INTRODUCTION

Warren Wilson College has implemented a Section 125 Cafeteria Plan to enable you to purchase certain benefits on a pre-tax basis.

The benefits may include insurance and other fringe benefits allowable under Section 125 of the Internal Revenue Code.  The benefit programs are listed in Appendix A and are described in separate documentation that you should have received.  Once you elect to purchase the benefits on a pre-tax basis, you cannot as a general rule change your election until the next annual enrollment period.  However, if you have a Change in Status Event as described below, you may be able to make a change in your election.  In most cases, you will have 30 days to make a change.  However, if the particular benefit that you want to change provides that you have 31 days, this Plan will also provide 31 days.  A change due to a Change in Status Event must be on account of and must correspond with that Event.  Please keep in mind that nothing in this Summary Plan Description overrides the terms and conditions of the plan documentation for the benefits that are available through this Section 125 Cafeteria Plan for pre-tax purchase, so you must always follow the terms of those plans.

If your employer offers Flexible Spending Accounts, this Summary Plan Description does not address those Accounts.  Rather, they are addressed in a separate Summary Plan Description.

If there is any difference between information described in this Summary Plan Description and the Plan’s formal documentation, the formal documentation will control.  The formal documentation is subject to rules, regulations, and interpretations under Section 125 of the Internal Revenue Code, which will ultimately control the interpretation of any matter under the Section 125 Cafeteria Plan.

ELIGIBILITY

Each Employee who normally performs services for the Employer of at least 30 hours per week may elect to participate in the Plan as of the beginning of the next following Coverage Period.  Any Employee whose employment begins after the beginning of a Coverage Period may begin participation on the first day of the month after completing 0 months of service with the Employer.

Participation

You become a Participant by completing the benefit election form or other enrollment process supplied by the Company wherein you elect one or more of the benefits available under the Plan, as well as agree to a salary reduction to pay for those benefits so elected.

Annual Enrollment Period

An annual enrollment period will be scheduled by Warren Wilson College prior to the beginning of each plan year.  At that time you will receive enrollment materials describing options available to you under the Plan.  You will be given the opportunity to change your choices made for the previous 12-month period, for the coming 12 months. Failure to complete the form or other enrollment process supplied by the Company at the annual enrollment period shall be deemed as an election to continue the elections from the previous Plan Year.  This deemed election will occur for all benefits except Flexible Spending Accounts, which require a new election each year.  After an election is made, it may not be modified until the next annual enrollment period unless there is a Change in Status or other IRS authorized event that allows an election change.

Electing Less than the Maximum Allowed Benefit

Any portion of your Compensation that you do not choose to apply toward the purchase of the benefits described will be paid to you as regular, taxable Compensation.

Change in Status Events

Rules of the Internal Revenue Code require that generally, you may not change your benefit plan elections until the next annual enrollment period.  However, you will be allowed to make a change if the change is a Change in Status Event and the Consistency Rule is satisfied.  Valid Change in Status Events include the following:

·          Change in Employee’s Legal Marital Status (marriage, divorce, annulment, legal separation or death of spouse).

·          Change in Number of Dependents (events that change an employee's number of dependents, such as birth, adoption, placement for adoption or death).

·          Change in Employment Status of Employee, Spouse or Dependent (any of the following that change the employment status of the employee, the employee's spouse, or the employee's dependent:  termination or commencement of employment, strike or lockout, beginning or returning from an unpaid leave of absence, change in worksite, or a change from an eligible to an ineligible employment status or classification).

·          Dependent Satisfies (or Ceases to Satisfy) Dependent Eligibility Requirements (events that cause an employee's dependent to satisfy or cease to satisfy eligibility requirements for coverage, such as due to age, student status, or similar circumstances).

·          Change in Residence (a change in the place of residence of the employee, spouse, or dependent).

Other Change in Status Events may be allowed if they are acceptable under interpretations of the Internal Revenue Code.  If you have questions, please ask your Employer’s benefits representative.

If you experience a Change in Status Event and desire to make a change, you must make the change no later than 30 days following the Event.  However, if the benefit you wish to change allows 31 days to make changes, this Plan will also allow 31 days.

Consistency Rule

A change must be "on account of and correspond with” a Change in Status Event. To meet this requirement, the change that you wish to make must be on account of and correspond with a Change in Status Event that affects eligibility for coverage under an employer's plan. The determination of whether a requested change is “on account of and consistent with” a Change in Status Event will be made by the Plan Administrator (in its sole discretion) in accordance with interpretations of the Internal Revenue Service.  If you have questions, please ask your Employer's benefits representative.

