FLEXIBLE BENEFITS PLAN

Transcription

1 FOLEY ISD #51 FLEXIBLE BENEFITS PLAN Original Effective Date: September 1 st, 1989 Plan Year End: December 31 st Reinstated: January 1 st, 2015 THE ADOPTION AGREEMENT IS INCLUDED IN THIS PLAN AND INCORPORATED HEREIN BY REFERENCE. Prepared by: Educators Benefit Consultants, LLC 3125 Airport Parkway, NE Cambridge, MN 55008

2 FLEXIBLE BENEFITS PLAN TABLE OF CONTENTS ARTICLE I PRELIMINARY MATTERS Name; Adoption of Plan Purpose Governing Law, Severability, Construction, Savings Provisions Nondiscrimination Taxation Savings Provisions Definitions Based upon Code, Regulations or Other Laws General Requirements Deferred Compensation Plans Excluded Miscellaneous Requirements... 5 ARTICLE II DEFINITIONS Selected Cross References Accident or Health Coverage Benefits Benefits Ceiling Benefit Package Option Change Event Change in Status Committee and Adoption Agreement Cost Change Coverage Change Covered Beneficiary Covered Expenses Currently Available Date of Employment Date of Participation Dependent Dependent Care Plan Disability Coverage Effective Date Employee Employer Family Member Plan Fixed Expenses Flex Cash FSA; Health FSA High Deductible Health Plan Highly Compensated Employee HSA Contributions Judgment, Decree or Order Flexible Benefits Plan Page i

3 2.30 Key Employee Leave; FMLA Medical Expense Medicare or Medicaid Eligibility Normal Compensation Participant Placement for Adoption Plan Administrator Plan Year Qualified Benefits Qualified Benefits Plan Salary Special Enrollment Rights Spouse Statutory Nontaxable Benefits Variable Expenses ARTICLE III ELIGIBILITY, PARTICIPATION AND FUNDING Participation Additional Participants Funding of Benefits Eligibility of Non Dependents ARTICLE IV COMPONENT PLANS Dependent Care Plan Accident and Health Reimbursement Plan Group Term Life Insurance HSA Contribution Plan ARTICLE V PLAN RULES Eligibility and Notification Benefits Ceiling Initial Election for Benefits and Salary Reductions Failure to Submit Forms on a Timely Basis Election for Less than Ceiling Election Modifications and Relating Definitions Method of Providing Benefits Request for Benefits Failure to Make Timely Reimbursement Request Benefits Shall Not be Currently Available Direct Payment Option Timing of Non Health FSA Payments Restrictions on Payments Health FSA Disbursements When HRA is Available Annual Statement of Benefits Continuing Health Coverage Flexible Benefits Plan Page ii

4 5.17 Termination of Employment Eligibility of Covered Expenses for Reimbursement; Definition of Incurred Forfeitures Adoption and Service Agreement Special Rules for Health FSAs Special Rule for FSAs Other than the Health FSA Presumptions Regarding Decisions of Board/Committee Premium Payments Grace Period Reimbursement Vehicles ARTICLE VI USE AND DISCLOSURE OF PROTECTED HEALTH INFORMATION BY HEALTH FSA Interpretation and Definitions Use and Disclosure of Protected Health Information Obligations of Employer With Respect to PHI Access to PHI Within Employer Privacy Official ARTICLE VII AMENDMENT AND TERMINATION Amendments Amendments Required by Law Termination or Partial Termination of Plan No Rights in Plan ARTICLE VIII CLAIMS PROCEDURES ARTICLE IX MISCELLANEOUS PROVISIONS Discretion of Board/Committee Conditions for Participation Agent for Process Operations of the Plan Administrator and Board/Committee Presumption of Competency No Guaranty of Employment Headings Mistakes Limits on Liability Plan Funds Indemnification Rules and Procedures Delegation of Duties Plan Modifications Singular/Plural and Gender; Cross Reference; Construction; Copies, Etc Flexible Benefits Plan Page iii

