Item 15 - Flexible Spending AccountI I do AENDA REPORT —11 of i
CITY OF POWAY
G,��
This report is included on the Consent Calendar.There will be no separate discussion of the report prior to approval by the 1 ='` '
City Council unless members of the Council,staff or public request it to be removed from the Consent Calendar and y
discussed separately.If you wish to have this report pulled for discussion,please fill out a slip indicating the report number F c, . ,ti THE co�r��
and give it to the City Clerk prior to the beginning of the City Council meeting.
To: Honorable Mayor and Members of •e City Council
From: James L. Bowersox, City Man. -��
r �
Initiated by: Susan M. Pulone, Director of Administrative Servic
Richard J. Howard, Management Analyst')
Date: December 8, 1987
Subject: Flexible Spending Plan
ABSTRACT
Staff is prepared to implement a Flexible Spending Plan in accordance with the
Internal Revenue Code, Section 125.
BACKGROUND
The City Council approved for the implementation of a Flexible Spending Plan, or
cafeteria plan, to become effective on the first day of the first pay period in
January 1988. The flexible spending plan concept was approved during the course
of negotiations with members of the Poway Firefighters Association and the
Non-Safety Employees (Teamsters) Union. Members of the Management, Supervisory,
Professional and Confidential Employees supported its implementation during
their respective salary and benefits discussions.
Flexible spending plans have begun to find their way into government over the past
eight years. Used extensively in the private sector, this novel approach to em-
ployee benefits allows employees the option of choosing from a variety of basic
benefits. Among the basic benefits are medical , dental , eye care, and term life
insurance. However, as employees' needs change, so may the packages which make up
their benefit portfolios. Dependent care and medical expenses not fully reimbursed
by the employee' s medical plan are becoming increasingly important to employees.
Under flexible spending, these expenses can be paid for through reimbursement
accounts. Reimbursement accounts allow you to pre-fund certain health care and
dependent care expenses with tax-free dollars. There are two types of reimburse-
ment accounts: one for health care expenses and one for dependent care expenses.
In order to allow reimbursement accounts tax-free status, the Internal Revenue
Service determines which expenses are eligible for reimbursement on a tax-free
basis. Generally, expenses that qualify as a tax deduction on IRS Form 1040,
Schedule A, are eligible for reimbursement account status. Reimbursement /---
ACTION: Approved staff recommendation and author zed execution of `
Agreement.
1A(ALlyu 4-4
EvelyniMadison, Deputy City Clerk
DEC 8 1987 ITEM 15-- 021
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December 8, 1987 -2-
accounts require the employee to estimate in advance how much money they are
likely to spend in the coming year for noncovered medical and dependent care
expenses. Careful planning is important because money left in an account at the
end of the plan year is forfeited according to IRS regulations. This is known
as the "use it or lose it" rule. Over the course of the year, salary reductions
are made from the employee' s biweekly pay, allowing them to have their salary
reduced--thus lowering taxes, resulting in a greater net pay.
Generally, reimbursable health care expenses include but are not limited to:
o Medical plan and dental plan deductibles and co-payments.
o Orthodontia
o Charges over the "reasonable and customary" limits.
o Hearing exams and aids.
o Vision care, eye care, eyeglasses, and contact lenses.
o Specific weight reduction program.
o Other health care expenses such as annual physicals, immunizations,
vaccinations, and cosmetic surgery.
Reimbursable dependent care expenses include:
o A child care center, babysitter, or nurse for a dependent child under
15 years of age.
o A nursery school , even though the school provides lunch and educational
services
o A maid or cook, if services are provided in part to a person who qualifies
for dependent care.
o A relative who provides dependent care services, as long as the relative
is not a spouse' s dependent, or who is under age 19 at the end of the
calendar year.
Another major element of the Flexible Spending Plan is known as a Premium-Only
Plan, or POP plan. POP is the simplist form of a Section 125 plan. Similar to
reimbursement accounts, POP allows employees to pay for benefits before income is
taxed rather than after income is taxed. Again, the result is lower taxes and
more take-home pay.
Employees who are presently paying dependent premiums for medical and dental
care are doing so after paying federal and state income taxes. POP' s allow
employees to pay these premiums before taxes.
FINDINGS
Presently, City employees receive the option of choosing among three medical , two
dental , and one eye care plan. Health and dental premiums are paid in full by the
City. Dependent medical and dental premiums are shared equally between the
employee and the City. Eye care coverage is fully paid by the City for employees
and dependents alike. Members of the Poway Firefighters Association are not
eligible for eye care but may elect to purchase it by way of flexible spending
through payroll deductions. All employees have the option of utilizing the City' s
deferred compensation plan. These benefits will not change with the implemen-
tation of a Flexible Spending Plan.
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Flexible Spending Plan
December 8, 1987 -3-
As previously stated, the City is in a position to implement a Flexible Spending
Plan, effective the first day of the first pay period in January 1988. Prior to
implementation, however, certain requirements must be met.
Internal Revenue Code Section 125 specifies that participants in a Flexible
Spending Plan may choose from among taxable and nontaxable benefits. Taxable
benefits mean cash, property, or other benefits attributable to employer contribu-
tions that are currently taxable under the Internal Revenue Code, whereas non-
taxable benefits include those which are financed by employer contributions that
are not taxable under the Internal Revenue Code. Nontaxable benefits include:
o IRC Sec. 79: Group Term Life Insurance up to $50,000.
o IRC Sec. 105 and 106: Group Accident or Health Coverage.
o IRC Sec. 129: Dependent Care Assistance.
For favorable tax treatment, benefits received under a Flexible Benefit Plan must
meet the following requirements:
o The Plan must be in writing.
o All participants must be employees.
o The employees must be able to choose among two or more qualified benefits.
o Elections (reimbursement accounts) must be irrevocable over the period
in which benefit coverage has begun.
o The election of nontaxable benefits under the Plan cannot discriminate in
favor of key employees or highly compensated employees.
o A Flexible Spending Plan must be established by a City Council resolution
according to Section 125 of the Internal Revenue Code.
APPROACH
There are two options for administration of a Flexible Spending Plan. The first
option is to administer the Plan in-house utilizing existing resources. The
second option is to contract with a third party administrator who will be able
to use their resources and implement a turn-key Flexible Spending Plan.
Through self administration, several benefits exist. The employees who participate
in the Plan will not be required to pay for on-going administrative costs. Also,
if questions arise concerning claims, someone from within the organization will
be able to answer employee concerns. Another benefit is the initial low cost of
implementation.
However, there are drawbacks to self administration. First, the City is not and
should not be in a position to administer an employee Flexible Spending Plan. As
the Plan grows in participants, the strain on existing resources could become
heavily burdened, possibly necessitating the need for added personnel to maintain
claims and on-going administration of the Plan. Secondly, the City should not
be placed in the position of providing tax information or advice to its employees.
Third, the City does not administer any other type of employee benefit program.
To do so would create confusion and the possibility of collusion.
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On the other hand, third party administration allows the City to contract with a
provider who will prepare all Plan documents, conduct employee orientation sessions,
monitor the Plan on a continual basis to determine compliance of discrimination
tests, maintain deposits and disbursements, provide annual reports for the City,
and furnish employee status reports on each reimbursement account on a monthly
basis. Costs for these services vary greatly according to size of the firm,
location, and the quality of services provided. The City received proposals from
six third-party administrators, four of which were deemed responsive. The four
are: Flex Plan Administrators of Palo Alto, California; Alta Health Systems of
Santa Ana, California; UniService, Inc of Phoenix, Arizona; and Coast Consulting
of San Diego, California.
After careful consideration, UniService, Inc. appears most capable of meeting
our needs. UniService will provide all plan documents, communication materials,
and set-up charges for $750. In addition, the employee administration fee is
$2.50/month for each participant. Richard S. Jones and Associates will conduct
the employee orientation sessions for UniService, Inc. Currently, Richard S. Jones
and Associates is the City' s insurance broker for the Lincoln National Medical and
Dental Plans. Jones and Associates has agreed to conduct the sessions at no cost
to the City or employee. They will offer employees an additional benefit, uni-
versal life insurance, with the premium to be paid through payroll deductions.
The amount of each premium is left to the discretion of the employee. By
making this coverage available to employees, the City is providing an additional
benefit, while simultaneously increasing the options made available to them
through the Flexible Spending Plan.
RECOMMENDATION
It is recommended that the City Council authorize the Director of Administrative
Services to enter into an agreement with UniService, Inc. and Richard S. Jones
and Associates for the third party administration of the City of Poway' s
Flexible Spending Plan (Attachment A) , and take all necessary steps required to
establish the Flexible Spending Plan by the effective date of January 11, 1988.
The City will fund start-up fees and all associated costs for Plan documents ($750) ,
while plan participants will pay the $2.50 administrative fee through payroll
deductions.
JLB:SMP:RJH:eg
Attachments:
A. Flexible Benefits Account Plan Adoption Agreement
B. Summary Plan Description
C. Flexible Benefits Account Plan
D. Dependent Care Assistance Program
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DEC 8 1987 ITEM 15
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FLEXIBLE BENEFITS ACCOUNT PLAN
ADOPTION AGREEMENT
ATTACHMENT A
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DEC 8 1W ITEM 15
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FLEXIBLE BENEFITS ACCOUNT PLAN
ADOPTION AGREEMENT
The Employer named below hereby establishes a Cafeteria Plan
pursuant to Section 125 of the Internal Revenue Code of 1986 , as
amended, by adopting the Plan named below (the Plan) which the
Employer has read and accepted with the specifications set forth
below.
