HomeMy WebLinkAboutJ- 3 third Part Administrator-IRS Section 125 Flexible Benefits Program HUMAN RESOURC 11111111 a
INTEROFFICE MEM AND UM
AGENDA ITEM
to: Honorable Mayor and Members of the City Council
if
from: Dottie Wallace, Human Resources Manag• '= • Officer
via: Henry Garcia, City Administrator
date: August 27, 1997
subject: Third Party Administrator—IRS Section 125 Flexible Benefits Program
Heller Associates
Background
On April 17, 1995, Council authorized the Mayor to sign an agreement with American Benefit Plan
Administrators (ABPA) (formerly Pacific Coast Administrators) to administer the City's IRS Section
125 Reimbursement Accounts.
ABPA has notified the City that it will no longer be administering Flexible Benefit Programs and
that they have entered into an agreement with Heller Associates to administer the City's Section
125 Program. Heller Associates have been a third party administrator since 1980. No changes
in administration fees are requested.
Recommendation
It is recommended that Council authorize the Mayor to sign the attached agreement with Heller
Associates to administer the City's IRS 125 Reimbursement Program.
attachment: Service Agreement with Heller Associates
g' 9/
Attachment "A"
ASSIGNMENT AGREEMENT
This Assignment Agreement (the Agreement), is made and entered into between American Benefit
Plan Administrators, Inc., a California Corporation (ABPA) and Heller Associates, a California
Corporation (Heller).
WHEREAS, Heller wishes to accept assignment of, and ABPA wishes to assign and transfer, the
client accounts comprising of ABPA's flexible spending claims administration business serviced out
of ABPA's office in El Monte, California (the "Business"), excluding accounts receivable for
services which have been provided prior to the Effective Date, which client accounts are identified
on Exhibit "A" attached hereto and incorporated herein by reference (hereinafter "Assets").
NOW, THEREFORE, the parties hereto agree as follows:
1. Assignment - ABPA hereby agrees to assign and transfer to Heller, and Heller hereby agrees
to purchase, all of ABPA's right, title and interest in and to and Heller agrees to assume all
obligations and liabilities of ABPA in respect of the Assets. Effective, September 1, 1997,
(Effective Date) ABPA shall assign, transfer, and deliver to Heller, and Heller shall accept from
ABPA, as just and reasonable consideration, all rights, title and interests of ABPA in and to the
Assets described on Exhibit "A", attached hereto and incorporated herein. No other assets are part
of this Agreement.
2. Limitations on Assumed Liabilities - Heller shall assume and agree to discharge and perform,
as appropriate, when lawfully due or required to be discharged and performed, all services and
obligations to be undertaken and or performed under any of the Assets after the Effective Date to
customers, clients or other third persons with respect to the Assets ("Assumed Liabilities"). Other
than the Assumed Liabilities, nothing contained in this Agreement shall be deemed or construed to
constitute the assumption by Heller of, or the agreement by Heller to pay or discharge, any liabilities
or obligations, whether known or unknown, existing or contingent, of the Business or otherwise
arising from ABPA's ownership and/or operation of the Business or the Assets prior to the Effective
Date. Except for the Assumed Liabilities, ABPA hereby expressly covenants and agrees that ABPA
shall remain liable for and shall be responsible for all liabilities and obligations related to the
Business or otherwise arising from the Assets and incurred prior to the Effective Date. ABPA will
defend, indemnify and save harmless Heller from and against any and all claims, demands, actions,
liabilities, expenses (including actually incurred reasonable attorney's fees) and losses to the extent
the same arise out of or relate to (i) any and all liabilities and obligations for which ABPA is
responsible as contemplated hereby, or (ii) ABPA's ownership and/or operation of the Business or
the Assets prior to the Effective Date. Except as otherwise provided in this Agreement, Heller
hereby expressly covenants and agrees that Heller shall be liable and responsible for all liabilities
and obligations related to the Assets incurred after the Effective Date and Heller - will defend,
indemnify and save harmless ABPA from and against any and all claims, demands, actions,
liabilities, expenses (including actually incurred reasonable attorney's fees) and losses to the extent
the same arise out of or relate to any and all liabilities and obligations for which Heller is responsible
as contemplated hereby.
