HomeMy WebLinkAboutR-2004-143 American Family Life Assurance Company (AFLAC) AgreementRESOLUTION NO. R-2004-143
A RESOLUTION authorizing and directing the City Manager to execute an agreement
and all other necessary and appropriate documents with American
Family Life Assurance Company (AFLAC) for assistance with the
establishment and maintenance of a flexible spending account
program for eligible city employees; and authorizing the City
Manager to take all necessary and appropriate actions to establish
and maintain a Flexible Benefits Plan.
WHEREAS, Section 125 and other provisions of the Internal Revenue Code
allows for the creation of a spending plan or "Flexible Benefits Plan" whereby an
employee is able to set aside a portion of his or her salary on a pre-tax basis to be placed
in an account to be used to pay for eligible expenses (i.e., certain health-related and
dependent care expenses); and
WHEREAS, a Section 125 plan for the City of Yakima as contemplated by Section
125 of the Internal Revenue Code has previously been authorized and adopted by the
City Council pursuant to Yakima Municipal Code 2.20.150; and
WHEREAS, the City of Yakima ("City") wishes to adopt a cafeteria plan within
the context of Section 125 of the Internal Revenue Code for the benefit of the employer's
eligible employees; and
WHEREAS, AFLAC is willing to assist the City of Yakima with the establishment
and administration of a Flexible Benefits Plan for the City's eligible employees in
accordance with terms and conditions similar to the attached reimbursement services
agreement; and
WHEREAS, it is desirable to authorize creation of a Flexible Benefits Plan and to
enter into an agreement with AFLAC for assistance with the establishment and
administration of the Flexible Benefits Plan; and
WHEREAS, YMC 2.20.150B provides that the Section 125 spending plan shall be
on file in the office of human resources and may be further amended by the City
Manager with respect to its amounts of contribution and services; provided, that such
amendments are made in written form and filed with the original plan; and
WHEREAS, it is the intent of the City's plan that eligible employees may
participate, which does not include temporary employees and anyone not eligible under
the City's health care plan, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
1. The City Manager of the City of Yakima is hereby authorized to take all
necessary and appropriate actions to establish a Flexible Benefits Plan for eligible
(1k)res/flexible benefits plan.hh
employees as defined by YMC 2.20.150 that shall be the same as or similar to the
attached "Flexible Benefits Plan" and "Flexible Benefits Plan Summary Plan
Description", to be effective January 1, 2005.
2. The City Manager of the City of Yakima is hereby authorized and
directed to execute all necessary and appropriate documents, including a
reimbursement services agreement the same as or similar to the attached
"Reimbursement Services Agreement", between the City and AFLAC for assistance with
the establishment and administration of a Flexible Benefits Plan.
3. The City Manager of the City of Yakima is hereby authorized to and,
without a further resolution, may execute any documents or amendments which may be
necessary or appropriate to adopt, amend, or maintain the plan, or to maintain its
compliance with applicable federal, state and local law.
ATTEST:
ADOPTED BY THE CITY COUNCIL this day of September 2004.
,23
City Clerk
(Ik)res/flexible benefits plan hh
Paul P. George, Mayor
REIMBURSEMENT SERVICES AGREEMENT
This Agreement, effective upon execution for the Plan Year, by and between City of Yakima and American Family Life Assurance
Company ("AFLAC®")
WITNESSETH:
WHEREAS, the Employer has adopted a Medical Care Expense Reimbursement ("URM") Plan and/or a Dependent Care
Expense Reimbursement ("DDC") Plan for its Employees in conjunction with its Flexible Benefits Plan (collectively referred to
as the "Plan" and attached hereto) to be adopted and administered in accordance with Sections 105, 125, and 129 of the
Internal Revenue Code of 1986, as amended (the "Code"), and
WHEREAS, the Employer will serve as the Pian Administrator; and
WHEREAS, the Employer desires that AFLAC, as its agent, furnish reimbursement services within a framework of policies,
interpretations, rules, practices and procedures (the "reimbursement practices and procedures") made and established by the
Employer in. (i) receiving and processing requests for benefits under the Plan ("Requests") and (ii) disbursing benefit
payments from Employer funds (as provided for in Section II.A.) for eligible expenses under the flexible spending account
provisions of the Plan, (if Self -Pay Option is selected in Section II.A. below, AFLAC shall convey its initial benefit
determinations to Employer so the Employer can disburse reimbursement payments for eligible expenses under the Flexible
Spending Agreement provisions of the Plan); and
WHEREAS, the Employer is to pay all plan benefits owed or established under the Plan to its Participants, and AFLAC is to
provide the agreed upon services to the Plan without assuming any such liability;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed as follows.
Section 1. Enrollment and Determination of Eligibility
A. The Employer shall:
(1) be responsible for interpreting the Plan and its provisions, its terms, conditions and operation, and
(2) notify Plan Participants of their ability to apply for reimbursement benefits and supply them with Request forms (to be
provided by AFLAC) and Request filing instructions, and
(3)
provide AFLAC with the names, addresses, Social Security Numbers, and elected amounts of all participants in the
Plan, and
(4) upon the occurrence of events that would change a Participant's status under the Plan (e.g. termination, Change in
Status, Change in Cost or Coverage for DDC, etc.) immediately provide AFLAC with updates (via Telefax) which
identify eligible Participants in each of the respective reimbursement Plans and/or the amount of reimbursement
benefits for which they are eligible, and
(5)
immediately inform AFLAC (via Telefax) as to any new Participants in either of the reimbursement Plans, any
Change in Status affecting a Participant's election, or any Qualified Beneficiary electing coverage under COBRA and
the amount of such election (if COBRA applies to the Employer), or of any other change which will affect AFLAC's
responsibilities hereunder
B In determining any person's right to benefits under the Plan, AFLAC shall rely on the eligibility information furnished by the
Employer, and any signed statements by Participants regarding the eligibility of their Requests under the respective Plan. It is
mutually understood that the effective performance of this Agreement by AFLAC will require that it be advised on a timely
basis by the Employer during the continuance of this Agreement of the identity of individuals eligible for benefits under each of
the respective reimbursement Plans. Information modifying a Participant's eligibility or status/election under either
reimbursement Plan shall identify the effective date of eligibility and the termination date of eligibility and shall be provided to
AFLAC (via Telefax) prior to the effective date of such modification in order to be considered by AFLAC in making benefit
determinations hereunder AFLAC shall not be responsible for Requests paid in error where the Employer has failed to inform
AFLAC (in a form and with such information as may reasonably be required by AFLAC) of a Participant's eligibility or status
change prior to the release of the benefit payment.
Section II. Funding and Payment of Requests for the Plan Benefits
A. Select one below.
j$ Daily Processing Option. The Employer shall.
(i) make sufficient funds available from its general assets for amounts allocable to eligible reimbursement benefits
under its plan by depositing a "Maintenance Deposit" (in amounts specified by AFLAC from time to time) in an
Employer -owned and named account (the "Account") in a financial institution selected by the Employer and
1 RSA(v111403) - CUSTOM
AFLAC to facilitate the timely processing of Requests under the Plan. [Note the Account should not be opened
in the Plan's name], and
(ii) grant AFLAC withdrawal authority over the Account sufficient to enable it to pay benefits under the Employer's
FSA Plans, and
(iii) deposit additional funds (at the request of AFLAC) in order to reestablish the Maintenance Deposit at the end of
each Request processing cycle (or such earlier time specified by AFLAC), and
(iv) telefax copies of all deposit verification receipts, Account Statements, and other correspondence relating to the
Account to AFLAC upon receipt of such correspondence from the financial institution; and
(v) during the term of this Agreement, the Employer shall not withdraw funds from the Account; except at the request
of, or to the extent approved by AFLAC The Employer bears sole responsibility for any fees imposed with
respect to the Account by the financial institution, including but not limited to Account maintenance fees,
insufficient funds fees, fees with respect to voided checks, etc.; and
(vi) authorize AFLAC to access the Account by-
❑ entering into a Withdrawal Agreement with CB&T, or
❑ if a Financial Institution other than CB&T is designated below, the Employer hereby authorizes AFLAC to.
a) draw benefit checks directly on the Account; b) electronically transfer benefit payments from the
Account; c) electronically access Account information, and d) execute the financial institution's standard
Deposit/Account Agreement on the Employer's behalf (subject to the terms and conditions set forth herein
and as AFLAC may otherwise establish) Name, address and contact person at other financial institution.
❑ Standard Option The Employer shall
(i)
make sufficient funds available from its general assets to reimburse AFLAC for amounts allocable to eligible
reimbursement benefits under its Plan; and
(ii) provide an amount equal to the aggregate amount of all Requests payable under the Employer's Plan and
facilitate an electronic transfer of the amount to AFLAC or submit, by first class mail, a check drawn on
Employer's account and payable to AFLAC/FLEX ONE® within three (3) business days of receipt of a request for
such funds from AFLAC for which there are eligible outstanding Requests (pursuant to the terms of the Plan)
AFLAC will not be responsible for paying claims to the extent sufficient funds are not provided to AFLAC within 30
days of the receipt of the request for such funds from AFLAC, and Employer must utilize the Self -Pay Option
described below with respect to such unfunded claims. The Employer agrees to indemnify AFLAC for all amounts
and expenses resulting from the Employer's failure to provide sufficient funds and shall hold AFLAC, its officers and
directors, harmless for any liability for which Employer may become liable
❑ Self -Pay Option. The Employer shall.
(1)
make sufficient funds available from its general assets for amounts allocable to eligible reimbursement benefits
under its Plan, and
(ii) review AFLAC's initial reimbursement determinations and issue reimbursement checks from its general assets
within seven days of the receipt thereof for those Requests which are reimbursable pursuant to the terms of its
Plan; and
(iii) upon request, provide AFLAC with proof of timely benefit check disbursements in a form and manner deemed
acceptable by AFLAC (e.g., bank issued account statements or check register).
If, at any time, the amount of reimbursement benefits payable under the applicable Plan provisions exceeds the
amount deposited by the Employer in the Account, the Employer shall transfer an amount necessary to the Account
to fulfill its reimbursement obligations under the applicable Plan before any further reimbursement benefit payment is
made. AFLAC is under no obligation to advance funds on behalf of the Employer.
B AFLAC, as agent for the Employer, shall provide those services described in Appendix A (attached hereto).
Upon written request submitted to AFLAC's FLEX ONE® Department, AFLAC may provide limited assistance with certain of
the nondiscrimination tests The terms and conditions (including applicable fees) under which such services are provided are
set forth in Appendix B "Nondiscrimination Testing Services"
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In providing services, AFLAC shall assume that ERISA and COBRA apply to the Employer's Plan unless the Employer gives
AFLAC written direction otherwise.
C AFLAC shall not be obligated or responsible for any duty with regard to the administration of the Plan (imposed by the Plan or
otherwise) except as specifically provided above or in the attached appendices Without limiting Employer's responsibilities
described therein, it shall be the Employer's sole responsibility (as Plan Administrator) and duty to ensure compliance with
COBRA; perform required nondiscrimination testing, amend the Plan as necessary to ensure ongoing compliance with
applicable law; file any required tax or governmental returns (including Form 5500 returns to meet ERISA requirements)
relating to the Plan, determine if and when a valid election change has occurred, handle Participant claim appeals, allow
AFLAC, by and through independent associates, a reasonable opportunity to discuss AFLAC, URM, and DDC benefits,
execute and retain required Plan and claims documentation, and take all other steps necessary to maintain and operate the
Plan in compliance with applicable provisions of the Plan, ERISA, the Code and other applicable federal and state laws.
D In the event that AFLAC overpays any person entitled to benefits under the Plan or pays benefits to any person who is not
entitled to them, AFLAC shall take all reasonable steps to recover the overpayment, except that AFLAC shall not be required
to initiate court proceedings to recover an overpayment. AFLAC shall promptly notify the Employer if it is unsuccessful in
recovering any overpayment.
E. AFLAC will optically scan and maintain electronic copies of all FSA Reimbursement Requests and supporting documentation
for a period of seven (7) years after the claim is processed Copies of FSA claim documents can be reproduced upon written
request at AFLAC's currently prevailing rate
Section 1I1. Liability and Indemnity
A. In performing its obligations under this Agreement, AFLAC neither assumes nor underwrites any liability of the Employer under
the Plan, but with respect to the Employer, acts only as provider of those services specifically described in Section 11.6 of this
Agreement and with respect to Plan Participants, acts only as the agent of the Employer The services to be performed by
AFLAC shall be ministerial in nature and shall be performed within the framework of policies, interpretations, rules, practices,
and procedures made or established by the Employer AFLAC shall have no discretionary authority or discretionary control
over any assets of the Employer, the Plan, or Plan Participants
B AFLAC shall have no duty or obligation to defend any legal action or proceeding brought to recover a Request for Plan
Benefits AFLAC shall, however, make available to the Employer and its counsel, such evidence relevant to such action or
proceeding as AFLAC may have as a result of its processing of the contested benefit determination.
C Except as otherwise explicitly provided in this Agreement, the Employer shall retain the liability for all Plan Benefit Requests
and all expenses incident to the Plan and for any and all violations of the Consolidated Omnibus Budget Reconciliation Act of
1985 ("COBRA"), if applicable, and agrees to indemnify and hold AFLAC, its officers, agents, or employees, harmless against
any and all loss, damage, interest, costs and expense, including attorney's fees, occasioned by claims, demands, or lawsuits
brought against AFLAC for its performance of its duties hereunder, excepts those actions resulting from the negligent, grossly
negligent, or intentionally wrongful acts or omissions by AFLAC, its agents, officers, or employees. AFLAC shall indemnify
and hold the Employer, its officers, agents, or employees, harmless against any and all loss, damage, interest, costs and
expense, including attorney's fees, occasioned by claims, demands or lawsuits brought against the Employer resulting from
the breach by AFLAC of this agreement.
D. AFLAC shall use ordinary and reasonable care in the performance of its duties, but shall not be liable to the Employer for
mistakes of judgment or other actions taken in good faith unless such error results directly from an intentionally wrongful,
grossly negligent, or negligent act of AFLAC, its agents, officers or employees.
E. AFLAC shall have no duty or obligation with respect to Requests incurred prior to the effective date of this Agreement
(hereafter "Prior Reimbursement Requests") and/or Plan Administrator (or other) services arising prior to the effective date of
this Agreement regardless of whether such services were/are to be performed prior to or after the effective date of this
Agreement (hereafter "Prior Administration"). The Employer specifically acknowledge(s) and agree(s) that: (i) AFLAC has no
responsibility or obligation with respect to Prior Reimbursement Requests and/or Prior Administration, (ii) the Employer will be
responsible for processing Prior Reimbursement Requests (including any Run -Off Requests submitted after the effective date
of this Agreement) and maintaining legally required records of all Prior Reimbursement Requests and Prior Administration
sufficient to comply with applicable legal (e.g., IRS substantiation) requirements and (iii) the Employer agrees to indemnify and
hold AFLAC harmless for any liability relating to Prior Reimbursement Requests and/or Prior Administration.
F The Employer agrees that AFLAC may communicate confidential, protected, privileged or otherwise sensitive information to
Employer through the Named Contact (as designated on the applicable plan document request form) and specifically agrees
to indemnify AFLAC and hold it harmless: i) for any such communications directed to the Employer through the Named
Contact attempted via telefax, mail, telephone, e-mail or any other media, acknowledging the possibility that such
communications may be inadvertently misrouted or intercepted; and ii) from any claim for the improper use or disclosure of
any health information by AFLAC where such information is used or disclosed in a manner consistent with its duties and
responsibilities under this Agreement.
3 RSA(v111403) - CUSTOM
Section IV. Reimbursement Request Processing Service Fee
A. The Employer shall pay AFLAC a fee for services performed under this Agreement in the amount of $0.00 per Participant per
FSA benefit (DDC or URM) per month (max per Participant of $0.00) with a minimum monthly fee of $0.00 for the
reimbursement Plans (URM and/or DDC) for which services are rendered This amount shall be due by the tenth (10th) of
each month (or portion thereof) for which this Agreement is in effect and is in addition to and separate from (i) any Account
Establishment (or "Set -Up") fee assessed by AFLAC of $450.00 (if all documentation is received prior to the effective date
of 1/1/05, the set-up fee will be waived) to initiate the reimbursement arrangement; and (ii) the Employer's obligation to
make available sufficient funds to satisfy its obligations under the Plan and to make benefit disbursement in accordance with
section II.A. above The Employer is responsible for paying the Service Fee to AFLAC AFLAC is not authorized to withdraw
the Service Fee from the Account. Failure to pay any applicable monthly Service Fee by the next monthly Request processing
cycle shall result in a cessation of Request processing services until such fees are received by AFLAC If Request processing
services are pended for an entire monthly processing cycle, AFLAC may terminate this Agreement in accordance with Section
VI
B AFLAC may revise the Service Fee for services performed under this Agreement effective on each Anniversary Date of this
Agreement by giving the Employer written notice of the revised rate at least thirty (30) days prior to the applicable Anniversary
Date
C Notwithstanding any other agreement between the parties (and/or their agents), AFLAC may revise the Service Fee set forth
above at any time if revision is deemed necessary by AFLAC by reason of (i) modification or amendment of the Plan by the
Employer; (ii) a significant decrease in the number of AFLAC policies purchased by Participants under the Plan below the
number initially included in the Plan after the Service Fee was established (or if later, when the Service Fee was last revised),
or (iii) a suspension, limitation, or revocation of the right of Employees or Participants to purchase AFLAC policies under the
Plan AFLAC shall advise the Employer of the revised Service Fee at least thirty (30) days prior to its implementation. If the
Employer does not terminate this Agreement (by written notification pursuant to Section VI.A.1 ) within thirty (30) days after the
receipt of a notice of such revision, the Employer shall be deemed to have agreed to such revision for the remainder of the
term of the Agreement. Thereafter, the Service Fee on and after the implementation date shall be made on the basis of such
revised Service Fee
D AFLAC may revise the Service Fee set forth above at any time if any change in law or regulations imposes on AFLAC greater
duties or obligations than contemplated by the Agreement in force at the time of such change
Section V. Term of Agreement
The initial term of this Agreement shall be the initial Plan Year commencing on the effective date hereof, thereafter, this Agreement will
automatically renew for successive periods of twelve (12) months unless, at least thirty (30) days prior to the end of the then current
term, the Employer or AFLAC gives written notice to the other of its intention not to renew the Agreement. In the event of a short Plan
Year (other than the first plan year) this Agreement shall automatically renew for an additional twelve (12) months unless the Employer
or AFLAC gives written notice to the other of its intention not to renew the Agreement within three (3) days after the Employer notifies
AFLAC of the short Plan Year
Section VI. Termination of Agreement
A. This Agreement shall terminate upon the earliest of the following dates
(1) The end of a term of the Agreement following the delivery of written notice of termination pursuant to Section V
(2) At the option of AFLAC, the date upon which the Employer fails to transfer sufficient funds to AFLAC (upon request
by AFLAC). (i) to pay all valid Requests pending under the Plan; or (ii) to pay the Service Fee (as provided in Section
II.A. and IV.A., above). AFLAC shall promptly communicate its election of this option to the Employer
Upon the implementation date for a proposed Service Fee increase deemed to be unacceptable by the Employer
(after delivery of written notice of termination by the Employer) pursuant to Section IV.C.
(4) At the option of AFLAC, if no Plan Participant is an AFLAC policyholder or if the Employer denies AFLAC a
reasonable opportunity (as determined by AFLAC in its sole discretion) to meet with Employees, AFLAC shall
immediately communicate its election of this option to the Employer
Any other date mutually agreeable to the Employer and AFLAC.
(3)
(5)
B. Upon termination of this Agreement, AFLAC shall cease the processing of all Requests then in its possession, return any
undistributed funds to the Employer, and make all records relating to Requests in process reasonably available to the
Employer If the termination occurs pursuant to VI.A.1. (above), AFLAC shall process all Run -Off claims provided any Service
Fee(s) is current. Thereafter, the Employer and/or Plan Administrator shall be responsible for all aspects of Reimbursement
Request processing and Plan administration
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Section VII. Miscellaneous
(1) Notices Any notice required to be given hereunder to AFLAC shall be sufficient if in writing and delivered personally or by
prepaid first class mail to AFLAC Administrative Services/FLEX ONE®, 1932 Wynnton Road, Columbus, GA 31999-9950, or if
to the Employer, at the address of the Employer denoted on the signature page attached hereto
(2) Applicable Law This Agreement shall be governed by, and shall be construed in accordance with the laws of the State of
Washington, to the extent they are not preempted by ERISA, the Code, or any other federal law
(3) Legal and Tax Status The Employer acknowledges that neither AFLAC nor its agents is providing legal or tax advice, and that
neither AFLAC nor its agents serves as the Plan Administrator or a fiduciary under the Plan The Employer shall be the sole
party responsible for determining the legal and tax status of the Plan under applicable law AFLAC shall have no power or
authority to waive, alter, breach, or modify any terms or conditions of the Plan
(4) Assignment. This Agreement may be assigned by AFLAC to any other party, including any successor to the business of
AFLAC by merger, consolidation, purchase of assets, or otherwise, without the prior consent of the Employer. This Agreement
shall be binding upon any corporation into which the Employer may be merged or with which it may be consolidated, or any
corporation succeeding to all or substantially all of the business of the Employer
(5) Entire Contract. This Agreement constitutes the entire contract between the parties and no modification or amendment hereto
shall be valid unless in writing and signed by an officer of the Employer and an Officer or duly authorized representative of
AFLAC
(6) Tax Reporting and Withholdings. The Employer has ultimate control over the payment of Plan benefits and shall be the sole
party responsible for income and employment tax reporting and withholding obligations imposed as a result of the includability
of such payments in the gross income of recipients AFLAC is a mere agent of the Employer for the processing of benefit
Requests.
(7)
(8)
Confidential Information. The term "Confidential Information" as used in this Agreement means confidential or proprietary
information of any party that is not generally known to the public, including, but not limited to compilations, lists of actual or
potential customers or suppliers, hardware systems, software, or other documentation of any type, whether in printed or
machine readable form, computer databases, forms and form letters, contracts, information regarding specific transactions,
and marketing and business plans For the purposes of this subsection, Confidential Information shall not include the
personally identifiable information relating to any of Employer's employees
The term "Trade Secrets" as used in this Agreement shall mean Confidential Information that: (1) derives economic value,
actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy The terms "Confidential Information" and "Trade Secrets" do not include information
that: (a) is known to the receiving party prior to its disclosure by the disclosing party, evidenced by the receiving party's written
records, (b) is developed by the receiving party independently of any of the Confidential Information or Trade Secrets received
in confidence from disclosing party, evidenced by the receiving party's written records, (c) is rightfully received by the receiving
party from a third party without restriction and without breach of any obligation of confidentiality running to the disclosing party
Each party agrees that it shall not disclose to others or use for any purpose other than performance of the Agreement any of
the other party's Confidential Information or Trade Secrets any time during or after the term of this Agreement. Each party
further agrees that it will disclose Confidential Information or Trade Secrets to its employees only as necessary for the
performance of the Agreement, and only to employees with a need to know Each party to this Agreement agrees that all
Confidential Information and Trade Secrets are the property of the party disclosing it, and each agrees to promptly return to
the disclosing party, upon demand, any Confidential Information or Trade Secrets furnished under this Agreement which is
either received in or reduced to material form, and all copies thereof The Employer agrees that AFLAC may make lawful
references to Employer in its marketing activities.
Individual Information. Each party acknowledges that performance of the Agreement may involve the use and disclosure of
personal information relating to the Employer's employees (including but not limited to names, addresses, benefit elections,
claims and health information) AFLAC agrees that it will not use any such information disclosed to it by Employer except as
authorized by the individual to whom the information relates or as otherwise permitted by applicable state or federal law or
regulation Employer agrees that it will not use any such information disclosed to it by AFLAC except for the purpose for which
it received the information and will not further disclose such information without the written authorization of the individual to
whom the information relates. This provision is not intended to create any third party beneficiary rights (in favor of Employer's
employees or any other party)
5 RSA(v111403) - CUSTOM
(9)
Capitalized Terms shall have the same meaning as in the Plan documents
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and signed by an Officer of the Employer and
an Officer or duly authorized Worldwide Headquarters Employee of AFLAC to do so
I5 day of 0 b -.r 200q
Dated OFAC this
By.