5 FOLEY ISD #51 FLEXIBLE BENEFITS PLAN ARTICLE I PRELIMINARY MATTERS 1.01 Name; Adoption of Plan. The name of this plan is the Foley ISD #51 Flexible Benefits Plan, hereinafter referred to as the "Plan," which includes all amendments hereto, and which is limited to only those Component Plans described in Article IV that are adopted by the Foley ISD #51(hereinafter referred to as the Employer) or the Committee (in the Adoption Agreement). The Plan is adopted by the Employer (which is defined to include collectively the Employer sponsoring the Plan and all other entities described in the definition of "Employer" in Article II) through resolutions of its board of directors or equivalent, or if a partnership or proprietorship, as the case may be, its partners or proprietor ("Resolutions") Purpose. The Plan is adopted to provide Benefits to the Employees and to allow the Employees to select at their option from among the Benefits offered by the Employer, which may be either nontaxable Benefits, or taxable Benefits. The Plan is adopted to provide Benefits to the Employees in order to (a) attract the best available personnel for the Employer, (b) provide such Employees with further incentives to contribute to the success of the Employer (and any affiliates), and (c) encourage such Employees to remain in the employment of the Employer. The Plan has been created for the exclusive benefit of such Employees Governing Law, Severability, Construction, Savings Provisions. The Plan is designed to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended, herein referred to as the "Code;" applicable Regulations there under, as amended from time to time, herein referred to as the "Regulations;" the Family and Medical Leave Act of 1993, Pub. L. No , as amended, hereinafter referred to as "FMLA;" the Uniformed Services Employment and Reemployment Act of 1994, as amended, hereinafter referred to as "USERRA;" and the Health Insurance Portability and Accountability Act of 1996, as amended, herein referred to as "HIPAA ; the Patient Protection and Affordable Care Act of 2010, as amended, hereinafter referred to as "PPACA"; the Employee Retirement Income Security Act of 1974, as amended, herein referred to as "ERISA" and the Regulations there under, Title I of ERISA excludes governmental plans from coverage. The term governmental plan is defined to include a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing. School district plans are governmental plans within the meaning of section 3 of ERISA, and, therefore excluded from ERISA Title I coverage pursuant to section 4 of ERISA. To the extent that the Code, applicable Regulations, FMLA, USERRA, HIPAA, PPACA, and ERISA do not preempt other laws, this Plan shall be subject to the laws of the United States and the various states in which the Employer operates. If any provision of this Plan is finally held by the Internal Revenue Service or a court of competent jurisdiction to be fully or partially invalid or unenforceable, and if such holding is not further appealed by the Employer, the remaining provisions shall continue to be fully effective. This Plan shall be construed and, if necessary, reformed and rewritten to carry out the intentions and provisions expressed herein to the fullest extent permitted by law. Any reference to a provision of the Code, ERISA, FMLA, USERRA, HIPAA, PPACA or any other law shall include its successor provision, if any Nondiscrimination. Any interpretations required, or discretionary powers granted, in connection with the Plan shall be made and exercised in a nondiscriminatory manner. The provisions of the Plan shall be construed, and the Plan shall be operated, so that it satisfies all applicable Flexible Benefits Plan Page 1

6 nondiscrimination requirements set forth in the Code, Regulations, FMLA, USERRA, HIPAA and applicable Regulations under FMLA, USERRA, PPACA and HIPAA. A. Highly Compensated. The Plan shall not discriminate in favor of (a) Highly Compensated Individuals as to eligibility to participate, or (b) Highly Compensated Participants as to contributions and Benefits. The term "Highly Compensated Individual" means an Individual who is either (i) an officer, or (ii) a shareholder owning more than 5% of the voting power or value of all classes of stock of the Employer, or (iii) a Highly Compensated Employee, or (iv) a Spouse or Dependent of an individual described in (i), (ii), or (iii). The term "Highly Compensated Participant" means a Participant who is a Highly Compensated Individual. B. Collective Bargaining Exception. The Plan shall be treated as complying with Subsection 1.04(a) if the Plan is maintained under an agreement which the Secretary of the Treasury of the United States or his delegate (herein "Secretary") finds to be a collective bargaining agreement between employee representatives and one or more Employers. C. General Limitations for Key Employees. Statutory Nontaxable Benefits provided to Key Employees shall not exceed twenty-five percent (25%) of the aggregate of such Statutory Nontaxable Benefits provided for all Employees under the Plan; provided that, for purposes of this paragraph, Statutory Nontaxable Benefits shall not include any Benefits that (without regard to this Subsection) are includible in gross income. If Statutory Nontaxable Benefits would otherwise exceed the twenty-five percent (25%) limitation set forth in this Subsection, then the Statutory Nontaxable Benefits of Key Employees shall be reduced and taxable Benefits shall be increased (beginning with those Key Employees having the greatest Statutory Nontaxable Benefits) by the minimum amount such that the twenty-five percent (25%) limitation set out in this Subsection is met; provided that the Committee shall, in a uniform non-discriminatory manner, reduce the expenses (as between medical, dependent care assistance, etc.) of a Key Employee in order to meet the limitation in this Subsection consistent with the following priorities: First, reductions will be made to Dependent Care Assistance Benefits to the minimum extent, if any, needed to permit qualification of the DCP under Section 4.01(g). Second, if further reductions are needed, reductions shall be made among the categories of Statutory Nontaxable Benefits to the minimum extent, if any, necessary to satisfy the limitation set forth in this Subsection, first of Dependent Care Assistance, next of whichever may be available of Variable Medical or Health FSA Medical Expenses, next of Fixed Medical Expenses, next of Group-Term Life Insurance Benefits, and last of any other Statutory Nontaxable Benefits provided under the Plan. Governmental Entities including school districts do not have Key Employees as defined in Code. D. Certain Controlled Groups, Etc. All Employees who are treated as employed by a single Employer under Subsections (b), (c), or (m) of Section 414 of the Code shall be treated as employed by a single Employer for purposes of this Section 1.04 of the Plan. E. Dependent Care Plan. The DCP (as defined in Section 4.01) shall benefit Employees who qualify under a classification set up by the Employer and found by the Secretary or the Secretary's delegate not to be discriminatory in favor of, and the contributions or Benefits provided under the DCP shall not discriminate in favor of, Employees who are officers, owners, or Highly Compensated Employees or their Dependents. For purposes of this Subsection and for purposes of the fifty-five percent (55%) test referred to in Section 4.01, there shall be excluded from consideration (i) subject to rules similar to the Flexible Benefits Plan Page 2

