HomeMy WebLinkAboutRes 2014-02 - Amnd Flexible Spnding Arrngmnts CITY OF PALM DESERT
FINANCE DEPARTMENT
STAFF REPORT
Request: Adopt Resolution No. 2014- 02 amending Resolution No 2013-13 to
include recent IRS Notice 2013-71 which relaxes the use-it-or-lose-it
rule that applies to health flexible spending arrangements.
Submitted by: Paul S. Gibson, Finance Director
Date: January 23, 2014
Contents: Resolution No. 2014- 02
Plan Amendment —Wageworks
Recommendation
Waive further reading and adopt Resolution No. 2014-�.
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. Most recently, Council adopted Resolution 2013-13 which
restated in its entirety the City of Palm Desert IRS Section 125 Flexible Benefits Plan.
Health Flexible Spending Arrangements (FSAs) are benefit plans that employers can
sponsor to allow their employees to be reimbursed for certain medical expenses that are
not covered by the employer's medical plan, and it is offered in conjunction with the City's
cafeteria plan. On October 31, 2013, the IRS released Notice 2013-71 which relaxed the
use-it-or-lose-it plan that applies to health FSAs. This provides for an amendment to the
City's health FSA allowing up to $500 of unused amounts remaining at the end of the plan
year to be paid in the following plan year, rather than forfeiting it. The $500 carryover is
in addition to the $2,500 limit on an employee's salary reduction contributions to a health
FSA for the plan year.
Adoption of the resolution will amend the current plan to allow for carryover for the 2013
plan year and every year thereafter. Staff recommends adoption of the resolution.
Resolution No. 2014-02
Staff Report
Adopt Resolution amending Res. 2013-13 — IRS Section 125 Flexible Benefits Plan
January 23, 2014
Page 2 of 2
Fiscal Impact
There is no direct impact to the City's budget as a result of this action.
Submitted by:
CITYCOUNCILA ON
APPROVED _DENIED
REC IVE OTHER
0 - b
P I S. Gibson, Finance Director �EET G D TE - 3-
AYES: ��
NOES:
Approval: ABSENTs
ABSTAIN:
VERIFIED BY:
Original on File with City rk's Offict
J hn M. Wohlmuth, City Manager
RESOLUTION NO. 2014- 02
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT,
CALiFORNIA, AMENDING RESOLUTION NO. 2013-13 TO INCLUDE RECENT
IRS NOTICE 2013-71 WHICH RELAXES THE USE-IT-OR-LOSE-IT RULE THAT
APPLIES TO HEALTH FLEXIBLE SPENDING ARRANGEMENTS
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 its flexible benefits plan in 1999; and
WHEREAS, over the years the plan has been amended to reflect changes in Federal law
and the City's benefits structure; and
WHEREAS, the City of Palm Desert most recently restated the current plan in its entirety
for ease of recordkeeping in 2013; and
WHEREAS, the Internal Revenue Service issued Notice No. 2013-71 in October 2013 to
relax the use-it-or-lose-it rule.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Palm Desert,
California approve the attached plan amendment and allow up to $500 of unused amounts
remaining at the end of the plan year to be paid in the following plan year in accordance with IRS
Notice No. 2013-71.
PASSED, APPROVED AND ADOPTED at the regular meeting of the Palm Desert City
Council, held on this 23�d day of January, 2014, by the following vote to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
VAN TANNER, MAYOR
RACHELLE D. KLASSEN, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
PLAN AMENDMENT
ARTICLE I
PREAMBLE
1.1 Adoption and effective date of amendment. The Employer adopts this
Amendment to the City of Palm Desert Health Care Spendinq Account Plan
("Plan") to reflect changes to Internal Revenue Code (IRC) Section 125(i), as
amended by the Internal Revenue Service (IRS) Notice 2013-17. The employer
and Plan sponsor intends this Amendment as good faith compliance with the
requirements of this Notice. This Amendment shall be effective on or after the
date the Employer elects in Section 2.1 below.
1.2 Election of Carryover. To the extent that the Plan contains "grace period"
language, said language for any "grace period" for the health flexible spending
account (health FSA) will be voided for Plan years following the Plan year that
carryover is adopted and such language shall be replaced with the "carryover"
language outlined below.
1.3 Supersession of inconsistent provisions. This Amendment shall supersede
the provisions of the Plan to the extent those provisions are inconsistent with the
provisions of this Amendment.
ARTICLE II
CARRYOVER ELECTION
2.1 Effective Date. This Amendment is entered into as of the date outlined below
-� and shall be effective for �'the 2013 Plan year or ❑the 2014 Plan year
and beyond.
2.2 Carryover Amount. The Plan shall provide for a carryover of $500 of any
amount remaining unused in a health FSA as of the end of the Plan year. Such
carryover amount may be used to pay or reimburse medical expenses under the
health FSA incurred during the entire Plan year to which it is carried over.
2.3 Participant Opt Out. Notwithstanding the foregoing, any Plan participant shall
have the right to opt out of the carryover if such participant has already enrolled
in a healthcare savings account for the following Plan year.
This Amendment has been executed this 23�d day of January, 2014.
Name of Employer: CITY OF PALM DESERT
By:
John M. Wohlmuth, City Manager
('ITY OF PAL�I DESERT IRS SECTION 125
FLEXIBLE BENEFI"CS PL�N
SI;�1�tARY PI.AV DF.SCRIP'I'ION
TABLE OF COVTEVTS
I
ELIGIBILITY'
l. When can 1 become a participant in the Plan?................................................................................................................................ 1
2. What are the eligibility reyuirements ft�r our Plan'?........................................................................................................................ 1
3. When is my entry date?................................................................................................................................................................... I
4. What must[do to enroll in the Plan?.............................................................................................................................................. 1
If
OPERATION
1. How does this Plan operate?...........................................................................................................................................................2
III
(:O�TRIBUTIONS
l. How much of my pay may the Employer redirect?.........................................................................................................................2
2. }low much will the�mployer contribute each year'?......................................................................................................................2
3. What happens to contributions made to the I'lan'?...........................................................................................................................2
4. When must I decide which accounts I w�nt to use?........................................................................................................................2
5. When is the clection period for our Plan`?.......................................................................................................................................2
6. May I change my elections during the Plan Year'?..........................................................................................................................2
7. May I make new elections in future Plan Years?............................................................................................................................3
IV
I3F.�EFI7'S
1. What benefits are offered under thc Plan?......................................................................................................................................3
2. F�ealth Flexible Spending Account.................................................................................................................................................3
3. Dcpendcnt Carc Flexible Spending Account..................................................................................................................................4
4. Premium Fxpense Account.............................................................................................................................................................4
V
BF.\EFIT PAY�IF,N7'S
I. When will I receive payments from my accounts?.........................................................................................................................5
2. What happens if 1 don't spend all Plan contributions during the Plan Year'?...................................................................................5
3. Family and Medical Leave Act(rMLA)........................................................................................................................................5
4. Uniformed Services Employment and Rcemployment Rights Act(USERRA)..............................................................................5
5. What happens if I terminate employment?......................................................................................................................................5
6. Will my Social Securiry benefits be al�fected?................................................................................................................................6
VI
IIIGHLY CO�IPE�SATED A\D KEY EMPLOt'EES
l. Do limitations apply to highly compensated employees?...............................................................................................................6
VII
PLAN ACCOUNTItiG
l. Periodic Statements.........................................................................................................................................................................6
VIII
GE\ER,1L INFOR�tATIOV ABOUT OUR PLAN
l. General Plan Information................................................................................................................................................................6
2. Employer Inf'ormation.....................................................................................................................................................................6
3. Plan Administrator Informa[ion......................................................................................................................................................7
4. Service of Lcgal Process.................................................................................................................................................................7
5. Type of Administration...................................................................................................................................................................7
6. Claims Submission.........................................................................................................................................................................7
IX
AUDITIOYAL PLA\1\FOR�I�ITIO\
1. Claims Proccss................................................................................................................................................................................7
X
CONTINUATIOti COVERACE RIGHTS UYDER COBRr1
I. What is COBRA continuation coverage?........................................................................................................................................8
2. Who can become a Qualified Beneficiary?.....................................................................................................................................8
3. What is a Qualitying Event?...........................................................................................................................................................8
4. What factors should be considcred�vhen determining ro elect COQRA continuation coverage?...................................................9
5. What is the procedure for obtaining COBRA continuation coverage?............................................................................................9
6. What is the election period and how long must it last?...................................................................................................................9
7. Is a covered Employcc or Qualitied Beneticiary responsible for informing the Plan Administrator of thc
occurrenceof a Qualifying Event?..................................................................................................................................................9
8. [s a�aaiver before the end of the cicction pc;riod effcctive to end a Qualified Beneficiary's election rights?.................................. 10
9. Is COI3RA coverage available if a Qualified E3eneticiary has other group health plan coverage or Medicare?.............................. 10
10. When may a Qualified i3eneficiary's COBI2A continuation coverage be tcrminated?.................................................................... 1 1
11. What are the muximum coverage periods for COBRA continuation coverage?............................................................................. 1 1
12. [lnder�vhat circumstances can the maximum coverage period be expanded?................................................................................ I i
l3. How does a Qualified Beneticiary become entitled to a disability extension?................................................................................ 12
l4. Does the Plan require payment for COI3RA continuation coverage?............................................................................................. 12
I5. Must the Plan allow payment for COI3RA continuation covcrage to lx:made in monthly installments`?....................................... 12
16. What is"I'imely Vayment for COBRA continuation coverage'?....................................................................................................... 12
l7. Must a Qualified Beneficiary be given the right to enroll in a conversion hcalth plan at the end of the maximum
coverage period for COBRA continuation covcrage?..................................................................................................................... 12
18. I low is my participation in the}Iealth Flexible Spending Account affected?................................................................................. 12
�C 1
SUM�IARY
CITI'OF PAL�1 DF.SERT'IRS SECTION 125
FLF.XlBLE BEIYEFI7'S PI.AN
INTRODUC"CIOY
We have amcnded the"Flexiblc Benefits Plan"that we previously established f'or you and other eligiblc employees.Under this Plan,
you will be able to choose among certain benefits that we make available.The benefits that you may choose are outlined in this Summary
Plan Description.We will also tell you about other important information conceming the amended Plan,such as the rules you must satisfy
before you can join and the taws that protect your rights. �
One of the most important fcatures of our Plan is that the benetits being otl'ered are generally ones that you arc already paying for,but
normally with money that has first becn subject to income and Social Security taxes.Under our Plan,these same expenses will be paid for
with a portion of your pay before Federal income or Social Security taxes are withheld.This means that you will pay less tax and have
more money to spend and save.
Read this Summary Ylan Description carefully so that you understand the provisions of our amcnded Plan and the benefits you will
receive.'I'his SPD describes the Plan's benefits and obligations as contained in the legal Plan document,which govcros the operation of the
Plan."�he Plan document is written in much more technical and precisc language.If'the non-technical language in this SPD and the
technical,Icgal language of thc Plan document conflict,the Plan document always govcrns.Also,if there is a conflict between an insurancc
contract and either the Plan document or this Summary Plan Description,the insurance contract will control.If you wish to receive a copy
of the legal Vlan document,please contact the Administrator.
This SPD describes the current provisions of the Plan which arc designed to comply with applicable legal requirements."1'he Plan is
subject to federal laws,such as the Intemal Revenue Code and other federal and state laws which may aff'ect your rights."1'he provisions of
the Plan are subject to revision due to a change in laws or duc to pronouncements by the Internal Revenue Service(IRS)or other federal
agencies.We rrzay also amend or terminate this 1'lan.If the provisions of the Plan that are described in this SPD change,we will notify you.
We have attempted to answer most of the qucstions you may have regarding your benefits in the Plan.If this SPD does not answer all
of your questions,please contact the Administrator(or other plan representative).The name and address of the Administr�tor can be found
in the Article of this SPD entiticd"General Information About the Plan."
I
EI.IGIBILITY
1. When can I become a participant in the Plan?
Before you become a Plan member(referrcd to in this Summary Plan Dcscription as a"ParticipanP'),there are certain rules which you
must satisfy.First,you must meet the eligibility requircments and be an active employee.After that,the next step is to actually join the
Plan on thc"entry datc"that wc have established for all employees."1'he"entry date"is defined in Qucstion 3 below.You will also be
requircd to complete certain application fortns before you can enroll in the Ilealth t�lexible Spending Account or Dependent Care 1'lexible
Spcnding Account.
2. �Yhat are the eligibility reyuirements for our Plan?
You will be eligible to join the Plan once you have satisfied the conditions for coverage under our group medical plan.Of coune,iP
you�vere alrcady a participant before this amendment,you will remain a participant.
3. When is my entry date?
Once you have met the eligibility rcquirements,your en[ry date will be the first day of thc pay period coinciding with or following the
date you met the eligibility requirements.
4. What must I Jo to enrull in the Plan?
I3efore you can join the 1'lan,you must complete an application to participate in the Plan.'I�he application includes your personal
choices for each of the benefits which are being of'f'ered under the l'lan.You must also authorize us to set some of your camings aside in
order to pay for a�rtion of the be;ncfits you have electcd.
However,if you arc already covcred undcr any of the insured benefits,you will automatically participate in this Plan to the extent of
your premiums unless you elect not to participate in this Plan.
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t�
orFa�•r�oH
1. How does this Plan operate?
Before the start of each Plan Year,you will be able to clect to have some of your upcoming pay contributed to the Plan."fhese
amounts will bc used to pay for the benefits you have chosen.The portion of your pay that is paid to the Plan is not subject to Federal
income or Social Security tares.In othcr words,this allows you to use tax-free dollars to pay for certain kinds of benefits and expenses
which you normally pay for with out-of-pocket,taxable dollars.Also,wc will make additional Employer contributions to the Plan that you
may use to incrcase the amounts used to pay bcnefits.However,if you receive a reimbursement for an expense under the Plan,you cannot
claim a Federal income tax credit or deduction on your retum.(See the Article entitled"General Information About Our Plan"for the
definition of"Plan Year.")
III
COtiTRIBUTIOtiS
1. How much of my pay may the Employer redirect?
Each year,we will automatically contribute on your behalf enough of your compensation to pay for the insurance coverage provided
unless you elect not to reccive any or all of such coverage.You may also elect to have us contribute on your behalf enough of'your
compensation to pay for any other benetits that you elect undcr the Plan.These amounts will be deducted from your pay over the course of
the year.
2. How much will the Employer cuntribute each year?
If you ha��e other medical coverage and opt out of our group medical coverage,we will contribute a discretionary amount which we
will determine prior to the beginning of each Plan Ycar."!'his contribution can be used for any benetit in the Plan and will be made on a pro
rata basis during the year.
3. �Vhat happens to contributions made to the Plan?
Before each Plan Ycar begins,you will sclect the benetits you want and how much of the contributions should go toward each benefit.
It is very important that you make these choices carefully based on what you expect to spend on each covered benefit or expense during the
Plan Year.Later,thcy will be used to pay for the expenses as they arise during the Plan Year.
In addition,you should also note that any previous benefit payments madc from any Account under the Plan that are unclaimed(e.g.,
uncashed benefit checks)by the end of the Plan Year following the period of covcrage in ti�hich the qualifying expense was incurred will
be forfeited to the E;mployer.
4. When must I Jecide which accounts I want to use?
You are reyuired by Federal law to decidc before the Plan Year begins,during the election period(dc�ned below).You must decide
two things.Pirst,which benefits you want and,second,how much should go toward each benefit.
lf you are alrcady covered by any of the insured lx:nefits offered by this Plan,you will automatically become a Participant to the
extent of the premiums for such insurancc unless}ou elect,during the election period(defined below),not to participate in the Plan.
5. �Vhen is the election period for our Plan?
You will make your initial clection on or before your entry date.(You should review Section I on Eligibility to better understand the
eligibility requirements and entry date.)Then,for each following Plan Year,the election pe;riod is established by the Administrator and
applieJ uniformly to all P�rticipants.[t will normally be a period of time prior to the beginning of each Plan Year.The Administrator will
inform you cach year about thc clection period.(Sec the Article entitled"General Information About Our Plan"for the detinition of Plan
Year.)
6. �tay I change my electiuns during the Plan Ycar?
Generally,you cannot change the elections you have made after the beginning of the Plan Year.I lowever,thcrc are certain limited
situations when you can change your elections.You are permitted to change elections if you have a"change in status"and you make an
election change that is consistent with the change in status.Currently,Federal law considers the following events to be a change in status:
--Marriage,divorce,death of a spouse,legal separation or annulment;
--Change in the number of dependents,including birth,adoption,placement for adoption,or death of a dependent;
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--Any of the following events for you,your spouse or dependent:tcrtnination or commencement of employment,a strike or lockout,
commencement or retum from an unpaid leave of absence,a change in worksite,or any other change in employment status that affects
eligibility for benefits;
--One of your dependents satisfies or ceases to satisfy the requirements for coverage due to change in a6e,swdent status,or any
similar circumstance;and
--A change in the placc of residence of you,your spouse or dependent that would lead ro a change in status,such as moving out of a
coverage area for insurance. �
In addition,if you are participating in the Dependent Care t�lexible Spending Account,then there is a change in status if your dependent
no longer mcets the qualifications to be eligible for dependcnt care.
There are detailed rules on when a change in election is deemed to be consistent with a change in status.In addition,there are laws
that give you rights to change health coverage for you,your spouse,or your dependents.If you change coverage due to rights you have
under the law,then you can make a corresponding change in your elections under the Plan.If any of thcse conJitions apply to you,you
should contact the Administrator.
If the cost of a benefit provided under the Plan increases or decreases during a Plan Ycar,then we will automatically increase or
decrease,as the casc may be,your salary redirection election.If the cost increases significantly,you will bc permitted to cither make
corcesponding changes in your payments or revoke your election and obtain coverage under another benetit package option w�ith similar
coverage,or revoke your clection entirely.
[f the coverage under a Benefit is significantly curtailed or ceases during a Plan Year,then you may revoke your elections and eiect to
receive on a prospective basis coverage under another plan with similar coverage.[n addition,if we add a new coverage option or eliminate
an cxisting option,you may elect the newly-added option(or elect another option if an option has bcen eliminated)and make
corresponding election changes to other options providing similar coverage.If you are not a 1'articipant,you may elect to join the Plan.
There are also certain situations when you may be able to change your elections on account of a change under the plan of your spouse's,
former s�wuse's or dependent's employer.
These rules on change due to cost or coverage do not apply to the Health Flexible Spending Account,and you may not change your
election to the Health Flexible Spending Account if you make a change due to cost or covcrage for insurance.
You may not change your election under the Dependent Care Flexible Spending Account if thc cost change is imposed by a dependcnt
care provider who is your relative.
