HomeMy WebLinkAboutItem 06 - Adopt the revised City of San Luis Obispo Section 125 Plan Department Name: Human Resources
Cost Center: 3001
For Agenda of: October 6, 2020
Placement: Consent
Estimated Time: N/A
FROM: Monica Irons, Human Resources Director
Prepared By: Nickole Sutter, Human Resources Manager
SUBJECT: ADOPT THE REVISED CITY OF SAN LUIS OBISPO SECTION 125 PLAN
RECOMMENDATION
Adopt the 2020 City of San Luis Obispo Section 125 Plan Document and delegate authority to
the Human Resources Director to make subsequent administrative changes necessary to maintain
the Plan.
DISCUSSION
A Section 125 Plan (“Plan”), also known as a Cafeteria Plan, is a written plan maintained by an
employer for employees that meets the specific requirements and regulations of Section 125 of
the Internal Revenue Code. It provides participants an opportunity to receive certain benefits on
a pre-tax basis. Participants in a Cafeteria Plan must be permitted to choose among at least one
taxable benefit (such as cash) and one qualified benefit. The written plan must specifically
describe all benefits and establish rules for eligibility and elections. In order to allow pre-tax
benefits for employees, it is required to have a Plan established that qualifies as a “Cafeteria
Plan” within the meaning of the Section 125 of the Internal Revenue Code of 1986, as am ended.
The Plan’s benefits1 which an employee elects to receive must also be excludable from the
employee’s income under Section 125(a) and other applicable sections of the Internal Revenue
Code of 1986, as amended. If taken as a benefit, the employee generally receives two tax
advantages: 1) Employee contributions toward Cafeteria Plan benefits are made pre-tax; and 2)
Employer contributions toward an employee's Cafeteria Plan benefits are not taxed.
1 Each Participant may elect any one or more of the following optional Benefits:
• Health Flexible Spending Account
• Dependent Care Flexible Spending Account
• Group Medical Plan
• Group Dental Plan
• Group Vision Plan
• Hospital Indemnity Insurance
• Cancer Insurance
• Voluntary Benefit(s)
• Intensive Care Insurance
• Specified Health Event
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The last time the City’s Section 125 Plan document was revised was in January 2010
(Attachment A). This year Human Resources staff worked with Igoe, the company the City uses
to administer Section 125 Plan benefits for unreimbursed medical expenses, to review and update
the City’s Section 125 Plan (Attachment B). The revised Plan aligns with City Memorandum of
Agreements for represented employee groups and resolutions around salary and benefits for
unrepresented employee groups. The most substantive change to the Plan clarifies that the
employee’s Health Flex Allowance (the amount the City contributes towards health insurance),
only applies to medical insurance and if the cost of a medical premium is less than the City’s
adopted Health Flex contribution, there is no cash back provided. This is consistent with
negotiated agreements with represented employee groups and resolutions over the last few years.
The changes do not affect the day-to-day administration of the Health Flex Allowance or impact
employees in any way. The updated Plan complies with regulatory requirements and aligns with
benefit plan years that are calendar, not fiscal year, and provides clarity moving into the annual
open enrollment of benefits period.
Previous delegation of authority for maintenance of the Plan was not clear, so st aff requests
Council adopt the City of San Luis Obispo Section 125 Plan and delegate authority to the Human
Resources Director to make future changes to the Section 125 Plan document to align with
benefit changes approved by Council through the negotiation process. This will ensure that the
Section 125 Plan remains accurate without a delay of seeking approval from Council.
Policy Context
The Section 125 Plan aligns with benefits outlined in Memorandum of Agreements for
represented employee groups and resolutions around salary and benefits for unrepresented
employee groups adopted by Council.
Public Engagement
This item is on the agenda for the October 6, 2020 City Council meeting and will follow all
required postings and notifications. The public may have an opportunity to comment on this
item at or before the meeting.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this
report, because the action does not constitute a “Project” under CEQA Guidelines Section 15378.
FISCAL IMPACT
Budgeted: N/A Budget Year: N/A
Funding Identified: N/A
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Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund N/A
State
Federal
Fees
Other:
Total
The recommended action before Council does not have a fiscal impact. The Plan does provide
tax benefits to the City and its employees and all cost associated with the adopted Health Flex
contributions are included in the annual budget appropriation as specified in the various MOA’s
and/or related employment resolutions.
ALTERNATIVES
The City Council could choose not to adopt the revised Section 125 Plan or not approve
delegating signing authority to the Human Resources Director. This is not recommended as
the previous Plan document is outdated and delegating authority to the Human Resources
Director for maintenance of the Plan is consistent with other benefit plan documents.
Attachments:
a - 2010 Section 125 Plan Document
b - 2020 Section 125 Plan Document
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City of San Luis Obispo
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
City of San Luis Obispo Section 125 Plan
Plan Document
Amended and Restated January 01, 2020
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TABLE OF CONTENTS
I. ARTICLE - PLAN DEFINITIONS
II. ARTICLE - PARTICIPATION
01. ELIGIBILITY
02. EFFECTIVE DATE OF PARTICIPATION
03. APPLICATION TO PARTICIPATE
04. TERMINATION OF PARTICIPATION
05. TERMINATION OF EMPLOYMENT
06. REINSTATEMENT OF A FORMER PARTICIPANT
07. DEATH
III. ARTICLE - CONTRIBUTIONS TO THE PLAN
01. SALARY REDIRECTION
02. APPLICATION OF CONTRIBUTIONS
03. PERIODIC CONTRIBUTIONS
04. EMPLOYER CONTRIBUTIONS
IV. ARTICLE - BENEFITS
01. BENEFIT OPTIONS
02. HEALTH FLEXIBLE SPENDING ACCOUNT BENEFIT
03. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT BENEFIT
04. HEALTH INSURANCE BENEFIT
05. DENTAL INSURANCE BENEFIT
06. VISION INSURANCE BENEFIT
07. CANCER INSURANCE BENEFIT
08. HOSPITAL INDEMNITY INSURANCE BENEFIT
09. VOLUNTARY BENEFIT(S)
10. INTENSIVE CARE INSURANCE
11. SPECIFIED HEALTH EVENT
12. NONDISCRIMINATION REQUIREMENTS
13. NON-TAX DEPENDENT COVERAGE
V. ARTICLE - PARTICIPANT ELECTIONS
01. INITIAL ELECTIONS
02. SUBSEQUENT ANNUAL ELECTIONS
03. FAILURE TO ELECT
04. CHANGE IN STATUS
VI. ARTICLE - HEALTH FLEXIBLE SPENDING ACCOUNT
01. ESTABLISHMENT OF BENEFIT
02. DEFINITIONS
03. FORFEITURES
04. LIMITATION ON ALLOCATIONS
05. NONDISCRIMINATION REQUIREMENTS
06. COORDINATION WITH CAFETERIA PLAN
07. HEALTH FLEXIBLE SPENDING ACCOUNT CLAIMS
08. DEBIT AND CREDIT CARDS
VII. ARTICLE - DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
01. ESTABLISHMENT OF ACCOUNT
02. DEFINITIONS
03. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
04. INCREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
05. DECREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
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06. ALLOWABLE DEPENDENT CARE REIMBURSEMENT
07. ANNUAL STATEMENT OF BENEFITS
08. FORFEITURES
09. LIMITATION ON PAYMENTS
10. NONDISCRIMINATION REQUIREMENTS
11. COORDINATION WITH CAFETERIA PLAN
12. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS
VIII. ARTICLE - ADMINISTRATION
01. PLAN ADMINISTRATION
02. EXAMINATION OF RECORDS
03. PAYMENT OF EXPENSES
04. INSURANCE CONTROL CLAUSE
05. INDEMNIFICATION OF ADMINISTRATOR
IX. ARTICLE - AMENDMENT OR TERMINATION OF PLAN
01. AMENDMENT
02. TERMINATION
X. ARTICLE - MISCELLANEOUS
01. PLAN INTERPRETATION
02. GENDER AND NUMBER
03. WRITTEN DOCUMENT
04. EXCLUSIVE BENEFIT
05. PARTICIPANT’S RIGHTS
06. ACTION BY THE EMPLOYER
07. EMPLOYER’S PROTECTIVE CLAUSES
08. NO GUARANTEE OF TAX CONSEQUENCES
09. INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS
10. FUNDING
11. GOVERNING LAW
12. SEVERABILITY
13. CAPTIONS
14. CONTINUATION OF COVERAGE (COBRA)
15. FAMILY AND MEDICAL LEAVE ACT (FMLA)
16. HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)
17. QUALIFIED RESERVIST DISTRIBUTIONS
18. COMPLIANCE WITH HIPAA PRIVACY STANDARDS
19. COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS
20. MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT
21. GENETIC INFORMATION NONDISCRIMINATION ACT (GINA)
22. WOMEN’S HEALTH AND CANCER RIGHTS ACT
23. NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT
Appendix A
Employees electing medical coverage in the City’s plans shall receive a health flexallowance,as
defined by the Affordable Care Act (“ACA”) and shall purchase such coverage through theCity’s
Cafeteria Plan. If the health flex allowance is less than the cost of the medical plan, the employee
shall have the opportunity to pay the difference between the health flex allowance and the premium
cost on a pre-tax basis through theCity’s Cafeteria Plan. If the premium cost for medical coverage is
less than the health flexallowance, the employee shall not receive any unused health flex in the form
of cash or purchase additional benefits under the Cafeteria Plan.Less than full-time employees shall
receive a prorated share of the City’s contribution.
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City of San Luis Obispo
City of San Luis Obispo Section 125 Plan
INTRODUCTION
The City amends and restates this Plan as of January 01, 2020 with an original effective date of January 01, 2020. Its purpose is to provide
benefits for those Employees who shall qualify hereunder and their Dependents and beneficiaries. The concept of this Plan is to allow
Employees to elect between cash compensation or certain nontaxable benefit options as they desire. The Plan shall be known as the City of San
Luis Obispo Section 125 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.
01."Administrator" means the Employer, unless another person or entity has been designated by the Employer
pursuant to the Article titled: "Administration" to administer the Plan on behalf of the Employer. If the Employer is
the Administrator, the Employer may appoint any person, including but not limited to the Employees of the
Employer, to perform the duties of the Administrator. Any person so appointed shall signify acceptance by filing
written acceptance with the Employer. Upon the resignation or removal of any individual performing the duties of
the Administrator, the Employer may designate a successor.
02."Benefit" or "Benefit Options" means any of the optional benefit choices available to a Participant as outlined
in the Article titled: "Benefit Information".
03."Cafeteria Plan Benefit Dollars" means the amount available to Participants to purchase Benefit Options as
provided under the Article titled: "Benefit Information". Each dollar contributed to this Plan shall be converted into
one Cafeteria Plan Benefit Dollar.
04."Code" means the Internal Revenue Code of 1986, as amended or replaced from time to time.
05."Compensation" means the amounts received as compensation by the Participant from the Employer during a
Plan Year.
06."Dependent" means any individual who qualifies as a dependent under an Insurance Contract for purposes of
coverage under that Contract only or under Code Section 152 (as modified by Code Section 105(b)). Any child of
a Plan Participant who is determined to be an alternate recipient under a qualified medical child support order
shall be considered a Dependent under this Plan.
"Dependent" shall include any Child of a Participant who is covered under an Insurance Contract, as defined in
the Contract, or under the Health Flexible Spending Account or as allowed by reason of the Affordable Care Act.
For purposes of the Health Flexible Spending Account, a Participant's "Child" includes his or her natural child,
stepchild, foster child, adopted child, or a child placed with the Participant for adoption. A Participant's Child will
be an eligible Dependent until reaching the limiting age of 26, without regard to student status, marital status,
financial dependency or residency status with the Employee or any other person. When the child reaches the
applicable limiting age, coverage will end at the end of the calendar year.
The phrase "placed for adoption" refers to a child whom the Participant intends to adopt, whether or not the
adoption has become final, who has not attained the age of 18 as of the date of such placement for adoption.
The term "placed" means the assumption and retention by such Employee of a legal obligation for total or partial
support of the child in anticipation of adoption of the child. The child must be available for adoption and the legal
process must have commenced.
07."Effective Date" means January 01, 2020.
08."Election Period" means the period, established by the Administrator, immediately preceding the beginning of
each Plan Year, such period to be applied on a uniform and nondiscriminatory basis for all Employees and
Participants. However, an Employee's initial Election Period shall be determined pursuant to the Article titled:
"Participant Elections".
09."Eligible Employee" means any Employee who has satisfied the provisions of the Section titled: "Eligibility".
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.
An "Eligible Employee" shall exclude the following:
I. ARTICLE - PLAN DEFINITIONS
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Non-Resident Aliens
Leased Employees
10. "Employee" means any person who is currently or hereafter employed by the Employer.
11. "Employer" means City of San Luis Obispo 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, or Adopting Employer.
12. "Insurance Contract" means any contract issued by an Insurer underwriting a Benefit, or any self-funded
arrangement providing any Benefit offered for health and welfare coverage to Eligible Employees of the
Employer.
13. "Insurance Premium Payment Plan" means the plan of benefits contained in the "Benefit Options" section of
this Plan, which provides for the payment of Premium Expenses.
14. "Insurer" means any insurance company that underwrites a Benefit or any self-funded arrangement under this
Plan.
