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R93-04 01-25-93RESOLIJTION NO. R934 A RESOLUTION AUTHORIZING THE ADOPTION OF A FLEXIBLE SPENDING PLAN IN COMPLIANCE WITH SECTION 125 OF THE INTERNAL REVENUE SERVICE CODE ACCORDING TO THE ATTACHED PLAN DOCUMENT. WHEREAS, Section 125 of the Internal Revenue Service Code provides that employees may pay for certain group coverage ex- penses with pre-income tax dollars if a proper plan is estab- lished; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND: That the City Council of the City of Pearland, Texas, does hereby authorize the City Manager to execute a flexible spending plan in accordance with the plan document outlined in Attachment ttA · It PASSED, APPROVED and ADOPTED by the City Council of the City of Pearland, Texas, in regular meeting this a[ day of A. D. , 1993. ATTEST: Pat Jo~~ty Secretary AP ROV : Lester Rorick, City Attorney AI'TACHMENT "A" ARTICLE 1: PURPOSE, APPLICABLE LAW AND DEFINITIONS Section 1.1 Purpose The City of Pearland hereby establishes a plan called CITY OF PEARLAND FLEXIBLE BENEFITS PLAN which is to permit participants to choose among fringe benefits available to be purchased on their behalf by premium payments by the City of Pearland. The purpose of this document is to set forth the plan and its provi- sions. Section 1.2 Applicable Law The provisions of this plan shall be construed according to the laws of the State of Texas, except as superseded by federal law. It is the intent of the Employer that this plan qualify as a "cafeteria plan" as defined under Section 125 of the Internal Revenue Code. The plan will be "nondiscriminatory" as such term is used in Section 125 of the Internal Revenue Code. The plan shall also serve as an amendment to certain existing benefit plans presently in effect for the Employer. Section 1.3 Definitions The following words when appearing in the plan have the meanings set forth below unless the context clearly denotes otherwise: a. Employer: City of Pearland b. Plan: CITY OF PEARLAND FLEXIBLE BENEFITS PLAN c. Effective Date: February 1, 1993 d. Plan Year: February 1, 1993 - December 31, 1993 e. Employee: Any person employed by the Employer and, to the extent necessary, a retired or term- inated Employee who is entitled to benefit pay- ments under this plan f. Employer Board: City Council of City of Pearland g. Employer Official: City Manager h. Administrator: City Manager i. Participant: An Employee of the Employer who elects to participate in this plan j. Dependents: An eligible Employee's spouse, children or other qualifying dependents of the Employee as defined in Section 152/125 of the Internal Revenue Code currently in effect or as amended k. Designated Representative: Any employee under the direction and guidance of the Administrator who is directed to coordinate, communicate, implement or administer CITY OF PEARLAND FLEXIBLE BENEFITS PLAN ARTICLE 2: ELIGIBILITY RE~UIRENENTS Section 2:1 Eligibility All Employees of the Employer shall be eligible to participate in the Plan. Section 2.2 Participant Election Any eligible Employee who wishes to participate in the Plan shall be considered to have elected into the Plan upon receipt of a signed Plan enrollment form by the Administrator. Such election shall be made prior to the beginning of the Plan Year for exist- ing participants. New eligible employees will have 30 days from the commencement date of their employment to enroll in the Plan. Section 2.3 IrrevocabilityofElection Once the Plan Year has commenced, .the Plan election shall become binding and irrevocable for the entire Plan Year; however, a benefit election may be revoked by a participant after the period of coverage has commenced and the participant may make a new election if the revocation and new election are on account of and consistent with a change in family status. A list of examples of family status changes is shown below. (This list is not intended to be exclusive, and election changes related to similar events may also be allowed.) a. Marriage or divorce of the participant b. Death of the participant's spouse or dependent c. Birth or adoption of a child d. Change in custody of dependents e. Termination or commencement of employment of the participant's spouse f. A switch from part-time to full-time status (or vice versa) by the participant or the spouse g. Unpaid leave of absence taken by the participant or the participant's spouse h. A significant change in the health coverage of the par- ticipant or spouse attributable to the spouse's employ- ment Also, if the cost of any Premium Expenses described in Section 5.2 increases or decreases during the Plan Year, corresponding changes consistent with such increase or decrease will automati- cally be made in the Plan Contributions for such Premium Expenses scheduled to be made by affected Participants. If any such cost increase raises a Participant's Plan Contribution for such Premi- um Expense by more than 25%, or if any health coverage under any policy described in Section 5.2 is significantly curtailed or ceases during the Plan Year, the affected Participants may elect to cease participation under such health plan. ARTICLE 3: EFFECTIVE DATE The effective date of the Plan shall be February 1, 1993, and being the first year of the City of.Pearland's participation in the Plan shall cover the period from February 1, 1993 through December 31, 1993. Each year thereafter will constitute a new plan year and will cover the time period from January 1 to Decem- ber 31. Each plan year will require a new election to partici- pate by the eligible participants which will be made prior to the beginning of the plan year. The Plan will remain in existence indefinitely until termination occurs. ARTICLE 4: TERMINATION AND AMENDMENTS Section 4.1 Termination of Plan The Employer may terminate the Plan at any time. Section 4.2 Termination Affect on Rights Upon termination of the Plan the rights of all participants affected thereby shall become payable as the Administrator may direct. Section 4.3 Amendments The Employer Official, with approval of the Employer Board, reserves the right to make from time to time any amendment or amendments to the Plan, provided, however, that the Employer may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with the law. ARTICLE 5: BENEFITS Section 5.1 Program Benefits The Plan is designed to enable the Employer to pay each Employ- ee's premium expenses, in lieu of an equal amount of his compen- sation, for the Employee's participation in the Employer's group medical and dental plans, as provided under Internal