7 rules of Section 410(b)(4) of the Code, Employees who have not attained the age of 21 and completed one year of service (as defined in Section 401(a)(3) of the Code), and (ii) Employees not covered in a dependent care assistance program, who are included in a unit of Employees covered by an agreement which the Secretary finds to be a collective bargaining agreement between Employee representatives and one or more Employers if there is evidence that dependent care assistance was the subject of good faith bargaining between such Employee representatives and such Employer or Employers. F. Group-Term Life Insurance Plan, Accident and Health Reimbursement Plan. The Group-Term Life Insurance Plan (herein TLP ), defined in Section 4.03, shall meet the nondiscrimination requirements of Section 79 of the Code. The Accident and Health Reimbursement Plan (herein AHRP ), defined in Section 4.02, shall also be subject to the nondiscrimination requirements of Subsection 4.02(c). G. Health Benefits. Contributions under the Plan on behalf of each Participant regarding health benefits shall include an amount which (i) equals 100% of the cost of the health benefit coverage under the Plan of the majority of the Highly Compensated Participants (as defined in Subsection (a) above) similarly situated, or (ii) equals or exceeds 75% of the cost of the health benefit coverage of the Participant (similarly situated) having the highest cost health benefit coverage under the Plan, provided that contributions or Benefits under the Plan in excess of those described in this sentence may be permissible if they bear a uniform relationship to compensation. H. Nondiscrimination Safe Harbor. The Plan shall be treated as not discriminating against Highly Compensated Individuals under Subsection (a) if the Plan benefits a group of Employees who qualify under a classification set up by the Employer and found by the Secretary not to be discriminatory in favor of Highly Compensated Employees, and: (i) no Employee is required to complete more than three years of employment with the Employer maintaining the Plan as a condition of participation in the Plan, and the employment requirement for each Employee is the same; and (ii) any Employee who has satisfied the employment requirements of (i) and who is otherwise entitled to participate in the Plan commences participating not later than the first day of the first Plan Year beginning after the Date of Employment requirement was satisfied unless the Employee was separated from service before the first day of that Plan Year. I. Comparable Flex Cash as HSA Contributions. Any Flex Cash amount the Employer elects to contribute as HSA Contributions for a Plan Year under the HSACP (as defined in Section 4.04) shall be made available to all Participants electing a High Deductible Health Plan, as their Benefit Package Option providing health benefit coverage, on a comparable basis within the meaning of Code Section 4980G. For this purpose, Employees who are customarily employed for 30 or more hours per week and are eligible for the Employer's Benefit Package Option providing health benefit coverage shall be eligible for the maximum amount of Flex Cash the Employer elects to contribute as HSA Contributions for a Plan Year in connection with each type of health benefit coverage (personal health coverage or family health coverage); and, if the Employer elects to provide a reduced level of Flex Cash as HSA Contributions in connection with each type of health benefit coverage, for any part-time eligible Employees customarily employed for fewer than 30 hours per week, all of such part-time eligible Employees shall be eligible for a comparable reduced level of such Flex Cash Taxation. It is the Employer's intention that reimbursement of Covered Expenses provided herein be excludable from gross income of the Participants to the maximum extent possible for purposes of federal income taxation. Flexible Benefits Plan Page 3

8 1.06 Savings Provisions. The provisions of the Plan shall be construed, and this Plan shall be operated, to comply with: A. The Code; B. FMLA, USERRA, ERISA when applicable, HIPAA and PPACA; C. Any applicable rules and Regulations of the Internal Revenue Service or U.S. Department of Labor; and D. Any other applicable laws, rules and Regulations of the United States and the various states and local jurisdictions, after taking into account the pre-emptive effect of ERISA on state and local laws and Regulations. If it is finally determined at any time that the Plan does not meet the requirements of this Section or that it is being administered or interpreted in a manner inconsistent with such requirements, the Employer shall make appropriate amendments and adjustments, which may be retroactive, to bring the Plan into compliance with these laws, rules and Regulations. In the event that this Plan shall not be able to satisfy all laws, rules and Regulations because of conflicts in laws or otherwise, the Plan shall be administered, construed, and if necessary, rewritten, to satisfy the provisions of the laws, rules and Regulations in the order set forth in this Section beginning with Subsection (a) and ending with Subsection (d); and, in the event that there are conflicts of laws between states, the Plan shall satisfy the provisions of the laws of states in which the Employer has greater numbers of Participants before satisfying the laws of states in which the Employer has lesser numbers of Participants Definitions Based upon Code, Regulations or Other Laws. Any language used herein which is identical to language of the Code, Regulations, ERISA, FMLA, USERRA, PPACA or HIPAA shall be construed in a manner identical to the construction of the language in the Code, Regulations, ERISA, FMLA, USERRA or HIPAA. This Section 1.07 shall govern in all instances, including without limitation in the event that any definitions, constructions of definitions, or language set forth herein is inconsistent with that of the Code, Regulations, ERISA, FMLA, USERRA, PPACA or HIPAA General Requirements. An Employee's rights under this Plan, if any, shall be legally enforceable. All Employees of the Employer shall be provided reasonable notification of the Benefits provided under this Plan. This Plan is maintained for the exclusive benefit of Employees and is established with the intention of being maintained for an indefinite period of time Deferred Compensation Plans Excluded. This Plan shall not provide for deferred compensation, except as permissible under Section 125(d) of the Code (referring to cash and deferred arrangements, certain plans maintained by educational institutions to the extent that a covered Employee may elect to have the Employer pay as contributions for post-retirement group life insurance under certain conditions, and amounts that an eligible Employee may elect to have the Employer pay as HSA Contributions to a health savings account established on behalf of the Employee). Reasonable premium rebates or policy dividends paid with respect to benefits provided under a cafeteria plan under Code Section 125 do not constitute impermissible deferred compensation if such rebates or dividends are paid before the close of the 12-month period immediately following the Plan Year to which such rebates and dividends relate. Compensation earned during one Plan Year cannot be used to purchase a benefit for the next Plan Year. Except, as provided below: A. an Employer may make a deduction for health care expense in the last month of a Plan Year to pay for the first month coverage in the next Plan Year; Flexible Benefits Plan Page 4

