Loading...
ORD 1988-13 - Cafeteria Plan Accident, Health, Dental, Group Term Life Insurance 07-19-1988ORDINANCE NO. 82- f 3 AN ORDINANCE OF THE CITY OF HUNTSVILLE, TEXAS, ESTABLISHING A CAFETERIA PLAN FOR THE CITY, OF HUNTSVILLE WHEREAS the City of Huntsville has in its employ certain personnel; and WHEREAS the City and its employees benefit by increasing its flexibility in personnel management by permitting salary reduction agreements; BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE, TEXAS that: Section 1: The City of Huntsville approves the Cafeteria Plan, Plan Summary and election forms attached hereto, and authorizes the Mayor and City Manager to execute those documents. Section 2: The Mayor and City Manager may, on behalf of the City, execute all Joinder Agreements with the City's employees and other eligible officers which are necessary for participation in the Plan. Section 3: This ordinance shall take effect immediately upon passage by City Council. PASSED AND APPROVEb this aril /o ril day of ATTEST: uth 'eShaw, City Secretary APPROVED AS TO FORM: Scott Bounds, City Attorney au , 1988. THE CI OF HUNTSVILLE By: Ja e Monday, Mayor SUMMARY PLAN DESCRIPTION EMPLOYEE'S CAFETERIA BENEFIT PLAN OF THE CITY OF HUNTSVILLE, TEXAS INTRODUCTION This plan was established by the City of Huntsville for the benefit of its eligible employees on the effective date. This plan description summarizes those benefits and provisions of the plan that are detailed in the the employee's benefit plan document. This plan . has been established to qualify under section 125 of the Internal Revenue Code. This plan has been established to provide you with benefits and to give you the opportunity to select the particular benefits that you wish to have. If after reading this summary you have any questions please ask the person identified in this booklet as the administrator. This summary is merely a highlight of the more important provisions of the plan. If you desire to review the plan document you may do so during normal business hours or upon paying a reproduction charge, the administrator will provide you with a complete copy of the plan document. BENEFITS OFFERED An eligible employee may choose under this plan to receive full compensation for any plan year in cash or to have a portion of it applied by the City toward the cost of one or more of the following optional benefits: 1. Accident, health, dental plan premium reimbursement 2. Group term life insurance. ELIGIBILITY TO PARTICIPATE In order to be eligible to participate in the plan you must be an employee of the City of Huntsville. A full or part -time employee is defined as one whose wages are subject to withholding for the purposes of federal income and tax and social security law and who works or is expected to work at least 30 hours per week. In order to become a participant you must first have satisfied all of these eligibility requirements and completed any forms which may be required by the administrator including but not limited to your election of benefits. You may only become a participant on any subsequent entry date after you have completed the necessary forms; provided, however, that you continue to be an employee and meet the eligibility conditions stated herein. TERMINATION OF PARTICIPATION Once you have become a participant in the plan you will automatically cease to be a participant on midnight on the earliest of any of the following days; A. Your death B. The date your employment terminates with the employer. C. The date on which you fail to meet the eligibility conditions set -forth above. D. The date on which the plan terminates. E. The first date of your retirement under retirement pension or annuity plans with the employer. F. On the date you receive retirement benefits under any state or federal government retirement plan or social security law other than any benefit which are paid solely because of disability or solely because of employment or service of the state or federal government unit. G. On the date on which the administrator determines that you have made a fraudulent or improper use of any benefit provided pursuant to the plan. ELECTION OF BENEFITS In each claim year you will be given the opportunity to elect among the benefits provided by the plan. The election shall be submitted prior to the beginning of the plan year. This election may not be changed or revoked by you during such plan year unless such changes on account of and consistent with the change in your family status such as marriage, divorce, death of a spouse or child, birth or adoption of a child. You may not carry over any contributions or benefits from one plan year to a subsequent plan year and you may not use any contribution from one plan year to purchase any benefit that will be provided in the subsequent plan year. DESCRIPTION OF BENEFITS There are certain limitations and definitions of the different types of benefits which are available to you. A specific description of these limitations and benefits are attached as appendices to this summary plan description. CLAIMS PROCEDURES You must file a claim for benefits under this plan with the administrator or its designated agent on forms provided for that purpose. You must also provide any information and /or file any appropriate claims and requests for payment from any other plan or insurance carrier prior to the request for any payments under this plan. If, however, you disagree with the administrator's determination of the amount of your benefits under the plan or with respect to any other decisions the administrator may make regarding your interest in the plan, the plan contains appeal