designate other persons to carry out any duty or power which may or may not
otherwise be a fiduciary responsibility of the Plan Administrator, under the terms of the
Plan;
(f) To keep records of all acts and determinations, and to keep all such records, books of
account, data and other documents as may be necessary for the proper administration
of the Plan;
(g) To prepare and distribute to all Employees information concerning the Plan and their
rights under the Plan;
(h) To do all things necessary to operate and administer the Plan in accordance with its
provisions;
6.02 Provision for Third -Party Plan Service Providers. The Plan Administrator, subject to approval
of the Employer, may employ the services of such persons as it may deem necessary or desirable in
connection with the operation of the Plan and to rely upon all tables, valuations, certificates, reports and
opinions furnished thereby. Unless otherwise provided in the service agreement, obligations under this Plan
shall remain the obligation of the Employer.
13
PROUPI.4
6.03 Fiduciary Liability. To the extent permitted by law, neither the Plan Administrator nor any other
person shall incur any liability for any acts or for failure to act except for their own willful misconduct or willful
breach of this Plan.
6.04 Compensation of Plan Administrator. Unless otherwise determined by the Employer and
permitted by law; any Plan Administrator who is also an employee of the Employer shall serve without
compensation for services rendered in such capacity, but all reasonable expenses incurred in the performance
of their duties shall be paid by the Employer.
6.05 Bonding. Unless otherwise determined by the Employer, or unless required by any Federal or
State law, the Plan Administrator shall not be required to give any bond or other security in any jurisdiction in
connection with the administration of this Plan.
6.06 Payment of Administrative Expenses. Unless otherwise indicated in the Adoption Agreement,
all reasonable expenses incurred in administering the Plan shall be paid by the Employer, provided, however
that each Participant shall bear the monthly cost (if any) charged for the maintenance of any Reimbursement
Account unless otherwise paid by the Employer.
6.07 Funding Policy. The Employer shall have the right to enter into a contract with one or more
insurance companies for the purposes of providing any benefits under the Plan and to replace any of such
insurance companies or contracts. Any dividends, retroactive rate adjustments or other refunds of any type
which may become payable under any such insurance contract shall not be assets of the Plan but shall be the
property of, and shall be retained by the Employer to provide future Benefit Plan or Policy benefits.
6.08 Disbursement Reports. The Plan Administrator shall issue directions to the Employer concerning
all benefits which are to be paid from the Employer's general assets pursuant to the provisions of the Plan.
6.09 Reporting and Disclosure Obligations. Unless specified otherwise, it shall be the Employer and
Plan Administrator's sole responsibility to comply with all filing, reporting, and disclosure requirements, imposed
by the Department of Labor and /or Internal Revenue Service , specifically including, but not limited to creating,
filing and distributing Summary Annual Reports, Form 5500's, and Summary Plan Descriptions. Furthermore,
the Employer and Plan Administrator shall be required to amend the Plan as is necessary to ensure compliance
with applicable tax and other laws and regulations.
6.10 Indemnification. The Plan Administrator shall be indemnified by the Employer against claims, and
the expenses of defending against such claims, resulting from any action or conduct relating to the
administration of the Plan except claims arising from gross negligence, willful neglect, or willful misconduct.
14
PROUPI.4
EEL Lea Ll
6.11 Substantiation of Expenses. Each Participant must submit a written Request for Reimbursement
form to the Plan Administrator to receive reimbursements from his Medical or Dependent Care Expense
Reimbursement Account(s), on a form provided by the Plan Administrator accompanied by a written
statement/bill from an independent third party stating that the expense has been incurred, and the amount
thereof. The forms shall contain such evidence as the Plan Administrator shall deem necessary as to
substantiate the nature, the amount, and timeliness of any expenses that may be reimbursed.
6.12 Reimbursement. Reimbursements shall be made as soon as administratively feasible after the
required forms have been received by the Plan Administrator. Reimbursements of less than $15 may be carried
forward and aggregated with future reimbursements until tite reimbursable amount is greater than $15, provided,
however, that the entire amount of reimbursable reimbursements outstanding at the end of the Plan Year shall
be reimbursed without regard to the $15 threshold limit. Such forms and documentation must be submitted by
the fourth (4th) Friday of the month in order to receive a reimbursement in the following month. Year -end
expense reimbursements must be submitted to the Plan Administrator within 90 days of the close of the Plan
Year for which the Salary Redirection Agreement is effective, and during which such expense was incurred, in
order to be eligible for reimbursement. Likewise, if a Participant terminates participation in the Plan with a credit
balance in any Reimbursement Account, such Participant shall be entitled to submit to the Plan Administrator
any Requests for Reimbursement for reimbursable expenses incurred prior to such cessation of Participation at
any time within 90 days after the close of the Plan Year for which the Salary Redirection Agreement is effective.
6.13 Annual Statements. Tile Plan Administrator shalt furnish each Participant with an annual
statement, showing the amounts paid or expenses incurred by the Employer in providing Medical and /or
Dependent Care Expense Reimbursement during the previous calendar year and the respective Reimbursement
Account balance(s) on or before January 31 following the close of the applicable Plan Year.
ARTICLE VII
FUNDING AGENT
7.01 Funding of the Plan The Plan shall be funded with amounts withhold from Compensation
pursuant to Salary Redirection Agreements and by Noneloctive Contributions by thq Employer.
7.02 The Employer as Funding Agent. If the Employer is designated the Funding Agent in the
Adoption Agreement, the Employer will immediately apply all such amounts, without regard to their source, to
pay for the welfare benefits provided in the Adoption Agreement and shall comply with all applicable regulations
promulgated by the Department of Labor ( "D.O.L. ") taking into consideration any enforcement procedures
adopted by the D.O.L.
7.03 Trust as Funding Agent. If a Trust is designated Funding Agent in the Adoption Agreement, an
appropriate Trust Agreement shall be attached at the end of this Plan.