Other Events That May Allow Election Changes

•     HIPAA Special Enrollment Rights.  If you, your Spouse and/or a Dependent are entitled to special enrollment rights under the provisions of HIPAA (Health Insurance Portability and Accountability Act of 1996, as amended) for a group health plan, you may change your election to correspond with the special enrollment right.  Please refer to the group health plan description for an explanation of special enrollment rights.

•     Judgment, Decree, or Order.  If a judgment, decree, or order (collectively called  “order”) resulting from a divorce, legal separation, annulment, or change in legal custody (including a Qualified Medical Child Support Order under the Employee Retirement Income Security Act) requires an employee to cover a child or children under a group health plan, the employee may change his or her election to cover the child(ren).  Likewise, if the order requires another individual to provide coverage for the child and coverage is, in fact, provided, then the employee may change his or her election to drop coverage for the child(ren).

•     Medicare and Medicaid.  If an employee, spouse, or dependent becomes entitled to Medicare or Medicaid (other than coverage only for pediatric vaccines), the employee may make a change in election to cancel or reduce any group health coverage available through this Plan for the individual.  Likewise, if the employee, spouse, or dependent loses eligibility for coverage under Medicare or Medicaid (other than coverage only for pediatric vaccines), the employee may make a change in election to commence or increase any group health coverage available through this Plan for the individual.

•     Cost Changes.  If the cost of qualified benefits increases or decreases during the plan year, your election may be automatically adjusted, if the Company in its discretion chooses to change your cost.  If the cost significantly increases, you will be permitted to make an election change to increase your payment or to revoke your election and, in lieu thereof, to receive on a prospective basis coverage under another benefit option similar coverage.  You may also be permitted to revoke your election and drop coverage if no other option providing similar coverage is available.  See your benefits representative for additional information.

•     Significant Coverage Change/Curtailment.  If the coverage under a benefit is significantly changed or curtailed, you may revoke your election and make a new election on a prospective basis for coverage under another option that provides similar coverage.  If the coverage is lost altogether, you may drop your election if no similar coverage is available.

•     Addition or Improvement of Benefit Option.  If during the plan year the Plan adds or significantly improves a benefit option, you may elect the newly added or improved option.

•     Change in Coverage of Spouse or Dependent Under Other Employer’s Plan.  If there is a change in your, your spouse’s, or your dependent’s coverage of a qualified benefit under another employer’s plan, you may be allowed to change your election under the Plan provided that the change is on account of and consistent with the change in coverage that is made under the other employer’s plan and is also consistent with the rules under Section 125 of the Internal Revenue Code.

The Plan Administrator, in its discretion, has the authority to interpret all rules that are applicable to the Section 125 Cafeteria Plan.  Further, the Plan Administrator may modify your election(s) downward during the plan year if you are a Key Employee or Highly Compensated Individual (as defined by the Internal Revenue Code), if necessary to prevent the Plan from becoming discriminatory within the meaning of the federal income tax law. 

TAX ADVANTAGES

The cash compensation (wages) you receive from Warren Wilson College is taxable.  However, when you allocate a portion of your compensation on a pre-tax basis to be used for payment of your benefits, your taxable income is reduced by the amount you have allocated to benefits.  This allocation results in a reduction of federal and, in most cases, state income taxes.

Social Security/Other Benefits May Be Affected

Plan participation will reduce the amount of your taxable compensation.  Accordingly, there could be a slight decrease in your Social Security benefits which may be based on taxable compensation.  Although this reduction usually is quite small, it could occur if your compensation falls below the annual Social Security taxable wage base as revised each year.  The resulting decrease in your taxable compensation could impact other benefits which may be available through your employer.

CHANGES TO EMPLOYEE’S STATUS

If your employment status changes, participation in the Plan is affected as follows:

Leave of Absence Under the FMLA

If your employer continues any benefit you have elected under the Plan during an FMLA leave, your participation may continue for as long as you are on paid leave or, if the leave is unpaid, you may pay premiums in a manner approved by the employer.  In no event, however, will this provision override the terms of any insurance or other program under which the benefit is provided, nor will it override the substance of any employer policy regarding leaves of absence.  You should discuss these issues with the benefits representative.  You may be entitled to cease participation while you are on FMLA leave.   If you cease participation as evidenced by non-payment of premiums, you will not be considered a participant in the Plan, and you will not receive benefits during the time you were not a participant.  If you timely return from FMLA leave, you can elect to be reinstated in the Plan on the same terms as existed prior to your FMLA leave (unless those terms were changed in the meantime for other plan participants).

