HomeMy WebLinkAbout10- Health Reimbursement Arrangement and Flexible Benefit Plan, 2010.pdf ADOPTION AGREEMENT
FOR
HEALTH REIMBURSEMENT ARRANGEMENT
The undersigned Employer adopts this Health Reimbursement Arrangement and elects the following
provisions:
EMPLOYER INFORMATION
1. EMPLOYER'S NAME, ADDRESS AND TELEPHONE NUMBER:
Name: City of Bozeman
Address: P.O. Box 1230
Bozeman,MT 59771
Telephone: 406-5 82-2346
2. EMPLOYER'S TAXPAYER IDENTIFICATION NUMBER: 81-6001238
3. TYPE OF ENTITY:
a. ❑ Corporation (including Tax-exempt or Non-profit Corporation)
b. ❑ Professional Service Corporation
c. ❑ S Corporation
d. ❑ Limited Liability Company that is taxed as:
1. ❑ a Partnership or Sole Proprietorship
2. ❑ a Corporation
3. ❑ an S Corporation
e. ❑ Sole Proprietorship or Non-profit Corporation
f. ❑ Partnership(including Limited Liability)
g. ® Governmental Entity
h. ❑ Other
NOTE: S Corporation shareholders, partners, sole proprietors, and members of a Limited Liability
Company generally cannot participate in the Heath Reimbursement Arrangement.
PLAN INFORMATION
4. PLAN NAME: City of Bozeman Health ReimbursementArrangement,
5. EFFECTIVE DATE:
a. ® This is a new Health Reimbursement Arrangement effective as of July 1.2010.(hereinafter
called the"Effective Date').
b. ❑ This is an amendment and restatement of a previously established Health Reimbursement
Arrangement of the Employer which was originally effective (hereinafter called the
"Effective Date"). The effective date of this amendment and restatement is
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6. NUMBER assigned by the Employer:
a. ❑ 501
b. ❑ 502
c. ❑ 503
d. ® Other: 506
7. PLAN ADMINISTRATOR'S NAME,ADDRESS AND TELEPHONE NUMBER:
(If none is named,the Employer will become the Administrator.)
a. ® Employer(Use Employer address and telephone number).
b. ❑ Use name,address and telephone number below:
Name:
Address:
Telephone:
8. CLAIMS ADMINISTRATOR'S NAME,ADDRESS AND TELEPHONE NUMBER:
(If none is named,the Employer will serve as the Claims Administrator.)
a. ❑ Employer(Use Employer address and telephone number).
b. ® Use name,address and telephone number below:
Name: Allegiance Benefit Plan Management, Inc.
Address: PO Box 4346
Missoula, MT 59806
Telephone: (406)721-2222 or(877)424-3570
ELIGIBILITY REQUIREMENTS
9, ELIGIBLE EMPLOYEES:
a. ❑ N/A.No exclusions.
b. ❑ The following are excluded(select all that apply):
1. ❑ Union Employees
2. ❑ Non-resident aliens
3. ® Employees who are not eligible for the Employer's group medical plan
4. ❑ Salaried Employees
5. ❑ Hourly Employees
6. ❑ Leased Employees
7. ® Part-Time Employees who work,or are expected to work,less than 20 hours a week.
8. ❑ Other:
ARE DEPENDENTS COVERED?
❑ No
® Yes(check one below)
® Included under employee election
❑ Under own election(if so,we must send dependent information)
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10. THE FOLLOWING AFFILIATED EMPLOYERS will adopt this Health Reimbursement
Arrangement as Participating Employers(if there is more than one,or if Affiliated Employers adopt
this after the date the Adoption Agreement is executed, attach a list to this Adoption Agreement of
such Affiliated Employers including their names,addresses and taxpayer identification numbers):
a. ® N/A
b. ❑ Name of Affiliated Employer(s):
Address:
TIN:
IL CONDITIONS OF ELIGIBILITY:
Any Eligible Employee will be eligible to participate in the Health Reimbursement Arrangement upon
satisfaction of the following:
a. ® Date of Hire(No service required)
b. ❑ Same conditions as Employer's group medical plan
c. ❑ years after date of hire
d. ❑ months after date of hire
e. ❑ days after date of hire
f. ❑ Other:
12. EFFECTIVE DATE OF PARTICIPATION:
An Eligible Employee who has satisfied the eligibility requirements will become a Participant on:
a. ❑ the day on which such requirements are satisfied.
b. ® the first day of the month coinciding with or next following the date on which such
requirements are satisfied.
c. ❑ the first day of the calendar quarter coinciding with or next following the date on which such
requirements are satisfied.
d. ❑ the first day of the pay period coinciding with or next following the date on which such
requirements are met.
e. ❑ the first day of the Coverage Period coinciding with or next following the date on which such
requirements are satisfied.
f. ❑ same date as Employer's group medical plan.
BENEFITS
13. MAXIMUM BENEFIT PER COVERAGE PERIOD:
a. ❑ $ per participant; $ per participant&dependent; $ per family
b. ® Other: The monthly HRA benefit equals any remaining amount after the premium for the
health plan elected is deducted from the Employer share The total HRA benefit equals the
monthly benefit time six months(July 1 2010-December 31 20101 The Total benefit accrues
monthly,and is available for reimbursement of eligible medical expenses after accrual
IS THERE AN HRA DEDUCTIBLE?
a. ® No
b. ❑ Yes $ per participant; $ per participant and dependents;$ per family.
14. COVERAGE PERIOD is:
a. ® yearly,and available balance will be updated monthly
b. ❑ quarterly, and available balance will be updated quarterly
c. ❑ yearly, and available balance will be updated annually
d. ❑ Other:
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15. THIS ARRANGEMENT SHALL REIMBURSE: (select all that apply)
a. ❑ co-payments under the Employer's group medical plan
b. ❑ deductibles under the Employer's group medical plan
c. ® all medical expenses within the meaning of Code Section 213
d. ❑ medical insurance premiums
e. ❑ the following types of medical expenses ONLY:
£ ❑ Other:
16. IF THE EMPLOYER MAINTAINS A HEALTH FLEXIBLE SPENDING ACCOUNT, WHICH
PLAN SHALL PAY EXPENSES FIRST?
a. ❑ N/A.The Employer does not maintain a Health Flexible Spending Account and/or Cafeteria
Plan.
b. ❑ This Plan (Heath Reimbursement Arrangement).
c. ® The Health Flexible Spending Account under the Employer's Cafeteria Plan.
17. IS THE EMPLOYER SUBJECT TO THE FAMILY AND MEDICAL LEAVE ACT?
If b. is selected,FMLA will not apply.
a. ® Yes.
b. ❑ No.
18. IS THE PLAN SUBJECT TO COBRA?
If b. is selected, COBRA will not apply.
a. ® Yes.
b. ❑ No.
19. CARRY FORWARD:Amounts not used during a Coverage Period shall:
a. ❑ Be carried forward to the next Coverage Period,in an amount up to $ However, the
maximum accumulation limit for a Coverage Period is$
b. ® Shall be forfeited.
20. RETIREES OR OTHER TERMINATED EMPLOYEES SHALL:
a. ❑ Shall continue to be eligible for reimbursement of any remaining balances.
b. ❑ May not participate and any unused amounts are forfeited.
21. A CLAIM may be submitted up to:
a. ® June 30, 2011 and expenses may be accrued until March 15 2011
b. ® 90 days after termination of emplo3inent,
The Contractor Allegiance Benefit Plan Management agrees not to discriminate in the fulfillment
of this Agreement on the basis of race, color,religion,creed, sex, age,marital status, national
origin or actual or perceived sexual orientation,gender identity or disability.
The Contractor Allegiance Benefit Plan Management agrees this requirement shall apply to the
hiring and treatment of the Contractor's employees and to all subcontracts.
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This Adoption Agreement may be used only in conjunction with The Health Reimbursement Arrangement
Basic Plan Document.This Adoption Agreement and the Health Reimbursement Arrangement document shall
together be known as the Health Reimbursement Arrangement.
EMPLOYER: City of Bozeman
By:ck�d
�X"-
Title: C f"C
Page 5
HEALTHREIMBURSEMENT
ARRANGEMENT
BASIC PLAN DOCUMENT
FOR
CITY OF BOZEMAN
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
PARTICIPATION
2.1 Eligibility ............................................................................................................ 3
2.2 Effective Date of Participation ............................................................................ 3
2.3 Termination of Participation ............................................................................... 3
ARTICLE III
BENEFITS
3.1 Establishment of Plan ......................................................................................... 4
3.2 Nondiscrimination Requirements ....................................................................... 4
3.3 Health Reimbursement Arrangement Claims ..................................................... 5
ARTICLE IV
ERISA PROVISIONS
4.1 Claim for Benefits .............................................................................................. 5
4.2 Named Fiduciary ................................................................................................ 7
4.3 General Fiduciary Responsibilities ..................................................................... 7
4.4 Nonassignability of Rights ................................................................................. 8
ARTICLE V
ADMINISTRATION
5.1 Plan Administration ............................................................................................ 8
5.2 Examination of Records ..................................................................................... 9
5.3 Payment of Expenses .......................................................................................... 9
5.4 Indemnification of Administrator ....................................................................... 9
ARTICLE VI
AMENDMENT OR TERMINATION OF PLAN
6.1 Amendment ........................................................................................................ 9
6.2 Termination ........................................................................................................ 9
ARTICLE VII
MISCELLANEOUS
7.1 Plan Interpretation ............................................................................................ 10
7.2 Gender and Number.......................................................................................... 10
7.3 Written Document ............................................................................................ 10
7.4 Exclusive Benefit .............................................................................................. 10
7.5 Participant's Rights .......................................................................................... 10
7.6 Action by the Employer .................................................................................... 10
7.7 No Guarantee of Tax Consequences ................................................................ 11
7.8 Indemnification of Employer by Participants .................................................... 11
7.9 Funding .............................................................................................................. 11
7.10 Governing Law .................................................................................................. 11
7.11 Severability ........................................................................................................ 11
7.12 Captions ............................................................................................I...............1 12
7.13 Continuation of Coverage .................................................................................. 12
7.14 Family and Medical Leave Act .......................................................................... 12
7.15 Health Insurance Portability and Accountability Act ........................................ 12
7.16 Uniformed Services Employment and Reemployment Rights Act ................... 12
HEALTH REIMBURSEMENT ARRANGEMENT
As used in this Plan, the following words and phrases shall have the meanings set forth herein
unless a different meaning is clearly required by the context:
ARTICLE I
DEFINITIONS
1.1 "Administrator" means the individual(s) or committee appointed by the Employer to
carry out the administration of the Plan. In the event the Administrator has not been
appointed, or resigns from a prior appointment, the Employer shall be deemed to be the
Administrator.
1.2 "Affiliated Employer" means any corporation which is a member of a controlled group
of corporations (as defined in Code Section 414(b)) which includes the Employer; any
trade or business (whether or not incorporated) which is under common control (as
defined in Code Section 414(c)) with the Employer; any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in Code
Section 414(m)) which includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to Treasury regulations under Code Section
414(o).
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Coverage Period" means the time period as set forth in the Adoption Agreement.
1.5 "Dependent" means any individual who qualifies as a dependent under Code Section
152 (as modified by Code Section 105(b)).
1.6 "Effective Date"means July 1, 2010.
1.7 "Eligible Employee" means any Eligible Employee as elected in the Adoption
Agreement and as provided herein. An individual shall not be an "Eligible Employee"
if such individual is not reported on the payroll records of the Employer as a common
law employee. In particular, it is expressly intended that individuals not treated as
common law employees by the Employer on its payroll records are not "Eligible
Employees" and are excluded from Plan participation even if a court or administrative
agency determines that such individuals are common law employees and not
independent contractors. Furthermore, Employees of an Affiliated Employer will not be
treated as "Eligible Employees" prior to the date the Affiliated Employer adopts the
Plan as a Participating Employer.
However, a self-employed individual as defined under Code Section 401(c) or a
2-percent shareholder as defined under Code Section 1372(b) shall not be eligible to
participate in this Plan.
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1.8 "Employee" means any person who is employed by the Employer. The term
"Employee" shall also include any person who is an employee of an Affiliated
Employer and any Leased Employee deemed to be an Employee as provided in Code
Section 414(n) or(o).
1.9 "Employer" means City of Bozeman, and any successor which shall maintain this Plan
and any predecessor which has maintained this Plan. In addition, unless the context
means otherwise, the term "Employer" shall include any Participating Employer which
shall adopt this Plan.
1.10 "Employer Contribution"means the amounts contributed to the Plan by the Employer.
1.11 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
1.12 "Leased Employee" means, effective with respect to Plan Years beginning on or after
January 1, 1997, any person (other than an Employee of the recipient Employer) who,
pursuant to an agreement between the recipient Employer and any other person or
entity ("leasing organization"), has performed services for the recipient (or for the
recipient and related persons determined in accordance with Code Section 414(n)(6))
on a substantially full time basis for a period of at least one year, and such services are
performed under primary direction or control by the recipient Employer. Contributions
or benefits provided a Leased Employee by the leasing organization which are
attributable to services performed for the recipient Employer shall be treated as
provided by the recipient Employer. Furthermore, Compensation for a Leased
Employee shall only include Compensation from the leasing organization that is
attributable to services performed for the recipient Employer.
A Leased Employee shall not be considered an employee of the recipient Employer if:
(a) such employee is covered by a money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least ten percent (10%) of compensation,
as defined in Code Section 415(c)(3), but for Plan Years beginning prior to January 1,
1998, including amounts contributed pursuant to a salary reduction agreement which
are excludable from the employee's gross income under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b), or for Plan Years beginning on or after January 1, 2001 (or as of
a date, no earlier than January 1, 1998, as specified in an addendum to the Adoption
Agreement), 132(f)(4), (2)immediate participation, and (3) full and immediate vesting;
and (b) leased employees do not constitute more than twenty percent (20%) of the
recipient Employer's nonhighly compensated workforce.
