Resolution 4994 - Amendment Number Two - Flexible Benefits PlanRESOLUTION NO.4994
A RESOLUTION BY THE CITY OF KALISPELL APPROVING AMENDMENT NUMBER
TWO TO THE CITY'S FLEXIBLE BENEFITS PLAN.
WHEREAS, the City of Kalispell had previously adopted a cafeteria plan within the context of
Section 125 of the Internal Revenue Code for the benefit of the employer's eligible
employees; and
WHEREAS, the Working Families Tax Relief Act (WFTRA) changed the definition. of
"Qualifying Dependent" to remove the one-half support requirement and institute a
residency requirement, which is an integral component of the Dependent Care
Assistance Program.
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KAL.ISPELL, MONTANA, AS FOLLOWS:
SECTION I. That the City hereby adopts Amendment No. Two to the Flexible Benefits
Plan (consisting of the flexible benefits plan document, the Adoption
Agreement, and component benefit plans and Policies) for the City, effective
as of the date specified in the Adoption Agreement.
SECTION II. That the City Manager may, without a further resolution, execute the
Amendment and any related documents or amendments which may be
necessary or appropriate to maintain compliance of the Plan with applicable
federal, state and local law.
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 MARCH, 20il s
ATTEST:
heresa White
City Clerk
AMENDMENT NUMBER TWO TO
CITY OF K.ALISPELL
FLEXIBLE BENEFITS PLAN
SUMMARY PLAN DESCRIPTION
MATERIAL. MODIFICATIONS
3. Plan Administrator Information
The name, address and business telephone number of your Plan's Admiinistrator are:
City of Kalispell
312 First Avenue East
Kalispell, Montana 59903
406-758W-7757
Your Plan's Administrator keeps the records for the Plan and is responsible for the
administration of the Plan. The Administrator will also answer any questions you may have
about your plan.
III
SUMMARY OF CHANGES
Dependent Care Assistance Program.
The Dependent Care Assistance Program has been amended to reflect changes required by a
new law called the Working Families Tax Relief Act (WFTRA). In general, WFTRA removed the
requirement that you maintain the household (i.e., provide over one-half the costs of maintaining
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dependent. WFTRA also changed who can be a "qualifying individual" for dependent care
expenses. One type of "qualifying individual" is an individual who is under age 13 and who can be
claimed as an exemption for income tax purposes. Under the new law, the ability to claim a child as
an exemption (and for this Dependent Care Assistance Program) is based on residency. Prior to the
change, it was based on whether over one-half of the support was provided to the child.
2. Continuation Coverage Rights Under COBRA
Under federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA), certain employees and their families covered under health benefits under this Plan
will be entitled to the opportunity to elect a temporary extension of health coverage (called
"COBRA continuation coverage") where coverage under the Plan would otherwise end. This
notice is intended to inform Plan Participants and beneficiaries, in summary fashion, of their
rights and obligations under the continuation coverage provisions of COBRA, as amended and
reflected in final and proposed regulations published by the Department of the Treasury. This
notice is intended to reflect the law and does not grant or take away any rights under the law.
The Plan Administrator or its designee is responsible for administering COBRA
continuation coverage. Complete instructions on COBRA, as well as election forms and other
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information, will be provided by the Plan Administrator or its designee to Plan Participants who
become Qualified Beneficiaries under COBRA. While the Plan itself is not a group health plan, it
iIPTiPf tr, Whpnf er Tlgn" is used in this section- it meanq ally nfthe.'henith
benefits under this Plan including the Health Care Reimbursement Plan.
What is COBRA Continuation Coverage?
COBRA continuation coverage is the temporary extension of group health plan coverage
that must be offered to certain Plan Participants and their eligible family members (called
"Qualified Beneficiaries") at group rates. The right to COBRA continuation coverage is triggered
by the occurrence of a life event that results in the loss of coverage under the terms of the Plan
(the "Qualifying Event"). The coverage must be identical to the coverage that the Qualified
Beneficiary had immediately before the Qualifying Event, or if the coverage has been changed,
the coverage must be identical to the coverage provided to similarly situated active employees
who have not experienced a Qualifying Event (in other words, similarly situated non -COBRA
beneficiaries).
Who Can Become a Qualified Beneficiary?
In general, a Qualified Beneficiary can be:
(a) Any individual who, on the day before a Qualifying Event, is covered under a
Plan by virtue of being on that day either a covered Employee, the Spouse of a covered
Employee, or a Dependent child of a covered Employee. If, however, an individual is
denied or not offered coverage under the Plan under circumstances in which the denial or
failure to offer constitutes a violation of applicable law, then the individual will be
considered to have had the coverage and will be considered a Qualified Beneficiary if that
individual experiences a Qualifying Event.