Non-FMLA Leave of Absence

If the employer’s policies provide for a paid leave of absence that is not covered by the FMLA, your participation may continue as provided by those policies, as long as you continue to receive compensation.  If your leave of absence is unpaid, you should review your options with the employer’s benefits representative.  In no event will this provision override the terms of any insurance or other program under which the benefit is provided.

Death

 In the event of your death, your participation ceases as of the date of your death.

Change to Ineligible Employment Status

Your participation ceases as of the date of the change in your employment status.

Termination of Employment

Your participation ceases as of the date of your termination.

If the events described above cause a loss of coverage under a group health plan, you may be eligible for Continuation Coverage for group health plans.  Continuation coverage, if any, is governed by the terms of the health plan and by laws that apply to group health plans.  Continuation coverage is not addressed in this Summary Plan Description.

MORE IMPORTANT FACTS

The Plan is provided through and administered by Warren Wilson College.

Plan Name

Warren Wilson College Section 125 Cafeteria Plan.  This Plan authorizes the payment of certain benefits with pre-tax dollars.

Plan Documents

Warren Wilson College' Plan is fully described in the Plans' legal document.  This booklet describes the major provisions of the Section 125 Cafeteria Plan in easy to understand terms.  It is shorter and far less technical than the Plans' legal documents.  If there is any conflict or inconsistency between this booklet and the Plans' legal documents, or if this booklet does not cover or only partially covers any provision in the legal documents, the Plans' legal documents govern.  If you have any questions about the Plans or if you would like to examine the Plans' legal documents, contact Warren Wilson College.  It is intended that the Plans will be administered in accordance with all relevant statutory and governmental authority.  To the extent that any Plan provision is contrary to any statutory and governmental authority, such authority will govern operation of the Plans.

Effective Date

The effective date of the Plan is July 1, 2002.

Plan Sponsor/Plan Administrator

Warren Wilson College

PO Box 9000

Asheville, NC 28815-9000

828-771-2048

The Plan Administrator has the discretionary authority to administer the Plan in all of its details, including determining eligibility for benefits and construing all terms of the plan.  The Plan Administrator has the discretion to determine all questions of fact and/or law that may arise in connection with the administration of the Plan.  The Plan Administrator may assign its duties to others. 

Legal Service

The agent for service of legal process for the Warren Wilson College Section 125 Cafeteria Plan is:

Corporate Secretary

Warren Wilson College

PO Box 9000

Asheville, NC  28815-9000

Plan Number

505

Plan Sponsor’s Identification Number

56-0767736

Plan Year

The Plan year begins on January 1 and ends on December 31. However, the first Plan Year is a short year that begins on the Effective Date and ends on December 31

Sources of Contributions

Employees contribute to the plan through pre-tax dollars that are elected by the employee and authorized by the Section 125 Cafeteria Plan.  Employees select the amount of their contributions, up to authorized limits.  A minimum contribution may be required.  There is no trust fund applicable to the Plan.  All payments hereunder involve the Employer’s general assets.

Future of the Plan

Warren Wilson College intends to continue the Plan indefinitely.  However, it reserves the right to change or to terminate the Plan, or to eliminate any benefit under the Plan, at any time without the consent of any participant or dependent. Warren Wilson College or any authorized officer or representative of Warren Wilson College can make changes to or terminate the Plan.  You will be notified if any changes are made.

APPEALING A DENIED CLAIM.

The following information is provided for general information about claims and review procedures for benefit plans that are covered by the Employee Retirement Income Security Act (“ERISA”).  It is based upon regulations issued by the U.S. Department of Labor, and is not intended to override the claims and review procedures that may be contained in the documentation for any underlying benefit program that may be available for purchase through this Plan with pre-tax dollars.  You should always consult the documentation that you have been provided for the benefit that you have elected to purchase under this Plan.

Claims Decisions.  If a claim for a benefit under one of the component benefits plans is denied, you will be provided written notice setting forth the specific reason or reasons for the denial, specific reference to pertinent plan provisions on which the denial is based, and a description of any additional material or information necessary to perfect the claim (including an explanation of why such material or information is necessary), and appropriate information as to the steps to be taken if you wish to submit a denied claim for review.  While claims may be processed sooner than 90 days, the law provides that a 90-day period to process a claim is reasonable.  The law also provides that if there are special circumstances, the 90-day period can be extended to 180 days.  If an extension of time from 90 days is needed for processing, written notice of the extension should be furnished before the end of the initial 90-day period.  The extension notice will indicate the special circumstances requiring an extension of time and the date by which a decision on the claim is expected to be given.  If notice of the denial of a claim is not furnished in accordance with the 90- and 180-day time periods provided in this paragraph, you should consider the claim to be deemed denied, and you should proceed with the appeal process described in the benefit plan documentation.  If there is no appeal process given, then the information below should be followed.  It is based upon regulations issued by the U.S. Department of Labor.

