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R-98-11-24-14F3 - 11/24/1998AD970249.055 REIIABURSEMENT SERVICES AGREEMENT This Agreement, effective upon exsc utioa for the Plan Year, by and between CITY OF ROUND ROCK and American Family Life Assurance Company ("AFtJ ) WITNESSETH: WHEREAS, the Employer has adopted a Medical Care Expense Reimbursement ("URM") Plan and/or a Dependent Care Expense Reimbursement rDDC') Plan for its Employees in conjunction with its Flexible Benefits Man (collectively referred to as the "Plan" and attached hereto) to be adopted and administered in accordance with Sections 105, 125, and 129 of the Internal Revenue Code of 1988, as amended (the "Code"); and WHEREAS, the Employer will serve as the Plan Administrator; and WHEREAS, the Employer desires that AFLAC, as its Plan Service Provider, fumish reimbursement services within a framework of policies, interpretations, rules, practices and procedures (the "reimbursement practices and procedures") made and established by the Employer in (i) receiving and processing requests for benefits under the Plan ( "Requests ") and (ii) disbursing benefit payments from Employer funds (as provided for in Section II.A) for eligible expenses under the flexible spending account provisions of the Plan; (if Self -Pay Option is selected in Section II.A. below, AFLAC shall convey its initial benefit determinations to Employer so Employer can disburse reimbursement payments for eligible expenses under the Flexible Spending Agreement provisions of the Plan); and WHEREAS, the Employer is to pay all plan benefits owed or established under the Plan to its Participants, and AFLAC is to provide the agreed upon services to the Plan without assuming any liability; NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed as follows: Section I. Enrollment and Determination of Eligibility A. The Employer shall: (1) be responsible for interpreting the Plan and its provisions, its terms, conditions and operations; and (2) notify Plan Participants of their ability to apply for reimbursement benefits and supply them with Request forms (to be provided by AFLAC) and Request filing instructions; and (3) provide AFLAC with the names, addresses, Social Security Numbers, and elected amounts of all participants in the Plan; and (4) upon the occurrence of events that would change a Participant's status under the Plan (e.g. termination, Change in Family Status, etc.) promptly provide AFLAC with updates (via Telefax) which identify eligible Participants in each of the respective reimbursement Plans and/or the amount of reimbursement benefits for which they are eligible; and (5) immediately inform AFLAC (via Telefax) as to any new Participants in either of the reimbursement Plans, any Change in Family Status affecting a Participant's election, or any Qualified Beneficiary electing coverage under COBRA (and the amount of such election), or of any other change which will affect AFLAC's responsibilities hereunder. 1 B. In detamtinIng any person's fight to bents under the Plan, API AC shall rely on the eligibility !denotation furnished bpthe Employer, and any shaded statements by Participants regarding the ellgibilby of their Requests wider the respective Plan. It is Mutuaily understood that the effective performance of this Agreetned by AFLAC will require that it be advised on a timely basis by the Employer during the continuance of this Agreement of the identity of individuals eligible for benefits under each of the respective reimbursement Plans. Information modifying a Participant's eligibility or status/election under either Plan shaU identify the effective date of eligibility and the termination date of eligibility and shall be provided to AFLAC (via telefax) prior to the effective date of such mod cation in order to be considered by AFLAC In making benefit determinations hereunder. AFLAC shall not be responsible for Requests paid in error where the Employer has failed to inform AFLAC (in a form and with such information as may reasonably be required by AFLAC) of a Participant's eligibility or status change prior to the release of the benefit payment. Section 1I. Funding and Payment of Requests for the Plan Benefits AD970240.055 A. Standard Option. The Employer shall: (5) ( (i) make sufficient funds available from its general assets for amounts allocable to eligible reimbursement benefits under its Plan; and (ii) draw an amount equal to the aggregate amount of all Requests payable under the Employers Plan and electronically transfer it to AFLAC (within three (3) business days of receipt of a request for such funds from AFLAC) for which there are eligible Requests for outstanding (pursuant to the terms of the Plan). If, at any time, the amount of reimbursement benefits payable under the applicable Plan provisions exceeds the amount deposited by the Employer in the