3. Resolution 5394 - Flexible Benefits Plan - Change of AdministratorCity of Kalispell
201 1" Ave E. P.O. Box 1997
Kalispell, Montana 59903-1997
(406) 758-7000 Fax (406)7757
REPORT TO: Honorable Mayor and City Council
FROM: Terry Mitton, Director of Human Resources
Jane Howington, City Manager
SUBJECT: Flexible Benefits Plan — Change of Administrator
MEETING DATE: September 21, 2009
BACKGROUND: The City has participated in a Flexible Spending Account (FLEX) benefit
program for its employees under section 125 of the Internal Revenue Code since July 1, 2002 to
which employees may contribute wages that provide a tax savings on insurance premiums,
medical expenses and dependent care. The program was administered by Employee Benefit
Resources, who recently sold to Insurance Coordinators of Montana, a subsidiary of Blue
Crogs[Rlne Shield_ Tact vear we ohanoer] health carp adminictratnrc frnm Rhie C mzQ/Rlne
Shield to Allegiance saving the City an increase in health insurance costs. Now with this recent
change of FLEX administrators it has made the coordination and administration of the FLEX
program awkward, time consuming, potentially costly for the City, and the employees lost some
benefits of the program. By adoption of this resolution we will contract with Allegiance to
assume our FLEX administration.
RECOMMENDATION: Council approve the resolution adopting a new Flexible Benefits
Plan Administrator for the City of Kalispell.
Respectively submitted,
ane Howington
City Manager
• RESOLUTION O. THE
FLEXIBLEBENEFITS '
WHEREAS, the City of Kalispell previously adopted a flexible benefit plan within the context of
Section 125 of the Internal Revenue Code for the benefit of the employer's eligible
employees; and
WHEREAS, the City now intends to contract with Allegiance Benefit Plan Management, Inc., to
be the agent for the flexible benefit plan.
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL, MONTANA, AS FOLLOWS:
SECTION I. That the City Council hereby approves Allegiance Benefit Plan Management,
Inc. as the plan administrator for the Flexible Benefits Plan (consisting of the
flexible benefits plan document, the Adoption Agreement, and component
hanafit plane and Pnliniaol fnr tl— 0t..
V valvlll 1J1ut1J Ct11U 1 V11V1liJJ 1V1 111%, VILY.
SECTION II. That the City Manager of the City, or her designee, may, without a further
resolution, execute the Administrator Agreement and any related documents
or amendments which may be necessary or appropriate to employ the
administrator of the Flexible Benefits Plan of the City.
SECTION III. This Resolution shall become effective immediately following its passage by
the City Council and approval by the Mayor.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE
CITY OF KALISPELL THIS 21ST DAY OF SEPTEMBER, 2009.
Pamela B. Kennedy
Mayor
ATTEST:
Theresa White
City Clerk
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO THE MONTANA UNIFORM ARBITRATION ACT
(§27-5-111 et seq. MCA)
ADMINISTRATIVE SERVICES AGREEMENT
FLEXIBLE BENEFITS PLAN
This Agreement, effective for the period beginning January 1, 2010, and ending December 31, 2010, and continuing thereafter, for
additional successive twelve (12) month periods, as provided by this Agreement and as long as both parties mutually agree, is entered
into by City of Kalispell, a legal entity (hereinafter referred to as the "Plan Sponsor") and Allegiance Benefit Plan Management, Inc., a
Corporation duly organized and existing under the laws of the State of Montana (hereinafter referred to as the "TPA").
WHEREAS, the Plan Sponsor sponsors a Flexible Benefits Plan (hereinafter referred to as the FLEX Plan) which is a "cafeteria plan"
within the meaning of Section 125 of the Internal Revenue Code of 1986 as amended, and regulations issued thereunder, for all
employees participating in the Plan Sponsor's health or welfare benefits plan; and
WHEREAS, the Plan Sponsor wishes to contract with an independent third party administrator to perform certain supervisory services
with respect to the FLEX Plan and to process reimbursement requests submitted under the FLEX Plan; and
WHEREAS, the TPA desires to contract with the Plan Sponsor to provide such supervisory and reimbursement services with respect to
the FLEX Plan, as set forth below; and
WHEREAS, the parties wish to enter into this Agreement to set forth the obligations and duties of both parties with regard to such
supervisory and reimbursement services.
THEREFORE, in consideration of the promises and mutual covenants contained herein, the Plan Sponsor and the TPA enter in to this
Agreement for administrative services for the FLEX Plan.
SECTION 1. DEFINITIONS
1.7 "HIPAA" means the Health Insurance Portability and
For the purposes of this Agreement the following words and Accountability Act of 1996, as it may be amended from
?hrases have the meanings set forth below, unless the context time to time, and all regulations applicable thereto.
clearly indicates otherwise and, wherever appropriate, the
singular will include the plural and the plural will include the 1.8 "Participant" is any employee, retiree or COBRA
singular beneficiary who is properly enrolled for and entitled to
participate in the FLEX Plan and who submits expenses
1.1 "Calendar Year" means January 1 through for reimbursement from the FLEX Plan.
December 31 of the same year.
1.9 "Plan" means the Flexible Benefits Plan for the
1.2 "COBRA" means the Consolidated Omnibus Budget Employees of City of Kalispell, which is the subject of
Reconciliation Act of 1985, as amended, together with this Agreement and which the Plan Sponsor has
all regulations applicable thereto. established pursuant to the Plan Document.
1.3 "Covered Services" means the care, treatments, 1.10
services or supplies described in the Plan Document as
eligible for reimbursement from the FLEX Plan.
1.4 "Employer" means the Plan Sponsor and any successor
organization or affiliate of such Employer which
assumes the obligations of the FLEX Plan and this
Agreement.
1.5 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, together with all
regulations applicable thereto.
1.6 "Fee Schedule" means the listing of fees or charges for
services provided under this Agreement. This Fee
Schedule may be modified from time to time in writing 1.11
by the mutual agreement of the parties. The Fee
Schedule is contained in Appendix A and is a part of this
Agreement.
"Plan Administrator" means the Employer and/or entity
designated by the Plan Sponsor which is responsible to
manage the day-to-day functions of the FLEX Plan and
make all discretionary decisions regarding Plan terms
and managing Plan assets. The Plan Administrator may
employ persons or firms to process Reimbursement
Requests and perform other Plan -connected services.
For the purposes of the Employee Retirement Income
Security Act of 1974, as amended, and any applicable
state legislation of a similar nature, the Employer will be
deemed to be the Plan Administrator of the FLEX Plan
unless by action of the Board of Directors or equivalent
authority the Employer designates in writing an
individual or committee to act as Plan Administrator.
"Plan Document" means the instrument or instruments
that set forth and govern the duties of the Plan Sponsor
and eligibility and benefit provisions of the FLEX Plan
which provide for before -tax payment of premium for the
FULL FLEX ASA Page 1 of 17 FLEX SNGL EMP
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8-2009
employee health and welfare plan and the
A. This is a contract for administrative services
reimbursement of Covered Services.
only as specifically set forth herein; and
1.12
"Plan Sponsor" will be as defined in Section 3(16)(A) of
B. The TPA will not be obligated to disburse more
ERISA and means the entity and any successor entity
in payment for Reimbursement Requests or
or organization, which is responsible for and which has
other obligations arising under the FLEX Plan
created, established and maintains an employee health
than the Plan Sponsor will have made
and welfare benefit plan and/or FLEX Plan for the
available in the Reimbursement Account; and
benefit of a group or groups of employees. Plan
Sponsor includes any successor organization or affiliate
C. This Agreement will not be deemed a contract
of such Plan Sponsor which assumes the obligations of
of insurance under any laws or regulations.
the FLEX Plan and this Agreement.
