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HomeMy WebLinkAboutRes 38-95 11/21/1995 P,F. SOLUTION NO. 38-95 A RESOLUTION AUTHORIZING THE AMENDMENT OF THE VILLAGE OF MOUNT PROSPECT FLEXIBLE COMPENSATION PLAN WHEREAS, the Village of Mount Prospect is a Home Rule Municipality exercising its Home Rule powers pursuant to the Illinois Constitution of 1970; and WHEREAS, the Corporate Authorities have previously adopted a Village of Mount Prospect Flexible Compensation Plan (the "Plan") for its employees; and WHEREAS, the Corporate Authorities have determined that the Plan should be amended to change its plan year to coincide with a January 1 to December 31 plan year; and WHF. REAS, the Corporate Authorities have determined the Plan should also be amended to include certain requirements to notify employees of the provisions of the Plan. NOW, THEREFORE, BE 1T RESOLVED BY THE MAYOR AND BOARD OF TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS, AS FOLLOWS: SECTION ONE: That the Mayor of the Village of Mount Prospect is hereby authorized to execute the amended Village of Mount Prospect Flexible Compensation Plan, attached hereto as Exhibit A, the same being hereby approved and adopted to be effective as of January 1, 1996. SECTION TWO: That the Plan Administrator of the Village of Mount Prospect be instructed to take any and all such steps as may be required for the implementation of the Amended Plan. SECTION THREE: That the Plan Administrator act to notify the employees of the Village of Mount Prospect of the adoption of the Amended Plan by delivering to each employee a copy of the summary description of the Plan in the form of the Summary Plan Description presented to this meeting, which form is hereby approved. SECTION FOUR: That this Resolution shall be in full force and effect from and after its adoption and passage in the manner provided by law. AYF_~S: Clbwes, Corcoran, Hendricks, Hoefert, Skowron, Wilks NAYS: None ABSENT: None PASSED and APPROVED this 21st day of November ,1995. ATrE, ST: Gerald L. Farley, Ivl~or Carol A. Fields, ~rfllage Clerk FLEX OF MOUNT VILLAGE OF MOUNT PROSPECT FLEXIBLE COMPENSATION PLAN SUMMARY PLAN DESCRIPTION TABLE OF CONTENTS I ELIGIBILITY !. When Can I Become a Participanc in the Plan? .... 1 2. What Are the Eligibility Requirements for Our Plan? .................... 1 3. When Is My Entry Date? .............. 2 4. Are There Any Employees Who Are Not Eligible? 2 5. What Must I Do to Enroll in the Plan? ....... 2 II OPERATION 1. How Does This Plan Operate? ............ 2 III CONTRIBUTIONS 1. How Much of My Pay May the Employer Redirect? 3 2 How Is My Compensation Measured Under Our Plan? 3 3 What Happens to Contribusions Made to the Plan? 3 4 When Must I Decide Which Accounus I Want ~o Use? 3 5 When Is the "Election Period" for Our Plan? .... 4 6 May I Change My Elections During the Plan Year? 4 7 May I Make New Elections in Future Plan Years? 4 IV BENEFITS 1. What Benefits Are Available? ............ 5 V BENEFIT PAYMENTS 1. When will I Receive Payments From My Accounts? 7 2. What Happens If I Don't Spend All Plan Contributions? ............... 7 3. What Happens If I Terminate Employment? ...... 7 What Happens If I Am a Retiree and My Sick Leave Deferred Compensation Account is Depeleted? .... 9 5. Will My Social Security Benefits Be Affected? 9 VI HIGHLY COMPENSATED AND KEY EMPLOYEES 1. Do Limitations Apply ~o Eighly Compensated Employees? ................ 9 VII PLAN ACCOUNTING 1. Periodic Statements ............... 10 VIII GENERAL INFORMATION ABOUT OUR PLAN 1. General Plan Information ........... 10 2. Employer Information ............. 10 Plan Administrator Information ........... 11 4. Service of Legal Process .............. 11 5. Type of Administration .............. 11 IX ADDITIONAL PLAN INFORMATION 1. Claims Process ................... 11 X SUMMARY VILLAGE OF MOUNT PROSPECT FLEXIBLE COMPENSATION PLAN INTRODUCTION We have amended the "flexible benefits plan" that we previously established for you and other eligible employees. Under this program, you will be able to choose among certain benefits that we make available. The benefits that you may choose are outlined this summary plan description. We will also tell you about oEher important information concerning the amended Plan, such as the rules you must satisfy before you can join and the laws that proEect your rights. One of the most important features of our Plan is that the benefits being offered are paid for with a portion of your pay before Federal income or Social Security taxes are withheld. This means that you will pay less tax and have more money to spend and save. Read this summary plan description carefully so that you understand the provisions of our amended Plan and the benefits you will receive. You should direct any questions you have to the Administrator. There is a plan document on file which you may review if you desire. In the evenE there is a conflict between this summary plan description and the plan