Summary Plan Description

Transcription

1 Summary Plan Description Your rights, obligations, and benefits under your plan

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3 Table of Contents INTRODUCTION... 1 OPERATION OF THE PROGRAM... 3 Plan Year Eligibility Benefit Options Spousal Benefits Domestic Partner Benefits Explanation of "Pre-Tax Dollars" Tax Advantages Effect on Your Social Security Benefits Enrollment HEALTH CARE REIMBURSEMENT ACCOUNT... 8 Deposits to Your Account Eligible Dependents Reimbursements Eligible Health Care Expenses Health Care Expenses Not Covered DEPENDENT CARE REIMBURSEMENT ACCOUNT Eligible Dependents Deposit to Your Account Reimbursements Eligible Dependent Care Expenses Dependent Care Expenses Not Covered Tax Considerations CHANGING YOUR ELECTION DURING THE PLAN YEAR Family Status Changes Consistency Requirement Significant Cost or Coverage Change Special Enrollment Rights Court Order Requiring Child Support Medicare or Medicaid Coverage Effect on Opt-Out Bonus FILING UNDER YOUR REIMBURSEMENT ACCOUNT When to Submit Your Claim Statement of Your Accounts Forfeitures of Unused Account Balances LEAVE OF ABSENCE AND TERMINATION If You Take a Leave of Absence If You Leave If You Die COBRA CONTINUATION COVERAGE Qualifying Beneficiaries and Qualifying Events Notice of the Qualifying Event and COBRA Election

4 Cost and Period of Coverage More Information on COBRA Lebanon Valley College Welfare Benefits Cafeteria Plan GENERAL INFORMATION Insurers Role in Financing the Plan Maternity and Newborn Length of Stay Genetic Information GENERAL CLAIM PROCEDURES Appealing a Denied Claim The Future of the Plan Plan Document YOUR RIGHTS UNDER ERISA Receive Information About Your Plan and Benefits Continue Group Health Plan Coverage Prudent Actions by Plan Fiduciaries Enforce Your Rights Assistance with Your Questions ADMINISTRATIVE INFORMATION FOR ALL PLANS Plan Name Plan Type Employer Identification Number Plan Number Plan Dates Plan Sponsor Plan Administrator Named Fiduciary Agent for Service of Legal Process

5 INTRODUCTION Through the Lebanon Valley College Welfare Benefits Cafeteria Plan, we are able to offer you a tax-efficient method of paying for your share of health care benefit premiums, out of pocket health care expenses, and dependent care expenses. By participating in the Plan, you will be paying for your share of the expenses with pre-tax dollars rather than after-tax dollars. The Lebanon Valley College Welfare Benefits Cafeteria Plan consists of 3 components: 1. Premium Conversion Plan 2. Health Care Reimbursement Account 3. Dependent Care Reimbursement Account The Lebanon Valley College Welfare Benefits Cafeteria Plan allows you to choose between cash and qualified benefits under certain employee welfare benefit programs. If you waive coverage under a health or welfare benefit program, you are solely responsible for paying for any services that program would have provided. For this reason, you should verify coverage under another plan before waiving coverage under the Lebanon Valley College Welfare Benefits Cafeteria Plan. Participation in the Premium Conversion Plan (PC) allows you to pay your share of the health premiums on a pre-tax basis. Your payment is made before Federal, State and Social Security taxes are calculated and the cost is automatically deducted from each paycheck. With a Health Care Reimbursement Account (HCRA), your voluntary contribution is automatically deducted in equal amounts from each paycheck. Your deposit into your HCRA is made before Federal, State, and Social Security taxes are calculated giving you tax-free money to spend on eligible health care expenses. After you incur an eligible expense, you submit a claim and pay yourself back from your HCRA with your own tax-free dollars. Your Health Care Reimbursement Account can help you pay for expenses on this tax-preferred basis provided: your claim is for an eligible expense that is not covered by any other medical, dental, or vision insurance; and you submit appropriate documentation to support your claim. At any time during the plan year, you may be reimbursed for more money than has been deposited into your account as long as your total reimbursement for the plan year does not exceed your annual election amount. You will not be paid more than your annual election amount in total. With a Dependent Care Reimbursement Account (DCRA) your voluntary contribution is also automatically deducted in equal amounts from each paycheck. Your deposit into your DCRA is made before Federal and Social Security taxes are calculated, giving you tax-free money to spend on eligible dependent care expenses. After you incur an eligible expense, you submit a claim and pay yourself back from your DCRA with your own tax-free dollars. You can use your Dependent Care Reimbursement Account to pay for eligible dependent care expenses on this tax-preferred basis if: you meet the eligibility requirements for this program; and 468_L539_507.doc:2/22/2010 1

6 you are a single, working parent; or you are married; and the dependent care expenses you incur enable both you and your spouse to work; your spouse is a full-time student for at least five months in a calendar year; or your spouse is disabled and unable to provide dependent care. Your claim for dependent care reimbursement must meet three requirements before it can be approved: your claim is for an expense incurred by an eligible dependent; your claim is for an eligible dependent care expense; and your claim is supported by appropriate documentation. This Plan is intended to qualify as an Internal Revenue Code section 125 cafeteria benefit plan, as well as a section 105 medical expense reimbursement plan, and a section 129 dependent care plan. 468_L539_507.doc:2/22/2010 2