Appeal Process.  If a claim is denied in whole or in part, you or your authorized representative have the right to request the Plan Administrator to review the claim.  This request must be submitted in writing.  You may appeal the denial by using the following procedure:

•     Within 60 days of receipt of a notice of denial on the claim, or within 60 days after a claim is deemed denied, you (or your authorized representative) must send a written request for a review of the claim.  Your request should be sent to the Plan Administrator.  You may review pertinent documents and submit issues and comments in writing.  These actions must be taken at your own expense.

•     Within 60 days (or no later than 120 days if additional time is needed due to special circumstances) after the request for review is received, the Plan Administrator will make a decision.  If special circumstances require additional time, you will be given written notice, before expiration of the initial 60-day period, that additional time is needed.  The decision on review will be in writing and will include specific reasons for the decision, as well as specific references to the pertinent plan provisions on which the decision is based.

STATEMENT OF ERISA RIGHTS

The information provided below applies to benefit programs that are covered by the Employee Retirement Income Security Act (“ERISA”).  This information is not intended to replace a similar statement provided in the underlying benefit program that is offered by this Plan, but is provided for your information.  This Section 125 Cafeteria Plan is not itself covered by ERISA.  However, benefits may be offered under the Plan that are subject to ERISA.  If a plan is subject to ERISA, you are entitled to certain rights and protections that law.  ERISA provides that all Plan Participants shall be entitled to:

Receive Information About Your Plan and Benefits

Examine, without charge, at your Plan Administrator's office and at other specified locations such as worksites and union halls, all documents governing the plan, including insurance contracts and collective bargaining agreements, if any, and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. 

Upon written request to the plan administrator, obtain copies of documents governing the operation of the plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary plan description.  The plan administrator may make a reasonable charge for the copies.

COBRA Continuation Coverage

If your Employer and the applicable benefit plan are subject to COBRA, you may have the right to continue health care coverage for yourself, your spouse, or your dependents if there is a loss of coverage under the plan as a result of a qualifying event.  You or your dependents may have to pay for such coverage.  Review the applicable summary plan description and the documents governing any health plan for the rules governing these rights.

If your Employer and the applicable benefit plan are subject to HIPPA, you may have the right to a reduction or elimination of exclusionary periods of coverage for pre-existing conditions under a group health plan, if you have creditable coverage from another plan.  You should be provided a certificate of creditable coverage, free of charge, from your group health plan or health insurance issuer when you lose coverage under the plan, when you become entitled to elect COBRA continuation coverage, or when your COBRA continuation coverage ceases, if you request it before losing coverage, or you request it up to 24 months after losing coverage.  Without evidence of creditable coverage, you may be subject to a preexisting conditions exclusion for 12 months (18 months for late enrollees) after your enrollment date in your coverage.  Review the applicable summary plan description and the documents governing any health plan for the rules governing these rights.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for plan participants, ERISA imposes obligations upon the people who are responsible for the operation of the employee benefit plan.  The people who operate your plan, called “fiduciaries" of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries.  No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit from a plan covered by ERISA or from exercising your rights under ERISA.

Enforce Your Rights

If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of plan documents or the latest annual report (if one is required) from the Plan and do not receive them within 30 days, you may file suit in a Federal court.  In such a case the court may require the plan administrator to provide the materials and to pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator.  If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.  In addition, if you disagree with the plan's decision or lack thereof concerning the qualified status of a medical child support order, you may file suit in a Federal court.  If it should happen that plan fiduciaries misuse the Plan's money (if the Plan is considered to have money), or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example if it finds your claim is frivolous.

Assistance With Your Questions

If you have any questions about your plan, you should contact the plan administrator.  If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

Newborns’ and Mothers’ Health Protection Act of 1996

Under ERISA, group health plans and health insurance issuers generally may not, under federal law, restrict benefits for any hospital length of stay in connection with childbirth for the mother or newborn child to less than 48 hours following a vaginal delivery, or less than 96 hours following a cesarean section.  However, federal law generally does not prohibit the mother’s or newborn’s attending provider, after consulting with the mother, from discharging the mother or her newborn earlier than 48 hours (or 96 hours, as applicable).  In any case, plans and issuers may not, under federal law, require that a provider obtain authorization from the Plan or the issuer for prescribing a length of stay not in excess of 48 hours (or 96 hours).

