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HomeMy WebLinkAboutResolution - 2004-R0591 - Contract For Stop Loss Insurance - Highmark Life Insurance Company - 12_16_2004Resolution No. 2004-RO591 December 16, 2004 Item No. 30D RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to enter into a contract by and between the City of Lubbock and Highmark Life Insurance Company for stop loss insurance. Such agreement is attached hereto and incorporated herein and into the minutes of the Council as though set forth fully therein. Passed by the City Council this 16th ATTEST: R becca Garza, City Secretary APPROVED AS TO CONTENT: Quincy Wh' e Assistant City Manager APPROVED AS TO FORM: Matthew L. Wade Natural Resources Attorney day of December , 2004. Resolution No. 2004-RO591 December 16, 2004 TiG �� �Ke Item No. 30D Application for Group Insurance LIFE INSURANCE COMPANY Please Type or Print - Must be completed in fail; P.O. Box 335061. surre P6518 fS PI"URGH. PA 15253�!Udl indicate "NA" or "none" if item does not apply. City of Lubbock 75-6000590 (806) 775-2317 Full Legal dame of Group (to appear on Policy) Tax ID Number Business Telephone P. 0. Box 2000 Lubbock, TX 79457 (806) 775-3965 Address Zip � 4 Fax Number 1625 13th Street, Room 104 _ 79.4.01 E-mail Delivery Address (If Different from Above) _ _ _ Internet Municipality 9199 ❑ Corp. ❑Gov. r? Parm. Nature of Business SIC Code !'$Other Affiliates to be Insured: K, No 7 Yes (List below; if additional space is needed, please attach a separate sheet.) Full Legal . ame and Address of Affiliates Ciao/State Nature of Business Life & AD&D Voluntary Products: C Dependents Life 7 vision ] Life & AD&D I.L Additional Life & AD&D -1 Dental _ i Spouse Life & AD&D C Life Only 36 Stop loss C Spouse Life C Child Life C Dependents Life XXSpecific 0 Life Only C1 Additional Life )UAggregate ❑ Spouse Life C Child Life r- Short Term Disability C Occupational Accident L: Short Term Disability C Long Term Disability C Other El CoMwtrvoiSAbiuTY This application must be accompanied by the Coverage Transmittal form and the proposal for the coverage requested. A separate Trust Subscription Agreement may be required for some products. 5. Will the requested insurance replace existing insurance'' 9 Yes C No 6. Premium Deposit of S 44,963. included. Estimated 1 st month's premium. (Must he attached to this application, except for Voluntary and Small Business Platt products.) The Premium Deposit will be applied to the first premium when due. Make check payable to Highmark Life. Do not make the check payable ro the agent or leave the "Payee" blank. If a policy is not issued, the premium deposit will be refunded in full. 7. Definition of Member: C All active employees working 30 hours or more a week. (VIA for Stop Loss) J Other _ If Definition of Member differs by line of coverage or class, please explain below; 8. Eligibility Waiting Period {NIA for.Srop Loss): Future Members: E. No waiting period C 1st day after days as a Member C 1 st of month coinciding with or next following __ days as a Member O 1 sr of nwuth coinciding with or next following becoming a Member C Other _ _-- C urrent Members: C Same as future Members U None on effective date If Eligibility Waiting Period diflers by line of coverage or class, please explain bellow: HG-1658 (4199) Pagc l of 2 9. Definition of Earnings for benefits based on earnings* (A'X4 for Stop Lo.vs) ❑Basic salary, including tax deferred contributions made to a qualified plan sponsored by the Employer and commissions, but excluding bonuses, overtime, and any ocher compensation. (Commissions based on prior calendar year.) 'JPartners: "Net earnings (Loss) frorn self employment" from the partnership during the prior calendar year, as reported on the partnership federal income tax return. `]Other ..-- If definition of earnings differs by line of coverage or class, please explain below: *Prior Calendar year earnings used for Voluntary Products. 10. Active Work Requirement (NA for Scup Los.v) No employee wilt become insured unless the employee satisfies an .Active Work Requirement on the scheduled Effective Date. Will any employees be Disabled on the last day before the scheduled Effective Date? Yes L No If so, please provide the following information about each employee who is expected to be disabled on the last day before the scheduled Effective Date. name, sex, date of birth, salary, amount of coverage. diagnosis. prognosis, date last worked and expected date of return. List all employees who will not be actively at work on the scheduled Effective Date (other than Disabled employees listed above): 11. Are any Union Members being covered? ` Yes C No (If yes, a copy of the collective bargaining agreement is required with the submission of the application.) 12. Remarks APPLICANT AGREES THAT The insurance coverage requested and requested effective date must be approved by Highmark Life Insurance Company under its current rules and practices including Active Work, Evidence Of Insurability and Pre-existing Condition provisions. All options and special requests are subject to Ilome Office approval. No insurance agent or broker has authority to guarantee acceptability of requested insurance coverage. All materials describing this coverage must be approved in writing by Highmark Life prior to distribution. Note: Coverage will not be in effect until notified in writing by the Home Office. Do not cancel prior coverage until notified. Premium rates quoted were based on the data submitted to Highmark Life. FinaLnremium rates will be determined on the basis of the actual composition of the group of persons who become insured. ✓ Any person who knowingly and with intent to defraud or deceive ar� lurance compa�'yy'll submits an insurance application or statement of claim containing any false, incomplete or misleading information may b8'1ubject to civil or criminal penalties, depending on state lacy. I represent that the statements contained in this application are true and complete to the best ol'my knowledge and belief, and I understand that they form the basis for Highmark Life's approval of the coverage requested. M� rLIG� 1 A4� D� Print Na of utho ' ed Representati4 �J L1-- Sign ore of. plicant' Authorized Representative Date Title Signature of Witness d'orAgent Location, Ciry'State Signature of Resident A, ntu-hcrc required:'Agent License Number Name of Resident Agent IIG-1658 puge ^_ of'-' 1{1G1- NMK. LIFE INSURANCE COMPiWY Insurance Broker/Consultant Ted L. Parker _ 4ddress tStreet, City, State, Zip Code) P. 0. 13ox 53070 Lubbock, Lligibility: (a) Disabled Persons & are (b) Retired Persons fSI are COVERAGE TRANSMITTAL Stop Loss Group Name _ wbmit copy of i Telephone No, TPA (806) 473-3000 TCON Benefit Administrators 11, TX 79453 Address (Street, City, State, Zip Code) P. 0. Box 53070 Lubbock, Resolution No. 2004-RO591 Detc�eNmber 16, 2004 City o� Lu3�ock et houc N . L.P.. 8T6) 47�-3000 TX 79453 ❑ are not covered Terminal Liability (I st year only) .............................................. Q Yes M No ❑ are not covered Aggregating Specific Funding Arrangement-- ... 