Res 05-465
RESOLUTION NO. ~
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
FEDERAL WAY, WASHINGTON, AUTHORIZING THE
EST ABLISHMENT OF A HEALTH REIMBURSEMENT
ARRANGEMENT/VOLUNTARY EMPLOYEES' BENEFICARY
ASSOCIA nON ("BRA VEBA") PLAN.
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WHEREAS, the Internal Revenue Code Section 50 I (c )(9) allows for the creation of a
voluntary employee's beneficiary association which is an employee sponsored tax-exempt health and
welfare trust; and
WHEREAS, IRS guidelines and regulations allow an employer to offer Health
Reimbursement Arrangement ("BRA") plans; and
WHEREAS, such HRA plans are available to governmental employees in the
Northwest; and
WHEREAS, The Voluntary Employees' Beneficiary Association for Public
Employees in the Northwest Trust ("Trust") offers and will administer an HRA entitled "Voluntary
Employees Beneficiary Association Medical Expense Plan for Public Employees in the Northwest"
as Amended and Restated January I, 2005 ("Plan"); and
WHEREAS, The City of Federal Way ("City") has determined that establishing an
BRA plan which provides a tax-free defil1ed contribution amount for employees to pay for medical,
dental, vision, and tax qualified long tenll care premiums and out-of-pocket expenses is in the best
interest of the City and its employees; and
WHEREAS, the City desires to establish an HRA plan for its employees, and
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Res. ~, Page I
WHEREAS, the City desires to use the services ofthe Trust to administer such Plan;
and
WHEREAS, such HRA established by the City will be administered in accordance
with the Plan documents provided by the Trust on file in the City office.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY
HEREBY RESOL YES AS FOLLOWS:
Section 1. Plan Established. Effective, January 1,2006, the City hereby elects to
participate in the Plan and Trust as presently constituted or hereafter amended using the Trust as its
plan administrator for the benefit of eligible City employees as defined by employer policies or
collective bargaining agreements.
Section 2. Plan Funding. The Plan will be funded by employer contributions in
amounts determined from time to time pursuant to employer policies and collective bargaining
agreements.
Section 3. Plan Administration. The Human Resources Manager is authorized to
execute documents and establish procedures consistent with Plan and Trust provisions and applicable
employer policies and collective bargaining agreements necessary to effect the adoption and
administration of the Plan.
Section 4. Severability. If any section, sentence, clause or phrase ofthis resolution
should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity
or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence,
clause or phrase of this resolution.
Res. # '/-G,5: , Page 2
Section 5. Ratification. Any act consistent with the authority and prior to the
effective date of the resolution is hereby ratified and affirmed.
Section 6. Effective Date. This resolution shall be effective January 1,2006.
RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON, this Q)tO~dayof QH\~ ,2005.
ATTEST:
WAY, CMC
APPROVED AS TO FORM:
't:~~ d k4~~-r-L
CITY ATTORNEY, PATRICIA A. RICHARDSON
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
RESOLUTION NO. 6S.LfbS
k:\reso\vcba
rev. 12/6/05
Res. # J!U, Page 3
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,~'..,..-,.".'I. VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION
.; , MEDICAL EXPENSE PLAN FOR PUBLIC EMPLOYEES IN THE NORTHWEST
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AS AMENDED AND RESTATED
January I, 2005
Article I.
Name. Documents & Definitions
1.1 ~. The name of this Plan IS the VOLUNTARY EMPLOYEES'
BENEFICIARY ASSOCIATION MEDICAL EXPENSE PLAN ("Plan"). It is offered by a
Voluntary Employees' Beneficiary Association under Internal Revenue Code ~ 501(c)(9).
1.2 Plan Documents. This Plan Document, together with the Trust Instrument, the
individual Membership Enrollment Fornl, and the Employer Adoption Agreement shall constitute
the Plan Documents. This Plan Document is hereby amended and restated and replaces the prior
Plan document in its entirety.
1.3 Definitions.
1.3.1 "Administrator" means an Administrator appointed or contracted by the
Trustees from time to time to administer all or a portion of the Plan.
e:) 1.3.2 "Dependent" means Employee's spouse or dependent as determined
under IRC S I 05(b).
1.3.3 "Effective Date" for this Plan document shall be January 1,2005.
1.3.4 "Employee" means any current or former employee of the Employer, as
defined by Treasury Regulation S 1.501 (c )(9 )-2(b), except employees excluded as a result
of collective bargaining agreements, agreements substantially similar to collective
bargaining agreements, or as a result of an individual Employers' nondiscriminatory
employee benefits policies.