"The Employer" is the City of Poway, a municipal corporation,
organized pursuant to the laws of the State of California
Business Address : 13325 Civic Center Drive
Poway, California 92064
Employer Federal Tax Identification Number: 95-3555845
Plan Name: City of Poway Flexible Benefit Plan
Plan Number: 4065
Nature of Business : City Government
Date Business Incorporated : December 1980
Effective Date of Plan: January 11 , 1988
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ARTICLE TWO - DEFINITIONS
2.10 "Trustee" :
Name: Northern Trust Company of Arizona, N.A. , a
national banking association having its
principal place of business in Phoenix,
Arizona.
Address : 4350 East Camelback Road, Building C - 100
Phoenix, Arizona 85018
Telephone: (602 ) 840-8550
2 . 11 "Entry Date" shall mean the first day after the month
following an open enrollment period. Such open
enrollment period will not be held more than once
during any plan year.
2 . 15 "Non-Taxable Benefits"
Medical Expense Reimbursement Benefits
Group Term Life Insurance Benefits
Dependent Care Assistance Benefits
Accident, Health and Hospitalization Benefits
All policies and documents representing coverage
provided by each Non-Taxable Benefit selected shall be attached
to this Adoption Agreement and are by this reference made a part
of this Agreement.
2 . 20 "Plan Year" shall mean:
The twelve (12 ) month period commencing on January 1
and ending December 31. The first Plan Year shall commence
on the effective date of this Adoption Agreement and shall end
on December 31 , 1988 .
DEC8 1987 ITEM 15
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ARTICLE THREE - ELIGIBILITY AND PARTICIPATION
3 . 01 "Eligibility Requirements" shall be:
Each Employee shall be eligible to participate at
the time designated below unless the Employee is separated from
service before such date.
On the first Entry Date on or after he or she has
become employed .
3 . 03 Application for Participation.
To become a Participant, the Eligible Employee must
specify his or her election of Non-taxable Benefits during an
open enrollment period after he or she becomes eligible to par-
ticipate in the Plan.
ARTICLE FOUR - BENEFITS
4 . 01 "Contributions" shall be set as follows :
(a) Maximum Contribution. Each Participant shall
have available an amount not to execeed $10, 000 per
Plan Year, or 50% of compensation, whichever is
less , which may be designated as Contributions
according to the terms and provisions of the Plan.
(b) Minimum Contributions . The minimum amount
which may be designated as contributions according
to the terms and conditions of the Plan is $175 . 00
per Plan Year.
ARTICLE FIVE - FBA EMPLOYER REPRESENTATIVE
5 . 01 "Designation" :
The individual listed below shall serve as the FBA
Employer Representative until his or her resignation or removal
by the Employer and appointment of a successor.
NAME: Susan M. Pulone, Director of Administrative Service
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ARTICLE NINE - ADMINISTRATION
9 . 06 "Administration Charges and Fees shall be:
(a ) The amount of the Initial Installation Fee
be $ 750 . 00 .
(b) The amount of the Annual Enrollment Fee per
eligible employee shall be zero dollars .
(c) The amount of the Monthly Maintenance Fee
shall be $ 2 . 50 per month per participant.
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The Employer and the Administrator have caused this Agreement to
be signed by their duly qualified officers on the date set forth
below.
DATED:
Employer Name
By
Name Title
"Employer"
UNI SERVICE, INC.
By� _v"
Nap - Title
"Administrator"
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DEC 8 1987 ITEM 15
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SUMMARY PLAN DESCRIPTION
OF THE
FLEXIBLE BENEFITS ACCOUNT PLAN
SUMMARY PLAN DESCRIPTION
1. NAME OF PLAN : City of Poway
Flexible Benefits Account
2 . PLAN NUMBER : 4065
• 3 . EFFECTIVE DATE OF PLAN : January 11, 1987
4 . SPONSORING EMPLOYER : City of Poway
13325 Civic Center Drive
Poway, CA 92064
5 . EMPLOYER' S FEDERAL ID# : 95-3555845
6 . TRUSTEE : Northern Trust Company
of Arizona, N.A. , a
national banking associ-
ation having its
principal place of
business at:
4350 East Camelback
Building C-100
Phoenix, Arizona 85018
Phone (602 ) 840-8550
7. AGENT FOR SERVICE OF
LEGAL PROCESS : The Office Manager
(or his/her
representative) at the
FBA Administrative
Office:
320 E. McDowell Road
Suite 300
Phoenix, AZ 85004
(Service of process
may also be made
upon the plan Trustee
at the address above )
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8 . FBA EMPLOYER REPRE-
SENTATIVE Susan M Pulone
9 . PLAN ADMINISTRATOR UniService, Inc.
P. O. Box 84
Phoenix, AZ 85001
Telephone ( 602 ) 271-0050
10 . ELIGIBILITY REQUIREMENTS • All employees of the
Sponsoring Employer named
above who are at least
18 years of age and are
eligible on the first
entry date on or after he
or she has become
employed.
11 . PLAN YEAR January 1 to December 31
12 . MINIMUM CONTRIBUTION. The minimum contribution amount
is $175 . 00 annually.
13 . MAXIMUM CONTRIBUTION. The maximum contribution amount
is $10 , 000 annually, or 50% of your annual compensation,
whichever amount is less .
14 . ADMINISTRATION CHARGES . There is an administration
charge which is also paid with pretax dollars . The
amount of the administration charge is indicated on
your Enrollment Form and is part of the total amount
which will be deducted according to your election.
15 . BENEFITS AVAILABLE
Medical Expense Reimbursement Benefits
Group Term Life Insurance Benefits
Dependent Care Assistance Benefits
Accident, Health and Hospitalization Benefits
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SUMMARY PLAN DESCRIPTION
OF THE
FLEXIBLE BENEFITS ACCOUNT PLAN
ATTACHMENT B
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SUMMARY PLAN DESCRIPTION
1 . NAME OF PLAN •
2 . PLAN NUMBER •
3 . EFFECTIVE DATE OF PLAN •
(Enter Date )
4 . SPONSORING EMPLOYER •
(Name)
(Address )
(City/Zip)
5 . EMPLOYER' S FEDERAL ID# QS' 3 5 s-g , 4
6. TRUSTEE Northern Trust Company of
Arizona, N.A. , a national
banking association having its
principal place of business in
Phoenix, Arizona
4350 East Camelback Road
Building C-100
Phoenix, Arizona 85018
Telephone ( 602 ) 840-8550
7 . AGENT FOR SERVICE OF
LEGAL PROCESS The Office Manager ( or his/her
representative ) at the FBA
Administrative Office:
320 E. McDowell Road
Suite 300
Phoenix, AZ 85004
( Service of process may also
be made upon the plan Trustee
at the address above )
8 . FBA EMPLOYER REPRE-
SENTATIVE •
(Enter Name of Representative )
9. PLAN ADMINISTRATOR UniService, Inc.
P. 0. Box 84
Phoenix, AZ 85001
Telephone ( 602 ) 271 -0050
10. ELIGIBILITY REQUIREMENTS All employees of the Sponsor-
ing Employer named above who
are at least years of age
and have completed years
of service with the sponsoring
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Employer are eligible to
participate in the Plan.
11 . PLAN YEAR •
12 . MINIMUM CONTRIBUTION. The minimum contribution amount is
$ annually, or % of your annual
compensation, whichever amount is less.
13 . MAXIMUM CONTRIBUTION. The maximum contribution amount is
$ annually, or % of your annual compen-
sation, whichever amount is less.
14 . ADMINISTRATION CHARGES. There is an administration charge
which is also paid with pretax dollars. The amount of the
administration charge is indicated on your Enrollment Form
and is part of the total amount which will be deducted
according to your election.
15 . BENEFITS AVAILABLE •
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INTRODUCTION:
Your employer is making available to you a plan which will reduce
your income taxes and give you the ability to pay for certain
benefits with pre-tax dollars. The name of the plan is the
Flexible Benefits Account Plan ( "FBA Plan" ) and it is also
referred to in general as a "Cafeteria Plan" . The reason for
this name is that each employee has a "menu" of benefits from
which to choose.
The FBA Plan is intended to provide these benefits, using pre-tax
dollars, as allowed under Federal Law. Since these deductions
are made from your gross income each month, your net taxable
income is reduced and you pay less income and social security
tax. Because you are paying for benefits to cover expenses that
you would normally have, your spendable income is increased.
A description of the benefits available under the FBA Plan is
listed at the end of this booklet. This booklet is a Summary
Plan Description ( SPD ) and is intended to give only a brief
description of the Plan. Feel free to consult the FBA Employer
Representative for clarification and/or more details.
For a more detailed explanation, you can write to the Admini-
strator and request a copy of the FBA Plan and Adoption Agree-
ment. There will be a charge for any duplicating and postage
required.
ELIGIBILITY AND PARTICIPATION:
Eligibility requirements are determined by your employer.
* Participation is optional.
* Your participation ceases upon the occurrence of any of
the following events:
( 1 ) your death;
( 2 ) the date your employment terminates under the
Employer;
( 3 ) the date upon which you fail to meet the eligi-
bility requirements of the Plan;
( 4 ) any date upon which the Plan terminates;
( 5 ) the date of your retirement.
If your participation ceases, any funds remaining in your Benefit
Accounts will remain available for qualified reimbursement of
expenses incurred during the Plan year and up to ninety ( 90 ) days
after the close of the Plan year.
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ENROLLMENT:
An open enrollment period is held each year and all eligible
employees have the option to join the FBA Plan at that time.
There will be a general meeting to explain the FBA Plan and an
opportunity to meet with counselors to discuss what benefits to
elect and appropriate amounts to deduct from your payroll check
each month.
* If you decide not to participate, you must state this
on the enrollment form as indicated. If you change
your mind you must wait until the next enrollment
period to join.
* All necessary information for participation is entered
on the enrollment form, which the counselor can help
you complete.