(b) Any child who is born to or placed for adoption with a covered Employee during a
period of COBRA continuation coverage, and any individual who is covered by the Plan
as an alternate recipient under a qualified medical support order. If, however, an
individual is denied or not offered coverage under the Plan under circumstances in which
the denial or failure to offer constitutes a violation of applicable law, then the individual
will be considered to have had the coverage and will be considered a Qualified
Beneficiary if that individual experiences a Qualifying Event.
The term "covered Employee" includes any individual who is provided coverage under
the Plan due to his or her performance of services for the employer sponsoring the Plan.
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An individual is not a Qualified Beneficiary if the individual's status as a covered
Employee is attributable to a period in which the individual was a nonresident alien who received
from the individual's Employer no earned income that constituted income from sources within
the United States. If, on account of the preceding reason, an individual is not a Qualified
Beneficiary, then a Spouse or Dependent child of the individual will also not be considered a
Qualified Beneficiary by virtue of the relationship to the individual.
Each Qualified Beneficiary (including a child who is born to or placed for adoption with a
covered Employee during a period of COBRA continuation coverage) must be offered the
opportunity to make an independent election to receive COBRA. continuation coverage.
What is a Qualifying Event?
A Qualifying Event is any of the following if the Plan provided that the Plan participant
would lose coverage (i.e., cease to be covered under the same terms and conditions as in effect
immediately before the Qualifying Event) in the absence of COBRA continuation coverage:
(a) The death of a covered Employee.
(b) The termination (other than by reason of the Employee's gross misconduct), or
reduction of hours, of a covered Employee's employment.
(e) The divorce or legal separation of a covered Employee from the Employee's
Spouse.
(d) A covered Employee's enrollment in any part of the Medicare program.
(e) A Dependent child's ceasing to satisfy the Plan's requirements for a Dependent
child (for example, attainment of the maximum age for dependency under the Plan).
If the Qualifying Event causes the covered Employee, or the covered Spouse or a
Dependent child of the covered Employee, to cease to be covered under the Plan under the same
terms and conditions as in effect immediately before the Qualifying Event (or in the case of the
bankruptcy of the Employer, any substantial elimination of coverage under the Plan occurring
within 12 months before or after the date the bankruptcy proceeding commences), the persons
losing such coverage become Qualified Beneficiaries under COBRA if all the other conditions of
the COBRA are also met. For example, any increase in contribution that must be paid by a
covered Employee, or the Spouse, or a Dependent child of the covered Employee, for coverage
under the Plan that results from the occurrence of one of the events listed above is a loss of
coverage.
For employers covered by the Family and Medical Leave Act of 1993 ("FMLA"), the
taking of leave under FMLA does not constitute a Qualifying Event. A Qualifying Event will
occur, however, if an Employee does not return to employment at the end of the FMLA leave and
all other COBRA continuation coverage conditions are present. If a Qualifying Event occurs, it
occurs on the last day of FMLA leave and the applicable maximum coverage period is measured
CI
from this date (unless coverage is lost at a later date and the Plan provides for the extension of
the required periods, in which case the maximum coverage date is measured from the date when
the coverage is lost.) Note that the covered Employee and family members will be entitled to
COBRA continuation coverage even if they failed to pay the employee portion of premiums for
coverage under the Plan during the FMLA leave.
What is the Procedure for Obtaining COBRA Continuation Coverage?
The Plan has conditioned the availability of COBRA continuation coverage upon the
timely election of such coverage. An election is timely if it is made during the election period.
What is the Election Period and How Long Must It Last?
The election period is the time period within which the Qualified Beneficiary can elect
COBRA continuation coverage under the Plan. The election period must begin not later than the
date the Qualified Beneficiary would lose coverage on account of the Qualifying Event and must
not end before the date that is 60 days after the later of the date the Qualified Beneficiary would
lose coverage on account of the Qualifying Event or the date notice is provided to the Qualified
Beneficiary of her or his right to elect COBRA continuation coverage.
Note: If a covered employee who has been terminated or experienced a reduction of hours
qualifies for a trade readjustment allowance or alternative trade adjustment assistance under a
federal law called the Trade Act of 2002, and the employee and his or her covered dependents
have not elected COBRA coverage within the normal election period, a second opportunity to
elect COBRA coverage will be made available for themselves and certain family members, but
only within a limited period of 60 days or less and only during the six months immediately after
their group health plan coverage ended, Any person who qualifies or thinks that he or she and/or
his or her family members may qualify for assistance under this special provision should contact
the Plan Administrator or its designee for further information.
