HomeMy WebLinkAboutRes 2013-13 - Restating IRS Sec 125 Flxble Bnfts PlnCITY OF PALM DESERT
HUMAN RESOURCES DEPARTMENT
STAFF REPORT
REQUEST: Adopt Resolution No. 2013- 13 restating in its entirety the City
of Palm Desert IRS Section 125 Flexible Benefits Plan.
SUBMITTED BY: Lori Carney, Human Resources Manager
CASE NOS. N/A
DATE: January 14, 2013
CONTENTS: Staff Report
Resolution No. 2013-13
City of Palm Desert IRS Section 125 Flexible Benefits Plan,
including exhibits
Recommendation:
Waive further reading and adopt Resolution No. 2013-13 restating in its
entirety the City of Palm Desert IRS Section 125 Flexible Benefits Plan.
Backqround:
The City of Palm Desert adopted its first flexible benefit or "Cafeteria Plan" in
1999. Over the years the plan has been amended to reflect changes in the law
and changes in the City's benefits structure. In the interest of clear
recordkeeping staff is restating the plan, with amendments, in its entirety.
Resolution No. 2013-13
Staff Report
Flexible Benefits Plan — restate for the record 2013
February 28, 2013
Page 2 of 2
No changes to the plan or benefits programs are being made at this time, the
entire document is simply being restated for ease of recordkeeping.
Fiscal Analvsis
No impact.
Submitted by:
�
Lori Carney, v
Human Resources Manager
Approval:
�,fJc�hn Wohlmuth,
,� C�ty Manager
# �/
Paul Gibson,
Finance Director
CITY COUNCIiA�"'iTION
APPROVED �
RECEIVED
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AYES: �'i'�/' % a�1�1Pi^, 1�.��Pi� � fi�2i�ik
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AB5ENT: ��"/e
ABSTAIN: ����
VERIFIED BY• r`�����1 �
Original on File with City�Icrk's Otiice
RESOLUTION NO. 2013-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, RESTATING THE CITY OF PALM DESERT
IRS SECTION 125 FLEXIBLE BENEFITS PLAN;
WHEREAS, Section 125 of the Internal Revenue Code allows employees to
choose among two or more appropriate levels of health benefits for themselves and
their families; and
WHEREAS, the City of Palm Desert first adopted it's flexible benefits plan in
1999; and
WHEREAS, the Flexible Benefits Plan is not considered discriminatory to
collective bargaining units; and
WHEREAS, over the years the plan has been amended to reflect changes in
Federal law and the City's benefits structure; and
WHEREAS, it is beneficial to restate the current plan in its entirety for ease of
recordkeeping;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Palm
Desert, California, adopt the attached restated City of Palm Desert IRS Section 125
Cafeteria Plan; and
PASSED, APPROVED AND ADOPTED at the regular meeting of the
Palm Desert City Council, held on this 28th day of February, 2013, by the following
vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
JAN HARNIK, MAYOR
ATTEST:
RACHELLE KLASSEN, CITY CLERK
City of Palm Desert, California
CITY OF PALM DESERT
SECTION 125
PLAN DOCUMENT
Amended and Restated Effective February 28, 2013
STATEMENT OF PURPOSE
This document describes the City of Palm Desert Section 125 Plan. The Plan was originally
effective on July 1, 1999, and is hereby amended and restated effective July 1, 2008.
The Plan is intended to qualify as a"cafeteria plan" under section 125 of the Intemal
Revenue Code of 1986, as amended, and is to be interpreted in a manner consistent with all
relevant provisions of the Code.
The purpose of the Plan is to give participants a choice between receiving cash or optional
benefit coverages. The Plan enables participants who choose an optional benefit coverage
to make their contributions for such coverage on a before-tax basis.
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ARTICLE I
DEFINITIONS
Whenever used herein, the following terms shall have the following meaning, unless a
different meaning is clearly required by the context:
1.1 Administrator. The Administrator shall be the entity designated as the Administrator in
section 6.1 of the Plan.
1.2 Anniversary Date. The Anniversary Date shall mean the first day of any Plan Year.
1.3 Code. Code shall mean the Internal Revenue Code of 1986, as amended.
1.4 Compensation. Compensation shall mean the total remuneration of a Participant,
including (but not limited to) wages, salary, overtime, bonuses, commissions, and any
other payment which is not an advance, loan or expense reimbursement. Each
Participant's Compensation shall be determined prior to taking into account the
Participant's salary reduction contributions under the Plan.