document, the Plan will control. Also, if there is a conflict between an insurance contracE and either the plan document or this summary plan description, the insurance contract will control. I ELIGIBILITY 1. When Can I Become a Participant in the Plan? Before you become a member or a "participant" in the Plan, there are certain rules which you must satisfy. First, you muse meet the "eligibility requirements." After that, the next step is to actually join the Plan on the "entry date" that we have established for all employees. You will also be required complete certain application forms before you can enroll in the Health Care Reimbursement Plan or Dependent Care Assistance Account. You will also be required to complete an application form for additional life insurance coverage under this Plan, however, the premiums are automatically covered under this Plan as discussed in question 5. 2. What Are the Eligibility Requirements for Our Plan? You will be eligible to join the Plan once you have satisfied the conditions for coverage under our group medical plan, or have otherwise elected participation pursuanE to this Plan. Of course, 1 if you were already a participant before this amendment, you will remain a participant. If you are retired, you will be eligible ~o join the Plan if you satisfy the eligibility conditions for the Village of Mount Prospect Retiree Health Insurance Program. 3. When Is My Entry Date? You can join the Plan on the day you mee5 the eligibility requirements. 4. Are There Any Employees Who Are Not Eligible? Yes, there are certain employees who are no5 eligible 5o join the Plan. They are: -- Employees who are part-time. A part-time employee is someone who is designated as a part-time employee pursuant ~o our employment policy. 5. What Must I Do to Enroll in the Plan? Before you can join the Plan, you must complete an application to participate in the Plan. The application includes your personal choices for each of the benefits which are being offered under the Plan. You must also authorize us to set some of your earnings aside in order to pay for the benefits you have elected. However, if you are an employee and are already covered under any of the insured benefits, you will automatically participate in this Plan to the extent of your premiums unless during the "election period" you elect not to participate in this Plan. II OPERATION 1. How Does This Plan Operate? Before the start of each Plan Year, you will be able ~o elect to have some of your upcoming pay contributed to the Plan. These amounts will be placed in special funds or accounss which must be set up for you in order to pay for the benefits you have chosen. The portion of your pay that is paid to the Plan is not subject ~o Federal income or Social Security taxes. In other words, this allows you to use tax-free dollars to pay for certain kinds of benefits and expenses which you normally pay for with out-of-pocket, taxable dollars. However, if you receive a reimbursement for an expense under the Plan, you cannot claim a Federal ~ncome ~ax credit or deduction on your re~urn. III CONTRIBUTIONS 1. How Much of My Pay May the Employer Redirect? Each year, for the premium paymen~ benefits provided zo Employees under this Plan we will automatically contribute on your behalf enough of your compensation 5o pay for the coverage provided. In addition, you may elect ~o pay for the benefits that you elsct under the Plan. These amounss will be deducted from your pay over the course of the year. However, you may not have us contribute more than the total amoun~ of your compensation each Plan Year. 2. How Is My Compensation Measured Under Our Plan? Compensation for each Plan Year will be your base compensation as of December 1st (or date of hire if hired during December) of the previous calendar year and does not include overtime commissions, or bonuses. If you are eligible to participate in the Retiree Health Insurance Program, Compensation for each Plan Year will be the balance as of December 1st (or date of retirement if it is during December) of the previous calendar year of your Sick Leave Deferred Compensation Account. 3. What Happens to Contributions Made ~o the Plan? Before each Plan Year begins, you will select the non-insured benefits you want and how much of the contributions should go toward each benefit. It is very important that you make these choices carefully based on what you expec~ to spend on each covered benefit or expense during the Plan Year. Later, they will be used ~o pay for the expenses as they arise during the Plan Year. 4. When Must I Decide Which Accounts I Want to Use? You are required by Federal law 5o decide before the Plan Year begins, during the "election period." You must decide ~wo things. First, which benefits you wan~ and, second, how much should go toward each benefit. If you are an Employee and are already covered by any of the insured benefits offered by this Plan, you will automatically become a Participant to the ex~en5 of the premiums for such insurance unless you elect, during the "election period," not ~o participate in the Plan. A Retiree, however, under the Retiree Health Insurance Program will not automatically become a Participan~ for the insurance benefits. A Retiree will need to make an election during the election period 5o participate. 