HomeMy WebLinkAbout2022-93 CC ResolutionRESOLUTION NO.2022-93
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TEMECULA ADOPTING THE AMENDED AND
RESTATED CITY OF TEMECULA SECTION 125
CAFETERIA PLAN AND THE AMENDED AND RESTATED
SECTION 125 CAFETERIA PLAN ADOPTION
AGREEMENT
THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS
FOLLOWS:
Section 1. The City Council adopted the City of Temecula Flexible Benefits Plan
Document on September 18, 1990, to provide a Section 125 Cafeteria plan, including any
applicable Healthcare Flexible Spending Account Plan, Dependent Care Assistance Program, and
group health, dental and vision insurance to eligible employees.
Section 2. The attached amended and restated Adoption Agreement and Plan
Document have been revised as follows:
A. To update the maximum carryover amount for the Healthcare Flexible Spending
Account to 20% of the maximum amount permitted under Code § 125(i) in
accordance with the IRS change;
B. To establish eligible opt out arrangement requirements for employees receiving
cash in lieu of City -sponsored health insurance;
C. To incorporate terms consistent with applicable memoranda of understanding,
compensation plans, policies, resolutions, contracts, and City practice throughout
the Plan Document;
D. To incorporate a claims substantiation procedure and appeals procedure consistent
with third -party administrator Ameriflex for the Healthcare Flexible Spending
Account and Dependent Care Assistance Program; and
E. To retroactively adopt amendments for plan year 2021 pursuant to the Consolidated
Appropriations Act of 2021 for the COVID-19 flexible changes, including:
1) To allow prospective mid -year election changes for the Healthcare Flexible
Spending Account and Dependent Care Assistance Program;
2) To incorporate an unlimited carryover of unused Healthcare Flexible Spending
Account funds;
3) To extend the grace period for Dependent Care Assistance Program Extended
Grace Period/Claims Extension Period; and
4) To allow the Spend Down of Healthcare Flexible Spending Account once
participation has ceased.
Section 3. Approval of the Plan Document Amendment will provide the framework
for staff to take such actions that are deemed necessary and proper in order to implement the Plan,
and to setup adequate accounting and administrative procedures to provide employee benefits
under the Plan.
Section 4. The City Council hereby adopts the Amended and Restated Section 125
Cafeteria Plan and the Amended and Restated Section 125 Cafeteria Plan Adoption Agreement as
attached hereto. The Mayor is authorized to execute the Amended and Restated Section 125
Cafeteria Plan Adoption Agreement on behalf of the City.
Section 5. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula
this 13'h day of December, 2022.
ATT
Randi Johl, City Clerk
[SEAL]
1
Matt Rahn, Mayor
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STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, do hereby certify that the foregoing
Resolution No. 2022-93 was duly and regularly adopted by the City Council of the City of
Temecula at a meeting thereof held on the 13t' day of December, 2022, by the following vote:
AYES: 5 COUNCIL MEMBERS: Alexander, Edwards, Rahn, Schwank,
Stewart
NOES: 0 COUNCIL MEMBERS
ABSTAIN: 0 COUNCIL MEMBERS:
ABSENT: 0 COUNCIL MEMBERS
None
None
None
Randi Johl, City Clerk
3
1
1
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•L~^� of T EmEc�r9
Adoption Agreement
City of Temecula 89
Section 125 Cafeteria Plan
Amended and Restated January 1, 2023
The undersigned Employer, by executing this Adoption Agreement, elects to adopt the
accompanying Section 125 Cafeteria Plan by adopting said Plan Document in full. The
Employer makes the following elections granted under the provisions of the Section 125
Cafeteria Plan.
1. Name of the Employer: City of Temecula
The Employer shall be the Plan Sponsor and Plan Administrator.
2. Effective Date:
❑ This Section 125 Cafeteria Plan shall be effective as of
® This amended Section 125 Cafeteria Plan shall be effective as of January 1, 2023.
® If amended and restated, the Section 125 Cafeteria Plan was originally effective on
September 18, 1990.
3. Plan and Plan Year:
The Name of the Plan shall be the City of Temecula Section 125 Cafeteria Plan (the
"Plan"). The Plan Year shall begin on January 1 st and end on December 31 St.
4. Plan Number: 501
5.
Employer's Principal Office:
This Plan shall be governed under the laws of the:
® State of California
❑ Commonwealth of
6. Eligible Employees:
All Employees shall be eligible to participate in the Plan as specified in the City of
Temecula Schedule of Authorized Positions, the Memorandum of Understanding between
the City of Temecula and Teamsters Local 911, the City of Temecula Management
Compensation Plan, and the City of Temecula City Council Compensation Plan, except:
■ Any self-employed person(s), within the meaning of Code Section 401(c), including
independent contractors, a greater than 2% shareholder in a Subchapter S
corporation, a partner in a partnership, or any owner or member of a limited liability
company that is treated like a partnership for tax purposes;
■ A relative, within the meaning of IRC Section 318, of one of the above self-
employed person(s);
Section 125 Cafeteria Plan Adoption Agreement (1/1/2023) Page 1 of 3
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• Commission salesperson;
■ Any Leased Employee, as well as any independent contractor, or other "statutory
employee" who is not treated as a common law employee of the Employer for
payroll purposes, regardless of any other court or administrative agency
determination; AND
■ Nonresident Aliens.
7. Plan Entry Date/Waiting Period:
Employees eligible to participate may become Participants:
® Same as Employer's Group Health Plan.
❑ days after date of hire (but subject to any shorter limitation period if
mandated under applicable law).
8. Benefits:
The following Benefit Options shall be included in the Plan:
® Healthcare Flexible Spending Account subject to an annual limit of $3,050 in taxable
year 2023 and as adjusted under IRC Section 125(i) for other taxable years (as
indexed for a 12-month Plan Year or prorated for a short Plan Year).
® Limited -Purpose Healthcare Flexible Spending Account subject to an annual limit of
$3,050 in taxable year 2023 and as adjusted under IRC Section 125(i) for other taxable
years (as indexed for a 12-month Plan Year or prorated for a short Plan Year).
® Dependent Care Assistance Program subject to the maximums contained in Section
7.9 of the Plan Document.
❑ Adoption Assistance Program.
® The Employer's Group Health Insurance (including health insurance, dental and vision
insurance, AD&D, etc.).
❑ Group Term Life Insurance.
❑ Disability Insurance.
❑ Tax -Free Transportation Program.
❑ Employee Health Savings Account Contributions.
Section 125 Cafeteria Plan Adoption Agreement (1/1/2023) Page 2 of 3
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9. Contributions:
The contributions for this Plan shall be:
❑ Employee (Salary Redirection) contributions only;
❑ Employer Contributions only, which shall be: $ annually per Participant
of which $ that is convertible to cash compensation. A Participant will be
credited on a (pay period, annual) basis, or
® Both Employee (Salary Redirection) and Employer Contributions. Employer
Contributions, a portion of which is convertible to cash compensation, shall be provided
in accordance with the Memorandum of Understanding between the City of Temecula
and Teamsters Local 911, the City of Temecula Management Compensation Plan, and
the City of Temecula City Council Compensation Plan, as these Plans or MOU may be
amended.
10. Claims Extension Period:
The Healthcare Flexible Spending Account ❑ shall ® shall not be subject to the terms and
conditions of a Claims Extension Period.
The Dependent Care Assistance Program ® shall ❑ shall not be subject to the terms and
conditions of Section 7.8 Forfeitures and Claims Extension Period.
11. Carryover Provision:
The Healthcare Flexible Spending Account ® shall ❑ shall not be subject to the terms
and conditions of Section 6.3 Forfeitures and Carryover Provision.
15. Affiliated Employers:
The following Employers have adopted this Plan: N/A
16. Authorized Signatures:
Matt Rahn, Mayor
Aaron Adams, City Manager
Date
Date
Section 125 Cafeteria Plan Adoption Agreement (1/1/2023) Page 3 of 3
City of Temecula
Section 125
Cafeteria Plan Document
As Amended and Restated
January 1, 2023 for
Section 125 Cafeteria Plan
Section 125 Cafeteria Plan Document
Table of Contents
ARTICLE I - DEFINITIONS ........................................................................................................ 1
ARTICLE II - PARTICIPATION .................................................................................................. 6
2.1 ELIGIBILITY ................................................................................................................. 6
2.2 EFFECTIVE DATE OF PARTICIPATION ..................................................................... 6
2.3 APPLICATION TO PARTICIPATE ............................................................................... 6
2.4 TERMINATION OF PARTICIPATION .......................................................................... 7
2.5 CHANGE OF EMPLOYMENT STATUS ....................................................................... 7
2.6 FAMILY AND MEDICAL LEAVE ACT OF 1993 ........................................................... 8
2.7 TERMINATION OF EMPLOYMENT ............................................................................ 9
2.8 DEATH OF A PARTICIPANT ..................................................................................... 12
ARTICLE III - CONTRIBUTIONS TO THE PLAN .................................................................... 12
3.1 SALARY REDIRECTION ........................................................................................... 12
3.2 APPLICATION OF CONTRIBUTIONS ....................................................................... 13
3.3 PERIODIC CONTRIBUTIONS ................................................................................... 13
ARTICLE IV - BENEFITS ........................................................................................................ 13
4.1 BENEFIT OPTIONS ................................................................................................... 13
4.2 HEALTHCARE FLEXIBLE SPENDING ACCOUNT BENEFIT ................................... 13
4.3 DEPENDENT CARE ASSISTANCE PROGRAM BENEFIT ....................................... 13
4.4 RESERVED ............................................................................................................... 14
4.5 INSURANCE BENEFIT .............................................................................................. 14
4.6 CASH BENEFIT ......................................................................................................... 14
4.7 NONDISCRIMINATION REQUIREMENTS ................................................................ 15
ARTICLE V - PARTICIPANT ELECTIONS .............................................................................. 16
5.1 INITIAL ELECTIONS .................................................................................................. 16
5.2 SUBSEQUENT ANNUAL ELECTIONS ...................................................................... 16
5.3 FAILURE TO ELECT.................................................................................................. 16
5.4 CHANGE OF ELECTIONS ......................................................................................... 17
5.5 CONSISTENCY REQUIREMENT .............................................................................. 21
ARTICLE VI - HEALTHCARE FLEXIBLE SPENDING ACCOUNT .......................................... 21
6.1 ESTABLISHMENT OF PLAN ..................................................................................... 21
6.2 DEFINITIONS ............................................................................................................ 22
Section 125 Cafeteria Plan Document
6.3 FORFEITURES AND CARRYOVER .......................................................................... 23
6.4 LIMITATION ON ALLOCATIONS ............................................................................... 24
6.5 NONDISCRIMINATION REQUIREMENTS ................................................................ 24
6.6 COORDINATION WITH SECTION 125 CAFETERIA PLAN ...................................... 25
6.7 HEALTHCARE FLEXIBLE SPENDING ACCOUNT CLAIMS ..................................... 25
ARTICLE VII - DEPENDENT CARE ASSISTANCE PROGRAM ............................................. 26
7.1 ESTABLISHMENT OF PROGRAM ............................................................................ 26
7.2 DEFINITIONS ............................................................................................................ 27
7.3 DEPENDENT CARE ASSISTANCE ACCOUNTS ..................................................... 28
7.4 INCREASES IN DEPENDENT CARE ASSISTANCE ACCOUNTS ........................... 28
7.5 DECREASES IN DEPENDENT CARE ASSISTANCE ACCOUNTS .......................... 28
7.6 ALLOWABLE DEPENDENT CARE ASSISTANCE REIMBURSEMENT .................... 29
7.7 ANNUAL STATEMENT OF BENEFITS ...................................................................... 29
7.8 FORFEITURES AND CLAIMS EXTENSION PERIOD ............................................... 29
7.9 LIMITATION ON PAYMENTS .................................................................................... 30
7.10 NONDISCRIMINATION REQUIREMENTS ................................................................ 30
7.11 COORDINATION WITH SECTION 125 CAFETERIA PLAN ...................................... 31
7.12 DEPENDENT CARE ASSISTANCE PROGRAM CLAIMS ......................................... 31
7.13 REIMBURSEMENTS FROM DEPENDENT CARE ASSISTANCE PROGRAM AFTER
TERMINATION OF PARTICIPATION ...................................................................... 33
S PROCEDURE ............................................................................... 34
8.1 PROCEDURE IF BENEFITS ARE DENIED UNDER THIS PLAN ............................ 34
ARTICLE IX - RESERVED ...................................................................................................... 34
ARTICLE X - RESERVED ....................................................................................................... 34
ARTICLE XI - RESERVED ...................................................................................................... 34
ARTICLE XII - ADMINISTRATION .......................................................................................... 35
12.1 PLAN ADMINISTRATION .......................................................................................... 35
12.2 METHOD OF BENEFIT PAYMENT ........................................................................... 36
12.3 EXAMINATION OF RECORDS .................................................................................. 38
12.4 PAYMENT OF EXPENSES ........................................................................................ 38
12.5 INSURANCE CONTROL CLAUSE ............................................................................ 38
12.6 INDEMNIFICATION OF ADMINISTRATOR .............................................................. 38
ARTICLE XIII - AMENDMENT OR TERMINATION OF PLAN ................................................. 39
13.1 AMENDMENT ............................................................................................................ 39
Section 125 Cafeteria Plan Document
13.2 TERMINATION .......................................................................................................... 39
ARTICLE XIV - HIPAA PRIVACY REQUIREMENTS .............................................................. 39
14.1 DEFINITIONS ............................................................................................................ 39
14.2 DISCLOSURE OF SUMMARY HEALTH INFORMATION .......................................... 42
14.3 DISCLOSURE OF PHI ............................................................................................... 42
14.4 ADEQUATE SEPARATIONS ..................................................................................... 43
14.5 USES AND DISCLOSURES ...................................................................................... 43
ARTICLE XV - MISCELLANEOUS .......................................................................................... 44
15.1 PLAN INTERPRETATION .......................................................................................... 44
15.2 GENDER AND NUMBER ........................................................................................... 44
15.3 WRITTEN DOCUMENT ............................................................................................. 44
15.4 EXCLUSIVE BENEFIT ............................................................................................... 45
15.5 RIGHTS .......................................................................................... 45
15.6 ACTION BY THE EMPLOYER ................................................................................... 45
15.7 ................................................................... 45
15.8 NO GUARANTEE OF TAX CONSEQUENCES ......................................................... 46
15.9 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS ........................................ 46
15.10 FUNDING ................................................................................................................... 46
15.11 GOVERNING LAW .................................................................................................... 46
15.12 SEVERABILITY .......................................................................................................... 46
15.13 CAPTIONS ................................................................................................................. 47
15.14 CONTINUATION OF COVERAGE ............................................................................. 47
15.15 UNIFORM SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS (USERRA)
ACT ............................................................................................................................ 47
15.16 GENETIC INFORMATION NONDISCRIMINATION ACT ........................................... 47
15.17 MENTAL HEALTH PARITY AND ADDICTION ACT .................................................. 47
15.18 NCER RIGHTS ACT ................................................... 47
15.19 EALTH PROTECTION ACT ................................. 47
ARTICLE XVI - CONSOLIDATED APPROPRIATIONS ACT OF 2021.................................. 48
16.1 CONSOLIDATED APPROPRIATIONS ACT OF 2021 ............................................. 48
Section 125 Cafeteria Plan Document (1/1/2023) Page 1 of 44
CITY OF TEMECULA
SECTION 125 CAFETERIA PLAN
INTRODUCTION
The Plan Sponsor designated in the City of Teme doption Agreement (the
City of Temecula hereinafter referred to as t
ployees. Its purpose is to reward them by
providing Benefits for those Employees who shall qualify hereunder and their qualifying
Dependents and Spouses. 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 and to
reimburse the Eligible Employees of the Employer for allowable expenses incurred by them,
ll otherwise be referred to by the Plan Name
Adoption Agreement, applicable collective
compensation plans, resolutions, or contracts.
