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HomeMy WebLinkAbout55B - RESO AND AGMT - RETIREE HEALTH SAVINGS PLANREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: NOVEMBER 28, 2011 TITLE: AGREEMENT WITH ICMA-RC TO ESTABLISH A RETIREE HEALTH SAVINGS PLAN ACCESSIBLE TO ALL BARGAINING GROUPS ON A VOLUNTARY BASIS CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on 1" Reading ? Ordinance on 2"d Reading ? Implementing Resolution ? Set Public Hearing For CONTINUED TO FILE NUMBER 1. Adopt a resolution authorizing the implementation of the "Vantage Care" Retirement Health Savings Plan ("RHS") and designating ICMA-RC as the administrator of the RHS plan. Bargaining units that elect to voluntarily participate in the RHS plan will transfer funds from their current Medical Retirement Subsidy Plan to establish the trust required under the plan; 2. Authorize the City Manager and the Clerk of the Council to execute the attached agreement with ICMA-RC to establish and administer the plan for a period of five years with provision for year-to-year extensions, contingent upon Council approval, and to execute any other documents required to establish the trust and implement the plan for each bargaining unit choosing to voluntarily participate; 3. Appoint the Executive Director of Finance & Management Services Agency, or his designee, as the City's Plan Trustee authorized to maintain compliance with any regulations regarding the trust. 4. Appoint the Executive Director of Personnel Services, or his designee, as the City's Plan Administrator for the Plan, authorized to implement the plan, amend the plan, and to take additional actions as necessary to maintain the City's participation in the plan, maintain compliance with any regulations regarding the plan, and to administer the plan for current and retired bargaining unit members, on behalf of the City. DISCUSSION Each bargaining unit (SEIU, FBA, FMA, POA, PMA, SAMA, EM, and CASA) has established a Medical Retirement Subsidy Plan for its members for the purpose of partially subsidizing the cost of retiree health insurance premiums. The plans (except for POA) are administered by the City, at no cost to the bargaining unit or members. It has recently come to the City's attention that the annual retiree health subsidy amounts deposited by the City are construed as a future unfunded liability for the City. 55B-1 ICMA-RC Retiree Health Savings Plan November 28, 2011 Page 2 In the Memorandum of Understanding between the City and The Santa Ana Police Management Association ("PMA") for fiscal year 2004 - 2008, the City agreed to establish a voluntary program for employees to contribute unused sick leave, vacation, or other employee benefits on a pre-tax basis. Since that time, the City and PMA have explored various alternatives to address this issue and determined that converting the subsidy plan to a retiree health savings plan would benefit both the City by eliminating the unfunded liability associated with retiree medical plans pursuant to Governmental Accounting Standards Board (GASB) reporting requirements for "Other Post Employment Benefits" (OPEB) and benefit the PMA members. The PMA has requested the City proceed with implementation steps required to adopt the ICMA- RC "Vantage Care" retiree health savings plan. All other bargaining groups are aware of this plan and the City would make this plan accessible to all bargaining units on a voluntary basis. Under this plan, bargaining unit members are allowed to accumulate assets to pay for health insurance and out-of-pocket medical expenses at retirement. An bargaining unit member may contribute unused sick leave, vacation, and other benefits to an account, which is tax-free at deposit and tax free at withdrawal when used to pay for medical expenses. Additionally, the existing medical retirement subsidy funds for participating bargaining units will be deposited into the trust and distributed equitably to current and retired bargaining unit members. Each bargaining unit will determine how the existing funds will be split among their membership. Any future negotiated City contributions for participating bargaining units will be deposited into the trust. The plan will be administered by ICMA-RC at no cost to the City. Therefore, the City proposes the creation of a trust to be administered by ICMA-RC, a 39-year-old company that provides retirement savings plans, products and services to over 8,700 public sector agencies with more than 900,000 participants. ICMA-RC will assess to participant accounts an annual account fee of $25 ($6.25/quarter) and an Asset fee of 40 basis points (0.40% of the account) quarterly. Reimbursement requests will be handled directly by a third-party administrator and no longer handled by the City of Santa Ana. FISCAL IMPACT There is no fiscal impact associated with this item. Executive Director Personnel Services Agency 55B-2 LES 11/8/11 RESOLUTION NO. 2011- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA FOR ADOPTION OF THE ICMA-RC VANTAGECARE RETIREMENT HEALTH SAVINGS PLAN ACCESSIBLE