1.5 Dependent. Dependent shall mean any individual who is a tax dependent of the
Participant as defined in Code section 152(a); however, in the case of a health benefit,
a Dependent shall be defined as set forth in Code section 105(b) and the regulations
issued under Code section 106. For purposes of a dependent-care flexible spending
arrangement (if offered under the Plan), a Dependent shall also be defined as in Code
section 21(e)(5) (i.e. a dependent of the parent with custody for the greater portion of
the calendar year).
1.6 Effective Date. Effective Date shall mean July 1, 2008.
1_7 Election Period. Election Period shall mean the period of time in which a Participant or
Eligible Employee may enter, change, or terminate from the Plan.
1.8 Eliqible Emqlovee. Eligible Employee shall mean (a) any Employee who is regularly
scheduled to work a minimum of 20 hours per week and (b) any city council member.
- Notwithstanding anything in the Plan to the contrary, the term "Eligible Employee" shall
not include Employees who are classified by the Employer as temporary Employees,
and Employees who are regularly scheduled to work less than 20 hours per week.
1.9 Emplovee. Employee shall mean (a) any individual who is classified by the Employer
as an employee of the Employer and who is on the Employer's Form W-2 payroll, and
(b) any elected official of the Employer; provided, that the person is not classified by
the Employer as a leased employee or contract worker.
1.10 Emplover. Employer shall mean City of Palm Desert.
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1.11 "Flex Dollars": Flex Dollars shall mean benefit credits or benefit dollars provided to a
participant by the Employer, which may be applied towards the cost of Optional Benefit
Coverages.
1.12 Hiahlv Compensated Emplovee. Highly Compensated Employee shall mean any
individual defined under Code section 125(e) as a"highly compensated individual" or
"highly compensated employee."
1.13 Insurance Companv. Insurance Company shall mean any insurance company,
insurance carrier, or insurer that underwrites insurance and has a contract with the
Employer for an Optional Benefit Coverage under this Plan.
1.14 Optional Benefit Coveraae. Optional Benefit Coverage shall mean coverage available
to Participants under the Plan.
1.15 Participant. Participant shall mean any Eligible Employee who elects to participate in
the Plan in accordance with Article II.
1.16 Period of Coveraae. Period of Coverage shall mean (i) a Plan Year, or (ii) the portion
of the Plan Year remaining after the effective date of an Eligible Employee's election of
an Optional Benefit Coverage under the Plan, or (iii) the portion of the Plan Year prior
to a Participant's termination from the Plan, whichever is applicable.
1.17 Plan. Plan shall mean the City of Palm Desert Section 125 Plan, as set forth herein.
1.18 Plan Year. Plan Year shall mean the period beginning January 1 and ending
December 31.
1.19 Salary Reduction Contributions. Salary Reductions Contributions shall mean the
amount that each Participant has authorized the Employer to reduce his or her
Compensation on a before-tax basis in order for such amount to be contributed to the
Plan to provide the Optional Benefit Coverages selected by the Participant. The
amount of Salary Reduction Contributions shall be designated on the salary reduction
agreement specified by the Administrator.
1.20 Status Chanae. Status Change shall mean any of the events described in section
4.6(A) of the Plan.
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ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eliqibilitv.
All Employees shall become eligible to participate in the Plan upon satisfying the
definition of an Eligible Employee.
2.2 Entry Date.
Eligible Employees begin participating in the Plan on the first day of the month
following their first day of active service for the Employer.
2.3 Emplovee Election.
All Employees who meet the eligibility requirements set forth in section 2.1 may elect,
during the appropriate Election Period, to become a Participant by completing the
salary reduction agreement specified by the Administrator, and submitting the
completed agreement to the Administrator. The agreement designates whether the
Employee desires to elect Optional Benefit Coverages under the Plan.
2.4 Election Periods.
Eligible Employees shall be allowed to make elections under the Plan during the
following Election Periods:
(A) Initial Election Period.