The intention of the Employer is that, wherever appropriate, portions of the Plan shall qualify
ion 125 of the Internal Revenue Code of 1986,
as amended, and that the Benefits which an Employee elects to receive under such portions of
the Plan be includable or excl income under Section 125(a) and
other applicable sections of the Internal Revenue Code of 1986, as amended.
ARTICLE I
DEFINITIONS
The following words and phrases as used herein shall have the following meanings, unless a
different meaning is plainly required by the context:
or means the Plan Sponsor unless the Plan
Sponsor has delegated any or all of its authority as the Administrator under this Plan to any
third-party, pursuant to the terms of this Plan and in accordance with the terms of any
applicable Service Agreement.
means the Employer and any corporation identified in the
ich 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) that is under common control (as defined in Code Section 414(c)) with the
Employer; any organization (whether or not incorporated) that 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).
means any of the optional benefit choices selected by the Participant as
outlined under Article IV below or as other
Agreement.
Section 125 Cafeteria Plan Document (1/1/2023) Page 2 of 44
means the carryover of any amount remaining unused in the
Healthcare Flexible Spending Account as of the end of any Plan Year, pursuant to Section 6.3.
For Plan Years prior to 2022, the maximum carryover amount is $500. For Plan Years
beginning 2022, the maximum carryover amount may be changed by the Plan Administrator
and shall be communicated to Employees through the election of Benefits form or another
document, provided that the maximum carryover amount shall not exceed 20% of the
maximum amount permitted under Code §125(i).
means the period that ends on the 15th day of the third
month immediately following the end of the most recent Plan Year, pursuant to Section 7.8.
means the Internal Revenue Code of 1986, as amended or replaced from time
to time, and which shall also include any governing Regulations or applicable guidance
thereunder.
means the total cash remuneration received by the Participant from
the Employer during a Plan Year prior to any reductions pursuant to a Salary Redirection
Agreement authorized hereunder. Compensation shall include overtime, commissions, and
bonuses.
means any individual who is defined under an Insurance Contract or who
is a Qualifying Child or Qualifying Relative who qualifies as a dependent under an Insurance
Contract or under Code Section 152 (as modified by Code Section 105(b)), as applicable. A
Dependent also includes an adult child of a Participant who as of the end of the calendar year
has not attained age 26. A child for purposes of this Section 1.8 means an individual who is a
son, daughter, stepson, or stepdaughter of the Participant, a legally adopted individual of the
Participant, an individual who is lawfully placed with the Participant for legal adoption by the
Participant, or an eligible foster child who is placed with the Participant by an authorized
placement agency or by judgment, decree, or other order of any court of competent
jurisdiction. Notwithstanding anything in the Plan to the contrary, the Plan will comply with
means the Effective Date specif
Agreement.
means the period preceding the beginning of each Plan Year
established by the Administrator for the election of Benefits and Salary Redirection, such
period to be applied on a uniform and nondiscriminatory basis for all Employees and
Election Period shall be determined pursuant to
Section 5.1.
means any Employee who has satisfied the eligibility
requirements necessary to participate in the Plan as stated in the
Agreement or as specified in the City of Temecula Schedule of Authorized Positions, the
Memorandum of Understanding between the City of Temecula and Teamsters Local 911, the
City of Temecula Management Compensation Plan, or the City of Temecula City Council
Compensation Plan, as they may be amended, or other policies or contracts adopted by the
Employer.
Section 125 Cafeteria Plan Document (1/1/2023) Page 3 of 44
means an opt out arrangement that meets the
conditions of Section 4.6.
means any person who is employed by the Employer, but for all portions of
the Plan, generally excludes any person who is employed as an independent contractor or any
person who is considered self-employed under Code Section 401(c), as well as a greater than
two percent (2%) shareholder in a Subchapter S corporation, as defined under Code Section
1372(b), a partner in a partnership or an owner or member of a limited liability company that
elects partnership status on its tax return.
1.14 "Employer" means the Plan Sponsor and any Affiliated Employer which is listed on the
provided, however, that the Plan Sponsor retains authority as
Plan Administrator for all purposes under the Plan and retains sole authority to amend or
terminate the Plan in accordance with Article XIII.
means the contributions as
Adoption Agreement, or as specified in the Memorandum of Understanding between the City
of Temecula and Teamsters Local 911, the City of Temecula Management Compensation
Plan, or the City of Temecula City Council Compensation Plan, as they may be amended, or
other policies or contracts adopted by the Employer, made by the Employer pursuant to
Section 3.1 to enable a Participant to purchase Benefits. These contributions may consist of
Employer-provided Health Flex Contributions and non-Health Flex Contributions as specified in
the Memorandum of Understanding between the City of Temecula and Teamsters Local 911,
the City of Temecula Management Compensation Plan, or the City of Temecula City Council
Compensation Plan, as they may be amended, or other policies or contracts adopted by the
Employer. These contributions shall be allocated to the accounts established under the Plan
Article V and the cost of eligible Benefits
described under Article IV.
means the earlier of the Plan Effective Date or the date an Employee
becomes entitled to participate in the Plan as s
1.17 [Reserved.]
1.18 [Reserved.]
1.19 Health Flex Contribution ion that meets the following
requirements: (1) the Participant may not opt to receive the amount as a taxable benefit, (2)
the Participant may use the amount to pay for minimum essential coverage, and (3) the
Participant may use the amount exclusively to pay for medical care including dental and vision
care, within the meaning of Code § 213, including group health coverage and Healthcare
Flexible Spending Account benefits.
means, for the purposes of determining
discrimination, an Employee described in Code Section 125 and the Treasury Regulations
thereunder.
Section 125 Cafeteria Plan Document (1/1/2023) Page 4 of 44
means the benefits provided under any applicable insurance
program or policy included within the list of qualifying, nontaxable benefit programs that have
been selected as part of the Em
means any contract issued by an Insurer underwriting a Benefit.
means the plan of Insurance Benefits selected
on Agreement, which provides for the payment of Premium
Expenses under this Plan.
means any insurance company that underwrites a Benefit under this Plan or,
the Employer if the Benefit is self-funded and otherwise paid for out
assets or paid for through a separate trust established by the Employer.
means an employee defined in Code Section 416(I)(1) and the
Treasury Regulations thereunder.
1.26 means an Employer Contribution that does not meet
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.
means this instrument, including all amendments and attachments thereto.
means the 12-month period designat
Agreement. 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
of entry and ending on the last day of such Plan Year.
or
Benefits described in the Empl
means an individual who, unless otherwise described under Code
Section 152(b):
Is a child (as defined under Code Section 152(f)(1)) of the Employee, or a
dependent of such child, or a brother, sister, stepbrother or stepsister of the
Employee, or a descendent of any such relative;
Who has the same principal residence, if allowed under local law, as the
Employee for more than one-half of the current taxable year;
Is under the age of 26 as of the end of the Plan Year in which the Employee was
eligible under this Plan; and
Has not provided over one-half of his or her own support during the current Plan
Year.
Section 125 Cafeteria Plan Document (1/1/2023) Page 5 of 44
means an individual who, unless otherwise described under
Code Section 152(d) or (e):
Is a child (as defined under Code Section 152(f)(1)), or descendant of a child, or
a brother, sister, stepbrother, stepsister, father, mother or any of their ancestors, or
any other relative as described under Code Section 152(d)(2), including an individual
who has the same principal residence as the Employee and who is a member of the
Has (with the exception of certain handicapped dependents described under
Code Section 152(d)(4)) gross income for the Plan Year that is less than the
allowable income exemption amount (as defined under Code Section 151(d) for that
taxable year;
For whom the Employee provides over one-half of the individual
calendar year; and
Is not an otherwise Qualifying Child of the Employee for any portion of the Plan
Year.
means either temporary, proposed or final regulations, as applicable,
issued or released by the U.S. Department of Treasury, and any further or related guidance or
interpretations, as well as such other federal or state regulations as otherwise applicable
herein.
means the contributions made by the Employer on behalf of
Participants pursuant to Section 3.1.
means an agreement between the Participant and
the Employer under which the Participant agrees to reduce their Compensation or to forego all
or part of the increases in such Compensation and to have such amounts contributed by the
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.
means COBRA coverage that allows a Participant
who terminates employment for any reason other than death to elect to continue Healthcare
Flexible Spending Account participation for the remainder of the Plan Year but not for the
traditional 18-month period for COBRA.
means an individual who is treated as a spouse for federal tax purposes.
Notwithstanding the above, for purposes of the Dependent Care FSA Component, the term
Spouse shall not include (a) an individual legally separated from the Participant under a
divorce or separate maintenance decree; or (b) an individual who is married to the Participant
and files a separate federal income tax return, where (i) the Participant maintains a household
that constitutes the principal place of abode of a child (within the meaning of Code Section
152(f)(1) with respect to whom such individual is entitled to a deduction for the taxable year)
for more than one-half of the taxable year, (ii) the Participant furnishes more than half of the
Section 125 Cafeteria Plan Document (1/1/2023) Page 6 of 44
cost of maintaining such household, and (iii) during the last 6 months of such taxable year, the
individual is not a member of such household.
1.38 [Reserved].
1.39 [Reserved]
All other defined terms in this Plan shall have the meanings specified in the various Articles of
the Plan in which they appear.
ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY
Any Employee of the Employer and its Affiliates who meets the eligibility requirements
the City of Temecula Schedule of Authorized
Positions, the Memorandum of Understanding between the City of Temecula and Teamsters
Local 911, the City of Temecula Management Compensation Plan, and/or the City of
Temecula City Council Compensation Plan, as they may be amended, or any other Employer
contract or policy or becomes an Eligible Employee and who executes a written election to
participate shall be eligible to participate in the Plan on the date they have satisfied any
applicable waiting peri Adoption Agreement (or the Effective
Date of the Plan, if later) or any other eligibility criteria set forth herein. The eligibility and entry
dates for the Healthcare Flexible Spending Accounts must not occur before eligibility for the
employer-sponsored group health coverage.
2.2 EFFECTIVE DATE OF PARTICIPATION
Any Employee who is eligible under Section 2.1 may become a Participant effective as of the
first day of the month coinciding with or next following date requirements are met. Any
Employee who does not elect to participate in the Plan on the date the Employee first becomes
eligible may later elect to participate during the Election Period and begin participating as of
the first day of the corresponding Plan Year or an earlier Entry Date following a Change in
Status pursuant to Section 5.4 hereof. Since this is a restated Plan, each Employee who was a
Participant in the Plan on the day prior to the restated Effective Date and is an Employee of an
Employer on the Effective Date shall remain a Participant.
2.3 APPLICATION TO PARTICIPATE
An Employee who is eligible to participate in this Plan shall, during the applicable Election
Period, complete an application to participate and election of Benefits form, which the
Administrator shall furnish to the Employee. The election made on such form shall be
irrevocable until the end of the applicable Plan Year unless the Participant is entitled to change
their Benefit elections pursuant to Section 5.4 hereof.
Section 125 Cafeteria Plan Document (1/1/2023) Page 7 of 44
An Eligible Employee shall also be required to execute a Salary Redirection Agreement during
the Election Period for which they wish to participate in this Plan. Any such Salary Redirection
Agreement shall be effective for the first pay
Effective Date of participation pursuant to Section 2.2.
2.4 TERMINATION OF PARTICIPATION
A Participant shall no longer participate in this Plan upon the occurrence of any of the following
events:
a) Termination of employment, subject to the provisions of Section 2.7;
b) The Participant ceases to be an Eligible Employee, which may be because of
retirement, termination of employment, layoff, change of employment status, or
reclassification.
c) The end of the Plan Year during which the individual became a limited Participant
because of a change in employment status pursuant to Section 2.5, or any other
reason;
d) Death, subject to the provisions of Section 2.8; or
e) The termination of this Plan, subject to the provisions of Section 13.2.
2.5 CHANGE OF EMPLOYMENT STATUS
If a Participant ceases to be an Eligible Employee because of a change in employment status
or classification (other than through termination of employment), the Participant may become a
limited Participant in this Plan for the remainder of the Plan Year in which such change of
employment status occurs if permitted by the applicable memorandum of understanding or
compensation plan, resolution, or contract. An employee will become a limited Participant if
they meet the following three conditions:
a) The Participant has taken an unpaid leave of absence from the Employer or is no
longer an Eligible Employee; and
b) The Participant elects under Section 3.1 to reduce their Salary Redirection to $0
as a result of the change in employment status or classification; and
c) Upon return to employment after a leave of absence or return becomes an
Eligible Employee, the Participant re-elects under Section 5.1 to increase their
Salary Redirection to the level that existed immediately before it was reduced to
$0 (or to some other level if on account of and consistent with a change in
status).
If COBRA applies, the Participant, while on the unpaid leave or in part-time employment
status, will be given the opportunity to continue their Insurance Plans and Healthcare Flexible
Spending Account following the terms of the applicable memorandum of understanding or
Section 125 Cafeteria Plan Document (1/1/2023) Page 8 of 44
compensation plan, resolution, or contract. Prem
as well as any applicable Prem ealthcare Flexible Spending
Account, may continue to be paid on a pre-tax basis provided the Participant receives
Compensation during the leave period. If, however, the Participant receives no Compensation
during the leave period, the Participant may continue Benefits under the Plan through payment
of all Premiums with after-tax dollars outside of the Plan. Regardless of how Premiums are
paid (either pre-tax or after-tax), the Participant will remain a full Participant in the Plan
provided all Premiums are paid within 30 days of any due date.
As a limited Participant, except as otherwise provided herein, no further Salary Redirection
may be made on behalf of the Participant and, except as otherwise provided herein, all further
Benefit elections shall cease, subject to the
under any Insurance Contracts. However, any balances in the limited Participant's Dependent
Care Assistance Account may be used during such Plan Year to reimburse the limited
Participant for any allowable employment-related dependent expenses incurred during the
Plan Year, subject to any other terms and conditions that are applicable under Article VII
herein.
Further, in accordance with Article VI, any bal
Flexible Spending Account may be used during such Plan Year to reimburse the limited
Participant for any allowable medical expenses incurred during the portion of the Plan Year in
which the Employee was a full Participant in the Plan.
Subject to the provisions of Section 2.6, if the limited Participant later becomes an Eligible
Employee, then the limited Participant may again become a full Participant in this Plan,
provided they otherwise satisfy the participation requirements set forth in this Article II as if
they were a new Employee and made an election in accordance with Section 5.1.
2.6 FAMILY AND MEDICAL LEAVE ACT OF 1993
Notwithstanding any provision to the contrary in this Plan, if a Participant goes on a qualifying
unpaid leave under the Family and Medical Leave Act of 1993 (FMLA), to the extent required
by the FMLA, the Employer will continue to mainta
on the same terms and conditions as though they were still an active Employee (i.e., the
Employer will continue to pay its share of the premium to the extent the Employee opts to
continue their coverage). If the Employee opts to continue their coverage, the Employee may
pay their share of the Premium through one of the following methods:
a) Prepayment. Under the prepayment option, the Participant increases their
Salary Redirection in an amount sufficient to cover the Premiums and other
expenses that will come due during the FMLA leave.
b) Pay-as-you go. With the pay-as-you-go option, the Participant shall continue to
pay Premiums on a regular basis throughout the FMLA leave. If the Participant
continues to receive a salary while on FMLA leave, the applicable Premiums are
to be paid with pre-tax contributions as if they had not taken the leave. On the
other hand, if the Participant
the funding for necessary coverage during the FMLA period, but the Participant is
Section 125 Cafeteria Plan Document (1/1/2023) Page 9 of 44
required to reimburse the Employer at regular intervals with after-tax funds for
the Premiums that come due during the leave.
c) Catch Up. The Administrator provides the funding for necessary coverage during
pay upon their return.
Upon return from such leave, that has been or is being paid for under one of the methods
referred to above, the Employee will be permitted to re-enter the Plan on the same basis the
Employee was participating in the Plan prior to the leave, or as otherwise required by the
FMLA.
However, for the Healthcare Flexible Spending Account, if the coverage terminates due to
revocation of the Benefit due to nonpayment of contributions by the Participant, three options
d) Proration. The actual amounts contributed by the Participant would remain in
effect for the duration of the Plan Year and the maximum contribution amount
would be reduced proportionately for the time that the Participant was not paying
contributions.
e) Reinstatement. The Participant may elect to reinstate the level of coverage in
effect when the leave began, with applicable contribution amounts being made
up for the remainder of the Plan Year.
f) In Accordance with an Applicable Policy, MOU, Compensation Plan,
Resolution, or Contract. The Participant may elect to reinstate the level of
coverage and make applicable contribution amounts for the remainder of the
Plan Year if permitted and in accordance with an applicable Employer policy,
memorandum of understanding, compensation plan, resolution, or contract.
Furthermore, if a Participant goes on a qualifying paid leave under the FMLA, to the extent
required by the FMLA, the Employee will continue coverage while on FMLA by the method
normally used during any paid leave.
In all instances, a paid or unpaid leave under FMLA will be treated in the same manner and
consistent with a non-FMLA paid or unpaid leave.
2.7 TERMINATION OF EMPLOYMENT
If a Participant terminates employment with the Employer for any reason other than death,
their participation in the Plan shall be governed in accordance with the following:
a) With regard to Benefits that are insured,
right to continue coverage if COBRA
applies or under any Insurance Contract for which Premiums have already been
paid.
Section 125 Cafeteria Plan Document (1/1/2023) Page 10 of 44
b) With regard to the Dependent Care
participation in the Plan shall cease and no further Salary Redirection
contributions shall be made. However, such Participant may submit claims for
employment-related dependent care expense reimbursements for the remainder
of the Plan Year in which termination occurs, provided the claims are submitted
within the grace period or Claims Extension Period as defined in Section 7.8.
Reimbursement for such claims will be
Dependent Care Assistance Account as of the date of termination.
c) With regard to the Healthcare Flexible Spending Account, the Participant may be
able to elect to continue participation in the Plan in accordance with final and
proposed IRS Regulations and as further provided below:
1) COBRA continuation coverage will not be offered to Healthcare Flexible
Spending Account Participants under the following circumstance:
(a) The Healthcare Flexible Spending Account has a deficit (i.e., it is
overspent) at the time of the Qualifying Event (i.e., if, taking into
account all claims submitted on or before the date of the Qualifying
remaining Healthcare Flexible
Spending Account balance for the Plan Year is less than the
maximum required COBRA Premiums for the rest of the year)
2) The Participant will qualify for Special Limited COBRA Coverage and can
elect to continue participation in the Healthcare Flexible Spending Account
for the remainder of the Plan Year in which the Qualifying Event occurs if:
portability rules The Healthcare Flexible Spending Account is
les if a major medical plan is
available in addition to the Healthcare Flexible Spending Account,
and the Healthcare Flexible Spending Account benefit does not
exceed two times the Salary Redirection or, if greater, the Salary
Redirection plus $500; and
(b) For the Plan Year in which the Qualifying Event occurs, the
maximum amount the Qualified Beneficiary could be required to
pay for a full year of Healthcare Flexible Spending Account COBRA
coverage equals or exceeds the maximum Benefit available to the
Qualified Beneficiary for the Plan Year.
3) If the Healthcare Flexible Spending Account qualifies for Special Limited
COBRA Coverage and the Participant elects to continue participation as
set forth under subparagraph (2)(b) above,
continue coverage under the Healthcare Flexible Spending Account shall
cease as of the end of the Plan Year in which the Qualifying Event occurs.
Any such fees shall be the responsibility of the Participant or Qualified
Beneficiary;
Section 125 Cafeteria Plan Document (1/1/2023) Page 11 of 44
4) If the Healthcare Flexible Spendi
portability rules, the Participant shall have the ability to continue coverage
under the Healthcare Flexible Spending Account under procedures and
conditions set forth below.
means the occurrence of any of the following:
a) Death of a Covered Employee;
b) Termination (other than by reason of gross misconduct) of the Covered
ction of hours of employment;
c) Divorce or legal separation of a Cove
to receive Medicare benefits under Title
XVIII of the Social Security Act; or
e) A Dependent child of a Covered Employee ceasing to be a Dependent.
of the day before a Qualifying Event, (i) an
Employee of the Employer (inc
Code Section 401(c), directors, and independent contractors) covered under a health plan
offered under the Plan as of such day (such per
ployee; or (iii) a Dependent of the Covered
Employee. A Covered Employee can be a Qualified Beneficiary only if the Qualifying Event
consists of termination of employment (other than for gross misconduct) or a reduction of
A child born or placed for adoption with the
Covered Employee during continuation coverage will also be considered as a Qualifying
Beneficiary. A retiree or other former Employee actively participating in the Plan by reason of a
previous period of employment will also be treated as a Qualified Beneficiary for purposes of
these rules.
The Plan Administrator will notify Healthcare Flexible Spending Account Participants as to their
COBRA eligibility (if any). The Plan Administrator shall also notify Healthcare Flexible
Spending Account Participants as to their HIPAA rights and responsibilities under Code
Section 9801 (including applicable provisions pertaining to HIPAA certification, portability,
creditable coverage, and special enrollment procedures) if the Plan is not exempt from
Section 2.7(c)(2) above.
If the Participant elects to continue participation in the Healthcare Flexible Spending Account
for the remainder of the Plan Year in which such termination occurs, the Participant may
continue to seek reimbursement from the Healthcare Flexible Spending Account. The
Participant shall be required to make contributions to the account based on the elections made
prior to the beginning of the Plan Year.
If the Participant does not elect to continue participation in the Healthcare Flexible Spending
Account for the remainder of the Plan Year in which such termi
participation in the Plan shall cease and no further Salary Redirection contributions shall be
Section 125 Cafeteria Plan Document (1/1/2023) Page 12 of 44
made. However, such Participant may submit claims for expenses incurred during the portion
of the Plan Year preceding their date of termination, provided the claims are submitted within
the grace period. In the event a Participant terminates participation in the Healthcare Flexible
Spending Account during the Plan Year, if Salary Redirections are made other than on a pro
rata basis, upon termination the Participant shall be entitled to a reimbursement for any Salary
Redirection previously paid for coverage or Benefits relating to the period after the date of the
aims or reimbursements
as of such date.
2.8 DEATH OF A PARTICIPANT
If a Participant dies during any Plan Year and at the time of death they have not received the
total reimbursements available fo surviving Spouse, children,
or legal representatives can continue to submit claims for expenses incurred during the Plan
Year pursuant to COBRA provisions stated in Section 2.7..
ARTICLE III
CONTRIBUTIONS TO THE PLAN
3.1 SALARY REDIRECTION
Plan is not sufficient to cover the cost of
Benefits or Premium Expenses being provided and elected pursuant to Articles IV and V, the
an amount equal to the difference between the
cost of Benefits they elected and the amount of Employer Contribution available to the
Participant. Such reduction in Compensation shall be their Salary Redirection, which the
Employer will use on behalf of the Participant, together with their Employer Contribution, to pay
for the Benefits elected by the Participant. 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 pay date of the month following the
and including the last day of the Plan Year. These Salary Redirection contributions shall be
allocated to the funds or accounts established under the Plan
elections made under Article V.