Robert M. Ottman
Second Vice President
AFLAC Administrative Services/FLEX ONE®
Dated at ® this c tom- day of 5-92.±-4 � .2 0 D `/
By.
ichard A. is, Cit ager
Street Address. Yakima City Hall, 129 N. 2nd Street, Yakima, WA 98901
CITY CONTRAC r N0: a�, -;&22
RESOLUTION NO: /e..."74%'44 -/4/r3
6 RSA(v111403) - CUSTOM
Appendix A
Schedule of Services to Be Provided By AFLAC
In accordance with attached Reimbursement Services Agreement AFLAC shall provide the following services for the
Employer:
General Plan Services:
provide the Employer with a sample cafeteria plan document, including a medical care expense reimbursement ("URM") Plan
and a dependent care expense reimbursement ("DDC") Plan to be reviewed by the Employer and its legal counsel, and
provide the Employer with a sample flexible benefits summary plan description for distribution to each Plan Participant and
employees and where may be required by a Change in Status, and
upon receiving instructions from the Employer on a Change in Status, AFLAC will make the change requested by the
Employer
Additional Services if DDC or URM Benefits Are Offered:
assist the Employer in explaining the URM and/or DDC features of the cafeteria plan to employees, and
process the Employee -executed Salary Redirection Agreements as they relate to the URM and DDC components of the
Employer's flexible spending account; and
prepare an enrollment confirmation letter and send it to the Employer to verify URM and DDC elections, and
provide each URM and/or DDC Participant with an Explanation of Benefits and account balance statement with each
reimbursement Request, at the end of each quarter (based on Plan Year) if no reimbursement Requests are received, and at
the end of each Plan Year; and
provide the Employer with monthly written reports summarizing the previous period's URM and/or DDC and Account activities,
and
receive Requests for URM and/or DDC benefits, and expeditiously review such Requests to determine what amount, if any, is
due and payable with respect thereto, and
disburse the benefit payments it determines to be due (provided the Employer transfers sufficient funds to AFLAC or has
sufficient funds in the Account) or if Self -Pay is elected under Section II. A., notify the Employer of the benefit determination in
accordance with the provisions of the Plan and the following procedures.
valid reimbursement for URM and/or DDC benefits shall be paid by AFLAC on the date funds are received from the
Employer (with respect to such Requests) by mailing a check to the Participants at their addresses (unless otherwise
requested by the Employer as allowed by the terms of the Plan) or by initiating a direct deposit transfer directly to the
Participants in their respective bank accounts in the appropriate amount(s), and
if the amount of the (otherwise) reimbursable DDC Request exceeds the amount the Participant had withheld for
DDC benefits, the excess shall be carried forward (within the same Plan Year) and treated as an Eligible
Employment -Related Expense for that month, and
if the amount of URM Requests exceeds the amount the Participant has had withheld from URM benefits, the entire
amount shall be processed to the extent of the Participant's annual election reduced by previous reimbursements
made for expenses during the Plan Year (provided the Employer makes available sufficient funds for AFLAC to
satisfy the Request), and
Requests of less than $15 00 may be carried forward and aggregated with future Requests until the reimbursable
amount is greater than $15 00, provided however, that the entire amount of the reimbursable Requests shall be paid
after the close of the Plan Year without regard to the $15.00 threshold, and
unless otherwise specified in writing by the Employer, Health FSA claims following a Change in Status impacting the
Health FSA election shall be processed using a "blended approach" (i e , the maximum Health FSA benefit for a
period of coverage following a Change in Status will be limited to the lesser of (a) the annual Health FSA maximum
set forth in the Plan document less any benefit payments made prior to the Change in Status, and (b) the sum of the
Participant's Health FSA Account balance immediately before the Change in Status and any additional contributions
made during the remaining period of coverage), and
7 RSA(v111403) - CUSTOM
notify claimants as to any Requests which are denied because of inadequate Request substantiation or improper
Request form submission, and give affected claimants the opportunity to resubmit their Requests, and
provide to the claimant within thirty (30) days following receipt of a Request, written notification. (a) as to the
disposition of the Request, or (b) of an anticipated delay beyond thirty (30) days, not to exceed 15 days from the end
of the 30-day period, with respect to the disposition of the Request together with an explanation of the delay; and
notify the claimant and refer to the Employer (with an analysis of the issues affecting the Request) for final decision,
any Requests which AFLAC deems not to be reimbursable pursuant to the terms of the Plan and/or the
reimbursement practices and procedures established by the Employer, setting forth the applicable review procedure
available to the claimant through the Employer
8 RSA(v111403) - CUSTOM
Appendix B
Nondiscrimination Testing Services
[Provided Upon Annual Request]
Nondiscrimination Testing:
The Employer, upon submission of an annual Employee Census Data Sheet, authorizes AFLAC to compile nondiscrimination testing
percentages based upon the employee census data provided As consideration for this service, the Plan Sponsor/Administrator agrees
to release and hold AFLAC, its subsidiaries, affiliates, officers, directors, owners, shareholders, attorneys, successors and assigns
harmless from any liability arising as a result of the provision of, or reliance upon such testing percentages In addition, the Employer
understands and agrees that:
AFLAC is not in the business of providing legal or tax advice, and the Employer, as the plan sponsor/administrator, will not
construe the testing percentages provided by AFLAC to be legal or tax advice Accordingly, the Employer will seek the
advice of its own tax or legal advisor to interpret and verify the testing percentages provided, and ensure compliance with
applicable nondiscrimination requirements.
The Employer bears sole responsibility for nondiscrimination testing and the continued qualified status of its cafeteria plan
under all applicable provisions of the Internal Revenue Code
The testing percentages provided by AFLAC are merely an indicator of compliance with three of the applicable
nondiscrimination tests - the Cafeteria Plan 25% Key Employee Concentration Test, the Dependent Care 5% Shareholder
Test, and the Dependent Care 55% Average Benefits Test. Each Employer must also ensure compliance with the Eligibility
Test and Contributions and Benefits Test applicable to the Cafeteria Plan, the URM, and the DDC Plan, as well as other tests
that may apply to the benefits offered through the Cafeteria Plan To ensure compliance with applicable provisions of the
Internal Revenue Code, additional nondiscrimination testing and result verification must be undertaken by the Employer with
the assistance of its tax or legal counsel
Discrimination testing should be conducted at least 180 days prior to the end of the Plan Year to which the data relates to
ensure adequate time to make any required corrections. AFLAC will assist with discrimination testing no less frequently than
once per year and no more frequently than once every thirty (30) days.
9 RSA(v111403) - CUSTOM
ADMINISTRATIVE
SERVICES
The #1 Provider of
Cafeteria Plan Services
09-02-04
Dear CITY OF YAKIMA
Welcome to AFLAC's FLEX ONE®, the #1 provider of cafeteria plan services! Enclosed in this packet are the documents
necessary to establish a cafeteria plan with the assistance of FLEX ONE® Please carefully review the Flexible Benefits Plan
Document and Summary Plan Description to verify that all of the information regarding benefits offered, eligibility, plan
administration, and funding appear correctly Please notice that the Plan Document refers to the Summary Plan Description
with regard to many of the Plan's provisions This approach eases administration and reduces the risk of inconsistency
between the Plan Document provisions and the Summary Plan Description provisions For example, if you have changes in
the Plan, most of the plan changes will only require formal adoption by the governing body of the employer and distribution of
a Summary of Material Modifications (discussed in more detail below) as opposed to both of these and a Plan Document
Amendment. You should note that these documents are only sample documents typical of a plan intended to qualify as a
Section 125 cafeteria plan with the terms and conditions thereof and that they may need to be modified to conform to your
individual circumstances
AFLAC has developed these documents with legal counsel, and it is AFLAC's intent and belief that the documents in form
satisfy the requirements of Code Section 125. However, AFLAC is not in the business of offering legal counsel or tax advice,
and, thus, AFLAC cannot and does not make any representations about the legal or tax effect of these documents upon any
particular employer Therefore, it is each employer's responsibility to determine, with the assistance of the employer's own
legal counsel, the suitability of these particular documents and the legal and tax effect of these plan documents upon the
employer and its employees
Since AFLAC has no control over your subsequent modification and/or administration of the Plan and because the Internal
Revenue Service will not render an opinion as to a plan's qualified status under IRS Code Section 125, AFLAC makes no
representation (express or implied) as to your Plan's qualification under IRS Code Section 125 (and related provisions),as it is
adopted and subsequently amended
You, as sponsoring employer, bear sole responsibility for amending your plan (as necessary) to comply with future tax law
changes, for meeting all reporting and disclosure requirements imposed by applicable law, and for the daily administration of
your plan. As such, we recommend you review the following important information:
Important Compliance Issues
Nondiscrimination Testing is at the very core of the legal requirements imposed by Section 125 of the Internal Revenue
Code. Failure to satisfy these requirements will cause adverse tax consequences to highly compensated employees and
could possibly disqualify the plan. For details regarding your Nondiscrimination Testing requirements, please refer to the
FLEX ONE®Account Establishment Information Checklist.
Certain Insurance Premiums which cover the employee (or in the case of coverage other than life insurance, the employee
and tax dependents/family) may be included in the FLEX ONE ® Plan Documents if adopted as part of your benefits plan
These include
• Group Term Life Insurance covering the employee (Eligible under IRS Code Section 79) that is equal to or less than
$50,000 (life insurance coverage on dependents is not eligible for pre-tax treatment),
• Accidental Death and Dismemberment (AD&D) coverage,
• Medical, Dental, Hospital Indemnity, Cancer Insurance, Vision, Hearing and other qualified accident and health
premiums
—
Please Note: When including health, medical and disability income policies within the FLEX ONE ®Plan: Paying for coverage
on a pre-tax basis may cause insurance benefit payments under medical coverage to be subject to federal and state taxes if
benefit payments from all medical policies/plans are in excess of actual medical expenses. Paying for disability income
policies with pre-tax premiums will cause the benefits payable thereunder to be taxable.
Form 5500 Annual Reports . For details regarding your Form 5500 annual reporting requirements, please refer to the FLEX
ONE®Account Establishment Information Checklist.
Continuation of Coverage. Health benefits offered through a cafeteria plan may be subject to the continuation coverage
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") See the Summary Plan Description
(SPD) for more details.
Continuation of Coverage During FMLA Leave . Health benefits (including Health FSA benefits) and non -health benefits
offered through a cafeteria plan are subject to the continuation and reinstatement provisions of the Family and Medical Leave
Act of 1993 ("FMLA"). See Q-13 of the SPD for more details on coverage offered under the Plan during FMLA reave
*2300009020046
COVLET
HIPAA Privacy Requirements. During the course of providing participants with health coverage under the Health FSA (if
applicable), the Pian will have access to information about covered individuals that is deemed to be "protected health
information", or PHI, by the Health Insurance Portability and Accountability Act of 1996, or HIPAA. HIPAA Privacy Rules apply
to health plans, including Health FSAs The Employer is solely responsible for ensuring that the Employer and the Plan comply
with HIPAA's rules. If you are a Health FSA Plan Sponsor, AFLAC is providing an attached privacy packet ("Important Privacy
Information") which is an overview of HIPAA Privacy Rules. AFLAC has also included general HIPAA privacy language in the
camnle rinnnmentetinn (Qeetinn 1f1 1 of the pian rinni invent and fpr Grill Plane nn iy, 6pnenrliv II to the CPI) The nriveey
information provided in this Cafeteria Plan Packet is not provided with the intent of fully satisfying your HIPAA obligations.
HIPAA's Privacy Rules are complicated, and its effects may vary for each plan You should consult with your legal counsel
regarding your required actions and plan language for your Company and Plan to achieve HIPAA compliance
Plan Administration and Maintenance
Plan Document Maintenance. Each plan sponsor is responsible for reviewing the FLEX ONE® Plan documents to ensure
that they are consistent with its desired plan design and any legal requirements that may apply in its state. For your added
convenience and your future reference, the most current version of the sample Cafeteria Plan Packet will be available on the
AFLAC web site (www.aflac.com) and the FLEX ONE® IVR (877-353-9487) As we make changes to the sample Cafeteria Plan
Documents to correspond with changes in applicable laws, you can access the updates quickly and easily
Summary Plan Description. All plan sponsors are required to give each eligible employee a copy of the SPD within 120 days
of the effective date of the initial plan year and within 90 days of the effective date of coverage for all subsequent plan years. If
an employer makes a change in the plan, the employer must provide the employees with a summary of the changes (a
Summary of Material Modifications or (SMM)) within 60 days of the adoption of the change Note: While the Plan and related
documents are copyrighted, AFLAC gives you limited permission to copy the documents as necessary for distribution to your
employees for use solely in the operation of your own cafeteria plan
Payroll Instructions. Payroll instructions will be thoroughly reviewed with you or your payroll specialist by your AFLAC agent.
Employee Eligibility and Elections
New Employees. For details regarding Employee eligibility, please refer to Section 3 02(b) of the Plan Document.
Employees of Affiliated Companies. If the requirements of IRS Code Section 414(b), (c), (rn) or (o) are satisfied, the
employees of an affiliated company may be able to participate in this plan You should consult with your tax advisor concerning
the potential impact of IRS Code Section 414(b), (c), (m) and (o)
Benefit Election Changes. Employees generally cannot change their election to participate in the Pre-tax Contribution
payment option or vary the Pre-tax Contributions they have selected For details regarding important exceptions to this general
rule please refer to Section 3.04 of the Plan Document and Q-9 of the SPD
Due to the complexity of cafeteria plans, we recommend that you consult with your accountant, attorney or other tax advisor
concerning the plan provisions, administration and operation before executing the plan documents Remember that your
cafeteria plan will not be effective until your plan is adopted, and the Plan Documents must be signed PRIOR TO THE
EFFECTIVE DATE. If your Plan Document is executed subsequent to the effective date, the IRS may attempt to challenge the
qualified status of your Plan We recommend you retain any evidence that you have that would establish your Plan was
adopted and enrollments were completed prior to the effective date. In the event that there have been no pre-tax deductions
taken thus far, you may consider changing the start date of your cafeteria plan
AFLAC will make its best efforts to provide employers information from time to time about developments concerning Section 125
cafeteria plans. However, for reasons stated above, it is the employer's responsibility to maintain the qualified status of the
Section 125 plan, in form and in operation If you have any questions concerning the FLEX ONE® Cafeteria Plan Program, you
may contact us toll-free at (877) 353-9487 Monday through Friday 8:00 a.m. to 7:00 p.m. Eastern Time
We are pleased you've chosen AFLAC Administrative Services/FLEX ONE® to help you meet your cafeteria plan needs, and we
look forward to the opportunity to serve you.
Sincerely,
Zvi?est rirL • tt 1 14
Robert M Ottman
Second Vice President
AFLAC Administrative Services/FLEX ONE®
COVLET
*2300G09020046
FLEX ONE® ACCOUNT ESTABLISHMENT INFORMATION AND CHECKLIST
Important steps for establishing your FLEX ONE® account
For all FLEX ONE® Cafeteria Plans:
n Employer's Acknowledgment: After executing and adopting your Plan Document, please sign and date the
Employer's Acknowledgment in order to officially adopt and execute your plan Place the signed and dated Employer's
Acknowledgment in your files with a copy of your Plan Document Packet.
n Summary Plan Description: A copy must be provided to each eligible employee within 120 days of the effective date
of the initial plan year and within 90 days of the effective date of coverage for all subsequent plan years
For all FLEX ONE® plans with FSAs when FLEX ONE® is the claims processor:
To ensure that your account is established in a timely manner, the following documents must be returned to FLEX ONE® at least 10
working days prior to the effective date of your plan. You may return these documents by toll-free fax to (877) FLEX -SRA
(877-353-9772) or by mail to AFLAC Administrative Services/FLEX ONE®, 1932 Wynnton Road, Columbus, GA 31999-9950
n Salary Redirection Agreements (SRAs): Completed SRAs for all Flexible Spending Account (FSA) participants must
be returned to FLEX ONE®
E Reimbursement Services Agreement (RSA): The RSA must be signed in the second signature block and returned
to FLEX ONE®. It will be signed by FLEX ONE® and returned to you for your records
Important information for administering your FLEX ONE® account
Plan Identification Number (PIN): The Department of Labor regulations require that welfare benefit plan sponsors assign
a three -digit PIN number to their welfare plans (including cafeteria plans) for identification purposes Numbering for welfare
plans should begin at 501 and proceed consecutively This number must be indicated on the Summary Plan Description
Affiliated Companies: Only those companies described in Section 414(b), (c) or (m) of the Internal Revenue Code can
participate in a cafeteria plan In addition, if there are affiliated companies, nondiscrimination testing will be affected
dependent upon relationships with these companies.
▪ 5500 and Summary Annual Report: IRS Notice 2002-24 suspended the requirement to file Form 5500 and Schedule F
for fringe benefit plans, including cafeteria plans, pursuant to Section 6039D Please note that Notice 2002-24 does not
affect annual reporting requirements under ERISA. Thus, welfare benefit plans subject to ERISA, which may include
Health Flexible Spending Accounts (FSAs), must continue to file Form 5500 and any applicable schedules (unless an
applicable exception applies) even if the benefits are funded through the cafeteria plan You should contact your tax or legal
advisor to find out if your Plan is subject to ERISA and whether filing a Form 5500 (including any applicable schedules) for
your Plan is required
❑ Nondiscrimination Testing: Nondiscrimination tests, including the Eligibility, Contributions and Benefits, and
Concentration of Benefits tests, must be performed In the case of Flexible Spending Accounts (FSAs), nondiscrimination
tests must be performed for each FSA. Upon request, AFLAC Administrative Services will assist you at no extra charge
with the Cafeteria Plan Key Employee 25% Concentration Test, Dependent Care 55% Average Benefit Test, and
Dependent Care 5% Shareholder Test.
Health FSAs: You, as Plan Sponsor, are responsible for ensuring that the Health FSA maximum, if applicable, does not
violate nondiscrimination testing requirements set forth by the Department of Labor or increase the Employer's risk in the
plan.
El Eligibility: You, as Plan Sponsor, are responsible for ensuring that the eligibility period listed in your plan documents does
not violate Internal Revenue Service or Department of Labor regulations.
Privacy: You, as Plan Sponsor, are responsible for ensuring that your plan does not violate the privacy requirements set
forth in the Gramm -Leach -Bliley Act of 1999 (GLB) and, if applicable, the Health Insurance Portability and Accountability
Act of 1996 (HIPAA) GLB regulates the privacy of financial information and applies to all FLEX ONE® plans (see the
attached "Privacy Practices"). HIPAA protects privacy by regulating the disclosure of protected health information (PHI), so
Plan Sponsors of only Health FSAs must comply with HIPAA privacy requirements (Health FSA Plan Sponsors only, see
the attached "Important Privacy Information")
* If you have any questions regarding this checklist, please contact FLEX ONE toll-free at (877) FLEX -IVR (877-353-9487),
and one of our Customer Service Representatives can assist you Monday through Friday from 8:00 A.M. to 7:00 P.M. EST.
Employer Acknowledgment: Your signature verifies that an AFLAC sales representative has reviewed the above information with
you
Signature Printed Name Date
CKLIST
IMPORTANT PRIVACY INFORMATION
As the #1 Provider of Cafeteria Plan Services, our primary goal is to provide you and all of our customers with the best possible
service In order to assist you in ensuring your plan's compliance, we want to inform you of existing and upcoming compliance
obligations under the privacy rules issued in the Gramm -Leach -Bliley Act of 1999 (GLB) and the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), respectively. These laws require you and your Business Associates to
protect the personal health and financial information of health plan participants
To assist you in understanding the compliance obligations under GLB and HIPAA, the following information is included in this
privacy packet:
• Privacy Practices - Due to regulation by GLB, we are required to provide you with this information, which explains our policy
regarding the sharing of our customers' personal information with affiliates and third parties
• Top HIPAA Privacy Questions - This Q&A provides basic introductory HIPAA Privacy information HIPAA protects privacy by
regulating the disclosure of protected health information (PHI), so HIPAA Privacy Rules apply only to health plans (including
Health FSAs). HIPAA Privacy Rules define who is authorized to access PHI created and maintained by the heath plan. The
Privacy Rules are effective either on April 14, 2003 or April 14, 2004, depending on whether your plan is a large or small health
plan (see Q-3 for guidelines on determining if your health plan is large or small).
• Summary of HIPAA Privacy Rules - This summary provides further valuable information and details regarding the Privacy
Rules under HIPAA.
• Sample Business Associate Contract - This contract addendum is intended to satisfy your HIPAA business associate
requirements with respect to AFLAC's FLEX ONE® services. As explained in this privacy packet, one of your compliance
obligations as Plan Sponsor is to ensure that companies and individuals that perform administrative functions on behalf of the
plan (i.e., "business associates") agree to comply with the HIPAA Privacy Rules This agreement is obtained by entering into
business associate contracts. Unless your plan is self-administered, we are a business associate of your Health FSA plan
because we provide claims processing services on behalf of the plan
In addition, a sample HIPAA privacy notice is provided as Appendix II of the SPD. This sample notice outlines the minimum
requirements of the required privacy notice under HIPAA, and it is intended to be used in conjunction with your specific HIPAA
Privacy Notice The Privacy Notice that you provide is already incorporated by reference into Appendix II and, upon distribution,
becomes part of the Cafeteria Plan Document.
NOTE. As AFLAC cannot provide you with tax or legal advice, the information in this privacy packet should not be construed as
such. All information provided is general in nature and cannot address issues and concerns particular to your health plan
administration. Before you use any of the sample documents in this privacy packet and/or Cafeteria Plan Packet, please review
them with your legal counselor or benefits advisor to ensure they meet your plan's specific compliance requirements.
Health FSAs are health plans subject to HIPAA's privacy requirements. To the extent that you sponsor other health plans
regulated by the Privacy Rules and have access to health information, your compliance obligations for the Health FSA Plan are
similar - and in many cases you need merely to include your Health FSA in your overall compliance initiative under the Privacy
Rules. However, as Plan Sponsor, you (and your legal advisor) are responsible for taking action to ensure that your health plans
(including the URM FSA) are compliant with the HIPAA Privacy Rules by the applicable effective date.
Action may be required of you, as Plan Sponsor:
Although AFLAC is taking steps to ensure internal compliance with HIPAA Privacy Rules, you may have further HIPAA obligations
While the information contained in this Cafeteria Plan Packet outlines certain Health FSA Plan Sponsor responsibilities, each plan
Sponsor should consult with their legal advisor(s) to determine the full effects of HIPAA. However, one of your HIPAA obligations
concerns business associates, and AFLAC fits the HIPAA definition of a business associate.
•
Under the Privacy Rules, the Plan Sponsor must designate which employees are authorized to review PHI from the health plan.
Generally, PHI is individually identifiable health information about participants in the health plan. As business associates, we
are only permitted to disclose PHI to your company to the specified contact who is authorized to receive PHI. We assume that
these individuals are the "named contact" as listed in our current client files (see Section III.F of the Reimbursement Services
Agreement) If a different contact person should be used, contact AFLAC Administrative Services/FLEX ONE® prior to
the HIPAA effective date for your Plan, as all HIPAA compliance responsibilities lie with you, as Plan Sponsor
• To use the attached sample HIPAA Business Associate Agreement (Exhibit A) as your business associate contract with AFLAC,
sign and return the original copy to AFLAC Administrative Services/FLEX ONE®, and the contract will become an
addendum to your Reimbursement Services Agreement (RSA). Depending on your Plan size and resulting HIPAA effective
date, you may not need to implement business associate contracts at this time.
If you need additional assistance regarding the business associate agreement or any of the attached privacy material, please contact
rn AFLAC Administrative Services/FLEX ONE® toll-free at (877) 353-9487 Monday through Friday from 8.00 A.M to 7.00 P.M Eastern
Time.
*2300G0
1 PRIVFSA
PRIVACY PRACTICES
Protecting the privacy and confidentiality of employer and participant information through our FLEX ONE® cafeteria plan services is very
important to American Family Life Assurance Company of Columbus (AFLAC®) and American Family Life Assurance Company of New York
(AFLAC New York) Throughout this notice when we use the name "AFLAC," we will be referring to both organizations Accordingly, e
strive to comply with each of the following practices in everything we do:
• We do not sell, rent, lease or otherwise disclose personal information about employers or employees of an employer for
purposes unrelated to our products and services. The personal information of our customers is of paramount importance to us
Therefore, we provide this information only to our employees, agents and third parties as required to allow them to help us develop and
provide our insurance and employee benefit products and services.
• We work to ensure information integrity and security. We use technology tools and design our business practices to help ensure
that the personal information of the employer and employees of the employer are properly gathered, stored and processed We also
work to maintain the security of, and internal and external access to, the personal information of our customers through the use of
technology and our business practices
• We expect our agents and employees to respect the personal information of our customers. AFLAC has business policies and
practices in place to help ensure that its employees and agents carry out these practices and otherwise protect the personal information
Both employees and agents are subject to censure, dismissal or termination for violation of these policies
These Privacy Practices apply to our U S. customers. Due to legal and cultural differences, our practices may vary outside the United States
PRIVACY NOTICE
AFLAC and our agents provide this notice to let you know about the current privacy practices of AFLAC and our agents. You do not need to
do anything in response to this notice. This notice is merely to inform you about how we safeguard your information.