procedures you should follow. In brief, if the administrator of the plan determines it should deny benefits to you or your beneficiary making a claim for benefits, the administrator will give you and your beneficiary adequate notice in writing that sets forth specific reasons for the denial and refers you or your beneficiary to the pertinent provision of the plan supporting the administrator's decision. If you or your beneficiary disagree with the administrator, you or your beneficiary or a duly authorized representative must appeal the adverse determination in writing to the administrator's within 60 days after the receipt of notice of denial of benefits. If you or your beneficiary fail to appeal the denial within the 60 day period, the administrator's determination will be final and binding. If you or your beneficiary appeal to the administrator, you or your duly authorized representative may submit issues and comments you feel pertinent to permit the administrator to re-examine all facts and make a final determination with the respect to the denial. The administrator, in most cases, will make a decision within 60 days of a request on an appeal unless special circumstances would make the rendering of a decision within a 60 day period infeasible. In any event the administrator must render a decision within 120 days after his or her receipt of a request for review. RIGHTS UNDER ERISA As a participant in the plan you are entitled to certain rights and protection under the Employee Retirement Income and Security Act of 1974 (ERISA). ERISA provides that all plan participants shall be entitled to: 1. Examine without charge at the administrator's office and at other specified locations, such as work sites, all plan documents, including insurance contracts and copies of all documents filed by the plan with the U.S. Department of Labor, such as detailed annual reports and plan descriptions. 2. Obtain copies of all plan documents and other plan information upon request to the administrator. The administrator may make a reasonable charge for the copies. 3. Receive a summary of the plan's annual financial report. The administrator is required by law to furnish each participant with a copy of the summary annual report. In addition to creating rights for plan participants, ERISA imposes duties upon people who are responsible for the operation of your employee benefit plan. The people who operate your plan, called "Fiduciaries" of the plan, have a duty to do so prudently and in the interest of you and other participants and beneficiaries. No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA. If your claim for a welfare benefit is denied, in whole or in part, you must receive a written explanation of the reasons for the denial. You have the right to have the administrator review and reconsider your claim. Under ERISA there are steps you can take to enforce the above rights. For instance, if you request materials from the plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the administrator to provide the materials and pay you up to $100.00 per day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that the plan fiduciaries misuses the plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who will pay court cost and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees (for example, if it finds your claim is frivolous). If you have any question about your plan, you should contact the administrator. If you have any question about this statement or about your rights under ERISA, you should contact the nearest area office of the U.S. Labor Management Services Administration Department of Labor. APPENDIX I ACCIDENT, HEALTH, DENTAL PLAN PREMIUM REIMBURSEMENT The employer shall reimburse you for medical premium expenses which you must pay. This includes any program which covers medical expenses, costs of medical and hospitalization insurance, major medical insurance, cancer care policies, and/or dental insurance. These medical insurance expenses shall include any incurred by you or your spouse or any of your dependent children. APPENDIX II GROUP TERM LIFE INSURANCE You may elect to receive reimbursement for term life insurance premiums paid for up to Fifty Thousand Dollars $50,000.00 of such insurance benefits with no tax consequences. The cost of any insurance over Fifty Thousand Dollars $50,000.00 shall be includable in your income. EMPLOYEES' CAFETERIA BENEFITS PLAN OF THE CITY OF HUNTSVILLE,TEXAS ARTICLE I INTRODUCTION 1.01 Purpose - The City of Huntsville, as an employer has adopted this cafeteria benefit plan to provide benefits for those employees who qualify hereunder and their beneficiaries. This plan allows employees to choose among different,types of benefits based on their own particular goals, desires, and needs. These choices shall include an option to receive certain tax free benefits in lieu of taxable compensation. 1.02 Status - The intention of the employer is that the plan qualify as a "Cafeteria Plan" within the meaning of the Section 125(d) of the Internal Revenue Code of 1954, as amended, and that the benefits which an employee elects to receive under the plan be includable or excludable from the employee's income under Section 125(a) and other applicable sections of the Internal Revenue Code of 1954, as amended. ARTICLE II DEFINITIONS Unless by the context in this agreement a different meaning is clearly indicated, whenever used in this agreement, the following words have the following meanings: 2.01 "Administrator ". Means the City Council of the City of Huntsville, Texas, or such other person or committee as may be appointed from time to time by the City Council to supervise the plan. 2.02 Agreement. Agreement shall mean this agreement and all amendments or supplements thereof. 