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HomeMy WebLinkAboutResolution 03-163-CCBOARD OF COUNTY COMMISSIONERS Grant County, Washington RESOLUTION ADOPTING GRANT COUNTY ) RESOLUTION No. 03 -1b3 -CC FLEXIBLE BENEFITS PLAN FOR ELIGIBLE ) GRANT COUNTY OFFICERS, OFFICIALS, AND ) EMPLOYEES AND, OTHER MATTERS ) PROPERLY RELATING THERETO. Recitals: WHEREAS, pursuant to Title 26 U.S.C, employers, including Grant County, have the authority to establish a Flexible Benefits Plan ("Plan"), otherwise known as "cafeteria plans'; and WHEREAS, the Board of County Commissioners of Grant County desires to adopt a Plan, as described in the attached Plan description; and WHEREAS, the Board of County Commissioners desires to appoint three positions for the Administrative Committee for the Plan; and WHEREAS, the Board of County Commissioners desires to set the Plan year for the Plan. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF GRANT COUNTY, WASHINGTON, as follows: Section 1: The Board of County Commissioners (`BOCC") found and determined that a flexible benefits plan as authorized pursuant to Title 26 U.S.C. would benefit Grant County officials, officers and employees. Section 2: The Board of County Commissioners does hereby adopt a Flexible Benefits Plan, to be known as the Grant County Flexible Benefits Plan. The terms and conditions of the Grant County Flexible Benefits Plan are set out in the attached Plan Document ("Attachment A") entitled "Grant County Flexible Benefits Plan" and incorporated by reference as if fully set forth herein. Section 3: The following three persons are hereby appointed to the Administrative Committee for the Plan to serve until such time as their successors are appointed by the BOCC: Auditor, Chair; Member of Board of County Commissioners, Member (designee of BOCC); and Human Resources Director, Member Resolution — Flexible Benefits Plan Page 1 of 2 H \Civil P\M-RV esoluuonsWlexible Oo¢fits Plan (December 2001) dm Section 4: The initial Plan period for the Grant County Flexible Benefits Plan, shall run from the first day of January, 2004, through the last day of December, 2004 and that succeeding Plan period shall run from the first day of January through the last day of December of each following year. PASSED AND ADOPTED by the Board of County Commissioners of Grant County, Washington, on December/S'A 2003. BOARD OF COUNTY COMMISSI{ GRANT COUNTY, WASHINGTON Abstain Ayes Nays ❑ ❑ ❑ Deborah Kay Moore, it ❑ ly ❑ LeRoy ember ❑ L -J Tim Snea ,Mem er TEI& (y Orvella R. Fields, Clerk of the Board Resolution — Flexible Benefits Plan Page 2 of 2 H VGvi; &M-R\RcsaMn aaAFlexible Rcncfits Plan (Dnccmbcr 2003) doc ATTACHMENT A GRANT COUNTY FLEXIBLE BENEFITS PLAN Revised December 11, 2003 Effective January 1, 2004 Plan Administrator: Board of County Commissioners Grant County P.O. Box 37 Ephrata, WA 98823 Administrative Committee: Auditor Member, Board of County Commissioners Human Resource Director Third Party Administrator: A. W. Rehn & Associates, Inc. Post Office Box 5433 Spokane, WA 99205 (509) 534-0600 GRANT COUNTY FLEXIBLE BENEFITS PLAN As Adopted Effective January 1, 2004 TABLE OF CONTENTS ARTICLE 1. INTRODUCTION ARTICLE II. DEFINITIONS AND CONSTRUCTION ARTICLE III. ELIGIBILITY AND PARTICIPATION ARTICLE IV. BENEFITS OFFERED; CONTRIBUTIONS; METHOD OF FUNDING ARTICLE V. PREMIUM PAYMENT COMPONENT ARTICLE VI. HEALTH CARE REIMBURSEMENT COMPONENT ARTICLE VII. DEPENDENT CARE COMPONENT ARTICLE VIII. IRREVOCABILITY OF ELECTION; EXCEPTIONS ARTICLE IX. APPEALS PROCEDURE ARTICLE X. RECORDKEEPING AND ADMINISTRATION ARTICLE XI. GENERAL PROVISIONS 2 GRANT COUNTY FLEXIBLE BENEFITS PLAN ARTICLE I. INTRODUCTION 1.1 Establishment of Plan Grant County (the "Employer") hereby establishes the Grant County Flexible Benefits Plan (the "Plan") effective January 1, 2004. This Plan is designed to permit an Eligible Employee to pay on a pre-tax basis for his or her share of premiums under the Health Insurance Plan, and to contribute to an account for pre-tax reimbursement of certain Health Care Expenses and Dependent Care Expenses. 1.2 Legal Status The Plan is intended to qualify as a "cafeteria plan" under Code Section 125 of the Internal Revenue Code of 1986, as amended (the "code"), and regulations issued thereunder. The Health Care reimbursement component of this Plan is intended to qualify as a "self-insured Health Care reimbursement plan" under Code Section 105(h), and the Health Care Expenses reimbursed under that component are intended to be eligible for exclusion from participating Employees' gross income under Code Section 105(b). The DCAP component of this Plan is intended to meet the requirements of Code Section 129. Although reprinted within this document, the Dependent Care Component and the Health Care Reimbursement Component are separate plans for purposes of administration and all reporting and nondiscrimination requirements imposed by Code Sections 105 and 129. And the Health Care Reimbursement Component is a separate plan for purposes of applicable provisions of ERISA. ARTICLE 1I. DEFINITIONS AND CONSTRUCTION 2.1 Definitions "Administrator" or "Plan Administrator" means Grant County, specifically, the Grant County Board of County Commissioners. "Benefits" means the Premium Payment Benefits, the Health FSA Benefits and the DCAP Benefits offered under the Plan. "Benefit Package Option" means a qualified benefit under Code Section 125(1) that is offered under a cafeteria plan or an option for coverage under an underlying accident or health plan (such as an indemnity option, an HMO option, or a PPO option under an accident or health plan). "Change in Status" means any of the events described below, as well as any other events included under subsequent changes to Code Section 125 or regulations issued under Code Section 125 which the Plan Administrator (in its sole discretion) decides to recognize on a uniform and consistent basis: • Legal Marital Status: A change in a Participant's legal marital status, including marriage, death of a Spouse, divorce, legal separation or annulment; Number of Dependents: Events that change a Participant's number of tax Dependents (see definition of Dependent below), including birth, death, adoption, and placement for adoption; Change in Employment Status: Any change in employment status of the Participant, the Participant's Spouse or the Participant's Dependents that affects the benefit eligibility under a cafeteria plan (including this Plan) or other employee benefit plan (including the Benefit Plans) or Policy(ies) of the employer of the Participant, the Spouse, or Dependents, such as: 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 or union to non-union or vice versa, incurring a reduction or increase in hours of employment (e.g., going from part-time to full-time), or any other similar change which makes the individual become (or cease to be) eligible for a particular employee benefit. • Dependent Eligibility Requirements: An event that causes a Participant' s Dependent to satisfy or cease to satisfy the Dependent eligibility requirements for a particular benefit, such as attaining a specified age, getting married, or ceasing to be a Student; Change in Residence: A change in the place of residence of the Participant, the Participant's Spouse or the Participant's Dependent. See Article IV for requirements that must be met for a Participant to change his or her election during the Plan Year on account of a Change in Status. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the Administrative Committee appointed by the Board of County Commissioners of Grant County. "Compensation" means the wages or salary paid to an Employee by the Employer, determined prior to any Salary Reduction election under this Plan, prior to any salary reduction election under any other Code Section 125 cafeteria plan and prior to any salary deferral election under any Code Section 401(k), 403(b) or 408(k) arrangement. "Dependent" means any individual who is a tax dependent of the Participant as defined in Code Section 152; except that, for purposes of accident or health coverage, any child to whom Section 152(e) applies (regarding a child of divorced parents, etc., where one or both parents have custody of the child for more than one-half of the calendar year and where the parents together provide more than half of the child's support for the year) is treated as a dependent of both parents, and, for purposes of the Dependent Care Expense Account Plan, a dependent means a qualifying individual as defined in Code Section 2 1(b)(1) with respect to the Participant and in the case of divorced parents, the child shall, as provided in Code Section 21(e)(5), be treated as a qualifying individual of the custodial parent (within the meaning of Code Section 152(e)(1)), and shall not be treated as a qualifying individual with respect to the non-custodial parent. Notwithstanding the foregoing, the Health Care Reimbursement Component of the Plan will provide benefits in accordance with the applicable requirements of any qualified medical child support order, as defined in ERISA Section 609(a), even if the child does not meet the definition of "Dependent". "Dependent Care Component Plan" or "Dependent Care Component" means the component of the