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HomeMy WebLinkAboutResolutions - 2005.11.10 - 27946• October 27, 2005 MISCELLANEOUS RESOLUTION #05 258 BY: Personnel Committee, Gregory Jamian, Chairperson IN RE: HUMAN RESOURCES DEPARTMENT - RETIREMENT HEALTH SAVINGS PLAN To the Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen, WHEREAS Oakland County has always been on the fore front of new and innovative ideas that keep the county financially sound, yet provide benefits for its employees that are in line with the business community, and WHEREAS the escalation of health care costs have been continuously monitored and assessed by the County, and WHEREAS the cost of retiree health care continues to escalate at a rate exceeding inflation making it necessary to develop economical alternatives, and WHEREAS the 2004 Kaiser/HRET Survey of Employer - Sponsored Health Benefits found the number of large employers offering medical benefits to retirees dropped from 66% in 1998 to 36% in 2004 and 8% of employers eliminated subsidized medical benefits for future retirees last year and 11% are likely to terminate them this year, and WHEREAS retirement health care benefits for new employees should be adjusted to better reflect the marketplace and to further contain costs while maintaining a reasonable competitive employee compensation package, and WHEREAS a ''Retirement Health Savings Plan" alternative would allow the County to further contain costs while offering employees a plan in which to save for health care upon retirement, and WHEREAS the plan also allows employees currently covered by the County's retirement health plan the option to contribute to the Retirement Health Savings Plan. NOW THEREFORE BE IT RESOLVED that the Board of Commissioners approves the Retirement Health Savings Plan for full-time Eligible employees hired on or after January 1, 2006 as contained in the attached report and that the Retirement Health Savings Plan shall be the only retiree health, dental, and vision plan available for employees hired after this date. Personnel Committee Vote: Motion carried unanimously on a roll call vote with Patterson and Hatchett absent BE IT FURTHER RESOLVED that part-time eligible employees hired on or after January 1, 2006 will not be eligible for County contributions to the retirement health savings account nor are they eligible for any retiree health, dental, or vision coverage. BE IT FURTHER RESOLVED, that the assets of the plan shall be held in trust, with the County Voluntary Employees' Beneficiary Association (VEBA) Board serving as trustee, for the exclusive benefit of Plan participants and their beneficiaries. BE IT FURTHER RESOLVED, that the County's contribution for full-time eligible employees hired on or after January 1, 2006 shall be $50 bi-weekly. The County's contribution applies to non-represented employees and represented employees whose collective bargaining agreement provides for this change. Chairperson, on behalf of the Personnel Committee, I move the adoption of the foregoing resolution. "SUMMARY" RETIREMENT HEALTH SAVINGS ACCOUNT (RHS) • Employees hired on or after January 1, 2006 will have a Retirement Health Savings Account rather than Oakland County's health, dental, or vision coverage when they retire. • This allows the County to put money into the RHS (Retirement Health Savings) account on a pre-tax basis and allows the retiree to pay for health insurance or any IRS allowable health expense on a pre-tax basis. • Current employees along with new hired employees can contribute to the RHS on a pre-tax basis using their sick and annual leave payoff. • Current employees along with new hired employees can contribute, based on a one-time irrevocable election, pre-tax to their RHS account. • The plan has a survivor benefit that goes to the spouse, dependent(s) or designated beneficiary. • The employee will be able to manage the money through various mutual funds including life style funds. • The vesting schedule will remain the same as the current plan, with at least 15 years of service to get 60% and going to 100% at 25 years. COUNTY CONTRIBUTION • $ 1,300 per year/$ 50 per pay • By using a flat dollar amount it will be equal for all employees regardless of their rate of pay. k70 VESTING SCHEDULE: Minimum of 15 years actual service with Oakland County. 15 Years 60% of Employer Portion 16 Years 64% of Employer Portion 17 Years 68% of Employer Portion Each additional year worked the employee will receive an additional 4%. 25 Years 100% of Employer Portion 30 Years 100% of Employer Portion 35 Years 100% of Employer Portion EMPLOYEE CONTRIBUTION I Pre-Tax Minimum = 1% Maximum = 50% ▪ Employee contributions are always 100% vested. • Employee can put off making an election as long as they choose. However, once they make a decision to begin pre-tax contributions, they cannot change the amount. They have a one-time irrevocable election. FORFEITURES • The money that is not vested when an employee separates from the county will go into a forfeiture account and will be reallocated as needed to offset plan payments. GAINS & LOSSES • The employee will be allowed to invest 100% of the county's contributions to the plan along with their own contributions. PAYOFF OF LEAVE TIME • The employees can designate a flat dollar amount of their annual and sick leave time to be deposited into the RHS account when they separate from service. 7,5% S OAKLAND COUNTY RETIREMENT HEALTH SAVINGS ACCOUNT (Estimated Value) Employer Contribution $50 bi-weekly Assumed Rate of Return 1giOT.01#..;t1 • .• . • • .• , • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $49 $150 $259 $376 $501 $636 $782 $938 $1,105 $1,286 $1,480 $1,688 $1,912 $2,153 $2,412 $2,691 $2,990 $3,312 $3,658 $4,030 $4,429 $4,859 $5,321 $5,817 $6,351 $1,349 $2,799 $4,357 $6,033 $7,834 $9,770 $11,852 $14,090 $16,495 $19,081 $21,861 $24,849 $28,061 $31,515 $35,227 60% $39,218 64% $43,508 68% $48,120 72% $53,078 76% $58,407 80% $64,136 84% $70,295 88% $76,916 92% $84,034 96% $91,685 100% 26 $1,300 $6,925 $99,910 27 $1,300 $7,542 $108,752 28 $1,300 $8,205 $118,257 29 $1,300 $8,918 $128,476 30 $1,300 $9,684 $139,460 31 $1,300 $10,508 $151,268 32 $1,300 $11,394 $163,962 33 $1,300 $12,346 $177,608 34 $1,300 $13,369 $192,277 *35 $1,300 $14,470 $208,047 36 $0 $15,604 $223,651 37 $0 $16,774 $240,424 38 $0 $18,032 $258,456 39 $0 $19,384 $277,840 40 $0 $20,838 $298,678 *Assumed retirement after 35 years VANTAGE CARE RETIREMENT HEALTH SAVINGS PLAN Retain Booklet LA RETIREMEIVIrCORPORATION The; PubliaSector Export USING THE VANTAGECARE RETIREMENT HEALTH SAVINGS PLAN RETAIN BOOKLET This is one of two booklets containing information to establish your VantageCare Retirement Health Savings (RHS) Plan with the ICMA Retirement Corporation. This booklet includes: •Model Integral Part Trust Document Private Letter Ruling •Sample Welfare Benefit Plan Please read the information and retain it for your files. MODEL INTEGRAL PART TRUST DOCUMENT You will need to execute a trust document; you may execute the model trust document in this retain booklet by inserting your information on pages 3, 4, 6, and 12. If you do not use the ICMA- RC model trust document, your individually designed document must be reviewed and approved by ICMA-RC prior to your joining the RHS program. This will ensure that ICMA-RC can administer all provisions of your plan. The ICMA-RC model trust document has been worded broadly to encompass any employer's RHS program. In most situations, as with your 457 or 401 plans, the Employer will act as Trustee. In this case, the terms Administrator and Trustee will refer to the Employer. Each reference to the Employer, Administrator, or Trustee refers to the Employer acting in the appropriate capacity. The Trust agreement is not an agreement between you and ICMA-RC; it provides for the legal establishment of the RHS Trust and lays out the duties of the Employer and Trustee with respect to the trust. The agreement gives the Employer (acting as Administrator) the ability to designate another entity (i.e. ICMA-RC) to perform administrative services for the RHS plan. The Administrative Services Agreement contained in the return booklet constitutes the contract between you and ICMA-RC for these services. The ICMA-RC model trust document may also be used in the situation where the Employer retains the services of an outside third-party trustee. In this case, the term Trustee refers to that third-party trustee. in no case may ICMA-RC be named as trustee for your RHS plan. PRIVATE LETTER RULING ICMA-RC has obtained a private letter ruling from the IRS approving one employer's RHS Plan trust. Your use of ICMA-RC's model trust document will provide you with comfort that the trust for your Plan is also within the IRS' requirements. (This is similar to the comfort provided when you use ICMA-RC's model 457 plan document.) Of course, you may want to talk to your legal counsel about whether or not you should obtain a private letter ruling on your own RHS trust document if you choose not to use the 1CMA-RC model document. Note that the plan upon which the IRS private letter ruling was based did not include certain features that have subsequently been added to the RHS program. These features include 14- • the irrevocable election to participate in the program, • the irrevocable election to contribute compensation or accrued leave*, • the irrevocable prospective election to contribute leave to be earned in the coming year*, and • voluntary employee after-tax contributions (Article 7.2 of the Trust). *These contribution types are treated as Employer contributions under Article 7.1 and 7.3 of the Trust. However, ICMA-RC has obtained the opinion of counsel that these features should be allowed as long as the requirements outlined in the Trust and Adoption Agreement are met. Any questions regarding these features of the RHS program can be directed to your ICMA-RC Retirement Plans Specialist. SAMPLE WELFARE BENEFIT PLAN You will need to execute a welfare benefit plan if you do not already have one in place. You may execute the sample welfare