HomeMy WebLinkAbout2022-09-13; City Council; ; Benefit Plan Document - Amended and Restated Cafeteria PlanCA Review CKM
Meeting Date: Sept. 13, 2022
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Lori Shonley, Human Resources Manager
lori.shonley@carlsbadca.gov, 442-303-2971
Sandra Smith, Senior Human Resources Technician
sandra.smith@carlsbadca.gov, 442-200-8842
Subject: Benefit Plan Document - Amended and Restated Cafeteria Plan
District: All
Recommended Action
1.Adopt a resolution approving the City of Carlsbad Amended and Restated Cafeteria Plan
for employee benefits to incorporate recent legal changes and authorize the City
Manager or designee to make any future Cafeteria Plan amendments necessary to
implement any legal requirements or City Council approved benefit programs.
2.Adopt a resolution authorizing the City Manager to procure any employee benefits
which have been approved by the City Council and for which the City Council has
budgeted or otherwise appropriated funds.
Executive Summary
The City of Carlsbad Cafeteria Plan gives city employees the ability to choose among benefit
options available to them through the individual plans. The City Council is being asked to
approve revisions to the cafeteria plan to keep it consistent with the requirements of federal
tax laws and regulations.
No ordinance or resolution delegates authority to approve these changes to the cafeteria plan,
so only the City Council has the authority to approve them. If the City Council adopts the
proposed resolutions, the City Manager will have the authority to approve any future revisions
to the cafeteria plan necessary to keep the cafeteria plan legally compliant or to implement any
City Council approved benefit programs. The City Manager will also have the authority to
procure any employee benefits which have been approved by the City Council in a
memorandum of understanding, a compensation and benefits plan, or other City Council
approved document and for which the City Council has budgeted or otherwise appropriated
funds.
Discussion
The City of Carlsbad established the City of Carlsbad Cafeteria Plan under Section 125 of the
Internal Revenue Code in 1988. The terms of the plan need to be updated consistent with the
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requirements of the Internal Revenue Code, and the plan has not been updated since it was
amended in 2004.
The City Attorney’s Office engaged Best Best and Krieger LLP, a law firm that specializes in
matters of municipal, employment and public finance law, to work with the Human Resources
Department to prepare this comprehensive update of the cafeteria plan.
The most significant revisions align the cafeteria plan with relevant changes to the law enacted
since the 2004 amendment. This includes language associated with the Affordable Care Act,
enacted in 2010, and the Health Insurance Portability and Accountability Act, amended in 2013.
The updated cafeteria plan incorporates current nondiscrimination requirements and describes
the standards required for the use of electronic media in communications about the plan and
benefit elections. The plan now includes Schedule A, which outlines annual benefit credits by
level of coverage and the opt-out allowance. It also includes Schedule B, which provides the
maximum salary reduction amount allowed per calendar year. This amount changes on an
annual basis according to plan costs. Schedules A and B require annual updates, which ensure
an annual review process of the cafeteria plan document.
Staff recommend approval of the Amended and Restated Cafeteria Plan as the revisions are
necessary for the cafeteria plan to comply with federal law. Staff further recommend
authorizing the City Manager to approve any future revisions to the cafeteria plan necessary to
keep the cafeteria plan legally compliant or to implement any City Council approved benefit
programs.
Similarly, staff recommend authorizing the City Manager to procure any employee benefits
which have been approved by the City Council in a memorandums of understanding, a
compensation and benefits plan, or other City Council-approved document and for which the
City Council has budgeted or otherwise appropriated funds. Approval of these
recommendations will help keep the cafeteria plan document current and legally compliant. It
will also help streamline the update and procurement processes.
Fiscal Analysis
There is no fiscal impact associated with these administrative changes to the City of Carlsbad
Amended and Restated Cafeteria Plan.
Next Steps
If the proposed resolution is approved, should there be future legislation or regulations that
mandate amendments to the cafeteria plan, the City Manager or designee will have the
authority to make the necessary amendments once they are approved as to form by the City
Attorney and provided that the City Manager or designee notifies the City Council of the
amendments within 60 days after they are made.
In addition, the City Manager or designee would have the authority to make day-to-day
administrative decisions consistent with the cafeteria plan and City Council approved benefit
programs. This will help ensure the cafeteria plan remains current and compliant in a timely
manner. Discretionary amendments and any associated costs will be brought to the City Council
for consideration and approval.
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Lastly, the City Manager or designee would have formal authority to procure any employee
benefits budgeted for and approved by City Council. This will streamline the procurement
process and ensure City Council approved employee benefit programs are timely implemented.
Environmental Evaluation
This action does not constitute a project within the meaning of the California Environmental
Quality Act under California Public Resources Code Section 21065 in that it has no potential to
cause either a direct physical change in the environment or a reasonably foreseeable indirect
physical change in the environment.
Public Notification
This item was noticed in keeping with the Ralph M. Brown Act and it was available for public
viewing and review at least 72 hours before the scheduled meeting date.
Exhibits
1.City Council resolution – approve amended and restated Cafeteria Plan
2.City Council resolution – authorize City Manager to procure approved employee benefits
3.Amended and restated Cafeteria Plan (revisions highlighted)
Sept. 13, 2022 Item #2 Page 3 of 116
RESOLUTION NO. 2022-215
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AMENDING THE CITY OF CARLSBAD CAFETERIA PLAN TO
INCORPORATE LEGAL CHANGES AND AUTHORIZING THE CITY MANAGER TO
MAKE FUTURE AMENDMENTS NECESSARY TO IMPLEMENT LEGAL
REQUIREMENTS OR CITY COUNCIL APPROVED BENEFIT PROGRAMS
WHEREAS, the City Council of the City of Carlsbad established a cafeteria plan ("the Plan") for
its employees and authorized the administration of the Plan by the City Manager; and
WHEREAS, the City Council intends for the Plan to be consistent with federal and state laws and
regulations and City Council approved benefit programs; and
WHEREAS, legal and regulatory changes made to Internal Revenue Code Section 125 require
corresponding changes to the Plan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.The above recitations are true and correct.
2.Effective Sept. 13, 2022, the City Council amends and restates the City of Carlsbad
Cafeteria Plan as shown in Attachment A.
3.The City Manager or designee is authorized to take all steps necessary and appropriate
to administer the City of Carlsbad Amended and Restated Cafeteria Plan, including
executing all documents necessary to implement the Plan.
4.The City Manager or designee is authorized to make any future Plan amendments
necessary to implement any mandatory legal requirements once the amendments are
approved as to form by the City Attorney and provided the City Manager notifies the
City Council of the amendments within sixty days after they are made.
5.The City Manager or designee is further authorized to make any future Plan
amendments necessary to implement any City Council approved benefit programs once
the amendments are approved as to form by the City Attorney.
Exhibit 1
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 13th day of September, 2022, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Norby.
None.
Hall.
MATT HALL, Mayor
FAVIOLA MEDINA, City Clerk Services Manager
(SEAL)
Sept. 13, 2022 Item #2 Page 5 of 116
CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN
The CITY OF CARLSBAD (“Employer”) established the CITY OF CARLSBAD
CAFETERIA PLAN for the benefit of its employees and their dependents effective December 1, 1998, and as amended and restated on January 1, 2002, and amended on April 14, 2004. The Employer desires to further amend and restate the Plan to comply with federal and state law and to conform to the benefits set forth in policies or agreements covering its employees. Accordingly,
the Employer hereby amends and restates the Plan, effective January 1, 2022.
ARTICLE I TITLE AND PURPOSE
This Cafeteria Plan shall be known as the CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN (“Plan”). The purpose of the Plan is to furnish to eligible
employees choices among certain Benefits provided by the Employer, so that Employees may
receive Benefits that best meet their individual needs. The Plan is intended to provide benefits in accordance with Section 125 of the Internal Revenue Code, as amended, and the Regulations issued thereunder, so that the Benefits that an Employee elects to receive under the Plan are eligible for exclusion from the Employee’s income for federal income tax purposes. In accordance with
Section 125 of the Internal Revenue Code, the Employer shall offer at least one permitted taxable
benefit and at least one nontaxable qualified benefit.
ARTICLE II COMPONENT PLANS
The Benefits offered under this Plan are provided through separate Component
Plans which are set forth in separate plan documents, group insurance policies or administrative
service contracts, and are incorporated herein and set forth in Schedule “A.”
ARTICLE III DEFINITIONS
The following words and phrases, when used herein, shall have the following
meanings, unless a different meaning is clearly required by the context:
3.1 Administrator. “Administrator” means the Employer or any person or entity appointed by the Employer to administer this Plan on its behalf, as provided in Article IV.
3.2 Benefit. “Benefit” means any of the qualified benefits and permitted taxable benefits which may be purchased under this Plan.
3.3 Benefit Credits. “Benefit Credits” means the amount of Employer
contributions to the Plan made by the Employer on behalf of each Participant for the purchase of Benefits under this Plan.
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Attachment A
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3.4 Code. “Code” means the Internal Revenue Code of 1986, as amended, and regulations issued thereunder. References to any section of the Code include references to any
comparable or succeeding provision of any legislation which amends, supplements or replaces
such section.
3.5 Component Plan. “Component Plan” means any plan offering Benefits available under this Plan, as set forth in the separate plan documents.
3.6 Dependent. “Dependent” means the Spouse or dependent of a Participant
and who is eligible to receive benefits under a Component Plan. Dependent shall also mean, as to
health benefits offered under the Plan, a dependent eligible under Code Section 152, determined without regard to Code Section 152(b)(1), (b)(2) or (d)(1)(B) and any child (as defined in Code Section 152(f)(1)) of the Participant who as of the end of the taxable year has not attained age 27 years.
Notwithstanding the preceding, if a Component Plan permits a Participant
to cover an individual other than the Participant’s Spouse or Dependent (including a Participant’s registered domestic partner as recognized by the State of California), the term Dependent as used throughout the Plan document shall also include such individual provided the benefit is treated as a taxable benefit in accordance with Section 7.6.
3.7 Effective Date. “Effective Date” shall mean the effective date of this
restatement which is January 1, 2022. The date this Plan first became effective is December 1, 1998.
3.8 Employee. “Employee” means all common law employees of the City eligible to receive Benefit Credits, as described in Schedule “A.” To the extent necessary, the term
“Employee” shall also include former employees who are entitled to receive benefit payments
under this Plan.
3.9 Employer. “Employer” means the City of Carlsbad, and any successor of such Employer.
3.10 Entry Date. “Entry Date” means, for all newly hired Employees, first day
of the month following the date on which the election form is received by the Administrator. In
all other cases, the “Entry Date” shall mean the first day of each Plan Year or within 60 days of qualifying events as dictated by CalPERS, whichever is applicable.
3.11 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, including all regulations issued thereunder.
3.12 FMLA. “FMLA” means the Family Medical Leave Act of 1993, as
amended, including all regulations issued thereunder.
3.13 Flexible Benefit Dollars. “Flexible Benefit Dollars” means the Salary Reduction and Benefit Credits or Opt-Out Allowance amounts allocated to each Participant for a Plan Year for the purchase of Benefits.
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3.14 Leave of Absence. “Leave of Absence” means any absence of an Employee which is authorized by the Employer under the Employer’s personnel policies, including any leave
designated as FMLA Leave. Additionally, an Employee shall be subject to such rights and benefits
for Family or Medical Leave, as defined in the Family and Medical Leave Act of 1993 and the California Family Rights Act of 1991.
3.15 Marketplace. “Marketplace” means a state-facilitated or federally-facilitated exchange through which individuals may purchase health insurance.
3.16 Open Enrollment Period. “Open Enrollment Period” means the period
beginning at least thirty (30) days before the beginning of the next Plan Year and ending on any date preceding the commencement of the Plan Year, as determined by the Administrator. For a new Employee, “Open Enrollment Period” shall mean the period between the Employee’s effective date of employment and the first day on which an Employee may become a Participant.
During the Open Enrollment Period, an Employee who is eligible to be a Participant can elect to
participate in the Plan, as set forth in Article V.
3.17 Opt-Out Allowance. “Opt-Out Allowance” means the amount of Employer contributions to the Plan made by the Employer on behalf of each Participant who waives medical coverage pursuant to Section 5.5 for the purchase of Benefits under this Plan.
3.18 Participant. “Participant” means an Employee who becomes enrolled in the
Plan pursuant to Article IV. “Participant” shall also mean a former Employee who elects to continue health coverage under the Plan. Former Employees, however, shall not receive Benefit Credits.
3.19 Period of Coverage. “Period of Coverage” generally means the Plan Year
beginning on January 1 and ending on December 31. A Participant’s Period of Coverage may be
less than 12 months if a new Participant enters the Plan during the Plan Year or a Participant completes a permitted election change in accordance with Article V.
A Participant’s Period of Coverage shall also include continuation coverage elected by a terminated Participant or Qualified Beneficiary (as defined in Section 9.2).
3.20 Plan. “Plan” means the CITY OF CARLSBAD AMENDED AND
RESTATED CAFETERIA PLAN, set forth herein, including all subsequent amendments and modifications hereto.
3.21 Plan Year. “Plan Year” means the twelve (12) consecutive month period commencing January 1 and ending on December 31.
3.22 Salary Reduction. “Salary Reduction” means the amounts paid into the Plan
pursuant to elections made by the Participant to reduce his or her compensation for the purchase of Benefits elected by the Participant. The maximum Salary Reduction amount for each Plan Year shall be set forth in Schedule “B.”
3.23 Short Plan Year. “Short Plan Year” shall mean a Plan Year which is less
than twelve (12) months and which ends on the last day of the Plan Year. A Short Plan Year shall
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arise only in the following circumstances: (i) the initial Plan Year did not begin on January 1; or (ii) the Employer changes the Plan Year for a valid business purpose resulting in a Short Plan Year.
In the event that a Short Plan Year is in effect, all references to “Plan Year” shall be replaced by
“Short Plan Year” in all instances where it is appropriate.
3.24 Spouse. “Spouse” means the person to whom the Participant is legally married but shall not include an individual legally separated from a Participant under a decree of legal separation. A Participant’s registered domestic partner, however, shall be entitled to and
receive the same rights and coverage attributable to medical and health benefits offered under the
Plan pursuant to the California Domestic Partner Rights and Responsibilities Act of 2003, provided that such benefits are treated as taxable benefits in accordance with Section 7.6.
3.25 Uniformed Services. “Uniformed Services” means the Armed Forces, the Army National Guard, and the Air National Guard when engaged in active duty for training,
inactive duty training, or full-time National Guard duty, the commissioned corps of the Public
Health Service, and any other category of persons designated by the President of the United States in time of war or emergency.
ARTICLE IV ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. Each Employee shall be eligible to participate in the Plan as of
his or her Entry Date.
4.2 Participation. An Employee may become a Participant by completing and executing an electronic or paper election form and Salary Reduction Agreement, and by providing such other information as is reasonably required by the Employer as a condition of such
participation. A Participant’s election to participate in the Plan shall continue to be valid until
expressly revoked or altered, as set forth in Article V. The Administrator shall continue to make Salary Reductions and the Participant shall be deemed to have selected the Benefits previously elected by Participant in subsequent Plan Years consistent with the Participant’s most recent election form.
4.3 Recommencement of Participation. A former Participant may recommence
participation in the Plan on his or her date of reemployment as an eligible Employee. If a former Participant is rehired by the Employer within thirty (30) days of his or her date of termination, such Participant shall not be permitted to submit a new election, and his or her prior election shall be reinstated for the remainder of the Plan Year. However, a reemployed former active Participant
may only make a new election to participate in the City of Carlsbad Health Flexible Spending
Account Plan or the Dependent Care Flexible Spending Account to the extent permitted by these respective plans.
Any employee who returns to active employment within ninety (90) days of completing a period of absence from employment for duty in the Uniformed Services shall reenter
the Plan upon reemployment. A Participant whose health coverage under the Plan is terminated
on account of his or her being in “uniformed service,” and is later reinstated, shall not be subject to a new exclusion or waiting period requirement imposed by such group health plan and/or Health
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Flexible Spending Account, provided that such requirements would not have been imposed if coverage had not been terminated as a result of the “uniformed service.”
4.4 Leave of Absence. An Employee shall not be disqualified from
participating in the Plan during the period in which the Employee is on an authorized Leave of Absence; provided the Employee continues to have an employment relationship with the Employer and arranges to continue to pay the required costs of coverage for the Benefits elected for the Plan Year. The Employer shall continue to provide the Benefit Credits or Opt-Out Allowance, as
applicable, during a Participant’s paid Leave of Absence, and the Participant shall have his or her
share of the cost of Health Benefits deducted from his or her salary in the same manner as before the paid Leave of Absence was taken.
A Participant who takes an unpaid leave of absence under the FMLA, the California Family Rights Act of 1991 or Pregnancy Disability Leave (“Statutory Leave”) shall pay
the required costs of coverage as provided in Section 7.2; however, the Employee may revoke his
or her election to participate under any group health insurance benefit offered under this Plan for the remainder of the Plan Year in which the unpaid Statutory Leave commences. Such revocation shall take effect in accordance with such procedures as prescribed by the Administrator. If the Participant makes such an election, the Employer’s provision of any Benefit Credits or Opt-Out
Allowance, as applicable, with respect to any protected Leave of Absence, shall also cease. Upon
such Participant’s return from his or her Statutory Leave, the Participant may then elect to be immediately reinstated in the Plan, on the same terms that applied to the Participant prior to the Statutory Leave, with respect to group health plans, taking into account any voluntary revocation with respect to the allocation of any Benefit Credits or Opt-Out Allowance, as applicable, and with
such other rights to revoke or change elections as are provided to the Participants under the Plan.
Notwithstanding the foregoing, a Participant on Statutory Leave shall have no greater rights to benefits for the remainder of the Plan Year in which the Statutory Leave commences than do other Participants.
4.5 Cessation of Participation. An Employee shall cease to be a Participant
under this Plan and therefore, under each Component Plan, as of the earliest of:
(a) Separation from service:
(1) For medical coverage the last date of the month following the month in which the Participant separates from service with the Employer.
(2) For dental and vision coverage, the last date of the
month in which the Participant separates separation from service with the Employer.
or;
(b) the date on which the Administrator, on a consistent and
uniform basis, deems the Participant has failed to make the required premium
payments, including the Salary Reduction, for the elected Benefits, as provided in Section 4.6; or
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(c) the date on which the Participant is not eligible to participate in any of the Component Plans for which he or she wishes to make an election; or
(d) the date on which the Participant dies; or
(e) the date on which the Plan terminates.
4.6 Cessation of Required Contributions. A Participant’s election to participate in the Plan may be terminated in accordance with Section 4.5(b) if the Participant fails to make the required premium payments with respect to his or her elected Benefits. In such case, that
individual may not make a new Benefit election for the remaining portion of the Plan Year.
4.7 Eligibility Under Component Plans. The eligibility of a Participant under a Component Plan shall be the same as set forth in this Article, unless otherwise specified in the Component Plan under which a Participant has elected to receive Benefits. Each Component Plan may provide more rigorous eligibility requirements which may cause a Participant to be ineligible
to participate in a particular Component Plan, but continue to be eligible to participate in this Plan.
ARTICLE V ELECTIONS AND PROCEDURES
5.1 Election of Benefits. Prior to the annual Entry Date (or mid-year Entry Date for newly hired Employees), there shall be an Open Enrollment Period during which the Employee
may elect to participate in this Plan. The Administrator shall provide each Employee during each
Open Enrollment Period with an election form and Salary Reduction Agreement.
5.2 Salary Reduction. Each Participant shall authorize the Employer to reduce his compensation by the amount needed for the purchase of the Benefits elected by the Participant by submitting a completed Salary Reduction Agreement containing, at a minimum, the following
information:
(a) that the election form must be completed and returned to the Administrator during the Open Enrollment Period; and
(b) that the election shall be effective on the Entry Date and continue in effect until the last day of the Plan Year for which the election is made,
or until the Participant provides the Administrator with a new election form
modifying or terminating his or her existing election; and
(c) that the election shall be irrevocable unless the Participant is entitled to change his or her election as provided in this Article; and
(d) that the Participant is directing the Administrator to convert
his or her salary (Salary Reduction) to Flexible Benefit Dollars, as set forth in
Article VI; and
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(e) that the Participant’s Salary Reduction shall be considered as Employer contributions used to pay for Benefits under the Plan.
Salary Reductions shall be contributed to the Plan by the Employer on behalf of a
Participant on a level and pro rata basis for each payroll period. The Administrator reserves the right reduce any Salary Reduction election made under the Plan and, if necessary, the Participant’s Benefit Credits or Opt-Out Allowance, as applicable, to ensure that the Plan complies with the nondiscrimination provisions of Article IX. In no event shall the Salary Reductions for a Plan
Year exceed the amount set forth in Schedule “B.”
5.3 Initial Election Period.
(a) A new Employee must complete, sign and file an election form and a Salary Reduction Agreement with the Administrator during the Open Enrollment Period for that Employee.
(b) A new Employee who fails to complete, sign and file an
election form and a Salary Reduction Agreement with the Administrator in accordance with paragraph (a) above during shall be deemed to have elected not to participate in the Plan.
5.4 Elections for Subsequent Plan Years.
(a) Open Enrollment Period. An Open Enrollment Period shall
occur prior to the beginning of each Plan Year. During the Open Enrollment Period, a Participant who wishes to change his or her existing election, shall have the opportunity to elect new or different Benefits under the Plan effective for the subsequent Plan Year subject to the terms and conditions of the Component Plans.
(b) Failure to Reelect. If a Participant fails to re-elect coverage
but remains eligible to participate, the Participant shall be deemed to have elected the Benefits selected on the election for the preceding Plan Year and a Salary Reduction and/or Benefit Credits or Opt-Out Allowance, as applicable, amount necessary to provide the same coverage. To the extent that the plan(s) that the
Participant previously elected is/are no longer available and the alternative plan(s)
offered by the provider are more expensive, the Participant will be required to make an affirmative election to participate in coverage in order to continue coverage.
(c) Reimbursement Accounts. Elections to contribute to the Health Flexible Spending Account and/or the Dependent Care Flexible Spending
Account must be affirmatively elected each year by the Participant. A failure to
reelect shall result in nonparticipation under the Health Flexible Spending Account and/or the Dependent Care Flexible Spending Account for the upcoming Plan Year. The prior year election will not be carried over.
(d) Continuation Coverage. During an Open Enrollment Period,
any Participant, or a Qualified Beneficiary thereof, that has elected continuation of
health coverage under the Plan, shall have the opportunity to elect new or different
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coverage under the Plan effective for the subsequent Plan Year. However, any such election shall be limited to health care options under the Plan.
5.5 Waiver of Medical Coverage. An Employee may waive medical coverage
under the Plan and receive an Opt-Out Allowance (as described in Schedule “A”) in lieu of Benefit Credits upon completion of the following:
(a) The Employee shall annually provide the Administrator with satisfactory evidence substantiating that the Employee is currently receiving
medical coverage from another employer-sponsored group health plan or Tri-Care.
(b) The Employee declines coverage and agrees in writing to hold the Employer harmless for any consequences resulting in the waiver of such coverage.
(c) The Employee acknowledges in writing that the Employee
shall not be permitted to enroll in the declined benefit option under the Plan until
the next Open Enrollment Period, subject to the terms and restrictions of the insurance provider, unless a special enrollment period arises.
(d) An Employee that qualifies to waive medical coverage under this Section 5.5 shall be required to submit a new election and proof of other group
health plan coverage for each Plan Year.
5.6 Participant Makes Incorrect Election. If a Participant does not elect the correct amount of Flexible Benefit Dollars to pay for coverage of the Benefits elected under the Plan, the Administrator is authorized to increase or decrease a Participant’s election by the amount necessary to provide the Participant’s elected coverage under the Plan.
5.7 Special Enrollment Period. In accordance with the Code Section 9801(f)
and the regulations issued by the Department of Health and Human Services, an eligible Employee or Dependent who either incurs a loss of health coverage or becomes otherwise eligible for health coverage under this Plan shall be permitted to enroll for health coverage under the Plan in accordance with one of the special enrollment periods described in paragraphs (a) and (b) below.
(a) Loss of Health Coverage. An Employee who is otherwise
eligible to enroll in the Plan but has not elected to participate in the Plan, or a Dependent of Employee that is not enrolled but is otherwise eligible under the Plan, shall be permitted to enroll for coverage under the Plan provided all of the following conditions are met:
(1) The Employee or Dependent was covered under
another group health plan or had alternate health insurance coverage (“Prior Health Coverage”) at the time coverage under this Plan was previously offered to the Employee.
(2) The Employee stated in writing at such time that
Prior Health Coverage was the reason for declining enrollment.