11.................... ❑ Yes M No Monthly Aggregate Accommodation Settlement Arrangement .. Cl Yes IS] No OP LOSS 1. Aggregate Benefit X3Yes ❑ No 2. Speciftc Benefit )m Yes ❑ No Aggregate Basis: Xj 15/12 1112115 ❑ 12112. other _. Specific Contract Basis: ❑ 15/12 XX 12115 ❑ 12112 ot)lg Employee Benefit Plan expenses must be incurred from lit/O1 /04 12 01 / O1 /05 Employee BBepeft. Platt expenses must be inc u c pr 01 �/ I05— " 12131 /05 1 �y_ through 31 „05 _ , and Paid front through and Paid from1 through.1243105 through _03j-31/06 Claims Incurred prior to the Effective Date are limited to S N/A Specific Eligible Expenses: MedicalXMand RX Aggregate eligible expenses include: Specific Deductible (per person): $150,OQO _500 0 XI Medical X11 Prescription Card Service Maximum Specific Benefit (per person in excess of XXDental Care ❑ Weekly (Disability) Income Specific Deductible): $850, 000 0 Vision Care ❑ Other See Be owe Aggregate Deductible Per Month, per Single Employee. $ •Individuals requiring separate S eciitc Deductible (Please list by Social Security Family: S _ number and relationship to employee): Composite: $ _ Relationship Aggregate Attachment Point: % Maximum Eligible Claim Expense Per Covered Person: S 1,000,000, Annual Minimum Aggregate Deductible: S15 r 566, 536. Minimum Percentage of First Month Covered Units for Calculation of Annual Aggregate Deductible: % Maximum Aggregate Benefit (excess of Deductible): $ , * Medical RX Dental Single $250.25 $ 80.51 $22.86 Family $600.61 $193.21 $54.86 Number of Employees: Medical and RX Dental 1186 Single 836 Single 1034 Family 1185 Family 2220 Total 2021 Total Social Security No. to Employee Specific Deductible Amount 13/A Renewal Action: 19L Special underwriting action with regard to any plan participant at renewal permitted. ❑ Special underwriting action with regard to any plan participant at renewal not permitted (a surcharge may be added if this option is selected). (See Reverse Side) H06213 (4199) 3. The maximum amount of payable expenses under this Agreement arising out of any treatment or an illness or injury resuttung from a mental or nervous disorder or substance abuse per Covered Person: ❑ $25,000 per lifetime. ID $- p r fif me, 30 .� days per Ca encfar ear (in -net) and 15 days per Calendar Year (out of net) C Other (if mental or nervous or substance abuse benefit does not fit in the above descriptions) explain here: PPO Network (if applicable) Health5mart 6. Premiums: (a) Aggregate Premium Premium Per Month Per Singlo Individual: Family: Composite: (b) Specific Premium Premium Per Month Per Single individual_ Family: Composite: $ $11.09 - S 26.32_' S _ 5. Special Risk Limitations: Agreement will be based upon the current employee benefits as defined in the Employee Benefit Platt, except as noted below: Specific: NIA Aggregate: N/A Remarks: N/A CITY OF LUBBOCK: Marc McDougal Mayor ATTEST: Re ecca Garza City Secretary APPROVED AS TO CONTENT: 4,e A,-t,�� Al ncy to Assistant City Manager APPROVED AS TO FORM: Matthew Wade Natural Resources Attorney Terms of Proposal Proposal is contingent upon carrier receipt and review of requested information as stated below. This proposal is not a formal contract, and is not to be considered binding to any participating party. Neither ICON Benefit Administrators nor the Carrier are to be held liable by any typographical or transpositional errors which may be contained in this presentation. Full and complete disclosure of the following: a. Multiple locations including number of participants in each location and complete address. b. COBRA Participants c. Any employee currently not actively at work, dependent, or COBRA participant currently disabled. d. All hospital pre -certifications e. Retirees f. Any medical conditions likely to produce large claims, in excess of 50% of the Specific Deductible. 2. All proposed plans with prescription drug card benefits are subject to additional dispensing and per claim fees charged by the drug card provider. Please contact your Marketing Representative at ICON Benefit Administrators for additional information about these programs. Carrier j Hiahmark Life See attached Basis of Offer and Exclusions / Limitations Exhibits. ICON has received written confirmation of Highmark's intent to finalize the Aggregate based on claims through 10/31/04. Disclosure as described above and in the attached Basis of Offer will be accepted with information through 10/31/04. 10/25/2004 Resolution No. 2004-RO591 December 16, 2004 Item No. 30D Highmark Life Insurance Company Stop Loss Insurance Basis of Offer Group Name: City of Lubbock -ICON 9/24/2004 ` An actively -at -work provision for employees or, in the case of a dependent or COBRA Participant, unable to perform the normal daily activities of a person of like sex and age due to a disability of more than three continuous week duration shall apply to all persons to be covered as of the effective date of stop loss coverage, or if after the Initial underwriting of the policy, the date the policyholder acquires another businesslope rating unit, or establishes another class of employees eligible for coverage throuqh the covered underlvinq plan. This provision may be waived after receipt, review, and approval of a signed Disclosure Statement (or other information acceptable to HUC). * Retirees are included in stop loss coverage. * The stop loss rates and factors are based on a description of the benefits provided, employee and dependent census data plus other information relevant to the underwriting risk, including a Pre-existing condition limitation for late enrollees. If any of the information was incorrect or changes the risk involved, the rates and factors will be redetermined. * Our quote assumes the plan of benefits includes mandatory pre -certification / utilization review / a large case management program with a benefit penalty for non-compliance. * A minimum of 75% participation of all eligible employees is required for all contributory plans unless employees have waived coveraged for another group plan other than an HMO/HIP. * Participation in a fully insured HMO/HIP plan cannot exceed 20%. * Should the number of employees, either in total and/or by single/family mix, change by 10% or more, Highmark Life reserves the right to recalculate both the premium rates and the aggregate retention factors. The specific stop loss rates are based on an underlying plan maximum lifetime of $1,000,000. The aggregate stop loss factors are based on an annual maximum of $1,000,000. * if it is determined that incomplete or inaccurate information was provided, any specific or aggregate stop loss claim will be adjusted accordingly, t The rates and deductible amounts are subject to change upon receipt of shock loss information for all past and ongoing claims that exceed or are expected to exceed the lesser of $50,000 or 50% of the specific deductible for the 12 months immediately proceeding the proposed effective date. Information required includes the total amount of the claim, date incurred, diagnosis, prognosis, age of l claimant and anticipated course of treatment, if applicable. A signed Medical Release Form can be accepted in lieu of the above information. This offer is valid only if a signed Disclosure Statement and Application are received within 30 days prior to, but no later than 15 days following the effective date. Should a higher deductible be required on any individual, the amount in excess of the group's self -insured retention will be excluded from coverage under the aggregate coverage. * The aggregate retention factors and annual attachment point are subject to change upon receipt and review of month -by -month claim and enrollment information for the twelve months immediately preceding the proposed effective date. Information must be received within 30 days of the effective date or aggregate premium may be refused or refunded. * Individual Special Requirements (Subject to Pending Review of all Open/Closed LCM Participants). Individual Specific Deductible Required Information All claims at or likely to exceed $75,000 Diagnosis, prognosis, treatment plan, paid and pended claims All potentially catastrophic claimants Diagnosis, prognosis, treatment plan, paid and pended claims Dx: Breast Cancer I Prognosis, current/future treatment plan, paid and pended claims G_ Hiahmark Life Insurance Company ,Stop Loss Insurance Exclusions and Limitations Group Name: City of Lubbock -ICON 9/24/2004 An eligible claim expense does not include any payments made on account of: - Expenses arising out of any treatment for mental or nervous disorders in excess of 30 inpatient days per calendar year and 30 outpatient visits per calendar year. Expenses arising out of any treatment for human organ transplants in excess of $1,000,000 per lifetime. NOTE: This provision will need to be amended if Transplants are excluded or limited under the stop