Collection of Information
As part of AFLAC's normal operating procedures, AFLAC (and our agents acting on our behalf) need to obtain information from both the
employer and the participant to service the flexible spending accounts AFLAC and our agents may collect nonpublic personal information
(which includes both nonpublic personal financial information and nonpublic personal health information) about AFLAC customers, including
but not limited to:
• Information from the employer or the participant (including names, addresses, Social Security numbers, financial and marital status, and
health and dependent child-care information),
• Infnrmatinn about the employer or the participants' transactions with AFI An nr nur agents (including claims payment information and
banking information),
• Information from the employer or the participants' health care providers (including drug receipts and medical information), employers
(including hnnpfit plprtinnc anri emnlnvmant irfnrmatinn) and family memherc
Disclosure of Information
AFLAC may disclose the nonpublic personal financial information we collect, as described above, as well as information about your
transactions with us (such as your election amounts, premiums, and payment history) to our agents or other third parties who perform
services for us or functions on our behalf, including the marketing of AFLAC services. AFLAC may also disclose the nonpublic personal
financial information we collect to other third parties as authorized by you, or as required or permitted by law.
Our agents will make disclosures of the employer or the participants' nonpublic personal financial information only while acting on AFLAC's
behalf and, furthermore, will make such disclosures only as AFLAC itself is permitted to make
Neither AFLAC nor our agents will use or share with other parties any nonpublic personal health information about our customers for any
purpose other than the servicing of the employer's flexible spending account plan by AFLAC or on our behalf, or to which the customer
consents.
Neither AFLAC nor our agents will further disclose any nonpublic personal information about a former customer of AFLAC other than as may
be required or permitted by law.
Confidentiality and Security
AFLAC and our agents will safeguard, according to strict standards of security and confidentiality, any information we collect, receive, or
maintain about AFLAC's customers. AFLAC maintains administrative, technical, and physical safeguards to ensure the security and
confidentiality of the employer and employees, and the employer information and records, to protect against anticipated threats or hazards
such records, and to protect against unauthorized access to or use of such information or records
Internally, AFLAC limits access to our customers' information to only those employees who need access to the information to perform their job
functions Employees who misuse information are subject to disciplinary actions Externally, we do not disclose customer information to any
third parties unless we have previously informed the customer of the disclosure, have been authorized to do so by the customer, or are
required or permitted to make the disclosure by law or our regulators.
AL 2 PRIVFSA
*2300G09020046
TOP HIPAA PRIVACY QUESTIONS
Q-1. Does HIPAA apply to plans sponsors?
HIPAA applies to covered entities, a term that includes health plans (including health FSAs) In most instances, Plan
Sponsors are not covered entities. Nevertheless, HIPAA requires Plan Sponsors to comply with certain administrative requirements
in order to receive protected health information (PHI) from their health plans If the Plan Sponsor does receive PHI from the plan, the
Sponsor must amend its plan documents and certify that its plan has been amended and that it has implemented appropriate
safeguards Plan Sponsor personnel dealing with PHI are subject to HIPAA, and firewalls must be created between the Plan Sponsor
and other employer functions PHI may not be used for employment purposes or for administering any other plan such as disability
or workers compensation
Q-2. How much time do Plan Sponsors have to comply?
Large health plans must comply with the HIPAA privacy requirements by April 14, 2003. Small health plans must comply
by April 14, 2004
Q-3. How do I know if my plan is a large or small health plan?
Under HIPAA, a small health plan is a health plan with "receipts" of less than $5 million. If your plan is fully insured,
receipts are measured by the amount of insurance premiums you paid in the last full plan year prior to April 14, 2003. For
self-insured plans, receipts is the amount of claims you paid for the last full plan year prior to April 14, 2003. For plans with both fully
insured and self-insured elements, it is the aggregate amount of claims and premiums paid HIPAA does not provide guidance on
what constitutes a "plan," but a good rule of thumb is that each plan for which you file a Form 5500 is a separate plan. If you have a
wrapped plan, then you would likely aggregate all of the claims or premiums paid for every health arrangement in the plan, i e dental
and vision claims and medical insurance premiums
Q-4. What is protected health information?
Protected health information (PHI) is individually identifiable health information that is created or received by a covered
entity Individually identifiable health information is health information that relates to an individual's past, present, or future physical
or mental health or condition, to the provision of health care to that person, or to the past, present, or future payment for that person's
health care Examples of PHI held or accessed by health plans are claims information and claims history.
Q-5. What is a business associate?
A business associate is an entity to which the plan discloses PHI in order for that entity to perform functions or services on
behalf of the health plan. Some examples are TPAs, claim auditors, consultants, attorneys, and Rx vendors. Business associates of
a plan do not include the Plan Sponsor or an insurer of a fully insured plan. The privacy rules require the plan to have a contract
(called a business associate agreement) where the business associate agrees to abide by similar confidentiality rules as the plan.
Q-6. Who enforces the privacy rules and what are the penalties for a violation?
The Department of Health and Human Services' Office of Civil Rights has authority to accept and investigate complaints
and also conduct compliance reviews. Failure to comply with the HIPAA privacy requirements may result in a fine of up to $100 per
violation with the total amount for all violations of an identical requirement not to exceed $25,000 Criminal fines and imprisonment
may also apply if someone knowinglyobtains or discloses individually identifiable health information in violation of the privacy rules.
Q-7. How does HIPAA impact my duties under FMLA, ADA, OSHA, and workers' compensation?
HIPAA does not regulate health information you receive from your employees as their employer. For example, your
employee can give you a physician's certification for FMLA leave. However, you cannot use PHI from the health plan such as
claims data for purposes of administering your disability or workers' compensation plans In addition, you must have an
authorization from your employees to receive medical information such as drug testing results directly from a health care provider
Thus, it would be a good idea to include an authorization in any FMLA or workers' compensation packets for this purpose.
Q-8. EDI - what does it mean and how does it apply to my health plan?
EDI stands for electronic data interchange. It is another part of the Administrative Simplification provisions of HIPAA that
applies in addition to privacy These standards mandate that certain health care transactions be conducted electronically.
Generally, if a "covered entity" or its "business associate" electronically conducts a HIPAA-covered transaction with another covered
entity or within the same covered entity then the entity must use standard formats and content, and uniform codes to communicate
with the other entity. This is called a standard transaction. In most cases health FSAs conduct transactions exclusively with
participants (not covered providers or health plans). If this is the case with your health FSA the EDI obligation may be minimal If
your health FSA conducts covered transactions with other covered entities you should notify FLEX ONE® immediately
3 PRIVFSA
SUMMARY OF HIPAA PRIVACY RULES
I. Introduction
The HIPAA privacy rules regulate the use and disclosure of protected health information (PHI) by defining who is authorized to'
access PHI created or maintained by covered entities and for what purposes
A. Who is Covered
There are three types of covered entities under the privacy rules health plans (which includes Health FSAs), health care
clearinghouses, and health care providers who transmit certain standard transactions electronically. Employers that are not in
the health care services field normally are not covered entities Nevertheless, employers, as health plan sponsors, must agree to
comply with certain privacy requirements if they want to receive PHI from their health plans.
B. Basic Concepts
Health plan sponsors should understand and recognize the following basic concepts under the Privacy Rules (1) what PHI is,
(2) which plans are considered health plans under the privacy rules, and (3) what business associates are
PHI
PHI is individually identifiable health information that is maintained, created or transmitted by a covered entity Individually
identifiable health information is health information that relates to an individual's past, present, or future physical or mental
health or condition, or to the provision of health care to that person, or to the past, present, or future payment for that
person's health care Examples of PHI held, created, or maintained by health plans include claims information and claims
payment history.
2. Health Plans
A health plan is defined in the privacy rules as an individual or group plan that provides (or pays the cost of) medical care
In addition to Health FSAs, this definition includes virtually all arrangements that pay the cost of medical care, including
• group health plans,
• health insurance issuers,
• HMOs,
• ERISA plans,
• Iviedicare and Medicare+Choice,
• Medicaid,
• Medicare supplement policies,
• issuers of long-term care policies, and
• welfare benefit plans or other arrangements that provide health benefits for two or more employees
Some plans that provide health care are excluded from the definition of a health plan under HIPAA. These are
self-administered and self-funded health plans that have fewer than 50 participants Note that this exclusion does not apply
to a self-funded health plan that uses a third -party administrator In addition, the following plans are not health plans under
HIPAA because they are considered "excepted benefits" accident -only plans, disability plans, liability insurance plans,
workers' compensation programs and on-site medical clinics.
3. Business Associates
Service providers who receive or create PHI to assist health plans in connection with their health care functions are
considered business associates under the Privacy Rules Examples of business associates are TPAs, consultants,
insurance agents and brokers, claim auditors, and utilization review companies. Employees of the Plan Sponsor and the
Plan Sponsor itself are not business associates. Although health plans are covered entities, most health plans do not have
employees; therefore, the health plan itself is generally not a business associate
4 PRIVFSA
Business associates normally are not covered entities themselves under the Privacy Rules However, before a health plan
may disclose PHI to a business associate, the Privacy Rules require the plan (through its Plan Sponsor) to enter into a
contract (called a business associate agreement) with the business associate This contract legally obligates the business
associate to agree to restrictions on the use and disclosure of PHI Health plans must execute business associate
agreements with all of their service providers before the effective date of the privacy rules. (We have attached a sample
"Privacy Rules Business Associate Contract" as Exhibit A, and it is intended to satisfy your HIPAA business associate
requirements with respect to AFLAC's FLEX ONE® services.)
I1. How the Privacy Rules Affect Sponsors of Self -Insured Health Plans
As mentioned above, Plan Sponsors are not covered entities under the Privacy Rules Nevertheless, if you are a Plan Sponsor of a
self-insured plan, the Privacy Rules impose requirements on both you and your plan These include the following:
provide individuals with the rights to access and PHI and to receive an accounting of PHI (as described in Section ILA below),
prepare and provide a privacy notice (as described in Section II.B below); and
comply with the administrative safeguards applicable to covered entities (as described in Section II.0 below)
Even if you retain a business associate to perform services for your plan, it is probable that you will have access to PHI For
example, most TPA arrangements require that the Plan Sponsor serve as the ultimate ERISA claims fiduciary for appeal purposes
In order to disclose PHI to its Plan Sponsor, the health plan must be amended. Finally, note that the Plan Sponsor may not retaliate
against health plan participants who exercise their privacy rights, or require individuals to waive their rights.
The following discussion examines three main compliance obligations for self-insured health Plan Sponsors: (A) the use and
disclosure rules, (B) individual rights, and (C) administrative safeguards
A. Use and Disclosure Rules
The privacy rules provide that covered entities are prohibited from using or disclosing PHI for any reason other than treatment,
claims payment, or health care operations (i e., operations related to claims payment and treatment) If a covered entity is not
using or disclosing PHI for these three purposes, then it must either (1) find a regulatory exception on which to rely or (2) obtain
a specific authorization from the individual to whom the PHI relates
Health plans are most likely to use PHI in connection with activities related to payment and health care operations. "Payment"
means an activity undertaken by a health plan to obtain contributions, to determine or fulfill its responsibility for provision of
benefits under the health plan, or to obtain or provide reimbursement for health care. Payment includes eligibility and coverage
determinations, billing, claims management, collection activities, and related health care data processing. "Health care
operations" refers to activities compatible with and directly related to treatment or payment, such as: (1) internal quality
oversight review; (2) credentialing and health provider evaluation; (3) underwriting, (4) insurance rating, and (5) other activities
relating to creation, renewal, or replacement of a contract of health insurance or health benefits (including stop -loss insurance
and excess insurance), medical review; legal services, and auditing functions (including fraud and abuse detection), business
planning, management and general administration; and fundraising Most self-insured health plans hire business associates to
assist them in performing payment and health care operations functions
In addition to the uses and disclosures for treatment, payment, and health care operations, plans may also use and disclose PHI
for certain mandated disclosures without an individual's authorization, such as
• Uses and disclosures required by law;
• Uses and disclosures for public health activities,
• Disclosures about victims of abuse, neglect, or domestic violence,
• Uses and disclosures for health care oversight activities;
• Disclosures for judicial and administrative proceedings,
• Disclosures for law enforcement purposes;
• Uses and disclosures about decedents;
• Uses and disclosures for cadaveric organ, eye, or tissue donation purposes;
• Uses and disclosures for certain limited research activities;
Uses and disclosures to avert a serious threat to health or safety;
• Uses and disclosures for specialized government functions; and
• Disclosures for workers' compensation
*2300G
5 PRIVFSA
Please note that a use or disclosure of PHI pursuant to another federal or state law must be "required" to be disclosed by the
other law (not just permitted), or the exception does not apply For example, a plan will not be able to disclose a participant's PHI
to the Plan Sponsor under a state law that merely permits but does not require a health plan to disclose medical records relating
disclosures
be Department
Health
d
to workers' compensation injuries to the employer In addition, diSCiv�u�e� must made to the ofLJCLJdILIIICIIIncanii and
Human Services in connection with its enforcement and compliance review actions
Any other use or disclosure in addition to the permitted uses and disclosures of PHI described above requires an authorization
from an individual An authorization must have the following core elements in order to qualify as a valid authorization under
LJ 10 AA
111
• Description of the information to be disclosed;
▪ Identification of person(s) authorized to use or disclose PHI and to whom PHI may be disclosed,
• Purpose of the requested disclosure,
• Expiration date or event that would terminate the authorization;
• Signatures by individual whose information is to be disclosed, and
• Statements regarding the right to revoke authorization, inability to condition treatment, payment, enrollment or eligibility for
benefits on authorization, and potential for re -disclosure.
The authorization must be written in "plain language," and the individual must receive a signed copy of the authorization if such
authorization was sought by the covered entity Individuals may request to have their PHI disclosed by a health plan for a variety
of reasons, including applications for life or disability insurance or for purposes of a lawsuit. The Plan Sponsor may request an
authorization from an individual to allow the plan to disclose medical claims records for FMLA leave or a request for reasonable
accommodation under the ADA. The Plan Sponsor must remember that it cannot use or disclose PHI for any employment
purpose without the individual's authorization, A health plan may not condition treatment or payment on an authorization
except in very limited circumstances
B. Individual Rights and Privacy Notice
The Privacy Rules grant individuals certain rights with respect to their health information. Such rights include the ability to
access and amend their PHI maintained by the covered entity, receive an accounting of disclosures of certain limited PHI, and
receive a privacy notice. As Plan Sponsor, you need to coordinate with your TPA and any other business associates to satisfy
these requirements In response to any participant inquiries that you receive, FLEX ONE° will make available any PHI that it
maintains for your plan
1. Individual Rights
An individual has the richt to inspect and copy his or her own PHI. The plan may require individuals to make requests for
access to PHI in writing, as long as the requirement is communicated to individuals Such a requirement should be placed
in the privacy notice The covered entity must respond to an access request within 30 days for PHI maintained on site or
within 60 days if the information is not on site Access may be denied in certain specified circumstances (e g ,
psychotherapy notes). If the plan denies the request, it must provide the individual with a written denial that includes the
reason for the denial, a statement about the individual's right to review the denial (if applicable), and a description of the
plan's complaint procedures, including the name, title, and telephone number of the covered entity's contact person or
office.
An individual has the right to request an amendment or correction to any of his or her PHI that is inaccurate or incomplete
The plan may require individuals to make request for corrections in writing and provide support for the requested change,
as long as these requirements are communicated to individuals in the privacy notice If the plan denies the request, it must
provide a written notice of the denial that includes the following
• the basis for the denial;
• the individual's right to submit a written statement disagreeing with the denial and how to file such statement;
• that the individual may (if he or she does not submit a written statement of disagreement) request that the review for
amendment and any subsequent denial be included in future disclosures of the information, and
• a description of the covered entity's complaint procedures, including the name, title, and telephone number of the
covered entity's contact person or office
6 PRIVFSA
*2300G09020046
The plan must implement a process to track and timely respond to individual amendments and amendment requests, as
well as to track denials by the covered entity, the individual's statement of disagreement, and the covered entity's rebuttal,
as applicable The covered entity must respond to an amendment request within 60 days, and it may extend this period by
30 days if it gives the participant notice within the original 60 -day period
An individual also has the right to obtain an accounting of certain limited disclosures of his or her own PHI This right to an
accounting extends to disclosures made by covered entities at any time in the last six years (but not including any time prior
to April 14, 2003 or 2004, as the case may be). Significantly, this right does not include the following disclosures for
treatment, for payment of health care operations, to individuals about their own PHI, for health information authorized by the
individual, and for certain other limited purposes The accounting must include the date of the disclosure, the name of the
receiving party, a brief description of the information disclosed, and a brief statement of the purpose of the disclosure The
covered entity must respond to an accounting request within 60 days.
2. Privacy Notice
The health plan is required to provide a notice of privacy practices for PHI to all individuals enrolled in the health plan This
notice must describe the uses and disclosures of PHI that may be made by the covered entity, the individual's rights, and
the covered entity's legal duties with respect to the PHI. The Privacy notices must be provided to individuals (a) no later
than the compliance date for the privacy regulations (for covered entities, this is April 14, 2003 or 2004, as the case may
be), (b) on an ongoing basis after the compliance date, at the time of an individual's enrollment in the plan, and (c) within
60 days after a material change to the notice. In addition, plans must provide a notice of availability of the privacy notice at
least once every three years.
It is likely that you will be sending out Privacy Notices for other health plans that you sponsor where you have access to
PHI. If this is the case, you might consider combining the Privacy Notices for plans where the information (e g , who has
access to PHI) is the same. If you do not otherwise have a Privacy Notice obligation, you must prepare and distribute a
Privacy Notice for your Health FSA. (For your convenience, we have attached a sample privacy notice as Appendix 11 to
the FLEX ONE® Summary Plan Description (SPD). Review the sample notice with your legal advisor and make any
necessary changes before distributing it to your employees as it will govern participant rights under the Privacy Rules.)
C. Administrative Safeguards
In implementing the administrative safeguard requirements, the Plan Sponsor must evaluate the roles of its employees to
determine which employees (or classes of employees) will have access to PHI The Plan Sponsor must then implement policies
and procedures to ensure that only these designated employees (or classes of employees) have access to PHI, and even then,
only to the minimum amount of PHI necessary to perform plan administration duties for the health plan For example, PHI from
the health plan may not be used to administer the disability program, which is not considered a health plan under the privacy
rule. Finally, the Plan Sponsor must ensure that these employees do not use or disclose PHI in a way prohibited by the final
regulations If you sponsor other health plans and have access to PHI you likely will have already begun to establish your
HIPAA Policies and Procedures document.
A Plan Sponsor of a self-insured plan must satisfy the following administrative safeguard requirements:
• Designate a privacy official responsible for the development and implementation of policies and procedures,
• Designate a contact person or office for receiving complaints and providing additional information concerning the privacy
notice (this may be but is not required to be the same person as the privacy official);
• Train of all employees who will have access to PHI on privacy policies and procedures;
• Establish appropriate administrative safeguards (both technical and physical) to protect PHI from accidentally being used
or disclosed in violation of HIPAA's requirements (for example, all PHI should be kept in locked file cabinets and computer
systems should have adequate firewalls to protect electronically stored PHI);
• Create a process for individuals to lodge complaint and a system for handling such complaints and recording their
resolution,
• Design a system of written disciplinary policies and sanctions for workforce members who violate the privacy rules;
Mitigate, to the extent possible, of any harmful effect that is known to the covered entity resulting from an improper use or
disclosure of PHI;
• Refrain from taking retaliatory action against any individuals who exercise their rights under HIPAA,
• Do not require an individual to waive their rights under HIPAA,
7 PRIVFSA
Implement polices and procedures designed to comply with HIPAA and have a written manual of such policies and
procedures; and
Amann the health plan rinnilment to include referenne to the Privnny Rillec (the amenrlerl FI FX
Packet accomplishes this by reference to your Privacy Notice)
In order to disclose PHI to its Plan Sponsor, the health plan must be amended in the following ways
Describe the permitted and required uses and disclosures of PHI by the Plan Sponsor.
Specify that disclosure is permitted only upon written certification that the plan documents have been amended to include
cnenifin rectrintinnc and that the Plan Snnncnr PgrPPC to thnce rectrintinnc
Describe the employees (or class of employees) or other persons under control of the Plan Sponsor who may be given
access to PHI;
• Restrict access to and use by such individuals to plan administration functions that the plan sponsor performs for the health
plans, and
• Provide a procedure for resolving any issues of non-compliance by such individuals
nNF® CafetP.ria Plan
The sample plan language, included :_i SLC updated fLCV O E° Cafeteria Plan Packet accomplishes the required amendment
by incorporating language from the Privacy Notice you create and distribute
8 PRIVFSA
"2300G09020046
Exhibit A
HEALTH INSURANCE PORTABILITY
AND
ACCOUNTABILITY ACT OF 1996
PRIVACY RULES
BUSINESS ASSOCIATE AGREEMENT
•
THIS APPENDIX, effective 1-1 —05 by and between G•i y O Ail. vrn("Plan")
and AFLAC (AFLAC) is incorporated into and made a part of the Reimbursement Services Agreement ("Agreement") between
AFLAC and CITY OF YAKIMA ("Employer") This Appendix is intended to comply with the business associate agreement
provisions set forth in 45 CFR §164 504(e), and any other applicable provisions of 45 CFR parts 160 and 164, subparts A and E
(the "Privacy Rules"), issued pursuant to the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191
("H I PAA")
AFLAC recognizes that in the performance of services for the Plan under the Agreement it will have access to, create, and/or
receive from the Plan or on its behalf Protected Health Information ("PHI") For purposes herein, PHI shall have the meaning
given to such term in 45 C.F R. § 164 501, limited to the information created or received from the Plan or on its behalf by
AFLAC Whenever used in this Appendix other capitalized terms shall have the respective meaning set forth below, unless a
different meaning shall be clearly required by the context. In addition, other capitalized terms used in this Appendix, but not
defined herein, shall have the same meaning as those terms are defined in the Privacy Rules
11
SECTION 1. AFLAC RESPONSIBILITIES
AFLAC may use or disclose PHI, provided that such use or disclosure of PHI would not violate the Privacy Rules, as
follows (a) as permitted or required in this Appendix and in the Agreement; (b) as Required by Law in accordance with
45 CFR § 164.512; (c) for the proper management and administration of AFLAC, (d) to fulfill any present or future legal
responsibilities, (e) for Data Aggregation services to the Plan (as defined in 45 CFR § 164.501), or (f) any use and
disclosure of PHI that has been de -identified within the meaning of 45 CFR § 164.514
1.2 AFLAC agrees to implement appropriate safeguards to prevent the use or disclosure of PHI other than as provided for
by this Appendix.
1 3 AFLAC agrees to use reasonable efforts to maintain the security of PHI and to prevent unauthorized uses or disclosures
of such PHI
1 4 AFLAC agrees to report to the Plan any use or disclosure of PHI not provided for by this Appendix or in the Agreement.
1.5 AFLAC agrees to only request, use or disclose the minimum amount of PHI necessary to accomplish the purpose of the
request, use or disclosure
1 6 AFLAC agrees to ensure that any agent, including a subcontractor, to whom it provides PHI agrees to the same
restrictions and conditions that apply through this Appendix to AFLAC with respect to such information.
1 7 AFLAC agrees to provide access, at the request of the Plan, and in the time and manner designated by Plan, to PHI in a
Designated Record Set (as defined in 45 CFR § 164 501), to the Plan, or as directed by the Plan, to an Individual in
order to meet the requirements under 45 CFR § 164.524. AFLAC shall have the right to charge the Individual a
reasonable cost -based fee, as permitted by 45 C F.R. § 164.524 AFLAC assumes no obligation to coordinate the
provision of PHI maintained by other business associates of the Plan
1 8 AFLAC agrees to make any amendment(s) to PHI in a Designated Record Set that the Plan directs or agrees to
pursuant to 45 CFR 164 526 at the request of the Plan or an Individual, and in the time and manner designated by the
Plan.
1 9 AFLAC agrees to make its internal practices, books and records relating to the use and disclosure of PHI received from,
or created or received by AFLAC on behalf of the Plan available to the Secretary (as defined in 45 CFR § 160.103), in
the time and manner designated by the Plan, or the Secretary, for purposes of the Secretary determining the Plan's
compliance with the Privacy Rules
1.10 AFLAC agrees to document such disclosures of PHI and information related to such disclosures as would be required
for the Plan to respond to a request by an Individual for an accounting of disclosures of PHI in accordance with 45 CFR
164.528.
