HomeMy Public PortalAboutRES-CC-2003-05Resolution #05-2003
A RESOLUTION AMENDING THE CAFETERIA PLAN FOR THE CITY OF MOAB
WHEREAS, Moab City currently has a cafetena plan, and
WHEREAS, Moab City is desirous of amending the cafetena plan,
NOW, THEREFORE, we, the Governing Body of the City of Moab do hereby amend the
Cafetena Plan as follows
See attached cafeteria plan document
Passed and adopted by action of the Governing Body of the City of Moab m open session
this I Ith day of February, 2003
CITY OF MOAB
By
David L Saknson
Mayor
Rachel Ellison
City Recoraer
Resolution#05 2003
Page 1 of It
CITY OF MOAB
FLEXIBLE BENEFITS PLAN
(Effective January 1, 2002)
Revised February 11, 2003
(c) 2001 Interval Software
TABLE OF CONTENTS
Section Subsection Page
1 Establishment of the Plan
1 1 Establishment of the Plan 1
1 2 Applicability of Plan l
2 Definitions
21 Definitions 3
2 2 Gender and Number 6
3 Eligibility and Participation
31 Eligibility 7
3 2 Participation for Each Plan 7
3 3 Discnmmation 7
4 Benefits
4 1 Flexible Dollars 9
4 2 Group Term Life Insurance Benefits 10
4 3 Disability Insurance Benefits 11
4 4 Medical and Dental Group Benefits 11
4 5 Dependent Care Assistance Benefits 15
4 6 Election of Benefits 20
4 7 Revocation of Election of Benefits 20
4 8 Annual Modification of Election 21
4 9 Payment of Claims for Reimbursement 21
410 Substitution 22
4 11 Notification of Participants 22
4 12 Rights Against the City 22
5 Election of Insurance Coverage and
Application For Reimbursement
5 1 Election of Insurance Coverage 23
5 2 Application for Reimbursement 23
6 Beneficiary Designation 24
7 Accounts and Records of the Plan 25
8 Incompetency 25
9 Contributions 26
10 Non -Alienation of Benefits 27
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11 Continuation Coverage
11 1 Termination of Employment 27
112 Election to Continue Coverage 27
11 3 Applicability of Section 11 2 35
12 Administration
12 1 The Third Party Administrator 35
12 2 Fiduciaries 36
12 3 Administration 36
12 4 Appeal from Denial of Claims 37
12 5 Indemnification 39
12 6 Expenses of Administration 39
12 7 Rights of the City to Inspect
the Records of the Plan and Trust Fund 39
13 Changes in the Plan
13 1 Amendment and Termination of the Plan 40
13 2 Final Distributions 40
14 Illegality of Particular Provision 41
15 Effect of Mistake 41
16 Other Participating Employers 41
17 Applicable Laws 41
Resolution N05 2003 Page 3 of IS
Section 1 Establishment of the Plan
1 1 Establishment of the Plan The City of Moab, (the "City"), a city authonzed to do business in the State of
Utah, hereby establishes a flexible benefits plan within the meaning of Sechon 125 of the Intemal Revenue Code of
1986, previously known as the Internal Revenue Code of 1954, as amended for its eligible employees effective as of
March 1, 1998, to be known as the "City of Moab, Flexible Benefits Plan" (the "Plan"), as set forth in this document
The purpose of this Plan is to provide eligible Participants a means of obtaining cash, a reimbursement of
dependent child care assistance expenses, a reimbursement of medical and dental expenses and additional insurance
coverage Such benefits are provided in a manner which affords the Participant the discretion to allocate the Plan
funds so that he or she may utilize those benefits which are best suited to such Participant's needs and obtain them
with advantageous tax treatment where possible
l 2 Applicability of Plan The provisions of this Plan are applicable only to the Participants of the City in
current employment on or after the Effechve Date or any former Participant who is currently compensated by the
City A Participant who retired or separated from employment prior to the Effective Date, or ceases to receive
compensation from the City pnor to the effective date, or beneficiaries of such an employee, shall not be entitled to
benefits after the Effective Date under the provisions of this Plan unless the Participant is rehired and then becomes
eligible for benefits
A Panccipant under this Plan shall, if allowed by the City, choose among the following Plans and Benefits
(a) Cash Distnbuhons, which shall be subject to the Provisions contained herein
(b) The provisions of this Plan for the selechon of additional term insurance within the provisions of a group
term msurance plan within the meaning of Code Section 79, but only if the City elects to provide this as an option to
the employees
(c) The provisions of this Plan for the selection of disability insurance coverage as allowed within the
provisions of the Internal Revenue Code but only if the City elects to provide this as an option to the employees
(d) The provisions of this Plan for the medical and dental expenses constitute a self-msured medical
reimbursement plan within the meaning of Code Section 10501) but only, and to the extent provided as a benefit by
the City Initially the City shall provide for health insurance as set forth in Section 4 4(a) and shall provide
reimbursement for medical and dental expenses not covered by health insurance as set forth in Section 4 4(b)
(e) The provisions of this Plan for the reimbursement of expenses for dependent cue assistance constitute a
dependent care assistance plan within the meaning of Code Section 129 Amounts which are not utilized for
benefits by Participants under this Plan are forfeited
Section 2 Definitions
2 1 Definitions Whenever used m the Plan, the followmg term shall have the respective meanings set forth
below unless otherwise expressly provided, and when the defined meaning is intended, the term is capitalized
(a) "Beneficiary" means the person or persons designated by a Participant pursuant to Section 6
(b) "Code" means the Internal Revenue Code of 1986, previously known as Internal Revenue Code 1954, as
amended
Resolution 1105 2003 ?age 4 of IS
(c) "Third Party Administrator" means the administrative thud party appointed by the City as provided in
subsection 12 1
(d) "City" means the City of Moab, and to the extent descnbed in a supplemental agreement to this Plan, an
organization that adopts this plan pursuant to Section 17 of this Plan
(e) "Covered Dependent" means (1) a spouse who is legally married to the Participant and not separated from
him under a court decree of legal separation, or (2) an unmamed child of the Participant who is primarily dependent
upon the Participant or the Participant's spouse for support and maintenance and is either (a) under age 18 and
residing with the Participant or the Participant's spouse, or (b) under age 25 and a full-time student at a recognized
educational institution "Child" means and mcludes stepchild, adopted child, or any child of whom the Participant
has care, custody and control under a court decree, or any other person who qualifies as a dependent under Section
152 of the Code and who is living in the household of the Participant
(f) 'Dependent Care Assistance Plan" means the provisions of subsection 4 6 of this Plan, and related
