00-8954r
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RESOLUTION NO. 8954
NOVEMBER 13, 2000 AMENDMENT TO THE
FLEXIBLE SPENDING ACCOUNT PLAN
WHEREAS, the City of Richfield provides employees with an opportunity to pay for
certain employee welfare benefits on a pre-tax basis through the above mentioned Plan
(the "Plan"); and
WHEREAS, the Employer considers is desirable and in the best interests of the
Plan to make the following amendment to the Plan.
NOW, THEREFORE, pursuant to the authority reserved in the Plan to allow
amendments to the Plan, the Plan is amended as follows:
Effective November 13, 2000, the provisions of the Plan governing a Participant's
ability to revoke a benefit election and make a new benefit election during the Plan Year
shall be administered in compliance with the Final and Proposed Cafeteria Plan
Regulations issued March 23, 2000, which are summarized as follows:
CHANGE IN STATUS RULES
Events
The following Change in Status events, when they result in an eligibility change for
underlying welfare benefits, shall be recognized under the Plan:
. Legal marital status change (marriage, divorce, death of spouse, legal
separation and annulment)
. Change in number of tax dependents (birth, placement for or adoption, death)
. Employment Status Change for employee, spouse or dependent (employment
termination or commencement, strike or lockout, unpaid leave of absence,
change in worksite)
. Dependent satisfies or fails to satisfy eligibility requirements (age, student
status, marriage)
. Residence change of employee, spouse, or dependent
. Commencement or termination of adoption proceedings for adoption assistance.
Consistencv Conditions
Further, the election modification on account of any of the status changes must be
consistent with that status change. Where the status change makes an employee, spouse
or dependent eligible for coverage, the election modification permitted is to add the newly
eligible individual or increase the deduction for the coverage. Where the status change
makes an employee, spouse or dependent ineligible for the underlying welfare benefit
coverage (divorce, legal separation, annulment or death of the employee's spouse or
dependent), the election modification permitted is to drop the coverage for that individual.
If the employee, spouse or dependent becomes eligible for coverage under a family
member's plan due to open enrollment, or a change in marital or employment status, the
affected individuals must actually elect that coverage in order to drop coverage under this
Plan.
Consistency Exceptions
. Where the status change is change in marital status, disability and life insurance
coverages may be increased or decreased.
. When the status change is loss of dependent status, an election modification to
allow a participant to pay COBRA continuation premiums on a pre-tax basis may
be made.
Change in Cost or Coverage
If a cost increase is "significant, " a participant may increase the Plan election or revoke his
or her election and make a new election for coverage under a similar welfare benefit plan.
If welfare benefit plan coverage is "significantly curtailed," a participant may revoke his or
her election and make a new election for coverage under a similar benefit plan. To meet
the "significant curtailment" standard, there must be an "overall reduction in coverage"
resulting in reduced coverage to participants in general under the welfare benefit plan. If a
new option is added to the welfare benefit plan or if an option is eliminated from the
welfare benefit plan, participants may make new elections, corresponding to the change,
under this Plan. Dependent care spending account elections shall be administered
according to these rules. Health care spending account elections shall not be eligible for
modification under theSe rules, in accordance with the Proposed Regulations.
Miscellaneous
The Employer reserves the right to automatically initiate changes to participants' elections
where an insignificant change in cost occurs or where the Plan is required to follow a
judgment, decree or order that mandates coverage for an employee's dependent. A
participant who gains Medicare or Medicaid coverage shall be allowed to drop or reduce
an election amount; an employee or participant who loses Medicare or Medicaid coverage
shall be allowed to begin or increase coverage. Employees rehired within 30 days of their
most recent termination of employment shall have their most recent election amounts
automatically reinstated. Employees rehired more that 30 days after their most recent
termination of employment shall be allowed to make new elections under the Plan as new
hires.
THESE RULES shall hereby supercede and replace the election change rules of
the Plan effective for status events that occur on and after November 13, 2000. These
rules are intended to comply with the Final and Proposed Cafeteria Plan Regulations
issued on March 23, 2000. In the event that these rules are ambiguous for any particular
situation, the Final and Proposed Cafeteria Plan Regulations shall be the decisive authority
for administration of the Plan. .
Adopted by the City Council of the City of Richfield, Minnesota this 13th day of
November, 2000.
ATTEST: