RES 15-687 - Adopting the Amended Cafeteria (Flex) Plan •
RESOLUTION NO. 15-687
A RESOLUTION of the City Council of the City of Federal Way,
Washington adopting the amended Cafeteria Plan.
WHEREAS, the Internal Revenue Code authorizes a Cafeteria Plan, which provides that
enrolled employees can make pre-tax contributions for medical and/or dependent care; and
WHEREAS,the City of Federal Way has provided a Cafeteria Plan for eligible employees
since 1995; and
WHEREAS,in 2014,the IRS released guidance allowing for$500 of unused Health Flexible
Spending Arrangement dollars to carry over to the next year,which allows increased flexibility from
the previous "use it or lose it"rule; and
WHEREAS, following a poll of plan participants,the Plan has been updated to remove the
2 1/2 month grace period and add the $500 carryover as allowed by the new IRS guidance;
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
RESOLVES AS FOLLOWS:
Section 1. The amended Cafeteria Plan including a Day Care Flexible Spending
Arrangement and the Health Flexible Spending Arrangement effective January 1,2015(the"Plan"),
is hereby approved and adopted. The Mayor is hereby authorized and directed to execute and deliver
to the Administrator of the Plan one or more counterparts of the Plan.
Section 2. The Administrator shall be instructed to take such actions that are deemed
necessary and proper in order to implement the Plan, and to set up adequate accounting and
administrative procedures to provide benefits under the Plan.
Section 3. The Mayor, or his or her designee, shall act as soon as possible to notify the
employees of the adoption of the amended Cafeteria Plan by delivering to each employee a copy of
Resolution No. 15-687 Page 1 of 3
•
the summary description of the Plan in the form of the Summary Plan Description, which form is
hereby approved.
Section 4. Severability. If any section,sentence,clause or phrase of this 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.
Section 5. Corrections. The City Clerk and the codifiers of this resolution are authorized to
make necessary corrections to this resolution including, but not limited to, the correction of
scrivener/clerical errors, references, resolution numbering, section/subsection numbers and any
references thereto.
Section 6. Ratification. Any act consistent with the authority and prior to the effective date
of this resolution is hereby ratified and affirmed.
Section 7. Effective Date. This resolution shall be effective immediately upon passage by
the Federal Way City Council.
RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON this 2nd day of June, 2015.
CITY OF FEDERAL WAY
/YOR, JIM FERRELL
ATTEST:
ERK, STEPHANIE C• R , CMC
Resolution No. 15-687 Page 2 of 3
•
APPROVED AS TO FORM:
970.04.A:f Idel
CITY ATT 1 PI EY, AMY JO PEARSALL
FILED WITH THE CITY CLERK: 05/29/2015
PASSED BY THE CITY COUNCIL: 06/02/2015
RESOLUTION NO.: 15-687
Resolution No. 15-687 Page 3 of 3
•
CITY OF FEDERAL WAY CAFETERIA PLAN
SUMMARY PLAN DESCRIPTION
• •
TABLE OF CONTENTS
ELIGIBILITY
1. When can I become a participant in the Plan? 1
2. What are the eligibility requirements for our Plan? 1
3. When is my entry date? 1
4. What must I do to enroll in the Plan? 1
II
OPERATION
1. How does this Plan operate? 2
CONTRIBUTIONS
1. How much of my pay may the Employer redirect? 2
2. What happens to contributions made to the Plan? 2
3. When must I decide which accounts I want to use? 2
4. When is the election period for our Plan? 2
5. May I change my elections during the Plan Year? 2
6. May I make new elections in future Plan Years? 3
IV
BENEFITS
1. What benefits are offered under the Plan? 3
2. Health Care Flexible Spending Arrangement 3
3. Day Care Flexible Spending Arrangement 4
4. Premium Expense Account 4
V
BENEFIT PAYMENTS
1. When will I receive payments from my accounts? 5
2. What happens if I don't spend all Plan contributions during the Plan Year? 5
3. Family and Medical Leave Act(FMLA) 5
4. Uniformed Services Employment and Reemployment Rights Act(USERRA) 5
5. What happens if i terminate employment? 5
6. Will my Social Security benefits be affected? 6
VI
HIGHLY COMPENSATED AND KEY EMPLOYEES
1. • Do limitations apply to highly compensated employees? 6
VII
PLAN ACCOUNTING
1. Periodic Statements 6
VIII
GENERAL INFORMATION ABOUT OUR PLAN
1. General Plan Information 6
2. Employer Information 6
• •
3. Plan Administrator Information 6
4. Service of Legal Process 7
5. Type of Administration 7
6. Claims Submission 7
IX
ADDITIONAL PLAN INFORMATION
1. Claims Process 7
APPENDIX I TO THE FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION
X
CONTINUATION COVERAGE RIGHTS UNDER COBRA
1. What is COBRA continuation coverage? 11
2. Who can become a Qualified Beneficiary? 11
3. What is a Qualifying Event? 12
4. What factors should be considered when determining to elect COBRA continuation coverage? 12
5. What is the procedure for obtaining COBRA continuation coverage? 13
6. What is the election period and how long must it last? 13
7. Is a covered Employee or Qualified Beneficiary responsible for informing the Plan Administrator of the
occurrence of a Qualifying Event? 13
8. Is a waiver before the end of the election period effective to end a Qualified Beneficiary's election rights? 14
9. Is COBRA coverage available if a Qualified Beneficiary has other group health plan coverage or Medicare? 14
10. When may a Qualified Beneficiary's COBRA continuation coverage be terminated? 14
11. What are the maximum coverage periods for COBRA continuation coverage? 15
12. Under what circumstances can the maximum coverage period be expanded? 15
13. How does a Qualified Beneficiary become entitled to a disability extension? 15
14. Does the Plan require payment for COBRA continuation coverage? 16
15. Must the Plan allow payment for COBRA continuation coverage to be made in monthly installments? 16
16. What is Timely Payment for COBRA continuation coverage? 16
17. Must a Qualified Beneficiary be given the right to enroll in a conversion health plan at the end of the maximum
coverage period for COBRA continuation coverage? 16
18. How is my participation in the Health Care Flexible Spending Arrangement affected? 16
XI
SUMMARY
CITY OF FEDERAL WAY CAFETERIA PLAN
INTRODUCTION
We have amended the"Flexible Benefits Plan"that we previously established for you and other eligible employees.Under
this Plan,you will be able to choose among certain benefits that we make available.The benefits that you may choose are
outlined in this Summary Plan Description.We will also tell you about other important information concerning the amended
Plan,such as the rules you must satisfy before you can join and the laws that protect your rights.
One of the most important features of our Plan is that the benefits being offered are generally ones that you are already
paying for,but normally with money that has first been subject to income and Social Security taxes.Under our Plan,these
same expenses will be paid for with a portion of your pay before Federal income or Social Security taxes are withheld.This
means that you will pay less tax and have more money to spend and save.
Read this Summary Plan Description carefully so that you understand the provisions of our amended Plan and the
benefits you will receive.This SPD describes the Plan's benefits and obligations as contained in the legal Plan document,
which governs the operation of the Plan.The Plan document is written in much more technical and precise language. If the
non-technical language in this SPD and the technical,legal language of the Plan document conflict,the Plan document always
governs.Also,if there is a conflict between an insurance contract and either the Plan document or this Summary Plan
Description,the insurance contract will control.If you wish to receive a copy of the legal Plan document,please contact the
Administrator.
This SPD describes the current provisions of the Plan which are designed to comply with applicable legal requirements.
The Plan is subject to federal laws,such as the Internal Revenue Code and other federal and state laws which may affect your
rights.The provisions of the Plan are subject to revision due to a change in laws or due to pronouncements by the Internal
Revenue Service(IRS)or other federal agencies.We may also amend or terminate this Plan. If the provisions of the Plan that
are described in this SPD change,we will notify you.
We have attempted to answer most of the questions you may have regarding your benefits in the Plan. If this SPD does
not answer all of your questions,please contact the Administrator(or other plan representative).The name and address of the
Administrator can be found in the Article of this SPD entitled"General Information About the Plan."
ELIGIBILITY
1. When can I become a participant in the Plan?
Before you become a Plan member(referred to in this Summary Plan Description as a"Participant"),there are certain
rules which you must satisfy. First,you must meet the eligibility requirements and be an active employee.After that,the next
step is to actually join the Plan on the"entry date"that we have established for all employees.The"entry date"is defined in
Question 3 below.You will also be required to complete certain application forms before you can enroll in the Health Care
Flexible Spending Arrangement or Day Care Flexible Spending Arrangement.
2. What are the eligibility requirements for our Plan?
You will be eligible to join the Plan once you have satisfied the conditions for coverage under our group medical plan.Of
course,if you were already a participant before this amendment,you will remain a participant.
3. When is my entry date?
Once you have met the eligibility requirements,your entry date will be the first day of the month coinciding with or
following the date you met the eligibility requirements.
4. What must I do to enroll in the Plan?
Before you can join the Plan,you must complete an application to participate in the Plan.The application includes your
personal choices for each of the benefits which are being offered under the Plan.You must also authorize us to set some of
your earnings aside in order to pay for the benefits you have elected.
However,if you are already covered under any of the insured benefits,you will automatically participate in this Plan to the
extent of your premiums unless you elect not to participate in this Plan.
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II
OPERATION
1. How does this Plan operate?
Before the start of each Plan Year,you will be able to elect to have some of your upcoming pay contributed to the Plan.
These amounts will be used to pay for the benefits you have chosen.The portion of your pay that is paid to the Plan is not
subject to Federal income or Social Security taxes. In other words,this allows you to use tax-free dollars to pay for certain
kinds of benefits and expenses which you normally pay for with out-of-pocket,taxable dollars. However,if you receive a
reimbursement for an expense under the Plan, you cannot claim a Federal income tax credit or deduction on your return.(See
the Article entitled"General Information About Our Plan"for the definition of"Plan Year.")
III
CONTRIBUTIONS
1. How much of my pay may the Employer redirect?
Each year,we will automatically contribute on your behalf enough of your compensation to pay for the coverage provided
unless you elect not to receive any or all of such coverage.You may also elect to have us contribute on your behalf enough of
your compensation to pay for any other benefits that you elect under the Plan.These amounts will be deducted from your pay
over the course of the year.
2. What happens to contributions made to the Plan?
Before each Plan Year begins,you will select the benefits you want and how much of the contributions should go toward
each benefit.It is very important that you make these choices carefully based on what you expect to spend on each covered
benefit or expense during the Plan Year. Later,they will be used to pay for the expenses as they arise during the Plan Year.
3. When must I decide which accounts I want to use?
You are required by Federal law to decide before the Plan Year begins,during the election period(defined below).You
must decide two things. First,which benefits you want and,second,how much should go toward each benefit.
If you are already covered by any of the insured benefits offered by this Plan,you will automatically become a Participant
to the extent of the premiums for such insurance unless you elect,during the election period(defined below), not to participate
in the Plan.
4. When is the election period for our Plan?
You will make your initial election on or before your entry date.(You should review Section I on Eligibility to better
understand the eligibility requirements and entry date.)Then,for each following Plan Year,the election period is established
by the Administrator and applied uniformly to all Participants.It will normally be a period of time prior to the beginning of each
Plan Year.The Administrator will inform you each year about the election period.(See the Article entitled"General Information
About Our Plan"for the definition of Plan Year.)
5. May I change my elections during the Plan Year?
Generally,you cannot change the elections you have made after the beginning of the Plan Year. However,there are
certain limited situations when you can change your elections.You are permitted to change elections if you have a"change in
status"and you make an election change that is consistent with the change in status.Currently, Federal law considers the
following events to be a change in status:
—Marriage,divorce,death of a spouse,legal separation or annulment;
—Change in the number of dependents,including birth,adoption,placement for adoption,or death of a dependent
—Any of the following events for you,your spouse or dependent:termination or commencement of employment,a strike
or lockout,commencement or return from an unpaid leave of absence,a change in worksite,or any other change in
employment status that affects eligibility for benefits;
—One of your dependents satisfies or ceases to satisfy the requirements for coverage due to change in age,student
status,or any similar circumstance;and
—A change in the place of residence of you,your spouse or dependent that would lead to a change in status,such as
moving out of a coverage area for insurance.
In addition,if you are participating in the Day Care Flexible Spending Arrangement,then there is a change in status if your
dependent no longer meets the qualifications to be eligible for Day Care.
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There are detailed rules on when a change in election is deemed to be consistent with a change in status. In addition,
there are laws that give you rights to change health coverage for you,your spouse,or your dependents. If you change
coverage due to rights you have under the law,then you can make a corresponding change in your elections under the Plan. If
any of these conditions apply to you,you should contact the Administrator.
If the cost of a benefit provided under the Plan increases or decreases during a Plan Year,then we will automatically
increase or decrease,as the case may be,your salary redirection election. If the cost increases significantly,you will be
permitted to either make corresponding changes in your payments or revoke your election and obtain coverage under another
benefit package option with similar coverage,or revoke your election entirely.
If the coverage under a Benefit is significantly curtailed or ceases during a Plan Year,then you may revoke your elections
and elect to receive on a prospective basis coverage under another plan with similar coverage. In addition,if we add a new
coverage option or eliminate an existing option,you may elect the newly-added option(or elect another option if an option has
been eliminated)and make corresponding election changes to other options providing similar coverage. If you are not a
Participant,you may elect to join the Plan.There are also certain situations when you may be able to change your elections on
account of a change under the plan of your spouse's,former spouse's or dependent's employer.
These rules on change due to cost or coverage do not apply to the Health Care Flexible Spending Arrangement,and you
may not change your election to the Health Care Flexible Spending Arrangement if you make a change due to cost or
coverage for insurance.
You may not change your election under the Day Care Flexible Spending Arrangement if the cost change is imposed by a
Day Care provider who is your relative.
6. May I make new elections in future Plan Years?
Yes,you may. For each new Plan Year,you may change the elections that you previously made.You may also choose
not to participate in the Plan for the upcoming Plan Year. If you do not make new elections during the election period before a
new Plan Year begins,we will assume you want your elections for insured or self-funded benefits only to remain the same and
you will not be considered a Participant for the non-insured benefit options under the Plan for the upcoming Plan Year.
IV
BENEFITS
1. What benefits are offered under the Plan?
Under our Plan,you can pay for the following benefits or expenses during the year.
2. Health Care Flexible Spending Arrangement
The Health Care Flexible Spending Arrangement enables you to pay for expenses allowed under Sections 105 and 213(d)
of the Internal Revenue Code which are not covered by our medical plan and save taxes at the same time.The Health Care
Flexible Spending Arrangement allows you to be reimbursed by the Employer for expenses incurred by you and your
dependents.
Drug costs,including insulin,may be reimbursed.
You may be reimbursed for"over the counter"drugs only if those drugs are prescribed for you.You may not,however,be
reimbursed for the cost of other health care coverage maintained outside of the Plan,or for long-term care expenses.A list of
covered expenses is available from the Administrator.
The most that you can contribute to your Health Care Flexible Spending Arrangement each Plan Year is$2,550.The
dollar limit may increase for cost of living adjustments. In addition,you will be eligible to carryover amounts left in your Health
Care Flexible Spending Arrangement, up to$500.This means that amounts you do not use during a Plan Year can be carried
over to the next Plan Year and used for expenses incurred in the next Plan Year.
