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Home My WebLink AboutRESPONSE - RFP - P1031 FLEXIBLE SPENDING ACCOUNT ADMINISTRATORY 1 n n i DENVER RESERVE, C O R P' 0 R A T I 0 N Cafeteria Plan Flexible Spending Account (Section 125) , Proposal For CITY OFFORT COLLINS, DENVER RESERVE C O R P O R A T I O N Data Reporting Capabilities 1. What data is required from an employer initially and on a monthly basis to maintain your account systems? Initial enrollment information includes participant name, address, email address (if available), social security number, per pay period contribution and annual election for all accounts. Non-discrimination testing information will also be required during the initial set up and could be required later during the plan year based on the results. On a per pay period basis, participant payroll contributions will be required. 2. In what format can you receive and transmit eligibility data including additions and deletions? Employer has the option to use the Denver Reserve website, submit information electronically, or by paper. 3. Are you able to furnish monthly reports or electronic files for payment status? What is included in these reports? Contribution reports, disbursement reports, and year to date activity reports will be sent electronically, or by hard copy, on a monthly or per pay period basis. They will reflect the activity of each participant and their respective accounts as well as the overall company balances. These reports ca also be accessed online via the employer side of our website. 4. Do you have any limitations with electronic payroll systems? Please describe your technology capabilities. With over 900 clients, we have clients using every major payroll system in America. We accept electronic information in most any format except tape. We are not aware the process any given employer uses to generate information from their payroll system to Denver Reserve. 5. What is your timeframe for receiving annual open enrollment processing dates? Generally, we prefer to receive enrollment information at least 3 weeks prior to the start of the plan year. If debit cards are used, this will allow cards to be processed and mailed to participants prior to the plan year. 6. Do you require Social Security # or can you accept other ID #s? The employer may designate an ID number instead of Social Security numbers. The alternative number must be at least 6 digits. 7. Describe the security parameters for your systems both for the employer and the employees (ex: passwords). Do you require an email address for online access? Both employer and employee access to the web site requires a user ID and password. The employer login will be provided by Denver Reserve. For participants, an email address is required as a part of the login. The password is determined by the participant after the first login. 8. Do you provide employer and employee statements if no online or phone access is available? DENVER RESERVE C O R P 0 R A T I O N Participants my request statements at any frequency without charge. Employer reports are provided automatically at any frequency desired. Communications 1. What employee communication materials are provided? Employee enrollment packets consist of a summary page outlining the different accounts that are available, the IRS restrictions, the claims process and the website. A list of qualified health care expenses as well as a summary of the over-the-counter drug ruling is also provided. Information regarding our Visa Direct Reimbursement Card is included. A copy of the claim and direct deposit form and election form is also in the enrollment packet. 2. Is printing and distribution of materials included or is there an additional cost? If so, please list all that apply There is no cost for printing or distribution of any materials. 3. Do you provide any of the following (include examples of materials reimbursement statement, etc.): ■ Plan Documents Yes ■ Summary Plan Description Yes ■ Enrollment kits Yes ■ Claim forms Yes ■ Explanation of Benefits/Statements Yes — statements are an additional fee to the employer. Employers today rarely pay for statements because of the real-time web site and because participants can request statements at any frequency at no charge. ■ Other communication materials Is there an additional charge for any of these services? No. 4. Are you available and willing to attend open enrollment meetings? Is there an extra cost? There is no cost associated with enrollment meetings. We make every attempt to attend every meeting. The issue is one scheduling, the earlier, the better. Quality Assurance/Compliance/Financial 1. Describe your quality control and audit procedures. Current error rate for claims is .64% for the past 90 days. 2. Please confirm that your organization administers all programs according to all federal laws. How do you stay informed of and implement changes to reflect the laws/regulations? DENVER RESERVE C 0 R P 0 R A T I 0 N Denver Reserve employs the only Certified Cafeteria Plan Instructor in Colorado as well as 3 of the 6 Certified Cafeteria Plan Administrators. Between personal contacts with the industry and the IRS along with the two most prominent industry trade groups were are very much part of the industry tracking not only changes but also the resulting impact. 3. Do you provide clients with legislative updates? If so, how do you obtain this information and how do you disseminate it to the client? Regulatory changes are communicated to clients within hours of most changes. Denver Reserve does not charge any consulting fees to advise clients as to the implementation, consideration, or effect of changes upon the clients plan. Regulatory changes are communicated to clients within hours of most changes. Denver Reserve does not charge any consulting fees to advise clients as to the implementation, consideration, or effect of changes upon the clients plan. 4. What amount of general professional and liability insurance do you maintain? General liability is $2,000,000 with excess umbrella coverage of $5,000,000. Professional Errors and Omission is $2,000,000. 5. What is your rate guarantee? Are you willing to provide rate caps if you cannot provide a multi -year rate guarantee? The rate guarantee is 3 years. 6. Provide and outline of your performance guarantees. Our client retention is close to 100 % for 16+ years when measured against service issues. We are happy to provide a performance guarantee. Usually, we ask the client for a suggested guarantee so that we address whatever aspect they are most concerned. 7. Provide a minimum of 3 references. City and County of Denver (new plan —1/06) Heather Britton 201 West Colfax, Department 412 Denver, CO 80202 720-913-5699 Douglas County Government Mindy Ridpath 100 Third Street Aurora, CO 80011 (303) 688-9306 City of Greeley Mark Buher 100010th Street Greeley, CO 80631 ri WIvI%I•M DENVER RESERVE C 0 R P O R A T I O N (970) 350-9712 Additional References are found on page 47 of the Formal Proposal. Fee Schedule CITY OF FORT COLLINS These fees represent an all-inclusive fee structure. There are no additional fees, see p.2 for included services. Plan Set -Up Services (additional setup for HRA — see below) $500 Plan Design Included Plan Document & Summary Plan Description Included Enrollment materials Included Enrollment meetings (DRC staff time) Included Enrollment meetings (travel expenses — outside CO) paid by Client Loading the plan on DRC systems Included HRA set up - $250 w/ FSA, $350 w/o FSA Monthly Record Keeping Fees Base Fee ($504/12 months) (includes all plans: FSA, Trans, $42 HRA, HSA) Spending Account Participants - Per Participant per Month (includes all plans: FSA, Trans, HRA, HSA)* $3.25 Other Services Participant replacement check (paid by participant) $20 Document amendment $175 Document amendment and restatement $350 DRC Visa Card**(AII spending accounts automatically receive a card. Use of the card is a participant decision.) ► Employer Sponsored (paid by the employer/participant) $ 15/plan yr ► Employee Paid Card — 2 options: Option # 1 — per plan year $18 Option # 2 — pay as you go $5 Option #2 transaction fee (up to $15) $1/transaction Maximum annual fee under Option #2 $20 * A participant includes all currently employed participants. It also includes participants who have terminated employment but are eligible to submit claims (they have an available balance). ** The DRC Visa Card is a great enhancement to the Flexible Spending Accounts. All spending accounts are available on the card (dep care, medical) plus transportation, etc. There are no additional fees for including all reimbursement accounts on the card. DENVER RESERVE C 0 R P 0 R A T I O N Cafeteria Plan Flexible Spending Account (Section 125) Proposal For CITY OF FORT COLLINS Table of Contents DenverReserve Corporation.........................................................................................................1 Summary of Plan Services............................................................................................................. 2 Transportation................................................................................................................................ 3 HealthReimbursement Arrangement.......................................................................................... 4 HealthSavings Account (HSA)............................................................................5 About Cafeteria Plans.................................................................................................................... 7 Whatis a Cafeteria Plan............................................................................................................... 8 WhyHave a Cafeteria Plan........................................................................................................ 12 TaxSavings................................................................................................................................. 13 What Denver Reserve Provides.................................................................................................. 14 WhyEmployees Want a Plan...................................................................................................... 15 TaxComparison.......................................................................................................................... 17 Howto Participate in a Plan........................................................................................................18 ElectionForm.......................................................................................................................... 19 Enrollment Summary Sheet..................................................................................................... 20 PlanOperations............................................................................................................................ 24 Plan Design and Documents....................................................................................................... 24 Banking....................................................................................................................................... 25 Auditsand Trusts........................................................................................................................ 26 Paymentof Claims...................................................................................................................... 27 Claim Form and Direct Deposit Form....................................................................................... 28 VisaCard.................................................................................................................................... 31 Non -Discrimination Testing........................................................................................................ 32 PlanTax Return.......................................................................................................................... 36 Employee Communications......................................................................................................... 37 Employer Communications and Reports.................................................................................... 38 Year to Date Statements.......................................................................................................... 38 ContributionListing................................................................................................................ 39 DisbursementListing............................................................................................................... 40 ClaimListing........................................................................................................................... 41 EmployeeStatement................................................................................................................ 42 ImplementationSchedule............................................................................................................ 44 FeeSchedule............................................................................................................................... 45 References................................................................................................................................... 46 Health Insurance Portability and Accountability Act (HIPAA)................................................. 48 Notice of Privacy Practices..................................................................................................... 48 Business Associate Agreement................................................................................................ 52 ServiceAgreement....................................................................................................................... 58 DENVER RESERVE (A) DENVER RESERVE c a R v o R e r l n ry Page 2 of 58 Denver Reserve Corporation Denver Reserve Corporation is a true, independent, third -party administrator for Cafeteria Plans, Flexible Spending Accounts, Transportation Expenses, Health Reimbursement Arrangements and Health Savings Accounts. Our only business is reimbursement plans. We neither offer nor sell any other product or service. With hundreds of plans throughout the United States, we have participants in every state. Service to the employer and the participant is unparalleled anywhere in the country. We think we offer the highest value of any administrator in the business. For over 15 years we have been providing record keeping and administrative services for clients throughout the U.S. From the beginning, our goal was to provide unmatched service and a high value to the client employer and their employees. We believe in the concept offered by Cafeteria Plans and Flexible Spending Accounts. The tax savings by participants helps to reduce the ever- increasing cost of health care and dependent care in America. You have our personal commitment to maintain the quality of employee benefit services you desire. It's not about the biggest computer or the fancy corporation trappings, it's about our people. We think you will notice the difference when you deal with Denver Reserve. Service is the only product we have. Therefore, we seek everyday to be the best in the business. Mitchell A. Chesney Robert G. Davis, CPA, CFCI UENVER RESERVE Page 1 of 58 c o a v. u. r i I n Summary of Plan Services • Daily Processing of Claims for reimbursement • DRC Visa Card for access to all reimbursement accounts. • Third -party claims substantiation • Unlimited participant inquiries - 800 number access • Claims sent directly to Denver Reserve • Reimbursement checks are sent directly to participant • Direct deposit of reimbursements at participant option • Internet access to current participant and employer account information • Terminations handled completely by Denver Reserve • Eleven -month warning notice to all participants to minimize forfeitures • Plan design • Document preparation - new plans • Form 5500 preparation (if needed) • Quarterly discrimination testing to maintain plan compliance • All-inclusive fee structure - no additional fees for administration services DENVER RESERVE l O F P U. A f I o N Page 2 of 58 DENVER RESERVE C O R P O R A T I O N August 1, 2006 City of Fort Collins Purchasing Division 215 North Mason Street, 2nd Floor Fort Collins, CO 80521 Re: Proposal Number P 1031 Proposal Compliance Letter This will be our assertion that our proposal is in compliance with the RFP specifications of Proposal Number P 1031. We know of no exceptions to the RFP specifications. CinnPrPly 7852 S Elati, Suite 200 • Littleton, CO 80120 • 303.483.6300 • 303.483.6358 fax mac@denverreserve.com °"[:'11-ON does an k1offloG ve benefit -;ae c hot1-3tilt` t'atrplot-c and th2`° r`ntl)ir)� er rntm�e�f)rtt ff1-"d)l1;16 t f,3,reat rtr t"t of the tax :thie to conimme atth t�;+, la't'e tlt4il�t1'� .tnd 5aN c oitr hos-, ta"\ didiars loos Kipfingers P4'rsonai 1F ilianC(' 'N Ik_Igarinc /Ill✓41; I il,;.ji1,Y: Transportation and Parking Expenses Can Ile Paid Pre -Tax Employers can allow their employees to purchase transit passes, pay van pool commuting costs and pay qualified parking with pre-tax dollars. ;This is a separate ,-i ;_; t fro, ; Secfion 125 plexihi€; Spendinc. Employees elect to deduct an amount from their paycheck each pay period. Employees may revoke their election any time before the start of the pay period in which the deduction is being made. Compensation reduction amounts are not refundable Amounts not used in any'00 period may be carried over _ Money is forwarded to Denver Reserve and maintained in a custodial �. account. Employees submit claims to be reimbursed for transit passes, van pool commuting costs and qualified parking. Claims for reimbursement must be submitted within 6 months of incurring expense. The DRC Visa Card can also be used to pay for transportation expenses. The limit for van pooling and transit passes is $105 per month for 2006 The limit for parking is $200 oer month for 2006. Contributions are excluded from federal income tax, state income taxi, FICA and unemployment taxes. Employees may not be paid out more funds than they have in their account at any point in time n=o Page 3 of 58 bursement Arrangement Employers may setup an account that reimburses employees for medical expenses. 