7. May 1 make new clections in future Nlan�'ears?
Yes,you may.For each new Plan Ycar,you may change the elections that you previously made.You may also choose not to
participatc in the Plan for the upcoming Plan Year.Ifyou do not make new elections during the election period before a new Ylan Year
begins,we will assume you want}•our elections for insured bencfits only to remain the samc and you will not be considered a Participant
for the non-insured benet7t options under the I'lan f'or the upcoming Plan Year.
IV
BENEFI'fS
I. What benefits are offered under the Plan?
Under our Plan,you can pay for the following benefits or expenses during the year:
2. Health Flexible Spending:lccount
"I'he 1 lealth 1�lexible Spending Account enables you to pay for expenses allowed unJer Sections 105 and 213(d)of the Intemal
Revenue Code which are not covered by our insured medical plan and save taxes at the same time.The Health Flexible Spending Account
allows you to bc reimbursed by the Employer for expenses incurred by you and your depcndents.
Urug costs,including insulin,may be reimbursed.
You may be reimbursed fr�r"over the counter"drugs only if thosc drugs are prescribed for you.You may not,howevcr,be reimbursed
for the cost of other health care coverage maintained outside of the Plan,or for long-tertn care expenses.A list of covered expenses is
available f�om the Administrator.
The most that you can contribute to your}lealth Flexible Spending Account each Plan Year is 52,500.00.In order to be reimbursed for
a health care expense,you must submit to the Administrator an itemized bill from the service provider.We will also provide you with a
debit or credit card to use to pay R>r medical expenses.The Administrator will provide you with furthcr details.Amounts rcimbursed from
the Pl�n may not bc claimed as a deduction on your personal income tax retum.Reimbursement from thc fund shall be paid at least once a
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month.t�cpcnses unJcr this Plan are trcated as bc;ing"incurced"when you are provided with the care that gives rise to the expenscs,not
when you are formally billed or charged,or you pay for the medical care.
You may be rcimbursed for expc:nses for any child until the end of the calendar year in which the child reachcs age 26.A child is a
natural child,stepc:hild,foster child,adopted child,or a child placed with you for adoption.If a child gains or regains eligibility due to
these new rules,that qualifies as a change in status to change coverage.
Newtwms'and Mother.s'I lealth Protection Act Group health plans generally may not,under Federal law,restrict benetits for any
hospital Iength of stay in connection with childbirth for the moiher or newborn child to less than 48 hours following a vaginal delivery,or
less than 96 hours following a cesarean section.However,f�'ederal law generally does not prohibit the mothcr's or newborn's attending
provider,aRer consulting with the mother,from discharging thc mother or her newborn earlier than 48 hours(or 96 hours as applicable). In
any case,plans and issuers may not,under Federal law,require that a provider obtain authorization from the plan or the issuer for
prescribing a Icngth of stay not in cxcess of 48 hours(or 96 hours).
Women's Ffealth and Cancer Rights Act:This plan,as required by the Women's Health and Cancer Rights Act of 1998,will reimburse
up to plan limits for benefits for mastectomy-related services inciuding reconstruction and surgery to achieve symmetry between the
breasts,prosthesc.s,and complications resulting from a mastecromy(including lymphedema).Contact your Plan Administrator for more
information.
3. Dependent Care Flexible Spending Account
The Dependent Care Flexible Spending Account enables you to pay for out-of-pocket,work-rclated dependent day-care cost with
pre-tax dollars.If you are married,you can use the account if you and your spouse both work or,in some situations,if your spouse goes to
school 1LII-time.Single employees can also use the account.
An eligible dependcnt is someone for whom you can d�im expenses on Pederal Incomc"I'ax Form 2441 "Credit for Child and
I)ependent Care Expenses."Children must be under age 13.Other dependents must be physically or mentally unable to care for
themsclves.Dependen[Care arrangements which qualify include:
(a) A Dependent(Day)Care Center,provided that if care is provided by the facility for more than six individuals,the facility
complies with applicable state and local laws;
(b) An Educational Institution for pre-school chilJren.For older children,only expenses for non-school care are eligiblc;and
(c) An"Individual"who provides care inside or outside your home:The"[ndividual"may not be a child of yours under age 19 or
anyone you claim as a dependent for Federal tax purposes.
You should make sure that the dependent carc expenses you are currcntly paying for qualify under our Plan.We will also providc you
with a debit or credit card to use to pay for dependent care expenses.The Administrator will provide you with further details.
The law places limits on the amount of moncy that can bc paid to you in a calendar year from your Dependent Care E�Icxible Spending
Account.(ienerally,your reimbursements may not exceed the Iesser of:(a)$5,000(if you are mareied filing a joint return or you are head
of a household)or$2,500(if you are married tiling separate returns);(b)your taxable compensation;(c)your spouse's actual or deemed
earned income(a spouse who is a full timc student or incapable of caring for himselt%hersclf has a monthly eamed income of$250 for one
depcndent or$500 for two or more dependents).
Also,in order to have the rcimbursements made to you from this account be excludable from your income,you must provide a
statemcnt from the scrvice provider including the name,address,and in most cases,the taxpayer identification number of the service
provider on your tax form for thc year,as Hcll as the amount of such expense as proof that the expense has been incurred.In addition,
Fedcral tax laws permit a tax credit for ccrtain dependent care cxpenses you may be paying Cor even if you are not a I'articipant in this Plan.
You may save more moncy if you takc advantage of this tax credit ruther than using the Uependcnt Care Fle�cible Spending Account undcr
our Plan.Ask your tax adviser�vhich is better for you.
4. Premium E:zpense dccount
A Premium Expense Account allows you to use tax-trce dollars to pay for certain premium cxpenses under various insurance
programs th�t wc offer you. l'hcse premium expenses include:
--Health care premiums under our insured group mcdical plan.
--1)ental insurance premiums.
--Vision insurancc premiums.
Under our Plan,we will establish sub-accounts for you for cach ditlerent typc of insurance coverage that is available.Also,certain
limits on the amount of coveragc may apply.
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The Administrator may terminate or modify Plan benefits at any time,subject to the provisions of any insurance contracts providing
benefits described above.Wc will not be liable to you if an insurance company fails to provide any of the benefits described above.Also,
your insurance will end when you leave employment,are no longer eligiblc under ihe terms of any insurance policies,or when insurance
terminates.
Any benetits to be provided by insurance will be provided only after(1)you have provided the Administrator the necessary
information to apply for insurancc,and(2)the insurance is in cffect for you.
If you cover your children up to age 26 under your insurance,you can pay for that coverage through the Plan.
V
BENEFI"1'PAY�IENTS
1. When will I receive payments from my accounts?
During the course of the Plan Year,you may submit requests for reimbursement of expenses you have incurred.Expenses are
considered"incurred"when the service is performed,not nccessarily when it is paid for.The Administrator will providc you with
acceptable forms for submitting these requests for reimbursement.If the request qualifies as a benefit or expense that the Plan has agreed to
pay,you will receive a reimbursement payment soon thereafter.Remembcr,these reimbursements which are made from the Plan are
gencrally not subject to fedcral income tax or withholding.Nor are they subject to Social Security taxes.Requests for payment of insured
bencfits should be made directly to the insurer.You will only be reimbursed from the Uependent Care Flexible Spending Account to the
extent that there are sufficient funds in the Account to cover your request.
2. �Yhat happens if 1 Jon't spend all Plan contributions during the Plan Year?
Any monics left at the end of the Plan Ycar will be forfeited.Obviously,qualifying expenscs that you incur late in the Plan Year for
which you seek rcimbursement after the end of such Plan Year will be paid first bef'ore any amount is forfeited.For the Health Flexible
Spending Account,you must submit claims no later than 90 days after thc end of the Plan Year.For the I)ependent Care Flexible Spending
Account,you must submit claims no later than 90 days af'ter the end of the Plan Year.[3ecause it is possiblc that you might forfeit amounts
in the Ylan if you do not fully use the contributions that have been made,it is important that you decide how much to place in each account
carefully and conservatively.Remember,you must decide which benefits you want to contribute to and how much to place in each account
before the Plan Year begins.You want to be as certain as you can that the amount you decide to place in each account will be used up
cntirely.
3. Family and�tedical Lea��e Act(F�1LA)
If you take leavc under the Family and Medical Leave Act,you may revoke or change your existing elections for health insurancc and the
1 lealth Flexible Spending Account.If your coverage in these benefits terminates,due to your revocation of the benefit while on leavc or due ro
your non-payment of contributions,you will be permitted to reinsta[e coverage for the remaining part of the Plan Yeat upon your retum.For
the I lealth�lexible Spending Account,you may continue your coverage or you may revoke your coverage and resume it�vhen you return.You
can resume your coverage at its original level and make payments for thc time that you are on leavc.I�or example,if}�ou elect S l>200 for the
year and are out on leave for 3 months,then retum and elect to resume your coverage at that level,your remaining payments will be increascd
to cover the difference-from$100 per month to$I 50 per month.Altematively your maximum amount will be reduced proportionately for the
time that you were gone.For example,if you clect$1,200 for the year and are out on leave for 3 months,your amount will be reduced to�900.
Thc erpensc�you incur during the timc you are not in the Flealth�lexible Spending Account are not reimbursable.
If you continue your coverage during your unpaid leave,you may prc-pay for thc coverage,you may pay for your coveragc on an after-tax
basis while you are on Icave,or you and your L'mployer may amange a schedule for you to"c�tch up"your payments when you retum.
4. Cniformed Services F.mployment and Reemployment Rights Act{USERRA)
[f you are going into or returning from military service,you may h�ve special rights to health care coverage under your I lealth Flexible
Spending Account under the Uniformed Services Gmployment and Reemployment Rights Act of 1994. Ihese rights can include extended
health care coverage.If you may be atTected by this law,ask your Administrator for further details.
5. What happens if 1 terminate employment?
If you terminatc employment during the('lan Year,your right to benefits will be determined in the following manner:
(a) You will remain covered by insurance,but only for the period for which premiums have been paid prior to your termination of
cmploymcnt.
(b) You will still be able to rcyuest reimbursement f'or yualifying dcpendent care expenses incurred during the remainder of'the Plan
Year from the balance rerriaining in your dependertt carc account at the time of tcrmination of employment.[iowever,no further salary
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redirection and contributions will be made on your behalf aRer you terminate.You must submit claims within 90 days aRer the end of
the Plan Year in which termination occurs.
(c) For health benefit coverage and Health Flcxible Spcnding Account coverage on termination of employment,please see the
Article entitled"Continuation Coverage Rights lJnder COdI2A."Upon your termination of employment,your participation in the
Health Flexible Spending Account will cease,and no furthcr salary redirection and contributions will be contributed on your behalf.
I{owever,you will be able to submit claims for health care expenses that were incurred before the end of the period for which
payments to the I lealth Flexible Spending Account have already bcen made.Your further participation will be governed by
"Continuation Coveragc Rights Undcr COI3ftA."
6. �Vill my Social Security benefits be affected?
Your Social Security benefits may be slightly reduced because when you receive tax-free benefits under our Plan,it reduces the
amount of contributions that you make to the 1'ederal Social Security system as well as our contribution to Social Security on your behalf.
VI
IIIGHLY COMPF.NSATED AND KEY EMPLOYEES
1. Do limitations apply to hi�hly compensated employees?
Under thc Intemal Revenue Code,highly compensated employees and key employces generally are Participants who are officers,
sharcholders or highly paid.You will be notified by the Administrator each Plan Year whethcr you are a highly compensated employec or a
key employee.
If you are within these categorics,the amount of contributions and benefits for you may be limited so that the Plan as a whole does not
unfairly favor those who are highly paid,their spouses or their dependents.Federal tax laws state that a plan will be considered to unfairly
favor the key employees if they as a group receivc more than 25%of all of the nontaxable benefits provided for under our Plan.
Plan experiencc will dictate whether contribution limitations on highly compensated employees or key employccs will apply.You will
be notified of these limitations if you are aflected.
VII
PI.AN ACCOUN"CItiG
1. PerioJic Statements
1'he Administrator will provide you with a statement of your account periodically during the Plan Year that shows your account
balance. It is important to read these statements carefully so you understand the balance remaining to pay for a benefit.Remember,you
want to spcnd all the money you have designated for a particular benefit by the end of the Plan Year.
VIII
CENH:RAL INFORMATION ABOUT OI,�R PLAN
This Section contains certain general information which you may need to know alwut the Plan.
1. Ceneral Plan Information
City of Palm Desert IRS Section 125 Flexible Benetits Plan is the name of the Plan.
Your F,mployer has assigned Plan Numbcr 530 to your Plan.
'Che provisions of your amended Plan become ef�ective on May I,2013.Your Plan was originally cffective on J�nuary 1,2001.
Your Plan's records are maintained on a twclve-month period of timc."I'his is known as the Plan Year."1'he Plan Year begins on
January 1 and ends on llecembcr 31,except for thc first Plan Ycar which began on May l.
2. Employer Infurmation
Your Gmployer's name,address,and idcntification number are:
City of Palm Descrt,a Municipal Corporation
73-510 Fred Waring
Palm Dcscrt,Califomia 92260
95-2859459
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3. Pian Administrator Information
"I'he namc,address and busincss telephone numbcr of your Plan's Administrator are:
City of Palm Descrt,a Municipal Corporation
73-510 Fred Waring
Palm Desert,California 92260
760-346-0611
Thc Administrator keeps the records for the Plan and is responsible for the administration of the Plan. I'he AdminisVator will also
answcr any yucstions you may have about our Plan.You may contact the Administrator for any further information about the Plan.
4. Service of Legal Process
The name and address of the Plan's agent for service of legal process are:
City of Palm Desert,a Municipal Corporation
73-510 Fred Waring
Palm Desert,Califomia 92260
5. Type of Administration
'l he type of Administration is Employer Administration.
6. Claims Submission
Claims for expenses should be submitted to:
WageWorks,lnc.
Attention:Flex Claims Group,PO Hox 14054
I.,exington,KY 40512
IX
ADDITIONAL PLAN INFORMATIO\
1. Claims Prucess
You should submit all reimbursement claims during the Plan Year.For the Health Flexible Spending Account,you must submit
claims no later than 90 days after the end of the Plan Year.However,if you terminate employment during the Plan Ycar,you must submit
your Ilealth Flexible Spending Account claims within 30 days after your termination of employment.For the Dependent Care I�lexible
Spending Account,you must submit claims no later than 90 days aRer the end of the Plan Year,Any claims submitted after that time will
not lx considered.
Claims that are insured will be handled in accordance with procedures contained in the insurance policies.All other general requests
should be directed to the Administrator of our Plan.If a dependent carc or medical expense claim under the Plan is denied in whole or in
part,you or your beneficiary will receive written notification.The notification will include thc reasons for the denial,with reference to the
specific provisions of the Plan on which the denial was batied,a description of any additional inFormation needed to process the claim and
an explanation of the claims review procedurc.Within 60 days aRcr denial,you or your beneficiary may submit a�crittcn request for
reconsideration of the denial to the Administrator.
Any such request should be accompanied by documents or recorJs in support of your appeal.You or your beneficiary may review
pertinent documents and submit issues and comments irt writing.7'he Administrator will revie�v the claim and provide,within 60 ciays,a
written response to the appeaL(This period may be extended an additional 60 days under certain circumstances.)In this response,the
Administrator will explain the reason for the decision,with specific reference to the provisions of the Plan on which the decision is based.
"I�he Administrator has the exclusive right to interpret the appropriate plan provisions. Decisions of the Administrutor are conclusive and
binding.
X
CONTI'�UAT[ON COVERAGE RIGH"CS UYDER C013RA
IJnder federal law,the Consoiidated()mnibus Budget Reconciliation Act of 1985(COBRA},certain employees and their families
covered under health bencfits under this Plan will bc entitled to the opportunity to elect a temporary crtension of health coverage(called
"COBRA continuation coverage")where coverage under the Plan would otherwise end.This notice is intended to infortn Plan Participants
and bcncficiaries,in summary fashion,of their rights and obligations under the continuation coverage provisions of COBItA,as amended
and reflected in final and pro�msed regulations published by the Department of the'I�rcasury.This notice is intended to reflect thc law and
Joes not grant or take away any rights under the law.
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Che Plan Administrator or its designce is responsible for administering COBRA continuation coverage.Complete instructions on
COBRA,as well as election forms anJ other information,will be provided by thc Plan Administrator or its dcsignee to Plan Participants
who become Qualified Beneficiaries under COBRA.While thc Plan itself is not a group health plan,it dces provide health benetits.
Whenever"Plan"is used in this scction,it means any of the health benefits under this Plan including thc Health Flexible Spcnding
Account.
1. What is COBRA continuation coverage?
COBRA continuation coverage is the temporary extension of group health plan coverage that must be ofl'ered to certain Plan
Participants and their eligible family members(called"Qualified Beneficiaries")at group rates.The right to COBRA continuation coverage
is triggered by the occurrence of a life event that results in the loss of coverage under the terms of the Plan(the"Qualifying Event").The
coverage must be identical to the coverage that the Qualified Beneficiary had immediately before the Qualifying Event,or if the coverage
has been changed,the coverage must be identical to the covcrage provided to similarly situated active employees who have not experienced
a Qualifying Event(in other words,similarly situated non-CO[3RA beneficiaries).
2. Who can become a Qualified Beneficiary?
In general,a Qualified Beneficiary can be:
(a) Any individual w�ho,on the day before a Qualifying Event,is covered under a Plan by virtue of being on that day either a covered
timployee,the Spouse of a covered Employee,or a Dcpendent child of a covered Employce.If,however,an individual who othenvise
yualifies as a Qualificd Beneficiary is denied or not offen;d coverage under the Plan under circumstances in which the denial or failure
to o(T'er constitutes a violation of applicable law,then the individual will be considered to have had the coverage and will be
considered a Qualiticd Beneficiary if that individual experiences a Qualifying Event.
(b) Any child who is born to or placed for adoption with a covered F,mployee during a period of COBRA continuation coverage,and
any individual who is covered by the Ylan as an alternate recipient under a qualified medical support order.It;however,an individual
who othcrwise yualifics as a Qualificd Beneficiary is denied or not offered coverage under the Plan under circumstances in which the
denial or failure to offer constitutes a violation of applicable law,then the individual will be considcred to have had the coverage and
will be considered a Qualified E3encficiary if that individual experiences a Qualitying Event.
I'he term"covered Employee"includes any individual who is provided coverage under the Plan due to his or her performance oF
scrvices for the employer sponsoring the Plan.However,this provision does not establish cligibiliry of these individuals.Eligibility for Plan
coveragc shall be determined in accordance with Plan Eligibility provisions.
