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Human Capital Management Service Agreement
Magellan Human Capital Management Inc. (Magellan) owns and operates a corporation designed to assist employers with their human capital management needs, including, but not limited to, the following: Payroll, Human Resources, COBRA, Benefits Management as Agent of Record, Benefits Enrollment & Eligibility Administration ∙ Time & Attendance, Affordable Care Act Compliance, Hire ATS, Learn LMS, EDI Carrier Feeds, & Mojo Employee Engagement.
The above services are offered through Magellan’s iSolved® Human Capital Management (HCM) system.
In consideration of the mutual promises set forth herein, it is agreed by and between Magellan and Employer (the “parties”) as follows:
Section 1: General Terms and Conditions of the Agreement
A. Commencement of Agreement and Duration
This Magellan iSolved® Human Capital Management Service Agreement (“Agreement”) shall commence on the effective date assigned by Magellan (the “Effective Date”); to be communicated to Employer in writing, and it shall continue until terminated in accordance with this Agreement. Employer acknowledges that Magellan’s acceptance of this Agreement is conditioned on its approval of Employer’s credit.
B. Scope of Agreement; Relationship of Parties: This Agreement sets forth certain rights and obligations of Employer and Magellan, and the terms of this Agreement shall apply to any assignee or successor of Employer and/or Magellan. The parties intend that this Agreement will establish an independent contractor relationship. Magellan is not an agent or employee of Employer (for purposes of establishing Principal -Agent relationships), and the employees of Employer are not entitled to any of the benefits of employment granted by Magellan to its own employees. Magellan is not the employer of any of Employer’s current or future employees. Magellan is not the Plan Administrator or a Plan Fiduciary of the Benefit Plans, as those terms are defined in ERISA. It is understood that Magellan is free to perform similar services for other employers while this Agreement is effective. It is Employer’s sole responsibility and duty to ensure compliance with all applicable laws and regulations, and Magellan’s provision of services under this Agreement does not relieve Employer of this obligation. Magellan is responsible for providing services that comply with applicable law and regulations and that assist Employers with its obligations to the extent set forth herein. Subject to Magellan’s responsibilities under subsection L, Employer understands that it is Employer’s responsibility to pay any fee or penalty assessed by the Internal Revenue Service or other state or federal regulatory agency. Employer acknowledges that Magellan is not an accounting or law firm and no services provided by Magellan in accordance with this Agreement will be construed by Employer as tax, accounting or legal advice as a result of providing such services.
All duties performed by Magellan will be non-discretionary in nature and will be performed in accordance with Magellan’s standard operating procedures.
C. Services: Magellan agrees to provide to Employer the services set forth in Section 2, which Employer has selected as indicated by Employer’s signature on page 1 of this agreement. The services shall commence on the Effective Date, unless otherwise indicated for a service selected on a later date, as agreed by the parties.
D. Fees 1. Employer agrees to pay Magellan for its services in the amounts specified on page 1 of this agreement. Employer authorizes Magellan to collect its fees from Employer’s bank account by means of an electronic funds transfer (EFT) on a monthly basis during the month that the system is available (the month of the live date). Any setup fee will be assessed to the Company before the first month of service and will be paid via EFT. PEPM fees are based on the number of active employees on record at the start of a given month. Employer must pay all of the monthly Fees on the first pay date of each month. If any EFT is rejected for insufficient funds or any other reason at any time, Employer agrees to pay based on the incidental fee schedule found at http://www.blacktreepayroll.com/incidentalfees.pdf. Failure to pay fees by the due date may result in the imposition of interest and penalties and/or termination of the Agreement. Magellan may change the fees for any reason at the beginning of each 12-month period beginning with the Effective Date provided that notice of such changes is provided at least 30 days before the beginning of such 12-month period. In addition, Magellan may revise the fees during any 12-month period if changes to Employer’s requirements or applicable law are made (regardless of the reason) that materially revise the nature or scope of the services contemplated by this Agreement. Such changes will be effective no earlier than 30 days after Magellan provides written notice to Employer to the above-named individuals with Employer.
2. Magellan will initiate a funds transfer for fees or charges, payroll taxes, direct deposit, or any other amounts due under this Agreement. At the agreed upon payroll processing time, Employer authorizes Magellan to originate Automated Clearing House (ACH) debit payment orders against Employer’s bank account for the amount of liabilities and fees of all services agreed to by Employer, including PEPM , payroll tax, direct deposit, implementation fees, and other service-related liabilities or processing fees due Magellan. Services performed under the Agreement and funding authorization begin upon the effective live date and will continue until revoked by the Employer with 15 days advance written notice or until this Agreement is terminated. Initiation of the funding authorization is subject to Magellan’s approval of Employer’s credit. Notwithstanding, Employer shall pay fees related to Flexible Benefit Administration as invoiced by Magellan or third party servicer.
3. Incidental fees can change with or without notice. The most current version of the incidental fee schedule is found online at http://www.magellanhcm.com/fees. Employer agrees to allow Magellan to impound all incidental fees from employer’s bank account on record on or off payroll run.
E. Information from Employer
Magellan will establish various methods for transferring information to and from Magellan. Employer must use one of the methods established by Magellan. Employer will furnish the information determined by Magellan to be necessary to satisfy its responsibilities under this Agreement. Such information will be provided to Magellan in the time and in the manner agreed to by Employer and Magellan. Employer understands that Magellan cannot accurately perform its duties under this Agreement without accurate and timely information and that Magellan shall have no liability to Employer or any of Employer’s employees as a consequence of inaccurate and/or untimely information provided to Magellan by Employer, its designee, or another existing or former service provider. Magellan will have no obligation to credit Employer for any fees incurred or paid to Magellan as a consequence of Magellan receiving inaccurate or untimely information. Magellan will assume that all such information provided to Magellan by Employer, its designee or another existing or former service provider is complete and accurate and is under no duty to question the completeness or accuracy of such information. Employer will review any information and/or reports provided by Magellan in accordance with this Agreement as soon as possible after Employer has received such information and Employer will notify Magellan of any errors in such information and/or reports as soon as possible after its review.