15. "Key Employee" means an Employee described in Code Section 416(i)(1) and the Treasury regulations
thereunder.
16. "Participant" means any Eligible Employee who elects to become a Participant pursuant to the Section titled:
"Application to Participate" and has not for any reason become ineligible to participate further in the Plan.
17. "Plan" means the flexible benefits plan described in this instrument, including all amendments thereto.
18. "Plan Year" means the 12-month period beginning January 01 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.
19. "Premium Expenses" or "Premiums" means the Participant's cost for the Benefits described in the Section
titled: "Benefit Options".
20. "Premium Expense Reimbursement Account" means the account established for a Participant pursuant to
this Plan to which part of his or her Cafeteria Plan Benefit Dollars may be allocated and from which Premiums of
the Participant shall be paid or reimbursed. If more than one type of insured Benefit is elected, sub-accounts
shall be established for each type of insured Benefit.
21. "Qualified Reservist" means a Participant of the plan who is a member of a reserve component such as: the
Army National Guard; the Air National Guard; the Army Reserve; the Navy Reserve; the Marine Corps Reserve;
the Air Force Reserve; the Coast Guard Reserve; the Reserve Corps of the Public Health Service; or as defined
37 U.S.C Section 101.
22. "Qualified Reservist Distribution" means a distribution to a Participant which includes a portion or the balance
in the Participant's Health Flexible Spending Account as described in the Article titled: "Qualified Reservist
Distribution".
23. "Run-out Period" means the set number of days after the plan year ends that allows you to submit claims for
eligible expenses incurred during the Plan Year.
24. "Salary Redirection" means the contributions made by the Employer on behalf of Participants pursuant to the
Section titled: "Salary Redirection". 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
the Article titled: "Participant Elections".
25. "Salary Redirection Agreement" means an agreement between the Participant and the Employer under which
the Participant agrees to reduce his or her 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.
26. "Spouse" means "spouse" as defined in an Insurance Contract, then, for purposes of coverage under that
Insurance Contract only, "spouse" shall have the meaning stated in the Insurance Contract. In all other cases,
"spouse" shall have the meaning stated under applicable federal or state law.
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01. ELIGIBILITY
An individual is eligible to participate in this Plan if the individual:
a. is an Eligible Employee as defined in the Article titled: "Definitions"
b. is working an average of 20 hours or more per week; and
c. is eligible for the group medical plan
02. EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant when the following condition(s) is/are met:
First of the month following date of hire; Group Term Life waiting period: Date of hire
03. APPLICATION TO PARTICIPATE
An Employee who is eligible to participate in this Plan shall, during the applicable Election Period, complete an
application to participate in a manner set forth by the Administrator. The election shall be irrevocable until the
end of the applicable Plan Year unless the Participant is entitled to change his or her Benefit elections pursuant
to the Section titled: "Change in Status".
An Eligible Employee shall also be required to complete 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 the Section titled: "Effective Date of Participation".
Notwithstanding the foregoing, an Employee who is eligible to participate in this Plan and who is covered by the
Employer's insured Benefits under this Plan shall automatically become a Participant to the extent of the
Premiums for such insurance, unless the Employee elects, during the Election Period, not to participate in the
Plan.
04. 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 termination of Participant's employment, subject to the provisions of
the Section titled: "Termination of Employment";
b. Death. The Participant's death, subject to the provisions of the Section titled: "Death"; or
c. Termination of the plan. The termination of this Plan, subject to the provisions of the Section titled:
"Termination".
05. TERMINATION OF EMPLOYMENT
If a Participant's employment with the Employer is terminated for any reason other than death, his or her
participation in the Benefit Options provided under the Section titled: "Benefit Options" 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 expenses within 90 days after the end of the Plan Year, limited by the balance in the
Participant's Dependent Care Flexible Spending Account as of the date of termination.
c. Health FSA, COBRA applicability. With regard to the Health Flexible Spending Account, the Participant
may submit claims for expenses that were incurred during the portion of the Plan Year for which
contributions to the Health Flexible Spending Account have already been made. Thereafter, the health
benefits under this Plan including the Health Flexible Spending Account, shall be applied and administered
consistent with such further rights that a Participant and his or her Dependents may be entitled to pursuant
to Code Section 4980B and the Section titled: "Continuation of Coverage" of the Plan.
06. REINSTATEMENT OF A FORMER PARTICIPANT
An Employee whose participation terminates and returns to an eligible status less than thirty days later may re-
enroll within thirty days of returning to an eligible status with a commencement date of the first of the month
following the adjusted eligibility date. An Employee who re-enrolls in a Health Flexible Spending Account or
Dependent Care Account after such time must re-enter the Plan and reinstate their original elections for that Plan
II. ARTICLE - PARTICIPATION
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Year with adjustments to the annual election amount as the Administrator deems necessary to prorate the
annual election amount over the remainder of the Plan Year. Expenses incurred by the employee during the time
that the employee was not a Participant will not be covered expenses unless COBRA was elected pursuant to
the Article titled: "Continuation of Coverage (COBRA)".
Any Employee who terminates employment and is rehired into an eligible status after thirty days from the date of
termination will be treated as a new enrollee under the Plan. If such Employee returns within the same Plan
Year, prior contributions made to the Health Flexible Spending Account and/or the Dependent Care Account will
be taken into consideration so as not to exceed Plan or IRS maximums.
07. DEATH
If a Participant dies, his or her participation in the Plan shall immediately 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 a particular specific benefit are exhausted. In no event may
reimbursements be paid to someone who is not a spouse or Dependent. If the Plan is subject to the provisions of
Code Section 4980B, then those provisions and related regulations shall apply for purposes of the Health
Flexible Spending Account.
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01. SALARY REDIRECTION
Subject to the provisions of the section titled "Employer Contributions," benefits under the Plan shall be financed
by Salary Redirections sufficient to support the benefits that a Participant has elected hereunder and to pay the
Participant's Premium Expenses. The salary administration program of the Employer shall be revised to allow
each Participant to agree to reduce his or her pay during a Plan Year by an amount determined necessary to
purchase the elected Benefit Options. The amount of such Salary Redirection shall be specified in the Salary
Redirection Agreement and shall be applicable for a Plan Year. Notwithstanding the above, for new Participants,
the Salary Redirection Agreement shall only be applicable from the first day of the pay period following the
Employee's entry date up to and including the last day of the Plan Year. These contributions shall be converted
to Cafeteria Plan Benefit Dollars and allocated to the funds or accounts established under the Plan pursuant to
the Participant's elections made under the Section titled: "Initial Elections".
Any Salary Redirection shall be determined prior to the beginning of a Plan Year (subject to initial elections
pursuant to the Section titled: "Initial Elections") 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 the Article titled: "Participant Elections" and are 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.
