HomeMy WebLinkAbout2010/12/07 Item 7
CITY COUNCIL
AGENDA STATEMENT
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DECEMBER 7,2010, ItemL
SUBMITTED BY:
REVIEWED BY:
RESOLUTION ADOPTING THE CITY OF CHULA VISTA
CAFETERIA BENEFITS PLAN FOR 2011
.IM1t01r
DIRECTOR OF ~RESOUR CES 1!-f(J' -
CITY MANAGER
----
ASSISTANT CITY NAGER '7 )
ITEM TITLE:
4/5THS VOTE: YES D NO 0
SUMMARY
The Internal Revenue Code requires that the Section 125 Cafeteria Benefits' Plan offered
by the City to its'employees be in a written document and that the document be formally
adopted by the City Council on or before the first day of the plan yeaL Adoption by
resolution of the attached plan document fulfills the City's obligation for the 2011 plan
yeaL
ENVIRONMENTAL REVIEW
Not applicable,
RECOMMENDATION
That Council adopt the plan by resolution.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
In June 1998, the City established its first Section 125 Cafeteria Benefits Plan. In
compliance with Internal Revenue Code 9125(d) the City Council annually adopts a
written plan document prior to the first day of the plan year. The first day of the City's
plan year is January 1, 2illl.
This Plan Document lays out how the City offers eligible employees the choice between
cash and certain nontaxable benefits (such as health insurance), thereby allowing
employees to pay for the benefits they choose on a pre-tax basis.
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DECEMBER 7, 2010, Item-L
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The specific health plans offered and their structure are not part of this Cafeteria Plan
Document. They are included in what is known as the Summary Plan Document that was
given to eligible employees as part of their open enrollment materials to assist them in
making their benefit choices. The plans offered and their structure are determined after
our broker, Barney and Barney, extensively markets and negotiates with providers to
provide coverage comparable to the prior year while keeping the increase in costs to the
City and its benefited employees to a minimum. All employee groups are advised of the
offers and the plan structures that will provide the least increase in premium costs.
Under current cafeteria plan regulations having an approved written plan is critical.
Without a written plan or if the written plan does not comply with applicable
requirements regarding content and timing of adoption, then the plan is not a cafeteria
plan and employees' elections will be taxable. The City has timed its open enrollment
period for 2011 to comply with these regulations and to meet provider cutoff deadlines
for enrollment to ensure employees are covered without interruption.
The City's Plan includes the following required information:
o Description of available benefits
. Participation rules
. Election procedures
. Manner of contributions
. Maximum amount of contributions
. The plan year
. The plans provisions for complying with flexible spending arrangements
(FSAs)
The attached Plan incorporates all of the operating rules prescribed in Code S 125 and the
regulations thereunder.
DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is
not site specific and consequently the 500 foot rule found in California Code of
Regulations section 18704.2(a)(l) is not applicable to this decision.
CURRENT YEAR FISCAL IMPACT
The flex allotment and cafeteria plans change from year to year and have been accounted
for in the current year fiscal budget.
ONGOING FISCAL IMPACT
None with this action.
ATTACHMENTS
Attachment A - 2011 City of Chula Vista Cafeteria Benefits Plan
Prepared by: Ted Enos, Risk Manager
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CllY OF
CHULA VISTA
CAFETERIA BENEFITS PLAN
FOR
THE CITY OF CHULA VISTA
Amended and Restated as of January 1, 2011
Established June 1998
Human Resources Department
City of Chula Vista
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SECTION 125 CAFETERIA BENEFIT PLAN
ADOPTION AGREEMENT
The undersigned Employer hereby adopts the Section 125 Cafeteria Benefit Plan for
those Employees who shall qualify as Participants hereunder. The Employer herby
selects the following Plan Specifications:
A. EMPLOYER INFORMATION
Name of Employer:
City of Chula Vista
Address:
276 Fourth Ave.
Chula Vista, CA 91910
Employer Tax ID:
95-6000690
Nature of Business:
Municipal Government
Name of Plan:
City of Chula Vista Cafeteria
Benefits Plan
B. EFFECTIVE DATE
Original Effective Date of Plan:
Effective Date of Amendment:
June 1998
January 1, 2011
C. ELIGIBILITY REQUIREMENTS FOR PARTICIPATION
Eligibility requirements for each component plan under this Section
125 document will be applicable and, if different, will be listed in Item
F.
Employee Status:
Directly employed by the City of
Chula Vista in a full- or part-time
benefited status.
Length of Service:
First day of employment in a
benefited status.
The current plan year will begin
on January 1, 2011 and end on
December 31,2011.
D. PLAN YEAR
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E. EMPLOYER CONTRIBUTIONS
Non-Elective Contributions:
Non-Elective Contributions
(Safety):
Elective Contributions (Salary
Reduction):
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The maximum amount available
to each Participant for the
purchase of certain elected
benefits (Group Medical
Insurance, Group Dental
Insurance, Group Vision,
Dental/MedicalNision and
Dependent/Child Care
Reimbursement and Cash
Payment Option) with non-
elective contributions will be:
Confidential
CVEA
Executive
MM,MMCF,MMUC
PROF,PRCF,PRUC
Senior Managers
WCE
Mayor/Council
$11,348
$10,848
$14,248
$11,848
$11,848
$12,848
$11,848
$14,248
For Employees represented by
POA/IAFF -The employer pays
the full cost of the Kaiser
Permanente Plan for employees
and their dependents or the
annual premium less $600 for
non-Kaiser plans. For dental
coverage the City will pay an
amount equal to the pre-paid
dental premium for the coverage
level elected.
