HomeMy WebLinkAboutCity of Rexburg Health Plan Trust CITY OF REXBURG HEALTH PLAN TRUST
—IRREVOCABLE TRUST AGREEMENT—
(EFFECTIVE: May 1, 2021)
WITNESSETH:
WHEREAS, the City of Rexburg in Madison County, Idaho (the "City" also referred to as
the "Employer" and the "Plan Sponsor") sponsors a self-funded healthcare benefit plan
(the "Plan") established by separate document contemporaneously with this declaration
of trust, to provide healthcare coverage only for employees of the City and their eligible
dependents;
WHEREAS, the City intends to pay through an irrevocable trust fund (the "Trust Fund")
certain health expenses incurred by an eligible employee of the City, his or her spouse or
his or her dependent while covered under the Plan in accordance with the terms set forth
in chapter 40, title 41, Idaho Code, and this Trust Agreement;
WHEREAS, the City understands and acknowledges that it cannot alter, amend, revoke,
or terminate the transfer of funds or property held in trust;
WHEREAS,Justin Beard (the City's Assistant Public Works Director), Matthew Nielson (the
City's Chief Financial Officer) and Terri Hill (the City's HR Director), agree with the City to
be the Trustees (also referred to individually as the "Trustee" and collectively as the
"Board of Trustees") to manage and administer the Trust Fund pursuant to this Trust
Agreement, independently from the City; and
WHEREAS, all funds contributed into the irrevocable Trust Fund shall be fiduciary funds
within the contemplation of Idaho Code §41-4008, held by the Trustees pursuant to this
Trust Agreement for the benefit of eligible employees of the City, their spouses and their
dependent(s).
NOW,THEREFORE,Justin Beard, Matthew Nielson and Terri Hill agree with the City,which
hereby declares, creates and establishes a self-funded healthcare benefit plan, an
irrevocable Trust Fund,and the independent entity through which both are managed and
administered asset forth below:
1. AGREEMENT BY THE TRUSTEES
Justin Beard, Matthew Nielson and Terri Hill, by execution of this Trust Agreement,
City of Rexburg Health Plan Trust PAGE Z
individually and collectively:
(i) accept the Trusteeship and its accompanying fiduciary duties and
(ii) declare that they will manage and administer the Plan and the Trust Fund established
hereby pursuant to this Trust Agreement declared hereby, and that such management
shall be conducted by each of them individually as Trustee,and collectively as the Board
of Trustees, independently from the City(as Plan Sponsor or Employer),pursuant to this
declared Trust Agreement and
(iii) agree to otherwise perform the duties of Trustee as set forth in this Trust Agreement
and the provisions of chapter 40,title 41, Idaho Code.
2. DECLARATION OF TRUST FUND
2.1.DECLARATION AND NAME OF IRREVOCABLE TRUST FUND
The City and the initial Board of Trustees (Justin Beard, Matthew Nielson and Terri
Hill) hereby declare and create this irrevocable employee benefit trust fund, known
and referred to as:
"City of Rexburg Health Plan Trust(hereinafter"Trust Fund").
2.2.PURPOSE OF TRUST FUND
The Trust Fund is established pursuant to chapter 40, title 41, Idaho Code, as
amended,for the following purposes:
2.2.1. As an entity independent, separate and apart from the Plan Sponsor or
employer;
2.2.2. As a vehicle for funding the self-funded healthcare benefits provided under
the Plan, including receiving all contributions to the Plan;
2.2.3. As a mechanism for creating, amending, administering and managing the
Plan; and.
2.2.4. As an irrevocable trust fund from which distributions are made in such
amounts and to such person as the Administrator and/or Trustees shall
direct to provide for the payment of self-funded healthcare benefits
incurred by Plan Beneficiaries and for the payment of plan operational
costs.
City of Rexburg Health Plan Trust PAGE 2
2.3.AUTHORITY OF THIS TRUST FUND
This Trust Fund described herein shall have the authority:
2.3.1. To have and use an appropriate descriptive name, i.e., the "City of Rexburg
Health Plan Trust";
2.3.2. To sue and be sued in its own name;
2.3.3. To contract in its own name.All such contracts shall be in writing and shall be
signed by the Trustees of this Trust, and if there is more than one Trustee,
the contract may be so executed by one Trustee but only if so authorized by
the Board of Trustees(and subject to Section 8.3.10 below);
2.3.4. To borrow money and give security therefor;and
2.3.5. To engage exclusively in transactions authorized or required by chapter 40,
title 41, Idaho Code, or reasonably incidental thereto.
2.4.DURATION OF TRUST AGREEMENT AND TRUST
This Trust Agreement is effective as of the Effective Date on the signature page
below and shall continue in effect until such time as it may be terminated in
accordance with the provisions of Article 11 below and chapter 40, title 41, Idaho
Code.
2.5.IRREVOCABILITY OF THE TRUST FUND
The City has no right or authority to alter, amend, revoke, or terminate any transfer
of funds or property into the Trust Fund.
2.6.CONTRIBUTIONS TO AND PAYMENTS FROM TRUST FUND;
COLLECTION OF CONTRIBUTIONS; ATTORNEY FEES
All contributions are to be paid in advance, deposited in and disbursed from the
trust fund accounts held by the Trust Fund as created by this Trust Agreement; all
benefits and expenses shall be paid out of such trust fund accounts.
2.6.1. All funds and monies received by the Plan and/or Trust Fund and all funds
billed and paid as contributions to the Trust Fund shall be timely deposited
City of Rexburg Health Plan Trust PAGE 3
into the Trust Fund account(s), pursuant to Idaho Code §41-4008(3). The
City shall contribute to the Trust Fund. All contributions by employees, if
any,shall be made by periodic payroll deduction,except as to contributions
made by an employee during an absence from such employment for such
period as the Plan may reasonably provide.
2.6.2. The Trustees may bring an action to collect contributions from the City if
coverage has been provided or if benefits have been paid and either no
contributions or an incorrect amount of contributions has been paid. If the
Trustees are successful in bringing legal action for unpaid contributions,
the City will owe, in addition to the contributions,interest at the legal rate,
court costs, and attorneys'fees.
