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Resolution No. 2012-230 (2).& AMA-" OFFICE OF THE CITY CLERK 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583-8811 November 26, 2012 RaeChelle Reyes-Marlang Flex Account Manager Igoe Administrative Services P.O. Box 501480 San. Diego, CA 92150-1480 Re: Cafeteria Plan Adoption Agreement and Business Associate Agreement Dear Ms. Reyes-Marlang: Transmitted herewith is an original fully executed Cafeteria Plan Adoption Agreement and two partially executed Business Associate Agreements for execution by the proper party. Please return one fully executed original Business Associate Agreement to the attention of the undersigned. If you have any questions regarding this matter, please contact Teresa McAllister at (323) 583- 8811 ext. 239. Very truly ours, Z'Z j Deborah R. Juarez Records. Management Assistant Enclosures c: Karina Rueda Resolution No. 2012-230 Agreement No. 12420 Ezcfusivefy Industriaf IGOE ADMINISTRATIVE SERVICES Flex Renewal Packet City of Vernon Igoe Administrative Services = Where Service Matters! AGOE AnMINISTRATIVE SERVICES Thank you!! On behalf of Igoe, please accept our sincerest thanks and gratitude for your partnership during the last year. You are the reason that we stand strong and we appreciate the privilege, opportunity and consideration that you extend to us every day. We are excited to be celebrating over 30 years of business based on the strength of our business relationships like yours and our continued dedication to provide quality service. At Igoe, we measure success by howlong our clients have retained our services. Many of our clients have been with us for 15-20+ years and we are proud beyond words To this extent we are pleased that we provide you with a dedicated point of contact -- your Account Manager. While technology affords instant access to critical business data, it cannot replace the benefit of having an interactive conversation with a real person who is dedicated to helping you! We also feel that your participant members deserve the same quality care. Our Call Center is On -Site for that specific reason. Our staff is dedicated to providing critical resources, tools and assistances to all end users. They have one simple goal - to provide resolutions for your members in an efficient, friendly and professional manner. As you can imagine, what our clients say about us is central to our success. As a valued client your comments and feedback are very important to us -- If there are other ways that we can serve you would you please let us know? HRA & HSA administration and premium reconciliation to carriers are just a few of the service areas we are expanding based on client comments. We look forward to determining how else we can help! Sincerely, Laura Kathleen McKinlay Leslie Farrer Anne -Marie DeWitt President/CEO Sr. Vice President, Customer Service Vice President, New Business Management Igoe Administrative Services - Where Service Matters! g COBRA I FSA I COMMUTER BENEFITS I HRA I and coming soon ..... HSAs Beginning on January 1, 2013, Flexible Benefits plans with a plan year start date of January 1, 2013 or later are required to limit the maximum employee contribution to $2500 for their health FSA programs. This new provision is part of the Patient Protection and Affordable Care Act (PPACA). To help explain how this change impacts various aspects of plan administration, the IRS released Notice 2012-40. Below are some of the key clarifications we thought we be of most significance to you. ✓ The $2,500 dollar limit applies to all Flexible Benefit Plans with a plan year start date on or after January 1, 2013. This limit will be indexed for cost of living adjustments for plan years beginning after December 31, 2013. ✓ Employers whose health FSAs currently follow a calendar plan year may not change to a fiscal year "primarily" in order to delay application of the $2,500 reimbursement limit. Plan year.changes must be for a "valid business purpose" (e.g., as a result of a merger or acquisition transaction) and any switch meant to delay application of the reimbursement cap will be disregarded (the original calendar year format will remain in effect). ✓ The $2,500 limit must be prorated over a short plan year that begins after 2012. For example, a plan year beginning April 1, 2013 and ending December 31, 2013 may allow reimbursement of only $1,875 ($2,500 x .75) ✓ The $2,500 limit applies on an employee -by -employee basis. Please note that if two spouses may participate in a health FSA as employees, they each are entitled to a $2,500 budget even if they both participate in the same health FSA sponsored by the same employer. ✓ With regard to employer contributions under a cafeteria plan, often called "flex credits," the flex credits will count towards the $2,500 (and reduce the employee's salary deferral limit) if the employee can elect to receive the flex credits as cash or as a taxable benefit. Flex credits that are only usable in the health FSA for reimbursed medical expenses will not offset the $2,500 limit. ✓ The $2,500 limit only applies to health FSA reimbursements and not to salary reduction contributions to any of the following: • Dependent care reimbursement accounts (DCAP) • "Premium only" or premium conversion portions of a cafeteria plan • Health Savings Accounts (HSA) • Health Reimbursement Accounts (HRA) • Unused salary reduction contributions to a health FSAs that are carried over after the end of a plan year into a grace period (not to exceed 2 % months into the subsequent plan year). do not count against the $2,500 limit applicable for the subsequent plan year. As we only covered some of the highlights, we recommend that you contact your legal counsel, CPA or benefits consultant to discuss how this impacts your specific plan. Your dedicated account manager would be happy to assist you by supplying Plan Amendments and updated Summary Plan Descriptions should you make a change to your health FSA maximum. The information contained herein was provided by attorney Christine P. Roberts of Mullen & Henzell LLP. 3 1 P a g e Igoe Administrative Services — Where Service Matters! COBRA I FSA I COMMUTER BENEFITS I HRA I and coming soon.....HSAs RE -ENROLLMENT INSTRUCTIONS ■ Review your Verification of Account Information. This document outlines your current administrative design. If the information is accurate, you can begin using your enrollment materials located in iView. For your ease, Enrollment Material Access Instructions are included on page 6. ■ Review, sign and send back an updated Business Associates Agreement (BAA). Please note that Igoe only needs one BAA on file regardless of how many services you have. While our records indicate that we have not received an updated BAA, we may have already sent you a copy under separate cover. If you have already received an updated BAA, simply ensure that you send back one copy for our records. ■ Interested in Making Changes to your Plan or adding new services? Let your dedicated Account Manager, RaeChelle Reyes-Marlang, know so that they can provide your personal assistance. 4 1 P a g e Igoe Administrative Services — Where Service Matters! COBRA I FSA I COMMUTER BENEFITS I HRA I and coming soon.....HSAs VERIFICATION OF ACCOUNT INFORMATION Please take a moment to look over this form. If it looks correct to you and you don't plan to change your plan design. You don't need to do anything. Your Enrollment Resources are already available on your Wiew site! Please reference your Enrollment Materials Access Instructions found on page 6 of your Renewal Packet. Emviover Information City of Vernon Company Name: 4305 Santa Fe Avenue DBA Name (if applicable): Vernon CA 90058 Company Address Karina Rueda Street City State Zip (323) 583-8811 krueda@ci.vernon.ca.us Primary Contact Phone Email Plan Information Plan Year: January 2013 - December 2013 2.5 Month Grace Period: Plan Year Run Out End: 2/28/2014 Termination of Medical FSA Run Out End: 60 days following the date of termination Dependent Care Annual Maximum: $5,000 Medical Care FSA Annual Maximum: $2,500 Limited Purpose FSA Annual Maximum: N/A Other Insurance Premium Plan Annual Maximum: N/A Transit/Parking Plan: N/A Total # of Contributions (Payroll Mode): 26 Payroll Cycle: Every Other Thursday First Contribution of the New Plan Year Scheduled: January 10, 2013 Please let Igoe know immediately if this date is incorrect or if you have had any changes to your payroll cycles(s). Ideally, Igoe prefers a listing of all pay dates that will have a salary redirection during the upcoming plan year. If no list is provided, Igoe will assume that existing system builds still pertain. Reimbursement Method: MICR Checks Reimbursement Schedule: Every Other Thursday (same as payday) 5 I F a g.e_ Igoe Administrative Services — Where Service Matters! COBRA I FSA I COMMUTER BENEFITS I HRA I and coming soon.....HSAs ENROLLMENT MATERIALS ACCESS INSTRUCTIONS Your custom enrollment materials are ready and waiting for use! Simply go to your iView account and select the Flex home page: Click on the following resource link: 'Jr communication Forms and Participant Resources Igoe is pleased to provide customized FSA enrollmentfonrs, informational flyers, participant resources, and ongoing election management forms. This will take you to the following resource page on which you can select the proper Plan Year and form that you wish to provide to your employees. ` Communication Forms and Part-icipant MeW Resources Select a Plan Year: 06/01/11 - 05/31/12 Select a Form. Select Form.., Select the plan year, and select the form you need. if no plans are Enrollment Pc m7 Management team by using the Flex Questions? option. on the lov, description of the forms purpose This application is best viewed I -plan Highlights FSA Online Account Instructions QGroup Health Insurance E irollment Benefits Card Flow Chart Benefits Card Information packet 1 Notice of Privacy Practices for Protected Health Info Children's Hearth Insurance PfOgfarn (CHIP) Don't forget about of Flexible Benefit Plan Enrollment Video! You can provide the link directly to your employees to review as they have time or you can schedule a group session: http://www eoigoe com/Participants%presentation aspx?&PPT-Enrollment The video is presented in chapters to allow the end user to skip to the account options that most interest them. Open Enrollment Power Point Presentation An overview of your FSA plan to be used for open enrollment and new hires, giving them useful information and answers to frequently asked questions about your FSA plan[ Simply provide the link below to your employees for access that does not require a login. http://V"ivw.g oigoe. com/participants/pre s entation. aspx?&P PT=Enrollment 6lPage.- Igoe Administrative Services — Where Service Matters! COBRA I FSA I COMMUTER BENEFITS I HRA I and coming soon.....HSAs BUSINESS ASSOCIATE AGREEMENT This Business Associate Agreement (the "Agreement") is made by City of Vernon in its capacity as Plan Administrator of City of Vernon Group Health Plan/Plans (herein referred to as "Covered Entity") and Igoe & Company Incorporated, dba Igoe Administrative Services (hereinafter known as "Business Associate"). Covered Entity and Business Associate shall collectively be known herein as the "Parties". WHEREAS, Covered Entity wishes to commence a business relationship with Business Associate that shall be memorialized in a separate administrative services agreement (the "Underlying Agreement") pursuant to which Business Associate may be considered a "business associate" of Covered Entity as defined in the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") including all pertinent regulations (45 CFR Parts 160 and 164) issued by the U.S. Department of Health and Human Services as either have been amended by Subtitle D of the Health Information Technology for Economic and Clinical Health Act (the "HITECH Act"), as Title XIII of Division A and Title IV of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5); and WHEREAS, the nature of the prospective contractual relationship between Covered Entity and Business Associate may involve the exchange of Protected Health Information ("PHI") as that term is defined under HIPAA; and For good and lawful consideration as set forth in the Underlying Agreement, Covered Entity and Business Associate enter into this Agreement for the purpose of ensuring compliance with the requirements of HIPAA, its implementing regulations, the HITECH Act and applicable medical privacy provisions of California law; NOW THEREFORE, in consideration of the mutual promises and of other good and valuable consideration herein contained, the Parties, intending to be legally bound, hereby agree as follows: I. DEFINITIONS. A. Individual. "Individual" shall have the same meaning as the term "individual" in 45 CFR §164.501 and shall include a person who qualifies as a personal representative in accordance with 45 CFR §164.502(g). B. Breach. "Breach" shall have the same meaning as the term "breach" in §13400 of the HITECH Act and shall include the unauthorized acquisition, access, use, or disclosure of PHI that compromises the security or privacy of such information. C. Designated Record Set. "Designated Record Set" shall have the same meaning as the term "designated record set" in 45 CFR §164.501. D. Electronic Protected Health Information. "Electronic Protected Health Information" or "Electronic PHI" shall have the same meaning as the term "electronic protected health information" in 45 CFR §160.103. 1 1 P a g e AGUE ACIMU 11.641JA111h SprtvlGC.9 Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT E. Electronic Transactions Rule. "Electronic Transactions Rule" shall mean the final regulations issued by HHS concerning standard transactions and code sets.under 45 CFR Parts 160 and 162. F. HHS. "HHS" shall mean the U.S. Department of Health and Human Services. G. Privacy Rule. "Privacy Rule" shall mean the Standards for Privacy of Individually Identifiable Health Information at 45 CFR Part 160 and Part 164, Subparts A and E, as amended by the HITECH Act and as may otherwise be amended from time to time. H. Protected Health Information. "Protected Health Information" or "PHI" shall have the same meaning as the term "protected health information" in 45 CFR §164.501, limited to the information created or received by Business Associate from or on behalf of Covered Entity. I.. Required by Law. "Required by Law" shall have the same meaning as the term "required by law" in 45 CFR §164.103. J. Secretary. "Secretary" shall mean the Secretary of the U.S. Department of Health and Human Services or his or her designee. K. Security Incident. "Security Incident" shall have the same meaning as the term "securing incident" in 45 CFR § 164.304. . L. Security Rule. "Security Rule" shall mean the Security Standards and Implementation Specifications at 45 CFR Parts 160 and 164, subpart C. M. Transaction. "Transaction" shall have the meaning given the term "transaction" in 45 CFR§ 160.103. N. Unsecured Protected Health Information. "Unsecured Protected Health Information" or "Unsecured PHI" shall mean PHI that is not secured through the use of a technology or methodology specified by the Secretary in guidance or as otherwise defined in the §13402(h) of the HITECH Act. II. USE OR DISCLOSURE OF PHI BY BUSINESS ASSOCIATE. A. Except as otherwise limited in this Agreement, Business Associate may use or disclose Protected Health Information to perform functions, activities, or services for, or on behalf of, Covered Entity as specified in the Underlying Agreement, provided that such use or disclosure would not violate the Privacy Rule. B. Business Associate shall only use and disclose PHI if such use or disclosure complies with each applicable requirement of 45 CFR §164.504(e). 2 1 P a g e nuaaini5rttanvr Ser�wres Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT C. Business Associate shall be directly responsible for full compliance with the relevant requirements of the Privacy and Security Rules to the same extent as Covered Entity. III. DUTIES OF BUSINESS ASSOCIATE RELATIVE TO PHI. A. Business Associate shall not use or disclose PHI other than as permitted or required by this Agreement or as Required by Law. B. Business Associate shall implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the Electronic PHI that it creates, receives, maintains, or transmits on behalf of Covered Entity. Business Associate shall immediately notify Covered Entity of any use or disclosure of PHI in violation of this Agreement. C. Business Associate will report to Covered Entity any attempted or successful (A) unauthorized access, use, disclosure, modification, or destruction of Covered Entity's Electronic Protected Health Information or (B) interference with Business Associate's system operations in Business Associate's information systems, of which Business Associate becomes aware. Business Associate will make this report within a reasonable timeframe except if any such security incident resulted in a disclosure not permitted by this. Agreement or Breach of Covered Entity's Unsecured Protected Health Information, Business Associate will make the report in accordance with the provisions set forth in the paragraph immediately below. D. Business Associate promptly shall notify Covered Entity of a Breach of Unsecured PHI following the first day on which Business Associate knows of such Breach or following the first day on which Business Associate (or Business Associate's employee, officer or agent, excluding any individual responsible for a breach), or reasonably should have known of such breach through the exercise of reasonable diligence. "Business Associate" for this limited purpose shall include Business Associate's owners, officers, employees, independent contractors, and agents, with the exclusion of any individual who is responsible for a breach. Business Associate's notification to Covered Entity hereunder shall: i. Be made to Covered Entity without unreasonable delay and in no event later than 60 calendar days after discovery of the Breach, except where a law enforcement official determines that a notification would impede a criminal investigation or cause damage to national security; ii. Include the individuals whose Unsecured PHI has been, or is reasonably believed to have been, the subject of a Breach; and iii. Include any other available information that the Covered Entity is required to include in its notification to the individual under §13402(f) of the HITECH Act, promptly upon such information becoming available to Business Associate. E. Business Associate agrees to require that any of its subcontractors and agents; to which Business Associate is permitted by this Agreement or in writing by Covered Entity to disclose Covered 3 1 P a g e n©au�ititunravr �eHwe�s Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT Entity's Protected Health Information and/or Electronic Protected Health Information, to provide reasonable assurance that such subcontractor or agent will comply with the same privacy and security safeguard obligations with respect to Covered Entity's Protected Health Information and/or Electronic Protected Health Information that are applicable to Business Associate under this Agreement. F. In the event Business Associate becomes aware of a pattern or practice of a subcontractor or agent that violates the privacy and security safeguard obligations made to Business Associate, Business Associate will take reasonable steps to cure such violation and otherwise will respond to non- compliance by a subcontractor or agent in the same way that Covered Entity is required to respond to non-compliance by Business Associate. G. As of the effective date specified by HHS in final regulations to be issued on this topic, Business Associate shall not directly or indirectly receive remuneration in exchange for any Protected Health Information of an individual unless the Covered Entity or Business Associate obtained from the individual, in accordance with 45 CFR § 164.508, a valid authorization that includes a specification of whether the Protected Health Information can be further exchanged for remuneration by the entity receiving Protected Health Information of that individual, except as otherwise allowed under the HITECH Act. H. If Business Associate conducts in whole or part electronic Transactions on behalf of Covered Entity for which HHS has established standards, Business Associate will comply, and will require any subcontractor or agent it involves with the conduct of such Transactions to comply, with each applicable requirement of the Electronic Transactions Rule. Business Associate shall also comply with the National Provider Identifier requirements, if and to the extent applicable. I. To the extent applicable, Business Associate shall provide access to Protected Health Information in a Designated Record Set at reasonable times, at the request of Covered Entity or, as directed by Covered Entity, to an Individual in order to meet the requirements under 45 CFR §164.524. J. To the extent applicable, Business Associate shall make any amendment(s) to Protected Health Information in a Designated Record Set that Covered Entity directs or agrees to pursuant to 45 CFR §164.526 at the request of Covered Entity or an Individual. K. Business Associate shall, upon request with reasonable notice, provide Covered Entity access to its premises for a review and demonstration of its internal practices and procedures for safeguarding PHI. Such access shall be granted no less frequently than annually, and in the event of a Breach or Security Incident as herein defined. L. Business Associate agrees to document such disclosures of PHI and information related to such disclosures as would be required for a Covered Entity to respond to a request by an individual for an accounting of disclosures of PHI in accordance with 45 C.F.R. §164.528. Should an individual make a request to Covered Entity for an accounting of disclosures of his or her PHI pursuant to 45 C.F.R. §164.528, Business Associate agrees to promptly provide Covered Entity with information in a format and manner sufficient to respond to the individual's request. 4 I P a g e ADMI %f»Arivc stavicFs Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT M. Business Associate shall, upon request with reasonable notice, provide Covered Entity with an accounting of uses and disclosures of PHI provided to it by Covered Entity. N. Business Associate shall make its internal practices, books, records, and any other material requested by the Secretary relating to the use, disclosure, and safeguarding of PHI received from Covered Entity available to the Secretary for the purpose of determining compliance with the Privacy Rule. The aforementioned information shall be made available to the Secretary in the manner and place as designated by the Secretary or the Secretary's duly appointed delegate. Under this Agreement, Business Associate shall comply and cooperate with any request for documents or other information from the Secretary directed to Covered Entity that seeks documents or other information held by Business Associate. O. Business Associate may use Protected Health Information to report violations of law to appropriate Federal and State authorities, consistent with 42 C.F.R. §164.502(j)(1). P. Except as otherwise limited in this Agreement, Business Associate may use or disclose PHI for the proper management and administration of. Business Associate, provided that any disclosures made are Required by Law, or Business Associate obtains reasonable assurances from the person to whom the information is disclosed that it.will remain confidential and be used or further disclosed only as Required by Law or for the purpose for which it was disclosed to the person, and the person notifies Business Associate of any instances of which it is aware in which the confidentiality of the information has been breached. IV. TERM AND TERMINATION. A. Term. The Term of this Agreement shall be effective as of the date the Underlying Agreement is effective, and shall terminate when all of the Protected Health Information provided by Covered Entity to Business Associate, or created or received by Business Associate on behalf of Covered Entity, is destroyed or returned to Covered Entity, or, if it is infeasible to return or destroy Protected Health Information, protections are extended to such information, in accordance with the termination provisions in this Section IV. B. Termination for Cause. Upon Covered Entity's knowledge of a material breach of this Agreement by Business Associate, Covered Entity shall: 1. Provide an opportunity for Business Associate to cure the breach or end the violation and, if Business Associate does not cure the breach or end the violation within the time specified by Covered Entity; which shall be no less than thirty (30 days), terminate this Agreement; 2. Immediately terminate this Agreement if Business Associate has breached a material term of this Agreement and cure is not possible; or 51P.age 3. If neither termination nor cure is feasible, report the violation to the Secretary. UAIMMIRAIWE SERVIC[K Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT C. Effect of Termination. 