An individual is not a Qualified Beneficiary if'the individual's status as a covered Employee is attributable to a period in which the
individual was a nonresident alicn who received from the individual's�,mployer no eamed income that constituted income from sources
within the United States.If,on account of the preceding reason,an individual is not a Qualitied I3eneficiary>then a Spouse or Dependent
child of thc individual will also not be considercd a Qualitied Beneticiary by virtuc of the relationship to the individual.A domestic partner
is not a Qualified Beneficiary.
Each Qualified Beneticiary(including a child who is born to or placed for adoption with a covered Employee during a pc;riod of
COBRA continuation coverage)must be otl'ered the opportunity to make an independent election to receive COE3RA continuation
coveragc.
3. W'hat is a Quaiifying F:vent?
A Qualifying L:vent is any of the following if the Plan provided that the Plan participant would lose coverage(i.e.,cease to be covered
under the sume terms and conditions as in effect immediately be:fore the Qualifying Event)in the absence of C013RA continuation
coverage:
(a) rhe death of a covcred Employec.
(b) "Che termination(other than by reason of the Gmployee's gross misconduct),or reduction of hours,of a covered P;mployee's
employment.
(c) 'l he divorce or Icgal separation of a covcrcd Employee from the�;mployee's Spouse.[f the Employee reduces or eliminates the
F.mployee's Spouse's Plan coverage in anticipation of a divorce or legal separation,and a divorce or legal separation later occurs,then
the divorce or legal separation may be considered a Qualitj�ing F,vent even though the Spouse's coverage was reduced or eliminated
before the divorce or Iegal separation.
(d) A covered F,mployee's enrollment in any part of the Medicare program.
(e) A Dependent child's ceasing to satisfy the Plan's reyuircments for a Dependent child{for example,attainment of the maximum
agc for dependency undcr the Plan).
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If'the Qualifying Event causes the covered Employce,or the covered Spouse or a Uependent child of the covered Employce,to cease
to be covered under the Plan under the same terms and conditions as in ef�ect immediately before the Qualifying i;vent,the persons losing
such coverage become Qualified Beneficiaries under COBRA if all the other conditions of COBRA are also met.For example,any increase
in contribution that must be paid by a covered Gmployee,or the Spouse,or a Dependent child of the covered F,mployee,for coverage under
the Plan that results from the occunence of one of the events listed above is a loss of coverage.
"fhe taking of leave under the l�amily and Medical l,eave Act of�1993("�MI,A")does not constitute a Qualif'ying Event.A Qualifying
Event will occur,however,if an Employec does nat rc[um to employment at the end of the FMLA leave and al!other COBRA continuation
coverage conditions are present.If a Qualifying L•'vent occurs,it occurs on the last day of FMLA leave and the applicable maximum
coverage period is measured from this date(unless coverage is lost at a later date and the Plan provides for the extension of the required
periods,in which case the maximum coverage date is measured from the date when the coverage is lost.)Note that the covered Gmployee
and family mcmbers will be entitled to COE3RA continuation coverage evcn if they failed to pay thc employee portion of premiums for
coverage under the Plan during the FMLA leave.
4. VVhat factors should be considered when determining to elect COBRA continuation coverage?
You should take into account that a failure to continue your group health coverage will affect your rights under federal law.First,you
can lose the right to avoid having pre-existing condition exclusions applicd by other group health plans if there is more than a 63-day gap in
health coverage and election of COI�RA continuation coverage may help you avoid such a gap.Second,if you do not etect COBRA
continuation coverage and pay the appropriate premiums for the maximum time available to you,you will lose the right to convert to an
individual health insurance policy,which does not impose such pre-existing condition exclusions.F�inally,you should take into account that
you have special enrollment rights under federal law(HIPAA).You have the right to request special enrollment in another group health
plan for which you are otherwise eligible(such as a plan sponsored by your Spouse's employer)within 30 days aftcr Plan coverage ends
due to a Qualifying Event listed above. You will also have the same special right at the end of COBRA continuation coverage if you get
COBRA continuation coverage f'or the maximum time available to you.
5. What is the procedure for obtaining COBRA continuation coverage.'
The Plan has conditioned the availability of COBRA continuation coverage upon the timely election of such covcrage.An election is
timely if'it is made during the election period.
6. �Yhat is the election period and how long must it last?
"1'he election period is the time period within which the Qualified Beneticiary must elect COBRA continuation coverage under the
Plan.The election period must begin no later than the date the Qualif ied Beneficiary would lose coverage on account of the Qualifying
Gvent and ends 60 days after the I�ter of the date thc Qualified Beneficiary would lose coverage on account of the Qualifying Event or the
date notice is provided to the Qualificd Beneficiary of her or his right to elect COBKA continuation coverage.[f coveragc is not electcd
within thc 60 day period,all rights to elect COBRA continuation coveragc are forfeited.
Note:If a covered timployee who has been terminated or experienced a rcduction of hours qualifies for a trade readjustment allowance
or alternative trade adjustment assistance under a federal law called the Trade Act of 2002,and the employee and his or her covered
dependents have not ciccted COBRA coverage within the normal election period,a second op�rtunity to elect COBRA coverage will be
madc available for themsclves and certain family members,but only within a limited period of 60 days or less and only during the six
months immediately after their group health plan coverage ended.Any person who yualifics or thinks that he or she and/or his on c�r family
membcrs may qualify for assistance unJer this special provision should contact the Plan Administrator or its designee for further
information.
"Che"I�rade Act of 2002 also created a tax credit for certain TAA-eligible individuals and for certain retired employees who arc
recciving pension payments from the Pension 13enefit Guaranty CorEx>ration(PBGC)(eligiblc individuals).Under the new tax provisions,
cligible individuals can eithcr take a tax crcdit or get advance payment of a part of thc premiums paid for qualificd health insurance,
including continuation coverage.[f you have questions about these new tar provisions,you may call the Health Coverage Tax Credit
Consumer Contact Center toll-free at 1-866-628-4282.'I'I�D/TTY callers may call toll-f�ee at 1-866-626-4282.More information about the
Trade Act is also available at www.doleta.gov/tradeact.
7. Is a covered Emplo��ee or Qualified Beneficiary responsible for informing the Plan Administrator of the occurrence of a
Qualifying Event?
The Plan will offer COBRA continuation coverage to Qualitied Beneficiaries only after the Plan Administrator or its designee has
been timcly notified that a Qualitying F,vent has occurred.The Gmployer(if the Employer is not the Plan Administrator)will notify the
Plan Administrator or its designee of the Qualifying I:vent within 30 days following the date coverage ends when the Qualifying Event is:
(a) the end of cmployment or reduction of hours of employment,
(b) dcath of the employee,
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(c) commenccment of a proceeding in bankruptcy with respect to the F.mployer,or
(d) entitlement of the employce to any part of Medicare.
Ih9PORTA\"T:
For the other Qualifying Events(divorce or legal separation of the employee and spouse or a dependent child's losing
eligibility for coverage as a dependent child),you or someone on your behalf must notify the Plan AJministrator or its designee in
writing within 60 days aRcr the Qualifying Event occurs,using the proceJures specified below.If these prucedures are not followed
or if the notice is not provided in writing to the Plan Administrator or its designee during the 60-day notice period,any spouse or
dependent child who loses coverage will not be offered the option to elect continuation coverage.You must send this notice to the
Plan Administrator or its designee.
NOTICE PROCEDURES:
Any notice that you provide must bc in writinQ.Oral noticc, including notice by telephone,is not acceptablc.You must mail,fax
or hand-deliver your notice to the person,department or firm listed below,at the following address:
City of Palm Desert,a Municipal Corporation
73-510 Fred Waring
Palm Desert,California 92260
If mailed,your notice must be postmarked no later than the last day of the required notice period.Any notice you provide must state:
• the name of the plan or plans under which you lost or are losing covera�;e,
• the name and address of the employee covered under the plan,
• the name(s)and address(es)oithe Qualified Beneficiary(ies),and
• the Qualifying Event and the Jate it happened.
[f the Qualifying Event is a divorce or legal separation,your notice must include a copy of the divorce decree or the legal
separation agreement.
L3e aware that thcrc are other notice requirements in other contexts,f'or example,in order to qualify for a disabiliry extension.
Once the Plan Administrator or its designee reccives trme! nv otice that a Qualifying 1?vent has occurced,COBRA continuation
coverage will be of'fcred to each of the yualitied beneticiaries.Each Qualified Beneficiary will have an independent right to elect
COQRA continuation coverage.Covered employces may elcct COQRA continuation coverage for thcir spouses,and parents may elect
CO[3RA continuation coverage on(xhalf of their children.For each Qualified Bencficiary who elects COBRA continuation coverage,
COE3RA continuation coverage will begin on the date that plan coverage would othenvise have been lost.If you or your spouse or
dependent children do not elect continuation coverage within the 60-day election period described above,the right to elect continuation
cnverage wi]]be lost.
S. Is a waiver before the end of the election period effective tu end a Qualified Beneficiary's electiun rights?
If,during the election period,a Qualified E3eneficiary waives COBRA continuation coverage,the waiver can be revoked at any time
before thc end of the election period.Revocation of the waiver is an election of C013RA continuation coverage.Eiowever,if a waiver is
later revoked,coverage need not be provided retroactively(that is,from the date of the loss of coverage until the waiver is revoked).
Waiven and revocaiions of waivers are considered made on the date they are scnt to the Plan Administrator or its designec,as applicable.
9. Is COBRA coverage available if a QualiGeJ Beneficiary has other group health plan coverage ur�1edicare?
Qualified Beneficiarics who�re en[ided to elect COBRA continuation coverage may do so even if they are covcred under another
group health plan or are entitled to Medicare benefits on or befo�+e the date on which COI3RA is elected.However,a Qualitied
Beneficiary's COBRA coverage will terminate automatically if,aftcr clecting COBRA,he or she becomes entitled to Medicarc or becomes
covered under other group health plan coverage(but only after any applicable preexisting condition exclusions of that other plan have been
exhausted or satisfied).
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]0. VVhen may a Qualified Beneficiary's COBRA continuation coverage be terminated?
During the election period,a Qualified Beneficiary may waive COBRA continuation coverage.Except for an interruption of coverage
in connection with a waiver,COBI2A continuation coverage that has been elected for a Qualificd f3eneficiary must extend for at least the
period beginning on the date of the Qualifying Event and ending not before the earliest of the following dates:
(a) The last day of thc applicable maximum coveragc period. ,
(b) The tirst day for which Timely Payment is not made to the Plan with respect to the Qualified Beneficiary.
(c) The date upon which thc Bmployer ceases to provide any group health plan(including a successor plan)to any employee.
(d) The datc,after the date of the election,that thc Qualified Beneficiary first becomes covered under any other Plan that does not
contain any exclusion or limitation with respect to any pre-existing condition,other than such an exclusion or limitation that does not
apply to,or is satisfied by,the Qualified I3eneficiary.
(e) 'I�he date,after the date of the election,that the Qualified I3eneficiary first becomes entitled to Medicare(either part A or part B,
whichever occurs earlier).
(t) In the casc of a Qualificd Beneficiary entitled to a disability extension,the later of:
(1) (i)29 months after the date of the Qualifying Event,or(ii)the first day of the month that is more than 30 days after the date
of a final determination under"I'itle ll or XVI of the Social Security Act that the disabled Qualified Beneficiary whose disability
resulted in the Qualified Heneficiary's entitlement to the disabiliry extension is no longcr disabled,whichever is earlier,or
(2) the end of the maximum coverage period that applics to the Qualitied Beneficiary without regard to the disability extension.
The Plan can terminate for cause the coverage of a Qualified Acneticiary on the same basis that thc I'lan terminates for cause.the
coverage of similarly situated non-COBRA beneficiarics,for example,for the submission of a fraudulent claim.
In the casc of an individual who is not a Qualified Beneficiary and who is receiving coverage under thc Plan solely because of thc
individual's relationship to a Qualified Beneticiary,if the Plan's obligation to make COBRA continuation coverage available to the
Qualified E3eneficiary ceases,thc 1'lan is not obligated to make coverage available to the individual who is not a Qualified Beneficiary.
11. �Vhat are the maximum coveraRe periods Por COBRA continuation coverage?
l�he maximum coverage periods are based on the type of the Qualif'ying F.,vent and thc status of the Qualified E3eneficiary,as shown
be lo�v.
(a) In the case of a Qualifying Event that is a termination of employment or reduction of hours of employment,the maximum
covcrage period ends 18 months after the Qualifying F,vcnt if there is not a disability extension and 29 months after the Qualitying
1?vent if there is a Jisability extension.
(b) In the case of a covcred Employce's enrollment in the Medicare program bcfore experiencing a Qualifying Event that is a
tcrmination of employment or reduction of hours of employment,the ma�cimum coverage period for Qualified Rcneficiaries ends on
thc later of':
(I) 36 months afler the datc the covered T;mployee bccomes enrolled in the Medicarc program.This extension docs not apply to
the covered Employee;or
(2) 18 months(or 29 months,if there is a disability extension)atter the date of the covered Employee's termination of
employment or reduction of hours of employment.
(c) [n the case of a Qualifled Beneficiary who is a child born to or placed for adoption with a covered F,mployee during a period of
COBRA continuation coverage,the maximum coverage period is the maximum coverage period applicable to the Qualifying Event
giving rise to the period of COBRA continuation coverage during which the child was bom or placed for adoption.
(d) ln the case of any other Qualifying Event than that described above,thc marimum covcrage period ends 36 months after the
Qualifying I:vcnt.
12, l;nder what circumstances can the maximum coverage period be expanded?
If'a Qualifying L•:vcnt that gives rise to an 18-month or 29-month maximum coverage period is Pollowed,within that 18-or 29-month
pe;riod,by a second Qualifying i:vent th�t gives rise to a 36-months maximum coverage period,the original period is expanded to 36
months,but only for individuals�vho are Qualified Beneficiaries at the time of and with respec[to both Qualitying Events.In no
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circumstance can thc COBRA marimum coverage period be expanded to more than 36 months after the date of the tirst Qualifying Event.
The Plan Administrator must be notified of the second qualifying event within 60 days of the second qualifying event. I�his notice must be
sent to the Plan Administrator or its designee in accordance with the procedures above.
13. llow does a Qualified Beneficiary become entitled to a Jisability extension?
A disability extension will be granted if an individual(whether or not the covcred Employee)who is a Qualiticd Beneficiary in
connection with the Qualifying l:vent that is a termination or reduction of hours of a covered Employee's employment,is determined under
T�itle!I or XVI of the Social Security Act to have becn disabled at any time during the first 60 days of COBRA coniinuation coverage.'1'0 �
qualify for the disability extension,the Qualified Beneficiary must also provide the Plan Administrator with notice of the disability
determination on a date that is both within 60 days afier the date of the determination and before the end of the original 18-month
maximum coverage.This notice must be sent to the Plan Administrator or iu designee in accordance with the procedures above.
14. Does the Plan require payment for COBRA continuxtion coverage?
For any period of COBRA continuation coverage under the Plan,Qualified Beneficiaries who elect C08RA continuation coverage
may be required to pay up to 102%of the applicable premium and up to 150%of the applicable premium for any expanded period of
COBRA continuation coverage covering a disabled Qualified Qeneficiary due to a disability extension.Your Plan Administrator will
inform you of the cost.The Plan will terminate a Qualitied Beneficiary's COBRA continuation coverage as of the first day of any period for
which timely payment is not made.
15. �tust the Plan allow payment for('OBItA continuation cuverage to be made in monthly installments?
Ycs. I'he Plan is also permitted to allow for payment at other intervals.
16. What is Timely Payment for COBRA continuation coverage?
Timely l'ayment means a payment made no later than 30 days after the first day of the coverage period.Paymcnt that is made to the
I'lan by a later date is also considered Timely Payment if either under the terms of the Plan,covered Employees or Qualified Beneficiaries
are allowed until that later date to pay fbr their covcrage for the period or under the terms of�an arrangemcnt between the Employer and the
entity that providcs Plan benetits on the Employer's behalf,the k:mployer is allowed until that later date to pay for coverage of similarly
situated non-COBRA beneticiaries for the period.
Notwithstanding the abovc paragraph,thc Plan does not require paqment for any pe�iod of COI3RA continuation coverage for a
Qualiticd Beneficiary carlier than 45 days after the date on which the election of COBRA continuation coverage is made for that Qualified
Beneficiary.Payment is considered made on the date on which it is postmarked to the{'lan.
[f"I'imely Paymcnt is made to the Plan in an amount that is not significantly less than the amount the Plan requires to be paid for a
period of coverage,then the amount paid will be deemed to satisfy the Plan's requirement for the amount to be paid,unless the Plan notifies
the Qualified[3eneticiary of the amouni of the deficiency and grants a reasonable period of time for payment of the deticiency to be made.
A"reasonable period of time"is 30 days after the notice is provided.A shortf�ll in a'Cimely P�yment is not significant if it is no greater
than the lesser of S50 or l0%of the reyuired amount.
17. M1lust a QualifieJ Beneficiary be given the right to enroll in a conversion health plan at the end of the maximum coverage
period for COBRA continuation coverage?
If a(1ualitied E3eneticiary's COBRA continuation coverage under a group hralth plan ends as a result of the eYpiration of the
applicable maximum cover�ge period,the Plan will,durin�the 180-day period that ends on that expiration date,provide the Qualified
Qeneficiary with thc option of enrolling under a conversion hcalth plan if such an option is othenvisc generally available to similarly
situated non-COBRA beneticiaries under the Plan.If such a convcrsion option is not othenvise generally available,it nced not be made
available to Qualified Beneficiaries.
18. How is my participation in the Health F'lexible Spending,lccount af7ected?
You can elect to continue your participation in the liealth 1�Iexible Spending Account for the remainder of the Plan Year,subject to
the following conditions.You may only continue to participate in the Hcalth Flexible Spending Account if you have elected to contribute
more money than you have taken out in claims.For example,if you elected to contribute an annual amount of$500 and,at thc time you
terminate employment,you have contributcd$300 but only claimed$I50,you may elect to continue coverage under the Hcalth Flexible
Spending Account.If you elect to continuc coverage,then you would be able to continue to receive your health reimbursements up to the
$500.How-ever,you must continue to pay for the covcrage,just as 1he money has becn taken out of your paycheck,but on an after-tax
basis."l�he Plan can also charge you an extra amount(as etplained above for othen c�alth benefits)to provide this benefit.
IF YOU FiAVE QCESTIONS
If you have yuestions about your COE3RA continuation coverage,you should contact the Plan Administrator or its designee.Por more
information about your rights under P;RISA,including COBRA,the Hcalth Insurance Portability and Accountability Act(}IIPAA),and
12
OS/13
other laws af�ecting group health plans,contact the ncarest Regional or District Officc of the U.S. Departmcnt of L�bor's Employce
E3enefits Security Administration(EBSA).Addresses and phone numbcrs of Regional and District EBSA Offices are available through
EBSA's website at www.dol.gov/ebsa.