loss contract in coordination with AIG Fully Insured Transplant coverage. Expenses which arise out of or are caused or contributed to by war or an act of war. Expenses for any injury or illness which is eligible for coverage under a workers' compensation or occupational disease policy or agreement, whether or not such policy or agreement is actually in force and whether or not such benefits are received by the covered person. - Expenses for any period a covered person is confined for any reason in a jail, prison, correctional institution, or in the covered person's home. - Expenses for any period caused or contributed to by a covered person committing or attempting to commit an assault, felony or illegal act, participating in an illegal occupation, or actively participating in a violent disorder or riot. - Expenses for the cost of drugs, procedures, services, supplies or treatment rendered or received in person, by mail or otherwise outside the United States if the purpose of such travel or communication is to obain or receive such service, supply or treatment. - Expenses which are incurred while the covered underlying plan is not in effect, incurred by an individual who is not covered by the underlying plan, excluded by the covered underlying plan or which the covered underlying plan is not required to pay. Expenses which are incurred by a covered person who was a plan participant in the covered underlying plan at the time of the initial underwriting, on the date of renewal, or if after the initial underwriting of the policy, the date the Policyholder acquires another business/operating unit, or establishes another class of employees eligible for coverage through the covered underlying plan, but whose known medical conditions were not accurately disclosed to us. - Expenses which are incurred by a covered person who is disabled on the effective date unless, prior to the date the eligible claims expense is incurred, the covered person, if an employee, has returned to active full-time work for one full day or, if a dependent, has been discharged from hospitalization (waived with disclosure). - Expenses in excess of the usual and customary charge for the covered service. - Expenses for the cost of drugs, procedures, services, supplies or treatments which are experimental or investigational. - Expenses for the cost of procedures, drugs, treatments, services, or supplies which are not medically necessary and appropriate. - Expenses for benefits to any covered person with coverage under any other plan, including Medicare or Medicaid, which, when combined with the benefits payable by such other plan, would cause the total to exceed 100% of the covered person's actual expenses. - Expenses for administrative costs, including but not limited to, claim payments, networks, case management fees in excess of the usual and customary charge, PPO access fees and prescription drug administration fees. Out-of-pocket expense(s). Expenses in excess of the fee, reimbursement percentage or other form of payment negotiated with a provider or facility as total reimbursement to the provider or facility for the cost of drugs, procedures, services and supplies through the covered underlying plan. Expenses for capitation fees. Expenses of litigation. Expenses for extra -contractual damages, compensatory damages, or punitive damages. Our stop loss proposal is based on the above assumptions. These exclusions are the general provisions in our Stop Loss Policy; the state guidelines of the domicile state will apply. Highmark has reviewed the Schedule of Benefits ONLY, not the Plan Document. Any Y'' deviation in the above assumptions may result in a rate or factor change. A. AGGREGATE TERMINAL LIABILITY PROVISION y If the Policyholder notifies us of a decision to elect the Aggregate Terminal Liability Provision prior, to the last three months of the initial Policy Term, the Aggregate Schedule of Insurance will be amended as follows retroactive to the commencement of the initial Policy Term: 1. The Covered Claims Basis for the initial Policy Term will be as follows: Incurred & Paid: Eligible Claims Expenses Incurred and Paid from (*) through (*) and Paid from (*) through (*). 2. The Annual Aggregate Deductible will be increased by 110% of the amount of the monthly Aggregate Deductible for each of the last three months of the initial Policy Term. The Policyholder's election of the Aggregate Terminal Liability Provision will only become effective if each of the following conditions is met: 1. The Policyholder must terminate the Stop Loss Policy at the end of the initial Policy Term and return to a fully insured health insurance program. 2. The Policyholder must notify us of that decision and elect the Aggregate Terminal Liability Provision prior to the last three months of the initial Policy Term. Resolution No. 2004-RO591 December 16, 2004 Item No. 30D HIGHMARK LIFE INSURANCE COMPANY P.O. BOX 1840, HARTFORD, CONNECTICUT 06144-1840 1-800-443-3221 POLICY NUMBER NAME OF POLICYHOLDER TYPE OF COVERAGE EFFECTIVE DATE POLICY TERM GROUP POLICY DELIVERED IN SPECIMEN ABC Company STOP LOSS INSURANCE March 1, 2000 March 1, 2000 through October 31, 2000 Arizona and governed by the laws of that state. Highmark Life Insurance Company agrees to pay the benefits provided by this Policy, in accordance with the provisions of this Policy. The consideration for this Policy is the application of the Policyholder and the payment by the Policyholder of premiums as provided herein. This Policy provides benefits to the Policyholder when Eligible Claims Expenses which are Paid by the Policyholder M1 through the Covered Underlying Plan(s) exceed the levels defined in this Policy. The benefits of this Policy are explained in the Specific Schedule of Insurance, Aggregate Schedule of Insurance, General Definitions, and Benefits provisions of this Policy and are subject to the Exclusions and Limitations and other provisions of this Policy. This Policy will terminate automatically upon the failure of the Policyholder to pay any premium within the Grace Period. Termination of this Policy for any reason other than non—payment of premium will occur following written notice by the Policyholder or us. All provisions on this and the following pages are a part of this Policy. The definitions of terms apply whenever the terms are used anywhere in this Policy. "We", "us", and "our" refer to Highmark Life Insurance Company. Other defined terms are printed with an initial capital letter. GP 198—SL Highmark Life Insurance Company By Secretary President This is a Renewable Term, Non —Participating Plan of Coverage TABLE OF CONTENTS Part 1. SCHEDULE OF INSURANCE ......................................................... 1 A. POLICY INFORMATION....................................................... 1 B. AGGREGATE SCHEDULE OF INSURANCE ...................................... 1 C. SPECIFIC SCHEDULE OF INSURANCE .......................................... 2 Part 2. BENEFITS ................. ........................................................ 3 A. AGGREGATE BENEFIT........................................................ 3 B. SPECIFIC BENEFIT........................................................... 3 Part 3. EXCLUSIONS AND LIMITATIONS................................................... 4 Part 4. DESIGNATED THIRD PARTY ADMINISTRATOR ........ 6 ................ .............. A. RESPONSIBILITIES OF THE DESIGNATED THIRD PARTY ADMINISTRATOR ........ 6 B. NOTICE TO POLICYHOLDER AND DESIGNATED THIRD PARTY ADMINISTRATOR .. 6 Part 5. NOTICE OF CLAIM................................................................. 6 Part 6. AMENDMENTS TO THE COVERED UNDERLYING PLAN(S) ............................ 7 Part 7. TERMINATION..................................................................... 7 Part 8. PREMIUMS........................................................................ 7 A. AMOUNT OF PREMIUMS ...................................................... 7 B. CHANGES IN PREMIUM RATES ................................................ 