HomeMy WebLinkAbout05-07-13-Resolution-Agreement to Provide Employee Certain Benefits-05/06/2013R 05-07-13
Agreement Authorizing the Corporation To Provide Employees
Certain *Benefits
Agreement of The Corporation of the City of Sanger,
a(n) "Government Agency".
WHEREAS there has been agreed a desire of the Executives of th(s Corporation to provide the
Employees of this Corporation/Government Agency with the new employee benefits, to wit: a(n)
The City of Sanger Section 125 Cafeteria Plan, subject to the following terms and conditions
and:
WHEREAS, this Corporation/Government Agency has reviewed the terms of the Plan and finds
it is in the best interest and to the benefit of the Corporation/Government Agency to enter Into
such a Plan for the use of employees of this Corporation/Government Agency,
NOW THEREFORE IT is RESOLVED, that the President or any Executive of this
Corporation/Government Agency, and each of them, be and hereby Is authorized, to execute
such documents, in the name and on behalf of this Corporation/Government Agency, as
necessary to commence the Plan substantially as agreed.
FURTHER RESOLVED, that each officer of Ihis Corporation/Government Agency be and .hereby
is authorized in the name and on behalf of the Corporation/Government Agency from time to
time to take such actions required or as such officers may deem necessary to enter into
agreements with legal, financial, administrative or professional services required and necessary
to carry out the desires of this Corporation/Government Agency and provide the benefits of the
Pian to Employees.
THls AGREEMENT is effective Ihis date, and agreed upon as spelled out in the Plan Document.
For the Corporation:
Authorized Officer
Dated this _,day
City of Sanger
Section 125 Cafeteria Plan
Plan Document
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City of Sanger Section 125 Cafeteria Plan
Plan Document
Table of Contents
Section
I Definitions
11 Participation In The Plan
III. Benefits And Benefit Rules
IV Contributions
V Administration
VI Continuation Of Coverage
Vll Miscellaneous
Vill Schedules Of Benefits
Purpose
The Name of this Plan is City of Sanger Section 125 Cafeteria Plan, established by the Employer, City of Sanger,
whose address is P.O. Box 1729, Sanger, TX 76266. For more information on the Plan Sponsor, see Administrative
Facts section. The effective date of this Plan is October 1, 2012.
The purpose of the Plan is to allow Employees of the Employer to choose certain Benefits provided by the Employer
or additional cash compensation so that Employees may receive Benefits that best meet their individual needs. The
Employer intends that the Plan qualify as a "cafeteria plan" within the meaning of section 125(a) of the Internal
Revenue Code of 1986, as amended, and that the Qualified Benefits that an Employee elects to receive under the
Plan be eligible for exclusion from the Employee's income for Federal Income Tax purposes. The Employer may offer
a choice among additional benefits that may not constitute Qualified Benefits, but nothing in this Plan shall be
construed as offering any taxable benefits except to the extent that the Employer may otherwise specifically provide.
Section I
Definitions
The following words and phrases as used herein shall have the following meanings, unless a different meaning is
plainly required by the context. Pronouns shall be interpreted so that the masculine pronoun shall include the
feminine and the singular shall include the plural, and the following rules of interpretation shall apply in reading this
instrument:
"Affiliated Company" means:
A. any corporation which is a member of a controlled group of corporations including those within the meaning
of section 1563(a) and 414(b) of the Code, determined without regard to sections 1563(a)(4) and (e)(3)(C),
including the Employer;
Be any organization under common control with the Employer within the meaning of section 414(c) of the Code;
C. any organization which is included with the Employer in an affiliated service group within the meaning of
section 414(m) of the Code; or
D. any other entity required to be aggregated with the Employer pursuant to regulations under section 414(o) of
the Code.
"Benefit Credits" means the amount set aside for Benefits under Section 3 and credited to the Participant's
Reimbursement Account(s).
"Benefits" means the Qualified Benefits of City of Sanger Section 125 Cafeteria Plan available from time to time
as described herein, and as set forth in the Benefit Schedules attached hereto.
"Board" means the Board of Directors of City of Sanger.
"Change in Status" means:
(a) A change in a Participant's legal marital status, including marriage, divorce, legal separation, annulment, or
death of the Participant's spouse.
(b) An event affecting the number of the Participant's Dependents, including birth, death, adoption, and
placement for adoption.
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(c) A change in employment status of the Participant, his spouse or Dependents, including termination or
commencement of employment (as determined under the Code Section 125 regulations); a strike or lockout;
a commencement of or return from an unpaid leave of absence; a change in worksite; or a change in the
employment status of the Participant, his spouse or dependent (e.g., hourly to salary, union to non -union, or
full-time to part-time), that affects that person's rights under this Plan or an underlying benefit program (e.g.,
changing from salaried to hourly -paid, union to non -union or part-time from full-time).
(d) An event that causes a Participant's Dependent to satisfy or cease to satisfy the eligibility requirements for a
particular benefit, such as attaining a specified age or the Dependent's status as a student.
(e) A change in the residence of the Participant, his spouse or Dependent.
(f) Any other events included under Code Section 125, or regulations or other guidance promulgated there
under relating to changes in family status. The determination of whether there is a Change in Status shall be
determined by the Plan Administrator in its sole discretion, consistent with the regulations under Code
Section 125.
"Code" means the Internal Revenue Code of 1986, and the same as may be amended from time to time.
"Committee" means the individuals who may be appointed by the Plan Administrator to administer the process of
claims review for the Plan in accordance with Section 5.
"Compensation" means earnings from this Employer.
"Compensation Reduction Agreement" means a voluntary agreement whereby an Employee agrees to reduce
his Compensation for the forthcoming Plan Year (or, if the agreement becomes effective after the beginning
of the Plan Year, for the balance of the Plan Year), for purposes of obtaining the Qualified Benefits offered
by the Plan.
"Dependent" means ,with respect to an Employee or Participant, any individual who meets the definition of
"dependent" as defined in Section 152 of the Code (as further modified to conform with the underlying Code
section for the qualified benefit) and all applicable Internal Revenue Service rulings and regulations
thereunder; provided that such definition of "Dependent" will be modified, where applicable, by the
provisions of Michelle's Law, as decribed in Section II below.
"Effective Date" means October 1, 2012.
"Eligible Benefit" This Plan considers any expenses incurred by a participant for any product or service that is
necessary for the good health of the covered individual and which is not reimbursed or reimbursable by any
medical or health plan available to the individual.
"Eligible Employee" means any Employee who meets the specific eligibility requirements for the Plan. Part -Time
employees who work less than 40 hrs/week are ineligible for this Plan.
"Eligible Benefit Expenses" means those eligible expenses as shown on Schedule A of this document, incurred
by the Participant, or the Participant's Spouse or Dependents, after the effective date of the Participant's
participation herein and during the Plan Year otherwise allowable as deductions under Code section 213
(without regard to the limitations contained in section 213(a), but shall not include an expense incurred
(A) for the payment of premiums under a health insurance plan not sponsored by the Employer, or
(B) for the purpose of cosmetic surgery as defined by Code section 213(d)(9).
(C) for purposes of this Plan, an expense is "incurred" when the Participant or beneficiary is furnished the medical care or
services giving rise to the claimed expense that is covered by the benefits provided by this cafeteria plan.
an eligible benefit expense means with regards to medical, dental and vision, if elected on Schedule A expense, any
expense incurred for products and services which are deemed to be beneficial to the good health of the participant or
dependent.
"Employee" means any person employed by the Employee, but not including leased employees and independent
contractors.
"Employer" means City of Sanger and any other business organization which succeeds to its business and elects
to continue this Plan and which adopts this Plan with the consent of the Board.
"Enrollment Period" means the period upon becoming an eligible employee. In addition, the Plan Administrator
has specified other acceptable enrollment periods, which are the month prior to Plan Anniversary and upon
becoming an eligible employee.
"Entry Date" means the date upon which your participation begins after you have enrolled in the Plan.
"FRIBA" means the Employee Retirement Income Security Act of 1974, and the same as may be amended from
time to time,
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"Expense" means any amount paid or incurred by the Employee for Eligible Benefit Expense not otherwise
reimbursed under any group plan, the reimbursement of which by the Employer is intended to be excludable
from the income of such Participant under various provisions of the Code.
"Highly Compensated Employee" means any Employee defined as such in section 414(q) of the Code.
"HIPAA" means the Health Insurance Portability and Accountability Act of 1997, which may be modified or
amended at any time.
"Key Employee" means any Employee defined as such in section 416(i)(1) of the Code.
"Participant" means any Eligible Employee who has met the conditions for participation set forth in Section 2,
below.
"Participating Employer" means the Employer and any affiliated company which adopts this Plan with the
consent of the Board.
"Plan" means the City of Sanger Flexible Benefits Plan described herein.
"Plan Year" means October 1, 2012 through September 30, 2013. The Plan year renews on October 1st
each year thereafter.
"Premium Expense" means the expense or premium paid for the cost of Benefits elected by the Participant.
"Qualified Benefits," means each benefit described in section 125(f) of the Code and the regulations promulgated
there under.
"Reimbursement Accounts" means the accounts established as provided under Section 3, in the Participant's
name and which are used to record the allocation of Benefit Credits and their expenditure (reimbursement)
for Qualified Benefits.