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(3) The Employee’s or Dependent’s Prior Health Coverage was either:
(i) under a continuation coverage provision and
the coverage period was exhausted; or
(ii) was terminated as a result of loss of eligibility (including a result from a change in family status) or employer contributions toward such coverage were terminated.
(4) Under the terms of the Plan, the employee requests
such enrollment not later than thirty (30) days after the date of a special enrollment event or the date a certificate of group health coverage is provided following a termination of health coverage.
(b) Dependent Special Enrollment Period. Any Employee,
regardless of whether said Employee is currently enrolled for health coverage under
the Plan, who experiences an increase in the number of Dependents whether through marriage, birth, adoption or placement for adoption, shall be permitted to enroll for health coverage under the Plan. During the “dependent special enrollment period,” Employee shall have the opportunity to enroll all other
Dependents who are otherwise eligible for coverage, including the Employee if not
enrolled, provided the Employee elects enrollment within thirty (30) days commencing on the later of: (i) the date dependent coverage is made available; or (ii) the date of the marriage, birth, adoption, placement for adoption, or other event which results in the change of Dependents of Employee.
(c) State Premium Subsidy. Notwithstanding the thirty (30) day
election period prescribed by subparagraphs (a) and (b) above, if an Employee or his or her Dependent becomes eligible to receive a state premium subsidy for a group health plan sponsored by the Employer, such Employee shall have the opportunity to enroll himself or herself or his or her affected Dependent for
coverage in the Employer’s health plan, provided the Employee elects enrollment
within sixty (60) days of the date of the notice of qualification from Medicaid or the Children’s Health Insurance Program (“CHIP”).
(d) Health Flexible Spending Account. Notwithstanding the foregoing, the special enrollment rights conveyed under this Section 5.7 shall not
extend to include an election to contribute to the Health Flexible Spending Account
offered as a Component Plan, unless expressly allowed by such Component Plan.
5.8 Revocability of Elections. The Administrator shall permit a Participant to revoke an existing election or make a new election outside of the Open Enrollment Period for the remainder of a Plan Year only if the new election is for one of the following reasons:
(a) both the revocation and new election are made on account of
and are consistent with a change in the Participant’s family status, as set forth in Section 5.9;
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(b) there is a significant change in the cost or coverage of the benefits previously elected by the Participant, as set forth in Sections 5.10 and 5.11;
(c) both the revocation and new election are made on account of
and pursuant to the terms of a “qualified medical child support order” as set forth in Section 5.12;
(d) the Participant, Spouse or Dependent becomes eligible for continuation coverage under Article IX and the Participant desires to elect to
increase the amount of his or her Salary Reduction in order to pay for the
continuation coverage.
5.9 Change in Family Status. A Participant may make a change in coverage during a Plan Year due to a change in family status, as set forth in this Section. A Participant must notify the Administrator and must complete a new election form to change coverage. The
Participant’s election shall only be deemed valid if the requested change in coverage is necessitated
by and corresponds with the change in family status and is consistent with the terms and conditions of the affected Component Plan. This election shall be effective as of the first day of the month following the date the Participant provides the Administrator with a new election form reflecting the change in coverage due to a change in family status.
A change in family status shall include the following:
(a) a change in the Participant’s marital status, including marriage, death of Spouse, divorce, legal separation, or annulment;
(b) a change in the number of Dependents of a Participant (as defined in Section 3.18), including a birth of a child, adoption, placement for
adoption, or death of a Dependent;
(c) any change in the employment status of the Participant, Spouse or Dependent which results in that individual becoming or ceasing to be eligible under this Plan or Component Plan maintained by the Employer, Spouse or Dependent, including a termination or commencement of employment; a
commencement or return from an unpaid leave of absence (including leave taken
under FMLA); a change in work site; or a reduction or increase in hours of employment (including a switch between part-time and full-time);
(d) a Dependent satisfies or ceases to satisfy the eligibility requirements for coverage due to attainment of age, student status, or any similar
circumstances as provided under the Component Plan under which the Employee
receives coverage;
(e) a change in the place of residence of the Participant, Spouse, or Dependent; and
(f) a Participant, Spouse, or Dependent becoming or ceasing to
be entitled to coverage under MediCare or Medicaid.
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To the extent the Code and the regulations issued thereunder alters this definition of change in family status, this Section 5.9 is intended to be interpreted in accordance
with any revised definition or interpretation.
5.10 Change in Cost of Benefit.
(a) Insignificant Change. If the cost of any Benefit offered under the Component Plans (other than a Component Plan which provides for the reimbursement of expenses) increases or decreases during the Plan Year, the
Administrator may, on a reasonable and consistent basis, automatically increase or
decrease a Participant’s election by a corresponding amount of Salary Reduction and/or Benefit Credits or Opt-Out Allowance, as applicable, to ensure that the Participant continues to receive the elected coverage under the Component Plans; provided, however, that if the increase or decrease is a significant change in cost,
the Participant shall be given the option to elect to change his or her Benefits.
(b) Significant Increase in Cost of Benefit. If the cost of a Benefit option (other than a Component Plan which provides for the reimbursement of expenses) significantly increases during a coverage period, all affected Participants may make a corresponding change in their Benefit election under the
Plan. Changes that may be made include the following:
(1) In the case of a Benefit option that has experienced a significant decrease in cost, a Participant may make a prospective change to an election to commence participation in that Benefit option.
(2) In the case of a Benefit option that has experienced a
significant increase in cost, a Participant may change an election to terminate such
coverage and either, elect prospective coverage under another Benefit option providing similar coverage or drop coverage if no other Benefit option providing similar coverage is available.
(c) For purposes of this Section, a “cost of increase or decrease”
refers to an increase or decrease in the amount of the Salary Reductions contributed
by a Participant under the Plan, whether that increase or decrease results from an action taken by the Employee (such as switching between full-time and part-time status) or from an action taken by the Employer (such as reducing the amount of Employer contributions for a class of Employees).
(d) Changes to Dependent Care Expenses. In the case of an
election to participate in the Dependent Care Flexible Spending Account, a Participant’s prior election may be changed only if the cost change is imposed by a dependent care provider who is not a relative of the employee.
5.11 Significant Change in Coverage of Component Plan Benefit.
(a) Significant Curtailment Without Loss of Coverage. If a
Participant or a Participant’s Spouse or Dependent experiences a “significant
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curtailment of coverage” under a Benefit option that is not a loss of coverage, including a significant increase in the deductible, co-payment, or the out-of-pocket
cost sharing limit under a group health plan; the Participant may revoke his or her
election for such coverage and prospectively elect to receive coverage under another Benefit option providing similar coverage. For this purpose, coverage under a Component Plan is “significantly curtailed” only if there is an overall reduction in coverage provided under the Component Plan so as to constitute
reduced coverage generally. In this regard, the loss of one particular physician in
a health care provider network in most cases will not qualify for a significant curtailment of coverage under this Section.
(b) Significant Curtailment With Loss of Coverage. If a Participant or a Participant’s Spouse or Dependent experiences a significant
curtailment of coverage that is a “loss of coverage” under a Benefit option, the
Participant may revoke his or her election for such coverage and elect either to receive coverage under another Benefit option providing similar coverage or to drop coverage if no other Benefit option providing similar coverage is available under the Plan. For this purpose, a “loss of coverage” means a complete loss of
coverage under a benefit package option or other coverage option, including the
elimination of a benefits package option, an HMO ceasing to be available in the area where the individual resides, or the individual losing all coverage under the option by reason of an overall lifetime or annual limitation under a group health plan. In this regard, each of the following is considered to be a “loss of coverage”
under this Section:
(1) a substantial decrease in the medical care providers available under the Benefit option (e.g., a major hospital ceasing to be a member of a preferred provider network, or a substantial decrease in the physicians participating in a preferred provider network or an HMO);
(2) a reduction in the benefits for a specific type of
medical condition or treatment with respect to which a Participant or the Participant’s Spouse or Dependent is currently in a course of treatment; or
(3) any other similar fundamental loss of coverage.
(c) Addition or Improvement of Benefit Option. If during the
Plan Year, a Component Plan adds a new benefit package option or other coverage
option, or if coverage under an existing option is significantly improved, any Participant or Employee, who is otherwise eligible to participate in the Plan, may revoke their election under the Plan for the Plan Year and make an election on prospective basis for coverage under the new or improved benefit option.
(d) Change In Coverage Under Another Employer Plan. A
Participant, or an Employee who is otherwise eligible to participate in the Plan but has elected not to participate, may make a prospective election change that is on account of and consistent with a change made under another employer plan
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(including a plan of the Employer or another employer) by the Employee or the Employee’s Spouse or Dependent, provided the other employer plan allows
participants to make an election change that would be permitted under the rules of
Treasury Regulation Section 1.125-4(c) and as provided in this Plan.
5.12 Qualified Medical Child Support Order. A Participant may make a change in coverage during a Plan Year to provide health coverage under the Plan for the Participant’s child or legal dependent pursuant to the terms of a judgment, decree, or order resulting from a family
law proceeding, including a “qualified child support order” as defined under ERISA Section 609,
requiring Participant to provide health coverage for the child. The Participant may also make a change which cancels health coverage for the Participant’s child or dependent provided the order requires the spouse, former spouse, or other individual to provide health coverage for the child.
5.13 Use of Electronic Medium for Participant Notices and Elections.
(a) Definition of Electronic Medium. “Electronic Medium”
means an electronic method of communication between the Administrator (or its designated representative) and Employee thereby allowing each party to send and receive notice and elections through the same medium. The only form of electronic communication permitted by the Plan shall be via electronic mail on the Employer’s
network or intranet, through an interactive website, or to a private e-mail address
supplied to the Employer by the Employee for communication purposes. The electronic medium must be designed so that the information provided is no less understandable to the receiving party than a written paper document. The electronic medium shall be designed to alert the Employee, at the time a notice is provided, to
the significance of the information in the notice (including identification of the
subject matter of the notice), and provide any instructions needed to access the notice, in a manner than is readily understandable. The electronic medium shall be designed to preclude any person, other than the appropriate individual, from making a Participant election, such as Salary Reduction Agreement, or accessing individual
Participant account information.
(b) Disclosure and Consent Requirements.
(1) Disclosure Statement. Prior to electronically transmitting any consent or notice to the Employee, the Administrator shall provide a statement which contains the following: (i) informs the Employee of the right to
receive a paper document of the notice or other Plan-related material either prior to
or after giving consent to electronic transmission; (ii) informs the Employee of the right to withdraw his or her consent at any time and the procedures for withdrawal, including any conditions or consequences arising from such withdrawal; (iii) describes the scope and duration of the consent as it related to various plan
transactions; (iv) describes the procedures for updating Employee contact
information; and (v) describes the hardware or software requirements needed to access and retain the notice.
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(2) Consent. The Administrator shall be exempt from the consent requirements of Section 101(c) of the Electronic Signatures in Global
and National Commerce Act (“E-SIGN”) provided the Electronic Medium used to
provide notices and Plan-related material is a medium that the Employee has the effective ability to access and the Employee is advised, each time a notice is transmitted, that he or she can request to receive the notice in paper form at no charge. The form of Electronic Medium utilized by this Plan shall be through an
interactive website requiring the Employee to register an e-mail address for
communication purposes.
(3) Changes in Hardware or Software Requirements. In the event of any changes in the hardware or software requirements needed to access the Electronic Medium, the Administrator, or its designated representative, shall
provide a statement to each Employee of the revised requirements and the right to
withdraw consent to receive electronic delivery of Plan-related materials without consequence.
(c) Participant Elections. The Administrator, or its designated representative, shall be permitted to electronically distribute participant elections
by Electronic Medium. Each Employee who is provided with enrollment or
election information via Electronic Medium will also be informed by the Administrator that he or she may receive a paper copy of the relevant documents upon request. A Participant election will not be treated as being made available to an individual if such individual cannot effectively access the Electronic Medium
for purposes of making the election. An election completed by an Employee via
Electronic Medium shall be deemed as being provided in written form so long as the following requirements are satisfied:
(1) The Employee has a reasonable opportunity to review, confirm, modify or rescind the terms of the election before it becomes
effective; and
(2) The Employee receives, within a reasonable time, a confirmation of the election either through written paper form or by electronic mail.
(d) Timing and Content of Elections and Notices. The provisions of this Section 5.13 shall in no way affect or alter the timing or content
requirements applicable to each individual notice or document.
5.14 Election Changes to Enroll through Marketplace. A Participant may make a prospective election change to revoke coverage under the Employer group health plan which provides minimum essential coverage (as defined in Code Section 5000A(f)(1)) on account of and consistent with his or her enrollment in a Qualified Health Plan through a Marketplace in
accordance with the following:
(a) Change Due to Reduction in Hours of Services. A Participant, who was reasonably expected to work an average of at least thirty (30)
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hours per week and experiences a change in employment status resulting in a reduction of hours, may prospectively change his or her election to revoke coverage
if the Participant has enrolled or intends to enroll in a Qualified Health Plan through
a Marketplace. To be eligible under this paragraph, the election change must be on account of the Participant’s intent to enroll for new coverage through the Marketplace and such new coverage shall be effective beginning no later than the day immediately following the last day of coverage under the Employer’s group
health plan.
(b) Change Due to Enrollment in Qualified Health Plan. A Participant, who is eligible for a special enrollment period to enroll in a Qualified Health Plan through the Marketplace or is eligible to enroll during the Marketplace’s annual open enrollment period, may prospectively change his or her
election to revoke health coverage. To be eligible under this paragraph, the election
change must be on account of the Participant’s intent to enroll for new coverage through the Marketplace and such new coverage shall be effective beginning no later than the day immediately following the last day of coverage under the Employer’s group health plan.
(c) Employer Reliance. For purposes of this Section 5.14, the
Administrator may rely on the reasonable representation of a Participant that the Participant (and his or her covered Dependents) have enrolled or intend to enroll in a Qualified Health Plan for new coverage that is effective beginning no later than the day immediately following the last day of the original coverage that is revoked.
(d) Definitions. The term “Qualified Health Plan” shall mean a
group health plan that provides “minimum essential coverage” as defined in Code Section 5000A(f).
(e) No Cash-Out Permitted. Participants electing to revoke coverage in accordance with this Section 5.14 and purchase Qualified Health Plan
coverage shall not be permitted to receive a cash-out of any excess Benefit Credits
as a taxable benefit under Section 6.3(a).
ARTICLE VI FLEXIBLE BENEFIT DOLLARS
6.1 Flexible Benefit Dollars. Amounts contributed by a Participant through
Salary Reduction (pursuant to Section 5.2) and the amount of Benefit Credits or Opt-Out
Allowance, as applicable, allocated by the Employer (pursuant to Section 6.2) shall be converted to Flexible Benefit Dollars for each Participant. Flexible Benefit Dollars shall be used to purchase the Benefits offered under this Plan.
6.2 Benefit Credits/Opt-Out Allowance. Benefit Credits or the Opt-Out
Allowance, as applicable, shall be credited to each participating Employee twice during each
calendar month of each Plan Year in which he or she is an active Participant under the Plan, subject to the provisions of Section 6.3. The amount shall be used by the Participant toward the purchase
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of Benefits under the Plan. The amount of the Benefit Credits or Opt-Out Allowance (as applicable) if any, to be funded by the Employer shall be determined prior to the beginning of each
Plan Year in a uniform and nondiscriminatory manner, pursuant to Section 125(g)(1) of the Code
and the Treasury Regulations issued thereunder and shall be set forth in Schedule “A”. The Employer shall inform each Participant of the amount of the Benefit Credits or Opt-Out Allowance for the subsequent Plan Year during the Open Enrollment Period. The maximum Benefit Credits or Opt-Out Allowance, as applicable, available to a Participant for a Short Plan Year shall be a
prorated amount, as determined by the Administrator.
(a) Designated Employer Contribution. If applicable, a portion of the Benefit Credits shall be designated as the Employer’s contribution towards health coverage under the Public Employees’ Medical and Hospital Care Act (“PEMHCA”) as administered by CalPERS. The amount shall be determined pursuant to Section 22892 of the California Government Code in
accordance with the Employer’s resolution on file with CalPERS.
6.3 Cash-Out of Remaining Benefit Credits or Opt-Out Allowance. Pursuant to the terms of Schedule “A,” if a Participant elects Benefits having an aggregate cost less than the Participant’s Benefit Credits or Opt-Out Allowance, as applicable. This taxable cash compensation shall be paid by the Employer twice during each calendar month during the Plan
Year in which an employee is a Participant under the Plan. In the event of the Participant’s
cessation of participation in this Plan, the Participant shall have no further right to receive any remaining Benefit Credits or Opt-Out Allowance, as applicable, as taxable cash compensation for the portion of the Plan Year after the termination of participation.
6.4 Nature of Flexible Benefit Dollars. No money shall actually be allocated to
any account(s) on behalf of Participants. Flexible Benefits Dollars credited to a Participant shall
be of a memorandum nature, the amount of which is maintained by the Administrator for accounting purposes and shall not be representative of any identifiable trust assets.
6.5 Leave of Absence. A Participant shall receive his or her Benefit Credits or Opt-Out Allowance, as applicable, during an unpaid Leave of Absence, except to the extent: (i)
otherwise required by law; or (ii) pursuant to the terms of an applicable memorandum of
understanding. During leaves of absence, Participants shall only be responsible for the employee portion of their elected Benefits.
ARTICLE VII FUNDING AND AVAILABLE BENEFITS
7.1 Funding. The Benefits provided herein shall be paid by the Employer; provided,
however, that the Employer’s payments under the Plan shall be limited to such amounts of compensation as a Participant elects to forego pursuant to his or her Salary Reduction election and amounts contributed by the Employer as Benefit Credits or Opt-Out Allowance, as applicable.
7.2 Payment of Contributions While on Statutory Leave. Upon a Participant taking
Statutory Leave (as defined in Section 4.4), each health care benefit elected by the Participant shall
continue during the Statutory Leave for the length of the applicable Statutory Leave, unless otherwise revoked by the Participant. During the unpaid Statutory Leave, the Participant shall be
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responsible for making the Participant’s required contributions for such benefits under his or her applicable memorandum of understanding. The Participant may select among the Prepayment
Option, Catch-Up Option, and Pay-As-You-Go Option to pay the contributions during Statutory
Leave.
(a) Prepayment. The Participant may elect to prepay the contributions prior to commencing the Statutory Leave. The prepaid contributions may be made from salary, vacation pay or sick pay, to the extent permitted by applicable law and
in a manner which will not defer compensation to a subsequent Plan Year. In the
event, a Participant’s Statutory Leave will span two Plan Years, the Participant may only prepay contributions for the remainder of the Plan Year and shall be required to utilize another payment option hereunder to make the contributions for the subsequent Plan Year. The Prepayment Option may not be required as a condition
to remaining in the Plan, and prepayment may not be the sole method of making
contributions hereunder.
(b) Pay-As-You-Go. The Participant may elect to pay the contributions on an after-tax basis as due. Payments shall be made on the same schedule as payments would have been due if the Participant had not been on Statutory Leave,
on the same schedule as payments required for continuation coverage under Article
VIII hereunder are made, under the Employer’s existing rules for payment by employees on leave without pay, or on any other schedule voluntarily agreed upon by the Administrator and the Participant that is not inconsistent with the Statutory Leave.
Contributions under the Pay-As-You-Go Option may also be paid
on a pre-tax basis from taxable compensation such as vacation pay or sick pay provided such payment will not defer compensation to a subsequent Plan Year.
(c) Catch-Up Option. The Employer may assume responsibility for advancing the contributions on behalf of the Participant, and may recoup such
contributions upon the Participant’s return to employment. The contributions may
be made on a pre-tax salary reduction basis from salary, vacation pay or sick pay when the Participant returns from Statutory Leave. The “Catch-Up Option” shall be applied in a manner consistent with Proposed Treasury Regulations Section 1.125-3.
7.3 Uniformed Service Under USERRA. In accordance with the Uniformed
Services Employment and Reemployment Rights Act of 1994 (“USERRA”), a Participant who is absent from employment with the Employer on account of being in the Uniformed Services (as defined in Section 3.25), may elect to continue participation in the Plan. The coverage period shall extend for the lesser of: (i) eighteen (18) months; or (ii) until the Participant fails to apply for
reinstatement or to return to employment with the Employer. The Participant shall be responsible
for making the required contributions to pay for Benefits elected during the period during which he or she is in “uniformed service.” The manner in which such payments are made shall be determined by the Administrator, in a manner similar to the payment of contributions with respect to FMLA Leave.
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7.4 Provision of Benefits. The Employer shall provide those Benefits elected by a Participant on his or her election for any Period of Coverage in accordance with such election.
The Benefits shall be provided pursuant to the terms and conditions of the Component Plans, where
applicable, as shall be set forth from time to time in the individual Component Plan documents; provided, however, that the terms and conditions of the Component Plans are not inconsistent with the terms and conditions of this Plan. No Benefit under this Plan shall be paid in any manner that defers the receipt of compensation beyond the last day of the Plan Year except as specifically
provided the Component Plan documents that set forth the Health Flexible Spending Account
and/or the Dependent Care Flexible Spending Account.
7.5 Cash Payments. Any cash to be paid to a Participant under an election to receive additional cash compensation shall be added to his or her taxable compensation and shall be paid to him or her during the Plan Year, subject to any applicable wage withholding or similar
taxes. Such payments shall not include interest from the date the amount was credited to the
Participant’s behalf through to the date of payment. No Benefit under the Plan shall be paid in any manner that defers the receipt of compensation beyond the last day of the Plan Year.
7.6 Taxable Benefits. If offered by the Employer, Employees shall be permitted to elect to receive certain permitted taxable benefits. An Employee receiving such benefits shall
be treated as having received, at the time that the benefit is received, cash compensation equal to
the full value of the benefits and then as subsequently purchasing the benefits with after-tax employee contributions.
The Employer shall also be permitted to allow Employees to elect health coverage under the Plan for a non-dependent registered domestic partner; provided, however, that the fair
market value of such health coverage is included in the Participant’s W-2 income.
ARTICLE VIII CLAIMS PROCEDURE
All claims for Benefits that are provided through insurance contracts, whether such contracts are between the insurer and the Employer or the insurer and the Participant, shall be
made by filing a claim for Benefits in accordance with the claims procedure set forth under the
relevant insurance contract. The Employer does not have the authority or responsibility for processing, reviewing or paying such claims. All disputes regarding those claims shall be resolved in accordance with the procedure set forth in the separate Component Plan document concerning those Benefits.
ARTICLE IX
CONTINUATION COVERAGE
9.1 In General. The following provisions shall apply to Benefits provided to eligible Employees and to their Spouse and eligible Dependents under the Plan, but only to the extent that the Benefits selected pertain to health care coverage providing medical, surgical, or
hospital benefits and to plans providing ancillary medical coverage such as dental, vision, or
prescription drug benefits. This coverage shall be continued pursuant to the federal continuation
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coverage provisions of Public Health and Safety Act (“PHSA”), pursuant to 42 U.S.C. Section 300bb.
9.2 Definitions. For purposes of this Article VIII, the following words and
phrases are intended to supplement, and in some instances replace, the defined terms listed generally in Article III and to the extent of any conflict between the terms set forth in this Article and those of Article III, the defined terms set forth in this Article shall control:
(a) “Dependent” means an individual who meets the definition
of dependent under the participating Employer provided health plan covering the
eligible Employee. For the purposes of any health flexible spending account, “Dependent” will also include individuals who are the Participant’s dependents within the meaning of Section 152(a) of the Code. No person shall be considered a Dependent of more than one Employee. If both an Employee and an Employee’s
Spouse are employed by the Employer, dependent children may be covered by
either Spouse, but not by both.
(b) “Election Period” means the sixty (60) day period during which a Qualified Beneficiary who would lose coverage as a result of a Qualifying Event may elect continuation coverage. This sixty (60) day period begins not later
than the date of termination of coverage as a result of a Qualifying Event and ends
not earlier than the sixty (60) days after the later of such date of termination of coverage or the receipt of notice of the right to elect continuation coverage under this Plan.
(c) “Medicare” means the Health Insurance for the Aged and
Disabled Act, Title XVIII of Public Law 89-97, Social Security, as amended.
(d) “Qualified Beneficiary” means an individual who, on the day before the Qualifying Event, is covered under this Plan as the covered Employee, the Spouse or Dependent of the covered Employee. Qualified Beneficiary shall include a child who is born to (or placed for adoption with) a
covered Employee during the coverage period. The term Qualified Beneficiary
does not include an individual whose status as a covered Employee is attributable to a period in which such individual is a nonresident alien who received no earned income from the employer which constituted income from sources within the United States (within the meaning of Code Section 911(d)(2) and Section
861(a)(3)). The term Qualified Beneficiary also does not include a covered
Employee’s domestic partner regardless of whether such person was a covered dependent under the Plan prior to the Qualifying Event. If an individual is not a Qualified Beneficiary pursuant to this paragraph, a spouse or dependent child of such individual shall not be considered a Qualified Beneficiary by virtue of the
relationship to such individual.