1 11
AFLAC agrees to provide to Plan or an Individual, in the time and manner designated by Plan, information collected in
accordance with 1 10 to permit the Plan to respond to a request by an Individual for an accounting of disclosures of PHI
in accordance with 45 CFR § 164.528
9 PRIVFSA
1 12 Fxcept as provided for herein, or as required by law upon termination of the Agreement, AFLAC agrees to return to the
Plan or destroy PHI and retain no copies in any form, if feasible. In the event that AFLAC determines that returning or
destroying the PHI is infeasible, AFLAC agrees to extend the protections, limitations and restrictions of this Appendix to
such PHI and to limit any further uses and/or disclosures of such PHI retained to the purpvoca that make the return or
destruction of the PHI infeasible, for as long as AFLAC maintains such PHI Both parties agree that this Section 1 12 shall`
survive the expiration or termination of the Agreement and remain in full force and effect thereafter for so long as AFLAC or
any of AFLAC' employees, subcontractors, or agents remain in possession of any PHI, and shall expire thereafter
SFC:TIfN 9, PI AN £Nil FMPI (IYFR RFSPONSIRII ITIFS
2.1 Employer acting as the Plan Sponsor agrees to comply with the administrative requirements set forth in 45 C.F.R § §
164 530 and 164 504(f), including but not limited to amending the Plan to restrict uses and disclosures of PHI. The
Employer agrees to forward a copy of such signed amendment to AFLAC at least 10 business days before the effective
date of this Appendix. [Note. If Employer has adopted AFLAC's revised Plan Document (rev 1/03), Employer shall send a
signed copy of the updated adoption page].
2.2 The Employer acknowledges and agrees that AFLAC shall only disclose PHI in its possession to the Named Contact as
designated (and through the modes specified) in Section III F The employees who are identified on the applicable plan
document request form (and in the Plan documents) shall be the Designated Persons in accordance with 45 C.F R. §
164 504(f), and disclosures to such persons by AFLAC are solely for purposes of carrying out plan administration functions
that the Employer performs for the Plan.
2 3 Employer shall timely notify AFLAC in writing of any changes to the names or positions of employees listed in subsection
2.2 as Designated Persons AFLAC shall have no duty to inquire whether the list of Designated Persons is accurate
2 4 Employer acknowledges and agrees that under the Privacy Rules Designated Persons may only request the minimum
amount of PHI necessary to accomplish the purpose of the request, use or disclosure. AFLAC shall have no duty to ensure
that the amount of PHI requested by the Designated Persons is the minimum amount necessary
2.5 AFLAC shall have no liability for uses or disclosures contemplated in the Agreement. Employer shall indemnify and hold
harmless AFLAC (and its employees) for any and all liability AFLAC may incur as a result of any improper use or disclosure
of PHI by the Plan, Employer or a Designated Person(s)
2 6 Plan shall not request AFLAC to use or disclose PHI in any manner that would not be permissible under the Privacy Rules
if done by the Plan, except that AFLAC may use or disclose PHI as provided in Section 1.1
2 7 Pian shall provide Pian participants and beneficiaries with adequate notice of the uses and disclosures of PHI that may be
made by the Plan, and of the individual's rights and the Plan's responsibilities with respect to PHI as required in 45 CFR §
164.520. The Plan further agrees to forward a copy of such notice to AFLAC, as well as any changes to such notices.
2.8 Plan shall provide AFLAC with any changes to, or revocation of, permission by a Participant or Beneficiary to use or
disclose PHI, if such changes affect AFLAC's permitted or required uses or disclosures
2 9 Plan shall not agree to any special privacy restrictions requested by an Individual without AFLAC's written approval,
including those provided for45 CFR § 164.522.
2.10 Notwithstanding any other provision of this Agreement, AFLAC recognizes that the Plan may have other business
associates and its sharing of PHI with such other business associates of the Plan will be reasonable and necessary to
facilitate Plan administration AFLAC agrees to disclose PHI in its possession to such other entities as directed by the Plan,
provided that such other business associates agree to comply with the Privacy Rules with respect to the use and disclosure
of such PHI. Plan shall be solely responsible for ensuring that it has entered into appropriate business associate
agreements with its other business associates in accordance with 45 C.F R. § 164 504(e).
SECTION 3. MISCELLANEOUS
3.1 Both parties agree that nothing express or implied in this Appendix is intended to confer, nor shall anything herein confer,
upon any person other than AFLAC, the Plan, the Employer, and their respective successors, or assigns, any rights,
remedies, obligations, or liabilities whatsoever
3.2 This Appendix shall be interpreted as broadly as necessary to implement and comply with HIPAA and the Privacy Rules,
and any ambiguity in this Appendix shall be resolved in favor of a meaning that complies and is consistent with HIPAA and
the Privacy Rules Both parties agree that the provisions of this Appendix shall prevail over any provisions in the
Agreement that may conflict or appear inconsistent with any provisions of this Appendix.
10 PRIVFSA
'' H111 11111 11111 11111 11111 111 11 11111 11111 11111 11111111
1 111111 11111 11111 11111 111111 1111 11
*2300G09020046
3.3 Both parties acknowledge that future changes to the requirements of HIPAA, the Privacy Rules, and other applicable laws
relating to the security or confidentiality of PHI may require amendment of this Appendix. Upon the written request of either
party, the other party agrees to promptly enter into negotiations concerning the terms of an amendment to this Appendix. If
either party disagrees with any such amendment, it shall so notify the other party in writing within 30 days of notice. If the
parties are unable to agree on an amendment within 30 days thereafter, then any of the parties may terminate the
Agreement in accordance with Section VI of the Agreement.
3 4 Notwithstanding Section 3.3 above and without limiting the rights of the parties under the Agreement, upon written notice of
the existence of an alleged material breach of the terms of this Appendix, the Plan shall afford AFLAC an opportunity to cure
said breach upon mutually agreeable terms Failure to cure within 30 days shall be immediate grounds for termination of
the Agreement.
3.5 Section 1 12 shall survive the termination or expiration of the Agreement for the reasons stated therein. The other
provisions of this Appendix shall survive the termination of the Agreement and remain in full force and effect thereafter for
so long as AFLAC or any of its employees, agents or subcontractors remains in possession of PHI in accordance with
Section 1.12 of this Appendix and shall expire thereafter
IN WITNESS WHEREOF, the parties hereto have caused this Appendix to the Services Agreement to be executed and signed by an
Officer of the Employer and an Officer or duly authorized Worldwide Headquarters Employee of AFLAC to do so.
SA"
Dated at AFLAC this IS day of
By:
Ocabci-- 2an"-1
Robert M. Ottman
Second Vice President, AFLAC Administrative Services
Dated at 1(4 - Ile -r
By:
Street Address. (c -)Ci N t Daa 5
this 2 bll' day of Oftbi , ZODY
i � jl1��i/Nrec
t rvtc� r k. A (g`lC
Title:
11 PRNFSA
*2300G09020046
TABLE OF CONTENTS
FLEXIBLE BENEFITS PLAN
PREAMBLE 3
ARTICLE I - DEFINITIONS 3
1 01 "Affiliated Employer" 3
1 02 "After-tax Contribution(s) " 3
1.03 "Anniversary Date" 3
1 04 "Benefit Plan(s) or Policy(ies) " 3
1 05 "Board of Directors" 3
1 06 "Change in Status" 3
107 "Code" 3
1.08 "Compensation" 3
1.09 "Dependent" 3
1 10 "Dependent Care Expense Reimbursement" 3
1 11 "Earned Income" 3
1 12 "Effective Date" 3
1 13 "Eligible Employment -Related Expenses" 3
1 14 "Eligible Medical Expenses" 4
1.15 "Employee" 4
116 "Employer" 4
117 "ERISA" 4
1 18 "Medicare Care Expense Reimbursements" 4
1 19 "Highly Compensated Individual" 4
1.20 "Key Employee" 4
1.21 "Nonelective Contribution(s)" 4
1.22 "Participant" 4
1.23 "Plan" 4
1.24 "Plan Administrator" 4
1.25 "Plan Year" 4
1.26 "Pre-tax Contribution(s)" 4
1.27 "Qualified Benefit" 4
1.28 "Qualifying Employment -Related Expenses" 5
1.29 "Qualifying Individual" 5
1.30 "Qualifying Services" 5
1 31 "Reimbursement Account(s)" or "Account(s)" 5
1 32 "Salary Redirection Agreement" or "SRA" 5
133 "Spouse" 5
1.34 "Student" 5
1.35 "Summary Plan Description" or "SPD" 5
136 "Trustee" 5
ARTICLE II - ELIGIBILITY AND PARTICIPATION 5
2 01 Eligibility to Participate 5
2.02 Termination of Participation 6
2.03 Eligibility to Participate in Reimbursement Accounts 6
2.04 Qualifying Leave Under FMLA 6
2 05 Non-FMLA Leave 6
ARTICLE III - BENEFIT ELECTIONS
3 01 Election of Contributions
3 02 Initial Election Period
3.03 Annual Election Period
3.04 Change of Elections
3.05 Impact of Termination of Employment on Election or Cessation of Eligibility
6
6
6
6
6
7
ARTICLE IV - BENEFIT FUNDING AND CREDITS AND DEBITS TO ACCOUNTS 7
4 01 Source of Benefit Funding 7
4 02 Reduction of Certain Elections to Prevent Discrimination 7
4.03 Medical Care Expense Reimbursement 7
4.04 Dependent Care Expense Reimbursement 7
ARTICLE V- BENEFITS 7
5 01 Qualified Benefits 7
5 02 Cash Benefit 8
5 03 Repayment of Excess Reimbursements 8
5 04 Termination of Reimbursement Accounts 8
5 05 Coordination of Benefits Under the URM 8
1 PLANDOC
ARTIfI F VI - P1 AN AnMINISTRATIQN 8
6 01 Allocation of Authority 8
6 02 Payment of Administrative Expenses 9
a no n
U UJ oGJUItirn cu U nisclo�ure nhi,ra+,ons
0
6.04 Indemnification 9
6 05 Substantiation of Expenses 9
6 06 Reimbursement 9
6 07 Annual Statements 9
ARTICLE VII - FUNDING AGENT 9
ARTICLE VIII - CLAIMS PRnr.Fnl'RES 9
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
9 01 Permanency
9.02 Employer's Right to Amend
9.03 Employer's Right to Terminate
9 04 Determination of Effective Date of Amendment or Termination
ARTICLE X- GENERAL PROVISIONS
10.01 Not an Employment Contract
10.02 Applicable Laws
10.03 Post -Mortem Payments
10.04 Nonalienation of Benefits
10.05 Mental or Physical Incompetency
10.06 Inability to Locate Payee
10.07 Requirement for Proper Forms
10 08 Source of Payments
10.09 Multiple Functions
10.10 Tax Effects
10 11 Gender and Number
10.12 Headings
10.13 Incorporation by Reference
10.14 Severability
10.15 Effect of Mistake
10.16 Provisions Relating to Insurers
10.17 Forfeiture of :lnclaimed Reimbursement Account Benefits
10.18 HIPAA PRIVACY
ARTICLE XI - CONTINUATION COVERAGE UNDER COBRA
EMPLOYER'S ACKNOWLEDGEMENT
ATTACHMENT I - SUMMARY PLAN DESCRIPTION (SPD)
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
11
11
11
11
11
11
11
11
11
11
112
2 PLANDOC
PREAMBLE
The Employer hereby establishes a Flexible Benefits Plan ("Plan") for its Employees for purposes of providing eligible
Employees with the opportunity to choose from among the fringe benefits available under the Plan. The Plan is intended
to qualify as a cafeteria plan under the provisions of Code Section 125. The Dependent Care Expense Reimbursement
Plan ("DDC") is intended to qualify as a Code Section 129 dependent care assistance plan, and the Medical Care Expense
Reimbursement Plan ("URM") is intended to qualify as a Code Section 105 medical expense reimbursement plan.
Although printed within this document, the DDC and URM Plans are separate written plans for purposes of administration
and all reporting and nondiscrimination requirements imposed by Sections 105 and 129 of the Code and all applicable
provisions of ERISA. The DDC and the URM are available only if designated as a Benefit Plan or Policy in the Summary
Plan Description (SPD).
FLEXIBLE BENEFITS PLAN
ARTICLE 1- DEFINITIONS
1.01 "Affiliated Employer" means any entity who is considered with the Employer to be a single employer in accordance
with Code Section 414(b), (c), or (m) of the Code
1.02 "After-tax Contribution(s)" means amounts withheld from an Employee's Compensation pursuant to a Salary
Redirection Agreement (SRA) after all applicable state and federal taxes have been deducted. Such amounts are withheld for
purposes of purchasing one or more of the Benefit Plans or Policies available under the Plan
1.03 "Anniversary Date" means the first day of any Plan Year.
1.04 "Benefit Plan(s) or Policy(ies)" means those Qualified Benefits available to a Participant under this Plan as set forth
in the SPD, as amended and/or restated from time to time
1.05 "Board of Directors" means the Board of Directors or other governing body of the Employer (the "Board"). The
Board, upon adoption of this Plan, appoints the Plan Administrator to act on the Employer's behalf in all matters regarding the Plan
1.06 "Change in Status" means any of the events described in the SPD, as well as any other events included under
subsequent changes to Code Section 125 or regulations issued under Code Section 125, that the Plan Administrator (in its sole
discretion) decides to recognize on a uniform and consistent basis as a reason to change the election mid -year. Note: See the SPD
for requirements that must be met to permit certain mid -year election changes on account of a Change in Status.
1.07 "Code" means the Internal Revenue Code of 1986, as amended
1.08 "Compensation" means the cash wages or salary paid to an Employee by the Employer.
1.09 "Dependent" means any individual who is a tax dependent of the Participant as defined in Code Section 152(a);
however, that in the case of a divorced Employee: i) for purposes of the DDC, Dependent shall be defined as in Code Section
21(e)(5) (i.e. dependent of the parent with custody), and ii) for purposes of accident or health coverage, a child of divorced parents
shall be considered a Dependent of both parents.
1.10 "Dependent Care Reimbursement" shall have the meaning assigned to it by Section 5.01 of the Plan
1.11 "Earned Income" means all income derived from wages, salaries, tips, self-employment, and other Compensation
(such as disability or wage continuation benefits), but only if such amounts are includable in gross income for the taxable year.
Earned income does not include any other amounts excluded from earned income under Code § 32(c)(2), such as amounts received
under a pension or annuity, or pursuant to workers' compensation.
`,2 1.12 "Effective Date" of this Plan is the effective date set forth in the SPD.
v
*2300G09020046
1.13 "Eligible Employment -Related Expenses" means those Qualifying Employment -Related Expenses (as defined
below) paid or incurred incident to maintaining employment after the date of the Employee's participation in the DDC and during the
Plan Year, other than amounts paid to:
(a)
an individual with respect to whom a Dependent deduction is allowable under Code Sec. 151(c) to the Participant or
his Spouse;
(b) the Participant's Spouse; or
(c) a child of the Participant who is under 19 years of age at the end of the taxable year in which the expenses were
incurred
3 PLAN DOC
1.14 "Eligible Medical Expenses" means those expenses incurred by the Employee, or the Employee's Spouse or
Dependents, after the date of the Employee's participation in the URM and during the Plan Year to the extent that the expense
satisfies the conditions set forth in the Summary Plan Description and are for "medical care" as defined by Code Section 213(d) For
purposes of this Pian, the following expenses are not considered "Eligible Medical Expenses" even if they otherwise constitute
"medical care" under Code Section 213(d) i) expenses for qualified long term care services (as defined in Code § 7702B(c)), and ii)
expenses incurred for health insurance premiums. 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, regardless of when the expense is paid.
"Employee" individual whoconsidered to he in a legal empinyer_empinyee relationship_ with the
1.15 "Employee" moans any l..0 i. �.. �. �,� ....., is.., ...., ��� �. ...y.... _...p.._�_. _...r.-�--
Employer for federal tax -withholding purposes Such term includes "former employees" for the limited purpose of allowing continued
eligibility for benefits hereunder for the remainder of the Plan Year in which an employee ceases to be employed by the Employer
The term "Employee" shall not include any leased employee (as that term is defined in Code Section 414(n)) or any self- employed
individual who receives from the Employer "net earnings from self- employment" within the meaning of Code Section 401(c)(2)
unless such individual is also an Employee
1.16 "Employer" means the Employer and the Affiliated Employers named in the SPD provided, however, that when the
Plan provides that the Employer has a certain power (e g , the appointment of a Plan Administrator, entering into a contract with a
third party insurer, or amendment or termination of the plan) the term "Employer" shall mean only that entity named on the first line of
the Plan Information Summary of the SPD, and not any Affiliated Employer. Affiliated Employers who sign the Plan Information
Summary andler otherwise adopt the Pian shall be hound by the Plan as adopted and subsequently amended unless they clearly
withdraw from participation herein
1.17 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.
1.18 "Health Care Reimbursement" shall have the meaning assigned to it by Section 5.01 of the Plan
1.19 "Highly Compensated individual" means an individual defined under Code Section 105(h), 125(e), or 414(q), as
amended, as a "highly compensated individual" or a "highly compensated employee."
1.20 "Key Employee" means an individual who is a "key employee" as defined in Code Section 125(b)(2), as amended
1.21 "Nonelective Contribution(s)" means any amount that the Employer, in its sole discretion, may contribute on behalf
of each Participant to provide benefits for such Participant and his or her Spouse and Dependents, if applicable, under one or more
of the Benefit Plan(s) or Policy(ies) offered under the Plan. The amount of employer contribution that is applied towards the cost of
the Benefit Plan(s) or Policy(ies) for each Participant and/or level of coverage shall be subject to the sole discretion of the Employer
The amount of Nonelective Contribution for each Participant may be adjusted upward or downward in the contributing Employer's
sole discretion The amount shah be calculated for each Pian Year in a uniform and nondiscriminatory manner and may be based
upon the Participant's dependent status, commencement or termination date of the Participant's employment during the Plan Year,
and such other factors as the Employer shall prescribe. To the extent set forth in the SPD or enrollment material, the Employer may
make Nonelective Contributions available to Participants and allow Participants to allocate the Nonelective Contributions among the
various Benefit Plans or Policies offered under the Plan in a manner set forth in the SPD of additional, taxable Compensation except
as otherwise provided in the SPD or enrollment material.
1.22 "Participant" means an Employee who becomes a Participant pursuant to Article II.
1.23 "Plan" means the Flexible Benefits Plan, the SPD (defined in Section 1.35 herein) and (if applicable) the related Trust
created by this document.
1.24 "Plan Administrator" means the person(s) or Committee identified in the SPD that is appointed by the Employer with
authority, discretion, and responsibility to manage and direct the operation and administration of the Plan if no such person is
named, the Plan Administrator shall be the Employer.
1.25 "Plan Year" shall be the period of coverage set forth in the SPD
1.26 "Pre-tax Contribution(s)" means amounts withheld from an Employee's Compensation pursuant to a Salary
Redirection Agreement before any applicable state and federal taxes have been deducted The amounts are withheld for purposes
of purchasing one or more of the Benefit Plans or Policies available under the Plan This amount shall not exceed the premiums or
contributions attributable to the most costly Benefit Plan or Policy afforded hereunder, and for purposes of Code Section 125, shall
be treated as an Employer contribution (this amount may, however, be treated as an Employee contribution for purposes of state
insurance laws).
1.27 "Qualified Benefit" means any benefit excluded from the Employee's taxable income under Chapter 1 of the Code
other than Sections 106(b), 117, 124, 127, or 132 and any other benefit permitted by the income Tax Regulations (i.e., any life
4 PLANDOC
*2300609020046
insurance coverage that is includable in gross income by virtue of exceeding the dollar limitation on nontaxable coverage under
Code Sec. 79). Notwithstanding the previous sentence, long-term care insurance is not a "Qualified Benefit."
1.28 "Qualifying Employment -Related Expenses" means those expenses that would be considered to be
employment-related expenses under Section 21(b)(2) of the Code (relating to expenses for household and dependent care services
necessary for gainful employment) if paid for by the Employee to provide Qualifying Services
1.29 "Qualifying Individual" means
(a) a Dependent of the Participant who is under the age of thirteen (13),
(b) a Dependent of a Participant who is mentally or physically incapable of caring for himself or herself; or
(c) the Spouse of a Participant who is mentally or physically incapable of caring for himself or herself
1.30 "Qualifying Services" means services relating to the care of a Qualifying Individual that enable the Participant or his
Spouse to remain gainfully employed which are performed
(a) in the Participant's home, or
(b) outside the Participant's home for (1) the care of a Dependent of the Participant who is under age 13, or (2) the care of
any other Qualifying Individual who resides at least eight (8) hours per day in the Participant's household If the
expenses are incurred for services provided by a dependent care center (i e., a facility that provides care for more than
six (6) individuals not residing at the facility), the center must comply with all applicable state and local laws and
regulations
1.31 "Reimbursement Account(s)" or "Account(s)" shall be the funding mechanism by which amounts are withheld from
an Employee's Compensation and retained for future Health Care Reimbursement (as defined in Section 1.18 herein) and
Dependent Care Reimbursement (as defined in Section 1 10 herein) to the extent adopted by the Employer as set forth in the SPD
No money shall actually be allocated to any individual Participant Account(s); any such Account(s) shall be of a memorandum
nature, maintained by the Administrator for accounting purposes, and shall not be representative of any identifiable trust assets. No
interest will be credited to or paid on amounts credited to the Participant Account(s).
1.32 "Salary Redirection Agreement" or "SRA" means the actual or deemed agreement pursuant to which an eligible
Employee or Participant elects to contribute his share of the cost of chosen Benefit Plans or Policies with Pre-tax or After-tax
Contributions and/or Benefit Credits (if offered under the Plan) in accordance with Article III herein If the Employer utilizes an
interactive voice response (IVR) system or web -based program for enrollment, the SRA may be maintained on an electronic
database in accordance with all applicable federal and/or state laws.
1.33 "Spouse" means an individual who is legally married to a Participant (and who is treated as a spouse under the
Code), but for purposes of the Dependent Care Reimbursement Plan provisions, shall not include an individual who, although
married to the Participant, files a separate federal income tax return, maintains a separate, principal residence from the Participant
during the last six months of the taxable year, and does not furnish more than one-half of the cost of maintaining the principal place
of abode of the Qualifying Individual.
1.34 "Student" means an individual who, during each of five (5) or more calendar months during the Plan Year, is a full
time student at any college or university, the primary function of which is the conduct of formal instruction, and which routinely
maintains a regular faculty and curriculum and normally has an enrolled student body in attendance at the location where its
educational activities are regularly presented.
1.35 "Summary Plan Description" or "SPD" means the document attached as Attachment I to the Plan document that
describes the term of Plan not set forth herein The SPD and all applicable appendices are incorporated hereto by reference
1.36 "Trustee" (if applicable) means the person(s) or institution (and their successors) named on the signature page
attached hereto, who have assented to being so named by their signature to this Agreement, otherwise empowered to hold and
disburse the funds that are created hereunder.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
2.01 Eligibility to Participate. Each Employee who satisfies the eligibility requirements set forth in the SPD shall be
eligible to participate in this Plan as of any applicable entry date set forth in the SPD The provisions of this Article are not intended
to override any eligibility requirement(s) or waiting period(s) specified in the applicable Benefit Plans or Policies and the terms of
eligibility and participation for the Benefit Plan(s) or Policy(ies) offered under the Plan shall be subject to the requirements specified
in the governing documents of the Benefit Plans or Policies
5 PLANDOC
909
Termination of Participation Participation shall terminate on the earliest of the dates set forth in the SPD
2.03 Eligibility to Participate in Reimbursement Accounts. Each Employee who satisfies the eligibility requirements set
forth in the SPD shall be eligible to participate in the Reimbursement Accounts, if adopted by the Employer, on the date set forth in
the SPD Participation in the Reimbursement Accounts shall be effective on the date set forth in the SPD
2.04 Qualifying Leave Under FMLA. Notwithstanding any provision to the contrary in this Plan, if a Participant goes on a
qualifying leave under the Family and Medica! Leave Act of 1993 (the "FMLA"), then to the extent required by the FMLA, the
PartiParticipant will h.. .,.,+i+l.,rh +.. continue the Participant's Pen -fit Piapc or Pniirioc +hat provide health coverage (inoliding I IRM
cipant ua,l l.raln vvnl be ernnl e.a w a.vnullae a. ales. I aa�a, a,l1-' �.., ..����. �..��., � .•..�.. ...... .. _........
benefits to the extent offered under the Plan) on the same terms and conditions as if the Participant were still an active Employee.
The requirements for continuing coverage, procedures for FMLA leave, and payment option(s) provided by the Employer (as
described above) will be set forth in the SPD and will be administered in accordance with the regulations issued under Code Section
125 and in accordance with the FMLA.
2.05 Non-FMLA Leave. If a Participant goes on an unpaid leave of absence that does not affect eligibility under this Plan or
the Benefit Plans or Policies chosen by the Participant, then the Participant will continue to participate and the contributions due for
the Participant will be paid by one or more of the payment options described in the SPD If a Participant goes on an unpaid leave
that affects eligibility under this Plan or the Benefit Plans or Policies chosen by the Participant, the election change rules in Section
3.04 will apply. If such policy requires coverage to continue during the leave but permits a Participant to discontinue contributions
while on leave the Participant will upon returning from leaves he required to repay the contributions not paid by the Participant
during the leave.