02. APPLICATION OF CONTRIBUTIONS
As soon as reasonably practical after each payroll period, the Employer shall apply the Salary Redirection to
provide the Benefits elected by the affected Participants. Any contribution made or withheld for the Health
Flexible Spending Account 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.
03. 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.
04. EMPLOYER CONTRIBUTIONS
The Employer may provide non-elective contributions in the form of Employer Funding into the Health Flexible
Spending Account and Dependent Care Spending Account to the extent as described in the Section Titled:
"Limitation on Allocations". Such contributions may be prorated for Participants who begin participating in the
middle of the Plan Year. Contributions or matching contributions made to the Health Flexible Spending Account
and Dependent Care Spending Account generally do not count toward the annual contribution limit as described
in the Section Titled: "Limitation on Allocations".
III. ARTICLE - CONTRIBUTIONS TO THE PLAN
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01. BENEFIT OPTIONS
Each Participant may elect any one or more of the following optional Benefits:
Health Flexible Spending Account
Dependent Care Flexible Spending Account
In addition, each Participant shall have a sufficient portion of his or her Salary Redirections applied to the
following Benefits unless the Participant elects not to receive such Benefits:
Group Medical Plan
Group Dental Plan
Group Vision Plan
Hospital Indemnity Insurance
Cancer Insurance
Voluntary Benefit(s)
Intensive Care Insurance
Specified Health Event
02. HEALTH FLEXIBLE SPENDING ACCOUNT BENEFIT
Each Participant may elect to participate in the Health Flexible Spending Account option, in which case the
Article titled: "Health Flexible Spending Account" shall apply.
03. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT BENEFIT
Each Participant may elect to participate in the Dependent Care Flexible Spending Account option, in which case
the Article titled: "Dependent Care Flexible Spending Account" shall apply.
04. 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 contracts 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.
05. 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 contracts 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.
06. 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 contracts will provide uniform benefits for all Participants
electing this Benefit.
IV. ARTICLE - BENEFITS
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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.
07. CANCER INSURANCE BENEFIT
a. Coverage for Participant and/or Dependents. Each Participant may elect to be covered under the
Employer's cancer Insurance Contract.
b. Employer selects contracts. The Employer may select suitable cancer Insurance Contracts for use in
providing this cancer insurance benefit, which contracts 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.
08. HOSPITAL INDEMNITY INSURANCE BENEFIT
a. Coverage for Participant and/or Dependents. Each Participant may elect to be covered under the
Employer's hospital indemnity Insurance Contract.
b. Employer selects contracts. The Employer may select suitable hospital indemnity Insurance Contracts
for use in providing this hospital indemnity insurance benefit, which contracts 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 hospital indemnity Insurance Contract shall be determined therefrom, and such hospital indemnity
Insurance Contract shall be incorporated herein by reference.
09. VOLUNTARY BENEFIT(S)
a. Coverage for Participant and/or Dependents. Each Participant may elect to be covered under a
Voluntary Benefit Contract.
b. Employer selects contracts. The Employer may select suitable voluntary benefit Contracts for use in
providing this voluntary benefit, which contracts 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 voluntary benefit Contract shall be determined therefrom, and such voluntary benefit Contract shall
be incorporated herein by reference.
10. INTENSIVE CARE INSURANCE
a. Coverage for Participant and/or Dependents. Each Participant may elect to be covered under a
Intensive Care Insurance Contract.
b. Employer selects contracts. The Employer may select suitable Intensive Care Insurance Contracts for
use in providing this Intensive Care Insurance benefit, which contracts 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 Intensive Care Insurance Contract shall be determined therefrom, and such Intensive Care Insurance
Contract shall be incorporated herein by reference.
11. SPECIFIED HEALTH EVENT
a. Coverage for Participant and/or Dependents. Each Participant may elect to be covered under a
Specified Health Event Contract.
b. Employer selects contracts. The Employer may select suitable Specified Health Event Contracts for use
in providing this Specified Health Event benefit, which contracts 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 Specified Health Event Contract shall be determined therefrom, and such Specified Health Event
Contract shall be incorporated herein by reference.
12. 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
Item 6
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 is prohibited by
Code Section 125, it may, but shall not be required to, reduce contributions or non-taxable Benefits in
order to assure compliance with this Section. Any act taken by the Administrator under this Section shall
be carried out in a uniform and nondiscriminatory manner. If the Administrator decides to reduce
contributions or non-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 or her non-taxable Benefits reduced until the discrimination tests set forth in this Section are satisfied or
until the amount of his or her 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.
13. NON-TAX DEPENDENT COVERAGE
a. If (i) Employee Salary Redirections are made to fund Benefits under the Plan, and (ii) the Employer allows
a Participant to elect to cover a Non-Tax Dependent through the Participant’s coverage under group
Medical, Dental or Vision benefit(s), a Participant who elects to participate in the Salary Redirection
program may pay on a pre-tax basis through salary reduction contributions the Participant’s portion of the
premium cost of coverage under the Employer’s Medical, Dental or Vision Benefits, provided that the full
fair market value of such Medical, Dental or Vision coverage for any such Non-Tax Dependent shall be
includible in the Participant’s gross income as a taxable benefit in accordance with applicable federal
income tax rules. For purposes of this Plan, the Participant electing coverage for Non-Tax Dependent(s)
shall be treated as receiving, at the time that coverage is received, cash compensation equal to the full fair
market value of such coverage and then as having purchased the coverage with after-tax employee
contributions.
b. Notwithstanding the foregoing, no medical care or dependent care expenses incurred by or with respect to
a Non-Tax Dependent of a Participant shall be eligible for reimbursement as eligible expenses under the
Health Flexible Spending Account or Dependent Care Flexible Spending Account.
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01. INITIAL ELECTIONS
An Employee who meets the eligibility requirements of the Section titled: "Eligibility" 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 or her effective date of participation pursuant to the Section titled: "Effective Date of
Participation".
Notwithstanding the foregoing, an Employee who is eligible to participate in this Plan and who is covered by the
Employer's insured benefits under this Plan shall automatically become a Participant to the extent of the
Premiums for such insurance unless the Employee elects, during the Election Period, not to participate in the
Plan.
02. 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 or electronically, as provided by the Administrator, which spending account
Benefit options he wishes to participate in. Any such election shall be effective for any Benefit expenses incurred
during the Plan Year which immediately 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 or her participation in the Plan by notifying the Administrator in writing or by
electronic notification, as determined by the Employer, during the Election Period that he does not want to
participate in the Plan for the next Plan Year;
c. An Employee who elects not to participate for the Plan Year following the Election Period will have to wait
until the next Election Period before again electing to participate in the Plan, except as provided for in the
Section titled: "Change of Status".