All Eligible Employees have an Election Period of 30 days, beginning on their
first date of active service for the Employer, during which they must complete
and submit the necessary forms to the Administrator to elect the Optional
Benefit Coverages that they desire under the Plan. This initial Election Period
may be extended by the Administrator, at its sole discretion, upon written notice
to Eligible Employees.
(B) Annual Election Periods.
After an Eligible Employee's initial Election Period, the Eligible Employee may
elect to change, modify, decrease, or increase his or her benefits during the
annual Election Period, which shall be the 30 day period immediately preceding
the Anniversary Date of the Plan or such other 30 day period as may be
specified by the Employer. Eligible Employees must complete a new salary
reduction agreement as described in section 2.3 in order to make changes in
��
their Plan elections. This annual Election Period may be extended by the
Administrator, in its sole discretion, upon written notice to Eligible Employees.
2.5 Termination of Participation.
A Participant shall remain a Participant in the Plan until the occurrence of one or more
of the following:
(A) Participant ceases to be eligible to participate in Plan;
(B) Participant's employment is terminated;
(C) Participant's death;
(D) The termination of this Plan;
(E) Participant elects not to participate under section 4.4(c).
2.6 Termination of Emqlovment.
If a Participant's employment is terminated, then all contributions to the Plan by the
Participant shall cease upon the termination date. The Participant shall no longer be
considered a Participant, effective on the date of termination of employment.
However, a Participant may still be eligible for certain benefits in accordance with the
terms of the Optional Benefit Coverages for which contributions have been paid on the
Participant's behalf. The continuation of any benefit shall be governed solely by the
terms and provisions of the plans providing the Optional Benefit Coverages, and in
accordance wi#h applicable law.
-5-
ARTICLE III
OPT/ONAL BENEF/T COVERAGES
3.1
3.2
3.3
Coveraqe Options.
Each Participant may choose under this Plan to receive his or her Compensation in
cash, plus any flex dollars, or to have a portion of it applied by the Employer toward
the cost of the Optional Benefit Coverages available to the Participant.
Notwithstanding anything herein to the contrary, Optional Benefit Coverages shall be
limited to coverages and benefits available under the plans identified in schedule A.
Description of Optional Benefit Coveraqes.
incorporated by reference) in certain of those plans. The benefit descriptions in such
plans, as in effect from time to time, are hereby incorporated by reference into this
Plan.
While the election of one or more of the Optional Benefit Coverages may be made
under this Plan, the coverages and benefits thereunder will be provided not by this
Plan but by the plans identified in schedule A. The requirements for participating in
such plans, and the other terms and conditions of coverage and benefits under such
plans, are set forth from time to time in the plans identified in schedule A, and in any
group insurance contracts and prepaid health plan contracts that constitute (or are
Election of Oqtional Benefit Coveraaes in Lieu of Cash.
A Participant may elect under this Plan to receive one or more of the Optional Benefit
Coverages described in section 3.2, to the extent available to the Participant under the
applicable plans identified on schedule A, in accordance with the procedures
described in sections 4.1, 4.2 and 4.3.
If a Participant elects coverage for a Period of Coverage under a plan identified on
Schedule A, and if the Participant is required under such plan to pay a share of the
cost of such coverage, such share shall be paid by the Participant. Payment shall first
be from the ParticipanYs Flex Dollars, as provided in Section 5.2, and second by
means of a reduction in the Participant's regular compensation for the Period of
Coverage for the balance of the cost of each coverage elected.
�
ARTICLE IV
ELECTIONS
4.1 Election Procedure.
Prior to the commencement of each Period of Coverage, the Administrator shall
provide one or more written election forms and salary reduction agreements to each
Participant and to each other individual who is expected to be an Eligible Employee at
the beginning of the applicable Period of Coverage. The election forms and
agreements shall be effective as of the first day of the Period of Coverage. Each
Participant who desires to elect an Optional Benefit Coverage available for the Period
of Coverage shall so specify on the appropriate election form or agreement, and shall
agree to a reduction in his or her Compensation.
(A) The amount of the reduction in the Participant's Compensation for the Period of
Coverage for an Optional Benefit Coverage on schedule A shall equal the
Participant's share of the cost of such coverage, reduced by the amounts paid
by the Employer (if any).
(B) The amount of contributions shall change according to the schedule of
Employee contributions for the Employer's group benefits. A Participant's salary
reduction agreement could automatically increase or decrease, depending upon
the change in premiums of that particular benefit offered by the Employer, or
increase or decrease depending upon the amount of the Participant's required
contribution for benefits.