provisions, which constitute a dependent care assistance program within the meaning of Section 129 of the Code
(g) "Effective Date" means 01/01/2002
(h) "Employee" means any salaried or hourly person currently employed by the City or former employee
who is being compensated by the City
(i) "ERISA" means the Participant Retirement income Secunty Act of 1974, as amended
0) "Flexible Dollars" means those dollar amounts specified in subsection 4 1 which a Participant may elect to
receive as a cash distribution under subsection 4 2 or may allocate to obtain benefits described in subsection 4 3
through 4 6
(k) "Highly Compensated Participant" means a Participant who is
(i) An Officer of the City, or,
(n) A Shareholder of the City owning more than 5% of the voting power or value of all classes of stock of
the employer, or,
(m)Highly compensated, or,
(iv) A spouse or dependent, within the meaning of Section 152 of an individual described in 0), (u) or (m)
above
(I) "Key Participant" means an employee who, at any time dunng the Plan Year or any of the four precedmg
Plan Years is
(i) An officer of the City having an annual compensation greater than 150 percent of the amount in effect
under Section 415(c)(1)(A) of the Code, as amended, for any such Plan year, provided that, no more than 50
Participants, or if lesser, the greater of three or ten percent (10%) of the Participants, shall be treated as officers,
(n) One of the ten employees having annual compensation from the City of more than the limitation in
effect under Section 415(c)(1)(A) of the Code, as amended, and owning, or considered as owning within the
meaning of Section 318, as amended, the largest interests in the City, provided that, if two Participants have the
same mterest in the City, the participant having the greater annual compensation form the City shall be treated as
havmg a larger interest,
Resolution ii05 2003 Page 5 of 12
(m) A more than five percent (5%) owner of the City, as a more than five percent (5%) owner is defined in
Section 416(0 of the Code, as amended, or
(iv) A more than one percent (1%) owner of the City having an annual compensation from the City of more
than one hundred fifty thousand and no/100 dollars ($150,000 00) as more than one percent (1%) owner is defined
in Section 416(i)(1)(B)(n) of the Code, as amended
(m) "Participant" means a Participant who meets the conditions of subsection 3 1
(n) "Plan" means the City of Moab, Flexible Benefits Plan
(o) "Plan Year" shall mean January 1st to December 31 st
(p) "Salary Reduction Agreement" means an agreement between a Participant and the City pursuant to which
the City reduces the Participant's current salary and the City contributes the amount of the reduction to the Plan on
behalf of the Participant as a before -tax contribution
2 2 Gender and number Except when otherwise indicated by the context, any masculine terminology shall also
include the feminine and the definition of any term in the singular shall also include the plural
Section 3 Eligibility and Participation
3 1 Eligibility A person who is employed by the City for thirty (30) days is eligible to participate in the Plan
on the first day of the following month
3 2 Participation for Each Plan
(a) A Participant shall cease to be a Participant when the conditions of subsection 3 1 are no longer satisfied
Notwithstanding the preceding sentence, a Participant who suffers a Disability shall remain a Participant until the
end of the Plan Year in which such Disability commences
(b) In addition to meeting the participation and eligibility requirements of the Plan, a Participant must also
qualify for panccipation in each of the individual plans established for the benefits provided under the Plan
3 3 Discrimination
(a) The Plan may not discriminate in favor of Highly Compensated Participants with respect to benefits or
employer contributions
(b) Total benefits attnbutable to Highly Compensated employees, measured as a percentage of
compensation, may not be significantly greater than total benefits attributable to other employees measured on the
same basis
(c) If health benefits are elected under the Plan by Participants, then employer contributions must include an
amount which equals either one hundred percent (100%) of the cost of the available health benefit coverage under
the Plan of the majonty of the highly compensated participants who are similarly situated (e g , same family size), or
are at least equal to seventy five percent (75%) of the cost of the most expensive health benefit coverage elected by
any similarly situated Participant All employer contributions for other benefits under the Plan must bear a uniform
relationship to the compensation of the Participant, provided that a highly compensated Participant may elect a
lower percentage of that participant's compensation than the Plan provides for the Participants who are not highly
compensated Participants
Resolution NO5 2003 Page 6 of IS
(d) Benefits provided under the Plan to Key Participants may not exceed twenty five percent (25%) of the
aggregate of such benefits provided for all Participants under the Plan
(e) The provisions of this Section do not apply if the Plan is maintained under an agreement which the
Secretary of the United States Treasury finds to be a collective bargaining agreement between employee
representahves and one or more employers which has been the subject of good faith bargaining
Section 4 Benefits
4 1 Flexible dollars
(a) General Subject to paragraphs (b) and (c), a Participant's Flexible Dollars with respect to a Plan year
shall be the sum of
An amount a Participant may elect to have the City make pursuant to the election of Benefits and salary
Reduction Agreement, form the Participant's annualized salary as of January 1 of Plan Year, or the date participation
m the Plan commences, if later
The amount above shall be determined at the discretion of the City prior to the commencement of each Plan
Year, and shall be uniformly applicable to all Participants All such amounts above shall be subject to review and
final approval by the Board of Directors A Participant's rate of salary shail not include any bonus payments, fnnge
benefits, or other special compensation The City reserves the nght to reduce the amount of the Participant's salary
reduction in order to assure compliance with the requirements of the Internal Revenue Code for favorable tax
treatment with respect to all benefits provided through this Agreement
(b) New Participants If a Participant becomes a Participant in the Plan after January 1, such Participant's
Flexible Dollars for the Plan year shall be equal to the product of the amount specified in paragraph (a) and a
fraction with a numerator equal to the number of completed calendar months of participation of the Plan Year and
denominator equal to l2
(c) Terminating Participants If a Participant terminates employment prior to December 31 and is not