* Each year you will complete a new enrollment form. If
you do not complete a new enrollment form each year,
you will automatically receive the same benefits you
elected to receive in the prior year
* New employees can enroll in the FBA Plan after they
have met the minimum eligibility requirements estab-
lished by the employer.
SELECTION OF BENEFITS:
* Select the benefits you want for the Plan Year from the
Confidential Employee Survey Form.
* Enter the amount of annual contributions for each
benefit account in the appropriate spaces on the
enrollment form.
* The amounts you choose should be based on prior ex-
penses as well as those anticipated this year.
* You may wish to consult a counselor to determine the
benefits and deduction amounts that are most appro-
priate for your situation.e
* Once benefit deductions are established, they cannot be
changed until the next year when you complete a new
enrollment form.
* In certain situations (divorce, birth, adoption, death,
change in spouse ' s employment status ) you can revoke or
change your participation and/or election of benefits.
* You may not carry over any contributions or benefits
from one Plan Year to a subsequent Plan Year and you
may not use any contributions from one Plan Year to
purchase any benefits that will be provided in a subse-
quent Plan Year. It is advisable to be conservative on
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estimating your costs since any contributions not used
for a given Plan Year are forfeited. You must "use it
or lose it. "
DEDUCTIONS FROM YOUR PAYROLL CHECKS:
* Each pay period, deductions will be made from your
payroll check for the proportionate amount which you
choose to withhold and will be paid to your FBA Plan
Account.
* The advantage of the FBA Plan is that the deductions
are from gross income BEFORE taxes. By participating
in the FBA Plan, you reduce your taxes and increase
your spendable income.
* Your accounts are not credited with interest.
* Amounts deducted are generally credited to your account
by the fifth of the following month.
* Because your social security taxes, as well as income
taxes are reduced, there will be a corresponding
reduction in social security benefits upon retirement .
* If your Employer provides disability income insurance
as one of the benefits available under the Plan, you
should be 'aware that, if you elect this benefit, any
disability income payments which you receive under the
Plan will be subject to income tax.
CLAIMS SUBMISSION:
Dependent Care Assistance claims are paid each month if :
* You have completed a Dependent Care Assistance Form,
* You supply a copy of your receipt for child care costs
to the Administrator each month,
* The Dependent Care Assistance Form is signed by you and
your employer, and
* The form was submitted to the Administrator and is on
file as evidence of the claim.
Other claims need to be submitted to the Administrator as
follows:
* Submit a fully completed claim form that is signed and
has all necessary receipts attached;
* Claims must reach the Administrator by the 25th of each
month to be eligible for payment by the 15th of the
following month;
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DEC 8 1987 ITEM 15
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* Claims received by the Administrator after the 25th,
will be paid on the following cycle (this may involve a
month ' s delay ) .
* Claims under group health and group life insurance will
automatically be paid to the Employer for payment of
those benefits.
ADDITIONAL CLAIMS INFORMATION:
* The maximum amount which you will be paid on a claim is
the balance remaining in the account for which you are
making a claim. Any claim amount over your current
balance will automatically be reimbursed as additional
funds are credited to your account.
* There is no borrowing permitted from other accounts to
cover claims in one account with insufficient funds,
nor can you borrow from your account balances.
* Only valid claims are eligible and those claims in-
curred prior to an individual ' s effective date in the
plan are not covered.
* Your account balances cannot be carried from one Plan
Year to the next. You have ninety ( 90 ) days, after the
Plan Year end to file a claim for all expenses incurred
in that ydar. It is important to remember that any
balances remaining after that time are forfeited.
* You cannot make a request for cash withdrawal from your
accounts. Payments will be made to you only as a
reimbursement for those expenses which are excludible
from income under the provisions of the Internal
Revenue Code.e
* If you terminate employment, you may file claims as
usual, but you may not contribute additional amounts to
your account balances. You will have ninety ( 90 ) days
after the Plan Year end to file a claim for all ex-
penses incurred in that plan year. Any balance remain-
ing after that time will be forfeited.
* Claims denied will be accompanied by a written notice
listing the reason( s ) for denial of payment.
CLAIMS APPEAL:
You have the right to appeal any denied claim for benefits by
following these guidelines:
* File a written notice with the Administrator;
* You must file within one hundred twenty ( 120 ) days of
your receipt of notice of claim denial;
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* You have the right to review the documents involved in
the claim and to submit any comments with respect to
those documents in writing.
* The Administrator must advise you in writing of the
final determination after review within sixty ( 60 ) days
after your request for review has been received. If an
extension of time is necessary to respond, the final
determination may be delayed, but in no event for
longer than one hundred twenty ( 120 ) days.
* The Administrator does not review denials of claims by
an insurance company. If your claim is denied by an
insurance company, you must appeal directly to the
insurance company.
FBA ELECTRONIC FUNDS TRANSFER:
To insure prompt payment and timely receipt of your money, FBA
has established a system of Electronic Funds Transfer to over
14 , 000 financial institutions. This benefit is free to use and
eliminates the worry of payments delayed due to the mail system,
vacations and other circumstances.
FBA ACCOUNTABILITY:
For each month in which you receive a payment from your FBA Plan
account, you will be given a report on the status of your ac-
counts as of the date the check or deposit was credited. This
report will give you the balance in each benefit account, how
e much you have paid in, how much has been paid out of each benefit
account and your estimated tax savings from using the FBA Plan.
PLAN CONTINUATION:
Your employer has the right to discontinue the FBA Plan at any
time. If this occurs, any funds in your accounts may be used to
pay benefits through the end of the Plan Year.
Future tax law changes may require a modification of the FBA Plan
and/or benefits provided. If this occurs, you will be notified
of any changes which are made.
RIGHTS UNDER ERISA:
Participants ' Rights Under ERISA. As a Participant in this Plan,
you are entitled to certain rights and protections under the
Employee Retirement Income Security Act of 1974 ( ERISA) . ERISA
provides that all plan Participants shall be entitled to:
A. Examine, without charge, at the Administrator ' s
office and at other specified locations, such as worksites, all
Plan documents, including insurance contracts and copies of all
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documents filed by the Plan with the U. S. Department of Labor,
such as detailed annual reports and Plan descriptions .
B. Obtain copies of all Plan documents and other Plan
information upon written request to the Administrator . The
Administrator may make a reasonable charge for the copies.
C. Receive a summary of the Plan ' s annual financial
report . The Administrator is required by law to furnish each
Participant with a copy of its Summary Annual Report.
In addition to creating rights for Plan Participants, ERISA
imposes certain duties upon the people who are responsible for
the operation of the 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 Partici-
pants and Beneficiaries. No one, including your Employer, or any
other person, may fire, discriminate against, or in any way
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 explana-
tion of the reason 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 case, the court may require the
Administrator to provide the materials and pay you up to $ 100 per
day until you receive the materials, unless the materials were
not sent because of reasons beyond the control of the Admini-
strator. If you have a claim for benefits which is denied or
ignored, in whole or in part, you may file a suit in a state or
federal court . If it should happen that the plan fiduciaries
misuse 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 .
This court will decide who will pay court costs 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 questions about your Plan, you should contact
the Administrator. If you have any questions 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.
8
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FBA
Administration & Claims
320 East McDowell Road
Phoenix, AZ 85004
ATTACHMENT C
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Table of Contents
ARTICLE ONE
ADOPTION AND PURPOSE 1
1 . 01 Name and Adoption 1
1 . 03 Benefits 1
ARTICLE TWO 1
DEFINITIONS
2 . 01 Administrative Charges and Fees 1
2 . 02 Administrator 2
2 . 04 Compensation 2
2 . 06 Employee 2
2 . 07 Employer 2
2 . 08 Employer Contribution 2
2 . 09 FBA Employer Representative 2
2 . 10 Entry Date
2 . 11 ERISA 3
2 . 12 FBA Account 3
2 . 13 Fiduciary 3
2 . 14 Highly Compensated Participant 3
2 . 15 Key Employee 3
2 . 16 Medical Expense 4
2 . 17 Nontaxable Benefits 4
2 . 18 Participant 4
2 . 19 Plan 4
2 . 20 Plan Year
2 . 21 Qualified Benefit 5
2 . 22 Summary Plan Description 5
2 . 23 Trust 5
2 . 24 Trustee
2 . 25 Year of Service 5
ARTICLE THREE 5
ELIGIBILITY AND PARTICIPATION
3 . 01 Eligibility Requirements 5
3 . 02 Notification of Participants 5
3 . 03 Initial Application for Participation 6
3 . 04 Continuous Participation 6
3. 05 Continuous Eligibility 7
3 . 06 Excluded Employees 7
3. 07 Effect of Employee Termination 7
ARTICLE FOUR 7
CONTRIBUTIONS 7
4 . 01 Em to er Contributions 7
4 . 02 Effective Period for Election 8
4 . 03 Procedure for Elections 8
4 . 04 Constructive Receipt 8
4. 05 Application of Contributions 9
4. 06 Cash Benefit
4 . 07 Contributions for Participants 9
4 . 08 Deposit of Employer Contributions 9
4 . 09 Employer Liability for Contributions 9
4 . 10 Non-Interest Bearing Accounts 9
ARTICLE FIVE
PROHIBITION AGAINST DISCRIMINATION 10
5 . 01
Highly Compensated Participants 10
5 . 02 Reduction of Benefits to Prevent Discrimination . 10
5 . 03 Key Employees 10
5. 04 Collective Bargaining
5 . 05 Health Related Benefits 10
5 . 06 Highly Compensated Employees 11
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ARTICLE SIX
BENEFITS 11
6. 01 Medical Expense Reimbursement Benefit 11
6 . 02 Accident, Health and Hospitalization Insurance 12
6. 03 Group-Term Life Insurance Benefit 12
6. 04 Disability Insurance Benefits
6. 05 Dependent Care Assistance Benefit 13
ARTICLE SEVEN
14
FBA EMPLOYER REPRESENTATIVE 14 14
7 . 01 Designation
7 . 02 Duties 14
ARTICLE EIGHT
FBA ACCOUNTING 14
14
8 . 01 FBA Accounts 14
8 . 02 Employer Contributions
8 . 03 Benefit Claim for Participants 14
8 . 04 Forfeiture of Unused Amounts 15
ARTICLE NINE
CLAIMS PROCESSING 15
9. 01 Benefit Payments 15
9. 02 Premium Payment 15
ARTICLE TEN
ADMINISTRATION 15
10 . 01 Named Fiduciaries, Allocation of Responsibility 15
10 . 02 Assignment of Administrative Authority 17
10 . 03 Administrator Powers and Duties 17
10. 04 Discretion of Administrator
10. 05 Records. and Reports 18
10 . 06 Administrative Charges and Fees
10 . 07 Limitation of Liability 18
10 . 08 Claims
10 . 09 Review of Claims 20
ARTICLE ELEVEN
TERMINATION 20
0
11 . 01 Termination of Employer Participation 21
11 . 02 Mutual Termination 21
11 . 03 Disposition of Funds Upon Termination 21
ARTICLE TWELVE
GENERAL PROVISIONS 21
12 . 01 Governed by this Agreement 2-1
12 . 02 Limitation of Participant Claims 21
12 . 03 Notice 22
12 . 04 Choice of Law 22
12 . 05 Arbitration
12 . 06 Severability 22
12 . 07 Confidential Nature of Records
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ARTICLE ONE
ADOPTION AND PURPOSE
1 . 01 Name and Adoption. The employer executing the
attached FLEXIBLE BENEFITS ACCOUNT PLAN ADOPTION AGREEMENT (the
"Adoption Agreement" ) , hereby adopts the FLEXIBLE BENEFITS
ACCOUNT PLAN (the "Plan" ) for the exclusive benefit of its
Employees who satisfy the terms and conditions set forth herein,
to become effec-tive on the date set forth in the Adoption Agree-
ment . By its execution, the Employer accepts and agrees to be
bound by all the terms and conditions of the Plan.