6 Only employers can contribute to the plan riot employees. No salary redirections are allowed. 0 Reimbursements may be made for expenses incurred by the employee, spouse or dependents. • An HRA may only reimburse expenses for medical expenses or some medical insurance including COBRA insurance premiums. HRAs may not reimburse insurance premiums that may be also be paid by salary reduction under a Cafeteria Plan. 0 An HRA may not reimburse premiums for disability coverage. ♦ Any amounts not used may be rolled over to the next year. 0 Money may not be paid out for anything other than medical expenses. No "cash -out". 0 HRA accounts may continue to reimburse former or retired employees for post - employment expenses, • If the HRA is available only to employees who participate in the offered high deductible major I or medical plan the HRA meets nondiscrimination requirements. ♦ HRAs only pay out what an employee has in their account at any point in time. 0 Employees pay no federal, state or social security taxes on monies received from the HRA. Page 4 of 58 Health Savings Accounts (HSA Simplified Approach o the i-ieal h Savings riccomit ► _ Detwcr Reserve has taken the frustration out of usiM' an I ISA. For DRC clients, the I ISAA is a seamless account in combination with a llexible spcnding plan and the DRC Visa Card. It is as simple as 1 , �) fhe employer sends payroll deferrals for the I ISA togctlie �- with IIexible spending contributions directly to Denvcr Reserve. Fhe client already uses this same pro•_ess ifthey have a llcxihlc spending plan mth Winer Reserve. 2) I )cnvcr Reserve sends IISA contributions to the trustee bank (IRS requirement): the llcxihlc spending contributions 1-10 to the custodial account for FSAs. 11 au employee has transportation (Section 1 )?) those deferrals are sent along with ISA/HSA contributions and deposited into the appropriate account. 1 3) 11 funds may he accessed by using the DRC Visa Card. When the card is swiped. funds to pay the transaction are pulled from the appropriate account- For example. if an I ISA participant uses the card for a dental expense the money automatically comes from the FSA (if heishe has onel. Ifthc I IS,\ participant uses the card for a prescription the nwney automatically comes from the IIISA to pay the transaction. I lemble .,pending participants still have the option of tilimg a' -paper- claim for reimhurscmmilt Since I ISA expenses require no approval before rcimhurscmcnt, the I ISA participant can either use the 1)14, Visa Card. or then can go to the Denser Reserve \ycb site at zny time and request funds Cron) their I I ISA. 1 funds are sent directly to the participant without any furthe_ substantiation required other than a simptc request. when an employee contributes to an HSA, thc� are still permitted to make contributions to a "limited I Ise " Ilexihle spending plan. t inder IRS rules. expenses arc limited to dental and vision. Once [ IS:A contrihutiions stop. a participant's flexible spending participation reverts to a traditional FSA Ior all cligible expenses, Faigihlc expenses in an [ISA are never limited regardless of the FSA participation. All contributions sent to one place— NSA So f=SA Account balances and transactions are maintained by Denver Reserve for Trustee Bank No cost if current FSA or HRA participant. One monthly participant fee covers all accounts with Denver Reserve. Guaranteed interest rate. Page 5 or 58 • Access HSA funds with same DRC debit card as other accounts. The debit card maintains j a separate balance for HSA account. • One website to access all accounts. • Call Denver Reserve with questions about all reimbursement accounts including HSA. • "Limited Use" FSA automatically available. • No adjudication of HSA expenses per IRS requirements. i • Choose any carrier or broker for your "high deductible health plan" • Investment options available in the future. r— Pay Check* 2 ■■ 11 l)ikii rl D-N,1si a-1rNFVr(-ARD 01 VfSA HSAIFSA Flow of Funds DRC HSA Account Page 6 o- 58 About Cafeteria Plans Page 7 of 58 What is a Cafeteria Plan Use whatever name you like Cafeteria Plan 125 Plans Flexible Benefit Plan Flex Plan Premium Conversation FSA Flexible Spending Account Premium Only Plan The results are the same, tax savings for employees and employers. Employees like cafeteria plans because they can buy benefits with pre-tax dollars, giving them more take-home pay. They also get to pay only for the benefits they want. The option of choosing from a "menu" of benefits is why the plans are called "cafeteria plans". Employers like cafeteria plans because they also save taxes. Cafeteria plans in their simplest form are a salary conversion: Page 8 of 58 Employees provide work to their employers. $100 aIkWq **�10 Employers pay compensation to employee Page 9 of 58 r 100 Employers pay pensation to employees Taxes are taken out before �- employees receive their p compensation q� w TAXES `I J- $73 Take home pay is significantly reduced after taxes. Employees p,ovide work to their employer Page 10 of 58 Employers pay compensation to employP.0 Taxes are taken out before employees receive their P compensation V TAXES ake hom pay is Sig redu ed after ta: �e b Employees may elect to put part of their compensation in the Cafeteria Plan No taxes are taken out loyees provide work to their employers Page 11 of 58 s-` Employees pay no taxes on money going through j the Cafeteria Plan Why Have a Cafeteria Plan Employers have two reasons to offer a Cafeteria Plan 1 To offer a competitive valued employee benefit. • Many employees understand the benefit and tax savings from a Cafeteria Plan. • Having a Cafeteria will enhance a benefit package. To save taxes • Employees save the Federal, State and Social Security Taxes. • Employers also save the matching social security and Medicare taxes. • Employers may experience savings simnlar to the following: I Page 12 of 58 Executive Summa DENVER RESERVE C 0 R P 0 R A T 1 0 N Denver Reserve is happy to provide the attached proposal in response to your request. This summary will provide the scope of our services and the associated fees. Both are also included in the formal proposal attached. The formal proposal also contains additional background on Denver Reserve and our services. Denver Reserve specializes in flexible benefit reimbursement plans. We do not offer any other services or products. In business for over 16 years, we administer over 900 plans throughout the nation. Our primary market is Colorado and the Front Range. Standard Services • Daily Processing of Claims for reimbursement • DRC Visa Card for access to all reimbursement accounts. • Third -party claims substantiation • Unlimited participant inquiries - 800 number access • Claims sent directly to Denver Reserve • Reimbursement checks are sent directly to participant • Direct deposit of reimbursements at participant option • Internet access to current participant and employer account information • Terminations handled completely by Denver Reserve • Eleven -month warning notice to all participants to minimize forfeitures • Plan design • Document preparation - new plans • Form 5500 preparation (if required) • Quarterly discrimination testing to maintain plan compliance • All-inclusive fee structure - no additional fees for administration services 7852 S Elati, Suite 200 • Littleton, CO 80120 • 303.483.6300 • 303.483.6358 fax mac@denverreserve.com Tax Savings Cafeteria Plan Employer Tax Saving Number of Employees Plan Participants Annual Medical Insurance Premiums Total Contributions Health Flexible Spending Account Participants Annual Per Participant Contribution Total Contributions Dependent Care Flexible Spending Account Participants Annual Per Participant Contribution Total Contributions Total Contributions Matching Tax Savings Total Employer Tax Savings Page 13 of 58 100 90 $300 20 1 200 5 4000 24 000 20 000 71 000 7.65% ,55,431 What Denver Reserve Provides We provide everything necessary to setup up a plan including: • Plan document (hard and soft copies). • Summary plan description to provide to employees. • Information materials introducing Denver Reserve and describing the plan. • Education meetings. • Enrollment forms. • Claim forms. • Website enablement. Page 14 of 58 Why Employees Want a Plan • Employees save the Federal, State and Social Security Taxes. • Employers also save the matching social security and Medicare taxes • Employers may experience savings similar to the following: Let's look at what a typical family might save in taxies. John and Jane Smith are an average family with joint income of $50,000 per year. They have two children who are both in day care with a cost in excess of $5,000 per year. They pay $100 through their employer per month for health insurance. They also pay about $150 per month in additional medical expenses. Page 15 of 58 Cafeteria Plan Employee Tax Savinas Without a Plan With a Plan Plan Balance Salary $50,000 $50,000 Contribution to Plan Dependent Care ($5,000) E--:* $5,000 Medical Insurance ($1,200) ;> $1,200 Medical Expenses ($1,800) _ > $1,800 Taxable Salary $.50,000 $42,000 Federal Income Tax (15%) $7,500 $6,300 State Income Tax (5%) $2.500 $2,100 Social Security Tax (7.65%) ; 3 825 $3,213 Total Taxes $ 3,825 $11,613 Salary After tax $36,175 $30, 387 Expenses Dependent Care ($5,000) ($5,000) Medical Insurance ($1,200) ($1,200) Medical Expenses ($ LKO) 1.800 Take Home Pay $28,175 $22,387 Reimbursement From Plan $8,000 ($8.000) Net Take Home Pay $28,175 $30,387 Net Tax Savings $2,212 Page 16 of 58 85000 79000 63000 5,000 49000 37000 29000 19000 0 Tax Comparison Tax Comparison Federal FICA State Page 17 of 58 ❑ No Plan Plan How to Participate in a Plan Employees in the plan elect to participate in some or all of the options in the plan. By electing to participate they elect to have their compensation reduced and their employer contributes the money towards the employee's benefits. Cafeteria plans offer substantial tax savings. Unfortunately, some employees do not receive those benefits because they don't receive enough attention to help them see those benefits. Our specialty is increasing participation in new and existing plans. We bring added credibility to the plan because we are a true independent administrator (our compensation is not tied to the level of participation of the individual employee). We feel a large part of our efforts should be to educate participants so that they can make an informed decision concerning participation. This can only be accomplished by a systematic process of enrollment. The most effective enrollments are employee group meetings of 15 to 20 employees. The group meetings can be conducted on site where the employees miss as little work time as possible. Making the meetings mandatory will also increase participation, as many employees are not aware of the benefits of a Cafeteria Plan. Enrollments can also be done using, enrollment packets, conference calls and computer disks. The enrollment process described, together with all associated materials, are included in our fees. We charge nothing for our time or materials but we do charge out-of-pocket expenses for travel outside of Colorado. We will also provide enrollment meetings throughout the year for new employees at your request. The employee is actually making a salary reduction election. The following page is a sample salary reduction election form followed by the front and back of the information sheet we use during enrollment. Page 18 of 58 Election Form CAFETERIA PLAN Election Form and Compensation Reduction Agreement Company Name Plan Year Total Pay Periods Contributing Employee Name Social Security Number Employee Address -Street City State Zip email HEALTH PREMIUMS PAID THROUGH EMPLOYER All eligible premiums are automatically Pre-tax, unless you mark the box to the [ ] NO right. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT 1 elect to reduce compensation, for dependent care expenses, by $ per each pay period which is a total of $ for the plan year. understand that: will be available only for "qualifying" dependent care expenses. HEALTH FLEXIBLE SPENDING ACCOUNT elect to reduce compensation, for out-of-pocket medical expenses, by $ per each ray period which is a total of $ for the plan year. understand that: Reimbursement will be available only for "qualifying" medical expenses, i.e. expenses deductible on an individual federal income tax return. OTHER TERMS AND CONDITIONS I understand that: I cannot change or revoke this compensation reduction agreement at any time during the plan year unless I have a change in Status. Status changes are changes in: legal marital status, number of dependents, employment status, eligibility status and residence. I agree to notify the Company if I have reason to believe that any expense for which I have obtained reimbursement is not a qualifying expense. I also agree to indemnify and reimburse the Company on demand, for any liability it may incur for failure to withhold federal, state, or local income tax or Social Security tax on any reimbursement I receive of a non -qualifying expense, up to the amount of additional tax actually owed by me. The Plan Administrator may reduce compensation reduction or otherwise modify this agreement in the event he believes it advisable in order to satisfy provisions of the Internal Revenue Code. My Social Security benefits may be slightly reduced as a result of my election. This agreement will automatically terminate if the Plan is terminated or discontinued, or if I cease to receive compensation from the Company which, before reduction hereunder, is at least equal to the amount of that reduction. If my employment is terminated I agree to contact Denver Reserve regarding my account. Employee Signature Date ❑ Check here to decline participation in the section 125 Cafeteria Plan. DENVER RESERVE t ll R !' O µ♦ T 1 O" raye Ito ui oa Enrollment Summary Sheet CAFETERIA PLAN SIGN UP FOR A PAY INCREASE HOW FLEXIBLE SPENDING ACCOUNTS WORK You now have the opportunity to redirect part of your compensation into your Company's Flexible Spending Accounts. The money is contributed to the Plan before you pay federal tax, state tax and social security tax. The money can then be used to pay for: Medical Insurance Premiums Dependent Care meatcat txnenses not Medical Insurance Premiums that you pay through your employer can be paid through a Cafeteria Plan. Premiums must be for a Plan sponsored by your TYPES OF EXPENSES Dependent Care expenses must be "qualifying" as defined by the IRS and must meet the following: * Expenses are for adults or children. * Children must be under age 13. * The expenses are incurred to enable you or your spouse to be gainfully employed. * The expenses are not payable to a dependent of yours, under age 19, for watching another dependent of yours. * The limit is $5,000 if you are head of household or file a joint return. * Your day care provider must provide you with a tax ID# or social security number. Medical Expenses not paid for by an Insurance Company are "qualifying expenses as defined in the Internal Revenue Code. Expenses can be incurred by the employee, spouse or dependent. Expenses must be for a medical reason and include: Contacts & Eyeglasses Lasik Eye Surgery Dental Exams & Work Co -Payments & Deductibles Doctor Visits & Hospital Drugs 1KJ KENTKICTIONS 1. You elect any one, two or both categories of expenses to direct money into. Money directed into one category cannot be used for another. You cannot transfer money from one account to another. 2. An election is made before a year begins and cannot be changed until the next year. No changes are allowed during the year unless there is a change of family status. Family status changes include change of employment, death, birth, marriage or divorce. 3. The expense being reimbursed for must be incurred during the Plan year. 4. If you incur fewer expenses than expected, you will forfeit any money remaining in your account at the end of the year. CLAIMS PROCEDURES (For dependent care and medical reimbursement.) 1. Complete claim form and attach a copy of the bill, statement, or receipt. 2. Mail or fax claim directly to Denver Reserve, 3. Reimbursement check will be mailed directly to the participant or a direct deposit will be made to the participant's bank account. 4. Claims are processed daily and checks are mailed daily. 5. We commit to paying your claim 7 business days from the date we receive the claim or the company contribution to pay the claim. Web Site: www.denverreserve.COM Denver Reserve has a web -site for participants. You can look up your account balance as well as current and prior year-to-date information. The online statement is easy to read and offers "drill -down" access to detailed information. Account information is updated every 24 hours. Log on: Your member ID is your social security number. Your initial password is your i code. After logging on, you are required to change your password. DENVER RESERVE t U R Y O P A T 1! 