03. FAILURE TO ELECT
With regard to Benefits available under the Plan for which no Premium Expenses apply, any Participant who fails
to complete a new benefit election pursuant to the Section titled: "Subsequent Annual Elections" by the end of
the applicable Election Period shall be deemed to have elected not to participate in the Plan for the upcoming
Plan Year. No further Salary Redirections shall therefore be authorized or made for the subsequent Plan Year
for such Benefits, subject to the provisions of the Section titled: "Change in Status" below.
With regard to Benefits available under the Plan for which Premium Expenses apply, any Participant who fails to
complete a new benefit election pursuant to the Section titled: "Subsequent Annual Elections" by the end of the
applicable Election Period shall be deemed to have made the same Benefit elections as are then in effect for the
current Plan Year. The Participant shall also be deemed to have elected Salary Redirection in an amount
necessary to purchase such Benefit options.
04. 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 with any of the provisions of this Plan, then such rules and
regulations shall control. See below in this Section for other situations in which changes in Benefit
elections are permitted.
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's
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 eligibility for coverage under any other
plan, then a Participant's election under the Plan to cease or decrease coverage for that individual under
the Plan is consistent with that change in status only if coverage for that individual becomes applicable or
is increased under said other plan. Also, if the Participant, Spouse or Dependent loses eligibility for
coverage under any other plan, then a Participant's election under the Plan to start or increase coverage
for that individual under the Plan is consistent with that change in status only if coverage for that individual
ceases or is decreased under said other plan.
Regardless of the consistency requirement, if the individual, or the individual's Spouse or Dependent,
becomes eligible for continuation coverage under the Employer's group health plan as provided in Code
Section 4980B or any similar state law, then the individual may elect to increase payments under this Plan
V. ARTICLE - PARTICIPANT ELECTIONS
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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;
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.
Notwithstanding anything in this Section to the contrary, the gain of eligibility or change in eligibility of a
child, as allowed under Code Sections 105(b) and 106, and IRS Notice 2010-38, shall 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) (collectively, an "order") resulting from a divorce, legal
separation, annulment, or change in legal custody (including a qualified medical child support order) that
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 Title XVIII of the Social Security
Act (Medicare) or Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of
benefits under Section 1928 of the Social Security Act (the program for distribution of pediatric vaccines). If
the Participant or the Participant's Spouse or Dependent who has been entitled to Medicaid or Medicare
coverage loses eligibility, that individual may prospectively elect coverage under the Plan if a benefit
package option under the Plan provides similar coverage.
e. Cost increase or decrease. Notwithstanding subsection (a), 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.
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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. Notwithstanding subsection (a), 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. Notwithstanding subsection (a), 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. Notwithstanding subsection (a), 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. Notwithstanding subsection (a), 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, former Spouse's employer or Dependent's employer if (1) the cafeteria
plan or other benefits plan of the Spouse, former Spouse's employer 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,
former Spouse's employer or Dependent's employer.
j. Change in dependent care provider. Notwithstanding subsection (a), a Participant may make a
prospective election change that is on account of and corresponds with a change by the Participant in a
dependent care provider. The availability of dependent care services from a new dependent care 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. Notwithstanding subsection (a), a Participant may prospectively revoke his or her election of group health
plan coverage if (i) the Participant changes from full-time employment (i.e., an average of 30 hours of
service per week) to part-time employment (i.e., an average of less than 30 hours of service per week),
even if the Participant continues to be eligible for coverage under the group health plan, and (ii) the
Participant, and any related individuals whose coverage is also to be revoked, intend to enroll in another
plan that provides minimum essential coverage and is effective no later than the first day of the second
month after the month during which the revocation is effective.
l. Notwithstanding subsection (a), a Participant may prospectively revoke his or her election of group health
plan coverage if (i) the Participant is eligible for a Special Enrollment Period to enroll in a Qualified Health
Plan through a Marketplace, or seeks to enroll in a Qualified Health Plan through a Marketplace during the
Marketplace's annual open enrollment period, and (ii) the Participant, and any related individuals whose
coverage is also to be revoked, intend to enroll in a Qualified Health Plan through a Marketplace that is
effective no later than the day immediately following the effective date of the revocation.
m. Health Flexible Spending Account 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.
n. Allowable mid-year Status Changes for 2020 due to Coronavirus. The above notwithstanding,
pursuant to applicable guidelines under IRS Notice 2020-29, for all Benefit elections made from January 1,
2020 through December 31, 2020, a Participant can make the following changes in existing coverage
elections on a prospective basis (and only make one change in each election):
a. Change in Healthcare Flexible Spending Account and Dependent Care Flexible Spending Account
elections: A Participant may:
1. Elect to enroll in Healthcare Flexible Spending Account coverage for the Participant and their
Dependents, and contribute allowable annual dollar amounts, even if coverage was previously
declined;
2. Change his or her current coverage elections and options for Healthcare Flexible Spending
Account coverage to increase payroll contribution elections previously made, as long as such
elections do not exceed annual contribution limit amounts;
Item 6
3. Change his or her current coverage elections and options for Healthcare Flexible Spending
Account coverage to decrease payroll contribution elections previously made;
4. Elect to enroll in Dependent Care Flexible Spending Account coverage for the Participant and
their Dependents, and contribute allowable annual dollar amounts, even if coverage was
previously declined;
5. Change his or her current coverage elections and options for Dependent Care Flexible
Spending Account coverage to increase payroll contribution elections previously made, as
long as such elections do not exceed annual contribution limit amounts;
6. Change his or her current coverage elections and options for Dependent Care Flexible
Spending Account coverage to decrease payroll contribution elections previously made;
7. Flex Credits and Salary Redirection amounts shall be adjusted by the Plan accordingly as of
the next applicable Salary Redirection date.
Item 6
01. ESTABLISHMENT OF BENEFIT
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 allowable Medical Expenses. All amounts reimbursed shall be periodically paid
from amounts allocated to the Participant’s Health Flexible Spending Account. Periodic payments reimbursing
Participants from the Health Flexible Spending Account shall in no event occur less frequently than monthly.
02. DEFINITIONS
For the purposes of this Article and the Plan, the terms below have the following meanings:
a. "Health Flexible Spending Account" means the account established for a Participant pursuant to this
Plan to which part of his or her Cafeteria Plan Benefit Dollars may be allocated and from which all
allowable Medical Expenses incurred by the Participant, his or her Spouse and his or her Dependents may
be reimbursed.
b. "Highly Compensated Participant" means, for the purposes of this Article and determining
discrimination under Code Section 105(h), a participant who is:
1. one of the 5 highest paid officers;
2. a shareholder who owns (or is considered to own, applying the rules of Code Section 318) more than
10 percent in value of the stock of the Employer; or
3. among the highest paid 25 percent of all Employees (other than exclusions permitted by Code
Section 105(h)(3)(B) for those individuals who are not Participants).
c. "Medical Expenses" means any expense for medical care within the meaning of the term "medical care"
as defined in Code Section 213(d) and the rulings and Treasury regulations thereunder, and not otherwise
used by the Participant as a deduction in determining his or her tax liability under the Code. "Medical
Expenses" can be incurred by the Participant, his or her Spouse and his or her Dependents. "Incurred"
means, with regard to Medical Expenses, when the Participant is provided with the medical care that gives
rise to the Medical Expense and not when the Participant is formally billed or charged for, or pays for, the
medical care.