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
and/or Salary Redirection Agreement 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.
Section 125 Cafeteria Plan Document (1/1/2023) Page 13 of 44
3.2 APPLICATION OF CONTRIBUTIONS
As soon as reasonably practical after each payroll period, the Employer shall apply the
Employer Contribution and Salary Redirection to provide the Benefits elected by the affected
Participants.
Any contributions made or wit pensation, pursuant to the
for the Healthcare Flexible Spending
Account or Dependent Care Assistance Program shall be credited to such account. Amounts
pense Reimbursement Account shall likewise be
credited to such account for the purpose of paying Premium Expenses.
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 Healthcare
Flexible Spending Account, the payment schedule for the required contributions may not be
based on the rate or amount of reimbursements during the Plan Year. In the event Salary
Redirections are not made on a pro rata basis, upon termination of participation, a Participant
may be entitled to a refund of such Salary Redirections pursuant to Section 3.1.
ARTICLE IV
BENEFITS
4.1 BENEFIT OPTIONS
Upon becoming a Participant prior to each Plan Year, a Participant must allocate their
Employer Contributions and Salary Redirection amounts, if any, among the Plan of Benefit
4.2 HEALTHCARE FLEXIBLE SPENDING ACCOUNT BENEFIT
If selected as an available Benefit Option under the Employer
Participant may elect coverage under the Healthcare Flexible Spending Account option, in
which case Article VI shall apply.
4.3 DEPENDENT CARE ASSISTANCE PROGRAM BENEFIT
If selected as an available Benefit Option under the Employer
Participant may elect coverage under the Dependent Care Assistance Program option, in
which case Article VII shall apply.
Section 125 Cafeteria Plan Document (1/1/2023) Page 14 of 44
4.4 RESERVED
4.5 INSURANCE BENEFIT
Each Participant may elect to be covered under e Contract(s) selected
Participant, their Spouse, and their Dependents,
as applicable and pursuant to the memorandum of understanding, resolution, or contract. The
Employer may select suitable Insurance Contracts for use in providing their health insurance
benefit. The rights and conditions with respect to the benefits payable from such Insurance
Contract shall be determined therein, and such Insurance Contract shall be incorporated
herein by reference.
4.6 CASH BENEFIT
The Employer has established an Eligible Opt Out Arrangement as a condition to an Eligible
Employee receiving any Employer Contribution that is a non-Health Flex Contribution as
taxable income (i.e., cash) in lieu of enrolling in City-sponsored health insurance. Employees
cannot receive taxable income for Employer Contributions that are Health Flex Contributions.
The conditions that must be satisfied for the Eligible Opt Out Arrangement are as follows and
subject to any applicable Employer policy, memorandum of understanding, resolution,
contract, or Employer compensation plan or other
Adoption Agreement, Employer policy, memorandum of understanding, resolution, contract, or
Employer compensation plan:
a) The Eligible Employee must have minimum essential health coverage through
another source (other than coverage in the individual market, whether or not
obtained through Covered California);
b) All individuals in the Eligible Employ
have) the required minimum essential healt
expected tax family includes all individuals for whom the Eligible Employee
reasonably expects to claim a personal exemption deduction for the taxable
year(s) that cover the Eligible Employee's Plan Year to which the opt-out
arrangement applies;
c) The Eligible Employee must provide reasonable documentation of minimum
essential health coverage pursuant to t
must cover both the Eligible Employee and all individuals in the Eligible
, for the applicable period. Reasonable
evidence may include an attestation by the Eligible Employee;
d) Each year, during the Elections Period or as otherwise required by the Employer,
the Eligible Employee must provide the Employer with an attestation or other
reasonable documentation, subject to the Em
alternate coverage.
Section 125 Cafeteria Plan Document (1/1/2023) Page 15 of 44
e) The Eligible Employee must provide the attestation or reasonable documentation
no earlier than a reasonable time before coverage starts (e.g. Elections Period).
The attestation or reasonable documentation may also be provided within a
reasonable time after the Plan Year starts; and
f) According to the ACA, the Employer cannot make payment if the Employer
knows or has reason to know that the Eligible Employee or a member of the
does not have the alternative minimum
essential health coverage.
4.7 NONDISCRIMINATION REQUIREMENTS
a) It is the intent of this Plan to provide Benefits to a classification of employees that
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, if
applicable to such Eligible Employees or Participants.
b) If the Administrator deems it necessary to avoid discrimination or possible
taxation to Key Employees or a group of employees in whose favor
discrimination may not occur in violation of Code Section 125, it may, but shall
not be required to, reject any election or reduce contributions or nontaxable
Benefits in order to assure compliance with this Section. Any action taken by the
Administrator under this Section shall be carried out in a uniform and
nondiscriminatory manner. If the Administrator decides to reject any election or
reduce contributions or nontaxable Benefits, it shall be done in the following
manner. First, the nontaxable Benefits of the affected Participant (either an
Employee who is Highly Compensated or a Key Employee, whichever is
applicable) who has elected the highest amount of nontaxable Benefits for the
Plan Year shall have their nontaxable Benefits reduced until the discrimination
tests set forth in this Section are satisfied or until the amount of their nontaxable
Benefits equals the nontaxable Benefits of the affected Participant who has
elected the second highest amount of nontaxable 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 non-
Insurance Benefits, and once all non-Insurance Benefits are expended,
proportionately among delineated Benefits. Insurance 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.
Section 125 Cafeteria Plan Document (1/1/2023) Page 16 of 44
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 they elect to do so before their Effective Date of participation pursuant to
Section 2.2, or for a newly eligible Employee, no more than 60 days after their date of hire. For
any such newly eligible Employee, if coverage is effective as of the date of hire pursuant to
Section 2.1 above, such Employee shall be eligible to participate retroactively as of their date
of hire. Newly eligible Employee Election amounts will be collected on the first pay date of the
month after their election was received. However, if such Employee does not complete an
application to participate and Benefit election form and deliver it to the Administrator before
such date, their Election Period shall extend 60 calendar days after such date, or for such
further period as the Administrator shall determine and apply on a uniform and
nondiscriminatory basis. However, any election during the extended 60-day election period
pursuant to this Section 5.1 shall not be effective until the first pay date concurrent with or
e Date of participation pursuant to Section 2.2
or the date of the receipt of the election form by the Administrator, and shall be limited to the
Benefit expenses incurred for the balance of the Plan Year for which the election is made.
5.2 SUBSEQUENT ANNUAL ELECTIONS
With the exception of an Insurance Benefit premium election that is made as of the initial
enrollment in the Plan, each Participant shall be given the opportunity to annually elect, on an
election of Benefits form to be provided by the Administrator, which Benefit options they wish
to select Any such election shall be effective 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 participation in the Plan by notifying the
Administrator in writing during the Election Period that they do not want to
participate in the Plan for the next Plan Year;
c) An Employee who elects not to participate for the Plan Year following the
Election Period will have to wait until the next Election Period before again
electing to participate in the Plan, or until a change in status event pursuant to
Section 5.4 would justify an earlier mid-year election change.
5.3 FAILURE TO ELECT
Any Participant failing to complete an election of Benefits form pursuant to Section 5.2 by the
end of the applicable Election Period shall be deemed to have elected not to participate in the
Section 125 Cafeteria Plan Document (1/1/2023) Page 17 of 44
Plan for the upcoming Plan Year for the Healthcare Flexible Spending Account and/or
Dependent Care Assistance Program. No further Salary Redirections shall therefore be
authorized for such subsequent Plan Year, until a change in status event pursuant to Section
5.4 would justify an earlier mid-year election change. Elections under the Insurance Benefit
shall remain in effect for such subsequent Plan Year.
5.4 CHANGE OF ELECTIONS
a) With the exception of any specific circumstances otherwise described below, 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, 1) a change
in status occurs, and 2) the requested revocation and new election satisfy the
consistency requirements in Section 5.5. Any new election shall be effective at
such time as the Administrator shall prescribe, but not earlier than first day of the
month coinciding with or next after the election of Benefits form is completed and
returned to the Administrator. For this purpose, a change in status includes the
following events:
1) Legal Marital Status. Events that change a Participant's legal marital
status, including marriage, divorce, death of a Spouse, legal separation, or
annulment;
2) Number of Dependents. Events that change a Participant's number of
Dependents, including birth, adoption, placement for adoption, or death of
a Dependent;
3) Employment Status. Any of the following events that change the
employment status of the Participant, Spouse, or Dependent: termination
or commencement of employment, a strike or lockout, commencement or
returns 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.
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;
4) Dependent Satisfies or Ceases to Satisfy 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;
Section 125 Cafeteria Plan Document (1/1/2023) Page 18 of 44
5) Residency: A change in the place of residence of the Participant, Spouse,
or Dependent;
6) Special requirements concerning the Family and Medical Leave Act
(FMLA) and the Health Insurance Portability and Accountability Act
(HIPAA); and
7) Other. Such other events that the Administrator (in its sole discretion)
determines to be consistent with and attributable to a change in status.
Additional proof may be required by the Administrator to support any
change of status election submitted by a Participant.
b) The Participant may change an election for accident coverage, if any, 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).
c) If the change in status is due to a c
under item 1) above, or a change in employment status
Spouse or covered Dependents under item 3) above, the Participant may elect to
increase or decrease group-term life coverage and/or group disability coverage, if
any, corresponding with that change in status.
d) In the event of a judgment, decree, or order ("order") resulting from a divorce,
legal separation, annulment, or change in legal custody (including a qualified
medical child support order defined in ERISA Section 609) which requires
accident or health coverage for a Participant's child:
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 and such coverage is actually provided.
e) A Participant may change elections to cancel accident coverage, if any, 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
coverage, if any, 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). Further, if the
e or Dependent that has been entitled to
Medicare or Medicaid loses eligibility for such coverage, the Participant may
prospectively elect to commence or increase the accident coverage, if any, or
health coverage of the individual who loses Medicare or Medicaid eligibility.
Section 125 Cafeteria Plan Document (1/1/2023) Page 19 of 44
f) A Participant may make a prospective election change to add group health
coverage for the Participant or the Part
individual(s) lose coverage under any group health coverage sponsored by a
governmental or educational institution, including (but not limited to) the
following: a medical care program of an Indian Tribal government (as defined in
Code Section 7701 (a) (40)), the Indian Health Service, or a tribal organization; a
state health benefits risk pool; or a foreign government group health plan, subject
to the terms and limitations of the applicable benefit package option(s).
In addition, to the extent permitted
Program Reauthorization Act of 2009, an Eligible Employee may enroll and a
Participant 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), in the event that either (i) the Employee or his
Dependent is covered under a plan offered
Health Insurance Program (SCHIP) established under Title XXI of the Social
Security Act and such coverage is terminated as the result of a loss of eligibility,
or (ii) the Employee or Dependent becomes eligible for a state premium
assistance subsidy from a plan offered under Medicaid or through a SCHIP). In
either case, the Employee must meet the 60 day notice requirements 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.
g) If the cost of a Benefit provided under the Plan increases or decreases during a
Plan Year, then the Plan shall automatically increase or decrease, as the case
may be, the Salary Redirections of all affected Participants for such Benefit.
Alternatively, if the cost of a benefit package option increases significantly, the
Administrator shall permit the affected Participants to either make corresponding
changes in their payments; or revoke their elections and, in lieu thereof, receive
on a prospective basis coverage under another benefit package option with
similar coverage; or drop coverage prospectively if there is no other benefit
package option available that provides similar coverage. This Plan treats
coverage by another employer, such as a
similar coverage.
h) If the cost of a Benefit provided under the Plan decreases significantly during a
Plan Year, the Administrator shall permit the affected Participants to either make
corresponding changes in their payments; and employees who are otherwise
eligible under the Plan may elect the benefit package option, subject to the terms
and limitations of the benefit package option.
i) If the coverage under a Benefit is significantly curtailed and such curtailment
results in a loss of coverage, or ceases during a Plan Year, any 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
Section 125 Cafeteria Plan Document (1/1/2023) Page 20 of 44
coverage or drop coverage prospectively if there is no other benefit package
option available that provides similar coverage.
j) If the coverage under a Benefit is significantly curtailed and such curtailment
does not result in a loss of coverage, 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.
k) If, during the period of coverage, a new benefit package option or other coverage
option is added (or an existing benefit package option or other coverage option is
eliminated), or a significantly improved existing benefit package option is added,
then the affected Participants and employees who are otherwise eligible under
the Plan may elect the newly added or significantly improved 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.
l) 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.
m) A Participant may make a prospective election change that is on account of and
corresponds with a change by the Participant in the dependent care service
provider. For example: (a) if the Participant terminates one dependent care
service provider and hires a new dependent care service provider, then the
Participant may change coverage to reflect the cost of the new service provider;
and (b) if the Participant terminates a dependent care service provider because a
different dependent care provider becomes available to take care of the child at
no charge, then the Participant may cancel coverage. A cost change is also
allowable in the Dependent Care Assistance Program if the cost change is
imposed by the dependent care provider who is not related to the Participant, as
defined in Code Section 152(a)(1) through (8). However, a Participant shall not
be permitted to change an election to the Healthcare Flexible Spending Account
as a result of a cost or coverage change under this subsection.
n) Generally, the termination of employment by a Participant shall not be
considered a change in status. Therefore, upon termination, such Participant
shall not be entitled to change existing Benefit elections. Rather, such
termination shall constitute a revocation of all existing Benefit elections, except
with regard to the Healthcare Flexible Spending Account, in which case the
o) Notwithstanding any other provision of this Plan, the Administrator may 1) permit
a Participant to revoke (and subsequently reinstate) their election of one or more
Section 125 Cafeteria Plan Document (1/1/2023) Page 21 of 44
Benefit coverages under the Plan and 2) adjust a Participant's Compensation
redirection as a result of a revocation or reinstatement to the extent the
Administrator deems necessary or appropriate to assure the Plan's compliance
with the provisions of the Family and Medical Leave Act of 1993 and any
Regulations pertaining thereto.