Account, the Employer shall transfer an amount necessary to the Account to fulfill its reimbursement obligations under the applicable Plan before any further reimbursement benefit payment is made. AFLAC is under no obligation to advance funds on behalf of the Employer. B. In accordance with the terms and conditions of the Plan, and any reimbursement practices and procedures prescribed by the Employer and, AFLAC, as Plan Service Provider for the Employer and shall: (1) provide Employer with a sample cafeteria plan document, including a medical care expense reimbursement ( "URM") Plan and a dependent care expense reimbursement ("DDC°) Plan to be reviewed by the Employer and its legal counsel; and (2) provide the Employer with a sample flexible benefits summary plan description for distribution to each Plan Participant; and (3) assist the Employer in explaining the URM and/or DDC features of the cafeteria plan to employees; and (4) provide the Employer with salary redirection agreement forms to be used during the enrollment process for current and new employees and where may be required by a Change in Family Status; and process for the Employer executed salary redirection agreements as they relate to the URM and DDC components of the Employer's flexible spending account; and prepare an enrollment confirmation letter and send it to the Employer to verify URM and DDC elections; and 2 AD970240.055 (7) provide each FMicIp M with reimbursement forms and Instructions for filing URM and DDC reimbursement requests; and (ft) provide each Participant with a URM and/ar DOC statement on a quarterly basis; and (9) provide the Employer with written monthly reports summarizing the pis period's URM and/or DDC and Account activites; and (10) upon receiving inntrudktrs from the Employer on a Charge in Family Status, AFLAC, will make the change requested by the Employer, and (11) by and through independent associates meet with each employee to discuss medical care expense reimbursement and dependent care expense reimbursement plans; and (12) based upon Information supplied by the Employer and upon written request each plan year, AFLAC shall prepare the information necessary to satisfy the Form 5500 filing obligation imposed by Section 6039D of the Internal Revenue Code upon sponsors of cafeteria plans. The Employer shall be responsible for reviewing the informaiton supplied by AFLAC to ensure its correctness and actually filling out and submitting the Form 5500 required by Sectin 6039D. This service will only be performed upon written request. (13) based upon information supplied by the Employer and upon written request each plan year, AFLAC shall assist the Employer in determinig discrimination testing percentages for the cafeteria plan 25% concentration test, the dependent care plan 25% concentration test and the dependent care plan 55% average benefits test and communicate the results in writing to Employer. The Employer shall be responsible for interpreting the percentages provided by AFLAC and for ensuring compliance with all applicable non - discrimination requirements. This service will only be performed upon written request. (14) receive Requests for, and expeditiously review such Requests to determine what amount, if any is due and payable with respect thereto; and (15) disburse the benefit payments it determines to be due (provided the Employer transfers sufficient funds to AFLAC or has sufficient funds in the Account) or if Self -Pay is elected above, notify Employer of the benefit determination in accordance with the provisions of the Plan and the following procedure(s): (I) valid reimbursement for URM and /or DDC benefits shall be paid by AFLAC on the date funds are received from the Employer (with respect to such Requests) by mailing a check in the appropriate amount(s) directly to the Participants at their home addresses or initiating electronic funds transfer via Automated Cleraring House (ACH) directly to the Participant's bank account; and (ii) if the amount of the (otherwise) reimbursable DDC Request exceeds the amount the Participant had withheld for DDC benefits, the excess shall be carried forward (within the same Plan Year) and treated as an Eligible Employment Related Expense for that month; and (iii) if the amount of the reimbursable URM Request exceeds the amount the Participant has had withheld for URM benefits, the entire amount shall be processed (provided the Employer makes available sufficient funds for AFLAC to satisfy the Request; and 3 AD970240.055 (v) Requests of lass than $15.00 may be carded forward and aggregated with future Requests unfit the Velmbureabis amount is greater than $15.00, provided, however, that the or*. amount of the reimbursable Requests shall be paid after the doss of the Plan Year without regard to the $15.00 threshold; and (v) unless otherwrise specified In writing