2.6.3. Any contributions and other assets received by the Plan and/or Trust Fund
may be deposited in trust fund accounts at one or more banks or similar
financial institutions supervised by the United States or a state.
2.7.NON-ALIENATION/NON-INUREMENT OF ASSETS
2.7.1. The assets of the Trust Fund shall never inure to the benefit of the City, or
any person other than Beneficiaries. The assets of the Trust Fund shall be
held for the exclusive purposes of providing the self-funded healthcare
benefits under the Plan to Beneficiaries and defraying reasonable expenses
of administering the Trust Fund and the Plan.
2.7.2. Neither the assets of the Trust Fund nor this Trust Fund are liable to or for
any obligation of the City nor are they subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
or charge, and any such attempt shall be null and void ab initio, except for
assignments relating to the payment of claims properly accrued under the
Plan.
2.7.3. The funds in the Trust Fund are fiduciary funds and are not liable to any
obligation of the City, nor are the fiduciary funds held in the Trust Fund
subject to garnishment, levy, attachment, lien, charge,or execution by any
person, and any such attempt shall be null and void. The prohibition on
garnishment or levy or other such collection action shall not be deemed to
prohibit levy upon the Trust Fund by any provider (or its assignee) for
healthcare services rendered to a Beneficiary.
City of Rexburg Health Plan Trust PAGE 4
2.8.TITLE TO TRUST FUND ASSETS
Title to the Trust Fund and any monies or property therein or within the Trustee's
custody and control shall be vested Trust Fund, maintained in the name of the
Plan, and remain exclusively within the control of the Board of Trustees.All funds
held in the Trust Fund or within the custody and control of the Trustees of the
Trust Fund are fiduciary funds as that term is used in Idaho Code§41-4008. Other
than as specifically provided in this Trust, no one (not even the City) shall have
any right, title, or interest in or under the Trust Fund; or any right in or to the
assets held in the Trust Fund; or the power to alter, amend, revoke or terminate
any transfer in trust.
2.9.APPLICATION AND LIABILITIES OF TRUST FUND
The Trust Fund is legally liable for the payment of all applicable benefits stated in
the schedule of benefits for the Plan in effect at the time the claim. Neither the
City, nor any other party hereto, shall be responsible for the acts of the Trustees,
or for any debts, liabilities, or obligations of the Trust Fund, except as described
herein.
3. DEFINITIONS
3.1. "ADMINISTRATOR" is a person, if other than the Trustee, employed or
contracted by the Board of Trustees to provide administrative services to the
Plan and Trust Fund. The "ADMINISTRATOR" retained for the Plan must be
licensed and bonded as such pursuant to Chapter 9, Title 41, Idaho Code and
Idaho Code §41-4014(4).The City may not be the "ADMINISTRATOR".
3.2. "BENEFICIARY" is any individual such as an eligible employee or his or her spouse
or dependent, entitled under the Plan to payment from the Trust Fund of any
part or all of the cost of any healthcare service rendered to such Beneficiary.
3.3. "CLAIMS LIABILITY" is the total of all incurred and unpaid claims, including
incurred but not reported claims,for allowable benefits under the Plan that are
not reimbursed or reimbursable by stop-loss insurance provided by a carrier
authorized to transact insurance in the state of Idaho.
3.4. "CONTRIBUTION" is the amount paid or payable by the City or employee into
the Trust Fund.
City of Rexburg Health Plan Trust PAGE 5
3.5. "DEPARTMENT" is the Idaho Department of Insurance.
3.6. "DIRECTOR" is the Director of the Idaho Department of Insurance.
3.7. "FIDUCIARY" is a Person entrusted with the duty to act for the benefit of
someone else; who must exercise a high degree of care; and must subordinate
his/her/its own personal interests in the event that there is a conflict.
3.8. "INSOLVENT" means that the Plan is unable to pay its obligations when they are
due or that its assets do not exceed its liabilities.
3.9. "PERSON" is any individual, corporation, limited liability company, partnership,
association, firm, syndicate, organization, educational institution or any other
public or private entity organized or recognized under the laws of the state of
Idaho.
3.10. "PLAN DOCUMENT" or "PLAN DOCUMENTS" includes without limitation this
Trust Agreement, the written statement of benefits, the financial statements of
the Trust Fund, all full and accurate records covering all financial transactions
and affairs of the Trust Fund,the actuarial study by a Qualified Actuary certifying
the rates, all contracts between the Plan and any claims Administrator,Trustee,
or any other service company/provider including the Plan Sponsor or employer,
and any stop-loss insurance agreement, under which said services are provided
for or promised from funds created or maintained in whole or in part by
contributions or payments thereto by the Plan Sponsor, employer or employee,
or any combination thereof.
3.11. "SELF-FUNDED PLAN" or "PLAN" is this, single-employer Plan under which
payment for medical,surgical,hospital,pharmacy,dental,and/or vision benefits
and other services for prevention,diagnosis,or treatment of any disease, injury,
or bodily condition of a Beneficiary is, or is to be, made from, out of and to the
extent of Trust Funds contributed thereto by the City, or by the City and the
employees (who are not otherwise covered by insurance or contract with a
healthcare service corporation or managed care organization authorized to
transact business in Idaho).This "SELL=-FUNDED PLAN" or"PLAN" consists of one
or more documents, including without limitation the written statement of
benefits currently offered by the Plan, which includes all applicable restrictions,
limitations, and exclusions, and the procedure for filing a claim for benefits, all
contracts between the Plan and any claims Administrator, Trustee, or any other
service company/provider including the City (as Plan sponsor or employer), and
City of Rexburg Health Plan Trust PAGE 6
any stop-loss insurance agreement, under which said services are provided for
or promised from funds created or maintained in whole or in part by
contributions or payments thereto by the City(as Plan sponsor or employer) or
employee, or any combination thereof.
3.12. "THE CITY" is the City of Rexburg in Madison County, Idaho, which is the Person
creating the Plan, i.e., the Plan Sponsor, described herein for the benefit of the
Plan's Beneficiaries.
3.13. "QUALIFIED ACTUARY" or "ACTUARY" is an actuary having experience in
establishing rates for a self-funded plan and the health services being provided,
and who is also a fellow of the society of actuaries, a member of the American
Academy of Actuaries or an enrolled actuary under the Employee Retirement
Income Security Act of 1974, as amended.