Each Participant may authorize
the Employer to reduce his or her
compensation by the amount
needed for the purchase of
benefits elected, less the amount
of non-elective contributions. An
election for salary reduction will
be made on the Benefit Election
Form.
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F. AVAILABLE BENEFITS
Each of the following components should be considered a plan that
comprises this Plan.
1. Group Medical Insurance
Mandatory for all employees
except those who are
covered by their City
Employee Spouse or who
are represented by MM,
MMUC,MMCF,PROF,
PRCF,PRUC and can
provide evidence of other
qualified coverage.
2. Dental Insurance
3. Vision Insurance
4. Dental/Medical/Vision
Reimbursement Account
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The terms, conditions, and
limitations for the Group Medical
I nsurance will be as set forth in
the insurance policy or policies
described below: (See Section V
of the Plan Document).
The terms, conditions and
limitations for the Dental
Insurance will be as set forth in
the insurance policy or policies
described below: (See Section
V of the Plan Document)
The terms, conditions and
limitations for the Dental
Insurance will be as set forth in
the insurance policy or policies
described below: (See Section
V of the Plan Document)
The terms conditions and
Limitations for the
DentallMedicalNision
Reimbursement Account will be
as set forth in Section VI of the
Plan Document and described
below:
Minimum Coverage:- $0 per Plan
Year
Maximum Contribution: $5,000
from all sources per Plan Year.
Recordkeeper: Wage Works
\
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5. Dependent/Child Care
Reimbursement Account
The terms conditions and
Limitations for the Dependent!
Child Care Reimbursement
Account will be as set forth in
Section VII of the Plan Document
and described below:
Minimum coverage: $0 per Plan
Year
Maximum Coverage-$5,000 per
plan year from all sources
($2,500 per plan year from all
sources for a married employee
filing separate tax returns).
Recordkeeper: Wage Works
6. Cash Payment Option
Any Flex Plan allotment
remaining after electing
mandatory medical coverage
may be allotted to this taxable
option.
7. The following benefits are
only available through Elective
Contributions (Salary Reduction):
AFLAC Cancer Insurance
AFLAC Basic Dental Coverage
AFLAC Accident Insurance
AFLAC Hospital Indemnity
Insurance
AFLAC Specified Health Event
Insurance
The terms condition and
limitations for the AFLAC
programs will be as set forth in
Section VIII of the Plan
Document.
Administered by: AFLAC
The Plan shall be construed, enforced, administered, and the validity
determined in accordal1ce with the applicable provisions of the Employee
Retirement Income Security Act of 1974 (as amended) if applicable, the
Internal Revenue Code of 1986 (as amended), and the laws of the State of
California. Should any provision be determined to be void, invalid, or
unenforceable by any court of competent jurisdiction, the Plan will continue to
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operate, and for purposes of the jurisdiction of the court only, will be deemed
not to include the provision determined to be void.
This Plan is hereby adopted the 7th day of December, 2010
By:
Title:
THIS DOCUMENT IS NOT COMPLETE WITHOUT PAGES 7 THROUGH 22
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SECTION 125 CAFETERIA BENEFITS PLAN
SECTION 1
PURPOSE
The Employer is establishing this Cafeteria Benefits Plan in order to make a broader
range of benefits available to its Employees and their Dependents. The Plan allows
Employees to choose among different types of benefits and select the combination
best suited to their individual goals, desires, and needs. These choices include an
option to receive certain benefits in lieu of taxable compensation.
In establishing this Plan, the Employer desires to attract, reward, and retain highly
qualified, competent employees, and believes this Plan will help achieve that goal.
It is the intent of the Employer to establish this Plan in conformity with Section 125 of
the Internal Revenue Code of 1986, as amended, and in compliance with applicable
rules and regulations issued by the Internal Revenue Service. This Plan will grant to
eligible Employees an opportunity to purchase qualified benefits, which when
purchased alone by the Employer, would not be taxable.
SECTION II
DEFINITIONS
The following words and phrases appear in this Plan and will have the meaning
indicated below unless a different meaning is plainly required by the context:
"Administrator" means the Human Resources Department of the City of Chula
Vista, or other such person or entity that it appoints as its designee.
"Annual Enrollment Period" means the period designated by the Administrator
which precedes the commencement of each Plan Year during which Eligible
Employees can elect or modify the amount contributed for Benefits.
"Applicable Law" means the Internal Revenue Code of 1986, and the same as may
be amended from time to time, plus all regulations promulgated with respect thereto.
Reference to any section or subsection of the Code includes reference to any
comparable or succeeding provision of any legislation which amends, supplements
or replaces such section or subsection.
"Benefit Election Form" See Enrollment Form.
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"Benefit Package Option" means a qualified benefit under Code Section 125 (f)
that is offered under the Cafeteria (Flexible) Benefits Plan, or an option for coverage
under an underlying health plan (such as an HMO or PPO option under a health
plan).
"Benefits" or "Qualified Benefits" means the following benefits available under
the Flex Plan:
(a) Group Medical Insurance
(b) Dependent/Child Care Reimbursement Account
(c) Dental/MedicalNision Reimbursement Account
(d) Cash Compensation (Post-Tax)
(e) Health Premiums for Non-Tax Qualified Dependents (Post-
Tax)
(f) Vision Insurance
(g) Dental Insurance
(h) Certain AFLAC Plans available via salary reduction only.
In order for a benefit to be qualified, a participant must also meet federal and/or state
tax requirements, including Code Section 152, etc.
