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HomeMy WebLinkAboutRes 618RESOLUTION NO. 618 A RESOLUTION AMENDING THE SECTION 125 FLEXIBLE BENEFITS PLAN OF THE CITY OF MISSION TO ALLOW A GRACE PERIOD AS SET FORTH IN THE ATTACHED AMENDMENT AND SUMMARY OF MATERIAL MODIFICATIONS. WHEREAS, the City adopted the Flexible Benefits Plan (the "Plan"), a Code Section 125 Plan and a Code Section 105 Medical Care Reimbursement Plan "URM"), collectively referred to as the Flexible Benefits Plan (the "Plan"). WHEREAS, the Internal Revenue Service issued Notice 2005 -42, which permits employers to amend the Plan to allow a grace period (the "Grace Period not to exceed two (2) months and fifteen (15) days following the end of the Plan Year during which Plan participants may use all or a portion of their unused URM salary reduction amounts from the prior year for eligible expenses incurred during the Grace Period; and WHEREAS, effective January 1, 2006 the Employer desires to amend the Plan as set forth in the attached amendment and Summary of Material Modifications to establish a Grace Period that is consistent with the requirements set forth in 2005 -42; NOW, THEREFORE, BE IT RESOLVED that the Governing Body of the City of Mission has hereby reviewed the attached amendment and Summary of Material Modifications and does hereby approve the adoption of the Grace Period as set forth therein; BE IT FURTHER RESOLVED that the officers of the City are authorized and directed to take any and all action as may be necessary to effectuate this Resolution. PASSED AND APPROVED BY 'ME GOVERNING BODY OF THE CITY OF MISSION KANSAS THIS 14 DAY OF DECEMBER 2005. THIS RESOLUTION IS APPROVED BY THE MAYOR THIS 14 DAY OF DECEMBER 2005. ATTEST: Martha M. Sunrall, City Clerk PA/Liu k �v 1utte aura L. Mc e Mayor Laura 11 y AMENDMENT TO THE FLEXIBLE BENEFITS PLAN This Amendment to the Flexible Benefits Plan (the 'Plan') is adopted by City of Mission Kansas the "Employer"), effective as of the dates set forth herein. NOW, THEREFORE, effective 1/1/2006 the Plan is amended as follows: A. Section 4.03 is deleted in its entirety and replaced with the following new Section 4.03: 4.03 Health Care Reimbursement. To the extent offered under the Plan, each Participant's URM will be credited for Health Care Reimbursement with amounts withheld from the Participant's Compensation and any Nonelective Contributions allocated thereto by the Employer or where applicable, the Participant. The Account will be debited for Health Care Reimbursements disbursed to the Participant in accordance with Article V of this document. The entire amount elected by the Participant on the SRA as an annual amount for the Plan Year for Health Care Reimbursement less any Health Care Reimbursements already disbursed to the Participant for Expenses incurred during the Plan Year (plus any grace period as set forth in the SPD) shall be available to the Participant at any time during the Plan Year without regard to the balance In the Health Care Account (provided that the periodic contributions have been made). Thus, the maximum amount of Health Care Reimbursement at any particular time during the Plan Year will not relate to the amount that a Participant has had credited to his URM. In no event will the amount of Health Care Reimbursements in any Plan Year (plus any grace period as set forth in the SPD) exceed the annual amount specified for the Plan Year in the SRA for Health Care Reimbursement. Any amount credited to the Health Care Account shall be forfeited by the Participant and restored to the Employer if it has not been applied to provide Health Care Reimbursement within the Run-Off Period set forth in the SPD. Amounts so forfeited shall be used in a manner that is permitted within the applicable Department of Labor ("DOL or Internal Revenue Service "IRS regulations. The maximum annual reimbursement under the URM shall be set forth in the SPD. The Employer may establish a minimum annual reimbursement amount as set forth in the SPD. B. Section 5.01(a) is deleted in is entirety and replaced with the following new Section 5.01 (a): Special Rules for Health Care Reimbursement To the extent offered under the Plan, payment shall be made to the Participant in cash as reimbursement for Eligible Medical Expenses incurred by the Participant or his Spouse or Dependents while he is a Participant during the Plan Year (plus any grace period as specified in the SPD) for which the Participant's election is effective provided that the substantiation requirements of Section 6.05 herein are satisfied. C. The following provisions should be added to the end of Section 5.04: A special grace period may be applicable with regard to URM participation after the close of the Plan Year (see SPD). City of Mission, Ka sass, By: l/a(AA,A.... L. /l�il ,Pry Title: SUMMARY OF MATERIAL MODIFICATIONS TO THE FLEXIBLE SPENDING ACCOUNT PLAN (the "Plan This document summarizes important changes to your Flexible Spending Account Plan. If you have any questions regarding the changes summarized in this Summary of Material Modifications "SMM', you should contact Laura G a v You should keep a copy of this SMM with your Summary Plan Description for future reference. Effective January 1, 2006 the Employer has established a "grace period" for the URM offered under the Flexible Benefits Plan that follows the end of the Plan Year during which amounts you have allocated to the applicable spending account that are unused at the end of the Plan Year may be used to reimburse Eligible Medical Expenses incurred during the grace period. The grace period will begin on the first day of the first Plan Year following the effective date of this SMM and will end two (2) months and fifteen (15) days later. For example, if the Plan Year ends December 31, 2005, the grace period begins January 1, 2006 and ends March 15, 2006. In order to take advantage of the grace