ARTICLE til - BENEFIT ELECTIONS
3.01 Election of Contributions A Participant may elect any combination of Pre-tax Contributions or After-tax Contributions
(as set forth in the SPD) to fund any Benefit Plan or Policy available under the Plan, provided that only Qualified Benefits may be
funded withPre-tax ContributionsThe Employer butnotrequired, to allocate Non -elective Contributionsto one or more
lulldeu Employer may, is ar,,,,,aa..
Benefit Plans or Policies offered under the Plan and to the extent set forth in the SPD or enrollment material, may allow the
Participants to allocate his allotted share of Nonelective Contributions among the various Benefit Plans or Policies in a manner set
forth in the SPD or enrollment material
3.02 Initial Election Period.
(a) Currently Eligible Employees. An Employee who is eligible to become a Participant in this Plan as of the Effective
must complete, and SRA with Plan Administrator the election by the
Date L.olllp lc6c, sign file an the Plan aavl during � period (as specified
Plan Administrator) immediately preceding the Effective Date of the Plan in order to become a Participant on the
Effective Date The elections made by the Participant on this initial SRA shall be effective, subject to Section 3 04, for
the Plan Year beginning on the Effective Date
(h)
New Employees and Employees Who Have Not Yet Satisfied The Plan's Waiting Period. An Employee who
becomes eligible to become a Participant in this Plan after the Effective Date must complete, sign and file a SRA with
the Plan Administrator (or its designated third party administrator as set forth on the SRA) during the Initial Election
Period set forth in the SPD or the enrollment material Participation will commence under this Plan as set forth in the
SPD. Coverage under the component Benefit Plans or Policies will be effective in accordance with the governing
provisions of such Benefit Plans or Policies.
(c) Failure to Elect. An eligible Employee who fails to complete, sign and file a SRA in accordance with paragraph (a) or
(b) above during an initial election period may become a Participant on a later date in accordance with Section 3.03 or
3.04.
3.03 Annual Election Period. Each Employee who is a Participant in this Plan or who is eligible to become a Participant in
this Plan shall be notified, prior to each Anniversary Date of this Plan, of his right to become a Participant in this Plan, to continue
participation in this Plan, or to modify or to cease participation in this Plan, and shall be given a reasonable period of time in which to
exercise such right: such period of time shall be known as the Annual Election Period. The date that the Annual Election Period
commences and ends will be set forth in the SPD or the enrollment material An election is made during the Annual Election Period
in the manner set forth in the SPD The consequences of failing to make an election during the Annual Election Period will be set
forth in the SPD
3.04 Change of Elections. A Participant shall not make any changes to the Pre-tax Contribution amount or, where
applicable, to the Participant's elected allocation of Nonelective Contributions except for election changes permitted under this
Section 3 04, and for changes made during the Annual Election Period (Section 3 03), changes caused by termination of
employment (Section 3 05) and changes pursuant to the Family and Medical Leave Act (Section 2.04).
Except as provided in the SPD for HIPAA special enrollment rights arising from the birth, adoption, or placement for adoption of
a child, all election changes shall be effective on a prospective basis only (i.e , election changes will become effective no earlier than
6 PLANDOC
the first day of the first pay period coinciding with or immediately following the date that the election change was filed) but, as
determined by the Plan Administrator, election changes may become effective later to the extent the coverage in the applicable
component plan commences later The circumstances under which a Participant may change his election under this Plan are set
forth in the SPD
3.05 Impact of Termination of Employment on Election or Cessation of Eligibility. Termination of employment or
cessation of eligibility shall automatically revoke any SRA. Except as provided below, if revocation occurs under this Section 3 05, no
new election with respect to Pre -Tax Contributions may be made by such Participant during the remainder of the Plan Year Rules
governing elections for former participants rehired during the same Plan Year shall be set forth in the SPD
ARTICLE IV - BENEFIT FUNDING AND CREDITS AND DEBITS TO ACCOUNTS
4.01 Source of Benefit Funding. The cost of coverage under the component Benefit Plans or Policies shall be funded by
the Participant's Pre-tax and/or After-tax Contributions and/or any Nonelective Contributions provided by the Employer The
required contributions for each of the Benefit Plans or Policies offered under the Plan shall be made known to employees in
enrollment materials Pre-tax or After-tax Contributions (as elected by the Employee on the SRA) shall equal the contributions
required from the Participant less any available Nonelective Contributions allocated thereto by the Employer, or where applicable,
the Participant for coverage of the Participant or the Participant's Spouse or Dependents under the Benefit Plans or Policies elected
by the Participant under this Plan Amounts withheld from a Participant's Compensation as Pre-tax Contributions or After-tax
Contributions shall be applied to fund benefits as soon as administratively feasible. The maximum amount of Pre-tax Contributions
plus any Nonelective Contributions made available by the Employer for Benefit Plan(s) or Policy(ies) offered under this Plan shall
not exceed the aggregate cost of the Benefit Plan(s) or Policy(ies) elected by the Employee
4.02 Reduction of Certain Elections to Prevent Discrimination. If the Plan Administrator determines, before or during
any Plan Year, that the Plan may fail to satisfy for such Plan Year any requirement imposed by the Code or any limitation on Pre-tax
Contributions allocable to Key Employees or to Highly Compensated Individuals, the Plan Administrator shall take such action(s) as
he deems appropriate, under rules uniformly applicable to similarly situated Participants, to assure compliance with such
requirement or limitation Such action may include, without limitation, a modification or revocation of a Highly Compensated
Individual's or Key Employee's election without the consent of such Employee.
4.03 Health Care Reimbursement. To the extent offered under the Plan, each Participant's URM will be credited for
Health Care Reimbursement with amounts withheld from the Participant's Compensation and any Nonelective Contributions
allocated thereto by the Employer or where applicable, the Participant. The Account will be debited for Health Care
Reimbursements disbursed to the Participant in accordance with Article V of this document. The entire amount elected by the
Participant on the SRA as an annual amount for the Plan Year for Health Care Reimbursement less any Health Care
Reimbursements already disbursed to the participant for Expenses incurred during the plan year shall be available to the Participant
at any time during the Plan Year without regard to the balance in the Health Care Account (provided that the periodic contributions
have been made). Thus, the maximum amount of Health Care Reimbursement at any particular time during the Plan Year will not
relate to the amount that a Participant has had credited to his URM In no event will the amount of Health Care Reimbursements in
any Plan Year exceed the annual amount specified for the Plan Year in the SRA for Health Care Reimbursement. Any amount
credited to the Health Care Account shall be forfeited by the Participant and restored to the Employer if it has not been applied to
provide Health Care Reimbursement within the Run -Off period set forth in the SPD Amounts so forfeited shall be used in a manner
that is permitted within the applicable Department of Labor ("DOL") or Internal Revenue Service ("IRS") regulations. The maximum
annual reimbursement under the URM shall be set forth in the SPD. The Employer may establish a minimum annual
reimbursement amount as set forth in the SPD
4.04 Dependent Care Reimbursement. To the extent offered under the Plan, each Participant's DDC will be credited for
Dependent Care Reimbursement with amounts withheld from the Participant's Compensation, and any Nonelective Contributions
allocated thereto by the Employer or where applicable, the Participant. The Dependent Care Account will be debited for Dependent
Care Reimbursements disbursed to the Participant in accordance with Article V of this document. In the event that the amount in the
Account is less than the amount of reimbursable claims at any time during the Plan Year, the excess part of the claim will be carried
cc over into following months within the same Plan Year, to be paid out as the Dependent Care Account balance becomes adequate In
no event will the amount of Dependent Care Reimbursements exceed the amount credited to the Dependent Care Account for any
Plan Year Any amount allocated to the Dependent Care Account shall be forfeited by the Participant and restored to the Employer if
it has not been applied to provide Dependent Care Reimbursement for the Plan Year within the Run -Off period set forth in the SPD
Amounts so forfeited shall be used in a manner that is not prohibited by applicable federal or state law. The maximum annual
reimbursement amount shall be set forth in the SPD. The Employer may establish a minimum annual reimbursement amount as set
forth in the SPD.
*2300009020046
ARTICLE V - BENEFITS
5.01 Qualified Benefits. The maximum benefit a Participant may elect under this Plan shall not exceed the sum of i) the
aggregate premium for all Benefit Plan(s) or Policy(ies) set forth in the SPD (other than Health and DDC), ii) the maximum annual
7 PLANDOC
Health Care Reimbursement under the I IRM as set forth in the SPD (if offered under the Plan), and iii) the maximum annual
Dependent Care Reimbursement under the DDC as set forth in the SPD (if offered under the Plan)
(a) Special Rules for Health Care Reimbursement. To the extent offered under the Plan, payment shall be made to the
Participant in cash as reimbursement for Eligible Medical Expenses incurred by the Participant or his Spouse or
Dependents while he is a Participant during the Plan Year for which the Participant's election is effective provided that
the substantiation requirements of Section 6 05 herein are satisfied.
for Dcpcndernt f am Reimbursement To the extent offered under the Plan payment shall be made
to the Participant in cash as reimbursement for Eligible Employment Related Expenses incurred by him while a
Participant, during the Plan Year for which the Participant's election is effective, provided that the substantiation
requirements of Section 6.05 have been satisfied
5.02 Cash Benefit. To the extent that a Participant does not elect to have the maximum amount of his Compensation
contributed as a Pre-tax Contribution or After-tax Contribution hereunder, such amount not elected shall be paid to the Participant in
the form of normal Compensation payments, provided, however, that any applicable Nonelective Contributions may not be received
in the form of cash compensation, except as otherwise provided for in the SPD or the enrollment material
5.03 Repayment of Excess Reimbursements. If, as of the end of any Plan Year, it is determined that a Participant has
received payments under this Plan that exceed the amount of Eligible Medical Expenses and/or Eligible Employment Related
Expenses that have been substantiated by such Participant during the Plan Year as required by Section 6 05 herein, the Plan
Administrator shall give the Participant prompt written notice of any such excess amount, and the Participant shall repay the amount
of such excess to the Employer within sixty (60) days of receipt of such notification.
5.04 Termination of Reimbursement Accounts. Coverage under the URM and/or DDC shall cease as of the day in which
a Participant is no longer employed by the Employer or when a premium payment for the respective plan(s) has been missed for any
reason Provided, however, that Participants may submit claims for reimbursement for Eligible Employment -Related Expenses
arising during the Plan Year at any time until the end of the Run -Off period set forth in the SPD Participants in the URM may submit
claims for reimbursement for Eligible Medical Expenses arising during the Plan Year and before the date of separation from service
at any time until the end of the Run -Off period set forth in the SPD. Unless a COBRA election is made as set forth in the SPD,
Participants shall not be entitled to receive reimbursement for Eligible Medical Expenses incurred after employment ceases under
this Section. Any unused reimbursement benefits at the expiration of the Plan Year (as set forth in the SPD) shall be treated in
accordance with Sections 4 03 or 4.04
5.05 Coordination of Benefits Under the URM. The URM is intended to pay benefits solely for otherwise unreimbursed
medical expenses Accordingly, it shall not be considered a group health plan for coordination of benefits purposes, and its benefits
shall not be taken into account when determining benefits payable under any other pan.
ARTICLE VI - PLAN ADMINISTRATION
6.01 Allocation of Authority. The Board of Directors or applicable governing body (or an authorized officer of the
Employer) appoints a Plan Administrator that keeps the records for the Plan and shall control and manage the operation and
administration of the Plan The Plan Administrator shall have the exclusive right to interpret the Plan and to decide all matters
arising thereunder, including the right to make determinations of fact, and construe and interpret possible ambiguities,
inconsistencies, or omissions in the Plan and the SPD issued in connection with the Plan. In the case of an insured Benefit Plan or
Policy, the insurer shall be the named fiduciary with respect to benefit claim determinations thereunder, and with respect to benefit
claims shall have all of the powers of the Plan Administrator described herein. All determinations of the Plan Administrator with
respect to any matter hereunder shall be conclusive and binding on all persons Without limiting the generality of the foregoing, the
Plan Administrator shall have the following powers and duties
(a) To require any person to furnish such reasonable information as he may request for the purpose of the proper
administration of the Plan as a condition to receiving any benefits under the Plan,
(b) To make and enforce such rules and regulations and prescribe the use of such forms as he shall deem necessary for
the efficient administration of the Plan,
(c) To decide on questions concerning the Plan and the eligibility of any Employee to participate in the Plan and to make
or revoke elections under the Plan, in accordance with the provisions of the Plan,
(d) To determine the amount of benefits which shall be payable to any person in accordance with the provisions of the
Plan, to inform the Employer or insurer as appropriate, of the amount of such benefits, and to provide a full and fair
review to any Participant whose claim for benefits has been denied in whole or in part;
8 PLANDOC
*2300G09020046
(e) To designate other persons to carry out any duty or power which may or may not otherwise be a fiduciary responsibility
of the Plan Administrator, under the terms of the Plan Such entity will be referred to as a third party administrator and
shall be identified in the SPD,
(f)
(9)
To keep records of all acts and determinations, and to keep all such records, books of account, and data and other
documents as may be necessary for the proper administration of the Plan, and
To do all things necessary to operate and administer the Plan in accordance with its provisions.
6.02 Payment of Administrative Expenses. Except as otherwise provided in the SPD, the Employer currently pays all
reasonable expenses incurred in administering the Plan.
6.03 Reporting and Disclosure Obligations. Unless specified otherwise, it shall be the Employer and Plan Administrator's
sole responsibility to comply with all filing, reporting, and disclosure requirements, imposed by the DOL and/or IRS, specifically
including, but not limited to creating, filing and distributing Summary Annual Reports, Form 5500s, and SPDs Furthermore, the
Employer and Plan Administrator shall be required to amend the Plan as is necessary to ensure compliance with applicable tax and
other laws and regulations
6.04 Indemnification. The Plan Administrator shall be indemnified by the Employer against claims, and the expenses of
defending against such claims, resulting from any action or conduct relating to the administration of the Plan except claims arising
from gross negligence, willful neglect, or willful misconduct.
6.05 Substantiation of Expenses. Each Participant must submit a written Claim Form to the Plan Administrator identified
in the SPD or its designated plan service provider to receive reimbursements from the URM and/or DDC, on a form provided by the
Plan Administrator accompanied by a written statement/bill from an independent third party stating that the expense has been
incurred, and the amount thereof. The forms shall contain such evidence, as the Plan Administrator shall deem necessary as to
substantiate the nature, the amount, and timeliness of any expenses that may be reimbursed
6.06 Reimbursement. Reimbursements shall be made as soon as administratively feasible after the required forms have
been received by the Plan Administrator identified in the SPD or its designated plan service provider. Reimbursements of less than
$15 may be carried forward and aggregated with future reimbursements until the reimbursable amount is greater than $15
However, claims for reimbursements outstanding at the end of the Plan Year shall be reimbursed without regard to the $15 threshold
limit. Year-end expense reimbursements must be submitted to the Plan Administrator within 90 days of the close of the Plan Year for
which the SRA is effective, and during which such expense was incurred, in order to be eligible for reimbursement.
6.07 Annual Statements. The Plan Administrator shall furnish each Participant with an annual statement, showing the
amounts paid or expenses incurred by the Employer in providing Medical and/or Dependent Care Expense Reimbursement during
the previous calendar year and the respective Reimbursement Account balance(s) on or before January 31 following the close of the
applicable Plan Year.
ARTICLE VII - FUNDING AGENT
The Plan shall be funded with amounts withheld from Compensation pursuant to SRAs, and/or Nonelective Contributions
provided by the Employer, if any. The Employer will apply all such amounts, without regard to their source, to pay for the welfare
benefits provided herein as soon as administratively feasible and shall comply with all applicable regulations promulgated by the
DOL taking into consideration any enforcement procedures adopted by the DOL. If a Trust is designated Funding Agent in the SPD,
an appropriate Trust Agreement shall be attached at the end of this Plan.
ARTICLE VIII - CLAIMS PROCEDURES
The Plan has established procedures for reviewing claims denied under this Plan and those claims review procedures are set
forth in the SPD The Plan's claim review procedures set forth in the SPD shall only apply to issues germane to the pre-tax benefits
available under this Plan (i.e., such as a determination of. a Change in Status; change in cost or coverage, or eligibility and
participation matters under this Cafeteria Plan document), and to the extent offered under the Plan, claims for benefits under the
Reimbursement Accounts.
9 PLANDOC
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
9.01 Permanency. While the Employer fully expects that this Plan will continue indefinitely, due to unforeseen, future
business contingencies, permanency of the Plan will be subject to the Employer's right to amend or terminate the Plan, as provided
in Sections 9 02 and 9 03 below Nothing in this Plan is intended to be or shall be construed to entitle any Participant, retired or
otherwise, to vested or non -terminable benefits
all of ..FFM..
9.02 Employer's Right to Amend. The Empioyer reserves the right to amend at any time any or all the provisions of he
Plan. All amendments shall be made in writing and shall be approved by the Employer in accordance with its normal procedures for
transacting business (e.g by approval by the Board of Directors through a meeting or unanimous consent of all Board members).
Such amendments may apply retroactively or prospectively as set forth in the amendment. Each Benefit Plan or Policy shall be
amended in accordance with the terms specified therein, or, if no amendment procedure is prescribed, in accordance with this
section Any amendment made by the Employer shall be deemed to be approved and adopted by any Affiliated Employer
9.03 Employer's Right to Terminate. The Employer reserves the right to discontinue or terminate the Plan without
prejudice at any time and for any reason without prior notice Such decision to terminate the Plan shall be made in writing and shall
be approved by the Employer in accordance with its normal procedures for transacting business Affiliated Employers may withdraw
from participation in the Plan, but may not terminate the Plan.
9.04 Determination of Effective Date of Amendment or Termination. Any such amendment, discontinuance, or
termination shall be effective as of such date as the Employer shall determine No amendment, discontinuance or termination shall
allow the return to any Employer of any Reimbursement Account balance for its use for any purpose other than for the exclusive
benefit of the Participants and their beneficiaries except as provided in Section 4.03 and 4 04 herein.
ARTICLE X - GENERAL PROVISIONS
10.01 Not an Employment Contract. Neither this Plan nor any action taken with respect to it shall confer upon any person
the right to continue employment with any Employer
10.02 Applicable Laws. The provisions of the Pian shall be construed, administered and enforced according to applicable
federal law and the laws of the state of the principal place of business of the Employer to the extent not preempted
10.03 Post -Mortem Payments. Any benefit payable under the Plan after the death of a Participant shall be paid to his
surviving spouse (if any), otherwise to his estate. If there is doubt as to the right of any beneficiary to receive any amount, the Plan
Administrator may retain such amount until the rights thereto are determined, without liability for any interest thereon
10.04 Nonalienation of Benefits. Except as expressly provided by the Plan Administrator, no benefit under the Plan shall
be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to
do hall be void. benefit under the PI shall in any manner he iiahio fnr nr subject to the debts, contracts, liabilities
so shall No an .. an -
engagements, or torts of any person
10.05 Mental or Physical Incompetency. Every person receiving or claiming benefits under the Plan shall be presumed to
be mentally and physically competent and of age until the Plan Administrator receives a written notice, in a form and manner
acceptable to it, that such person is mentally or physically incompetent or a minor, and that a guardian, conservator or other person
legally vested with the care of his estate has been appointed
10.06 Inability to Locate Payee. If the Plan Administrator is unable to make payment to any Participant or other person to
whom a payment is due under the Plan because it cannot ascertain the identity or whereabouts of such Participants or other person
after reasonable efforts have been made to identify or locate such person, such payment and all subsequent payments otherwise
due to such Participant or other person shall be forfeited one year after the date any such payment first became due.
10.07 Requirement for Proper Forms. All communications in connection with the Plan made by a Participant shall become
effective only when duly executed on any forms as may be required and furnished by, and filed with, the Plan Administrator
10.08 Source of Payments. The Employer, the Trust fund (if selected as Funding Agent), and any insurance company
contracts purchased or held by the Employer or funded pursuant to this Plan 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
Plan
10.09 Multiple Functions. Any person or group of persons may serve in more than one fiduciary capacity with respect to the
10 PLANDOC
*2300009020046
10.10 Tax Effects. Neither the Employer, its agents, the Plan Administrator, nor the Trustee makes any warranty or other
representation as to whether any Pre-tax Premiums made to or on behalf of any Participant hereunder will be treated as excludable
from gross income for local, state, or federal income tax purposes If for any reason it is determined that any amount paid for the
benefit of a Participant or Beneficiary is includable in an Employee's gross income for local, federal, or state income tax purposes,
then under no circumstances shall the recipient have any recourse against the Plan Administrator or the Employer with respect to
any increased taxes or other losses or damages suffered by the Employees as a result thereof The Plan is designed and is
intended to be operated as a "cafeteria plan" under Section 125 of the Code
10.11 Gender and Number. Masculine pronouns include the feminine as well as the neuter genders, and the singular shall
include the plural, unless indicated otherwise by the context.
10.12 Headings. The Article and Section headings contained herein are for convenience of reference only, and shall not be
construed as defining or limiting the matter contained thereunder
10.13 Incorporation by Reference. Except for the Medical and Dependent Care Expense Reimbursement Plan(s), the
actual terms and conditions of the separate component Benefit Plans or Policies offered under this Plan are contained in separate,
written documents governing each respective benefit, and shall govern in the event of a conflict between the individual plan
document, and this Plan as to substantive content. To that end, each such separate document, as amended or subsequently
replaced, is hereby incorporated by reference as if fully recited herein The provisions of the Medical and Dependent Care Expense
Reimbursement Plan(s) are reproduced herein, but shall constitute separate plans for purposes of all applicable Code and ERISA
provisions.
10.14 Severability. Should any part of this Plan subsequently be invalidated by a court of competent jurisdiction, the
remainder thereof shall be given effect to the maximum extent possible.
10.15 Effect of Mistake. In the event of a mistake as to the eligibility or participation of an Employee, the allocations made to
the account of any Participant, or the amount of distributions made or to be made to a Participant or other person, the Plan
Administrator shall, to the extent it deems possible, cause to be allocated or cause to be withheld or accelerated, or otherwise make
adjustment of, such amounts as will in its judgment accord to such Participant or other person the credits to the account or
distributions to which he is properly entitled under the Plan Such action by the Administrator may include withholding of any
amounts due the Plan or the Employer from Compensation paid by the Employer.
10.16 Provisions Relating to Insurers. No insurer shall be required or permitted to issue an insurance policy or contract
that is inconsistent with the purposes of this Plan, nor be bound to take any action not in accordance with the terms of any policy or
contract with this Plan The insurer shall not be deemed to be a party to this Plan, nor shall it be bound to interpret the construction
or validity of the Plan The insurer shall be protected from its good faith reliance on the written representations and instructions of
the Trustee and the Plan Administrator, and shall not be responsible for the initial or continued qualified status of the Plan
10.17 Forfeiture of Unclaimed Reimbursement Account Benefits. Any Reimbursement Account benefit payments that
are unclaimed (e g , uncashed benefit checks) by the close of the Plan Year following the Plan Year in which the Health or
Dependent Care Expense was incurred shall be forfeited.
10.18 HIPAA Privacy. To the extent a URM is offered under the Plan, the rights and obligations of an individual covered
under the URM, the Employer and Plan, with respect to permitted uses and disclosures of a covered individual's protected health
information, set forth in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) will be summarized in the SPD
ARTICLE XI - CONTINUATION COVERAGE UNDER COBRA
The SPD includes provisions that shall be applicable to the URM to the extent the URM is a "group health plan" as defined by
Code §§ 4980B and 5000(b)(1) and the regulations promulgated thereunder and to the extent it is offered under the Plan. The
intent of those provisions (as incorporated in this Article) is to extend continuation rights required by COBRA.
11 PLANDOC
IN WITNFRS WHEREOF, the Employer has executed this Plan as of the date set forth below
EMPLOYER'S ACKNOWLEDGMENT
As evidenced by the formal execution of this document, the undersigned Employer adopted and established this Plan on the
Effective Date as the Flexible Benefits Plan of the undersigned Employer In doing so, the undersigned Employer acknowledges that
the Summary Plan Description ("SPD") and this Plan document are important legal instruments with significant legal and tax
implications.