"Retirement" means the "non -termination" of active employment with the Employer.
"Spouse (as used in this Plan) [means the person married to a Participant. For purposes of this Plan marriage is
defined as the union of one man and one woman in accordance with laws of a state and in accordance with
the Defence of Marriage Act. (DOMAM
Section 11
Participation In The Plan
Commencement of Participation. Each Eligible Employee shall be eligible to become a Participant on his Entry
Date. The Entry Dates) for this Plan is/are: 1S` day of month following 30 days after date of hire.
Procedure for and Effect of Participation. An Eligible Employee may become a Participant in the Plan by
executing Enrollment Forms and Compensation Reduction Agreements, and by providing such data as are
reasonably required by the Employer as a condition of such participation. The Compensation Reduction
Agreement shall be governed by Section 4 of this document. By becoming a Participant, each individual
shall for all purposes be deemed conclusively to have consented to the provisions of the Plan and all
amendments thereto.
Cessation of Participation. A Participant will cease to be a Participant as of the earlier of:
A. the date on which the Plan terminates;
B. the date on which he ceases to be an Eligible Employee; or
C. the date on which he fails to make a contribution required under the terms of the Plan.
D. the date on which a Participating Employer terminates its participation in the Plan.
Nothing in this section shall prohibit the payment of Benefits with respect to claims arising prior to the
Participant's termination of participation.
Notwithstanding the foregoing, a former Participant who continues to receive Compensation from the
Employer shall remain a Participant for all purposes until such Compensation ceases.
Notwithstanding the above provisions, a Participant will cease to be a Participant on the last day of the plan
year in which a qualifying event occurs.
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However, if the Participant has any unused benefits remaining at the termination of participation, the
Participant will be allowed to claim those benefits for in accordance with Forfeiture of Section III, Benefits,
above.
Recommencement of Participation. A former active Participant will recommence participation as of his date of
reemployment. A reemployed former active Participant may not make a new election which is effective
during the Plan Year in which he separated from service with the Employer.
FMLA Leave. A Participant who takes an unpaid leave of absence under the Family and Medical Leave Act of
1993 ("FMLA Leave") may revoke his election to participate under any group health insurance benefit
offered under this Plan, for the remainder of the Plan Year in which such leave of absence commences.
Such revocation shall take effect in accordance with such procedures as prescribed by the Plan Ad-
ministrator. Upon such Participant's return from his or her FMLA Leave, the Participant may elect to be
reinstated in the Plan, on the same terms that applied to the Participant prior to his or her taking the FMLA
Leave, and with such other rights to revoke or change elections as are provided to other Participants under
the Plan. Notwithstanding the foregoing, a Participant on FMLA Leave shall have no greater rights to
benefits for the remainder of the Plan Year in which the FMLA Leave commences as other Plan Participants.
Michelle's Law. With regard to the Health Insurance Plan that constitutes a "group health plan," if a Dependent
Child was enrolled in such plan on the basis of being a student at a postsecondary educational institution
immediately before the first day of a "Medically Necessary Leave of Absence" and ceases to be enrolled as
a student due to a serious illness or injury, such child shall cease to qualify as a Dependent not before the
earlier of: (I) one year after the first day of a "Medically Necessary Leave of Absence;" or (ii) the date on
which the child would otherwise cease to qualify as a Dependent under the plan or health insurance
coverage. A "Medically Necessary Leave of Absence" is the Dependent's leave of absence or other change
in enrollment at a postsecondary educational institution which a treating physician certifies in writing as
medically necessary due to the Dependent's serious illness or injury and which would cause such
Dependent to lose student status for purposes of coverage under the respective group health plan. A
Dependent child whose benefits are continued under this section shall be entitled to the same benefits as if
(during the Medically Necessary Leave of Absence) the child continued to be a covered student at the
institution of higher education and was not on a Medically Necessary Leave of Absence.
Special Enrollment under the Children's Health Insurance Program Reauthorization Act of 2009
("CHIPRA"). With regard to the Health Insurance Plan (excluding the Medical Reimbursement Plan and a
high deductible health plan) which constitutes a "group health plan", if an employee or dependent
experiences one of the events described herein, the Employee may make a corresponding change to a prior
election within sixty (60) days of the occurrence thereof:
(a) Termination of coverage as a result of loss of eligibility for coverage under a state plan for medical
assistance under Title XIX of the Social Security Act or a state child health plan under Title XXI of the
Social Security Act; or
(b) Becoming eligible to receive financial assistance, with respect to paying for coverage under a plan which
is a group health plan (excluding the Medical Reimbursement Plan and a high deductible health plan),
from a state plan for medical assistance under Title XIX of the Social Security Act or a state child health
plan under Title XXI of the Social Security Act.
Section III
Benefits And Benefit Rules
Benefit Plans.
This Plan contains the Qualified Benefits of:
Medical Reimbursement Account Plan
Dependent Care Reimbursement Account Plan
Premium Conversion Plan
Medical Reimbursement Account Plan
There are some expenses you know you will have to pay for in the coming year; for instance, new eyeglasses,
medical and dental expenses not reimbursed by the health plan. Normally you would pay for expenses like
these with after-tax income. And because taxes reduce the value of your dollars, you would have to earn
considerably more than $100 to pay $100 of these expenses.
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If you are eligible to participate, the City of Sanger Flexible Benefit Plan allows you to contribute pretax income
to create a special reimbursement account in order to reimburse yourself on a pretax basis for payment of
certain medical and other outlined expenses (See Schedule A). It's like getting a discount on these bills since
you don't have to earn as much money to pay for them. The money you contribute to the reimbursement
account by automatic payroll deduction is not subject to federal or Social Security taxes, but depending on
your residence, may be subject to state and local income taxes.
How the Medical Reimbursement Account Works
You may establish a reimbursement account for predictable medical expenses, including. dental and vision
care expenses. Once you have determined your annual predictable expenses for the period of time covered by
the Plan Year, a portion of that amount may be paid for with pretax pay, deposited on a per pay period basis to
the medical reimbursement account. The minimum and maximum pretax deferral allowed for the Medical
Reimbursement Account during a Plan Year is shown on Schedule A once you have completed the
Compensation Reduction Agreement for the Medical Reimbursement Account, you may file a claim for the
afore mentioned medical expenses incurred or paid on or after your entry date, and during the current Plan
Year, that have not been reimbursed under any other Employer's accident or health plan. Generally, the
qualified expenses are costs you have paid or incurred that exceed any plan deductibles and co -payments, as
determined as allowable medical expenses under IRS Code Section 213, and to the limit of your Benefit
Credits. The Plan Administrator will inform you of the rules that apply to filing claims.
Under this category are expenses such as non -reimbursable medical expenses covered by any other
Employer's accident and health plan. Generally, the expenses covered must be "medically necessary," or
prescribed by a licensed practitioner to qualify. Covered expenses do not include premiums paid for other
health plan coverage, including plans maintained by the employer of a family member, or expenses for non -
reconstructive cosmetic surgery; nor do they include expenses for personal mileage.
One way to predict your reimbursable expenses is to look at your bills over the past couple of years. While the
objective of these reimbursements is to help you to maintain good health through preventive care, it is
important not to overestimate your needs because the tax laws require unused amounts in your
reimbursement accounts to be forfeited at the end of each Plan Year.
When you are reimbursed for these qualified expenses, your Medical Reimbursement Account will be debited
in the amount of reimbursement, provided there are sufficient Benefit Credits available. Once you have
elected the amount of your compensation reduction, you may not add to or change the amount except as
explained above as a result of a Change of Status. You may make a new election to change or eliminate the
compensation reduction amounts at the beginning of each Plan Year. The Internal Revenue Code Section 125
states that these balances cannot be combined with any other reimbursement accounts in this or any other
Plan, or used for purposes other than for which they are originally intended.
Compensation reduction amounts in the form of Benefit Credits remaining in your Reimbursement Account
after all qualified claims have been filed and paid during a Plan Year cannot be carried forward in any following
year, and will be forfeited. It is therefore important that you carefully estimate your potential needs for the
entire length of the Plan Year to assure that you have enough credits for your needs, but so as to have no un-
used, remaining credits that you will lose.
Notwithstanding the foregoing, the maximum amount of reimbursement under the Medical Reimbursement
Account which is part of this Plan will be available at all times throughout the coverage period in accordance
with proposed Treasury regulations section 1.125-2(A-7)(b)(2)1
Dependent Care Reimbursement Account Plan
Provision of Benefits. Benefits under this Plan shall take the form of reimbursement for Dependent Care, as
determined by Code Sec.129, by the Employer for Eligible Expenses incurred by a Participant during the
Plan Year, A Participant shall be entitled to benefits under this Plan only for Eligible Expenses incurred
after becoming a Participant.
Funding. All Benefits of this Plan will be paid by the Employer, based on the Contributions from the
Compensation Reduction Agreements provided by the Participants. Contributions to this Plan for the Plan
Year will be limited to the amounts determined by the Compensation Reduction Agreements entered into
by the Plan Participants for a Plan Year. All contributions by the Participants will be held by the Employer
in whatever manner the Employer deems necessary, as credits in the Participant's Account. Contributions
may not exceed the maximum contribution shown on Schedule B of this document. Employer
contributions to Dependent Care, if available, will be made on a prospective basis, and will be available for
the entire Plan Year.