8 C. D. PAYMENT OF PREMIUMS ..................................................... 8 GRACE PERIOD.............................................................. 8 Part 9. GENERAL POLICY PROVISIONS.................................................... 8 A. HOLD HARMLESS ....................................................... 8 B. NOTICE OF OBJECTION . .................................................... 9 C. POLICY NON PARTICIPATING................................................. .9 D. OFFSET................................................................. 9 E. RECOVERY ............................................................ 9 F. RERvIBURSEMENT........................................................... 9 G. ARBITRATION............................................................... 9 Part 10. RECORDS AND REPORTS.......................................................... 10 A. REPORTING................................................................. 10 B. AUDITS .................... ........................................... 10 C. LIABILITY AND INDEMNIFICATION ........................................... 10 D. UNDERWRITING INFORMATION ............................................... 10 Part 11. ENTIRE CONTRACT, CHANGES .................................................... 10 Part 12. INCONTESTABLE CLAUSE......................................................... 11 Part 13. TIME LIMITS FOR FILING A CLAIM ............................................... 11 Part 14. LEGAL ACTIONS.................................................................. 11 Part 15. INSOLVENCY .................................... ............................... 11 Part 16. ASSIGNMENT..................................................... ............... 11 (< Part 17. GENERAL DEFINITIONS........................................................... 12 Part 1. SCHEDULE OF INSURANCE A. POLICY INFORMATION 1. Number of Covered Units Single: 0 Family: 0 Composite: 0 2. Covered Underlying Plan Names Employer's Comprehensive Medical Plan 3. Covered Underlying Plan(s) Aggregate Coverage Specific Coverage Hospital ❑ Hospital ❑ Surgical ❑ Surgical ❑ Major Med ❑ Major Med ❑ Comprehensive ® Comprehensive Dental ❑ Dental ❑ Vision ❑ Vision ❑ Prescription Drug ❑ Prescription Drug ❑ Short Term Disability ❑ Short Term Disability 1-1 Non—Capitated HMO ❑ Non—Capitated HMO ❑ B. AGGREGATE SCHEDULE OF INSURANCE 1. Covered Claims Basis Incurred & Paid: Eligible Claims Expenses Incurred from 00/00/00 through 00/00/00 and Paid from 00/00/00 through 00/00/00. 2. Aggregate Attachment Point 0% 3. Aggregate Annual Deductible Aggregate Annual Deductible is equal to A or B, whichever is greater, where: A = The sum of the 12 Aggregate Monthly Deductible Amounts during the Policy Term. B = The Minimum Aggregate Annual Deductible of $0 The Aggregate Annual Deductible cannot be finally determined until the Aggregate Monthly Deductible Amounts have been calculated for each Policy Month of the Policy Term. Printed 1 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss 4. Aggregate Monthly Deductible Amount per Covered Unit $0 per Single Covered Unit per Policy Month $0 per Family Covered Unit per Policy Month 5. Aggregate Maximum Eligible Claims Expense $0 per Covered Person per Policy Term. 6. Minimum Percentage of Initial Number of Covered Units, for Calculation of Aggregate Annual Deductible 0% 7. Maximum Aggregate Benefit $0 per Policy Term. 8. Annual Aggregate Premium $0 per Covered Unit per Policy Month for each Policy Month of the Policy Term. C. SPECIFIC SCHEDULE OF INSURANCE 1. Covered Claims Basis C-0/ For each Covered Person to whom an Individual Covered Claims Basis does not apply: Incurred & Paid: Eligible Claims Expenses Incurred from 00/00/00 through 00/00/00 and Paid from 00/00/00 through 00/00/00. 2. Individual Covered Claims Basis None 3. Specific Deductible $0 per Covered Person to whom an Individual Specific Deductible does not apply. 4. Individual Specific Deductible None 5. Maximum Lifetime Specific Benefit $0 (in excess of the Specific Deductible), per Covered Person 6. Annual Specific Premium The sum of A + B, where: A = $0 per Single Covered Unit per Policy Month B = $0 per Family Covered Unit per Policy Month Printed 2 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss Part 2. BENEFITS Unless otherwise indicated in the Covered Claims Basis section(s) in the Specific Schedule of Insurance or the Aggregate Schedule of Insurance, benefits under this Policy will only be paid based on Eligible Claims Expenses through the Covered Underlying Plan(s) which are Incurred after the effective date of this Policy and which are Paid by the Policyholder during the Policy Term. A. AGGREGATE BENEFIT We will pay to the Policyholder, subject to the terms and conditions of this Policy, the following Aggregate Benefit, as shown in the Aggregate Schedule of Insurance, in accordance with the terms of settlement mutually agreed upon by the Policyholder and us. The Aggregate Benefit will be equal to the amount of the Eligible Claims Expenses which are Paid by the Policyholder during the period shown in the Aggregate Schedule of Insurance as the Covered Claims Basis for Aggregate Benefits, reduced by the sum of the following amounts: The Aggregate Annual Deductible or the Aggregate Annual Minimum Deductible for the Policy Term, whichever is greater. 2. The amount in excess of the Aggregate Maximum Eligible Claims Expense per Covered Person. Any amounts recovered by the Policyholder for Eligible Claims Expenses which were Paid by the Policyholder during the Policy Term, or any amounts which the Policyholder is later able to recover through any recovery provision of the Covered Underlying Plan(s). The Aggregate Benefit will be paid at the end of each Policy Term, subject to the terms and conditions of this Policy. In no event will the Aggregate Benefit paid by us for the Policy Term exceed the Maximum Aggregate Benefit shown in the Aggregate Schedule of Insurance. B. SPECIFIC BENEFIT We will pay to the Policyholder, subject to the terms and conditions of this Policy, the following Specific Benefits, as shown in the Specific Schedule of Insurance, in accordance with the terms of settlement mutually agreed upon by the Policyholder and us. The Specific Benefit payable for the Policy Term with respect to a Covered Person will be equal to the amount of Eligible Claims Expenses which are Paid by the Policyholder for that Covered Person during that Policy Term, reduced by the sum of the following amounts: 1. The Specific Deductible or Individual Specific Deductible for the Covered Person. 2. Any amounts recovered by the Policyholder for Eligible Claims Expenses which were Paid by the Policyholder during the Policy Term for Eligible Claims Expenses which were Incurred by that Covered Person, or any such amounts which the Policyholder is later able to recover through any recovery provision of the Covered Underlying Plan(s). Specific Benefits will be paid as they become due following satisfaction of the Specific Deductible, subject to the terms and conditions of this Policy. In no event will the Specific Benefit paid by us with respect to Eligible Claims Expenses which are Incurred by any one Covered Person during the lifetime of that Covered Person exceed the Maximum Lifetime Specific Benefit shown in the Specific Schedule of Insurance. Printed 3 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss Part 3. EXCLUSIONS AND LIMITATIONS WAR: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for Eligible Claims Expenses which arise out of or are caused or contributed to by war or an act of war. WAR means declared or undeclared war, whether civil or international, and any substantial armed conflict between organized forces of a military nature. 