1.13 "Participant" means any Eligible Employee who has satisfied the requirements of
Section 2.1 and has not for any reason become ineligible to participate further in the
Plan.
1.14 "Plan"means this Basic Plan Document and the Adoption Agreement as adopted by the
Employer, including all amendments thereto.
1.15 "Premiums"mean the Participant's cost for any health plan coverage.
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1.16 "Qualifying Medical Expenses" means any expense eligible for reimbursement under
the Health Reimbursement Arrangement which would qualify as a "medical expense"
(within the meaning of Code Section 213 and the rulings and Treasury regulations
thereunder) of the Participant, the Participant's spouse or a Dependent and not
otherwise used by the Participant as a deduction in determining the Participant's tax
liability under the Code or reimbursed under any other health coverage, including a
health Flexible Spending Account. Qualifying Medical Expenses covered by this Plan
are limited as elected in the Adoption Agreement. Furthermore, a Participant may not
be reimbursed for "qualified long-term care services" as defined in Code Section
7702B(c).
ARTICLE II
PARTICIPATION
2.1 Eligibility
Any Eligible Employee shall be eligible to participate hereunder on the date such
Employee satisfies the conditions of eligibility elected in the Adoption Agreement.
2.2 Effective Date of Participation
An Eligible Employee who has satisfied the conditions of eligibility pursuant to Section
2.1 shall become a Participant effective as of the date elected in the Adoption
Agreement.
If an Employee, who has satisfied the Plan's eligibility requirements and would
otherwise have become a Participant, shall go from a classification of a noneligible
Employee to an Eligible Employee, such Employee shall become a Participant on the
date such Employee becomes an Eligible Employee or, if later, the date that the
Employee would have otherwise entered the Plan had the Employee always been an
Eligible Employee.
If an Employee, who has satisfied the Plan's eligibility requirements and would
otherwise become a Participant, shall go from a classification of an Eligible Employee
to a noneligible class of Employees, such Employee shall become a Participant in the
Plan on the date such Employee again becomes an Eligible Employee, or, if later, the
date that the Employee would have otherwise entered the Plan had the Employee always
been an Eligible Employee.
2.3 Termination of Participation
This Section shall be applied and administered consistent with any rights a Participant
and the Participant's Dependents may be entitled to pursuant to Code Section 498013,
Section 7.13 of the Plan, or any election on the Adoption Agreement. In the case of the
death of the Participant, any remaining balances may only be paid out as
reimbursements for Qualifying Medical Expenses and shall not constitute a death
benefit to the Participant's estate and/or the Participant's beneficiaries.
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ARTICLE III
BENEFITS
3.1 Establishment of Plan
(a) This Health Reimbursement Arrangement is intended to qualify as a Health
Reimbursement Arrangement under Code Section 105 and shall be interpreted in
a manner consistent with such Code Section and the Treasury regulations
thereunder.
(b) Participants in this Health Reimbursement Arrangement may submit claims for
the reimbursement of Qualifying Medical Expenses as defined under the Plan and
the Adoption Agreement. Unless otherwise elected in the Adoption Agreement,
this Plan shall reimburse any expenses only after amounts in all other Plans that
could reimburse the expense have been exhausted.
(c) The Employer shall make available to each Participant an Employer Contribution
as elected in the Adoption Agreement, for the reimbursement of Qualifying
Medical Expenses. No salary reductions may be made to this Health
Reimbursement Arrangement.
(d) This Plan shall not be coordinated or otherwise connected to the Employer's
cafeteria plan (as defined in Code Section 125), except as permitted by the Code
and the Treasury regulations thereunder, to the extent necessary to maintain this
Plan as a Health Reimbursement Arrangement.
3.2 Nondiscrimination Requirements
(a) It is the intent of this Health Reimbursement Arrangement not to discriminate in
violation of the Code and the Treasury regulations thereunder.
(b) If the Administrator deems it necessary to avoid discrimination under this Health
Reimbursement Arrangement, it may, but shall not be required to reduce benefits
provided to "highly compensated individuals" (as defined in Code Section 105(h))
in order to assure compliance with this Section. Any act taken by the
Administrator under this Section shall be carried out in a uniform and
nondiscriminatory manner.
(c) The Contractor Allegiance Benefit Plan Management agrees not to discriminate in
the fulfillment of this Agreement on the basis of race, color, religion, creed, sex,
age, marital status, national origin or actual or perceived sexual orientation,
gender identity or disability.
(d) The Contractor Allegiance Benefit Plan Management agrees this requirement shall
apply to the hiring and treatment of the Contractor's employees and to all
subcontracts.
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3.3 Expense Reimbursement
(a) The Administrator shall direct the reimbursement to each eligible Participant for
all Qualifying Medical Expenses. All Qualifying Medical Expenses eligible for
reimbursement pursuant to Section 3.1(b) shall be reimbursed during the
Coverage Period, even though the submission of such a claim occurs after his
participation hereunder ceases;but provided that the Qualifying Medical Expenses
were incurred during a Coverage Period. Claims must include receipts or
documentation that the expense being incurred is eligible for reimbursement, in
order to claim reimbursement. Expenses may be reimbursed in subsequent
Coverage Periods. However, a Participant may not submit claims incurred prior to
beginning participation in the Plan and/or the Effective Date of the Plan,
whichever is earlier.
(b) Notwithstanding the foregoing, if elected in the Adoption Agreement, Qualifying
Medical Expenses shall not be reimbursable under this Plan if eligible for
reimbursement and claimed under the Employer's Health Flexible Spending
Account.
(c) Claims for the reimbursement of Qualifying Medical Expenses incurred in any
Coverage Period shall be paid as soon after a claim has been filed as is
administratively practicable; provided however,that if a Participant fails to submit
a claim within the period elected in the Adoption Agreement immediately
following the end of the Coverage Period, those Medical Expense claims shall not
be considered for reimbursement by the Administrator.
(d) Reimbursement payments under this Plan shall be made directly to the Participant.
(e) If the maximum amount available for reimbursement for a Coverage Period is not
utilized in its entirety, such remainder shall be carried forward to another
Coverage Period or forfeited, as elected in the Adoption Agreement.
ARTICLE IV
ERISA PROVISIONS
4.1 Claim for Benefits
Any claim for Benefits shall be made to the Administrator. The following timetable for
claims and rules below apply:
Notification of whether claim is accepted or denied 30 days
Extension due to matters beyond the control of the Plan 15 days
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Insufficient information on the Claim:
Notification of 15 days
Response by Participant 45 days
Review of claim denial 60 days
The Administrator will provide written or electronic notification of any claim denial.
The notice will state:
(1) The specific reason or reasons for the denial.
(2) Reference to the specific Plan provisions on which the denial was based.
(3) A description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary.
(4) A description of the Plan's review procedures and the time limits
applicable to such procedures. This will include a statement of the right to
bring a civil action under section 502 of ERISA following a denial on
review.
(5) A statement that the claimant is entitled to receive, upon request and free
of charge reasonable access to, and copies of, all documents, records, and
other information relevant to the Claim.
(6) If the denial was based on an internal rule, guideline, protocol, or other
similar criterion, the specific rule, guideline, protocol, or criterion will be
provided free of charge. If this is not practical, a statement will be included
that such a rule, guideline, protocol, or criterion was relied upon in malting
the denial and a copy will be provided free of charge to the claimant upon
request.
When the Participant receives a denial, the Participant shall have 180 days following
receipt of the notification in which to appeal the decision. The Participant may submit
written comments, documents, records, and other information relating to the Claim. If
the Participant requests, the Participant shall be provided, free of charge, reasonable
access to, and copies of, all documents, records, and other information relevant to the
Claim.
The period of time within which a denial on review is required to be made will begin at
the time an appeal is filed in accordance with the procedures of the Plan. This timing is
without regard to whether all the necessary information accompanies the filing.
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A document, record, or other information shall be considered relevant to a Claim if it:
(1) was relied upon in making the claim determination;
(2) was submitted, considered, or generated in the course of making the claim
determination, without regard to whether it was relied upon in making the
claim determination;
(3) demonstrated compliance with the administrative processes and safeguards
designed to ensure and to verify that claim determinations are made in
accordance with Plan documents and Plan provisions have been applied
consistently with respect to all claimants; or
(4) constituted a statement of policy or guidance with respect to the Plan
concerning the denied claim.
The review will take into account all comments, documents, records, and other
information submitted by the claimant relating to the Claim, without regard to whether
such information was submitted or considered in the initial claim determination. The
review will not afford deference to the initial denial and will be conducted by a fiduciary
of the Plan who is neither the individual who made the adverse determination nor a
subordinate of that individual.
4.2 Named Fiduciary
The "named Fiduciaries' of this Plan are (1) the Employer and (2) the Administrator.
The named Fiduciaries shall have only those specific powers, duties, responsibilities,
and obligations as are specifically given them under the Plan including, but not limited
to, any agreement allocating or delegating their responsibilities, the terms of which are
incorporated herein by reference. In general, the Employer shall have the sole
responsibility for providing benefits under the Plan; and shall have the sole authority to
appoint and remove the Administrator; and to amend the elective provisions of the
Adoption Agreement or terminate, in whole or in part, the Plan. The Administrator shall
have the sole responsibility for the administration of the Plan, which responsibility is
specifically described in the Plan. Furthermore, each named Fiduciary may rely upon
any such direction, information or action of another named Fiduciary as being proper
under the Plan, and is not required under the Plan to inquire into the propriety of any
such direction, information or action. It is intended under the Plan that each named
Fiduciary shall be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under the Plan. Any person or group may serve in more
than one Fiduciary capacity.
4.3 General Fiduciary Responsibilities
The Administrator and any other fiduciary under ERISA shall discharge their duties
with respect to this Plan solely in the interest of the Participants and their beneficiaries
and
(a) for the exclusive purpose of providing Benefits to Participants and their
beneficiaries and defraying reasonable expenses of administering the Plan;
(b) with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with like
aims; and
(c) in accordance with the documents and instruments governing the Plan insofar as
such documents and instruments are consistent with ERISA.
4.4 Nonassignability of Rights
The right of any Participant to receive any reimbursement under the Plan shall not be
alienable by the Participant by assignment or any other method, and shall not be subject
to the rights of creditors, and any attempt to cause such right to be so subjected shall not
be recognized, except to such extent as may be required by law.
ARTICLE V
ADMINISTRATION
5.1 Plan Administration
The operation of the Plan shall be under the supervision of the Administrator. It shall be
a principal duty of the Administrator to see that the Plan is carried out in accordance
with its terms, and for the exclusive benefit of Employees entitled to participate in the
Plan. The Administrator shall have full power to administer the Plan in all of its details,
subject, however, to the pertinent provisions of the Code. The Administrator's powers
shall include, but shall not be limited to the following authority, in addition to all other
powers provided by this Plan:
(a) To make and enforce such rules and regulations as the Administrator deems
necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan, the Administrator's interpretations thereof in good faith to
be final and conclusive on all persons claiming benefits under the Plan;
(c) To decide all questions concerning the Plan and the eligibility of any person to
participate in the Plan and to receive benefits provided under the Plan;
(d) To limit benefits for certain highly compensated individuals if it deems such to be
desirable in order to avoid discrimination under the Plan in violation of applicable
provisions of the Code;
(e) To approve reimbursement requests and to authorize the payment of benefits; and
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(f) To appoint such agents, counsel, accountants, consultants, and actuaries as 1-flay be
required to assist in administering the Plan.
Any procedure, discretionary act, interpretation or construction taken by the
Administrator shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the Plan shall
continue to comply with the terms of Code Section 105(h) and the Treasury regulations
thereunder.
5.2 Examination of Records
The Administrator shall snake available to each Participant, Eligible Employee and any
other Employee of the Employer such records as pertain to their interest under the Plan
for examination at reasonable times during normal business hours.
5.3 Indemnification of Administrator
The Employer agrees to indemnify and to defend to the fullest extent permitted by law
any Employee serving as the Administrator or as a member of a committee designated
as Administrator (including any Employee or former Employee who previously served
as Administrator or as a member of such committee) against all liabilities, damages,
costs and expenses (including attorney's fees and amounts paid in settlement of any
claims approved by the Employer) occasioned by any act or omission to act in
connection with the Plan, if such act or omission is in good faith.
ARTICLE VI
AMENDMENT OR TERMINATION OF PLAN
6.1 Amendment
The Employer, at any time or from time to time, may amend any or all of the provisions
of the Plan without the consent of any Employee or Participant.
6.2 Termination
The Employer is establishing this Plan with the intent that it will be maintained for an
indefinite period of time. Notwithstanding the foregoing, the Employer reserves the
right to terminate the Plan, in whole or in part, at any time. In the event the Plan is
terminated,no further reimbursements shall be made.
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ARTICLE V11
MISCELLANEOUS
7.1 Plan Interpretation
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. This Plan shall be read in its entirety and not severed except
as provided in Section 7.11.
7.2 Gender and Number
Wherever any words are used herein in the masculine, feminine or neuter gender, they
shall be construed as though they were also used in another gender in all cases where
they would so apply, and whenever any words are used herein in the singular or plural
form, they shall be construed as though they were also used in the other form in all cases
where they would so apply.
7.3 Written Document
This Plan, in conjunction with any separate written document which may be required by
law, is intended to satisfy the written Plan requirement of Code Section 105 and any
Treasury regulations thereunder.
7.4 Exclusive Benefit
This Plan shall be maintained for the exclusive benefit of the Employees who participate
in the Plan.
7.5 Participant's Rights
This Plan shall not be deemed to constitute an employment contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall be
deemed to give any Participant or Employee the right to be retained in the service of the
Employer or to interfere with the right of the Employer to discharge any Participant or
Employee at any time regardless of the effect which such discharge shall have upon him
as a Participant of this Plan.
