University of Minnesota
Office of Human Resources

Letter of Understanding - Pay Conversion Program

This letter confirms the understanding of the parties regarding administration of the pay conversion process. Beginning with the September 2002 premium payment, this agreement will allow for a portion of pay for the medial premiums to be deducted from the Employees pay on a pretax basis. By signing below the parties agree to the following requirements:

The University of Minnesota will extend the pay conversion program to Employees, in addition to the health and dependent care reimbursement accounts currently offered. This program will be applied consistently with the provisions of Code Section 125 and any regulations there under.

Employees will be permitted to make changes in coverage elections only in accordance with the status change rules of the regulations under Section 125 of Internal Revenue Code.

When requested by the Employer, the GCC/IBT Upper Midwest Local 1-M Health and Welfare Fund will provide through its Plan Administrator a compliance letter.

The GCC/IBT Upper Midwest Local 1-M Health and Welfare Fund will report through its Plan Administrator to the University any changes in benefits, per the rules and regulations of the Trust Fund Agreement.

All information will be reported by the University of Minnesota on the annual IRS Form 5500.

In accordance with the Pre-Tax Benefits Plan, Employees will not be given an election to treat premium payments as after-tax payments.