1. Except as provided in paragraph C(2) of this section, upon termination of this Agreement, for any reason, Business Associate shall return or destroy all Protected Health Information received from Covered Entity, or created or received by Business Associate on behalf of Covered Entity. This provision shall apply to Protected Health Information that is in the possession of subcontractors or agents of Business Associate. Business Associate shall not retain any copies of the Protected Health Information. 2. In the event that Business Associate determines that returning or destroying the Protected Health Information is infeasible, Business Associate shall provide to Covered Entity written notification of the conditions that make return or destruction infeasible. After written notification that return or destruction of Protected Health Information is infeasible, Business Associate shall extend the protections of this Agreement to such Protected Health Information and limit further uses and disclosures of such Protected Health Information to those purposes that make the return or destruction infeasible, for so long as Business Associate maintains such Protected Health Information. 3. Should Business Associate make a disclosure of PHI in violation of this Agreement, Covered Entity shall have the right to immediately terminate any contract, other than this Agreement, then in force between the Parties, including the Underlying Agreement. V. CONSIDERATION. The parties mutually recognize that the promises each has made to the other in this Agreement shall, henceforth, be detrimentally relied upon by each party in choosing to continue orcommence a business relationship with the other party. VI. REMEDIES IN EVENT OF BREACH. Business Associate hereby recognizes that irreparable harm will result to Covered Entity, and to the business of Covered Entity, in the event of breach by Business Associate of any of the covenants and assurances contained in this Agreement. As such, in the event of breach of any of the covenants and assurances contained in Sections II or III above, Covered Entity shall be entitled to enjoin and restrain Business Associate from any continued violation of Sections II or III. Furthermore, in the event of breach of Sections II or III by Business Associate, Covered Entity is entitled to reimbursement and indemnification from Business Associate for Covered Entity's reasonable attorneys' fees and expenses and costs that were reasonably incurred as a proximate result of Business Associate's breach however not including attorneys' fees, expenses or costs incurred in claims or actions brought by third parties affected by the breach. The remedies contained in this Section VI shall be in addition to (and not supersede) any action for damages and/or any other remedy Covered Entity may have for breach of any part of this Agreement. VII. MODIFICATION. This Agreement may only be modified through a writing signed by the Parties and, thus, no oral modification hereof shall be permitted. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for Covered Entity to comply with the requirements of the Privacy Rule and HIPAA. 6 I P a g e 'L ADMINISTRAIWt SERVIErS Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT Vill. INTERPRETATION OF THIS CONTRACT IN RELATION TO OTHER CONTRACTS BETWEEN THE PARTIES. Should there be any conflict between the language of this contract and any other contract entered into between the Parties (either previous or subsequent to the date of this Agreement), the language and provisions of this Agreement shall control and prevail unless the Parties specifically refer in a subsequent written agreement to this Agreement by its title and date and specifically state that the provisions of the later written agreement shall control over this Agreement. IX. COMPLIANCE WITH STATE LAW. Except to the extent it's obligation to do so is preempted by the provisions of HIPAA, including provisions of the HITECH Act, Business Associate shall notify Covered Entity in accordance with California Civil Code § 1798.82(d) of any breach of unencrypted data owned or licensed by Covered Entity; and maintained by Business Associate. "Breach" for these purposes means acquisition of unencrypted data by an unauthorized person, or the reasonable belief of such acquisition, that compromises the security, confidentiality, or integrity of personal information consisting of medical or insurance information pertaining to California residents, subject however to the good faith exception set forth in Civil Code § 1798.82(d). If the HIPAA Privacy or Security Rules and the California Civil Code provisions conflict regarding the degree of protection provided for Protected Health Information, Business Associate shall comply with the more restrictive protection requirement. X. MISCELLANEOUS A. Ambiguity. Any ambiguity in this Agreement shall be resolved to permit Covered Entity to comply with the Privacy Rule. B. Regulatory References. A reference in this Agreement to a section in the Privacy or Security Rule means the section as in effect or as amended. C. Notice to Covered Entity/Business Associate. All Notices required hereunder shall be in writing and provided by electronic mail and will be considered received as of the date of the electronic transmission. Notices to the Covered Entity shall be sent to the daily contact on file with the Business Associate. Notices to the Business Associate shall be sent to the daily contact on file with the Covered Entity. Both Parties agree that they are responsible for ensuring that such Notices are forwarded to the appropriate internal personnel for handling. If additional information is needed to take action related to a Notice, a request must be made in writing outlining all specific requirements and instructions and provided by electronic mail 7 I P a g e ApS11Nf.�.tith'i11'E 5ErtVIClS Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT IN WITNESS WHEREOF and acknowledging acceptance and agreement of the foregoing, the Parties affix their signatures hereto. Covered Entity: 1 By: Name: William Davis Title: Mayor Date: Business Associate: By: Name: Laura K. McKinlay Title: President/CEO Date: ATT T: 1 1: i - U Dan eed, In erim Vity Clerk OVED AS TO FORM: 61W 1 Po// L.. Nicholas George Rodriguez, City Attorney 8 I P a g e ADMINISIRA71W seuvius Document Generated on August 16, 2011. City of Vernon Business Associate Agreement ADOPTION AGREEMENT CAFETERIA PLAN The undersigned adopting employer hereby adopts this Plan. The Plan.is intended to qualify as a cafeteria plan under Code section 125. The Plan shall consist of this Adoption Agreement, its related Basic Plan Document and any related Appendix and Addendum to the Adoption Agreement. Unless otherwise indicated, all Section references are to Sections in the Basic Plan Document. COMPANY INFORMATION 1. Name of adopting employer (Plan Sponsor): City of Vernon 2. Address: 4305 Santa Fe Ave. 3. City: Vernon 4.State: CA 5. Zip: 90058 6. Phone number: 323-583-8811 7. Fax number: 323-826-1439 8. Plan Sponsor EIN:95-6000808 9. Plan Sponsor fiscal year end: June 30 10a. Plan Sponsor entity type: i. [ ] C Corporation ii. [ ] S Corporation iii. [] Non Profit Organization iv. [ ] Partnership V. [ ] Limited Liability Company vi. [ ] Limited Liability Partnership vii. [ ] Sole Proprietorship viii. [ ] Union ix. [ X ] Government Agency X. [ ] Other: 10b. If 10a.viii (Union) is selected, enter name of the representative of the parties who established or maintain the Plan: 11. State of organization of Plan Sponsor: California 12a. The Plan Sponsor is a member of an affiliated service group: [ ] Yes [ X ] No 12b. If 12a is "Yes", list all members of the group (other than the Plan Sponsor): 13a. The Plan Sponsor is a member of a controlled group: [IYes IXINo 13b. If 13a is "Yes", list all -members -of -the group -(other than the Plan Sponsor): PLAN INFORMATION A. GENERAL INFORMATION. 1. Plan Number: 510 2. Plan name: a. City of Vernon b. Amended and Restated Cafeteria Plan 3. Effective Date: 3a. Original effective date of Plani May 1, 2007 3b. Is this a restatement of a previously -adopted plan? [XIYes [INo 3c. If A.3b is "Yes", effective date of Plan restatement: January 1, 2013 NOTE: If A.3b is "No", the Effective Date shall be the date specified in A.3a, otherwise the date specified in A.3c; provided, however, that when a provision of the Plan states another effective date, such stated specific effective date shall apply as to that provision. Copyright 2002-2012 CCH INCORPORATED, DBA FTWILLIAM.COM 4a. Plan Year means each 12-consecutive month period ending on December 31 (e.g. December 31). If the Plan Year changes, any special provisions regarding a short Plan Year should be placed in the Addendum to the Adoption Agreement. 4b. The Plan has a short plan year: []Yes [XINo 4c. If A.4b is "Yes", the short plan year begins and ends on 5. Is the Plan Subject to ERISA? [] Yes [XINo Plan Features loa. Premium Conversion Account. Contributions to fund a Premium Conversion Account are permitted (Section 4.01) (If "No", questions regarding Premium Conversion Accounts are disregarded.): [X]Yes [INo 10b. If A.10a is "Yes", select the types of Contracts for which a Participant may seek reimbursement under Section 4.01: i. [ X ] Employer Group Medical ii. [ X ] Employer Dental iii. [ X ] Employer Vision iv. [ ] Employer Disability V. ] Employer Group Term Life A. [ ] Individually - Owned Medical vii. [ ] Individually - Owned Dental viii. [ ] Individually - Owned Vision ix. [ ] Individually - Owned Disability X. [ ] Other loc. If A.10a is "Yes" and A.10b.x (other contracts) is selected, describe other types of Contracts: l la. Health Care Reimbursement Account. Contributions to fund a Health Care Reimbursement Account are permitted (Section 4.02) (If "No", questions regarding Health Care Reimbursement Accounts are disregarded.): [ X ] Yes [ ] No llb. HSA Account. Contributions to fund an HSA Account are permitted (Section 4.08): [IYes [X]No 12. Dependent Care Assistance Account. Contributions to fund a Dependent Care Assistance Account are permitted (Section4.03) (If "No", questions regarding Dependent Care Assistance Accounts are disregarded.): [XIYes [INo NOTE: The maximum amount of expense that may be contributed/reimbursed in any Plan Year for the Dependent Care Assistance Account is the maximum amount permitted by federal tax law ($5,000 or $2,500 if the Participant is married and filing a separate federal tax return). 13. Adoption Assistance Account. Contributions to fund an Adoption Assistance Account are permitted. (Section 4.04) (If "No", questions regarding Adoption Assistance Accounts are disregarded.): [IYes [XINo NOTE: The maximum amount of expense that may be contributed/reimbursed for the Adoption Assistance Account is the maximum amount permitted by federal tax law for the prior year ($10,960 for Plan Years beginning in 2006). The annual limit shall be reduced for adoption assistance expenses incurred any prior Plan Year. Simple Cafeteria Plan 15. Is the Plan a simple cafeteria plan as defined in Code section 125(j): [IYes [X]No NOTE: In order to be a simple cafeteria plan, the Employer must be an eligible employer (as defined in Code section 1250)(5)) and the Plan must meet certain contribution, eligibility and participation requirements. Copyright 2002-2012 CCH INCORPORATED, DBA FTVULLIAM.COM B. ELIGIBILITY. Exclusions/Modifications The term "Eligible Employee" shall not include (Check items B.1 - B.5a as appropriate): NOTE: If A.15 is "Yes (the Plan is a simple cafeteria plan), B.2 may not be selected and BA and B.5a may be selected only to the extent that the provisions do not violate the requirements on Code section 1250). 1. [ X ] Union. Any Employee who is included in a unit of Employees covered by a collective bargaining agreement, if benefits were the subject of good faith bargaining, and if the collective bargaining agreement does not provide for participation in this Plan. 2. [ X ] Any leased employee. 3. [ X ] Non -Resident Alien. Any Employee who is a non-resident alien who received no earned income (within the meaning of Code section 911(d)(2)) which constitutes income from services performed within the United States (within the meaning of Code section 861(a)(3)). 4. [ X ] Part-time. Any Employee who is expected to work less than N/A hours per week. 5a. [ ] Other. Other Employees described in B.5b (any exclusion must satisfy Code section 125(g) and the requirements under Section 5.01). 5b. If B.5a is selected, describe other Employees excluded from definition of Eligible Employee: 6a. Allow immediate participation for all Eligible Employees employed on the date specified in B.6b: [ ] Yes [ X ] No 6b. If B.6a is "Yes", all Eligible Employees employed on shall become eligible to participate in the Plan as of such date. 7. If A.10a is "Yes", (Contributions to fund a Premium Conversion Account are permitted), an Employee shall be an Eligible Employee with respect to the Premium Conversion Account if the Employee is eligible to participate in the benefit plans described in A.10b: [XIYes [INo 8a. Indicate whether the Plan will make any other revisions to the term "Eligible Employee": [XIYes [INo 8b. If B.8a is "Yes", describe any further modifications to the term 'Eligible Employee": An Eligible Employee is further defined as being classified as a full-time employee. Service Requirements 10. Minimum age requirement for an Eligible Employee to become eligible to be a Participant in the Plan: None NOTE: If A.15 is "Yes" (the Plan is a simple cafeteria plan), B.10-may not exceed 21. 11. Minimum service requirement for an Eligible Employee to become eligible to be a Participant in the Plan: i. [ X ] None. ii. [ ] Completion of hours of service. iii. [ ] Completion of days of service. iv. [ ] Completion of months of service. V. [ ] Completion of years of service. NOTE: If A.15 is "Yes" (the Plan is a simple cafeteria plan), B.11 may not exceed 1,000 hours of service or one year of service. 12a. Frequency of entry dates: i. [ ] An Eligible Employee shall become a Participant in the Plan as soon as administratively feasible upon meeting the requirements of B.10 and B.11. ii. [ X ] first day of each calendar month iii. [ ] first day of each plan quarter iv. [ ] first day of the first month and seventh month of the Plan Year v. [ ] first day of the Plan Year 12b. If B.12.a.i (immediate entry) is not selected, an Eligible Employee shall become a Participant in the Plan on the entry date selected in B.12a that is: i. [ X ] coincident with or next following Copyright 2002-2012 CCH INCORPORATED, DBA FTWiLLIAM.COM ii. [ ] next following the date the requirements of B.10 and B.11 are met. 13. If A.10a is "Yes", (Contributions to fund a Premium Conversion Account are permitted), an Eligible . Employee shall become eligible to become a Participant in the Plan with respect to the Premium Conversion Account at the same date as he or she becomes eligible to participate in the Contracts(s) described in A.IOb: [XIYes [1No 14a. Indicate whether the Plan will make any other revisions to the eligibility rules specified in B.10 - B.13: [IYes [X1No NOTE: If A.15 is "Yes" (the Plan is a simple cafeteria plan), B.14a may only be "Yes" if the modifications in B.14b do not violate any requirements of Code section 1250). 14b. If B.14a is "Yes", describe any further modifications to the eligibility rules specified in B.10 - B.13: Transfers/Rehires 15. Permit Participants who are no longer Eligible Employees (for reasons other than Termination) to continue to participate in the Plan until the end of the Plan Year (Section 3.02): 1,1 Yes [ X 1 No NOTE: If "No" is selected, a Participant who has a change in job classification or a transfer that results in the Participant no longer qualifying as an Eligible Employee shall cease to be a Participant as of the effective date of such change of job classification or transfer. 16. Automatically reinstate benefit elections for Terminated Participants who are rehired within 30 days of Termination and permit new benefit elections for Terminated Participants who are rehired more than 30 days after Termination (Section 3,03(a)): [XIYes []No NOTE: If "No" is selected, a Terminated Participant shall not be able to Participate in the Plan until the later of the first day of the subsequent Plan Year or the first entry date following reemployment. C. BENEFITS Premium Conversion Ia. If A.10a is "Yes" (Contributions to fund a Premium Conversion Account are permitted), provide for automatic enrollment for the Premium Conversion Account: [XIYes [1No NOTE: If C.1 a is "Yes", a Participant shall be deemed to elect to contribute the entire amount of any premiums payable by the Participant for the benefit plans described in A.IOb. lb. If A.10a is "Yes" (Contributions to fund a Premium Conversion Account are permitted), provide for automatic adjustment of Participant elections for changes in the cost of Contracts pursuant to the terms of Treas. Reg. 1.125-4: [XIYes [1No Health Care Reimbursement 2a. If A.11 is "Yes" (Contributions to fund a Health Care Reimbursement Account are permitted), select the maximum salary reduction amount that can be contributed to a Health Care Reimbursement Account in any Plan Year: i. [ 1 The maximum amount permitted under Code section 125(i) ii. [ X 1 Other amount specified in C.2b NOTE: If C.2a.i is selected effective prior to 2013, the maximum amount shall be $2,500. 2b. If C.2a is "Other amount specified in C.2b", enter the maximum salary reduction amount that can be contributed to a Health Care Reimbursement Account in any Plan Year: 2,500 (maximum per pay period contribution allowable: $96.15). Copyright 2002-2012 CCH INCORPORATED, DBA FTW4LLIAM.COM NOTE: As of January 1, 2013, C.2 may not exceed the maximum permitted under Code section 125(i) ($2,500 in 2013). 3. If A.11 is "Yes" (Contributions to fund a Health Care Reimbursement Account are permitted), specify whether a Participant shall continue making contributions after Termination of employment for the remainder of the Plan Year: i. [ ] Yes - Continue contributions on an after-tax basis and reimbursements will be allowed for the remainder of the Plan Year. ii. [ X ] No - Contributions shall cease upon Termination and reimbursements will be allowed only for expenses incurred prior to Termination. NOTE: Any required COBRA elections described in Section 4.06 shall supersede this C.3. 4a. If A.11 is "Yes" (Contributions to fund a Health Care Reimbursement Account are permitted), indicate whether a Participant may revise a Health Care Reimbursement Account election upon a change of status: i. [ X ] Yes - without limitation ii. [ ] Yes — but no decrease to the extent that new annual contribution amount would be less than the amount previously reimbursed at the time of the election change iii. [ ] Yes - a Participant may only increase an election upon a change of status iv. [ ] Yes - with limitations described in C.4b. V. [ ] No NOTE: The rules regarding the revision of Health Care Reimbursement Account elections in this CA are also subject to the conditions and limitations provided in C.12. 4b. If A.11 is "Yes" and if C.4a.iv is selected (Yes - with limitations described in C.4b), describe the limitations: Health Care Reimbursement - Eligible Expenses 5a. If A.11 is "Yes" (Contributions to fund a Health Care Reimbursement Account are permitted), a Participant may only be reimbursed from his or her Health Care Reimbursement Account for expenses that are incurred by: i. [ X ] Participant, spouse and dependents. The Participant, his or her spouse and all dependents within the meaning of Code section 152 as modified by Code section 105(b), and any child (as defined in section 152(f)(1)) of the Participant until his or her 26th birthday. ii. [ ] Persons covered under Company medical plan. The Participant, his or her spouse and all dependents within the meaning of Code section 152 as modified by Code section 105(b), and any child (as defined in section 152(f)(1)) of the Participant until his or her 26th birthday, but only if such persons are also covered under the Company -sponsored benefit plan specified in C.5b. iii. [ ] Participants Only. No spousal or dependent coverage. iv. [ ] Other. The persons described in C.5c. NOTE: The Plan Administrator may extend coverage for children until the end of the calendar year in which a child turns age 26. 5b. If C.5a is "Persons covered under Company medical plan", indicate the name of the Company -sponsored benefit plan: NOTE: If i) the Plan constitutes a group health plan as defined in Treas. Reg. section 54.9801-2 or if the Plan Administrator determines that the Plan is subject to HIPAA portability rules, ii) the Plan is not a grandfathered health plan under the Patient Protection and Affordable Care Act, and iii) children are covered under this Plan, all children up to their 26th birthday must be covered. 5c. If C.5a is "Other", indicate who must incur expenses that can be reimbursed from a Participant's Health Care Reimbursement Account: NOTE: The definition in C.5c may not include anyone other than the Participant, his or her spouse and all dependents within the meaning of Code section 152 as modified by Code section 105(b), and any child (as defined in section 152(f)(1)) of the Participant until his or her 26th birthday. If i) the Plan constitutes a group health plan as defined in Treas. Reg. section 54.9801-2 or if the Plan Administrator determines that the Plan is subject to HIPAA portability rules, ii) the Plan is not a grandfathered health plan under the Patient Protection and Affordable Care Act, and iii) children are covered under this Plan, all children up to their 26th birthday must be covered. Copyright 2002-2012 CCH INCORPORATED, DBA FTW5LLIAM.COM 5d. If A.I1 is "Yes" (Contributions to fund a Health Care Reimbursement Account are permitted), exclude coverage for other expenses described in C.5e: []Yes IX]No 5e. If A.11 is "Yes" and C.5d is "Yes", describe other expenses that are not eligible for reimbursement: NOTE: If i) the Plan constitutes a group health plan as defined in Treas. Reg. section 54.9801-2 or if the Plan Administrator determines that the Plan is subject to HIPAA portability rules and ii) the Plan is not a grandfathered health plan under the Patient Protection and Affordable Care Act, then the Plan must provide coverage without cost -sharing requirements for preventative care as provided in Treas. Reg. 54.9815-2713T (and any superseding guidance; up to the amount available in the Participant's Health Care Reimbursement Account). NOTE: If A.I1 is "Yes (Contributions to fund a Health Care Reimbursement Account are permitted), reimbursements may be made for any expense that qualifies for exclusion from income under Code section 105(b) (other than certain long term care expenses and insurance premiums), except as provided in C.5a-e. 6a. If A.11 is "Yes" (Contributions to fund a Health Care Reimbursement Account are permitted), describe method to coordinate coverage in the Plan with Health Savings Accounts (Section 6.010)): i. [ X ] None. Coverage in the Plan is not limited or the Plan is not used in conjunction with a Health Savings Account. ii. [ ] Permitted Coverage. Coverage in the Plan is only provided for permitted insurance and other specified coverage (e.g., coverage for accidents, disability, dental care, vision care or preventive care within the meaning of Code section 223(c)(1) and Rev. Rul. 2004-45 (but not through insurance or for long-term care services). iii. [ ] Post Deductible Coverage. The Plan will not pay or reimburse any medical expense incurred before the minimum annual deductible under Code section 223(c)(2)(A)(i) is satisfied. iv. [ ] Both Permitted and Post Deductible Coverage. Until the minimum annual deductible under Code section 223(c)(2)(A)(i) is satisfied, coverage in the Plan is only provided for permitted insurance and other specified coverage (e.g., coverage for accidents, disability, dental care, vision care or preventive care within the meaning of Code section 223(c)(1) and Rev. Rul. 2004-45 (but not through insurance or for long-term care services). The Plan will pay or reimburse all medical expenses otherwise allowed by the Plan incurred after the minimum annual deductible under Code section 223(c)(2)(A)(i) is satisfied. 