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HomeMy WebLinkAboutV- 3 Section 125 Plan Document Amendment CalPers HUMAN RESOURC 4� INTEROFFICE MEM to: Honorable Mayor and Members of the City Council from: Dottie Wallace, Human Resources Manager/Pers•nne Re!- via: Henry Garcia, City Administrato;', date: October 6, 1997 subject: Section 125 Plan Document Amendment BACKGROUND On June 20, 1993,the City Council adopted a resolution introducing the IRS Section 125 Flexible Benefit Plan(FBP) effective August 1, 1993. As the cost of insurance premiums increase or decrease, the amount the City contributes to the Plan is increased or decreased, and the plan year changes, the Plan document should be amended. The Plan was last amended in the fiscal year 96-97. Since that time the California Public Employees Retirement System Health Benefits Division has converted to calendar year contracts(beginning January, 1997)from a contract period beginning August 1. Also, the amount the City contributes to the FBP (pursuant to memoranda of understanding) and the qualifying supplemental benefits have changed. In addition, upon review of the Plan, there are minor adjustments required to include the role of the Claims Administrator(which Council appointed as Heller Associates on 9-2-97). For your information, the chart below lists the current and new 1998 plan year FBP amounts: CURRENT EFFECTIVE JANUARY 1, 1998 $605 with CaIPERS Medical Plan Participation $632 with CaIPERS Medical Plan Participation $589 without CaIPERS Medical Participation $589 without CaIPERS Medical Plan Participation $516 Headstart with CaIPERS Medical Plan Participation $516 Headstart with CaIPERS Medical Plan Participation (30, 35, 40 hour employees) (30,35,40 hour employees) $500 Headstart without CaIPERS Medical Plan $500 Headstart without CaIPERS Medical Plan Participation(30, 35,40 hour employees) Participation(30, 35,40 hour employees) $235 Part-time Headstart Employees(20 hours) $235 Part-time Headstart Employees(20 hours) RECOMMENDATION It is recommended that Council approve the attached resolution amending the City's IRS Section 125 Flexible Benefits Plan to include qualifying benefits for the new calendar Plan Year of 1998. Attachments: Resolution amending the City of Azusa Flexible Benefits Plan City of Azusa Flexible Benefits Plan Proposed Amendment(with lined-through verbiage) 4,a1e2//6( //i Flex\PlanDoc\Amend\1997\CnclRep CITY OF AZUSA FLEXIBLE BENEFITS PLAN (As Amended October 6, 1997) RESOLUTION NO. 97-C142 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA ADOPTING THE AMENDMENT TO THE CITY OF AZUSA IRS SECTION 125 FLEXIBLE BENEFIT PLAN WHEREAS,the City Council at its regular meeting on June 21, 1993, adopted the City of Azusa Flexible Benefits Plan document (Plan), and WHEREAS, Section VI of the Plan states that the employer shall have the right at any time to modify, alter or amend this Plan in whole or in part, provided, however,that no such amendment shall diminish or eliminate any claim for any benefit to which a Participant shall have become entitled prior to such amendment, and WHEREAS, it is appropriate to make amendments to update the Plan. NOW, THEREFORE, the City Council of the City of Azusa does hereby approve the amended IRS Section 125 Flexible Benefit Plan marked as Exhibit A attached. ADOPTED , • D APPROVED THIS 6th Day of October, 1997 /1/. I' ;1-7 ;;Otti r x`t t- :r `/ MAYOR I HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof on the 6th Day of October, 1997, by the following vote of the Council: AYES: COUNCIL MEMBERS: HARDISON, STANFORD, ROCHA, BEEBE, MADRID NOES: COUNCIL MEMBERS: NONE ABSEN . COUNCIL MEMBERS: NONE /// /1, Aid.1 CITY CLE-•' EXHIBIT A CITY OF AZUSA FLEXIBLE BENEFITS PLAN I. FOREWORD AND PURPOSE The City of Azusa Flexible Benefits Plan permits Participants to elect to receive compensation or coverage for themselves and their eligible dependents under various Component Plans The Plan has been established by the City of Azusa for the exclusive benefit of its employees and is intended to qualify under Section 125 of the Internal Revenue Code of 1986, as a"cafeteria plan." II. DEFINITIONS AND CONSTRUCTION A. Definitions—Where the following words and phrases appear in this Plan, they shall have the meaning set forth below, unless a different meaning is plainly required by the context. 1. Claims Administrator: The Plan Administrator or the company contracted by the City to administer the Dependent Care Assistance and Medical Reimbursement Components of this Plan. 2. Code: The Internal Revenue Code of 1986 and regulations and rulings issued thereunder, as amended from time to time. 3. Component Plan: Any one of the plans listed in subsection (c) below. It is intended that each of the Component Plans shall constitute a"qualified benefit"within the meaning of Section 125 of the Code. 4. Coverage Expenses: The insurance premiums or other costs for the benefit coverage a Participant elects pursuant to Section 3.2,and which is provided under one or more of the Component Plans which are attached hereto and incorporated herein by reference as Schedule"A,""A-1," "A-2," "A-3." 5. Covered Compensation: For each plan year, a Participants covered compensation shall mean the actual compensation (including bonuses and overtime) accrued or paid by the employer to the employee for the period during which the employee was a Participant in this Plan. 6. Dependent: A spouse or child of the Participant as defined in the various benefit plans listed on Schedule"A-1," "A-2," and "A-3." 7. Discrimination: This Plan shall not be operated in such a manner as to discriminate in favor of highly compensated individuals pursuant to Code Section 105. 8. Effective Date: The date upon which this Plan is effective is August 1, 1993. 