"Child" means for these purposes will include (1) a natural child, (2) a stepchild, (3)
a legally adopted child, (4) a child placed with the employee for legal adoption, (5) a
foster child and (6) a child placed under the legal guardianship of the employee. In
addition and in order to comply with OBRA 1993: a child will include a child for
whom the employee or covered dependent spouse or Life Partner is required to
provide coverage due to a Medical Child Support Order. A Qualified Medical Child
Support Order (QMCSO) will also include a judgment, decree or order issued by a
court of competent jurisdiction or through an administrative process established
under state law and having the force and effect of law.
"Code" means the Internal Revenue Code of 1986, as amended.
"DentallMedicalNision Reimbursement Account" Shall have the meaning
assigned to it by Section 6.01 of the Plan attached hereto as Exhibit A.
"Dependent" means an individual including:
(a) Participant's legal spouse;
(b) Life Partner (see definition of Life Partner)
(c) Child of the employee, spouse or Life Partner who is under 26 years of
age (group medical insurance only);
(d) Unmarried child of the employee, spouse or Life Partner who is dependent
upon the employee for support and if they are under 25 years of age (all
other plans except group medical);
And
(e) Unmarried child of any age who is incapable of self-support due to mental
or physical handicap and such handicap began before age 25
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Note: A child who is eligible for an employer-sponsored medical benefits plan
where he/she works shall not be eligible for benefits under the City of Chula Vista's
medical plan, even if the child does not elect to be covered under his/her employer's
medical benefits plan.
"Dependent/Child Care Reimbursement Account" shall have the same meaning
assigned to it by Section 6.02 of the Plan Attached hereto as Exhibit A.
"Effective Date" of this Flex Plan was June 1998.
"Eligible Employee" means any active, full- or part-time employee of the City of
Chula Vista employed in a benefited status.
"Employee" means an individual that the Employer classifies as active, full-time or
part-time, who is on the Employer's W-2 payroll, include elected and appointed
officials but does not include the following: (a) any leased employee or an individual
classified as a contract worker, independent contractor, temporary employee or
casual employee for the period during which such individual is so classified, whether
or not any such individuals are on the Employer's W-2 payroll or determined by the
IRS or others or be common-law employees of the Employer; (b) any individual who
performs services for the Employer but who is paid by a temporary or other
employment or staffing agency for the period during which such individual is paid by
such agency, whether or not such individual are determined by the IRS or others to
be common-law employees of the Employer.
"Employer" means the City of Chula Vista.
"Enrollment Form" means the form or forms whether paper or electronic provided
by the Employer or the Administrator for the purpose of allowing an Eligible
Employee to participate in this Cafeteria Benefits Plan by employer contributions and
by electing Salary Reductions to pay for Benefits. It includes an agreement pursuant
to which an Eligible Employee or Participant authorizes the employer to make Salary
Reductions.
"Enrollment Period" means the period designated by the Administrator which
allows new employees to select Benefits for the current Plan Year and shall be the
first 30 days following each new Eligible employee's hire date.
"Entry Date" shall mean the date that an Eligible Employee shall become a
Participant:
(a) on the first day of the Flex Plan Year if the Eligible Employee's elects are
made during the annual Enrollment Period, or
(b) on the first day of the pay period coinciding with the receipt of the
Enrollment Form by the Participant's Employer, provided the new hire
makes such request within 30 days after the date of employment, or
(c) on the first day coinciding with the date of satisfying the plan's eligibility
requirements.
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"FMLA" means the Family and Medical Leave Act of 1993, as amended.
"Flex Plan Year" means the twelve-month period commencing on January 1 and
ending on December 31st.
"Health Plan" means the group medical, dental and vision plans maintained by the
City for its employees, as amended from time to time and are automatically
incorporated by reference under this Flex Plan. A Participant may request a copy of
the plan(s) from the Human Resources Benefits Division.
"HIPAA" Means the Health Insurance Portability and Accountability Act of 1996 as
amended.
"Life Partner" means: both you and your partner are eighteen (18) years of age or
older and are capable of consenting to the domestic partnership; neither of you can
be married to another or be a member of another domestic partnership; you cannot
be related by blood in a way that would prevent you from being married to each
other in this state; you must share the same principal place of abode, with the intent
to continue doing so indefinitely (this means that both partners share the same
residence, however, it is not necessary that the legal right to possess the common
residence be in both names); You are jointly financially responsible for "basic living
expenses; defined as basic food, water, shelter, and any other basic living
expenses. Life partners do not need to contribute equally to the cost of these
expenses as long as they agree that both are responsible for the cost; neither of you
have had a different domestic partner in the last six (6) months unless a previous
domestic partnership terminated by death.
"Non-elective Contribution(s)" means any amount which the Employer, pursuant
to Labor Agreements contributes on behalf of each Participant to provide benefits for
such Participant and his or her Dependents, if applicable, under one or more of the
Benefit Plan Option(s) offered under the Plan. The amount shall be calculated for
each plan year in a uniform and nondiscriminatory manner and in the case of POA
and IAFF employees will be based upon the Participant's elected coverage
dependent status, and for all others may be based on the commencement or
termination date of the Participant's employment during the Plan Year, and such
other factors as the Employer shall prescribe. To the extent set forth in the
Summary Plan Description or enrollment material, the Employer may make non-
elective contribution available to Participants and allow Participants to allocate the
Non-elective Contributions among the various Benefit Plan Options offered under
the Plan in a manner set forth in the Summary Plan Description or enrollment
material. In no event will any Non-elective Contribution be disbursed to a Participant
in the form of additional, taxable Compensation except as otherwise provided in the
Summary Plan Description or enrollment material.