In order to be reimbursed for a health care expense,you must submit to the Administrator an itemized bill from the service
provider.We will also provide you with a debit or credit card to use to pay for medical expenses.The Administrator will provide
you with further details.Amounts reimbursed from the Plan may not be claimed as a deduction on your personal income tax
retum. Reimbursement from the fund shall be paid at least once a month. Expenses under this Plan are treated as being
"incurred"when you are provided with the care that gives rise to the expenses,not when you are formally billed or charged,or
you pay for the medical care.
You may be reimbursed for expenses for any child until the end of the calendar year in which the child reaches age 26.A
child is a natural child,stepchild,foster child,adopted child,or a child placed with you for adoption.If a child gains or regains
eligibility due to these new rules,that qualifies as a change in status to change coverage.
3
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Newborns'and Mothers'Health Protection Act:Group health plans generally may not,under Federal law, restrict benefits
for any hospital length of stay in connection with childbirth for the mother or newborn child to less than 48 hours following a
vaginal delivery,or less than 96 hours following a cesarean section. However, Federal law generally does not prohibit the
mother's or newborn's attending provider, after consulting with the mother,from discharging the mother or her newborn earlier
than 48 hours(or 96 hours as applicable). In any case,plans and issuers may not,under Federal law, require that a provider
obtain authorization from the plan or the issuer for prescribing a length of stay not in excess of 48 hours(or 96 hours).
Health and Cancer Rights Act of 1998
as required by the Women's H Ith a 1998,
Women's Health and Cancer Rights Act:This plan,a 9
9
P q Y
will reimburse up to plan limits for benefits for mastectomy-related services including reconstruction and surgery to achieve
symmetry between the breasts,prostheses,and complications resulting from a mastectomy(including lymphedema).Contact
your Plan Administrator for more information.
3. Day Care Flexible Spending Arrangement
The Day Care Flexible Spending Arrangement enables you to pay for out-of-pocket,work-related dependent day-care
cost with pre-tax dollars.If you are married,you can use the account if you and your spouse both work or,in some situations,
if your spouse goes to school full-time.Single employees can also use the account.
An eligible dependent is someone for whom you can claim expenses on Federal Income Tax Form 2441 "Credit for Child
and Day Care Expenses."Children must be under age 13.Other dependents must be physically or mentally unable to care for
themselves.Day Care arrangements which qualify include:
(a) A Dependent(Day)Care Center,provided that if care is provided by the facility for more than six individuals,the
facility complies with applicable state and local laws;
(b) An Educational Institution for pre-school children.For older children,only expenses for non-school care are eligible;
and
(c) An"Individual"who provides care inside or outside your home:The"Individual"may not be a child of yours under age
19 or anyone
you claim as a dependent for Federal tax
purposes.
You should make sure that the Day Care expenses you are currently paying for qualify under our Plan.
The law places limits on the amount of money that can be paid to you in a calendar year from your Day Care Flexible
Spending Arrangement.Generally,your reimbursements may not exceed the lesser of:(a)$5,000(if you are married filing a
joint return or you are head of a household)or$2,500(if you are married filing separate returns);(b)your taxable
compensation;(c)your spouse's actual or deemed earned income(a spouse who is a full time student or incapable of caring
for himself/herself has a monthly earned income of$250 for one dependent or$500 for two or more dependents).
Also,in order to have the reimbursements made to you from this account be excludable from your income,you must
provide a statement from the service provider including the name,address,and in most cases,the taxpayer identification
number of the service provider on your tax form for the year,as well as the amount of such expense as proof that the expense
has been incurred. In addition,Federal tax laws permit a tax credit for certain Day Care expenses you may be paying for even
if you are not a Participant in this Plan.You may save more money if you take advantage of this tax credit rather than using
the Day Care Flexible Spending Arrangement under our Plan.Ask your tax adviser which is better for you.
4_ Premium F Tense Account
A Premium Expense Account allows you to use tax-free dollars to pay for certain Premiums under various insurance
programs that we offer you.These Premiums include:
—Health care premiums under our self-funded medical plan.
Under our Plan,we will establish sub-accounts for you for each different type of coverage that is available.Also,certain
limits on the amount of coverage may apply.
The Administrator may terminate or modify Plan benefits at any time,subject to the provisions of any contracts providing
benefits described above.Also,your coverage will end when you leave employment,are no longer eligible under the terms of
any coverage,or when coverage terminates.
Any benefits to be provided by insurance will be provided only after(1)you have provided the Administrator the necessary
information to apply for insurance,and(2)the insurance is in effect for you.
If you cover your children up to age 26 under your insurance,you can pay for that coverage through the Plan.
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V
BENEFIT PAYMENTS
1. When will I receive payments from my accounts?
During the course of the Plan Year,you may submit requests for reimbursement of expenses you have incurred.
Expenses are considered"incurred"when the service is performed, not necessarily when it is paid for.The Administrator will
provide you with acceptable forms for submitting these requests for reimbursement. If the request qualifies as a benefit or
expense that the Plan has agreed to pay,you will receive a reimbursement payment soon thereafter.Remember,these
reimbursements which are made from the Plan are generally not subject to federal income tax or withholding. Nor are they
subject to Social Security taxes.The provisions of the insurance contracts will control what benefits will be paid and when.You
will only be reimbursed from the Day Care Flexible Spending Arrangement to the extent that there are sufficient funds in the
Account to cover your request.
2. What happens if I don't spend all Plan contributions during the Plan Year?
Any monies left at the end of the Plan Year will be forfeited.Obviously,qualifying expenses that you incur late in the Plan
Year for which you seek reimbursement after the end of such Plan Year will be paid fir st before any amount is forfeited. For
the Health Care Flexible Spending Arrangement,you must submit claims no later than 90 days after the end of the Plan Year.
For the Day Care Flexible Spending Arrangement,you must submit claims no later than 90 days after the end of the Plan
Year.Because it is possible that you might forfeit amounts in the Plan if you do not fully use the contributions that have been
made,it is important that you decide how much to place in each account carefully and conservatively.Remember,you must
decide which benefits you want to contribute to and how much to place in each account before the Plan Year begins.You want
to be as certain as you can that the amount you decide to place in each account will be used up entirely.
3. Family and Medical Leave Act(FMLA)
If you take leave under the Family and Medical Leave Act,you may revoke or change your existing elections for health
insurance and the Health Care Flexible Spending Arrangement.If your coverage in these benefits terminates,due to your
revocation of the benefit while on leave or due to your non-payment of contributions,you will be permitted to reinstate coverage
for the remaining part of the Plan Year upon your return.For the Health Care Flexible Spending Arrangement,you may continue
your coverage or you may revoke your coverage and resume it when you return.You can resume your coverage at its original
level and make payments for the time that you are on leave.For example,if you elect$1,200 for the year and are out on leave for
3 months,then return and elect to resume your coverage at that levet,your remaining payments will be increased to cover the
difference-from$100 per month to$150 per month.Alternatively your maximum amount will be reduced proportionately for the
time that you were gone.For example,if you elect$1,200 for the year and are out on leave for 3 months,your amount will be
reduced to$900.The expenses you incur during the time you are not in the Health Care Flexible Spending Arrangement are not
reimbursable.
If you continue your coverage during your unpaid leave,you may pre-pay for the coverage,you may pay for your coverage
on an after-tax basis while you are on leave,or you and your Employer may arrange a schedule for you to"catch up"your
payments when you return.
4. Uniformed Services Employment and Reemployment Rights Act(USERRA)
If you are going into or returning from military service,you may have special rights to health care coverage under your Health
Care Flexible Spending Arrangement under the Uniformed Services Employment and Reemployment Rights Act of 1994.These
rights can include extended health care coverage.If you may be affected by this law,ask your Administrator for further details.
5. What happens if I terminate employment?
If you terminate employment during the Plan Year,your right to benefits will be determined in the following manner.
(a) You will remain covered by insurance,but only for the period for which premiums have been paid prior to your
termination of employment.
(b) You will stilt be able to request reimbursement for qualifying Day Care expenses incurred during the remainder of the
Plan Year from the balance remaining in your Day Care account at the time of termination of employment.However,no
further salary redirection contributions will be made on your behalf after you terminate.You must submit claims within 90
days after the end of the Plan Year in which termination occurs.
(c) For health benefit coverage and Health Care Flexible Spending Arrangement coverage on termination of
employment,please see the Article entitled"Continuation Coverage Rights Under COBRA."Upon your termination of
employment,your participation in the Health Care Flexible Spending Arrangement will cease,and no further salary
redirection contributions will be contributed on your behalf.However,you will be able to submit claims for health care
expenses that were incurred before the end of the period for which payments to the Health Care Flexible Spending
Arrangement have already been made.Your further participation will be governed by"Continuation Coverage Rights
Under COBRA."
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6. Will my Social Security benefits be affected?
Your Social Security benefits may be slightly reduced because when you receive tax-free benefits under our Plan, it
reduces the amount of contributions that you make to the Federal Social Security system as well as our contribution to Social
Security on your behalf.
VI
HIGHLY COMPENSATED AND KEY EMPLOYEES
1. Do limitations apply to highly compensated employees?
Under the Internal Revenue Code, highly compensated employees and key employees generally are Participants who are
9 Y
officers,shareholders or highly paid.You will be notified by the Administrator each Plan Year whether you are a highly
compensated employee or a key employee.
within categories,the amount of contributions and benefits for you may be limited so that the Plan as a
!f you are thin these cat o e amou co t
Y e9 Y Y
whole does not unfairly favor those who are highly paid,their spouses or their dependents. Federal tax laws state that a plan
will be considered to unfairly favor the key employees if they as a group receive more than 25%of all of the nontaxable
benefits provided for under our Plan.
Plan experience will dictate whether contribution limitations on highly com pe nsated employees or key employees will
apply.You will be notified of these limitations if you are affected.
VII
PLAN ACCOUNTING
1. Periodic Statements
The Administrator will provide you with a statement of your account periodically during the Plan Year that shows your
account balance.It is important to read these statements carefully so you understand the balance remaining to pay for a
benefit. Remember,you want to spend all the money you have designated fora particular benefit by the end of the Plan Year.
VIII
GENERAL INFORMATION ABOUT OUR PLAN
This Section contains certain general information which you may need to know about the Plan.
1. General Plan Information
City of Federal Way Cafeteria Plan is the name of the Plan.
Your Employer has assigned Plan Number 501 to your Plan.
The provisions of your amended Plan become effective on January 1,2015.Your Plan was originally effective on January
1, 1994.
Your Plan's records are maintained on a twelve-month period of time.This is known as the Plan Year.The Plan Year
begins on January 1 and ends on December 31.
2. Employer Information
Your Employer's name,address,and identification number are:
City of Federal Way
33325 8th Ave South
Federal Way,Washington 98003
91-1462550
3. Plan Administrator Information
The name,address and business telephone number of your Plan's Administrator are:
City of Federal Way
33325 8th Ave South
Federal Way,Washington 98003
(253)661-4000
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The Administrator keeps the records for the Plan and is responsible for the administration of the Plan.The Administrator
will also answer any questions you may have about our Plan.You may contact the Administrator for any further information
about the Plan.
4. Service of Legal Process
The name and address of the Plan's agent for service of legal process are:
City of Federal Way
33325 8th Ave South
Federal Way,Washington 98003
5. Type of Administration
The type of Administration is Employer Administration.
6. Claims Submission
Claims for expenses should be submitted to:
Flex-Plan Services,Inc.
PO Box 53250
Bellevue,Washington 98015
IX
ADDITIONAL PLAN INFORMATION
1. _ Claims Process
You should submit all reimbursement claims during the Plan Year. For the Health Care Flexible Spending
Arrangement,you must submit claims no later than 90 days after the end of the Plan Year.For the Day Care Flexible
Spending Arrangement,you must submit claims no later than 90 days after the end of the Plan Year.Any claims submitted
after that time will not be considered.
Claims that are insured or self-funded will be handled in accordance with procedures contained in the insurance
policies or contracts.All other general requests should be directed to the Administrator of our Plan.If a Day Care or medical
expense claim under the Plan is denied in whole or in part,you will receive written notification.The notification will include the
reasons for the denial,with reference to the specific provisions of the Plan on which the denial was based,a description of any
additional information needed to process the claim and an explanation of the claims review procedure.Within 180 days after
receipt of the denial,you may submit a written request for reconsideration of the denial to the claims administrator.
Any such request should be accompanied by documents or records in support of your appeal.You may review
pertinent documents and submit issues and comments in writing.The claims administrator will review the claim and provide,
within 30 days,a written response to the appeal(extended by reasonable time if necessary). In this response,the claims
administrator will explain the reason for the decision,with specific reference to the provisions of the Plan on which the decision
is based. If you disagree with the level one appeal decision you may submit a request for a level two appeal to be determined
by the Employer. You must submit your request for level two appeal within 60 days of receipt of the level one notice. You will
be notified within 30 days after the Employer receives the appeal(extended by reasonable time if necessary). The Employer
has the exclusive right to interpret the appropriate plan provisions. Decisions of the Employer are conclusive and binding.
You must file both level one and level two appeals by submitting a written request by email,fax,or mail. Indicate
either level one or two appeal on the email,fax,or letter.
Email:claims @flex-plan.com
Fax:425-451-7002 or 866-535-9227
Mail to: Flex-Plan Services,PO Box 53250, Bellevue WA 98015.
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APPENDIX I TO THE FLEXIBLE SPENDING ARRANGEMENT SUMMARY PLAN DESCRIPTION
NOTICE OF PRIVACY PRACTICES
THIS NOTICE DESCRIBES HOW PHI ABOUT YOU MAY BE USED AND DISCLOSED AND HOW YOU CAN GET
ACCESS TO THIS INFORMATION PLEASE REVIEW IT CAREFULLY
EFFECTIVE DATE:SEPTEMBER 23,2013
This Notice of Privacy Practices("Notice")describes the legal obligations of the Plan and your rights regarding your
protected health information("PHI")held by the Flexible Spending Arrangement Plan(the"Plan"). PHI is defined by
the Health Insurance Portability and Accountability Act of 1996("HIPAA"). PHI generally means information that is
created or received by the Plan and relates to the past,present,or future physical or mental health or condition of an
individual;the provision of health care to an individual;or the past,present,or future payment for the provision of
health care to an individual;and that identifies the individual or for which there is a reasonable basis to believe that
the information can be used to identify the individual.PHI includes information of persons living or deceased.
This Notice describes how your PHI may be used or disclosed to carry out treatment,payment,or health care
operations,or for any other purposes permitted or required by law.
We are required e by law to:a q
• maintain the privacy of your PHI;
• provide you with the notice of our legal duties and privacy practices with respect to your PHI;and
• follow the terms of the Notice that is currently in effect.
Your PHI will be disclosed to certain employees of Employer who assist in administration of the Plan. These
individuals may only use your PHI for Plan administration functions including those described below,provided they do not
violate the provisions set forth herein. Any employee of Employer who violates the rules for handling PHI established herein
will be subject to adverse disciplinary action. Employer will establish a mechanism for resolving privacy issues and will take
prompt corrective action to cure any violations.