3.14. "SURPLUS" is the excess of the assets minus the liabilities of the Plan, which
liabilities shall include the claims liability of the Plan.
3.15. "TRUST AGREEMENT" is this irrevocable Trust Agreement between and among
the Trustees and the City(as Plan sponsor)whereby under its terms the City has
no retained power to alter, amend, revoke or terminate the transfer of funds or
property held in trust.
3.15. "TRUST FUND" is the City of Rexburg Health Plan Trust established in
conjunction with the Plan for the receipt of contributions from the City and
employees, if applicable, and for the payment of or with respect to healthcare
service costs of Beneficiaries. For purposes of this definition,the "TRUST FUND"
is an entity independent of the City established in accordance with this Trust
Agreement and governed by Trustees for the purpose of managing and
administering the Plan. The "TRUST FUND" shall be comprised of all bank
accounts or savings accounts or certificates together with all investments made
and held in the name of the Plan by the Trustees, all monies received by the
Trustees and any other property received and held in the name of the Plan by
the Trustees for uses, purposes and trusts set forth in this Trust Agreement.
Payments from the "TRUST FUND" shall be made by the Trustee in such amounts
and to such persons as the Administrator shall direct and/or Board of Trustees
determines, to provide for the payment of self-funded healthcare expenses
incurred by Plan Beneficiaries and for the payment of Plan and Trust Fund
operational costs.
City of Rexburg Health Plan Trust PAGE 7
3.17. "TRUSTEE" is the Trustee, whether single or "Board of Trustees" collectively, of
the Trust Fund, appointed and who have accepted said appointment under the
terms of and pursuant to this Trust Agreement to competently manage and
administer the Trust Fund and Plan on behalf of the Pian Beneficiaries.
4. THE BOARD OF TRUSTEES
4.1.TRUSTEE AS FIDUCIARY
Any Person serving on the Board of Trustees or acting as a Trustee is a Fiduciary
acting on behalf of the Beneficiaries of the Trust Fund. A Trustee may be an
individual, a corporation, or other legal entity (other than the City).
4.2.NUMBER OF TRUSTEES
The Board of Trustees shall consist of three Trustees. The initial Trustees shall be
Justin Beard, Matthew Nielson and Terri Hill,who by their signatures below to this
Trust Agreement each accepts appointment as Trustee.
4.3.QUALIFICATIONS OF TRUSTEE
A Trustee shall be a Person who demonstrates the character, fitness and
competence to function in such role and is qualified by training and/or experience
to perform such services as a fiduciary on behalf of the Beneficiaries of the Plan
and the Trust Fund. No elected official or officer of the City (as Plan sponsor and
employer) may be a Trustee of the Trust Fund.
4.4.TENURE
Each Trustee shall continue to hold office until the Trustee's death, incapacity,
resignation or removal as provided in this Trust Agreement.
4.5.COMPENSATION OF TRUSTEES
A Trustee may receive compensation for his/her/its services as Trustee under this
Trust in accordance with and limited by Idaho Code §41-4015, recited in
Section 4.7 herein, and only as approved by the Board of Trustees. Trustees may
receive reimbursement for reasonable and necessary expenses incurred in the
performance of services as a Trustee under this Trust.The Board of Trustees shall
City of Rexburg Health Plan Trust PAGE 8
establish a policy setting forth the conditions for payment of compensation,if any,
and for the reimbursement of expenses.
4.6.INDEMNIFICATION OF TRUSTEES
The Trustees shall be indemnified out of the assets of the Trust Fund for all
liabilities or expenses incurred or imposed on the Trustees in connection with any
claim, suit, action, or proceeding concerning the Trust Fund, or the Trustees' acts
or omissions as Trustees, including legal fees and amounts paid in compromise or
settlement, unless such acts or omissions constitute breach of trust or their
statutory fiduciary responsibilities; PROVIDED, however, the foregoing shall not
relieve the Trustees from liability that may be established under Idaho Code§§41-
4009(5) and 41-4017.
4.7.PROHIBITED PECUNIARY INTERESTS
Neither the City, Trustee, Administrator nor any other person having
responsibility for the management of the Plan or the investment or other handling
of the Trust Fund shall:
4.7.1. Receive directly or indirectly or have a pecuniary interest,either directly or
indirectly, in any fee, commission, or compensation, or emolument, other
than salary or other similar compensation regularly fixed and authorized
for services duly rendered to the Plan, arising out of any transaction to
which the Trust Fund is or may become a party.
4.7.2. Receive compensation as a consultant to the Plan while also acting as a
Trustee or Administrator, or as an employee of either the Trust Fund or the
Pla n.
4.7.3. Have any direct or indirect material pecuniary interest in any loan or
investment related to the Trust Fund.
4.8.FIDELITY BOND
The Trustees, and each of them, shall obtain a fidelity bond, or coverage deemed
by the Director to be equivalent to a fidelity bond, in the name of the City of
Rexburg Health Plan Trust,for the purpose of protecting the Plan and Trust Fund
from acts of fraud and dishonesty by the Trustees, directors, officers and
employees in connection with the Trust Fund or Plan. The bond shall be for at
City of Rexburg Health Plan Trust PAGE 9
least the following amounts depending on the contributions received by the
Trustees or the benefits paid during the preceding year:
Prior Year's Contributions Received/Benefits Paid" Minimum Bond Amount
No more than $250,000 $ 25,000
More than $250,000, but less than $5,000,000 10%of Amount"
$5,000,000 or more $500,000
For the first year of operations, i.e., 5.1.2021-4.30.2022, the amount of the bond
shall be based on the projected contributions for that first year.
The bond must contain a provision that it may only be canceled upon at
least 30 days advance written notice to the Trust Fund and the Director.
4.9.NO DUTY TO DEFEND
In the event a breach of fiduciary duties resulting in personal liability on the part
of one or more of the Trustees or other persons, none of the Trust Fund shall be
used to pay nor shall the Trust or Trust Fund be responsible for the attorney fees
and costs of the individual Trustee or such other persons.