7 OPERATION OF THE PROGRAM Plan Year Eligibility Benefit Options This Plan operates on a January 1 to December 31 plan year. If you are a full-time or part-time employee, you shall be eligible to become a Plan participant if your customary employment, excluding overtime work, is at least 20 hours per week on a 12 month assignment. Benefits become effective on the first day of the month following fulfillment of these requirements if you properly complete enrollment. Participation in the Plan is completely voluntary. You are not required to accept any of the Benefit Options listed below from our plan. The plan provides you with a choice of receiving your full pay or of being covered by the following Employer-sponsored benefit programs and paying your share of the premium cost with pre-tax dollars: Medical and Prescription Drug Program Dental Program Flexible Spending Accounts The actual carriers and products currently available under each program are listed in the most recent Employee Notice of Currently Included Benefit Programs. The Notice in effect when this Summary Plan Description was printed appears at the end of this booklet. You will be notified of any changes. Under the health care program(s), you have the option of electing employee-only coverage or one of the family coverages. The types and amounts of benefits available, the requirements for coverage, and other terms and conditions are described in a separate booklet for each of the plans. Each program provides whether or not your dependents can be covered and defines the term "dependent." If the definition of dependent permits you to elect coverage for someone who is not your "qualifying child" or "qualifying relative" and you elect to cover such a person, the tax law will affect you. At the end of the year, your Form W-2 will include in your taxable income an amount equal to the fair market value of the coverage. 468_L539_507.doc:2/22/2010 3

8 For example, our Medical Program provides coverage for a college student up to age 24. Employee A elects to cover Child B who is age 24 and attending college. Child B is too old to be A's "qualifying child" under the new tax law. Child B also fails to be a qualifying relative, because the proceeds from the student loan he signed provided more than half of his support for the year. A's Form W-2 for the year will include in his taxable income an amount equal to the premium charge for single person age 24 to be covered by the program. Under a new Pennsylvania law, an insured health care program may provide coverage for adult children up to age 30. This opportunity may become available as early as January 2010, but its availability will depend upon the particular insured program. To be eligible, the adult child cannot be married or have dependents and must be either a Pennsylvania resident or a college student. The individual cannot be covered under another health care plan. However, as described above, the premium charge for this coverage will be included in your taxable income. If you waive coverage under certain health and welfare programs, you will receive an opt-out bonus payment of additional taxable compensation that will be paid once per year and prorated for employees who did not work the entire plan year. You will be notified of the bonus amount prior to the beginning of each plan year. We reserve the right to revoke or amend the opt-out bonus payment at any time and for any reason. In the event the opt-out bonus payment is revoked or amended, the Plan Administrator will notify affected employees during the annual enrollment period. You will be notified of your share of the cost for a particular benefit program prior to the beginning of each plan year. Spousal Benefits Domestic Partner Benefits If you are married, you may elect to cover your spouse under the health care program(s) and the Health Care Reimbursement Account on a pretax basis. Under the Plan, your spouse is the person of the opposite sex to whom you are legally married. If you believe you have established a common-law marriage, your spouse may be recognized as such if you provide to the Plan Administrator a notarized statement signed by both of you. With respect to Pennsylvania residents, a common-law marriage cannot be recognized if the relationship began on or after January 1, If you are unmarried, but residing with another adult of the same or opposite sex in a domestic partnership, you may elect to cover your Domestic Partner (and the children of your Domestic Partner living with you) under the health care program(s). If your Domestic Partner is not your "qualifying relative" under tax law, your Form W-2 will include in your taxable income an amount equal to the fair market value of the coverage. 468_L539_507.doc:2/22/2010 4

9 Explanation of "Pre-Tax Dollars" Lebanon Valley College Welfare Benefits Cafeteria Plan If your Domestic Partner is your "qualifying relative" under tax law, you may also elect to provide coverage for him or her under the Flexible Spending Accounts. The children of your Domestic Partner living with you may qualify for coverage as either your qualifying child or your qualifying relative. See the definitions under the Eligible Dependent for the Health Care Reimbursement Account in this Summary Plan Description. When you elect to cover your Domestic Partner, you will be asked to complete an Affidavit of Domestic Partnership. The affidavit requires you to make certain declarations with your Domestic Partner under penalty of perjury and to provide supporting evidence of your relationship. If you cannot meet the requirements, this coverage will not be available. Without this Plan, your share of the cost of your benefit options could be paid by you after you receive your pay. This would be payment with after-tax dollars, money on which you have paid income tax. Section 125 of the Internal Revenue Code allows us to set up a plan under which you can contribute your share of the benefit costs with pretax dollars. This will save you Federal and State income tax. In addition, most people also save Social Security (FICA) taxes. Here are examples of the tax savings from this Plan. The contribution rates are for the purpose of the example and may not apply in your specific case. Example #1: Employee A works for us and her spouse works elsewhere. They have full family medical coverage costing A $48.00 per weekly pay. The total family adjusted gross income places them in the 28% marginal Federal income tax bracket. All of A's pay is subject to FICA. A's tax savings would be as follows: Tax Savings Tax Rate Weekly Annually Federal Income Tax 28.00% $ $ State Income Tax 3.07% FICA Tax 7.65% Total $ $ Due to the tax savings, A's net cost for family medical coverage would be: Total Cost $ per week Less: Tax Savings Net Cost $ per week 468_L539_507.doc:2/22/2010 5