F. Employer Obligations for Payroll Submission
Employer will submit to Magellan its payroll data in a form, at a time, and by a method specified by Magellan. Because the accuracy of the payroll is limited by the Employer’s data, Magellan is not responsible for Employer errors, wage and hour violations, employment discrimination, or other employment policies or reports that may violate the local, state, or federal law. It is the Employers responsibility to review the processed payroll information and to promptly notify Magellan of any errors before submitting a payroll for processing. Before any payroll is submitted for processing, Employer is responsible for ensuring all necessary funds are available to cover all fees, payroll amounts, taxes, penalties, and net check amounts. Assisted Payrolls will not be submitted until Employer has approved all information and accepts all information to be accurate and correct. If the data submitted by Employer for processing is incorrect, incomplete, or not in proper form, then Employer agrees to pay Magellan an additional fee for correction of the data. Magellan reserves the right to not process Employer’s payroll unless the Set-Up Packet has been completed in its entirety and submitted to Magellan at least 10 business days prior to first check date. Employer will submit to Magellan all Federal, State, and Local tax notifications of changes in regards to their payroll taxes on an on-going basis including but not limited to rate changes, tax number changes, and payment frequency changes. Employer is responsible for notifying Magellan in a timely manner of any employees who are subject to local taxes. Magellan will not verify if employees are subject to local taxes.
G. Master Banking Account
If Employer chooses to utilize Magellan’s master banking account for its payroll, Employer agrees to authorize Magellan to withdraw from its bank account(s) on or about the specified date of each payroll period such sums as are required to adequately fund the client's payroll, including taxes, escrows benefit plans, withholding, adjustments, or other associated fees and charges. Should any pre authorized transfer or other tender of funds to Black Tree be returned for any reason whatsoever, Employer agrees to pay Magellan incidental fees which are found in section D subsection 3 in this agreement. In this event, Magellan shall also have the right, in its sole discretion, to terminate this Agreement and to immediately terminate any limited agency agreement that might exist for purposes of tax filings or any other purpose. This includes the Tax Reporting Authorization Agreement and Limited Power of Attorney. In any event, Magellan shall not be liable for payments associated with uncollected funds, whatever the reason, including employee direct deposits, Federal and State tax payments, escrows benefit plans, withholdings, adjustments or any other payments due by Employer. Magellan will not “float” any amounts in Magellan’s master bank account(s) for Employer and will always respond in the negative if asked.
H. Payroll Funding By Wire or Reverse Wire (Wire Draw Down) Employer agrees that any single payroll run over $100,000.00 will be wired to Magellan two (2) business days prior to payroll check date by 3pm Mountain Standard/Daylight time. Employer acknowledges that Reverse Wires (also called “wire draw downs”) might be required by Magellan and Employer permits and acknowledges such actions by Magellan or Magellan’s third party administrators.
I. Confidentiality and Disclosure
1. All information, whether printed, written or oral, in answer to an inquiry or voluntarily furnished by Employer or its agents or employees to Magellan shall be held in confidence by Magellan and used and disclosed solely for the purposes of fulfillment of the terms of this Agreement. Employer and Magellan each acknowledge that as a result of entering into this Agreement, each party has, and will continue to reveal and disclose to the other, information that is proprietary and/or confidential to such party. Employer and Magellan agree that each party will (a) keep such proprietary and/or Confidential Information of the other party in strict confidence;
(b) not disclose Confidential Information of the other party to any third parties or to any of its employees not having a legitimate need to know such information; and (c) will not use Confidential Information of the other party for any purpose not directly related to and necessary for the performance of its obligations under this Agreement (unless required to do so by a court of competent jurisdiction or a regulatory body having authority to require such disclosure).
2. Information revealed or disclosed by a party for any purpose not directly related to and necessary for the performance of such party’s obligations under this Agreement shall not be considered Confidential Information for purposes hereof (a) if, when, and to the extent such information is or becomes generally available to the public without the fault or negligence of the party receiving or disclosing the information; or (b) if the unrestricted use of such information by the party receiving or disclosing the information has been expressly authorized in writing and in advance by an authorized representative of the other party. For purposes of this Agreement, Confidential Information is defined as any information in written, human-readable, machine-readable, or electronically recorded form (and identified as confidential and/or proprietary or words of similar import) and information disclosed orally in connection with this Agreement and identified as confidential and/or proprietary (or words of similar import); and programs, policies, practices, procedures, files, records and correspondence concerning the parties’ respective businesses or finances. The terms and conditions related to confidentiality in this Agreement shall survive the termination of this Agreement. Employer agrees that it shall not disclose to any other party, nor shall Employer use for its own benefit, the details or written evidence of services provided by Magellan hereunder without the express prior written consent of Magellan.
J. Force Majeure
Magellan will use prudent and reasonable care in processing Employer’s work. Magellan will not be responsible for its failure to provide services or correct any condition due to circumstances beyond its control, including but not limited to any errors or omissions by any third party, any acts of God, and condition beyond control of Magellan. Employer agrees to hold Magellan harmless for use of tools provided by Magellan including, but not limited to, HR software, Time and Attendance Software, ACA software, employee self-service, benefit administrator, or data breaches at third party sights. Magellan’s liability, for any errors or omissions (with the exception of tax payments) shall be limited to the total charge for its service provided under this Agreement. Magellan shall not under any circumstances be liable for special, indirect, incidental, liquidated, or consequential damages.