9. Employee: Any person who is an employee(the term"employee"having its customary, common law meaning) of the employer and who is receiving remuneration for personal services rendered to the employer and is eligible for coverage in the various benefit plans offered by the employer. 10. Employer. The City of Azusa. 11. Employer Contribution: The employer contribution for each plan year shall be the sum of a. and b. below: Lined-through verbiage equals deleted language;underlined equals added language. Page 1 of 15 a. Non-elective contributions: The amount the employer makes available for the benefit of each Participant for the plan year pursuant to section IV. A. b. Elective Contributions: The amount of flexible pay applied to a Participants coverage expenses under the Plan. It is intended hereunder that such amounts shall, for tax purposes (including Section 125 of the Code),constitute an employer contribution. For each plan year,the maximum amount of employer contribution available under the Plan to any Participant for application to his or her coverage expenses shall be that amount set forth in Schedule A of the Plan. For purposes of Section 125 of the Code, the amount set forth in Schedule A shall constitute the maximum employer contribution available to any Participant under the Plan during a plan year. The maximum amount shall be determined by the employer prior to the beginning of the regular enrollment period for the ensuing plan year and may be adjusted as necessary due to increases in cost of the coverage. 12. ERISA:Public Law 93-406,the Employee Retirement Income Security Act of 1974 and regulations and rulings issued thereunder as amended from time to time. 13. Fiduciaries: The named fiduciaries who shall be the employer, Plan, and Claims Administrators, and other parties designated as fiduciaries by such named fiduciaries in accordance with the powers herein provided, but only with respect to the specific responsibilities of each in connection with the Plan. 14. Flexible Pay:The amount of covered compensation that, pursuant to Article IV.A., is applied on behalf of a Participant to pay his or her coverage expenses or that(to the extent not otherwise applied) he or she may elect to receive as additional cash compensation. 15. Highly Compensated Participant: See Key Employees below. 16. Key Employee: A Participant who is (1) an officer of the employer having at least$56,110 annual compensation from the employer or such other amount as is prescribed by the Secretary of the Treasury from time to time, pursuant to Code Section 415(d)(1)(B); provided, however,that no more than fifty employees, or if the number of employees of the employer is less than 500, the greater of three of 10% of the employees, shall be treated as officers; (2) one of the ten employees, having at least$30,000 annual compensation from the Employer(or such other amount as is prescribed by the Secretary of the Treasury from time to time pursuant to Code Section 415 (d)(1)(B). 17. Participant: Any employee who has qualified under the terms of the Plan for participation herein and who remains so qualified. 18. Plan: The City of Azusa Flexible Benefits Plan set forth herein and as amended from time to time. 19. Plan Administrator: The employer or its successor or successors, which shall have authority to administer the Plan as provided in Article V. 20. Plan Year: • - V - - • .. -- - • . • 1904. Plan years shall be the twelve-month period commencing on July 31. January 1 and ending December 31. B. Construction: As used in this Plan,the masculine gender includes the feminine,and the singular includes the plural, unless the context clearly indicates to the contrary. The words"hereof', "hereunder'and other similar compounds of the words"here" mean and refer to the entire Plan, not to any particular provision or section. Lined-through verbiage equals deleted language;underlined equals added language. Page 2 of 15 III. ELIGIBILITY, PARTICIPATION AND ENROLLMENT A. Eligibility and Participation 1. Commencement of Participation:An eligible employee, -as defined in Section II.A. 9. may commence (or recommence)participation in this Plan on the latest of the following dates: (1)the effective date of the Plan, (2) the first day of the month concurrent with the employee's date of employment or re- employment(may not exceed 37 months)as an employee; or(3)the date(as determined by the Plan Administrator)that the election form is filed by the Participant. Notwithstanding the preceding sentence, an employee who is disabled and not actively employed on the date his or her participation would otherwise have commenced, shall not become a Participant in the Plan until the date he or she returns to active employment as an employee. A Participant's right to participate in any component plan shall be dependent upon the Participant's satisfying the specific terms and conditions of participation which are applicable to such component plan. 2. Termination of Participation: A Participant shall continue to participate in this Plan until the earlier of the following dates: (1)the day Participant ceases to qualify as a participant resulting from termination of employment or failure to make required contributions, if any; (2) the day Participant terminates membership in a group or class of employees eligible for plan or program benefits; (3)with respect to a covered dependent, the date such person ceases to be a dependent; or(4) the date the plan is terminated. B. Enrollment An eligible employee as defined in section II.A.9 may enroll (or re-enroll) in the plan by submitting to the Plan Administrator, during an enrollment period described in subsection(1)below,an election form which specifies his or her elections for the plan year as to dependent status and benefit coverage under the component plans for which he or she is eligible, which sets forth his or her agreement to use the necessary amount of flexible pay to pay his or her coverage expenses(if any),and which meets such other standards for completeness and accuracy as the Plan Administrator may establish. Such employee shall specify his election as to dependent status as coming within one of the following categories: (1) employee without dependents, or (2) employee with one dependent, or (3) employee with two or more dependents. A Participant's election form shall not be effective prior to the date such form is submitted to the Plan Administrator. Any election form submitted by a Participant in accordance with this section shall remain in effect until the earlier of the following dates:the date the Participant terminates participation in the plan or the effective date (as determined by the Plan Administrator) of a subsequently filed election form submitted pursuant to subsection (1) below. 