4 Page 20 of 58 REIMBURSABLE MEDICAL EXPENSES Medical care expenses include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Expenses for solely cosmetic reasons generally are not expenses for medical care. Also, expenses that are merely beneficial to one's general health (for example, vacations) are not expenses for medical care. Only expenses NOT paid by insurance can be claimed Reimbursable Medical Nonprescription drugs and 15cents a mile for 2005) Expenses medicines Vasectomy Nursing care Weight loss program, Acupuncture Obstetrical expense prescribed as treatment for a Air conditioning used for Ophthalmologist specific disease alleviating illness Optician X-rays Ambulance hire Optometrist Anesthetist Oral surgery Artificial limbs and teeth Orthodontics Expenses That Are Not Birth Control Pills Osteopath Reimbursable Blood Oxygen equipment Chiropractor Pediatrician Controlled substances Christian Science Clinic Physical Exams Cosmetic surgery Contact Lenses Physician Hair transplant Contact Lens -equipment and Physiotherapist Household help material required for using lenses, Podiatrist Maternity clothes such as saline and enzyme cleaner. Practical Nurse Nutritional supplements (Vitamins, Dentist Prescription medicines & drugs herbal supplements, natural Drugs - prescription or insulin Psychiatrist medicines unless you can only Medical supplies Psychologist obtain them legally with a Eye Exams Psychoanalyst physician's prescription.) Eye surgery to improve vision Psychotherapist Personal use items Eyeglasses Rental of medical or healing Weight -loss program Fertility Enhancement equipment Guide Dog Retirement home fees, portion Many forms and publications Gynecologist allocable to medical care are now on the IRS web site Healing services Sanitarium or rest home at Health spa in home (to extent Sex therapist http://www.irs.goy/forms pubs/ value of home not increased) Smoking Cessation Program Pubs.htmi. This includes Hearing devices Specialist Publication 502: Medical and Hospital Surgery (not cosmetic) Dental Expenses Iron lung, operating cost Therapy Laboratory Special education Lifetime, care at medical facility Support or corrective devices These are only examples. This Lip reading lessons (including mattress and board for list is not all-inclusive - it only Massage therapy for specific arthritis) provides some of the more medical treatment Swimming pool common expenses. We Meals at hospital if they're for Therapy treatments recommend that you check with medical care Transportation expense primarily our office to clarify any expense Midwife for medical care or questions. (Auto actual expenses or DENVER RESERVE Page 21 of 58 n e r o a e 1 i o e Once you have made elections your salary reductions will take effect on the first pay period of the plan year. The amounts withheld from your compensation are contributed to the Cafeteria Plan. Remember, no taxes are paid on the money contributed to the Cafeteria Plan. After claims are submitted by participants reimbursements are sent directly to participants. Claims may be submitted by fax, mail or email. Reimbursements are sent by direct deposit or by check. Fee Schedule CITY OF FORT COLLINS These fees represent an all-inclusive fee structure. There are no additional fees, see p.2 for included services. Plan Set -Up Services (additional setup for HRA — see below) $500 Plan Design Included Plan Document & Summary Plan Description Included Enrollment materials Included Enrollment meetings (DRC staff time) Included Enrollment meetings (travel expenses — outside CO) paid by Client Loading the plan on DRC systems Included HRA set up - $250 w/ FSA, $350 w/o FSA Monthly Record Keeping Fees Base Fee ($504/12 months) (includes all plans: FSA, Trans, $42 /v10 HRA, HSA) Spending Account Participants - Per Participant per Month (includes all plans: FSA, Trans, HRA, HSA)" $3.25 Other Services Participant replacement check (paid by participant) $20 Document amendment $175 Document amendment and restatement $350 DRC Visa Card**(AII spending accounts automatically receive a card. Use of the card is a participant decision.) ► Employer Sponsored (paid by the employer/participant) $ 15/plan yr ► Employee Paid Card — 2 options: Option # 1 — per plan year $18 Option # 2 — pay as you go $5 Option #2 transaction fee (up to $15) $1/transaction Maximum annual fee under Option #2 $20 * A participant includes all currently employed participants. It also includes participants who have terminated employment but are eligible to submit claims (they have an available balance). ** The DRC Visa Card is a great enhancement to the Flexible Spending Accounts. All spending accounts are available on the card (dep care, medical) plus transportation, etc. There are no additional fees for including all reimbursement accounts on the card. WHO Nearly all employers may have a Cafeteria Plan including: • Corporations • Partnerships • Limited Liability Companies • Non -Profit Organizations • Government Entities • Sole Proprietors Under the IRS's 1984 proposed regulations, all cafeteria plan participants must be employees of the employer offering the plan. The "employer for this purpose includes all companies within the same controlled group (as defined under Sections 414(b), 414(c) and 414(m) of the tax code. The term "employees" includes present and former employees of the employer. All employees who are treated as employed by a single employer under subsections (b), (c) or (m) of section 414 are treated as employed by a single employer for purposes of section 125. The term "employees" does not, however, include self-employed individuals described in section 401(c) of the Code. Even though former employees generally are treated as employees, a cafeteria plan may not be established predominantly for the benefit of former employees of the employer. See Code 1372(a): "For purposes of applying the provisions of this subtitle [Subtitle A — Income Taxes] which relate to employee fringe benefits — (1) the S corporation shall be treated as a partnership, and (2) any 2% shareholder of the S corporation shall be treated as a partner of such partnership." A "2-percent shareholder" is defined as any person who owns more than 2% of the outstanding stock of the corporation or stock possessing more that 2% of the total combined voting power of all stock of the corporation. Code 1372(b). See also Rev. Rul.-91-26, 1991-1 C.B. 184 (accident and health insurance premiums paid by an S corporation on behalf of a more-than-2% shareholder -employee were includable in the shareholder -employee's gross income, and had to be reflected as wages on the Form W-2), and Coordinated Issue Paper, Health Insurance Deductibility for Self —Employed Individuals, UIL 162.35-02 (Mar. 29, 1999), reproduced behind Appendix Tab 11. Self-employed persons, partners in a partnership, or shareholders of 2% or more of S Corporations or LLCs may not participate in a cafeteria plan. This restriction applies to relatives of owners as well. DENVER RESERVE Page 23 of 58c o u r o z n r i o ry Plan Operations Plan Design and Documents One of the keys to the success of a plan is the plan design. Plan design includes eligibility, what accounts to offer and limits. We have experience with a wide variety of plans and can consult with you on creating the best plan for each employer. Internal Revenue Code Regulation Section 1.125-1Q-2 reads "A'cafeteria plan' is a separate written benefit plan maintained by an employer...." Q-3 goes on to define the plan document. The written plan document embodying a cafeteria plan must contain at least the following information: (i) A specific description of each of the benefits available under the plan, including the periods during which the benefits are provided (i.e., the periods of coverage), (ii) the plan's eligibility rules governing participation, (iii) the procedures governing participants' elections under the plan, including the period during which the elections are irrevocable, and the periods with respect to which elections are effective, (iv) the manner in which employer contributions may be made under the plan, such as by salary reduction agreement between the participant and the employer or by nonelective employer contributions to the plan, (v) the maximum amount of employer contributions available to any participant under the plan, and (vi) the plan year on which the cafeteria plan operates. Denver Reserve obtains all plan documents through Relius Corbel. Corbel has been providing plan services since 1974 and has been a national leader in providing retirement/flexible benefit plan documents. We have been obtaining documents from Corbel since 1990. Although we compile, review and take responsibility for the accuracy of the document, the language is provided by Corbel's software. With each plan document we provide both a hard copy and pdf file of a "summary plan description" (SPD). The SPD should be given to all participants. Included in the setup fee is a review of existing plan documents and a new document if necessary. Amendments to documents that we have prepared are $175. A complete amendment and restatement of a plan with all new documents is $350. (8A �n DENVER RESERVE _ C () X P 11 R A t1 0 N Banking Regardless of which account claims are paid from, all monies remain a general asset of the employer which the employer has a right to at any time. At no time are monies held by the Plan. 1) Denver Reserve Custodial Account with Daily Processing Each pay period payroll deductions for the medical and dependant care FSA accounts are forwarded to Denver Reserve and deposited into a custodial account. The custodial account is at Denver Reserve's bank. Using the custodial account allows for daily claims processing and payment of claims through direct deposit. There is no additional charge for check stock or direct deposit. Monies are temporarily held in a Denver Reserve Custodial Account but remain a general asset of the employer until disbursed to the participant. This option is the most popular and most convenient. Of over 600 Clients 90% use this option. 2) Client/Employer Account The employer maintains an account on which Denver Reserve has signature authority. The account may be a segregated account or the employer's general asset account. The account may be at any bank. DRC will prepare laser checks on the account or the employer may provide check stock. This option allows for daily processing but not direct deposit. Denver Reserve does not reconcile the account. 3) The employer maintains an account on which Denver Reserve does not have signature authority. The employer will provide check stock to DRC. DRC will prepare the checks and return them to the Employer for signature and distribution. Claims processing is per pay period and direct deposit is not available. Denver Reserve does not reconcile the account. Health FSA accounts may at times become negative until additional contributions are received. We pool all of the money the employer has on account with us. If at any time the pool of funds drops below zero and we have additional claims we require the employer to provide those funds until additional contributions are received. Audits and Trusts On June 2, 1992 the Department of Labor issued Technical Release No. 92-1 announcing that plan sponsors of certain contributory welfare plans in cafeteria arrangements do not violate ERISA solely because employees' contributions are not held in trust, nor will such a plan be subject to civil penalties for failure to comply with ERISA's reporting and disclosure rules. The confusion over whether financial audits are required for Flexible Spending Accounts (FSAs) is the result of the interplay of long-standing Labor Department rules and a 1988 Labor Department notice that temporarily relieved employers from holding FSA assets in trust. Under department rules, benefit plan assets generally must be held in special trusts. Those trusts must be audited by an independent accountant, and that statement must be attached to Form 5500, the annual statement that details a plan's financial operations. Employers file that form annually with the Internal Revenue Service, and the IRS forwards those statements to the Labor Department for additional review. In all plans Denver Reserve is the record keeper or administrator and all monies remain a general asset of the employer until paid to the participant. The plan is "unfunded" and holds no assets. Payment of Claims Daily Processing Since 1990 Denver Reserve has offered and continues to offer Clients daily claims processing as its standard service. There is no additional charge for this service. Daily Processing means we will send out the payment of claims every day. When a claim is received, it goes immediately into processing. Ninety percent of the time a check is mailed or direct deposit initiated within 24 hours from the time we receive a claim or the company contribution to pay the claim. We commit to paying all claims within 7 business days from the time we receive the claim or company contribution to pay the claim. We meet this commitment over 99% of the time. Claims may be sent by fax, mail or email. Claims can also be submitted online through the web site. Upon receiving the claim, we will review it for missing information, accuracy and compliance. If the claim is missing something (a receipt or signature) or is not in compliance, we will notify the participant by phone, fax, email or letter. Proposed Regulation 1.125-2 Q&A 7 (b)(5) defines the rules for Health FSA claims: A health FSA may reimburse a medical expense only if the participant provides a written statement from an independent third party stating that the medical expense has been incurred and the amount of such expense and the participant provides a written statement that the medical expense has not been reimbursed or is not reimbursable under, any other health plan coverage. Thus, for example, as with any other flexible spending arrangement, a health FSA cannot make advance reimbursements of future or projected expenses. In determining whether, under all the facts and circumstances, employees are being reimbursed for inadequately substantiated claims, special scrutiny will be given to other arrangements such as employer -to -employee loans that are related to the employee premium payments or actual or projected employee claims. This rule is also applicable to Dependent Care Flexible Spending Arrangements. To pay a claim we must have a signed claim form and a bill, statement, or receipt from the provider for both the Health FSA and Dependent Care FSA. How Claims are Paid Direct Deposit Since 1991 Denver Reserve has made available the payment of claims by direct deposit. Direct deposits are sent to the account the participant directs. Participants can start or stop this at any time and it is entirely handled by Denver Reserve. When a direct deposit is initiated the participant is notified by email. We do not send a hard copy notification. If direct deposit is not elected the claim is paid by check. Health FSA Proposed Regulations 1.125-2 Q&A 7 (b)(2) explains the requirement that, in a medical reimbursement account, the entire annual election is available from the first day of participation. (2) Uniform coverage throughout coverage period. The maximum amount of reimbursement under a health FSA must be available at all times during the period of coverage (properly reduced as of any particular time for prior reimbursements for the same period of coverage), Thus the maximum amount of reimbursement at any particular time during the period of coverage cannot relate to the extent to which the participant has paid the required premiums for coverage under the health FSA for the coverage period. A health FSA can only reimburse medical expenses as defined in section 213. Thus, for example, a health FSA cannot reimburse dependent care expenses. In addition, a health FSA may not treat participants' premium payments for other health coverage as reimbursable expenses. Thus, for example, a health FSA may not reimburse participants for premiums paid for other health coverage under a plan maintained by the employer of the employee's spouse or dependent. Medical expenses reimbursed under a health FSA must be incurred during the participant's period of coverage under the FSA. Expenses are treated as having been incurred when the participant is provided with the medical care that gives rise to the medical expenses, and not when the participant is formally billed or charged for, or pays for the medical care. Participants cannot be reimbursed for expenses incurred after they terminate employment unless they elect to continue participating in the plan under COBRA. Dependent Care FSA The "uniform coverage" rule does not apply to the Dependent Care FSA. Claims are only paid to the extent the participant has money in their account. Dependent care participants may be reimbursed for any expenses incurred during the plan year even if the participant has terminated employment. Claim Form and Direct Deposit Form The following pages are sample of the claim form and direct deposit form: Claim for Reimbursement Company Name Plan Year: Employee Name SS# Check if New Address ❑ Employee Address City State Zip Email Health Care Flexible Spending Account (Medical, dental, vision expenses not covered by your insurance.) Date Expense Person for Whom Net Incurred Name of Service Description Expense Incurred Amount Provider Total Health Care FSA Claim Dependent Care Flexible Spending Account Claims (Expenses paid by you for the care of a legal dependent in order to be gainftuWdlly em loyed.) Date Net Incurred Name of Dependents Provider of the Service Amount Total Dependent Care FSA Claim The undersigned participant in the Plan certifies the following: • All expenses for which reimbursement or payment is claimed by submission of this form were incurred during a period while the undersigned was covered under the Company's Flexible Spending Account with respect to such expenses. • All expenses were incurred (service provided) in the Plan Year indicated above. • Both medical expenses and dependent care expenses are "qualifying" expenses. • Medical expenses have not been reimbursed or are not reimbursable under any other health plan coverage. The undersigned fully understands that he or she alone is fully responsible for the sufficiency, accuracy, and veracity of all information relating provided by the undersigned, and that unless an expense for which payment or reimbursement is claimed is a proper expense under the Plan, the undersigned may be liable for payment of all related taxes including federal, state, or city income tax on amounts paid from the Plan which relate to such expense. We commit to paying your claim 7 business days from the date we receive the claim or the company contribution to pay the claim. A copy of a third party receipt, bill or statement showing an amount and proof of incurment (not payment) must be included in order to process this claim. Employee's Signature Date DENVER RESERVE c o x i �� x e r� u n ELECTION TO START OR STOP DIRECT DEPOSIT Employee Name: SSN: Employer: I hereby authorize and request the payment of all future Flexible Spending Account claims be by direct deposit to my account. I understand that the only notification of the payment of my claim will be by Email. [ hereby authorize and request the payment of all future Flexible Spending Account claims be by check and mailed to my address of record. If Credit Union -ABA Number: Account Number: Employee Signature: Date: Attach a copy of a voided check (Required for direct deposit) voided check Policies of Direct Deposit 1. Participants have the opportunity to receive their claim payment by direct electronic transfer into their checking account or by check mailed directly to them. If participants make no election a check will be mailed directly to the address of record 2. Denver Reserve Corporation agrees to mail a check or initiate a direct deposit within seven business days from the date a claim is received or the date a contribution is received from the employer to initiate the claim. 