7.6 Action by the Employer
Whenever the Employer under the terms of the Plan is permitted or required to do or
perform any act or matter or thing, it shall be done and performed by a person duly
authorized by its legally constituted authority.
10
7.7 No Guarantee of Tax Consequences
Neither the Administrator nor the Employer makes any commitment or guarantee that
any amounts paid to or for the benefit of a Participant under the Plan will be excludable
from the Participant's gross income for federal or state income tax purposes, or that any
other federal or state tax treatment will apply to or be available to any Participant. It
shall be the obligation of each Participant to determine whether each payment under the
Plan is excludable from the Participant's gross income for federal and state income tax
purposes, and to notify the Employer if the Participant has reason to believe that any
such payment is not so excludable. Notwithstanding the foregoing, the rights of
Participants under this Plan shall be legally enforceable.
7.8 Indemnification of Employer by Participants
If any Participant receives one or more payments or reimbursements under the Plan that
are not for a permitted Medical Expense such Participant shall indemnify and reimburse
the Employer for any liability it may incur for failure to withhold federal or state income
tax or Social Security tax from such payments or reimbursements. However, such
indemnification and reimbursement shall not exceed the amount of additional federal
and state income tax (plus any penalties) that the Participant would have owed if the
payments or reimbursements had been made to the Participant as regular cash
compensation, plus the Participant's share of any Social Security tax that would have
been paid on such compensation, less any such additional income and Social Security
tax actually paid by the Participant.
7.9 Funding
Unless otherwise required by law, amounts made available by the Employer need not be
placed in trust, but may instead be considered general assets of the Employer.
Furthermore, and unless otherwise required by law, nothing herein shall be construed to
require the Employer or the Administrator to maintain any fund or segregate any amount
for the benefit of any Participant, and no Participant or other person shall have any
claim against, right to, or security or other interest in, any fund, account or asset of the
Employer from which any payment under the Plan may be made.
7.10 Construction of Plan
This Plan and Trust shall be construed and enforced according to the Code, ERISA, and
the laws of the state or commonwealth in which the Employer's principal office is
located (unless otherwise designated in the Adoption Agreement), other than its laws
respecting choice of law, to the extent not pre-empted by ERISA.
7.11 Severability
If any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability shall not affect any other provisions of the Plan, and the Plan shall be
construed and enforced as if such provision had not been included herein.
11
7.12 Headings
The headings and subheadings of this Plan have been inserted for convenience of
reference and are to be ignored in any construction of the provisions hereof.
7.13 Continuation of Coverage
Notwithstanding anything in the Plan to the contrary, in the event any benefit under this
Plan subject to the continuation coverage requirement of Code Section 4980B becomes
unavailable, each qualified beneficiary (as defined in Code Section 4980B) will be
entitled to continuation coverage as prescribed in Code Section 4980B.
7.14 Family and Medical Leave Act
Notwithstanding anything in the Plan to the contrary, in the event any benefit under this
Plan becomes subject to the requirements of the Family and Medical Leave Act and
regulations thereunder, this Plan shall be operated in accordance with Proposed
Regulation 1.125-3.
7.15 Health Insurance Portability and Accountability Act
Notwithstanding anything in this Plan to the contrary, this Plan shall be operated in
accordance with HIPAA and regulations thereunder.
7.16 Uniformed Services Employment and Reemployment Rights Act
Notwithstanding any provision of this Plan to the contrary, contributions, benefits and
service credit with respect to qualified military service shall be provided in accordance
with USERRA and the regulations thereunder.
12
CERTIFICATE OF ADOPTING RESOLUTION
The undersigned Principal of City of Bozeman (the Employer) hereby certifies that the following
resolutions were duly adopted by the board on MLme- 21 2b10 > and that such
resolutions have not been modified or rescinded as of the date hereof ,
RESOLVED, that the Health Reimbursement Arrangement effective July 1, 2010, presented to
this meeting is hereby approved and adopted and that the proper officers of the Employer are
hereby authorized and directed to execute and deliver to the Administrator of the Plan one or
more counterparts of the Plan.
RESOLVED, that the Administrator shall be instructed to take such actions that are deemed
necessary and proper in order to implement the Plan, and to set up adequate accounting and
administrative procedures to provide benefits under the Plan.
The undersigned further certifies that attached hereto is a true copy of the Health Reimbursement
Arrangement and the Summary Plan Description approved and adopted in the foregoing
resolutions.
By:
Date:
.'� •'W"W 7.
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b
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13
PLAN DOCUMENT
for the
FLEXIBLE BENEFITS PLAN
For The Employees of
CITY OF BOZEMAN
PLAN EFFECTIVE DATE:
AUGUST 1, 1995
PLAN DOCUMENT EFFECTIVE DATE:
JULY 1 , 2010
GROUP NUMBER:
8001004
EMPLOYER ID NUMBER:
81-6001238
PLAN NUMBER:
501
}ALLEGIANCE
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE 11
PARTICIPATION
2.1 ELIGIBILITY...................................................................................................................3
2.2 EFFECTIVE DATE OF PARTICIPATION.......................................................................4
2.3 APPLICATION TO PARTICIPATE .................................................................................4
2.4 TERMINATION OF PARTICIPATION ............................................................................4
2.5 CHANGE OF EMPLOYMENT STATUS.........................................................................4
2.6 TERMINATION OF EMPLOYMENT...............................................................................5
2.7 DEATH...........................................................................................................................6
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 EMPLOYER CONTRIBUTION.......................................................................................6
3.2 SALARY REDIRECTION ...............................................................................................6
3.3 APPLICATION OF CONTRIBUTIONS...........................................................................6
3.4 PERIODIC CONTRIBUTIONS .......................................................................................7
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS.......................................................................................................7
4.2 HEALTH FLEXIBLE SPENDING ACCOUNT BENEFIT .................................................7
4.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT BENEFIT...............................8
4.4 HEALTH INSURANCE BENEFIT...................................................................................8
4.5 DENTAL INSURANCE BENEFIT...................................................................................8
4.6 GROUP-TERM LIFE INSURANCE BENEFIT ................................................................8
4.7 CANCER INSURANCE BENEFIT..................................................................................9
4.8 VISION INSURANCE BENEFIT.....................................................................................9
4.9 ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE BENEFIT.....................9
4.10 PRESCRIPTION DRUG COVERAGE BENEFIT............................................................9
4.11 OTHER INSURANCE BENEFIT...................................................................................10
4.12 HEALTH SAVINGS ACCOUNT BENEFIT....................................................................10
4.13 CASH BENEFIT...........................................................................................................10
4.14 NONDISCRIMINATION REQUIREMENTS..................................................................10
ARTICLE V
PARTICIPANT ELECTIONS
5.1 INITIAL ELECTIONS....................................................................................................11
5.2 SUBSEQUENT ANNUAL ELECTIONS........................................................................11
5.3 FAILURE TO ELECT...................................................................................................12
5.4 CHANGE IN STATUS..................................................................................................12
ARTICLE VI
HEALTH FLEXIBLE SPENDING ACCOUNT
6.1 ESTABLISHMENT OF PLAN.......................................................................................15
6.2 DEFINITIONS..............................................................................................................15
6.3 FORFEITURES............................................................................................................17
6.4 LIMITATION ON ALLOCATIONS.................................................................................17
6.5 NONDISCRIMINATION REQUIREMENTS..................................................................17
6.6 COORDINATION WITH CAFETERIA PLAN................................................................18
6.7 HEALTH FLEXIBLE SPENDING ACCOUNT CLAIMS .................................................18
ARTICLE VII
DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
7.1 ESTABLISHMENT OF ACCOUNT...............................................................................19
7.2 DEFINITIONS..............................................................................................................19
7.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS ..........................................21
7.4 INCREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS ................21
7.5 DECREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS...............21
7.6 ALLOWABLE DEPENDENT CARE REIMBURSEMENT..............................................21
7.7 ANNUAL STATEMENT OF BENEFITS........................................................................21
7.8 FORFEITURES............................................................................................................21
7.9 LIMITATION ON PAYMENTS......................................................................................21
7.10 NONDISCRIMINATION REQUIREMENTS..................................................................21
7.11 COORDINATION WITH CAFETERIA PLAN ................................................................22
7.12 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS...............................22
ARTICLE VIII
BENEFITS AND RIGHTS
8.1 CLAIM FOR BENEFITS...............................................................................................24
8.2 APPLICATION OF BENEFIT PLAN SURPLUS............................................................25
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATION ............................................................................................25
9.2 EXAMINATION OF RECORDS....................................................................................26
9.3 PAYMENT OF EXPENSES..........................................................................................26
9.4 INSURANCE CONTROL CLAUSE ..............................................................................26
9.5 INDEMNIFICATION OF ADMINISTRATOR.................................................................27
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 AMENDMENT..............................................................................................................27
10.2 TERMINATION ............................................................................................................27
ARTICLE XI
MISCELLANEOUS
11.1 PLAN INTERPRETATION............................................................................................27
11.2 GENDER AND NUMBER.............................................................................................27
11.3 WRITTEN DOCUMENT...............................................................................................28
11.4 EXCLUSIVE BENEFIT.................................................................................................28
11.5 PARTICIPANT'S RIGHTS............................................................................................28
11.6 ACTION BY THE EMPLOYER.....................................................................................28
11.7 EMPLOYER'S PROTECTIVE CLAUSES.....................................................................28
11.8 NO GUARANTEE OF TAX CONSEQUENCES............................................................28
11.9 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS ..........................................29
11.10 FUNDING ....................................................................................................................29
11.11 GOVERNING LAW......................................................................................................29
11.12 SEVERABILITY...........................................................................................................29
11.13 CAPTIONS ..................................................................................................................29
11.14 FAMILY AND MEDICAL LEAVE ACT (FMLA)..............................................................29
11.15 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)...........29
11.16 UNIFORM SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
(USERRA) ...................................................................................................................30
11.17 COMPLIANCE WITH HIPAA PRIVACY STANDARDS ................................................30
11.18 COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS ......................32
11.19 MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT.......................................32
11.20 GENETIC INFORMATION NONDISCRIMINATION ACT (GINA).................................32
11.21 HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008.......................32
CITY OF BOZEMAN
FLEXIBLE BENEFITS PLAN
INTRODUCTION
The Employer has amended this Plan effective July 1, 2010, to recognize the
contribution made to the Employer by its Employees. Its purpose is to reward them by providing
benefits for those Employees who shall qualify hereunder and their Dependents and
beneficiaries. The concept of this Plan is to allow Employees to choose among different types of
benefits based on their own particular goals, desires and needs. This Plan is a restatement of a
Plan which was originally effective on August 1, 1995. The Plan shall be known as City of
Bozeman Flexible Benefits Plan (the "Plan").
The intention of the Employer is that the Plan qualify as a "Cafeteria Plan" within
the meaning of Section 125 of the Internal Revenue Code of 1986, as amended, and that the
benefits which an Employee elects to receive under the Plan be excludable from the
Employee's income under Section 125(a) and other applicable sections of the Internal Revenue
Code of 1986, as amended.
ARTICLE I
DEFINITIONS
1.1 "Administrator" means the individual(s) or corporation appointed by the
Employer to carry out the administration of the Plan. The Employer shall be empowered to
appoint and remove the Administrator from time to time as it deems necessary for the proper
administration of the Plan. In the event the Administrator has not been appointed, or resigns
from a prior appointment, the Employer shall be deemed to be the Administrator.
1.2 "Affiliated Employer" means the Employer and any corporation which is a
member of a controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in Code Section 414(c)) with the Employer; any organization
(whether or not incorporated) which is a member of an affiliated service group (as defined in
Code Section 414(m)) which includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to Treasury regulations under Code Section 414(o).
1.3 "Benefit" or "Benefit Options" means any of the optional benefit choices
available to a Participant as outlined in Section 4.1.
1.4 "Cafeteria Plan Benefit Dollars" means the amount available to Participants to
purchase Benefit Options as provided under Section 4.1. Each dollar contributed to this Plan
shall be converted into one Cafeteria Plan Benefit Dollar.
1.5 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.6 "Compensation" means the amounts received by the Participant from the
Employer during a Plan Year.
1.7 "Dependent" means any individual who qualifies as a dependent under Code
Section 152 (as modified by Code Section 105(b)).
1.8 "Effective Date" means August 1, 1995.
1
1.9 "Election Period" means the 30 day period immediately preceding the
beginning of each Plan Year. However, an Employee's initial Election Period shall be
determined pursuant to Section 5.1.
1.10 "Eligible Employee" means any Employee who has satisfied the provisions of
Section 2.1.
An individual shall not be an "Eligible Employee" if such individual is not reported
on the payroll records of the Employer as a common law employee. In particular, it is expressly
intended that individuals not treated as common law employees by the Employer on its payroll
records are not "Eligible Employees" and are excluded from Plan participation even if a court or
administrative agency determines that such individuals are common law employees and not
independent contractors.
However, any Employee who is a "part-time" Employee shall not be eligible to
participate in this Plan. A "part-time" Employee is any Employee who works, or is expected to
work on a regular basis, less than 20 hours a week and is designated as a part-time Employee
on the Employer's personnel records.
1.11 "Employee" means any person who is employed by the Employer. The term
Employee shall include leased employees within the meaning of Code Section 414(n)(2).
1.12 "Employer" means City of Bozeman and any successor which shall maintain
this Plan; and any predecessor which has maintained this Plan. In addition, where appropriate,
the term Employer shall include any Participating, Affiliated or Adopting Employer.
1.13 "Employer Contribution" means the contributions made by the Employer
pursuant to Section 3.1 to enable a Participant to purchase Benefits. These contributions shall
be converted to Cafeteria Plan Benefit Dollars and allocated to the funds or accounts
established under the Plan pursuant to the Participants' elections made under Article V and as
set forth in Section 3.1.