The Employer also acknowledges read this SPD the Plan document in their entirety, consulted independent legal
euiNi�yCi awv ainnvvvicuyca that it has this andan has
and tax counsel other than representatives of American Family Life Assurance Company of Columbus (AFLAC), to the extent
considered necessary, and accepts full responsibility for participation of Employees hereunder and the operation of the Plan The
Employer acknowledges that, as sponsor and Plan Administrator, it shall have sole responsibility to comply with all filing, reporting,
and disclosure requirements imposed by the DOL, IRS, or any other government agency, specifically including, but not limited to,
creating and filing Form 5500s and preparing and distributing SPDs Furthermore, the Employer further acknowledges that it shall
bear sole responsibility for amending the Plan as necessary to ensure compliance with applicable tax, labor, and other laws and
regulations The Employer acknowledges receipt of the checklist of Plan Sponsor Responsibilities included provided in with the
applicable plan document request form and has agreed to the obligations set forth therein,
It is also understood and agreed that American Family Life Assurance Company of Columbus (AFLAC), and its Subsidiaries, agents,
and representatives, are not providing legal or tax advice to the undersigned Employer in connection with this Plan and that no
representations are made by it with respect to the operation of the Flexible Benefits Plan pursuant to the documents provided by
American Family Life Assurance Company of Columbus (AFLAC) to the Employer
This Plan shall be construed and enforced according to the Internal Revenue Code of 1986, as amended from time to time, the
applicable regulations thereto, and the laws of the state of the principal place of business of the Employer
IN WITNESS WHEREOF, the Employer has caused this Plan and Summary Plan Description to be executed on the day of
1 A 1 , e S to ratify the adoption of the Plan adopted and effective as of the Effective Date.
WITNESS
Corporate Officer
ATTACHMENT I - SUMMARY PLAN DESCRIPTION
Employer'
By. C• -s• s`�..
Title
Date: ' ®- )
12 PLANDOC
FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION
PLAN INFORMATION SUMMARY
The Employer named below establishes a Flexible Benefits Plan (the "Plan") as set forth in this Summary Plan Description
("SPD") as of the Effective Date set forth below. The purpose of the Plan is to provide eligible Employees a choice between
cash and the specified welfare benefits described in this Plan Information Summary (see "Benefits Provided Under the Plan")
Pre-tax Contribution elections under the Plan are intended to qualify for the exclusion from income provided in Section 125 of the
Internal Revenue Code of 1986.
FLEXIBLE BENEFITS PLAN
EMPLOYER INFORMATION
1) Name and Address of Employer/
Plan Administrator
CITY OF YAKIMA
CITY OF YAKIMA
129 N 2ND ST
YAKIMA, WA 98901
The Plan Administrator has the exclusive right to interpret the Plan and to decide all matters arising under the Plan, including the
right to make determinations of fact and to construe and interpret possible ambiguities, inconsistencies, or omissions in the Plan
and this SPD.
2) Employer's Telephone Number:
3) Employer's Federal Tax
Identification Number:
4) Plan Number Assigned to Cafeteria
Plan (e.g., 501 if this is the first ERISA
Plan Number assigned).
5) 125 Start Date.
6) Effective Date of this Plan:
7) Last Day of the Plan Year
Subsequent Plan Years.
8) Name and Address of
Plan Service Provider:
9) Name and Address of registered
agent for service of legal process:
10) Affiliated Employers that will participate in the Plan (affiliates in excess of 30 are listed in Appendix 1 and are mailed
(509) 575-6090
91-6001293
boa
01/01/05
01/01/05
12/31/05
01/01-12/31
CLAIMS PROCESSOR: FLEX ONE
1932 WYNNTON ROAD
COLUMBUS, GA 31999
RICHARD A ZAIS
*3100G09020046
SPD
11) Employer's Type of Business: OTHER
ELIGIBILITY
All Employees employed by the Employer shall be eligible to participate under the Plan except the following.
TEMPORARY & ANYONE NOT ELIGBILE UNDER CITY HEALTH
An eligible Employee may become a Participant in the Plan.
Immediately, upon the first day of employment (but not prior to the Effective Date of the Plan)
On the day following commencement of employment.
On the first day of the month following days of employment.
Other: ON THE 1ST DAY OF MONTH FOLLOWING EMPLOYMENT
provided the Employee completes a Salary Redirection Agreement ("SRA"). However, eligibility for coverage under any
given Benefit Plan or Policy shall be determined by the terms of that Benefit Plan of Policy, and reductions of the
Employee's Compensation to pay Pre-tax or After-tax Contribution(s) shall commence when the Employee becomes
covered under the applicable Benefit Plan or Policy.
An eligible Employee may become a Participant in the Dependent Care and/or Medical Expense Reimbursement Plan(s) (if
elected below).
On the same day such Employee is eligible for the Pre -Tax Contribution benefits under the Plan.
On the day following commencement of employment.
On the first day of the month following days of employment.
Other: OTHER, provided the Employee completes an SRA selecting such benefits
BENEFITS PROVIDED UNDER THE PLAN
The following Benefit Plans and Policies subject to the terms and conditions of the Plan are available for election by eligible
Employees The maximum a Participant can contribute via the SRA is the maximum aggregate cost of the Benefit Plans or
Policies elected minus any Nonelective Contribution made by the Employer. It is intended that such Pre-tax Contribution
amounts shall, for tax purposes, constitute an Employer contribution, but may constitute Employee contributions for state
insurance law purposes. Copies of the Benefit Plans or Policies (or a list of eligible Policy numbers) shall be attached as an -
appendix to this Plan
Medical Coverage
Vision Care Coverage
Disability Income - Short Term (A&S)
Cancer Insurance
Group Dental Coverage
Group Term Life Insurance
Disability Income - Long Term (LTD)
Intensive Care Insurance
Accident Insurance
Hospital Indemnity Insurance (HIP)
Specified Health Event
Personal Sickness Indemnity (PSI)
Medical Care Expense Reimbursement described in Appendix II to this SPD, not to exceed $ 4,800 per Plan Year
pursuant to the CITY OF YAKIMA Medical Care Expense Reimbursement Plan.
Dependent Care Expense Reimbursement described in Appendix II to this SPD, not to exceed $5,000 per Plan Year or
$2,500 for married filing separate returns pursuant to the CITY OF YAKIMA Dependent Care Expense Reimbursement
Plan.
Opt -out Option' See Employer enrollment material.
THE FUNDING AGENT
The Employer selects the following Funding Agent for the Plan (check one):
❑ The Employer, which will comply with the requirements of Article VII of the Plan
❑ The Flexible Benefits Trust created concurrently with the execution of the Plan, which shall receive contributions under
the Plan in accordance with Article VII of the Plan.
ADMINISTRATIVE EXPENSES
Administrative Expenses incurred in operating the Plan shall be paid by (check one):
❑ The Employer, except as otherwise noted in the Plan.
❑ The Participants, except as otherwise noted in the Plan.
2 SPD
FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION
Introduction
Your employer (the "Employer") is pleased to sponsor an employee benefit program known as a "Flexible Benefits Plan" (the "Plan")
for you and your fellow employees. Under federal tax laws, it is also known as a "cafeteria plan". It is so called because it lets you
choose from several different insurance and fringe benefit programs according to your individual needs The Employer provides you
with the opportunity to use pre-tax dollars to pay for them by entering into a salary redirection arrangement instead of receiving a
corresponding amount of your regular pay This arrangement helps you because the benefits you elect are nontaxable, you save
Social Security and income taxes on the amount of your salary redirection Alternatively, your Employer may allow you to pay for any
of the available benefits with after-tax contributions on a salary deduction basis.
This Summary Plan Description ("SPD") describes the basic features of the Plan, how it operates, and how you can get the maximum
advantage from it. Information relating to the Plan that is specific to your Employer is described in the Plan Information Summary
attached to the front of this SPD. You will be referred to the Plan Information Summary throughout the SPD. The Plan is also
established pursuant to a plan document into which this SPD has been incorporated If there is a conflict between the official plan
document and the SPD, the plan document will govern.
In some cases, the Employer may adopt a Medical Care and/or Dependent Care Reimbursement Plan. If so, they will be listed in the
Plan Information Summary as "Benefits Provided under the Plan," and the SPD for each Reimbursement Plan adopted by the
Employer will be set forth in Appendix I to this SPD To the extent that the Employer adopts a Medical Care Reimbursement Plan as
indicated in the Plan Information Summary, a summary of your rights and obligations under HIPAA's privacy rules is attached.to this
SPD as Appendix II.
Questions & Answers about the Flexible Benefits Plan
Q-1. What is the purpose of the Plan?
The purpose of the Plan is to allow eligible employees to pay for certain benefits offered under the Plan (called "Benefit Plans or
Policies") with pre-tax dollars called "Pre-tax Contributions" Pre-tax Contributions are described in more detail in Q-8 of this SPD.
Q-2. What benefits can I purchase on a pre-tax basis through the Plan?
You will be able to choose to participate in the Plan's various pre-tax options by filling out any required enrollment form(s) for the
component Benefit Plans or Policies offered under the Plan. The complete list of Benefit Plans or Policies offered under the Plan is
located in the Plan Information Summary under "Benefits Offered Under the Plan." NOTE: You may only contribute with Pre-tax
Contributions towards the cost of Benefit Plans or Policies that cover you, your legal Spouse, and/or your tax Dependents defined
under Internal Revenue Code Section 152. Each Benefit Plan or Policy may define eligible Dependents more narrowly for purposes
of coverage under the particular Benefit Plan or Policy
Q-3. Who can participate in the Plan?
Each employee of the Employer (or an Affiliated Employer identified in the Plan Information Summary) who satisfies the eligibility
requirements described in the Plan Information Summary and who is eligible to participate in any of the Benefit Plans or Policies
offered under the Plan will be eligible to participate in this Plan as of the date described in the Plan Information Summary (see Q-5 of
this SPD for instructions on how to become a Participant). Those employees who actually participate in the Plan are called
"Participants." The terms of eligibility of this Plan do not override the terms of eligibility of each of the Benefit Plans or Policies offered
under the Plan. For the details regarding eligibility provisions, benefit amounts, and premium schedules for each of the Benefit Plans
or Policies, please refer to the plan summary for each of the Benefit Plans or Policies listed in the Plan Information Summary.
Q-4. When does my participation in the Plan end?
You continue to participate in the Plan until (i) you elect not to participate in accordance with Q-9 of this SPD; (ii) you no longer satisfy
CO the eligibility requirements described in the Plan Information Summary; (iii) you terminate employment with the Employer; or (iv) the
▪ Plan is terminated or amended to exclude you or the class of employees of which you are a member. If your employment with the
Employer is terminated during the Plan Year or you otherwise cease to be eligible, your active participation in the Plan will
automatically cease, and you will not be able to make any more Pre-tax Contributions under the Plan If you are rehired within the
same Plan Year or you become eligible again, you may make new elections, provided that you are rehired or become eligible again
more than 30 days after you terminated employment or lost eligibility If you are rehired or again become eligible within 30 days or
less, your prior elections will be reinstated and remain in effect for the remainder of the Plan Year unless you again lose eligibility.
▪ Q-5. How do 1 become a Participant?
III MEEK
*3100G09020046
You become a Participant by signing an individual Salary Redirection Agreement ("SRA") on which you elect one or more of the
Benefit Plans or Policies available under the Plan, as well as agree to a salary redirection to pay for those benefits so elected. You
will be provided an SRA when you first become eligible to participate in this Plan. You must complete the form and turn it in to the
Personnel Office during the applicable enrollment period described in Q-6 below.
3 SPD
Q-6. What are the enrollment periods for entering the Pian?
If you are eligible on the effective date of the Plan, you must enroll during the enrollment period immediately preceding the effective
date of the Plan Otherwise, you must enroll during either the "Initial Enrollment Period" or the "Annual Enrollment Period". You will
be notified of the dates that each enrollment period begins and ends in the enrollment material provided to you prior to each
enrollment period If you make an election during the Initial Enrollment Period, your participation in this Plan will begin on the later of
your eligibility date described in the Plan Information Summary, the first pay period coinciding with or next following the date that your
election is received by the Plan Administrator (or its designated claims administrator) or the date coverage under a Benefit Plan or
policy that you elect begins. The effective date of coverage under the applicable Benefit Plan(s) or Policy(ies) is governed by the
terms of each Benefit Plan or Policy, as set forth in the governing documents for each Benefit Plan or Policy. The election that you
make during the Initial Enrollment Period is effective for the remainder of the Plan Year and generally cannot be revoked during the
Plan Year unless you have a Change in Status event as described in Q-9 below. If you do not make an election during the Initial
Enrollment Period, you will be deemed to have elected not to participate in this Plan for the remainder of the Plan Year. You may,
however, be covered by certain Benefit Plans or Policies automatically (and be required to contribute with pre-tax dollars) even if you
fail to make an election These automatic Benefit Plans or Policies are called "Default Benefits" and will be identified in the enrollment
material that you receive.
The election that you make during the Annual Enrollment Period is effective the first day of the next Plan Year and is irrevocable for
the entire Plan Year unless you have a Change in Status event described in Q-9 below A Participant who fails to complete, sign, and
file an SRA during the Annual Enrollment Period as required shall be deemed to have elected to continue participation in the Plan
with the same benefit elections as during the prior Plan Year (adjusted to reflect any increase/decrease in applicable premiums), and
except for a Change in Status, will not be permitted to modify his election until the next Annual Enrollment Period Notwithstanding
the foregoing, annual elections for participation in the Medical Care and Dependent Care Expense Reimbursement Plans, if offered
under the Plan, must be made by submitting an SRA prior to the beginning of each Plan Year -- no deemed elections shall occur with
respect to such benefits.
The Plan Year is generally a 12 -month period (except during the initial or last Plan Year of the Plan). The beginning and ending
dates of the Plan Year are described in the Plan Information Summary.
Q-7. What tax advantages are available through the Plan?
Suppose your monthly gross pay is $2,500 per month and your cost for coverage is $140 per month. Also, suppose your total
withholdings (income tax and Social Security) are 22.65%. After paying for coverage from your after-tax pay, your take home pay is
$1,794. However, under the pre-tax premium plan, you will be considered to have received $2,360 gross pay rather than $2,500 for
tax purposes with $140 contributed for medical coverage. This means your take home pay will be $1,825 with the pre-tax premium
plan rather than $1,794 without it. Thus, you save $31 per month ($372 per year) by participating in the pre-tax premium plan The
Table below illustrates this savings.
With Cafeteria Plan Without Cafeteria Plan
Gross Monthly Pay $2,500 $2,500
Pre -Tax Coverage Under Plan 140
Taxable Income 2.360 2.500
Estimated Federal Tax (15%) 354 375
FICA Tax 181 191
After-tax Coverage 140
Take Home Pay 1,825 1,794
Monthly Savings: $31.00
Q-8. How are my contributions under the Benefit Plans or Policies made?
When you become a Participant, your share of the contributions for the elected Benefit Plan or Policy(ies) will be paid with Pre-tax
Contributions elected on the SRA. Pre-tax Contributions are amounts withheld from your gross income before any applicable federal
and state taxes have been deducted (some state tax laws do not recognize Pre-tax Contributions). In addition, all or a portion of the
cost of the Benefit Plans or Policies may, in the Employer's discretion, be paid with contributions made by the Employer on behalf of
each Participant (these are called "Nonelective Contributions") The amount of Nonelective Contribution that is applied towards the
cost of the Benefit Plan(s) or Policy(ies) for each Participant and/or level of coverage is subject to the sole discretion of the Employer,
and it may be adjusted upward or downward in the Employer's sole discretion The Nonelective Contribution amount will be
calculated for each Plan Year in a uniform and nondiscriminatory manner and may be based upon your Dependent status,
commencement or termination date of your employment during the Plan Year, and such other factors that the Employer deems
relevant. In no event will any Nonelective Contribution be disbursed to you in the form of additional, taxable Compensation except as
otherwise provided in the enrollment material. To the extent set forth in the enrollment material, the Employer may make available a
certain amount of Nonelective Contributions and then allow you to allocate the Nonelective Contributions among the various Benefit
Plan(s) or Policy(ies) that you choose (subject to restrictions described in the enrollment material)
4
SPD
"3100G09020046
Q-9. Can I ever change my election during the Plan Year?
Generally, you cannot change your election to participate in the Plan or vary the Pre-tax Contribution amounts although your election
will terminate if you are no longer working for the Employer or no longer eligible under the terms of the Plan Otherwise, you may
change your elections for Pre -Tax Contributions only during the Annual Enrollment Period, and then, only for the coming Plan Year.
There are several important exceptions to this general rule: You may change or revoke your previous election during the Plan Year if
you file a written request for change with the Plan Administrator (or its designated claims administrator) within 30 days of any of the
following events:
1. Change in Status. If one or more of the following "Changes in Status" occur, you may revoke your old election and
make a new election, provided that both the revocation and new election are on account of and correspond with the Change in
Status (as described below). Those occurrences that qualify as a Change in Status include the events described below, as well as
any other events that the Plan Administrator determines are permitted under subsequent IRS regulations:
• a change in your legal marital status (such as marriage, legal separation, annulment, or divorce or death of your Spouse),
• a change in the number of your tax Dependents (such as the birth of a child, adoption or placement for adoption of a
Dependent, or death of a Dependent),
any of the following events that change the employment status of you, your Spouse, or your Dependent that affect benefit
eligibility under a cafeteria plan (including this Plan and the Plan of another employer) or other employee benefit plan of
yours, your Spouse, or your Dependents Such events include any of the following changes in employment status:
termination or commencement of employment, a strike or lockout, a commencement of or return from an unpaid leave of
absence, a change in worksite, switching from salaried to hourly -paid, union to non-union, or part-time to full-time, incurring
a reduction or increase in hours of employment; or any other similar change which makes the individual become (or cease
to be) eligible for a particular employee benefit (NOTE: The specific rules governing election changes when you take a
leave of absence are described in Q-13 of this SPD);
an event that causes your Dependent to satisfy or cease to satisfy an eligibility requirement for a particular benefit (such as
attaining a specified age, getting married, or ceasing to be a student);
a change in your, your Spouse's or your Dependent's place of residence.
If a Change in Status occurs and you want to make a corresponding election change, you must inform the Plan Administrator and
complete a new election within 30 days from the date of the event. The election change must be on account of and correspond with
the Change in Status event as determined by the Plan Administrator. With the exception of special enrollment resulting from birth,
placement for adoption or adoption, all election changes are prospective. As a general rule, a desired election change will be found
to be consistent with a Change in Status event if the event affects eligibility for coverage. A Change in Status affects eligibility for
coverage if it results in an increase or decrease in the number of Dependents who may benefit under the plan. In addition, you must
also satisfy the following specific requirements in order to alter your election based on that Change in Status:
Loss of Dependent Eligibility. For accident and health benefits (e.g., health, dental and vision coverage, and Medical Care
Reimbursement Plan), a special rule governs which types of election changes are consistent with the Change in Status.
For a Change in Status involving your divorce, annulment or legal separation from your Spouse, the death of your Spouse
or your Dependent, or your Dependent ceasing to satisfy the eligibility requirements for coverage, your election to cancel
accident or health benefits for any individual other than your Spouse involved in the divorce, annulment, or legal
separation, your deceased Spouse or Dependent, or your Dependent that ceased to satisfy the eligibility requirements,
would fail to correspond with that Change in Status. Hence, you may only cancel accident or health coverage for the
affected Spouse or Dependent.
Example: Employee Mike is married to Sharon, and they have one child. The employer offers a calendar year cafeteria
plan that allows employees to elect no health coverage, employee -only coverage, employee -plus -one -Dependent coverage,
or family coverage. Before the plan year, Mike elects family coverage for himself, his wife Sharon, and their child. Mike
and Sharon subsequently divorce during the plan year; Sharon loses eligibility for coverage under the plan, while the child
is still eligible for coverage under the plan. Mike now wishes to cancel his previous election and elect no health coverage.
The divorce between Mike and Sharon constitutes a Change in Status. An election to cancel coverage for Sharon is
consistent with this Change in Status. However, an election to cancel coverage for Mike and/or the child is not consistent
with this Change in Status. In contrast, an election to change to employee -plus -one -Dependent coverage would be
consistent with this Change in Status. However, there are instances in which you may be able to increase your Pre-tax
Contributions to pay for COBRA coverage of a Dependent child or yourself.
5 SPD
• Gain of Coverage Eligibility Under Another Employer's Plan. For a Change in Status in which you, your Spouse, or your
Dependent gain eligibility for coverage under another employer's cafeteria plan (or Benefit Plan or Policy) as a result of a
change in your marital status or a change in your, your Spouse's, or your Dependent's employment status, your election to
cease or decrease coverage for that individual under the Plan would correspond with that Change in Status only if coverage
for that individual becomes effective or is increased under the other employer's plan.
• Dependent Care Reimbursement Plan Benefits (if offered under the Plan. See the list of Benefit Plans or Policies offered
under the Plan in the Plan Information Summary). With respect to the Dependent Care Reimbursement Plan benefit (if
offered by the Plan), you may change or terminate your election only if (1) such change or termination is made on account
of and corresponds with a Change in Status that affects eligibility for coverage under the Plan; or(2) your election change
is on account of and corresponds with a Change in Status that affects the eligibility of Dependent care assistance expenses
for the available tax exclusion
Example: Employee Mike is married to Sharon, and they have a 12 year-old daughter. The employer's plan offers a
Dependent care expense reimbursement program as part of its cafeteria plan. Mike elects to reduce his salary by $2,000
during a plan year to fund Dependent care coverage for his daughter In the middle of the plan year when the daughter
turns 13 years old, however, she is no longer eligible to participate in the Dependent care program. This event constitutes
a Change in Status Mike's election to cancel coverage under the Dependent care program would be consistent with this
Change in Status.
Group Term Life Insurance, Disability Income, or Dismemberment Benefits (if offered under the Plan. See the list of
Benefit Plans or Policies offered under the Plan in the Plan Information Summary). For group term life insurance,
disability income, and accidental death and dismemberment benefits, if you experience any Change in Status (as
described above), you may elect either to increase or decrease coverage.
Example: Employee Mike is married to Sharon, and they have one child. The employer's plan offers a cafeteria plan which
funds group -term life insurance coverage (and other benefits) through salary reduction Before the plan year Mike elects
$10,000 of group -term life insurance. Mike and Sharon subsequently divorce during the plan year The divorce constitutes
a Change in Status. An election by Mike either to increase or to decrease his group -term life insurance coverage would
each be consistent with this Change in Status.
2. Special Enrollment Rights. If you, your Spouse, and/or a Dependent are entitled to special enrollment rights under a
Benefit Plan or Policy that is a group health plan, you may change your election to correspond with the special enrollment right.
Thus, for example, if you declined enrollment in medical coverage for yourself or your eligible Dependents because of outside
medical coverage and eligibility for such coverage is subsequently lost due to certain reasons (i.e., due to legal separation, divorce,
death, termination of employment, reduction in hours, or exhaustion of COBRA period), you may be able to elect medical coverage
under the Plan for yourself and your eligible Dependents who lost such coverage. Furthermore, if you have a new Dependent as a
result of marriage, birth, adoption, or placement for adoption, you may also be able to enroll yourself, your Spouse, and your newly
acquired Dependents, provided that you request enrollment within the Election Change Period An election change that
corresponds with a special enrollment must be prospective, unless the special enrollment is attributable to the birth, adoption, or
placement for adoption of a child, which may be retroactive up to 30 days Please refer to the group health plan description for an
explanation of special enrollment rights.
3 Certain Judgments, Decrees and Orders If a judgment, decree or order from a divorce, separation, annulment, or
custody change requires your Dependent child (including a foster child who is your tax Dependent) to be covered under this Plan,
you may change your election to provide coverage for the Dependent child identified in the order. If the order requires that another
individual (such as your former Spouse) cover the Dependent child, and such coverage is actually provided, you may change your
election to revoke coverage for the Dependent child
4. Entitlement to Medicare or Medicaid. If you, your Spouse, or a Dependent becomes entitled to Medicare or Medicaid,
you may cancel that person's accident or health coverage. Similarly, if you, your Spouse, or a Dependent who has been entitled to
Medicare or Medicaid loses eligibility for such, you may, subject to the terms of the underlying plan, elect to begin or increase that
person's accident or health coverage.
5. Change in Cost. If you are notified that the cost of your Benefit Plan or Policy coverage under the Plan significantly
increases or decreases during the Plan Year, you may make certain election changes. If the cost significantly increases, you may
choose either to make an increase in your contributions, revoke your election and receive coverage under another Benefit Plan or
Policy that provides similar coverage, or drop coverage altogether if no similar coverage exists. If the cost significantly decreases,
you may revoke your election and elect to receive coverage provided under the option that decreased in cost. For insignificant
increases or decreases in the cost of Benefit Plans or Policies, however, your Pre-tax Contributions will automatically be adjusted to
reflect the minor change in cost. The Plan Administrator will have final authority to determine whether the requirements of this
section are met. (Please note that none of the above "Change in Cost" exceptions are applicable to a Medical Care Reimbursement
Plan, to the extent offered under the Plan )
Example: Employee Mike is covered under an indemnity option of his employer's accident and health insurance coverage If the
cost of this option significantly increases during a period of coverage, the Employee may make a corresponding increase in his
payments or may instead revoke his election and elect coverage under an HMO option.