benefit plan provided herein or you may execute your own welfare benefit plan. It can be a simple document, but it must be in writing in order for your employees to enjoy tax-free treatment of the benefits they receive from this plan or any other welfare benefit plan you provide. FOR ASSISTANCE Please contact your VantageCare Retirement Health Savings Plan New Business Analyst at 1- 800-326-7272. Please note that the information in this booklet and the documents herein take into account only the federal tax rules related to ICMA-RC's VantageCare Retirement Health Savings Plan. Prior to implementing an RHS plan, the employer is responsible for determining that there are no state or local laws that would prohibit it from offering the plan to its employees. The employer must also determine that the options it selects in the VantageCare Retirement Health Savings Plan Adoption Agreement fall within state/local requirements. DECLARATION OF TRUST OF THE OAKLAND COUNTY INTEGRAL PART TRUST DECLARATION OF TRUST OF THE OAKLAND COUNTY INTEGRAL PART TRUST Declaration of Trust made as of the day of , 2005, by and between Oakland County, Michigan a county (hereinafter referred to as the "Employer") and Oakland County VEBA board or its designee (hereinafter referred to as the 'Trustee"). RECITALS WHEREAS, the Employer is a political subdivision of the State of Michigan exempt from federal income tax under the Internal Revenue Code of 1986; and WHEREAS, the Employer provides for the security and welfare of its eligible employees (hereinafter referred to as "Participants"), their Spouses, Dependents and Beneficiaries by the maintenance of one or more post-retirement welfare benefit plans, programs or arrangements which provide for life, sickness, medical, disability, severance and other similar benefits through insurance and self-funded reimbursement plans (collectively the "Plan"); and WHEREAS, it is an essential function and integral part of the exempt activities of the Employer to assist Participants, their Spouses, Dependents and Beneficiaries by making contributions to and accumulating assets in the trust, a segregated fund, for post-retirement welfare benefits under the Plan; and WHEREAS, the authority to conduct the general operation and administration of the Plan is vested in the Employer or its designee, who has the authority and shall be subject to the duties with respect to the trust specified in this Declaration of Trust; and WHEREAS, the Employer wishes to establish this trust to hold assets and income of the Plan for the exclusive benefit of Plan Participants, their Spouses, Dependents and Beneficiaries; NOW, THEREFORE, the parties hereto do hereby establish this trust, by executing the Declaration of Trust of the Oakland County Integral Part Trust (hereinafter referred to as the "Trust"), and agree that the following constitute the Declaration of Trust (hereinafter referred to as the "Declaration"): ARTICLE I Definitions 1.1 Definitions. For the purposes of this Declaration, the following terms shall have the respective meanings set forth below unless otherwise expressly provided. (a) "Account" means the individual recordkeeping account maintained under the Plan to record the interest of a Participant in the Plan in accordance with Section 7.4. (b) "Administrator" means the Employer or the entity designated by the Employer to carry out administrative services as are necessary to implement the Plan. (c) "Beneficiary" means the Spouse and Dependents, or the person or persons designated by the Participant pursuant to the terms of the Plan, who will receive any benefits payable hereunder in the event of the Participant's death. A Beneficiary may also designate a beneficiary(ies) to receive any benefits payable hereunder in the event of the preceding Beneficiary's death, until the satisfaction of all liabilities under the Plan to provide benefits. In the case where there is no designated Beneficiary, any amount of contributions, plus accrued earnings thereon, remaining in the Account must, under the terms of the Plan, be returned to the Trust. (d) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (e) "Dependent" means an individual who is a person described in Code Section 152(a). (f) "Investment Fund" means any separate investment option or vehicle selected by the Employer in which all or a portion of the Trust assets may be separately invested as herein provided. The Trustee shall not be required to select any Investment Fund. (9) "Nonforfeitable Interest" means the interest of the Participant or the Participant's Spouse, Dependent or Beneficiary (whichever is applicable) in the percentage of Participant's Employer's contribution which has vested pursuant to the vesting schedule specified in the Employer's Plan. A Participant shall, at all times, have a one hundred percent (100%) Nonforfeitable Interest in the Partici-pant's own contributions. (h) "Spouse" means the Participant's lawful spouse as determined under the laws of the state in which the Participant has his primary place of residence. "Trust" means the trust established by this Declaration. a) "Trustee" means the Employer or the person or persons appointed by the E Employer to serve in that capacity. ARTICLE II Establishment of Trust 2.1 The Trust is hereby established as of the date set forth above for the exclusive benefit of Participants, their Spouses, Dependents and Beneficiaries. ARTICLE III Construction 3.1 This Trust and its validity, construction and effect shall be governed by the laws of the State of Michigan. 3.2 Pronouns and other similar words used herein in the masculine gender shall be read as the feminine gender where appropriate, and the singular form of words shall be read as the plural where appropriate. 3.3 If any provision of this Trust shall be held illegal or invalid for any reason, such determination shall not affect the remaining provisions, and such provisions shall be construed to effectuate the purpose of this Trust. ARTICLE IV Benefits 4.1 Benefits. This Trust may provide benefits to the Participant, the Participant's Spouse, Dependents and Beneficiary(les) pursuant to the terms of the Plan. 4.2 Form of Benefits. This Trust may provide benefits by cash payment. This Trust may reimburse the Participant, his Spouse, Dependents or Beneficiary(ies) for insurance premiums or other payments expended for permissible benefits described under the Plan. This trust may reimburse the Employer, or the Administrator for insurance premiums. ARTICLE V General Duties 5.111 shall be the duty of the Trustee to hold title to assets held in respect of the Plan in the Trustee's name as directed by the Employer or its designees in writing. The Trustee shall not be under any duty to compute the amount of contributions to be paid by the Employer or to take any steps to collect such amounts as may be due to be held in trust under the Plan. The Trustee shall not be responsible for the custody, investment, safekeeping or disposition of any assets comprising the Trust, to the extent such functions are performed by the Employer or the Administrator, or both. 5.2 It shall be the duty of the Employer, subject to the provisions of the Plan, to pay over to the Administrator or other person designated hereunder from time to time the Employer's contributions and Participants' contributions under the Plan and to inform the Trustee in writing as to the identity and value of the assets titled in the Trustee's name hereunder and to keep accurate books and records with respect to the Participants of the Plan. ARTICLE VI Investments 6.1 The Employer may appoint one or more investment managers to manage and control all or part of the assets of the Trust and the Employer shall notify the Trustee in writing of any such appointment. 6.2 The trustee shall not have any discretion or authority with regard to the investment of the Trust and shall act solely as a directed Trustee of the assets of which it holds title. To the extent directed by the Employer (or Participants, their Spouses and Dependents, or Beneficiaries to the extent provided herein) the Trustee is authorized and empowered with the following powers, rights and duties, each of which the Trustee shall exercise in a nondiscretionary manner: (a) To cause stocks, bonds, securities, or other investments to be registered in its name as Trustee or in the name of a nominee, or to take and keep the same unregistered; (b) To employ such agents and legal counsel as it deems advisable or proper in connection with its duties and to pay such agents and legal counsel a reasonable fee. The Trustee shall not be liable for the acts of such agents and counsel or for the acts done in good faith and in reliance upon the advice of such agents and legal counsel, provided it has used reasonable care in selecting such agents and legal counsel; (c) To exercise where applicable and appropriate any rights of ownership in any contracts of insurance in which any part of the Trust may be invested and to pay the premiums thereon; and (d) At the direction of the Employer (or Participants, their Spouses, their Dependents, their Beneficiaries, or the investment manager, as the case may be) to sell, write options on, convey or transfer, invest and reinvest any part thereof in each and every kind of property, whether real, personal or mixed, tangible or intangible, whether income or non- income producing and wherever situated, including but not limited to, time deposits (including time deposits in the Trustee or its affiliates, or any successor thereto, if the deposits bear a reasonable rate of interest), shares of common and preferred stock, mortgages, bonds, leases, notes, debentures, equipment or collateral trust certificates, rights, warrants, convertible or exchangeable securities and other corporate, individual or government securities or obligations, annuity, retirement or other insurance contracts, mutual funds (including funds for which the Trustee or its affiliates serve as investment advisor, custodian or in a similar or related capacity), or in units of any other common, collective or commingled trust fund. 6.3 Notwithstanding anything to the contrary herein, the assets of the Plan shall be held by the Trustee as title holder only. Persons holding custody or possession of assets titled to the Trust shall include the Employer, the Administrator, the investment manager, and any agents and subagents, but not the Trustee. The Trustee shall not be responsible or liable for any loss or expense which may arise from or result from compliance with any direction from the Employer, the Administrator, the investment manager, or such agents to take title to any assets nor shall the Trustee be responsible or liable for any loss or expense which may result from the Trustee's refusal or failure to comply with any direction to hold title, except if the same shall involve or result from the Trustee's negligence or intentional misconduct. The Trustee may refuse to comply with any direction from the Employer, the Administrator, the investment manager, or such agents in the event that the Trustee, in its sole and absolute discretion, deems such direction illegal. 