1.3.5 "Emplover" means a county, city, or town, or special district, or similar
entity in Washington, Oregon, and Idaho, whose purpose is to provide public services to its
citizens, and is authorized to do so by state statute.
1.3.6 "Fiduciaries" under this Plan are the Trustees and the Administrator.
1.3.7 "IRC" means the Internal Revenue Code of 1986, as amended from time
to time.
1.3.8 "Investment Account" means any investment account established by the
Trustees to fund benefits. The Trustees' power to invest funds is described in the Trust.
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Plan Document (Amended 1/05) I
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1.3.9 "Medical Benefits" refers to payments or reimbursements for health
benefits as described in Section 5.1.
1.3.10 "Membership Enrollment Form" means the form provided by the
Trustees that must be completed by the Employee in order to participate in this Plan.
1.3.11 "Participant" means an Employee for whom deposits have been received
by the Trust.
1.3.12 "Partieipant's Account" refers to the account maintained for a Participant
to record his/her share of the deposits of the Employer and adjustments relating thereto.
1.3.13 "Plan Year" is from October 1 to September 30, except the first year for
this Plan with an effective date other than October I shall run from such effective date
until the next September 30.
1.3.14 "Retirement Age" shall be the same as the retirement age specified by the
Employer, and as amended from time to time.
1.3.15 "Severance" means a Participant's voluntary or involuntary termination
of Service for any reason other than retirement, death or disability.
1.3.16 "Trust or Trust Agreement" refers to the Trust which the Trustees
adopted October 21, 1999, as an amended and restated document, together with all /'--------.
subsequent amendments and restatements thereto. \ )
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1.3.17 "Trustees" refers to the individuals serving as Trustees in accordance
with the Trust.
Article II.
Participation
2.1 In General. Subject to the limitations of Section 2.2, and subject to the
eligibility provisions of applicable local and State law, an Employee becomes a Participant under
this Plan at the time of the first Employer deposit to this Plan on behalf of the Employee, and
proper completion of a Membership Enrollment Form.
2.2 Limitations. This Plan does not permit any condition for eligibility or benefits
which would discriminate in favor of any class of Participants to the extent such discrimination is
prohibited by applicable law.
2.3 Duration of Participation. Once an Employee becomes a Participant in the
Plan, his/her participation shall continue as long as funds remain in his/her Participant's Account.
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Plan Document (Amended 1105) 2
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t \ Fundin2 of Benefits
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3.1 Contributions. Each individual Employer shall contribute to this Plan on
behalf of participating Employees on terms pursuant to each Participating Employer's sick leave
conversion program, flat rate contribution program, or any other Employer sponsored program
permitting contributions to this Plan and Trust. Employer contributions shall be specifically
allocated to each Participant's Individual Account for the purpose of providing for payment of the
benefits dcscribed hereinafter. An Employer's liability for paymcnt of benefits provided in this
Plan shall be limited to the amount of its Employer contributions.
Article IV.
Allocation to Participant's Accounts
4.1 Participant's Account. A scparate account shall be maintained by the Trustees
for each Participant, and the income, losses, appreciation, depreciation and withdrawals for
expenses or benefit payments attributable to his/her account. The Trustees shall not be required
to maintain separate investments for any account.
4.2 Receipt of Deposits. Deposits for any Plan Year will be crcdited as received by
the Trustees.
4.3 Accountin2 Steps. As of each calcndar month, the Administrator shall:
~~) 4.3.1 FIRST, chargc to each Participant's Account all fees, payments or
distributions made under this Plan to or for the benefit of the Participant or his
beneficiary that have not been chargcd previously;
4.3.2 SECOND, adjust each Participant's Account upward or downward, by an
amount equal to thc net income or loss accrued under this Plan by the Account; and
4.3.3 THIRD, allocate and credit any Employer deposit to this Plan that is
made during the month to a Participant's Account.
Article V.
Medical Benefits
5.1 Description. Medical Benefits must be payments or reimbursement for health
benefits as defined by IRC ~213(d) and excludable from income under IRC ~I05 and 106, as
amended from time to time. Reimbursements for health benefits are limited to health benefits not
provided by Social Security, Medicare, or any other medical and health insurance contracts held
by the Participants, their Dependents, or the Employer, and the reimbursements may not be made
for items paid by anyother insurance contract or for expenses that are deducted by the Participant
under any other section of the Internal Revenue Code.
5.l.! Commencement of Benefits. Medical Benefits commence for expenses
incurred on or after the date the Administrator receives a deposit on behalf of a
Participant and in accordance with any limitations contained in the Plan Documents.