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"Participant" means all Eligible Employees.
"Period of Coverage" means that portion of the Flex Plan Year for which one is a
Participant. In no event shall the period of coverage commence prior to, nor
terminate after, the commencement and ending dates of the Flex Plan Year.
"Qualified Benefits" means any benefit excluded from the Employee's taxable
income under Chapter 1 of the Code other than Sections 106 (b), 117,124, 127 or
132 and any other benefit permitted by the Income Tax Regulations (i.e. any
premiums for Life Partners who are not otherwise tax qualified dependents). Long
term care is not a "Qualified Benefit"
SECTION III
ELGIBILlTY, ENROLLMENT, AND PARTICIPATION
3.01 ELIGIBILITY: Each Employee of the Employer who has met the eligibility
requirements of Item C of the Adoption Agreement will be eligible to participate in
the Plan on the entry date specified or the effective date of the Plan, which ever is
later. The Employer must notify the Employee of his eligibility to participate in the
Plan so that the Employee shall complete the necessary enrollment forms on or
before the entry date.
3.02 ENROLLMENT: An eligible Employee may enroll (or re-enroll) in the Plan by
submitting to the Employer, during an enrollment period, an Election Form which
specifies his or her benefit elections for the Plan Year and which meets such
standards for completeness and accuracy as the Employer may establish. A
Participant's Election Form shall be completed prior to the beginning of the Plan
Year, and shall not be effective prior to the date such form is submitted to the
Employer. Any Election Form submitted by a Participant in accordance with this
Section shall remain in effect until the earlier of the following dates: the date the
Participant terminates participation in the Plan; or, the effective date of a
subsequently filed Election Form.
A Participant's right to elect certain benefit coverage shall be limited hereunder to
the extent such rights are limited in the Policy. Furthermore, a Participant will not be
entitled to revoke an election after a period of coverage has commenced and to
make a new election with respect to the remainder of the period of coverage unless
both the revocation and the new election are on account of and consistent with a
change in status, or oth~r allowable events, as determined by Section 125 of the
Internal Revenue Code and the regulations thereunder. Notwithstanding anything to
the contrary herein, to the extent required by the Health Insurance Portability and
Accountability Act of 1996, the Plan shall permit special enrollment period for
employees who have previously declined coverage under the Plan; a new
dependent may also justify a special enrollment period.
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3.03 DEFAULT ENROLLMENT:
(a) Employees of the CVEA, WCE, MAYOR, COUNCIL, CITY ATTORNEY,
CITY CLERK, EXECUTIVE, SENIOR MANAGER, MID-MANAGER, MID-
MANAGER CONFIDENTIAL, MID-MANAGER UNCLASSIFIED,
PROFESSIONAL, PROFESSIONAL CONFIDENTIAL, PROFESSIONAL
UNCLASSIFIED, AND CONFIDENTIAL employee groups who fail to
make their elections during Open Enrollment will have their current
medical and life insurance automatically continued in to the next Plan year
as if the Employee elected to keep them. All other coverage, including
dental, vision and reimbursement accounts will stop. Any Flex Allotment
funds remaining after the health coverage election will be placed in the
taxable cash option.
In the case of a newly eligible employee, failure to turn in the completed
enrollment forms within 30 days from eligibility date will result in automatic
enrollment in the least costly medical coverage for employee only with
any remaining funds placed in the taxable Cash Payment Option.
(b) POA and IAFF employees who fail to make their benefit elections
either within 30 days of their eligibility date or during open enrollment will
only be enrolled in the Kaiser Employee Only plan.
3.04 TERMINATION OF PARTICIPATION: A Participant shall continue to
participate in the Plan until the earlier of the following dates:
a. The date the Participant terminates employment by death,
disability, retirement or other separation from service; or
b. The date the Participant ceases to work for the Employer as an
eligible Employee;
c. The date of termination of the Plan;
d. The first date a Participant fails to pay required contributions
while on a leave of absence, or
e. The date an employee is on a leave of absence without benefits.
3.05 SEPARATION FROM SERVICE: The Employer shall, on a reasonable and
consistent basis, permit an Employee who separates from the employment
service of the Employer during a Plan Year to revoke his existing elections
and terminate the receipt of benefits for the remaining portion of the Plan
Year.
3.06 QUALIFYING LEAVE UNDER FAMILY LEAVE ACT: Notwithstanding any
provision to the contrary in this Plan, if a Participant goes on a qualifying paid
or unpaid leave under the Family and Medical Leave Act of 1993 (FMLA), to
the extent required by the FMLA, the Employer will continue to maintain the
Participant's existing coverage under the Plan with respect to the benefits
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under Section V and Section VI of the Plan on the same terms and conditions
as though they were still an active Employee. If the Employee fails to return
to work after such leave for any reason other than the serious illness of the
employee or the family member for whom the leave was granted or through
no fault of the employee, they will be required to pay all Cafeteria Benefits
Plan monies paid to them, or on their behalf during the absence.
3.07 COVERAGE WHILE ON A LEAVE OF ABSENCE WITH BENEFITS:
Employees who are authorized to take a leave with benefits (e.g. Military
Leave as approved by the City Council) will continue to be covered under the
Plan until the expiration of their leave.
3.08 COVERAGE WHILE ON A LEAVE OF ABSENCE WITHOUT BENEFITS:
Employees on an unpaid leave of absence for any reason other than those
under Section 3.06 and 3.07 are no longer eligible for participation in the
Plan.