2. WORK RELATED: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder through a Covered Underlying Plan for any injury or illness which is eligible for coverage under a workers' compensation or occupational disease policy or agreement, whether or not such policy or agreement is actually in force and whether or not such benefits are received by the Covered Person. LATE ENROLLEE; PREEXISTING CONDITIONS: No Deductible of this Policy will be satisfied and no .benefit of this Policy will be paid for Eligible Claims Expenses which are Incurred for a Preexisting Condition by a Covered Person who is a Late Enrollee, unless the Eligible Claims Expenses are Incurred after the Covered Person has been covered through the Covered Underlying Plan for at least 18 months. LATE ENROLLEE means a Covered Person who did not enroll in the Covered Underlying Plan within 30 days of first becoming eligible to enroll. However, late Enrollee does not include a person who originally declined coverage through the Covered Underlying Plan because of other medical coverage and then enrolled during a special enrollment period within 30 days after the loss of the other coverage. PREEXISTING CONDITION means a mental or physical condition other than pregnancy or a complication of pregnancy for which you have consulted a physician, received medical treatment or services, or taken prescribed drugs or medications at any time during the six month period just before the effective date of your coverage through the Covered Underlying Plan. 4. MENTAL OR NERVOUS CONDITION, DRUG OR SUBSTANCE ABUSE, OR ALCOHOLISM: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for Eligible Claims Expenses which are Incurred by a Covered Person for a Mental or Nervous Condition, Drug or Substance Abuse, or Alcoholism, which, combined, exceed $0 per Covered Person during the lifetime of the Covered Person. 5. ORGAN TRANSPLANTS: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for Eligible Claims Expenses which are Incurred by a Covered Person for Organ Transplants which exceed $0 per Covered Person during the lifetime of the Covered Person. 6. RETIRED: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for an expense which is Incurred by a Covered Person who has retired. 7. NONDISCLOSURE: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for an expense which is Incurred by a Covered Person who was a plan participant in the Covered Underlying Plan at the time of the initial underwriting of this Policy, but whose known medical conditions were not accurately disclosed to us at that time by the Policyholder. 8. USUAL AND CUSTOMARY CHARGE: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder in excess of the usual and customary charge for the Covered Service, as defined and/or applied by the Covered Underlying Plan(s). Printed 4 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss rks 9. EXPERIMENTAL: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for the cost of procedures, drugs, treatments, services, or supplies which are experimental. 10. NOT MEDICALLY NECESSARY: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for the cost of procedures, drugs, treatments, services, or supplies which are not medically necessary and appropriate, as determined by the Food and Drug Administration, the American Medical Association, or their successor organization(s). COVERED UNDERLYING PLAN NOT IN EFFECT: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for an expense which is Incurred when the Covered Underlying Plan(s) is not in effect. 12. NOT A COVERED PERSON: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for an expense which is Incurred by an individual who is not a Covered Person through the Covered Underlying Plan(s) when the expense is Incurred. 13. NOT COVERED UNDER COVERED UNDERLYING PLAN: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for an expense which is not specifically covered under the terms of the Covered Underlying Plan(s) on the date the expense is Incurred. 14. NOT A COVERED UNDERLYING PLAN: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for an expense which is covered under any employee benefit plan of the Policyholder which is not identified as a Covered Underlying Plan in the Schedule of Insurance. 15. TERMS OF THE COVERED UNDERLYING PLAN: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which the Policyholder was not required to pay in accordance with the terms of the Covered Underlying Plan(s). 16. LIMITATIONS ON COVERED UNDERLYING PLAN: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for expenses resulting from loss of income, dental, vision, prescription card service, or hearing care, unless shown in the description of the Covered Underlying Plan(s) in the Schedule of Stop Loss Insurance. 17. MEDICARE; OTHER COVERAGE: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for the amount of any expenses for benefits to any Covered Person with coverage under any other plan, including Medicare, which, when combined with the benefits payable by such other plan, would cause the total to exceed 100% of the Covered Person's actual expenses. It will be conclusively presumed that each Covered Person eligible for coverage under Medicare became covered for all parts of Medicare to which he or she is entitled on the earliest possible date and thereafter maintained such coverage in force. 18. ADMINISTRATIVE COSTS: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for the administration of claim payments. 19. LITIGATION EXPENSES: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for the expense of litigation. 20. DAMAGES: No Deductible of this Policy will be satisfied and no benefit of this Policy will be paid for any amount which is Paid by the Policyholder for extra contractual damages, compensatory damages, or punitive {w damages. Printed 12/03/99 SPECIMEN Specific & Aggregate Stop Loss Part 4. DESIGNATED THIRD PARTY ADMINISTRATOR A. RESPONSIBILITIES OF THE POLICYHOLDER'S DESIGNATED THIRD PARTY ADMINISTRATOR Without waiving any of its rights under this Policy, and without making the Designated Third Party Administrator a party to this Policy, we agree to recognize the Designated Third Party Administrator as respects the normal administration of the Policyholder's Covered Underlying Plan(s), subject to each of the following conditions: 1. The Designated Third Party Administrator must be responsible on behalf of the Policyholder for auditing, calculating and processing all Eligible Claims Expenses through the Covered Underlying Plan(s) within a reasonable period of time, preparing periodic reports as required by us, and maintaining and making available to us at all times such information as we may reasonably require for proof of payment of Eligible Claims Expenses by the Policyholder. 2. The Designated Third Party Administrator must perform such other duties as may be reasonably required by us, including but not limited to, maintaining an accurate record of the Covered Persons covered through the Covered Underlying Plan(s). 3. We will not be responsible for any compensation due the Designated Third Party Administrator for functions performed in relation to this Policy. 4. This Policy will not be deemed to make us a party to any agreement between the Policyholder and the Designated Third Party Administrator. B. NOTICE TO POLICYHOLDER AND DESIGNATED THIRD PARTY ADMINISTRATOR ' For the purpose of any notice required from us under the provisions of this Policy, notice to the Policyholder's Designated Third Party Administrator will be considered notice to the Policyholder and notice to the Policyholder will be considered notice to the Policyholder's Designated Third Party Administrator. Part 5. NOTICE OF CLAIM Written notice of claim must be given to us within 20 days after the occurrence or commencement of any loss covered by this Policy or as soon thereafter as is reasonably possible. Notice given by or on behalf of the Policyholder or its authorized representative, to us or to any of our authorized agents, with information sufficient to identify the Policyholder, will be deemed notice to us. The Policyholder or its authorized representative must provide written notification to us within 20 days of the date the Policyholder is first notified that a Covered Person has Incurred Eligible Claims Expenses through the Covered Underlying Plan(s) which exceed 50% of the Specific Deductible. Failure to give notice within such time will not invalidate or reduce any claim if it is shown not to have been reasonably possible to give such notice in time and that notice was given as soon as was reasonably possible. The notice to us must include: The identity of the Covered Person. 