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5.3. ERMUSR 02-09-2010Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 February 4, 2010 To: Elk River Municipal Utilities commission John Dietz Jerry Gumphrey Daryl Thompson From: Theresa Slominski Subject: ERMU Flexible Benefits Plan Document Phone: 763.441.2020 Fax: 763.441.8099 Since 1988, Elk River Municipal. Utilities has offered a Flexible Benefits Plan to its employees to be able to exclude from tax medical and dental premiums, and also participate in dependent care and medical expense reimbursement plans that offer tax savings. These plans fall under the IRS regulations for Section 125 Cafeteria Plans. In 2008 a Flexible Benefits Plan Document was adopted, that was compliant with IRS regulations. Changes in the law necessitate revision of that document. The document was drafted with the appropriate changes by Hitesman & Associates (I've included it for your reference), and has been reviewed by our attorneys at Gray, Plant, Mooty. There are a lot of changes that are semantics and/or presentation oriented. Other items that changed or were added are a language related to the increased COBRA obligations of employers (when an employee leaves employment and is allowed to continue on the health insurance at their own expense, now some cases warrant a sharing of the costs), Reservist obligations of employers (for those employees enlisted in reserve duty), and HIPPA information protection (private, nonpublic information specific to employees). The final document for your approval follows. Staff recommends approval. ELK RIVER MUNICIPAL UTILITIES FLEXIBLE BENEFITS PLAN (including the following component plans: Group Medical Benefits, Group Dental Benefits, Medical Expense Reimbursement Plan and Dependent Care Expense Reimbursement Plan) Amended and Restated Effective January 1, 2010 TABLE OF CONTENTS ARTICLE I INTRODUCTION ................................................................................ 1 ARTICLE II DEFINITIONS ................................................................................... 3 ARTICLE III ELIGIBILITY AND PARTICIPATION ....................................................... 7 ARTICLE IV CONTRIBUTIONS .............................................................................. 9 ARTICLE V ELECTION OF AVAILABLE BENEFITS ...................................................11 ARTICLE VI ADMINISTRATION ............................................................................17 ARTICLE VII PLAN AMENDMENT AND TERMINATION ...............................................22 ARTICLE VIII GENERAL PROVISIONS .....................................................................23 ARTICLE IX GROUP MEDICAL BENEFITS ...............................................................25 ARTICLE X GROUP DENTAL BENEFITS ................................................................27 ARTICLE XI MEDICAL EXPENSE REIMBURSEMENT PLAN .........................................29 ARTICLE XII DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN .............................33 ARTICLE XIII HIPAA PROVISIONS .........................................................................39 ARTICLE XIV CONTINUATION COVERAGE ...............................................................43 EXHIBIT A Insurance Carrier /Third Party Provider Information .............................44 ARTICLE I INTRODUCTION 1.1 Establishment. Elk River Municipal Utilities (hereinafter the 'Employer"), hereby amends and restates, effective January 1, 2010, the Elk River Municipal Utilities Flexible Benefits Plan (the ~~Plan"). 1.2 Purpose. The purpose of the Plan is to provide Participants with a choice between cash and certain "qualified benefits" as defined in Section 125 of the Code. [See Illustration 1 on Page 2 of this Plan.] The Plan is intended to qualify as a "cafeteria plan" under Section 125 of the Code so that Optional Benefits a Participant elects to receive under the Plan will be eligible for exclusion from the Participant's gross income to the fullest extent possible under the Code. 1.3 HIPAA Privacy and Security Rules. Portions of this Plan are "covered entities" for purposes of the Privacy Rules and the Security Rules. 1.4 Gender and Number. Pronoun references in this Plan shall be deemed to be of any gender relevant to the context, and words used in the singular may also include the plural. 1.5 Not ERISA Plan. This Plan is not an employee welfare plan for purposes of ERISA because the Plan is a governmental plan within the meaning of Act. Sec. 3(32) of ERISA. Any resemblance of the Plan to an ERISA plan shall not bind the Plan to comply with ERISA. 1' ILLUSTRATION 1: Elk River Municipal Utilities Flexible Benefits Plan Employee Contribution Elk River Municipal Utilities Flexible Benefits Plan Group Medical Group Dental Medical Dependent Benefits Benefits Expense Care Expense Reimbursement Reimbursement Plan Plan 2 ARTICLE II DEFINITIONS The following words and phrases are used in this Plan and shall have the meanings set forth in this Article unless a different meaning is clearly required by the context or is defined within an Article. 2.1 Cafeteria Plan Regulations means any final regulations, or proposed regulations on which employers may rely, issued by the Department of Treasury under Section 125 of the Code. 2.2 Change in Status means the situations that permit an Eligible Employee or Participant to make a change in his or her Election mid-Plan Year and include events that: (a) change an Eligible Employee's or Participant's legal (under applicable state and federal law) marital status; (b) change the number of an Eligible Employee's or Participant's dependents (as defined in Section 5.3); (c) change an Eligible Employee's or Participant's employment status, or the employment status of the Participant's Spouse or dependents (as defined in Section 5.3); (d) cause an Eligible Employee's or Participant's dependent (as defined in Section 5:3) to satisfy or cease to satisfy the eligibility requirements for an Optional Benefit; and (e) change the place of residence of an Eligible Employee or Participant, or his or her Spouse or dependents (as defined in Section 5.3). 2.3 Claims Administrator means the entity described in Section 6.1(c). 2.4 Claims Run-out Period means the period of time following the end of the Plan Year during which claims incurred during such Plan Year may be submitted as provided in the Optional Benefit. 2.5 Code means the Internal Revenue Code of 1986, as amended from time to time. 2.6 Compensation means all of an Employee's earnings from the Employer which are subject to withholding for federal income tax purposes. 2.7 Covered Individual means a person, including a Participant, a Dependent of a Participant, a Spouse of a Participant, and any other person, appropriately covered under an Optional Benefit subject to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and as reflected in the Public Health Services Act ('~PHSA"), as amended. 2.8 Dependent means "Dependent" as defined in each Optional Benefit provision in which such term is used. Dependent is not necessarily the same as a dependent for tax purposes. See the definition of Tax Dependent in Section 2.34. 3 2.9 Effective Date means the effective date of this amendment and restatement, which is January 1, 2010. 2.10 Election means the choice of Optional Benefits and means of payment made by the Participant, as described in Article v. 2.11 ePHI means PHI maintained or transmitted in electronic media including, but not limited to, electronic storage media (i.e., hard drives, digital memory medium) and transmission media used to exchange information in electronic storage media (i.e., Internet, extranet, and other networks). PHI transmitted via facsimile and telephone is not considered to be transmissions via electronic media. 2.12 Election Period means the period of time identified by the Plan Administrator prior to the start of a Plan Year during which a Participant may change his or her Election. For a Participant who enters the Plan other than at the start of a Plan Year, Election Period means the period of time identified by the Plan Administrator prior to the date on which the Eligible Employee begins participation during which an Eligible Employee may make an Election or change a deemed Election. 2.13 Eligible Employee means each Employee who has met the eligibility requirements of Section 3.1. 2.14 Employee means any person employed by the Employer on or after the Effective Date, except that it shall not include: (a) any self-employed individual as described in Section 401(c) of the Code; (b) any employee included within a unit of employees covered by a collective bargaining unit unless such agreement expressly provides for coverage of the employee under this Plan; (c) any employee who is a nonresident alien and receives no earned income from the Employer from sources within the United States; or (d) any employee who is a leased employee as defined in Section 414(n)(2) of the Code. All employees who are treated as employed by a single employer under subsections (b), (c) or (m) of Section 414 of the Code are treated as employed by a single employer for purposes of this Plan. Employee also includes any elected official of the Employer employed by the Employer on or after the Effective Date. 2.15 Employer means Elk River Municipal Utilities. 2.16 Employer Contribution means amounts, if any, that have not been actually or constructively received by the Participant that are made available to the Participant by the Employer for the purpose of electing Optional Benefits under the Plan. 2.17 Entry Date means the date(s) as of which Eligible Employees may become Participants in this Plan provided all necessary forms have been completed. The initial Entry Date for an Eligible Employee is the later of: (a) the first day on which the Employee first becomes an Eligible Employee; or (b) the date on which all 4 necessary forms have been completed. Thereafter, the Entry Date is the first day of each Plan Year unless a Change in Status occurs. 2.18 Highly Compensated Individual means individuals who are highly compensated as defined in Section 125(e)(2) of the Code. 2.19 Highly Compensated Participant means Participants who are highly compensated as defined in Section 125(e)(1) of the Code. 2.20 HIPAA means Health Insurance Portability and Accountability Act of 1996, and regulations thereunder, as amended from time to time. 2.21 HSA means a health savings account within the meaning of Section 223 of the Code. 2.22 Insurer means any insurance company that has issued a policy through which benefits are made available under this Plan. 2.23 IRS means the Internal Revenue Service. 2.24 Optional Benefits means the benefits made available through this Plan as follows: Non-Reimbursement: • Group Medical Benefits • Group Dental Benefits Reimbursement • Dependent Care Expense Reimbursement Plan • Medical Expense Reimbursement Plan 2.25 PHI means health information that: (a) is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; (b) relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an individual; the past, present or future payment for the provision of health care to an individual or genetic information as defined by the Genetic Information Nondiscrimination Act of 2008 ("GINA") and (c) either identifies the individual or reasonably could be used to identify the individual. PHI includes ePHI. 2.26 Participant means an Eligible Employee who participates in the Plan in accordance with Article III and has not ceased to be a Participant under Section 3.4. 2.27 Plan means the Elk River Municipal Utilities Flexible Benefits Plan, as it may be amended from time to time. 2.28 Plan Administrator means the entity determined under Section 6.1. 2.29 Plan Year means the twelve-month period commencing on the first day of January and ending on the last day of December. 5 2.30 Privacy Rules means the Standards and Privacy of Individually Identifiable Health Information at 45 C.F.R. Part 160 and Part 164 at subparts A and E. 2.31 Security Rules means the Security Standards and Implementation Specifications at 45 C.F.R. Part 160 and Part 164, subpart C. 2.32 Spouse means an individual who is (a) legally married to a Participant (under applicable state law), and (b) treated as a "spouse" under the Code and the Defense of Marriage Act. 2.33 Summary Health Information means "summary health information" as defined in 45 C.F.R. Section 164.504, which generally defines "summary health information" to include information, which may be PHI, that summarizes claims history, claims expenses, or the type of claims experienced by individuals receiving benefits under the Plan from which certain identifiers have been deleted. 2.34 Tax Dependent means an individual who qualifies as a "dependent" of the Participant for purposes of Sections 105 and 106 of the Code, as clarified in Revenue Procedure 2008-48. 6 ARTICLE III ELIGIBILITY AND PARTICIPATION 3.1 Eligibility Requirements. (a) Initial Eligibility Requirements. In general, an Eligible Employee is (1) an Employee employed by the Employer, and (2) who is scheduled to work a normal work week of forty (40) hours or more per week in a continuous twelve (12) month period. (b) Ongoing Eligibility Requirements. In order to maintain eligibility, an Eligible Employee must continue to meet the requirements described above for initial eligibility. 3.2 Notification to Participants. The Plan Administrator shall provide each Eligible Employee written notice of the Employee's eligibility to participate in the Plan in sufficient time to enable such Eligible Employee to submit an application for participation in the Plan on or before the applicable Entry Date. 3.3 Application for Participation. (a) Generally. In general, unless an Eligible Employee is deemed to have made an Election as provided in Section 5.1, to become a Participant, an Eligible Employee shall execute and deliver to the Plan Administrator prior to the applicable Entry Date, a written application signed by the Eligible Employee in which the Eligible Employee: (1) requests to participate in the Plan; (2) designates the required portion of Compensation for the pre-tax and after-tax (if any) contributions; (3) makes a benefit Election; and (4) supplies any other pertinent information that the Plan Administrator may reasonably require. By signing such application or agreement, the Eligible Employee shall be deemed for all purposes to have agreed to participate and to conform to the requirements of the Plan. Such application or agreement may be the same as, or separate from, the application or agreement required to participate in any Optional Benefit under this Plan. Alternatively, or in addition to, the Plan Administrator may require or permit application of same scope by electronic means. Participation shall begin on a Participant's Entry Date. 3.4 Termination of Participation. A Participant automatically ceases to be a Participant at midnight of the earliest of the following dates: (a) the date of the death of the Participant; (b) the date of termination of the Participant's employment with the Employer; 7 (c) the date of the Participant's failure to meet the eligibility requirements of Section 3.1, as may be amended from time to time; or (d) the date of termination of the Plan in accordance with Article VII. Note: This provision applies to participation in this Plan. With respect to the Optional Benefits that involve premium payments for other plans sponsored by the Employer, coverage under the underlying plan may extend beyond the date a Participant ceases to be a Participant in this Plan. In the event the Plan does not learn that a Participant has automatically ceased to be a Participant until a date after the date participation ceased, participation will be terminated retroactively and the Plan shall be entitled to recover any benefits paid after the date participation terminated. Termination of participation in this Plan shall not prevent a former Participant from continuation coverage, conversion coverage or benefits under the respective Optional Benefit plans if and to the extent provided by such plans. 3.5 Conditions of Participation. As a condition of participation and receipt of benefits under this Plan, the Participant agrees to: (a) (b) (c) observe all Plan rules and regulations; consent to inquiries by the Plan Administrator with respect to any provider of services involved in a claim under this Plan; and submit to the Plan Administrator all notifications, reports, bills, and other information required by the Plan or which the Plan Administrator may reasonably require. Failure to do so relieves the Plan, Plan Administrator, and Claims Administrator from any and all obligations under this Plan. 3.6 Participation in Optional Benefit Plans. In order to elect a specific Optional Benefit provided under this Plan, a Participant must elect that Optional Benefit on such forms as the Plan Administrator may require (unless the benefit is provided to all Participants) and, if the cost of the Optional Benefit is not fully paid by the Employer, shall be required to share the cost of the Optional Benefit as provided in Article IV. Further, the Participant must meet any eligibility, participation, etc., requirements applicable to that Optional Benefit in accordance with the terms of the underlying plan through which the Optional Benefit is provided. 8 ARTICLE IV CONTRIBUTIONS 4.1 Salary Reduction Contributions. To the extent the cost of an Optional Benefit exceeds the Employer Contribution (if any), a Participant may elect in accordance with the Election procedures described in Article V to receive his or her full Compensation in cash, or to have a portion of such Compensation applied by the Employer toward the Participant's share of the cost of Optional Benefits. If so elected, the Participant's Compensation will be reduced, and an amount equal to the reduction shall be allocated by the Employer to the Optional Benefits designated by the Participant. A Participant's Compensation shall be reduced by pro-rata amounts of the Participant's total salary reduction Election. Salary reduction is done on a pre- tax basis before any withholdings have been made. Salary reduction contributions shall be made each pay period according to the administrative practices of the Employer. Notwithstanding the foregoing, if participation in the Plan extends to the last day of the month in which a Participant's employment terminates, if necessary, additional salary reduction contributions shall be taken from the Participant's final pay check to pay for the coverage provided during the period of time following the date on which the Participant's employment terminates. 4.2 Imputation of Income. To the extent a Participant participates in an Optional Benefit that covers a Dependent who is not the Participant's Spouse or Tax Dependent, the cost of coverage for which the Participant is responsible shall be paid on an after-tax basis up to the amount of the fair market value of the coverage provided to that Dependent. To the extent the cost of coverage for which the Participant is responsible exceeds that fair market value, the remaining cost of coverage may be paid pre-tax through this Plan. To the extent the cost of coverage for which the Participant is responsible is less than that fair market value, the excess of the fair market value over the after-tax payments shall be imputed as income to the Participant as the coverage is provided. 4.3 Salary Deduction Contributions. The Employer may require that amounts for which the Participant is responsible, but which cannot be paid with pre-tax dollars through salary reduction described above, be funded with after-tax dollars pursuant to a salary deduction agreement. Such salary deductions shall be made on a periodic basis and relate to a Participant's Compensation after taxes and withholdings have been made. 4.4 Employer Contribution. The Employer may make a fixed dollar contribution per Plan Year, or portion of a Plan Year (e.g., month, pay period), per Participant. The amount of the Employer Contribution may change from year to year as announced by the Employer prior to the Plan Year start. The Employer may designate different amounts for different groups of Eligible Employees. The Employer Contribution, including any additional limitations or restrictions thereon, shall be communicated to Participants prior to the start of the Plan Year as part of the Election materials. No Employer Contribution shall be credited to any Employee during a period of leave of absence, whether authorized or unauthorized, unless required by the Family Medical Leave Act ("FMLA"). 4.5 Maximum Under the Plan. Under no circumstances may a Participant's total salary reduction exceed the sum of (a) the cost of benefits paid on a pre-tax basis provided through insurance or insurance-types of benefits, plus (b) the maximum 9 Election amounts permitted under the Optional Benefits reimbursement-type of benefits, minus (c) the Employer Contribution, if any. 4.6 No Trust. Nothing in this Plan is intended to require the establishment of a trust. The portion of benefits paid under this Plan attributable to Employer Contributions, if any, is paid from the Employer's general assets. The portion of benefits paid under this Plan attributable to Participant contributions including, but not limited to, salary reduction amounts is paid from the Employer's general assets. 10 ARTICLE V ELECTION OF AVAILABLE BENEFITS 5.1 Initial Elections. An Election must be made during the initial Election Period. An affirmative Election to participate is required. If the Election Period ends and an Eligible Employee has not returned an Election form to the Plan Administrator, the Eligible Employee will be deemed to have elected not to participate in Optional Benefits. To the extent there is an Employer Contribution, the Eligible Employee will forfeit the entire Employer Contribution. 