9 B. an Employer is permitted, to reimburse Employees for orthodontia services or durable medical equipment before services are provided but only to the extent that the Employee has actually made the payments in advance of the orthodontia services or equipment in order to receive the services Miscellaneous Requirements. Any Employer-provided coverage under the AHRP shall meet the requirements of Sections 105 and 106 of the Code. Flexible Benefits Plan Page 5

10 2.01 Selected Cross-References: ARTICLE II DEFINITIONS A. "Adoption Agreement" is defined in Section B. "AHRP" is defined in Section C. "Automatic Cost Change" is defined in Section 2.09 D. "Code" is defined in Section E. "Component Plans" are described in Article IV. F. "DCP" is defined in Section G. Dependent Care Assistance is defined as eligible reimbursements from DCP. H. "ERISA" is defined in Section I. "Exchange" a federal or state public health insurance marketplace as provided under PPACA. J. "FMLA" is defined in Section K. "FMLA Leave" is defined in Section L. "FSA" is defined in Section 2.25 and further described in Section M. "Health FSA" is defined in Section 2.25 and further described in Section N. "Health Reimbursement Arrangement" is defined in Revenue Ruling O. High Deductible Health Plan" is defined under Code Section 223(c)(2). P. "HIPAA" is defined in Section Q. "HSACP" is defined in Section R. "Incurred" is defined in Section S. "Plan" is defined in Section T. "PPACA" is defined in Section U. "Qualifying Individual" is defined in Section V. "Regulations" is defined in Section W. "Resolutions" is defined in Section X. "Secretary" is defined in Section 1.04(b). Y. "Significant Cost Change" is defined in Section Z. "Significant Curtailment" is defined in Section AA. "TLP" is defined in Section BB. "USERRA" is defined in Section "Accident or Health Coverage" means coverage under an Accident or Health Plan as defined in Regulations under Section 105(a) of the Code Benefits. "Benefits" shall include Covered Expenses, any other Qualified Benefits and any taxable cash (also referred to as cash-in-lieu) that a Participant may elect under the Plan, in total up to the amount of the Benefits Ceiling. However, make note that the PPACA added Code 125(f) prohibiting the pre-tax purchase of individual health insurance policies through a public Exchange with a Code section 125 Plan Benefits Ceiling. The "Benefits Ceiling" shall be the maximum amount of Benefits a Participant may elect to receive under the Plan in connection with any Plan Year. Unless the Committee determines otherwise, the amount of the Benefits Ceiling shall be $20,000 per Participant plus the total of Flex Cash plus the cost of an Employee's Fixed Expenses per Plan Year, but no greater than a Participant's total compensation (as defined under Section 415(c)(3) of the Code) for the Plan Year. The $20,000 ceiling includes a Dependent Care Plan maximum of $5,000 per Participant per Plan Year ($2,500 for Participants who are married filing separately for federal tax purposes) that may be used for Covered Expenses in a Plan Year. The $20,000 ceiling includes the Health FSA maximum of $2,500 amount per Participant per Plan Year (the $2,500 amount is subject to change and may be indexed to Flexible Benefits Plan Page 6