TO ALL BARGAINING GROUPS BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. Each bargaining unit (SEIU, FBA, FMA, POA, PMA, SMA, EM and CASA) of the City has established a Medical Retirement Subsidy Plan for its members for the purpose of partially subsidizing the cost of retiree health insurance premiums. These plans (except for POA) are administered by the City, at no cost to the bargaining unit or its members. The City recently learned that the annual retiree health subsidy amounts deposited by the City are construed as a future unfunded liability for the City. B. The establishment of a retiree health savings plan for the employees serves the interests of the City by enabling it to provide reasonable security regarding such employees' health needs during retirement, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel. C. The City has determined that the establishment of a retiree health savings plan serves the above objectives and would benefit both the City by eliminating the unfunded liability associated with retiree medical plans, and be of benefit to the bargaining unit members. D. PMA has requested the City to proceed with implementation steps required to adopt the ICMA Retirement Corporation's VantageCare Retirement health savings plan. ICMA-RC has been in business 39 years and provides retirement savings plans, products and services to over 8,700 public sector agencies with more than 900,000 participants. ICMA- RC will assess to participant accounts an annual account fee of $25.00 and an asset fee of 40 basis points quarterly. E. The City will make this plan accessible to all bargaining units on a voluntary basis. Under this plan, bargaining unit members are allowed to accumulate assets to pay for health insurance and out-of-pocket medical expenses at retirement. A bargaining unit member may contribute unused 55B-3 Resolution No. 2011-XXX Page 1 of 3 sick leave, vacation, and other benefits to an account, which is tax-free at deposit and tax-free at withdrawal when used to pay for qualified medical expenses. F. The existing medical retirement subsidy funds for participating bargaining units will be deposited into the trust and distributed equitably to current and retired bargaining unit members. Each bargaining unit will determine how the existing funds will be split among their membership. Any future negotiated City contributions for participating bargaining units will be deposited into the trust. G. The plan will be administered by ICMA-RC at no cost to the City. Reimbursement requests will be handled directly by a third party administrator and no longer handled by the City of Santa Ana. Section 2. The City hereby adopts the ICMA-RC VantageCare Retirement Health Savings Plan. The City Manager and Executive Director of Personnel or their respective designees are hereby authorized to execute any documents required in furtherance of the establishment of this health savings plan. Section 3. This Resolution shall take effect immediately upon its adoption by the City Council, and the Clerk of the Council shall attest to and certify the vote adopting this Resolution. 55B-4 Resolution No. 2011-XXX Page 2 of 3 ADOPTED this day of , 2011. Miguel A. Pulido Mayor APPROVED AS TO FORM: Joseph Straka, Interim City Attorney By: Lisa Storck Assistant City Attorney AYES: NOES: ABSTAIN: NOT PRESENT Councilmembers Councilmembers Councilmembers Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2011- to be the original resolution adopted by the City Council of the City of Santa Ana on , 2011. Date: Clerk of the Council City of Santa Ana 55B-5 Resolution No. 2011-XXX Page 3 of 3 Plan number 803237 ADMINISTRATIVE SERVICES AGREEMENT This Agreement, made as of the 28 day of November , 2011 (herein referred to as the "Inception Date"), between The International City Management Association Retirement Corporation ("ICMA-RC"), a nonprofit corporation organized and existing under the laws of the State of Delaware; and the City of Santa Ana ("Employer") a local governmental instrumentality organized and existing under the laws of the State of California with an office at 20 Civic Center Plaza, Santa Ana, California 92701. RECITALS Employer acts as a public plan sponsor for a retiree health plan with responsibility to obtain investment alternatives and services for employees participating in that plan; Employer desires to make the VantageCare Retirement Health Savings Plan ("RHS Plan" or "Plan") provided by ICMA-RC available to its employees; ICMA-RC makes available the Vantagepoint Funds, a no-load, diversified mutual fund, for investment of public employer plan assets, including RHS Plan assets; lC MA-RC provides a complete offering of services to public employers for the operation of employee retirement and retiree health savings plans including, but not limited to, communications concerning investment alternatives, account maintenance, account record-keeping, investment and tax reporting, form processing, benefit disbursement and asset management. Acceptance of RHS Plan AGREEMENTS Employer agrees to make the RHS Plan provided by ICMA-RC available to its employees. The details of the RHS Plan shall be as mutually agreed between the Employer and ICMA-RC, and in general shall be as set forth in the RHS Plan materials developed by ICMA-RC and provided to Employer. The RHS Plan materials are hereby incorporated by reference and made a part of this Agreement, except that Employer and ICMA-RC may from time to time mutually agree in writing to terms that vary from the RHS Plan materials. RHS plan materials shall include the VantageCare RHS Employer Manual, available electronically through the EZ Link System upon plan adoption. The functions to be performed by ICMA-RC and its agents include: (a) allocation in accordance with participant direction of individual accounts to investment funds ("Funds") made available to Plan participants; (b) maintenance of individual accounts for participants reflecting amounts 55B-6 Plan number 803237 contributed, income, gain, or loss credited, and amounts disbursed as benefits; (c) provision of periodic reports to the Employer and participants of the status of Plan investments and individual accounts; (d) communication to participants of information regarding their rights and elections under the Plan; (e) disbursement of benefits as agent for the Employer in accordance with terms of the Plan; and (t) performance of tax withholding and reporting in conjunction with the Employer for each RHS account. 2. Employer Duty to Furnish Information Employer agrees to furnish to ICMA-RC on a timely basis such information as is necessary for ICMA-RC to carry out its responsibilities with respect to the Plan, including information needed to allocate individual participant accounts to Funds, and information as to the benefit eligibility and employment status of participants, and participant ages, addresses, beneficiaries and other identifying information (including tax identification numbers). ICMA-RC shall be entitled to rely upon the accuracy of any information that is furnished to it by a responsible official of the Employer or any information relating to an individual participant, dependent, or beneficiary that is furnished by such participant, dependent, or beneficiary, and ICMA-RC shall not be responsible for any error arising from its reliance on such information. ICMA-RC will provide account information in reports, statements or accountings. 3. Certain Representations and Warranties ICMA-RC represents and warrants to Employer that: (a) ICMA-RC is a non-profit corporation with full power and authority to enter into this Agreement and to perform its obligations under this Agreement. (b) ICMA-RC is an investment adviser registered as such with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended. ICMA-RC Services, LLC (a wholly owned subsidiary of ICMA-RC) is registered as a broker-dealer with the Securities and Exchange Commission (SEC) and is a member in good standing of the National Association of Securities Dealers, Inc. Employer represents and warrants to ICMA-RC that: ( c ) Employer is organized in the form and manner recited in the opening paragraph of this Agreement with full power and authority to enter into and perform its 55B-7 Plan number 803237 obligations under this Agreement and to act for the Plan and participants in the manner contemplated in this Agreement. Execution, delivery, and performance of this Agreement will not conflict with any law, rule, regulation or contract by which the Employer is bound or to which it is a party. (d) Information required to be retained by the Employer shall be set forth in the RHS plan materials developed by ICMA-RC and provided to the Employer. (e) Employer is responsible for determining that there are no state or local laws that would prohibit it from establishing ICMA-RC's VantageCare RHS program. Employer is also responsible for determining that the investments selected for the RHS plan fall within state/local requirements. (t) Employer acknowledges that the RHS plan may be treated as a "health plan" for Health Insurance Portability and Accountability Act ("HIPAA") purposes and therefore may be subject to HIPAA privacy rules. If it is determined that the RHS plan is considered a "health plan", an employer sponsoring RHS would be responsible for complying with the HIPAA privacy and security rules regarding protected health information of RHS plan participants. ICMA-RC has procedures in place to safeguard the protected health information of RHS plan participants. Participation in Certain Proceedings The Employer hereby authorizes ICMA-RC to act as agent, to appear on its behalf, and to join the Employer as a necessary party in all legal proceedings involving the garnishment of benefits or the transfer of benefits pursuant to a medical child support order. Unless Employer notifies ICMA-RC otherwise, Employer authorizes ICMA-RC to determine whether disbursement of benefits to a former spouse, spouse or child pursuant to a medical child support order is appropriate. Compensation and Payment (a) Absent an explicit agreement to the contrary