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Resolution No. 9369
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 RESOLUTION NO. 9369 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON RATIFYING THE ESTABLISHMENT OF A SECTION 125 CAFETERIA PLAN, AND APPROVING AND AUTHORIZING THE ADOPTION AND EXECUTION OF DOCUMENTS NECESSARY TO IMPLEMENT AND ADMINISTER THE CITY OF VERNON CAFETERIA PLAN WITH AFLAC BENEFIT SERVICES/FLEX ONE WHEREAS, the Risk Manager commenced the establishment of an optional program commencing September 1, 2007 through December 31, 2007 that will allow all employees to save taxes on their voluntary premiums with the American Family Life Assurance Company of Columbus ("Aflac") to voluntarily set aside a portion of their salary on a before -tax basis in a voluntary premium account to cover premiums under Section 125 of the Internal Revenue Code (the "Cafeteria Plan"), subject to ratification by the City Council;. and WHEREAS, Aflac has been providing voluntary insurance programs, including but not limited to, accident, cancer, intensive care, hospital indemnity and vision to City employees in the past with the City deducting their premiums from the employee's net compensation;) F_�:I WHEREAS, Aflac will provide administrative services for the Cafeteria Plan at no cost to the City based upon its experience and knowledge in providing the services; and WHEREAS, the Risk Manager has recommended that a FlexOne Cafeteria Specimen Plan proto-type document, Summary Plan Description proto-type, Payroll Account Acknowledgment proto-type, and the Salary Redirection Agreement proto-type (collectively, the "Plan Documents") be approved and adopted by the City Council to create and implement a Cafeteria Plan for the benefit of employees; and 1 WHEREAS, the City Council desires to approve and ratify the 2 actions taken by the Risk Manager in implementing the Cafeteria Plan; 3 and 4 WHEREAS, the City Council desires to approve and adopt the 5 Plan Documents and to approve and authorize the execution of the 6 necessary Plan Documents; and 7 WHEREAS, the City Council of the City of Vernon has 8 determined that, pursuant to the provi.sions of subsection (a) of 9 Section 2-.27 of the Vernon City Code, it is in the public interest and 10 necessity to ratify the actions of the Risk Manager relating to the 11 Cafeteria Plan and the adoption of the Plan Documents to implement the 12 Plan. 13 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 14 CITY OF VERNON AS FOLLOWS: 15 SECTION 1: The City Council of the City of Vernon hereby 16 finds and determines that the recitals contained hereinabove are true 17 and correct. 18 SECTION 2: The City Council of the City of Vernon hereby 19 approves and ratifies the actions of the Risk Manager in commencing 20 the establishment of an optional program that will allow all employees 21 to save taxes on their voluntary Aflac premiums. 22 SECTION 3: The City Council of the City of Vernon hereby 23 approves and adopts the FlexOne Cafeteria Specimen Plan proto-type 24 document, the Summary Plan Description proto-type, the Payroll Account 25 Acknowledgment proto-type, and the Salary Redirection Agreement proto- 26 type in substantially the same form as the copies which are attached 27 hereto as Exhibit A and incorporated by reference. 28 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 4: The City Council of the City of Vernon hereby approves and authorizes the City Administrator, or his designee, to execute the Plan Documents for, and on behalf of, the City of Vernon and the City Clerk is hereby authorized to attest thereto. SECTION 5: The City Council of the City of Vernon hereby authorizes the City Administrator, or his designee, to make whatever nonsubstantive, administrative and/or text changes, upon advice of counsel, to the Plan documents. SECTION 6: The City Council of the City of Vernon hereby authorizes the City Administrator, or his designee, to execute any and all documents necessary or required to implement and carry out the Plan Documents consistent with the terms of the Plan Documents approved herein for, and on behalf of, the City of Vernon and to perform such other acts and deeds, as may be necessary or convenient to effect the purposes of this Resolution and the transactions herein authorized. SECTION 7: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 6th day of August, 2007. EST: MANUELA GIRON, Pity Clerk Name: Leonis C. Malburg Title: Mayor / �4aPs� - 3 MW— EXHIBIT V4, Afb c TM Dear Plan Administrator. Welcome to Aflac's Flex One®, a leading provider of cafeteria plan servicesl Enclosed. in this packet are the documents necessary to establish a cafeteria plan with the assistance of Flex One. Please carefully review the Flexible Benefits Plan Document and Summary Plan Description to verify that all of the information regarding benefits offered, eligibility, plan administration, and funding appear correctly. Please notice that the Plan Document refers to the Summary Plan Description with regard to many of the Plan's provisions. This approach eases administration and reduces the risk of inconsistency between the Plan Document provisions and the Summary Plan Description provisions. For example, if you have change 'n the Plan, most of the plan changes will only require formal adoption by the governing body of the employer and distributio Summary of Material Modifications (discussed in more detail below). You should note that these documents are only sa doc ents typical of a plan intended to qualify as a Section 125 cafeteria plan with the terms and conditions thereof, and that th n to be modified to conform to your individual circumstances. Aflac has developed these documents with legal counsel, and it is Aflac's in nt and belief tha a documents in form satisfy the requirements of Code Section 125. However, Aflac is not in the business offering legal counsel or tax advice, and, thus, Aflac cannot and does not make any representations about the legal or tax Vthie:secuments upon any particular employer. Therefore, it is each employer's responsibility to determine, with the assistanceoyees own legal counsel, the suitability of these particular documents and the legal and tax effect of these plan documents mployer and its employees. Since Aflac has no control over your subsequent modification d/or ministration of the Plan, and the Internal Revenue Service will not render an opinion as to a plan's qualified status and C e Section 125, Aflac makes no representation (express or implied) as to your Plan's qualification under IRS Code Section and related provisions as it is adopted and subsequently amended by you. You, as sponsoring employer, bear sole responsibility �amendinga y ur plan (as necessary) to comply with existing tax law and future changes, for meeting all reporting and disclosur ts imposed by applicable law, and for the daily administration of your plan. As such, we recommend you review the folio innt information: 11 1 f t.l f; I ll -71 K Nondiscrimination Testing is at the very core of'e�legal requirements imposed by Section 125 of the Internal Revenue Code. Failure to satisfy these requirements will cause adveyrre tax consequences to highly compensated and/or key employees and could possibly disqualify the plan. Fo tails regarding your Nondiscrimination Testing requirements, please refer to the Flex One Account Establishment Informati�t Certain Insurance Premiums whick&verAhe employee (or in the case of accident or health coverage other than life insurance, the employee and tax deUndents/famil y be included in the Flex One Plan Documents if adopted as part of your benefits plan. These include: /--N IV • Group TerIft=ftrance covering the employee (Eligible under IRS Code Section 79) that is equal to or less than $50,000 (life insuran coverage on dependents is not eligible for pre-tax treatment); • Accidental Death'Tnd Dismemberment (AD&D) coverage; • Medical, Dental, Hospital Indemnity, Cancer Insurance, Vision, Hearing and other qualified accident and health premiums. Please Note: When including health, medical and disability income policies within the Flex One Plan: Paying for coverage on a pre -tack basis may cause insurance benefit payments under medical coverage to be subject to federal and state taxes if benefit payments from all medical policies/plans are in excess of actual medical expenses. Paying for disability income policies with pre-tax premiums will cause the benefits payable thereunder to be taxable. Form 5500 Annual Reports. ERISA requires a Form 5500 annual return for Health FSA benefits where there are 100 or more participants in the Health FSA. For details regarding your Form 5500 annual repotting requirements, please refer to the Flex One Account Establishment Information Checklist. Continuation of Coverage. Health benefits offered through a cafeteria plan may be subject to the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). See the Summary Plan Description (SPD) for more details. Continuation of Coverage During FMLA Leave. Health benefits (including Hearth FSA benefits) and non4mfth benefits offered through a cafeteria plan are subject to the continuation and reinstatement provisions of the Family and Medical Leave Act of 1993 (°FMLAI. See Q-13 of the SPD for more details on coverage offered under the Plan during FMLA leave. HIPAA Privacy and Security Requirements. During the course of providing participants with health coverage under the Health FSA (f applicable), the Plan will have access to information about covered individuals that is deemed to be 'protected health information", or PHI, by the Health Insurance Portability and Accountability Act of 1996, or HIPAA. HIPAA Privacy and Security 1 COVLET PRIVACY PRACTICES Protecting the privacy and confidentiality of employer and participant information through our Flex Onee cafeteria plan services is very important to American Family Life Assurance Company of Columbus (Aflac) and American Family Life Assurance Company of New York (Aflac New Yak). Throughout this notice when we use the name Aflac,' we will ,be referring to both organizations. Accordingly, myna strive to comply with each of the following practices in everything we do: We do not sell, rent, lease or otherwise disclose personal information about employers or employees of an employer for purposes unrelated to our products and services. The personal information of our customers is of paramount importance tows. Therefore, we provide this information only to our employees, agents and third parties as required to allow them to help us develop and provide our insurance and employee benefit products and services. • We worts to ensure Information Integrity and security. We use technology tools and design our business practices to help ensure that the personal information of the employer and employees of the employer are property gathered, stored and processed. We also work to maintain the security of, and internal and extemal access to, the personal information of our customers through the use of technology and our business practices. • We expect our agents and employees to respect the personal information of o us mars. Also has business policies and practices in place to help ensure that its employees and agents cant' out these ice d otherwise protect the personal information. Both employees and agents are subject to censure, dismissal orterminati rviol 'on of these policies. These Privacy Practices apply to our U.S. customers. Due to legal and cultural differences, practices may vary outside the United States. O Aflac and our agents provide this notice to let you know, about ttcrrent privacy ices of Aflac, and our agents. You do not need to do anything in response to this notice. This nomerely to nform you about how we safeguard your Informmation. Collection ation As part of Aflads normal operating procedures, Aflac { d our agents a rng on our behalf) need to obtain information from both the employer and the participant to service the flexible ding accounts. Aflac and our agents may collect nonpublic personal information (which includes both nonpublic personal a ' I information and nonpublic personal health information) about Aflac customers, including but not limited to: • Information from the employer or the parti a ding names, addresses, Social Security numbers, financial and marital status, and health and dependent child-care i rma'on); • Information about the emplo err or the participa ' transactions with Aflac or our agents (including claims, payment information and banking information); Information from the employe or aYicipants' health care providers (including drug receipts and medical information), employers (including benefit ele ionsmployment information) and family members. Disclosure of Information Aflac may disclose lie personal financial information we collect, as described above, as well as information about your transactions with us (such as ur election amounts, premiums and payment history) to our agents or other third parties who perform services for us or functio our behalf, including the marketing of Aflac services. Aflac may also disclose the nonpublic personal financial information we cal act to other third parties as authorized by you, or as required or permitted by taw. Our agents will make disclosures of the employer or the participants' nonpublic personal financial information only while acting on Aflaes behalf and, furthermore, will make such disclosures only as Aflac bell is permitted to make. Neither Aflac nor our agents will use or share with other parties any nonpublic personal health information about our customers for any purpose other than the servicing of the employer's flexible spending account plan by Aflac or on our behalf, or to which the customer consents. Neither Aflac nor our agents will further disclose any nonpublic personal information about a former customer of Allae other than as may be required or permitted by law. Confidentiality and Security Aflac and our agents will safeguard, according to strict standards of security and confidentiality, any information we collect, receive or maintain about Aflac's customers. Aflac maintains administrative; technical and physical safeguards to ensure the security and confidentiality of the employer and employees, and the employer information and records; to protect against anticipated threats or hazards to such records; and to protect against unauthorized access to or use of such information or records. Intemally, Aflac limits access to our customers' information to only those employees who need access to the information to perform their job functions. Employees who misuse information are subject to disciplinary actions. Externally, we do not disclose customer information to any third parties unless we have previously informed the customer of the disclosure, have been authorized to do so by the customer, or are required or permitted to make the disclosure by law or our regulators. t PRIVPOP FLEX ONE® ACCOUNT ESTABLISHMENT INFORMATION AND CHECKLIST Important steps forestablishina your Flex One account For all Flex One Cafeteria Plans: ❑ Employer's Acknowledgment: After executing and adopting your Plan Document, please sign and date the Employer's Acknowledgment in order to officially adopt and execute your plan. Place the signed and dated Employer's Acknowledgment in your flies with a copy of your Plan Document Packet. ❑ Summary Plan Description: A copy must be provided to each eligible employee as soon as possible. Regulations require distribution within 120 days of the effective date of the initial plan year and within 90 days of the effective date of coverage for all subsequent plan years. For all Flex One plans with FSAs when Flex One is the claims processor: To ensure that your account is established in a timely manner, the following documents must be returned to Flex One at least 10 working days prior to the effective date of your plan. You may return these documents by toll -free fax to (877) FLEX SRA (877-353-9772) or by mad to Aflac Benefit Services/Flex One, 1932 Wynnton Road, Columbus, GA 31999-9950. ❑ Salary Redirection Agreements (SRAs): Completed SRAs for all Flexible end' g Account (FSA) participants must be returned to Flex One. ❑ Reimbursement Services Agreement (RSA): The RSA must be signed in the signature block and returned to Flex One. It will be signed by Flex One and returned to you for our records. Important information for administering your Flex One account El Plan Identification Number (PIN): The Department of Labor regNplans)entification that welfare benefit plan sponsors assign a three -digit PIN number to their welfare plans (including rig purposes. Numbering for welfare plans should begin at 501 and proceed consecutively. ou vg., health coverage) assign the next open number. This number must be indicated on the Su Pla cription. ❑ Affiliated Companies: Only those companies described i i n 414(b), (c) or (m) of the Internal Revenue Code can participate in a cafeteria plan. In addition, if ere are affilia mpanies, nondiscrimination testing may be affected by affiliated companies. Consult your tax adviso ❑ 6600 and Summary Annual Report: There i rb�GQrrp 5500 filing requirement for the cafeteria plan itself. IRS Notice 2002-24 suspended this requireme se n e th otice 2002-24 does not affect annual reporting requirements under ERISA. Thus, welfare benefit pla s IS which may include Health Flexible Spending Accounts (FSAs), must continue to file Form 5500 and any app ' b e edules (unless an applicable exception applies) even if the benefits are funded through the cafeteria plan. You sh Id contact your tax or legal advisor to find out if your Plan is subject to ERISA and whether filing a Form 5500 (including a applicable schedules) for your Plan is required. ❑ Nondiscrimination Te ax no tests, including the Eligibility, Contributions and. Benefits, and Concentration of Benefits sts a performed. In the case of Flexible Spending Accounts (FSAs), nondiscrimination tests must be performed ach SA. Upon request, Aflac Benefit Services vAll assist you at no extra charge with the Cafeteria Plan Key Employ 25% Concentration Test, Dependent Care 55% Average Benefit Test, and Dependent Care 5% Shareh Test. ❑ Health F Plan Sponsor, are responsible for ensuring that the Health FSA maximum, is in line with your risk tolerance/ emem r1RS Notice 2005-42 allows an additional 2 % month period (i.e., grace period) in which to incur additional medical enses. If you have selected the grace period feature, the Aflac sample plan incorporates this extension for He FSAs. Eligibility: Any eligibility waiting period for pre-tax benefits should generally be uniformly applies. You, as Plan Sponsor, are responsible for ensuring that the eligibility period listed in your plan documents does not violate Internal Revenue Service or Department of Labor regulations. El Privacy: You, as Plan Sponsor, are responsible for ensuring that your plan does not violate the privacy requirements set forth in the Gramm -Leach -Bliley Act of 1999 (GLB) and, if applicable, the Health Insurance Portability and Accountability Act of 1996 (HIPAA). GLB regulates the privacy of financial information and applies to all Flex One plans (see the attached "Privacy Practices'). HIPAA protects privacy by regulating the disclosure of protected health information (PHI), so Plan Sponsors of only Health FSAs must comply with HIPAA privacy requirements (Health FSA Plan Sponsors only, see the attached "Important Privacy Information'). " If you have any questions regarding this checklist, please contact Flex One toll -free at (877) FLEX4VR (877-353-0487), and one of our Customer,Service Representatives can assist you Monday through Friday from 8,00 A.M. to 7:00 P.M. EST. Employer Acknowledgment: Your signature verifies that an Aflac safes representative has reviewed the above information with you. Signature Printed Name Date CKLIST TABLE OF CONTENTS FLEXIBLE BENEFITS PLAN PREAMBLE ARTICLE I- DEFINITIONS 1.01 "Affiliated Employee' 1.02 "After --tax Contribution(s) " 1.03 "Anniversary Date" 1.04 "Benefit Plan(s) or Poltcy(ies)" 1.05 "Board of Directors" 1.06 "Change in Status" 1.07 ..Code., 1.08 "Compensation" 1.09 "Dependent" 1.10 "Dependent Care Expense Reimbursement" 1.11 "Earned Income" 1.12 "Effective Date" 1.13 "Eligible Employment -Related Expenses" 1.14 "Eligible Medical Expenses" 1.15 "Employee" 1.16 "Employee' 1.17 "ERISA" 1.18 "Medicare Care Expense Reimbursements" 1.19 "Highly Compensated Individual" 1.20 "Key Employee" 1.21 "Nonelective Contribution(s)" 1.22 "Participant" 1.23 "Plan" 1.24 "Plan Administrator' 1.25 "Plan Year' 1.26 "Pre-tax Contribution(s)" 1.27 "Qualified Benefit' 1.28 "Qualifying Employment- lated ns 1.29 "Qualifying Individual" 1.30 "Qualifying Services" 1.31 "ReimbursementAccount(s)"o " ceount(s)" . 1.32 "Salary Redirection Agreement" o RA' 1.33 "Spouse" 1.34 "Student' 1.35 "Summary Plan tPTICIPATION or "SPD" 1.36 'Trustee" ARTICLE II - E ILITYAND 2.01 igibili to Participate 2.02 of Participation 2.03 Eligibility t Participate in Reimbursement Accounts 2.04 Quali ' Leave Under FMLA 2.05 Non-F LA Leave ARTICLE III- BENEFIT ELECTIONS 3.01 Election of Contributions 3.02 Initial Election Period 3.03 Annual Election Period 3.04 Change of Elections 3.05 Impact of Termination of Employment on Election or Cessation of Eligibility ARTICLE IV -BENEFIT FUNDING AND CREDITS AND DEBffSTOACCOUNTS 4.01 Source of Benefit Funding 4.02 Reduction of Certain Elections to Prevent Discrimination 4.03 Medical Care Expense Reimbursement 4.04 Dependent Care Expense Reimbursement ARTICLE V- BENEFITS 5.01 Qualified Benefits 5.02 Cash Benefit 5.03 Repayment of Excess Reimbursements 5.04 Termination of Reimbursement Accounts 5.05 Coordination of Benefits Under the URM 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 8 8 8 8 1 PLANDOC ARTICLE VI- PLAN ADMINISTRATION 6.01 Allocation ofAuthority - 6.02 Payment of Administrative Expenses 6.03 Reporting and Disclosure Obligations 6.04 Indemnification 6.05 Substantiation of Expenses 6.06 Reimbursement 6.07 Annual Statements ARTICLE VII - FUNDING AGENT ARTICLE Vlll -CLAIMS PROCEDURES ARTICLE DC -AMENDMENT OR TERMINATION OF PLAN 9.01 Permanency 9.02 Employer's Right to Amend 9.03 Employer's Right to Terminate 9.04 Determination of Effective Date of Amendment or Termination ARTICLE X - GENERAL PROVISIONS 10.01 Not an Employment Contract 10.02 Applicable_aws 10.03 Post-Mortem Payments 10.04 Nonalienation of Benefits 10.05 Mental or Physical Incompetency 10.06 Inability to Locate Payee 10.07 Requirement for Proper Forms 10.08 Source of Payments 10.09 Multiple Functions 10.10 Tax Effects 10.11 Gender and Number 10.12 Headings 10.13 Incorporation by Reference 10.14 Severability 10.15 Effect of Mistake 10.16 Provisions Relating to Insurers 10.17 Forfeiture of Unclaimed Reimburse tAccount Benefits 10.18 HIPAA Privacy ARTICLE XI -CONTINUATION C E UNDER COBRA EMPLOYER'S ACKNOWLEDGEM ATTACHMENT I - M RY PLAN ESCRIPTION (SPD) 8 8 9 9 9 9 9 9 9 9 9 9 9 10 10 10 10 10 10 10 10 10 10 10 10 10 11 11 11 11 11 11 11 11 11 12 2 PLANDOC PREAMBLE The Employer hereby establishes a Flexible Benefits Plan ("Plan") for Its Employees for purposes of providing eligible Employees with the opportunity to choose from among the fringe benefits available under the Plan. The Plan is Intended to qualify as a cafeteria plan under the provisions of Code Section 125. The Dependent Care Expense Reimbursement Plan ("DDC") is Intended to qualify as a Code Section 129 dependent care assistance plan, and the Medical Care Expense Reimbursement Plan ("URM") is intended to qualify as a Code Section 105 medical expense reimbursement plan. Although printed within this document, the DDC and URM Plans are separate written plans for purposes of administration and all reporting and nondiscrimination requirements unposed by Sections 105 and 129 of the Code and all applicable provisions of ERISA. The DDC and the URM are available only If designated as a Benefit Plan or Policy in the Summary Plan Description (SPD). FLEXIBLE BENEFITS PLAN ARTICLE I - DEFINITIONS 1.01 "Affiliated Employer" means any entity who is considered with the Employer be a Ingle employer in accordance with Code Section 414(b), {c}, or (m) of the Code. 1.02 "After-tax Contribution(s)" means amounts withheld from an Employee's Compens ursuant to a Salary Redirection Agreement (SRA) after all applicable state and federal taxes have b deducted. Su mounts are withheld for purposes of purchasing one or more of the Benefit Plans or Policies availabl der the Plan. 1.03 "Anniversary Date" means the first day of any Plan Year. 1.04 "Benefit Plan(s) or Pollcy(lesr means those Qualifi its availab to a Participant under this Plan as set forth in the SPD, as amended and/or restated from time to ti 1.05 "Board of Directors" means the Board of Directors or of o erring body of the Employer (the "Board"). The Board, upon adoption of this Plan, appoints the PI�iAdministrator act on the Employer's behalf in all matters regarding the Plan. 1.06 "Change In Status" means any the eve is nbed in the SPD, as well as any other events included under subsequent changes to Code Se ul ns issued under Code Section 125, that the Plan Administrator (in its sole discretion) decides to recognize o um and consistent basis as a reason to change the election mid -year. Note: See the SPD for requirements' that must a met to permit certain mid -year election changes on account of a Change in Status. 1.07 "Code" means the Inte ode of 1986, as amended. 1.06 "Compensation" means cash wages or salary paid to an Employee by the Employer. 1.09 "Depend t" means any i dividual who is a tax dependent of the Participant as defined generally in Code Section 152; however, an purposes, a Dependent shall also be defined as in Code Section 105(b) and for DDC purposes (if offered under the P n), a Dependent shall also be defined as in Code Section 21(e)(5) (i.e. dependent of the custodial parent as defin ode Section 152(e)). 1.10 "Dependent Care Reimbursement" shall have the meaning assigned to it by Section 5.01 of the Plan. 1.11 "Earned Income" means all income derived from wages, salaries, tips, self-employment, and other Compensation (such as disability or wage continuation benefits), but only if such amounts are includable in gross income for the taxable year. Earned income does not include any other amounts excluded from earned income under Code § 32(c)(2), such as amounts received under a pension or annuity, or pursuant to workers' compensation. 1.12 "Effective Date" of this Plan is the effective date set forth in the SPD. 1.13 "Eligible Employment -Related Expenses" meats those Qualifying Employment Related Expenses (as defined below) paid or incurred incident to maintaining employment after the data of the Employee's participation in the DDC and during the Plan Year, other than amounts paid to: (a) an individual with respect to whom a Dependent deduction is allowable under Code Sec. 151(c) to the Participant or his Spouse; (b) the Participant's Spouse; or PLANDOC (c) a child of the Participant who is under 19 years of age at the end of the taxable year in which the expenses were incurred. 1.14 "Eligible Medical Expenses" means those expenses incurred by the Employee, or the Employee's Spouse or Dependents, after the date of the Employee's participation in the U RM and during the Plan Year (plus any applicable grace period extension as described in the SPD) to the extent that the expense satisfies the conditions set forth in the Summary Plan Description and are for "medical cue" as defined by Code Section 213(d). For purposes of this Plan, the following expenses are not considered "Eligible Medical Expenses" even if they otherwise constitute "medical care" under Code Section 213(d): i) expenses for qualified long tens care services (as defined in Code § 7702B(c)); and ii) expenses incurred for health insurance premiums. For purposes of this Plan, an expense is 'Incurred" when the Participant or beneficiary is fumished the medical care or services giving rise to the claimed expense, regardless of when the expense is paid. 1.15 "Employee" means any individual who is considered to be in a legal employer -employee relationship with the Employer for faderal tax -withholding purposes. Such term includes "former employees" for the limited purpose of allowing continued eligibility for benefits hereunder for the remainder of the Plan Year in which an eel oyee ceases to be employed by the Employer. The term "Employee" shall not include any leased employee (as thats defined in Code Section 414(n)) or any self- employed individual who receives from the Employer "net earnings If- ployment" within the meaning of Code Section 401(c)(2) unless such individual is also an Employee. 1.16 "Employer' means the Employer and the Affiliated Employers named in the SPD pr ad, however, that when the Plan provides that the Employer has a certain pourer (e.g., the appointor t of a Plan Admi strator, entering into a contract with a third panty insurer, or amendment or termination of the plan) t "Empl er" shall mean only that entity named on the first line of the Plan Information Summary of the SPD, and not an liat mployer. Affiliated Employers who sign the Plan Information Summary and/or otherwise adopt the Plan shall be by the Plan as adopted and subsequently amended unless they clearly withdraw from participation 1.17 "ERISA" shall mean the Employee Retirement Inco a uri Act of 1974, as amended. 1.18 "Health Care Reimbursement" shall have th meaning ass to it by Section 5.01 of the Plan. 1.19 "Highly Compensated Individual" means . dividual defined under Code Section 105(h), 125(e), or 414(q), as amended, as a "highly compensated individua ' o ' i ly compensated employee." 1.20 "Key Employee" means an indivi ua ey employee" as defined in Code Section 125(b)(2), as amended. 1.21 "Nonelective Contribution(s)" means a mount that the Employer, in its sole discretion, may contribute on behalf of each Participant to provide benefits for su Participant and his or her Spouse and Dependents, if applicable, under one or more of the Benefit PI r Policy(ies) offered under the Plan. The amount of employer contribution that is applied towards the cost of the a or Policy(ies) for each Participant and/or level of coverage shall be subject to the sole discretion of the Employ he ount of Nonelective Contribution for each Participant may be adjusted upward or downward in the contributi Employer's sole discretion. The amount shall be calculated for each Plan Year in a uniform and nondis^inatory man and may be based upon the Participant's dependent status, commencement or termination date of th Partici ant's em loyment during the Plan Year, and such other factors as the Employer shall prescribe. To the extent se a SPD or enrollment material, the Employer may make Nonelective Contributions available to Participants and all Participants to allocate the Nonelective Contributions among the various Benefit Plans or Policies offered under t n in a manner set forth in the SPD of additional, taxable Compensation except as otherwise provided in the SPD or enrollment material. 1.22 "Participant" means an Employee who becomes a Participant pursuant to Article It 1.23 "Plan" means the Flexible Benefits Plan, the SPD (defined in Section 1.35 herein) and (if applicable) the related Trust created by this document: 1.24 "Plan Administrator' means the person(s) or Committee identified in the SPD that is appointed by the Employer with authority, discretion, and responsibility to manage and direct the operation and administration of the Plan. If no such person is named, the Plan Administrator shall be the Employer. 1.25 "Plan Year" shall be the period of coverage set forth in the SPD (as extended by any applicable grace period as set forth in the SPD). 1.26 "Pre-tax Contribution(s)" means amounts withheld from an Employee's Compensation pursuant to a Salary Redirection Agreement before any applicable state and federal taxes have been deducted. The amounts are withheld for purposes of purchasing one or more of the Benefit Plans or Policies available under the Plan. This amount shall not exceed the premiums or contributions attributable to the most costly Benefit Plan or Policy afforded hereunder, and for purposes of Code Section 125, shall be treated as an Employer contribution (this amount may, however, be treated as an Employee contribution for purposes of state insurance laws). PLANDOC 1.27 "Qualified Benefit" means any benefit excluded from the Employee's taxable income under Chapter 1 of the Code other than Sections 106(b), 117, 124, 127, or 132 and any other benefit permitted by the Income Tax Regulations (i.e., any life insurance coverage that is includable in gross income by virtue of exceeding the dollar limitation on nontaxable coverage under Code Sec. 79). Notwithstanding the previous sentence, long-term care insurance is not a "Qualified Benefit." 