15
PROUPI.4
ARTICLE VIII
CLAIMS PROCEDURES
8.01 Application to Plan Benefits. The provisions of this Article do not apply to individual policies or
group policies not subject to ERISA, and if applicable, apply to claims for benefits only to the extent that no
claims procedure is specified for such benefit in the applicable Benefit Plan or Policy. If a claims procedure is
otherwise available under the applicable Benefit Plan or Policy, this Article shall not apply to benefits under the
component Benefit Plan or Policy, but shall only apply to issues germane to the pre -tax benefits available under
this Plan (i.e., such as a determination of: a Change in Family Status; significant change in premiums charged;
or eligibility and participation matters under this Flexible Benefits Plan document). This Article shall be the
claims procedure applicable to the Medical Care Expense Reimbursement and the Dependent Care Expense
Reimbursement Plan(s).
8.02 Procedure if Benefits are Denied Under the Plan. Any Employee, beneficiary, or his duly
authorized representative may file a claim for a benefit to which the claimant believes that he is entitled, but that
has been previously denied by the Plan Administrator. Such a claim must be in writing and delivered to the
Plan Administrator in person or by mail, postage paid. Within ninety (90) days after receipt of such claim, the
Plan Administrator shall send to the claimant, by mail, postage prepaid, notice of the granting or denying, in
whole or in part, of such claim, unless special circumstances require an extension of time for processing the
claim. In no event may the extension exceed ninety (90) days from the end of the initial period. If such
extension is necessary, the claimant rill be given a written notice' to this effect prior to the expiration of the
initial 90 -day period. The Plan Administrator shall have full discretion to deny or grant a claim in whole or in
part. If notice of the denial of a claim is not furnished in accordance with this Section 8.02, the claim shall. be
deemed denied and the claimant shall be permitted to exercise his right to review pursuant to Sections 8.04 and
8.05.
8.03 Requirement for Written Notice of Claim Denial. The Plan Administrator shall provide a written
notice to every claimant who is denied a claim for benefits under this Article. Such written notice shall set forth
in a manner calculated to be understood by the claimant, the following information:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent Plan provisions on which the denial is based;
(c) A description of any additional material or information necessary for the claimant to perfect the
claim and an explanation of why such material is necessary, and
(d) An explanation of the Plan's claim review procedure.
16
PROCFPI.4
8.04 Right to Request Hearing on Benefit Denial. Within sixty (60) days after the receipt by the
claimant of written notification of the denial (in whole or in part) of his claim, the claimant or his duly authorized
representative may make a written application to the Plan Administrator, in person or by certified mail, postage
prepaid, to be afforded a review of such denial; may review pertinent documents; and may submit issues and
comments in writing.
8.05 Disposition of Disputed Claims. Upon receipt of a request for review, the Plan Administrator
shall make a prompt decision on the review matter. The decision on such review shall be written in a manner
calculated to be understood by the claimant and shall include specific reasons for the decision and specific
references to the pertinent plan or insurance policy provisions on which the decision was based. The decision
upon review shall be made not later than sixty (60) days after the Plan Administrator's receipt of a request for a
review, unless special circumstances require an extension of time for processing, in which case a decision shall
be rendered not later than one hundred twenty (120) days after receipt of a request for review. If an extension
is necessary, the claimant shall be given written notice of the extension prior to the expiration of the initial sixty
(60) day period. If notice of the decision on the review is not furnished in accordance with this Section 8.05,
the claim shall be deemed denied and the Claimant shall be permitted to exercise his right to a legal remedy.
ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
. 9.01 Permanency. While the Employer fully expects thdt this Plan will continue indefinitely, due to
unforeseen, future business contingericies, permanency of the Plan will be subject to the Employer's right to
amend or terminate the Plan, as provided in Sections 9.02 and 9.03, below. Nothing in this Plan is intended to
be or shall be construed to entitle any Participant, retired or otherwise, to vested or nonterminable benefits.
9.02 Employer's Right to Amend. The Employer reserves the right to amend the Plan at any time
and from timo -to -time, and retroactively, if deemed necessary or appropriate to meet the requirements of Code
Section 125, or any similar provisions of subsequent revenue or other laws, to modify or amend in whole or in
part any or all of the provisions of the Plan. All amendments shall be made in writing and shall be approved by
the Board of Directors (or a duly authorized officer of the Employer) in accordance with its normal procedures
for transacting business. Each Benefit Plan or Policy shall be amended in accordance with the terms specified
therein, or, if no amendment procedure is prescribed, in accordance with this section. Any amendment made
by the Employer shall be deemed to be approved and adopted by any Affiliated Employer.
9.03 Employer's Right to Terminate. The Employer reserves the right to discontinue or terminate
the Plan without prejudico at any time and for any reason without prior notice. Such decision to terminate the
Plan shall be made in writing and shall be approved by the Board of Directors (or a duly authorized officer of the
Employer) in accordance with its normal procedures for transacting business. Affiliated Employers may
withdraw from participation in the plan, but may not terminate it.
9.04 Determination of Effective Date of Amendment or Termination. Any such amendment,
discontinuance or termination shall be effective as of such date as the Employer shall determine. Subject to
Sections 4.05(a) and 4.06(a) (if applicable), no amendment, discontinuance or termination shall allow the return
to any Employer of any Reimbursement Account balance nor its use for any purpose other than for the
exclusive benefit of the Participants and their beneficiaries.
17
PROUPI.4
ARTICLE X
GENERAL PROVISIONS
10.01 Not an Employment Contract. Neither this Plan nor any action taken with respect to it shall
confer upon any person the right to continue employment with any Employer.
10.02 Applicable Laws. The provisions of the Plan shall be construed, administered and enforced
according to applicable Federal law and the laws of the State of the principal place of business of the Employer.
10.03 Post -Mortem Payments. Any benefit payable under the Plan after the death of a Participant
shall be paid to his surviving spouse (if any), otherwise, to his estate. If there is doubt as to the right of any
beneficiary to receive any amount, tho Plan Administrator may retain such amount until the rights thereto are
determined, without liability for any interest thereon.
10.04 Nonallenation of Benefits. Except as expressly provided by the Administrator, no benefit under
the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be void. No benefit under the Plan shall in any manner
be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person.