Employer may not use or disclose your PHI other than as summarized herein or as required by law.Your PHI
may not be used by Employer for any employment-related actions or decisions or in connection with any other
benefit or employee benefit plan of Employer. Employer must report to the Plan any uses or disclosures of your PHI
of which the Employer becomes aware that are inconsistent with the provisions set forth herein.
HOW WE MAY USE AND DISCLOSE YOUR PHI
The following categories describe different ways that we use and disclose PHI for purposes of Plan administration.
For each category of uses or disclosures we will explain what we mean and try to give some examples. Not every use or
disclosure in a category will be listPrl. However, all of the ways we are permitted to use and disclose information will fall
within one of the categories.
For Payment(as described in applicable regulations) We may use and disclose PHI about you to determine eligibility for Plan
benefits,to facilitate payment for the treatment and services you receive from health care providers,to determine benefit
responsibility under the Plan,or to coordinate Plan coverage.
For Health Care Operations(as described in applicable regulations) We may use and disclose PHI about you for other Plan
operations. These uses and disclosures are necessary to administer the Plan.
To Business Associates,Subcontractors, Brokers,and Agents We may contract with entities known as Business Associates to
perform various functions on the Plan's behalf or to provide certain types of services. In order to perform these functions or to
provide these services, Business Associates will receive,create,maintain,transmit,use,and/or disclose your PHI,but only
after they agree in writing to implement appropriate safeguards regarding your PHI in a Business Associate Agreement Our
Business Associates shall also require each of its subcontractors or agents to agree in writing to provisions that impose at
least the same obligations to protect PHI as are imposed on Business Associate by the Business Associate Agreement or by
HIPAA.
As Required By Law We will disclose PHI about you when required to do so by federal,state,or local law.
To Avert a Serious Threat to Health or Safety We may use and disclose PHI about you when necessary to prevent a serious
threat to your health and safety or the health and safety of the public or another person. Any disclosure,however,would only
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be to someone able to help prevent the threat.
Disclosure to Health Plan Sponsor Information may be disclosed to another health plan maintained by Employer for purposes
of facilitating claims payments under that plan. In addition, PHI may be disclosed to Employer personnel solely for purposes of
administering benefits under the Plan.
SPECIAL SITUATIONS
Oman and Tissue Donation If you are an organ donor,we may release PHI to organizations that handle organ procurement or
organ,eye,or tissue transplantation or to an organ donation bank,as necessary to facilitate organ or tissue donation and
transplantation.
Military and Veterans If you are a member of the armed forces,we may release PHI about you as required by military
command authorities.
Workers'Compensation We may release PHI about you for workers'compensation or similar programs.
Public Health Risks We may disclose PHI about you for public health activities(e.g.,to prevent or control disease,injury,or
disability).
Health Oversight Activities We may disclose PHI to a health oversight agency for activities authorized by law.
Lawsuits and Disputes If you are involved in a lawsuit or a dispute,we may disclose PHI about you in response to a court or
administrative order. We may also disclose PHI about you in response to a subpoena,discovery request,or other lawful
process by someone else involved in the dispute,but only if efforts have been made to tell you about the request or to obtain
an order protecting the information requested.
Law Enforcement We may release PHI if asked to do so by a law enforcement official for law enforcement purposes.
Coroners.Medical Examiners and Funeral Directors We may release PHI to a coroner or medical examiner. We may also
release PHI about patients of the hospital to funeral directors as necessary to carry out their duties.
National Security and Intelligence Activities We may release PHI about you to authorized federal officials for intelligence,
counterintelligence,and other national security activities authorized by law.
Inmates If you are an inmate of a correctional institution or under the custody of a law enforcement official,we may release
PHI about you to the correctional institution or law enforcement official.
Research We may disclose your PHI for research if the individual identifiers have been removed or when an institutional
review board or privacy board has reviewed the research proposal and established protocols to ensure the privacy of the
requested information and approves the research.
REQUIRED DISCLOSURES
Government Audits We are required to disclose your PH!to Health and Human Services("NHS")in the event of an audit in
order to determine our compliance with HIPAA.
Disclosures to you We are required to disclose your PHI to you. We are also required,when requested,to provide you with
an accounting of most disclosures of your PHI if the disclosure was for reasons other than for treatment,payment,or health
care operations,and if the PHI was not disclosed pursuant to your authorization.
YOUR RIGHTS REGARDING YOUR PHI
You have the following rights regarding your PHI:
Right to Inspect and Copv You have the right to inspect and copy PHI that may be used to make decisions about your Plan
benefits. To inspect and copy PHI that may be used to make decisions about you,you must submit your request in writing to
your Human Resources Department If the information you request is in electronic copy,and you request an electronic copy,
we will provide a copy in electronic format unless the information cannot be readily produced in that format then we will work
with you to come to an agreement on a different format. If we cannot agree,we will provide you with a paper copy.
If you request a copy of the information,we may charge a fee for the costs of copying,mailing or other supplies associated
with your request.
In certain very limited circumstances,we may deny your request to inspect and copy. If you are denied access to PHI,you may
request that the denial be reviewed by your Human Resources Department
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Right to Amend If you feel that the PHI we have about you is incorrect or incomplete,you may ask us to amend the information.
You have the right to request an amendment for as long as the information is kept by or for the Plan.
To request an amendment,your request must be made in writing and submitted to your Human Resources Department. In
addition,you must provide a reason that supports your request
We may deny your request for an amendment if it is not in writing or does not include a reason to support the request. In
addition,we may deny your request if you ask us to amend information that:
• Is not part of the PHI kept by or for the Plan;
• Was not created by us,unless the person or entity that created the information is no longer available to make the
amendment;
• Is not part of the information which you would be permitted to inspect and copy;or
• Is accurate and complete.
Right to Receive Notice of Breach You have a right to be notified upon a breach of your unsecured PHI.
Right to an Accounting of Disclosures You have the right to request an"accounting of disclosures"of PHI made in the six
years prior to the date on which the accounting is requested,except for disclosures:
• To carry out treatment,payment and health care operations as provided in§164.506;
• To individuals of PHI about them as provided in§164.502;
• Incident to a use or disclosure otherwise permitted; •
• Pursuant to an authorization as provided in§164.508;
• to persons involved in the individual's care or other notification purposes as provided in§164.510;
• For national security or intelligence purposes as provided in§164.512(k)(2);
• To correctional institutions or law enforcement officials as provided in§164.512(k)(5);
• As part of a limited data set in accordance with§164.514(e);or
• That occurred prior to the compliance date for the Plan.
Please submit a written request of an accounting of disclosures to your Human Resources Department.
Employer must act on your request for an accounting of the disclosures of your PHI no later than 60 days after receipt of the
request. Employer may extend the time for providing you an accounting by no more than 30 days,but it must provide you a
written explanation for the delay. You may request one accounting in any 12-month period free of charge. Employer will
impose a fee for each subsequent request within the 12-month period.
Right to Request Restrictions You have the right to request a restriction or limitation on the PHI we use or disclose for
treatment,payment,or health care operations. You also have the right to request a limit on the PHI we disclose to someone
involved in your care or the payment for your care,like a family member or friend. For example,you could ask that we not
share information about a particular claim with your spouse. To request a restriction,you must make your request,in wilting,
to your Human Resources Department. We are not required to agree to your request unless you are asking us to restrict the
use and disclosure of your PHI to a health plan for payment or health care operation purposes and such information you wish
to restrict pertains solely to a health care item or service for which you have paid the health care provider"out-of-pocket"in full.
If we agree,we will comply with your request unless the information is needed to provide you with emergency treatment.
Right to Request Confidential Communications You have the right to request that we communicate with you about your PHI a
certain way or at a certain location. For example,you can ask that we only contact you at work or by mail.
To request confidential communications,you must make your request in writing to your Human Resources Department. We
will not ask you the reason for your request. We will accommodate all requests we deem reasonable. Your request must
specify how or where you wish to be contacted.
Right to a Paper Copy You have a right to a paper copy of this Notice. You may ask for a copy at any time. Even if you have
agreed to receive this Notice electronically,you are still entitled to a paper copy. Contact the Human Resources Department
for a paper copy of this Notice.
CHANGES TO THIS SUMMARY AND THE SEPARATE PRIVACY NOTICE
We reserve the right to change this Notice of Privacy Practices that may be provided to you. We reserve the right to make
the revised or changed Notice effective for PHI we already have about you as well as any information we receive in the
future. The Notice will indicate the effective date on the front page.
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COMPLAINTS
If you believe your privacy rights have been violated,you may file a complaint with the Plan or with the Secretary of the
Department of HHS. To file a complaint with the Plan,contact your Human Resources Department. All complaints must be
submitted in writing.
You will not be penalized for filing a complaint.
OTHER USES OF PHI
Other uses and disclosures of PHI not covered by this Notice or the laws that apply to us will be made only with your written
authorization. If you provide us with,an authorization to use or disclose PHI about you,you may revoke that authorization, in
writing, at any time. If you revoke your authorization,we will no longer use or disclose PHI about you for the reasons covered
by your written authorization. We are unable to take back any disclosures we have already made with your authorization and
that we are required to retain our records of the care that we provided to you.
Authorizations for Psychiatric Notes.Genetic Information,Marketing,&Sale In general,and subject to specific conditions,we
will not use or disclose psychiatric notes without your authorization;we will not use or disclose PHI that is genetic information
for underwriting purposes;we will not sell your PHI,i.e. receive direct or indirect payment in exchange for your PHI,without
your authorization;we will not use your PHI for marketing purposes without your authorization;and we will not use or disclose
your PHI for fundraising purposes unless we disclose that activity in this Notice.
Personal Representatives We may disclose your PHI to individuals authorized by you,or an individual designated as your
personal representative,provided that we have received your authorization or some other Notice or documentation
demonstrating the legal right of that individual to receive such information. Under HIPAA we do not have to disclose PHI to a
personal representative if we have a reasonable belief that
1)you have been or may be subjected to domestic violence,abuse,or neglect by such person;or
2)treating such person as your personal representative could endanger you;and
3)in the exercise of professional judgment,it is not in your best interest to treat the person as your personal representative.
Spouses and other Family Members With only limited exceptions,we will send all mail to the employee. This may include
information regarding a spouse or dependents also covered under the Plan. Information includes,but is not limited to, Plan
statements,benefit denials,and benefit debit cards and accompanying information.
X
CONTINUATION COVERAGE RIGHTS UNDER COBRA
Under federal law,the Consolidated Omnibus Budget Reconciliation Act of 1985(COBRA),certain employees and their
families covered under health benefits under this Plan will be entitled to the opportunity to elect a temporary extension of
health coverage(called"COBRA continuation coverage")where coverage under the Plan would otherwise end.This notice is
intended to inform Plan Participants and beneficiaries,in summary fashion,of their rights and obligations under the
continuation coverage provisions of COBRA,as amended and reflected in final and proposed regulations published by the
Department of the Treasury.This notice is intended to reflect the law and does not grant or take away any rights under the
law.
The Plan Administrator or its designee is responsible for administering COBRA continuation coverage.Complete
instructions on COBRA,as well as election forms and other information,will be provided by the Plan Administrator or its
designee to Plan Participants who become Qualified Beneficiaries under COBRA.While the Plan itself is not a group health
plan,it does provide health benefits.Whenever"Plan"is used in this section,it means any of the health benefits under this
Plan including the Health Care Flexible Spending Arrangement.
1. What is COBRA continuation coverage?
COBRA continuation coverage is the temporary extension of group health plan coverage that must be offered to certain
Plan Participants and their eligible family members(called"Qualified Beneficiaries")at group rates.The right to COBRA
continuation coverage is triggered by the occurrence of a life event that results in the loss of coverage under the terms of the
Plan(the"Qualifying Event").The coverage must be identical to the coverage that the Qualified Beneficiary had immediately
before the Qualifying Event,or if the coverage has been changed,the coverage must be identical to the coverage provided to
similarly situated active employees who have not experienced a Qualifying Event(in other words,similarly situated
non-COBRA beneficiaries).
2. Who can become a Qualified Beneficiary?
In general,a Qualified Beneficiary can be:
(a) Any individual who,on the day before a Qualifying Event,is covered under a Plan by virtue of being on that day either
a covered Employee,the Spouse of a covered Employee,or a Dependent child of a covered Employee.If,however,an
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individual who otherwise qualifies as a Qualified Beneficiary is denied or not offered coverage under the Plan under
circumstances in which the denial or failure to offer constitutes a violation of applicable law,then the individual will be
considered to have had the coverage and will be considered a Qualified Beneficiary if that individual experiences a
Qualifying Event.
(b) Any child who is born to or placed for adoption with a covered Employee during a period of COBRA continuation
coverage,and any individual who is covered by the Plan as an alternate recipient under a qualified medical support order.
If, however,an individual who otherwise qualifies as a Qualified Beneficiary is denied or not offered coverage under the
Plan under circumstances in which the denial or failure to offer constitutes a violation of applicable law,then the individual
will be considered to have had the coverage and will be considered a Qualified Beneficiary if that individual experiences a
Qualifying Event.
The term"covered Employee"includes any individual who is provided coverage under the Plan due to his or her
performance of services for the employer sponsoring the Plan. However,this provision does not establish eligibility of these
individuals. Eligibility for Plan coverage shall be determined in accordance with Plan Eligibility provisions.
An individual is not a Qualified Beneficiary if the individual's status as a covered Employee is attributable to a period in
which the individual was a nonresident alien who received from the individual's Employer no earned income that constituted
income from sources within the United States.If,on account of the preceding reason,an individual is not a Qualified
Beneficiary,then a Spouse or Dependent child of the individual will also not be considered a Qualified Beneficiary by virtue of
the relationship to the individual.A domestic partner is not a Qualified Beneficiary.
Each Qualified Beneficiary(including a child who is born to or placed for adoption with a covered Employee during a
period of COBRA continuation coverage)must be offered the opportunity to make an independent election to receive COBRA
continuation coverage.
3. What is a Qualifying Event?
A Qualifying Event is any of the following if the Plan provided that the Plan participant would lose coverage(i.e.,cease to
be covered under the same terms and conditions as in effect immediately before the Qualifying Event)in the absence of
COBRA continuation coverage:
(a) The death of a covered Employee.
(b) The termination(other than by reason of the Employee's gross misconduct),or reduction of hours,of a covered
Employee's employment.
(c) The divorce or legal separation of a covered Employee from the Employee's Spouse.If the Employee reduces or
eliminates the Employee's Spouse's Plan coverage in anticipation of a divorce or legal separation,and a divorce or legal
separation later occurs,then the divorce or legal separation may be considered a Qualifying Event even though the
Spouse's coverage was reduced or eliminated before the divorce or legal separation.
(d) A covered Employee's enrollment in any part of the Medicare program.
(e) A Dependent child's ceasing to satisfy the Plan's requirements for a Dependent child(for example,attainment of the
maximum age for dependency under the Plan).
If the Qualifying Event causes the covered Employee,or the covered Spouse or a Dependent child of the covered
Employee,to cease to be covered under the Plan under the same terms and conditions as in effect immediately before the
Qualifying Event,the persons losing such coverage become Qualified Beneficiaries under COBRA if all the other conditions of
COBRA are also met. For example,any increase in contribution that must be paid by a covered Employee,or the Spouse,or a
Dependent child of the covered Employee,for coverage under the Plan that results from the occurrence of one of the events
listed above is a loss of coverage.
The taking of leave under the Family and Medical Leave Act of 1993("FMLA")does not constitute a Qualifying Event.A
Qualifying Event will occur, however,if an Employee does not return to employment at the end of the FMLA leave and all other
COBRA continuation coverage conditions are present.If a Qualifying Event occurs,it occurs on the last day of FMLA leave
and the applicable maximum coverage period is measured from this date(unless coverage is lost at a later date and the Plan
provides for the extension of the required periods,in which case the maximum coverage date is measured from the date when
the coverage is lost)Note that the covered Employee and family members will be entitled to COBRA continuation coverage
even if they failed to pay the employee portion of premiums for coverage under the Plan during the FMLA leave.
4. What factors should be considered when determining to elect COBRA continuation coverage?
You should take into account that a failure to continue your group health coverage will affect your rights under federal law.
First,you can lose the right to avoid having pre-existing condition exclusions applied by other group health plans if there is
more than a 63-day gap in health coverage and election of COBRA continuation coverage may help you avoid such a gap.
(These pre-existing condition exclusions will only apply during Plan Years that begin before January 1,2014.)Second,if you
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do not elect COBRA continuation coverage and pay the appropriate premiums for the maximum time available to you,you will
lose the right to convert to an individual health insurance policy,which does not impose such pre-existing condition exclusions.
Finally,you should take into account that you have special enrollment rights under federal law(HIPAA).You have the right to
request special enrollment in another group health plan for which you are otherwise eligible(such as a plan sponsored by your
Spouse's employer)within 30 days after Plan coverage ends due to a Qualifying Event listed above.You will also have the
same special right at the end of COBRA continuation coverage if you get COBRA continuation coverage for the maximum time
available to you.
5. What is the procedure for obtaining COBRA continuation coverage?
The Plan has conditioned the availability of COBRA continuation coverage upon the timely election of such coverage.An
election is timely if it is made during the election period.
6. What is the election period and how long must it last?
The election period is the time period within which the Qualified Beneficiary must elect COBRA continuation coverage.
under the Plan.The election period must begin no later than the date the Qualified Beneficiary would lose coverage on
account of the Qualifying Event and ends 60 days after the later of the date the Qualified Beneficiary would lose coverage on
account of the Qualifying Event or the date notice is provided to the Qualified Beneficiary of her or his right to elect COBRA
continuation coverage.If coverage is not elected within the 60 day period,all rights to elect COBRA continuation coverage are
forfeited.
Note:If a covered Employee who has been terminated or experienced a reduction of hours qualifies for a trade
readjustment allowance or alternative trade adjustment assistance under a federal law called the Trade Act of 2002,and the
•
employee and his or her covered dependents have not elected COBRA coverage within the normal election period,a second
opportunity to elect COBRA coverage will be made available for themselves and certain family members,but only within a
limited period of 60 days or less and only during the six months immediately after their group health plan coverage ended.Any
person who qualifies or thinks that he or she and/or his or her family members may qualify for assistance under this special
provision should contact the Plan Administrator or its designee for further information.
The Trade Act of 2002 also created a tax credit for certain TAA-eligible individuals and for certain retired employees who
are receiving pension payments from the Pension Benefit Guaranty Corporation(PBGC)(eligible individuals). Under the new
. tax provisions,eligible individuals can either take a tax credit or get advance payment of a part of the premiums paid for
qualified health insurance,including continuation coverage.If you have questions about these new tax provisions,you may
call the Health Coverage Tax Credit Consumer Contact Center toll-free at 1-866-628-4282.TTD/TTY callers may call toll-free
at 1-866-626-4282.More information about the Trade Act is also available at www.doleta.gov/tradeact.
7. Is a covered Employee or Qualified Beneficiary responsible for informing the Plan Administrator of the
occurrence of a Qualifying Event?
The Plan will offer COBRA continuation coverage to Qualified Beneficiaries only after the Plan Administrator or its
designee has been timely notified that a Qualifying Event has occurred.The Employer(if the Employer is not the Plan
Administrator)will notify the Plan Administrator or its designee of the Qualifying Event within 30 days following the date
coverage ends when the Qualifying Event is:
(a) the end of employment or reduction of hours of employment,
(b) death of the employee,
(c) commencement of a proceeding in bankruptcy with respect to the Employer,or
(d) entitlement of the employee to any part of Medicare.
IMPORTANT:
For the other Qualifying Events(divorce or legal separation of the employee and spouse or a dependent child's
losing eligibility for coverage as a dependent child),you or someone on your behalf must notify the Plan
Administrator or its designee in writing within 60 days after the Qualifying Event occurs,using the procedures
specified below.If these procedures are not followed or if the notice is not provided in writing to the Plan
Administrator or its designee during the 60-day notice period,any spouse or dependent child who loses coverage
will not be offered the option to elect continuation coverage.You must send this notice to the Plan Administrator or
its designee.
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NOTICE PROCEDURES:
Any notice that you provide must be in writing.Oral notice, including notice by telephone, is not acceptable.You must
mail,fax or hand-deliver your notice to the person,department or firm listed below, at the following address:
City of Federal Way
33325 8th Ave South
Federal Way,Washington 98003
If mailed,your notice must be postmarked no later than the last day of the required notice period.Any notice you provide
must state:
• the name of the plan or plans under which you lost or are losing coverage,
• the name and address of the employee covered under the plan,
• the name(s)and address(es)of the Qualified Beneficiary(ies), and
• the Qualifying Event and the date it happened.
If the Qualifying Event is a divorce or legal separation,your notice must include a copy of the divorce decree or the
legal separation agreement.
Be aware that there are other notice requirements in other contexts,for example,in order to qualify for a disability
extension.
Once the Plan Administrator or its designee receives timely notice that a Qualifying Event has occurred,COBRA
continuation coverage will be offered to each of the qualified beneficiaries. Each Qualified Beneficiary will have an
independent right to elect COBRA continuation coverage.Covered employees may elect COBRA continuation coverage for
their spouses, and parents may elect COBRA continuation coverage on behalf of their children. For each Qualified
Beneficiary who elects COBRA continuation coverage, COBRA continuation coverage will begin on the date that plan
coverage would otherwise have been lost. If you or your spouse or dependent children do not elect continuation coverage
within the 60-lay election period described above,the right to elect continuation coverage will be lost.
8. Is a waiver before the end of the election period effective to end a Qualified Beneficiary's election rights?
If,during the election period,a Qualified Beneficiary waives COBRA continuation coverage,the waiver can be revoked at
any time before the end of the election period. Revocation of the waiver is an election of COBRA continuation coverage.
However,if a waiver is later revoked,coverage need not be provided retroactively(that is,from the date of the loss of
coverage until the waiver is revoked).Waivers and revocations of waivers are considered made on the date they are sent to
the Plan Administrator or its designee,as applicable.
9. Is COBRA coverage available if a Qualified Beneficiary has other group health plan coverage or Medicare?
Qualified Beneficiaries who are entitled to elect COBRA continuation coverage may do so even if they are covered under
another group health plan or are entitled to Medicare benefits on or before the date on which COBRA is elected.However,a
Qualified Beneficiary's COBRA coverage will terminate automatically if,after electing COBRA, he or she becomes entitled to
Medicare or becomes covered under other group health plan coverage(but only after any applicable preexisting condition
exclusions of that other plan have been exhausted or satisfied).
10. When may a Qualified Beneficiary's COBRA continuation coverage be terminated?
During the election period,a Qualified Beneficiary may waive COBRA continuation coverage.Except for an interruption of
coverage in connection with a waiver,COBRA continuation coverage that has been elected for a Qualified Beneficiary must
extend for at least the period beginning on the date of the Qualifying Event and ending not before the earliest of the following
dates:
(a) The last day of the applicable maximum coverage period.
(b) The first day for which Timely Payment is not made to the Plan with respect to the Qualified Beneficiary.
(c) The date upon which the Employer ceases to provide any group health plan(including a successor plan)to any
employee.
(d) The date,after the date of the election,that the Qualified Beneficiary first becomes covered under any other Plan that
does not contain any exclusion or limitation with respect to any pre-existing condition,other than such an exclusion or
limitation that does not apply to,or is satisfied by,the Qualified Beneficiary.
(e) The date,after the date of the election,that the Qualified Beneficiary first becomes entitled to Medicare(either part A
or part B,whichever occurs earlier).
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(f) In the case of a Qualified Beneficiary entitled to a disability extension,the later of:
(1) (i)29 months after the date of the Qualifying Event,or(ii)the first day of the month that is more than 30 days
after the date of a final determination under Title II or XVI of the Social Security Act that the disabled Qualified
Beneficiary whose disability resulted in the Qualified Beneficiary's entitlement to the disability extension is no longer
disabled,whichever is earlier,or
(2) the end of the maximum coverage period that applies to the Qualified Beneficiary without regard to the disability
extension.
The Plan can terminate for cause the coverage of a Qualified Beneficiary on the same basis that the Plan terminates for
cause the coverage of similarly situated non-COBRA beneficiaries,for example,for the submission of a fraudulent claim.
In the case of an individual who is not a Qualified Beneficiary and who is receiving coverage under the Plan solely
because of the individual's relationship to a Qualified Beneficiary,if the Plan's obligation to make COBRA continuation
coverage available to the Qualified Beneficiary ceases,the Plan is not obligated to make coverage available to the individual
who is not a Qualified Beneficiary.
11. What are the maximum coverage periods for COBRA continuation coverage?
The maximum coverage periods are based on the type of the Qualifying Event and the status of the Qualified Beneficiary,
as shown below.
(a) In the case of a Qualifying Event that is a termination of employment or reduction of hours of employment,the
maximum coverage period ends 18 months after the Qualifying Event if there is not a disability extension and 29 months
after the Qualifying Event if there is a disability extension.
(b) In the case of a covered Employee's enrollment in the Medicare program before experiencing a Qualifying Event that
is a termination of employment or reduction of hours of employment,the maximum coverage period for Qualified
Beneficiaries ends on the later of:
(1) 36 months after the date the covered Employee becomes enrolled in the Medicare program.This extension does
not apply to the covered Employee;or
(2) 18 months(or 29 months,if there is a disability extension)after the date of the covered Employee's termination
of employment or reduction of hours of employment
(c) In the case of a Qualified Beneficiary who is a child born to or placed for adoption with a covered Employee during a
period of COBRA continuation coverage,the maximum coverage period is the maximum coverage period applicable to
the Qualifying Event giving rise to the period of COBRA continuation coverage during which the child was born or placed
for adoption.
(d) In the case of any other Qualifying Event than that described above,the maximum coverage period ends 36 months
after the Qualifying Event.
12. Under what circumstances can the maximum coverage period be expanded?
If a Qualifying Event that gives rise to an 18-month or 29-month maximum coverage period is followed,within that 18-or
29-month period, by a second Qualifying Event that gives rise to a 36-months maximum coverage period,the original period is
expanded to 36 months,but only for individuals who are Qualified Beneficiaries at the time of and with respect to both
Qualifying Events.In no circumstance can the COBRA maximum coverage period be expanded to more than 36 months after
the date of the first Qualifying Event.The Plan Administrator must be notified of the second qualifying event within 60 days of
the second qualifying event This notice must be sent to the Plan Administrator or its designee in accordance with the
procedures above.
13. How does a Qualified Beneficiary become entitled to a disability extension?
A disability extension will be granted if an individual(whether or not the covered Employee)who is a Qualified Beneficiary
in connection with the Qualifying Event that is a termination or reduction of hours of a covered Employee's employment,is
determined under Title II or XVI of the Social Security Act to have been disabled at any time during the first 60 days of COBRA
continuation coverage.To qualify for the disability extension,the Qualified Beneficiary must also provide the Plan
Administrator with notice of the disability determination on a date that is both within 60 days after the date of the determination
and before the end of the original 18-month maximum coverage.This notice must be sent to the Plan Administrator or its
designee in accordance with the procedures above.
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14. Does the Plan require payment for COBRA continuation coverage?
For any period of COBRA continuation coverage under the Plan,Qualified Beneficiaries who elect COBRA continuation
coverage may be required to pay up to 102%of the applicable premium and up to 150%of the applicable premium for any
expanded period of COBRA continuation coverage covering a disabled Qualified Beneficiary due to a disability extension.
Your Plan Administrator will inform you of the cost.The Plan will terminate a Qualified Beneficiary's COBRA continuation
coverage as of the first day of any period for which timely payment is not made.
15. Must the Plan allow payment for COBRA continuation coverage to be made in monthly installments?
Yes.The Plan is also permitted to allow for payment at other intervals.
16. What is Timely Payment for COBRA continuation coverage?
Timely Payment means a payment made no later than 30 days after the first day of the coverage period. Payment that is
made to the Plan by a later date is also considered Timely Payment if either under the terms of the Plan,covered Employees
or Qualified Beneficiaries are allowed until that later date to pay for their coverage for the period or under the terms of an
arrangement between the Employer and the entity that provides Plan benefits on the Employer's behalf,the Employer is
allowed until that later date to pay for coverage of similarly situated non-COBRA beneficiaries for the period.
Notwithstanding the above paragraph,the Plan does not require payment for any period of COBRA continuation coverage
for a Qualified Beneficiary earlier than 45 days after the date on which the election of COBRA continuation coverage is made
for that Qualified Beneficiary.Payment is considered made on the date on which it is postmarked to the Plan.
If Timely Payment is made to the Plan in an amount that is not significantly less than the amount the Plan requires to be
paid for a period of coverage,then the amount paid will be deemed to satisfy the Plan's requirement for the amount to be paid,
unless the Plan notifies the Qualified Beneficiary of the amount of the deficiency and grants a reasonable period of time for
payment of the deficiency to be made.A"reasonable period of time"is 30 days after the notice is provided.A shortfall in a
Timely Payment is not significant if it is no greater than the lesser of$50 or 10%of the required amount.
17. Must a Qualified Beneficiary be given the right to enroll in a conversion health plan at the end of the maximum
coverage period for COBRA continuation coverage?
If a Qualified Beneficiary's COBRA continuation coverage under a group health plan ends as a result of the expiration of
the applicable maximum coverage period,the Plan will,during the 180-day period that ends on that expiration date,provide
the Qualified Beneficiary with the option of enrolling under a conversion health plan if such an option is otherwise generally
available to similarly situated non-COBRA beneficiaries under the Plan. If such a conversion option is not otherwise generally
available,it need not be made available to Qualified Beneficiaries.
18. How is my participation in the Health Care Flexible Spending Arrangement affected?
You can elect to continue your participation in the Health Care Flexible Spending Arrangement for the remainder of the
Plan Year,subject to the following conditions.You may only continue to participate in the Health Care Flexible Spending
Arrangement if you have elected to contribute more money than you have taken out in claims.For example,if you elected to
contribute an annual amount of$500 and,at the time you terminate employment,you have contributed$300 but only daimed
$150,you may elect to continue coverage under the Health Care Flexible Spending Arrangement.If you elect to continue
coverage,then you would be able to continue to receive your health reimbursements up to the$500. However,you must
continue to pay for the coverage,just as the money has been taken out of your paycheck,but on an after-tax basis.The Plan
can also charge you an extra amount(as explained above for other health benefits)to provide this benefit.
