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R-98-11-24-14F2 - 11/24/1998 t RESOLUTION NO. R-98-11-24-14F2 WHEREAS, the City of Round Rock has duly advertised for bids for the City' s stop loss reinsurance, and WHEREAS, Southland Life Insurance Company has submitted the lowest and best bid, and WHEREAS, the City Council wishes to accept the bid of Southland Life Insurance Company, Now Therefore, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the bid of Southland Life Insurance Company is hereby accepted as the lowest and best bid for the City' s stop loss reinsurance. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended, and the Act . RESOLVED this 24th day of Novembe , 1998 . ,� 1 CHARLES CUL R, Mayor City of Round Rock, Texas ATTEST: AA AU1 9J &E LAND, City Secretary K:\NPDOCS\RESOLUTI\RB1124F2.NPD/scg • *r N City of Round Rock 0 o; J Invitation for Bid Results TPA HBI HBI 7` HBI HBI HBI H81 Hal TML BPI Reinsurance Carrier BCBSTX BCBSTX Southland Jotm Alden LINA Monumental AIG US Benefits K . Common Specific Paid 15112 15112 15112 24112 15/12 15112 15112 15/12 Aggregate Paid 15112 15112 15/12 24/12 15/12 Paid 15112 15/12 Stop Loss $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 530,000 Ln Ln rn Employee O $25.71 $24.43 $18.54 $18.24 $22.80 $30.09 $21.70 $21.30 $17.01 rn N Employee Family $69.43 $65.97 545.85 $45.03 $52.30 $69.14 $53.92 $54.51 $44.70 F Ln Aggregate Corridor 12011/6 125% 125% 125% 125% 125% 125% 125% 125% ` Aggregate Premium $3.05 $2.54 $4.27 $6.07 $3.15 $3.32 $3.59 $3.41 $3.62 z Expected Claims $210.07 $200.14 $189.53 $190.62 $192.04 $199.26 $239.96 $191.63 $114.14 x¢' Factor(ee cam. Expected Claims $210.07 $200.14 $189.53 $190.62 $192.04 $199.26 $239.96 $191.63 $285.31 Factor e Attachment Point $252.06 $250.18 $236.91 S238.28 $240.05 $249.08 $299.95 $239.54 $142.68 Factor ee Attachment Point $252.06 $250.18 $236.91 $238.28 $240.05 $249.08 $299.95 $239.54 $356.64 Factor e Medical Admin $12.50 $12.50 512.50 $12.50 $12.50 $12.50 S12.50 $8.45 $11.90 Precerfification $1.80 S1.80 $1.80 $1.80 $1.80 $1.80 $1.80 $2.00 $1.65 Dental/Vision Admin $2.25 S2.25 52.25 $2.25 $2.25 $2.25 $2.25 $1.20 $2.10 PPO Fee $0.00 SO.00 SO.00 $0.00 $0.00 $0.00 $0.00 $2.50 $3.90 m Pres ' tion included included included included included included included Included $1.10 Total Fixed Cost $291,128.40 $276,920.80 $236,254.60 $242,823.60 $255,120.00 $306,721.20 $256,116.00 $242,998.80 $246,294.00 C, z Expected Claims $1,033,544.40 $984,688.80 $932,487.60 $937,850.40 $944,836.80 S980,359.20 51,180,603.20 $942,819.60 $828,594.00 Annual Attachment $1,240,233.60 $1,230,885.60 $1,165,597.20 $1,172,337.60 $1,181,046.00 $1,226,473.60 $1,475,754.00 $1,178,536.80 $1,035,763.20 Q Point Q' Total Estimated Plan Qi Cost $1,324,672.80 $1,263,609.60 $1,168,742.40 $1.180,674.00 $1,199,956.80 $1,287,080.40 $1,436,719.20 $1,185,818.40 $1,074,888.00 C:) Total Maximum $1,531,362.00 $1,308,806.40 $1,401,652.00 $1,415,161.20 $1,436,166.00 $1,532,194.80 $1,731,870.00 $1,421,535.60 $1,282,057.20 C) Plan Cost CO Run In Limit Inone, Inone Inane 7 $175,491.00 1 not known I $153,429.00 Inot known Inot known 1 $2071CO 53.00 3 r � z (� l �� tom►C '> �� qf,, C ��l/Sal: l.A.l� 11 6L�T Fart, r))em CoSTS DATE: November 19, 1998 SUBJECT: City Council Meeting, November 24, 1998 ITEM: 14. F. 2. Consider a resolution awarding the bid for stop loss reinsurance to Southland Life Insurance Company. The stop loss reinsurance provides coverage for the City's health benefit plan claims payments which exceed limits which the City has chosen to self-insure. Staff Resource Person: David Kautz, Finance Director This coverage protects the City's self-funded plan from catastrophic financial losses. A spreadsheet of comparative reinsurance costs is attached. EXECUTED DOCUMENT FOLLOWS PLAN DOCUMENT NO.: 1169 PLAN SPONSOR: City of Round Rock PLAN SPONSOR'S PRINCIPAL LOCATION: Round Rock, Texas PLAN EFFECTIVE DATE: December 1, 1998 PLAN ANNIVERSARIES: December 1, 1999 and each year thereafter STOP LOSS CARRIER: Southland Life Insurance Company The Plan Sponsor has established a self-funded Employee Welfare Benefit Plan and the Plan Sponsor has adopted this "PLAN DOCUMENT" (hereinafter "PLAN") providing for certain medical benefits as herein described for certain Employees and certain Dependents of such Employees of the Plan Sponsor and other Participant Employers as herein listed. The Plan Sponsor AGREES to pay, subject to all the provisions of this Plan, including any amendments to this Plan, the benefits hereinafter described to the person or persons entitled to such payments while.covered hereunder. The provisions of the following pages are a part of this Plan. Such provisions alone constitute the agreement under which payments will be made and are a part of this "Plan" as fully as if recited over the signatures hereto affixed. IN WITNESS HEREOF, City of Round Rock has caused this Plan to be executed this 1st day of December, 1998. SI Y: WITNESSED BY: Title Title Date Date 2 IMPORTANT NOTICE The Group Excess Loss Insurance Policy is being issued without receipt of the Employer Plan Document. The Plan Document must contain the Plan's schedule of benefits, limitations, exclusions, eligibility requirements, Rights of Appeal ERISA Rights Statement, definitions, and signed Signature Page by the Policyholder. Upon receipt of the Plan Document, we will verify that the schedule of benefits are the same as the benefits quoted in the Policy. If there is a variance in the benefits which would have affected the rates, deductibles, terms or conditions for coverage, Medical Risk Managers has the right to revise the rates, deductibles, terms or conditions as of the Effective Date of the Policy by providing written notice to the Policyholder. ING MEDICAL RISK SOLUTIONS IS PROHIBITED FROM CONSIDERING ANY CLAIM FOR REIMBURSEMENT PRIOR TO RECEIPT AND ACCEPTANCE OF THE EMPLOYER PLAN DOCUMENT. • SOUTHLAND LIFE INSURANCE COMPANY P.O. Box 105833, Atlanta, GA 30348-5833 1-800-746-6246 Hereby issues this Group Excess Loss Insurance Policy (the Policy) providing Specific (and Aggregate) Excess Loss Insurance to: CITY OF ROUND ROCK and agrees to pay the benefits of this Policy subject to its terms and conditions. This Policy is issued in consideration of the