(e) “Qualifying Event” means with respect to a covered Employee, any of the following events which, but for the continuation coverage under this provision, would result in the loss of coverage of a Qualified Beneficiary:
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(1) the death of the covered Employee;
(2) the termination (except by reason of such covered
Employee’s gross misconduct) or reduction in hours of the covered Employee’s
employment;
(3) the divorce or legal separation of the covered Employee from such covered Employee’s spouse;
(4) the covered Employee becoming entitled to benefits
under Title XVIII of the Social Security Act (Medicare);
(5) a Dependent child who ceases to be a Dependent child under the terms of this Plan;
9.3 Continuation Coverage. To the extent required by Section 9.1 above, a Qualified Beneficiary who would lose health coverage under this Plan as a result of a Qualifying
Event is entitled to elect continuation coverage within the election period under this Plan.
Coverage provided under this provision is on a contributory basis. No evidence of good health will be required.
Except as otherwise specified in an election, any election by a Qualified Beneficiary who is a covered Employee or Spouse of the covered employee will be deemed to
include an election for continuation coverage under this provision on behalf of any other Qualified
Beneficiary who would lose coverage by reason of a Qualifying Event.
If this Plan provides a choice among the types of coverage under this Plan, each Qualified Beneficiary is entitled to make a separate selection among such types of coverage (i.e., single, family, etc.).
9.4 Type of Coverage.
(a) Group Health Coverage. Continuation coverage under this provision is coverage which is identical to the coverage provided under this Plan to similarly situated beneficiaries under this Plan with respect to whom a Qualifying Event has not occurred as of the time coverage is being provided. If coverage under
this Plan is modified for any group of similarly situated beneficiaries, the coverage
shall also be modified in the same manner for all Qualified Beneficiaries under this Plan in connection with such group.
Continuation coverage available to a Qualified Beneficiary under this provision shall apply only to the type and level of health coverage under
the Plan that a Qualified Beneficiary was actually receiving on the day before the
Qualifying Event. The Qualified Beneficiary may not change his or her election except as otherwise provided under Sections 5.4(d) and 5.8(d).
(b) Health Flexible Spending Account. Notwithstanding subparagraph (a) above, an Employee that was participating in the Plan prior to the
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Qualifying Event may be eligible to elect continuation coverage under the Health Flexible Spending Account, as set forth provided in the component plan document.
9.5 Coverage Period. The coverage under this provision will extend for at least
the period beginning on the date of a Qualifying Event and ending not earlier than the earliest of the following:
(a) Initial 18-Month Coverage Period. If the Qualifying Event is a termination of employment (other than for gross misconduct) or a reduction in
employment hours of a covered Employee, the coverage period for the Employee
and his or her dependents shall extend for eighteen (18) months after the date of the Qualifying Event;
(b) Disability Extension. The initial eighteen (18) month coverage period described in (a) above may be extended to twenty-nine (29) months
after the date of the Qualifying Event in the event the Qualified Beneficiary was
disabled upon termination of employment or during the first sixty (60) days of continuation coverage. The Qualified Beneficiary must provide the Administrator with notice of a Social Security disability determination within sixty (60) days of the disability determination and prior to the expiration of the initial eighteen (18)
month continuation period provided in (a) above to become eligible for this
extension of continuation coverage.
(c) Extension of Coverage Period. The initial eighteen (18) month coverage period described in (a) above may be extended to thirty-six (36) months after the date of the Qualifying Event upon the occurrence of a second
Qualifying Event prior to the expiration of the initial eighteen (18) month coverage
period. The Qualified Beneficiary must notify the Administrator of the second Qualifying Event within sixty (60) days of the date of the second Qualifying Event and prior to the expiration of the initial eighteen (18) month period. In no event shall continuation coverage extend for a period greater than thirty-six (36) months.
(d) 36-Month Coverage Period. In the case of any Qualifying
Event causing the loss of coverage, except those Qualifying Events identified in (a) above, the coverage period for the Employee and his or her Spouse and Dependents shall extend for thirty-six (36) months after the date of the Qualifying Event.
9.6 Notification Requirements.
(a) Notification by Qualified Beneficiary. Each covered
Employee or Qualified Beneficiary must notify the Employer of the occurrence of a divorce or legal separation of the covered Employee from such covered Employee’s Spouse and/or the covered Employee’s Dependent child ceasing to be a Dependent child under the terms of this Plan within sixty (60) days after the date
of such occurrence.
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(b) Notification by Employer. The Employer shall notify the Administrator within thirty (30) days of a Qualifying Event, as required by federal
law.
(c) Notification to Qualified Beneficiary.
(1) The Administrator shall provide written notice to each covered Employee and Spouse of such covered Employee of his or her right to continuation coverage under this provision upon commencement of coverage
under a Component Plan providing health coverage, as required by federal law.
(2) The Administrator shall notify any Qualified Beneficiary of the right to elect continuation coverage under this provision within fourteen (14) days of receiving notice of the occurrence of a Qualifying Event, as required by federal law. If the Qualifying Event is the divorce or legal separation
of the covered Employee from the covered Employee’s Spouse or a Dependent
child ceasing to be a Dependent child under the terms of this Plan, the Employer shall only be required to notify a Qualified Beneficiary of his or her right to elect continuation coverage if the covered Employee or the Qualified Beneficiary notifies the Employer of such Qualifying Event within sixty (60) days after the date
of such Qualifying Event.
Notification of the requirements of this provision to the spouse of a covered Employee shall be treated as notification to all other Qualified Beneficiaries residing with such spouse at the time notification is made.
9.7 Termination of Continuation Coverage. The continuation coverage
provided hereunder shall be terminated prior to the expiration of the coverage periods provided in
Section 9.5 above upon the earlier of the following:
(a) with respect to continuation coverage under a Health Flexible Spending Account, the last day of the Plan Year in which the Qualified Beneficiary experiences the Qualifying Event or as set forth in the applicable
component plan document.
(b) the date on which the Employer ceases to provide any group health plan to any Employee;
(c) the date on which the Qualified Beneficiary fails to make timely payment of the required contribution pursuant to this provision provided the
deficiency is not an “insignificant amount” as described in Section 9.8(d);
(d) the date on which the Qualified Beneficiary first becomes, after the date of the election, covered under any other group health plan as an employee or dependent. However, if the other group health plan has a preexisting condition limitation, continuation coverage under the Plan will not cease while such
preexisting condition limitation under the group plan remains in effect (taking into
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account prior creditable coverage under the portability rules of the Health Insurance Portability and Accountability Act of 1996); or
(e) the date on which the Qualified Beneficiary becomes entitled
to benefits under Title XVIII of the Social Security Act (Medicare).
9.8 Contribution.
(a) A Qualified Beneficiary shall only be entitled to continuation coverage provided such Qualified Beneficiary pays the applicable
premium required by the Employer in full and in advance, except as provided in (b)
below. Such premium shall not exceed the requirements of applicable federal law. A Qualified Beneficiary may elect to pay such premium in installments as indicated by the Employer.
(b) Except as provided in (c) below, the payment of any
premium shall be considered to be timely if made within thirty (30) days after the
date due, or within such longer period of time as applies to or under this Plan.
(c) Notwithstanding (a) or (b) above, if an election is made after a Qualifying Event during the election period, this Plan will permit payment of the required premium for continuation coverage during the period preceding the
election to be made within forty-five (45) days of the date of the election.
(d) A premium payment received by the Employer which is deficient by an insignificant amount shall be treated as full payment of the premium amount. For purposes of this Section, an insignificant amount is an amount not greater than the lesser of (i) ten percent (10%) of the required amount; or (ii) fifty
dollars ($50.00). Alternatively, in the event an Employer receives an insufficient
payment premium, the Employer retains the option of taking steps to collect the deficient insignificant amount by notifying the Qualified Beneficiary of the deficiency and allowing thirty (30) days after date of the notice for payment of the deficiency.
9.9 Coordination with State Continuation Coverage. In the event a Qualified
Beneficiary is entitled to less than thirty-six (36) months of federal continuation coverage as a result of a Qualifying Event, the Qualified Beneficiary will be notified prior to the expiration of federal continuation coverage if he or she is eligible to elect an extension of continuation coverage under the Plan for an additional period of up to thirty-six (36) months from the date of the
Qualifying Event pursuant to the Section 1366.20 et. seq. of the California Health and Safety Code
(the “California Continuation Benefits Replacement Act” or “Cal-COBRA Program”).
A covered employee’s Dependent who, (1) on the day before the Qualifying Event, is covered under this Plan as the registered domestic partner of the covered Employee and (2) loses health coverage under this Plan as a result of a Qualifying Event shall be entitled to state
continuation coverage subject to the eligibility, election and contribution requirements set forth
under the Cal-COBRA Program.
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ARTICLE X DISCRIMINATION
10.1 Nondiscrimination Requirements. The Employer shall not discriminate in
favor of Highly Compensated Individuals as to eligibility to participate in the Plan or as to contributions and Benefits provided under the Plan pursuant to Section 125 of the Code and the Regulations. In addition, the Employer shall not discriminate in favor of Highly Compensated Individuals as to the actual operation of this Plan.
(a) Eligibility to Participate. The Plan shall not be considered
discriminatory if the Plan benefits a group of employees who qualify under a reasonable classification established by the Employer and the group of employees included in the classification satisfies the safe harbor percentage test or unsafe harbor percentage component of the facts and circumstances test in Section 1.410(b)-4(c) of the Treasury Regulations. The
Employer is permitted to exclude the following employees in making this determination:
(1) Employees covered by a collectively bargained plan;
(2) Employees who are nonresident aliens and receive no earned income in the United States from the Employer; and
(3) former employees who have elected to extend health
coverage under the Plan pursuant to Article VIII.
Notwithstanding, the Plan will not be considered discriminatory if all employees are permitted to participate.
(b) Benefit Availability and Participation. The Plan shall not be considered discriminatory if the Plan provides Benefits, including Employer contributions
allocable to Benefits, which do not discriminate in favor of Highly Compensated Participants.
Benefits shall be made available to all employees on a uniform basis and each eligible employee will be given an equal opportunity to make an election for Benefits. The Plan shall be considered discriminatory if the actual election or participation in the Plan by Highly Compensated Participants, including types of Benefits provided and utilization of Employer contributions for the
selection of qualified Benefits, is disproportionate to the total number of Non-Highly Compensated
Participants for a Plan Year.
(1) Election of Benefits by Highly Compensated Participants. Qualified Benefits are disproportionately elected by Highly Compensated Participants if the aggregate qualified Benefits elected by Highly
Compensated Participants, measured as a percentage of the aggregate
compensation of Highly Compensated Participants, exceed the aggregate qualified benefits elected by Non-Highly Compensated Participants measured as a percentage of the aggregate compensation of Non-Highly Compensated Participants.
(2) Utilization of Employer Contributions by Highly
Compensated Participants. Employer contributions are disproportionately utilized
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by Highly Compensated Participants if the aggregate contributions utilized by Highly Compensated Participants, measured as a percentage of the aggregate
compensation of Highly Compensated Participants, exceed the aggregate
contributions utilized by Non-Highly Compensated Participants measured as a percentage of the aggregate compensation of Non-Highly Compensated Participants.
(3) Safe Harbor for Health Benefits. If health benefits
are provided under the Plan, excluding dental coverage, vision coverage, and health
flexible spending accounts, the Plan shall not be considered discriminatory as to the availability of Benefits and utilization of Employer contributions if –
(i) Employer contributions made on behalf of each Participant include an amount which equals one hundred percent (100%) of
the cost of the health Benefit coverage of the majority of the Highly Compensated
Participants similarly situated, or equals or exceeds seventy-five percent (75%) percent of the cost of the health Benefit coverage of the Participants (similarly situated) having the highest cost health benefit coverage under the Plan; and
(ii) Contributions or Benefits under the Plan in
excess of those described in subparagraph (i) above bear a uniform relationship to
compensation.
(c) Safe Harbor for Premium-Only-Plans. A premium-only plan is deemed to satisfy the nondiscrimination rules described in Section 10.1(b) above, as to the availability of benefits and contributions, for a Plan Year upon
satisfaction of the nondiscrimination requirements for eligibility to participate
described in Section 10.1(a) above.
(d) Definitions.
(1) Highly Compensated Individual. For purposes of this Section, “Highly Compensated Individual” shall mean (i) an officer of the
Employer who is regularly and continuously involved in the business operations of
the Employer; (ii) an individual that is “highly compensated;” or (iv) a Spouse or Dependent of a Highly Compensated Individual.
An individual is “highly compensated” if for the preceding Plan Year (or the current Plan Year in the case of the first year of
employment) if he or she received compensation from the Employer in excess of
the amount specified in Section 414(q)(1)(B) of the Code. The Employer may also elect to identify a top-paid group for any Plan Year consisting of the top twenty percent (20%) of the Employees when ranked on the basis of compensation pursuant to Section 414(q)(3) of the Code.
A Highly Compensated Individual who elects to
participate in the Plan may be referred to as a Highly Compensated Participant for purposes of this Article IX.
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10.2 Annual Testing. The Employer shall perform nondiscrimination testing as of the last day of the Plan Year, taking into account all non-excludable Employees or former
Employees who were employed during the Plan Year.
10.3 Avoiding Discrimination.
(a) Ability to Reject Election. If the Administrator deems it necessary to avoid discrimination or possible taxation to Highly Compensated Participants, the Administrator may, but shall not be required to, reject any Salary Reduction Agreement or reduce contributions
or non-taxable benefits to assure compliance with the nondiscrimination requirements of Code
Section 125. Any act taken by the Administrator pursuant to this Section shall be in a nondiscriminatory and uniform manner.
(b) Manner of Rejecting Election to Avoid Discrimination. In the event the Administrator determines that it is necessary to reject a Salary Reduction Agreement or reduce
contributions or non-taxable benefits, the rejection shall be carried out as set forth in this
subsection. Non-taxable benefits of the affected Highly Compensated Participant who has elected the highest amount of non-taxable benefits shall be reduced until the discrimination tests set forth in Section 10.1(a) and (b) are satisfied or until the amount of his or her non-taxable benefit equals the non-taxable benefits of the affected Participant who has elected the second highest amount of
non-taxable benefits. This process shall continue until the discrimination tests are satisfied. Any
reduction made pursuant to this subsection shall be made proportionately among non-insured benefits and once all non-insured benefits are expended, proportionately among insured benefits. Contributions which are not utilized to provide benefits to any Participant by virtue of any administrative act under this subsection shall be forfeited and deposited into the general account.
10.4 Reimbursement Accounts. The Plan is intended not to discriminate in favor
of “highly compensated individuals” (as defined in Section 414(q) of the Code with respect to the Dependent Care Flexible Spending Account and as defined in Section 105(h) of the Code with respect to the Health Flexible Spending Account) as to eligibility to participate, contributions, and/or Benefits under the Health Flexible Spending Account or the Dependent Care Flexible
Spending Account. The Administrator of such plans, as defined by the relevant component plan
documents, will be responsible for determining whether such prohibited discrimination exists, and taking appropriate measures to ensure compliance with the nondiscrimination requirements of Sections 129 and 105 of the Code.
10.5 Compliance with Mental Health Parity and Addiction Equity Act and
GINA. Notwithstanding any provision in the Plan to the contrary, the Plan, and any Component
Plan providing health benefits, will comply with the Mental Health Parity and Addiction Equity Act of 2008 and Title II of the Genetic Information Nondiscrimination Act of 2008.
ARTICLE XI ADMINISTRATION
11.1 Allocation of Responsibility for Administration.
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(a) Designated Representatives. The Employer may appoint an individual or an administrative committee to serve at its discretion as
Administrator. The Administrator shall have only those powers, duties,
responsibilities and obligations as are specifically given to the Administrator under the Plan.
(b) Employer Responsibilities. The Employer shall have the sole responsibility for making the contributions provided for under Section 6.2 and
shall have the sole authority to amend or terminate, in whole or in part, the Plan at
any time.
(c) Administrator’s Responsibilities. The Administrator shall have the sole responsibility for, and shall supervise, the administration of the Plan, as set forth herein. The Administrator warrants that any directions given,
information furnished, or action taken by it shall be in accordance with the
provisions of the Plan authorizing or providing for such direction, information or action. The Administrator shall be responsible for the proper exercise of its own powers, duties, responsibilities and obligations under this Plan and shall not be responsible for any act or failure to act of another employee. Neither the
Administrator, nor the Employer, makes any guarantee to any Participant in any
manner for any loss or other event because of the Participant’s participation in the Plan.
(d) Transfer of Duties. The Employer may, at any time, assign all or any portion of the Administrator’s duties to a contracting third-party.
11.2 Powers and Duties of Administrator.
(a) Powers and Duties Delegated to Administrator. The Administrator shall be responsible for ensuring that the terms and conditions of the Plan are carried out for the exclusive benefit of persons entitled to participate in the Plan without discrimination. The Administrator shall have full power to administer
the Plan, subject to the applicable requirements of the law and any administration
agreement executed by and between the Employer and the Administrator. For this purpose, the Administrator’s powers shall include the following:
(1) to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of
any benefits hereunder;
(2) to prescribe the procedures for the Participants to follow in filing applications for Benefits and to prepare forms to be used by the Participants;
(3) to prepare and distribute, in such manner as the
Administrator determines appropriate, information explaining the Plan;
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(4) to receive from the Employer, Participants, Participant’s spouses and Dependents, and other persons such information as shall
be necessary for the proper administration of the Plan;
(5) to furnish to the Employer and the Participants, upon request, annual reports detailing the administration of the Plan;
(6) to receive, review and keep on file records pertaining to the Plan, as the Administrator deems convenient and proper;
(7) to allocate its administrative responsibilities;
(8) to appoint or employ individuals and any other agents the Administrator deems advisable, including legal and actuarial counsel, to assist in the administration of the Plan;
(9) to adopt such rules as the Administrator deems
necessary, desirable or appropriate, subject to applicable law. All rules and
decisions of the Administrator shall be uniformly and consistently applied to all Participants in similar circumstances; and
(10) to take all other steps necessary to properly administer the Plan in accordance with its terms and conditions and the
requirements of the applicable law.
(b) Powers and Duties Not Delegated to Administrator. The Administrator shall have no power to add to, subtract from, or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan,
except as may be expressly provided herein. Interpretations of the provisions of
the Plan shall not be deemed to be additions, subtractions, or modifications of the Plan.
11.3 Nondiscriminatory Exercise of Authority. Whenever in the administration of the Plan any discretionary action by the Administrator is required, the Administrator shall
exercise its authority in a nondiscriminatory manner so that all persons similarly situated shall
receive substantially the same treatment.
11.4 Incapacity of Participant. Whenever, in the Administrator’s opinion, a person entitled to receive any payment of a benefit hereunder or an installment thereof is under a legal disability or is incapacitated in any way so as to be unable to manage the person’s financial
affairs, the Administrator may direct the Employer to make payments to such Participant or to such
person or to the person’s legal representative or to a relative or friend of such person on such person’s behalf, or the Administrator may apply the payment for the benefit of such Participant in such manner as the Administrator considers advisable. Any payment of a benefit or installment in accordance with the provisions of this Section shall be a complete discharge of any liability for the
making of such payment under the provisions of the Plan.
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11.5 Indemnification of Administrator. The Employer agrees to indemnify any employee or employees serving as Administrator (including any employee or former employee
who formerly served as Administrator), against any and all liabilities, damages, costs and expenses
(including attorneys’ fees and amounts paid in settlement of any claims approved by the Employer) occasioned by any act or omission to act in connection with the Plan, if such act or omission is made in good faith pursuant to the provisions of the Plan and not as a result of the Administrator’s gross negligence or willful misconduct.
ARTICLE XII
AMENDMENTS, TERMINATION AND ACTION BY EMPLOYER
12.1 Action by Employer. Any action by the Employer under this Plan, including but not limited to, termination of this Plan, shall be by action of the Employer, or by any person or persons duly authorized by action of the Employer to act on its behalf.
12.2 Amendments. Subject to any applicable meet and confer laws, the
Employer reserves the right to make, from time to time, any amendment (or amendments) to this Plan as it deems necessary or desirable, without retroactive effect, unless specifically permitted to comply with the law.
12.3 Right to Terminate. The Employer may terminate this Plan at any time
subject to any meet and confer obligations. In the event of the dissolution, merger, consolidation
or reorganization of the Employer, the Plan shall terminate unless the Plan is continued by a successor to the Employer in accordance with the Employer’s procedures.
12.4 Plan Termination. Upon the termination of the Plan, the Administrator may determine the best method to make payments to the affected Participants.
ARTICLE XIII
HIPAA PRIVACY STANDARDS
13.1 Applicability. The provisions of this Section shall apply only to extent any Component Plan constitutes a “health plan” under 45 CFR Section 160.103 that uses or discloses “protected health information” (“PHI”) or “electronic protected health information” (“electronic
PHI”) as those terms are defined under 45 CFR Sections 160 and 164, as amended from time to
time (“HIPAA Privacy Rule”) and 45 CFR Sections 160, 162, and 164, as amended from time to time (“HIPAA Security Rule”) (collectively, the “HIPAA Rules”).
13.2 Protection of Individually Identifiable Health Information. The Employer and the Plan have adopted policies and procedures (“Privacy Policy”) for the sole and limited
purpose of complying with the HIPAA Rules. The manner in which these provisions will be
administered shall in no way affect, or be taken into account in determining, the Benefits under the Plan with respect to any individual.
13.3 Definitions. The defined terms and phrases used in this Article shall carry the same meaning and intent set forth under the HIPAA Rules, and in some instances may replace
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the defined terms listed generally in Article III and to the extent of any conflict between the terms set forth herein and those of Article III, the defined terms shall carry the meaning prescribed under
the HIPAA Rules.
13.4 Protected Health Information. For purposes of this Article XII, Protected Health Information (“PHI”) means information that (a) is created or received by a health care provider, health plan, employer, or health care clearinghouse; (b) relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an
individual, or the past, present or future payment for the provision of health care to an individual;
(c) identifies the individual (or for which there is a reasonable basis for believing that the information can be used to identify the individual); and (d) is transmitted or maintained in electronic media or in any other form or medium. PHI excludes education records covered by the Family Educational Rights and Privacy Act, as amended, 20 U.S.C. Section 1232g, records
described at 20 U.S.C. Section 1232g(a)(4)(B)(iv), and employment records held by a covered
entity in its role as employer.
13.5 Identity of Plan Sponsor. The Employer shall be the Plan Sponsor for purposes of the Privacy Rule when performing Plan administration functions or Plan Sponsor functions, when acting on behalf of the Plan with respect to its obligations under the Privacy Rule,
and when acting on behalf of the Plan’s participants and beneficiaries with respect to Participation
and Enrollment Information. The Privacy Official shall act for the Plan Sponsor and shall be entitled to delegate its powers and responsibilities in accordance with its usual practices.
13.6 Responsibilities and Undertakings. The Plan Sponsor shall be responsible for making any necessary certifications to the Plan. Such certifications shall be delivered to the
Plan’s Privacy Official. The Plan Sponsor also undertakes and agrees that it:
(a) Shall not use or disclose any PHI except as to those uses specifically permitted under the Privacy Rule;
(b) Shall require any agents or subcontractors to whom it discloses PHI to agree to the same restrictions on the use and disclosure of PHI as
apply to the Plan Sponsor;
(c) Shall not use or disclose PHI for any employment-related actions of Employer;
(d) Shall not use or disclose PHI in connection with any other benefits or benefit plan, program, or arrangement of Employer;
(e) Shall report to the Privacy Official any uses or disclosures of
PHI inconsistent with the Privacy Policy of which it becomes aware;
(f) Shall make PHI available in accordance with an individual's right of access in accordance with the Privacy Policy;
(g) Shall make PHI available for amendment and shall
incorporate amendments in accordance with the Privacy Policy;
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(h) Shall make information available to provide any required accounting of disclosures of PHI in accordance with the Plan’s Privacy Policy;
(i) Shall make available to the Secretary of Health and Human
Services its internal practices, books, and records relating to the use and disclosure of PHI from the Plan for purposes of determining the Plan's compliance with the Privacy Rule;
(j) Shall, if feasible, return to the Plan or destroy any PHI from
the Plan that it maintains in any form, and shall retain no copies of the PHI when
the PHI is no longer needed for the purpose for which disclosure was originally made. If it is not feasible to return or destroy the PHI, the Plan Sponsor agrees that it shall further limit any uses and disclosures to those purposes that make the return or the destruction of the information not feasible; and
(k) Shall ensure that adequate separation between the Plan
Sponsor and the Plan is established.
