HomeMy WebLinkAboutRes 11-05 04/06/2005
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RESOLUTION NO. 11-05
A RESOLUTION AUTHORIZING AMENDMENTS
TO THE MOUNT PROSPECT FLEXIBLE COMPENSATION PLAN
WHEREAS, pursuant to provisions of the Internal Revenue Code, there was submitted
to the Mayor and Board of Trustees of the Village of Mount Prospect (hereinafter
referred to as "the Village') a certain plan entitled "Village of Mount Prospect Flexible
Compensation Plan" to provide for payment of specific expenses of Village employees
for the Medical Plan of the Village of Mount Prospect; and
WHEREAS, the Mayor and Board of Trustees did approve Resolution No. 39-85
authorizing said "Village of Mount Prospect Flexible Compensation Plan" (hereinafter
referred to as "the Flex Comp Plan') for employees of the Village; and
WHEREAS, the Mayor and Board of Trustees of the Village of Mount Prospect have
determined that it is in the best interest of the Village to amend the Flex Comp Plan,
which amendments would create compliance with the Internal Revenue Service Code
and the Health Insurance Portability and Accountability Act.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND BOARD OF
TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS:
SECTION ONE: That the Village of Mount Prospect Flexible Compensation Plan is
hereby amended to define "dependent" to comply with the I nternal Revenue Service
Code as amended, to include privacy regulations and procedures to comply with the
Health Insurance Portability and Accountability Act (HIPAA), and to define "eligible
medical or dental expenses" to exclude the purchase of, or participation of, items
considered for general health.
SECTION TWO: That the Mayor and Village Clerk are hereby authorized to execute
"The Village of Mount Prospect Flexible Compensation Plan" as amended and attached
hereto as Exhibit "A", which shall be effective as of April 6, 2005.
Amend Flex Comp
Page 2/2
SECTION THREE: That this Resolution shall be in full force and effect from and after
its passage and approval in the manner provided by law.
AYES:
Corcoran, Lohrstorfer, Skowron, Wilks, Zadel
NAYS:
None
ABSENT:
Farley
PASSED and APPROVED this 6th day of April, 2005.
ATTEST:
V 81 r!J:¿!
Village Clerk
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H:ICLKOIfilesIWINIRESIFLEX CaMP amendments,Apr 2005.doc
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VILLAGE OF MOUNT PROSPECT
FLEXIBLE COMPENSATION PLAN AMENDMENTS
APRIL, 2005
At a meeting held on the 6th day of April, 2005, at which a quorum was present, the Board
of the Village of Mount Prospect (the "Board") adopted the following amendments to the Flexible
Compensation Plan:
RECITALS
1.
The Village of Mount Prospect (the "Village") has established, and maintains, the Village
of Mount Prospect Flexible Compensation Plan (the "Plan").
2.
The Plan defines the term "Dependent" by reference to section 152 of the Internal
Revenue Code (the "Code").
The Working Families Tax Relief Act of 2004 (the "WFTRA") modified the definition of
the term "dependent" under Code section 152 (and related statutory provisions) effective
January 1, 2005.
3.
4.
The Village must amend the Plan to reflect the modifications made to the definition of
"dependent" under the WFTRA.
5.
In addition, the Village's Business Office is concerned that employees are using
amounts set aside in their Health Reimbursement Accounts under the Plan to purchase
exercise equipment and health club memberships by obtaining physician prescriptions
that may, or may not, be legitimate.
6.
The application of Health Reimbursement Account balances to expenses that are not
legitimate medical expenses could jeopardize the tax status of the Plan.
7.
To minimize the risk the Plan's tax status could be jeopardized by the improper
reimbursement of expenses associated with exercise equipment, health club
memberships, or equipment or services simply intended to promote general health, the
Board has determined it is in the Village's best interest to amend the Plan to exclude
coverage of those items.
8.
The Health Insurance Portability and Account Act of 1996 ("HIPAA") and the regulations
under HIPAA require that the Plan limit the use and disclosure of protected health
information ("PHI") and protect the confidentiality of PHI in the Plan's possession.
9.
The Board has determined that it is in the best interest of the Village to amend the Plan
to clarify the application of HIPAA to the Plan.
Flex-Comp, Page 2/6
AMENDMENTS
1.
Effective January 1, 2005, Section 1.2 of the Plan is revised in its entirety to read as
follows:
Dependent. With regard to "Eligible Medical or Dental Expenses," the
term "Dependent" means any individual who is a dependent of the
Participant, as defined in Code section 152 (as modified by Code section
1 05(b)), as amended.
1.2
With regard to "Dependent Care Expenses," the term "Dependent" means
any individual who is:
(a)
(b)
A dependent of the Participant who is under the age of 13 and
with respect to whom the Participant is entitled to an exemption
under Code section 152(a)(1); or,
A dependent (as defined in Code section 152) or spouse of the
Participant who is physically or mentally incapable of caring for
himself/herself.
If a Participant is divorced and the Participant has a child described in (a)
or (b) above, the rules of Code section 21 (e)(5) (with respect to custody
of the child) shall apply for purposes of determining the child's status as a
Dependent.
2.
Effective January 1, 2005, Section 1.8 of the Plan is amended in its entirety to read as
follows:
1.8
Eliqible Medical or Dental Expenses. Except as otherwise
provided in this Section 1.8, the phrase "Eligible Medical or Dental
Expenses" means any expense for "medical care" as defined in
Code section 213(d), as amended. The term "Eligible Medical or
Dental Expenses" does not include premium payments for long-
term care insurance coverage or for health plan coverage, such as
premiums paid for health coverage under a plan maintained by an
employer of the Participant's Spouse or Dependents. The term
"Eligible Medical and Dental Expenses" does not include
expenses incurred for long-term care services as defined in Code
section 7702B(c).