5.2 Subsequent Elections. During the Election Period prior to each subsequent Plan Year, each Participant shall be given the opportunity to change his or her Election. Such changes include the following: (a) an Eligible Employee who is not participating may elect to begin participating by electing Optional Benefits during the Election Period; (b) a Participant may terminate participation in the Plan; or 5.3 (c) a Participant may elect different Optional Benefits or different levels of Optional Benefits. An affirmative election is required. If the Election Period ends and an Eligible Employee has not returned an Election form to the Plan Administrator, the Eligible Employee will be deemed to have elected not to participate in Optional Benefits. Elections Irrevocable. For purposes of this Section 5.3, the term "dependent" shall mean an individual who is a "dependent" under the provision of the Code applicable to the Optional Benefit(s) to which the Election being changed or revoked relates. An Election becomes effective and shall be irrevocable for the Plan Year or the remainder of the Plan Year except under the following circumstances: (a) Change in Status. A Participant may change or terminate his or her actual or deemed Election under the Plan upon the occurrence of a Change in Status, but only if such change or termination is made on account of and corresponds with a Change in Status that affects coverage eligibility of a Participant, a Participant's Spouse, or a Participant's dependent (referred to as the "general consistency requirement"). The Plan Administrator (in its sole discretion) shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a Change in Status. Assuming that the general consistency requirement is satisfied, a requested change must also satisfy the following specific consistency requirements in order for a Participant to be able to alter his or her Election based on that change. (1) Loss of Dependent Eligibility. For a Change in Status involving a Participant's divorce, annulment or legal separation from a Spouse, the death of a Spouse or a dependent, or a dependent ceasing to satisfy the eligibility requirements for coverage, a Participant may only elect to cancel accident or health insurance, or insurance-type, coverage for the Spouse involved in the divorce, annulment, or legal separation, the 11 deceased Spouse or dependent, or the dependent that ceased to satisfy the eligibility requirements. Canceling coverage for any other individual under these circumstances fails to correspond with that Change in Status. (2) Gain of Coverage Eligibility Under Another Employer's Plan. For a Change in Status in which a Participant, a Participant's Spouse, or a Participant's dependent gains eligibility for coverage under another employer's cafeteria plan (or another employers qualified benefit plan) as a result of a change in marital status or a change in employment status, a Participant may elect to cease or decrease coverage only if that coverage becomes actually effective or is increased under the other employers plan. (3) Dependent Care Expense Reimbursement Plan. With respect to the Dependent Care Expense Reimbursement Plan, a Participant may change or terminate his or her Election only if (I) such a change or termination is made on account of and corresponds with a Change in Status that affects eligibility for coverage under the Plan; or (ii) the Election change is on account of and corresponds with a Change in Status that affects eligibility of dependent care expenses for the tax exclusion available under the Code. (b) HIPAA Special Enrollment Rights. If a Participant, a Participant's Spouse, and/or a Participants dependent enrolls in a group health plan that is an Optional Benefit of this Plan pursuant to the HIPAA special enrollment rights provided by Code § 9801(f), the Participant may make a new election that corresponds with the special enrollment. For purposes of this provision (1) an Election to add previously eligible dependents as a result of the acquisition of a new Spouse or dependent child (a/k/a the Tag-along Rule), shall be considered consistent with the special enrollment right; and (2) a HIPAA special enrollment Election attributable to the birth or adoption of a new dependent child may be effective retroactive (up to thirty (30) days), provided it applies to Compensation not yet currently available. (c) Certain Judgments, Decrees and Orders. If a judgment, decree, or order (an "Order") resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) requires accident or health coverage for a Participant's dependent child (including a foster child who is a dependent of the Participant), a Participant may: (1) change his or her Election to provide coverage for the dependent child (provided that the Order requires the Participant to provide coverage and subject to the provisions of the underlying group health plan); or (2) change his or her Election to revoke coverage for the dependent child if the Order requires that another individual (including the Participant's Spouse or former Spouse) provide coverage under that individual's plan. (d) Medicare and Medicaid. If a Participant, a Participant's Spouse, or a Participant's dependent who is enrolled in a health or accident benefit under this Plan (including the Medical Expense Reimbursement Plan) becomes entitled to Medicare or Medicaid (other than coverage consisting solely of benefits under Section 1928 of the Social Security Act providing for pediatric vaccines), the Participant may prospectively reduce or cancel the health or 12 accident coverage of the person becoming entitled to Medicare or Medicaid. Further, if a Participant, a Participant's Spouse, or a Participants dependent who has been entitled to Medicare or Medicaid loses eligibility for such coverage, then the Participant may prospectively elect to commence or increase the health or accident coverage provided under this Plan (including the Medical Expense Reimbursement Plan) of the person losing entitlement to Medicare or Medicaid. NOTE: Effective April 1, 2009, certain changes to Medicaid coverage also create a HIPAA special enrollment right. Election changes based upon HIPAA special enrollment rights are described above. (e) Change in Cost. (1) Automatic Increase or Decrease for Insignificant Cost Changes. If the cost of an Optional Benefit (other than Medical Expense Reimbursement Plan) increases or decreases during a Plan Year by an insignificant amount,' then the pre-tax contributions or after-tax contributions (as applicable) under each affected Participant Election shall be prospectively increased or decreased to reflect such change. The Plan Administrator, on a reasonable and consistent basis, will automatically effectuate this prospective increase or decrease in Participant contributions in accordance with such cost changes. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether increases or decreases in costs are 'insignificant' based upon all the surrounding facts and circumstances (including, but not limited to, the dollar amount or percentage of the cost change). (2) Significant Cost Increases. If the Plan Administrator determines that the cost of an Optional Benefit (other than Medical Expense Reimbursement Plan) significantly increases during a Plan Year, the Participant may, on a prospective basis, either: (i) make a corresponding increase in his or her Election, (ii) enroll in another benefit package option providing similar coverage and make a corresponding Election change, or (iii) revoke his or her Election if no other benefit package option providing similar coverage is available. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a cost increase is significant and what constitutes 'similar coverage' based upon all the surrounding facts and circumstances. (3) Significant Cost Decrease. If the Plan Administrator determines that the cost of an Optional Benefit (other than Medical Expense Reimbursement Plan) significantly decreases during a Plan Year: (i) an Eligible Employee or Participant may commence participation in such Optional Benefit; and (ii) the Plan Administrator shall automatically effectuate a prospective decrease in a Participant's Election with respect to such Optional Benefit in accordance with the cost decrease. (f) Change in Coverage. 13 (1) Significant Curtailment. If the Plan Administrator determines that coverage under an Optional Benefit (other than Medical Expense Reimbursement Plan) is significantly curtailed during a Plan Year, the Participant may prospectively enroll in another benefit package option providing similar coverage and make a corresponding Election change. Coverage under an accident or health plan is deemed "significantly curtailed" only if there is an overall reduction in coverage provided to Participants under the Plan so as to constitute reduced coverage to Participants in general. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a curtailment is "significant," and whether a benefit package option constitutes "similar coverage" based upon all the surrounding facts and circumstances. (2) Loss of Coverage. If the Plan Administrator determines that coverage under an Optional Benefit (other than Medical Expense Reimbursement Plan) is lost during a Plan Year, the Participant may, on a prospective basis: (i) enroll in another benefit package option providing similar coverage and make a corresponding Election change, or (ii) revoke his or her Election if no other benefit package option providing similar coverage is available. Coverage under an accident or health plan is deemed "lost" only if there is a complete loss of coverage under the benefit package option (e.g., due to elimination of the benefit package option or application of an annual or lifetime maximum) or other fundamental loss of coverage. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a "loss' has occurred, and whether a benefit package option constitutes 'similar coverage based upon all the surrounding facts and circumstances. (3) Addition or Improvement of an Optional Benefit. If during a Plan Year, the Plan adds a new Optional Benefit or a new benefit package option under the Optional Benefit (other than the Medical Expense Reimbursement Plan), or if coverage under an existing Optional Benefit (other than the Medical Expense Reimbursement Plan) is significantly improved: (i) an affected Participant may prospectively change his/her Election with respect to the newly-added or improved Optional Benefit; and (ii) an Eligible Employee may commence participation in such Optional Benefit. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether an Optional Benefit has been "significantly improved" based upon all the surrounding facts and circumstances. (4) Change Under Another Employer-Sponsored Plan. A Participant may make a prospective Election change (other than with respect to the Medical Expense Reimbursement Plan) that is on account of and corresponds with a change made under another employer-sponsored plan (including a plan of the Employer or a plan of another employer), provided (i) the other cafeteria plan or qualified benefits plan permits its participants to make an Election change that would be permitted under the Cafeteria Plan Regulations, or (ii) this Plan permits Participants to make an Election fora Plan Year period of coverage which is different from the plan year period of coverage under the 14 other cafeteria plan or Optional Benefit. The Plan Administrator shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a change made under another employer-sponsored plan. (5) Loss of Governmental or Educational Coverage. A Participant may prospectively change his or her Election to add group health coverage for the Participant or his or her Spouse or dependent, if such individual(s) loses coverage under any group health coverage sponsored by a governmental or educational institution including, but not limited to, the following: a medical care program of an Indian Tribal government (as defined in Code § 7701(a)(40)), the Indian Health Service, or a tribal organization; a state health Benefits risk pool; or a foreign government group health plan, subject to the terms and limitations of the applicable benefit package option(s). NOTE: Effective April 1, 2009, certain changes to coverage under a state children's health insurance program ("SCRIP") create a HIPAA special enrollment right. Election changes based upon HIPAA special enrollment rights are described above. (g) Family and Medical Leave Act. A Participant taking a leave governed by the Family and Medical Leave Act of 1993 ("FMLA") may revoke or change an Election as may be provided for under the FMLA and the Employer's FMLA policy required thereunder, provided the Employer is subject to FMLA. (h) Other. The Plan Administrator shall have the discretion to allow a change to or termination of an Election to the extent such change or termination is the result of any other situation informally recognized by the IRS as providing an exception to the general rule that Elections are irrevocable (e.g., corrections of mistakes, changes to meet nondiscrimination requirements, failure to satisfy underwriting). A Participant entitled to make a new Election under this Section must do so within thirty (30) days of the event. An Employee who is eligible to elect benefits but declined to do so during the initial Election period, or during a subsequent Election period, may file a new Election within thirty (30) days of the occurrence of an event described above, but only if the new Election is made on account of and corresponds with the event. Subject to the provisions of the underlying group health plan, Elections made to add medical coverage for a newborn or newly adopted dependent child pursuant to a HIPAA special enrollment right may be retroactive for up to thirty (30) days. All other new Elections shall be effective prospectively immediately following the date the Participant files the new Election with the Plan Administrator. Elections made pursuant to this Section shall be effective for the balance of the Plan Year in which the Election is made unless a subsequent event (described above) allows a further Election change. 5.4 Rehire and Eligibility Loss. Termination of employment shall automatically revoke any Election. Former Participants who are rehired: (a) After thirty (30) days following a termination of employment, shall have two "periods of coverage;" that period prior to the termination of employment and that period following the re-employment of the terminated Employee. 15 Expenses incurred prior to the termination of employment shall be subject to the Election in effect upon termination; while the Employee shall have an opportunity to make a new Election and expenses incurred after re- employment shall be subject to the Election made upon re-employment. (b) Within thirty (30) days following a termination of employment, shall have the Election in effect prior to the termination of employment reinstated upon re- employment. 5.5 Benefit Descriptions. While an Election to receive one or more of the Optional Benefits may be made under this Plan, the benefits themselves may be provided in accordance with Plan documents or contracts which describe the types and amounts of benefits available, the requirements for participation, procedures for submitting claims, and the other terms and conditions of coverage. Such underlying Plan documents or contracts, if any, are incorporated into this Plan by reference. 5.6 Forfeiture. Any amounts, whether obtained through salary reduction, salary deduction, Employer Contributions, or otherwise, under this Plan which cannot be distributed by the Plan Administrator to cover the cost of Optional Benefits for the applicable Plan Year, shall be forfeited by the Participant. Forfeited amounts, in accordance with the Cafeteria Plan Regulations, may be: (a) retained by the Employer, (b) used to defray the reasonable administrative costs of the Plan, (c) used to reduce required salary reduction amounts for the immediately following Plan Year on a reasonable and uniform basis, and/or (d) returned to the Participants on a reasonable and uniform basis. Under no circumstances shall the Plan Administrator establish an outside formal or informal arrangement under which the forfeited amounts are allocated among Participants based (directly or indirectly) on their individual claims experience under the Plan. 5.7 Limitations on Benefits. Benefits shall be limited as determined by the Plan Administrator for the purpose of ensuring compliance with any nondiscrimination requirement applicable to the Plan or an Optional Benefit. 16 ARTICLE VI ADMINISTRATION 6.1 Plan Administrator. (a) The Plan Administrator shall be responsible for the general supervision of the Plan. The Plan Administrator shall perform any and all acts necessary or appropriate for the proper management and administration of the Plan. (b) The Employer shall be the Plan Administrator unless the Employer's managing body designates a person or persons other than the Employer to be the Plan Administrator. The Employer shall also be the Plan Administrator if the person or persons so designated cease to be the Plan Administrator. (c) The Plan Administrator may designate an individual or entity to act on its behalf with respect to certain powers, duties, responsibilities, etc. with respect to the operation and administration of this Plan. Where benefits under this Plan are provided through an insurance company, Health Maintenance Organization ("HMO"), or Dental Maintenance Organization ("DMO"), or similar entity, that entity shall be the Claims Administrator with respect to those benefits. In all other situations, the Plan Administrator shall be the Claims Administrator unless the Plan Administrator contracts with a third party to act on its behalf. 6.2 Agent for Service of Legal Process. The agent for service of legal process for the Plan is the Plan Administrator. 6.3 Allocation of Responsibility for Administration. The Plan Administrator shall have the sole responsibility for the administration of this Plan as is specifically described in this Plan. The designated representatives of the Plan Administrator shall have only those specific powers, duties, responsibilities, and obligations as are specifically given to them under this Plan. The Plan Administrator warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan authorizing or providing for such direction, information or action. It is intended under this Plan that the Plan Administrator shall be responsible for the proper exercise of its own powers, duties, responsibilities, and obligations under this Plan and shall not be responsible for any act or failure to act of another Employee of the Employer. Neither the Plan Administrator (including any designee) nor the Employer makes any guarantee to any Participant in any manner for any loss or other event because of the Participant's participation in this Plan. 6.4 Rules and Decisions. Except as otherwise specifically provided in the Plan, the Plan Administrator may adopt such rules and procedures as it deems necessary, desirable, or appropriate to fulfill the purposes of the Plan. All rules 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, the Employer, or legal counsel. 6.5 Procedures. The Plan Administrator may act at a meeting or in writing. The Plan Administrator may adopt by-laws and regulations as it deems desirable for the conduct of the Plan's affairs and as are consistent with the terms of the Plan. 17 6.6 Records and Reports. The Plan Administrator shall be responsible for complying with all reporting, filing and disclosure requirements for the Plan. 6.7 Claim for Benefits. This Section addresses the requirements for claims for reimbursement-type Optional Benefits and the provisions of general applicability. Claims requirements for other Optional Benefits shall be handled in accordance with the governing documents for those Optional Benefits. A Participant may apply to the Claims Administrator for reimbursement of eligible expenses incurred during such Plan Year by completing a claim form and submitting such form to the Claims Administrator (or its designee) via email, facsimile, mail, setting forth at least the following: (a) the amount, date and nature of the expense, including the identity of the individual who incurred the expense; (b) the name of the person or entity to which the expense was paid; (c) the Participant's statement that the expense has not been reimbursed and the Participant will not seek reimbursement for the expense; and (d) such other information as the Claims Administrator may require. Such claim form shall be accompanied by bills, invoices, receipts, or other statements from an independent third party, or by an explanation of benefits ("EOB") issued by a health plan, stating the eligible expense has been incurred and the amount of the expense. The Claims Administrator is entitled to rely on the information provided on the claim form in processing claims under this Plan. Where circumstances beyond the Participant's control prevent submission within the described time frame, notice of a claim with an explanation of the circumstances may be accepted by the Claims Administrator as a timely filing. Claims shall be determined in accordance with Article VI. 6.8 Determination of Benefits. This Section addresses the claims determination and appeal procedures for reimbursement-type Optional Benefits, and the provisions of general applicability. (a) Initial Determination. The Plan Administrator, or Plan Administrator's designee, shall notify a person within thirty (30) days of receipt of a written claim for benefits of that persons eligibility or non-eligibility for benefits under the Plan. If it is determined that a person is not eligible for benefits or for full benefits, the notice shall set forth: (1) the specific reasons for the denial; (2) a specific reference to the provision of the Plan on which the denial is based; (3) a description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; and 18 (4) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Plan Administrator, or Plan Administrator's designee, determines that there are special circumstances requiring additional time to make a decision, the Plan Administrator, or Plan Administrator's designee, shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional fifteen (15) days. (b) Appeals. If a Participant is determined by the Plan Administrator, or Plan Administrator's designee, not to be eligible for benefits, or if the Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have the claim reviewed by the Plan Administrator, or Plan Administrator's designee, by filing an appeal within one hundred eighty (180) days after receipt by the Participant of the notice issued by the Employer, or the Employer's designee. The appeal shall state the specific reasons the Participant believes he or she is entitled to benefits or greater or different benefits. Within sixty (60) days after receipt of the appeal, the Plan Administrator, or Plan Administrator's designee, shall afford the Participant (and the Participants counsel, if any) an opportunity to present the Participants position to the Plan Administrator, or Plan Administrator's designee, orally or in writing, and the Participant (or the Participants counsel) shall have the right to review the pertinent documents. (c) Decision on Appeal. The Plan Administrator shall notify the Participant of its decision on appeal in writing within said sixty (60) day period stating specifically the basis of said decision. If it is determined that a person is not eligible for benefits or for full benefits, the notice shall set forth: (1) the specific reasons for the denial; (2) a specific reference to the provision of the Plan on which the denial is based; (3) a statement of the Participant's right to review (on request and at no charge) relevant documents and other information; (4) if the Plan Administrator relied on an "internal rule, guideline, protocol, or other similar criterion" in making the decision, a description of the specific rule, guideline, protocol, or other similar criterion or a statement that such a rule, guideline, protocol, or other similar criterion was relied on and that a copy of such rule, guideline, protocol, or other similar criterion will be provided free of charge to Participant upon request; and In the event of the death of a Participant, the same procedure shall be applicable to the Participants beneficiaries. 19 6.9 Authorization of Benefit Payments. The Plan Administrator shall issue directions to the Employer concerning all benefits to be paid from the Employer's assets pursuant to the provisions of the Plan, and shall warrant at the time the directions are provided that all such directions are in accordance with the Plan. 6.10 Benefit Payments. The Participant shall be reimbursed at least either (a) once per month, or (b) when the total reimbursement for eligible expenses first equals or exceeds a reasonable minimum amount that the Plan Administrator may communicate to Employees from time to time. 6.11 Overpayments. If a payment for benefits is made by the Plan in excess of the benefit to which a Covered Individual is entitled under the Plan, the Plan shall have the right to recover such overpayment from the payee. Repayment of an overpayment is a condition of participation in the Plan. 6.12 Inability to Locate Payee. If benefits are due under this Plan and the Plan Administrator is unable, after reasonable attempts to do so, to locate the Participant to whom such benefits are payable, such benefits shall be handled in accordance with applicable state law regarding unclaimed property or escheat. For purposes of the foregoing, the Plan Administrator shall be deemed to be unable to locate a Participant if a check issued for benefits payable under the Plan has been sent to the payee's last known address and has not been cashed within three (3) years of its date of issuance. 6.13 Facility of Payment. Whenever, in the Plan Administrator's opinion, a person entitled to receive any payment of a benefit or installment under the Plan is under a legal disability or is incapacitated in any way so as to be unable to manage their financial affairs, the Plan Administrator may request the Employer to make payments to such person, or the Plan Administrator may request the Employer to apply the payment for the benefit of such person in such manner as the Plan Administrator considers advisable. Any payment of a benefit, or installment, in accordance with the provisions of this Section, shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan. 6.14 Other Powers and Duties of the Administrator. The Plan Administrator shall also have such other duties and powers as may be necessary to discharge its duties under the Plan including, but not limited to, the following: (a) discretion to construe and interpret the Plan in anon-discriminatory manner, to decide all questions of eligibility, except to the extent the eligibility determinations are governed by an insurance contract, and to determine all questions arising in the administration and application of the Plan, except to the extent such eligibility determinations are governed by an insurance contract; (b) to receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan; (c) to furnish the Employer, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate; and (d) to appoint individuals to assist in the administration of the Plan and any other agents the Plan Administrator deems advisable, including legal and actuarial 20 counsel. The Plan Administrator shall not have the power to add to, subtract from, or modify any of the terms of the Plan, to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under this Plan. 6.15 Indemnification. To the maximum extent allowed by, and in accordance with applicable law, the Employer shall indemnify and hold harmless any Employee that is deemed to be a fiduciary against any and all losses, claims, damages, expense (including court costs and attorneys' fees), and liability arising from the Employee's duties and responsibilities in connection with the Plan, unless the same is determined to be intentional or willful. 