Each election form must be completed and retumed to the Administrator on or before
such date as the Administrator shall specify, which date shall be no later than the
beginning of the first pay period for which the participant's salary reduction agreement
will applY-
4.2 Salary Reduction Aareements
Each Participant shall complete a salary reduction agreement at the initial Election
Period. In all following years, if a Participant desires to change the amount of the
election, enroll in the Plan, or terminate from the Plan, a new salary reduction
agreement must be completed within the annual Election Period.
4.3 Initial Elections.
Upon commencing employment as an Eligible Employee, an Eligible Employee who is
not already a Participant in the Plan shall have 30 days to elect one or more Optional
Benefit Coverage under the Plan for the remainder of the Plan Year. Such election
shall be made by completing the salary reduction agreement and other necessary
��
forms as specified by the Administrator. The Administrator may choose to extend this
initial Election Period, at its sole discretion, in order to assist Employees in determining
whether to participate in the Plan.
4.4 Failure to Return Election Forms.
(A) A new Participant's failure to retum a completed election form under section
4.1, 4.2, or 4.3 to the Administrator on or before the specified due date for the
Period of Coverage in which he or she becomes a Participant with respect to
the benefits available for that Period of Coverage shall constitute (1) an election
to participate in any default coverage as the Administrator may, in its discretion,
designate from time to time; and (2) an agreement to a reduction in the
Participant's Compensation for the Period of Coverage equal to the cost of the
Participant's share of such coverages for the Period of Coverage, reduced by
the amounts paid by the Employer (if any).
(B) An existing Participant's failure to return a completed election form to the
Administrator relating to coverage under a plan identified as an Optional Benefit
Coverage on Schedule A on or before the specified due date for any subsequent
Period of Coverage shall be deemed to constitute (1) a reelection to participate
in any of the same Optional Benefit Coverages, if any, under such plans as were
in effect just prior to the end of the preceding Period of Coverage (to the extent
such coverage remains available as an Optional Benefit Coverage under the
Plan), and (2) an agreement to a reduction in the Participant's Compensation for
the subsequent Period of Coverage equal to the Participant share of each such
coverage for the Period of Coverage, reduced by the amounts paid by the
employee's flex dollars (if any) under Section 5.2.
(C) Participants may voluntarily terminate their participation in the Plan, but only
during an annual Election Period. If a Participant elects not to participate for the
Plan Year applicable for the annual Election Period, then that Participant cannot
elect to reenter the Plan until the ne� annual Election Period, unless a Status
Change occurs.
4.5 Irrevocable Nature of Salary Reduction Selected.
(A) A Participant's election of the amount of the Salary Reduction Contributions
shall be irrevocable during the Period of Coverage.
(B) Participants can change, modify, decrease or increase their Salary Reduction
Contributions only if a Status Change has occurred, a change has occurred in
the Employer's group benefits offered to its Employees, or a change has
occurred in the amount of contributions for the Plan as required by the
Employer during the Plan Year. If such a change has occurred, then the
Participant must submit to the Administrator a completed new salary reduction
agreement in order to have the change be effective at the beginning of the
following payroll period for the remaining Period of Coverage.
:
(C) The Employer and/or the Administrator cannot change any amount of the
Salary Reduction Contributions selected by each Participant during the Plan
Year, unless a termination has occurred as defined under section 2.5 or 2.6 of
this Plan, or a Status Change has occurred, or a change has occurred in the
Employer's group benefits offered to its Employees, or a change has occurred
in the amount of contribution for the plan's benefits as required by the
Employer.
4.6 Status Chanqes.
A Participant's election made under the Plan (including an election made through
inaction under section 4.4) shall be irrevocable by the Participant during the Period of
Coverage, except as otherwise provided in sections (A) through (F) below. A
Participant may revoke an election in writing for the balance of the Period of Coverage
and, if desired, file a new election in writing if, under the facts and circumstances, a
Status Change occurs, and the requested revocation and new election satisfy the
applicable consistency requirements in section 4.7 hereof. Application for a Status
Change must be submitted to the Administrator within 30-days of the actual event.