3. Due to banking limitations, the initial direct deposit, for any participant, may take up to ten days from the date the direct deposit is initiated. Because of this banking limitation, the fast reimbursement may be by check 4. If a check is sent, the check stub will contain the participant's Flexible Spending Account balance and activity. If a direct deposit is requested, the participant will receive an Email notification of the payment of the claim. If an Email address is not available, notification of payment will not be given. However, Participants may look up their account activity on our website. 5. Participants requesting a direct deposit must provide, or have previously provided an election for direct deposit and a voided check. Email Address: (Not required for the Direct Deposit option, only for notification.) Flexible Spending Account and HRA participants have the option of using a "stored value" DRC Visa Card for reimbursement of all expenses Features and Benefits ■ Participants may elect this option individually or employers can sponsor the card as an added enhancement to their plan. ■ Participants may use the card to pay for medical expenses. The use of the card serves as submission of a claim and the receipt of reimbursement. ■ At last, we have found a card system that we are comfortable recommending to our clients. We feel the card will, in many situations, meet the IRS substantiation compliance requirements. ■ In those situations where use of the card does not meet the substantiation requirements, we will request that the participant send in a claim form and/or receipts to substantiate the transaction. ■ Availability of a stored value card will increase participation — both in terms of numbers of participants and total dollars contributed. As a result, the employer FICA savings will increase. Employers have experienced as much as a 40% increase in participation when a card is sponsored. ■ If the employer sponsors the card for all participants the cost is $15 per year. If participants pay for the card — they have 2 options. Pay $ 18 each plan year OR pay $5.00 and $ 1.00 per transaction (maximum fee of $ 20) ■ The DRC card will handle all reimbursement accounts: medical expenses, dependent day care; transportation, HRAs, and HSAs. DENVER RESERVE C O b 1 11 H A T I 1� N Non -Discrimination Testing Cafeteria Plans are subject to non-discrimination testing. The testing may limit the extent to which a Highly Compensated or Key Employee may participate in a Cafeteria Plan. After Denver Reserve receives the initial enrollment information we will calculate the discrimination tests. If the Plan is close to failing the test we will calculate the test once each quarter. If the plan is not close, we will make a final calculation at the end of the plan year. Discrimination Testing Under Code Section 125 Code Section 125 provides for several discrimination tests that must be met in order to obtain all the tax advantages generally associated with cafeteria plans. In addition, each underlying benefit may also have its own discrimination testing that must be satisfied, as well. General Discrimination Testing The rule is that a plan may not discriminate in favor of "highly compensated individuals" with regard to eligibility to participate or "highly compensated participants" as to contributions or benefits. For the purpose of this test, a highly compensated participant or individual is defined under Code Section 125(e) and basically includes an officer, a 5% shareholder, someone who is highly compensated and the spouses or dependents of any person included in one of these classes. Proposed Regulation 1.125-1, Q&A-13 indicates that the determination of who is "highly compensated" for this purpose will be made on a facts and circumstances basis. There exist no enunciated attribution of stock ownership rules under Section 125 for this purpose. " With regard to discrimination as to eligibility to participate, Code Section 125(g)(3) provides general guidelines. A cafeteria plan will not be treated as discriminatory with respect to eligibility if (i) it benefits a classification of employees that satisfies the coverage requirements of Code Section 410(b)(2)(A)(i), (ii) not more than three years of employment with the employer maintaining the plan are required as a condition of plan participation, and (iii) each eligible employee commences participation by the first day of the plan year following the satisfaction of the employment requirement. It is interesting to note that the classification test of the statute now cross-references the new pension coverage requirements (Code Section 89 repeal changed this cross reference). In addition, the Code Section 410(b) coverage regulations issued in 1989 specifically state that the classification test will be applied to Section 125 until further guidance is provided on the issue. However, under the transitional relief for the non-discriminatory classification test under the Proposed 410(b) Regulations permits a facts and circumstances approach for the 1989 plan year. Thereafter, the rules of 1.410(b)(4) will apply. Alternatively, an employer could choose to satisfy the Regulation's requirements DENVER RESERVE c o n y 1i x n, ''I n To participate in the RFP process vendors need to sign and return this Business Associate Agreement. BUSINESS ASSOCIATE AGREEMENT — SECURITY STANDARDS This agreement is entered into between Denver Reserve Company LLC (Business Associate) and the City of Fort Collins. Business Associate agrees that it will implement policies and procedures to ensure that its creation, receipt, maintenance, or transmission of electronic protected health information ("ePHI") on behalf of the City of Fort Collins complies with the applicable administrative, physical, and technical safeguards required to protect the confidentiality and integrity of ePHI under the Security Standards 45 CFR Part 164. Business Associate agrees that it will ensure that agents or subcontractors agree to implement the applicable administrative, physical, and technical safeguards required to protect the confidentiality and integrity of ePHI under the Security Standards 45 CFR Part 164. Business Associate agrees that it will report security incidents to the City of Fort Collins, Security Manager. By: Date: August 1, 2006 Mitchell A. Chesney e4 CEO Return to: City of Fort Collins Attn: Purchasing-RFP# P1031 PO Box 580 Fort Collins, CO 80522-0580 for the 1989 plan year. Of course, pension coverage rules use the statutory definition of highly compensated employees under Code Section 414(q), whereas discrimination under Code Section 125 for eligibility uses highly compensated individuals. This is an apparent conflict in the statutory scheme. If a cafeteria plan discriminates in favor of highly compensated employees, then the constructive receipt exception under Code Section 125 will not apply with respect to such highly compensated employees. They will be taxed as if the cash option was selected with respect to all benefits. See Proposed Regulations 1.125-1, Q&A 10 and Q&A 11. Code Section 125(a)(2) and Proposed Regulations 1.125-1, Q&A-12 would treat these amounts as received or accrued in the taxable year of the participant in which the Plan Year ends. Key Employee Concentration Test The concentration test under Code Section 125(b)(2) provides that key employees may not be provided with qualified benefits that exceed 25% of the aggregate of such benefits provided to all employees. For the purposes of this concentration test, a key employee is defined in the same manner as for top-heavy pension purposes, determined under Code Section 416(i)(1). If this test is violated, the result is that the key employees will not get the benefit of the constructive receipt doctrine and will incur a current tax as if the cash option was selected under the cafeteria plan. In determining whether the 25% threshold is violated, the statute indicates that qualified benefits will be determined without regard to amounts included in income under Code Section 79 by virtue of exceeding the dollar limit. Since the concentration test is numerical in nature, it is certainly easier to track than the "facts and circumstances" general discrimination test. For this reason and because of the lack of any real guidance on the general discrimination test, the IRS has indicated on an informal basis that if the concentration test is satisfied, the general discrimination test will also be met. However, this might no longer be the case if discrimination is analyzed under the nondiscriminatory classification test of the 410(b) Proposed Regulations, since they are now numerical and objective in nature, as well. Note that non -highly compensated and/or non -key employees will incur no negative tax results if the plan is discriminatory in favor of highly compensated employees. They will still get the benefit of the constructive receipt exception of Code Section 125 and not recognize income currently for qualified benefits elected under the plan. Health Flexible Spending Account Tests For health flexible spending account accounts, the repeal of Code Section 89 means the DENVER RESERVE i a x v 1 u e 1 i o n re-enactment of the Code Section 105(h) discrimination rules. The committee reports associated with the repeal do, however, indicate that if a plan would have been non- discriminatory under Code Section 89 for the 1989 plan year, the plan will be treated as complying with the reinstated health benefit provisions under Code Section 105(h). The re -instituted rules prohibit discrimination in favor of highly compensated individuals who are, for this purpose, one of the 5 highest paid officers, a 10% shareholder, and the highest paid 25% of all employees. Health flexible spending account accounts and self - insured medical plans cannot discriminate in favor of these highly compensated individuals as to eligibility to participate and benefits received. To satisfy the eligibility component of this discrimination test, a plan must benefit either 70% of all employees, or 80% or more of all the employees who are eligible to benefit under the plan, (provided 70% are eligible to benefit under the plan). Alternatively, the plan may benefit any group of employees provided they qualify under a classification set up by the employer that is found not to be discriminatory in favor of highly compensated individuals. In determining whether these eligibility rules are satisfied, employees who have not completed 3 years of service, are under age 25, or are union employees, part-time or seasonal employees as well as non-resident aliens may be excluded. You should note that these eligibility rules under re -instituted Code Section 105(h) are very similar to the Code Section 410(b) coverage rules for pensions, which existed prior to their revisions for TRA'86. With regard to discrimination as to benefits, the statute very generally provides that a plan will be discriminatory unless all benefits provided for participants who are highly compensated individuals are provided for all other participants. The Regulations under Code Section 105(h) indicate that a maximum limit for benefits may be provided, but such maximum limit must be uniform for all participants and their dependents and may not be modified by reason of a participant's age or years of service. Furthermore, a plan may not base the level of reimbursement on a participant's compensation because it would have the effect of being discriminatory. Dependent Care Flexible Spending Account Tests Discrimination for dependent care assistant programs under Code Section 129 has also been adjusted as a result of Code Section 89 repeal, though in this case, it is not merely a return to pre-TRA'86 rules. Rather, because Code Section 89 applied to dependent care programs on an elective basis only, the revised TRA'86 discrimination rules for Code Section 129 programs have been continued, although certain rules have been modified and delayed for one year. Under Code Section 129, there are several discrimination tests. Under Code Section 129(d)(2) and (3), the contributions or benefits under the plan, and eligibility to participate, may not discriminate in favor of highly compensate employees. For eligibility testing purposes, the 410(b) Regulations for pensions would appear to apply, just as with cafeteria plans. Regarding discrimination as to benefits, the 55% average benefits test enacted in Code Section 129(d) as a result of TRA'86 has been retained. However, its application has been delayed for one year - until plan years beginning after December 31, 1989. That test indicates a DENVER RESERVE 1 11 x 1 11 u 1 1 1 a n dependent care assistance program will not be discriminatory if benefits provided to employees who are not highly compensated employees are at least 55% of the average benefits provided to highly compensated employees. For the purpose of computing this test, employees who have completed less than a year of service and are under age 21 may be excluded. Also, union employees where dependent care benefits were the subject of good faith bargaining may also be excluded. If benefits are provided through a salary reduction agreement, employees earning less than $25,000 may be excluded. This exclusion is, of course, important where the dependent care program is part of a cafeteria plan where employees earning under $25,000 may be better off using the child care tax credit. Discrimination testing for Code Section 129 dependent care programs may be tested applying the rules for separate lines of business under Code Section 414(r). Finally, if a dependent care program becomes discriminatory under Code Section 129(d), only highly compensated employees must include amounts of income. The Code Section 414(q) statutory definition of highly compensated employees is used in applying this 55% average benefits test. " Code Section 129(d)(4) also includes a concentration test. Under this test, the exclusion for dependent care benefits is not available if more than 25% of the amounts paid or incurred by the employer is provided for 5% owners (or their spouses or dependents). I■ I o _sue_ o Plan Tax Return On April 4, 2002 the IRS issued Notice 2002-24 suspending the filing requirements of IRC Code Section 6039D. Prior to this notice, plan sponsors of cafeteria plans, educational assistance programs, and adoption assistance programs have been required under IRC Section 6039D to file the fringe benefit form. Under this code section, plans with under 100 participants at the beginning of the year ("small plans"), governmental and church plans were required to file for the fringe benefit plan even though they were exempt from filing a welfare benefit plan Form 5500 under ERISA. With this notice, cafeteria plans; educational assistance plans, and adoption assistance programs will no longer have to file Schedule F. The release does not affect, however, the filing requirement applicable to ERISA plans, including health flexible spending accounts. It is noteworthy that small plans will no longer have a Form 5500 obligation of any kind provided they continue to satisfy the small plan requirement under ERISA and, if contributory, the requirements of Technical Release 92-01 whereby employee contributions made through a cafeteria plan which remain in the employer's general assets, and premiums for fully -insured plans are paid directly to the carrier from the employer's general assets. For example, health flexible spending accounts offered under a cafeteria plan that have less than 100 participants may have to file a Form 5500 nonetheless (but no Schedule F) if they segregate participants' contributions from the employer's general assets. Therefore, you must still file a Form 5500 if funds are held in trust or if not held in the employer's general assets. Separately maintained funds for a health FSA may require filing the Form 5500. The suspension of Schedule F filing applies to ALL plan years, including years prior to 2001. The IRS said specifically that plan sponsors who did not file in prior years should not request relief for failure to file from the Department of Labor or the IRS. If Plans are required to file a Form 5500 Denver Reserve will prepare and provide to the Client a final Form 5500 at no additional charge. rr..1 I■ I o lip_ o Employee Communications The key to continued success of any qualified plan is the communication with employees and participants. We start with customized enrollment information, forms and presentations. Participants have 24 hour access to real time account information through our website. WEB SITE INSTRUCTIONS Viewing Sample Account Information www.denverreserve.com Participants access their account with the following steps. 1. Enter your member ID. A participants member ID is their social security number. 