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Claims. The Plan Administrator will inform you as to the frequency of claim submission(s). The Plan
Administrator will pay the claims as expeditiously as possible, at times determined by the Plan
Administrator.
Amount of Reimbursement. A Participant shall be entitled to benefits under this Plan in an amount that does
not exceed his Benefit Credits. No Eligible Expense shall be reimbursed to the extent that the expense
exceeds such amount. Each payment hereunder shall be a charge to the Participant's Benefit Credits.
Limitations on Reimbursement. The Employer's payment of benefits under this Plan for any Plan Year will
be limited to the lesser of (i) the Participant's Eligible Expenses for the year, or (ii) the Participant's Benefit
Credits.
Covered Expenses. Reimbursement shall be provided to any individual only for Eligible Expenses incurred
while that individual is a Participant. Reimbursement for Eligible Expenses incurred during a period of
participation may be made after such participation ceases, as provided for in the Claims section. An
Eligible Expense shall be considered incurred when the goods or services giving rise to such Eligible
Expense are provided, irrespective of when such Eligible Expenses are billed to the Participant.
Reimbursement shall not be made for any amount that does not qualify as an Eligible Expense, and no
Participant or former Participant shall receive any amount by which his Benefit Credits allocated under the
Cafeteria Plan for Eligible Expense reimbursement exceed the amount actually paid as reimbursement for
Eligible Expenses.
Eligible Expenses or Reimbursable Expenses are expenses payable by the Plan Administrator according
to the definitions below. The term "Eligible" Expense means any reasonable expense incurred by the
Participant or his Spouse for Qualifying Services for the cost of sending a child of the Participant to a
Qualifying Day Care Center. The Employer shall determine in its sole discretion whether any expense is
reasonable. An expense shall be an Eligible Expense only if it is payable to a person who is not either the
dependent of the Participant, or the Participant's Spouse, or a child of the Participant under the age of 19
as of the close of the Plan Year in which the Qualified Services are rendered.
"Qualifying Day Care Center" means a day care center which provides full-time or part-time care for more
than six individuals (other than individuals who reside at the day care center) on a regular basis during the
Eligible Employee's taxable year, and which:
A. complies with all applicable laws and regulations of the state and town, city or village in which it is
located; and
B. receives a fee, payment or grant for services for any of the individuals to whom it provides services
(regardless of whether such facility is operated for a profit)
"Qualifying Individual" means:
A. a Dependent of the Participant who is under the age of 13; or
B. a Dependent of the Participant who is physically or mentally incapable of caring for himself or herself.
C. a Spouse of the Participant who is physically or mentally incapable of caring for himself or herself.
"Qualifying Services," means Services performed:
A. in the home of the Participant; or
B. outside the home of the Participant for
(i) the care of a Dependent of the Participant under the age of 13, or
(ii) the care of any other Qualifying Individual who spends at least eight hours a day in a
Participant's home.
"Services" means the duties performed to enable a Participant or his Spouse to remain gainfully employed
and which are related to the care of a Qualifying Individual.
"Spouse" (as used in this Plan) means the person to whom the Participant is legally married but shall not
include an individual legally separated from a participant under a decree of legal separation.
"Student" means an individual who during each of five calendar months during a Plan Year is enrolled as a
full-time student at an Educational Institution.
Dependents are defined for this purpose as a child up to age 13, handicapped children or adults, or
elderly individuals who rely on you for financial support and are eligible to be claimed as an exemption on
your federal tax return. If dependent care is required to enable you (or a spouse or single person) to work,
these expenses may be eligible for reimbursement. Included are payments to child care centers, nursery
schools, kindergarten and schools for children up to but not including first grade. Eligible expenses also
include payment for summer day camps, after -school and elderly care. Care within your home by a
relative (for whom you do not take a standard tax exemption, provided the relative is not a child under 19),
or a non -relative, as long as such person is reporting payments as income, is also eligible. However you
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must have accumulated a sufficient credit balance in your Dependent Care Reimbursement account in
order to receive full reimbursement; otherwise, you will receive partial reimbursement with the remaining
portion of the claim automatically considered for reimbursement in subsequent weeks as more dollars are
contributed from your pay to your Dependent Care Reimbursement account.
Maximum Annual Benefits. A Participant who is married at the close of a Plan Year may not receive
reimbursement for Eligible Expenses incurred by him for the Plan Year in excess of the lesser of:
A. $5,000 (or $2,500 in the case of a married Participant filing a federal income tax return separate from
his Spouse);
B. his Compensation for such Plan Year;
CO the Compensation of his Spouse for such Plan Year;
D. the amount set forth in Schedule A attached hereto; or
E. the Benefit Credits allocated to a Participant's account for the Plan Year.
A Participant who is not married at the close of a Plan Year may not receive reimbursement for Eligible
Expenses incurred by him for the Plan Year in excess of the lesser of $5,000 or his Compensation for the
Plan Year. Not with -standing the above, the maximum reimbursement paid under this Plan must also be
reduced by the amount of any tax-exempt dependent care assistance benefits received by the Participant
or his Spouse from any other employer during the Plan Year.
Cash Alternative. Any Participant who has not elected to participate in the Plan under the procedures
described in Section 2 to receive Benefit Credits will be assumed to have elected cash Compensation,
and his Compensation will not be reduced to cover the payment of non -cash Benefit Credits under this
Plan.
Nondiscriminatory Benefits. The Plan is intended not to discriminate in favor of Highly Compensated
Employees as to eligibility to participate, contributions and/or Benefits, and to comply in this respect with
the requirements of the Code. If in the judgment of the Plan Administrator, the operation of the Plan in any
Plan Year would result in such discrimination, then the Plan Administrator shall select and exclude from
coverage under the Plan such Participants and/or reduce such Plan Contributions and/or Benefits under
the Plan, all as shall be necessary to assure that, in the judgment of the Plan Administrator, the Plan does
not discriminate.
Maximum Overall Contributions. No Participant shall be entitled to reduce Compensation by more than the
aggregate maximum annual benefit specified in this section 3.
Forfeiture of Unused Benefits. A Participant shall receive no reimbursement for Benefit Credits which are
elected but unused during a Plan Year, for any reason.
Premium Conversion Plan
The Premium Conversion Plan included in this Flexible Benefit Plan provides tax-free reimbursement from the
Benefit Credits established by the Employer from the Participant's Compensation Reduction account for the
costs or premiums charged under the various insurance plan(s) sponsored by City of Sanger, the Employer.
Benefit Credits. There shall be credited to each Participant's Reimbursement Account those Benefit Credits
that correspond to the Participant's Compensation reduction amounts under Section 4. Such contributions
shall not exceed the amounts set forth on Schedule C attached hereto, as revised by the Employer from
time to time. The Participant's Benefit Credits shall be credited when the Participant's Compensation is
reduced, pursuant to the Compensation Reduction Agreement then in effect. The Benefit Credits shall be
allocated in accordance with the Benefits the Participant has designated pursuant to this section. The
amount of Benefits actually provided to or for the benefit of any Participant shall be a charge to the
balance of his Reimbursement Account.
Election of Benefits. Each Eligible Employee shall submit to the Employer before the close of the Enrollment
Period for each Plan Year, or at other designated times, a written statement identifying the Benefits to be
provided by the Employer to the Eligible Employee, and the portion of the Eligible Employee's anticipated
Benefit Credits for the Plan Year which may be applied to provide each Benefit. If the Participant's Benefit
Credits actually exceed the sum of amounts allocated to provide Qualified Benefits available under the
Plan, the Participant shall be deemed to have allocated such excess to the provision of additional cash
Compensation. Each election under this Section 3 may be modified by the Employer to the extent required
to enable the Plan, and payments hereunder, to satisfy the requirements of section 125 of the Code.
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Benefit Rules
Provision of Benefits. The Employer shall provide such Benefits as the Participant has elected under the
Plan, in such amounts as do not exceed the amount allocated to the provision of each such Benefit and
subject to Employee Contributions. Such Benefits shall be subject to the provisions of any plan, Summary
Plan Description, contract, or other arrangement setting forth the further terms and conditions pursuant to
which such Benefits are provided, and any condition or restriction imposed by an insurance company
providing any Benefit. To the extent the Participant has elected to receive additional cash Compensation
(or is deemed to have made such an election), such Compensation shall be paid pursuant to this Section.
No amount shall be applied to provide Benefits under this Plan if such amount would exceed the balance
of the Participant's Benefit Credits. However, the Employer, at its sole discretion, may defer and provide
such Benefits with Employer contributions which cause the Participant's Benefit Credits to equal or
exceed the amount required to provide such Benefits.
Revocation and Modification of Elections, and Change of Status.
(a) Once an Eligible Employee has elected Benefits under the Plan and the Plan Year has begun, he
may not amend or revoke his election of Benefits, unless there is a Change in Status or as may
otherwise be permitted under this Section 3. The revocation of a designation of Benefits and election
of new Benefits may be made by an Eligible Employee only if both the revocation of existing
designation of Benefits and election of new Benefits are made on account of and consistent with the
previously described Change in Status (except for coverage under COBRA as defined in Section 6, or
similar state coverage).
(b) Change in Coverage.