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Plan Document (Amended 1/05) 3
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5.1.2 Expenses. Medical Benefits are payable for expenses incurred by the
Participant or the Participant's Dependents.
5.1.3 Payment of Benefits. Insurance premium payments may be paid by the
Administrator directly to insurance companies, hcalth maintenance organizations or
preferred provider organizations or to the Employer for COBRA benefits, or may be
reimbursed directly to the Participant. Payments for Medical Benefits may be made
directly to the service provider, or reimbursed to the Participant. Reimbursements shall
be made in accordance with rules and regulations established by the Administrator from
time to time.
5.1.4 Termination of Benefits. All Medical Benefits will terminate when the
Participant's Account has no funds remaining. Notwithstanding the above, after the death
of the Participant's last Dependent, any funds then remaining in the Participant's Account
shall be used for Medical Benefits for the Participant's heir(s).
5.1.5 Funding Limitations. Deposits made on behalf of each Participant for
Medical Bcnefits provided by this Plan shall not exceed the amount anticipated to be
necessary to provide current supplemental Medical Benefits and post-retirement Medical
Benefits for the Participant and the Participant's Dependents.
Article VI.
General Provisions
6.1 Source of Benefits. The Plan's obligation to any Participant for Medical
Benefits, or to any surviving spouse or Dependent or heir for Medical Benefits in the event of the ()
Participant's death under the Plan shall be limited to the balance in such Participant's Account.
Neither the Sponsors, its agents, officers, or employees, nor the Trustees or Administrator shall be
responsible for any Medical Benefits under the Plan.
6.2 Participant's Accounts. The Trustees shall determine the options to be made
available through the Trust for the investment of Participant Accounts, and Participants shall elect
one or more of the options. Participant elections shall be made and changed in accordance with
procedures established by the Trustees and as may be amended from time to time.
6.3 Mechanics of Payment. The Participant, or in the event of the Participant's
death, a spouse or Dependent's guardian, or if no spouse or Dependent(s) remain eligible to file
claims, the Beneficiary may submit a request for eligible benefits to the Administrator for the
Trustee:
6.3.1 To pay Medical Benefits directly to an insurance company, health benefit
plan, HMO or PPO for qualified insurance premiums, including taxpqualified long-term
care premIUms; or
6.3.2 To pay Medical Benefits to the Employer for qualified COBRA premium
payments; or
6.3.3 To pay Medical Benefits to the Participant for reimbursement of qualified
medical expenses and/or premiums; or
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Plan Document (Amended 1105) 4
6.3.4 To pay the Participant out of pocket premium expenses for Medicare
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, Coverage
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6.3.5 In the event written notice of a denial of a request for Medical Benefits is
not provided the claimant in the manner set forth in paragraph 6.3.4, the request shall be
deemed denied as of the date on which the Administrator's time period for rendering its
decision expires.
6.3.6 Any claimant whose request for Medical Benefits has been denied, in
whole or in part, or such claimant's authorized representative, may appeal said denial of
Plan benefits by submitting to the Administrator a written request for a review of such
denied claim. Any such request for review must be delivered to the Administrator no
later than sixty (60) days from the date the claimant received written notification of the
Administrator's initial denial of the claimant's request for Medical Benefits or from the
date the claim was deemed denied, unless the Administrator, upon the written application
of the claimant or his authorized representative, shall in its discretion agree in writing to
an extension of said period.
6.3.7 During the period prescribed in paragraph 6.3.6 for filing a request for
review of a denied claim, the Administrator shall permit the claimant to review pertinent
documents and submit written issues and comments concerning the claimant's request for
Medical Benefits.
6.3.8 Upon receiving a request by a claimant, or his authorized representative,
for a review ofa denied claim, the Administrator shall deliver the complete file to the
~) Trustees, who shall consider such request promptly and shall advise the claimant of their
decision within sixty (60) days from the date on which said request for review was
received by the Administrator, unless special circumstances require an extension of time
for reviewing said denied claim. in the event special circumstances require an extension
of time for reviewing said denied claim, the Administrator shall, prior to the expiration of
the initial 60-day period referred to above, provide the claimant with written notice of the
extension and of the special circumstances which require such extension and of the date
by which the Trustees expect to render their decision. In no event shall such extension
exceed a period of one hundred twenty (120) days from the date on which the claimant's
request for review was received by the Administrator. The Trustees' decision shall be
furnished to the claimant and shall:
6.3.8.1 Be written in a manner calculated to be understood by the
claimant;
6.3.8.2 Include specific reasons for their decision; and
6.3.8.3 Include specific references to the pertinent Plan provisions
on which the decision is based.