SECTION IV
CONTRIBUTIONS
4.01 EMPLOYER CONTRIBUTIONS: The Employer may pay the costs of the
benefits elected under the Plan with funds from the sources indicated in Item
E of the Adoption Agreement. The Employer Contribution may be made up of
Non-Elective Contributions and/or Elective Contributions authorized by each
Participant.
4.02 IRREVOCABILITY OF ELECTIONS: A Participant may file a written election
form with the Administrator before the end of the current plan year revising
the rate of his contributions or discontinuing such contributions effective as of
the first day of the following Plan Year. The Participant's Elective
Contributions will automatically terminate the date his employment
terminates. Except as provided in this Section 4.02 and Section 4.03, a
Participant's election under the Plan is irrevocable for the duration of the plan
year to which it relates. The exceptions to the irrevocability requirement
which would permit a mid-year election change in benefits and the salary
reduction amount elected are set out in the Treasury regulations promulgated
under Code Section 125, which include the following:
(a) Chanqe in Status. A Participant may change or revoke his election under the
Plan upon the occurrence of a valid change in status, but only if such change
or termination is made on account of, and is consistent with, the change in
status in accordance with the Treasury regulations promulgated under
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Section 125. The Employer, in its sole discretion as Administrator, shall
determine whether a requested change is on account of and consistent with a
change in status, as follows:
(1) Change in Employee's legal marital status, including marriage, divorce,
death of spouse, legal separation, and annulment;
(2) Change in number of Dependents, including birth, adoption, placement
for adoption, and death;
(3) Change in employment status, including any employment status
change affecting benefit eligibility of the Employee, spouse or
Dependent, such as termination or commencement of employment,
change in hours, strike or lockout, a commencement or return from an
unpaid leave of absence and change in work site. If the eligibility for
either the cafeteria Plan or any underlying benefit plans of the
Employer of the Employee, spouse or Dependent relies on the
employment status of that individual, and there is a change in that
individual's employment status resulting in gaining or losing eligibility
under the Plan, this constitutes a valid change in status. This category
only applies if the benefit eligibility is lost or gained as a result of the
event. If an Employee terminates and is rehired within 30 days, the
Employee is required to step back into his previous election. If the
Employee terminates and his rehired after 3Q days, the Employee may
either step back into the previous election or make a new election;
(4) Dependent satisfies, or ceases to satisfy, Dependent eligibility
requirements due to attainment of age, gain or loss of student status,
marriage or any similar circumstances; and
(5) Resident change of Employee, spouse or Dependent, affecting the
Employee's eligibility for coverage.
(b) Special HIPAA Enrollment Riqhts. If a Participant, spouse, or Dependent
enrolls in the health insurance plan pursuant to special enrollment rights
under HIPAA, the Participant may make a corresponding change in election
under this Plan. Special enrollment rights under the health insurance plan
will be determined by the terms of the health insurance plan.
(c) Certain Judqments, Decrees or Orders. If a judgment, decree or order
resulting from a divorce, legal separation, annulment or change in legal
custody (including a qualified medical child support order [QMCSO]) requires
accident or health coverage for a Participant's child or for a foster child who is
a dependent of the Participant, the Participant may have a mid-year election
change to add or drop coverage consistent with the Order.
(d) Entitlement to Medicare or Medicaid. If a Participant, Participant's spouse or
Participant's Dependent who is enrolled in an accident or health plan of the
Employer becomes entitled' to Medicare or Medicaid (other than coverage
consisting solely of benefits under Section 1928 of the Social Security Act
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providing for pediatric vaccines), the Participant may cancel or reduce health
coverage under the Employer's Plan. Loss of Medicare or Medicaid
entitlement would allow the Participant to add health coverage under the
Employer's Plan.
(e) Familv Medical Leave Act. If an Employee is taking leave under the rules of
the Family Medical Leave Act, the Employee may revoke previous elections
and re-elect benefits upon return to work.
(f) COBRA Qualifvinq Event. If an Employee has a COBRA qualifying event (a
reduction in hours of the Employee, or a Dependent ceases eligibility), the
Employee may increase his pre-tax contributions for coverage under the
Employee's Plan if a COBRA event occurs with respect to the Employee, the
Employee's spouse or Dependent. The COBRA rule does not apply to
COBRA coverage under another Employer's Plan.
4.03 OTHER EXEPTIONS TO THE IRREVOCABILITY OF ELECTIONS.
Other exceptions to the irrevocability of election requirement permit mid-year
election changes an apply to all qualified benefits except for
Dental/MedicalNision Reimbursement Plan, as follows:
(a) Chanqe in Cost. If the cost of a benefit package option under the Plan
significantly increases during the plan year, Participants may (i) make a
corresponding increase in their salary reduction amount, (ii) revoke their
elections and make a prospective election under another benefit option
offering similar coverage, or (iii) revoke election completely if no similar
coverage is available, including in spouse or dependent's plan. If the cost
significantly decreases, employees may elect coverage even if they had not
previously participated and may drop their previous election for a similar
coverage option in order to elect the benefit package option that has
decreased in cost during the year. If the increased or decreased cost of a
benefit package option under the Plan is insignificant, the participant's salary
reduction amount shall be automatically adjusted.
(b) Siqnificant curtailment of coveraqe.
(i.) With no loss of coverage. If the coverage under a benefit
package option is significantly curtailed or ceases during the
Plan Year, affected Participants may revoke their elections for
the curtailed coverage and make a new prospective election for
cove~age under another benefit package option providing similar
coverage.