2. Enter your password. The initial password is your home zip code. After logging on, you are required to change your password. Participants may call our office at any time and have a year-to-date statement faxed or mailed to them. Call our office at 303-798-4611 or 800-736-4611(outside of the Denver metro areal Sample Account Information The web site for account information is divided into 2 areas: (1) Company or plan information, and (2) participant information. To access a sample company screen (after entering "member services"), enter sam for the Member ID and use sample for the password. Eleventh -Month Notice An eleven -month warning notice is also sent during the eleventh month of the plan year. This will serve as a reminder that expenses to be included for the current plan year must be incurred before the end of the plan year. Re -Enrollment Form Before enrollment for the next plan year, a pre-printed re-election form is prepared for each participant (see current participant enrollment form on preceding pages) which will show the approximate tax savings received by participation in the plan. This dollar amount is based upon the level of participation in the plan. This report will also contain the current elections by the employee. Employer Communications and Reports Year to Date Statements FLEXIBLE BENEFIT PLAN Report: Year -To -Date Report Option: Sort By Department/ Employee SortBy Prepared by: Denver Reserve Corporation Date printed: 719l02, 7:28:16 AM Company Name: Sample Company Benefit: Health Care FSA PlanYear: 2001 Em to ee# 1 Emolovee Name I Contributions Disbursement Balanee 141414141 ANTHONY ALLEN 232.00-119.10 112.90 000022222 ALLEN BOARD 144.00-139.00 5 00 111222333 JANE CHURCH 184.00 -39.00 145.00 123456789 ALLSION DISK 488.00-155.41 33259 363636363 JOHN DOE 236.48-709.44-472.96 000011111 PETE GRAPE 388.00 -91.80 296.20 222222222 JORDAN ROAD 768.00-478.00 290.00 000044444 RYAN SMOOSH 276.00-530.92-254.92 000033333 SCOTT TAPE 42.00-126.00 -84 00 Total fordepanment : 2.758.48-2.388.67 369.81 XXa7000IX 999999999 0.00 -10.00 -Woo Total for department XXXXXXXK 0.00 -10.00 -10.00 Total for Health Care FSA 12001 : 2,758.48-2,398.67 359.81 Count for Health Care FSA 12001 : 10 Total for SAM_Plan Year 2001 : 7,022.48-6,415.07 607AI Employee Identifiers: T = Terminated H = High Comp K = Key Employee O = 5% Owner U = Under 25K Page 2 DENVER RESERVE c n u r u x n r i o ry Contribution Listing FLEXIBLE BENEFIT PLAN Report: Contribution Listing Option: Sort by Department I Employee Sortby Transactions date: 5/15101 _ Prepared by Denver Reserve Corporation Dale primed: 719102, 8:49:53 AM Batch Number: 19862 Name: Sample Compaq Plan Year: 2001 Employee ID/ Line# Benefit Contribution Adjusted SortB Descrl tion Amount Amount 141414141 ALLEN A 1 Dependent Care FSA 156.00 8 Health Care FSA 29.00 000022222 BOARD A 2 Dependent Care FSA 35.00 9 Health Care FSA 1800 111222333 CHURCH J 10 Health Care FSA 23.00 5 Dependent Care FSA 108.00 123456789 DISK A 11 Health Care FSA 61.00 363636363 DOE J 12 Health Care FSA 2956 151515151 DOLL C 6 Dependent Care FSA 34.00 000011111 GRAPE P 13 Health Care FSA 4850 222222222 ROAD J 14 Health Care FSA 96-00 000044444 SMOOSH R 15 Health Care FSA 34.50 000033333 TAPE S 16 Health Care FSA 5.25 111111111 WHITE M 7 Dependent Care FSA 200.00 Total for department : 87781 Department )COCOOOCX 000111222 PARTICIPANTS 3 Dependent Care FSA 20833 4 Health Care FSA 100.00 Total fir deoartmem XXXXX)00( 30R33 For batch 19862 : Net To Be Posted: 1,186.14 Number of Record(s): 16 Employees) with Spending Account Only: 12 Employee(s) with Non -Spending Account Only: 0 Employee(s) with Both Accounts: 0 page 1 DENVER RESERVE � O N I li It A T I V M1 Disbursement Listing FLOOBLE BENEFIT PLAN Report:Ois6ursement Using Option: Sort By Department I Employee SortBy Transac9on date: 2115101 Prepared by: Denver Reserve Corporation Date panted: 719102, 7:51:04 AM Batch Number 19785 Company Name: Sample Company Plan Year: 2001 Employees Processed: I Summary for Batch 19785: Benefit 1Hshursemerds Fin o ee Dependent Care FSA 500.00 1 Health Care FSA 20.00 1 520.00 Page 2 DENVER RESERVE 1 11 x r u x n r n v Claim Listing FLEXIBLE BENEFIT PLAN Report: Claan listing Prepared by: Denver Reserve Corporation Dale pdW 719102, 7.4:23 AM BaM Number: 0730 Linea I CoCode I EmplDfSoffly I Year Benefit Code ransWk Type ClaimTypej Amount AmL R 'eded ServiceStart Services 1 SAM 0001l1222 PARTICIPAN 2001 DCFSA 2113101 3 DAYCARE 500.00 0.00 118101 ml 2 SAM 000111222 PARTICIPAN 2001 HCFSA 2113/01 3 CO -PAY 2000 0.00 213101 213101 SUMMARY FOR BATCH 10780: TOTAL CLAIMED: 520.00 TOTAL REJECTED: 0.00 NET TO BE POSTED: 520.00 NUMBER OF RECORDg): 2 NOTE, - indedu POTENTIAL OOPUCATEM)in Sakfillic tede "inacetes POTENTIAL OOPUCATEIS) in Nester Trasador! tm& Page ! rat Employee Statement FLEXIBLE BENEFIT PLAN Report: Employee Statement of Accounts Transactions dale: 12/31102 Prepared by: Denver Reserve Corporation Date printed: 719102, 8:48:16 AM Company Name: Sample Company PlanYear: 2001 Employee #: 000111222 Department: )COODO XX Sample Participant Eligible date: 1/1f01 ???? Pretend Avenue Leave Of Absence start: No Name, CO 87664 Leave Of Absence end: Termination Date: Date Transaction Dose Reference # Claims Contributions Plan Name: Dependent Care FSA 1/15101 Contributions 1977311 208.33 1/31/01 Contributions 1977711 208.33 2/13/01 Claim DAYCARE 1978011 500.00 2115101 Contributions 1978211 208.33 2/15101 Disbursement 19785/1-Chk:7745 -500.00 -500.00 2/21101 Claim -DAYCARE 1983611 250.00 2/21101 Disbursement 19839/1-Chk:7746 -124.99 -124.99 2/28/01 Contributions 19841/1 208.33 2128/01 Disbursement 19844/1-Chk:7747 -125.01 -125.01 3/15/01 Contributions 19846/1 208.33 3/31/01 Contributions 1985011 208.33 4115/01 Contributions 19854/1 208.33 4/30/01 Contributions 1985811 208.33 0.00 916.64 SUMMARY FOR DEPENDENT CARE FSA: Annual Election: $5,000.00 Contributed to date: $1,666.64 Claimed to date: $750.00 Disbursed to date: $750.00 Balance to be disbursed : $916.64 Plan Name: Health Care FSA 1115/01 Contributions 1977312 100.00 1131/01 Contributions 19777/2 100.00 2113101 Claim CO -PAY 1978012 20.00 2/15101 Contributions 19782/2 100.00 2/15/01 Disbursement 197852-Chk:7745 -20.00 -20.00 2128101 Contributions 198412 10000 3/15/01 Contributions 198462 100.00 3/31/01 Contributions 198502 100.00 4115/01 Contributions 198542 100.00 4/30101 Contributions 198582 10000 0.00 780.00 Page 1 Page 42 of 58 DENVER RESERVE City of Fort Collins r4m. I\ �i= °o DENVER RESERVE C O R P O R A T 1 0 N City of Ft. Collins FSA Questionnaire General Administration 1. What is the core business you administer? Flexible spending is our only business. 2. Is your FSA system automated? Please Explain. Yes. We use a system developed by Denver Reserve which manages FSA plans, the DRC-owned Visa Card and the web site functionality. 3. How long have you been administering FSA plans? 16+ years 4. What is your target market size, and what size groups do you work with? We have plans that range in size from 25,000 to 15 employees. The average employee size for a first -year plan is 500 to 3500. FSA Administration 1. Can you electronically accept account contributions withheld from participant's paycheck? Yes 2. Will you provide FSA reimbursements by either check or direct deposit? Can each participant elect one or the other? Is there an additional charge for either process? Reimbursements are available either by check of direct deposit at the participant's option. There are no fees associated with this service. 3. Can you provide discrimination testing for FSA plans? Indicate if there are any additional charges Discrimination testing is included, there are no additional fees. 4. What is the minimum amount of FSA reimbursement you will process? There is no minimum FSA claim amount. 5. How will you know who is an eligible dependent for reimbursement? According to IRS rules, when a participant signs a claim form, they have asserted the eligibility of the claim. There is no further review, except for a review of the actual receipt submitted with the signed claim form. 6. Do you provide a debit card? If so, which company provides the card, and is there an additional charge? Can participants elect to opt out of the card? When is the card issued for new employees and the next year enrollment? Denver Reserve designed a card last year for Visa. This card is a multiple purse card which carries both dependent care and medical reimbursement balances, along with any other reimbursement accounts such as transportation (if needed). FLEXIBLE BENEFIT PLAN Report: Employee Statement of Accounts Transactions date: 12/31/02 Prepared by: Denver Reserve Corporation Date printed: 719102, 8:48:17 AM Company Name: Sample Company PlanYear: 2001 Employee #:000111222 Departrnent:)ODODDDDt Sample Participant Eligible date: 111101 ???? Pretend Avenue Leave Of Absence start: No Name, CO 87654 Leave Of Absence and Termination Date: Date Transaction Desc Reference # Claims Contributions SUMMARY FOR HEALTH CARE FSA: Annual Election: $2,400.00 Contributed to date: $800.00 Claimed to dale: $20.00 Disbursed to date: $20.00 Balance to be disbursed: $2,360.00 Page 2 DENVER RESERVE c o x r u x n r i o n MLwMMG APDA Implementation Schedule • Denver Reserve submits proposal • Client signs Service Agreement and pays set-up fee • Denver Reserve consults on plan design and enrollment • Client assigned to a Denver Reserve Senior Administrator • Enrollment meetings scheduled • Plan Documents prepared and provided to Client • Enrollment materials prepared • Client announces the plan to employees • Enrollment meetings • Client collects enrollment information and provides a copy to Denver Reserve • Initial discrimination testing performed by Denver Reserve • Payroll deductions commence by the Client • Payroll information provided to Denver Reserve • Denver Reserve pays claims DENVER RESERVE Page 44 of 58C Il N C �� U � 1' 1 1, N Fee Schedule CITY OF FORT COLLINS These fees represent an all-inclusive fee structure. There are no additional fees, see p.2 for included services. Plan Set -Up Services (additional setup for HRA — see below) $500 Plan Design Included Plan Document & Summary Plan Description Included Enrollment materials Included Enrollment meetings (DRC staff time) Included Enrollment meetings (travel expenses — outside CO) paid by Client Loading the plan on DRC systems Included HRA set up - $250 w/ FSA, $350 w/o FSA Monthly Record Keeping Fees Base Fee ($504/12 months) (includes all plans: FSA, Trans, $42 HRA, HSA) Spending Account Participants - Per Participant per Month (includes all plans: FSA, Trans, HRA, HSA)* $3.25 Other Services Participant replacement check (paid by participant) $20 Document amendment $175 Document amendment and restatement $350 DRC Visa Card**(AII spending accounts automatically receive a card. Use of the card is a participant decision.) ► Employer Sponsored (paid by the employer/participant) Z $ 15/plan yr ► Employee Paid Card — 2 options: Option # 1 — per plan year Is, $18 Option # 2 — pay as you go $5 Option #2 transaction fee (up to $15) $1/transaction Maximum annual fee under Option #2 $20 * A participant includes all currently employed participants. It also includes participants who have terminated employment but are eligible to submit claims (they have an available balance). ** The DRC Visa Card is a great enhancement to the Flexible Spending Accounts. All spending accounts are available on the card (dep care, medical) plus transportation, etc. There are no additional fees for including all reimbursement accounts on the card. I■ I o 1�7_ o Federal ID # 84-1098543 Date of Incorporation: State of Incorporation References September 2, 1988 Delaware Principals & Officers: President - Mitchell A. Chesney Vice President & Secretary - Robert Davis Bank and Financial References: Colorado Business Bank 101 West Mineral Avenue Littleton, CO 80120 Piper Jaffray 1050 17th Street Suite 2100 Denver, CO 80265 Trade References: Able Printing Berger Properties Omaha Property & Casualty Contact: Pete Smit 303-292-1555 Contact: Steve Schindler, Vice President 303-820-5726 Gaylin Poulson Scott Berger Sarah Spence 303-694-1071 303-794.4127 303-721-7722 Client References: Janus Funds Tracy Shepard 303 336-4292 Allegheny Technologies Inc. Karen Rapavi 412.395.2718 Autoliv ASP Bridgette Burnett 801 625 9324 Johns Manville Sandy Busch 303.978.2721 Western States Equipment Vonda Johnson 208-884-2262 Genesys Conferencing Jennifer Bracanto 781 761-6237 University Corporation for Atmospheric Research Laurie Carr 303 497 8702 Time Warner Telecom Lisa Donovan 303 566 1442 Mitsubishi Electronics America Hoyt Robinson 919.767.7771 Tucson Electric Power Co. Laurie Treu 520 884 3647 IHS Group Melissa Wright 303 397 2602 Neenan Company Karysa McIntire 970-419-1898 Cimarex Annie Lord 303 295 3995 WaterPik Technologies Mary Tracy 970 221 7082 Gilead Sciences, Inc. Diane Tanguay 650 522-5746 Phil Long Dealership Sara Gonzales 719 575 7667 Roche Palo Alto Sharon Vargo 415 885 5050 City of Littleton Mary Lucariello 303-795-3786 Pinkard Construction Brenda Emerson 303 986 4555 ICG Communications Nancy Holmes 303 414 3197 Denver Art Museum Judy Meadows 720.913.0022 Hand Surgery Associates Brent Gremban 303 744 7078 Hospice of Metro Denver Brenda Ritter 303 321 2828 Arapahoe County Yvonne Higgins 303-795-4491 DENVER RESERVE c o x r u x n r i n n Health Insurance Portability and Accountability Act (HIPAA) Notice of Privacy Practices This Notice Describes How Medical Information About You May Be Used and Disclosed and How You Can Get Access To This Information. Please Review It Carefully If you have any questions about this notice, please contact: Denver Reserve Corporation 7852 S. Elati Street, Suite 200 Littleton, CO 80120 (303) 798-4611 dremail2t denverreserve.com Who Will Follow This Notice This notice describes the medical information practices of your Employers Section 125 Cafeteria Plan (the "Plan") and that of any third party that assists in the administration of Plan claims. Our Pledge Regarding Medical Information We understand that medical information about you and your health is personal. We are committed to protecting medical information about you. We create a record of the health care claims reimbursed under the Plan for Plan administration purposes. This notice applies to all of the medical records we maintain. Your personal doctor or health care provider may have different policies or notices regarding the doctor's use and disclosure of your medical information created in the doctor's office or clinic. This notice will tell you about the ways in which we may use and disclose medical information about you. It also describes our obligations and your rights regarding the use and disclosure of medical information. We are required by law to: • make sure that medical information that identifies you is kept private; • give you this notice of our legal duties and privacy practices with respect to medical information; and • follow the terms of the notice that is currently in effect. How We May Use and Disclose Medical Information About You The following categories describe different ways that we use and disclose medical information. For each category of uses or disclosures we will explain what we mean and present some examples. Not every use or disclosure in a category will be listed. However, all of the ways we are permitted to use and disclose information will fall within one of the categories. For Treatment (as described in applicable regulations). We may use or disclose medical information about you to facilitate medical treatment or services by providers. We may disclose medical information about you to providers, including doctors, nurses, technicians, medical students, or other hospital personnel who are involved in taking care of you. For Payment (as described in applicable regulations). We may use and disclose medical information about you to determine eligibility for Plan benefits, to facilitate payment for the treatment and services you receive from health care providers, to determine benefit responsibility under the Plan, or to coordinate Plan coverage. We may also share medical information with a utilization review or precertification service provider. Likewise, we may share medical information with another entity to assist with the adjudication or subrogation of health claims or to another health plan to coordinate benefit payments. For Health Care Operations (as described in applicable regulations). We may use and disclose medical information about you for other Plan operations. These uses and disclosures are necessary to run the Plan. For example, we may use medical information in connection with: conducting quality assessment and improvement activities; unde DENVER RESERVE premium rating, and other activities relating to Plan coverage; submitting claims for stop -loss (or excess loss) coverage; conducting or arranging for medical review, legal services, audit services, and fraud and abuse detection programs; business planning and development such as cost management; and business management and general Plan administrative activities. As Required By Law. We will disclose medical information about you when required to do so by federal, state or local law. For example, we may disclose medical information when required by a court order in a litigation proceeding such as a malpractice action. To Avert a Serious Threat to Health or Safety. We may use and disclose medical information about you when necessary to prevent a serious threat to your health and safety or the health and safety of the public or another person. Any disclosure, however, would only be to someone able to help prevent the threat. For example, we may disclose medical information about you in proceeding regarding the licensure of a physician. Special Situations Disclosure to Health Plan Sponsor. Information may be disclosed to another health plan maintained by your Employer for purposes of facilitating claims payments under that plan. In addition, medical information may be disclosed to your Employer personnel solely for purposes of administering benefits under the Plan. Organ and Tissue Donation. If you are an organ donor, we may release medical information to organizations that handle organ procurement or organ, eye or tissue transplantation or to an organ donation bank, as necessary to facilitate organ or tissue donation and transplantation. Military and Veterans. if you are a member of the armed forces, we may release medical information about you as required by military command authorities. We may also release medical information about foreign military personnel to the appropriate foreign military authority. Workers' Compensation. We may release medical information about you for workers' compensation or similar programs. These programs provide benefits for work -related injuries or illness. Public Health Risks. We may disclose medical information about you for the public health activities. These activities generally include the following: • to prevent or control disease, injury or disability; • to report births and deaths; • to report child abuse or neglect; • to report reactions to medications or problems with products; • to notify people of recalls of products they may be