10 Example #2: Employee B works for us and has single medical coverage costing $10.00 per pay. B is in the 15% federal tax bracket. B's tax savings would be as follows: Tax Savings Tax Rate Weekly Annually Federal Income Tax 15.00% $ 1.50 $ State Income Tax 3.07% FICA Tax 7.65% Total $ 2.57 $ Due to the tax savings, B's net cost for single medical coverage would be: Total Cost $ per week Less: Tax Savings 2.57 Net Cost $ 7.43 per week Tax Advantages Your voluntary contributions to your HCRA and DCRA are not subject to Federal income tax or Social Security tax. In addition, your voluntary contributions to your HCRA are not subject to Pennsylvania State income tax. By using your HCRA and DCRA and shifting some of your income to the account before taxes are taken, you are increasing your spendable income. Example: Employee A is married and has one child. In the upcoming plan year, they expect to have $1,500 in out-of-pocket health care expenses and $1,500 in out-of-pocket dependent care expenses. The total family adjusted gross income places them in the 28% marginal Federal income tax bracket: Tax Rate HCRA Tax Savings DCRA Tax Savings Total Tax Savings Federal Income Tax 28% $ $ $ State Income Tax 3.07% FICA Tax 7.65% Total $ $ $ 1, Due to the tax savings, Employee A's net cost for health care and dependent care expenses would be: Total Cost $ 3, Less: Tax Savings 1, Net Cost $ 1, _L539_507.doc:2/22/2010 6

11 Effect on Your Social Security Benefits Enrollment Lebanon Valley College Welfare Benefits Cafeteria Plan Your Social Security benefits at retirement may be reduced slightly if you participate in the Plan and earn less than the Social Security wage base ($106,800 in 2010). If you earn more than the Social Security wage base, your benefits are unaffected. For most people, the current value of the tax savings outweighs the potential impact on future Social Security benefits. You should consult your tax advisor regarding your particular situation if you have any questions. Approximately one month before becoming eligible to join the Plan, the Plan Administrator will provide you with an election form. On the form, you will be asked to choose your benefit coverage and to agree to the appropriate pay reduction. You will also be given the option to waive benefit coverage under the Plan and in turn be entitled to payment of additional taxable compensation. The pay reduction will be adjusted automatically if your share of a benefit program cost changes or the insurance company changes its rates. The form must be returned to the Plan Administrator on or before the date specified. The date specified will not be later than the beginning of the first pay period in which the pay reductions are to begin. For the first plan year in which you are eligible to participate, if you do not return the election form by the specified date, you will not be covered under any health and welfare programs and you will not be eligible to receive an opt-out bonus. Further, you will not be able to elect to make deposits to your Health Care and Dependent Care Reimbursement Accounts. You will be able to elect to make Health Care and Dependent Care Reimbursement Account deposits and elect benefit coverage (or opt-out) at the beginning of the next plan year. After you elect and receive coverage by returning the election form by the specified date, you will continue to be covered and your pay will continue to be reduced by the appropriate amount. You will be asked to make a new election each year. With the exception of the Health Care and Dependent Care Reimbursement Accounts, if you make no election, you will continue as a member of the Plan with your current benefit coverage choices. However in order to receive an opt-out bonus, you must make a new election. If you do not make an election during the annual enrollment period, you will generally be unable to open a Health Care or Dependent Care Reimbursement Account until the following plan year's enrollment period. To request a change in your election during a plan year, submit the election form to the Plan Administrator with your change and reason for change. Your change, if approved, will be effective as of the next pay period that is administratively practicable. Your change can only be approved if you satisfy the requirements described in Changing Your Election During the Plan Year. 468_L539_507.doc:2/22/2010 7

12 If the Plan Administrator determines, before or during any plan year, that the Plan may fail to satisfy for the plan year any nondiscrimination requirement or any limitation on benefits provided to certain employees who own part of our business, who are officers, or who earn above a certain level of compensation imposed by the Code, the Plan Administrator will take any appropriate action, under rules uniformly applied to similarly situated participants, to assure compliance with these requirements. The action may include a change in the elections made by these employees with or without the consent of those employees. You will be notified by the Plan Administrator if it is determined that your elections must be changed. HEALTH CARE REIMBURSEMENT ACCOUNT Deposits to Your Account Eligible Dependents You can elect to deposit from $120 to a maximum of $5,000 in your Health Care Reimbursement Account each plan year. If we hire you in the middle of a plan year, your maximum contribution to the account will be prorated accordingly. You can use your Health Care Reimbursement Account (HCRA) to pay for expenses incurred by you or your eligible dependents. "Eligible dependents" means the dependents you claim on your Federal income tax return. The new tax law effective January 1, 2005 changes whom you can claim as dependent. Under the Plan you can cover any or all of your "qualifying children" and your "qualifying relatives". To be a qualifying child: the child must be your child, grandchild (great-grandchild, etc.), sibling, step-sibling, niece, or nephew; the child must be living with you as of January 1 of the year deductions are being claimed (if this changes, contact the Plan Administrator to determine if you must change your election); the child cannot provide over one-half of his own support for the calendar year; the child must be under age 19 as of the end of the calendar year or either a "student" or disabled; as a "student" the child must be under age 24 as of the end of the calendar year and attending a college or similar institution for at least 5 months during the year or satisfying Michelle's Law; and 468_L539_507.doc:2/22/2010 8