13.7 Uses and Disclosures of Protected Health Information.
(a) Certification. The Plan, and any Health Insurance Issuer or Health Maintenance Organization with respect to the Plan, may disclose PHI to the
Plan Sponsor only following receipt of the Plan Sponsor’s certification that the Plan
has been amended in accordance with the requirements of the Privacy Rule.
(b) Plan Administration. The Plan Sponsor shall be permitted to the limited use and disclosure of PHI for purposes of plan administration, including all Payment Activities and health care operations, as permitted under the
HIPAA Policy.
(c) Compliance with Privacy Rule. The Plan Sponsor shall be entitled to those uses and disclosures of PHI as permitted by the Privacy Rule to the extent necessary for compliance, including but not limited to any uses and disclosures permitted: (1) without permission from an individual; (2) only with
explicit or implicit authorization; or (3) because the PHI has been cleansed.
(d) Participation and Enrollment Information. Participation and Enrollment Information may be disclosed as necessary to the Plan Sponsor.
(e) Summary Health Information. Summary Health Information may be disclosed to the Plan Sponsor for the limited purpose of
performing Plan Sponsor functions.
(f) Individuals With Access to PHI. The Privacy Official and his or her delegates, if any, are permitted to have access to PHI disclosed to or by the Plan. In addition, the Plan Sponsor shall designate the individual(s) or group(s) of individuals under the direct control of the Plan Sponsor who are permitted to
have access to PHI disclosed by or to the Plan.
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(g) Limitations on Disclosures of, Access to, and Uses of PHI. PHI may be disclosed from the Plan only for Plan Administration Functions
performed on behalf of the Plan, and the other purposes identified in the Plan’s
HIPAA Policy.
13.8 Health Information Security. In accordance with the HIPAA Rules, the Plan Sponsor shall:
(a) Implement administrative, physical, and technical
safeguards that reasonably and appropriately protect the confidentiality, integrity,
and availability of the electronic PHI that is created, received, maintained, or transmitted on behalf of the Plan;
(b) Ensure that adequate separation, as required by the HIPAA Security Rule, is supported by reasonable and appropriate security measures;
(c) Require any agent to whom it provides this information to
agree to implement reasonable and appropriate security measures to protect the electronic PHI; and
(d) Report to the Plan any successful unauthorized access, use, disclosure, modification, or destruction of electronic PHI or interference with
system operations in an information system containing PHI of which the
Administrator becomes aware.
ARTICLE XIV GENERAL PROVISIONS
14.1 Written Plan. The Administrator shall, upon request, provide each
Participant with a copy of the written Component Plan(s) detailing the Benefits available to the
Participant.
14.2 No Trust Fund Required. The Employer shall have no obligation, but shall have the right, to insure any benefits under the Plan or to establish any fund or trust for the payment of Benefits under the Plan.
14.3 Insured Benefits. The Employer shall have no responsibility for the
payment of any Benefits covered under the Component Plans provided by policies of insurance.
14.4 Rights to Employer’s Assets. 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 this Plan, and then only to the extent of the Benefits
payable under the Plan to such Employee or beneficiary. All payments of Benefits as provided for
in this Plan shall be made solely out of the assets of the Employer and the Administrator shall not be liable therefore in any manner.
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14.5 Nonalienation of Benefits. Benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any
such liability which is for alimony or other payments for the support of a Spouse or former Spouse, or for any other relative of the Employee, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to Benefits payable hereunder, shall
not be recognized except to the extent required by law. The Employer shall not in any manner be
liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder.
14.6 Divestment of Benefits. Subject only to the specific provisions of this Plan, nothing shall be deemed to divest a Participant of a right to the benefit to which the Participant
becomes entitled in accordance with the provisions of this Plan.
14.7 Discontinuance of Contributions. In the event of a permanent discontinuance of contributions to the Plan, all Participants shall receive any and all benefits to which they were entitled as of the date the discontinuance of contributions occurred.
14.8 Plan Interpretation. This Plan, and the various Component Plans, are
intended to be read in conjunction with one another. However, to the extent of any conflict, the
provisions of the Plan shall control, unless otherwise provided by Sections 125, 105(b) or 129 of the Code or the Treasury Regulations issued thereunder.
14.9 Governing Law. The Plan shall be administered in the State of California and its validity, construction, and all rights hereunder shall be governed by the laws of the State of
California.
14.10 Severability. If any provision of the Plan shall be held invalid or unenforceable, the remaining provisions shall continue to be fully effective.
14.11 Gender and Number. Words used in the masculine, feminine, or neuter gender shall each be deemed to refer to the other whenever the context so requires. Words used
in the singular or plural number shall each be deemed to refer to the other whenever the context so
requires.
14.12 Headings. Headings used in the Plan are intended solely for reference and are not intended to explain, modify or place any construction on any of the provisions of the Agreement. Any conflict between such headings and the text shall be resolved in favor of the text.
14.13 Successors and Assigns. The Plan shall inure to the benefit of and be
binding upon the parties hereto, their successors and assigns.
14.14 Discharge of Employee. The adoption and maintenance of the Plan shall not be deemed to be a contract between the Employer and the Employee. Nothing herein contained shall be deemed to give any Employee the right to be retained in the employ of the Employer or to
interfere with the right of the Employer to discharge any Employee at any time.
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14.15 Consolidation With Other Plan Documents. In the event the Plan merges or consolidates with, or transfers the assets and liabilities to, any other plan, no Participant herein
shall, solely on account of such consolidation or transfer, be entitled to a benefit on the day
following such event which is less than the benefit to which he or she was entitled on the day preceding such event. For the purpose of this Section, the benefit to which a Participant is entitled shall be calculated and based upon the assumption that a Plan termination and distribution of assets occurred on the day as of which the amount of the Participant’s entitlement is being determined.
14.16 Counterparts. The Plan may be executed in an original and any number of
counterparts by the Employer, each of which shall be deemed an original of one and the same instrument.
Sept. 13, 2022 Item #2 Page 39 of 116
DocuSign Envelope ID: 99D60D0A-06B7-4698-88C8-E1949F598A27
IN WITNESS WHEREOF, the Employer has caused this CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN to be executed on
EMPLOYER:
By:��+--____:,:1--�---------Its:_j�:nt::-����:-.l.:�------
ATTEST:
APPROVED AS TO FORM AND CONTENT: BEST BEST & KRIEGER LLP
By:
Attorneys for Employer
35
Sept. 13, 2022 Item #2 Page 40 of 116
Schedule “A”
Effective as of January 1, 2022
The following, which may be amended from time to time by the Employer,
specifies the Benefits and the Component Plans which set forth the terms, conditions and limitations of the Benefits offered to Participants. The periods of coverage for the Component Plans shall be the same as the Plan Year of the Cafeteria Plan, unless specified otherwise.
COMPONENT PLANS
Benefit Carrier
Health Insurance The Employer contracts with CalPERS for
health insurance. CalPERS releases available
insurers annually.
Dental Insurance MetLife
Vision Insurance VSP
Health Flexible Spending Account PayFlex
Dependent Care Flexible Spending Account PayFlex
Accidental Death & Dismemberment Insurance The Standard
BENEFIT CREDITS
Employees who participate in a medical insurance plan offered by the City receive Benefit Credits that can be used towards the cost of any Benefit offered through a Component Plan. Such Benefit Credits includes any applicable required PEMHCA minimum.
Employee Groups Amount
Full-time Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’
Association; Management and Elected
Officials
2022
Employee Only $329.50
Employee +1 $658.00
Family $868.50
Effective for the pay period that includes December 31, 2021, Employees working full-
time schedules (i.e., 40 hours per week) will
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receive Benefit Credits equal to 80% of the average health (medical, dental and vision) premium for Employee, Employee + 1 and Family coverage levels (as applicable), rounded to the nearest whole dollar based on
the premiums that will take effect on January 1, 2022.
75%-Time Carlsbad City Employees’
Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022
Employee Only $247.13
Employee +1 $493.50
Family $651.38
Employees working less than a full-time schedule will receive pro-rated Benefit Credits. Employees on a 75%-time schedule (i.e., 30
hours per week) will receive 75% of the
Benefit Credits made available to full-time employees.
Job Sharing (50%-Time) Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022
Employee Only $164.75
Employee +1 $329.00
Family $434.25
Employees on a 50%-time schedule (i.e., 20 hours per week) will receive 50% of the
Benefit Credits made available to full-time
employees.
OPT-OUT ALLOWANCE
Employees who can show proof of coverage under another employer’s group health plan may
waive coverage under the Employer’s health insurance and will receive an Opt-Out Allowance
which is set on an annual basis.
Employee Groups Amount
Full-time Carlsbad City Employees’ 2022: $164.75
Sept. 13, 2022 Item #2 Page 42 of 116
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Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; Management and Elected Officials
75%-Time Carlsbad City Employees’
Association; Carlsbad Police Officers’
Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022: $123.56
Job Sharing (50%-Time) Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022: $82.38
UNALLOCATED BENEFIT CREDITS OR OPT-OUT ALLOWANCE
If an Employee does not use the entire Benefit Credits for Benefits, he or she will receive the difference (if any) between the Benefit Credits and the portion thereof used to purchase
Benefits as taxable compensation as set forth below.
Employee Groups Amount
Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association;
Carlsbad Firefighters’ Association;
Management; Employees in Emergency Medical Technician classification; and Elected Officials
Any unused Benefit Credits or Opt-Out Allowance, as applicable, will be paid to the employee in cash and reported as taxable
income.
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SCHEDULE “B”
MAXIMUM SALARY REDUCTION AMOUNT
During the Plan Year beginning on January 1, 2022, no Participant shall be allowed to contribute a Salary Reduction in excess of $19,612.00 per year (i.e., $1,634.33 per month).
Sept. 13, 2022 Item #2 Page 44 of 116
40
CERTIFICATION OF THE CITY OF CARLSBAD TO THE CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN
The CITY OF CARLSBAD is the sponsor of the CITY OF CARLSBAD
AMENDED AND RESTATED CAFETERIA PLAN (“Cafeteria Plan”). The Cafeteria Plan is a hybrid entity within the meaning of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) which includes non-health care and health care components. The health care Component Plans of the Cafeteria Plan include the following separate group health plans:
•All group health plans offered by CalPERS and in accordance with PEMHCA
•Dental
•Vision
•Health Flexible Spending Account
The Cafeteria Plan and the health care components included in the Cafeteria Plan(collectively, the “Plan”) are group health plans within the meaning of HIPAA. The Plan and the City of Carlsbad desire to exchange health information protected under HIPAA for purposes related to administration of the Plan. The City of Carlsbad, acting in its capacity as plan sponsor
of the Plan (“Plan Sponsor”) makes the following certifications for purposes of administering the Plan as required by the “Standards for Privacy of Individually Identifiable Health Information,” 45 CFR Section 164.102 et seq. (“Privacy Rule”):
The plan document of the Plan incorporates the following provisions and Plan Sponsor agrees to:
•not use or further disclose any PHI received from the Plan (including anyhealth insurance issuer or HMO with respect to the group health plan) except as permitted or required by the plan documents or required by law;
•ensure that any agents or subcontractors to whom it discloses any PHI agree
to the same restrictions and conditions that apply to the Plan Sponsor with respect to such information;
•not use or disclose PHI for employment-related actions and decisions;
•not use or disclose PHI in connection with any other benefit plan, program,or arrangement of the City of Carlsbad except to the extent such other benefit plan, program or arrangement is part of an organized health care arrangement of which the Plan also is a part;
•report to the Plan any use or disclosure of PHI that is inconsistent with the
uses and disclosures specified in the Plan of which it becomes aware;
•give individuals access rights to PHI in its possession in accordance withthe policies and procedures of the Plan;
Sept. 13, 2022 Item #2 Page 45 of 116
• permit individuals to request amendment of their PHI in the Plan Sponsor's
possession, and to make any necessary amendments, in accordance with the policies and
procedures of the Plan;
• make information available to provide any necessary accounting of
disclosures of PHI in accordance with the policies and procedures of the Plan;
• make its internal practices, books, and records relating to the use and
disclosure of PHI from the Plan available to the Secretary of the Department of Health and Human
Services for purposes of determining the Plan's compliance with the Privacy Rule;
• if feasible, to return to the Plan or destroy any PHl from the Plan that it
maintains in any form, and shall retain no copies of the PHI when the PHI is no longer needed for
the purpose for which disclosure was originally made. If it is not feasible to return or destroy the
PHI, the Plan Sponsor agrees that it shall further limit any uses and disclosures to those purposes
that make the return or the destruction of the information not feasible; and
• agrees to ensure that adequate separation between the Plan Sponsor and the
Plan is established.
B y:._--\_,,,""'----------
Name: ~Pt:r l'J,..l~l Ch
Title:~ ~J:::
Dated: (~2
Sept. 13, 2022
By:--+-----,,,,c.---""-=:...__--------
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41
Item #2 Page 46 of 116
RESOLUTION NO. 2022-216
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE CITY MANAGER TO PROCURE ANY
EMPLOYEE BENEFITS WHICH HAVE BEEN APPROVED BY THE CITY COUNCIL
AND FOR WHICH THE CITY COUNCIL HAS BUDGETED OR OTHERWISE
APPROPRIATED FUNDS
WHEREAS, the City Council of the City of Carlsbad established a cafeteria plan ("the Plan") for
its employees and authorized the administration of the Plan by the City Manager; and
WHEREAS, the Plan includes benefit programs approved by the City Council; and
WHEREAS, the City Council has approved other benefit programs in memorandums of
understanding, compensation and benefit plans, and other documents; and
WHEREAS, the City Manager is responsible for implementing the City Council approved benefit
programs and procuring the associated employee benefits; and
WHEREAS, the City Council desires to formalize the City Manager's employee benefit
procurement authority.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.The above recitations are true and correct.
2.The City Manager or designee is authorized to procure any employee benefits which
have been approved by the City Council and for which the City Council has budgeted or
otherwise appropriated funds.
Exhibit 2
Sept. 13, 2022 Item #2 Page 47 of 116
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 13th day of September, 2022, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
Blackburn, Bhat-Patel, Acosta, Norby.
None.
Hall.
MATT HALL, Mayor
FAVIOLA MEDINA, City Clerk Services Manager
{SEAL)
Sept. 13, 2022 Item #2 Page 48 of 116
CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN
Section 1.01 Cafeteria Plan
Effective December 1, 1988 Restated January 1, 2002
Amended April 14, 2004 - HIPAA
Sept. 13, 2022 Item #2 Page 49 of 116
Exhibit 3
TABLE OF CONTENTS
ARTICLE I. INTRODUCTION ........................................................................................ 1 Section 1.1 Purpose 1 ARTICLE II. DEFINITIONS .............................................................................................. 2 Section 2.1 Annual Enrollment Period 2 Section 2.2 Change in Status 2 Section 2.3 CFRA 2 Section 2.4 CFRA Leave 2 Section 2.5 Code 3 Section 2.6 Compensation 3
Section 2.7 Compensation Reduction Agreement 3 Section 2.8 Constituent Plan 3 Section 2.9 Effective Date 3 Section 2.10 Employee 3 Section 2.11 Employer 4 Section 2.12 Flexible Credits 4 Section 2.13 FMLA 4 Section 2.14 FMLA Leave 4 Section 2.15 Highly Compensated Employee 4 Section 2.16 Key Employee 4 Section 2.17 Participant 4 Section 2.18 Plan 4 Section 2.19 Plan Administrator 4 Section 2.20 Plan Year 5 ARTICLE III. .......................................................................................... PARTICIPATION 6 Section 3.1 Eligibility to Participate 6 Section 3.2 Commencement of Participation 6 Section 3.3 Termination of Participation 7 Section 3.4 Reinstatement of Former Participant 7 ARTICLE IV. .................................................................................................. ELECTIONS 9 Section 4.1 Election Procedure 9 Section 4.2 Automatic Termination of Elections 11 ARTICLE V. BENEFITS .................................................................................................. 12 Section 5.1 Form of Benefits 12 Section 5.2 Benefit Options 12 Section 5.3 Description of Benefits Other Than Cash 12 Section 5.4 Limitations on Contributions 13
Sept. 13, 2022 Item #2 Page 50 of 116
ARTICLE VI. ................................................................... ADMINISTRATION OF PLAN 14 Section 6.1 Appointment of Plan Administrator 14 Section 6.2 Duties of Plan Administrator 14 Section 6.3 Reliance by Plan Administrator 15 Section 6.4 Notification 15 Section 6.5 Nondiscrimination 15 Section 6.6 Fiscal Records 15 Section 6.7 Discretionary Authority 16 Section 6.8 Indemnification of Plan Administrator 16 Section 6.9 Government Reporting 16 Section 6.10 Availability of Plan Document 16 Section 6.11 Allocation of Fiduciary Responsibilities 16 Section 6.12 Nonliability of Allocated Responsibilities 17 ARTICLE VII. GENERAL PROVISIONS ..................................................................... 18 Section 7.1 Information to be Furnished 18 Section 7.2 No Vested Interest 18 Section 7.3 Non-Alienation of Benefits 18 Section 7.4 Not a Contract of Employment 18 Section 7.5 Limitation of Rights 18 Section 7.6 Amendment and Termination 18 Section 7.7 Invalid Provisions 19 Section 7.8 No Guarantee of Tax Consequences 19 Section 7.9 Governing Law 19 ARTICLE VIII. HIPAA 2004 COMPLIANCE............................................................... 20 Section 8.1 Permitted Uses and Disclosures of PHI 20 Section 8.2 Disclosure Permitted only Pursuant to Certification 20 Section 8.3 Plan Sponsor’s Use or Disclosure of PHI 20 Section 8.4 Classes of Employees With Access to PHI 20
Section 8.5 Sanctions on Employees who Fail to Comply 21 Section 8.6 Plan Sponsor to Notify Self-funded Plan of Misuse of PHI 21 Section 8.7 Plan Sponsor Responsibility re: Subcontractors 21 Section 8.8 Access to and Amendment of PHI 21 Section 8.9 Accounting for Disclosures 22 Section 8.10 Grievance Procedure 22 Section 8.11 Destruction of PHI 22 Section 8.12 Cooperation with the Department of Health and Human Services (HHS) 22 Section 8.13 Disclosure of Certain Enrollment Information to the Plan Sponsor 22
Sept. 13, 2022 Item #2 Page 51 of 116
1
ARTICLE I. INTRODUCTION
Section 1.1 Purpose
This document constitutes the City of Carlsbad Cafeteria Plan. It is intended to constitute a separate, written plan for the exclusive benefit of the Employees of the Employer and to provide such Employees with the opportunity to choose among cash and other benefits available to Employees through Constituent Plans. This Plan is established and shall be maintained as a cafeteria plan under Section 125 of the Code, and its terms are to be interpreted in a manner consistent with the requirements of such section.
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2
ARTICLE II. DEFINITIONS
Wherever used in the text of this Plan document, the following capitalized termsThe CITY OF CARLSBAD (“Employer”) established the CITY OF CARLSBAD CAFETERIA PLAN for the benefit of its employees and their dependents effective December 1, 1998, and as amended and restated on January 1, 2002, and amended on April 14, 2004. The Employer desires to further amend and restate the Plan to comply with federal and state law and to conform to the benefits set forth in policies or agreements covering its employees. Accordingly, the Employer hereby amends and restates the Plan, effective January 1, 2022.
ARTICLE I TITLE AND PURPOSE
This Cafeteria Plan shall be known as the CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN (“Plan”). The purpose of the Plan is to furnish to eligible employees choices among certain Benefits provided by the Employer, so that Employees may receive Benefits that best meet their individual needs. The Plan is intended to provide benefits in accordance with Section 125 of the Internal Revenue Code, as amended, and the Regulations issued thereunder, so that the Benefits that an Employee elects to receive under the Plan are eligible for exclusion from the Employee’s income for federal income tax purposes. In accordance with Section 125 of the Internal Revenue
Code, the Employer shall offer at least one permitted taxable benefit and at least one nontaxable qualified benefit.
ARTICLE II COMPONENT PLANS
The Benefits offered under this Plan are provided through separate Component Plans which are set forth in separate plan documents, group insurance policies or administrative service contracts, and are incorporated herein and set forth in Schedule “A.”
ARTICLE III DEFINITIONS
The following words and phrases, when used herein, shall have the following meanings, unless a different meaning is clearly required by the context. Words in the singular form shall connote the plural form in all cases where they so apply, and vice versa.:
Section 2.1 Annual Enrollment Period
Formatted: Body Text
Sept. 13, 2022 Item #2 Page 53 of 116
3
Annual Enrollment Period means the period during which Employees are permitted to make their elections in accordance with Article IV for each Plan Year, and which shall be the period preceding the start of such Plan Year as shall be established by the Plan Administrator.
Section 2.2 Change in Status
A Change in Status means any event permissible under Section 125 of the Code and the regulations promulgated thereunder that permits a Participant to change his or her election during the Plan Year, under this Plan and a Constituent Plan. Permissible events are:
(a) Changes in legal marital status (including marriage, death of spouse,
divorce, legal separation or annulment)
(a) Changes in the employee’s number of dependents (including birth,
adoption, placement for adoption, or death of a dependent
(a) Employment status changes, meaning commencement or
termination of employment by the employee, spouse, or dependent
(a) Work schedule changes that cause a reduction or increase in hours
of employment by the employee, spouse, or dependent, including a
switch between part-time and full-time, a strike or lockout, or
commencement or return from an unpaid leave of absence
(a) Employee’s dependent satisfying or ceasing to satisfy the health
plan’s coverage requirements due to age, student status, or similar
circumstances
(a) Changes in residence or worksite of the employee, spouse, or
dependent
Cafeteria plan election changes are permitted if a qualified medical
child support order (QMCSO), or similar order, requires medical or
dental coverage for an employee’s child.
If the employee, spouse, or dependent becomes entitled to Medicare or Medicaid, the
employee may make an election change to cancel medical coverage for that person.
Section 2.3 CFRA
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CFRA means the California Family Rights Act of 1993, as amended from
time to time.
Section 2.4 CFRA Leave
CFRA leave means a leave of absence that the Employer is required to
extend to an Employee under the provisions of the CFRA.
Section 2.5 Code
Code means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or any subdivision of a section of the Code shall include a reference to any comparable or succeeding provision of any legislation that amends, supplements, or replaces such section or
subdivision.
Section 2.6 Compensation
Compensation means the regular base pay of an Employee as well as bonuses and overtime pay, and any amounts otherwise payable to an Employee from the Employer's general assets. Compensation does not include Flexible Credits.
Section 2.7 Compensation Reduction Agreement
Compensation Reduction Agreement means an agreement whereby an Employee authorizes the Employer to reduce his or her Compensation by the amount equal to the Participant's share of the cost of each optional benefit provided under any of the Constituent plans elected by the Employee, minus any Flexible Credits allocated by the Employee to the Plan.
Section 2.8 Constituent Plan
Constituent Plan means any one of the plans identified in Section 5.2 of Article V.
Section 2.9 Effective Date
Effective Date means December 1, 1988.
Section 2.9 Employee
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Employee means a full-time individual working a minimum of 24 hours per week, who is employed by the Employer or any other individual defined as an employee under any Constituent Plan.
Section 2.10 Administrator. “Administrator” means the Employer
Employer means the City of Carlsbad, or any of its affiliated agencies that are designated by the City of Carlsbad for inclusion in this Plan.
Section 2.11 Flexible Credits
Flexible Credits means the amounts that the Employer annually allocates to Employees to be used toward the cost of coverage under any Constituent Plan.
Section 2.12 FMLA
FMLA means the Family and Medical Leave Act of 1993 as amended from time to time.
Section 2.13 FMLA Leave
FMLA Leave means a leave of absence that the Employer is required to extend to an Employee under the provisions of the FMLA.
Section 2.14 Highly Compensated Employee
Highly Compensation Employee means any Employee who meets the definition of highly compensated individual in Section 125(e) of the Code.
Section 2.15 Key Employee
Key Employee means any Employee who meets the definition of key employee in Section 416(i) of the Code.
Section 2.16 Participant
Participant means any Employee who has elected to participate in the Plan
in accordance with the provisions of Article IV, and whose participation has not terminated in accordance with Section 3.3 of Article III.
Section 2.17 Plan
Plan means the City of Carlsbad Cafeteria Plan, which is set forth in this document.
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Section 2.18 Plan Administrator
Plan Administrator means the city manager or such other person, committee, or any person or entity as may be appointed from time to time by the Employer pursuant to Section 6.1 of Article VI to administer thethis Plan.
Section 2.19 Plan Year
Plan Year means the 12-month period beginning January 1 and ending December 31.
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ARTICLE III. PARTICIPATION
Section 3.1 Eligibility to Participate
Each Employee of the Employer is eligible to participate in the Plan.