using; • to notify a person who may have been exposed to a disease or may be at risk for contracting or spreading a disease or condition; • to notify the appropriate government authority if we believe a patient has been the victim of abuse, neglect or domestic violence. We will only make this disclosure if you agree or when required or authorized by law. Health Oversight Activities. We may disclose medical information to health oversight agency for activities authorized by law. These oversight activities include, for example, audits, investigations, inspections, and licensure. These activities are necessary for the government to monitor the health care system, government programs, and compliance with civil rights laws. Lawsuits and Disputes. If you are involved in a lawsuit or a dispute, we may disclose medical information about you in response to a court or administrative order. We may also disclose medical information about you in response to a subpoena, discovery request, or other lawful process by someone else involved in the dispute, but only if efforts have been made to tell you about the request or to obtain an order protecting the information requested. Law Enforcement. We may release medical information if asked to do so by a law enforcement official: • in response to a court order, subpoena, warrant, summons or similar process; DENVER RESERVE 1 11 . I f, . .1 lI 1� N • to identify or locate a suspect, fugitive, material witness, or missing person; • about the victim of a crime if, under certain limited circumstances, we are unable to obtain the person's agreement. • about a death we believe may be the result of criminal conduct; • about criminal conduct at the hospital; and • in emergency circumstances to report a crime; the location of the crime or victims; or the identity, description or location of the person who committed the crime. Coroners, Medical Examiners and Funeral Directors. We may release medical information to a coroner or medical examiner. This may be necessary, for example, to identify a deceased person or determine the cause of death. We may also release medical information about patients of the hospital to funeral directors as necessary to carry out their duties. National Security and Intelligence Activities. We may release medical information about you to authorized federal officials for intelligence, counterintelligence, and other national security activities authorized by law. Inmates. If you are an inmate of a correctional institution or under the custody of a law enforcement official, we may release medical information about you to the correctional institution or law enforcement official. This release would be necessary (1) for the institution to provide you with health care; (2) to protect your health and safety or the health and safety of others; or (3) for the safety and security of the correctional institution. Your Rights Regarding Medical Information About You You have the following rights regarding medical information we maintain about you: Right to Inspect and Copy. You have the right to inspect and copy medical information that may be used to make decisions about your Plan benefits. To inspect and copy medical information that may be used to make decisions about you, you must submit your request in writing to Denver Reserve Corporation. If you request a copy of the information, we may charge a fee for the costs of copying, mailing or other supplies associated with your request. We may deny your request to inspect and copy in certain very limited circumstances. If you are denied access to medical information, you may request that the denial be reviewed. Right to Amend. If you feel that medical information, we have about you is incorrect or incomplete, you may ask us to amend the information. You have the right to request an amendment for as long as the information is kept by or for the Plan. To request an amendment, your request must be made in writing and submitted to Denver Reserve Corporation. In addition, you must provide a reason that supports your request. We may deny your request for an amendment if it is not in writing or does not include a reason to support the request. In addition, we may deny your request if you ask us to amend information that: • is not part of the medical information kept by or for the Plan; • was not created by us, unless the person or entity that created the information is no longer available to make the amendment; • is not part of the information which you would be permitted to inspect and copy; or • is accurate and complete. Right to an Accounting of Disclosures. You have the right to request an "accounting of disclosures" where such disclosure was made for any purpose other than treatment, payment, or health care operations. To request this list or accounting of disclosures, you must submit your request in writing to Denver Reserve Corporation. Your request must state a time period which may not be longer than six years and may not include dates before April, 2003. Your request should indicate in what form you want the list (for example, paper or electronic). The first list you request within a 12 month period will be free. For additional lists, we may charge you for the costs of providing the list. We will notify you of the cost involved and you may choose to withdraw or modify your request at that time before any costs are incurre DENVER RESERVE 1 11 . 1 11 . A lI f. N Right to Request Restrictions. Your have the right to request a restriction or limitation on the medical information we use or disclose about you for treatment, payment or health care operations. You also have the right to request a limit on the medical information we disclose about you to someone who is involved in your care of the payment for your care, like a family member or friend. For example, you could ask that we not use or disclose information about a surgery you had. We are not required to agree to your request. To request restrictions, you must make your request in writing. In your request, you must tell us (1) what information you want to limit; (2) whether you want to limit our use, disclosure or both; and (3) to whom you want the limits to apply, for example, disclosures to your spouse. Right to Request Confidential Communications. You have the right to request that we communicate with you about medical matters in a certain way or at a certain location. For example, you can ask that we only contact you at work or by mail. To request confidential communications, you must make your request in writing to Denver Reserve Corporation. We will not ask you the reason for your request. We will accommodate all reasonable requests. Your request must specify how or where you wish to be contacted. Right to a Paper Copy of This Notice. You have the right to a paper copy of this notice. You may ask us to give you a copy of this notice at any time. Even if you have agreed to receive this notice electronically, you are still entitled to a paper copy of this notice. You may obtain a copy of this notice at our website, www.denverreserve.com To obtain a paper copy of this notice write or call Denver Reserve Corporation Changes to This Notice We reserve the right to change this notice. We reserve the right to make the revised or changed notice effective for medical information we already have about you as well as any information we receive in the future. We will post a copy of the current notice on the Plan website. The notice will contain on the first page, in the top right hand corner, the effective date. Complaints If you believe your privacy rights have been violated, you may file a complaint with the hospital or with the Secretary of the Department of Health and Human Services. To file a complaint with the Plan, contact Denver Reserve Corporation, 7852 S. Elati Street, Suite 200, Littleton, CO 80120, (303) 798-4611. All complaints must be submitted in writing. Other Uses of Medical Information Other uses and disclosures of medical information not covered by this notice or the laws that apply to us will be made only with your written permission. If you provide us permission to use or disclose medical information about you, you may revoke that permission, in writing, at any time. If you revoke your permission, we will no longer use or disclose medical information about you for the reasons covered by your written authorization. You understand that we are unable to take back any disclosures we have already made with your permission, and that we are required to retain our records of the care that we provided to you, Business Associate Agreement Health Insurance Portability and Accountability Act (HIPAA) This Business Associate Agreement (the "Agreement") is made and entered into by and between CITY OF FORT COLLINS (the "Plan Sponsor") of the CITY OF FORT COLLINS Cafeteria Plan (the "Covered Entity"), on behalf of itself and Denver Reserve Corporation WHEREAS, the Department of Health and Human Services ("HHS") has promulgated Regulations at 45 C.F.R. Parts 160-164, implementing the privacy requirements set forth in the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 ("Privacy Rules"); WHEREAS, the Privacy Rules provide, among other things, that a covered entity is permitted to disclose Protected Health Information (as defined below) to a Business Associate and allow the business associate to obtain and receive Protected Health Information, if the covered entity obtains satisfactory assurances in the form of a written contract that the Business Associate will appropriately safeguard the Protected Health Information; WHEREAS, Business Associate will have access to, create and/or receive certain Protected Health Information in conjunction with the services being provided by Business Associate to Covered Entity, thus necessitating a written agreement that meets the applicable requirements of the Privacy Rules. Both parties have mutually agreed to satisfy the foregoing regulatory requirements through this Agreement. NOW THEREFORE, Covered Entity and Business Associate agree as follows: Definitions. The following terms shall have the meaning set forth below: (a) C.F.R. "C.F.R." means the Code of Federal Regulations. (b) Designated Record Set. "Designated Record Set" has the meaning assigned to such term in 45 C.F.R. 164.501. (c) Individual. "Individual" shall have the same meaning as the term "individual" in 45 C.F.R. 164.501 and shall include a person who qualifies as the Individual's personal representative in accordance with 45 C.F.R. 164.502 (g). (d) Protected Health Information "Protected Health Information' shall have the same meaning as the term "Protected Health Information", as defined by 45 C.F.R. 164.501, limited to the information created or received by Business Associate from or on behalf of Covered Entity. (e) Required By Law. "Required By Law" shall have the same meaning as the term "required by law" in 45 C.F.R. 164.501 Secre "Secretary" shall mean the Secretary of the Department of Health and Human Services or his designee. 2. Obligations and Activities of Business Associate (a) Business Associate agrees to not use or further disclose Protected Health Information other than as permitted or required by this Agreement or as required by law. Business Associate shall also comply with any further limitations on uses and disclosures agreed by Covered Entity in accordance with 45 C.F.R. 164.522 provided that such agreed upon limitations have been communicated to Business Associate according to Section 4.1(c) of this Agreement. (b) Business Associate agrees to use appropriate safeguards to prevent use or disclosure of the Protected Health Information other than as provided for by this Agreement. DENVER RESERVE i o e r o u a z t u n rfint ts o •'i= o DENVER RESERVE C O R P O R A T I O N All participants automatically receive 2 cards. The participant makes the decision whether or not to use the card. There are no fees unless the participant activates the card. The card is good for 3 plan years. Balances are reloaded for each plan year, dependent care balances are loaded each pay period. This card also supports the extended grace period, if needed. Cards are issued before the plan year begins — actual timing is determined by receipt of plan elections from the employer. 7. If a service/provider does not accept a debit card, how does the reimbursable service get reimbursed to the employee? If a transaction is not paid by the debit card, the participant will file a paper or online claim (see # 8 below). 8. If no debit card, what format do you use for accepting and reimbursing claims? Claims can be submitted by fax, US Mail, email, or online. 9. What is the process used for Dependent Care reimbursements? Dependent Care reimbursements are processed the same as medical reimbursements, the actual reimbursement is not released unless a participant has funds in their account. Pending claims are released immediately after posting of payroll contributions (if we are waiting for the next payroll contribution). 10. How often do you need to be notified of terminations? What is your policy for reimbursements submittals after termination (deadline date, etc.)? Notification of terminations is determined by the employer. However, the timing of notification is critical if the plan offers a credit card. We prefer to receive termination information as soon as possible, weekly at a minimum. Paper claims will continue to be processed up to the date allowed under the plan document for expenses incurred on or before the date of termination. 11. Can your systems accommodate the 14 '/z month eligible reimbursement extension? Yes. Customer Serve/Account Management 1. Please provide the location of the customer service unit that would be assigned to our client. Will there be a dedicated person assigned to the client? Customer Service is handled completely from Littleton, Colorado. Each plan is assigned to a Senior Administrator who has the day-to-day responsibility for the plan. The Senior Administrator is the primary contact for the employer 2. Provide a complete list of customer service and account management services you provide for FSA administration. Summary of Plan Services • Daily Processine of Claims for reimbursement (c) Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is known to Business Associate of a use or disclosure of Protected Health Information by Business Associate in violation of the requirements of this Agreement. (d) Business Associate agrees to report to Covered Entity any use or disclosure of the Protected Health Information not provided for by this Agreement. (e) Business Associate agrees to ensure that any agent, including a subcontractor, to whom it provides Protected Health Information received from, or created or received by Business Associate on behalf of Covered Entity agrees to the same restrictions and conditions that apply through this Agreement to Business Associate with respect to such information. (f) Business Associate agrees to provide access to Protected Health Information in a Designated Record Set, within twenty five (25) days of a written request from Covered Entity, to Covered Entity or, as directed by Covered Entity within thirty (30) days to an Individual, in order to meet the requirements under 45 C.F.R. 164.524. Covered Entity and Business Associate will jointly determine what constitutes "Protected Health Information" or a "Designated Record Set", and such determination shall be final and conclusive. If Business Associate provides copies or summaries of Protected Health Information to an Individual it may impose a reasonable, cost -based fee in accordance with 45 C.F.R. 164.524 (c)(4). If Business Associate is unable to provide the Covered Entity or the Individual with access within the required time frame, Business Associate will notify Covered Entity so Covered Entity may request, in writing, an extension from the Individual. (g) Business Associate agrees to make any amendment(s) to Protected Health Information in a Designated Record Set, within forty five (45) days of a written request from Covered Entity pursuant to 45 C.F.R. 164.526, or at the request of Covered Entity, within sixty (60) days of a written request from an Individual. Business Associate shall not charge any fee for fulfilling requests for amendments. Covered Entity and Business Associate will jointly determine what constitutes Protected Health Information, and thus what information is subject to amendment pursuant to 45 C.F.R. 164.526. The determination shall be final and conclusive. If Business Associate is unable to amend the Protected Health Information within the required time frame, Business Associate will notify Covered Entity so Covered Entity may request, in writing, an extension from the Individual. (h) Business Associate agrees to make internal practices, books, and records relating to the use and disclosure of Protected Health Information received from, or created or received by Business Associate on behalf of, Covered Entity available to the Secretary, for purposes of the Secretary determining Covered Entity's compliance with the Privacy Rule. (i) Business Associate agrees to document such disclosures of Protected Health Information and information related to such disclosures as would be required for Covered Entity to respond to a request by an Individual for an accounting of disclosures of Protected Health Information in accordance with 45 C.F.R. 164.528. 