K. Tax Penalties
If Magellan makes an error or omission which results in an assessment by a taxing authority against the Employer that includes interest and/or penalties, then Magellan will pay the interest and/or penalties. Magellan will not pay any interest and/or penalties which result from a failure of the Employer to fulfill their responsibilities in this agreement. It will remain the Employer’s responsibility to pay any uncollected tax due. This is the sole liability of Magellan as it pertains to tax payments and is Employer’s sole remedy. Employer shall allow Magellan, in Magellan’s discretion, to participate in defending against any claim for penalties or interest and to subrogate any such defense or claim to Magellan. Magellan will not pay any tax penalty or interest related local taxes if client did not notify Magellan beforehand which of its employees were subject to local taxes.
All communications provided for herein between the parties shall be sent by confirmed facsimile; by guaranteed overnight mail, with tracing capability; by first class United States mail, with postage prepaid; or by e-mail addressed to the other party at their respective addresses as set forth herein. All communications between the parties are deemed provided when sent, delivered to carrier, or released from physical custody, except as otherwise set forth in this Agreement. Employer agrees that Magellan may communicate confidential, protected, privileged or otherwise sensitive information to Employer through a named contact designated by Employer (“Designated Person”), either below or as otherwise indicated by Employer in writing, and specifically agrees to indemnify Magellan and hold it harmless for any such damages or costs arising from communication to such Designated Person attempted via facsimile, mail, telephone, e-mail or any other media to the extent that Magellan did not breach its Standard of Care in sending the information.
M. Limited Reporting Agent
If Client authorizes Magellan to prepare and file taxes for Client, Magellan will serve as a limited reporting agent for Client. As a reporting agent, Magellan shall only prepare required deposits and filings with the Internal Revenue Service and/or any state reporting agency or agencies. Magellan is not otherwise an agent of Client, nor is Magellan in partnership or otherwise affiliated with Client's business. Client agrees to obtain (if necessary) and maintain appropriate tax identification numbers for its own tax reporting, and to obtain and maintain any necessary tax forms and information from its employees, and to forward this information to Magellan upon request. Client also agrees to conduct its business in full compliance with all state and federal laws and regulations.
N. Entire Agreement
This instrument (including documents specifically incorporated into and made a part of this Agreement by reference) embodies the whole agreement of the parties. There are no promises, terms, conditions or obligations other than those contained herein; and this Agreement shall supersede all previous communications, representations or agreements, either verbal or written, between the parties hereto. Failure by Employer or Magellan to insist upon strict performance of any provision of this Agreement will not modify such provision, render it unenforceable, or waive any subsequent breach. This Agreement and its subject matter shall be construed under the laws of the state of Utah. If any part, section, clause, or provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other part, section, clause, or provision thereof.
O. Amendments, Waivers and Modifications
This agreement may be amended only by written agreement of the duly authorized officials of Employer and Magellan except as otherwise set forth herein. In addition, any failure by Magellan to enforce a right provided for in this Agreement shall not be considered a waiver of that right unless expressly set forth as such in writing.
Neither party can assign this Agreement without prior written consent from the other party except in the event either party is purchased by another entity.
Q. Indemnification and Liability
1. Magellan will exercise the same reasonable care and due diligence in performing its obligations under this Agreement that a prudent administrator in the same industry would exercise (herein after, the “Standard of Care”). It shall not be a breach of the Standard of Care set forth herein if Magellan acts in accordance with Employer’s written instructions.
2. Except as otherwise provided in this Agreement, Magellan will indemnify and hold Employer, its officers and employees harmless against all direct monetary damages of a compensatory nature to the extent such damages are reasonably ascertainable and only to the extent that such damages are the direct and proximate result of Magellan’s breach of the Standard of Care set forth herein.
3. Employer agrees to indemnify and hold Magellan, its officers, and employees harmless from and against all direct monetary damages of a compensatory nature, in connection with any action, suit, administrative proceeding or settlement related to the Magellan’s administrative services to Employer to the extent such damages arising from or related to services provided under this Agreement are not the direct and proximate result of Magellan’s breach of the Standard of Care set forth herein.
4. Under no circumstance will either party be liable to the other in a breach of contract claim for any incidental, consequential and/or punitive damages.
5. MAGELLAN SHALL NOT BE LIABLE IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE FOR DAMAGES SUFFERED OR INCURRED BY EMPLOYER OR FOR LOSS OF PROPERTY, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF PROPERTY, COST OF CAPITAL, CLAIMS OF CLIENTS OF EMPLOYER, OR FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL, OR PUNITIVE DAMAGES (INCLUDING LOST DATA, LOST BUSINESS OR PROFITS, AND INTERRUPTION OF BUSINESS), WHETHER OR NOT SUCH DAMAGES WERE FORSEEABLE. WITH THE EXCEPTION OF A PARTY’S OBLIGATIONS UNDER THIS AGREEMENT AS DEFINED THEREIN), THE TOTAL CUMULATIVE LIABILITY OF MAGELLAN FOR ANY CLAIMS ARISING OUT OF THIS AGREEMENT (INCLUDING WITH RESPECT TO PRODUCTS AND SERVICES PROVIDED HEREUNDER) IS LIMITED TO THE TOTAL AMOUNT ACTUALLY PAID BY EMPLOYER TO MAGELLAN DURING THE TWELVE (12) MONTHS IMMEDIATELY PRECEDING THE DATE THE CLAIM AROSE. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN LIMITS EITHER PARTY’S INTELLECTUAL PROPERTY RIGHTS.