2.03 Allocation. The portion of the participant's annual compensation which the employee has committed to a particular program hereunder. 2.04 Anniversary Date. Anniversary date shall be the first day of July, each and every year. 2.05 Beneficiary. Beneficiary means any one or more primary or contingent beneficiaries designated by the participants to receive any benefit payable under the plan on or after the participant's death. 2.06 Benefit. Benefit means any benefit provided to a participant under the employee's medical insurance premium reimbursement program, term life insurance program, or any other benefit provided by employer under the plan. Page 1 of 8 2.07 Code. Code shall mean the Internal Revenue Code of 1954, as amended from time to time. 2.08 Compensation. Compensation means the most recent available W -2 (calendar year) compensation, including overtime, bonuses and other special remuneration. 2.09 Dependents. For the purposes of this plan, the term "dependent" shall have the same meaning as set out in Section 152 of the Code. 2.10 Effective Date. Effective date means November 1, 1987. 2.11 Employee. Employee means any regular, full -time employee of the employer who is or is expected to work at least 30 hours per week. 2.12 Employer. Employer means the City of Huntsville. Any action or determination of the employer under the plan shall be by its City Council. 2.13 Expense. Expense shall mean any expense paid or incurred by a participant, the reimbursement of which by the employer would not be includable in the income of the participant under any provision of the Code. 2.14 Fiduciary. Fiduciary shall mean the employer, the administrator but only with the respect to the specific duties of each for plan as set forth in the agreement. 2.15 Highly Compensated Employee. Highly compensated employee means a participant who is an officer, or as otherwise defined by the Code, or a spouse or dependent of a participant described in this subsection. 2.16 Hour of Service. Hour of service means each hour which an employee is paid, or entitled to payment, for the performance of duties for the employer. 2.17 Nontaxable Benefits. Nontaxable benefits means those benefits (as provided for in Article IV) that the employer could have provided and funded as a tax - deductible expense, and that would not have been includable in the gross income of the Participant. 2.18 Participant. Participant means an employee who qualifies to participate in this plan as provided in Article III. 2.19 Plan. Plan means the plan embodied herein (as it may be amended from time to time) to be known as the "employees' cafeteria benefits plan of the City of Huntsville, Texas." ARTICLE III PARTICIPATION (ELIGIBILITY) 3.01 Employees on Effective Date. Each employee who is in the employer's employment on the effective date shall become eligible on the effective date. 3.02 New or Re -Hired Employees After Effective Date. Each employee whose employment by the employer begins after the effective date shall become eligible on the first day of the month after the date of employment. Page 2 of 8 ,1 ARTICLE IV BENEFITS 4.01 Salary reduction. By participating in the plan, each participant agrees to have his annual compensation reduced by the cost of the benefits selected under the Plan. 4.02 Benefit options. The programs under which benefits are available to employees under the plan are as follows: 1. Medical Plan Premium Reimbursement Program; 2. Group Term Life Insurance Program; 3. Cash payment in the amount of the Employer's contribution to the plan. 4.03 Election of Optional Benefits Other Than Cash. From the benefits listed in the preceding section, each-participant may elect annually to reduce his salary as provided herein, and to elect the amounts to be contributed for each such benefit. 4.04 Election Procedure. Approximately thirty days prior to the commencement Of each plan year, the administrator shall provide a written election form t which shall include a compensation reduction agreement) to each participant and to each other employee expected to become a participant. The election form shall be effective as of the first day of the plan year. The amount of the reduction in the participant's compensation for the plan year shall equal the participant's share of the cost of each optional benefit elected by the participant, and shall be adjusted automatically in the event of a change in any such cost. Each election form must be completed and returned to the administrator on or before such date as the administrator shall specify, which date shall be no later than the beginning of the first pay period for which the participant's compensation reduction agreement will apply 4.05 Failure to Elect. A participant failiqg to retwrn a completed election form to the administrator on or before the specified due date for the initial plan year of the plan, or for the plan year in which he became eligible to participate, shall be deemed to have elected to receive his full compensation. A participant failing to return a completed election form to the administrator on or before the specified due date for any subsequent plan year shall be deemed to have made the same election as was in effect just prior to the end of the preceding plan year. The participant shall also be deemed to have agreed to a reduction in compensation for the subsequent plan year equal to the participant's share of the cost from time to time during such plan year of each optional benefit he is deemed to have elected for such plan year. 4.06 Irrevocability