Plan providing the dependent care reimbursement benefits described in Article VII of the Plan. "Dependent Care Expenses" means expenses that are considered to be employment-related expenses under Code Section 21(b)(2) (relating to expenses for household and dependent care services necessary for gainful employment of the employee and spouse, if any), if paid for by the Employee to provide Qualifying Dependent Care Services. "Dependent Care Expense Reimbursement Account" means the account described in Article VII of this Plan. 4 "Earned Income" means all income derived from wages, salaries, tips, self-employment, and other Employee Compensation (such as disability or wage continuation benefits), but does not include (a) any amounts received pursuant to any dependent care assistance program under Code Section 129, (b) any amounts received as a pension or annuity, or (c) any amounts received pursuant to workers compensation. "Effective Date" of this Plan means January 1, 2004. "Election Form" means the form provided by the Administrator for the purpose of allowing an Eligible Employee to participate in this Plan by electing Salary Reductions to pay for any of the following benefits: pre- tax payment of health insurance premiums, reimbursement for Health Care Expenses, and reimbursements for Qualifying Dependent Care Expenses. "Eligible Employee" means an Employee eligible to participate in this Plan as provided in Section 3.1. "Eligible Employment -Related Expenses" means those Qualifying Dependent Care Services incurred incident to maintaining employment after the date of the Employee's participation in the Dependent Care Component of this Plan and during the Plan Year, other than amounts: an individual with respect to whom a Dependent deduction is allowable under Code Section 151(a) to the Participant or his Spouse; the Participant's Spouse; or a child of the Participant who is under 19 years of age at the end of the year in which the expenses were incurred. For this purpose, a Dependent Care Expense is incurred only after the services giving rise to the expense have actually been rendered. "Employee" means an individual that the Employer classifies as a common-law employee and who is on the Employer's W-2 payroll, and includes any Grant County elected official or officer but does not include: (a) any leased employee (including, but not limited to those individuals defined in Code Section 414(n)) or an individual classified by the Employer as a contract worker, independent contractor, temporary employee or casual employee, whether or not any such persons are on the Employer's W-2 payroll or are determined by the IRS or others to be common-law employees of the Employer; or (b) any individual who performs services for the Employer but who is paid by a temporary or other employment or staffing agency such as "Kelly," "Manpower," etc., whether or not such individuals are determined by the IRS or others to be common-law employees of the Employer. "Employer" means Grant County and any Related Employer that adopts this Plan with the approval of Grant County. Related Employers that have adopted this Plan are listed in Appendix A to this Plan. For purposes of Article VIII and Section 9.4, "Employer" means only Grant County. "Employment Commencement Date" means the first regularly scheduled working day on which the Employee first performs an hour of service for the Employer for Compensation. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "FMLA" means the Family and Medical Leave Act of 1993, as amended. "Health Care Expenses" means those expenses incurred by a Participant, or the Spouse or Dependents of such Participant, for Health Care as defined in Code Section 213 (including, for example, amounts for certain hospital bills, doctor and dental bills and prescription drugs), other than expenses that are excluded hereunder (see Appendix B to this Plan for exclusions), but only to the extent that the Participant or other person incurring the expense is not reimbursed for the expense (nor is the expense reimbursable) through the Health Insurance Plan, other insurance or any other accident or health plan. "Health Care Reimbursement Account" means the account described in Article V of this Plan. "Health Care Reimbursement Component Plan" or "Health Care Reimbursement Component' means the component of the Plan providing the Health Care reimbursement benefits described in Article V of this Plan. "Health Insurance Plan" means the plan(s) that the Employer maintains for its Employees (and for their respective spouse and eligible Dependent(s), providing medical benefits through a group insurance policy or policies (including HMOs), plan or plans that qualify as accident or health plans under Code Section 106 (other than a long-term care insurance plan). The Employer may substitute, add, subtract or revise at any time the menu of such plans and/or the benefits, terms and conditions of any such plans. Any such substitution, addition, subtraction or revision will be communicated to Participants and will automatically be incorporated by reference under this Plan. The specific coverage selected by the Employee (for the Employee, Spouse and/or eligible Dependents) is considered the Employee's Health Insurance Plan coverage for purposes of this Plan (also referred to as "Health Insurance Plan benefits"). "HIPAA" means the Health Insurance Portability and Accountability Act of 1996, which, among other things, requires a group health plan to provide special enrollment rights to Participants, Spouses and beneficiaries under certain circumstances. "Named Fiduciary" means Grant County, who is the named fiduciary for purposes of ERISA Section 402(a). "Open Enrollment Period" with respect to the Plan Year means the first 30 days of the month immediately preceding such Plan Year, or other period prescribed by the Administrator. "Participant" means a person who is an Eligible Employee and who is participating in this Plan in accordance with the provisions of Article III. Participants include those who elect Health Insurance Plan Benefits and/or benefits under the Health Care Reimbursement Component or Dependent Care Component and Salary Reductions to pay for such benefits, and those who instead elect to receive their full salary in cash and pay for their share of their premiums under the Health Insurance Plan (if any) with after-tax dollars outside of this Plan and who have not elected any benefits under the Health Care Reimbursement Component or Dependent Care Component. "Plan" means the Grant County Flexible Benefits Plan as set forth herein and as amended from time to time "Plan Year" shall be the 12 -month period from January 1 through December 31, provided that a period of less than 12 months may be a Plan Year for the final Plan Year, and a transition period to a different Plan Year. "Premium Payment Component" means the component providing the premium payment benefits described in Article IV of this Plan. "Qualified Benefit" means any benefit excluded from the Employee's taxable income under Chapter I of the Code (other than benefits excluded under Code sections 106(b), 117, 127 or 132) and any other benefit permitted by regulations under the Code. "Qualifying Individual" means: • a Dependent of the Participant who is under the age of thirteen (13); • a Dependent of a Participant who is mentally or physically incapable of self-care; or • the Spouse of a Participant who is mentally or physically incapable of self-care. "Qualifying Dependent Care Services" means services relating to the Care of a Qualifying Individual that enable the Participant and Spouse to remain gainfully employed, which are performed: • in the Participant's home; or • outside the Participant's home for (a) the care of a Dependent of the Participant who is under age 13; or (b) the care of any other Qualifying Individual who resides at least eight 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 individuals not residing at the facility), then the center must comply with all applicable state and local laws and regulations. "Related Employer" means any employer affiliated with Grant County that, under Code Section 414(b), (c) or (m) is treated as a single employer with Grant County for purposes of Code Section 125. "Salary Reduction" means the amount by which a Participant's Compensation is reduced and applied by the Employer under this Plan to pay for one or more of the Benefits, as permitted for the applicable Component, before any applicable state and / or federal taxes have been deducted from the Participant's Compensation (ie, on a pre-tax basis) "Spouse" means an individual who is legally married to a Participant (and who is treated as a spouse under the Code). Notwithstanding the above, for purposes of the Dependent Care Component, the term "Spouse" shall not include an individual legally separated from the Participant under a divorce or separate maintenance decree, nor shall it 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 half of the cost of maintaining the principal place of abode of the Qualifying Individual. "Student" means an individual who, during each of five 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, which routinely maintains a regular faculty and curriculum, and which normally has an enrolled student body in attendance at the location where its educational activities are regularly presented. 