reemployed by such date, such Participant's Flexible Dollars for the Plan year of termination shall equal the product
of the amount specified in paragraph (a) and a fraction with a numerator equal to the number of completed calendar
months of participation for the Plan Year and a denominator equal to 12 This paragraph shall not be applicable to a
person whose employment is terminated on account of death
4 2 Group Term Life insurance Benefits
(a) Benefits Flexible Dollars may be used for premium payments for group term life insurance coverage on
the life of the Participant pursuant to the requirements of Section 79 of the Code Death benefits shall be payable
pursuant to the terms of the life insurance policy The amount of coverage shall be elected by the Participant on a
form provided by the third party administrator Premium payment shall be made directly by the City to the insurer
This shall only constitute a benefit under this plan if the City elects to provide it on a non-drscnmmatory basis
Initially, this shall not be a benefit of the plan
(b) Dependent Life Insurance Flexible Dollars may be used for premium payment for term life insurance
coverage on the life of the Participant's spouse in the amount of $10,000 and on the life or Yves of the Participant's
child or children in the amount of $2,000 for each child Death benefits shall be payable pursuant to the terms of the
life insurance policy Premium payments shall be made directly by the City to the insurer
4 3 Disability insurance Benefits
Resoluilon 005 2003 rage 7 of li
Flexible Dollars may be used for premium payments for disability insurance with the Participant as the insured
The amount of coverage shall be elected by the Participant on a form provided by the third party administrator
Premium payments shall be made directly by the City to the insurer Disability benefits shall be payable pursuant to
the terms of the insurance policy This shall only constitute a benefit under this plan if the City elects to provide it
on a non-discnmmatory basis Initially, this shall not be a benefit of the plan
4 4 Medical and Dental Group Benefits
(a) Insurance Premiums Flexible Dollars may be used for premium payments for coverage under the City's
comprehensive medical and dental insurance plans Premium payments shall be made directly by the City to the
Insurance Company Medical and dental benefits shall be payable pursuant to the terms of the insurance policies
(b) Reimbursement Flexible Dollars may be used for reimbursement of those expenses of the Participant or
a Co%ered Dependent which would be reimbursed under the City's comprehensive medical plan or dental plan but
for the effect of a deductible amount limitation, a coinsurance provision, or a dollar limitation on the amount of the
reimbursement allowable In addition, expenses may be reimbursed for the following to the extent that they are not
reimbursable under the City's comprehensive medical plan and dental plan routine medical examination, hearing
care (mcludmg examination and hearing aids), vision care (including examinations, glasses, and contact lenses),
well -baby care, and other medical and dental expenses as defined in Code Section 213(e) Premiums on health
insurance other than on a policy maintained by the City (carried by the spouse or the spouse's employer may not be
subject to reimbursement under this Flexible Benefits Plan, however, premiums paid on a policy carried on the city
employee/official by a second employer shall be eligible for reimbursement under this plan This shall only
constitute a benefit under this plan if the City elects to provide it on a non discriminatory basis Initially, this shall
not be a benefit of the plan
(c) Limitation on Reimbursement Notwithstanding the foregoing provisions regarding medical and dental
expense reimbursements, all reimbursements shall be subject to the following medical expense limitations
(i) the maximum amount of medical expense reimbursements which any Participant may elect to receive in
a Plan Year shall be as set forth in the "Election of Benefits and Salary Reduction Agreement "
(n) Reimbursement or payment of these benefits shall be made by the City only in the event and to the
extent that such reimbursement or payment is (I) not provided for under any insurance policy, whether the premium
on such policy is paid by the City or the individual Participant, or (u) not provided for or reimbursable under any
other plan or policy
(ni) The City shall be required to pay any medical expense reimbursement in excess of the amount
previously contnbuted and not previously paid out on behalf of the Participant during the Plan Year This account
should meet the flexible spending account arrangements as required by the Regulations under Section 125 of the
Internal Revenue Code
(iv) The benefits provided under this Article shall not discriminate in favor of highly compensated
individuals (as defined in Code Section 105(h)(5)) as to eligibility to participate nor as to provided benefits in that
all Participants may elect these benefits and all participants will be reimbursed for the same category of benefits
(v) Contributions on behalf of each Participant will include an amount equal to 100% of the cost of the
benefits under this Article of the majority of the highly compensated Participants similarly situated, or (n) equal to
at least 75% of the cost of the benefits of the similarly situated Participants having the highest cost of benefit
coverage under this Article Any contributions or benefits under this Article in excess of the above percentages will
bear a uniform relationship to compensation
(vi) Reimbursement and/or payment of these benefits shall be made by the City only to the extent that such
medical expenses have not been previously deducted by Participant
Resolulion It05 2003 Page i of li
(vn) The maximum medical and dental expenses subject to reimbursement during any plan year for any
Participant shall not exceed the greater of 1/26 of Participant's annual income or $2,000 00
(d) Frequency of Reimbursement The Participant may incur medical expenses and then submit to the
Admmistrator proof of such expenses not less frequently than quarterly for reimbursement It is not necessary that
the Participant actually pay an expense pnor to being reimbursed for it The Participant shall provide such
information and verification at such times and m such manner as required by the Administrator
(e) Claim Substantiation In order to reimburse a participant for any medical or dental expense, the
Participant must provide a wntten statement from an independent thud party stating the medical expense has been
incurred and the amount of such expense The Participant must also provide a wntten statement stating the amount
has not been reimbursed under this Plan or under any other health plan
4 5 Dependent Cue Assistance Benefits
(a) Purpose Flexible Dollars may be used for the reimbursement of Dependent Care Assistance Expenses