period, you must be: A Participant in the URM on the last day of the Plan Year to which the grace period relates, or A Qualified Beneficiary who is receiving COBRA coverage under the URM on the last day of the Plan Year to which the grace period relates. The following additional rules will apply to the grace period: Eligible Medical Expenses incurred during a grace period and approved for reimbursement will be paid first from available amounts that were remaining at the end of the Plan Year to which the grace period relates and then from any amounts that are available to reimburse expenses incurred during the current Plan Year. Claims will be paid in the order in which they are received. This may impact the potential reimbursement of eligible expenses incurred during the Plan Year to which the grace period relates to the extent such expenses have not yet been submitted for reimbursement. Previous claims will not be reprocessed or recharacterized so as to change the order in which they were received. For example, assume that $200 remains in your URM sub account at the end of the current Plan Year (December 31, 2005) and further assume that you have elected to allocate $2,400 to the URM for the next Plan Year (beginning January 1, 2006). If you submit for reimbursement an Eligible Medical Expense of $500 that was incurred on January 15, 2006, $200 of your claim will be paid out of the unused amounts remaining in your URM from the Plan Year ending December 31, 2005 and the remaining $300 will be paid out of amounts allocated to your URM for the next Plan Year that begins on January 1, 2006. Expenses incurred during a grace period must be submitted before the end of the Run -off Period described in this SPD. This is the same Run-off Period for expenses incurred during the Plan Year to which the grace period relates. Any unused amounts that are not used to reimburse eligible expenses incurred either during the Plan Year to which the grace period relates or during the grace period will be forfeited if not submitted for reimbursement before the end of the Run -off Period. You may not use URM amounts to reimburse eligible DDC Expenses. vist ADDENDUM TO THE REIMBURSEMENT SERVICES AGREEMENT AND ACKNOWLEDGEMENT OF GRACE PERIOD SERVICES Effective as of the date this Agreement is signed by both parties, the undersigned Employer and American Family Life Assurance Company "Aflac") agree to amend the Reimbursement Services Agreement "RSA') between Employer and Aflac as set forth below. Moreover, by executing this document and returning it to Mac as set forth in the instructions accompanying this Addendum, the Employer hereby certifies that it has adopted a "grace period" under the Employer's Medical Care Reimbursement Plan "URM for the Plan Year ending on December 31, 2005, and for all subsequent Plan Years until notified by the Employer otherwise. The Employer acknowledges that Aflac will not provide any of the services set forth below that are related to the grace period unless and until this Addendum has been received by Mac. If the Addendum is received by Aflac, Af lac will begin performing grace period administrative services in accordance with the following terms with regard to reimbursement requests received on or after the later of the effective date of the grace period as identified or the date such Addendum is received: The grace period only applies to the Medical Care Reimbursement Plan "URM The grace period will begin on the first day of the Plan Year following the Plan Year to which it relates and will end two (2) months and fifteen (15) days later. For example, if the Plan Year ends December 31st, the grace period begins January 1st and ends March 15th. Eligible Medical Expenses incurred during the grace period and approved for reimbursement will be paid first from available amounts that were remaining at the end of the Plan Year to which the grace period relates and then from any amounts that are available to reimburse expenses incurred during the current Plan Year. Claims will be paid in the order in which they are received. Previous claims will not be reprocessed or recharacterized so as to change the order in which they were received. Expenses incurred during the grace period must be submitted before the end of the Run -off Period. This is the same Run -off Period for expenses incurred during the Plan Year to which the grace period relates. Plan will not amend/change their Run -off Period without first notifying Mac at least one (1) month prior to the existing Run -off Period and that an amendment to the plan's existing Run -off Period may result in additional service fees. Aflac will continue to assume that your current Run -off Period still applies unless notified otherwise prior to the end of the Run -off Period. If your current Run -off Period does not extend past the grace period, we will assume that there is no Run -off Period for grace period expenses. Failure to timely notify Aflac of any changes in the Run -off Period may result in an increase in the service fees as set forth in Section V of the RSA. Any unused amounts that are not used to reimburse eligible expenses incurred either during the Plan Year to which the grace period relates or during the grace period will be forfeited if not submitted for reimbursement before the end of the Run -off Period. Nothing in this Addendum is intended to supersede the terms of the RSA; however, if there is a conflict between the terms of the RSA and this Addendum with respect to the subject matter contained herein, this Addendum will control. IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed in duplicate and signed by an Officer of the Employer and an Officer or duly authorized Worldwide Headquarters Employee of Aflac to do so. Dated at Mac this day of By: Michael D. Flock Second Vice President Mac Administrative Services /Flex One Corporate Officer of Employer Dated this day of By: