HomeMy WebLinkAboutHealth Benefits/125 Cafeteria Plan7"
CITY OF CARMEL
Section 125 Cafeteria Plan
Restated Effective January 1, 2013
[Note: This Section 125 Cafeteria Plan affects the
City of Carmel Employee Health Benefit Plan only
as it pertains to the pre-tax status of employee
"premiums." All other aspects of the health plan
are subject to the terms and conditions outlined in
the Employee Health Benefit Plan Document.]
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TABLE OF CONTENTS
I. DESCRIPTION OF PLAN AND PLAN SUMMARY 1
2. USE OF DEFINED WORDS AND PHRASES 1
3. PARTICIPATION IN THE PLAN 4
A. When Coverage Begins 4
B. When Coverage Ends 5
C. Rehired Employees. 5
D. Unpaid Leaves of Absence that Qualify under the FMLA 5
4. AVAILABLE BENEFITS 6
A. Health Contributions 6
B. Other Accounts 6
5. ELECTIONS UNDER THE PLAN 6
A. Election Form 6
B. Election at Time of Initial Eligibility 7
C. Annual Elections. 7
D. Mid-Year Changes in Election for All Benefits Except HSA Benefits. 7
E. Irrevocability of Elections 10
F. Effect of Failure to File an Election Form 10
G. Authority of City to Cancel or Revise Certain Elections 10
H. Adjustments to Prevent Discrimination. 11
6. HEALTH CARE FLEXIBILE SPENDING ACCOUNT 11
A. Establishment of Health Care Flexible Spending Account 11
B. Maximum Reimbursement 11
C. Debiting of Health Care Flexible Spending Account. 11
D. Health Care Expenses 12
E. Ceasing to be a Participant with Respect to the Health Care Flexible Spending
Account 12
7. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT 13
A. Establishment of Dependent Care Flexible Spending Account. 13
B. Maximum Reimbursement 13
C. Debiting of Dependent Care Flexible Spending Account 14
D. Dependent Care Expenses. 14
E. Ceasing to be a Participant with Respect to the Dependent Care Flexible Spending
Account 15
F. Tax Credit vs. Dependent Care Reimbursement. 15
G. Reports. 15
8. HEALTH SAVINGS ACCOUNT 15
A. HSA Benefits. 15
B. HSA Contributions;Maximum Limits. 16
C. Recording Contributions for HSA 16
D. Tax Treatment of HSA Contributions and Distributions. 16
E. Trust/Custodial Agreement; HSA Not an Employer-Sponsored Employee Benefits
Plan 16
F. Election Modifications for HSA Benefits 17
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9. REIMBURSEMENT ISSUES AND DEBIT CARDS 17
A. Mandatory Rules Regarding Debit Cards 17
B. Submission of Health Care Expenses 19
C. Submission of Dependent Care Expenses 20
D. Reimbursement 20
E. Forfeiture of Unused Amounts 20
10. CLAIMS PROCEDURES 21
A. Initial Claim for Benefits. 21
B. Review of Claim Denial 22
C. Exhaustion of Remedies 22
11. HIPAA PROVISIONS FOR HEALTH CARE FLEXIBLE SPENDING ACCOUNT 22
A. Provision of Protected Health Information to City. 22
B. Permitted Disclosure of Enrollment/Disenrollment Information. 23
C Permitted Uses and Disclosure of Summary Health Information. 23
D. Permitted and Required Uses and Disclosures of PHI for Plan Administration
Purposes 23
E. Conditions of Disclosure for Plait Administration Purposes. 23
F. Adequate Separation Between Plan and City 25
G. Certification of Plan Sponsor 25
12. ADDITIONAL IMPORTANT INFORMATION 25
A. Plan Administrator. 25
B. Questions of Interpretation 25
C Change or Termination of Plan. 26
D. Assignments of Benefits. 26
E. Federal Income Tax Consequences 26
F. FMLA and USERRA. 26
G. Misrepresentation 26
H. Nondiscrimination Rules. 26
I. Limitation of Rights 26
J. Indemnification 27
K. Forms and Proofs 27
L. Taxes or Penalties 27
M. Employment of Consultants 27
N. Counterparts 27
O. Notice. 27
P. Disclaimer of Liability. 27
Q. Right of Recovery. 28
R. Inability to Locate Payee 28
S. Receipt and Release. 28
T. Benefits Solely front Medical Escrow Fund 28
U. Reliance. 28
V. Participant Incapacitation. 28
W. Participant Death 29
X. Entire Plan 29
Y. Rules of Interpretation. 29
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1. DESCRIPTION OF PLAN AND PLAN SUMMARY
The City of Carmel Section 125 Cafeteria Plan, established effective January 1, 1990 and
hereby restated effective January 1, 2013, allows you to reduce your Compensation and
direct the City to use that amount to pay for your cost of Health Coverage, as well as to
provide coverage under a Health Care Flexible Spending Account, a Dependent Care
Flexible Spending Account, and/or a Health Savings Account on a pre-tax or tax-free
basis.
The Plan is intended to qualify as a "cafeteria plan" within the meaning of Code
Section 125. The Health Care Flexible Spending Account is intended to qualify as a self-
insured medical reimbursement plan under Code Section 105, and the Health Care
Expenses reimbursed thereunder are intended to be eligible for exclusion from the
participating Employees' gross income under Code Section 105(b). The Dependent Care
Flexible Spending Account is intended to qualify as a dependent care assistance program
under Code Section 129, and the Dependent Care Expenses reimbursed thereunder are
intended to be eligible for exclusion from participating Employees' gross income under
Code Section 129(a).
To the extent permitted under the Code and any applicable state tax law, benefits you
elect in lieu of cash under the Plan are excluded from your taxable income. If you
participate in the Plan, you will not pay federal, state, local or Social Security taxes on
these pre-tax amounts under current law. Please be aware that this may reduce your
future Social Security benefits.
2. USE OF DEFINED WORDS AND PHRASES
Throughout this Plan/Summary the capitalized words have a precise meaning. When you
encounter a capitalized word or phrase, you should look below to find its meaning.
A. Accounts means your Health Care Flexible Spending Account (`'Health Care Flex
Account") and/or Dependent Care Flexible Spending Account ( Dependent Care
Flex Account"). These are the records that account for payment or
reimbursement of your Health Care Expenses and Dependent Care Expenses.
B. Claims Administrator means the company or entity approved by the City to
process claims with respect to the Participant's Accounts.
C. City means the City of Carmel, Indiana.
D. Code means the Internal Revenue Code of 1986, as amended.
E. Compensation means the cash remuneration you receive from the City that is
reportable as wages for federal income tax purposes, plus any elective deferrals or
other amounts excludable from taxable income because of an election under Code
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Sections 125, 414(h)(2) or 457(b). Compensation does not include cash
remuneration received before you began participation in the Plan.
F. Dependent Care Expense means an expense 'Incurred to enable you to be
gainfully employed, or to actively search for gainful employment, for any period
during which you must provide care for one or more Qualifying Individuals.
Dependent Care Expenses include expenses for the care of a Qualifying
Individual and certain expenses for household services. Dependent Care
Expenses do not include:
(i) expenses Incurred for services outside of your household, unless the
services were Incurred for a Qualifying Individual who spends at least 8
hours each day in your household;
(ii) expenses paid to certain persons related to you;
(iii) if applicable, expenses paid to your former spouse who is the child's
noncustodial parent; or
(iv) expenses paid to a dependent care center, unless the center complies with
all applicable laws and governmental regulations.
G. Earned Income means earned income as defined under Code Section 129(e)(2).
H. Employee means any full-time employee of the City as defined by City Code.
Temporary and seasonal employees, part-time employees, leased employees and
independent contractors are excluded from this definition and are not eligible to
participate in the Plan.
FMLA means the Family and Medical Leave Act of 1993, as amended.
J. Grace Period means the first two (2) months of any calendar year immediately
following a calendar year for which you elect to establish a Health Care Flex
Account. You may be reimbursed for a Health Care Expense Incurred during the
Grace Period from the balance, if any, remaining in your Health Care Flex
Account at the end of the immediately preceding calendar year.