5.5 CONSISTENCY REQUIREMENT
a) A Participant's requested revocation and new election will be consistent with a
change in status 1) if the election change is on account of and corresponds with
a change in status that affects the eligibility for coverage under a Plan of the
Employer or under a Plan maintained by the employer of the Participant's
Spouse or Dependent, and 2) with respect to dependent care assistance, if the
election change is on account of and corresponds with a change in status that
affects expenses described in Code Section 129 (including employment-related
expenses defined in Code Section 21(b)(2)). A change in status election is not
consistent if the change in status is due to the Participant's divorce, annulment,
or legal separation from a Spouse; the death of a Spouse or Dependent; or a
Dependent ceases to satisfy the eligibility requirements for coverage, yet 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. Likewise, if
the Participant, Spouse, or Dependent gains eligibility for coverage under a
family member plan as a result of a change in marital status or a change in
employment status, then a Participant's election 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.
b) Regardless of the consistency requirement, if the i
Spouse, or Dependent becomes eligible for continuation coverage under the
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.
ARTICLE VI
HEALTHCARE FLEXIBLE SPENDING ACCOUNT
6.1 ESTABLISHMENT OF PLAN
This Healthcare Flexible Spending Account is intended to qualify as a medical reimbursement
plan under Code Section 105 and shall be interpreted in a manner consistent with such Code
Section and the Treasury Regulations thereunder. Participants who elect to participate in this
Healthcare Flexible Spending Account may submit claims for the reimbursement of medical
expenses. All amounts reimbursed under this Healthcare Flexible Spending Account shall be
periodically paid from amounts allocated to the
Account. Periodic payments reimbursing Participants from the Healthcare Flexible Spending
Account shall in no event occur less frequently than monthly.
Section 125 Cafeteria Plan Document (1/1/2023) Page 22 of 44
6.2 DEFINITIONS
For the purposes of this Article and the Plan, the terms below have the following meaning:
a) means the account established for
Participants pursuant to this Plan to which part of their Health Flex Contribution,
non-Health Flex Contribution, or Salary Redirection may be allocated and from
which all allowable medical expenses may be reimbursed. The City also offers a
Limited-Purpose Healthcare Flexible Spending Account that reimburses only
vision care, dental care, and preventative care expenses (as defined in Code
Section 223(c)). Participants can either enroll in the Healthcare Flexible
Spending Account or the Limited-Purpose Healthcare Flexible Spending Account
but not enroll in both and must choose their option for the entire Plan Year.
b) means the Plan of Benefits
contained in this Article, which provides for the reimbursement of eligible medical
expenses incurred by a Participant, their Spouse, or their Dependents. The City
also offers a Limited-Purpose Healthcare Flexible Spending Account Plan that
reimburses only vision and dental expenses.
c) means for the purpose of this Article and
determining discrimination under Code Section 105(h) a Participant who is:
1) One of the five highest paid officers;
2) A shareholder who owns (or is considered to own applying the rules of
Code Section 318) more than 10 percent in value of the stock of the
Employer; or
3) Among the highest paid 25 percent of all Employees (other than
exclusions permitted by Code Section 105(h)(3)(B) for those individuals
who are not Participants).
d) means a medical expense is incurred at the time the medical care or
service giving rise to the expense is furnished, and not when the Participant is
formally billed for, charged for, or pays for the medical care.
e) means any expense for medical care within the meaning of
and as allowed under Code Section 105 and the rulings and Treasury
Regulations thereunder, and not otherwise used by the Participant as a
deduction in determining their tax liability under the Code. However, 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 Partic
individual policies maintained by the Participant or their Spouse or Dependent.
Furthermore, a Participant may not be re
Section 125 Cafeteria Plan Document (1/1/2023) Page 23 of 44
f) The definitions in Article I are hereby incorporated by reference to the extent
necessary to interpret and apply the provisions of this Healthcare Flexible
Spending Account.
6.3 FORFEITURES AND CARRYOVER
The amount in the Healthcare Flexible Spending Account as of the end of any Plan Year (and
after the processing of all claims for such Plan Year pursuant to Section 6.7 hereof) shall be
forfeited and credited to the benefit plan surplus. In such event, the Participant shall have no
further claim to such amount for any reason.
Notwithstanding this provision, the provisions of the Plan concerning the payment of qualifying
expenses, which include payment from any Healthcare Flexible Spending Account that would
otherwise be forfeited if not incurred by the end of the Plan Year, are as follows:
For Plan Years prior to 2022, the Plan shall provide for a carryover of $500 of any amount
remaining unused in a Healthcare Flexible Spending Account as of the end of the Plan Year,
except as otherwise provided in Article XVI. For Plan Years beginning after 2022, the
maximum carryover amount may be changed by the Plan Administrator and shall be
communicated to Employees through the election of Benefits form or another document,
provided that the maximum carryover amount shall not exceed 20% of the maximum amount
permitted under Code §125(i). Such carryover amount shall be used to pay or reimburse
Medical Expenses under any Healthcare Flexible Spending Account incurred during the entire
Plan Year to which it is carried over.
Such carryover amounts may not be cashed out or converted to any other taxable or
nontaxable benefit, and will not count toward the limitation on allocations for the following Plan
Year, as described in Section 6.4.
A Participant who is otherwise eligible for the Healthcare Flexible Spending Account for a Plan
Year but does not make a Healthcare Flexible Spending Account election for that Plan Year
may use any carryovers from the preceding Plan Year for Medical Expenses incurred in the
current or preceding Plan Year. However, an Employee or other individual must be a
Participant in the Healthcare Flexible Spending Account as of the last day of a Plan Year in
order to carry over unused amounts to the next Plan Year. Termination of employment and
cessation of eligibility will result in a loss of carryover eligibility unless a COBRA election is
made.
Medical Expenses incurred during a Plan Year will be reimbursed first from a Participant's
unused amounts credited for that Plan Year and then from amounts carried over from the
preceding Plan Year. Carryovers that are used to reimburse a current Plan Year expense will
reduce the amount available to pay the Participant's preceding Plan Year expenses, cannot
exceed the maximum carryover amount, and will count against the maximum carryover
amount.
If unused Healthcare Flexible Spending Amounts remain for a Plan Year after all
reimbursements have been made for that Plan Year in excess of the amount that can be
carried over, the Participant will forfeit all rights with respect to those amounts, which will be
subject to the Plan's provisions regarding forfeitures.
Section 125 Cafeteria Plan Document (1/1/2023) Page 24 of 44
6.4 LIMITATION ON ALLOCATIONS
a) Notwithstanding any provision contained in this Healthcare Flexible Spending
Account to the contrary, the maximum amount, which may be allocated by a
Participant in or on account of any Plan Year to this Account, is prescribed in the
nimum amount which may be allocated
by a Participant in or on account of any Plan Year to this Account shall be $0.00.
b) Cost of Living Adjustment. In no event shall the amount of salary redirections
on the Healthcare Flexible Spending Account exceed $3,050 in taxable year
2023 and as adjusted and indexed for other taxable years in accordance with
Code Section 125(i)(2).
c) Participation in Other Plans. All employers that are treated as a single
employer under Code Sections 414(b), or (m), relating to controlled groups and
affiliated service groups, are treated a single employer for purposes of the $3,050
limit, as adjusted and indexed for other taxable years in accordance with Code
Section 125(i)(2).
d) Carryover Provision. The carryover amount will not count against or otherwise
affect the $3,050 limit (as adjusted and indexed for other taxable years in
accordable with Code Section 125(i)(2)) on annual Healthcare Flexible Spending
Accounting Salary Redirections.
6.5 NONDISCRIMINATION REQUIREMENTS
a) To the extent legally applicable, it is the intent of this Healthcare Flexible
Spending Account not to discriminate in violation of the Code and the Treasury
Regulations thereunder.
b) If the Administrator deems it necessary to avoid discrimination under this
Healthcare Flexible Spending Account, it may, but shall not be required to, reject
any elections or reduce contributions or Benefits in order to assure compliance
with this Section. Any act taken by the Administrator under this Section shall be
carried out in a uniform and nondiscriminatory manner. If the Administrator
decides to reject any elections or reduce contributions or Benefits, it shall be
done in the following manner. First, the Benefits designated for the Healthcare
Flexible Spending Account by the member of the group in whose favor
discrimination may not occur pursuant to Code Sections 105 or 125 that elected
to contribute the highest amount of the account 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 account equals the amount
designated for the account by the next member of the group in whose favor
discrimination may not occur pursuant to Code Sections 105 or 125 who has
elected the second highest contribution to the Healthcare Flexible Spending
Account for the Plan Year. This process shall continue until the nondiscrimination
tests set forth in this Section or the Code are satisfied. Contributions, which are
not utilized to provide Benefits to any Participant by virtue of any administrative
Section 125 Cafeteria Plan Document (1/1/2023) Page 25 of 44
act under this paragraph, shall be forfeited and credited to the benefit plan
surplus.
6.6 COORDINATION WITH SECTION 125 CAFETERIA PLAN
All Participants under the Plan are eligible to receive Benefits under this Healthcare Flexible
Spending Account. The enrollment and termination of participation under the Plan overall shall
constitute enrollment and termination of participation under this Healthcare Flexible Spending
Account Program. In addition, other matters concerning contributions, elections, and the like
shall be governed by the general provisions of the Plan overall.
6.7 HEALTHCARE FLEXIBLE SPENDING ACCOUNT CLAIMS
a) All Medical Expenses incurred by a Participant shall be reimbursed during the
Plan Year subject to Sections 2.5 through 2.8, even though the submission of
such a claim occurs after their participation hereunder ceases; but provided that
the Medical Expenses were incurred during the applicable Plan Year.
b) 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 Healthcare Flexible Spending Account for the Plan Year.
Reimbursements shall be made available to the Participant throughout the year
without regard to the level of Health Flex Contributions, Non-Health Flex
Contributions, or Salary Redirection amounts which have been allocated to the
account 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 healthcare plan covering the Participant and/or the
c) Claims for the reimbursement of Medical Expenses incurred in any Plan Year
shall be paid within 30 days after receipt by the Administrator; provided however,
that if a Participant fails to submit a claim within the 90-day period immediately
following the end of the Plan Year or the 90-day period immediately following a
e Medical Expense claims shall not be
considered for reimbursement by the Administrator. The 30-day time period for
the Administrator to pay claims for reimbursement of Medical Expenses may be
extended by an additional 15 days for matters beyond the control of the
Administrator, including in cases where a reimbursement claim is incomplete.
The Administrator will provide written notice of any extension, including the
reasons for the extension, and will allow the Participant 45 days in which to
complete the previously incomplete reimbursement claim.
d) Claims Substantiation. A Participant who has elected to receive Healthcare
Flexible Spending Account Benefits may apply for reimbursement by submitting a
request in writing to the Administrator in such form as the Administrator may
prescribe, by no later than 90-days following the close of the Plan Year in which
the Medical Expense was incurred (except that for a Participant who ceases to
Section 125 Cafeteria Plan Document (1/1/2023) Page 26 of 44
be eligible to participate, this must be done no later than 90-days after the date
that eligibility ceases setting forth:
1) The person(s) on whose behalf Medical Expenses have been incurred;
2) The nature and date of the Medical Expenses so incurred;
3) The amount of the requested reimbursement;
4) A statement that such Medical Expenses have not otherwise been
reimbursed and that the Participant will not seek reimbursement through
any other source; and
5) Other such details about the expenses that may be requested by the
Administrator in the reimbursement request form or otherwise (e.g., a
statement from a medical practitioner that the expense is to treat a specific
medical condition, or a more detailed certification from the Participant).