Revenue Code 105, and group life insurance plans as provided under Internal Revenue Code 79, and long-term and/or short-term disability insurance. Section 5.2 Premium Expenses The premium expenses which shall be paid by the Employer or reimbursed by the Employer shall be the Employee's portion of the premiums for coverage or reimbursement incurred during the Plan Year, under the following Premium Plans, as such portion is defined in the relevant plans and contracts of the Employer: 3 a. City of Pearland Group Health and Dental Plans b. City of Pearland Group Life Insurance Plan, provided that if the Employee's total insurance coverage under such plan is in excess of $50,000, the premiums attributed to such excess coverage shallnot be con- sidered Premium Expenses under the Plan c. City of Pearland Accidental Death and Dismemberment Plan d. City of Pearland Long Term Disability Plan e. City of Pearland Short Term.Disability Plan Section 5.3 Contributions to the Plan Contribution to the Plan for the payment of benefits provided under the plans shall come from the reduction or conversion of a participant's compensation. The compensation reduction or con- version will be agreed to by the employee upon completion of the Plan Enrollment Form. The Employer may also make non-elective contributions to the Plan on behalf of the participants. Section 5.4 Limitations o__n Benefits Coverage and limitations for a participant's Premium Plan bene- fits shall be as set forth on the participant's Premium Plan. ARTICLE 6: MISCELLANEOUS Section 6.1 Availability of Plan Details The Employer will make available descriptive materials to partic- ipants concerning how the Plan operates including the process by which benefits are payable. If participants have questions concerning the operation of the Plan or the participant's eligi- bility for the payment of benefits under the Plan, the Employer's designated representative is to be contacted either in person or in writing. In the event the Employer's designated representa- tive is unavailable, then the participant should contact the Administrator. Section 6.2 Allocation of Responsibility of Administration The designated representative of the-Employer shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under the Plan. The Employer Official shall have the sole authority to amend or terminate, in whole or in part, the Plan at any time with the approval of the Employer Board. The Administrator shall have the sole responsibility for the administration of the Plan, which responsibility is specifically described in the Plan. 4 The Administrator warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan. Furthermore, the Administrator may rely upon any such direction, information or action of another Employ- ee of the Employer as being proper under the Plan, and is not required under the Plan to inquire into the propriety of any such direction, information or action. It is intended under the Plan that the Administrator shall be responsible for the proper exer- cise of its own powers, duties, responsibilities and obligations under the Plan and shall not be responsible for any act or fail- ure to act for another Employee of the Employer. Neither the Administrator nor the Employer makes any guarantee to any partic- ipant in any manner for any loss or other event because of the participant's participation in the Plan. Section 6.3 sation Administrator and Designated Representative .Compen- The Administrator and designated representative shall not receive any compensation with respect to services hereunder except as such person may be entitled to contracts and/or benefits agreed to under the Plan. Section 6.4 Powers and Duties of the Administrator The Administrator shall have such duties and powers as may be necessary to discharge its duties hereunder, including, but not byway of limitation, the following: a. to construe and interpret the Plan, decide all question of eligibility and determine the amount, manner and time of payment of any benefits hereunder b. to prescribe procedures to be followed by participants filing applications for benefits c. to prepare and distribute, in such a manner as the Administrator determines to be appropriate, information explaining the Plan d. to receive any information from the Employer Board, other Employer departments and from participants necessary for the proper administration of the Plan e. to furnish the Employer, upon request, such reports with respect to the administration of the Plan as are reason- able and appropriate f. to receive, review and keep on file (as it deems conven- ient and proper) reports of benefit payments by the Employer and reports of disbursements for expenses directed by the Administrator g. to appoint individuals to assist in the administration of the Plan and any other agents it deems advisable, including legal and actuarial counsel h. to furnish to participants any information necessary as required by the various Internal Revenue Code sections for the benefits in the Plan The Administrator shall have no power to add to, subtract from or 5 modify any of the terms of the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan. Section 6.5 Rules and Decisions The Administrator may adopt such rules as he deems necessary~ desirable or appropriate. All rules and decisions of the Admin- istrator shall be uniformly and consistently applied to all participants in similar circumstances. When making a determina- tion orcalculation, the Administrator shall be entitled to rely upon information furnished by a participant, other Employer personnel or the legal and professional counsel of the Employer. Section 6.6 Authorization of Benefit Payments The Administrator shall issue directions to .the appropriate Employer departments concerning all benefits which are to be paid from the Employer's funds pursuant to the provisions of the Plan. Section 6.7 Liability Limitation In administering the Plan, neither the Employer, the Administra- tor, nor any person to whom is delegated any duty or power in connection with administering such plan, shall be liable for any action of failure to act, except for its or his own gross negli- gence or willful misconduct, nor for the payment of any benefit or other amount under any plan. Section 6.8 Non-alienation o__f Benefits Benefits payable under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee. ARTICLE 7: SIGNATURE IN WITNESS WHEREOF, the Employer Official has caused the Plan to be executed and its City of Pearland seal attach hereto by its v f a , , , CITY OF PEARLAND ATTEST: By:~ < City Manager By ~' City