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© Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 14 You should realize that any benefits your receive through the Cafeteria Plan (e.g., premium payments, medical expense reimbursements) cannot be claimed as a medical expense deduction on your income tax return. However, unless your medical expenses exceed seven and one-half percent (7.5%) of your adjusted gross income, you are not permitted to use the deduction anyway. Any reimbursements made with pre-tax dollars for dependent care expenses affect your ability to claim the dependent care credit. This is explained further in the description of the Dependent Care Flexible Spending Account later in this summary. If you receive a cash payment of any of the Employer contribution, the cash payment will be taxable to you. See Article XIV for additional information. Note: If the Plan Administrator determines before or during any Plan Year the Cafeteria Plan may fail to satisfy any nondiscrimination requirement imposed by the Internal Revenue Code, the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to further compliance with such requirements or limitation. Such action may include, without limitation, a re-characterization within the Plan Year of benefits provided under the Cafeteria Plan as taxable income, with or without consent of the affected Participants. 1.14 What is the impact on my Social Security benefits? Participating in the Cafeteria Plan will reduce the amount of your taxable compensation. Accordingly, your Social Security benefits, which are based upon your taxable compensation, may be affected at your retirement. However, the tax savings you obtain through participation in the Cafeteria Plan often will offset any reduction in your future Social Security benefits. 1.15 What contributions are made to the Cafeteria Plan? (a) Employer Contribution. The Employer may make a fixed dollar contribution per Plan Year, or portion of a Plan Year (e.g., month, pay period), per Participant. The amount of the Employer contribution may change from year to year as announced by the Employer prior to the Plan Year start. The Employer may designate different amounts for different groups of Eligible Employees. The Employer contribution must be used as follows: Flex Credit amounts for the specific Plan Year are indicated in the City of Orono Intranet, linked in the document named “Flexible Spending Plan Credits.” Employees can apply any remaining Flex Credits after enrolling in Group Medical or waiving Group Medical, towards group Dental, FSA, LPFSA, DCAP and or taken as cash. The portion of the Employer contribution not used to pay for benefits shall be paid in taxable compensation. No Employer contribution shall be credited to any Employee during a period of leave of absence, whether authorized or unauthorized, unless it is a paid leave of absence or is required by the Family Medical Leave Act (“FMLA”) or other applicable law. Employees who are not eligible for participation on the first day of the Plan Year shall have their annual Employer contribution pro-rated by multiplying the annual available Employer contribution by a fraction, the numerator of which is the number of months the Employee is eligible for participation for the Plan Year, the denominator which is twelve. (b) Salary Reduction Contributions. To the extent the cost of an Optional Benefit exceeds the Employer contribution (if any), you may elect in accordance with the election