by the Employer, Health FSA claims following a Change In Family Status Imparting the Heath FSA election will be processed using a 'blended approach " —i.e., the maximum Health FSA benefit for a period of coverage following a Change In Family Status will be limited to the lesser of: a) the annual Heath FSA maximum set forth in the Plan document less any benefit payments made prior to the Change in Family Status, and b) the sum of the Partcipnat's Health FSA Account balance immediately before the Change in Family Status and any additional contribution made during the remaining period of coverage. (16) notify claimants as to any Requests which are denied because of inadequate Request substantiation or improper Request form submission and give affected claimants the opportunity to resubmit their Requests; and (17) provide to the claimant within thirty (30) days following receipt of a Request, written notification (A) as to the disposition of the Request, or (B) of an anticipated delay beyond thirty (30) days in the disposition of the Request together with an explanation of the delay; and (18) notify the claimant and refer to the Employer (with an analysis of the issues affecting the Request) for final decision any Requests which AFLAC deems not to be reimbursable pursuant to the terms of the Plan and/or the reimbursement practices and procedures established by the Employer, setting forth the applicable review procedure available to the claimant through the Employer; and (19) provide the Employer and with written monthly and year -end reports summarizing the previous period's URM and/or DDC and Account activities with sufficient detail to provide for the audit and control of funds used; and (20) provide the Employer and with the information needed with respect to the URM and /or DDC Plans for fulfilling annual reporting requirements and the preparation and submission of a Form 5500 Series Annual Report by the Employer to the Internal Revenue Service. C. AFLAC shall not be obligated or responsible for any duty with regard to the administration of the Plan (imposed by the Plan or otherwise) except as specifically provided above. It shall be the Employer's sole responsibility and duty to: (1) comply with the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as amended including, but not limited to, providing Covered Employees and Qualified Beneficiaries covered by the URM with initial COBRA notices, notices upon a Qualifying Event, and other information conceming COBRA elections; and (2) undertake and comply with any Internal Revenue Service requirements with regard to nondiscrimination as to eligibility and participation in the Plan (including any applicable withholding and/or reporting obligations applicable to the benefits by virtue of the Plan being deemed to be discriminatory) and other state, Federal, or local statutes or regulations; and 4 AD970240.055 (3) amend the Phut as necessary to comply with future changes In applicable Memel ;Went* or Labor statutes and regulations or other federal, state, or Local statutes or remdations; and (4) determine If and when, a valid Change in Family Status has occurred, determine the appropriate election change, and convey Such information to AFLAC; and (5) make a full and fair review of any unpaid Requests as described In 11.8.5, above, and required by the Plan, and notify the claimant in writing of its decision on review within the time limits rebating thereto; and (8) prepare and submit summary plan descriptions and summary descriptions of material modifications to each Employee and to the extent ERISA applies to the U.S. Department of Labor as may from time to time be required; and (7) annually prepare a Form 5500 Series Annual Report and submit it to the Internal Revenue Service within seven (7) months after the end of the Plan Year and (8) submit annual statements to Plan Participants showing the amounts paid and/or expenses incurred as required by the Plan Document and the Code; and (9) take all other actions necessary to maintain and operate the Plan in compliance with applicable provisions of the Plan, the Code, and any other applicable state and/or federal law. (10) execute and retum Additional Adoption Agreement to Flex One Administration. D. In the event AFLAC pays any person less than the amount to which he or she is entitled under the Plan, AFLAC will adjust the underpayment at the end of the next reimbursement period for which a total payment of $15.00 would result or at the end of the Plan Year. In the event that AFLAC overpays any person entitled to benefits under the Plan, or pays benefits to any person who is not entitled to them, AFLAC shall take all reasonable steps to recover the overpayment except that AFLAC shall not be required to initiate court proceedings to recover an overpayment. AFLAC shall promptly notify the Employer if it is unsuccessful in recovering any overpayment. E. AFLAC will optically scan and maintain electronic copies of all FSA claim documents for a period of seven (7) years after the claim is processed. Copies of FSA claim documents can be reproduced upon written request at AFLAC's currently prevailing rate. Section 111. Liability and Indemnity A. In performing its obligations under this Agreement, AFLAC neither assumes nor underwrites any liability of the Employer under the Plan, but, with respect to the Employer, acts only as provider of those services specifically described in this Agreement and, with respect to Plan Participants, acts only as the Plan Service Provider of the Employer. The services to be performed by AFLAC shall be ministerial in nature and shall be performed within the framework of policies, interpretations, rules, practices, and procedures made or established by the Employer. AFLAC shall have no discretionary authority or discretionary control over any assets of the Employer, the Plan, or Plan Participants. B. AFLAC shall have no duty or obligation to defend any legal action or proceeding brought to recover a Request for Plan Benefits. AFLAC shall, however, make available to the Employer and its counsel, such evidence relevant to such action or proceeding as AFLAC may have as a result of its processing of the contested benefit determination. C. Except as otherwise explicitly provided in this Agreement, the Employer shall retain the liability: For all Plan benefit Requests and all expenses incident to the Plan 5 D. AFLAC shall use ordinary and reasonable care in the performance of its duties, and will indemnify and hold Employer harmless from and against all extra - contractual non - benefit costs, damages, judgments, attorneys' fees , expenses and liabilities which occur as a direct result of any acts or omissions of AFLAC which, in the aggregate, constitute a failure by AFLAC to perform its claim services with that degree of skill and judgment possessed by one experienced in furnishing claim services to plans of similar size and characteristics as Employer's plan. E. AFLAC shall have no duty or obligation with respect to Requests for Plan benefits incurred prior to the effective date of this Agreement (hereafter "Prior Reimbursements ") and /or Plan administration (or other) services arising prior to the effective date of this Agreement regardless of whether such services were/are to be performed prior to or after the effective date of this Agreement (hereafter "Prior Administration"). The Employer specifically acknowledge(s) and agree(s) that: (i) AFLAC has no responsibility or obligation with respect to Prior Reimbursements and/or Prior Administration; (ii) the Employer will be responsible for processing prior reimbursements (including any run -off Requests submitted after the effective date of this Agreement) and maintaining legally required records of all Prior Reimbursements and Prior Administration sufficient to comply with applicable legal (e.g., IRS substantiation) requirements and (iii) the Employer agree to indemnify and hold AFLAC harmless for any liability relating to Prior Reimbursements and/or Prior Administration." Section IV. Reimbursement Request Processing Service Fee A. The Employer shall pay AFLAC a fee for services performed under this Agreement in the amount of $2.00 per Participant per FSA benefit (DDC or URM) per month (max per Participant of $4.00) with a minimum monthly fee of $16.00 for the reimbursement Plans (URM and/or DDC) for which services are rendered. This amount shall be due by the tenth (10th) of each month (or portion thereof) for which this Agreement is in effect and is in addition to and separate from (i) any Account Establishment (or "Set Up ") fee assessed by AFLAC of $00.00 to initiate the reimbursement arrangement: and (ii) the Employer's obligation to make available sufficient funds to satisfy its obligations under the Plan and to make benefit disbursement in accordance with section II.A.. above. The Employer is responsible for paying the Service Fee to AFLAC. AFLAC is not authorized to withdraw the Service Fee from the Account. Failure to pay any applicable monthly Service Fee by the next monthly Requests processing cycle shall result in a cessation of Request processing services until such fees are received by AFLAC. If Request processing services are pended for an entire monthly processing cycle, AFLAC may terminate this Agreement in accordance with Section VI. B. AFLAC may revise the Service Fee for services performed under this Agreement effective on each Anniversary Date of this Agreement by giving the Employer written notice of the revised rate at least thirty (90) days prior to the applicable Anniversary Date. Employer may reserve the right to cancel as set forth in Section V & VI below. AD970240.055 For any state prendum, or similar