of Election. Elections made under the plan shall be irrevocable by the participant during the plan year; provided, however, that a participant may revoke a benefit election for the balance of a plan year and file a new election only if both the revocation and the new election are on account of and consistent with a change in family status. A change in family status for this purpose includes marriage, divorce, death of a spouse Page 3 of 8 or child, birth or adoption of a child, termination of employment of a spouse, and such other events that the administrator determines will permit a change or revocation of an election during a plan year under regulations and rulings of the Internal Revenue Service. Any new election under this section shall be effective at such time as the administrator shall prescribe, but not earlier than the first pay period beginning after the election form is completed and returned to the administrator. 4.07 Automatic Termination of Election. Elections made under this plan (or deemed to be made) shall automatically terminate on the date on which the participant ceases to be a participant in the plan, although coverage and benefits under medical plans and life insurance may continue if and to the extent provided by such plans. ARTICLE V ADMINISTRATION 5.01 Powers and Duties. The employer shall name the administrator of the plan and the administrator shall have the power and duty to do all things necessary or convenient to effect the intent and purposes of this plan and not inconsistent with any of the provisions hereof whether or not such powers and duties are specifically set forth herein. ARTICLE VI ADMINISTRATOR 6.01 General Powers of the Administrator. a. The administrator shall perform the duties and exercise the powers and discretion given to it in this agreement and its decisions and actions shall be final and conclusive as to all persons affected therein. The employer shall furnish the administrator with all data and information available to the employer, which the administrator may reasonably require in order to perform its functions hereunder. The administrator may rely without question upon any such data or information furnished by the employer. b. Any and all disputes which may arise involving participants or former participants, shall be referred to the administrator and its decision shall be final. Furthermore, if any question arises as to the meaning, interpretation or application of any provision hereof, the decision of the administrator with respect thereto shall be final. c. Notwithstanding any other provisions of the Article or elsewhere in the agreement, no member of the administrator shall vote or act upon any matter involving his own rights, benefits or other participation hereunder. d. The administrator may engage agents, including claims processors, actuaries, legal counsel (who may be counsel for the employer), and physicians. The administrator shall be responsible for any action taken or omitted to be taken pursuant to written opinions or certificates of any agent, counsel, actuary or physician. Page 4 of 8 ARTICLE VII CLAIMS PROCESSOR 7.01 Duties and Powers of Claims Processor. Subject to the direction of the administrator, the claims processor shall have such duties and powers as may be necessary to process claims and make payments under this plan, including, but not limited to, the following: a. to act under the direction and control of the administrator; b. to receive, review and verify and investigate as necessary, all claims for benefits under this plan; c. to determine the amounts, manner and time of payment of benefits under this plan; d. to forward to the insurer all claims for which benefits may be payable under the insured part of the plan, if any; e. to provide information as to the amounts and timing of disbursements for payment of insurance premiums, benefits and expenses under this plan; f. to receive moneys and to deposit the same in a common account for future payment of premiums, benefits and expenses under the plan; to prescribe procedures to be followed by participants and dependents in filing claims for benefits under this plan; h. to receive from the employer, the administrator, and participants and dependents such information as shall be necessary for the proper processing and payment of claims under this plan; i. to furnish the employer and the administrator, upon request, such reports with respect to the processing and payment of claims under the plan as are reasonable and appropriate; to maintain records relating to claims for benefits, processing of claims, and payment of denial of claims for benefits; k. to do such other acts as may be necessary, or as requested by the administrator, to properly handle the processing and payment of claims under this plan. g. j. ARTICLE VIII CLAIMS PROCEDURE 8.01 Request for Payment or Reimbursement. Request for payment or reimbursement of allowable expenses shall be made by submitting invoices, copies of invoices, or claim forms as required by the administrator. The administrator shall then review the invoice or claim form and any supporting documentation and make a determination as to the allowability of the claimed Page 5 of 8 expense under the plan. Upon approval of the administrator appropriate payments will be made on behalf of the employee with respect to allowable claims submitted by himself or his covered dependents. 