S. CHANGES TO THE BOARD OF TRUSTEES
5.1.CHANGE IN TRUSTEES, OFFICERS OR MANAGEMENT OF TRUST FUND
The Board of Trustees shall provide written notice to the Director of any change
in the Trustees, officers or management of the Trust Fund, which notice shall
include biographical affidavits of any new Trustee, officer or management
personnel.
5.2.RESIGNATION OF TRUSTEE(S)
A Trustee may resign and subsequent thereto shall be discharged from further
duty or responsibility hereunder by giving at least 60 days' prior written notice to
the Chairman and Secretary of the Board of Trustees and to the Mayor of the City.
The notice shall state the date such resignation is to be effective and such
resignation shall take effect on said date unless a successor Trustee shall have
been appointed at an earlier date. If a successor Trustee has been appointed,the
resignation shall take effect immediately upon the appointment of the successor
Trustee.
City of Rexburg Health Plan Trust PAGE 10
5.3.REMOVAL OF TRUSTEES
A Trustee may be removed from office at any time for good cause upon written
notice signed by the Mayor of the City (as Plan sponsor) and/or a majority of the
Board of Trustees, which notice shall be sent by registered or certified mail and
which notice shall state a date when the removal shall take place. Good cause
shall include the Trustee's failure to continue to demonstrate character, fitness
and competence to manage and administer the Trust Fund and Plan and may also
be established by and one or more of the following:
5.3.1. A Trustee's breach of his/her/its fiduciary duty to the Trust Fund, Plan
and/or Beneficiaries;
5.3.2. A Trustee's failure to attend more than 50%of the regular meetings of the
Board of Trustees in a year;
5.3.3. A Trustee's having or acquiring a pecuniary interest prohibited by
Section 4.7 above;
5.3.4. A determination of the Trustee's mental incapacity;
5.3.5. The Director's removal of the Trustee in accordance with Idaho Code §41-
4015(3).
5.4.SUCCESSOR TRUSTEE
In case any Trustee shall die, become incapable of acting under this Trust
Agreement, resign, or be removed, a successor Trustee shall promptly be
appointed by a written notice signed by the Mayor of the City (as Plan sponsor)
and upon written notice to the Director.
5.4.1. Appointment of a successor Trustee shall not become effective until at
least 30 days have passed after notice is delivered to the Director for his
review and approval of such appointment.
5.4.2. A successor Trustee shall become vested with all the property, rights,
powers, and duties of a Trustee upon
(i) appointment as a successor Trustee becoming effective, and
(ii) acceptance by such successor Trustee of the Trusteeship in a writing
filed with the Trustees.
City of Rexburg Health Plan Trust PAGE 11
5.4.3. Until the appointment of a successor Trustee,the remaining Trustees have,
by a majority of their number, full power to act as Trustee.
S.S.RETURN OF TRUST PROPERTY
A Trustee,upon leaving office for any reason,shall forthwith turn over and deliver
to the Chairman or Secretary of the Board of Trustees any and all books, records,
documents, instruments, reports, monies and other property in the possession or
control of the Trustee that belong to the Trust Fund and/or that was received by
said Trustee in his/her/its official capacity as Trustee.
6. TRUST FUND ADMINISTRATION
6.1.OFFICE OF TRUST FUND
The Trust Fund's principal office shall be at
35 N 15t East
Rexburg
Madison County, Idaho.
6.2.MEETINGS OF THE BOARD OF TRUSTEES
The business of the Board of Trustees shall be conducted at regular or special
meetings. The Board of Trustees shall establish a schedule for regular meetings,
which shall meet, at a minimum, on a quarterly basis. Any one or more Trustees
may call a meeting of the Board of Trustees at any time by giving at least 7 days'
written notice of the time and place of the meeting to the remaining Trustees.
Meetings of the Board of Trustees may be held at anytime without 7 days'written
notice if all of the Trustees attend or consent to the meeting.
6.3.QUORUM OF TRUSTEES
For the purposes of conducting business, a quorum of the Board of Trustees shall
be a majority of Trustees then serving who are present at the regular or special
meeting in person or by live audio or audio/visual link (e.g.,telephone or Skype).
City of Rexburg Health Plan Trust PAGE 12
6.4.VOTI NG
Each Trustee shall have one vote on all matters in any meeting of the Board of
Trustees. Action will be taken by a majority of the Trustees present either in
person or by live audio or audio/visual link (e.g., telephone or Skype). Proxy may
be allowed in any action by the Board of Trustees, if and to the extent it provides
how the proxy vote is to be cast on specific issues.
6.5.ACTIONS ON BEHALF OF TRUST FUND
The Board of Trustees is hereby authorized to act on behalf of or as agent of the
Trust Fund and to execute all negotiable instruments, certificates, contracts,
government reports, and other legal documents on behalf of the Trust Fund.
Neither the City (as Plan sponsor), nor any individual employed thereby, nor any
individual Trustee shall have any authority to act on behalf of or as agent of the
Trust Fund; PROVIDED, however, the Board of Trustees may from time to time
delegate to an Administrator, depository bank, or custodian bank by written
service agreement the authority to act on behalf of the Trust Fund for designated
purposes, such as signing contracts, reports, and/or administrative tasks. Any
such written service agreement shall delineate the duties and responsibilities of
each party and shall specify the Trust Fund is the true owner of any documents
generated as a result of the delegation of authority.
6.6.ADMINISTRATORS
Any Administrator that is retained by the Board of Trustees must be licensed and
bonded as an administrator pursuant to title 41, chapter 9, Idaho Code.