5. When Is the "Election Period" for Our Plan? Your election period will stare on the date you first meet the "eligibility requirements" and end 30 days after your "entry datei" (You should review Section I on Eligibility Eo better understand the terms "eligibility requirements" and "entry date.") Then, for each following Plan Year, the election period is established by the Administrator and applied uniformly to all participants. It will normally be a period of time prior to the beginning of each Plan Year. The Administrator will inform you each year about the election period. (See the Article entitled "General Information Abou~ Our Plan" for the definition of Plan Year~) 6. May I Change My Elections During the Plan Year? Generally, no. You cannot change the elections you have made after the beginning of the Plan Year. However, there are certain limited situations when you can change your elections. You are permitted Eo change if there is a change in your family status. Currently, Federal law considers the following events 5o be examples of a change in family status: -- You ge~ married or divorced. -- You have a child or adopt one. -- Your spouse and/or child(ren) die(s). -- Your spouse commences or terminates employment. -- Your or your spouse's employment suatus changes from full-time Eo part-time or from part-time to full-time. -- You or your spouse take an unpaid leave of absence. -- Your spouse has a significant change in health coverage directly attributable to your spouse's employment. There may be other events which are considered Eo be a change in family status. Also, any election change muse be consistent with the reason that such change was permitted. If you have a change in family status, you should contact the Administrator, who will provide you with the required forms for changzng your benefit elections. 7. May I Make New Elections in Future Plan Years? Yes, you may. For each new Plan Year, you may change the elections that you previously made. You may also choose not to participate in the Plan for the upcoming Plan Year. If you do not make new elections during the "election period" before a new Plan Year begins, you will not be considered a participant for the 4 benefit options under the Plan for the upcoming Plan Year. However, Employees will automatically be considered a Participan5 for the insured benefit options unless an election is made no5 5o participate. IV BENEFITS 1. What Benefits Are Available? Under our Plan, you can choose to receive your entire compensation in cash or use a portion to pay for the following benefits or expenses during the year: Health Care Reimbursement Plan: The Health Care Reimbursement Plan enables you to pay for expenses which are not covered by our medical plan and save uaxes at the same uime. The account allows you ~o be reimbursed by the Employer for out-of-pocket medical, dental and vision expenses incurred by you and your dependents. The expenses which qualify are those permitted by Section 213 of the Internal Revenue Code. A list of covered expenses is available from the Administrator. You may non, however, be reimbursed for the cost of other health care coverage maintained outside of the Plan. In order to be reimbursed for a health care expense, you musu submit to the Administrator an itemized bill from the service provider. Amounts reimbursed from uhe Plan may not be claimed as a deduction on your personal Income tax return. Reimbursement from the fund shall be paid at least once a month. Dependent Care Assistance Accounu: The Dependent Care Assistance Account enables you uo pay for out-of-pocket, work-related dependenu day-care cosu with pre-uax dollars. If you are married, you can use the account if you and your spouse both work or, in some situations, if your spouse goes uo school full-time. Single employees can also use the accounu. An eligible dependent is any member of your household for whom you can claim expenses on Federal Income Tax Form 2441 "Credit for Child and Dependent Care Expenses." Children musu be under age 13. Other dependents must be physically or mentally unable to care for themselves. Dependenu Care arrangements which qualify include: -- A Dependent (Day) Care Center, provided that if care is provided by the facility for more than six individuals, the facility complies with applicable suate and local laws. -- An Educational Institution for pre-school children. For older children, only expenses for non-school care are eligible. / -- An "Individual" who provides care inside or outside your homel The "Individual" may not be a child of yours under age 19 or anyone you claim as a dependent for Federal tax purposes. You