1.28 "Qualifying Employment -Related Expenses" means those expenses that would be considered to be employment-mlated expenses under Section 21(b)(2) of the Code (relating to expenses for household and dependent care services necessary for gainful employment) if paid for by the Employee to provide Qualifying Services. 1.29 "Qualifying Individual" means an individual defined as a "Qualifying Individual" in the Summary Plan Description. 1.30 "Qualifying Services" means services relating to the care of a Qualifying Individual that enable the Participant or his Spouse to remain gainfully employed which are performed: (a) in the Participant's home; or (b) outside the Participant's home for (1) the care of a Dependent of the ant o is under age 13, or (2) the care of any other Qualifying Individual who resides at least eight (8) hours da n the Participants household. If the expenses are incurred for services provided by a dependent care cent ., a facility that provides care for more than six (6) individuals not residing at the facility), th nter must com y with all applicable state and local laws and regulations. 1.31 "Reimbursement Account(s)" or "Account(s)" shall be the funding m by which amounts are withheld from an Employee's Compensation and retained for future Healt re Reimbur ent (as defined in Section 1.18 herein) and Dependent Care Reimbursement (as defined in Sectio 1 rein) to t extent adopted by the Employer as set forth in the SPD. No money shall actually be allocated to a ivid I ParticipantAccount(s); any such Account(s) shall be of a memorandum nature, maintained by the Administrator ting purposes, and shall not be representative of any identifiable trust assets. No interest will be cre ited to or 7,5� punts credited to the Participant Account(s). 1.32 "Salary Redirection Agreement" or "S eans the actual or deemed agreement pursuant to which an eligible Employee or Participant elects to contribute a are of the cost of chosen Benefit Plans or Policies with Pre-tax or After-tax Contributions and/or Benefi redits (i offs nder the Plan) in accordance with Article III herein. If the Employer utilizes an interactive voice respo m r web -based program for enrollment, the SRA may be maintained on an electronic database in accordance a icable federal and/or state laws. 1.33 "Spouse" means an individual who is legaVmarded to a Participant (and who is treated as a spouse under the Code), but for purposes of the Dep nt Care Reimbursement Plan provisions, shall not include an individual who, although married to the Participant, files a federal income tax return, maintains a separate, principal residence from the Participant during the last six mont o able year, and does not fumish more than one-half of the cost of maintaining the principal place of abode of a Qu ifying Individual. 1.34 "Student' means an indivi al who, during each of five (5) or more calendar months during the Plan Year, is a full time student a e or university, the primary function of which is the conduct of formal instruction, and which routinely maintains a ular culty and curriculum and normally has an enrolled student body in attendance at the location where its educational ctiv es are regularly presented. 1.35 "Summary Plan Description" or "SPD" means the document attached as Attachment I to the Plan document that describes the term of Plan not set forth herein. The SPD and all applicable appendices are incorporated hereto by reference. 1.36 "Trustee" (if applicable) means the person(s) or institution (and their successors) named on the signature page attached hereto, who have assented to being so named by their signature to this Agreement, otherwise empowered to hold and disburse the funds that are created hereunder. ARTICLE 11- ELIGIBILITY AND PARTICIPATION 2.01 Eligibility to Participate. Each Employee who satisfies the eligibility requirements set forth in the SPD shall be eligible to participate in this Plan as of any applicable entry date set forth in the SPD. The provisions of this Article are not intended to override any eligibility requirement(s) or waiting period(s) specified in the applicable Benefit Plans or Policies and the terms of eligibility and participation for the Benefit Plan(s) or Policy(es) offered under the Plan shall be subject to the requirements specified in the governing documents of the Benefit Plans or Policies. 2.02 Ternunation of Participation. Participation shall terminate on the earliest of the dates set forth in the SPD. 5 PtANDOC 2.03 Eligibility to Participate in Reimbursement Accounts. Each Employee who satisfies the eligibility requirements set forth in the SPD shall be eligible to participate in the Reimbursement Accounts, if adopted by the Employer, on the date set forth in the SPD: Participation in the Reimbursement Accounts shall be effective on the date set forth in the SPD. 2.04 Qualifying Leave Under FMLA. Notwithstanding any provision to the contrary in this Plan, if a Participant goes on a qualifying leave underthe Family and Medical Leave Act of 1993 (the °FMLX), then to the extent required by the FMLA, the Participant will be entitled to continue the Participant's Benefit Plans or Policies that provide health overage (including LIRM benefits to the extent offered under the Plan) on the same terms and conditions as if the Participant were still an active Employee. The requirements for continuing coverage, procedures for FMLA leave, and payment option(s) provided by the Employer (as described above) will be set forth in the SPD and will be administered in accordance with the regulations issued under Code Section 125 and in accordance with the FMLA. 2.05 Non-FMLA Leave. If a Participant goes on an unpaid leave of absence that does not affect eligibility under this Plan or the Benefit Plans or Policies chosen by the Participant, then the Participant will continue to participate and the contributions due for the Participant will be paid by one or, more of the payment options described in the SPD. If a Participant goes on an unpaid leave that affects eligibility under this Plan or the Benefit Plans or Polici osen by the Participant, the election change rules in Section 3.04 will apply. ff such policy requires coverage nti a during the leave but permits a Participant to discontinue contributions while on leave, the Participant will, u on mg m leave, be required to repay the contributions not paid by the Participant during the leave. ARTICLE III - BENEFIT ENrequi 3.01 Election of Contributions. A Participant may elect any combina ontributiots or After-tax Contributions (as set forth in the SPD) to fund any Benefit Plan or Policy availablen, provided that only Qualified Benefits may be funded with Pre-tax Contributions. The Employer m s, to allocate Non -elective Contributions to one or more Benefit Plans or Policies offered under the PIA and M the extent set forth in the SPD or enrollment material, may allow the Participants to allocate his allotted share orzve Contributions among the various Benefit Plans or Policies in a manner set forth in the SPD or enrollment material 3.02 Initial Election Period. IL (a) Currently Eligible. Employees. E who is eligible to become a Participant in this Plan as of the Effective Date must corn n a d firan SRA with the Plan Administrator during the election period (as specified by the Plan min ediately preceding the Effective Date of the Plan in order to become a Participant on the Effective D The elections made by the Participant on this initial SRA shall be effective, subject to Section 3.04, for the PI ear beginning on the Effective Date. (b) New Employe Employees Who Have Not Yet Satisfied The Plan's Waiting Period. An Employee who becomes eligibl to Participant in this Plan after the Effective Date must complete, sign and file a SRA with the Plan Ad ' stra r (or its designated third party administrator as set forth on the SRA) during the Initial EI ion Period se rth in the SPD or the enrollment material. Participation will commence under this Plan as set f the SPD. erage under the component Benefit Plans or Policies will be effective in accordance with the vemi provisions of such Benefit Plans or Policies. (c) Failure to lect. An eligible Employee who fails to complete, sign and file a SRA in accordance with paragraph (a) or bove during an initial election period may become a Participant on a later date in accordance with Section 3.03 or 3.04. 3.03 Annual Election Period. Each Employee who is a Participant in this Plan or who is eligible to become a Participant in this Plan shall be notified, prior to each Anniversary Date of this Plan, of his right to became a Participant in this Plan, to continue participation in this Plan, or to modify or to cease participation in this Plan, and shall be given a reasonable period of time in which to exercise such right: such period of time shall be known as the Annual Election Period. The date that the Annual Election Period commences and ends will be set forth in the SPD or the enrollment material. An election is made during the Annual Election Period in the manner set forth in the SPD. The consequences of failing to make an election during the Annual Election Period will be set forth in the SPD. 3.04 Change of Elections. A Participant shall not make any changes to the Pre -tact Contribution mount or, where applicable, to the Participant's elected allocation of Nonelective Contributions except for election changes permitted under this Section 3.04, and for changes made during the Annual Election Period (Section 3.03), changes caused by termination of employment (Section 3.05) and changes pursuant to the Family and Medical Leave Act (Section 2.04). Except as provided in the SPD for HIPAA special enrollment rights arising from the birth, adoption, or placement for adoption of a child, all election changes shall be effective on a prospective basis only (i.e., election changes will become effective no earlier than the first day of the first pay period coinciding with or immediately following the date that the election change was filed) but, as determined by the Plan Administrator, election changes may become effective later to the extent PtANDOC the coverage in the applicable component plan commences later. The circumstances under which a Participant may change his election under this Plan are set forth in the SPD. 3.06 Impact of Termination of Employment on Election or Cessation of Eligibility. Termination of employment or cessation of eligibility shall automatically revoke any SRA. Except as provided below, if revocation occurs under this Section 3.05, no new election with respect to Pre -Tax Contributions may be made by such Participant during the remainder of the Plan Year. Rules governing elections for former participants rehired during the same Plan Year shall be set forth in the SPD. ARTICLE IV - BENEFIT FUNDING AND CREDITS AND DEBITS TO ACCOUNTS 4.01 Source of Benefit Funding. The cost of coverage under the component Benefit Plans or Policies shall be funded by the Participants Pre-tax and/or After-tax Contributions and/or any Nonelective Contributions provided by the Employer. The required contributions for each of the Benefit Plans or Policies offered under the Plan shall be made known to employees in enrollment materials. Pre-tax or After-tax Contributions (as elected by the Employee on the SRA) shall equal the contributions required from the Participant less any available Nonelective Contribu ' s allocated thereto by the Employer, or where applicable, the Participant for coverage of the Participant or a Parti ' an s Spouse or Dependents under the Benefit Plans or Policies elected by the Participant under this Plan. Amount hel m a Participant's Compensation as Pre-tax Contributions or After-tax Contributions shall be applied to fund ben as soV as administratively feasible. The maximum amount of Pre-tax Contributions plus any Nonelective Contribution available by the Employer for Benefit Plan(s) or Policy(ies) offered under this Plan shall not exceed the aggregate cos the Benefit Plan(s) or Policy(ies) elected by the Employee. 4.02 Reduction of Certain Elections to Prevent Discrindnation. If the Ad istrator determines, before or during any Plan Year, that the Plan may fail to satisfy for such Plan Year any requ t imposed by the Code or any limitation on Pre-tax Contributions allocable to Key Employees or to ' Compensa Individuals, the Plan Administrator shall take such action(s) as he deems appropriate, under rul unifo ly applicable to similarly situated Participants, to assure compliance with such requirement or limitation. Su n ay include, without limitation, a modification or revocation of a Highly Compensated Individual's or Key Employee's el without the consent of such Employee. 4.03 Health Care Reimbursement. To the ext ffered under a Plan, each Participant's URM will be credited for Health Care Reimbursement with amounts withhel the Participant's Compensation and any Nonelective Contributions allocated thereto by the Employer or where p I , the Participant. The Account will be debited for Health Care Reimbursements disbursed to the ant i a ance with Article V of this document. The entire amount elected by the Participant on the SRA as an an t for the Plan Year for Health Care Reimbursement less any Health Care Reimbursements already disbursed to t parties ant for Expenses incurred during the Plan Year (plus any grace period as set forth in the SPD) shalt be available to articipant at any time during the Plan Year without regard to the balance in the Health Care Account (provided that the eriodic contributions have been made). Thus, the maximum amount of Health Care Reimbursement a articular time during the Plan Year will not relate to the amount that a Participant has had credited to his URM. In e ' he amount of Health Care Reimbursements in any Plan Year (plus any grace period as set forth in the SPD) a th nnual amount specified for the Plan Year in the SRA for Health Care Reimbursement. Any amount credited to the ealth Care Account shall be forfeited by the Participant and restored to the Employer if it has not been to provid ealth Care Reimbursement within the Run -Off period set forth in the SPD. Amounts so forfeited all be used in a anner that is permitted within the applicable Department of Labor ("DOL") or Internal Revenue Service (" ations. The maximum annual reimbursement under the URM shall be set forth in the SPD. The Employer may esta sh-a minimum annual reimbursement amount as set forth in the SPD. 4.04 Dependent Care Reimbursement. To the extent offered under the Plan, each Participant's DDC will be credited for Dependent Care Reimbursement with amounts withheld from the Participant's Compensation, and any Nonelective Contributions allocated thereto by the Employer or where applicable, the Participant. The Dependent Care Account will be debited for Dependent Care Reimbursements disbursed to the Participant in accordance with Article V of this document. In the event that the amount in the Account is less than the amount of reimbursable claims at any time during the Plan Year, the excess part of the claim will be carried over into following months within the same Plan Year, to be paid out as the Dependent Care Account balance becomes adequate. In no event will the amount of Dependent Care Reimbursements exceed the amount credited to the Dependent Care Account for any Plan Year. Any amount allocated to the Dependent Care Account shall be forfeited by the Participant and restored to the Employer if it has not been applied to provide Dependent Care Reimbursement for the Plan Year within the Run -Off period set forth in the SPD. Amounts so forfeited shall be used in a manner that is not prohibited by applicable federal or state law. The maximum annual reimbursement amount shall be set forth in the SPD. The Employer may establish a minimum annual reimbursement amount as set forth in the SPD. ARTICLE V - BENEFITS 5.01 Qualified Benefits. The maximum benefit a Participant may elect under this Plan shall not exceed the sum of i) the aggregate premium for all Benefit Plan(s) or Policy(ies) set forth in the SPD (other than Health and DDC); 11) the PLANDOC maximum annual Health Care Reimbursement under the URM as set forth in the SPD (if offered under the Plan); and iii) the maximum annual Dependent Can: Reimbursement under the DDC as setforth in the SPD (if offered underthe Plan). (a) Special Rules for Health Care Reimbursement. To the extent offered under the Plan, payment shall be made to the Participant in cash as reimbursement for Eligible Medical Expenses incurred by the Participant or his Spouse or Dependents while he is a Participant during the Plan Year (plus any grace period as specified in the SPD) for which the Participant's election is effective provided that the substantiation requirements of Section 6.05 herein are satisfied. (b) Special Rules for Dependent Care Reimbursement. To the extent offered under the Plan, payment shall be made to the Participant in cash as reimbursement for Eligible Employment Related Expenses incurred by him while a Participant, during the Plan Year for which the Participants election is effective, provided that the substantiation requirements of Section 6.05 have been satisfied. 6.02 Cash Benefit To the extent that a Participant does not elect to have the maximum amount of his Compensation contributed as a Pre-tax Contribution or After-tax Contribution hereunder, such unt not elected shall be paid to the Participant in the form of normal Compensation payments; provided, ver, that any applicable Nonelective Contributions may not be received in the form of cash compensation, excep a se rovided for in the SPD or the enrollment material 5.03 Repayment of Excess Reimbursements. If, as of the end Nwithin Year, it i determined that a Participant has received payments under this Plan that exceed the amount ofdical Expenses and/or Eligible Employment Related Expenses that have been substantiated by such Partit Plan Year as required by Section 6.05 herein, the Plan Administrator shall give the Participant promce of any such excess amount, and the Participant shall repay the amount of such excess to the E ye(60) days of receipt of such notification. 5.04 Termination of Reimbursement Accounts. Cove rid the URM and/or DDC shall cease as of the day in which a Participant is no longer employed by the Employer or wh premium payment for the respective plan(s) has been missed for any reason. Provided, however, t Participa ay submit claims for reimbursement for Eligible Employment -Related Expenses arising duri the Plan Year any time until the end of the Run -Off period set forth in the SPD. Participants in the URM may submit for reimbursement for Eligible Medical Expenses arising during the Plan Year and before the date of separation from at any time until the end of the Run -Off period set forth in the SPD. Unless a COBRA election is made set fort in t D, Participants shall not be entitled to receive reimbursement for Eligible Medical Expenses incurr m t ceases under this Section. Any unused reimbursement benefits at the expiration of the Plan Year (as set f h in PD) shall be treated in accordance with Sections 4.03 or 4.04. A special grace period maybe applicable with rega to URM participation after the close of the Plan Year (see SPD). 5.06 Coordination of Ben Under the URM. The URM is intended to pay benefits solely for otherwise unreimbursed medical expenses. shall not be considered a group health plan for coordination of benefits purposes, and its benefits shall not be take 'nt t when determining benefits payable under any other plan. ARTICLE VI - PLAN ADMINISTRATION 6.01 Allocatio ity. The Board of Directors or applicable governing body (or an authorized officer of the Employer) appoints a Plan Acyhinistrator that keeps the records for the Plan and shall control and manage the operation and administration Plan. The Plan Administrator shall have the exclusive right to interpret the Plan and to decide all matters arising t ereunder, including the right to make determinations of fact, and construe and interpret possible ambiguities, inconsistencies, or omissions in the Plan and the SPD issued in connection with the Plan. In the case of an insured Benefit Plan or Policy, the insurer shall be the named fiduciary with respect to benefit claim determinations thereunder, and with respect to benefit claims shall have all of the powers of the Plan Administrator described herein. All determinations of the Plan Administrator with respect to any matter hereunder shall be conclusive and binding on all persons. Without limiting the generality of the foregoing, the Plan Administrator shall have the following powers and duties: (a) To require any person to famish such reasonable information as he may request for the purpose of the proper administration of the Plan as a condition to receiving any benefits under the Plan; (b) To make and enforce such rules and regulations and prescribe the use of such forms as he shall deem necessary for the efficient administration of the Plan; (c) To decide on questions concerning the Plan and the eligibility of any Employee to participate in the Plan and to make or revoke elections under the Plan, in accordance with the provisions of the Plan; (d) To determine the amount of benefits which shall be payable to any person in accordance with the provisions of the Plan; to inform the Employer or insurer as appropriate, of the amount of such benefits; and to provide a full and fair review to any Participant whose claim for benefits has been denied in whole or in part; PLANDOC (a) To designate other persons to carry out any duty or power which may or may not otherwise be a fiduciary responsibility of the Plan Administrator, under the terms of the Plan. Such entity will be referred to as a third party administrator and shall be identified in the SPD; (f) To keep records of all acts and determinations, and to keep all such records, books of account, and data and other documents as may be necessary for the proper administration of the Plan; and (g) To do all things necessary to operate and administer the Plan in accordance with its provisions. 6.02 Payment of Administrative Expenses. Except as otherwise provided in the SPD, the Employer currently pays all reasonable expenses incurred in administering the Plan. 6.03 Reporting and Disclosure Obligations. Unless specified otherwise, it shall be the Employer and Plan Administrator's sole responsibility to comply with all filing, reporting, and disclosure requirements, imposed by the DOL and/or IRS, specifically including, but not limited to creating, filing and distributing Summary Annual Reports, Form 5500s, and SPDs. Furthermore, the Employer and Plan Administrator shall be required to ame Plan as is necessary to ensure compliance with applicable tax and other laws and regulations. 6.04 Indemnification. The Plan Administrator shall be indemnified by the EmployeVainclaims, and the expenses of defending against such claims, resulting from any action or conduct relating to the adtion of the Plan except claims arising from gross negligence, willful neglect, or willful misconduct. 6.05 Substantiation of Expenses. Each Participant must submit a wri laim rm to the Plan Administrator identified in the SPD or its designated plan service provider to receive reimburseme fir the URM and/or DDC, on a form provided by the Plan Administrator accompanied by a written stat ill from an ependent third party stating that the expense has been incurred, and the amount thereof. The form a ntain su evidence, as the Plan Administrator shall deem necessary as to substantiate the nature, the amount, 'mel ass of any expenses that may be reimbursed. 6.06 Reimbursement Reimbursements shall be ad as soon inistratively feasible after the required forms have been received by the Plan Administrator identifi the SPD or ft esignated plan service provider. Reimbursements of less than $15 may be carried forward 4eli eg with future reimbursements until the reimbursable amount is greater than $15. However, claims for reimbuou g at the end of the Plan Year (plus any grace period as set forth in the SPD) shall be reimbursed withouoth $1 shold limit. Year-end expense reimbursements must be submitted to the Plan Administrator within 9e f the Plan Year for which the SRA is effective, and during which such expense was incurred, in order toe imbursement. 6.07 Annual Statements. The Plan Adminis�`ator shall furnish each Participant with an annual statement, showing the amounts paid or e s incurred by the Employer in providing Medical and/or Dependent Care Expense Reimbursement during us calendar year and the respective Reimbursement Account balance(s) on or before January 31 following the s pplicable Plan Year. y ARTICLE VII - FUNDING AGENT The Plan shall be amounts withheld from Compensation pursuant to SRAs, and/or Nonelective Contributions provided by the Employer, if y. jTh,Employer will apply all such amounts, without regard to their source, to pay for the welfare benefits provided herein as soonministratively feasible and shall comply with all applicable regulations promulgated by the DOL taking into consideration any ernent procedures adopted by the DOL. If a Trust is designated Funding Agent in the SPD, an appropriate Trust Agreement shall be attached at the end of this Plan. ARTICLE Vlll - CLAIMS PROCEDURES The Plan has established procedures for reviewing claims denied under this Plan and those claims review procedures are set forth in the SPD. The Plan's claim review procedures set forth in the SPD shall only apply to issues germane to the pre-tax benefits available under this Plan (i.e., such as a determination of a Change in Status; change in cost or coverage; or eligibility and participation matters under this Cafeteria Plan document), and to the extent offered under the Plan, claims for benefits under the Reimbursement Accounts. ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN 9.01 Permanency. While the Employer fully expects that this Plan will continue indefinitely, due to unforeseen, future business contingencies, permanency of the Plan will be subject to the Employers right to amend or terminate the Plan, as provided in Sections 9.02 and 9.03 below. Nothing in this Plan is intended to be or shall be construed to entitle any Participant, retired or otherwise, to vested or non -terminable benefits. 9.02 Employer's Right to Amend. The Employer reserves the right to amend at any time any or all of the provisions of the Plan. Al amendments shall be made in writing and shall be approved by the Employer in accordance with its normal PI APDOC procedures for transacting business (e.g. by approval by the Board of Directors through a meeting or unanimous consent of all Board members). Such amendments may apply retroactively or prospectively as set forth in the amendment. Each Benefit Plan or Policy shall be amended in accordance with the terms specified therein, or, if no amendment procedure is prescribed, in accordance with this section. Any amendment made by the Employer shall be deemed to be approved and adopted by any Affiliated Employer. 9.03 EmployeMs Right to Terminate. The Employer reserves the right to discontinue or terminate the Plan without prejudice at any time and for any reason without prior notice. Such decision to terminate the Plan shall be made in writing and shall be approved by the Employer in accordance with its normal procedures for transacting business. Affiliated Employers may withdraw from participation in the Plan, but may not terminate the Plan. 9.04 Determination of Effective Date of Amendment or Termination. Any such amendment, discontinuance, or termination shall be effective as of such date as the Employer shall determine. No amendment, discontinuance or termination shall allow the return to any Employer of any Reimbursement Account balance for its use for any purpose other than for the exclusive benefit of the Participants and their beneficiaries except as provided in Section 4.03 and 4.04 herein. , ARTICLE X - GENERAL PROVISIONS 10.01 Not an Employment Contract Neither this Plan nor any action taken with'respe it s I confer upon any person the right to continue employment with any Employer. 10.02 Applicable Laws. The provisions of the Plan shall be cons administ red and enforced according to applicable federal law and the laws of the state of the principal place of business a Em yer to the extent not preempted. 10.03 PostaMortem Payments. Any benefit payable under the after the d of a Participant shall be paid to his surviving spouse (if any), otherwise, to his estate. If there is do as the right o any beneficiary to receive any amount, the Plan Administrator may retain such amount until the right to determined, without liability for any interest thereon. 10.04 Nonalienatfon of Benefits. Except as expre ly provid Plan Administrator, no benefit under the Plan shall be subject in any manner to anticipation, alie on, sale, trarin ssignment pledge, encumbrance, or charge, and any attempt to do so shalt be void. No benefit un Plan shy manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any persoNnN�., 10.06 Mental or Physical Incompeten on Aeceiving or claiming benefits under the Plan shall be presumed to be mentally and physically competent an f ag til the Plan Administrator receives a written notice, in a form and manner acceptable to it, that such person is men or physically incompetent or a minor, and that a guardian, conservator or other person legally vested with the care of his es a has been appointed. 10.06 Inability to Locate Pay . la Administrator is unable to make payment to any Participant or other person to whom a payment is due under a la ecause it cannot ascertain the identity or whereabouts of such Participants or other person after reasonable a rts ve been made to identify or locate such person, such payment and all subsequent payments o ise due to Participant or other person shall be forfeited one year after the date any such payment first became d e. 10.07 Requiremen or per Forms. All communications in connection with the Plan made by a Participant shall become effective only w en ulyexecuted on any forms as may be required and furnished by, and filed with, the Plan Administrator. 10.08 Source of Payments. The Employer, the Trust fund (if selected as Funding Agent), and any insurance company contracts purchased or held by the Employer or funded pursuant to this Plan shall be the sole sources of benefits under the Plan. No Employee or beneficiary shall have any right to, or interest in, any assets of the Employer upon termination of employment or otherwise, except as provided from time to time under the Plan, and then only to the extent of the benefits payable under the Plan to such Employee or beneficiary. 10.09 Multiple Functions. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. 10.10 Tax Effects. Neither the Employer, its agents, the Plan Administrator, nor the Trustee makes any warranty or other representation as to whether any Pre-tax Premiums made to or on behalf of any Participant hereunder will be treated as excludable from gross income for local, state, or federal income tax purposes. If for any reason it is determined that any amount paid for the benefit of a Participant or Beneficiary is includable in an Employee's gross income for local, federal, or state income tax purposes, then under no circumstances shall the recipient have any recourse against the Plan Administrator or the Employer with respect to any increased taxes or other losses or damages suffered by the Employees as a result thereof. The Plan is designed and is intended to be operated as a "cafeteria plan" under Section 125 of the Code. 10 PtANDOC 10.11 Gender and Number. Masculine pronouns include the feminine as well as the neuter genders, and the singular shall include the plural, unless indicated otherwise by the context 10.12 Headings. The Article and Section headings contained herein are for convenience of reference only, and shall not be construed as defining or limiting the matter contained thereunder. 10.13 Incorporation by Reference. Except for the Medical and Dependent Care Expense Reimbursement Plan(s), the actual terms and conditions of the separate component Benefit Plans or Policies offered under this Plan are contained in separate, written documents governing each respective benefit, and shall govern in the event of a conflict between the individual plan document, and this Plan as to substantive content. To that end, each such separate document as amended or subsequently replaced, is hereby incorporated by reference as if fully rued herein. The provisions of the Medical and Dependent Care Expense Reimbursement Plan(s) are reproduced herein, but shall constitute separate plans for purposes of all applicable Code and ERI.SA provisions. 10.14 Severability. Should any part of this Plan subsequently be invalidated by a court of competent jurisdiction, the remainder thereof shall be given effect to the maximum extent possible. 