The TPA does not insure, guarantee or
underwrite the liability of the Plan Sponsor
1.13
"Plan Year" means the twelve-month period of time
under the FLEX Plan. The Plan Sponsor has
beginning with the effective date of the FLEX Plan as
total responsibility for payment of before -tax
specified in the Plan Document.
premium for the employee health and welfare
benefits plan, for Reimbursement Requests
1.14
"Reimbursement Account" means an account utilized for
under the FLEX Plan and all expenses
reimbursement for Covered Services. For purposes of
incidental to the FLEX Plan.
this Agreement, the Reimbursement Account means the
funds deposited for before -tax payment of premium for
2.4
Except as specifically set forth herein, this Agreement
the employee health and welfare benefits plan and for
will inure to the benefit of and be binding upon the
Reimbursement Requests.
parties hereto and their respective legal successors
provided, however, neither party may assign this
1.15
"Reimbursement Request" means a request by a
Agreement without the prior written consent of the other,
Participant for reimbursement for Covered Services
which consent will not be unreasonably withheld. There
from the FLEX Plan.
are no intended or unintended third -party beneficiaries
to this Agreement, and this Agreement will not be
1.16
"Summary Plan Description" means the document
construed in any manner as to create same.
required to be provided under Sec. 102 of ERISA that
describes the terms and conditions under which the
2.5
Any dispute as to the applicability of this Agreement
FLEX Plan operates.
between the parties or the respective rights and
F
obligations of the parties under this Agreement which
1.17
"Working Day" will mean a regular business day that is
the parties are unable to resolve, will be determined by
not a recognized federal or banking holiday, and
arbitration in Missoula, Montana. Either party may
specifically excluding any Saturday or Sunday.
submit the dispute to arbitration before a single
arbitrator and in accordance with the rules of the
SECTION 2. RELATIONSHIP OF THE PARTIES
American Arbitration Association. The party that does
not substantially prevail will pay the cost of such
2.1
The Plan Sponsor delegates to the TPA only those
arbitration. The decision of the arbitrator will be final and
powers and responsibilities with respect to
binding upon the parties and may be filed with any court
development, maintenance and administration of the
of competent jurisdiction and enforced as judgment of
FLEX Plan that are specifically enumerated in this
that court.
Agreement. Any function not specifically delegated to
and assumed by the TPA in writing pursuant to this
2.6
It is agreed by the parties to this Agreement that any
Agreement will remain the sole responsibility of the Plan
cause of action brought by either party to this contract
Sponsor. The Plan Sponsor retains the responsibility
must be made within two (2) years of the date of
for any obligations under the Consolidated Omnibus
occurrence of any alleged breach, infraction or dispute,
Budget Reconciliation Act (COBRA) of 1985, as
or within two (2) years of the termination date of this
amended, and obligations under the Health Insurance
Agreement, whichever occurs first. All parties agree this
Portability and Accountability Act of 1996 (HIPAA)
is a voluntary waiver by parties regardless of any other
unless this Agreement and the Fee Schedule in
applicable state or federal statute of limitations.
Appendix A expressly include provisions and fees for
COBRA or HIPAA administrative services by the TPA.
2.7
The TPA agrees to be duly licensed as a Third Party
Administrator to the extent required under applicable
2.2
The TPA is acting as an independent contractor for
law and agrees to maintain such licensure throughout
purposes of this Agreement. As such, the TPA is not a
the term of this Agreement.
fiduciary and does not assume any liability or
responsibility for any breach of duty or act of omission
2.8
The TPA may secure the services of actuaries,
by Plan Sponsor.
computer service firms, insurance consultants, legal
counsel, accountants and any other entities that it
2.3
The parties acknowledge that:
deems necessary in performing its duties under this
Agreement. At the discretion of the TPA such services
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ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8-2009
may be performed directly by it, wholly or in part,
through a subsidiary or affiliate of the TPA or under an
agreement with an organization, agent, advisor or other
person of its choosing. Any such services resulting in a
charge not agreed to in the Fee Schedule must first be
authorized in writing by the Plan Sponsor. The TPA will
be entitled to rely, without investigation or inquiry, upon
any written or oral information or communication of the
Plan Sponsor or Agents, including but not limited to:
Consultants, Actuaries, Attorneys, Accountants,
auditors, or Brokers retained by the Plan Sponsor.
2.9 ALLEGIANCE will not be bound by any notice, directive
or request unless and until it is received in writing at the
mailing address or fax number shown below:
2806 SOUTH GARFIELD STREET
MISSOULA, MT 59801
(406) 523-3149
Neither Plan Sponsor nor Plan Administrator will be
bound by any written notice, directive or request unless
and until it is received in writing at its primary place of
business or fax number shown below:
201 15T Avenue E.
Kalispell, MT 59901
(406) 758-7758
2.10 The parties to this Agreement acknowledge that the
TPA will have no obligation of any sort, express or
implied, in this contract to provide Plan Sponsor with
any proprietary, confidential or trade secret information
of TPA. The Plan Sponsor is entitled to its claims
information and other information which the Plan
Sponsor and Plan Administrator are required to retain
by applicable law, but any proprietary, confidential or
trade secret information of the TPA shall be removed
from such information. The TPA will not disclose
proprietary, confidential or trade secret information to
the Plan Sponsor without the Plan Sponsor first
executing a legally binding Confidentiality and Non -
Disclosure Agreement regarding such information.
SECTION 3. THE TPA's RESPONSIBILITIES
Plan elections applicable to each Participant based on
information submitted by the Plan Sponsor, and
maintain Plan records regarding Reimbursement
Requests, denials of Reimbursement Requests, and
Reimbursement Requests pended.
3.3 Upon request of Plan Sponsor, TPA will perform 25%
Key Employee Concentration discrimination testing for
the Plan referenced in this Agreement. However, by
providing these services, TPA is not acting as Plan
Sponsor's legal counsel or tax advisor. All services
provided by TPA under this paragraph should be
reviewed by Plan Sponsor's legal counsel and tax
advisors.
3.4 The TPA will perform the following specific services for
Plan Sponsor as requested:
A. Project estimated costs relating to the FLEX
Plan.
B. Draft and prepare FLEX Summary Plan
Description for review and approval by
Sponsor's legal counsel.
C. Assist with the introduction of Plan provisions
and procedures to Sponsor's electing
employees through materials and meetings
arranged by agreement between Sponsor and
the TPA.
D. Prepare reports as required by law for the
financial management and administrative
control of the FLEX Plan for use by Sponsor.
E. Provide to Plan Sponsor, upon request, a copy
of all Plan documents which employees are
entitled to examine under ERISA and any other
related documents. Said documents will be
limited to insurance contracts, if any, and
documents required to be filed with the U. S.
Department of Labor. There will be a $0.15
per page copy charge assessed for all copies
produced hereunder.
The TPA will provide the following FLEX Plan 3.5 The Employer and not the TPA, is responsible
Supervisory and Reimbursement Services for the Plan for preparing and filing the IRS Form 5500 on
Sponsor. The fees for these services are stated in the or before the due date. The TPA will provide
Fee Schedule in Appendix A. the necessary information to enable the Plan
Sponsor to complete and file an IRS form 5500
annual report, if requested, at least thirty (30)
SUPERVISORY SERVICES days prior to the date such filings are due.
3.1 The TPA will assist Plan Sponsor in developing and REIMBURSEMENT PROCESSING SERVICES
designing the FLEX Plan and any amendments,
revisions or modifications, subject to approval by Plan 3.6 As specified under the FLEX Plan, the TPA will:
Sponsor or Plan Sponsor's attorney.
A. Promptly process and prepare disbursement to
3.2 The TPA will maintain FLEX Plan records based on pay valid Reimbursement Requests submitted
eligibility information submitted by the Plan Sponsor as by participating employees.
to the dates on which a Participant's eligibility
commences and terminates, maintain Plan records of B. Provide a proper accounting and billing to Plan
FULL FLEX ASA Page 3 of 17 FLEX SNGL EMP
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8-2009
Sponsor of Reimbursement Requests paid. to pay the Reimbursement Requests as they occur.
C. Maintain current and complete records and 3.13 The TPA will maintain local telephone service and toll -
files of Reimbursement Requests and free telephone lines for inquiries made by Participants
payments for each participating employee regarding the status of their Reimbursement Requests.
according to the TPA's current practices. The TPA may record such telephone calls.
3.7 The TPA agrees to be duly licensed as a Third Party 3.14 The TPA will respond to Reimbursement Request
Administrator to the extent required under applicable inquiries by a Participant, the estate of a Participant, an
law and agrees to maintain such licensure throughout authorized member of a Participant's family unit, or the
the term of this Agreement. Participant's authorized legal representative.