Assignment Agreement 1
3. Heller's Representations and Warranties - Heller acknowledges, represents and warrants to
ABPA that:
A. Authority - (i) Heller is a corporation duly organized and existing under the laws of
the State of California; (ii) Heller has all requisite corporate power to enter into this Agreement; (iii)
this Agreement has been duly executed and delivered by Heller and constitutes a legal, valid and
binding obligation of Heller, enforceable against Heller in accordance with its terms; and (iv) the
execution, delivery and performance of this Agreement by Heller does not: (a) violate any provision
of law applicable to Heller, or (b) conflict with or result in a default under Heller's Articles of
Incorporation and By-Laws, as may be amended, or any material document, agreement, instrument,
order or decree to which Heller is a party or binding on Heller, or (c) require any consent or
approval of, or notice to, any person which has not been obtained.
B. Legal Action - There is no action, suit, proceeding or investigation at law or in equity
by or before any court, government instrumentality or other agency now pending or to the best
knowledge of Heller, threatened, against Heller which prohibits or restricts the consummation of the
transactions contemplated by this Agreement.
C. Due Diligence - Heller has conducted its own investigation and has performed such
due diligence and has obtained such information about the Assets as Heller deems appropriate and
Heller acknowledges that it is accepting the Assets without reliance on any representations or
information regarding the Assets provided by ABPA except that Heller has relied upon the
representations made in this Agreement.
4. ABPA's Representations and Warranties - ABPA, for itself, acknowledges, represents and
warrants to Heller that:
A. Authority - (i) ABPA is a corporation duly organized and existing under the laws of
its jurisdiction of organization; (ii) ABPA has all requisite corporate power to enter into this
Agreement; (iii) this Agreement has been duly executed and delivered by ABPA and constitutes a
legal, valid and binding obligation of ABPA, enforceable against ABPA in accordance with its
terms; and (iv) the execution, delivery and performance of this Agreement by ABPA does not: (a)
violate any provision of law applicable to ABPA, or (b) conflict with or result in a default under any
document, agreement, instrument, order or decree to which ABPA is a party or binding on ABPA.
B. Legal Actions - There is no action, suit, proceeding or investigation at law or in
equity by or before any court, government instrumentality or other agency now pending or to the
best of its knowledge, threatened against ABPA which prohibits or restricts the consummation of the
transactions contemplated by this Agreement.
C. Compliance With Laws - ABPA owns and operates, and has owned and operated, the
Business and the Assets in material compliance with all federal, foreign, state and local laws and
regulations, and all court or administrative orders.
Assignmenz Agreement 2
5. Indemnity - ABPA agrees to indemnify and hold harmless Heller and Heller agrees to
indemnify and hold harmless ABPA from any damage, loss, claim or expense resulting from the
other party's breach of the representations, warranties, acknowledgments, covenants or agreements
from the date hereof through September 1, 1997 and thereafter the indemnity shall expire.
6. Confidentiality - Neither APBA nor Heller will, and neither of them will allow any of their
affiliates to, disclose the terms of this Agreement or any other information provided in connection
with the transactions contemplated by this Agreement other than to employees, representatives,
advisors, investment managers, other agents of such parties, current and potential investors in the
parties and in affiliates of Heller, or its affiliates or other parties necessary to obtain consents or
approvals, which persons shall be informed of the confidential nature of such information, or as may
be required by law.
7. Miscellaneous
A. Governing Law - This Agreement shall be governed by and construed under the laws
of the State of California.
B. Expenses - Except as otherwise set forth herein, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such costs and expenses.
C. Further Assurances - Each party agrees that, from and after the Effective Date, upon
the request of the other party, it will from time to time execute and deliver to the other party all such
instruments, certificates and documents of further assurances as shall be necessary or appropriate to
vest in Heller's title to and possession of the Assets and to carry out the obligations of each party
hereunder and to consummate fully the transactions contemplated hereby.
D. Entire Agreement - This Agreement supersedes all discussions, negotiations, oral
understandings, agreements or representations between ABPA and Heller relating to the assignment
of the Assets. No supplement, modifications, or amendment of this Agreement shall be binding
unless it is executed in writing by authorized officer of both parties.
E. Counterparts - This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute one and the same
instrument.