10.18 Effect of Mistake. In the event of a mistake as to the eligibility or participation o plo ee, the allocations made to the account of any Participant, or the amount of distributions made or to be made to rti ' ant or other person, the Plan Administrator shall, to the extent it deems possible, cause to be allocated or cau be withheld or accelerated, or otherwise make adjustment of, such amounts as will in its judgment ord to such Pa cipant or other person the credits to the account or distributions to which he is properly entitled unde Ian. S ch action by the Administrator may include withholding of any amounts due the Plan or the Employer from Comp tion p by the Employer. 10.16 Provisions Relating to Insurers. No insurer shall be or permitt o issue an insurance policy or contract that is inconsistent with the purposes of this Plan, nor be bo to a any acti n not in accordance with the terms of any policy or contract with this Plan. The insurer shall not be t e a party to this Plan, nor shall it be bound to interpret the construction or validity of the Plan. The insurer shall beRed from its good faith reliance on the written representations and instructions of the Trustee and the Plan ministrator, all not be responsible for the initial or continued qualified status of the Plan. 10.17 Forfeiture of Unclaimed Reimbursement t Benefits. Any Reimbursement Account benefit payments that are unclaimed (e.g., uncashed benefit ks) by he a of the Plan Year following the Plan Year in which the Health or Dependent Care Expense was in orf ed. 10.18 HIPAA Privacy. To the extent a URM is Bred under the Plan, the rights and obligations of an individual covered under the URM, the Employer and Plan, with res to permitted uses and disclosures of a covered individual's protected health information, set forth in ealth Insurance Portability and Accountability Act of 1996 (HIPAA) will be summarized in the SPD. r1CL -CONTINUATION COVERAGE UNDER COBRA The SPD includes revisions thatcable to the URM to the extent the URM is a "group health plan" as defined by Code §§ 4960B and 500 the regulations promulgated thereunder and to the extent it is offered under the Plan. The intent of those provisions (as incorpor ed in this Article) is to extend continuation rights required by COBRA 11 PLANDOC IN WITNESS WHEREOF, the Employer has executed this Plan as of the date set forth below. EMPLOYERS ACKNOWLEDGMENT As evidenced by the formal execution of this document, the undersigned Employer adopted and established this Plan on the Effective Date as the Fledble Benefits Plan of the undersigned Employer. In doing so, the undersigned Employer acknowledges that the Summary Plan Description (`SPD") and this Plan document are important legal instruments with significant legal and tax implications. The Employer also acknowledges that it has read this SPD and the Plan document in their entirety, has consulted independent legal and tax counsel other then representatives of American Family Life Assurance Company of Columbus (Mac), to the extent considered necessary, and accepts full responsibility, for participation of Employees hereunder and the operation of the Plan. The Employer acknowledges that, as sponsor and Plan Administrator, it shall have sole responsibility to comply with all filing, reporting, and disclosure requirements imposed by the DOL, IRS, or any other government agency, specifically including, but not limited to, creatingand filing Form 5500s and preparing and distributing SPDs and performing required nondiscrimination testing. Furthermore, the Employer further acknowledges that it shall bear sole responsibility fora n ing the Plan as necessary to ensure compliance with applicable tax, labor, and other laws and regulations. The Employer owl es receipt of the checklist of Plan Sponsor Responsibilities included provided with the applicable plan document requestt d h7 agreed to the obligations set forth therein. It is also understood and agreed that American Family Life Assurance Com ny of Columbus flak), and its subsidiaries, agents, and representatives, are not providing legal or tax advice to the undersi Employ in connection with this Plan and that no representations are made by it with respect to the operation of the Flexible fits PI pursuant to the documents provided by American Family Life Assurance Company of Columbus (Aflac) to the Employer. This Plan shall be construed and enforced according to the I ma venue C e of 1986, as amended from time to time, the applicable regulations thereto, and the laws of the state of the . al ace of business of the Employer. IN WITNESS WHEREOF, the Employer has cau this Plan and ummary Plan Description to be executed on the day of to ratify the adoption Plan adopted and effective as of the Effective Date. WITNESS: ,a._ ATTACHMENT -SUMMARY PLAN DESCRIPTION mployer. Y! — be: 12 PLANDOC FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION PLAN INFORMATION SUMMARY The Employer named below establishes a flexible Benefits Plan (the "Plan") as set'forth in this Summary Plan Description ("SPD"j as of the Effective Date set forth below. The purpose of the Plan is to provide eligible Employees a choice between cash and the specified welfare benefits described in this Plan Information Summary (see "Benefits Provided Under the Plan"). Pre-tax Contribution elections under the Plan are intended to qualify for the exclusion from income provided in Section 125 of the Internal Revenue Code of 1986: FLEXIBLE BENEFITS PLAN EMPLOYER INFORMATION (System Data) Employer Name 1) Name and Address of Employer. Plan Administrator: (System Data) Plan's Principal Contact Name (System Data) ER Address 1, 2 (System Data) City, State ZIP The Plan Administrator has the exclusive right to interpret the Plan and to decide all matters g und@r the Plan, including the right to make determinations of fact and construe and interpret possible ambiguities, inconsistencies, i ns in the Plan and this SPD. 2) Employer's Telephone Number: (System Data) (##rl) #111111 3) Employer's Federal Tax Identification Number. (System Data) ER Tax ID 4) Plan NumberAssigned to Cafeteria Plan (e.g., 501 if this is the first ERISA Plan Number assigned) 5) 125 Start Data: System Data 6) Effective Date of this Plan: System Data) mmlddl 7) Last Day of the Plan Year. (System Dat mmlddlyy Subsequent Plan Years: {System D mmidd-mml 8) Name and Address of FSA Claim Administrator. (System Dat IM PROCESSOR: FLEX ONE or "SAME" if Self-Admin (Sy ern Data 19 NNTON ROAD or blank if self-admin ( O MBUS, GA 31999 or blank if self-admin 9) Name and Address of registered agent for service of legal process: (System ata) Legal Representative 10) Affiliated' Employers that wil I part to in the Plan (affiliates in excess of 29 are listed in Appendix 1): (System Data) Affiliate Name (System Data) Affilate ID# 1 SPD 11) Employer's Type of Business: "(System Data) ELIGIBILITY All Employees employed by the Employer shall be eligible to participate under the Plan except the following: (Systeirn Data) An eligible Employee may become a Participant in the Plan (check one): Immediately, upon the first day of employment (but not prior to the Effective Date of the Plan). On the (SD) day following commencement of employment. On the first day of the month following S( DL#ttdays of employment El Other. (System Data) provided the Employee completes a Salary Redirection Agreement (°SFW). However, eligibility for coverage under any given Benefit Plan or Policy shall be determined by the temps of that Benefit Plan of Policy, and reductions of the Employee's Compensation to pay Pre-tax or After-tax Contribution(s) shall commence when the Employee becomes covered under the applicable Benefit Plan or Policy. An eligible Employee may become a Participant in the Dependent Care and/or Medical Expense eimbursement Plan(s) (if elected below): On the same day such Employee is eligible for the Pre -Tax Contribution benefits h n. ED On the (SD) day following commencement of employment. On the first day of the month following SD Mdays of employment El Other. (System Data provided the Employee completes a SRA selecting such benefits. BENEFITS PROVIDED UNDER THE PLAN The following Benefit Plans and Policies subject to the terms and conch ' of the Plan available for election by eligible Employees. The maximum a Participant can contribute via the SRA is the maxim a gate cost f the Benefit Plans or Policies elected minus any Nonelective Contribution made by the Employer. It is intend su Pre-tax Contribution amounts shall, for tax purposes, constitute an Employer contribution, but may constitute Employee con ions for state insurance law purposes. Copies of the Benefit Plans or Policies (or a list of eligible Policy numbers) shall be attached a a pendix to this Plan. ❑ Medical Coverage ❑ Vision Care Coverage ❑ Disability Income — Short Term (A&S) ❑ Cancer Insurance ❑ Group Dental Coverage ❑ Group Term Life Insurance ❑ Disability Income — Long Term (LTD) ❑ Intensive Care Insurance ❑ Accident Insurance ❑ Hospital Indemnity Insurance IP ❑ Specified Health Event ❑ Personal Sickne Indemnity ( I) ❑ Medical Care a se Reimbu ent described in Appendix Ito this SOD, not to exceed $(SD) per Plan Year pursuant to the stem D a Employer Name Medical Care Expense Reimbursement Plan. Name and AddRITMWical Care Expense Reimbursement Plan COBRA Administrator (if pplicable): ❑ Dependent Care Expense Reimbursement described in Appendix I to this SPD, not to exceed $5,000 per Plan Year or $2,500 for married filing separate returns pursuant to the (System Data) Employer Name Dependent Care Expense Reimbursement Plan. ❑ Health Savings Account (as defined in Code Section 223) established with the following Custodian/Trustee: ❑ Opt -out Option: See Employer enrollment material. THE FUNDING AGENT The Employer selects the following Funding Agent for the Plan (check one): The Employer, which will comply with the p y requirements of Article VII of the Plan. The Flexible Benefits Trust created concurrently with the execution of the Plan, which shall receive contributions under the Plan in accordance with Article VII of the Plan. ADMINISTRATIVE EXPENSES Administrative Expenses incurred in operating the Plan shall be paid by (check one): The Employer, except as otherwise noted in the Plan. The Participants, except as otherwise noted in the Plan. SPD FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION Introduction Your employer (the "Employer") is pleased to sponsor an employee benefit program known as a "Flexible Benefits Plan" (the "Plan") for you and your fellow employees. Under federal tax laws, it is also known as a'"cafeteria plan". It is so called because it lets you choose from several different insurance and tinge benefit programs according to your individual needs. The Employer provides you with the opportunity to use pre-tax dollars to pay for them by entering into a salary redirection arrangement instead of receiving a corresponding amount of your regular pay. This arrangement helps you because the benefits you elect are nontaxable; you save Social Security and income taxes on the amount of your salary redirection. Alternatively, your Employer may allow you to pay for any of the available benefits with after --tax contributions on a salary deduction basis. This Summary Plan Description (*SPDI describes the basic features of the Plan, how it operates, and how you can get the maximum advantage from it. Information relating to the Plan that is specific to your Employer is described in the Plan Information Summary attached to the front of this SPD. You will be referred to the Plan Information Summary throughout the SPD. The Plan is also established pursuant to a plan document into which this SPD has been incorporated. If there is a conflict between the official plan document and the SPD, the plan document will govern. In some cases, the Employer may adopt a Medical Care and/or Dependent Care Reimb a Ian. If so, they will be listed in the Plan Information Summary as "Benefits Provided under the Plan," and the SPD for ea eimb ent Plan adopted by the Employer will be set forth in Appendix 1 to this SPD. To the extent that the Employer adopts a i Care Reimbursement Planes indicated in the Plan Information Summary, a summary of your rights and obligations under HI privacy rules is attached to this SPD as Appendix IL You may also be able to make pre-tax contributions to a Health Savings Acco as defi d in Code Section 223) through this Plan if Health Savings Accounts are identified as an included benefit under "Benefi rovi under the Plan" in the Plan Information Summary. If Health Savings Accounts are identified as a benefit plan option offe rider the Plan, your rights and obligations in regard to such contributions will beset forth in the Health Saving es nt Contribu on Appendix attached hereto. Questions & Answers �b h�lexible Benefits Plan 0-1. What is the purpose of the Plan? The purpose of the Plan is to allow eligible oyees to pay for certain benefits offered under the Plan (called "Benefit Plans or Policies") with pre-tax dollars called Contributions". Pre-tax Contributions are described in more detail in Q-8 of this SPD. 0-2. What benefits can I purchase on a is through the Plan? You will be able to choose to participate i Plan's various pre-tax options by filling out any required enrollment for the component Benefit Plans or Policie offered under the Plan. The complete list of Benefit Plans or Policies offered under the Plan is locate a Plan Information Summary under "Benefits Offered Under the Plan.' NOTE: You may only contribute with Pre-tax C71an? wards the cost of Benefit Plans or Policies that cover you, your legal Spouse, and/or your tax Dependents deernal Revenue Code Section 152. Each Benefit Plan or Policy may define eligible Dependents more narrows of coverage under the particular Benefit Plan or Policy. Q-3. Who can rticipate in Each emp Employer (oran Affiliated Employer identified in the Plan Information Summary) who satisfies the eligibility requireme described in the Plan Information Summary and who is eligible to participate in any of the Benefit Plans or Polid red under the Plan will be eligible to participate in this Plan as of the date described in the Plan Information Summary (see Q-5 of this SPD for instructions on how to become a Participant). Those employees who actually participate in the Plan are called "Participants." The terms of eligibility of this Plan do not override the terms of eligibility of each of the Benefit Plans or Policies offered under the Plan. For the details regarding eligibility provisions, benefit amounts, and premium schedules for each of the Benefit Plans or Policies, please refer to the plan summary for each of the Benefit Plans or Policies listed in the Plan Information Summary. Only coverage for an Employee and the Employee's Dependents may be paid for under this Plan. A dependent is defined generally as an individual who would be considered the Employee's spouse under the federal income tax code or the Employee's tax dependents as defined in Code Section 152; however, for purposes of health benefits and Dependent Care Reimbursement ("DDC') benefits offered under the Plan, a dependent is defined as (i) for health plan purposes, as setforlh in Code Section 105(b) and (ii) for DDC purposes, as any person who meets the requirements to be a "qualifying individual" as defined in the DDC component SPD. QA When does my participation in the Plan end? You continue to participate in the Plan until (i) you elect not to participate in accordance with Q-9 of this SPD; (ii) you no longer satisfy the eligibility requirements described in the Plan Information Summary; (iii) you terminate employment with the Employer, or (iv) the Plan is terminated or amended to exclude you or the Gass of employees of which you are a member. If your employment with the Employer is terminated during the Plan Year or you otherwise cease to be eligible, your active participation in the Plan will automatically cease, and you will not be able to make any more Pre-tax Contributions under the Plan. If you are rehired within the same Plan Year or you become eligible again, you may make new elections, provided that you are rehired or became eligible again more than 30 days after you terminated employment or lost eligibility. If you are rehired or again become eligible within 30 days or less, your prior elections will be reinstated and remain in effect for the remainder of the Plan Year unless you again lose eligibility. Q-5. How do I become a Participant? You became a Participant by signing an individual Salary Redirection Agreement ("SRA") on which you elect one or more of the Benefit Plans or Polities available under the Plan, as well as agree to a salary redirection to pay for those benefits so elected. You will be provided an SRA when you first become eligible to participate in this Plan. You must complete the form and turn it in to the Personnel Office during the applicable enrollment period described in Q-6 below. 04. What are the enrollment periods for entering the Plan? If you are eligible on the effective date of the Plan, you must enroll during the enrollment period immediately preceding the effective date of the Plan. Otherwise, you must enroll during either the "Initial Enrollment Period" or the 'Annual Enrollment Period". You will be notified of the dates that each enrollment period begins and ends in the enrollment material provided to you prior to each enrollment period. If you make an election during the Initial En ent Period, your participation in this Plan will begin on the later of your eligibility date described in the Plan Imorma, u nary, the first pay period coinciding with or next following the date that your election is received by the PI dm trator (or its designated claims administrator) or the date coverage under a Benefit Plan or policy that you el e ins. he effective date of coverage under the applicable Benefit Plan(s) or Policy(ies) is governed by the terns of eaOINanqKPlan or Policy, as set forth in the governing documents for each Benefit Plan or Policy. The election that you make ffig the Initial Enrollment Period is effective for the remainder of the Plan Year and generally cannotbe revoked Burin the Plan Year unless you have a Change in Status event as described in Q-9 below. If you do not an election during the Initial Enrollment Period, you will be deemed to have elected not to participate in this Plan for th ainde of the Plan Year. You may, however, be covered by certain Benefit Plans or Policies automatically (and be requ to tribute with pre-tax dollars) even if you fail to make an election. These automatic Benefit Plans or P icies are cal efault Benefits" and will be identified in the enrollment material that you receive. The election that you make during the Annual En II t nod is effective the first day of the next Plan Year and is irrevocable for the entire Plan Year unless you have a Ch a in Status event described in Q-9 below. A Participant who fails to complete, sign, and file an SRA during a Annual E nt Period as required shall be deemed to have elected to continue participation in the Plan with the a benefit el ns as during the prior Plan Year (adjusted to reflect any increase/decrease in applicable premiums), xcept for a Change in Status, will not be permitted to modify his election until the next Annual Enrollment Period. NotrImending the foregoing, annual elections for participation in the Medical Care and Dependent Care Expense eimbu a ns, if offered under the Plan, must be made by submitting an SRA prior to the beginning of each PlaViod m elections shall occur with respect to such benefits. The Plan Year is generally a 12-monthxcept during the initial or last Plan Year of the Plan). The beginning and ending dates of the Plan Year are descPlan Information Summary. Q-7. What tax advantages 81tqjLailable through the Plan? Suppose your monthly g s ay 2,500 per month and your cost for coverage is $140 per month. Also, suppose your total withholdings (income Security) are 22.65%. After paying for coverage from your after-tax pay, your take Vand/Social home pay is1,794. Howunder the pre-tax premium plan, you will be considered to have received $2,360 gross pay rather tha 2, 00 for tax oses with $140 contributed for medical coverage. This means your take home pay will be $1,825 wik t tax premium plan rather than $1,794 without it. Thus, you save $31 per month ($372 per year) by participatin -tax premium plan. The Table below illustrates this savings. With Cafeteria Plan Without Cafeteria Plan Gross Monthly Pay $2,500 $2,500 Pre -Tax Coverage Under Plan 140 - Taxable Income 2.360 2.500 Estimated Federal Tax (15%) 354 375 FICA Tax 181 191 After-tax Coverage - 140 Take Home Pay 1,825 1,794 Monthly Savings: $31.00 Q-8. How are my contributions under the Benefit Plans or Policies made? When you become a Participant, your share of the contributions for the elected Benefit Plan or Policy(ies) will be paid with Pre-tax Contributions elected on the SRA. Pre-tax Contributions are amounts withheld from your gross income before any applicable federal and state taxes have been deducted (some state tax laws do not recognize Pre-tax Contributions). In addition, all or a portion of the cost of the Benefit Plans or Policies may, in the Employers discretion, be paid with contributions made by the Employer on behalf of each Participant (these are called "Nonelective Contributions"). The amount of Nonelective Contribution that is applied towards the cost of the Benefit Plan(s) or Policy(ies) for each Participant and/or level of coverage is subject to the sole discretion of the Employer, and it may be adjusted upward or downward in the Employees sole discretion. The Nonelective Contribution amount will be calculated for each Plan Year in a uniform and aN nondiscriminatory manner and may be based upon your Dependent status, commencement or termination date of your employment during the Plan Year, and such other factors that the Employer deems relevant. In no event will any Nonalective Contribution be disbursed to you in the form of additional, taxable Compensation except as otherwise provided in the enrollment material. To the extent set forth in the enrollment material, the Employer may make available a certain amount of Nonalective Contributions and then allow you to allocate the Nonelective Contributions among the various Benefit Plan(s) or Policy('ies) that you choose (subject to restrictions described in the enrollment material). 0-9. Can I ever change my election during the Plan Year? Generally, you cannot change your election to participate in the Plan or vary the Pre-tax Contribution amounts although your election will terminate if you are no longer working for the Employer or no longer eligible under the terms of the Plan. Otherwise, you may change your elections for Pre -Tax Contributions only during the Annual Enrollment Period, and then, only for the caning Plan Year. There are several important exceptions to this general rule: You may change or revoke your previous election during the Plan Year if you file a written request for change with the Plan Administrator (or its designated claims administrator) within 30 days of any of the following events: 1: Change In Status. If one or more of the following 'Changes in Status" may revoke your old election and make a new election, provided that both the revocation and new election eon occ , u ccount of and correspond with the Change in Status (as described below). Those occurrences that quali n e in Status include the events described below, as well as any other events that the Plan Administrator delVespermitted under subsequent IRS regulations: • a change in your legal marital status (such as marriage, le I separation, annulment, or divorce or death of your Spouse); 11 • a change in the number of your tax Dependents (such as theVbichild, adoption or placement for adoption of a Dependent, or death of a Dependent); • any of the following events that change the ym t status of you, your Spouse, or your Dependent that affect benefit eligibility under a cafeteria plan (includi is Plan and the Plan of another employer) or other employee benefit plan of yours, your Spouse, or your Dep n Such events include any of the following changes in employment status: termination or mmencement employment, a strike or lockout, a commencement of or return from an unpaid leave of a change n worksite, switching from salaried to hourly -paid, union to non -union, or part-time to full-time; i g a reduction or increase in hours of employment; or any other similar change which makes the individual b o o cease to be) eligible for a particular employee benefit (NOTE: The specific rules governing el Chan n you take a leave of absence are described in Q-13 of this SPD); • an event that causes your Dep den satisfy or cease to satisfy an eligibility requirement for a particular benefit (such as attaining a specified ag etting married, or ceasing to be a student); • a change in y our Spouse's or your Dependent's place of residence. If a Change in Stat d you want to make a corresponding election change, you must inform the Plan Administrator and co to a ew election within 30 days from the date of the event. The election change must be on account f and corresp d with the Change in Status event as determined by the Plan Administrator with the exception of spe nrollment ing from birth, placement for adoption or adoption, all election changes are prospective. As a , a desired election change will be found to be consistent with a Change in Status event if the event affects eligibilit or coverage. A Change in Status affects eligibility for coverage if it results in an increase or decrease in the num er Dependents who may benefit under the plan. in addition, you must also satisfy the following specific requiremen in order to alter your election based on that Change in Status: • Loss of Dependent Eligibility. For accident and health benefits (e.g., health, dental and vision coverage, and Medical Care Reimbursement Plan), a special rule governs which types of election changes are consistent with the Change in Status. For a Change in Status involving your divorce, annulments legal separation from your Spouse, the death of your Spouse or your Dependent, or your Dependent oeasing to satisfy the eligibility requirements for coverage, your election to canoe) accident or health benefits for any individual other than your Spouse involved in the divorce, annulment, or legal separation, your deceased Spouse or Dependent, or your Dependent that ceased to satisfy the eligibility requirements, would fail to correspond with that Change in Status. Hence, you may only cancel accident or health coverage for the affected Spouse or Dependent Example: Employee Mike is married to Sharon, and they have one child. The employer offers a calendar year cafeteria plan that allows employees to elect no health coverage, employee -only coverage, employee -plus -one -Dependent coverage, or family coverage. Before the plan year, Mike elects family coverage for himself, his wife Sharon, and their child. Mike and Sharon subsequently divorce during the plan year, Sharon loses eligibility for coverage under the plan, while the child is still eligible for coverage under the plan. Mike now wishes to cancel his previous election and elect no health overage. The divorce between Mike and Sharon constitutes a Change in Status. An election to canoel coverage for Sharon is consistent with this Change in Status. However, an election to cancel coverage for Mike and/or the child is not consistent with this Change in Status. In contrast, an election to change to employee -plus -one -Dependent coverage would be consistent with this Change in Status. However, there are instances in which you may be able to increase your Pre-tax Contributions to pay for COBRA coverage of a Dependent child or yourself. SPD • Gain of Coverage Eligibility Under Another Employer's Plan. For a Change in Status in which you, your Spouse, or your Dependent gain eligibility for coverage under another employer's cafeteria plan (or Benefit Plan or Policy) as a result of a change in your marital status or a change in your, your Spouse's, or your Dependent's employment status, your election to cease or decrease coverage for that individual under the Plan would correspond with that Change in Status only if coverage for that individual becomes effective or is increased under the other employees plan. • Dependent Care Reimbursement Plan Benefits l7f offered under the Plan. See the list of Benefit Plans or Policies offered under the Plan in the Plan Information Summary). With respect to the Dependent Care Reimbursement Plan benefit (if offered by the Plan), you may change or terminate you election only if (1) such change or termination is made on account of and corresponds with a Change in Status that affects eligibility for coverage Under the Plan; or (2) your election change is on account of and corresponds with a Change in Status that effects the eligibility of Dependent care assistance expenses for the available tax exclusion. Example: Employee Mike is married to Sharon, and they have a 12 year -old daughter. The employer's plan offers a Dependent care expense reimbursement program as part of its cafeteria plan. Mike elects to reduce his salary by $2,000 during a plan year to fund Dependent care coverage for his hter. In the middle of the plan year when the daughter turns 13 years olds however, she is no longer ell ' le t participate in the Dependent care program. This event constitutes a Change in Status. Mike's electi ca I coverage under the Dependent care program would be consistent with this Change in Status. • Group Term Life Insurance, Disability income, or Dismemberment Benefits ffered under the Plan. See the list of Benefit Plans or Policies offered under the Plan in he Plan Infomra n Summary). For group term life insurance, disability income, and accidental death and d' mberment benefits, if you experience any Change in Status (as described above), you may elect either to increa decrea coverage. Example: Employee Mike is married to Sharon, and they have hild. The employer's plan offers a'cafeteria plan which funds group -term life insurance (and othe enefits) through salary reduction. Before the plan year Mike elects $10,000 of group-te feItas. rance. Mike and Sharon subsequently divorce during the plan year. The divorce constitutes a Chan a An election by Mike either to increase or to decrease his group -term life insurance coverage would each b nsistent with this Change in Status. Special Enrollment Rights. If y4an use, and/or a ependent are entitled to special enrollment rights under a Benefit Plan or Policy that is a groh you may change your election to correspond with the special enrollment right. Thus, forexample, if you dan in medical coverage for yourself or your eligible Dependents because of outside medical coverage and for ch rage is subsequently lost due to certain reasons (i.e., due to legal separation, divorce, death, terminI ym t, reduction in hours, or exhaustion of COBRA period), you may be able to elect medical coverage for yourself and your eligible Dependents who lost such coverage. Furthermore, if you have anew Dt as a result of marriage, birth, adoption, or placement for adoption, you may also be able to enroll yourself, your Spur newly acquired Dependents, provided that you request enrollment within the Election Change Period. An ange that corresponds with a special enrollment must be prospective, unless the special enrollment i utable to the birth, adoption, or placement for adoption of a child, which may be retroactive up to 30 days. Please refer ealth plan description for an explanation of special enrollment rights. Certain Judgments, Dec es acid Orders. If a judgment, decree or order from a divorce, separation, annulment, or custody ch a requires y r ependent child (including a foster child who is your tax Dependent) to be covered Under this Plan, ou may change our election to provide coverage for the Dependent child identified in the order. If the order requires t t r individual (such as your former Spouse) cover the Dependent child, and such coverage is actually provided, nge your election to revoke coverage for the Dependent child. Entitlement to ics re or Medicaid. If you, your Spouse, or a Dependent becomes entitled to Medicare or Medicaid, you may cancel t at person's accident or health coverage. Similarly, if you, your Spouse, or a Dependent who has been entitled to Medicare or Medicaid loses eligibility for such, you may, subject to the terms of the underlying plan, elect to begin or increase that person's accident or health coverage. 