(1) If benefit coverage under this Plan is significantly curtailed (as determined by the Plan
Administrator in its sole discretion) or ceases during a Plan Year, the Participant may revoke
his or her election under the Plan with respect to that coverage and may prospectively elect
coverage under another plan that provides similar coverage. Coverage under a benefit plan is
deemed "significantly curtailed" only if there is an overall reduction in coverage provided to
Participants under the Plan so as to constitute reduced coverage to Participants in general.
(2) If during a Plan Year the Plan adds or eliminates a benefit, an affected Participant may elect a
newly -added benefit, or elect another benefit where a benefit option has been eliminated,
prospectively on a pre-tax basis by making corresponding election changes with respect to
cover age with respect to the benefit option providing similar coverage.
(3) A Participant may make a prospective election change that is on account of and corresponds
with a change made under the plan of the employer of the Participant's spouse, former
spouse, or Dependent's employer, if (a) the cafeteria plan or benefit plan in which the spouse,
former Spouse, or Dependent participates permits its participants to make an election change
that would be permitted under Treasury regulation Section 1A254(b) through (g); or (b) the
Participant's plan year period of coverage is different from the plan year period of coverage
under the cafeteria plan or benefit plan of the plan in which the Spouse, former Spouse or
Dependent participates.
(4) If the Participant's share of the premium increases or decreases during a Plan Year by an
insignificant amount, then the appropriate benefit elections of the Participant shall be prospec-
tively increased or decreased to reflect such change. If the Participant's share of the premium
increases significantly during a Plan Year, then the Participant may either make a
corresponding prospective increase in his or her contributions or may revoke his or her
election and in lieu thereof, receive coverage under another Plan option which provides similar
coverage. Whether an increase or decrease in cost is significant or insignificant shall be
determined by the Plan Administrator, on a reasonable and consistent basis, in accordance
with prevailing IRS guidance, and based upon all the surrounding facts and circumstances
(including, but not limited to, the dollar amount or percentage of the cost change).
(5) Where there is a judgment, decree, or order (including a qualified medical child support order
described in ERISA Section 609) ("Order") resulting from a Participant's divorce, annulment,
legal separation, or change in custody, (a) a Participant's election under an accident and
health plan may be changed to provide coverage for a Dependent who is the Participant's child
if the Order requires such coverage, and (b) coverage of the Dependent who is the
Participant's child may be revoked or changed if the Order requires someone other than the
Participant to provide such coverage.
(6) If a Participant, his spouse or Dependent who is enrolled in an accident or health plan of the
employer becomes entitled to Medicare or Medicaid (other than coverage consisting solely of
benefits under Section 1928 of the Social Security Act providing for pediatric vaccines), then
the Participant may prospectively reduce or cancel the accident or health coverage of the
person becoming entitled to Medicare or Medicaid. If a Participant, spouse or Dependent who
has been entitled to Medicare or Medicaid loses eligibility for such coverage, then the
Participant may prospectively elect to commence or increase the health or accident coverage.
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(7) If a Participant, his spouse, or Dependent becomes eligible for accident or health coverage
under COBRA (as defined herein) or similar health plan continuation coverage under state law,
then the Participant may increase his election to pay for such coverage.
(8) If a Participant, his spouse or Dependent is entitled to special enrollment rights under a group
health plan, as required by Code §9801(f) (i.e., HIPAA), then a Participant may revoke a prior
election for coverage under a group health plan and make a new election, provided that the
election corresponds with such special enrollment rights.
(9) Where the Participant takes leave under the Family and Medical Leave Act of 1993, the
provisions of Section 3 shall apply.
A Participant entitled to make a new election under this Section 3 must do so within 30 days of
the event described above. Any such election shall apply for the balance of the Plan Year in
which the election is made unless a subsequent event (described in this Section 3) occurs.
Cash Payments, Any cash to be paid to a Participant with respect to any portion of the Benefit Credits (other
than as Qualified Benefits) shall be added to his taxable Compensation and shall be paid to him during the
Plan Year subject to any applicable wage withholding or similar taxes. Such payments shall not include
interest from the date as of which the Benefit Credits were credited on the Participant's behalf to the date
of payment. No Benefit under the Plan shall be paid in any manner that defers the receipt of
Compensation beyond the last day of the Plan Year.
Forteitures. A Participant shall be entitled to carry over any unused Qualified Benefits to the succeeding
Plan Year within the limitations provided below. A participant who at the end of a plan year has unused
qualified benefits remaining in his or her account may continue to receive these benefits during the grace
period beginning on the first day of the next plan year and continuing but not beyond the fifteenth day of
the third calendar month of the immediately preceeding plan year. A participant who has unused benefits
or contributions relating to a particular qualified benefit from the immediately preceeding plan year, and
who incurs expenses for that same qualified benefit during the grace period, may be paid or reimbursed
for these expenses from the unused benefits or contributions as if the expenses had been incurred in the
immediately preceeding plan year. Any remaining unused benefit or contribution at the end of the grace
period will be forfeited.
Reimbursements. Except as otherwise provided in any plan, contract or arrangement established to provide
Benefits, reimbursement of Expenses shall be made at such time and in such amounts as shall be
determined by the Employer in accordance with Treasury Regulations 1.125-2 Q&A 7(b)(2).
Nondiscrimination. Contributions and Benefits under the Plan shall not discriminate in favor of Highly
Compensated Employees nor shall the aggregate cost of the Benefits provided to Key Employees exceed
25% of the aggregate of such cost for the Benefits provided to all Employees under the Plan. The
Employer may limit or deny any Employee's Compensation Reduction Agreement to the extent necessary
to avoid any such discrimination.
Insurance Contracts. Some or all of the Benefits provided under the Plan may, at the discretion of the
Employer, be provided by the purchase of insurance contracts issued by one or more insurance
companies, or health care service contracts issued by or provided through a health care service provider,
qualified health maintenance organization, or preferred provider organization. Any dividends, retroactive
rates, or other refunds which may become payable under any insurance or health care service contracts
or benefit programs due to actuarial error in rate calculation shall be the property of and retained by the
appropriate Participating Employer,
Benefit Costs
The cost of each Benefit shall be determined in a uniform manner according to the benefit option cost
described on Schedule A, B and C attached hereto. Such costs are subject to change, at the discretion of the
Employer, for any future Plan Year for current Participants and at any time prior to the commencement of
participation for new Participants.
Termination of Employment. If an Eligible Employee separates from service with the Employer during a
period in which he is covered under the Plan, the Employer may terminate the remaining portion of
Benefits provided by the Plan. If a terminated Employee who has revoked coverage under the Plan is
reemployed by the Employer, that said Employee shall be prohibited from making a new benefit election in
the Plan Year for which the revocation was effective. However, the reemployed Employee may receive
Benefits under the Plan in accordance with the election which was in effect prior to his termination of
employment with the Employer. A terminated Employee shall be entitled to reimbursement for claims for
Qualified Benefits incurred prior to his termination of employment, only if the Employee (or his estate)
applies for such reimbursement on or before the 90th day following date of termination, but not later than
the 90th day following the end of the Plan Year.
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Employee Contributions. To the extent a Participant does not have sufficient Benefit Credits to pay for the
Benefits selected, the Employer is authorized to withhold the additional amounts from a Participant's
Compensation from the Employer to the extent required to pay for said Benefits. Further, the Employer
may require that such withholdings be made on a post -tax basis.
Payment of Contributions While on FMLA Leave. A Participant who takes an unpaid leave of absence
under the Family and Medical Leave Act of 1993 ("FMLA Leave") and who elects to continue participation
under this Plan shall be responsible for making the required contributions under the group health
insurance plan offered under this Plan during the period of the FMLA Leave. The manner in which such
payments are made shall be determined by the Plan Administrator in its sole discretion, as previously
stated in Section 2 above.
Prepayment: The Participant may prepay the contributions due during the FMLA Leave period.
Prepayments may be made from salary, vacation pay or sick pay, to the extent permitted by
applicable law.
Uniformed Service Under USERRA. A Participant who is absent from employment with the Employer on
account of being in "uniformed service", as that term is defined by the Uniformed Services Employment
and Reemployment Rights Act of 1994 ("USERRA"), may elect to continue participation in the Plan. The
coverage period shall extend for the lesser of 24 months or until the Participant fails to apply for
reinstatement or to return to employment with the Employer. The Participant shall be responsible for
making the required contributions under the Plan, during the period during which he or she is in
"uniformed service". The manner in which such payments are made shall be determined by the Plan
Administrator. A Participant whose coverage under the group health insurance plan and/or the medical
savings account portion of the Plan is terminated on account of his or her being in "uniformed service",
and is later reinstated, shall not be subject to a new exclusion or waiting period requirement imposed by
such group health plan and/or medical savings account, provided that such requirements would not have
been imposed if coverage had not been terminated as a result of the "uniformed service".
Section IV
Contributions
Funding. The Benefits provided shall be paid by the Employee; provided, however, that the Employer's payments
under the Plan shall be limited to such amounts of Compensation as a Participant elects to forego pursuant to
a Compensation Reduction Agreement.
If any benefits of this Plan are insured by a third party insurer, those benefits will be paid by the insurer or its
nominee, such as a third party administrator.