(iL) With loss of coverage. It there is a significant curtailment of
coverage with loss of coverage, affect Participants may revoke
election for curtailed coverage an make a new prospective
election for coverage under another benefit package option
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providing similar coverage, or drop coverage if no similar benefit
package option is available.
(c) Addition or Siqnificant Improvement of Benefit Packaqe Option. If during the
Plan Year a new benefit package option is added or significantly improved,
eligible employees, whether currently participating or not, may revoke their
existing election and elect the newly added or newly improved option.
(d) Chanqe in Coveraqe of a Spouse or Dependent Under Another Employer's
Plan. If there is a change in coverage of a spouse, former spouse, or
Dependent under another employer's plan, a Participant may make a
prospective election change that is on account of and corresponds with a
change made under the plan of the spouse or Dependent. This rule applies if
(1) mandatory changes in coverage are initiated by either the insurer of
spouse/dependent's plan or by the spouse/dependent's employer, or (2)
option changes are initiated by the spouse/dependent's employer or by the
spouse/dependent through open enrollment.
(e) Loss of coveraqe under other qroup health coveraqe. If during the Plan Year
coverage is lost under any group health coverage sponsored by a
governmental or educational institution, a Participant may prospectively
change his or her election to add group health coverage for the affected
Participant or his or her spouse or dependent.
4.04 CASH BENEFIT: Available amounts not used for the purchase of benefits
under this Plan may be considered a cash benefit under the Plan payable to
the Participant as taxable income to the extent indicated in Item E of the
Adoption Agreement.
4.05 PAYMENT FROM EMPLOYER'S GENERAL ASSETS: Payment of benefits
under this Plan shall be made by the Employer from Elective Contributions
which shall be held as part of its general assets.
4.06 EMPLOYER MAY HOLD ELECTIVE CONTRIBUTIONS: Pending payment of
benefits in accordance with the terms of this Plan, Elective Contributions may
be retained by the Employer in a separate account, or if elected by the
Employer and as permitted or required by regulations of the Internal Revenue
Service, Department of Labor or other governmental agency, such amounts
of Elective Contributions my be held in a trust pending payment.
4.07 MAXIMUM EMPLOYER CONTRIBUTIONS: With respect to each Participant,
the maximum amount made available to pay benefits for any Plan Year shall
not exceed the Employer's Contribution specified in the Adoption Agreement
and as provided in this Plan.
SECTION V
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GROUP MEDICAL INSURANCE BENEFIT PLAN
5.01 PURPOSE: These benefits provide the group medical insurance benefits to
Participants.
5.02 ELIGIBILITY: Eligibility will be required in Items F(1), F(2), and F(3) of the
Adoption Agreement.
5.03 DESCRIPTION OF BENEFITS: The benefits available under this Plan will be
as defined in items F(1), F(2), and F(3) of the Adoption Agreement.
5.04 TERMS, CONDITONS AND LIMITATIONS:
limitations of the benefits offered shall be as
Policy identified in the Adoption Agreement.
The terms, conditions and
specifically described in the
5.05 COBRA: To the extent required by Section 4980B of the Code and Sections
601 through 607 of ERISA, Participants and Dependents shall be entitled to
continued participation in this Group Medical Insurance Benefit Plan by
contributing monthly (form their personal assess previously subject to taxation)
102% of the amount of the premium for the desired benefits during the period
that such individual is entitled to elect continuation coverage, provide, however,
in the event the continuation period is extended to 29 months due to disability,
the premium to be paid for the continuation coverage for the 11 month
extension period shall be 150% of the applicable premium.
5.06 SECTION 105 AND 106 PLAN: It is the intention of the Employer that these
benefits shall be eligible for exclusion from the gross income of the Participants
covered by this benefit plan, as provided in Code Sections 105 and 106, and all
provisions of this benefit plan shall be construed in a manner consistent with
that intention. It is also the intention of the Employer to comply with the
provision of the Consolidated Omnibus Budget Reconciliation Act of 1985 as
outlined in the policies identified in the Adoption Agreement.
However, eligibility for tax qualified benefits will be subject to all state and
federal regulations. In order to receive tax free benefits, a participant must
meet all other state and federal eligibility guidelines.
5.07 CONTRIBTUIONS: Contributions for these benefits will be provided by the
Employer on behalf of a Participant as provided for in Item E of the Adoption
Agreement.
5.08 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT:
Notwithstanding anything to the contrary herein, the Group Medical Insurance
Benefit Plan shall comply with the applicable provision of the Uniformed
Services Employment and Reemployment Rights Act of 1994.
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Page 17 of 22
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SECTION VI
DENTALlMEDICALNISION REIMBURSEMENT PLAN
6.01 The Plan Document for this option is included in the attached Exhibit A and is
incorporated by reference.
SECTION VII
DEPENDENT/CHILD CARE REIMBURSEMENT PLAN
7.01 The Plan Document for this option is included in the attached Exhibit A and is
incorporated by reference.
SECTION VIII
AFLAC CANCER, BASIC DENTAL COVERAGE, ACCIDENT INSURANCE,
HOSPITAL INDEMNITY INSURANCE, SPECIFIED HEALTH EVENT
INSURANCE
8.01 The Plan Document for these options is included in the attached Exhibit B
and is incorporated by reference.
SECTION IX
AMENDMENT AND TERMINATION
9.01 AMENDMENT: The Employer shall have the right at any time, and from time
to time, to amend, in whole or in part, any or all of the provisions of this Plan,
provided that no such amendment shall change the terms and conditions of
payment of any benefits to which Participants and covered dependents
otherwise have become entitled to under the provisions of the Plan, unless
such amendment is made to comply with federal or local laws or regulations.