This shall only constitute a benefit under this plan if the City elects to provide it on a non-discr.mmatory basis
Initially, this shall not be a benefit of the plan
(b) Definitions
(0 "Dependent" means any individual with respect to whom, for the taxable year, a deduction is allowable
under Code Section 151(e) for Participant or Participant's spouse
(ii) "Dependent Care Assistance' means the payment of, or provision of, those services which if paid for
by the Participant would be considered eligible employment related expenses
(iu) "Dependent Care Center" means as provided by Code Section 21(b)(2)(C) and (D) (0 a facility which
complies with all applicable laws and regulations of the state and town, city or village in which it is located, (u)
provides cue for more than six (6) individuals (other than individuals who reside at the facility), and (m) receives a
fee payment or grant for providing services for any of the individuals (regardless of whether such facility is
operated for profit)
(iv) "Earned Income" shall have the meaning provided in Code Section 32(c)(2) which means all income
denved from wages, salaries, tips, other employee compensation and net earnings from self-employment (within the
meaning of Code Section 1402(a), but such term does not include any amounts paid or incurred (i) as a pension or
annuity, or (n) by the City for Dependent Cue Assistance to the Participant
(v) "Eligible Employment Related Expenses" means expenses incurred for Qualifying Services and for the
care of a Qualifying Individual which are paid to a person who is not (i) a dependent of Participant, (n) a dependent
of Participant's spouse, or (m) a child within the meaning of Code Section 151(e)(3) of the Participant under the age
of 19 at the close of the taxable year
(vi) "Qualifying Individual" means as provided in Code Section 21(b)(1) (i) a dependent of a Participant
who is under the age of 13, (ii) a dependent of a Participant who is physically or mentally incapable of canng for
themselves, or (m) the spouse of a Participant, if he or she is physically or mentally incapable of cuing for
themselves
(vu) "Qualifying Services" are household services and expenses for the care of a Qualifying Individual
within the meaning of Code Section 21(b)(2) which are performed to enable a Participant to remain gainfully
employed and which are performed (0 in the home of the Participant, (ii) outside the home of Participant for the
care of a Dependent of the Participant under the age of 13, (m) outside the home of a Participant for a qualifying
Resolution N05 2003 Page 9 of IS
mdwidual descnbed in (6)00 or (6)(111) above, who regularly spends at least eight (8) hours a day in the Participant's
home, or (iv) outside the home of Participant for the care of a Qualifying Individual as described to (7)(n) or (7)(m)
above, and in a Dependent Care Center
(vitt) "Student" shall have the meaning provided in Code Section 21(e)(7) which means an individual who
dunng each of five calendar months during the taxable year if full time student at an educational organization which
normally maintains a regular facility and cumculum and normally has a regularly enrolled body of students in
attendance at the place where its education achvities are regularly carried on as provided in Code Section
24e)(8)and 170(b)(I)(A)(n)
(c) Reimbursement The City shall reimburse each Participant for all expenses incurred by such Participant
for Dependent Care Assistance
(i) The maximum amount of dependent care assistance which any Participant may elect to receive in a Plan
Year shall be Five Thousand Dollars (S5,000), if marred, Two Thousand Five Hundred Dollars ($2,500) in the case
of a separate return by a marred individual
(u) Not more than twenty-five percent (25%) of the amounts paid or incurred by the City for Dependent
Care Assistance during the Plan Year shall be provided to that class of individuals who are shareholders or owners
(or their spouses or dependents), each of who (on any day of the Plan Year) owns more than five percent (5%) of the
stock or of the capital or profits interest in the City, as provided in Code Section 129
(m) Reimbursement or payment of these benefits shall be made by the City only in the event and to the
extent that such reimbursement or payment is (i) not provided for under any insurance policy, whether the premium
on such policy is paid by the City or the individual Participant, or (n) not provided for or reimbursable under any
other plan or policy
(w) A Participant may not receive Dependent Care Assistance in any Plan Year in excess of the lesser of
(l) Participant's Earned Income for the Plan Year, or,
(2) The Earned Income of Participant spouse for the Plan Year, with mantel status detemuned at the
close of the taxable year For purposes of this subsection, a Participant's spouse who is either a student or
incapable of caring for themselves shall be deemed to have Earned Income as provided for in Code Section 21(d)(2)
(v) The City shall not be required to pay any Dependent Care Assistance in excess of that amount
previously contributed and not previously paid out on behalf of a Participant during the Plan Year
(vi) The benefits provided under this Article shall not discnmmate in favor of employees who are officers,
owners, or highly compensated, or their dependents within the meaning of Code Section 129
(vii) Payment of Dependent Care Assistance shall be made by the City only to the extent that such amounts
have not been previously claimed as a credit by Participant
(d) Frequency of Reimbursement The Participant may incur Dependent Care Assistance and then submit to
the Administrator proof of such provision of services not less frequently than quarterly for reimbursement, provided,
however, that no claim may be made nor proof submitted later than the earlier of (a) the 60th day after the end of the
Plan Year, or (b) the temmnation of employment with the City (other than by death) It is not necessary that the
Participant actually pay an expense prior to being reimbursed for it The Participant shall provide such information
and venfication at such times and in such manner as required by the Administrator
Resolution Nay 2003 Page 10 of IS
(e) Exclusion from Income It is the intention of the City that these benefits shall be eligible for exclusion
from the gross income of the Participant covered by these benefits, as provided in Code Section 129, and all
provisions of this welfare benefit plan shall be construed in a manner consistent with that intention
(f) Contributions Contributions for this benefit will be provided by the City on behalf of a Participant
through the "Election of Benefits & Salary Reduction Agreement "
(g) Annual Reimbursement Summary The Administrator shall famish to each Participant within a
reasonable penod of time following the close of the Plan Year, a wntten statement showing the amounts paid or
expenses incurred by the City for Dependent Care Assistance to such Participant during the previous calendar year