Execution of Agreements. Approximately 30 days prior to the beginning of the Plan Year, the Administrator shall
provide a written election form, which shall include a Compensation Reduction Agreement to each Participant
and to each other Employee who is expected to become an Eligible Employee by the first day of the first Plan
Year, and all subsequent Plan Years. All Compensation Reduction Agreements entered into by Participants in
the Plan shall be executed before the close of the Enrollment Period for the Plan Year for which such
agreements will be effective or, in the case of Participants who were not eligible to participate in the Plan at the
beginning of the Plan Year, before the first day of the pay period after the Entry Date on which they become
eligible to participate in the Plan, Each Compensation Reduction Agreement shall remain effective throughout
the Plan Year unless revoked or suspended by reason of any Participant's ceasing to be an Eligible Employee.
No Compensation Reduction Agreement may be revoked by any Participant during the Plan Year for which it
is effective, except by reason of a family status change described herein. Any Participant who fails to execute
appropriate agreements during the Enrollment Period shall be deemed to have elected to maintain his prior
Plan Year's election for health options but will not be eligible for any Reimbursement Account. Any newly
Eligible Employee who fails to execute appropriate agreements during the Enrollment Period to become a
Participant shall be deemed to have elected cash Compensation to the extent permissible.
Amount of Compensation Reduction. The Compensation reduction amount shall be specified by the Eligible
Employee in the Compensation Reduction Agreement. Such Compensation reduction shall not exceed the
amount set forth on Schedule A, B and C attached hereto. The Compensation reduction amount shall be
designated on a per pay basis, as indicated.
Crediting of Compensation Reduction Amounts. All Compensation reduction amounts shall be applied to
reduce the Participant's Compensation for each pay period in as nearly equal amounts as the Employer
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deems practicable, except as the Employer shall otherwise determine. Compensation reduction amounts shall
be credited to the Participant's Benefit Credits as of the end of the pay period to which such amount is
attributable, provided, however, that no person's Compensation for any pay period shall be reduced by reason
of a Compensation Reduction Agreement, nor shall any Benefit Credits be credited by reason of such
agreement, if such person is not an Eligible Employee on the date as of which such Compensation is
otherwise payable.
Section V
Administration
Administrator. The Employer shall be the Plan Administrator for the purposes of ERISA.
For purposes of this Plan, the Employer shall serve as the Plan Administrator.
The Employer has appointed Keystone Flex Administrators, Lt_C whose address is P.O. Box 30685, Edmond,
OK 73003 and whose telephone number is 405-285A 144 as claims manager/administrator.
Named Fiduciary. The Employer shall be the named fiduciary responsible for administration of the Plan. The
Employer may, however, delegate any of its powers or duties under the Plan in writing to any person or entity.
The delegate shall become the fiduciary for only that part of the administration which has been delegated by
the Employer and any references to the Employer shall instead apply to the delegate. However, if the
employer assigns any of the Employer's responsibility to an Employee, it will not be considered a delegation of
Employer responsibility but rather how the Employer internally is assigning responsibility.
Rules of Administration. The Employer shall adopt such rules for administration of the Plan as it considers
desirable, provided they do not conflict with the Plan, and may construe the Plan, correct defects, supply
omissions and reconcile inconsistencies to the extent necessary to effectuate the Plan, and such action shall
be conclusive. Records of administration of the Plan shall be kept, and Participants and their beneficiaries may
examine records pertaining directly to themselves.
Services to the Plan. The Employer may contract for legal, actuarial, investment advisory, medical accounting,
clerical and other services to carry out the provisions of the Plan. The costs of services and other
administrative expenses shall be paid by the Employer.
Funding Policy. The Employer shall periodically at its discretion review and determine the funding policy of the
Plan, with the advice of such experts as the Employer deems appropriate.
Claims Procedure.
A. To receive benefits under the Plan, a Participant must submit written claims for benefits to the Claims
Administrator. For purposes of the claims procedure, the Employer will assign a person or a committee, to
be the Claims Administrator. The Claims Administrator will review the claim and will advise the Participant
of any Benefit to which he is entitled. If a Participant believes he has not been reimbursed in accordance
with the Plan or has not been advised of his Benefits, he may submit a written request to the Claims
Administrator to provide either an explanation of how Benefits are reimbursed or further information of his
Benefits. The Claims Administrator must respond to such a request within a reasonable time. Additionally,
the Claims Administrator will provide to every claimant, who is denied a claim for Benefits, a written notice
stating, in a format determined to be understood by the claimant,
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent plan provisions on which the denial is based;
(iii) a description of any additional material or information necessary for the claimant to perfect the claim,
and an explanation of why such material or information is necessary; and (iv) an explanation of the
claim review procedure set forth in Paragraph B. below.
Such notice will be given within 90 days after the claim is received by the Claims Administrator (or within
180 days, if special circumstances require an extension of time for processing the claim, and if written
notice of such extension and circumstances is given to such person within the initial 90 day period). If
such notification is not given within such period, the claims will be considered denied as of the last day of
such period, and such person may then request a review of his claim, as set forth in subsection B., below.
B. Within 60 days of receipt by a claimant of a notice denying a claim under Paragraph A, the claimant or his
duly authorized representative may request in writing a full and fair review of the claim by the Claims
Administrator, or by the Committee which may be appointed by the Employer for that purpose.
The Claims Administrator or Committee may extend the 60-day period where the nature of the Benefit
involved or other attendant circumstances make such extension appropriate. In connection with such review,
the claimant or his duly authorized representative may review pertinent documents and may submit issues
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and comments in writing. The Claims Administrator or committee shall make a decision promptly, and not
later than 60 days after the Claims Administrator's receipt of a request for review, unless special
circumstances (such as the need to hold a hearing, if the committee deems one necessary) require an
extension of time for processing, in which case a decision shall be rendered as soon as possible, but not
later than 120 days after receipt of a request for review. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner calculated to be understood by the
claimant, and specific references to the pertinent Plan provisions on which the decision is based. If the
decision on review is not made within such period, the claim will be considered denied.
City of Sanger permits electronic reimbursement of medical expenses through the use of a debit card or stored -
value card. Each participating employee is issued a card and certifies upon enrollment in the health FSA and
each plan year thereafter that the card will only be used for eligible medical care expenses. The employee also
certifies that any expense paid with the card has not been reimbursed and that the employee will not seek
reimbursement under any other plan covering health benefits.
If the dollar amount of the transaction at a health care provider equals the dollar amount of the standard
copayment for that service under the Plan in which the specific employee or cardholder participates, the charge
is considered to be fully substantiated without the need for submission of a receipt or further review.
The Employer/Plan Sponsor of this plan will not require sampling techniques based on transaction amounts.
The credit or debit card is usable at a merchant or service provider with a specified Merchant Code relating to
healthcare.
Automatic reimbursement, without further review, of recurring expenses that match expenses previously
approved as to the amount the provider and time period, is not provided by the plan.
If a merchant, service provider or other independent third party at the time and point of sale provides
information to verify to the Employer or Plan Sponsor that the charge is for a medical expense, the charge is not
considered to be fully substantiated without the need for submission of a receipt for further review.
Claims Appeals —Participants have a right to appeal claim payment determinations. If Participants disagree with
any claim payment determination, then said Participant must submit proof that a claim for benefits is covered
and payable under the Plan's provisions; including (a) all facts and theories supporting the claim, (b) a
statement within the referenced Plan provision. If Participant does so, it may be that some or the entire claim
will be payable under the Plan. This Plan allows for two appeals of an adverse benefit determination. Each
appeal provides full and fair review of an adverse determination in compliance with the Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations issued there under. Participant will be provided
free of charge with a complete description of the Plan's review procedures and the applicable time limits by
contacting the Claims Administrator. In summary, claimant may file an appeal within 180 days following
receipt of this notice, which must be in writing and addressed as follows: Keystone Flex Administrators, LLC,
P.O. Box 30685, Edmond, OK 73003, Attn: Claims Appeals. If participant provides the Plan with all
information needed to address the appeal, the Plan will respond to the appeal not later than 30 days after
receipt of the appeal. Participant are entitled to receive, free of charge upon request, reasonable access to,
and copies of, all documents, records and other information relevant to a claim for benefits. If Participant
receives an adverse benefit determination following the final appeal, Participant have the right to bring a civil
action under section 502(a) of ERISA,
Nondiscriminatory Operation. All rules, decisions and designations by the Employer, Claim Administrator, and
each Committee under the Plan shall be made in a nondiscriminatory manner, and persons similarly situated
shall be treated alike.
Liability of Administrative Personnel. Neither the Employer nor any of its Employees shall be liable for any loss
due to an error or omission in administration of the Plan unless the loss is due to the gross negligence or willful
misconduct of the party to be charged or is due to the failure of the party to be charged to exercise a fiduciary
responsibility with the care, skill, prudence, and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims.
-13-
THE FOLLOWING DESCRIBES HOW MEDICAL INFORMATION ABOUT PLAN
PARTICIPANTS MAY BE USED AND DISCLOSED AND HOW PLAN
PARTICIPANTS CAN GET ACCESS TO THIS INFORMATION. PLEASE REVIEW IT
CAREFULLY.