2.2 Headings The headings of the various Articles, Sections and Subsections are inserted for convenience of reference and are not to be regarded as part of this Plan or as indicating or controlling the meaning or construction of any provision. 2.3 Gender and Number Except when otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and the definition of any term herein in the singular shall also include the plural. ARTICLE III. ELIGIBILITY AND PARTICIPATION 3.1 Eligibility to Participate An individual is eligible to participate in this Plan if the individual is an Employee as defined in Section 2. 1, is regularly scheduled to work at least 80 hours per month hours or more per week, and has been employed by the Employer for 180 consecutive calendar days, counting the Employee's Commencement Date as the first such day. Once the Employee has met the Plan's eligibility requirements, the Employee may elect coverage effective the first day of the next calendar month, or for any subsequent Plan Year, as described in Section 3.2. 3.2 Election to Participate; Commencement of Participation (a) Election When First Eligible. An Employee who first becomes eligible to participate in the Plan mid -year may commence participation on the first day of the month after the eligibility requirements have been satisfied. The election shall be made by submitting an Election Form to the Administrator at least ten days before the first day of the month in which participation will commence. An Employee who does not elect to participate when first eligible may not enroll until the next Open Enrollment Period, unless an event occurs that would justify a mid -year election change, as described by 8.2. (b) Elections During Open Enrollment Period. During each Open Enrollment Period with respect to a Plan Year, the Administrator shall provide an Election Form to each Employee who is eligible to participate in this Plan. The Election Form shall enable the Employee to elect to participate in the various components of this Plan for the next Plan Year, and to authorize the necessary Salary Reductions to pay for the benefits elected. The Election Form must be returned to the Administrator on or before the last day of the Open Enrollment Period. If an Eligible Employee makes an election to participate during an Open Enrollment Period, then the Employee becomes a Participant on the first day of the next Plan Year. If an Eligible Employee fails to return the Election Form during the Open Enrollment Period, then the Employee may not elect to participate in this Plan until the next Open Enrollment Period, or has a qualifying event as described in 8.2. (c) Eligible Employee Who Fails to File an Election Form. If an Eligible Employee fails (or fails to timely file) an Election Form within the time frames described in the previous Sections 3.2(a) and (b), then the Employee may not elect to participate in the Plan until the next Open Enrollment Period until a change in status event (see Sections 8.2) would justify an earlier mid -year election change. If an Employee who files an election under the Premium Payment Component of the Plan when first eligible is eligible for Health Insurance Plan benefits, the Employee's share of the premiums for such benefits will continue to be paid with pre-tax dollars until such time as the Employee's election for such benefits is revoked in writing. 3.3 Termination of Participation A Participant will cease to be a Participant in this Plan upon the earliest of: • the expiration of the Plan Year for which the Employee has elected to participate (unless during the Open Enrollment Period for the next Plan Year the Employee elects to continue participating); • the termination of this Plan; • the date on which the Employee ceases (because of retirement, termination of employment, layoff, reduction in hours, or any other reason) to be an Employee eligible to participate under Section 3.1; or • the date the Participant revokes his or her election to participate under a circumstance when such change is permitted under the terns of this plan. Reimbursements after termination of participation will be made pursuant to Sections 6.6 and 7.6. Participation in the Health Insurance component will cease as of the date specified in the Health Insurance Plan. 3.4 Participation Following Termination of Employment A former Participant who is rehired within 30 days or less of the date of a termination of employment will be reinstated with the same elections that such individual had before termination. If a former Participant is rehired more than 30 days following termination of employment and is otherwise eligible to participate in the Plan, then the individual may make new elections as a new hire. Notwithstanding the above, an election to participate in the Premium Payment Component of the Plan will be reinstated only to the extent that coverage under the Health Insurance Plan is reinstated. 3.5 Family and Medical Leave Act of 1993 Notwithstanding any provisions to the contrary in this Plan, if a Participant goes on a qualifying leave under the Family and Medical Leave Act of 1993 (FMLA), then to the extent required by the FMLA, the Employer will continue to maintain the Participant's Health Insurance Plan benefits on the same terms and conditions as if the Participant were still an active Employee. That is, if the Participant elects to continue his or her coverage while on leave, the Employer will continue to pay its share of the premium. A Participant may elect to continue his or her coverage under the Premium Payment and/or Health Care Reimbursement Components of the Plan during the FMLA leave. If the Participant elects to continue coverage while on leave, then the Participant may pay his or her share of the premium in one of the following ways: • with after-tax dollars, by sending monthly payments to the Employer; • with pre-tax dollars, by pre -paying all or a portion of the premium for the expected duration of the leave on a pre-tax salary reduction basis out of pre -leave Compensation. To pre-tax the premium, the Participant must make a special election to that effect prior to the date that such Compensation would normally be made available (note, however, that pre-tax dollars may not be used to fund coverage during the next Plan Year); or under another arrangement agreed upon between the Participant and the Administrator (e.g. the Administrator may fund coverage during the leave and withhold "catch-up" amounts upon the Participant's return). If a Participant's coverage ceases while on FMLA leave, the Participant will be permitted to re-enter the Plan upon return from such leave on the same basis the Participant was participating in the Plan prior to the leave, or as otherwise required by the FMLA. 9 ARTICLE IV. BENEFITS OFFERED; CONTRIBUTIONS; METHOD OF FUNDING 4.1 Benefits Offered When first eligible or during the Open Enrollment Period as described under Sections 3.1, 3.2 and 3.3, Participants will be given the opportunity to elect one or more of the following Benefits as available: • Premium Payments Benefits, as described in Article V • Health FSA Benefits, as described in Article VI • DCAP Benefits, as described in Article VII In no event shall Benefits under the Plan be provided in the form of deferred compensation. 4.2 Contributions The Employer shall withhold from a Participant's Compensation on a pre-tax Salary Reduction basis or with after tax deductions (as elected by the Participant and permitted under the Plan) an amount equal to the contributions required from the Participant for the Benefits elected by the Participant under this Plan, amounts withheld from a Participant's Compensation, whether on a pre-tax Salary Reduction basis or with after-tax deductions, shall be applied to fund Benefits as soon as administratively feasible. If a Participant elects the pre- tax option, the Farticipant's deductions shall be set forth in the Election Form / Salary Reduction Agreement and / or other enrollment materials, and such amounts may be adjusted, at the sole discretion of the Administrator, as applicable and in conjunction with the Code. Salary Reductions are applied by the Employer and, for the purpose of this Plan and for Code compliance; such Salary Reductions are considered Employer contributions. For those Participants who elect to pay their share of the cost of any Premium Payment Benefits with after-tax deductions, both the Employee and the Employer portions of such premiums will be paid outside of this Plan. 4.3 Funding of this Plan All of the amounts payable under this Plan shall be paid from the general assets of the Employer. Nothing herein will be construed to require the Employer of the Administrator to maintain any fund or to segregate any amount for the benefit of any Participant, and no Participant or other person shall have any claim against, right to, or security or other interest in any fund, account or asset of the Employer from which any payment under this Plan may be made. There is no trust or other fund from which benefits are paid. While the Employer has complete responsibility for the payment of benefits out of its general assets, it may hire an outside paying agent to make benefit payments on its behalf. The maximum contribution that may be made under this Plan for a Participant is the total of the maximums that may be elected under the Articles for each component as listed below. 