3.8 The TPA will possess throughout the term of this 3.15 The TPA will maintain information that identifies a
Agreement an in -force fidelity bond or other insurance Participant in a confidential manner. The TPA agrees to
as may be required by state and federal laws for the take all reasonable precautions to prevent disclosure or
protection of its clients. Additionally, the TPA agrees to the use of premium payment information or
comply with any state or federal statutes or regulations Reimbursement Request information for a purpose
regarding its operations. unrelated to the administration of the FLEX Plan.
3.9 The TPA will process enrollment forms for Participants 3.16 Plan Sponsor may provide its own Plan Document and
in the FLEX Plan and answer enrollment inquiries; Summary Plan Description at its expense, used by TPA
create and maintain enrollment records for Participants for review and approval by Plan Sponsor's legal
and distribute FLEX Plan materials supplied by the Plan counsel, subject to review and approval by TPA.
Sponsor to new Plan Participants.
3.10 The TPA will process Reimbursement Requests
incurred by Participants according to the terms of the
Plan Document as construed by the Plan Sponsor. The
TPA will establish and maintain usual and customary
Reimbursement Request review procedures within the
usual standard of care in the TPA industry. The TPA
will take reasonable measures and precautions to
prevent the reimbursement of improper requests. The
TPA will not be liable for fraud, misrepresentation or
errors by any Participant or for errors in
Reimbursements made to Participants in good faith.
When all necessary documents and Reimbursement
Request form information have been received and the
Reimbursement Request has been adjudicated, a
Reimbursement check or draft will be remitted on the
next Reimbursement disbursal date provided that the
Plan Sponsor has provided funds for such
Reimbursement. All Reimbursement Requests will
remain in a processed but pended status until funded by
the Plan Sponsor.
Customer Service Representatives of the TPA will
inform any Participant who inquires about any
Reimbursement Request which is pended for lack of
funds that such Reimbursement Request has been
received and processed and is pending receipt of funds.
No further explanation will be required of the TPA by the
Plan Sponsor under such circumstances.
3.11 The TPA will notify Participants in writing of ineligible
Reimbursement Requests received.
3.17 The TPA will maintain a Reimbursement Request file on
every Reimbursement Request reported to it by the
Participants. Copies of such records will be made
available to the Plan Sponsor during a regularly
scheduled Working Day at the office of the TPA for
consultation, review, and audit upon advance notice of a
minimum of fourteen (14) Working Days.
The Plan Sponsor will pay for any audit made at its
request. A fee of fifteen cents ($.15) per photo copy will
be paid by the Plan Sponsor or Plan auditor on behalf of
the Plan Sponsor for any Reimbursement Request or
other record. The TPA will charge an hourly fee of $100
for executive or professional time, $50 per hour for
department manager time and $25 per hour for clerical
time spent in cooperation with such consultation, review
and audit.
3.18 The TPA will, upon termination of this Agreement, save
all records at the TPA's principal administrative office.
Reimbursement request files will be kept in secure
storage facilities for at least six (6) years following the
termination of a Plan Year or as required by ERISA.
Copies of any materials in storage will be available to
Plan Sponsor for a copy fee of fifteen cents ($.15) per
page copied plus a retrieval fee of ten dollars ($10.00)
per box or CD ROM diskette accessed. At the end of
the six-(6) year period, the TPA will destroy all records.
3.19 The TPA will perform special Reimbursement Request
history research projects upon request by the Plan
Sponsor. A separate fee may be required depending
upon the complexity of such request.
3.12 The TPA will process, issue, and distribute 3.20 The TPA will provide non-proprietary information and
Reimbursement checks or drafts as instructed by the documents as requested by the Plan Sponsor to brokers
Plan Sponsor to Participants. The TPA will notify the and agents designated by the Plan Sponsor, provided,
Plan Sponsor of the Reimbursement Request amount however, if the Plan Sponsor has entered into an agent
required to be deposited to the Reimbursement Account of record agreement with any agent or broker, and the
FULL FLEX ASA Page 4 of 17 FLEX SNGL EMP
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8-2009
TPA has notice of the same, the TPA will not be
required to provide any information or documentation to
other agents or brokers unless or until Plan Sponsor has
terminated the agent of record agreement and notified
the agent of record of the termination. The TPA will
have the express right to contact any agent of record to
verify the agent of record agreement has been
terminated.
3.21 The TPA will have no obligation whatsoever with regard
to the Plan Sponsor's obligations and responsibilities
under the Consolidated Omnibus Budget Reconciliation
Act (COBRA) of 1985, as amended, or the Health
Insurance Portability and Accountability Act (HIPAA) of
1996, unless specifically requested by Plan Sponsor, in
which case TPA's responsibilities for COBRA
administration are stated in the COBRA Appendix
attached hereto and made a part hereof by this
reference.
3.22 Upon request TPA will provide certain limited bank
account management services for the reimbursement
Account, for the fees and upon the conditions set out in
Reimbursement Account Management Services
Appendix attached hereto and made a part hereof by
this reference.
SECTION 4. PLAN SPONSOR OBLIGATIONS
4.1 Plan Sponsor will furnish to the TPA the following
reports and information to allow effective performance
by the TPA:
A. Certification of participation in the FLEX Plan
and such other information as may be
necessary for processing Reimbursement
Requests.
B. Prompt reconciliation of:
(1) The itemized monthly billing provided
by the TPA listing employees covered
under the FLEX Plan, and;
This information will be provided in a format acceptable
to the TPA and will include the following for each
Participant: name and address, Social Security number,
date of birth, type of participation, sex, relationship to
employee, changes in participation, date participation
begins or ends, and any other information necessary to
determine eligibility and participation levels under the
FLEX Plan.
Plan Sponsor assumes the responsibility for the
erroneous disbursement of reimbursements by the TPA
in the event of error or neglect on the Plan Sponsor or
Employer's part of providing eligibility and participation
information to the TPA, including but not limited to,
failure to give timely notification of ineligibility or
termination of a former Participant.
4.4 Plan Sponsor will resolve all Plan ambiguities and
disputes relating to the eligibility of a Participant, Plan
participation, denial of Reimbursement Requests or
decisions regarding appeal, or denial of Reimbursement
Requests, or any other Plan interpretation questions.
The Plan Sponsor will respond to any written request
made by the TPA within ten (10) working days.
(2) The amount of premiums and
contributions elected by each
participating employee for the billing
period. 4.5
In the event the Plan Sponsor does not
reconcile the contribution listing, the TPA will
reconcile the contribution listing at the rates
shown in the Fee Schedule in Appendix A.
4.2 Plan Sponsor will give notice of the establishment of the
FLEX Plan to its employees and will be responsible for
distributing copies of the Summary Plan Description to 4.6
participating employees.
4.3 Plan Sponsor will maintain current and accurate Plan
eligibility and participation records, verify Participant
eligibility and submit this information if requested by the
TPA, to the TPA at its designated mailing address.
The TPA will administer and process Reimbursement
Requests in accordance with this Agreement if the Plan
Document and Summary Plan Description are clear and
unambiguous as to the validity of the Reimbursement
Requests and the Participants' eligibility for participation
under the FLEX Plan, but will have no discretionary
authority to interpret the FLEX Plan or adjudicate
Reimbursement Requests. If processing a
Reimbursement Request requires interpretation of
ambiguous Plan language, and the Plan Sponsor has
not previously indicated to the TPA the proper
interpretation of the language, then the Plan Sponsor
will be responsible for resolving the ambiguity or any
other dispute.
The Plan Sponsor's decision as to any Reimbursement
Request (whether or not it involves a Plan ambiguity or
other dispute) will be final and binding unless modified
or reversed by a court or regulatory agency having
jurisdiction over such matter.
Plan Sponsor will prospectively fund the
Reimbursement Accounts each pay period by
depositing funds deducted from Participants' wages into
the Reimbursement Account. If additional funding is
required to pay claims, Plan Sponsor shall advance
funds in a timely manner, but in no event later than thirty
(30) days after notice from the TPA of the required
funding amount, so pended claims can be released.
Plan Sponsor will not demand or require the TPA, under
any circumstances, to issue checks or drafts for
Reimbursement Requests or any other costs arising out
of the subject matter of this Agreement, unless the Plan
Sponsor has so authorized and has previously
deposited sufficient funds to cover such payment(s).