Section 3.2 Commencement of Participation
For an Employee to become a Participant in the Plan, the Plan Administrator must receive an election form in accordance with the terms of Section 4.1 of Article IV, whereby the Employee elects to participate in any of the Constituent Plans. The participation of any such Employee shall commence according to the following schedule:
(a) Initial & Annual Election
(i) Each Employee who is employed by the Employer before the
first day of the Plan Year and files an election form during the
Annual Enrollment Period shall become a Participant on the
first day of the Plan Year.
(i) Each Employee who is first employed by the Employer on or after the first day of the Plan Year and files an election form during the 31-day period beginning on the date such employment commences shall become a Participant on the first day of the first pay period following the date on which the election form is actually received by the Plan Administrator.
(i) Each Employee who first elects to participate in any
Constituent Plan following a Change in Status and files an
election form during the period designated by the plan
administrator of the Constituent Plan shall become a
Participant in the Plan on the first day of the first pay period
following the date on which the election form is actually
received by the Plan Administrator. However, in the event of the birth of the Employee’s child, or adoption or placement for adoption of a child with the Employee, coverage for the child will be effective on the date of birth or adoption respectively. (a) Reinstatement Election
(i) Each Employee who elects to be reinstated as a Participant pursuant to Section 3.4 of this Article during an Annual
Enrollment Period shall become a Participant on the first day
of the Plan Year for which the election is filed.
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(ii) Each Employee who elects to be reinstated as a Participant
pursuant to Section 3.4 of this Article during the period
allowed as a result of a Change in Status shall become a
Participant on the first day of the first pay period following
the date on which the election form is actually received by
the Plan Administrator.
Section 3.3 Termination of Participation A Participant's participation in the Plan shall terminate as of the earliest of:
(a) The last day of the pay period that includes the date on which such
Participant elects to terminate participation pursuant to Section
4.1(b),
(a) The date such Participant ceases to be an Employee,
(a) The date on which the Plan terminates.
(a) The date the Employee commences an unpaid leave of absence,
except with respect to a prior election for group health plan coverage that an Employee may choose to sustain during a period of FMLA Leave or CFRA Leave. Although a Participant's participation under this Plan terminates on the earliest of the above dates, coverage or benefits under the Constituent Plans may continue if and to the extent provided by such Constituent Plans.
Section 3.4 Reinstatement of Former Participant
An Employee whose participation in this Plan has previously terminated under Section 3.3(a) of this Article may again become a Participant by
electing to receive any of the optional benefits available under any of the Constituent Plans during either an Annual Enrollment Period or, if the Constituent Plan permits changes in elections following a Change in Status, the time period prescribed by the Constituent Plan for such changes. 1.1073.1 An Employee whose participation in this Plan has previously terminated under Section 3.3(b) of this Article may again become a Participant by making an election with the Plan Administrator during the 30-day period following the date of new employment. In the event that a previously terminated Employee is rehired by the Employer within the same Plan Year and within 30 days after the date of termination, the Employee is only permitted to resume the elections in effect prior to termination. If the Employee is rehired more than 30 days after the date of termination,
Sept. 13, 2022 Item #2 Page 59 of 116
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the Employee may make new elections as its behalf, as provided in Section 3.2 of this Article. An Employee whose participation in this Plan has previously terminated under Section 3.3(d) of this Article may, upon return from FMLA or CFRA leave in the same Plan Year, be reinstated in the same elections that were in place before the FMLA or CFRA leave commenced, subject to the potential applicability of the Change in Status provisions. If the Employee returns from FMLA or CFRA leave in the following Plan Year, the Employee may make new elections for the Plan Year as described in Section 3.2(a) of this ArticleArticle IV.
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ARTICLE IV. ELECTIONS
Section 4.1 Election Procedure
(a) Annual Enrollment
(i) At the beginning of each Annual Enrollment Period, the Plan Administrator shall provide each Employee a written election form, which shall include a Compensation Reduction Agreement. Each Employee who desires one or more optional benefits available under any of the Constituent Plans during the next succeeding Plan Year shall so specify on the election form. The election form also shall be used by
the Employee to allocate his or her Flexible Credits, if any,
among the Constituent Plans. Each Employee who does not
desire any of such optional benefits shall specify on the
election form that his or her Compensation shall be paid in
cash.
(ii) The Employee shall also complete a Compensation Reduction
Agreement if the Employee elects one or more optional
benefits available under any of the Constituent Plans, and if the Employee’s required contribution under any of the Constituent Plans exceeds the Employee’s allocated Flexible Credits. The balance of the cost of each such benefit, if any, shall be paid by the Employer with nonelective Employer contributions to the appropriate Constituent Plan. 3.2 Benefit. “Benefit” means any of the qualified benefits and permitted taxable benefits which may be purchased under this Plan.
3.3 Benefit Credits. “Benefit Credits” means the amount of Employer contributions to the Plan made by the Employer on behalf of each Participant for the purchase of Benefits under this Plan.
3.4 Code. “Code” means the Internal Revenue Code of 1986, as amended, and regulations issued thereunder. References to any section of the Code include references to any comparable or succeeding provision of any legislation which amends, supplements or replaces such section.
3.5 Component Plan. “Component Plan” means any plan offering
Benefits available under this Plan, as set forth in the separate plan documents.
3.6 Dependent. “Dependent” means the Spouse or dependent of a Participant and who is eligible to receive benefits under a Component Plan. Dependent shall also mean, as to health benefits offered under the Plan, a dependent eligible under Code Section 152, determined without regard to Code Section 152(b)(1), (b)(2) or (d)(1)(B) and any child (as defined in Code Section 152(f)(1)) of the Participant who as of the end of the taxable year has not attained age 27 years.
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Notwithstanding the preceding, if a Component Plan permits a Participant to cover an individual other than the Participant’s Spouse or Dependent (including a Participant’s registered domestic partner as recognized by the State of California), the term Dependent as used throughout the Plan document shall also include such individual provided the benefit is treated as a taxable benefit in accordance with Section 7.6.
3.7 Effective Date. “Effective Date” shall mean the effective date of this restatement which is January 1, 2022. The date this Plan first became effective is December 1, 1998.
3.8 Employee. “Employee” means all common law employees of the City eligible to receive Benefit Credits, as described in Schedule “A.” To the extent necessary, the term “Employee” shall also include former employees who are entitled to
receive benefit payments under this Plan.
3.9 Employer. “Employer” means the City of Carlsbad, and any successor of such Employer.
3.10 Entry Date. “Entry Date” means, for all newly hired Employees, first day of the month following the date on which the election form is received by the Administrator. In all other cases, the “Entry Date” shall mean the first day of each Plan Year or within 60 days of qualifying events as dictated by CalPERS, whichever is applicable.
3.11 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, including all regulations issued thereunder.
3.12 FMLA. “FMLA” means the Family Medical Leave Act of 1993, as amended, including all regulations issued thereunder.
3.13 Flexible Benefit Dollars. “Flexible Benefit Dollars” means the Salary Reduction and Benefit Credits or Opt-Out Allowance amounts allocated to each Participant for a Plan Year for the purchase of Benefits.
3.14 Leave of Absence. “Leave of Absence” means any absence of an Employee which is authorized by the Employer under the Employer’s personnel policies, including any leave designated as FMLA Leave. Additionally, an Employee shall be subject to such rights and benefits for Family or Medical Leave, as defined in the Family and Medical Leave Act of 1993 and the California Family Rights Act of 1991.
3.15 Marketplace. “Marketplace” means a state-facilitated or federally-facilitated exchange through which individuals may purchase health insurance.
3.16 Open Enrollment Period. “Open Enrollment Period” means the period beginning at least thirty (30) days before the beginning of the next Plan Year and ending on any date preceding the commencement of the Plan Year, as determined by the
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Administrator. For a new Employee, “Open Enrollment Period” shall mean the period between the Employee’s effective date of employment and the first day on which an Employee may become a Participant. During the Open Enrollment Period, an Employee who is eligible to be a Participant can elect to participate in the Plan, as set forth in Article V.
3.17 Opt-Out Allowance. “Opt-Out Allowance” means the amount of Employer contributions to the Plan made by the Employer on behalf of each Participant who waives medical coverage pursuant to Section 5.5 for the purchase of Benefits under this Plan.
3.18 Participant. “Participant” means an Employee who becomes enrolled in the Plan pursuant to Article IV. “Participant” shall also mean a former Employee who elects to continue health coverage under the Plan. Former Employees,
however, shall not receive Benefit Credits.
3.19 Period of Coverage. “Period of Coverage” generally means the Plan Year beginning on January 1 and ending on December 31. A Participant’s Period of Coverage may be less than 12 months if a new Participant enters the Plan during the Plan Year or a Participant completes a permitted election change in accordance with Article V.
A Participant’s Period of Coverage shall also include continuation coverage elected by a terminated Participant or Qualified Beneficiary (as defined in Section 9.2).
3.20 Plan. “Plan” means the CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN, set forth herein, including all subsequent amendments and modifications hereto.
3.21 Plan Year. “Plan Year” means the twelve (12) consecutive month period commencing January 1 and ending on December 31.
3.22 Salary Reduction. “Salary Reduction” means the amounts paid into the Plan pursuant to elections made by the Participant to reduce his or her compensation for the purchase of Benefits elected by the Participant. The maximum Salary Reduction amount for each Plan Year shall be set forth in Schedule “B.”
3.23 Short Plan Year. “Short Plan Year” shall mean a Plan Year which is less than twelve (12) months and which ends on the last day of the Plan Year. A Short Plan Year shall arise only in the following circumstances: (i) the initial Plan Year did not begin on January 1; or (ii) the Employer changes the Plan Year for a valid business purpose
resulting in a Short Plan Year. In the event that a Short Plan Year is in effect, all references to “Plan Year” shall be replaced by “Short Plan Year” in all instances where it is appropriate.
3.24 Spouse. “Spouse” means the person to whom the Participant is legally married but shall not include an individual legally separated from a Participant
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under a decree of legal separation. A Participant’s registered domestic partner, however, shall be entitled to and receive the same rights and coverage attributable to medical and health benefits offered under the Plan pursuant to the California Domestic Partner Rights and Responsibilities Act of 2003, provided that such benefits are treated as taxable benefits in accordance with Section 7.6.
3.25 Uniformed Services. “Uniformed Services” means the Armed Forces, the Army National Guard, and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the Public Health Service, and any other category of persons designated by the President of the United States in time of war or emergency.
ARTICLE IV ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. Each Employee shall be eligible to participate in the Plan as of his or her Entry Date.
4.2 Participation. An Employee may become a Participant by completing and executing an electronic or paper election form and Salary Reduction Agreement, and by providing such other information as is reasonably required by the Employer as a condition of such participation. A Participant’s election to participate in the Plan shall continue to be valid until expressly revoked or altered, as set forth in Article V.
The Administrator shall continue to make Salary Reductions and the Participant shall be deemed to have selected the Benefits previously elected by Participant in subsequent Plan Years consistent with the Participant’s most recent election form.
4.3 Recommencement of Participation. A former Participant may recommence participation in the Plan on his or her date of reemployment as an eligible Employee. If a former Participant is rehired by the Employer within thirty (30) days of his or her date of termination, such Participant shall not be permitted to submit a new election, and his or her prior election shall be reinstated for the remainder of the Plan Year. However, a reemployed former active Participant may only make a new election to participate in the City of Carlsbad Health Flexible Spending Account Plan or the Dependent Care Flexible Spending Account to the extent permitted by these respective plans.
Any employee who returns to active employment within ninety (90) days of completing a period of absence from employment for duty in the Uniformed Services shall reenter the Plan upon reemployment. A Participant whose health coverage under the Plan is terminated on account of his or her being in “uniformed service,” and is later reinstated, shall not be subject to a new exclusion or waiting period requirement imposed by such group health plan and/or Health Flexible Spending Account, provided that such requirements would not have been imposed if coverage had not been terminated as a result of the “uniformed service.”
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4.4 Leave of Absence. An Employee shall not be disqualified from participating in the Plan during the period in which the Employee is on an authorized Leave of Absence; provided the Employee continues to have an employment relationship with the Employer and arranges to continue to pay the required costs of coverage for the Benefits elected for the Plan Year. The Employer shall continue to provide the Benefit Credits or Opt-Out Allowance, as applicable, during a Participant’s paid Leave of Absence, and the Participant shall have his or her share of the cost of Health Benefits deducted from his or her salary in the same manner as before the paid Leave of Absence was taken.
A Participant who takes an unpaid leave of absence under the FMLA, the California Family Rights Act of 1991 or Pregnancy Disability Leave (“Statutory Leave”) shall pay the required costs of coverage as provided in Section 7.2; however, the Employee may revoke his or her election to participate under any group health insurance benefit offered under this Plan for the remainder of the Plan Year in which the unpaid Statutory Leave commences. Such revocation shall take effect in accordance with such procedures as prescribed by the Administrator. If the Participant makes such an election, the Employer’s provision of any Benefit Credits or Opt-Out Allowance, as applicable, with respect to any protected Leave of Absence, shall also cease. Upon such Participant’s return from his or her Statutory Leave, the Participant may then elect to be
immediately reinstated in the Plan, on the same terms that applied to the Participant prior to the Statutory Leave, with respect to group health plans, taking into account any voluntary revocation with respect to the allocation of any Benefit Credits or Opt-Out Allowance, as applicable, and with such other rights to revoke or change elections as are provided to the Participants under the Plan. Notwithstanding the foregoing, a Participant on Statutory Leave shall have no greater rights to benefits for the remainder of the Plan Year in which the Statutory Leave commences than do other Participants.
4.5 Cessation of Participation. An Employee shall cease to be a Participant under this Plan and therefore, under each Component Plan, as of the earliest of:
(a) Separation from service:
(1) For medical coverage the last date of the month following the month in which the Participant separates from service with the Employer.
(2) For dental and vision coverage, the last date of the month in which the Participant separates separation from service with the Employer.
or;
(b) the date on which the Administrator, on a consistent and uniform basis, deems the Participant has failed to make the required premium payments, including the Salary Reduction, for the elected Benefits, as provided in Section 4.6; or
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(c) the date on which the Participant is not eligible to participate in any of the Component Plans for which he or she wishes to make an election; or
(d) the date on which the Participant dies; or
(e) the date on which the Plan terminates.
4.6 Cessation of Required Contributions. A Participant’s election to participate in the Plan may be terminated in accordance with Section 4.5(b) if the Participant fails to make the required premium payments with respect to his or her elected Benefits. In such case, that individual may not make a new Benefit election for the remaining portion of the Plan Year.
4.7 Eligibility Under Component Plans. The eligibility of a Participant under a Component Plan shall be the same as set forth in this Article, unless otherwise specified in the Component Plan under which a Participant has elected to receive Benefits. Each Component Plan may provide more rigorous eligibility requirements which may cause a Participant to be ineligible to participate in a particular Component Plan, but continue to be eligible to participate in this Plan.
ARTICLE V ELECTIONS AND PROCEDURES
5.1 Election of Benefits. Prior to the annual Entry Date (or mid-year Entry Date for newly hired Employees), there shall be an Open Enrollment Period during which the Employee may elect to participate in this Plan. The Administrator shall provide each Employee during each Open Enrollment Period with an election form and Salary Reduction Agreement.
5.2 Salary Reduction. Each election form and CompensationParticipant shall authorize the Employer to reduce his compensation by the amount needed for the purchase of the Benefits elected by the Participant by submitting a completed Salary Reduction Agreement containing, at a minimum, the following information:
(a) that the election form must be completed and returned to the Plan Administrator on or beforeduring the last day of the AnnualOpen Enrollment Period, which date; and
(b) that the election shall be no later than effective on the day beforeEntry Date and continue in effect until the firstlast day of the Plan Year for which the Participant'selection is made, or until the Participant provides the Administrator with a new Compensationelection form modifying or terminating his or her existing election; and
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(c) that the election shall be irrevocable unless the Participant is entitled to change his or her election as provided in this Article; and
(d) that the Participant is directing the Administrator to convert his or her salary (Salary Reduction) to Flexible Benefit Dollars, as set forth in Article VI; and
(e) that the Participant’s Salary Reduction shall be considered as Employer contributions used to pay for Benefits under the Plan.
Salary Reductions shall be contributed to the Plan by the Employer on behalf of a Participant on a level and pro rata basis for each payroll period. The Administrator reserves the right reduce any Salary Reduction election made under the Plan and, if necessary, the Participant’s Benefit Credits or Opt-Out Allowance, as applicable, to ensure that the Plan complies with the nondiscrimination provisions of Article IX. In no event shall the Salary Reductions for a Plan Year exceed the amount set forth in Schedule “B.”
5.3 Initial Election Period.
(a) A new Employee must complete, sign and file an election form and a Salary Reduction Agreement will apply.with the
Administrator during the Open Enrollment Period for that Employee.
(b) Change in Elections (b) WhenA new Employee who fails to complete, sign and file an election form and a Salary Reduction Agreement with the Plan Administrator is notified by an Employee in accordance with paragraph (a) above during shall be deemed to have elected not to participate in the Plan.
5.4 Elections for Subsequent Plan Years.
(a) Open Enrollment Period. An Open Enrollment Period shall occur prior to the beginning of each Plan Year. During the Open Enrollment Period, a Participant who wishes to change his or her existing election, shall have the opportunity to elect new or different Benefits under the Plan effective for the subsequent Plan Year subject to the terms and conditions of the Component Plans.
(b) Failure to Reelect. If a Participant fails to re-elect coverage but remains eligible to participate, the Participant shall be deemed to have elected the Benefits selected on the election for the preceding Plan Year and a Salary Reduction and/or Benefit Credits or Opt-Out Allowance, as applicable, amount necessary to provide the same coverage. To the extent that he or she has experienced a Change in Status , or is notifiedthe
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plan(s) that the Participant previously elected is/are no longer available and the alternative plan(s) offered by the provider are more expensive, the Participant will be required to make an affirmative election to participate in coverage in order to continue coverage.
(c) Reimbursement Accounts. Elections to contribute to the Health Flexible Spending Account and/or the Dependent Care Flexible Spending Account must be affirmatively elected each year by the Participant. A failure to reelect shall result in nonparticipation under the Health Flexible Spending Account and/or the Dependent Care Flexible Spending Account for the upcoming Plan Year. The prior year election will not be carried over.
(d) Continuation Coverage. During an Open Enrollment
Period, any Participant, or a Qualified Beneficiary thereof, that has elected continuation of health coverage under the Plan, shall have the opportunity to elect new or different coverage under the Plan effective for the subsequent Plan Year. However, any such election shall be limited to health care options under the Plan.
5.5 Waiver of Medical Coverage. An Employee may waive medical coverage under the Plan and receive an Opt-Out Allowance (as described in Schedule “A”) in lieu of Benefit Credits upon completion of the following events has occurred that would also permit a change in election and, as a result, wishes to change the election for that Plan Year, the Plan:
(i) The Employee shall annually provide the Administrator shall
provide the Employee a written election form, which shall
include a Compensation Reduction Agreement: (a) The Employee has a right to enroll in a Constituent Plan that is a with satisfactory evidence substantiating that the Employee is currently receiving medical coverage from another employer-sponsored group health plan, or add such group health coverage for a family member pursuant to a HIPAA .
(b) The Employee declines coverage and agrees in writing to hold the Employer harmless for any consequences resulting in the waiver of such coverage.
(b)(c) The Employee acknowledges in writing that the Employee shall not be permitted to enroll in the declined benefit option under the Plan until the next Open Enrollment Period, subject to the terms and restrictions of the insurance provider, unless a special enrollment period arises.
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A) A judgment, decree or order (including a Qualified
Medical Child Support Order) requires health coverage for
an Employee's child, or
B) An Employee, spouse, or dependent becomes entitled to
(or ceases to be entitled to) Medicare or Medicaid (d) AAn Employee that qualifies to waive medical coverage under this Section 5.5 shall be required to submit a new election and proof of other group health plan coverage for each Plan Year.
5.6 Participant Makes Incorrect Election. If a Participant does not elect the correct amount of Flexible Benefit Dollars to pay for coverage of the Benefits elected under the Plan, the Administrator is authorized to increase or decrease a Participant’s election by the amount necessary to provide the Participant’s elected coverage under the Plan.
5.7 Special Enrollment Period. In accordance with the Code Section 9801(f) and the regulations issued by the Department of Health and Human Services, an eligible Employee or Dependent who either incurs a loss of health coverage or becomes otherwise eligible for health coverage under this Plan shall be permitted to enroll for health coverage under the Plan in accordance with one of the special enrollment periods described in paragraphs (a) and (b) below.
(a) Loss of Health Coverage. An Employee who is otherwise eligible to enroll in the Plan but has not elected to participate in the Plan, or a Dependent of Employee that is not enrolled but is otherwise eligible under the Plan, shall be permitted to enroll for coverage under the Plan provided all of the following conditions are met:
(1) The Employee or Dependent was covered under another group health plan or had alternate health insurance coverage (“Prior Health Coverage”) at the time coverage under this Plan was previously offered to the Employee.
(2) The Employee stated in writing at such time that Prior Health Coverage was the reason for declining enrollment.
(3) The Employee’s or Dependent’s Prior Health Coverage was either:
(i) under a continuation coverage provision and the coverage period was exhausted; or
(ii) was terminated as a result of loss of eligibility (including a result from a change in family status) or employer contributions toward such coverage were terminated.
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(4) Under the terms of the Plan, the employee requests such enrollment not later than thirty (30) days after the date of a special enrollment event or the date a certificate of group health coverage is provided following a termination of health coverage.
(b) Dependent Special Enrollment Period. Any Employee, regardless of whether said Employee is currently enrolled for health coverage under the Plan, who experiences an increase in the number of Dependents whether through marriage, birth, adoption or placement for adoption, shall be permitted to enroll for health coverage under the Plan. During the “dependent special enrollment period,” Employee shall have the opportunity to enroll all other Dependents who are otherwise eligible for coverage, including the Employee if not enrolled, provided the Employee elects enrollment within thirty (30) days commencing on the later of: (i) the date dependent coverage is made available; or (ii) the date of the marriage, birth, adoption, placement for adoption, or other event which results in the change of Dependents of Employee.
(c) State Premium Subsidy. Notwithstanding the thirty (30) day election period prescribed by subparagraphs (a) and (b) above, if an Employee or his or her Dependent becomes eligible to receive a state premium subsidy for a group health plan sponsored by the Employer, such Employee shall have the opportunity to enroll himself or herself or his or her affected Dependent for coverage in the Employer’s health plan, provided the Employee elects enrollment within sixty (60) days of the date of the notice of qualification from Medicaid or the Children’s Health Insurance Program (“CHIP”).
(d) Health Flexible Spending Account. Notwithstanding the foregoing, the special enrollment rights conveyed under this Section 5.7 shall not extend to include an election to contribute to the Health Flexible Spending Account offered as a Component Plan, unless expressly allowed by such Component Plan.
5.8 Revocability of Elections. The Administrator shall permit a Participant to revoke an existing election or make a new election outside of the Open
Enrollment Period for the remainder of a Plan Year only if the new election is for one of the following reasons:
(a) both the revocation and new election are made on account of and are consistent with a change in the Participant’s family status, as set forth in Section 5.9;
(c)(b) there is a significant change in the cost or coverage of a Constituent Plan occurs, as defined in IRS Prop. Reg. 1.125-4(f).the benefits previously elected by the Participant, as set forth in Sections 5.10 and 5.11;
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Such Employee shall, pursuant to the terms of the Constituent
Plans under which the benefits are or will be provided, and in
accordance with the policies established by the Plan
Administrator of such plan, specify on the election form which
prior elections are to be revoked and which benefits are being
elected for the balance of the Plan Year.
(ii) The Employee shall also complete a new Compensation Reduction Agreement authorizing the Employer to reduce his or her Compensation by the amount determined by the Employer to be necessary to cover the Participant's share of the cost of each option elected by the Employee for the balance of the Plan Year.
(iii) Each new election form and Compensation Reduction Agreement must be completed and returned to the Plan Administrator on or before such date as the Plan
Administrator shall specify, which date shall be no later than
the day before the first day of the first pay period for which
the Participant's new Compensation Reduction Agreement
will apply.
(c) New Employees
As soon as practicable after a new Employee commences
employment, the Plan Administrator shall provide the written election form described in Section 4.1 of this Article to such Employee. If the Employee desires one or more optional benefits available through the Constituent Plans for the balance of the then current Plan Year, the Employee shall so specify on the election form and shall agree to a reduction in Compensation as provided in Section 4.1 of this Article. The election form and Compensation Reduction Agreement must be completed and returned to the Plan
Administrator on or before such date as the Plan Administrator shall
specify, which date shall be no later than the day before the first
day of the first pay period for which the Employee's Compensation
Reduction Agreement will apply.
