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HomeMy WebLinkAboutRES 90-201 r R E S O L U T I O N BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the City of Beaumont civilian employees ' health insurance plan, attached hereto as Exhibit "A", be, and it is hereby approved; and, THAT the City Manager is hereby authorized to provide health insurance coverage for all regular, full-time, civilian employees at no cost to the employees and that employees may obtain coverage for their dependents at a cost to the employee of $50. 00 a month for a single dependent or $80. 00 a month for family coverage, regardless of the number of dependents. PASSED BY THE CITY COUNCIL of the City of Beaumont on this the 1AV&, day of spa a� , 1990. ayor - e , b CITY OF BEAUMONT CIVILLAN MEDICAL PLAN DOCUMENT Revised 1990 EXHIBIT "An r TABLE OF CONTENTS Topics Page No. Introduction iii-v Schedule of Benefits vi-vii SECTION 1.0 Major Medical Expense Benefit 1 1.1 Covered Expenses 1 1.2 Benefit Percentage & Deductible 3 1.3 Allocation and Apportionment of Benefits 4 1.4 Automatic Restoration/Reinstatement of Max Benefit 4 1.5 Changes in Coverage Classification 4 SECTION 2.0 General Plan Coverage Description 5 2.1 Accident Expense Benefit 5 2.2 Maternity Expense Benefit 5 2.3 Newborn Provision 6 2.4 Outpatient Surgery 6 2.5 Routine Examinations 6 2.6 Pre-Admission Testing 7 2.7 Mandatory Hospital Admission/Outpatient Surgery Review 7 2.8 Mandatory Second Surgical Opinion g 2.9 Transplant Procedures 10 2.10 Weekend Admissions 11 SECTION 3.0 Special Provisions 11 3.1 Convalescent Nursing Facility 11 3.2 Home Health Care 12 3.3 Hospice Care 14 3.4 Mental Nervous Disorders & Alcohol/Drug Abuse 15 SECTION 4.0 Exclusions & Limitations 15 4.1 Pre-Existing Conditions 15 4.2 General Plan Exclusions & Limitations 16 SECTION 5.0 General Plan Administrative Guidelines 20 5.1 Coordination of Benefits 20 5.2 Subrogation 24 5.3 Right to Receive and Release Necessary Information 24 i ,t r TABLE OF CONTENTS (Continued) 5.4 Eligibility of Coverage 25 5.5 Effective Date of Coverage 26 5.6 Termination of Coverage 28 SECTION 6.0 GENERAL PROVISIONS 31 6.1 Notice & Proof of Claim 31 6.2 Legal Proceedings 33 6.3 Time Limitation 33 6.4 Worker's Compensation 33 6.5 Conformity With Law 33 6.6 Representations and Warranties 33 6.7 Miscellaneous 33 SECTION 7.0 Definitions 34 SECTION 8.0 ERISA Information 42 ii j INTRODUCTION WHEREAS The City of Beaumont, hereinafter referred to as the "COMPANY', hereby establishes the benefits, rights and privileges which shall pertain to Partic- ipating Employees, hereinafter referred to as "Participants" and the Eligible Dependents of such Participants, as herein defined, and which benefits are pro- vided through a Fund established by the Company and hereinafter referred to as the "Plan". PURPOSE The purpose of the Plan Document is to set forth the provisions of the Plan which provide for the payment or reimbursement of all or a portion of eligible medical expenses. EFFECTIVE DATE The effective date of the Plan is June 1, 1990. PLAN SUPERVISOR The supervisor of the Plan is GreenTree Administrators. NAMED FIDUCIARY AND PLAN ADMINISTRATOR The Named Fiduciary and Plan Administrator is The City of Beaumont who shall have the authority to control and manage the operation and administration of the Plan. The Company shall have the authority to amend the Plan, to determine its policies, to appoint and remove other supervisors, fix their compensation (if any), and exercise general administrative authority over them. The Administrator has the sole authority and responsibility to review and make final decisions on all claims to benefits hereunder. CONTRIBUTIONS TO THE PLAN The amount of contributions to the Plan are to be made on the following basis: The company shall from time to time evaluate the costs of the Plan and determine the amount to be contributed by the Company and the amount to be contributed (if any) by each Covered Participant. Notwithstanding any other provision of the Plan, the Company's obligation to pay claims otherwise allowable under the terms of the Plan shall be limited to its obligation to make contributions to the plan as set forth in the preceding paragraph. Payment of said claims in accordance with these procedures shall discharge completely the Company's obligation with respect to such payments. iii In the event that the Company terminates the Plan, then as of the effective date of termination, the Company and Covered Participants shall have no further obli- gation to make additional contributions to the Plan. In accordance with section 503 of ERISA, the Company shall provide adequate notice in writing to any Covered Participants whose claim for benefits under this Plan has been denied, setting forth the specific reasons for such denial and written in a manner calculated to be understood by the participant. Further, the Company shall afford a reasonable opportunity to any Participant, whose claim for benefits has been denied, for a full and fair review of the decision denying the claim by the person designated by the Company for the purpose. Details of the Claim Procedure which are in compliance with ERISA regulations will be given to Plan Participants. PROTECTION AGAINST CREDITORS No benefit payment under the Plan shall be subject in any way to alienation, sale, transfer, pledge, attachment, garnishment, execution or encumbrance of any kind, and any attempt to accomplish the same shall be void. If the Company shall find that such an attempt has been made with respect to any payment due or to become due to any Covered Participant, the Company in its sole discretion may terminate the interest of such Covered Participant or former Covered Participant in such payment and in such case shall apply the amount of such payment to or for the benefit of such Covered Participant or former Covered Participant, his spouse, parent, adult child, guardian of a minor child, brother or sister, or other relative of a dependent of such Covered Participant or former Covered Participant, as the Company may determine, and any such application shall be a complete discharge of all liability with respect to such benefit payment. PLAN AMENDMENTS This Document contains all the terms of the Plan and may be amended from time to time by the Company. Any changes so made shall be binding on each Covered Participant and on any other Covered Persons referred to in this Plan Document. The Company reserves the right at any time to terminate the plan by a written instrument to that effect. All previous contributions by the Company shall continue to be issued for the purpose of paying benefits under the provisions of this Plan with respect to claims arising before such termination, or shall be used for the purpose of providing similar health benefits to Covered Participants, until all contributions are exhausted. iv i PLAN IS NOT A CONTRACT This Plan Document constitutes the entire Plan. The Plan will not be deemed to constitute a contract of employment or give any Participant of the Company the right to be retained in the service of the Company or to interfere with the right of the Company to discharge or otherwise terminate the employment of any participant. V a SCHEDULE OF BENEFITS FOR ALL ELIGIBLE PARTICIPANTS AND DEPENDENTS The pages which follow refer to this schedule TYPE OF COVERAGE BENEFITS ACCIDENT EXPENSE BENEFIT (Deductible Waived) . . . . . . . . . . 80% MEDICAL EXPENSE BENEFIT* Annual Deductible Per Covered Person . . . . . . . . . . . . . . . . . . $ 150.00 Maximum per family (cumulative) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300.00 Deductible Accumulation Benefit Period . . . . . . . . . . . . . . . . . . Calendar Year BENEFIT PERCENTAGE FOR MAJOR MEDICAL EXPENSES First $10,000 In Excess of Deductible . . . . . . . . . . . . . . . . . . . 80% Balance of Expenses In that Benefit period . . . . . . . . . . . . . . . 100% Hospital Services Deductible (per stay) . . . . . . . . . . . . . . . . . . . $ 100.00 Hospital Room & Board Limitation * . . . . . . . . . . . . . . . . . . . . Semi-Priv.Rm Rate Intensive Care Unit Limitation . . . . . . . . . . . . . . . . . . . . . . . . Actual Charge Maximum Lifetime Benefit on Major Medical Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000.00 Transplants (See section for items covered) . . . . . . . . . . . . . . . 80% Maximum Benefit per calendar year . . . . . . . . . . . . . . . . . . . . $ 150,000.00 Outpatient Surgery (Deductible waived) . . . . . . . . . . . . . . . . . . . 80% Routine Examinations (Subject to Deductible) 50% Maximum Calendar Year Benefit Per Person . . . . . . . . . . . . . $ 200.00 (Employee & Covered Spouse Only) (The above benefits do not apply to covered expenses incurred under the Special Provisions Section nor Mental/Nervous Alcohol/Drug Abuse Sections of this plan.) SPECIAL PROVISIONS Covered expenses under the following provisions will not count toward satisfaction of any co-payments of this plan. CONVALESCENT NURSING FACILITY* (Deductible Waived) 80% Maximum Benefit per Disability . . . . . . . . . . . . . . . . . . . . . . . $ 4,000.00 HOME HEALTH CARE* (Deductible Waived) a Maximum Calendar Year Benefit Per Person . . . . . . . . . . . . . . no limit HOSPICE CARE EXPENSES* (Deductible Waived) . . . . . . . . . . 80% Vi Maximum Calendar Year In/Out Patient Benefit . . . . . . . . . . . . no limit *All in-patient and out-patient surgeries (except emergency surgeries), pregnancies and special services, requires pre-certification by the designated utilization review firm. SPECIAL PROVISIONS CONTINUED... MENTAL NERVOUS DISORDERS - ALCOHOL AND/OR DRUG ABUSE This plan provides no benefits for any treatment of a mental/nervous disorder or alcohol/drug abuse until the covered person has been on the plan for 180 days. Each incident requires an EAP Assessment. Expenses incurred will not count toward satisfaction of any co-payment of this plan. Outpatient Treatment Benefit Percentage (Subj. to Calendar Yr. Ded.) 80% Maximum Calendar Year Benefit per person . . . . . . . . . . . . . . $ 5,000.00 Inpatient Treatment Lifetime Maximum Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000.00 Covered as Any Illness up to Lifetime Maximum Benefit Percentage (subject to Calendar Year & Hospital Services Deductibles) . . . . . . . . . . . . . . . . . . . . . . 80% PRESCRIPTION DRUG PROGRAM This program is offered by The City of Beaumont under a separate plan. It is not included as part of the benefits outlined herein. Contact the Employee Benefits Coordinator for more information. Vii 1. MAJOR MEDICAL EXPENSE BENEFITS 1.1 COVERED EXPENSES 1.1.1 Eligibility In order to be eligible for benefits under this provision, expenses actually incurred by a Covered Person must meet all of the following requirements: (1) They must be administered or ordered by a physician; and (2) They must be medically necessary for the diagnosis and treatment of an illness or injury unless otherwise specifically included as a Covered Expense; and (3) They must not be in excess of reasonable and customary for such services rendered; and (4) They must not be excluded under any provision or section of this Plan. 1.1.2 Covered Expense Covered expenses include, but are not limited to, the following: 1.1.2.a Charges made by a Hospital for: (1) Daily room and board and general nursing service, or confinement in an Intensive Care Unit, or Semi-Private Room not to exceed the applicable maximum limits shown in the Schedule of Benefits, including nursery charges for a healthy newborn dependent child. Charges made by a hospital having only private rooms will be considered at 80% of the private room rate. (2) Necessary services and supplies (other than room and board furnished by the hospital, including inpatient miscellaneous services and supplies), outpatient hospital treatments for chronic conditions and emergency room use, physical therapy treatments also including charges for such miscellaneous services and supplies of a newborn dependent child. 1.1.2.b Charges for treatment at a licensed Psychiatric Day Treatment Facility if the physician certifies that such treatment is provided in lieu of hospitalization. The covered charge for each day at a Psychiatric Day Treatment Facility will not exceed one-half the average Hospital semi-private room rate in the geographic area, and the covered charges will be processed under and subject to the Mental/Nervous conditions Treatment Inpatient and Lifetime Maximum Benefit Limitations shown on the Schedule of Benefits. 1 1.1.2.c The services of a legally qualified physician for medical care and/or surgical treatments including office, home visits, hospital inpatient care, hospital outpatient visits/exams, clinic care, and surgical opinion consultations. 1.1.2.d Fees of registered graduate nurses (R.N.'s) or licensed vocational nurses (L.V.N's), or licensed practical nurses (L.P.N.'s) and Public Health Nurses for private duty nursing. 1.1.2.e Treatment or services rendered by a licensed physical therapist in a home setting or at a facility or institution whose primary purpose is to provide medical care for an illness or injury. 1.1.2.f Fees of a legally qualified physician or qualified speech therapist for restoratory or rehabilitory speech therapy for speech loss or impairment due to an illness or injury or due to surgery performed on account of an illness or injury sustained while covered under this plan. If the speech loss is due to a congenital anomaly, surgery to correct the anomaly must have been performed prior to the therapy. Coverage under this benefit is provided as long as the covered person with the congenital anomaly is covered under the plan from birth. 1.1.2.g Charges for a licensed professional air ambulance ordered by the authorized authorities or land ambulance service to a local facility. Medical transfer is appropriate when a covered person's condition indicates that the treatment needed is medically necessary and the medical facility to provide specialized treatment for the medical condition is within a maximum 150 mile radius of the City of Beaumont. 1.1.2.h Charges for x-rays, microscopic tests, and laboratory tests. 1.1.2.1 Charges for radiation therapy or treatment. 