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05-71 Resolution No. 05-71 RESOLUTION AUTHORIZING EXECUTION OF A HEALTH REIMBURSEMENT ACCOUNT ADOPTION AGREEMENT WITH FLEXIBLE BENEFIT SERVICE CORPORATION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Olufemi Folarin, City Manager, be and is hereby authorized and directed to execute a Health Reimbursement Account Adoption Agreement on behalf of the City of Elgin with Flexible Benefit Service Corporation for the administration of a health reimbursement arrangement,a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: March 9, 2005 Adopted: March 9, 2005 Vote: Yeas: 6 Nays: 0 Attest: s/Dolonna Mecum Dolonna Mecum, City Clerk I City of Elgin Health Reimbursement Agreement ADOPTION AGREEMENT Effective Date: 03/01/2005 City of Elgin hereby establishes a Health Reimbursement Arrangement(the"Plan")with one or more Health Reimbursement Accounts ("HRAs")for its Employees.The Plan's purpose is to reimburse eligible Employees of the Employer for the certain Eligible Medical Expenses incurred by them,their Spouses,and eligible Dependents. It is intended that the Plan meet the requirements for qualification under Internal Revenue Code § 106, and that benefits paid employees hereunder be excludable from their gross incomes by virtue of Internal Revenue Code § 10 5(b). Nothing in this Adoption Agreement shall be intended to override the terms of the Summary Plan Description to which it is attached. Item 1: Employer Information 1.01 Employer Name and Address City of Elgin 150 Dexter Court Elgin, IL 60120 1.02 Participating Affiliated Employers N/A Item 2: Plan Information 2.01 Plan Name and Number Plan No. 502 Health Reimbursement Arrangement 2.02 Effective Date of Plan The Effective Date of this Plan is 03/01/2005. 2.03 Effective Date of Appendix The Effective Date of this Appendix is 03/01/2005. This Appendix should replace all other appendices(if any)with an earlier effective date. 2.04 Plan Year A Plan Year shall be the twelve(12)consecutive month period of 03/01 -02/28.For the year in which the Plan becomes effective,the ending date changes,or the Plan terminates,the Plan Year may be shorter than twelve(12)months. 2.05 Plan Administrator City of Elgin Gail Cohen 150 Dexter Court E1gin,IL 60120 2.06 Plan Service Provider In addition to other duties,the Plan Service Provider is responsible for processing claims filed under the Plan and for making the initial determination(and in some cases,the first level of appeal if the Plan has two levels of appeal)as to whether such claims are payable in accordance with the terms of the Plan.Notwithstanding the Plan Service Provider's responsibility to review the claim and make the initial determination,the Plan Administrator identified below retains the authority and discretion for making the final determination in accordance with the Plan's claims review procedures. Flexible Benefit Service Corporation 10275 W. Higgins Road,Suite 500 Rosemont, IL 60018 Contact: Joe Mancuso Contact Phone: (847)699-6900 Item 3: Contacts and Responsibilities 3.01 Employer's Benefits Coordinator Gail Cohen, City of Elgin 150 Dexter Court Elgin,IL 60120 (847)931-5605 Item 4: HRAs 4.01 HRAs under this Plan HRA EE&FAMILY Effective Date: 03/01/2005 4.02 Reimbursement Cap The Plan may set a maximum amount of reimbursement for Eligible Medical Expenses that each Participant can receive during a Plan Year from the current Plan Year's Annual Employer Contributions andlor any available Carry-Over funds. The limits for this Plan are: Linked HRA5: N/A Non-Linked HRA5: N/A 4.03 Eligible Expenses Not Reimbursed during Plan Year If the Employee has submitted a claim,but the Eligible Medical Expenses(or a portion thereof)have not been reimbursed by the close of the Plan Year because the available balance in the HRA is insufficient or the HRA Cap has been reached,then: An Employee can submit unreimbursed claims from a previous Plan Year for payment during the current Plan Year if(a)the Employee was a Participant in the HRA during the previous year and(b)the Employee is a Participant in the current Plan Year. 4.04 Group Health Plan The Group Health Plan(s)referenced in the SPD means one or more of the following: N/A 4.05 Coordination of Benefits with FSA(Flexible Spending Account) If the Employee participates in a Health FSA