6b. If A.11 is "Yes", C.6a is not "None" and D.3a is "Yes" (grace period allowed), indicate period when the limitations described in C.6a apply: i. [ ] Entire Plan Year. ii. [ ] Only during the grace period described in D.3. NOTE: If no grace period is allowed in D.3a, the limitations in C.6a shall apply for the entire Plan Year. 6c. If A.11 is "Yes" and C.6a is not "None", the limitations shall apply to: i. [ ] All Participants. ii. [ ] Only Participants who are also eligible to participate in the high deductible health plan. iii. [ ] Only Participants who are also enrolled in the high deductible health plan. NOTE: If C.6a is "None" or C.6c is not "All Participants", eligibility for a Health Savings Account may be limited. 7. If A.11 is "Yes" (Contributions to fund a Health Care Reimbursement Account are permitted), describe method to coordinate coverage in the Plan with a Company -sponsored health reimbursement arrangement ("HRA") for expenses that are reimbursable under both this Plan and the HRA (Section 6.01(e)): i. [ X ] None. Plan is not used in conjunction with a Company -sponsored HRA. ii. [ ] HRA first. A Participant shall not be entitled to payment/reimbursement under the Health Care Reimbursement Account until the Participant has received his or her maximum reimbursement under the HRA. iii. [ ] Cafeteria plan first. A Participant shall not be entitled to payment/reimbursement under the HRA until the Participant has received his or her maximum reimbursement under the Health Care Reimbursement Account. Company Contributions 8a. Indicate whether the Company may contribute to the Plan (Section 4.09): Copyright 2002-2012 CCH INCORPORATED, DBA FTW6LLIAM.COM i. [ ] Yes - in Company's sole discretion. ii. [ ] Yes - 2% of Compensation. iii. [ ] Yes the lesser of 6% of Compensation or 100% match of a Participant's salary reduction contribution. iv. [ ] Yes - pursuant to the method described in C.8b. V. [ X ] No. NOTE: If A.15 is "Yes" (the Plan is a simple cafeteria plan), C.8a.ii, C.8a.iii or C.8a.iv must be selected. 8b. If C.8a is "Yes - pursuant to the method described in C.8b", describe how the contributions are determined and allocated: NOTE: If A.15 is "Yes" (the Plan is a simple cafeteria plan), C.8b must equal or exceed the formulas under options C.8a.ii or C.8a.iii. 9a. If C.8a is not "No", indicate whether the Plan permits Participants to elect cash in lieu of benefits: i. [ ] No. ii. [ ] Yes -with limitation. iii. [ ] Yes -without limitation. 9b. If C.8a is not "No" and C.9a is "Yes - with limitation", describe any limitations: Elections NOTE: The Plan Administrator may establish a minimum dollar amount or percentage of Compensation for all elections provided that such minimum is non-discriminatory. 10. When may continuing Participants make elections regarding contributions (Section 4.06(b)): i. [ ] The day period ending prior to the beginning of the Plan Year ii. [ X ] Pursuant to Plan Administrator procedures. NOTE: If C.10.i is selected, the Plan Administrator may require that elections be made no later than a certain number of days prior to the beginning of the Plan Year. See Section 4.06(a) for procedures regarding new Participants. 11. The election for a continuing Participant who fails to make an election within the period described in C.10 shall be determined in accordance with the following (Section 4.06(c)-(d)): i. [ ] Election not to participate. The Participant shall be treated as having elected not to participate in the Plan. ii. [ ] Continue same election. Elections for the applicable Plan Year shall be the same as the elections made in the prior Plan Year. iii. [ X ] Continue same election for the Premium Conversion Account. Elections for the applicable Plan Year shall be the same as the elections made in the prior Plan Year but only with respect to the Premium Conversion Account. The Participant shall be treated as having elected not to participate in the Plan with respect to any other Accounts. 12. When may Participants modify elections regarding contributions (Section 4.07(a)): i. [ X ] At any time permitted under Treas. Reg. section 1.125-4. ii. [ ] Pursuant to Plan Administrator procedures. 13a. A Participant may elect to continue coverage on a pre-tax or after tax basis for non medical benefits when on leave of absence under the FMLA (Section 4.06(f)): i. [ X ] Yes - A Participant may continue coverage for all benefits to which he is entitled when on FMLA leave. ii. [ ] No A Participant may continue coverage for Premium Conversion Accounts and Health Care Reimbursement Accounts only. 13b. A Participant may elect to continue coverage on a pre-tax or after tax basis pursuant to C.13a when on a. leave of absence other than a leave of absence under the FMLA: i. [ X ] Yes. ii. [ ] Yes - but subject to the conditions and limitations described in C.13c. iii. [ ] No. 13c. If C.13b is "Yes - but subject to conditions and limitations", describe the conditions and/or limitations: Copyright 2002-2012 CCH INCORPORATED, DBA FTWILLIAM.COM Dependent Care Spend Down 15a. Indicate whether Employees that cease to Participate in the cafeteria plan may continue to be reimbursed for eligible dependent care expenses through the end of the Plan Year (or grace period if applicable): [XI Yes No 15b. If C.15a is "Yes",enter the effective date: August 6.2007 (must be on or after August 6, 2007. Please note that under the proposed cafeteria plan regulations, amendments must be effective on the later of the adoption date or effective date of the amendment). D. PLAN OPERATIONS Claims 1. Claims for reimbursement for an active Participant must be filed with the Plan Administrator (Section 6.01): i. [ ] within days following the last day of each Plan Year. ii. [ X ] by the last day of February following the close of the Plan Year. 2a. The Plan provides for an earlier deadline for claims submission for Terminated Participants: [X] Yes [] No 2b. If D.2a is Yes, claims for reimbursement for a Terminated Participant must be filed with the Plan Administrator (Section 6.01): i. [ X ] within 60 days following Termination of employment. ii. [ ] by 3a. The Plan provides for a 2-1/2 month grace period described in IRS Notice 2005-42 immediately following the end of each Plan Year (Section 4.05(c)): i. [ ] Yes. ii. [ ] Yes - but limited to the Accounts described in D.3c. iii. [ X ] No. 3b. If D.3a is not "No", enter the first day of the first Plan Year for which the grace period will apply: 3c. If D.3a is "Yes - but limited to certain Accounts", enter the Accounts that are eligible for the grace period: 3d. If D.3a is not "No" and D.l.i is selected (claims are due within a number of days after the end of the Plan Year), will the same number of days apply to the end.of the grace period? i. [ ] Yes. ii. [ ] No - same due date applies for grace period claims. iii. [ ] No - claims incurred during the grace period are due: 4. Indicate whether the Company will provide debit, credit, and/or other stored -value cards for Health Care Reimbursement Accounts and/or Dependent Care Assistance Accounts (Section 6.01(i)): [XIYes [INo Qualified Reservist Distributions (HEART Act) 5a. Permit Qualified Reservist Distributions: [IYes [XINo 5b. If D.5a is "Yes", enter the effective date: (must be on or after June 18, 2008. Please note that under the proposed cafeteria plan regulations, amendments must be effective on the later of the adoption date or effective date of the amendment). 5c. If D.5a is "Yes", the amount available as a Qualified Reservist Distribution will be: i. [ ] The entire amount elected for the Health Care Reimbursement Account for the Plan Year minus Health Care Reimbursement Account reimbursements received as of the date of the Qualified Reservist Distribution request. ii. [ ] The amount contributed to the Health Care Reimbursement Account as of the date of the Qualified Reservist Distribution request minus Health Care Reimbursement Account reimbursements received as of the date of the Qualified Reservist Distribution request. Copyright 2002-2012 CCH INCORPORATED, DBA FTMLLIAM.COM iii. j ] Other amount: (not exceeding the entire amount elected for the Health Care Reimbursement Account for the Plan Year minus reimbursements). Plan Administrator 6a. Designation of Plan Administrator (Section 7.01) i. ] Plan Sponsor ii. X ] Committee appointed by Plan Sponsor iii. ] Other 6b. If D.6a.iii is selected, Name of Plan Administrator: 7a. Type of indemnification for the Plan Administrator (Section 7.02): i. ] None - the Company will not indemnify the Plan Administrator. ii. [ X ] Standard as provided in Section 7.02. iii. [ ] Custom. 7b. If D.7a.iii (Custom) is selected, indemnification for the Plan Administrator is provided pursuant to an Addendum to the Adoption Agreement. State Law Rules 10a. If A.5 is "No" (non-ERISA Plan), is the Plan subject to other state law rules?: IIYes IXINo 10b. If A.5 is "No" (non-ERISA Plan) and D.10a is "Yes," enter any state law rules that apply to the Plan: E. EFFECTIVE DATES Use this Section to provide any effective dates for Plan provisions other than the Effective Date. specified in A.3. F. EXECUTION PAGE Failure to properly fill out the Adoption Agreement may result in the failure of the. Plan to achieve its intended tax consequences. The Plan shall consist of this Adoption Agreement, its related Basic Plan Document #125 and any related Appendix and Addendum to the Adoption Agreement. Additional participating employers may be specified in an addendum to the Adoption Agreement. The undersigned agree to be bound by the terms of this Adoption Agreement and Basic Plan Document and acknowledge receipt of same. The Plan Sponsor caused this Plan to be executed this &day of CITY OF VERNON: LAO 1W, V"V, Dana Signature. ed, Inter' City -Clerk g APPROVED AS 0 F I 1 Ipl (I/ Print Name: William Davis Nicholas Geo e Rodriguez, City Attorney Copyright 2002-2012 CCH INCORPORATED, DBA FTMLLIAM.COM Title/Position: Mayor V2.02-3.00 Copyright 2002-2012 CCH INCORPORATED, DBA FTRIILLIAM.COM CITY OF VERNON CAFETERIA PLAN BASIC PLAN DOCUMENT #125 Copyright, 2005-2012 All Rights Reserved. CITY OF VERNON CAFETERIA PLAN BASIC PLAN DOCUMENT TABLE OF CONTENTS ARTICLE 1 INTRODUCTION Section1.01 Plan.....................................................................................................................................................I Section1.02 Application of Plan.............................................................................................................................I ARTICLE 2 DEFINITIONS ARTICLE 3 PARTICIPATION Section3.01 Participation........................................................................................................................................4 Section3.02 Transfers.............................................................................................................................................4 Section 3.03 Termination and Rehires.....................................................................................................................4 Section 3.04 Procedures for Admission...................................................................................................................4 ARTICLE 4 ACCOUNTS Section 4.01 Premium Conversion Accounts...........................................................................................................5 Section 4.02 Health Care Reimbursement Accounts...............................................................................................5 Section 4.03 Dependent Care Assistance Accounts.................................................................................................6 Section 4.04 Adoption Assistance Accounts...........................................................................................................7 Section 4.05 Forfeitures/Transfers...........................................................................................................................8 Section4.06 Elections..............................................................................................................................................8 Section 4.07 Revocation of Elections......................................................................................................................9 Section 4.08 Health Savings Accounts Special Rules............................................................................................12 Section 4.09 Employer Contributions....................................................................................................................12 ARTICLE 5 LIMITATIONS ON CONTRIBUTIONS Section5.01 Nondiscrimination.............................................................................................................................13 Section 5.02 Limitations on Contributions............................................................................................................13 ARTICLE 6 REIMBURSEMENTS Section6.01 Reimbursements................................................................................................................................14 Section 6.02 Claims Procedure for Health Care Reimbursement Account............................................................15 Section 6.03 Claims Procedures for Non -Health Benefits.....................................................................................17 Section 6.04 Minor or Legally Incompetent Payee................................................................................................18 Section6.05 Missing Payee...................................................................................................................................18 ARTICLE 7 PLAN ADMINISTRATION Section7.01 Plan Administrator............................................................................................................................19 Section7.02 Indemnification.................................................................................................................................20 Section7.03 HIPAA Privacy Rules ............................. ...............:..........................:...............................................20 Section 7.04 Medical Child Support Orders..........................................................................................................22 Section 7.05 HIPAA Portability Rules..................................................................................................................22 ARTICLE 8 AMENDMENT AND TERMINATION Section8.01 Amendment.......................................................................................................................................23 Section8.02 Termination.......................................................................................................................................23 ARTICLE 9 MISCELLANEOUS Section 9.01 Nonalienation of Benefits.................................................................................................................24 Section 9.02 No Right to Employment..................................................................................................................24 Section9.03 No Funding Required........................................................................................................................24 Section9.04 Governing Law.................................................................................................................................24 Section9.05 Tax Effect..........................................................................................................................................24 Section 9.06 Severability of Provisions.................................................................................................................24 Section 9.07 Headings and Captions......................................................................................................................24 Section9.08 Gender and Number..........................................................................................................................25 In ARTICLE 1 INTRODUCTION Section 1.01 PLAN This document ('Basic Plan Document") and its related Adoption Agreement are intended to qualify as a cafeteria plan within the meaning of Code section 125. To the extent provided in the Adoption Agreement, the Plan provides for the pre-tax payment of premiums and contributions to spending accounts that are excludable from gross income under Code section 125, reimbursement of certain medical expenses that are excludable from gross income under Code section 105(b) and reimbursement of certain dependent care expenses that are excludable from gross income under Code section 129, and reimbursement of certain adoption expenses that are excludable from gross income under Code section 137. Section 1_.02 APPLICATION OF PLAN Except as otherwise specifically provided herein, the provisions of this Plan shall apply to those individuals who are Eligible Employees of the Company on or after the Effective Date. Except as otherwise specifically provided for herein, the rights and benefits, if any, of former Eligible Employees of the Company whose employment terminated prior to the Effective Date, shall be determined under the provisions of the Plan, as in effect from time to time prior to that date. ARTICLE 2 DEFINITIONS "Account" means the balance of a hypothetical account established for each Participant as of the applicable date. "Account" or "Accounts'_' shall include to the extent provided in the Adoption Agreement, a Premium Conversion Account, a Health Care Reimbursement Account, a Dependent Care Assistance Account, an Adoption Assistance Account and such other account(s) or subaccount(s) as the Plan Administrator, in its discretion, deems appropriate. "Adoption Agreement" means the document executed in conjunction with this Basic Plan Document that contains the optional features selected by the Plan Sponsor. "Adoption Assistance Account" means the Account established with respect to the Participant's election to have adoption expenses reimbursed by the Plan pursuant to Section 4.04. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Company" means the Plan Sponsor and any other entity that has adopted the Plan with the approval of the Plan Sponsor. "Compensation" means the cash wages or salary paid to a Participant. If the Adoption Agreement indicates that the Plan is a simple cafeteria plan as defined in Code section 1250), "Compensation" shall mean Section 414(s) Compensation (defined below). "Dependent Care Assistance Account" means the Account established with respect to the Participant's election to have dependent care expenses reimbursed by the Plan pursuant to Section 4.03. "Effective Date" shall have the meaning set forth in the Adoption Agreement. "Eligible Employee" means any Employee employed by the Company, subject to the modifications and exclusions described in the Adoption Agreement. If an individual is subsequently reclassified as, or determined to be, an Employee by a court, the Internal Revenue Service or any other governmental agency or authority, or if the Company is required to reclassify such individual an Employee as a result of such reclassification determination (including any reclassification by the Company in settlement of any claim or action relating to such individual's employment status), such individual shall not become an Eligible Employee by reason of such reclassification or determination. An individual who becomes employed by the Employer in a transaction between the Employer and another entity that is a stock or asset acquisition, merger, or other similar transaction involving a change in the employer of the employees of the trade or business shall not become eligible to participate in the Plan until the Plan Sponsor specifically authorizes such participation. "Employee" means any individual who is employed by the Employer. The term "Employee" shall not include: (i) a self-employed individual (including a partner) as defined in Code section 401(c), or (ii) any person who owns (or is considered as owning within the meaning of Code section 318) more than 2 percent of the outstanding stock of an S corporation. "Employer" means the Company or any other employer required to be aggregated with the Company under Code sections 414(b), (c), (m) or (o); provided, however, that "Employer shall not include any entity or unincorporated trade or business prior to the date on which such entity, trade or business satisfies the affiliation or control tests described above. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "FMLA" means the Family and Medical Leave Act of 1993 as amended from time to time. "Health Care Reimbursement Account" means the Account established with respect to the Participant's election to have medical expenses reimbursed by the Plan pursuant to Section 4.02. "Contract" means an insurance policy, contract or self -funded arrangement under which a Participant is eligible to receive benefits regardless of whether such policy, contract or arrangement is related to any benefit offered hereunder. Contract shall not include any product which is advertised, marketed, or offered as long-term care insurance. As of January 1, 2014, "Contract" may not include any qualified health plan (as defined in section 1301(a) of the Patient Protection and Affordable Care Act) offered through an exchange established under section 1311 of such Act unless the Employee's Employer is a qualified employer (as defined in section 1312(f)(2) of the Patient Protection and Affordable Care Act) offering the Employee the opportunity to enroll through such exchange in a qualified health plan in a group market. "Participant" means an Eligible Employee who participates in the Plan in accordance with Articles 3 and 4. "Plan Administrator" means the person(s) designated pursuant to the Adoption Agreement and Section 7.01. "Plan Sponsor" means the entity described in the Adoption Agreement. "Plan Year" means the 12-consecutive month period described in the Adoption Agreement. "Premium Conversion Account" means the Account established with respect to the Participant's election to have premiums reimbursed by the Plan pursuant to Section 4.01. "_Section 414(s) Compensation" means compensation as defined in Code section 414(s) and Treas. Reg. section 1.414(s)-1. The period used to determine an Employee's compensation for a Plan Year must be either the Plan Year or the calendar year ending within the Plan Year. Whichever period is selected by the Plan Administrator must be applied uniformly to determine the compensation of every eligible Employee under the Plan for that Plan Year. The Plan Administrator may, however, limit the period taken into account under either method to that portion of the Plan Year or calendar year in which the Employee was an eligible Employee, provided that this limit is applied uniformly to all eligible. "Termination" and "Termination of Employment" means any absence from service that ends the employment of the Employee with the Company. ARTICLE 3 PARTICIPATION Section 3.01 PARTICIPATION Each Eligible Employee as of the Effective Date who was eligible to participate in the Plan immediately prior to the Effective Date shall be a Participant eligible to make benefit elections pursuant to Article 4 on the Effective Date. Each other Eligible Employee who was not a Participant in the Plan prior to the Effective Date shall become a Participant eligible to make benefit elections pursuant to Article 4 on the date specified in the Adoption Agreement; provided that he is an Eligible Employee on such date. Notwithstanding the foregoing, a Participant shall be eligible to make elections only for the Accounts as are specifically authorized in the Adoption Agreement. Section 3.02 TRANSFERS If a change in job classification or a transfer results in an individual no longer qualifying as an Eligible Employee, such Employee shall cease to be a Participant for purposes of Article 4 (or shall not become eligible to become a Participant) as of the effective date of such change of job classification or transfer; unless otherwise provided in the Adoption Agreement. Should such Employee again qualify as an Eligible Employee, he shall be eligible to participate as of the first day of the subsequent Plan Year; unless earlier participation is required by applicable law or permitted pursuant to the change of status provisions of Section 4.07(a). If an Employee who was not previously an. Eligible Employee becomes an Eligible Employee, he shall be eligible to participate on the first entry date following the later of the effective date of such subsequent change of status or the date the Employee meets the eligibility requirements of this Article 3. Section 3.03 TERMINATION AND REHIRES (a) Participants. If a Participant has a Termination of Employment, such Employee shall cease to be a Participant for purposes of Article 4 as of his Termination of Employment. The Plan Administrator may continue participation for purposes of Article 4.01 until the end of the calendar month coincident with or next following his Termination of Employment or other timeframe according to established Plan Administrator procedures. Unless otherwise provided in the Adoption Agreement, if an individual who has satisfied the applicable eligibility requirements set forth in Article 3 as of his Termination date, and who is subsequently reemployed by the Company as an Eligible Employee, shall resume or become a Participant as of the later of the first day of the subsequent Plan Year or the first entry date following reemployment. Notwithstanding the foregoing and if so provided in the Adoption Agreement, the Plan Administrator shall automatically reinstate benefit elections for Terminated Participants who are rehired within 30 days of Termination and permit new benefit elections for Terminated Participants who are rehired more than 30 days after Termination. (b) Non -Participants. An Eligible Employee who has not satisfied the applicable eligibility requirements set forth in Article 3 on his Termination date, and who is subsequently reemployed by the Company as an Eligible Employee, shall be eligible to participate on the first entry date following the later of the effective date of such reemployment or the date the individual meets the eligibility requirements of this Article 3. Section 3.04 PROCEDURES FOR ADMISSION The Plan Administrator shall prescribe such forms and may require such data from Participants as are reasonably required to enroll a Participant in the Plan or to effectuate any Participant elections made pursuant to Article 4. ARTICLE 4 ACCOUNTS Section 4.01 PREMIUM CONVERSION ACCOUNTS (a) In General. To the extent that the Adoption Agreement authorizes Premium Conversion Accounts, each Participant may choose to receive his or her full Compensation for any Plan Year in cash or to have a portion of such Compensation applied by the Company toward the Premium Conversion Account described in Subsection (b). The amount of such contributions to and the premiums that may be reimbursed from the Premium Conversion Account shall not exceed the employee -paid portion of premiums payable under the Contracts specified in the Adoption Agreement. If a Contract is offered in conjunction with a Company -sponsored benefit plan, a Participant shall be eligible to make contributions to the Premium Conversion Account with respect to that Contract only if he or she is also eligible to participate in the applicable Company -sponsored plan. The Account established under this Section 4.01 is intended to qualify under Code Sections 79 and 106(a) to the extent so indicated in the Adoption Agreement and shall be interpreted in a manner consistent with such Code sections. Elections for Code section 79 coverage shall be made on an after-tax basis to the extent that the premiums relate to coverage in excess of the limit described in Code section 79(a). (b) Premium Conversion Account. Each Participant's Premium Conversion Account will be credited with amounts withheld from the Participant's Compensation and amounts paid by the Company pursuant to Section 4.09; and will be debited for amounts applied to employee -paid portion.of applicable premiums. However, the Plan Administrator will not direct the Company to pay any premium on a Contract to the extent such payment exceeds the balance of a Participant's Premium Conversion Account. (c) Conflicts. In the event of a conflict between the terms of this Plan and the terms of a Contract, the terms of the Contract (or the benefit plan under which it is established) shall control in defining the terms and conditions of coverage including, but not limited to, the persons eligible for coverage, the dates of their eligibility, the conditions which must be satisfied to become covered, if any, the benefits Participants are entitled to and the circumstances under which coverage terminates. Section 4.02 HEALTH CARE REIMBURSEMENT ACCOUNTS (a) In General. To the extent that the Adoption Agreement authorizes Health Care Reimbursement Accounts, each Participant may choose to receive his or her full Compensation for any Plan Year in cash or to have a portion of such Compensation applied by the Company toward the Health Care Reimbursement Account described in Subsection (b). The amount of such salary reduction contributions to the Health Care Reimbursement Account shall not exceed the maximum annual limit described in the Adoption Agreement. The Account established under this Section 4.02 is intended to qualify as a health flexible spending arrangement under Code Sections 105 and 106(a) and shall be interpreted in a manner consistent with such Code sections. (b) Health Care Reimbursement Account. Each Participant's Health Care Reimbursement Account will be credited with amounts withheld from the Participant's Compensation and amounts paid by the Company pursuant to Section 4.09; and will be debited for expenses described in Subsection (c). The entire annual amount elected by the Participant on the salary reduction agreement for the Plan Year for the Health Care Reimbursement Account less any reimbursements already disbursed shall be available to the Participant at anytime during the Plan Year without regard to the balance in the Health Care Reimbursement Account provided that the amounts elected in the salary reduction agreement have been paid as provided in the salary reduction agreement. (c) Eligible Expenses. Except as otherwise provided in the Adoption Agreement, a Participant may be reimbursed from his or her Health Care Reimbursement Account for expenses that are: (i) incurred in the Plan Year (except as provided in Section 4.05(c)), (ii) incurred while the Participant participates in the Plan, and (iii) excludable under Code section 105(b); provided that such expenses that are not covered, paid or reimbursed from any other source. (1) For purposes of Code section 105(b), unless otherwise provided in the Adoption Agreement, dependents shall also include students who have not attained the age of 24 for whom coverage is required under Code section 9813; provided, that treatment as a dependent due to a medically necessary leave of absence under Code section 9813 shall not extend beyond a period of one year. (2) For purposes of Code section 105(b), unless otherwise provided in the Adoption Agreement, expenses for a child (as defined in section 152(f)(1)) of the Participant may be covered until his or her 26th birthday although the Plan Administrator may extend coverage until the end of the calendar year in which the child turns age 26. (3) Effective January 1, 2011, reimbursement for expenses incurred fora medicine or a drug shall be treated as a reimbursement for medical expenses under Code section 105(b) only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin. (d) Qualified Reservist Distributions. (1) If the Plan allows Qualified Reservist Distributions, a Participant may receive a distribution of the portion of his Health Care Reimbursement Account specified in the Adoption Agreement provided that such amount was in existence on or after June 18, 2008. The distribution will only be made if: (i) such Participant was a member of a reserve component ordered or called to active duty for a period in excess of 179 days or for an indefinite period and (ii) such distribution is made during the period beginning on the date of such order or call and ending on the last date that reimbursements could otherwise be made under the Plan for the. Plan Year which includes the date of such order or call. A Participant ordered or called to active duty before June 18, 2008 is eligible for a Qualified Reservist Distribution if the Participant's period of active duty continues after June 18, 2008 and meets the duration requirements of IRS Notice 2008-82. A Qualified Reservist Distribution may not be made based on an order or call to active duty of any individual other than the Participant, including the spouse of the Participant. (2) The Plan shall permit a Participant to submit Health Care Reimbursement Account claims for medical expenses incurred before the date a Qualified Reservist Distribution is requested. The Participant shall not have the right to submit claims for medical expenses incurred after the date such Qualified Reservist Distribution is requested. The Company shall pay the Qualified Reservist Distribution to the Participant within a reasonable time, but not more than sixty days after the request for a Qualified Reservist Distribution has been made. (3) This Subsection shall be construed in accordance with IRS Notice 2008-82 and any superseding guidance. Section 4.03 DEPENDENT CARE ASSISTANCE ACCOUNTS (a) In General. To the extent that the Adoption Agreement authorizes Dependent Care Assistance Accounts, each Participant may choose to receive his or her full Compensation for any Plan Year in cash or to have a portion of such Compensation applied by the Company toward the Dependent Care Assistance Account described in Subsection (b). The Account established under this Section 4.03 is intended to qualify as a dependent care assistance program under Code Section 129 and shall be interpreted in a manner consistent with such Code section which provisions are incorporated herein by reference. (b) Dependent Care Assistance Account. Each Participant's Dependent Care Assistance Account will be credited with amounts withheld from the Participant's Compensation and amounts paid by the Company pursuant to Section 4.09; and will be debited for expenses described in Subsection (c). However, the Plan Administrator will not direct the Company to reimburse such expenses to the extent the reimbursement exceeds the balance of a Participant's Dependent Care Assistance Account. (c) Eligible Expenses. (1) In General. A Participant may be reimbursed from his or her Dependent Care Assistance Account to the extent that such reimbursement: (i) is incurred in the Plan Year (except as provided in Section 4.05(c), (ii) is incurred while the Participant participates in the Plan, and (iii) qualifies as dependent care expenses; provided that such expenses that are not covered, paid or reimbursed from any other source and the Participant does not claim a tax benefit for the same expenses. (2) Dependent Care Expenses. Dependent care expenses are defined as expenses incurred for the care of a qualifying individual. A qualifying individual is either: (i) a dependent who is -under age 13, or (ii) the. Participant's spouse or dependent who lives with the Participant and is physically or mentally incapable of caring for himself/herself. However, these expenses are dependent care expenses only if they allow the Participant to be gainfully employed. Dependent care expenses include expenses for household services and expenses for the care of a qualifying individual. Such term shall not include any amount paid for services outside the Participant's household at a camp where the qualifying individual stays overnight. Expenses described in this Subsection which are incurred for services outside the Participant's household are not taken into account if they are incurred on behalf of the Participant's spouse or dependent who is physically or mentally incapable of caring for himself/herself unless such individual lives at least 8 hours per day in the Participant household. Expenses incurred at a dependent care center are taken into account only if such center complies with all applicable laws and regulations of a state or local government, the center provides care for more than six individuals, and the center receives a fee, payment, or grant for providing services for any of the individuals. (3) Limits. The maximum amount of expense that may be coptributed/reimbursed in any Plan Year for the Dependent Care Assistance Account is $5,000 ($2,500 if the Participant is married and filing a separate return). The amount payable may also not be greater than the amount of the Participant's earned income or the earned income of his or her spouse. In the case of a spouse who is a student or a qualifying individual, Code section 21(d)(2) shall apply in determining earned income. (d) If the Plan allows Employees that cease to be Participants in the plan to spend down unused Dependent Care Assistance Account expenses, Employees that cease to Participate in the Plan (due to Termination or any other reason) may be reimbursed for unused benefits through the end of the Plan Year in which the Termination of Participation occurs (or grace period if provided in the Plan) to the extent the claims do not exceed the balance of the Dependent Care Assistance Account. Section 4.04 ADOPTION ASSISTANCE ACCOUNTS (a) In General. To the extent that the Adoption Agreement authorizes Adoption Assistance Accounts, each Participant may choose to receive his or her full Compensation for any Plan Year in cash or to have a portion of such Compensation applied by the Company toward the Adoption Assistance Account described in Subsection (b). The Account established under this Section 4.04 is intended to qualify as an adoption assistance program under Code Section 137 and shall be interpreted in a manner consistent with such Code section which provisions are incorporated herein by reference. (b) Adoption Assistance Account. Each Participant's Adoption Assistance Account will be credited with amounts withheld from the Participant's Compensation and amounts paid by the Company pursuant to Section 4.09; and will be debited for reimbursements described in Subsection (c). However, the Plan Administrator will not direct the Company to reimburse such expenses to the extent the reimbursement exceeds the balance of a Participant's Adoption Assistance Account. (c) Eligible Expenses. (1) In General. A Participant may be reimbursed from his or her Adoption Assistance Account to the extent that such reimbursement is (i) incurred in the Plan Year (except as provided in Section 4.05(c), (ii) incurred while the Participant participates in the Plan, and (iii) qualifies as adoption assistance; provided that such expenses that are not covered, paid or reimbursed from' any other source and the Participant does not claim a tax benefit for the same expenses. (2) Adoption Assistance. Adoption assistance is defined as reasonable and necessary adoption fees, court costs, attorney fees and other expenses which are (i) directly related to the legal adoption of an eligible child by the Participant and (ii) not incurred in violation of state or federal law or in carrying out any surrogate parenting arrangement. An eligible child includes a child under age 18 or a child who is physically or mentally incapable of caring for himself/herself. However, an eligible child does not include a child of the Participant's spouse. In the case of an adoption of a child who is not a citizen or resident of the United States, any adoption expense with respect to such adoption is not reimbursable until such adoption becomes final. (3) Limits. The maximum amount of expense that may be contributed/reimbursed for the Adoption Assistance Account for any Plan Year beginning in a calendar year is the maximum amount permitted by federal tax law for that calendar year. The annual limit shall be reduced for adoption assistance expenses incurred any prior Plan Year. Section 4.05 FORFEITURES/TRANSFERS (a) Forfeitures. Any balance remaining in aParticipant's Account at the end of any Plan Year (or after the grace period if Subsection (c) applies) shall be forfeited and shall remain the property of the Company. Except as expressly provided herein, any balance remaining in a Participant's Account on his date of Termination shall be forfeited and shall remain the property of the Company. However, no forfeiture shall occur until all payments and reimbursements hereunder have been made on claims submitted within the time period specified in Section 6.01(b). (b) Transfers. Amounts may not be transferred between Accounts. (c) Grace Period. If the Adoption Agreement provides for a 2-1/2 month grace period, effective for grace periods beginning on or after the date specified in the Adoption Agreement and notwithstanding anything to the contrary in the Plan, the unused contributions that remain in a Participant's Account at the end of a Plan Year may be used to reimburse expenses that are incurred during the grace period. The grace period shall commence on the first day of the subsequent Plan Year and shall end on the fifteenth day of the third calendar month of the subsequent Plan Year. Unless otherwise provided in the Adoption Agreement, the grace period shall apply to all Accounts in which the Participant is eligible to Participate. Payment or reimbursement of unused benefits shall be subject to the following terms and conditions: (1) Same Account. Unused contributions remaining at the end of a Plan Year relating to a particular Account may only be used to reimburse expenses incurred with respect to that Account. (2) No Cash Out. Unused contributions remaining at the end of a Plan Year may not be cashed -out or converted to any other taxable or nontaxable benefit. (3) No Carryforward. Any unused contributions remaining at the end of a Plan Year that exceed the expenses for a particular Account that are incurred during the grace period may not be carried forward to any subsequent period (including any subsequent Plan Year) and shall be forfeited. (4) Construction. This Section 4.05(c) is to be construed in accordance with IRS Notice 2005-42 and any superseding guidance. Section 4.06 ELECTIONS (a) New Participants. The Plan Administrator shall provide, where possible, an election form to a Participant before such Participant meets the eligibility requirements of Article 3. In order to participate in the Plan in the initial Plan Year, the Participant must return the completed election form to the Plan Administrator on or before such date as specified by the Plan Administrator. However, any election shall not be effective until a pay period following the later of such Participant's effective date of participationpursuant to Article 3 or the date of the receipt of the election form by the Plan Administrator and shall be limited to the expenses incurred after the effective date of the election. (b) Continuing Participants. Prior to the commencement of each Plan Year, the Plan Administrator shall provide an election form to each Participant and to each other individual who is expected to become a Participant at the beginning of such Plan Year. In order to participate in the Plan in the applicable Plan Year, the Participant must return the completed election form to the Plan Administrator on or before such date specified in the Adoption Agreement, which date shall be no later than the beginning of the first pay period for which the individual's Compensation reduction agreement will apply. (c) Failure to Return Election Form. The failure of a Participant described in Subsection (a) to return a completed election form to the Plan Administrator on or before the specified due date shall constitute an election to receive his or her full Compensation in cash for the remainder of the Plan Year. The failure of a Participant described in Subsection (b) to return a completed election form to the Plan Administrator on or before the specified due date shall constitute an election not to participate for the applicable Plan Year unless a default election is otherwise specified in the Adoption Agreement or under Subsection (d). (d) Premium Conversion Special Election Rules. If elected in the Adoption Agreement, a Participant shall be deemed to elect to contribute the entire amount of any premiums payable by the Participant for the benefits described in Section 4.01 unless he or she affirmatively elects otherwise before such date specified by the Plan Administrator. If elected in the Adoption Agreement, a Participant's election for benefits described in Section 4.01 shall be automatically adjusted for any change in the cost of premiums pursuant to the terms of Treas. Reg. 1.125-4. (e) Form of Elections. All elections shall be made in written form unless the Plan Administrator provides procedures for such elections to be made in electronic and/or telephonic format to the extent that such alternative format is permitted under applicable law. (f) Leave of Absence/FMLA/USERRA. If the Plan is subject to FMLA or the Plan Administrator determines that the Plan is subject to FMLA, the Plan Administrator shall permit a Participant taking unpaid leave under the FMLA to continue medical benefits under such applicable law unless otherwise specified in the Adoption Agreement. To the extent provided in the Adoption Agreement, the Plan Administrator shall also permit a Participant taking unpaid Non-FMLA leave to continue the benefits specified in the Adoption Agreement. Participants continuing participation pursuant to the foregoing shall pay for such coverage (on a pre-tax or after-tax basis) under a method as determined by the Plan Administrator satisfying Treas. Reg. 1.125-3 Q&A-3. Any Participant on FMLA leave who revoked coverage shall be reinstated to the extent required by Treas. Reg. 1.125-3. If the Participant's coverage under the Plan terminates while the Participant is on FMLA leave, the Participant is not entitled to receive reimbursements for claims incurred during the period when the coverage is terminated. Upon reinstatement into the Plan upon return from FMLA leave, the Participant has the right to (i) resume coverage at the level in effect before the FMLA leave and make up the unpaid premium payments, or (ii) resume coverage at a level that is reduced by the amount of unpaid premiums and resume premium payments at the level in effect before the FMLA leave. The Plan Administrator shall also permit Participants to continue benefit elections as required under the Uniformed Services Employment and Reemployment Rights Act and shall provide such reinstatement rights as required by such law. The Plan Administrator shall also permit Participants to continue benefit elections as required under any other applicable state law to the extent that such law is not pre-empted by federal law. (g) COBRA. If the Plan is subject to COBRA (Code section 4980B and other applicable state law) or the Plan Administrator determines that the Plan is subject to COBRA, a