The application shall be accompanied by bills, invoices, or other statements from
an independent third party showing that the Medical Expenses have been
incurred and showing the amounts of such Medical Expenses, along with any
additional documentation that the Plan Administrator may request. If the
Healthcare Flexible Spending Account is accessible by an electronic payment
card (e.g., debit card, credit card, or similar arrangement), the Participant will be
required to comply with substantiation procedures established by the Plan
Administrator in accordance with Rev. Rul. 2003-43, IRS Notice 2006-69, or
other IRS guidance.
Unless payment arrangements are as directed within this paragraph or as
otherwise specified below, reimbursement payments under this Plan shall be
made directly to the Participant. Howeve
payments may also be made directly to the service provider. The Administrator
shall retain a file of all such statements and applications.
e) Claims Denied. For reimbursement claims that are denied, see the appeals
procedure in Article VIII.
ARTICLE VII
DEPENDENT CARE ASSISTANCE PROGRAM
7.1 ESTABLISHMENT OF PROGRAM
This Dependent Care Assistance Program is intended to qualify as a program under Code
Section 129 and shall be interpreted in a manner consistent with such Code Section.
Participants who elect to participate in this program may submit claims for the reimbursement
of employment-related dependent care expenses. All amounts reimbursed under this
Section 125 Cafeteria Plan Document (1/1/2023) Page 27 of 44
Dependent Care Assistance Program shall be periodically paid from amounts allocated to the
7.2 DEFINITIONS
For the purposes of this Article and the Plan, the terms below shall have the following
meaning:
a) means the account established for a
Participant pursuant to this Plan to which part of their Salary Redirection and/or
non-Health Flex Contribution may be allocated and from which all employment-
related dependent care expenses of the Participant may be reimbursed.
b) means the program of Benefits
contained in this Article, which provides for the reimbursement of eligible
expenses for the care of the Qualifying Dependents of Participants.
c) means earned income as defined under Code Section
32(c)(2), but excluding such amounts paid or incurred by the Employer for
dependent care assistance to the Participant.
d) 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 or 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 is one or
more Qualifying Dependents with respect to such Participant. The determination
of whether an amount qualifies as an employment-related dependent care
expense shall be made subject to the following rules:
1) If such amounts are paid for expenses in
household, they shall constitute employment-related dependent care
expenses only if incurred for a Qualifying Dependent as defined in Section
7.2(f)(1) (or deemed to be, pursuant to Section 7.2(f)(3)), or for a
Qualifying Dependent as defined in Section 7.2(f)(2) (or deemed to be,
pursuant to Section 7.2(f)(3)) who regularly spends at least 8 hours per
2) If the expense is incurred outside the
provides care for a fee, payment, or grant for more than six 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
Section 125 Cafeteria Plan Document (1/1/2023) Page 28 of 44
3) Employment-related dependent care expenses of a Participant shall not
include amounts paid or incurred to a child of such Participant who is
under the age of 19 or to an individual who is a dependent of such
e) means an Employee who is a Highly
Compensated Employee within the meaning of Code Section 414(q) and the
Treasury Regulations thereunder.
f) means, for Dependent Care Assistance Program
purposes,
1) A Dependent (as defined under Code Section 152(a)(1) who is under the
age of 13;
2) A Qualifying Child, a Qualifying Relative or the Spouse of a Participant
who is physically or mentally incapable of caring for himself or herself and
who has the same principal place of residence as the Participant for more
than one-half of year; or
3) A Dependent 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).
g) The definitions of Article I are hereby incorporated by reference to the extent
necessary to interpret and apply the provisions of this Dependent Care
Assistance Program.
7.3 DEPENDENT CARE ASSISTANCE ACCOUNTS
The Administrator shall establish a Dependent Care Assistance Account for each Participant
who elects to apply their Salary Redirection and/or non-Health Flex Contribution to Dependent
Care Assistance Program Benefits.
7.4 INCREASES IN DEPENDENT CARE ASSISTANCE ACCOUNTS
shall be increased each pay period by the
portion of Salary Redirection and/or Non-Health Flex Contributions that they have elected to
apply toward their Dependent Care Assistance Account pursuant to elections made under
Article V hereof.
7.5 DECREASES IN DEPENDENT CARE ASSISTANCE ACCOUNTS
ount shall be reduced by the amount of any
employer-related dependent care expense reimbursements incurred on behalf of a Participant
pursuant to Section 7.12 hereof.
Section 125 Cafeteria Plan Document (1/1/2023) Page 29 of 44
7.6 ALLOWABLE DEPENDENT CARE ASSISTANCE REIMBURSEMENT
Subject to limitations contained in Section 7.9 of this Program, and to the extent of the amount
Assistance Account, a Participant who incurs
employment-related dependent care expenses shall be entitled to receive from the Employer
full reimbursement for the entire amount of such expenses incurred during the Plan Year or
portion thereof during which they are a Participant.
7.7 ANNUAL STATEMENT OF BENEFITS
On or before January 31 of each calendar year, the Employer shall furnish to each Employee
who was a Participant and received Benefits under Section 7.6 during the prior calendar year,
a statement of all such Benefits paid to or on behalf of such Participant during the prior
calendar year.
7.8 FORFEITURES AND CLAIMS EXTENSION PERIOD
ssistance Account as of the end of any Plan
Year (and after the processing of all claims for such Plan Year pursuant to Section 7.12
hereof) shall be forfeited and credited to the benefit plan surplus. In such event, the Participant
shall have no further claim to such amount for any reason.
Notwithstanding this provision, the provisions of the Plan concerning the payment of qualifying
expenses or other similar benefits, which may include but is not limited to payment from
dependent care assistance accounts or other similar arrangements, that would otherwise be
forfeited if not incurred by the end of the Plan Year are amended in the following respects:
a) Claims Incurred Prior to the End of the Plan Year. For purposes of any
provisions within the Plan that require qualifying expenses or other similar
benefits to have been incurred by the end of the Plan Year to be eligible for
reimbursement by the Plan, as of the Effective Date, the Plan shall also
reimburse any qualifying expenses or other similar benefits that are incurred
within the Claims Extension Period immediately following the end of the Plan
Year. Any Plan provisions related to the deadline for forfeiture of any unused
Plan accounts that are not utilized by the end of the Plan Year shall also take into
consideration the Claims Extension Period.
he period that ends on the 15th day of the third month
immediately following the end of the most recent Plan Year.
c) Order of Expense or Benefit Payment.
applicable dependent care assistance or other similar Plan account as of the end
of the Plan Year shall be used first for the payment of any claims submitted
during the Claims Extension Period. If all prior year amounts have been fully
utilized, claims incurred during the Claims Extension Period shall be paid from
any amounts elected for the Plan Year immediately coinciding with the Claims
Extension Period. For these purposes, amounts remaining in one Plan account
cannot be used to supplement the lack of available funds from another Plan
Section 125 Cafeteria Plan Document (1/1/2023) Page 30 of 44
account (e.g., excess amounts within a parti
account may not be used to fund flexible spending account health claims
incurred during the Claims Extension Period).
d) Forfeitures. Any amount(s) that remain as of the end of any Plan Year (including
the processing all allowable claims submitted during the Claims Extension
Period, pursuant to b) above) shall be forfeited and credited to any benefit plan
surplus. In such event, the Participant shall have no further claim to such amount
for any reason, subject to any claims appeal rights otherwise set forth herein.
e) Claims Submission Deadline. All claims reimbursement requests must be
submitted by the end of the month following the end of the Claim Extension
Period deadline.
7.9 LIMITATION ON PAYMENTS
Notwithstanding any provision contained in this Article to the contrary, amounts paid from a
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)) or
such lesser or greater amount as determined by the Department of Treasury or the IRS for
future taxable years. The minimum amount that a Participant may elect to receive under this
Plan in the form of reimbursements for dependent care expenses shall be $0.00.
7.10 NONDISCRIMINATION REQUIREMENTS
a) To the extent legally applicable, it is the intent of this Dependent Care Assistance
Program that contributions or Benefits not discriminate in favor of Highly
Compensated Employees or their Dependents, as prohibited by Code Section
129(d).
b) It is the intent of this Dependent Care Assistance Program that not more than 25
percent of the amounts paid by the Employer for dependent care assistance
during the Plan Year will be provided for the class of individuals who are
shareholders or owners (or their Spouses or Dependents), each of whom (on any
day of the Plan Year) owns more than 5 percent of the stock or of the capital or
profits interest in the Employer.
c) If the Administrator deems it necessary to avoid discrimination or possible
taxation to Highly Compensated Employees defined under Section 7.2(e) or to
principal shareholders or owners as set forth in this Section, it may, but shall not
be required to, reject any elections or reduce contributions or nontaxable Benefits
in order to assure compliance with this Section. Any action taken by the
Administrator under this Section shall be carried out in a uniform and
nondiscriminatory manner. If the Administrator decides to reject any elections or
reduce contributions or Benefits, it shall be done in the following manner. First,
the Benefits designated for the Dependent Care Assistance Account by the
Section 125 Cafeteria Plan Document (1/1/2023) Page 31 of 44
Highly Compensated Employee that elected to contribute the highest amount to
such account for the Plan Year shall be reduced until the nondiscrimination tests
set forth in this Section are satisfied, or until the amount designated for the
account equals the amount designated for the account of the Highly
Compensated Employee who has elected the second highest contribution to the
Dependent Care Assistance Account for the Plan Year. This process shall
continue until the nondiscrimination tests set forth in this Section are satisfied.
Contributions, which are not utilized to provide Benefits to any Participant by
virtue of any administrative act under this paragraph, shall be forfeited.
7.11 COORDINATION WITH SECTION 125 CAFETERIA PLAN
Participants under the Plan are eligible to receive Benefits under this Dependent Care
Assistance Program as specified in the Memorandum of Understanding between the City of
Temecula and Teamsters Local 911, the City of Temecula Management Compensation Plan,
or the City of Temecula City Council Compensation Plan, as they may be amended, or other
policies or contracts adopted by the Employer. The enrollment and termination of participation
under the Plan shall constitute enrollment and termination of participation under this
Dependent Care Assistance Program. In addition, other matters concerning contributions,
elections, and the like shall be governed by the general provisions of the Plan.
7.12 DEPENDENT CARE ASSISTANCE PROGRAM CLAIMS
The Administrator shall direct the payment of all such Dependent Care Assistance claims to
the Participant upon the presentation to the Administrator of documentation of such expenses
in a form satisfactory to the Administrator.
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 and the amount
of such expense. In addition, the Administrator may require that each Participant who desires
to receive reimbursement under this Program for employment-related dependent care
expenses submit a statement, which may contain some or all of the following information:
a) The Dependent or Dependents for whom the services were performed;
b) The nature of the services performed for the Participant, the cost of which they
wish 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;
Section 125 Cafeteria Plan Document (1/1/2023) Page 32 of 44
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
g) If the services were being performed in a daycare center, a statement
1) That the daycare center complies with all applicable laws and regulations
of the state of residence,
2) That the daycare center provides care for more than six 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:
se is not employed, that
(a) They are incapacitated, or
(b) They are a full-time student attending an educational institution and
the months during the year which they attended such institution.
i) If a Participant fails to submit a claim within the 90-day period immediately
following the end of the Plan Year, the Administrator shall not consider those
claims for reimbursement.
j) Subject to Section 7.13, all Dependent Care Assistance claims incurred by a
Participant shall be reimbursed during the Plan Year subject to Sections 2.5
through 2.8 of the Plan, even though the submission of such a claim occurs after
their participation hereunder ceases, provided that the Dependent Care
Assistance Expenses were incurred during the applicable Plan Year prior to the
date that the Participant ceases to be eligible (or during any Grace Period to
which he or she is entitled) and provided t
estate) files a claim within 90 days afte
employment terminates or the Participant otherwise ceases to be eligible.
k) The Administrator shall direct the reimbursement to each eligible Participant for
all allowable employment-related dependent care expenses, up to a maximum of
the amount designated by the Participant for the Dependent Care Assistance
Program for the Plan Year. Reimbursements shall be made available to the
Participant throughout the year up to the level of Salary Redirection and/or non-
Health Flex Contributions which have been allocated to the account 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
Dependent Care Assistance Plan covering t
Spouse or Dependents.
Section 125 Cafeteria Plan Document (1/1/2023) Page 33 of 44
l) Notwithstanding anything in this Section to the contrary, Dependent Care
Expenses incurred during the Claims Extension Period, up to the remaining
account balance, shall also be deemed to have been incurred during the Plan
Year to which the Claims Extension Period
Adoption Agreement.
Furthermore, the Participant shall provide a written statement that the Dependent
Care Assistance Expense has not been reimbursed or is not reimbursable under
any other Dependent Care Assistance Plan coverage and, if reimbursed from the
Dependent Care Assistance Program, such amount will not be claimed as a tax
credit. The Administrator shall retain a file of all such applications.
Within 30 days after receipt by the Administrator of a reimbursement claim from a
Participant, the Employer will reimburse
dependent care expenses (if the Administrator approves the claim), or the
Administrator will notify the Participant that his or her claim has been denied.