Section 4.2 Automatic Termination of Elections
(c) Elections made under this Plan shall automatically terminate on the date on which both the revocation and new election are made on account of and pursuant to the terms of a “qualified medical child support order” as set forth in Section 5.12;
the Participant ceases to be a , Spouse or Dependent becomes eligible for continuation coverage under Article IX and the Participant in the Plan as determined in Section 3.3 of Article III, although coverage or benefits under the Constituent Plans may continue if and to the extent provided by such plans.
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ARTICLE V. BENEFITS
Section 5.1 Form of Benefits
(d) Under this Plan, a Participant may desires to elect to allocate his or her Flexible Credits toward this cost of increase the amount of his or her Salary Reduction in order to pay for the continuation coverage under any of the constituent plans. In addition, a Participant may elect to receive his or her full Compensation for any Plan Year in cash, or to have a portion of such compensation applied toward the cost of one or more benefits available under any of the Constituent Plans.
Section 5.2 Benefit Options
A Participant may elect in accordance with Section 4.1 of Article IV to receive either cash (i.e., meaning an election not to have the Participant’s Compensation reduced for benefits) or one or more of the benefits available through the following Constituent Plans:
(a) The City of Carlsbad Medical Plan,
(b) The City of Carlsbad Dental Plan, 5.9 The CityChange in Family Status. A Participant may make a change in coverage during a Plan Year due to a change in family status, as set forth in this Section. A Participant must notify the Administrator and must complete a new election form to change coverage. The Participant’s election shall only be deemed valid if the requested change in coverage is necessitated by and corresponds with the change in family status and is consistent with the terms and conditions of the affected Component Plan. This election shall be effective as of the first day of the month following the date the Participant provides the Administrator with a new election form reflecting the change in coverage due to a
change in family status.
A change in family status shall include the following:
(a) a change in the Participant’s marital status, including marriage, death of Spouse, divorce, legal separation, or annulment;
(c) a change in the number of Carlsbad Vision Plan
(d) The CityDependents of Carlsbad Health Care Spending Account Plan
(e) The City of Carlsbad Dependent Care Spending Account Plan
Section 5.3 Description of Benefits Other Than Cash
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While the election to receive one or more of the benefits available through the Constituent Plans described in Section 5.2 of this Article may be made under this Plan, the benefits will not be provided by this Plan, but by the appropriate Constituent Plan. The types and amounts of benefits available under each Constituent Plan described in Section 5.2 of this Article, the requirements for participating in each such Constituent Plan, and the other terms and conditions of coverage and benefits under each such Constituent Plan shall be as set forth from time to time in the individual Constituent Plans, and in the various contracts that may be incorporated by reference to such Constituent Plans. The benefit descriptions in such Constituent Plans and contracts are hereby incorporated by reference into this Plan.
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Section 5.4 Limitations on Contributions
(b) The maximum amount thata Participant may reduce his or her Compensation under this Plan shall not exceed the sum of (i) the greatest(as defined in Section 3.18), including a birth of a child, adoption, placement for adoption, or death of a Dependent;
(c) any change in the employment status of the Participant, Spouse or Dependent which results in that individual becoming or ceasing to be eligible under this Plan or Component Plan maintained by the Employer, Spouse or Dependent, including a termination or commencement of employment; a commencement or return from an unpaid leave of absence (including leave taken under FMLA); a change in work site; or a reduction or increase in hours of employment (including a switch between part-time and full-time);
(d) a Dependent satisfies or ceases to satisfy the eligibility requirements for coverage due to attainment of age, student status, or any similar circumstances as provided under the Component Plan under which the Employee receives coverage;
(e) a change in the place of residence of the Participant, Spouse, or Dependent; and
(f) a Participant, Spouse, or Dependent becoming or ceasing to be entitled to coverage under MediCare or Medicaid.
To the extent the Code and the regulations issued thereunder alters this definition of change in family status, this Section 5.9 is intended to be interpreted in accordance with any revised definition or interpretation.
5.10 Change in Cost of Benefit.
(a) Insignificant Change. If the cost of any Benefit offered under the Component Plans (other than a Component Plan which provides for the reimbursement of expenses) increases or decreases during the Plan Year, the Administrator may, on a reasonable and consistent basis, automatically increase or decrease a Participant’s election by a corresponding amount of Salary Reduction and/or Benefit Credits or Opt-Out Allowance, as applicable, to ensure that the Participant continues to receive the elected coverage under the Component Plans; provided, however, that if the increase or decrease is a significant change in cost, the Participant shall be given the option to elect to change his or her Benefits.
(b) Significant Increase in Cost of Benefit. If the cost of a Benefit option (other than a Component Plan which provides for the reimbursement of expenses) significantly increases during a coverage
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period, all affected Participants may make a corresponding change in their Benefit election under the Plan. Changes that may be made include the following:
(1) In the case of a Benefit option that has experienced a significant decrease in cost, a Participant may make a prospective change to an election to commence participation in that Benefit option.
(2) In the case of a Benefit option that has experienced a significant increase in cost, a Participant may change an election to terminate such coverage and either, elect prospective coverage under another Benefit option providing similar coverage or drop coverage if no other Benefit option providing similar coverage is available.
(c) For purposes of this Section, a “cost of increase or decrease” refers to an increase or decrease in the amount of the Salary Reductions contributed by a Participant under the Plan, whether that increase or decrease results from an action taken by the Employee (such as switching between full-time and part-time status) or from an action taken by the Employer (such as reducing the amount of Employer contributions required by the Constituent Plans identified in Sections 5.2, (a), (b),for a class of Employees).
(d) Changes to Dependent Care Expenses. In the case of an election to participate in the Dependent Care Flexible Spending Account, a Participant’s prior election may be changed only if the cost change is imposed by a dependent care provider who is not a relative of the employee.
5.11 Significant Change in Coverage of Component Plan Benefit.
(a) Significant Curtailment Without Loss of Coverage. If a Participant or a Participant’s Spouse or Dependent experiences a “significant curtailment of coverage” under a Benefit option that is not a loss of coverage, including a significant increase in the deductible, co-payment, or the out-of-pocket cost sharing limit under a group health plan; the Participant may revoke his or her election for such coverage and (c) of this Article, plusprospectively elect to receive coverage under another Benefit option providing similar coverage. For this purpose, coverage under a Component Plan is “significantly curtailed” only if there is an overall reduction in coverage provided under the Component Plan so as to constitute reduced coverage generally. In this regard, the loss of one particular physician in a health care provider network in most cases will not qualify for a significant curtailment of coverage under this Section.
(b) Significant Curtailment With Loss of Coverage. If a
Participant or a Participant’s Spouse or Dependent experiences a significant
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curtailment of coverage that is a “loss of coverage” under a Benefit option, the Participant may revoke his or her election for such coverage and elect either to receive coverage under another Benefit option providing similar coverage or to drop coverage if no other Benefit option providing similar coverage is available under the Plan. For this purpose, a “loss of coverage” means a complete loss of coverage under a benefit package option or other coverage option, including the elimination of a benefits package option, an HMO ceasing to be available in the area where the individual resides, or the individual losing all coverage under the option by reason of an overall lifetime or annual limitation under a group health plan. In this regard, each of the following is considered to be a “loss of coverage” under this Section:
(1) a substantial decrease in the medical care providers available under the Benefit option (e.g., a major hospital ceasing to be a member of a preferred provider network, or a substantial decrease in the physicians participating in a preferred provider network or an HMO);
(2) a reduction in the benefits for a specific type of medical condition or treatment with respect to which a Participant or the Participant’s Spouse or Dependent is currently in a course of treatment; or
(3) any other similar fundamental loss of coverage.
(c) Addition or Improvement of Benefit Option. If during the Plan Year, a Component Plan adds a new benefit package option or other coverage option, or if coverage under an existing option is significantly improved, any Participant or Employee, who is otherwise eligible to participate in the Plan, may revoke their election under the Plan for the Plan Year and make an election on prospective basis for coverage under the new or improved benefit option.
(d) Change In Coverage Under Another Employer Plan. A Participant, or an Employee who is otherwise eligible to participate in the Plan but has elected not to participate, may make a prospective election change that is on account of and consistent with a change made under another employer plan (including a plan of the Employer or another employer) by the Employee or the Employee’s Spouse or Dependent, provided the other employer plan allows participants to make an election change that would be permitted under the rules of Treasury Regulation Section 1.125-4(c) and as provided in this Plan.
5.12 Qualified Medical Child Support Order. A Participant may make a change in coverage during a Plan Year to provide health coverage under the Plan for the Participant’s child or legal dependent pursuant to the terms of a judgment, decree, or order resulting from a family law proceeding, including a “qualified child support order” as defined under ERISA Section 609, requiring Participant to provide health coverage for the
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child. The Participant may also make a change which cancels health coverage for the Participant’s child or dependent provided the order requires the spouse, former spouse, or other individual to provide health coverage for the child.
5.13 Use of Electronic Medium for Participant Notices and Elections.
(a) Definition of Electronic Medium. “Electronic Medium” means an electronic method of communication between the Administrator (or its designated representative) and Employee thereby allowing each party to send and receive notice and elections through the same medium. The only form of electronic communication permitted by the Plan shall be via electronic mail on the Employer’s network or intranet, through an interactive website, or to a private e-mail address supplied to the Employer by the Employee for communication purposes. The electronic
medium must be designed so that the information provided is no less understandable to the receiving party than a written paper document. The electronic medium shall be designed to alert the Employee, at the time a notice is provided, to the significance of the information in the notice (including identification of the subject matter of the notice), and provide any instructions needed to access the notice, in a manner than is readily understandable. The electronic medium shall be designed to preclude any person, other than the appropriate individual, from making a Participant election, such as Salary Reduction Agreement, or accessing individual Participant account information.
(b) Disclosure and Consent Requirements.
(1) Disclosure Statement. Prior to electronically transmitting any consent or notice to the Employee, the Administrator shall provide a statement which contains the following: (i) informs the Employee of the right to receive a paper document of the notice or other Plan-related material either prior to or after giving consent to electronic transmission; (ii) the maximuminforms the Employee of the right to withdraw his or her consent at any time and the procedures for withdrawal, including any conditions or consequences arising from such withdrawal; (iii) describes the scope and duration of the consent as it related to various plan transactions;
(iv) describes the procedures for updating Employee contact information; and (v) describes the hardware or software requirements needed to access and retain the notice.
(2) Consent. The Administrator shall be exempt from the consent requirements of Section 101(c) of the Electronic Signatures in Global and National Commerce Act (“E-SIGN”) provided the Electronic Medium used to provide notices and Plan-related material is a medium that the Employee has the effective ability to access and the Employee is advised, each time a notice is transmitted, that he or she can request to receive the notice in paper form at no charge. The form of
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Electronic Medium utilized by this Plan shall be through an interactive website requiring the Employee to register an e-mail address for communication purposes.
(3) Changes in Hardware or Software Requirements. In the event of any changes in the hardware or software requirements needed to access the Electronic Medium, the Administrator, or its designated representative, shall provide a statement to each Employee of the revised requirements and the right to withdraw consent to receive electronic delivery of Plan-related materials without consequence.
(c) Participant Elections. The Administrator, or its designated representative, shall be permitted to electronically distribute participant elections by Electronic Medium. Each Employee who is
provided with enrollment or election information via Electronic Medium will also be informed by the Administrator that he or she may receive a paper copy of the relevant documents upon request. A Participant election will not be treated as being made available to an individual if such individual cannot effectively access the Electronic Medium for purposes of making the election. An election completed by an Employee via Electronic Medium shall be deemed as being provided in written form so long as the following requirements are satisfied:
(1) The Employee has a reasonable opportunity to review, confirm, modify or rescind the terms of the election before it becomes effective; and
(2) The Employee receives, within a reasonable time, a confirmation of the election either through written paper form or by electronic mail.
(d) Timing and Content of Elections and Notices. The provisions of this Section 5.13 shall in no way affect or alter the timing or content requirements applicable to each individual notice or document.
5.14 Election Changes to Enroll through Marketplace. A Participant may make a prospective election change to revoke coverage under the Employer group health plan which provides minimum essential coverage (as defined in Code Section 5000A(f)(1)) on account of and consistent with his or her enrollment in a Qualified Health Plan through a Marketplace in accordance with the following:
(a) Change Due to Reduction in Hours of Services. A Participant, who was reasonably expected to work an average of at least thirty (30) hours per week and experiences a change in employment status resulting in a reduction of hours, may prospectively change his or her election to revoke coverage if the Participant has enrolled or intends to
enroll in a Qualified Health Plan through a Marketplace. To be eligible
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under this paragraph, the election change must be on account of the Participant’s intent to enroll for new coverage through the Marketplace and such new coverage shall be effective beginning no later than the day immediately following the last day of coverage under the Employer’s group health plan.
(b) Change Due to Enrollment in Qualified Health Plan. A Participant, who is eligible for a special enrollment period to enroll in a Qualified Health Plan through the Marketplace or is eligible to enroll during the Marketplace’s annual open enrollment period, may prospectively change his or her election to revoke health coverage. To be eligible under this paragraph, the election change must be on account of the Participant’s intent to enroll for new coverage through the Marketplace and such new coverage shall be effective beginning no later than the day immediately following the last day of coverage under the Employer’s group health plan.
(c) Employer Reliance. For purposes of this Section 5.14, the Administrator may rely on the reasonable representation of a Participant that the Participant (and his or her covered Dependents) have enrolled or intend to enroll in a Qualified Health Plan for new coverage that is effective beginning no later than the day immediately following the last day of the original coverage that is revoked.
(d) Definitions. The term “Qualified Health Plan” shall mean a group health plan that provides “minimum essential coverage” as defined in Code Section 5000A(f).
(e) No Cash-Out Permitted. Participants electing to revoke coverage in accordance with this Section 5.14 and purchase Qualified Health Plan coverage shall not be permitted to receive a cash-out of any excess Benefit Credits as a taxable benefit under Section 6.3(a).
ARTICLE VI FLEXIBLE BENEFIT DOLLARS
6.1 Flexible Benefit Dollars. Amounts contributed by a Participant through Salary Reduction (pursuant to Section 5.2) and the amount of Benefit Credits or Opt-Out Allowance, as applicable, allocated by the Employer (pursuant to Section 6.2) shall be converted to Flexible Benefit Dollars for each Participant. Flexible Benefit Dollars shall be used to purchase the Benefits offered under this Plan.
6.2 Benefit Credits/Opt-Out Allowance. Benefit Credits or the Opt-Out Allowance, as applicable, shall be credited to each participating Employee twice during each calendar month of each Plan Year in which he or she is an active Participant under the Plan, subject to the provisions of Section 6.3. The amount shall be used by the Participant toward the purchase of Benefits under the Plan. The amount of the Benefit
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Credits or Opt-Out Allowance (as applicable) if any, to be funded by the Employer shall be determined prior to the beginning of each Plan Year in a uniform and nondiscriminatory manner, pursuant to Section 125(g)(1) of the Code and the Treasury Regulations issued thereunder and shall be set forth in Schedule “A”. The Employer shall inform each Participant of the amount of the Benefit Credits or Opt-Out Allowance for the subsequent Plan Year during the Open Enrollment Period. The maximum Benefit Credits or Opt-Out Allowance, as applicable, available to a Participant for a Short Plan Year shall be a prorated amount, as determined by the Administrator.
(a) Designated Employer Contribution. If applicable, a portion of the Benefit Credits shall be designated as the Employer’s contribution towards health coverage under the Public Employees’ Medical and Hospital Care Act (“PEMHCA”) as administered by CalPERS. The amount shall be determined pursuant to Section 22892 of the California Government Code in accordance with the Employer’s resolution on file with CalPERS.
6.3 Cash-Out of Remaining Benefit Credits or Opt-Out Allowance. Pursuant to the terms of Schedule “A,” if a Participant elects Benefits having an aggregate cost less than the Participant’s Benefit Credits or Opt-Out Allowance, as applicable. This taxable cash compensation shall be paid by the Employer twice during each calendar month during the Plan Year in which an employee is a Participant under the Plan. In the event of the Participant’s cessation of participation in this Plan, the Participant shall have no further right to receive any remaining Benefit Credits or Opt-Out Allowance, as applicable, as taxable cash compensation for the portion of the Plan Year after the termination of participation.
6.4 Nature of Flexible Benefit Dollars. No money shall actually be allocated to any account(s) on behalf of Participants. Flexible Benefits Dollars credited to a Participant shall be of a memorandum nature, the amount of which is maintained by the Administrator for accounting purposes and shall not be representative of any identifiable trust assets.
6.5 Leave of Absence. A Participant shall receive his or her Benefit Credits or Opt-Out Allowance, as applicable, during an unpaid Leave of Absence, except to the extent: (i) otherwise required by law; or (ii) pursuant to the terms of an applicable memorandum of understanding. During leaves of absence, Participants shall only be
responsible for the employee portion of their elected Benefits.
ARTICLE VII FUNDING AND AVAILABLE BENEFITS
7.1 Funding. The Benefits provided herein shall be paid by the Employer; provided, however, that the Employer’s payments under the Plan shall be limited to such amounts of compensation as a Participant elects to forego pursuant to his or her Salary Reduction election and amounts contributed by the Employer as Benefit Credits or Opt-
Out Allowance, as applicable.
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7.2 Payment of Contributions While on Statutory Leave. Upon a Participant taking Statutory Leave (as defined in Section 4.4), each health care benefit elected by the Participant shall continue during the Statutory Leave for the length of the applicable Statutory Leave, unless otherwise revoked by the Participant. During the unpaid Statutory Leave, the Participant shall be responsible for making the Participant’s required contributions allowed under the Constituent Plans identified in Section for such benefits under his or her applicable memorandum of understanding. The Participant may select among the Prepayment Option, Catch-Up Option, and Pay-As-You-Go Option to pay the contributions during Statutory Leave.
(a) Prepayment. The Participant may elect to prepay the contributions prior to commencing the Statutory Leave. The prepaid contributions may be made from salary, vacation pay or sick pay, to the extent permitted by applicable law and in a manner which will not defer compensation to a subsequent Plan Year. In the event, a Participant’s Statutory Leave will span two Plan Years, the Participant may only prepay contributions for the remainder of the Plan Year and shall be required to utilize another payment option hereunder to make the contributions for the subsequent Plan Year. The Prepayment Option may not be required as a
condition to remaining in the Plan, and prepayment may not be the sole method of making contributions hereunder.
(b) Pay-As-You-Go. The Participant may elect to pay the contributions on an after-tax basis as due. Payments shall be made on the same schedule as payments would have been due if the Participant had not been on Statutory Leave, on the same schedule as payments required for continuation coverage under Article VIII hereunder are made, under the Employer’s existing rules for payment by employees on leave without pay, or on any other schedule voluntarily agreed upon by the Administrator and the Participant that is not inconsistent with the Statutory Leave.
Contributions under the Pay-As-You-Go Option may also be paid on a pre-tax basis from taxable compensation such as vacation pay or sick pay provided such payment will not defer compensation to a subsequent Plan Year.
(c) Catch-Up Option. The Employer may assume responsibility for advancing the contributions on behalf of the Participant, and may recoup such contributions upon the Participant’s return to employment. The contributions may be made on a pre-tax salary reduction basis from salary, vacation pay or sick pay when the Participant returns from Statutory Leave. The “Catch-Up Option” shall be applied in a manner consistent with Proposed Treasury Regulations Section 1.125-3.
7.3 Uniformed Service Under USERRA. In accordance with the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), a Participant who is absent from employment with the Employer on account of being in the
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Uniformed Services (as defined in Section 3.25), may elect to continue participation in the Plan. The coverage period shall extend for the lesser of: (i) eighteen (18) months; or (ii) until the Participant fails to apply for reinstatement or to return to employment with the Employer. The Participant shall be responsible for making the required contributions to pay for Benefits elected during the period during which he or she is in “uniformed service.” The manner in which such payments are made shall be determined by the Administrator, in a manner similar to the payment of contributions with respect to FMLA Leave.
7.4 Provision of Benefits. The Employer shall provide those Benefits elected by a Participant on his or her election for any Period of Coverage in accordance with such election. The Benefits shall be provided pursuant to the terms and conditions of the Component Plans, where applicable, as shall be set forth from time to time in the individual Component Plan documents; provided, however, that the terms and conditions of the Component Plans are not inconsistent with the terms and conditions of this Plan. No Benefit under this Plan shall be paid in any manner that defers the receipt of compensation beyond the last day of the Plan Year except as specifically provided the Component Plan documents that set forth the Health Flexible Spending Account and/or the Dependent Care Flexible Spending Account.
7.5 Cash Payments. Any cash to be paid to a Participant under an election to receive additional cash compensation shall be added to his or her taxable compensation and shall be paid to him or her during the Plan Year, subject to any applicable wage withholding or similar taxes. Such payments shall not include interest from the date the amount was credited to the Participant’s behalf through to the date of payment. No Benefit under the Plan shall be paid in any manner that defers the receipt of compensation beyond the last day of the Plan Year.
7.6 Taxable Benefits. If offered by the Employer, Employees shall be permitted to elect to receive certain permitted taxable benefits. An Employee receiving such benefits shall be treated as having received, at the time that the benefit is received, cash compensation equal to the full value of the benefits and then as subsequently purchasing the benefits with after-tax employee contributions.
The Employer shall also be permitted to allow Employees to elect health coverage under the Plan for a non-dependent registered domestic partner; provided, however, that the fair market value of such health coverage is included in the Participant’s
W-2 income.
ARTICLE VIII CLAIMS PROCEDURE
All claims for Benefits that are provided through insurance contracts, whether such contracts are between the insurer and the Employer or the insurer and the Participant, shall be made by filing a claim for Benefits in accordance with the claims procedure set forth under the relevant insurance contract. The Employer does not have the
authority or responsibility for processing, reviewing or paying such claims. All disputes
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regarding those claims shall be resolved in accordance with the procedure set forth in the separate Component Plan document concerning those Benefits.
ARTICLE IX CONTINUATION COVERAGE
9.1 In General. The following provisions shall apply to Benefits provided to eligible Employees and to their Spouse and eligible Dependents under the Plan, but only to the extent that the Benefits selected pertain to health care coverage providing medical, surgical, or hospital benefits and to plans providing ancillary medical coverage such as dental, vision, or prescription drug benefits. This coverage shall be continued pursuant to the federal continuation coverage provisions of Public Health and Safety Act (“PHSA”), pursuant to 42 U.S.C. Section 300bb.
9.2 Definitions. For purposes of this Article VIII, the following words and phrases are intended to supplement, and in some instances replace, the defined terms listed generally in Article III and to the extent of any conflict between the terms set forth in this Article and those of Article III, the defined terms set forth in this Article shall control:
(a) “Dependent” means an individual who meets the definition of dependent under the participating Employer provided health plan covering the eligible Employee. For the purposes of any health flexible
spending account, “Dependent” will also include individuals who are the Participant’s dependents within the meaning of Section 152(a) of the Code. No person shall be considered a Dependent of more than one Employee. If both an Employee and an Employee’s Spouse are employed by the Employer, dependent children may be covered by either Spouse, but not by both.
(b) “Election Period” means the sixty (60) day period during which a Qualified Beneficiary who would lose coverage as a result of a Qualifying Event may elect continuation coverage. This sixty (60) day period begins not later than the date of termination of coverage as a result of a Qualifying Event and ends not earlier than the sixty (60) days after the later of such date of termination of coverage or the receipt of notice of the right to elect continuation coverage under this Plan.
(c) “Medicare” means the Health Insurance for the Aged and Disabled Act, Title XVIII of Public Law 89-97, Social Security, as amended.
(d) “Qualified Beneficiary” means an individual who, on the day before the Qualifying Event, is covered under this Plan as the covered Employee, the Spouse or Dependent of the covered Employee. Qualified Beneficiary shall include a child who is born to (or placed for
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adoption with) a covered Employee during the coverage period. The term Qualified Beneficiary does not include an individual whose status as a covered Employee is attributable to a period in which such individual is a nonresident alien who received no earned income from the employer which constituted income from sources within the United States (within the meaning of Code Section 911(d)(2) and Section 861(a)(3)). The term Qualified Beneficiary also does not include a covered Employee’s domestic partner regardless of whether such person was a covered dependent under the Plan prior to the Qualifying Event. If an individual is not a Qualified Beneficiary pursuant to this paragraph, a spouse or dependent child of such individual shall not be considered a Qualified Beneficiary by virtue of the relationship to such individual.
(e) “Qualifying Event” means with respect to a covered Employee, any of the following events which, but for the continuation coverage under this provision, would result in the loss of coverage of a Qualified Beneficiary:
(1) the death of the covered Employee;
(2) the termination (except by reason of such covered Employee’s gross misconduct) or reduction in hours of the covered Employee’s employment;
(3) the divorce or legal separation of the covered Employee from such covered Employee’s spouse;
(4) the covered Employee becoming entitled to benefits under Title XVIII of the Social Security Act (Medicare);
(5) a Dependent child who ceases to be a Dependent child under the terms of this Plan;
9.3 Continuation Coverage. To the extent required by Section 9.1 above, a Qualified Beneficiary who would lose health coverage under this Plan as a result of a Qualifying Event is entitled to elect continuation coverage within the election period under this Plan. Coverage provided under this provision is on a contributory basis. No evidence of good health will be required.