(A) For this purpose, a Status Change includes the following events:
Leaal Marital Status. Events that change a Participant's legal marital
status, including marriage, death of spouse, divorce, legal separation,
or annulment.
2. Number of Dependents. Events that change the Participant's number
of Dependents, including birth, adoption, placement for adoption (as
defined in regulations under Code section 9801), or death of a
Dependent.
3. Emplovment Status. Any of the following events that change the
employment status of the Employee, Employee's spouse, or the
Employee's Dependent: a termination or commencement of
employment; a strike or lockout; a commencement of or retum from
an unpaid leave of absence; and a change in worksite. In addition, if
the eligibility conditions of the cafeteria plan or other employee
benefit plan of the employer of the Employee, 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 of employment under this
paragraph.
4. Requirements
Participant's
requirements
For Unmarried Deqendents. An event that causes a
Dependent to satisfy or cease to satisfy the
or coverage due to attainment of age, student status,
�
or any similar circumstance as provided in any accident or health plan
identified in schedule A under which the Participant received
coverage.
5. Residence or Worksite. A change in the place of residence or work of
the Participant or the Participant's spouse or Dependent.
6. Enrollment in Health Coveraae. A significant change in the cost or
health coverage of the Participant or the Participant's spouse
attributable to the spouse's employment, and such other events that
the Administrator determines will permit the revocation of an election
(and, if applicable, the filing of a new election) during a Period of
Coverage under regulations and rulings of the Internal Revenue
Service.
(B) In order to revoke an election or file a new election under this subsection, a
Participant must submit to the Administrator a written application within 30 days
of the Status Change.
(C) In the case of coverage under a welfare plan identified in Schedule A, a
Participant may revoke an election in writing for the balance of the Period of
Coverage and file a new election in writing that corresponds with the special
enrollment rights provided in Code section 9801(f), whether or not the change in
election is permitted under section 4.6 above.
(D) In the case of a judgment, decree or order resulting from a divorce, legal
separation, annulment, or change in legal custody (including a qualified medical
child support order) that requires accident or health coverage for a Participant's
child, a Participant may change his or her election (1) to provide coverage for
the child under a health plan identified in schedule A if the order so requires, or
(2) to cancel coverage under a health plan identified in schedule A for the
Participant's child if such order requires the Participant's former spouse to
provide coverage.
(E) In the case of coverage under a health plan identified in schedule A, a
Participant may revoke an election in writing for the balance of the Period of
Coverage and file a new election in writing to cancel such health plan coverage
for the Participant and/or the Participant's spouse or Dependent to the extent
that such individual become entitled to coverage under Part A or Part B of Title
XVIII of the Social Security Act (Medicare) or Title XIX of the Social Security Act
(Medicaid), other than coverage consisting solely of benefits under section 1928
of the Social Security Act (the program for distribution of pediatric vaccines). In
addition, if an Employee, spouse or Dependent who has been entitled to such
coverage under Medicare or Medicaid loses eligibility for such coverage, the
Plan may permit the Employee to make a prospective election to commence or
increase coverage of that Employee, spouse, or Dependent under the accident
or health plan. A Participant may not revoke his or her election if he or she
-10-
becomes eligible for state children's health insurance program coverage during
the year.
(F) In the case of coverage under a health plan identified in schedule A which is
provided by an independent third-party provider, if:
1. The Participant's share of the cost of such coverage significantly
increases as a result of a significant cost increase by the independent
third-party provider, or
2. Such coverage ceases or is significantly curtailed,
the Administrator may permit all Participants electing such coverage for the
Period of Coverage to revoke their elections for the balance of the Period of
Coverage, provided that similar coverage is elected under a health plan
identified in schedule A for the balance of the Period of Coverage.
(G) Any revocation and new election under this section 4.6 shall be effective at
such time as the Administrator shall prescribe, but not earlier than the first pay
period beginning after the revocation and submission of a new election to the
Administrator, unless otherwise required by law.
4.7 Consistencv Rules.
A Participant's requested written revocation and new election will be consistent with a
Status Change described in section 4.6 if, and only if, (1) the Status Change results in
the Participant, or the Participant's spouse or Dependent, gaining or losing eligibility
for accident or health coverage under either the Plan or a plan of the spouse's or
Dependent's employer, and (2) the election change corresponds with that gain or loss
of coverage.