F. Notices - All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or
mailed first class, postage prepaid, by registered or certified mail, return receipt requested (notices
shall be deemed to have been given on the second (2'd) day following the date upon which such
notice was hand-delivered or mailed) and shall be given to ABPA at the following address:
Assignment Agreement 3
American Benefit Plan Administrators, Inc.
4401 Santa Anita Avenue
El Monte, CA 91731-1607
and shall be given to Heller at the following address:
Heller Associates
2755 Bristol Street, Suite 250
Costa Mesa, CA 92626
or in any case to such other address or addressee as hereafter shall be furnished as provided in this
paragraph by any of the parties hereto to the other parties hereto.
G. Benefit Assignment - This Agreement shall be binding upon and inure to the benefit of
and shall be enforceable by Heller and ABPA and their successors and assigns. This agreement shall
not be assigned by any party without the prior written consent of the other party.
H. Severability - If any provision, clause or part of this Agreement or the application
thereof under certain circumstances is held invalid, or unenforceable, the remainder of this
Agreement, or the application of such provision, clause or part under other circumstances, shall not
be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
AMERICAN BENEFIT
PLAN ADMINISTRATORS, INC. HELLER ASSOCIATES
By By
Title President Title G.404,-
Date 2//7 7 7 Date 7/2.'/97
Assignment Agreement 4
ASSIGNMENT & RECORD TRANSFER FORM
In conjunction with the assignment and transfer of the flexible spending account claims
administration business from ABPA to Heller Associates, we ask that you to approve the assignment
of your Administrative Services Agreement with ABPA or any of its affiliated companies and
authorized the transfer of Plan records to Heller Associates.
p ABPA is hereby authorized to transfer all Plan records to Heller Associates.
p ABPA is hereby authorized to assign the Administrative Services Agreement to Heller
Associates.
Plan Name The City of Azusa
Authorized Signature
Date
Assignment Agreement 5
SERVICE AGREEMENT
Article 1. Parties
1.01 We, Heller Associates, a California Corporation, with principal offices located at 2755 Bristol Street, Costa Mesa, County of
Orange,California 92626,hereinafter referred to as"Heller Associates,"and you,hereinafter referred to as "Client" and fully
identified on the attached Proposal, labeled as Attachment "A" and incorporated as a part of this service agreement by this
reference,have entered into this service agreement the day and year last entered below.
Article 2. Purpose of Agreement,Services to be Provided
2.01 The purposes of this Agreement are to clearly define the respective duties,functions,and responsibilities of Heller Associates to
Client, and of Client to Heller Associates, in the operation of Client's employee benefit plan,hereinafter referred to as "Plan,"
which is identified in the Proposal.
2.02 The Proposal contains the services to be performed by Heller Associates for Client,the charges for those services to be paid by
Client,and other pertinent contract matters which are specific to the ongoing services to be performed by Heller Associates for
Client.
2.03 In the event that there is a conflict in the terms of this Service Agreement and the Proposal,the Proposal shall control except as
to matters where the Proposal is silent regarding the particular subject matter, in which case this Service Agreement shall
control.
Article 3. Limitations
3.01 The Plan and benefits under the Plan are the direct responsibility of Client. Heller Associates is not an insurer, agent,
underwriter, or acting in any other manner to guarantee,pay or otherwise be obligated for the benefits provided by Client for
the employees covered under its plan of benefits.Further,Heller Associates is specifically not engaged by Client to function in
a capacity whereby it shall determine the propriety of claims made in coordination with the federal Medicare program or any
similar state provided medical assistance program. It is agreed that Client shall be deemed the sole payer of said benefits and
that Heller Associates' function shall be only ministerial to that of the sole obligations of Client to its Plan.
3.02 Heller Associates is not the Plan Administrator of Client's plan, nor is Heller Associates the Named Fiduciary under the said
plan. These are specific responsibilities which are provided by applicable law and are not delegated or assigned to Heller
Associates.
3.03 Heller Associates does not provide investment counsel,act as a corporate co-trustee, legal counsel, certified public accountant,
benefit consultant,licensed collection agency,or broker for casualty,liability,bonding or any other insurance. It is understood
that Client will arrange for these and similar services directly. In the event that Client requests that Heller Associates make
arrangements for these services on Client's behalf,the engagement of any such service provider shall be the direct responsibility
of Client and Client shall be solely responsible for any fees and charges incurred for such services.