6.7.RECORDS
The Board of Trustees shall cause full and accurate records of the Trust Fund to
be maintained, including but not limited to
(i) the application materials submitted to the Director for registration with the
Department of Insurance
(ii) the records of the administration of the Trust Fund, including copies of the
`summary plan description' materials (see Section 8.3.11 below) to Plan-
eligible employees and logs of it being provided (with entry of name of each
such employee, date provided, means by which provided (including
specification of any United States Postal Service or e-mail address used), as
initialed by the person who provided such to that employee),
City of Rexburg Health Plan Trust PAGE 13
(iii) the audited annual financial statements (and qualified actuarial opinions),
(iv) the unaudited quarterly financial statements,
(v) audit reports and certifications,
(vi) the minutes and records of each and every meeting of the Board of Trustees
including but not limited to the acts,resolutions,appointments, delegations
and other decisions of the Board of Trustees,
(vii) records of all receipts and disbursements with sufficient detail to identify
the source of the money received, whether it is a City contribution,
employee payroll deducted amounts or amounts paid by inactive
employees, and the amount and date of each receipt and disbursement,
and as to disbursements,the payee,the invoice (date, number,etc)and the
Plan beneficiary for or to whom the services paid for were provided,
(viii) all investments authorized by the Board of Trustees, thereby purchased or
sold,
(ix) all delegations of authority, and
(x) all correspondence and notices, including but not that limited to that
between the Trustee and any Person contracting with them for the Trust
Fund, or the Plan as well as that between the Trustee and the Director.
All records shall be kept until the Department has filed an examination report of
the Plan covering the period of said records but no longer than seven years from
the date of the record, and no such record shall be destroyed during any
liquidation or runoff period. The Board of Trustees shall have ownership of and
produce such records to the Director as required by law.
7. AUTHORITY OF THE BOARD OF TRUSTEES
7.1.GENERAL AUTHORITY
The Board of Trustees shall have the authority to execute and hold all contracts
and agreements entered into with the Trust Fund for the purpose of providing the
self-funded healthcare benefits to Beneficiaries under the Plan, and to take such
actions as may be necessary in the management and administration of the Plan
and the Trust Fund and to carry out the purposes of this Trust Agreement, subject
to the provisions of Section 8.3.10 below.
7.2.AMENDMENTS TO TRUST AGREEMENT
The City may not amend or revoke this Trust Agreement. Subject to the prior
review and approval by the Department, the Board of Trustees may amend the
terms of this Trust Agreement for the purpose of complying with applicable law,
City of Rexburg Health Plan Trust PAGE 14
but no such amendment shall become effective until at least 30 days have passed
after a copy of the amendment was submitted to the Director.
7.3.DESIGN OF PLAN
7.3.1. The Board of Trustees and the City (as Plan sponsor) shall identify and
agree upon the benefits, the Beneficiaries, and the source and amount of
funding necessary to provide said benefits under the Plan.
7.3.2. The Board of Trustees shall establish administrative procedures for
managing and providing the benefits outlined in the Plan, including but not
limited to the review of adverse benefit determinations and other claims
arising in the operation and administration of the Plan, including any
external review of adverse benefit determinations as required by title 41,
chapter 59, Idaho Code.
7.4.ADDITIONAL POWERS
In addition to the powers described in this Article 7, the Board of Trustees shall
have the authority to take the following actions:
7.4.1. To collect contributions from the City, which may include employee
contributions deducted from the pay of eligible employees or due from
employees while not actively working, and pay forthe benefits and services
provided for through the Plan.
7.4.2. To refund contributions that have been paid to the Trust Fund in error, as
permitted by law.
7.4.3. To issue assessments to and collect from the City in such amounts as
necessary to establish and maintain the reserves required by Idaho Code
§41-4010.
7.4.4. To fund the surplus amounts required by Idaho Code §41-4010 by
borrowing monies guaranteed by a surplus note as defined in Idaho Code
§41-2841 and in the name of the Trust Fund, PROVIDED, the form of the
surplus note is first approved by the Director.
City of Rexburg Health Plan Trust PAGE 15
7.4.5. To pay,at the expense of the Trust Fund, all taxes or assessments and other
Trust Fund expenses that may be lawfully levied or assessed against the
Trust Fund.
7.4.6. To prosecute legal actions,or claims involving potential legal actions,at the
expense of the Trust Fund, for and on behalf of and in the name of the
Trust Fund or an assignee.
7.4.7. To defend, settle, or compromise legal actions, or claims involving legal
actions, and investigatory proceedings initiated against the Trust Fund, or
against one or more Trustees, that pertain to the administration of the
Trust Fund. Notwithstanding any other provisions of this Trust Agreement,
the Trustees are not obligated to defend, settle, or compromise legal
actions, or claims involving legal actions, and investigatory proceedings
brought against a Trustee for negligent and/or wrongful acts or omissions
or against the City(as Pian sponsor or employer).
7.4.8. To correct errors in Trust Fund records when they are discovered, and to
take appropriate action with respect to such corrections.
7.4.9. To interpret and apply the provisions of this Trust Agreement with respect
to the operation and administration of the Trust Fund.
7.4.10. To delegate all or part of their responsibilities, except for the power to
alter, amend, revoke or terminate the Trust Fund, and except for the
Trustees' obligations arising under Idaho Code §41-4009, regarding the
investment of Trust funds, for the operation and administration of the
Trust Fund to providers of services whom the Trustees may designate;
PROVIDED, however, the Trustees cannot delegate or transfer any
fiduciary obligations.
7.4.11. To contract with one or more investment advisers or representatives who
is licensed to provide the type of services and advice for which
contracted. Any such investment advisor or representative shall
acknowledge, in writing, that it is a fiduciary with respect to the Trust
Fund's assets. Any investment of funds of the Trust Fund shall be made
in the name of the Trust Fund and shall be subject to the restrictions
described in 41-4009, Idaho Code, and no investment shall be made
City of Rexburg Health Plan Trust PAGE 16
unless authorized in writing by the Board of Trustees and so shown in the
records of the Trust Fund.
S. DUTIES OF BOARD OF TRUSTEES
8.1.DUTIES OF BOARD OF TRUSTEES
The Board of Trustees shall have the duties of managing and administering the
Trust Fund and the Plan, and holding and investing assets held by the Trust Fund
for the purpose of providing funding for the self-funded healthcare benefits to be
paid under the Plan on behalf of the Beneficiaries, and entering into any other
contracts or arrangements necessary to fund and provide the self-funded
healthcare benefits contemplated through the Plan, subject to the contracting
requirements of Section 8.3.10 below. The Board of Trustees also shall have the
specific duties described in this Trust Agreement, and any other duties that are
imposed upon them by law.
8.2.FIDUCIARY DUTY
The Board of Trustees, collectively and individually, shall discharge their duties
and manage and administer the Trust Fund assets as fiduciaries
(1) solely in the interest of the Beneficiaries, and
(2) exclusively for the purposes of providing benefits under the Plan to the
Beneficiaries;
(3) exclusively for the purposes of defraying reasonable expenses of
administering the Trust Fund and the Plan.