6.4 The Employer hereby indemnifies and holds the Trustee harmless from any and all actions, claims, demands, liabilities, losses, damages or reasonable expenses of whatsoever kind and nature in connection with or arising out of (i) any action taken or omitted in good faith by the Trustee in accordance with the directions of the -Employer or its agents and subagents hereunder, or (ii) any disbursements of any part of the Trust made by the Trustee in accordance with the directions of the Employer, or (iii) any action taken by or omitted in good faith by the Trustee with respect to an investment managed by an investment manager in accordance with any direction of the investment manager or any inaction with respect to any such investment in the absence of directions from the investment manager. Notwithstanding anything to the contrary herein, the Employer shall have no responsibility to the Trustee under the foregoing indemnification if the Trustee fails negligently, intentionally or recklessly to perform any of the duties undertaken by it under the provisions of this Trust. 6.5 Notwithstanding anything to the contrary herein, the Employer or, if so designated by the Employer, the Administrator and the investment manager or another agent of the Employer, will be responsible for valuing all assets so acquired for all purposes of the Trust and of holding, investing, trading and disposing of the same. The Employer will indemnify and hold the Trustee harmless against any and all claims, actions, demands, liabilities, losses, damages, or expenses of whatsoever kind and nature, which arise from or are related to any use of such valuation by the Trustee or holding, trading, or disposition of such assets. 6.6 The Trustee shall and hereby does indemnify and hold harmless the Employer from any and all actions, claims, demands, liabilities, losses, damages and reasonable expenses of whatsoever kind and nature in connection with or arising out of (a) the Trustee's failure to follow the directions of the Employer, the Administrator, the investment manager, or agents thereof, except as permitted by the last sentence of Section 6.3 above; (b) any disbursements made without the direction of the Employer, the Administrator, the investment manager or agents thereof; and (c) the Trustee's negligence, willful misconduct, or recklessness with respect to the Trustee's duties under this Declaration. ARTICLE VII Contributions 7.1 Employer Contributions. The Employer shall contribute to the Trust such amounts as specified in the Plan or by resolution. 7.2 Participant Contributions. If specified in the Plan, each Participant may make voluntary after- tax contributions. Under no circumstances shall Participant Contributions exceed an insubstantial amount. These contributions shall be collected by the Employer and remitted to the Trust for deposit at such time or times as required under the terms of the Plan. 7.3 Accrued Leave. Contributions up to an amount equal to the value of accrued sick leave, vacation leave, or other type of accrued leave, as permitted under the Plan. The Employer's Plan must provide a formula for determining the value of the Participant's contribution of accrued leave. The Employer's Plan must contain a forfeiture provision that will prevent Participants from receiving the accrued leave in cash in lieu of a contribution to the Trust. \D 7.4 Accounts. Employer contributions, Participant contributions, and contributions of accrued leave, all investment income and realized and unrealized gains and losses, and forfeitures allocable thereto will be deposited into an Account in the name of the Participant for the exclusive benefit of the Participant, his Spouse, Dependents and Beneficiaries. The assets in each Participant's Account may be invested in Investment Funds as directed by the Participant (or, after the Participant's death, by the Spouse, Dependents or Beneficiaries) from among the Investment Funds selected by the Employer. 7.5 Receipt of Contributions. The Employer or, if so designated by the Employer, the Administrator or investment manager or another agent of the Employer, shall receive all contributions paid or delivered to it hereunder and shall hold, invest, reinvest and administer such contributions pursuant to this Declaration, without distinction between principal and income. The Trustee shall not be responsible for the calculation or collection of any contribution under the Plan, but shall hold title to property received in respect of the Plan in the Trustee's name as directed by the Employer or its designee pursuant to this Declaration. 7.6 No amount in any Account maintained under this Trust shall be subject to transfer, assignment, or alienation, whether voluntary or involuntary, in favor of any creditor, transferee, or assignee of the Employer, the Trustee, any Participant, his Spouse, Dependent, or Beneficiaries. 7.7 Upon the satisfaction of all liabilities under the Plan to provide such benefits, any amount of Employer contributions, plus accrued earnings thereon, remaining in such separate Accounts must, under the terms of the Plan, be returned to the Employer. ARTICLE VIII Other Plans If the Employer hereafter adopts one or more other plans providing life, sickness, accident, medical, disability, severance, or other benefits and designates the Trust hereby created as part of such other plan, the Employer or, if so designated by the Employer, the Administrator or an investment manager or another agent of the Employer shall, subject to the terms of this Declaration, accept and hold hereunder contributions to such other plans. In that event (a) the Employer or, if so designated by the Employer, the Administrator or an investment manager or another agent of the Employer, may commingle for investment purposes the contributions received under such other plan or plans with the contributions previously received by the Trust, but the books and records of the Employer or, if so designated by the Employer, the Administrator or an investment manager or another agent of the Employer, shall at all times show the portion of the Trust Fund allocable to each plan; (b) the term "Plan" as used herein shall be deemed to refer separately to each other plan; and (c) the term "Employer" as used herein shall be deemed to refer to the person or group of persons which have been designated by the terms of such other plans as having the authority to control and manage the operation and administration of such other plan. ARTICLE IX Disbursements and Expenses 9.1 The Employer or its designee shall make such payments from the Trust at such time to such persons and in such amounts as shall be authorized by the provisions of the Plan provided, however, that no payment shall be made, either during the existence of or upon the discontinuance of the Plan (subject to Section 7.7), which would cause any part of the Trust to be used for or diverted to purposes other than the exclusive benefit of the Participants, their Spouses and Dependents, and Beneficiaries pursuant to the provisions of the Plan. 9.2 All payments of benefits under the Plan shall be made exclusively from the assets of the Accounts of the Participants to whom or to whose Spouse, Dependents, or Beneficiaries such payments are to be made, and no person shall be entitled to look to any other source for such payments. 9.3 The Employer, Trustee and Administrator may be reimbursed for expenses reasonably incurred by them in the administration of the Trust. All such expenses, including, without limitation, reasonable fees of accountants and legal counsel to the extent not otherwise reimbursed, shall constitute a charge against and shall be paid from the Trust upon the direction of the Employer. ARTICLE X Accounting 10.1 The Trustee shall not be required to keep accounts of the investments, receipts, disbursements, and other transactions of the Trust, except as necessary to perform its title- holding function hereunder. All accounts, books, and records relating thereto shall be maintained by the Employer or its designee. 10.2 As promptly as possible following the close of each year, the Trustee shall file with the Employer a written account setting forth assets titled to the Trust as reported to the Trustee by the Employer or its designee. \L ARTICLE XI Miscellaneous Provisions 11.1 Neither the Trustee nor any affiliate thereof shall be required to give any bond or to qualify before, be appointed by, or account to any court of law in the exercise of its powers hereunder. 11.2 No person transferring title or receiving a transfer of title from the Trustee shall be obligated to look to the propriety of the acts of the Trustee in connection therewith. 11.3 The Employer may engage the Trustee as its agent in the performance of any duties required of the Employer under the Plan, but such agency shall not be deemed to increase the responsibility or liability of the Trustee under this Declaration. 