IF YOU HAVE QUESTIONS
If you have questions about your COBRA continuation coverage,you should contact the Plan Administrator or its
designee. For more information about your rights under ERISA,including COBRA,the Health Insurance Portability and
Accountability Act(HIPAA),and other laws affecting group health plans,contact the nearest Regional or District Office of the
U.S. Department of Labor's Employee Benefits Security Administration(EBSA).Addresses and phone numbers of Regional
and District EBSA Offices are available through EBSA's website at www.dol.gov/ebsa.
KEEP YOUR PLAN ADMINISTRATOR INFORMED OF ADDRESS CHANGES
In order to protect your family's rights,you should keep the Plan Administrator informed of any changes in the addresses
of family members.You should also keep a copy,for your records,of any notices you send to the Plan Administrator or its
designee.
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•
XI
SUMMARY
The money you earn is important to you and your family.You need it to pay your bills,enjoy recreational activities and
save for the future.Our flexible benefits plan will help you keep more of the money you eam by lowering the amount of taxes
you pay.The Plan is the result of our continuing efforts to find ways to help you get the most for your earnings.
If you have any questions, please contact the Administrator.
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•
CITY OF FEDERAL WAY CAFETERIA PLAN
AND ALL SUPPORTING FORMS HAVE BEEN PRODUCED FOR
CITY OF FEDERAL WAY
Copyright 2014 SunGani
All Rights Reserved
CITY OF FEDERAL WAY CAFETERIA PLAN
• •
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY 2
2.2 EFFECTIVE DATE OF PARTICIPATION 2
2.3 APPLICATION TO PARTICIPATE 3
2.4 TERMINATION OF PARTICIPATION 3
2.5 TERMINATION OF EMPLOYMENT 3
2.6 DEATH 3
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 SALARY REDIRECTION 4
3.2 APPLICATION OF CONTRIBUTIONS 4
3.3 PERIODIC CONTRIBUTIONS 4
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS 4
4.2 HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT BENEFIT 4
4.3 DAY CARE FLEXIBLE SPENDING ARRANGEMENT BENEFIT .4
4.4 HEALTH INSURANCE BENEFIT 5
4.5 NONDISCRIMINATION REQUIREMENTS 5
ARTICLE V
PARTICIPANT ELECTIONS
5.1 INITIAL ELECTIONS 5
5.2 SUBSEQUENT ANNUAL ELECTIONS 5
5.3 FAILURE TO ELECT 6
5.4 CHANGE IN STATUS 6
ARTICLE VI
HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT
6.1 ESTABLISHMENT OF PLAN 8
6.2 DEFINITIONS 8
6.3 FORFEITURES 8
6.4 LIMITATION ON ALLOCATIONS 9
6.5 NONDISCRIMINATION REQUIREMENTS 9
6.6 COORDINATION WITH CAFETERIA PLAN 9
6.7 HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT CLAIMS 9
6.8 DEBIT AND CREDIT CARDS 10
ARTICLE VII
DAY CARE FLEXIBLE SPENDING ARRANGEMENT
7.1 ESTABLISHMENT OF ACCOUNT 11
7.2 DEFINITIONS 11
. •
7.3 DAY CARE FLEXIBLE SPENDING ARRANGEMENTS 12
7.4 INCREASES IN DAY CARE FLEXIBLE SPENDING ARRANGEMENTS 12
7.5 DECREASES IN DAY CARE FLEXIBLE SPENDING ARRANGEMENTS 12
7.6 ALLOWABLE DAY CARE REIMBURSEMENT 12
7.7 ANNUAL STATEMENT OF BENEFITS 12
7.8 FORFEITURES 12
7.9 LIMITATION ON PAYMENTS 12
7.10 NONDISCRIMINATION REQUIREMENTS 12
7.11 COORDINATION WITH CAFETERIA PLAN 13
7.12 DAY CARE FLEXIBLE SPENDING ARRANGEMENT CLAIMS 13
ARTICLE VIII
BENEFITS AND RIGHTS
8.1 CLAIM FOR BENEFITS 13
8.2 APPLICATION OF BENEFIT PLAN SURPLUS 15
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATION 15
9.2 EXAMINATION OF RECORDS 16
9.3 PAYMENT OF EXPENSES 16
9.4 INSURANCE CONTROL CLAUSE 16
9.5 INDEMNIFICATION OF ADMINISTRATOR 17
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 AMENDMENT 17
10.2 TERMINATION 17
ARTICLE XI
MISCELLANEOUS
11.1 PLAN INTERPRETATION 17
11.2 GENDER AND NUMBER 17
11.3 WRITTEN DOCUMENT 17
11.4 EXCLUSIVE BENEFIT 17
11.5 PARTICIPANTS RIGHTS 17
11.6 ACTION BY THE EMPLOYER 17
11.7 NO GUARANTEE OF TAX CONSEQUENCES 18
11.8 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS 18
11.9 FUNDING 18
11.10 GOVERNING LAW 18
11.11 SEVERABILITY 18
11.12 CAPTIONS 18
11.13 CONTINUATION OF COVERAGE(COBRA) 18
11.14 FAMILY AND MEDICAL LEAVE ACT(FMLA) 18
11.15 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT(HIPAA) 18
11.16 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT(USERRA) 19
•
•
11.17 COMPLIANCE WITH HIPAA PRIVACY STANDARDS 19
11.18 COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS 20
11.19 MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT 20
11.20 GENETIC INFORMATION NONDISCRIMINATION ACT(GINA) 20
11.21 WOMEN'S HEALTH AND CANCER RIGHTS ACT 20
11.22 NEWBORNS'AND MOTHERS'HEALTH PROTECTION ACT 20
• •
CITY OF FEDERAL WAY CAFETERIA PLAN
INTRODUCTION
The Employer has amended this Plan effective January 1,2015,to recognize the contribution made to the Employer
by its Employees.Its purpose is to reward them by providing benefits for those Employees who shall qualify hereunder and
their Dependents and beneficiaries.The concept of this Plan is to allow Employees to choose among different types of
benefits based on their own particular goals,desires and needs.This Plan is a restatement of a Plan which was originally
effective on January 1, 1994.The Plan shall be known as City of Federal Way Cafeteria Plan(the"Plan").
The intention of the Employer is that the Plan qualify as a"Cafeteria Plan"within the meaning of Section 125 of the
Internal Revenue Code of 1986,as amended,and that the benefits which an Employee elects to receive under the Plan be
excludable from the Employee's income under Section 125(a)and other applicable sections of the Internal Revenue Code of
1986,as amended.
ARTICLE I
DEFINITIONS
1.1 "Administrator"means the Employer unless another person or entity has been designated by the
Employer pursuant to Section 9.1 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.
1.2 "Affiliated Employer"means the Employer and any corporation which is a member of a controlled group of
corporations(as defined in Code Section 414(b))which includes the Employer,any trade or business(whether or not
incorporated)which is under common control(as defined in Code Section 414(c))with the Employer,any organization
(whether or not incorporated)which is a member of an affiliated service group(as defined in Code Section 414(m))which
includes the Employer,and any other entity required to be aggregated with the Employer pursuant to Treasury regulations
under Code Section 414(o).
1.3 'Benefit"or"Benefit Options"means any of the optional benefit choices available to a Participant as
outlined in Section 4.1.
1.4 "Cafeteria Plan Benefit Dollars"means the amount available to Participants to purchase Benefit Options
as provided under Section 4.1.Each dollar contributed to this Plan shall be converted into one Cafeteria Plan Benefit Dollar.
1.5 "Code"means the Internal Revenue Code of 1986,as amended or replaced from time to time.
1.6 "Compensation"means the amounts received by the Participant from the Employer during a Plan Year.
1.7 "Dependent"means any individual who qualifies as a dependent under the self-funded plan for purposes of
that plan or under Code Section 152(as modified by Code Section 105(b)).
"Dependent"shall include any Child of a Participant who is covered under an Insurance Contract,as
defined in the Contract,or under the Health Care Flexible Spending Arrangement or as allowed by reason of the Affordable
Care Act.
For purposes of the Health Care Flexible Spending Arrangement,a Participant's"Child"includes his/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.
1.8 "Effective Date"means January 1, 1994.
1.9 "Election Period"means the period immediately preceding the beginning of each Plan Year established by
the Administrator,such period to be applied on a uniform and nondiscriminatory basis for all Employees and Participants.
However,an Employee's initial Election Period shall be determined pursuant to Section 5.1.
1.10 "Eligible Employee"means any Employee who has satisfied the provisions of Section 2.1.
An individual shall not be an"Eligible Employee"if such individual is not reported on the payroll records of
the Employer as a common law employee. In particular,it is expressly intended that individuals not treated as common law
employees by the Employer on its payroll records are not"Eligible Employees"and are excluded from Plan participation even
if a court or administrative agency determines that such individuals are common law employees and not independent
contractors.
1.11 "Employee"means any person who is employed by the Employer.The term Employee shall include leased
employees within the meaning of Code Section 414(n)(2).
1.12 "Employer"means City of Federal Way and any successor which shall maintain this Plan;and any
predecessor which has maintained this Plan. In addition,where appropriate,the term Employer shall include any Participating,
Affiliated or Adopting Employer.
1.13 "Insurance Contract"means any contract issued by an Insurer underwriting a Benefit.
1.14 "Insurer"means any insurance company that underwrites a Benefit under this Plan or,with respect to any
self-funded benefits,the Employer.
1.15 "Key Employee"means an Employee described in Code Section 416(i)(1)and the Treasury regulations
thereunder.
1.16 "Participant"means any Eligible Employee who elects to become a Participant pursuant to Section 2.3 and
has not for any reason become ineligible to participate further in the Plan.
1.17 "Plan"means this instrument,including all amendments thereto.
1.18 "Plan Year"means the 12-month period beginning January 1 and ending December 31.The Plan Year
shall be the coverage period for the Benefits provided for under this Plan. In the event a Participant commences participation
during a Plan Year,then the initial coverage period shall be that portion of the Plan Year commencing on such Participant's
date of entry and ending on the last day of such Plan Year.
1.19 "Premiums"mean the Participants cost for the self-funded Benefits described in Section 4.1.
1.20 "Premium Conversion Benefit"means the account established for a Participant pursuant to this Plan to
which part of his Cafeteria Plan Benefit Dollars may be allocated and from which Premiums of the Participant shall be paid or
reimbursed.If more than one type of insured or self-funded Benefit is elected,sub-accounts shall be established for each type
of insured or self-funded Benefit.
1.21 "Salary Redirection"means the contributions made by the Employer on behalf of Participants pursuant to
Section 3.1.These contributions shall be converted to Cafeteria Plan Benefit Dollars and allocated to the funds or accounts
established under the Plan pursuant to the Participants'elections made under Article V.
1.22 "Salary Redirection Agreement"means an agreement between the Participant and the Employer under
which the Participant agrees to reduce his Compensation or to forego all or part of the increases in such Compensation and to
have such amounts contributed by the Employer to the Plan on the Participant's behalf.The Salary Redirection Agreement
shall apply only to Compensation that has not been actually or constructively received by the Participant as of the date of the
agreement(after taking this Plan and Code Section 125 into account)and,subsequently does not become currently available
to the Participant.
1.23 "Spouse"means"spouse"as defined in the self-funded plan for purposes of that plan or the"spouse,"as
defined under Federal law,of a Participant,unless legally separated by court decree.
ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder as of the date he satisfies the eligibility conditions for
the Employer's group medical plan,the provisions of which are specifically incorporated herein by reference.However,any
Eligible Employee who was a Participant in the Plan on the effective date of this amendment shall continue to be eligible to
participate in the Plan.
2.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the first day of the month coinciding with or next
following the date on which he met the eligibility requirements of Section 2.1.
2
• •
2.3 APPLICATION TO PARTICIPATE
An Employee who is eligible to participate in this Plan shall,during the applicable Election Period,complete an
application to participate in a manner set forth by the Administrator.The election shall be in-evocable until the end of the
applicable Plan Year unless the Participant is entitled to change his Benefit elections pursuant to Section 5.4 hereof.
An Eligible Employee shall also be required to 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 Employees effective date of participation pursuant to Section 2.2.
Notwithstanding the foregoing,an Employee who is eligible to participate in this Plan and who is covered by the
Employer's insured or self-funded Benefits under this Plan shall automatically become a Participant to the extent of the
Premiums for such insurance unless the Employee elects,during the Election Period, not to participate in the Plan.
2.4 TERMINATION OF PARTICIPATION
A Participant shall no longer participate in this Plan upon the occurrence of any of the following events:
(a) Termination of employment.The Participant's termination of employment,subject to the
provisions of Section 2.5;
(b) Death.The Participant's death,subject to the provisions of Section 26;or
(c) Termination of the plan.The termination of this Plan,subject to the provisions of Section 10.2.
2.5 TERMINATION OF EMPLOYMENT
If a Participant's employment with the Employer is terminated for any reason other than death,his participation in the
Benefit Options provided under Section 4.1 shall be govemed in accordance with the following:
(a) Insurance Benefit.With regard to Benefits provided under Section 4.1,the Participants
participation in the Plan shall cease,subject to the Participant's right to continue coverage under any Insurance
Contract or self-funded benefit for which premiums have already been paid.
(b) Day Care FSA.With regard to the Day Care Flexible Spending Arrangement,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 Day Care Expense reimbursements for claims incurred through
the remainder of the Plan Year in which such termination occurs and submitted within 90 days after the end of the
Plan Year,based on the level of the Participant's Day Care Flexible Spending Arrangement as of the date of
termination.
(c) COBRA applicability.With regard to the Health Care Flexible Spending Arrangement,the
Participant may submit claims for expenses that were incurred during the portion of the Plan Year before the end of
the period for which payments to the Health Care Flexible Spending Arrangement have already been made.
Thereafter,the health benefits under this Plan including the Health Care Flexible Spending Arrangement shall be
applied and administered consistent with such further rights a Participant and his Dependents may be entitled to
pursuant to Code Section 4980B and Section 11.13 of the Plan.
2.6 DEATH
If a Participant dies,his participation in the Plan shall cease.However,such Participant's spouse or Dependents may
submit claims for expenses or benefits for the remainder of the Plan Year or until the Cafeteria Plan Benefit Dollars allocated
to each specific benefit are exhausted.In no event may reimbursements be paid to someone who is not a spouse or
Dependent If the Plan is subject to the provisions of Code Section 4980B,then those provisions and related regulations shall
apply for purposes of the Health Care Flexible Spending Arrangement.
3
•
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 SALARY REDIRECTION
Benefits under the Plan shall be financed by Salary Redirections sufficient to support Benefits that a Participant has
elected hereunder and to pay the Participant's Premiums.The salary administration program of the Employer shall be revised
to allow each Participant to agree to reduce his pay during a Plan Year by an amount determined necessary to purchase the
elected Benefit Options.The amount of such Salary Redirection shall be specified in the Salary Redirection Agreement and
shall be applicable for a Plan Year. Notwithstanding the above,for new Participants,the Salary Redirection Agreement shall
only be applicable from the first day of the pay period following the Employee's entry date up to and including the last day of
the Plan Year.These contributions shall be converted to Cafeteria Plan Benefit Dollars and allocated to the funds or accounts
established under the Plan pursuant to the Participants'elections made under Article IV.