R. Termination of Agreement
1. Either party may terminate this Agreement for any reason effective no earlier than 30 days after written notice is provided to the other party. This Agreement will automatically terminate if the reason for termination is the failure by Employer to pay a fee by the due date (including any grace period), retroactively effective as of the last day of the period for which a fee was properly made in accordance with this Agreement, except as otherwise provided in writing by Magellan. Upon termination of the Agreement, Employer’s access to Magellan’s proprietary, web-based system shall be terminated immediately, unless the parties agree otherwise.
2. On the date the Agreement is terminated (the “Termination Date”), Magellan shall return to Employer all of Employer’s funds held by it, less all fees and expenses due Magellan. If Employer’s funds held by Magellan are not sufficient to pay all fees and expenses through the Termination Date, Employer shall pay on the Termination Date all remaining sums owed to Magellan. All services under this Agreement shall cease on the Termination Date. Notwithstanding the foregoing, if Employer is terminating this Agreement, termination shall not be effective until Magellan and Employer have each had reasonably sufficient time to act on the notice. All other services shall be deemed terminated on the Termination Date and all fees to be paid and funds to be returned with respect to the other services shall be paid or returned after a final audit.
3. If Employer breaches any of its obligations in this Agreement, or if Magellan’s transactions on Employer’s behalf are returned for any reason (including insufficient funds), then Magellan may terminate this Agreement and recover from Employer, in addition to all amounts owed by Employer to Magellan, all damages caused by Employer’s breach. Employer shall promptly reimburse Magellan for all collection costs, including reasonable attorney’s fees, which Magellan may incur as a result of Employer’s default.
Magellan Service Agreement - HIPAA Confidentiality Appendix
This HIPAA Confidentiality Appendix (“Appendix”) is by and between Employer in its individual capacity and on behalf of its group health plan(s) (“Plan(s)”) and Magellan, in its capacity as service provider to both the Plan and Employer. This Appendix is incorporated into and made a part of the Magellan Service Agreement (“Agreement”) between Employer and Magellan. The effective date of this Appendix is the effective date of the Agreement. This Appendix is effective until terminated as set forth below or the Agreement is terminated in accordance with the terms of the Agreement.
A. Scope and Purpose
Generally, this Appendix is intended to comply with the privacy, security, breach notification and enforcement rules at 45 CFR Parts 160 and 164 (“HIPAA Rules”), issued pursuant to the Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”). The parties agree and acknowledge that this Appendix is intended to serve the same purposes as a Business Associate Agreement as that term is defined in the HIPAA Rules. In agreeing to this Appendix, both Employer and Magellan acknowledge that the Plan and Employer are separate and distinct entities, and that Magellan may perform services both on behalf of the Plan and also on behalf of Employer in its capacity as Plan Sponsor. Magellan is considered a Business Associate under the HIPAA Rules only with respect to services it performs on behalf of the Plan, which is a Covered Entity under HIPAA, if any, and an Agent of Employer with respect to services it performs on behalf of Employer/Plan Sponsor, if any. This Appendix sets forth the responsibilities of Magellan in its capacity as a Business Associate and in its capacity as Agent of Employer, as required by HIPAA Rules. See 45 CFR §164.504(e) & (f) for more information. This Appendix also sets forth Employer’s responsibilities under this Appendix. Magellan is referred to as Agent of Employer in this Appendix for the sole purpose of identifying the distinction between its role as a service provider to the Plan and as a service provider to Employer related to the use and disclosure of health information. The use of the term “agent” is not intended to define the legal relationship between Employer and Magellan. A reference in this Appendix to a section in the HIPAA Rules means the section as in effect or as amended. Any ambiguity in this Appendix will be interpreted to permit compliance with the HIPAA Rules.
The following terms used in this Appendix have the same meaning as those terms in the HIPAA Rules: Breach, Data Aggregation, Designated Record Set, Disclosure, Health Care Operations, Individual, Minimum Necessary, Notice of Privacy Practices, Protected Health Information (“PHI”), Required by Law, Secretary, Security Incident, Subcontractor, Unsecured PHI and Use. Other capitalized terms used but not defined in this Agreement have the same meaning as those terms are defined in the HIPAA Rules. Other defined terms are as follows:
1. “Business Associate” has the same meaning as the term “business associate” at 45 CFR §160.103.
2. “Covered Entity” generally has the same meaning as the term “covered entity” at 45 CFR §160.103.
3. “Representative” includes Business Associate’s managing members (as applicable), trustees, general partners (as applicable), financial and legal advisors and all other individuals, including employees, who are performing functions related to the subject matter of this Agreement. C.
C: Responsibilities of Business Associate
1. Scope of Responsibilities. All services performed by Magellan in accordance with the Agreement other than those set forth in Section D below will be considered performed on behalf of the Plan and are subject to the provisions set forth in this Section C. 2. Confidentiality. At all times, both during and after the termination of its relationship with the Plan for any reason, Business Associate and its Representatives will not use, disclose, or give others any of the PHI in any manner whatsoever, except as provided in Sections C.3 and C.4 of this Appendix, and will hold and maintain the PHI in confidence. Business Associate will ensure that appropriate safeguards are in place to prevent the use or disclosure of the PHI otherwise than as permitted by this Agreement or HIPAA.