8.3.SPECIFIC DUTIES OF THE BOARD OF TRUSTEES
The Board of Trustees shall have the following specific duties under this Trust
Agreement of which the actual performance of these duties may be delegated to
professional advisers or Administrator(s):
8.3.1. Establish procedures whereby all contributions by the City(as Plan sponsor
or employer) are made directly to the Trust Fund account(s) and all
contributions by employees, if any, are made by regular periodic payroll
deductions by the City's payroll, are remitted directly to the Trust Fund
account(s), as well as how an employee during his absence from such
employment mattes contributions for such period.
City of Rexburg Health Plan Trust PAGE 17
8.3.2. Establish procedures whereby all contributions made to the Trust Fund are
paid in advance and deposited and disbursed from the Trust Fund.
8.3.3. Execute under oath and submit the Plan for approval to the Department
and obtain registration of the same from the Director.
8.3.4. File the following documents with the Director for review and approval not
less than 30 days before the effective date thereof(in addition to and after
registration of the Plan, the required quarterly and annual fillings required
by chapter 40, title 41, Idaho Code):
8.3.4.1. An actuarial study as described in Idaho Code §41-4005(2)(e),
calculating new rates for the next Plan year and whenever any
midterm rate changes are to be made;
8.3.4.2. Any changes in the policy form, benefits or summary plan
description (i.e.,the materials identified in Section 8.3.11 below);
8.3.4.3. Any amendments or changes made to the stop-loss
agreement(s), including change of carriers;
8.3.4.4. Any amendments or changes made to administrative, service or
management agreements;
8.3.4.5. Any amendments or changes to the fidelity bond or other
coverage the Director deemed equivalent pursuant to Idaho Code
§41-4014(3);
8.3.4.6. Any amendments or changes to this Trust Agreement; and
8.3.4.7. Any change in the Board of Trustees, officers or management of
the Trust Fund, which notice shall include biographical affidavits
of any new Trustee, officer or management personnel.
8.3.5. Cause initial and subsequent contribution rates to be calculated by a
Qualified Actuary and include a reasonable provision for adverse deviation
and a reasonable contribution to surplus.
8.3.6. Establish procedures to be followed in establishing actuarially certified
rates for the Plan that are reasonably adequate to provide for full payment
City of Rexburg Health Plan Trust PAGE 18
of all benefits promised to Beneficiaries by the Plan and sufficient to cover
all other costs of operation.
8.3.7. Establish and maintain in the Trust Fund the reserves described in Article 9
below.
8.3.8. Notify the Director immediately upon learning or receiving information
that indicates that the surplus of the Trust Fund has fallen below the
minimum surplus requirements.
8.3.9. Upon receipt of any notice of cancelation of the bond, forward it to the
Director.
8.3.10. Sign any and all contracts and other documents necessary or appropriate
to carry out the duties contained herein and to effectuate the purposes
of the Trust Fund and Plan in the name of the Trust Fund, which shall be
in writing, signed by the Board of Trustees (or one Trustee to which the
Board of Trustees have authorized to so sign, but only if the Board of
Trustees has approved the contract). As to any contract for goods or
services provided to the plan by the City or an Administrator (or
employee or agent of either) or for services including but not limited
thereto, accounting services, legal services, custodial agreement, and
agreements for lease, rent, or insurance coverage, the Trustee shall only
enter into the contract if it is in writing, setting forth in detail the rights
and duties of each party to the contract. The Trustee will only cause the
Plan, Trust or Trust Fund to enter into any contract or transaction with
certain other parties (i.e., an insurer, health care service corporation,
health maintenance organization or other provider of health care
services,or of drugs or other health care needs and supplies) if that other
party attests that no one that is a consultant to the Plan or Trust Fund
will be paid directly or indirectly any commission or other compensation
by reason of the contact or transaction, or have any direct or indirect
pecuniary interest in the contract or transaction.
8.3.11. Furnish to each Beneficiary:
8.3.11.1. a copy of the Plan,
City of Rexburg Health Plan Trust PAGE 19
8.3.11.2. a written statement or schedule adequately and clearly stating
all benefits currently provided under the Plan,
8.3.11.3. a written statement or schedule adequately and clearly stating
all applicable restrictions, limitations, and exclusions, and
8.3.11.4. a written statement adequately and clearly stating the
procedure for filing a claim for benefits.
8.3.12. Maintain a record of contributions made to the Trust Fund.
8.3.13. Maintain a list of insurers (if any)and their mailing addresses.
8.3.14. Provide reports to the insurers (if any) with any information they may
require in connection with policies issued to the Trust Fund.
8.3.15. Request from the City (as Plan sponsor) and the Beneficiaries any
information necessary to maintain the Plan and to continue, operate and
administer the Trust Fund.
8.3.16. Maintain the funding of the Trust Fund on an actuarially sound basis by
assuring that the assets and income of the Trust Fund are adequate under
reasonable estimates to fund all of the self-funded healthcare benefits
provided under the Plan and to cover all other costs of operation.
8.3.17. Maintain a list of any service providers and their addresses and a copy of
any agreements with said service providers.
8.3.18. Maintain all reports and documents as required by the Department and
provide such material to the Department as required.
8.3.19. Promptly make the books, records and account of the Plan and Trust
Fund available to the Department and its examiners in Idaho and
otherwise facilitate an examination.
8.3.20. Cause full and accurate records and accounts to be entered and
maintained during all times of the existence of the Trust Fund covering
all financial transactions and affairs of the Trust Fund and maintain the
Trust Fund's ownership and access to the records and accounts.
City of Rexburg Health Plan Trust PAGE 20
8.3.21. Hire only an independent certified public accountant to prepare,
complete and certify within 90 days of the end of each fiscal year, a
financial statement of the Trust Fund summarizing the financial
transactions of the Trust Fund for such fiscal year and the financial
condition of the Trust Fund at the end of such year, in a format that is
acceptable to the Director and in accordance with GAAP (generally
accepted accounting principles).