Any Salary Redirection shall be determined prior to the beginning of a Plan Year(subject to initial elections pursuant
to Section 5.1)and prior to the end of the Election Period and shall be irrevocable for such Plan Year.However,a Participant
may revoke a Benefit election or a Salary Redirection Agreement after the Plan Year has commenced and make a new
election with respect to the remainder of the Plan Year,if both the revocation and the new election are on account of and
consistent with a change in status and such other permitted events as determined under Article V of the Plan and consistent
with the rules and regulations of the Department of the Treasury.Salary Redirection amounts shall be contributed on'a
pro rata basis for each pay period during the Plan Year.All individual Salary Redirection Agreements are deemed to be part of
this Plan and incorporated by reference hereunder.
3.2 APPLICATION OF CONTRIBUTIONS
As soon as reasonably practical after each payroll period,the Employer shall apply the Salary Redirection to provide
the Benefits elected by the affected Participants.Any contribution made or withheld for the Health Care Flexible Spending
Arrangement or Day Care Flexible Spending Arrangement shall be credited to such fund or account.Amounts designated for
the Participant's Premium Conversion Benefit shall likewise be credited to such account for the purpose of paying Premiums.
3.3 PERIODIC CONTRIBUTIONS
Notwithstanding the requirement provided above and in other Articles of this Plan that Salary Redirections be
contributed to the Plan by the Employer on behalf of an Employee on a level and pro rata basis for each payroll period,the
Employer and Administrator may implement a procedure in which Salary Redirections are contributed throughout the Plan
Year on a periodic basis that is not pro rata for each payroll period. However,with regard to the Health Care Flexible Spending
Arrangement,the payment schedule for the required contributions may not be based on the rate or amount of reimbursements
during the Plan Year.
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS
Each Participant may elect any one or more of the following optional Benefits:
(1) Health Care Flexible Spending Arrangement
(2) Day Care Flexible Spending Arrangement
In addition,each Participant shall have a sufficient portion of his Salary Redirections applied to the following Benefits
unless the Participant elects not to receive such Benefits:
(3) Health Insurance Benefit
4.2 HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT BENEFIT
Each Participant may elect to participate in the Health Care Flexible Spending Arrangement option,in which case
Article VI shalt apply.
4.3 DAY CARE FLEXIBLE SPENDING ARRANGEMENT BENEFIT
Each Participant may elect to participate in the Day Care Flexible Spending Arrangement option,in which case Article
VII shall apply.
4
• •
4.4 HEALTH INSURANCE BENEFIT
(a) Coverage for Participant and Dependents.Each Participant may elect to be covered under a
health Contract for the Participant, his or her Spouse,and his or her Dependents.
(b) Employer selects contracts.The Employer may select suitable health Contracts for use in
providing this health insurance benefit,which policies will provide uniform benefits for all Participants electing this
Benefit.
(c) Contract incorporated by reference.The rights and conditions with respect to the benefits
payable from such health Contract shall be determined therefrom,and such Contract shall be incorporated herein by
reference.
4.5 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory.It is the intent of this Plan to provide benefits to a classification of
employees which the Secretary of the Treasury finds not to be discriminatory in favor of the group in whose favor
discrimination may not occur under Code Section 125.
(b) 25%concentration test.It is the intent of this Plan not to provide qualified benefits as defined
under Code Section 125 to Key Employees in amounts that exceed 25%of the aggregate of such Benefits provided
for all Eligible Employees under the Plan.For purposes of the preceding sentence,qualified benefits shall not include
benefits which(without regard to this paragraph)are includible in gross income.
(c) Adjustment to avoid test failure.If the Administrator deems it necessary to avoid discrimination
or possible taxation to Key Employees or a group of employees in whose favor discrimination may not occur in
violation of Code Section 125,it may,but shall not be required to,reduce contributions or non-taxable Benefits in
order to assure compliance with this Section.Any act taken by the Administrator under this Section shall be carried
out in a uniform and nondiscriminatory manner.If the Administrator decides to reduce contributions or non-taxable
Benefits,it shall be done in the following manner.First,the non-taxable Benefits of the affected Participant(either an
employee who is highly compensated or a Key Employee,whichever is applicable)who has the highest amount of
non-taxable Benefits for the Plan Year shall have his non-taxable Benefits reduced until the discrimination tests set
forth in.this Section are satisfied or until the amount of his non-taxable Benefits equals the non-taxable Benefits of the
affected Participant who has the second highest amount of non-taxable Benefits.This process shall continue until the
nondiscrimination tests set forth in this Section are satisfied.With respect to any affected Participant who has had
Benefits reduced pursuant to this Section,the reduction shall be made proportionately among Health Care Flexible
Spending Arrangement Benefits and Day Care Flexible Spending Arrangement Benefits,and once all these Benefits
are expended,proportionately among self-funded Benefits.Contributions which are not utilized to provide Benefits to
any Participant by virtue of any administrative act under this paragraph shall be forfeited and deposited into the
benefit plan surplus.
ARTICLE V
PARTICIPANT ELECTIONS
5.1 INITIAL ELECTIONS
An Employee who meets the eligibility requirements of Section 2.1 on the first day of,or during,a Plan Year may
elect to participate in this Plan for all or the remainder of such Plan Year,provided he elects to do so on or before his effective
date of participation pursuant to Section 2.2.
Notwithstanding the foregoing,an Employee who is eligible to participate in this Plan and who is covered by the
Employer's insured or self-funded benefits under this Plan shall automatically become a Participant to the extent of the
Premiums for such insurance unless the Employee elects,during the Election Period,not to participate in the Plan.
5.2 SUBSEQUENT ANNUAL ELECTIONS
During the Election Period prior to each subsequent Plan Year,each Participant shall be given the opportunity to
elect,on an election of benefits form to be provided by the Administrator,which spending account Benefit options he wishes to
select.Any such election shall be effective for any Benefit expenses incurred during the Plan Year which follows the end of the
Election Period.With regard to subsequent annual elections,the following options shall apply:
(a) A Participant or Employee who failed to initially elect to participate may elect different or new
Benefits under the Plan during the Election Period;
(b) A Participant may terminate his participation in the Plan by notifying the Administrator in writing
during the Election Period that he does not want to participate in the Plan for the next Plan Year;
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(c) An Employee who elects not to participate for the Plan Year following the Election Period will have
to wait until the next Election Period before again electing to participate in the Plan,except as provided for in Section
5.4.
5.3 FAILURE TO ELECT
With regard to Benefits available under the Plan for which no Premiums apply,any Participant who fails to complete a
new benefit election form pursuant to Section 5.2 by the end of the applicable Election Period shall be deemed to have elected
not to participate in the Plan for the upcoming Plan Year.No further Salary Redirections shall therefore be authorized or made
for the subsequent Plan Year for such Benefits.
With regard to Benefits available under the Plan for which Premiums apply, any Participant who fails to complete a
new benefit election form pursuant to Section 5.2 by the end of the applicable Election Period shall be deemed to have made
the same Benefit elections as are then in effect for the current Plan Year.The Participant shall also be deemed to have
elected Salary Redirection in an amount necessary to purchase such Benefit options.
5.4 CHANGE IN STATUS
(a) Change in status defined.Any Participant may change a Benefit election after the Plan Year(to
which such election relates)has commenced and make new elections with respect to the remainder of such Plan Year
if,under the facts and circumstances,the changes are necessitated by and are consistent with a change in status which
is acceptable under rules and regulations adopted by the Department of the Treasury,the provisions of which are
incorporated by reference.Notwithstanding anything herein to the contrary,if the rules and regulations conflict,then
such rules and regulations shall control.
In general,a change in election is not consistent if the change in status is the Participants divorce,annulment
or legal separation from a Spouse,the death of a Spouse or Dependent,or a Dependent ceasing to satisfy the eligibility
requirements for coverage,and the Participant's election under the Plan is to cancel accident or health insurance
coverage for any individual other than the one involved in such event.In addition,if the Participant,Spouse or
Dependent gains or loses eligibility for coverage,then a Participant's election under the Plan to cease or decrease
coverage for that individual under the Plan corresponds with that change in status only if coverage for that individual
becomes applicable or is increased under the family member plan.
Regardless of the consistency requirement,if the individual,the individual's Spouse,or Dependent becomes
eligible for continuation coverage under the 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 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 Participants legal marital status,including marriage,
divorce,death of a Spouse,legal separation or annulment
(2) Number of Dependents:Events that change a Participants 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 Day Care Flexible Spending Arrangement,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.
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(b) Special enrollment rights.Notwithstanding subsection(a),the Participants may change an
election for accident or health coverage during a Plan Year and make a new election that corresponds with the
special enrollment rights provided in Code Section 9801(f),including those authorized under the provisions of the
Children's Health Insurance Program Reauthorization Act of 2009(SCHIP);provided that such Participant meets the
sixty(60)day notice requirement imposed by Code Section 9801(f)(or such longer period as may be permitted by the
Plan and communicated to Participants).Such change shall take place on a prospective basis,unless otherwise
required by Code Section 9801(f)to be retroactive.
(c) Qualified Medical Support Order.Notwithstanding subsection(a),in the event of a judgment,
decree,or order(including approval of a property settlement)("order")resulting from a divorce,legal separation,
annulment,or change in legal custody which requires accident or health coverage for a Participant's child(including a
foster child who is a Dependent of the Participant):
(1) The Plan may change an election to provide coverage for the child if the order requires coverage
under the Participant's plan;or
(2) The Participant shall be permitted to change an election to cancel coverage for the child if the order
requires the former Spouse to provide coverage for such child,under that individual's plan and such
coverage is actually provided.
(d) Medicare or Medicaid.Notwithstanding subsection(a),a Participant may change elections to cancel
accident or health coverage for the Participant or the Participant's Spouse or Dependent if the Participant or the
Participant's Spouse or Dependent is enrolled in the accident or health coverage of the Employer and becomes entitled
to coverage(i.e.,enrolled)under Part A or Part B of the Title XVIII of the Social Security Act(Medicare)or Title XIX of
the Social Security Act(Medicaid),other than coverage consisting solely of benefits under Section 1928 of the Social
Security Act(the program for distribution of pediatric vaccines).If the Participant or the Participant's Spouse or
Dependent who has been entitled to Medicaid or Medicare coverage loses eligibility,that individual may prospectively
elect coverage under the Plan if a benefit package option under the Plan provides similar coverage.
(e) Cost increase or decrease.If the cost of a Benefit provided under the Plan increases or
decreases during a Plan Year,then the Plan shall automatically increase or decrease,as the case may be,the Salary
rY
Redirections of all affected Participants for such Benefit.Alternatively,if the cost of a benefit package option
increases significantly,the Administrator shall permit the affected Participants to either make corresponding changes
in their payments or revoke their elections and,in lieu thereof,receive on a prospective basis coverage under another
benefit package option with similar coverage,or drop coverage prospectively if there is no benefit package option
with similar coverage.
A cost increase or decrease refers to an increase or decrease in the amount of elective contributions under
the Plan,whether resulting from an action taken by the Participants or an action taken by the Employer.
(f) Loss of coverage.If the coverage under a Benefit is significantly curtailed or ceases during a Plan
Year,affected Participants may revoke their elections of such Benefit and,in lieu thereof,elect to receive on a
prospective basis coverage under another plan with similar coverage,or drop coverage prospectively if no similar
coverage is offered.
(g) Addition of a new benefit.If,during the period of coverage,a new benefit package option or other
coverage option is added,an existing benefit package option is significantly improved,or an existing benefit package
option or other coverage option is eliminated,then the affected Participants may elect the newly-added option,or
elect another option if an option has been eliminated prospectively and make corresponding election changes with
respect to other benefit package options providing similar coverage. In addition,those Eligible Employees who are
not participating in the Plan may opt to become Participants and elect the new or newly improved benefit package
option.
(h) Loss of coverage under certain other plans.A Participant may make a prospective election
change to add group health coverage for the Participant,the Participant's Spouse or Dependent if such individual
loses group health coverage sponsored by a governmental or educational institution, including a state children's
health insurance program under the Social Security Act,the Indian Health Service or a health program offered by an
Indian tribal government,a state health benefits risk pool,or a foreign government group health plan.
(i) Change of coverage due to change under certain other plans.A Participant may make a
prospective election change that is on account of and corresponds with a change made under the plan of a Spouse's,
former Spouse's or Dependent's employer if(1)the cafeteria plan or other benefits plan of the Spouse's,former
Spouse's or Dependent's employer permits its participants to make a change;or(2)the cafeteria plan permits
participants to make an election for a period of coverage that is different from the period of coverage under the
cafeteria plan of a Spouse's,former Spouse's or Dependent's employer.
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(j) Change in Day Care provider.A Participant may make a prospective election change that is on
account of and corresponds with a change by the Participant in the Day Care provider.The availability of Day Care
services from a new childcare provider is similar to a new benefit package option becoming available.A cost change
is allowable in the Day Care Flexible Spending Arrangement only if the cost change is imposed by a Day Care
provider who is not related to the Participant,as defined in Code Section 152(a)(1)through(8).
(k) Health FSA cannot change due to insurance change.A Participant shall not be permitted to
change an election to the Health Care Flexible Spending Arrangement as a result of a cost or coverage change under
any health insurance benefits.
ARTICLE VI
HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT
6.1 ESTABLISHMENT OF PLAN
This Health Care Flexible Spending Arrangement 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 Care Flexible Spending Arrangement may submit claims for the
reimbursement of Medical Expenses.All amounts reimbursed shall be periodically paid from amounts allocated to the Health
Care Flexible Spending Arrangement. Periodic payments reimbursing Participants from the Health Care Flexible Spending
Arrangement shall in no event occur less frequently than monthly.
6.2 DEFINITIONS
For the purposes of this Article and the Cafeteria Plan,the terms below have the following meaning:
(a) "Health Care Flexible Spending Arrangement"means the account established for Participants
( ) P 9 9
pursuant to this Plan to which part of their Cafeteria Plan Benefit Dollars may be allocated and from which all
allowable Medical Expenses incurred by a Participant,his or her Spouse and his or her Dependents may be
reimbursed.
(b) "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 rinrltirtinn in determining his tax liability finder the CruVa."Medical Expanses"can he 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 any medicine or drug that is not"prescribed"within the
meaning of Code Section 106(f)or is not insulin.
A Participant may not be reimbursed for the cost of other health coverage such as premiums paid under
plans maintained by the employer of the Participant's Spouse or individual policies maintained by the Participant or
his Spouse or Dependent.
A Participant may not be reimbursed for"qualified long-term care services"as defined in Code Section
7702B(c).
(d) The definitions of Article I are hereby incorporated by reference to the extent necessary to interpret
and apply the provisions of this Health Care Flexible Spending Arrangement.
6.3 FORFEITURES
The amount in the Health Care Flexible Spending Arrangement as of the end of any Plan Year(and after the
processing of all claims for such Plan Year pursuant to Section 6.7 hereof)shall be forfeited and credited to the benefit plan
surplus.In such event,the Participant shall have no further claim to such amount for any reason,subject to Section 8.2.
