GROUP HEALTH PLANS

GROUP HEALTH PLANS

HIGHLIGHTS

Coverage begins for new employees on the 31st consecutive day in pay status.

Coverage begins for elected officials when they are sworn into office.

Coverage ends on the last day of the month for terminating employees.

Provides for continued coverage after termination.

INTRODUCTION

This Health Plan provides extensive and valuable benefits for you and your family (if family coverage is elected), including hospitalization, medical, surgical, maternity care and other services necessary for the diagnosis and treatment of a nonoc­cupational injury or disease. Your health care coverage is good worldwide.

The Plan is described in the benefits contract (group policy) between the State of Alaska and the health carrier including riders issued at a later date.

Plan Choices and Premiums

Your coverage may be for yourself only or, if you want, you may elect additional coverage for:

Your spouse,

Your child or children, or

Your spouse and children.

The cost for coverage may be paid entirely by your employer or you may be required to share in the cost. If you are eligible for coverage, your employer will advise you of the amount of your monthly premium, if any. Premiums are subject to change, generally in July of each year. Current premium amounts may be obtained from your employer. Please note that the Group Health Plan and Group Life Plan are one complete package and it is not possible to obtain one without the other.

WHO IS COVERED

Employees

Permanent full-time employees of participating political subdivisions (those who work 30 or more hours a week on a regular basis).

Permanent part-time employees of participating political subdivisions who elect to participate in the Plan (those who work at least 15 but less than 30 hours a week on a regular basis).

If you are a permanent part-time employee and want to participate in this Health Plan, you must elect coverage within the first 30 consecutive calendar days of employ­ment. You need to sign an enrollment card and enroll in the Basic Life Insurance Plan. You pay at least one-half of the premium cost for employee coverage. If you do not elect coverage within the 30 days, you may elect coverage during the open enrollment period or under one of the conditions described under Enrollment on page 4. Contact your person­nel office for more information.

“Employees” are those persons actively working for a partici­pating political subdivision and receiving earnings.

Elected Officials

• Persons who are elected officials receiving salaries from participating political subdivisions.

Dependents

You may elect coverage for your dependents when you first enroll in the health plan or when the health carrier has an open enrollment period.

If you elect coverage for your dependents, the following individuals may be covered:

Your spouse. You may be legally separated but not divorced.

• Your children from birth (exclusive of hospital nursery charges at birth and well baby care) up to 23 years of age only if they are:

Your natural children, step-children, foster children placed through a state foster child program, legally adopted children, children in your physical custody and for whom bona fide adoption proceedings are under way, or children for whom you are the legal, court-appointed guardian.

Unmarried and chiefly dependent upon you for support.

Living with you in a normal parent-child relationship.

✓ This provision is waived for natural/adopted chil­dren of the employee who are living with a divorced spouse, assuming all other criteria is met.

✓ Only stepchildren living with the employee more than 50% of the time are covered under this plan.

Children incapable of earning their own living because of a mental or physical incapacity are covered even if they are past age 23. However, the incapacity must have existed before age 23 and the children must continue to rely chiefly on you for support. You must furnish the health carrier evidence of the incapacity, proof that the incapacity existed before age 23 and proof of financial dependency. This proof must be provided no later than 31 days after their 23^rd birthday or the date they become covered under the plan, whichever is later. The health carrier has the right to re­quire proof of the ongoing incapacity and dependency and the right to examine your child as often as needed as long as the incapacity continues. Assuming you continue to cover your dependents, children are covered as long as the incapacity exists, they meet the definition of children, except for age, and you continue to give proof of the inca­pacity or have examinations as required.

If more than one family member is covered by this health plan, each eligible member of the family may be covered both as an employee and as a dependent or as the dependent of more than one employee.

ENROLLMENT

Enrollment is automatic for permanent full-time employees and elected officials as described under Who is Covered on page 2. Coverage for permanent part-time employees and dependents is not automatic and must be elected as described below.

Part-Time Employees

Permanent part-time employees may elect coverage within 30 days of the date they become eligible. Employees who do not elect coverage during that time may elect coverage during the annual open enrollment or within 31 days following loss of other creditable coverage as defined by Alaska Statute

21.54.500.

If you or your dependent were covered under another health plan recognized by Alaska Statute 21.54.500 and that coverage terminates, you may elect coverage under this plan. Coverage under your prior plan must have terminated due to:

Termination of employment in a class eligible for the coverage.

Reduction in hours of employment.

Your spouse dies.

You and your spouse divorce.

The other coverage was continued under COBRA and the continuation period was exhausted or

The employer fails to pay the premium or any other reason.

Coverage must be elected within 31 days of the event that causes you to lose coverage and is effective on the date of election. Any applicable limits due to pre-existing conditions apply.

Dependents

If you did not elect coverage for yourself (if you are a part-time employee) or for your dependents, you may elect coverage if you subsequently acquire a dependent as described below. Any applicable limitation due to a pre-existing condition may apply.

• You are ordered by a court to provide coverage for your dependent child. You may elect coverage for the child

within 31 days of the date of the order. Coverage is effective on the date of the court order.

You marry. You may elect coverage for yourself, your new spouse and any children who meet the definition of chil­dren. You must elect coverage within 31 days of the date of the marriage. Coverage is effective on the date the election is received.

You acquire a dependent through birth, adoption or place­ment for adoption. You may elect coverage for yourself, your spouse and the new dependent within 31 days of the event. Coverage is effective on the date of the event.