application for it and payment of premiums as provided in this Policy. This Policy is effective on the Effective Date shown below. The first Policy Anniversary shall be the Anniversary Date shown below. Subsequent anniversaries shall be on the same month and day in the years that follow. The first Policy Year shall be from the Effective Date to the first Policy Anniversary. Subsequent Policy Years shall run from one Policy Anniversary date to the next. INSURING DATES (as of 12:01 a.m. Standard Time at the policyholders principal address): EFFECTIVE DATE: 12/1/1998 POLICY NUMBER: G-36110 ANNIVERSARY DATE: 12/1/1999 DATE OF ISSUE: 3/24/1999 The provisions set forth on the following pages, including any amendments, and any referenced or attached documents, are a part of this Policy. Southland Life Insurance Company executes this Policy in Atlanta, Georgia on the Date of Issue. James D. Thompson B. Scott Burton President Secretary THIS IS NOT A POLICY OF WORKERS' COMPENSATION INSURANCE. THE EMPLOYER DOES NOT BECOME A SUBSCRIBER TO THE WORKERS' COMPENSATION SYSTEM BY PURCHASING THIS POLICY, AND IF THE EMPLOYER IS A NON-SUBSCRIBER, THE EMPLOYERS LOSES THOSE BENEFITS WHICH WOULD OTHERWISE ACCRUE UNDER THE WORKERS' COMPENSATION LAWS. THE EMPLOYER MUST COMPLY WITH THE WORKERS' COMPENSATION LAW AS IT PERTAINS TO NON-SUBSCRIBERS AND THE REQUIRED NOTIFICATIONS THAT MUST BE FILED AND POSTED. THE POLICYHOLDER UNDERSTANDS THE LIABILITY ASSUMED UNDER THE PORTION OF THE EMPLOYEE BENEFIT PLAN WHICH HE IS SELF INSURING AND FURTHER UNDERSTANDS THAT HE IS EXEMPTED FROM ARTICLE 1.14-1 OF THE TEXAS INSURANCE CODE ONLY IF A QUALIFIED EMPLOYEE BENEFIT PLAN HAS BEEN FILED AND MEETS THE REQUIREMENTS OF ERISA. GROUP SPECIFIC (AND AGGREGATE) EXCESS LOSS INSURANCE NON-PARTICIPATING Countersigned FORM 17010-97 TABLE OF CONTENTS PAGE Schedule of Benefits 3 Definitions 5 General Contract Provisions 7 Entire Contract 7 Notice 7 Renewal 7 Data Required 7 Clerical Error 7 Legal Action 7 Conformity with State Statutes 8 Amendments to the Policy 8 Benefit Provisions 8 Specific Excess Loss Insurance 8 Aggregate Excess Loss Insurance 8 Limitations 9 Our Obligation 9 Taxes 9 Limitations on Eligibility for Reimbursement Under This Policy 9 Late Entrants 10 Newborn Children 10 Retired Employees 10 Exclusions 10 Claims 11 Employee Benefit Plan's Claims Administration 11 Management of Large Claims and Potentially Catastrophic Losses 12 Notice of Claim 13 Audit 13 Notice Of Appeal 13 Subrogation 13 Employee Benefit Plan Changes 14 Premiums 14 Payment of Premiums 14 Grace Period 14 Change In Premium Rates 14 Notice of Change 14 Contract Termination 15 Insolvency 15 1 Page 2 TABLE OF CONTENTS (Continued) Any Riders and/or Amendments Follow Page 15 Amendment(s) Actively At Work Monthly Aggregate Accounting Page 2-a SCHEDULE OF BENEFITS This Policy provides those benefits shown below. This Schedule of Benefits is applicable to the coverage period from 12/1/1998 to 12/1/1999. Initial Enrollment: Single - 221; Family - 180. A. Specific Excess Loss Insurance 1. Specific Deductible Amount, Per Covered Person . . . . . . . . . . . . . . . $30,000.00 2. Reimbursement Percentage, Per Covered Person . . . . . . . . . . . . . . . 100 % 3. Specific Lifetime Maximum, Per Covered Person . . . . . . . . . . . . . . . . $1,000,000.00 4. Premium Rates a. Rate Per Single (Employee) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18.45 b. Rate Per Family (Employee with Dependents) . . . . . . . . . . . . . . . .$45.85 5. Basis of Policy Benefit Payment: 15/12 Incurred and Paid Include Run-In Period of 3 Months 6. Coverages Included: Medical Prescription Drug $25,000.00 Drug &Alcohol B. Aggregate Excess Loss Insurance 1. Monthly Aggregate Deductible Factors a. Composite Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $236.91 2. Aggregate Excess Reimbursement Maximum (Per Policy Year) . . . . . $1,000,000.00 3. Minimum Annual Aggregate Attachment Point . . . . . . . . . . . . . . . . . . $969,009.00 4. Maximum per Covered Person which may be applied to the Annual Aggregate Attachment Point (Specific Deductible) . . . . . . . . . . . . . . .$30,000.00 5. Aggregate Excess Loss Premium Rate a. Per Employee Per Month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4.25 6. Reimbursement Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 % Page 3 SCHEDULE OF BENEFITS (Continued) B. Aggregate Excess Loss Insurance (Continued) 7. Basis of Policy Benefit Payment: 15/12 Incurred and Paid Include Run-in Period of 3 Months 8. Coverages Included: Medical Vision Plan Prescription Drug --- w._~, -- `— —� Dental Plan x__$25,000.00 Drug &Alcohol 9. Optional Benefits/Riders Desired Monthly Aggregate Accounting C. Actively at Work: Waived D. Retired Employees: Not Covered E. Claims Administrator for Employee Benefit Plan (TPA): HEALTHCARE BENEFITS, INC. F. Affiliates/Subsidiaries (To be included under this Policy): None G. Additional Provisions Other. Craig Stluka is excluded from coverage. Page 4 DEFINITIONS The following words and phrases are used throughout this Policy. These defined terms are r capitalized. They have specific definitions for purposes of this Policy. ANNUAL AGGREGATE ATTACHMENT POINT means for the Policy Year, or any portion of the Policy Year, the Employee Benefit Plan benefit amount wholly retained by you. It is not considered for reimbursement under this Policy, and is the greater of: (a) the sum of Monthly Aggregate Deductible Amounts for each Policy Month of the Policy Year, determined by multiplying the total number of Covered Persons by the Monthly Aggregate Deductible Factor, or (b) the Minimum Annual Aggregate Attachment Point shown in the Schedule of Benefits. The maximum per Covered Person which may be applied annually to the Annual Aggregate Attachment Point is shown in the Schedule of Benefits. CLAIMS ADMINISTRATOR means a firm or person having a written agreement with you to process Plan benefits and provide administrative services. The selected Claims Administrator must be approved by us. The term "Claims Administrator" as used in this contract does not refer to the Plan Administrator used in the Employee Retirement Income Security Act (ERISA) of 1974, as amended unless you have specifically appointed the Claims Administrator as