11 inflation, in accordance with changes enacted in the PPACA ). The Benefits Ceiling may be adjusted by the Committee at any time and from time to time, as set forth in Committee Minutes, subject to limitations contained elsewhere in this Plan Benefit Package Option. A "Benefit Package Option" means a qualified benefit under Section 125(f) of the Code that is offered under a cafeteria plan governed by Code Section 125, or an option for coverage under an underlying accident or health plan (such as an indemnity option and an HMO option, or a PPO option under an accident or health plan) Change Event. "Change Event" shall include: a Cost Change; a Coverage Change; a Change in Status; Special Enrollment Rights; a Judgment, Decree, or Order; and gain or loss of Medicare or Medicaid Eligibility Change in Status. A "Change in Status" is an event which falls within the following categories: A. Change in the Employee's legal marital status including marriage, divorce, legal separation, annulment, or death of Spouse. B. Change in the number of the Employee's Dependents including birth, adoption, and Placement for Adoption or death. C. Any of the following events that change the employment status of the Employee, or the Employee's Spouse or Dependent: termination or commencement of employment; strike or lockout; commencement of or return from a Leave; change in worksite; or a change in employment status (such as a switch from salaried to hourly-paid) where cafeteria-plan or other benefit eligibility of the Employee, Spouse, or Dependent is gained or lost. D. An event that causes the Employee's Dependent to satisfy (or cease to satisfy) eligibility requirements for coverage on account of attainment of age, student status, or any similar circumstance. The term "on account of" is defined as provided at the end of Section E. Change in the place of residence of the Employee, Spouse, or Dependent Committee and Adoption Agreement. The "Committee" is such individual or group of individuals appointed and designated as such by Resolution of the Employer at any time and from time to time to administer the Plan. The "Adoption Agreement" is the Agreement that establishes which component Benefits are part of the Employer s Plan pursuant to Section Cost Change. A "Cost Change" shall include (a) an increase or decrease in the cost of a Qualified Benefits Plan during a period of coverage, if the Plan requires a corresponding change in an Employee's Salary reductions or other payments for the Qualified Benefits Plan (herein, an "Automatic Cost Change"); and (b) a significant increase or decrease in the cost of a Benefit Package Option during a period of coverage. If the Plan would require or allow a corresponding change in an Employee's Salary reductions or other payments for the Qualified Benefits Plan (herein a "Significant Cost Change"); provided that, in the case of the DCP, the terms "Cost Change," "Automatic Cost Change" and "Significant Cost Change" shall only include Cost Changes imposed by a dependent care provider who is not a relative of the Employee. For purposes of the previous sentence, a "relative" is an individual who is related to the Employee as described in Section 152(a)(1) through (8) of the Code, incorporating the rules of Code Section 152(b)(1) and (2), as in effect before In addition to changes imposed by service or insurance providers, a Cost Change may result from an action taken by an Employee (such as a switch between full-time and part-time status) or the Employer (such as reducing Employer contributions for a class of Employees, with respect to a Qualified Benefits Plan). Flexible Benefits Plan Page 7

12 2.10 Coverage Change. A "Coverage Change" is (a) a significant curtailment of coverage under an existing Benefit Package Option or other coverage option during a period of coverage, (b) the elimination of an existing Benefit Package Option or other coverage option during a period of coverage, (c) the addition of a new Benefit Package Option or other coverage option during a period of coverage, (d) a significant improvement of an existing Benefit Package Option or other coverage option during a period of coverage, or (e) a change in a provider of dependent care assistance or the Dependent being enrolled in school during the Plan Year. For purposes of this definition, coverage under the Fixed Expense portion of the AHRP or any other Accident or Health Coverage is significantly curtailed only if there is an overall reduction in coverage provided to Participants therein, so to constitute reduced coverage to such Participants generally. Any event described in clause (a) or (b) of this definition is also referred to herein as a "Significant Curtailment." 2.11 Covered Beneficiary. "Covered Beneficiary" shall mean the Spouse of a Participant or any of the Participant's Dependents whom the Participant elected to cover under any Benefit Package Option or other coverage option available under this Plan; provided that: A. for purposes of Accident or Health Coverage, any child to whom Code Sections 105(b) and 152(e) applies is treated as a Dependent of both parents; and, effective as of January 1, 2005, a Dependent (as defined under Code section 152) is determined without regard to Code Section 152(b)(1) (a dependent of another taxpayer is treated as having no dependents), Code Section 152(b)(2) (a married individual who files a joint return cannot be a dependent), or Code Section 152(d)(1)(B) (the gross income of a dependent who is a qualifying relative must be less than the personal exemption amount under Code Section 151(d); and B. for purposes of Dependent Care Plan provided through a cafeteria plan under Code Section 125, a Dependent means a Dependent who is a Qualifying Individual (as defined in Section 2.17) with respect to the Employee. The Plan Administrator may, from time to time, require documentary evidence that any individual designated as a Covered Beneficiary with respect to a Participant under this Plan (or any plan that is a Benefit) satisfies the definition of Spouse under this Plan, or the applicable definition of Dependent set forth above, and any other applicable eligibility requirements of the applicable plan Covered Expenses. "Covered Expenses" shall mean any of the expenses for Qualified Benefits Incurred on or after the later of the Effective Date or the Date of Employment for which a Participant may receive, and has duly elected to receive, payment or reimbursement under the terms of the Plan Currently Available. "Currently Available" shall be defined as set out in the Regulations. By way of partial description, a Benefit is "Currently Available" to a Participant if the Participant is free to receive the Benefit currently at the Participant's discretion or the Participant could receive the Benefit currently if an election or notice of an intent to receive the Benefit were given. However, a Benefit is not "Currently Available" if the Participant under no circumstances will be able to receive the Benefit before a particular time in the future and there is a substantial risk that if the Participant does not fulfill the specific conditions during the period preceding this point in time the Participant will not receive the Benefit Date of Employment. The "Date of Employment" means the day on which the person performs his/her first hour of service for the Employer as an Employee. Flexible Benefits Plan Page 8