A Participant may not be reimbursed for the cost of other health coverage such as premiums paid under
plans maintained by the employer of the Participant's Spouse or individual policies maintained by the
Participant or his or her Spouse or Dependent.
d. A Participant may not be reimbursed for "qualified long-term care services" as defined in Code Section
7702B(c).
e. The definitions of the Article titled: "Plan Definitions" are hereby incorporated by reference to the extent
necessary to interpret and apply the provisions of this Health Flexible Spending Account.
03. FORFEITURES
A Participant in the Health Care Flexible Spending Account may roll over up to $550.00 of unused funds at the
end of one Plan Year to the next Plan Year. The maximum limit may increase from year-to-year as provided
under IRS Notice 2020-33 and Section 125(i) of the Internal Revenue Code. These funds can be used during the
following Plan Year for expenses incurred in that Plan Year. Amounts carried over do not affect the maximum
amount of salary redirections otherwise permitted for said next Plan Year. Unused amounts are those remaining
after all eligible expenses for the Plan Year have been reimbursed. These amounts may not be cashed out or
converted to any other taxable or nontaxable benefit. Unused amounts in excess of maximum limit will be
forfeited.
04. LIMITATION ON ALLOCATIONS
Notwithstanding any provision contained in this Health Flexible Spending Account to the contrary, the maximum
amount of salary redirections that may be allocated to the Health Flexible Spending Account by a Participant in
any Plan Year is $2,700.00. The maximum limit may increase from year-to-year pursuant to Section 125(i)(2) of
the Internal Revenue Code.
Carryover: A Participant in the Health Care Flexible Spending Account may roll over up to $550.00 of unused
funds at the end of one Plan Year to the next Plan Year. The maximum limit may increase from year-to-year as
provided under IRS Notice 2020-33 and Section 125(i) of the Internal Revenue Code. These funds can be used
during the following Plan Year for expenses incurred in that Plan Year. Amounts carried over do not affect the
maximum amount of salary redirections otherwise permitted for said next Plan Year. Unused amounts are those
remaining after all eligible expenses for the Plan Year have been reimbursed. These amounts may not be
VI. ARTICLE - HEALTH FLEXIBLE SPENDING ACCOUNT
Item 6
cashed out or converted to any other taxable or nontaxable benefit. Unused amounts in excess of maximum limit
will be forfeited.
05. 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.
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 and/or the Code are satisfied, or until the amount designated for the fund
equals the amount designated for the fund by the 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.
06. COORDINATION WITH CAFETERIA PLAN
All Participants under the Plan are eligible to receive Benefits under this Health Flexible Spending Account.
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.
07. HEALTH FLEXIBLE SPENDING ACCOUNT CLAIMS
a. Expenses must be incurred during Plan Year. All eligible Medical Expenses incurred by a Participant,
his or her Spouse and his or her Dependents during the Plan Year shall be reimbursed, subject to the
Section titled: "Termination of Employment", even though the submission of such a claim occurs after his
or her participation hereunder ceases; but provided that the Medical Expenses were incurred during the
applicable Plan Year. Medical Expenses are treated as having been incurred when the Participant is
provided with the medical care that gives rise to the medical expenses, not when the Participant is formally
billed or charged for, or pays for the medical care.
b. Reimbursement available throughout Plan Year. The Administrator shall direct the reimbursement to
each eligible Participant for all allowable Medical Expenses, up to a maximum of the amount designated
by the Participant for the Health Flexible Spending Account for the Plan Year. Reimbursements shall be
made available to the Participant throughout the year without regard to the level of Cafeteria Plan Benefit
Dollars which have been allocated to the fund at any given point in time. Furthermore, a Participant shall
be entitled to reimbursements only for amounts in excess of any payments or other reimbursements under
any health care plan covering the Participant and/or his or her 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 after 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. Claims for reimbursement. Claims for the reimbursement of Medical Expenses incurred in any Plan Year
shall be paid as soon after a claim has been filed as is administratively practicable; provided however, that
if a Participant fails to submit a claim within 90 days after the end of the Plan Year, those Medical Expense
claims shall not be considered for reimbursement by the Administrator. However, if a Participant
terminates employment during the Plan Year, claims for the reimbursement of Medical Expenses must be
submitted within 60 days after the date of termination.
08. DEBIT AND CREDIT CARDS
Participants may, subject to a procedure established by the Administrator and applied in a uniform
nondiscriminatory manner, use debit and/or credit (stored value) cards ("cards") provided by the Administrator
and the Plan for payment of Medical Expenses, subject to the following terms:
a. Card only for medical expenses. Each Participant issued a card shall certify that such card shall only be
used for Medical Expenses. The Participant shall also certify that any Medical Expense paid with the card
has not already been reimbursed by any other plan covering health benefits and that the Participant will not
Item 6
seek reimbursement from any other plan covering health benefits.
b. Card issuance. Such card shall be issued upon the Participant’s Effective Date of Participation and
reissued or remain in effect for each Plan Year the Participant remains a Participant in the Health Flexible
Spending Account. Such card shall be automatically cancelled upon the Participant’s death or termination
of employment, or if such Participant has a change in status that results in the Participant’s withdrawal
from the Health Flexible Spending Account.
c. Maximum dollar amount available. The dollar amount of coverage available on the card shall be the
amount elected by the Participant for the Plan Year. The maximum dollar amount of coverage available
shall be the maximum amount for the Plan Year as set forth in the Section titled: "Limitation on
Allocations".
d. Only available for use with certain service providers. The cards shall only be accepted by such
merchants and service providers as have been approved by the Administrator.
e. Card use. The cards shall only be used for Medical Expense purchases as defined in Code Section 213(d)
and the rulings and Treasury regulations thereunder, including, but not limited to, the following:
1. Co-payments for doctor and other medical care;
2. Purchase of drugs prescribed by a health care provider, including, if permitted by the Administrator,
over-the-counter medications as allowed under IRS regulations;
3. Purchase of medical items such as eyeglasses, syringes, crutches, etc.
f. Substantiation. Such purchases by the cards shall be subject to confirmation by the Administrator,
usually by requiring the Participant to submit a receipt from a service provider describing the service, the
date and the amount. The Administrator shall also follow the requirements set forth in Revenue Ruling
2003-43 and Notice 2006-69. All charges shall be conditional pending confirmation by the Administrator.
g. Correction methods. If such purchase is later determined by the Administrator to not qualify as a Medical
Expense, the Administrator, in its discretion, shall use one of the following correction methods to make the
Plan whole. Until the amount is repaid, the Administrator shall take further action to ensure that further
violations of the terms of the card do not occur, up to and including denial of access to the card.