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ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8.2009
4.7 Plan Sponsor will provide the TPA with copies of any
and all revisions or changes to the FLEX Plan within five
(5) Working Days of the effective date of the changes.
4.8 Plan Sponsor will provide, and timely distribute, all
notices and information required to be given to
Participants, maintain and operate the FLEX Plan in
accordance with applicable law, maintain all record
keeping, and file all forms relative thereto pursuant to
any federal, state, or local law, unless this Agreement
specifically assigns such duties to the TPA.
4.9 Plan Sponsor will at all times acknowledge that it is the
Plan Sponsor, Plan Administrator, and Named
Fiduciary, as these terms are defined in ERISA or other
applicable law. As such, Plan Sponsor retains full
discretionary control and authority and discretionary
responsibility in the operation and administration of the
FLEX Plan.
4.10 Plan Sponsor will pay any and all taxes, licenses, and
fees levied, if any, by any local, state, or federal
authority in connection with the FLEX Plan.
Consolidated Omnibus Budget Reconciliation Act
(COBRA) of 1985,.as amended, or the Health Insurance
Portability and Accountability Act (HIPAA) of 1996,
unless Plan Sponsor has specifically requested TPA to
provide COBRA administrative services, in which case
TPA's responsibilities for COBRA administration are
stated in the COBRA Appendix attached hereto and
made a part hereof by this reference.
4.19 If the Plan Sponsor elects Set -Up Services Only, as
shown on the Fee Schedule in Appendix A, and elects
not to have the TPA provide Re -Enrollment and
Discrimination Testing Services, the Plan Sponsor
retains sole responsibility for Discrimination Testing, and
the TPA will have no responsibility for the same.
Further, if these services are not elected, the TPA will
have no responsibility whatsoever for notifying Plan
Sponsor of changes in, and required compliance with,
the laws applicable to this Plan, including Plan
Document revisions required for such compliance. The
Plan Sponsor will remain solely responsible for
remaining apprized of such future changes in laws and
required compliance with regard to Plan Documents.
4.11 Plan Sponsor will hold confidential information obtained 4.20
that is proprietary to the TPA or information or material
not generally known by personnel other than
management employees of the TPA.
4.12 Plan Sponsor will pay, in accordance with the Fee
Schedule, the TPA's fees for services rendered under
this Agreement. Unless otherwise agreed, the TPA may
withdraw from the applicable account any fee then due
to the TPA prior to application of the funds in the
applicable account to pay Reimbursement Requests or
any other costs arising out of the FLEX Plan or the
subject matter of this Agreement.
4.13 Plan Sponsor will maintain any fidelity bond or other
insurance as may be required by state or federal law for
the protection of the FLEX Plan and Participants.
4.14 Plan Sponsor will notify the TPA of any requests for
FLEX Plan documents or written inquiries about
Reimbursement Requests processed under the FLEX
Plan.
The Plan Sponsor has sole responsibility for preparing
and filing IRS Form 5500 if applicable.
SECTION 5. DURATION OF AGREEMENT
5.1 This Agreement shall commence on January 1, 2010,
and end on December 31, 2010. This Agreement shall
automatically renew at the end of each term for an
additional twelve (12) month period, under the same
terms, conditions and Fee Schedule unless modified or
terminated as described below.
5.2 In the event of a change in the Fee Schedule for a
subsequent twelve (12) month period, this Agreement
shall renew upon acceptance by Plan Sponsor of a fee
quote from the TPA for the succeeding twelve (12)
month period. The fee quote described in this
subsection must be accepted, in writing, by Plan
Sponsor prior to the renewal date for the period to which
the fee quote applies. Nonacceptance of the fee quote
prior to such renewal date shall cause this Agreement to
lapse and terminate at 12:01 o'clock a.m. on that
renewal date.
4.15 Plan Sponsor will maintain a supply of election forms,
Reimbursement Request forms, Compensation 5.3
Reduction Agreement forms, and other documents
provided by the TPA, and will make them available to
participating employees.
4.16 Plan Sponsor will submit timely payment for enrollment
services and administrative fees as stated in Appendix
A.
4.17 Plan Sponsor will provide all reports and documents
required from time to time to satisfy governing law or to
promote effective FLEX Plan operation.
5.4
1.18 Plan Sponsor retains sole responsibility for Plan
Sponsor's obligations and responsibilities under the
Either party may terminate this Agreement at any time
upon providing the terminating party with thirty (30) days
prior notice of intent to terminate unless both parties
agree to waive such advance notice. All obligations of
the TPA to process benefits under the FLEX Plan are
terminated on the effective date of termination even
though a reimbursable expense arose prior to the
termination of this Agreement. At the option of the
party initiating the termination, the other party may be
permitted a cure period (of a length determined by the
party initiating the termination) to cure any default.
Failure of Plan Sponsor to provide funds for
Reimbursement Requests or to make contributions to
the FLEX Plan will result in the termination of this
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ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 5-2009
Agreement thirty (30) days from the date of written 5.8
The Plan Sponsor may, at its option, terminate this
notice to Plan Sponsor of the lack of funds.
Agreement with ten (10) days written notice upon the
occurrence of any one or more of the following events
5.5 Upon termination of this Agreement, the TPA shall
pertaining to the TPA:
provide an accounting and reconciliation to Plan
Sponsor within sixty (60) days after the effective date of
A. Insolvency;
termination. Together with said accounting and
reconciliation, the TPA shall return to Plan Sponsor all
B. Court appointment of a permanent receiver for
remaining funds of Plan Sponsor and/or its employees
all or substantially all of the TPA's assets;
held by the TPA.
C. A general assignment of the benefit of creditors
5.6 Any amendment which affects only the Fee Schedule,
by the TPA;
Appendix A, may be made, in writing signed by all
parties, and without other formal amendment of this
D. The filing of a voluntary or involuntary petition
Agreement. All fee quotes accepted by Plan Sponsor for
of bankruptcy, if such petition is not dismissed
renewals of this Agreement will be incorporated into this
within forty-five (45) days of the date of filing,
Agreement as amendments to the Fee Schedule,
provided that an order for relief from automatic
Appendix A.
stay has been obtained, or with respect to a
Chapter 11 proceeding, that the bankrupt or
5.7 The TPA may, at its sole option, terminate this
Bankruptcy Trustee fails to reaffirm this
Agreement with ten (10) days written notice upon the
Agreement and provide adequate assurances
occurrence of any one or more of the following events
pursuant to 11 USC 365;
pertaining to the Plan Sponsor:
E. The TPA engages in any unethical business
A. The Plan Sponsor fails to pay administration
practice or conducts itself in a manner which in
fees or other fees for the TPA's services upon
the reasonable judgment of the Plan Sponsor
presentation for Pavment and in accordance
may be a violation of any federal, state, or
with the Fee Schedule;
other government statute, rule, or regulation; or
B. The Plan Sponsor engages in any unethical
F. The TPA loses its licensure or certification
business practice or conducts itself in a
required by law to continue its business or
manner which in the reasonable judgment of
continue as third -party administrator.
the TPA may be a violation of any federal,
state, or other government statute, rule, or 5.9
Plan Sponsor specifically acknowledges that the TPA
regulation;
incurs ongoing costs for staffing, long term planning,
maintenance of customer service support and other
C. The Plan Sponsor, through its acts, practices,
costs connected with providing services to Plan
or operations, exposes the TPA to any existing
Sponsor's Plan, and that the notice of termination and
or potential investigation or litigation;
termination date provisions of this Agreement provide
adequate notice to the TPA so that unnecessary costs
D. The Plan Sponsor loses its licensure or
are not incurred by the TPA if Plan Sponsor terminates
certification required by law to continue the
this Agreement. In that regard, it is specifically agreed
FLEX Plan;
by Plan Sponsor that in the event that Plan Sponsor
either fails to provide the advance notice for termination
E. Insolvency;
required by this Agreement, the Plan Sponsor shall pay
to the TPA a fee equal to two times the amount of Plan
F. Court appointment of a permanent receiver for
Sponsor's administrative fees payable to the TPA for the
all or substantially all of the Plan Sponsor's
month immediately prior to the date notice of termination
assets;
is received. The amount payable under this provision
shall be as liquidated damages incurred by the TPA for
G. A general assignment of the benefit of creditors
the costs recited in this subsection, in lieu of specific
by the Plan Sponsor; or
calculation of the same, and not as a penalty.