Except as otherwise specified in an election, any election by a Qualified Beneficiary who is a covered Employee or Spouse of the covered employee will
be deemed to include an election for continuation coverage under this provision on behalf of any other Qualified Beneficiary who would lose coverage by reason of a Qualifying Event.
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If this Plan provides a choice among the types of coverage under this Plan, each Qualified Beneficiary is entitled to make a separate selection among such types of coverage (i.e., single, family, etc.).
9.4 Type of Coverage.
(a) Group Health Coverage. Continuation coverage under this provision is coverage which is identical to the coverage provided under this Plan to similarly situated beneficiaries under this Plan with respect to whom a Qualifying Event has not occurred as of the time coverage is being provided. If coverage under this Plan is modified for any group of similarly situated beneficiaries, the coverage shall also be modified in the same manner for all Qualified Beneficiaries under this Plan in connection with such group.
Continuation coverage available to a Qualified Beneficiary under this provision shall apply only to the type and level of health coverage under the Plan that a Qualified Beneficiary was actually receiving on the day before the Qualifying Event. The Qualified Beneficiary may not change his or her election except as otherwise provided under Sections 5.4(d) and 5.28(d) and (e).
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(b) ARTICLE VI. Health Flexible Spending Account. Notwithstanding subparagraph (a) above, an Employee that was participating in the Plan prior to the Qualifying Event may be eligible to elect continuation coverage under the Health Flexible Spending Account, as set forth provided in the component plan document.
9.5 Coverage Period. The coverage under this provision will extend for at least the period beginning on the date of a Qualifying Event and ending not earlier than the earliest of the following:
(a) Initial 18-Month Coverage Period. If the Qualifying Event is a termination of employment (other than for gross misconduct) or a reduction in employment hours of a covered Employee, the coverage period for the Employee and his or her dependents shall extend for eighteen
(18) months after the date of the Qualifying Event;
(b) Disability Extension. The initial eighteen (18) month coverage period described in (a) above may be extended to twenty-nine (29) months after the date of the Qualifying Event in the event the Qualified Beneficiary was disabled upon termination of employment or during the first sixty (60) days of continuation coverage. The Qualified Beneficiary must provide the Administrator with notice of a Social Security disability determination within sixty (60) days of the disability determination and prior to the expiration of the initial eighteen (18) month continuation period provided in (a) above to become eligible for this extension of continuation coverage.
(c) Extension of Coverage Period. The initial eighteen (18) month coverage period described in (a) above may be extended to thirty-six (36) months after the date of the Qualifying Event upon the occurrence of a second Qualifying Event prior to the expiration of the initial eighteen (18) month coverage period. The Qualified Beneficiary must notify the Administrator of the second Qualifying Event within sixty (60) days of the date of the second Qualifying Event and prior to the expiration of the initial eighteen (18) month period. In no event shall continuation coverage extend for a period greater than thirty-six (36) months.
(d) 36-Month Coverage Period. In the case of any Qualifying Event causing the loss of coverage, except those Qualifying Events identified in (a) above, the coverage period for the Employee and his or her Spouse and Dependents shall extend for thirty-six (36) months after the date of the Qualifying Event.
9.6 Notification Requirements.
(a) Notification by Qualified Beneficiary. Each covered
Employee or Qualified Beneficiary must notify the Employer of the
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occurrence of a divorce or legal separation of the covered Employee from such covered Employee’s Spouse and/or the covered Employee’s Dependent child ceasing to be a Dependent child under the terms of this Plan within sixty (60) days after the date of such occurrence.
(b) Notification by Employer. The Employer shall notify the Administrator within thirty (30) days of a Qualifying Event, as required by federal law.
(c) Notification to Qualified Beneficiary.
(1) The Administrator shall provide written notice to each covered Employee and Spouse of such covered Employee of his or her right to continuation coverage under this provision upon commencement of coverage under a Component Plan providing health coverage, as required by federal law.
(2) The Administrator shall notify any Qualified Beneficiary of the right to elect continuation coverage under this provision within fourteen (14) days of receiving notice of the occurrence of a Qualifying Event, as required by federal law. If the Qualifying Event is the divorce or legal separation of the covered Employee from the covered Employee’s Spouse or a Dependent child ceasing to be a Dependent child under the terms of this Plan, the Employer shall only be required to notify a Qualified Beneficiary of his or her right to elect continuation coverage if the covered Employee or the Qualified Beneficiary notifies the Employer of such Qualifying Event within sixty (60) days after the date of such Qualifying Event.
Notification of the requirements of this provision to the spouse of a covered Employee shall be treated as notification to all other Qualified Beneficiaries residing with such spouse at the time notification is made.
9.7 Termination of Continuation Coverage. The continuation coverage provided hereunder shall be terminated prior to the expiration of the coverage periods provided in Section 9.5 above upon the earlier of the following:
(a) with respect to continuation coverage under a Health Flexible Spending Account, the last day of the Plan Year in which the Qualified Beneficiary experiences the Qualifying Event or as set forth in the applicable component plan document.
(b) the date on which the Employer ceases to provide any group health plan to any Employee;
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(c) the date on which the Qualified Beneficiary fails to make timely payment of the required contribution pursuant to this provision provided the deficiency is not an “insignificant amount” as described in Section 9.8(d);
(d) the date on which the Qualified Beneficiary first becomes, after the date of the election, covered under any other group health plan as an employee or dependent. However, if the other group health plan has a preexisting condition limitation, continuation coverage under the Plan will not cease while such preexisting condition limitation under the group plan remains in effect (taking into account prior creditable coverage under the portability rules of the Health Insurance Portability and Accountability Act of 1996); or
(e) the date on which the Qualified Beneficiary becomes entitled to benefits under Title XVIII of the Social Security Act (Medicare).
9.8 Contribution.
(a) A Qualified Beneficiary shall only be entitled to continuation coverage provided such Qualified Beneficiary pays the applicable premium required by the Employer in full and in advance, except as provided in (b) below. Such premium shall not exceed the requirements of applicable federal law. A Qualified Beneficiary may elect to pay such premium in installments as indicated by the Employer.
(b) Except as provided in (c) below, the payment of any premium shall be considered to be timely if made within thirty (30) days after the date due, or within such longer period of time as applies to or under this Plan.
(c) Notwithstanding (a) or (b) above, if an election is made after a Qualifying Event during the election period, this Plan will permit payment of the required premium for continuation coverage during the period preceding the election to be made within forty-five (45) days of the date of the election.
(d) A premium payment received by the Employer which is deficient by an insignificant amount shall be treated as full payment of the premium amount. For purposes of this Section, an insignificant amount is an amount not greater than the lesser of (i) ten percent (10%) of the required amount; or (ii) fifty dollars ($50.00). Alternatively, in the event an Employer receives an insufficient payment premium, the Employer retains the option of taking steps to collect the deficient insignificant amount by notifying the Qualified Beneficiary of the deficiency and allowing thirty (30) days after date of the notice for payment
of the deficiency.
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9.9 Coordination with State Continuation Coverage. In the event a Qualified Beneficiary is entitled to less than thirty-six (36) months of federal continuation coverage as a result of a Qualifying Event, the Qualified Beneficiary will be notified prior to the expiration of federal continuation coverage if he or she is eligible to elect an extension of continuation coverage under the Plan for an additional period of up to thirty-six (36) months from the date of the Qualifying Event pursuant to the Section 1366.20 et. seq. of the California Health and Safety Code (the “California Continuation Benefits Replacement Act” or “Cal-COBRA Program”).
A covered employee’s Dependent who, (1) on the day before the Qualifying Event, is covered under this Plan as the registered domestic partner of the covered Employee and (2) loses health coverage under this Plan as a result of a Qualifying Event shall be entitled to state continuation coverage subject to the eligibility, election and contribution requirements set forth under the Cal-COBRA Program.
ARTICLE X DISCRIMINATION
10.1 Nondiscrimination Requirements. The Employer shall not discriminate in favor of Highly Compensated Individuals as to eligibility to participate in the Plan or as to contributions and Benefits provided under the Plan pursuant to Section 125 of the Code and the Regulations. In addition, the Employer shall not discriminate in favor of Highly Compensated Individuals as to the actual operation of this Plan.
(a) Eligibility to Participate. The Plan shall not be considered discriminatory if the Plan benefits a group of employees who qualify under a reasonable classification established by the Employer and the group of employees included in the classification satisfies the safe harbor percentage test or unsafe harbor percentage component of the facts and circumstances test in Section 1.410(b)-4(c) of the Treasury Regulations. The Employer is permitted to exclude the following employees in making this determination:
(1) Employees covered by a collectively bargained plan;
(2) Employees who are nonresident aliens and receive no earned income in the United States from the Employer; and
(3) former employees who have elected to extend health coverage under the Plan pursuant to Article VIII.
Notwithstanding, the Plan will not be considered discriminatory if all employees are permitted to participate.
(b) Benefit Availability and Participation. The Plan shall not be considered discriminatory if the Plan provides Benefits, including Employer contributions
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allocable to Benefits, which do not discriminate in favor of Highly Compensated Participants. Benefits shall be made available to all employees on a uniform basis and each eligible employee will be given an equal opportunity to make an election for Benefits. The Plan shall be considered discriminatory if the actual election or participation in the Plan by Highly Compensated Participants, including types of Benefits provided and utilization of Employer contributions for the selection of qualified Benefits, is disproportionate to the total number of Non-Highly Compensated Participants for a Plan Year.
(1) Election of Benefits by Highly Compensated Participants. Qualified Benefits are disproportionately elected by Highly Compensated Participants if the aggregate qualified Benefits elected by Highly Compensated Participants, measured as a percentage of the aggregate compensation of Highly Compensated Participants, exceed the aggregate qualified benefits elected by Non-Highly Compensated Participants measured as a percentage of the aggregate compensation of Non-Highly Compensated Participants.
(2) Utilization of Employer Contributions by Highly Compensated Participants. Employer contributions are disproportionately utilized by Highly Compensated Participants if the aggregate contributions utilized by Highly Compensated Participants, measured as a percentage of the aggregate compensation of Highly Compensated Participants, exceed the aggregate contributions utilized by Non-Highly Compensated Participants measured as a percentage of the aggregate compensation of Non-Highly Compensated Participants.
(3) Safe Harbor for Health Benefits. If health benefits are provided under the Plan, excluding dental coverage, vision coverage, and health flexible spending accounts, the Plan shall not be considered discriminatory as to the availability of Benefits and utilization of Employer contributions if –
(i) Employer contributions made on behalf of each Participant include an amount which equals one hundred percent (100%) of the cost of the health Benefit coverage of the majority of the Highly Compensated Participants similarly situated, or equals or
exceeds seventy-five percent (75%) percent of the cost of the health Benefit coverage of the Participants (similarly situated) having the highest cost health benefit coverage under the Plan; and
(ii) Contributions or Benefits under the Plan in excess of those described in subparagraph (i) above bear a uniform relationship to compensation.
(c) Safe Harbor for Premium-Only-Plans. A premium-only plan is deemed to satisfy the nondiscrimination rules described in Section 10.1(b) above, as to the availability of benefits and contributions,
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for a Plan Year upon satisfaction of the nondiscrimination requirements for eligibility to participate described in Section 10.1(a) above.
(d) Definitions.
(1) Highly Compensated Individual. For purposes of this Section, “Highly Compensated Individual” shall mean (i) an officer of the Employer who is regularly and continuously involved in the business operations of the Employer; (ii) an individual that is “highly compensated;” or (iv) a Spouse or Dependent of a Highly Compensated Individual.
An individual is “highly compensated” if for the preceding Plan Year (or the current Plan Year in the case of the first year of employment) if he or she received compensation from the Employer in excess of the amount specified in Section 414(q)(1)(B) of the Code. The Employer may also elect to identify a top-paid group for any Plan Year consisting of the top twenty percent (20%) of the Employees when ranked on the basis of compensation pursuant to Section 414(q)(3) of the Code.
A Highly Compensated Individual who elects to participate in the Plan may be referred to as a Highly Compensated Participant for purposes of this Article IX.
10.2 Annual Testing. The Employer shall perform nondiscrimination testing as of the last day of the Plan Year, taking into account all non-excludable Employees or former Employees who were employed during the Plan Year.
10.3 Avoiding Discrimination.
(a) Ability to Reject Election. If the Administrator deems it necessary to avoid discrimination or possible taxation to Highly Compensated Participants, the Administrator may, but shall not be required to, reject any Salary Reduction Agreement or reduce contributions or non-taxable benefits to assure compliance with the nondiscrimination requirements of Code Section 125. Any act taken by the Administrator pursuant to this Section shall be in a nondiscriminatory and uniform manner.
(b) Manner of Rejecting Election to Avoid Discrimination. In the event the Administrator determines that it is necessary to reject a Salary Reduction Agreement or reduce contributions or non-taxable benefits, the rejection shall be carried out as set forth in this subsection. Non-taxable benefits of the affected Highly
Compensated Participant who has elected the highest amount of non-taxable benefits shall be reduced until the discrimination tests set forth in Section 10.1(a) and (b) are satisfied or until the amount of his or her non-taxable benefit equals the non-taxable benefits of the affected Participant who has elected the second highest amount of non-taxable benefits. This process shall continue until the discrimination tests are satisfied. Any reduction made pursuant to this subsection shall be made proportionately among non-insured benefits and
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once all non-insured benefits are expended, proportionately among insured benefits. Contributions which are not utilized to provide benefits to any Participant by virtue of any administrative act under this subsection shall be forfeited and deposited into the general account.
10.4 Reimbursement Accounts. The Plan is intended not to discriminate in favor of “highly compensated individuals” (as defined in Section 414(q) of the Code with respect to the Dependent Care Flexible Spending Account and as defined in Section 105(h) of the Code with respect to the Health Flexible Spending Account) as to eligibility to participate, contributions, and/or Benefits under the Health Flexible Spending Account or the Dependent Care Flexible Spending Account. The Administrator of such plans, as defined by the relevant component plan documents, will be responsible for determining whether such prohibited discrimination exists, and taking appropriate measures to ensure compliance with the nondiscrimination requirements of Sections 129 and 105 of the Code.
10.5 Compliance with Mental Health Parity and Addiction Equity Act and GINA. Notwithstanding any provision in the Plan to the contrary, the Plan, and any Component Plan providing health benefits, will comply with the Mental Health Parity and Addiction Equity Act of 2008 and Title II of the Genetic Information Nondiscrimination Act of 2008.
ARTICLE IIARTICLE XI ADMINISTRATION OF PLAN
11.1 Section 6.1 AppointmentAllocation of Plan Responsibility for Administration.
(a) Designated Representatives. The Employer may appoint an individual or an administrative committee to serve at its discretion as Administrator. The Administrator shall have only those powers, duties, responsibilities and obligations as are specifically given to the Administrator under the Plan.
(b) Should the Employer from time to time desire to appoint another person or entity other thanResponsibilities. The Employer shall have the sole responsibility for making the city manager as contributions provided for under Section 6.2 and shall have the sole authority to amend or terminate, in whole or in part, the Plan at any time.
(b)(c) Administrator’s Responsibilities. The Administrator, shall have the sole responsibility for, and shall supervise, the administration of the Plan, as set forth herein. The Administrator warrants that any directions given, information furnished, or action taken by it shall do so pursuant to be in accordance with the provisions set forth by the Employer. The details of the appointment and the acceptance by the
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appointed person of the of the Plan authorizing or providing for such direction, information or action. The Administrator shall be responsible for the proper exercise of its own powers, duties, responsibilities of the Plan Administrator or Claims Administrator as set forth in the Plan shall be recorded byand obligations under this Plan and shall not be responsible for any act or failure to act of another employee. Neither the Administrator, nor the Employer, makes any guarantee to any Participant in any manner for any loss or other event because of the Participant’s participation in the Plan.
Section 6.2 Transfer of Duties of Plan Administrator
. The administrationEmployer may, at any time, assign all or any portion of the Plan shall be under the supervision of the Plan Administrator. The Plan Administrator shall have the sole responsibility, full discretion and complete authorityAdministrator’s duties to control and manage the operation and administration of the Plan. (d) It shall be a principal dutycontracting third-party.
11.2 Powers and Duties of the Plan Administrator to see that the Plan is.
(a) Powers and Duties Delegated to Administrator. The Administrator shall be responsible for ensuring that the terms and conditions of the Plan are carried out in accordance with its terms for the exclusive benefit of persons entitled to participate in the Plan. without discrimination. The Administrator shall have full power to administer the Plan, subject to the applicable requirements of the law and any administration agreement executed by and between the Employer and the Administrator. For this purpose, the Plan Administrator'sAdministrator’s powers willshall include but will not be limited to the following discretionary authority,:
(1) to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder;
(2) to prescribe the procedures for the Participants to follow in addition to all filing applications for Benefits and to prepare forms to be used by the Participants;
(3) to prepare and distribute, in such manner as the Administrator determines appropriate, information explaining the Plan;
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to receive from the Employer, Participants, Participant’s spouses and Dependents, and other powers provided by this Plan or by law: (1)(4) To make and enforcepersons such rules and regulationsinformation as it deemsshall be necessary or proper for the efficientproper administration of the Plan, including the establishment of any procedures that may be required by applicable provisions of law,;
(5) To interpret to furnish to the Employer and the Participants, upon request, annual reports detailing the administration of the Plan, its interpretation thereof in good faith to be final and conclusive;
(2)(6) to receive, review and keep on all persons claiming benefits underfile records pertaining to the Plan, as the Administrator deems convenient and proper;
(a) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan, (7) Toto allocate its administrative responsibilities;
(3)(8) to appoint such or employ individuals and any other agents, counsels, accountants, consultants and other persons as may be required the Administrator deems advisable, including legal and actuarial counsel, to assist in the administration of the Plan, and;
(b) To allocate and delegate its responsibilities under the Plan and to
designate other persons to carry out any of its responsibilities under
the Plan, any adopt such allocation, delegation, or designation to be
in writing.
Notwithstanding the foregoing, any claim that arises under any one of the Constituent Plans shall not be subject to review under this Plan, and the Plan Administrator's authority under this Section 6.2 shall not extend to any matterrules as to which a plan administrator under any such Constituent Plan is empowered to make determinations under such plan.
Section 6.3 Reliance by Plan the Administrator
(4)(9) In administering the Plan, the Plan deems necessary, desirable or appropriate, subject to applicable law. All rules and decisions of the Administrator shall be entitled to the extent permitted by law to rely conclusively on uniformly and consistently applied to all tables, valuations, certificates, opinions, and reports that are furnished by or in accordance with the instructions of the administrators of the Constituent Plans, or by accountants, counsels, or other experts employed
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or engaged by the Plan Administrator.Participants in similar circumstances; and
Section 6.4 Notification
(10) The to take all other steps necessary to properly administer the Plan in accordance with its terms and conditions and the requirements of the applicable law.
(c)(b) Powers and Duties Not Delegated to Administrator shall ensure that all Employees receive reasonable notification of their . The Administrator shall have no power to add to, subtract from, or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility to become Participants for a benefit under this Plan and of the availability and terms of the Plan. The the Plan Administrator shall notify Employees of any changes in the terms, except as may be expressly provided herein. Interpretations of the provisions of the Plan before the beginningshall not be deemed to be additions, subtractions, or modifications of the Plan Year for which such
changes are effective.
Section 6.5 Nondiscrimination
This Plan is intended not to discriminate in favor of Highly Compensated Employees as to eligibility to participate or as to contributions and benefits, as required by Section 125(b)(1) of the Code, or in favor of Key Employees as to utilization, as required by Section 125(b)(2) of the Code. If, in the judgment of the Plan Administrator, the Plan so discriminates, the Plan Administrator shall impose a pro rata reduction on the benefit elections of all Highly Compensated Employees or Key Employees, as appropriate, or take other appropriate action sufficient to assure compliance with such requirements or limitations.
Section 6.6 Fiscal Records
The fiscal records of the Plan are to be maintained on the basis of the Plan Year. The Plan Administrator shall make available to any Employee such records for the Plan as pertain to the Employee, for examination at reasonable times during normal business hours.
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Section 6.7 DiscretionaryNondiscriminatory Exercise of Authority 2.211.3 . Whenever in the administration of the Plan any discretionary action by the Plan Administrator is required, the Plan Administrator shall exercise its authority in a nondiscriminatory manner so that all persons similarly situated willshall receive substantially the same treatment.
Section 6.8 Indemnification of Plan Administrator
11.4 Incapacity of Participant. Whenever, in the Administrator’s opinion, a person entitled to receive any payment of a benefit hereunder or an installment thereof is under a legal disability or is incapacitated in any way so as to be unable to manage the person’s financial affairs, the Administrator may direct the Employer to make payments to such Participant or to such person or to the person’s legal representative or to a relative or friend of such person on such person’s behalf, or the Administrator may apply the payment for the benefit of such Participant in such manner as the Administrator considers advisable. Any payment of a benefit or installment in accordance with the provisions of this Section shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan.
2.311.5Indemnification of Administrator. The Employer agrees to indemnify and to defend to the fullest extent permitted by law any Employee who serves as the Plan Administrator or as a member of a committee designatedany employee or employees serving as Plan Administrator (including any Employeeemployee or former Employeeemployee who formerly served as Plan Administrator or as a member of such committee)), against any and all liabilityliabilities, damages, costs, and expenses (including attorneys'attorneys’ fees and amounts paid in settlement of any claims approved by the Employer) occasioned by any act or omission to act in connection with the Plan, if such act or omission was in good faithis made in good faith pursuant to the provisions of the Plan and not as a result of the Administrator’s gross negligence or willful misconduct.
Section 6.9 Government Reporting
The Plan Administrator shall timely file with proper governmental authorities any and all forms and documents regarding the Plan that may be required under the Code or other relevant laws and regulations.
Section 6.10 Availability of Plan Document
A copy of the Plan document is available for inspection during normal business hours at the offices of the Plan Administrator.
Section 6.11 Allocation of Fiduciary Responsibilities
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The Plan Administrator may allocate certain of its fiduciary responsibilities among others and/or designate other persons to carry out certain of its fiduciary responsibilities. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. The Plan Administrator and any fiduciary designated by the Plan Administrator as aforesaid may employ one or more persons to render advice with respect to their responsibilities under the Plan.
1) Section 6.12 Nonliability for Allocated Responsibilities
Neither the Plan Administrator nor any other fiduciary shall be liable for
an act or omission of another person in carrying out any fiduciary responsibility where such fiduciary responsibility is or may be allocated to such other person by the Plan or pursuant to a procedure established by the Plan, except to the extent that:
(a) The Plan Administrator or such fiduciary participated knowingly in, or
knowingly undertook to conceal, an act or omission of such other
person, knowing such act or omission to be a breach of fiduciary
responsibility
(b) The Plan Administrator or such fiduciary has knowledge of a breach of fiduciary responsibility by such other person, unless the Plan Administrator or fiduciary makes reasonable efforts under the circumstances to remedy the breach.
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ARTICLE VII. GENERAL PROVISIONS
Section 7.1 Information to be Furnished
Participants shall provide the Employer and the Plan Administrator with such information and evidence, and shall sign such documents, as may reasonably be requested from time to time for the purpose of administration of the Plan.
Section 7.2 No Vested Interest
Except for the right to receive any benefit payable under a Constituent Plan, no person shall have any right, title, or interest in or to the assets of the Employer because of the Plan.
Section 7.3 Non-Alienation of Benefits
Except as otherwise provided by law, the benefits provided under the Plan shall not be subject to assignment, anticipation, alienation, attachment, levy, or transfer, and any attempt to do so shall not be recognized.
Section 7.4 Not a Contract of Employment
Participation hereunder shall not grant any Participation the right to be retained in the service of the Employer or any other right or interest except as specifically set forth in the Constituent Plans or herein.
Section 7.5 Limitation of Rights
Neither the establishment of the Plan nor any amendment thereof, nor the payment of benefits under the Constituent Plans, shall be construed as giving to any Participant or any other person any legal or equitable right against the Employer or Plan Administrator, except as provided herein.
Section 7.6 Amendment and Termination
The Employer has established this Plan with the intention and expectation that it will be continued for an indefinite period of time. The Employer shall, however, have no obligation to maintain the Plan for any given length of time
and may alter, amend, or terminate this Plan, in whole or in part, at any time without liability; provided, however, that the Employer shall not alter, amend, or terminate this Plan so as to affect benefits payable to Participants before
the date of such alteration, amendment, or termination.