You or your dependents are covered under another em­ployer plan that offers multiple health plans and the cov­ered person changes coverage during an open enrollment period. You may elect coverage for yourself, your spouse and dependent within 31 days of the event. Coverage is effective on the first day of the second calendar month following the open enrollment period.

WHEN COVERAGE STARTS

New Employees

If you are a permanent full-time employee or a permanent part-time employee who elects coverage, coverage for you, and your dependents if you choose to cover them, will begin on the 31st consecutive day you are in pay status.

Rehired Employees

If you were previously insured under this political subdivision plan and you are rehired within seven calendar days by your former employer or by another employer participating in this plan, your coverage begins on your date of rehire. If you are rehired more than seven calendar days after your insurance terminated, you are considered a new employee and coverage begins on the 31st day as specified above.

Elected Officials

If you are an elected official, coverage for you, and your depen­dents if you choose to cover them, starts on the day you are sworn into office.

Employees Returning From Leave Without Pay or Layoff

If you returned from leave without pay or layoff, you, and your dependents if you elected to cover them, are covered starting the day you begin work.

Dependents

If you elect coverage for your dependents when hired, they are covered on the same day you are as noted above.

If you add new dependents through birth, marriage, placement for adoption or receipt of a qualified medical support order, you may elect to cover them within 31 days of the event. Cover­age starts on the date of the birth, adoption, or placement, on the date of the election following marriage or on the date of the court order.

WHEN COVERAGE ENDS

Coverage under this health plan ends at the earliest time that one of the following occurs:

Employees on Leave Without Pay or Layoff

Coverage ends on the last day of the month in which you were last in pay status. For example, if you worked or were on paid leave status on January 15 and then placed on leave without pay or layoff, coverage ends on January 31.

Employees on Federal Family Leave

Coverage ends on the last day of the month in which you are on Federal Family Leave.

Employees Who Terminate Employment

Coverage ends on the last day of the month in which you last worked. For example, if you last worked on January 15 and terminated your employment, coverage ends on January 31.

Dependents

Coverage for a dependent ends on the same day as the employee’s coverage ends or on the last day of the calendar month for which the premium is paid, unless:

you divorce. Coverage for your spouse ends on the date the divorce is final, or

your child no longer meets all eligibility requirements. Coverage ends on the last day of the month in which the child first fails to meet any of the requirements.

Failure to Pay the Required Premium

Coverage terminates at the end of the month for which the premium was paid by an employee who must pay a premium for their health coverage.

Termination of the Group Policy

If the group health plan is terminated for your employer or for the entire group, coverage ends on the effective date of that termination.

* * * * * There are several options available for continuing health coverage if one of the above situations occurs. Options are described in the “How to Continue Health Coverage”

MEDICAL BENEFITS

MEDICAL BENEFITS

MEDICAL PLAN HIGHLIGHTS

Requires an annual deductible for each covered person, with a maximum of three deductibles per family.

Requires a deductible for each office visit.

Requires certification from the health carrier for all inpatient stays and certain outpatient procedures and Plan-required second opin­ions.

HOW MEDICAL BENEFITS ARE PAID

Benefit Year

The benefit year is January through December. Any benefits limited in a benefit year are reset on January 1.

Deductibles

Each covered person must first meet the annual deductible before the plan pays benefits for that person. Once your family has met the maximum of three deductibles per family, no further deductibles are required. In the event of a common accident involving two or more family members, only one deductible is required. Any portion of the deductible satisfied in the last three months of the calendar year will be carried over and applied toward the following year’s deductible.

In addition, a deductible is required for each office visit. This “per visit” deductible does not apply to your annual deduct­ible. (The deductible amounts are listed in your plan summary, a separate insert available from your personnel office.)

Coinsurance

After you meet the annual deductible, the medical plan pays the coinsurance amount until the out-of-pocket limit has been met. (See your plan summary, a separate insert available from your employer.) Your out-of-pocket expense, the amount you must pay in addition to the deductible, is the difference be­tween the coinsurance amount paid by the plan, and 100% of covered expenses. When your out-of-pocket expense equals the out-of-pocket limit for the plan you are enrolled in for any one person, the medical plan pays 100% of most covered medical expenses for that person for the rest of the benefit year. This out-of-pocket limit does not apply to expenses paid at a rate other than the normal coinsurance, to expenses applied against deductibles or copayments, or to benefits not payable because of failure to precertify.

For example, if you are enrolled in Plan I, you must first satisfy a deductible of $100. Then the plan pays 90% of most of your covered expenses. When your 10% payments total $195, most claims for you for the rest of the benefit year would be paid at 100%.

Recognized Charge

Payment is based on the recognized charge for covered ser­vices. Charges or fees in excess of the recognized charge, as determined by the health carrier, are your responsibility to pay.

The recognized charge is the charge contained in an agreement the health carrier has with the provider either directly or through a third party. If no agreement is in place, the recog­nized charge is the lowest of:

The provider’s usual charge for furnishing the service.

The charge the health carrier determines to be appropriate based on factors such as the cost for providing the same or similar service or supply and the manner in which charges for the service or supply are made.

The charge the health carrier determines to be the recog­nized charge percentage made for that service or supply.