H. The filing of a voluntary or involuntary petition 5.10
In the event this Agreement is terminated for any reason
of bankruptcy, if such petition is not dismissed
and Plan Sponsor cannot be located following
within forty-five (45) days of the date of filing,
reasonable efforts by TPA, TPA shall charge a $50.00
provided that an order for relief from automatic
per check administrative charge for its efforts to return
stay has been obtained, or with respect to a
any stale dated funds (defined as a check with an
Chapter 11 proceeding, that the bankrupt or
original issue date greater than 180 days) belonging to
Bankruptcy Trustee fails to reaffirm this
Plan Sponsor or belonging to a plan participant who,
Agreement and provide adequate assurances
likewise, cannot be located. The administrative charge
pursuant to 11 USC 365.
may be paid from any funds of the Plan Sponsor held by
TPA, or billed directly to the Plan Sponsor. This
FULL FLEX ASA Page 7 of 17
FLEX SNGL EMP
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC.
REV. 8-2009
provision shall survive termination of this Agreement.
5.11 TPA, in its sole discretion may provide run out services
upon the termination of this agreement. The Run out
period, not to exceed 3 months, will be determined by
the Plan Sponsor at the time of notification of the
termination. If no run out time is specified, the TPA
cease all claims processing on the date of termination.
Run out services will consist solely of processing claims
incurred by a Participant prior to the date of termination
of this agreement, but submitted no later than the end of
the run out period. Run out services will be provided by
the TPA only if at the time of termination of this
agreement, all fees due the TPA and all plan funding
are paid and current. TPA will not provide run out
services if the above conditions are not met, or if
termination is a result of any of the conditions listed in
paragraph 5.7 of this Agreement. The run out fee, which
is payable in advance, will be an amount equal to the
amount of Plan Sponsor's administrative fees payable to
the TPA for the month immediately prior to the date
notice of termination multiplied by the run out time in
months. Upon determination of the run out period, a run
out fee schedule will be issued to the Plan Sponsor as
an Appendix B to this agreement.
SECTION 6. LIMITATIONS AND INDEMNIFICATION
6.1 In performing its obligations in this Agreement, the TPA
is acting only as an independent contractor. Plan
Sponsor shall be deemed to be Plan Administrator,
unless Plan Sponsor designates an individual or
committee to act as Plan Administrator. For purposes of
the Employee Retirement Security Act of 1974 as
amended from time to time and any applicable State
legislation of a similar nature, Sponsor will be deemed
to be Administrator of the FLEX Plan, unless Sponsor
designates an individual or committee to act as
Administrator. In no instance will the TPA be deemed to
be or be, Administrator of the FLEX Plan for purposes of
the Employee Retirement Security Act of 1974, as
amended from time to time.
6.2 The TPA will not be liable for, and will not advance its
funds for payment of Reimbursement Requests under
the FLEX Plan. The TPA will not be considered the
insurer or underwriter of the liability of Plan Sponsor to
provide benefits for the employees participating under
the FLEX Plan. Plan Sponsor will have final
responsibility and liability for Reimbursement Requests
in accordance with the FLEX Plan.
6.3 The TPA will indemnify, defend, save and hold the Plan
Sponsor harmless from and against any and all claims,
suits, actions, liabilities, losses, penalties or damages
including court costs and attorney's fees with respect to
the FLEX Plan which directly result from or arise out of
the dishonest, fraudulent, grossly negligent or criminal
acts of the TPA or its employees, except for any acts
taken at the specific direction of the Plan Sponsor.
1.4 The Plan Sponsor will indemnify, defend, save, and hold
the TPA harmless from and against any and all claims,
suits, actions, liabilities, losses, penalties or damages,
including court costs and attorneys' fees, to the extent
that such claims, losses, liabilities, damages and
expenses arise out of or are based upon the gross
negligence, fraudulent, criminal or dishonest acts of
Plan Sponsor, its agents and employees in the
performance of their duties, a release of data by the
TPA to the Plan Sponsor, or an interpretation of the
FLEX Plan by the Plan Sponsor on which the TPA acts.
SECTION 7. MISCELLANEOUS
7.1 This Agreement, together with all addenda, exhibits, and
appendices supersedes any and all prior
representations, conditions, warranties, understandings,
proposals, or other agreements between the Plan
Sponsor and the TPA hereto, oral or written, in relation
to the services and systems of the TPA, which are
rendered or are to be rendered in connection with its
assistance to the Plan Sponsor in the administration of
the FLEX Plan.
7.2 This Agreement, together with the aforesaid addenda,
exhibits, and appendices constitutes the entire
Administrative Services Agreement of whatsoever kind
or nature existing between or among the parties.
7.3 The parties hereto, having read and understood this
entire Agreement, acknowledge and agree that there
are no other representations, conditions, promises,
agreements, understandings, or warranties that exist
outside this Agreement which have been made by either
of the parties hereto, which have induced either party or
have led to the execution of this Agreement by either
party. Any statements, proposals, representations,
conditions, warranties, understandings, or agreements
which may have been heretofore made by either of the
parties hereto, and which are not expressly contained or
incorporated by reference herein, are void and of no
effect.
7.4 This Agreement may be executed in two or more
counterparts, each and all of which shall be deemed an
original and all of which together shall constitute but one
and the same instrument.
7.5 Except as provided herein, no changes in or additions to
this Agreement shall be recognized unless and until
made in writing and signed by all parties hereto.
7.6 In the event any provision of this Agreement is held to
be invalid, illegal, or unenforceable for any reason and
in any respect, such invalidity, illegality, or
unenforceability shall in no event affect, prejudice, or
disturb the validity of the remainder of this Agreement,
which shall remain in accordance with its terms.
7.7 The Plan Sponsor will notify the TPA within ten (10)
Working Days of any inquiry made by any Participant or
authorized representative of any Participant related to
Plan Documents, Plan Records, Reimbursement
Requests, disputes, threatened litigation, lawsuits
pertaining to the FLEX Plan or any inquiry made by any
FULL FLEX ASA Page 8 of 17 FLEX SNGL EMP
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8.2009
federal or state authority regarding the FLEX Plan.
7.8 In the event that either party is unable to perform any of
its obligations under this Agreement because of natural
disaster, labor unrest, civil disobedience, acts of war
(declared or undeclared), or actions or decrees of
governmental bodies (any one of these events which is
referred to as a "Force Majeure Event'), the party who
has been so affected shall immediately notify the other
party and shall do everything possible to resume
performance.
Upon receipt of such notice, all obligations under this
Agreement shall be immediately suspended. If the
period of non-performance exceeds fourteen (14)
Working Days from the receipt of notice of the Force
Majeure Event, the party whose ability to perform has
not been so affected may, by giving ten (10) Working
Days written notice, terminate this Agreement.
7.9 All notices required to be given to either party by this
Agreement shall, unless otherwise specified in writing,
be deemed to have been given three (3) days after
deposit in the U.S. Mail, first class postage prepaid,
certified mail, return receipt requested.
Any official notice to the TPA will be mailed to the
attention of the President at 2806 South Garfield Street,
Missoula, MT 59801. The TPA will not be bound by
any notice, directive or request unless and until it is
received in writing at this address.
Any official notice to the Plan Sponsor will be mailed to
the attention of the Human Resource Director at 201 152
Avenue E., Kalispell, MT 59901. The Plan Sponsor will
not be bound by any notice, directive or request unless
and until it is received in writing at this address.
7.10 The TPA has adopted an Affirmative Action Policy that
is in compliance with Section 49-3-101 to Section 49-3-
303 MCA. Employees hired by the TPA are hired on the
basis of merit and qualifications; and there is no
discrimination on the basis of race, color, religious
creed, political ideas, sex, age, marital status, physical
handicap, national origin or ancestry by persons
performing this Agreement. Qualifications mean such
abilities as are genuinely related to competent
performance of the particular occupational task.
7.11 This Agreement shall be interpreted and construed in
accordance with the laws of the state of Montana except
to the extent superseded by federal law.
7.12 No forbearance or neglect on the part of either party to
enforce or insist upon any of the provisions of this
Agreement shall be construed as a waiver, alteration, or
modification of the Agreement.