10 ARTICLE V. PREMIUM PAYMENT COMPONENT 5.1 Benefits Grant County currently underwrites all participant premiums. This portion of a Section 125 Plan is listed for the sole purpose of information and should participants become liable for a portion of the premiums. An Eligible Employee can elect to participate in the Premium Payment Component of the Plan by electing to pay for his or her share of the premiums under the Health Insurance Plan with pre-tax Salary Reduction dollars. Alternatively, a Participant may elect not to participate in the Premium Payment Component of the Plan, and to pay for his or her share of the premiums with after-tax dollars outside of this Plan. 5.2 Contributions If an Employee elects to participate in the Premium Payment Component, then the Participant's share (as determined by the Employer) of the premium for the Health Insurance Plan benefits elected by the Participant will be financed by Salary Reductions. The Salary Reduction for each pay period for a Participant is an amount equal to the annual premium divided by the number of pay periods in the Plan Year, or an amount otherwise agreed upon. Salary Reductions are applied by the Employer to pay for the premium for the Participant's benefits and, for the purposes of this Plan, are considered Employer contributions. The Employer will pay under this Plan its share of the premiums for Participants who elect to participate in the pre-tax feature of this Plan. For those who elect the after-tax option, both the Employee and Employer portions of the premiums will be paid outside of this Plan. 5.3 Health Benefits Provided Under the Health Insurance Plan Health benefits will be provided not by this Plan but by the Health Insurance Plan. The types and amounts of benefits available under the Health Insurance Plan, the requirements for participating in the Health Insurance Plan, and the other terms and conditions of coverage and benefits of the Health Insurance Plan are set forth from time to time in the Health Insurance Plan. All claims to receive benefits under the Health Insurance Plan shall be subject to and governed by the terms and conditions of the Health Insurance Plan and the rules, regulations, policies and procedures from time to time adopted in accordance therewith. ARTICLE VI. HEALTH CARE REIMBURSEMENT COMPONENT 6.1 Benefits An election to participate in the Health Care Reimbursement Component of this Plan is an election to receive benefits in the form of reimbursements for Health Care Expenses and to pay the premium for such benefits on a pre-tax Salary Reduction basis. Unless an exception applies as described in Article VIII, Section 8.2, such election is irrevocable for the duration of the Period of Coverage to which it relates. 6.2 Maximum and Minimum Benefits The maximum annual benefit amount that a Participant may elect to receive under this Plan in the form of reimbursements for Health Care Expenses incurred in any Plan Year shall be $3,000. The minimum annual benefit amount a Participant may elect to receive under this Plan in the form of reimbursements for Health Care Expenses incurred in any Plan Year shall be $10 per month, $120 per year. Amounts received that are attributable to reimbursements due for Health Care Expenses incurred by the Participant's Spouse or Dependents shall be attributed to the Participant. For subsequent Plan Years, the maximum and minimum annual benefit amount may be changed by the Administrator and shall be communicated to Employees via the Election Form or via another document. If a Participant enters the Plan mid -year, then the Participant may elect coverage up to the annual maximum amount of benefit. 6.3 Benefit Premiums; Salary Reduction Contributions The annual premium for a Participant's benefits is equal to '.l annual benefit amount elected by the Participant (for example, if the maximum $3,000 annual benefit amount is elected, then the annual premium amount is also $3,000). The Salary Reduction for each pay period for a Participant is an amount equal to the annual premium divided by the number of pay periods in the Plan Year, or an amount otherwise mutually agreed upon. Salary Reductions are applied by the Employer to pay for the premium for the Participant's benefits and, for purposes of this Plan, are considered Employer contributions. 6.4 Irrevocability of Election Except as provided in Section 8.2, a Participant's election to participate in the Health Care Reimbursement Component of this Plan is irrevocable for the duration of the Plan Year to which it relates. If election change is permitted under Section 8.2, the following rule will apply: No Participant shall be allowed to reduce his or her election for Health Care reimbursement benefits to a point where the annualized contribution for such benefit is less than the amount already reimbursed. In addition, any change in an election affecting the annual benefit amount in the Health Care Reimbursement Component pursuant to this Section also will change the Maximum Reimbursement Benefit for the period of coverage remaining in the Plan Year. The Maximum Reimbursement Benefit for the period of coverage following an election change shall be calculated by adding the balance (if any) remaining in the Participant's Reimbursement Account as of the end of the portion of the Plan Year immediately preceding the change in election, to the total contributions to such Account scheduled to be made by the Participant during the remainder of such Plan Year. 6.5 Reimbursement Procedure (a) Expenses That May be Reimbursed. Under the Health Care Reimbursement Component, a Participant may receive reimbursement for Health Care Expenses incurred during the Plan Year for which an election is in force. A Health Care expense is incurred at the time the Health Care or service giving rise to the expense is furnished. 12 (b) Maximum Reimbursement Available. Reimbursement for Health Care Expenses of the maximum dollar amount elected by the Participant for a Plan Year (reduced by prior reimbursements during the Plan Year) shall be available at all times during the Plan Year, regardless of the actual amounts credited to the Participant's Health Care Reimbursement Account pursuant to Section 10.1. (c) Timing of Reimbursement. As soon as is practicable after the Participant submits a reimbursement claim to the Administrator, the Employer will reimburse the Participant for the Participant's Health Care Expenses (if the Administrator approved the claim), or the Administrator will notify the Participant that his or her claim has been denied. (d) Use -It -or -Lose -It Rule. If a Participant does not submit enough expenses to receive reimbursements for the full amount of coverage elected for a Plan Year, then the excess amount will be forfeited and applied by the Employer. (e) Applying for Reimbursements. A Participant who has elected to receive Health Care reimbursement benefits for a Plan Year may apply for reimbursement by submitting an application in writing to the Administrator in such form as the Administrator may prescribe, within 90 days following the close of the Plan Year in which the expense was incurred, setting forth: • the person or persons on whose behalf Health Care Expenses have been incurred; • the nature of the expenses so incurred; • the amount of the requested reimbursement; and • a statement that such expenses have not otherwise been paid and are not expected to be paid through any other source. The application shall be accompanied by bills, invoices, or other statements from an independent third party showing the amounts of such expenses, together with any additional documentation that the Administrator may request. 6.6 Reimbursement After Termination When a Participant ceases to be a Participant under Section 3.3, the Participant's Salary Reductions will terminate, as will his or her election to receive reimbursements. The Participant will not be able to receive reimbursements for Health Care Expenses incurred after his or her participation terminates. However, such Participant (or the Participant's estate) may claim reimbursement for any Health Care Expenses incurred during the period of coverage prior to termination, provided that the Participant (or the Participant's estate) files a claim within 90 days following the close of the Plan Year in which the expense arose. To the extent required by federal law (COBRA) (see e.g., Code Section 4980B) a Participant and the Participant's Spouse and Dependents, whose coverage terminates under the Health Care reimbursement component of this Plan because of a COBRA qualifying event, shall be given the opportunity to continue coverage under this Plan on an after-tax basis for the periods prescribed by COBRA (subject to all conditions and limitations under COBRA). Specifically, such individuals will be eligible for COBRA Continuation Coverage only if, under Section 8. 