5. Change in Cost. If you are notified that the cost of your Benefit Plan or Policy coverage under the Plan significantly increases or decreases during the Plan Year, you may make certain election changes. If the cost significantly increases, you may chose either to make an increase in your contributions, revoke your election and receive coverage under another Benefit Plan or Policy that provides similar coverage, or drop coverage altogether if no similar coverage exists. If the cost significantly decreases, you may revoke your election and elect to receive overage provided under the option that decreased in cost. For insigniffcent increases or decreases in the cost of Benefit Plans or Policies, however, your Prewar Contributions will automatically be adjusted to reflect the minor change in cost. The Plan Administrator will have final authority to determine whether the requirements of this section are met. (Please note that none of the above "Change in Cost" exceptions are applicable to a Medical Care Reimbursement Plan, to the extent offered under the Plan.) Example: Employee Mike is covered under an indemnity option of his employers accident and health insurance coverage- 9 the cost of this option significantly increases during a period of overage, the Employee may make a corresponding increase in his payments or may instead revoke his election and elect overage under an HMO option. 6. Change in Coverage: If you are notified that your Benefit Plan or Policy coverage under the Plan is significantly curtailed, you may revoke your election and elect overage under another Benefit Plan or Policy that provides similar coverage. if the significant curtailment amounts to a complete loss of coverage, you may also drop overage if no other similar overage is available. Further, if the Plan adds or significantly improves a benefit option during the Plan Year, you may revoke your l&c election and elect to receive on a prospective basis coverage provided by the newly added or significantly improved option, so long as the newly added or significantly improved option provides similar coverage. Also, you may make an election change that is on account of and corresponds with a change made under another employer plan (including a plan of the Employer or another employer), so long as: (a) the other employer plan permits its participants to make an election change permitted under the IRS regulations; or (b) the Plan Year for this Plan is different from the Plan Year of the other employer plan. Finally, you may change your election to add coverage under this Plan for yourself, your Spouse, or your Dependent if such individuals) loses coverage under any group health coverage sponsored by a governmental or educational institution. The Plan Administrator will have final discretion to determine whether the requirements of this section are met (Please note that none of the above 'Change in Coverage' exceptions are applicable to the Medical Care Reimbursement Plan, to the extent offered under the Plan.) Additionally, your election(s), may be modified downward during the Plan Year if you are a Key Employee or Highly Compensated Individual (as defined by the internal Revenue Code), if necessary to prevent the Plan from becoming discriminatory within the meaning of the federal income taco law. 0-10. How long will the Plan remain In effect? Although the Employer expects to maintain the Plan indefinitely, it has the righ m ify or terminate the program at any time for any reason. It is also possible that future changes in state or f tax may require that the Plan be amended accordingly. 0-11. What happens if my claim for benefits under this Plan is denied? i This SPD describes the basic features of the Plan. If your claim is benefit under one of the component Benefit Plans or Policies, you will generally proceed under the claims procedures a ble u er the component Benefit Plan or Policy (see the plan summary for each of the Benefit Plans or Policies that yo ct) owever, if you are denied a benefit under this Plan, the claims procedure under this Plan will apply. ou will be n if your claim under the Plan is denied. The notice of denial will be furnished to you within 30 days suing you claim. However, if additional time is needed to process your claim you will be notified before the snits da eriod has expired. The notice will explain why an extension is necessary and the date a decision is expected to e e d. in no event will an extension go beyond 15 days after the end of the initial 30-day period. The notice of the denial clude the specific reasons for the denial and the relevant plan provisions on which the denial was based. If your claim is denied in whole or in part, y ay appeal by requesting a review of the denied claim, as set forth in the notice of denial, within 180 days after you r i Lice of the denial. if there are two levels of appeal (as indicated in the notice of denial), you will have a rea unable a ou me in which to request a second review and such time period will be identified in the notice of den' rt th appeal process (whether there is one or two appeals), you or your authorized representative may exams nts, records, and other information relevant to your claim and submit issues, documents and comments in wn g. Wi hin 60 days after the request for review is received, you will be notified in writing of the decision on review. The notice of denial icate whether there are one or two levels of appeals and will contain the same type of information provided to u notice of denial. If there are two levels of Plan appeals, the decisions on appeal will be made within 30 days he uest for each review is received. The Plan Administrator is the claims fiduciary for making the final decision u erth plan. In the eve�th your death, y r beneficiary has the same rights and is subject to the same time limits and other restrictions that woul apply to you under the claims procedures explained above. 0-12. What effect will PI participation have on Social Security and other benefits? Plan participation will reduce the amount of your taxable compensation. Accordingly, there could be a decrease in your Social Security benefits and/or other benefits (e.g., pension, disability and life insurance) that are based on taxable compensation. Q-13. What happens if I take a leave of absence? (a) If you go on a qualifying unpaid leave under the Family and Medical Leave Act of 1993 (FMLA), to the extent required by the FMLA, the Employer will continue to maintain your Benefit Plans or Policies providing health coverage on the same terms and conditions as though you were still active (e.g., the Employer will continue to pay its share of the contribution to the extent you opt to continue coverage). (b) Your Employer may elect to continue all coverage for Participants while they are on paid leave (provided Participants on non-FMLA paid leave are required to continue coverage). If so, you will pay your share of the contributions by the method normally used during any paid leave (for example, with Pre tax Contributions if that is what was used before the FM LA leave began). (c) In the event of unpaid FMLA leave (or paid leave where coverage is not required to be continued), if you opt to continue your group health coverage, you may pay your share of the contribution with after-tax dollars while on leave, or you may be given the option to pre -pay all or a portion of your share of the contribution for the expected duration of the leave with Pre-tax Contributions from your pre -leave compensation by making a special elections to that effect before the date such compensation would normally be made available to you provided, however, that pre -payments of Pre-tax Contributions may not be utilized to fund covera9e during the next Plan Year, or by other arrangements agreed upon SPD between you and the Plan Administrator (for example, the Plan Administrator may fund coverage during the leave and withhold amounts from your compensation upon your return from leave). The payment options provided by the Employer will be established in accordance with Code Section 125, FMLA and the Employer's internal policies and procedures regarding leaves of absence. Alternatively, the Employer may require all Participants to continue coverage during the leave. ff so, you may elect to discontinue your share of the required contributions until you return from leave. Upon return from leave, you will be required to repay the contribution not paid during the leave in a manner agreed upon with the Administrator. (d) If your coverage ceases while on FMLA leave (e.g., for non-payment of required contributions), you will be permitted to re-enter the Plan upon return from such leave on the some basis as you were participating in the Plan prior to the leave, or as otherwise required by the FMLA. Your coverage under the Benefit Plans or Policies providing health coverage may be automatically reinstated provided that coverage for Employees on non-FMLA leave is automatically reinstated upon return from leave. (a) The Employer may, on a uniform and consistent basis, continue your group health coverage for the duration of the leave following your failure to pay the required contribution. Upon return from leave, you will be required to repay the contribution in a manner agreed upon by you and Employer. (f) If you are commencing or returning from unpaid FMLA leave, your electio er ' Plan for Benefit Plans or Policies providing non -health benefits shall be treated in the same manner that Vonsfofnon-health Benefit Plans or Policies are treated with respect to Participants commencing and returning fromon-FMLA leave. (g) If you go on an unpaid non-FMLA leave of absence (e.g., perso 1 leave, sick le) that does not affect eligibility in this Plan or Benefit Plan or Policy offered under this plan h you will continue to participate and the contribution due will be paid by pre -payment before going on leave, by ahkN&x con 'butions while on leave, or with catch-up contributions after the leave ends, as may be determined by th mi ator. If you go on an unpaid leave that affects eligibility under this Plan or a Benefit Plan or Policy, the el change rules in Q-9 of this SPD will apply. The Plan Administrator will have discretion to det ether taki an unpaid non-FMLA leave of absence affects eligibility. Q-14. Is there any other information that I should know Participation in the Plan does not give any R other right not specified in the Plan, The PI. Information Summary attached to the front of and to decide all matters arising u der the interpret possible ambiguities, in the Plan Number and Plan Sponsor's AkReq Plan? the rig to be retained in the employ of his or her Employer or any strato s name, address and telephone number appear in the Plan The Plan Administrator has the exclusive right to interpret the Plan Idding the right to make determinations of fact, and construe and Mons in the Plan and this SPD. Other important information such as a has also been provided in the Plan Information Summary. SPD Payroll Account Acknowledgment All applicable sections must be completed for processing. INSTRUCTIONS • ALL accounts must complete Section 9, the Authorization and Signatures section. • Accounts establishing or modifying a Flex One cafeteria plan must complete Section 5. • Accounts with another carrier's cafeteria plan must complete Section 7. • Fax completed form to 1-866-AFL-NASA (1-866-235-6272). 1. GENERAL ACCOUNT INFORMATION ❑ New Aflac Payroll Account ❑ Changes to an Existing Aflac Payroll Account Group Number: ❑ Split or Transferred Account Does this account have multiple locations, each requiring an invoice? ❑Yes ❑No Are there any existing policies to place on this account? []Yes ❑No (If yes, submit a list of the policies on a separate page with the Payroll Account Acknowledgment to Aflac WWHQ.) Name of Account: Type of Business: _ -----_ _Tax ID No.: — — -- industry Classification (Contact SIC Team for correct classification.): OA ❑B ❑C ❑D ❑E SIC Record No.: — Affiliate/Subsidiary of (if applicable): _ --- — Master Account No.: — Mailing Address:_ —_—_---_—_— City: ----------- ---- - State: ZIP: Location Address: ❑ Check if same as mailing address (P.O. box is not acceptable.) City: _ — — —_---- _-- State: — ZIP: _ Phone: ( ) —_— — Fax (if applicable): ( ) _---- Total No. of Employees:— Total No. of 1099 Workers: _Total No. of W-2 Employees: __-Will 1099 workers be applying for coverage? ❑Yes ❑ No If 1099 workers are applying for coverage, submit an exception request for payroll rates to WWHQ on Form IN-02-05 prior to writing the business. Account Web Site Address (if applicable): _-- —_-- — Enrollment Period: Will the enrollment period exceed 90 days? ❑Yes O No If so, has this been approved by Sales Support? ❑Yes []No What is the length of the enrollment period? __ Is there an established Aflac New York account? ❑Yes ❑ No If yes, provide name and group number: _--,— ------ --_ ----- ,__ What led your organization to begin offering Aflac products to your employees? (Check all that apply.) ❑ Employee/Member Request ❑ Benefit Package Improvement ❑ Benefit Advisor or Broker Recommendation ❑ Sales Associate/Agent ❑ Commercial Advertising ❑ Aflac Products Are a Good Value ❑ Other: _--__— Please consult with employer's payroll contact to ensure accurate completion of next section. American Family Life Assurance company of Columbus (Aflac) Worldwide Headquarters • 1932 Wynnton Road • Columbus, Georgia 31999. 1.800.99•AFLAC (1.800.992.3522) M-0138 1 M0138.4 Account Name: Tax ID: __ Group No.: ____-- Writing No.: 2. BILLING INFORMATION 2a. BILLING CONTACT INFORMATION NOTE: Aflac will contact the designated Billing Contact to review information. All accounts with fewer than 1,000 employees will receive their invoice via Aflac's Online Billing system. As an Online Billing account, you have the option of making payments and reconciling your account online. Once your account is established, you can submit your invoice and payment electronically when due from the bank account noted below. At that time, if you prefer, you may also choose to pay by mailing a check. Aflac will not debit your account until you have reconciled and submitted your invoice for payment. Any adjustments or requested changes you submit electronically will not be processed until payment is received and the transaction is complete. Bank Routing No.: Account No.: Account Type: ❑ Checking ❑ Savings Contact for Billing Inquiries: ❑ Mr. ❑ Ms. Billing Contact Phone: ( ) _�Ext.: ____ Fax (rf applicable): ( ) Billing Contact Contact E-Mail (required): 0 Account does not have access to the Internet and/or internal processes prohibit use. 21b. BILLING FREQUENCIES Invoice Due Date: On what day of the month would you like your Aflac invoice to be due (1s' or the 1 brn)? How often would you like to receive your invoice from Aflac? ❑ Monthly (Aflac will bill for the number of deductions made the previous month. Example: Deductions made January 1st through the 31st will be due in February.) ❑ 8-Month (8 invoices) ❑ 9-Month (9 invoices) 010-Month (10 invoices) For 8-, 9- or 90-month, indicate months when no deductions will be made: ❑Jan ❑Feb OMar❑Apr❑May ❑Jun ❑Jul ❑Aug ❑Sep OOct ❑Nov ❑Dec ❑ Quarterly (4 invoices) ❑ Semiannually (2 invoices) ❑ Annually (1 invoice) For Quarterly, Semiannually, and Annually, initial premiums must be submitted with applications. 2c. BILLING FORMAT ❑ Check if account uses Social Security number for employee number. In what order would you like your employees listed on your bill? (if more than one is checked, please number your choices according to priority.) EXAMPLE. to request a bill with employees listed alphabetically under their department numbers, you would mark: © Alphabetic 2 © Dept. No. __ 1 __ ❑ Employee No. __ ❑ Alphabetic ❑ Department No. _ ❑ Employee No. M-0138 2 M0138.4 Account Name: Tax ID: Group No.: _-_--__- --- Writing No.: _—_—_----__— _ 3. DEDUCTION INFORMATION Employer Contributions: Does the employer pay any portion of this benefit? []Yes ❑ No If yes, please provide percent: __% OR flat dollar amount: Percent or dollar amount must be a whole number, such as "50%" or"$10." Based on the information provided in this section, Aflac will determine the number of deduction periods billed each month (when the account selects monthly billing). If you choose monthly billing frequency, indicate the number of payroll deductions made annually for insurance premiums. For all other billing frequencies, mark N/A: ❑ 52 ❑ 26 ❑ 24 ❑ 12 ❑ N/A ❑ Check if premiums are deducted at different frequencies for different employees (i.e., some employees are deducted weekly while others are deducted biweekly), and indicate the different frequencies that exist for the account on separate M-0138 applications. Initial Deduction: When willpremium deductions begin? Date of first deduction: // - Date of second deduction: /__ !_ _ The date of the first deduction should reflect the date the payroll account physically obtains funds from the employees. It does not necessarily equal the pay date for the employees. 4.. INFORMATION CONCERNING TAX STATUS OF DISABILITY INSURANCE BENEFIT PAYMENTS If disability coverage is funded by employer contributions, pre-tax employee contributions, or combination of these two, then the disability benefits an employee receives upon becoming disabled will be includible in the employee's income and are fully taxable when paid. In addition, FICA taxes must be withheld and paid on all such benefits during the first six months after the disability. Where, as noted below, coverage is funded by employer contributions or employee pre-tax contributions, Aflac will notify the employer of the amount of disability benefits paid, from which the employee's portion of FICA taxes is withheld and will deposit such taxes with the government as required by the Intemal Revenue Code. The employer will be required to submit the employer's portion of applicable FICA and FUTA taxes and report the benefit payments on its Form 941 and the employee's Form W-2. Employer authorizes disability coverage to be included as part of this agreement: ❑ Yes ❑ No • Authorized disability coverage types: OAccident/Disability ❑Short -Term Disability ❑Off -the -job • Authorized riders: ❑Off -the -job ❑On-the-job ❑Sickness ❑Spouse Will any portion of disability premiums be funded by employer contributions? ❑ Yes ❑ No If yes, please provide percent: % OR flat dollar amount: $ Percent or dollar amount must be a whole number, such as "50%" or "$10." Will any portion of disability premiums be funded by pre-tax employee contributions? ❑ Yes ❑ No This employer is a government employer exempt from FICA or exempt from a portion of FICA. 0 Yes ❑ No Employees of this employer are eligible for RRTA (Railroad Retirement Tax). ❑ Yes ❑ No NOTE., Disability caused by or under certain circumstances wilt not be covered. Refer to each policy to determine specific coverage, exclusions, and limitations. Please consult with employer's cafeteria plan contact to ensure accurate completion of next section. M-0138 3 M0138.4 Account Name: Tax ID: _ � Group. No__�_ Writing No,: __-----_--- —`— — 5. FLEX ONE® CAFETERIA PLAN: ❑New Flex One Plan ❑Flex One Plan Change Request ❑Requesting Additional Payroll Account Number for Existing Flex One Plan/Company Name: _ Tax ID: Plan Type: What type of Flex One Plan will this beg (Flexible Spending Account = FSA) ❑ Premium Only- no FSAs ❑Self -Administered -has FSAs; employer processes FSA claims 0 Full -has FSAs; Flex One processes FSA claims Plan Year; What are the dates of this plan? Plan Start Date: —/-_ /_—__ Plan End Date: Plan Sponsor/legal Representative: List the plan sponsor and legal representative for this cafeteria plan. Plan Sponsor/Principal Contact: Phone: ( )— — ---- Fax: — Legal Representative's Name/Title:Is this leasing company or Professional Employee Organization (PEO)? ❑ Yes ❑ No Business Type: ❑ Corporation ❑ Sub S Corporation ❑ Partnership ❑ Sole Proprietorship ❑ Other Eligibility: Indicate Indicate eligibility criteria (e.g., eligibility dates, exceptions) for your cafeteria plan. Employees shall become eligible: Immediately upon the first day of employment On the __day following commencement of employment. On the first day of the month following _—_ days of employment. Other All employees shall be eligible under the plan except: Cafeteria Plan Benefits: (To add, account must be qualfed under Section 106 of the internal Revenue Code.) Check plans to add: ❑ Medical ❑ Long -Term Disability 0 Vision Care ❑ Dental ❑ Short -Term Disability ❑ Health Savings Account ❑ Cancer ❑ Hospital Indemnity ❑ Intensive Care ❑ Group Term Life ❑ Specified Health Event ❑ Personal Sickness Indemnity ❑ Accident 4ffiliated Companies: List the names and tax ID numbers of all affiliated companies ado ting this plan. Corn an Name Tax Identification Number 6. FLEXIBLE SPENDING ACCOUNT (FSA) INFORMATION (not applicable to Premium -Only Plans) FSA Type: Which types of FSAs will be included in this cafeteria plan? (Complete for both self-administered and full plans.) ❑ Section 105: unreimbursed medical expense annual maximum per participant requested by employer. $ Will a Grace Period be offered for Section 105? ❑ Yes ❑ No ❑ Section 129: dependent child care annual maximum per participant cannot exceed $5,000 by law. Complete account type only if Full Plan is selected in Section 5. Account Type: If you selected the Flex One option, you must establish an account from which Flex One will draw funds for claims payments. ❑ Local Account: You establish a local bank account against which Flex One is authorized to write checks for the sole purpose of paying participant claims. With this option, reimbursements can be issued within 2-3 business days. ❑ ACH Debit: You authorize Flex One to initiate funds transfers from a specified bank account for the sole purpose of paying participant claims. With this option, reimbursements can be issued within 5-7 business days. ❑ CB&T Account: You establish an account at Columbus Bank & Trust against which Flex One is authorized to write checks for the sole purpose of paying participant claims. With this option, reimbursements can be issued within 10-14 business days. ❑ Wire: Upon notification by Flex One, you wire funds for the amount of reimbursement payments to Flex One for distribution to participants. Flex One is authorized to write checks and to initiate direct deposits to participants for the sole purpose of paying claims. With this option, reimbursements can be issued within 8-10 business days.* ❑ Check: Upon notification by Flex One, you mail a check for the amount of reimbursement payments to Flex One for distribution to participants. Flex One is authorized to write checks and to initiate direct deposits to participants for the sole purpose of paying claims. With this option, reimbursements can be issued within 14-21 days.* 13 Self -Pay: Upon notification by Flex One, you issue reimbursement checks to participants. Reimbursements are issued according to your time frame because you are responsible for disbursement. Direct Deposit is not available through Flex One with this payment option. *Please note that the time frame for the issuance of reimbursements is subject to the processing schedule chosen by the employer and the employees response time for funding payment amounts. M-0138 4 M0138.4 Account Name: _ Tax ID: __—_-- _-- Group No.Y—��_� Writing No.: —_--_-- Please consult with employer's cafeteria plan contact to ensure accurate completion of next section. 7. OTHER CARRIER'S (not FLEX ONE®) CAFETERIA PLAN INFORMATION Current plan year dates required: --_ / — / _�—__ through ^— _ / _ — / - If If short plan year, renewal dates required: ____ / --__ / —_ through -- / —_—_ / _— _ ❑ Authorization to Add Benefits Mid -Year (Complete ONLY if adding benefits to a non -Flex One cafeteria plan at mid -year.) Effective Start Date of Additional Benefits: _ / / --__ Effective End Date: Benefits (check new benefits to be added): ❑ Medical ❑ Long -Term Disability ❑ Vision Care ❑ Dental ❑ Short -Tenn Disability ❑ Health Savings Account ❑ Cancer ❑ Hospital Indemnity ❑ Intensive Care ❑ Group Term Life ❑ Specified Health Event ❑ Personal Sickness Indemnity ❑ Accident 8. ASSOCIATE/AGENT I acknowledge that Aflac has the sole and absolute right to determine who shall solicit and service payroll deduction accounts, and Aflac may assign and/or reassign any account for servicing and designate who may solicit applications from persons in the account. I confine that I am not an employee, officer, director, owner, or relative of any of the foregoing (or otherwise a "party in interest" as defined under ERISA). I acknowledge that, for Key Accounts as defined in the Key Account Management Procedures, the proper guidelines will be followedtoprovide the most efficient service to the account. 1 confirm that I will register any such account with Key Account Management regardless of whether I use their assistance in the overall management and coordination of the enrollment. I understand that I am not authorized to collect premium from this account without specific written approval from Aflac. Associate's/Agent's Signature: Associate's/Agent's Name: Writing Number: Phone Number: Broker's Name of applicable): Broker's Number: 9. AUTHORIZATION AND SIGNATURES EMPLOYER Date: Sit Code: _--_____ Geographical Code:__ Fax Fax Number: ( ) ------ _�_-- Sit Code: Code: Level: Aflac assures you that you will be reimbursed without question for premium you advance for any employee who terminates after the premium is remitted but before payroll deductions commence. Aflac also agrees to hold you harmless from any claims against you due to any disagreements between your employees and our company with respect to the coverage provided under our insurance policies issued to your employees except where caused by misconduct or negligence committed by you or any of your employees or violations of your responsibilities under state or federal laws. The employer agrees to provide Aflac (and its agents) with certain personally identifiable information (including, but not limited to, compensation, Social Security numbers, addresses, etc.) regarding its officers and employees for Aflac (and its agents) to use in the administration of employer's cafeteria (including health and dependent care FSA) plan and Aflac products and services. Aflac is authorized to offer this insurance program to our officers and employees. I understand that all applicants must qualify for coverage based on each product's underwriting requirements and that payments for such coverage will be deducted from wages and remitted by my organization to Aflac. ❑ Check if Establishing Flex One Account: The employer plans to establishlamend a flexible benefits plan in accordance with Section 125 of the Internal Revenue Code. The employer acknowledges that neither Aflac nor its agents are providing legal or tax advice, nor serving as the plan administrator or a plan fiduciary under the plan. The employer shall be the sole party responsible for establishment of the plan under applicable law. Aflac shall have no power or authority to waive, alter, breach, or modify any terms and conditions of the plan. The employer shall retain all responsibility and liability for the plan, except as may otherwise be specifically agreed to in writing by officer of Aflac. The plan sponsor/administrator should consult its own tax advisor regarding the plan and any changes to the plan. The employer acknowledges receipt of the Summary of Plan Sponsor Responsibilities and agrees to fulfill its responsibilities as stated therein. Authorizing Officer's Name/Title fpfease print): ❑ Mr. ❑ Ms. Authorizing Officer's Signature: _— _ _— _ Date: _—_—_�— M-0138 5 M0138.4 Account Name: --- -- ----------- ------------ Tax ID: _-_--_-_ Group No.: ____— Writing No.: ___ AFFILIATE NAME TAX ID AFFILIATE NAME TAX ID M-0138 6 M0138.4 mt Name: _ Group No.: ----- Writing No.: Group Short -Term Disability Insurance Number of Eligible Employees at Company: Participation Requirements (%): (A minimum of 30 percent participation is required for all eligible employees.) Guaranteed -Issue Only: Benefit Amount $ Simplified -Issue Only: Benefit Amount $ Elimination Period (Injury/Sickness Benefit Period Group Short -Term Disability Approval Date: Group Short -Term Disability Withdrawal Date: Dental Requirements Dental Plan Start Date: Dental Plan Stop Date: Number of Eligible Employees for Dental at Company: Participation Requirements: Long -Term Care Requirements Long -Term Care Plan Start Date: Long -Term Care Plan Stop Date: Revised Personal Short -Term Disability Exempt from Standard Salary Income Chart: Accident/Disability Revised Income Replacement Exempt from Standard Salary Income Chart: M-0138 7 M0138.4 SALARY REDIRECTION AGREEMENT EMPLOYER: EMPLOYER TAX ID NUMBER: AFFILIATE NAME/LOCATION: AFFILIATE TAX ID NUMBER: Flex One® FSA? ❑ Yes ❑ No CAFETERIA PLAN YEAR: Social Security Number: If new employee, indicate eligibility date NAME: (Last) (First) (Middle Initial) ADDRESS: CITY/STATE: ZIP: Number of Payroll Cycles in Plan Year: Date of First Deduction: Payroll Mode: ❑ Weekly ❑ Biweekly ❑ Semimonthly ❑ Monthly On a separate benefit enrollment form(s), I have enrolled for certain insurance coverage(s) and understand that my insurance premiums and/or Flexible Savings Account(s) (FSA) election amounts will be deducted from my paycheck by my employer or third -party payroll administrator. Unless this agreement is amended or terminated, these deductions will be continuous and in an equal amount to the insurance premiums and/or FSA account election amount for each payroll period throughout the plan year. The amount of my required contribution is set forth on a schedule that has been provided to me. In the event of a rate change, I authorize a corresponding change in the amount deducted from my salary without signing anew Salary Redirection Agreement. If the rate change is brought on by the third -party carrier (insurance company), the premium increase or decrease can be deducted pre-tax. "Employer -provided" nonelective benefits (if any) will not be deducted from my paycheck. In addition, pre-tax contributions reduce my compensation for Social Security tax purposes; therefore, my Social Security benefits could be decreased. I elect to receive the following coverage(s) under the Flexible Benefits Plan as elected in the pre-tax column. Any previous election and Salary Redirection Agreement under the Flexible Benefits Plan relating to the same benefits selected below are hereby revoked. My employer's deduction of premium/contribution amounts hereunder shall evidence acceptance of this agreement. Check the desired coverage(s) below: Pre-tax After-tax Pre-tax After-tax Medical Coverage Accident )tisuratice Dental Insurance Short -Tenn Disability Insurance Vision Care I0surance.. Long Tel t'I IJi9sr?btltty tilt r3nce Cancer Insurance Hospital Indemnity Insurance Intensive Care Insurance Pergttpai sreltttes<ideitit ty, Group Term Life Insurance Other accident or health plan(s) under Section 106 (if family, must be after-tax) of the Internal Revenue Service Code Specified Health Event List: Complete the following section only if part eipati#g in a Medicak�or cndenoare ei iiblirse "t:Iht Ist3a Medical FSA plan: ($ per pay period) x ( number of deductions) = $ Annual Election Dependent Care FSA plan: ($ per pay period) x ( number of deductions) = $ Annual Election I understand and afree'that (initial all). INITIAL On or after the first day of the plan year, I cannot change or revoke this Salary Redirection Agreement with respect to pre-tax premiums before the next anniversary date of the plan unless a "change in family status" occurs (as defined under the Internal Revenue Code), and the change is caused by and consistent with the "change in family status." I understand that I cannot revoke any pre-tax election based on a Right to Examine provision as may be contained in any insurance plan or policy issued to me. 1NITIAI Execution of this Salary Redirection Agreement does not begin coverage under the component benefit plans or policies. The terms and conditions and actual coverage effective date of the underlying coverage will be determined under the separate benefit plans or insurance policies. Prior to the anniversary date each year, I will be offered the opportunity to add, drop, or change coverage for the following plan year. If I do not complete and return a new Salary Redirection Agreement form at that time, benefit plans or policies currently in effect will continue. Elections under the Medical and Dependent Care FSA plans will not continue without my completing and submitting a new Salary Redirection Agreement prior to the beginning of each plan year. �TTIAI In addition to and without limiting in any way any rights my employer, the plan, the service provider (Aflac and Flex One") and its respective agents, employees; subcontractors, and assigns may have under applicable state or federal law or regulation, I hereby specifically authorize those parties to use my personal information (including but not limited to benefit elections, wages, employment status, number of dependents, marital status, and health and dependent child-care information) as is reasonably required to administer the plan (including g processing payment ) g P g P evaluating and rocessin requests for of claims and detecting and preventing fraud or misrepresentation. 