2. A description of the illness or accident and the prognosis. 3. A listing of the Eligible Claims Expenses Paid to date through the Covered Underlying Plan(s). In addition, the Policyholder or its authorized representative must notify us immediately of certain "Catastrophic Diagnosis" claims on a special exception basis (case selections to be mutually agreed upon by the Policyholder and us). Printed 6 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss Part 6. AMENDMENTS TO THE COVERED UNDERLYING PLAN(S) We reserve the right to approve any change to the Covered Underlying Plan(s). The Policyholder must promptly furnish us with a copy of each change to the Covered Underlying Plan(s) prior to the effective date of the change. If we do not give our prior written approval of a change to the Covered Underlying Plan(s), then we will have the right to exercise one of the following options by giving written notice to the Policyholder: 1. We may approve the change retroactive to the date of the change and pay benefits under this Policy based on the changes to the Covered Underlying Plan(s), contingent on the Policyholder's written acceptance of any necessary adjustment to the premium. 2. We may decline to approve the change and pay benefits under this Policy as if the Covered Underlying Plan(s) had not been changed. Other options may be mutually agreed upon by the Policyholder and us. Part 7. TERMINATION This Policy and all coverage under this Policy will terminate on the earliest of the following dates: 1. The end of the last period for which premiums were paid. 2. The Premium Due Date next following receipt by us of written notice from the Policyholder that this Policy is to be terminated. 3. The end of any Policy Term following 31 days prior written notice to the Policyholder of termination. 4. The end of any Policy Term following 31 days prior written notice to the Policyholder that we are not planning to renew this Policy because there are fewer than 50 Covered Units through the Covered Underlying Plan. 5. The date of termination of the Covered Underlying Plan(s). 6. The date of cancellation of the administrative agreement between the Policyholder and the Designated Third Party Administrator, unless we have, prior to such cancellation, consented in writing to the Policyholder's selection of a new Designated Third Party Administrator. If this Policy terminates prior to the end of the Policy Term, the Covered Claims Basis of this Policy will be limited to Eligible Claims Expenses Incurred and Paid prior to the termination of this Policy. However, the full Minimum Aggregate Annual Deductible will still apply. Part 8. PREMIUMS A. AMOUNT OF PREMIUMS Premium is calculated based upon the number of Covered Units covered by the Covered Underlying Plan(s) in any given Policy Month. The estimated number of Covered Units for the first Policy Month is shown in the Policy Information, based on the estimated initial enrollment shown in the Application. Printed 12/03/99 7 SPECIMEN Specific & Aggregate Stop Loss The number of Covered Units for each Policy Month will be determined in accordance with the definition of a Covered Unit. If the Aggregate Schedule of Insurance shows that the "Single Employee/Family" method is used, then the total number of "Single Employees" and the total number of "Families" is each multiplied by the appropriate rate for each classification. If the Aggregate Schedule of Insurance shows that the "Composite" method is used, then the "Composite" total is multiplied by the appropriate rate. The rates for this Policy are set by us. B. CHANGES IN PREMIUM RATES We reserve the right to change any rate or percentage used in determining the monthly premium. The change may occur on one of the following dates: On any Premium Due Date, if the number of Covered Units covered by the Covered Underlying Plan(s) fluctuates by more than 10% from the number on the effective date of this Policy or the number on the date of the last Policy Anniversary, whichever is the later date. 2. Retroactively to the beginning of the Policy Term, if we determine that claim payments are not being made in accordance with the terms and conditions of the Covered Underlying Plan(s). 3. On the effective date of any change in the Covered Underlying Plan(s) approved by us. 4. On any Policy Anniversary. We will give the Policyholder 31 days prior written notice of any change in any rate or percentage used in determining the monthly premium. We will give the Policyholder 60 days prior written notice of any such change which will increase the premium by 25% or more. C. PAYMENT OF PREMIUMS All premiums are due on the Premium Due Dates shown on the cover of the Policy. Each premium is payable by the Policyholder on or before the Premium Due Date direct to us at our Home Office. The payment of each premium as it becomes due will maintain this Policy in force through the date immediately preceding the next Premium Due Date. D. GRACE PERIOD A Grace Period of 31 days will be allowed for the payment of each premium after the first premium. Should a premium which is otherwise due not be paid during the Grace Period, this Policy will automatically terminate as of the end of the last period for which premiums were paid, without further notice to the Policyholder. Our liability will be limited to Eligible Claims Expenses which are Paid by the Policyholder prior to the date of termination. Part 9. GENERAL POLICY PROVISIONS A. HOLD HARMLESS 1. The Policyholder agrees to hold us harmless from any legal expenses incurred or judgement(s) awarded arising out of any dispute involving a participant or former participant in the Policyholder's Covered Underlying Plan(s), provided such legal expenses or judgments were not incurred as a result of our sole negligence or intentional wrongful acts. Printed 8 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss 1 If we are notified that we have been named, or are likely to be named, as a defendant in any action involving a participant or former participant in the Covered Underlying Plan(s), we will give the Policyholder written notice of the dispute within a reasonable time. We will make all probative material available to the Policyholder upon written request from the Policyholder. We will cooperate with the Policyholder in matters pertaining to the dispute. However, such cooperation with the Policyholder will not waive our right to solely defend or settle any such action in any manner we deem prudent. 