6 SPD
6. Change in Coverage. If you are notified that your Benefit Plan or Policy coverage under the Plan is significantly
curtailed, you may revoke your election and elect coverage under another Benefit Plan or Policy that provides similar coverage. If
the significant curtailment amounts to a complete loss of coverage, you may also drop coverage if no other similar coverage is
available. Further, if the Plan adds or significantly improves a benefit option during the Plan Year, you may revoke your election and
elect to receive on a prospective basis coverage provided by the newly added or significantly improved option, so long as the newly
added or significantly improved option provides similar coverage. Also, you may make an election change that is on account of and
corresponds with a change made under another employer plan (including a plan of the Employer or another employer), so long as:
(a) the other employer plan permits its participants to make an election change permitted under the IRS regulations, or (b) the Plan
Year for this Plan is different from the Plan Year of the other employer plan. Finally, you may change your election to add coverage
under this Plan for yourself, your Spouse, or your Dependent if such individual(s) loses coverage under any group health coverage
sponsored by a governmental or educational institution. The Plan Administrator will have final discretion to determine whether the
requirements of this section are met. (Please note that none of the above "Change in Coverage" exceptions are applicable to the
Medical Care Reimbursement Plan, to the extent offered under the Plan.)
Additionally, your election(s), may be modified downward during the Plan Year if you are a Key Employee or Highly Compensated
Individual (as defined by the Internal Revenue Code), if necessary to prevent the Plan from becoming discriminatory within the
meaning of the federal income tax law.
Q-10. How long will the Plan remain in effect?
Although the Employer expects to maintain the Plan indefinitely, it has the right to modify or terminate the program at any time for
any reason It is also possible that future changes in state or federal tax laws may require that the Plan be amended accordingly.
Q-11. What happens if my claim for benefits under this Plan is denied?
This SPD describes the basic features of the Plan If your claim is for a benefit under one of the component Benefit Plans or Policies,
you will generally proceed under the claims procedures applicable under the component Benefit Plan or Policy (see the plan
summary for each of the Benefit Plans or Policies that you elect). However, if you are denied a benefit under this Plan, the claims
procedure under this Plan will apply. You will be notified if your claim under the Plan is denied. The notice of denial will be
furnished to you within 30 days after receiving your claim. However, if additional time is needed to process your claim you wilt be
notified before the initial 30 -day period has expired. The notice will explain why an extension is necessary and the date a decision is
expected to be rendered. In no event will an extension go beyond 15 days after the end of the initial 30 -day period. The notice of the
denial will include the specific reasons for the denial and the relevant plan provisions on which the denial was based.
If your claim is denied in whole or in part, you may appeal by requesting a review of the denied claim, as set forth in the notice of
denial, within 180 days after you receive notice of the denial. If there are two levels of appeal (as indicated in the notice of denial),
you will have a reasonable amount of time in which to request a second review and such time period will be identified in the notice of
denial As part of the appeal process (whether there is one or two appeals), you or your authorized representative may examine
documents, records, and other information relevant to your claim and submit issues, documents and comments in writing. Within 60
days after the request for review is received, you will be notified in writing of the decision on review. The notice of denial will indicate
whether there are one or two levels of appeals and will contain the same type of information provided to you in the first notice of
denial. If there are two levels of Plan appeals, the decisions on appeal will be made within 30 days after the request for each review
is received. The Plan Administrator is the claims fiduciary for making the final decision under the plan.
In the event of your death, your beneficiary has the same rights and is subject to the same time limits and other restrictions that
would otherwise apply to you under the claims procedures explained above.
Q-12. What effect will Plan participation have on Social Security and other benefits?
Plan participation will reduce the amount of your taxable compensation Accordingly, there could be a decrease in your Social
Security benefits and/or other benefits (e.g., pension, disability and life insurance) that are based on taxable compensation.
Q-13. What happens if I take a leave of absence?
v
*3100G09020046
(a) If you go on a qualifying unpaid leave under the Family and Medical Leave Act of 1993 (FMLA), to the extent required by the
FMLA, the Employer will continue to maintain your Benefit Plans or Policies providing health coverage on the same terms and
conditions as though you were still active (e.g., the Employer will continue to pay its share of the contribution to the extent you
opt to continue coverage).
(b) Your Employer may elect to continue all coverage for Participants while they are on paid leave (provided Participants on
non-FMLA paid leave are required to continue coverage). If so, you will pay your share of the contributions by the method
normally used during any paid leave (for example, with Pre-tax Contributions if that is what was used before the FMLA leave
began)
7 SPD
(c) In the event of unpaid FMLA leave (or paid leave where coverage is not required to be continued), if you opt to continue your
group health coverage, you may pay your share of the contribution with after-tax dollars while on leave, or you may be given the
option to pre -pay all or a portion of your share of the contribution for the expected duration of the leave with Pre-tax
Contributions from your pre -leave compensation by making a special election to that effect before the date such compensation
would normally be made available to you provided, however, that pre -payments of Pre-tax Contributions may not be utilized to
fund coverage during the next Plan Year, or by other arrangements agreed upon between you and the Plan Administrator (for
example, the Plan Administrator may fund coverage during the leave and withhold amounts from your compensation upon your
return from leave). The payment options provided by the Employer will be established in accordance with Code Section 125,
FMLA and the Employer's internal policies and procedures regarding leaves of absence. Alternatively, the Employer may
require all Participants to continue coverage during the leave If so, you may elect to discontinue your share of the required
contributions until you return from leave. Upon return from leave, you will be required to repay the contribution not paid during
the leave in a manner agreed upon with the Administrator.
(d) If your coverage ceases while on FMLA leave (e.g., for non-payment of required contributions), you will be permitted to re-enter
the Plan upon return from such leave on the same basis as you were participating in the Plan prior to the leave, or as otherwise
required by the FMLA. Your coverage under the Benefit Plans or Policies providing health coverage may be automatically
reinstated provided that coverage for Employees on non-FMLA leave is automatically reinstated upon return from leave.
(e) The Employer may, on a uniform and consistent basis, continue your group health coverage for the duration of the leave
following your failure to pay the required contribution. Upon return from leave, you will be required to repay the contribution in a
manner agreed upon by you and Employer.
(f)
(9)
If you are commencing or returning from unpaid FMLA leave, your election under this Plan for Benefit Plans or Policies
providing non -health benefits shall be treated in the same manner that elections for non -health Benefit Plans or Policies are
treated with respect to Participants commencing and returning from unpaid non-FMLA leave
If you go on an unpaid non-FMLA leave of absence (e.g., personal leave, sick leave, etc.) that does not affect eligibility in this
Plan or a Benefit Plan or Policy offered under this plan, then you will continue to participate and the contribution due will be paid
by pre -payment before going on leave, by after-tax contributions while on leave, or with catch-up contributions after the leave
ends, as may be determined by the Administrator. If you go on an unpaid leave that affects eligibility under this Plan or a
Benefit Plan or Policy, the election change rules in Q-9 of this SPD will apply. The Plan Administrator will have discretion to
determine whether taking an unpaid non-FMLA leave of absence affects eligibility
Q-14. Is there any other information that I should know about the Plan?
Participation in the Plan does not give any Participant the right to be retained in the employ of his or her Employer or any other right
not specified in the Plan. The Plan Administrator's name, address and telephone number appear in the Plan Information Summary
attached to the front of this SPD The Plan Administrator has the exclusive right to interpret the Plan and to decide all matters arising
under the Plan, including the right to make determinations of fact, and construe and interpret possible ambiguities, inconsistencies,
or omissions in the Plan and this SPD. Other important information such as the Plan Number and Plan Sponsor's name and
address has also been provided in the Plan Information Summary.
8
SPD
*3100G09020046
APPENDIX I TO THE FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION
Medical Care and Dependent Care Reimbursement Plan Summary Plan Description
To the extent elected by the Employer (indicated in the Plan Information Summary attached to this SPD), you will have the
opportunity to elect to receive income tax-free reimbursement for some or all of your unreimbursed medical expenses under the
Medical Care Reimbursement Plan ("URM") and/or some or all of your work-related Dependent care expenses under the Dependent
Care Reimbursement Plan ("DDC") (collectively, the "Reimbursement Plans"). Under the URM and DDC, you purchase a specific
level of reimbursement benefits and you provide a source of pre-tax funds to reimburse yourself for your Eligible Expenses. For both,
you pay for coverage through the Salary Redirection Agreement ("SRA") with the Employer, in lieu of receiving a corresponding
amount of current pay, which means the premiums you pay will be with pre-tax funds. This arrangement helps you because the
level of coverage you elect is nontaxable, and you save Social Security and income taxes on the amount of your salary conversion.
By enrolling in either the URM or DDC option and submitting reimbursement claims you specifically authorize the Plan, AFLAC®
and AFLAC Administrative Services/FLEX ONE®, and their respective agents, employees, sub -contractors, and assigns to use your
personal health information in their possession to administer the Plan (including the evaluation of eligibility for reimbursement under
the Plan) and to detect or prevent fraud or misrepresentation, and to further disclose such information as is reasonably required for
those purposes You further authorize any provider, insurer, or other entity to release any health or treatment information for the
purpose of determining eligibility for Plan benefits or for detecting or preventing fraud or misrepresentation You further waive and
release any claims related to the use, disclosure, or release of such information so long as the information is used in furtherance of
administering the Plan (including processing or evaluating a claim for benefits under the Plan) or to detect or prevent fraud or
misrepresentation. This authorization does not and is not intended to in any way limit any right the Plan, AFLAC and AFLAC
Administrative Services/FLEX ONE®, or their respective agents, employees, sub -contractors, and assigns may have under
applicable state or federal law or regulation regarding the use of such information.
General Questions and Answers
Q-1. Who can participate in the URM and/or DDC?
Each employee who satisfies the eligibility requirements described in the Plan Information Summary is eligible to participate in the
Reimbursement Plans as of the eligibility date described in the Plan Information Summary.
Q-2. How do I become a Participant?
You become a Participant by electing URM and/or DDC benefits during the Initial or Annual Enrollment Periods. (The Initial and
Annual Enrollment Periods are described in Q-6 of the Flexible Benefits Plan SPD.) Your participation in the URM or DDC will be
effective on the date that you make an election to participate or the eligibility date described in the Plan Information Summary,
whichever is later. You may not change your election (either to participate or not to participate) during the Plan Year unless you
experience an event described in Q-9 of the Flexible Benefits Plan SPD Once you become a Participant in the URM, you may also
receive reimbursements for Eligible Medical Expenses incurred by your "Eligible Dependents". For purposes of the URM, Eligible
Dependents include your legal Spouse (as determined by state law to the extent consistent with the federal Defense of Marriage Act)
and any other individuals who would qualify as a tax Dependent under Code Section 152 for purposes of your federal income tax
return.
If the Plan Administrator receives a qualified medical child support order relating to the URM, the URM will provide the health benefit
coverage specified in the order to the person or persons ("alternate recipients") named in the order. "Alternate recipients" include
any child of the participant who the Plan is required to cover pursuant to a qualified medical child support order A "qualified medical
child support order" is a legal judgment, decree or order relating to medical child support that clearly specifies the type of coverage
that is to be provided to one or more alternate recipients (or the manner in which such type of coverage is to be provided). Before
providing any coverage to an alternate recipient, the Plan Administrator must determine whether the medical child support order is
qualified. If the Plan Administrator receives a medical child support order relating to your Health Care Account (See Q-3 below), it
will notify you in writing, and after receiving the order, it will inform you of its determination of whether or not the order is qualified.
Upon request to the Plan Administrator, you may obtain, without charge, a copy of the Plan's procedures governing qualified medical
child support orders.
Q-3. What are my "URM Account" and my "DDC Account"?
If you elect benefits under this portion of the Plan, a non-interest bearing account will be established under each Plan to keep a
record of the reimbursements you are entitled to under each Plan, as well as the contributions you have made for such benefits
during the Plan Year No actual accounts are established; they are merely bookkeeping accounts.
Q-4. When does coverage under the URM and/or DDC end?
You continue to participate in the URM and/or DDC until (i) you elect not to participate in accordance with Q-9 of Flexible Benefits
Plan SPD; (ii) the end of the Plan Year unless you make an election during the annual election period; (iii) you no longer satisfy
g SPD
the eligibility requirements described in the Plan Information Summary; (iv) you terminate employment with the employer; or (v) the
Plan is terminated or amended to exclude you or the class of eligible employees of which you are a member are specifically excluded
from the Plan. You are not eligible to receive reimbursement for otherwise Eligible Medical Expenses incurred during the Plan Year
after you cease to be eligible unless you elect COBRA continuation coverage (as described below in Q-19 of this Appendix),
provided you are eligible to elect COBRA. However, you will be eligible to receive reimbursement under the DDC for Eligible
Employment -Related Expenses (as defined in Q-9 below) incurred during the plan year but after you cease to be eligible up to your
account balance as of the date you cease to be eligible
Coverage under the URM for your Eligible Dependents ends on earliest of the following to occur (i) your coverage ends; (ii) the
individual ceases to be an Eligible Dependent (e.g divorce or legal separation from the spouse); or (iii) the Plan is terminated or
amended to exclude individual or the class of individuals of which the individual is a member (spouse or dependent child) from
coverage under the URM. Your Spouse and/or your Dependent children may also be entitled to COBRA continuation coverage if
coverage is lost for certain reasons. See Q-19 of this Appendix for more information on COBRA.
Q-5. What happens to my URM Account and/or DDC Account if I take an approved leave of absence?
Generally, the rules described in Q-13 of your Flexible Benefits Plan SPD apply. However, if your URM coverage ceases during
your FMLA leave, you will be entitled to elect whether to be reinstated in the URM at the same coverage level in effect before the
FMLA leave (with increased contributions for the remaining period of coverage) or at a URM reimbursement level that is reduced
pro -rata for the period of FMLA leave during which you did not make any contributions. Under either scenario, expenses incurred
during the period that your URM coverage was not in effect are not eligible for reimbursement under this URM
Q-6. What is the maximum URM and/or DDC benefit I may elect?
For URM, you may choose any amount of annual reimbursement you desire subject to the maximum reimbursement amount set
forth in the Employer Information Section of the Plan Information Summary.
For DDC, this is set forth in the Employer Information Section, however, this amount cannot exceed the maximum amount specified
in Section 129 of the Internal Revenue Code. The maximum amount is currently $5,000 per Plan Year if you -
• are married and file a joint return; or
• are married, but you furnish more than one-half the cost of maintaining those Dependents for whom you are eligible to
receive tax-free reimbursements under the DDC, your Spouse maintains a separate residence for the last 6 months of the
calendar year, and you file a separate tax return; or
• are single, or a head of household for tax purposes.
If you are married and reside together but file a separate federal income tax return, the maximum DDC benefit you may elect is
$2,500.
You will be required to pay the annual contribution equal to the coverage level you have chosen.
Q-7. How is my Medical Care and/or Dependent Care Expense Reimbursement benefit paid for and what amounts will
be available at any particular time during the Plan Year?
For URM and DDC, when you complete the SRA, you specify the amount of Medical Care and or Dependent Care Expense
Reimbursement(s) you wish to pay for with your Pre-tax Contributions. Thereafter, you must make a contribution for such coverage
by having an equal portion of the annual reimbursement amount deducted from each paycheck. Your employer will distribute benefit
payments from its general assets.
For URM Benefits, the full amount of the coverage you have elected, reduced by the amount of prior reimbursements received
during the Plan Year, will be available to reimburse you for your out-of-pocket medical expenses incurred at any time during the Plan
Year and while you are a Participant. For DDC Benefits, the amount that is available for reimbursement at any particular time will be
whatever has been credited to your Dependent Care Account less any reimbursements already paid
Q-8. How do I receive reimbursement under the Plan?
If you elect to participate in URM or DDC, you will have to take certain steps to be reimbursed for your Eligible Medical and/or
Eligible Employment -Related Expenses (as defined in Q-9 below). When you incur an expense that is eligible for payment, you
submit a request to the Plan's Administrator on a Request for Reimbursement form that will be supplied to you.
For URM and DDC, you must include written statement(s)/bill(s) from an independent third party(ies) stating that the eligible
expenses have been incurred, and the amount of such expense(s) along with the Request for Reimbursement form. In addition, you
must include for URM claims an Explanation of Benefits (EOB) form(s) from any primary medical and/or dental insurance carrier(s)
indicating the amount(s) that you are obligated to pay.
10
SPD
*3100G09020046
For DDC, if your reimbursement request is for an amount that is more than your current Account balance, the excess part of the
reimbursement will be carried over into following months, to be paid out as your balance becomes adequate. Remember, though,
that you can't be reimbursed for any total Dependent Care expenses above your available, annual credits to your Account.
With respect to either DDC or URM benefits, you may not be reimbursed for any expenses that arise before your SRA becomes
effective, or for any expense incurred after the close of the Plan Year.
To have your Request for Reimbursements processed as soon as possible, please read the reimbursement instructions on the back
of the Request for Reimbursement form you have been furnished Please note that it is not necessary that you have actually paid an
amount due for Eligible Medical and/or Eligible Employment -Related Expenses -- only that you have incurred the expense, and that
it is not being paid for or reimbursed from any other source. In addition, you will have 90 days after the end of the Plan Year in which
to submit a Request for Reimbursement form for Eligible Expenses incurred during the previous Plan Year You will be notified in
writing if any Request for Reimbursement is denied.
Q-9. What is an "Eligible Expense?"
For URM, an "Eligible Expense" generally means any item for "medical care as defined by Code Section 213(d) for which you have
not received reimbursement and will not seek reimbursement from insurance, or some other source and for which you will not or
have not taken a deduction under Code Section 213. "Medical Care" means amounts for diagnosis, treatment or prevention of a
specific medical condition or to affect a function or structure of the body Expenses solely for general well-being are not "medical
care" expenses. Premiums for accident or health insurance and expenses for qualified long term care services are not Eligible
Medical Expenses for purposes of this Plan.
For DDC, you may be reimbursed for work-related expenses ("Eligible Employment -Related Expenses") incurred on behalf of any
Qualifying Individual described below. Generally, these expenses must meet all of the following conditions for them to be Eligible
Employment -Related Expenses•
• The expenses are incurred for services rendered after the date of your election to receive Dependent Care Expense
Reimbursement, and during the calendar year to which it applies.
• Services are incurred for a Qualifying Individual A Qualifying Individual is
1. a Dependent under age 13 for whom you are entitled to a personal tax exemption as a Dependent, or
2. a Spouse or other tax Dependent who is physically or mentally incapable of caring for himself or herself.
• The expenses are incurred for the care of a Dependent (as described above), or for related household services, and are
incurred to enable you to be gainfully employed.
• If the expenses are incurred for services outside your household and such expenses are incurred for the care of a
Dependent who is age 13 or older, such Dependent regularly spends at least 8 hours per day in your home.
• If the expenses are incurred for services provided by a Dependent care center (i e., a facility that provides care for more
than 6 individuals not residing at the facility), the center must comply with all applicable state and local laws and
regulations
• The expenses are not paid or payable to a child of yours who is under age 19 at the end of the year in which the expenses
are incurred or an individual for whom you or your Spouse is entitled to a personal tax exemption as a Dependent.
• This reimbursement (when aggregated with all other Dependent Care Reimbursements during the same year) may not
exceed the least of the following limits:
1 $5,000
2. $2,500, if you are married but you and your Spouse file separate tax returns.
3. Your taxable compensation (after your Pre-tax Contributions have been deducted under the Plan).
4. If you are married, your Spouse's actual or deemed Earned Income.
For purposes of (4.) above, your Spouse will be deemed to have Earned Income of $250 ($500 if you have two or more
Dependents described in paragraph 2 above), for each month in which your Spouse is (i) physically or mentally incapable
of caring for himself or herself or (ii) a full-time Student.
You are encouraged to consult your personal tax advisor or IRS Publication 17 "Your Federal Income Tax" for further guidance as to
what is or is not an Eligible Expense if you have any doubts.
Q-10. When must the expenses be incurred?
Eligible Medical and Employment -Related Expenses must have been incurred during the Plan Year. You may not be reimbursed for
any expenses arising before the Plan became effective, before your SRA becomes effective, or for any expenses incurred after the
close of the Plan Year, or, except for Continuation Coverage and certain Eligible Employment -Related Expenses, after a separation
11 SPD
from service. You may be reimbursed for Eligible Employment -Related Expenses that are incurred after a separation from service
up to your account balance on the date of separation from service. In addition, IRS regulations require that service or treatment be
actually rendered prior to the time that the expense is reimbursed. Therefore, even if your doctor requires that an expense be paid in
advance, you cannot be reimbursed until the service relating to the expense has been rendered. In order to ensure compliance with
this IRS requirement, you (and/or your doctor) may be required to submit additional substantiation (such as a proposed treatment
plan) with respect to certain long-term treatments (e.g., orthodontic or obstetric expenses) Failure to submit the required forms
could result in your reimbursement being pended and/or denied
Q-11. What if the Eligible Medical or Eligible Employment -Related Expenses I incur during the Plan Year are less than.
the annual amount I have elected for Medical Care and/or Dependent Care Expense Reimbursement?
You will not be entitled to receive any direct or indirect payment of any amount that represents the difference between the actual
Eligible Expenses you have incurred, on the one hand, and the annual coverage level you have elected and paid for, on the other.
This is called the "Use -It -or -Lose -It" Rule. Any amount allocated to an Account shall be forfeited by the Participant and restored to
the Employer if it has not been applied to provide the elected benefit for any Plan Year by the ninetieth (90th) day following the end
of the Plan Year for which the election was effective. Amounts so forfeited shall be used to offset administrative expenses and future
costs.
Q-12. Will I be taxed on the DDC benefits I receive?
You will not normally be taxed on your DDC benefits, up to the limits set out in Q-4 However, to qualify for tax-free treatment, you
will be required to list the names and taxpayer identification numbers on your annual tax return of any persons who provided you
with Dependent care services during the calendar year for which you have claimed a tax-free reimbursement.
Q-13. What is the household and Dependent care credit?
The household and dependent care credit is an allowance for a percentage of your annual, Eligible Employment -Related Expenses
as a credit against your federal income tax liability under the U.S. Tax Code. In determining what the tax credit would be, you may
take into account only $3,000 of such expenses for one Qualifying Individual, or $6,000 for two or more Qualifying Individuals.
Depending on your adjusted gross income, the percentage could be as much as 35% of your Eligible Employment -Related
Expenses (to a maximum credit amount of $1050 for one Qualifying Individual or $2100 for two or more Qualifying Individuals) to a
minimum of 20% of such expenses. The maximum 35% rate must be reduced by 1% (but not below 20%) for each $2,000 portion
(or any fraction of $2,000) of your adjusted gross income over $15,000
Illustration: Assume you have one Qualifying Individual for whom you have incurred Eligible Employment -Related Expenses of
$3,600, and that your adjusted gross income is $21,000. Since only one Qualifying Individual is involved, the credit will be
calculated by applying the appropriate percentage to the first $3,000 of expenses. The percentage is, in turn, arrived at by
subtracting one percentage point from 35% for each $2,000 of your adjusted gross income over $15,000. The calculation is: 35% --
[($21,000 - 15,000)/$2,000 X 1%] = 32%. Thus, your tax credit would be $3,000 X 32% = $960. If you had incurred the same
expenses for two or more Qualifying Individuals, your credit would have been $3,600 X 32% = $1152, because the entire $3,600
expense would have been taken into account, not just the first $3,000.
Q-14. If I participate in the DDC, will I still be able to claim the household and Dependent care credit on my federal
income tax return?
You may not claim any other tax benefit for the tax-free amounts received by you under this Plan, although the balance of your
qualified Dependent care expenses may be eligible for the Dependent care credit.
Q-15. When would I be better off to include the reimbursements in my income and claim the credit, rather than to treat
the reimbursements as tax-free?
Generally, if you are in a lower income tax bracket, you may come out ahead by including the DDC benefits in income, and claiming
the credits for Dependent care. On the other hand, it will generally be better to treat DDC benefits as tax-free the more income taxes
you are required to pay. Because the actual determination of the preferable method for treating benefit payments depends on a
number of factors such as one's tax filing status (e.g., married, single, head of household), number of Dependents, etc., each
Participant will have to determine his or her tax position individually in order to make the decision between taxable and tax-free
benefits.
Q-16. What happens to unclaimed Reimbursements?
Any Reimbursement Account benefit payments that are unclaimed (e.g., uncashed benefit checks) by the close of the Plan Year
following the Plan Year in which the Eligible Medical and/or Employment -Related Expense was incurred shall be forfeited.
12
SPD
Q-17. What happens if a Claim for Benefits under the URM or DDC is denied?