6.16 Changes by the Plan Administrator. If the Plan Administrator determines before or during any Plan Year, the Plan may fail to satisfy any nondiscrimination requirement imposed by the Code or any limitation on benefits provided to key employees, the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to further compliance with such requirements or limitation. Such action may include, without limitation, a modification of Elections by Highly Compensated Participants or key employees with or without consent of such Employees and/or a recharacterization within the Plan Year of benefits provided under the Plan as taxable income with or without consent of such Employees. 21 ARTICLE VII PLAN AMENDMENT AND TERMINATION 7.1 Employer Amendments. The Employer reserves the right to amend the Plan, or any portion of the Plan, at any time. The Employer expressly may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with the law. Such amendment shall not affect any right to benefits that accrued prior to such amendment. Such amendment shall be made in writing and in accordance with Section 8.4. 7.2 Employer's Right to Terminate. Although the Employer expects the Plan to be maintained for an indefinite time, the Employer reserves the right to terminate the Plan, or any portion of the Plan, at any time. In the event of the dissolution, merger, consolidation, or reorganization of the Employer, the Plan shall terminate unless the Plan is continued by a successor to the Employer in accordance with the resolution of such successor's managing body. Such termination shall not affect any right to benefits that accrued prior to any termination. Such action shall be taken in writing and in accordance with Section 8.4. 22 ARTICLE VIII GENERAL PROVISIONS 8.1 Plan Not a Contract of Employment. The Plan is not an employment contract and does not assure the continued employment of any Employee or Participant for any period of time. Nothing contained in the Plan shall interfere with the Employer's right to discharge an Employee or Participant at any Ume, regardless of the effect such discharge may have upon the individual as a Participant in this Plan. 8.2 No Right to Employer's Assets. No Employee, Participant or beneficiary thereof shall have any right to, or interest in, any assets of the Employer upon termination of employment, or otherwise except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Employee, Participant or beneficiary thereof. In addition, the Claims Administrator shall not be liable in any manner for such payments. 8.3 Non-Alienation of Benefits. Benefits payable under this Plan shall not be subject to anticipation, alienation, sale, transfer, execution, or levy of any kind either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a Spouse or former Spouse, or for any other relative of the Participant, prior to actually being received by the person entitled to the benefit under the terms of the Plan. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable under the Plan shall be void. The Employer, Plan Administrator and/or Claims Administrator shall not in any manner be made liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits under the Plan. 8.4 Action by Employer. Whenever the Employer, under the terms of this Plan, is permitted or required to do or perform any act or matter or thing, it shall be done and performed by the managing body of the Employer or such representatives of the Employer as the managing body may designate. 8.5 No Guarantee of Tax Consequences. Notwithstanding any provision in this Plan to the contrary, neither this Plan nor the Employer make any commitment or guarantee that any amounts paid to or on behalf of a Participant under this Plan will be excludable from the Participant's gross income for federal or state income tax purposes. It shall be the obligation of each Participant to determine whether each payment is excludable from the Participant's gross income for federal and state income tax purposes, and to notify the Employer if the Participant has reason to believe that any such payment is not so excludable. 8.6 Indemnification of Employer by Participants. To the maximum extent allowed by, and in accordance with, applicable law, if any Participant receives one or more payments or reimbursements under this Plan that are not for eligible expenses, such Participant shall indemnify and reimburse the Employer for any liability it may incur for failure to withhold federal or state income tax or Social Security tax from such payments 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, plus the Participants share of any Social Security tax that would have been paid on such compensation, less any such additional income and Social Security tax actually paid by the Participant. 23 8.7 Benefits Provided Through Third Parties. In the case of any Optional Benefit provided through a third party (e.g., an insurance company pursuant to a contract or policy with that third party), if there is any conflict or inconsistency between the description of benefits contained in this Plan and the contract or policy, the terms of the contract or policy shall control, unless prohibited by applicable law. The Employer does not guarantee benefits payable under any insurance contract or health maintenance organization policy incorporated by reference into the Plan. Any benefits payable thereunder shall be the exclusive responsibility of the insurer or health maintenance organization that is obligated under the contract or policy. 8.8 Mistakes and Errors. It is recognized that in the administration of the Plan, certain administrative and accounting errors may be made or situations may arise by reason of factual errors in information supplied to the Employer or the Plan Administrator. The Employer and/or the Plan Administrator shall have the power to take such equitable steps as may be necessary to correct the mathematical, accounting or factual errors, as they, in their sole discretion, determine(s) to be appropriate. 8.9 Limitation on Liability. The Employer does not guarantee benefits payable under any insurance policy or other similar contract described or referred to herein, and any benefits thereunder shall be the exclusive responsibility of the Insurer or other entity that is required to provide such benefits under such policy or contract. 8.10 Governing Law. This Plan shall be construed and enforced according to the laws of Minnesota except to the extent preempted by federal law. 8.11 Family and Medical Leave Act of 1993. Notwithstanding any provision of this Plan to contrary, this Plan shall be operated and maintained in a manner consistent with the Family and Medical Leave Act of 1993 ("FMLA") and the Employer's FMLA policy required thereunder, provided the Employer is subject to FMLA. 8.12 Uniformed Services Employment and Reemployment Rights Act of 1994. Notwithstanding any provision of this Plan to the contrary, this Plan shall be operated and maintained in a manner consistent with the Uniformed Services Employment and Reemployment Act of 1994 ("USERRA"), and the Plan Administrator shall, within the parameters of the law, establish uniform policies by which to provide such continuation coverage required by USERRA. 8.13 Genetic Information Nondiscrimination Act of 2008. Notwithstanding any provision of this Plan to contrary, this Plan shall be operated and maintained in a manner consistent with the Genetic Information Nondiscrimination Act of 2008 ("GINA"). 8.14 Children's Health Insurance Program Reauthorization Act of 2009. Notwithstanding any provision of the Plan to the contrary, the Plan shall be operated and maintained in a manner consistent with the Children's Health Insurance Program Reauthorization Act of 2009 ("CHIPRA'). 24 ARTICLE IX GROUP MEDICAL BENEFITS 9.1 Purpose. The purpose of this Article is to provide for the pre-tax payment opportunity for Group Medical Benefits under this Plan as an Optional Benefit. The Employer provides Group Medical Benefits through one or more ~~plans" within the meaning of Sections 105 and 106 of the Code. 9.2 Separate Written Plan. For purposes of Sections 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the reimbursement or direct payment of Insurance Premium expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 9.3 Definitions. (a) Dependent means an individual (e.g., Spouse, child, domestic partner, etc.) who qualifies as a "dependent" under the terms and conditions of the applicable plan document governing the Group Medical Benefits. To the extent a Dependent is provided coverage under the Group Medical Benefits and that Dependent is not the Participant's Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. (b) Group Medical Benefits means the medical coverage made available by the Employer through this Article to which the Insurance Premiums relate. It does not include individual Insurance Contracts. (c) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (d) HMO means a health maintenance organization authorized to do business in the state in which it operates with which an agreement has been entered for the purpose of providing benefits under the Plan. (e) Insurance Contract means (1) any insurance contract secured from an insurance company or HMO authorized to do business in the state in which such contract is issued, which has been obtained for the purpose of providing benefits under this portion of the Plan; or (2) aself-insured plan administered by a third party. (f) Insurance Premiums means the amount that must be paid on a periodic basis in return for coverage under the Insurance Contract. 9.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts, HMO agreements, or other health benefit agreements from third party providers, as identified in Exhibit A. Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts, HMO agreements, other health benefit agreements, and/or self- insured plan documents. Such Insurance Contracts, agreements, and plan documents are expressly incorporated into and made part of this Plan. 9.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Medical Benefits on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the 25 applicable Plan Year. Such payments shall be made from Employer Contributions, if any, provided by the Employer under the Plan and, if necessary, contributions made in accordance with the salary reduction arrangement and other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participant. The Plan Administrator shall also make such payments on behalf of the Participant's Dependents who are enrolled in the Group Medical Benefits. To the extent a Dependent is provided coverage under the Group Medical Benefits and that Dependent is not the Participant's Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. 9.6 Nondiscrimination. To the extent this portion of the Plan is subject to Section 105(h) of the Code, it shall not discriminate in favor of Highly Compensated Individuals with respect to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such a result as described in Section 6.16. If this portion of the Plan fails any applicable nondiscrimination requirements. Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 9.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Plan to the extent required by applicable law. 9.8 Continuation of Coverage. Continued coverage shall be provided if it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and, as reflected in the Public Health Services Act ("PHSA"), as amended To the extent not contained in Article XIV, the Plan Administrator shall, within the parameters of the law, be responsible for the applicable continuation requirements. There shall also be compliance with applicable state laws concerning continuation of coverage to the extent not preempted by federal law. There shall also be compliance with applicable state laws concerning continuation of coverage to the extent not preempted by federal law. 9.9 HIPAA. The Group Medical Benefits shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in Article XIII. 26 ARTICLE X GROUP DENTAL BENEFITS 10.1 Purpose. The purpose of this Article is to provide for the pre-tax payment opportunity for Group Dental Benefits under this Plan as an Optional Benefit. The Employer provides Group Dental Benefits through one or more ~~plans" within the meaning of Sections 105 and 106 of the Code. 10.2 Separate Written Plan. For purposes of Sections 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the reimbursement or direct payment of Insurance Premium expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 10.3 Definitions. (a) Dependent means an individual (e.g., Spouse, child, domestic partner, etc.) who qualifies as a "dependent" under the terms and conditions of the applicable plan document governing the Group Dental Benefits. To the extent a Dependent is provided coverage under the Group Dental Benefits and that Dependent is not the Participant's Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. (b) DMO means a dental maintenance organization authorized to do business in the state in which an agreement has been entered for the purpose of providing benefits under this portion of the Plan. (c) Group Dental Benefits means the dental coverage made available by the Employer through this Article to which the Insurance Premiums relate. It does not include individual Insurance Contracts. (d) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (e) Insurance Contract means (1) any insurance contract secured from an insurance company or DMO authorized to do business in the state in which such contract is issued, which has been obtained for the purpose of providing benefits under this portion of the Plan; or (2) aself-insured plan administered by a third party. (f) Insurance Premiums means the amount that must be paid on a periodic basis in return for coverage under the Insurance Contract. 10.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts, DMO agreements, or other dental benefit agreements from third party providers, as identified in Exhibit A. Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts, DMO agreements, other dental benefit agreements, and/or self-insured plan documents. Such Insurance Contracts, agreements, and plan documents are expressly incorporated into and made part of this Plan. 10.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Dental Benefits on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the 27 applicable Plan Year. Such payments shall be made from Employer Contributions, if any, provided by the Employer under the Plan and, if necessary, contributions made in accordance with the salary reduction arrangement and other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participant. The Plan Administrator shall also make such payments on behalf of the Participant's Dependents who are enrolled in the Group Dental Benefits. To the extent a Dependent is provided coverage under the Group Dental Benefits and that Dependent is not the Participant's Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. 10.6 Nondiscrimination. To the extent this portion of the Plan is subject to Section 105(h) of the Code, it shall not discriminate in favor of Highly Compensated Individuals with respect to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such a result as described in Section 6.16. If this portion of the Plan fails any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 10.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Plan to the extent required by applicable law. 10.8 Continuation of Coverage. Continued coverage shall be provided if it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and, as reflected in the Public Health Services Act ("PHSA ), as amended To the extent not contained in Article XIV, the Plan Administrator shall, within the parameters of the law, be responsible for the applicable continuation requirements. There shall also be compliance with applicable state laws concerning continuation of coverage to the extent not preempted by federal law. There shall also be compliance with applicable state laws concerning continuation of coverage to the extent not preempted by federal law. 10.9 HIPAA. The Group Dental Benefits shall comply with the Privacy Rules and Security Rules under HIPAA (it applicable) as further provided in Article XIII. 28 projected expenses. Notwithstanding the foregoing, pursuant to and in accordance with the Cafeteria Plan Regulations, the Plan may reimburse Medical Expenses for orthodontia care in advance. 11.7 Reimbursement of Expense. The Participant shall be reimbursed as specified in Section 6.8 from the Participant's ME Account for eligible Medical Expenses incurred during the applicable Plan Year for which the Participant submits the documentation required under Article VI. An amount up to the sum of the Participant's Election and the Employer Contribution, if any, and reduced as of any particular time for prior reimbursements for the same Plan Year, shall be available for reimbursement at all times during the Plan Year. Claims for reimbursement with respect to a Plan Year must be submitted prior to the close of the Claims Run-out Period for such Plan Year. In no case shall a payment be made which exceeds the balance in the Participant's ME Account at the time reimbursement is processed. If a claim for reimbursement exceeds the balance in the Participant's ME Account, the excess part of the claim will be denied. Under no circumstances (a) will any balance remaining in a Participant's ME Account at the end of the Plan Year be carried over to the next Plan Year, or (b) will an otherwise eligible Medical Expense be carried over to the next Plan Year. 11.8 Maximum Reimbursement. The maximum reimbursement a Participant may receive for a Plan Year under this portion of the Plan shall be $3,000. The maximum reimbursement amount applies to the Participant, Spouse, and Dependent on an aggregate basis, not an individual basis. 11.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan, coverage shall cease (which means that reimbursements shall cease) unless benefits under the Plan are continued as provided in Section 11.15, if applicable. If coverage ceases, reimbursements for eligible Medical Expenses incurred before participation terminated may be reimbursed if submitted within ninety (90) days following termination of participation. 11.10 Participant's Death. In the event a Participant dies having incurred an eligible Medical Care Expense (a) which would have been reimbursable out of the Participant's ME Account had the Participant not died, and (b) for which a person or the Participant's estate has paid for or assumed liability, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant's ME Account shall be forfeited in accordance with Section 5.6. 11.11 Nondiscrimination. This portion of the Plan shall not discriminate in favor of Highly Compensated Individuals as to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such result as provided in Section 6.16. If the Plan fails any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 11.12 ME Account Forfeiture. Amounts attributed to a Participant's ME Account for any Plan Year shall be used only to reimburse the Participant for eligible Medical Expenses incurred during such Plan Year. Any balance remaining in a Participant's ME Account for a Plan Year shall be forfeited following the Claims Run-out Period and shall be forfeited in accordance with Section 5.6. The Plan Administrator may extend this period in the event the Participant cannot obtain proper documentation until 30 after the expiration of the period. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 11.13 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Plan to the extent required by applicable law. 11.14 Qualified Reservist Distribution. A Participant may request, in writing on a form provided by the Plan Administrator, a "Qualified Reservist Distribution" from the Participant's ME Account if: (a) the Participant is a member of the Army National Guard, the Army Reserve, the Navy Reserve, the Marine Corps Reserve, the Air National Guard, the Air Force Reserve, the Coast Guard Reserve, or the Reserve Corps of the Public Health Service; and (b) the Participant has been ordered or called to active duty for either (1) at least one hundred eighty (180) days, or (2) an indefinite period of time. Such request must be made on or after the date of the order or call to active duty and before the last day of the Plan Year. A copy of the order or call to duty must accompany the form. The amount available to the Participant as a Qualified Reservist Distribution shall be the amount contributed to the ME Account as of the date of the request minus any reimbursements of Medical Expenses provided under the ME Account as of that date. Such distributions shall be included in the Participant's taxable income and shall be subject to normal wage withholding requirements to the extent required by law. If a balance remains in the Participant's ME Account following the Qualified Reservist Distribution, the Participant may continue to submit claims for reimbursement. 11.15 Continuation of Coverage. Continued coverage shall be provided if it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and, as reflected in the Public Health Services Act ("PHSA"), as amended To the extent not contained in Article XIV, the Plan Administrator shall, within the parameters of the law, be responsible for the applicable continuation requirements. 