1, they have a positive Health Care Reimbursement Account balance at the time of a Qualifying Event (taking into account all claims submitted before the date of the qualifying event). Such individuals will be notified if eligible for COBRA Continuation Coverage. If COBRA is elected, it will be available only for the year in which the qualifying event occurs; such COBRA coverage for the Health Care Reimbursement Component will cease at the end of the year and cannot be continued for the next Plan Year. 13 ARTICLE VII. DEPENDENT CARE COMPONENT 7.1 Benefits An election to participate in the Dependent Care Component of the Plan is an election to receive benefits in the form of reimbursements for Eligible Employment -Related expenses and to pay the premium for such benefits via Salary Reductions. 7.2 Maximum and Minimum Benefits The maximum annual benefit amount that a Participant may elect to receive under this Plan in the form of reimbursements for Eligible Employment -Related Expenses incurred in any Plan Year shallbe$5,000. If a Participant enters the Plan mid -year, then the Participant may elect coverage up to the annual maximum amount of benefit. 7.3 Salary Reduction Contributions The annual contribution for a Participant's benefits is equal to the annual benefit amount elected by the Participant (for example, if the maximum $5,000 annual benefit amount is elected, then the annual premium amount is also $5,000). The Salary Reduction for each pay period for a Participant is an amount equal to the annual premium divided by the number of pay periods in the Plan Year, or an amount otherwise mutually agreed upon. Salary Reductions are applied by the Employer to pay for the premium for the Participant's benefits and, for purposes of this Plan, are considered Employer contributions. 7.4 Irrevocability of Election; Change in Status Except as provided in Section 8.2, a Participant's election to participate in the Dependent Care Component Plan is irrevocable for the duration of the Plan Year to which it relates. If election change is permitted under Section 8.2, the following rule will apply: No Participant shall be allowed to reduce his or her election for Dependent Care Reimbursement benefits to a point where the annualized contribution for such benefit is less than the amount already reimbursed. In addition, any change in an election affecting the annual benefit amount in the Dependent Care Component pursuant to this Section also will change the Maximum Reimbursement Benefit for the period of coverage remaining in the Plan Year. The Maximum Reimbursement Benefit for the period of coverage following an election change shall be calculated by adding the balance (if any) remaining in the Participant's Reimbursement Account as of the end of the portion of the Plan Year immediately preceding the change in election, to the total contributions to such Account scheduled to be made by the Participant during the remainder of such Plan Year. 7.5 Reimbursement Procedure (a) Expenses That May Be Reimbursed. Under the Dependent Care Component, a Participant may receive reimbursement for Eligible Employment -Related expenses incurred during the Plan Year for which an election is in force. (b) Maximum Reimbursement Available. Payment shall be made to the Participant in cash as reimbursement for Eligible Employment -Related expenses incurred during the Plan Year for which the Participant's election is effective, provided that the substantiation requirements have been complied with. No payment otherwise due to a Participant hereunder shall exceed the smallest of: 14 the year-to-date amount that has been withheld from the Participant's Compensation for dependent Care reimbursement for the Plan Year, less any prior dependent care reimbursements during the plan year; the Participant's Earned Income for the applicable month; the Earned Income of the Participant's Spouse for such month (note: a Spouse of a Participant who is not employed during a month in which the Participant incurs Eligible Employment - Related expenses and who is either incapacitated or a Student shall be deemed to have Earned Income in the amount of $200 per month per Qualifying Individual for whom the Participant incurs Eligible Employment -Related expense(s), up to a maximum amount of $400 per month); or • $5,000, or if the Participant is married and files a separate tax return, $2,500 (or any future aggregate limitations promulgated under Code Section 129 less any prior reimbursements during the Plan Year. (c) Timing of Reimbursement. As soon as is practicable after the Participant submits a reimbursement claim to the Administrator, the Plan will reimburse the Participant for his or her Eligible Employment -Related expenses (if the Administrator approved the claim), or the Administrator will notify the Participant that his or her claim has been denied. (f) Use -It -or -Lose -It Rule. If a Participant does not submit enough expenses to receive reimbursements for the full amount of coverage elected for a Plan Year, then the excess amount will be forfeited and applied by the Employer. (g) Applying for Reimbursements. A Participant who has elected to receive dependent care benefits for a Plan Year may apply for reimbursement by submitting an application in writing to the Administrator in such form as the Administrator may prescribe, within 90 days following the close of the Plan Year - which the expense arose, setting forth: the person or persons on whose behalf Eligible Employment -Related expenses have been incurred; the nature of the expenses so incurred; a statement that such expenses have not otherwise been paid and are not expected to be paid through any other source. The application shall be accompanied by bills, invoices, or other statements from an independent third party showing the amounts of such expenses, together with any additional documentation that the Administrator may request. For this purpose, Eligible Employment -Related expenses have been incurred when the services giving rise to the expenses have been rendered. 7.6 Reimbursements After Termination When a Participant ceases to be a Participant under Section 3.3, the Participant's Salary Reductions will terminate, as will his or her election to receive reimbursements. The Participant will not be able to receive reimbursements for Eligible Employment -Related expenses incurred after his or her participation terminates. However, such Participant (or the Participant's estate) may claim reimbursement for any Eligible Employment - Related expenses incurred during the period of coverage prior to termination, provided that the Participant (or the Participant's estate) files a claim within 90 days following the close of the Plan Year in which the expense arose. 15 ARTICLE VIII. IRREVOCABILITY OF ELECTION; EXCEPTIONS 8.1 Irrevocability of Election Except as described below in this Article VIII, Section 8.2, a Participant's election under the Plan is irrevocable for the duration of the Plan Year to which it relates. In other words, unless an exception applies, the Participant may not change any election for the duration of the Plan year regarding: • participation in this Plan; • Salary Reduction amounts; or • Election of particular component plan benefits. 8,2 Exceptions The exceptions to the irrevocability requirement, which would permit a Participant to make a mid -year election change in benefits and/or Salary Reduction amounts for the Premium Payment Component, the Dependent Care Component and the Health Care Reimbursement Component, are set forth below. Note that the exceptions in paragraph 8.2(b) (HIPAA), 8.2(c) (Certain Judgments), 8.2(d) (Medicare and Medicaid) and 8.2(e)(1)(2)&(3) (Automatic Increase or Decrease) and 8.2(f) (Change in Coverage)do not apply to elections under the Health Care Reimbursement Component. Note that the exceptions in paragraph 8.2(b) (HIPAA), 8.2(c) (Certain Judgments), 8.2(d) (Medicare and Medicaid) and 8.2(e)(1)&(2) (Automatic Increase or Decrease) do not apply to elections under the Dependent Care Component. (a) Change in Status. A Participant may change or terminate his or her actual or deemed election under the Plan upon the occurrence of a Change in Status, but only if such change or termination is made on account of and corresponds with a Change in Status that affects coverage eligibility of a Participant, a Participant's Spouse, or a Participant's Dependent (referred to as the general consistency requirement). The Plan Administrator (in its sole discretion) shall determine, based ori prevailing IRS guidance, whether a requested change is on account of and corresponds with a Change in Status. Assuming that the general consistency requirement is satisfied, a requested change must also satisfy the following specific consistency requirements in order for a Participant to be able to alter his or her election based on that change. (1) Loss of Dependent Eligibility. For a Change in Status involving a Participant's divorce, annulment or legal separation from a Spouse, the death of a Spouse or a Dependent, or a Dependent ceasing to satisfy the eligibility requirements for coverage, a Participant may only elect to cancel accident or health insurance coverage for the Spouse involved in the divorce, annulment, or legal separation, the deceased Spouse or Dependent, or the Dependent that ceased to satisfy the eligibility requirements. Canceling coverage for any other individual