89-140 BenefitAmerica for Flexible Benefits Plan BenefitAmerica .
August 13, 1991
Ms. Mary Reasoner
City of Cupertino
10300 Torre Avenue
Cupertino, California . 95014
Dear Ms.,Reasoner.
I must apologize for the delay in getting this information to you; however,.it
was necessary for me to take a short, personal leave. This will confirm the
conversation you had with Kim,in our office that your administrative fees for
the 1991-1992 Plan year which runs from August 1, 1991 through July 31,
1992;will remain the same as they currently are: Premium Conversion: $.50,
Medical Reimbursement: $1.25, Dependent Care: $1.25.
BenefitAmerica increased administrative fees beginning January 1, 1991;
however, due to the fact that the City is on an annual budget from July through
June,-we will not increase fees this year. Please make note, however, that
beginning August 1, 1992 your fees will be increased to the following:
Premium Conversion $1.50
Medical Reimbursement $2.25
Dependent Care $2.25
Maximum $4.00/employee
Please let me know if you have any questions regarding the above information.
Very truly yours,
Christine Moreno-Young
Flexible Benefits Manager
1601 Dove St.,Ste.185,Newport Beach,CA 92660, (714)756-9445
ADMINISTRATIVE SERVICES AGREEMENT
FOR FLEXIBLE BENEFITS PLAN
LAGREEMENT made this�day of1990 by and between
("Employer") and BenefitAmerica, Inc. of Columbia, South Carolina ("BenefitAmerica").
WHEREAS, Employer has determined that it is in the best interest of the Employer
and its eligible employees to install a flexible benefits plan for the benefit of such eligible em-
ployees, to be known as the GF W INo ("Plan"); and
WHEREAS, in furtherance of such determination and in accordance with applicable
provisions of the Plan, Employer deems it advisable to delegate certain ministerial duties and
functions for purposes of accounting claims processing and record keeping to a person or
entity with the capability of providing such services; and
WHEREAS, Employer has determined that BenefitAmerica has such capability, and
has elected to appoint BenefitAmerica to serve in such capacity and has and does hereby
delegate such ministerial duties and functions to BenefitAmerica; and
WHEREAS, the parties hereto do desire to set forth their agreement concerning the
respective rights, duties and responsibilities of such parties relative to such delegation;
NOW, THEREFORE, for and in consideration of the mutual covenants and agree-
ments hereinafter set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employer and BenefitAmerica agree a� J-2 3
lows: t_
I SERVICE
The Employer appoints BenefitAmerica to assist it in thfAU
of itra nis-
trative duties under the plan. BenefitAmerica.accepts s ,*166�.subjb. to
the terms and conditions of this Agreement. 11��Q j
11. DUTIES OF BENEFITAMERICA �r
A. BenefitAmerica shall assist the Employer in developing the Plan, which shall
provide benefit elections for participating employees consistent with provisions of
Section 125 of the Internal Revenue Code of 1986, as amended ("Code").
B. BenefitAmerica shall assist the Employer in developing, designing and obtaining
vouchers, claim forms or other documentation necessary for the administration of
the Plan.
1 30112BA-2
C. BenefitAmerica shall provide accounting services to the Plan, as follows:
(i) Maintain a list of participating employees, including full names and social
security numbers;
(ii) Maintain records of contributions by, payments of benefits to, and resulting
account balances of participating employees;
(iii) Prepare and mail to participating employees quarterly and year end re-
ports of contributions made by and benefits paid to or on behalf of partici-
pating employees under the Plan.
(iv) Maintain records of all transactions under the Agreement during
the term of the Agreement and for a period of five years thereafter.