3. Permitted Uses and Disclosures. Except as otherwise limited in this Appendix, Business Associate may use or disclose PHI, provided that the use or disclosure of PHI would not violate the HIPAA Rules, as follows: (i) as permitted or required in this Appendix and in the Agreement; (ii) as otherwise permitted by the HIPAA Rules; (iii) as Required by Law; (iv) for the proper management and administration of Business Associate; (v) to fulfill any present or future legal responsibilities; (vi) for Data Aggregation services, only as permitted or required by this Agreement or the HIPAA Rules; or (vii) any use or disclosure of PHI that has been de-identified as defined by the Privacy Security/Security Rules.
(a.) Business Associate shall document any disclosures of PHI and the information related to those disclosures to respond to an accounting of disclosures of PHI if requested by Employer in accordance with the HIPAA Rules and to provide the documentation to the Plan as it may request from time to time.
(b.) If Business Associate maintains PHI in a Designated Record Set, Business Associate shall provide access to the PHI to the Individual or the Individual’s designee as necessary to satisfy the Plan’s obligations under the HIPAA Rules. Business Associate shall amend PHI that it maintains in a Designated Record Set as directed or agreed to by the Plan and to incorporate any amendments to PHI.
(c.) Business Associate may disclose PHI to its agents or Subcontractors with a bona fide need to know the PHI, but only if, prior to the disclosure, these agents or Subcontractors will agree to the same restrictions, conditions and requirements that apply to Business Associate with respect to PHI.
(d.) Business Associate may disclose PHI to other third party vendors provided that Business Associate has received instruction to do so from Employer. Business Associate may assume upon instruction from Employer that the third party vendor has properly entered into a Business Associate Agreement where required.
(e.) Business Associate shall make reasonable efforts to use or disclose no more than the minimum amount of PHI necessary to accomplish the intended purpose. The Minimum Necessary standard will not apply in these situations:
∙ Disclosures to or requests by a health care provider for treatment
∙ Uses or disclosures made to an Individual regarding the Individual’s PHI or as authorized by the Individual in writing ∙ Disclosures to the Secretary or as Required by Law
∙ Uses or disclosures required for compliance with HIPAA
4. Required Uses and Disclosures. Business Associate may disclose the PHI revealed to it by the Plan only to the extent the disclosure is required by Law or is in compliance with a court order. Business Associate shall make its internal practices, books and records, relating to the use and disclosure of PHI received from or created or received by Business Associate on behalf of the Plan, available to the Secretary for purposes of determining the Plan’s compliance with the HIPAA Rules.
5. Required Notice to Business Associate. In accordance with HIPAA, and to the extent that the limitation may affect Business Associate’s use or disclosure of PHI, Employer, acting on behalf of the Plan, shall notify Business Associate of any limitation(s) in its notice of privacy practices, including but not limited to any change in, or revocation of, permission by an Individual to use or disclose PHI. Employer, acting on behalf of the Plan, shall also notify Business Associate of any restriction to the use or disclosure of PHI that it has agreed to in accordance
with HIPAA, to the extent that the restriction may affect Business Associate’s use or disclosure of PHI. The Plan shall not request Business Associate to use or disclose PHI in any manner that would violate the HIPAA Rules if done by the Plan, excep t for Data Aggregation or management and administration and legal responsibilities of the Business Associate.
6. Required Notice to the Plan. Business Associate shall notify the Plan of any use or disclosure of PHI otherwise than as provided by this Agreement, including but not limited to any Security Incident of which it becomes aware, as soon as possible but no later than within ten days of becoming aware of the prohibited use of disclosure. Notice to one of the employees designated by Employer in accordance with Section C.7 is considered notice to the Plan.
7. Disclosure to Employees of Employer:
a. When Business Associate discloses PHI to Employer, the Plan acknowledges and agrees that Business Associate shall only disclose PHI to the employees who are identified in the Notice of Privacy Practices distributed by Employer as having access to PHI and employees whom the Employer has designated as HIPAA contacts. The Plan agrees and acknowledges that these disclosures are solely for purposes of carrying out Plan administration functions that Employer performs for its Plan.
b. Employer shall timely notify Business Associate in writing of any changes to the names or positions of employees listed in the Notice of Privacy Practices and changes to a HIPAA designated contact. Business Associate has no duty to inquire whether Employer’s list of designated HIPAA contacts is accurate or up to date.
c. Employer shall indemnify and hold harmless Business Associate (and its employees) for any and all liability Business Associate may incur as a result of any improper use or disclosure of PHI by Employer or its employees. Business Associate shall indemnify and hold harmless Employer (and its employees) for any and all liability Employer may incur as a result of any improper use or disclosure of PHI by Business Associate.
8. Electronic Data Interchange (EDI). Business Associate agrees to comply with the EDI standard transaction requirements in the HIPAA Rules to the extent applicable.
9. Security. Business Associate shall:
a. Implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity and availability of electronic PHI that it creates, receives, maintains or transmits on behalf of the Plan and prevent use or disclosure of electronic PHI other than as provided for by this Appendix.
b. Ensure that any agent or Subcontractor to whom it provides electronic PHI agrees to implement reasonable and appropriate safeguards to protect electronic PHI.
10. Additional Requirements from the HITECH Act. Business Associate shall:
a. Comply with the HIPAA Rules in the same manner that a Covered Entity is required to comply in the performance of one or more of the Plan’s HIPAA obligations.
b. Refrain from directly or indirectly receiving remuneration in exchange for any PHI of an Individual unless specifically allowed by HIPAA. c. Comply with the marketing limitations in HIPAA.
d. Comply with any required accounting of PHI disclosures as necessary to satisfy the Plan’s obligations under the HIPAA Rules. e. Notify the Plan of a Breach of Unsecured PHI, following the discovery of the Breach, without unreasonable delay and in no case later than 60 calendar days after discovery of the Breach. Breaches are treated as discovered on the first day on which the Breach is known to Business Associate or, by exercising reasonable diligence, would have been known to Business Associate. The Plan agrees that all other Breach notifications (including but not limited to disclosures to individuals, the Department of Health and Human Services and/or prominent media outlets) are the responsibility of the Covered Entity, as specified in the HITECH Act.