Notwithstanding anything in this section 4.7 to the contrary, if the Participant, or the
Participant's spouse or Dependent, become eligible for continuation coverage under a
health plan identified in schedule A as provided in Code section 4980B or any similar
state law, the Participant may elect to reduce his or her Compensation under the Plan
in order to pay for the continuation coverage.
4.8 Chanaes bv Administrator.
If the Administrator determines, before or during any year, that the Plan may fail to
satisfy for such year any nondiscrimination or other requirement imposed by the Code,
or any limitation on benefits provided to the Highly Compensated Employees, the
Administrator shall take such action as the Administrator deems appropriate, under
rules uniformly applicable to similarly situated Participants, to assure compliance with
such requirement or limitation. Such action may include, without limitation, a
modification of elections by Highly Compensated Employees (as defined by the Code
-11-
for purposes of the nondiscrimination requirement in question) without the consent of
such Employees.
4.9 Adiustment of Compensation Reductions.
If the cost of Optional Benefit Coverages provided by an independent third-party
provider under a medical, dental or vision plan identified in Schedule A increases or
decrease during a Period of Coverage, a corresponding change shall be made in the
Salary Reduction Contributions of all Participants receiving such coverage in an
amount to be determined by the Administrator.
4.10 Maximum Elective Contributions:
The maximum amount of elective contributions under the Plan for any Participant shall
be the total cost to the Participant for the Period of Coverage of the most expensive
Optional Benefit Coverages that any Participant could elect.
4.11 Cessation of Reauired Contributions.
Nothing in this Plan shall prevent the cessation of coverage or benefits under any plan
identified on schedule A, in accordance with the terms of such plan, on account of a
Participant's failure to pay the Participant's share of the cost of such coverage or
benefits, through Compensation reduction or otherwise.
4.12 Coordination with Familv and Medical Leave Act.
Notwithstanding any other provision of this Plan, the Administrator may (a) permit a
Participant to revoke and (subsequently reinstate) his or her election of one or more
Optional Benefit Coverages under the Plan, and (b) adjust a Participant's
Compensation reduction 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.
�iF�
ARTICLE V
FLEX DOLLARS AND ADDITIONAL CASH BENEFITS
5.1 Flex Dollars. A Participant will be eligible to receive Flex Dollars if, and to the extent
that, the Employer has elected to provide Flex Dollars under the Plan. Prior to the
commencement of each Period of Coverage the Employer shall determine the amount
of Flex Dollars available to each such Participant in accordance with the rules and
procedures adopted by the Employer and by the Plan Administrator, which shall not
discriminate in favor of Highly Compensated Employees. The Administrator shall
notify such Participant in writing of the amount of Flex Dollars available to him or her
for the Period of Coverage (or for the balance of the Period of Coverage).
5.2 Allocation of Flex Dollars. Any Flex Dollars available to a Participant under this Article
V shall be applied proportionately each pay period toward the cost of the Optional
Benefit Coverages elected by the Participant. If for any Period of Coverage the cost of
the Optional Benefit Coverages elected by the participant exceeds the Participant's
Flex Dollars, then the Participant's compensation shall be reduced proportionately
each pay period on a pre-tax basis in the amount of the excess, and an amount equal
to the compensation reduction shall be contributed by the Employer to cover the
remaining cost of the optional Benefit Coverages elected by the Participant. However,
if for any Period of Coverage the cost of the Optional Benefit Coverages elected by the
Participant is less than the Participant's Flex Dollars, then the Participant shall receive
the value of any Flex Dollars not allocated to Optional Benefit Coverage and divert
them to the plans described on Schedule B or receive the Flex Dollars as taxable
income.
5.3 Waiver of Coveraqe Cash Oqtion. A Participant who has elected to waive coverage
under a medical, dental and/or vision Optional Benefit Coverage identified in Schedule
A may elect the Waiver of Coverage Cash Option. Under this Option, the Employer will
increase such Participant's cash compensation by the waiver amount applicable to the
Participant for each pay period during which the Participant does not have in effect any
medical, dental and or vision Optional Benefit Coverage. Determination of the waiver
amount available to Participants, and the manner in which it is paid, shall be made in
accordance with the rules and procedures adopted by the Employer and by the
Administrator, which shall not discriminate in favor of Highly Compensated Employees.