1.1.2.j Charges for the processing and administration of blood or blood components, but not for the cost of the actual blood or blood components if replaced. 1.1.2.k Charges for oxygen and other gases and their administration. 1.1.2.1 Charges for electrocardiograms, electroencephalograms, pneumoencephalograms, basal metabolism tests,or similar well-established diagnostic tests generally approved by physicians throughout the United States. 1.1.2.m Charges for the cost and administration of an anesthetic. 1.1.2.n Charges for dressings, sutures, casts, splints, trusses, crutches, braces, or other necessary medical supplies, with the exception of dental braces, orthotic devices, or corrective shoes. 2 1.1.2.o Charges for the rental of a wheelchair, hospital bed or iron lung or other durable medical equipment required for temporary therapeutic use, or the purchase of this equipment if economically justified, whichever is less. 1.1.2.p Charges for artificial limbs, eyes or larynx, but not the replacement thereof (except as required by pathological change or growth). 1.1.2.q Services for voluntary sterilization for Participants and Dependent spouses. 1.1.2.r Charges made by an ambulatory surgical center, free-standing birthing center, or minor emergency medical clinic when treatment has been rendered. 1.1.2.s Charges of a certified social worker or advanced clinical practitioner when referred by a physician or the Regional Employee Assistance Program Counselor only as it pertains to treatment for Mental/Nervous Disorders or Alcohol/Drug Abuse. 1.1.2.t Charges for routine newborn care up to fourteen (14) days or initial discharge from the hospital. 1.2 BENEFIT PERCENTAGE AND DEDUCTIBLE Upon receipt of Proof of Loss, the Plan will pay 80% of the first $10,000.00 of eligible expenses incurred in each benefit period, unless otherwise stated in the Plan, which are in excess of the $150.00 Calendar Year Deductible per Covered Person. The Hospital Deductible will apply for each inpatient hospital confinement per illness per calendar year. However, if the illness or injury requires multiple hospital admissions, the hospital deductible will be charged only once, per calendar year for the initial admission. All eligible covered expenses incurred in the benefit period in excess of the $10,000.00, and the calendar year deductible per covered person, will be paid at 100% (except items in the special provision section of this document.) The amount payable in no event shall exceed the Maximum Lifetime Benefit stated in the Schedule of Benefits. The calendar year deductible applies to the eligible charges of each benefit period, (except hospital inpatient confinement charges.) It applies only once for each Covered Person within a benefit period regardless of the number of illnesses. (If Covered Expenses incurred during a benefit period by the Covered Participant and his Covered Dependent and applied against this deductible exceed the Family Deductible Maximum of$300.00, no further deductible applies to any members of that family during that benefit period.) Any Covered Expenses incurred during the last three months of any Benefit Period, and applied toward the Calendar Year Deductible Amount for that Benefit Period, may also be applied toward satisfaction of the Calendar Year Deductible Amount during the next Benefit Period. If the Plan benefit period is established on a calendar year basis, charges which were used toward satisfying the cash deductible under any prior plan of insurance coverage for the year in which this Plan was originally effective shall be accepted by the Company 3 toward satisfying the cash deductible of this Plan, upon receipt of documented proof of such full or partial satisfaction. 1.3 ALLOCATION AND APPORTIONMENT OF BENEFITS The Company reserves the right to allocate the deductible amount to any eligible charges and to apportion the benefits to the Covered Person and any assignees. Such allocation and apportionment shall be conclusive and shall be binding upon the Covered Person and all assignees. 1.4 AUTOMATIC RESTORATION/REINSTATEMENT OF MAXIMUM BENEFIT The total Major Madical Expense Benefits payable for all illnesses and/or injuries of a Covered Person shall not exceed the Maximum Lifetime Benefit, as specified in the Schedule of Benefits, even though he may not have been continuously covered. If less than the full Major Medical Maximum Benefit applicable to the Covered Person is available at the beginning of a benefit period (as a result of benefits paid or payable with respect to charges previously incurred), the used portion of the Major Medical Maximum Benefit shall automatically be restored to the extent of: 1.4.1 The amount needed to restore the full Major Medical Maximum Lifetime Benefit applicable to the Covered Person; or 1.4.2 $1,000.00, whichever is less. 1.5 CHANGES IN COVERAGE CLASSIFICATION If a change in the coverage classification of a Covered Person which would otherwise increase the Maximum Benefit applicable to the Covered Person becomes effective in accordance with the terms of the Plan, then such increase shall not apply with respect to the Major Medical Expense Benefits applicable to the Covered Person until the first day on which the Participant is actively at work within his eligible class, or on which the dependent is not confined in a hospital, and the amount of Maximum Benefit applicable to him either remains or has been re-established as the full amount of his previous coverage classification as specified in the Schedule of Benefits, or elsewhere in the Plan. If a change in the coverage classification of a Covered Person which would otherwise decrease the Maximum Benefit applicable to the Covered Person becomes effective in accordance with the terms of the Major Medical Expense Benefits applicable to the Covered Person, such decreases shall apply immediately with respect to the Major Medical Expense Benefits applicable to the Covered Person, except that if the Covered Person is totally disabled on the date of change, the decrease shall not apply to the benefits payable for eligible charges incurred during the subsequent period of continuous total disability within the benefit period in which the change occurs and due solely to the illness or injury which caused the total disability. 4 2. GENERAL PLAN COVERAGE DESCRIPTION 2.1 ACCIDENT EXPENSE BENEFIT The deductible will be waived on Covered Expenses and the normal co-payment provisions will apply. If an accident results in hospital confinement, the designated utilization firm must be contacted within 48 hours of the emergency. 2.1.1 Covered Charges This Plan will pay benefits for the following when furnished for medical care to the Covered Person for accidental injuries, including but not limited to: 2.1.1.a Services and supplies (including room & board), furnished by a hospital or minor emergency medical center for medical care in that hospital; 2.1.1.b Doctor's services for surgical procedures and other medical care including treatment for insect, and snake bites; 2.1.1.c Surgical dressings; 2.1.1.d X-ray and laboratory examinations; 2.1.1.e Private duty professional nursing services by a Registered Nurse (R.N.) or Licensed Practical Nurse (L.P.N.); 2.1.1.f Cast, splints, trusses, braces and crutches; 2.1.1.g Ambulance Services for local travel. 2.1.2 Limitations Injuries must be sustained subsequent to the effective date of coverage for the Covered Person. Services and supplies must be ordered by a doctor and furnished within a ninety (90) day period beginning with the date the Covered Person sustained those injuries. 2.2 MATERNITY EXPENSE BENEFITS (FOR PARTICIPANTS AND DEPENDENT SPOUSES ONLY) If a Participant or Covered Dependent Spouse becomes pregnant after the effective date of her coverage, and if delivery occurs while the Plan is in effect, the charges incurred will be paid the same as any illness. The designated utilization review firm must be contacted at the time a pregnancy is confirmed and within 48 hours of any hospital confinement. 5 If a Participant or Covered Dependent Spouse becomes pregnant prior to the effective date of the coverage, or if delivery occurs after coverage has terminated, the charges incurred will be considered and processed the same as any illness subject to the Pre- Existing Conditions Limitation. Dependent children are not eligible for benefits under this provision. 2.3 NEWBORN PROVISION The newborn child's charges are payable at 80% not subject to the calendar year or hospital services deductibles for the first fourteen (14) days or until the initial hospital discharge whichever occurs first. For a baby who is hospitalized for more than 14 days, benefits for the associated professional fees (including, but not limited to, physician, anesthesiologist, pathologist and radiologist) will be the same as provided under the major medical provisions of the plan, subject to all plan conditions, exclusions and limitations, including usual deductible and co-payment provisions. 2.4 OUTPATIENT SURGERY For outpatient surgical procedures performed in the outpatient department of a hospital, an Ambulatory Surgical Center, Minor Emergency Medical Center, or doctor's office, eligible charges by the facility will be payable at 80%, not subject to the deductible. The designated utilization review firm must be contacted before the performance of an outpatient surgical procedure (except emergency surgeries). Covered expenses shall include reasonable and customary charges by the facility for necessary services perform- ed and/or supplies received in connection with and on the same day as the outpatient surgical procedure. All associated covered professional fees (including, but not limited to, physicians, anesthesiologist, pathologist and radiologist) will be paid at 80% and processed subject to the usual deductible and co-payment provisions of the Plan. If procedures are performed on an inpatient basis due to medical necessity, benefits will be payable under the Major Medical Expense Benefit provision of the Plan subject to all Plan conditions, exclusions and limitations, including usual deductible and co-payment provisions, and Mandatory Hospital Admission and Outpatient Surgery Review. 2.5 ROUTINE EXAMINATIONS This plan will pay charges for routine examinations or check-ups including associated routine laboratory and/or x-ray services for the Participant and Covered Spouse. The maximum benefit under this provision is $200.00 per calendar year per Participant and Covered Spouse. Benefits will be payable at a percentage rate of 50%, subject to the calendar year deductible. 6 2.6 PRE-ADMISSION TESTING Pre-Admission Testing, when performed on an outpatient basis, will be included as a Covered Expense, and will be payable at 80% not subject to a deductible up to the maximum benefit of $10,000.00. Such testing must be performed within seven (7) days of a scheduled hospital admission, and must be performed at the same hospital where such confinement is to occur, or a qualified facility designated by the admitting physi- cian(s). 2.7 MANDATORY HOSPITAL ADMISSION AND OUTPATIENT SURGERY REVIEW Under this Plan, an authorization and pre-certification of every inpatient hospital admission'or outpatient surgery (except emergency surgery) is required. Failure to obtain authorization will result in an additional $300.00 PENALTY DEDUCTIBLE for each inpatient confinement charge (hospital facility) or any expenses resulting from outpatient surgery. It is the responsibility of the Participant to make sure that the designated utilization review firm is contacted. 2.7.1 Inpatient Admission or Outpatient Surgery Review 2.7.1.a NON-EMERGENCY(Elective)ADMISSIONS/OUTPATIENT SURGERY must be reported to the designated utilization review firm at least 5 days prior to any scheduled con- finement or surgery (except emergency surgeries). 2.7.1.b EMERGENCY ADMISSIONS must be reported to the designated utilization review firm within 48 hours of the admission. 2.7.1.c HOLIDAY AND WEEKEND EMERGENCY ADMISSIONS are to be reported to the designated utilization review firm on the next regular business day thereafter. 2.7.1.d PREGNANCY is to be reported to the designated utilization review firm as soon as condition is confirmed. At the time of actual admission, notify the designated utilization review firm within 48 hours. 2.7.1.e CONVALESCENT NURSING FACILITY, HOME HEALTHCARE, AND HOSPICE CARE services are to be reported to the designated utilization review firm, before these programs are outlined or any services rendered. 