The Protected Health Information (PHI) provisions of the Health Insurance Portability and Accountability Act of
1997 (HIPAA) and its regulations ("Rules") include privacy protections impacting group handling health plan medical
or financial information that could identify an individual. Individually identifiable information is protected whether it is in
electronic, paper or oral format. The HIPAA rules give individuals control over health and financial information related
to their health care. PHI may be used only for limited purposes without consent, and in many situations only upon
individual authorization. Regarding their own PHI, participants in this Plan have the right to:
(1) object to using information;
(2) gain access to information;
(3) change information; and
(4) obtain an accounting of any information disclosures.
An underlying principle of the rules is that the "minimum necessary" disclosure should be the standard when
using or disclosing information in the normal course of treatment, payment or health plan operations.
Participants in this plan are guaranteed access to their PHI and have the right to: (1) copy and amend health
information; (2) receive an accounting of PHI uses; and (3) receive notices of health plans' information practices.
Individuals have the right to request that PHI use and disclosure be restricted even for treatment and payment
purpose.
The Plan places restrictions on the Employer's use or disclosure of PHI received from the plan or an
insurer. Insurers may determine what information will be available to the Plan.
The Plan will meet the minimum necessary uses and disclosures provisions of HIPAA for PHI. However, the minimum
necessary provisions do not apply to the following:
• Disclosures to or request by a health care provider for treatment purposes;
• Disclosures to the individual who is the subject of the information;
• Uses or disclosures made based on an authorization requested by the individual;
• Uses or disclosures required for compliance with HIPAA's transaction standards ( see 813);
• Disclosures to HHS when the rule requires the disclosure of information for enforcement purpose; and
• Uses or disclosures that are required by other laws.
Any uses or disclosures for which the covered entity has a valid authorization is exempt.
Marketing
The group health plans) and other covered entities, as defined by HIPAA, will not use or disclose PHI for
marketing purposes without the individual's authorization, except for face-to-face communications with the individual
or promotional gifts of nominal value.
Communications that are part of treatment or are about a plan's benefits,
services or operations are excluded from the definition of marketing, even if they promote the use or sale of a service
or product.
Specifically excluded from the definition of marketing communications about:
• Participating providers and health plans in a network, the services offered by a provider or the benefits
covered by a health plan;
• Treatment of the individual; and
• Case management or care coordination for the individual, or directions or recommendations for
alternative treatments, therapies, health care providers or settings of care to that individual.
This health plan is not engaging in marketing when it advises enrollees about other available health
coverage that could enhance or substitute for existing health coverage. For example, if a child is about to age out of
coverage under a family policy, the plan may send the family information about continuation coverage for the child.
This exception does not extend to excepted benefits under HIPAA, such as accident -only policies or auto medical
liability, nor to other lines of insurance.
It is not marketing for this plan to communicate about health -related products and services available only to
pIan enrollees or members that add value to but are not part of a plan of benefits. To qualify for this exclusion, the
communication must meet two conditions:
(1) It must be health -related. For example, offers of discounts for eyeglasses may be considered part of
plan benefits. This exclusion appears to included wellness programs that offer incentives to adopt
healthy lifestyle behaviors.
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(2) It must offer an added value of plan membership and not merely be a pass -through of a discount or item
available to the public at large.
For marketing activities permitted by an authorization, if there is remuneration, the marketing material must state that
the entity making the communication is being paid by another entity.
Underwriting
An insurer that receives protected group health plan information for underwriting, premium rating and other
similar purpose — and that coverage is not placed with the insurer- cannot use or disclose the information for any
purpose other than as required by law.
Verification
In any disclosure other than those allowing the individual to agree or object, verifying the identity of anyone
requesting PHI who is not known to the health plan or other covered entity must first occur.
If disclosure is conditional on documentation or statements from the person seeking PHI, that documentation
or statement must be obtained before the PHI can be disclosed.
Section VI
Continuation Of Coverage
In General. The following provisions shall apply to Benefits provided to Eligible Employees and their dependents
under the Plan, but only to the extent that the Benefits selected pertain to health care and medical coverage.
This coverage shall be continued pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (P.L. 99-272) Title X (COBRA).
Continuation of Coverage. To the extent required by Section 6 above, a qualified beneficiary who would lose
coverage under this Plan as a result of a qualifying event is entitled to elect continuation coverage within the
election period under this Plan. Coverage provided under this provision is on a contributory basis. No evidence
of good health will be required.
Except as otherwise specified in an election, any election by a qualified beneficiary who is a covered employee
or spouse of the covered employee will be deemed to include an election for continuation coverage under this
provision on behalf of any other qualified beneficiary who would lose coverage by reason of a qualifying event.
If this Plan provides a choice among the types of coverage under this Plan, each qualified beneficiary is
entitled to make a separate selection among such types of coverage (i.e. single, family,
Participant in this Plan has all the benefits and requirements of COBRA previously stated except for:
Participant in this Plan may receive all the benefits and requirements of COBRA previously stated except for
Cessation of Participation in this Flexible Benefit Plan with regards to benefits remaining at time of Qualifying
Event. The Participant's participation will cease at the end of the Plan Year during which the Qualifying Event
occurs.
Notwithstanding the above provisions, a Participant will cease to be a Participant on the last day of the plan
year in which a qualifying event occurs.
However, if the Participant has any unused benefits remaining at the termination of participation, the
participant will be allowed to claim those benefits for in accordance with Forfeiture of Section III, Benefits,
above.
Type of Coverage. Continuation coverage under this provision is coverage which is identical to the coverage
provided under this Plan to similarly situated beneficiaries under this Plan with respect to whom a qualifying
event has not occurred as of the time coverage is being provided. If coverage under this Plan is modified for
any group of similarly situated beneficiaries, the coverage shall also be modified in the same manner for all
qualified beneficiaries under this Plan in connection with such group.
Coverage Period. The coverage under this provision will extend for at least the period beginning on the date of a
qualifying event and ending not earlier than the earliest of the following:
A.
in the case of a terminated Employee (except for gross misconduct) or a covered Employee whose hours
have been reduced, except as provided in B. and C. below, and his covered dependents, the date which
is 18 months after the qualifying event;
-15-
Be in the case of a qualified beneficiary disabled during the first 60 days following the covered Employee's
termination (except for gross misconduct) the date which is 29 months after the qualifying event, provided
the qualified beneficiary provides the Plan Administrator with notice of Social Security disability
determination within 60 days of the disability determination and within 18 months of the qualifying event;
CO in the case of a qualifying event which occurs during the 18-months after the date that a covered
Employee is terminated (except for gross misconduct) or the date that a covered Employee's hours are
reduced, for the covered dependents, the date which is 36 months after the date that a covered Employee
is terminated (except for gross misconduct), or the date that a covered Employee's hours are reduced;
(1) for plan years commencing on or prior to June 30, 1997, in the case of a termination (except for
gross misconduct) or reduction in hours of a covered Employee and that Employee's subsequent
entitlement to Medicare while continuation coverage is in force for the qualified beneficiary, the date
which is 36 months after the date of the covered Employee's entitlement to Medicare;
(2) for plan years commencing after June 30, 1997, in the case of a termination (except for gross
misconduct) or reduction in hours of a covered employee that occurs less than 18 months before the
covered employee becomes subject to Medicare, the date which is the close of the 36 month period
beginning on the date the covered employee became entitled to Medicare.
E. in the case of any qualifying event except as described in A., Be, C. and D. above, the date which is 36
months after the date of the qualifying event;
F. the date on which the Employer or a Participating Employer, if any, ceases to provide any group health
plan to any Employee;
G. the date on which the qualified beneficiary fails to make timely payment of the required contribution
pursuant to this provision;
H. the date on which the qualified beneficiary first becomes, after the date of the election, covered under any
other group health plan as an employee or dependent, or otherwise becomes entitled to benefits under
Title XVIII of the Social Security Act (Medicare). However, if the other group health plan has a preexisting
condition limitation, coverage under the Plan will not cease while such preexisting condition limitation
under the other group plan remains in effect (taking into account, for plan years commencing after June
30, 1997, prior creditable coverage under the portability rules of the Health Insurance Portability and
Accountability Act of 1996). In no event will coverage continue longer than the coverage period as set
forth in this Section 6.4.
Contribution.
A. A qualified beneficiary shall only be entitled to continuation coverage provided such qualified beneficiary
pays the applicable premium required by the Employer or a participating Employer in full and in advance,
except as provided in Be below. Such premium shall not exceed the requirements of applicable federal
law. A qualified beneficiary may elect to pay such premium in monthly installments.
Be Except as provided in C. below, the payment of any premium shall be considered to be timely if made
within 30 days after the date due, or within such longer period of time as applies to or under this Plan.
C. Notwithstanding A. and Be above, if an election is made after a qualifying event during the election period,
this Plan will permit payment of the required premium for continuation coverage during the period
preceding the election to be made within 45 days of the date of the election.
Notification by Qualified Beneficiary. Each covered Employee or qualified beneficiary must notify the Employer
or a participating Employer of the occurrence of a divorce or legal separation of the covered Employee from
such covered Employee's spouse, and/or the covered Employee's dependent child ceasing to be a dependent
child under the terms of this Plan within 60 days after the date of such occurrence. This 60-day time limit shall
only apply to those occurrences as described in this paragraph, which occurs after the date of the enactment
of the Tax Reform Act of 1986.