1 further authorize my employer, the plan, the service provider (Aflac and Flex One") and its respective agents, employees, subcontractors, and assigns to further disclose any such personal information as is reasonably required for such purposes. I hereby expressly waive and release any claims related to the use, disclosure, or release of such information so long as the information is used in furtherance of plan administration or to detect or prevent fraud or misrepresentation. INITIAL Paying for coverage on a pre-tax basis may cause insurance claim payments under health and medical coverage to be subject to federal and state taxes if claim payments (combining the total from all health and medical policies/plans) are in excess of medical expenses. Paying for disability income policies with pre-tax premiums will cause the benefits payable thereunder to be taxable. Such coverage may be funded on an after-tax basis to preserve the excludability of policy benefits. INITIAL FOR MEDICAL AND DEPENDENT CARE FSA PARTICIPANTS: I verify that 1 have received a summary of the tax rules, operational guidelines, and reimbursement procedures for use in Medical and Dependent Care FSA plans. I understand the plan document will control notwithstanding any contrary oral representation by any person. I understand that reimbursement will be available only for eligible expenses, and I agree to notify the employer if I receive reimbursement for an expense that does not qualify. I also agree, upon demand, to indemnify and reimburse the employer for any liability it may incur for failure to withhold taxes from any reimbursement I receivefor nonqualified expenses, up to the amount of additional tax owed by me. Furthermore, I understand that any account surplus at the end of the plan year shall be retained by the employer to offset administrative expenses or future costs, and the obligation to make reimbursements is the responsibility of my employer and not any service provider hired by the employer to assist in processing claims. I understand that 1 may be responsible for a monthly service fee for Medical and Dependent Care FSA plans and authorize my employer to payroll deduct any required service fee amount. WAIVER OF PRE-TAX BENEFITS UNDER THE FLEXIBLE BENEFITS PLAN: n I certify that the features and benefits under the Flexible Benefits Plan have been explained to me completely. I elect to waive all pre-tax benefits under the plan, and understand that the benefits may be elected on an after-tax basis. Except for a change in family status. I understand that I cannot elect pre-tax benefits until the next anniversary date, and that any after-tax coverage shall be outside the plan. EMPLOYEE SIGNATURE: DATE: Aflac Benefit Services • Flex One' • A Service of American Family Life Assurance Company of Columbus (Aflac) Worldwide Headquarters • 1932 Wynnton Road • Columbus, Georgia 31999 + 1.800.323.5391 tel • 1.877-353-9772 fax M0019B Copy —White (Flex One) Yellow (Employee) Pink (Employer) Gold (Associate) DIM m k au k mm DOCUMENTS Payroll Account Acknowledgment All applicable sections must be completed for processing. INSTRUCTIONS • ALL accounts must complete Section 9, the Authorization and Signatures section. Accounts establishing or modifying a Flex One® cafeteria plan must complete Section 5. • Accounts with another carrier's cafeteria plan must complete Section 7. • Fax completed form to 1-866-AFL-NASA (1-866-235-6272). 1. GENERAL ACCOUNT INFORMATION ❑ New Aflac Payroll Account ® Changes to an Existing Aflac Payroll Account Group Number: ❑ Split or Transferred Account Does this account have multiple locations, each requiring an invoice? ❑Yes CSNo FV764 Are there any existing policies to place on this account? DYes ONo (If yes, submit a list of the policies on a separate page with the Payroll Account Acknowledgment to Afisc WWHQ.) Name of Account: CITY OF VERNON Type of Business: MUNICIPALITY Tax ID No.: 956000808 Industry Classification (Contact SIC Team for correct classification.): CA DB OC OD OE SIC Record No.: Af lliate/Subsidiary of (if applicable): Master Account No.: Mailing Address: 4305 SA_NTA FF AVENUE city: VERNON Stater Zip: 90058 Location Address: M Check if same as mailing address (P.O. box is not acceptable.). City: State: ZIP: Phone: (321 583-8811 Fax (if applicable): 023) 826-1439 Total No. of Employees: 300 Total No. of 1099 Workers: 0 Total No. of W-2 Employees: 300 Will 1099 workers be applying for coverage? ❑Yes $3 No If 1099 workers are applying for coverage, submit an exception request for payroll rates to WWHQ on Form 1N-02-05 r�ier to writing the business. Account Web Site Address (If applicable): Enrollment Period: WIN the enrollment period exceed 90 days? DYes bNo If so, has this been approved by Sales Support? ❑Yes ONo What is the length of the enrollment period? 60 days Is there an established Aflac New York account? DYes IIX No If yes, provide name and group number. What led your organization to begin offering Aflac products to your employees? (Check all that apply.) (TEmployee/Member Request O Benefit Package Improvement O Benefit Advisor or Broker Recommendation • Sales Associate/Agent O Commercial Advertising O Aflac Products Are a Good Value O Other: Please consult with employer's payroll contact to ensure accurate completion of next section. American Family Life Assurance Company of Columbus (Aflac) Worldwide Headquarters - 1932 Wynnion Road - Columbus. Georgia 31999. 1-NO-99-AFLAC (1-800-992.3522) M-0138 1 M0138.4 Account Name: CTTr CIF VRR>NON Tax ID: 956000808 Group No.: FV764 Writing No.: BI286 2. BILLING INFORMATION 2a. BILLING CONTACT INFORMATION NOTE: Aflac will contact the designated Billing Contact to review information. All accounts with fewer than 1,000 employees will receive their Invoice via Aflac's Online Billing system. As an Online Billing account, you have the option of making payments and reconciling your account online. Once your account is established, you can submit your invoice and payment electronically when due from the bank account noted below. At that time, if you prefer, you may also choose to pay by mailing a check. Aflac will not debit your account unlit you have reconciled and submitted your invoice for payment. Any adjustments or requested changes you submit electronically will not be processed until payment is received and the transaction is complete. Bank Routing No.: Account No.: Account Type: O Checking D Savings Contact for Billing Inquiries: O Mr.1Z Ms. KARTNA RuRnA Billing Contact Phone:?23 ) 583-8811 Ext.: 325 Fax (if applicable): (323) 826-1439 Billing Contact E-Mail (required): kruedafei.vernon.ca.us O Account does not have access to the Internet and/or internal processes prohibit use. 2b. BILLING FREQUENCIES Invoice Due Date: On what day of the month would you like your Aflac invoice to be due (1'r or the 15u')? 15th Now often would you like to receive your invoice from Aflac? M Monthly (Aflac will bill for the number of deductions made the previous month. Example: Deductions made January Ist through the 31s` will be due in February.) O 8-Month (8 invoices) 0 9-Month (9 invoices) 010-Month (10 invoices) For 8-, 9- or 10-month, Indicate months when no deductions will be made: Wan OFeb OMar OApr OMay OJun OJul DAug OSep OOct ONov DDec 0 Quarterly (4 invoices) 0 Semiannually (2 invoices) 0 Annually (i invoice) For Quarterly, Semiannually, and Annually, initial premiums must be submitted with applications. 2c. BILLING FORMAT ❑ Check if account uses Social Security number for employee number. In what order would you like your employees listed on your bill? (If more than one is checked, please number your choices according to priority.) EXAMPLE: to request a bill with employees listed alphabetically under their department numbers, you would mark: 0 Alphabetic 2 ® Dept. No. 1 0 Employee No. Ig Alphabetic __L,_O Department No. 0 Employee No. M-0138 ' 2 W138.4 Account Name: CITY OF VERNON Tax ID: 956000808 Group No.: FV764 Writing No.: BT286 3. DEDUCTION INFORMATION Employer Contributions: Does the employer pay any portion of this benefit? ClYes a No If yes, please provide percent: % OR flat dollar amount: $ Percent or dollar amount must be a whole number, such as "50%" or "$10." Based on the information provided in this section, Aflac will determine the number of deduction periods billed each month (when the account selects monthly billing). If you choose monthly billing frequency, indicate the number of payroll deductions made annually for insurance premiums. For all other billing frequencies, mark NIA: O 52 O 26 O 24 fL] 12 O NIA O Check if premiums are deducted at different frequencies for different employees (i.e., some employees are deducted weekly while others are deducted biweekly), and indicate the different frequencies that exist for the account on separate M-0138 applications. Initial Deduction: When will premium deductions begin? Date of first deduction: I I Date of second deduction: l I The date of the first deduction should reflect the date the payroll account physically obtains funds from the employees. It does not necessarily equal the pay date for the employees. 4. INFORMATION CONCERNING TAX STATUS OF DISABILITY INSURANCE BENEFIT PAYMENTS If disability coverage is funded by employer contributions, pre-tax employee contributions, or a combination of these two, then the disability benefits an employee receives upon becoming disabled will be includible In the employee's income and are fully taxable when paid. In addition, FICA taxes must be withheld and paid on all such benefits during the first six months after the disability. Where, as noted below, coverage is funded by employer contributions or employee pre-tax contributions, Aflac will notify the employer of the amount of disability benefits paid, from which the employee's portion of FICA taxes is withheld and will deposit such taxes with the government as required by the Internal Revenue Code. The employer will be required to submit the employer's portion of applicable FICA and FUTA taxes and report the benefit payments on its Form 941 and the employee's Form W 2. Employer authorizes disability coverage to be included as part of this agreement: 13 Yes O No • Authorized disability coverage typesMAccidentlDisability XIShort-Term Disability $70ff-the-job • Authorized riders: 33011--the-job OOn-the-job ®Sickness ZlSpouse Will any portion of disability premiums be funded by employer contributions? O Yes M No If yes, please provide percent: % OR flat dollar amount: $ Percent or dollar amount must be a whole number, such as "50%" or "$10." Will any portion of disability premiums be funded by pre-tax employee contributions? O Yes M No This employer is a government employer exempt from FICA or exempt from a portion of FICA. ❑ Yes El No Employees of this employer are eligible for RRTA (Railroad Retirement Tax). ❑ Yes IXNo NOTE Oisabil4y caused by ar wxfercertafn circumstances wi# #W be covered. Rarer to each pocky to detemvne specif c coverage, exduwws, and finWatbns. Please consult with employer's cafeteria plan contact to ensure accurate completion of next section. M-0138 3 M0138.4 Account Name: CITY OF VERNON Tax ID: 956000808 Group No.: FV764 Writing No.: BT286 5. FLEX ONhCAFETERIA PLAN: ifNew Flex One Plan OFlex One Plan Change Request ❑Requesting Additional Payroll Account Number for Existing Flex One Plan/Company Name: Tax ID: Plan Type: What type of Flex One Plan will this be? (Flexible spending Account = FSA) SHORT PLAN YEAR $3 Premium Only - no FSAs OSelf-Administered - has FSAs; employer processes FSA claims O Fud - has FSAs; Flex One processes FSA claims Plan Year: What are the dates of this plan? Plan Start Date: 09 / 01 / 2007 Plan End Date: 12 / 31 / 2007 Plan Sponsor/Legal Representative: List the plan sponsor and legal representative for this cafeteria plan. Plan Sponsor/Prindpal Contact WILL AM G- YAMAGiICHI Phone: (32Y 581-991 1 Y175 Fax: t323) 876= 1439 Legal Representative's NameMlle: 1WILLARD G. YAMAGUCHI, CHIEF DEPUTY CITY ATTORNEY/RISK MANAGER is this a leasing company or Professional Employee Organization (PEO)? O Yes t$ No Business Type: O Corporation 13 Sub S Corporation O Partnership O Sole Proprietorship I Other Muuicipality Eligibility: Indicate eligibility criteria (e.g., eligibility dates, exceptions) for your cafeteria plan. Employees shall become eligible: Immediately upon the first day of employment On the day following commencellnt of employment. On the first day of the month following days of employment. Other All employees shall be eligible under the plan except: Cafeteria Plan Benefits: (To add, account must be qual led under Section 106 of the Internal Revenue Code.) Check plans to add: X7 Medical ❑ Lang -Tenn Disability Q Vision Care M Dental O Short -Term Disability O Health Savings Account $7 Cancer J7 Hospital Indemnity 11Intensive Care 13 Group Term Life -I1Specified Health Event O Personal Sickness Indemnity �j Accident Affiliated Companies: List the names and tax iD numbers of all afflllated companies adoBn this plan, Company Name Tax identification Number 6. FLEXIBLE SPENDING ACCOUNT (FSA) INFORMATION (not applicable to Premium -Only Plans) FSA Type: Which types of FSAs will be Included in this cafeteria plan? (Complete for both self-administered and full plans.) O Section 105: unreimbursed medical expense annual maximum per participant requested by employer. $ Will a Grace Perm be offered for Section 105? E3 Yes O No O Section 129: dependent chili care annual maximum per participant cannot exceed $5,000 by law. Complete account type only if Full Plan Is selected In Section 5. Account Type: N you selected the Rex One option, you must establish an account from which Flex One will draw funds for claims payments. 0 Local Account: You establish a local bank account against which Flex One is authorized to write checks for the sole purpose of paying participant claims. With this option, reimbursements can be Issued within 2-3 business days. ❑ ACH Debit: You authorize Flex One to initiate funds transfers from a specified bank account for the sole purpose of paying participant claims. With this option, reimbursements can be issued within 5-7 business days. O CB&T Account: You establish an account at Columbus Bank & Trust against which Flex One is authorized to write checks for the sole purpose of paying participant claims. With this option, reimbursements can be issued within 10-14 business days. O Wire: Upon notification by Flex One, you wire funds for the amount of reimbursement payments to Flex One for distribution to participants. Flex One is authorized to write checks and to initiate direct deposits to participants for the sole purpose of paying claims. With this option, reimbursements can be issued within 8-10 business days' O Check: Upon notification by Flex One, you mail a check for the amount of reimbursement payments to flex One for distribution to participants. Flex One Is authorized to write checks and to initiate direct deposits to participants for the sole purpose of paying claims. With this option, reimbursements can be issued within 14-21 days.' O Self -Pay. Upon notification by Flex One, you issue reimbursement checks to participants. Reimbursements are issued according to your time frame because you are responsible for disbursement. Direct Deposit is not available through Flex One with this payment option. ?Please note that the lime frame for the issuance of reimbursements is subject to the processing schedule chosen by the employer and the employer's response time for funding payment savants. M4138 4 M0138A Account Name: CITY OF V—MON- Tax ID: 956000808 Group No.: FV764 Writing No.: BT286 Please consult with employer's cafeteria plan contact to ensure accurate completion of next section. 7. OTHER CARRIER'S (not FLEX ONE) CAFETERIA PLAN INFORMATION Current plan year dates required: / / through ! / If short plan year, renewal dates required: / / through / O Authorization to Add Benefits Mid -Year (Complete ONLY if adding benefits to a non -Flex One cafeteria plan at midlear.) Effective Start Date of Additional Benefits: I I Effective End Date: / I Benefits (check new benefits to be added): 13 Medical 0 Long -Term Disability ❑ Vision Care ❑ Dental O Short -Term Disability 0 Health Savings Account ❑ Cancer 0 Hospital Indemnity Ci Intensive Care D Group Term Life 13 Specified Health Event O Personal Sickness indemnity Q Accident 8. ASSOCIATE/AGENT I acknowledge that Aflac has the sole and absolute right to determine who shall solicit and service payroll deduction accounts, and Aflac may assign and/or reassign any account for servicing and designate who may solicit applications from persons in the account. I confirm that I am not an employee, officer, director, owner, or relative of any of the foregoing (or otherwise. a 'party in interest' as defined under ERISA). I>acknowledge that, for Key Accounts as defined in the Key Account Management Procedures, the proper guidelines will be followed to provide the most efficient service to the account. I confrnn that I will register any such account with Key Account Management regardless of whether I use their assistance in the overall management and coordination of the enrollment. I understand that I am not authorized to collect premium from this account without specific written approval from Affac. Associate'slAgent's Signature. Date: Associate's/Agent's Name: Writing Number. Sit. Code Geographical Code: Phone Number: ( ) Fax Number: ( ) Broker's Name (if applicable): Broker's Number. Sit. Code: Level: 9. AUTHORIZATION AND SIGNATURES EMPLOYER Aflac assures you that you will be reimbursed without question for premium you advance for any employee who terminates after the premium is remitted but before payroll deductions commence. Aflac also agrees to hold you ham less from any claims against you due to any disagreements between your employees and our company with respect to the coverage provided under our insurance policies issued to your employees except where caused by misconduct or negligence committed by you or any of your employees or Violations of your responsibilities under state or federal laws. The employer agrees to provide Aflac (and its agents) with certain personally identifiable Information (including; but not limited to, compensation, Social Security numbers, addresses, etc.) regarding its officers and employees for Allac (and its agents) to use in the administration of employer's cafeteria (including health and dependent care FSA) plan and Aflac products and services. Aflac is authorized to offer this insurance program to our officers and employees. I understand that all applicants must qualify for coverage based on each product's underwriting requirements and that payments for such coverage will be deducted from wages and remitted by my organization to Affae. 11 Check if Establishing Flex One Account: The employer plans to establish/amend a flexible benefits plan in accordance with Section 125 of the Internal Revenue Code. The employer acknowledges that neither Aflac nor its agents are providing legal or tax advice, nor serving as the plan administrator or a plan fiduciary under the plan. The employer shall be the sole party responsible for establishment of the plan under applicable law. Aflac shall have no power or authority to waive, alter, breach, or modify any terms and conditions of the plan. The employer shall retain all responsibility and liability for the plan, except as may otherwise be specifically agreed to in writing by an officerofAflac. The plan sponsor/administrator should consult its own tax advisor regarding the plan and any changes to the plan. The employer acknowledges receipt of the Summary of Plan Sponsor Responsibilities and agrees to fulfill its responsibilities as stated therein. Authorizing Officer's Authorizing Officer's M,0138 5 M0138.4 XGR ri RISK MANAGEMENT APPROVED AUG 0 6 '07 CITY COUNCIL. INTER -DEPARTMENT MEMORANDUM / fa DATE: July 18, 2007 TO: Eric T. Fresch, City Administrator FROM: Willard G. Yamaguchi, Chief Deputy City Attorney/Risk Manager [Pq Re: Cafeteria Plan for American Family Life Assurance Company of Columbus (Aflac) Premiums Dear Eric: I recommend that the City ratify my election to introduce a program that will allow all employees to save taxes on their voluntary Aflac premiums. Such a program would allow employees to redirect a portion of their salaries to pay for qualified benefits from Aflac through pre-tax salary reduction rather than with after-tax dollars. In order to initiate the program to be effective September 1, 2007 through December 31, 2007, Aflac will be at the City for open enrollment from July 23, 2007 through August 2, 2007. There will be another open enrollment before the end of 2007 for the January 1, 2008 through December 31, 2008 plan year. Some City employees have enrolled in Aflac's voluntary insurance programs, including, but not limited to, accident, cancer, intensive care, hospital indemnity and vision and the City deducts their premium from their net salaries. The City will need to adopt by resolution a sample Section 125 Cafeteria Plan document as required by the Internal Revenue Services, Summary Plan Descriptions for each of the benefits available under the Cafeteria Plan, a Payroll Account Acknowledgment and any documents required under federal privacy regulations in order to establish the program. A copy of all the documents are attached. I look forward to discussing this matter with you at your earliest convenience. Enclosure AfbcTm ♦ Fax Memorandum # Worldwide Headquarters ♦ 1932 Wynnton Road ♦ Columbus, GA 31999 TO (Name): carlos_ferlini aAus.aflacxom FAX NUMBER: SUBJECT: FROM: Aflac RETURN FAX #: DATE/TIME: 7/19/2007 10:59:40 AM PAGES: 25 RETURN TO: COMMENTS: Confidentiality Note: The information contained in this facsimile message is legally privileged and confidential. Itis intended only for use by the individual or entity named above. if the reader of this message is not the intended recipient you are hereby notified that any dissemination, distribution, or copy of this telecopy is strictly prohibited. If you have received this telecopy in error, please immediately notify us by telephone and return the original message to us at the address above. Thank you. Afbc Dear Plan Administrator: Welcome to Aflac's Flex One®, a leading provider of cafeteria plan services[ Enclosed in this packet are the documents necessary to establish a cafeteria plan with the assistance of Flex One. Please carefully review the Flexible Benefits Plan Document and Summary Plan Description to verify that all of the information regarding benefits offered, eligibility, plan administration, and funding appear correctly. Please notice that the Plan Document refers to the Summary Plan Description with regard to many of the Plan's provisions. This approach eases administration and reduces the risk of inconsistency between the Plan Document provisions and the Summary Plan Description provisions. For example, if you have chang �pin the Plan, most of the plan changes will only require formal adoption by the governing body of the employer and distributio Summary of Material Modifications (discussed in more detail below). You should note that these documents are only saNtha en typical of a plan intended to qualify as a Section 125 cafeteria plan with the terms and conditions thereof, and thato be modified to conform to your individual circumstances. Aflac has developed these documents with legal counsel, and it is Aflac's in nt andocuments in form satisfy the requirements of Code Section 125. However, Aflac is not in the business offering legal counsel or tax advice, and, thus, Aflac cannot and does not make any representations about the legal or tax aNu se ocuments upon any particular employer. Therefore, it is each employer's responsibility to determine, with the assistanem oyer's own legal counsel, the suitability of these particular documents and the legal and tax effect of these plan documeemployer and its employees. Since Aflac has no control over your subsequent modification will not render an opinion as to a plan's qualified status unde implied) as to your Plan's qualification under IRS Code Sec amended by you. , You, as sponsoring employer, bear sole responsib future changes, for meeting all reporting and discic your plan. As such, we recommend you review the Imoortarrt Compliance Issues ministration of the Plan, and the Internal Revenue Service e Section 125, Aflac makes no representation (express or and related provisions as it is adopted and subsequently cur plan (as necessary) to comply with existing tax law and imposed by applicable law, and for the daily administration of information: Nondiscrimination Testing is at the very core of a legal requirements imposed by Section 125 of the Internal Revenue Code. Failure to satisfy these requirements will cause adve a tax consequences to highly compensated and/or key employees and could possibly disqualify the plan. Fo tails regarding your Nondiscrimination Testing requirements, please refer to the Flex One Account Establishment Informatio t. Certain Insurance Premiums whi ver a employee (or in the case of accident or health coverage other than life insurance, the employee and tax dendents/famil y be included in the Flex One Plan Documents if adopted as part of your benefits plan. These include: • Group Te rance covering the employee (Eligible under IRS Code Section 79) that is equal to or less than $50,000 (life insuran coverage on dependents is not eligible for pre-tax treatment); • Accidental Death nd Dismemberment (AD&D) coverage; Medical, Dental, Hospital Indemnity, Cancer Insurance, Vision, Hearing and other qualified accident and health premiums Please Note: When including health, medical and disability income policies within the Flex One Plan: Paying for coverage on a pre-tax basis may cause insurance benefit payments under medical coverage to be subject to federal and state taxes if benefit payments from all medical policiestplans are in excess of actual medical expenses. Paying for disability income policies with pre-tax premiums will cause the benefits payable thereunder to be taxable. Form 5500 Annual Reports. ERISA requires a Form 5500 annual return for Health FSA benefits where there are 100 or more participants in the Health FSA. For details regarding your Form 5500 annual reporting requirements, please refer to the Flex One Account Establishment Information Checklist. Continuation of Coverage. Health benefits offered through a cafeteria plan maybe subject to the continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). See the gummary Plan Description (SPD) for more details. Continuation of Coverage During FMLA Leave. Health benefits (including Health FSA benefits) and non -health benefits offered through a cafeteria plan are subject to the continuation and reinstatement provisions of the Family and Medical Leave Act of 1993 ("FMLA"). See Q-13 of the SPD for more details on coverage offered under the Plan during FM LA leave. HIPAA Privacy and Security Requirements. During the course of providing participants with health coverage under the Health FSA (f applicable), the Plan will have access to information about covered individuals that is deemed to be "protected health information", or PHI, by the Health Insurance Portability and Accountability Act of 1998, or HIPAA. HIPAA Privacy and Security 1 COVLET Rules apply to health plans, including Health FSAs. The Employer is solely responsible for ensuring that the Employer and the Plan comply with HIPAA's rules. If you area Health FSA Plan Sponsor, Aflac is providing an attached privacy packet ("Important Privacy Information"), which is an overview of the HIPAA Privacy Rules. Aflac has also included general HIPAA language in the sample documentation (Section 10.18 of the Plan Document and, for Full Plans only, Appendix II to the SPD). The privacy information provided in this Cafeteria Plan Packet is not provided with the intent of fully satisfying your HIPAA obligations. HIPANs Privacy Rules are complicated, and its effects may vary for each plan. You should consult with your legal counsel regarding your required actions and plan language for your Company and Plan to achieve HIPAA compliance. Plan Administration and Maintenance Plan Document Maintenance. Each plan sponsor is responsible for reviewing the Flex One Plan documents to ensure that they are consistent with its desired plan design and any legal requirements that may apply in its state. For your added convenience and your future reference, the most current version of the sample Cafeteria Plan Packet will be available on the Aflac web site (aflac.com) and the Flex One IVR (877-353-9487). As we make changes to the sample Cafeteria Plan Documents to correspond with changes in applicable laws, you can access the updates quickly and easily. Summary Plan Description. All plan sponsors are required to give each eligible employ copy of the SPD within 120 days of the effective date of the initial plan year and within 90 days of the effective date of co" ge for all subsequent plan years. if an employer makes a change in the plan, the employer must provide the employees wit um of the changes (a Summary of Material Modifications or (SMM)) within 60 days of the adoption of the change. Note: the nand related documents are copyrighted, Aflac gives you limited permission to copy the documents as necessary for distri ' n your employees for use solely in the operation of your own cafeteria plan. Payroll Instructions. Payroll instructions will be thoroughly reviewed with or your p yroll specialist by your Aflac agent. Employee Elioibllity and Elections New Employees. For details regarding Employee eligibility, pieI to Sed 01 of the Plan Document. Employees of Affiliated Companies. If the requirements of ection 414(b), (c), (m) or (o) are satisfied, the employees of an affiliated company may be able to participate in this plan. Y ould consult with your tax advisor concerning the potential impact of IRS Code Section 414(b), (c), (m) and (o). Benefit Election Changes. Employees generally ca change their election to participate in the Pre-tax Contribution payment option or vary the Pre-tax Contributions they have sel For details regarding important exceptions to this general rule please refer to Section 3.04 of the Plan Document an Q-9 oft S Due to the complexity of cafeteria plans, we d that you consult with your accountant, attorney or other tax advisor concerning the plan provisions, administration a opera ion before executing the plan documents. Remember that your cafeteria plan will not be effective until your plan is adopted, the Plan Documents must be signed PRIOR TO THE EFFECTIVE DATE. If your Plan Document is executed subsequent to the fective date, the IRS may attempt to challenge the qualified status of your Plan. We recommend you retain any a that you have that would establish your Plan was adopted and enrollments were completed prior to the effective date. In the vl�* re have been no pre-tax deductions taken thus far, you may consider changing the start date of your cafeteria plan. Aflac will use its best its to provi mployers information from time to time about developments concerning Section 125 plans. However, for reaso stated above, it the employer's responsibility to maintain the qualified status of the Section 125 plan, in form and in operation. 