The recognized charge percentage is the charge determined by the health carrier on a semiannual basis to be in the 90^th percentile of the charges made for a service or supply by providers in the geographic area where it is furnished. The recognized charge is determined by collecting the claims submitted for each procedure, defined by the procedure code, in a specific geographic area. The highest and lowest charges are ignored and the charge that allows 90% of all the claims to be paid in full is set as the recognized charge for that proce­dure. The geographic area is determined by where the proce­dure is performed. For example, most procedures in Juneau are based on charges submitted from all of Southeast Alaska. Some types of procedures, such as surgery, are based on statewide claims data to ensure sufficient information to establish the recognized charge.

If data is insufficient to determine a recognized charge, the health carrier may consider items such as the following:

The recognized charge in a greater geographic area.

The complexity of the service or supply.

The degree of skill needed.

The type or specialty of the provider.

• The range of services or supplies provided by a facility.

If two or more surgical procedures are performed during the same operative session, payment will be calculated as follows:

The health carrier will determine which procedures are primary, secondary or tertiary, taking into account the billed amounts.

• Payment for each procedure will be made at the lesser of the billed charge or the following percentage of the recog­nized charge:

— primary 100%

— secondary 50%

— all others 25%

Incidental procedures, those that take little or no additional resources or time when performed at the same time as another procedure, are not covered by the plan.

Charges in excess of the recognized charge as determined by the health carrier are not paid by the plan.

Lifetime Maximum

The maximum lifetime benefit for one person for all covered medical expenses is $1,000,000. At the end of each calendar year, up to $5,000 of covered medical benefits is automatically restored regardless of your physical condition.

Pre-existing Conditions Limitation

Pre-existing conditions are conditions, excluding pregnancy, for which you received diagnosis, tests or treatment (including taking medication) during the three consecutive months before the most recent day you became covered under this plan. For example, if your coverage begins on April 1, a pre-existing condition would be one for which you received diagnosis, testing, or treatment during January, February, and/or March.

Only the first $1,000 of covered medical expenses are paid by the medical plan for pre-existing conditions. However, once you have been covered for 12 consecutive months, this limita­tion is cancelled and claims incurred after the 12-month period are covered the same as all other services with no pre-existing limitation.

The limitation does not apply to a child who meets the defini­tion of dependent and:

For whom you are required to provide health coverage as a result of a qualified medical child support order (QMCSO) issued on or after the date your coverage becomes effec­tive, provided you make a written request for the child’s coverage within 31 days of the court order.

Who is placed for adoption, meaning assumption and retention of a legal obligation for total or partial support of a child in anticipation of adoption, provided such place­ment takes effect on or after the date your coverage is effective and you make a written request for coverage within 31 days of the placement.

If you or your dependent was covered under another group health plan as defined by Alaska Statute 21.54.500 that either ended less than 90 days before the waiting period or coverage under this plan started or that continues to cover you or your dependent, some or all of the pre-existing condition limitation may be waived. Contact the health carrier for information on obtaining this waiver.

COVERED MEDICAL EXPENSES

COVERED MEDICAL EXPENSES

Benefits are available for medically necessary services and supplies needed to diagnose, care for, or treat a physical or medical condition. They must be widely accepted profession­ally in the United States as effective, appropriate and essential, based upon recognized standards of the health care specialty involved.

A service or supply is necessary if the health carrier determines it is appropriate for diagnosis, care or treatment of the disease or injury involved.

To be appropriate, the service or supply must be:

Care or treatment which is expected to improve or maintain your health or to relieve pain and suffering without aggra­vating the condition or causing additional health problems.

A diagnostic procedure indicated by the health status of the patient and expected to provide information to deter­mine the course of treatment without aggravating the condition or causing additional health problems.

• No more costly (taking into account all health expenses incurred in connection with the service or supply) than another service or supply which could fulfill these require­ments.

In determining if a service or supply is appropriate, the health carrier will consider:

Information provided on the affected person’s health status.

Reports in peer reviewed medical literature.

Reports and guidelines published by nationally recognized health care organizations that include supporting scientific data.

Generally recognized professional standards of safety and effectiveness in the United States for diagnosis, care or treatment.

The opinion of health professionals in the generally recog­nized health specialty involved.

• Any other relevant information brought to the health carrier’s attention.

In no event will the following services or supplies be consid­ered medically necessary:

Those that do not require the technical skills of a medical, mental health or dental professional.

Those furnished mainly for the personal comfort or conve­nience of the person, the person’s family, anyone who cares for him or her, a health care provider or health care facility.

Those furnished only because the person is an inpatient on a day when the person could safely and adequately be diagnosed or treated while not confined.

Those furnished only because of the setting if the service or supply can be furnished in a doctor’s or dentist’s office or other less costly setting.

Physician’s Services

This medical plan pays for covered medical treatment and surgery performed by a qualified physician. This includes any sterilization procedure, including voluntary sterilization.

There is a deductible for each office visit to a physician. (See your plan summary, a separate insert available from your personnel office.)

Providers who are covered by the plan are people licensed to practice:

Medicine and surgery (M.D.)

Osteopathy and surgery (D.O.)

• Dentistry (D.D.S. or D.M.D.)

Also covered are:

Psychologists

Physician’s assistants

Occupational therapists

Physical therapists

Licensed clinical social workers

Licensed marital and family counselors

Audiologists

Optometrists

State-certified nurse midwives or registered midwives

Naturopaths

Ophthalmologists

Chiropractors

Podiatrists

Christian Science Practitioners authorized by the Mother Church, First Church of Christ Scientist, Boston, Massachu­setts

Nurse practitioners

Psychological associates

Practitioners with a master’s degree in psychology or social work, if supervised by a psychologist, medical doctor or licensed clinical social worker.

All providers must be licensed by the state in which they practice and practicing within the scope of their license.

Hospitalization

Important: Certification is required for all hospital stays. If certification is not obtained, a $400 penalty will be assessed before any benefits may be paid. Please refer to the “Certification” section on page 22.

A hospital is an institution providing inpatient medical care and treatment of sick and injured people. It must:

Be accredited by the Joint Commission on Accreditation of Hospitals, a medical care, psychiatric or tuberculosis hospital as defined by Medicare, or have a staff of qualified physicians treating or supervising treatment of the sick and injured.

Have diagnostic and therapeutic facilities for surgical and medical diagnosis on the premises, 24-hour a day nursing care provided or supervised by registered graduate nurses, and continuously maintain facilities for operative surgery on the premises.

This Medical Plan covers hospital room and board charges only while you are necessarily confined as a registered bed patient and under the care of a physician. Coverage includes room, board, general duty nursing, intensive care and other services regularly rendered by the hospital to its occupants but does not include private duty or special nursing services rendered outside an intensive care unit. You must pay the difference in charges between a private room and a semipri­vate room, unless the health carrier determines a private room is medically necessary.

The Plan also provides for hospital services and supplies, which includes those charges made by a hospital on its own behalf for necessary medical services and supplies actually administered during hospital confinement other than for room and board, intensive care unit, private duty nursing, or physicians’ services. Services of a personal nature, including radio, television and guest trays, are not included.

If benefits change during your stay, the benefits that apply are those in effect the day you were hospitalized. The new benefit is effective the day after you are discharged from the hospital. This includes the recognized charge for an intensive or coro­nary care unit ordered by a physician.

If the health carrier changes during the time you are hospital­ized, benefits for the entire period of confinement are paid by the previous carrier. The new carrier is responsible the day after you are discharged. This includes, but is not limited to, the recognized charge for an intensive care or coronary unit ordered by a physician.

Skilled Nursing Care

The Medical Plan pays for charges by a registered nurse (R.N.), licensed practical nurse (L.P.N.), or nursing agency for skilled care.

Covered services include:

Visiting nursing care of an R.N. or L.P.N. of not more than four hours to perform specific skilled nursing tasks.

• Private duty nursing by an R.N. or L.P.N. if your condition requires skilled nursing services and visiting nursing care is inadequate.

Skilled nursing services that are not covered include:

Nursing care that does not require the education, training and technical skills of an R.N. or L.P.N., such as transporta­tion, meal preparation, charting of vital signs and compan­ionship activities.

Private duty nursing care given while the person is an inpatient in a hospital or other health care facility.

Care provided to help a person in the activities of daily life, such as bathing, feeding, personal grooming, dressing, getting in and out of bed or a chair, or toileting.

Any service provided solely to administer oral medicines, except where applicable law requires that such medicines be administered by an R.N. or L.P.N.

Care provided solely for skilled observation except as follows:

➣ For no more than 4 hours per day for a period of no more than 10 consecutive days following the occurrence of:

✓ Change in patient medication.

✓ Need for emergency medical services provided by a physician, or the onset of symptoms indicating the likely need for such services.

✓ Surgery.

✓ Release from inpatient confinement.

Outpatient Procedures and Plan-required Second Opinions

Important: Certification is required before having any of the following procedures. If certification is not obtained, a $200 penalty will be assessed before any benefits may be paid. Please refer to the “Certification” section on page

22.

Allergy Immunotherapy — treatment of allergies.

Bunionectomy — surgical removal of bunions.

Carpal tunnel surgery — surgery of wrist nerve.

CAT Scan–Spine — computerized axial tomography of the spine.

Cholecystectomy — surgical removal of the gallbladder.*

Colonoscopy — scope exam of large intestine.

Coronary angiography — X-ray visualization of heart arter­ies and/or chambers by insertion of catheter through vein into heart.

Coronary angioplasty — plastic “balloon” surgery to clear diseased heart vessels.*

Coronary artery bypass — surgical “detour” of circulation in heart vessels.*

Dilation and curettage (D&C) — examination of cervix and removal of tissue from the lining of the uterus.

Hemorrhoidectomy — surgical removal of hemorrhoids.

Hip replacement — placement of an artificial hip.*

Hospital admission for lower back pain.*

Hysterectomy — surgical removal of the uterus.*

Knee arthroscopy — scope inserted through surgical open­ing in knee joint for diagnosis and/or treatment.

Knee replacement — placement of an artificial knee.*

Laminectomy — surgical removal of thin vertebral plate.*

MRI - knee — study of the knee using magnetic resonance imaging technology.

MRI - spine — study of the spine using magnetic resonance imaging technology.

Pelvic laparoscopy — scope exam of abdomen inserted through small surgical opening for diagnosis or treatment of pelvic problems.

Septorhinoplasty — surgery on septum and nose.

Tonsillectomy/adenoidectomy — surgical removal of the tonsils/adenoids.*

Tympanostomy tube insertion — tubes surgically inserted in ears.

Upper GI endoscopy — scope exam of esophagus, stomach and small intestines.

* If the necessity for this procedure cannot be readily determined, you may be required to have an indepen­dent medical exam by a physician certified by the appropriate specialty board and not in practice with the physician recommending the procedure or treatment.