Notification to Qualified Beneficiary. The Employer or a participating Employer shall provide written notice to
each covered Employee and spouse of such covered employee of his/her right to continuation coverage under
this provision as required by federal law.
The Employer or a Participating Employer shall notify any qualified beneficiary of the right to elect continuation
coverage under this provision as required by federal law. If the qualifying event is the divorce or legal
separation of the covered Employee from the covered Employee's spouse or a dependent child ceasing to be
a dependent child under the terms of this Plan, City of Sanger shall only be required to notify a qualified
beneficiary of his/her right to elect continuation coverage if the covered Employee or the qualified beneficiary
notifies City of Sanger of such qualifying event occurring after the date of the enactment of the Tax Reform Act
of 1986 within 60 days after the date of such qualifying event.
Notification of the requirements of this provision to the spouse of a covered Employee shall be treated as
notification to all other qualified beneficiaries residing with such spouse at the time notification is made.
Definitions. The italicized terms used in the text of this Section 6 are defined as follows:
"Dependents" means an individual who meets the definition of dependent under the Participating Employer
provided health plan covering the Eligible Employee. For the purposes of the Medical Reimbursement
-16-
Plan, if any, dependents will also include individuals who are dependents within the meaning of section
152(a) of the Code, and as defined in section 1 hereof.
No person shall be considered a dependent of more than one Employee. If both an Employee and an
Employee's spouse are employed by the Employer or a participating Employer, then their dependent
children may be covered by either spouse, but not by both.
"Election Period" means the 60-day period during which a qualified beneficiary who would lose coverage as
a result of a qualifying event may elect continuation coverage. This 60-day period begins not later than the
date of termination of coverage as a result of a qualifying event and ends not earlier than 60 days after the
later of such date of termination of coverage or the receipt of notice of the right to elect continuation
coverage under this Plan.
"Full -Time Student" means a dependent child who is enrolled in, regularly attends and is recognized by the
Registrar of an accredited secondary school, college or university, institution for the training of registered
nurses (R.N.), or any other accredited or licensed school for the minimum number of credit hours required
by that institution in order to maintain Full -Time Student status.
"Medicare" means the Health Insurance for the Aged and Disabled Act, Title XVIII of Public Law 89-97, Social
Security, as amended.
"Qualified Beneficiary" means an individual who, on the day before the qualifying event for a covered
Employee, is a beneficiary under this Plan as the dependent (as defined in Section 1 hereof) of the
covered Employee. In the case of the termination of a covered Employee (except by reason of such
covered Employee's gross misconduct) or the reduction in hours of the covered Employee's employment,
the term "qualified beneficiary" includes the covered Employee. Effective January 1, 1997, a child who is
born to (or placed for adoption with) a Qualified Beneficiary who is a covered Employee during the
Coverage Period shall also be a Qualified Beneficiary.
Exception -the term qualified beneficiary does not include an individual whose status as a covered Employee
is attributable to a period in which such individual is a nonresident alien who received no earned income
from the employer which constituted income from sources within the United States (within the meaning of
Code section 911(d)(2) and section 861(a)(3)). If an individual is not a qualified beneficiary pursuant to
this paragraph, a spouse or dependent child of such individual shall not be considered a qualified
beneficiary by virtue of the relationship to such individual.
"Qualifying Event" means with respect to a covered Employee, any of the following events which, but for the
continuation coverage under this provision, would result in the loss of coverage of a qualified beneficiary:
(i) the death of the covered Employee;
(ii) the termination (except by reason of such covered Employee's gross misconduct) or reduction in hours
of the covered employee's employment;
(iii) divorce or legal separation of the covered Employee from such covered Employee's spouse, as herein
defined.
(iv) the covered Employee becoming entitled to benefits under Title XVIII of the Social Security Act
(Medicare);
(v) a dependent child who ceases to be a dependent child under the terms of this Plan.
(vi) the Company's filing for Chapter 11 reorganization, as it would affect retiree coverage.
"University/College" means an accredited institution listed in the current publication of accredited institutions
of higher education.
Section VII
Miscellaneous
Amendment and Termination. The Employer or its authorized representative may amend or terminate this Plan at
any time by action of the Board. The Employer may amend this Plan retroactively to enable the Plan to qualify
as a cafeteria plan under section 125 of the Code. No amendment shall deprive any Participant or beneficiary
of any Benefit to which he or she is entitled under this Plan with respect to contributions previously made, and
no amendment shall provide for the use of funds or assets other than for the benefit of Employees and their
beneficiaries, except as may be specifically authorized by statute or regulation.
It is the intention of the Employer that should a termination of the Plan or the amendment of this Plan deprive
any Participant of a Benefit Credit that exists upon such termination or amendment, that the value of the
accounts of the Participant's existing upon that date would be paid to the Participant in full.
-17-
Effect of Plan on Employment. The Plan shall not be deemed to constitute a contract of employment between the
Participating Employer and any Participant or to be a consideration or an inducement for the employment of
any Participant or Employee. Nothing contained in this Plan shall be deemed to give any Participant or
Employee the right to be retained in the service of the Participating Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time regardless of the effect which such discharge
will have upon him or her as a Participant of this Plan.
Alienation of Benefits. No Benefit under this Plan may be voluntarily or involuntarily assigned or alienated.
Facility of Payment. If the Employer deems any person incapable of receiving Benefit to which he is entitled by
reason of not having reached the age of majority, illness, infirmity, or other incapacity, it may direct that
payment be made directly for the benefit of such person or to any person selected by the Employer to disburse
it, whose receipt shall be a complete release of the Employer and shall be deemed full payment of the Benefit.
Such payments shall, to the extent thereof, discharge all liability of the Employer.
Proof of Claim. As a condition of receiving Benefits under the Plan, any person may be required to submit
whatever proof the Employer may require either directly to the Employer or to any person delegated by it.
Status of Benefits. The Employer believes that this Plan is in compliance with section 125 of the Code and that it
provides certain Benefits to Employees which are tax free pursuant to other provisions of the Code. This Plan
has not been submitted to the Internal Revenue Service for approval, and thus there can be and is no
assurance that intended tax benefits will be available. Any Participant, by accepting Benefits under this Plan,
agrees to be liable for any tax plus interest that may be imposed with respect to those Benefits.
Agent for Service of Legal Process: The Employer named on Page 1 is the Agent for Service of Legal Process.
The Plan Administrator, City of Sanger may also be an agent for service of legal process.
Applicable Law. The Plan shall be construed and enforced according to the laws of the State of Oklahoma to the
extent not pre-empted by any federal law.
Lost Distributees. Any Benefit payable hereunder shall be deemed forfeited if the Employer is unable to locate the
Participant to whom payment is due, provided, however that such Benefit shall be reinstated if a claim is made
by the Participant for the forfeited Benefit.
Source of Payments. The Employer and any insurance company contracts purchased or held by the Employer
shall be the sole sources of Benefits under the Plan. No Employee or beneficiary shall have any right to, or
interest in, any assets of the Employer upon termination of employment or otherwise, except as provided from
time to time under the Plan, and then only to the extent of the Benefits payable under the Plan to such
Employee or beneficiary.
Severability. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision, and this Plan shall be construed and enforced as if such provision had not
been included.
Heirs and Assigns. This Plan shall be binding upon the heirs, executors, administrators, successors and assigns
of all parties, including each Participant and beneficiary.
Headings and Captions. The headings and captions set forth in the Plan are provided for convenience only, shall
not be considered part of the Plan, and shall not be employed in construction of the Plan.
Tax Effects. Neither the Employer nor the Claims Administrator makes any warranty or other representation as to
whether or not payments received by a Participant under the Plan will be treated as includible in gross income
for federal or state income tax purposes.
Multiple Functions. Any person or a group of persons may serve in more than one fiduciary capacity with respect
to the Plan.
Gender and Form. Unless the context clearly indicates otherwise, pronouns shall be interpreted so that the
masculine pronoun shall include the feminine, and the singular shall include the plural.
No Reversion to Employer. At no time shall any part of Plan assets be used for, or diverted to purposes other
than for the exclusive benefit of Plan participants or their beneficiaries, or for defraying reasonable expenses of
administering the Plan.
-18-
Prior Year Claims. Claims can be submitted up to 90 days past the end of the Plan year. Claims can be incurred
up to 2-1/2 months after the end of the Plan Year (Grace Period Ruling Applies.).
Flexible Benefit Plan Document
Attest: City of Sanger
e
Executed this Date:_ r I /
By:
Secretary) _
Authorized Officer)
a ;:'r
�f(tldlaQ4,p�.
-19-
City of Sanger Section 125 Cafeteria Plan
Plan Document
Schedule A
Section VIII
Schedules Of Benefits
City of Sanger Medical Reimbursement Account
Eligible Medical Expenses:
Medical Expenses, Dental Expenses, Vision Expenses, Eligible OTC Expenses
Employee Annual Contribution Limitations*
Pay Period for Annual Payroll Contributions: Semi -Monthly
Annual Minimum Annual Maximum
City of Sanger Medical Reimbursement Account
*Employee designated salary reduction and allocation subject to the limitations set forth.
**Employer contributions may be used as indicated in the Funding paragraph of Section 4. In no event may
the Employer Contribution and the Employee Contribution together exceed the Employee
Contribution Limitation above.