4 6 Election of Benefits
The benefits available under the Plan, shall take the form of the benefits listed on the City Selection of Benefits
form, and shall be elected by the Participant by executing the "Election of Benefits and Salary Reduction
Agreement " The City Contributions will be applied dunng each Plan Year, in such proportions as the Participant
chooses on the "Election of Benefits and Salary redut,tion Agreement", to pay the Participant's expenses for the City
sponsored Benefits
4 7 Revocation of Election of Benefits
All Participant elections are irrevocable for the Plan Year in which made and must be made before the Benefits
become currently available, provided however, an election may be revoked during the Plan Year if there is a family
status change (e g , birth, death, mamage, divorce, switching from part-time to full-time employment of a
participant or spouse, unpaid leave of absence) or termination of employment, but only to the extent of the unused
benefits and only to elect new benefits consistent with the change of family status The right to continued benefits
ceases on the later of the date of termination for any employee who terminates employment during a Plan Year, or
the dale any employee's compensation ceases during a Plan Year If there is a premium expense change during the
Plan Year, then the Participant's Salary Reduction Election for insurance coverage may be adjusted upward or
downward to take into account such change in premium
4 tl Annual Modification of Election of Benefits
A Participant may change his or her benefits elected for a subsequent Plan Year by completing a new "Election
of Benefits and Salary Reduction Agreement" at least 30 days pnor to the first day of the Plan Year for which such
new Election of Benefits is to become effective
4 9 Payment of Claims for Reimbursement
Claims for reimbursement of expenses related to a Plan Year shall be submitted not later than the earlier of (a)
the 90th day after the end of the Plan Year, or (b) the termination of employment with the City (other than by death)
No claim for less than $ 100 shall be submitted unless the participant designated on the claim form that it is the last
claim he or she will file with respect to such Participant's Flexible Benefits for the Plan Year No claims will be
paid prospectively or in advance Claims shall be submitted to the City on forms approved by the third party
administrator, accompanied by bills, the Participant's canceled check, or other proof of payment Payment of
covered claims shall be made directly to the Participant by the City Failure to submit claims during the period
established by this Section shall depnve • Participant of Coverage to which he or she might otherwise be entitled
410 Substitution
The City shall be substituted for all rights of a Participant to recover attorney fees against any adverse party
Participants shall do nothing to prejudice such rights of the City and further they agree to do all acts necessary to
preserve and take advantage of such rights If payment has been made by the City in such instances and if the
Rewluuon ir05-2003 Page I I of If
adverse party reimburses the Participant directly, the City shall have the nght to recover such payment from any
Participant
4 11 Notification of Participants
The City shall communicate m wntmg to all eligible Participants the terms and conditions of the Plan
4 12 Rights Against the City
Neither the establishment of the Plan, nor any modification thereof, nor any distributions hereunder, shall be
construed as giving to any Participant or any person whomsoever any legal or equitable rights against the City, its
shareholders, directors, or officers, as such, or as giving any person the right to be retained in the employ of the City
Section 5 Election of Insurance Coverage and Application for Reimbursement
5 1 Election of Insurance Coverage Pnor to the commencement of a Plan Year, or upon the commencement of
participation in the Plan, dialer, a Participant who is eligible to participate in the Plan shall designate on a form
provided by the Third Party Administrator the life insurance benefits descnbed in subsection 4 2 (if any) which he or
she elects for the Plan Year The Participant shall provide the Third Party Administrator with all information
required by an insurer of such benefits If the Participant fails to file the form and required information on or before
a date prescnbed by the Third Party Administrator, he or she shall receive no insurance benefits under this Plan for
the Plan Year
5 2 Application for Reimbursement Each Participant eligible to receive a payment for reimbursement of
expenses under the Plan shall apply for such payment by completing a request for reimbursement form to be
furnished by the Third Party Administrator Each such participant shall also furnish the Third Party Administrator
with such documents, evidence, data or information in support of such application as the Third Party Administrator
considers necessary
Section 6 Beneficiary Designation
Each participant shall designate upon such fors as may be provided for that purpose by the Third Party
Administrator, a Beneficiary or Beneficianes who are to receive, in the event of his or her death, payment of a
reimbursement to which he or she is entitled under the Plan or as distributions selected under the Plan The
designation of a Beneficiary shall not be effective for any purpose unless and until it has been filed with the Third
Party Administrator In the event that a Participant fads to designate a Beneficiary in the specified manner, or if for
any reason such designation shall be legally ineffective, or if such Beneficiary shall tither predecease the Participant
or die simultaneously with such Participant, then, for the purposes of the Plan, distnbution shall be made by the
Third Party Administrator to the Member's spouse (if any) If there is no spouse, at the discretion of the Third Party
Administrator, the benefits shall be paid to either (I) any one or more of the persons comprising the group consisting
of the Member's descendants, the Member's parents, or the Member's heirs at law, and the Third Party Administrator
may pay the entire benefit to any member of such group or apportion such benefit among any two or more of them
in such shares as the Third Party Administrator, in its sole discretion, shall determine, or (2) the estate of such
deceased Members In the event the Third Party Administrator does not so direct any of such payments, the Third
Party Administrator may elect to have a court of applicable jurisdiction determine to whom a payment or payments
shall be paid
Section 7 Accounts and Records of the Plan
The Third Party Administrator shall establish and maintain accounts in the name of each Participant as the time
he or she first becomes a Participant in the Plan The Third Party Administrator shall maintain records with respect
Resolution N05 2003 Page 12 of IS