between ICMA-RC and Employer, participant fees and expenses shall be payable from RHS assets, in accordance with the requirements of the RHS Plan as set forth below. An annual asset fee of 0.40% (40 basis points) will be charged on a quarterly basis, based on the balance in the account on the last day of the previous quarter. In addition to the annual asset fee, a $25 annual account fee will be charged quarterly to each Accountholder's account. Account administration fees are subject to change with appropriate prior 55B-8 Plan number 803237 notification. (b) Compensation for Advisory and other Services to the Vantagepoint Funds. Employer acknowledges that certain wholly-owned subsidiaries of ICMA-RC receive compensation for advisory and other services furnished to the Vantagepoint Funds. The fees referred to in this subsection are disclosed in the Vantagepoint Funds Prospectus. Custody Employer understands that amounts contributed to the RHS plan are to be remitted directly to Vantagepoint Transfer Agents in accordance with instructions provided to Employer in the RHS plan materials and are not to be remitted to the ICMA Retirement Trust or ICMA-RC. In the event that any check or wire transfer is incorrectly labeled or transferred, ICMA-RC will return it to Employer with proper instructions. Responsibility (a) ICMA-RC shall not be responsible for any acts or omissions of any person other than ICMA-RC in connection with the administration or operation of the Plan. (b) The Employer understands that, as a general matter, the Internal Revenue Service ("IRS") may decline to rule on certain design features or provisions that the Employer may request to have added to the RHS plan materials. The Employer agrees to hold ICMA-RC harmless in connection with the addition and administration of any RHS plan feature or provision requested by the Employer for which the IRS will not provide express interpretive guidance. Term This Agreement shall be in effect for an initial term beginning on the Inception Date and ending 5 years after the Inception Date. This Agreement will be renewed automatically for each succeeding year unless written notice of termination is provided by either party to the other no less than 60 days before the end of such Agreement year. Q Amendments and Adjustments i a) This Agreement may not be amended except by written instrument signed by the parties. (b) The parties agree that an adjustment to compensation or administrative and operational services under this Agreement may only be implemented by ICMA- RC through a proposal to the Employer via correspondence or the Employer Bulletin. The Employer will be given at least 60 days to review the proposal before the effective date of the adjustment. Such adjustment shall become effective unless, within the 60 day period before the effective date, the Employer 55B-9 Plan number 803237 By Angela C. Montez Assistant Corporate Secretary 55B-10 Plan number 803237 notifies ICMA-RC in writing that it does not accept such adjustment, in which event the parties will negotiate with respect to the adjustment. (c? No failure to exercise and no delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver of such right, remedy, power or privilege. 10. Notices All notices required to be delivered under Section 9 of this Agreement shall be delivered personally or by registered or certified mail, postage prepaid, return receipt requested, to (1) Legal Department, ICMA Retirement Corporation, 777 North Capitol Street, N.E., Suite 600, Washington, D.C, 20002-4240; (ii) Employer at the office set forth in the first paragraph hereof, or to any other address designated by the party to receive the same by written notice similarly given. 11. Complete Agreement This Agreement shall constitute the sole agreement between ICMA-RC and Employer relating to the object of this Agreement and correctly sets forth the complete rights, duties and obligations of each party to the other as of its date. Any prior agreements, promises, negotiations or representations, verbal or otherwise, not expressly set forth in this Agreement are of no force and effect. 12. Governiniz Law 1'his agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made in that jurisdiction without reference to its conflicts of laws provisions. In Witness Whereof, the parties hereto have executed this Agreement as of the Inception Date first above written. CITY OF SANTA ANA By Signature Date Paul Walters, City Manager Name and Title (Please Print) INTERNATIONAL CITY/COUNTY MANAGEMENT ASSOCIATION RETIREMENT CORPORATION 55B-11 icm/ -RC livi/lu!X Reri--w Secusirp City of Santa Ana, CA NAME OF EMPLOYER RETIREE WELFARE BENEFITS PLAN m N, F?:k 55B-12 ICM/RC 811ildbrg Ali .. ...... Srr nruy RETIREE WELFARE BENEFITS PLAN Table of Contents Article 1 Preamble 1.01 Establishment of Plan 1.02 Purpose of Plan Article II Definitions 2.01 "Benefits" 2.02 "Code" 2.03 "Dependent" 2.04 "Eligible Medical or Dental Expenses" 2.05 "Employer" 2.06 "Entry Date" 2.07 "Participant" 2.08 "Plan Administrator" 2.09 "Plan Year" 2.10 "Retiree" 2.11 "Spouse" Article 111 Eligibility 3.01 General Requirements Article IV Amount of Benefits 4.01 Annual Benefits Provided by the. Plan 4.02 Cost of Coverage Article V Payment of Benefits 5.01 Eligibility for Benefits 5.02 Claims for Benefits Article VI Plan Administration 6.01 Allocation of Authority 6.02 Provision for Third-Party Plan Service Providers 6.03 Several Fiduciary Liabilit.N 6.04 Compensation of Plan Administrator 6.05 Bonding 6.06 Payment of Administrative Expenses 6.07 Timeliness of Payments 6.08 Annual Statements y 55B-13 Table of Contents (continued) Article VII Claims Procedure 7.01 Procedure if Benefits are Denied Under the Plan 7.02 Requirement for Written Notice of Claim Denial 7.03 Right to Request Hearing on Benefit Denial 7.04 Disposition of Disputed Claims 7.05 Preservation of Other Remedies Article VIII Amendment or Termination of Plan 8.01 Permanency 8.02 Employer's Right to Amend 8.03 Employer's Right to Terminate Article IX General Provisions 9.01 No Employment Rights Conferred 9.02 Payments to Survivor 9.03 Nonalienation of Benefits 9.04 Mental or Physical Ilicontpctency 9.05 Inability to Locate Payee 9.06 Requirement of Proper Forms 9.07 Source of Payments 9.08 Tax Effects 9.09 Multiple Functions 9.10 Gender and Number 9.11 Headings 9.12 Applicable Laws 9.13 Severability 55B-14 Name of Employer RETIREE WELFARE BENEFITS PLAN ARTICLE I Preamble fIIIS INSTRUMENT made and published by City of Santa Ana (hereinafter called "Employer") on he 28 day of November 2011 creates the City of Santa Ana Retiree Welfare Benefits !'Ian, is follows: 1.01 Establishment of Plan I h, finplovcr mimed above hereby establishes a Retiree Welfare Benefits Plan as of the 28 day of November 20 11 1.02 Purpose of Plan I his Plan has been established to reimburse the eligible Retirees of the Employer for medical and dental expenses incurred by t hem, their Spouses and Dependents pursuant to the Employer's VantageCare Retirement Health Savings (RHS) Plan. ARTICLE II Definitions I he following words and phrases as used herein shall have the following meanings, unless a different meaning is plainly quired be the context: 2.01 "Benefits" means any amounts paid to a Participant, Spouse or Dependents in the Plan as reimbursement for Eligible Pvled ica) and Dental Expenses incurred by the Participant during a Plan Year by him, his Spouse or his Dependents. 2.02 "Code" means the Internal Revenue Code of 1986, as amended. 2.03 "Dependent" means any individual who is a dependent of the Participant within the meaning of Code Sec. 152, as mpltlied by Intel-nal Revenue Service Notice 2004-79, 2004-49 I.R.B.898. 2.04 "Eligible Medical Expenses" means those expenses designated by the Employer as eligible for reimbursement in the VantageCtre Retiremenr Health Savings Plan Adoption Agreement. 2.05 "Employer" means the unit of state or local government creating this [']an, or any' affiliate or successor thereof that likewise adopts this Plan. 2.06 "Entry Date" means the first day the Participant meets the eligibility requirements ofArticle III as of such Date. 2.07 "Participant" means any Retiree who has met the eligibilit), requirements set forth in Article 111. 2.08 "Plan Administrator" means the Employer or other person appointed by the Employer who has the authority and ,:,Poilsibiht? to ntanagC and direct the operation and administration of the Plan. 2.09 "Plan Year" means the annual accounting period of the Plan, which begins on the 28 day of November 'tt and ends on the 31 day of December _ 20 11 with respect to the first Plan Year, and hereafter as Ion} is this Plan remains in effect, the period that begins on January 1 and ends on month/day December 31 Al, 55B-15 2.10 "Retiree" means any individual who, while in the service of the Employer, was considered to be in a legal employer- mphwec t.I,n iottsltip with the Employer for federal withholding tax purposes, and who was part of the classification of tnPloVee, designated as covered by the Employer's VantageCare Retirement Health Savings Plan. 2.11 "Spouse" means the Participant's lawful spouse as determined under the laws of the state in which the Participant has ii, priniat v place of residence. All other defined terms in this Plan shall have the meanings specified in the various Articles of hr Plot in which they appear. ARTICLE III Eligibility i.uh Retiree xcho meets the eligibility requirements outlined in the Employer's VantageCare Retirement Health Savings Plan ,hall be eligible to participate in this Plan. ARTICLE IV Amount of Benefits 4.01 Annual Benefits Provided by the Plan r.a. h Participant shall be entitled to reimbursement for his documented, Eligible Medical Expenses incurred during the Plan rear in an annual amount not to exceed the account balance of the Participant in the Employer's VantageCare Retirement Iealth S:nings Plan. 4.02 Cost of Coverage h. _-xpcwk of providing the benefits set out in Section 4.01 shall be contributed as outlined in the Employer's VantageCare RetnCmcnt Health Savings Plan. ARTICLE V Payment of Benefits 5.01 Eligibility for