2. The Policyholder agrees to hold us harmless from any state premium taxes incurred with respect to funds paid to or by the Policyholder through the Covered Underlying Plan(s). Taxes incurred with respect to premiums paid for this Policy will be our responsibility. B. NOTICE OF OBJECTION Any objection, notice of legal action, or complaint received on a claim processed by the Policyholder or the Designated Third Party Administrator, and on which it reasonably appears a benefit will be payable to the Policyholder under this Policy, must be brought to the immediate attention of our claims department. C. POLICY NON PARTICIPATING This Policy is non participating and does not share in our surplus earnings. D. OFFSET We have the right to offset any benefits payable to the Policyholder under this Policy against premiums due and unpaid by the Policyholder, but this right will not prevent the termination of this Policy for the non payment of premium pursuant to the terms of Part 8. E. RECOVERY The Policyholder must prosecute any and all valid claims that the Policyholder may have against third parties arising out of any occurrence resulting in a payment for Eligible Claims Expenses by the Policyholder and must account to us for any amounts recovered. F. REIMBURSEMENT In the event that the Policyholder recovers from a third party with respect to any Eligible Claims Expense for which benefits were paid under this Policy, the Policyholder must repay us. No part of any Eligible Claims Expense which is Paid by the Policyholder and for which the Policyholder has been reimbursed by a third party may be used to meet any Deductible under this Policy. This provision will survive the termination of this Policy. G. ARBITRATION In the event of a dispute between the parties to this Policy upon which an amicable understanding cannot be reached, either party has the right to refer the dispute to binding arbitration. The Court of Arbitrators, which is to be held in the city where the home office of the Policyholder is located, will consist of three arbitrators familiar with the Covered Underlying Plan(s) and/or stop loss insurance policies. One of the arbitrators will be appointed by the Policyholder, one by us, and the third will be selected by the first two appointees prior to the beginning of the arbitration. Printed 12/03/99 SPECIMEN Specific & Aggregate Stop Loss Should the two arbitrators be unable to agree upon the choice of a third, the appointment will be left to the President or any Vice President of the American Arbitration Association. The arbitrators are empowered to decide all questions or issues and will be free to reach their decision by application of principles of equity and customary practice of the Insurance and reinsurance industry rather than by strict application of all rules of evidence and law. They will decide by a majority of votes and there will be no right of appeal from their written decision. The cost of arbitration, including the fees of the arbitrators, will be borne by the losing party unless the arbitrators decide otherwise. Part 10. RECORDS AND REPORTS A. REPORTING The Policyholder or its authorized representative must submit on a timely basis all proofs, reports, and supporting documents requested by us, including, but not limited to, a monthly summary of all Eligible Claims Expenses which were processed by the Policyholder or the Designated Third Party Administrator. Clerical error, whether by the Policyholder or by us, in keeping any records pertaining to the coverage, will not invalidate coverage otherwise validly in force nor continue coverage otherwise validly terminated. B. AUDITS We have the right to inspect and audit all records and procedures of the Policyholder and the Designated Third Party Administrator. We have the right to require, upon request, proof satisfactory to us that payment has been made to the Covered Person or the provider of the Covered Services which are the basis for any claim by the Policyholder under this Policy. C. LIABILITY AND INDEMNIFICATION We will have neither the right nor the obligation under this Policy to directly pay any Covered Person or provider of Covered Services for any benefit which the Policyholder has agreed to provide through the terms of the Covered Underlying Plan(s). Our sole liability under this Policy is to the Policyholder. D. UNDERWRITING INFORMATION We have relied upon the underwriting information provided by the Policyholder or the Policyholder's Designated Third Party Administrator in the issuance of this Policy. Should subsequent information become known which, if known prior to issuance of this Policy, would affect the rates, Deductibles, or the terms and conditions of this Policy, we will have the right to revise the rates, Deductibles, and the terms and conditions of this Policy retroactive to the effective date of this Policy, by providing written notice to the Policyholder. Part 11. ENTIRE CONTRACT, CHANGES This Policy and the Application, a copy of which is attached to this Policy, constitute the entire contract of insurance. No change in this Policy will be valid unless it is approved in writing by one of our executive officers and delivered to the Policyholder for attachment to this Policy. This approval must be shown on or attached to this Policy. No agent or Designated Third Party Administrator has authority to change this Policy or to waive any of its provisions. Printed 12/03/99 10 SPECIMEN Specific & Aggregate Stop Loss Pant 12. INCONTESTABLE CLAUSE Any statement made by the Policyholder to obtain this Policy is a representation and not a warranty No misrepresentation by the Policyholder will be used to deny a claim or to deny the validity of this Policy unless all of the following are true: This Policy would not have been issued by us if we had known the truth. 2. The misrepresentation is contained in a written instrument signed by the Policyholder. 3. A copy of the written instrument has been given to the Policyholder. The validity of this Policy will not be contested after it has been in effect for two years, except for non payment of premiums or a fraudulent misrepresentation made with actual intent to deceive. Part 13. TIME LIMITS FOR FILING A CLAIM The Policyholder must provide satisfactory written proof of loss to support a claim within 90 days after the commencement of the period for which we are liable or as soon thereafter as reasonably possible and, in any case, within one year after the end of that 90 day period. Claims not filed within these time limits will be denied and no benefits will be paid. These limits will not apply during any period when the Policyholder lacked the legal capacity to file a claim. Part 14. LEGAL ACTIONS No action at law or in equity may be brought to recover under this Policy until 60 days after written proof of loss has been furnished to us. No such action may be brought more than three years after the time within which proof of loss is required to be furnished. Part 15. INSOLVENCY The insolvency, bankruptcy, financial impairment, receivership, voluntary plan of arrangement with creditors, or dissolution of the Policyholder or the Policyholder's Designated Third Party Administrator will not impose upon us any liability other than the liability defined in this Policy. Part 16. ASSIGNMENT No assignment of interest under this Policy will be binding upon us unless and until the original or a duplicate is filed with us. We do not assume any responsibility for the validity of an assignment. Printed 12/03/99 I 1 SPECIMEN Specific & Aggregate Stop Loss Part 17. GENERAL DEFINITIONS AGGREGATE ANNUAL DEDUCTIBLE means an amount that the total of the Eligible Claims Expenses which are Paid by the Policyholder during the Policy Tenn for all Covered Persons must exceed before Aggregate Benefits become payable to the Policyholder. This amount, which cannot be finally determined until the end of the Policy Tenn, is based on the number of Covered Units in effect at the start of each Policy Month during the Policy Term. The Aggregate Annual Deductible is equal to the Minimum Aggregate Annual Deductible or the sum of the monthly amounts determined by multiplying the number of Covered Units in effect at the start of each Policy Month during the Policy Term by the Aggregate Monthly Deductible Amount Per Covered Unit, whichever is greater. AGGREGATE ATTACHMENT POINT means the percentage of anticipated Eligible Claims Expenses which the Policyholder must pay before Aggregate Benefits will become payable to the Policyholder. The Aggregate Attachment Point, as shown in the Aggregate Schedule of Insurance, is used to determine the amount of the Aggregate Monthly Deductible Amount Per Covered Unit. AGGREGATE BENEFIT means a type of benefit payment provided under this Policy to the Policyholder when Eligible Claims Expense which are Paid by the Policyholder through the Covered Underlying Plan(s) for all Covered Persons combined exceed the Aggregate Annual Deductible shown in the Aggregate Schedule of Insurance. AGGREGATE DEDUCTIBLES mean the Aggregate