8.02 Disputes Regarding Claims. If the administrator determines that any person who has claimed a right to receive benefits under the plan is not entitled to receive all or any part of the benefits claimed, the administrator shall inform the claimant of such determination and the reasons therefor. The claimant may within thirty (30) days thereafter submit to the administrator such further information as will, in the claimant's opinion, establish his right to such benefits. If, upon receipt of this further information, the administrator determines that the claimant is not entitled to the benefits claimed, it shall afford the claimant or his representative a reasonable opportunity to appear personally before it, to submit evidence and comments in writing, and to review pertinent documents. The administrator shall render its final decision with the specific reasons therefor in writing and shall transmit it to the claimant within sixty (60) days of any such appearance. ARTICLE IX AMENDMENT AND TERMINATION OF PLAN 9.01 Plan Amendment. The employer shall retain the right, in its ,sole and final discretion, to amend the plan at any time and from time to time to any extent that it may deem advisable, but in no event, shall any amendment to the plan result in discrimination in favor of a participant who is highly compensated employee. 9.02 Plan Termination. The plan shall automatically terminate upon cessation of operations by the employer unless a successor employer adopts and continues the plan. ARTICLE X MEDICAL INSURANCE PREMIUM REIMBURSEMENT PLAN 10.01 General. The employer shall reimburse all participants for medical plan expenses to the extent provided herein. For purposes of this program medical plan expenses shall include costs of medical and hospitalization insurance, major medical insurance cancer care policies, and /or dental insurance as provided by the City of Huntsville employee medical benefit plan. Medical insurance expenses of a participant (or any dependent) shall include those incurred with respect to the participant individually, a spouse of a participant, and any dependent children of a spouse of a participant, and any dependent children of a participant. There shall be no reimbursement to the extent there is other reimbursement such as through other insurance, damages or otherwise. Page 6 of 8 10.02 Method of Payment by Employer. The employer will pay if applicable, the dependent health premiums due on behalf of the employee directly to the plan. This payment administratively shall be construed as: 1. A reduction of income from the employee; 2. A reimbursement paid to the employee 10.03 Intent. This program is intended to comply with the provisions of Internal Revenue Code Section 105 and 106 and, therefore; will be deemed to be automatically amended to comply with all appropriate regulations to these parts, issued by any appropriate government agency as of the effective date of each such regulation, unless the employer elects to terminate the plan following issuance of new regulations instead. ARTICLE XI GROUP TERM LIFE INSURANCE 11.01 General. Each participant may elect to be reimbursed for personal term life insurance premiums up to an amount of fifty- thousand ($50,000) dollars coverage without any additional income tax consequences if provided through the City of Huntsville Employee Group Life insurance program. The cost of any insurance over fifty- thousand ($50,000) dollars coverage shall be included in the employees income according to the current IRS table. 11.02 Intent. This program of group -term life insurance is intended to comply with the provisions of Section 79 of the Code. ARTICLE XII MISCELLANEOUS 12.01 Forms and Proofs. Each participant of beneficiary eligible to receive any benefit hereunder shall complete such forms and furnish such proofs, receipts and releases as shall be required by the administrator. 12.02 Nondiversion. Regardless of anything contained in the plan, as now expressed or hereafter amended, it shall be impossible for any part of the participant account to be used for or diverted to any purpose not for the exclusive benefit of participants or their beneficiaries at any time prior to the satisfaction of all rights and liabilities, fixed and contingent, with respect to participants or their beneficiaries hereunder, either by the operation, amendment, revocation or termination of the plan. No part of the participant account shall be paid, distributed or made available to the employee at any time, except as expressly provided by the plan. 12.03 Nonassignability. No benefit under the plan shall be liable for any debt, liability, contract, engagement or tort of any participant of his beneficiary, nor be subject to anticipation, sale, assignment, transfer, encumbrance, pledge, charge, attachment, garnishment, execution or other voluntary or involuntary alienation or other legal or equitable process, nor transferability by operation of law. Page 7 of 8 12.04 Construction and Law Governing. 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. c. The plan shall be construed, enforced and administered and the validity determined in accordance with the Employee Retirement Income Security Act of 1974 (ERISA, as amended), the Internal Revenue Code of 1954 (as amended), and the law of Texas. Should any provision be determined to be void by any court of competent jurisdiction, the plan will continue to operate, and for the purposes of the jurisdiction of that court only, will be deemed not to include the provision determined to be void. I certify that the foregoing is a true and exact copy of EMPLOYEES' CAFETERIA BENEFITS PLAN OF THE CITY OF HUNTSVILLE as adopted by the Employer on 91L.07 /A7 1988. TNESS my hand and the corporate seal this 4P1.6 day of , 1988. SEAL ATTEST: y Secretary APPROVED AS TO FORM: J)44t Scott Bounds, City Attorney Page 8 of 8 CITY OF HUNTSVILLE By Jane , riy Its ayor