Responsibilities of Agent of Employer
1. Scope of Responsibility. Magellan performs the services set forth in Section 2 on behalf of Employer as agent of Employer to assist Employer with Employer’s obligations related to the Plan.
2. Scope of Services. The following services are performed by Magellan as Agent of Employer:
a. Services that facilitate and report the enrollment and disenrollment of employees and their eligible dependents in the Plan. b. Services that facilitate the payment of premiums under the Plan.
3. Scope of Responsibilities of Agent of Employer. Magellan, as Agent of Employer, agrees to the same conditions and restrictions set forth in Sections C.2 through C.10 to the extent the information received from Employer originated from the Plan (i.e., the information was once PHI). With regard to all other individual identifiable health information, Magellan agrees to use its best efforts to protect the confidentiality of the information and to only use the information as necessary to perform services referenced in Section D.2 or as otherwise required or permitted by applicable law.
4. Electronic Data Interchange. Employer acknowledges that Agent of Employer is under no obligation to comply with the EDI standard transaction requirements set forth in 45 CFR Parts 160 and 162 and the security rules set forth in 45 CFR §164.302 et seq. with respect to services set forth in Section D.2.
1. Termination for Cause. If Business Associate violates a material term of this Appendix, Employer may choose: one of the following: a. Provide an opportunity for Magellan to cure the breach or end the violation within a reasonable amount of time and terminate this Appendix and/or this Agreement if Magellan does not cure the breach or end the violation within the time specified by Employer. b. Immediately terminate this Appendix and/or this Agreement if cure is not possible.
2. Business Associate Obligations upon Termination.
a. Upon termination of this Appendix and/or this Agreement, Magellan shall return to the Plan or destroy all PHI received from the Plan, or created, maintained or received by Magellan on behalf of the Plan in any form except to the extent determined infeasible as set forth in Section 2b. This provision shall apply to PHI that is in the possession of Subcontractors or agents of Magellan. Magellan shall retain no copies of the PHI.
b. If Magellan determines, in its sole discretion, that returning or destroying the PHI is infeasible, Magellan shall notify the Plan of the conditions that make return or destruction infeasible. In that event, Magellan shall:
∙ Retain only that PHI which is necessary for Business Associate to continue its proper management and administration or to carry out its legal responsibilities.
∙ Return to the Plan or destroy the remaining PHI that Business Associate still maintains in any form.
∙ Continue to use appropriate safeguards and comply with the HIPAA Rules with respect to electronic PHI to prevent use or disclosure of the PHI, other than as provided for in this Section E, for as long as Business Associate retains the PHI.
∙ Refrain from using or disclosing the PHI retained by Business Associate other than for the purposes for which the PHI was retained and continue to comply with the permitted uses and disclosures that applied prior to termination of this Appendix. ∙ Return to the Plan or destroy the PHI retained by Business Associate when no longer needed for its proper management and administration or to carry out its legal responsibilities.
3. Survival. The obligations of Business Associate under this Section E shall survive the termination of this Appendix and/or this Agreement.
Section 2: Description of Services
Employer agrees to pay the IMPLEMENTATION FEE up front when the first payroll is processed. The following implementation services are included in the fee set forth in the first page of this agreement. Additional configuration of services may be requested at an additional cost:
Payroll: Wage calculation requiring less than 3 hours of analysis & testing per FEIN. Use of payroll preview for pre-live verification. Parallel processing not included. Direct deposit of paychecks.
Time: Includes employee import, accrual policies, absence codes, pay codes, rounding policies, meal policies, break policies, Policy groups, departments, clock configuration, mobile app, union, job tracking level and tasks, user security configuration, mobile app, union, job tracking level and tasks, user security configuration, existing payroll export using export generator, 1 remote supervisor training, 1 remote administration training, scheduling, one setup across all locations/FEINs.
Benefits: Medical, dental, vision, FSA, HSA, retirement, LTD, STD, life, and AD&D plan designs. Supplemental plans handled through deductions Employee Self-Service configuration - view only Employer provides employee benefits data in an importable manner (templates provided by Magellan) and Magellan imports/enrolls. HR module standard items: employee contacts and documents.
General Ledger: Divisions of labor that determine GL account posting (location, division, department, class, position, etc.) GL account segments (XXX-YYY-ZZZ with XXX division, YYY department, ZZZ account) 1 Legal Entity Standard reports in the report meni are GL Report and GL Detail Report (available in Excel or PDF format) and can be run for a single payroll or a date range. All GL import files would require a quote to determine additional charges.
Employee Data & Prior Balances: Magellan will extract, convert, balance (priors) and import current YTD employee data and balances from the Predecessor payroll systems. For all other systems, the Employer will provide data in an importable manner (templates provided by Magellan) and Magellan will import.
Predecessor Systems: ADP, Paychex, Quickbooks, Evolution, Sage, PayChoice, Dominion, Paycom, Paylocity Employee Data: Current demographics, recurring deductions, direct deposit set up, and accrual balances Scope: Only applies to companies/FEINs/pay groups that are in scope for implementation.
Wage & Tax Balancing: Pay groups, states, local tax jurisdictions, work locations per implementation Organization levels set up or restructuring of organization levels during implementation requiring less than 3 hours of analysis and set up Payroll check date history runs included per month per FEIN.