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Flex-Comp, Page 3/6
3.
The term "Eligible Medical or Dental Expenses" does not include
the following (regardless of whether the Participant has a
physician's prescription):
(a)
(b)
The cost to join or utilize a health, athletic or similar club;
The cost of any weight loss or similar program;
(c)
The cost to purchase or rent supplies or equipment that (i)
promote general health or (ii) are of common household
use, such as (by way of example and not limitation):
.
Exercise equipment;
. Air purifiers;
.
Central or unit air conditioners;
. Water purifiers;
.
Allergenic pillows or mattresses; or
. Waterbeds.
The Village amends the Plan by adding new Section 4.6 to read as follows:
4.6
Use and Disclosure of Protected Health. Information. The
provisions of this Section shall be effective April 14, 2004.
(a)
Compliance With HIPAA. The Health Reimbursement
Account plan (the "HRA Plan") will use protected health
information ("PHI") to the extent of and in accordance with
the uses and disclosures permitted by the Health
Insurance Portability and Accountability Act of 1996
("HIPAA"). PHI is individually identifiable health
information that is transmitted or maintained in any form or
medium - electronic, oral or written. Health information
means any information that is created or received by the
HRA Plan that relates to: 1) the past, present or future
physical or mental health or condition of an individual,
2) the provision of health care to an individual, or 3) the
past, present or future payment for the provision of health
care to an individual. Specifically, the HRA Plan will use
and disclose PHI for purposes related to health care
treatment, payment and health care operations.
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Flex-Comp,4/6
(c)
Payment includes activities undertaken by the HRA Plan to
obtain premiums or determine or fulfill its responsibility for
coverage and provision of plan benefits that relate to an
individual to whom health care is provided. These
activities include, but are not limited to, the following:
.
determination of eligibility and coverage;
adjudication of health benefit claims (including
appeals and other payment disputes); and
billing, collection activities and related health care
data processing.
.
.
(b)
Use and Disclosure of PHI As Permitted by Authorization
of the Participant or Beneficiary. With an authorization, the
HRA Plan will disclose PHI to the Employer for purposes
that may include, but are not limited to: 1) drug testing or
fitness for duty examinations, 2) requests for leave under
the federal or state Family and Medical Leave Act, 3) short
term disability claims, 4) long term disability claims,
5) workers' compensation claims, and 6) requests for
accommodations under the Americans with Disability Act.
Permitted Disclosures to Employer. The HRA Plan will
disclose PHI to the Employer only upon receipt of a
certification from the Employer that the plan documents
have been amended to incorporate the following provisions
and the Employer agrees to the following. The Employer
shall:
.
Not use or further disclose PHI other than as
permitted or required by the HRA Plan document or
as required by law;
Ensure that any agents, including a subcontractor,
to whom the Employer provides PHI received from
the HRA Plan agree to the same restrictions and
conditions that apply to the Employer with respect
to such PHI;
Not use or disclose PHI for employment-related
actions and decisions unless authorized by an
individual;
Not use or disclose PHI in connection with any
other benefit or employee benefit plan of the
Employer unless authorized by an individual;
.
.
.
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Flex-Comp, Page 5/6
(d)
(e)
.
Report to the HRA Plan any PHI use or disclosure
that is inconsistent with the uses or disclosures
provided for of which it becomes aware;
Make PHI available to an individual in accordance
with HIPAA's access requirements;
Make PHI available for amendment and incorporate
any amendments to PHI in accordance with HIPAA;
Make available the information required to provide
an accounting of disclosures;
Make internal practices, books and records relating
to the use and disclosure of PHI received from the
HRA Plan available to the HHS Secretary for the
purposes of determining the HRA Plan's
compliance with HIPAA; and
If feasible, return or destroy all PHI received from
the HRA Plan that the Employer still maintains in
any form, and retain no copies of such PHI when
no longer needed for the purpose for which
disclosure was made (or if return or destruction is
not feasible, limit further uses and disclosures to
those purposes that make the return or destruction
infeasible ).
.
.
.
.
.
Separation Between HRA Plan and Employer. In
accordance with HIPAA, only the following employees or
classes of employees may be given access to PHI:
.
The Human Resources Director;
The Village Manager;
The Assistant Village Manager;
The Payroll and Accounts Payable Clerk; and
Staff designated by the Human Resources Director.
.
.
.
.
Limitations of PHI Access and Disclosure. The persons
described above may only have access to and use and
disclose PHI for plan administration functions that the
Employer performs for the HRA Plan.
Noncompliance Issues. If the persons who have access to PHI do not
comply with this HRA Plan document, the Employer shall provide a
mechanism for resolving issues of noncompliance, including disciplinary
sanctions.
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Flex-Comp, Page 6/6
4.
The following actions taken by Management, effective April 14, 2004, with the intent to
comply with the requirements of HIPAA are ratified:
(a)
The Village's Human Resources Director has been appointed as the Privacy Official
for the Plan.
(b)
The Village has adopted Privacy Policies and Procedures that are intended to
comply with HIPAA.
5.
The Village Manager is authorized and directed to take any and all action that he/she
deems necessary or appropriate to affect the foregoing amendments and to execute a
revised Plan document incorporating the changes approved above.
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ATTEST:
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C:IDocumeritf"âhiSettingslkdewisILocal SeflingslTemporary Internet FileslOLK2\Flex Camp Modifications 2005Attachments1.DOC
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