13 2.15 Date of Participation. The "Date of Participation" is the first date upon which an Employee elects to be a Participant under the Plan Dependent. "Dependent" shall mean, except as otherwise provided in Section 2.11 or elsewhere in this Plan, any of a Participant's Dependents as defined under Code Section 152 and as defined under Code Section 105(b) Dependent Care Plan. "Dependent Care Plan" refers to any amounts paid for the following expenses, but only as such expenses are Incurred to enable the Employee to be gainfully employed for any period for which there is one or more Qualifying Individuals with respect to the Employee: A. Expenses for the care of a Qualifying Individual (as defined below), if they are paid primarily to assure the individual's well-being and protection, and not to provide food, clothing or education (unless such items are incident to and inseparably a part of the care); and B. Expenses for household services, if they are paid for the performance, in and about the Employee's home, of ordinary and usual services necessary to the maintenance of the household, so long as the expenses are attributable in part to the care of the Qualifying Individual; Provided that the "Dependent Care Plan" shall not include any amount paid for services outside the Employee's household at a camp where the Qualifying Individual stays overnight. Dependent Care assistance that is Incurred for services outside the Employee's household shall be taken into account only if Incurred for the care of (i) a Dependent of the Employee who is a child or other family member treated as a qualifying child under Code Section 152(c) and is under the age of thirteen (13), and with respect to whom the Employee is entitled to a deduction under Section 151(c) of the Code; or (ii) a Qualifying Individual other than one described in clause (i) who regularly spends at least eight (8) hours each day in the Employee's household. The term "Qualifying Individual" means, as of January 1, 2005, a qualifying individual as defined in Code section 21(b)(1), which includes (a) a Participant s Dependent who is under the age of thirteen (13) and is a child or other family member treated as a qualifying child under Code Section 152(c); and (b) a Participant s Dependent (as defined in Code Section 152, as modified by Section 21(b)(1)(B) of the Code) or Spouse who is physically or mentally incapable of caring for himself or herself and has the same principal place of abode as the Participant for more than one-half of the Participant's taxable year.) Effective as of January 1, 2005, an individual shall not be treated as having the same principal place of abode of the Participant if, at any time during the taxable year of the Participant, the relationship between the individual and the Participant is in violation of local law. Dependent Care Assistance that is Incurred for services provided outside the Employee's household by a dependent care center (as defined in Section 21(b)(2)(D) of the Code) shall be taken into account only if (a) such center complies with all applicable laws and Regulations of a state or local unit of government and (b) the requirements of the preceding sentence are met. "Dependent Care Assistance" shall not include payments to related individuals described in Section 129(c) of the Code. Notwithstanding any inconsistent provision in this definition, the term "Dependent Care Assistance" shall be equivalent to the identical term in Section 129 of the Code Disability Coverage. "Disability Coverage" means income or fixed indemnity coverage (including without limitation coverage providing for payments described in Section 105(c) of the Code) under an Accident or Health Plan that provides benefits due to personal injury or sickness, but does not Flexible Benefits Plan Page 9

14 reimburse expenses Incurred for medical care (as defined in Section 213(d) of the Code) of the Employee or the Employee's Spouse and Dependents Effective Date. The "Effective Date" is the effective date of the Plan's adoption as set forth in the Resolutions adopting the Plan Employee. "Employee" includes present and former employees of the Employer. For purposes of the provisions of this Plan that are governed by the cafeteria plan rules of Code Section 125, the term "Employee" does not include self-employed individuals described in Section 401(c) of the Code Employer. The term "Employer" shall mean, in addition to the Employer or Employers described in Section 1.01, any other entities determined by the Committee. The term "Employer" shall also include predecessors of the Employer as determined in a manner consistent with Section 414(a) of the Code, including, but not limited to, prior corporations, partnerships, or proprietorships. "Employer" shall also mean any other entity which adopts the Plan, and shall include any entity required to be included in the Plan under Section 1.04 of the Plan. If the DCP is adopted by the Committee as a Component Plan, the term "Employer" shall be expanded, with respect to each such Component Plan only, to include an individual who owns the entire interest in an unincorporated trade or business and shall include a partnership for each partner who is an Employer under such Component Plan Family Member Plan. A "Family Member Plan" means a cafeteria plan under Code Section 125, or a Qualified Benefits Plan, sponsored by the Employer of the Employee's Spouse or the Employee's Dependent Fixed Expenses. "Fixed Expenses" are Covered Expenses (other than Covered Expenses reimbursable under an FSA) that would be funded by an Employee's payroll deductions, but for the Employee's election to reduce his or her Salary under this Plan with respect to the Covered Expenses Flex Cash. The term "Flex Cash" shall refer to any contributions made by the Employer with respect to a Component Plan herein if and to the extent set out in the Committee Minutes FSA; Health FSA. An "FSA" means a Qualified Benefits Plan that is a flexible spending arrangement as defined in Section 106(c)(2) of the Code and described in Section 5.20(c). A "Health FSA" means a Health or Accident Plan that is an FSA, including the Health FSA included in the AHRP. The DCP is an FSA, but is not a Health FSA. A Health Savings Account described in Subsection 4.04(a) is not an FSA High Deductible Health Plan. "High Deductible Health Plan" means any health plan (including without limitation a Fixed Expense Benefit Package Option providing health benefit coverage under Section 4.02 of this Plan) that qualifies under Code Section 223(c)(2), because it: A. has an annual deductible that is at least $1,250 for self-only coverage, or $2,500 for family coverage; and B. the sum of the annual deductible and all other annual out-of-pocket expenses (other than premiums) required to be paid by the covered individual person or persons for covered Benefits does not exceed $6,350 for self-only coverage, or $12,700 for family coverage. A High Deductible Health Plan may provide preventive medical care (as defined by the Internal Revenue Service) without regard to such deductible, may have a greater out-ofpocket expense limit for services provided outside a network of providers used by the plan and does not include any dental or vision care plan. Flexible Benefits Plan Page 10