under these circumstances would fail to correspond with that Change in Status. Notwithstanding the foregoing, if the Participant, the Participant's Spouse (but not ex-spouse) or the Participant's Dependent becomes eligible for COBRA (or similar health plan continuation coverage under state law) under the Employer's Plan, the Participant may increase his election to pay for such coverage. (2) Gain of Coverage Eligibility Under Another Employer's Plan. For a Change in Status in which a Participant, a Participant's Spouse, or a Participant's Dependent gains eligibility for coverage under another employer's cafeteria plan (or another employer's qualified benefit plan) as a result of a change in marital status or a change in employment status, a Participant may elect to cease or decrease coverage for that individual only if coverage for that individual becomes effective or is increased under the other employer's plan. (3) Special Rule for Dependent Care Component. The Participant may change or terminate his or her election under the Dependent Care Component if (a) such change or termination is made on account of and corresponds with a Change in Status that affects eligibility for coverage under an 16 employer's plan; or (b) the election change is on account of and corresponds with a Change in Status that affects eligibility of dependent care expenses for the tax exclusion available under Code Section 129. (b) HIPAA Special Enrollment Rights. If a Participant, a Participant's Spouse or a Participant's Dependent is entitled to special enrollment rights under a group health plan, as required by Code Section 9801(£), and medical coverage was declined under the group health plan because of outside medical coverage and eligibility for such coverage is subsequently lost due to legal separation, divorce, death, termination of employment, reduction in hours, or exhaustion of the maximum COBRA period, or if a new Dependent is acquired as a result of marriage, birth, adoption, or placement for adoption, then a Participant may revoke a prior election for health or accident coverage and make a new election (including salary reduction election), provided that the election right. For purposes of this provision, (1) an election to add corresponds with such special enrollment previously eligible Dependents as a result of the acquisition of a new Spouse or Dependent child shall be considered to be consistent with the special enrollment right; and (2) a HIPAA special enrollment election attributable to the birth or adoption of a new Dependent child may, subject to the provisions of the underlying group health plan, be effective retroactively (up to 30 days). (c) Certain Judgments, Decrees and Orders. If a judgment, decree, or order (an "Order") resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) requires accident or health coverage for a Participant's Dependent e his or her edinchild g a e foster child who is a Dependent of the Participant), a Participant may: (1) g to provide coverage for the Dependent child (provided that the Order requires the Participant to provide coverage); or (2) change his or her election to revoke coverage for the Dependent child if the Order requires that another individual (including the Participant's Spouse or former Spouse) provide coverage under that individual's plan. (d) Medicare and Medicaid. If a Participant, a Participant's Spouse, or a Participant's Dependent who is enrolled in a health or accident benefit under this Plan becomes entitled to Medicare or Medicaid (other than coverage consisting solely of benefits under Section 1928 of the Social Security Act providing for pediatric vaccines), the Participant may prospectively reduce or cancel the health or accident coverage of the person becoming entitled to Medicare or Medicaid. Further, if a Participant, a Participant's Spouse, or a Participant's Dependent who has been entitled to Medicare or Medicaid loses eligibility for such coverage, then the Participant may prospectively elect to commence or increase the health or accident coverage. (e) Change in Cost. (1) Automatic Increase or Decrease for Insignificant Cost Changes. If the cost of a Benefit Plan or Policy increases or decreases during a Plan Year by an insignificant amount, then the Pre-Tax Contributions or After-Tax Contributions (as applicable) under each affected Participant's election shall be prospectively increased or decreased to reflect such change. The Plan Administrator, on a reasonable and consistent basis, will automatically effectuate this prospective increase or decrease in affected employees' elective contributions in accordance with such cost changes. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether increases or decreases in costs are "insignificant" based upon all the surrounding facts and circumstances (including, but not limited to, the dollar amount or percentage of the cost change). (2) Significant Cost Increases. If the Plan Administrator determines that the cost of a Participant's Benefit Plans) or Policy(ies) significantly increases during a Plan Year, the Participant may either make a corresponding prospective increase in his or her contributions, or revoke his or her election, and in lieu thereof, receive coverage under another Plan option which provides similar coverage. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a cost increase is significant and what constitutes "similar coverage" based upon all the surrounding facts and circumstances. 17 (3) Limitation on Change in Cost Provisions for Dependent Care Expense Reimbursement. The above "Change in Cost" provisions apply to Dependent Care Component Plan only if the cost change is imposed by a dependent care provider who is not a "relative" of the employee by blood or marriage (as that term is defined in Proposed Treas. Reg. Section 1.125-4(f)(2)(iii) or other IRS guidance). (f) Change in Coverage. (1) Significant Curtailment or Cessation of Coverage. If the Plan Administrator determines that coverage under the Health Insurance Plan or the Dependent Care Component Plan is significantly curtailed or ceases during a Plan Year, an affected Participant may revoke his or her election under the Plan. In that case, an affected Participant may prospectively elect coverage under another Benefit Plan or Policy option which provides similar coverage. Coverage under an accident or health plan is deemed "significantly curtailed" only if there is an overall reduction in coverage provided to Participants under the Plan so as to constitute reduced coverage to Participants in general. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a curtailment is "significant", and whether a substitute Benefit Plan or Policy constitutes "similar coverage" based upon all the surrounding facts and circumstances. (2) Addition or Elimination of Benefit Package Option Providing Similar Coverage. If during a Plan Year the Plan adds or eliminates a Benefit Plan or Policy, an affected Participant may elect a newly -added option or elect another Benefit Plan or Policy (where a Plan option has been eliminated), and may do so prospectively on a pre-tax basis by making corresponding election changes with respect to coverage under another Benefit Plan or Policy option that provides similar coverage. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether : substitute Benefit Plan or Policy constitutes "similar coverage" based upon all the surrounding facts and circumstances. (3) Change in Coverage of Spouse or Dependent Under Their Employer's Plan. To avoid "election lock", a Participant may make a prospective election change that is on account of and corresponds with a change made under the plan of the Spouse's, former Spouse's, or Dependent's employer, so long as (a) the cafeteria plan or qualified benefits plan of the Spouse's, former Spouse's, or Dependent's employer permits its participants to make an election change that would be permitted under the proposed or final IRS regulations under Code Section 125; or (b) the Plan permits Participants to make an election for a Plan Year period of coverage which is different from the plan year period of coverage under the cafeteria plan or qualified benefits plan of the Spouse's, former Spouse's or Dependent's employer. The Plan Administrator shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a change made under the plan of the Spouse's, former Spouse's, or Dependent's employer. A Participant entitled to make a new election under this Section 8.2 must do so within 30 days of the event described above. An Employee who is eligible to elect benefits and declined to do so during the initial election period or during a subsequent Open Enrollment Period, may do so within thirty 30 days of the occurrence of an event described above, but only if the election under the new Salary Reduction Agreement is made on account of and consistent with the event. Subject to the provisions of the underlying group health plan, elections made to add medical coverage for a newborn or newly adopted Dependent child pursuant to a HIPAA special enrollment right may be retroactive for up to 30 days. All other new election shall be effective no sooner than the first day of the payroll period immediately following the date the Participant files his or her new Salary Reduction Agreement with the Plan Administrator. Elections made pursuant to this Section shall be effective for the balance of the Plan Year in which the election is made unless a subsequent event (described above) allows a further election change. 