tax, however denominated, including any penalties and interest payable with respect thereto, assessed on the basis of and/or measured by the amount of Plan benefit funds handled pursuant to this For any acts or omissions by the Employer (and Its emplOyees, agents, Or afliNates) arising out of this Agreement, or the administration of the Plait (including those alleged to be a breach of fidweiary dray under applicable law); For any legal action or proceeding to recover benefits under the Plan; or For any cost, charge, tax, fine, penalty, or interest, however denominated, that may be assessed against AFLAC or the Employer for any violation of the Code (including COBRA and/or any COBRA - related provisions). This liability shall survive the termination of this Agreement. 6 G. AFLAC may revise the Service Fee set farpi above at any time If such revision Is deemed Receesery by AFLAC by reason of I) mcdiScatIon or amendment of the Plait by the Employer, in a significant decotate is the number of AFLAC policies purchased by Participants under the Plan fan betew the number initially included in the Plait after the Service Fee was established (or if later, whet Ike Service Fee was lest revise* or in) a suspension, limitation, or revocation of the right of Employees or Participants to purchase AFLAC policies under the Plan. AFLAC shall request such revisions at least sbdy (SO) days prior to anticipated implementation. The Employer reserves the right to accept the revisions, reject the revisions or negotiate new fees. Either party reserves the right to terminate the Agreement if new fees are not agreed upon or negotiate a new Aoreemeid. D. AFLAC may revise the Service Fee set forth above at any timed any change in law or regulations imposes on AFLAC greater duties or obligations than contemplated by the Agreement in force at the time of such change. Section V. Term of Agreement The initial term of this Agreement shall be the initial Plan Year commencing on the effective date hereof, thereafter, this Agreement will automatically renew for successive periods of twelve (12) months unless, at least thirty (30) days prior to the end of the then current term, the Employer of AFLAC gives written notice to the other of its intention not to renew the Agreement. In the event of a short plan year (other than the first plan year) this Agreement shall automatically renew for an additional twelve (12) months unless the Employer or AFLAC gives written notice to the other of its intention not to renew the Agreement within three (3) days after the Employer notifies AFLAC of the short plan year. Section VI. Termination of Agreement A. This Agreement shall terminate upon the earliest of the following dates: (1) The end of a term of the Agreement following the delivery of written notice of termination pursuant to Section V. (2) At the option of AFLAC, the date upon which the Employer fails to transfer sufficient funds to AFLAC (upon request by AFLAC) i) to pay all valid Requests pending under the Plan; or ii) to pay the Service Fee (as provided in Section II.A and IV.A., above). AFLAC shall promptly communicate its election of this option to the Employer. (3) Upon the implementation date for a proposed Service Fee increase deemed to be unacceptable by the Employer (after delivery of written notice of termination by the Employer) pursuant to Section IV.C. (4) At the option of AFLAC, if no Plan Participant is an AFLAC policyholder. AFLAC shall Immediately communicate its election of this option to the Employer. (5) Any other date mutually agreeable to the Employer and AFLAC. (6) Upon 30 days written notice by either Employer or AFLAC. B. Upon termination of this Agreement, AFLAC shall cease the processing of all Requests then in its possession, retum any undistributed funds to the Employer, and make all records relating to Requests in process reasonably available to the Employer. If the termination occurs pursuant to VI.A.1. (above), AFLAC shall process all run -off claims provided any Service fee(s) is current. Thereafter, the Employer and /or Plan Administrator shall be responsible for all aspects of Reimbursement Requests processing and Plan administration. AD970240.055 7 10.020.3BUIMMLIMIM21M (1) Mag. Arai wets requlrd 10 be given hereunder to AFLAC shell be sufficient if in writing and delivered personally or by prepaid first class mail to AFLAC, F'leidble lienefrta Division, 1032 Wynnton Road, Columbus, GA 31990, or if to Employer, to Assistant City Manager, 221 E. Main Street, Round Rock Texas 78064. (2) tailiggialajgg. This Agreement shall be governed by, and strap be construed in accordance Mill the laws of the State of Texas, Venure in Williamson County to the extent they are not preempted by ERISA, the Code, or any other federal law. (3) Legal and Tax Status. The Employer acknowledges that neither AFLAC nor its agents is