should make sure that the dependent care expenses you are currently paying for qualify under our Plan. The law places limits on the amount of money that can be paid to you in a calendar year from your Dependent Care Assistance Account. Generally, your reimbursements may not exceed the lesser of: (a) $5,000 (if you are married filing a joint return or you are head of a household) or S2,500 (if you are married filing separate returns); (b) your taxable compensation; (c) your spouse's actual or deemed earned income (a spouse who is a full time student or incapable of caring for himself/herself has a monthly earned ~ncome of $200 for one dependent or $400 for two or more dependents). Also, in order to have the reimbursements made to you from this account be excludable from your income, you must provide a statement from the service provider including the name, address, and in most cases, the taxpayer identification number of the service provider on your tax form for the year, as well as the amount of such expense as proof that the expense has been incurred. In addition, Federal tax laws permit a tax credit for certain dependent care expenses you may be paying for even if you are not a participant in this Plan. You may save more money if you take advantage of this tax credit rather than using the Dependent Care Assistance Account under our Plan. Ask your tax adviser which is better for you. A Retiree under the Retiree Health Insurance Program who is eligible to participate in the Plan ("Retiree") will nou be eligible to participate in the Dependent Care Assistance Program. Premium Expense Account (Health Care and Life Insurance): A Premium Expense Account allows you to use tax-free dollars to pay for certain premium expenses under various insurance programs that we offer you. These premium expenses include: -- Health care premiums under our self-funded medical plan. -- Group term life insurance premiums. You may elect to purchase additional life insurance coverage in increments of S10,000 up to a total coverage (including coverage provided directly by the Village) equal to $50,000. A "Retiree" is not eligible to use the Premium Expense Account to pay for group term life insurance premiums. Under our Plan, we will establish sub-accounts for you for each different type of coverage that ~s available. Also, certain limits on the amount of coverage may apply. The Administrator may terminate or modify Plan benefits at any time, subject to the provisions of any contracts providing benefits described above. Also, your coverage will end when you are no 6 longer eligible under the terms of any coverage, or when coverage terminates. Any benefits co be provided by insurance will be provided only after (1) you have provided the Adminissra~or the necessary information to apply for insurance, and (2) the insurance is in effect for you. V BENEFIT PAYMENTS 1. When Will I Receive Payments From My Accounts? During the course of the Plan Year, you may submit requests for reimbursement of expenses you have incurred. Expenses are considered "incurred" when the service is performed, noc necessarily when it is paid for. The Administrator will provide you with acceptable forms for submitting these requests for reimbursement. If the request qualifies as a benefit or expense tha~ the Plan has agreed 5o pay, you will receive a reimbursement payment soon thereafter. Remember, these reimbursements which are made from the Plan are generally not subjecz to federal income tax or withholding. Nor are they subjec~ 5o Social Security taxes. The provisions of the insurance contracts will control what benefits will be paid and when. You will only be reimbursed from the Dependent Care Assistance Account to 5he exsent that there are sufficient funds in the Account to cover your requess. 2. What Happens If I Don'~ Spend All Plan Contributions? Any monies left at the end of the Plan Year will be forfeited. Obviously, qualifying expenses that you incur late in the Plan Year for which you seek reimbursement after the end of such Plan Year will be paid first before any amount is forfeited. However, you must make your requests for reimbursement no later than a reasonable time following each Plan Year, subject to procedures established by the Plan Administrator. Because it is possible tha5 you might forfeit amounts in the Plan if you do not fully use the contributions that have been made, it is important that you decide how much to place in each accoun5 carefully and conservatively. Remember, you must decide which benefits you want to contribute Eo and how much ~o place in each accoun~ before the Plan Year begins. You wan~ to be as certain as you can that the amount you decide to place in each account will be used up entirely. 3. What Happens If I Terminate Employment? If you leave our employ during the Plan Year, your right to benefits will be determined in the following manner: -- You will remain covered by insurance, but only for the period for which premiums have been paid prior to your termination of employment. 