The Administrator shall notify such Participant in writing of the waiver amount available
to him or her for the Period of Coverage (or for the balance of the Period of Coverage)
under this Coverage Cash Option. A Participant may elect the Waiver of Coverage
Cash Option in writing in such form and manner as the Administrator shall prescribe,
at the same time or times that the Participant is permitted to elect Optional Benefit
Coverages under Article IV. Such election shall be irrevocable during each Period of
Coverage to the same extent as an election of Optional Benefit Coverages identified in
Schedule A.
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ARTICLE VI
NON-DISCRIMINATION
6.1
6.2
6.3
Intent.
It is the intent of this Plan not to discriminate between any classes of Employees or
create such an action in part or whole of this Plan document that is in violation of Code
section 125 and applicable regulations. The Administrator shall avoid all discretionary
acts, which could be deemed to be discriminatory under any applicable Code section
or law.
Reduction of Benefits and/or Contributions.
The Administrator
contribution of an�
make certain thi;
Employees within
section or law.
may reduce, modify, change or reject the benefits or amounts of
Participant of the Plan, if the Administrator deems it necessary to
Plan does not discriminate in favor of Highly Compensated
rhe meaning of Code section 125 and any other applicable Code
Treatment of Contribution Reductions.
Contribution reductions due to the Administrator's actions in accordance with sections
4.1 and/or 4.2 of the Plan shall be returned to the Participant in the form of a taxable
refund of contributions.
"li[�
ARTICLE VII
ADMINISTRATION
7.1
7.2
7.3
Appointment of Administrator.
The Employer is hereby designated as the Administrator.
Duties of the Administrator.
The Administrator shall be responsible for the complete management of the Plan, and
shall undertake any action necessary to preserve the benefits of the Participants. The
Administrator shall have all necessary discretionary power to carry out the full
administration and management of the Plan. The Administrator's powers shall include,
but are not limited to, the following:
(A)
�B)
(C)
(D)
(E)
�F)
(G)
(H)
��)
(J)
(K)
(L)
(M)
(N)
To interpret the provisions of the Plan;
To enforce all provisions of the Plan;
To decide all questions of eligibility;
To decide all questions of benefits;
To decide the proper management of benefit claims;
To obtain from every Employee the necessary forms and documents that allow
participation in the Plan;
To obtain from every Participant the necessary forms and documents that allow
continued participation or termination of participation in the Plan;
To contract with any and all insurance companies or other suppliers to provide
benefits under the Plan;
To notify each Participant in writing of any amendment of the Plan, of any
proposed amendment of the Plan, of the termination of any benefit of the Plan,
and of the termination of the Plan;
To provide guidance for Employees and Participants as to questions of
participation, benefits, or and other matters in connection with the Plan;
To appoint agents, consultants and professionals to assist in administering the
Plan, and to complete necessary documentation and reports;
To avoid discrimination under the Plan;
To pay for any administrative costs of the Plan;
To do any other acts as deemed necessary to administer and manage the plan
for the benefit of its Participants.
Reports and Records.
The Administrator shall keep books, reports and records of all activities under the
Plan. The records of the Plan shall be open for inspection during normal business
hours, provided that a Participant may only inspect that Participant's individual
participation records. The Administrator shall prepare and submit to the Employer an
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annual report containing material which the Administrator deems necessary under
Code section 125 or any other section of the Code.
7.4 Administrator Limitations.
The Administrator is not responsible for administration of any group insurance plan
supplied by an insurance Company.
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ARTICLE VIII
AMENDMENT AND TERMINATION OF THE PLAN
8.1 Amendment.
The Employer may amend the Plan at any time, and from time to time, either
retroactively or prospectively, except as may be limited by applicable law.
8.2 Termination.
The Employer expects that this Plan will be maintained indefinitely. However,
continuance is not guaranteed. The Employer reserves the right to terminate the Plan
at any time with advance notice to Participants.
sr�
ARTICLE IX
MISCELLANEOUS
9.1 Indemnification bv Emplover.
To the fullest extent permitted by law, the Employer shall indemnify and hold harmless
the Administrator and Employees who perform duties under the Plan, against all
claims, losses, damages, expenses, and liabilities resulting from any action or
omission of any such person in connection with administering the Plan, as long as
such action or omission was at the time in good faith and carried forth with proper
diligence and care, and provided that the Employer determines in its discretion that the
Administrator or Employee did not commit gross negligence or willful misconduct.