1. Enrollment Periods a. Each employee who is eligible, as defined in section II.A. on August 1, 1993 shall have an initial enrollment period which shall begin on June 15, 1993 and shall terminate on July 31, 1993. Each Employee who becomes eligible on or after August 1, 1993 shall have an initial enrollment period which shall begin on the first date of his or her employment as an eligible employee and shall terminate sixty days thereafter. b. Each participant shall have a regular enrollment period as designated by the Plan Administrator during which to make elections for the immediately ensuing Plan Year. Lined-through verbiage equals deleted language;underlined equals added language. Page 3 of 15 c. A Participant who incurs a change in dependent status shall have a special enrollment period which shall begin on the date of his or her dependent status changes and shall terminate forty five days thereafter. For purposes of this paragraph, a Participant's dependent status shall change when his or her dependents change in number, identity or employment. 2. Enrollment Dependents: An eligible employee may enroll in the plan any or all of his or her dependents during his or her initial enrollment period, regular enrollment period, or special enrollment period. A Participant who incurs a dependent status change may enroll any new dependents during the special enrollment period commencing on the date such individuals become dependents of the Participant. Any dependent not enrolled during an enrollment period described in the two preceding sentences may be enrolled thereafter for the current plan year only with the consent of the Plan Administrator. An employee shall enroll his other dependents by specifying,on such forms as the Plan Administrator may require, the dependents' names and birth dates and by electing the category of dependent coverage that corresponds to the number of dependents the employee wishes to enroll. 3. Limitations on Enrollment Elections: A Participant's right to elect certain benefit coverage shall be limited hereunder to the extent such rights are limited in a component plan or in rules adopted by the Plan Administrator. Furthermore, a Participant shall not be entitled to revoke an enrollment election after a period of coverage has commenced and to make a new enrollment election with respect to the remainder of the period of coverage unless both the revocation and the new election are on account of and consistent with a change in family status(e.g.marriage,divorce,death of a spouse or child,birth or adoption of child and termination of employment of spouse). 4. Notice of Eligibility:The Plan Administrator shall notify employees of their eligibility to participate in the plan and of the terms of the plan. Each Participant shall be furnished with a copy of this plan description. IV. CONTRIBUTIONS A. Nonelective Contributions For each plan year, the employer in its sole discretion, may make on behalf of each Participant, a nonelective contribution as provided in Schedule A to provide benefits for such Participant and his or her dependents, if applicable, under the plan. The amount of a nonelective contribution shall be calculated for each plan year in a uniform and non-discriminatory manner based on the Participant's dependent status category (as elected under Section III. B) the commencement or termination date of the Participant's employment during the plan year, and such other factors as the employer shall prescribe. If the amount of the nonelective contribution exceeds the cost of the benefit coverage selected by the Participant, such excess amounts will be currently paid to the Participant. B. Elective Contributions 1. Flexible Pay Contributions: Each Participant shall authorize the Plan Administrator to withhold from his or her covered compensation for the plan year an amount of flexible pay equal to his or her coverage expenses in excess of his or her nonelective contributions for such year. Any flexible pay which is withheld from a Participant's covered compensation pursuant to this section shall be withheld in approximately equal installments from the amounts payable to the Participant for each pay period during the plan year (or such portion of the year as the Plan Administrator may designate). For employees whose salary during the year is paid to them over a period of time less than a year,flexible pay amounts will be withheld in installments as determined by the Plan Administrator. If an employee becomes a Participant after the beginning of the first pay period of the plan year, the amount withheld from his or her covered compensation during such year shall be a pro rata share of the amount that would have been withheld had he or she been a Participant in the plan as of the beginning of the plan year. Lined-through verbiage equals deleted language:underlined equals added language. Page 4 of 15 2. Election: An election to authorize withholding of flexible pay shall be made on an election form submitted in accordance with section III.B. An election to have withheld an amount of flexible pay which, in the determination of the Plan Administrator,exceeds the limitation on flexible pay set forth in subsection 1. may in the discretion of the Plan Administrator be treated as void or an election to have withheld the maximum amount permissible under such limitation. 3. Effect of Change in Dependent Status: If a Participant's elections change during the plan year because of an election made during a special enrollment period, then in accordance with rules adopted by the Plan Administrator appropriate adjustments shall be made in the amount withheld from or added to the Participant's pay for the balance of the year to reflect any changes in the Participant's elective contributions and benefit elections. V. ADMINISTRATOR A. Allocation of Responsibility among Fiduciaries for Plan Administration:The fiduciaries shall have only those powers, duties, responsibilities and obligations as are specifically given or delegated to them under this plan. 1. The employer shall have the sole responsibility for making the employer contributions under the plan as specified in Article IV. 2. The employer shall have the sole authority to appoint and remove the Plan and/or Claims Administrator and to amend or terminate this plan in whole or in part. 3. The Plan Administrator shall have the sole responsibility for the administration of the plan, which responsibility is specifically described herein. 4. Each fiduciary warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the plan authorizing or providing for such direction, information or action of another fiduciary as being proper under the plan,and is not required under the plan to inquire into the propriety of any direction, information or action. B. Administrator The plan shall be administered by the Plan Administrator which may appoint or employ persons to assist in the administration of the plan and may appoint or employ any other agents it deems advisable, including legal counsel, actuaries, auditors, bookkeepers and record-keepers to serve at the Plan Administrator's direction. All usual and reasonable expenses of the plan and the Plan Administrator may be paid by the employer or this plan. C. Claims Procedure: The Plan Administrator, or a party designated by the Plan Administrator shall make all determinations as to the right of a person to an employer contribution under the plan. If an assertion of any such right by a Participant or dependent is wholly or partially denied, the Plan Administrator, or the designated party,will provide such claimant a comprehensible written notice within ninety days after receipt of the claim, unless circumstances warrant an extension of time not to exceed an additional ninety days, setting forth: 1. The specific reason or reasons for such denial; 2. Specific reference to pertinent plan provisions on which the denial is based; 3. A description of any additional material or information necessary for the claimant to submit pertinent to the claim and an explanation of why such material or information is necessary; Lined-through verbiage equals deleted language;underlined equals added language. Page 5 of 15 4. A description of the plan's claim review procedure. The review procedure is available upon written request by the claimant to the Plan Administrator,or the designated party,within sixty days after receipt by the claimant of written notice of denial of the claim, and includes the right to examine pertinent documents and submit issues and comments in writing to the Plan Administrator, or the designated party. The decision on review shall be made within sixty days after receipt of request for review, unless circumstances warrant an extension of time not to exceed an additional sixty days. The decision shall be in writing and drafted in a manner calculated to be understood by the claimant and shall include specific reasons for the decision with references to the specific plan provisions on which the decision is based. D. Other Administrative Powers and Duties:The Plan Administrator shall have such powers and duties as may be necessary to discharge its-functions hereunder, including: 1. to construe and interpret the plan,decide all questions of eligibility and determine the amount, manner and time of payment of any reimbursements hereunder; 2. to prescribe procedures to be followed by Participants electing benefit coverage or filing applications for reimbursements; 3. to prepare and distribute, in such manner as the Plan Administrator determines to be appropriate, information explaining the plan; 4. to receive from employees, agents and Participants such information as shall be necessary for the proper administration of the plan; 5. to receive, review and keep on file (as it deems convenient or proper) reports of the receipts and disbursements of the plan; 6. to appoint or employ individuals or other parties to assist in the administration of the plan and any other agents it deems advisable,including accountants,legal counsel,bookkeepers and record-keeper; and 7. to designate or employ persons to carry out any of the Plan Administrator's fiduciary duties or responsibilities under the plan. E. Rules and Decisions: The Plan Administrator may adopt such rules and procedures as it deems necessary,desirable,or appropriate for the administration of this plan. All rules, procedures and decisions of the Plan Administrator shall be uniformly and consistently applied to all Participants in similar circumstances. When making a determination or calculation,the Plan Administrator shall be entitled to rely upon information furnished by a Participant, a dependent, the duly authorized representative of a Participant or dependent or the legal counsel of the Plan Administrator. F. Forms and Requests for Information:The Plan Administrator may require a Participant to complete and file such forms as are provided for herein and all other forms prescribed by the Plan Administrator, and to furnish all pertinent information requested by the Plan Administrator. The Plan Administrator may rely upon all such information, including