D. If the Plan offers one or more flexible reimbursement accounts as eligible bene-
fits, BenefitAmerica shall receive claims for benefits made by participating em-
ployees and shall process the same and issue checks payable to such participat-
ing employees in accordance with the terms of the Plan and any guidelines
issued by the Employer; provided, however, that checks shall be issued only to
the extent that accounting information provided to BenefitAmerica indicates that
an account balance is available to permit payment of the benefits applied for by
the employee. Checks shall be mailed to the Employer for forwarding to eligible
employees unless, in return for the payment of an additional fee, the Employer
instructs BenefitAmerica to mail the checks directly to the employees. If Bene-
fitAmerica determines that a given application for benefits is not eligible under the
Plan, for whatever reason, BenefitAmerica shall forward a notice to the employee
providing the reason for denial and describing any additional information that
might be necessary to perfect or complete the application.
BenefitAmerica isvested only with ministerial authority to investigate and process-
claims for benefits under the Plan in accordance with the terms of the Plan.
BenefitAmerica shall have no discretionary authority to make decisions as to
Plan policy, interpretations, practices or procedures, but shall perform its duties
and functions within the framework of the terms of the Plan and policies, interpre-
tations, rules, practices and procedures made by the Employer. BenefitAmerica
is not a fiduciary with regard to the Plan and shall not be considered the plan
administrator, a fiduciary or named fiduciary as the same terms are defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
BenefitAmerica shall make"employee benefit eligibility determinations on behalf
of the Employer in accordance with the claims procedures set forth in the Plan
based upon information provided to BenefitAmerica by the employee and by the
Employer. It is understood that BenefitAmerica is acting on behalf of the Em-
ployer in a ministerial, administrative capacity only and shall have no responsibil-
ity to investigate the accuracy or truthfulness of any information provided to
BenefitAmerica.
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BenefitAmerica shall not advance its personal funds for the payment of any
benefits under the Plan. BenefitAmerica shall not be considered the insurer or
underwriter of the liability of the Employer to provide benefits for the participating
employees.
BenefitAmerica shall provide the Employer with the information in its custody for
use in the preparation of all returns and reports that are required by the Internal
Revenue Service, the Department of Labor and any other federal or state
agency. BenefitAmerica shall assist in the preparation of such returns and re-
ports whenever called upon to do so by the Employer; provided, however, that
the Employer shall be responsible for the timely preparation, filing and content of
all such returns and reports, and the payment of any taxes which may be due.
i
E. BenefitAmerica shall have the right to retain outside service providers to assist it
in performing the duties delegated to it under this Agreement. All such outside
services shall be provided at the expense of BenefitAmerica and shall be subject
to the supervision, control and responsibility of BenefitAmerica. BenefitAmerica
shall have the right to retain the services of accountants, attorneys, actuaries and
any other professionals whose services are reasonably necessary or desirable to
aid in the performance of its duties under this Agreement, for the benefit of the
Employer. The expenses for those professional services shall be payable by the
Employer upon receipt of appropriate billing from BenefitAmerica. BenefitAmer-
ica shall notify the Employer of any pending matter which necessitates the reten-
tion of such professional services and shall refrain from hiring any such persons
for the performance of substantial services without the prior written approval of
the Employer.
F. BenefitAmerica shall obtain and maintain such fiduciary bonds as are required
under applicable law:
III. DUTIES OF EMP QYEg
A. Employer warrants that it has validly adopted the Plan and any component plans
of the Plan. True copies of the Plan and any component plans are attached
hereto as Exhibit A.
B. Employer shall notify, or insure that the participating employees notify, Bene-
fitAmerica of the age, years of service and benefit elections of participating em-
ployees. The Employer shall also notify BenefitAmerica of (1) a reduction of par-
ticipating employee hours of service resulting in loss of benefit eligibility of a par-
ticipating employee; (2) termination of the employment of a participating em-
ployee and whether such termination was due to gross misconduct; or (3) a
participating employee becoming eligible for Medicare.
C. Employer shall be responsible for the initial qualification of the Plan and any
component plans under the Code, ERISA, or any other applicable federal, State
or local law or ordinance.
3
D. If BenefitAmerica is to process claims for benefits under flexible reimbursement
accounts, as described in paragraph ILD above, funds for the payment'of bene-
fits shall be provided to BenefitAmerica by the Employer in accordance with the
option selected by the Employer and indicated below.
. _ OPTION 1: Employer shall forward an amount equal to one month's pay-
roll reduction (exclusive of premiums paid directly by Employer) for all
employees who have elected to participate in the Plan to BenefitAmerica
in such manner that such sum shall be in the possession of BenefitAmer-
ica on or before the initial effective date of the Plan, or of this Agreement,
if later. Such funds shall be deposited in an agency account called "Bene-
fitAmerica Flexible Benefits Account." Benefit America shall utilize such
funds to make payment of benefits properly payable according to the
,terms of the Plan. BenefitAmerica shall, upon making a payment for
benefits under the Plan from such funds, submit a statement to the Em-
ployer for reimbursement of the amount so paid to replenish the amount
so paid out form the initial month's payroll reduction, thereby assuring the
existence of a fund in BenefitAmerica's hands sufficient to pay benefits
under the Plan. Such funds shall remain the assets of the Employer until
expended in accordance with the terms of the Plan.
OPTION 2: Employer, on notice from BenefitAmerica, shall forward to
BenefitAmerica such amounts as BenefitAmerica may request in order to
pay benefits payable under the terms of the Plan which are properly due
and payable pursuant to properly filed, processed and documented
claims.
IV. TERM OF AGREEMENT
The appointment of BenefitAmerica under this Agreement is effective as of
2/ g® and shall last until - 'LL q&
The appointment shall automatically be extended from year to year after the end of the
original term unless one party gives written notice sixty (60) days prior to the end of the
term to the other of its intention to terminate this Agreement as of the end of such term.
During any term hereof, and on sixty (60) days written notice, either party may terminate
the Agreement with or without cause.
Upon termination of this Agreement, copies of all pertinent information from the files of
BenefitAmerica shall be made available to the Employer at its request.
V. COMPENSATION
The Employer shall pay to BenefitAmerica fees in accordance with the schedule attached
hereto as Exhibit B. Fees and other charges authorized hereby shall be paid by the
Employer within ten days of the presentation of a bill by BenefitAmerica.
4
VI. INDEMNIFICATION AND HOLD HARMLESS
The Employer shall indemnify and hold harmless BenefitAmerica for any claims, costs,
demands or actions incurred by BenefitAmerica with regard to BenefitAmerica's actions
or failure to act in regard to the Plan, unless such claims, costs, demands or actions are
incurred as a result of the negligence of BenefitAmerica.
Any benefit payments processed by BenefitAmerica shall be made by BenefitAmerica as
agent for the Employer. In the event that,any benefits paid under the Plan should come
to be recharacterized for any reason as income to any participating employee; Bene-
fitAmerica shall under no circumstances be liable for any Employer or employee taxes,
including withholding thereof, or interest or penalties relating to them that result from
such recharacterization. BenefitAmerica shall have no responsibility for federal, state or
local taxes or reporting to federal, state or local taxing authorities with respect to contribu-
tions to the Plan or benefits paid from the Plan.
VII. NOTICES
Any notices that may be required under this Agreement shall be sent by U.S. Mail,
properly addressed, with postage prepaid. Notices will be sent to the Employer at
103 00 Tory -! Ave-. CLAperti no
Notices will be sent to BenefitAmerica at
O
Dave 5 . 8 s" Notice shall be effective upon receipt.
ewport, eczch , Ga . y a..6 6o
VIII. _MISCELLANEOUS
A. This Agreement shall constitute the entire understanding of the parties with re-
gard to the matters covered in it and shall not be modified except by written,
document signed by both parties.
B. This Agreement shall be construed in accordance with the applicable laws of the
State of 66.:L FdT AIZA_
C. This Agreement shall be binding upon the undersigned parties, their successors
and assigns.
EXECUTED the day and year first mentioned above.
BENEFITAMERICA, INC. EMPLOYER
BY: BY:
n�
TITLE: TITLE: «J /
5
EXHIBIT B
FEE SCHEDULE
Installation Fee:
Annual Enrollment Fee: �.�.�.