to each participant itemizing and Identifying the benefits distributed under the Cash Distribution, the Group Life
Insurance Benefits, the Disability Benefits, the Medical and Dental Benefits and the Dependent Care Benefits
Section g Incompetency
Every person receiving or claiming benefits under the Plan shall be presumed to be mentally and physically
competent and of age until the Third Party Administrator receives a wntten notice, in a form and manner acceptable
to the Third Party Administrator, that such person is mentally or physically incompetent or a minor, and that a
guardian, conservator or other person legally vested with the care of his or her estate has been appointed If,
however, the Third Party Administrator shall find that any person to whom a benefit is payable under the Plan is
unable to care for his or her affairs because of any mental or physical incompetency or because he or she is a minor,
any payment due (unless a pnor claim therefore shall have been made by a duly appointed legal representative of his
or her estate) may be paid to the spouse, a child, a parent, or a brother or sister, or beneficiary or to any person with
whom such person is residing, or to any other person or institution deemed by the Third Party Administrator to have
incurred expense for such person otherwise entitled to payment In the event a guardian, conservator or other person
legally vested with the care of the estate of any person receiving or claiming benefits under the plan shall be
appointed by a court of competent jurisdiction, payments shall be made to such guardian or conservator or other
person, provided that proper proof of appointment is furnished in a form and manner suitable to the Third Party
Administrator To the extent permitted by law, any such payment so made shall be a complete discharge of any
liability therefore under the Plan
Section 9 Contributions
The City agrees to make employer contributions to the Plan for the Participant in the amount elected on the
"Election of Benefits and Salary Reduction Agreement " All City Contributions must be used within the Plan Year
during which the City Contnbution was made Any unused City Contributions will be forfeited by the Participant
Under the Plan, Participants may not carry over unused benefits of employer contributions from one Plan year to a
subsequent Plan Year, or cause the Plan to purchase a benefit for the Participant in a subsequent Plan Year
The City will make payroll reductions from the Participant's salary to use as City Contributions, from each pay
check received by the Participant from the City
Section 10 Non -Alienation of Benefits
No benefit payable under the provisions of the plan shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate, sell, transfer,
assign, pledge, encumber, or charge shall be void, nor shall such benefits be in any manner liable for or subject to
the debts, contracts, liabilities, engagements, or torts of, or claims against, any Participant, Covered Dependent or
Beneficiary, including claims of creditors, claims for alimony or support, and any like or unlike claims
Section 11 Continuation coverage
11 1 Termination of employment Except where the participant elects to continue coverage for a longer penod
under Section 11 2, upon termination of a participant's employment with the employer, his prior election under the
flexible benefits plan to have payments made by the employer of insurance premiums under this plan shall continue
only until the dale his employment terminates
11 2 Election to continue coverage Except as provided in Section 11 3, each qualified beneficiary who would
otherwise lose coverage under this plan as a result of a qualifying event shall be entitled to elect, within the election
period, continuation coverage under this plan If an electron is timely made, coverage under this plan shall continue
for such qualified beneficiary (and any others as described by paragraph (e)) until the end of the penod of coverage
Rewlunon #05-2003 Page 13 of IS
(a) Notice by employer to administrator of qualifying event The employer shall notify the administrator of a
qualifying event descnbed in subparagraphs (6)(A), (6)(B), (6)(D), or (6)(F) of paragraph (i) with respect to such
covered employee within 30 days after the qualifying event Within 14 days after the administrator is notified, the
adnumstrator shall notify any qualified beneficiary of such beneficiary's rights under this Section 11 2 and furnish
an election form with such notice to such qualified beneficiary
(b) Other notices to administrator Each covered employee or qualified beneficiary shall be responsible for
notifying the administrator of the occurrence of any qualifying event described in subparagraphs (6)(C) or (6)(E) of
paragraph (0 within 60 days after the date of the qualifying event If the administrator is so notified, the
administrator shall, within 14 days after it is so notified, notify each qualified beneficiary of such beneficiary's nghts
under this Section 11 2 and furnish an election form with such notice to such qualified beneficiary
(c) Deemed notification Any such notice by the administrator under paragraphs (a) or (b) above to an
individual who is a qualified beneficiary as the spouse of the covered employee shall be treated as notice to all other
qualified beneficianes who reside with such spouse at the time such notice is made
(d) Insurability Evidence of insurability (or lack thereof) of a qualified beneficiary shall not be a condition
to continuation coverage under this plan and shall not be used as a basis for different benefits or treatment among all
qualified beneficiaries who are similarly situated
(e) Making election To make an election under this Section 11 2, the qualified beneficiary shall complete,
date and sign the election form furnished by the administrator and return it to the administrator within the election
penod If it is not returned to the administrator within the election period, the rights of such qualified beneficiary
(and of other qualified beneficiaries on whose behalf and election is deemed made) to continuation coverage under
this plan shall thereby be waived Except as otherwise specified in an election form, any election by a qualified
beneficiary who is a covered employee or a spouse (or former spouse) of a covered employee shall be deemed to
include an election of continuation coverage on behalf of any other qualified beneficiary who would lose coverage
under this plan by reason of a qualifying event
(f) Payments Once an election is properly made, the qualified beneficiary shall have sole responsibility to
pay to the employer (or provide for payment) of all amounts necessary to fund the payment of such qualified
beneficiary's insurance premiums under this plan which were not already paid pnor to the applicable qualifying
event Payment shall be considered to be timely if made within 30 days of the date due except that if an election is