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6.4 LIMITATION ON ALLOCATIONS
(a) Notwithstanding any provision contained in this Health Care Flexible Spending Arrangement to the
contrary,the maximum amount that may be allocated to the Health Care Flexible Spending Arrangement by a
Participant in or on account of any Plan Year is$2500.Notwithstanding any provision contained in this Health Care
Flexible Spending Arrangement to the contrary,the maximum amount of salary reductions that may be allocated to
the Health Care Flexible Spending Arrangement by a Participant in or on account of any Plan Year is$2,550,as
adjusted for increases in the cost of living in accordance with Code Section 125(i)(2).
(b) Cost of Living Adjustment.In no event shall the amount of salary redirections on the Health Care
Flexible Spending Arrangement exceed$2,550 as adjusted by law.Such amount shall be adjusted for increases in
the cost-of-living in accordance with Code Section 125(i)(2).The cost-of-living adjustment in effect for a calendar year
applies to any Plan Year beginning with or within such calendar year.The dollar increase in effect on January 1 of
any calendar year shall be effective for the Plan Year beginning with or within such calendar year. For any short Plan
Year,the limit shall be an amount equal to the limit for the calendar year in which the Plan Year begins multiplied by
the ratio obtained by dividing the number of full months in the short Plan Year by twelve(12).
(c) Participation in Other Plans.All employers that are treated as a single employer under Code
Sections 414(b),(c),or(m), relating to controlled groups and affiliated service groups,are treated as a single
employer for purposes of the$2,550 limit. If a Participant participates in multiple cafeteria plans offering Health Care
Flexible Spending Arrangements maintained by members of a controlled group or affiliated service group,the
Participants total Health Care Flexible Spending Arrangement contributions under all of the cafeteria plans are limited
to$2,550(as adjusted).However,a Participant employed by two or more employers that are not members of the
same controlled group may elect up to$2,550(as adjusted)under each Employer's Health Care Flexible Spending
Arrangement
(d) Carryover.A Participant in the Health Care Flexible Spending Arrangement may roll over up to
$500 of unused amounts in the Health Care Flexible Spending Arrangement remaining at the end of one Plan Year to
the immediately following Plan Year.These amounts 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 redirection contributions
for the Plan Year to which they are carried over.Unused amounts are those remaining after expenses have been
reimbursed during the runout period.These amounts may not be cashed out or converted to any other taxable or
nontaxable benefit.Amounts in excess of$500 will be forfeited.The Plan is allowed,but not required,to treat claims
as being paid first from the current year amounts,then from the carryover amounts.
6.5 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory.It is the intent of this Health Care Flexible Spending Arrangement
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 Care Flexible Spending Arrangement,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 Care Flexible Spending Arrangement by the member of the group in whose favor
discrimination may not occur pursuant to Code Section 105 that elected to contribute the highest amount to the fund
for the Plan Year shall be reduced until the nondiscrimination tests set forth in this Section or the Code are satisfied,
or until the amount designated for the fund equals the amount designated for the fund by the next member of the
group in whose favor discrimination may not occur pursuant to Code Section 105 who has elected the second highest
contribution to the Health Care Flexible Spending Arrangement 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.
6.6 COORDINATION WITH CAFETERIA PLAN
All Participants under the Cafeteria Plan are eligible to receive Benefits under this Health Care Flexible Spending
Arrangement The enrollment under the Cafeteria Plan shall constitute enrollment under this Health Care Flexible Spending
Arrangement.In addition,other matters concerning contributions,elections and the like shall be governed by the general
provisions of the Cafeteria Plan.
6.7 HEALTH CARE FLEXIBLE SPENDING ARRANGEMENT CLAIMS
(a) Expenses must be incurred during Plan Year.All Medical Expenses incurred by a Participant,
his or her Spouse and his or her Dependents during the Plan Year shall be reimbursed during the Plan Year subject
to Section 2.5,even though the submission of such a claim occurs after his participation hereunder ceases;but
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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 Care Flexible Spending Arrangement for the Plan Year. Reimbursements
shall be made available to the Participant throughout the year without regard to the level of Cafeteria Plan Benefit
Dollars which have been allocated to the fund at any given point in time.Furthermore,a Participant shall be entitled
to reimbursements only for amounts in excess of any payments or other reimbursements under any health care plan
covering the Participant and/or his Spouse or Dependents.
(c) Payments.Reimbursement payments under this Plan shall be made directly to the Participant.
However,in the Administrator's discretion,payments may be made directly to the service provider.The application for
payment or reimbursement shall be made to the Administrator on an acceptable form within a reasonable time of
incurring the debt or paying for the service.The application shall include a written statement from an independent
third party stating that the Medical Expense has been incurred and the amount of such expense. Furthermore,the
Participant shall provide a written statement that the Medical Expense has not been reimbursed or is not
reimbursable under any other health plan coverage and,if reimbursed from the Health Care Flexible Spending
Arrangement,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.
6.8 DEBIT AND CREDIT CARDS
Participants may,subject to a procedure established by the Administrator and applied in a uniform nondiscriminatory
manner,use debit 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 seek
reimbursement from any other plan covering health benefits.
(b) Card issuance.Such card shall be issued upon the Participant's Effective Date of Participation and
reissued for each Plan Year the Participant remains a Participant in the Health Care Flexible Spending Arrangement.
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 Care Flexible Spending
Arrangement
(c) Maximum dollar amount available.The dollar amount of coverage available on the card shall be
the amount elected by the Participant for the Plan Year.The maximum dollar amount of coverage available shall be
the maximum amount for the Plan Year as set forth in Section 6.4.
(d) Only available for use with certain service providers.The cards shall only be accepted by such
merchants and service providers as have been approved by the Administrator following IRS guidelines.
(e) Card use.The cards shall only be used for Medical Expense purchases at these providers,
including,but not limited to,the following:
(1) Co-payments for doctor and other medical care;
(2) Purchase of drugs 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 substantiation by the
Administrator,usually by submission of a receipt from a service provider describing the service,the date and the
amount.The Administrator shall also follow the requirements set forth in Revenue Ruling 2003-43 and Notice 2006-
69.All charges shall be conditional pending confirmation and substantiation.
(g) Correction methods.If such purchase is later determined by the Administrator to not qualify as a
Medical Expense,the Administrator,in its discretion,shall use one of the following correction methods to make the
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Plan whole. Until the amount is repaid,the Administrator shall take further action to ensure that further violations of
the terms of the card do not occur,up to and including denial of access to the card.
(1) Repayment of the improper amount by the Participant;
(2) Withholding the improper payment from the Participant's wages or other compensation to the
extent consistent with applicable federal or state law;
(3) Claims substitution or offset of future claims until the amount is repaid;and
(4) if subsections(1)through(3)fail to recover the amount,consistent with the Employer's business
practices,the Employer may treat the amount as any other business indebtedness.
ARTICLE VII
DAY CARE FLEXIBLE SPENDING ARRANGEMENT
7.1 ESTABLISHMENT OF ACCOUNT
This Day Care Flexible Spending Arrangement 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 Day Care Expenses.All amounts reimbursed shall be paid from
amounts allocated-to the Participant's Day Care Flexible Spending Arrangement.
7.2 DEFINITIONS
For the purposes of this Article and the Cafeteria Plan the terms below shall have the following meaning:
(a) "Day Care Flexible Spending Arrangement"means the account established for a Participant
pursuant to this Article to which part of his Cafeteria Plan Benefit Dollars may be allocated and from which
Employment-Related Day 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 exduding
such amounts paid or incurred by the Employer for Day Care assistance to the Participant.
(c) "Employment-Related Day Care Expenses"means the amounts paid for expenses of a
Participant for those services which if paid by the Participant would be considered employment related expenses
under Code Section 21(b)(2).Generally,they shall include expenses for household services and for the care of a
Qualifying Dependent,to the extent that such expenses are incurred to enable the Participant to be gainfully
employed for any period for which there are one or more Qualifying Dependents with respect to such Participant.
Employment-Related Day Care Expenses are treated as having been incurred when the Participant's Qualifying
Dependents are provided with the Day Care that gives rise to the Employment-Related Day Care Expenses,not
when the Participant is formally billed or charged for,or pays for the Day Care.The determination of whether an
amount qualifies as an Employment-Related Day 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 Day Care Expenses only if incurred for a Qualifying Dependent as defined in
Section 7.2(d)(1)(or deemed to be,as described in Section 7.2(d)(1)pursuant to Section 7.2(d)(3)),or for a
Qualifying Dependent as defined in Section 7.2(d)(2)(or deemed to be,as described in Section 7.2(d)(2)
pursuant to Section 7.2(d)(3))who regularly spends at least 8 hours per day in the Participant's household;
(2) If the expense is incurred outside the Participant's home at a facility that provides care for a fee,
payment,or grant for more than-6 individuals who do not regularly reside at the facility,the facility must
comply with all applicable state and local laws and regulations,including licensing requirements,if any;and
(3) Employment-Related Day Care Expenses of a Participant shall not include amounts paid or
incurred to a child of such Participant who is under the age of 19 or to an individual who is a Dependent of
such Participant or such Participant's Spouse.
(d) "Qualifying Dependent"means,for Day Care Flexible Spending Arrangement purposes,
(1) a Participant's Dependent(as defined in Code Section 152(a)(1))who has not attained age 13;
(2) a Dependent or the Spouse of a Participant who is physically or mentally incapable of caring for
himself or herself and has the same principal place of abode as the Participant for more than one-half of
such taxable year or
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(3) a child that is deemed to be a Qualifying Dependent described in paragraph(1)or(2)above,
whichever is appropriate,pursuant to Code Section 21(e)(5).
(e) The definitions of Article I are hereby incorporated by reference to the extent necessary to interpret
and apply the provisions of this Day Care Flexible Spending Arrangement.
7.3 DAY CARE FLEXIBLE SPENDING ARRANGEMENTS
The Administrator shall establish a Day Care Flexible Spending Arrangement for each Participant who elects to apply
Cafeteria Plan Benefit Dollars to Day Care Flexible Spending Arrangement benefits.
7.4 INCREASES IN DAY CARE FLEXIBLE SPENDING ARRANGEMENTS
A Participant's Day Care Flexible Spending Arrangement shall be increased each pay period by the portion of
Cafeteria Plan Benefit Dollars that he has elected to apply toward his Day Care Flexible Spending Arrangement pursuant to
elections made under Article V hereof.
7.5 DECREASES IN DAY CARE FLEXIBLE SPENDING ARRANGEMENTS
A Participants Day Care Flexible Spending Arrangement shall be reduced by the amount of any Employment-Related
Day Care Expense reimbursements paid or incurred on behalf of a Participant pursuant to Section 7.12 hereof.
7.6 ALLOWABLE DAY CARE REIMBURSEMENT
Subject to limitations contained in Section 7.9 of this Program,and to the extent of the amount contained in the
Participant's Day Care Flexible Spending Arrangement,a Participant who incurs Employment-Related Day Care Expenses
shall be entitled to receive from the Employer full reimbursement for the entire amount of such expenses incurred during the
Plan Year or portion thereof during which he is a Participant.
7.7 ANNUAL STATEMENT OF BENEFITS
On or before January 31st of each calendar year,the Employer shall furnish to each Employee who was a Participant
and received benefits under Section 7.6 during the prior calendar year,a statement of all such benefits paid to or on behalf of
such Participant during the prior calendar year.This statement is set forth on the Participant's Form W-2.
7.8 FORFEITURES
The amount in a Participant's Day Care Flexible Spending Arrangement as of the end of any Plan Year(and after the
processing of all claims for such Plan Year pursuant to Section 7.12 hereof)shall be forfeited and credited to the benefit plan
surplus. In such event,the Participant shall have no further claim to such amount for any reason.
7.9 LIMITATION ON PAYMENTS
(a) Code limits.Notwithstanding any provision contained in this Article to the contrary,amounts paid
from a Participant's Day Care Flexible Spending Arrangement in or on account of any taxable year of the Participant
shall not exceed the lesser of the Earned Income limitation described in Code Section 129(b)or$5,000($2,500 if a
separate tax return is filed by a Participant who is married as determined under the rules of paragraphs(3)and(4)of
Code Section 21(e)).
7.10 NONDISCRIMINATION REQUIREMENTS
(a) Intent to be nondiscriminatory.It is the intent of this Day Care Flexible Spending Arrangement
that contributions or benefits not discriminate in favor of the group of employees in whose favor discrimination may
not occur under Code Section 129(d).
(b) 25%test for shareholders.It is the intent of this Day Care Flexible Spending Arrangement that
not more than 25 percent of the amounts paid by the Employer for Day Care assistance during the Plan Year will be
provided for the class of individuals who are shareholders or owners(or their Spouses or Dependents),each of whom
(on any day of the Plan Year)owns more than 5 percent of the stock or of the capital or profits interest in the
Employer.
(c) Adjustment to avoid test failure.If the Administrator deems it necessary to avoid discrimination
or possible taxation to a group of employees in whose favor discrimination may not occur in violation of Code Section
129 it may,but shall not be required to,reject any elections or reduce contributions or non-taxable benefits in order to
assure compliance with this Section.Any act taken by the Administrator under this Section shall be carried out in a
uniform and nondiscriminatory manner. If the Administrator decides to reject any elections or reduce contributions or
Benefits,it shall be done in the following manner.First,the Benefits designated for the Day Care Flexible Spending
Arrangement by the affected Participant that elected to contribute the highest amount to such account for the Plan
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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 Day Care Flexible Spending Arrangement for the Plan Year.This process shall
continue until the nondiscrimination tests set forth in this Section are satisfied.Contributions which are not utilized to
provide Benefits to any Participant by virtue of any administrative act under this paragraph shall be forfeited.
7.11 COORDINATION WITH CAFETERIA PLAN
All Participants under the Cafeteria Plan are eligible to receive Benefits under this Day Care Flexible Spending
Arrangement.The enrollment and termination of participation under the Cafeteria Plan shall constitute enrollment and
termination of participation under this Day Care Flexible Spending Arrangement. In addition,other matters concerning
contributions,elections and the like shall be governed by the general provisions of the Cafeteria Plan.
7.12 DAY CARE FLEXIBLE SPENDING ARRANGEMENT CLAIMS
The Administrator shall direct the payment of all such Day Care claims to the Participant upon the presentation to the
Administrator of documentation of such expenses in a form satisfactory to the Administrator. However, in the Administrator's
discretion,payments may be made directly to the service provider. In its discretion in administering the Plan,the Administrator
may utilize forms and require documentation of costs as may be necessary to verify the claims submitted.At a minimum,the
form shall include a statement from an independent third party as proof that the expense has been incurred 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 Day Care Expenses submit a statement which may contain some
or all of the following information:
(a) The Dependent or Dependents for whom the services were performed;
(b) The nature of the services performed for the Participant,the cost of which he wishes
reimbursement;
(c) The relationship,if any,of the person performing the services to the Participant;
(d) If the services are being performed by a child of the Participant,the age of the child;
(e) A statement as to where the services were performed;
(f) If any of the services were performed outside the home,a statement as to whether the Dependent
for whom such services were performed spends at least 8 hours a day in the Participant's household;
•
(g) If the services were being performed in a day care center,a statement:
(1) that the day care center complies with all applicable laws and regulations of the state of residence,
(2) that the day care center provides care for more than 6 individuals(other than individuals residing at
the center),and
(3) of the amount of fee paid to the provider.
(h) If the Participant is married,a statement containing the following:
(1) the Spouse's salary or wages if he or she is employed,Or
(2) if the Participants Spouse is not employed,that
(I) he or she is incapacitated,or
(ii) he or she is a full-time student attending an educational institution and the months during
the year which he or she attended such institution.