K. Health Care Expense means any medical, dental or vision expense Incurred by
you or your dependents that qualifies as "medical care" as defined in Section
213(d) of the Code. To be eligible for reimbursement through this Plan, a Health
Care Expense must not be reimbursed or be entitled to reimbursement through
any insurance plan. If only a portion of a Health Care Expense has been
reimbursed elsewhere (e.g., because the medical or dental plan imposes a co-
payment or deductible limitations), then the Health Care Flex Account can
reimburse the remaining portion of such Health Care Expenses if it is otherwise
eligible for reimbursement. Further, you or your dependents must be legally
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obligated to pay for the Health Care Expense. Notwithstanding the foregoing,
Health Care Expense does not include:
(i) Premium payments for other health coverage, including but not limited to
health insurance premiums for any other plan (whether or not sponsored
by the City);
(ii) Medicines or drugs, unless the medicine or drug is a prescribed drug
(determined without regard to whether the medicine or drug is available
without a prescription) or is insulin (for this purpose, the Plan
Administrator shall have the sole discretion to determine, on a uniform
and consistent basis, whether a particular item is a medicine or drug and
whether the requirement of a prescription has been satisfied);
(iii) Cosmetic surgery or other similar procedures, unless the surgery or
procedure is necessary to ameliorate a deformity arising from, or directly
related to, a congenital abnormality, a personal injury resulting from an
accident or trauma, or a disfiguring disease (for this purpose, "cosmetic
surgery" means any procedure that is directed at improving the patient's
appearance and does not meaningfully promote the proper function of the
body to prevent or treat illness or disease).
(iv) Any premium paid for health coverage or qualified long-term care services
(as defined in Code Section 7702(B)(c)), or for coverage for any product
that is advertised, marketed or offered as long-term care insurance. •
L. Health Coverage means medical, dental or vision coverage provided to
Employees and their dependents under any health plan that is maintained by the
City and to which you make contributions.
M. Health Savings Account (HSA) means a health savings account established
under Code Section 223. Such arrangements are individual trusts or custodial
accounts, each separately established and maintained by an Employee with a
qualified trustee/custodian.
N. High Deductible Health Plan means the high deductible health plan offered by
the City as a Health Coverage option that is intended to qualify as a high
deductible health plan under Code Section 223(c)(2), as described in materials
provided separately by the City.
O. HSA Benefits has the meaning described in Section 8.
P. HSA-Eligible Individual means an individual who is eligible to contribute to an
HSA under Code Section 223 and who has elected qualifying High Deductible
Health Plan coverage offered by the City and who has not elected any
disqualifying non-High Deductible Health Plan coverage.
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Q. HIPAA means the Health Insurance Portability and Accountability Act of 1996,
as amended.
R. Incur or Incurred refers to the date on which care or services are provided, not
the date you are billed or pay for the care or services. To be Incurred, the care or
services must be provided after you become a Participant or dependent.
S. Participant means an Employee who has elected and begun participation in the
Plan and has not opted out or become ineligible to participate.
T. Plan or Flexible Benefit Plan or Plan/Summary means the City of Carmel
Flexible Benefit Plan and Summary, as amended.
U. Plan Administrator means the Board of Public Works and Safety.
V. Plan Year means the 12-month period beginning on each January 1 and ending
on each December 31.
W. Qualifying Individual means: (a) a tax dependent of a Participant as defined in
Code Section 152 who is under the age of 13 and who is the Participant's
qualifying child as defined in Code Section 152(a)(1); (b) a tax dependent of the
Participant as defined in Code Section 152, but determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B) thereof, who is physically or mentally
incapable of self-care and who has the same principal place of abode as the
Participant for more than half of the year. Notwithstanding the foregoing, in the
case of divorced or separated parents, a Qualifying Individual who is a child shall,
as provided in Code Section 21(e)(5), be treated as a Qualifying Individual of the
custodial parent (within the meaning of Code Section 152(C))) and shall not be
treated as a Qualifying Individual with respect to the noncustodial parent.
X. Relative means your son, daughter, grandson, granddaughter, stepson,
stepdaughter, brother, sister, stepbrother, stepsister, father, mother, grandfather,
grandmother, stepfather, stepmother, nephew, niece, uncle, aunt and in-laws.
Y. USERRA means the Uniformed Services Employment and Reemployment Rights
Act of 1994, as amended.
3. PARTICIPATION IN THE PLAN
A. When Coverage Begins. Your coverage under this Plan will be effective:
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(i) the first payroll period following the date on which you submit your
election form to Human Resources, if you are enrolling when you first
become an Employee or when you experience a change of status (election
form must be submitted within 30 days of your date of hire or change of
status); or
(ii) January 1 of the following calendar year, if you are enrolling during the
annual election period.
B. When Coverage Ends. You will no longer be covered under the Plan on the
earliest of
(1) the date the Plan ends;
(ii) the date you elect not to participate in the Plan;
(iii) the date you stop making contributions under or to the.Plan; or
(iv) the date your employment with the City is terminated, you retire or you
cease to be an Employee as defined by the Plan. (However, continuation
of coverage may be available under the Health Coverage and the Health
Care Flex Account on an after-tax basis.)
Termination of participation in this Plan will automatically revoke your elections.
Distributions from an Employee's HSA (whether before or after termination of
employment) and all other matters relating to an Employee's HSA are outside of
this Plan and are to be handled by the Employee and his or her trustee/custodian
in accordance with the agreement between them.
C. Rehired Employees. If you participate in the Plan, terminate employment with
the City, then return to employment with the City, you must submit a new election
form for the remainder of the Plan Year. An HSA Benefit election will only be
reinstated if an individual is an HSA-Eligible Individual.
D. Unpaid Leaves of Absence that Qualify under the FMLA.
(1) Stopping Your Contributions. If you take an unpaid leave of absence that
qualifies as an FMLA leave of absence, you may stop your contributions
for Health Coverage, HSA and/or the Health Care Flex Account for the
duration of your FMLA leave. (You must stop contributions to the
Dependent Care Flex Account while on FMLA leave.)
If you stop making contributions to the Health Care Flex Account while
on an unpaid FMLA leave, you will not be entitled to reimbursement of
Health Care Expenses Incurred during the period in which you did not
make contributions. If you return from FMLA leave during the same
calendar year in which your leave began, you may elect to reinstate
coverage. However, the amount of your coverage will be reduced (on a
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pro rata basis) for the period and to the extent which contributions were
not made, less any reimbursements made from your Account prior to the
reinstatement of such coverage. When you return from your unpaid
FMLA leave, you may be eligible to make a new election for the
remainder of the calendar year, as allowed under the Change in Status
rules below.
(ii) Continuing Your Contributions. If you decide to continue contributions to
the Plan while on an unpaid FMLA leave, your payments will be made on
an after-tax "pay-as-you-go" basis. (You may not continue contributions
to the Dependent Care Flex Account while on FMLA leave.) When you
return from your unpaid FMLA leave, you may be eligible to make a new
election for the remainder of the calendar year, as allowed under the
Change in Status rules below.
4. AVAILABLE BENEFITS
A. Health Contributions. In order to receive Health Coverage, you must elect to
reduce your Compensation by substantially equal amounts per payroll period on
either a pre-tax basis or a post-tax basis, in an amount equal to your "premium"
cost for the Health Coverage. Your election must be filed within the election
period specified below. The amount of your reduction for a calendar year will not
exceed the lesser of(i) your annual Compensation or (ii) the total annual premium
you pay for the elected Health Coverage. You will be informed each year of the
contributions required for Health Coverage. These contributions may change
from time to time, either at the beginning of a year or during the course of a year.
You will not be required to pay federal, state, or local income taxes or Social
Security taxes on any pre-tax reduction amounts.