The Employer shall not be responsible for any action taken by any Insurance
Company, nor shall it be responsible to make payments to any Participant if the
Insurance Company fails to do so.
9.2 Fundinq.
All contributions to the Plan shall be considered general assets of the Employer.
9.3 Not an Emplovment Aareement.
The establishment of the Plan shall not be construed to constitute a contract between
the Employer and any Participant, or to be a consideration or inducement for the
employment of any Participant or Employee, or to confer upon any Employee or
Participant any legal right to be retained in the employ of the Employer. All Employees
will remain subject to discharge to the same extent as if the Plan had never been
adopted, and may be treated without regard to the effect such treatment might have
upon them under the Plan. Nothing in the Plan shall be deemed to be an agreement,
consideration, inducement, or condition of employment.
9.4 Titles and Headinqs.
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.
9.5 Gender and Number.
Wherever used in this document, the singular shall mean the plural, the plural shall
mean the singular, the masculine shall mean the feminine, and the feminine shall
mean the masculine, except where the context requires otherwise.
�
9.6 Amendments in Writinq.
Any and all amendments to this Plan need to be in writing, and signed by a duly
authorized representative of the Employer, in order to be valid.
9.7 Severabilitv.
If any provision of the Plan is held invalid or unenforceable, its invalidity or its inability
to be enforced will not affect other provisions of the Plan, and the Plan will be
construed and enforced as if such provision had not been included therein.
9.8 Administrator Information.
Name and address of the Administrator:
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Telephone number of the Administrator:
760-346-0611
Employer identification number of the Administrator:
95-2859459
9.9 Governinq Law.
The Plan shall be construed in accordance with the laws of the state of California to
the extent not preempted by federal law.
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SCHEDULE A
OPTIONAL BENEFIT COVERAGES
Optional Benefit Coverages shall consist of coverages under the following plans maintained
by the Employer:
• City of Palm Desert Medical Plan
• City of Palm Desert Dental Plan
• City of Palm Desert Vision Plan
• City of Palm Desert Health Care Spending Account Plan
• City of Palm Desert Dependent Care Spending Account Plan
The plan documents for the above-referenced plans are hereby incorporated into this Plan by
reference.
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SIGNATURE PAGE
IN WITNESS WHEREOF, the Employer has caused this Plan to be signed by its duly
authorized representative on the day of , 200_.
City of Palm Desert
By:
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SCHEDULE B
Flex Dollar Allowance Schedule
Full Time Employees
With Health Insurance Coverage
Employee Only
Employee + 1
Employee + 2 or More
Without Health insurance Coverage
Employee Only
Employee + 1
Employee + 2 or More
Premium Coverage
Actual premium rate up to 2nd highest cost plan
Actual premium rate up to 2nd highest cost plan
Actual premium rate up to 2nd highest cost plan
Cash in lieu of premium
$150.00
$150.00
$150.00
Dental & Vision
Employee Only
Employee + 1
Employee + 2 or More
Actual Premium
Actual Premium w/dependants
Actual Premium w/ dependants
Part Time Employees (Work between 20 and 40 hours per week)
With Health Insurance Coverage
Employee Only
Employee + 1
Employee + 2 or more
Without Health insurance Coverage
Employee Only
Flex Dollars
$50.00
$50.00
$50.00
Premium Coverage
50% of current premium paid for employees with
regular full-time status
Cash in lieu of premium
$75.00
Dental & Vision
Employee Only
Employee + 1
Employee + 2 or More
50% of actual Premium
50% of actual Premium
50% of actual Premium
Flex Dollars
$25.00
$25,00
$25.00
Council Members (effective January 1, 2013)
With Health Insurance Coverage
Individual Only (No Dependents)
Without Health Insurance Coverage
Individual Only (No Dependents)
Dental & Vision
Employee Only
Premium Coverage
Actual premium Rate up to 2nd highest cost plan
Cash in Lieu of Premium
Cash benefit equal to the amount of the individual premium
for the 2nd highest cost plan, including dental & vision
premiums.
Actual Premium - individual only
Flex Dollars
$50.00
Amended on 12/13/2012 for an effective date of January 1, 2013