11.16 HIPAA. The Medical Expense Reimbursement Plan shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in Article XIII. 11.17 Further Limitations on Benefits. (a) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are payable under any worker's compensation law or other employer, union, association or governmental sponsored group insurance plan. (b) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are received by the Participant, the Participant's Spouse or the Participant's Dependent under any health and accident insurance policy or program, whether or not premiums are paid by the Employer or the Participant, the Participant's Spouse or the Participant's Dependent child. (c) Amounts reimbursed under a dependent care assistance program described in Section 129 of the Code shall not be reimbursed under this Plan. 31 (d) A Participant in the Plan may not participate under this Article and contribute to an HSA. 32 ARTICLE XII DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN 12.1 Purpose. The purpose of this Article is to provide Participants with the opportunity to be reimbursed for eligible Dependent Care Expenses under this Plan as an Optional Benefit under the Plan. This Article is intended to qualify as a °dependent care assistance program" under Section 129 of the Code so that payments received under this portion of the Plan are excludable from the gross income of the Participant under Section 129(a) of the Code. 12.2 Separate Written Plan. For purposes of Section 129 of the Code, this Article shall constitute a separate written plan providing reimbursement of certain Dependent Care Expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 12.3 Definitions. (a) Claims Run-out Period means the period beginning on the first day following the close of the Plan Year and ending on the last day of March. (b) Dependent Care Account ("DC Account") means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Election to create such an account is received. (c) Dependent Care Center shall have the meaning given such term in Sections 21(b)(2)(C) and 21(b)(2)(D) of the Code: a facility that (1) complies with all applicable laws and regulations of the state and town, city or village in which it is located; (2) provides care for more than six individuals (other than individuals who reside at the facility); and (3) receives a fee, payment or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit). (d) Dependent Care Expenses means amounts paid by the Participant for services that would be considered employment-related expenses under Section 21(b)(2) of the Code, any applicable proposed or final regulations issued thereunder, or any guidance issued by the IRS interpreting or applying any of the foregoing. Employment-related expenses for purposes of this Plan include expenses incurred to enable a Participant to be Gainfully Employed during any period for which there are one or more Qualifying Individuals with respect to the Participant for (1) household services, and (2) care of a Qualifying Individual. However, employment-related expenses which are incurred for services outside the Participant's household shall be considered Dependent Care Expenses only if incurred for the care of a Qualifying Individual described in Section 12.3(1)(1) below or a Qualifying Individual not described in Section 12.3(1)(1) below who regularly spends at least eight (8) hours each day in the Participant's household. Dependent Care Expenses do not include expenses which are incurred for services provided by a Dependent Care Center if such center does not comply with all applicable laws and regulations of the applicable state or other unit of local government which regulates the center. In addition, Dependent Care Expenses shall not include any amounts paid to an individual who: 33 (1) is a child of such Participant (within the meaning of Section 152(Q(1) of the Code) who is under the age of nineteen (19) at the close of such taxable year; (2) with respect to whom, for such taxable year, a deduction is allowable under Section 151(c) of the Code (relating to personal exemptions for dependents) to such Participant or the Spouse of such Participant; (3) is the Spouse of the Participant at any time during the taxable year; or (4) is the parent of the Participant's child who is a Qualifying Individual. (e) Earned Income shall have the meaning given such term in Section 32(c)(2) of the Code (which refers to wages, salaries, tips and other Employee Compensation as well as net earnings from self-employment), but shall not include any amounts reimbursed by the Employer under this portion of the Plan. Further, if a Participant's Spouse is a Student or incapable of caring for himself or herself, the provisions of Section 21(d)(2) of the Code shall apply in determining the Earned Income of that Spouse. Generally, this Section provides that a Spouse of a Participant shall be deemed to have Earned Income of not less than $250 per month if there is one Qualifying Individual with respect to the Participant or $500 per month if there are two or more Qualifying Individuals with respect to the Participant. (f) Gainfully Employed means the earning of income for services performed or the period of active search for gainful employment. Nominal reimbursement for volunteer work is not considered gainful employment. (g) Highly Compensated Employees means Employees who are "highly compensated" as defined in Section 414(q) of the Code. (h) Non-Highly Compensated Participants means Employees who are not Highly Compensated Employees. (i) Qualifying Individual means a person for whom expenses can be submitted for reimbursement. (1) A Qualifying Individual is: i) the Participant's "qualifying child" under Section 152 of the Code who is under age thirteen (13); ii) the Participant's "qualifying child" under Section 152 of the Code (determined without regard to Sections 152(b)(1) and (b)(2) of the Code) who is mentally or physically unable to care for himself or herself; iii) the Participant's "qualifying relative" under Section 1.52 of the Code (determined without regard to Sections 152(b)(1), (b)(2), and (d)(1)(B) of the Code) who: (1) is mentally or physically unable to care for himself or herself, and (2) has the same principal place of abode as the Participant for at least one-half of the year; or 34 iv) the Participant's Spouse who: (1) is mentally or physically unable to care for himself or herself, and (2) has the same principal place of abode as the Participant for at least one-half of the year. (2) With the exception of two parents that file income taxes jointly, only one person is entitled to treat the child as a Qualifying Individual. Where multiple people are involved, there are two special rules to determine which person is entitled to treat the child as a Qualifying Individual. i) Divorced or Separated Parents, or Parents Living Apart. If a child's parents are divorced, legally separated, separated pursuant to a written agreement, or live apart at all times during the last six (6) months of the calendar year, a special rule applies if: (i) the child is under age 13 or is mentally or physically unable to care for himself or herself; (ii) the child receives more than 50% of his or her support from the parents (in aggregate); and (iii) the child resides with the parents (in aggregate) for more than 50% of the year. In such situations, the child is the Qualifying Individual of the custodial parent even if the custodial parent has released the right to claim the child as a dependent. The custodial parent is the parent identified in Section 152(e) of the Code (i.e., generally the parent with whom the child resides for the greater number of nights during the calendar year or, if the child resides with both parents for an equal number of nights, the parent with the higher adjusted gross income for the year). ii) Two or More Persons Claiming a Child as a Qualifying Individual. If the special rule described above regarding divorce, etc. does not apply, the special tie-breaker rules of Section 152(c)(4) of the Code may apply. If an individual is a qualifying child (as defined in Section 152 of the Code) with respect to more than one person, then: a. If both persons are the individual's parents and they file a joint federal income tax return, the child is the Qualifying Individual of both parents. b. If both persons are the individual's parents and they file separate federal income tax returns, then the child is the Qualifying Individual of the parent with whom the child resided for the longest period of time during the calendar year (or, if child resides with both parents for the same amount of time during the year, the parent with the highest adjusted gross income for the year). However, if that parent (i.e., the custodial parent or the parent with the highest adjusted gross income) does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the 35 child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other parent (i.e., the non-custodial parent or the parent with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual. c. If one person is the individual's parent and the other is not, the child is the Qualifying Individual of the parent. However, if the parent does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the non-parent). This is the one person that is entitled to treat the child as a Qualifying Individual. d. If neither person is the individual's parent, the child is the Qualifying Individual of the person with the highest adjusted gross income for the year in question. However, if that person does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the person with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual. (j) Student shall have the meaning provided in Section 21(e)(7) of the Code which means an individual who during each of five (5) calendar months during the taxable year is a full time student at an educational organization which normally maintains a regular facility and curriculum and normally has a regularly enrolled body of students in attendance at the place where its educational activities are regularly carried on as provided in Sections 21(e)(8) and 170(b)(1)(A)(ii) of the Code. 12.4 Dependent Care Account. The DC Account will be credited as of each date Compensation is paid to the Participant with apro-rated portion of the Participant's Election for the Plan Year. A Participant's DC Account will be decreased from time to time in the amount of payments made to the Participant for eligible Dependent Care Expenses incurred during the Plan Year. 12.5 Claims Determination. Claim submission, determination, and appeals shall be handled in accordance with Article VI. 12.6 Incurred Expenses. To be reimbursable, an eligible Dependent Care Expense must have been incurred after participation in this portion of the Plan began and during the Plan Year for which reimbursement is claimed. An expense is "incurred" when the Participant is provided with the care which gives rise to the eligible Dependent 36 Care Expense, not when the service is billed or paid. Reimbursement shall not be made for future or projected expenses. 12.7 Reimbursement of Expense. The Participant shall be reimbursed as specified in Section 6.8 from the Participant's DC Account for eligible Dependent Care Expenses incurred during the applicable Plan Year for which the Participant submits the documentation required under Article VI. In no case shall a payment be made which exceeds the balance in the Participant's DC Account at the time reimbursement is processed. Claims for reimbursement with respect to a Plan Year must be submitted prior to the close of the Claims Run-out Period for such Plan Year. If a claim for reimbursement exceeds the available balance in the Participant's DC Account, the excess part of the claim will be carried over and paid as the Participant's DC Account becomes adequate. Under no circumstances (a) will any balance remaining in a Participant's DC Account at the end of the Plan Year be carried over to the next Plan Year, or (b) will an otherwise eligible Dependent Care Expense be carried over to the next Plan Year. 12.8 Maximum Reimbursement. The maximum reimbursement which a Participant may receive in a tax year under this portion of the Plan shall be the lesser of: (a) the Participant's Earned Income for the tax year; (b) the actual or deemed Earned Income of the Participant's Spouse for the tax year; or (c) $5,000 (or in the case of a Participant who is married and filing a separate income tax return from his or her Spouse, $2,500). This maximum includes the Employer Contribution, if any, DC Account forfeitures and the Participant's salary reduction. If a Participant is married and the Spouse of the Participant also participates in a dependent care program under Section 129 of the Code, the combined reimbursements may not exceed the limits described above for the tax year. It shall be the Participant's responsibility to monitor the combined reimbursements. 12.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan during a Plan Year, no further contributions will be credited to the DC Account. However, expenses incurred while a Participant may be reimbursed if submitted within Claims Run-out Period identified in Section 12.3(a). 12.10 Participant's Death. In the event a Participant dies having incurred an eligible Dependent Care Expense (a) which would have been reimbursable out of the Participant's DC Account had the Participant not died, and (b) for which a person or the Participant's estate has paid for or assumed liability, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant's DC Account shall be forfeited in accordance with Section 5.6. 12.11 Nondiscrimination. Not more than twenty-five percent (25%) of the amounts paid or incurred by the Employer for Dependent Care Expenses during the Plan Year shall be provided to Participants who are shareholders or owners (or their Spouses or Tax 37 Dependents) of more than five percent (5%) of the stock or of the capital or profit interest in the Employer. This portion of the Plan shall not discriminate in favor of Highly Compensated Employees or their Dependents with respect to eligibility, contributions or benefits. The average eligible Dependent Care Expenses paid to Non-Highly Compensated Employees shall be at least fifty-five percent (55%) of the average eligible Dependent Care Expenses paid to Highly Compensated Employees. If benefits are provided through salary reduction agreements, Employees with annual compensation less than $25,000 may be excluded. If the Plan Administrator determines that the Plan is or will be discriminatory, the Plan Administrator may take any action permitted by law to avoid such result in accordance with Section 6.16. If this portion of the Plan fails any applicable nondiscrimination requirements, Highly Compensated Employees shall have taxable income imputed to the extent required by law. 12.12 DC Account Forfeiture. Amounts attributed to a Participant's DC Account for any Plan Year shall be used only to reimburse the Participant for eligible Dependent Care Expenses incurred during such Plan Year. Any balance remaining in a Participant's DC Account for a Plan Year shall be forfeited following the Claims Run-out Period and shall be forfeited in accordance with Section 5.6. The Plan Administrator may extend this period in the event the Participant cannot obtain proper documentation until after the expiration of the period. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 12.13 Dependent Care Limitations. Reimbursement or payment of eligible Dependent Care Expenses shall be made to the Participant only in the event and to the extent that such reimbursement or payment is: (a) not otherwise provided under any insurance policy, whether the premium on such policy is paid by the Employer or an individual, and (b) not provided for or reimbursable under any other plan or policy. 12.14 Reporting and Disclosure. Each Participant must be furnished with a written statement showing the amounts paid under this portion of the Plan by an Employer on behalf of the Participant for a calendar year. The statement must be furnished before January 31st of the following year. It the actual amount paid is not known by this deadline, the Employer may report a reasonable estimate of the amounts paid under this portion of the Plan. 38 ARTICLE XIII HIPAA PROVISIONS The Privacy Rules and Security Rules under HIPAA apply to certain Optional Benefits of the Plan that constitute "covered entities" within the meaning of HIPAA (e.g., employer sponsored group health plans), unless such Optional Benefits are self-insured and have less than fifty (50) Participants and the Employer is the Claims Administrator for such Optional Benefits. 13.1 Use and Disclosure of PHI. The plan will use PHI to the extent of and in accordance with the uses and disclosures permitted by HIPAA. Specifically, the plan will use and disclose PHI for purposes related to health care treatment, payment for health care and health care operations. (a) Payment includes activities undertaken by the plan to obtain premiums or determine or fulfill its responsibility for coverage and provision of plan benefits that relate to an individual to whom health care is provided. These activities include, but are not limited to, the following: (1) determination of eligibility, coverage and cost sharing amounts (for example, cost of a benefit, plan maximums and co-payments as determined for an individual's claim); (2) coordination of benefits; (3) adjudication of health benefits claims (including appeals and other payment disputes); (4) subrogation of health benefit claims; (5) establishing employee contributions; (6) risk adjusting amounts due based on enrollee health status and demographic characteristics; (7) billing, collection activities, and related health care data processing; (8) claims management and related health care data processing, including auditing payments, investigating and resolving payment disputes and responding to participant inquiries about payments; (9) obtaining payment under a contract for reinsurance (including stop- loss and excess of loss insurance); (10) medical necessity reviews or reviews of appropriateness of care or justification of charges; (11) utilization review, including pre-certification, preauthorization, concurrent review and retrospective review; (12) disclosure to consumer reporting agencies related to the collection of premiums or reimbursement (the following PHI may be disclosed for - payment purposes: name and address, date of birth, Social Security 39 number, payment history, account number and name and address of provider and/or health plan); and (b) (13) reimbursement to the plan. Health care operations include, but are not limited to, the following activities: (1) quality assessment; (2) population-based activities relating to improving health or reducing health care costs, protocol development, case management and care coordination, disease management, contacting health care providers and patients with information about treatment alternatives and related functions; (3) rating provider and plan performance, including accreditation, certification, licensing or credentialing activities; (4) underwriting, premium rating and other activities relating to the creation, renewal or replacement of a contract of health insurance or health benefits, and ceding, securing or placing a contract for reinsurance of risk relating to health care claims (including stop-loss insurance and excess of loss insurance); (5) conducting or arranging for medical review, legal seMces and auditing function, including fraud and abuse detection and compliance programs; (6) business planning and development, such as conducting cost- management and planning-related analyses related to managing and operating the plan, including formulary development and administration, development or improvement of payment methods or coverage policies; (7) business management and general administration activities of the plan, including, but not limited to: i) management activities relating to the implementation of and compliance with HIPAA's administrative simplification requirements; 13.2 ii) customer service, including data analyses for policyholders. (8) resolution of internal grievances; and (9) due diligence in connection with the sale or transfer of assets to a potential successor in interest, if the potential successor in interest is a covered entity under HIPAA or following completion of the sale or transfer, will become a covered entity. Employer's Obligations under the Privacy Rules. Under the Privacy Rules, the plan may not disclose PHI to the Employer unless the Employer agrees to certain 40 conditions. The Employer agrees to the following conditions, thereby allowing the plan to disclose PHI to the Employer. The Employer agrees to: (a) not use or further disclose PHI other than as permitted or required by the plan document or as required by law; (b) ensure that any agents, including a subcontractor, to whom the plan provides PHI received from the plan agree to the same restrictions and conditions that apply to the Employer with respect to such PHI; (c) not use or disclose PHI for employment related actions and decision unless authorized by an individual; (d) not use or disclose PHI in connection with any other benefit or employee benefit plan of the Employer unless authorized by an individual; (e) report to the plan any PHI use or disclosure, that is inconsistent with the uses or disclosures provided for, of which it becomes aware; (f) make PHI available for amendment and incorporate any amendments to PHI in accordance with HIPAA; (g) make available the information required to provide an accounting of disclosures; (h) make internal practices, books and records relating to the use and disclosure of PHI received from the plan available to the HHS Secretary for the purposes of determining the plan's compliance with HIPAA; and (i) if feasible, return or destroy all PHI received for the plan that the Employer still maintains in any form, and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made (or if return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction infeasible). 13.3 Employer's Obligations under Security Rules. If the Employer creates, receives, maintains, or transmits ePHI (other than enrollment and disenrollment information and Summary Health Information, which are not subject to these restrictions), the Employer will: (a) implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of ePHI; (b) ensure that any agents, including subcontractors, who create, receive, maintain, or transmit ePHI on behalf of the plan implement reasonable and appropriate security measures to protect the ePHI; (c) report to the plan any Security Incident of which it becomes aware;- and (d) implement reasonable and appropriate security measures to ensure that only those persons identified below have access to ePHI and that such access is limited to the purposes identified below. 41 13.4 Adequate separation between the plan and the Employer must be maintained. In accordance with HIPAA, only the following employees or classes of employees may be given access to PHI: (a) the person employed in the position that is given primary responsibility for performing the Employer's duties as the plan Administrator of the Optional Benefits; and (b) staff designated by the person described in (a) above. 13.5 Limitation of PHI Access and Disclosure. The person(s) described above may only have access to and use and disclose PHI for plan administration functions that the Employer performs for the plan. 13.6 Noncompliance Issues. If the person(s) described above does not comply with this plan document, the Employer shall provide a mechanism for resolving issues of noncompliance including, but not limited to, disciplinary sanctions. 13.7 Amendments and Guidance. To the extent HIPAA is amended and/or enforcement agency guidance is issued after the Effective Date of this Plan, the Plan shall be administered in accordance with the law, including such amendments and/or changes. 42 ARTICLE XIV CONTINUATION COVERAGE 14.1 Compliance with Continuation Coverage. Continued coverage for the Group Medical Benefits, Group Dental Benefits, and Medical Expense Reimbursement Plan provided through this Plan shall be provided as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") as amended, and/or applicable state law. The Plan Administrator shall, within the parameters of the law, be responsible for compliance with continuation requirements as required by applicable law. IN WITNESS WHEREOF, the parties hereto have executed this Plan as of the effective date set forth above. Dated: Elk River Municipal Utilities By: Its: 43 EXHIBIT A Insurance Carrier /Third Party Provider Information (as of January 1, 2010) Elk River Municipal Utilities Flexible Benefits Plan Elk River Municipal Utilities Medical Expense Reimbursement Plan Elk River Municipal Utilities Dependent Care Expense Reimbursement Plan Claims Administrator Name: Elk River Municipal Utilities Address: 13069 Orono Parkway Elk River, MN 55330 Phone Number: 763-441-2020 Elk River Municipal Utilities Group Medical Benefits Carrier Name: BlueCross BlueShield of Minnesota Address: P.O. Box 64338 St. Paul, MN 55164 Phone Number: 651-662-5517 Group Number: GA175 Policy Year: January through December * Group Medical Benefits are obtained through Resource Training & Solutions and the City, County and Other Governmental Agencies ("CCOGA") Health Insurance Pool. Elk River Municipal Utilities Group Dental Benefits Carrier Name: Assurant Employee Benefits Address: P.O. Box 842573 Kansas City, MO 64184-2573 Phone Number: 800-733-7879 Group Number: 5299207 Policy Year: January 1 through December 31 GP:2722532 v2 44 DRAFT DOCUMENT FROM HITESMAN AND ASSOCIATES Deleted: ¶ ELK RIVER MUNICIPAL UTILITIES FLEXIBLE BENEFITS PLAN (including the fol%wing componentplans.• Group Medics/ Benefits, Group Dents/ Benefits, Medics/ Expense Reimbursement Plan, and Dependent Care Expense Reimbursement Plan) Amended and Restated Effective January 1, Deleted: zoos Prepared by: 12900 - 63rd Avenue North Deleted: 3&1I Maple Grove, MN 55369 ©2007 Hitesman & Associates, P.A. Elk River Tele. 763-503-6620 Municipal Utilities¶ 122707 Flexible Benents Plan TABLE OF CO I. INTRODUCTION ....................................................................................................................1 Deleted: ARTICLE Illustration 1 ..................................................................................................................................2 II. DEFINITIONS .......................................................................................................................3 ~ Deleted: ARTICLE III. ELIGIBILITY AND PARTICIPATION .......................................................................................6 i Deleted: ARTICLE IV. CONTRIBUTIONS ................................................................................................................8 Deleted: ARTICLE V. ELECTION OF AVAILABLE BENEFITS ......................................................................................9 ,~ Deleted: ARTICLE VI. ADMINISTRATION ................................................................................ VII. PLAN AMENDMENT AND TERMINATION ............................................... .............................14_ .............................18 -_- Deleted: ARTICLE .~ Deleted: ARTICLE VIII. GENERAL PROVISIONS ....................................................................... .............................1 ~ Deleted: ARTICLE IX. GROUP MEDICAL BENEFITS .................................................................. .............................21 _. -Deleted: ARTICLE X. GROUP DENTAL BENEFITS ..................................................................... .............................23 /Deleted: ARTICLE XI. MEDICAL EXPENSE REIMBURSEMENT PLAN ........................................... .............................25 , ~- Deleted: ARTICLE XII. DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN ............................ .............................28 ~- Deleted: ARTICLE XIII. HIPAA PROVISIONS .........................................................._._............. .................,_.....33 ~ Deleted: ARTICLE XIV. ....................................................._..._....................._.......37 ~ Deleted: ARTICLE \ Deleted: CONTINUATION COVERAGE Exhibit A -Insurance Carrier /Third Party Provider Information ...........................................................38 Deleted: ¶ © 2009 Hitesman & Associates, P.A. i Elk River Municipal Utilities Flexible Benefits Plan (NO. 8.0.0.0) ARTICLE I. INTRODUCTION 1.1 Establishment. Elk River Municipal Utilities (hereinafter the "Employer"), hereby amends and Deleted: restates, effective January 1, the Elk River Municipal Utilities Flexible Benefits Plan (the Deleted: 2008, "Plan"). 1.2 Purpose. The purpose of the Plan is to provide Participants with a choice between cash and certain "qualified benefits" as defined in Section 125 of the Code. [See Illustration 1 on Page 2 of this Plan.] The Plan is intended to qualify as a "cafeteria plan" under Section 125 of the Code so that Optional Benefits a Participant elects to receive under the Plan will be eligible for exclusion from the Participant's gross income to the fullest extent possible under the Code. 1.3 HIPAA Privacy and Security Rules. Portions of this Plan are "covered entities" for purposes of the Privacy Rules and the Security Rules. 1.4 Gender and Number. Pronoun references in this Plan shall be deemed to be of any gender relevant to the context, and words used in the singular may also include the plural. ©2009 Hitesman & Associates, P.A. 1 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) ILLUSTRATION 1: Elk River Municipal Utilities Flexible Benefits Plan Deleted: Deleted: <sp>¶ Employee Contribution Elk River Municipal Utilities Flexible Benefits Plan Group Medical Group Dental Medical Dependent Benefits Benefitr Expense Care Expense Reimbursement Reimbursement Plan Plan © 2009 Hitesman & Associates, P.A. Z Elk River Municipal Utilities Flexible Benefits Plan (NO. 8.0.0.0) ARTICLE II. DEFINITIONS The following words and phrases are used in this Plan and shall have the meanings set forth in this Article unless a different meaning is clearly required by the context or is defined within an Article. 2.2 Change in Status means the situations that permit a a change in his or her Election mid-Plan Year 2.3 Claims Administrator means the entity described Section 6.1(c). Participant to make 2.5 Code means the Internal Revenue Code of 1986, as amended from time to time. 2.6 Compensation means all of an Employee's earnings from the Employer which are subject to withholding for federal income tax purposes. 2.7 Covered Individual means a person, including a Participant, a Dependent of a Participant, a Spouse of a Participant, and any other person, appropriately covered under an Optional Beneft subject to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and as reflected in the Public Health Services Act ("PHSA"), as amended. 2.8 Dependent means "Dependent" as defined in each Optional Benefit provision in which such term is used. Dependent is not necessarily the same as a dependent for tax purposes. 2.9 Effective Date means the effective date of this amendment and restatement, which is January 1, 2.10 Election means the choice of Optional Benefits and means of payment made by the Participant, as described in Article V. 2.11 ePHI means PHI maintained or transmitted in electronic media including, but not limited to, electronic storage media (i.e., hard drives, digital memory medium) and transmission media used to exchange information in electronic storage media (i.e., Internet, extranet, and other © 2009 Hitesman & Associates, P.A. 3 Elk River Municipal Utilities Flexible Benefits Plan (NO. 8.0.0.0) Deleted: recognized by this Plan and permitted under applicable law, as reflected in Section 5.3, Deleted:. Deleted: under Deleted: Unless specifically stated otherwise, Deleted: 2008. networks). PHI transmitted via facsimile and telephone is not considered to be transmissions via electronic media. 2.12 Election Period means the period of time identified by the Plan Administrator prior to the start of a Plan Year during which a Participant may change his or her Election. For a Participant who enters the Plan other than at the start of a Plan Year, Election Period means the period of time identified by the Plan Administrator during which an Eligible Employee may make an Election or change a deemed Election. 2.13 Eligible Employee means each Employee who has met the eligibility requirements of Section 3.1. 2.14 Employee means any person employed by the Employer on or after the Effective Date, except that it shall not include: (a) any self-employed individual as described in Section 401(c) of the Code; (b) any employee included within a unit of employees covered by a collective bargaining unit unless such agreement expressly provides for coverage of the employee under this Plan; (c) any employee who is a nonresident alien and receives no earned income from the Employer from sources within the United States; or (d) any employee who is a leased employee as defned in Section 414(n)(2) of the Code. All employees who are treated as employed by a single employer under subsections (b), (c) or (m) of Section 414 of the Code are treated as employed by a single employer for purposes of this Plan. Employee also includes any elected official of the Employer employed by the Employer on or after the Effective Date. 2.15 Employer means Elk River Municipal Utilities. 2.16 Employer Contribution means amounts, if any, that have not been actually or constructively received by the Participant made available to the Participant by the Employer for the purpose of electing Optional Benefits under the Plan Deleted: as described in section a.a, in accordance with the Election requirements. 2.17 Entry Date means the date(s) as of which Eligible Employees may become Participants in this Deleted: No Employer contribution mall be Plan provided all necessary forms have been completed. The initial Entry Date for an Eligible credited to any Employee during a period of Employee is the first day on which the Employee first becomes an Eligible leave of absence, whether aumonzed or Thereafter the unauthorized, unless required by the Family " " , - Medical Leave Act ( FMLA ). Entry Date is the first day of each Plan Year unless a Change in Status occurs. Deleted: Employees who are not eligible for participation on the first day of the Plan Year 2.18 Highly Compensated Individual means individuals who are highly compensated as defined in shall have their annual Employer Contribution $eCtlOn 125(e)(2) Of the Code. prorated by multiplying the annual available Employer Contribution by a fraction, the 2.19 Highly Compensated Participant means Participants who are highly compensated as defined numerator of which is the number of months the Employee is eligible for participation for the in Section 125(e)(1) of the Code. Plan year, the denominator which is twelve. The Employer Contribution, including any 2.20 HIPAA means Health Insurance Portability and Accountability Act of 1996, and regulations additional limaa6ons or restrictions thereon, thereunder, as amended from time to time. shall be communicated to Participants prior to [he start of [he Plan Year as part of [he Election materials. Deleted: Employee. 2.22 Insurer means any insurance company that has issued a policy through which benefits are Deleted: ,licensed to do business in the state made available under this Plan. of Minnesota, © 2009 Hitesman & Associates, P.A. 4 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) 2.24 Optional Benefits means the benefits made available through this Plan as follows: 2.25 PHI means health information that: (a) is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; (b) relates to the past, present future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present or future payment for the provision of health care to an individual; and (c) either identifies the individual or reasonably could be used to identify the individual. PHI includes ePHI. 2.26 Participant means an Eligible Employee who participates in the Plan in accordance with Article III and has not ceased to be a Participant under Section 3.4. 2.27 Plan means the Elk River Municipal Utilities Flexible Benefits Plan, as it may be amended from time to time. 2.28 Plan Administrator means the entity determined under Section 6.1. 2.29 Plan Year means the twelve-month period commencing on the first day of January and ending on the last day of December. 2.30 Privacy Rules means the Standards and Privacy of Individua//y Identifiab/e Hea/th Information at 45 C.F.R. Part 160 and Part 164 at subparts A and E. 2.31 Security Rules means the Security Standards and Imp/ementation Specifications at 45 C.F.R. Part 160 and Part 164, subpart C. 2.32 Spouse means an individual who is legally married to a Participant and treated as a "spouse" under the Code 2.33 Summary Health Information means "summary health information" as defined in 45 C.F.R. Section 164.504, which generally defines "summary health information" to include information, which may be PHI, that summarizes claims history, claims expenses, or the type of claims experienced by individuals receiving benefits under the Plan from which certain identifiers have been deleted. Deleted: (a) group medical benefits;¶ (b) group dental benefits;¶ (c) medical expense reimbursement plan; and¶ (d) dependent care expense reimbursement plan.¶ Deleted: , or Deleted: , Deleted: or restated Deleted: ,except as otherwise specifically described with respect to an Optional Benefit, Deleted: <#>Security Incident means "security incident" as defined in 45 C.F.R. Section 164.304, which generally defines "security incident" [o include attempted or successful unauthorized access, use, disclosure, modification, or destruction of ePHI.¶ Deleted: who is Deleted: . © 2009 Hitesman & Associates, P.A. 5 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) 3.1 3.2 3.4 ARTICLE III. ELIGIBILITY AND PARTICIPATION Eligibility Requirements. (a) Initial Eligibility Requirements. In general, an Eligible Employee is (1) an Employee employed by the Employer, and (2) scheduled to work a normal work week of Deleted: an Employee forty (40) hours or more per week in a continuous twelve (12) month period. Ongoing Eligibility Requirements. In order to maintain eligibility, an Eligible Deleted: (b) Employee must continue to meet the requirements described above for initial eligibility. Notification Participants. The Plan Administrator shall provide each Eligible Employee Deleted: of written notice of the Employee's eligibility to participate in the Plan in sufficient time to enable such Eligible Employee to submit an application for participation in the Plan on or before the applicable Entry Date. Deleted: The amount o1 time that is "sufficient" shall be determined by the Plan Application for Participation. Administraror. In general, to become a Participant, an Eligible Employee shall execute and deliver to the Plan Administrator prior to the applicable Entry Date, a written application signed by the Eligible Employee in which the Eligible Employee to participate in the Deleted: applies designates the required portion of Compensation for the pre-tax and after-tax (if Deleted: Plan, any). makes a benefit and Deleted: contributions, Deleted: Election, supplies any other pertinent information that the Plan Administrator may reasonably require. By signing such application or agreement, the Eligible Employee shall be deemed for all Deleted: For new hires, an Eligible Employee purposes to have agreed to participate and to conform to the requirements of the Plan, mall execute and deliver to me Plan Such application or agreement may be the same as, or separate from, the application or Administrator wrthm tnirty (so) days or employment, sucn wncten application, to t7us a reement re wired to artici ate in an 0 tional Benefit under this Plan. Alternative) , g q p p y p Y situation, participation in this Plan is retroactive or in addition to, the Plan Administrator may require or permit application of same scope ro the dace of Hire pursuanc to section t tzs- by electronic means. z(d) or me proposed regulations. Termination of Participation. A Participant automatically ceases to be a Participant at midnight of the earliest of the following dates: Deleted: The (a) death of the Participant; (b) date of termination of the Participant's employment with the Employer; Deleted: The (c) date of the Participant's failure to meet the eligibility requirements of Section 3.1, as Deleted: The may be amended from time to time; or (d) date of termination of the Plan in accordance with Article VII. Deleted: Tne (~ 2009 Hitesman & Associates, P.A. 6 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) In the event the Plan does not learn that a Participant has automatically ceased to be a Participant until a date after the date participation ceased, participation will be terminated retroactively and the Plan shall be entitled to recover any benefits paid after the date participation terminated. Termination of participation in this Plan shall not prevent a former Deleted: is Participant from continuation coverage, conversion coverage or benefits under the respective Optional Benefit plans if and to the extent provided by such plans. 3.5 Conditions of Participation. As a condition of participation and receipt of benefits under this Plan, the Participant agrees to: Deleted: Observe (a) all Plan rules and regulations; (b) to inquiries by the Plan Administrator with respect to any provider of services Deleted: Consent involved in a claim under this Plan; and (c) to the Plan Administrator all notifications, reports, bills, and other information Deleted: submit required by the Plan or which the Plan Administrator may reasonably require. Failure to do so relieves the Plan, Plan Administrator, and Claims Administrator from any and all obligations under this Plan. 3.6 Participation in Optional Benefit Plans. In order to elect a specific Optional Beneft provided under this Plan, a Participant must elect that Optional Benefit on such forms as the Plan Administrator may require (unless the benefit is provided to all Participants) and, if the cost of Optional Benefit is not fully paid by the Employer, shall be required to share the cost of the Optional Benefit as provided in Article IV. Further, the Participant must meet any eligibility, participation, etc., requirements applicable to that Optional Benefit in accordance with the terms of the through which the Optional Benefit is provided. Deleted: Plan © 2009 Hitesman & Associates, P.A. 7 Elk River Municipal Utilities Flexible Benefts Plan (NO. 8.0.0.0) ARTICLE IV. CONTRIBUTIONS 4.1 Salary Reduction Contributions. To the extent the cost of an Optional Benefit exceeds the Employer Contribution (if any), a Participant may elect in accordance with the Election procedures described in Article V to receive his or her full Compensation in cash, or to have a portion of such Compensation applied by the Employer toward the Participant's share of the cost of Optional Benefits. If so elected, the Participant's Compensation will be reduced, and an amount equal to the reduction shall be allocated by the Employer to the Optional Benefits designated by the Participant. A Participant's Compensation shall be reduced by pro-rata amounts of the Participant's total salary reduction Election Salary reduction is done on a pre-tax basis before any withholdings have been made. salary reduction 4.2 Imputation of Income. the the cost of coverage for which the Participant is responsible may be paid pre-tax through this Plan. To the extent coverage is provided. shall be imputed as income to the Participant as the 4.3 Salary Deduction Contributions. The Employer may amounts for which the Participant is responsible, but cannot be paid with pre-tax dollars through salary reduction described above, be funded with after-tax dollars pursuant to a salary deduction agreement. Such salary deductions shall be made on a periodic basis and relate to a Participant's Compensation after taxes and withholdings have been made. 4.4 Employer Contribution. The Employer may make a fixed dollar contribution per Plan Year, or portion of a Plan Year (e.g., month, pay period), per Participant. The amount of the Employer Contribution may change from year to year as announced by the Employer prior to the Plan Year start. The Employer may designate different amounts for different groups of Eligible Employees. 4.5 Maximum Under no circumstances may a Participant's total salary reduction exceed the sum of (a) the cost of benefits provided through insurance or insurance types of benefits plus (b) the maximum Election amounts permitted under reimbursement minus (c) the Employer Contribution, if any. 4.6 No Trust. Nothing in this Plan is intended to require the establishment of a trust. The benefits paid under this Plan attributable to Employer Contributions Participant contributions including, but not limited to, salary reduction amounts paid from the Employer's general assets. Deleted: per pay period Deleted: with the exception of the calendar months in which there are three pay periods. Deleted: Only two paychecks per calendar month will reflect the Deleted:. Deleted: Pursuant to section 1.125-1(h) of Deleted: proposed regulations, Deleted: entire Deleted: that payment includes coverage for a non-tax Dependent, the value of the coverage for that non-tax Dependent Deleted: This provision applies regardless of whether [he cost of coverage is paid by salary reduction or allocation of available Employer Contributions. The preceding notwithstanding, if the cost of the coverage for anon-tax Dependent is paid with after-[ax dollars, there shall be no imputation of income. Refer to Section 9.5 for a definition of "non-tax Dependent." Deleted: permit Deleted: (1) Deleted: , or (2) cannot be paid with pre-tax dollars without a corresponding imputation of income Deleted: The amount of [he Employer Contribution shall be communicated to the Partidpants prior to the start of each Plan Year so that [hey may consider it in making their Elections. Deleted: Where a Participant begins participation during the Plan Year rather than at [he start of a Plan Year, the Employer Contribution shall be prorated based upon the number of complete calendar months remaining in the Plan Year and the number of calendar days remaining in the calendar month in which [he Participant begins participation. Deleted: . Deleted: Deleted: plans Deleted: and Deleted: s Deleted: are ~~ 2009 Hitesman & Associates, P.A. $ EIk River Municipal Utilities Flexible Benefitr Plan (No. 8.0.0.0) ARTICLE V. ELECTION OF AVAILABLE BENEFITS 5.1 Initial Elections. An Election must be made during the initial Election Period. An aftrmative Election to participate is required. If the Election Period ends and an Eligible Employee has not returned an Election form to the Plan Administrator, the Eligible Employee will be deemed to have elected not to participate in Optional Benefits. To the extent there is an Employer Contribution, the Eligible Employee will forfeit the entire Employer Contribution. 5.2 Subsequent Elections. During the Election Period prior to each subsequent Plan Year, each Participant shall be given the opportunity to change his or her Election. Such changes include the following: (a) an Eligible Employee who is not participating may elect to begin participating by electing Optional Benefits during the Election Period; (b) a Participant may terminate participation in the Plan; or (c) a Participant may elect different Optional Benefts or different levels of Optional Benefits. An affirmative election is required. If the Election Period ends and an Eligible Employee has not returned an Election form to the Plan Administrator, the Eligible Employee will be deemed to have elected not to participate in Optional Benefits. Elections Irrevocable. shall be irrevocable for the Plan Year or the remainder of the Plan Year except under the following circumstances: (a) Change in Status. A Participant may change or terminate his or her actual or deemed Election under the Plan upon the occurrence of a Change in Status, but only if such change or termination is made on account of and corresponds with a Change in Status that affects coverage eligibility of a Participant, a Participant's Spouse, or a Participant's (referred to as the general consistency requirement). The Plan Administrator (in its sole discretion) shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a Change in Status. Assuming that the general consistency requirement is satisfed, a requested change must also satisfy the following specific consistency requirements in order for a Participant to be able to alter his or her Election based on that change. (1) Loss of Dependent Eligibility. For a Change in Status involving a Participant's divorce, annulment or legal separation from a Spouse, the death of a Spouse or a or a ceasing to satisfy the eligibility requirements for coverage, a Participant may only elect to cancel accident or health insurance, or insurance type, coverage for the Spouse involved in the divorce, annulment, or legal separation, the deceased Spouse or or the that ceased to satisfy the eligibility requirements. Canceling coverage for any other individual under these circumstances Deleted: Once an Election becomes effective, such Election Deleted: Dependent Deleted: Dependent, Deleted: Dependent Deleted: Deleted: Dependent, Deleted: Dependent Deleted: would fail [o correspond with that Change in Status. Notwithstanding the foregoing, if the Participant, the Participant's Spouse (but not ex-Spouse) or the Participant's Dependent becomes eligible for COBRA (or similar health plan continuation coverage under state law) under the Employer's Plan, the Participant may increase the Election for that Optional Benefit to pay for such coverage provided [he Participant is still eligible under the Plan and still receiving Compensation. O 2009 Hitesman & Associates, P.A. 9 Elk River Municipal Utilities Flexible Benefits Plan (NO. 8.0.0.0) (2) Gain of Coverage Eligibility Under Another Employer's Plan. For a Change in Status in which a Participant, a Participant's Spouse, or a Participant's gains eligibility for coverage under another employer's cafeteria plan Deleted: Dependent (or another employer's qualified benefit plan) as a result of a change in marital status or a change in employment status, a Participant may elect to cease or decrease coverage only if that coverage becomes effective or is increased under the other employer's plan. (3) Dependent Care Expense Reimbursement Plan. With respect to the Dependent Care Expense Reimbursement Plan, a Participant may change or terminate his or her Election only if (i) such a change or termination is made on account of and corresponds with a Change in Status that affects eligibility for coverage under or (ii) the Election change is on account of and Deleted: an employer's plan; corresponds with a Change in Status that affects eligibility of dependent care expenses for the tax exclusion available under the Code. Deleted: code § tz9 of (b) HIPAA Special Enrollment Rights. If a Participant's Spouse or a Participant's is to special enrollment rights by Code § 9801(f), the may make a new corresponds with the special enrollment For purposes of this provision (1) an Election to add previously eligible as a result of the acquisition of a new Spouse or child shall be considered consistent with the special enrollment right and (2) a HIPAA special enrollment Election attributable to the birth or adoption of a new child may be effective retroactive (up to thirty (30) (c) Certain Judgments, Decrees and Orders. If a judgment, decree, or order (an "Order") resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) requires accident or health coverage for a Participant's child (including a foster child who is a of the Participant), a Participant may: (1) change his or her Election to provide coverage for the child (provided that the Order requires the Participant to provide coverage and subject to the provisions of the underlying group health plan); or (2) change his or her Election to revoke coverage for the child if the Order requires that another individual (including the Participant's Spouse or former Spouse) provide coverage under that individual's plan. (d) Medicare and Medicaid. If a Participant, a Participant's Spouse, or a Participant's who is enrolled in a health or accident benefit under this Plan becomes entitled to Medicare or Medicaid (other than coverage consisting solely of benefits under Section 1928 of the Social Security Act providing for pediatric vaccines), the Participant may prospectively reduce or cancel the health or accident coverage of the person becoming entitled to Medicare or Medicaid. Further, if a Participant, a Participant's Spouse, or a Participant's who has been entitled to Medicare or Medicaid loses eligibility for such coverage, then the Participant may prospectively elect to commence or increase the health or accident coverage Deleted: Deleted: Dependent Deleted: entitled Deleted: under a group health plan, as required Deleted: medical coverage was declined under the group health plan because of outside medical coverage, and eligibility for Deleted: outside medical coverage is subsequently lost due to legal separation, divorce, death, termination of employment, reduction in hours, or exhaustion of the maximum COBRA period, then a Participant Deleted: revoke a prior Election for health or accident coverage and Deleted: Election (including salary reduction Election), provided that the Election Deleted: exercise of such Deleted: right. Deleted: Dependents Deleted: Dependent Deleted: ,subject to the provisions of the underlying group health plan, Deleted: (a/k/a the Tag-along Rule); Deleted: Dependent Deleted: ,subject to the provisions of the underlying group health plan, Deleted: days). Deleted: Dependent Deleted: Dependent Deleted: Dependent Deleted: Dependent Deleted: Dependent Deleted: Dependent Deleted:. ©2009 Hitesman & Associates, P.A. 10 EIk River Municipal Utilities Flexible Benefits Plan (NO. 8.0.0.0) (e) Change in Cost. (1) Automatic Increase or Decrease for Insignificant Cost Changes. If the cost of an Optional Benefit (other than Medical Expense Reimbursement Plan) Deleted: the increases or decreases during a Plan Year by an insignificant amount, then the pre-tax contributions or after-tax contributions (as applicable) under each affected Participant Election shall be prospectively increased or decreased to reFlect such change. The Plan Administrator, on a reasonable and consistent basis, will automatically effectuate this prospective increase or decrease in Participant contributions in accordance with such cost changes. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether increases or decreases in costs are "insignificant" based upon all the surrounding facts and circumstances (including, but not limited to, the dollar amount or percentage of the cost change). (2) Significant Cost Increases. If the Plan Administrator determines that the cost of an Optional Benefit (other than Medical Expense Reimbursement Plan) Deleted: the significantly increases during a Plan Year, the Participant may either make a corresponding increase in his or her Deleted: (a) Deleted: prospective or revoke his or her Election similar coverage is The Plan Deleted: contributions, Administrator (in its sole discretion) will decide, in accordance with prevailing IRS Deleted: (b) simply guidance, whether a COSt increase IS significant and what constitutes "similar Deleted: ,and in lieu thereof, receive coverage coverage" based upon all the surrounding facts and circumstances. under another Plan option which provides Deleted:. If no similar coverage Deleted: available, the Participant may revoke his or her Election. Deleted: the Deleted: under this Plan (f) Change in Coverage. Deleted: or ceases (1) Significant Curtailment. If the Plan Administrator determines that Deleted: revoke his or her Election under [he an Optional Beneft (other than Medical Expense Reimbursement Plan) is Plan. To the extent there is significantly curtailed during a Plan Year, the Participant may Deleted: ,the Participant may prospectively slmllar coverage elect such coverage. If no similar coverage is Covera e under an accident or health Ian is 9 P available, me Participant may simply revoke nis or her Election. deemed "significantly curtailed" only if there is an overall reduction in coverage " " provided to Participants under the Plan so as to constitute reduced coverage to Deleted: significant , Participants in general. The Plan Administrator (in its sole discretion) will decide, Deleted: substitute optional Benefit in accordance with prevailing IRS guidance, whether a curtailment is Deleted: Addition or Elimination and whether a Constitutes "similar coverage" Deleted: a Benefit Providing Similar based upon all the surrounding facts and circumstances. Deleted: during a Plan Year, (2) of Coverage. If the Plan Deleted: adds or eliminates an Optional Benefit (other than Medical Expense Reimbursement Plan) Deleted: the Deleted: , an affected Participant may elect a Slmllar coverage newly-added option or elect another Optional Beneft (where a Plan option has been eliminated), and may do so prospectively on a pre-tax basis by making corresponding Election changes with respect to coverage under another Optional Benefit that provides © 2009 Flitesman & Associates, P.A. 11 Elk River Muniapal Utilities Flexible Benefits Plan (No. 8.0.0.0) The Plan Administrator (in its sole discretion) will Deleted: . decide, in accordance with prevailing IRS guidance, whether a constitutes "similar coverage" Deleted: substitute Optional Benefit based upon all the surrounding facts and circumstances. Under Plan. A Participant may Deleted: (3) Change in Coverage of make a prospective Election change (other than the Medical Spouse or Dependent Expense Reimbursement Plan) that is on account of and corresponds with a Deleted: Their Employer's change made under plan of the Deleted: under or cafeteria plan or qualified benefts plan permits its participants to make an Election change that Deleted: the would be permitted under the Plan permits Deleted: Spouse's, former Spouse's, Participants to make an Election for a Plan Year period of coverage which is Deleted: Dependenrs employer, so long as (a) different from the plan year period of coverage under the cafeteria plan or the The Plan Administrator shall determine, based on prevailing Deleted: of the Spouse's, former spouse's, or IRS guidance, whether a requested change is on account of and corresponds Dependent's employer with a change made under Deleted: proposed or final IRS regulations; or (b) [he Loss of Governmental or Educational Coverage. A Participant may Deleted: qualified benefits plan of the prospectively change his or her Election to add group health coverage for the spouses, former spouses or Dependenrs Participant or his or her Spouse or if such individual(s) loses employer. coverage under any group health coverage sponsored by a governmental or Deleted: the plan of the Spouse's, former educational institution including but not limited the a medical care spouse's, or Dependent's employer. program of an Indian Tribal government (as defned in Code § 7701(a)(40)), the Deleted: (4) Indian Health Service, or a tribal organization; a state health risk pool; or a foreign government group health plan, subject to the terms and limitations Deleted: Dependent, of the applicable benefit package option(s). Deleted: , Deleted: Deleted: to) Deleted: following: a state children's health insurance program (SCRIP) under Title XXI of the Social Security Act; Deleted: benefits Other. The Plan Administrator shall have the discretion to allow a change to or Deleted: (g) termination of an Election to the extent such change or termination is the result of any other situation informally recognized by the as providing an exception to the general Deleted: Internal Revenue Service © 2009 Hitesman & Associates, P.A. 12 Elk River Municipal Utilities Flexible Benefits Plan (NO. 8.0.0.0) rule that Elections are irrevocable (e.g., corrections of mistakes, changes to meet nondiscrimination Deleted: requirements).¶ A Participant entitled to make a new Election under this Section must do so within thirty (30) days of the event. An Employee who is eligible to elect benefits but declined to do so during the initial Election period, or during a subsequent Election period, may file a new Election within thirty (30) days of the occurrence of an event described above, but only if the new Election is made on account of and corresponds with the event. Subject to the provisions of the underlying group health plan, Elections made to add medical coverage for a newborn or newly adopted child pursuant to a HIPAA special enrollment right may be retroactive for up to thirty Deleted: Dependent (30) days. All other new Elections shall be effective prospectively immediately following the date the Participant files the new Election with the Plan Administrator. Elections made pursuant to this Section shall be effective for the balance of the Plan Year in which the Election is made unless a subsequent event (described above) allows a further Election change. Deleted: ¶ 5.4 Rehire and Eligibility Loss. Termination of employment shall automatically revoke any For purposes of Section 5.3, [he term " " E2CtI0n. PdrtlClpdnt5 Who are rehired: shall mean an individual who is a Dependent "dependent" under Section 152 of the Code, determined without regard to subsections After thirty (30) days following a termination of employment, shall have two "periods of (b)(I), (b)(z), and (d)(1)(B) tnereor.¶ coverage;" that period prior to the termination of employment and that period following Deleted: except as otnerwise limited by the re-employment of the terminated Employee. Expenses incurred prior to the applicable Optional Benefits, former termination of employment shall be subject to the Election in effect upon termination; Deleted: (a) while the Employee shall have an opportunity to make a new Election and expenses incurred after re-employment shall be subject to the Election made upon re-employment. Within thirty (30) days following a termination of employment, shall have the Election in Deleted: (b) effect prior to the termination of employment reinstated upon re-employment. 5.5 Benefit Descriptions. While an Election to receive one or more of the Optional Benefits may Deleted: (if any), be made under this Plan, the benefits themselves may be provided in accordance with Plan Deleted: The documents or contracts which describe the types and amounts of benefits available, the requirements for participation, procedures for submitting claims, and the other terms and Deleted: Administrator conditions of coverage. Such underlying Plan documents or contracts, if any, are incorporated Deleted: use such forfeited amounts into this Plan by reference. Deleted: Plan. To the extent forfeited Deleted: remain, the Plan Administrator shall 5.6 Forfeiture. Any amounts, whether obtained through salary reduction, salary deduction, arrange Employer Contributions or otherwise, under this Plan which cannot be distributed by the Plan Deleted: provision of a benefit for Administrator to cover the cost of Benefits for the applicable Plan Year, shall be forfeited by the Participant. Plan may Deleted: broad cross section of to defray the reasonable administrative costs Of the Deleted: of the same type as the benefit which amounts for the resulted in the forfeitures. d Participants Deleted: will be "currently available" (as Under no circumstances shall the Plan Administrator establish an Outside defned in Internal Revenue Service proposed or formal or informal arran ement under which the forfeited amounts 9 anal regulations) to the Participant wno experienced the forfeiture. This forfeiture requirement shall be applied separately for each Optional Benefit. 5.7 Limitations on Benefits. Benefits shall be limited the Plan Administrator Deleted: in a manner which will prevent the With Plan from discriminating in favor of Highly Or Compensated Individuals as to eligibility to participate and Highly Compensated Pamcipants as to contributions and benefits. As provided in Section 6.13, Deleted: shall determine the manner of adjusting eligibility, benefits, and contributions, if necessary, and may do so Deleted: without [he consent of such Participants. © 2009 Hitesman & Associates, P.A. 13 Elk River Municipal Utilities Flexible Benefts Plan (No. 8.0.0.0) ARTICLE VI. ADMINISTRATION 6.1 Plan Administrator. (a) The Plan Administrator shall be responsible for the general supervision of the Plan. The Plan Administrator shall perform any and all acts necessary or appropriate for the proper management and administration of the Plan. (b) The Employer shall be the Plan Administrator unless the Employer's managing body designates a person or persons other than the Employer to be the Plan Administrator. The Employer shall also be the Plan Administrator if the person or persons so designated cease to be the Plan Administrator. (c) The Plan Administrator may designate an individual or entity to act on its behalf with respect to certain powers, duties, responsibilities, etc. with respect to the operation and administration of this Plan. Where benefits under this Plan are provided through an insurance company, Health Maintenance Organization ("HMO"), or Dental Maintenance Organization ("DMO"), that shall be the Claims Administrator with Deleted: insurance company, HMO or DMO respect to those benefits. In all other situations, the Plan Administrator shall be the Claims Administrator unless the Plan Administrator contracts with a to act on Deleted: nother entity its behalf. 6.2 Agent for Service of Legal Process. The agent for service of legal process for the Plan is the Plan Administrator. 6.3 Allocation of Responsibility for Administration. The Plan Administrator shall have the sole responsibility for the administration of this Plan as is specifically described in this Plan. The designated representatives of the Plan Administrator shall have only those specific powers, duties, responsibilities, and obligations as are specifically given to them under this Plan. The Plan Administrator warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan authorizing or providing for such direction, information or action. It is intended under this Plan that the Plan Administrator shall be responsible for the proper exercise of its own powers, duties, responsibilities, and obligations under this Plan and shall not be responsible for any act or failure to act of another Employee of the Employer. Neither the Plan Administrator (including any designee) nor the Employer makes any guarantee to any Participant in any manner for any loss or other event because of the Participant's participation in this Plan. 6.4 Rules and Decisions. Except as otherwise specifically provided in the Plan, the Plan Administrator may adopt such rules and procedures as it deems necessary, desirable, or appropriate All rules and decisions of the Plan Administrator Deleted: . 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, the Employer, or legal counsel. 6.5 Procedures. The Plan Administrator may act at a meeting or in writing. The Plan Administrator may adopt by-laws and regulations as it deems desirable for the conduct of the Plan's affairs and as are consistent with the terms of the Plan. 6.6 Records and Reports. The Plan Administrator shall be responsible for complying with all reporting, filing and disclosure requirements for the Plan. ©2009 Hitesman & Associates, P.A. 14 Elk River Municipal Utilities Flexible BeneFts Plan (No. 8.0.0.0) Claim Participant the claim for the Participant the Claims Administrator may require The Claims Administrator rely information Participant's described the Claims Administrator shall notify within thirty (30) days a claim for benefits that If shall the specific reasons for the denial; a description of any additional material necessary to the claim and an explanation of why Deleted: Notice of Deleted:. In Deleted: event a Deleted: has a Deleted: any benefits under this Plan, Deleted: shall Flle a claim wdh the Claims Administrator on forms provided for such purpose. Upon request, the Claims Administrator shall provide the Participant or Participant's designated representative with any and all necessary forms. Prior to making any payment of benefits under this Plan, Deleted: the Participant to provide such information to complete such appropriate documents or forms as necessary for the proper administration of this Plan. Deleted: may Deleted: upon all such Deleted: furnished to it, including Deleted: mailing address. ¶ <ti>Claims Review Procedure.¶ (a) Third Party Benefits. The claims requirements and appeal procedures regarding beneftr available from third parties shall be handled in accordance with the governing documents for those benefits.¶ (b) Other Benefits. For benefits other than those Deleted: in (a), Deleted: the claimant Deleted: after Deleted: is filed, [he claim will either have been paid or [he Claims Administrator will notify you Deleted: it has been denied. Deleted: [he Claims Administrator denies the claim, the individual Deleted: be provided with the following Information in writing: (1) Deleted: and (2) Deleted: or information Deleted: complete Deleted: , Cd 2009 Hitesman & Associates, P.A. 15 Elk River Municipal Utilities Flexible benefits Plan (NO. 8.0.0.0) information Deleted: such material or Deleted: is necessary. 6.9 Authorization of Benefit Payments. The Plan Administrator shall issue directions to the Employer concerning all benefts to be paid from the Employer's assets pursuant to the provisions Deleted: which are of the Plan, and that all such directions are Deleted: , in accordance with the Plan. Deleted: warrants ~ 2009 Hitesman & Associates, P.A. 16 Elk River Municipal Utilities Flexible Benefts Plan (No. 8.0.0.0) 6.13 Facility of Payment. Whenever, in the Plan Administrator's opinion, a person entitled to receive any payment of a benefit or installment under the Plan is under a legal disability or is incapacitated in any way so as to be unable to manage their financial affairs, the Plan Administrator may request the Employer to make payments to such person, or the Plan Administrator may request the Employer to apply the payment for the benefit of such person in such manner as the Plan Administrator considers advisable. Any payment of a benefit, or installment, in accordance with the provisions of this Section, shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan. Deleted: 6.14 Other Powers and Duties of the Administrator. The Plan Administrator shall also have such other duties and powers as may be necessary to discharge its duties under the Plan including, but not limited to, the following: (a) discretion to construe and interpret the Plan in anon-discriminatory manner, to decide all questions of eligibility, except to the extent the eligibility determinations are governed by an insurance and to determine all questions arising in the administration and Deleted: policy, application of the Deleted: Plan; (b) to receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan; (c) to furnish the Employer, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate; and (d) to appoint individuals to assist in the administration of the Plan and any other agents deems advisable, including legal and actuarial counsel. The Plan Deleted: he or she Administrator shall not have the power to add to, subtract from; or modify any of the terms of the Plan, to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under this Plan. 6.15 Indemnification. To the maximum extent allowed by, and in accordance with applicable law, Deleted: , the Employer shall indemnify and hold harmless any Employee that is deemed to be a fiduciary against any and all losses, claims, damages, expense (including court costs and attorneys' fees), and liability arising from the Employee's duties and responsibilities in connection with the Plan, unless the same is determined to be intentional or willful. 6.16 Changes by the Administrator. If the Plan Administrator determines before or during any Plan Year, the Plan may fail to satisfy any nondiscrimination requirement imposed by the Deleted: thac Code or any limitation on benefits provided to the Plan Administrator take Dele[ed: Key Employees, such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to compliance with such requirements or limitation. Such Deleted: shall action may include, without limitation, a modification of Elections by Highly Compensated Deleted: assure Participants or with or without consent of such Employees and/or a Deleted: Key Employees within the Plan Year of benefits provided under the Plan as taxable income with Deleted: recharac[erization or without consent of such Employees. © 2009 Hitesman & Associates, P.A. 17 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) ARTICLE VII. PLAN AMENDMENT AND TERMINATION 7.1 Employer Amendments. The Employer reserves the right to Plan, Employer expressly may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with the law. Such amendment shall not affect any right to benefits that accrued prior to such Such amendment shall be made in writing 7.2 Employer's Right to Terminate. Although the Employer expects the Plan to be maintained for an indefinite time, the Employer reserves the right to terminate the Plan or any portion of the Plan at any time. In the event of the dissolution, merger, consolidation, or reorganization of the Employer, the Plan shall terminate unless the Plan is continued by a successor to the Employer in accordance with the resolution of such successor's managing body. Such termination shall not affect any right to benefits that accrued prior to termination. Such action shall be taken in writing. Deleted: make, from time to time, any amendment or amendments to this Deleted: and the Deleted:s Deleted: amendments. Deleted:. Deleted: such Deleted:. © 2009 Hitesman & Associates, P.A. 18 Elk River Muroapal Uttlrties Flexible Benefitr Phan (No. 8.0.0.0) ARTICLE VIII. GENERAL PROVISIONS 8.1 Plan Not a Contract of Employment. The Plan is not an employment and does not Deleted: agreement assure the continued employment of any Employee or Participant for any period of time. Nothing contained in the Plan shall interfere with the Employer's right to discharge an Employee or Participant at any time, regardless of the effect such discharge may have upon the individual as a Participant in this Plan. 8.2 No Right to Employer's Assets. No Employee, Participant or beneficiary thereof shall have any right to, or interest in, any assets of the Employer upon termination of employment, or otherwise except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Employee, Participant or beneficiary thereof. In addition, the Claims Administrator shall not be liable in any manner for such payments. 8.3 Non-Alienation of Benefits. Benefits payable under this Plan shall not be subject to anticipation, alienation, sale, transfer, execution, or levy of any kind either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a Spouse or former Spouse, or for any other relative of the Participant, prior to actually being received by the person entitled to the benefit under the terms of the Plan. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable under the Plan shall be void. The Employer, Plan Administrator and/or Claims Administrator shall not in any manner be made liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits under the Plan. 8.4 Action by Employer. Whenever the Employer, under the terms of this Plan, is permitted or required to do or perform any act or matter or thing, it shall be done and performed by the managing body of the Employer or such representatives of the Employer as the managing body may designate. 8.5 No Guarantee of Tax Consequences. Notwithstanding any provision in this Plan to the contrary, neither this Plan nor the Employer make any commitment or guarantee that any amounts paid to or on behalf of a Participant under this Plan will be excludable from the Participant's gross income for federal or state income tax purposes. It shall be the obligation of each Participant to determine whether each payment is excludable from the Participant's gross income for federal and state income tax purposes, and to notify the Employer if the Participant has reason to believe that any such payment is not so excludable. 8.6 Indemnification of Employer by Participants. any Participant receives one or more payments or Deleted: tr reimbursements under this Plan that are not for eligible expenses, such Participant shall indemnify and reimburse the Employer for any liability it may incur for failure to withhold federal or state income tax or Social Security 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, plus the Participant's share of any Social Security tax that would have been paid on such compensation, less any such additional income and Social Security tax actually paid by the Participant. 8.7 Benefits Provided Through Third Parties. In the case of an Optional Benefit provided through a third party (e.g., an insurance company pursuant to a contract or policy with that third Deleted:. The Employer does not guarantee benefts payable under any insurance contract party), if there is any conflict or inconsistency between the description of benefits contained in or neaitr, maintenance organization policy this Plan and the contract or policy, the terms of the contract or policy shall control, unless incorporated by reference into the Plan. Any prohibited by applicable law benefts payable thereunder shall be the exclusive responsibility of [he insurer or health maintenance organization that is obligated under the contract or policy. ~ 2009 Hitesman & Associates, P.A. 19 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) 8.8 Mistakes and Errors. It is recognized that in the administration of the Plan, certain administrative and accounting errors may be made or situations may arise by reason of factual errors in information supplied to the Employer or the Plan Administrator. The Employer and/or the Plan Administrator shall have the power to take such equitable steps as may be necessary to correct the mathematical, accounting or factual errors, as they, in their sole discretion, determine(s) to be appropriate. 