KEEP Y'OCR PLAN AD�IIti1S"TRATOR INFOR�IED OF ADDRESS CIIANGES
In order to protect your family's rights,you should kecp the Plan Administrator informed of'any changes in the addresses of family
members.You should also keep a copy,for your records,of any notices you send to the Plan Administrator or its Jesignce.
XI
SUMMARY
'I'he money you earn is important to you and your family.You nced it to pay your bills,enjoy recreational activities and save for the
future.Our flexible benefits plan will hclp you keep more of the money you eam by lowering the amount of taxes you pay.The Plan is the
result of our continuing efforts to find ways to help you get the most for your earnings.
If you have any questions,please contact the Administrator.
13
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Attachment A
**FiIPAA NOTICE OF PRIVr�C�'PRACTICES**
"1'HIS NOTICE DESCRIBES IiOW�IEDICAL INFORMATION ABOLIT t'OU MAY BE USED AtiD DISCLOSED AND HO�V
YOU G�N GET ACCESS"1'O THIS INFORMAI'ION.
PLEASE RE�7EW IT CARF.H'ULLY.
Purpose
This noticc is intended to inform you of the privacy practices followed by your employer's Healthcare Flexible Spending Account Plan.It
also explains the 1'ederal privacy rights afforded to you and the members of your family as Plan Participants covered under a group health
plan.
As a I'lan sponsor your employer often needs access to health inf'ormation in order to perform Plan Administrator functions.We want to
assure the Plan Participants covered under our group health plan thai we comply with Federal privacy laws and respect your right to
privacy.We reyuire all members of our workforcc and third partics that are provided access to health information to comply with the
privacy practices outlined below.
Uses and Disclosures of}Iealth Informatiun
Healthcare Operations.We use and disclose health information about you in order to perform Plan administration functions such as
quality assurance activities,resolution of intemal gricvances,and evaluating plan performance.For example,we review claims experience
in order to understand utilir.ation and to makc plan design changes that are intended to control health care costs.
Payment.We may also use or disclose identifiable health information about you without your written authorization in order to detcrtnine
cligibility for benefits,seek rcimbursement from a third party,or coordinate benetits with another health plan undcr which you arc covered.
Por example,a hcalthcare providcr that provided trcatment to you will provide us with your health infortnation.We use that information to
detcrmine whether those serviccs are eligible f'or payment under our group health plan.
'Treatment.Although the law allows usc and disclosurc of your health information for purposes of treatment,as a Plan sponsor we
generally do not need to disclose your information for treatment purposes.Your physician or healthcare provider is required to provide you
with an explanation of how thcy use and share your health information for purpo.ties of treatment,payment,and healthcare operations.
As permitted or required by law.We may also usc or disclose your health inforrnation without your written authorixation for othcr
rcasons as permitted by law.We are permitted by law to share information,subject to ccrtain requirements,in order to communicate
information on health-related benefits or services that may be of interest to you,respond to a court order,or provide information to further
public health activities(c.g.,preventing the spread of disease)without your written authorization.We are also permitted to share health
information during a corporate restructuring such as an mcrger,sale,or acquisition.We w•ill also disclose health information alx�ut you
whcn required by law,for example,in order to prevent serious hartn to you or others.
Pursuant to your Authorization.When required by law,we will ask for your written authorization be:i'ore using or disclosing your
idcntifiable health information.If'you choose to sign an authorization to disclose infortnation,you can later revoke that authorization to
cease any future uses or disclosures.
Right to Inspect and Copy.In most cases,you have a right to inspect and copy the health information we maintain about you.If you
reyucst copies,wc will charge you$0.05(5 cents)for each pagc.Your request to inspect or review your health information must be
submitted in writing to the person listed below.
Right to an Accounting of Uisclosures.You have a right to receive a list of instances where we have disclosed health information about
you for reasons other than veatment,payment,healthcare operations,or pursuant to your written authorization.
Right to Amend.If you bclieve that information within your records is incorrect or if important infortnation is missing,you have a right to
request that we correct the existing information or add the missing information.
Right to Reyuest Restrictions.You may reyuest in writing that we not use or disclose information for treatment,payment,or other
administrative purposes except when specifically authorized by you,when required by law,or in emergency circumstances.We will
consider your reyuest,but are not legally obligated to agree ro those restrictions.
14
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Right to Request Confidential Communications.You have a right to receivc confidential communications containing yc�ur health
information.We are required to accommodate reasonable requests.For example,you may ask that we contact you at your place of
employment or send communications regarding treatment to an alternate address.
Riqht to Receive a Paper Copy of this Notice.If you have agreed to accept this notice electronically,you also have a right to obtain a
paper copy of this notice from us uEwn request.7'0 obtain a paper copy of'this notice,please contact the person listed below.
Legal Requirements
We are required by law to protect the privacy of your information,provide this notice about information practices,and follow the
information practices that are described in this notice.
We may change our policies at any time.Before we make a significant change in our policies,we will provide you with a revised copy of
this notice.You can also request a copy of our notice at any time.For more infortnation about our privacy practices,contact the person
listed bclow.
Ifyou have any yuestions or complaints,please contact the Plan Administrator listed under Section l,"Gcneral Information About Our
Plan."
Filing a Cumplaint
If'you are concemed that wc have violated your privacy rights,or you disagree with a decision we made about access to your records,you
may contact the person listed above. You also may send a wri[ten complaint ro the U.S. Department of Hcalth and Human Services;Office
of Civil Kights.The person listed above can provide you with the appropriate address upon request or you may visit www.hhs.gov./ocr f'or
furthcr information.
l5
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y .� �
Wage +�rks1,!
PLAN AMENDMENT
� ARTICLE I .
PREAMBLE
1.1 Adoption and effedive date of amendment.The Employer adopts this Amendment to the
City of Palm Desert Medical (enter name of plan)("Plan")to reflect
changes to Internal Revenue Code(IRC)Section 125(i),as amended by the Internal Revenue Service
(IRS)Notice 2013-71.The employer and Plan sponsor intends this Amendment as good faith
compliance with the requirements of this Notice.This Amendment shall be effective on or after the
date the Employer elects in Section 2.1 below.
1.2 Election of Carryover. To the extent that the Plan contains"grace period" language,said language
for any"grace period"for the health flexible spending account(health FSA)will be voided for Plan
years following the Plan year that carryover is adopted and such language shall be replaced with the
"carryover"language outlined below.
1.3 Supersession of inconsistent provisions.This Amendment shall supersede the provisions of the Plan �
to the extent those provisions are inconsistent with the provisions of this Amendment. �,�
ARTICLE II
CARRYOVER ELECTION
2.1 Effective Date.This Amendment is entered into as of the date outlined below and shall be effective
for m the 2013 Plan year and beyond or � the 2014 Plan year and beyond.
2.2 Carryover Amount.The Plan shall provide for a carryover of$500 of any amount remaining unused
in a health FSA as of the end of the Plan year. Such carryover amount may be used to pay or reimburse
medical expenses under the health FSA incurred during the entire Plan year to which it is carried over.
2.3 Participant Opt Out. Notwithstanding the foregoing,any Plan participant shall have the right to opt
out of the carryover if such participant has already enrolled in a health care savings account for the
following Plan year.
This Amendment has been executed as of the date signed. �
Signature: P�'� S ,�s�N
__ ... _ _ �
Email: pgibson@ciryofpalmdesert.org
� Title: Finance Director
� Company: City of Palm Desert
� �
�
�
�r pocument Integrity Verified EchoSign Transaction Number:X216SBXK3J8X656�
. ;,��5,., , � ���� ��rr�r���r ���i�r� �1�r�
„____.-=- _ _ �r��r� ��n t
� "'�Y-�� �M ~ -~ EchoSign Document History November 12, 2013
Created: November 12,2013
� � ����� �+�� yr�~ By: Carryover Option Team(carryover.opGon@wageworks.com)
,_.,�,. ---`--�—'•---- =" Status: SIGNED
Transaction ID: X216SBXK3J8X656
"FSA Carryover Option Plan Amendment" History
l- Widget created by Carryover Option Team (carryover.option@wageworks.com) �
November 07,2013-2:27 PM PST
t- Widget filled in by Paul S Gibson (pgibson@cityofpalmdesert.org)
November 12,2013-7:38 AM PST-IP address:67.52.175.194
� E-Signature verified by Paul S Gibson (pgibson@cityofpalmdesert.org)
November 12,2013-7:38 AM PST-IP address:67.52.175.194
�1 Signed document emailed to Carryover Option Team (carryover.option@wageworks.com)and Paul S Gibson �
(pgibson@cityofpalmdesert.org)
November 12,2013-7:38 AM PST
�
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9�llag�lA/orks �aoe.eaoe�x�
CITY OF PALM DESERT IRS SECTION 125
FI,H:XII3LE BENEFITS PLAN
A�ID,�►LL SIiPPOR"I'ING FORMS HAVE BF,EV PRODUCED FOR
WAGEWORKS,INC.
Copyright 2013 SunCiard
All Itights Reserved
CITY OF PALM DESERT IRS SECTION 125
FLEXIBLE BE\EFITS PLA;Y
TAI3LE OF CON"1'ENTS
ARTICLF,I
DEFINCCIONS
ARTICLF.11
PAR'I'ICIPATION
2.1 F.I,IGIBILITY.................................................................................................................................................................................2
2.2 �;FFECTIVE DA'1'E OF PARTlCIPATION...................................................................................................................................2
23 API'I,ICATION TO PARTICIPATI:..............................................................................................................................................3
2.4 TIiRMINATION OF PARTICIPATION........................................................................................................................................3
2.5 'I'E,RMINATION Ot'EMPLOYMF,NT..........................................................................................................................................3
2.6 DEATH...........................................................................................................................................................................................3
ARTICLE III
COtiTRIBUTIO�iS TO TIIE PLAN
3.l EMPLOYER CON'I'RIB[JTION....................................................................................................................................................3
3.2 SALARY RI;UIRECTION.............................................................................................................................................................4
33 APPLICA'I'ION OF CONTRIBU"I'IONS.......................................................................................................................................4
3.4 1'1?RIODIC CONTRIBU"I�IONS.....................................................................................................................................................4
ARTICLF.IV
BENEFI"1'S
4.1 I3ENEFIT OPTIONS......................................................................................................................................................................4
4.2 kIEALTE{FI,EXIBLE SPENDING ACCOUNT BF,NL:1'IT...........................................................................................................4
43 DEPEND�N"1'CARE FLEXIBI,t;SPENDING ACCOUNT E3ENEFI"C........................................................................................4
4.4 HEAL"I'H INSURANC�BI;NEF[T...............................................................................................................................................4
4.5 DENTAL INSURANCE E3ENEFI'I�...............................................................................................................................................5
4.6 VISION INSIJRANCE BE;NI?PI'C..................................................................................................................................................5
4.7 NONDISCKIMINA'CION REQUIRE;MFNTS...............................................................................................................................5
AR7'ICLE V
PAR"17CIPA\T F,I,ECTIONS
5.1 INITIAL LLE.CTIONS...................................................................................................................................................................5
5.2 SUI3SEQUENT ANNUAL ELECTIONS......................................................................................................................................6
5.3 r'AILURE TO GLECT....................................................................................................................................................................6
5.4 CE IANGF,IN S'1'A'['US...................................................................................................................................................................6
AR7'ICLF,VI
EIEAL"CH FLEXIBLE SPENDING ACCOUNT
6.1 I;S'I'ABL[SE IMENT OI�PLAN......................................................................................................................................................8
6.2 DF.FINITIONS...............................................................................................................................................................................8
6.3 FORFE["I'URES..............................................................................................................................................................................8
6.4 LIMI"I'AT[ON ON ALLOCA'I'IONS.............................................................................................................................................9
6.5 NONllISCRIMINATION REQUIREMENTS...............................................................................................................................9
6.6 COOItllINATION WI'CH CAFETI:RIA YLAN.............................................................................................................................9
6.7 I IEAI,TH FLEX[BLF SPENDING ACCOUNT CI,A[MS............................................................................................................9
6.8 DIiBIT AND CREDI I'CARDS..................................................................................................................................................... 10
AR"1'ICLE VI[
llEPEYDENT CARE FLEXIBLE SPEtiDING ACCOU\T
7.1 ESTABLISHMENT OF ACCOUNT............................................................................................................................................. l 1
7.2 DL'I�INITIONS............................................................................................................................................................................... II
7.3 UI:PF.NDENT CARE FLEXIBLE SPENI)ING ACCOUN I'5....................................................................................................... 1 1
7.4 [NCREASES IN DEPENDENT CAItE FLEXIBLE SPk:NDING ACCOUN"I'S........................................................................... 12
7.5 UfCREASES IN UEPf:NDENT CARL E�I,I;XIBLE SPENDING ACCOiJNTS.......................................................................... 12
7.6 ALLOWABLE DEPENDEN'C CARE REIMBURSr;MI:NT......................................................................................................... 12
7.7 ANN[JAL STA'i'I?Mk:NT OF BENEFI'I�S..................................................................................................................................... 12
7.8 FORI�I',ITURES.............................................................................................................................................................................. 12
7.9 LIMITAT[ON ON PAYMENTS.................................................................................................................................................... 12
7.10 NONDISCRIMINATION RF;QUIREMENTS............................................................................................................................... 12
7.11 COORD[NA"I'ION WITFI CAFF."['I:RIA PLAN............................................................................................................................. 12
7.12 I)F.PENDENT CARE PI,E:XIBLE SPEND[NG ACCOUNT CLAIMS......................................................................................... 13
7.13 DI;BI'I'AND CREDIT CAKI)S..................................................................................................................................................... 13
ARTICLE VI11
B�:NEFITS A\D RIGHTS
8.1 CLAIM FOR BF.N}i}�I"I'S............................................................................................................................................................... 14
8.2 APPLICA"CION OF BENEFIT PLAN SURPLUS......................................................................................................................... 15
ARTICI.E IX
AU�tI\ISTR.ITION
9.1 PLAN AUMINISTRAT[ON........................................................................................................................................................... 15
9.2 EXAMINATION OF RECORDS................................................................................................................................................... 16
9.3 PAYMENT OF[:XI'�NSES.......................................................................................................................................................... 16
9.4 INSURANCI CONTROL CI,AUSL•'............................................................................................................................................. 16
9.5 INDF,MNIi►CA"1'ION OF ADMINISTRA'I�OR............................................................................................................................. 16
ARTICI.F.?C
A�IEVDMENT OR TF,R�tI\A770N OF PLAN
10.1 AMENUMI:NT.............................................................................................................................................................................. 16
10.2 ['1?RMINATION............................................................................................................................................................................. i6
AR'1'ICI.E XI
�11SCELLA\EOUS
Il.l PLAN INTf;RPRETATION........................................................................................................................................................... 16
11.2 GENDGR ANU NUMB�,R............................................................................................................................................................. 17
11.3 WR[TTEN DOCUMBN"T............................................................................................................................................................... 17
11.4 EXCLUSIVI-:BENEFIT................................................................................................................................................................. 17
11.5 PARTIC[PAN"1"S RIGIITS............................................................................................................................................................ 17
11.6 AC"1'ION BY TEIE GMPL,OYER.................................................................................................................................................... 17
11.7 EMP[.OYER'S PRO"I'FCTIVE CLAUSGS.................................................................................................................................... l7
11.8 NO GUARANTEE OF"CAX CONSEQUENCES.......................................................................................................................... 17
1 1.9 INllEMNIFICA"1'ION OF F,MPLOY�:R BY PARTICIPANTS..................................................................................................... 17
11.10 I'UNDING...................................................................................................................................................................................... 17
• 11.1 I GOVERNING LAW....................................................................................................................................................................... l8
11.12 SEVERABII,["I'Y............................................................................................................................................................................ 18
11.13 CAPTIONS..................................................................................................................................................................................... lA
11.14 CON"CINIJATION OI�COVERAGE(COBRA)............................................................................................................................ 18
11.15 FAMILY AND MGDICAL LEAVF.ACT(FMLA)....................................................................................................................... 18
11.16 HEALTII INSURANCE PORTABILI`I'Y AND ACCOUN��ABILITY AC"I'(HIPAA)................................................................ l8
1 1.17 UN[t�ORMED SERVICES I;MPLOYMENT AN[)REEMPLOYMEN I�RIGHTS AC"I'(USf:RRA).......................................... 18
11.18 COMPLIANCE WI'I'H HIPAA PRIVACY STANDARDS........................................................................................................... 18
11.19 COMPI.IANCE WI"l'H HIPAA ELEC7'RONIC SECURI"I'Y S'I'ANDARDS................................................................................ 19
1 1.20 MENTAI,I IEAL1'H PAR[TY AND ADDIC'CION EQUITY AC'I'...............................................................................................20
11.21 GF.NF.TIC INFORMAT[ON NONDISCRIMINA"CION ACT(G[NA)..........................................................................................20
1 1.22 WOMEN'S HEAI;['H AND CANCLR R1GIiTS ACT..................................................................................................................20
11.23 NEWBORNS'AND MOTI IERS'HEAI,TH PROTECTION AC I'................................................................................................20
CITY OF PALM DESERT IRS SECTION 125
FI,EXIBLE BENEFI"1'S PLAN
ItiTRODUCTION
The Employer has amended this Plan effective May I,20i3,to recognize the contribution made to the Employer by its
Employees.Its purpose is to reward them by providing benetits for those Employees who shall qualify hereunder and their Dependents and
beneficiarics.The concept of this 1'lan is to alfo�v Employees to chcx�se among diff'erent types of benefits based on thcir own particular
goals,desires and needs."Chis Ylan is a restatement of a Plan which was originally effective on January l,2U01."l he Plan shall be kno�vn as
Ciry of Palm Uesert IRS Section 125 Flexible E3enefits 1'lan(the"Plan").
The intention of[he Employer is that the Plan qualify as a"Cafeteria Plan"within the meaning of Section 125 of the Internal
Revcnue Code of 1986,as amended,and that the benefits which an Fmployce elects to receive under the Plan be excludable from the
F;mployee's income under Section 125(a)and other applicable sections of the Intemal Revenue Code of 1986,as amended.
AR7'ICLE 1
DEFI\ITIONS
1.1 "AJministrator"means the Employer unless another person or entity has been designated by the Employer pursuant
to Section 9.l to administer the Plan on behalf of thc t:mployer.If the Employcr is the Administrator,the Employer may appoint any
person,including,but not limited to,the I;mployees of the Employer,to perform the duties of thc Administrator.Any person so appointed
shall signify acceptance by filing written acceptance with thc Employer.Upon the resignation or removal of any individual performing thc
duties of the Administrator,the Employer may designate a successor.