10.05 Mental or Physical Incompetency. Every person receiving or claiming benefits under the Plan
shall be presumed to be mentally and physically competent and of ago until the Plan Administrator receives a
written notice, in a form and manner acceptable to it, that such person is mentally or physically incompetent or
a minor, and that a guardian, conservator or other person legally vested with the care of his estate has been
appointed.
10.06 Inability to Locate Payee. If the Plan Administrator is unable to make payment to any
Participant or other person to whom a payment is due under the Plan because he cannot ascertain the identity
or whereabouts of such Participants or other person after reasonable efforts have been made to identify or
locate such person such payment and all subsequent payments otherwise due to such Participant or other
person shall be forfeited seven (7) years after the date any such payment first became due.
10.07 Requirement for Proper Forms. All communications in connection with the Plan made by a
Participant shall become effective only when duly executed on any forms as may be required and furnished by,
and filed with, the Plan Administrator.
10.08 Source of Payments. The Employer, the Trust fund (if selected as Funding Agent), and any
insurance company contracts purchased or held by the Employer or funded pursuant to this Plan shall be the
sole sources of benefits under the Plan. No Employee or beneficiary shall have any right to, or interest in, any
assets of the Employer upon termination of employment or otherwise, except as provided from time to time
under the Plan, and then only to the extent of the benefits payable under the Plan to such Employee or
beneficiary.
18
PROUPI.4
10.09 Multiple Functions. Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
10.10 Tax Effects. Neither the Employer, its agents, the Plan Administrator, nor the Trustee makes
any warranty or other representation as to whether any Pre -tax Premiums made to or on behalf of any
Participant hereunder will be treated as excludable from gross income for local, state, or federal income tax
purposes. If for any reason it is determined that any amount paid for the benefit of a Participant or Beneficiary
are includable in an Employee's gross income for local, federal, or state income tax purposes, then under no
circumstances shall the recipient have any recourse against the Plan Administrator or the Employer with respect
to any increased taxes or other losses or damages suffered by the Employees as a result thereof. The Plan is
designed and is intended to be operated as a "cafeteria plan" under Section 125 of the Code.
10.11 Gender and Number. Masculine pronouns include the feminine as well as the neuter genders,
and the singular shall include the plural, unless indicated otherwise by the context.
10.12 Headings. The Article and Section headings contained herein are for convenience of reference
only, and shall not be construed as defining or limiting the matter contained thereunder.
10.13 Incorporation by Reference. Except for the Medical and Dependent Care Expense
Reimbursement Plan(s), the actual terms and conditions of the separate component Benefit Plans or Policies
offered under this Plan are contained in separate, written documents governing each respective benefit, and
shall govern in the event of a conflict' between the individual plan document, and this Plan as to substantive
content. To that end, each such separate document, as amended or subsequently replaced, is hereby
incorporated by reference as if fully recited herein. The provisions of the Medical and Dependent Care Expense
Reimbursement Plan(s) are reproduced herein, but shall constitute separate plans for purposes of all applicable
Code and ERISA provisions.
10.14 Severabflity. Should any part of this Plan subsequently be invalidated by a court of competent
jurisdiction, the remainder thereof shall be given effect to the maximum extent possible.
1
10.15 Effect of Mistake. In the event of a mistake as to the eligibility or participation of an Employee,
or the allocations made to the account of any Participant, or the amount of distributions made or to be made to
a Participant or other person, the Plan Administrator shall, to the extent it deems possible, cause to be allocated
or cause to be withheld or accelerated, or otherwise make adjustment of, such amounts as will in its judgment
accord to such Participant or other person the credits to the account or distributions to which he is properly
entitled under the Plan. Such action by the Administrator may include withholding of any amounts due the Plan
or the Employer from Compensation paid by the Employer.
19
PROUPI.4
10.16 Provisions Relating to Insurers. No insurer shall' be required or permitted to issue an
insurance policy or contract that is inconsistent with the purposes of this Plan, nor be bound to take any action
not in accordance with the terms of any policy or contract with this Plan. The insurer shall not be deemed to be
a party to this Plan, nor shall it be bound to interpret the construction or validity of the Plan. The insurer shall
be protected from its good faith reliance on the written representations and instructions of the Trustee and the
Plan Administrator, and shall not be responsible for the initial or continued qualified status of the Plan.
ARTICLE XI
CONTINUATION COVERAGE UNDER COBRA
The following provisions shall be applicable to any group health plan (as defined by Code 49808 and
5000(b)(1) and the regulations promulgated thereunder) subject to COBRA that does not otherwise contain
COBRA provisions.
11.01 Continuation Coverage after Termination of Normal Participation.
During any Plan Year during which the Employer is subject to Code Section 49808, each person who is a
Qualified Beneficiary shall have the right to elect to continue coverage under any group health plan subject to
COBRA upon the occurrence of a Qualifying Event that would otherwise result in such person losing coverage
hereunder. Such extended coverage under the plan is known as "Continuation Coverage."
11.02 Who is a "Qualified Beneficiary ". A "Qualified Beneficiary" is any person who is, as of the day
before a Qualifying Event, (a) an Eftloyee of the Employer (including persons who are considered to be
"employees" within Code Sec. 401(c), directors and independent contractors) covered under the Plan as of
such day (such persons are called "Covered Employees "), (b) the Spouse of the Covered Employee, or (c) a
Dependent of the Covered Employee. A Covered Employee can be a Qualified Beneficiary only if the Qualifying
Event consists of termination of employment (for any reason other than gross misconduct) or reduction of hours
of the Covered Employee's employment. A retiree or other former Employee actively participating in the Plan
by reason pf a previous period of employment will be treated as a "Qualified Beneficiary ".
11.03 Who is not a "Qualified Beneficiary ". A person is not a Qualified Beneficiary if, as of such
day, either the individual is covered under the group health plan by virtue of the election of Continuation
Coverage by another person and is not already a Qualified Beneficiary by reason of a prior Qualifying Event, or
is entitled to Medicare coverage under Title XVIII of the Social Security Act. Furthermore, an individual who fails
to elect Continuation Coverage within the election period provided in Section 11.07, below, shall not be
considered to be a Qualified Beneficiary.