such. COVERED PERSON means any eligible individual who becomes covered for benefits under your Employee Benefit Plan. The term "Covered Person" does not include any individual who makes written application for coverage under your Employee Benefit Plan more than 31 days after first becoming eligible except a person who became covered: (1) during a Special Enrollment Period as required by the Health Insurance Portability and Accountability Act of 1996; or (2) as a Late Entrant as defined in the Limitations section. ELIGIBLE EXPENSES means the eligible charges payable under your Employee Benefit Plan. It does not include expenses specifically excluded or limited by this Policy, your Application for this Policy or any endorsements. EMPLOYEE BENEFIT PLAN means the employee welfare benefit plan established by you. The Employee Benefit Plan must be defined in written form and be in effect on the Effective Date of this Policy. The Employee Benefit Plan and any changes to that plan must be approved by us. You must promptly provide us with all changes to the Employee Benefit Plan. See the Employee Benefit Plan Changes provision on page 14. EMPLOYER, YOU and YOUR means the Policyholder. These terms are sometimes used without regard to capitalization. INCURRED means the date on which a covered service was provided or a covered purchase was made for a Covered Person under the Employee Benefit Plan. LARGE CLAIM ("LC") means paid or pending claims reaching or with the potential to reach 50% of the specific deductible or any claim that is potentially catastrophic. See the List of PCLs on page 12. Page 5 DEFINITIONS (Continued) MINIMUM ANNUAL AGGREGATE ATTACHMENT POINT means, for the Policy Year, the / Employee Benefit Plan benefit amount specified in the Schedule, which is wholly retained by you. It is not considered for reimbursement under this Policy regardless of how long this Policy remains in force. MONTHLY AGGREGATE DEDUCTIBLE FACTOR means the factor(s) specified in the Schedule, multiplied by the number of Covered Persons each Policy Month to determine the Aggregate Attachment Point. NUMBER OF COVERED PERSONS means the total number of Covered Persons existing in any Policy Month. The number of Covered Persons for any given Policy Month will be determined on a monthly basis. It is determined in accordance with the definition of "Covered Person" and the eligibility requirements of your Employee Benefit Plan. PAID means that a claim has been adjudicated by the Claim Administrator and the funds are actually disbursed by the Employee Benefit Plan prior to the end of the Policy Year. Payment of a claim is the unconditional and direct payment of a claim to a Covered Person or their health care providers. Payment will be deemed made on the date that both (1) the payor directly tenders payment by mailing "or otherwise delivering" a draft or check, and (2) the account upon which the payment is drawn contains, and continues to contain, sufficient funds to permit the check or draft to be honored. POLICY MONTH means each calendar month within a Policy Year. If the Effective Date of this coverage is other than the first day of the calendar month, then the first Policy Month is from the Effective Date to the last day of the same month. POLICY YEAR means the period from the Effective Date to the Policy Anniversary, as shown on the front of this Policy. This also includes any subsequent twelve (12) consecutive months coverage is continued beyond the first Policy Anniversary. REIMBURSEMENT PERCENTAGE means that percentage of excess loss which will be payable to you. RUN-IN PERIOD means the number of months immediately prior to the first day of a Policy Year. Eligible Expenses incurred by a Covered Person during this period which are paid by you during the Policy Year will be considered when determining benefit payments under this policy. RUN-IN LIMIT means the maximum benefit amount paid by you under your Employee Benefit Plan for Eligible Expenses incurred by a Covered Person during the Run-In Period which will be applied toward payment under this policy. RUN-OUT PERIOD means the number of months immediately following this Policy's Anniversary Date. Employee Benefit Plan benefits paid by you during this period for Eligible Expenses incurred by a Covered Person during the Policy Year will be considered when determining benefit payments under this policy. Page 6 DEFINITIONS (Continued) SPECIFIC DEDUCTIBLE AMOUNT means the amount which is wholly retained by you in the first Policy Year. It is not considered for reimbursement under this Policy. The Specific Deductible Amount applies separately to each Covered Person for each Policy Year. The Specific Deductible Amount for subsequent Policy Years will be determined annually. WE, OUR, US, and the COMPANY mean Southland Life Insurance Company. These terms are sometimes used without regard to capitalization. GENERAL CONTRACT PROVISIONS ENTIRE CONTRACT This entire contract consists of: (a) the pages of this Policy, including any amendments; (b) your application and any supplemental application, a copy of which is attached to this Policy; and (c) Employee Benefit Plan document. All statements made by you or any employee are, in the absence of fraud, understood to be representations and not warranties. Such statements will not be used to contest coverage unless contained in the application or any supplemental application. NOTICE For purposes of any notice required under this Policy, notice to the Claims Administrator shall be considered notice to you. Notice to you shall be considered notice to the Claims Administrator. RENEWAL This Policy may be renewed at our option for subsequent 12-month periods. DATA REQUIRED You will maintain adequate records acceptable to us for this insurance coverage. You will also provide any information we may require to administer this coverage. We may examine any of your records relating to this Policy and any claims filed under your Employee Benefit Plan. CLERICAL ERROR Clerical error, whether by you or us, will not invalidate coverage validly in force or validly terminated. Clerical errors should be reported and corrected. We will make appropriate adjustments in the premiums due for claims eligible for reimbursement under this policy. LEGAL