under a § 125 Cafeteria Plan(Section 125 of the Internal Revenue Code)and the Employee's Eligible Medical Expenses are covered under both the Health FSA and the HRA,the Employer has the choice of determining whether the Health FSA or HRA pays first. Under this Plan,the following will occur: For Linked HRAs: If an employee participates in a Health FSA under the employer's § 125 Cafeteria Plan and an HRA under this Plan and both cover the employee's Eligible Medical Expenses,the expenses will be paid out of the HRA first until the funds are exhausted,and then from the Health FSA. For non-Linked HRAs: If an employee participates in a Health FSA under the employer's § 125 Cafeteria Plan and an HRA under this Plan and both cover the employee's Eligible Medical Expenses,the expenses will be paid out of the Health FSA.first until the funds are exhausted,and then from the HRA. Item 5: Spend-Down Option 5.01 Spend-Down Coverages Below are listed the Qualifying Events,if any,which would activate the Spend-Down Option.The Conversion Percentage and Coverage Period are explained below. Qualifying Event Covered Conversion Percentage Coverage Period Termination Y Use 100%of the available Until funds are funds exhausted Disability N n/a n/a Death N n/a n/a Retirement Y Use 100%of the available Until funds are funds exhausted Loss of Eligibility w/o N n/a n/a loss of employment USERRA Leave N n/a n/a exceeding 31 days 5.02 Spend-Down Conversion Percentage A percentage of a participant's HRA balances (if set forth in 5.01 above)will be converted to Spend-Down amounts. 5.03 Spend-Down Coverage Period The Spend-Down Coverage Period(if set forth in 5.01 above)will begin on the date coverage is lost as result of the Qualifying Spend-Down Event and will last for the length of time indicated. 5.04 Eligible Spend-Down Expenses "Eligible Spend-Down Expenses"are any medical care expenses incurred by participant or participant's Eligible Dependents that would otherwise qualify for a deduction under Code § 213 (irrespective of the income limitations set forth in Code § 213),and have not been or will not be reimbursed by any other source.Notwithstanding this,qualified long term care services and COBRA payments will be eligible for reimbursement. For purposes of this Plan,an expense is"incurred"when the Participant or beneficiary is furnished the medical care or services giving rise to the claimed expense. 5.05 Spend-Down Closing Period The Spend-Down Closing Period is the period of time beginning at the end of the Spend- Down Coverage Period during which claims for expenses incurred during the Spend- Down Period may be submitted.The Spend-Down Closing Period is 90 days. 5.06 Conversion of Spend-Down Amounts after Employee Regains Eligibility. If a Participant in the Spend-Down Option regains eligibility under the Plan,any remaining Spend-Down balance will be transferred to the Participant's newly elected HRA(s)according to the following procedure: If the employee elects both a Linked HRA and a non-Linked BRA,the remaining Spend- Down amount will be added to the Linlced HRA's balance. If the employee elects more than one Linked IIRA,the remaining Spend-Down amounts will be split between the Linked HRAs. Item 6: Plan Participation 6.01 Eligibility Requirements The eligibility requirements for employees to participate in the Plan are: Those employees who opt out of the City's health plan benefit. The following employees are not eligible to participate: Same as underlying health plan. Additional Eligibility Requirements may be added for an HRA(see Item 9). 6.02 Service Period Requirement The Service Period Requirement is the period of time that the Employee must be employed to be eligible to participate in the Plan.The Service Period Requirement for this Plan is: Same as underlying health plan. An alternate Service Period may be set for an HRA as provided in Item 9 herein. (The HRA Service Period cannot be shorter than the Service Period set for the Plan.) 6.03 Plan Entry Date The Plan Entry Date is the date when an employee may commence participation in the Plan once the Service Period Requirement has been satisfied.The Plan Entry Date will be: Same as underlying health plan. A separate entry date for an HRA may be imposed as set forth in Item 9. 