Participant shall be entitled to continuation coverage as prescribed in Code Section 4980B (and the regulations thereunder) or such applicable state statutes. (h) Procedures. A Participant shall make the elections described in this Section in such form and manner as may be prescribed by the Plan Administrator and at such time in advance as the Plan Administrator may require. Such procedures may include, without limitation, a minimum annual and per -pay period contribution amount, a maximum contribution per pay -period amount consistent with applicable annual limits, and the ability of a Participant to make after-tax contributions to the Plan. Section 4.07 REVOCATION OF ELECTIONS (a) By Participant. Any election made under this Article 4 shall be irrevocable by the Participant during the Plan Year unless revocation is required by the provisions of the Federal Family and Medical Leave Act or other applicable law and is permitted under Treas. Reg. 1.125-4 and the provisions of the Adoption Agreement. If the Adoption Agreement provides that elections may be modified at any time permitted under Treas. Reg. section 1.125-4, elections may be modified upon the occurrence of any of the following events: (1) HIPAA Special Enrollment Rights. Participant may revoke an election for coverage under a group health plan during a period of coverage and make a new election that corresponds with the special enrollment rights provided in Code section 9801(f). (2) Change in Status. A Participant may revoke an election during a period of coverage with respect to a qualified benefits plan (as defined in Treas. Reg. 1.125-4(i)(8)) and make a new election for the remaining portion of the period if, under the facts and circumstances: (i) a change in status described in Subsections (A)-(F) occurs; and (ii) the election change is on account of and corresponds with a change in status that affects eligibility for coverage under a qualified benefits plan. (A) Legal Marital Status. Events that change a Participant's legal marital status, including the following: marriage; death of spouse; divorce; legal separation; and annulment. (B) Number of Dependents. Events that change a Participant's number of dependents, including the following: birth; death; adoption; and placement for adoption. (C) Employment Status. Any of the following events that change the employment status of the Participant, the Participant's spouse, or the Participant's dependent: a termination or commencement of employment; a strike or lockout; a commencement of or return from an unpaid leave of absence; a change in worksite and, the extent permitted in Treas. Reg. 1.125-4 and Section 3.03, change in employment status resulting in gaining or losing eligibility under the Plan. (D) Dependent Satisfies or Ceases to Satisfy Eligibility Requirements. Events that cause a Participant's dependent to satisfy or cease to satisfy eligibility requirements for coverage on account of attainment of age, student status, or any similar circumstance. (E) Residence. A change in the place of residence of the Participant, spouse, or dependent. (F) Adoption Assistance. For purposes of adoption assistance provided through Section 4.04 of the Plan, the commencement or termination of an adoption proceeding. (3) Judgment, Decree, or Order. A Participant may modify an election pursuant to a judgment, decree, or order resulting from a divorce, legal separation, annulment, or change in legal custody (including a qualified medical child support order as defined in ERISA section ,609) that requires accident or health coverage for a Participant's child or for a foster child who is a dependent of the Participant; provided that the modification: (A) changes the Participant's election to provide coverage for the child if the order requires coverage for the child under the Plan; or (B) cancels coverage for the child if the order requires the spouse, former spouse, or other individual to provide coverage for the child; and that coverage is, in fact, provided. (4) Entitlement to Medicare or Medicaid. A Participant may modify an election for benefits attributable to a Company -sponsored accident or health plan if the Participant, spouse, or dependent becomes entitled to coverage under Medicare or Medicaid (other than coverage consisting solely of benefits under the program for distribution of pediatric vaccines). The Participant may make a prospective election change to cancel or reduce coverage of that Participant, spouse, or dependent under the accident or health plan. Corresponding rights to commence or increase benefits under the accident or health plan shall be granted in the case of loss of coverage under Medicare or Medicaid. (5) Significant Cost or Coverage Changes. A Participant may modify an election for benefits, other than those provided in Section 4.02, as a result of changes in cost or coverage pursuant to Treas. Reg. section 1.125-4. 10 (6) FMLA. A Participant taking leave under the FMLA may revoke an existing election of accident or health plan coverage and make such other election for the remaining portion of the period of coverage as may be provided for under the FMLA. (b) By Plan Administrator. If the Plan Administrator determines that the Plan may fail to satisfy any nondiscrimination requirement or any limitation imposed by the Code, the Plan Administrator may modify any election in order to assure compliance with such requirements or limitations. Any act taken by the Plan Administrator under this Subsection shall be carried out in a uniform and non-discriminatory manner. (c) Automatic Termination of Election. Any election made under this Section shall automatically terminate on the date specified in Sections 3.02 or 3.03. (d) Plan Administrator Discretion. The Plan Administrator reserves the right to determine whether a Participant has experienced an event that would permit an election change under this Section 4.07 and whether the Participant's requested election change is consistent with such event. 11 Section 4.08 HEALTH SAVINGS ACCOUNTS SPECIAL RULES (a) In General. Notwithstanding anything in the Plan to the contrary, this Section 4.08 shall apply to the extent that the Adoption Agreement allows the Plan to fund Health Savings Accounts within the meaning of Code section 223 ("HSA Contributions"). (b) HSA Account. The Plan Administrator shall establish an HSA Account to separately account for contributions/payments used to fund Health Savings Accounts. Each Participant's HSA Account will be credited with amounts withheld from the Participant's Compensation and amounts paid by the Company pursuant to Section 4.09; and will be debited for payments to the applicable Health Savings Account. (c) No Forfeitures. Any balance remaining in a Participant's HSA Account at the end of any Plan Year shall be carried forward and used to fund such benefits in any subsequent Plan Year. (d) Benefit Limited to Account Balance. The Plan Administrator shall not direct the Company to fund a Health Savings Account to the extent the payment exceeds the balance of a Participant's HSA Account. (e) Period of Coverage. The mandatory twelve month period of coverage shall not apply to HSA Contributions. (f) Modifications of Elections. A Participant who elects to make HSA Contributions may start or stop the election or increase or decrease the election at any time as long as the change is effective prospectively (i.e., after the request for the change is received). The Plan Administrator may place additional restrictions on the election of HSA Contributions; provided, however, that the same restrictions shall apply to all Participants. (g) HSA Comparability Rules. Any contribution to an HSA from the Plan shall comply with Treas. Reg. section 54.4980G-5 and any superseding guidance. Section 4.09 EMPLOYER CONTRIBUTIONS The Company may contribute to the Plan to the extent provided in the Adoption Agreement. Such contributions shall be credited to the applicable Account at such time as determined by the Company. 12 ARTICLE 5 LIMITATIONS ON CONTRIBUTIONS Section 5.01 NONDISCRIMINATION If the Adoption Agreement indicates this Plan is intended to be a simple cafeteria plan and the requirements of Code section 1250) are met for any year, the following nondiscrimination requirements of Code sections 125(b), 79(d), 105(h) and 129(d)(2), (3), (4), and (8) shall be treated as met during such year. (a) Cafeteria Plan. The Plan may not discriminate in favor of highly compensated employees (within the meaning of Code section 125(e)) as to benefits provided or eligibility to participate. (b) Group Term Life. The Plan may not discriminate in favor of key employees (within the meaning of Code section 416(i)(1)) as to benefits provided or eligibility to participate with respect to any group term life insurance offered pursuant to Section 4.01. (c) Health Care Reimbursement Accounts. The Plan may not discriminate in favor of highly compensated employees (within the meaning of Code section 105(h)(5)) as to benefits provided or eligibility to participate with respect to the Account described in Section 4.02. (d) Dependent Care Assistance Accounts. The Plan may not discriminate in favor of highly compensated employees (within the meaning of Code section 414(q)) as to benefits provided or eligibility to participate with respect to the Account described in Section 4.03. (e) Adoption Assistance Accounts. The Plan may not discriminate in favor of highly compensated employees (within the meaning of Code section 414(q)) 'as to benefits provided or eligibility to participate with respect to the Account described in Section 4.04. Section 5.02 LIMITATIONS ON CONTRIBUTIONS (a) Cafeteria Plan. Key employees (within the meaning of Code section 416(i)(1)) may not receive more than 25% of the aggregate benefits provided for all employees under the Plan. (b) Dependent Care Assistance Accounts. Shareholders or owners owning more than 5% of the capital or profits interest of the Employer may not receive more than 25% of the aggregate benefits provided for all employees under the Plan with respect to the Account described in -Section 4.03. The average benefits provided under Section 4.03 to Participants who are not highly compensated employees must be at least 55 percent of the average benefits provided to highly compensated employees of the Company. (c) Adoption Assistance Accounts. Shareholders or owners owning more than 5% of the capital or profits interest of the Employer may not receive more than 5% of the aggregate benefits provided for all employees under the Plan with respect to the Account described in Section 4.04. 13 ARTICLE- 6 REIMBURSEMENTS Section 6.01 PROCEDURES FOR REIMBURSEMENT (a) Benefits Provided by Contracts. All claims for benefits that are provided under Contracts shall be made by the Participant to the company issuing such contract. (b) Timing of Claims. Reimbursements and/or payments shall only be made for expenses incurred in the applicable Plan Year while the Participant participates in the Plan. Except as otherwise expressly provided herein, no reimbursement and/or payment shall be made for any expenses relating to services rendered before participation or after Termination of Employment for any reason. All claims for reimbursement and/or payment must be made within the time periods specified in the Adoption Agreement. (c) Documentation. A Participant or any other person entitled to benefits from the Plan (a "Claimant") may apply for such benefits by completing and filing a claim with the Plan Administrator. Any such claim shall include all information and evidence that the Plan Administrator deems necessary to properly evaluate the merit of and to make any necessary determinations on a claim for benefits. The Plan Administrator may request any additional information necessary to evaluate the claim. (d) Payment. To the extent that the Plan Administrator approves the claim, the Company shall: (i) reimburse the Claimant, or (ii) at the option of the Plan Administrator, pay the service provider directly for any amounts payable from the Accounts established hereunder. The Plan Administrator shall establish a schedule, not less frequently than monthly, for the payment of claims. The Plan Administrator may provide that payments/reimbursements of less than a certain amount may be carried forward and aggregated with future claims until the reimbursable amount is greater than such minimum, provided, however, that the entire amount of payments/reimbursements outstanding at the end of the Plan Year shall be reimbursed without regard to the minimum payment amount. (e) Coordination with HRA. A Participant who is also eligible to participate in a Code section 105 health reimbursement arrangement ("HRA") sponsored by the Company shall not be entitled to payment/reimbursement under the Health Care Reimbursement Account for expenses that are reimbursable under both the Health Care Reimbursement Account and the HRA until the Participant has received his or her maximum reimbursement under the HRA. Notwithstanding the foregoing, a Participant shall be entitled to payment/reimbursement under the Health Care Reimbursement Account if before the Plan Year begins, the plan document for the HRA specifies that coverage under the HRA is available only after expenses exceeding the applicable dollar amounts in the Health Care Reimbursement Account have been paid. (f) Death. If a Participant dies, his beneficiaries or his estate may submit claims for expenses or benefits for the portion of the Plan Year preceding the date of the Participant's death. A Participant may designate a specific beneficiary for this purpose. If no such beneficiary is specified, the Plan Administrator may pay any amount due hereunder to the Participant's spouse, one or more of his or her dependents or a representative of the Participant's estate. Such payment shall fully discharge the Plan Administrator and the Company from further liability on account thereof. (g) Form of Claim/Notice. All claims and notices shall be made in written form unless the Plan Administrator provides procedures for such claims and notices to be made in electronic and/or telephonic format to the extent that such alternative format is permitted under applicable law. (h) Refunds/Indemnification. If the Plan Administrator determines that any Claimant has directly or indirectly received excess payments/reimbursements or has received payments/reimbursements that are taxable to the Claimant, the Plan Administrator shall notify the Claimant and the Claimant shall repay such excess amount (or at the option of the Plan Administrator, the Claimant shall repay the amount that should have been withheld or paid as payroll or withholding taxes) as soon as possible, but in no event later than 30 days after the date of notification. A Claimant shall indemnify and reimburse the Company for any liability the Company may incur for making such 14 payments, including but not limited to failure to withhold or pay payroll or withholding taxes from such payments or reimbursements. If the Claimant fails to timely repay an excess amount and/or make sufficient indemnification, the Plan Administrator may: (i) to the extent permitted by applicable law, offset the Claimant's salary or wages, and/or (ii) offset other benefits payable hereunder. (i) Debit, Credit or Other Stored Value Cards. To the extent provided in the Adoption Agreement, the Company may enter into an agreement with a financial institution to provide a Participant with a debit, credit or other stored value card to provide immediate payment of reimbursements available under Section 4.02 and/or Section 4.03 provided that the use of such card complies with IRS Revenue Ruling 2003-43 (to the extent not superseded by IRS Notice 2006-69), IRS Notice 2006-69, IRS Notice 2007-2, IRS Notice 2008-104, IRS Notice 2010-59, IRS Notice 2011-5 and any superseding guidance. A Participant may obtain benefits under Sections 4.02 and 4.03 without the use of the card. 0) HSA Coordination. Except as otherwise provided in the Adoption Agreement, benefits under this Plan shall not be coordinated with coverage in a high deductible health plan to facilitate participation in Health Savings Accounts. (k) Plan Administrator Procedures. The Plan Administrator may establish procedures regarding the documentation to be submitted in a claim for reimbursement and/or payment and may also establish any other procedures regarding claims for reimbursement and/or payment provided that the procedures do not violate ERISA section 503 if the Adoption Agreement indicates the plan is subject to ERISA. Such procedures may include, without limitation, requirements to submit claims periodically throughout the Plan Year. Section 6.02 CLAIMS PROCEDURE FOR HEALTH CARE REIMBURSEMENT ACCOUNT (a) A request for benefits is a "claim" subject to this Section only if it is filed by the Participant or the Participant's authorized representative in accordance with the Plan's claim filing guidelines. In general, claims must be filed in writing. Any claim that does not relate to a specific benefit under the Plan (for example, a general eligibility claim or a dispute involving a mid -year election change) must be filed with the Plan Administrator. A request for prior approval of a benefit or service where prior approval is not required under the Plan is not a "claim" under these rules. Similarly, a casual inquiry about benefits or the circumstances under which benefits might be paid under the Plan is not a "claim" under these rules, unless it is determined that your inquiry is an attempt to file a claim. If a claim is received, but there is not enough information to process the claim, the Participant will be given an opportunity to provide the missing information. Participants may designate an authorized representative if written notice of such designation is provided. (b) This Section 6.02(b) shall apply for any claim for benefits under the Health Care Reimbursement Account. (1) Timing of Notice of Denied Claim. The Plan Administrator shall notify the Claimant of any adverse benefit determination within a reasonable period of time, but not later than 30 days after receipt of the claim. This period may be extended one time by the Plan for up to 15 days, provided that the Plan Administrator both determines that such an extension is necessary due to matters beyond the control of the Plan and notifies the Claimant, prior to the expiration of the initial 30-day period, of the circumstances requiring the extension of time and the date by which the Plan expects to render a decision. If such an extension is necessary due to a failure of the Claimant to submit the information necessary to decide the claim, the notice of extension shall specifically describe the required information, and the Claimant shall be afforded at least 45 days from receipt of the notice within which to provide the specified information. (2) Content of Notice of Denied Claim. If a claim is wholly or partially denied, the Plan Administrator shall provide the Claimant with a notice identifying (A) the reason or reasons for such denial, (B) the pertinent Plan provisions on which the denial is based, (C) any material or information needed to grant the claim and an explanation of why the additional information is necessary, (D) an explanation of the steps that the Claimant must take if he wishes to appeal the denial including a statement that the Claimant may bring a civil action under ERISA, and (E): (I) If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, 15 guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the Claimant upon request; or (II) if the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the Claimant's medical circumstances, or a statement that such explanation will be provided free of charge upon request. (3) Appeal of Denied Claim. If a Claimant wishes to appeal the denial of a claim, he shall file an appeal with the Plan Administrator on or before the 180th day after he receives the Plan Administrator's notice that the claim has been wholly or partially denied. The appeal shall identify both the grounds and specific Plan provisions upon which the appeal is based. The Claimant shall be provided, upon request and free of charge, documents and other information relevant to his claim. An appeal may also include any comments, statements or documents that the Claimant may desire to provide. The Plan Administrator shall consider the merits of the Claimant's presentations, the merits of any facts or evidence in support of the denial of benefits, and such other facts and circumstances as the Plan Administrator may deem relevant. In considering the appeal, the Plan Administrator shall: (A) Provide for a review that does not afford deference to the initial adverse benefit determination and that is conducted by an appropriate named fiduciary of the Plan who is neither the individual who made the adverse benefit determination that is the subject of the appeal, nor the subordinate of such individual; (B) Provide that, in deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate, the appropriate named fiduciary shall consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment; (C) Provide for the identification of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with a Claimant's adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (D) Provide that the health care professional engaged for purposes of a consultation under Subsection (B) shall be an individual who is neither an individual who was consulted in connection with the adverse benefit determination that is the subject of the appeal, nor the subordinate of any such individual. The Plan Administrator shall notify the Claimant of the Plan's benefit determination on review within 60 days after receipt by the Plan of the Claimant's request for review of an adverse benefit determination. The Claimant shall lose the right to appeal if the appeal is not timely made. (4) Denial of Appeal. If an appeal is wholly or partially denied, the Plan Administrator shall provide the Claimant with a notice identifying (1) the reason or reasons for such denial, (2) the pertinent Plan provisions on which the denial is based, (3) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant's claim for benefits, and (4) a statement describing the Claimant's right to bring an action under section 502(a) of ERISA. The determination rendered by the Plan Administrator shall be binding upon all parties. (5) Exhaustion of Remedies. Before a suit can be filed in federal court, claims must exhaust internal remedies. (c) Additional Internal and External Claims Procedure for Health Care Reimbursement Account. (1) Applicability. This Section shall apply for any claim for benefits under the Health Care Reimbursement Account if (A) the Plan constitutes a group health plan as defined in Treas. Reg. section 54.9801-2 or if the Plan Administrator determines that the Plan is subject to HIPAA portability rules and (B) the Plan is not a grandfathered health plan under the Patient Protection and Affordable Care Act. 16 (2) Effective Date. This Section shall be effective the later of the first plan year beginning after September 23, 2010 or the date the Plan is no longer a grandfathered health plan under the Patient Protection and Affordable Care Act. (3) Internal Claims Process. The requirements under Section 6.02(b) shall apply as the internal appeals process except as modified below. This section is intended to satisfy the requirements of DOL Reg. 2590.715-2719 and any superseding guidance. (A) Adverse Benefit Determination. An adverse benefit determination means an adverse benefit determination as defined in DOL Reg. 2560.503-1, as well as any rescission of coverage, as described in DOL Reg. 2590.715-2712(a)(2). (B) Full and Fair Review. A Claimant must be allowed to review the file and present evidence and testimony as part of the internal appeals process. Claimants must be provided, free of charge, with any new or additional evidence considered relied upon or generated by the Plan in connection with the claim sufficiently in advance of the final adverse benefit determination to give the Claimant a reasonable opportunity to respond prior to that date. The Plan must also meet the conflict