The results of this exam will be used as a second opin­ion to determine the necessity of the procedure or treatment. Covered medical expenses incurred be­cause of the requested exam are paid at 100% and the deductible is waived. If a required examination is not obtained, a $200 penalty will be assessed before any benefits may be paid.

Employee-elected Second Opinions

The Plan pays 100% of covered expenses with no deductible (including normal plan benefits for travel if preauthorized) for obtaining a second surgical opinion when the first surgeon has recommended nonemergency surgery.

An emergency is a recent and severe medical condition, in­cluding, but not limited to, severe pain, which would lead a prudent layperson with average knowledge of medicine and health to believe their condition, sickness, or injury requires immediate medical care to prevent:

Placing their health in serious jeopardy.

Serious impairment to bodily function.

Serious dysfunction of a body part or organ.

In the case of a pregnant woman, serious jeopardy to the health of the fetus.

If the first and second opinions differ, you may seek a third opinion. The Plan pays benefits for a third opinion the same as for a second opinion. Charges for X-rays and diagnostic tests required in connection with the second and third opin­ions are included. However, to avoid duplication, the attend­ing physician is encouraged to share his X-ray and test results with the consulting physician(s).

To qualify for second opinion benefits, the physician may not be in practice with the physician who provided the first or second opinion and the proposed surgery:

Must be recommended by the physician who plans to perform it.

Will, if performed, be covered under this Medical Plan.

Require general or spinal anesthesia.

The second opinion must be obtained before you are hospitalized.

To arrange for a second or third opinion, obtain a “Second Surgical Opinion Travel Pre-authorization and Consultation Report” from your personnel office or the health carrier. You may choose your consulting physician. If you want, the health carrier can provide you with a list of names of qualified physicians.

Certification

To receive full benefits, certification is required for:

Confinement in a hospital or treatment facility.

Any of the procedures or treatments listed under the Outpatient Procedures and Plan-required Second Opinions section on page 19.

Call the health carrier to request certification. You, your physician, the hospital or the facility may call.

When to Call

You should call:

At least 14 days in advance of a prescheduled admission, or as soon as the admission is scheduled. You must call before the confinement or services begin.

60 days before the expected delivery date for maternity.

• Within two working days following the admission, or as soon as reasonably possible, for emergencies.

An emergency admission is an admission where the physician admits the person to the hospital immediately after the sudden and, at that time, unexpected change in a person’s physical or mental condition which:

Requires immediate confinement as a full-time hospital inpatient.

• If immediate inpatient care was not given could, as deter­mined by the health carrier, reasonably be expected to result in:

Placing the patient's health in serious jeopardy.

Serious impairment to bodily function.

Serious dysfunction of a body part or organ.

In the case of a pregnant woman, serious jeopardy to the health of the fetus.

You will receive prompt written notice of days and services approved. If you are to be confined in a hospital or other facility, the health carrier sends notice to the hospital or the facility as well as to you and your physician.

When the health carrier certifies any confinement, procedure, service, or supply, it is only for the purpose of reviewing whether the service is necessary to the care or treatment of the illness or injury. Certification does not guarantee that all charges are covered under this plan. All charges submitted for payment are subject to all other terms and conditions of this plan, regardless of certification by the health carrier.

Certification of Additional Days

If your physician is considering lengthening a stay, you, your physician, the hospital or the facility must call the health carrier to request certification for additional days. Call no later than the last day previously certified.

If there has been no prior contact, the health carrier will con­tact the facility on the last scheduled date of confinement to check your condition. If medically necessary, additional days of confinement may be certified at that time.

Benefits Without Certification

If the health carrier does not certify as medically necessary a confinement (or any day of it) or a listed procedure or treat­ment, either specifically or as part of a planned program of care, benefits are paid as follows:

If certification has been requested and denied, no ben­efits are paid for the hospital or facility room and board or the procedure or the treatment.

If certification has not been requested and the confine­ment is not medically necessary, no benefits will be paid for the facility room and board. In addition, the first $400 of medically necessary facility charges, if any, are not covered.

If certification has not been requested and the proce­dure or treatment is not medically necessary, no benefits will be paid.

• If certification has not been requested and the confine­ment, procedure, treatment, or the service and supply is medically necessary, a penalty will be assessed:

For hospital or treatment facilities, the first $400 of expenses will not be paid; and

For any of the treatments or procedures listed in the

Outpatient Procedures and Plan-required Second Opinions

section on page 19, the first $200 of expenses will not be paid.

Prescription Drugs

The Plan pays for prescription drugs for the treatment of an illness, disease or injury if dispensed upon prescription of physicians or dentists acting within the scope of their license.

This includes needles and syringes purchased simultaneously with insulin, as well as other diabetic supplies.

The Plan pays normal plan benefits (see the plan summary for your plan) for a brand name drug. Generic drugs are covered at 100%.

Definitions

Prescription drugs are medical substances which must bear a label that states, “Caution: Federal law prohibits dispensing without a prescription.” Diabetic supplies are defined as sugar test tablets, sugar test tape, acetone test tablets and Benedict’s solution or the equivalent. A generic drug is:

Produced and sold under the chemical name or shortened version.

Approved by the U.S. Food and Drug Administration as safe and effective.

Produced after the original patent expires.

Produced by a company different from the one that first patented the chemical formulation.

Priced less than the product produced by the company that first patented the formulation.