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ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8.2009
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on their behalf by their duly authorized
representatives, effective as of the date first above written.
CITY OF KALISPELL
BY: -I _ _
�94ignature
NAME: TeP W. Mitton
TITLE: Human Resources Director
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC.
13%
Signature
NAME: Ronald K. Dewsnup
TITLE: President, General Manager
FULL FLEX ASA Page 10 of 17 FLEX SNGL EMP
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8-2009
APPENDIX A
FEE SCHEDULE AND FINANCIAL ARRANGEMENT
1. FEE SCHEDULE
The Plan Sponsor and the TPA hereby agree to the compensation schedules set forth below as being the sole compensation to the
TPA for any of its services which relate to the FLEX Plan. Monthly fees are based upon Plan Participant enrollment as of the
beginning of the month.
Annual Administration fees shall be payable in advance and, if such amount is determined by the monthly Plan Participant enrollment,
will be reconciled annually on the contract anniversary date. In the event that this Agreement is terminated prior to the end of any
twelve-month contract period, the amount of annual fee will be determined by the first month enrollment times twelve.
Plan Sponsor shall pay THE TPA the following fees as indicated:
SERVICE
CHECK TO AMOUNT DUE DATE DUE
ELECT
A. Set-up Fee !X_
$600.00 Within 30 days of invoice date
(Only applicable to new clients,
otherwise strictly for information)
B. Monthly Service Fee FSA JX_
$4.75/participant/month Within 30 days of invoice date
or
$50.00/month minimum
(Service Fee/sponsor group)
C. Annual Re -Enrollment Fee* _X_
$400.00 Within 30 days of invoice date
(Includes re -enrollment of group
annually into software system, changes
to Plan Document and Summary Plan
Description, and any other changes
required for the Flex Plan to remain in
compliance with current federal and
state law.)
D. Hourly fee of $50.00 for reconciliation of contribution listing and related accounting services.
E. Hourly fee of $100.00 for welfare plan consulting. Such services must be agreed to in advance by the Plan Sponsor.
F. Hourly fee of $100.00 per hour for audit assistance services and any other services provided by the TPA not specifically
provided for in this Agreement.
G. Electronic Payment Card Service _X_ $1.00 /participant/month Within 30 days of invoice date
H. Fee for COBRA services
_X_ Included in per participant per month fee
Initials
(Plan Sponsor)
Initials
(TPA)
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ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8-2009
APPENDIX B
REIMBURSEMENT ACCOUNT MANAGEMENT SERVICES APPENDIX
TPA ACCOUNT
TPA maintains certain bank accounts for the convenience of its client Plan Sponsors to be used to hold funds for payment of claims under flexible
benefit medical expense and dependent care reimbursement plans for which TPA provides services. The Plan Sponsor has requested that, as part of
the services under this Agreement, that TPA allow Plan Sponsor to use said Reimbursement Accounts, and TPA has agreed to allow Plan Sponsor use
of such accounts upon the following terms:
1. The accounts are not Trust Accounts, nor are they to be deemed to be Trust Accounts for any purpose, provided, however, the funds in such
accounts are held for the. benefit of Plan Sponsor, not TPA, and shall not be deemed the property of TPA for any reason or purpose.
2. TPA does not in any manner, express or implied, act as a Trustee of the accounts.
3. TPA will provide ministerial services with regard to the accounts, including but limited to the following:
a. Reconciliation of the accounts.
b. Payment of any applicable bank charges and service fees.
c. Reports of bank account activity.
d. Compliance with bank procedures and requirements.
e. Production of check stock.
f. Deposit, withdrawal and transfer of funds.
g. Issuance of checks from those accounts based upon the direction of the Plan Sponsor and/or the express terms of any Plan Document.
4. The funds deposited in such accounts shall be considered to be the property of the entity that provided the funds for deposit and shall not in any
manner be considered or implied to be plan assets as defined by ERISA, or any other applicable law.
5. To the extent any of the accounts above referenced are interest bearing accounts, the interest from such accounts shall be retained by TPA as
compensation for the services listed above.
Upon termination of this agreement, TPA will transfer all remaining funds of Plan Sponsor in the benefit claims payment account, excluding accrued
interest, back to Plan Sponsor, or Plan Sponsor's designee.
Except as stated above, TPA shall have no further obligations regarding the above banking accounts.
TPA shall not be considered for any manner or for any purpose to be an investment manager as that term is defined by ERISA or other applicable
law.
At the end of each Plan Year of Plan Sponsor's plan, after TPA has adjudicated all eligible reimbursement claims of the specific Plan Year in
accordance with the terms of the Plan Document, all flexible benefit accounts will be reconciled, and any amounts subject to forfeiture according to
the terms of the Plan document will be transferred by TPA out of the benefit plan claims payment account and to Plan Sponsor or Plan Sponsor's
designee, except upon request of the Plan Sponsor an amount not to exceed 2months of contributions, may be retained to pay for the costs and
reimbursements of the first 2 month's of operation of the Plan for the succeeding year.
❑ PLAN SPONSOR ACCOUNT
TPA provides certain bank account management services for the convenience of its client Plan Sponsors who maintain their own Reimbursement
Accounts for purposes of payment of claims and other fees for their self funded flexible benefits medical expense and dependent care reimbursement
plans. The Plan Sponsor has requested, as part of the services under this Agreement, that TPA provide such account management services and TPA
has agreed to provide the specific services as follows, upon the following terms:
The accounts for which TPA provides services are not Trust Accounts, nor are they to be deemed to be Trust Accounts for any purpose.
2. TPA does not in any manner, express or implied, act as a Trustee of the accounts.
3. TPA will provide ministerial services with regard to the accounts, including but limited to the following:
a. Reconciliation of the accounts
b. Payment of any applicable bank charges and service fees
c. Distribution of bank statements
d. Compliance with bank procedures and requirements
e. Production of check stock
f. Deposit, withdrawal and transfer of funds
g. Issuance of checks from those accounts based upon the direction of the Plan Sponsor and/or the express terms of any Plan Document
4. The funds deposited in such accounts shall be considered to be the property of the entity that provided the funds for deposit and shall not be in any
manner considered or implied to be plan assets as defined by ERISA, or any other applicable law.
Except as stated above, TPA shall have no further obligations regarding the above banking accounts.
6. TPA shall not be considered for any manner or for any purpose to be an investment manager as that term is defined by ERISA or other applicable
law.
FULL FLEX ASA Page 12 of 17 FLEX SNGL EMP
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 8-2009
APPENDIX C
COBRA ADMINISTRATIVE SERVICES AGREEMENT
FOR
MEDICAL REIMBURSEMENT FLEXIBLE SPENDING PLAN
This COBRA Administrative Services Agreement (hereinafter "Agreement") is entered into January 1, 2010, by and between CITY OF
KALISPELL (hereinafter "Plan Sponsor"), whose address and phone number are 201 is` Avenue E., PO Box 1997, Kalispell, MT
59901, and ALLEGIANCE COBRA SERVICES, INC., (hereinafter "TPA"), whose address and phone number are 2806 S. Garfield St,
PO Box 2097, Missoula, MT 59806; (406) 721-2222.
WHEREAS, the Plan Sponsor and/or the plan administrator of the group health plan sponsored by the Plan Sponsor is required to
perform certain duties pursuant to continuation of benefits coverage for its medical reimbursement flexible spending plan (the Plan).
WHEREAS, the Plan Sponsor has selected the TPA to perform certain nondiscretionary and ministerial duties pursuant to the Plan
Sponsor's continuation of benefits coverage.
NOW THEREFORE, in consideration of the terms and conditions hereinafter set forth, the parties agree as follows:
SECTION 1: Definitions
1.1 "COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985 or the Public Health Service
Act, as amended or interpreted from time to time, and
applicable regulations.
1.2 "COBRA Participant" means any person who is properly
enrolled for and entitled to benefits from the Plan,
pursuant to COBRA continuation coverage.
1.4 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended and interpreted from
time to time, together with applicable regulations.
1.5 "HIPAA" means the Health Insurance Portability and
Accountability Act of 1996, as amended or interpreted
from time to time, together with applicable regulations.