B. Other Accounts. Regardless of your election under Section A. above, you may
elect to reduce your cash Compensation by a specified amount and direct the City
to credit this amount to a Health Care Flex Account and/or Dependent Care Flex
Account. If you are eligible, you may also elect a Health Savings Account. Your
cash Compensation reduction amount will be subject to the limitations specified
below. Such election must be filed within the election period specified below.
5. ELECTIONS UNDER THE PLAN
A. Election Form. The City will provide, as soon as practicable after you become
eligible and within a reasonable period before the beginning of each calendar
year, written materials regarding the Plan. These materials shall include a payroll
reduction agreement. You arc not permitted to participate in both the Health Care
Flex Account and the HSA. In addition, an Employee who has an election for a
Health Care Flex Account that is in effect on the last day of a plan year cannot
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elect HSA Benefits for any of the first two calendar months following the close of
that Plan Year, unless the balance in the Employee's Health Care Flex Account is
$0 as of the last day of the Plan Year.
B. Election at Time of Initial Eligibility. You must complete a payroll reduction
agreement within 30 days of becoming an Employee, which election will be
effective the first payroll period after the agreement form is returned to Human
Resources.
C. Annual Elections. For each calendar year after you first become an Employee
(your"annual election"), you may elect to:
(i) continue your current election;
(ii) change your current election;
(iii) stop your current election; or
(iv) begin coverage.
These elections are to be made by completing a payroll reduction authorization
form, on paper or electronically, within the time period communicated annually
(this will be some time before the first day of the next calendar year). Your
election will be effective the first payroll period in the next calendar year.
D. Mid-Year Changes in Election for All Benefits Except HSA Benefits. An
election may be changed during a calendar year for all benefits except .HSA
Benefits only if there is (i) a "change in status" or (ii) another "applicable event"
occurs. For rules regarding changes to HSA Benefits elections, please see Section
8. To change or end your election due to a "change in status" or another
"applicable event," you must complete an election form within 30 days of the
"change in status" or the "applicable event". The election will be effective on the
first payroll after: (i) the filing of the election form with Human Resources or
(ii) the "change in status" or "applicable event," whichever is later.
(i) You may change your election, make a new election or revoke an election
to participate in the Plan mid-year if you have a "change in status" that
results in you, your spouse or your dependent gaining or losing eligibility
under the Plan or under your spouse/dependent employer's plan. Such
change or revocation must be (1) on account of the status change (2)
necessary or appropriate as a result of the status change and (3)
consistent with the terms and conditions of the coverage.
•
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For the purposes of the Plan, a "change in status" includes the following:
❑ A change in your legal marital status, including:
• divorce;
• marriage;
• death of a spouse; or
• legal separation or annulment of your marriage.
❑ A change in the number of your dependents, including:
• the death of a spouse or dependent; or
• the birth or adoption (or placement for adoption) of your child.
❑ A change in your, your spouse's or your dependent's employment
status, including:
• the termination or commencement of employment;
• a strike or lockout;
• the commencement of or return from an unpaid leave of absence;
or
• a change in worksite;
❑ Your dependent satisfying or ceasing to satisfy the definition of
"dependent" under the Health Coverage, including the attainment
of certain age.
• A change in your, your spouse's or your dependent's place of
residence.
(ii) There are other situations or "applicable events" that allow you to change
your election mid-year for all benefits except HSA Benefits, including:
❑ Failure to Make Employee Contributions. Generally, coverage
under the Plan will end if you do not make required contributions for
benefits elected under the Plan (except in the case of an_FMLA unpaid
leave of absence). In this situation, you may not make a new benefit
election under the Plan for the remaining portion of that calendar year.
If you decide again to participate, you must wait until the next annual
enrollment period.
❑ Significant Change in Cost of Coverage. (Does not apply to
elections with respect to the Health Care Flex Account.)
• Significant Cost Increase. If you elect to participate in the Plan
and your premium cost for Health Coverage or your Dependent
Care Expenses significantly increase during the calendar year, then
you may either (i) make a corresponding increase in your payments
or (ii) revoke your election for such coverage and elect to receive
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coverage, on a prospective basis, under another benefit package
option providing similar coverage(if available).
Such changes will be allowed under the Dependent Care Flex
Account only if the cost change is imposed by a dependent care
provider who is not your Relative.
• Cost Increase or Decrease. If you elect to participate in the Plan
and your premium cost for Health Coverage or your Dependent
Care Expenses increase or decrease during the calendar year, the
Plan may make a prospective increase or decrease, as appropriate,
in such premium payments.
Such changes will be allowed under the Dependent Care Flex
Account only if the cost change is imposed by a dependent care
provider who is not your Relative.
• Coverage is Significantly Curtailed or Stops. If you elect to
participate in the Plan and your coverage is significantly curtailed
or stops, then you may revoke your election for such coverage and
elect to receive coverage, on a prospective basis, under another
benefit package option providing similar coverage (if available).
❑ Addition (or Elimination) of Benefit Plan Option Providing
Similar Coverage. (Does not apply to elections with respect to the
Health Care Flex Account.)
If during the Plan Year the City adds a new benefit plan option or
other coverage option (or eliminates an existing benefit package option
or other coverage option) you may elect the newly-added option (or
elect another option if an option has been eliminated) on a prospective
basis and make a corresponding election change with respect to other
benefit package options providing similar coverage.
❑ Change in Coverage of the Spouse or Dependent Under Other
Employer's Plan. (Does not apply to elections with respect to the
Health Care Flex Account.)
You may make an election change that is on account of and
corresponds with a change made under the plan of your spouse,former
spouse or dependent's employer if (i) the other plan permits
participants to make an election change or (ii) this Plan permits
Participants to make an election for a period of coverage that is
different from the period of coverage under such other plan.
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❑ Special Enrollment. If you or your spouse or dependent are entitled
to special enrollment under the provisions of HIPAA (as they apply to
the City's Health Coverage) due to acquisition of a new dependent by
adoption, placement for adoption, birth or marriage - you may elect to
make a mid-year change in your election related to the cost of your
Health Coverage consistent with your change in enrollment.
❑ Entitlement to Medicare or Medicaid. If you, your spouse, or your
dependent are covered under the Plan and become entitled to coverage
under Medicare or Medicaid (other than coverage solely under the
program for distribution of pediatric vaccines), you may change your
election to cancel or reduce coverage under the Plan for the entitled
person. If there is a loss of coverage under Medicare or Medicaid, you
may elect to begin or increase coverage under the Plan for the affected
person.
❑ Court Orders. If you are subject to a judgment, decree, or order
resulting from a divorce, legal separation, annulment or change in
legal custody (including a qualified medical child support order), you
may make a consistent change in your election under the Plan to the
extent such judgment, decree or order requires such a change, to either
(i) cover the child or (ii) cancel coverage of the child.
E. Irrevocability of Elections. An election, once made, will remain in effect until
the earliest of
(i) the date you are no longer a Participant;
(ii) the effective date of a new election; or
(iii) the end of the calendar year, except as provided in F below.
F. Effect of Failure to File an Election Forty:. Your failure to return an election
form under Section S.B. on or before the specified due date will constitute an
election to have no Health Coverage, no HSA Benefits and no coverage under the
Accounts.
Your failure to make an election under Section S.C. on or before the specified due
date for the next calendar year will constitute (i) a re-election of the same Health
Coverage, if any, and an agreement to reduce your Compensation equal to the
premium cost of the Health Coverage currently in effect and (ii) an election of no
coverage tinder the Accounts or the HSA (regardless of your election in effect for
the current calendar year).
G. Authority of City to Cancel or Revise Certain Elections. To the extent required
by Code Section 125, the following nondiscrimination rules will apply:
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(i) the Plan will not discriminate in favor of highly compensated Employees
(as defined by Code Section 125(e)) as to eligibility to participate or as to
contributions or benefits; and
(ii) the benefits provided to key Employees (as defined by Code Section
416(i)(1)) will not exceed 25% of the aggregate benefits provided to all
Participants.