7 -- YOU will still be able to request reimbursement for qualifying dependent care expenses for the remainder of the Plan Year from the balance remaining in your dependent care account at the time of termination of employment. However, no further salary redirection contributions will be made on your behalf after you terminate. -- Your participation in the Health Care Reimbursement Plan will cease, and no further salary redirection contributions will be contributed on your behalf. However, you will be able to submit claims for health care expenses incurred prior to your date of termination. Under Federal law, you, your spouse, and your dependents may be entitled to continuation of health care coverage. The Administrator will inform you of these rights if you terminate employment. Generally, if we (and any related companies) employed twenty (20) or more employees "on a typical business day" in the preceding calendar year, health plan continuation must be made available for a period not to exceed eighteen (18) months if a loss of benefits occurs because of your termination of employment or reduction of hours, or for a period not to exceed three (3) years for any of the other reasons given in (b) and (c) below. Under certain circumstances, persons who are disabled at the time of termination of employment or reduction in hours may be eligible for continuation of coverage for a total of 29 months (rather than 18). You should check with the Administrator for more details regarding this extended coverage. However, in certain circumstances, this continuation coverage may be terminated for reasons such as failure to pay continuation coverage cos~, coverage under another employer's plan (whether as an employee or otherwise, provided the other employer's health plan does not contain any exclusion or limitation with respect to any pre-existing condition of the beneficiary), termination of our health plan, or you (or the person entitled to continued coverage) become entitled to Medicare benefits. However, if you become entitled to Medicare benefits, your dependents may still qualify for continuation coverage. The cos~ of continuation coverage must be paid by the individual choosing such coverage; however, the cost may not exceed 102% of the cost of the same coverage far a "similarly situated" employee or family member. When the continuation coverage for a disabled person is exsended from 18 months to 29 months, the disabled person may be charged 150% (rather than 102%) of the cost of the coverage after expiration of the initial 18-month period. (a) If you would otherwise lose your health plan coverage under this Plan because of a Eermination of employment or reduction in hours, you may continue the health plan coverage provided under this Plan. However, this will no~ be a tax-deductible expense to you, absent unusual circumstances. (b) Your spouse may choose continuation coverage for himself or herself if he or she loses group health coverage for 8 any of the following reasons: (1) your death; (2) your divorce or legal separation; or (3) you become entitled ~o Medicare. (c) Your dependent children may choose continuation coverage for themselves if they lose group health coverage for any of the following reasons: (1) death of a parent; (2) your divorce or legal separation; (3) you become entitled to Medicare; or (4) your dependent ceases to be a dependent child under the Plan. It is your responsibility to notify the Plan Administrator of a divorce, legal separation or other change in marital status, change in a spouse's address, or a child losing dependent status under the plan, within sixty (60) days of the event. It is our responsibility to notify the Plan Administrator of your death, termination of employraent or reduction in hours, or Medicare eligibility. 4. What Happens If I Am A Retiree and My Sick Leave Deferred Compensation Account Is Depleted? If you participate in the Plan pursuant to the Retiree Health Insurance Program and you no longer have sick leave available to pay for benefits under the Plan, your right to current benefits will be determined in the following manner: -- You will remain covered by insurance, but only for the period for which premiums have previously been paid. -- Your participation in the Health Care Reimbursement Plan will cease, and no further salary redirection contributions will be contributed on your behalf. However, you will be able to submit claims for health care expenses previously incurred. 5. Will My Social Security Benefits Be Affected? Your Social Security benefits may be slightly reduced because when you receive tax-free benefits under our Plan, it reduces the amount of contributions that you make to the Federal Social Security system as well as our contribution to Social Security on your behalf. VI HIGHLY COMPENSATED AND KEY EMPLOYEES 1. Do Limitations Apply to Highly Compensated Employees? Under the Internal Revenue Code, "highly compensated employees" and "key employees" generally are Participants who are officers, shareholders or highly paid. You will be notified by the Administrator each Plan Year whether you are a "highly compensated employee" or a "key employee." 