14LOuila= any questions concerning the Flex One Cafeteria Plan Program, you may contact us toll -free at (877) 353-9487 Monday t ay 8:00 a.m. to 7:00 p.m. Eastern Time. We are pleased you've n Aflac Benefit Services/Flex One to help you meet your cafeteria plan needs, and we look forward to the opportunity to serve you. Sincerely, Michael D. Flock Second Vice President Also Benefit Services/Flex One COVLEr FLEX ONED ACCOUNT ESTABLISHMENT INFORMATION AND CHECKLIST Important steps for establishing Your Flex One account For all Flex One Cafeteria Plans: ❑ Employer's Acknowledgment: After executing and adopting your Plan Document, please sign and date the Employer's Acknowledgment in order to offid ally adopt and execute your plan. Place the signed and dated Employer's Acknowledgment in your files with a copy of your Plan Document Packet. ❑ Summary Plan Description: A copy must be provided to each eligible employee as soon as possible. Regulations require distribution within 120 days of the effective date of the initial plan year and within 90 days of the effective date of coverage for all subsequent plan years. For all Flex One plans with FSA9 when Flex One is the claims processor: To ensure that your account is established in a timely manner, the following documents must be returned to Flex One at least 10 working days prior to the effective date of your plan. You may return these documents by toll -free fax to (877) FLEX-SRA (877-353-9772) or by mail to Aflac Benefit Services/Flex One, 1932 Wynnton Road, Columbus, GA 31999-9950. ❑ Salary Redirection Agreements (SRAs): Completed SRAs for all Flexible end' g Account (FSA) participants must be returned to Flex One. ❑ Reimbursement Services Agreement (RSA): The RSA must be signed in the signature block and returned to Flex One. It will be signed by Flex One and returned to you for our records. Important information for administering your Flex One account ❑ Plan Identification Number (PIN): The Department of Labor regulation a that welfare benefit plan sponsors assign a three -digit PIN number to their welfare plans (including ria plans) fo entification purposes. Numbering for welfare plans should begin at 501 and proceed consecutively. ou ve other p ns (e.g., health coverage) assign the next open number. This number must be indicated on the Su Pla escription. ❑ Affiliated Companies: Only those companies described i ct' n 414(b), (c) or (m) of the Internal Revenue Code can participate in a cafeteria plan. In addition, if ere are affilia mpanies, nondiscrimination testing may be affected by affiliated companies. Consult your tax advisoM ❑ 5500 and Summary Annual Report: There i 'n3SLrT 5500 filing requirement for the cafeteria plan itself. IRS Notice 2002-24 suspended this requireme%�i e th otice 2002-24 does not affect annual, reporting requirements under ERISA: Thus, welfare benefit plan IS , which may include Health Flexible Spending Accounts (FSAs), must continue to file Form 5500 and any edules (unless an applicable exception applies) even if the benefits are funded through the cafeteria plan. Ycontact your tax or legal advisor to find out if your Plan is subject to ERISA and whether filing a Form 5500 (inclapplicable schedules) for your Plan is required. ❑ Nondiscrimination To ax no tests, including the Eligibility, Contributions and Benefits, and Concentration of Benefits sts a performed. In the case of Flexible Spending Accounts (FSAs), nondiscrimination tests must be performed f ach SA. Upon request, Aflac Benefit Services will assist you at no extra charge with the Cafeteria Plan Key Employ 25% Concentration Test, Dependent Care 55% Average Benefit Test, and Dependent Care 5% Shareh Test. ❑ Health F s Plan Sponsor, are responsible for ensuring that the Health FSA maximum, is in line with your risk tolerance/ emem r IRS Notice 2005-42 allows an additional 2 '/s month period (i.e., grace period) in which to incur additional medical enses. If you have selected the grace period feature, the Aflac sample plan incorporates this extension for He FSAs. ❑ Eligibility: Any eligibility waiting period for pre-tax benefits should generally be uniformly applies. You, as Plan Sponsor, are responsible for ensuring that the eligibility period listed in your plan documents does not violate Intemal Revenue Service or Department of Labor regulations. ❑ Privacy: You, as Plan Sponsor, are responsible for ensuring that your plan does not violate the privacy requirements set forth in the Gramm -Leach -Bliley Act of 1999 (GLB) and, if applicable, the Health Insurance Portability and Accountability Act of 1996 (HIPAA). GLB regulates the privacy of financial infomation and applies to all Flex One plans (see the attached "Privacy Practices"). HIPAA protects privacy by regulating the disclosure of protected health information (PHI), so Plan Sponsors of only Health FSAS must comply with HIPAA privacy requirements (Health FSA Plan Sponsors only, see the attached "Important Privacy Information"). * if you have any questions regarding this checklist, please contact Flex One toll -free at (877) FLEX4VR (877-353-9487), and one of our Customer Service Representatives can assist you Monday through Friday from 8:00 A.M. to 7:00 P.M. EST. Employer Acknowledgment: Your signature verifies that an Also sales representative has reviewed the above information with you. Signature Printed Name Date CKLIST PRIVACY PRACTICES Protecting the privacy and confidentiality of employer and participant information through our Flex Ones cafeteria plan services is very important to American Family Life Assurance Company of Columbus (Aflac) and American Family Life Assurance Company of New York (Aflac New York). Throughout this notice when we use the name Aflac,' we will be referring to both organizations. Accordingly, we strive to comply with each of the following practices in everything we do: We do not sell, rent, lease or otherwise disclose personal information about employers or employees of an employer for purposes unrelated to our products and services. The personal information of our customers is of paramount importance to us. Therefore, we provide this information only to our employees, agents and third parties as required to allow them to help us develop and provide our insurance and employee benefit products and services. • We work to ensure information integrity and security. We use technology tools and design our business practices to help ensure that the personal information of the employer and employees of the employer are properly gathered, stored and processed. We also work to maintain the security of, and internal and external access to, the personal information of our customers through the use of technology and our business practices. • We expect our agents and employees to respect the personal information of o us mars. Aflac has business policies and practices in place to help ensure that its employees and agents carry out these ice d otherwise protect the personal information. Both employees and agents are subject to censure, dismissal or terminati r viol 'on of these policies. These Privacy Practices apply to our U.S. customers. Due to legal and cultural differences, practices may vary outside the United States. PRIVACY NOTIC , Aflac and our agents provide this notice to let you know about the rrent privacy ices of Aflac, and our agents. You do not need to do anything in response to this notice. This no merely to nform you about how we safeguard your Information. Col ection of m tion As part of Aflac's normal operating procedu4ading d our agents a ing on our behalf) need to obtain information from both the employer and the participant to service thding accounts. Aflac and our agents may collect nonpublic personal information (which includes both nonpublia ' I information and nonpublic personal health information) about Aflac customers, including but not limited to: • Information from the employer or the pding names, addresses, Social Security numbers, financial and marital status, and health and dependent childtion); • Information about the emplo er or the ansactions with Aflac or our agents (including claims, payment information and banking information); • Information from the employe?ions aZ icipants' health care providers (including drug receipts and medical information), employers (including benefit elmployment information) and family members. Disclosure of Information Aflac may disclose lic personal financial information we collect, as described above, as well as information about your transactions with us (such as ur election amounts, premiums and payment history) to our agents or other third parties who perform services for us or functio our behalf, including the marketing of Aflac services. Aflac may also disclose the nonpublic personal financial information we col act to other third parties as authorized by you, or as required or permitted by law. Our agents will make disclosures of the employer or the participants' nonpublic personal financial information only while soling on Aflac's behalf and, furthermore, will make such disclosures only as Aflac itself is permitted to make. Neither Aflac nor our agents will use or share with other parties any nonpublic personal health information about our customers for any purpose other than the servicing of the employer's flexible spending account plan by Aflac or on our behalf, or to which the customer consents. Neither Aflac nor our agents will furtherdisclose any nonpublic personal information about a former customer of Aflac other than as may be required or permitted by law. Confidentiality and Securfty Aflac and our agents will safeguard, according to strict standards of security and confidentiality, any information we collect, receive or maintain about Also's customers. Aflac maintains administrative, technical and physical safeguards to ensure the security and confidentiality of the employer and employees, and the employer information and records; to protect against anticipated threats or hazards to such records; and to protect against unauthorized access to or use of such information or records. Internally, Aflac limits access to our customers' information to only those employees who need access to the information to perform their job functions. Employees who misuse information are subject to disciplinary actions. Externally, we do not disclose customer information to any third parties unless we have previously informed the customer of the disclosure, have been authorized to do so by the customer, or are required or permitted to make the disclosure by law or our regulators. t PRIVPOP PREAMBLE ARTICLE 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 1.25 1.26 1.27 1.28 1.29 1.30 1.31 1.32 1.33 1.34 1.35 1.36 ARTICLE 2.01 2.02 2.03 2.04 2.05 TABLE OF CONTENTS FLEXIBLE BENEFITS PLAN I- DEFINITIONS "Affiliated Employer' "After-tax Contribution(s) " "Anniversary Date" "Benefit Plan(s) or Policy(ies) " "Board of Directors" "Change in Status' "Code., "Compensation" "Dependent" "Dependent Care Expense Reimbursement" "Earned Income" "Effective Date" "Eligible Employment -Related Expenses" "Eligible Medical Expenses" "Employee" "Employer" "ERISA" "Medicare Care Expense Reimbursements" "Highly Compensated Individual" "Key Employee" "Nonelective Contribution(s)" "Participant "Plan" "Plan Administrator" "Plan Year" "Pre-tax Contribution(s)" "Qualified Benefit" "Qualifying Employment- lated E ns "Qualifying Individual" "Qualifying Services" "ReimbursementAccount(s)"o " ccount(s)" "Salary Redirection Agreement" o RA" "Spouse" "Student" "Summary PlantPTICIPATION or "SPD" 'Trustee' II - E ILITYAND igibilit to Participate of Participation Eligibility t Participate in Reimbursement Accounts Quali Leave Under FMLA Non-F LA of ARTICLE III- BENEFIT ELECTIONS 3.01 Election of Contributions 3.02 Initial Election Period 3.03 Annual Election Period 3.04 Change of Elections 3.05 Impact of Termination of Employment on Election or Cessation of Eligibility ARTICLE IV- BENEFIT FUNDING AND CREDITS AND DEBITS TO ACCOUNTS 4.01 Source of Benefit Funding 4.02 Reduction of Certain Elections to Prevent Discrimination 4.03 Medical Care Expense Reimbursement 4.04 Dependent Care Expense Reimbursement ARTICLE V - BENEFITS 5.01 Qualified Benefits 5.02 Cash Benefit 5.03 Repayment of Excess Reimbursements 5.04 Termination of Reimbursement Accounts 5.05 Coordination of Benefits Under the URM 3 3 3 3 3 3 3 3 3 3 4 4 4 4 5 5 PLANDOC ARTICLE VI- PLAN ADMINISTRATION 8 6.01 Allocation of Authority 8 6.02 Payment of Administrative Expenses 9 6.03 Reporting and Disclosure Obligations 9 6.04 Indemnification 9 6.05 Substantiation of Expenses 9 6.06 Reimbursement 9 6.07 Annual Statements 9 ARTICLE VII - FUNDING AGENT 9 ARTICLE VIII -CLAIMS PROCEDURES 9 ARTICLE X-AMENDMENT OR TERMINATION OF PLAN 9 9.01 Permanency 9 9.02 Employer's Right to Amend 9 9.03 Employer's Right to Terminate 10 9.04 Determination of Effective Date of Amendment or Termination 10 ARTICLE X - GENERAL PROVISIONS 10 10.01 Not an Employment Contract 10 10.02 Applicable Laws 10 10.03 Post-Mortem Payments 10 10.04 Nonalienation of Benefits 10 10.05 Mental or Physical Incompetency 10 10.06 Inability to Locate Payee 10 10.07 Requirement for Proper Forms 10 10.08 Source of Payments 10 10.09 Multiple Functions 10 10.10 Tax Effects 10 10.11 Gender and Number 11 10.12 Headings 11 10.13 Incorporation by Reference 11 10.14 Severability 11 10.15 Effect of Mistake 11 10.16 Provisions Relating to Insurers 11 10.17 Forfeiture of Unclaimed Reimburse t Account Benefits 11 10.18 HIPAA Privacy 11 ARTICLE XI - CONTINUATION C E UNDER COBRA 11 EMPLOYER'S ACKNOWLEDGEM 12 ATTACHMENT I - M RY PLAN ESCRIPTION (SPD) PLANDOC PREAMBLE The Employer hereby establishes a Flexible Benefits Plan ("Plan") for its Employees for purposes of providing eligible Employees with the opportunity to choose from among the fringe benefits available under the Plan. The Plan is intended to qualify as a cafeteria plan under the provisions of Code Section 125. The Dependent Care Expense Reimbursement Plan ("DDC") is intended to qualify as a Code Section 129 dependent care assistance plan, and the Medical Care Expense Reimbursement Plan ("URM") Is intended to qualify as a Code Section 105 medical expense reimbursement plan. Although printed within this document, the DDC and URM Plans are separate written plans for purposes of administration and all reporting and nondiscrimination requirements Imposed by Sections 105 and 129 of the Code and all applicable provisions of ERISA. The DDC and the URM are available only if designated as a Benefit Plan or Policy In the Summary Plan Description (SPD). FLEXIBLE BENEFITS PLAN ARTICLE I - DEFINITIONS 1.01 "Affiliated Employer" means any entity who is considered with the Employer be a ingle employer in accordance with Code Section 414(b), (c), or (m) of the Code. 1.02 "After-tax Contribufion(sr means amounts withheld from an Employee's Compens ursuant to a Salary Redirection Agreement (SRA) after all applicable state and federal taxes have be deducted. Su mounts are withheld for purposes of purchasing one or more of the Benefit Plans or Policies availabl der the Plan. 1.03 "Anniversary Date" means the first day of any Plan Year. 1.04 "Benefit Plan(*) or Policy(iesr means those Qualifi is availab to a Participant under this Plan as set forth in the SPD, as amended and/or restated from time to ti 1.05 "Board of Directors" means the Board of Directors or of o erning body of the Employer (the "Board"). The Board, upon adoption of this Plan, appoints the PI Administrator act on the Employers behalf in all matters regarding the Plan. 1.06 "Change In Status" means any the eve is ribed in the SPD, as well as any other events included under subsequent changes to Code Se ula ns issued under Code Section 125, that the Plan Administrator (in its sole discretion) decides to recognize o uni and consistent basis as a reason to change the election mid -year. Note: See the SPD for requirements that must a met to permit certain mid -year election changes on account of a Change in Status. 1.07 "Code" means the Inte ode of 1986, as amended. 1.08 "Compensation" means t cash wages or salary paid to an Employee by the Employer. 1.09 "'Depend t" means any i dividual who is a tax dependent of the Participant as defined generally in Code Section 152; however, an purposes, a Dependent shall also be defined as in Code Section 105(b) and for DDC purposes (if offered under the P n), a Dependent shall also be defined as in Code Section 21(e)(5) (i.e. dependent of the custodial parent as defin ode Section 152(e)). 1.10 "Dependent Care Reimbursement" shall have the meaning assigned to it by Section 5.01 of the Plan. 1.11 "Earned Income" means all income derived from wages, salaries, tips, self-employment, and other Compensation (such as disability or wage continuation benefits), but only if such amounts are includable in gross income for the taxable year. Earned income does not include any other amounts excluded from earned income under Code § 32(c)(2), such as amounts received under a pension or annuity, or pursuant to workers' compensation. 1.12 "Effective Date" of this Plan is the effective date set forth in the SPD. 1.13 "Eligible Employment -Related Expenses" means those Qualifying Employment -Related Expenses (as defined below) paid or incurred incident to maintaining employment after the date of the Employee's participation in the DDC and during the Plan Year, other than amounts paid to: (a) an individual with respect to whom a Dependent deduction is allowable under Code Sea 151(c) to the Participant or his Spouse; (b) the Participant's Spouse; or PLANDOC (c) a child of the Participant who is under 19 years of age at the end of the taxable year in which the expenses were incurred. 1.14 "Eligible Medical Expenses" means those expenses incurred by the Employee, or the Employee's Spouse or Dependents, after the date of the Employee's participation in the URM and during the Plan Year (plus any applicable grace period extension as described in the SPD) to the extent that the expense satisfies the conditions set forth in the Summary Plan Description and are for "medical care" as defined by Code Section 213(d). For purposes of this Plan, the following expenses are not considered "Eligible Medical Expenses" even if they otherwise constitute "medical care" under Code Section 213(d): i) expenses for qualified long term care services (as defined in Code § 7702B(c)); and ii) expenses incurred for health insurance premiums. For purposes of this Plan, an expense is "incurred" when the Participant or beneficiary is furnished the medical care or services giving rise to the claimed expense, regardless of when the expense is paid. 1.15 "Employee" means any individual who is considered to be in a legal employer -employee relationship with the Employer fbr federal tax -withholding purposes. Such term includes "former employees" for the limited purpose of allowing continued eligibility for benefits hereunder for the remainder of the Plan Year in which an a loyee ceases to be employed by the Employer. The term "Employee' shall not include any leased employee (as that is defined in Code Section 414(n)) or any self- employed individual who receives from the Employer "net earnings If- ployment" within the meaning of Code Section 401(c)(2) unless such individual is also an Employee. 1.16 "Employer" means the Employer and the Affiliated Employers named in the SPD pr ed, however, that when the Plan provides that the Employer has a certain power (e.g., the appointor t of a Plan Admi strator, entering into a contract with a third party insurer, or amendment or temnination of the plan) t "Empl er" shall mean only that entity named on the first line of the Plan Information Summary of the SPD, and not an liat mployer. Affiliated Employers who sign the Plan Information Summary and/or otherwise adopt the Plan shall be by the Plan as adopted and subsequently amended unless they clearly withdraw from participation 1.17 "ERISA" shall mean the Employee Retirement Inco a uri Act of 1974, as amended. 1.16 "Health Care Reimbursement" shall have th meaning ass to it by Section 5.01 of the Plan. 1.19 "Highly Compensated Individual" means . dividual defined under Code Section 105(h), 125(e), or 414(q), as amended, as a "highly compensated individua ' o ' i ly compensated employee." 1.20 "Key Employee" means an indivi ua ey employee" as defined in Code Section 125(b)(2), as amended. 1.21 "Nonelective Contribution(s)" means a mount that the Employer, in its sole discretion, may contribute on behalf of each Participant to provide benefits for suc Participant and his or her Spouse and Dependents, if applicable, under one or more of the Benefit PI r Policy(ies) offered under the Plan. The amount of employer contribution that is applied towards the cost of the B e r Policy(ies) for each Participant and/or level of coverage shall be subject to the sole discretion of the Employ he ount of Nonelective Contribution for each Participant may be adjusted upward or downward in the contributi Employers sole discretion. The amount shall be calculated for each Plan Year in a uniform and nondi inatory man and may be based upon the Participant's dependent status, commencement or termination date of th Partici ant's em loyment during the Plan Year, and such other factors as the Employer shall prescribe. To the extent se a SPD or enrollment material, the Employer may make Nonelective Contributions available to Participants and all Participants to allocate the Nonelective Contributions among the various Benefit Plans or Policies offered under t n in a manner set forth in the SPD of additional, taxable Compensation except as otherwise provided in the SPD orenr llment material. 1.22 "Participant" means an Employee who becomes a Participant pursuant to Article II. 1.23 "Plan" means the Flexible Benefits Plan, the SPD (defined in Section 1.35 herein) and (if applicable) the related Trust created by this document. 1.24 "Plan Administrator" means the person(s) or Committee identified in the SPD that is appointed by the Employer with authority, discretion, and responsibility to manage and direct the operation and administration of the Plan. If no such person is named, the Plan Administrator shall be the Employer. 1.25 "Plan Year" shall be the period of coverage set forth in the SPD (as extended by any applicable grave period as set forth in the SPD). 1.26 "Pre-tax Contribution(s)" means amounts withheld from an Employee's Compensation pursuant to a Salary Redirection Agreement before any applicable state and federal taxes have been deducted. The amounts are withheld for purposes of purchasing one or more of the Benefit Plans or Policies available under the Plan. This amount shall not exceed the premiums or contributions attributable to the most costly Benefit Plan or Policy afforded hereunder, and for purposes of Code Section 125, shall be treated as an Employer contribution (this amount may, however, be treated as an Employee contribution for purposes of state insurance laws). 4 PLANDOC 1.27 "Qualified Benefit" means any benefit excluded from the Employee's taxable income under Chapter 1 of the Code other than Sections 106(b), 117, 124, 127, or 132 and any other benefit permitted by the Income Tax Regulations (i.e., any life insurance coverage that is includable in gross income by virtue of exceeding the dollar limitation on nontaxable coverage under Code Sec. 79). Notwithstanding the previous sentence, long-term pre insurance is not a "Qualified Benefit." 1.28 "Qualifying Employment -Related Expenses" means those expenses that would be considered to be employment -related expenses under Section 21(b)(2) of the Code (relating to expenses for household and dependent care services necessary for gainful employment) if paid for by the Employee to provide Qualifying Services. 1.29 "Qualifying Individual" means an individual defined as a "Qualifying Individual' in the Summary Plan Description. 1.30 "Qualifying Services means services relating to the care of a Qualifying Individual that enable the Participant or his Spouse to remain gainfully employed which are performed: (a) in the Participant's home; or (b) outside the Participant's home for (1) the care of a Dependent of the ant ho is under age 13, or (2) the care of any other Qualifying Individual who resides at least eight (8) hours da n the Participant household. If the expenses are incurred for services provided by a dependent care cent a facility that provides care for more than six (fi) individuals not residing at the facility), th nter must corn y with all applicable state and local laws and regulations. 1.31 "Reimbunaernent Account(s)" or "Account(s)" shall be the funding m by which amounts are withheld from an Employee's Compensation and retained for future Healt re Reimbur ent (as defined in Section 1.18 herein) and Dependent Care Reimbursement (as defined in Sectio 1 erein) to t e extent adopted by the Employer as set forth in the SPD. No money shall actually be allocated to a ivid I Participant Account(s); any such Account(s) shall be of a memorandum nature, maintained by the Administrator ccounting purposes, and shall not be representative of any identifiable trust assets. No interest will be ere ited to or pal punts credited to the Participant Aceount(s). 1.32 "Salary Redirection Agreement" or "SR eans the actual or deemed agreement pursuant to which an eligible Employee or Participant elects to contribute i are of the cost of chosen Benefit Plans or Policies with Pre-tax or After-tax Contributions and/or Benefi redits (i off rider the Plan) in accordance with Article III herein. if the Employer utilizes an interactive voice respo m r web -based program for enrollment, the SRA may be maintained on an electronic database in accordance a icable federal and/or state laws. 1.33 "Spouse" means an individual who is legap'marded to a Participant (and who is treated as a spouse under the Code), but for purposes of the Dep nt Care Reimbursement Plan provisions, shall not include an individual who, although married to the Participant, files a federal income tax return, maintains a separate, principal residence from the Participant during the last six montho able year, and does not furnish more than one-half of the cost of maintaining the principal place of abode of a Qu ifying Individual. 1.34 "Student' means an indivi al who, during each of five (5) or more calendar months during the Plan Year, is a full time student a e or university, the primary function of which is the conduct of formal instruction, and which routinely maintains a ular culty and curriculum and normally has an enrolled student body in attendance at the location where its educational ctiv es are regularly presented. 1.35 "Summary Plan Description" or "SPD" means the document attached as Attachment I to the Plan document that describes the term of Plan not set Borth herein. The SPD and all applicable appendices are incorporated hereto by reference. 1.36 "Trustee" (if applicable) means the person(s) or institution (and their successors) named on the signature page attached hereto, who have assented to being so named by their signature to this Agreement, otherwise empowered to hold and disburse the funds that are created hereunder. ARTICLE II - ELIGIBILITY AND PARTICIPATION 2.01 Eligibility to Participate. Each Employee who satisfies the eligibility requirements set forth in the SPD shall be eligible to participate in this Plan as of any applicable entry date set forth in the SPD. The provisions of this Article are not intended to override any eligibility requirement(s) or waiting period(s) specified in the applicable Benefit Plans or Policies and the terms of eligibility and participation for the Benefit Plan(s) or Policy(ies) offered under the Plan shall be subject to the requirements specified in the governing documents of the Benefit Plans or Policies. 2.02 Termination of Participation. Participation shall terminate on the earliest of the dates set forth in the SPD. PLANDOC 2.03 Eligibility to Participate in Reimbursement Accounts. Each Employee who satisfies the eligibility requirements set forth in the SPD shall be eligible to participate in the Reimbursement Accounts, if adopted by the Employer, on the date set forth in the SPD. Participation in the Reimbursement Accounts shall be effective on the date set forth in the SPD. 2.04 Qualifying Leave Under FMLA. Notwithstanding any provision to the contrary in this Plan, if a Participant goes on a qualifying leave under the Family and Medical Leave Act of 1993 (the "FMLA"), than to the extent required by the FMLA, the Participant will be entitled to continue the Participant's Benefit Plans or Policies that provide health coverage (including URM benefits to the extent offered under the Plan) on the same terms and conditions as if the Participant were still an active Employee. The requirements for continuing coverage, procedures for FMLA leave, and payment option(s) provided by the Employer (as described above) will be set forth in the SPD and will be administered in accordance with the regulations issued under Code Section 125 and in accordance with the FMLA. 2.05 Non-FMLA Leave. If a Participant goes on an unpaid leave of absence that does not affect eligibility under this Plan or the Benefit Plans or Policies chosen by the Participant, then the Participant will continue to participate and the contributions due for the Participant will be paid by one or more of the payment options described in the SPD. If a Participant goes on an unpaid leave that affects eligibility under this Plan or the Benefit Plans or Polici c osen by the Participant, the election change rules in Section 3.04 will apply. If such policy requires coverage nti a during the leave but permits a Participant to discontinue contributions while on leave, the Participant will, u on ing leave, be required to repay the contributions not paid by the Participant during the leave. ARTICLE III -BENEFIT ELNreqtuii 3.01 Election of Contributions. A Participant may elect any combina ontributions or After-tax Contributions (as set forth in the SPD) to fund any Benefit Plan or Policy availablen, provided that only Qualified Benefits may be funded with Pre-tax Contributions. The Employer rn is, to allocate Non -elective Contributions to one or more Benefit Plans or Policies offered under the NP'and�, the extent set forth in the SPD or enrollment material, may allow the Participants to allocate his allotted share oe Contributions among the various Benefit Plans or Policies in a manner set forth in the SPD or enrollment mate 3.02 Initial Election Period. A (a) Currently Eligible Employees. A E who is eligible to become a Participant in this Plan as of the Effective Date must corn n a d fit an SRA with the Plan Administrator during the election period (as specified by the Plan Olin ediately preceding the Effective Date of the Plan in order to become a Participant on the Effective D . The elections made by the Participant on this initial SRA shall be effective, subject to Section 3.04, for the PI ear beginning on the Effective Date. (b) New Employe?ra Employees Who Have Not Yet Satisfied The Plan's Waiting Period. An Employee who becomes eligibl Participant in this Plan after the Effective Date must complete, sign and file a SRA with the Plan Ad r (or its designated third party administrator as set forth on the SRA) during the Initial EI ion Period sh in the SPD or the enrollment material. Participation will commence under this Plan as set f the SPD.erage under the component Benefit Plans or Policies will be effective in accordance with the vemin provisions of such Benefit Plans or Policies. (c) Failure to lest. An eligible Employee who fails to complete, sign and file a SRA in accordance with paragraph (a) or bove during an initial election period may become a Participant on a later date in accordance with Section 3.03 or 3.04. 3.03 Annual Election Period. Each Employee who is a Participant in this Plan orwho is eligible to become a Participant in this Plan shall be notified, prior to each Anniversary Date of this Plan, of his right to become a Participant in this Plan, to continue participation in this Plan, or to modify or to cease participation in this Plan, and shall be given a reasonable period of time in which to exercise such right: such period of time shall be known as the Annual Election Period. The date that the Annual Election Period commences and ands will be set forth in the SPD or the enrollment material. An election is made during the Annual Election Period in the manner set forth in the SPD. The consequences of failing to make an election during the Annual Election Period will be set forth in the SPD. 3.04 Change of Elections. A Participant shall not make any changes to the Pre -tact Contribution amount or, where applicable, to the Participant's elected allocation of Nonelective Contributions except for election changes permitted under this Section 3.04, and for changes made during the Annual Election Period (Section 3.03), changes caused by termination of employment (Section 3.05) and changes pursuant to the Family and Medical Leave Act (Section 2.04). Except as provided in the SPD for HIPAA special enrollment rights arising from the birth, adoption, or placement for adoption of a child, all election changes shall be effective on a prospective basis only (i.e., election changes will become effective no earlier than the first day of the first pay period coinciding with or immediately following the date that the election change was filed) but, as determined by the Plan Administrator, election changes may become effective later to the extent PLANDOC the coverage in the applicable component plan commenoes later. The circumstances under which a Participant may change his election under this Plan are set forth in the SPD. 3.05 impact of Termination of Employment on Election or Cessation of Eligibility. Termination of employment or cessation of eligibility shall automatically revoke any SRA. Except as provided below, if revocation occurs under this Section 3.05, no new election with respect to Pre -Tax Contributions may be made by such Participant during the remainder of the Plan Year. Rules governing elections for former participants rehired during the same Plan Year shall be set forth in the SPD. ARTICLE IV - BENEFIT FUNDING AND CREDITS AND DEBITS TO ACCOUNTS 4.01 Source of Benefit Funding. The cost of coverage under the component Benefit Plans or Policies shall be funded by the Participant's Pre-tax and/or After-tax Contributions and/or any Nonelective Contributions provided by the Employer. The required contributions for each of the Benefit Plans or Policies offered under the Plan shall be made known to employees in enrollment materials. Pre-tax or After -tar Contributions (as elected by the Employee on the SRA) shall equal the contributions required from the Participant less any available Nonelective Contribu' ns allocated thereto by the Employer, or where applicable, the Participant for coverage of the Participant or the Parti ' an s Spouse or Dependents under the Benefit Plans or Policies elected by the Participant under this Plan. Amoun hel om a Participant's Compensation as Pre-tax Contributions or After-tax Contributions shall be applied to fund ben as soV as administratively feasible. The maximum amount of Pre-tax Contributions plus any Nonelective ContributionYS available by the Employer for Benefit Plan(s) or Policy(ies) offered under this Plan shall not exceed the aggregate ce Benefit Plan(s) or Policy(ies) elected by the Employee. 