Training: Weekly open webinar for iSolved usability training - basic navigation, site overview and basic functions Pre -live training delivered remotely - customer specific training for each solution purchased once data is loaded.
Payroll Taxes: File, impound and pay federal 941, state, local withholding, federal and state unemployment taxes, and provide annual W-2/W-3 reporting.
Learn LMS: Learning management system that includes building your own courses content, and quizzes that employees can use for training purposes.
Hire ATS: Applicant tracking system that allows employers to post jobs, collect resumes/applications, vette/rate candidates, requisition hires, communicate with candidates, and hire. Integrates with iSolved onboarding for seamless hiring.
Mojo Engage: Employee engagement platform which allows employees to reward each other, align goals to company vision, perform 360 performance evaluations and other engagement features.
EDI Fees: Electronic Data Interface (EDI) carrier feeds allow online benefit elections to be communicated directly to an insurance carrier.
Magellan Service Agreement - Federal COBRA USERRA, State Continuation and/or HIPAA Service: Appendix
Employer has independently concluded that one or more of its benefit plans that provide medical care (“Health Plans”) are subject to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as subsequently amended, and/or the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), as subsequently amended and/or the portability provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) as subsequently amended, and/or certain benefit continuation rights under state law, as subsequently amended. Consequently, Employer is required to perform certain acts in order to comply with these laws. Employer has asked Magellan to assist it with satisfying Employer’s obligations under one or more of these laws as set forth in the Fees and Consideration Appendix. This Service Appendix describes the rights and responsibilities of Magellan and Employer with respect to various federal COBRA and/or USERRA and/or HIPAA special enrollment and/or state continuation services provided by Magellan with respect to the Health Plans. Magellan will also provide current and updated information to Employer relating to compliance with applicable laws, including any changes or modifications in compliance requirements, notification language and related steps necessary to act in accord with said changes or modifications. These notifications will be based on Magellan’s interpretation as a consultant/benefits administrator of applicable law and should not be construed as tax or legal advice. The rights and obligations outlined below apply only to the extent chosen by Employer on the Fees and Consideration Appendix. This Service Appendix is incorporated into and made a part of the Service Agreement (the “Agreement”). The effective date of this Service Appendix is the effective date of the Agreement, or if later, the date assigned by Magellan as defined in the Magellan Client Welcome Letter. The responsibilities of the parties set forth in this Service Appendix are in addition to any responsibilities set forth in the Agreement. If there is a conflict between this Service Appendix and the Agreement, the Agreement controls.
NOTE: Employer should choose one or more of the following service sets on the Fees and Consideration Appendix.
A. COBRA Administration Services
1. Responsibilities of Magellan.
(a.) Notices Required by COBRA: Magellan will distribute its standard notices in the following situations where notice is required by COBRA, including the following:
i. Initial/General Notice. Magellan will send its standard COBRA general notice (“General Notice”) to the last known address of each covered employee and, when required by applicable law, the covered spouse or the covered dependent. Magellan is not responsible for any changes or additions made to the notices by Employer. Magellan will only provide a General Notice to individuals who become covered after the effective date of this Service Appendix, except as otherwise agreed to by Magellan. Such General Notice will be distributed to covered employees and/or covered spouses (if enrolling at a different date) as soon as reasonably possible but no later than ten (10) business days after receiving the required information from Employer or its designee.
ii. Qualifying Event Election Notice. Magellan will send its standard COBRA election notice (“Election Notice”) to the last known address of each qualified beneficiary entitled to elect federal COBRA continuation coverage. Magellan is not responsible for any changes or additions made by Employer to the Election Notice. If all Qualified Beneficiaries reside at the same address, Magellan may send a single Election Notice and form in accordance with applicable law. An Election Notice will only be sent to Qualified Beneficiaries whose qualifying event occurs after the effective date of this Agreement, except as otherwise agreed to by Magellan. The Election Notice will be sent to Qualified Beneficiaries as soon as reasonably possible but no later than fourteen (14) calendar days after receiving the required information from Employer, its designee, or where applicable, from the qualified beneficiary. Magellan will also notify Qualified Beneficiaries of their rights to an extension of COBRA continuation coverage upon proper notification from the qualified beneficiary, Employer or Employer’s designee of an event that will extend coverage under applicable law. Magellan may rely on a certificate from the respective parties that an event permitting an extension of coverage has occurred. Such notice will be sent as soon as reasonably possible but no later than fourteen (14) calendar days after receipt of written notice of such event from a qualified beneficiary, Employer or Employer’s designee.
iii. Notice of Unavailability. If Magellan receives notice from a qualified beneficiary, Employer or Employer’s designee that a qualifying event has occurred or an event that will extend COBRA coverage has occurred, and such qualified beneficiary is not eligible for COBRA in accordance with records maintained by Magellan in the course of performing its duties under this Agreement, Magellan will send the required notice (“Unavailability Notice”) as soon as possible but no later than fourteen
(14) calendar days after receiving notice from such qualified beneficiary, Employer or Employer’s designee at the last known address. The Unavailability Notice will indicate the reasons for ineligibility.
iv. Notice of Early Termination. Magellan will send a notice to the qualified beneficiary that coverage has terminated before the end of the maximum period of coverage (“Early Termination Notice”). The Early Termination Notice will be sent to the last known address of the qualified beneficiary. The Early Termination Notice will be sent as soon as possible but no later than a reasonable amount of time after COBRA coverage has ended if Magellan performs Premium Collection. If Employer does not select the Premium Collection service, then Magellan will send the Early Termination Notice as soon as possible but no later than ten (10) business days after receiving the required information from Employer or its designee.