11.4 The Employer shall have the right at all reasonable times during the term of this Declaration and for three (3) years after the termination of this Declaration to examine, audit, inspect, review, extract information from, and copy all books, records, accounts, and other documents of the Trustee relating to this Declaration and the Trustees performance hereunder. ARTICLE XII Amendment and Termination 12.1 The Employer reserves the right to alter, amend, or (subject to Section 9.1) terminate this Declaration at any time for any reason without the consent of the Trustee or any other person, provided that no amendment affecting the rights, duties, or responsibilities of the Trustee shall be adopted without the execution of the Trustee to the amendment. Any such amendment shall become effective as of the date provided in the amendment, if requiring the Trustee's execution, or on delivery of the amendment to the Trustee, if the Trustee's execution is not required. 12.2 Upon termination of this Declaration and upon the satisfaction of all liabilities under the Plan to provide such benefits, any amount of Employer contributions, plus accrued earnings thereon, remaining in such separate Accounts must, under the terms of the Plan, be returned to the Employer. ARTICLE XIII Successor Trustees 13.1 The Employer reserves the right to discharge the Trustee for any or no reason, at any time by giving ninety (90) days' advance written notice. 13.2 The Trustee reserves the right to resign at any time by giving ninety (90) days' advance written notice to the Employer. Internal Revenue Service Index Number: 115.02-00 > Department of the Treasury Washington, DC 20224 Contac.t Person: Telephone Number: In Reference to: CC : D014 : 2 PLR-116685 -99 Date: December 28 1 1999 City Trust State Dear This iS in response to a letter dated October 12,, 1999, and prior correapondence, requesting a private letter ruling that Trust is •an integral part cf City. FACTS City is a political subdivision of State. City currently maintains one or more post-retirement welfare benefit plans (collectively, the "Plan") that provide its eligible employees ("Participants") and their beneficiaries ("Beneficiaries") with life, sickness, medical, disability, severance and other similar benefits through insurance and f-funded reiMbursement pdans. City intends to establish Trust to hold assets and income of the Plan for the exclusive benefit of Participants and their Beneficiaries. Trust's Declaration defines "Beneficiaries" to include a Participant's spouse, any child of the Participant or the Participant's spouse who is minor or a student within the meaning of section 151(c)(4) of the Internal Revenue Code, any other minor child residing with the Participant, and any other individual who is a person described in section 152(a) of the Code. Death benefits may be provided to any Beneficiary designated by a Participant under the terms of a death benefit Program or an insurance contract forming par: cf PLR-116685-39 2 may provide benefits by cash payment, and may reimburse a Participant, City, or Trust's Administrator for insurance premiums or other payments expended for permissible benefits under the Plan. Under Trust's Declaration, City will be the Administrator of Trust. City may appoint one or more investment managers to manage and control all or part of the assets of Trust Under Trust's Declaration, the Trustee will hold -assets only as titleholder. „Persons having custody or possession of assets may include City, the Administrator of Trust, the investment manager, and their agents and subagents, but not the Trustee. The Trustee will have no discretion or authority with regard to the investments of Trust and will act solely as a directed Trustee with respect to the assets to which it holds title. The Trustee will mot be responsible or liable fox any loss or expense that may arise or result from complying with any direction from the City, the ,Administrator, the investment manager, or such agents to take title to any assets, or from the Trustee's refusal or failure to comply with any direction to hold title, unless it involves or results from the Trustee's negligence or intentional misconduct. The Trustee may refuse to comply with any direction if it deems such direction illegal. City indemnifies and holds the Trustee harmless from any actions, claims, demands, 14,RhJlitipc, losses, damages or reasonable expenses of any kind in connection with or arising out of (i) any action taken or omitted in good faith in accordance with its directions, (ii) any disbursements made in accordance 'loath directions, or any action taken by Or omitted by the Trustee with respect to an investment managed by an investment manager in accordance with any direction of the investment manager or any inaction regarding any investment in the absence D f directions from the investment manager. City, however, has no responsibility to the Trustee under the indemnification if the Trustee fails negligently, intentionally, or reckless to perform its duties. City will contribute to Trust such amounts as specified in the Plan or by resolution. No other 'person or persons will be Permitted to make any contributions. The Plan must provide a formula for determining the value of a Particioant's accrued vacation leaVe, sick leave, or both, in excess of a threshold number of hours of such leave. City may contribute amounts so determined to Trust. The Plan will contain a forfeiture provision that will prevent Participants and their Beneficiaries from receivina cash in lieu of a contribution to Trust in their behalf. Contributions, investment income, realized and unrealized cams and losses, and fn ,---,-sWillbe deposited into an account in Trust in the name of the Pa—ticinanz t PLR-116685-99 3 for the exclusive benefit of the Participant and his or her Beneficiaries. A Participant may direct the investment of amounts in her or his account among investments selected by City. No amount in any account will be subject to transfer, assignment, or alienation, whether voluntary or involuntary, in favor of any creditor, transferee, or assignee of City, the Trustee, Participant or Beneficiary. city or the Administrator, investment manager, or other agent designated by City will receive contributions and will hold, invest, and ,administer contributions without distinction between principal and income. The Trustee will not be responsible for the calculation or collection of contributions, but will hold title to property received as directed by City or its designee. The Trustee will not be required to keep accounts of the investments, receipts, disbursements, and other transaction of Trust except as necessary to perform its title- holding function. City or its designee will maintain all books and records. City reserves the right to alter, amend, or terminate Trust : at any time for any reason without the consent of .any person. No amendment affecting the Trustee is effective without the Trustee's consent, and no termination can result ia any part of Trust's assets being used for or diverted to purposes other than the exclusive benefit of Participants and Beneficiaries. If City adopts other plans providing life, sickness, accident, medical, disability, severance, or other benefits and designates Trust as part of such plan, City or its agent will hold contributions to stint Plan in Trust- The contributions may be commingled for investment Purposes, but the books and record of Trust must shoW the portion of Trust allocable to each plan. Upon the satisfaction of all liabilities under the Plan to provide benefits, any amounts remaining in any account must be returned to City. LAW ie ANALYSIS Income of an integral part of a state or political subdivision of a state is not taxable absent specific statutory authorization. See Rev. Rul. 87-2, 1987-1 C.B. le; section 51i (a) .(2) (B) of the Code, •GCM 14407, C,B. XIV-1, 103 (1935), superseded by Rev. Rul. 71-181, 1971-1 C.B. 28, Whether an enterprise is an integral part depends on facts and circumstances such as the state's degree of control over the enterprise and its financial commitment to the enterprise_ If an enterprise is an integral pert of a state or :political subdivision of a state, it will not be treated as a separate entity for federal tax purposes, though it may have been farmed as a separate entit7 PLR-116685-99 4 under state law. Section 301.7701-I(a)(3) of the Procedural and Administrative Regulations. City has made a substantial financial commitment to Trust by providing all of its funding. City retains complete control over Trust because it may amend or terminate Trust at any time City retains control over the daily operation of Trust by its power to appoint or remove agents who manage daily operation. The Trustee is merely a title holder with no power to manage Trust. CONCIZSION Provided that City is the only person that makes contributions to Trust, and Trust accepts or holds only amounts of money contributed by City, Trust will be an integral part of City, and any income earned an amounts in Trust will not be subject to federal income tax, This ruling is directed only to the ,taxpayer that requested it Section 6110(k) (3) of the Code 'Provides that it may not be used or Cited as Precedent. Except as specifically provided otherwise, no opinion is expressed on the federal income tax consequences of the transaction described above'. In accordance with the terms of a power of attorney on file in this office, a copy of th" letter is being sent to your authorized representative. Sincerely, Assistant Chief Counsel (Financial Institutions & Products) By: William Coppersmith William E. Coppersmith Chief, Branch 2 SAMPLE RETIREE MEDICAL AND DENTAL EXPENSE REIMBURSEMENT PLAN Article I Preamble 1. 1.01 Establishment of Plan 2. 1.02 Purpose of Plan Article II Definitions 1. 2.01 "Beneficiary 2. 2.02 "Benefits" 3. 2.03 "Code" 4. 2.04 "Dependent" 5. 2.05 "Eligible Medical or Dental Expenses" 6. 2.06 "Employer" 7. 2.07 "Entry Date" 8. 2.08 "Participant" 9. 2,09 "Plan Administrator" 10. 2,10 "Plan Year" 11. 2.11 "Retiree" 12. 2.12 "Spouse" Article Ill Eligibility 3.01 General Requirements Article IV Amount of Benefits 1. 