1.14 "Grace Period" means, with respect to any Plan Year, the time period ending on
the fifteenth day of the third calendar month after the end of such Plan Year, during which Medical
Expenses and Employment-Related Dependent Care Expenses incurred by a Participant will be
deemed to have been incurred during such Plan Year.
1.15 "HDHP" means a qualifying High Deductible Health Plan which meets applicable
statutory requirements as defined under Code Section 223.
1.16 "Insurance Contract" means any contract issued by an Insurer underwriting a
Benefit.
1.17 "Insurance Premium Payment Plan" means the plan of benefits contained in
Section 4.1 of this Plan, which provides for the payment of Premium Expenses.
1.18 "Insurer" means any insurance company that underwrites a Benefit under this
Plan.
1.19 "Key Employee" means an Employee described in Code Section 416(i)(1) and
the Treasury regulations thereunder.
1.20 "Participant" means any Eligible Employee who elects to become a Participant
pursuant to Section 2.3 and has not for any reason become ineligible to participate further in the
Plan.
2
1.21 "Plan" means this instrument, including all amendments thereto.
1.22 "Plan Year" means the 12-month period beginning January 1 and ending
December 31. The Plan Year shall be the coverage period for the Benefits provided for under
this Plan. In the event a Participant commences participation during a Plan Year, then the initial
coverage period shall be that portion of the Plan Year commencing on such Participant's date of
entry and ending on the last day of such Plan Year.
1.23 "Premium Expenses" or "Premiums" mean the Participant's cost for the
Benefits described in Section 4.1.
1.24 "Premium Expense Reimbursement Account" means the account established
for a Participant pursuant to this Plan to which part of his Cafeteria Plan Benefit Dollars may be
allocated and from which Premiums of the Participant may be paid or reimbursed. If more than
one type of insured Benefit is elected, sub-accounts shall be established for each type of
insured Benefit.
1.25 "Salary Redirection" means the contributions made by the Employer on behalf
of Participants pursuant to Section 3.2. These contributions shall be converted to Cafeteria Plan
Benefit Dollars and allocated to the funds or accounts established under the Plan pursuant to
the Participants' elections made under Article V.
1.26 "Salary Redirection Agreement" means an agreement between the Participant
and the Employer under which the Participant agrees to reduce his Compensation or to forego
all or part of the increases in such Compensation and to have such amounts contributed by the
Employer to the Plan on the Participant's behalf. The Salary Redirection Agreement shall apply
only to Compensation that has not been actually or constructively received by the Participant as
of the date of the agreement (after taking this Plan and Code Section 125 into account) and,
subsequently does not become currently available to the Participant.
1.27 "Spouse" means "spouse" as defined in an Insurance Contract for purposes of
that Contract or the legally married husband or wife of a Participant, unless legally separated by
court decree.
ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder 30 days after his
initial date of employment with the Employer (or the Effective Date of the Plan, if later).
Regardless of the preceding, an Eligible Employee shall be eligible to participate hereunder with
respect to the Health and/or Dependent Care Flexible Spending Accounts as of his date of
employment. However, any Eligible Employee who was a Participant in the Plan on the effective
date of this amendment shall continue to be eligible to participate in the Plan.
Any Eligible Employee shall be eligible to participate in a limited purpose Flexible
Spending Account hereunder as of the date he satisfies the eligibility requirements for coverage
under a HDHP, enrolls for coverage under such HDHP, does not have other coverage under a
non-HDHP that would disqualify the Eligible Employee, and is not entitled for Medicare.
3
2.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the first day of
the month coinciding with or next following the date on which he met the eligibility requirements
of Section 2.1.
2.3 APPLICATION TO PARTICIPATE
An Employee who is eligible to participate in this Plan shall, during the applicable
Election Period, complete an application to participate and election of benefits form which the
Administrator shall furnish to the Employee. The election made on such form shall be
irrevocable until the end of the applicable Plan Year unless the Participant is entitled to change
his Benefit elections pursuant to Section 5.4 hereof.
An Eligible Employee shall also be required to execute a Salary Redirection
Agreement during the Election Period for the Plan Year during which he wishes to participate in
this Plan. Any such Salary Redirection Agreement shall be effective for the first pay period
beginning on or after the Employee's effective date of participation pursuant to Section 2.2.
2.4 TERMINATION OF PARTICIPATION
A Participant shall no longer participate in this Plan upon the occurrence of any
of the following events:
(a) Termination of employment. The Participant's termination of
employment, subject to the provisions of Section 2.6;
(b) Change in employment status. The end of the Plan Year during
which the Participant became a limited Participant because of a change in
employment status pursuant to Section 2.5;
(c) Death. The Participant's death, subject to the provisions of
Section 2.7; or
(d) Termination of the plan. The termination of this Plan, subject to
the provisions of Section 10.2.
2.5 CHANGE OF EMPLOYMENT STATUS
If a Participant ceases to be eligible to participate because of a change in
employment status or classification (other than through termination of employment), the
Participant shall become a limited Participant in this Plan for the remainder of the Plan Year in
which such change of employment status occurs. As a limited Participant, no further Salary
Redirection may be made on behalf of the Participant, and, except as otherwise provided
herein, all further Benefit elections shall cease, subject to the limited Participant's right to
continue coverage under any Insurance Contracts. However, any balances in the limited
Participant's Dependent Care Flexible Spending Account may be used during such Plan Year to
reimburse the limited Participant for any allowable Employment-Related Dependent Care
incurred during the Plan Year. Subject to the provisions of Section 2.6, if the limited Participant
later becomes an Eligible Employee, then the limited Participant may again become a full
Participant in this Plan, provided he otherwise satisfies the participation requirements set forth in
this Article II as if he were a new Employee and made an election in accordance with Section
5.1.
4
2.6 TERMINATION OF EMPLOYMENT
If a Participant's employment with the Employer is terminated for any reason
other than death, his participation in the Benefit Options provided under Section 4.1 shall be
governed in accordance with the following:
(a) Insurance Benefit. With regard to Benefits which are insured, the
Participant's participation in the Plan shall cease, subject to the Participant's right
to continue coverage under any Insurance Contract for which premiums have
already been paid.
(b) Dependent Care FSA. With regard to the Dependent Care
Flexible Spending Account, the Participant's participation in the Plan shall cease
and no further Salary Redirection contributions shall be made. However, such
Participant may submit claims for employment related Dependent Care Expense
reimbursements for claims incurred up to the date of termination and submitted
within 30 days after the end of the Plan Year, based on the level of the
Participant's Dependent Care Flexible Spending Account as of the date of
termination.
(c) Health FSA. With regard to the Health Flexible Spending Account,
the Participant may elect to continue his participation in the Plan.
(1) If the Participant elects to continue participation in the Health
Flexible Spending Account for the remainder of the Plan Year in which
such termination occurs, the Participant may continue to seek
reimbursement from the Health Flexible Spending Account. The
Participant shall be required to make contributions to the fund based on
the elections made prior to the beginning of the Plan Year.
(2) If the Participant does not elect to continue participation in the
Health Flexible Spending Account for the remainder of the Plan Year in
which such termination occurs, the Participant's participation in the Plan
shall cease and no further Salary Redirection contributions shall be made.
However, such Participant may submit claims for expenses that were
incurred during the portion of the Plan Year before the end of the period
for which payments to the Health Flexible Spending Account have already
been made for claims incurred up to the date of termination and
submitted within 30 days after termination.
(d) Health FSA treatment. In the event a Participant terminates his
participation in the Health Flexible Spending Account during the Plan Year, if
Salary Redirections are made other than on a pro rats basis, upon termination
the Participant shall be entitled to a reimbursement for any Salary Redirection
previously paid for coverage or benefits relating to the period after the date of the
Participant's separation from service regardless of the Participant's claims or
reimbursements as of such date.
(e) Employer Contributions. With regard to Employer Contributions,
if the Participant elects to continue coverage under the Benefit, such contribution
shall continue to the Health Flexible Spending Account on behalf of the
Participant up to the end of the period for which payments are made to the Plan.
5
2.7 DEATH
If a Participant dies, his participation in the Plan shall cease. However, such
Participant's spouse or Dependents may submit claims for expenses or benefits for the
remainder of the Plan Year or until the Cafeteria Plan Benefit Dollars allocated to each specific
benefit are exhausted. In no event may reimbursements be paid to someone who is not a
spouse or Dependent.
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 EMPLOYER CONTRIBUTION
The Employer shall make available to each Participant an Employer Contribution
to be used for any Benefit under the Plan in an amount to be determined by the Employer prior
to the beginning of each Plan Year. Each Participant's Employer Contribution shall be converted
to Cafeteria Plan Benefit Dollars and be available to purchase Benefits as set forth above. The
Employer's Contribution shall be made on a pro rata basis for each pay period of the
Participant. If no Benefits are selected, there shall be no Employer Contribution.
3.2 SALARY REDIRECTION
If a Participant's Employer Contribution is not sufficient to cover the cost of
Benefits or Premium Expenses he elects pursuant to Section 4.1, his Compensation will be
reduced in an amount equal to the difference between the cost of Benefits he elected and the
amount of Employer Contribution available to him. Such reduction shall be his Salary
Redirection, which the Employer will use on his behalf, together with his Employer Contribution,
to pay for the Benefits he elected. The amount of such Salary Redirection shall be specified in
the Salary Redirection Agreement and shall be applicable for a Plan Year. Notwithstanding the
above, for new Participants, the Salary Redirection Agreement shall only be applicable from the
first day of the pay period following the Employee's entry date up to and including the last day of
the Plan Year. These contributions shall be converted to Cafeteria Plan Benefit Dollars and
allocated to the funds or accounts established under the Plan pursuant to the Participants'
elections made under Article V and as set forth in Section 3.1.
Any Salary Redirection shall be determined prior to the beginning of a Plan Year
(subject to initial elections pursuant to Section 5.1) and prior to the end of the Election Period
and shall be irrevocable for such Plan Year. However, a Participant may revoke a Benefit
election or a Salary Redirection Agreement after the Plan Year has commenced and make a
new election with respect to the remainder of the Plan Year, if both the revocation and the new
election are on account of and consistent with a change in status and such other permitted
events as determined under Article V of the Plan and consistent with the rules and regulations
of the Department of the Treasury. Salary Redirection amounts shall be contributed on a
pro rata basis for each pay period during the Plan Year. All individual Salary Redirection
Agreements are deemed to be part of this Plan and incorporated by reference hereunder.
3.3 APPLICATION OF CONTRIBUTIONS
As soon as reasonably practical after each payroll period, the Employer shall
apply the Employer Contribution and Salary Redirection to provide the Benefits elected by the
affected Participants. Any contribution made or withheld for the Health Flexible Spending
Account or Dependent Care Flexible Spending Account shall be credited to such fund or
account. Amounts designated for the Participant's Premium Expense Reimbursement Account
shall likewise be credited to such account for the purpose of paying Premium Expenses.
6
3.4 PERIODIC CONTRIBUTIONS
Notwithstanding the requirement provided above and in other Articles of this Plan
that Salary Redirections be contributed to the Plan by the Employer on behalf of an Employee
on a level and pro rata basis for each payroll period, the Employer and Administrator may
implement a procedure in which Salary Redirections are contributed throughout the Plan Year
on a periodic basis that is not pro rata for each payroll period. However, with regard to the
Health Flexible Spending Account, the payment schedule for the required contributions may not
be based on the rate or amount of reimbursements during the Plan Year. In the event Salary
Redirections to the Health Flexible Spending Account are not made on a pro rata basis, upon
termination of participation, a Participant may be entitled to a refund of such Salary Redirections
pursuant to Section 2.6.
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS
Each Participant may elect any one or more of the following optional Benefits:
(1) Health Flexible Spending Account
(2) Dependent Care Flexible Spending Account
(3) Insurance Premium Payment Plan
(i) Health Insurance Benefit
(ii) Dental Insurance Benefit
(iii) Group-Term Life Insurance Benefit
(iv) Cancer Insurance Benefit
(v) Vision Insurance Benefit
(vi) Accidental Death and Dismemberment Insurance
Benefit
(vii) Prescription Drug Coverage Benefit
(viii) Other Insurance Benefit
(4) Health Savings Account Benefit
4.2 HEALTH FLEXIBLE SPENDING ACCOUNT BENEFIT
Each Participant may elect to participate in the Health Flexible Spending Account
option, in which case Article VI shall apply.
7
4.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT BENEFIT
Each Participant may elect to participate in the Dependent Care Flexible
Spending Account option, in which case Article VII shall apply.
4.4 HEALTH INSURANCE BENEFIT
(a) Coverage for Participant and Dependents. Each Participant
may elect to be covered under a health Insurance Contract for the Participant, his
or her Spouse, and his or her Dependents.
(b) Employer selects contracts. The Employer may select suitable
health Insurance Contracts for use in providing this health insurance benefit,
which policies will provide uniform benefits for all Participants electing this
Benefit.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such health Insurance Contract shall be
determined therefrom, and such Insurance Contract shall be incorporated herein
by reference.
4.5 DENTAL INSURANCE BENEFIT
(a) Coverage for Participant and/or Dependents. Each Participant
may elect to be covered under the Employer's dental Insurance Contract. In
addition, the Participant may elect either individual or family coverage under such
Insurance Contract.
(b) Employer selects contracts. The Employer may select suitable
dental Insurance Contracts for use in providing this dental insurance benefit,
which policies will provide uniform benefits for all Participants electing this
Benefit.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such dental Insurance Contract shall be
determined therefrom, and such dental Insurance Contract shall be incorporated
herein by reference.
4.6 GROUP-TERM LIFE INSURANCE BENEFIT
(a) Coverage for Participant only. Each Participant may elect to be
covered under the Employer's group-term life Insurance Contract.