15 The limits in Section 2.26, clauses (a) and (b) are indexed to inflation and are subject to change. The limits in clauses (a) and (b) are effective January 1, Highly Compensated Employee. The term "Highly Compensated Employee" or "HCE" shall be defined as set forth under Section 1.04(A) of the Plan and Section 414(q) of the Code HSA Contributions. "HSA Contributions" means any Salary reduction and Flex Cash contributions that may be made by the Employer to a Participant's Health Savings Account described in Subsection 4.04(a), pursuant to the Participant s election under Section 5.03 of Benefit Package Options (a) with respect to such contributions and (b) health benefit coverage under a High Deductible Health Plan Judgment, Decree or Order. "Judgment, Decree, or Order" means a judgment, decree, or order resulting from a divorce, legal separation, annulment, or change in legal custody (including a qualified medical child support order as defined in Section 609 of ERISA) that requires Accident or Health Coverage for an Employee's child or for a foster child who is a Dependent of the Employee Key Employee. "Key Employee" shall be as defined under Section 416(i)(1) of the Code. School Districts and governmental entities do not have Key Employee(s) as defined in the Code Leave; FMLA Leave. The term "Leave" shall refer to any unpaid leave of absence approved by the Employer or required by applicable law (such as FMLA). The term "FMLA Leave" shall refer to any Leave that is subject to FMLA Medical Expenses. "Medical Expenses" shall include without limitation all Qualified Benefits that are expenses Incurred for medical care, as defined under Subsections 213(d) and 213(e) of the Code and the Regulations hereunder, provided to an Employee or the Employee's Spouse or Dependents. Notwithstanding anything to the contrary contained herein, Medical Expenses shall not include any premium for any health or medical benefit insurance program, plan or coverage, including that which is provided or offered by the Employer of a Participant's Spouse or Dependent Medicare or Medicaid Eligibility. "Medicare or Medicaid Eligibility" means entitlement to, and enrollment for, coverage that is in fact provided under Part A or Part B of Title XVIII of the Social Security Act (or "Medicare") (Public Law (79 Stat. 291)) or Title XIX of the Social Security Act (or "Medicaid") (Public Law (79 Stat. 343)), other than coverage consisting solely of benefits under Section 1928 of the Social Security Act (the program for distribution of pediatric vaccines) Normal Compensation. "Normal Compensation" shall mean a Participant's Salary computed after any Salary reduction elected under Section 5.07 and before the addition of Benefits payable under the Plan Participant. A "Participant" is an Employee who becomes entitled to Benefits under the Plan because such Employee has met the eligibility requirements of Article III of the Plan Placement for Adoption. "Placement for Adoption" means placement for adoption as defined in Regulations under Section 9801 of the Code Plan Administrator. The "Plan Administrator" shall be such individual or individuals authorized and directed to administer the Plan and the "named fiduciary", and who shall be named by the Committee. Flexible Benefits Plan Page 11

16 2.38 Plan Year. The "Plan Year", unless the Committee determines otherwise, shall be the year ending the date set forth on the cover page or Committee Minutes of this Plan. The first Plan Year to which this document applies shall begin on the date set forth on such cover page or Committee Minutes Qualified Benefits. "Qualified Benefits" shall be defined as set forth in Section 125(f) of the Code Qualified Benefits Plan. A "Qualified Benefits Plan" means an employee benefit plan governing the provision of one or more Benefits that are Qualified Benefits Salary. "Salary" shall mean an Employee's wages (not taking into account: (a) contributions by the Employer for unemployment insurance, the Federal Insurance Contributions Act and Workers' Compensation; (b) Benefits provided hereunder; (c) other benefits provided by the Employer which do not increase taxable income; and (d) taxable benefits provided by the Employer which are not paid in the form of cash to the Employee) for the Plan Year before any Salary reduction elected under Section 5.07 is taken into account Special Enrollment Rights. "Special Enrollment Rights" means rights to elect coverage under HIPAA provided under Section 9801(f) of the Code Spouse. "Spouse" means, for purposes of this Plan and each underlying Benefit available under this Plan, an individual who is legally married to a Participant as determined under the Code, consistent with IRS Rev. Rul and other applicable guidance Statutory Nontaxable Benefits. "Statutory Nontaxable Benefits" shall include Qualified Benefits plus any benefit excluded from the definition of Qualified Benefits solely because it consists of coverage under any product that is advertised, marketed, or offered as long-term care insurance Variable Expenses. "Variable Expenses" are Covered Expenses other than Fixed Expenses. Flexible Benefits Plan Page 12