4.01 Annual Benefits Provided by the Plan 2. 4.02 Cost of Coverage Article V Payment of Benefits 1. 5.01 Eligibility for Benefits 2. 5.02 Claims for Benefits Article VI Plan Administration 1. 6.01 Allocation of Authority 2. 6.02 Provision for Third-Party Plan Service Providers 3. 6.03 Several Fiduciary Liability 4. 6.04 Compensation of Plan Administrator 5. 6.05 Bonding 6, 6.06 Payment of Administrative Expenses 7. 6.07 Timeliness of Payments 8. 6.08 Annual Statements Article VI Claims Procedure 1. 7.01 Procedure if Benefits are Denied Under the Plan 2. 7.02 Requirement for Written Notice of Claim Denial 3. 7.03 Right to Request Hearing on Benefit Denial 4. 7.04 Disposition of Disputed Claims 5. 7,05 Preservation of Other Remedies Article VIII Amendment or Termination of Plan 1. 8.01 Permanency 2. 8.02 Employer's Right to Amend 3. 8.03 Employer's Right to Terminate Article IX General Provisions 1. 9.01 No Employment Rights Conferred 2. 9.02 Payments to Beneficiary 3. 9.03 Nonalienation of Benefits 4. 9.04 Mental or Physical Incompetency 5. 9.05 Inability to Locate Payee 6. 9.06 Requirement of Proper Forms 7. 9.07 Source of Payments 8. 9.08 Tax Effects 9. 9.09 Multiple Functions 10. 9.10 Gender and Number 11. 9.11 Headings 12, 9.12 Applicable Laws 13. 9.13 Severability ARTICLE I Preamble THIS INSTRUMENT made and published by Oakland County (hereinafter called "Employer") on the day of , 2005, creates the Oakland County Retiree Medical and Dental Expense Reimbursement Plan, as follows: 1.01 Establishment of Plan The Employer named above hereby establishes a Retiree Medical and Dental Expense Reimbursement Plan as of the day of , 2005. 1.02 Purpose of Plan This Plan has been established to reimburse the eligible Retirees of the Employer for medical and dental expenses incurred by them, their Spouses, Dependents, and Beneficiaries pursuant to the Employer's VantageCare Retirement Health Savings (RHS) Plan. ARTICLE II Definitions The following words and phrases as used herein shall have the following meanings, unless a different meaning is plainly required by the context: 2.01 "Beneficiary" means the person or persons designated pursuant to the terms of the Plan, who will receive any Benefits payable hereunder in the event of the Participant's death. A Beneficiary may also designate a beneciary(ies) to receive any benefits payable hereunder in the event of the preceeding Ben-eficiary's death until the satisfaction of all liabilities under the plan to provide benefits. 2.02 "Benefits" means any amounts paid to a Participant or Beneficiary in the Plan as reimbursement for Eligible Medical and Dental Expenses incurred by the Participant or Beneficiary during a Plan Year by him, his Spouse, his Dependents, or his Beneficiary. 2.03 "Code" means the Internal Revenue Code of 1986, as amended. 2.04 "Dependent" means any individual who is a dependent of the Participant within the meaning of Code Sec. 152. 2.05 "Eligible Medical or Dental Expenses" means those expenses designated by the Employer as eligible for reimbursement in the VantageCare Retirement Health Savings Plan Adoption Agreement. 2.06 "Employer" means the unit of state or local government creating this Plan, or any affiliate or successor thereof that likewise adopts this Plan. 2.07 "Entry Date" means the first day the Participant meets the eligibility requirements of Article ill as of such Date. 2.08 "Participant" means any Retiree who has met the eligibility requirements set forth in Article 2.09 "Plan Administrator" means the Employer or other person appointed by the Employer who has the authority and responsibility to manage and direct the operation and administration of the Plan. 2.10 "Plan Year" means the annual accounting period of the Plan, which begins on the 1st day of January, 2006, and ends on the 31st day of December, 2006, with respect to the first Plan Year, and thereafter as long as this Plan remains in effect, the period that begins on January 1, and ends on December 31. 2.11 "Retiree" means any individual who, while in the service of the Employer, was considered to be in a legal employer-employee relationship with the Employer for federal withholding tax purposes, and who was part of the classification of employees designated as covered by the Employer's VantageCare Retirement Health Savings Plan. 2.12 "Spouse" means the Participant's lawful spouse as determined under the laws of the state in which the Participant has his primary place of residence.. All other defined terms in this Plan shall have the meanings specified in the various Articles of the Plan in which they appear. ARTICLE III Eligibility Each Retiree who meets the eligibility requirements outlined in the Employer's VantageCare Retirement Health Savings Plan shall be eligible to participate in this Plan. ARTICLE IV Amount of Benefits 4.01 Annual Benefits Provided by the Plan Each Participant shall be entitled to reimbursement for his documented, Eligible Medical or Dental Expenses incurred during the Plan Year in an annual amount not to exceed the account balance of the Participant in the Employer's VantageCare Retirement Health Savings Plan. 4.02 Cost of Coverage The expense of providing the benefits set out in Section 4.01 shall be contributed as outlined in the Em-ployer's VantageCare Retirement Health Savings Plan. ARTICLE V Payment of Benefits 5.01 Eligibility for Benefits (a) Each Participant in the Plan shall be entitled to a benefit hereunder for all Eligible Medical and Dental Expenses incurred by the Participant on or after the Entry Date of his or her participation, (and after the effective date of the Plan) subject to the limitations contained in this Article V, regardless whether the mental or physical condition for which the Participant makes application for benefits under this Plan was detected, diagnosed, or treated before the Participant became covered by the Plan. (b) In order to be eligible for benefits, the Participant must meet the benefit eligibility criteria outlined in the Employer's VantageCare Retirement Health Savings Plan Adoption Agreement. (c) A Participant who becomes totally and permanently disabled (as defined by the Social Security Administration) will become immediately eligible to receive medical benefit payments from the Plan. Pursuant to Section 9.02 and Employer's VantageCare Retirement Health Savings Plan Adoption Agreement, the surviving Spouse and Dependents, or Beneficiary(ies) shall become immediately eligible to receive or to continue receiving medical benefit payments from the Plan upon the death of the Participant. 5.02 Claims for Benefits No benefit shall be paid hereunder unless a Participant, his Spouse, Dependent or Beneficiary has first submitted a written claim for benefits to the Plan Administrator on a form specified by the Plan Administrator, and pursuant to the procedures set out in Article VI, below. Upon receipt of a properly documented claim, the Plan Administrator shall pay the Participant, his Spouse, Dependent or Beneficiary the benefits provided under this Plan as soon as is administratively feasible. ARTICLE VI Plan Administration 6.01 Allocation of Authority The Employer shall control and manage the operation and Administration of the Plan. The Employer shall have the exclusive right to interpret the Plan and to decide all matters arising thereunder, including the right to remedy possible ambiguities, inconsistencies, or omissions. All determinations of the Employer with respect to any matter hereunder shall be conclusive and binding on all persons. Without limiting the generality of the foregoing, the Employer shall have the following powers and duties: (a) To decide on questions concerning the Plan and the eligibility of any Employee to participate in the Plan, in accordance with the provisions of the Plan; b) To determine the amount of benefits that shall be payable to any person in accordance with the provisions of the Plan; to inform the Plan Administrator, as appropriate, of the amount of such Benefits; and to provide a full and fair review to any Participant whose claim for benefits has been denied in whole or in part; and (c) To designate other persons to carry out any duty or power which would Otherwise be a fiduciary responsibility of the Plan Administrator, under the terms of the Plan. (d) To require any person to furnish such reasonable information as it may request for the purpose of the proper administration of the Plan as a condition to receiving any benefits under the Plan; (e) To make and enforce such rules and regulations and prescribe the use of such forms as he shall deem necessary for the efficient administration of the Plan. 6.02 Provision for Third-Party Plan Service Providers The Plan Administrator, subject to approval of the Employer, may employ the services of such persons as it may deem necessary or desirable in connection with operation of the Plan. The Plan Administrator, the Employer (and any person to whom it may delegate any duty or power in connection with the administration of the Plan), and all persons connected therewith may rely upon all tables, valuations, certificates, reports and opinions furnished by any duly appointed actuary, accountant, (including Employees who are actuaries or accountants), consultant, third party administration service provider, legal counsel, or other specialist, and they shall be fully protected in respect to any action taken or permitted in good faith in reliance thereon. All actions so taken or permitted shall be conclusive and binding as to all persons. 6.03 Several Fiduciary Liability To the extent permitted by law, neither the Plan Administrator nor any other person shall incur any liability for any acts or for failure to act except for his own willful misconduct or willful breach of this Plan. 6.04 Compensation of Plan Administrator Unless otherwise agreed to by the Employer, the Plan Administrator shall serve without compensation for services rendered in such capacity, but all reasonable expenses incurred in the performance of his duties shall be paid by the Employer. 