the Participant's current mailing address. G. Responsibility for Plan:The complete authority to control and manage the operation and administration of the plan shall be placed in the Plan Administrator, who shall be solely responsible for the operation of the plan in accordance with its terms. Lined-through verbiage equals deleted language;underlined equals added language. Page 6 of 15 VI. AMENDMENT OF THE PLAN The employer shall have the right at any time by instrument in writing, duly executed and acknowledged, to modify, alter or amend this plan in whole or in part, provided, however,that no such amendment shall diminish or eliminate any claim for any benefit to which a Participant shall have become entitled prior to such amendment. Notwithstanding the foregoing,the employer shall have the limited right to amend the Plan at any time, retroactively or otherwise. In such respects and to such extent as may be necessary to fully qualify it as a "cafeteria plan" under existing and applicable laws and regulations, including Section 125 of the Code,and if and to the extent necessary to accomplish such purpose,may by such amendment decrease or otherwise affect benefits to which Participants may have already become entitled. VII. TERMINATION OF THE PLAN The Plan herein provided for has been established by the employer with the bona fide intention that it shall be continued in operation indefinitely. However; the employer reserves the right at any time to terminate or partially terminate the plan. Should the employer decide to terminate or partially terminate the plan, the Plan Administrator shall be notified of such termination in writing and shall proceed at the direction of the employer to take such steps as are necessary to discontinue the operation of the plan in an appropriate and timely manner. VIII. MISCELLANEOUS A. Employment Rights: Under no circumstances shall the terms of employment of any Participant be modified or in any way affected hereby. This plan shall not constitute a contract of employment nor afford any individual any right except as contained herein nor to be retained in the employ of the employer. B. Non-assignability: In the extent permitted by law, Participants are prohibited from anticipating, encumbering,alienating or assigning any of their rights,claims or interests in this plan,and no undertaking or attempt to do so shall in any way bind the Plan Administrator or be of any force or effect whatsoever. Furthermore, to the extent permitted by law, no such rights, claims or interest of a Participant in this plan shall in any way be subject to such Participant debts, contracts or engagements, nor to attachment, garnishment, levy or other legal or equitable process. Provided, however, anything to the contrary herein notwithstanding,to the extent permissible under applicable law,a Participant's interest hereunder is subject to all bona fide and existing debts owed by such Participant to the plan. C. No Guarantee on Non-Taxability: The plan is designed and is intended to be operated as a "cafeteria plan"under Section 125 of the Code. Nonetheless,neither the employer nor any plan fiduciary shall in any way be liable for any taxes or other liability incurred by a Participant or anyone claiming through him or her by virtue of participation in this plan. The plan does not prohibit, and indeed contemplates, the payment of taxable benefits under certain of the component plans. D. Non-discrimination: In accordance with Sections 105 and 125 (b) (1) and (2) of the Code, the plan is intended not to discriminate in favor of highly compensated individuals as to eligibility to participate or as to contributions and benefits, nor to provide more than 25%of all qualified benefits to key employees. If, in the operation of the plan, more than 25% of the total qualified benefits are found to be provided to key employees, or the plan discriminates in any other manner (or is in danger of so discriminating), then notwithstanding any other provision contained herein, the Plan Administrator shall reduce or adjust such contributions and/or benefits under the plan as shall be necessary to assure that, in the judgement of the Plan Administrator,the plan thereafter will not discriminate. All rules,procedures and decisions of the Plan Administrator shall be adopted, made and/or applied in such fashion that they do not discriminate in favor of highly compensated Participants and key employees. E. Delegation of Authority by Employer. Whenever the employer under the terms of this agreement is - permitted or required to do or perform any act or matter or thing, it shall be done and performed by any Lined-through verbiage equals deleted language;underlined equals added language. Page 7 of 15 officer or individual duly authorized by the employer. F. Construction of Agreement This plan shall be construed according to the laws of the State of Califomia and all provisions hereof shall be administered according to and its validity and enforceability shall be determined under the laws of such State, except where preempted by the Code or ERISA. G. Headings: The headings of sections and subsections are for ease of reference only and shall not be construed to limit or modify the detailed provisions hereof. H. Entire Plan Stated: This document sets forth the entire plan. No other employee benefit or employee benefit plan which is or may hereafter be maintained by the employer on a non-elective basis shall constitute a part of this plan. Lined-through verbiage equals deleted language;underlined equals added language. Page 8 of 15 • CITY OF AZUSA FLEXIBLE BENEFITS PLAN SCHEDULE A 1. Monthly City Contribution The monthly City contribution for each eligible employee effective the first of the month following the date of eligible employment shall be pursuant to applicable respective employee units' memoranda of understanding or compensation and benefits resolution. 