The Employer also shall have the right to make any amendment retroactively,
which is necessary to bring the Plan into conformity with the Code. In addition,
the Employer may amend any provision or any supplements to the Plan and
may merge or combine supplements or add additional supplement to the Plan,
or separate existing supplements into an additional number of supplements.
9.02 TERMINATION: The Employer shall have the right at any time to terminate
this Plan, provided that such termination shall not eliminate any obligations of
the Employer which therefore have arise under the Plan.
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SECTION X
ADMINISTRATION
10.01 NAMED FIDUCIARIES: The Administrator shall be the fiduciary of the Plan.
10.02 APPOINTMENT OF RECORDKEEPER: The Employer may appoint a
Reimbursement Recordkeeper which shall have the power and
responsibility of performing Recordkeeping and other ministerial duties
arising under the Dental/MedicalNision Reimbursement Plan and the
DependenUChild Care Reimbursement Plan provisions of this Plan. The
Reimbursement Recordkeeper shall serve at the pleasure of, and may be
removed by, the Employer without cause. The Recordkeeper shall receive
reasonable compensation for its services as shall be agreed upon from time
to time between the Administrator and the Recordkeeper.
10.03 POWERS AND RESPONSIBILITIES OF ADMINISTRATOR:
a. General. The Administrator shall be vested with all powers and
authority necessary in order to amend and administer the Plan, and
is authorized to make such rules and regulations as it may deem
necessary to carry out the provisions of the Plan. The
Administrator shall determine any questions arising in the
administration (including all questions of eligibility and
determination of amount, time and manner of payments of
benefits), construction, interpretation and application of the Plan,
and the decision of the Administrator shall be final and binding on
all persons.
b. Recordkeeping. The Administrator shall keep full and complete
records of the administration of the Plan. The Administrator shall
prepare such reports and such information concerning the Plan and
the administration thereof by the Administrator as may be required
under the Code or ERISA and the regulation promulgated
thereunder.
c. Inspection of Records. The Administrator shall, during normal
business hours, make available to each Participant for examination
by the Participant at the principal office of the Administrator a copy
of the Plan and such records of the Administrator as may pertain to
such Participant. No Participant shall have the right to inquires as
to or inspect the accounts or records with respect to other
Participants.
10.04 COMPENSATION AND EXPENSES OF ADMINISTRATOR: The
Administrator shall serve without compensation for services as such. All
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expenses of the Administrator shall be paid by the Employer. Such
expenses shall include any expense incident to the functioning of the Plan,
including, but not limited to, attorneys' fees, accounting and clerical charges,
actuary fees and other costs of administering the Plan.
10.05 LIABILITY OF ADMINISTRATOR: Except as prohibited by law, the
Administrator shall not be liable personally for any loss or damage or
depreciation which may result in connection with the exercise of duties or of
discretion hereunder or upon any other act or omission hereunder except
when due to willful misconduct. In the event the Administrator is not
covered by fiduciary liability insurance or similar insurance arrangements,
the Employer shall indemnify and hold harmless the Administrator from any
and all claims, losses, damages, expenses, (including reasonable counsel
fees approved by the Administrator) and liability (including any reasonable
amounts paid in settlement with the Employer's approval) arising from any
act or omission of the Administrator, except when the same is determined to
be due to the willful misconduct of the Administrator by a court of competent
jurisdiction.
10.06 DELEGATION OF RESPONSIBILITY: The Administrator shall have the
authority to delegate, from time to time, all or any part of its responsibilities
under the Plan to such person or persons as it may deem advisable and in
the same manner to revoke any such delegation of responsibility which shall
have the same force and effect for all purposes hereunder as if such action
had been taken by the Administrator. The Administrator shall not be liable for
any acts or omissions of any such delegate. The delegate shall report
periodically to the Administrator concerning the discharge of the delegated
responsibilities.
10.06 RIGHT TO RECEIVE AND RELEASE NECESSARY INFORMATION: The
Administrator may release or obtain any information necessary for the
application, implementation and determination of this Plan or other Plans
without consent or notice to any person. This information may be released
to or obtained from any insurance company, organization, or person subject
to applicable law. Any individual claiming benefits under this Plan shall
furnish to the Administrator such information as may be necessary to
implement this provision.
10.07 CLAIM FOR BENEFITS: To obtain payment of any benefits under the Plan
a Participant must comply with the rules and procedures of the particular
benefit program elected pursuant to this Plan under which the Participant
claims a benefit.
10.08 PROTECTED HEALTH INFORMATION: The provisions of this Section
shall be effective on April 14, 2004 or at such other date required by 45 CFR
Section 164.534. The Plan may disclose PHI to employees of the Employer
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Page 20 of 22
with employee benefits responsibility or to employees with oversight
responsibility for third party administrator claims administration. Access to
and use by such individual must be restricted to plan administration
functions that the plan sponsor performs for the Plan. The applicable claims
procedures under the Plan shall be used to resolve any issues of non-
compliance by such individuals. The Plan may disclose PHI to such
individual only if the Employer certifies that the Plan documents have been
amended to incorporate the following specific provisions, and the Employer
agrees to comply with them. The Employer will:
. Not use or further disclose PHI other than as permitted
by the plan documents or as required by law;
. Ensure that any agents or subcontractors to whom it
provides PHI received from the Plan agree to the same
restrictions and conditions that apply to the Employer;
. Not use or disclose PHI for employment-related actions
or in connection with any other employee benefit plan;
. Report to the Plan any use of disclosure of the
information that is inconsistent wit the permitted uses or
disclosures;
. Make available to Plan participants, consider their
amendments, and upon their request, provide them with
an accounting of PHI disclosures;
. Make its internal practices and records relating to the use
and disclosure of PHI received from the Plan available to
the Department of Health and Human Services upon
request; and
. Will, if feasible, return or destroy all PHI received from
the Plan that the Employer still maintains, in any form and
retain no copies of such information when no longer
needed for the purposes for which the disclosure was
made, except that, if such return or destruction is not
feasible, limit further uses no disclosure to those
purposes that make the return or discretion 0 the
information infeasible.