4.02 Reduction of Certain Elections to Prevent Discrimination. If the Ad istrator determines, before or during any Plan Year, that the Plan may fail to satisfy for such Plan Year any requ t imposed by the Code or any limitation on Pre-tax Contributions allocable to Key Employees or to Compensa d Individuals, the Plan Administrator shall take such action(s) as he deems appropriate, under rul unifo ly applicable to similarly situated Participants, to assure compliance with such requirement or limitation. Su n ay include, without limitation, a modification or revocation of a Highly Compensated Individual's or Key Employee's eleomwithout the consent of such Employee. 4.08 Health Care ReinrbuBement To the ex ffered undert%e Plan, each Participant's URM will be credited for Health Care Reimbursement with amounts withhei the Participant's Compensation and any Nonelective Contributions allocated thereto by the Employer or where p I , the Participant. The Account will be debited for Health Care Reimbursements disbursed to the ant i ac ance with Article V of this document. The entire amount elected by the Participant on the SRA as an an t fo the Plan Year for Health Care Reimbursement less any Health Care Reimbursements already disbursed to t partid ant for Expenses incurred during the Plan Year (plus any grace period as set forth in the SPD) shall be available to articipant at any time during the Plan Year without regard to the balance in the Health Care Account (provided that the eriodic contributions have been made). Thus, the maximum amount of Health Care Reimbursement a articular time during the Plan Year will not relate to the amount that a Participant has had credited to his URM. In a he amount of Health Care Reimbursements in any Plan Year (plus any grace period as set forth in the SPD) e th nnual amount specified for the Plan Year in the SRA for Health Care Reimbursement. Any amount credited to the ealth Care Account shall be forfeited by the Participant and restored to the Employer if it has not been to provid ealth Care Reimbursement within the Faun -Off period set forth in the SPD. Amounts so forfeited s all be used in a anner that is permitted within the applicable Department of Labor ("DOL") or Internal Revenue Service (" ations. The maximum annual reimbursement under the URM shall be set forth in the SPD. The Employer may esta sh a minimum annual reimbursement amount as set forth in the SPD. 4.04 Dependent Car Reimbursement. To the extent offered under the Plan, each Participant's DDC will be credited for Dependent Care Reimbursement with amounts withheld from the Participant's Compensation, and any Nonelective Contributions allocated thereto by the Employer or where applicable, the Participant. The Dependent Care Account will be debited for Dependent Care Reimbursements disbursed to the Participant in accordance with Article V of this document. In the event that the amount in the Account is less than the amount of reimbursable claims at any time during the Plan Year, the excess part of the claim will be carried over into following months within the same Plan Year, to be paid out as the Dependent Care Account balance becomes adequate. In no event will the amount of Dependent Care Reimbursements exceed the amount credited to the Dependent Care Account for any Plan Year. Any amount allocated to the Dependent Care Account shall be forfeited by the Participant and restored to the Employer if it has not been applied to provide Dependent Care Reimbursement for the Plan Year within the Run -Off period set forth in the SPD. Amounts so forfeited shall be used in a manner that is not prohibited by applicable federal or state law. The maximum annual reimbursement amount shall be set forth in the SPD. The Employer may establish a minimum annual reimbursement amount as set forth in the M. ARTICLE V - BENEFITS 5.01 Qualified Benefits. The maximum benefit a Participant may elect under this Plan shall not exceed the sum of t) the aggregate premium for all Benefit Plan(s) or Policy(ies) set forth in the SPD (other than Health and DDC); ii) the PLANDOC maximum annual Health Cane Reimbursement under the URM as set forth in the SPD (if offered under the Plan); and iii) the maximum annual Dependent Cane Reimbursement under the DDC as setforth in the SPD (if offered under the Plan). (a) Special Rules for Health Care Reimbursement. To the extant offered under the Plan, payment shall be made to the Participant in cash as reimbursement for Eligible Medical Expenses incurred by the Participant or his Spouse or Dependents while he is a Participant during the Plan Year (plus any gnats period as specified in the SPD) for which the Participant's election is effective provided that the substantiation requirements of Section 6.05 herein are satisfied. (b) Special Rules for Dependent Care Reimbursement. To the extent offered under the Plan, payment shall be made to the Participant in cash as reimbursement for Eligible Employment Related Expenses incurred by him Mile a Participant, during the Plan Year for which the Participants election is effective, provided that the substantiation requirements of Section 6.05 have been satisfied. 5.02 Cash Benefit. To the extent that a Participant does not elect to have the maximum amount of his Compensation contributed as a Pre-tax Contribution or After-tax Contribution hereunder, such unt not elected shall be paid to the Participant in the form of normal Compensation payments; provided, verVid that any applicable Nonelective Contributions may not be received in the form of cash compensation, exoep arounded for in the SPD or the enrollment material. 5.03 Repayment of Excess Reimbursements. If, as of the end of Plan Yea,mined thata Participant has received payments under this Plan that exceed the amount of ble Medical Expenses and/or Eligible Employment Related Expenses that have been substantiated by such Participa ring t Plan Year as required by Section 6.05 herein, the Plan Administrator shall give the Participant prompt wri n ce of any such excess amount, and the Participant shall repay the amount of such excess to the E yer within s (60) days of receipt of such notification. 5.04 Termination of Reimbursement Accounts. Cove nd the URM and/or DDC shall cease as of the day in which a Participant is no longer employed by the Employer or wh premium payment for the respective plan(s) has been missed for any reason. Provided, however, t t Particpa ay submit claims for reimbursement for Eligible Employment -Related Expenses arising duri the Plan Year any time until the end of the Run -Off period set forth in the SPD. Participants in the URM may submit c for reimbursement for Eligible Medical Expenses arising during the Plan Year n;� before the date of separation from at any time until the end of the Run -Off period set forth in the SPD. Unless a COBRA election is made set fo in t D, Participants shall not be entitled to receive reimbursement for Eligible Medical Expenses incurr m It ceases under this Section. Any unused reimbursement benefits at the expiration of the Plan Year (as set f h in PD) shall be treated in accordance with Sections 4.03 or 4.04. A special grace period maybe applicable with rega to URM participation after the close of the Plan Year (see SPD). IF 6.05 Coordination of Ben Under the URM. The URM is intended to pay benefits solely for otherwise unreimbursed medical expenses. AcTIt considered a group health plan for coordination of benefits purposes, and its benefits shall not be taetermining benefits payable under any other plan. VI - PLAN ADMINISTRATION 6.01 Allocatio ity. The Board of Directors or applicable governing body (or an authorized officer of the Employer) appoints a Plan A inistrator that keeps the records for the Plan and shall control and manage the operation and administration Plan. The Plan Administrator shall have the exclusive right to interpret the Plan and to decide all matters arising t ereunder, including the right to make determinations of fact, and construe and interpret possible ambiguities; inconsistencies, or omissions in the Plan and the SPD issued in connection with the Plan. In the case of an insured Benefit Plan or Policy, the insurer shall be the named fiduciary with respect to benefit claim determinations thereunder, and with respect to benefit claims shall have all of the powers of the Plan Administrator described herein. All determinations of the Plan Administrator with respect to any matter hereunder shall be conclusive and binding on all persons. Without limiting the generality of the foregoing, the Plan Administrator shall have the following powers and duties: (a) To require any person to furnish such reasonable information as he may request for the purpose of the proper administration of the Plan as a condition to receiving any benefits under the Plan; (b) To make and enforce such rules and regulations and prescribe the use of such forms as he shall deem necessary for the efficient administration of the Plan; (c) To decide on questions concerning the Plan and the eligibility of any Employee to participate in the Plan and to make or revoke elections under the Plan, in accordance with the provisions of the Plan; (d) To determine the amount of benefits which shall be payable to any person in accordance with the provisions of the Plan; to inform the Employer or insurer as appropriate, of the amount of such benefits; and to provide a full and fair review to any Participant whose claim for benefits has been denied in whole or in part; PLANDOC (a) To designate other persons to carry out any duty or power which may or may not otherwise be a fiduciary responsibility of the Plan Administrator, under the terms of the Plan. Such entity will be referred to as a third party administrator and shall be identified in the SPD; (f) To keep records of all acts and determinations, and to keep all such records, books of account, and data and other documents as may be necessary for the proper administration of the Plan; and (g) To do all things necessary to operate and administer the Plan in accordance with its provisions. 6.02 Payment of Administrative Expenses. Except as otherwise provided in the SPD, the Employer currently pays all reasonable expenses incurred in administering the Plan. 6.03 Reporting and Disclosure Obligations. Unless specified otherwise, it shall be the Employer and Plan Administrator's sole responsibility to comply with all filing, reporting, and disclosure requirements, imposed by the DOL and/or IRS, specifically including, but not limited to creating, filing and distributing Summary Annual Reports, Form 5500s, and SPDs. Furthermore, the Employer and Plan Administrator shall be required to are a Plan as is necessary to ensure compliance with applicable tax and other laws and regulations. 6.04 Indemnification. The Plan Administrator shall be indemnified by the Employe air claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the ad ' tration of the Plan except claims arising from gross negligence, willful neglect, or willful misconduct. 6.05 Substantiation of Expenses. Each Participant must submit a wdn Claim rm to the Plan Administrator identified in the SPD or its designated plan service provider to receive reimburseme fr the URM and/or DDC, on a form provided by the Plan Administrator accompanied by a written $tat ill from an ependent third party stating that the expense has been incurred, and the amount thereof. The form a ntain su evidence, as the Plan Administrator shall deem necessary as to substantiate the nature, the amount, me ess of any expenses that may be reimbursed. 6.06 Reimbursement. Reimbursements shall be ade as soon inistratively feasible after the required forms have been received by the Plan Administrator identifie the SPD or it esignated plan service provider. Reimbursements of less than $15 may be carried forward and aggreg with future reimbursements until the reimbursable amount is greater than $15. However, claims for reimbursements ou t g at the end of the Plan Year (plus any grace period as set forth in the SPD) shall be reimbursed without r rd to th $1 shold limit. Year-end expense reimbursements must be submitted to the Plan Administrator within 9 e f the Plan Year for which the SRA is effective, and during which such expense was incurred, in order to be eli ' le imbursement. 6.07 Annual Statements. The Plan AdminiNlior shall furnish each Participant with an annual statement, showing the amounts paid ore es incurred by the Employer in providing Medical and/or Dependent Care Expense Reimbursement during us lendar year and the respective Reimbursement Account balance(s) on or before January 31 following the ppIicable Plan Year. ARTICLE VII - FUNDING AGENT The Plan shall be amounts withheld from Compensation pursuant to SRAs, and/or Nonelective Contributions provided by the Employer, if Can:ys Employer will apply all such amounts, without regard to their source, to pay for the welfare benefits provided herein as sooministratively feasible and shall comply with all applicable regulations promulgated by the DOL taking into consideration anyrcement procedures adopted by the DOL. If a Trust is designated Funding Agent in the SPD, an appropriate Trust Agreement shall be attached at the end of this Plan. ARTICLE Vlll - CLAIMS PROCEDURES The Plan has established procedures for reviewing claims denied under this Plan and those claims review procedures are set forth in the SPD. The Plan's claim review procedures set forth in the SPD shall only apply to issues germane to the pre-tax benefits available under this Plan (i.e., such as a determination of a Change in Status; change in cost or coverage; or eligibility and participation matters under this Cafeteria Plan document), and to the extent offered under the Plan, claims for benefits under the Reimbursement Accounts. ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN 9.01 Permanency. While the Employer fully expects that this Plan will continue indefinitely, due to unforeseen, future business contingencies, permanency of the Plan will be subject to the Employers right to amend or terminate the Plan, as provided in Sections 9.02 and 9.03 below. Nothing in this Plan is intended to be or shall be construed to entitle any Participant, retired or otherwise, to vested or non -terminable benefits. 9.02 Employee's Right to Amend. The Employer reserves the right to amend at any time any or all of the provisions of the Plan. All amendments shall be made in writing and shall be approved by the Employer in accordance with its normal PLANDOC procedures for transacting business (e.g. by approval by the Board of Directors through a meeting or unanimous consent of all Board members). Such amendments may apply retroactively or prospectively as set forth in the amendment. Each Benefit Plan or Policy shall be amended in accordanoe with the terns specified therein, or, if no amendment procedure is prescribed, in accordanoe with this section. Any amendment made by the Employer shall be deemed to be approved and adopted by any Affiliated Employer. 8.03 Employer's Right to Terminate. The Employer reserves the right to discontinue or terminate the Plan without prejudice at any time and for any reason without prior notice. Such decision to terminate the Plan shall be made in writing and shall be approved by the Employer in accordance with its normal procedures for transacting business. Affiliated Employers may withdraw from participation in the Plan, but may not terminate the Plan. 8.04 Determination of Effective Date of Amendment or Termination. Any such amendment, discontinuance, or termination shall be effective as of such date as the Employer shall determine. No amendment, discontinuance or termination shall allow the return to any Employer of any Reimbursement Account balance for its use for any purpose other than for the exclusive benefit of the Participants and their beneficiaries except as provided in Section 4.03 and 4.04 herein. ARTICLE X - GENERAL PROVISIONS 10.01 Not an Employment Contract. Neither this Plan nor any action taken with respe it s I confer upon any person the rightto continue employmentwith any Employer. 10.02 Applicable Laws. The provisions of the Plan shall be cons administ red and enforced according to applicable federal law and the laws of the state of the principal place of business a Em yer to the extent not preempted. 10.03 Post-Mortem Payments. Any benefit payable under the after the d of a Participant shall be paid to his surviving spouse (if any), otherwise, to his estate. If there is do as the right o any beneficiary to receive any amount, the Plan Administrator may retain such amount until the right to determined, without liability for any interest thereon. 10.04 Nonalienation of Benefits. Except as expre ly provide Plan Administrator, no benefit under the Plan shall be subject in any manner to anticipation, ill .on, sale, trans r, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void. No benefit un a Plan shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person. 10.05 Mental or Physical Incompeten dllic�on {eceiving or claiming benefits under the Plan shall be presumed to be mentally and physically competent an fag til the Plan Administrator receives a written notice, in a form and manner acceptable to it, that such person is men or physically incompetent or a minor, and that a guardian, conservator or other person legally vested with the care of his es to has been appointed. 10.06 Inability to Locate Pay" ay . Is Administrator is unable to make payment to any Participant or other person to whom a payment is due under a la ause it cannot ascertain the identity or whereabouts of such Participants or other person after reasonable a rts ave been made to identify or locate such person, such payment and all subsequent payments o ise due to Participant or other person shall be forfeited one year after the date any such payment first became d e. 10.07 Requiremen aenulecuted per Forms. All communications in connection with the Plan made by a Participant shall become effective only wyexon any forms as may be required and furnished by, and filed with, the Plan Administrator. 10.08 Source of Payments. The Employer, the Trust fund (if selected as Funding Agent), and any insurance company contracts purchased or held by the Employer or funded pursuant to this Plan shall be the sole souroes of benefits under the Plan. No Employee or beneficiary shall have any right to, or interest in, any assets of the Employer upon termination of employment or otherwise, except as provided from time to time under the Plan, and then only to the extent of the benefits payable under the Plan to such Employee or beneficiary. 10.08 Multiple Functions. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. 10.10 Tax Effects. Neither the Employer, its agents, the Plan Administrator, nor the Trustee makes any warranty or other representation as to whether any Pre-tax Premiums made to or on behalf of any Participant hereunder will be treated as excludable from gross income for local, state, or federal income tax purposes. If for any reason it is determined that any amount pad for the benefit of a Participant or Beneficiary is includable in an Employee's gross income for local, federal, or state income tax purposes, then under no circumstanoes shall the recipient have any recourse against the Plan Administrator or the Employer with respect to any increased taxes or other losses or damages suffered by the Employees as a result thereof. The Plan is designed and is intended to be operated as a "cafeteria plan" under Section 125 of the Code. 10 PLANDOC 10.11 Gender and Number. Masculine pronouns include the feminine as well as the neuter genders, and the singular shall include the plural, unless indicated otherwise by the context 10.12 Headings. The Article and Section headings contained herein are for convenience of reference only, and shall not be construed as defining or limiting the matter contained thereunder 10.13 incorporation by Reference. Except for the Medical and Dependent Care Expense Reimbursement Plan(s), the actual terms and conditions of the separate component Benefit Plans or Policies offered under this Plan are contained in separate, written documents governing each respective benefit, and shall govern in the event of a conflict between the individual plan document, and this Plan as to substantive content. To that end, each such separate document, as amended or subsequently replaced, is hereby incorporated by reference as if fully recited herein. The provisions of the Medical and Dependent Care Expense Reimbursement Plan(s) are reproduced herein, but shall constitute separate plans for purposes of all applicable Code and ERISA provisions. 10.14 Severability. Should any part of this Plan subsequently be invalidated by a court of competent jurisdiction, the remainder thereof shall be given effect to the maximum extent possible. 10.15 Effect of Mistake. In the event of a mistake as to the eligibility or participation o plo ee, the allocations made to the account of any Participant, or the amount of distributions made or to be made to rti ' ant or other person, the Plan Administrator shall, to the extent it deems possible, cause to be allocated or taus be withheld or accelerated, or otherwise make adjustment of; such amounts as will in its judgment rd to such Pa cipant or other person the credits to the account or distributions to which he is properly entitled uncle Ian. S ch action by the Administrator may include withholding of any amounts due the Plan or the Employer from Comp don p by the Employer. 10.16 Provisions Relating to Insurers. No insurer shall be r or permitt o issue an insurance policy or contract that is inconsistent with the purposes of this Plan, nor be bo to a any aoti n not in accordance with the terms of any policy or contract with this Plan. The insurer shall not be t be a party to this Plan, nor shall it be bound to interpret the construction or validity of the Plan. The insurer shall be ed from its good faith reliance on the written representations and instructions of the Trustee and the Plan A ministrator, all not be responsible for the initial or continued qualified status of the Plan. 10.17 Forfeiture of Unclaimed Reimbursement t Benefits. Any Reimbursement Account benefit payments that are unclaimed (e.g., uncashed benefit cks) by he a of the Plan Year following the Plan Year in which the Health or Dependent Care Expense was in orf ed. 10.18 HIPAA Privacy. To the extent a URM isV4 red under the Plan, the rights and obligations of an individual covered under the URM, the Employer and Plan, with res t to permitted uses and disclosures of a covered individual's protected health information, set forth in ealth Insurance Portability and Accountability Act of 1996 (HIPAA) will be summarized in the SPD. A TICL XI - CONTINUATION COVERAGE UNDER COBRA The SPD includes rovisions that sh II be applicable to the URM to the extent the URM is a "group health plan" as defined by Code §§ 4960B and 500 the regulations promulgated thereunder and to the extent it is offered under the Plan. The intent of those provisions (as incorpor ed in this Article) is to extend continuation rights required by COBRA. 11 PLANDOC IN WITNESS WHEREOF, the Employer has executed this Plan as of the date set forth below. EMPLOYER'S ACKNOWLEDGMENT As evidenced by the formal execution of this document, the undersigned Employer adopted and established this Plan on the Effective Date as the Flexible Benefits Plan of the undersigned Employer. In doing so, the undersigned Employer acknowledges that the Summary Plan Description (°SPD") and this Plan document are important legal instruments with significant legal and tax implications. The Employer also acknowledges that it has read this SPD and the Plan document in their entirety, has consulted independent legal and tack counsel other than representatives of American Family Life Assurance Company of Columbus (Afiac), to the extant considered necessary, and accepts full responsibility for participation of Employees hereunder and the operation of the Plan. The Employer acknowledges that, as sponsor and Plan Administrator, it shall have sole responsibility to comply with all filing, reporting, and disclosure requirements imposed by the DOL, IRS, or any other government agency, specifically including, but not limited to, creating and filing Form 5500s and preparing and distributing SPDs and performin required nondiscrimination testing. Furthermore, the Employer further acknowledges that it shall bear sole responsibility fora n ing the Plan as necessary to ensure compliance with applicable tax, labor, and other laws and regulations. The Employer owl es receipt of the checklist of Plan Sponsor Responsibilities included provided with the applicable plan document request d h agreed to the obligations set forth therein. it is also understood and agreed that American Family Life Assurance Com ny of Columbus flac), and its subsidiaries, agents, and representatives, are not providing legal or tax advice to the undersi Employ r in connection with this Plan and that no representations are made by it with respect to the operation of the Flexible fits PI pursuant to the documents provided by American Family Life Assurance Company of Columbus (Aflac) to the Employer. This Plan shall be construed and enforced according to the I ma venue C e of 1986, as amended from time to time, the applicable regulations thereto, and the laws of the state of the al ace of business of the Employer. IN WITNESS WHEREOF, the Employer has caus this Plan and ummary Plan Description to be executed on the day of to ratify the adoption Plan adopted and effective as of the Effective Date. ATTACHMENT I - SUMMARY PLAN DESCRIPTION Employer: Date: 12 PLANDOC FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION PLAN INFORMATION SUMMARY The Employer named below establishes a Flexible Benefits Plan (the "Plan") as set forth in this Summary Plan Description (`S3PDj as of the Effective Date set forth below. The purpose of the Plan is to provide eligible Employees a choice between cash and the specified welfare benefits described in this Plan Information Summary (see 'Benefits Provided Under the Plan"). Pre-tax Contribution elections under the Plan are intended to qualify for the exclusion from income provided in Section 125 of the Internal Revenue Code of 1986. FLEXIBLE BENEFITS PLAN EMPLOYER INFORMATION (System Data) Employer Name Name and Address of Employer. Plan Administrator. (System Data) Plan's Principal Contact Name (System Data) ER Address 1, 2 (System Data) City, State ZIP The Plan Administrator has the exclusive right to interpret the Plan and to decide all matters g un r the Plan, including the right to make determinations of fact and construe and interpret possible ambiguities, inconsistencies, i ns in the Plan and this SPD. 2) 3) 4) 6) 7) 8) 9) Employer's Telephone Number. (System Data) (###) ###�/### Employer's Federal Tax Identification Number: (System Data) ER Tax ID Plan Number Assigned to Cafeteria Plan (e.g., 501 if this is the first ERISA Plan Number assigned) 125 Start Date: (System Data) m Effective Date of this Plan: ((System Data)) mmldd/ Last Day of the Plan Year. (System Dat mmlddlyy Subsequent Plan Years: (System D mmidd-mml Name and Address of FSA Claim Administrator. (�em IM PROCESSOR: FLEX ONE or "SAME" if Self-Admin (19 NNTON ROAD orblank if self-admin ) O MBUS. GA 31999 or blank if self-admin Name and Address of registered agent for service of legal process: 10) Affiliated Employers that will parti ' to in the Plan (System Data) Affiliate Name 117 Legal Representative in excess of 29 are listed in Appendix 1): (System Data) Affilate ID# SPD 11) Employer's Type of Business: (System Data) ELIGIBILITY All Employees employed by the Employer shall be eligible to participate under the Plan exce the following: (item Dab) An eligible Employee may become a Participant in the Plan (check one): Immediately, upon the first day of employment (but not prior to the Effective Date of the Plan). On the (SD) day following commencement of employment. On the first day of the month following S( D}##days of employment. ❑ Other. (System Data) provided the Employee completes a Salary Redirection Agreement ('SFW). However, eligibility for coverage under any given Benefit Plan or Policy shall be determined by the terms of that Benefit Plan of Policy, and reductions of the Employee's Compensation to pay Pre-tax or After-tax Contribution(s) shall commence when the Employee becomes covered under the applicable Benefit Plan or Policy. An eligible Employee may become a Participant in the Dependent Care and/or Medical Expense eimbursement Plan(s) (if elected below): 1 On the same day such Employee is eligible for the Pre -Tax Contribution benefits h n. I On the (SD) day following commencement of employment. On the first day of the month following (SD days of employment. Other. stem Data provided the Employee completes a SRA selecting such benefits. BENEFITS PROVIDED UNDER THE PLAN The following Benefit Plans and Policies subject to the terms and condi ' of the Plan available for election by eligible Employees. The maximum a Participant can contribute via the SRA is the maxim a egate cost of the Benefit Plans or Policies elected minus any Nonelective Contribution made by the Employer. It is intend su Pre-tax Contribution amounts shall, for tax purposes, constitute an Employer contribution, but may constitute Employee con ions for state insurance law purposes. Copies of the Benefit Plans or Policies (or a list of eligible Policy numbers) shall b attached a a pendix to this Plan. ❑ Medical Coverage ❑ Vision Care Coverage ❑ Disability Income — Short Term (A&S) ❑ Cancer insurance ❑ Group Dental Coverage ❑ Group Term life Insurance ❑ Disability Income — Long Term (LTD) ❑ Intensive Care Insurance ❑ Accident Insurance ❑ Hospital Indemnity Insurance I ❑ Specified Health Event ❑ Personal Sick ne Indemnity ( 1) ❑ Medical Care a se Reimbur ent described in Appendix Ito this SPD, not to exceed $(SD) per Plan Year pursuant to the (System D to Employer Name Medical Care Expense Reimbursement Plan. Name and AddMWSWical Care Expense Reimbursement Plan COBRA Administrator {if pplicable): ❑ Dependent Care Expense Reimbursement described in Appendix I to this SPD, not to exceed $5,000 per Plan Year or $2,500 for married filing separate returns pursuant to the (system Data) Employer Name Dependent Care Expense Reimbursement Plan. ❑ Health Savings Account (as defined in Code Section 223) established with the following Custodian/Trustee: ❑ Opt -out Option: See Employer enrollment material THE FUNDING AGENT The Employer selects the following Funding Agent for the Plan (check one): Y.f The Employer, which will comply with the requirements of Article VII of the Plan. (;" The Flexible Benefits Trust created concurrently with the execution of the Plan, which shall receive contributions under the Plan in accordance with Article VI of the Plan. ADMINISTRATIVE EXPENSES Administrative Expenses incurred in operating the Plan shall be paid by (check one): ;iisi The Employer, except as otherwise noted in the Plan. rsF: The Participants, except as otherwise noted in the Plan. SPD FLEXIBLE BENEFITS PLAN SUMMARY PLAN DESCRIPTION Introduction Your employer (the "Employer") is pleased to sponsor an employee benefit program known as a "Flexible Benefits Plan" (the "Plan") for you and your fellow employees. Under federal tax laws, it is also known as a "cafeteria plan". it is so called because it lets you choose from several different insurance and fringe benefit programs according to your individual needs. The Employer provides you with the opportunity to use pre-tax dollars to pay for them by entering into a salary redirection arrangement instead of receiving a corresponding amount of your regular pay. This arrangement helps you because the benefits you elect are nontaxable; you save Social Security and income taxes on the amount of your salary redirection. Alternatively, your Employer may allow you to pay for any of the available benefits with after -taut contributions on a salary deduction basis. This Summary Plan Description ("SPD') describes the basic features of the Plan, how it operates, and how you can get the maximum advantage from it. Information mating to the Plan that is specific to your Employer is described in the Plan Information Summary attached to the front of this SPD. You will be referred to the Plan Information Summary throughout the SPD. The Plan is also established pursuant to a plan document into which this SPD has been incorporated. If there is a conflict between the official plan document and the SPD, the plan document will govern. In some cases, the Employer may adopt a Medical Care and/or Dependent Care Reimb a Ian. If so, they will be listed in the Plan Information Summary as "Benefits Provided under the Plan," and the SPD for ea eirr ement Plan adopted by the Employer will be set forth in Appendix I to this SPD. To the extent that the Employer adopts di Care Reimbursement Plan as indicated in the Plan Information Summary, a summary of your rights and obligations under HI privacy rules is attached to this SPD as Appendix II. You may also be able to make pre-tax contributions to a Health Savings Acco V din Code Section 223) through this Plan if Health Savings Accounts are identified as an included benefit under "Benefi under the Plan" in the Plan Information Summary. If Health Savings Accounts are identified as a benefit plan option offr the Plan, your rights and obligations in regard to such contributions will be set forth in the Health Saving ntContrpendix attached hereto. Questions & Answers b h lexible Benefits Plan Q-1. What is the purpose of the Plan? The purpose of the Plan is to allow eligible oyees to pay for certain benefits offered under the Plan (called "Benefit Plans or Policies") with pre-tax dollars called Contributions". Pre-tax Contributions are described in more detail in Q-8 of this SPD. 0-2. What benefits can I purchase on a p=ta�is through the Plan? You will be able to choose to participate ifte Plan's various pre-tax options by filling out any required enrollment form(s) for the component Benefit Plans or Policie offered under the Plan. The complete list of Benefit Plans or Policies offered under the Plan is locate a Plan Information Summary under "Benefits Offered Under the Plan." NOTE: You may only contribute with Pre tax C wards the cost of Benefit Plans or Policies that cover you, your legal Spouse, and/or your tax Dependents deft n nternal Revenue Code Section 152. Each Benefit Plan or Policy may define eligible Dependents more narrow) r pu oses of coverage under the particular Benefit Plan or Policy. Q-3. Who can rticipate in the Ian? Each emp Employer (or an Affiliated Employer identified in the Plan Information Summary) who satisfies the eligibility requireme s described in the Plan Information Summary and who is eligible to participate in any of the Benefit Plans or Polici red under the Plan will be eligible to participate in this Plan as of the date described in the Plan Information Summary (see 0-5 of this SPD for instructions on how to become a Participant). Those employees who actually participate in the Plan are called "Participants." The terms of eligibility of this Plan do not override the terms of eligibility of each of the Benefit Plans or Policies offered under the Plan. For the details regarding eligibility provisions, benefit amounts, and premium schedules for each of the Benefit Plans or Policies, please refer to the plan summary for each of the Benefit Plans or Policies listed in the Plan Information Summary. Only coverage for an Employee and the Employee's Dependents may be paid for under this Plan. A dependent is defined generally as an individual who would be considered the Employee's spouse under the federal income tax code or the Employee's tax dependents as defined in Code Section 152; however, for purposes of health benefits and Dependent Care Reimbursement ("DDC') benefits offered under the Plan, a dependent is defined as (i) for health plan purposes, as set forth in Code Section 105(b) and (ii) for DDC purposes, as any person who meets the requirements to be a "qualifying individual" as defined in the DDC component SPD. CIA When does my participation In the Plan end? You continue to participate in the Plan until (1) you elect not to participate in accordance with Q-9 of this SPD; (ii) you no longer satisfy the eligibility requirements described in the Plan Information Summary; (III) you terminate employment with the Employer, or (iv) the Plan is terminated or amended to exclude you or the class of employees of which you are a member. 