'For the purpose of clarification, hospital admission also includes special provision services of Convalescent Nursing Facility, Home Health Care, and Hospice Care. 7 i 2.7.2 Review Procedures The Plan will provide Covered Participants with the designated utilization review firm information and an 800-Toll-Free telephone number to call. To avoid penalty, the firm must be contacted within the time limits specified above. When contacted, a Verification Number will be issued. Retain this number which will confirm that the firm was notified of the confinement or surgery. The Participant should retain the Verification Number until the claim is processed,,in case proof is needed that the designated utilization review firm was contacted. Nurses and physicians of the designated utilization review firm are to collect any information necessary for the review from Covered Persons, attending physicians and hospitals to assess whether inpatient hospital care or outpatient surgery is medically necessary and appropriate. Inpatient care or outpatient surgery will be considered "medi- cally necessary" only if it is appropriate given the symptoms, and is consistent with the diagnosis. "Appropriate" means that the type, level, and length of service, and the set- ting are needed to provide safe and adequate care and treatment. If inpatient care or outpatient surgery is approved as medically necessary, authorization for the surgery or admission and the number of days approved for confinement, if any, will be certified and reported to the physician, hospital, and/or Covered Person. If the patient needs to be hospitalized longer than the originally authorized length of stay, or must be hospitalized after an outpatient surgery, the attending physician must request authorization from the designated utilization review firm for additional days. The request must be made before the end of the stay originally authorized, or before admitting, if it is an outpatient surgery, by phoning. If any days are not requested and authorized in advance, the hospital benefits may be reduced for those days retrospectively determined as not medically necessary and appropriate. Authorization for inpatient care or outpatient surgery does not guarantee: (1) the payment of benefits; or (2) the amount of benefits. Eligibility for, and payment of, benefits are subject to all the terms and provisions of the Plan. UNLESS THE COVERED PERSON USES THE UTILIZATION REVIEW PROGRAM, ANY HOSPITAL BILL FOR AN INPATIENT CONFINEMENT OR OUTPATIENT SURGERY WHICH HAS NOT BEEN AUTHORIZED UNDER THE PROGRAM WILL BE SUBJECT TO AN ADDITIONAL $300.00 DEDUCTIBLE. Expenses incurred but not paid due to the above penalty and/or in connection with any days of confinement or the performance of surgery determined to be not medically necessary will not count toward satisfaction of any deductible or co-payment of this Plan. 8 2.8 MANDATORY SECOND SURGICAL OPINION Charges by a physician for a mandatory second surgical opinion will be payable at 100%, not subject to a deductible, when any of the listed non-emergency elective surgical procedures is recommended to a Covered Person by a surgeon. (See required list of such procedures below). The designated utilization review firm may require a second surgical opinion, or based upon the history of the covered person, approve the surgery in lieu of the second surgical opinion. If the second opinion does not confirm the need for surgery, a third consultation will be considered a covered expense. The physicians rendering such second and third opinions must be qualified to render such a service, either through experience, specialized training or education, or similar criteria, must not be affiliated in any way with the physician who will be performing the actual surgery, and does not subsequently perform the surgery or treat the Covered Person for the condition which resulted in a request for a second opinion. NOTE: A referral by the Covered Person's family physician to a specialist is not a request for a second opinion--it is a referral. Such a referral will not satisfy the requirements of this provision. IF THIS MANDATORY SECOND SURGICAL OPINION EXPENSE BENEFIT IS NOT UTILIZED BY A COVERED PERSON AND/OR A CONFIRMING SECOND OPINION IS NOT OBTAINED, CHARGES FOR THE SURGERY AND ANY EXPENSES RELATED TO THE SURGERY SHALL BE SUBJECT TO THE FOLLOWING PENALTY. ALL ASSOCIATED CHARGES WILL BE PAID AT 50% CO-PAYMENT. The designated utilization review firm must be contacted before any second surgical opinion is obtained. The following are procedures which may require a second surgical opinion: * D & C (Dilation & Curettage) * Hysterectomy * Surgery of the stomach (gastric stapling not covered if for weight reduction) * Surgery of the thyroid, tonsils or adenoids * Surgery of the foot (ostectomy) * Surgery of the back (laminectomy) * Surgery of the knee (arthroplasty) * Surgery of the gallbladder * Surgery for hernia * Surgery of the ear (myringotomy) * Surgery of the nose (deviated septum; septoplasty) * Surgery of the breast (mastectomy) * Surgery for veins; arteries * Surgery of the prostate * Surgery for the heart (by-pass) * Surgery for hemorrhoids (hemorrhoidectomy) * Kidney Transplant * Corneal Transplant 9 * Bone Marrow Transplant * Heart Transplant * Lung Transplant Expenses incurred but not paid due to non-compliance with this provision will not count toward satisfaction of any deductible, or co-payment of this plan. 2.9 TRANSPLANTS PROCEDURE Charges for services and supplies provided in conjunction with Bone Marrow, Kidney, Heart, Lung and/or Corneal transplant procedures, are subject to the calendar year deductible up to a calendar year maximum benefit of $150,000.00. Both the hospital pre-admission and outpatient surgery for services in this section are subject to review by the designated utilization review firm. Transplant procedures will be subject to a second opinion and benefit eligibility conditions as follows: 2.9.1 Second Opinion A second opinion must be obtained prior to undergoing any transplant procedure. This mandatory second opinion (requires review by the designated utilization review firm) must concur with the attending physician's findings regarding the medical necessity of such procedure. The physician rendering this second opinion must be qualified to render such a service either through experience, specialist training or education, or such similar cri- teria, and must not be affiliated in any way with the physician who will be performing the actual surgery. 2.9.2 Benefit Eligibility 2.9.2.a If the donor is covered under this Plan, eligible medical expenses incurred by the donor will be considered for benefits. 2.9.2.b If the recipient is covered under this Plan, eligible medical expenses incurred by the recipient will be considered for benefits. Expenses incurred by the donor, who is not ordinarily covered under this Plan according to participant eligibility requirements, will be considered eligible expenses to the extent that such expenses are not payable by the donor's plan. In no event will benefits be payable in excess of the Maximum Lifetime Benefit still available to the recipient. 2.9.2.c If both the donor and the recipient are covered under this Plan, eligible medical expenses incurred by each person will be treated separately for each person. 2.9.2.d The reasonable and customary cost of securing an organ from a cadaver or tissue bank, including the surgeon's charge for removal of the organ and a hospital's charge for storage or transportation of the organ, will be considered a Covered Expense. 10 2.9.2.e No other replacement or transplant of tissue or organs are covered by the Plan. 2.10 WEEKEND ADMISSIONS Expenses associated with an elective, non-emergency hospital admission on Friday, Saturday or Sunday will not be covered expenses under the Plan. The only exception to this exclusion shall be a medically necessary Sunday evening admission for a surgical procedure scheduled to be performed before 9 A.M. on Monday. Expenses incurred but not paid due to non-compliance with this provision will not count toward satisfaction of any deductible, or co-payments of this Plan. 3. SPECIAL PROVISIONS 3.1 CONVALESCENT NURSING FACILITY 3.1.1 Definitions: 3.1.1.a The term "Convalescent Nursing Facility" means an institution, or distinct part thereof, operated pursuant to law and one which meets all of the following conditions: (1) It is licensed to provide, and is engaged in providing on an inpatient basis, for persons convalescing from injury or illness, professional nursing services ren- dered by a registered graduate nurse (R.N.) or by a licensed practical nurse (L.P.N.) under the direction of a registered graduate nurse and physical restoration services to assist patients to reach a degree of body functioning to permit self-care in essential daily living activities; and (2) Its services are provided for compensation from its patients and under the full- time supervision of a physician or registered graduate nurse; and (3) It provides 24-hour nursing service by licensed nurses, under the direction of a full-time registered graduate nurse; and (4) It maintains a complete medical record on each patient; and (5) It has an effective utilization review plan; and (6) It is not, other than incidentally, a place for rest, the aged, drug addicts, alcoholics, mental retardates, custodial or educational care, or care of mental disorders; and (7) It is approved and licensed by Medicare. This term shall also apply to expenses incurred in an institution referring to itself as a Skilled Nursing Facility, Extended Care Facility, Convalescent Nursing Home, or any such other similar nomenclature. 11 3.1.1.b The term "Convalescent Period" means a period of time commencing with the date of confinement by a Covered Person to a Convalescent Nursing Facility. Such con- finement must meet all of the following conditions: (1) Such confinement must commence within fourteen (14) days of being discharged from a hospital; and (2) Said hospital confinement must have been for a period of not less than three (3) consecutive days; and (3) Both the hospital and convalescent confinements must have been for the care and treatment of the same illness or injury. A Convalescent Period will terminate when the Covered Person has been free of confinement in any and all institutions providing hospital or nursing care for a period of ninety (90) consecutive days. A new convalescent period shall not commence until a previous convalescent period has terminated. 3.1.2 Covered Expenses 3.1.2.a Covered expenses shall include charges made by a Convalescent Nursing Facility in any one convalescent period, as follows: (1) Room and board, including any charges made by the facility as a condition of occupancy, or on a regular daily or weekly basis such as general nursing services. If private room accommodations are used, the daily room and board charge allowed will not exceed the facility's average semi-private charges or an average semi-private rate made by a representative cross-section of similar insti- tutions in the area. (2) Covered expenses shall be paid at 80%, not subject to a deductible, up to a maximum benefit of $4,000.00 per confinement. The designated utilization review must be contacted before services are provided. Covered expenses under this provision will not count toward satisfaction of any co payment of this Ip an. 3.2 HOME HEALTH CARE 3.2.1 Definitions 3.2.1.a The term "Home Health Care Agency" means a public or private agency or organization that specializes in providing medical care and treatment in the home. Such a provider must meet all of the following conditions: 12 (1) It is primarily engaged in and duly licensed, if such licensing is required, by the appropriate licensing authority to provide skilled nursing services and other therapeutic services. (2) It has policies established by a professional group associated with the agency or organization. This professional group must include at least one physician and at least one registered graduate nurse (R.N.) to govern the services provided and it must provide for full-time supervision of such services by a physician or registered graduate nurse. (3) It maintains a complete medical record on each individual. (4) It has a full-time administrator. 3.2.1.b The term "Home Health Care Plan" means a program for continued care and treatment of the Covered Person established and approved in writing by the Covered Person's attending physician within seven (7) days following termination of a hospital confinement as a resident inpatient, and is for the same or related condition for which he was hospitalized. The attending physician must certify that the proper treatment of the illness or injury would require continued confinement as a resident inpatient in a hospital in the absence of the services and supplies provided as part of the home health care plan. 3.2.2 Covered Expenses Covered expenses shall be payable at 80%, not subject to a deductible up to the lifetime maximum benefit. The designated utilization review firm must be contacted before services are provided. Covered expenses under this provision will not count toward satisfaction of any co-payment of this plan Covered expenses shall include charges made by a Home Health Care Agency for care in accordance with a Home Health Care Plan. Such expenses include: 3.2.2.a Part-time or intermittent nursing care by a registered graduate nurse (R.N) or a licensed practical nurse (L.P.N.), a vocational nurse, or a public health nurse who is under the direct supervision of a registered nurse; 3.2.2.b Home health aides; 3.2.2.c Medical supplies, drugs and medicines prescribed by a physician, and laboratory ser- vices provided by or on behalf of a hospital, but only to the extent that they would have been covered under this Plan if the Covered Person had remained in the hospital. EXCLUSIONS - Specifically excluded from coverage under this benefit are the following: 3.22d Services and supplies not included in the Home Health Care Plan. 13 I 3.2.2.e Services of a person who ordinarily resides in the home of the Covered Person, or is a close relative of the Covered Person. 3.2.2.f Services of any social worker. 3.2.2.g Transportation services. 3.3 HOSPICE CARE 3.3.1 Definition 3.3.1.a The term "Hospice" means a health care program providing a coordinated set of services rendered at home, in outpatient settings or in institutional settings for Covered Persons suffering from a condition that has a terminal prognosis. Such facility must meet all of the following conditions: (1) It must have an inter-disciplinary group of personnel which includes at least one physician and one registered graduate nurse (2) It must maintain central clinical records on all patients. (3) It must meet the standards of the National Hospice Organization (NHO) and applicable state licensing requirements. 3.3.2 Covered Expenses 3.3.2.a Covered expenses shall be paid at 80%, not subject to a deductible to the lifetime maximum benefit for in/outpatient services. The designated utilization review firm must be contacted before services are provided. Covered expenses under this provision will not count toward satisfaction of any co-payment of this plan. 3.3.2.b Covered expenses shall include charges made by a hospice for: (1) Room and board and/or nursing care by a registered graduate nurse, a licensed practical nurse, a vocational nurse or a public health nurse who is under the direct supervision of a registered nurse. (2) Physical therapy and speech therapy when rendered by a licensed therapist. (3) Medical supplies, including drugs and biological and the use of medical appliances. (4) Physician services. 14 (5) Services, supplies, and treatments deemed medically necessary and ordered by a licensed physician. 