(b) Employer selects contracts. The Employer may select suitable
group-term life Insurance Contracts for use in providing this group-term life
insurance benefit, which policies will provide benefits for all Participants electing
this Benefit on a uniform basis.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such group-term life Insurance Contract
shall be determined therefrom, and such group-term life Insurance Contract shall
be incorporated herein by reference.
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4.7 CANCER INSURANCE BENEFIT
(a) Coverage for Participant and/or Dependents. Each Participant
may elect to be covered under the Employer's cancer Insurance Contract. In
addition, the Participant may elect either individual or family coverage.
(b) Employer selects contracts. The Employer may select suitable
cancer Insurance Contracts for use in providing this cancer insurance benefit,
which policies will provide uniform benefits for all Participants electing this
Benefit.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such cancer Insurance Contract shall
be determined therefrom, and such cancer Insurance Contract shall be
incorporated herein by reference.
4.8 VISION INSURANCE BENEFIT
(a) Coverage for Participant and/or Dependents. Each Participant
may elect to be covered under the Employer's vision Insurance Contract. In
addition, the Participant may elect either individual or family coverage.
(b) Employer selects contracts. The Employer may select suitable
vision Insurance Contracts for use in providing this vision insurance benefit,
which policies will provide uniform benefits for all Participants electing this
Benefit.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such vision Insurance Contract shall be
determined therefrom, and such vision Insurance Contract shall be incorporated
herein by reference.
4.9 ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE BENEFIT
(a) Coverage for Participant and/or Dependents. Each Participant
may elect to be covered under the Employer's accidental death and
dismemberment Insurance Contract.
(b) Employer selects contracts. The Employer may select suitable
accidental death and dismemberment policies for use in providing this accidental
death and dismemberment insurance benefit, which policies will provide uniform
benefits for all Participants electing this Benefit.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such accidental death and
dismemberment Insurance Contract shall be determined therefrom, and such
accidental death and dismemberment Insurance Contract shall be incorporated
herein by reference.
4.10 PRESCRIPTION DRUG COVERAGE BENEFIT
(a) Coverage for Participant and/or Dependents. Each Participant
may elect to be covered under the Employer's Prescription Drug Coverage
Contract.
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(b) Employer selects contracts. The Employer may select suitable
prescription drug coverage for use in providing this benefit, including, but not
limited to, if applicable, by-mail services and prescription drug cards, which will
provide uniform benefits for all Participants electing this Benefit.
(c) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from such prescription drug coverage
contract shall be determined therefrom, and such Contract shall be incorporated
herein by reference.
4.11 OTHER INSURANCE BENEFIT
(a) Employer selects contracts. The Employer may select additional
health or other policies allowed under Code Section 125 or allow the purchase of
additional health or other policies by and for Participants, which policies will
provide uniform benefits for all Participants electing this Benefit.
(b) Contract incorporated by reference. The rights and conditions
with respect to the benefits payable from any additional Insurance Contract shall
be determined therefrom, and such Insurance Contract shall be incorporated
herein by reference.
4.12 HEALTH SAVINGS ACCOUNT BENEFIT
Each Participant may elect to have a portion of his Employer Contributions and
Salary Redirections contributed to a Health Savings Account, as defined in Code Section 223.
The amounts contributed shall be subject to the terms of the Health Savings Account as
established.
4.13 CASH BENEFIT
If a Participant does not elect any Salary Redirections, such Participant shall be
deemed to have chosen the Cash Benefit as his sole Benefit Option. However, if a Participant
fails to make any election of Benefit Option, then the Employer Contribution will be deemed to
be waived.
4.14 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory. It is the intent of this Plan to
provide benefits to a classification of employees which the Secretary of the
Treasury finds not to be discriminatory in favor of the group in whose favor
discrimination may not occur under Code Section 125.
(b) 25% concentration test. It is the intent of this Plan not to provide
qualified benefits as defined under Code Section 125 to Key Employees in
amounts that exceed 25% of the aggregate of such Benefits provided for all
Eligible Employees under the Plan. For purposes of the preceding sentence,
qualified benefits shall not include benefits which (without regard to this
paragraph) are includible in gross income.
(c) Adjustment to avoid test failure. If the Administrator deems it
necessary to avoid discrimination or possible taxation to Key Employees or a
group of employees in whose favor discrimination may not occur in violation of
Code Section 125, it may, but shall not be required to, reject any election or
reduce contributions or non-taxable Benefits in order to assure compliance with
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this Section. Any act taken by the Administrator under this Section shall be
carried out in a uniform and nondiscriminatory manner. If the Administrator
decides to reject any election or reduce contributions or non-taxable Benefits, it
shall be done in the following manner. First, the non-taxable Benefits of the
affected Participant (either an employee who is highly compensated or a Key
Employee, whichever is applicable) who has the highest amount of non-taxable
Benefits for the Plan Year shall have his non-taxable Benefits reduced until the
discrimination tests set forth in this Section are satisfied or until the amount of his
non-taxable Benefits equals the non-taxable Benefits of the affected Participant
who has the second highest amount of non-taxable Benefits. This process shall
continue until the nondiscrimination tests set forth in this Section are satisfied.
With respect to any affected Participant who has had Benefits reduced pursuant
to this Section, the reduction shall be made proportionately among Health
Flexible Spending Account Benefits and Dependent Care Flexible Spending
Account Benefits, and once all these Benefits are expended, proportionately
among insured Benefits. Contributions which are not utilized to provide Benefits
to any Participant by virtue of any administrative act under this paragraph shall
be forfeited and deposited into the benefit plan surplus.
(d) The Contractor Allegiance Benefit Plan Management agrees not to
discriminate in the fulfillment of this Agreement on the basis of race, color,
religion, creed, sex, age, marital status, national origin or actual or perceived
sexual orientation, gender identity or disability.
(e) The Contractor Allegiance Benefit Plan Management agrees this
requirement shall apply to the hiring and treatment of the Contractor's employees
and to all subcontracts.
ARTICLE V
PARTICIPANT ELECTIONS
5.1 INITIAL ELECTIONS
An Employee who meets the eligibility requirements of Section 2.1 on the first
day of, or during, a Plan Year may elect to participate in this Plan for all or the remainder of
such Plan Year, provided he elects to do so on or before his effective date of participation
pursuant to Section 2.2.
5.2 SUBSEQUENT ANNUAL ELECTIONS
During the Election Period prior to each subsequent Plan Year, each Participant
shall be given the opportunity to elect, on an election of benefits form to be provided by the
Administrator, which Benefit options he wishes to select. Any such election shall be effective for
any Benefit expenses incurred during the Plan Year which follows the end of the Election
Period. With regard to subsequent annual elections, the following options shall apply:
(a) A Participant or Employee who failed to initially elect to participate
may elect different or new Benefits under the Plan during the Election Period;
(b) A Participant may terminate his participation in the Plan by
notifying the Administrator in writing during the Election Period that he does not
want to participate in the Plan for the next Plan Year, or by not electing any
Benefit options;
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(c) An Employee who elects not to participate for the Plan Year
following the Election Period will have to wait until the next Election Period before
again electing to participate in the Plan, except as provided for in Section 5.4.
5.3 FAILURE TO ELECT
Any Participant failing to complete an election of benefits form pursuant to
Section 5.2 by the end of the applicable Election Period shall be deemed to have elected not to
participate in the Plan for the upcoming Plan Year. No further Salary Redirections shall
therefore be authorized for such subsequent Plan Year.
5.4 CHANGE IN STATUS
(a) Change in status defined. Any Participant may change a Benefit
election after the Plan Year (to which such election relates) has commenced and
make new elections with respect to the remainder of such Plan Year if, under the
facts and circumstances, the changes are necessitated by and are consistent with
a change in status which is acceptable under rules and regulations adopted by the
Department of the Treasury, the provisions of which are incorporated by reference.
Notwithstanding anything herein to the contrary, if the rules and regulations
conflict, then such rules and regulations shall control.
In general, a change in election is not consistent if the change in status is
the Participant's divorce, annulment or legal separation from a Spouse, the death
of a Spouse or Dependent, or a Dependent ceasing to satisfy the eligibility
requirements for coverage, and the Participant's election under the Plan is to
cancel accident or health insurance coverage for any individual other than the one
involved in such event. In addition, if the Participant, Spouse or Dependent gains
or loses eligibility for coverage, then a Participant's election under the Plan to
cease or decrease coverage for that individual under the Plan corresponds with
that change in status only if coverage for that individual becomes applicable or is
increased under the family member plan.
Regardless of the consistency requirement, if the individual's dependent
becomes eligible for continuation coverage under the Employer's group health plan
as provided in Code Section 4980B or any similar state or federal law, then the
individual may elect to increase payments under this Plan in order to pay for the
continuation coverage. However, this does not apply for COBRA eligibility due to
divorce, annulment or legal separation.
Any new election shall be effective at such time as the Administrator shall
prescribe, but not earlier than the first pay period beginning after the election form
is completed and returned to the Administrator. For the purposes of this
subsection, a change in status shall only include the following events or other
events permitted by Treasury regulations:
(1) Legal Marital Status: events that change a Participant's legal
marital status, including marriage, divorce, death of a Spouse, legal
separation or annulment;
(2) Number of Dependents: Events that change a Participant's number
of Dependents, including birth, adoption, placement for adoption, or death
of a Dependent;
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(3) Employment Status: Any of the following events that change the
employment status of the Participant, Spouse, or Dependent: termination
or commencement of employment, a strike or lockout, commencement or
return from an unpaid leave of absence, or a change in worksite. In
addition, if the eligibility conditions of this Plan or other employee benefit
plan of the Employer of the Participant, Spouse, or Dependent depend on
the employment status of that individual and there is a change in that
individual's employment status with the consequence that the individual
becomes (or ceases to be) eligible under the plan, then that change
constitutes a change in employment under this subsection;
(4) Dependent satisfies or ceases to satisfy the eligibility requirements:
An event that causes the Participant's Dependent to satisfy or cease to
satisfy the requirements for coverage due to attainment of age, student
status, or any similar circumstance; and
(5) Residency: A change in the place of residence of the Participant,
Spouse or Dependent, that would lead to a change in status (such as a
loss of HMO coverage).
For the Dependent Care Flexible Spending Account, a Dependent
becoming or ceasing to be a "Qualifying Dependent" as defined under Code
Section 21(b) shall also qualify as a change in status.
(b) Special enrollment rights. Notwithstanding subsection (a), the
Participants may change an election for accident or health coverage during a
Plan Year and make a new election that corresponds with the special enrollment
rights provided in Code Section 9801(f), including those authorized under the
provisions of the Children's Health Insurance Program Reauthorization Act of
2009 (SCHIP); provided that such Participant meets the sixty (60) day notice
requirement imposed by Code Section 9801(f) (or such longer period as may be
permitted by the Plan and communicated to Participants). Such change shall
take place on a prospective basis, unless otherwise required by Code Section
9801(f)to be retroactive.
(c) Qualified Medical Support Order. Notwithstanding subsection
(a), in the event of a judgment, decree, or order (including approval of a property
settlement) ("order") resulting from a divorce, legal separation, annulment, or
change in legal custody which requires accident or health coverage for a
Participant's child (including a foster child who is a Dependent of the Participant):
(1) The Plan may change an election to provide coverage for the child
if the order requires coverage under the Participant's plan; or
(2) The Participant shall be permitted to change an election to cancel
coverage for the child if the order requires the former Spouse to provide
coverage for such child, under that individual's plan and such coverage is
actually provided.
(d) Medicare or Medicaid. Notwithstanding subsection (a), a
Participant may change elections to cancel accident or health coverage for the
Participant or the Participant's spouse or dependent if the Participant or the
Participant's spouse or dependent is enrolled in the accident or health coverage of
the Employer and becomes entitled to coverage (i.e., enrolled) under Part A or Part
B of the Title XVIII of the Social Security Act (Medicare) or Title XIX of the Social
13
Security Act (Medicaid), other than coverage consisting solely of benefits under
Section 1928 of the Social Security Act (the program for distribution of pediatric
vaccines). If the Participant or the Participant's spouse or dependent who has been
entitled to Medicaid or Medicare coverage loses eligibility, that individual may
prospectively elect coverage under the Plan if a benefit package option under the
Plan provides similar coverage.
(e) Cost increase or decrease. If the cost of a Benefit provided
under the Plan increases or decreases during a Plan Year, then the Plan shall
automatically increase or decrease, as the case may be, the Salary Redirections
of all affected Participants for such Benefit. Alternatively, if the cost of a benefit
package option increases significantly, the Administrator shall permit the affected
Participants to either make corresponding changes in their payments or revoke
their elections and, in lieu thereof, receive on a prospective basis coverage under
another benefit package option with similar coverage, or drop coverage
prospectively if there is no benefit package option with similar coverage.
A cost increase or decrease refers to an increase or decrease in the
amount of elective contributions under the Plan, whether resulting from an action
taken by the Participants or an action taken by the Employer.
(f) Loss of coverage. If the coverage under a Benefit is significantly
curtailed or ceases during a Plan Year, affected Participants may revoke their
elections of such Benefit and, in lieu thereof, elect to receive on a prospective
basis coverage under another plan with similar coverage, or drop coverage
prospectively if no similar coverage is offered.
(g) Addition of a new benefit. If, during the period of coverage, a
new benefit package option or other coverage option is added, an existing benefit
package option is significantly improved, or an existing benefit package option or
other coverage option is eliminated, then the affected Participants may elect the
newly-added option, or elect another option if an option has been eliminated
prospectively and make corresponding election changes with respect to other
benefit package options providing similar coverage. In addition, those Eligible
Employees who are not participating in the Plan may opt to become Participants
and elect the new or newly improved benefit package option.