of interest requirements under DOL Reg. 2590.715-2712(b)(2)(D). (C) Notice. A description of available internal and external claims processes and information regarding how to initiate an appeal must be provided. Notices of adverse benefit determinations must include the information required under DOL Reg. 2590.715-2719(b)(2)(ii)(E) as applicable. The final notice of internal adverse benefit determination must include a discussion of the decision. Notice must be provided in a linguistically appropriate manner as provided under DOL Reg. 2590.715-2719(e). The Plan must disclose the contact information for any applicable office of health insurance consumer assistance or ombudsman established under PHS Act section 2793. (D) Deemed Exhaustion of Internal Claims Process. If the Plan fails to adhere to the requirements of DOL Reg. 2590.715-2719(b)(2), except as provided under DOL Reg. 2590.715- 2719(b)(2)(ii)(F)(2), the claimant may initiate an external review under Section 6.02(b)(2) or may bring an action under section 502(a) of ERISA as provided in DOL Reg. 2590.715-2719(b)(2)(ii)(F) and any superseding guidance. (2) External Claims Process. (A) State External Claims Process. If the Adoption Agreement specifies that the Plan is not subject to ERISA and the State external claims process includes at a minimum the consumer protections in the NAIC Uniform Model Act then the plan must comply with the applicable State claims review process. (B) Federal External Claims Process. The plan must comply with the Federal external claims process of DOL Reg. section 2590.715-2719(d) and any superseding guidance if Subsection (c)(2)(A) above is not applicable. (d) Notwithstanding anything to the contrary, if the Adoption Agreement specifies that (1) the Plan is not subject to ERISA and (2) the Plan does not constitute a group health plan as defined in Treas. Reg. section 54.9801-2 or the Plan is a grandfathered health plan under the Patient Protection and Affordable Care Act, claims procedures shall be established by the policies and procedures of the Plan Administrator and/or Company and any other applicable law. Section 6.03 CLAIMS PROCEDURES FOR NON -HEALTH BENEFITS (a) This Section 6.03 shall apply for any claim for benefits under Accounts other than the Health Care Reimbursement Account. (b) Timing of Notice of Denied Claim. The Plan Administrator shall notify the Claimant of any adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim. This period may be extended one time by the Plan for up to 90 days, provided that the Plan Administrator both determines that such an extension is necessary due to matters beyond the control of the Plan and notifies the 17 Claimant, prior to the expiration of the initial 90-day period, of the circumstances requiring the extension of time and the date by which the Plan expects to render a decision. (c) Content of Notice of Denied Claim. If a claim is wholly or partially denied, the Plan Administrator shall provide the Claimant with a written notice identifying (1) the reason or reasons for such denial, (2) the pertinent Plan provisions on which the denial is based, (3) any material or information needed to grant the claim and an explanation of why the additional information is necessary, and (4) an explanation of the steps that the Claimant must take if he wishes to appeal the denial including a statement that the Claimant may bring a civil action under ERISA. (d) Appeal of Denied Claim. If a Claimant wishes to appeal the denial of a claim, he shall file a written appeal with the Plan Administrator on or before the 60th day after he receives the Plan Administrator's written notice that the claim has been wholly or partially denied. The written appeal shall identify both the grounds and specific Plan provisions upon which the appeal is based. The Claimant shall be provided, upon request and free of charge, documents and other information relevant to his claim. A written appeal may also include any comments, statements or documents that the Claimant may desire to provide. The Plan Administrator shall consider the merits of the Claimant's written presentations, the merits of any facts or evidence in support of the denial of benefits, and such other facts and circumstances as the Plan Administrator may deem relevant. The Claimant shall lose the right to appeal if the appeal is not timely made. The Plan Administrator shall ordinarily rule on an appeal within 60 days. However, if special circumstances require an extension and the Plan Administrator furnishes the Claimant with a written extension notice during the initial period, the Plan Administrator may take up to 120 days to rule on an appeal. (e) Denial of Appeal. If an appeal is wholly or partially denied, the Plan Administrator shall provide the Claimant with a notice identifying (1) the reason or reasons for such denial, (2) the pertinent Plan provisions on which the denial is based, (3) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant's claim for benefits, and (4) a statement describing the Claimant's right to bring an action under section 502(a) of ERISA. The determination rendered by the Plan Administrator shall be binding upon all parties. (f) Notwithstanding anything to the contrary, if the Adoption Agreement specifies that the Plan is not subject to ERISA, claims procedures shall be established by the policies and procedures of the Plan Administrator and/or Company and any other applicable law. Section 6.04 MINOR OR LEGALLY INCOMPETENT PAYEE If a distribution is to be made to an individual who is either a minor or legally incompetent, the Plan Administrator may direct that such distribution be paid to the legal guardian. If a distribution is to be made to a minor and there is no legal guardian, payment may be made to a parent of such minor or a responsible adult with whom the minor maintains his residence, or to the custodian for such minor under the Uniform Transfer to Minors Act, if such is permitted by the laws of the state in which such minor resides. Such payment shall fully discharge the Plan Administrator and the Company from further liability on account thereof. Section 6.05 MISSING PAYEE If the Plan Administrator is unable to make payment to any Participant or other person to whom a payment is due under the Plan because it cannot ascertain the identity or whereabouts of such Participants or other person after reasonable efforts have been made to identify or locate such person, such payment and all subsequent payments otherwise due to such Participant or other person shall be forfeited one year after the date any such payment first became due. 18 ARTICLE 7 PLAN ADMINISTRATION Section 7.01 PLAN ADMINISTRATOR (a) Designation. The Plan Administrator shall be specified in the Adoption Agreement. In the absence of a designation in the Adoption Agreement, the Plan Sponsor shall be the Plan Administrator. If a Committee is designated as the Plan Administrator, the Committee shall consist of one or more individuals who may be Employees appointed by the Plan Sponsor and the Committee shall elect a chairman and may adopt such rules and procedures as it deems desirable. The Committee may also take action with or without formal meetings and may authorize one or more individuals, who may or may not be members of the Committee, to execute documents in its behalf. (b) Authority and Responsibility of the Plan Administrator. The Plan Administrator shall be the Plan "administrator" as such term is defined in section 3(16) of ERISA (if the Adoption Agreement provides that the Plan is subject to ERISA), and as such shall have total and complete discretionary power and authority: (i) to make factual determinations, to construe and interpret the provisions of the Plan, to correct defects and resolve ambiguities and inconsistencies therein and to supply omissions thereto. Any construction, interpretation or application of the Plan by the Plan Administrator shall be final, conclusive and binding; (ii) to determine the amount, form or timing of benefits payable hereunder and the recipient thereof and to resolve any claim for benefits in accordance with Article 6; (iii) to determine the amount and manner of any allocations hereunder; (iv) to maintain and preserve records relating to the Plan; (v) to prepare and furnish all information and notices required under applicable law or the provisions of this Plan; (vi) to prepare and file or publish with the Secretary of Labor, the Secretary of the Treasury, their delegates and all other appropriate government officials all reports and other information required under law to be so filed or published; (vii) to hire such professional assistants and consultants as it, in its sole discretion, deems necessary or advisable; and shall be entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports which are furnished by same; Participants; (viii) to determine all questions of the eligibility of Employees and of the status of rights of (ix) to adjust Accounts in order to correct errors or omissions; (x) to determine the validity of any judicial order; (xi) to retain records on elections and waivers by Participants; (xii) to supply such information to any person as may be required; (xiii) to perform such other functions and duties as are set forth in the Plan that are not specifically given to any other fiduciary or other person. iy' (c) Procedures. The Plan Administrator may adopt such rules and procedures as it deems necessary, desirable, or appropriate for the administration of the Plan. When making a determination or calculation, the Plan Administrator shall be entitled to rely upon information furnished to it. The Plan Administrator's decisions shall be binding and conclusive as to all parties. (d) Allocation of Duties and Responsibilities. The Plan Administrator may designate other persons to carry out any of his duties and responsibilities under the Plan. (e) Compensation. The Plan Administrator shall serve without compensation for its services. (f) Expenses. All direct expenses of the Plan, the Plan Administrator and any other person in furtherance of their duties hereunder shall be paid or reimbursed by the Company. (g) Allocation of Fiduciary Duties. A Plan fiduciary shall have only those specific powers, duties, responsibilities and obligations as are explicitly given him under the Plan. It is intended that each fiduciary shall not be responsible for any act or failure to act of another fiduciary. A fiduciary may serve in more than one fiduciary capacity with respect to the Plan. Section 7.02 INDEMNIFICATION Unless otherwise provided in the Adoption Agreement, the Company shall indemnify and hold harmless any person serving as the Plan Administrator (and its delegate) from all claims, liabilities, losses, damages and expenses, including reasonable attorneys' fees and expenses, incurred by such persons in connection with their duties hereunder to the extent not covered by insurance, except when the same is due to such person's own gross negligence, willful misconduct, lack of good faith, or breach of its fiduciary duties under this Plan or ERISA to the extent that the Adoption Agreement provides the Plan is subject to ERISA. Section 7.03 HIPAA PRIVACY RULES (a) Application. This Section 7.03 shall only apply in the event that this Plan constitutes a group health plan as defined in section 2791(a)(2) of the Public Health Service Act or if the Plan Administrator determines that the Plan is subject to the HIPAA privacy rules. (b) Privacy Policy. The Plan shall adopt a HIPAA privacy policy, the terms of which are incorporated herein by reference. (c) Business Associate Agreement. The Plan will enter into a business associate agreement with any persons as may be required by applicable law as determined by the Plan Administrator. (d) Notice of Privacy Practices. The Plan will provide each Participant with a notice of privacy practices to the extent required by applicable law. (e) Disclosure to the Company. (1) In General. This Subsection permits the Plan to disclose protected health information ("PHI"), as defined in the HIPAA privacy rules, to the Company to the extent that such PHI is necessary for the Company to carry out its administrative functions related to the Plan, (2) Permitted Disclosure. The Plan may disclose the PHI to the Company that is necessary for the Company to carry out the following administrative functions related to the Plan: eligibility determinations, enrollment and disenrollment activities, and Plan amendments or termination. The Company may use and disclose the PHI provided to it from the Plan only for the administrative purposes described in this Subsection. (3) Limitations. The Company agrees to the following limitations and requirements related to its use and disclosure of PHI received from the Plan: 20 (A) Use and Further Disclosure. The Company shall not use or further disclose PHI other than as permitted or required by the Plan document or as required by all applicable law, including but not limited to the HIPAA privacy rules. When using or disclosing PHI or when requesting PHI from the Plan, the Company shall make reasonable efforts to limit the PHI to the minimum amount necessary to accomplish the intended purpose of the use, disclosure or request. (B) Agents and Subcontractors. The Company shall require any agents, including subcontractors, to whom it provides PHI received from the Plan to agree to the same restrictions and conditions that apply to the Company with respect to such information. (C) Employment -Related Actions. Except as permitted by the HIPAA privacy rules and other applicable federal and state privacy laws, the Company shall not use PHI for employment -related actions and decisions, or in connection with any other employee benefit plan of the Company. (D) Reporting of Improper Use or Disclosure. The Company shall promptly report to the Plan any improper use or disclosure of PHI of which it becomes aware. (E) Adequate Protection. The Company shall provide adequate protection of PHI and separation between the Plan and the Company by: (i) ensuring that only those employees who work in the human resources department of the Company on issues related to the healthcare components of the Plan will have access to the PHI provided by the Plan; (ii) restricting access to and use of PHI to only the employees identified in clause (i) above and only for the administrative functions performed by the Company on behalf of the Plan that are described herein; (iii) requiring any agents of the Plan who receive PHI to abide by the Plan's privacy rules; and (iv) using the Company's established disciplinary procedures to resolve issues of noncompliance by the employees identified in clause (i) above. (F) Return or Destruction of PHI. If feasible, the Company shall return or destroy all PHI received from the Plan that the Company maintains in any form, and retain no copies of such information when no longer needed for the purpose for which disclosure was made. If such return or destruction is not feasible, the Company shall limit further uses and disclosures to those purposes that make the return or destruction of the information infeasible. (G) Participant Rights. The Company shall provide Participants with the following rights: (i) the right to access to their PHI in accordance with 45 C.F.R. § 164.524; (ii) the right to amend their PHI upon request (or the Company will explain to the Participant in writing why the requested amendment was denied) and incorporate any such amendment into a Participant's PHI in accordance with 45 C.F.R. § 164.526;.and (iii) the right to an accounting of all disclosures of their PHI in accordance with 45 C.F.R. § 164.528. (H) Cooperation with HHS. The Company shall make its books, records, and internal practices relating to the use and disclosure of PHI received from the Plan available to HHS for verification of the Plan's compliance with the HIPAA privacy rules. (4) Certification. By executing the accompanying Adoption Agreement, the Company hereby certifies that the Plan documents have been amended in accordance with 45 C.F.R. § I64.504(f), and that the Company shall protect the PHI as described in Subsection 3 herein. (5) Security Standards Requirement. To comply with the Security Standards regulations that were published on February 21, 2003, the Company must: (A) implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity and availability of the electronic PHI that it creates, receives, maintains or transmits on behalf of the Plan; (B) ensure that the adequate separation required by 45 C.F.R. 164.504(f)(2)(iii) is supported by reasonable and appropriate security measures; 21 (C) ensure that any agent, including a subcontractor, to whom it provides this information agrees to implement reasonable and appropriate security measures to protect the information; and (D) report to the Plan any security incident of which it becomes aware. (6) Amendment. Notwithstanding any other provision of the Plan, this Section may be amended in any way and at any time by the Privacy Officer. (7) Effective Dates. Subsections (1) — (4) and Subsection (6) apply to the Plan no later than April 14, 2003, or such other date that the HIPAA Privacy Regulations apply to the Plan. Section (5) applies to the Plan no later than April 20, 2005, or such other date that the HIPAA Security Regulations apply to the Plan. Section 7.04 MEDICAL CHILD SUPPORT ORDERS In the event the Plan Administrator receives a medical child support order (within the meaning of ERISA section 609(a)(2)(13)), the Plan Administrator shall notify the affected Participant and any alternate recipient identified in the order of the receipt of the order and the Plan's procedures for determining whether such an order is a qualified medical child support order (within the meaning of ERISA section 609(a)(2)(A)). Within a reasonable period the Plan Administrator shall determine whether the order is a qualified medical child support order and shall notify the Participant and alternate recipient of such determination. If the plan is not subject to ERISA any applicable law related to qualified medical child support orders or National Medical Support Notices shall apply and the Plan Administrator shall follow any required procedures under such law. Section 7.05 HIPAA PORTABILITY RULES In the event the Plan constitutes a group health plan as defined in Treas. Reg. section 54.9801-2 or if the Plan Administrator determines that the Plan is subject to HIPAA portability rules, the Plan shall comply with the requirements of Code section 9801 et. Seq. The Plan Administrator shall only provide a certificate of creditable coverage if the Plan constitutes a group health plan as defined in Treas. Reg. section 54.9801-2. 22 ARTICLE 8 AMENDMENT AND TERMINATION Section 8.01 AMENDMENT The provisions of the Plan may be amended in writing at anytime and from time to time by the Plan Sponsor. Section 8.02 TERMINATION (a) It is the intention of the Plan Sponsor that this Plan will be permanent. However, the Plan Sponsor reserves the right to terminate the Plan at any time for any reason. (b) Each entity constituting the Company reserves the right to terminate its participation in this Plan. Each such entity constituting the Company shall be deemed to terminate its participation in the Plan if. (i) it is a party to a merger in which it is not the surviving entity and the surviving entity is not an affiliate of another entity constituting the Company, or (ii) it sells all or substantially all of its assets to an entity that is not an affiliate of another entity constituting the Company. 23 ARTICLE 9 MISCELLANEOUS Section 9.01 NONALIENATION OF BENEFITS No Participant or Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments which he may expect to receive, contingently or otherwise, under the Plan. Section 9.02 NO RIGHT TO EMPLOYMENT Nothing contained in this Plan shall be construed as a contract of employment between the Company and the Participant, or as a right of any Employee to continue in the employment of the Company, or as a limitation of the right of the Company to discharge any of its Employees, with or without cause. Section 9.03 NO FUNDING REQUIRED Except as otherwise required by law: (a) Any amount contributed by a Participant and/or the Company to provide benefits hereunder shall remain part of the general assets of the Company and all payments of benefits under the Plan shall be made solely out of the general assets of the Company. (b) The Company shall have no obligation to set aside any funds, establish a trust, or segregate any amounts for the purpose of making any benefit payments under this Plan. However, the Company may in its sole discretion, set aside funds, establish a trust, or segregate amounts for the purpose of making any benefit payments under this Plan. (c) No person shall have any rights to, or interest in, any Account other than as expressly authorized in the Plan. Section 9.04 GOVERNING LAW (a) The Plan shall be construed in accordance with and governed by the laws of the state or commonwealth of organization of the Plan Sponsor to the extent not preempted by Federal law. (b) The Plan hereby incorporates by reference any provisions required by state law to the extent not preempted by Federal law. Section 9.05 TAX EFFECT The Company does not represent or guarantee that any particular federal, state or local income, payroll, personal property or other tax consequence will result from participation in this Plan. A Participant should consult with professional tax advisors to determine the tax consequences of his or her participation. Section 9.06 SEVERABILITY OF PROVISIONS If any provision of the Plan shall be held invalid or unenforceable; such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included. Section 9.07 HEADINGS AND CAPTIONS The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan. 24 Section 9.08 GENDER AND NUMBER Except where otherwise clearly indicated by context, the masculine and the neuter shall include the feminine and the neuter, the singular shall include the plural, and vice -versa. 25 CITY OF VERNON AMENDED AND RESTATED CAFETERIA PLAN SUMMARY PLAN DESCRIPTION January 1, 2013 Copyright 2002-2012 CCH INCORPORATED, DBA FTWILLIAM.COM CITY OF VERNON AMENDED AND RESTATED CAFETERIA PLAN SUMMARY PLAN DESCRIPTION TABLE OF CONTENTS INTRODUCTION.............................................................................................................. 1 ELIGIBILITY FOR PARTICIPATION............................................................................. 1 EligibleEmployee....................................................................................................................... 1 Dateof Participation................................................................................... ............................... 1 ELECTIONS....................................................................................................................... 2 InGeneral.................................................................................................................................... 2 ElectionProcedures..................................................................................................................... 2 Modification of Elections ................... BENEFITS.......................................................................................................................... 3 PremiumConversion Account..................................................................................................... 3 Health Care Reimbursement Account......................................................................................... 4 Dependent Care Assistance Account........................................................................................... 4 Coordination with Other Plans.................................................................................................... 5 Limits on Certain Employees...................................................................................................... 6 FORFEITURES ..................... .......... 6 ................................................................................... PlanYear/Termination................................................................................................................ 