13 the child will be recognized as disabled if he is permanently and totally disabled unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months. A student child satisfies Michelle s Law if he is on a medically necessary leave of absence from college. The Plan Administrator will require a written certification from the child s treating doctor that states that the child is suffering from a serious illness or injury and that the leave of absence (or other change of school enrollment) is medically necessary. If the child is unable to return to college after 1 year, he cannot continue to be an eligible dependent under the student rule. To be a qualifying relative: the relative must be your child, grandchild (great-grandchild, etc.), sibling, step-sibling, parent or stepparent, grandparent (or ancestor thereof), niece or nephew, aunt or uncle, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; you must provide over 50% of the relative's financial support; the relative cannot be anyone's "qualifying child;" and In the alternative, the individual can be an unrelated person (not your spouse) who lives with you as a member of your household that otherwise meets all of the above requirements. Reimbursements Eligible Health Care Expenses At any time during the plan year, you may be reimbursed for more money than has been deposited into your HCRA as long as your total reimbursement for the plan year does not exceed your annual election amount. (This is different from the reimbursement rule for your Dependent Care Reimbursement Account.) You will not be paid more than your annual election amount in total. Any eligible health care expenses that could be paid by another source are not eligible for reimbursement under your HCRA. Generally, all health care expenses that are considered medical expenses by the IRS are reimbursable through your HCRA. The following list shows some of the expenses currently considered reimbursable by the IRS: prescription drugs, vaccines, doctor prescribed birth control pills; services performed by medical doctors, dentists, eye doctors, chiropractors, osteopaths, podiatrists, dermatologists, psychologists, and physical therapists; 468_L539_507.doc:2/22/2010 9

14 Health Care Expenses Not Covered medical treatment including alcohol and substance abuse, hospital services, lab fees, legal abortion, organ transplants, invitro fertilization, x-rays for medical reasons, sterilization, vasectomy, insulin treatment, and well-baby care; medical equipment such as hearing aids, eyeglasses, contact lenses, braces, crutches, artificial limb, abdominal supports, back supports and orthopedic shoes; ambulance service, transportation costs essential to medical care; and certain over-the-counter medicines or drugs. The following health care expenses are not covered under your HCRA: expenses reimbursed through any other insurance plan; health care premiums; expenses incurred outside of the period that you were enrolled in the HCRA; expenses incurred after the end of the plan year; any treatment or drug used for cosmetic purposes. In order for an expense to be "incurred" during the plan year: if the expense is for a service (e.g., doctor's appointment), the date of the service must be within the plan year. if the expense is for buying an item provided along with a service, the date the item is purchased (or the date the item is in your possession, if later) must be within the plan year. if the expense is for buying an item by itself, the date the item is purchased must be within the plan year. However, for orthodontia expenses, the Plan Administrator will determine the amount that can be reimbursed in any one plan year by taking the total charges billed and dividing this amount by the total time over which the services will be rendered. If a fee is paid at the start of orthodontic treatment to cover initial services performed, this can be reimbursed up front, with the remaining treatment cost prorated over the total length of treatment. In addition, orthodontic services can be reimbursed before the services are provided but only to the extent that you have actually made the payments in advance. Contact your Plan Administrator before making your election for any plan year in which you anticipate having orthodontia expenses. 468_L539_507.doc:2/22/

15 DEPENDENT CARE REIMBURSEMENT ACCOUNT Eligible Dependents Deposit to Your Account "Eligible Dependents" for the Dependent Care Reimbursement Account are those you claim for Federal income tax purposes that meet certain additional requirements. Under the new tax law effective January 1, 2005 an eligible dependent must be either a "qualifying child" or a "qualifying relative" with certain additional requirements. If the dependent is a child: the child must be under age 13; the child must be your child, grandchild (great-grandchild, etc.), sibling, step-sibling, niece, or nephew; the child must be living with you as of January 1 of the year deductions are being claimed (if this changes, contact the Plan Administrator to determine if you must change your election); the care expenses must be incurred to enable you to work; and if the care is provided by a day-care facility, it must be licensed if it cares for more than six children at a time. If the dependent is a disabled child age 13 or older or an adult who is disabled or elderly: the dependent must be physically or mentally unable to care for himself/herself; the dependent must be living with you as of the date your Reimbursement Account election takes effect and must spend at least eight hours a day in your home (if this changes, contact the Plan Administrator to determine if you must change your election); you must provide over 50% of the dependent's financial support; and the care cannot be provided at a nursing home facility. You can elect to deposit from $120 to a maximum of $5,000 in your Dependent Care Reimbursement Account (DCRA) each Plan year. If we hire you in the middle of a plan year, your maximum contribution to the account will be prorated accordingly. You can use the money in your account to reimburse yourself for eligible dependent care expenses you incur during the year. The IRS has established the following restrictions for DCRA deposits. 468_L539_507.doc:2/22/

16 If you are single, you can deposit up to $5,000 or your earned income, whichever is less. If you are married and filing a joint return, you and your spouse can deposit up to $5,000. However, if both you and your spouse work, your deposit cannot exceed your income or your spouse's, whichever is less. If your spouse opens an account under a similar program sponsored by his/her employer, you and your spouse's total annual deposits cannot exceed the least of: $5,000, your income, or your spouse's income. If your spouse is a full-time student, or is incapable of self-care, your spouse's earned income is assumed to be at least $250 a month if you have one person eligible for dependent care reimbursement, or $500 a month if you have two or more people eligible for dependent care reimbursement. If you are married and filing a separate Federal tax return, you can deposit up to $2,500. Highly paid employees may need to be placed under an additional limit to ensure the Plan meets certain nondiscrimination requirements. The Plan Administrator will contact the affected employees if this becomes necessary. Reimbursements Eligible Dependent Care Expenses Any time during the year, you can submit a claim against your DCRA up to the amount of your current account balance. (This is different from the reimbursement rule for your Health Care Reimbursement Account.) Of course, the amount of your reimbursement cannot be more than the total amount you elected to deposit during the year less any amount you have already been reimbursed. Eligible dependent care expenses include many of the expenses you pay for the care of your eligible dependents while you work. However, these expenses cannot include what you pay your child, stepchild, or foster child who is under age 19 at the end of the calendar year. The new tax law changed this exclusion to include your foster child. These expenses include the following: day-care center charges (if the center cares for six or more children at a time, it must be a licensed day-care center); day camp charges, but only if the camp qualifies as a day-care center within your State; 468_L539_507.doc:2/22/

17 Dependent Care Expenses Not Covered charges for services by maids or housekeepers for the part of their work that consists of taking care of eligible dependents; Social Security and unemployment taxes paid on behalf of the person caring for an eligible dependent; and charges for services of a person who provides dependent care unless the person is: you or your spouse's dependent for Federal income tax purposes; or your child or stepchild who is under age 19 at the end of the year. You may be reimbursed from your account for nursery school or kindergarten expenses, but beginning with first grade, tuition for education is not an eligible dependent care expense. The following dependent care expenses are not covered under your DCRA: amounts paid to a person with respect to whom you or your spouse is entitled to claim an exemption for federal income tax purposes; amounts paid to your child who is 18 years of age or younger; amounts paid to your spouse; amounts paid for or reimbursed under another plan we sponsor or to which we contribute on your behalf, under any federal, state or local program of dependent care assistance, or by the employer of your spouse or by an educational institution where your spouse is an enrolled student; expenses incurred for food or clothing for your eligible dependent; expenses incurred for day care that is not provided by a qualified, licensed provider; expenses incurred for educational activities for your eligible dependent in the first or higher grade level; expenses incurred for overnight camp; expenses incurred for transporting your eligible dependent between your home and a dependent care facility; and expenses incurred for medical care of your eligible dependents. 468_L539_507.doc:2/22/

18 Tax Considerations You will be required to pay income taxes on any reimbursement paid from your account for an ineligible expense. If you are not sure whether an expense qualifies for reimbursement from your DCRA, please contact the Plan Administrator. Dependent Care Tax Credit If you use your account to pay for a dependent care expense, you cannot claim the Federal child and dependent care tax credit for the same expense. In addition, deposits made to a DCRA reduce dollar-fordollar the eligible expenses you can claim as a tax credit. You should carefully consider which alternative is best for you based on your tax bracket and personal circumstances. Reporting Information About Dependent Care Providers If you contribute to the DCRA or take the dependent care tax credit, you will be required to report general tax information about the dependent care provider. This information includes the provider's tax identification number. If you participate in the DCRA, you will receive a form to help you gather this information. CHANGING YOUR ELECTION DURING THE PLAN YEAR Family Status Changes Your Plan elections stay in effect for the entire plan year. However, if you have a change in family status during the year, you may elect to change your elections, including stopping or starting contributions, if your change is consistent with your change in family status. You have 30 days to notify the Plan Administrator of a family status change and the appropriate change in elections using the election form. This may mean that you will need to give notice while on maternity leave or other leave of absence. Your elections under this Plan will be effective as of the first payroll period beginning after the Plan Administrator receives your elections. Family status changes include: your marriage, divorce, annulment, or legal separation; a change in your dependent child's custody; death of your spouse, domestic partner, dependent child, or other eligible dependent; birth or adoption (or placement for adoption) of your child; any other event that changes the number of your dependents, including the commencement or cessation of a qualifying domestic partnership; 468_L539_507.doc:2/22/