1 . 02 Purpose and Intent. The purpose of the Plan is to
furnish Participants with a choice of receiving certain non-
taxable benefits provided by the Employer in lieu of taxable
compensation. It is the intention of the Employer that this
Plan, its attachments and any amendments, qualify as a "cafeteria
plan" as that term is defined in Section 125 (d ) of the Internal
Revenue Code and that the Nontaxable Benefits which a Participant
elects to receive under this Plan be eligible for exclusion from
such Participant ' s gross income under Section 125 ( a ) of the
Internal Revenue Code. To the extent applicable, this Plan will
serve as an amendment to any existing welfare benefit plan
presently maintained by the Employer.
1 . 03 Benefits. The Nontaxable Benefits provided through
the Plan are Group-Term Life Insurance; Medical Expense Reim-
bursement; Group Accident, Health and Hospitalization Insurance;
Disability Insurance; and Dependent Care Assistance.
ARTICLE TWO
DEFINITIONS
2 . 01 Administrative Charges and Fees. The term "Admini-
strative Charges and Fees" shall mean those charges and fees
authorized to be charged to the Employer as well as charged
against the FBA Account of each Participant, as specifically
defined in the Adoption Agreement .
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2 . 02 Administrator. The term "Administrator" shall mean
Uniservice, Inc.
2 . 03 Code. The term "Code" shall mean the Internal
Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
2 . 04 Compensation. The term "Compensation" shall mean
the total of all amounts, which are paid or accrued by the
Employer to a Participant during the Plan Year. Compensation
shall include all elective contributions made to this Plan.
Compensation shall exclude any Contributions made by the Employer
to this Plan but includes any contribution made to any plan of
deferred compensation.
2 . 05 Dependent. The term "Dependent" shall mean the
spouse of a Participant and any other dependents of the Partici-
pant within the meaning of Section 152 of the Code who otherwise
meet the rules for exclusion of benefits from income under the
applicable Section of the Code governing such benefits.
2 . 06 Employee. The term "Employee" shall mean any
person employed by the Employer.
2 . 07 Employer. The term "Employer" shall mean the
employer executing the Adoption Agreement attached hereto.
2 . 08 Employer Contribution. The term "Employer Contri-
bution" shall mean the amounts paid to the Administrator by the
Employer on behalf of a Participant. Such amounts shall not be
actually or constructively received by a Participant and shall be
made available only for the purchase of benefits as provided
herein.
2 . 09 FBA Employer Representative. The term "FBA
Employer Representative" shall mean the person or persons desig-
nated by the Employer and identified in the Adoption Agreement,
to interface between Participants, the Administrator and the
Employer.
2 . 10 Entry Date. The term "Entry Date" shall mean the
date specified by the Employer in the Adoption Agreement as of
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which Eligible Employees may become Participants.
2 . 11 ERISA. The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended and the
regulations promulgated thereunder.
2 . 12 FBA Account. The term "FBA Account" shall mean
amounts held by the Trustee in designated Accounts for a Partici-
pant, consisting of the Employer Contributions paid to the
Administrator on behalf of the Participant to provide a specified
Nontaxable Benefit.
2 . 13 Fiduciary. The term "Fiduciary" shall mean any
person who exercises any discretionary authority or control with
respect to the management of the Plan; or who exercises any
authority or control with respect to the management or disposi-
tion of its assets; or who renders investment advise for a fee or
other compensation, directly or indirectly, with respect to any
monies or other property of the Plan, or has any authority or
responsibility to do so; or who has any discretionary authority
or discretionary responsibility in the administration of the
Plan; or who acts to carry out a fiduciary responsibility, when
designated by a named Fiduciary pursuant to authority granted by
the Plan; provided, however that the foregoing definition shall
be subject to any exception granted directly or indirectly by the
provisions of ERISA or any regulation promulgated thereunder.
2 . 14 Highly Compensated Participant. The term "Highly
Compensated Participant" shall mean any employee who is:
( a ) a five percent ( 5% ) owner of the Employer;
(b) a highly compensated employee of the Employer;
(c ) an officer of the employer;
(d ) a spouse or dependent of the foregoing indivi-
duals.
2 . 15 Key Employee. The term "Key Employee" shall mean
an Employee who, at any time during the Plan Year or any of the
four preceding Plan Years, is -
( a ) an officer of the Employer having an annual
compensation greater than one hundred fifty
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percent ( 1519% ) of the amount in effect under
section 415( c ) ( 1 ) (A) of the Code for any such
Plan Year;
( b) one of the ten Employees having annual compen-
sation from the Employer of more than the
limitation in effect under section
415( c ) ( 1 ) (A) of the Code and owning ( or
considered as owning within the meaning of
section 318 of the Code ) the largest interests
in the Employer;
(c ) a five percent ( 5% ) owner of the Employer; or
(d ) a one percent ( 1 % ) owner of the Employer
having an annual compensation from the
Employer of more than $150, 000 .
For purposes of this definition, no more than fifty
( 50 ) Employees ( or, if lesser, the greater of three ( 3 ) or ten
percent ( 10% ) of the Employees ) shall be treated as officers. If
two ( 2 ) Employees have the same interest in the Employer, the
Employee having the greater annual compensation from the Employer
shall be treated as having the larger interest.
2 . 16 Medical Expense. The term "Medical Expense" shall
mean amounts incurred for the diagnosis, cure, mitigation,
treatment or prevention of disease or for the purpose of affect-
ing any structure or function of the body. Such term is
expressly intended to include, but without limitation by way of
inclusion, expenses incurred for psychiatric care and for care of
the eyes, ears and teeth.
2 . 17 Nontaxable Benefits. The term "Nontaxable Bene-
fits" shall mean any benefit adopted by the Employer in the
Adoption Agreement which is excluded from a Participant ' s gross
income under the provisions of the Code, including specifically
any group term life insurance which is includable in gross income
only because it exceeds the dollar limitation of Section 79 of
the Code.
2 . 18 Participant. The term "Participant" shall mean any
Employee of the Employer who meets the eligibility require-ments
adopted by the Employer and who has elected to participate in
this Plan by completion of an FBA Enrollment Form.
2 . 19 Plan. The term "Plan" shall mean the Flexible
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Benefits Account Plan set forth herein and any amendments there-
to. "FBA" shall be an acronym for Flexible Benefits Account
Plan. The Plan incorporates by reference the Adoption Agreement
and the Flexible Benefits Account Trust Agreement.
2 . 20 Plan Year. The term "Plan Year" shall mean the
twelve ( 12 ) month period which comprises the operating period of
the Plan and which is specifically defined in the Adoption
Agreement.
2 . 21 Qualified Benefit. The term "Qualified Benefit"
shall mean any benefit offered under the plan which is not
includable in the gross income of the Employee by reason of an
express provision of Chapter 1B of the Code.
2 .22 Summary Plan Description. The term "Summary Plan
Description" shall mean the document distributed to the Partici-
pant which summarizes the Participant ' s Nontaxable Benefits and
rights under this Plan.
2 . 23 Trust., The term "Trust" shall mean the Trust Fund
created to fund benefits under the Plan as evidenced by a Trust
Agreement separate and apart from this document.
2 . 24 Trustee. The term "Trustee" shall mean the entity
named as Trustee in the Adoption Agreement or any successor in
office who in writing accepts the position of Trustee.
2 . 25 Year of Service. The term "Year of Service" shall
mean the twelve ( 12 ) consecutive month period, elapsed since the
first date for which an Employee was entitled to payment for the
performance of services for the Employer.