8.3.22. Hire only a Qualified Actuary to prepare and render a certified actuarial
opinion(in accordance with actuarial standard of practice number 28 and
including a statement of the bases used by the actuary in making or
arriving at the reserve determination) addressing the soundness of the
- Trust Fund, its surpluses and its reserves as of the end of each fiscal year,
requiring by contract that the Qualified Actuary retain the actuarial work
papers for at least 7 years from the date of the actuarial opinion.
8.3.23. Promptly deliver a copy of the annual financial statement (with the
certified actuarial opinion)to the City.
8.3.24. Keep a copy of each annual financial statement (with the certified
actuarial opinion) on file in the business office from which the Plan and
Trust Fund is operated,so that it is available for review by any Beneficiary
at all reasonable times for at least 3 years from the date of the financial
statement.
8.3.25. Hire only auditors independent of the City, the Plan, the Trust, the Trust
Fund,the Trustee, and any other entity to audit the Plan or Trust.
8.3.26. File with the Department within 90 days after the end of the fiscal year
an original of the annual financial statement (with the certified actuarial
opinion), along with the annual fee and a tax computed at the rate
of 4C per month per beneficiary covered by the Plan during the fiscal year
with respect to all Beneficiaries working or residing in Idaho.
8.3.27. File quarterly supplemental unaudited financial reports within 60 days of
the end of the calendar quarter being reported and other periodic
supplemental unaudited financial reports at times and in a format
prescribed by the Director.
City of Rexburg Health Plan Trust PAGE 21
9. RESERVES AND SURPLUS
9.1.RESERVES
9.1.1. Claims Reserve. The Board of Trustees shall establish and maintain in the
Trust Fund reserves in the amount as certified by a Qualified Actuary as
being necessary for payment for claims liability. The reserves shall be
reasonably adjusted on a quarterly basis in an amount as determined by a
Qualified Actuary or some other qualified person who has been authorized
by the Director.
9.1.2. Reserve for Unearned Contributions. If periodic contributions to the Trust
Fund are paid in advance or are paid less frequently than monthly, the
Board of Trustees shall ensure a reserve is created through the Plan for
unearned contributions, computed pro rata on the basis of the unexpired
portion of the period for which the contribution was paid.
9.1.3. Contribution Deficiency Reserve. In the event future claims payments plus
future costs of operation are greater than future contributions plus current
reserves, the Board of Trustees shall ensure a reserve is created through
the Plan in an amount equal to future claims payments plus future costs of
operation , less future contribution, less current reserves.
9.1.4. The Claims Reserve, Reserve for Unearned Contributions and Contribution
Deficiency Reserve shall constitute liabilities in any determination of the
financial condition of the Trust Fund.
9.2.SURPLUS
9.2.1. Except to the extent waived by the Director (see Subsection 9.2.4,
within 12 months after the date of initial operation (i.e., by May 1, 2022),
the Board of Trustees shall establish and thereafter maintain in the Trust
Fund at all times a surplus equal to at least the equivalence of 3 months of
contributions for the current Plan year; or 110%of the difference between
the total dollar aggregate stop-loss attachment point plus costs of
operation and the total dollar expected contributions for the current Pian
year.
City of Rexburg Health Plan Trust PAGE 22
9.2.2. A surplus note,approved by the Director and as defined in Idaho Code§41-
2841 may be used to fund the surplus described in Subsection 9.2.1 above,
which surplus note shall not be accounted as a liability of the Trust Fund.
9.2.3. The Board of Trustees may elect to fund up to %3 of the required surplus
required by Subsection 9.2.1 above through a clean, irrevocable letter of
credit approved by the Director, issued in favor of the Trust Fund by a
federally or state chartered bank having a branch office in Idaho, provided
that such letter of credit is not guaranteed by a pledge of any assets of the
Trust Fund nor can the funding be in the form of prepaid contributions or
other loan or associated obligation with offsetting liability.
9.2.4. The surplus requirement of this part 9.2 shall not apply to a year for which
the City may have applied and the Director has waived such pursuant to
Idaho Code §41-4010(c).
10.INVESTMENTS OF THE TRUST FUND
10.1. TITLE TO INVESTMENTS
The Board of Trustees is authorized to make certain investments as described
herein and in accordance with chapter 40,title 41, Idaho Code,of available Trust
Fund monies "available for that purpose"; PROVIDED, that all such investments
shall be made and held in the name of the Trust Fund, and the interest and yield
thereon shall inure solely to the benefit of the Trust Fund.
10.2. WRITTEN AUTHORIZATION
No investment shall be made by or on behalf of the Trust Fund unless authorized
in writing by the Board of Trustees and included in the records of the Trust Fund.
10.3. ALLOWED INVESTMENTS
The Board of Trustees may invest the available Trust Fund monies in only the
following kinds of investments:
10.3.1. General obligations of the United States government, or of any state,
district, commonwealth, or territory of the United States, or of any
municipality, county, or other political subdivision or agency thereof.
City of Rexburg Health Plan Trust PAGE 23
10.3.2. Obligations, including the payment of principal and interest thereon of
which are guaranteed by any such government or agency.
10.3.3. Corporate bonds and similar obligations meeting the requirements
specified for investment of funds of insurers under Idaho Code§41-
711.
10.3.4. Collateral loans, including payment of principal and interest of which
are adequately secured by securities in which the Trust Fund could
lawfully invest directly.
10.3.5. Deposits, savings accounts, and share accounts in chartered banks and
savings and loan associations located in the United States. An
investment in any one such institution may not be in excess of the
amount covered by applicable deposit, savings, and share account
insurance, unless otherwise authorized by the Director.
10.3.6. Investments as permitted by Idaho Code §§41-714 and 41-715,
provided that the combined amount of such investments shall not
exceed 10% of the total assets of the Trust Fund.