ACTION No legal action may be brought to recover on this Policy within 60 days after written proof of loss has been furnished. No legal action may be brought after three (3) years from the time written proof of loss is required to be furnished unless the laws of your state provide otherwise. Page 7 GENERAL CONTRACT PROVISIONS (Continued) CONFORMITY WITH STATE STATUTES If on the Effective Date any part of this Policy does not conform to the minimum requirements of state statutes that govern it, this Policy is hereby amended to include such minimum requirements. AMENDMENTS TO THE POLICY Your coverage may be amended at any time by mutual consent between you and us. Such modification must be by written agreement signed by our President, Vice President or Secretary. The change will not be subject to the consent of any Employee or Beneficiary. Only these officers have the authority to modify this Policy, waive any of our rights or requirements, or make any promise with respect to benefits under this Policy. BENEFIT PROVISIONS SPECIFIC EXCESS LOSS INSURANCE We will pay, subject to all terms, conditions and limitations of this Policy, the Specific Excess Loss Benefit, if any. Claims will be paid after our acceptance of proof of loss, and satisfactory proof of benefit payments made by your Employee Benefit Plan. The Speck Excess Loss Benefit applies to a Policy Year or any fraction of a Policy Year. It is the lesser of the Specific Lifetime Maximum shown in the Schedule of Benefits or the result in (c), as determined with regard to each Covered Person as follows: (a) eligible benefit payments made under your Employee Benefit Plan with regard to a Covered Person; (b) less the Specific Deductible Amount; (c) the result multiplied by the Reimbursement Percentage. AGGREGATE EXCESS LOSS INSURANCE We will pay, subject to all terms, conditions and limitations of this Policy, the Aggregate Excess Loss Benefit, if any. Payment will be made following the end of the Policy Year. Claims will be paid after our acceptance of proof of loss and satisfactory proof of benefit payments made by your Employee Benefit Plan. Claims will be limited to the basis of the Policy benefit payment stated in the Schedule. Page 8-TX BENEFIT PROVISIONS (Continued) The Aggregate Excess Loss Benefit for the Policy Year, or fraction of the Policy Year, is the lesser of the Aggregate Excess Reimbursement Maximum shown in the Schedule or the result in (d) as determined for the total Covered Persons as follows: (a) eligible benefit payments under the Employee Benefit Plan; (b) less the Annual Aggregate Attachment Point; (c) less the Specific Excess Loss Benefit payable under this Policy, or any similar Benefit payable by any other source; and (d) the result multiplied by the Reimbursement Percentage. LIMITATIONS OUR OBLIGATION We are acting only as a provider of insurance to you. We are not and will not be considered a fiduciary. We assume no obligations required by the Employee Retirement Income Act (ERISA) of 1974, as amended. We have no responsibility or obligation to directly reimburse any Covered Person. This contract will not create any right or legal relationship between us and any Covered Person. Our sole liability under this Policy is to you. TAXES If premium taxes should be assessed against you with respect to claims paid under your Employee Benefit Plan, you shall hold us harmless from any tax liability. If premium taxes should be assessed against us with respect to Employee Benefit Plan benefits paid, you must reimburse us the amount of the premium tax liability, interest, penalty and costs incurred by us as a result of the tax assessment. LIMITATIONS ON ELIGIBILITY FOR REIMBURSEMENT UNDER THIS POLICY We will not reimburse expenses incurred by individuals who, on the later of the Effective Date of your coverage under the Employee Benefit Plan or the Effective Date of this Policy, are excluded by name in the application and the Schedule of Benefits for reasons unrelated to Health Status. (a) are not Actively at Work; unless the Actively at Work requirement has been waived in the application and the Schedule of Benefits. (b) are Disabled Persons unless disclosed and accepted by us. (c) are excluded by name in the application and the Schedule of Benefits. (d) represent Potentially Catastrophic Losses as identified in the List of PCLs in the Claims provision of this Policy, unless disclosed and accepted by us. We reserve the right to terminate or limit your Policy, change or modify the premium rates or deductible amount(s) or adjust the terms of aggregate and specific stop loss coverage in the event of nondisclosure. (e) are late applicants, except Late Entrants as defined on the next page. Actively at Work means that a Covered Person is performing the ordinary duties of the job and is not hospital confined or absent from the workplace because of any illness or accident. Ordinarily scheduled vacation time is considered to be Actively at Work. Page 9 LIMITATIONS (Continued) Disabled Persons are those Covered Persons not Actively at Work, or , by reason of disability unable to perform each of the usual and customary duties or activities of a person of like sex and age on the Effective Date of this Policy or the date such person becomes eligible for coverage under the Employee Benefit Plan. Expenses incurred will not be eligible to satisfy the Specific Deductible Amount or the Annual Aggregate Attachment Point until the day next following the date: (a) the Covered Person returns to work on a full time basis as defined in your Employee Benefit Plan; or (b) the Covered Person is able to perform each of the usual and customary duties or activities of a person of like sex and age; or (c) the Covered Person meets the eligibility requirements of your Employee Benefit Plan. For the first Policy Year this limitation applies to all Covered Persons, whether covered under your Employee Benefit Plan before, on, or after the effective date of this Policy, unless waived by us. For subsequent Policy Years, this limitation does not apply to any persons who are covered under your Employee Benefit Plan before, and on, the Effective Date of this policy. LATE ENTRANTS Reimbursement for expenses incurred for a pre-existing condition by a Late Entrant will