6.05 Bonding Unless otherwise determined by the Employer, or unless required by any Federal or State law, the Plan Administrator shall not be required to give any bond or other security in any jurisdiction in connection with the administration of this Plan. 6.06 Payment of Administrative Expenses All reasonable expenses incurred in administering the Plan, including but not limited to administrative fees and expenses owing to any third party administrative service provider, actuary, consultant, accountant, attorney, specialist, or other person or organization that may be employed by the Plan Administrator in connection with the administration thereof, shall be paid by the Employer, provided, however that each Participant shall bear the monthly cost (if any) charged by a third party administrator for maintenance of his Benefit Account unless otherwise paid by the Employer. 6.07 Timeliness of Payment for Benefits Payment for Benefits shall be made as soon as administratively feasible after the required forms and documentation have been received by the Plan Administrator, 6.08 Annual Statements The Plan Administrator shall furnish each Participant with an annual statement of his medical and dental expense reimbursement account within ninety (90) days after the close of each Plan Year. ARTICLE VII Claims Procedure 7.01 Procedure if Benefits are Denied Under the Plan Any Participant, Spouse, Dependent, or Beneficiary, or his duly authorized representative may file a claim for a plan benefit to which the claimant believes that he is entitled. Such a claim must be in writing on a form provided by the Plan Administrator and delivered to the Plan Administrator, in person or by mail, postage paid. Within thirty (30) days after receipt of such claim, the Plan Administrator shall send to the claimant, by mail, postage prepaid, notice of the granting or denying, in whole or in part, of such claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension exceed ninety (90) days from the end of the initial period. If such extension is necessary, the claimant will be given a written notice to this effect prior to the expiration of the initial 30-day period. The Plan Administrator shall have full discretion to deny or grant a claim in whole or in part. If notice of the denial of a claim is not furnished in accordance with this Section, the claim shall be deemed denied and the claimant shall be permitted to exercise his right to review pursuant to Sections 7.03 and 7.04. 7.02 Requirement for Written Notice of Claim Denial The Plan Administrator shall provide, to every claimant who is denied a claim for benefits, written notice setting forth in a manner calculated to be understood by the claimant: 0.(a) The specific reason or reasons for the denial; 13.(b) Specific reference to pertinent Plan provisions on which the denial is based; D.(c) A description of any additional material of information necessary for the claimant to perfect the claim and an explanation of why such material is necessary, and 0.(d) An explanation of the Plan's claim review procedure. 7.03 Right to Request Hearing on Benefit Denial Within sixty (60) days after the receipt by the claimant of written notification of the denial (in whole or in part) of his claim, the claimant or his duly authorized representative, upon written application to the Plan Administrator, in person or by certified mail, postage prepaid, may request a review of such denial, may review pertinent documents, and may submit issues and comments in writing. 7.04 Disposition of Disputed Claims Upon its receipt of notice of a request for review, the Plan Administrator shall make a prompt decision on the review. The decision on review shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision and specific references to the pertinent plan provisions on which the decision is based. The decision on review shall be made not later than sixty (60) days after the Plan Administrator's receipt of a request for a review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered not later than one hundred-twenty (120) days after receipt of a request for review. If an extension is necessary, the claimant shall be given written notice of the extension prior to the expiration of the initial sixty (60) day period. If notice of the decision on the review is not furnished in accordance with this Section, the claim shall be deemed denied and the claimant shall be permitted to exercise his right to legal remedy pursuant to Section 7.05. 7.05 Preservation of Other Remedies After exhaustion of the claims procedures provided under this Plan, nothing shall prevent any person from pursuing any other legal or equitable remedy otherwise available. (c2 ARTICLE VIII Amendment or Termination of Plan 8.01 Permanency While the Employer fully expects that this Plan will continue indefinitely, due to unforeseen, future business contingencies, permanency of the Plan will be subject to the Employer's right to amend or terminate the Plan, as provided in Sections 8.02 and 8.03, below. 8.42 Employer's Right to Amend The Employer reserves the right to amend the Plan at any time and from time-to-time, and retroactively if deemed necessary or appropriate to meet the requirements of the Code, or any similar provisions of subsequent revenue or other laws, or the rules and regulations in effect under any of such laws or to conform with governmental regulations or other policies, to modify or amend in whole or in part any or all of the provisions of the Plan. 8.03 Employer's Right to Terminate The Employer reserves the right to discontinue or terminate the Plan at any time without prejudice. ARTICLE IX General Provisions 9.01 No Employment Rights Conferred Neither this Plan nor any action taken with respect to it shall confer upon any person the right to be continued in the employment of the Employer. 9.02 Payments After Death of Participant Any benefits otherwise payable to a Participant following the date of death of such Participant shall be paid as outlined in the Employer's VantageCare Retirement Health Savings Plan Adoption Agreement. 9.03 Nonalienation of Benefits No benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. No benefit under the Plan shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person. If any person entitled to benefits under the Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any benefit under the Plan, or if any attempt is made to subject any such benefit to the debts, contracts, liabilities, engagements or torts of the person entitled to any such benefit, except as specifically provided in the Plan, then such benefit shall cease and terminate in the discretion of the Plan Administrator, and he may hold or apply the same or any part thereof to the benefit of any dependent or beneficiary of such person, in such manner and proportion as he may deem proper. 9.04 Mental or Physical Incompetency If the Plan Administrator determines that any person entitled to payments under the Plan is incompetent by reason of physical or mental disability, he may cause all payments thereafter becoming due to such person to be made to any other person for his benefit, without responsibility to follow the application of amounts so paid. Payments made pursuant to this Section shall completely discharge the Plan Administrator and the Employer. 9.05 Inability to Locate Payee If the Plan Administrator is unable to make payment to any Participant or other person to whom a payment is due under the Plan because he cannot ascertain the identity or whereabouts of such Participant or other person after reasonable efforts have been made to identify or locate such person (including a notice of the payment so due mailed to the last known address of such Participant or other person as shown on the records of the Employer), such payment and all subsequent payments otherwise due to such Participant or other person shall be escheated under the laws of the State of the last known address of the Participant or other persons eligible for benefits. 9.06 Requirement of Proper Forms All communications in connection with the Plan made by a Participant shall become effective only when duly executed on forms provided by and filed with the Plan Administrator. 9.07 Source of Payments The Employer shall be the sole source of benefits under the Plan. No Employee or Beneficiary shall have any right to, or interest in, any assets of the Employer upon termination of employment or otherwise, except as provided from time to time under the Plan, and then only to the extent of the benefits payable under the Plan to such Employee or Beneficiary. 9.08 Tax Effects Neither the Employer nor the Plan Administrator makes any warranty or other representation as to whether any payments received by a Participant, his Spouse, Dependents, or Beneficiary(ies) hereunder will be treated as includible in gross income for federal or state income tax purposes. 9.09 Multiple Functions Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. 9.10 Gender and Number Masculine pronouns include the feminine as well as the neuter gender, and the singular shall include the plural, unless indicated otherwise by the context. a8 9.11 Headings The Article and Section headings contained herein are for convenience of reference only, and shall not be construed as defining or limiting the matter contained thereunder. 9.12 Applicable Laws The provisions of the Plan shall be construed, administered and enforced according to the laws of the State of Michigan. 