9 your employment with the Employer is terminated during the Plan Year or you otherwise oease to be eligible, your active participation in the Plan will automatically cease, and you will not be able to make any more Pre-tax Contributions under the Plan. If you are rehired within the same Plan Year or you become eligible again, you may make SPD new elections, provided that you are rehired or become eligible again more than 30 days after you terminated employment or lost eligibility. N you are rehired or again become eligible within 30 days or less, your prior elections will be reinstated and remain in effect for the remainder of the Plan Year unless you again lose eligibility. 0-5. How do 1 become a Participant? You become a Participant by signing an individual Salary Redirection Agreement ("SRA") on which you elect one or more of the Benefit Plans or Policies available under the Plan, as well as agree to a salary redirection to pay for those benefits so elected. You will be provided an SRA when you first become eligible to participate in this Plan. You must complete the form and turn it in to the Personnel Office during the applicable enrollment period described in Q-6 below. 0-6. What are the enrollment periods for entering the Plan? 9 you are eligible on the effective date of the Plan, you must enroll during the enrollment period immediately preceding the effective date of the Plan. Otherwise, you must enroll during either the "Initial Enrollment Period" or the "Annual Enrollment Period'. You will be notified of the dates that each enrollment period begins and ends in the enrollment material provided to you prior to each enrollment period. If you make an election during the Initial En ant Period, your participation in this Plan will begin on the later of your eligibility date described in the Plan Informati ummary, the first pay period coinciding with or next following the date that your election is received by the PI dm' trator {or its designated claims administrator) or the date coverage under a Benefit Plan or policy that you ale insig he effective date of coverage under the applicable Benefit Plan(s) or Policy(ies) is governed by the terms of eac nPlan or Policy, as set forth in the governing documents for each Benefit Plan or Policy. The election that you make he Initial Enrollment Period is effective for the remainder of the Plan Year and generally cannotbe revoked durin the Plan Year unless you have a Change in Status event as described in Q-9 below. If you do notNlefault n during the Initial Enrollment Period, you will be deemed to have elected not to participate in this Plan foof the Plan Year. You may, however, be covered by certain Benefit Plans or Policies automatically (and btribute with pre-tax dollars) even if you fail to make an election. These automatic Benefit Plans or Policies Benefits" and will be identified in the enrollment material that you receive. The election that you make during the Annual En II riod is effective the first day of the next Plan Year and is irrevocable for the entire Plan Year unless you have a Ch a in Status event described in Q-9 below. A Participant who fails to complete, sign, and file an SRA during a Annual En nt Period as required shall be deemed to have elected to continue participation in the Plan with the a benefit el ns as during the prior Plan Year (adjusted to reflect any increase/decrease in applicable premiums), xcept for a Change in Status, will not be permitted to modify his election until the next Annual Enrollment Period. No 1 riding the foregoing, annual elections for participation in the Medical Care and Dependent Care Expense eimburs me ns, if offered under the Plan, must be made by submitting an SRA prior to the beginning of each Pla d m elections shall occur with respect to such benefits. The Plan Year is generally a 12-month kriod (except during the initial or last Plan Year of the Plan). The beginning and ending dates of the Plan Year are describe ' the Plan Information Summary. Q-7. What tax advantages atlable through the Plan? Suppose your monthly I s ay 2,500 per month and your cost for coverage is $140 per month. Also, suppose your total withholdings (income an ocial Security) are 22.66%. After paying for coverage from your after-tax pay, your take home pay is 1,794. Howe under the pre-tax premium plan, you will be considered to have received $2,360 gross pay rather tha 2, 00 for tax p oses with $140 contributed for medical coverage. This means your take home pay will be $1,825 wi t tax premium plan rather than $1,794 without it. Thus, you save $31 per month ($372 per year) by participatin -tax premium plan. The Table below illustrates this savings. With Cafeteria Plan Without Cafeteria Plan Gross Monthly Pay $2,500 $2,500 Pre -Tax Coverage Under Plan 140 — Taxable Income 2,360 2.500 Estimated Federal Tax (15%) 354 375 FICA Tax 181 191 After-tax Coverage — 140 Take Home Pay 1,825 1,794 Monthly Savings: $31.00 0-8. How are my contributions under the Benefit Plans or Policies made? When you become a Participant, your share of the contributions for the elected Benefit Plan or Policy(ies) will be paid with Pre-tax Contributions elected on the SRA. Pre-tax Contributions are amounts withheld from your gross income before any applicable federal and state taxes have been deducted (some state tax laws do not recognize Pre-tax Contributions). In addition, all or a portion of the cost of the Benefit Plans or Policies may, in the Employer's discretion, be paid with contributions made by the Employer on behalf of each Participant (these are called "Nonelective Contributions"). The amount of Nonelective Contribution that is applied towards the cost of the Benefit Plan(s) or Policy(ies) for each Participant and/or level of coverage is subject to the sole discretion of the Employer, and it may be adjusted upward or downward in the Employers sole discretion. The Nonelective Contribution amount will be calculated for each Plan Year in a uniform and SPD nondiscriminatory manner and may be based upon your Dependent status, commencement or termination date of your employment during the Plan Year, and such other factors that the Employer deems relevant In no event will any Nonelective Contribution be disbursed to you in the form of additional, taxable Compensation except as otherwise provided in the enrollment material. To the extent set forth in the enrollment material, the Employer may make available a certain amount of Nonelective Contributions and then allow you to allocate the Nonelective Contributions among the various Benefit Plan(s) or Policy(ies) that you choose (subject to restrictions described in the enrollment material). Q-9. Can I ever change my election during the Plan Year? Generally, you cannot change your election to participate in the Plan or vary the Pre-tax Contribution amounts although your election will terminate if you are no longer working for the Employer or no longer eligible under the terms of the Plan. Otherwise, you may change your elections for Pre -Tax Contributions only during the Annual Enrollment Period, and then, only for the coming Plan Year. There are several important exceptions to this general rule: You may change or revoke your previous election during the Plan Year if you file a written request for change with the Plan Administrator (or its designated claims administrator) within 30 days of any of the following events: Change in Status. If one or more of the following "Changes in Status" o u may revoke your old election and make a new election, provided that both the revocation and new election eon ccount of and correspond with the Change in Status (as described below). Those occurrences that quali Ndees in Status include the events described below, as well as any other events that the Plan Administratopermitted under subsequent IRS regulations: • a change in your legal marital status (such as marriage, I I separation, annulment, or divorce or death of your Spouse); • a change in the number of your tax Dependents (such as theyNchild, adoption or placement for adoption of a Dependent, or death of a Dependent); • any of the following events that change the ym t status of you, your Spouse, or your Dependent that affect benefit eligibility under a cafeteria plan (include is Plan and the Plan of another employer) or other employee benefit plan of yours, your Spouse, or your Dep n . Such events include any of the following changes in employment status: termination ori6mmencement employment, a strike or lockout, a commencement of or return from an unpaid leave of ab a change n worksite, switching from salaried to hourly paid, union to non -union, or part-time to full-time; i g a reduction or increase in hours of employment; or any other similar change which makes the individual b cc o cease to be) eligible for a particular employee benefit (NOTE: The specific rules governing et2pNQL_chan n you take a leave of absence are described in Q-13 of this SPD); • an event that causes your De denTtil satisfy or cease to satisfy an eligibility requirement for a particular benefit (such as attaining a specified agboetting married, or ceasing to be a student); • a change in y our Spouse's o� your Dependent's place of residence. If a Change in Stat d you want to make a corresponding election change, you must inform the Plan Administrator and co tea ew election within 30 days from the date of the event. The election change must be on account f and corresp d with the Change in Status event as determined by the Plan Administrator with the exception of spe nrollment re ing from birth, placement for adoption or adoption, all election changes are prospective. As a a desired election change will be found to be consistent with a Change in Status event if the event affects a igibilit or coverage. A Change in Status affects eligibility for coverage if it results in an increase or decrease in the num er Dependents who may benefit under the plan. In addition, you must also satisfy the following specific requiremen in order to alter your election based on that Change in Status: • Loss of Dependent Eligibility. For accident and health benefits (e.g., health, dental and vision coverage, and Medical Care Reimbursement Plan), a special rule governs which types of election changes are consistent with the Change in Status. For a Change in Status involving your divorce, annulment or legal separation from your Spouse, the death of your Spouse or your Dependent, or your Dependent ceasing to satisfy the eligibility requirements for coverage, your election to cancel accident or health benefits for any individual other than your Spouse involved in the divorce, annulment, or legal separation, your deceased Spouse or Dependent, or your Dependent that ceased to satisfy the eligibility requirements, would fail to correspond with that Change in Status. Hence, you may only cancel accident or health coverage for the affected Spouse or Dependent. Example: Employee Mike is married to Sharon, and they have one child. The employer offers a calendar year cafeteria plan that allows employees to elect no health coverage, employee -only coverage, employee -plus -one -Dependent coverage, or family coverage. Before the plan year, Mike elects family coverage for himself, his wife Sharon, and their child. Mike and Sharon subsequently divorce during the plan year, Sharon loses eligibility for coverage under the plan, while the child is still eligible for coverage under the plan. Mike now wishes to cancel his previous election and elect no health coverage. The divorce between Mike and Sharon constitutes a Change in Status. An election to cancel coverage for Sharon is consistent with this Change in Status. However, an election to cancel coverage for Mike and/or the child is not consistent with this Change in Status. In contrast, an election to change to employee -plus -one -Dependent coverage would be consistent with this Change in Status. However, there are instances in which you may be able to increase your Pre-tax Contributions to pay for COBRA coverage of a Dependent child or yourself. Gain of Coverage Eligibility Under Another Employer's Plan. For a Change in Status in which you, your Spouse, or your Dependent gain eligibility for coverage under another employer's cafeteria plan (or Benefit Plan or Policy) as a result of a change in your marital status or a change in your, your Spouse's, or your Dependent's employment status, your election to cease or decrease coverage for that individual under the Plan would correspond with that Change in Status only If coverage for that individual becomes effective or is increased under the other employers plan. • Dependent Care Reimbursement Plan Benefits (if offered under the Plan. See the list of Benefit Plans or Policies offered under the Plan in the Plan Information Summary). With respect to the Dependent Care Reimbursement Plan benefit (if offered by the Plan), you may change or terminate your election only if (1) such change or termination is made of account of and corresponds with a Change in Status that affects eligibility for coverage under the Plan; or (2) your election change is or account of and corresponds with a Change in Status that affects the eligibility of Dependent care assistance expenses for the available tax exclusion. Example: Employee Mike is married to Sharon, and they have a 12 year -old daughter. The employer's plan offers a Dependent care expense reimbursement program as part of its cafeteria plan. Mike elects to reduce his salary by $2,000 during a plan year to fund Dependent care coverage for his hter. In the middle of the plan year when the daughter turns 13 years old, however, she is no longer eli le t participate in the Dependent care program. This event constitutes a Change in Status. Mike's elect ca I coverage under the Dependent care program would be consistent with this Change in Status. • Group Term Life Insurance, Disability Income, or Dismemberment Benefits ffered under the Plan. See the list of Benefit Plans or Policies offered under the Plan in he Pfan informs ' n Summary). For group term life insurance, disability income, and accidental death and d' mberment benefits, if you experience any Change in Status (as described above), you may elect either to increas decrea coverage. Example: Employee Mike is married to Sharon, d they have hild. The employer's plan offers a cafeteria plan which funds group -term life insurance (and othe enefits) through salary reduction. Before the plan year Mike elects $10,000 of group -ter fe in rance. Mike and Sharon subsequently divorce during the plan year. The divorce constitutes a Chan a to s. An election by Mike either to increase or to decrease his group -term life insurance coverage would each b nsistent with this Change in Status. Special Enrollment Rights. If you, your use, and/or a ependent are entitled to special enrollment rights under a Benefit Plan or Policy that is a group health you may c ange your election to correspond with the special enrollment right. Thus, for example, if you declined enro in medical coverage for yourself or your eligible Dependents because of outside medical coverage and eli ibility for ch rage is subsequently lost due to certain reasons (i.e., due to legal separation, divorce, death, termin I ym t, reduction in hours, or exhaustion of COBRA period), you may be able to elect medical coverage and for yourself and your eligible Dependents who lost such coverage. Furthermore, if you have a new Depend t as a result of marriage, birth, adoption, or placement for adoption, you may also be able to enroll yourself, your Spouse, an ur newly acquired Dependents, provided that you request enrollment within the Election Change Period. An election ange that corresponds with a special enrollment must be prospective, unless the special enrollment i ' utable to the birth, adoption, or placement for adoption of a child, which may be retroactive up to 30 days. Please refer ealth plan description for an explanation of special enrollment rights. Certain Judgments, Dec as a d Orders. If a judgment, decree o order from a divorce, separation, annulment, or custody ch a requires y r ependent child (including a foster child who is your tax Dependent) to be covered under this Plan, ou may change our election to provide coverage for the Dependent child identified in the order. If the order requires t t r individual (such as your former Spouse) cover the Dependent child, and such coverage is actually provided, nge your election to revoke coverage for the Dependent child. Entitlement to icare or Medicaid. If you, your Spouse, or a Dependent becomes entitled to Medicare or Medicaid, you may cancel t at person's accident or health coverage. Similarly, if you, your Spouse, or a Dependent who has been entitled to Medicare or Medicaid loses eligibility for such, you may, subject to the terms of the underlying plan, elect to begin or increase that person's accident or health coverage. 5. Change in Cost. If you are notified that the cost of your Benefit Plan or Policy coverage under the Plan significantly increases or decreases during the Plan Year, you may make certain election changes. If the cost significantly increases, you may choose either to make an increase in your contributions, revoke your election and receive coverage under another Benefit Plan or Policy that provides similar coverage, or drop coverage altogether if no similar coverage exists. If the cost significantly decreases, you may revoke your election and elect to receive coverage provided under the option that decreased in cost. For insignificant increases or decreases in the cost of Benefit Plans or Policies, however, your Pre-tax Contributions will automatically be adjusted to reflect the minor change in cost. The Plan Administrator will have final authority to determine whether the requirements of this section are met. (Please note that none of the above "Change in Cost" exceptions are applicable to a Medical Care Reimbursement Plan, to the extent offered under the Plan.) Example: Employee Mike is covered under an indemnity option of his employer's accident and health insurance overage. If the cost of this option significantly increases during a period of coverage, the Employee may make a corresponding increase in his payments or may instead revoke his election and elect coverage under an HMO option. 6. Change In Coverage. If you are notified that your Benefit Plan or Policy coverage under the Plan is significantly curtailed, you may revoke your election and elect coverage under another Benefit Plan or Policy that provides similar overage. Ifthe significant curtailment amounts to a complete loss of coverage, you may also drop overage if no other similar coverage is available. Further, if the Plan adds or significantly improves a benefit option during the Plan Year, you may revoke your SPD election and elect to receive on a prospective basis coverage provided by the newly added or significantly improved option, so long as the newly added or significantly improved option provides similar coverage. Also, you may make an election change that is on account of and corresponds with a change made under another employer plan (including a plan of the Employer or another employer), so long as: (a) the other employer plan permits its participants to make an election change permitted under the IRS regulations; or (b) the Plan Year for this Plan is different from the Plan Year of the other employer plan. Finally, you may change your election to add coverage under this Plan for yourself, your Spouse, or your Dependent if such individual(s) loses coverage under any group health coverage sponsored by a governmental or educational institution. The Plan Administrator will have final discretion to determine whether the requirements of this section are met (Please note that none of the above "Change in Coverage" exceptions are applicable to the Medical Care Reimbursement Plan, to the extent offered under the Plan.) Additionally, your election(s), may be modified downward during the Plan Year if you are a Key Employee or Highly Compensated Individual (as defined by the Internal Revenue Code), if necessary to prevent the Plan from becoming discriminatory within the meaning of the federal income tax law. 0-10. How long will the Plan remain in effect? Although the Employer expects to maintain the Plan indefinitely, it has the righ m ify or terminate the program at any time for any reason. It is also possible that future changes in state or f tax s may require that the Plan be amended accordingly. Q-11. What happens if my claim for benefits under this Plan is denied? 1, This SPD describes the basic features of the Plan. If your claim is benefit under one of the component Benefit Plans or Policies, you will generally proceed under the claims procedures a ' able u er the component Benefit Plan or Policy (see the plan summary for each of the Benefit Plans or Policies that yo ct) owever, if you are denied a benefit under this Plan, the claims procedure under this Plan will apply. ou will be n if your claim under the Plan is denied. The notice of denial will be furnished to you within 30 days iving you claim. However, if additional time is needed to process your claim you will be notified before the initi -da eriod has expired. The notice will explain why an extension is necessary and the date a decision is expected to e e d. In no event will an extension go beyond 15 days after the end of the initial 30-day period. The notice of the denial clude the specific reasons for the denial and the relevant plan provisions on which the denial was based. If your claim is denied in whole or in part, y ay appeal by requesting a review of the denied claim, as set forth in the notice of denial, within 180 days after you re lice of the denial. If there are two levels of appeal (as indicated in the notice of denial), you will have a rea onable a ou me in which to request a second review and such time period will be identified in the notice of den' rt th appeal process (whether there is one or two appeals), you or your authorized representative may exams nts, records, and other information relevant to your claim and submit issues, documents and comments in wn g. Wi hin 60 days after the request for review is received, you will be notified in writing of the decision on review. The notice of denial icate whether there are one or two levels of appeals and will contain the same type of information provided to u notice of denial. If there are two levels of Plan appeals, the decisions on appeal will be made within 30 days a he quest for each review is received. The Plan Administrator is the claims fiduciary for making the final decision u er th plan. In the eve'th your death, y r beneficiary has the same rights and is subject to the same time limits and other restrictions that woul apply to you under the claims procedures explained above. 0-12. What effect will PI participation have on Social Security and other benefits? Plan participation will reduce the amount of your taxable compensation. Accordingly, there could be a decrease in your Social Security benefits and/or other benefits (e.g., pension, disability and life insurance) that are based on taxable compensation. 0-13. What happens If I take a leave of absence? (a) If you go on a qualifying unpaid leave under the Family and Medical Leave Act of 1993 (FMLA), to the extent required by the FMLA, the Employer will continue to maintain your Benefit Plans or Policies providing health overage on the same terms and conditions as though you were still active (e.g., the Employer will continue to pay its share of the contribution to the extent you opt to continue coverage). (b) Your Employer may elect to continue all coverage for Participants while they are on paid leave (provided Participants on non-FMLA paid leave are required to continue coverage). if so, you will pay your share of the contributions by the method normally used during any paid leave (for example, with Pre-tax Contributions if that is what was used before the FM LA leave began). (c) In the event of unpaid FMLA leave (or paid leave where coverage is not required to be continued), if you opt to continue your group health coverage, you may pay your share of the contribution with after-tax dollars while on leave, or you may be given the option to pre -pay all or a portion of your share of the contribution for the expected duration of the leave with Pre-tax Contributions from your pre -leave compensation by making a special election to that effect before the date such compensation would normally be made available to you provided, however, that pre -payments of Pre-tax Contributions may not be utilized to fund coverage during the next Plan Year, or by other arrangements agreed upon between you and the Plan Administrator (for example, the Plan Administrator may fund coverage during the leave and withhold amounts from your compensation upon your return from leave). The payment options provided by the Employer will be established in accordance with Code Section 125, FMLA and the Employer's internal policies and procedures regarding leaves of absence. Altsmatively, the Employer may require all Participants to continue coverage during the leave. If so, you may elect to discontinue your share of the required contributions until you return from leave. Upon return from leave, you will be required to repay the contribution not paid during the leave in a manner agreed upon with the Administrator. (d) H your coverage ceases while on FMLA leave (e.g., for non-payment of required contributions), you will be permitted to re-enter the Plan upon return from such leave on the same basis as you were participating in the Plan prior to the leave, or as otherwise required by the FMLA. Your coverage under the Benefit Plans or Policies providing health coverage may be automatically reinstated provided that coverage for Employees on non-FMLA leave is automatically reinstated upon return from leave. (a) The Employer may, on a uniform and consistent basis, continue your group health coverage for the duration of the leave following your failure to pay the required contribution. Upon return from leave, you will be required to repay the contribution in a manner agreed upon by you and Employer. (f) If you are commencing or returning from unpaid FMLA leave, your electio er Plan for Benefit Plans or Policies providing non -health benefits shall be treated in the same manner that ons f non -health Benefit Plans or Policies are treated with respect to Participants commencing and returning from ai on-FMLA leave. (g) If you go on an unpaid non-FMLA leave of absence (e.g., perso I leave, sick lea , etc.) that does not affect eligibility in this Plan or a Benefit Plan or Policy offered under this plan n you will continue to participate and the contribution due will be paid by pre -payment before going on leave, by a ax con 'butions while on leave, or with catch-up contributions after the leave ends, as may be determined by th mi ' ator. If you go on an unpaid leave that affects eligibility under this Plan or a Benefit Plan or Policy, the el change rules in Q-9 of this SPD will apply. The Plan Administrator will have discretion to deter ether taki an unpaid non-FMLA leave of absence affects eligibility. 0-14. Is there any other information that I should know abo a Plan? Participation in the Plan does not give any icipant the rig to be retained in the employ of his or her Employer or any other right not specified in the Plan. The PI dministrato s name, address and telephone number appear in the Plan Information Summary attached to the front of i D. The Plan Administrator has the exclusive right to interpret the Plan and to decide all matters arising under the an, ding the right to make determinations of fad, and construe and interpret possible ambiguities, Inc r o ions in the Plan and this SPD. Other important information such as the Plan Number and Plan Sponsor's ddress has also been provided in the Plan Information Summary. RIE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 9369, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Monday, August 6, 2007, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. MANUELA GIR N, City Clerk (SEAL) - 4 -