Exclusions

Benefits are not payable for:

A device of any type.

Any contraceptive drug prescribed for contraceptive pur­poses.

Any drug entirely consumed at the time and place it is prescribed.

The administration or injection of any drug.

More than the number of refills specified by the prescriber. The health carrier may require a new prescription, or evi­dence of need. For example, the need may be questioned if the prescriber did not specify the number of refills or if the frequency or number of prescriptions or refills appears excessive under accepted medical practice.

Any refill of a drug dispensed more than one year after the latest prescription for it.

Radiation, X-rays, and Laboratory Tests

The Medical Plan pays normal benefits for X-rays, radium treatments and radioactive isotope treatments if you have specific symptoms. This includes diagnostic X-rays, lab tests, TENS therapy and analyses performed while you are an inpa­tient. Charges for these services are not paid if related to a routine physical examination.

Routine Cancer Screening

The Plan provides coverage for certain routine lab tests for cancer screening. This includes physician services to provide, review, interpret, and report the results.

Coverage is provided for one test per year for each of the following:

Pap smear for all women age 18 and older.

Prostate specific antigen (PSA) blood test (or other equiva­lent or better cancer detection test) for men 35 years and older.

Mammograms.

These tests will be paid at normal Plan benefits following the deductible. Other incidental lab procedures in connection with Pap smears, PSA tests, and mammograms are not covered.

Rehabilitative Care

The Medical Plan covers inpatient or outpatient rehabilitative care designed to restore and improve bodily functions lost due to injury or illness. This care is considered medically necessary only if significant improvement in body function is occurring and is expected to continue. Care (excluding speech therapy) aimed at slowing deterioration of body functions caused by neurological disease is also covered.

Rehabilitative care includes:

Physical therapy and occupational therapy.

Speech therapy if existing speech function (the ability to express thoughts, speak words, and form sentences) has been lost and the speech therapy is expected to restore the level of speech the individual had attained before the onset of the disease or injury.

Rehabilitative counseling or other help needed to return the patient to activities of daily living but excluding maintenance care or educational, vocational or social adjustment services.

Rehabilitative care must be part of a formal written program of services consistent with your condition. Your physician or therapist must submit a statement to the health carrier outlin­ing the goals of therapy, type of program, and frequency and duration of therapy.

Outpatient Pre-operative Testing

If you have a specific illness, disease or injury, the Plan pays 100% of covered expenses with no deductible for pre-operative testing performed while you are an outpatient before a sched­uled surgery, if the surgery would have been covered by the Plan.

To be covered, the tests:

Must be related to the scheduled surgery.

Are done within 7 days prior to the scheduled surgery.

Are done while you are not confined as an inpatient in a hospital.

Would have been covered if you were confined in a hospi­tal.

Must not be repeated by the hospital or surgery center where the surgery is done.

The test results must appear in your medical records kept by the hospital or surgery center where the surgery is performed.

You must have the scheduled surgery in a hospital or surgery center unless your physical condition prevents the surgery. If you cancel the surgery (other than when your physical condi­tion prevents it), the testing is paid at normal plan benefits.

Outpatient Ambulatory Surgery

The Medical Plan pays 100% of covered expenses with no deductible for same day ambulatory surgery if you are an outpatient. The surgery must take place in a freestanding surgical facility or outpatient department of a hospital. Sur­gery performed or normally performed in a provider office is paid at normal plan benefits.

Anesthetic

The cost of anesthetic and its administration is covered. This includes injections of muscle relaxants, local anesthesia and steroids. When billed by a hospital or physician, the services of an anesthetist are covered.

Pregnancy

Pregnancy and childbirth are covered like any other medical condition as long as you are covered under the Medical Plan. No pre-existing conditions limitations are applied.

Coverage is provided for a hospital stay for childbirth for at least 48 hours following a normal delivery or 96 hours follow­ing a cesarean delivery.

Pregnant women may get screening for high-risk pregnancy factors and receive educational materials and access to obstet­rical nurse case management. If you are pregnant, call the health carrier as soon as possible for advice and counseling on having a healthy pregnancy. A nurse consultant will assess the risk factors in your pregnancy and discuss ways to reduce them with you, as well as provide ongoing monitoring and evalua­tion. The nurse can also provide educational materials, nutri­tional analysis and ongoing support.

If you are totally disabled as a result of a pregnancy problem and your coverage ends, you may be eligible for extended benefits. See Continued Health Coverage on page 71. Totally disabled means the complete inability of an individual to perform everyday duties appropriate for your employment, age or sex. The inability may be due to disease, illness, injury, or pregnancy. The plan reserves the right of determination of total disability based upon the report of a duly qualified physi­cian or physicians chosen by the health carrier.

Durable Medical Equipment/Supplies

When medically necessary, the Medical Plan covers supplies prescribed by a physician, including:

Artificial limbs and eyes.

Bandages and surgical dressings.

Purchase or rental of autorepositioning appliances, casts, splints, trusses, crutches and other similar, durable medi­cal or mechanical equipment.

Rental or purchase of a wheelchair or hospital-type bed.

Rental or purchase of iron lungs or other mechanical equipment required for respiratory treatment.

Blood transfusions, including the cost of blood and blood derivatives.

• Oxygen or rental of equipment for the administration of oxygen.