1.2 "Affiliated Employer"means the timploycr and any corporation which is a member of a controlled group of
corporations(as defined in Code Section 4l4(b))which includes the Employer,any trade or business(whether or not incorporated)which
is under common control(as defined in Code Section 414(c))�vith the F,mployer;any organization(whether or not incorporated)which is a
member of an affiliated service group(as defined in Code Section 414(m))which includes the F;mployer;and any other entity required to
bc aggregated with the Employer pursuant to Treasury regulations under Code Section 414(0).
1.3 "Benefit"or"Benefit Optiuns" mcans any of the optional bene6t choices available to a Participant as outlined in
Section 4.1.
1.4 "Cafeteria Plan Benefit Dollars"means the amount available to Participants to purchase Benefit Options as provided
under Section 4.1. F.ach dollar contributed to this Plan shall be converted into one Cafeteria Plan Benefit Dollar.
1.5 "Code"means the[ntcrnal Revenue Code of 1986,as amended or replaced from time to time.
1.6 "Compensation"means the amounts received by the Participant from the Employer during a Plan Year.
1.7 "Dependent"means any individual who qualifies as a dependent undcr an Insurance Contract for purposes of
coverage under that Contract only or under Code Section 152(as modified by Code Section 105(b)).
"Dependent"shall include any Child of a Participant who is covered under an Insurance Contract,as defined in the
Contract,or under the Health P Icxible Spending Account or as allowed by reason of the AtTordable Care Act.
�or purposes of�the I lealth Flcxible Spending Account,a Participant's"Child"includes his natural child,stepchild,
foster child,adopted child,or a child placed with the Participant for adoption.A Participant's Child will be an cligible Dependent until
reaching the limiting age of 26,without regard to student status,marital status,f nancial dependency or residency status with the�mployee
or any other person.When the child reaches the applicable limiting age,coverage�tiill end at the end of the calendar year.
The phrase"placcd for adoption"refers to a child whom the Participant intends to adopt,whethcr or not thc adoption
has become final,who has not attained the age of l8 as of the date of such placement for�doption.The term"placed"means the
assumption�nd retention by such Employee of a legal obligation for total or p�rtial support of the child in anticipation of adoption of thc
child.The child must be available for adoption and the legal process must have commenced.
1.8 "Effective Date"means January l,2001.
1.9 "Election PerioJ" means the period immedi�tely preceding thc beginning of each Plan Year established by the
Administrator,such�xriod to be applied on a uniform and nondiscriminatory basis for all Employces and Participants.Elowever,an
Employce's initial�;lection Period shall bc detcrmined pursuant to Section 5.1.
I.10 "Eligible Employee"mcans any Employee who has satisticd the provisions of Section 2.1.
An inJividual shall not bc an"Eligible Employee"if such individual is not reported on the payroll records of thc
�;mploycr as a common law employcc.In particular,it is expressly intended that individuals not treated as common law employees by the
1
E?mployer on its payroll records are not"Eligible I?mployees"and are excluded from Plan participation even if a court or administrative
agency determines that such individuals are common law employees and not indepenJent contractors.
1.11 "Employee"means any person who is employed by the l:mployer.The term F.mployee shall include leased cmployees
within the meaning of Code Section 414(n)(2).
1.12 "Employer"means City of Palm Desert,a Municipal Corporation and any successor which shall maintain this Plan;
and any predecessor which has maintained this Plan.In addition,where appropriate,the term Employer shall include any Participating,
Aftiliated or Adopting t?mployer.
1.13 "Employer Contribution"mcans the contributions made by the Employer pursuant to Scction 3.1 to enable a
Participant to purchasc Benefits.Thesc contributions shall be converted to Cafeteria Plan[3enefit Dollars and allocated to the funds or
accounts established under the{'lan pursuant to the f'articipants'elections made under Articic V and as set forth in Section 3.1.
1.14 "Insurance Contract"means any contract issued by an Insurer underwriting a E3enefit.
1.15 "Insurance Premium Payment Plan"mcans the plan of benefits contained in Section 4.l of this Plan,which provides
for the payment of Premium I;xpenses.
1.16 "Insurer"means any insurance company that underwrites a E3enetit under this Plan.
I.17 "Key Employee"means an I;mployee described in Code Section 416(i)(1)and the Treasury regulations thereunder.
1.18 "Participant"means any F•,ligible Employee wfio elects to become a Participant pursuant to Section 2.3 and has not
for any reason become incligible to participatc further in the I'lan.
1.19 "Plan"means this instrument,including all amendments thereto.
1.20 "Plan Year"means the 12-month period beginning January 1 and ending December 3l,except that the first Plan Year
shall be a short Plan Year beginning May I."Che Plan Ycar shall be the coverage period for the I3enefits provided for undcr this Ylan. [n the
event a Participant commences participation during a Plan Year,then the initial coverage period shall be that portion of the Plan Year
commencing on such ParticipanCs datc of entry and ending on the last day of such I'lan Year.
1.21 "Premium Expenses"or"Premiums"mcan the ParticipanPs cost for thc Bencfits described in Section 4.1.
1.22 "Premium Expense Reimbursement Account"means thc account established for a Participant pursuant to this Plan
to which part of his Cafeteria f'lan Benefit Dollars may be allocated and from which Premiums of the Participant shall be paid or
rcimbursed.If more than one type of insured Benefit is elected,sub-accounts shall be established for each rype of insured Benelit.
1.23 "Salary Redirection"means the contributions made by the I:mployer on behalf of Participants pursuant to Section
3.2.Thesc contributions shall be converted to Catetcria Plan E3enetit Dollars and allocated to the funds or accounts established undcr the
Plan pursuant to the Participants'elections made under Article V.
1.24 "Salary Redirection Agreement"means an agreement beriveen the Participant and the fimployer under H�hich the
Participant agrees to reduce his Compensation or to forego all or part of the increases in such Compensation and to have such amounts
contributed by the Employcr to the Plan on the Participant's behalf."I�hc Salary Redirection Agreement shall apply only ro Compensation
that has not been actually or constructively receiveJ by thc Yarticipant�s of the date vf the agreement(after taking this Plan and Code
Section 125 into account)and,subsequcmly does not lx;come currently available to the Participant.
1.25 "Spouse"means"spouse"as defined in an Insurance Contract for purposes of'coverage under that Contract only or the
"spouse,"as defined under Federal law,of a Participant,unless Iegally separated by court decrce.
AR"CICLE lI
NAR'I"ICIPATION
2.1 ELIGIBILI'I'Y
Any Eligiblc l;mployee shall be eligible to participate hereunder as of the date he satisties the eligibiliry conditions for the
I?mployer's group mcdical plan,the provisions of which are specifically incorporated herein by refcrence.However,any Gligible Eimployee
who was a Participant in the Plan on the ef3ective date of this amendment shall continue to be eligible to participate in the Plan.
2.2 EEFECTIVE llA'I'E OF PARTICIPA'1'ION
An Gligible Employee shall become a Participant ef�ective as of the first day of the pay period coinciding with or next following
the datc on which he met the eligibility requirements of Section 2.1.
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2.3 APPLICATION TO PAR'1'ICIPATE
An Employee who is cligible to participate in this Plan shall,during the applicable I:lection Period,complcte an application to
participate in a manner sct forth by the Administrator.The election shall be irrevocable until the end of the applicable Plan Year unless the
Participant is entitled to change his Benefit elections pursuant to Section 5.4 hereof.
An F',ligible Employec shall also be required to complete a Salary Redirection Agreement during the Election I'criod for the Plan
Ycar during which he wishes to participate in this Plan.Any such Salary Redirection Agreement shall be effective for the first pay period
beginning on or after the Employcc's effective date of paRicipation pursuant to Section 2.2.
Notwithstanding the foregoing,an Employee who is eligible to participate in this Plan and who is covered by the Employer's
insured Benefits under this Plan shalf automatically become a Participant to the extent of the Premiums for such insurance unless the
Employee elects,during the Election Pcriod,not to participate in the Plan.
2.4 TER:�IINATION OF PARTICIPA"1'IOti
n Pariicipant shall no longer participate in this Plan upon the occurrence of any of the following events:
(a) Termination of employment."Che Participant's termination oCemployment,subject to the provisions of
Section 2.5;
(b) Death."I�he Participant's dca[h,subject to the provisions of Section 2.6;or
(c) Termination of the plan."rhe termination of this 1'lan,subject to the provisions of Section 10.2.
2.5 TERMINA"CIO\OF E�iPLOY�tE\T
If a Participant's employment with thc F•.mployer is terminated for any rcason other than death,his participation in the 13enefit
Options providcd under Section 4.1 shall be govemed in accordance with the following:
(a) Insurance Benefit.With regard to I3enefits which are insured,the Participant's participation in the Plan shall
cease,subject to the Participant's right to continue coverage under any Insurance Contract for�vhich premiums have already been
paid.
(b) DepenJent Care FSA.W ith regard to the Ucpendent Care Flexible Spending Account,the Participant's
participation in the I'lan shall cease and no further Salary Redirection contributions shall be made.I towever,such Participant
may submit claims for employment related Dependent Care Expense reimburscments for claims incurred through thc rcmainder
of the Plan Year in which such termination occurs and submitted within 90 days after the end of the Plan Year,bascd on the le��el
ot�the Yarticipant's Dependent Care Flexible Spending Account as of the date of termination.
(c) COBRA applicability.With regard to the Health Flexible Spending Account,the Panicipant may submit
claims for expenses that were incurred during the portion of the Plan Year beti�re the end of the period for which payments to the
Health Flexible Spending Account have already been made.Thereafter,the health benefits under this Plan including the Health
Flexiblc Spending Account shall be applied and administered consistent with such further rights a Participant and his Ucpcndents
may be entitled to pursuant to Code Section 4980B and Section 11.14 of the Plan.
2.6 DEATII
If a Participant dies,his participation in the Plan shall cease.Howevcr,such Participant's spouse or Dependents may submit
claims for expc;nses or benefits for the remainder of the Plan Year or until the Cal'eteria Plan Benefit Dollars allocated to cach spccific
benefit are exhausted.In no event may reimbursements be paid to somcone who is not a spouse or Dependent.If the Plan is subject to the
provisions of Code Section 4980B,then those provisions and related regulations shall apply for purposes of the Health I�lexible Spending
Account.
ARTICLE III
COV'I'RIIiI;TIO�S TO TIIE PLAN
3.1 E�fPLOYER CON"1'RIBUTION
"I�he Employer shall make availablc to cach PaRicipant who has othcr medical coverage and who opts out of the Employer's group
medical plan an L:mployer Contribution in an amount to be determined by the Employer prior to the beginning of'each Plan Year.The
Employer's Contribution shall be made on a pro rata basis for each pay period of the Participant.If a Participant fails to make any election
of Aenefit Option,then the Fmployer Contribution shall be distributed in cash to the Participant.
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3.2 SAI.ARY REDIR�.CTIO\
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 ircevocable for such Plan Year.flowever,a Participant may revoke a E3enefit
clection or a Salary Redirection Agrcement after the Plan Ycar has commenced and make a new election with respect to the remainder of
the Ptan 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 detcrmined under Article V of the Plan and consistent with the rules and regulations of the Departmcnt 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 incorporared by reference hereunder. '
3.3 APPLICA7'IO\OF CO\7'I2IBUTIONS
As soon as rcasonably 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 contribution made or withheld for the Health Flexible
Spending Account or Dependent Care Plexible Spending Account shall be credited to such fund or account.Amounts designated for the
Participant's I'remium Expense Reimbursement Account shall likewise be credited to such account for the purpose of paying Premium
Expenses.
3.4 NERIODIC CON'1'RIB(:TIONS
Notwithstanding the requirement provided above and in other Articles of this Plan that Salary Redirections be contributed to thc
Pl�n by thc[:mployer on behalf of'an Employee on a Ievel and pro rata basis for each payroll period,the Employer and Administrator may
implement a procedure in w�hich Salary Redirections are contributed throughout the Plan Year on a periodic basis that is not pro rata f'or
each payroll period.However,with regard to the I lealth Flexible Spending Account,the payment schedule for the required contributions
may not bc based on the rate or amount of reimbursements during the Plan Year.
ARTICLE IV
BENEF'CCS
4.1 BEVEFIT OP"1'IOIVS
Each Participant may elect any one or more of the following optional Benefits:
(1) Ilealth Flexible Spending Account
(2) Ucpendent Care Flexible Spending Account
In addition,each I'articipant shall have a sufficicnt portion of his timploqcr Contributions and Salary Redirections applied ro the
following Bencfits unless the Participant elccts not to receive such Benetits:
(3) Hcalth Insurance E3enefit
(4) Dental Insurance Benciit
(5) Vision Insurance Benefit
4.2 HEALTII FLEXIBI.E SPENDING AC(:OI:�T BF.NEFIT
F,ach Participant may clect to participate in the Hcalth Flexible Spending Account option,in which case Article VI shall apply.
4.3 DEPEtiUEti'C CARF.FLF.XIBLE SNEtillING ACCOIitiT BENEFI"f
F,ach Panicipant may elect to participate in the llependent Care Flexible Spending Account option,in which case Article VI[
shall apply.
4.4 HEALTH IVSURANCE BENEFIT
(a) ('overage for Participant anJ Dependents.Each Participant may elect to be covered under a health
Insurance Contract for the Participant,his or her Spouse,and his on c�r Dependents.
(b) F,mployer selects cuntracts.The Employer may sclect suitable health Insurance Contracts for usc in
providing this health insurance benefit,which policies will provide uniform bene�ts for all Participants electing this Benefit.
(c) Contract incorporated by reference. l'he rights and conditions with respect to the benefits payable from
such health Insur�nce Contrac►shall be determined thcrefrom,and such[nsurance Contract shall be incorporated herein by
reference.
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4.5 DEN'CAL INSURA\CE BF.\EH'Cf
(a) Cuverage for Participant and/or DepenJents.L'ach Participant may elect to be covered under the
F?mployer's dental Insurancc Contract.In addition,the Participant may clect either individual or family coverage under such
Insurance Contract.
(b) Fmployer selects contracts.The Employer may select suitable dental Insurance Contracts for use in
providing this dental insurance benefit,which policies will provide uniform bcnefits for all Participants electing this Aenefit.
(c) Contract incorporated by reference.The rights and conditions with respect to the benefits payable from
such dental Insurance Contract shall bc determined therefrom,and such dental Insurance Contract shall be incorporated herein by
refcrence.
4.6 VISION INSURANCE BEVEFIT
(a) ('overage for Participant and/or Dependents.Each Participant may elect to be covered under the
Employer's vision Insurance Contract.In addition,the Participant may elect either individual or family coverage.
(b) Employer selects contracts.The Employer may select suitable vision Insurance Contracts for use in
providing this vision insurance benefit,which policies will provide uniform benefits for all Participants cleciing ihis Benefit.
(c) Contract incorporateJ by reference.The rights and conditions with respect to the bene6ts payable from
such vision Insurance Contract shall be determined therefrom,and such vision Insurance Contract shall be incorporated herein by
reference.
4.7 NONDISCRI�II�iATION REQUIREMENTS
(a) Intent tu be nondiscriminatory.It is the intent of this Plan to provide benefits to a classification of
employces which the Secretary of the Treasury finds not to be discriminatory in favor of thc group in whose favor discrimination
may not occur under Code Section 125.
(b) 25%concentration test.It is the intcnt of this Plan not to provide qualified benefits as detined under Code
Section 125 to Kcy Employees in amounts that excccd 25%of the aggregate of such I3enefits provided for all Eligible I;mployees
under the Plan.For putposes of the preceding sentence,qualified benefits shall not include benefits which(without regard to this
paragraph)are includible in gross income.
(c) Adjustment tu avoid test failure.If the Administrator deems it necessary to avoid discrimination or possible
taxation to Kcy Employees or a group of employecs in whose favor discrimination may not occur in violation of Code Section
125,it may,but shall not bc required to,reduce contributions or non-taxable Benefits in order to assure compliance with this
Section.Any act taken by the Administrator under this Section shall be carried out in a uniform and nondiscriminatory manner. If
the Administrator decides to reduce contributions or non-taxable Benefits,it shall be done in the following manner.First,the
non-taxable l3enetits of the af7ected Participant(either an employee who is highly compensared or a Key Gmployee,whichevcr is
�pplicable)who has the highest amount of non-taxable Benefits for the Plan Ycar shall have his non-taxable Benefits reduced
until the discrimination tests sct forth in this Section are satisfied or until the amount of his non-taxable E3enefits equals the
non-taxable E3enefits of'the atl'ected Participant who has the second highest amount of non-taxable Benefits.This process shall
continue until the nondiscrimination tests set forth in this Section are satisfied. With respect to any affected Participant who has
hud Benefts reduced pursuant to this Scction,the reduction shall be made proportionatcly among}lealth Flcxiblc Spc;nding
Account 13enefits and Dependent Care Flexible Spending Account 13enefits,and once all these Benefits are expended,
pro�rtionately among insured E3enefits.Contributions which are not utilized to provide L3enetits ro�ny Participant by virtuc of
uny administrative act under this paragraph shall be forfeited and deposited into the bcnetit plan surplus.
AR'1'ICLE V
PARTIC[PA\"1'ELECTIONS
5.1 I�ITIAL ELEC`CIONS
An Employee who meets the eligibility requirements of Section 2.1 on the first day of,or during,a Plan Ycar may elect to
participate in this Plan for all or the remainder of such Plan Ycar,provided hc clects to do so on or beforc his effective date of participation
pursuant to Section 2.2.
Notwithstanding thc foregoing,an Employee who is eligible to participate in this Plan and who is covered by the Employcr's
insured benetits under this Plan shall automatically becomc a Participant to thc extent of the Premiums f'or such insurance unless the
Employee elects,during the F.lection Period,not to participate in the Plan.
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5.2 SUBSEQUF.�I"I'A\tiU.aL ELEC"CIONS
During[he Election Pcriod prior to cach subsequent Plan Year,each Participant shall be given the opportunity to elect,on an
election of benefits form to be pmvided by the Administrator,which spending account Benefit options he wishes to select.Any such
election shall be effectivc for any C3enefit expenses incurred during the Plan Year which follows the end of the Election Period.W ith regard
to subsequcnt annual elections,the following options shall apply:
(a) A{'articipant or Employee who failed to initially elect to participate may elect different or new Benefits
under the Plan during the Election Period; `
(b) A Participant may terminate his participation in the Plan by notilying the Administrator in writing during the
lilection Period that hc does not want to participate in the Plan for the next Plan Ycar;
(c) An Employee who elects not to participate for the Plan Year following the Election Period will have to wait
until the next E',lection Period before again electing to participate in the Plan,exccpt as provided for in Section 5.4.