If the City determines, before or during any calendar year, that the Plan (or any
part thereof) may fail to satisfy such applicable nondiscrimination requirement,
the City will cancel or revise the elections of key Employees and/or highly
compensated Employees to receive benefits under the Plan to the extent necessary
to satisfy the Code's nondiscrimination requirements.
H. Adjustments to Prevent Discrimination. The Health Coverage, the HSA and
Accounts will be administered to be in compliance with all applicable
nondiscrimination requirements of the Code. The City may limit the amounts
paid or reimbursed with respect to certain Participants to the extent necessary to
satisfy the Code's nondiscrimination requirements.
6. HEALTH CARE FLEXIBLE SPENDING ACCOUNT
A. Establishment of Health Care Flexible Spending Account. You will have a
separate Health Care Flex Account for each calendar year in which you elect such
benefits under the Plan. If two Employees are married and are participating in the
Plan, each Employee may have his or her own Health Care Flex Account. Health
Care Flex Accounts will be maintained for bookkeeping purposes only, and such
amounts will remain in the City of Carmel Medical Escrow Fund until paid. No
interest or other earnings will be credited to your Health Care Flex Account.
B. Maximum Reimbursement. There will be credited to your Health Care Flex
Account, as of the beginning of the calendar year (or as of the later effective date
of your election, if applicable), the annualized amount that you have elected to
have your Compensation reduced for the calendar year. The minimum amount
that you may elect to have credited to your Health Care Flex Account is $10 per
payroll period and the maximum amount is $2,500 per calendar year, beginning
January 1, 2013 (subject to any future adjustments for inflation as permitted by
Code Section 125(i)). Any expenses paid out of your Health Care Flex Account
during the calendar year or during the Grace Period will be reflected in your
Health Care Flex Account balance.
C. Debiting of Health Care Flexible Spending Account. As of the date of a
payment under these provisions, your Health Care Flex Account will be debited
by the amount of that payment, subject to the annualized amount credited to the
Health Care Flex Account for the calendar year.
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D. Health Care Expenses. Health Care Expenses (as defined in Section 2.J.) are
expenses that can be reimbursed out of your Health Care Flex Account. Eligible
expenses normally include deductibles, copays, coinsurance and amounts in
excess of plan maximums.
Examples of expenses that are not eligible for reimbursement include:
❑ certain cosmetic surgery;
❑ tooth whitening;
❑ over-the-counter drugs without a prescription;
❑ expenses related to health clubs and travel;
❑ premiums for health coverage; and
❑ qualified long-term care services.
See Human Resources for additional information and examples.
E. Ceasing to be a Participant with Respect to the Health Care Flexible Spending
Account. If you stop being a Participant during a calendar year, you will be
entitled to reimbursements from your Health Care Flex Account for Health Care
Expenses that were Incurred before you stopped being a Participant to the same
extent as if you were still a Participant. In addition, you will not be entitled to
reimbursement for Health Care Expenses of any dependent that are Incurred after
such person is no longer a dependent as defined under the Health Coverage.
Notwithstanding any provision to the contrary in this Plan, to the extent required
by COBRA, a Participant and his or her dependents, as applicable, whose
coverage terminates under the Health Care Flex Account because of a COBRA
qualifying event (and who is a qualified beneficiary as defined under COBRA)
shall be given the opportunity to continue on a self-pay basis the same coverage
that he or she had under the Health Care Flex Account the day before the
qualifying event for the periods prescribed by COBRA. Specifically, such
individuals will be eligible for COBRA continuation coverage only if they have a
positive Health Care Flex Account balance at the time of a COBRA qualifying
event (taking into account all claims submitted before the date of the qualifying
event). Such individuals will be notified if they are eligible for COBRA
continuation coverage. If COBRA is elected, it will be available only for the
remainder of the Plan Year in which the qualifying event occurs; such COBRA
coverage for the Health Care Flex Account will cease at the end of the Plan Year
and cannot be continued for the next Plan Year. Such continuation coverage shall
be subject to all conditions and limitations under COBRA. Notwithstanding the
foregoing, a qualified beneficiary (as defined under COBRA) who has COBRA
coverage under the Health Care Flex Account on the last day of a Plan Year may
be entitled to reimbursement of Health Care Expenses Incurred during the Grace
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Period following that Plan Year.
Contributions for coverage under the Health Care Flex Account may be paid on a
pre-tax basis for current Employees receiving taxable Compensation (as may be
permitted by the Plan Administrator on a uniform and consistent basis, but may
not be prepaid from contributions in one Plan Year to provide coverage that
extends into a subsequent Plan Year) where COBRA coverage arises either (a)
because the Employee ceases to be eligible because of a reduction of hours or (b)
because the Employee's dependent ceases to satisfy the eligibility requirements
for coverage. For all other individuals (e.g., Employees who cease to be eligible
because of retirement, termination of employment, or layoff), contributions for
COBRA coverage under the Health Care Flex Account shall be paid on an after-
tax basis (unless permitted otherwise by the Plan Administrator on a uniform and
consistent basis, but may not be prepaid from contributions in one Plan Year to
provide coverage that extends into a subsequent Plan Year).
7. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
A. Establishment of Dependent Care Flexible Spending Account. You will have a
separate Dependent Care Flex Account for each calendar year in which you elect
such benefits under the Plan. Dependent Care Flex Accounts will be maintained
for bookkeeping purposes only, and such amounts will remain in the City of
Carmel Medical Escrow Fund until paid. No interest or other earnings will be
credited to your Dependent Care Flex Account.
B. Maximum Reimbursement. There will be credited to your Dependent Care Flex
Account, as of each payroll date, the amount you have elected to have your
Compensation reduced for the reimbursement of Dependent Care Expenses. The
minimum amount that you may elect to have credited to your Dependent Care
Flex Account is $10 per payroll period. The maximum amount of your
reimbursement for Dependent Care Expenses will be limited to the credit balance
in your Dependent Care Flex Account. In no event will your total amount of
claims reimbursed from your Dependent Care Flex Account for any calendar year
exceed the lesser of:
(I) your Earned Income for the calendar year;
(ii) if you arc married, the actual or deemed Earned Income of your spouse for
the calendar year; or
(iii) $5,000 (or $2,500 if you are married and you and your spouse file separate
federal income tax returns).
If you are married and filing a joint income tax return, the $5,000 maximum is
reduced by the amount received by your spouse under his or her dependent care
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reimbursement account. The City will maintain only one account if you and your
spouse are both employed by the City.
C. Debiting of Dependent Care Flexible Spending Account. As of the date of a
payment, your Dependent Care Account will be debited by the amount of that
payment. If the Dependent Care Expense exceeds the credit balance in your
Dependent Care Account, the amount to be paid to you will equal the balance in
your Dependent Care Flex Account and your Dependent Care Flex Account
balance will be reduced to zero. However, if you submit additional expenses, a
record of any such unpaid Dependent Care Expenses will be maintained, and
thereafter, if there is a credit balance in your Dependent Care Flex Account during
the year, you will be paid an amount equal to the lesser of (i) the unpaid
Dependent Care Expense or (ii) the credit balance in your Dependent Care Flex
Account.
D. Dependent Care Expenses. Dependent Care Expenses are expenses that can be
reimbursed out of your Dependent Care Flex Account. To qualify as Dependent
Care Expenses, the expenses must (i) allow you and your spouse to work or to
seek work and (ii) be for the care of a Qualifying Individual.
Additionally, you will not be entitled to reimbursements unless (1) both you and
your spouse work or (2) your spouse is a full-time student or is mentally or
physically unable to care for himself or herself.
Expenses will not be reimbursed as Dependent Care Expenses unless their main
purpose is to assure the Qualifying Individual's well-being and protection.
Examples of expenses that are not eligible for reimbursement include:
❑ services not required by your employment, such as baby sitters for leisure
activity;
❑ overnight camps;
❑ care provided by a person you claim as a dependent on your federal income
tax return;
❑ amounts paid for food, clothing or education;
❑ transportation expenses for a dependent care provider;
❑ care when you are on vacation, holiday or sick leave; and
❑ custodial care.