19 a change in employment status that affects eligibility for plan coverage of you, your spouse, your domestic partner, or your dependent, including: a termination or beginning of employment, a strike or lockout, a beginning of or return from an unpaid leave of absence, or a change in worksite; an event that causes your dependent to satisfy or to no longer satisfy the eligibility requirements for coverage on account of attainment of an age (e.g., age 19 for health benefits, age 13 for the Dependent Care Reimbursement Account), student status, or any similar situation; and a change in the place of residence of you, your spouse, or your dependent. An election change is permissible where the change in residence affects your eligibility for coverage. For example, you may not revoke medical coverage under the Plan merely because you moved, unless as a result of the move you no longer are eligible for such medical coverage. If you stop or start contributing during the middle of the plan year due to a change in family status, you may only submit eligible expenses that are incurred during the time that you were making contributions to the account. If, at any time, your total reimbursements under the Health Care Reimbursement Account exceed your current contributions in your account, you will be unable to reduce those contributions, in the event of a family status change, below your current reimbursement level. If you terminate employment but then resume employment with us within 30 days or within the same plan year, your Plan elections will be automatically reinstated, if there has not been some other family status change. You will not be required to contribute to your HCRA for the period you were unemployed. 468_L539_507.doc:2/22/

20 Consistency Requirement Significant Cost or Coverage Change Lebanon Valley College Welfare Benefits Cafeteria Plan Your election is required to be consistent with the family status change. If the change in status is your divorce, annulment, or legal separation from your spouse or the death of your spouse, or the cessation of qualifying domestic partnership, you cannot elect to cancel health insurance coverage for any individual other than your spouse (or domestic partner). If the change in status is the death of your dependent or a dependent no longer satisfies the eligibility requirements for coverage, you cannot elect to cancel health insurance coverage for any individual other than that dependent. If the change in status is your marriage or a loss of other coverage for you, your spouse, or your dependent, you can elect to increase your health insurance coverage or contributions to your Health Care Reimbursement Account. If the change in status is a change in eligibility to be covered by a benefit plan due to a change in employment status or residence of you, your spouse, or your dependent, you can elect to change or cancel health insurance coverage. In addition, if you, your spouse, your domestic partner, or your dependent become eligible for coverage under a family member plan through marriage or a change in employment status, your election to cancel or decrease coverage for that individual under this Plan can only be approved if coverage for that individual actually occurs or is increased under the family member plan. A family member plan means a cafeteria plan or benefit plan sponsored by the employer of your spouse, your domestic partner, or your dependent. Any change to your Dependent Care Reimbursement must be consistent with a change in coverage eligibility or in expenses. For example, you need to place an additional child in day care. If you, your spouse, your domestic partner, or your dependent become eligible for COBRA continuation coverage while you are still a participant under this Plan, you may elect to increase payments under this Plan in order to pay for the continuation coverage. This section does not apply to the Health Care Reimbursement Account. Automatic Changes If the cost of a benefit plan increases (or decreases) during the plan year and you are required to make a corresponding change in your payments, the Plan Administrator will automatically make a prospective increase (or decrease) in your elective contributions. Elected Changes If you have a significant cost or coverage change under a benefit program during the plan year, you may make a new election, including stopping or starting contributions or switching to a different plan or program. A significant cost or coverage change means: your share of the cost of the benefit program is significantly increased by the benefit provider; or 468_L539_507.doc:2/22/

21 Special Enrollment Rights coverage for all employees under the benefit program is significantly decreased or canceled due to the action of benefit provider. You may also make a prospective election change if your spouse (or former spouse), your domestic partner (or former domestic partner), or dependent is employed by an employer that provides group benefits and there is a change in those benefits. Your election must correspond with the change made under the other plan. The other employer's plan must either permit election changes like this Plan does or operate on a different plan year. Dependent Care Reimbursement Account Under the Dependent Care Reimbursement Account, if you have a significant cost increase, you may be permitted to make a new election, including stopping or starting contributions. You may not make a new election if your relative increases the child care charges. However, you may change your election if you switch between a day care center and a relative and your costs increase significantly. You may make a prospective election change under the DCRA Plan that is on account of and corresponds with a change by your dependent care service provider. For example: if you terminate one dependent care service provider and hire a new dependent care service provider, you may change coverage to reflect the cost of the new service provider; and if you terminate a dependent care service provider because a relative becomes available to take care of the child at no charge, you may cancel coverage. Effective Date for Your Election You have 30 days after you receive notice of the significant cost or coverage change to make your new election. Your new election will be effective as of the first payroll period beginning after the Plan Administrator receives your election. Special Mid-Year Group Health Plan Coverage Change If you or a dependent are not covered by our group health plan, coverage could be elected under the terms of that plan during the plan year. See the description of special enrollment in the group health plan materials. If this happens, you will be permitted to elect to pay your share of the medical premiums under this Plan. Generally, your election under this Plan will not be effective before the first payroll period beginning after the Plan Administrator receives your election. However, if the coverage change is due to the birth, adoption, or placement for adoption of a child, your election under this Plan will be retroactively effective to the date of birth, adoption, or placement for adoption if the Plan Administrator receives the election within 30 days of the event. If you or a dependent have been covered under a Medicaid or CHIP plan and lose your eligibility, you will have 60 days from your termination of coverage to enroll in the group health plan. Special Mid-Year Coverage under HCRA If you or a dependent are not covered by the Health Care Reimbursement Account, you (or your dependent) may elect to be covered under the HCRA during the plan year if each of the following requirements is met: 468_L539_507.doc:2/22/