3.4 MENTAL NERVOUS DISORDERS - ALCOHOL/DRUG ABUSE This plan will pay for services pertaining to treatment on an outpatient basis in connection with mental illness, functional nervous disorders, mental or nervous disorders of any type or cause, for psychiatric or psychoanalytic care, or for alcohol and/or drug abuse, ordered by a physician or certified social worker-advance clinical practitioner referred by the Employee Assistance Program. Covered expenses shall not include charges for psychological testing, marriage counseling, family or group therapy. Covered expenses will be paid at 80% up to the calendar year maximum benefit of $5,000.00. This plan will pay for services rendered on an inpatient basis in connection with mental illness, functional nervous disorders, mental or nervous disorders of any type or cause, psychiatric or psychoanalytic care, or for alcohol and/or drug abuse ordered by a physician. Covered expenses will be paid at 80%, subject to the calendar year and hospital deductibles, up to the lifetime maximum benefit of $25,000.00. Any expenses incurred will not count toward satisfaction of any co-payment of this plan. All participants and dependents must be effective on the Plan for 180 days before any benefits will be paid by the plan for any treatment of a mental/nervous disorder. Unless the covered person completes an EAP assessment prior to going to any provider, all associated charges will be paid at 50% co-payment. Emergency admissions in connection with mental/nervous disorders shall be covered according to the Plan as long as the EAP Provider is notified within forty-eight (48) hours of the emergency admission. 4. EXCLUSIONS & LIMATIONS 4.1 PRE-EXISTING CONDITIONS Claims resulting from Pre-Existing Conditions, as defined in the Plan, are excluded for 18 months from coverage under the Plan. 4.1.1 Treatment Free Period If the Covered Person does not receive medical care or services (including prescription drugs) or is not under a physician's care with respect to the pre-existing (or related condition(s)) for a period of eighteen (18) consecutive months, the pre-existing conditions limitation will no longer apply and any charges incurred for such condition(s) after the treatment free period are allowed; or, 15 4.1.2 Waiting Period If the Covered Person is covered under the Plan for a period of eighteen (18) consecutive months, the,pre-existing conditions limitation will no longer apply and all charges incurred thereafter will be considered eligible. 4.1.3 Exception to the Pre-Existing Condition The exclusion of coverage due to the above Pre-Existing Condition provision of this Plan shall be modified to the following extent for those persons covered on the Effective Date of this Plan and covered on the immediately preceding day under the policy this Plan replaced, whether such policy replaced was written by an insurer or under a similar but not insured plan: 4.1.3.a If the Covered Person incurs expense which would be eligible for payment hereunder except for the Pre-Existing Conditions Provision and such expense would have been eligible for payment under the policy replaced had that policy been continued in force rather than replaced by this plan, the Company agrees to pay the lesser of the amount thus payable for such expenses under: (1) The policy replaced, and (2) This plan disregarding the Pre-Existing Conditions Provision. 4.1.3.b In no event shall the total amount payable hereunder because of this exception exceed the maximum amount payable under this Plan if the Pre-Existing Conditions Provision were not present. 4.1.3.c No item of expenses incurred before the Effective Date of the Plan shall be payable under this Plan. 4.1.3.d In no event shall the term "this Plan" be construed to include the policy replaced. 4.2 GENERAL PLAN EXCLUSIONS AND LIMITATIONS 4.2.1 General Exclusions The following exclusions and limitations apply to expenses incurred by all Covered Persons, and Covered Expenses do not include: 4.2.1.a Charges incurred prior to the effective date of coverage under the Plan, or after coverage is terminated; 4.2.1.b Charges incurred as a result of war or any act of war, whether declared or undeclared, or caused during service in the armed forces of any country; 16 4.2.1.c Charges arising out of or in the course of any occupation for wages or profit, or for which the Covered Person is entitled to benefits under any Worker's Compensation or Occupational Disease Law, or any such similar law; 4.2.1.d Charges incurred while confined in a hospital owned or operated by the United States Government or any Agency thereof, or charges for services,treatments or sup- plies furnished by the United States Government or any Agency thereof for treatment of a service-connected disability; 4.2.1.e Charges incurred for which the Covered Person is not, in the absence of this coverage, legally obligated to pay, or for which a charge would not ordinarily be made in the absence of this coverage; 4.2.1.f Charges resulting from or occurring: (1) during the commission of a crime by the Covered Person; or (2) while engaged in an illegal act, illegal occupation or felonious act or aggra- vated assault; 4.2.1.g Charges incurred in connection with any intentionally self-inflicted injury or illness, whether sane or insane; 4.2.1.h Charges incurred for, nutritional supplements, or immunizations not necessary for the treatment of an injury or illness; 4.2.1.i Charges incurred for services or supplies which constitute personal comfort or beauti- fication items, television or telephone use, or in connection with custodial care, edu- cation or training, occupational therapy, or expenses actually incurred by other persons; 4.2.1.j Charges incurred in connection with the care or treatment of, or surgery performed for, a cosmetic procedure. This exclusion shall not apply when such treatment is for reconstructive surgery for a Covered Person incidental to or following surgery resulting from trauma, infection, or other disease (s) of the involved part which occurs while coverage is in effect, or when rendered to correct a congenital anomaly, i.e., a birth defect, for a Covered dependent child; 4.2.1.k Charges incurred in connection with services and supplies which are not necessary for treatment of the injury or illness, or are in excess of reasonable and customary charges or are not recommended and approved by a physician, unless specifically shown as a Covered Expense elsewhere in the Plan; 4.2.1.1 Charges for services, supplies, or treatments not recognized by the American Medical Association as generally accepted and medically necessary for the diagnosis and/or treatment of an active illness or injury; or charges for procedures, surgical or 17 i otherwise,which are specifically listed by the American Medical Association as having no medical value; 4.2.1.m Charges for services rendered by a physician, nurse, or licensed therapist if such physician, nurse, or licensed therapist is a close relative of the Covered Person; 4.2.1.n Charges incurred outside the United States if the Covered Person traveled to such a location for the sole purpose of obtaining medical services, drugs, or supplies; 4.2.1.o Charges for hospitalization when such confinement occurs primarily for physiotherapy, hydrotherapy, convalescent or rest care, or any routine physical examinations or tests not connected with the actual illness or injury; 4.2.1.p Charges for physician fees for any treatment which is not rendered by or in the physical presence of a physician; 4.2.1.q Charges incurred in connection with eye refractions, the purchase or fitting of eye- glasses, contact lenses, hearing aids, or such similar aid devices. This exclusion shall not apply to the initial purchase of eyeglasses or contact lenses following cata- ract surgery, nor does it apply to the initial purchase of a hearing aid if the loss of hearing is a result of a surgical procedure performed while coverage is in effect; 4.2.1.r Charges incurred for treatment on or to the teeth, the nerves or roots of the teeth, gingival tissue or alveolar processes; however, benefits will be payable for charges incurred: (1) for the removal of bony impacted teeth (no allowance for other extractions) on an outpatient basis, unless hospital confinement is documented to be medically necessary; and (2) for treatment required because of accidental bodily injury to natural teeth sustained while covered. Such expenses must be incurred within six(6) months of the date of the accident. This exception shall not in any event be deemed to include charges for treatment for the repair or replacement of a denture; 4.2.1.s Charges related to or in connection with fertility studies, sterility studies, procedures to restore or enhance fertility, artificial insemination, or in-vitro fertilization; 4.2.1.t Charges for professional services on an outpatient basis in connection with mental illness, functional nervous disorders, mental or nervous disorders of any type or cause, or for psychiatric or psychoanalytic care for any reason, or for alcohol and/or drug abuse or addiction unless such services are rendered by a physician or a Certified Social Worker-Advance Clinical Practitioner recommended by the Employee Assistance Program. Covered expenses shall not include charges for psychological testing, marriage counseling, family or group therapy. Covered expenses shall not include services rendered prior to the 181st day following the covered person's effective date of coverage. 18 1 1 , 4.2.1.0 Charges for professional services on an inpatient basis in connection with mental illness, functional nervous disorders, mental or nervous disorders of any type or cause, or for psychiatric or psychoanalytic care for any reason, or for alcohol and/or drug abuse or addiction unless such services are rendered by a physician. Covered expenses shall not include services rendered prior to the 181st day following the covered person's effective date of coverage. 4.2.1.v Charges for professional nursing services if rendered by other than registered graduate nurse (R.N.) or licensed practical nurse (L.P.N.), licensed vocational nurse (L.V.N.) or unless such care was vital as a safeguard for the life of a Covered Person, and unless care is specifically listed as Covered Expenses elsewhere in the Plan; 4.2.1.w Charges resulting from or in connection with the reversal of a sterilization procedure; 4.2.1.x Charges incurred as a result of or in connection with the pregnancy of a dependent child; 4.2.1.y Charges for experimental procedures, drugs, or research studies, or for any services or supplies not considered legal in the United States; 4.2.1.z Charges for well-baby care, including the usual, ordinary and routine care of a new- born, and routine circumcision after 24 months, except as otherwise stated in the plan; 4.2.1.aa Charges for elective abortions; 4.2.1.ab Charges for replacement of a lost, missing or stolen prosthetic device; 4.2.1.ac Charges for diagnosis and/or medical or surgical treatment of any type of temporomandibular joint disorder or dysfunction, by any name called; 4.2.1.ad Charges for treatment of (a) weak, strained, flat, unstable or unbalanced feet, metatarsalgia or bunions, except open cutting operations; (b) corns, callouses or toenails, except removing nail roots; charges for orthotic devices; care prescribed by a physician treating metabolic or peripheral-vascular disease; 4.2.1.ae Charges for vitamins or dietary supplements; 4.2.1.af Charges for equipment for environment control or general household use such as air filters or food liquidizers; 4.2.1.ag Charges for biofeedback training and therapy; 4.2.1.ah Charges for sex transformation surgery and sex hormones related to such surgery; 19 4.2.1.ai Charges for treatment of obesity, including surgical procedures; treatment of eating. disorders, including (but not limited to) anorexia nervosa and/or bulimia; 4.2.1.aj Charges for vision therapy; 4.2.1.ak Charges for radial keratotomy or keratoplasty; 4.2.1.al Charges for chelation therapy; 4.2.1.am Maximum benefits payable for any charges for eligible chiropractic services (and/or any other professional services in connection with care for dislocations or subluxations of the vertebrae) shall be limited to $600.00 per Calendar year. This limitation shall not apply to charges for or in connection with diagnosis or treatment requiring a general anesthetic, and open cutting operation, and/or a necessary hospi- tal confinement. 4.2.1.an Charges incurred as a result of or in connection with diagnosis or treatment of a learning disability or learning impairment, by any name called. This exclusion includes, but is not limited to, charges for initial testing; room and board by a Remedial Clinic; remedial education or training; Educational Therapy (including therapeutic training exercises and multisensory teaching techniques); periodic achievement tests; tutoring; rental or purchase of books, tools, equipment, implements, or supplies of any kind; travel; recreational activities. 4.2.1.ao Charges for prescription drugs, insulin, and/or immunization agents; however, this exclusion shall not apply to medication which is to be taken by or administered to and is-billed to an individual while confined as an inpatient in a licensed hospital or similar medical institution which operates on its premises, a facility for dispensing pharmaceuticals nor does it apply to allergy or biological sera administered by a licensed physician. 5. GENERAL PLAN ADMINISTRATIVE GUIDELINES 5.1 COORDINATION OF BENEFITS The Coordination of Benefits provision is intended to prevent the payment of benefits which exceed expenses. It applies when the Participant or any eligible dependent who is covered by the Plan is also covered by any other plan or plans. When more than one coverage exists, one plan normally pays its benefits in full and the other plans pay a reduced benefit. This Plan will always pay either its benefits in full or a reduced amount which, when added to the benefits payable by the other plan or plans, will not exceed 100% of allowable expenses. Only the amount paid by the Plan will be charged against the Plan maximums. 20 1 f I I i The Coordination of Benefits provision applies whether or not a claim is filed under the other plan or plans. If needed, authorization must be given this Plan to obtain information as to benefits or services available from the other plan or plans, or to recover overpay- ments. All benefits contained in the Plan Document are subject to this provision. 