1.10 "Qualifying Event" means:
2.1
1.6 "Plan" means the medical reimbursement flexible
spending plan (FSA) which is the subject of this
Agreement and which the Plan Sponsor has established
pursuant to the Plan Document. 2.2
1.7 "Plan Administrator" means the person or entity
designated by the Plan Sponsor to manage the Plan
and make all discretionary decisions regarding Plan
terms and managing Plan assets.
1.8 "Plan Participant" is any employee, retiree or COBRA
beneficiary who is properly enrolled and eligible for
benefits under the Plan.
1.9 "Qualified Beneficiary" means a covered employee
under the Plan. 2.3
a. Termination of employment of the employee
(except for termination as a result of gross
misconduct), or reduction of hours of employment
causing the employee to become ineligible for
coverage.
SECTION 2: Relationship of Parties
Independent Contractor. Plan Sponsor acknowledges
that the TPA is an independent contractor as defined in
section 39-71-120 of the Montana Code Annotated, as
amended, for purposes of this Agreement. As such, the
TPA is not an agent or employee of Plan Sponsor and
does not assume any liability or responsibility for any
breach of duty or act of omission by Plan Sponsor.
Plan Fiduciary. Plan Sponsor acknowledges and
agrees that the performance by the TPA of its
obligations under this Agreement does not make the
TPA a plan administrator, plan sponsor, or fiduciary as
defined by ERISA, and Plan Sponsor will not identify the
TPA or any of its affiliates as such. The Plan Sponsor
further acknowledges and agrees that it is the plan
sponsor, plan administrator, and named fiduciary as
defined by ERISA. As such, Plan Sponsor retains full
discretionary authority, control, and responsibility for the
operation and administration of the Plan.
No Legal or Tax Advice. Plan Sponsor acknowledges
APPENDIX C: COBRA SERVICES AGREEMENT APX C: COBRA SVCS
ALLEGIANCE BENEFIT PLAN MANAGEMENT, INC. REV. 2008
Page 13 of 17
and agrees that the TPA will not be deemed to be a 3.8
legal or tax advisor as a result of the performance of its
duties under this Agreement.
2.4 Subcontractors. The TPA may subcontract the services
of computer companies, consultants, attorneys,
accountants, and other organizations that it deems
necessary in the performance of its obligations under
this Agreement. At the discretion of the TPA, such 3.9
services may be performed directly by the TPA, wholly
or in part, through a subsidiary or affiliate of the TPA or
under an agreement with an organization, agent, or
other person of its choosing. Any such services
resulting in a fee not agreed to in Appendix A, Fee
Schedule and Financial Arrangement in the
Administrative Services Agreement between Plan
Sponsor and Allegiance Benefit Plan Management, shall
have prior written authorization by the Plan Sponsor.
2.5 Third Party Administrator Licensure. The TPA 3.10
represents that it is licensed and/or registered as a third
party administrator in the following states: Montana,
California, Colorado, Idaho, Kansas, Nebraska, North
Dakota, Oregon, South Dakota, Utah, Washington, 3.11
Wisconsin, and Wyoming.
SECTION 3: Responsibilities of Plan Sponsor
3.1 Initial Notice: If applicable, Plan Sponsor will notify the
TPA within thirty (30) days after employees enroll in 4.1
Plan Sponsor's Plan, of such enrollment to allow the
TPA to send the employee an initial COBRA notice.
3.2 Qualifying Event Notice: Plan Sponsor will notify the
TPA or cause the TPA to be notified when employees
have a Qualifying Event within 30 days of the 4.2
employee's termination from employment for any reason
including gross misconduct, or reduction of employment
hours.
3.4 Qualified Beneficiary Information: Plan Sponsor will 4.3
provide the TPA the following information with notice of
a Qualifying Event:
a. The name, address, and Social Security number of 4.4
the employee.
3.6 Plan Sponsor Plan, Changes, and Amendments: Plan
Sponsor will notify the TPA of any changes in benefits,
eligibility and/or premiums for Plan Sponsor's Plan, in 4.6
accordance with the terms of the Administrative Service
Agreement for the Plan Sponsor's Plan.
3.7 COBRA Premiums: Plan Sponsor will determine the
amount to be charged for COBRA premiums and notify
the TPA of the same, in writing, upon execution of this
Agreement. Plan Sponsor will notify the TPA in writing
of any premium changes at least thirty (30) days prior to
the effective date of the change or as soon as
reasonably possible thereafter. 4.7
COBRA Election Forms: If Plan Sponsor receives
requests for COBRA coverage, Plan Sponsor will record
on the form the date it was received by Plan Sponsor.
Plan Sponsor will fax a copy of the form to the TPA on
the date it is received by Plan Sponsor, and will mail a
copy of the same to the TPA within five (5) days of
receipt by Plan Sponsor.
Premium _ Pavments Received from COBRA
Participants: If Plan Sponsor receives premium
payments directly from COBRA Participants, Plan
Sponsor will notify the TPA in writing on the date of
receipt, or cause the TPA to be notified in writing on the
date of receipt, of the premium amount, the name of the
COBRA Participant(s) for whom the premium applies,
date of receipt, and period for which the premium
applies. Plan Sponsor shall forward premium checks
received to the TPA for deposit into the premium
account.
Initial Grace Period: Plan Sponsor designates that the
initial 45 day grace period for the premium payment will
begin on the date of COBRA election.
Other: Plan Sponsor will provide any other information
required by the TPA to perform its obligations under this
Agreement.
SECTION 4: COBRA Services of the TPA
Initial Notice. If applicable, within fourteen (14) days of
receipt of notice from Plan Sponsor of a newly -enrolled
employee and/or spouse, the TPA will mail to the
employee an initial notice of COBRA continuation
coverage rights.
Enrollment Packet: Within 14 days of receipt of notice
from the Plan Sponsor of a Qualifying Event, the TPA
will mail to Qualified Beneficiaries a notice of the right to
elect COBRA continuation coverage.
Enrollment of Qualified Beneficiaries: The TPA will
enroll all Qualified Beneficiaries who elect COBRA
continuation coverage within the time permitted by law.
Notice of Open Enrollment. The TPA will notify COBRA
participants of any open enrollment periods held for
employees under Plan Sponsor's Plan.
Post -Election Notices: The TPA will provide all post
election notices to employees required by applicable
law, including but not limited to notice of ineligibility for
COBRA continuation coverage, notice of nonpayment of
premium, and notice of termination of COBRA
coverage. If the notice of ineligibility is due to the
employee's termination of employment for gross
misconduct, the Plan Sponsor shall be solely
responsible for the determination of gross misconduct.
Plan Changes and Amendments: The TPA will inform
COBRA Participants under the Plan of any changes in
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benefits, eligibility requirements, or premiums of the
Plan. The obligations of the TPA under this subsection
will be limited to mailing to COBRA Participants, copies
of all Plan amendments, changes, modifications, or
other notices as received from the Plan Sponsor.
4.8 Customer Service Toll -Free Line: The TPA will provide 6.2
customer service assistance regarding COBRA issues
to Plan Sponsor and beneficiaries under Plan Sponsor's
Plan through a toll -free telephone number during regular
business hours.
4.9 COBRA Participant Premiums: The TPA will bill COBRA
Participants for the premiums as designated by Plan
Sponsor and in accordance with applicable law. The
TPA will not be required to bill for any premium amount
that does not comply with applicable law.
The TPA will direct COBRA Participants to make
COBRA premium payments payable to Allegiance
COBRA Services and to send payments to the TPA for
deposit into the premium account. If the TPA receives
premium checks made payable to Allegiance COBRA
Services, the TPA will endorse them over to Allegiance
COBRA Services. The TPA will collect COBRA
premiums and deposit them no less frequently than
weekly
The TPA will establish, or cause to be established, a
system to credit the premium payments to the
appropriate Qualified Beneficiary or COBRA Participant.
4.10 Late Premium Payments: If the TPA receives a premium
payment past the premium due date (including any
grace period provided by law or the Plan), the TPA will
return the payment to the sender with a notice that it
cannot be accepted. The TPA will return the payment to
the sender, with such notice, within five (5) days of
receiving the payment.
liability to any person or entity regarding the processing
of premium payments. Provided the TPA acts in
accordance with this Agreement, the TPA will have no
liability to any person or any entity for loss of COBRA
coverage as a result of late or nonpayment of premium.