2. Elective Contribution Maximum Schedule A-1 Benefits: $10,000 Schedule A-2 Benefits: $5,000 Schedule A-3 Benefits: $2,000 Lined-through verbiage equals deleted language;underlined equals added language. Page 9 of 15 CITY OF AZUSA FLEXIBLE BENEFITS PLAN SCHEDULE A-1 INSURANCE PREMIUMS I lealth Plans Monthly Rates 1 Party 2 Party family $ $ $ AETNA(lealth 161.00 321.00 410.00 Blue Shield HMO 104.00 323.00 415.00 Cali omiaCare 171.23 319.76 401.53 CIGNA 162.54 307.75 407.98 f IIP,INC. 152.55 305.09 411.87 Foundation 164.10 328.20 429.94 I lealth Net 162.77 302.11 422.93 Kaiser 103.0G 320.12 448.42 Lifeguard 159.60 319.20 438.90 MaxiCare 170.32 316.91 425.47 OMNI I lealth Plan 155.45 310.90 404.20 PacifiCare 1-55.95 301-58 435.70 PERS-Care 252.00 478.00 037.00 PERS Choice 107.00 373.00 499.00 PORAC 225.00 390.420- QUALMED 162.26 317.33 420.68 TakeCare 107.54 312.41 428.33 ValuCare 170.15 336.30 429.50 Dental Plans Monthly Rates 1 Party 2 Party Family Pre-paid Plan $13.65 $20.30 $30.05 Indemnity $25.90 $47.05 ;65.70 Life-Insurance Individual Lingle-Parent family Family Cancer Plan $20.80 $34.20 $36.00 Intensive Care/Coronary Care(rider) $6.80 $13.00 Intensive Care/Coronary Care alone $8.00 $16.00 Health Insurance premiums: The amount of approved premiums shall increase or decrease according California Public Employees' Retirement System Health Benefits Division contract provisions . Dental Insurance premiums: The amount of approved premiums shall increase or decrease according to the provider as approved by the Plan Administrator. Supplemental Insurances: Supplemental insurances may be included upon approval of the Plan Administrator provided that they meet the qualifications as established the IRS Section 125 regulations. Lined-through verbiage equals deleted language;underlined Page 10 of 15 equals added language. CITY OF AZUSA FLEXIBLE BENEFITS PLAN SCHEDULE A-2 DEPENDENT CARE ASSISTANCE COMPONENT PLAN I. Foreword and Purpose This dependent care assistance component plan is established for the exclusive benefit of employees and is intended to qualify as a dependent care assistance program under Sections 125 and 129 of the Code. The purpose of the plan is to enable employee Participants to elect to receive payments or reimbursements of their dependent care expenses in lieu of their compensation,which payments are incurred by Participants in connection with their employment and are excludable from the Participant's gross income under Sections 125 and 129 of the Code. II. Definitions and Construction A. Definitions -Where the following words and phrases appear in this plan, they shall have the following meanings, unless a different meaning is plainly required by the context: 1. Dependent a. General Rule: Any individual who is(i)a dependent of the Participant who is under the age of 13 and with respect to whom the Participant is entitled to an exemption under Section 151 (c)of the Code; or(ii)a dependent or spouse of the Participant who is physically or mentally incapable of caring for himself. b. Special Rule for Divorce or Separation of Parents : Notwithstanding subsection (1), if(i) either Code Section 152(e)(2)(regarding the release by a custodial parent of a claim to a dependency exemption) or Code Section 152 (e)(4) (regarding various pre-1985 divorce or separation agreements) is applicable to a child of an employee, and(ii)such child is under the age of 13 or is physically or mentally incapable of self-care,then such child shall be deemed a dependent with respect to the employee if such employee is the custodial parent (within the meaning of Code Section 152 (e)(1) of the child. c. Other relatives by blood or marriage that are incapable of caring for themselves meeting the requirements of both Sections 151 and 152 of the Code. 2. Dependent Care Assistance Account: The account described in Article IV hereof. 3. Dependent Care Expenses: Expenses incurred by a Participant which a. are paid or incurred for the care of a dependent of the Participant b. are paid or incurred to a Dependent Care Service Provider; and c. are incurred to enable the Participant to be gainfully employed for any period for which there are one or more dependents with respect to the Participant, Dependent Care Expenses shall not include expenses paid or incurred for services rendered outside the Participant's household for the care of dependent unless such dependent is described in Section II.A.1.a.,or such dependent regularly spends at least eight hours a day in the Participant's household. Dependent care expenses shall be deemed to be incurred at the time the services to which the expenses relate are rendered. Lined-through verbiage equals deleted language;underlined Page 11 of 15 equals added language. 4. Dependent Care Service Provider A person who provides care or their services described in Section II.A.3.a. above, but shall not include. a. a dependent care center (as defined in Code Section 21 (b)(2)(D), unless the requirements of Code Section 21 (b)(2)(C)are satisfied; or b. a related individual described in Code Section 129 (c). 