Is a Covered Employee or Qualified. Beneficiary Responsible for Informing the Plan
Administrator of the Occurrence of a Qualifying Event?
The Plan will offer COBRA continuation coverage to qualified beneficiaries only after
the Plan Administrator or its designee has been timely notified that a Qualifying Event has
occurred. The employer (if the employer is not the Plan Administrator) will notify the Plan
Administrator or its designee of the Qualifying Event within 30 days following the date coverage
ends when the Qualifying Event is;
(a) the end of employment or reduction of hours of employment,
(b) death of the employee,
(c) commencement of a proceeding in bankruptcy with respect to the employer, or
(d) enrollment of the employee in any part of Medicare,
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IMPORTANT:
For the ether Qualifying Events (divorce or legal separation of the employee and
spouse or a dependent child's losing eligibility for coverage as a dependent child), you or
someone on your behalf must notify the Plan Administrator or its designee in writing
within 60 days after the Qualifying Event occurs, using the procedures specified below. If
these procedures are not followed or if the notice is not provided in writing to the Plana
Administrator or its designee during the 60-day notice period, any spouse or dependent
child who loses coverage will not be offered the option to elect continuation coverage. You
mast send this .notice to the Plan Administrator.
NOTICE PROCEDURES:
Any notice that you provide must be in writing. Oral notice, including notice by telephone, is not
acceptable. You must mail, fax or hand -deliver your notice to the person, department or firm listed
below, at the following address:
City of Kalispell
'312 Firct Avenue F,a-,t
Kalispell, Montana 59903
If mailed, your notice must be postmarked no later than the last day of the required notice period.
Any notice you provide roust state:
• the name of the plan or plans under which you lost or are losing coverage,
the name and address of the employee covered under the plan,
• the name(s) and address(es) of the Qualified Beneficiary(ies), and
• the Qualifying Event and the date it happened.
If the Qualifying Event is a divorce or legal separation, your notice must include a copy of the
divorce decree or the legal separation agreement.
Be aware that there are other notice requirements in other contexts, for example, in order to qualify
for a disability extension.
Once the Plan Administrator or its designee receives timely notice that a Qualifying
Event has occurred, COBRA continuation coverage will be offered to each of the qualified
beneficiaries. Each Qualified Beneficiary will have an independent right to elect COBRA
continuation coverage. Covered employees may elect COBRA continuation coverage for their
spouses, and parents may elect COBRA continuation coverage on behalf of their children. For
each Qualified Beneficiary who elects COBRA continuation coverage, COBRA continuation
coverage will begin on the date that plan coverage would otherwise have been lost. If you or your
spouse or dependent children do not elect continuation coverage within the 60-day election
period described above, the right to elect continuation coverage will be lost.
C1
Is a Waiver Before the End of the EIection Period Effective to End a Qualified Beneficiary's
Election Rights?
If, during the election period, a Qualified Beneficiary waives COBRA continuation
coverage, the waiver can be revoked at any time before the end of the election period. Revocation
of the waiver is an election of COBRA continuation coverage. However, if a waiver is later
revoked, coverage need not be provided retroactively (that is, from the date of the loss of
coverage until the waiver is revoked). Waivers and revocations of waivers are considered made
on the date they are sent to the Plan Administrator or its designee, as applicable.
When May a Qualified Beneficiary's COBRA Continuation Coverage be Terminated?
During the election period, a Qualified Beneficiary may waive COBRA continuation
coverage. Except for an interruption of coverage in connection with a waiver, COBRA
continuation coverage that has been elected for a Qualified Beneficiary must extend for at least
the period beginning on the date of the Qualifying Event and ending not before the earliest of the
following dates:
(a) The last day of the applicable maximum coverage period.
(b) The first day for which Timely Payment is not made to the Plan with respect to the
Qualified Beneficiary.
(c) The date upon which the Employer ceases to provide any group health plan
(including a successor plan) to any employee.
(d) - The date, after the date of the election, that the Qualified Beneficiary first
becomes covered under any other Plan that does not contain any exclusion or limitation
with respect to any pre-existing condition, other than such an exclusion or limitation that
does not apply to, or is satisfied by, the Qualified Beneficiary.