11.04 What Is a "Qualifying Event ". Any of the following shall be considered as a "Qualifying Event ":
(a) death of a Covered Employee;
20
PROUPI.4
(b) termination (other than by reason of gross misconduct) of the Covered Employee's
employment or reduction of hours of employment;
(c) divorce or legal separation of a Covered Employee from the employee's spouse;
(d) a Covered Employee's becoming eligible to receive Medicare benefits under Title XVIII of the
Social Security Act; or
(e) a dependent child of a Covered Employee ceasing to be a Dependent.
In the case of any person treated as a Covered "Employee" but who is not a common -law employee,
termination of "employment" means termination of the relationship that originally gave rise to eligibility to
participate in the group health plan subject to COBRA.
11.05 What Benefit Is Available under Continuation Coverage. Each person who is eligible to elect
to continue coverage under Article XI shall have the right to continue the level of coverage in effect for the
Covered Employee on the day before the Qualifying Event (or a lesser level of coverage). A premium for
Continuation Coverage shall be charged to Employees and Qualified Beneficiaries in such amounts and shall be
payable at such times as are established by the Plan Administrator and permitted by applicable law.
11.06 Notice Requirements.
1
(a) When an Employee becomes covered under a group health plan subject to COBRA, the Plan
Administrator must inform the Participant (and spouse, if any) in writing of the rights to continued coverage, as
described in Article XI.
(b) The Employer shall give the Plan Administrator written notice of a Qualifying Event within thirty
(30) days of the occurrence thereof.
(c) Within fourteen (14) days of receipt of the Employer's notice,, the Plan, Administrator shall
furnish each Qualifying Beneficiary with written notification of the termination of regular: coVergg#"undorya'ny_=* d.
group health plan subject to COBRA, as well as a recital of the rights of any such Beneficiary to elect
Continuation Coverage, as required by Code Sec. 4980B and ERISA G01, in accordance with the terms of this
Plan.
(d) In the case of a Qualifying Event described in Section 11.04(c) or (e), a Covered Employee or a
Qualified Beneficiary who is a Spouse or Dependent of such Employee must notify the Plan Administrator within
sixty (60) days of the occurrence thereof. The Plan Administrator shall give written notification of Conversion
Coverage rights to any other affected Qualified Beneficiaries within fourteen (14) days of receipt of the notice
described in this Section 11.06(d).
Notwithstanding any of the foregoing, notification to a Qualified Beneficiary who is a spouse of a
Covered Employee is treated as notification to all other Qualified Beneficiaries residing with that person at the
time notification is made.
21
PROUPI.4
11.07 Election Period. Any Qualified Beneficiary entitled to Continuation Coverage shall have 60 days
from the date of the notice required by Section 11.06, in the case of occurrence of a Qualifying Event, in which
to return a signed election to the Plan Administrator indicating the choice to continue benefits under this Plan.
11.08 Duration of Continuation Coverage. Continuation Coverage shall extend for a period of 18
months after the date that regular coverage ceased due to occurrence of a Qualifying Event, unless during such
18 -month period a subsequent, Qualifying Event occurs, in which case, another election to extend coverage for
18 months shall be available to the Beneficiary. In the event a Covered Employee becomes entitled to
Medicare coverage, the period of Continuation Coverage for a Qualified Beneficiary, other than the Covered
Employee for such Qualifying Event or any subsequent Qualifying Event, shall not terminate for a period of 36
months from the date the Covered Employee becomes entitled to Medicare benefits. In no event, however,
shall Continuation Coverage extend more than 36 months beyond the date of the original Qualifying Event.
11.09 Automatic Termination of Continuation Coverage. Continuation Coverage shall automatically
cease if (a) the Employer no longer offers group health coverage to any of its employees (b) the required
premium for Continuation Coverage is not paid within 30 days of the date duo or within 45 days after the initial
election of Continuation Coverage made pursuant to Section 11.07 (whichever is later), (c) an electing Qualified
Beneficiary becomes covered under another group health plan other than a group health plan which may limit a
Qualified Beneficiary's coverage because it involves a pre - existing condition, or (d) an electing Qualified
Beneficiary becomes eligible to receive benefits under Medicare.
IN WITNESS WHEREOF, the Employer has executed this Flexible Benefits Plan, Medical Care Expense
Reimbursement Plan, and /or Dependent Care Expense Reimbursement Plan (as noted in the Adoption
Agreement), the date and year first written below, to be effective as set forth in the Adoption Agreement.