8.9 Limitation on Liability. The Employer does not guarantee benefits payable under any insurance policy or other similar contract described or referred to herein, and any benefits thereunder shall be the exclusive responsibility of the Insurer or other entity that is required to provide such benefits under such policy or contract. 8.10 Governing Law. This Plan shall be construed and enforced according to the laws of Minnesota except to the extent preempted by federal law. 8.11 Family and Medical Leave Act of 1993. Notwithstanding any provision of this Plan to contrary, this Plan shall be operated and maintained in a manner consistent with the Family and Medical Leave Act of 1993 ("FMLA") and the Employer's FMLA policy required Deleted: thereunder. 8.12 Uniformed Services Employment and Reemployment Rights Act of 1994. Notwithstanding any provision of this Plan to the contrary, this Plan shall be operated and maintained in a manner consistent with the Uniformed Services Employment and Reemployment Act of 1994 ("USERRA"), and the Plan Administrator shall, within the parameters of the law, establish uniform policies by which to provide such continuation coverage required by USERRA. Deleted: ¶ © 2009 Hitesman & Associates, P.A. 20 Elk River Municipal Utilities Flexible BenefUS Plan (No. 8.0.0.0) ARTICLE IX. GROUP MEDICAL BENEFITS Deleted: Separate Written Plan. For purposes 9.1 of this Article for the pre tax payment for Group Deleted: sectors 1os and 106 of me code, Medical Benefits The Employer provides Group Medical Deleted: mall constitute a separate written Benefits through one or more "plans" within the meaning of Sections 105 and 106 of the Code. plan, providing Deleted: Deleted: of Insurance Premiums Deleted: to Participants. To the extent necessary, other provisions of the Plan are incorporated by reference.¶ Purpose. 9.3 Definitions. Deleted: The purpose of this Article is to provide for the pre tax payment of Insurance (d) Dependent means an IndlVldUdl Who Premiums For Group Medical Benefits [o qualifies as a "dependent" under the terms and conditions of the applicable plan Pamcipants. The DMO and/or Insurance document governing the Group Medical Benefits. To the extent a Dependent is provided contracts and/or omen health benefic coverage agreements through which the Group Medical shall be as Benefits are provided are identified in Exhibit A. described in Section 4.2. Deleted: Insurance Contract, HMO agreement, or (b) Group Medical Benefits means the coverage made available by the Employer Deleted: non-tax to which the Insurance Premiums relate. It does not include Deleted: ,income indlVld Udl Ins UranCe Contra CtS. Deleted: imputed to the Participant (c) Highly Compensated means an individual who is highly compensated as Deleted: Medical defined in Section 105(h)(5) of the Code. Deleted: employee Deleted: Medical (d) HMO means a maintenance organization authorized to do business in the state in Deleted: this portion of which an agreement has been entered for the purpose of providing benefits under the Plan. Deleted: State of Minnesota Deleted: (e) Insurance Contract means any insurance Contra Ct secured from an InSUrdnCe Deleted: group company authorized to do business in the Deleted: . which has been obtained for the purpose of providing benefts under this portion of the Plan; or aself-insured plan administered by a third party. Deleted: Premiums includes amounts for insurance types of benefits, including but not limited to Insurance Contracts, HMO coverage (f) Insurance Premiums means the amount that must be paid on a periodic basis in and self-insured programs for which "premium return for coverage Insurance equivalents" are charged. Deleted: <#>Medical Plan means this 9.4 Terms, COndltlOfts and Limitations. The Employer Shall secure the necessary Insurance Article of the Elk River Municipal Utilities Flexible Contracts, HMO agreements, other health benefit agreements from third party providers eenefts Plan which constitutes a separate written plan as described in Section 9.1 above.¶ Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts, HMO agreements, other health Deleted: with respect to the provision of benefit a reements, and/or self-insured Ian documents $UCfI a reements, 9 P 9 Group Medical Benefits and/or establish the necessary self-insured program. and plan documents are expressly incorporated into and made part of this Plan. Deleted: described in Exhibit A. 9.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Deleted: contracts, Medical Benefits on behalf of the Participant in an amount necessary to provide the benefit Deleted: tf the Participant nas elected to nave applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such the cost of their coverage paid under this payments shall be made from Employer Contributions, if any, provided by the Employer under Portion of the Plan, the Plan Administrator shall the Plan and, if necessary, contributions made in accordance with the salary reduction also make such payments on behalf of the Participant's Spouse and Dependents. arrangement and other arrangements applicable to the Participant under the terms of the Plan. However, if the Dependent is not a "dependent" The appropriate portions shall depend on the coverage elected by the Participant. under section 15z of the code, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(&) thereof (a "non-tax Dependent', the value of the coverage provided to such ~" - © 2009 Hitesman & Associates, P.A. 21 Elk River Municipal Utilities Flexible Benefts Plan (No. 8.0.0.0) 9.6 Nondiscrimination. To the extent this portion of the Plan is subject to Section 105(h) of the Code, it shall not discriminate in favor of Highly Compensated Individuals to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such a result If this portion of the Plan fails any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 9.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Plan to the extent required by applicable law. 9.8 Continuation of Coverage. Continued coverage shall be provided if it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and as reflected in the Public Health Services Act ("PHSA"), as amended To the extent not contained in Article XIV, the Plan Administrator shall, within the parameters of the law, continuation There shall also be compliance with state laws concerning continuation of coverage to the extent not preempted by federal law. Deleted: , Deleted: as Deleted: . Deleted: Medical Deleted: Medical Deleted: Medical Deleted: Participants involved in a divorce or child custody matter should be directed to have their legal counsel contact the Plan Administrator. Deleted:. Deleted: establish uniform policies by which to provide such Deleted: coverage. Deleted: medical insurance © 2009 Hitesman & Associates, P.A. 22 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) ARTICLE X. Deleted: Separate Written Plan. For GROUP DENTAL BENEFITS purposes Deleted: Section 105 and 106 of [he Code, 10.1 Of this Article for the pre tax payment fOr GrOUp Deleted: shall constitute a separate written Dental Benef is The Employer provides Group Dental plan, providing Benefits through one or more "plans" within the meaning of Sections 105 and 106 of the Code. peleted: Deleted: of Insurance Premiums Deleted: [o Participants. To the extent necessary, other provisions of the Plan are incorporated by reference.¶ Purpose. 10 3 Definitions Deleted: The purpose of this Article is to . . provide for the pre [ax payment of Insurance Premiums for Group Dental Benefits [o Participants. The DMO and/or Insurance Contracts and/or other health benefit agreements through which the Group Dental Benefits are provided are identified in Exhibit A. Deleted: <tF>Dental Plan means this Article of the Elk River Municipal Utilities Flexible Benefits Plan which constitutes a separate written plan as described in Section 10.1 above.T (b) DMO means a dental maintenance organization authorized to do business in the state in <#>Dependent means an individual who ' which an agreement has been entered for the purpose of providing benefits under this under me terms and qualifies as a "dependent On Of the Plan t conditions of the applicable Insurance Contract, . Or l P DMO agreement, or plan document governing the Group Dental BeneFlts. To the extent a (c) Group Dental Benefits means the dental coverage made available by the Employer non-[ax Dependent is provided coverage, to which the Insurance Premiums relate. It does not include income shall be imputed to the Participant as individual Insurance Contracts. described in Section 4.2.¶ Deleted: Employee (d) Highly Compensated means an individual who is highly compensated as Deleted: State of Minnesota defined in Section 105(h)(5) of the Code. Deleted: (e) Insurance Contract means any insurance contract secured from an insurance Deleted: group company authorized to do business in the Deleted: . which has been obtained for the purpose of providing benefits under this portion of the Deleted: Premiums includes amounts for Plan; or aself-insured plan administered by a third party. insurance types of benefits, inducting but not limited to Insurance Contracts, DMO coverage (f) Insurance Premiums means the amount that must be paid on a periodic basis in and self-insured programs for which "premium equivalents"are charged. return for coverage Insurance Deleted: health 10.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Deleted: with respect to the provision of Contracts, DMO a reements, other benefit a reements from third ar roviders 9 g p h' p Group Dental Benefits and/or establish the necessary self-insured program. Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts, DMO agreements, other Deleted: health benefit agreements, and/or self-insured plan documents Such agreements, Deleted: described in Exhibit A. and plan documents are expressly incorporated into and made part of this Plan. Deleted: contracts, 10.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Deleted: If the Participant has elected to have the cost of their coverage paid under this Dental Benefits on behalf of the Participant in an amount necessary to provide the benefit portion of the Plan, the Plan Administrator shall applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such also make such payments on behalf of the payments shall be made from Employer Contributions, if any, provided by the Employer under Farcicipants spouse and Dependents. However, if the Dependent is not a "dependent" the Plan and, if necessary, contributions made in accordance with the salary reduction under Section 152 of the code, determined arrangement and other arrangements applicable to the Participant under the terms of the Plan. without regard to subsections (b)(1), (b)(z), The appropriate portions shall depend on the coverage elected by the Participant. and (d)(1)(B) thereof, the value of the coverage provided [o such Dependent shall be included in [he Participant's income as the coverage is provided. © 2009 Hitesman & Associates, P.A. 23 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) 10.6 Nondiscrimination. To the extent this portion of the Plan is subject to Section 105(h) of the Code, it shall not discriminate in favor of Highly Compensated Individuals to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such a result If this portion of the Plan fails any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. 10.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Plan to the extent required by applicable law. 10.8 Continuation of Coverage. Continued coverage shall be provided if it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and as reFlected in the Public Health Services Act ("PHSA"), as amended To the extent not contained in Article XIV, the Plan Administrator shall, within the parameters of the law, continuation There shall also be compliance with state laws concerning continuation of coverage to the extent not preempted by federal law. Deleted: , Deleted: as Deleted:. Deleted: Dental Deleted: Dental Deleted: Dental Deleted: Participants involved in a divorce or child custody matter should be directed to have their legal counsel contact the Plan Administrator. Deleted:. Deleted: establish uniform policies by which to provide such Deleted: coverage. Deleted: dental insurance Deleted: ¶ © 2009 Hitesman & Associates, P.A. 24 EIk River Municipal Utilities Flexible 8enefts Plan (No. 8.0.0.0) ARTICLE XI. Deleted: <#>Separate Written Plan. MEDICAL EXPENSE REIMBURSEMENT PLAN Deleted: <#>For purposes of Section 105 of the Code, [his Article shall constitute a separate 11.1 Purpose. The purpose of this Article is to provide Participants with the written plan, the Medical Expense reimbursed for eligible Medical Expenses This Reimbursement Plan ("ME Plan', providing for Article is intended to qualify as a medical reimbursement plan under Section 105 of the reimbursement of Medical Expenses. the Code so that payments received under this portion of the Plan are excludable from the gross Deleted: <#> To the extent necessary, other income of the Participant under Section 105(b) of the Code. provisions of the Plan are incorporated by reference.¶ Deleted: option of being Deleted:. Deleted: (h) 11.3 DeflnltiOns. Deleted: n individual Deleted: Section 152 of the Code, determined without regard to subsections (b)(1 ), (b)(2), and (d)(1)(B) thereof. Deleted: <#>Medical Expense means an b De endent means a who is a "dependent" under ( ) P expense incurred duhng the applicable Plan Year by a Participant, Spouse, or Dependent for medical tare as def ned in Section 213 of the Code, excluding premiums for health coverage, health reimbursement arrangementr ("HRAS'~, (c) Highly Compensated Individual means an individual who is highly compensated as medical savings accounts ("M5A5'"), and long- o e t defined in Section 105(h)(5) of the Code. erm care c v rage. Deleted: <#> Medical care generally refers to [he diagnosis, cure, treatment, or prevention of (d) Medical Expense Account ("ME Account") means the record keeping account disease or for me purpose of affecting any established by the Plan Administrator for each Plan Year for each Participant from whom structure or function of the body. an Election to create such an account is received. Deleted: <#>Also included, are transportation expenses for and essential to medical care. ¶ Deleted: <#>Claims for Reimbursement. A Participant who has made an Election for a Plan Year may apply to the Claims Administrator for reimbursement of eligible Medical Expenses incurred during such Plan Year by submitting a claim form provided by the Claims Administrator setting forth a[ least the following:¶ <#>the amount, date and nature of the 11.4 Medical Expense Account. The ME Account will be credited with the amount elected by the expense,¶ <#>cne name of cne person or entity to which Partici ant and the Em to er Contribution, if an at the be mnin of the Plan Year. A P P Y Y. 9 9 the expense was paid,¶ Participant's ME Account will be decreased from time to time in the amount of payments made to <#>the Participant's statement mat me the Participant for eligible Medical Expenses incurred during the Plan Year. expense has not been reimbursed or is not reimbursable from any other source, and¶ <#>such other information as the Claims Administrator may require.¶ Such claim form shall be accompanied by bills, invoices, receipts, or other statements from an 11.6 Incurred Expenses. To be reimbursable, an eligible Medical Expense must have been incurred independenc th;rd party stating me er~gible after participation in this portion of the Plan began and during the Plan Year for which Medical Expense has been incurred and cne amount of the expense. The Claims reimbursement is claimed. An expense is "incurred" when the Participant is provided with the Adminiscrator may, to me extent provided by care which gives rise to the eligible Medical Expense, not when the service is billed or paid. law, rely on information provided by Reimbursement shall not be made for future projected expenses. Participants.¶ the Plan may reimburse Deleted: However, for orthodontia care in advance. Deleted: expenses 11.7 Reimbursement of Expense. The Participant shall be reimbursed Deleted: at least either (a) once per month, or (b) when the total reimbursement for Eligible from the Participant's ME Account for eligible Medical Expenses incurred during the applicable Medical Expenses first equals or exceeds Plan Year for which the Participant submits the documentation required under An Sso.oo. Reimbursements snau be made amount up to the sum of the Participant's Election and the Employer Contribution, if any, and Deleted: Section 11.5. © 2009 Hi[esman & Associates, P.A. 25 Elk River Municipal Utilities Flexible Benefts Plan (No. 8.0.0.0) reduced as of any particular time for prior reimbursements for the same Plan Year, shall be available for reimbursement at all times during the Plan Year. 11.8 Maximum Reimbursement. The maximum reimbursement a Participant may receive for a Plan Year under this portion of the Plan shall be $3,000. The maximum reimbursement amount applies to the Participant, Spouse, and Dependent on an aggregate basis, not an individual basis. Deleted: children 11.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan, coverage shall cease (which means that reimbursements shall cease) unless benefts under the Plan are continued as provided in Section If coverage ceases, reimbursements for eligible Medical Expenses incurred before Deleted: 11.14. participation may be reimbursed within ninety (90) days following Deleted: stopped termination of participation. Deleted: The remainder of [he Participant's ME Account shall be forfeited in accordance 11.10 Participant's Death. In the event a Participant dies having incurred an eligible Medical with Section 5.6. Expense which would have been reimbursable out of the Participant's ME Account had the Participant not died and a person or the Participant's estate has paid for or assumed liability reimbursement may be made to that person or the estate for that payment or Deleted: for the expense, assumption. The remainder of the Participant's ME Account shall be forfeited in accordance with Section 5.6. 11.11 Nondiscrimination. This portion of the Plan shall not discriminate in favor of Highly Compensated Individuals as to eligibility to participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such result If the Plan fails Deleted: . any applicable nondiscrimination requirements, Highly Compensated Individuals shall have taxable income imputed to the extent required by law. Deleted: Forfeitures. 11.12 ME Account Amounts attributed to a Participant's ME Account for any Plan Year shall be used only to reimburse the Participant for eligible Medical Expenses incurred during Deleted: [he Plan Year. Any balance remaining in a Participant's ME Account for a Plan Year shall be forfeited following the and shall be forfeited in accordance with Section 5.6. The Deleted: on the first day Plan Administrator may extend this period in the event the Participant cannot obtain proper Deleted: last day of March immediately documentation until after the expiration of the period. Such forfeited amount shall not be following the end of such Plan near (cne °daims distributed in cash, carried over to the next Plan Year or used by the Participant for any other run-out purpOSe. Deleted: period's 11.13 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Plan shall recognize child support orders regarding coverage under this Plan to the extent regUlred by appllCdble IaW. Deleted: Participants involved in a divorce or child custody matter should be directed to have their legal counsel contact the Plan Administrator. © 2009 Hitesman & Associates, P.A. 26 Elk River Municipal Utilities Flexible Benefitr Plan (No. 8.0.0.0) 11.15 Continuation of Coverage. Continued coverage shall be provided it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as amended, and as reflected in the Public Health Services Act ("PHSA"), as amended To the extent Deleted: . not contained in Article XIV, the Plan Administrator shall, within the parameters of the law, continuation Deleted: establish uniform policies by which to provide such Deleted: coverage. 11.17 Further Limitations on Benefits. (a) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are payable under any worker's compensation law or other employer, union, association or governmental sponsored group insurance plan. (b) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are received by the Participant, the Participant's Spouse or the Participant's Dependent under any health and accident insurance policy or program, whether or not premiums are paid by the Employer or the Participant, the Participant's Spouse or the Participant's Dependent child. (c) Amounts reimbursed under a dependent care assistance program described in Section 129 of the Code shall not be reimbursed under this Plan. (d) A Participant in the Plan may not participate under this Article and contribute to a Deleted: health savings account ("HSA'~ within the meaning of Section Z23 of the Code. Deleted: ¶ 9 © 2009 Hi[esman & Associates, P.A. 27 Elk River Municipal Utilities Flexible Benefitr Plan (NO. 8.0.0.0) ARTICLE XII. DEPENDENT CARE EXPENSE REIMBURSEMENT PLAN 12.1 Purpose. The purpose of this is to provide. Participants with the reimbursed for eligible Dependent Care Expenses is intended to qualify as a dependent care assistance program under Section 129 of the Code so that payments received under this portion of the Plan are excludable from the gross income of the Participant under Section 129(a) of the Code. 12.3 Definitions. Dependent Care Account ("DC Account") means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Election to create such an account is received. Dependent Care Center shall have the meaning given such term in Sections 21(b)(2)(C) and 21(b)(2)(D) of the Code: a facility that complies with all applicable laws and regulations of the state and town, city or village in which it is located; provides care for more than six individuals (other than individuals who reside at the facility); and receives a fee, payment or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit). Dependent Care Expenses means amounts paid by the Participant for services that would be considered employment-related expenses under Section 21(b)(2) of the Code applicable proposed or final regulations issued Employment-related expenses for purposes of this Plan include expenses incurred to enable a Participant to be Gainfully Employed during any period for which there are one or more Qualifying Individuals with respect to the Participant for (1) household services and (2) care of a Qualifying Individual. However, employment-related expenses which are incurred for services outside the Participant's household shall be considered Dependent Care Expenses only if incurred for the care of a Qualifying Individual described in Section below or a Qualifying Individual not described in Section below who regularly spends at least eight ($) hours each day in the Participant's household. Dependent Care Expenses do not include expenses which are incurred for services provided by a Dependent Care Center if such center does not comply with all applicable laws and regulations of the applicable or other unit of local government which regulates the center. In addition, Dependent Care Expenses shall not include any amounts paid to an individual who is a child of such Participant (within the meaning of Section 152(f)(1) of the Code) who is under the age of nineteen (19) at the close of such taxable with respect to whom, for such taxable year, a deduction is allowable under Section 151(c) of the Code (relating to personal exemptions for to such Participant or the Spouse of such Deleted: <#>Separate Written Plan Deleted: <#> For purposes of Section 129 of the Code, this Article shall constitute a separate written plan providing reimbursement of Dependent Care Expenses. Deleted: <#> To the extent necessary, other provisions of the Plan are incorporated by reference.