You will be notified if your claim under the Plan is denied. The notice will be furnished to you as soon as reasonably possible but no
later than 30 days after the Plan Administrator (or its designated claims administrator identified in the reimbursement form) receives
your claim. However, if for reasons beyond the control of the claims reviewer, more time for processing your claim is needed, the
applicable claims reviewer may take an extension of not more than 15 days following the end of the 30 -day period. You will be
notified of this extension before the initial 30 days has expired, and the notice will explain why an extension is necessary and the
date a decision is expected to be rendered If the reason for the extension is because you failed to submit complete information
necessary to decide the claim, you will have 45 days from the notice of the extension in which to provide the information. The time
period for making a decision will be suspended until the earlier of the date that you submit the necessary information or the end of
the 45 -day period
The notice of the denial will include the following.
• the specific reason or reasons for the denial;
• specific reference to pertinent Plan provisions on which the denial is based;
• a description of any additional material or information necessary for the claim to be approved and an explanation of why
such material or information is necessary;
• instructions on how to appeal the denied claim (including the applicable time periods) and the identity of the individual(s)
who will review the denied claim, and
• Any other information required by applicable law
If your claim is denied in whole or in part, you may appeal by requesting a review of the denied claim. Your request must be in
writing and must be submitted in accordance with the instructions set forth in the denial notice within 180 days after you receive
notice of the denial. If there are two levels of appeal, you will have a reasonable amount of time described in the notice of denial in
which to request a second review by the Plan Administrator. As part of the appeal process (whether there is one or two appeals),
you or your authorized representative may examine documents, records, and other information relevant to your claim and submit
issues, documents and comments in writing You will be notified in writing of the decision on review as soon as reasonably possible
but no later than 60 days after the request for review is received The notice will contain the same type of information described
above and it will indicate whether there are one or two levels of appeals. If there are two levels of appeals, the decisions on review
will be made no later than 30 days after the request for each review is received. The reviews upon appeal (whether one level or two)
will take into account all comments, documents, records and other information submitted by the claimant relating to the claim without
regard to whether such information was submitted or considered in a previous review In no event will a determination upon review
be made by the same individual(s) who made previous determinations or someone who is a subordinate of any individual who made
such previous determinations. The Plan Administrator is the claims fiduciary responsible for making final claim decisions under the
Plan.
In the event of your death, your beneficiary has the same rights and is subject to the same time limits and other restrictions that
would otherwise apply to you under the claims procedures explained above.
Q-18. What is COBRA continuation coverage?
Federal law requires most employers sponsoring group health plans to offer employees and their families the opportunity for a
temporary extension of health care coverage (called "continuation coverage") at group rates in certain instances where coverage
under the plans would otherwise end. These rules apply to the URM only, unless the Employer is a small -employer within the
meaning of the applicable regulations. The Plan Administrator can tell you whether the Employer is a small employer (and thus not
subject to these rules).
When Coverage May Be Continued
If you are a Participant in the URM, then you have a right to choose continuation coverage under the URM if you lose your
▪ coverage because of a reduction in your hours of employment; or a voluntary or involuntary termination of your employment (for
reasons other than gross misconduct).
*3100G09020046
If you are the Spouse of a Participant, then you have the right to choose continuation coverage for yourself if you lose
coverage due to the death of your Spouse; a voluntary or involuntary termination of your Spouse's employment (for reasons other
than gross misconduct) or reduction in your Spouse's hours of employment; or the divorce or legal separation from your Spouse.
In the case of a Dependent child of a Participant, he or she has the right to choose continuation coverage if coverage is lost
because of: the death of the employee; a voluntary or involuntary termination of the employee's employment (for reasons other than
gross misconduct) or reduction in the employee's hours of employment; his or her parents' divorce or legal separation; or his or her
loss of Dependent status. A child who is born to, or placed for adoption with, the employee during a period of continuation coverage
is also entitled to continuation coverage under COBRA. Those who are entitled to continue coverage under COBRA are called
"Qualified Beneficiaries."
13 SPD
Type of Coverage
If you choose continuation coverage, you may continue the level of coverage you had in effect immediately preceding the
qualifying event. However, if Plan benefits are modified for similarly situated active employees, then they will be modified for you
and other Qualified Beneficiaries as well You will be eligible to make a change in your benefit election with respect to the Plan upon
the occurrence of any event that permits a similarly situated active employee to make a benefit election change during a Plan Year.
If you do not choose continuation coverage, your coverage under the URM will end with the date you would otherwise lose coverage.
Notice Requirements
You or another Qualified Beneficiary must notify the employer of a divorce, legal separation, or a child losing Dependent
status under the Plan within 60 days of the later of the date of the event or the date on which coverage is lost because of the event.
When the Plan Administrator is notified that one of these events has occurred, the Plan Administrator will in turn notify you that you
have the right to choose continuation coverage. Notice to an employee's Spouse is treated as notice to any covered Dependents
who reside with the Spouse. An employee or covered Dependent is responsible for notifying the Plan Administrator if he or she
becomes covered under another group health plan.
Election Procedures and Deadlines
Each qualified beneficiary is entitled to make a separate election for continuation coverage under the Plan. In order to elect
continuation coverage, you must complete the election form(s) provided to you by the Plan Administrator. You have 60 days from
the date you would lose coverage for one of the reasons described above or the date you are sent notice of your right to elect
continuation coverage, whichever is later, to inform the Plan Administrator that you wish to continue coverage Failure to return the
election form within the 60 -day period will be considered a waiver, and you will not be allowed to elect continuation coverage.
Cost
You will have to pay the entire cost of your continuation coverage. The cost of your continuation coverage will not exceed
102% of the applicable premium for the period of continuation coverage. The first premium payment after electing continuation
coverage will be due 45 days after making your election Subsequent premiums must be paid within a 30 -day grace period following
the due date. Failure to pay premiums within this time period will result in automatic termination of your continuation coverage,
Claims incurred during any period will not be paid until your premium payment is received for that period If you timely elect
continuation coverage and pay the applicable premium, however, then continuation coverage will relate back to the first day on
which you would have lost regular coverage.
When Continuation Coverage Ends
The maximum period for which coverage may be continued will be until the end of the Plan Year in which the qualifying
event occurs. To the extent that Nonelective Employer contributions are provided, the maximum duration of coverage may be 18 or
36 months from the qualifying event (depending on the type of qualifying event). You will be notified of the duration of continuation
coverage when you have a qualifying event. However, continuation coverage may end earlier for any of the following reasons
• The contribution for your continuation coverage is not paid on time or it is insufficient (Note. if your payment is insufficient
by the lesser of 10% of the required COBRA premium, or $50, you will be given 30 days to cure the shortfall);
• After you elect COBRA continuation coverage, the date that you first become covered under another group health plan
under which you are not subject to a pre-existing condition exclusion limitation;
• After you elect COBRA continuation coverage, the date that you first become entitled to Medicare; or
The date the employer no longer provides group health coverage to any of its employees.
Q-19. How long will the Plan remain in effect?
Although the Employer expects to maintain the URM and DDC indefinitely, it has the right to modify or terminate the programs at any
time for any reason It is also possible that future changes in state or federal tax laws may require that the Plan be amended
accordingly.
Q-20. Will my health information be kept confidential?
Under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") group health plans such as the URM and the third
party service providers are required to take steps to ensure that certain "protected health information" is kept confidential. Attached
as Appendix II to this SPD (included in the HIPAA packet) is a summary of your rights and obligation under HIPAA. You may receive
a separate notice that outlines the Employer's health privacy policies in more detail.
14 SPD
Q-21. Is there any other important information that I should know about the Reimbursement Plan?
Participation in the Plan does not give any Participant the right to be retained in the employ of his or her Employer or any other right
not specified in the Plan The Plan Administrator's name, address and telephone number appear in the Plan Information Summary
attached to the front of this SPD. The Plan Administrator has the exclusive right to interpret the Plan and to decide all matters arising
under the Plan, including the right to make determinations of fact and construe and interpret possible ambiguities, inconsistencies,
or omissions in the Plan and this SPD Other important information such as the Plan Number and Plan Sponsor's name has also
been provided in the Plan Information Summary.
ERISA Rights
The URM may be an ERISA welfare benefit plan (unless the employer is a governmental employer or the plan is a "church
plan" as defined in the applicable regulations). As a Participant in an ERISA -covered benefit, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act ("ERISA") ERISA provides that all plan Participants shall be
entitled to:
Receive Information About Your Plan and Benefits
Examine, without charge, at the Plan Administrator's office and at other specified locations, such as work -sites and union
halls, all documents governing the plan, including insurance contracts, collective bargaining agreements, and a copy of the latest
annual report (Form 5500 series) filed by the plan with the U S Department of Labor and available at the Public Disclosure Room of
the Employee Benefits Security Administration
Obtain, upon written request to the Plan Administrator, copies of all documents governing the operation of the plan,
including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 series) and
updated SPD. The Plan Administrator may make a reasonable charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each
Participant with a copy of this summary annual report.
Continue Group Health Plan Coverage
You may continue health care coverage for yourself, Spouse or Dependent children if there is a loss of coverage under the
Plan as a result of a qualifying event. You or your eligible dependents will have to pay for such coverage. You should review Q-19 of
this appendix for more information concerning your COBRA continuation coverage rights
(To the extent the URM is subject to HIPAA's portability rules) You may be eligible for a reduction or elimination of
exclusionary periods of coverage for preexisting condition under your group health plan, if you move to another plan and you have
creditable coverage from this Plan. You will be provided a certificate of creditable coverage, free of charge, from the Plan
Administrator when you lose coverage under the Plan, when you become entitled to elect COBRA continuation coverage, when your
COBRA continuation coverage ceases, if you request it before losing coverage, or if you request it up to 24 months after losing
coverage. Without evidence of creditable coverage, you may be subject to a preexisting condition exclusion for 12 months (18
months for late enrollees) after your enrollment date in your coverage in another plan.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for plan Participants, ERISA imposes duties upon the people who are responsible for the
operation of the employee benefit plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so
prudently and in the interest of the plan participants and beneficiaries. No one, including your employer, your union, or any other
person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit from the Plan
or from exercising your rights under ERISA.
N Enforce Your Rights
*3100G09020046
If your claim for a welfare benefit under an ERISA -covered plan is denied in whole or in part, you must receive a written
explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there
are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the
materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons
beyond the control of the Administrator. If you have a claim for benefits that is denied or ignored in whole or in part, you may file suit
in a state or federal court. In addition, if you disagree with the Plan's decision or lack thereof concerning the qualified status of a
domestic relations order or a medical child support order, you may file suit in a federal court. If it should happen that Plan fiduciaries
misuse the Plan's money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S.
Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you
lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
15 SPD
Assistance with Your Questions
If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about this
statement or about your rights under ERISA or if you need assistance obtaining documents from the Plan Administrator, you should
contact the nearest office of the U.S. Department of Labor, Employee Benefits Security Administration listed in your telephone
directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of
Labor; 200 Constitution Ave., NW; Washington, D.0 20210. You may also obtain certain publications about your rights and
responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
16
SPD
*3100609020046
APPENDIX II TO THE FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION
Summary of Privacy Policies and Procedures
OUR PLEDGE REGARDING MEDICAL INFORMATION
We understand that medical information about you and your health is personal. We are committed to protecting medical
information about you. We create a record of the URM claims reimbursed under the Plan for Plan administration
purposes. This summary applies to all of the medical records we maintain with regard to the URM. Your personal doctor
or health care provider may have different policies or notices regarding the doctor's use and disclosure of your medical
information created in the doctor's office or clinic. During the course of providing you with health coverage under the
URM, the Plan will have access to information about you that is deemed to be "protected health information", or PHI, by
the Health Insurance Portability and Accountability Act of 1996, or HIPAA. In accordance with Section 10.18 of the Plan,
the following is a summary of procedures adopted by the Employer to ensure that both the Employer and any third party
service providers treat your PHI with the level of protection required by HIPAA. You may receive a separate notice that
provides more detailed information regarding the procedures adopted by the Employer.
This summary will provide you with a general overview of the ways in which we may use and disclose medical information about
you. We also describe your rights and certain obligations we have regarding the use and disclosure of medical information. In the
event this summary conflicts with the separate Privacy Notice from your employer, the separate Privacy Notice controls.
We are required by law to:
• make sure that medical information that identifies you is kept private;
• give you this notice of our legal duties and privacy practices with respect to medical information about you, and
• follow the terms of the notice that is currently in effect.
Your PHI will be disclosed to certain employees of Employer. Except as otherwise provided in the separate Privacy Notice that may
be provided to you, these employees consist of the members of the Personnel Benefits Department of the Employer who assist in
administration of URM claims. These individuals may only use your PHI for Plan administration functions including those described
below, provided they do not violate the provisions set forth herein. Any employee of Employer who violates the rules for handling
PHI established herein will be subject to adverse disciplinary action. The Employer will establish an effective mechanism for
resolving privacy issues and will take prompt corrective action to cure any violations.
By adoption of this SPD, the Employer has certified that it will comply with the privacy procedures summarized herein and detailed in
any separate privacy notice. Employer may not use or disclose your PHI other than as summarized herein or as required by law.
Any agents or subcontractors who are provided your PHI must agree to be bound by the restrictions and conditions concerning your
PHI found herein Your PHI may not be used by Employer for any employment-related actions or decisions or in connection with any
other benefit or employee benefit plan of Employer. Employer must report to the Plan any uses or disclosures of your PHI of which
the Employer becomes aware that are inconsistent with the provisions set forth herein.
HOW WE MAY USE AND DISCLOSE MEDICAL INFORMATION ABOUT YOU.
The following categories describe different ways that we use and disclose medical information for purposes of URM administration.
For each category of uses or disclosures we will explain what we mean and try to give some examples. Not every use or disclosure
in a category will be listed. However, all of the ways we are permitted to use and disclose information will fall within one of the
categories.
For Payment (as described in applicable regulations). We may use and disclose medical information about you to determine
eligibility for Plan benefits, to facilitate payment for the treatment and services you receive from health care providers; to determine
benefit responsibility under the Plan, or to coordinate Plan coverage.
For Health Care Operations (as described in applicable regulations). We may use and disclose medical information about you for
other Plan operations. These uses and disclosures are necessary to run the Plan.
As Required By Law. We will disclose medical information about you when required to do so by federal, state, or local law.
To Avert a Serious Threat to Health or Safety. We may use and disclose medical information about you when necessary to prevent
a serious threat to your health and safety or the health and safety of the public or another person. Any disclosure, however, would
only be to someone able to help prevent the threat.
SPECIAL SITUATIONS
Disclosure to Health Plan Sponsor. Information may be disclosed to another health plan maintained by Employer for purposes of
facilitating claims payments under that plan. In addition, medical information may be disclosed to Employer personnel solely for
purposes of administering benefits under the Plan.
17 SPD
Organ and Tissue Donation. If you are an organ donor, we may release medical information to organizations that handle organ
procurement or organ, eye, or tissue transplantation or to an organ donation bank, as necessary to facilitate organ or tissue donation
and transplantation.
Military and Veterans If you are a member of the armed forces, we may release medical information about you as required by
military command authorities. We may also release medical information about foreign military personnel to the appropriate foreign
military authority
Workers' Compensation. We may release medical information about you for workers' compensation or similar programs These
programs provide benefits for work-related injuries or illness
Public Health Risks. We may disclose medical information about you for public health activities (e.g , to prevent or control disease,
injury, or disability).
Health Oversight Activities. We may disclose medical information to a health oversight agency for activities authorized by law.
Lawsuits and Disputes. If you are involved in a lawsuit or a dispute, we may disclose medical information about you in response to a
court or administrative order. We may also disclose medical information about you in response to a subpoena, discovery request, or
other lawful process by someone else involved in the dispute, but only if efforts have been made to tell you about the request or to
obtain an order protecting the information requested
Law Enforcement. We may release medical information if asked to do so by a law enforcement official for law enforcement
purposes.
Coroners, Medical Examiners and Funeral Directors. We may release medical information to a coroner or medical examiner. We
may also release medical information about patients of the hospital to funeral directors as necessary to carry out their duties.
National Security and Intelligence Activities. We may release medical information about you to authorized federal officials for
intelligence, counterintelligence, and other national security activities authorized by law.
Inmates. If you are an inmate of a correctional institution or under the custody of a law enforcement official, we may release medical
information about you to the correctional institution or law enforcement official. This release would be necessary (1) for the institution
to provide you with health care; (2) to protect your health and safety or the health and safety of others, or (3) for the safety and
security of the correctional institution.
YOUR RIGHTS REGARDING MEDICAL INFORMATION ABOUT YOU.
You have the following rights regarding medical information we maintain about you:
Right to Inspect and Copy. You have the right to inspect and copy medical information that may be used to make decisions about
your Plan benefits. To inspect and copy medical information that may be used to make decisions about you, you must submit your
request in writing to Personnel/Benefits Office, except as otherwise set forth in any separate Privacy Notice provided to you by the
Employer. If you request a copy of the information, we may charge a fee for the costs of copying, mailing or other supplies
associated with your request.
We may deny your request to inspect and copy in certain very limited circumstances HIPAA provides several important exceptions
to your right to access your PHI. For example, you will not be permitted to access psychotherapy notes or information compiled in
anticipation of, or for use in, a civil, criminal, or administrative action or proceeding. Employer will not allow you to access your PHI if
these or any of the exceptions permitted under HIPAA apply. If you are denied access to medical information, you may request that
the denial be reviewed.
Right to Amend. If you feel that medical information we have about you is incorrect or incomplete, you may ask us to amend the
information. You have the right to request an amendment for as long as the information is kept by or for the Plan.
To request an amendment, your request must be made in writing and submitted to the Personnel/Benefits Office In addition, you
must provide a reason that supports your request.
We may deny your request for an amendment if it is not in writing or does not include a reason to support the request. In addition,
we may deny your request if you ask us to amend information that:
Is not part of the medical information kept by or for the Plan;
Was not created by us, unless the person or entity that created the information is no longer available to make the
amendment;
• Is not part of the information which you would be permitted to inspect and copy; or
• Is accurate and complete.
18
SPD
The Employer must act on your request for an amendment of your PHI no later than 60 days after receipt of your request. Employer
may extend the time for making a decision for no more than 30 days, but it must provide you with a written explanation for the delay.
If Employer denies your request, it must provide you a written explanation for the denial and an explanation of your right to submit a
written statement disagreeing with the denial.
Right to an Accounting of Disclosures. You have the right to request an "accounting of disclosures" (other than disclosures you
authorized in writing) where such disclosure was made for any purpose other than treatment, payment, or health care operations
You will be notified of where you can obtain an accounting of disclosure in the separate Privacy Notice. Your request must state a
time period that may not be longer than six years and may not include dates before April 2003. Your request should indicate in what
form you want the list (for example, on paper, or electronically) The first list you request within a 12 -month period will be free. For
additional lists, we may charge you for the costs of providing the list. We will notify you of the cost involved and you may choose to
withdraw or modify your request at that time before any costs are incurred.
Note that HIPAA provides several important exceptions to your right to an accounting of the disclosures of your PHI. For example,
Employer does not have to account for disclosures of your PHI (i) to carry out treatment, payment or healthcare operations, (ii) to
correctional institutions or law enforcement officials, or (iii) for national security or intelligence purposes. Employer will not include in
your accounting any of the disclosures for which there is an exception under HIPAA. Employer must act on your request for an
accounting of the disclosures of your PHI no later than 60 days after receipt of the request. Employer may extend the time for
providing you an accounting by no more than 30 days, but it must provide you a written explanation for the delay. You may request
one accounting in any 12 -month period free of charge. Employer will impose a fee for each subsequent request within the 12 -month
period
Right to Request Restrictions. To the extent set forth in the separate privacy notice, you may have the right to request a restriction or
limitation on the medical information we use or disclose about you for treatment, payment, or health care operations, or you may
have the right to request a limit on the medical information we disclose about you to someone who is involved in your care or the
payment for your care, like a family member or friend.
Right to Request Confidential Communications. You have the right to request that we communicate with you about medical matters
in a certain way or at a certain location. For example, you can ask that we only contact you at work or by mail.
To request confidential communications, you must make your request in writing to the Personnel Office except as otherwise provided
in the separate privacy notice. We will not ask you the reason for your request. We will accommodate all requests we deem
reasonable. Your request must specify how or where you wish to be contacted.
When Employer no longer needs PHI disclosed to it by the Plan, for the purposes for which the PHI was disclosed, Employer must, if
feasible, return or destroy the PHI that is no longer needed. ff it is not feasible to return or destroy the PHI, Employer must limit
further uses and disclosures of the PHI to those purposes that make the return or destruction of the PHI infeasible.
CHANGES TO THIS SUMMARY AND THE SEPARATE PRIVACY NOTICE
We reserve the right to change this summary and the separate Privacy Notice that may be provided to you. We reserve the right to
make the revised or changed notice effective for medical information we already have about you as well as any information we
receive in the future. The notice will contain the effective date on the front page.
COMPLAINTS
If you believe your privacy rights have been violated, you may file a complaint with the Plan or with the Secretary of the Department
of Health and Human Services. To file a complaint with the Plan, contact the Personnel Office except as otherwise provided in the
separate Privacy Notice All complaints must be submitted in writing.
You will not be penalized for filing a complaint.
N OTHER USES OF MEDICAL. INFORMATION.
*3100G09020046
Other uses and disclosures of medical information not covered by this notice or the laws that apply to us will be made only with your
written permission. If you provide us permission to use or disclose medical information about you, you may revoke that permission,
in writing, at any time. If you revoke your permission, we will no longer use or disclose medical information about you for the reasons
covered by your written authorization. We are unable to take back any disclosures we have already made with your permission, and
that we are required to retain our records of the care that we provided to you.
19 SPD
An independent Sales Agent
Representing
July 9, 2004
Sheryl Smith
City of Yakima
129 N. 2nd Street
Yakima, WA 98901
Dear Sheryl:
As per your request, this letter is regarding the Reimbursement Services Agreement
between City of Yakima and American Family Life Assurance Company (AFLAC).
The attached document references on page 4, Section IV, paragraph A, a $450.00 set-up
fee for the FSA benefit (DDC or URM) per month (max per participant of $3.00) with a
minimum monthly fee of $25.00 for the reimbursement plans. These fees will be waived
for the first year and the document will be amended at time of implementation to reflect
this.
If you have any questions, please call me at (509) 574-5225.
Sincerely,
Cherie Ergeson
AFLAC Associate
cc: Dan Fisher/Fisher Consulting
Helen Harvey/Senior Assistant City Attorney
American Family Life Assurance Company of Columbus (AFLAC)
Worldwide Headquarters: 1932 Wynnton Road • Columbus, Georgia 31999-0001 • (706) 323-3431
www.aflac.com
ITEM TITLE:
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting of September 21, 2004
A resolution authorizing the City Manager to execute an agreement and
all other necessary and appropriate documents with American Family
Life Assurance Company of Columbus (AFLAC) for assistance with the
establishment and administration of a flexible spending account
program for eligible City employees; and authorizing a Flexible Benefits
Plan.
SUBMITTED BY: Dick Zais, City Manager; Sheryl M. Smith, Deputy Human Resources
Manager; and Cindy Epperson, Financial Services Manager.
CONTACT PERSON/TELEPHONE: Dick Zais, 575-6040
Sheryl M. Smith, 575-6090
SUMMARY EXPLANATION:
Section 125 and other provisions of the United States Internal Revenue Code allow for the
creation of flexible spending account programs or "flexible benefits plans" whereby an
employee can set aside a portion of his or her salary on a pre-tax basis to be used to pay for
eligible expenses (i.e., certain medical expenses and dependent care expenses, such as
childcare costs.) The City Council has previously adopted a Section 125 plan pursuant to YMC
2.20.150. The attached resolution authorizes execution of an agreement with AFLAC which
will include the City's current Section 125 Premium Only Plan and pursuant to which AFLAC
will administer a flexible spending account program.
The spending account program will result in income tax savings for employees who
participate. The plan will also result in a total of 7.65% payroll tax savings to the City on
amounts employees elect to defer. The payroll tax savings of 7.65% consists of 6.20% for Social
Security (FICA) taxes and 1.45% for Medicare taxes. Therefore, this program will provide a
benefit to eligible employees and generate payroll tax savings for the City.
AFLAC has agreed to administer the spending account program for the City without charge
for one year, beginning January 1, 2005, and possibly for future years. AFLAC will offer other
voluntary policies to City employees including an accident insurance policy, cancer insurance
policy, and a specified health event policy. These additional policies may vary over time.
Resolution X Ordinance _ Other (Specify)
Contract X Mail to (name and address): Cherie Ergeson, AFLAC, P.O. Box 383, Yakima,
WA 98907 Phone: (509) 5745225
Funding Source
APPROVED FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: Adopt Resolution
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION:
Resolution adopted. RESOLUTION R-2004-143