See Human Resources for additional information and examples.
When the expense Incurred includes expenses for other benefits incident to and an
inseparable part of the care, the full amount of the expense is considered to be for
such care. For example, the full amount paid to a nursery school in which a child
is enrolled is considered to be a Dependent Care Expense, even though the school
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also furnishes lunch and educational services. However, educational expenses
Incurred for a child in the first grade or higher are not treated as eligible
Dependent Care Expenses. Child care provided by a housekeeper whose services
include child care and house cleaning are covered.
Special rules apply to child care centers. Services provided by a childcare center
are generally covered. The childcare center must be a center that provides
dependent care for more than 6 individuals (who do not live at the center on a
regular basis during the year) and receives a fee for providing the services. Such
centers must comply with all applicable state and local laws and regulations.
See Human Resources for additional guidance for determining whether a
particular expense qualifies as a Dependent Care Expense.
E. Ceasing to be a Participant with Respect to the Dependent Care Flexible
Spending Account. If you stop being a Participant during a calendar year, you
will be entitled to reimbursements from your Account for Dependent Care
Expenses that are Incurred before you stopped being a Participant, but not to
exceed the credit balance of your Dependent Care Flex Account at the time you
stopped being a Participant.
F. Tax Credit is. Dependent Care Reimbursement. You are provided a limited tax
credit for Dependent Care Expenses. As a general rule, the amount of the tax
credit is 30% of your Dependent Care Expenses, reduced (but not below 20%) by
one percentage point for each $2,000 (or fraction thereof) by which your
adjustable gross income for the taxable year exceeds $10,000. Participation in
this Plan affects this credit because the dependent care credit is not available for
non-taxable reimbursements that you receive from your Dependent Care Flex
Account under this P/an. Under certain circumstances, the credit would be more
valuable than the tax savings provided under this Plan. Therefore, you may wish
to consult with your tax advisor before making use of your Dependent Care Flex
Account.
G. Reports. On or before January 31 of each year, the City or its designee will
furnish to each Participant who has received dependent care reimbursement
during the prior calendar year a written statement (on Form W-2) showing the
total amount of dependent care reimbursement paid to or on behalf of the
Participant during the prior Plan Year.
8. HEALTH SAVINGS ACCOUNT
A. HSA Benefits. An HSA-Eligible Individual can elect to participate in the HSA by
electing to pay the contributions on a pre-tax salary reduction basis to the
Employee's HSA established and maintained outside the Plan by a
trustee/custodian to which the City can forward contributions to be deposited (this
funding feature constitutes the HSA Benefits offered under this Plan). Such
15
election can be increased prospectively at any time during the Plan Year, effective
no later than the first day of the next calendar month following the date that the
election change was filed. An election may only be decreased during the period
of open enrollment.
B. HSA Contributions; Maximum Limits. The annual contribution for a
Participant's HSA Benefits is equal to the annual benefit amount elected by the
Participant, but in no event shall the amount elected exceed the statutory
maximum amount for HSA contributions applicable to the Participant's High
Deductible Health Plan coverage option (i.e., single or family) for the calendar
year in which the contribution is made.
An additional catch-up contribution may be made for Participants who are age 55
or to the extent permitted by federal law.
In addition, the maximum annual contribution shall be:
0) reduced by any matching or other City contribution made on the
Participant's behalf; and
(ii) prorated for the number of months in which the Participant is an HSA-
Eligible Individual.
C Recording Contributions for HSA. As described in subsection E, the HSA is not
an employer-sponsored employee benefit plan; it is an individual trust or custodial
account separately established and maintained by a trustee/custodian"outside the
Plan. Consequently, the HSA trustee/custodian, not the City, will establish and
maintain the HSA. The HSA trustee/custodian will be chosen by the Participant,
not by the City. The City may, however, limit the number of HSA providers to
whom it will forward contributions that the Employee makes via pre-tax salary
reductions — such a list is not an endorsement of any particular HSA provider.
The Plan Administrator will maintain records to keep track of HSA Contributions
an Employee makes via pre-tax salary reductions, but it will not create a separate
fund or otherwise segregate assets for this purpose. The City has no authority or
control over the funds deposited in a HSA.
D. Tax Treatment of HSA Contributions and Distributions.
The federal income tax treatment of the HSA (including contributions and
distributions) is governed by Code § 223.
E. Trust/Custodial Agreement; HSA Not an Employer-Sponsored Employee
Benefits Plan.
HSA Benefits under this Plan consist solely of the ability to make contributions to
the HSA on a pre-tax salary reduction basis. Terms and conditions of coverage
16
and benefits (e.g., eligible medical expenses, claims procedures, etc.) will be
provided by and are set forth in the HSA, not this Plan. The terms and•conditions
of each Participant's HSA trust or custodial account are described in the HSA
trust or custodial agreement provided by the applicable trustee/custodian to each
electing Participant and are not a part of this Plan.
The HSA is not an employer-sponsored employee benefits plan. It is a savings
account that is established and maintained by an HSA trustee/custodian outside
the Plan to be used primarily for reimbursement of "qualified eligible medical
expenses" as set forth in Code § 223(d)(2). The City has no authority or control
over the funds deposited in a HSA.
F. Election Modifications for HSA Benefits. An election to make a contribution to
an HSA can be increased at any time on a prospective basis. Such election
changes shall be effective no later than the first day of the next calendar month
following the date that the election change was filed. An election may only be
decreased during the period of open enrollment.
9. REIMBURSEMENT ISSUES AND DEBIT CARDS
A. Mandatory Rules Regarding Debit Cards. The following rules apply to all debit
cards usable to pay or reimburse medical expenses.
(1) Before any Employee participating in a Health Care Flex Account receives
the debit card, the Employee must agree in writing that he or she will only
use the card to pay for medical expenses (as defined, in Code Section
213(d)) of the Employee or his or her spouse or dependents, that he or she
will not use the debit card for any medical expense that has already been
reimbursed, that he or she will not seek reimbursement under any other
health plan for any expense paid for with a debit card, and that he or she
will acquire and retain sufficient documentation (including invoices and
receipts) for any expense paid with the debit card.
(ii) The debit card must include a statement providing that the agreements
described above are reaffirmed each time the Employee uses the card.
(iii) The amount available through the debit card must equal the amount
elected by the Employee for the Health Care Flex Account for the
cafeteria , and shall be reduced by amounts paid or reimbursed for section
213(d) medical expenses Incurred during the .
(iv) The debit card will be automatically cancelled when the Employee ceases
to participate in the Health Care Flex Account.
(v) Use of the debit card shall be limited to:
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❑ Physicians, dentists, vision care offices, hospitals and other
medical care providers (as identified by the merchant category
code);
❑ Stores with the merchant category code for drugstores and
pharmacies if, on a location by location basis, 90 percent of the
store's gross receipts during the prior taxable year consisted of
items which qualify as expenses for medical care described in
section 213(d); and
❑ Stores that have implemented the inventory information approval
system set forth by the Internal Revenue Service.
(vi) The City's Claims Administrator must substantiate claims based on
payments to medical care providers and stores in accordance with
Treasury Proposed Regulation § 1.125-6.
(vii) The City follows all of the following correction procedures for any
improper payments using the debit card:
❑ Until the amount of the improper payment is recovered, the debit card
will be de-activated and the Employee must request payments or
reimbursements of medical expenses from the Health Care Flex
Account through other methods (for example, by submitting receipts
or invoices from a merchant or service provider showing the Employee
Incurred a Code Section 213(d) medical expense);
❑ The City will demand that the Employee repay the cafeteria plan an
amount equal to the improper payment;
❑ lf, after the demand for repayment of improper payment, the Employee
fails to repay the amount of the improper charge, the City will
withhold the amount of the improper charge from the Employee's pay
or other compensation, to the full extent allowed by applicable law;
❑ If any portion of the improper payment remains outstanding after
attempts to recover the amount, the City will apply a claims
substitution or offset to resolve improper payments, such as a
reimbursement for a later substantiated expense claim is reduced by
the amount of the improper payment. So, for example, if an Employee
has received an improper payment of$200 and subsequently submits a
substantiated claim for $250 Incurred during the same coverage
period, a reimbursement for$50 is made; and
❑ If the Employee still remains indebted to the City for improper
payments, the City, consistent with its business practice, treats the
improper payment as it would any other business indebtedness.