9.13 Severability Should any part of this Plan subsequently be invalidated by a court of competent jurisdiction, the remainder thereof shall be given effect to the maximum extent possible. IN WITNESS WHEREOF, we have executed this Plan Agreement the date and year first written above. Oakland County By: ATTEST Secretary mom RETIREMENT CORPORATION 777 North Capitol Street, NE Washington, DC 20002 1-800-326-7272 www.iernarc.org BKT000-006-200212-765 3,9 VANTAGECARE RETIREMENT HEALTH SAVINGS PLAN Return Booklet leffn A RETIREMENT' CORPORATIO Tha. PtaicSactor Expect EMPLOYER VANTAGECARE RETIREMENT HEALTH SAVINGS (RHS) PLAN ADOPTION AGREEMENT Plan Number: 8 Employer Retirement Health Savings Plan Name: OAKLAND COUNTY RETIREMENT HEALTH SAVINGS (OCRHS) I. Employer Name: OAKLAND COUNTY State: MICHIGAN II. The Employer hereby attests that it is a unit of a state or local government or an agency or instrumentality of one or more units of a state or local government. III. The Effective Date of the Plan: JANUARY 1,2006 IV. The Employer intends to utilize the Trust to fund only welfare benefits pursuant to the following welfare benefit plan(s) established by the Employer: Oakland County Retirement Health Savings Account. V. Eligible Groups and Participant Eligibility Requirements A. The following group or groups of Employees are eligible to participate in the VantageCare Retirement Health Savings Plan: All Employees All Full-Time Employees X Non-Union Employees Public Safety Employees — Police Public Safety Employees — Firefighters X General Employees X Collectively Bargained Employees - kj.L[eDresentod employees whose contract provides for this chanae, X Other (specify below) All non-union employees and employees in the baraaininn units whose nnntrant nrnviries for this chanoe. hired on or after 01/01/06 shall he renuireri tn nartininate in the nnpHs plan. Employees hired prior to 01/01/06 shall have the nnnortilnitv trk irrpvnr:phiv piprt participation once each year. The group specified must correspond to a group of the same designation that is defined in the statutes, ordinances, rules, regulations, personnel manuals or other material in effect in the state or locality of the Employer. 2 Ell TUI flan nstp in thp OCRI- For eligible employees hired on or after 1/1/2006, participation shall be mandatory. • If this box is checked, in lieu of mandatory participation, for eligible employees hired prior to 1/1/2006, the Employer provides for a one-time irrevocable election by eligible Employees to participate in RHS. Until such time as the election is made, the Employee shall not participate in the Plan or receive contributions pursuant to Section VI. Employees hired prior to 01/01/06 may elect to participate in the plan. They shall be provided an election window of 60 days (no more than 60 calendar days) from the date of initial eligibility during which they may make the election to contribute on a pre-tax basis. No contribution will be made by the employer. Participation may begin no earlier than the calendar month following the end of the election window. If the Employee does not make the election in the year of initial eligibility, the election to participate may be made in a later year. An annual election window of 60 days (no more than 60 calendar days) shall be provided during which the election may be made. The election window shall run from October 1 to November 29. Participation may begin no earlier than the calendar year following the year of the election. Once made, the election is irrevocable and may not be revoked while the participant is a member of the group covered by the RHS plan. If the Employer's underlying welfare benefit plan or funding under this VantageCare Retirement Health Savings Plan is in whole or part a non-collectively bargained, self-insured plan, the nondiscrimination requirements of Internal Revenue Code (IRC) Section 105(h) will apply. These rules may impose taxation on the benefits received by highly compensated Employees if the Plan discriminates in favor of highly compensated Employees in terms of eligibility or benefits. The Employer should discuss these rules with appropriate counsel. B. Participant Eligibility 1. Minimum period of service required for participation is _N/A (write N/A if an Employee is eligible to participate or to elect to participate immediately upon employment). 2. Minimum age required for eligibility to participate is _N/A (write N/A if no minimum age is required). VI. Contribution Sources and Amounts A. Mandatory Contributions • 1. Direct Employer Contributions The Employer shall contribute on behalf of each Participant $50 bi-weekly for Full-Time Eligible Employees for the Plan Year. B. Elective Contributions 1. Elective Pre-Tax Contributions The Employer will permit each Employee to make the following elections to make pre-tax contributions to the Plan: • a. Irrevocable Election for Pre-Tax Contributions from Compensation: A one-time, irrevocable election of the amount of Employer contributions of compensation made on his or her behalf. The Employer limits the amount elected to either a fixed percentage or a range of percentages of an Employee's earnings Up to 50% of earnings (as defined in VI.A.1) for the Plan Year. Newly eligible Employees shall be provided an election window of 60 days (no more than 60) from the date of initial eligibility during which they may make the election to contribute. Contributions may begin no earlier than the calendar month following the end of the election window. If the Employee does not make the election in the year of initial eligibility, the election to contribute may be made in a later year. An annual election window of 60_days (no more than 60) shall be provided during which the election may be made. The election window shall run from October 1 to November 29. Contributions may begin no earlier than the calendar year following the year of the election. Once made, the election is irrevocable and may not be revoked. • b. Irrevocable Election for Pre-Tax Contributions of Accrued Leave: A one-time, irrevocable election of the amount of employer contributions of Employee accrued • sick • vacation • Yes DNo The Employer limits the amount elected as shown below: Contributions will be limited to Sick and Vacation leave payoffs due to sanaration fmm SArVir.P Newly eligible Employees shall be provided an election window of 60days (no more than 60 calendar days) from the date of initial eligibility during which they may make the election to contribute. Contributions may begin no earlier than the calendar month following the end of the election window. If the Employee does not make the election in the year of initial eligibility, the election to contribute may be made in a later year. An annual election window of 60 days (no more than 60 calendar days) shall be provided during which the election may be made. The election window shall run from October 1 November 29. Contributions may begin no earlier than the calendar year following the year of the election. Once made, the election is irrevocable and may not be revoked. C. Limits on Total Contributions The total contribution on behalf of each Participant (including both mandatory and Elective Contributions) for each Plan Year shall not exceed the following limit(s): • There is no Plan-defined limit on the percentage or dollar amount of earnings that may be contributed. See Section V.A. for a discussion of nondiscrimination rules that may apply to non-collectively bargained self-insured Plans. VII. Vesting Schedule A. The account is 100% vested at all times, unless specified otherwise in B. below. B. The following vesting schedule applies to Direct Employer Contributions outlined in VI.A.1: Years of Specified Percent Service Completed Vesting 1-14 0% 15 60% 16 64% 17 68% 18 72% 19 76% 20 80% 21 84% 22 88% 23 92% 24 96% 25 100% C. The account will become 100% vested upon the duty death or duty disability of the participant. D. Any period of service by a Participant prior to a rehire of the Participant by the Employer shall count toward the vesting schedule outlined in B above if they return within five years of termination of employment. 5 VIII. Forfeiture Provisions Upon separation from the service of the Employer or upon reversion to the Trust of a Participant's account assets remaining upon the participants death (as outlined in Section XI), a Participants non-vested funds shall: • Revert to the Employer. In the case of separation from service, the Participant's non-vested funds shall be applied as shown above, In the case of reversion due to the Participant's death under Section XI, the remaining account assets shall be applied as shown above. IX. Eligibility Requirements to Receive Medical Benefit Payments from the VantageCare Retirement Health Savings Plan A Participant is eligible to receive benefits: At separation from service with the following restrictions. Must meet vesting requirements listed under section VII for employer contributions. Employee contributions are always 100% vested. X. Permissible Medical Benefit Payments Benefits eligible for payment consist of: A. All Medical Expenses eligible under RC Section 213* other than direct long-term care expenses * See Section V.A. for a discussion of nondiscrimination rules which may apply to non- collectively bargained, self-insured Plans. Xl. Death Benefit In the event of a Participant's death, the following shall apply: Account Transfer: The surviving spouse and/or surviving eligible dependents (as defined in Section XIII.F.) of the deceased Participant are immediately eligible to maintain the account and utilize it to fund eligible medical benefits specified in Section X above. Upon notification of a Participants death, the Participant's account balance will be transferred into the Vantagepoint Money Market Fund*. The account balance may be reallocated by the surviving spouse or dependents. * Please read the current prospectus carefully prior to investing. An investment in this fund is neither insured nor guaranteed and there can be no assurance that the Fund will be able to maintain a stable net asset value of $1.00 per share. Vantagepoint Mutual Funds are distributed by ICMA-RC Services, LLC, a controlled affiliate of ICMA Retirement Corporation. Member NASD/SIPC. r If a Participant's account balance has not been fully utilized upon the death of the eligible spouse, the account balance may continue to be utilized to pay benefits of eligible dependents. Upon the death of all eligible dependents, the balance will be available for medical benefits for the designated beneficiary of the last dependent or spouse to die. Assets remaining upon the death of a designated beneficiary shall be available for medical