Failure of Plan Sponsor to Notify: The TPA will provide
all notices to COBRA Participants and Qualified
Beneficiaries in accordance with this Agreement.
Provided the TPA acts in accordance with this
Agreement, the TPA will have no liability to any COBRA
Participant or Qualified Beneficiary for failure of the Plan
Sponsor to properly notify the TPA and provide the
information required for the TPA to perform its
obligations under this Agreement. The TPA will have no
liability for the accuracy of the information provided by
the Plan Sponsor and for any actions taken in reliance
upon any such information.
6.3 NSF Checks: This Agreement will not be construed in
any manner to require the TPA to collect insufficient
funds, "stop -payment" or otherwise dishonored checks,
or other negotiable instruments received for premium
payments, which are subsequently not paid by the
maker. The TPA will not be liable for any losses to Plan
Sponsor or Plan Sponsor's Plan as a result of such
checks or negotiable instruments.
6.4 Determinations of Gross Misconduct: The TPA shall not
make any determinations of any nature regarding
whether a Qualified Beneficiary's termination from
employment was due to gross misconduct. The TPA
shall be entitled to rely upon any determinations of
gross misconduct as made by the Plan Sponsor and
shall have no liability for actions taken in reliance upon
any such information as provided by the Plan Sponsor.
SECTION 7: Indemnification
4.11 Notice of Default: The TPA will notify each COBRA 7.1 Plan Sponsor Indemnification: The TPA will indemnify,
Participant, in writing, of any default in payment of defend, save and hold the Plan Sponsor harmless from
premium, or other default causing loss of coverage, and against any and all claims, suits, actions, liabilities,
including the date of default and the date COBRA losses, penalties or damages including court costs and
continuation coverage terminated. Notice will be sent attorneys' fees with respect to the Plan to the extent
by first class mail within five (5) days following receipt of they are caused by the gross negligence, malfeasance,
notice from Plan Sponsor and/or Plan Administrator. or criminal acts or omissions of the TPA or its
employees in the performance of its duties under this
SECTION 5: TPA Compensation Agreement and for any acts taken at the specific
direction of the Plan Sponsor.
Plan Sponsor agrees to pay the TPA its compensation
for services provided under this Agreement in 7.2
accordance with the terms and conditions outlined in
Appendix A, "Fee Schedule and Financial Arrangement"
in the Administrative Services Agreement between Plan
Sponsor and Allegiance Benefit Plan Management.
SECTION 6: Limitations on Liability
6.1 Premium Payments/Loss of Coverage: Except as
provided for under section 8.1, the TPA will have no
TPA Indemnification: The Plan Sponsor will indemnify,
defend, save, and hold the TPA harmless from and
against any and all claims, suits, actions, liabilities,
losses, penalties or damages, including court costs and
attorneys' fees, to the extent that such claims, losses,
liabilities, damages and expenses are caused by the
gross negligence, malfeasance or criminal acts or
omissions of the Plan Sponsor, its agents and
employees, in the performance of its duties under this
Agreement and in those situations under Section 7
where the TPA is exculpated from liability.
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SECTION 8: Term and Termination of Agreement
8.1 Term and Renewal Term. This Agreement shall
commence on January 1, 2010. This Agreement shall
automatically renew at the end of each term for an
additional twelve (12) month period, under the same
terms, conditions and Fee Schedule unless modified or
terminated as described below.
8.2 Termination. This Agreement shall be terminated in
accordance with the provisions of Article V: Term and
Termination of the Administrative Services Agreement
between the Plan Sponsor and Allegiance Benefit Plan
Management, Inc.
8.3 Survival: The provisions of Sections 2, 6, and 7 shall
survive termination of this Agreement.
SECTION 9: General Provisions
9.1 Authorization: Plan Sponsor grants to the TPA the
authority to do all acts it deems necessary to carry out
the terms of this Agreement.
9.2 Waiver: No forbearance or neglect on the part of either
party to enforce or insist upon any of the provisions of
this Agreement will be construed as a waiver, alteration,
or modification of this Agreement.
9.3 Entire Agreement, Amendments, Modification: This
Agreement and any attachments constitute the entire
agreement between the parties with respect to its
subject matter. This Agreement supersedes all existing
agreements and all other oral, written or other
communications between them concerning its subject
matter. This Agreement or any attachment shall not be
amended or modified except as agreed upon in writing
and signed by the parties. If any such modification or
amendment increases the direct costs to the TPA under
this Agreement, the Plan Sponsor agrees to pay any
increases in direct costs that the TPA reasonably
expects to incur as a result of such modification.
9.7 Notice of Threatened Litigation: The Plan Sponsor will
notify the TPA within ten (10) days of any threatened
litigation, lawsuits or regulatory complaints or inquiries
pertaining to the subject matter of this Agreement, or
any inquiry made by any federal or state authority
regarding the same.
9.8 Compliance with Laws. The TPA shall, in the
performance of its obligations under this Agreement,
comply with applicable federal, state or local laws, rules
and regulations, including the Montana Human Rights
Act, the Civil Rights Act of 1964, the Age Discrimination
Act of 1975, the American Disabilities Act of 1990, and
Section 504 of the Rehabilitation Act of 1973. In
accordance with section 49-3-207, Montana Code
Annotated, the TPA agrees that the hiring of persons to
perform the Agreement will be made on the basis of
merit and qualifications and there will be no
discrimination based upon race, creed, religion, color,
national origin, sex, age, physical or mental disability,
marital status, or political ideas in the right to obtain and
hold employment.
9.9 Service of Notice. Neither party will be bound by any
notice, directive or request unless and until it is received
in writing, or by facsimile transmission, or by e-mail
address at the addresses in this subsection. All notices
given to either party under this Agreement shall, unless
otherwise specified in writing, be deemed to have been
given three (3) days after deposit in the U.S. Mail, first
class postage prepaid, certified mail, return receipt
requested.; date of facsimile transmission; or date of e-
mail transmission
9.4 Severability: If any provision of this Agreement is held
to be invalid, illegal, or unenforceable by any court of
final jurisdiction, it is the intent of the parties that all
other provisions of this Agreement be construed to
remain fully valid, enforceable, and binding on the 9.10
parties.
9.5 Agreement Counterparts: This Agreement may be
executed in two or more counterparts, each and all of 9.11
which will be deemed an original and all of which
together will constitute but one and the same
instrument.
9.6 Assignment. Neither party shall assign, transfer, or
subcontract any portion of this Agreement without the 9.12
prior written consent of the non -assigning party.
Notice to the TPA shall be directed to:
Ronald K. Dewsnup, President and General Manager
Allegiance Benefit Plan Management, Inc., 2806 South
Garfield St., PO Box 3018, Missoula, MT 59806-3018;
Phone: (406) 721-2222; Fax: (406) 721-2252; Email:
rdewsnui)@abpmtpa.com.
Notice to the Plan Sponsor shall be directed to:
Terry W. Mitton, Human Resources Director. City of
Kalispell, 201 1 st Avenue E., PO Box 1997, Kalispell, MT
59901; Phone: (406) 758-7757; Fax: (406) 758-7758;
Email: tmitton@kalispell.com.
Choice of Law and Venue. This Agreement shall be
governed and construed in accordance with the laws of
the State of Montana.
Costs and Attorney Fees. If either party breaches or
defaults in the performance of their obligations under
this Agreement, the breaching party will pay all
reasonable attorney fees and costs incurred by the non -
breaching party as a result of such breach or default.
Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall
APPENDIX C: COBRA SERVICES AGREEMENT APX C: COBRA SVCS
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be settled by arbitration administered by the American
Arbitration Association in accordance with its 9.13 Headings: Section headings are included only for
Commercial Arbitration Rules, unless otherwise stated convenient reference and do not describe the sections
in this provision, and judgment upon the award rendered to which they relate.
by the arbitrator may be entered in any court having
jurisdiction thereof. The locale for arbitration under this 9.14 Interpretation of Words: Words denoting the singular
provision shall be Missoula, Montana, unless otherwise include the plural and vice versa.
agreed by the parties.
� V y\--
Initials
(Plan Sponsor)
Initials
(TPA)
APPENDIX C: COBRA SERVICES AGREEMENT APX C: COBRA SVCS
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