WITNESS
Corporal ecretary
Employer Cit of Pu to
By 'xt L u•
Title: Pr9 s ident of the City Council
Date: January 15. 1998
22
PROUPI.4
REIMBURSEMENT SERVICES AGREEMENT
Daily Processing Agreement - Other Bank
This Agreement, effective upon execution for the Plan Year, by and between
CITY OF PUEBLO, A MUNICIPAL CORPORATION
and American Family Life Assurance Company ( "AFLAC")
WITNESSETH:
WHEREAS, the Employer has adopted a Medical Care Expense Reimbursement
("URM") Plan and /or a Dependent Care Expense Reimbursement ("DDC")
Plan for its Employees in conjunction with its Flexible Benefits Plan
(collectively referred to as the "Plan" and attached hereto)to be
adopted and administered in accordance with Sections 105, 125, and 129
of the Internal Revenue Code of 1986, as amended (the !'Code "); and
WHEREAS, the Employer will either function as the Plan Administrator
or contract with a duly licensed third party administrator (other than
AFLAC) to be the Plan Administrator; and
WHEREAS, the Employer desires that AFLAC, as its agent, furnish
reimbursement services within a framework of policies, interpreta-
tions, rules, practices and procedures (the "reimbursement practices
and procedures ") made and established by the Employer and /or Plan
Administrator in (i) receiving and processing requests for benefits
under the Plan ( "Requests ") and (ii) disbursing benefit payments from
Employer funds (as provided for in Section II.A) for eligible expenses
under the flexible spending account provisions of the Plan; and
WHEREAS, the Employer: i) has established a se crate account (the
Account) with a financial institution acceptable to AFLAC for the
purpose of holding a portion of its general assets sufficient to
facilitate the payment of Plan benefits; and ii) will grant AFLAC
withdrawal authority over the Account sufficient to enable AFLAC to
draw benefit checks directly of the Account and /or electronically
transfer funds from the Account and deposit such Funds into an account
maintained by AFLAC (to facilitate the payment of Plan benefits)
without further approval of the Employer;
WHEREAS, the Employer is to retain all liabilities owed or established
under the plan to its Participants, and all responsibilities and
liabilities incident to maintaining the Account, (including, but not
limited to, Account funding, Account reconciliation, and any service
fees associated with the Account), and AFLAC is to provide the agreed
upon services to the Plan without assuming any such liability;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed as follows:
-1-
Section I. Enrollment and Determination of Eligibility
A. The Employer and /or Plan Administrator shall:
(1) respond to all routine inquiries from Employees concerning en-
rollment in the Plan, and its terms, conditions and operations;
and
(2) notify Plan Participants of their ability to apply for reimburse-
ment benefits and supply them with Request forms (to be provided
by AFLAC) and Request filing instructions; and
(3) provide AFLAC with names, addresses, Social Security Numbers, and
elected amounts of all participants in the Plan; and
(4) upon the occurrence of events that would change a Participant's
status under the Plan (e.g. termination, Change in Family Status,
etc.) immediately provide AFLAC with updates (via Telefax which
identify eligible Participants in each of the respective reim-
bursement Plans and /or the amount of reimbursement benefits for
which they area eligible; and
(5) immediately inform AFLAC (via Telefax) as to any new Participants
in either of the reimbursement Plans, any Change in Family
Status affecting a Participant's election, or any Qualified
Beneficiary electing coverage under COBRA (and the amount of such
election), or of any other change which will affect AFLAC's
responsibilities hereunder.
B. In determining any person's.right to benefits under the Plan, AFLAC
shall rely on the eligibility information furnished by the Employer
and /or Plan Administrator, and any signed statements by Participants
regarding the eligibility of their Requests under the respective Plan.
It is mutually understood that the effective performance of this
Agreement by AFLAC will require that it be advised on a timely basis
by the Employer and /or Plan Administrator during the continuance of
.this Agreement of the identity of individuals eligible for benefits
under each of the respective reimbursement Plans. Information modify-
ing a Participant's eligibility or status /election under either Plan
shall identify the effective date of eligibility and the termination
date of eligibility and shall be provided to AFLAC (via telefax) prior
to the effective date of such modification in order to be considered
by AFLAC in making benefit determinations hereunder. AFLAC shall not
be responsible for Requests paid in error where the Employer has
failed to inform AFLAC (in a form and with such information as may
reasonably be required by AFLAC) of a Participant's eligibility or
status change prior to the release of the benefit payment.
-2-
Section II. Funding and Payment of Reauests for the Plan Benefits
A. The Employer shall:
(i) establish the conduit Account at a financial institution
acceptable to AFLAC and arrange with the institution for
AFLAC to have withdrawal authority over the Account; and
make sufficient funds available from its general assets for
amounts allocable to eligible reimbursement benefits under
its plan by: i) depositing a "Maintenance Deposit" of at
least $ (two month's payroll deductions) in the Account; and
ii) arranging with the financial institution for overdraft
protection for the Account equal to (two month's payroll
deductions) to facilitate the timely processing of Requests
under the Plan; and
grant AFLAC withdrawal authority over the Account sufficient
to draw benefit checks directly on the Account and /or
electronically transfer funds from the Account and deposit
such Funds into an account maintained by AFLAC (to facili-
tate the ipayment of Plan benefits) without further approval
of the Employer;
(iv) deposit additional funds equal to the benefit payments
disbursed during the last Request Processing cycle (or such
other amount specified by and at the request of AFLAC) in
order to reestablish the Maintenance Deposit at the end of
each Request processing cycle (or such earlier time speci-
fied by AFLAC). 4
(vY telefax copies of all deposit verification receipts, Account
statements, and other correspondence relating to the Account
to AFLAC upon receipt from the depository institution.
During the term of this Agreement, the Employer shall not withdraw
funds from the Account, except at the request of, or to the extent
approved by AFLAC. In addition, Employer shall make available such
information relating to the Account as is deemed necessary by AFLAC.
The Employer bears sole responsibility for ensuring that there are
adequate funds in the Account and for reconciling the Account. If, at
any time, the amount of reimbursement benefits payable under the
applicable Plan provisions exceeds the amount deposited by the Em-
ployer in the Account, the Employer shall transfer such amounts to the
Account to fulfill its reimbursement obligations under the applicable
Plan. AFLAC is under no obligation to advance funds on behalf of the
Employer, and is not responsible for any fees imposed by the deposi-
tory institution with respect to the Account (including, but not
limited to Account maintenance fees, overdraft or insufficient fund
fees, fees with respect to voided checks, or Account balance inquiry
fees) .
-3-
B. In accordance with the terms and conditions of the Plan, and any
reimbursement practices and procedures prescribed by the Employer
and /or Plan Administrator, AFLAC, as agent for the employer and /or
Plan Administrator shall:
(1) receive Requests for, and expeditiously review such Requests to
determine what amount if any is due and payable with respect
thereto; and
(2) disburse the benefit payments it determines to be due from funds
deposited by the Employer in the Account (provided the
Employer has sufficient funds in the Account) in accordance with
the provisions of the plan and the following procedure(s):
(i) valid reimbursement for URM and /or DDC benefits shall be
paid by AFLAC by mailing a check in the appropriate
amount(s) directly to the Participants at their home ad-
dresses; and
(ii) if the amount of the (otherwise) reimbursable DDC Request
exceeds the amount the Participant had withheld for DDC
benefits, the excess shall be carried forward (within the
same Plan Year) and treated as an Eligible Employment
Related Expense for that month; and
(iii) if the amount of the reimbursable URM Request exceeds the
amount the Participant has had withheld for URM benefits,
the entire amount shall be reimburse provided the employer
makes available sufficient funds for AFLAC to satisfy the
Request; and
(iv) Requests of less than $15.00 may be carried forward and '
aggregated with future Requests until the reimbursable
amount is greater than $15.00, provided, however, that the
entire amount of the reimbursable Requests shall be paid
after the close of the Plan Year without regard to the
$15.00 threshold; and
(v) disbursements for Requests of $1,000 or more shall be
forwarded to the Employer for countersignature and disburse-
ment
(3) notify claimants as to any Requests which are denied because of
inadequate Request substantiation or improper Request form sub-
mission and give affected claimants the opportunity to resubmit
their Requests; and
-4-
(4) provide to the claimant within sixty (60) days following receipt
of a Request, written notification (A) as to the disposition of
the Request, or (B) of an anticipated delay beyond sixty (60)
days in the disposition of the Request together with an explana-
tion of the delay; and
(5) not claimant and refer to the Plan Administrator (with an
analysis of the issues affecting the Request) for final decision
any requests which AFLAC deems not to be reimbursable pursuant to
the terms of the Plan and /or the reimbursement practices and
procedures established by the Employer and /or Plan Administrator,
setting forth the applicable review procedure available to the
claimant through the Plan Administrator; and
C.