Charges for the purchase, repair or replacement of durable medical and surgical equipment will be included as covered medical expenses as follows:

• The initial purchase of such equipment and accessories to operate the equipment is covered only if the health carrier is shown that:

Long term use is planned; and

The equipment cannot be rented; or

It is likely to cost less to buy it than to rent it.

• Repair or replacement of purchased equipment and acces­sories will be covered only if the health carrier is shown that:

It is needed due to a change in the person’s physical condition; or

It is likely to cost less to buy a replacement than to repair the existing equipment or to rent similar equip­ment.

Not included are charges for more than one item of equipment for the same or similar purpose.

Durable medical and surgical equipment is equipment that is:

Made to withstand prolonged use.

Made for and mainly used in the treatment of a disease or injury.

Suited for use in the home.

Not normally of use to persons who do not have a disease or injury.

Not for use in altering air quality or temperature.

Not for exercise or training.

Travel

Travel expenses must be preauthorized to receive reim­bursement under the Medical Plan. Contact the health carrier for pre-authorization before you or your dependent travel.

The Medical Plan pays travel and ambulance costs within the contiguous limits of the United States, the State of Alaska and the State of Hawaii. This includes:

Transportation to the nearest hospital by professional ambulance. A professional ambulance is a land or air vehicle specially equipped to transport injured or sick people to a destination capable of caring for them upon arrival. Specially equipped means that the vehicle contains the appropriate stretcher, oxygen and other medical equip­ment necessary for patient care enroute. A medical techni­cian trained in lifesaving services accompanies the trans­ported patient.

Round-trip transportation, not exceeding the cost of coach class commercial air transportation, from the site of the illness or injury to the nearest professional treatment. If you use ground transportation and the one-way distance exceeds 100 miles, the Medical Plan pays your documented travel expenses while enroute for fares, mileage, food and lodging for the most direct route. Only eligible persons are reimbursed.

Travel does not include reimbursement of airline miles used to obtain tickets, the cost of lodging, food, or local ground trans­portation such as airport shuttles, cabs or car rental.

If the patient is a child under 18 years of age, a parent or legal guardian’s transportation charges are allowed. Also, when authorized by the claims administrator, travel charges for a physician or a registered nurse are covered.

Travel benefits apply only to the conditions covered under the Medical Plan. They do not apply to the audio, dental, or vision plans.

Travel, as described above, is covered only in the circum­stances set forth in the sections below. Travel is not covered for diagnostic purposes.

Emergencies

Travel is covered if you have an emergency condition requiring immediate transfer to a hospital with special facilities for treating your condition. Preauthorization is waived if you are immediately transferred in a ground or air ambulance; you do not need to call the health carrier before this occurs.

An emergency condition is a recent, severe medical condition, including but not limited to severe pain, which would lead a prudent layperson possessing an average knowledge of medi­cine and health to believe their condition, sickness or injury is of such a nature that failure to get immediate medical care could result in:

Placing the person’s health in serious jeopardy.

Serious impairment to bodily function.

Serious dysfunction of a body part or organ.

In the case of a pregnant woman, serious injury to the health of the fetus.

Treatment Not Available Locally

Travel is covered for you to receive treatment which is not available in the area you are located when the need for treat­ment occurs. Treatment is defined as a service or procedure, including a new prescription which could not have been ob­tained without the travel, which is medically necessary to correct or alleviate a condition or specific symptoms of an illness or injury. It does not include any diagnostic procedures or more than one follow-up visit (as specified below) to monitor a condition. Treatment must be received for travel to be covered.

Travel benefits for treatment which is not available locally are limited during each calendar year to:

One visit and one follow-up visit for a condition requiring therapeutic treatment.

One visit for prenatal or postnatal maternity care and one visit for the actual maternity delivery.

One presurgical or postsurgical visit and one visit for the surgical procedure.

One visit for each allergic condition.

If you need travel for a nonemergency condition which cannot be treated locally, you must receive preauthorization. Obtain a Travel Preauthorization Application form from your personnel office or the health carrier. Complete the top portion and have your physician complete the bottom portion. Submit the form to the health carrier before you travel. The health carrier will provide you with written preauthorization.

If you do not have time to obtain the form or you have not received written preauthorization, you must call the health carrier before you travel.

Second Surgical Opinions

Travel is covered if you require a second surgical opinion which cannot be obtained where you are currently located. This will count as a presurgical trip as shown above.

If you require transportation for a second surgical opinion which cannot be obtained locally, you must receive pre-authorization. Obtain a Travel Preauthorization Application from your personnel office or the health carrier. Complete the top portion and have your physician complete the bottom portion. Submit the form to the health carrier before you travel.

If you do not have time to obtain the form or you have not received written preauthorization, you must call the health carrier before you travel.

Chemical Dependency and Substance Abuse Treatment

Important: Certification is required for all inpatient stays in a treatment facility. If certification is not obtained, a $400 penalty will be assessed before any benefits may be paid. Please refer to the “Certification” section on page

22.

Treatment of chemical dependency and substance abuse is paid at normal plan benefits following the deductible, up to the limits shown on the Benefit Summary. The limits are subject to change. Please check with the health carrier for the most current maximum benefit. Treatment of medical compli­cations of chemical dependency does not count towards the maximum benefit.

A treatment facility is a hospital or institution that charges for its services and that:

Mainly provides a program for diagnosis, evaluation and treatment of chemical dependency or substance abuse.

Meets licensing standards.

Prepares and maintains a written plan of treatment for each patient which is based on medical, psychological and social needs and is supervised by a physician.

• Provides on premises, 24 hours a day:

Detoxification services needed with its effective treat­ment program.

Infirmary level medical services and provides or has arrangement with an area hospital to provide for any other medical services that may be required.

Supervision by a staff of physicians.

Skilled nursing care by licensed nurses who are directed by a full time R.N.

Mental Disorders

Important: Certification is required for all inpatient stays in a treatment facility. If certification is not obtained, a $400 penalty will be assessed before any benefits may be paid. Please refer to the “Certification” section on page

22.

The Medical Plan pays the following benefits for disorders:

Outpatient services are covered at 50% up to 25 visits per year.

• Inpatient services are covered at 50% up to an individual annual maximum of 21 calendar days .

A mental disorder is a disease commonly understood to be a mental disorder, whether or not it has a physiological or organic basis, and for which treatment is generally provided by or under the direction of a mental health professional such as a psychiatrist or psychologist. A mental disorder includes but is not limited to:

Schizophrenia

Bipolar disorder (manic/depressive)

Pervasive Mental Development Disorder (Autism)

Panic disorder

Major depressive disorder

Psychotic depression

Obsessive compulsive disorder

Employee Assistance Program (EAP)

The Employee Assistance Program (EAP) is a confidential counseling service, free of charge to you and your dependents. This service provides assessment, treatment and referral services. The program is geared to provide assistance with difficulties that you may encounter at work, emotional prob­lems, stress, family or relationship problems, and chemical dependency.

Call the number shown on the front page of the booklet for the EAP provider. Staff is available 24 hours a day, 7 days a week. When you call, you may be able to work through your problem on the phone with an EAP counselor. In most cases though, the staff will try to schedule an appointment with a local counselor. The counselor will then assess your situation in person. Based upon this assessment, he or she will either counsel you or refer you to another professional for specialized care. In an emergency, the EAP staff will provide crisis coun­seling by phone or will direct the caller immediately to appro­priate medical or psychiatric facilities in the area.

Your call or visit will be completely confidential. Unless you choose to tell others, no one needs to know about your EAP counseling sessions. EAP counseling offices are located away from your work site. Discussions with an EAP counselor will not be revealed to anyone without your written permission. However, in cases involving child abuse or threatened harm to yourself or others, EAP counselors may be required by law to suspend confidentiality to protect the persons involved.

Medical Treatment of Mouth, Jaws, and Teeth

The Plan pays for medical conditions of the teeth, jaw and jaw joints as well as supporting tissues including bones, muscles and nerves. Medical services include:

Inpatient hospital care to perform dental services if required due to an underlying medical condition.

Surgery needed to treat wounds, cysts or tumors or to alter the jaw, jaw joint or bite relationships when appliance therapy alone cannot provide functional improvement.

Nonsurgical treatment of infections or diseases not related to the teeth.

Dental implants if necessary due to disease or accident but only if dentures or bridges are inappropriate or ineffective. False teeth for use with the implants are covered only under the Dental Plan as a Class III service.

Services needed to treat accidental fractures or disloca­tions of the jaw or injury to natural teeth if the accident occurs while the individual is covered by the Plan. Treat­ment must begin during the calendar year the accident occurred or the calendar year following. The teeth must have been firmly attached to the jaw bone at the time of injury and damaged or lost other than in the course of biting or chewing and must have been free of decay or in good repair.

Diagnosis, appliance therapy (excluding braces), nonsurgi­cal treatment, and surgery by a cutting procedure which alters the jaw joints or bite relationship for temporoman­dibular joint (TMJ) disorder or similar disorder of the jaw joint.

Myofunctional therapy is not covered. This includes muscle training or training or in-mouth appliances to correct or con­trol harmful habits.

Medical Treatment of Obesity

Expenses for medical supervision of weight reduction pro­grams will be covered as any other medical condition when determined to be medically necessary by the health carrier.

If determined to be medically necessary by the health carrier, covered services for medical supervision of weight reduction may include history and complete physical exam, diagnostic tests, physician office visits, anorectic (weight control) prescription drugs, and/or surgery.

Noncovered services include, but are not limited to, intestinal bypass surgery, loop gastric bypass, gastroplasty (stomach stapling), duodenal switch operation, biliopancreatic bypass, mini-gastric bypass, gastric bubble balloon surgery, special diet supplements, vitamin injections, hospital confinement for weight reduction programs, exercise, exercise equipment, gym fees, whole body calorimeter studies and psychiatric treat­ment/counseling including behavior modification, biofeedback and hypnosis.

Plastic, Cosmetic, and Reconstructive Surgery

The plan covers plastic, cosmetic or reconstructive surgery only as needed to:

• Improve the function of a part of the body (excluding teeth or any structure that supports the teeth) and that is mal­formed as a result of:

A severe birth defect, including harelip or webbed fingers or toes; or

Disease, or surgery performed to treat a disease or injury.

Repair an injury sustained in an accident which occurs while you are covered under the plan, provided surgery is provided in the calendar year the accident occurred or the calendar year following.

Mastectomy/Breast Reconstruction

Any person who receives benefits for a medically necessary mastectomy may also receive benefits for:

Reconstruction of the breast on which the mastectomy was performed.

Surgery and reconstruction of the other breast to produce a symmetrical appearance.

Prostheses.

Treatment of physical complication of all stages of mastec­tomy, including lymphedemas.