ARTICLE THREE
ELIGIBILITY AND PARTICIPATION
3 . 01 Eligibility Requirements . Each Employee shall be
eligible to participate in this Plan upon meeting the eligibility
requirements as set forth in the Adoption Agreement .
3 . 02 Notification of Participants. The Employer shall
give each Employee written notice of his or her eligibility to
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DEC 8 1987 ITEM 15
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FLEXIBLE BENEFITS ACCOUNT PLAN
participate in the Plan in sufficient time to enable such
Employee to submit an application for participation in the Plan
on or before the date on which he or she becomes an Eligible
Employee.
3 . 03 Initial Application for Participation. To become a
Participant, an Eligible Employee shall sign any application or
agreements as may be required by the Administrator and shall
specify his or her election of Non-Taxable Benefits within the
time set forth in the Adoption Agreement after he or she becomes
eligible for participation in the Plan. By signing such applica-
tions, the Eligible Employee shall be deemed for all purposes to
have agreed to participate and to conform to the requirements of
the Plan. If an Eligible Employee elects not to participate in
the Plan, he or she shall so indicate on forms supplied by the
Administrator. A signed election declining participation shall
be effective until the Eligible Employee completes a subsequent
form evidencing an election to participate. Such election may be
made at any subsequent entry date upon which the Employee is an
Eligible Employee. If an Eligible Employee fails to comply with
the application procedures set forth in this Section 3 . 03 , he or
she shall be advised by the Employer of the consequences and
shall be given an additional five business days in which to
comply. If , at the end of such five days, the Eligible Employee
shall have failed to comply, he or she may become a Participant
on any subsequent Entry Date after having completed the necessary
acts as specified in this Section 3 . 03; provided, however, that
he or she continues to be an Eligible Employee.
3 . 04 Continuous Participation. After an Eligible
Employee has completed the requirements for participation as set
forth in Section 3 . 03 , such Employee shall become a Participant
in the Plan for the Plan Year in which his or her initial elec-
tion is effective. In each subsequent Plan Year, the Participant
shall have an opportunity to revise the election of benefits made
for the prior Plan Year or to decline participation for the next
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DEC 8 1987 ITEM 15
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Plan Year according to the procedures set forth in Article
Four. If no such revision or declination is made by the Partici-
pant, the Participant shall be deemed to have elected to continue
participation under the terms of the election made for the prior
Plan Year.
3 . 05 Continuous Eligibility. A Participant shall
continue to remain eligible for Nontaxable Benefits as long as
sufficient funds remain in his or her FBA Accounts for Nontaxable
Benefits selected. Nontaxable Benefits may not be paid by the
Plan for an amount in excess of the current balance in a Partici-
pant ' s FBA Account after first deducting all administrative
charges and fees relating to the Nontaxable Benefits to be paid.
3 . 06 Excluded Employees shall mean the employees desig-
nated in the Adoption Agreement who are excluded from participa-
tion in the plan, even though they otherwise meet the eligibility
requirements. The group of Excluded Employees must fall within
the parameters of Code Section 89( h ) .
3 . 07 Effect of Employee Termination. Upon death,
disability, retirement or termination of employment of a Partici-
pant, his or her FBA Account balance shall be used to provide
Nontaxable Benefits to the Participant and his or her dependents
until the earlier of ( a ) the balance, if any, of the FBA Accounts
is exhausted; or ( b) the completion of the plan year in which
such death, disability, retirement, or termination occurred.
Although participation in the Plan shall terminate under the
conditions set forth in this paragraph, coverage under the
individual benefit plans offered under the Plan may continue if
and to the extent provided by such plans.
ARTICLE FOUR
CONTRIBUTIONS
4 . 01 Employer Contributions. Each Participant shall be
permitted at his or her sole discretion to convert a portion of
his or her compensation ( subject to the limitation in the Adop-
tion Agreement ) into his or her FBA Accounts, which amounts shall
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FLEXIBLE BENEFITS ACCOUNT PLAN
constitute Employer Contributions to the Trust for the Employee ' s
benefit and shall be used to purchase or provide Nontaxable
Benefits.
4 . 02 Effective Period for Election. The Participant ' s
election shall be effective beginning on the first day of the
Plan Year as set forth in the Adoption Agreement following the
election and ending on the last day of such Plan Year. The
Nontaxable Benefits elected by the Participant shall be provided
during the Plan Year. Under no circumstances shall such benefits
be provided during any period other than the Plan Year for which
the Participant ' s election is made, provided, however, that the
Participant shall have ninety ( 90 ) days following the close of
the Plan Year in which to submit claims for expenses incurred
during such Plan Year. Payment of such claims shall be made
pursuant to the terms of Section 10 . 09( f ) .
4 . 03 Procedure for Elections. The Employee election to
convert a portion of his or her compensation shall be in writing
and shall be made on an FBA Enrollment Form which shall be
supplied by the Administrator. Each such election shall be
irrevocable as of the beginning of the Plan Year in which such
election is effective, subject to the right of the Participant to
amend his or her election due to a change during the Plan Year in
his or her family status as provided in the Code and applicable
regulations. Such amendment shall be made in accordance with
procedures established by the Administrator.
4 . 04 Constructive Receipt. The Participant ' s election
on the FBA Enrollment Form shall relate to compensation that has
not been actually or constructively received by the Participant
as of the date of the election. That portion of the Partici-
pant ' s compensation which he or she elects to convert into his or
her FBA Account shall not become currently available to the
Participant subsequent to such election. Any benefit selected by
a Participant must be used within the Plan Year for which the
election is effective. Any benefits not used within such Plan
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DEC 8 1987 ITEM 15
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FLEXIBLE BENEFITS ACCOUNT PLAN
Year shall be forfeited by the Participant.
4 . 05 Application of Contributions. Contributions may be
used to provide nontaxable benefits to a Participant as further
described in this Article. Only those nontaxable benefits
elected to be provided by the Employer in the Adoption Agreement '
and selected by a Participant on an FBA Enrollment Form shall be
provided to a Participant.
4 . 06 Cash Benefit. The Participant will receive as
regular Compensation any amounts which he or she has not elected
to convert to Contributions pursuant to this Article Four.
4 . 07 Contributions for Participants. The Employer
agrees to pay to the Administrator such Employer Contributions as
are required by the Plan pursuant to Section 4 . 01 . The amount of
such Employer Contributions shall not be less than that amount
set forth in the Adoption Agreement. Monthly Employer Contribu-
tions will be remitted by the Employer in sufficient time to be
1
received at the principal office of the Administrator no later
than the fifth ( 5th ) day of each month of participation under
this Plan. Checks or drafts shall be payable to UniService
Flexible Benefits Account Plan.
4 . 08 Deposit of Employer Contributions. The Admin-
istrator shall receive all Employer Contributions due and shall
deposit them in a special trust fund account or accounts estab-
lished in federally insured banks or savings and loan associa-
tions.
4 . 09 Employer Liability for Contributions. The Employer
shall be liable to make contributions to the extent that the
Employer is required to make such Contributions by the express
terms and conditions of the Plan.
4 . 10 Non-Interest Bearing Accounts. The Employer and
the Administrator agree that no Participant ' s Benefit Fund
Account shall be credited with interest nor shall interest inure
to the Employer.
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DEC8 1987 ITEM 15
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ARTICLE FIVE
PROHIBITION AGAINST DISCRIMINATION
5 . 01 Highly Compensated Participants. This Plan shall
not discriminate as to eligibility, contributions or benefits, in
favor of Highly Compensated Participants.
5 . 02 Reduction of Benefits to Prevent Discrimination.
The Employer may reduce the amounts of Nontaxable Benefits
payable to a Highly Compensated Participant ( beginning with the
Employees with the greatest nontaxable benefits ) to the extent
that the Employer deems necessary to assure that the Plan does
not discriminate in favor of Highly Compensated Participants in
violation of the Code. Any such reduction of benefits shall be
made by the Employer on a reasonable and nondiscretionary
basis. Contributions which may not be paid out because of
benefit reductions imposed shall be forfeited.
5 . 03 Key Employees. The Qualified Benefits provided to
Key Employees under 'the Plan shall not exceed twenty-five percent
( 25% ) of the aggregate of such benefits provided for all Eligible
Employees under the Plan.
5 . 04 Collective Bargaining. The provisions of this
Article Five do not apply if the Plan is maintained under an
agreement which the Secretary of the Treasury finds to be a
collective bargaining agreement between employee representatives
and the Employer.
5 . 05 Health Related Benefits . If health benefits are
elected under the Plan by Participants, then Employer Contribu-
tions 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 majority 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 a
similarly situated Participant. All Employer Contributions under
the Plan must bear a uniform relationship to the compensation of
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DEC 8 1987 ITEM 15
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FLEXIBLE BENEFITS ACCOUNT PLAN
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.
5 . 06 Highly Compensated Employees.
( a ) For Plan Years beginning after the later of
( 1 ) December 31 , 1987, or
( 2 ) The earlier of
(A) the date which is three months after
the date on which the Secretary of
the Treasur or his delegate issues
such regulations as are necessary to
carry out the provisions of Section
89 of the Internal Revenue Code of
1986, or
(B ) December 31 , 1987,
the Plan shall be available to a group of Employees as qualify
under a classification set up by the Employer and which the
Secretary finds not to be discriminatory in favor of the Highly
Compensated Employees with respect to eligibility to participate.
(b) For purposes of this Section 5 . 06, the term
"Highly Compensated Employee" shall mean any Employee who, during
the year or the preceding year
( 1 ) was at any time a five percent owner,
( 2 ) received compensation from the Employer
in excess of $75 , 000,
( 3 ) received compensation from the Employer
in excess of $50, 000 and was in the top
twenty percent grou of employees with
respect to compensation for such year, or
( 4 ) was at any time an officer and received
compensation greater than 150 ercent of
the amount n effect under section
415 ( c ) ( 1 ) ( A) for such year.