benefits of the beneficiary's designated beneficiary. If there is no living beneficiary(ies), the account will revert to the Plan to be applied as specified in Section VIII. There will be no elective withholding of federal, state, or local taxes for medical benefit payments to the Participant's spouse's or dependent's designated beneficiary(ies). If there are no living spouse or dependents at the time of death of the Participant, the account will be available for medical benefits for the designated beneficiary(ies) of the Participant. Assets remaining upon the death of all designated beneficiaries shall be available for medical benefits of the beneficiary's beneficiary. If there is no living beneficiary(ies), the account will revert to the Plan to be applied as specified in Section VIII. There will be no elective withholding of federal, state, or local taxes for medical benefit payments to the Participant's beneficiary(ies) or any beneficiary's beneficiary. XII. be Minimis Accounts Upon separation from the service of the Employer prior to a Participant becoming eligible for medical benefits from a VantageCare Retirement Health Savings Plan account, Participant accounts that are considered de minimis as specified below will be paid to the Participant. • The Plan shall not allow de minimis account distributions. XIII The Plan will operate according to the following provisions: A. Employer Responsibilities 1. The Employer will submit all VantageCare Retirement Health Savings Plan contribution data via electronic submission. 2. Participant status updates and/or changes or personal information updates and/or changes (Participants' termination dates, Participants' benefit eligibility dates, etc.) will be provided via electronic submission. B. Participant account administration fees will be paid through the redemption of Participant account shares, unless agreed upon otherwise in the Administrative Services Agreement. C. Employer plan fees will be paid by the Employer as outlined in the Administrative Services Agreement. D. Assignment of benefits is not permitted. E. Payments to an alternate payee (payee other than a Participant) are not permitted with the exception of reimbursement of health insurance premiums to the Employer. F. An eligible dependent is the Participant's lawful spouse and any other individual who is a person described in IRC Section 152(a). G. The Employer will be responsible for withholding, reporting and remitting any applicable taxes, as outlined in the VantageCare Retirement Health Savings Plan Employer Manual. XIV. The Employer hereby acknowledges it understands that failure to properly fill out this Employer VantageCare Retirement Health Savings Plan Adoption Agreement may result in the loss of tax exemption of the Trust and/or loss of tax-deferred status for Employer contributions. EMPLOYER By: Title: Attest: Accepted: Vantagepoint Transfer Agents, LLC C. 3 44-464,41 Corporate Treasurer Instructions for Completing the VantageCare Retirement Health Savings Plan Implementation Data Form FISCAL NOTE (M.R. #05258) November 10, 2005 BY: FINANCE COMMITTEE, CHUCK MOSS, CHAIRPERSON IN RE: HUMAN RESOURCES DEPARTMENT - RETIREMENT HEALTH SAVINGS PLAN TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Pursuant to Rule XII-C of this Board, the Finance Committee has reviewed the above reference resolution and finds: 1. Due to the rapidly increasing cost of providing retiree health care, most of the business community has implemented alternatives to the traditional employer paid health care. 2. In order to maintain the on-going fiscal stability of the County and to continue to provide employee benefits in line with the business community, the Human Resource Department proposes to establish a "Retirement Health Savings Plan". 3. Under this plan, non-represented employees, and represented employees whose contract provides for this change, hired after January 1, 2006 will have a Retirement Health Savings Account (RHS) rather than Oakland County's traditional health, dental, or vision coverage when they retire. 4. The County will contribute $1,300 per year ($50 per pay) of pre-tax dollars to each RHS account. This is a flat dollar contribution regardless of an individual employee's rate of pay. New hires and current employees may also contribute a portion of pre-tax dollars to their RHS account. 5. Like the current system, a new hire must complete 15 years of County service in order to be vested at 60% of the County's contribution in the retirement health care system. The percentage of vestment will increase 4% per year, for each year of service, after 15 years, until the new hire is fully vested at 25 years of service. Employee's contributions are always 100% vested. 6. Implementation of this plan would effectively close entrance to the County's Voluntary Employee Beneficiary Association (VEBA) after January 1, 2006. This will limit the amount the County must contribute to the VEBA as well as the amount of Other Post Employment Benefits (OPEB) obligations the County must report on its financial statements. These limits, however, will not appear immediately, but over time as new hires are shifted to the RHS system. 7. Based upon a 5% turnover factor estimated contributions would approximate $295,000, which would be paid from the Fringe Benefit Fund. As new employees are hired, the annual contribution will increase. However, the annual contribution to the RHS should be more than offset by a decrease in the VEBA contribution. FINANCE COMMITTEE FINANCE COMMITTEE Motion carried unanimously on a roll call vote with Melton and Jamian absent and Woodward voting no. ' Resolution #05258 October 27, 2005 The Chairperson referred the resolution to the Finance Committee. There were no objections. t Resolution #05258 November 10, 2005 Moved by Jam ian supported by Moss the resolution be adopted. Discussion followed. Moved by Gershenson supported by Zack to propose the resolution "Lay on the Table". Chairperson Bill Bullard stated there will be no discussion as this motion is not a debatable issue. Vote on motion to "Lay on the Table": AYES: Melton, Nash, Suarez, Woodward, Zack, Coleman, Coulter, Gershenson, Gregory, Hatchett. (10) NAYS: Long, Middleton, Molnar, Moss, Palmer, Patterson, Potter, Rogers, Scott, Wilson, Bullard, Crawford, Douglas, Jamian, KowaII. (15) A sufficient majority not having voted in favor, the motion failed. Discussion followed. Moved by Melton supported by Nash the resolution be amended to add a BE IT FURTHER RESOLVED paragraph to read as follows: BE IT FURTHER RESOLVED that annually the Personnel Committee will re-evaluate the amount being contributed for each employee and representatives of the employee unions and representatives of non-represented employees will be invited to testify. Discussion on Commissioner Melton's amendment followed. Nancy Scarlet, Director of Human Resources, addressed the Board in regards to the Retirement Health Savings Plan. Further discussion on Commissioner Melton's amendment followed. Commissioner Melton requested Nancy Scarlet, Director of Human Resources, address the Board to comment on whether unions were invited to comment on the Retirement Health Savings Plan, and were there any written comments received. Nancy Scarlet addressed the Board. Commissioner Douglas addressed the Board and stated she wished to propose an amendment to Commissioner Melton's amendment or if Commissioner Melton would withdraw his amendment she would introduce a new version of his amendment. Chairperson Bill Bullard asked Commissioner Douglas what that amendment would be if presented. Commissioner Douglas read her proposed amendment. Commissioner Melton withdrew his amendment and Commissioner Nash withdrew his support to the amendment. Moved by Douglas supported by Melton the resolution be amended to add a BE IT FURTHER RESOLVED paragraph to read as follows: BE IT FURTHER RESOLVED that the Retirement Health Savings Plan be evaluated and reviewed annually by the Fringe Benefits Review Committee, the Personnel Committee and the Finance Committee. Discussion followed on Commissioner Douglas' amendment. Commissioner Melton asked Chairperson Bill Bullard to respond on whether the Fringe Benefit Review Committee reviewed the Retirement Health Saving Plan. Commissioner Douglas and Nancy Scarlet, Director of Human Resources, addressed the Board in response to this matter. Commissioner Scott moved to "call the question". There was no support. Discussion continued on Commissioner Douglas' amendment. Ruth Johnson, County Clerk Vote on Commissioner Douglas' amendment: AYES: Melton, Middleton, Nash, Potter, Rogers, Suarez, Woodward, Zack, Bullard, Coleman, Coulter, Douglas, Gershenson, Gregory, Hatchett, KowaII. (16) NAYS: Moss, Palmer, Patterson, Scott, Wilson, Crawford, Jamian, Long. (8) A sufficient majority having voted in favor, the amendment carried. Discussion on resolution, as amended followed. Nancy Scarlet, Director of Human Resources, addressed the Board to answer Commissioner Potter's questions and concerns. Discussion on resolution, as amended continued. Commissioner Woodward asked for a "Point of Clarification" on the Retirement Health Care Savings Plan. Doug Williams, Retirement Administrator, addressed the Board in response to this issue. Discussion on resolution, as amended continued. Chairperson Bill Bullard stated a "Yes" vote would be in support of the resolution, as amended and a "No" vote would oppose the resolution, as amended. Vote on resolution, as amended: AYES: Middleton, Molnar, Moss, Palmer, Patterson, Potter, Rogers, Scott, Suarez, Wilson, Bullard, Crawford, Douglas, Jamian, KowaII, Long. (16) NAYS: Nash, Woodward, Zack, Coleman, Coulter, Gershenson, Gregory, Hatchett, Melton. (9) A sufficient majority having voted in favor, the resolution, as amended, was adopted. I EBY Nffi Tlf Ftle01111 RESKU1111 STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Ruth Johnson, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on November 10, 2005, with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 10th day of November, 2005.