10.4. PROHIBITED INVESTMENTS AND CONTRIBUTIONS
The Board of Trustees shall in no event use Trust Fund monies:
10.4.1. To invest in any loan to or security of the City including any employer
participating in the Plan or to or of any trustee, officer, director,
subsidiary or affiliate of the City;
10.4.2. To invest in the security of any person in which the Trustee,
Administrator, or any consultant of or to the Plan or the Trust Fund has
a direct or indirect material pecuniary interest;
10.4.3. To invest in real property or loans thereon; or
10.4.4. To make or invest in any personal loan.
10.4.5. To knowingly make, even indirectly, any political contribution.
City of Rexburg Health Plan Trust PAGE 24
10.5. PERSONAL LIABILITY FOR PROHIBITED INVESTMENT
Any person who authorizes any investment of Trust Fund monies and/or assets
in violation of this Trust and/or in violation of chapter 40, title 41, Idaho Code,
shall, in addition to other penalties that may be applicable, be liable for all loss
suffered by the Trust Fund on account of the investment.
10.6. NON-ASSET
No investment made in violation of this Article 10 shall constitute an "asset" in
any determination of the financial condition of the Trust Fund.
11.TERMINATION
11.1. EVENTS OF TERMINATION OF REGISTRATION
11.1.1. The Director may terminate the registration of the Plan upon motion
and written request of the Board of Trustees to the Director.
11.1.2. Upon the failure of the Board of Trustees to timely file the annual
statement or actuarial opinion and timely pay the required taxes, the
Director may terminate the registration of the Plan.
11.1.3. If, after inquiry or an examination of the Trust Fund, the Director finds
that the Trust Fund is insolvent, the Director may terminate the
registration of the Plan.
11.1.4. The Director may terminate the registration of the Plan for violation(s)
of chapter 40,title 41, Idaho Code.
11.1.5. If, after inquiry or an examination of the Trust Fund and the Plan, or
upon notice from the Trustee(s), the Director may terminate the
registration of the Plan upon a finding:
11.1.5.1. That the plan longer meets the qualifications of required by sections
41-4004, Plan requirements, and 41-4005, Application for registration—
City of Rexburg Health Plan Trust PAGE 25
fee, and that such deficiency will not or cannot be remedied within a
reasonable time;
11.1.5.2. That there is a pattern of benefits promised by the Plan that are not
being fairly and promptly paid;
11.1.5.3. That the cost of administering the plan is excessive in relation to the
character and volume of service being rendered in the administration;
11.1.5.4. That the Trust Fund has been subject to fraudulent, incompetent or
dishonest practices on the part of a Trustee, the Board of Trustees, an
Administrator, consultant, any participating employer, any
postsecondary educational institution, Beneficiaries or others; or
11.1.5.5. That the Trust Fund does not meet the minimum surplus
requirements under chapter 40, title 41, Idaho Code.
11.2. LIQUIDATION AND PLAN OF LIQUIDATION
Upon the termination of the registration of the Plan and subject to Section 2.4
above, the Trust Fund shall be liquidated as soon as practicable.
11.2.1. If the Plan is solvent, liquidation shall be conducted by the Trustee
under a plan of liquidation prepared in writing by the Trustee and filed
with and approved by the Director as fair and equitable to all persons
having a pecuniary interest in the Trust Fund. Any balance or assets of
the Trust Fund remaining after payment or adequate provision for all
claims and charges against the Trust Fund shall be disposed of in such
manner as provided for in the plan of liquidation. Unless the plan of
liquidation provides that liability for all unpaid claims and obligations of
the Trust Fund has been unconditionally assumed by other financially
responsible person(s) and the third party contract has been submitted
to the Department for its review, the existence of surplus funds for such
disposition shall not be determined prior to the expiration of two years
after termination of the registration.
11.2.2. If the Trust Fund is insolvent,the Director shall carry out the liquidation
in accordance with title 41, chapter 33, Idaho Code, or its subsequent
equivalent. For this purpose, the Plan shall be deemed to be an
insolvent domestic insurer and subject to all statutes and rules
applicable to the same.
City of Rexburg Health Plan Trust PAGE 26
ACKNOWLEDGMENT AND AFFIRMATION BY EACH INITIAL TRUSTEE
The undersigned Trustees do each hereby acknowledge and affirm that he or she
individually
1. has read the entirety of this Trust Agreement
2. accepts the appointment and role, and will function, as a Trustee and member of
the Board of Trustees independently of the City and of any duties as an employee
or officer of and to the City, and solely in the best interests of the Plan Beneficiaries,
3. agrees to abide by the terms of this Trust Agreement,
4. has fiduciary responsibilities as explained in this Trust Agreement and under law,
5. has read and understands the duties and obligations imposed on Trustees under
chapter 40,title 41, Idaho Code,
6. may, as a Fiduciary, be held personally liable for his or her acts and omissions, and
7. may, as a Fiduciary, be held personally liable for the acts and omissions of the
Board of Trustees for which he or she does not timely and properly express and
register his or her exception to action taken by the majority of the Board, and
assure that such exception is noted in the next minutes of the Board.
�{— "z 1
NJUh�. v Dated: I 20Z 1 2&177-- 2 d
Jus n Beard, Trustee
Dated: �� _ zoz 1
Matthew Nielson, Trustee
Dated: 7 Z
Terri Hill, Trustee
City of Rexburg Health Plan Trust PAGE 28
12.GENERAL PROVISIONS
12.1. SINGULAR/PLURAL AND HEADINGS
Whenever any words are used in this Trust Agreement in the singular form,they
shall be construed as though they were also used in the plural form in all cases
where they would so apply. Titles of articles and headings of sections are
inserted for convenience of reference and they are not part of, nor shall they be
used to construe, any term or provision of this Trust Agreement.
12.2. NOTICES
Any notices permitted or required by this Trust Agreement shall be delivered in
person to the intended recipient or shall be sent to such person by first-class
mail or overnight courier to his or her last known address.
12.3. SEVERABILITY
If any term or provision of this Trust Agreement or of the Plan is held to be
unlawful or invalid far any reason,such unlawfulness or invalidity shall not affect
the remaining portions of this Trust Agreement.
12.4. CONSTRUCTION
This Trust Agreement shall be construed and interpreted in accordance with the
laws of the State of Idaho.
This Trust is hereby declared effective May 1, 2021 (the "Effective Date").
THE CITY:
i Dated: KZ r_ , 281 -zazf
er L. rrill, Ma or
Dated:
AiVuk "(VW , City Council
(in attestation that the City Council properly
approved of this Trust)
City of Rexburg Health Plan Trust PAGE 27