5.3 E'AIL�RE TO ELEC1'
W ith regard to Benefits available undcr the Plan for which no Premium Expenses apply,any Participant who fails to complete a
new benetit election form pursuant to Section 5.2 by the end of the applicable Election I'eriod shall be deemed to have elected not to
participate in the Plan for the upcoming Plan Year.No further Salary Redirections shall therefore be authorized or made for the subsequent
Plan Ycar for such E3enefits.
With regard to Benetits available under the Plan for which Premium Expenses apply,any Participant who fails to complete a new
lxnefit election form pursuant to Section 5.2 by the end of the applicable Election Period shall be deemed to have made the same Benefit
elections as are then in effect for the current Plan Year."I'he l'articipant shall also be deemed to have elected Salary Redirection in an
amount necessary to purchase such Benefit options.
5.4 CHr1�GE IN STATI-S
(a) Change in status defineJ.Any Participant may change a Benefit election after thc Plan Year(to which such
election relates)has commenced and make new elections with respect to the remainder of such Plan Year if,under the facts and
circumstances,the changes are necessitated by and are consistent with a change in status which is acceptable under rules and
regulations aJopted by the Department of the"1'reasury,the provisions of which are incorEx�rated by reference.Notwithstanding
anything herein to the contrary,if'the rules and regulations conflict,then such rules and regulations shall control.
In general,a change in election is not consistent if the change in status is the Participant's divorce,annulment or legal
separation from a Spouse,the dcath of a Spcwse or Dependent,or a Dependent ceasing to satisfy the eligibiliry requirements for
coverage,and the Participant's election under the Plan is to cancel accident or health insurance coverage for any individual other than
the one involved in such event.In addition,if'the Participant,Spouse or Dependent gains or loses cligibility for coverage,then a
I'articipant's election under the Plan to cease or decrease coverage for that individual under the Plan corresponds with that change in
status only if coverage for that individual becomes applicable or is increascd under the family member plan.
Regardless of the consistcncy requirement,if the individual,the individual's Spousc,or[�pendent lxcomes eligible for
continuation coveragc undcr the Employers group health plan as provided in Code Section 4980Q or any similar statc law,then the
individual may clect to increase payments under this Plan in order to pay for the continuation coveragc.Howcvcr,this does not apply
for COI3RA eligibility duc to divorce,annulment or Icgal separation.
Any new election shall be effecti��c at such time as the Administrator shall prescribe,but not earlicr th:u�the first pay
period beginning after the election form is completed and returned to the Administrator.For the purposes of this subsection,a change
in status shall only include the following events or other e�ents permitted by"1'rcasury regulations:
(I) I.cgal Marital Status:events that change a Participant's Icgal marital status,including marriage,divorcc,death
of a Spouse,leg�l separation or armulment;
(2) Numbcr of Dependents:Events that change a Participants number of Uependents,including biRh,adoption,
placement for adoption,or death of a Dependent
(3) Lmployment Status:Any of the following events that change the employment status of the Participant,Spouse,
or Dependent:termination or commencemcnt of employment,a strike or lockout,commencement or return trom 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 thc f'articipant,Spouse,or Dcpendent 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 changc constitutes a change in employment under this subsection;
(4) Dependent satisfies or ceases to satisf'y the eligibility rcquirements:An event that causes the ParticipanPs
Depcndent to satisfy or cease to satisfy thc requirements for coverage duc to attainment of�e,student status,or any
similarcircumstance;and
6
(5) Residency:A change in the place of residence of the Participant,Spouse or Dependent,that would lead to a
change in status(such as a loss of HMO coverage).
For the Dependent Care Flexible Spending Account,a Dependent becoming or ceasing to be a"Qualitying I)ependent"as
defined under Code Sec[ion 21(b)shall also qualify as a change in status.
Notwithstanding anything in this Section to the contrary,thc gain of eligibility or change in eligibility of a child,as
allowed�nder Code Sections 105(b)and 106,and(RS Notice 2010-38,shall quality as a change in status.
(b) Special enrollment rights.Notwithstanding subsection(a),the Participants may change an election for
accidcnt or health coverage during a Plan Year and make a new election that corresponds with the special enrollment rights
provided in Code Section 9801(�,including thosc authorized under the provisions of the Children's Health Insurance Program
Reauthorization Act of 2009(SCHIP);provided that such Participant meets the sixry(60)day noticc requirement imposed by
Code Section 9801(�(or such longer period as may be permitted by the Plan and communicated to Participants).Such change
shall takc place on a prospcctive b�.sis,unless othenvise required by Code Section 9801(�to be retroactive.
(c) Qualified�tedical Support Order.Notwithstanding subsection(a),in the event of a judgment,decree,or
order(including approval of a property setdement)("ordcr")resulting from a divorce,legal scparation,annulment,or changc in
legal custody which reyuires accidcnt or health covcrage for a Participant's child(including a foster chiid who is a Dependent of
the Participant):
(I) Thc Plan may change an clection to provide covcrage for the child if the order reyuires covcrage 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 reyuires
the former Spouse to provide coverage for such child,under that individual's plan and such coverage is actuaily
provided.
(d) MeJicare or Medicaid.Notwithstanding subsection(a),a Participant may change elections to cancel accident
or health coverage for the Participant or the Participant's Spouse or Dependent if the Participant or the Participant's Spouse or
Dependcnt is enrolled in the accident or health coverage of the Employcr and becomes entiticd to coverage(i.e.,enrolled)under Part
A or Part B of the T'itle XVIII of the Social Securiry Act(Medicare)or Title XIX of the Social Securiry Act(Medicaid),other than
coverage consisting solely of benef its under Section 1928 of the Social Security Act(the program for distribution of pediavic
vaccines).[f the Participant or the PaRicipant's Spouse or DepE:ndent�vho has been entitled to Medicaid or Medicare coverage loses
elibibility,that individual may prospectively elect coverage under the Plan if�a benefit package option under the Plan provides similar
coverage.
(c) Cost increase or decrease.If thc cost of a E3enefit provided under the Plan incrcases or decreases during a
Plan Year,then the Plan shall automatically incrcase or decrease,as the case may be,thc Salary Redirections of all affected
Participants for such BenefiL Alternatively,if thc 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 und,in lieu
thcrcof,receive on a prospcctive basis coveragc under another benefit package option with similar coverage,or drop coverage
prospectively if there is no benefit package option with similar coverage.
A cost increase or decrease refers to an increase or decrease in the amount of elective contributions under the Plan,
whether resulting from an action taken by the P;srticipants or an action takcn by the F.mployer.
(� Loss uf coverage.[f the coverage under a Benefit is significanUy curtailed or ceases during a Plan Year,
atTected Participants may revoke their elections of such Benetit and,in lieu thereof,elect to receive on a prospective basis
coverage under another plan with similar coverage,or drop coverage prospectively if no similar coverage is offered.
(g) Addition of a new benefit.If,during the period of coverage,a new benefit package option or other coverage
option is added,an existing lxnefit patkage option is significantly improved,or an existing benetit package option or other
coverage option is climinated,then the affected Participants may clect the newly-added option,or elect another option if an
option has been eliminated prospectively and make corresponding election changes with respect to other benefit package options
providing similar coverage.In addition,those Eligible F.mployees who are not participating in the E'lan may opt to become
Participants and elect the new or newly improved benetit package option.
(h) Loss of coverage under certain other plans.A Participant may make a prospectivc clection change to add
group health coverage for the Participant,the Participant's Spouse or Uependent if such individual loses group health coverage
sponsored by a governmental or educational institution,including a statc children's health insurance program under thc Social
Security Act,the Indian Health Service or a health program offered by an Indian tribal government,a state health benefits risk
pool,or a forcign govcrnmcnt group health plun.
(i) Change of coverage due to change under certain other plans.A Participant may make a prospective
election change that is on account of and corresFxmds with a change made under the plan of a Spouse's,former Spouse's or
DependenCs employer if(1)the cafeteria plan or other beneGts plan of the Spou.le's,former Spouse's or Dependent's employcr
7
permits its participants to make a change;or(2)the cafetcria plan permits particip�nts to make an election for a period of
coverage that is difTerent from the period of coverage undcr the cafeteria plan of a Spousc's,former Spouse's or Dependent's
employer.
(j) Change in dependent care provider.A Participant may make a prospective clection change that is on
account of and corresponds with a change by the Participant in the dcpe�de�t carc provider."Che availability of dependent care
services from a new childcare provider is similar to a new benefit package option becoming available.A cost change is allowable
in the Uependent Care Flexible Spending Account only if the cost change is imposed by a dependcnt care provider who is not
related ro thc Participant,as defined in Code Section 152(a)(1)through(8). '
(k) Elealth FSA cannot change due to insurance chan�e.A Participant shall not be permitted to change an
clection to the Hcalth Flexible Spending Account as a result of a cost or covcrage change under any health insurance benefits.
ARTICLE VI
HEALTII FLEXBLE SPENDItiG ACCOUNT
G.1 ESTABLISHMEN"I'OF PLAIY
This E Iealth k�'lexible 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 1'rcasury regulations thereunder.Participants who elect to participate
in this Hcalth Flexible Spending Account may submit claims for the reimbursement of Medical E:xpenses.All amounts reimbursed shall be
periodically paid from amounts allocated to the Health Flexible Spending Account.Periodic payments reimbursing Participants from the
I lealth I�lexible Spending Account shall in no event occur less frequently than monthly.
6.2 DEFI\ITIONS
For the purposcs of this Article and the Cafeteria Plan,the terms below have the following meaning:
(a) "Health Flexible Spending��ccount"means the account established for Participants pursuant to this Plan to
which part of their Cafeteria Plan Benefit Dollars may be allocated and from which all allowable Medical Expenses incurced by a
Participant,his or her S�use and his or her Dependents may be reimbursed.
(b) "Highly Compensated Participant"means,for the purposes of this Article and determining discrimination
under Code Section 105(h),a paRicipant who is:
(i) one of the 5 highest paid officers;
(2) a sharcholder w�ho owns(or is considered to own applying the rules of Code Section 318)more than l0
percent in value of the stock of the Gmployer;or
(3) among the highest paid 25 percent of all Employees(other than exclusions permitted by Code Section
105(h)(3)(B)for those individuals who are not Participants).
(c) "�tedical Expenses"means any expense for medical care within the meaning of the term"medical care"as
defined in Code Section 213(d)and the rulings and Treasury regulations thereunder,and not othenvise used by the Participant as
a deduction in determining his tar liability under[he C'ode."Medical F;xpenses"can be incurced by the Participan[,his or her
Spouse and his or her Dependents."Incurred"means,with regard to Medical F;xpenses,when the I'articipant is provided with the
medical care that gives rise to the Medical I:xpense and not when the Parlicipant is formally billed or charged for,or pays for,the
medical care.
A Participant may not be reimbursed for the cost of any medicine or drug that is not"prescribed"within the meaning of
Code Section 106(n or is not insulin.
A Participant may not be reimbursed f'or the cost of other health coverage such as prcmiums paid under plans
maintained by the employcr of the Participant's Spouse or individual policies maintained by the Participant or his Spouse or
Dependent.
A Participant may not be reimbursed for"qualified long-term care scrvices"as defined in Code Section 7702B(c).
(d) 7�he definitions of Article I arc hereby incorporated by reference to the extent necessary to intcrpret and apply
the provisions of this Health Flexible Spending Account.
6.3 H'ORFEITURES
'I'he amount in the Health 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 hereo�shall be forfeited and credited to the benefit plan surplus.In such event,the Participant shall
have no further claim to such amount for any reason,subject to Section 8.2.
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6.4 LIM1IITATION OV ALLOCA'CIO!YS
(a) Notwithstanding�ny provision contained in this Hcalth Flexible Spending Account to the contrary,the
marimum amount that may be allocated to the Health Flexible Spending Account by a Participant in or on account of any Plan
Year is$2>SOO.QO.
(b) Cost of Living Adjustment.In no event shall the amount of salary redirections and Employer Contributions
convcrtible to cash on the Health Flcxible Spending Account excced$2,500 as adjusted by law.Such amount shall be adjusted
for incrcases in the cost-of-living in accordance with Code Section 125(i)(2).The cost-of-living adjustment in effect for a
calendar year applies to any 1'lan Year beginning with or within such calendar year.'f'Ihe dollar increase in effect on January 1 of
any calendar year shall be effective for the Plan Year beginning with or within such calendar year.For any short Plan Year,the
limit shall be an amount equal to the limit for the calcndar year in which the Plan Ycar begins multiplied by thc ratio obtained by
dividing the number of full months in the short Plan Year by[welve(12).
(c) Participation in Other Plans.All employcrs that are treated as a single cmployer under Code Sections
414(b),(c),or(m),rclating to controlled groups and affiliated service groups,are treated as a single employer For purposes of the
$2,500 limit.If a Participant participates in multiple cafeteria plans offering health Flexible spending accounts maintained by
members of a controlled group or aftiliated service group,the Participant's total Health Flexible Spending Account contributions
under all of the cafeteria plans are limited to$2,500(as adjusted).However,a Participant employed by two or more employers
that are not members of the same controlled group may elect up to 52,500(as adjusted)under each Employer's Health Flerible
Spending Account,
6.5 NO\DISCRIMIVA7'ION REQCIRE�IE\TS
(a) Intent to be nondiscriminatory.It is the intent of this Heallh Flexible Spending Account not to discriminate
in violation of the Codc and the Treasury regulations thereundcr.
(b) AJjustment to avoid test failure.If the Administrator deems it neccssary to avoid discrimination under this
Health Flexible Spending Account,it may,but shall not be required to,reject any elections or reduce contributions or Benefits in
order to assure compliance with this Section.Any act taken by the Administrator under this Scction shall be carried out in a
uniform and nondiscriminatory manner. If the Administrator decides to reject any elections or reduce contributions or Benefi[s,it
shall be done in the following manner.First,the Benefits designated for thc Health Flexible Spending Account by the member of
the group in whose favor discrimination may not cx;cur pursuant to Code Section 105 that elected to contribute the highest
amount to the fund for the Plan Year shall be reduced until the nondiscrimination tests set forth in this Section or the Code are
satisfied,or until the amount dcsignated for the fund equals the amount dcsignated for the fund by the next membcr of the group
in whose favor discrimination may not occur pursuant to Codc Section 105 who has elected the second highest contribution to the
Efealth Flexible Spending Account for the Plan Year.This process shall continue until the nondiscrimination tests set forth in this
Section or the Code are satisfied.Contributions which are not utilized to provide Benefits to any Participant by virtue of any
administrative act under this paragraph shall be forfeited and crcdited to thc benefit plan surplus.
6.6 COORDINATION WITH CAFE'CERIA PLA\
All PaRicipants under the Cafeteria 1'lan are eligible to receive E3enefits under this Health Flexible Spending Account.The
enrollmcnt under thc Cafeteria Plan shall constitute enrollment under this llealth Flexible Spending Account.In addition,other matters
concerning contributions,elections and the like shall be governed by the general provisions of the Cafeteria Plan.
6.7 IIEALTH FLEXIBLE SPENDING ACCOCtiT CLAIM1IS
(a) Expenses must be incurreJ Juring Plan Y'ear.All Medical Expenses incurred by a Participant,his or her
Spouse and his or her Dependents during the Plan Ycar shall bc rcimbursed during the Plan Year s�bject to Section 2.5,even
though the submission of such a claim occurs aRer his participation hereunder ccas�s;but provided that the Medical Expenses
were incurred during thc applicable Plan Year. Medical F.xpens�:s are treated as having been incurred when the Participant is
provided with the medical care that gives rise to the medical expenses,not when the Participant is formally billed or chargcd f'or,
or pays for the medical care.
(b) Reimbursement available throughout Plan Year.The Administrator shall direct thc reimbursement to each
eligible Participant for all allowablc Medical Expenses,up to a maximum of the amount designated by the Participant for the
Elealth Flexible Spending Account for the Plan Year.Reimbursements shall be made available to the Participant throughout the
year without regard to the level of Cafeteria Plan I3enefit Dollars which have been allocated to the fund at any given point in
time.Furthermore,a Participant shall be entitled to reimbursements only for amounts in excess of any payments or other
reimbursements under any health care plan covcring the Participant and/or his S�use or Dependents.
(c) Payments.Reimbursement payments under this Nlan shall be made directly to the Participant.However,in
the Administrator's discretion,payments may be made direcdy to the service provider.The application for payment or
rcimbursement shall be made to the Administrator on an acceptable form�vithin a reasonable time of incurring the debt or paying
for thc service.The application shall include a written statement from an independent third party stating that the Medical Expense
has been incurred and the amount of such expense.Furthermore,the Participant shall provide a written statement that the MeJical
9
Expense has not been reimbursed or is not reimbursable under any other health plan covcrage and,if reimbursed from the Health
f�lexible Spending Account,such amount will not be claimed as a tax deduction."fhe Administrator shall retain a file of all such
applications.
(d) ('laims for reimbursement.Claims for thc reimbursement of Medical F,xpenses incurred in any Vlan Year
shall be paid as soon after a claim has been filed as is administrativcly practicable;provided however,that if a Participant fails to
submit a claim within 90 days after the end of the Plan Year,those Medical Expense claims shall not be considered for
reimbursemen[by the Administrator.However,if a Participant terminates employment during thc Plan Year,claims for the
reimbursement of Medical Expenses must be submitted within 30 days after termination of employment.
6.8 DE617'A\D CREDIT Cr1RDS
Participants may,subject to a procedurc established by the Administrator and applied in a uniform nondiscriminatory manner,
use debit and/or crcdit(stored value)cards("cards")provided by the Administrator and the Ylan for payment of Medical Expenses,subject
to the following terms:
(a) Card only fur medical expenses.Each Participant issued a card shall certify that such card shall only be
used f'or Medical Expenses.The Participant shall also certify that any Medical Expense paid with the card has not alrcady been
reimbursed by any other plan covering health benefits and that the Participant will not seek reimbursemcnt from any other plan
covering health benefits.
(b) ('ard issuance.Such card shall bc issued upon the Participant's�,ffective Date of Participation and reissued
for each Plan Year the Participant remains a Participant in the Health Flexible Spending Account.Such card shall be
automatically cancelled upon the Participant's death or termination of employment,or if such Participant has a change in status
that results in the Participant's withdrawal from the Health Flexible Spending Account.
(c) 1�1aximum dollar amount available."1'he dollar amount of coverage available on tE�e card shall be thc
amount electcd by the Participant for the Plan Ycar.The maximum dollar amount of coverage available shall be thc maximum
amount for the Plan Year as set forth in Section 6.4.
(d) Only available for use with certain service proviJers.The cards shall only be accepted by such mcrchants
and scrvicc providers as have been approved by the Administraror following[RS guidelines.