(e) The date, after the date of the election, that the Qualified Beneficiary first enrolls
in the Medicare program (either part A or part B, whichever occurs earlier).
(f) In the case of a Qualified Beneficiary entitled to a disability extension, the later of.
(1) (i) 24 months after the date of the Qualifying Event, or (ii) the first day of
the month that is more than 30 days after the date of a final determination under
Title II or XVI of the Social Security Act that the disabled Qualified Beneficiary
whose disability resulted in the Qualified Beneficiary's entitlement to the
disability extension is no longer disabled, whichever is earlier; or
(2) the end of the maximum coverage period that applies to the Qualified
Beneficiary without regard to the disability extension.
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The Plan can terminate for cause the coverage of a Qualified Beneficiary on the same
basis that the Plan terminates for cause the coverage of similarly situated non -COBRA.
beneficiaries, for example, for the submission of a fraudulent claim.
In the case of an individual who is not a Qualified Beneficiary and who is receiving
coverage under the Plan solely because of the individual's relationship to a Qualified Beneficiary,
if the Plan's obligation to make COBRA continuation coverage available to the Qualified
Beneficiary ceases, the Plan is not obligated to make coverage available to the individual who is
not a Qualified Beneficiary.
What Are the Maximum. Coverage Periods for COBRA Continuation Coverage?
The maximum coverage periods are based on the type of the Qualifying Event and the
status of the Qualified Beneficiary, as shown below.
(a) In the case of a Qualifying Event that is a termination of employment or reduction
of hours of employment, the maximum coverage period ends 18 months after the
Qualifying Event if there is not a disability extension and 29 months after the Qualifying
Event if there is a disability extension.
(b) In the case of a covered Employee's enrollment in the Medicare program before
experiencing a Qualifying Event that is a termination of employment or reduction of
hours of employment, the maximum coverage period for Qualified Beneficiaries other
than the covered Employee ends on the later of
(1) 36 months after the date the covered Employee becomes enrolled in the
Medicare program; or
(2) 18 months (or 29 months, if there is a disability extension) after the date of
the covered Employee's termination of employment or reduction of hours of
employment.
(c) In the case of a Qualified Beneficiary who is a child born to or placed for adoption
with a covered Employee during a period of COBRA. continuation coverage, the
maximum coverage period is the maximum coverage period applicable to the Qualifying
Event giving rise to the period of COBRA continuation coverage during which the child
was born or placed for adoption.
(d) In the case of any other Qualifying Event than that described above, the maximum
coverage period ends 36 months after the Qualifying Event.
Under What Circumstances Can the Maximum Coverage Period Be Expanded?
If a Qualifying Event that gives rise to an 18-month or 29-month maximum coverage
period is followed, within that 18- or 29-month period, by a second Qualifying Event that gives
rise to a 36-months maximum coverage period, the original period is expanded to 36 months, but
only for individuals who are Qualified Beneficiaries at the time of both Qualifying Events. In no
circumstance can the COBRA. maximum coverage period be expanded to more than 36 months
after the date of the first Qualifying Event. The Plan Administrator must be notified of the second
qualifying event within 60 days of the second qualifying event. This notice must be sent to the
Plan Administrator or its designee.
How Does a Qualified Beneficiary Become Entitled to a Disability Extension?
A disability extension will be granted if an individual (whether or not the covered
Employee) who is a Qualified Beneficiary in connection with the Qualifying Event that is a
termination or reduction of hours of a covered Employee's employment, is determined under
Title II or XVI of the Social Security Act to have been disabled at any time during the first 60
days of COBRA continuation coverage. To qualify for the disability extension, the Qualified
Beneficiary must also provide the Plan Administrator with notice of the disability determination
on a date that is both within 60 days after the date of the determination and before the end of the
original 18-month maximum coverage. This notice must be sent to the Plan Administrator or its
designee.
Does the Plan Require Payment for COBRA Continuation Coverage?
For any period of COBRA continuation coverage under the Plan, qualified beneficiaries
who elect COBRA continuation coverage may be required to pay up to 102% of the applicable
premium and up to 150% of the applicable premium for any expanded period of COBRA
continuation coverage covering a disabled Qualified Beneficiary due to a disability extension.
Your Plana Administrator will inform you of the cost. The Plana will terminate a Qualified
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payment is not made.
Must the Plan Allow Payment for COBRA Continuation Coverage to be Made in Monthly
Installments?
Yes. The Plan is also permitted to allow for payment at other intervals.
What is Timely Payment for Payment for COBRA Continuation Coverage?