Benefits Fach Panicipant in the Plan shall be entitled to a benefit hereunder for all Eligible Medical Expenses incurred by the Pan mpant on or after the Entry Date of his or her participation (and after the effective date of the Plan), subject to the limitations contained in this Article V, regardless whether the mental or physical condition for which the Participant makes application for benefits under this Plan was detected, diagnosed, or treated before the Participant became covered by the Plan. In (,tart u3 be eligible for benefits, the Participant must meet the benefit eligibility criteria outlined in the Employer's Manage( :.3rc Retirement Health Savings Plan Adoption Agreement. :1 I'.nt i, Want who becomes totally and permanently disabled (as defined by the Social Security Administration) will become unntcdi.neh eligible to receive medical benefit payments frorn the Plan. Pursuant to Section 9.02 and Employer's VantageCare I ecmement Health Savings Plan Adoption Agreement, the surviving Spouse and Dependents shall become immediately ; ligihle o receive or to continue receiving medical benefit payments from the Plan upon the death of the Participant. t 55B-16 5.02 Claims for Benefits 'Jo benefit shall be paid hereunder unless a Participant, his Spouse or Dependent has first submitted a written claim for h 11e:Iu, to the Plan Administrator on a form specified by the Plan Administrator, and pursuant to the procedures set out in \ ri iclc V1, below. Upon receipt of a properly documented claim, the Plan Administrator shall pay the Participant, his Spouse I I pendent the benefits provided under this Plan as soon as is administratively feasible. ARTICLE VI Plan Administration 6.01 Allocation of Authority I hr Employer shall control and manage the operation and Administration of the Plan. The Employer shall have the exclusive fight to interpret the Plan and to decide all matters arising thereunder, including the right to remedy possible ambiguities, i11t0ulsistencies, or omissions. All determinations of the Employer with respect to any matter hereunder shall be conclusive and herding on all persons. \'n hour limiting the generality of the foregoing, the Employer shall have the following powers and duties: 0 V6 decide on questions concerning the Plan and the eligibility of any Employee to participate in the Plan, in accordance with the provisions of the Plan; Ib dctcrmine the amount of benefits that shall be payable to any person in accordance with the provisions of the Plan; to nform the Plan Administrator, as appropriate, of the amount of such Benefits; and to provide a full and fair review to any Participant whose claim for benefits has been denied in whole or in part; and G, designate other persons to carry out any fluty or power which would otherwise be a fiduciary responsibility of the Plan Administrator, under the terms of the Plan. i; 10 require any person to furnish such reasonable information as it may request for the purpose of the proper administration of the Plan as a condition to receiving any benefits under the Plan; to make and enforce such rules and regulations and prescribe the use of such forms as he shall deem necessary for the :fficient administration of the Plan. 6.02 Provision for Third-Party Plan Service Providers h, l'brn Administrator, subject to approval of the Employer, may employ the services of such persons as it may deem nt cc•ss t'? or desirable in connection with operation of the Plan. The Plan Administrator, the Employer (and any person horn it may delegate any duty or power in connection with the administration of the Plan), and all persons connected herewith may rely upon all tables, valuations, certificates, reports and opinions furnished by any duly appointed actuary, countant, (including Employees who are actuaries or accountants), consultant, third party administration service provider, coal .111.11tsel, or other specialist, and they shall be fully protected in respect to any action taken or permitted in good faith in li.uicr thereon. All actions so taken or permitted shall be conclusive and binding as to all persons. 6.03 Several Fiduciary Liability o 1.he extent permitted by law, neither the Plan Administrator nor any other person shall incur any liability for any acts or for '.ulore ro a. t except for his own willful misconduct or willful breach of this Plan. 55B-17 6.04 Compensation of Plan Administrator 'nie,s otherwise agreed to by the Employer, the Plan Administrator shall serve without compensation for services rendered in M It capacity, but all reasonable expenses incurred in the performance of his duties shall be paid by the Employer. 