9 If you are within these categories, the amount of contributions and benefits for you may be limited so that the Plan as a whole does not unfairly favor those who are highly paid, their spouses or their dependents. Federal tax laws state that a plan will be considered to unfairly favor the key employees if they as a group receive more chan 25% of all of the nontaxable benefits provided for under our Plan. Plan experience will dictate whether contribution limitations on "highly compensated employees" or "key employees" will apply. You will be notified of these limitations if you are affected. VII PLAN ACCOUNTING 1. Periodic Statements The Administrator will provide you with a statement of your accoun~ periodically during the Plan Year that shows your accoun5 balance. It is important to read these statements carefully so you understand the balance remaining to pay for a benefit. Remember, you want to spend all the money you have designated for a particular benefit by the end of the Plan Year. VIII GENERAL INFORMATION ABOUT OUR PLAN This Section contains certain general information which you may need 5o know about the Plan. 1. General Plan Information Village of Mount Prospect Flexible Compensation Plan is the name of the Plan. Your Employer has assigned Plan Number 501 ~o your Plan. The provisions of your amended Plan become effective on January 1, 1996. Your Plan was originally effective on July 1, 1985. Your Plan's records are maintained on a twelve-month period of time. This is known as the Plan Year. The Plan Year begins on January 1st and ends on December 31st. 2. Employer Information Your Employer's name, address, and identification number are: Village of Mount Prospec~ 100 South Emerson Stree5 Moun~ Prospect, Illinois 60656 36-6006011 10 3. Plan Administrator Information The name, address and business telephone number of your Plan's Adminiszrasor are: Mr. David Jepson, Village of Mount Prospec~ 100 South Emerson Street Mount Prospect, Illinois 60656 (708) 392-6000 The Administrator keeps the records for the Plan and is responsible for the administration of the Plan. The Administrator will also answer any questions you may have about our Plan. You may contact the Administrator for any further information about the Plan. 4. Service of Legal Process The name and address of the Plan's agenz for service of legal process are: Village of Mount Prospec5 100 South Emerson Street Mount Prospect, Illinois 60656 5. Type of Administration The type of Administration is Employer Administration. IX ADDITIONAL PLAI~ INFORMATION 1. Claims Process You should submit reimbursement claims during the Plan Year, but in no event later than a reasonable time following each Plan Year, subjec5 to procedures established by the Plan Administrator. Any claims submitted after tha~ time will no~ be considered. Claims for benefits that are insured or self-funded will be reviewed in accordance with procedures contained in the policies. All other general claims or requests should be directed to the Administrator of our Plan. If a non-insured claim under the Plan is denied in whole or in part, you or your beneficiary will receive wri~sen notification. The notification will include the reasons for the denial, with reference 5o the specific provisions of the Plan on which the denial was based, a description of any additional information needed to process the claim and an explanation of the claims review procedure. If we fail to respond within 90 days, your claim is treated as denied. Within 60 days after denial, you or your beneficiary may submit a written reques5 for reconsideration of the application to the Administrator. Any such reques~ should be accompanied by documents or records in suppor~ of your appeal. You or your beneficiary may review 11 pertinent documents and submit issues and comments in writing. The Administrator will review the claim and provide, within 60 days, a writsen response to the appeal. (This period may be extended an additional 60 days under certain circumstances.) In this response, the Administrator will explain the reason for the decision, with specific reference ~o the provisions of the Plan on which the decision is based. The Administrator has the exclusive r~ght to interpret the appropriate plan provisions. Decisions of the Administrator are conclusive and binding. X SUMMARY The money you earn is important to you and your familyl You need it ~o pay your bills, enjoy recreational activities and save for the future. Our flexible benefits plan will help you keep more of the money you earn by lowering the amount of taxes you pay. The Plan is the result of our continuing efforts 5o find ways to help you get the most for your earnings. If you have any questions, please contact the Administrator. 12