(e) Card use.'Che cards shall only be used for Medical Expense purchases at these providers,including,but not
limited to,the following:
(I) Co-payments for doctor and other medical care;
(2) Purchase of drugs prescribed by a health care provider,including,if permitted by the Administrator,overthe-
counter medications as allowed under IRS rcgulations;
(3) Purchase of inedical items such as eyeglasses,syringes,crutches,etc.
(f) Substantiation.Such purchases by the cards shall be subject to substantiation by the Administrator,usually
by submission of'a receipt from a service provider describing the service,the date and the amount.The Administrator shall also
follow the requirements sct forth in Revenue Ruling 2003-43 and Notice 2006-69.All charges shall be conditional pending
contirmation and substantiation.
(g) Correction methoJs.If such purchase is latcr determined by the Administrator to not yuality as a Medical
Gxpense,the Administrator,in its discretion,shall use one of the following correction methods to make the Plan whole.Until the
amount is repaid,the Administrator shall take further action to ensure that further violations of the terms of the carJ do not occur,
up to and including denial of access to the card.
(l) Repayment of the improper amount by the Participant
(2) W ithholding the improper payment from the Participant's wages or other compensation to the ertent
consistent with applic�ble federal or state law;
(3) Claims substitution or offset of future claims until the amount is repaid;and
(4) if subscctions(1)through(3)fail to recover the amount,consistent with thc I:mployer's business practices,
thc E:mployer may treat the amount as any other business indebtedness.
l0
ARTICLF.VII
UEPEtiDENT CARE FLEX[BLE SPENDING ACCOUNT
7.1 F,STAI3LISHME\T OF ACCOUNT
This Dependent Care Flexible Spcnding Account is intended to qualify as a program undcr Code Section 129 and shaii 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 I-:mployment-Related Dependent Care Erpenses.All amounts reimburseJ sh�ll be paid from amounts allocated to the
Participant's Dependent Care Flexible Spending Account.
7.2 DEFINITIO\S
For thc purposes of this Article and thc Cafctcria Plan the terms below shall have the following meaning:
(a) "Dependent Care Flexible Spending Accuunt"means thc account established for a Participant pursuant to
this Article to which part of his Cafeteria Plan Benefit Dollars may be allocated and from which Employment-Related Dependent
Care Expenses of the Participant may be reimbursed for thc care of the Qualifying Dependents of Participants.
{b) "EarneJ Income"mcans carned income as defined under Code Section 32(c)(2),but excluding such
amounts paid or incurred by the Gmployer for dependent care assistance to the Participant.
(c) "E:mployment-Related DepenJent Care F.xpenses"means the amounts paid for expcnscs of a Participant
for those services which if paid by the Participant would bc considcred employment related expenses undcr Code Section
21(b)(2).Generally,they shall include expenses for household services and for the care of a Qualifying Dependent,to thc extent
that such expenses are incurred to enable the Participant to be gainfully employed for any period for which there are one or more
Qualifying Dependents with respcct to such Participant.Employment-Related Ucpendent Care Expenses are treated as having
becn incurred when the Participant's Qualifying Dependents are provided with the dependent care that gives rise ro the
F.mployment-Related Dependent Care F,xpenses,not when the Participant is formally billed or chargcd f'or,or pays for the
dependent care.The determination of whether an amount qualifies as an Employment-Related llepcndent Care Expense shall be
made subject to the fi>Ilo�ving rules:
(I) If such amounts are paid for expenses incurred outside the Participant's householci,they shall constitute
Employment-Rclatcd llependent Care Expenses only if incurred for a Qualifying Dependent as defincd in Section
7.2(d)(I)(or deemed to be,as described in Section 7.2(d)(I)pursuant to Section 7.2(d)(3)),or for a Qualifying
Dependent as defined in Section 7.2(d)(2)(or deemed to be,as described in Section 7.2(d)(2)pursuam►o Section
7.2(d)(3))«ho regularly spends at le�st 8 hours per day in the Participant's household;
(2) If the expense is incurred outsidc the PaRicipant's home at a facility that provides carc for a fee,payment,or
grant for more than 6 individuals who do not regularly reside at the facility,thc faciliry must comply with all applicable
st�te and local laws and regulations,including licensing requirements,if any;and
(3) Employment-Related Dependent Care Expenses of a Participant shall not include amounts paid or incurred to
a child of such Participant who is under the age of 19 or to an individual who is a Uependent of such Participant or such
Participant's Spouse.
(d) "Qualifying Dependent"means,for Dependent Care Plexible Spending Account purposes,
(1) a Participant's Dependent(as defined in Code Section 152(a)(1))who has not attained age 13;
(2) a Dependent or thc Spouse of a Participant who is physicully or mentally incapable of caring for himself or
herself and has the same principal place of abode as the Participant for more than one-half of such taxable year;or
(3) a child that is deemed to bc a Qualifying Dependent described in paragraph(1)or(2)above,�vhichever is
appropriate,pursuant to Code Section 21(c)(5).
(e) I�he definitions of Article 1 are hereby incorporated by reference to the extent necessary to interpret and apply
the provisions of this Dcpendent Care Flexible Spending nccount.
7.3 DEPE\DE�T CARF,HI.EXIBLE SPE\DI\C ACCOI;V'CS
'�hc Administrator shail establish a Dependent Care Flexible Spcnding Account for each Participant�vho elecis to apply Cateteria
Plan Bcne�t Dollars to Dependent Care Flexible Spending Account benefits.
11
7.4 INCREASES Iti DENENDF.NT CARE FLEXIBI.E SPE�DING ACCOI V7'S
A Participant's Dependent Care Plexible Spending Account shall be increased each pay period by the portion of Cafeteria 1'lan
I3enefit Uollars that he has clected to apply toward his Dependent Carc I�lexible Spending Account pursuant to elections made under
Article V hereof.
7..5 DF.CREASES IN DEPEtiDF.VT CARE FLEXIIiLE SPENDIVG ACCOIJYTS
A Participant's Depcndent Care Flexible Spending Account shall be reduced by the amount of any Employment-Related
Dependent Care Expense reimbu►sements paid or incurred on behalf of a Participant pursuant to Section 7.12 hereof.
7.6 AI.LOWABLE DEPENDF.NT CARE REI�IBURSEMENT
Subject to limitations contained in Section 7.9 of this Program,and to the cxtent of the amount contained in the ParticipanPs
Dependent Care Flexible Spending Account,a Participant who incurs Employment-Related Dependent Care Expenses shall be entitled to
receive Gom the Employer full reimbursement for the entire amount of such expenses incurred during the Plan Year or portion thcreof
during which he is a Participant.
7.7 ANVUAL S'I'A'1'E�tENT OF BENEFI"1'S
On or before January 31 st of each calendar year,the Employer shall furnish to each 6mployee who was a I'articipant and
received benefits under Section 7.6 during the prior calendar year,a statement of all such benefits paid to or on bchalf of such Participant
during the prior calendar year.This statement is sct forth on the PaRicipant's Form W-2.
7.8 FORFECCURES
"I'hc amount in a Participant's Dependcnt Carc 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 7.12 hcreo�shall be forfeited and credited to the benefit plan surplus.In
such event,the Participant shall have no fuRher claim to such amount for any reason.
7.9 LI�tITA"1'ION O:Y PAY�IENTS
(a) Code limits.Notwithstanding any provision contained in this Article to the contrary,amounts paid from a
1'articipant's Dependent Carc Flexible Spending Account in or on account of any taxable year of the Participant shall not exceeJ
the lesser of the Earned Income limitation described in Code Section l29(b)or$5,000($2,500 if a separate tax rctum is filed by a
I'articipant who is married as determined under the rules of paragraphs(3)and(4)of Code Section 21(e)).
7.10 ti0\UISCRIMI\ATIOV REQIJIREME�TS
(a) Intent to be nondiscriminatory.It is the intent of this Dependent Care Flexible Spending Account that
contributions or benefits not discriminate in favor of the group of employees in whose favor discrimination may not occur under
Code Section 129(d).
(b) 25%test for shareholders.It is the intent of this llependent Care Flexible Spending Account that not more
than 25 percent of'the amounts paid by the Bmployer for dependent care assistancc during the Plan Year will be provided for the
class of'individuals�vho are sharcholders or owners(or thcir Spouses or Dependents),each of whom(on any day of the Plan
Yeaz)owns more than 5 percent of the stock or of the capital or profits intcrest in the Employer.
(c) Adjustment to avoid test failure.If the Administrator deems it necessary to avoid discrimination or possible
taxation to a group of employees in whose favor discrimination may not occur in violation of Code Section 129 it may,but shall
not be required to,reject any clections or reduce contributions or non-taxable benefits in order to assure compliance with this
Scction.Any act taken by the Administrator under this Section shall be carricd 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 manncr.
First,the Benetits designated for the Dependent Care I�lexible Spending Account by the affected Participant that elected to
contribute thc highest amount ro such account for thc Plan Year shall be reduced until the nondiscrimination tests set forth in this
Section are satisticd,or until the amount designatcd for thc account equals the amount designated for the account of the aticcted
Participant who has elected the second highest contribution to the Dependent Care Plexible Spending Account for the Plan Year.
This process shall continue until the nondiscrimination tests set forth in this Section are satisfied.Contributions which are not
utilized to providc Bcnefits to any Participant by virtuc of any administrative act under this paragraph shall be forfeited.
7.11 COORDItiA'1'10\�VIT}I CAFETERIA PLAN
All Participants under the Caf'ctcria Plan are eligible to receive{3encfits under this Dependent Care Flexible Spcnding Account.
The enrollment and termination of participation under the Cafeteria Plan shall constitute enrollment and termination of participation under
this Dependent Care Flexible Spending Account.In addition,other matters concerning contributions,elections and the like shall be
governcd by the general provisions of the Cafeteria Plan.
12
7.12 DEPEVDEI�T CARE FLE�IBLE SPE\DING ACCOU\"C CLAIMS
The Administrator shall direct the payment of all such Dependent Care claims to the Participant upon thc presentation to the
Administraror of documentation of such expenses in a form satisfactory to the Administrator.However,in the Administraror's discretion,
paymcnts may be madc directly to the servicc provider.[n its discretion in administering the Plan,the Administrator may utilize forms and
require documentation of costs as may be neccssary 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 bcen incurred during the Plan Year and the amount of such expense.In addition,
the Administrator may requirc that each Participant who desires to receivc reimbursement undcr this Program for Employment-Related
Dependent Care I:xpenses submit a statement which may contain some or all of the following information:
(a) The Dependent or Dependents for whom thc services were pc:rformed;
(b) The naturc of the services performed for the Participant,ihc cost of which he wishcs reimbursement;
(c) The relationship,if any,of the person performing the scrvices to the Participant;
(d) If the services are being performed by a child of the Participant,the agc of the child;
(e) A statement as ro where the scrvices were performed;
(� If any of the services were performed outside the home,a statement as to whether the Dcpendent for whom
such serviccs were performed spends at Icast 8 hours a Jay in the Participant's household;
(g) [f the serviccs�vere being performed in a day care center,d statement:
(1) that the day care center complics with all applicable laws and regulations of the state of residence,
(2) that the day care center provides care for more than 6 individuals(other than individuals residing at the
centcr),and
(3) of the amount of fee paid to thc provider.
(h) If the Participant is married,a statemcnt containing the following:
(1) the Spouse's salary or wages if he or she is employed,or
(2) if the ParticipanCs Spouse is not employed,that
(i) he or shc is incapacitated,or
(ii) he or she is a full-time student attending an educational institution and the months during the year which he
or shc aUcnded such institution.
(i) Claims for reimbursement.[f a Participant fails to submit a claim within 90 days after the end of the Plan
Year,those claims shall not be considered for reimbursement by the Administrator.
7.13 UEBI"f ANU CREDIT CARDS
Participants may,subject to a procedure established by the Administrator and applied in a uniform nondiscriminatory manner,
use debit and/or credit(stored value)cards("cards")provided by the Administrator and the Plan for payment of Fmployment-Related
Dependent Care Expenses,subject to the following terms:
(a) ('arJ only for dependent care expenses.Each Participant issued a card shall certify that such card shall
only be used for�;mployment-Related Dependent Care Expenses.The Participant shall also certify that any Employment-Related
Dependent Care(:xpense paid with the card has not alrcady been reimbursed by any other plan covering dependent care benefits
and that the Participant will not seek reimbursement from any other plan covering dependent care benefits.
(b) Card issuance.Such card shall be issued upon the Participant's Effective Date of Participation and reissued
for each{'lan Year the Participant remains a Participant in the Dependent Carc Flexible Spending Account.Such card shall be
automatically caneelled upon the Participant's death or termination of employment,or if such Participant has a change in status
that results in the 1'articipant's withdrawal from the Depcndent Care Flexible Spending Account.
(c) Only available for use with certain service providers.The cards shall only be accepted by such servicc
providers as havc bccn approved by the Administrator.The cards shall only be used for�;mployment-Rclated Dependcnt Care
Expenses f�om these providcrs.
(d) Substantiation.Such purchases by the cards shall be subject to substantiation by thc Administrator,usually
by submission of a receipt from a scrvice providcr describing the service,Ihc date and the amount.The Administrator shall aJso
13
lollow thc requirements set forth in Revenuc Ruling 2003-43 and Notice 2006-69.All charges shall be conditional pending
confirmation and substantiation.
(e) Correction methods.If such purchase is later determined by the Administrator to not qualify as an
F..mployment-Related Dependent Care Expense,the Administrator,in its discretion,shall use one of the following corcection
meihods to make the Plan whole.Until the amount is repaid,the Administrator shall take further action to ensure that further
violations of the terms of the card do not occur,up to and including denial of access to the card.
(1) Repayment of the improper amount by the Participant;
(2) Withholding the improper payment f�om the Participant's wages or othcr compensation to the extent
consistent with applicable federal or state law;
(3) Claims substitution or offset of future claims until the amount is repaid;and
(4) if subsections(1)through(3)fail to recover the amount,consistent with the Employer's business practices,
the Employcr may treat the amount as any other business indebtedness.
ARTICI.E VIII
BF.NEFITS AND RIGH'CS
8.1 CLAIM FOR BENEFITS
(a) Insurance claims.nny claim for Benefits undenvritten by[nsurance Contract(s)shall be made to the
Insurer.If the[nsurer denies any claim,the Participant or beneficiary shall follow the[nsurer's claims review procedure.
(b) DepenJent Carc Flexible Spending Account or Elealth Flexible Spending rlccount claims.Any claim for
Dependent Carc Flexible Spending Account or Flealth Flexible Spending Account Benefits shall be made to 1he Administrator.
I�or the I lealth Flexible Spending Account,if a Participant fails to submit a claim within 90 days after the end of the Plan Year,
thosc claims shall not be considered for reimbursement by the Administrator.I Iowever,if a Participant terminates employment
during the Plan Ycar,claims for the rcimbursement of Medical Expenses must bc submitted within 30 days atter termination of
employmenL For the Dependent Care}�lexible Spending Account,if a Participant fails to submit a claim within 90 days after the
cnd of the Plan Year,those claims shall not be considered for reimbursemcnt by the Administratoc If the Administrator denies a
claim,the Administrator may provide notice to the Participant or beneficiary,in writing,within 90 days after the claim is filed
unless special circumslances require an extension of time for processing the claim. I'he notice of a denial of a claim shall be
written in a m�nner calculated ro be understood by the claimant and sh�ll set forth:
(I) specific references to the pertinent Plan provisions on which the denial is based;
(2) a description of any additional material or information necessary for the claimant to perfect the claim and an
explanation as to why such information is neccssary;and
(3) an explanation of the Plan's claim procedure.
(c) Appeal.W ithin 60 days aitcr receipt of the above material,the claimant shall have a reasonable opportunity
to appeal the claim denial to the Administrator for a full and fair review.T'he claimant or his duly authorired representative may:
(I) request a review upon wriuen notice to the Administraror;
(2) review pertinent dvcuments;and
(3) submit issues and commcnts in writing.
(d) Review of appeal,A decision on the review by the Administrator will be made not later than 60 days after
receipt of a request for review,unless special circumstances reyuire an extension of time for processing(such as the need to hold
a hearing),in which event a decision should lx rendered as soon as possible,but in no event later than 120 days after such
rcceipt.The decision of the Administrator shall be written and shall include specific reasons for the decision,written in a manner
calculated to be understood by thc claimant,with specific references to the pertinent Plan provisions on which the decision is
based.
(e) Forfeitures.Any balance remaining in the Participant's Dependent Care h'lexible Spending Account or
Health Flexible Spending Account as of the end of the time for claims rcimbursement for each Plan Year shall be forfcited and
dcposited in the benefit plan surplus of the Employer pursuant to Section 6.3 or Section 7.8,whichever is applicable,unless the
Participant had made a claim for such Plan Ycar,in writing,which has been denied or is pending;in wfiich event the amount of
the claim shall be held in his account until thc claim appeal procedures set forth above have been satisfied or the claim is paid.[f
any such claim is denied on appeal,the amount held beyond the end of the Plan Year shall be forfeited and credited to the benefit
plan surplus.
14
[f the 1'lan Administrator is unablc to make payment to any Participant or other person to whom a payment is due undcr
the Plan becausc it cannot ascertain the identity or whereabouts of such Participant or other person after reasonable cfforts have
been made to identify or locate such person,then such payment and all subsequent payments othcrwise due to such Participant or
other person shall be forfeited and returned to the Employer following a reasonable time after the date any such payment first
became due.
8.2 APPLICATION OF BENEFIT PLAN SURPLUS
Any forfeited amounts credited to the benefit plan surplus by virtue of the failure of a Participant to incur a qualified expense or
seek reimburscment in a timely manner may,but need not be,separately accounted for after the close of the Plan Year(or after such further
time specified herein for thc f iling of claims)in which such forfeitures arose.In no event shall such amounts be carried over to reimburse a
Participant for expenses incurred during a subsequent Plan Year for the same or any other Benetit available under the Plan;nor shall
amounts forfcited by a particular I'articipant be made available to such Participant in any other form or manner,except as permitted by
'I'rcasury regulations.Amounts in the bcnefit plan surplus shall be used to defray any administrative costs and experience losses or used to
provide additional benefits under thc Plan.
ARTICLE IX
ADMII�ISTRATIO�
9.1 PLAN ADMIVIS'1'I2ATION
The F:mployer shall be the Administrator,unless the Employer elects othenvise.The Employcr may appoint any person,
including,but not limited to,the Employces of the Employer,to perform the duties of thc Administrator.Any person so appointed shall
signify acceptance by tiling written acccptance with the Employer.IJpon the resignation or removal of any individual performing the duties
of the AJministrator,the Employer may designate a successor. -
If the Employer elects,the Employer shall appoint one or more Administrators.Any person,including,but not limited to,the
1?mployees of the rmployer,shall be eligiblc to serve as an Administrator.Any person so appointed shall signify acceptance by tiling
written acceptance with the Employer.An Administrator may resign by delivering a written resignation to the E:mployer or be removed by
the Employer by delivery of written notice of removal,to take effect at a date speciFed therein,or upon delivery to the Administrator if no
date is specitied.The Employcr shall be empowered to appoint and removc the Administrator from time to time as it dcems necessary for
the proper administration of the Plan to ensure that thc Plan is being operated for the exclusive benefit of the Employces entiUed to
participate in the Plan in accordance with the terms of the Plan and the Codc.