6 CLAIMS.............................................................................................................................. 6 . Deadlines..................................................................................................................................... 6 Debit/Credit Cards....................................................................................................................... 6 Documentationof Claims............................................................................................................ 6 Methodand Timing of Payment................................................................................................. 7 Whereto Submit Claims.............................................................................................................. 7 Refunds/Indemnification............................................................................................................. 7 Beneficiary................................................................................................................................... 7 CONTINUATION RIGHTS............................................................................................... 7 MilitaryService........................................................................................................................... 7 COBRA....................................................................................................................................... 8 FMLA.......................................................................................................................................... 8 NonFMLA Leave....................................................................................................................... 8 YOURRIGHTS.................................................................................................................. 8 MISCELLANEOUS........................................................................................................... 8 Qualified Medical Child Support Orders..................................................................................... 8 Lossof Benefit............................................................................................................................. 9 Amendment and Termination...................................................................................................... 9 Administrator Discretion............................................................................................................. 9 Taxation....................................................................................................................................... 9 Privacy......................................................................................................................................... 9 i ADMINISTRATIVE INFORMATION............................................................................. 9 INTRODUCTION City of Vernon (the "Company") established the City of Vernon Amended and Restated Cafeteria Plan (the "Plan") effective May 1, 2007. This Summary Plan Description describes the Plan as amended and restated effective January 1, 2013. This revised Summary Plan Description supersedes all previous Summary Plan Descriptions. Although the purpose of this document is to summarize the more significant provisions of the Plan, the Plan document will prevail in the event of any inconsistency. ELIGIBILITY FOR PARTICIPATION Eligible Employee You are an "Eligible Employee" if you are employed by City of Vernon or any affiliate who has adopted the Plan. However, you are not an 'Eligible Employee" if you are any of the following: Covered by a collective bargaining agreement. A leased employee. A non-resident alien who received no U.S. earned income. A part-time employee who is expected to work less than N/A hours per week. The term "Eligible Employee" is further modified as follows: An Eligible Employee is further defined as being classified as a full-time employee. You are an "Eligible Employee" for purposes of the Premium Conversion Account on the date you become eligible to receive benefits from the contracts described for Premium Conversion Accounts in the Section titled 'BENEFITS" below. Date of Participation You will become a Participant eligible to receive benefits from the Plan on the first day of the calendar month coincident with or next following the date you first perform an hour of service as an Eligible Employee. However, you will become a Participant eligible to make contributions and receive benefits from the Premium Conversion Account on the date you become eligible to receive benefits from the contracts described for Premium Conversion Accounts in the Section titled 'BENEFITS below. You will stop being a participant eligible to receive benefits from the Plan on the date you are no longer an Eligible Employee or the date you terminate employment with the Company. ELECTIONS In General When you become eligible to participate in the Plan, you may begin contributing to the Plan. All contributions will be credited to an account established in your behalf. Your contributions to the Plan are not subject to federal income tax or social security taxes. Please note that while you may enjoy certain tax benefits, there may. be some drawbacks to participation in the Plan. For instance, participation in the Plan may lower your social security benefits. You should consult with your professional tax/financial advisor to determine the consequences of your participation in this Plan. Election Procedures When you are first eligible to participate in the Plan, you must return a completed election form to the Plan Administrator on or before the date specified by the Plan Administrator. After you are first eligible to participate in the Plan you will generally only be able to change your elections as of the beginning of each Plan Year. Prior to the start of each Plan Year, the Plan Administrator will provide an election form to you. In order to participate in the Plan for the next Plan Year, you must return the completed election form to the Plan Administrator on or before the date specified by the Plan Administrator. However, see "Modification of Elections" below for situations where you may modify elections at a time other than the beginning of a Plan Year. If, as of the start of a Plan Year, you have not returned an election form by its due date, you will be deemed to have elected not to participate in the Plan for that Plan Year. As of the start of every Plan Year, you are deemed to elect to contribute the entire amount of any participant -paid premiums for the Premium Conversion Account unless you otherwise elect in writing. Modification of Elections Generally speaking, you may only revise your elections as of the start of a Plan Year. However, in certain situations you may modify your elections upon a "change in status". A brief listing of events that constitute a change in status follows. Please note that there are several conditions and/or limitations that apply to the events listed below. Please 2 contact the Plan Administrator if you have any questions or believe that you may qualify for an election change. A change in status includes: Change in your marital status. Change in the number of your dependents. Change in employment status. A dependent satisfies or ceases to satisfy eligibility requirements. Change in your place of residence. Commencement or termination of an adoption proceeding. Court judgment, decree, or order. Entitlement to Medicare or Medicaid. Significant cost or other coverage changes. You take leave under the FMLA In addition, your election for your premiums will be automatically adjusted for any change in the cost of contracts as permitted by applicable law. BENEFITS Premium Conversion Account When you become eligible to participate in the Plan, the Plan will establish a Premium Conversion Account in your name. This Account will be credited with your contributions and will be reduced by any payments made on your behalf. This account may be used to pay premiums on the contracts listed below: Employer Group Medical Employer Dental Employer Vision If a contract is offered in conjunction with a Company -sponsored benefit plan, you will be eligible to make contributions to the Premium Conversion Account only if you are also eligible to participate in the applicable Company -sponsored plan, it` is described above and you are eligible to participate in this Plan. 3 In the event of :a conflict between the terms of this Plan and the terms of a contract, the terms of the contract (or the benefit plan under which it is established) will control. Health Care Reimbursement Account When you become eligible to participate in the Plan, the Plan will establish a Health Care Reimbursement Account in your name. This Account will be credited with your contributions and will be reduced by any payments made on your behalf. You will be entitled to receive reimbursement from this account for eligible expenses incurred by you, your spouse and dependents, if any. A dependent is generally someone who you may claim as a dependent on your federal tax return and also includes a child who is under the age of 27 through the end of the calendar year. You may receive reimbursement for eligible expenses incurred at a time when you are actively participating in the Plan. The entire annual amount you elect to contribute for the Plan Year for the Health Care Reimbursement Account less any reimbursements already disbursed will be available for reimbursement. The maximum amount you may contributeeach year is 2,500 (maximum per pay period contribution allowable: $96.15). Eligible expenses generally include all medical expenses that you may deduct on your federal income tax return, although health insurance premiums are not an eligible expense for the Health Care Reimbursement Account. Medicines or drugs are eligible expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin (unless otherwise excluded). You will not be reimbursed for any expenses that are (i) not incurred in the Plan Year, (ii) incurred before or after you are eligible to participate in the Plan, (iii) attributable to a tax deduction you take in a prior taxable year, or (iv) covered, paid or reimbursed from any other source. Dependent Care Assistance Account When you become eligible to participate in the Plan, the Plan will establish a Dependent Care Assistance Account in your name. This Account will be credited with your contributions and will be reduced by any payments made on your behalf. You will be entitled to receive reimbursement from this account for dependent care assistance. Dependent care assistance is defined as expenses you incur for the care of a qualifying individual. A qualifying individual is a dependent who is under age 13 or a spouse or dependent who lives with you and is physically or mentally incapable of caring for himself/herself. However, these expenses only qualify if they allow you to be gainfully employed. Not all expenses qualify as dependent care assistance. Only expenses that are excludable from income under federal tax may qualify as dependent care assistance. Some examples of expenses that qualify are: 4 Before and after school programs Care in your home or someone else's home (as long as the care giver is not your spouse or dependent and is age 19 or older) Licensed child care center Nursery school or pre-school Summer day care (not overnight) Please contact the Plan Administrator before enrolling in the Plan to confirm that the expenses for which you will seek reimbursement will qualify as dependent care assistance. You will not be reimbursed for any expenses that are (i) not incurred in the Plan Year, (ii) incurred before or after you are eligible to participate in the Plan, (iii) attributable to a tax credit you take for the same expenses, or (iv) covered, paid or reimbursed from any other source. The maximum amount of expense that may be contributed/reimbursed in any Plan Year is $5,000 ($2,500 if you are married and filing a separate return). The amount payable may also not be greater than the amount of your earned income or the earned income of your spouse. Special rules apply in the case of a spouse who is a student or incapable of caring for himself/herself. Effective August 6, 2007, if you cease to be participant in the cafeteria plan (because of termination of employment or other reason) you may continue to be reimbursed for eligible dependent care expenses through the end of the Plan Year (or grace period if applicable). You generally must file a Form 2441 to determine whether any part of your Dependent Care Assistance Account is taxable. Please note that participation in the Plan may prevent you from taking a tax credit for the same expenses. You should consult with your professional tax/financial advisor to determine the consequences of your participation in this Plan. Coordination with Other Plans All claims for benefits that are covered by an insurance policy must be made to the insurance company issuing such insurance policy. 5 Limits on Certain Employees If you are a highly paid employee or an owner of the Company, federal law may impose limits on your eligibility to participate in the Plan and/or the benefits you may receive from the Plan. FORFEITURES Plan Year/Termination Any amounts remaining in your account at the end of the Plan Year will be forfeited after all claims are paid. In addition, any balance remaining in your account on the date you terminate employment with the Company will be forfeited after all claims are paid. CLAIMS Deadlines You must submit claims for reimbursement by the last day of February following the close of the Plan Year. However, if you terminate employment you must submit claims for reimbursement within 60 days after your date of termination. Debit/Credit Cards The Company will provide you with a debit, credit or other stored -value card for purposes of making purchases that may be reimbursed from your Health Care Reimbursement Account and/or your Dependent Care Assistance Account. The Plan 'Administrator will provide you with more information about stored value cards at the time you enroll in the Plan. Documentation of Claims Any claim for benefits must include all information and evidence that the Plan Administrator deems necessary to properly evaluate the merits of the claim. The Plan Administrator may request any additional information necessary to evaluate the claim. 0 Method and Tinning o�yment To the extent that the Plan Administrator approves a claim, the Company may either (i) reimburse you, or (ii) pay the service provider directly. The Plan Administrator will pay claims at least once per year. The Plan Administrator may provide that payments/reimbursements of less than a certain amount will be carried forward and aggregated with future claims until the reimbursable amount is greater than a minimum amount. In any event, the entire amount of payments/reimbursements outstanding at the end of the Plan Year will be reimbursed without regard to the minimum payment amount. Where to Submit Claims All claims must be submitted to Igoe & Company Incorporated dba Igoe Administrative Services at 16769 Bernardo Center Dr. #21, San Diego, CA 92128; via email at flex@goigoe.com or fax at 1-888-357-6307. The telephone number is 1-800- 633-8818. Refunds/Indemnification You must immediately repay any excess payments/reimbursements or any payments/reimbursements that are taxable to you. You must reimburse the Company for any liability the Company may incur for making such payments, including but not limited to, failure to withhold. or pay payroll or withholding taxes from such payments or reimbursements. If you fail to timely repay an excess amount and/or make adequate indemnification, the Plan Administrator may: (i) to the extent permitted by applicable law, offset your salary or wages, and/or (ii) offset other benefits payable under this Plan. Beneficiary If you die, your beneficiaries or your estate may submit claims for Eligible Expenses for the portion of the Plan Year preceding the date of your death. You may designate a specific beneficiary for this purpose. If you do not name a beneficiary, the Plan Administrator may pay any amount to your spouse, one or more of your dependents or a representative of your estate. CONTINUATION RIGHTS Military Service If you serve in the United States Armed Forces and must miss work as a result of such service, you may be eligible to continue to receive benefits with respect to any qualified military service. 7 Under Federal law, you, your spouse, and your dependents may be entitled to COBRA continuation coverage in certain circumstances. Please see the "COBRA NOTICE" that is attached to the end of this Summary Plan Description for important information about your right to COBRA continuation coverage, which is a temporary extension of coverage under the Plan. The COBRA NOTICE generally explains COBRA continuation coverage and when it may become available to you. The Plan Administrator will inform you of these rights, if any, when you terminate employment. FMLA If you go on unpaid leave that qualifies as family leave under the Family and Medical Leave Act you may be able to continue receiving health care benefits. You may elect to continue coverage on a pre-tax or after tax basis for non medical benefits when on leave of absence under the FMLA. Non FMLA Leave In addition, you may elect to continue coverage on a pre-tax or after tax basis when on leave of absence other than the FMLA.. YOUR RIGHTS As a participant in this Plan, you are entitled to certain rights and protections. You have the right to: Continue health care coverage for yourself, spouse or dependents if there is a loss of coverage under the plan as a result of a qualifying event. You or your dependents may have to pay for such coverage. Review this Summary Plan Description and the documents governing the plan on the rules governing your COBRA continuation coverage rights MISCELLANEOUS Qualified Medical Child Support Orders In certain circumstances you may be able to enroll a child in the Plan if the Plan receives a Qualified Medical Child Support Order (QMCSO) and/or National Medical Support Notice. You may obtain a copy of the medical child support procedures from the Plan Administrator, free of charge. 8 Loss of Benefit You may lose all or part of your account if the unused balance is forfeited at the end of a Plan Year and if we cannot locate you when your benefit becomes payable to you. You may not alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments which you may expect to receive, contingently or otherwise, under the Plan, except that you may designate a Beneficiary. Amendment and Termination The Company may amend, terminate or merge the Plan at any time. Administrator Discretion The Plan Administrator has the authority to make factual determinations, to construe and interpret the provisions of the Plan, to correct defects and resolve ambiguities in the Plan and to supply omissions to the Plan. Any construction, interpretation or application of the Plan, by the Plan Administrator is final, conclusive and binding. Taxation The Company intends that all benefits provided under the Plan will not be taxable to you under federal tax law. However, the Company does not represent or guarantee that any particular federal, state or local income, payroll, personal property or other tax consequence will result from participation in this Plan. You should consult with your professional tax advisor to determine the tax consequences of your participation in this Plan. Privacy The Plan is required under federal law to take sufficient steps to protect any individually identifiable health information to the extent that such information must be kept confidential. The Plan Administrator will provide you with more information about the Plan's privacy practices. ADMINISTRATIVE INFORMATION 1. The Plan Sponsor is City of Vernon. Its address is 4305 Santa Fe Ave., Vernon, CA 90058. Its telephone number is 323-583-8811. 0 Its Employer Identification Number is 95-6000808. The Plan Administrator is a committee appointed by Plan Sponsor. If no committee has been designated, the Plan Administrator will be the Plan Sponsor. Its address and telephone number is that of the Plan Sponsor listed above. 2. The Plan is a welfare benefit plan which has been designated by the sponsor as its plan number 510. 3. The Plan's designated agent for service of legal process is the chief officer of the entity named in paragraph 1. Any legal papers should be delivered to him or her at the address listed in paragraph 1. However, service may also be made upon the Plan Administrator. 4. The Company's fiscal year ends on June 30 and the plan year ends on December 31. 10 COBRA NOTICE In General. This notice contains important information about your right to COBRA continuation coverage, which is a temporary extension of coverage under the Plan. This notice generally explains COBRA continuation coverage, when it may become available to you and your family, and what you need to do to protect the right to receive it. The right to COBRA continuation coverage was created by a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA continuation coverage can become available to you when you would otherwise lose your group health coverage. It can also become available to other members of your family who are covered under the Plan when they would otherwise lose their group health coverage. What is COBRA Continuation Coverage? COBRA continuation coverage is a continuation of Plan coverage when coverage would otherwise end because of a life event known as a "qualifying event." Specific qualifying events are listed later in this notice. After a qualifying event, COBRA continuation coverage must be offered to each person who is a "qualified beneficiary." You, your spouse, and your dependent children could become qualified beneficiaries if coverage under the Plan is lost because of the qualifying event. Under the Plan, qualified beneficiaries who elect COBRA continuation coverage must pay for COBRA continuation coverage. If you are an employee, you will become a qualified beneficiary if you lose your coverage under the Plan because either one of the following qualifying events happens: Your hours of employment are reduced, or Your employment ends for any reason other than your gross misconduct. If you are the spouse of an •employee, you will become a qualified beneficiary if you lose your coverage under the Plan because any of the following qualifying events happens: Your spouse dies; Your spouse's hours of employment are reduced; Your spouse's employment ends for any reason other than his or her gross misconduct; Your spouse becomes entitled to Medicare benefits (under Part A, Part B, or both); or You become divorced or legally separated from your spouse. Your dependent children will :become qualified beneficiaries if they lose coverage under the Plan because any of the following qualifying events happens: The parent -employee dies; The parent -employee's hours of employment are reduced; The parent -employee's employment ends for any reason other than his or her gross misconduct; The parent -employee becomes entitled to Medicare benefits (Part A, Part B, or both);. The parents become divorced or legally separated; or The child stops being eligible for coverage under the plan as a "dependent child." 