(h) Loss of coverage under certain other plans. A Participant may
make a prospective election change to add group health coverage for the
Participant, the Participant's Spouse or Dependent if such individual loses group
health coverage sponsored by a governmental or educational institution,
including a state children's health insurance program under the Social Security
Act, the Indian Health Service or a health program offered by an Indian tribal
government, a state health benefits risk pool, or a foreign government group
health plan.
(i) Change of coverage due to change under certain other plans.
A Participant may make a prospective election change that is on account of and
corresponds with a change made under the plan of a Spouse's, former Spouse's
or Dependent's employer if (1) the cafeteria plan or other benefits plan of the
Spouse's, former Spouse's or Dependent's employer permits its participants to
make a change; or (2) the cafeteria plan permits participants to make an election
for a period of coverage that is different from the period of coverage under the
cafeteria plan of a Spouse's, former Spouse's or Dependent's employer.
14
0) Change in dependent care provider. A Participant may make a
prospective election change that is on account of and corresponds with a change
by the Participant in the dependent care provider. The availability of dependent
care services from a new childcare provider is similar to a new benefit package
option becoming available. A cost change is allowable in the Dependent Care
Flexible Spending Account only if the cost change is imposed by a dependent
care provider who is not related to the Participant, as defined in Code Section
152(a)(1) through (8).
(k) Health FSA cannot change due to insurance change. A
Participant shall not be permitted to change an election to the Health Flexible
Spending Account as a result of a cost or coverage change under any health
insurance benefits.
(1) Health Savings Account changes. With regard to the Health
Savings Account Benefit specified in Section 4.12, a Participant who has elected
to make elective contributions under such arrangement may modify or revoke the
election prospectively, provided such change is consistent with Code Section 223
and the Treasury regulations thereunder.
ARTICLE VI
HEALTH FLEXIBLE SPENDING ACCOUNT
6.1 ESTABLISHMENT OF PLAN
This Health Flexible Spending Account is intended to qualify as a medical
reimbursement plan under Code Section 105 and shall be interpreted in a manner consistent
with such Code Section and the Treasury regulations thereunder. Participants who elect to
participate in this Health Flexible Spending Account may submit claims for the reimbursement of
Medical Expenses. All amounts reimbursed shall be periodically paid from amounts allocated to
the Health Flexible Spending Account. Periodic payments reimbursing Participants from the
Health Flexible Spending Account shall in no event occur less frequently than monthly.
6.2 DEFINITIONS
For the purposes of this Article and the Cafeteria Plan, the terms below have the
following meaning:
(a) "Health Flexible Spending Account" means the account
established for Participants pursuant to this Plan to which part of their Cafeteria
Plan Benefit Dollars may be allocated and from which all allowable Medical
Expenses incurred by a Participant, his or her Spouse and his or her Dependents
may be reimbursed.
(b) "Health Flexible Spending Account Remainder Amount"
means that portion of the Employer's Contribution, if any, allocated to the Health
Flexible Spending Account, determined assuming that Employer Contributions
which are converted to Cafeteria Plan Benefit Dollars are first applied to all other
Benefits elected by the Participant under the Plan.
15
(c) "Highly Compensated Participant" means, for the purposes of
this Article and determining discrimination under Code Section 105(h), a
participant who is:
(1) one of the 5 highest paid officers;
(2) a shareholder who owns (or is considered to own applying the
rules of Code Section 318) more than 10 percent in value of the stock of
the Employer; or
(3) among the highest paid 25 percent of all Employees (other than
exclusions permitted by Code Section 105(h)(3)(B) for those individuals
who are not Participants).
(d) "Medical Expenses" means any expense for medical care within
the meaning of the term "medical care" as defined in Code Section 213(d) and as
allowed under Code Section 105 and the rulings and Treasury regulations
thereunder that is considered to be for dental, vision, certain preventative care
costs or any other expenses allowed under Code Section 223 as amended and
interpreted from time to time, and not otherwise used by the Participant as a
deduction in determining his tax liability under the Code.
A Participant, spouse and/or dependent who elects to contribute to a
Health Savings Account may only be reimbursed for medical expenses that are
considered to be for dental, vision, certain preventative care costs, or other
expenses as allowed under Code Section 223, as amended from time to time.
A Participant, spouse and/or dependent may not be reimbursed for the
cost of other health coverage such as premiums paid under plans maintained by
the employer of the Participant's spouse or individual policies maintained by the
Participant or his spouse or Dependent.
A Participant, spouse and/or dependent may not be reimbursed costs that
apply towards the minimum deductible required under a HDHP intended to
qualify the Participant for an HSA.
A Participant, spouse and/or dependent may not be reimbursed for
"qualified long-term care services" as defined in Code Section 7702B(c).
(e) The definitions of Article I are hereby incorporated by reference to
the extent necessary to interpret and apply the provisions of this Health Flexible
Spending Account.
(e) "Qualified Reservist Distribution" means any distribution to a
participant of all of the balance in the participant's Health Flexible Spending
Account if:
(1) Such participant was, by reason of being a member of a reserve
component (as defined in Title 37 USC § 101), ordered or called to active
duty for a period in excess of 179 days or for an indefinite period; and,
(2) Such distribution is made during the period beginning on the date of
such order or call and ending on the last date that reimbursements could
otherwise be made under such arrangements for the plan year which
includes the date of such order or call.
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6.3 FORFEITURES
The amount in the Health Flexible Spending Account as of the end of any Plan
Year (and after the processing of all claims for such Plan Year pursuant to Section 6.7 hereof)
shall be forfeited and credited to the benefit plan surplus. In such event, the Participant shall
have no further claim to such amount for any reason, subject to Section 8.2.
6.4 LIMITATION ON ALLOCATIONS
Notwithstanding any provision contained in this Health Flexible Spending
Account to the contrary, no more than $5,000 may be allocated to the Health Flexible Spending
Account by a Participant in or on account of any Plan Year.
6.5 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory. It is the intent of this Health
Flexible Spending Account not to discriminate in violation of the Code and the
Treasury regulations thereunder.
(1) The Contractor Allegiance Benefit Plan Management agrees not to
discriminate in the fulfillment of this Agreement on the basis of race, color,
religion, creed, sex, age, marital status, national origin or actual or
perceived sexual orientation, gender identity or disability.
(2) The Contractor Allegiance Benefit Plan Management agrees this
requirement shall apply to the hiring and treatment of the Contractor's
employees and to all subcontracts.
(b) Adjustment to avoid test failure. If the Administrator deems it
necessary to avoid discrimination under this Health Flexible Spending Account, it
may, but shall not be required to, reject any elections or reduce contributions or
Benefits in order to assure compliance with this Section. Any act taken by the
Administrator under this Section shall be carried out in a uniform and
nondiscriminatory manner. If the Administrator decides to reject any elections or
reduce contributions or Benefits, it shall be done in the following manner. First,
the Benefits designated for the Health Flexible Spending Account by the member
of the group in whose favor discrimination may not occur pursuant to Code
Section 105 that elected to contribute the highest amount to the fund for the Plan
Year shall be reduced until the nondiscrimination tests set forth in this Section or
the Code are satisfied, or until the amount designated for the fund equals the
amount designated for the fund by the next member of the group in whose favor
discrimination may not occur pursuant to Code Section 105 who has elected the
second highest contribution to the Health Flexible Spending Account for the Plan
Year. This process shall continue until the nondiscrimination tests set forth in this
Section or the Code are satisfied. Contributions which are not utilized to provide
Benefits to any Participant by virtue of any administrative act under this
paragraph shall be forfeited and credited to the benefit plan surplus.
17
6.6 COORDINATION WITH CAFETERIA PLAN
All Participants under the Cafeteria Plan are eligible to receive Benefits under
this Health Flexible Spending Account. The enrollment under the Cafeteria Plan shall constitute
enrollment under this Health Flexible Spending Account. In addition, other matters concerning
contributions, elections and the like shall be governed by the general provisions of the Cafeteria
Plan.
6.7 HEALTH FLEXIBLE SPENDING ACCOUNT CLAIMS
(a) Expenses must be incurred during Plan Year or Grace Period.
All Medical Expenses incurred by a Participant, his or her Spouse and his or her
Dependents shall be reimbursed during the Plan Year subject to Section 2.6,
even though the submission of such a claim occurs after his participation
hereunder ceases; but provided that the Medical Expenses were incurred during
the applicable Plan Year or Grace Period. Medical Expenses are treated as
having been incurred when the Participant is provided with the medical care that
gives rise to the medical expenses, not when the Participant is formally billed or
charged for, or pays for the medical care. However, for employees participating
in a Health Savings Account, all expenses must be incurred during the Plan
Year. Such participants shall not be eligible to participate in the Grace Period.
(b) Reimbursement available throughout Plan Year. The
Administrator shall direct the reimbursement to each eligible Participant for all
allowable Medical Expenses, up to a maximum of the amount designated by the
Participant for the Health Flexible Spending Account for the Plan Year.
Reimbursements shall be made available to the Participant throughout the year
without regard to the level of Cafeteria Plan Benefit Dollars which have been
allocated to the fund at any given point in time. Furthermore, a Participant shall
be entitled to reimbursements only for amounts in excess of any payments or
other reimbursements under any health care plan covering the Participant and/or
his Spouse or Dependents.
(c) Payments. Reimbursement payments under this Plan shall be
made directly to the Participant. However, in the Administrator's discretion,
payments may be made directly to the service provider. The application for
payment or reimbursement shall be made to the Administrator on an acceptable
form within a reasonable time of incurring the debt or paying for the service. The
application shall include a written statement from an independent third party
stating that the Medical Expense has been incurred and the amount of such
expense. Furthermore, the Participant shall provide a written statement that the
Medical Expense has not been reimbursed or is not reimbursable under any
other health plan coverage and, if reimbursed from the Health Flexible Spending
Account, such amount will not be claimed as a tax deduction. The Administrator
shall retain a file of all such applications.
(d) Grace Period. Notwithstanding anything in this Section to the
contrary, Medical Expenses incurred during the Grace Period, up to the
remaining account balance, shall also be deemed to have been incurred during
the Plan Year to which the Grace Period relates. However, for employees
contributing to a Health Savings Account, all expenses must be incurred during
the Plan Year. Such participants shall not be eligible to participate in the Grace
Period.
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(e) Claims for reimbursement. Claims for the reimbursement of
Medical Expenses incurred in any Plan Year shall be paid as soon after a claim
has been filed as is administratively practicable; provided however, that if a
Participant fails to submit a claim within 90 days after the end of the Grace
Period, those Medical Expense claims shall not be considered for reimbursement
by the Administrator. However, for employees participating in a Health Savings
Account, all claims for reimbursement must be submitted 165 days after the end
of the Plan Year. However, if a Participant terminates employment during the
Plan Year, claims for the reimbursement of Medical Expenses must be submitted
within 30 days after termination of employment.
ARTICLE VII
DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
7.1 ESTABLISHMENT OF ACCOUNT
This Dependent Care Flexible Spending Account is intended to qualify as a
program under Code Section 129 and shall be interpreted in a manner consistent with such
Code Section. Participants who elect to participate in this program may submit claims for the
reimbursement of Employment-Related Dependent Care Expenses. All amounts reimbursed
shall be paid from amounts allocated to the Participant's Dependent Care Flexible Spending
Account.
7.2 DEFINITIONS
For the purposes of this Article and the Cafeteria Plan the terms below shall have
the following meaning:
(a) "Dependent Care Flexible Spending Account' means the
account established for a Participant pursuant to this Article to which part of his
Cafeteria Plan Benefit Dollars may be allocated and from which
Employment-Related Dependent Care Expenses of the Participant may be
reimbursed for the care of the Qualifying Dependents of Participants.
(b) "Earned Income" means earned income as defined under Code
Section 32(c)(2), but excluding such amounts paid or incurred by the Employer
for dependent care assistance to the Participant.
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(c) "Employment-Related Dependent Care Expenses" means the
amounts paid for expenses of a Participant for those services which if paid by the
Participant would be considered employment related expenses under Code
Section 21(b)(2). Generally, they shall include expenses for household services
and for the care of a Qualifying Dependent, to the extent that such expenses are
incurred to enable the Participant to be gainfully employed for any period for
which there are one or more Qualifying Dependents with respect to such
Participant. Employment-Related Dependent Care Expenses are treated as
having been incurred when the Participant's Qualifying Dependents are provided
with the dependent care that gives rise to the Employment-Related Dependent
Care Expenses, not when the Participant is formally billed or charged for, or pays
for the dependent care. The determination of whether an amount qualifies as an
Employment-Related Dependent Care Expense shall be made subject to the
following rules:
(1) If such amounts are paid for expenses incurred outside the
Participant's household, they shall constitute Employment-Related
Dependent Care Expenses only if incurred for a Qualifying Dependent as
defined in Section 7.2(d)(1) (or deemed to be, as described in Section
7.2(d)(1) pursuant to Section 7.2(d)(3)), or for a Qualifying Dependent as
defined in Section 7.2(d)(2) (or deemed to be, as described in Section
7.2(d)(2) pursuant to Section 7.2(d)(3)) who regularly spends at least 8
hours per day in the Participant's household;
(2) If the expense is incurred outside the Participant's home at a
facility that provides care for a fee, payment, or grant for more than 6
individuals who do not regularly reside at the facility, the facility must
comply with all applicable state and local laws and regulations, including
licensing requirements, if any; and
(3) Employment-Related Dependent Care Expenses of a Participant
shall not include amounts paid or incurred to a child of such Participant
who is under the age of 19 or to an individual who is a Dependent of such
Participant or such Participant's Spouse.
(d) "Qualifying Dependent" means, for Dependent Care Flexible
Spending Account purposes,
(1) a Participant's Dependent (as defined in Code Section 152(a)(1))
who has not attained age 13;
(2) a Dependent or the Spouse of a Participant who is physically or
mentally incapable of caring for himself or herself and has the same
principal place of abode as the Participant for more than one-half of such
taxable year; or
(3) a child that is deemed to be a Qualifying Dependent described in
paragraph (1) or (2) above, whichever is appropriate, pursuant to Code
Section 21(e)(5).