6.04 Eligible Dependents The Eligible Dependents will be as set forth in the SPD unless otherwise stated in Item 9. Item 7: Reimbursements 7.01 Required Substantiation Requests for reimbursement must be accompanied with proper substantiation as set forth below.The claims may be denied if this substantiation is not provided. Substantiation for Linked HRAs consists of Written statement from an independent third party stating the day the services were incurred,the name of the person incurring the service,and the amount of the services. Substantiation for non-Linked HRAs consists of Written statement from an independent third party stating the day the services were incurred,the name of the person incurring the service,and the amount of the services. 7.02 Claim Submission Periods The Closing Period is the period of time following the end of the Plan Year during which claims may be submitted for reimbursement. The Closing Period for linked HRAs is 90 days. The Closing Period for non-linked HRAs is 90 days. The Claims Submission Grace Period is the period of time after an employee terminates employment(or loses eligibility to participate in the Plan)during which the employee can submit claims for expenses incurred during the Plan Year prior to termination of participation. If no Claims Submission Grace Period is set,then the Closing Period dates will apply. The Claim Submission Grace Period for linked HRAs is 0 days. The Claim Submission Grace Period for non-linked HRAs is 0 days. 7.03 Minimum Payment Amount The Minimum Payment Amount described in the Summary Plan Description is$0.00. Item 8: HRA Carryover 8.01 Carryover Funds See Item 9 for terms governing the Carry-Over amount for each HRA. Item 9: HRA Parameters Following is a report listing each HR.A and its parameters. Item 9: Available Benefits Available Benefits: 9.01 HRA EE&FAMILY Benefit Description: 9.01 HRA EE& FAMILY(Linked) Effective Date: 03/01/2005 Contribution Period: Annual Amended Date: / / Coverage Period: Plan Year Tiers Tier Annual Contribution Flat Rate 2000.00 Eligibility Requirements: The following employees are eligible to participate: Those employees who opt out of the City's health plan benefit. The following employees are not eligible to participate: Same as the Plan. Service Period Requirement: Same as the Plan. Entry Date: Date requirements are met. Eligible Dependents Same as the Plan. Carry Over Funds: 100.00%of the Year End Balance COMPONENT: HRA-EE &EF Covered Expenses: ALL 213D ELIGIBLE EXPENSES Maximum Reimbursement From Current Year Contributions: $2,000.00 Reimbursement Parameters: Coinsurance Claims Reimbursement Rate $0.00 -$2,000.00 100% Item 10: Signature Block Cli „,t____ Signature: ;� ,� Date: 3/ 9/2005 Name: O1�gmi arias Title: City Manager Executed at: City of Elgin 150 Dexter Court Elgin, IL 60120 i 0 OFEt.0 Gn \y City of Elgin Agenda Item No. n ' ...O�i TED L(b E t. L March 4,2005 ( titro TO Mayor and Members of the City Council N FINANCIALLY STABLE CITY GOVERNMENT EFFK!ENT SE FROM: Olufemi Folarin, City Manager ANDOUALIT V INFRAVSTRJCTURE Gail Cohen, Human Resources d Purchasing Director SUBJECT: Health Reimbursement Account Adoption Agreement PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to enter into a Health Reimbursement Account Adoption Agreement with Flexible Benefit Service Corporation. RECOMMENDATION It is recommended that the City Council approve execution of a Health Reimbursement Account Adoption Agreement with Flexible Benefit Service Corporation. BACKGROUND At its February 9 meeting, Council approved initiating an "Opt Out" program, whereby employees with alternative sources of health insurance could decline the City's health insurance and, in exchange, receive an annual total of$2,000, paid in biweekly increments, into a health reimbursement account (HRA). Contributions to the HRA do not need to be spent within a calendar year and can complement the flexible spending plan, also approved by Council. GROUPS/INTERESTED PERSONS CONTACTED None. EffAiNANCIAL IMPACT There is no cost to the City. `��, /LEGAL IMPACT ' V Legal has reviewed and approved the attached Adoption Agreement. 4 rib- Health Reimbursement Account March 4,2005 Page 2 ALTERNATIVES 1. Approve execution of the Adoption Agreement as recommended. 2. Do not approve execution of the Adoption Agreement. Respectfully submitted for Council consideration. GAC Attachment •