(i) 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.
ARTICLE VIII
BENEFITS AND RIGHTS
8.1 CLAIM FOR BENEFITS
(a) Insurance claims.Any claim for Benefits underwritten by Insurance Contract(s)shall be made to
the Insurer. If the Insurer denies any claim,the Participant or beneficiary shall follow the Insurer's claims review
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procedure.
(b) Health and Day Care Flexible Spending Arrangement Claims.The Participant must submit all
claims no later than 90 days after the end of the Plan Year.Any claims submitted after that time will not be
considered.
If a claim under the Plan is denied in whole or in part,the Participant will receive written notification.The
notification will include the reasons for the denial,with reference to the specific provisions of the Plan on which the
denial was based,a description of any additional information needed to process the claim and an explanation of the
claims review procedure.
A level one appeal must be submitted within 180 days of receipt of the denial. Any such request should be
accompanied by documents or records in support of the appeal.The Participant may review pertinent documents and
submit issues and comments in writing.The claims administrator will review the claim and provide,within 30 days,a
written response to the appeal(extended by reasonable time if necessary). In this response,the claims administrator
will explain the reason for the decision,with specific reference to the provisions of the Plan on which the decision is
based. If the Participant disagrees with the level one appeal decision the Participant may submit a request for a level
two appeal to be determined by the Employer. The Participant must submit the request for level two appeal within 60
days of receipt of the level one notice. The Participant will be notified within 30 days after the Employer receives the
appeal(extended by reasonable time if necessary).The Employer has the exdusive right to interpret the appropriate
plan provisions. Decisions of the Employer are conclusive and binding.
The following timetable for claims applies:
Notification of whether claim is accepted or denied 30 days
Extension due to matters beyond the control of the Plan 15 days
Denial or insufficient information on the claim:
Notification of 15 days
Response by Participant 45 days
Review of claim denial 30 days
The Participant must file the appeal by submitting a written request by email,fax,or mail to Flex-Plan and
indicate either level one or two appeal on the email,fax,or letter.
Email:claims @flex-plan.com
Fax:425-451-7002 or 866-535-9227
Mail:Flex-Plan Services,PO Box 53250, Bellevue WA 98015.
The response will provide written or electronic notification of any claim denial.The notice will state:
(a) The specific reason or reasons for the denial;
(b) Reference to the specific Plan provisions on which the denial was based;
(c) A description of any additional material or information necessary for the Participant to perfect the
claim and an explanation of why such material or information is necessary;
(d) A description of the Plan's review procedures and the time limits applicable to such procedures.
(e) A statement that the Participant is entitled to receive, upon request and free of charge,reasonable
access to,and copies of,all documents, records,and other information relevant to the claim;and
(f) If the denial was based on an internal rule,guideline,protocol,or other similar criterion,the specific
rule,guideline,protocol,or criterion will be provided free of charge.If this is not practical,a statement will be
included that such a rule,guideline,protocol,or criterion was relied upon in making the denial and a copy
will be provided free of charge to the Participant upon request.
When the Participant receives a denial,the Participant will have 180 days following receipt of the notification
in which to appeal the decision.The Participant may submit written comments,documents,records,and other
information relating to the claim. If the Participant requests,the Participant will be provided,free of charge,
reasonable access to,and copies of,all documents,records,and other information relevant to the claim.
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The period of time within which a denial on review is required to be made will begin at the time an appeal is
filed in accordance with the procedures of the Plan.This timing is without regard to whether all the necessary
information accompanies the filing.
A document, record,or other information shall be considered relevant to a claim if it:
(a) was relied upon in making the claim determination;
(b) was submitted,considered,or generated in the course of making the claim determination,without
regard to whether it was relied upon in making the claim determination;
(c) demonstrated compliance with the administrative processes and safeguards designed to ensure
and to verify that claim determinations are made in accordance with Plan documents and Plan provisions
have been applied consistently with respect to all claimants;or
(d) constituted a statement of policy or guidance with respect to the Plan concerning the denied claim.
The review will take into account all comments,documents,records,and other information submitted by the
Participant relating to the claim,without regard to whether such information was submitted or considered in the initial
claim determination.The review will not afford deference to the initial denial and will be conducted by a fiduciary of
the Plan who is neither the individual who made the adverse determination nor a subordinate of that individual.
(e) Forfeitures.Any balance remaining in the Participant's Day Care Flexible Spending Arrangement or Health Care
Flexible Spending Arrangement as of the end of the time for claims reimbursement for each Plan Year and Grace Period(if
applicable)shall be forfeited and deposited in the benefit plan surplus of the Employer pursuant to Section 6.3 or Section 7.8,
whichever is applicable, unless the Participant had made a claim for such Plan Year,in writing,which has been denied or is
pending;in which event the amount of the claim shall be held in his account until the claim appeal procedures set forth above
have been satisfied or the claim is paid.If any such claim is denied on appeal,the amount held beyond the end of the Plan
Year shall be forfeited and credited to the benefit plan surplus.
82 APPLICATION OF BENEFIT PLAN SURPLUS
Any forfeited amounts credited to the benefit plan surplus by virtue of the failure of a Participant to incur a qualified
expense or seek reimbursement in a timely manner may,but need not be,separately accounted for after the close of the Plan
Year(or after such further time specified herein for the filing of claims)in which such forfeitures arose. In no event shall such
amounts be carried over to reimburse a Participant for expenses incurred during a subsequent Plan Year for the same or any
other Benefit available under the Plan;nor shall amounts forfeited by a particular Participant be made available to such
Participant in any other form or manner,except as permitted by Treasury regulations.Amounts in the benefit plan surplus shall
be used to defray any administrative costs and experience losses or used to provide additional benefits under the Plan.
ARTICLE IX
ADMINISTRATION
9.1 PLAN ADMINISTRATION
The Employer shall be the Administrator,unless the Employer elects otherwise.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.
If the Employer elects,the Employer shall appoint one or more Administrators.Any person,including,but not limited
to,the Employees of the Employer,shall be eligible to serve as an 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 be removed by the Employer by delivery of written notice of removal,to take effect at a date specified therein,
or upon delivery to the Administrator if no date is specified.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.
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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 shall be paid if the Administrator decides in its
discretion that the applicant is entitled to them.This authority specifically permits the Administrator to settle disputed
claims for benefits and any other disputed claims made against the Plan;
(h) 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.
9.2 EXAMINATION OF RECORDS
The Administrator shall make available to each Participant, Eligible Employee and any other Employee of the
Employer such records as pertain to their interest under the Plan for examination at reasonable times during normal business
hni irc.
9.3 PAYMENT OF EXPENSES
Any reasonable administrative expenses shall be paid by the Employer unless the Employer determines that
administrative costs shall be borne by the Participants under the Plan or by any Trust Fund which may be established
hereunder.The Administrator may impose reasonable conditions for payments,provided that such conditions shall not
discriminate in favor of highly compensated employees.
9.4 INSURANCE CONTROL CLAUSE
In the event of a conflict between the terms of this Plan and the terms of an Insurance Contract of an independent
third party Insurer whose product is then being used in conjunction with this Plan,the terms of the Insurance Contract shall
control as to those Participants receiving coverage under such Insurance Contract.For this purpose,the Insurance Contract
shall control in defining the persons eligible for insurance,the dates of their eligibility,the conditions which must be satisfied to
become insured,if any,the benefits Participants are entitled to and the circumstances under which insurance terminates.
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9.5 INDEMNIFICATION OF ADMINISTRATOR
The Employer agrees to indemnify and to defend to the fullest extent permitted by law any Employee serving as the
Administrator or as a member of a committee designated as Administrator(including any Employee or former Employee who
previously served as Administrator or as a member of such committee)against all liabilities,damages,costs and expenses
(including attorney's fees and amounts paid in settlement of any claims approved by the Employer)occasioned by any act or
omission to act in connection with the Plan, if such act or omission is in good faith.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 AMENDMENT
The Employer,at any time or from time to time,may amend any or all of the provisions of the Plan without the
consent of any Employee or Participant. No amendment shall have the effect of modifying any benefit election of any
Participant in effect at the time of such amendment,unless such amendment is made to comply with Federal,state or local
laws,statutes or regulations.
10.2 TERMINATION
The Employer 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 Contract shall be paid in accordance with the terms of
the Contract.
No further additions shall be made to the Health Care Flexible Spending Arrangement or Day Care Flexible Spending
Arrangement, but all payments from such fund shall continue to be made according to the elections in effect until 90 days after
the termination date of the Plan.Any amounts remaining in any such fund or account as of the end of such period shall be
forfeited and deposited in the benefit plan surplus after the expiration of the filing period.
ARTICLE XI
MISCELLANEOUS
11.1 PLAN INTERPRETATION •
All provisions of this Plan shall be interpreted and applied in a uniform,nondiscriminatory manner.This Plan shall be
read in its entirety and not severed except as provided in Section 11.11.
11.2 GENDER AND NUMBER
Wherever any words are used herein in the masculine,feminine or neuter gender,they shall be construed as though
they were also used in another gender in all cases where they would so apply,and whenever any words are used herein in the
singular or plural form,they shall be construed as though they were also used in the other form in all cases where they would
so apply.
11.3 WRITTEN DOCUMENT
This Plan,in conjunction with any separate written document which may be required by law, is intended to satisfy the
written Plan requirement of Code Section 125 and any Treasury regulations thereunder relating to cafeteria plans.
11.4 EXCLUSIVE BENEFIT
This Plan shall be maintained for the exclusive benefit of the Employees who participate in the Plan.
11.5 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute an employment contract between the Employer and any Participant or to
be a consideration or an inducement for the employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the service of the Employer or to interfere with the
right of the Employer to discharge any Participant or Employee at any time regardless of the effect which such discharge shall
have upon him as a Participant of this Plan.
11.6 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required to do or perform any act or matter or
thing,it shall be done and performed by a person duly authorized by its legally constituted authority.
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11.7 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Administrator nor the Employer makes any commitment or guarantee that any amounts paid to or for the
benefit of a Participant under the Plan will be excludable from the Participant's gross income for federal or state income tax
purposes,or that any other federal or state tax treatment will apply to or be available to any Participant. It shall be the
obligation of each Participant to determine whether each payment under the Plan is excludable from the Participant's gross
income for federal and state income tax purposes,and to notify the Employer if the Participant has reason to believe that any
such payment is not so excludable. Notwithstanding the foregoing,the rights of Participants under this Plan shall be legally
enforceable.
11.8 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS
If any Participant receives one or more payments or reimbursements under the Plan that are not for a permitted
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(p lus an y penalties)t h at the Part rc i
ant
would have owed if the payments or reimbursements had been made to the Participant as regular cash compensation,plus
the Participant's share of any Social Security tax that would have been paid on such compensation,less any such additional
income and Social Security tax actually paid by the Participant.
11.9 FUNDING
Unless otherwise required by law,contributions to the Plan need not be placed in trust or dedicated to a specific
Benefit,but may instead be considered general assets of the Employer. Furthermore,and unless otherwise required by law,
nothing herein shall be construed to require the Employer or the Administrator to maintain any fund or segregate any amount
for the benefit of any Participant,and no Participant or other person shall have any claim against, right to,or security or other
interest in,any fund, account or asset of the Employer from which any payment under the Plan may be made.
11.10 GOVERNING LAW
This Plan is governed by the Code and the Treasury regulations issued thereunder(as they might be amended from
time to time). In no event shall the Employer guarantee the favorable tax treatment sought by this Plan.To the extent not
preempted by Federal law,the provisions of this Plan shall be construed,enforced and administered according to the laws of
the State of Washington.
11.11 SEVERABILITY
If any provision of the Plan is held invalid or unenforceable,its invalidity or unenforceability shall not affect any other
provisions of the Plan,and the Plan shall be construed and enforced as if such provision had not been included herein.
11.12 CAPTIONS
The captions contained herein are inserted only as a matter of convenience and for reference,and in no way define,
limit,enlarge or describe the scope or intent of the Plan,nor in any way shall affect the Plan or the construction of any
provision thereof.
11.13 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.
11.14 FAMILY AND MEDICAL LEAVE ACT(FMLA)
Notwithstanding anything in the Plan to the contrary, in the event any benefit under this Plan becomes subject to the
requirements of the Family and Medical Leave Act and regulations thereunder,this Plan shall be operated in accordance with
Regulation 1.125-3.
11.15 HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT(HIPAA)
Notwithstanding anything in this Plan to the contrary,this Plan shall be operated in accordance with HIPAA and
regulations thereunder.
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• •
11.16 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT(USERRA)
Notwithstanding any provision of this Plan to the contrary,contributions,benefits and service credit with respect to
qualified military service shall be provided in accordance with the Uniform Services Employment And Reemployment Rights Act
(USERRA)and the regulations thereunder.
11.17 COMPLIANCE WITH HIPAA PRIVACY STANDARDS
(a) Application.If 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 of an individual,including genetic
information and 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 designated and 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 official.The privacy official 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 provide certification to the Plan that it agrees to:
(1) Not use or further disclose the information other than as permitted or required by the Plan
documents or as required by law;
(2) Ensure that any agent or subcontractor,to whom it provides Protected Health Information received
from the Plan,agrees to the same restrictions and conditions that apply to the Employer with respect to such
information;
(3) Not use or disclose Protected Health Information for employment-related actions and decisions or
in connection with any other benefit or employee benefit plan of the Employer,
(4) Report to the Plan any use or disclosure of the Protected Health Information of which it becomes
aware that is inconsistent with the uses or disclosures permitted by this Section,or required by law;
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• •
(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
required by Section 164.504(f)(2)(iii)of the Privacy Standards and set out in(d)above.
11.18 COMPLIANCE WITH HIPAA ELECTRONIC SECURITY STANDARDS
Under the Security Standards for the Protection of Electronic Protected Health Information(45 CFR Part 164.300 et.
seq.,the"Security Standards"):
(a) Implementation.The Employer agrees to implement reasonable and appropriate administrative,
physical and technical safeguards to protect the confidentiality,integrity and availability of Electronic Protected Health
Information that the Employer creates,maintains or transmits on behalf of the Plan."Electronic Protected Health
Information"shall have the same definition as set out in the Security Standards,but generally shall mean Protected
Health Information that is transmitted by or maintained in electronic media.
(b) Agents or subcontractors shall meet security standards.The Employer shall ensure that any
agent or subcontractor to whom it provides Electronic Protected Health Information shall agree, in writing,to
implement reasonable and appropriate security measures to protect the Electronic Protected Health Information.
(c) Employer shall ensure security standards.The Employer shall ensure that reasonable and
appropriate security measures are implemented to comply with the conditions and requirements set forth in Section
11.17.
11.19 MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT
Notwithstanding anything in the Plan to the contrary,the Plan will comply with the Mental Health Parity and Addiction
Equity Act and ERISA Section 712.
11.20 GENETIC INFORMATION NONDISCRIMINATION ACT(GINA)
Notwithstanding anything in the Plan to the contrary,the Plan will comply with the Genetic Information Nondiscrimination
Act
11.21 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.
11.22 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
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IN WITNESS WHEREOF,this Plan document is hereby executed this day of
City of Federal Way
By
EMPLOYER
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