5. Earned Income:All income derived from wages,salaries,tips, self employment and other employee compensation described in Code Section 32 (c)(2) but excluding amounts received under this plan or under any other plan providing dependent care assistance. III. DEPENDENT CARE ASSISTANCE A. Maximum Dependent Care Assistance: The maximum amount which the Participant may receive in any plan year in the form of dependent care assistance under this plan shall be the least of 1. the Participant's earned income for the plan year; 2. the actual or deemed earned income of the spouse for the plan year, or 3. $5,000. Provided, however, that the taxable years beginning after December 31, 1986 the maximum that the Participant may receive in any taxable year shall not exceed$5,000. The$5,000 limit shall be reduced to $2,500 in the case of a separate return by a married individual. In the case of a spouse who is a student or is physically or mentally incapable of caring for himself or herself,such spouse shall be deemed to have earned income of not less than$200 per month if the Participant has one dependent and$400 per month if the Participant has two or more dependents. B. Treatment of On-site Facilities: Except to the extent provided in regulations, effective for taxable years beginning after December 31, 1986 the amount of dependent care assistance any Participant may receive under this plan with respect to an on-site facility maintained by the employer shall be based on utilization of the facility by the dependent and the value of services provided. IV. DEPENDENT CARE ASSISTANCE ACCOUNTS A. Establishment of Accounts: The employer will establish and maintain on its books a Dependent Care Assistance Account for each plan year with respect to each Participant who has elected under the Flexible Benefits Plan to receive dependent care assistance for the plan year. B. Crediting of Accounts:There shall be credited to a Participant's Dependent Care Assistance Account for each plan year,as of each date compensation is paid to the Participant in such plan year,an amount equal to the reduction for dependent care assistance,if any,to be made in such compensation in accordance with the Participant's election under the Flexible Benefits Plan. All amounts credited to each such Dependent Care Assistance Account shall be the property of the employer until paid out pursuant to Article V. C. Debiting of Accounts: A Participants Dependent Care Assistance Account for each plan year shall be debited from time to time in the amount of any payment under Article V or for the benefit of the Participant for dependent care expenses incurred during such plan year. Amounts debited to each such Dependent Care Assistance Account shall be treated as payments of those amounts first credited to the account that have not yet been treated as paid under this Section. D. Forfeiture of Accounts:The amount credited to a Participant's Dependent Care Assistance Account for any plan year shall be used only to reimburse the Participant for dependent care expenses incurred during Lined-through verbiage equals deleted language;underlined equals added language. Page 12 of 15 such plan year, and only if the Participant applies for reimbursement on or before the 90th day following the close of the Plan Year. If any balance remains in the Participant's Dependent Care Assistance Account for any plan year after all reimbursements hereunder, such balance shall not be carried over to reimburse the Participant for dependent care expenses incurred during a subsequent plan year, and shall not be available to the Participant in any other form or manner, but shall remain the property of the employer and the Participant shall forfeit all rights with respect to such balance. V. PAYMENT OF DEPENDENT CARE ASSISTANCE A. Claims for Reimbursement: A Participant who has elected to receive dependent care assistance for a plan year may apply to the employer for reimbursement of dependent care expenses incurred by the Participant during the plan year by submitting an application in writing to the Plan Administrator setting forth 1. the amount, date and nature of the expenses with respect to which a benefit is requested; 2. the name of the person, organization or entity to which the expense was or is to be paid; and 3. such other application shall be accompanied by bills, invoices, receipts, canceled checks or other statements showing the amounts of such expenses,together with any additional documentation which the Plan Administrator may request B. Reimbursement or Payment of Expenses: The Plan Administrator shall reimburse the Participants dependent care expenses incurred during the plan year for which the Participant submits documentation in accordance with Section V.A. The Plan Administrator may, at its option, pay any such dependent care expenses directly to the Dependent Care Services Provider in lieu of reimbursing the Participant. No reimbursement or payment under this section V.B. of expenses incurred during a plan year shall at any time exceed the balance of the Participant's Dependent Care Assistance Account for the plan year at the time of the reimbursement or payment. The amount of any dependent care expenses not reimbursed or paid as a result of the preceding sentence shall be carried over and reimbursed or paid only if and when the balance in such account permits such reimbursement or payment; provided, however, that no dependent care expenses may be carried over from one plan year to the next. C. Report to Participants : On or before January 31 of each year, the Plan Administrator shall furnish to each Participant who has received dependent care assistance during the prior calendar year a written statement showing the amount of such assistance paid or incurred by the employer during such calendar year with respect to the Participant. Lined-through verbiage equals deleted language;underlined Page 13 of 15 equals added language. CITY OF AZUSA FLEXIBLE BENEFITS PLAN SCHEDULE A-3 MEDICAL REIMBURSEMENT COMPONENT PLAN I. FOREWORD AND PURPOSE This Medical Reimbursement Component Plan is established for the exclusive benefit of employees and is intended to qualify under Sections 125 and 105 (b) of the Code, and is to be interpreted in a manner consistent with the requirements of the Code. The purpose of this component of the plan is to enable employee Participants to elect to receive payments or reimbursements of qualifying medical care expenses in lieu of compensation,which payments are excludable from the Participant's gross income under Sections 125 and 105 (b) of the Code. II. DEFINITIONS Where the following words and phrases appear in this plan,they shall have the following meanings,unless a different meaning is plainly required by the context. A. Medical Reimbursement