22 Court Order Requiring Child Support Medicare or Medicaid Coverage You (or your dependent) were covered under another HCRA at the beginning of the plan year. One of the following is true: (1) you (or your dependent) were under the other HCRA through a COBRA continuation program and this has been exhausted; (2) there were employer contributions being made to the other HCRA, but this has stopped; or (3) you (or your dependent) are no longer eligible to be under the other HCRA. You request to participate in this HCRA not later than 30 days after the date that the prior coverage ended. Your HCRA election will be effective as of the first day of the month following the date the Plan Administrator receives your election. Your benefits can be subject to a court order for child support. The Plan Administrator must honor a court order that complies with the requirements of your health care plan for a "qualified medical child support order." You may obtain, without charge, from the plan administrator for your health care plan a copy of its procedures regarding a qualified medical child support order. If you are subject to a judgment, decree, or order resulting from a divorce, legal separation, annulment, or change in legal custody (including a qualified medical child support order) that requires health coverage for your child or for a foster child who is your dependent, the Plan Administrator may: change your election to provide coverage for the child under this Plan if the order requires coverage for the child; or cancel your opt-out bonus for future pay periods; or permit you to make an election change to cancel coverage for the child if the order requires your spouse (or former spouse), your domestic partner (or former domestic partner), or other individual to provide coverage for the child. If you become (or your spouse or your dependent becomes) entitled to Medicare or Medicaid coverage, you may make a prospective election to cancel or reduce coverage for the affected person under your health plan or Health Care Reimbursement Account. In addition, if you lose (or your spouse, your qualifying domestic partner, or your dependent loses) eligibility for such coverage, you may make a prospective election to begin or increase coverage for the affected person under your health plan or Health Care Reimbursement Account. You will have 60 days from your termination of coverage to make your election. 468_L539_507.doc:2/22/

23 Effect on Opt-Out Bonus Lebanon Valley College Welfare Benefits Cafeteria Plan If you change your election for any reason to coverage under the program(s) for which you are receiving an opt-out bonus, your opt-out bonus will stop as of the day before your coverage election is effective. FILING UNDER YOUR REIMBURSEMENT ACCOUNT When to Submit Your Claim Statement of Your Accounts To be reimbursed from your Health Care or Dependent Care Reimbursement Account, send the following information to the Plan Administrator: a completed claim form. Forfeitures of Unused Account Balances itemized bills or other proof of payment for eligible services already received. for your Dependent Care Reimbursement Account claim, a statement about your spouse's employment, the organization or person providing the dependent care service, and the provider's tax identification number. You can obtain claim forms from the Plan Administrator. The Plan Administrator may request that you submit additional information, as necessary, to support your claims. You may file a claim at any time throughout the plan year for eligible expenses incurred during that year. You have until 90 days after the end of the plan year to submit the claim. Claims will be paid from your account once a month. To file a claim, send your completed Health Care or Dependent Care Reimbursement Account claim form, along with the other required items, to the address listed on the form. If you make a claim and the claim is denied, see Appealing a Denied Claim. At the end of each plan year, you will receive a statement showing the total reimbursements you received during the plan year from the reimbursement accounts. You have until 90 days after the end of the plan year to file any claims related to eligible expenses for reimbursement for the prior plan year. If you have any money left in your accounts after this time, the IRS requires that the unused account balance be forfeited. Therefore, your contribution elections should be considered carefully for the upcoming year. When making your Dependent Care Reimbursement Account election, take into consideration vacation days, personal days, and possible sick days when you would be caring for your dependents. 468_L539_507.doc:2/22/