For purposes of this Section, "PHI" is "Protected Health Information" as defined in 45
CFR Section 164.501, which is individually identifiable health information that is
maintained or transmitted any a covered entity, as defined in 45 CFR Section
16.4104.
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SECTION XI
MISCELLANEOUS PROVISIONS
11.01 FORMS AND PROOFS: Each Participant or Participant's Beneficiary eligible
to receive any benefit hereunder shall complete such forms and furnish such proofs,
receipts, and release as shall be required by the Administrator.
11.02 NON-ASSIGNABILITY: No benefit under the Plan shall be liability for any
debt, liability, contract, engagement or tort of any Participant or his
Beneficiary, nor be subject to charge, anticipation, sale, assignment, transfer,
encumbrance, pledge, attachment, garnishment, execution or other voluntary
or involuntary alienation or other legal or equitable process, nor transferability
by operation of law.
11.03 CONSTRUCTION:
(a) Words used herein in the masculine or feminine gender shall be construed
as the feminine or masculine gender, respectively where appropriate.
(b) Words used herein in the singular or plural shall be construed as the plural
or singular, respectively, where appropriate.
11.04 NONDISCRIMINATION: In accordance with Code Section 125(b)(1), (2),
and (3), this Plan is intended not to discriminate in favor of Highly Compensated
Participants (as defined in Code Section 125(e)(1) as to contributions and benefits
nor to provide more that 25% of all qualified benefits to Key Employees. If, in the
judgment of the Administrator, more than 25% of the total non-taxable benefits are
provided to Key Employees, or the Plan discriminates in any other manner (or is at a
risk of possible discrimination), then notwithstanding any other provision contained
herein to the contrary, and in accordance with the applicable provision of the Code,
the Administrator shall, after written notification to affected Participants, reduce or
adjust such contributions and benefits under the Plan as shall be necessary to
insure that, in the judgment of the Administrator, the Plan shall not be discriminatory.
11.05 ERISA The Plan shall be construed, enforced, and administered and the
validity determined in accordance with the applicable provision of the Employee
Retirement Income Security Act of 1974 (as amended), the Internal Revenue Code
of 1986 (as amended), and the laws of the State indicated in the Adoption
Agreement. Notwithstanding anything to the contrary herein, the provisions of
ERISA will not apply to this Plan if the Plan is exempt from coverage under ERISA.
Should any provisions be determined to be void, invalid, or unenforceable by any
court of competent jurisdiction, the Plan will continue to operate, and for purposes of
the jurisdiction of the <<ourt only will be deemed not to include the provision
determined to be void.
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RESOLUTION NO. 2010-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ADOPTING THE CITY OF CHULA VISTA
CAFETERIA BENEFITS PLAN FOR 20 II
WHEREAS, the Internal Revenue Code requires that the Section 125 Cafeteria Benefits
plan otfered by the City to it employees be in a VliTitten document and that the document be
formally adopted by the City Council on or before the first day of each plan year; and
WHEREAS, in June 1998, the City established its first Section 125 Cafeteria Benefits
Plan; and
WHEREAS, in compliance with Internal Revenue Code Section 125(d) the City Council
annually adopts a written plan document prior to the first day ofthe plan year; and
WHEREAS, the first day of the City's plan year is January 1,2011; and
WHEREAS, this Plan Document lays out how the City offers eligible employees the
choice between cash and certain nontaxable benefits (such as health insurance), thereby allowing
employees to pay for the benefits they choose on a pre-tax basis; and
WHEREAS, the specific health plans offered and their structure are not part of this
Cafeteria Plan Document; and
WHEREAS, they are included in what is known as the Summary Plan Document that
was given to eligible employees as part of their open enrollment materials to assist them in
making their bene tit choices; and
WHEREAS, the plans offered and their structure are determined after our broker, Barney
and Barney, extensively markets and negotiates with providers to provide coverage comparable
to the prior year while keeping the increase in costs to the City and its benefitted employees to a
minimum; and
WHEREAS, all employee groups are advised of the offers and the plan structures that
will provide the least increase in premium costs; and
WHEREAS, under current cafeteria plan regulations having an approved written plan is
critical; and
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Resolution No. 2010-
Page 2
WHEREAS, without a written plan or if the written plan does not comply with applicable
requirements regarding content and timing of adoption, then the plan is not a cafeteria plan and
employees' elections will he taxable; and
WHEREAS, the City has timed its open enrollment period for 2011 to comply with these
regulations and to meet provider cutoff deadlines for enrollment to ensure employees are covered
without interruption; and
WHEREAS, the City's Plan includes the following required information: description of
available benefits, participation rules, election procedures, manner of contributions, maximum
amount of contributions, the plan year, and the plans provisions for complying with flexible
spending arrangements (FSAs).
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista
that it hereby adopts the Cafeteria Benefits Plan for the City of Chula Vista for 20 II.
Presented by
Approved as to form by
Ah~Ut7! /?l
Kelley Bacon
Director of Human Resources
Bart C. Miesfeld
City Attorney
7-26