0) Business Associate agrees to provide to Covered Entity, within forty five (45) days of a written request from the Covered Entity, an accounting of disclosures of an individual's Protected Health Information, collected in accordance with Section 2(i) of this Agreement, to permit Covered Entity to respond to a request by an Individual for an accounting of disclosures of Protected Health Information in accordance with 45 C.F.R. 164.528. This Accounting will be provided on the form attached (see Exhibit A). If Covered Entity requests an accounting of an Individual's Protected Health Information more than once in any twelve (12) month period, Business Associate will impose a reasonable fee for such accounting in accordance with 45 C.F.R. 164.528(c). If Business Associate is unable to provide the Covered Entity with an accounting within the required time frame, Business Associate will notify Covered Entity so Covered Entity may request, in writing, an extension from the Individual. (k) Business Associate acknowledges that it shall request from the Covered Entity and so disclose to its affiliates, subsidiaries, agents and subcontractors or other third parties, only the minimum Protected Health Information necessary to perform or fulfill a specific function required or permitted under this Agreement. (1) Business Associate shall use commercially reasonable efforts to maintain the security of the Protected Health Information and to prevent unauthorized uses or disclosures of Protected Health Information. (m) If Business Associate conducts any Standard Transactions on behalf of Covered Entity, Business Associate shall comply with the applicable requirements of 45 C.F.R. Part 162. DENVER RESERVE C 11tl P 11 R 1 1 1 11 1 3. Permitted Uses and Disclosures by Business Associate 3.1 General Use and Disclosure Except as otherwise limited in this Agreement, Business Associate may use or disclose Protected Health Information to perform its obligations and services to Covered Entity, provided that such use or disclosure would not violate the Privacy Rule if done by Covered Entity. 3.2 Specific Use and Disclosure Provisions (a) Business Associate may use Protected Health Information to the extent necessary to determine whether stop -loss payments from the stop -loss carrier were accurately determined and if such payments appropriately reimburse Employer for amounts it paid on behalf of the Plan; (b) Business Associate may use Protected Health Information to the extent necessary to work with Employer's Subrogation Entity to help the Plan obtain reimbursement when appropriate; (c) Business Associate may use Protected Health Information for activities related to soliciting, securing, or placing a contract for reinsurance of risk relating to claims for health care (including stop -loss and excess of loss insurance). (d) Except as otherwise limited in this Agreement, Business Associate may use Protected Health Information for the proper management and administration of the Business Associate or to carry out the legal responsibilities of the Business Associate. (f) Except as otherwise limited in this Agreement, Business Associate may disclose Protected Health Information for the proper management and administration of Business Associate, provided that disclosures are required by law, or Business Associate obtains reasonable assurances from the person to whom the information is disclosed that it will be held confidential and used or further disclosed only as required by law or for the purpose for which it was disclosed to the person, and the person notifies the Business Associate of any instances of which it is aware in which the confidentiality of the information has been breached. 4. Obligations of Covered Entity. 4.1 Provisions for Covered Entity to Inform Business Associate of Privacy Practices and Restrictions (a) Covered Entity shall provide Business Associate with the notice of privacy practices that Covered Entity produces in accordance with 45 C.F.R. § 164.520, as well as any changes to that notice. (b) Covered Entity shall provide Business Associate with any changes in, or revocation of, permission by Individual to use or disclose Protected Health Information, if such changes affect Business Associate's permitted or required uses and disclosures. (c) Covered Entity shall notify Business Associate, in writing, of any restriction to the use or disclosure of Protected Health Information that Covered Entity has agreed to in accordance with 45 C.F.R. § 164.522. (d) Covered Entity acknowledges that it shall provide to, or request from, the Business Associate only the minimum Protected Health Information necessary for Business Associate to perform or fulfill a specific function required or permitted hereunder. 4.2 Permissible Requests by Covered Entity Covered Entity represents and warrants that it has the right and authority to disclose Protected Health' Information to Business Associate for Business Associate to perform its obligations and provide services to Covered Entity, and Business Associate's use of the Protected Health Information to perform its obligations and provide services to Covered Entity requested by Covered Entity does not violate the Privacy Rules, Covered Entity's privacy notice or any applicable law. Except as may be set forth in Section 3.2, Covered Entity shall not DENVER RESERVE 1 11 x 1 11 x n r i n n request Business Associate to use or disclose Protected Health Information in any manner that would not be permissible under the Privacy Rule if done by Covered Entity. 5. Term and Termination (a) Tenn. The provisions of this Agreement shall take effect April 14, 2003, and shall terminate when all of the Protected Health Information provided by Covered Entity to Business Associate, or created or received by Business Associate on behalf of Covered Entity, is destroyed or returned to Covered Entity, or, if it is infeasible to return or destroy Protected Health Information, protections are extended to such information, in accordance with the provisions in this Section. (b) Termination for Cause. Upon the parties' mutual agreement that there has been a material breach by Business Associate which does not arise from any breach by Covered Entity, Covered Entity shall provide an opportunity for Business Associate to cure the breach or end the violation, and terminate this Agreement if Business Associate does not cure the breach or end the violation within a mutually agreeable time, or immediately terminate this Agreement if cure of such breach is not possible. (c) Effect of Termination. (1) Except as provided in paragraph (2) of this section, upon termination of this Agreement, for any reason, Business Associate shall return or destroy all Protected Health Information received from Covered Entity, or created or received by Business Associate on behalf of Covered Entity. Business Associate shall request, in writing, Protected Health Information that is in the possession of subcontractors or agents of Business Associate. Business Associate shall retain no copies of the Protected Health Information. (2) In the event the Business Associate determines that returning or destroying the Protected Health Information is infeasible, Business Associate shall provide to Covered Entity notification of the conditions that make return or destruction infeasible. Business Associate shall extend the protection of this Agreement to such Protected Health Information, limited to those purposes that make the return or destruction infeasible, for so long as Business Associate maintains such Protected Health Information. 6. Indemnification. Business Associate shall indemnify and hold harmless Covered Entity and any of Covered Entity's affiliates, directors, officers, employees and agents from and against any claim, cause of action, liability, damage, cost or expense (including reasonable attorneys' fees) arising out of or directly relating to any non -permitted use or disclosure of Protected Health Information or other breach of this Agreement by Business Associate or any affiliate, director, officer, employee, agent or subcontractor of Business Associate. Covered Entity shall indemnify and hold harmless Business Associate and any of Business Associate's affiliates, directors, officers, employees and agents from and against any claim, cause of action, liability, damage, cost or expense (including reasonable attorneys' fees) arising out of or directly relating to any non -permitted use or disclosure of Protected Health Information, any breach or violation of a state privacy law or rule, or other breach of this Agreement by Covered Entity or any affiliate, director, officer, employee, agent or subcontractor of Covered Entity. 7. Notices. Any notices or communications to be given hereunder this Agreement, shall be made to the address and/or fax to the fax numbers given below: If to Covered Entity, to: CITY OF FORT COLLINS Attention: Fax: (8xn� DENVER RESERVE c. x 1 11 x e I i o n If to Business Associate, to: Denver Reserve Company LLC 7852 S. Elati Street, #200 Littleton, CO 80120 Attention: Bob Davis FAX: (303) 795-5105 Each party named above may change its address upon thirty (30) days written notice to the other party. 8. Miscellaneous. (a) Regulatory References. A reference in this Agreement to a section in the Privacy Rule means the section as in effect or as amended, and for which compliance is required. (b) Amendment. Upon the enactment of any law or regulation affecting the use or disclosure of Protected Health Information, or the publication of any decision of a court of the United States or any state relating to any such law or the publication of any interpretive policy or opinion of any governmental agency charged with the enforcement of any such law or regulation, either party may, by written notice to the other party, and by mutual agreement, amend the Agreement in such manner as such party determines necessary to comply with such law or regulation. If the other party disagrees with such amendment, it shall so notify the first party in writing within thirty (30) days of the notice. If the parties are unable to agree on an amendment within thirty (30) days thereafter, either of the parties may terminate the Agreement on thirty (30) days written notice to the other party. (c) Survival. The respective rights and obligations of Business Associate and Covered Entity under section 5(c)(2) and 6 of this Agreement shall survive the termination of this Agreement. (d) Interpretation. Any ambiguity in this Agreement shall be resolved in favor of a meaning that permits both parties to comply with the Privacy Rule. In the event of any inconsistency or conflict between this Agreement and any other agreement between the parties, the terms, provisions and conditions of this Agreement shall govern and control. (e) No third party beneficiary. Nothing express or implied in this Agreement is intended to confer, nor shall anything herein confer, upon any person other than the parties and the respective successors or assigns of the parties, any rights, remedies, obligations, or liabilities whatsoever. (f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of IN WITNESS WHEREOF, the parties hereto have executed this Agreement. CITY OF FORT COLLINS By: Printed Name: Title: Denver Reserve Company LLC By: Name: Bob Davis Title: President DENVER RESERVE Exhibit "A" Business Associate Disclosure Accounting Form Business Associate: Denver Reserve Company LLC Submitted By: Phone Number: Date of Disclosure: Name of member who was the subject of the disclosure: I Member ID: Subscriber ID: (If different than member ID) Name of entity or person receiving Protected Health Information ("PHI"): Address of recipient (if known): Please provide a brief description of disclosed PHI: Please indicate the purpose of the disclosure: Note: The intent of this description is to inform the member of the basis for the disclosure. An alternative would be to provide a copy of the written authorization. In some circumstances, a copy of the written request for disclosure is also sufficient See 45 C.F.R. 164.522(b)(2)(iv) for details. This form should only be used to communicate a disclosure that needs to be accounted for under section 164.528 of the Health Insurance Portability and Accountability Act. Please send this form and a copy of the authorization (if applicable) to: CITY OF FORT COLLINS Cafeteria Plan Address: ATTN: Privacy Officer Fax Number: Email Address: Service Agreement This agreement is by and between the DENVER RESERVE COMPANY LLC (DRC) and CITY OF FORT COLLINS (Client), dated 1) DRC will perform the work necessary to implement a Section 125 Cafeteria Plan for the Client. This work will include employee meetings, payroll consulting, enrollment materials, and recommendations for Client's adoption of the plan. 2) The Client may obtain its own Plan Document or have DRC prepare and compile the Plan Documents. If DRC prepares and compiles the Plan Documents, documents will be obtained from a national plan document provider. DRC will examine and verify the accuracy of the Plan Document. The Client will be notified of regulatory changes that require an amendment to a plan document. There is an additional fee to amend and/or restate the plan document once it has been prepared and approved. This fee will be the current fee charged for document amendments or restatements. 3) Client agrees to provide all necessary information for implementation of the plan and its continued record keeping. This information includes, but is not limited to employee records, ownership information, and payroll withholdings. 4) DRC will provide all participants a Debit Card unless the Client specifically requests otherwise. There is an additional fee for use of the card. The card fee can be paid by either the participant or the employer. 5) DRC agrees to initiate the payment of claims seven business days from, the later of, the date the claim is received or the date the company contribution (which allows DRC to pay the claim) is received. Payment is initiated by mailing a check to the participant or by sending an electronic funds transfer. The average time from receipt of a claim to the initiation of a payment is two days. 6) DRC will make available a web site from which participants may obtain their account information. Participants may also request year-to-date statements at any time by fax or mail. 7) If required, DRC will prepare the IRS 5500 form for each plan year. This form will be provided to the Client for signature and filing. 8) The Client agrees to provide the necessary information to calculate non- discrimination testing for IRS compliance. After the necessary information is received, DRC will calculate the test within a reasonable time after the beginning of the plan year and after the end of the plan year. Testing may also be calculated quarterly if necessary. The Client will be notified of non-discrimination test problems. 9) DRC is the record keeper for the plan. Notwithstanding any other declaration in this agreement, the plan document, or proposal DRC is not the trustee or a fiduciary of the plan. Money sent to DRC for plan reimbursements will be maintained in a segregated account and not co -mingled with DRC general funds. 10) The Client has a choice of banking options as outlined in the proposal. The Client may choose to maintain the funds in the DRC custodial account. All funds maintained in the DRC custodial account remain a general asset of the Client. Any or all earnings from or allocated to funds in the custodial account will be remitted to DRC to be used to offset DRC expenses such as bank charges, check expenses and other expenses. 11) DRC agrees to notify Client when the Health Flexible Spending Account balance falls below zero. Client recognizes the liability associated with this reimbursement account and agrees to remit funds necessary to bring the balance above zero. Client agrees to prompt remittance upon notice from DRC. Client recognizes that failure to remit timely may cause DRC to suspend payment of claims. 12) Client agrees to allow DRC to transfer money between accounts that DRC has signature authority to facilitate the more timely payment of claims or debit card transactions. 13) Fees for DRC services are billed monthly and listed in an attached fee Exhibit. 14) Client agrees to pay the set-up fee at the time this agreement is executed. Plan Documents will not be prepared until the set-up fees are paid. 15) This agreement may be terminated by either party upon 60 days written notice. 16) All working papers and documents are property of the Client. Copies may be obtained at reasonable cost from Denver Reserve. Client documents will not be released to third parties without permission from the Client or by subpoena. In witness hereof, the parties have executed this agreement as of the day and year first written above. DENVER RESERVE COMPANY LLC CITY OF FORT COLLINS Date: 13Am* st x J s e 2 ,y Y A e SIGN UP FOR A PAY INCREASE HOW FLEXIBLE SPENDING ACCOL:NTS WORK 7 ou notv hate the oppnrtLill ih LoVo ibWrl pall ofAour omtpell;ation into tour ('ompam" I ]Csihlc Spcnding:Accounts. I hC moles is contributed to the plan hclurc sou put Jr,6-"td i'ot- wall not imd so, tal ill it 1 he inone_t can Ihcn he (1,cd to pat Ibr Dependent Cure tledical F..i�es not prod br br an insurance Comptij .o, �tI expenses must he "qutlltving" as defined by the IRS and nrtut meet the Ibllowina: I.xpenscs are Ior adults or children. * Children must he under age I ,. t he expenses are incurred to enable cou and Vour spouse to be gaintulh em111MCd. * the expenses are not parable to a dependent of Hours. under age 19. for watchino-' another dcpcndent of tours. 111,2 limit is. S' .0)0 it you are head set household ur Ilk: a joint return. * Your daV sire providermust provide.ou with it tax II)- or socal security number. at "qualifying expenses a:; detined in the I sternal Revenue Coda Expenses can be incurred ht the cmplopee. spc use or dependent. 