Article 4. Servicers Performed,Responsibilities of Heiler Associates
4.01 The specific services to be performed by Heller Associates for Client are described in the Proposal. Heller Associates agrees
that it will use its best efforts in the performance of these services for Client.
4.02 All questions of benefits,propriety,method of payment and other matters relative to the operation of the Plan will be referred to
Client for its determination. Once Client has instructed Heller Associates in the operational procedures it will require to be
followed, Heller Associates will be privileged to continue following those instructions until changed by Client and properly
noticed to Heller Associates as required under this Service Agreement.
4.03 All applicable Plan records, files and documents are, and shall remain, the sole property of Client and Heller Associates, nor
any third party, shall have no right, title or interest in or to such records. Heller Associates will protect and maintain the
confidentiality of all Plan records and information against disclosure to unauthorized persons. Heller Associates will store
records required for current processing at its expense or as otherwise specifically directed by Client. The destruction of plan
records will be performed only upon the specific written instructions of Client.
4.04 At the direction of Client, Heller Associates will assist other professionals employed by Client in the preparation of required
governmental reports. The fees and charges set forth in this Service Agreement do not include the cost of responding to special
requests for information,whether written or oral,from governmental agencies or other third parties. If Client directs that Heller
Associates respond to such requests, such responses will be subject to a fee charge as additional services under this Service
Agreement.
Page 1 of 3
HELLER RSSUCIRTES Fax:714-549-4816 Rug 28 '97 8:49 R.U2
Article 5. ReSponsibilly of Mut
5.01 Client will provide or approve written procedures for Heller Associates which are to be followed by it in its services under this
Agreement. Client has the sole right to direct and the responsibility for such direction under this Service Agreement. In the
event that changes are recommended by Heller Associates in the procedures which Client has previously directed Holler
Associates to follow,Client agrees that it will use good faith in considering the merits of the requested changes and implement
any required changes on a timely basis in good faith.
5.02 In the event that Client directs changes in the scope or manner of services to be perbnned by Heller Associates under this
Agreement which are not included in the Proposal,those changes will be subject to a fix charge as additional services under this
Service Agreement.
5.03 In the event that client is requested by Heller Associates to make a specific determination of a benefit question or procedure
which Heller Associates feels Is not covered under the existing directions provided by Client.Client agrees that it will respond
in a timely mariner to provide such detremination to Heller Associates.
Article 6. Fees and Payment
6.01 The fees and reimbursable costs due Heller Associates payable by Client under this Service Agreement are specified under this
Service Agreement ate contained in the Proposal.
6.02 Feer and exist rehnburaetttents due Heller Assuciater payable by Client fur services and expenses nut contained in the Proposal
or this Service Agreement will be billed at the prevailing rate charged by Heller Associates to its clients,or for the actual con of
the expenses incurred,as the case may be. In all cases, advanced approval will be obtained from Client,accompanied by a
written estimate of cost where possible,for such additional services prior to the commencement of such work_
6.03 Client will pay Heller Associates all fees and costs to be reimbursed on a timely basis. All charges are due and payable upon
receipt of billing by Client and will be considered delinquent if not paid within 30 days of the receipt of the bill. Delinquent
amounts due Heller Associates will bear interest at the rate of one and one half(1.5%)per month until paid.
Article 7. Termination
7.01 This Service Agreement shall contihme for 24 months unless sooner terminated as provided herein.
7.02 The term of the Agreement shall be 24 months.This Agreement shall automatically renew thereafter on a year to year basis
upon the same terns and conditions unless either party gives the other written notice of the desire to terminate the Agree-
ment ninety(90)days or more days prior to the end of the initial term or any anniversary date thereafter.
7.02a The term of the Agreement may also terminate upon the expiration of ninety(90)days following written notice by either party
to the other of the other's material breech of duty expressly defined In this Agreement,provided such breeching patty has not
cured or commenced in good faith to cure such breech within said ninety(90)day period.
7.03 This Agreement shall automatically terminate as of and in the event of:
(a) The institution of any liquidation or dissolution proceeding relating to Client or Plan, whether voluntary or involuntary and
whether or not involving insolvency unless dismissed within thirty(30)days.
(b) The enactment of any law or the promulgation of any regulation which makers illegal the continuance of this Agreement or the
performance of any services by Heller Associates under this Agreement.