(b.) Response to Providers. Magellan will provide responses to inquiries by providers and/or insurance carriers regarding coverage status of qualified beneficiaries. All responses will be based solely on the information provided by Employer and maintained by Magellan in accordance with this Service Appendix.
(c.) Government Audits. Magellan, or its officer or designated agent, shall also provide records and documentation for any audit held by the Internal Revenue Service, or hearing by any governmental agency or bureau, regarding compliance with COBRA by Employer so as to assist Employer at such hearing in evidencing compliance with COBRA.
(d.) Reporting. Magellan will send or make available standard verification reports listing the COBRA notices sent on a periodic basis to Employer (or as directed by Employer in writing).
(e.) USERRA Compliance. Where Employer indicates that a qualifying event is a result of the covered employee’s leave of absence under USERRA, Magellan will include verbiage in its Notices to address USERRA.
2. Responsibilities of Employer.
Employer is responsible for all COBRA administration not set forth in A.1 above, including but not limited to the following: (a.) Notices Required by COBRA. Employer must report all such information necessary for Magellan to provide COBRA notifications for Employer. Employer must report information necessary to complete the General Notice as soon as possible after an individual becomes covered but no later than seventy-five (75) days after the commencement of coverage. Employer shall report all COBRA qualifying events to Magellan as soon as possible after the event occurs but no later than thirty (30) days after the event, except where the qualified beneficiary is required to provide notice of a qualifying event.
(b.) Electronic Reporting to Magellan. If Employer chooses to report certain information to Magellan via Electronic Data Transfer (EDT), then Employer will comply with Magellan’s standard EDT procedures, which require testing of files before EDT becomes operational. Employer is responsible for providing acceptable files for testing before EDT becomes operational. Once Magellan has validated testing, Magellan will notify Employer.
(c.) Verification. Employer is responsible for reviewing all standard verification reports set forth in A.1 above and reporting any discrepancies promptly to Magellan.
B. HIPAA Special Enrollment Notification
Magellan will provide Employer with a sample HIPAA Special Enrollment Notice (which includes a Notice of Special Enrollment Rights and Declination of Coverage Form).
1. Responsibilities of Employer
Employer is responsible for all HIPAA administration not set forth herein, including but not limited to the following:
(a.) Notices. Employer will provide the HIPAA Special Enrollment Notice to the extent applicable under the Health Plan(s) in accordance with HIPAA regulations. Typically, the HIPAA Special Enrollment Notice must be provided to all newly eligible employees. Employer is also responsible for inserting any HIPAA Special Enrollment verbiage provided by Magellan into its plan documents and summary plan descriptions, as applicable.
(b.) Verification. Employer is responsible for reviewing all standard verification reports and reporting any discrepancies promptly to Magellan.
C. COBRA Premium Responsibilities of Employer
Employer is responsible for all COBRA premium collection duties not set forth above, including but not limited to the following:
(a.) Premium Changes. Employer is responsible for notifying Magellan of the applicable premium amounts as well as any other related information that Magellan deems necessary (e.g. due dates, etc.) and any changes to the applicable premiums at least thirty (30) days prior to the effective date of such change.
(b.) Vouchering. From time to time, two situations may arise related to vouchering. First, Employer may, in its discretion, decide to make special arrangements for premium payments on behalf of participants (e.g., deductions from severance pay). Second, Quali fied Beneficiaries may inadvertently send premium payments to Employer or some other entity, instead of Magellan. In either case, the parties agree to the following procedure:
• Employer shall notify Magellan immediately of the details of the payment and retain the payment.
• Magellan shall update the qualified beneficiary's COBRA records to properly reflect the inadvertently sent payment, and will issue a voucher for the two (2) percent administrative fee described above.
• Employer shall pay the voucher for the two (2) percent administrative fee, when invoiced.
(c.) Verification. Employer is responsible for reviewing all standard verification reports set forth in C.1 above and reporting any discrepancies promptly to Magellan.
C. COBRA Eligibility Management Services
1. Responsibilities of Magellan
(a.) Eligibility Notification. There may be instances where Employer desires Magellan to interact with one or more vendors regarding communications. In this case, a Vendor is defined as any insurance carrier, enrollment & eligibility service provider or other provider with whom Magellan will communicate on behalf of Employer. Where Employer and Magellan have confirmed that such communication with Vendor is feasible, Magellan will report to Vendor all changes in eligibility and coverage levels related to COBRA qualified beneficiaries who have either previously elected COBRA coverage or failed to elect COBRA coverage . This reporting may be accomplished by a variety of means: the Vendor’s website, e-mail, facsimile or other communication methods.
(b.) Premium Remittance. Where Employer and Magellan have confirmed the Vendor’s approval and to the extent legally permissible, Magellan will forward all COBRA premiums related to coverage with such Vendor no later than the date that Magellan would have sent such premiums to Employer for the Premium Collection Services described in C.1 above. If Employer offers Health Plans through a bundled arrangement, Magellan shall forward COBRA premiums to various Vendors (i.e., unbundle the COBRA premiums), provided that Employer agrees to pay an additional bundled plan fee for such service, as invoiced by Magellan and/or reflected in the Fees and Consideration Appendix.
(c.) Premium Collection. To select Vendor Interface Services, Employer must also have Premium Collection Services with Magellan. (d.) Reporting. Magellan will provide standard verification reports on a periodic basis to Employer (or as directed by Employer in writing).
2. Responsibilities of Employer
Employer is responsible for all other duties not set forth in D.1 above, including but not limited to reviewing all standard verification reports set forth in C.1 above and reporting any discrepancies promptly to Magellan.
event, except where the qualified beneficiary is required to provide notice of a qualifying event.