5.1.1 Definitions 5.1.1.a The term 'Plan" as used herein will mean any Plan providing benefits or services for or by reason of medical or dental treatment, and such benefits or services are provided by group insurance or any other arrangement for coverage for Covered Persons in a group whether on an insured or uninsured basis, including but not limited to: (1) Hospital indemnity benefits; and (2) Hospital reimbursement-type plans which permit the covered person to elect indemnity at the time of claims; or (3) Hospital or medical service organizations on a group basis, group practice and other group pre-payment plans; or (4) Hospital or medical service organizations on an individual basis having in effect a provision similar to this provision; or (5) A licensed Health Maintenance Organization (H.M.O.); or (6) Any coverage for students which is sponsored by, or provided through, a school or other educational institution; or (7) Any coverage under a Governmental program, and any coverage required or provided by any statute; or (8) Group automobile insurance; or (9) Individual automobile insurance coverage on an automobile leased or owned by the company; or (10) Individual automobile insurance coverage based upon the principles of "No Fault" coverage. The term 'Plan" will be construed separately with respect to each policy, contract, or other arrangement for benefits or services, and separately with respect to that portion of any such policy, contract, or other arrangement which reserves the right to take the benefits or services of other plans into consideration in determining its benefits and that portion which does not. 21 5.1.1.b The term "Allowable Expenses" means any necessary item of expense, the charge for which is reasonable, regular and customary, at least a portion of which is covered under at least one of the plans covering the person for whom claim is made. (1) When a Plan provides benefits in the form of services rather than cash payments, then the reasonable cash value of each service rendered will be deemed to be both an allowable expense and a benefit paid. 5.1.1.c The term "Claim Determination Period" means a Calendar Year or that portion of a Calendar Year during which the Covered Person for whom claim is made has been covered under this Plan. 5.1.2 Coordination Procedures Notwithstanding the other provisions of this Plan, benefits that would be payable under this Plan will be reduced so that the sum of benefits and all benefits payable under all other Plans will not exceed the total of Allowable Expenses incurred during any Claim Determination Period with respect to Covered Persons eligible for: 5.1.2.a Benefits either as an insured person or participant or as a dependent under any other Plan which has no provision similar in effect to this provision, or 5.1.2.b Dependent benefits under this Plan for Dependents who are also eligible for benefits: (1) As an insured person or participant under any other Plan; or (2) As a dependent child of an insured person or participant covered under any other Plan; or 5.1.2.c Benefits under this Plan for Participants who are also eligible for benefits as an insured person or participant under any other Plan and have been covered contin- uously for a longer period of time under such other Plan. For the purpose of determining the applicability of and for implementing this provision, or any provision of similar purpose in any other Plan, the Company may, without the consent of or notice to any person, release to or obtain from any other insurance company or other organization or person any information with respect to any person, which the Company deems to be necessary for such purposes. Any Covered Person claiming benefits under this Plan will furnish to the Company such information as may be necessary to implement this provision or to determine its applicability. 22 5.1.3 Payments Each plan makes its claim payments according to where it falls in this order, if Medicare is not involved; 5.1.3.a If a plan contains no provision for Coordination of Benefits, then it pays before all other plans. 5.1.3.b The plan which covers the claimant as an employee (or named insured) will pay as though no other plan existed; remaining recognized charges are paid under a plan which covers the claimant as a dependent. 5.1.3.c If the claimant is a dependent child, then the benefits of the Plan for the parent whose date of birth, excluding year of birth, occurs earlier in the calendar year shall be determined before the benefits of a Plan covering the parent whose date of birth, excluding year of birth, occurs later in the calendar year. However, if his parents are divorced, then, (1) The plan of the parent with custody pays first unless a court order or decree specifies the other parent to have financial responsibility, in which case the plan for that parent would pay first; (2) The plan of a step-parent with whom he lives pays second (if applicable). 5.1.3.d If the order set out in A, B, or C above does not apply in a particular case, then the plan which has covered the claimant for the longest period of time will pay first. 5.1.3.e The Company has the right: (1) To obtain or share information with the insurance company or other organization regarding Coordination of Benefits without the consent of the claimant. (2) To require that the claimant provide the Company with information on such other plans so that this provision may be implemented. (3) To pay over the amount due under this Plan to an insurer or other organization if this is necessary, in the opinion of the Company, to satisfy the terms of this provision. 5.1.4 Facility of Payment Whenever payments which should have been made under this Plan in accordance with this provision have been made under any other plan or plans, the Company will have the right, exercisable alone and in its sole discretion, to pay to any insurance company or other organization or person making such other payments any amounts it will determine in order to satisfy the intent of this provision, and amounts so paid will be 23 deemed to be benefits paid under this Plan and to the extent of such payments, the Company will be fully discharged from liability under this Plan. The benefits that are payable will be charged against any applicable maximum-payment benefit of this Plan rather than the amount payable in the absence of this provision. 5.1.5 Coordination with Medicare Notwithstanding all other provisions of this Plan, all Covered Persons who are eligible for Medicare benefits will be entitled to benefits under this Plan in addition to Medicare. However, any benefits of this Plan will be coordinated with Medicare in accordance with the Coordination of Benefits Provision of this Plan and benefits subject to the rules and regulations as specified by the Tax Equity and Fiscal Responsibility Act of 1982. If any Covered Person eligible for Medicare fails to enroll thereunder, benefits will be paid as though he had enrolled. 5.2 SUBROGATION This Plan may withhold payment of benefits when a party other than the Covered Person or the Plan may be liable for expenses until such liability is legally determined. In the event of any payment for services under the Plan, the Plan Administrator shall, to the extent of such payment, be subrogated to all the rights of recovery of the Covered Person arising out of any claim or cause of action which may occur because of the alleged negligent conduct of a third party. Any such Covered Person hereby agrees to reimburse the Plan, for any benefits so paid hereunder, out of any monies recovered from such third party as the result of judgment, settlement or otherwise; and such Covered Person hereby agrees to take such action, to furnish such information and assistance, and to execute and deliver all necessary instruments as the Plan Administrator may require to facilitate the enforcement of their rights. This provision shall not apply, however, to a recovery obtained by a Covered Person from an insurance company on a policy under which such Covered Person is entitled to indemnity as a named insured person. 5.3 RIGHT TO RECEIVE AND RELEASE NECESSARY INFORMATION For the purposes of determining the applicability of implementing the terms of this provision of the Plan or any provision of similar purpose of any other Plan the Company may, without the consent of or notice to any person, release to or obtain from any insurance company or other organization or person any information, with respect to any person, which the Company deems to be necessary for such purposes. Any person claiming benefits under this Plan shall furnish to the Company such information as may be necessary to implement this provision. 24 5.4 ELIGIBILITY OF COVERAGE Coverage provided under this Plan for Participants and their Dependents shall be in accordance with the Eligibility, Effective Date, and Termination provisions as stated in this Plan Document, including any Coverage Classification stated on the Schedule of Benefits page. If coverage classifications are designated on the Schedule of Benefits, any change in the amount of coverage available to a Covered Person occasioned by a change in the classification of Participant shall become effective automatically on the classification change date; however, if the Participant is not actively at work within the eligible class on the date the amount of his coverage would otherwise increase, such increase shall not become effective until the next following day on which he is actively at work within the eligible class. If coverage for a Participant is to be continued during disability, approved leave of absence or temporary lay-off, the amount of his coverage shall be the amount for which he was covered on his last day of active work; in no event shall this coverage be continued for longer than ninety (90) days, except where it conflicts with Workers' Compensation Laws of the State of Texas. In the case of a Dependent, such increase shall not become effective automatically if on that date the dependent is confined in a hospital or elsewhere. Such increase will become effective, however, on the day next following the final discharge of dependent from the hospital. This limitation will not apply to a newborn who is hospital confined solely because of his birth. 5.4.1 Participant Eligibility 5.4.1.a A Participant eligible for coverage under the Plan shall include only full-time employees who have met all of the following conditions: (1) Is employed by the Company on a permanent basis for at least 40 hours per week. (2) Has been actively at work for a continuous period of 90 days. (3) Is within the classification, if any, shown in the Schedule of Benefits. 5.4.1.b With respect to such eligible person employed by the company on the effective date of this Plan, the date of eligibility shall be the effective date of the Plan. 5.4.1.c With respect to such an eligible person who becomes employed by the Company after the effective date of the Plan, the date of eligibility shall be: (1) The day immediately following the date he has been actively at work for a continuous period of 90 days. 25 [ I r (2) The day he first comes within the Classification, if any, shown in the Schedule of Benefits, whichever date is later. 5.4.1.d A Participant eligible for dependent coverage shall be any Participant whose dependents meet the definition of a dependent as stated earlier in the Plan. Each Participant will become eligible for Dependent Coverage on the latest of the following: (1) The date he becomes eligible for participant coverage; or (2) The date on which he first acquires a dependent; or (3) The date he first comes within the classification, if any, eligible for dependent coverage as stated on the Schedule of Benefits. 5.4.1.e If both the husband and wife are employed by the Company, and both are eligible for dependent coverage, either the husband or wife, but not both, may elect dependent coverage for their eligible dependents. 5.4.2 Dependent Eligibility 5.4.2.a A dependent will be considered eligible for coverage on the date the Participant becomes eligible for dependent coverage, subject to all limitations and requirements of this Plan, and in accordance with the following: 5.4.2.b Newborn children of a Covered Participant will be covered from the moment of birth for injury or illness, including the necessary care or treatment of medically diagnosed congenital defects, birth abnormalities or prematurity, provided the child is properly enrolled as a dependent of the Participant within thirty (30) days of the date of birth of the child. This provision shall not apply nor in any way affect the normal mater- nity provisions applicable to the mother. 5.4.2.c A spouse will be considered an eligible dependent from the date of marriage, provided the spouse is properly enrolled as a dependent of the Participant within thirty (30) days of the date of marriage. 5.4.2.d If a dependent is acquired other than at the time of his birth, due to a court order, decree, or marriage, that dependent will be considered an eligible dependent from the date of such court order, decree, or marriage provided that this new dependent is properly enrolled as a dependent of the Participant within (30) days of the court order, decree or marriage. 5.5 EFFECTIVE DATE OF COVERAGE 5.5.1 Effective Date for Participants 5.5.1.a Participant coverage under the Plan shall become effective with respect to an eligible person on the date of his eligibility, provided written application is made on or before 26 { that date. If application is made within thirty (30) days after the date of eligibility, the participant coverage for the eligible person shall become effective on the date that application is made. 5.5.1.b The Company reserves the right to require evidence of good health satisfactory to the Company from any eligible person who makes application for participant cover- age under the Plan more than thirty (30) days after the date of his eligibility; his coverage shall become effective on the date such evidence of good health is approved by the Company. 