providing legal or tax advice, and that neither AFLAC nor its agents serves as the plan administrator or a plan fiduciary under the Plan. The Employer shall be the sole party responsible for determining the legal and tax status of the Plan under applicable law. AFLAC shall have no power or authority to waive, after, breach or modify any terms or conditions of the Plan. AD970240.055 (4) Assignment. This Agreement may not be assigned by AFLAC to any other party, Including any successor to the business of AFLAC by merger, consolidation, purchase of assets, or otherwise, without the prior consent of the Employer. This Agreement shall be binding upon any corporation into which the Employer may be merged or with which it may be consolidated, or any corporation succeeding to all or substantially all of the business of the Employer. (5) Entire Contract. This Agreement constitutes the entire contract between the parties and no modification or amendment hereto shall be valid unless in writing and signed by an officer of the Employer and an Officer of duly authorized representative of AFLAC. (6) Tax Reporting and Withholdings. The Employer has ultimate control over the payment of Plan benefits and shall be the sole party responsible for income and employment tax reporting and withholding obligations imposed as a result of the includability of such payments in the gross income of recipients. AFLAC is a mere Plan Service Provider of the Employer for the processing of benefit Requests. (7) Capitalized Terms shall have the same meaning as in the Plan documents. 8 IN WITNESS %HEREOF, the parties hereto have caused this Agreement to be executed in duplicate and signed by an Officer of the Employer and an Offlow or duly authorised Worldwide lleedquartere Employee of ARAC to do so. Dated at American Family Life Assurance Company This day of 19 By: Cheryl M. Moss Second Vice President Flex One Administration Director of Administration /Compliance AD970240.055 Street Address: Eouluo ,Poee, Tic. 7960y 9 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate and signed by an lacer of tie Employer and an Officer or duly authorized Worldwide Headquarters Employee of AFLAC so AD970240.055 By: Cheryl M. Second Vice -' . eat Flex One Administration Director of Administration/Compliance Dated at This day of 19 By: Street Address: 9 May 17, 1999 City of Round Rock Attn: Linda Gunther 221 East Main Round Rock, TX 78664 Dear Ms. Gunther: Please find enclosed the revised Reimbursement Services Agreement. Please sign both copies and mail them to AFLAC's FLEX ONE Department 1932 Wynnton Road Columbus, Georgia 31999 Once we received the signed copies, we will review them for additional changes. If no changes were made or if the changes are acceptable, we will have Cheryl Moss, Second Vice President, sign them and return one copy to you. if you have any questions, you may contact me directly at (706) 660 -7596 or reach me by facsimile at (706) 596 -2994. Sincerely, Wanda J. Sweeney Quality Analyst/Trainer FLEX ONE Administration 1 v )vi •iiivii n. • v -.�, I. i....d; iii. 4. v�,.■ i,i..�.,'1, . i. ._���:��� 111■1 • ROCK, TEXAS: %:\ WPDOCS \RESOLITTI \RB1124P3.NPD /jkg RESOLUTION NO. R- 98- 11- 24 -14F3 WHEREAS, the City of Round Rock desires to provide its eligible employees with a flexible benefits plan for certain insurance areas; and WHEREAS, in furtherance of such objective, the City desires to enter into an agreement with American Family Life Assurance Company (AFLAC) to participate in its AFLAC FLEX ONE cafeteria plan; and WHEREAS, entry into such plan requires execution of Flexible Benefits Plan documents such as Adoption Agreement, Plan Document, and Benefit Plans and Policies including Dependent Care Expense Reimbursement Plan and /or Medical Care Expense Reimbursement Plan; Now Therefore BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ROUND That the Mayor is hereby authorized and directed to execute on behalf of the City the necessary documents with AFLAC to initiate its AFLAC FLEX ONE cafeteria plan. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended, and the Act. RESOLVED this 24th day of November, 1998. ATTEST: LAND, City Secretary 2 CHARLES CULPE`PPER, Mayor City of Round Rock, Texas DATE: November 20, 1998 SUBJECT: City Council Meeting —November 24, 1998 ITEM: 14.F.3. Consider a resolution authorizing the Mayor to execute an agreement with American Family Life Assurance Company ( AFLAC) for third party administration of Medical Care and Dependant Care reimbursement accounts. This agreement with AFLAC provides third - party administration of City's cafeteria plan Flexible Spending Accounts for medical and dependent care reimbursement. The term of this agreement is for the period of one year renewable, December 1, 1998 through November 30, 1999. Staff Resource Person: Teresa S. Bledsoe, Human Resource Director.