¶ Deleted: DC Plan Deleted: option of being Deleted:. The DC Plan Deleted: Deleted: (a) Deleted: (b) Deleted: (i) Deleted: (ii) Deleted: (iii) Deleted: (c) Deleted: if paid for by a Participant Deleted: and under Deleted: thereunder. Deleted: 12.3(h)(1) Deleted: 1z.3(n)(i) Deleted: State Deleted: Deleted: (i) Deleted: Deleted: year, or Qi) Deleted: Dependents) Deleted: Participant. © 2009 Hitesman & Associates, P.A. 28 Elk River Municipal Utildies Flexible Benefits Plan (No. 8.0.0.0) Earned Income shall have the meaning given such term in Section 32(c)(2) of the Code Deleted: (d) (which refers to wages, salaries, tips and other Employee as well as net Deleted: compensation earnings from but shall not include any amounts reimbursed by the Employer under this portion of the Plan. Further, if a Participant's Spouse is a Student or Deleted: self-employment), incapable of caring for himself or herself, the provisions of Section 21(d)(2) of the Code shall apply in determining the Earned Income of that Spouse. Generally, this Section provides that a Spouse of a Participant shall be deemed to have Earned Income of not less than $250 per month if there is one Qualifying Individual with respect to the Participant or $500 per month if there are two or more Qualifying Individuals with respect to the Participant. (f) Gainfully Employed means the earning of income for services performed or the period of active search for gainful employment. Nominal reimbursement for volunteer work is not considered gainful employment. (g) Highly Compensated Employees means Employees who are highly compensated as defined in Section 414(q) of the Code. Deleted: ny individual who is: Deleted: (1) (h) Non-Highly Compensated Participants means Employees who are not Highly Deleted: dependent (as defined in Compensated Employees. Deleted: (a)(1) (i) Qualifying Individual means a Deleted:) of the Pamcipant Deleted: age of 13; or¶ (2) A Spouse or a dependent (as defined in A Deleted: , Section 152 of the Code Deleted: subseRions under Deleted:, Deleted: and (d)(1)(B) thereof) the Section 152 of the Code Deleted: Participant determined without regard to (b)(1) (b)(2) of the who i5 physically care Deleted: or mentally incapable of self- Deleted:and Deleted: more than Deleted: year. Who hds the same principal place Of abode a5 the Deleted: Unless two people are married and Partici ant for One-half Of the p fle a joint tax return, only one person may request reimbursement of expenses incurred with respect to a particular child, even where the Who the child satisfies the definition of "child" as [o has more than one person. Special rules apply to the determine which person may receive the reimbursements where more than one person wants to receive reimbursement for expenses incurred with respect [o a particular child.¶ is entitled to ¶ t0 Special Tie-breaker Rules. In general, Deleted: parent Deleted: custody for the longest period during the calendar year (i.e., Deleted: "custodial" parent) Deleted: receive reimbursement for Dependent the Child Care Expenses. This is true even though [he non-custodial parent may be allowed the child Deleted: receive Deleted: tax credit and the dependency exemption for © 2009 Hitesman & Associates, P.A. 29 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) Claim the child a5 a Deleted: on [heir federal income tax return. However, if the custodial parent does not © 2009 Hitesman & Associates, P.A. Flexible Benefits Plan (NO. 8.0.0.0) for any purpose (i.e., a dependent care Deleted: qua/ifying chi/d expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the Deleted: non-custodia/parent may receive reimbursement for Dependent Care Expenses If one person is the parent and the other is not, the undera dependent care expense reimbursement program. child is the Qualifying Individual of the parent the parent Deleted: ¶ Deleted: chi/d's reimbursement Deleted: and Deleted: mayreceive If neither person i5 the Deleted: for the chi/d's Dependent Care the person with the highest adjusted Expenses. gross income for the year in question However, if person Deleted: chi/d's parent, does not claim the child as a qualifying Child Deleted: may receive reimbursement for for any purpose (i.e., a dependent care Dependent Care Expenses. expense reimbursement program, the earned income credit, the Deleted: in both cases, dependency deduction, the child tax credit, and the dependent care credit), then the Deleted: fhe Deleted: otherwise entitled to c/aim the child as a Qualifying Individual 30 Elk River Municipal Utilities Deleted: other person may do so and receive reimbursement for dependent care expenses (j) Student shall have the meaning provided in Section 21(e)(7) of the Code which means under theocpian. an individual who during each of five (6) calendar months during the taxable year is a full Deleted: 1I time student at an educational organization which normally maintains a regular facility a is assumed mat all participants in the Dc and curriculum and normally has a regularly enrolled body of students in attendance at Plan will be entitled to treat the child as a the place where its educational activities are regularly carried on as provided in Sections Qualiryinq Individual For purposes or 21(e)(8) and 170(b)(1)(A)(ii) of the Code. reimbursement under the DC Plan.¶ 12.4 Account. The DC Account will be credited as of each date Compensation is Deleted: DC paid to the Participant with apro-rated portion of the Participant's Election for the Plan Year. A Participant's DC Account will be decreased from time to time in the amount of payments made to the Participant for eligible Dependent Care Expenses incurred during the Plan Year. Deleted: <#>Claims for Reimbursement. 12.6 Incurred Expenses. To be reimbursable, an eligible Dependent Care Expense must have been A Participant who has made an Election for a Plan near may apply to me Qaims Administrator incurred after participation in this portion of the Plan began and during the Plan Year for which for reimbursement of eligible Dependent Care reimbursement is claimed. An expense is "incurred" when the Participant is provided with the Expenses incurred during such Plan rear by care which gives rise to the eligible Dependent Care Expense, not when the service is billed or submitting a claim form provided by the Claims Administrator setting form at least the paid. Reimbursement shall not be made for future or projected expenses. foilowinq:Q <#>the amount, date and nature of the Reimbursement of Expense. The Participant shall be reimbursed expense,¶ from the Partici ant's DC Account for eli Ible De endent Care Ex enses incurred Burin the p g p p g <#>the name of the person or entity co wnicn the expense was paid,¶ applicable Plan Year for which the Participant submits the documentation required under <#>the Partidpant's statement that me In no case shall a payment be made which exceeds the balance in the Participant's DC expense has not been reimbursed or is no[ Account at the time reimbursement i5 reimbursable from any other source, and¶ <#>such other information as the Claims Administrator may require.¶ If a claim for reimbursement exceeds the balance in the Participant's DC Account, the Such claim form shall be accompanied by bills, excess part of the claim will be carried over paid as the Participant's becomes invoices, receipts, or other statements from an adequate. no circumstances will any balance remaining in a Participant's DC Account independent third party stating the eligible Dependent Care Expense has been incurred and at the end of the Plan Year be carried over to the next Plan the amount of the expense. Tne claims Admirnstrator may, to the extent provided by law, rely on information provided by 12.8 Maximum Reimbursement. The maximum reimbursement a Participant may receive in Participants.¶ a tax year under this portion of the Plan shall be the lesser of: Deleted: at least either (a) once per month, or (b) when the total reimbursement for (a) the Participant's Earned Income for the tax year; Dependent Care Expenses first equals or exceeds $50.00. Reimbursements shall be made (b) the actual or deemed Earned Income of the Participant's Spouse for the tax year; or Deleted: Section 12.5. (c) $5,000 or in the case of a Participant who is married and filing a separate income tax Deleted: requested. return from his or her Spouse, Deleted: into fallowing pay periods, to be Deleted: balance This maximum includes the Employer Contribution if DC Account forfeitures and the Deleted: However, under Participant's salary reduction. If a Participant is married and the of the Participant also participates in a dependent care program under Section 129 of the Code, the combined Deleted: Year. reimbursements may not exceed the limits described above for the tax year. It shall be the Deleted: that Participant's responsibility to monitor the combined reimbursements. Deleted: , Deleted: $2,500. Deleted: Deleted: any), Deleted: spouse © 2009 Hi[esman & Associates, P.A. 31 Elk River Municipal Utilities Flexible Benefts Plan (No. 8.0.0.0) 12.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan during a Plan Year, no further will be credited Deleted: allocations to the DC Account. However, incurred may be reimbursed Deleted: reimbursements shall continue for within in Section eligible Dependent Care Expenses 12.10 Participant's Death. In the event a Participant dies having incurred an eligible Dependent Deleted: before participation stopped Care Expense which would have been reimbursable out of the Participant's DC Account had Deleted: ninety (90) days following termination the Participant not died and a person or the Participant's estate has paid for or of participation. The remainder of the participant's DC Account shall be forfeited assumed liability reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant's DC Account shall be forfeited in accordance with Deleted: accordance with SectlOn 5.6. Deleted: 5.6. Deleted: for the expense, 12.11 Nondiscrimination. Not more than twenty-five percent (25%) of the amounts paid or incurred by the Employer for Dependent during the Plan Year shall be provided to Deleted: care assistance Participants who are shareholders or owners (or their Spouses or Dependents) of more than five percent (5%) of the stock or of the capital or profit interest in the Employer. This portion of the Plan shall not discriminate in favor of Highly Compensated Employees or their Dependents with respect to eligibility, contributions or benefits. The average eligible Dependent Care Expenses paid to Non-Highly Compensated Employees shall be at least fifty-five (55%) of the average eligible Dependent Care Expenses paid to Highly Compensated Employees. If benefits are provided through salary reduction agreements, Employees with annual compensation less than $25,000 may be excluded. If the Plan Administrator determines that the Plan is or will be discriminatory, the Plan Administrator may take any action permitted by law to avoid such result If this portion of the Plan Deleted: . to the extent required by law. 12.12 DC Account Forfeiture. Amounts attributed to a Participant's DC Account for any Plan Year shall be used only to reimburse the Participant for eligible Dependent Care Expenses incurred during such Plan Year. Any balance remaining in a Participant's DC Account for a Plan Year shall be forfeited following the and shall be forfeited in accordance with Section 5.6. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. tdxdble Deleted: the Plan fails any of these requirements, benefts provided under Deleted: will become 12.13 Dependent Care Limitations. Reimbursement or payment of eligible Dependent Care Expenses shall be made the only in the event and to the extent that such reimbursement or payment is: (a) not provided under any insurance policy, whether the premium on such policy is paid by the Employer or an individual, and (b) not provided for or reimbursable under any other or policy. 12.14 Reporting and Disclosure. Each Participant must be furnished with a written statement showing the amounts paid under this portion of the Plan by an Employer on behalf of the Participant for a calendar year. The statement must be furnished before January 31st of the following year. Deleted: on the f rst day Deleted: last day of March immediately following the end of such Plan Year (the "claims run-out period's Deleted: by Deleted: Employer Deleted: for Deleted: Plan Deleted: For calendar years beginning after December 31, 1988, the law requires that this information be placed on Internal Revenue Service Form W-2 for the applicable year. Deleted: ¶ © 2009 Hitesman & Associates, P.A. 32 Elk River Municipal Utilities Flexible Benefitr Plan (No. 8.0.0.0) ARTICLE XIII. HIPAA PROVISIONS The Privacy Rules and Security Rules under HIPAA apply to certain Optional Benefits Deleted: the that constitute "covered entities" within the meaning of HIPAA (e.g., employer sponsored health Deleted: - Deleted: plans). 13.1 Use and Disclosure of PHI. The will use PHI to the extent of and in accordance with the Deleted: Plan uses and disclosures permitted by HIPAA. Specifically, the will use and disclose PHI for Deleted: Plan purposes related to health care treatment, payment for health care and health care operations. Deleted: (a) Payment includes activities undertaken by the to obtain premiums or determine or fulfill its responsibility for coverage and provision of benefts that relate to an Deleted: Plan individual to whom health care is provided. These activities include, but are not limited Deleted: Plan to, the following: of eligibility, coverage and cost sharing amounts (for example, Deleted: (1) Determination cost of a benefit, plan maximums and co-payments as determined for an individual's claim); Of benefits; Deleted: (2) Coordination of health benefts claims (including appeals and other payment Deleted: (3) Adjudication disputes); of health benefit claims; Deleted: (4) Subrogation employee contributions; Deleted: (5) Establishing adjusting amounts due based on enrollee health status and demographic Deleted: (6) Risk characteristics; collection activities and related health care data processing; Deleted: (7) Billing, management and related health care data processing, including auditing Deleted: (8) claims payments, investigating and resolving payment disputes and responding to participant inquiries about payments; payment under a contract for reinsurance (including stop-loss and Deleted: (9) obtaining excess of loss insurance); necessity reviews or reviews of appropriateness of care or justification of Deleted: (10) Medical charges; review, including pre-certification, preauthorization, concurrent review Deleted: (11) utilization and retrospective review; to consumer reporting agencies related to the collection of premiums Deleted: (12) Disclosure or reimbursement (the following PHI may be disclosed for payment purposes: name and address, date of birth, Social Security number, payment history, account number and name and address of provider and/or health and Deleted: plan; to the Deleted: (13) Reimbursement Deleted: Plan. © 2009 Hitesman & Associates, P.A. 33 Elk River Munibpal Utilities Flexible Benefits Plan (No. 8.0.0.0) (b) Health care operations include, but are not limited to, the following activities: assessment; Deleted: (1) Quality activities relating to improving health or health care Deleted: (2) Population-based costs, protocol development, case management and care coordination, disease Deleted: reduction management, contacting health care providers and patients with information about treatment alternatives and related functions; provider and plan performance, including accreditation, certification, Deleted: (3) Rating licensing or credentialing activities; premium rating and other activities relating to the creation, Deleted: (4) underwriting, renewal or replacement of a contract of health insurance or health benefits, and Deleted: ceding, securing or placing a contract for reinsurance of risk relating to health care claims (including stop-loss insurance and excess of loss insurance); or arranging for medical review, legal services and auditing function, Deleted: (s) conducting including fraud and abuse detection and compliance programs; planning and development, such as conducting cost-management and Deleted: (6) Business planning-related analyses related to managing and operating the including Deleted: Plan, formulary development and administration, development or improvement of payment methods or coverage policies; management and general administration activities of the Deleted: (7) Business including, but nOt limited t0: Deleted: Plan, activities relating to the implementation of and compliance Deleted: a. Management with HIPAA's administrative simplification requirements; service, including data analyses for Deleted: b. Customer Deleted: policyholders; of internal grievances; and Deleted: (8) Resolution diligence in connection with the sale or transfer of assets to a potential Deleted: (9) oue successor in interest, if the potential successor in interest is a covered entity under HIPAA or following completion of the sale or transfer, will become a covered entity. Deleted: 13.2 Employer's Obligations under the Privacy Under the Privacy the may Deleted: Rule. not disclose PHI to the Employer unless the Employer agrees to certain conditions. The Employer Deleted: Rule, agrees to the following conditions, thereby allowing the to disclose PHI to the Employer. The Employer Deleted: Plan Deleted: Plan a. use or further disclose PHI other than as permitted or required by the document Deleted: will: or as required by law; Deleted: Not b. that any agents, including a subcontractor, to whom the provides PHI Deleted: Plan received from the agree to the same restrictions and conditions that apply to the Deleted: Ensure Employer with respect to such PHI; Deleted: Plan Deleted: Plan c. use or disclose PHI for employment related actions and decision unless authorized by an individual; Deleted: Not © 2009 Hitesman & Associates, P.A. 34 Elk River Municipal Utilities Flexible Benefits Plan (NO. 8.0.0.0) d. use or disclose PHI in connection with any other benefit or employee benefit plan of Deleted: Not the Employer unless authorized by an individual; e. to the any PHI use or disclosure, that is inconsistent with the uses or Deleted: Report disclosures provided for, of which it becomes aware; Deleted: Plan f. PHI available for amendment and incorporate any amendments to PHI in Deleted: Make available to an individual for accordance with HIPAA; inspection and copying PHI about the individual as allowed by and in accordance with HIPAA;¶ g. available the information required to provide an accounting of disclosures; Make Deleted: Make h. internal practices, books and records relating to the use and disclosure of PHI Deleted: Make received from the available to the HHS Secretary for the purposes of determining peleted: Plan the compliance with HIPAA; and ' Deleted: Plan s i. feasible, return or destroy all PHI received for the that the Employer still maintains Deleted: , in any form, and retain no copies of such PHI when no longer needed for the purpose for Deleted: If which disclosure was made (or if return or destruction is not feasible, limit further uses Deleted: Plan and disclosures to those purposes that make the return or destruction infeasible). 13.3 Employer's Obligations under Security If the Employer creates, receives, maintains, Deleted: the or transmits ePHI (other than enrollment and disenrollment information and Summary Health Deleted: Rule. Information, which are not subject to these restrictions), the Employer will: Deleted: (a) Implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of ePHI; that any agents, including subcontractors, who create, receive, maintain, or Deleted: (b) Ensure transmit ePHI on behalf of the implement reasonable and appropriate security Deleted: Plan measures to protect the ePHI; to the any Security Incident of which it becomes aware; and Deleted: (c) Report Deleted: Plan reasonable and appropriate security measures to ensure that only those persons identified have access to ePHI and that such access is limited to the Deleted: (d) Implement purpOSeS Identified Deleted: in Section 13.4 Deleted: in Section 13.5. 13.4 Adequate separation between the and the Employer must be maintained. In Deleted: Plan accordance with HIPAA, only the following employees or classes of employees may be given access to PHI: Deleted: (a) The benefit manager; and,¶ Deleted: Staff (b) designated by the Deleted: beneftr manager. 13.5 Limitation of PHI Access and Disclosure. The described above may only have Deleted: For this purpose, "benefits manager" access to and use and disclose PHI for administration functions that the Employer performs is a designation made by me employer. ¶ fOr the Deleted: persons Deleted: in Section 13.4 13.6 Noncompliance Issues. If person described above does not comply with this Deleted: Plan document, the Employer shall provide a mechanism for resolving issues of noncompliance Deleted: Plan. including, but not limited to, disciplinary sanctions. Deleted: a Deleted: in Section 13.4 Deleted: Plan © 2009 Hitesman & Associates, P.A. 35 Elk River Municipal Utilities Flexible Benefitr Plan (No. 8.0.0.0) © 2009 Hitesman & Associates, P.A. 36 Elk River Municipal Utilities Flexible Benefits Plan (No. 8.0.0.0) ARTICLE XIV. CONTINUATION COVERAGE 14.1 Compliance with Continuation Continued coverage for Group Dental Benefits, Medical Expense Reimbursement Plan shall be provided as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") as amended or applicable state law. The the continuation By: ICS: Deleted: Medical Expense Reimbursement Plan, Limited Scope Deleted: ,and the Individual Premium Plan (hereinafter collectively referred to as the "Health Plans ~ Deleted: Deleted: remainder of this Article applies only if and to Deleted: extent required under COBRA or state Deleted: laws. Deleted: <#>POlicies and Procedures. To the extent not provided herein, the Plan Administrator shall, within the parameters of the law, establish uniform policies by which to provide such continuation coverage. To the extent the policies and procedures provided herein conflict with the underlying plan documentr for the Health Plans, such underlying plan documents shall control,¶ <#>COBRA Notification Procedures, The Health Plans require the notifications described below with respect to continuation coverage under COBRA: ¶ (a) Notice of qualifying even[. Under the law, a Covered Individual (or a representative acting on behalf of the Covered Individual) has the responsibility to inform the Health Plans of a divorce, legal separation, or a child losing Dependent status under the Health Plans (the "qualifying event's wi[hln sixty (60) days of the latest of: (i) [he date of the qualifying event; (ii) the date coverage would be lost because of the qualifying event; or (iii) [he date on which [he Covered Individual was informed of the responsibility to provide notice and the procedures for doing so. The notification must be provided in writing and be mailed to the Health Plans. Oral notification, including notification by telephone is not acceptable. Electronic (including emailed or faxed) or hand- delivered notifications are not acceptable. The notification must be postmarked no later than the last day of the sixty (60) day notice penod described above. The notification must:¶ <#>state the name of the Health Plans;¶ <#>State the name and address of [he employee or former employee who is or was covered under the Health Plans;¶ <#>State the name(s) and address(es) of all Covered Individuals who lost coverage due to the qualifying event;¶ <#>Include a detailed description of the event; ' <#>Identify the effective date of the event; and¶ <#>Be accompanied by any documentation providing proof of [he even[ (i.e., the divorce decree).¶ If no notification is received within the required time period, no continuation cove2ge will be provided. If the notification is incomplete, it Deleted: ¶ By: ¶ ICs: ¶ TI © 2009 Hitesman & Associates, P.A. 3J Elk River Municipal Utilities Flexible Benefts Plan (NO. 8.0.0.0) EXHIBIT A Insurance Carrier /Third Party Provider Information (as of January 1, Name: Elk River Municipal Utilities Address: 13069 Orono Parkway Elk River, MN 55330 Phone Number: 763-441-2020 Group Medical Benefits Carrier Name: BlueCross BlueShield of Minnesota Address: P.O. Box 64338 St. Paul, MN 55164 Phone Number: 651-662-5517 Group Number: GA175 Policy Year: January through December * Group Medical Benefts are obtained through Resource Training & Solutions and the City, County and Other Governmental Agencies ("CCOGA") Health Insurance Pool. Group Dental Benefits Carrier Name: Assurant Employee Benefits Address: P.O. Box 842573 Kansas City, MO 64184-2573 Phone Number: 800-733-7879 Group Number: 5299207 Policy Year: January 1 December 31 Deleted: 2008) Deleted: ELK RIVER MUNICIPAL UTILITIES FLEXIBLE BENEFITS PLAN¶ CLAIMS ADMINISTRATOR Deleted: Deleted: Policy or Deleted: Policy or Deleted: - © 2009 Hitesman & Associates, P.A. 38 Elk River Municipal Utilities Flexible Benefts Plan (N0. 8.0.0.0)