5.5.1.c If an eligible person is not actively at work on the date this Participant coverage would otherwise become effective, his coverage shall become effective on the day he returns to active work. 5.5.1.d All Participant coverage under the Plan shall commence at 12:01 A.M. Standard Time on the date such coverage is effective, provided such Participant is able to be actively at work at such time. 5.5.1.e If the Participant is not actively at work on the date this participant coverage would otherwise take effect, but was able to do so at 12.01 A.M. Standard Time had such work been commenced at that time, such Participant shall be eligible for coverage on that date. 5.5.1.f The actively at work provision is waived for Participants who are qualified beneficiaries as defined by the Consolidated Omnibus Budget Reconciliation Act of 1985. 5.5.2 Effective Date for Dependents Each Participant who makes written request for dependent coverage hereunder, on a form approved by the Company, shall, subject to the further provisions of this section, become covered for dependent coverage as follows: 5.5.2.a If the Participant makes such written request on or before the date he becomes eligible for dependent coverage, he shall become covered, with respect to those persons who are then his dependents, on the date he becomes covered for participant coverage. 5.5.2.b If the Participant makes such written request after he becomes eligible for dependent coverage within the thirty (30) day period immediately following the first day on which he is both eligible for dependent coverage and actively at work, he shall become covered on the date of such request or on the date he becomes covered for participant coverage, whichever date is later, with respect to those persons who are then his dependents. 27 5.5.2.c If dependent coverage under the Plan is requested and the participant makes such written request after the end of the 30 day period specified in 5.5.2b immediately above, or after previous termination of dependent coverage because of his failure to make a contribution when due, the Participant must furnish evidence of good health, satisfactory to the Company, of each person who is a dependent of such Participant. Dependent coverage with respect to each dependent shall become effective on the date such evidence of good health is approved by the Company. 5.5.2.d If a dependent has recently been confined on the date such Participant would otherwise become covered for dependent coverage with respect to such dependent, coverage for that dependent will be deferred until he has either been free of all confinement (at home, in a hospital or elsewhere) for thirty-one 31 days, or until the Company has received evidence satisfactory to it that the individual no longer has any disease or injury. 5.5.2.e A "recent confinement" for the purposes of this provision means either that: (1) The dependent is confined anywhere on the date coverage would otherwise become effective, and/or (2) The dependent has been confined in a hospital during the thirty-one 31 days prior to that date. This limitation shall not apply to an infant with respect to whom a Participant would otherwise become covered for dependent coverage on the date of such birth of infant, except for those limitations outlined in the Covered Expenses and Exclusions and Limita- tions Sections of this Plan. 5.6 TERMINATION OF COVERAGE 5.6.1 Participant Termination 5.6.1.a Participant coverage shall automatically terminate immediately upon the earliest of the following dates: 5.6.1.b Date of termination of employment for Participant; or 5.6.1.c Date the Participant ceases to be in a class of participants eligible for coverage; or 5.6.1.d Date the Participant fails to make any required contribution for coverage; or 5.6.1.e Date the Plan is terminated; or with respect to any participant benefits of the Plan, the date of termination of such benefit; or 5.6.1.f Date the Company terminates coverage for Participant; or 5.6.1.g Date the Participant dies. 28 5.6.2 Dependent Termination The Dependent Coverage of a Participant shall automatically terminate immediately upon the earliest of the following dates: 5.6.2.a Date the dependent ceases to be an eligible dependent as defined in the Plan; or 5.6.2.b Date of termination of coverage for Participant under the Plan; or 5.6.2.c Date the Participant ceases to be in a class of participants eligible for dependent coverage; or 5.6.2.d Date the Participant fails to make any required contribution for dependent coverage; or 5.6.2.e Date the Plan is terminated; or with respect to any benefits for dependents under the Plan, the date of termination of such benefits; or 5.6.2.f Date the company terminated coverage for dependent; or 5.6.2.g Date the Participant dies. 5.6.3 Continuation Rights on Termination of Eligibility Subject to the following conditions, the employee and/or his dependent will be entitled, without evidence of good health, to continue coverage under this Plan: 5.6.3.a If the coverage of an employee terminates due to: (1) termination of employment (other than for gross misconduct); or (2) reduction in hours of employment; or 5.6.3.b If the coverage of a dependent terminates due to: (1) the employee's death; (2) the employee's divorce or legal separation from his spouse; (3) the employee's eligibility under Medicare; or (4) a covered child's ineligibility as a family member; 5.6.3.c The Plan Administrator must be notified within thirty (30) days in the event of termination or reduction of hours, employee's death, or the employee's eligibility under Medicare. 29 5.6.3.d The employee or dependent is responsible for notifying the Plan Administrator within 60 days after a divorce or legal separation, or the dependent child's loss of dependent status. 5.6.3.e The Plan Administrator will notify the employee or dependent of continuation rights under this plan within 14 days of the date of receipt of notification of the specific qualifying event. 5.6.3.f Written notice which is: (a) presented to the employee; or (b) mailed to the employee's or dependent's last known address, shall constitute proper notice. 5.6.3.g Notification to a dependent spouse eligible for continuation of coverage shall be deemed to be notification to all other dependents residing with the spouse at the time of notification, (1) unless otherwise specified in the election in the event of termination or reduction in hours, the election by the employee to continue coverage shall be deemed election for all eligible dependents; and (2) unless otherwise specified in the election, in the event of termination due to any other qualifying event, election by the employee's spouse to continue coverage shall be deemed election for all other eligible dependents. In the case of a dependent child who has lost his dependent status the child must notify the Plan Administrator of such election. 5.6.3.h Election to continue coverage and payment of the first contribution thereof must be received by the Plan Administrator no later than 60 days after: (1) the date on which coverage terminates; or (2) the date of notification of continuation rights. 5.6.3.i If election to continue coverage is made after the qualifying event, an additional 45 days from the date of election will be allowed for payment of the contribution due for the period from the time coverage terminates until the time election is made. 5.6.4 Termination of Continuation of Coverage Rights Continuation of coverage under this Plan will terminate on the earliest of the following dates: 5.6.4.a The date on which the Company ceases to provide any group health plan on any employee; 5.6.4.b The date the required contribution ceases to be made; 30 5.6.4.c The date the employee or dependent becomes covered under any other group health plan (as an employee or otherwise) that does not contain any exclusion or limitation for any pre-existing condition of the covered person, or becomes entitled to benefits under Medicare; 5.6.4.d 18 months after termination of eligibility due to termination or reduction in hours; or 5.6.4.e 36 months after termination of eligibility due to the divorce, or legal separation, employee death, employee's eligibility for Medicare and loss of dependent status for a dependent child; or 5.6.4.f 29 months if during the 18 month period coverage is extended because you or a covered dependent are determined to be disabled (for Social Security purposes) at the time of termination or reduction in hours and notification is made within 60 days of the Social Security determination; or 5.6.4.g The date that the disabled individual is no longer disabled. Federal law requires that you inform the Plan Administrator of any final determination that the individual is no longer disabled. 6. GENERAL PROVISIONS 6.1 NOTICE AND PROOF OF CLAIM Written notice of injury or of illness upon which claim may be based must be given to the company within ninety (90) days of the date of the commencement of the first loss for which benefits arising out of such injury or illness may be claimed. Notice given by or in behalf of the claimant to the Company with particulars sufficient to identify the Covered Person, shall be deemed to be notice to the Company. Failure to furnish notice within the time provided in the Plan shall not invalidate any claim if it shall be shown not to have been reasonably possible to furnish such notice and that such notice was furnished as soon as was reasonably possible. The Company, upon receipt of the notice required by the Plan, will furnish to the claimant such forms as are usually furnished by it for filing proof of loss. If such forms are not so furnished within fifteen (15) days after the Company receives such notice, the claimant shall be deemed to have complied with the requirements of the Plan as to proof of loss upon submitting, within the time fixed in the Plan for filing proofs of loss, written proof covering the occurrence, character and extent of the loss for which claim is made. Affirmative proof of loss of time on account of disability or of hospital confinement for which claim is made must be furnished to the Company within ninety (90) days after the termination of the period for which claim is made. Affirmative proof of any other loss on which claim is made must be furnished to the Company within ninety (90) days after the date of such loss. Failure to furnish proof within the time provided in the Plan shall not 31 t m invalidate or reduce any claim if it shall be shown not to have been reasonably possible to furnish such proof and that such proof was furnished as soon as reasonably possible. However, when coverage for the Covered Person terminates for any reason, written proof of claim must be given to the Company within ninety (90) days of the date of termination of coverage, provided that the Plan remains in force. However, upon termination of the Plan, final claims must be received within thirty (30) days of termination. 6.1.1 Examination The Company shall have the right and opportunity to have the Covered Person (whose injury or sickness is the basis of a claim hereunder) examined when and so often as it may reasonably require during pendency of claim hereunder. The Company shall also have the right and opportunity to have an autopsy performed in case of death where it is not forbidden by law. 6.1.2 Payment of Claims All Plan benefits are payable to the Participant, or subject to any written direction of the Participant. All or a portion of any indemnities provided by the Plan on account of hospital, nursing, medical or surgical services may, at the Participant's option and unless Participant requests otherwise in writing not later than the time of filing proofs of such loss, be paid directly to the hospital or person rendering such services; however, if any benefit remains unpaid at the death of the Participant or if the Participant is a minor or is, in the opinion of the Company, legally incapable of giving a valid receipt and discharge for any payment, the Company may, at its option, pay such benefits to any one or more of the following relatives of the Participant: wife, husband, mother, father, child or children, brother or brothers, sister or sisters. Any payment so made will constitute a complete discharge of the Company's obligation to the extent of such payment and the Company will not be required to see the application of the money so paid. If a claim is not paid in full, the Company will furnish notice to the Participant which will specify the reason or describe the additional information required to perfect the claim. Upon written request by the Participant within sixty (60) days after notice is received, Company will review the claim in question and give a final written decision on the review within sixty (60) days, or one hundred-twenty (120) days under special circumstances, after such request is received. 6.1.3 Rights of Recovery Whenever payments have been made by the Company with respect to allowable expenses in excess of the maximum amount of payment necessary to satisfy the intent of this Plan, the Company shall have the right, exercisable alone and in its sole discretion, to recover such excess payments. 32 6.1.4 Free Choice of Physician The Covered Person shall have free choice of any legally qualified physician or surgeon and the physician-patient relationship shall be maintained. 6.2 LEGAL PROCEEDINGS No action at law or in equity shall be brought to recover on the Plan prior to the expiration of sixty (60) days after proof of loss has been filed in accordance with the requirements of the Plan, nor shall such action be brought at all unless brought within three (3) years from the expiration of the time within which proof of loss is required by the Plan. 6.3 TIME LIMITATION If any time limitation of the Plan with respect to giving notice of claim or furnishing proof of loss, or the bringing of an action at law or in equity, is less than that permitted by the law of the state in which the Plan is existent, such limitation is hereby extended to agree with the minimum period permitted by such law. 6.4 WORKER'S COMPENSATION NOT AFFECTED This Plan is not in lieu of, and does not affect any requirement for coverage by Worker's Compensation Insurance. 6.5 CONFORMITY WITH LAW If any provision of this Plan is contrary to any law to which it is subject, such provision is hereby amended to conform thereto. 