Annual Mailing Fee:
Monthly Administrative Fee: per participant in
Premium Conversion
$ I.25' per participant in
Medical Reimbursement
U�� per participant in
Dependent Care Assistance
Fee schedule accepted this day of 1 g 9b
BENEFITAMERICA, INC. EMPLOYER
tiBY: BY:
TITLE: TITL
- 1 � � E. ,
6
ski
Citq of CWpertiro
City of Cupertino 10300 Torre Avenue Cupertino, California 95014 (408) 252-4505
To: _FILE 125 PROGRAM ADMINISTRATIVE SERVICES AGREEMENT
From: MARY E. REASONER, PERSONNEL TECHNICIAN Date: 8/9/91
Subject: RENEWAL FOR YEAR 1991/1992
I talked with Kim of Benefit America today regarding the "Administrative
Services Agreement" which was signed 8/7/90. The agreement reads that
it is effective from 9/1/90 - 7/31/91. I was informed that no new
agreement needs to be signed. When they receive the white copies of the
125 Election Forms of the employees who signed up 8/1/91, that is all
they need. They have agreed also to send us a letter saying the fee
schedule will remain the same as last year. Listed below is that schedule:
$.50/mo. per participant PREMIUM CONVERSION
$1.25/mo. per participant MEDICAL REIMBURSEMENT
$1.25/mo. per participant DEPENDENT CARE ASSISTANCE
The Personnel Office was informed by Christina Jordan, Sales Rep. with
Colonial Life that the fees had been increased as follows:
$1.50/mo PREMIUM CONVERSION
$2.50/mo MEDICAL REIMBURSEMENT
$2.50/mo DEPENDENT CARE ASSISTANCE
I called. Benefit America and talked with Kim on July 23rd regarding these
increased costs. She said that a letter had gone to the City in November
of 1990 explaining this. I checked with Finance before calling they had
not received this letter and the Personnel Office had not seen such a
document.
The original document was signed by Christine Young, Benefit America
and Blaine Snyder, Finance Director.
I explained that our negotiations were over and our budgets set and as
we had nothing in writing on these increaed costs. Kim talked with
Christine Young and they agreed that the cost would remain the same
for this next year. To date the letter has not been received; however,
I was informed that Christine Young had been out of the office on an
emergency and they hoped she would return on Monday, August 12, 1991.
cc/Blaine Snyder
Barbara Brown
Dorothy Cornelius, City Clerk
A
4`
ADMINISTRATION AGREEMENT
FOR THE, FLEXIBLE BENEFIT PLAN
FOR
CITY OF CUPERTINO.
This Administration Agreement("Agreement")is entered into this 1st day of September,
1989, by and between CITY OF CUPERTINO (hereinafter "Company"), and Hinebaugh
Fox Group, Inc., a corporation, (hereinafter "Administrator"), for the administration of
the Flexible Benefit Plan ("Plan") adopted by company.
RECITALS:
A. Company desires to provide a Flexible Benefit Plan for its employees utilizing salary
reduction.
B. Hinebaugh Fox Group, Inc. is a company which currently implements and
administers Internal Revenue Code Section 125,Flexible Benefit Plans throughout
the United States.
C. Hinebaugh Fox Group, Inc. desires to administer the Company Plan.
D. CITY OF CUPERTINO hereby desires to hire and retain Administrator to.perform
the administrative services specified in this agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
I. Effective Date. The effective date of the agreement shall be September 1, 1989.
II. Duties of Administrator. The Administrator shall provide the following services
to perform the functions and duties necessary to prepare, implement and operate
the Company's Flexible Benefit Plan. The functions and duties include: processing
of benefit.claims;preparation of Company Plan Document;preparation of summary
plan desription, employee election forms and employee statements; and prepara-
tion of the Plan's annual report (Form 5500). The Administrator will provide an
opportunity for and conduct employee orientation and enrollment meetings.
A. Maintenance of Records. At all times during.the term of the Agreement and
for a period of two years thereafter the Administrator shall maintain adequate
books and records of all transactions between it, the company, and the Plan
Participants, at its principal administrative office.