(6) provide the Employer and /or Plan Administrator with written
monthly and year -end reports summarizing the previous period's
URM and /or DDC and Account activities with sufficient detail to
provide for the audit and control of funds used; and
(7) provide the Employer and /or P1an.Administrator with the informa-
tion needed wbth respect to the URM and /or DDC Plans for
fulfilling annual reporting requirements and the preparation and
submission of a Form 5500 Series Annual Report by the Employer
and /or Plan Administrator to the Internal Revenue Service.
(8) with respect to Requests submitted for long -term expenses (e.g.,
installment contracts for obstetric and orthodontic charges), the
Employer as Plan Administrator directs AFLAC to reimburse only
.those Requests which are: i) accompanied Py substantiation (ac-
ceptable to AFLAC) verifying that the medical services relating
to the installment payment have been rendered and /or ii) deter-
mined by AFLAC to have been incurred after reviewing a proposed
treatment plan submitted by the medical service provider. Any
.long -term Requests submitted without the foregoing substantiation
will be returned to the Employer as Plan Administrator for
individual adjudication.
AFLAC shall not be obligated or responsible for any duty with regard
to the administration of the Plan (imposed by.the Plan or otherwise)
except as specifically provided above. It shall be the Employer
and /or Plan Administrator's sole responsibility and duty to: .
-5-
(1) comply with the applicable provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA), as amended including,
but not limited to, providing Covered Employees and Qualified
Beneficiaries covered by the URM with initial COBRA notices,
notices upon a Qualifying Event, and other information concerning
COBRA elections; and
(2) undertake and comply with any Internal Revenue Service require-
ments with regard to nondiscrimination as to eligibility and
participation in the Plan (including any applicable withholding
and /or reporting obligations applicable to the benefits by virtue
of the Plan being deemed to be discriminatory); and
(3) amend the Plan as necessary to comply with future changes in
applicable Internal Revenue or Labor statutes and regulations or
other federal, state, or local statutes or regulations; and
(4) determine if, and when, a valid Change in Family Status has
occurred, determine the appropriate election change, and convey
such information to AFLAC; and
1
(5) make a full and fair review of any unpaid Requests as described
in II.B.5., above, and required by the Plan and the Employee
Retirement Income Security Act of 1974 (" ERISA"), and notify the
claimant in writing of its decision on review within the time
limits and other ERISA requirements relating thereto; and
(G) prepare and submit summary plan descriptions and summary descrip-
tions of material modifications to each Employee and to the U.S.
Department of Labor as may from time to time be required; and
(7) prepare and submit a Summary Annual Report to each Plan Partici-
pant as may from time to time be required; and
(8) annually prepare a Form 5500 Series Annual Report and submit it
to the Internal Revenue Service within seven (7) months after the
end of the Plan Year; and
(9)' submit annual statements to Plan Participants showing the amounts
paid and /or expenses incurred as required by the Plan Document
and the Code; and
-G-
(10) take all other actions necessary to maintain and operate the Plan
in compliance with applicable provisions of the Plan, ERISA, the
Code, and any other applicable state and /or federal law.
D. In the event AFLAC pays any person less than the amount to which he or
she is entitled under the Plan, AFLAC will adjust the underpayment at
the end of the next reimbursement period for which a total payment of
$15.00 would result or at the end of the Plan Year. In the event that
AFLAC overpays any person entitled to benefits under the Plan, or pays
benefits to any person who is not entitled to them, AFLAC shall take
all reasonable steps to recover the overpayment except that AFLAC
shall not be required to initiate court proceedings to recover an
overpayment. AFLAC shall promptly notify the Employer if it is
unsuccessful in recovering any overpayment.
Section III. Liability and Indemnity
A. In performing its obligations under this Agreement, AFLAC neither
assumes nor underwrites any liability of the Employer under the Plan,
but, with respect to the Employer and /or Plan Administrator, acts only
as provider of thoge services specifically described in this Agreement
and with respect to Plan.Participants, acts only as the agent of the
Plan Administrator. The services to be performed by AFLAC shall be
ministerial in nature and shall be performed within the framework of
policies, interpretations, rules, practices, and procedures made or
established by the Employer and /or Plan Administrator. AFLAC shall
have no discretionary authority or discretionary control over any
assets of the Employer, the Plan, or Plan Participants.
B. 'AFLAC shall have no duty or-obligation to defend any legal action or
proceeding brought to recover a Request for Plan Benefits. AFLAC
shall, however, make available to the Plan Administrator and its
counsel, such evidence relevant to such action or proceeding as AFLAC
may have as a result of its processing of the contested benefit
determination.