This time period may be extended by an additional 15 days for matters beyond
the control of the Administrator, including in cases where a reimbursement claim
is incomplete. The Administrator will provide written notice of any extension,
including the reasons for the extension, and will allow the Participant 45 days in
which to complete the previously incomplete reimbursement claim.
For reimbursement claims that are denied, see the appeals procedure in Article
VIII.
7.13 REIMBURSEMENTS FROM DEPENDENT CARE ASSISTANCE PROGRAM AFTER
TERMINATION OF PARTICIPATION
When a Participant ceases to be a Participant of the Dependent Care Assistance Program, the
and election to participate will terminate. Except as otherwise
provided in this Article (regarding certain individuals who may be reimbursed from prior Plan
Year amounts for expenses incurred during a Grace Period), the Participant will not be able to
receive reimbursements for dependent care expenses incurred after the end of the day on
s or the Participant otherwise ceases to be
eligible. However, such Partic te) may claim reimbursement for
any dependent care expenses incurred during the Plan Year prior to the date that the
Participant ceases to be eligible (or during any Grace Period to which he or she is entitled),
provided that the Participant (o s a claim within 90 days after the
es or the Participant otherwise ceases to be
eligible.
Section 125 Cafeteria Plan Document (1/1/2023) Page 34 of 44
ARTICLE VIII
APPEALS PROCEDURE
8.1 PROCEDURE IF BENEFITS ARE DENIED UNDER THIS PLAN
If a claim for reimbursement under this Plan is wholly or partially denied, then claims shall be
administered in accordance with the claims procedure set forth in the summary plan
description for this Plan.
ARTICLE IX
RESERVED
ARTICLE X
RESERVED
ARTICLE XI
RESERVED
Section 125 Cafeteria Plan Document (1/1/2023) Page 35 of 44
ARTICLE XII
ADMINISTRATION
12.1 PLAN ADMINISTRATION
The operation of the Plan shall be under the supervision of the Administrator. It shall be a
principal duty of the Administrator to see that the Plan is carried out in accordance with its
terms, and for the exclusive benefit of Employees entitled to participate in the Plan. The
Administrator shall have full authority and discretion to administer the Plan in all of its details or
may delegate a portion of such authority to any third party, subject, however, to applicable
requirements of law. The Admini
following authority, in addition to all other powers provided by this Plan:
a) To make and enforce such rules and regulations as the Administrator deems
necessary or proper for the efficient administration of the Plan;
b) To interpret the Plan, with the Administ thereof to be final
and conclusive on all persons claiming Benefits under the Plan;
c) To decide all questions concerning the Plan and the eligibility of any person to
participate in the Plan and to receive Benefits provided under the Plan;
d) To the extent applicable and considering this is a non-federal government plan
covering collectively bargained employees, to reject elections or to limit
contributions or Benefits for certain Highly Compensated Participants or other
affected Participants if the Administrator deems such to be necessary in order to
avoid discrimination under the Plan in violation of applicable provisions of the
Code, or maintain compliance with any other applicable provisions of the Plan or
other requirements of the law;
e) To provide Employees with a reasonable notification of their Benefits available
under the Plan;
f) To approve reimbursement requests and to authorize the payment of Benefits;
and
g) To appoint such agents, counsel, accountants, consultants, and actuaries as
may be required to assist in administering the Plan; and
h) To delegate its responsibilities under the Plan and to designate other persons to
carry out any of its responsibilities under the Plan, any such delegation or
designation to be in writing.
Any determination by the Administrator shall be final and conclusive on all persons, in the
absence of clear and convincing evidence that the Administrator acted arbitrarily and
capriciously. Notwithstanding the foregoing, any claim which arises under any plan of
Insurance Benefits selected by the Employer under Paragraph 8 of its signed Adoption
Agreement shall not be subject to review under this Plan, and the Administrator's authority
Section 125 Cafeteria Plan Document (1/1/2023) Page 36 of 44
under this Section 12.1 shall not extend to any matter as to which an administrator under any
such other plan is empowered to make determinations under such plan or policy. 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.
12.2 METHOD OF BENEFIT PAYMENT
a) The Administrator shall make, or otherwise direct any Trustee to make (if
applicable) any and all payments or other reimbursements in the manner
specified herein and as otherwise elected by the Employer (e.g., direct
reimbursement by check, automatic deposit via automated clearing house
(ACH)).
b) If a Participant agrees to the terms and conditions of any applicable cardholder
agreement that provides for the payment of qualifying Benefit expenses through
use of a debit or credit card, stored value card or other similar electronic media
this Plan shall be made directly to
the service provider, authorized merchant, or other independent third party that
provides products or services that are eligible for payment of qualifying Benefit
expenses as otherwise set forth herein.
1) Within the cardholder agreement, the Participant agrees that payment for
qualifying Benefit expenses can only be made on behalf of the Participant,
qualifying Dependents and is otherwise
limited to the maximum dollar amount of coverage that is otherwise
specified for that Benefit in accordance with the limitations set forth in the
Agreement or as otherwise specified by the
icipant also certifies that any
expense paid with the Debit Card has not been, and will not be,
reimbursed through any other plan or method of coverage provided under
this Plan. The Participant-cardholder also understands that the
certification, which shall be printed on the back of the Debit Card, is
reaffirmed each time the Debit Card is used. The Participant-cardholder
also agrees to acquire and retain sufficient documentation for any
expense(s) paid with the Debit Card, including invoices and receipts
where appropriate or as required by law. The Participant-cardholder also
understands that the Debit Card is automatically cancelled at termination
of employment or under such other situations that are otherwise set forth
within the cardholder agreement itself.
2) Unless other more stringent procedures or requirements are implemented
and communicated to the Employer and its Employees, the Administrator
agrees that it shall separately adhere to the terms and conditions of any
separate Employer cardholder servicing agreement, including but not
limited to, a requirement to maintain the program in compliance with
Section 125 Cafeteria Plan Document (1/1/2023) Page 37 of 44
applicable standards under the Code and any mandates that payments for
qualifying expenses only be made to authorized merchants and service
providers. The Administrator also agrees that it shall establish and
maintain procedures for substantiation of any payments after the Debit
Card has been used for qualifying Benefit payments that are in
accordance with applicable provisions of the Code, any underlying
Regulations and other applicable guidance thereunder.
3) If the Benefit reimbursement request is being submitted for any non-
qualifying Benefit expense in a manner other than as specified under any
of the methods allowable under existing IRS guidelines, the Administrator
may make a conditional payment of an allowable Benefit item to the
authorized service provider, merchant, or approved independent third
party, but shall also require the Participant-cardholder to remit additional
third-party information, such as merchant or service provider receipts,
describing the service or product; the date of service or sale; and the
amount, which shall be subject to further review and substantiation.
4) If a Participant attempts to utilize the Debit Card or other form of electronic
payment for any improper or non-allowable purpose, the Participant shall
be responsible for any and all fees or other expenses, including restitution
or other similar penalty amounts, charged inappropriately by the
Participant.
5) If any conditional payment or other Benefit payment has been made but is
not deemed to be qualifying Benefit expense reimbursement, the
Administrator shall ensure that proper correction procedures are
maintained with respect to the improper payment(s):
(a) Upon identification of any improper payment, the Administrator
shall require the Participant to pay back to the Plan an amount
equal to the improper payment;
(b) If the Participant does not immediately repay the Plan, the
Administrator shall ensure that the proper amount is withheld from
Compensation (with such amounts
then being immediately remitted to the Plan by the Employer) to the
extent consistent with applicable law;
(c) To the extent that neither (a) nor (b) above are allowable or
effective, the Administrator shall have the authority to utilize a
Claim substitution or offset approach to resolve the improper Claim
amount(s), with such methodology being clearly explained to the
Participant-cardholder as part of their cardholder agreement.
(d) The Administrator may also take any further steps or actions as
deemed necessary, including denial or cancellation of access to the
Debit Card until the indebtedness is repaid by the Participant. The
Section 125 Cafeteria Plan Document (1/1/2023) Page 38 of 44
Administrator may also pursue any other methods of collection as
would be consistent with its usual business practices to ensure the
improper payment amounts are adequately remitted to the Plan as
required by the Plan or Participant-cardholder agreement.
12.3 EXAMINATION OF RECORDS
The Administrator shall make available to each Participant, Eligible Employee, and any other
Employee of the Employer such records as pertain to their interest under the Plan for
examination at reasonable times during normal business hours; provided, however, the
Administrator shall have no obligation to disclose any records or information which the
Administrator, in its sole discretion, determines to be of a privileged or confidential nature.
12.4 PAYMENT OF EXPENSES
Any reasonable administrative expenses shall be paid by the Plan or by any Trust Fund that
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 to the extent nondiscrimination laws apply.
12.5 INSURANCE CONTROL CLAUSE
In the event of a conflict between the terms of this Plan and the terms of an Insurance Contract
of a particular 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.
12.6 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
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.
Section 125 Cafeteria Plan Document (1/1/2023) Page 39 of 44
ARTICLE XIII
AMENDMENT OR TERMINATION OF PLAN
13.1 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.
13.2 TERMINATION
By signing the Adoption Agreement, the Employer is establishing this Plan with the intent that it
will be maintained for an indefinite period of time. Notwithstanding the foregoing, the Employer
reserves the right to terminate the Plan, in whole or in part, at any time. In the event the Plan is
terminated, no further contributions shall be made and no further additions shall be made to
the Insurance Benefit program, Healthcare Flexible Spending Account, or Dependent Care
Assistance Account. Payments from such account(s)/program(s) shall continue to be made
according to the elections in effect until the end of the Plan Year in which the Plan termination
occurs (and for a reasonable period of time thereafter, if required for the filing of Claims), or
until the balances of all accounts have been reduced to zero, whichever occurs first. Any
amounts remaining in any such account(s)/ program(s) as of the end of the Plan Year in which
Plan termination occurs shall be forfeited after the expiration of the Claim filing period. The
above notwithstanding, Benefits under any Insurance Contract shall be paid in accordance
with the terms of that Contract.
ARTICLE XIV
HIPAA PRIVACY REQUIREMENTS
As of the required Effective Date, the Employer has implemented or amended the Plan to
comply with the Health Insurance Portability
forth in 45 C.F.R. Parts 160 through 164;
14.1 DEFINITIONS In addition to the specific definitions set forth below, all other capitalized
terms used that are not otherwise defined herein have the meanings ascribed in HIPAA:
a) has the meaning in 45 CFR Section 164.501.
b) has the meaning in 45 CFR Section 160.103, which is:
1) Electronic storage media including memory devices in computers (hard
drives) and any removable/transportable digital memory medium, such as
magnetic tape or disk, optical disk, or digital memory card; or
Section 125 Cafeteria Plan Document (1/1/2023) Page 40 of 44
2) Transmission media used to exchange information already in electronic
storage media.
3) Transmission media include, for example, the internet (wide-open), extranet
(using internet technology to link a business with information accessible only
to collaborating parties), leased lines, dial-up lines, private networks, and the
physical movement of removable/transportable electronic storage media.
Certain transmissions, including of paper, via facsimile, and of voice, via
telephone, are not considered to be transmissions via electronic media,
because the information being exchanged did not exist in electronic form
before the transmission.
c)
the meaning in 45 CFR Section 160.103, and is limited to the information
created, maintained, transmitted or received by Business Associate from or on
behalf of the Plan.
d) is defined as activities that would meet the
definition of Payment or Healthcare Operations by HIPAA as set forth in 45
C.F.R. Section 164.501, but do not include functions to modify, amend, or
terminate the Plan or solicit bids from prospective issuers. Plan administration
includes quality assurance, claims processing, auditing, monitoring, and
management of carve-out plans (i.e., vision and dental). Plan administration does
not include any employment-related functions or functions in connection with any
other Benefits or Benefit plans, and the Plan(s) may not disclose information for
such purposes absent an authorization from an individual for whom the
information pertains. In addition, enrollment functions performed by the Employer
are not considered Plan Administration Functions.
e) is defined as Protected Health Information, as set forth in 45 C.F.R.
Section 164.501. It is information that is created or received by a health plan,
employer, healthcare provider, or healthcare clearing house and includes
information that 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.
In addition, the information either identifies the individual; or with respect to which
there is a reasonable basis to believe the information can be used to identify the
individual. This information may be maintained or transmitted either electronically
or in any other form or medium.
f) means the Secretary of the Department of Health and Human
Services or designee.
g) has the meaning in 45 CFR Section 164.304, which is: the
attempted or successful unauthorized access, use, disclosure, modification, or
destruction of information or interference with system operations in an
information system.
Section 125 Cafeteria Plan Document (1/1/2023) Page 41 of 44
h) is defined by HIPAA as set forth in 45 C.F.R.
Section 164.504 as information that may be PHI, and that summarizes the claims
history, claims expenses, or type of claims experienced by individuals for whom
the Employer has provided health benefits under the Plan; and from which the
following information has been deleted, except that the geographic information
described in 2) need only be aggregated to the level of a five-digit zip code or the
initial three digits of a zip code:
1) Names;
2) All geographic subdivisions smaller than a State, including street address,
city, county, precinct, zip code, and their equivalent geocodes, except for
the initial three digits of a zip code if, according to the current publicly
available data from the Bureau of the Census:
(a) The geographic unit formed by combining all zip codes with the
same three initial digits contains more than 20,000 people; and
(b) The initial three digits of a zip code for all such geographic units
containing 20,000 or fewer people is changed to 000.