The Administrator shall continue to maintain records for a five year period.
The books and records shall be maintained in accordance 'with prudent
standards of recordkeeping. The Administrator shall provide access to Com-
pany or its authorized representative to such books and records and give the
Company the right to examine, audit and make transcripts therefrom as
necessary. It is agreed that during the maintenance of records for terminated
companies all reasonable charges for retrieving and duplicating the records
will be the sole responsibility of the Company.
B.° Administrative Function. The Administrator shalldiligently pursue re-
search on all pertinent changes in or amendments to the Code. Any revisions
}
y
or amendments to the Code will be communicated to the Company in a timely
manner. This and all Administrative functions will be insured by Errors and
Omissions coverage continued and maintained by the Administrator. Under
no circumstances shall the administrator be required to provide or perform
any services which would cause the Administrator to be deemed a Trustee or
which would constitute the practice of law,accounting or any other profession
regulated by federal or state laws.
III. Duties of the Employer. It is understood and agreed that the company is the
legal Plan Administrator within the meaning of Section 3(16)(Aj of ERISA and
Section 414(g) of the Internal Revenue Code of 1954, as amended, and by this
agreement, it delegates the ministerial duties described herein to the Ad-
ministrator.
In connection with the performance of the Agreement,the Company shall have the
following duties:
A. Employee Eligibility Information. The company shall provide the Ad-
ministrator in a timely manner with the information necessary to administer
the plan, including the name of each employee participant, each employee
participant's most current mailing address, social security number and the
amount by which the participant has elected to have his/her salary reduced.
As the Administrator is totally dependent on the Company's provided infor-
mation and must rely on their assurance that the information provided is true
and correct; it is agreed that the company is to be held liable for all misleading,
false or incorrect information provided to and/or acted upon by the Ad-
ministrator.
B. Deposit Account. The Company shall establish a Plan Deposit Account as
a depository for funds to be used for benefit payments pursuant to the Plan.
It shall be the Company's responsibility to provide funds in the Plan Deposit
Account sufficient to cover checks validly issued. In addition, it shall be the
duty of the Company to process all of the company contributions to the Plan
Deposit Account and it shall be the duty of the Administrator to process all
employee benefit claims therefrom. It shall be the duty of the Administrator
to.provide the Company with an Evidence,of Benefits Report for each claim
payable. These reports will serve as a voucher, from which the company will
issue reimbursement to the Employees. .
C. Payroll Deductions. The company agrees to provide data necessary to
calculate payroll deductions. These deductions, based upon employee elec-
tions, will be reconciled and reported to the Administrator within 60 days of
the Plan Year End for IRS Form 5500 annual reporting.
D. Other Information. The Company shall provide the Administrator with
additional information about and prior to any matters of incident, modifica-
tion or termination of the Plan, as they arise, in a timely manner.
E. Appeal of Denied Reimbursements. The Company shall be responsible for
all, appeals for the denied benefit reimbursement insofar as the Plan is
2
concerned the Company shall have the final authority regarding the choice of
benefits and provisions of the Plan and advise the Administrator accordingly.
IV. Administration Fees. The fee of the Administrator shall be $5.50 monthly
administrative fee per participant if the employee participates in one or more benefit
options, including one option requiring Flexible Spending Accounts. The fee of the
Administrator shall be $1.50 monthly administrative fee .per participant if the
employee participates in the Insurance Premium Conversion option only. The
maximum fee charged is $5.50 monthly administrative fee per participant.
The fee schedule shall apply for the Plan Year beginning September 1, 1989 and
shall be reviewed on a yearly basis by both the Company and the.Administrator.
Additional fees will be charged for any Plan consulting and redesign work neces-
sitated by change in the laws governing Flexible Benefit Plans or changes brought
about by the needs of the Company.
V. Limitation ofAdministrator Responsibility. It is understood and agreed that
Administrator is and shall remain an independent contractor and shall not be
deemed for any purpose an employee, partner or relationship as parties in a,joint
venture. The Administrator does not assume any responsibility, risk, liability, or
obligation for the general policy or specific direction of the Plan by the Company.