6.6 REPRESENTATIONS AND WARRANTIES In the absence of fraud, all statements made by a Covered Person will be deemed representations and not warranties. No such representations will void the Plan benefits or be used in defense to a claim hereunder unless a copy of the instrument containing such representation is or has been furnished to such Covered Person. 6.7 MISCELLANEOUS Section titles are for convenience of reference only and are not to be considered in interpreting this Plan. No failure to enforce any provision of this Plan shall affect the right thereafter to enforce such provision of this Plan. 33 7. DEFINITIONS Certain words and phrases which may be used in this Plan Document are listed below, along with the definition or explanation of the manner in which the term is used for the purposes of this Plan. Masculine pronouns used in this Plan Document shall include masculine or feminine gender unless the context indicates otherwise. Wherever any words are used herein in the singular or plural, they shall be construed as though they were in the plural or singular, as the case may be, in all cases where they would so apply. 7.0.1 Actively at work-The active expenditure of time and energy in the service of the City. A participant shall be deemed actively at work on each working day or while using accrued leave time consistent with the City's policies. 7.0.2 Affiliate - A firm which is a subsidiary of the Company, or which is affiliated with the Company may be an Affiliate if such affiliate, by action of its board and with the approval of the Company, has adopted the Plan. 7.0.3 Ambulatory Surgical Center - An institution or facility, either free-standing or as part of a hospital with permanent facilities, equipped and operated for the primary pur- pose of performing surgical procedures and to which a patient is admitted to and discharged from within a twenty-four (24) hour period. Any office maintained by a physician for the practice of medicine or dentistry, or for the primary purpose of performing terminations of pregnancy, shall not be considered to be an ambulatory surgical center. 7.0.4 Amendment - A formal document that changes the provisions of the Plan Document, duly signed by the authorized person or persons as designated by the Plan Administrator. 7.0.5 Benefit Percentage - That portion of the eligible expenses to be paid by the Plan in accordance with the coverage provisions as stated in the Plan. It is the basis used to determine any out-of-pocket expenses in excess of the annual deductible which are to be paid by the Participant. 7.0.6 Benefit Period - A time period of one year, as shown on the Schedule of Benefits. Such benefit period will terminate on the earliest of the following dates: (1) The last day of the one-year period so established; or (2) The day the Maximum Lifetime Benefit applicable to the Covered Person becomes payable; or 34 (3) The day the Covered Person ceases to be covered for Major Medical Expense Benefits. 7.0.7 Benefit Year- A period of time commencing with the effective date of this Plan or the Plan Anniversary, and terminating on the date of the next succeeding Plan Anniversary. 7.0.8 Calendar Year-A period of time commencing on January 1 and ending on December 31 of the same given year. 7.0.9 Certified Social Worker-Advanced Clinical Practitioner - A person certified by the Texas Department of Human Services as a Certified Social Worker with the order of recognition of Advanced Clinical Practitioner with Private Practitioner Recognition. In states where there is a licensure requirement,the Certified Social Worker-Advanced Clinical Practitioner must be licensed by the appropriate state administrative agency. 7.0.10 Close Relative - The spouse, parent, brother, sister, child, or spouse's parent of the Covered Person. 7.0.11 College - See definition of University. 7.0.12 Company - The City of Beaumont. 7.0.13 Cosmetic Procedure - A procedure performed solely for the improvement of a Covered Person's appearance rather than for the improvement or restoration of bodily function. 7.0.14 Covered Expenses - Any medically necessary treatments, services, or supplies, that are not specifically excluded from coverage elsewhere in this Plan. 7.0.15 Covered Person - Any Participant or dependent of a Participant meeting the eligibility requirements for coverage as specified in this Plan, and properly enrolled in the Plan. 7.0.16 Custodial Care - That type of care or service, wherever furnished and by whatever name called, which is designed primarily to assist a Covered Person, whether or not totally disabled, in the activities of daily living. Such activities include, but are not limited to: bathing, dressing, feeding, preparation of special diets, assistance in walking or in getting in and out of bed, and supervision over medication which can normally be self-administered. 7.0.17 Deductible - A specified dollar amount of Covered Expenses which must be incurred during a benefit period before any other Covered Expenses can be considered for payment according to the applicable Benefit Percentage. 35 7.0.18 Dependent 7.0.18.a The Participant's legal spouse who is a resident of the same country in which the Participant resides. Such spouse must have met all requirements of a valid marriage contract in the State of marriage of such parties. 7.0.18.b The Participant's child who meets all of the following conditions: (1) Is a resident of the same country in which the Participant resides; (2) Is unmarried; (3) Is a natural child, step-child, legally adopted child, or a child who has been placed under the legal guardianship of the Participant; (4) Is in the custody of and/or financially dependent upon the Participant. This requirement is waived if the Participant is required to provide coverage due to Court order or divorce decree for a natural or adopted child not in his custody or not wholly dependent on him; (5) Is less than nineteen (19) years of age. This requirement is waived if the child is at least nineteen (19) years of age but less than twenty-five (25) years of age, and is dependent upon the Participant for support, and is a regular full-time student at a high school, college or university. The age requirement above is also waived for any mentally retarded or physically handicapped child, provided that the child is incapable of self-sustaining employment and is chiefly dependent upon the Participant for support and maintenance. Proof of incapacity must be furnished to the Company, and additional proof may be requested from time to time. 7.0.18.c Those situations specifically excluded from the definition of a dependent are: (1) A spouse who is legally separated or divorced from the Participant; or (2) Any person on active military duty; or (3) Any person eligible for coverage under this Plan as an individual Participant; or (4) Any person who is covered as a dependent by more than one Participant of the same Company. 7.0.18.d If both the husband and wife are employed by the company and both are eligible for coverage, either the husband or wife, but not both, may elect dependent coverage for their eligible dependents. 36 7.0.19 Dependent Coverage - Eligibility under the terms of the Plan for benefits payable as a consequence of eligible expenses incurred for an illness or injury of a dependent. 7.0.20 Durable Medical Equipment - Equipment which is: (1) Able to withstand repeated use; (2) Primarily and customarily used to serve a medical purpose; (3) Not generally useful to a person in the absence of illness or injury. 7.0.21 Eligible Expenses - See Covered Expenses. 7.0.22 ERISA - The Employee Retirement Income Security Act of 1974 or any provision or section thereof which is herein specifically referred to, as such act, provision or section may be amended from time to time. 7.0.23 Family - A Covered Participant and his eligible dependents. 7.0.24 Free-Standing Birthing Center-An institution or facility, either free-standing or as part of a hospital with permanent facilities, equipped and operated for the primary pur- pose of performing surgical procedures and to which a patient is admitted to and discharged from within a twenty-four (24) hour period. Any office maintained by a physician for the practice of medicine or dentistry, or for the primary purpose of performing terminations of pregnancy, shall not be considered to be an ambulatory surgical center. 7.0.25 Full-Time Employment - A Participant actively working for the Company at least forty (40) hours per week (exclusive of overtime) on a year-round basis. 7.0.26 Full-Time Student - A Participant's dependent child who is enrolled in and regularly attending high school or an accredited college or university for the minimum number of credit hours required by that college or university in order to maintain full-time student status. 7.0.27 Hospital - An institution which meets all of the following conditions: (1) It is engaged primarily in providing medical care and treatment to ill and injured persons on an inpatient basis at the patient's expense; and (2) It is constituted, licensed and operated in accordance with the laws of jurisdiction in which it is located which pertain to hospitals; and (3) It maintains on its premises all the facilities necessary to provide for the diagnosis and medical and surgical treatment of an illness or an injury; and 37 r a rr (4) Such treatment is provided for compensation by or under the supervision of physicians with continuous twenty-four hour nursing services by registered graduate nurses (R.N.'s); and (5) It qualifies as a hospital, a psychiatric hospital, or a tuberculosis hospital and is accredited by the Joint Commission on the Accreditation of Hospitals (JCAH); and (6) It is a provider of services under Medicare; and it is not, other than incidentally, a place for rest, a place for the aged, a place for drug addicts, a place for alcoholics, or a nursing home. 7.0.28 Hospital Miscellaneous Expenses - The actual charges made by a hospital in its own behalf for services and supplies rendered to the Covered Person which are medically necessary for the treatment of such Covered Person. Hospital mis- cellaneous expenses do not include charges for room and board or for professional services (including intensive nursing care by whatever name called), regardless of whether the services are rendered under the direction of the hospital or otherwise. 7.0.29 Illness - A bodily disorder, disease, physical sickness, mental infirmity, or functional nervous disorder of a Covered Person. A recurrent illness will be considered one ill- ness. Concurrent illnesses will be considered one illness unless the concurrent illnesses are totally unrelated. All such disorders existing simultaneously which are due to the same or related causes shall be considered one illness. 7.0.30 Incurred Expenses - Those services and supplies rendered to a Covered Person. Such expenses shall be considered to have occurred at the time or date the service or supply is actually provided. 7.0.31 Injury - A condition caused by accidental means which results in damage to the Covered Person's body from a sudden, violent, unexpected and external event. Any loss which is caused by or contributed to by a hernia of any kind will be considered a loss under the definition of illness, and not as a loss resulting from accidental injury. 7.0.32 Inpatient - The classification of a Covered Person when that Person is admitted to a hospital, convalescent facility, or hospice for treatment, and charges are made for room and board to the Covered Person as a result of such treatment. 7.0.33 Intensive Care Unit - A section, ward, or wing within the hospital which is separated from other facilities that meet all of the following conditions: (1) Is operated exclusively for the purpose of providing professional medical treatment for critically ill patients; (2) Has special supplies and equipment necessary for such medical treatment available on a standby basis for immediate use; and 38 (3) Provides constant observation and treatment by registered nurses (R.N.'s) or other highly trained hospital personnel. 7.0.34 Licensed Practical Nurse-An individual who has received specialized nursing training and practical nursing experience, and is duly licensed to perform such nursing services by the state in which the individual performs such services. 7.0.35 Medically Necessary - Health care services, supplies or treatment which, in the judgment of the attending physician, are appropriate and consistent with the diagnosis and which, in accordance with generally accepted medical standards, could not have been omitted without adversely affecting the patient's condition or the quality of medical care rendered. 7.0.36 Medicare - The programs established by Title I of Public Law 89-98 (79 Statutes 291) as amended entitled "Health Insurance for the Aged Act," and which includes Parts A and B and Title XVIII of the Social Security Act (as amended by Public Law 89-98, 79) as amended from time to time. 7.0.37 Mental/Nervous Disorder - Any neurosis, psychoneurosis, psychopathy, psychosis, personality disorder, or any other Mental, Nervous or Emotional disease or disorder of any kind. 7.0.38 Minor Emergency Medical Clinic - A free-standing facility which is engaged primarily in providing minor emergency and episodic medical care to a Covered Person. A Board-Certified Physician, a Registered Nurse, and a Registered X-Ray Technician must be in attendance at all times that the clinic is open. Clinic facilities must include x-ray and laboratory equipment and a life support system. For the purposes of this Plan a clinic meeting these requirements will be considered to be a minor emergency medical clinic, by whatever actual name it may be called; however, a clinic located on or in conjunction with or in any way made a part of a regular hospital shall be excluded from the terms of this definition. 7.0.39 Named Fiduciary - The City of Beaumont, which has the authority to control and manage the operation and administration of the Plan. 7.0.40 Newborn - An infant from the date of his birth until the initial hospital discharge or until the infant is fourteen (14) days old, whichever occurs first. 