(e) The definitions of Article I are hereby incorporated by reference to
the extent necessary to interpret and apply the provisions of this Dependent Care
Flexible Spending Account.
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7.3 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
The Administrator shall establish a Dependent Care Flexible Spending Account
for each Participant who elects to apply Cafeteria Plan Benefit Dollars to Dependent Care
Flexible Spending Account benefits.
7.4 INCREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
A Participant's Dependent Care Flexible Spending Account shall be increased
each pay period by the portion of Cafeteria Plan Benefit Dollars that he has elected to apply
toward his Dependent Care Flexible Spending Account pursuant to elections made under Article
V hereof.
7.5 DECREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
A Participant's Dependent Care Flexible Spending Account shall be reduced by
the amount of any Employment-Related Dependent Care Expense reimbursements paid or
incurred on behalf of a Participant pursuant to Section 7.12 hereof.
7.6 ALLOWABLE DEPENDENT CARE REIMBURSEMENT
Subject to limitations contained in Section 7.9 of this Program, and to the extent
of the amount contained in the Participant's Dependent Care Flexible Spending Account, a
Participant who incurs Employment-Related Dependent Care Expenses shall be entitled to
receive from the Employer full reimbursement for the entire amount of such expenses incurred
during the Plan Year or portion thereof during which he is a Participant.
7.7 ANNUAL STATEMENT OF BENEFITS
On or before January 31 st of each calendar year, the Employer shall furnish to
each Employee who was a Participant and received benefits under Section 7.6 during the prior
calendar year, a statement of all such benefits paid to or on behalf of such Participant during the
prior calendar year.
7.8 FORFEITURES
The amount in a Participant's Dependent Care Flexible Spending Account as of
the end of any Plan Year (and after the processing of all claims for such Plan Year pursuant to
Section 7.12 hereof) shall be forfeited and credited to the benefit plan surplus. In such event,
the Participant shall have no further claim to such amount for any reason.
7.9 LIMITATION ON PAYMENTS
Notwithstanding any provision contained in this Article to the contrary, amounts
paid from a Participant's Dependent Care Flexible Spending Account in or on account of any
taxable year of the Participant shall not exceed the lesser of the Earned Income limitation
described in Code Section 129(b) or $5,000 ($2,500 if a separate tax return is filed by a
Participant who is married as determined under the rules of paragraphs (3) and (4) of Code
Section 21(e)).
7.10 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory. It is the intent of this Dependent
Care Flexible Spending Account that contributions or benefits not discriminate in
21
favor of the group of employees in whose favor discrimination may not occur
under Code Section 129(d).
(1) The Contractor Allegiance Benefit Plan Management agrees not to
discriminate in the fulfillment of this Agreement on the basis of race, color,
religion, creed, sex, age, marital status, national origin or actual or
perceived sexual orientation, gender identity or disability.
(2) The Contractor Allegiance Benefit Plan Management agrees this
requirement shall apply to the hiring and treatment of the Contractor's
employees and to all subcontracts.
(b) 25% test for shareholders. It is the intent of this Dependent Care
Flexible Spending Account that not more than 25 percent of the amounts paid by
the Employer for dependent care assistance during the Plan Year will be
provided for the class of individuals who are shareholders or owners (or their
Spouses or Dependents), each of whom (on any day of the Plan Year) owns
more than 5 percent of the stock or of the capital or profits interest in the
Employer.
(c) Adjustment to avoid test failure. If the Administrator deems it
necessary to avoid discrimination or possible taxation to a group of employees in
whose favor discrimination may not occur in violation of Code Section 129 it may,
but shall not be required to, reject any elections or reduce contributions or
non-taxable benefits in order to assure compliance with this Section. Any act
taken by the Administrator under this Section shall be carried out in a uniform
and nondiscriminatory manner. If the Administrator decides to reject any
elections or reduce contributions or Benefits, it shall be done in the following
manner. First, the Benefits designated for the Dependent Care Flexible Spending
Account by the affected Participant that elected to contribute the highest amount
to such account for the Plan Year shall be reduced until the nondiscrimination
tests set forth in this Section are satisfied, or until the amount designated for the
account equals the amount designated for the account of the affected Participant
who has elected the second highest contribution to the Dependent Care Flexible
Spending Account for the Plan Year. This process shall continue until the
nondiscrimination tests set forth in this Section are satisfied. Contributions which
are not utilized to provide Benefits to any Participant by virtue of any
administrative act under this paragraph shall be forfeited.
7.11 COORDINATION WITH CAFETERIA PLAN
All Participants under the Cafeteria Plan are eligible to receive Benefits under
this Dependent Care Flexible Spending Account. The enrollment and termination of participation
under the Cafeteria Plan shall constitute enrollment and termination of participation under this
Dependent Care Flexible Spending Account. In addition, other matters concerning contributions,
elections and the like shall be governed by the general provisions of the Cafeteria Plan.
7.12 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS
The Administrator shall direct the payment of all such Dependent Care claims to
the Participant upon the presentation to the Administrator of documentation of such expenses in
a form satisfactory to the Administrator. However, in the Administrator's discretion, payments
may be made directly to the service provider. In its discretion in administering the Plan, the
Administrator may utilize forms and require documentation of costs as may be necessary to
verify the claims submitted. At a minimum, the form shall include a statement from an
22
independent third party as proof that the expense has been incurred and the amount of such
expense. In addition, the Administrator may require that each Participant who desires to receive
reimbursement under this Program for Employment-Related Dependent Care Expenses submit
a statement which may contain some or all of the following information:
(a) The Dependent or Dependents for whom the services were
performed;
(b) The nature of the services performed for the Participant, the cost
of which he wishes reimbursement;
(c) The relationship, if any, of the person performing the services to
the Participant;
(d) If the services are being performed by a child of the Participant,
the age of the child;
(e) A statement as to where the services were performed;
(f) If any of the services were performed outside the home, a
statement as to whether the Dependent for whom such services were performed
spends at least 8 hours a day in the Participant's household;
(g) If the services were being performed in a day care center, a
statement:
(1) that the day care center complies with all applicable laws and
regulations of the state of residence,
(2) that the day care center provides care for more than 6 individuals
(other than individuals residing at the center), and
(3) of the amount of fee paid to the provider.
(h) If the Participant is married, a statement containing the following:
(1) the Spouse's salary or wages if he or she is employed, or
(2) if the Participant's Spouse is not employed, that
(i) he or she is incapacitated, or
(ii) he or she is a full-time student attending an educational
institution and the months during the year which he or she
attended such institution.
(i) Grace Period. Notwithstanding anything in this Section to the
contrary, Employment-Related Dependent Care Expenses incurred during the
Grace Period, up to the remaining account balance, shall also be deemed to
have been incurred during the Plan Year to which the Grace Period relates.
0) Claims for reimbursement. If a Participant fails to submit a claim
within 90 days after the end of the Grace Period, those claims shall not be
considered for reimbursement by the Administrator. However, if a Participant
23
terminates employment during the Plan Year, claims for reimbursement must be
submitted within 30 days after termination of employment.
ARTICLE Vill
BENEFITS AND RIGHTS
8.1 CLAIM FOR BENEFITS
(a) Insurance claims. Any claim for Benefits underwritten by an
Insurance Contract shall be made to the Insurer. If the Insurer denies any claim,
the Participant or beneficiary shall follow the Insurer's claims review procedure.
Any other claim for Benefits shall be made to the Administrator. If the
Administrator denies a claim, in whole or in part, the Administrator will provide
notice to the Participant or beneficiary, in writing, within 30 days after the claim is
filed unless special circumstances require an extension of time for processing the
claim. The notice of a denial of a claim or adverse benefit determination shall be
written in a manner calculated to be understood by the claimant and shall set
forth below:
(b) Dependent Care Flexible Spending Account or Health Flexible
Spending Account claims. Any claim for Dependent Care Flexible Spending
Account or Health Flexible Spending Account Benefits shall be made to the
Administrator. For the Health and Dependent Care Flexible Spending Accounts,
if a Participant fails to submit a claim within 90 days after the end of the Grace
Period, those claims shall not be considered for reimbursement by the
Administrator. However, if a Participant who contributes to a Health Savings
Account fails to submit a claim within 165 days after the end of the Plan Year,
those claims shall not be considered for reimbursement by the Administrator
However, if a Participant terminates employment during the Plan Year, claims for
the reimbursement of Medical Expenses must be submitted within 30 days after
termination of employment and claims for reimbursement of dependent care
expenses must be submitted within 30 days after the end of the Plan Year. If the
Administrator denies a claim, the Administrator may provide notice to the
Participant or beneficiary, in writing, within 30 days after the claim is filed unless
special circumstances require an extension of time for processing the claim. The
notice of a denial of a claim shall be written in a manner calculated to be
understood by the claimant and shall set forth below:
(1) specific references to the pertinent Plan provisions on which the
denial is based;
(2) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation as to why such
information is necessary; and
(3) an explanation of the Plan's claim procedure.
(c) Appeal. Within 60 days after receipt of the above material, the
claimant shall have a reasonable opportunity to appeal the claim denial to the
Administrator for a full and fair review. The claimant or his duly authorized
representative may:
(1) request a review upon written notice to the Administrator;
24
(2) review pertinent documents; and
(3) submit issues and comments in writing.
(d) Review of appeal. A decision on the review by the Administrator
will be made not later than 60 days after receipt of a request for review, unless
special circumstances require an extension of time for processing (such as the
need to hold a hearing), in which event a decision should be rendered as soon as
possible, but in no event later than 120 days after such receipt. The decision of
the Administrator shall be written and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant, with
specific references to the pertinent Plan provisions on which the decision is
based.
(e) Forfeitures. Any balance remaining in the Participant's
Dependent Care Flexible Spending Account or Health Flexible Spending Account
as of the end of the time for claims reimbursement for each Plan Year and Grace
Period (if applicable) shall be forfeited and deposited in the benefit plan surplus
of the Employer pursuant to Section 6.3 or Section 7.8, whichever is applicable,
unless the Participant had made a claim for such Plan Year, in writing, which has
been denied or is pending; in which event the amount of the claim shall be held
in his account until the claim appeal procedures set forth above have been
satisfied or the claim is paid. If any such claim is denied on appeal, the amount
held beyond the end of the Plan Year shall be forfeited and credited to the benefit
plan surplus.
8.2 APPLICATION OF BENEFIT PLAN SURPLUS
Any forfeited amounts credited to the benefit plan surplus by virtue of the failure
of a Participant to incur a qualified expense or seek reimbursement in a timely manner may, but
need not be, separately accounted for after the close of the Plan Year (or after such further time
specified herein for the filing of claims) in which such forfeitures arose. In no event shall such
amounts be carried over to reimburse a Participant for expenses incurred during a subsequent
Plan Year for the same or any other Benefit available under the Plan; nor shall amounts
forfeited by a particular Participant be made available to such Participant in any other form or
manner, except as permitted by Treasury regulations. Amounts in the benefit plan surplus shall
be used to pay reasonable administrative costs, to reduce required premium payments in the
subsequent year or in any other manner permitted by law.
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATION
The operation of the Plan shall be under the supervision of the Administrator. It
shall be a principal duty of the Administrator to see that the Plan is carried out in accordance
with its terms, and for the exclusive benefit of Employees entitled to participate in the Plan. The
Administrator shall have full power to administer the Plan in all of its details, subject, however, to
the pertinent provisions of the Code. The Administrator's powers shall include, but shall not be
limited to the following authority, in addition to all other powers provided by this Plan:
(a) To make and enforce such rules and regulations as the
Administrator deems necessary or proper for the efficient administration of the
Plan;
25
(b) To interpret the Plan, the Administrator's interpretations thereof in
good faith to be final and conclusive on all persons claiming benefits by operation
of the Plan;
(c) To decide all questions concerning the Plan and the eligibility of
any person to participate in the Plan and to receive benefits provided by
operation of the Plan;
(d) To reject elections or to limit contributions or Benefits for certain
highly compensated participants if it deems such to be desirable in order to avoid
discrimination under the Plan in violation of applicable provisions of the Code;
(e) To provide Employees with a reasonable notification of their
benefits available by operation of the Plan;
(f) To approve reimbursement requests and to authorize the payment
of benefits;
(g) To appoint such agents, counsel, accountants, consultants, and
actuaries as may be required to assist in administering the Plan.
Any procedure, discretionary act, interpretation or construction taken by the
Administrator shall be done in a nondiscriminatory manner based upon uniform principles
consistently applied and shall be consistent with the intent that the Plan shall continue to comply
with the terms of Code Section 125 and the Treasury regulations thereunder.
9.2 EXAMINATION OF RECORDS
The Administrator shall make available to each Participant, Eligible Employee
and any other Employee of the Employer such records as pertain to their interest under the Plan
for examination at reasonable times during normal business hours.
9.3 PAYMENT OF EXPENSES
Any reasonable administrative expenses shall be paid by the Employer unless
the Employer determines that administrative costs shall be borne by the Participants under the
Plan or by any Trust Fund which may be established hereunder. The Administrator may impose
reasonable conditions for payments, provided that such conditions shall not discriminate in favor
of highly compensated employees.
9.4 INSURANCE CONTROL CLAUSE
In the event of a conflict between the terms of this Plan and the terms of an
Insurance Contract of an independent third party Insurer whose product is then being used in
conjunction with this Plan, the terms of the Insurance Contract shall control as to those
Participants receiving coverage under such Insurance Contract. For this purpose, the Insurance
Contract shall control in defining the persons eligible for insurance, the dates of their eligibility,
the conditions which must be satisfied to become insured, if any, the benefits Participants are
entitled to and the circumstances under which insurance terminates.