6.3.9 The Trustees may, in their discretion, determine that a hearing is required
in order to properly consider the claimant's request for review of a denied claim. In the
event the Trustees determine that such hearing is requircd, such determination shall, in
and of itself, constitute special circumstances permitting an extension of time in which to
~ consider the claimant's request for review.
Plan Document (Amended 1105) 5
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6.3.10 The claims procedures set forth in this Article 6 shall be strictly adhered
to by each Participant or Dependent under this Plan, and no judicial or arbitration
proceedings with respect to any claim for Plan benefits hereunder shall be commenced by
any such Participant or Dependent until the proceedings set forth herein have been
exhausted in full.
Article VII.
Administrator
7.1 Riehts & Duties. The Trustees shall enforce this Plan in accordance with its
terms and shall be charged with its general administration. The Trustees may delegate
administrative duties to the Administrator. The Administrator shall exercise all of its discretion
in a uniform, nondiscriminatory manner and shall have all necessary power to accomplish those
purposes, including but not limited to the power:
7.1.1 To determine all questions relating to the eligibility of Employees to
participate.
7.1.2 To compute and certify to the Trustees the amount and kind of benefits
payable to the Participants and their Dependents.
7.1.3 To maintain all the necessary records for the administration of this Plan
other than those maintained by the Trustees.
7.1.4 To prepare and file or distribute all reports and notices required by law.
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7.1.5 To authorize all the disbursements by the Trustees from the Trust.
7.1.6 To direct the investments to be made by the Trustees in a manner
consistent with the objectives of the Plan and authorized by the Trust.
7.1.7 To make and publish such rules for the regulation of this Plan that are not
inconsistent with the terms hereof.
7.1.8 If an Administrator has been named, it shall assume and perform each
and every duty and responsibility delegated to it by the Trustees.
7.2 Information. To enable the Administrator to perform its functions, the
Employer shall supply it with full and timely information on all matters relating to Employer
deposits on behalf of a Participant and Participant entitlement to benefits. The Administrator
shall maintain such information and advise the Trustees of such other information as may be
pertinent to the Trustees' administration of the Trust.
7.2.1 The Trust shall forward to each Participant information necessary to use
the Participant's Account and receive reimbursement of Medical Benefits. The
information will include a summary ofthe Plan, including claim procedures and forms.
7.2.2 The Trust shall also mail a written acknowledgement to the Participant
within a reasonable amount of time after receipt of the deposit, acknowledging
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Plan Document (Amended 1105) 6
establishment of the Participant's Account; confirmation of the amount received, a
description of the Plan and infonnation on filing claims with copies of the necessary
forms, and a toll-free contact telephone number for error corrections or questions.
7.2.3 The Trust shall provide a written statement prepared upon the
Participant's request, at least semi-annually in January and July for each Participant,
which shall include the following information: Participant's name and address; account
number; contributions; total Account value at statement date; interest earned or other
shared gain or loss; payout and disbursement activities, ending/forward balance; toll-free
contact telephone number for error corrections or questions on reading the statement.
7.3 Compensation & Expenses. All expenses of administering the Plan shall be
paid by reasonable reductions of investment earnings and/or assessments from the Participant's
Accounts, allocated in a nondiscriminatory manner along similarly situated employees, as
determined by the Trustees from time to time. The Employer shall not be responsible for any
such expenses.
7.4 Consultants. Advisors & Manaeers. The Trustees may employ such
consultants, advisors, and investment managers as it reasonably deems necessary or useful in
carrying out its duties hereunder. all of which shall be considered expenses of administering the
Plan.
7.5 Liability Limitation. The Employer and the Administrator shall not be liable
for the acts or omissions to act of any investment manager appointed to manage the assets of the
(_."~ Plan and Trust. The Trustees shall not be liable for the acts or omissions to act of any investment
lJ manager appointed to manage the assets of the Plan and Trust if the Trustee in appointing such
,~ manager acted with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person would use in the conduct of an enterprise of a like character and
with like aims.
7.6 Notices & Directions. The address for delivery of all communications shall be,
for the Employer, the principal office of the Employer marked to the attention of the Personnel
Director of the Employer (or other person designated by the employer), for the Administrator, the
address certified by it for such purpose, and for the Trustees, the address certified by it for such
purpose.
7.7 Fundine Policv & Procedures. The Trustees shall formulate policies, practices,
and procedures to carry out the funding of the Plan, which shall be consistent with the Plan
objectives and the provisions of applicable law.
Article VIII.