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B. Submission of Health Care Expenses.
(i) Debit Cards Payments. You will receive a debit card to cover eligible
Health Care Expenses provided that you follow the Mandatory Rules
Regarding Debit Cards. No claim form or other documentation is
required for debit card expenses IF a medical claim created by the
transaction will be processed by the City's Claims Administrator.
Expenses that are NOT processed by the City's Claims Administrator
must be documented using the procedure outlined in (iii) below.
Examples include:
❑ Expenses covered by the City's vision plan;
• Medical expenses for Participants that are not enrolled in the City's
Health Coverage.
(ii) Other Payments. If you do not use your debit card to pay for Health Care
Expenses processed by the City's Claims Administrator, you must apply
for reimbursement by submitting a written claim form to the Claims
Administrator not later than April 30 after the end of the Plan Year for
which the expenses were Incurred. The claim for reimbursement may be
made before or after you have paid the Health Care Expense, but not
before the expense has been Incurred.
(iii) A documentation/claim form for Health Care Expenses must include the
following information and documentation.
❑ amount, date and description of the expense;
❑ name of the person for whom the expense was Incurred and, if the
person is not you, the relationship of the person to you;
❑ name of the provider to which the expense was or is to be paid;
❑ an Explanation of Benefits (EOB) for all expenses covered by any
health insurance plan OR a fully itemized bill from a provider whose
services are not covered by any health insurance plan OR an itemized
store receipt for over-the-counter medications prescribed by a
physician (if the register receipt does not include the name of the
medication, you must obtain a handwritten receipt from the store
indicating the name of the medication and the date purchased);
❑ Whether you require reimbursement or whether you are simply
providing documentation for a debit card payment; and
❑ any other information or documentation that the City or the Claims
Administrator reasonably requests.
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C. Submission of Dependent Care Expenses. You must apply for reimbursement of
Dependent Care Expenses by submitting a written claim form to the Claims
Administrator not later than April 30 after the end of the Plan Year in which the
expenses were Incurred. The claim for reimbursement may be made before or
after you have paid the Dependent Care Expense, but not before the expense has
been Incurred.
A claim form for Dependent Care Expenses must include the following
information and documentation:
❑ amount, dates of service and description of the expense;
❑ name of the dependent;
❑ name, address and taxpayer identification number of the individual or
organization to which the expense was or is to be paid;
❑ itemized bills or receipts for the services (if your provider is'a daycare center,
a printout is acceptable; if your provider is an individual you must submit a
receipt signed by the provider); and
❑ any other information or documentation that the City or the Claims
Administrator reasonably requests.
D. Reimbursement. If you timely submit a claim form and all required
documentation, and your request for reimbursement is approved, your claim will
be reimbursed at such times as the City will prescribe, generally as soon as
administratively feasible. The amount of any reimbursement will not exceed the
amount credited to your applicable Accounts at the time of the reimbursement.
Any dispute regarding a claim for benefits will be governed by the section entitled
Claims Procedure.
E. Forfeiture of Unused Amounts.
(i) The amount credited to your Health Care Flex Account may be used only
to reimburse you for Health Care Expenses Incurred during the calendar
yea-for which your election is applicable or the first two (2) months of the
year immediately following (the Grace Period). Any balance remaining in
your Health Care Flex Account (after all allowable reimbursements for the
calendar year plus the 2-month Grace Period have been made) shall be
forfeited. Such amounts will be used to pay expenses and fees of the Plan.
In other words, if you do not use up the amounts contained in your Health
Care Flex Account by the end of the 2-month Grace Period immediately
following the end of the calendar year, you will lose those amounts.
Therefore, it is very important to be conservative when allocating money
to your Account.
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(ii) The amount credited to your Dependent Care Flex Account may be used
only to reimburse you for Dependent Care Expenses Incurred during the
calendar year for which your election is applicable (there is no Grace
Period for Dependent Care Flex Accounts). Any balance remaining in
your Dependent Care Flex Account (after all allowable reimbursements
for the calendar year have been made) shall be forfeited. Such amounts
will be used to pay expenses and fees of the Plan. In other words, if you
do not use up the amounts contained in your Dependent Care Flex
Account by the end of the calendar year, you will lose those amounts.
Therefore, it is very important to he conservative when allocating money
to your Account.
10. CLAIMS PROCEDURES
Please see your Health Coverage for claims procedures applicable to those benefits. A
summary of claims procedures for the Accounts is set forth below:
A. Initial Claim for Benefits. Use of your debit card is considered submission of a
claim. You may also submit a claim for benefits to the Claims Administrator on
forms furnished for that purpose by the Claims Administrator or the City. Such
claim forms must be submitted by April 30 of the year immediately following the
Plan Year for which the expense is Incurred. A claim will be deemed to be filed
upon receipt by the Claims Administrator. You will have no right to seek review
of a denial of benefits, or to bring any action in any court to enforce a claim for
benefits prior to your filing a claim for benefits and exhausting your rights to
review under this Section, or if you fail to file a claim for benefits within the
specified time.
Any claim filed timely and properly will be evaluated and either paid or denied
within 30 days after the Claims Administrator's receipt of such claim, unless
special circumstances require an extension of time for processing the claim. If the
claim is not paid, the Claims Administrator will furnish notice specifying the
reason and describing any additional information required to perfect the claim.
Prior to the termination of the initial 30 day period, written notice of any
extension of such period will be furnished to you specifying the special
circumstances requiring the extension and the date by which a final decision will
be reached, which date will not be later than 60 days after the receipt of the claim.
When the final decision is made, you will be given a written notice advising you
as to whether the claim is granted or denied, in whole or in part. If the Claims
Administrator fails to pay benefits or to furnish a written explanation for the
denial of the claim within this time frame, the claim will be deemed denied for the
purpose of the review procedure.
21
B. Review of Claim Denial If a claim is denied by the Claims Administrator, in
whole or in part, you will have 60 days after the date you received written notice
of the denial to file a written request for review by the Plan Administrator. The
request for review will be deemed to be filed upon receipt by the Plan
Administrator. If a written request is not made in a timely manner, the decision of
the Claims Administrator will be the final decision of the Plan.
If a timely request for review is made, you or your duly authorized representative
may review pertinent documents and submit issues and comments in writing to
the Plan Administrator. Within 30 days after a request is received, the review will
be made and you will be advised in writing of the decision on review, unless
special circumstances require an extension of time for processing the review. A
final decision will be made not later than 60 days after the receipt of the request
for review, which decision shall be final, conclusive and binding on all persons.
If the Plan Administrator fails to furnish a written explanation of the review of the
claim denial within this time frame, the claim will be deemed denied for the
purpose of the review procedure.
C. Exhaustion of Remedies. If you fail to timely and properly file a request for the
review of a denial of benefits, in whole or in part, in accordance with the
procedures outlined above, you will have no right to review and will have no right
to bring any action, at law or in equity, in any court or administrative tribunal, and
the denial of your claim will be final, conclusive and binding on all persons for all
purposes.
11. HIPAA PROVISIONS FOR HEALTH CARE FLEXIBLE SPENDING ACCOUNT
A. Provision of Protected Health Information to City. Members of the City's
workforce have access to the individually identifiable health information of Plan
Participants for administrative functions of the Health Care Flex Account. When
this health information is provided from the Health Care Flex Account to the City,
it is Protected Health Information (PHI). The Health Insurance Portability and
Accountability Act of 1996 (HIPAA) and its implementing regulations restrict the
City's ability to use and disclose PHI. The following HIPAA definition of PHI
applies for purposes of this Section 11:
Protected Health Information. Protected health information means
information that is created or received by the Plan and relates to
the past, present, or future physical or mental health or condition of
a Participant; the provision of health care to a Participant; or the
past, present, or future payment for the provision of health care to a
Participant; and that identifies the Participant or for which there is
a reasonable basis to believe the information can be used to
identify the Participant. Protected health information includes
information of persons living or deceased.