made after the qualifying event, payment for continuation coverage for the period preceding the election must be
made within 45 days after the date of the election
(g) Conversion upon expiration If this plan provides for the option of enrollment under a conversion health
plan, then and in that event, in the case of a qualified beneficiary whose period of continuation coverage expires
under subparagraph 0)(4)(A), such qualified beneficiary shall have the same option of enrollment under a
conversion health plan throughout the 180-day penod ending on such expiration date
(h) Notice of nghts The administrator shall provide wntten notice of rights under this Section 11 2 to each
covered employee and spouse of such covered employee (if any) at the time of commencement of coverage of such
covered employee under this plan
0) Definitions The following definitions shall apply for purposes of this Section 11 2
(1) "Continuation coverage" means coverage under this plan which meets the following requirements
(A) the coverage must consist of coverage which, as of the time coverage is being provided, is
identical to the coverage provided under this plan to similarly situated beneficianes under this plan with respect to
whom a qualifying event has not occurred Also, if a coverage under this plan is modified for any group of similarly
situated beneficianes, the coverage shall also be modified in the same manner for all individuals who are qualified
Resolution 1I05 2003 Page 14 of 18
beneficianes under this plan in connection with such group If there is a choice among types of coverage under this
plan, each qualified beneficiary is entitled to make a separate selection among such types of coverage
(B) the coverage extends throughout the penod of coverage
(C) payment for such coverage must comply with paragraph (f)
(D) the terms of coverage comply with paragraphs (d) and (g)
(2) "Covered employee" means an individual who is (or was) provided coverage under this plan by
virtue of the individual's employment or previous employment with the employer
(3) "Election penod" means the penod within which each qualified beneficiary must elect continuation
of coverage under this Section 11 2 The election penod as to a qualified beneficiary begins not later than the date
of a qualifying event and ends not earlier than 60 days after the later of
(A) the date of such qualifying event, or
(B) the date the qualified beneficiary receives notice form the administrator
(4) "Period of coverage" means the penod of beginning on the date of the qualifying event and ending
not earlier than the earliest of the following
(A) except as provided in subparagraph (B), 18 months after the date of the qualifying event if the
qualifying event is one descnbed in subparagraphs 6(B) or 6(F) of this paragraph (0,
(B) if an additional qualifying event occurs during the 18 months after the date of* qualifying event
descnbed in subparagraphs (6)(B) or (6)(F) of this paragraph (i), the date which is 36 months after the date of the
qualifying event described in subparagraphs (6)(B) or (6)(F), or
(C) 36 months after the date of the qualifying event for all qualifying events other than those descnbed
in subparagraphs 6(B) and 6(F) of this paragraph (i) Notwithstanding any of the provisions of these subparagraphs
(A), (B) or (C), the period of coverage shall terminate upon the occurrence of any of the following events
(i) the date on which the employer ceases to provide any gioup health plan to any employee,
(n) the date on winch coverage ceases under this plan because the person providing funds for
payment of insurance premiums under this plan fails to make timely payment or transfer of such funds to the
employer, or
(irr) the date on which the qualified beneficiary first becomes, after the date of a timely election
(A) covered under any other group health plan (as an employee or otherwise), or
(B) entitled to benefits under Title XVIII of the Social Security Act
(5) "Qualified beneficiary" means any individual who, on the day before the applicable qualifying event
occurs, is a beneficiary under this plan as the spoaso of the covered employee or as the dependent child of the
covered employee In the case of a qualifying event descnbed in subparagraphs 6(B) or 6(F) of this paragraph (0,
the term "qualified beneficiary" also includes the covered employee
(6) ' Qualifying event" means any of the following events which would result in loss of coverage under
this plan of a qualified beneficiary were R not for the continuation coverage requirements of this Section 11 2,
Resolution 005 2003 Page 15 of IS
(A) death of the covered employee,
(B) termination of the covered employee's employment with the employer except where such
termination is by reason of such employee's gross misconduct,
(C) the divorce or legal separation of the covered employee from the employee's spouse,
(D) the covered employee's becoming entitled to benefits under Title XVIII of the Social Security Act,
(E) a dependent child of the covered employee ceasing to qualify as a dependent child of the covered
employee as defined under this plan,
(F) reduction of hours of the covered employee to fewer than the minimum required for participation
in this plan
11 3 Applicability of Section 11 2 Section 11 2 shall not apply to this plan unless such application is
mandated under state or federal law and, in such event, it shall not apply for any calendar year if the City and all
related employers normally employ, in the aggregate, fewer than 20 employees on a typical business day during the
preceding calendar year
Section 12 Administration
12 1 The Third Party Admimstrator The City shall appoint a Third Party Administrator consisting of one or
more persons who shall serve at the pleasure of the City The City may at any time and from time to time remove
the Third Party Administrator
12 2 Fiducianes The Third Party Administrator shall be the administrator of the plan, but the City shall be
named fiduciary under the Plan in accordance with ERISA As a fiduciary, the City shall discharge its duties under
the Plan solely in the interests of the Participants in the Plan and their Beneficiaries, and for the exclusive purpose of
providing benefits to Participants and their Beneficiaries, and defraying the reasonable expenses of admmistenng the
Plan
12 3 Administration The Third Party Admimstrator shall administer the Plan and shall have the authority to
exercise the powers and discretion conferred on it by the Plan and shall have such other powers and authorities
necessary or proper for the administration of the Plan as shall be determined from time to time by the City
The Third Party Administrator shall keep complete records and accounts necessary or proper to administer the
Plan and shall render such statements to the City as the City may request
The Third Party Admimstrator may adopt such rules and regulations for the administration of the Plan as it