6.05 Bonding . mess otherwise determined by the Employer, or unless required by any Federal or State law, the Plan Administrator shall not he required to give any bond or other security in any jurisdiction in connection with the administration of this Plan. 6.06 Payment of Administrative Expenses 111 reasonable expenses incurred in administering the Plan, including but not limited to administrative fees and expenses 'N% 111J4 to :uiy third party administrative service provider, actuary, consultant, accountant, attorney, specialist, or other person t1a organization that may be employed by the Plan Administrator in connection with the administration thereof, shall be oaid by the F mployer, provided, however that each Participant shall bear the monthly cost (if any) charged by a third party administrator for maintenance of his Benefit Account unless otherwise paid by the Employer. 6.07 Timeliness of Payment for Benefits a? ntent tot Bcttcfits shall be made as soon as administratively feasible after the required forms and documentation have been CcCived by the Plan Administrator. 6.08 Annual Statements I lie Plan Administrator shall furnish each Participant with an annual statement of his medical expense reimbursement ,ecount within ninety (90) days after the close of cacti Plan Year. ARTICLE V11 Claims Procedure 7.01 Procedure if Benefits are Denied Under the Plan ltav Participant, Spouse. Dependent, or his duly authorized representative may file a claim for a plan benefit to which the Jatmant believes that he is entitled. Such a claim must be in writing on a form provided by the Plan Administrator and delivered to the plan Administrator, in person or by mail, postage paid. Within thirty (30) days after receipt of such claim, alit Plan Administrator shall send to the claimant, by mail, postage prepaid, notice of the granting or denying, in whole or H part, of sue h claim, unless special circumstances require an extension of time for processing the claim. In no event may he es:tcnsaon exceed forty-five (45) days from the end of the initial period. If such extension is necessary, the claimant will be given a R ritten notice to this effect prior to the expiration of the initial 30-day period. If such extension is necessary due to a failure of the Participant, Spouse or Dependent to submit the information necessary to decide the claim, the notice of . XtCnsion hall describe the required information and the claimant shall be afforded at least forty-five (45) days from receipt of (lie notice within which to provide such information. The Plan Administrator shall have full discretion to deny or grant a Jaim in sti hole or in part. If notice of the denial of a claim is not furnished in accordance with this Section, the claim shall be deemed JLo1Cd and the claimant shall be permitted to exercise his right to review pursuant to Sections 7.03 and 7.04. 55B-18 7,02 Requirement for Written Notice of Claim Denial h, I'Lin :\dminkt ator shall provide, to every claimant who is denied a claim for benefits, written notice setting forth in a nt.uux•r calculated to be understood by the claimant: II<<,prcific reason or reasons for the denial; ul spc, ih, reference to pertinent Plan provisions on which the denial is based; A desc ription of any additional material of information necessary for the claimant to perfect the claim and an explanation of k? h such material is necessary, and k ?n explanation of the Plan's claim review procedure. 7.03 Right to Request Hearing on Benefit Denial it hin one hundred eighty (180) days after the receipt by the claimant of written notification of the denial (in whole or in l"ar;) of his claim, the claimant or his duly authorized representative, upon written application to the Plan Administrator, in pcp,on or by certified mail, postage prepaid, may request a review of such denial, may review pertinent documents, and may uhmit issues and comments in writing. 7.04 Disposition of Disputed Claims Ton its receipt of notice of a request for review, the Plan Administrator shall make a prompt decision on the review. The decision )n review shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision +nd specific references to the pertinent plan provisions on which the decision is based. The decision on review shall be made not later • han sixty (60) days after the Plan Administrator's receipt of a request for a review, unless special circumstances require an extension ,I rime lire processing, in which case a decision shall be rendered not later than one hundred-twenty (120) days after receipt of a equtst fur review. If an extension is necessary, the claimant shall be given written notice of the extension prior to the expiration of I rc inir ill sixt} (60) day period. If notice of the decision on the review is not furnished in accordance with this Section, the claim ha Il ht deerned denied and the claimant shall be permitted to exercise his right to legal remedy pursuant to Section 7.05. 