Monthly Deductible Amount Per Covered Unit, Aggregate Annual Deductible, and Minimum Aggregate Annual Deductible, as shown in the Aggregate Schedule of Insurance. AGGREGATE MAXIMUM ELIGIBLE CLAIMS EXPENSE means the maximum dollar amount of Eligible Claims Expenses that are Paid by the Policyholder for a single Covered Person during the Policy Term which can be used either to satisfy the Aggregate Deductibles or included in the calculation of the Aggregate Benefit for that Policy GTerm, as shown in the Aggregate Schedule of Insurance. AGGREGATE MONTHLY DEDUCTIBLE AMOUNT means, for each Policy Month in the v, the Aggregate Maximum Deductible Amount Per Covered Unit time the number of Covered Units in effect at the start of that Policy Month. AGGREGATE MONTHLY DEDUCTIBLE AMOUNT PER COVERED UNIT means the monthly dollar amount per Covered Units which is used to calculate the Aggregate Annual Deductible and the Minimum Aggregate Annual Deductible. The Aggregate Monthly Deductible Amount Per Covered Unit is shown in the Schedule of Insurance. APPLICATION means the written request of an entity through its duly authorized representative(s) for insurance under this Policy on a form acceptable to us. COVERED CLAIMS BASIS means the basis on which Eligible Claims Expenses which are Incurred through the Covered Underlying Plan(s) by Covered Persons qualify under this Policy to be applied to satisfy the Deductibles of this Policy and for payment of benefits under this Policy. The Covered Claims Basis shown in the Aggregate Schedule of Insurance and the Specific Schedule of Insurance establishes the period during which an Eligible Claims Expense must be Incurred and the period during which it must be Paid by the Policyholder. COVERED PERSON(S) means any person covered through a Covered Underlying Plan who is an employee of the Employer or a dependent of an employee of the Employer. COVERED SERVICE means a service for which the Covered Person has Incurred an Eligible Claims Expense and for which benefits are payable through the Covered Underlying Plan(s). COVERED UNDERLYING PLAN(S) means the Underlying Plan(s) which are identified in the Policy Information in the Schedule of Insurance. Printed 12 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss COVERED UNIT(S) means a Covered Unit composed of one or more Covered Persons, as shown in the Policy Information in the Schedule of Insurance. A Covered Unit can be composed of a Single Employee, the Family of the employee, or the Composite of the employee and family, as shown in the Policy Information. The number of Covered Units is used to calculate the premium due each month. The estimated number of Covered Units for the first Policy Month is shown in the Policy Information in the Schedule of Insurance. DEDUCTIBLE(S) means the Specific Deductible(s) or Aggregate Deductible, as shown in the Specific Schedule of Insurance or the Aggregate Schedule of Insurance. DESIGNATED THIRD PARTY ADMINISTRATOR means the third party administrator designated by the Policyholder and recognized by us, as described in this Policy. ELIGIBLE CLAIMS EXPENSE(S) means expenses which are Incurred by a Covered Person through the Covered Underlying Plan(s) and for which benefits have been Paid by the Policyholder in accordance with the terms of the Covered Underlying Plan(s). Eligible Claims Expenses which are covered under the terms of the Covered Underlying Plan(s), Paid by the Policyholder, and not excluded under the terms of this Policy can be used either to satisfy the Deductible(s) of this Policy or included in the calculation of the benefits payable under this Policy. Eligible Claims Expenses include the 8.18% surcharge assessed by the New York Health Care Reform Act of 1996, but do not include any additional surcharges or penalties imposed by the New York Department of Health. EMPLOYER means ABC Company. INCURRED means an Eligible Claims Expense is Incurred on the date the Covered Service is received by the Covered Person. INDIVIDUAL SPECIFIC DEDUCTIBLE means the separate Specific Deductible, if any, shown in the Specific Schedule of Insurance for certain Covered Persons who are identified by name. The Individual Specific Deductible shown in the Specific Schedule of Insurance for those Covered Persons must be satisfied prior to any Specific Benefit becoming payable under this Policy with respect to those Covered Persons. MAXIMUM AGGREGATE BENEFIT means the maximum dollar amount of the Aggregate Benefit which will be paid to the Policyholder for any Policy Term, as shown in the Aggregate Schedule of Insurance. MAXIMUM LIFETIME SPECIFIC BENEFIT means the maximum dollar amount of the Specific Benefits which will be paid to the Policyholder with respect to Eligible Claims Expenses which are Incurred by any one Covered Person during the lifetime of that Covered Person, as shown in the Specific Schedule of Insurance. MINIMUM AGGREGATE ANNUAL DEDUCTIBLE means an amount that the total of the Eligible Claims Expenses which are Paid by the Policyholder during the Policy Tenn for all Covered Persons must exceed before Aggregate Benefits become payable to the Policyholder. This amount is based on the Aggregate Monthly Deductible Amount Per Covered Unit, the expected number of Covered Units, and the number of months in the Policy Term. The Minimum Aggregate Annual Deductible is shown in the Aggregate Schedule of Insurance. PAID means an Eligible Claims Expense is Paid by the Policyholder when funds are disbursed to the Covered Person who incurred the Eligible Claims Expense or to the provider of the Covered Service. A claim will be deemed Paid on the date that the payor directly tenders payment by mailing or otherwise delivering a draft or check, provided that 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 means this contract between the Policyholder and us with respect to Stop Loss Insurance. POLICY ANNIVERSARY means each anniversary of the effective date of this Policy, unless changed by agreement between the Policyholder and us. Printed 13 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss f POLICY MONTH means successive intervals of time, while this Policy is in force, determined on a monthly basis starting on the effective date of this Policy. Each new interval will begin on a day which corresponds to the effective date of this Policy. If there is no such day in any applicable month, then the last day of the month will be used. POLICY TERM means from the effective date of this Policy through the end of the "Incurred" period shown in the Covered Claims Basis section of the Specific Schedule of Insurance and the Aggregate Schedule of Insurance. Each new Policy Term will begin on the Policy Anniversary. PREMIUM DUE DATES means the effective date of this Policy and the first day of each Policy Month thereafter. SPECIFIC BENEFIT means a type of benefit provided under this Policy to the Policyholder when Eligible Claims Expenses which are Paid by the Policyholder through the Covered Underlying Plan(s) for a Covered Person exceed the Specific Deductible. SPECIFIC DEDUCTIBLE means the dollar amount(s) shown in the Specific Schedule of Insurance as the Specific Deductible which must be satisfied prior to any Specific Benefit becoming payable under this Policy. STOP LOSS INSURANCE means the coverage provided under this Policy, which provides benefits to the Policyholder when Eligible Claims Expenses which are Paid by the Policyholder through the Covered Underlying Plan(s) exceed the levels defined in this Policy. UNDERLYING PLAN(S) means the employee benefit plans of the Policyholder which provide hospital, surgical, major medical, comprehensive health, dental, vision, short term disability income, or non—capitated HMO coverage for the Policyholder's employees and their dependents. This Policy insures the Policyholder for excess losses through such plans which are identified in the Schedule of Insurance as Covered Underlying Plan(s). Printed 14 SPECIMEN 12/03/99 Specific & Aggregate Stop Loss