1 xpenses nnlst he lilt it medical reason and include: Contacts & Eeegtasses L&A he SurgcrN Dental Lsams of Work Co-PaVnlClltS & Deductibles Doctor Visits & Hospital Prescription and Over-the-1 ounict Drugs See other side of this page IIZS I21'd,"f`1�;1( I�10'NS I You ciccl ant or hoth eiac,_ol Cs of e\penscs to direct mullet into Atalcs it it into one catceol cannot he n,L^d lilt another 1'on c,mnol lir.n,lcr names Troll one account to ;mother. - - _'- An election is inadc helolo: it tear heeins and cannot he chanced until IhC IICst vcar. so chanaCs ore allotted dolma IhC vcar unless Ihcrc is it chaanC of status. ChaneC in state, events include a cha`c in: nlzuitai SIlIILI numhcr of dcpcndent,. cnlplot melt stattu. it dcpcndent sati;lics or ccancs to saliaA clici hil itv r, quireulents and residence. ChanLCs oh ,tutu, mnst rsult in a chmtaC in insurance to allots it changC in participant Jcctioas. I he C\pcnsc hr_int-, rcimhuncd for nut;I he incurrai durinI-P IIIC Plan cear. I It ton nutr Icttcl Ihcn e\pccicd. too will Ra'Icil ;ult names rcniaininp in tour account al the Clio] ill tltc tear. - - - 1 I \ I S P ( )(' I': i) l It 1' ` I Pot dependent c;trc and medical rcinuwrsenl, nl.l ontplete clairl li,rnl and ,Mach it Copt of the hill. siii1cillcill_ or recctpi _. Mild of Illy claim directlt to Denser kescrte. kolilhumCnlent check still he mailed dirccth to the pilillopanl of a dir:cl .Icponit trill he made to the pit tio- pant s hank account. t. ( hill, arc proccsed d`.lih and Check, arc mailed daih. \vC c.oinmit to pat ins toil[ claim 7 husincss da_ts lionl the date tic rccooc the claim or the compam Conuihulion Io pat IhC claim. [.. I hC I W( \ i>a Card is awilahlC for 11cvNc spcndinp participantsisa ONcr. Web Site: 1% 4ioy.illm errt-,uil c.coi63 DC [lot:[ Re,Ctte hits ,i ttCh-,itC lbr putlClpanh. You uln I001, up t (,ill JCCOUM h lluuc a, bell ill current and priol tear-lo-date mt,ornlimon. I I c online slatcment I, Ca,o In [Cal and OOCII -drill-dome access to detailed initnmalioll-Aceoiva inlorination rs updated Coen 'd hour,. Logy on: blur mcmhu II) is tour social sCcurit-\ numhcr. Your initial pas>toord is _toll home All code \tier loeeinz on. sou arc rcyuired to change ton[ pusstcord. r85's I.I'm street- suds `.uo Wtct<m_cYI Sn C'u t 71)s-161 I I -at I;n t, I o, to of n. dctncoc,cnr'om Reimb :ACupid Ail- cot all \nlhul licsth \rtilic Banda< Birth c Blood Clairol Christi C'onta C'onta nla tell en Crutcl Ucntis I )rugs Co vc c I_vC surgcrN to improve I kision Ncalasses I crtility cnlhancenlont Guide do� Gvncatlo(ist I lealinL seniccs I lealth spa in home (to cxtcnt v aluC of hunts not incrcascd i REIMBURSABLE MEDICAL EXPENSES Medical care expenses include amount, paid tot -the cia��nusis. cure. miti�_ation. ucatntcnt. ur prevention of disease and like trcatlllcnts al ectims anv hart or lunetwil ill the hock- I he C\pcnses must he primarily to Aleyialc or prcvCut a phvsiall �'I nicntai klcl�ct llness I_.xpcllws for uolclk cosmetic reason, Lenerallk arc nut uprose, Io,r nlcciCai �:uc \Is��_ .apcnxs that arc nrcrelv henelicial to one's general health (lon-evanlple. yacauon>i arc not ckpcnx�, !Ili medical care. Only expenses NOT paid by insurance can be claimed Medicine prescrit,tiun ukcr A ascctolm ursable Aledical F_.vpenses the -counter iuunins ,uui supplcnlcnts --1idkvit� ioctordiaLnosed meth lcturC Aursine_ care 'A CluAll i0s, pru�'ram. prcx xfitionim) used lot Uhstcu-ical c\pcns� a, neatlllCnl fora sped eviating illness ()phthalnukla,�'isl disease ancchire Optician ` 1:1v, etist Optontcu'isl iol limbs and teeth t)rdI sur,�ery /,xpenser.s That. Ire . l )rthodontic, ='cs Reimbursable ontrol pills t)stcopath �raculr Pcciau icum an science clinic Physical evanl- ct lenses I'hsieian ct Lens-Cquipment and Pllvsiotherapisi tcrial rcyuircti lox using( ia Poo U-ist ses, such as saline and Practical nurse \; itanitn, anti suPplcmel rk s Personal nle cleaner Psvchiau-ist 'Cncral health lePscchoio,isl t P>kchuanalvst i�etghl-lo,s program - prescription and o�cr-thc- Psv chotherapisl fee the updated list of es enter Kemal ulmediCai ��I hcalin� under 'learn more" after VMll, ellrllplllClll un at: I Iearin�-, dcv ices Ilospitul Iron lung. aperating cost I ,ahoraton I.iletinlc. care at medical Iacilitk I.ip reading lessons Massage therapy titr,pecilic medical treatment Meals at hospital it its Ili)[ medical cart Kctlrcnlcnt home Iccs portion: alloclhlc to medical care Sanitarium or rest home ticy thcrapi,l Smol:inta ce,sation pn<<-1run; Specialist 1lIrL'CI'V (1101 cnsnielIk I hempv Special CduGlnUr, 1 tuppol't. oI Co ICC! I y I.:'1CV ICC- includim' nlultrc•• ,and xrthri roar:! laatis SvkinunnrL pool I hemp.\ trcaullcnt, I ran,sportatloll C��pcnsc hrnlruilk lit medical u\uto actual ryivusc, „1 cent, .i nli�� fit, t ouu-ollcd substances t o,ntCUc sur��crk I lair trauspiant lluuschold help \lalrruitk clothes use itcm� Inc Carr i �rihcd fe cal lts lot, pcnscs lug�,in!� Many forms and publications are now on the IRS web site at: This includes Publication 502 Medical and Dental Expenses i,�� u�.nil� kanq�l��, hi. liv i�noi all .�nk �,i „\iJc. ume oI the° mute Urrco qmnirnd lrtl �'on.h'rl. O�.Ct��gs Over-the-counter medicines and drugs are now eligible expenses for Cafeteria Plans and Flexible Spending Accounts. On September 3, 2003 the IRS issued Revenue Ruling 2003-102 clarifying that, "Reirnbursements... of amounts paid by an employee for medicine and drugs purchased without a physician's prescription are [now eligible expenses for reimbursement]" What drugs and medicines are eligible? The medicine must be purchased for "medical care" to include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. Antacid, allergy medicine, pain relievers and cold medicines are all eligible expenses. "Dual purpose" drugs and/or medicines may require a doctor's diagnosis of a "medical condition". What is not included? The ruling only Includes as eligible expenses Items in the category of medicine and drugs. Toiletries such as toothpaste and mouthwash, cosmetics such as face creams and lotions, and sundry items are not included. Dietary supplements (including vitamins) to maintain the general health of the employee are not for medical care and not reimbursable. What about vitamins and supplements? Verbally the IRS has confirmed these are eligible expenses if for a specific medical condition. They have also indicated the medical condition may not be self -diagnosed. Therefore, a doctor's prescription, note, or letter indicating the need for the vitamin or supplement and the medical condition is required. Are band -aids or bandages reimbursable? If band -aids and/or bandages are used to treat a medical condition and not for personal comfort, the expenses are reimbursable as they have always been. Revenue Ruling 2003-102 did not change the rule for band -aids and/or bandages. What am I required to send with a claim? Participants must submit a signed claim form with a third -party receipt. The receipt must show the amount, date of purchase, and medicine or drug. For vitamins and supplements, a letter or prescription from a doctor must also be included. For other questions please call us at 303-798-4611 or send an email to: 7852 S. Elati Street, Suite 200 * Littleton, CO 80120 , 303-798-4611 * 800-736-4611 ` FAX 303-795-5105 \ DENVER RESERVE C 0 R P 0 R A T 1 0 N • DRC Visa Card for access to all reimbursement accounts. • Third -party claims substantiation • Unlimited participant inquiries - 800 number access • Claims sent directly to Denver Reserve • Reimbursement checks are sent directly to participant • Direct deposit of reimbursements at participant option • Internet access to current participant and employer account information • Terminations handled completely by Denver Reserve • Eleven -month warning notice to all participants to minimize forfeitures • Plan design • Document preparation - new plans • Form 5500 preparation (if needed) • Quarterly discrimination testing to maintain plan compliance • All-inclusive fee structure - no additional fees for administration services 3. Do you provide a toll -free number for employee questions? Yes 4. What are the proposed days and hours of operation staffed by live customer service representatives for the customer service unit? Customer Service by live operator is available 8 — 5 mountain time, Monday through Friday. 5. Please provide the number of staff members employed full time within the company. There are approximately 30 employees on site and another 8-10 that process claims remotely (from the Denver metro area) 24 hours a day. 6. How can participants access up-to-the-minute status of their account? Web? 800#? Web access is real-time 24/hours/day. The 800 number for live operators is available during normal business hours. 7. Please provide the most recent calendar year results for the administration office that will be administering our client's claims for: Average speed of answer 12.5 seconds or less Call abandonment rates DRC does not track abandonment rates Total numbers of calls received DRC does not track total number of calls received. The best measurement is to call and verify the experience of existing clients. Our retention is close to 100% for 16+ years. It has been quite rare to lose any client because of service issues. 8. How is an employee notified of an ineligible reimbursement? How is the ineligible reimbursement reconciled? Claim for Reimbursement ('ompam Namc: Cite of Fort Collins I�mplos,ceName-_ - - Chccl< il'Nevi :Address I:n)plctvice Address City State /ip f'hun� I.mail I'lan Yci 2007 11)I Health Care Flexible Spending account - h, , nur II1 Cllra llt'l' Date Incurred \IV l l.11 l\.U1. '.Name of Service Expense Description Person for Whom Expense Incurred Net Amount Provider I T- — Total Health are FSA Claim Dependent Care Flexible Spending .Account Claims (Ixpenses paid hs yuu I'M- the care ul'a le,,al clepcndcnt in he employcd.l Net Date Incurred Name of 1) endents Provider of the Service Amount Total Dependent Care FSA Claim the Inh ILr.uncd panicglanl m the Plun.crut ic, the folloll II - \ Cypclhc, tol 1111 JI Icll❑lit II InCnl i9 11vI111111 I� hnincll tI ,I1b1„1_-1�`� ,� III � ., '.� � �V, Gleis I�,nuL' 1 �r�4,J vv 1hU the nlldCl,I JICJ 0..h ancrcd undo the COnlpBnI', Ilse vh l r'1 pcnd in; A`coon( 1, uh I Iy l` -: b hh a�prn . VII r�pen,c. s%crr wairrrd I,cn icc pn1s ll ❑t the flan Both medical cyxn,e, and dependent , 111 c\pcmr, .ire VICkKlII cylcmc, hese not been rrunhut,at n ,uc ma rci nihw,ahh i.11 �m ih c.illh i I the under,ienrd litlh undcrAend, that he 1 It, ahmr n lulh ic•p n ibll i In a _;cn �.i., in 1c�ant. t -ill wh rn uunm rrl,il,ne ptm idcd III the uIlk['i_ncJ_ and Ihal n11"„ .m cyxinc Ini 1+Ind1 i, n� a .in it-cni,i _ .inns l hnyiu cyl1 und�t the I10the undctu enal ma, hC Imblc lilt pdsIII cnl al .ill i, l.ual ci,r� nrludnr du :. li ,M] �m the flan e�lnch rcl:ac I„ wch eylemc I )cm nciaia ct Rcx,I na n1Crf All n1 pes Infl a`_ent „I the unplolci Ali �nnni�i,eincnt.-u ;�.0 ut ;:i1 �„�.� the engllo�<i !hoc, m ,`palate land of uealu nl I'll the plan. I hcc !, nr,cpfuak (anti ,•� n�i hW .., n� i.i a "r,in �encli� lAe coconut to pas 1111 roue zb.mn vUdllll h11SlnO dav, t[Onl the d.ue "' 1— - ..ni ni 1,�n. _ �.tl;,l n:n I!— a:uni I rnpr 0/ a third parr rrceip6 hill or ualement chulrirw an arrunuu lord pn,,,J of ro,avrnrrm nror oM Bi nn muse he included in order if, proles` this ( laim. Employcc's Signature Date i1 1)ENVER RES�ERVF� Lug . Ana Jcm cn r��ne,,,n, ELECTION TO START OR STOP DIRECT DEPOSIT F.mplo\ee Name: SSN: Employer: City of Fort Collins NOTE: THIS INFORMATION CARRIES FORWARD FROM PEAR TO YEAR. IF A FORM IS ON FILF; WITH DENVER RESERVE IT IS NOT NECESSARY TO SEND IN A FORM EACH YEAR START: I hereby authorize and request the payment of all Frame Fle,able Spending Account claims be by direct deposit to my account. I understand it may take up to 10 dars for the chavioc to be effective and that the onh_ notification of the payment ol'mv claim will he by L:mail. STOP: I hereby authorize and request the payment of all ftnure Elcxihle Spending Account claims be by check and mailed to my address of record. CHANGE ACCOUNTS: I hereby authorize and request the pa\mew ofall I lexible Spending Account claims he by direct deposit to the new account below. I understand it may take up to 10 days Ibr the change to be ellccnve 11 Credit Union -ABA Nmllher: Lmplol\ce Si_nawle_ Account Number: Date: ATTACH A COPY OF A VOIDED CHECK REQUIRED FOR DIRECT DEPOSIT) Policies of Direct Deposit I. participants have the oppor'umity to receive their claim payment by direct electronic translcr into their checking .recount or be check mailed directly to them. If participants make no election a check will be mailed directh to the address of record 3. I)enver Reserve Corporation aerees to mail a check or initiate a direct deposit within seven husiness days fi'om the date a claim is received or the date a contribution is received from the employer to initiate the claim. Due to hanking limitations. the initial direct deposit. Rx any participant. may take up to ten days from the date the direct deposit is initiated. Because Of -this bankin, limitation the First reimbursement maN be be check. a. II a check is sent, the check stub v%ill contain the participant's Flexible Spending Account balance and activity. It a direct deposit is requested, the participant will receive an Ismail notific�rtion ofthe payment of the claim. If an Ismail address is not available, notification of payment will not he given. I lowever. Participants may look up their account activity on our wcbsitc. 5_ Participants requesting direct deposit must provide, or have prcvioits k mrovided an election for direct deposit and a voided check. Grl Email Address: llENVER RESERVE (Not required for direct deposit, only for notification.) 1 N 1 1 ?R�'_ s I lmi titrcct_ SUIrC _'nn f tlticton. k L) SOL 2tn ��<<Jcnerrrexn c. toll) Flexible spending participants will automatically receive the DRC VISA Card. Whether the card is used is the decision of the employee/participant. Fees for the card are shown below �1-RE CT REIMBURSFNI NTCART) 11IJ1 5 61211 901D t Before using the DRC VISA ( and for dependent care, he sure to check the balance on the earl [Ces for the DR( I'S ( and s You have 2 options in paying for use of the card (Iu decide 18 lurthe plan vear �6rRtns� :� Par.As-Vou-Gu - `� ` ulxm ucu�allc�u fi��. til ;;�; transaction %pith a mammuilt lee of 'tl 101 the t)lau r.r If Nou don't want the card — don't activate the card no tees w ill E he charged. tlrr iur! u"r6 Nil< Uhlhrn I (SIN in th<< Ile //Ih „JNhm;; „_ . pi_ 7852 S Elati Street. Suite 200•Littleton -;J 6u12u•iuJ -)� ur •�„r �� J"-• 4vww t7enverreserve corn CAFETERIA PLAN Election Form and Compensation Reduction Agreement City of Fort Collins Name Plan Year Total Pay Periods Contributing Employee Name Social Security Number Employee Address -Street City State Email Address Phone HEALTH PREMIUMS PAID THROUGH EMPLOYER All eligible premiums are autonnatically l+ pre-tax, unless you mark the box to the right. NO DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT I elect to reduce compensation, for dependent care expenses, oy $ per each? pay period which is a total of $ for the plan year.t I understand that. __ Reimbursement will be available only for "qualifying' dependent care expenses. HEALTH FLEXIBLE SPENDING ACCOUNT (MEDICAL_ EXPENSES) I elect to reduce compensation, for out-of-pocket medical care expenses, by $ per F each pay period which is a total of $ for the plan year. I understand that __Reimbursement will be available only for IRC §213 Expenses, i.e. expenses deductible on an individual federal tax return- OTHER TERMS AND CONDITIONS =1(xn :.p 5{Jf It rq 77ar iGlrlantswO; 0 0 ]t S1?C �r.. , 1 understand that - An election is made before a year begins and cannot be changed until the next year. No changes are allowed during the year unless there is a change of status. Change in status events includes a :hange in legal marital stains, number of dependents employment status, a dependent satisfies or ceases to satisfy eligibility requirements and residence Changes of status must meet the "consistencyrequirement. I agree to notify the Company if I have reason to believe that any expense to which I have obtained reimbursement is not a qualifying expense. I also agree to indemnify and reimburse the Company on demand, for any liability it may incur for failure to withhold federal, state, or local income tax or Social Security tax on any reimbursement I receive of a non - qualifying expense. up to the amount of additional tax actually owed by me. The Plan Administrator may reduce compensation reduction or otherwise modify this agreement in the event he believes it advisable in order to satisfy provisions of the Internal Revenue Code My Social Security benefits may be slightly reduced as a resur: of my electior This agreement will automatically terminate if the Plan is terminated or discordinued, or if I �- cease to receive compensation from the Company whichbefore reduction he rounder, is at least equal to the amount of that reduction -_ If my employment is terminated I agree to contact Denver Reserve regarding my account. I kill 1,11C0- 11111, '00 Employee Signature Date �ulclon rrr sul �� 131 rti �y8-�011 isAA11ut�?�:_�Im I—� Check here to decline participation in the section 125 Cafetena Plan. �„k\k-d j\ CrrC]a'r C .nn, 7852 S Elati Street. Suite 200 -Littleton CO 80120 • :303-98-46' ' • FAX , 0 '95-5105 • 1800, 736-461 1 www denverreserve con• rIV f fin PA DENVER RESERVE C O R P O R A T I O N Participants are notified by email or US Mail. If the ineligible reimbursement occurred with the Visa card, Denver Reserve will explain the options permitted by the IRS to reconcile the transaction. 9. What is the turnaround time for reimbursements? Most claims are processed same day with reimbursements released same day. Implementation Services 1. Describe your overall account management services during the implementation. Will the same person be responsible for servicing our client once the implementation is complete? The set up and implementation of the plan will be handled by a New Business Development representative whose sole responsibility is to ensure a smooth transition and enrollment process. Once the plan has been set up and enrollment is completed, the plan will be assigned to a Senior Administrator. This is the primary contact for the employer. The Senior Administrator is responsible for the day to day management of the plan. 2. Provide a copy of your proposed implementation timetable with a January 1, 2007 implementation date. Implementation tailored to each individual client. Listed below is the general implementation outline: • Denver Reserve submits proposal • Client signs Service Agreement and pays set-up fee • Denver Reserve consults on plan design and enrollment • Client assigned to a Denver Reserve Senior Administrator • Enrollment meetings scheduled • Plan Documents prepared and provided to Client • Enrollment materials prepared • Client announces the plan to employees • Enrollment meetings • Client collects enrollment information and provides a copy to Denver Reserve • Initial discrimination testing performed by Denver Reserve • Payroll deductions commence by the Client • Payroll information provided to Denver Reserve • Denver Reserve pays claims 3. Will a Client Administration Manual be included with implementation? Yes. 4. What are your implementation costs? Implementation includes plan design, plan documents, enrollment materials and enrollment meetings.