**The Employee contributions necessary to obtain the coverage's set forth in this Schedule A above will be
communicated by the Employer to Eligible Employees upon commencement of participation and to
Participants at the time of the Enrollment Period, as included in the Summary Plan Description of
the Benefit. The Employee contribution required to obtain coverage under any of the above will be
the maximum elected contributions required for coverage under such options.
**Minimum to be determined by Plan Administrator.
**Effective with Healthcare Reform beginning January 1, 2013, Plan Maximum=$2,500.00/year.
-20-
City of Sanger Section 125 Cafeteria Plan
Plan Document
Schedule B
Dependent Care Reimbursement Account
Employee Annual Contribution Limitations*
Pay Period for Annual Payroll Contributions: Semi -Monthly
Annual Minimum Annual Maximum
City of Sanger Dependent Care Reimbursement Account
$60.00* $ 5,000000**
* Minimum Contribution as determined by the Employer.
** Maximum Contribution according to Internal Revenue Code Section 129 is $5,000 for a married couple filing
a joint federal income tax report, or $ 2,500 for a married employee filing separately.
** Employer contributions may be used as indicated in the Funding paragraph of Section IV. In no event
may the Employer Contribution and the Employee Contribution together exceed the Employee
Contribution Limitation above.
** The Employee contributions necessary to obtain the coverage set forth in this Schedule B will be commu-
nicated by the Employer to Eligible Employees upon commencement of participation and to Participants at
the time of the Enrollment Period, as included in the Summary Plan Description of the Benefit. The
Employee contribution required to obtain coverage under any of the above will be the maximum elected
contributions required for coverage under such options.
** Minimum to be determined by Plan Administrator and/maximums by allowed maximums.
City of Sanger Section 125 Cafeteria Plan
Plan Document
Schedule C
Premium Conversion Plan Reimbursement Account Annual Contributions
Schedule Of Benefits
Benefit Programs* **Coverage Tiers Employee Contributions***
Health Insurance Plan
Dental Plan
Employee Only ***
Employee & Spouse ***
Employee & Child(ren) ***
Employee & Family ***
Employee Only ***
Employee & Spouse ***
Employee & Child(ren) ***
Employee & Family *`*
The Employee contributions necessary to obtain the coverage options set forth in this Schedule C will
be communicated by the Employer to Eligible Employees upon commencement of participation and to
Participants at the time of the Enrollment Period. The necessary form is called "Flexible Benefit Plan
Enrollment Form & Salary Reduction Agreement."
Participation in this Plan is conditioned upon the participant completing the Flexible Benefit Plan
Enrollment Form &Salary Reduction Agreement provided to each Participant at the time of your
enrollment.
** Benefit Programs. These programs have an Employee cost for which the Premium Conversion Plan
applies.
*** Employee Contributions: Amounts employees contribute towards their health and dental plans
are stated on their "Flexible Benefit Plan Enrollment Forms" and could change at each renewal
of their plans. NOTE: There may be other premiums that employees elect on a pre-tax or post -
tax basis and are not necessarily listed here individually by premium name, etc.
List any Affiliated Employer who has adopted this Plan with name, address and phone numbers.
There are no other Employers affiliated with this plan.
-22-
Document Plan Set Report
Employer Information
Employer Name City of Sanger
Employer Address P.O. Box 1729
City, State, Zip Sanger, TX 76266
Employer Phone (940)458-7930
Employer EIN 75-60006615
Single Employer? Yes
Additional Employers No
Controlled Group? No
Employer Funding? Yes
Administration
State Law Oklahoma
Plan Records are kept per Plan Year
Taxable Wage Base $90,000
Domestic Partnerships Allowed? No
Plan Administrator
Is Employer?
Name
Address
City, State, Zip
Phone
Yes
City of Sanger
Same as employer
Same as employer
Same as employer
Third Party Administrator Yes
Name Keystone Flex Administrators, LLC
Address P.O. Box 30685
City, State, Zip Edmond, OK 73003
Phone 405-285-1144
Provides Services? Yes
Claim Administration? Yes
Plan Dates
Effective Date
First Plan Year Begins
First Plan Year Ends
First Year Is a Short Year?
Second Plan Year Begins
Plan Is a Restatement?
Old Name
Old Effective Date
10/01 /2012
10/01 /2012
09/30/2013
No
10/01 /2013
City of Sanger
Claims Administrator
Is Employer? No
Name Keystone Flex Administrators, LLC
Address P.O. Box 30685
City, State, Zip Edmond, OK 73003
Phone 405-285-1144
Yes
City of Sanger Section 125 Cafeteria Plan
10/01 /2012
Type of Document Set Unified
Flexible Benefit Plan
Name City of Sanger
Description City of Sanger Section 125 Cafeteria Plan
Plan Number 501
Medical Reimbursement Plan (1) Yes
Name City of Sanger Medical Reimbursement Account
Plan Number 501
Limit to Contribution? Yes
Annual Minimum $60.00
Annual Maximum $21500.00*
"Effective with Heathcare Reform beginning 1/1/2013, Mandated Plan Maximum= $2,500.00/year.
Medical Expenses Medical Expenses, Dental Expenses, Vision Expenses, Eligible OTC Expenses
Medical Reimbursement Plan (2) No
Name No
Plan Number No
Limit to Contribution? No
Annual Minimum No
Annual Maximum No
Dependent Care Reimbursement Plan Yes
Name City of Sanger Dependent Care Reimbursement Account
Plan Number 501
Limit to Contribution? Yes
Annual Minimum $60.00
Annual Maximum $5,000400
Premium Conversion Plan Yes
Name City of Sanger Premium Conversion Plan
Plan Number 501
Adoption Assistance Plan No
Plan Number No
Normal Child Benefit No
Special Child Benefit No
Benefit Period No
By Reimbursement to Employer? No
By Payment Direct to Provider? No
Employee must pay percentage? No
Percentage No
Educational Assistance Plan No
Plan Number No
Seminars Covered? No
Equipment Covered? No
Maximum Benefit No
Transportation Assistance Plan No
Plan Number No
Limit to Contribution? No
Annual Minimum No
Annual Maximum No
Employer Contribution? No
Amount No
Parking Account? No
Annual Minimum Contribution No
Annual Maximum Contribution No
Employer Contribution? No
Amount No
Vouchers? No
Employer Contributions? No
Voucher Types:
Transit Passes? No
Van Pool Passes? No
Single Transit? No
Multiple Transits? No
Voucher Distribution:
With initial application then by mail No
After initial app then monthly by mail No
Human Resources Dept. in person No
Other No
Health Reimbursement Arrangement No
Plan Number No
Retired Employees are Eligible? No
End Of Year? No
Continuous with 125 Plan? No
Retired Employees are Eligible? No
End Of Year? No
Continuous with 125 Plan? No
Short Plan Year Funding No
Amount No
How Determined No
FSA and HRA Funding Order No
COBRA Continuation No
Healthcare Savings Account No
Legal Name of Employer No
Name of HSA Plan No
Effective Date No
HDHP Health Plan No
Effective Date No
Employer Contributions? No
Frequency of Claim Payments Frequency for Pay Period Allowable Frequency of
Contributions Claim Requests
Weekly? No
Bi-Weekly? No Weekly? No Weekly? No
Monthly? No Bi-Weekly? No BkWeekly? No
Other? Daily Monthly? No Monthly? No
Debit Cards? Yes Semi -Monthly Yes Other? Daily
Other? No
Eligibil
All Employees are eligiblE
Part Time employees?
Length of Employment?
Under a certain age?
Contract Employees?
Other?
Entry Date
No
eligible if working more than 40 hrs/week
eligible
eligible
eligible
No
First of the Month? No
Next Enrollment Date? No
Plan Anniversary? No
Next Pay Period? No
Other Entry Date? 15t Day of Month following 30 days after
hire.
Enrollment
FMLA
Prepayment?
Pay -As -You -Go?
Yes
No
Catch -Up? No
Plan Year Anniversary Only? No
Plan Year and Mid Year Only? No
Upon becoming Eligible Only? No
Month Prior to Plan Anniversary? Yes
Upon becoming Eligible? Yes
Plan Anniversary and Fifth Month? No
Other Enrollment Period? No
Entry Dates
Upon placement of adoption? No
Annual Election Date? No
First Pay Period after Election Date? No
April 8, 2013
City of Sanger
Attn: Cheryl Price
P.O. Box 1729
Sanger, TX 76266
RE: Section 125 Flexible Spending Account
Plan Document/Summary Plan Description
Cheryl,
Attached are your Section 125 Flexible Spending Account Plan Document and Summary
Plan Description. The Plan Document is the "Employer Copy" and should be kept in your
office. A copy of the SPD (Summary Plan Description) needs to be made available to
each employee that participates in your Flex plan (this can be via your "Intranet site").
These documents can also be sent via &Mail to you or you can physically give a copy to
each employee if you'd rather. These documents have been updated with the required
Healthcare Reform wording, etc.
An officer of the company needs to sign both pages indicated of the Plan Document
(Page 18) and also the Corporate Resolution. Please return a copy of these 2 pages only
to us via fax or mail.
Thank you for the opportunity to continue to serve you and your employees with this
valuable benefit!
If you have any questions about the attached, feel free to give me a call.
Regards,
President/CEO
"Operatir�,g a/ /he pinr�ac% of exce/%rice "