The Administrator shall not be deemed an insurer, underwriter or guarantor with
respect to any benefits under the Plan. The Company agrees to indemnify and
hold Administrator free and harmless from any claim, demand, liability or cause
of action, arising in any manner out of the Plan or the administration or the
performance by the Administrator pursuant to the terms of this agreement,
excepting only the negligence, willful misconduct or fraud of the Administrator in
such performance.
VI. Termination. This agreement shall automatically terminate following the ter-
mination of the Plan, once all benefits have been paid to the limit of the participants'
account balances for claims submitted within a 90-day period following Plan
termination, and final reports prepared.
A. Termination Upon Sixty Days Written Notice. This Agreement may be
sooner terminated upon sixty days prior written notice by either party to either
party. Upon any such termination, the Administrator shall`apply the funds
then in its possession to the payment of benefits to employees for whom the
Administrator-had received request for reimbursement prior to such termina-
tion, and to payment of its then accrued administrative fees and.expenses.
The Administrator shall accept no further requests for reimbursement from
company employees after the Administrator has received notice of the
Company's intent to terminate the Agreement. Any request for reimburse-
ment received by the Administrator after it has received notice of the
Company's intent to terminate the Agreement' shall be forwarded by the
Administrator to the Company and the Administrator shall have no further
responsibility therefor.
3
1"
r
B. Individual Employee Continuation. After a 90 day grace period for Sub-
mission of reimbursement requests, payment for reimbursements may be
processed only if a separate administration fee has been agreed upon and
approved by the Company in writing for services performed by the Ad-
ministrator after the termination date.
C. Return of Remaining Funds. Any funds which had been advanced by the
Company to the Plan Deposit Account and which are remaining after the
termination of this Agreement and after all previously received request for
disbursement have been processed and after all accrued administration fees
have been paid, shall be retained by the Company upon the termination of
the agreement.
VII: Notices. Any notice to be given pursuant to the terms of the agreement shall be
In writing and may be given either by personal delivery or by certified or registered
mail, postage prepaid and return receipt requested or by overnight courier, or by
United States Mail, addressed as follows:
Company: CITY OF CUPERTINO
10300 Torre Ave.
Cupertino, CA 95014
Administrator: Hinebaugh Fox Group, Inc'.
1967 N. Gateway Blvd., Suite 101
Fresno, CA 93727
VIII. Services ofAdministrator: The Administrator agrees that all services performed
pursuant to this Agreement shall be provided in a manner commensurate with the
highest professional standards and shall be performed by qualified and ex-
perienced personnel.
IX. Integrated Agreement. This Agreement represents the full and complete under-
standing of every kind or nature whatsoever between the parties hereto and all
preliminary negotiations and agreements of whatsoever kind or nature are merged
herein. No verbal agreement or implied covenant shall be held to vary the
provisions hereof. Any modification of the Agreement will be effective only by
written execution signed by both the Company and the Administrator.
X. Counterparts. This Agreement may be executed in several counterparts, each of
which is an original, and all of which together constitute one and the same
document.
M. Cost of Litigation. If any legal action is necessary to enforce any provision of this
Agreement or for damages by reason of an alleged breach of any provision of the
Agreement, the prevailing party shall be entitled to receive from the losing party
all costs and expenses in such amount as the court may adjudge to be reasonable
attorney's fees.
XII.
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Reports. To the extent that the forms of the Plan document and of the summary
plan description are copyrighted items, each and every report, draft,work product,
map, record and other document process reproduced, prepared or caused to be
prepared by the Administrator pursuant to or in connection with this Agreement
shall be the exclusive property of the Administrator. No report, information or
other data given to or prepared by the Administrator pursuant to this Agreement
shall be made available to any individual or organization by the Administrator
without prior approval by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
COMPANY: ADMINISTRATOR:
CITY OF CUPERTINO HINEBAUGH FOX GROUP,INC.
B BY:
N NAME. cc G�
TITLE. o! ' � E• � S�C1�1
•
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