3) All elements of dates (except year) for dates directly related to an
individual, including birth date, admission date, discharge date, date of
death; and all ages over 89 and all elements of dates (including year)
indicative of such age, except that such ages and elements may be
aggregated into a single category of age 90 or older;
4) Telephone numbers;
5) Fax numbers;
6) Electronic mail addresses;
7) Social Security numbers;
8) Medical record numbers;
9) Health plan beneficiary numbers;
10) Account numbers;
11) Certificate/license numbers;
12) Vehicle identifiers and serial numbers, including license plate numbers;
13) Device identifiers and serial numbers;
14) Web Universal Resource Locators (URLs);
Section 125 Cafeteria Plan Document (1/1/2023) Page 42 of 44
15) Biometric identifiers, including finger and voice prints;
16) Full face photographic images and any comparable images; and
17) Any other unique identifying number, characteristic, or code.
14.2 DISCLOSURE OF SUMMARY HEALTH INFORMATION
The Plan, its Administrator, or any contracted representatives of the Plan, may disclose
Summary Health Information to the Employer, if the Employer requests the Summary Health
Information for the purpose of:
a) Obtaining premium bids from health plans for providing health insurance
coverage under the Plan; or
b) Modifying, amending, or terminating the Plan.
14.3 DISCLOSURE OF PHI
The Plan, its Administrator, or any contracted representatives of the Plan, may release PHI to
the Employer, so long as the Employer agrees to do the following:
a) The Employer shall not use or further disclose the PHI other than as permitted or
s or as required by law;
b) The Employer shall ensure that any agents, including a subcontractor, to whom it
provides PHI shall agree to the same restrictions and conditions that apply to the
Employer with respect to such PHI;
c) The Employer shall not use or disclose the PHI for employment-related actions
and decisions, or in connection with any other Benefit or employee Benefit plan
of the Employer;
d) The Employer agrees to report to the Plan any use or disclosure of the PHI that
is inconsistent with the uses or disclosures providing herein, if and when the
Employer becomes aware of such inconsistent use or disclosure;
e) The Employer, in accordance with HIPAA as set forth in 45 C.F.R. Section
164.524 and consistent with the Employer Privacy Policy, has authorized the
Plan to make PHI available to individuals;
f) The Employer, in accordance with HIPAA as set forth in 45 C.F.R. Section
164.524 and consistent with the Employer Privacy Policy, has authorized the
Plan to make PHI available to individuals for amendment and to incorporate such
amendments of PHI;
g) The Employer, in accordance with HIPAA as set forth in 45 C.F.R. Section
164.528 and consistent with the Employer Privacy Policy, has authorized the
Section 125 Cafeteria Plan Document (1/1/2023) Page 43 of 44
Plan to make available the information required to provide an accounting of
disclosures;
h) The Employer, agrees to make its internal practices, books, and records relating
to the use and disclosure of PHI received from the Plan available to the
Secretary for purposes of determining
i) If feasible, the Employer shall return or destroy all PHI that the Employer
received from the Plan and which the Employer no longer needs for the purpose
for which disclosure was made, except that, if such return or destruction is not
feasible, the Employer shall limit further uses and disclosures to those purposes
that make the return or destruction of the PHI infeasible;
j) The Employer agrees to use appropriate safeguards to prevent unauthorized use
or disclosure of PHI, and have reasonable and appropriate safeguards in place to
protect the confidentiality, integrity and availability of ePHI;
k) The Employer agrees to mitigate, to the extent practicable, any harmful effect
that is known to Business Associate of a use or disclosure of PHI by Business
Associate in violation of the requirements of this Agreement;
l) The Employer agrees to report to the Plan, any use or disclosure of PHI of which
it becomes aware that is not permitted or required by HIPAA; and
m) The Employer agrees to report to the Plan any Security Incident of ePHI of which
it becomes aware.
14.4 ADEQUATE SEPARATIONS
The Employer shall ensure that the following adequate separations are established:
a) The Employer shall designate specific people who shall use and disclose PHI on
behalf of the Plan for purposes of Plan Administration Functions.
b) Access and use of PHI by the Group shall be limited to Plan Administration
Functions that the Employer performs on behalf of the Plan;
c) Any issues of noncompliance by the Group shall result in disciplinary measures
specified in the Employer Privacy Policy.
14.5 USES AND DISCLOSURES
The Plan, its Administrator, or any contracted representatives of the Plan, may:
a) Disclose PHI to the Employer in order for the Employer to carry out Plan
Administration Functions consistent with the provisions of Subsections a) through
i) and Subsection 14.4 above;
Section 125 Cafeteria Plan Document (1/1/2023) Page 44 of 44
b) Permit an insurance company, insurance service, insurance organization, or
HMO to disclose PHI to the Employer, so long as the disclosure is made to an
authorized person, and the disclosure is only for the purpose described in this
Section 14.5;
c) Not disclose or permit an insurance, insurance service, insurance organization,
or HMO to disclose PHI to the Employer
contains a provision which permits such disclosure; and
d) Not disclose PHI to the Employer for the purpose of employment-related actions
or decisions or in connection with any other Benefit or employee Benefit plan of
the Employer.
ARTICLE XV
MISCELLANEOUS
15.1 PLAN INTERPRETATION
a) All provisions of this Plan shall be governed and interpreted by the Administrator
in its full and complete discretion and shall be otherwise applied in a uniform,
nondiscriminatory manner. This Plan shall be read in its entirety and not severed
except as provided in Section 15.12.
b) In administering the Plan, the Administrator will be entitled to the extent permitted
by law to rely conclusively on all tables, valuations, certificates, opinions, and
reports which are furnished by, or in accordance with the instructions of the
Administrators of the plans for any Insurance Benefits selected as part of
Paragraph 8 of the signed Adoption Agreement, or by accountants, counsel, or
other experts employed or engaged by the Administrator.
15.2 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine, or gender neutral, 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.
15.3 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 Regulations
thereunder relating to cafeteria plans.
Section 125 Cafeteria Plan Document (1/1/2023) Page 45 of 44
15.4 EXCLUSIVE BENEFIT
This Plan shall be maintained for the exclusive benefit of the Employees who participate in the
Plan.
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 that such discharge shall have upon him/her as a Participant of this Plan.
15.6 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.
a) Upon the failure of either the Participant or the Employer to obtain the insurance
contemplated by this Plan (whether as a result of negligence, gross neglect, or
ll be limited to the insurance premium, if
any, that remained unpaid for the period in question and the actual insurance
proceeds, if any, received by the Employer or the Participant as a result of the
pant shall only extend to and shall be limited
to any payment actually received by the Employer from the Insurer. In the event
that the full insurance Benefit contemplated is not promptly received by the
Employer within a reasonable time after submission of a Claim, then the
Employer shall notify the Participant of such facts and the Employer shall no
longer have any legal obligation whatsoever (except to execute any document
called for by a settlement reached by the Participant). The Participant shall be
free to settle, compromise, or refuse to pursue the Claim as the Participant, in
their sole discretion, shall see fit.
c) The Employer shall not be responsible for the validity of any Insurance Contract
issued hereunder or for the failure on the part of the Insurer to make payments
provided for under any Insurance Contract. Once insurance is applied for or
obtained, the Employer shall not be liable for any loss that may result from the
failure to pay Premiums to the extent Premium notices are not received by the
Employer.
Section 125 Cafeteria Plan Document (1/1/2023) Page 46 of 44
15.8 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Administrator nor the Employer makes any commitment or guarantee that any
amounts paid to or for the benefit of a Participant under the Plan will be excludable from the
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
ate 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.
15.9 INDEMNIFICATION OF EMPLOYER BY PARTICIPANTS
If any Participant receives one or more payments or reimbursements under the Plan that are
not for a permitted Benefit, such Participant shall indemnify and reimburse the Employer for
any liability it may incur for failure to withhold Federal or State income tax or Social Security
tax from such payments or reimbursements. However, such indemnification and
reimbursement shall not exceed the amount of additional Federal and State income tax (plus
any penalties) that the Participant would have owed if the payments or reimbursements had
been made to the Participant as regular cash Compensation, plus
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.
15.10 FUNDING
Unless otherwise required by law, contributions to the Plan need not be placed in trust or
dedicated to a specific Benefit, but shall 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.
15.11 GOVERNING LAW
This Plan is governed by the Code and the Treasury Regulations issued thereunder (as they
might be amended from time to time). In no event shall the Employer guarantee the favorable
tax treatment sought by this Plan. To the extent not preempted by Federal law, the provisions
of this Plan shall be construed, enforced, and administered according to the laws of the State
identified as part of the Employer
15.12 SEVERABILITY
If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability
shall not affect any other provisions of the Plan, and the Plan shall be construed and enforced
as if such provision had not been included herein.
Section 125 Cafeteria Plan Document (1/1/2023) Page 47 of 44
15.13 CAPTIONS
The captions contained herein are inserted only as a matter of convenience and for reference,
and in no way define, limit, enlarge, or describe the scope or intent of the Plan, nor in any way
shall affect the Plan or the construction of any provision thereof.
15.14 CONTINUATION OF COVERAGE
Notwithstanding anything in the Plan to the contrary, in the event any Benefit under this Plan
subject to the continuation coverage requirement of Code Section 4980B becomes
unavailable, each Participant will be entitled to continuation coverage as prescribed in Code
Section 4980B.
15.15 UNIFORM SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS (USERRA)
ACT
Notwithstanding any provision of this Plan to the contrary, contributions, Benefits, and service
credit with respect to qualified military service shall be provided in accordance with USERRA
and the regulations thereunder.
15.16 GENETIC INFORMATION NONDISCRIMINATION ACT
Notwithstanding anything in the Plan to the contrary, the Plan will comply with the Genetic
Information Nondiscrimination Act.
15.17 MENTAL HEALTH PARITY AND ADDICTION 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. Specifically, as of January 1,
2010, the Plan shall no longer apply a specific annual or lifetime maximum coverage limitation,
daily visit limitation or separate per day limit on coverage or services for mental and nervous
disorders and/or substance abuse that is different from any other inpatient or outpatient
treatment provided for under the Plan, and coverage shall be provided the same as any other
medical procedure.
Notwithstanding anything in the Plan to the contrary, the Plan will co
Health and Cancer Rights Act.
Notwithstanding anything in the Plan to the cont
Section 125 Cafeteria Plan Document (1/1/2023) Page 48 of 44
ARTICLE XVI
CONSOLIDATED APPROPRIATIONS ACT OF 2021
16.1 CONSOLIDATED APPROPRIATIONS ACT OF 2021
in good faith compliance with the Consolidated Appropriations Act of 2021 (CAA, 2021), IRS
Notice 2021-15, the American Rescue Plan Act of 2021 (ARPA), and other applicable law and
guidance, unless otherwise specifically stated herein. This Article supersedes any inconsistent
provisions of the Plan for eligible Plan Years provided by the CAA, IRS Notice 2021-15, the
ARPA, and other applicable law and guidance.
a) Prospective Change of Election
1) Prospective election changes can be
Flexible Spending Account and/or Dependent Care Assistance Program
accounts during the 2021 Plan Year.
2) This change is effective on January 1, 2021, and is in effect for eligible
Plan Years provided by the CAA, IRS Notice 2021-15, the ARPA, and
other applicable law and guidance.
b) Healthcare Flexible Spending Account Carryover
1) The maximum amount Participants may carryover in their Healthcare
Flexible Spending Account from the plan year beginning in 2021 to the
plan year beginning in 2022 is unlimited up to the amount of contributions
for the plan year beginning in 2021.
2) This change is effective on January 1, 2021, and is in effect for eligible
Plan Years provided by the CAA, IRS Notice 2021-15, the ARPA, and
other applicable law and guidance.
c) Dependent Care Assistance Program Extended Grace Period/Claims Extension
Period
1) The claims extension period (grace period) for Participants to use funds in
their Dependent Care Assistant Program from the plan year beginning in
2021 to the plan year beginning in 2022 is extended from 2 ½ months to
12 months after the end of the plan year beginning in 2021.
2) This change is effective on January 1, 2021, and is in effect for eligible
Plan Years provided by the CAA, IRS Notice 2021-15, the ARPA, and
other applicable law and guidance.
d) Spend Down of Healthcare Flexible Spending Account
Section 125 Cafeteria Plan Document (1/1/2023) Page 49 of 44
1) The Participants may continue to receive reimbursements from unused
contributions in their Healthcare Flexible Spending Account for expenses
incurred through the end of the plan year in which such Participant ceased
participation.
2) This change is effective on January 1, 2021, and is in effect for eligible
Plan Years provided by the CAA, IRS Notice 2021-15, the ARPA, and
other applicable law and guidance.