18 8.3 Election Modifications Required by Administrator The Administrator may, at any time, require any Participant or class of Participants to amend the amount of their Salary Reductions for a Plan Year if the Administrator determines that such action is necessary or advisable in order to (a) satisfy the Code's nondiscrimination requirements applicable to this Plan or other cafeteria plans; (b) prevent any Employee or class of Employees from having to recognize more income for federal income tax purposes from the receipt of benefits hereunder than would otherwise be recognized; (c) maintain the qualified status of benefits received under this Plan; or (d) satisfy Code nondiscrimination requirements or other limitations applicable to the Employer's Code Section 401(k) Plans (e.g., Code Section 415 limitations). In the event that contributions need to be reduced for a class of Participants, the Administrator will reduce the Salary Reduction amounts for each affected Participant, beginning with the Participant in the class who had elected the highest Salary Reduction amount, continuing with the Participant in the class who had elected the next -highest Salary Reduction amount, and so forth, until the defect is corrected. ARTICLE IX. APPEALS PROCEDURE 9.1 Procedure If Benefits Are Denied Under This Plan If a claim for reimbursement under this Plan is wholly or partially denied, notice of the decision shall be furnished to the claimant within a reasonable period of time, not to exceed 90 days after receipt of the claim by the Administrator unless special circumstances require an extension of time for processing the claim. If such an extension of time is required, then written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90 day period. In no event shall such extension exceed a period of 90 days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date on which the Administrator expects to render a decision. The written notice referred to in the above paragraph shall be set forth in a manner calculated to be understood by the claimant and shall include the following: • a specific reason or reasons for the denial; • specific reference to pertinent Plan provisions upon which the denial is based; • a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and • an explanation of this Plan's claims review procedure, as set forth below. 9.2 Appeals by Participant The purpose of the review procedure set forth herein is to provide a procedure by which a claimant under this Plan, may have reasonable opportunity to appeal a denial of a claim under this Plan to the Committee for a full and fair review. To accomplish that purpose, the claimant (or the claimant's duly authorized representative) may: • request review upon written application to the Committee; • review pertinent Plan documents; and • submit issues and comments in writing. A claimant (or the claimant's duly authorized representative) shall request a review by filing a written application for review with the Committee, at any time within 180 days after receipt by the claimant of written notice of denial of his or her claim. 19 9.3 Decision upon Appeal Decision on review of a denied claim shall be made in the following manner. (a) The decision on review shall be made by the Committee, which may, in its discretion, hold a hearing on the denied claim; the Committee shall make its decision promptly, but not later than 60 days after the Committee receives the request for review (unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review). If such an extension of time for review is required, then written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. (b) The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and shall include specific references to the pertinent Plan provisions on which the decision is based. (c) In the event that the decision on review is not furnished within the time period set forth in this Section 9.3, the claim shall be deemed denied on review. ARTICLE X. RECORDKEEPING AND ADMINISTRATION 10.1 Establishment of Accounts The Plan Administrator will establish and maintain a Health Care Reimbursement Account with respect to each Particip., d who has elected to participate in the Health Care Reimbursement Component of V e Plan, and will establish and maintain a Dependent Care Component of the Plan, but it will not create a separate fund or otherwise segregate assets for this purpose. The accounts so established will be merely recordkeeping accounts with the purpose of keeping track of contributions and determining forfeitures under subsection (c)' below. (a) Crediting of Accounts. A Participants' Health Care Reimbursement Account and Dependent Care Reimbursement Account will be credited periodically during each Plan Year with an amount equal to the Participant's Salary Reductions elected by Participants to be allocated to the respective Accounts. (b) Debiting of Accounts. A Participant's Health Care Reimbursement Account and Dependent Care Reimbursement Account will be debited during each Plan Year for any reimbursement of Health Care Expenses and Eligible Employment -Related Expenses respectively incurred during the Plan Year. (c) Forfeiture of Accounts. If any balances remains in the Participant's Health Care Reimbursement Account or Dependent Care Reimbursement Account for a Plan Year after all reimbursements have been made for the Plan Year, such balances shall not be carried over to reimburse the Participant for Health Care Expenses and Eligible Employment -Related Expenses during a subsequent Plan Year, The Participant shall forfeit all rights with respect to such balance. All forfeitures under this Plan shall be used to offset any losses experienced by the employer during the Plan Year as a result of making reimbursements (i.e., providing benefits) with respect to any Participant in excess of the premiums paid by such Participant via salary reductions; and second, to reduce the Employer's cost of administering this Plan during the Plan Year (all such administrative costs shall be well documented by the Administrator); and third, to provide increased benefits or compensation to Participants in subsequent years in any fashion the Administrator deems appropriate, consistent with Prop. Treas. Reg. Section 1.125-2 Q/A-7(b)(7) or other similar guidelines. 20 As described in Section 6.5(b), the amount available for reimbursement of Health Care Expenses is the Participant's annual benefit amount, reduced by prior Plan Year reimbursements; it is not based on the amount credited to the Account at a particular point in time. Thus, a Participant's Health Care Reimbursement Account may have a negative balance during a Plan Year, but any such negative amount shall never exceed the maximum dollar amount of benefits under this Plan elected by the Participant. By contrast, as described in Section 7.5(c), the amount available for reimbursement of Eligible Employment -Related Expenses is limited to the amount actually credited to the Participant's Dependent Care Account. 10.2 Plan Administrator The administration of this Plan shall be under the supervision of the Administrator. It is the principal duty of the Administrator to see that this Plan is carried out, in accordance with its terms, for the exclusive benefit of persons entitled to participate in this Plan without discrimination among them. 10.3 Powers of the Administrator The Administrator shall have duties and powers as it considers necessary or appropriate to discharge its duties of hereunder, including (but not limited to) the following discretionary authority: (a) to construe and interpret this Plan and to decide all questions of fact, questions relating to eligibility and participation, and questions of benefits under this Plan (provided that the Committee shall exercise such exclusive power with respect to an appeal of a claim under Article IX); (b) to prescribe procedures to be followed and the forms to be used by Employees and Participants to make elections pursuant to this Plan; (c) to prepare and distribute information explaining this Plan and the benefits under this Plan in such manner as the Administrator determines to be appropriate; (d) to request and receive from all Employees and Participant such information as the Administrator shall from time to time determine to be necessary for the proper administration of this Plan; (e) to furnish each Employee and Participant with such reports with respect to the administration of this Plan as the Administrator determines to be reasonable and appropriate, including appropriate statements setting from the amounts by which a participant's Compensation has been reduced in order to provide benefits under this Plan; (f) to receive, review and keep on file such reports and information concerning the benefits covered by this Plan as the Administrator determines from time to time to be necessary and proper; (g) to appoint and employ such individuals or entities to assist in the administration of this Plan as it determines to be necessary or advisable, including legal counsel and benefit consultants; (h) to sign documents for the purposes of administering this Plan, or to designate an individual or individuals to sign documents for the purposes of administering this Plan; (i) to secure independent Health Care or other advice and require such evidence as it deems necessary to decide any claims appeal; and (j) to maintain the books of accounts, records, and other data in the manner necessary for proper administration of this Plan and to meet any applicable disclosure and reporting requirements. 