The definition of Highly Compensated Employee shall be inter-
preted according to the provisions of Section 414( q) of the Code.
ARTICLE SIX
BENEFITS
6 . 01 Medical Expense Reimbursement Benefit. The
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FLEXIBLE BENEFITS ACCOUNT PLAN
Employer may maintain a self-funded medical reimbursement program
designed to qualify as a nontaxable employee benefit under Code
section 105 (b) . Such program, if adopted, shall be attached to
and become a part of this Plan. Each Participant who desires to
receive this benefit shall select the portion of his or her
Contributions to be used to provide this Nontaxable Benefit . The
Plan shall reimburse the Participant in a dollar amount not to
exceed the amount selected by the Participant for medical
expenses ( as defined in Section 2 . 16 ) incurred by the Participant
and his or her Dependents ( as defined in Section 2 . 05 ) , to the
extent such expenses are not otherwise compensated. Medical
expenses shall include only those expenses incurred during the
Plan Year for which the Participant ' s benefit election is effec-
tive and shall include those expenses approved and defined by the
Code.
6 . 02 Accident, Health and Hospitalization Insurance
Benefits. The Employer may maintain one or more health, dental
and vision insurance plans. Each Participant who desire to
receive this benefit shall select the insurance plan in which he
or she desires to participate, and the cost of premiums for such
insurance may be paid from his FBA Account or reimbursed to the
Participant.
6 . 03 Group-Term Life Insurance Benefit. The Employer
may maintain one or more group-term life insurance plans as that
term is defined in Section 79 of the Code and the regulations
promulgated thereunder, which Plans shall qualify as non-discrim-
inatory group term life insurance eligible for special tax
treatment. Each Participant who desires to receive this benefit
shall select the amount of life insurance protection to be
provided under the group term life insurance plan for such
Participant or his or her eligible dependents.. The cost of
premiums to provide such protection shall be paid directly from
his or her FBA Account . Any Participant, upon selecting this
Nontaxable Benefit, shall be provided by the Employer FBA Plan
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DEC 8 1987 ITEM 15
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FLEXIBLE BENEFITS ACCOUNT PLAN
Benefits Advisor with an estimate of the annual Table I cost of
such insurance protection which will be included in his gross
income under Section 79 of the Code. The specific terms, condi-
tions and limitations of this benefit shall be as outlined in the
group term life insurance policy identified in the Adoption
Agreement.
6 . 04 Disability Insurance Benefits . The Employer may
maintain one or more disability insurance or salary continuation
benefit plans which plans shall qualify under Code sections 104
and 106 in order that premiums paid for disability benefits shall
be excludible from the gross income of the Participant . Each
Participant who desires to receive this benefit shall select the
disability insurance or salary continuation benefit plan in which
he or she desires to participate, and the cost of premiums for
such insurance may be paid directly from his or her FBA Account
or reimbursed to the Participant. The terms, conditions and
limitations of this , benefit shall be as specifically described in
the policy identified in the Adoption Agreement.
6. 05 Dependent Care Assistance Benefit. The Employer
may maintain a Dependent Care Assistance Program in a separate
written document that is attached and made a part of this Plan.
Each Participant who desires to receive this benefit shall select
the portion of his or her Contributions to be used to provide
this seciton. The maximum benefit which may be provided under
this Section may not exceed the earned income of the Participant
( if he or she is not married) or the lesser of the earned income
of the Participant or his or her spouse ( if he or she is married )
for the Participant ' s taxable year. The maximum benefit which
may be provided under this section for any taxable year of a
participant shall not exceed $5 , 000 ( $2, 500 where a separate
return is filed by a married individual ) . A claim for this Non-
taxable Benefit shall be accompanied by a written statement con-
taining information specified in the Dependent Care Assistance
Benefit document .
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The Administrator shall be entitled to rely absolutely upon any
written statements or forms provided by a Participant in com-
pliance with the requirements of Section 21 and 129 of the
Code. The Administrator shall not be required to make any inves-
tigation of the accuracy of such statements.
ARTICLE SEVEN
FBA EMPLOYER REPRESENTATIVE
7 . 01 Designation. The Employer shall designate in the
Adoption Agreement an individual to act as FBA Employer Represen-
tative until such individual ' s resignation or removal by the
Employer and appointment of a successor.
7 . 02 Duties. The FBA Employer Representative shall :
( a ) verify the eligibility of a Participant to
participate in this Plan;
(b) distribute The Summary Plan Description to
Participants;
( c ) provide information to Participants regard-ing
the Nontaxable Benefits provided by the Plan;
(d ) act as an interface between the Employer,
Administrator and the Participant.
ARTICLE EIGHT
FBA ACCOUNTING
8 . 01 FBA Accounts. The Administrator shall maintain FBA
Accounts, as defined in Section 2 . 12 of the Plan, for each
Participant.
8 . 02 Employer Contributions. Employer Contributions
will be credited to the appropriate FBA Account of each Partici-
pant for whom such Contributions are designated.
8 . 03 Benefit Claim for Participants. As Nontax-able
Benefits are paid or Administrative Charges are made, the FBA
Account balance of each Participant for whom such Nontaxable
Benefit or Administrative Charges are made will be reduced by
such amount paid or Administrative Charge.
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8 . 04 Forfeiture of Unused Amounts. Any amounts
remaining in an FBA Account of a Participant at the end of a Plan
Year which are not used to provide Nontaxable Benefits or pay
Administrative Charges with respect to that Plan Year, shall be
forfeited by the Participant within ninety ( 90 ) days of the close -
of the Plan Year. Amounts so forfeited shall be applied to
reduce the Employer ' s future contributions to the Plan. However,
claims incurred before the end of the Plan Year may be paid if
submitted to the Administrator within ninety ( 90 ) days of the
close of the Plan Year. Forfeitures shall be subject to the
terms of Section 10 . 09( f ) .
ARTICLE NINE
CLAIMS PROCESSING
9 . 01 Benefit Payments. Claims for benefit payments must
be properly submitted by the Participant to the Administrator on
forms provided by the Administrator and received by the Admini-
strator on or before the 25th day of each month. Each claim for
Nontaxable Benefits other than insurance claims shall be paid on
or before the fifteenth ( 15th ) day of the following month. Each
claim for Nontaxable Benefits received after the 25th day of each
month will be processed in the following claims payment cycle.
All claims with respect to a Plan Year must be submitted no later
than ninety ( 90 ) days following the end of such Plan Year.
Insurance claims shall be made directly to the insurance carrier
on its forms.
9. 02 Premium Payment. Premiums paid by the Admin-
istrator for insurance will constitute a Nontaxable Benefit claim
to be paid from the Participant ' s Accident, Health and Hospitali-
zation FBA Account .
ARTICLE TEN
ADMINISTRATION
10 . 01 Named Fiduciaries, Allocation of Responsibility.
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FLEXIBLE BENEFITS ACCOUNT PLAN
(a ) There are three Named Fiduciaries--the
Employer, the Administrator, and the Trustee. Each is severally
liable for its responsibilities as specified in this Article Ten
and elsewhere in the Plan.
(b) Except as provided in the Trust Agreement, the
Trustee has exclusive responsibility for the control and manage-
ment of the Trust Fund. If an Investment Manager is appointed
according to this Plan or the Trust Agreement, the Trustee is
released from any obligation or liability for the management,
investment, or control of the assets for which the appointment is
made.
(c ) The Administrator has only the responsi-
bilities described in this Plan and those delegated by the
Employer and accepted in writing by the Administrator. The
Administrator has no responsibility for the control or management
of the Trust Fund.
(d ) All responsibilities not specifically
delegated to another Named Fiduciary remain with the Adminis-
trator . The Administrator ' s responsibilities include drafting
and designing the Plan and amendments to it and designating all
additional Fiduciaries not named in this Plan.
(e ) This Plan and the Trust Agreement allocate to
each Named Fiduciary the individual responsibilities assigned.
Responsibilities are not shared by Named Fiduciaries unless the
sharing is provided for specifically in this Plan or the Trust
Agreement.
( f ) Whenever one Named Fiduciary is required by
the Plan or the Trust Agreement to follow the directions of
another Named Fiduciary, the two have not been assigned to share
the responsibility. The Named Fiduciary giving directions bears
the sole responsibility for those directions, and the respon-
sibility of the Named Fiduciary receiving those directions is to
follow directions as long as on their face the directions are not
improper under applicable law.
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FLEXIBLE BENEFITS ACCOUNT PLAN
10 . 02 Assignment of Administrative Authority. The
Employer hereby appoints the Administrator to administer the
Plan. The current name and address of the Administrator is set
forth in the Adoption Agreement .
10 . 03 Administrator Powers and Duties. The Administrator
must administer the Plan by its terms and has all powers
necessary to do so. The Administrator is agent for service of
legal process unless another person is designated by the Adminis-
trator. The Administrator must interpret the Plan. The Adminis-
trator ' s duties include, but are not limited to:
( a ) determining the answers to all questions
relating to the Employees ' eligibility to become Participants;
(b) communicating with Insurers and the Trustee
about benefit payments for Participants and their Beneficiaries;
(c ) communicating to the Trustee and to the
appropriate officer of the Employer, according to the terms of
this Plan and the Trust Agreement, any need to acquire a Policy
from an Insurer and to disburse funds in payment of Benefits or
premiums or other obligations under Policies to accomplish the
purposes of this Plan;
(d ) creating and publishing Plan rules not incon-
sistent with the terms of the Plan.
Subject to the appeals procedures in section 10 . 09
an Administrator determination made in good faith is conclusive
and binding on all persons. No decision of the Administrator,
however, may take away any rights specifically given to a Par-
ticipant by this Plan.