24 Military Leave If you are a military reservist and are called to active duty for a period of at least 180 days (or for an indefinite period of time), you may request a distribution from your Health Care Reimbursement Account in order to avoid the possible forfeiture. The maximum distribution that you may request is the amount equal to the amount credited to your HCRA as of the date for your requested distribution minus any reimbursable claims you have submitted. You may request your distribution at any time from the date you are called to active duty to the last day of that plan year. To make this request, you will need to complete a claim reimbursement form and provide proof of your military reservist status and your call to active duty. Any undistributed portion of your HCRA will remain available for regular health expense reimbursement claims incurred during the plan year while you remain covered by the Plan. See Military Leave under If You Take a Leave of Absence. LEAVE OF ABSENCE AND TERMINATION If You Take a Leave of Absence If you take a paid leave of absence, pay reductions will continue to be contributed to this Plan and your coverage will continue. If you are taking an unpaid leave of absence, you must elect how your share of the premiums will be contributed to your account for the period of leave. You may choose between pre-payment and paying while on leave. You may also elect to discontinue your coverages. If your unpaid leave qualifies as leave under the Family and Medical Leave Act, you will have the additional choice of making your HCRA deposit and your health care premium payments by having your contributions adjusted upon your return to work. Health Care Reimbursement Account If you discontinue your HCRA contributions while you are on leave, your coverage will terminate during your leave. When you return to work, you may elect between: (A) making up the missed contributions in order to have your full annual election amount of coverage for the remaining plan year; or (B) resuming your prior contribution level for a reduced amount of coverage. Dependent Care Reimbursement Account Before you take a leave of absence, you should talk to the Plan Administrator about whether you want to continue to deposit money in your DCRA account while you are on your leave. If you take an unpaid leave of absence, you will not be able to continue to make pre-tax deposits. Depending on your situation, you may be able to have your contributions adjusted upon your return to work in order to fulfill your annual election amount. Opt-Out Benefit If you take a paid leave of absence, or an unpaid leave of absence that qualifies as leave under the Family and Medical Leave Act, you will continue to receive your opt-out bonus. No opt-out bonus will be paid for an unpaid leave of absence that does not qualify as leave under the Family and Medical Leave Act (FMLA). 468_L539_507.doc:2/22/

25 Military Leave If you take an unpaid leave of absence due to military service that is protected by the Uniformed Services Employment and Re- Employment Rights Act of 1994 (USERRA), special rules will apply. If you are employed in Pennsylvania, we will pay your premiums for the first 30 days. If you are absent for 31 days or more, you will need to arrange to pay for your full premium costs. We will not pay any portion of the premium. You may pay to continue your coverage for up to 24 months. If you are not employed in Pennsylvania, your cost will include a small (2%) additional charge for administration. If You Leave If you terminate your employment with us, you will no longer be a participant in this Plan. However, coverage may continue under the health care benefit plans you have chosen. You will need to pay for any continuing coverage directly. The booklets for the benefit plan or plans will explain how coverage may be continued. If you leave employment with us for any reason, your contributions to the Health Care and Dependent Care Reimbursement Accounts will stop. You may be able to elect COBRA continuation coverage for the Health Care Reimbursement Account as described under COBRA Continuation Coverage. You can continue to submit claims for reimbursement of eligible health care expenses incurred before you left us. You have until 90 days after the end of the plan year to submit these health care expenses, and your health care claims will be paid up to your annual election amount. You can continue to submit claims for reimbursement of eligible dependent care expenses incurred while working for another employer until the end of the plan year. Your dependent care claims will be paid up to the amount you had deposited when your employment ended. If you leave us and have been reimbursed for amounts over your dependent care deposits made as of the day you leave, you will be required to refund the difference. Any remaining opt-out bonus for the plan year will not be paid. If You Die If you die while you are actively employed, your spouse or estate can file claims for eligible expenses for the rest of that year. These claims can be submitted until 90 days after the end of the plan year in which you die. In the case of the Health Care Reimbursement Account, if there is no COBRA continuation coverage, the eligible expenses must have been incurred before the termination of coverage due to your death. 468_L539_507.doc:2/22/

26 COBRA CONTINUATION COVERAGE Lebanon Valley College Welfare Benefits Cafeteria Plan The Consolidated Omnibus Budget Reconciliation Act (COBRA) may provide you with rights to health care continuation coverage. If you are covered by our group health plan, COBRA may give you the right to stay covered even if something happens, like losing your job, that would otherwise cause you to lose coverage. This continuation coverage under a group health plan is called "COBRA continuation coverage." COBRA continuation coverage lasts only for a limited time, and you have to pay for it. Qualifying Beneficiaries and Qualifying Events If you are covered by our group health plan or the Health Care Reimbursement Account, you, your spouse, and your dependent children may have rights under COBRA if: you lose or leave your job, other than by reason of your gross misconduct (if you take an FMLA leave of absence and do not return to active employment, the qualifying event of termination of employment occurs at the end of the leave); or you work less hours and our group health plan says this makes you ineligible for coverage. Your dependent children may include any child who is born to or placed for adoption with you during a period of COBRA continuation coverage, if certain requirements are met. Your spouse and your dependent children have the right to be qualified beneficiaries for COBRA continuation coverage following your death or divorce or legal separation if they are covered by our group health plan or the Health Care Reimbursement Account and would lose coverage because of the qualifying event. COBRA gives your dependent child the right to COBRA continuation coverage for up to 36 months if he or she is covered by our group health plan and would lose coverage because he or she has reached an age or satisfied a condition that causes dependent coverage to end. If you become entitled to Medicare benefits (under Part A, Part B, or both), this would be a qualifying event for your spouse and dependent children. You are not "entitled" to Medicare until you have actually completed the Medicare enrollment and you have been notified your Medicare coverage is in effect. We have contracted with the group health plan to provide COBRA equivalent benefits for domestic partners covered by the plan. Also, the Health Care Reimbursement Account will extend COBRA equivalent benefits to domestic partners. These are similar benefits provided under the terms of the plan. Domestic partners do not have enforceable COBRA rights under federal law. 468_L539_507.doc:2/22/