C. Except as otherwise explicitly provided in this Agreement, the Em-
ployer shall retain the liability for all Plan benefit Requests and
all expenses incident to the Plan and for any.and all violations of
the Consolidated Omnibus Budget Reconciliation Act of 1985 ( "COBRA ")
and agrees to indemnify AFLAC for and hold it, its directors,
officers, and employees, harmless from all amounts and expenses
(including reasonable attorneys' fees and court costs) for which AFLAC
may become liable:
-7-
For any state premium, or similar tax, however, denominated,
including any penalties and interest payable with respect
thereto, assessed against AFLAC on the basis of and /or
measured by the amount of Plan benefit funds handled by
AFLAC pursuant to this Agreement;
In consequence of any acts or omissions by AFLAC, the Plan
Administrator, or the Employer (and their employees, agents,
or affiliates) arising out of this Agreement, or the admin-
istration of the Plan (including those alleged to be a
breach of fiduciary duty under ERISA), unless such act or
omission is attributable to the negligence of AFLAC or
AFLAC's breach of the terms of this agreement.
Arising from any legal action or proceeding to recover
benefits under the Plan; or
For any cost, charge, tax, fine, penalty,
however denominated, that may be assessed
Plan Administrator, or the Employer for a:
ERISA or the Code (including COBRA and /or
provisions, provided such violation shall
sult).
or interest,
against AFLAC, the
ay violation of
any COBRA- related
not be the re-
This indemnity shall survive the termination of this Agreement.
D. AFLAC shall use ordinary and reasonable care in the performance of its
duties, but shall not be liable to the Employer and /or Plan Adminis-
trator for mistakes of judgment or other actions taken in good faith
unless such error results directly from a negligent act of AFLAC, its
officers or employees.
E. AFLAC shall have no duty or obligation with respect to Request
incurred prior to the effective date of this Agreement (hereafter
"Prior Reimbursement Requests ") and /or Plan Administrator (or other)
services arising prior to the effective date of this Agreement
regardless of whether such services were /are to be performed prior to
or after the effective date of this Agreement (hereafter "Prior
Administration "). The Employer and /or Plan Administrator specifically
acknowledge(s) and agree(s) that: (i) AFLAC has no responsibility or
obligation with respect to Prior Reimbursement Requests and /or Prior
Administration; (ii) the Employer and /or Plan Administrator will be
responsible for processing Prior Reimbursement Requests (including any
run -off Requests submitted after the effective date of this Agreement)
and maintaining legally required records of all Prior
Reimbursement Requests and Prior Administration sufficient to comply
with applicable legal (e.g., IRS substantiation) requirements and
(iii) the Employer and /or Plan Administrator agree to indemnify and
hold AFLAC harmless for any liability relating to Prior Reimbursement
Requests and /or Prior Administration."
Wt
Section IV Reimbursement Request Processing Service Fee
A. The Employer shall pay AFLAC a fee for services performed under this
Agreement in the amount of $ 2.00 per Participant with a minimum
monthly fee of $15.00 for the reimbursement Plans for which services
are rendered. This amount shall be due by the tenth (10th) of each
month (or portion thereof) for which this Agreement is in effect and
is in addition to and separate from (i) any Account Establishment (or
"Set Up ") fee assessed by AFLAC of $0.00 to initiate the reimbursement
arrangement: and (ii) the Employers obligation to make available
sufficient funds to.satisfy its obligations under the Plan and to
adequately fund the Account to satisfy benefit disbursement in accor-
dance with section II.A. above. The Employer is responsible for
paying the Service Fee to AFLAC. AFLAC is not authorized to withdraw
the Service Fee from the Account. Failure to pay any applicable
monthly service Fee by the next monthly Requests processing cycle
shall result in a cessation of Request processing services until such
fees are received by AFLAC. If Request processing services are pended
for an entire monthly processing cycle, AFLAC may terminate this
Agreement in accordance with Section VI.
r
B. AFLAC may revise the Service Fee for services performed under this
Agreement effective on each Anniversary Date of this Agreement by
giving the Employer written notice of the revised rate at least ninety
(90) days prior to the applicable Anniversary Date.
Section V. Term of Agreement
The initial term of this Agreement shall be the initial Plan Year
commencing on the effective date, hereof, thereafter, this Agreement will
automatically renew for successive periods of twelve (12) months unless,
at least ninety (90) days prior to the end of the then current term, the
Employer or AFLAC gives written notice to the other of its intention not
to renew the Agreement.
Section VI. Termination of Agreement
A. This Agreement shall terminate upon the earliest of the following
dates:
(1) The end of a term of the Agreement following the delivery of
written notice of termination pursuant to Section V.
-9-
(2) At the option of AFLAC, the date upon which the Employer fails
to: i) transfer sufficient funds to the Account (upon request by
AFLAC) to pay all valid Requests pending under the Plan; or ii)
to pay the Service Fee (as provided in Section II.A and IV.A.,
above). AFLAC shall promptly communicate its election of this
option to the Employer.
(3) At the option of AFLAC, if no Plan Participant is an AFLAC
policyholder. AFLAC shall immediately communicate its election
of this option to the Employer.
(4) Any other date.mutually agreeable to the Employer and AFLAC.
B. Upon termination of this Agreement, AFLAC shall cease the processing
of all Requests then in its possession, return any undistributed funds
to the Employer, and make all records relating to Requests in process
reasonably available to the Employer. If'the termination.occurs
pursuant to VI.A.l (above), AFLAC shall process all run -off claims
provided any Service fee(s) is current. Thereafter, the Employer
and /or Plan Administrator shall be responsible for all aspects of
Reimbursement Requests processing and.Plan administration.
Section VII. Miscellaneous
(1) Notices. Any notice required to be given hereunder to AFLAC
shall be sufficient if in writing and delivered personally or by
prepaid first class mail to AFLAC, Flexible Benefits Division,
1932 Wynnton Road, Columbus, GA, 31999, or if to Employer, at the
address of the Employer denoted on the signature page attached
hereto.
(2) Applicable Law. This Agreement shall be governed by, and shall be
construed in accordance with the laws of the State of Colorado,
to the extent they are not preempted by ERISA, the Code, or any
other federal law.
(3) Legal and Tax Status. AFLAC is neither the Plan Administrator,
nor a named fiduciary of the Plan, and it is understood that the
Employer shall be the sole party responsible for determining the
legal and tax status of the Plan and Account under applicable law
AFLAC shall have no power or authority to waive, alter, breach or
modify any terms or conditions of the Plan.
(4) Assignment. This Agreement may be assigned by AFLAC to any
successor to the business of AFLAC by merger, consolidation,
purchase of assets, or otherwise, without the prior consent of
the Employer. This Agreement shall be binding upon any corpora-
tion into which the Employer may be merged or with which it may
be consolidated, or any corporation succeeding to all or substan-
tially all of the business of the Employer.
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(5) Entire Contract. This Agreement constitutes the entire contract
between the parties and no modification or amendment hereto shall
be valid unless in writing and signed by an officer of the
Employer and an Officer of duly authorized representative of
AFLAC.
(6) Tax Reporting and Withholdings. The Employer has ultimate
control over the payment of Plan benefits and shall be the sole
party responsible for income and employment tax reporting and
withholding obligations imposed as a result of the includability
of such payments in the gross income of recipients. AFLAC is a
mere agent of the Employer for the processing of benefit Re-
quests.
(7) Capitalized Terms shall have the same meaning as in the Plan
documents.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed in duplicate and signed by an Officer of the Employer and-an
Officer or duly authorized Home Office Employee of AFLAC to do so.
I
Dated at American Family Life Assurance Company
This day of 1 19
Cheryl.M. Moss
Second Vice President
Director of Administration /Compliance
Dated at Cit nr P1101110
This 15th day of January ' 19 98
By:
Preside of t'he City Council
Street Address: #1 City Hall Place
Pueblo, CO 81003
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JAN 16 '98 12:27 FROMt:FLEX ONE OPERATIONS SUPPORT 706- 596-2995
AFLAC /FLEX ONE"
T -617 P.02/02 F -084
FLEXIBLE SPENDING ACCOUNT INFORMATION SITEET
This sheet must be completed and returned to FLEX ONO 10 working days prior to your cafeteria
plan effective date to avoid a delay in processing Reimbursement Requests.
1. GENERAL ACCOUNT INFORMATION: List the primary contact for any financial transactions. Otherwise,
any Financial issues will be addressed to your pri mast as listed in your plan documents..
Company Namc: L C7 Tax 1D o 'T 6; 1—
Contnct: ^ 17�� -� Phone 7�9 `f"�O Ext
2. REMITTANCE OPTIONS Detailed banking and remittance of funds information is included in your sample
plan documents packet. Select One. -
Daily Using GB &T ( ) Daly Using Own Local Bank
Wire Transfer ( )
Other - Specify( )
3. PAYROLL CYCLE Specify first and second payroll dates after plan effective date for each payroll mode.
Payroll Mode " FSA Deductions lit Pqvroll Date 2nd Payroll Date
O Biweekly per year)
O Semimontly per year)
() weekly c pe r y ear)
() Other- Specify /�=per year)
"List only the number of payroll cycles in which an FSA deduction will be made.
4. FSA DEDUCTION VERIFICATION A report indicating the participant names, Social Security numbers,
annual elections, and pay period deduction amounts will be provided. Please check the thethod you desire.
4 Ex Autopost - You, as the Plan Administrator, must verify your payroll election report at the beginning of each plan year.
ONE will automatically post the participant's deduction amounts according to this report. Piece notify FLEX ONE
immediatel regarding terminations, new employees, or a change in family status. Failure to report these cb,anges could
result in an overpayment to participants. I.
Manual - You, as the Plan Administrator, must verity and fax your payroll election report to 1 ONE" every payroll
period. FLEX ONE will not be able to process Reimbursement Requests without this report. Please notify FLEX ONE
immediately regarding terminations, new employees, or a change in family status. Failure to report these changes could
result in an overpayment to participants.
ACKNOWLEDGMENT:
I acknowledge, as Plan Administrator, that I have read the above information and agree to comply with these requirements.
agree to indemnify and hold A.FLACTLEX ONE" harmless from any adverse tax consequences or overpayments that may
occur as a;esu5pLtha.(net}l od_wIccted or failure to notify FLEX ONE* of any changes or additions.
Z,AJ2�� "'*,\ - 16 try'"
.ANAD NISTRATU Lignulur required) eA TE
PLAN ADMJNP TRATOR (please print name)
�Il'l�t C%F'/.P:X �1Nt" it Jneinwtruru n IM Wynalon /toad Cvlun"hwr, G,w►lia J1999 1- 8114423•5341
JAN -08- 99.16 =35 FROM=
ID =17066607587 PAGE 2/2
...
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❑ The employer is required to open and maintain a conduit account for the Flexible Spending
Accounts (FSA) and must keep separate records for each FSA.
❑ If an account separate from the general asset account is chosen, the account should retain only
Flexible Spending Account (FSA) funds. The employer will be required to deposit two payroll
deduction amounts for each participant in the account.. The employer will be faxed a
confirmation of funds sheet after each processing cycle The emplover will be required to
confirm that funds are available to cover all reauests for reimburse and fax back to FLE)
prior to the release of reimbursement checks.
❑ The employer may choose to set up a zero balance account with the financial institution. If this
option is chosen, FLEX ONE will require a letter from the financial institution stating they will
cover any check or Electronic Funds Transfer (EFT).
The employer will need to obtain the required paperwork from the financial institution and send
to FLEX ONE for review. The following information is required:
/.Signature Cards- The signature cards must be completed and signed by the designated officers
of the employer prior to submission to FLEX ONE a . The signature cards
must contain adequate space for facsimile signatures of AFLAC personnel.
v : Counter Check: The financial institution will need to provide the employer with a counter
check, check encoding form or deposit slip. This information will provide
FLEX ONE with the routing number and account number.
".1ank Terms & This information provides specific details regarding liabilities and
Agreement requirements of all parties on the signature cards imposed by the financial
institution.
A. Signed by the officers of the employer authorizing the financial institution to
open the conduit account
It is vea important to obtain all of the necessary paperwork to expedite the process of setting up the
account. After FLEX ONE has reviewed the information, it will be signed by the designated AFLAC
personnel and returned to the employer.
NOTE: You cannot use AFLAC nor FLEX ONE as part of the bank account name. Identifying
the account as a trust account or a FSA account may impose additional audits required
by the Department of Labor. You may want to consult your tax or legal advisor
regarding identifying the proper name for the account.