The Administrator may employ such accountants,
counsel, specialists, and other advisory and clerical persons as
it deems necessary or desirable in connection with the Plan ' s
administration. The Administrator is entitled to rely conclu-
sively on any opinions or reports furnished to it by its accoun-
tant or counsel.
10 . 04 Discretion of Administrator. The Administrator ' s
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FLEXIBLE BENEFITS ACCOUNT PLAN
discretionary power to perform or consent to any act is exclusive
if exercised in a consistent manner with respect to all similarly
situated Employees and Participants.
10 . 05 Records and Reports. The Employer must supply
information to the Administrator sufficient to enable the Admin- '
istrator to fulfill its duties. The Administrator must advise
the Trustee of information necessary or desirable to the
Trustee ' s administration of the Trust Fund.
The Administrator must keep all books of account,
records, and other data necessary for proper administration of
the Plan.
10 . 06 Administrative Charges and Fees.
( a ) Installation Charges Assessed to Employer.
The Administrator will charge each participating Employer on a
one time basis, the Plan Installation Charge specified in the
Adoption Agreement. This charge shall be based upon the number
of Participants in the Plan . In addition, the Administrator will
assess the Annual Renewal Fee specified in the Adoption Agree-
ment, for the number of Participants in the Plan. The Annual
Renewal Fee shall be received at the beginning of each Plan Year
or on the date the Employer first adopted the Plan should that
date be later.
(b) Administrative Charges. The Administrator
shall assess the Employer a per capita maintenance charge based
upon the number of participating employees, as specified in the
Adoption Agreement .
( c ) No Termination Fee. The Employer shall not be
liable for any termination fee or charges by the Administrator in
the event the Employer terminates its participation in the Plan
as provided under Article Eleven of the Plan.
10 . 07 Limitation of Liability. If Permissible by law,
the Administrator serves without bond. If the law requires bond,
the Administrator must secure the minimum required. Except as
otherwise provided in this Plan, the Administrator is not liable
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FLEXIBLE BENEFITS ACCOUNT PLAN
for another Fiduciary' s act or omission. To the extent allowed
by law and except as otherwise provided in this Plan, the Admin-
istrator is not liable for any action or omission that is not the
Administrator ' s own negligence or bad faith.
10 . 08 Claims.
(a ) It is necessary to file a claim in order to
receive Plan benefits. Subject to section 10 . 09, claims for
benefits from this Plan must be made in writing to the Adminis-
trator or any person the Administrator designates to receive
claims, on such forms as may be provided by the Administrator.
Insurance claims shall be made directly to the insurance carrier
on its forms, rather than to the Administrator. Dependant Care
Assistance claims may be made on an annual, semi-annual or
quarterly basis as determined by the Administrator, and shall be
paid on a monthly basis by the Administrator as specified in the
Dependant Care Assistance Plan document.
(b) If a claim is wholly or partially denied, the
Administrator must give written notice to the claimant of such
denial . An adverse notice must specify each reason for denial .
There must be specific reference to provisions of this Plan, the
relevant Policy, or related documents on which the denial is
based. If additional material or information is necessary for
the claimant to perfect the claim, it must be described and there
must be an explanation of why that material or information is
necessary. Adverse notice must disclose appropriate information
about the steps to be taken if the claimant wishes to submit the
claim for review.
(c ) The full value of a payment according to the
provisions of this Plan satisfies that much of the claim and all
related claims under this Plan against the Administrator, each
Insurer, the Company, and the Trustee--any of whom, as a condi-
tion to a payment from it or directed by it, may require the
Participant, Beneficiary, or legal representative to execute a
receipt and release of the claim in a form determined by the
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FLEXIBLE BENEFITS ACCOUNT PLAN
person requesting the receipt and release.
10 . 09 Review of Claims.
( a ) On proper written request for review from a
claimant to the Administrator, there must be a review by the
Administrator, or by a person designated by the Administrator to
review any denied claim made according to section 10 . 08 . The
written request must be received by the Administrator within one
hundred twenty-one ( 121 ) days after the claimant ' s receipt of
notice that a claim has been denied according to section 10 . 08 .
( b) The claimant or a duly authorized represent-
ative may review all Plan documents and other papers that affect
the claim and may submit issues and comments in writing.
(c ) The Administrator, the Insurer, or other
reviewer must advise the claimant in writing of the final deter-
mination after review; that written advice must be rendered
within sixty ( 60 ) days after the request for review is received,
unless special circumstances require an extension of time for
processing. If an extension is necessary, the decision must be
rendered as soon as possible but no later than 120 days after
receipt of the request for review.
(d ) Except for a written request for review under
paragraph ( a ) , all good-faith determinations by the Administrator
are conclusive and binding on all persons, and there is no right
of appeal .
(e ) The Administrator is not required to review or
challenge a claim denied by an Insurer.
( f ) It is hereby understood and agreed that where
it is determined by the Administrator upon review of a previously
denied claim that such claim shall be paid, the Employer shall be
liable for payment of such claim from previous forfeitures under
the terms of this Plan.
ARTICLE ELEVEN
TERMINATION
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11 . 01 Termination of Employer Participation. The
Employer, at any time, may terminate its participation in this
Plan by giving written notice of such termination to the Adminis-
trator. Such termination shall be effective sixty ( 60 ) days
after receipt of the notice. After termination, the Employer
shall have no obligation to the Administrator, except that which
accrued during the time of the Employer ' s participation in the
Plan.
11 . 02 Mutual Termination. The Plan may be terminated at
any time by the mutual consent of the Employer and the Admini-
strator upon the execution of a written instrument evidencing
such consent.
11 . 03 Disposition of Funds Upon Termination. Upon the
termination of the Plan, any and all monies remaining after
payment of all Administrative Charges and Fees shall be used for
the continuance of one or more benefits of the type provided by
this Plan for the benefit of the Participant ' s FBA Account until
funds are exhausted or 90 days after the end of the Plan Year,
whichever first occurs. In no event shall any funds be used for
any purpose other than as provided for in this Plan, nor returned
to the Employer nor returned to a Participant except in the form
of Nontaxable Benefits. However, if the Plan is terminated, any
amounts subsequently forfeited by any Participant shall revert to
the Employer to be used for the benefit of all participants in a
pro-rata, nondiscriminatory manner.
ARTICLE TWELVE
GENERAL PROVISIONS
12 . 01 Governed by this Agreement. The rights and duties
of all parties, including the Employer, the Participants, other
beneficiaries and the Administrator, shall be governed by the
provisions of this Plan.
12 . 02 Limitation of Participant Claims. All Nontaxable
Benefits provided by this Plan shall be limited to the funds
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FLEXIBLE BENEFITS ACCOUNT PLAN
contributed by the Employer to the Administrator on behalf of the
Participant after payment of Administrative Charges and Fees, and
shall be subject to the determination by the FBA Employer Repre-
sentative that the claim constitutes a Nontaxable Benefit .
12 . 03 Notice. Any notice required to be given under the .
terms of this Plan shall be deemed to have been duly served if
delivered personally to the person notified in writing, or if
mailed in a sealed envelope, postage prepaid, to such person at
his last known address as shown on the records of the Employer,
or if sent by wire to such person at his last known address.
12 . 04 Choice of Law. All questions pertaining to the
Plan and its validity, administration and construction, shall be
determined in accordance with the laws of the State of Arizona,
except to the extent Arizona law is preempted by Federal
Statute. Where Arizona law is preempted by federal statute, then
such federal statute shall be used to construe the Plan.
12 . 05 Arbitration. Any controversy or claim arising out
of or relating to this Plan shall be settled by arbitration in
accordance with rules of the American Arbitration Association
then in effect. Judgment upon the award rendered by the arbitra-
tor or arbitrators may be entered in any state or Federal court
having jurisdiction.
12 . 06 Severability. If any provision of the Plan, the
rules and regulations made pursuant thereto, or any step in the
administration of the Plan is held to be illegal or invalid for
any reason, such illegality or invalidity shall not affect the
remaining portions of the Plan and its rules and regulations
unless such illegality or invalidity will prevent the accomplish-
ment of the purpose and intent of the Plan.
12 . 07 Confidential Nature of Records. Except to the
extent necessary for the proper administration of the Plan, all
books, records, papers, reports, documents, or other information
obtained with respect to the Plan shall be confidential to the
Administrator. Nothing in this Section shall prohibit the
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FLEXIBLE BENEFITS ACCOUNT PLAN
preparation of statistical data and summary reports with respect
to the operations of the Plan if authorized by the Administrator .
THE ATTACHED ADOPTION AGREEMENT IS INCORPORATED BY REFERENCE AND
IS HEREBY MADE A PART OF THIS DOCUMENT.
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DEPENDENT CARE ASSISTANCE PROGRAM
UNISERVICE, INC.
ATTACHMENT D
48 Of 53
DEC 8 1987 ITEM 15
• •
DEPENDENT CARE ASSISTANCE PROGRAM
ARTICLE ONE: ADOPTION AND PURPOSE
1 . 01 Adoption by Company. The undersigned and employer
( the "Company" ) hereby adopts this Dependent Care Assis-tance
Program (the "Plan" ) effective on the date signed.
1 . 02 Purpose of the Plan . The purpose of this Plan is
to reimburse the Company ' s employees for the cost of dependent
care assistance expenses which they incur in order to remain
gainfully employed pursuant to the provisions of Section
129(d ) ( 1 ) of the Internal Revenue Code. It is the Company ' s
intent that the benefits provided under the Plan be eligible for
exclusion from the Employees ' income under Section 129( a ) of the
Internal Revenue Code.