Section 7.7 Invalid Provisions
In the event any provisions of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining sections of this
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Plan, and this Plan shall be construed and enforced as if said illegal or invalid provision had never been inserted herein.
Section 7.8 No Guarantee of Tax Consequences
Neither the Plan Administrator nor the Employer makes any commitment or guarantee that any amounts paid to or for the benefit of a Participant under this Plan or the Constituent Plans will be excludable from the Participant's gross income for federal, state, or local tax income tax purposes, or that any other federal, state, or local tax treatment will apply to or be available to any Participant. It shall be the obligation of each Participant to determine whether such payments are excludable from his or her gross income for federal, state, or local income tax purposes, and to notify the Employer if the Participant has reason to believe that any such payment is not so excludable.
Section 7.9 Governing Law
ARTICLE XII THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH AMENDMENTS, TERMINATION AND ACTION BY EMPLOYER
12.1 Action by Employer. Any action by the Employer under this Plan, including but not limited to, termination of this Plan, shall be by action of the Employer, or by any person or persons duly authorized by action of the Employer to act on its behalf.
Amendments. Subject to any applicable federal laws and in accordance with the laws of the State of California, to the extent not preempted by applicable federal laws.
ARTICLE VIII. HIPAA 2004 COMPLIANCE
This section only applies to the City of Carlsbad self-funded Dental and Flexible Spending Account plans. The City of Carlsbad (hereinafter “Plan Sponsor”) is the sponsor of the City of Carlsbad self-funded Dental and Flexible Spending Account plans (hereinafter “Self-funded Plan”). This Self-funded Plan is subject to the Health Insurance Portability and Accountability Act (HIPAA) of 1996 and to the privacy regulations promulgated by the U.S. Department of Health and Human Services (HHS), found at 45 CFR, Parts 160-164. This Self-funded Plan meet and confer laws, the Employer reserves to the Plan Sponsor complete discretion and authority to amend or terminate the Self-funded Plan at any time. The Plan Sponsor wishes to obtain from the Self-funded Plan “protected health information” (PHI), as defined at section 164.504 of the HIPAA regulations, and other health information. The HIPAA regulations require that, in order for a plan to disclose
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PHI (for purposes beyond enrollment and disenrollment) to a plan sponsor, the plan document under which the plan was established and is maintained must be amended to include specific provisions and limitations.
The Self-funded Plan is hereby amended, effective as of April 14, 2004, to include the following provisions:
Section 8.1 Permitted uses and disclosures of PHI:
The HIPAA Privacy Rule allows or requires that PHI be used or disclosed only: a) pursuant to a valid signed Authorization by the individual to whom the PHI pertains, or b) for purposes of “treatment, payment or health care operations” (TPO), or c) directly to the individual to whom the PHI pertains, or d) for certain public health and safety purposes (such as reporting abuse or communicable diseases), where required by law or as part of a legal or regulatory proceeding, or for law enforcement.
Section 8.2 Disclosure Permitted only Pursuant to Certification:
Self-funded Plan will disclose PHI to Plan Sponsor only for purposes
of Self-funded Plan administration (such as payment or health care operations)
and only after Plan Sponsor amends the plan document, certifies in writing that plan documents have been amended and agrees to certain conditions regarding
the use and disclosure of PHI and the adequate separation between the Self-
funded Plan and Plan Sponsor.
Section 8.3 Plan Sponsor’s Use or Disclosure of PHI:
Plan Sponsor will not use PHI for any purpose not required by law or allowed by the Self-funded Plan. Specifically, Plan Sponsor will not use or disclose PHI obtained from the Self-funded Plan for decisions relating to
employment or in connection with other plans (e.g., disability plans, workers’ compensation plans), unless pursuant to a valid Authorization from the individual to whom the PHI pertains.
Section 8.4 Classes of Employees With Access to PHI:
The following employees of, or other persons under the control
of, Plan Sponsor will have access to PHI solely for the purposes specified below, and only for plan administration functions performed on behalf of the Self-funded Plan. Other employees of Plan Sponsor shall not have access to PHI.
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a. Plan Sponsor’s Human Resources Department: Employees who work in the Human Resources Department will
have access to PHI
1. to the extentthe right to make, from time to time, any amendment (or amendments) to this Plan as it deems necessary to fulfill the Human
Resource Department’s responsibility to review and determine appeals from denied claims under this Self-funded Plan; 2. to the extent necessary to monitor and/or enforce the subrogation
provisions of the Self-funded Plan; 3. to the extent necessary to assist employees and their family members if they request such assistance in getting benefits claims resolved;
4. to the extent necessary to work with Plan Sponsor’s Subrogation Entity to help the Self-funded Plan obtain reimbursement when appropriate; 5. for activities related to the creation, renewal or replacement of a
contract for dental insurance and flex spending account benefits; 6. to the extent necessary to correspond with other group health plans on coordination of benefits issues; 7. that is the result of pre-employment physicals requested or required by
Employer prior to hiring prospective employees
b. Plan Sponsor’s City Attorney’s Department:
Employees who work in the City Attorney’s Department will have access to PHI to the extent necessary to respond to, defend against,
and provide necessary information to outside counsel for responding to and
defending against, lawsuits by Self-funded Plan participants against the Self-funded Plan and/or Plan Sponsor, or other lawsuits that also require benefits information or PHI; or to the extent necessary to enforce subrogation
provisions in the Self-funded Plan.
c. Plan Sponsor’s Finance Department and City Treasurer’s Department: Employees who work in the Finance Department and City
Treasurer’s Department will have access to PHI to the extent necessary to conduct an internal audit of the Self-funded Plan’s expenses and payments of claims.
Section 8.5 Sanctions on Employees who Fail to Comply:
2.412.2If any of the employees listed above failsor desirable, without retroactive effect, unless specifically permitted to comply with these provisions regarding use or disclosure of PHI, Plan Sponsor shall impose reasonable sanctions on such individual(s), as necessary, to end such non-compliance. If appropriate, such sanctions shall be imposed progressively (for example,
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an oral warning, a written warning, and termination); or, in the Plan Sponsor’s discretion, an individual who violates privacy rules could be immediately terminated by following the City’s disciplinary procedures (e.g., those procedures outlined in the Memorandum of Understanding that the City has with each employee association). the law.
Section 8.6 Plan Sponsor to Notify Self-funded Plan of Misuse of PHI:
Plan Sponsor will notify the Self-funded Plan of any misuses or impermissible disclosures of
PHI of which it becomes aware.
Section 8.7 Plan Sponsor Responsibility re: Subcontractors:
12.3 Plan Sponsor will ensure that any of its Right to Terminate. The Employer may terminate this Plan at any time subject to any meet and confer obligations. In the event of the dissolution, merger, consolidation or reorganization of the Employer, the Plan shall terminate unless the Plan is continued by a successor to the Employer in accordance with the Employer’s procedures.
12.4 Plan Termination. Upon the termination of the Plan, the Administrator may determine the best method to make payments to the affected Participants.
ARTICLE XIII HIPAA PRIVACY STANDARDS
13.1 Applicability. The provisions of this Section shall apply only to extent any Component Plan constitutes a “health plan” under 45 CFR Section 160.103 that uses or discloses “protected health information” (“PHI”) or “electronic protected health information” (“electronic PHI”) as those terms are defined under 45 CFR Sections 160 and 164, as amended from time to time (“HIPAA Privacy Rule”) and 45 CFR Sections 160, 162, and 164, as amended from time to time (“HIPAA Security Rule”) (collectively, the “HIPAA Rules”).
13.2 Protection of Individually Identifiable Health Information. The Employer and the Plan have adopted policies and procedures (“Privacy Policy”) for the sole and limited purpose of complying with the HIPAA Rules. The manner in which these provisions will be administered shall in no way affect, or be taken into account in determining, the Benefits under the Plan with respect to any individual.
13.3 Definitions. The defined terms and phrases used in this Article shall carry the same meaning and intent set forth under the HIPAA Rules, and in some instances may replace the defined terms listed generally in Article III and to the extent of any conflict between the terms set forth herein and those of Article III, the defined terms shall carry the meaning prescribed under the HIPAA Rules.
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13.4 Protected Health Information. For purposes of this Article XII, Protected Health Information (“PHI”) means information that (a) is created or received by a health care provider, health plan, employer, or health care clearinghouse; (b) relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an individual, or the past, present or future payment for the provision of health care to an individual; (c) identifies the individual (or for which there is a reasonable basis for believing that the information can be used to identify the individual); and (d) is transmitted or maintained in electronic media or in any other form or medium. PHI excludes education records covered by the Family Educational Rights and Privacy Act, as amended, 20 U.S.C. Section 1232g, records described at 20 U.S.C. Section 1232g(a)(4)(B)(iv), and employment records held by a covered entity in its role as employer.
13.5 Identity of Plan Sponsor. The Employer shall be the Plan Sponsor for purposes of the Privacy Rule when performing Plan administration functions or Plan Sponsor functions, when acting on behalf of the Plan with respect to its obligations under the Privacy Rule, and when acting on behalf of the Plan’s participants and beneficiaries with respect to Participation and Enrollment Information. The Privacy Official shall act for the Plan Sponsor and shall be entitled to delegate its powers and responsibilities in accordance with its usual practices.
13.6 Responsibilities and Undertakings. The Plan Sponsor shall be responsible for making any necessary certifications to the Plan. Such certifications shall be delivered to the Plan’s Privacy Official. The Plan Sponsor also undertakes and agrees that it:
(a) Shall not use or disclose any PHI except as to those uses specifically permitted under the Privacy Rule;
(a)(b) Shall require any agents or subcontractors to whom it providesdiscloses PHI to agree to be subject to the same restrictions and conditions inon the privacy rules thatuse and disclosure of PHI as apply to the Plan Sponsor. ;
Section 8.8 Access to and Amendment of PHI.
Self-funded Plan participants will be given appropriate access to their PHI, and Self-funded
Plan will amend or correct PHI if requested to do so by the individual, where appropriate
under the privacy rules.
Section 8.9 Accounting for Disclosures.
(c) Plan Sponsor will track Shall not use or disclose PHI for any employment-related actions of Employer;
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(d) Shall not use or disclose PHI in connection with any other benefits or benefit plan, program, or arrangement of Employer;
(e) Shall report to the Privacy Official any uses or disclosures of PHI, as inconsistent with the Privacy Policy of which it becomes aware;
(f) Shall make PHI available in accordance with an individual's right of access in accordance with the Privacy Policy;
(g) Shall make PHI available for amendment and shall incorporate amendments in accordance with the Privacy Policy;
(b)(h) Shall make information available to provide any required by the privacy regulations, as of April 14, 2004, and will provide (to plan participants who so request) an accounting of disclosures to third parties that were made other than for treatment, payment or health care operations or pursuant to a valid authorization signed by the individual, or toof PHI in accordance with the individual him/herself. Plan’s Privacy Policy;
Section 8.10 Grievance Procedure:
The following procedures apply for resolving issues of alleged noncompliance with the
privacy requirements:
(c)(i) Any Self-funded Plan participant who feels the Self-funded Plan has unlawfully used or disclosed his/her PHI may file a written complaint with the Self-funded Plan’s Privacy Officer and/or file a complaint with the U.S.Shall make available to the Secretary of Health and Human Services. its internal practices, books, and records relating to the use and disclosure of PHI from the Plan for purposes of determining the Plan's compliance with the Privacy Rule;
Section 8.11 Destruction of PHI:
(j) Plan Sponsor will destroy, to the extentShall, if feasible, all PHI receivedreturn to the Plan or destroy any PHI from the Self-funded Plan that it maintains in any form, and shall retain no copies of the PHI when such informationthe PHI is no longer needed for the purpose for which itdisclosure was received.originally made. If destructionit is not feasible, to return or destroy the PHI, the Plan Sponsor willagrees that it shall further limit its any uses and disclosures to those purposes that make the return or the destruction of the information not feasible; and
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(k) Shall ensure that adequate separation between the Plan Sponsor and the Plan is established.
13.7 Uses and Disclosures of Protected Health Information.
(a) Certification. The Plan, and any Health Insurance Issuer or Health Maintenance Organization with respect to the Plan, may disclose PHI to the Plan Sponsor only following receipt of the Plan Sponsor’s certification that the Plan has been amended in accordance with the requirements of the Privacy Rule.
(b) Plan Administration. The Plan Sponsor shall be permitted to the limited use and disclosure of PHI for purposes of plan administration, including all Payment Activities and health care operations, as permitted under the HIPAA Policy.
(c) Compliance with Privacy Rule. The Plan Sponsor shall be entitled to those uses and disclosures of PHI as permitted by the Privacy Rule to the extent necessary for compliance, including but not limited to any uses and disclosures to those purposes that make thepermitted: (1) without permission from an individual; (2) only with explicit or implicit authorization; or (3) because the PHI has been cleansed.
(d) Participation and Enrollment Information. Participation and Enrollment Information may be disclosed as necessary to the Plan Sponsor.
(e) Summary Health Information. Summary Health Information may be disclosed to the Plan Sponsor for the limited purpose of performing Plan Sponsor functions.
(f) Individuals With Access to PHI. The Privacy Official and his or her delegates, if any, are permitted to have access to PHI disclosed to or by the Plan. In addition, the Plan Sponsor shall designate the individual(s) or group(s) of individuals under the direct control of the Plan Sponsor who are permitted to have access to PHI disclosed by or to the Plan.
(g) Limitations on Disclosures of, Access to, and Uses of PHI. PHI may be disclosed from the Plan only for Plan Administration Functions performed on behalf of the Plan, and the other purposes identified in the Plan’s HIPAA Policy.
13.8 Health Information Security. In accordance with the HIPAA Rules, the Plan Sponsor shall:
(a) Implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic PHI that is created, received, maintained, or transmitted on behalf of the Plan;
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(b) Ensure that adequate separation, as required by the HIPAA Security Rule, is supported by reasonable and appropriate security measures;
(c) Require any agent to whom it provides this information to agree to implement reasonable and appropriate security measures to protect the electronic PHI; and
(d) Report to the Plan any successful unauthorized access, use, disclosure, modification, or destruction infeasible. of electronic PHI or interference with system operations in an information system containing PHI of which the Administrator becomes aware.
ARTICLE XIVSECTION 8.12 COOPERATION GENERAL PROVISIONS
Written Plan. The Administrator shall, upon request, provide each Participant with a copy of the Department of Health and Human Services (HHS) Requests.
2.514.1Plan Sponsor will make its internal practices, books and records regarding use and disclosure of PHI received from the Self-fundedwritten Component Plan(s) detailing the Benefits available to HHS to the extent required for HHS to audit and monitor compliance. the Participant.
Section 8.13 Disclosure of Certain Enrollment Information to the Plan Sponsor.
Pursuant to Section 164.504(f)(l)(iii) of the HIPAA Privacy regulations, the Self-funded Plan
may disclose to the Plan Sponsor information about whether an individual is enrolled in the
Self-funded Plan or is enrolled in or disenrolled from a dental insurance or flex spending
account issuer offered by the Self-funded Plan.
14.2 No Trust Fund Required. The Employer shall have no obligation, but shall have the right, to insure any benefits under the Plan or to establish any fund or trust for the payment of Benefits under the Plan.
14.3 Insured Benefits. The Employer shall have no responsibility for the payment of any Benefits covered under the Component Plans provided by policies of insurance.
14.4 Rights to Employer’s Assets. 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 this Plan, and then only to the extent of the Benefits payable under the Plan to such Employee or beneficiary. All payments of Benefits as provided for
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in this Plan shall be made solely out of the assets of the Employer and the Administrator shall not be liable therefore in any manner.
14.5 Nonalienation of Benefits. Benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a Spouse or former Spouse, or for any other relative of the Employee, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to Benefits payable hereunder, shall not be recognized except to the extent required by law. The Employer shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder.
14.6 Divestment of Benefits. Subject only to the specific provisions of this Plan, nothing shall be deemed to divest a Participant of a right to the benefit to which the Participant becomes entitled in accordance with the provisions of this Plan.
14.7 Discontinuance of Contributions. In the event of a permanent discontinuance of contributions to the Plan, all Participants shall receive any and all benefits to which they were entitled as of the date the discontinuance of contributions occurred.
14.8 Plan Interpretation. This Plan, and the various Component Plans, are intended to be read in conjunction with one another. However, to the extent of any conflict, the provisions of the Plan shall control, unless otherwise provided by Sections 125, 105(b) or 129 of the Code or the Treasury Regulations issued thereunder.
14.9 Governing Law. The Plan shall be administered in the State of California and its validity, construction, and all rights hereunder shall be governed by the laws of the State of California.
14.10 Severability. If any provision of the Plan shall be held invalid or unenforceable, the remaining provisions shall continue to be fully effective.
14.11 Gender and Number. Words used in the masculine, feminine, or neuter gender shall each be deemed to refer to the other whenever the context so requires. Words used in the singular or plural number shall each be deemed to refer to the other whenever the context so requires.
14.12 Headings. Headings used in the Plan are intended solely for reference and are not intended to explain, modify or place any construction on any of the provisions of the Agreement. Any conflict between such headings and the text shall be resolved in favor of the text.
14.13 Successors and Assigns. The Plan shall inure to the benefit of and be binding upon the parties hereto, their successors and assigns.
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14.14 Discharge of Employee. The adoption and maintenance of the Plan shall not be deemed to be a contract between the Employer and the Employee. Nothing herein contained shall be deemed to give any Employee the right to be retained in the employ of the Employer or to interfere with the right of the Employer to discharge any Employee at any time.
14.15 Consolidation With Other Plan Documents. In the event the Plan merges or consolidates with, or transfers the assets and liabilities to, any other plan, no Participant herein shall, solely on account of such consolidation or transfer, be entitled to a benefit on the day following such event which is less than the benefit to which he or she was entitled on the day preceding such event. For the purpose of this Section, the benefit to which a Participant is entitled shall be calculated and based upon the assumption that a Plan termination and distribution of assets occurred on the day as of which the amount of the Participant’s entitlement is being determined.
14.16 Counterparts. The Plan may be executed in an original and any number of counterparts by the Employer, each of which shall be deemed an original of one and the same instrument.
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IN WITNESS WHEREOF, the Employer has caused this Plan to be executed in its name and on its behalf the day of , 2004 by its officer duly authorized. CITY OF CARLSBAD, a municipal corporation of AMENDED AND RESTATED CAFETERIA PLAN to be executed on _______________________.
The State of California By: ___________ (EMPLOYER: CITY OF CARLSBAD By:_______________________________________ Its:_______________________________________ ATTEST: By:_______________________________________ Its:_______________________________________ APPROVED AS TO FORM AND CONTENT: BEST BEST & KRIEGER LLP By: _______________________________ Attorneys for Employer
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Schedule “A”
Effective as of January 1, 2022
The following, which may be amended from time to time by the Employer, specifies the Benefits and the Component Plans which set forth the terms, conditions and limitations of the Benefits offered to Participants. The periods of coverage for the Component Plans shall be the same as the Plan Year of the Cafeteria Plan, unless specified otherwise.
COMPONENT PLANS
Benefit Carrier
Health Insurance The Employer contracts with CalPERS for health insurance. CalPERS releases available insurers annually.
Dental Insurance MetLife
Vision Insurance VSP
Health Flexible Spending Account PayFlex
Dependent Care Flexible Spending Account PayFlex
Accidental Death & Dismemberment Insurance The Standard
BENEFIT CREDITS
Employees who participate in a medical insurance plan offered by the City receive Benefit Credits that can be used towards the cost of any Benefit offered through a Component Plan. Such Benefit Credits includes any applicable required PEMHCA minimum.
Employee Groups Amount
Full-time Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; Management and Elected Officials
2022
Employee Only $329.50
Employee +1 $658.00
Family $868.50
Effective for the pay period that includes December 31, 2021, Employees working full-time schedules (i.e., 40 hours per week) will
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receive Benefit Credits equal to 80% of the average health (medical, dental and vision) premium for Employee, Employee + 1 and Family coverage levels (as applicable), rounded to the nearest whole dollar based on the premiums that will take effect on January 1, 2022.
75%-Time Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022
Employee Only $247.13
Employee +1 $493.50
Family $651.38
Employees working less than a full-time schedule will receive pro-rated Benefit Credits. Employees on a 75%-time schedule (i.e., 30 hours per week) will receive 75% of the Benefit Credits made available to full-time employees.
Job Sharing (50%-Time) Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022
Employee Only $164.75
Employee +1 $329.00
Family $434.25
Employees on a 50%-time schedule (i.e., 20 hours per week) will receive 50% of the Benefit Credits made available to full-time employees.
OPT-OUT ALLOWANCE
Employees who can show proof of coverage under another employer’s group health plan may waive coverage under the Employer’s health insurance and will receive an Opt-Out Allowance
which is set on an annual basis.
Employee Groups Amount
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Full-time Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; Management and Elected Officials
2022: $164.75
75%-Time Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022: $123.56
Job Sharing (50%-Time) Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; the Carlsbad Firefighters’ Association; and Management
2022: $82.38
UNALLOCATED BENEFIT CREDITS OR OPT-OUT ALLOWANCE
If an Employee does not use the entire Benefit Credits for Benefits, he or she will receive the difference (if any) between the Benefit Credits and the portion thereof used to purchase Benefits as taxable compensation as set forth below.
Employee Groups Amount
Carlsbad City Employees’ Association; Carlsbad Police Officers’ Association; Carlsbad Police Management Association; Carlsbad Firefighters’ Association; Management; Employees in Emergency Medical Technician classification; and Elected Officials
Any unused Benefit Credits or Opt-Out Allowance, as applicable, will be paid to the employee in cash and reported as taxable income.
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SCHEDULE “B”
MAXIMUM SALARY REDUCTION AMOUNT
During the Plan Year beginning on January 1, 2022, no Participant shall be allowed to contribute a Salary Reduction in excess of $19,612.00 per year (i.e., $1,634.33 per month).
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CERTIFICATION OF THE CITY OF CARLSBAD TO THE CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN
The CITY OF CARLSBAD is the sponsor of the CITY OF CARLSBAD AMENDED AND RESTATED CAFETERIA PLAN (“Cafeteria Plan”). The Cafeteria Plan is a hybrid entity within the meaning of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) which includes non-health care and health care components. The health care Component Plans of the Cafeteria Plan include the following separate group health plans:
• All group health plans offered by CalPERS and in accordance with PEMHCA
• Dental City Manager)
• Vision
• Health Flexible Spending Account
The Cafeteria Plan and the health care components included in the Cafeteria Plan (collectively, the “Plan”) are group health plans within the meaning of HIPAA. The Plan and the City of Carlsbad desire to exchange health information protected under HIPAA for purposes related to administration of the Plan. The City of Carlsbad, acting in its capacity as plan sponsor of the Plan (“Plan Sponsor”) makes the following certifications for purposes of administering the Plan as required by the “Standards for Privacy of Individually Identifiable Health Information,” 45 CFR Section 164.102 et seq. (“Privacy Rule”):
The plan document of the Plan incorporates the following provisions and Plan Sponsor agrees to:
• not use or further disclose any PHI received from the Plan (including any health insurance issuer or HMO with respect to the group health plan) except as permitted or required by the plan documents or required by law;
• ensure that any agents or subcontractors to whom it discloses any PHI agree to the same restrictions and conditions that apply to the Plan Sponsor with respect to such information;
• not use or disclose PHI for employment-related actions and decisions;
• not use or disclose PHI in connection with any other benefit plan, program, or arrangement of the City of Carlsbad except to the extent such other benefit plan, program or arrangement is part of an organized health care arrangement of which the Plan also is a part;
• report to the Plan any use or disclosure of PHI that is inconsistent with the uses and disclosures specified in the Plan of which it becomes aware;
• give individuals access rights to PHI in its possession in accordance with the policies and procedures of the Plan;
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• permit individuals to request amendment of their PHI in the Plan Sponsor’s possession, and to make any necessary amendments, in accordance with the policies and procedures of the Plan;
• make information available to provide any necessary accounting of disclosures of PHI in accordance with the policies and procedures of the Plan;
• make its internal practices, books, and records relating to the use and disclosure of PHI from the Plan available to the Secretary of the Department of Health and Human Services for purposes of determining the Plan’s compliance with the Privacy Rule;
• if feasible, to return to the Plan or destroy any PHI from the Plan that it maintains in any form, and shall retain no copies of the PHI when the PHI is no longer needed for the purpose for which disclosure was originally made. If it is not feasible to return or destroy the PHI, the Plan Sponsor agrees that it shall further limit any uses and disclosures to those purposes that make the return or the destruction of the information not feasible; and
• agrees to ensure that adequate separation between the Plan Sponsor and the Plan is established.
PLAN SPONSOR CITY OF CARLSBAD
PLAN CITY OF CARLSBAD By: Name: Title: Dated:
By: Name: Title: Dated:
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