Amendment & Termination
8.1 Permanencv. It is the expectation of the Employer that this Plan, and the
payment of deposits hereunder, will be continued indefinitely, but continuance of this Plan is not
assumed as a contractual obligation of the Employer. This Plan may be amended or terminated
only as provided in this Article.
8.2 Exclusive Benefit Rule. It shall be impossible for any part of the deposits under
,j this Plan to be used for, or diverted to, purposes other than the exclusive benefit of the
Participants or their Dependents.
Plan Document (Amended 1105) 7
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8.3 Amendments.
8.3.1 The Trustees shall have the right to amend this Plan from time to time,
and to amend or cancel any such amendments in accordance with Article JlI of the Trust.
8.3.2 Such amendments shall be as set forth in an instrument in writing
executed by the amending party. Any amendment may be current, retroactive, or
prospective, in each case as provided herein and provided, however, that such
amendment must comply with Article III of the Trust Agreement.
8.4 Discontinuance of Contributions. The Employer shall have the right to
discontinue contributions without prior notice by delivering written notice of termination to the
Trustees.
8.5 Termination of Plan. The Employer shall have the right to terminate this Plan
without prior notice by delivering written notice of termination to the Trustees. In case of
termination, the Employer shall also notify the Trustees of the Employer's decision with regard to
disposition of the assets, based on the following options:
a. A direct in-kind transfer of assets to a substantially similar 50 I (c )(9) trust;
b. A series of installment payments over a set period of the assets from the
Trust attributable to this Plan to another 501(c )(9) trust; or
c. An immediate cash payment to another 501(c)(9) trust or another program 0
providing medical benefits for the Participants of this Plan and their
Dependents, subject to any contractual adjustments due upon such a transfer.
In any event, the Employer and the Trustees shall work to prevent adverse consequences
to other Employers contributing to and Participants in the Trust as a result of the Employer's
decision with respect to these options. The Terminating Employer agrees to pay the Trust all
reasonable costs resulting from the disposition and transfer of the assets that are not covered by
the Participants' Account.
Article IX.
Miscellaneous
9.1 The Trust. This Plan, the Trust, and the Membership Enrollment Form are all
parts of a single, integrated employee benefit system and shall be construed together. In the event
of any conflict between the terms of this Plan and the Membership Enrollment Form and the
terms of the Trust, such conflict shall be resolved first by reference to the Trust, except as more
specifically addressed in the Plan, then the Plan, then the Membership Enrollment Form.
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Plan Document (Amended 1105) 8
~""""""'" 9.2 Applicable Law. Except as required in 9 514 of the Employee Retirement Income
i )
t, / Security Act of 1974 ("ERISA"), this Plan shall be construed, administered, and governed under
the laws of the. State of Washington. If any provision of this Plan shall be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully effective.
9.3 Gender & Number. Words used in the masculine shall apply to the feminine
where applicable, and when the context requires, the plural shall be read as the singular and
singular as the plural.
9.4 Headin2:s. Headings used in this Plan are inserted for convenience of reference
only, and any conflict between such headings and the text shall be resolved in favor of the text.
9.5 Unclaimed Accounts. In the event 3 years shall have passed since the date that a
Participant Account which is payable has had contributions made to it, withdrawals made from it,
or communications or other expressions of interest received by the Administrator from or on behalf
of the Participant, the Participant Account shall be disposed of in accordance with the applicable.
state statute for unclaimed or abandoned property.
9.6 Limitation on Riebts. Neither the establishment of this Plan, nor any
modification or amendment thereof, nor the payment of any benefits, nor the issuance of any
insurance Contracts shall be construed as giving any Participant, or any person whomsoever, any
legal or equitable right against the Trustees; the State of Washington, its agencies, officers,
employees, and institutions of higher education; or't:he Employer Dor any right to the assets of the
(') Plan.
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9.7 Assumment. The interest of any Participant in any assets held on his behalf by
the Trustee shall not be subject to assigrunent or alienation, either by voluntary or involuntary act
of the Participant or by operation of law, and shall not be subject to assigrunent, attachment,
execution, garnishment, or any other legal or equitable process.
9.8 Counterparts. This Plan may be adopted in an original and any number of
counterparts, each of which shall be deemed to be an original of one and the same instrument.
IN WITNESS WHEREOF, Andy Michels, Chairman of the Board of Trustees, being
duly authorized, on this 26th day of January, 2005 signed this Plan Document.
By: $-1ItsL-
Andy Michels
Approved:
KATTEN MUCHIN ZA VIS ROSENMAN
By: f7~ '(~,u.?
~~ Russell Greeqbia'
Trust AttomV
Plan Document (Amended 1105) 9