10.4 Reliance on Participant, Tables, etc. The Administrator may rely upon the direction, information or election of a Participant as being proper under the Plan and shall not be responsible for any act or failure to act because of a direction or lack of direction 21 by a Participant. The Administrator will also be entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports that are furnished by accountants, attorneys, or other experts employed or engaged by the Administrator. 10.5 Provision of Third -Party Plan Service Providers The Administrator, subject to approval of the Employer, may employ the services of such persons as it may deem necessary or desirable in connection with the operation of the Plan. Unless otherwise provided in the service agreement, obligations under this Plan shall remain the obligation of the Employer, 10.6 Fiduciary Liability To the extent permitted by law, the Administrator shall not incur liability for any acts of or failure to act except for their own willful misconduct or willful breach of this Plan. 10.7 Compensation of Plan Administrator Unless otherwise determined by the Employer and permitted by law, any Administrator who is also an Employee of the Employer shall serve without compensation for services rendered in such capacity, but all reasonable expenses incurred in the performance of their duties shall be paid by the Employer. 10.8 Insurance Contracts The Employer shall have the right (a) to enter into a coi, tact with one or more insurance companies for the purposes of providing any benefits under the Plan; and (b) to replace any of such insurance companies or contracts. 10.9 Inability to Locate Payee If the Administrator is unable to make payment to any Participant or other person to whom payment is due under the Plan because it cannot ascertain the identity or whereabouts of such Participant or other person after reasonable efforts have been made to identify or locate such person, then such payment and all subsequent payments otherwise due to such Participant or other person shall be forfeited following a reasonable time after the date any such payment first became due. 10.10 Effect of Mistake In the event of a mistake as to eligibility or participation of an Employee, or the allocations made to the account of a Participant, or the amount of benefit paid or to be paid to a Participant or other person, the Administrator shall, to the extent it deems administratively possible and otherwise permissible under the Code, cause to be allocated or cause to be withheld or accelerated, or otherwise make adjustment of, such amounts as it will in its judgment accord to such Participant or other person the credits to the account or distribution 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. 22 ARTICLE XL GENERAL PROVISIONS 11.1 Expenses All administrative costs shall be borne by the Employer. 11.2 No Contract of Employment Nothing herein contained is intended to be or shall be construed as constituting a contract or other arrangement between any Employee and the Employer to the effect that the Employee will be employed for any specific period of time. All Employees are considered to be employed at the will of the Employer. 11.3 Amendment and Termination This Plan has been established with the intent of being maintained for an indefinite period of time. Nonetheless, the Employer may amend or terminate this Plan at any time by resolution of the Employer's Board of County Commissioners or by any person or persons authorized by the Board of County Commissioners to take such action, and any such amendment or termination will automatically apply to the related employers that are participating in this Plan. 11.4 Plan Provisions Controlling In the event that the terms or provision )f any summary or description of this Plan, or of any other instrument, are in any construction interpreted as being in conflict with the provisions of this Plan as herein set forth, the provisions of this Plan shall be controlling. 11.5 Code and ERISA Compliance It is intended that this Plan meets all applicable requirements of the Code, ERISA, and all regulations issued thereunder. (ERISA applies to the Health Care Reimbursement Component but not to the Dependent Care Component.) This Plan shall be construed, operated and administered accordingly, and in the event of any conflict between any part, clause or provision of this Plan and the Code and/or ERISA, the provisions of the Code and ERISA shall be deemed controlling, and any conflicting part, clause or provision of this Plan shall be deemed superseded to the extent of the conflict. 11.6 Governing Law This Plan shall be construed, administered and enforced according to the laws of the State of Washington, to the extent not superseded by the Code, ERISA or other federal law. 11.7 Guarantee of Tax Consequences Neither the Administrator nor the Employer makes any commitment or guarantee that any amounts paid to or for the benefit of a Participant under this Plan will be excludable from the Participant's gross income for federal or state income tax purposes. 11.8 Non -Assignability of Rights The right of any participant to receive any reimbursement under this Plan shall not be alienable by the 23 Participant by assignment or any other method and shall not be subject to be taken by the Participant's creditors by any process whatsoever. Any attempt to cause such right to be so subjected will not be recognized, except to such extent as may be required by law. 11.9 Indemnification of Employer If any Participant receives one or more payments or reimbursements under this Plan on a pre-tax Salary Reduction basis, and such payments do not qualify for such treatment under the Code, such Participant shall indemnify and reimburse the Employer for any liability it may incur for failure to withhold federal income taxes, Social Security taxes, or other taxes from such payment or reimbursements. 11.10 Severability In the event that any provision of this Plan shall be held illegal or invalid for any reason, this illegality or invalidity shall not affect the remaining provisions of this Plan. Such remaining provisions shall be fully severable and this Plan shall, to the extent practicable, be construed and enforced as if the illegal or invalid provision had never been inserted therein. IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing instrument comprising the Grant County Flexible Benefits Plan, Grant County has caused this Plan to be executed in its name and on its behalf, on this ISNdayof December, 2003. GRANT COUNTY BOARD OF COUNTY COMMISSIONERS By Q �l )),GQe, Deborah Moore, Chair By: , 6::�� _- r-c'Roy-llison, Kfember By: Tim S ead, ember Witness: � U5 Signature _UW&L,� 24 APPENDIX A RELATED EMPLOYERS THAT HAVE ADOPTED THIS PLAN, WITH THE APPROVAL OF GRANT COUNTY (No related employers have adopted this plan, Grant County is the only employer participating in this Plan) 25 APPENDIX B EXCLUSION — HEALTH CARE EXPENSES THAT ARE NOT REIMBURSABLE The Grant County Flexible Benefits Plan document contains the general rules governing what expenses are and are not reimbursable. Exclusions: The following expenses are not reimbursable: • Health insurance premiums that you or your spouse pays for coverage under another health plan. • Long-term care services. • Cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease. "Cosmetic Surgery" means any procedure or drug, which is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. • The salary expense of a nurse to care for a healthy newborn at home. • Funeral and burial expenses. • Household and domestic help (even though recommended by a qualified physician due to an employee's or dependent's inability to perform physical housework). • Custodial care. • Costs for sending a problem child to a special school for benefits that the child may receive from the course of study and disciplinary methods. • Health club or fitness program dues. • Social activities, such as dance lessons (even though recommended by a qualified physician for general health improvement). • Bottled water. • Maternity clothes. • Diaper service or diapers. • Cosmetics, toiletries, toothpaste, etc. • Vitamins and food supplements, even if prescribed. • Uniforms or special clothing, such as maternity clothing. • Automobile insurance premiums. • Transportation expenses of any sort, including transportation expenses to receive Health Care. • Marijuana and other controlled substances, even if prescribed. • Any item that does not constitute Health Care as defined under Internal Revenue Service Code Section 213. • Any item that is not reimbursable under Internal Revenue Code Section 213 due to the rules in Proposed Treasury Regulation Section 1.125-2,Q/A-7. 26