1. Repayment of the improper amount by the Participant;
2. Withholding the improper payment from the Participant's wages or other compensation to the extent
consistent with applicable federal and state law;
3. Claims substitution or offset of future claims until the amount is repaid; and
4. If subsections (1) through (3) fail to recover the amount, consistent with the Employer's business
practices, the Employer may treat the amount as any other business indebtedness.
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01. 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.
02. DEFINITIONS
For the purposes of this Article and the 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 or her Cafeteria Plan Benefit Dollars may be allocated and from which
Employment-Related Dependent Care Expenses of the Participant may be reimbursed for the care of the
Qualifying Dependents of Participants.
b. "Earned Income" means earned income as defined under Code Section 32(c)(2), but excluding such
amounts paid or incurred by the Employer for dependent care assistance to the Participant.
c. "Employment-Related Dependent Care Expenses" means the amounts paid for those expenses of a
Participant that, if paid by the Participant, would be considered employment related expenses under Code
Section 21(b)(2). Generally, they 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 during 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 the "Definitions" Section of the Article titled: "Dependent Care Flexible
Spending Account") who regularly spends at least eight (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 six (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 to
or incurred by 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 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 the Article titled: "Definitions" are hereby incorporated by reference to the extent
necessary to interpret and apply the provisions of this Dependent Care Flexible Spending Account.
03. 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.
04. INCREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
A Participant's Dependent Care Flexible Spending Account shall be increased each pay period by the amount of
Cafeteria Plan Benefit Dollars that he has elected to apply toward his or her Dependent Care Flexible Spending
Account pursuant to elections made under Article V hereof.
05. DECREASES IN DEPENDENT CARE FLEXIBLE SPENDING ACCOUNTS
VII. ARTICLE - DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
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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 the Participant pursuant to the
Section titled: "Dependent Care Flexible Spending Account Claims" hereof.
06. ALLOWABLE DEPENDENT CARE REIMBURSEMENT
Subject to limitations contained in the Section titled: "Limitation on Payments" below, 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.
07. ANNUAL STATEMENT OF BENEFITS
On or before January 31st of each calendar year, the Employer shall furnish to each Employee who was a
Participant and received benefits under the Section titled: "Definitions" during the prior calendar year, a
statement of all such benefits paid to or on behalf of such Participant during the prior calendar year. This
statement is set forth on the Participant's Form W-2.
08. 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 the Section titled: "Dependent Care Flexible
Spending Account Claims" 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.
09. LIMITATION ON PAYMENTS
a. Code limits. 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 tax year of the Participant
shall not exceed the lesser of the Earned Income limitation described in Code Section 129(b) and
$5,000.00 ($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)).
10. NONDISCRIMINATION REQUIREMENTS
a. Intent to be nondiscriminatory. It is the intent of this Dependent Care Flexible Spending Account that
contributions or benefits not discriminate in favor of the group of employees in whose favor discrimination
is prohibited under Code Section 129(d).
b. 25% test for shareholders. It is the intent of this Dependent Care Flexible Spending Account that not
more than 25 percent of the amounts paid by the Employer for dependent care assistance during the Plan
Year will be provided for the class of individuals who are shareholders or owners (or their Spouses or
Dependents), each of whom (on any day of the Plan Year) owns more than 5 percent of (i) the stock of, or
(ii) 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 is prohibited by 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.
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.
12. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS
The Administrator shall direct the payment of all qualified 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
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may be necessary to verify the claims submitted. At a minimum, the form shall include a statement from an
independent third party as proof that the expense has been incurred during the Plan Year 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 Dependent, the cost of which the Participant 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 of the year
during which he or she attends such institution.
i. Claims for reimbursement. If a Participant fails to submit a claim within 90 days after the end of the Plan
Year, those claims shall not be considered for reimbursement by the Administrator.
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01. PLAN ADMINISTRATION
The Employer shall be the Administrator, unless the Employer elects otherwise. The Employer may appoint any
person or persons, including, but not limited to, one or more Employees of the Employer, to perform the duties of
the Administrator. Any person so appointed shall signify acceptance by filing written acceptance with the
Employer. An Administrator may resign by delivering a written resignation to the Employer or may be removed by
the Employer by delivery of written notice of removal, to take effect at a date specified therein, or upon delivery if
no date is specified. Upon the resignation or removal of any individual performing the duties of the Administrator,
the Employer may designate a successor. 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 to ensure that the
Plan is being operated for the exclusive benefit of the Employees entitled to participate in the Plan in accordance
with the terms of the Plan and the Code.
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 and discretion to administer
the Plan in all of its details and determine all questions arising in connection with the administration,
interpretation, and application of the Plan. The Administrator may establish procedures, correct any defect,
supply any information, or reconciles any inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purpose of the Plan. The Administrator shall have all powers necessary
or appropriate to accomplish the Administrator's duties under the Plan. The Administrator shall be charged with
the duties of the general administration of the Plan as set forth under the Plan, including, but not limited to, in
addition to all other powers provided by this Plan:
a. To make and enforce such procedures, rules and regulations as the Administrator deems necessary or
proper for the efficient administration of the Plan;
b. To interpret the provisions of 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 and
to assist any Participant regarding the Participant's rights, benefits or elections under the Plan;
f. To keep and maintain the Plan documents and all other records pertaining to and necessary for the
administration of the Plan;
g. To review and settle all claims against the Plan, to approve reimbursement requests, and to authorize the
payment of benefits if the Administrator determines such should be paid. This authority specifically permits
the Administrator to settle disputed claims for benefits and any other disputed claims made against the
Plan;
h. To establish and communicate procedures to determine whether a medical child support order is qualified;
and
i. To appoint such agents, counsel, accountants, consultants, and other persons or entities 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.
02. EXAMINATION OF RECORDS
The Administrator shall make available to each Participant, Eligible Employee and any other Employee of the
Employer, for examination at reasonable times during normal business hours, such records as pertain to their
interest under the Plan.
03. 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.
VIII. ARTICLE - ADMINISTRATION
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04. 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 or other benefit program that is self-insured 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.
05. 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.
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01. 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 and local laws, statutes and regulations.
02. TERMINATION
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 accounts 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.
IX. ARTICLE - AMENDMENT OR TERMINATION OF PLAN
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01. 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 the Section titled: "Severability".