26
9.5 INDEMNIFICATION OF ADMINISTRATOR
The Employer agrees to indemnify and to defend to the fullest extent permitted
by law any Employee serving as the Administrator or as a member of a committee designated
as Administrator (including any Employee or former Employee who previously served as
Administrator or as a member of such committee) against all liabilities, damages, costs and
expenses (including attorney's fees and amounts paid in settlement of any claims approved by
the Employer) occasioned by any act or omission to act in connection with the Plan, if such act
or omission is in good faith.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 AMENDMENT
The Employer, at any time or from time to time, may amend any or all of the
provisions of the Plan without the consent of any Employee or Participant. No amendment shall
have the effect of modifying any benefit election of any Participant in effect at the time of such
amendment, unless such amendment is made to comply with Federal, state or local laws,
statutes or regulations.
10.2 TERMINATION
The Employer is establishing this Plan with the intent that it will be maintained for
an indefinite period of time. Notwithstanding the foregoing, the Employer reserves the right to
terminate this Plan, in whole or in part, at any time. In the event the Plan is terminated, no
further contributions shall be made. Benefits under any Insurance Contract shall be paid in
accordance with the terms of the Insurance Contract.
No further additions shall be made to the Health Flexible Spending Account or
Dependent Care Flexible Spending Account, but all payments from such fund shall continue to
be made according to the elections in effect until 90 days after the termination date of the Plan.
Any amounts remaining in any such fund or account as of the end of such period shall be
forfeited and deposited in the benefit plan surplus after the expiration of the filing period.
ARTICLE XI
MISCELLANEOUS
11.1 PLAN INTERPRETATION
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. This Plan shall be read in its entirety and not severed except as
provided in Section 11.12.
11.2 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender in all cases
where they would so apply, and whenever any words are used herein in the singular or plural
form, they shall be construed as though they were also used in the other form in all cases where
they would so apply.
27
11.3 WRITTEN DOCUMENT
This Plan, in conjunction with any separate written document which may be
required by law, is intended to satisfy the written Plan requirement of Code Section 125 and any
Treasury regulations thereunder relating to cafeteria plans.
11.4 EXCLUSIVE BENEFIT
This Plan shall be maintained for the exclusive benefit of the Employees who
participate in the Plan.
11.5 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute an employment contract between the
Employer and any Participant or to be a consideration or an inducement for the employment of
any Participant or Employee. Nothing contained in this Plan shall be deemed to give any
Participant or Employee the right to be retained in the service of the Employer or to interfere
with the right of the Employer to discharge any Participant or Employee at any time regardless
of the effect which such discharge shall have upon him as a Participant of this Plan.
11.6 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required to
do or perform any act or matter or thing, it shall be done and performed by a person duly
authorized by its legally constituted authority.
11.7 EMPLOYER'S PROTECTIVE CLAUSES
(a) Insurance purchase. Upon the failure of either the Participant or
the Employer to obtain the insurance contemplated by this Plan (whether as a
result of negligence, gross neglect or otherwise), the Participant's Benefits shall
be limited to the insurance premium(s), if any, that remained unpaid for the
period in question and the actual insurance proceeds, if any, received by the
Employer or the Participant as a result of the Participant's claim.
(b) Validity of insurance contract. The Employer shall not be
responsible for the validity of any Insurance Contract issued hereunder or for the
failure on the part of the Insurer to make payments provided for under any
Insurance Contract. Once insurance is applied for or obtained, the Employer
shall not be liable for any loss which may result from the failure to pay Premiums
to the extent Premium notices are not received by the Employer.
11.8 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Administrator nor the Employer makes any commitment or guarantee
that any amounts paid to or for the benefit of a Participant under the Plan will be excludable
from the Participant's gross income for federal or state income tax purposes, or that any other
federal or state tax treatment will apply to or be available to any Participant. It shall be the
obligation of each Participant to determine whether each payment under the Plan is excludable
from the Participant's gross income for federal and state income tax purposes, and to notify the
Employer if the Participant has reason to believe that any such payment is not so excludable.
Notwithstanding the foregoing, the rights of Participants under this Plan shall be legally
enforceable.
28
11.9 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS
If any Participant receives one or more payments or reimbursements under the
Plan that are not for a permitted Benefit, such Participant shall indemnify and reimburse the
Employer for any liability it may incur for failure to withhold federal or state income tax or Social
Security tax from such payments or reimbursements. However, such indemnification and
reimbursement shall not exceed the amount of additional federal and state income tax (plus any
penalties) that the Participant would have owed if the payments or reimbursements had been
made to the Participant as regular cash compensation, plus the Participant's share of any Social
Security tax that would have been paid on such compensation, less any such additional income
and Social Security tax actually paid by the Participant.
11.10 FUNDING
Unless otherwise required by law, contributions to the Plan need not be placed in
trust or dedicated to a specific Benefit, but may instead be considered general assets of the
Employer. Furthermore, and unless otherwise required by law, nothing herein shall be
construed to require the Employer or the Administrator to maintain any fund or segregate any
amount for the benefit of any Participant, and no Participant or other person shall have any
claim against, right to, or security or other interest in, any fund, account or asset of the Employer
from which any payment under the Plan may be made.
11.11 GOVERNING LAW
This Plan is governed by the Code and the Treasury regulations issued
thereunder (as they might be amended from time to time). In no event shall the Employer
guarantee the favorable tax treatment sought by this Plan. To the extent not preempted by
Federal law, the provisions of this Plan shall be construed, enforced and administered according
to the laws of the State of Montana.
11.12 SEVERABILITY
If any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability shall not affect any other provisions of the Plan, and the Plan shall be
construed and enforced as if such provision had not been included herein.
11.13 CAPTIONS
The captions contained herein are inserted only as a matter of convenience and
for reference, and in no way define, limit, enlarge or describe the scope or intent of the Plan, nor
in any way shall affect the Plan or the construction of any provision thereof.
11.14 FAMILY AND MEDICAL LEAVE ACT (FMLA)
Notwithstanding anything in the Plan to the contrary, in the event any benefit
under this Plan becomes subject to the requirements of the Family and Medical Leave Act and
regulations thereunder, this Plan shall be operated in accordance with Regulation 1.125-3.
11.15 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)
Notwithstanding anything in this Plan to the contrary, this Plan shall be operated in
accordance with HIPAA and regulations thereunder.
29
11.16 UNIFORM SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
(USERRA)
Notwithstanding any provision of this Plan to the contrary, contributions, benefits
and service credit with respect to qualified military service shall be provided in accordance with
the Uniform Services Employment And Reemployment Rights Act (USERRA) and the regulations
thereunder.
11.17 COMPLIANCE WITH HIPAA PRIVACY STANDARDS
(a) Application. If the Health Flexible Spending Account under this
Cafeteria Plan is subject to the Standards for Privacy of Individually Identifiable
Health Information (45 CFR Part 164, the "Privacy Standards"), then this Section
shall apply.
(b) Disclosure of PHI. The Plan shall not disclose Protected Health
Information to any member of the Employer's workforce unless each of the
conditions set out in this Section are met. "Protected Health Information" shall
have the same definition as set forth in the Privacy Standards but generally shall
mean individually identifiable information about the past, present or future
physical or mental health or condition of an individual, including information about
treatment or payment for treatment.
(c) PHI disclosed for administrative purposes. Protected Health
Information disclosed to members of the Employer's workforce shall be used or
disclosed by them only for purposes of Plan administrative functions. The Plan's
administrative functions shall include all Plan payment functions and health care
operations. The terms "payment" and "health care operations" shall have the
same definitions as set out in the Privacy Standards, but the term "payment"
generally shall mean activities taken to determine or fulfill Plan responsibilities
with respect to eligibility, coverage, provision of benefits, or reimbursement for
health care.
(d) PHI disclosed to certain workforce members. The Plan shall
disclose Protected Health Information only to members of the Employer's
workforce who are authorized to receive such Protected Health Information, and
only to the extent and in the minimum amount necessary for that person to
perform his or her duties with respect to the Plan. "Members of the Employer's
workforce" shall refer to all employees and other persons under the control of the
Employer. The Employer shall keep an updated list of those authorized to receive
Protected Health Information.
(1) An authorized member of the Employer's workforce who receives
Protected Health Information shall use or disclose the Protected Health
Information only to the extent necessary to perform his or her duties with
respect to the Plan.
(2) In the event that any member of the Employer's workforce uses or
discloses Protected Health Information other than as permitted by this
Section and the Privacy Standards, the incident shall be reported to the
Plan's privacy officer. The privacy officer shall take appropriate action,
including:
(i) investigation of the incident to determine whether the
breach occurred inadvertently, through negligence or deliberately;
30
whether there is a pattern of breaches; and the degree of harm
caused by the breach;
(ii) appropriate sanctions against the persons causing the
breach which, depending upon the nature of the breach, may
include oral or written reprimand, additional training, or termination
of employment;
(iii) mitigation of any harm caused by the breach, to the
extent practicable; and
(iv) documentation of the incident and all actions taken to
resolve the issue and mitigate any damages.
(e) Certification. The Employer must provide certification to the Plan
that it agrees to:
(1) Not use or further disclose the information other than as permitted
or required by the Plan documents or as required by law;
(2) Ensure that any agent or subcontractor, to whom it provides
Protected Health Information received from the Plan, agrees to the same
restrictions and conditions that apply to the Employer with respect to such
information;
(3) Not use or disclose Protected Health Information for employment-
related actions and decisions or in connection with any other benefit or
employee benefit plan of the Employer;
(4) Report to the Plan any use or disclosure of the Protected Health
Information of which it becomes aware that is inconsistent with the uses
or disclosures permitted by this Section, or required by law;
(5) Make available Protected Health Information to individual Plan
members in accordance with Section 164.524 of the Privacy Standards;
(6) Make available Protected Health Information for amendment by
individual Plan members and incorporate any amendments to Protected
Health Information in accordance with Section 164.526 of the Privacy
Standards;
(7) Make available the Protected Health Information required to
provide an accounting of disclosures to individual Plan members in
accordance with Section 164.528 of the Privacy Standards;
(8) Make its internal practices, books and records relating to the use
and disclosure of Protected Health Information received from the Plan
available to the Department of Health and Human Services for purposes
of determining compliance by the Plan with the Privacy Standards;
(9) If feasible, return or destroy all Protected Health Information
received from the Plan that the Employer still maintains in any form, and
retain no copies of such information when no longer needed for the
purpose for which disclosure was made, except that, if such return or
destruction is not feasible, limit further uses and disclosures to those
31
purposes that make the return or destruction of the information infeasible;
and
(10) Ensure the adequate separation between the Plan and members
of the Employer's workforce, as required by Section 164.504(f)(2)(iii) of
the Privacy Standards and set out in (d) above.
11.18 COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS
Under the Security Standards for the Protection of Electronic Protected Health
Information (45 CFR Part 164.300 et. seq., the "Security Standards"):
(a) Implementation. The Employer agrees to implement reasonable
and appropriate administrative, physical and technical safeguards to protect the
confidentiality, integrity and availability of Electronic Protected Health Information
that the Employer creates, maintains or transmits on behalf of the Plan.
"Electronic Protected Health Information" shall have the same definition as set
out in the Security Standards, but generally shall mean Protected Health
Information that is transmitted by or maintained in electronic media.
(b) Agents or subcontractors shall meet security standards. The
Employer shall ensure that any agent or subcontractor to whom it provides
Electronic Protected Health Information shall agree, in writing, to implement
reasonable and appropriate security measures to protect the Electronic Protected
Health Information.
(c) Employer shall ensure security standards. The Employer shall
ensure that reasonable and appropriate security measures are implemented to
comply with the conditions and requirements set forth in Section 11.17.
11.19 MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT
Notwithstanding anything in the Plan to the contrary, the Plan will comply with the
Mental Health Parity and Addition Equity Act and ERISA Section 712.
11.20 GENETIC INFORMATION NONDISCRIMINATION ACT (GINA)
Notwithstanding anything in the Plan to the contrary, the Plan will comply with the
Genetic Information Nondiscrimination Act.
11.21 HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008
Notwithstanding any provision of this Plan to the contrary, Qualified Reservist
Distributions from a Health Flexible Spending Account shall be provided in accordance with the
Heroes Earnings Assistance and Relief Tax Act of 2008 and applicable regulations thereunder.
32
S. IN WITNESS WHEREOF, this Plan document is hereby executed this
day of P_ 2,0 J
City of Bozeman
By(r� \
EMPLOYER
33
ADOPTING RESOLUTION
The undersigned Principal of City of Bozeman (the Employer) hereby certifies
that the following resolutions were duly adopted by the Employer on —��e, 2.1,
and that such resolutions have not been modified or rescinded as of the date hereof:
RESOLVED, that the form of amended Cafeteria Plan including a Dependent
Care Flexible Spending Account and Health Flexible Spending Account effective July 1, 2010,
presented to this meeting is hereby approved and adopted and that the duly authorized agents
of the Employer are hereby authorized and directed to execute and deliver to the Administrator
of the Plan one or more counterparts of the Plan.
RESOLVED, that the Administrator shall be instructed to take such actions that
are deemed necessary and proper in order to implement the Plan, and to set up adequate
accounting and administrative procedures to provide benefits under the Plan.
RESOLVED, that the duly authorized agents of the Employer shall act as soon
as possible to notify the employees of the Employer of the adoption of the Cafeteria Plan by
delivering to each employee a copy of the summary description of the Plan in the form of the
Summary Plan Description presented to this meeting, which form is hereby approved.
The undersigned further certifies that attached hereto as Exhibits A and B,
respectively, are true copies of City of Bozeman Flexible Benefits Plan as amended and
restated and the Summary Plan Description approved and ado ted in the foregoing resolutions.
Principal
Date: 6 — 21 ' l0
FAO
1883 •� .
Adopting Resolution
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