Appendix A:

List benefits available under the Plan:

Group Health Plan

Dental

Appendix B: - LIMITATIONS ON DISCLOSURE OF PROTECTED HEALTH INFORMATION TO THE EMPLOYER

Disclosure of Protected Health Information and Limitations on Use of Protected Health Information - The Plan will disclose Protected Health Information to the Employer only in accordance with 45 CFR 164.504(f) and the provisions of this Section. For this purpose, the following definitions apply:

“Health Information” means information (whether oral or recorded in any form or medium) that is created or received by a health care provider, health plan (as defined in 45 CFR 160.103), employer, life insurer, school or university or health care clearinghouse (as defined in 45 CFR 160.103) that relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.

“Individually Identifiable Health Information” means Health Information, including demographic information, collected from an individual and created or received by a health care provider, health plan, employer or health care clearinghouse that identifies the individual involved or with respect to which there is a reasonable basis to believe the information may be used to identify the individual involved.

“Protected Health Information” ("PHI") means Individually Identifiable Health Information that is transmitted or maintained electronically, or in any other form or medium.

PHI may be disclosed to the Employer only for quality assurance, auditing and monitoring.  The Treasurer of the Employer shall have access to PHI for the purpose of quality assurance, auditing and/or monitoring the performance of the Claims Administrator. 

Access to and use of PHI by the individuals described above shall be restricted to plan administration functions that the Employer performs for the Plan.  Such access or use shall be permitted only to the extent necessary for these individuals to perform their respective duties for the Plan.

The Plan hereby incorporates the following provisions (a) through (j) to enable it to disclose PHI to the Employer and to show receipt of written certification from the Employer that the Plan has been so amended.

Additionally, the Employer agrees:

a.       not to use or further disclose PHI other than as permitted or as required by law,

b.      to ensure that any of its agents or subcontractors to whom it provides PHI received from the Plan agree to the same restrictions and conditions,

c.       not to use or disclose PHI for employment-related actions or in connection with any other benefit or employee benefit plan,

d.      to report to the Plan any use or disclosure of the information that is inconsistent with the permitted uses and disclosures in Section 11.03(a),

e.       to make PHI available to individuals in accordance with 45 CFR 164.524,

f.        to make PHI available for individuals' amendment and incorporate any amendments in accordance with 45 CFR 164.526,

g.       to make the information available required to provide individuals with an accounting of disclosures in accordance with 45 CFR 164.528,

h.       to make its internal practices, books, and records relating to the use and disclosure of PHI received from the Plan available to the Department of Health and Human Services upon request, and

i.         if feasible, to return or destroy all PHI received from the Plan that the Employer maintains in any form and retain no copies of such information when no longer needed for the purpose for which disclosure was made, except that, if such return or destruction is not feasible, the Employer will limit further its uses and disclosures of the PHI to those purposes that make the return or destruction of the information infeasible,

j.        to ensure that adequate separation between the Plan and the Employer, as required by 45 CFR 164.504(f), is established and maintained.

Disclosure of Summary Health Information - The Plan may disclose Summary Health Information to the Employer if the Employer requests such information for the purpose of obtaining premium bids for providing health insurance coverage under the Plan or for modifying, amending, or terminating the Plan.  For this purpose “Summary Health Information” means information, including Individually Identifiable Health Information, that summarizes the claims history, expenses, or types of claims by individuals for whom the Employer provides benefits under the Plan, and from which the following information has been removed:

a.        names

b.        geographic information more specific than state,

c.        all elements of dates relating to the individual(s) involved (e.g. birth date) or their medical treatment (e.g., admission date) except the year; all ages for those over age 89 and all elements of dates, including the year, indicative of such age (except that ages and elements may be aggregated into a single category of age 90 and older),

d.        other identifying numbers, such as Social Security, telephone, fax, or medical record numbers, e-mail addresses, VIN or serial numbers,

e.        facial photographs or biometric identifiers (e.g., finger prints), and

f.         any information the Employer does not have knowledge of that could be used alone or in combination with other information to identify an individual.

Noncompliance - Instances of noncompliance with the permitted uses or disclosures of PHI set forth in this Section shall be addressed in the following manner:

The individual who does not comply with the permitted uses or disclosures of PHI shall be warned by the Plan Administrator and required to undergo training in the Privacy rules set forth in this Section.  If the same individual again does not comply with the permitted uses or disclosures of PHI, the individual’s access to PHI will be denied.

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