11 When is COBRA Coverage Available? The Plan will offer COBRA continuation coverage to qualified beneficiaries only after the Plan Administrator has been notified that a qualifying event has occurred. When the qualifying event is the end of employment or reduction of hours of employment, death of the employee, or the employee's becoming entitled to Medicare benefits (under Part A, Part B, or both), the employer must notify the Plan Administrator of the qualifying event. You Must Give Notice of Some Qualifying Events For the other qualifying events (divorce or legal separation of the employee and spouse or a dependent child's losing eligibility for coverage as a dependent child), you must notify the Plan Administrator within 60 days after the qualifying event occurs. You must provide this notice to the Company at 4305 Santa Fe Ave., Vernon, CA 90058. The Company's telephone number is 323-583-8811. How is COBRA Coverage Provided? Once the Plan Administrator receives notice that a qualifying event has occurred, COBRA continuation coverage will be offered to each of the qualified beneficiaries. Each qualified beneficiary will have an independent right to elect COBRA continuation coverage. Covered employees may elect COBRA continuation coverage on behalf of their spouses, and parents may elect COBRA continuation coverage on behalf of their children. The COBRA continuation coverage lasts only until the end of the plan year in which the qualifying event occurs. COBRA continuation coverage may only be elected under this plan if, as of the date of the qualifying event, the maximum benefit available under the plan for the remainder of the plan year is more than the maximum amount that the Plan could require as payment to maintain coverage for the remainder of that plan year. If You Have Questions Questions concerning your Plan or your COBRA continuation coverage rights should be addressed to the contact or contacts identified below. For more information about your rights under ERISA, including COBRA and other laws affecting group health plans, contact the nearest Regional or District Office of the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) in your area or visit the EBSA website at www.dol.gov/ebsa. (Addresses and phone numbers of Regional and District EBSA Offices are available through EBSA's website.) Keep Your Plan Informed of Address Changes In order to protect your family's rights, you should keep the Plan Administrator informed of any changes in the addresses of family members. You should also keep a copy, for your records, of any notices you send to the Plan Administrator. Plan Contact Information City of Vernon 4305 Santa Fe Ave. Vernon, CA 90058. 323-583-8811. V2.02-3.00 12 RECEIVED NOV 13 2012 IN CITYCLERK'S OFFICE STAFF REPORT HUMAN RESOURCES DEPARTMENT DATE: November 6, 2012 TO: Honorable Mayor and City Council FROM: Teresa McAllister, Director of Human Resources RE: Igoe Administrative Services 2013 Flexible Benefit Plan Agreement Backeround RECEIVED NOV 0 6 2012 CITY ADMINISTRATION Igoe Administrative Services administers the City's Flexible Spending Account for Medical Care and Dependent Care. The plan allows employees to set aside pre-tax dollars for certain expenses. As a result of the Patient Protection and Affordable Care Act of 2010, (PPACA), health flexible spending accounts (FSA) salary reductions are being limited to $2,500 for taxable year beginning 2013. Therefore the maximum limits employees may set aside for medical care has been reduced from $5,000 to $2,500.00 pursuant to IRS regulations. However, employees may continue to set aside up to $5,000 for Dependent Care expenses. The attached Cafeteria Plan Adoption Agreement and related renewal packets for the City of Vernon 2013 Flexible Spending Account (FSA) plan incorporates the change in the medical care $2500 maximum limit. Recommendation It is hereby recommended that the City amend Resolution No. 2010-195 and approve and authorize for signature the attached Cafeteria Plan Agreement and renewal packet with Igoe Administrative Services for the City's 2013 Flexible Spending Account. BUSINESS ASSOCIATE AGREEMENT This Business Associate Agreement (the "Agreement") is made by City of Vernon in its capacity as Plan Administrator of City of Vernon Group Health Plan/Plans (herein referred to as "Covered Entity") and Igoe & Company Incorporated, dba Igoe Administrative Services (hereinafter known as "Business Associate"). Covered Entity and Business Associate shall collectively be known herein as the "Parties". WHEREAS, Covered Entity wishes to commence a business relationship with Business Associate that shall be memorialized in a separate administrative services agreement (the "Underlying Agreement") pursuant to which Business Associate may be considered a "business associate" of Covered Entity as defined in the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") including all pertinent regulations (45 CFR Parts 160 and 164) issued by the U.S. Department.of Health and Human Services as either have been amended by Subtitle D of the Health Information Technology for Economic and Clinical Health Act (the "HITECH Act"), as Title XIII of Division A and Title IV of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5); and WHEREAS, the nature of the prospective contractual relationship between Covered Entity and Business Associate may involve the exchange of Protected Health Information ("PHI") as that term is defined under HIPAA; and For good and lawful consideration as set forth in the Underlying Agreement, Covered Entity and Business Associate enter into this Agreement for the purpose of ensuring compliance with the requirements of HIPAA, its implementing regulations, the HITECH Act and applicable medical privacy provisions of California law; NOW THEREFORE, in consideration of the mutual promises and of other good and valuable consideration herein contained, the Parties, intending to be legally bound, hereby agree as follows: I. DEFINITIONS. A. Individual. "Individual' shall have the same meaning as the term "individual' in 45 CFR §164.501 and shall include a person who qualifies as a personal representative in accordance with 45 CFR §164.502(g). B. Breach. "Breach" shall have --the same meaning as the term "breach" in §13400 of the HITECH Act and shall include the unauthorized acquisition, access, use, or disclosure of PHI that compromises the security or privacy of such information. C. Designated Record Set. "Designated Record ,Set" shall have the same meaning as the term "designated record set" in 45 CFR §164.501. D. Electronic Protected Health Information. "Electronic Protected Health Information" or "Electronic PHI" shall have the same meaning as the term "electronic protected health information" in 45 CFR §160.103. 1IPage ADMINISf"ATIVE SFOVIt i Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT E. Electronic Transactions Rule. "Electronic Transactions Rule" shall mean the final regulations issued by HHS concerning standard transactions and code sets under 45 CFR Parts 160 and 162. F. HHS. "HHS" shall mean the U.S. Department of Health and Human Services. G. Privacy Rule. "Privacy Rule" shall mean the Standards for Privacy of Individually Identifiable Health Information at 45 CFR Part 160 and Part 164, Subparts A and E, as amended by the HITECH Act and as may otherwise be amended from time to time. H. Protected Health Information. "Protected Health Information" or "PHI" shall have the same meaning as the term "protected health information" in 45 CFR §164.501, limited to the information created or received by Business Associate from or on behalf of Covered Entity. I. Required by Law. "Required by Law" shall have the same meaning as the term "required by law" in 45 CFR §164.103. J. Secretary. "Secretary" shall mean the Secretary of the U.S. Department of Health and Human Services or his or her designee. K. Security Incident. "Security Incident" shall have the same meaning as the term "securing incident" in 45 CFR § 164.304. L. Security Rule. "Security Rule" shall mean the Security Standards and Implementation Specifications at 45 CFR Parts 160 and 164, subpart C. M. Transaction. 'Transaction" shall have the meaning given the term "transaction" in 45 CFR§ 160.103. N. Unsecured Protected Health Information. "Unsecured Protected Health Information" or "Unsecured PHI" shall mean PHI that is not secured through the use of a technology or methodology specified by the Secretary in guidance or as otherwise defined in the §13402(h) of the HITECH Act. II. USE OR DISCLOSURE OF PHI BY BUSINESS ASSOCIATE. A. Except as otherwise limited in this Agreement, Business Associate may use or disclose Protected Health Information to perform functions, activities, or services for, or on behalf of, Covered Entity as specified in the Underlying Agreement, provided that such use or disclosure would not violate the Privacy Rule. B. Business Associate shall only use and disclose PHI if such use or disclosure complies with each applicable requirement of 45 CFR §164.504(e). 2 1 P a g e naRuv str3nive acav erti Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT C. Business Associate shall be directly responsible for full compliance with the relevant requirements of the Privacy and Security Rules to the same extent as Covered Entity. III. DUTIES OF BUSINESS ASSOCIATE RELATIVE TO PHI. A. Business Associate shall not use or disclose PHI other than as permitted or required by this Agreement or as Required by Law. B. Business Associate shall implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the Electronic PHI that it creates, receives, maintains, or transmits on behalf of Covered Entity. Business Associate shall immediately notify Covered Entity of any use or disclosure of PHI in violation of this Agreement. C. Business Associate will report to Covered Entity any attempted or successful (A) unauthorized access, use, disclosure, modification, or destruction of Covered Entity's Electronic Protected Health Information or (B) interference with Business Associate's system operations in Business Associate's information systems, of which Business Associate becomes aware. Business Associate will make this report within a reasonable timeframe except if any such security incident resulted in a disclosure not permitted by this Agreement or Breach of Covered Entity's Unsecured Protected Health Information, Business Associate will make the report in accordance with the provisions set forth in the paragraph immediately below. D. Business Associate promptly shall notify Covered Entity of a Breach of Unsecured PHI following the first day on which Business Associate knows of such Breach or following the first day on which Business Associate (or Business Associate's employee, officer or agent, excluding any individual responsible for a breach), or reasonably should have known of such breach through the exercise of reasonable diligence.. "Business Associate" for this limited purpose shall include Business Associate's owners, officers, employees, independent contractors, and agents, with the exclusion of any individual who is responsible for a breach. Business Associate's notification to Covered Entity hereunder shall: i. Be made to Covered Entity without unreasonable delay and in no event later than 60 calendar days after discovery of the Breach, except where a law enforcement official determines that a notification would impede a criminal investigation or cause damage to national security; ii. Include the individuals whose Unsecured PHI has been, or is reasonably believed to have been, the subject of a Breach; and iii. Include any other available information that the Covered Entity is required to include in its notification to the individual under §13402(f) of the HITECH Act, promptly upon such information becoming available to Business Associate. E. Business Associate agrees to require that any of its subcontractors and agents, to which Business Associate is permitted by this Agreement or in writing by Covered Entity to disclose Covered 3 1 P a g e Trin+ivisn3nr+�e yrr+vicrs Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT Entity's Protected Health Information and/or Electronic Protected Health Information, to provide reasonable assurance that such subcontractor or agent will comply with the same privacy and security safeguard obligations with respect to Covered Entity's Protected Health Information and/or Electronic Protected Health Information that are applicable to Business Associate under this Agreement. F. In the event Business Associate becomes aware of a pattern or practice of a subcontractor or agent that violates the privacy and security safeguard obligations made to Business Associate, Business Associate will take reasonable steps to cure such violation and otherwise will respond to non- compliance by a subcontractor or agent in the same way that Covered Entity is required to respond to non-compliance by Business Associate. G. As of the effective date specified by HHS in final regulations to be issued on this topic, Business Associate shall not directly or indirectly receive remuneration in exchange for any Protected Health Information of an individual unless the Covered Entity or Business Associate obtained from the individual, in accordance with 45 CFR § 164.508, a valid authorization that includes a specification of whether the Protected Health Information can be further exchanged for remuneration by the entity receiving Protected Health Information of that individual, except as otherwise allowed under the HITECH Act. H. If Business Associate conducts in whole or part electronic Transactions on behalf of Covered Entity for which HHS has established standards, Business Associate will comply, and will require any subcontractor or agent it involves with the conduct of such Transactions to comply, with each applicable requirement of the Electronic Transactions Rule. Business Associate shall also comply with the National Provider Identifier requirements, if and to the extent applicable. I. To the extent applicable, Business Associate shall provide access to Protected Health Information in a Designated Record Set at reasonable times, at the request of Covered Entity or, as directed by Covered Entity, to an Individual in order to meet the requirements under 45 CFR §164.524. J. To the extent applicable, Business Associate shall make any amendment(s) to Protected Health Information in a Designated Record Set that Covered Entity directs or agrees to pursuant to 45 CFR §164.526 at the request of Covered Entity or an Individual. K. Business Associate shall, upon request with reasonable notice, provide Covered Entity access to its premises for a review and demonstration of its internal practices and procedures for safeguarding PHI. Such access shall be granted no less frequently than annually, and in the event of a Breach or Security Incident as herein defined. L. Business Associate agrees to document such disclosures of PHI and ,information related to such disclosures as would be required for a Covered Entity to respond to a request by an individual for an accounting of disclosures of PHI in accordance with 45 C.F.R. §164.528. Should an individual make a request to Covered Entity for an accounting of disclosures of his or her PHI pursuant to 45 C.F.R. §164.528, Business Associate agrees to promptly provide Covered Entity with information in a format and manner sufficient to respond to the individual's request. 4 1 P a g e ADMINISFRATM SROAes Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT M. Business Associate shall, upon request with reasonable notice, provide Covered Entity with an accounting of uses and disclosures of PHI provided to it by Covered Entity. N. Business Associate shall make its internal practices, books, records, and any other material requested by the Secretary relating to the use, disclosure, and safeguarding of PHI received from Covered Entity available to the Secretary for the purpose of determining compliance with the Privacy Rule. The aforementioned information shall be made available to the Secretary in the manner and place as designated by the Secretary or the Secretary's duly appointed delegate. Under this Agreement, Business Associate shall comply and cooperate with any request for documents or other information from the Secretary directed to Covered Entity that seeks documents or other information held by Business Associate. O. Business Associate may use Protected Health Information to report violations of law to appropriate Federal and State authorities, consistent with 42 C.F.R. §164.502(j)(1). P. Except as otherwise limited in this Agreement, Business Associate may use or disclose PHI for the proper management and administration of Business Associate, provided that any disclosures made are Required by Law, or Business Associate obtains reasonable assurances from the person to whom the information is disclosed that it will remain confidential and be used or further disclosed only as Required by Law or for the purpose for which it was disclosed to the person, and the person notifies Business Associate of any instances of which it is aware in which the confidentiality of the information has been breached. IV. TERM AND TERMINATION. A. Term. The Term of this Agreement shall be effective as of the date the Underlying Agreement is effective, and shall terminate when all of the Protected Health Information provided by Covered Entity to Business Associate, or created or received by Business Associate on behalf of Covered Entity, is destroyed or returned to Covered Entity, or, if it is infeasible to return or destroy Protected Health Information, protections are extended to such information, in accordance with the termination provisions in this Section IV. B. Termination for Cause. Upon Covered Entity's knowledge of a material breach of this Agreement by Business Associate, Covered Entity shall: 1. Provide an opportunity for Business Associate to cure the breach or end the violation and, if Business Associate does not cure the breach or end the violation within the time specified by Covered Entity, which shall be no less than thirty (30 days), terminate this Agreement; 2. Immediately terminate this Agreement if Business Associate has breached a material term of this Agreement and cure is not possible; or 3. If neither termination nor cure is feasible, report the violation to the Secretary. MWE 5 1 P a g e ,euantiis1rtnIWt 5crtvitES Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT C. Effect of Termination. 1. Except as provided in paragraph C(2) of this section, upon termination of this Agreement, for any reason, Business Associate shall return or destroy all Protected Health Information received from Covered Entity, or created or received by Business Associate on behalf of Covered Entity. This provision shall apply to Protected Health Information that is in the possession of subcontractors or agents of Business Associate. Business Associate shall not retain any copies of the Protected Health Information. 2. In the event that Business Associate determines that returning or destroying the Protected Health Information is infeasible, Business Associate shall provide to Covered Entity written notification of the conditions that make return or destruction infeasible. After written notification that return or destruction of Protected Health Information is infeasible, Business Associate shall extend the protections of this Agreement to such Protected Health Information and limit further uses and disclosures of such Protected Health Information to those purposes that make the return or destruction infeasible, for so long as Business Associate maintains such Protected Health Information. 3. Should Business Associate make a disclosure of PHI in violation of this Agreement, Covered Entity shall have the right to immediately terminate any contract, other than this Agreement, then in force between the Parties, including the Underlying Agreement. V. CONSIDERATION. The parties mutually recognize that the promises each has made to the other in this Agreement shall, henceforth, be detrimentally relied upon by each party in choosing to continue or commence a business relationship with the other party. VI. REMEDIES IN EVENT OF BREACH. Business Associate hereby recognizes that irreparable harm will result to Covered Entity, and to the business of Covered Entity, in the event of breach by Business Associate of any of the covenants and assurances contained in this Agreement. As such, in the event of breach of any of the covenants and assurances contained in Sections II or III above, Covered Entity shall be entitled to enjoin and restrain Business Associate from any continued violation of Sections II or III. Furthermore, in the event of breach of Sections II or III by Business Associate, Covered Entity is entitled to reimbursement and indemnification from Business Associate for Covered Entity's reasonable attorneys' fees and expenses and costs that were reasonably incurred as a proximate result of Business Associate's breach however not including attorneys' fees, expenses or costs incurred in claims or actions brought by third parties affected by the breach. The remedies contained in this Section VI shall be in addition to (and not supersede) any action for damages and/or any other remedy Covered Entity may have for breach of any part of this Agreement. VII. MODIFICATION. This Agreement may only be modified through a writing signed by the Parties and, thus, no oral modification hereof shall be permitted. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for Covered Entity to comply with the requirements of the Privacy Rule and HIPAA. L 6 1 P a g e ADMINIsrRnrIVES1HVItci Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT Vill. INTERPRETATION OF THIS CONTRACT IN RELATION TO OTHER CONTRACTS BETWEEN THE PARTIES. Should there be any conflict between the language of this contract and any other contract entered into between the Parties (either previous or subsequent to the date of this Agreement), the language and provisions of this Agreement shall control and prevail unless the Parties specifically refer in a subsequent written agreement to this Agreement by its title and date and specifically state that the provisions of the later written agreement shall control over this Agreement. IX. COMPLIANCE WITH STATE LAW. Except to the extent it's obligation to do so is preempted by the provisions of HIPAA, including provisions of the HITECH Act, Business Associate shall notify Covered Entity in accordance with California Civil Code § 1798.82(d) of any breach of unencrypted data owned or licensed by Covered Entity,- and maintained by Business. Associate. "Breach" for these purposes means acquisition of unencrypted data by an unauthorized person, or the reasonable belief of such acquisition, that compromises the security, confidentiality, or integrity of personal information consisting of medical or insurance information pertaining to California residents, subject however to the good faith exception set forth in Civil Code § 1798.82(d). If the HIPAA Privacy or Security Rules and the California Civil Code provisions conflict regarding the degree of protection provided for Protected Health Information, Business Associate shall comply with the more restrictive protection requirement. X. MISCELLANEOUS A. Ambiguity. Any ambiguity in this Agreement shall be resolved to permit Covered Entity to comply with the Privacy Rule. B. Regulatory References. A reference in this Agreement to a section in the Privacy or Security Rule means the section as in effect or as amended. C. Notice to Covered Entity/Business Associate. All Notices required hereunder shall be in writing and provided by electronic mail and will be considered received as of the date of the electronic transmission. Notices to the Covered Entity shall be sent to the daily contact on file with the Business Associate. Notices to the Business Associate shall be sent to the daily contact on file with the Covered Entity. Both Parties agree that they are responsible for ensuring that such Notices are forwarded to the appropriate internal personnel for handling. If additional information is needed to take action related to a Notice, a request must be made in writing outlining all specific requirements and instructions and provided by electronic mail. 7 I P a g e AUMCNISIRAIKIt SCI VIM., Document Generated on August 16, 2011 City of Vernon Business Associate Agreement BUSINESS ASSOCIATE AGREEMENT 9 IN WITNESS WHEREOF and acknowledging acceptance and agreement of the foregoing, the Parties affix their signatures hereto. Covered Entity: By. Name: William Davis Title: Mayor Date: Business Associate: By: Name: Laura K. McKinlay Title: President/CEO Date: 8 1 P a g e A STc j fid a Reed, I teri City Clerk AP VED AS TO FORM: Nicholas George Rodriguez, City Attorney AUMIMISINA11W 4MVIC[S Document Generated on August 16, 2011 City of Vernon Business Associate Agreement