22
The City shall have access to PHI from the Health Care Flex Account only as
permitted under this Section 10 or as otherwise required or permitted by HIPAA.
HIPAA and its implementing regulations were modified by the Health
Information Technology for Economic and Clinical Health Act (HITECH Act),
the statutory provisions of which are incorporated herein by reference.
B. Permitted Disclosure of Enrollment/Disenrollment Information. The Health
Care Flex Account may disclose to the City information on whether the individual
is participating in the Plan.
C Permitted Uses and Disclosure of Summary Health Information. The Health
Care Flex Account may disclose Summary Health Information to the City,
provided that the City requests the Summary Health Information for the purpose
of modifying, amending, or terminating the Health Care Flex Account.
"Summary Health Information" means information (a) that summarizes the claims
history, claims expenses, or type of claims experienced by individuals for whom a
plan sponsor had provided health benefits under a health plan; and (b) from which
the information described at 42 CFR § 164.514(b)(2)(i) has been deleted, except
that the geographic information described in 42 CFR § 164.514(b)(2)(i)(B) need
only be aggregated to the level of a five-digit ZIP code.
D. Permitted and Required Uses and Disclosure of PHI for Plan Administration
Purposes. Unless otherwise permitted by law, and subject to the conditions of
disclosure and obtaining written certification described herein, the Health Care
Flex Account may disclose PHI to the City, provided that the City uses or
discloses such PHI only for Plan administration purposes. "Plan administration
purposes" means administration functions performed by the City on behalf of the
Health Care Flex Account, such a quality assurance, claims processing, auditing,
and monitoring. Plan administration functions do not include functions
performed by the City in connection with any other benefit or benefit plan of the
City, and they do not include any employment-related functions.
Notwithstanding the provisions of this Plan to the contrary, in no event shall the
City be permitted to use or disclose PHI in a manner that is inconsistent with 45
CFR § 164.504(f).
E. Conditions of Disclosure for Plan Administration Purposes. The City agrees
that with respect to any PHI (other than enrollment/disenrollment information and
Summary Health Information, which are not subject to these restrictions)
disclosed to it by the Health Care Flex Account, the City shall:
❑ not use or further disclose the PHI other than as permitted or required by the
Health Care Flex Account or as required by law;
❑ ensure that any agent, including a subcontractor, to whom it provides PHI
23
received from the Health Care Flex Account agrees to the same restrictions
and conditions that apply to the City with respect to PHI;
❑ not use or disclose the PHI for employment-related actions and decisions or in
connection with any other benefit or employee benefit plan of the City;
❑ report to the Plan any use or disclosure of the information that is inconsistent
with the uses or disclosures provided for of which it becomes aware;
❑ make available PHI to comply with HIPAA's right to access in accordance
with 45 CFR § 164.524;
❑ make available PHI for amendment and incorporate any amendments to PHI
in accordance with 45 CFR § 164.526;
❑ make available the information required to provide an accounting of
disclosures in accordance with 45 CFR § 164.528;
❑ make its internal practices, books, and records relating to the use and
disclosure of PHI received from the Health Care Flex Account available to the
Secretary of Health and Human Services for purposes of determining
compliance by the Health Care Flex Account with HIPAA's privacy
requirements;
❑ if feasible, return or destroy all PHI received from the Health Care Flex
Account that the City still maintains in any form and retain no copies of such
information when no longer needed for the purpose for which disclosure was
made, except that, if such return or destruction is not feasible, limit further
uses and disclosures to those purposes that make the return or destruction of
the information infeasible; and
❑ ensure that the adequate separation between the Health Care Flex Account and
the City (i.e., the "firewall"), required in 45 CFR § 504(f)(2)(iii), is satisfied.
The City further agrees that if it creates, receives, maintains, or transmits any
electronic PHI (other than enrollment/disenrollment information and Summary
Health Information, which are not subject to these restrictions) on behalf of the
Health Care Flex Account, it will implement administrative, physical, and
technical safeguards that reasonably and appropriately protect the confidentiality,
integrity, and availability of the electronic PHI, and it will ensure that any agents
(including subcontractors) to whom it provides such electronic PHI agree to
implement reasonable and appropriate security measures to protect the
information. The City will report to the Health Care Flex Account any security
incident of which it becomes aware.
24
F. Adequate Separation Between Plan and City. The City shall allow the following
persons access to PHI: members of the Human Resources Department and any
other Employee who needs access to PHI in order to perform Plan administration
functions that the City performs for the Health Care Flex Account (such as quality
assurance, claims processing, auditing, monitoring, payroll, and appeals). No
other persons shall have access to PHI. These specified Employees (or classes of
Employees) shall only have access to and use PHI to the extent necessary to
perform the plan administration functions that the City performs for the Health
Care Flex Account. In the event that any of these specified Employees does not
comply with the provisions of this Section, that Employee shall be subject to
disciplinary action by the City for non-compliance pursuant to the City's
employee discipline and termination procedures.
The City will ensure that these provisions are supported by reasonable and
appropriate security measures to the extent that the designees have access to
electronic PHI.
G. Certification of Plan Sponsor. The Health Care Flex Account shall disclose PHI
to the City only upon the receipt of a certification by the City that the Health Care
Flex Account incorporates the provisions of 45 CFR § 164.504(f)(2)(ii), and that
the City agrees to the conditions of disclosure set forth in Section 10.5.
12. ADDITIONAL IMPORTANT INFORMATION
A. Plan Administrator. The Board of Public Works and Safety will be the Plan
Administrator for the Plan. The Board may from time to time designate a person,
committee or organization to perform certain administrative functions on its
behalf Any such individual, committee or organization will hold such
designation and responsibility until removed by the Board. The Board will have
full, discretionary authority to control and manage the operation and
administration of the Plan and will be the named fiduciary of the Plan. The Board
will have all power necessary or convenient to enable it to exercise such authority.
The Board or its designee may provide rules and regulations, not inconsistent with
the Plan provisions, for the operation and management of the Plan and may from
time to time in its sole discretion amend or rescind such rules or regulations. The
City will have full discretion, power and duty to take any and all actions
necessary or proper to carry out its duties.
B. Questions of Interpretation. The Plan Administrator and/or its designee will
have full, discretionary authority to enable it to carry out its duties under the Plan,
including, but not limited to, the authority to determine eligibility under the Plan,
to construe the terms of the Plan and to determine all questions of fact or law
arising there under. All such determinations and interpretations will be final,
conclusive and binding on all persons affected thereby. The Plan Administrator
and/or its designee will have full, discretionary authority to correct any defect,
25
supply any omission, reconcile any inconsistency and/or resolve any ambiguity in
the Plan in such manner and to such extent as it may deem expedient and the Plan
Administrator and/or its designee will be the sole and final judge of such
expediency. Benefits under the Plan will be paid only if the Plan Administrator
and/or its designee decides, in its sole discretion, that you are entitled to them.
C. Change or Termination of Plan. The City, by and through action of the Board of
Public Works and Safety, will have the right, in its sole discretion, to amend or
terminate the Plan in whole or in part, at any time and to any extent it may deem
advisable. Such amendment or termination of the Plan will be effective upon the
date of such action or on such later date as the Board of Public Works and Safety
may determine in connection therewith. To the extent allowed by the Code, any
such modification and/or amendment may be effective retroactively.
D. Assignments of Benefits. No benefit under the Plan, prior to its actual receipt by
you or your beneficiary, will be subject to any debt, liability, contract,
engagement or tort of or regarding you or your beneficiary, nor be subject to
anticipation, sale, assignment (except in the case of medical benefits), transfer,
encumbrance, pledge, charge, attachment, garnishment, execution, alienation or
any other voluntary or involuntary alienation or other legal or equitable process.