7.0.41 Occupational Therapy - Treatment which is rendered for reasons other than restoration of bodily function and the prevention of disability. Such treatment is usually rendered by the use of work-related skills and leisure time tasks for the evaluation of an individual's behavior and/or abilities for self-care, work or play. 7.0.42 Outpatient - The classification of a Covered Person when that Covered Person received medical care, treatment, services or supplies at a clinic, office of a physician, 39 s x d or at a hospital if not a registered bed patient at that hospital, and outpatient psychiatric facility or an outpatient alcoholism treatment facility. 7.0.43 Outpatient Alcoholism Treatment Facility - An institution which provides a program for diagnosis, evaluation, and effective treatment of alcoholism; provides detoxification services needed with its effective treatment program; provides infirmary-level medical services or arranges with a hospital in the area for any other medical services that may be required; is at all times supervised by a staff of physicians; provides at all times skilled nursing care by licensed nurses who are directed by a full-time registered graduate nurse (R.N.); prepares and maintains a written plan of treatment for each patient based on medical, psychological and social needs which is supervised by a physician; and meets licensing standards. 7.0.44 Outpatient Psychiatric Facility - An administratively distinct governmental, public, private or independent unit or part of such unit that provides outpatient mental health services and which provides for a psychiatrist who has regularly scheduled hours in the facility, and who assumes the overall responsibility for coordinating the care of all patients. 7.0.45 Participant - A person permanently and directly employed full time in the regular business of, and compensated for services by, the Company. The term "Participant" shall also include a person who is a qualified beneficiary as defined by the Consolidated Omnibus Budget Reconciliation Act of 1985. 7.0.46 Participant Coverage - Coverage hereunder providing benefits payable as a consequence of an injury or illness of a Participant. 7.0.47 Physical Therapy - Treatment which is rendered to restore a certain degree of bodily function or prevent disability following illness, injury, or loss of a body part. Physical therapy shall not include any occupational therapy. 7.0.48 Physician - A legally licensed medical or dental doctor or surgeon, chiropractor, osteopath, chiropodist, podiatrist, optometrist, Certified Social Worker-Advanced Clinical Practitioner, or certified consulting psychologist to the extent that same, within the scope of their license, are permitted to perform services provided in this Plan. A Physician shall not include the Covered Person or any close relative of the Cov- ered Person. 7.0.49 Plan - Without qualification, this Plan Document. 7.0.50 Plan Administrator- The Company, which is responsible for the day-to-day functions and management of the Plan. The Plan Administrator may employ persons or firms to process claims and perform other Plan connected services. 7.0.51 Plan Supervisor-The person or firm employed by the Company to provide consulting services to the Company in connection with the operation of the Plan and any other functions, including the processing and payment of claims. 40 7.0.52 Pre-Admission Testing - The procedure where certain routine tests (x-ray, laboratory, etc.) are performed on an outpatient basis within seven (7) days of a scheduled hospital admission. 7.0.53 Pre-Existing Condition - Any condition which has been discovered during the pre- employment process or injury or illness of a Covered Person for which the Covered Person has been under the care of a licensed physician or has received medical care or services within the eighteen (18) month period immediately preceding his effective date of coverage. Claims resulting from pre-existing conditions, as defined are excluded from coverage under the Plan for 18 months. 7.0.54 Pregnancy - That physical state which results in childbirth, abortion, or miscarriage, and any medical complications arising out of or resulting from such state. 7.0.55 Psychiatric Care - Also known as psychoanalytic care, means treatment for mental illness or disorder, or a functional nervous disorder. 7.0.56 Psychiatric Day Treatment Facility - A mental health facility which is: (1) accredited by the Program for Psychiatric Facilities (or its successor) or by the Joint Commission of Accreditation of Hospitals; and (2) provides treatment for acute mental or nervous disorders; and (3) provides such treatment for up to 8 hours in any 24 hour period. Treatment must be given in a structured psychiatric program using a personalized treatment plan. The treatment plan must have specific attainable goals which are appropriate both to the patient and the program. The treatment plan must be supervised by a doctor of medicine who is certified in psychiatry by the American Board of Psychiatry and Neurology. 7.0.57 Psychologist - An individual holding the degree of Ph.D. and acting within the scope of his license. 7.0.58 Reasonable and Customary-The designation of a charge as being the usual charge made by a physician or other providers of services, supplies, medication or equipment that does not exceed the general level of charges made by other pro- viders rendering or furnishing such care or treatment within the same area. The term "area" in this definition means a county or such other area as is necessary to obtain a representative cross-section of such charges. Due consideration will be given to the nature and severity of the condition being treated and any medical complications or unusual circumstances which require additional time, skill or expertise. 7.0.59 Registered Nurse - An individual who has received specialized nursing training and is authorized to use the designation of "R.N.", and who is duly licensed by the state or regulatory agency responsible for such licensing in the state in which the individual performs such nursing services. 7.0.60 Room and Board - All charges by whatever name called which are made by a hospital or convalescent nursing facility as a condition of occupancy. Such charges 41 do not include the professional services of physicians nor intensive nursing care by whatever name called. 7.0.61 Semi-Private - A class of accommodations in a hospital or convalescent nursing facility in which at least two patient beds are available per room. 7.0.62 TEFRA - Tax Equity and Fiscal Responsibility Act of 1982, as amended from time to time. 7.0.63 Total Disability (Totally Disabled) - A physical state of a Covered Person resulting from an illness or injury which wholly prevents: In the case of a Participant, from engaging in any and every business or occupation and from performing any and all work for compensation or profit; and In the case of a Dependent, from performing the normal activities of a person of like age and sex in good health; however, a dependent who is normally gainfully employed will not be deemed totally disabled if he is engaging in any occupation or employment for which he is or becomes qualified by education, training, or experience; and a dependent who is normally a student will not be deemed totally disabled if he is attending an educational institution on a full-time or part-time basis. 7.0.64 University - An institution accredited in the current publication of accredited institutions of higher education. ERISA REQUIREMENTS The following information is required to be in the PLAN by Federal Law and Regulation (ERISA): Name and type of administration of the Plan: The City of Beaumont Employee Benefit Plan Providing Benefits for Reimbursement of Medical Expenses. Name and address of the person designated as agent for the service of legal process: City of Beaumont 801 Main Street Beaumont, Texas 77701 Attn: MAYOR Name and address of the Plan Administrator/Sponsor and Named Fiduciary: City of Beaumont 801 Main Street Beaumont, Texas 77701 42 i 6 Name and address of Plan Supervisor: GreenTree Administrators P. O. Box 7306 Beaumont, TX 77726-7306 Name and address of the Trustee: City of Beaumont 801 Main Street Beaumont, Texas 77701 Contributions are made to the fund by the COMPANY AND COVERED EMPLOYEES, and are held by the Trustee. Contributions are calculated and based upon the cost of coverages and benefits. Benefits for covered expenses are provided directly from the Plan, through the Plan Supervisor and under the direction of the Plan Administrator. Insurance is provided to cover larger claims. Date of the end of the Plan year: September 30. Internal Revenue Service Identification Number: 74-6000278. Remedies available under the Plan for the redress of claims which are denied in whole or in part: In the event a claim is denied by the Plan Supervisor, the denial shall be in writing, delivered to the claimant, and shall set forth the reasons for denial and specify the pertinent Plan provisions upon which denial is based. If additional information is necessary to process a claim, the denial shall state and/or describe any additional material or information needed to process the claim. Any denial shall also advise the claimant of the review procedure below. Written application for review or denial of a claim must be received in the office of the Plan Sponsor not later than sixty (60) days following receipt by the claimant of the denial of his claim, or no appeal will be allowed. The Plan Administrator/Sponsor shall decide the appeal within sixty (60) days after receipt of the appeal by the Plan Supervisor, unless special circumstances (such as the need to hold a hearing) cause delay. In such case, a decision shall be rendered as soon as possible, but in no event more than one-hundred-twenty (120) days after receipt of the application for review. The decision on review shall be in writing, stating the reasons for the decision, and referring to the pertinent Plan provisions upon which the decision is based. All written decisions by the Plan Administrator/Sponsor shall be written in Plain English. 43 Additional Information: Any person aggrieved by the decision at the conclusion of the review process may then take any legal action deemed appropriate. The court may assess penalties against the Plan Administrator/Sponsor for improperly failing to provide information, documents or payment of legitimate claims, and may assess court costs and reasonable legal fees against either party, according to the circumstances. Service of process may be made on the designated agent or on the Plan Administrator/Sponsor, the Plan Supervisor, or on the Trustee. The Plan must be managed fairly and in the interest of all participants. No one may be fired or in any way discriminated against because of a disputed claim or due to the exercise of any rights under the law. Participants may examine, without charge, at the office of the Plan Supervisor and other specified locations, such as worksites, all documents pertaining to the Plan, including reports, insurance contracts and the like. Copies of any such documents are available from the Plan Supervisor, for which a reasonable charge may be made. Participants will also receive a summary of the annual financial report, as required by law. Participants in the Plan are entitled to the assistance of the local area office of the Labor- Management Services Administration, U.S. Department of Labor. It is the intention of The City of Beaumont to hereby establish a program of benefits constituting an "Employee Welfare Benefit Plan" under the Employee Retirement Income Security Act of 1974 (ERISA) and any amendments thereto. IN WITNESS WHEREOF, the Company has executed, and the Plan Supervisor has acknowledged, this Plan Document as of the Plan Effective Date shown herein. Signed by: Title: Date: 44 m AMENDMENT 1 EFFECTIVE DATE: January 1, 1991 The following sections of the Civilian Medical Plan Document are to be amended as stated below: SCHEDULE OF BENEFITS FOR ALL ELIGIBLE PARTICIPANTS AND DEPENDENTS MEDICAL EXPENSE BENEFIT* Annual Deductible Per Covered Person...........................$ 250.00 Maximum per family (cumulative)......................................$ 500.00 Deductible Accumulation Benefit Period............................ Calendar Year 1.2 BENEFIT PERCENTAGE AND DEDUCTIBLE Upon receipt of Proof of Loss, the Plan will pay 80% of the first $10,000.00 of eligible expenses incurred in each benefit period, unless otherwise stated in the Plan, which are in excess of the $250.00 Calendar Year Deductible per Covered Person. The Hospital Deductible will apply for each inpatient hospital confinement per illness per calendar year. However, if the illness or injury requires, multiple hospital admissions, the hospital deductible will be charged only once, per calendar year for the initial admission. All eligible covered expenses incurred in the benefit period in excess of the $10,000.00, and the calendar year deductible per covered person, will be paid at 100% (except items in the special provision section of this document.) The amount payable in no event shall exceed the Maximum Lifetime Benefit stated in the Schedule of Benefits. The calendar year deductible applies to the eligible charges of each benefit period, (except hospital inpatient confinement charges.) It applies only once for each Covered Person within a benefit period regardless of the number of illnesses. (If Covered Expenses incurred during a benefit period by the Covered Participant and his Covered Dependent and applied against this deductible exceed the Family Deductible Maximum of $500.00, no further deductible applies to any members of that family during that benefit period.) Any Covered Expenses incurred during the last three months of any Benefit Period, and applied toward the Calendar Year Deductible Amount for that Benefit Period, may also be applied toward satisfaction of the Calendar Year Deductible Amount during the next Benefit Period. 1 If the Plan benefit period is established on a calendar year basis, charges which were used toward satisfying the cash deductible under any prior plan of insurance coverage for the year in which this Plan was originally effective shall be accepted by the Company toward satisfying the cash deductible of this Plan, upon receipt of documented proof of such full or partial satisfaction. Authorized by: Title: Date: .0 2