17 ARTICLE III ELIGIBILITY, PARTICIPATION AND FUNDING 3.01 Participation. Unless the Employer or Committee determines otherwise, every Employee shall become a Participant in the Plan for Fixed Expenses, and for Flex Cash to the extent set forth in the Board/Committee Minutes, after satisfying such service and other eligibility conditions as may be set forth in the Minutes, subject to the nondiscrimination provisions of Section 1.04, except that an Employee who files with the Plan Administrator a form electing to waive receipt of Fixed Expenses shall not be a Participant for the Plan Year with respect to the Fixed Expenses specified in such form. An eligible Employee may be a Participant for Variable Expenses upon such Participant's election for a Plan Year under the Plan. An electing Employee shall remain a Participant in the Plan for the Plan Year unless either the Plan is first terminated or until such Employee is no longer employed by the Employer; provided that the Board/Committee may further expand or limit the definition of "Participant" consistent with this Article and the provisions of the Plan and the Code Additional Participants. The Board/Committee at its option may, at any time and from time to time, allow as additional Participants any additional class or classes of Employees; provided that the inclusion of any additional Participants conforms to the nondiscrimination provisions of Section 1.04 and Article IV of the Plan and applicable provisions of the Code. Unless otherwise eligible as an Employee or as required by law, no Spouse or other beneficiary of a Participant shall be a Participant of the Plan. However, a Participant's Spouse and eligible Dependents may indirectly share the Benefits from this Plan through selection by the Participant of Covered Expenses (other than group-term life insurance) that benefit such individuals Funding of Benefits. Except for any amounts the Employer elects to pay directly toward periodic premiums due for any insurance included in a Participant's election under the AHRP or TLP, as applicable, the cost of each Participant's Benefits elected under the Plan shall be funded as provided in Section Eligibility of Non-Dependents. If the requirements of Section 106 of the Code are satisfied, Employer-provided accident and health coverage for an Employee his/her Spouse and/or Dependents are excludable from the Employee s gross income. If coverage is purchased for someone other than the Employee s Spouse or Dependent s the contributions have to be made on an after-tax basis. The fair market value of coverage for any other individual is includible in the Employee s gross income. The Plan is permitted to allow Employees to elect accident and health coverage for an individual who is not the Spouse or Dependent of the Employee as a taxable benefit. Flexible Benefits Plan Page 13

18 ARTICLE IV COMPONENT PLANS 4.01 Dependent Care Plan. The name of this Component Plan shall be the Dependent Care Plan, herein the "DCP." The DCP, as described in this Section, shall constitute, together with Articles I, II, III, V, VI, VII, VIII and IX hereof, a component of the Plan. A. Covered Expenses. If the DCP is adopted by the Board/Committee, Participants shall be eligible to receive from the Employer, in lieu of other Benefits, reimbursement for dependent care expenses consistent with the terms of this Section 4.01 and the other Articles of the Plan. B. Principal Shareholders or Owners. Not more than twenty-five percent (25%) of the amounts paid or Incurred by the Employer for dependent care expenses with respect to any Plan Year may be provided for the class of individuals who are shareholders or owners (or their Spouses or Dependents), each of whom (on any day of the year) owns more than five percent (5%) of the stock or of the capital or profits interest in the Employer. If the total Dependent Care Expense reimbursement sought by the class referred to in the preceding sentence exceeds the limitation set forth in such sentence, then the Dependent Care Expenses eligible for reimbursement shall be reduced and the taxable Benefits increased (beginning with those of the members of such class with the greatest Dependent Care reimbursement benefit) by the minimum amounts such that the Dependent Care FSA will satisfy the rules set forth in this Subsection. This Subsection shall apply, if at all, to the minimum extent required in light of Section 129(e)(6) of the Code. School Districts will never have Employees that fall within the definition of Principal Shareholders or Owners as described above; thus are not subject to this test. C. Attribution Rules. For purposes of Subsection (b) above, ownership of stock in a corporation shall be determined in accordance with the rules provided under Subsections (d) and (e) of Section 1563 of the Code (without regard to Section 1563(e)(3)(C) of the Code). The interest of an Employee in an unincorporated trade or business shall be determined under Section 129(e)(5)(B) of the Code. D. Amount of Dependent Care Assistance. Except as otherwise provided in this Subsection, the amount of Dependent Care Assistance Incurred during any taxable year which may be taken into account for purposes of reimbursement shall not exceed the lesser of $5,000 ($2,500 in the case of a separate return by a married individual as determined subject to the rules of Section 21(e)(3) and Section 21(e)(4) of the Code), or: (i) (ii) In the case of an individual who is not married at the close of the Plan Year, such individual's earned income for such year; or In the case of an individual who is married at the close of such year, the lesser of such individual's earned income or the earned income of such individual's Spouse for that year. In the case of a Spouse who is a full-time student or is mentally or physically incapable of self-care, for purposes of the preceding sentence in this Subsection, such Spouse shall be deemed for each month during which such Spouse is a full-time student at an educational institution, or is mentally or physically incapable of self-care, to be gainfully employed and to have an Earned Income of not less than (a) $200 if there is one Qualifying Individual (as defined in Section 21(b) of the Code) with respect to the Employee for such Plan Year; or Flexible Benefits Plan Page 14