shall consider advisable and shall have full power and authonty to enforce, construe, interpret and administer the
Plan All interpretations under this Plan and all determination of fact made in good faith by the Third Party
Administrator shall be binding on the Participants, their Beneficianes, and all other interested persons
The Third Party Administrator may adopt such rules and regulations for the conduct of its business as it deems
advisable and may employ such agents, attomeys, accountants, investment advisers or other persons (who also may
be employed by the City) as in its opinion may be desirable for the administration of the Plan, and may pay any such
person reasonable compensation The Third Party Administrator may delegate to any agent, attomey, accountant or
other person selected by it, any power or duty vested in, imposed upon, or granted to it by the Plan
12 4 Appeal from Denial of Claims If any claim for benefits under the Plan is wholly or partially dented, the
claimant shall be given notice in wntutg of such denial within 90 days after receipt of the claim (or if special
Resolution N05 2003 Page 16 of IS
circumstances required an extension of time written nonce of the extension shall be furnished to the claimant and an
additional 90 days will be considered reasonable), setting forth the following information
(a) the specific reason or reasons for such denial,
(b) specific reference to the pertinent Plan provisions on which the denial is based,
(c) a description of any additional material or information necessary for the claimant to perfect the claim,
(d) an explanation that a full and fair review by the Third Party Admimstrator of the decision denying the
claim may be requested by the claimant or his or her authonzed representative by filing with the Third Party
Administrator, within 60 days after such notice has been received, a written request for such review, and
(e) If such request is so filed, the claimant or his or her authorized representative may review pertinent
documents and submit issues and comments in wntmg within the same 60 day period specified in paragraph (D)
above
The decision of the Third Party Administrator shall be made promptly, and not later than 60 days after the Third
Party Administrators receipt of the request for review, unless special circumstances require an extension of time for
processing, in which case the claimant shall be so nohfted and a decision shall be rendered as soon as possible, but
not later than 120 days after receipt of the request for review The claimant shall be given a copy of the decision
promptly The decision shall be in wnting and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and specific references to the pertinent Plan provisions on which the
decision is based
12 5 Indemnification To the extent permitted by law, Participants of the City, the Third Party Administrator
and all agents and representatives of the Third Party Administrator, shall be indemnified by the City and saved
harmless against any claims, and the expenses of defending against such claims, resulting from any action or
conduct relating to the administration of the Plan except claims arising from gross negligence, willful neglect, or
willful misconduct The City reserves the nght to select and approve counsel and also the right to take the lead in
any action in which it may be liable as an mdemnitor
12 6 Expenses of Administration Any expense incurred by the City or the Third Party Administrator relative
to the administration of the Plan shall be paid by the City unless indicated otherwise on the Election of Benefits and
Salary Reduction Agreement
12 7 Rights of the City to Inspect the Records of the Plan and Trust Fund The City may at its own expense, at
any time or from time to time, cause an examination of the books and records of the Plan to be made by such
attomeys, accountants, auditors or other agents as it shall select for that purpose and may cause a report of such
examination to be made
Section 13 Changes in the Plan
13 1 Amendment and Termination of the Plan The City expects the Plan to be permanent, but since future
conditions affecting the City cannot be anticipated or foreseen, the City must necessarily and does hereby reserve
the nght to amend, modify or terminate the Plan at any time The City may make any modifications or amendments
to the Plan that are necessary or appropriate to qualify or maintain the Plan as a plan meeting the requirements of the
applicable Sections of the Code, or any applicable provisions of ERISA The Plan shall not at any time be used for
Resolution X05 2003 pate 17 of It
or diverted to purposes other than for the exclusive benefit of Panccipants or their Beneficiaries, and no amendment
shall divest any person of his mterest therein, except as may be required by the Internal Revenue Service or other
governmental authority, or give any person any assignable or exchangeable interest or any right or thing of
exchangeable value in advance of the time distribution is to be made to such person
l3 2 Final Distributions Upon termination of the Plan, the interest of Participants shall be determined as of the
date of termmatron, and thereafter final distributions shall be made pursuant to the provisions of the Plan to such
persons
Section I4 Illegality of Particular Provision
The illegality of any particular provision of this Plan shall not affect the other provisions, but the Plan shall be
construed in all respect as if such invalid provision were omitted
Section 15 Effect of Mistake
In the event of a mistake as to the eligibility or participation of a Participant, or the allocations made to the
account of any Participant, or the amount of distributions made or to be made to a Participant or other person, the
Third Party Admimstrator shall, to the extent it deems possible, cause to be allocated or cause to be withheld or
accelerated, or otherwise make adjustment of such amounts as will in its judgment accord to such Participant or
other person the credits to the account or distributions to which he is properly entitled under the plan
Section 16 Other Participating Companies
Upon the approval of the City of Moab, this Plan may be adopted by any affiliated organization The adopting
organization shall execute and deliver to the City of Moab, a supplemental agreement providing for the adoption of
this Plan and such other documents as the City of Moab, shall deem necessary or desirable The provisions of this
Plan shall be applicable to such organization to the extent provided in the supplemental agreement
Section 17 Applicable Laws
To the extent not preempted by ERISA, the plan shall be governed by and construed according to the laws of
the State of Utah
IN WITNESS WHEREOF, and as evidence of the amendment of this Plan, the City has caused its authorized
officers to duly execute this Plan this 11's day of February, 2003
i
(ATTES
City Recorder
ty of Moab
`-,
Titlo David L Sakrison, Mayor
Resolution H05 2003
Page 12 of IS