7.05 Preservation of Other Remedies Meer exhaustion of the claims procedures provided under this Plan, nothing shall prevent any person from pursuing any other cf,J of equitable remedy otherwise available. ARTICLE VIII Amendment or Termination of Plan 8.01 Permanency ,hLI, the l.nrployer filly expects that this Plan will continue indefinitely, due to unforeseen, future business contingencies, I+rr 111.1 nen ? of the Plan will be subject to the Employer's right to amend or terminate the Plan, as provided in Sections 8.02 110 8 n.,. - F { <a 55B-19 8.02 Employer's Right to Amend he Emplover reserves the right to amend the Plan at any time and from time-to-time, and retroactively if deemed necessary or appropriate to meet the requirements of the Code, or any similar provisions of subsequent revenue or other laws, or the role and regulations in effect under any of such laws or to conform with governmental regulations or other policies, to modify or amend in whole or in part any or all of the provisions of the Plan. 8.03 Employer's Right to Terminate I he Emplover reserves the right to discontinue or terminate the Plan at any time without prejudice. ARTICLE IX General Provisions 9.01 No Employment Rights Conferred `veither this flan nor any action taken with respect to it shall confer upon any person the right to be continued in the ruiployment of the Employer. 9.02 Payments After Death of Participant \m hcnehts otherwise payable to a Participant following the date of death of such Participant shall he paid as outlined in the i mployer's `v'antageCare Retirement Health Savings Plan Adoption Agreement. 9.03 Nonalienation of Benefits ',lo hcueht under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge. ne umhrancc or charge, and any attetnpt to do so shall be void. No benefit under the Plan shall in any manner be liable for .r .nbjcct to i he d,:bts, contracts, liabilities, engagements or torts of any person. If any person entitled to benefits under the !'1,111 become, bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any beneftr under dw flan. or if any attempt is made to subject any such benefit to the debts, contracts, liabilities, engagements or torts ofthe tn•rson entitled to any such benefit, except as specifically provided in the flan, then such benefit shall cease and terminate ,n the disc rction of the Plan Administrator, and he may hold or apply the same or any part thereof to the benefit of any , iependerrt of such person, in such manner and proportion as he may deem proper. 9.04 Mental or Physical Incompetency (. thc- Plan Administrator determines that any person entitled to payments under the Plan is incompetent by reason of physical u ntrnral disability, lie may cause all payments thereafter becoming due to such person to be made to any other person for h i, hcn,-fit without responsibility to follow the application of amounts so paid. Payments made pursuant to this Section shall onipletely discharge the Plan Administrator and the Employer. 9.05 Inability to Locate Payee I: the Hai, Administrator is unable to make payment to any Participant or other person to whom a payment is due under • he flan hrc ausc he cannot ascertain the identity or whereabouts of such Participant or other person after reasonable efforts 55B-20 I :n.• heen made to identify or locate such person (including a notice of the payment so due mailed to the last known address d surlt Participant or other person as shown on the records of the Employer), such payment and all subsequent payments o Item, isc due to such Participant or other person shalt be escheated under the laws of the State of the last known address of he Participaw or other persons eligible for benefits. 9.06 Requirement of Proper Forms \11 ommunicarions in connection with the Plan made by a Participant shall become effective only when duly executed on onns provided by and filed with the Plan Administrator. 9.07 Source of Payments hc. l?ntploycr shall be the sole source of benefits under the Plan. No Employee, Spouse or Dependents shall have any right to, or merest in. aut} assets of the Employer upon termination of employment or otherwise, except as provided from time to time under 1 he Pk it. and then only to the extent of the benefits payable under the Plan to such Employee, Spouse or Dependents. 9.08 Tax Effects 'veirher the Employer nor the Plan Administrator makes any warranty or other representation as to whether any payments ei rived b) a Participant, his Spouse or Dependents hereunder will be treated as includible in gross income for federal or state uuomc tax purposes. 9.09 Multiple Functions m person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. 9.10 Gender and Number '11,11culinc pronouns include the feminine as well as the neuter gender, and the singular shall include the plural, unless indicated otherwise by the context. 9.11 Headings h( article and Section headings contained herein are for convenience of reference only, and shall not be construed as fining or limiting the matter contained thereunder. 9.12 Applicable Laws It, provisions of the Plan shall be construed, administered and enforced according to the laws of the State of California 9,13 Severability hould anv part of this Plan subsequently be invalidated by a court of competent jurisdiction, the remainder thereof shall be I rl n e`fc, t to the maximtrrn extent possible. \X'I I NFS) W14EREC)F, we have executed this Plan Agreement the date and year first written above. - - M 55B-21 1 \11'I.t )}"I?.R Signature of Authorized Official =%f I FS I (i! applicable) Signature of Attestor Title: Finance Director Title: v 55B-22