7.04 If agreed to by Client and Heller Associates, Heller Associates will retain Client's records and complete processing of all
transactions submitted to Heller Associates,but not processed prior to the date of termination of this Agreement. The fee for
such services shall be as mutually agreed upon,in writing,between Client and Heller Associates.
Page 2 of 3
HtLLtK HSSULIHILS Fax:714-549-48lb Hug 28 '9? 9:45 F'.02
Article 8. ly(beellamemw
8.01 All communication,under this Service Agreement will be deemed to have been received two days alter they are postmarked by
die U.S.Postal Service,
(a) All rices,payments and other communication,Mal be addressed to Heiler Associates at its principal offices.
(b) All notices,and Other communications shall be addressed to Client at the address indicated on the Proposal.
8.02 In the evert that legal action is required to enforce or iseerpret any of the tents of this Agreement,including the collection of
any monies due harauader. the perdes agree to Me award of reasonable anorney'e fees said costa of suit which a Court may
award in addition to any other remedy specifically requested in the same or in a separate wk brought specifically for its
recovery.
LOS This Agreereme will be ieletpreted under me lair,of the State of California. Any wit brought hereunder shall be brought in a
Calilbrla court of appropriate Jurisdiction and venue.
Arfltie 9 WW1.,Dots
9.01 nu Agreement becomes efilictive es 9-1-97 and will continue in force until the date provided in the Proposal unless
earlier terminated in accordance with this Service Agreement.
Execution
Agreed to this day of , 1997,in the Camay of Orange.State of California.
aim Hefkr Minders,Inc.
BY: By:
Tide: Title:
Page 3 of 3
Attachment"B"
PROPOSAL
FLEXIBLE SPENDING ACCOUNTS
CITY OF AZUSA
The day-to-day administrative operations of the Plan will be performed in the offices of Heller
Associates in Costa Mesa,California.
Based on our understanding of the specifications,we offer to provide the ministerial services requested
for the administration of a IRS Section 125 Flexible Spending Accounts Program commencing September
1, 1997 for the following fees:
SPENDING ACCOUNTS ADMINISTRATION
MONTHLY
UNIT RATE
MEDICAL/DENTAL EXPENSES ACCOUNT(S) $ 4.00
Employee(with/without dependents)
DEPENDENT CARE ASSISTANCE EXPENSES ACCOUNT(S)
Employee(with dependents) $ 4.00
SET-UP and PLAN DOCUMENTATION
First Year $Waived
Second and each succeeding year $Waived
EMPLOYEE COMMUNCIATION(Optional)
Group Meetings(per day) $Waived
Employee Communication Information Packet(per packet) $Waived
ANNUAL FORM 5500 FILING(Optional) $ 150.00
ANNUAL FEE $300.00
Our administration fees and services are guaranteed for a minimum period of twenty-four months to
continue indefinitely thereafter. Further, any change in our fees or services are subject to a sixty(60)
days notification.
The Plan is responsible for the costs of printing and postage for: mass mailing of Plan announcements,
customized forms(if required)and printing of employee booklets/brochures.
The Plan will be responsible for the cost of responding to special requests from governmental agencies,
either written or verbal.
Page 2 of 2
Our services include,but are not limited to,the following:
Posting contribution to employee records
Posting claims to employee records
Posting adjustments to employee records
Processing and paying claims twice monthly
Communicating with participants regarding the status of their accounts,claims, etc.
Reporting results-
Account status
Claims statements(Explanation Of Benefits)
Issuing reimbursement checks,premium checks, etc.
Check Registers-by benefit account
Flexible Spending Accounts Reports include the following:
Daily Flexible Spending Check Register Twice Monthly
Monthly Flexible Spending Transaction register Monthly
Flexible Spending Activity Statements(for employees) Quarterly
Flexible Spending Accounts Eligibility Lisitng As Requested
Flexible Empolyee Account Summary Report(for employer) Monthly
Plan Documentation and Filing
Draft of Plan Document -Not Applicable
Draft of Summary Plan Description and Filing with DOL—Not Applicable
All client records remain the property of the client. However, all computer programs are proprietary and
remain the property of Heller Associates and/or our software vendors.
This proposal is valid for 90 days from July 18, 1997.
Heller Assoicates City of Azusa
Frank Heller Officer
Chariman&CEO
Date Date