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 Lmployees entitled to participate in the Plan.
The Administrator shall have full power and discretion to administer the I'lan in all of its details and determine all questions arising in
connection with the administration,interpre[ation,and application of the Plan.Thc Administrator may establish procedures,correct any
defect,supply any information,or reconciles any inconsistency in such manncr and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan.The Administrator shall have all powers necessary or appropriate to accomplish the
Administrator's duties undcr the Plan.The Administrator shall be charged with the dulies of the general administration of the Plan as set
forth under the Plan,including,but not limited to,in addition to all other powers provided by this Plan:
(a) "I'o make and enforce such procedures,rules and regulations as the Administrator deems necessary or proper
for the efficient administration of the Plan;
(b) "Co interpret thc provisions of the Plan,the Administrator's interpretations thereof in good faith to be tinal and
conclusive on all persons claiming benetits by operation of the Plan;
(c) To decide all yucstions concerning the Plan and the cligibiliry of any person to participate in the Plan and to
receive benefits provided by operation of the Plan;
(d) 'I�o reject elections or to limit contributions or 13enefits for certain highly compensated participants if it Jeems
such to be desirable in order to avoid discrimination under the Plan in violation of applicable provisions of the Code;
(e) 'I'o provide Employces with a reasonablc notitication of their benefits available by operation of the Plan and
ro assist any Participant regarding the Participant's rights,bcnefits or elections under the Plan;
(� 7'o keep and maintain the Plan documents and all othcr records pertaining to and necessary for the
administration of the Plan;
(g) To review and settle all claims against the Plan,to approve reimburxment requests,and to authorize the
paymcnt of benefits if�the Administrator determines such shall be paid if the Administrator decides in its discretion that the
applicant is entitled to them.This authority specitically permits the Administrator ro settle disputed claims for benetits and any
other disputcd claims made against the Plan;
15
(h) To appoint such agents,counsel,accountants,consultants,and other persons or entities as may be rcquired to
assist in administering the I'lan.
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 tertns of Codc Section 125 and ihe Treasury regulations thereunder.
9.2 EXANiINAT10N OH RECORDS
The Administrator shall make available to each Participant,Eligiblc Employee and any other Employee of the Employer such
records as pertain to their interest undcr the Plan for examination at reasonable times during normal business hours.
9.3 PAY�IE\T OF EXPENSES
Any reasonable administrative expenses shall be paid by the L'mployer unless the kimployer determines that administrativc costs
shall be bornc by the Participants under the Plan or by any Trust Fund which may be established hereunder.The Administrator may impose
reasonable conditions for payments,provided that such conditions shall not discriminate in f'avor of highly compensated employees.
9.4 INSI;RANCE CO\TROL CLAUSE
In the event of a conFlict between the terms of this Plan and the terms of an Insurance Contract of an independent third party
Insurer whose product is then being used in conjunction with this Plan,the terms of the[nsurance Contract shall control as to those
Participants receiving coverage under such Insurance ContracL For this purEx>se,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.
9.5 INDF.�iNIFICATIOV OF'ADM[tiISTRATOR
The Employer agrecs to indemnify and to defend to the fullest extent permitted by law any Employce serving as the
Administrator or as a member of a committce designated as Administra[or(including any Employee or former Employee who previously
served as Administrator or as a member of such committee)against all liabilitics,damages,costs and expenses(including attomey's fees
and amounts paid in settlement of any claims approved by the Employer)occasioncd by any act or omission to act in connection with the
Plan,if such act or omission is in good faith.
ARTICLE X
A�tENDMENT OR'I'ER�iIYATION OF PLAN
10.1 ��fE\D�iF.NT
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
Fmployee 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 I�ederal,state or local laws,statutes or regulations.
10.2 TERMII�A'I'IOIV
Thc Employer reserves thc right to terminate this Plan,in whole or in part,at any time.In the event the Plan is terminatcd,no
further contributions shall be made.[3enefits under any Insurance Contruct shall be paid in accordance with the terms of the Insurance
Contract.
No further additions shall be made to the Health Flexible Spending Account or Dependent Care Flexible Spending Account,but
all payments from such fund shall continue to be made according to the elections in eflect until 90 days after the termination date of the
Plan.Any amounts remaining in any such f'und or account as of the end of such period shall be forfcited and deposited in the benefit plan
surplus after the expiration o£the filing period.
AR7'ICLE XI
MISCELLANF,OUS
11.1 PLAti Iti"I'ERPRE'I'ATIO\
All provisions of this 1'lan shall be interpreted and applied in a uniform,nondiscriminatory manner.This Plan shall be read in its
entirety and not severed cxcept as provided in Section 11.12.
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11.2 CEtiDERA\DNUMBER
Wherever any words are used hercin in the masculine,feminine or neuter gender,they shall be construed as though they were
also used in another gender in all cases where they would so apply,and whenevcr any words are used herein in the singular or plural form,
thcy shall be construed as though they were also used in the other ibrm in all cases where they would so apply.
11.3 WRITTEN DOC��IH;N7'
This Plan,in conjunction with any separate written document which may be required by law,is intended to satisfy the written
Plan requirement of Code Section 125 and any Treasury regulations thereunder relating to cafeteria plans.
11.4 EXCLUSIVE BE\EFIT
This Plan shall bc maintained for the exclusive benefit of the limployees who participate in the Plan.
11.5 PAR"1'ICIPAtiT'S RIGHTS
This Plan shall not be deemed to constitute an employmcnt contract between the Fmployer and any Participant or to be a
consideration or an inducemcnt for the employment of any Participant or Employee.Nothing contained in this Plan shall be deemed to give
any Participant or Employce the right to be retained in the service of the Employer or to interfcre wiih the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which such discharge shall have upon him as a Participant of this
Plan.
11.6 ACTION BY'I'HE EMPLOYER
Whenever the I:mployer under the terms of the Plan is permitted or rcquired 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.
11.7 E�tYL01'ER'S PR07'EC'TIVE CLAUSF.S
(a) Insurance purchase.Upon the failure of ei[her the Yarticipant or thc Gmployer to obtain the insurance
contemplated by this Plan(whether as a result of ncgligence,gross neglect or othenvise),the Participant's Bencfits shall be
limited to the insurance premium(s),if any,that remained unpaid f'or the period in yuestion and thc actual insurance proceeds,if
any,received by thc fimployer or the Participant as a result of the P�rticipant's claim.
(b) Validity of insurance contract. rhe Employer shall not be nesponsible for the validity of any Insurance
Contrac[issued hereunder or for the failure on the part of the Insurer to make p�yments provided for under any Insurance
Contract.Once insurance is applied for or obtained,the Employer shall not be liable for any loss which may result Gom the
failure to pay Premiums to the extent Premium notices are not received by the Employer.
11.8 \O GIiARAtiTEE OF T?►X CO�SEQI;ENCES
Neither the Administrator nor thc�:mployer makes any commitment or guarantee that any amounts paid to or for the benetit of a
Participant under the Plan will be excludable from the Participant's gross income for federal or state income tax purposes,or that any other
federal or state tax trcatment will apply to or be available to any Participant.It shall be the obligation of each{'articipant to determine
whether each payment under the Plan is cxcludable from the Participant's gross income for federal and state income tar purposes,and to
notify the Employer if'the Panicipant has reason to believe that any such payment is not so excludable.Notwithstanding the f'oregoing,the
rights of Participants undcr this Plan shall be Iegally enforceable.
119 INUE�lY1FICATIOti OF E�IPLOYER BY PAR"CICIPA�TS
[f any Participant receives one or more payments or reimbursements under the Plan that are not for a pf;rmitted Rencfit,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 exceeJ thc
amount of additional federal und state income tax(plus any penalties)that the Participunt would have owed if the payments or
rcimbursements had been madc to thc Participant as regular cash compensation,plus thc ParticipanPs share of any Social Security tax that
would have been paid on such compensation,Icss any such additional income and Social Security tax actually paid by the Participant.
11.10 Fli\DI\C
Unless otherwise required by law,contributions to the Plan need not be placed in trust or dedicated to a specific Benefit,but may
instead be considered general assets of the L'mployer.Furthermore,and unless othenvise required by law,nothing hercin shall be construed
to require the F,mployer or the Administrator to maintain any fund or segregate any amount for the benefit of any Participant,and no
Participant or othcr person shall have any claim against,right to,or securiry or othcr intcrest in,any fund,account or asset of thc Gmployer
from which any payment under the Plan may be made.
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>>.>> GOVER\I\G LAW
"1'his Plan is governed by the Code and the Treasury regulations issued thereundcr(as they might be amended from time to time).
In no event shall thc Gmployer guarantee the favorable tax treatment sought by this Plan.'Co the extent not preempted by Federal law,the
provisions of this Plan shall be construeJ,enforced and administered according to the laws of the State of California.
11.12 SEVERr1BILITY'
If any provision of the Plan is held invalid or unenforceable,its invalidiry or unenforceability shall not affect any other provisions
of the Plan,and the Plan shall be construed and enforced as if such provision had not been included herein.
11.13 CAP'I'IONS
l'hc captions contained herein are insertcd only as a matter of convenicnce and for reference,and in no way define,limit,enlarge
or describe the scope or intent of the Plan,nor in any way shall atTect the Plan or the construction of'any provision thereof.
11.14 CO�TIti�;ATIO:�i OF COVERAGE(COBILI)
Notwithstanding anything in the Plan to the contrary,in the event any bene�t under this Plan subject to the continuation coverage
reyuirement of Codc Section 49806 becomes unavailable,cach Participant will be entitled to continuation coverage as prescribed in Code
Section 4980E3,and related regulations.'1'his Section shall only apply if the Fmployer employs at least twenry(20)employees on more than
50%of its typical business days in the previous calendaryear.
11.15 FA�11LY A�D�9EDICAL I,F,AVF:AC"C(F�ILA)
Norivithstanding anything in the Plan ro the contrary>in the event any benefit undcr this Plan becomes subject to the rcquirements
of the Family and Medical I.cave Act and regulations thereunder,this Plan shall be operated in accordance with Regulation 1.125-3.
11.16 IiF,A1,TH ItiSl;Rr1NCE PORTABILITY AND ACCOUV"I'ABILITY ACT(IIIPAA)
Notwithstanding anything in this Plan to the contrary,this Plan shall be operated in accordance with HIPAA and regulations
thereunder.
11.17 UN(F'OR�tED SERVICES ENIPLOYMENT AND REEMPLOY�4EtiT R[CHTS ACT(USERRA)
Notwithstanding any provision of this Plan to the contrary,contributions,benetiu and scrvice credit with respect to yualified military
service shall be provided in accordance with the iJniform Services I;mployment And Reemployment Rights Act(USF,RRA)and the
regulations thereunder.
11.18 COh1PLIANCE VVITEI 1[IP,a.1 PRIV 1CY STANDARUS
(a) Application.If any benetits under this Cafeteria Plan are subject to the Standards for Privacy of Individually
Identifiablc Health[nfortnation(45 CFR Part 164,the"Privacy Standards")>then this Section shall apply.
(b) Disclosure of PHI.l he Plan shall not disclose Protected tlealth Information to any member of the
Employcr's workforce unless each of the conditions set out in this Section are met."Protected flealth Information"shall have the
same definition as sct forth in the Privacy Standards but generally shall mean indiviJually identifiable information about the past,
present or future physical or mcntal health or condition of an individual,including information about trcatment or payment for
treatment.
(c) PIII disclosed for administrative purposes.Protected Health Information disclosed to members of the
F;mploycr's�vorkforce shall be used or disclosed by them only for purposes of Plan administrative functions.The Plan's
administrative functions shall include all Plan payment functions and health care operations.The terms"paymcnt"and"health
care operations"shall have the same definitions as set out in the Privacy Standards,but the term"payment"generally shall mean
activitics taken to determine or fulfill Plan responsibilities with respect to eligibiliry,coverage,provision of benefits,or
reimbursemcnt for health care.Genetic information will not be used or disclosed for undenvriting purposes.
(d) PIII disclosed to certain workforce members.The Plan shall disclose Protected E lealth Information only to
members of the Employer's workforce who are authorized to receivc such Protected Health Information,and only ro the extent
and in the minimum amount necessary for that person to perform his or her duties with respect to the Plan."Members of thc
Employer's workforce"shall refer to all employees and other persons under the control of the E?mployer.'I'hc 1?mploycr shall
keep an updated list of those authorized to receive Protected f fealth Information.
(1) An authorired member ofthe Fmployer's workforce who receives Protected Health Information shall use or
disclose the Protected f�ealth Information only to the extent necessary to perform his or her duties with respect to the
Plan.
18
(2) In the event that any member of thc Employer's workforce uses or discloscs Protected Health Information
other than as permitted by this Section and the Privacy Standards,the incident shall be reported to the Plan's privacy
officer.The privacy officer shall take appropriate action,including:
(i) invcstigation of the incident to detertnine whether thc brcach occurred inadvertently,through
negligence or deliberately;whether there is a pattern of breaches;and the degree of harm caused by the
brcach;
(ii) appropriate sanctions against the persons causing the breach which,depending upon the nature of
the brcach,may include oral or written reprimand,additional training,or termination of employment;
(iii) mitigation of any harm caused by the brcach,to the extent practicablc:and
(iv) documentation of the incidcnt and all actions taken ro resolve the issue and mitigate any damages.
(c) Certification.The};mploycr must provide certification to thc Plan that it agrees to:
(1) Not use or furthcr disclose the information other than as permitted or required by the Plan documents or as
required by law;
(2) Ensure that any agent or subconVactor,to whom it provides Protected Health Information received from the
Plan,agrees to thc same restrictions and conditions that apply to the Employcr with respect ro such information;
(3) Not use or disclose Protected Health Information for employment-rclated actions and decisions or in
connection with any other benefit or employee benefit plan of the F:mployer;
(4) Report to the Plan any use or disclosure of the Protected Health[nformation of'which it becomes aware that
is inconsistent with the uses or disclosures permitted by this Section,or required by law;
(5) Make available Protected Health Information to individual Plan members in accordance with Section 164.524
of the I'rivacy Standards;
(6) Make available Protected Hcalth Information for amendment by individual Ylan members and incorporate
any amendments to I'rotected Ilealth Information in accordance with Section 164.526 of the Privacy Standards;
(7) Make available the Protected Health Information reyuired to provide an accounting of disdosures to
individual Plan mcmbers in accordance with Section 164.528 of the Privacy Standards;
(8) Makc its intemal practices,books and rccords rclating to the use and disclosure of Protected Hcalth
Information received from the Plan available to the Department of I lealth and Human Scrviccs for purposes of
determining compliance by the Plan with the Privacy Standards;
(9) If feasible,return or destroy all['rotected Health Information received from the Plan that thc Employer still
maintains in any form,and retain no copies of such information when no longer needed for the purpose for which
Jisclosurc was made,except that,if such return or destruction is not feasible,limit further uses and disdosures to those
purposes that make the return or destruction of the information infeasible;and
(10) Ensure the adeyuate separation between the Plan and members of the Gmploycr's workforce,as required by
Section 164.504(�(2)(iii)of the Privacy Standards and set out in(d)above.
11.19 CO�iPLIANCE WI"CH HIPAA ELF.CTRONIC SECl;R11'Y S7'ANDARDS
iJnder the Security Standards for the Protection of F,lectronic 1'rotected Health[nformation(45 CFR Part 164.300 et.seq.,the
"Security Stand�rds"):
(a) Implementation."Che Employer agrees to implement rcasonable and appropriate administrative,physical and
technical safeguards to protect the contidentiality,integrity and availability of�:lectronic Protected Health Information that the
Fmployer creates,maintains or transmits on behalf of the Pl:xn."Electronic Protected Hcalth Information"shall have the same
definition as set out in the Security Standards,but generally shall mean Protected Health Infortnation that is transmitted by or
maintained in electronic media.
(b) Agents or subcontractors shall meet security standards.The Employer shall ensure that any agent or
subcontractor to whom it provides Electronic Protected Health Infortnation shall agree,in writing,to implement reasonable and
appropriate security mcasures to protect the Electronic Protected I Iealth Information.
(c) Employer shall ensure security standards.Thc Gmploycr shall ensure that reasonable and appropriate
security measures are implemented to comply with the conditions and requirements set forth in Section 11.18.
19
11.20 hiF,N'1'.4L EIEALTH PARITY AND ADUICTIOti F.Q1117'1':�CT
Notwithstanding anything in the Plan to the contrary,the Plan will comply with the Mental Flealth Parity and Addiction E•:quity Act
and ERISA Section 712.
11.21 GENETIC ItiFOR�tATION YONUISCRIMINATION ACT(G[NA)
Notwithstanding anything in the Plan to thc contrary,the Plan will comply with the Genetic Infortnation Nondiscrimination Act.
11.22 WO�tEN'S HEALTH AtiD CAtiCER RIGH7'S ACT
Notwithstanding anything in the Plan to the contrary>the Plan will comply with the Women's}Iealth and Cancer Rights Act of
1998.
11.23 NEWBORNS'AND�tOTHERS'HEALTiI PROTE:CTION ACT
Notwithstanding anything in thc Plan to the contrary,thc Plan will wmply with the Newborns'and Mothers'Health Protection Act.
20
IN WI"INESS WHI:REOF,this Plan document is hereby executed this day of'
City of Palm Desert,a Municipal Corporation
By
EMPLOYF'.R
21
ADOPTINCi RESOLU"CION
The undersigned authorized representative of City of Palm Desert,a Municipal Corporation(the Employer)hcreby certifies that
the following resolutions were duly adopted by the Employer on ,and that such resolutions have not been modified
or rescinded as of the date hereof:
RESOLVED,that the form of amended Cafeteria Plan including a Dependent Care Flexible Spending Account and Heaith
I'lexible Spending Account etTective May 1,2013,presented to this meeting is hereby approved and adopted and that an authorized
representative of the r;mploycr is hereby authorized and dircctcd to execute and deliver to thc Administrator of the E'lan one or more
counterparts of the Plan.
The undersigned furthcr ccrtifies that attached hereto as Exhibits A and E3,respectively,are true copies of Ciry of Palm Dcsert
IRS Section 125 Flexible Benefits Plan as amended and restated,and the Summary Plan Description approved and adopted in the foregoing
resolutions.
llate:
Signed:
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