Account: The account described in section IV hereof. B. Qualifying Medical Care Expenses:An expense incurred by a Participant,or by the spouse or dependent of such Participant, for medical care as defined in Section 213(d)of the Code(including amounts paid for eligible hospital bills,doctor and dental bills and prescribed drugs),but only to the extent that the Participant or other eligible person incurring the expense is not reimbursed for the expense through insurance or otherwise (other than under the plan). - MEDICAL REIMBURSEMENTS The maximum amount which a Participant may receive under this plan in the form of payments or reimbursements for qualifying medical expenses incurred in any calendar year shall be$2,000. IV. MEDICAL REIMBURSEMENT ACCOUNTS A. Establishment of Accounts: The employer will establish and maintain on its books a Medical Reimbursement Account for each plan year with respect to each Participant who has elected under the Flexible Benefits Plan to receive reimbursement of qualifying medical care expenses incurred during the plan year. B. Crediting of Accounts:There shall be credited to a Participant's Medical Reimbursement Account for each plan year, as of each date compensation is paid to the Participant in such plan year, an amount equal to the reduction for medical reimbursements, if any,to be made in such compensation in accordance with the Participant's election under the Flexible Benefits Plan. All amounts credited to each such Medical Reimbursement Account shall be the property of the employer until paid out pursuant to section V. C. Debiting of Accounts: A Participants Medical Reimbursement Account for each plan year shall be debited from time to time the amount of any payment under Article V to or for the benefit of the Participant for qualifying medical care expenses incurred during such plan year. Amounts debited to each such Medical Reimbursement Account shall be treated as payments of the earliest amounts credited to the account and not yet treated as paid under this section. D. Forfeiture of Accounts: The amount credited to a Participants Medical Reimbursement Account for any -- plan year shall be used only to pay or reimburse the Participant for qualifying medical care expenses Lined-through verbiage equals deleted language;underlined Page 14 of 15 equals added language. incurred during such plan year, and only if the Participant applies for payment or reimbursement on or before the 90th day following the close of the plan year. If any balance remains in the Participant's Medical Reimbursement Account for any plan year after all reimbursements hereunder, such balance shall not be carried over to reimburse the Participant for qualifying medical care expenses incurred during a subsequent plan year, and shall not be available to the Participant in any other form or manner, but shall remain the property of the employer and the Participant shall forfeit all rights with respect to such balance. V. Payment of Medical Reimbursements A. Claims for Reimbursement: A Participant who has elected to receive medical reimbursements for a plan year may apply to the Plan Administrator for reimbursement of qualifying medical care expenses incurred by the Participant during the plan year by submitting an application in writing to the Plan Administrator on or before the 90th day following the close of the plan year, in such form as the Plan Administrator may prescribe, setting forth 1. the amount, date and nature of the expense with respect to which a benefit is requested; 2. the name of the person, organization or entity to which the expense was or is to be paid; 3. the name of the person for whom the expense was incurred and, if such person is not the Participant requesting the benefit, the relationship of such person to the Participant; and 4. the amount recovered,or expected to be recovered, under any insurance arrangement or other plan, with respect to the expense. Such application shall be accompanied by bills, invoices, receipts, canceled checks or other statements showing the amounts of such expenses, together with any additional documentation which the Plan Administrator may request. B. Reimbursement or Payment of Expenses:The Plan Administrator shall reimburse the Participant from the Participant's Medical Account for qualifying medical care expenses incurred during the plan year, for which the Participant submits documentation in accordance with section V.A. of this component. The Plan Administrator may, at its option, pay any such qualifying medical care expenses directly to the person providing or supplying medical care in lieu of reimbursing Participant. No reimbursement or payment under this section of expenses incurred during a play year shall at any time exceed the balance of the Participant's Medical Reimbursement Account for the plan year at the time of the reimbursement or payment. The amount of any qualifying medical care expense not reimbursed or paid as a result of the preceding sentence shall be carried over and reimbursed or paid only if and when the balance in such account permits such reimbursement or payment provided, however, that no Qualifying Medical Care Expenses may be carried over from one plan year to the next. C. Indemnification of Employer by Participants : If any Participant receives one or more payments for reimbursements under Article V that are not for qualifying medical care expenses, such Participants shall indemnify and reimburse the employer for any liability it may incur for failure to pay or withhold Federal or State income or employment tax from such payment or reimbursements. However, such indemnification and reimbursement shall not exceed the amount of additional Federal and State income tax that the Participant would have owed if the payments or reimbursements had been made to the Participant as regular cash compensation. 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