be limited as specified in the Employee Benefit Plan. "Late Entrant" means an individual: (1) who applied for coverage more than 31 days after the date of first becoming eligible for Employee Benefit Plan coverage; and (2) who became covered during a late entrant enrollment period as permitted by your Employee Benefit Plan. A Late Entrant does not include a person who enrolls during a Special Enrollment Period as referenced under the definition of a Covered Person on page 5. NEWBORN CHILDREN Newborn children of employees who have previously enrolled and continue to cover their eligible dependents under the Employee Benefit Plan and employees who have not previously enrolled for dependent coverage will be eligible for newborn child coverage as defined within the Employee Benefit Plan. RETIRED EMPLOYEES Retired employees and their dependents, who are eligible under the Employee Benefit Plan, will be eligible for coverage under this Policy only if so indicated in the Application and the Schedule of Benefits. EXCLUSIONS We will not reimburse any loss or expense caused by or resulting from any of the following: (a) Expenses incurred while your Employee Benefit Plan is not in force. (b) Expenses resulting from dental, vision, prescription drug, hearing care or weekly income unless specifically included in the Schedule of Benefits. (c) Any amount paid which is not covered by, your Employee Benefit Plan. (d) Expenses in connection with injury or illness arising out of any occupation or employment. Page 10-TX EXCLUSIONS (Continued) (e) Cost of the administration of claims, payments, or other service(s) provided by the ( Claims Administrator, consulting fees and/or expenses of any litigation. (f) For each Covered Person eligible for Medicare benefits, benefits under this Policy will be reduced by the amount of any Medicare benefits so that total reimbursement will not exceed 100% of the Covered Person's actual expenses. (g) Payments recoverable through your Employee Benefit Plan's Coordination of Benefits, Maintenance of Benefits, Payment As Secondary Benefit, or similar provisions. (h) Expenses resulting from or caused by war, whether declared or undeclared, invasion, civil war or hostilities. (i) Expenses or costs resulting from noncontractual damages, legal fees, including but not limited to compensatory, exemplary and punitive damages, fines oe statutory penalties. (j) Payments for treatment or services which are considered experimental by any one of the following: the American Medical Association, the Food and Drug Administration or the Department of Health and Human Services. (k) Expenses of any affiliate or subsidiary company not included in the Application and the Schedule of Benefits. CLAIMS EMPLOYEE BENEFIT PLAN'S CLAIMS ADMINISTRATION You must retain and pay a Claims Administrator at all times. You may not change the Claims Administrator unless we have given prior written consent. The Claims Administrator shall: (a) supervise the administration and adjustment of all claims and verify the accuracy and computation of all claims, in accordance with the Employee Benefit Plan; (b) maintain accurate records of all claim payments; (c) maintain separate records of expenses not covered; (d) provide us on or before the 15th day of each Policy Month the following data for the preceding Policy Month: 1. Number of Covered Persons 2. Notice of claims that reach 50% of the Specific Deducible Amount 3. Total amount of claims paid Page 11 CLAIMS (Continued) MANAGEMENT OF LARGE CLAIMS AND POTENTIALLY CATASTROPHIC LOSSES Notice of Large Claim ("LC") You or your Claims Administrator must notify us of any LC (regardless of whether charges have been Paid or are pending payment) within 10 days of the date the claim exceeds or it appears that the claim will reach or exceed the defined limits for a LC. Notice of Potentially Catastrophic Losses ("PCI-s") You or your Claims Administrator must notify us of any PCL within 10 days of receiving any information indicating that the claim (regardless of whether charges have been Paid or are pending payment) is potentially catastrophic. See the List of PCLs below. Failure to Notify If for any reason a LC or PCL is not properly submitted to the Claims Administrator, the policyholder shall promptly notify the Claims Administrator of the claim. We reserve the right to refuse to renew your stop loss coverage at the end of any Policy Year if you or your Claims Administrator fails to notify us of any LC or PCL. LCM Recommendations If we recommend alternative care and treatment that are not provided for in the Employee Benefit Plan, you will allow charges for such care and treatment to be paid under the Employee Benefit Plan. Such payments will be considered eligible charges under this Policy regardless of any limitations or exclusions contained in this Policy. If you receive information that any claim may be or become a PCL, you will immediately notify your Claims Administrator. Claims which qualify as PCLs are listed below. We retain the right to add to or delete from the List of PCLs with 30 days written notice to you. List of PCLs For purposes of the policy, PCLs include, but are not limited to, the following list: AIDS (Acquired Immune Deficiency Syndrome) Amputations Any illness or injury which requires intensive and prolonged treatment (such as nutritional support systems, intravenous therapies, and ventilators) Chronic Liver disease Dialysis patient or renal failure Home health care greater than 15 days Hospitalization in excess of 10 days Hospitalization of $40,000 or more Interim/Cycle hospital billings Leukemia Major brain injuries or tumors Multiple Sclerosis or Muscular Dystrophy or Cystic Fibrosis or Cerebral Palsy or Degenerative Muscular Disease Organ transplantation High risk pregnancy Hospitalization during pregnancy Multiple birth of two or more (or expected multiple birth) Page 12 CLAIMS (Continued) Premature birth (less than 36 weeks gestation) Birth injuries or anomalies, such as Spina Bifida, Hyaline Membrane Disease and major birth trauma Severe bums Severe stroke Spinal cord injuries or paralysis of any kind Multiple fractures Trauma to the elderly or chronically ill NOTICE OF CLAIM (a) Aggregate Excess Loss Insurance You shall give written notice of claims to us within thirty (30) days of the date you become aware claims have reached the Annual Aggregate Attachment Point. (b) Specific Excess Loss Insurance You shall give written notice of claims to us within thirty (30) days of the date you become aware claims, with respect to a Covered Person, have reached fifty (50) percent of the Specific Deductible Amount. Your failure to furnish written notice within thirty (30) days will not invalidate or reduce any claim if it were not reasonably possible to provide written notice within such time. However, written notice must be furnished as soon as possible but in no event later than one (1) year after the date written notice is first required. You or your Administrator shall submit on a timely basis all proofs, reports and supporting documents we may request. AUDIT We, or our duly authorized representative, shall have the right to inspect and audit all of your and your Claims Administrator's records and procedures as they relate to this Policy and our liability or premium. We shall also have the right to require proof that payment has been made under your Employee Benefit Plan to a provider of services or benefits. NOTICE OF APPEAL Any objection, notice of legal action, or complaint received on a claim processed under your Employee Benefit Plan on which it reasonably appears an excess loss benefit will be payable to the Employer under this Policy shall be brought to the immediate attention of our claims department. SUBROGATION If you have paid benefits for claims for which another party may be liable, you shall prosecute all valid claims you may have against the other party. Another party may mean a person, entity, or insurance company. If you fail to prosecute valid claims, and we become liable to make payment under this Policy, we shall be subrogated to all your rights. You must account for and pay to us any amounts recovered, regardless of whether this Policy is still in force. Page 13 CLAIMS (Continued) Any amounts we recover will be used to pay our expenses of collection and reimbursement for amounts we may have paid or become liable to pay. All remaining amounts will be paid to you. If the payment received from another party is less than the amount required to fully satisfy amounts we paid, we are entitled to recover first, in full, any amount we paid. We shall also be assigned all rights of recovery if payment is made for which you are or become entitled to receive from another party. EMPLOYEE BENEFIT PLAN CHANGES AMENDMENT TO THE EMPLOYEE BENEFIT PLAN We must be notified of any change to the Employee Benefit Plan. This notice must be in writing and provided to us at least thirty-one (31) days prior to the effective date-of the change. We must approve the change in writing before coverage effected by this change will be provided by this policy. If we do not receive advance written notice of the change, or we decline coverage of the changes under this policy, we will be liable only for benefits provided by the Employee Benefit Plan prior to the change. You must provide us with a copy of your written Employee Benefit Plan and all amendments prior to the time the change becomes effective. PREMIUMS PAYMENT OF PREMIUMS Premiums for this coverage are payable on or before the due date at our Home Office (or to our authorized agent). Payment of premium will not keep coverage in force beyond the date for which the premium is paid, except as provided in the Policy. GRACE PERIOD A grace period of thirty-one (31) days will be allowed for payment of each premium after the first. If premiums are not paid within the grace period, this Policy will terminate as of the premium due date. CHANGES IN PREMIUM RATES We have the right to establish new Premium Rates on each anniversary date. We have the right to establish new Premium Rates and new Monthly Aggregate Deductible Factors: 1. at any time during a Policy Year if the number of Covered Persons changes by more than 25% from the number shown in your application, or 2. beginning the next Policy Month following our discovery of an individual who was not disclosed to us and whom we determine to be an unacceptable risk according to our rules, or 3. resulting from any amendment to the Employee Benefit Plan made during the Policy Year. NOTICE OF CHANGE We will provide you a thirty (30) day advance written notice in the event of any change in premium rates or if we exercise our right to terminate this Policy. Page 14 CONTRACT TERMINATION This Policy will terminate upon the earliest of the following: (a) For non-payment of premiums, on the date provided in the Grace Period provision of this Policy. (b) On any anniversary date on which we do not renew this Policy. (c) The date your Employee Benefit Plan terminates. This Policy will automatically terminate upon cancellation of your agreement with your Claims Administrator, unless we have, prior to such cancellation agreed in writing to your designation of a new Claims Administrator. INSOLVENCY We shall not be discharged or released from liability of any outstanding claims occurring during the period covered by this Policy should you become insolvent or enter into any proceedings of bankruptcy. Page 15 SOUTHLAND LIFE INSURANCE COMPANY ACTIVELY AT WORK AMENDMENT To amend Policy Number G-36110, a contract of Group Specific (and Aggregate) Excess Loss Insurance between SOUTHLAND LIFE INSURANCE COMPANY and CITY OF ROUND ROCK The "Actively at Work" provision as shown on Page 9 of the Section entitled "Limitations" is hereby waived for original Employees. This amendment shall be effective from 12/1/1998. Signed for Southland Life Insurance Company by 94-44 r James D. Thompson B. Scott Burton President Secretary J/C Countersigned 17010-97-AAW SOUTHLAND LIFE INSURANCE COMPANY MONTHLY AGGREGATE ACCOUNTING AMENDMENT To amend Policy Number G-36110, a contract of Group Specific (and Aggregate) Excess Loss Insurance between SOUTHLAND LIFE INSURANCE COMPANY and CITY OF ROUND ROCK MONTHLY The Employers coverage for this benefit will begin on the Policy's AGGREGATE Effective Date. All monthly reimbursements are subject to audit. We will BENEFIT advance to the Employer the Aggregate Excess Loss Benefit calculated on a year to date basis starting the third Policy Month provided that: 1. the total claims paid by the Employer to date during the current Policy Year exceed the sum of (a) plus (b) by at least $3,000 where: a. is the year to date Annual Aggregate Attachment Point b. is any previous advance; and 2. on or before the 15th day of each Policy Month, and we receive the monthly census, the total of the monthly claims paid and the total of the claims paid in excess of the Specific Deductible Amount. If an Aggregate Excess Loss Benefit is determined to be payable at the end of the Policy Year, it will be reduced by the total of the advances made, if any, under this benefit. The balance will then be paid to the Employer within 60 days after the determination is made. RECONCILIATION If the amounts advanced under this benefit exceed the Aggregate OF ADVANCES Excess Loss Benefit, the Employer must remit the amount by which the advances made exceed the Aggregate Excess Loss Benefit. The Employer must remit this amount quarterly. If such payment is not made quarterly, interest at the rate of 10% per annum on said sum must be remitted by the Employer to the Third Party Administrator 17010-97-MAA Amendment To Policy Number G-36110 Page 2 TERMINATION If the Employer's coverage under the Aggregate Excess Loss Benefit terminates before the end of the Policy Year, this benefit will automatically terminate. UNDER 100 LIVES COST Cost Of Monthly IMPLICATIONS Aggregate Contract Aggregate CAP 12/12 $ 750 13/12 $1,000 14/12 $1,250 15/12 $1,500 PAID $1,500 This cost is added to the aggregate premium. EQUAL TO OR OVER 100 LIVES 1.00 per Covered Person/per month This agreement becomes effective on 12/1/1998. Signed for Southland Life Insurance Company by James D. Thompson B. Scott Burton President Secretary ountersigne ING Jkii� FINANCIAL SERVICES INTERNATIONAL ING MEDICAL RISK SOLUTIONS July 14, 1999 City of Round Rock Howard Baker 221 E. Main St. Round Rock, TX 78664 RE: City of Round Rock Dear Mr.Baker: Per your request—please see the attached copy of the application and a copy of the new Schedule of Benefits for the current policy year. If you have any questions,please contact me at 1-800-241-5665. Thank you, OW 1 � Candace Brundidge Office Manager cb 500 North Central Expressway Phone:972-422-6957 Southland Life Insurance Company Suite 201 Fax:972422-6958 Security Life of Denver Insurance Company Piano,TX 75074 First ING Life Insurance Company of New York SOUL MD LIFE INGUGROUP APPLICATION FOR EXCESS LOSS INSURANCE Southland Life Insurance Company(the"Company*). P.O. Box 105833 Atlanta, GA 30348-5833 A. APPLICANT 1. Applicant's Full Legal Name: City of Round Rock 2. 124incipal Office Address: Street: City State Zip Code 2NI East Main Street Round Rock TX 78664 3. Em foyer Federal Tax I.D.Number: �Y- o! & 4. If employee benefit plans of affiliated companies(under common control through stock ownership, contract,etc). included, list legal name, addresses, and nature of such companies. 5. Business Entity: Corporation 0 Proprietorship Partnership X Government Agency ❑Other(Describe) B. INSURING DATES(as of 12:01 a.m.Standard Time at the Appl'icant's principal address) 1. Effective Date(Proposed): 12/01/98 2. Initial Coverage Period (Policy Year)From Effective Date to: 11/30/98 C. SPECIFIC EXCESS LOSS INSURANCE Per Covered Person: 1. Specific Deductible Amount $30,000 5. Basis of Policy Benefit Payment 2. Reimbursement Percentage 100% Paid 3. Specific Lifetime Maximum $1,000,000 X Incurred and Paid 15/12 4. Premium RatesRun-in Period of 3 - Months a.Single(Employee) $18.45 1 Run-out Period of Months b. Family Em to ee with Dependents) $45.85 6. Coverages Included: or c. Composite ! til X Medical X Prescription Drugs Other(Describe): D. AGGREGATE EXCESS LOSS INSURANCE 1. Monthly Aggregate Deductible Factors 7. Basis of Policy Benefit Payment: I a. Single(Employee) El Paid b. Family Em to ee with Dependents) 3x49533 X Incurred and Paid or c.Composite $Z3t1t I Run-in Period of 3 Months 2. Reimbursement Maximum $1,000,000 1 Run-out Period of Months Per Policy Year 8. Coverages Included: 3. Minimum Annual Aggregate Attachment Point 929 X Medical X Prescription Drug 4. Maximum per Covered Person which may be !," �.G8(. ;.3 X Dental Plan X Vision Plan applied to the Annual Aggregate Other(Specify): Attachment Point(Specific Deductible $30.000 9. Optional Benefits/Riders 5. Aggregate Excess Loss Premium Rate X Monthly Aggregate Accountin a. Per Employee Per Month $4.25 Aggregate Extension Benefit or b.Annual Amount $ El Other Specify): 6. Reimbursement Percentage 100% E. MANAGED CARE NETWORK(S) Name of Network(s) , Address: Street Q 1 City State Zip Code �U SPJ �41eG..J�U ���JN �J3T.!✓ � {g T 17011-97 Page 1 F. COVERED PERSONS Unless otherwise indicated and approved by us, Covered Persons under the Policy include employees actively at work and dependents who are non-hospital confined. The Policy is not intended to cover employees not actively at work or dependents who are hospital confined or totally disabled,whether a covered employeeldependent, retired person or COBRA beneficiary. Disabled persons are excluded unless disclosed and coverage is requested in this application. 1. Application is made to cover. Yes NO Retired Persons ❑ ❑ COBRA Persons ® ❑ Disabled Persons ❑ 2. Initial enrollment: �] Single and Family(or) Composite G.ACTIVELY AT WORK PROVISION ❑Waived ❑Not Waived H.CLAIMS ADMINISTRATOR OF BENEFIT PLAN Name HealthCare Benefits, Inc. Address: Street City State Zip Code P.O. Box 833889 Richardson TX 75083- 3889 If this application satisfies our requirements, we will issue a Group Excess Loss Insurance Policy. Any Policy issued will become effective on the date requested only if: (1)the Applicant accepts the rating basis and all terms, conditions, . amendments,or riders of the Policy; and (2)the first premium is paid in full. Premium accompanying this Application $ Once approved, this Application shall become a part of the Policy. Fraud Warning: Any person who with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing a false or deceptive statement is guilty of insurance fraud. Full Legal Name ofApgIicant--qity of Round Rock Signed Title City 0k+10 V L k State E7Y Date Agent of Record (Please Print or Type) Agent's Signature Agent ID Number(Issued by the State Insurance Department 17011-97 Page 2 SOUTHLAND LIFE INSURANCE COMPANY CITY OF ROUND ROCK, G-36110 SCHEDULE OF BENEFITS This Policy provides those benefits shown below. This Schedule of Benefits is applicable to the coverage period from 12/1/1998 to 12/1/1999. Enrollment: Single -221; Family- 180. A. Specific Excess Loss Insurance 1. Specific Deductible Amount, Per Covered Person . . . . . . . . . . . . . . .$30,000.00 2. Reimbursement Percentage, Per Covered Person . . . . . . . . . . . . . . . 100% 3. Specific Lifetime Maximum, Per Covered Person . . . . . . . . . . . . . . . .$1,000,000.00 4. Premium Rates a. Rate Per Single (Employee) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$18.45 b. Rate Per Family (Employee with Dependents) . . . . . . . . . . . . . . . .$45.80 5. Basis of Policy Benefit Payment: 15/12 Incurred and Paid Include Run-In Period of 3 Months 6. Coverages Included: Medical Prescription Drug Drug&Alcohol-See Additional Provisions B. Aggregate Excess Loss Insurance 1. Monthly Aggregate Deductible Factors a. Composite Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$236.91 2. Aggregate Excess Reimbursement Maximum (Per Policy Year) . . . . .$1,000,000.00 3. Minimum Annual Aggregate Attachment Point . . . . . . . . . . . . . . . . . .$969,009.00 4. Maximum per Covered Person which may be applied to the Annual Aggregate Attachment Point (Specific Deductible) . . . . . . . . . . . . . . .$30,000.00 5. Aggregate Excess Loss Premium Rate a. Per Employee Per Month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$4.25 6. Reimbursement Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% Page 3-Ren SCHEDULE OF BENEFITS (Continued) B. Aggregate Excess Loss Insurance (Continued) 7. Basis of Policy Benefit Payment: 15/12 Incurred and Paid Include Run-in Period of 3 Months 8. Coverages Included: Medical Vision Plan Prescription Drug Dental Plan Drug&Alcohol-See Additional Provisions 9. Optional Benefits/Riders Desired Monthly Aggregate Accounting C. Actively at Work: Waived D. Retired Employees: Not Covered E. Claims Administrator for Employee Benefit Plan (TPA): HealthCare Benefits, Inc. F. Affiliates/Subsidiaries (To be included under this Policy): None G. Additional Provisions Other. Drug &Alcohol Maximum: no separate maximum Craig Stluka is excluded from coverage. Page 4-Ren aS'. ING MEDICAL RISK SOLUTIONS J. Keith Carmichael 515 Congress Ave., 1P Floor Austin,TX 78701 RE: City of Round Rock Dear Mr. Carmichael: Per your conversation with Matt McCuen,I have attached the original letters you had requested to be mailed to you regarding the City of Round Rock. If you have any questions,please feel free to give me a call at 1-800-241-5665. Th you, Candace Brundidge Office Manager 500 North Central Expressway Suite 201 Plano.T% 75074 Phone:972-422.6957 Fax:972-422-6958 SECURITY LIFE OF DENVER INSURANCE COMPANY SOUTHLAND LIFE INSURANCE COMPANY INGJW May 27, 1999 MEDICAL RISK SOLUTIONS Dan Kennedy Blue Cross Blue Shield of Texas 9020 Capital of Texas Hwy, Suite 400 Austin,TX 78759 RE: City of Round Rock Dear Dan: In response to the policyholder's concerns regarding the provisions discussed in the Southland Life stop loss contract,please note that the underwriter has approved changing the alcohol and drug limitation to reflect no separate lifetime maximum. Our administration team should have a new Schedule of Benefits for the stop loss contract issued within the next three weeks. Further,please be assured that the provision of thirty(30)day advance written notification concerning contract changes is not inforced. ING does understand that many times, 30 days prior notification is not realistic. Basically,we want to be notified of changes in a timely fashion(preferably, as soon as possible and no later than the 15th of the month the change is effective) and reserve the right to review any changes as to the effect on the stop loss rates. The Renewal provision which states that the policy may be renewed at our option for subsequent 12-month period is contingent upon the contract holder accepting our renewal offer. We cannot legally force a client to renew with us. Basically,this provision allows us to reserve the right not to offer a renewal,but in the history of ING we have never seen this exercised. The notification of Potentially Catastrophic Losses that you read on page 12 of-the contract mainly pertains to notification from the Claims Administrator. Obviously, if the contract holder is aware of catastrophic claims, they would notify the administrator,who in turn will notify the reinsurance carrier, Southland Life. Healthcare Benefits, Inc. is fully aware of Southland's claim notification procedures. I hope that this information helps to alleviate your client's concerns regarding our contract. Should you have any questions, please do not hesitate to contact me. SincereI �- Matt McCuen Regional Sales D*ector 500 North Central Expressway Suite 201 Plano,TX 75074 Phone:972-422-6957 Fax:972-422-6958 SECURITY LIFE OF DENVER INSURANCE COMPANY SOUTHLAND LIFE INSURANCE COMPANY I NGS MEDICAL RISK SOLUTIONS - Fax Cover Sheet- Date: 6/2/99 Pages: 1 To: Keith Carmichael Fax Phone: 512-495-9534 From: Matthew McCuen Subject: The City of Round Rock Keith, I apologize for not clarifying the issue on page 14 of the Southland stop loss contract in regards to notice of change. The contract states that ING will provide your client with a thirty day advance written notice in the event of any change in premium rates. This means that we contractually cannot wait any less than thirty days to provide a renewal increase. There is not a time frame specified as to how early (greater than thirty days) in which we will offer a renewal. As with almost all public entities, renewals are provided up to ninety days or greater. ING does require that ten months of monthly claims, enrollment and shocks be provided to firm up the previously offered renewal. The ten month update will enable ING to properly access the risk with the most current information. I hope that this clarifies a confusing issue. Please do not hesitate to call me if I can ever be of any assistance. 500 North Central Expressway • Suite 201 • Plano,TX 75074 • Phone:972.422-6957 • Fax:972-422-6958 SECURITY LIFE OF DENVER INSURANCE COMPANY SOUTHLAND LIFE INSURANCE COMPANY