ARTICLE TWO: DEFINITIONS
2 . 01 Benefits . The term "Benefits" shall mean the
amounts paid to a Participant pursuant to the Plan as reimburse-
ments for Eligible Employment Related Expenses paid or incurred
by the Participant.
2 . 02 Code. The term "Code" shall mean the Internal
Revenue Code 1986, as amended, and regulations promulgated
thereunder .
2 . 03 Dependent . The term "Dependent" shall mean any
individual who is a dependent of a Participant within the meaning
of Code Section 152( a ) .
2 . 04 Earned Income. The term "Earned Income" shall
mean all income derived 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 by the Employer for
Dependent Care Assistance to the Participant.
2 . 05 Eligible Employment Related Expenses. The term
"Eligible Employment Related Expenses" shall mean all Employment
Related Expenses incurred by a Participant for the care of a
qualifying individual which are paid to a person who is not:
( a ) a Dependent of the Participant;
( b) the Participant ' s Spouse; or
( c ) a child of the Participant under the age of
nineteen ( 19 ) .
2 . 06 Employee. The term "Employee" shall mean a person
who is employed by the Company.
2 . 07 Employment Related Expenses. The term
"Employment Related Expenses" shall mean expenses
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49 of 53 DEC8 1987 ITEM 15
•
incurred for Qualifying Services or for the cost of sending a
child of the Participant to a Qualifying Day Care Center.
2 . 08 Participant. The term "Participant" shall mean
any Employee who has satisfied the eligibility requirements and
completed the Dependent Care Assistance Form.
2 . 09 Plan Administrator. The term "Plan Administrator"
shall mean UniService, Inc.
2 . 10 Plan Year. The term "Plan Year" shall mean the
twelve month period which comprises the operating period of the
Plan and is specifically defined in the FBA Plan Adoption Agree-
ment.
2 . 11 Qualifying Day Care Center. The term "Qualifying
Day Care Center" shall mean ( a) a facility which complies with
all applicable laws and regulations of the State and town, city
or village in which it is located, (b) provides care for more
than six individuals ( other than individuals who reside at the
day care center ) and (c ) receives a fee, payment or grant for
services for any of the individuals to whom it provides services
( regardless of whether such facility is operated for a profit ) .
2 . 12 Qualifying Individual. The term "Qualifying
Individual" shall mean:
(a ) a Dependent of a Participant who is under the
age of fifteen ( 1 5 ) ;
( b) a Dependent of a Participant who is phy-
sically or mentally incapable of caring for herself or himself ;
or
(c ) the Spouse of a Participant, who is phy-
sically or mentally incapable of taking care of herself or him-
self .
2 . 13 Qualifying Services. The term "Qualifying
Services" shall mean services performed:
( a ) in the home of the Participant; or
(b) outside the home of the Participant for ( 1 )
the care of a Dependent of the Participant under the age of
fifteen ( 15 ) or ( 2 ) the care of any other Qualifying Individual
who spends at least eight ( 8 ) hours a day in the Participant ' s
home.
2 . 14 Student. The term "Student" shall mean an indi-
vidual who during each of five calendar months during a Plan Year
is a full time student at an Educational Institution maintaining
a regular facility, curriculum, and regularly enrolled student
body.
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DEC 8 1987 ITEM 15
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ARTICLE THREE: ELIGIBILITY AND BENEFITS
Each Employee who is a participant in the FBA Plan
sponsored by the Employer shall be eligible to participate in
this program.
3 . 01 Eligibility. Each Participant in the Plan shall
be eligible to receive a Benefit under the Plan for all Eligible
Employment Related Expenses incurred by such Participant.
3 . 02 Claim. No Benefits shall be payable hereunder
unless the Participant submits to the Plan Administrator a claim
for such Benefits pursuant to the Provisions of the FBA Plan
sponsored by the Employer. Upon receipt of such claim, the Plan
Administrator shall pay the Participant the Benefit the
Participant is entitled to receive under the Plan within the time
period specified in the FBA Plan.
3 . 03 Required Information. Each Participant who makes
a claim for a Benefit under the Plan shall complete and submit to
the Plan Administrator the Dependent Care Assistance Form
provided by the Administrator.
3 . 04 Termination. If a Participant ceases to be an
Employee: (a ) no Benefits shall be paid for expenses incurred
after the date he ceases to be an Employee, and ( b) requests for
Benefits may be made for Eligible employment Related Expenses
incurred prior to such date if such requests are made before the
date that is 90 days' after the end of the Plan Year in which such
termination of employment occurs.
3 . 05 FBA Account. All Benefits hereunder shall be
provided from the participant ' s Dependent Care Assistance Account
under the FBA Plan sponsored by the Employer.
3 . 06 Earned Income Limitation: (a ) A Participant may
not receive a Benefit for Eligible Employment Related Expenses
incurred by him or her for any one month in which he or she is
married in excess of the lesser of :
( 1 ) the Participant ' s Earned Income for such month;
( 2 ) the Earned Income of the Participant ' s Spouse for
such month; or
( 3 ) the balance in his Dependent Care Assistance
Benefit Account in the FBA Plan adopted by the Employer.
(b) For purposes of paragraph ( a ) , a Spouse of a
Participant who is not employed during any month in which the
Participant incurs Eligible Employment Related Expenses and which
Spouse is either incapacitated or a Student shall be deemed to
have Earned Income for such month of :
( 1 ) $200, if there is one Qualifying Individual for
whom the Participant incurs Eligible Employment Related Expenses.
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51 of 53 DEC 8 1987 ITEM 15
• •
( 2 ) $400 , if there is more than one Qualifying
Individual for whom the Participant incurs Eligible Employment
Related Expenses.
(c ) In the case of a Participant who is not married at the
close of his or her taxable year, the benefits received under
this program shall not exceed such Participant ' s earned income.
3 . 07 Dollar Limitation. The maximum dollar amount
which may be received by a Participant under this program for a
Participant ' s taxable year is $5 , 000 ( $2 , 500 in the case of a
separate return filed by a married individual ) .
3 . 08 25% Limitation. In no event shall more than 25%
of the Benefits provided by the Plan in any Plan Year be provided
to those Participants ( or their Spouses or Dependents ) who own
more than 5% of the stock or of the capital or profits interest
in the Employer. For purposes of this Section,
( a ) ownership of stock in a corporation shall be
determined in accordance with the rules provided in Sections
1563(d ) and (e ) of the Code (without regard to Code Section
1563( e ) ( 3 ) ( C ) ) , and
(b) the interest of an employee in a trade or
business which is not incorporated shall be determined on the
basis of principles similar to that stated in subclause ( a ) .
ARTICLE FOUR: PLAN TRUSTEE AND ADMINISTRATOR
4 . 01 Trustee. The Trustee of the FBA Plan sponsored by
the Employer and specifically named in the FBA Plan Adoption
Agreement shall serve as Trustee for this program.
4 . 02 Administrator. The Plan Administrator as defined
in Section 2 . 09, shall have sole responsibility for the adminis-
tration of the Plan, including payment of claims and maintenance
of records concerning Participant accounts.
ARTICLE FIVE: CLAIM REVIEW
5 . 01 Claims Review Procedure. The Administrator shall
make all determinations as to the rights of any person to a
benefit under this Plan. If a claim for benefits under this Plan
is denied in whole or in part, the Participant or Beneficiary of
the Participant will be sent a written notice specifying the
reason( s ) for denial and the Plan provision( s ) on which such
denial is based. A Participant, his or her Beneficiary, or
authorized representative may request a review of the denied
claim, but such a request must be in writing and submitted to the
Administrator within sixty ( 60 ) days after receiving the denial
notice. Also, the Participant, Beneficiary or authorized repre-
sentative may submit issues and comments in writing and review
pertinent documents. The Administrator will perform the review
of the denied claim and render its written decision within sixty
( 60 ) days, or within one hundred twenty ( 120 ) days under special
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52 of 53 DEC 8 1987 ITEM 15
411 4111
circumstances of receiving the request. The written decision
will include specific reasons for the decision and specific
reference to the Plan provision( s ) on which such decision is
based.
ARTICLE SIX: GENERAL PROVISIONS
6. 01 Amendment and Termination. The Employer may
terminate this Plan at any time. The Employer may amend this
Plan at any time upon receiving written notice by the Administra-
tor approving said amendment.
6. 02 Allocation of Responsibility for Administration.
The Administrator shall have the sole responsibility for the
administration of this Plan as is specifically described in this
Plan.
6. 03 Records and Reports. The Administrator shall
exercise such authority and responsibility as it deems appro-
priate in order to comply with the terms of the Plan relating to
the records of the Participants and the balances and benefits
which are payable under this Plan. The Administrator shall also
be responsible for all reporting and disclosure requirements
imposed upon the Employer, and for maintaining all of the records
of the Plan.
6. 04 Indemnification of the Administrator. The Admin-
istrator shall be indemnified by the Employer against any and all
liabilities arising by reason of any act or failure to act made
in good faith, pursuant to the provisions of the Plan, including
expenses reasonably incurred in the defense of any claim relating
thereto.
6 . 05 Statement of Expenses. The Administrator shall
furnish to each Participant no later than ninety ( 90 ) days after
the close of the Plan Year, a written statement showing the
amounts paid or expenses incurred for Dependent Care Assistance
to such Participant during the previous calendar year.
6. 06 No Employment Contract. This Plan shall not be
deemed to constitute a contract between the Employer and any
Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in
this Plan shall be deemed to give any Participant or Employee the
right to be retained in the service of the Employer or to inter-
fere with the right of the Employer to discharge any Employee at
any time regardless of the effect which such discharge shall have
upon him as Participant of the Plan.
6. 07 Governing Law. This Plan shall be construed and
enforced according to the laws of the State of Arizona, to the
extent not preempted by any federal law.
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