02. 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.
03. 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.
04. EXCLUSIVE BENEFIT
This Plan shall be maintained for the exclusive benefit of the Employees who participate in the Plan.
05. 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.
06. 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 the Employer.
07. 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.
08. 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.
09. 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 and
Medicare tax that would have been paid on such compensation, less any such additional income tax, Social
Security tax, and Medicare tax actually paid by the Participant.
10. FUNDING
X. ARTICLE - MISCELLANEOUS
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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. 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 does 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 California.
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.
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.
14. CONTINUATION OF COVERAGE (COBRA)
Notwithstanding anything in the Plan to the contrary, in the event any benefit under this Plan subject to the
continuation coverage requirement of Code Section 4980B becomes unavailable, each Participant will be
entitled to continuation coverage as prescribed in Code Section 4980B, and related regulations. This Section
shall only apply if the Employer employs at least twenty (20) employees on more than 50% of its typical business
days in the previous calendar year.
15. FAMILY AND MEDICAL LEAVE ACT (FMLA)
Notwithstanding anything in the Plan to the contrary, in the event any benefit under this Plan becomes subject to
the requirements of the Family and Medical Leave Act and regulations thereunder, this Plan shall be operated in
accordance with Regulation 1.125-3.
16. HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)
Notwithstanding anything in this Plan to the contrary, this Plan shall be operated in accordance with HIPAA and
regulations thereunder.
17. QUALIFIED RESERVIST DISTRIBUTIONS
Notwithstanding any provision of this Plan to the contrary, a Participant may elect to receive a distribution of
certain funds from his or her Health Flexible Spending Account or Limited Purpose Flexible Spending Account if
the following criteria is met:
1. The Participant is a Qualified Reservist as defined in the Section titled: "Definitions".
2. The Participant is ordered or called to active duty for a period in excess of 180 days or more, or for an
indefinite period. If the period is less than 180 days, a Qualified Reservist Distribution is not allowed unless
there are subsequent orders or calls for duty that increase the total period of active duty to 180 days or
more.
3. The Participant has provided the Plan Administrator with a copy of the order or call to active duty and;
4. The request for distribution is made during the period beginning with the order or call to duty and ending
on the last day of the Plan Year (or Grace Period if applicable) in which the order or call to duty occurred.
The Participant delivers a written election to the Plan Administrator in a form designated or requested by
the Plan Administrator.
The amount of the QRD shall be the amount contributed to the account as of the date of the QRD request minus
reimbursements received as of the date of the QRD request.
18. COMPLIANCE WITH HIPAA PRIVACY STANDARDS
a. Application. If any benefits under this Cafeteria Plan are 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
Item 6
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. Genetic information will not be used or disclosed for underwriting purposes.
d. PHI disclosed to certain workforce members. The Plan shall disclose Protected Health Information only
to members of the Employer's workforce who are authorized to receive such Protected Health Information,
and only to the extent and in the minimum amount necessary for that person to perform his or her duties
with respect to the Plan. "Members of the Employer's workforce" shall refer to all employees and other
persons under the control of the Employer. The Employer shall keep an updated list of those authorized to
receive Protected Health Information.
1. An authorized member of the Employer's workforce who receives Protected Health Information shall
use or disclose the Protected Health Information only to the extent necessary to perform his or her
duties with respect to the Plan.
2. In the event that any member of the Employer's workforce uses or discloses Protected Health
Information other than as permitted by this Section and the Privacy Standards, the incident shall be
reported to the Plan's privacy officer. The privacy officer shall take appropriate action, including:
i. investigation of the incident to determine whether the breach occurred inadvertently, through
negligence or deliberately; whether there is a pattern of breaches; and the degree of harm
caused by the breach;
ii. appropriate sanctions against the persons causing the breach which, depending upon the
nature of the breach, may include oral or written reprimand, additional training, or termination
of employment;
iii. mitigation of any harm caused by the breach, to the extent practicable; and
iv. documentation of the incident and all actions taken to resolve the issue and mitigate any
damages.
e. Certification. The Employer must and hereby does provide certification to the Plan that it agrees to adopt
all required provisions as mandated under HIPAA for all non-exempt group health plans, including the
following:
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 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
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required by Section 164.504(f)(2)(iii) of the Privacy Standards.
19. COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS
Under the Security Standards for the Protection of Electronic Protected Health Information (45 CFR Part 164.300
et. seq., the "Security Standards"):
a. Implementation. The Employer agrees to implement reasonable and appropriate administrative, physical
and technical safeguards to protect the 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 the
Section titled: "Compliance with HIPAA Privacy Standards".
20. 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
Addiction Equity Act and ERISA Section 712.
21. GENETIC INFORMATION NONDISCRIMINATION ACT (GINA)
Notwithstanding anything in the Plan to the contrary, the Plan will comply with the Genetic Information
Nondiscrimination Act.
22. WOMEN'S HEALTH AND CANCER RIGHTS ACT
Notwithstanding anything in the Plan to the contrary, the Plan will comply with the Women's Health and Cancer
Rights Act of 1998.
23. NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT
Notwithstanding anything in the Plan to the contrary, the Plan will comply with the Newborns' and Mothers'
Health Protection Act.
Item 6
By:
Name:
Title:
Execution Agreement
IN WITNESS WHEREOF, City of San Luis Obispo has caused its authorized officer to execute this amended and restated Plan document as of
______________________, the same to be effective January 01, 2020, unless otherwise indicated herein.
City of San Luis Obispo
Item 6
By:
Name:
Title:
CERTIFICATE OF RESOLUTION
The undersigned authorized representative of City of San Luis Obispo (the Employer) hereby certifies that the following resolutions were duly
adopted by the governing body of the Employer on ______________________, and that such resolutions have not been modified or rescinded
as of the date hereof:
RESOLVED, that the form of amended and restated Welfare Benefit Plan, effective January 01, 2020, presented to this meeting (and a copy of
which is attached hereto) is hereby approved and adopted, and that the proper agents of the Employer are hereby authorized and directed to
execute and deliver to the Administrator of said Plan one or more counterparts of the Plan.
RESOLVED, that the Administrator shall be instructed to take such actions that the Administrator deems necessary and proper in order to
implement the Plan, and to set up adequate accounting and administrative procedures for the provision of benefits under the Plan.
RESOLVED, that the proper agents of the Employer shall act as soon as possible to notify the employees of the Employer of the adoption of the
Plan and to deliver to each employee a copy of the Summary Plan Description of the Plan, which Summary Plan Description is attached hereto
and is hereby approved.
The undersigned further certifies that attached hereto as Exhibits, are true copies of City of San Luis Obispo's Benefit Plan Document and
Summary Plan Description approved and adopted at this meeting.
City of San Luis Obispo
Item 6