E. Federal Income Tax Consequences. The City does not make any representation,
commitment or guarantee that any amounts paid to you or for your benefit under
the Plan will be excludable from your gross income for federal, state.or local
income tax purposes or for social security tax purposes, or that any other federal
or state tax treatment will apply or be available to you. It will be your obligation
to determine whether any payment under the Plan is excludable from your gross
income for federal, state and local income tax, and social security tax purposes,
and to notify the City if you have reason to believe that any such payment is not
excludable.
F. FMLA and USERRA. The Plan will comply with the requirements of the FMLA
and USERRA.
G. Misrepresentation. If you or your beneficiary make an intentional or reckless
material misrepresentation in applying for coverage or benefits, your coverage
and the coverage of your beneficiary will be null and void.
H. Nondiscrimination Rules. The Plan will comply with the nondiscrimination rules
to the extent required by Code Section 105(h), 125, and 129.
L Limitation of Rights. Neither the establishment nor maintenance of the Plan, nor
any amendment thereof, nor any act or omission under the Plan or resulting from
the operation of the Plan, will be construed as:
(i) conferring upon you, your beneficiary or any other person a right or claim
against the City, except to the extent that such right or claim is specifically
expressed or provided in the Plan;
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•
(ii) creating any responsibility or liability of the City for the validity or effect
of the Plan;
(iii) a contract or agreement between the City and you or another person;
(iv) being consideration for, or an inducement or condition of, the employment
of you or another person, or as affecting or restricting in any manner or to
any extent whatsoever the rights or obligations of the City or you or
another person to continue or terminate the employment relationship at
any time; or
(v) to give you or any other person the right to be retained in the service of the
City or to interfere with the right of the City to discharge you or any other
person at any time.
J. Indemnification. If you receive one or more reimbursements under your Health
Care Flex Account that arc not for Health Care Expenses or under your
Dependent Care Flex Account that are not for Dependent Care Expenses, you will
indemnify and reimburse the Claims Administrator or the City for any liability the
same may incur for its failure to withhold federal, state or local income tax or
Social Security tax from such reimbursements; provided, however, that your
indemnification and reimbursement will not exceed the amount of additional
federal, state or local income tax that you would have owed if the reimbursements
had been made to you as regular cash Compensation, plus your share of any
Social Security tax that would have been paid on that Compensation, less any
such additional income and/or Social Security tax actually paid by you.
K. Forms and Proofs. You must furnish all proofs, receipts and releases as required
by the Plan, the Claims Administrator or the City.
L. Taxes or Penalties. If any taxes or penalties are payable by the City on your
behalf, such taxes or penalties will be payable by you to the extent such taxes
would have been originally payable by you had this Plan not been in existence.
M. Employment of Consultants. The City may employ one or more persons to
render advice with regard to the City's responsibilities under the Plan.
N. Counterparts. The Plan may be executed in any number of counterparts, each of
which will be deemed to be an original. All counterparts will constitute but one
and the sane instrument and will be evidenced by any one counterpart.
O. Notice. Any notice given under the Plan will be sufficient if given to the City,
when addressed to its office; if given to the Claims Administrator, when
addressed to its office; or if given to you, when addressed to you at your address
as it appears in the records of the Claims Administrator or the City.
P. Disclaimer of Liability. Nothing contained herein shall confer upon you any
claim, right or cause of action, either at law or at equity, against the Plan, the
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Claims Administrator or the City, its employees and agents for any acts or
omissions of any provider of services or supplies for any benefits provided under
the Plan.
Q. Right of Recovery. If the City or its designee or the Claims Administrator makes
any payment that according to the terms of the Plan should not have been made, it
may recover that incorrect payment from the person to whom it was made or from
any other appropriate party, whether or not such payment was made due to the
City's or Claims Administrator's own error. If any such incorrect payment is
made directly to you, the City or its designee or the Claims Administrator may
deduct it from future payments made directly to you.
R. Inability to Locate Payee. If the Plan Administrator is unable to make payment
to any Participant or other person to whom a payment is due under the Plan
because it cannot ascertain the identity or whereabouts of such Participant or other
person after reasonable efforts have been made to identify or locate such person,
then such payment and all subsequent payments otherwise due to such Participant
or other person shall be forfeited following a reasonable time after the date any
such payment first became due.
S. Receipt and Release. Any payments to you will be in full satisfaction of your
claim of being paid and the City may condition payment on your delivery of the
duly executed receipt and release in such form as may be determined appropriate
by the City.
T. Benefits Solely from Medical Escrow Fund. Except as may otherwise be
required by law:
(i) the benefits provided hereunder will be paid solely from the City of
Carmel Medical Escrow Fund;
(ii) nothing herein will be construed as requiring the City to maintain any fund
or segregate any amount for your benefit; and
(iii) you will not have any claim against, right to or security or other interest in,
any fund, account or asset of the City from which any payment under the
Plan may be made.
U. Reliance. Neither the City nor the Claims Administrator, nor their respective
employees, agents or designees, shall incur any liability in acting upon any notice,
request, signed letter, telegram or other paper or document believed by the City or
the Claims Administrator to be genuine and/or to have been executed or sent by
an authorized person.
V. Participant Incapacitation. When you are under legal disability or, in the City's
opinion, are in any way incapacitated so as to be unable to manage your affairs,
the City may cause your benefits to be paid to your legal representative for your
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benefit. The payment of such benefits will completely discharge the liability of
the City for such benefits.
W. Participant Death. In the event of your death, your spouse (or, if none, your
executor or the City) may apply on your behalf for reimbursement of Health Care
Expenses or Dependent Care Expenses, as applicable.
X. Entire Plant. The Plan document and the documents incorporated by reference
herein will constitute the only legally governing documents for the Plan. All
statements made by the City will be deemed representations and not warranties.
No such statements will void or reduce or increase coverage under the Plan or be
used in defense to a claim unless in writing signed by the City.
Y. Rules of Interpretation. In interpreting the Plan, the following rules of
interpretation will apply:
(i) The Plan shall be construed to be in compliance with Code Section 125
and other applicable provisions of law so that the intended tax
consequences of the Plan/Summary are achieved.
(ii) The Health Care Flex Account shall be construed to be in compliance with
the requirements of Code Sections 105, 106, 213 and 4980B; the
Dependent Care Flex Account shall be construed to be in compliance with
the requirements of Code Section 129; and the Health Savings Account
shall be construed to be in compliance with the requirements of Code
Section 223.
(iii) The Plan shall be construed, enforced and administered and the validity
thereof determined in accordance with applicable provisions of the Code
and, to the extent not inconsistent with the Code, in accordance with the
laws of the State of Indiana, except for its conflict of laws provisions.
(iv) Words used herein in the masculine gender shall be construed to include
the feminine gender, and words used in the singular or plural shall be
construed as being in the plural or singular, as appropriate.
(v) Headings and subheadings are inserted for convenience and are not to be
considered in the construction of any provision of the Plan.
(vi) If a provision of the Plan is held illegal or invalid for any reason by a court
or agency of competent jurisdiction, that provision will be deemed null
and void, but the invalidation of such provision will not otherwise impair
or affect the Plan.
(vii) Any reference to a Section of the Code will be deemed a reference to any
comparable or succeeding provision of any legislation that amends,
supplements or replaces such Section.
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IN WITNESS WHEREOF, t e City has caused this restatement to be executed by its duly
authorized officers this M day of y4--(1,2 2_ z _ , 2012, to be effective January 1,
2013.
CITY OF CARMEL, INDIANA
By and through its Board of Public Works and Safety
i ems. --1-9
James 'ainard, Presiding S—ice
Date
�'l a vs 13 4 5'-ia
Mary Aryf� Burke, Board Member Date
Lori Wdtso , Board Member Date
ATTEST:
1: ' i'_A .2'2, i s / -/9-/
Diana Cordray, IA ' C, Clerk-Treasurer Date
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