Timely Payment means a payment made no later than 30 days after the first day of the
coverage period. Payment that is made to the Plan by a later date is also considered Timely
0
Payment if either under the terms of the Plan, covered employees or Qualified Beneficiaries are
allowed until that later date to pay for their coverage for the period or under the terms of an
arrangement between the Employer and the entity that provides Plan benefits on the Employer's
behalf, the Employer is allowed until that later date to pay for coverage of similarly situated
non -COBRA beneficiaries for the period.
Notwithstanding the above paragraph, the Plan does not require payment for any period
of COBRA continuation coverage for a Qualified Beneficiary earlier than 45 days after the date
on which the election of COBRA. continuation coverage is made for that Qualified Beneficiary.
Payment is considered made on the date on which it is postmarked to the Plan.
If Timely Payment is made to the Plan in an amount that is not significantly less than the
amount the Plan requires to be paid for a period of coverage, then the amount paid will be
deemed to satisfy the Plan's requirement for the amount to be paid, unless the Plan notifies the
Qualified Beneficiary of the amount of the deficiency and grants a reasonable period of time for
payment of the deficiency to be made. A "reasonable period of time" is 30 days after the notice is
provided. A shortfall in a Timely Payment is not significant if it is no greater than the lesser of
$50 or 10% of the required amount.
Must a Qualified Beneficiary be Given the Right to Enroll in a Conversion Health Plan at the
End of the Maximum Coverage Period for COBRA Continuation Coverage?
If a Qualified Beneficiary's COBRA continuation coverage under a group health plan
ends as a result of the expiration of the applicable maximum coverage period, the Plan will,
during the 180-day period that ends on that expiration date, provide the Qualified Beneficiary
with the option of enrolling under a conversion health plan if such an option is otherwise
generally available to similarly situated non -COBRA beneficiaries under the Plan, if such a
conversion option is not otherwise generally available, it need not be made available to Qualified
Beneficiaries.
How is My Participation in the Health Care Reimbursement Plan Affected?
You can elect to continue your participation in the Health Care Reimbursement Plan for
the remainder of the Plan Year, subject to the following conditions. You may only continue to
participate in the Health Care Reimbursement Plan if you have contributed more money than you
have taken out in claims. For example, if you elected to contribute an annual amount of $500
and, at the time you terminate employment, you have contributed $300 but only claimed $150,
you may elect to continue coverage under the Health Care Reimbursement Plan. If you elect to
continue coverage, then you would be able to continue to receive your health care
reimbursements up to the $500. However, you must continue to pay for the coverage, just as the
money has been taken out of your paycheck, but on an after-tax basis. The Plan can also charge
you an extra amount (as explained above for other health benefits) to provide this benefit.
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IF YOU HAVE QUESTIONS
If you .have questions about your COBRA continuation coverage, you should contact the
Plan Administrator or its designee or you may contact the nearest Regional or District Office of
the U.S. Department of Labor's Employee Benefits Security Administration (EBSA). Addresses
and phone numbers of Regional and District EBSA Offices are available through EBSA's website
at www.dol.gov/ebsa.
KEEP YOUR PLAN ADMINISTRATOR INFORMED OF ADDRESS CHANGES
In order to protect your family's rights, you should keep the Plan Administrator informed
of any changes in the addresses of family members. You should also keep a copy, for your
records, of any notices you send to the Plan Administrator or its designee.
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AMENDMENT NUMBER TWO TO
CITY OF KALISPELL
FLEXIBLE BENEFITS PLAN
AMENDMENT NUMBER TWO TO
CITY OF KAL.ISPELL
FLEXIBLE BENEFITS PLAN
BY THIS AGREEMENT, City of Kalispell Flexible Benefits Plan (hereinafter referred to
as the "Plan") is hereby amended as follows, effective as January 1, 2005:
The definition of "Qualifying Dependent" in the "Definitions" section of the Article
entitled "Dependent Care Assistance Program" is amended to read as follows:
"Qualifying Dependent" means, for Dependent Care Assistance
Program purposes,
(1) a Participant's Dependent (as defined in Code Section 152(a)(1))
who has not attained age 13;
(2) a Dependent or the Spouse of a Participant 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 such
taxable year; or
(3) a child that is deemed to be a Qualifying Dependent described in
paragraph (1) or (2) alcove, whichever is appropriate, pursuant to Code
Section 21(e)(5).
IN WITNESS WHEREOF, this Amendment has been executed th4�_ t day
of
City of Kalispell
EMPLOYER