PURMS

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Section 15

 

HEALTH & WELFARE POOL

GENERAL ASSESSMENT FORMULA

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Amended and Restated as of December 7, 2001

 

TABLE OF CONTENTS

 

1.      Definitions For H&W General Assessment Formula  2

1.1.   Allowed H&W Claim   2

1.2.   Alternate ISL Method  2

1.3.   Assessment Formula  2

1.4.   Average Claims Frequency Ratio  2

1.5.   Benefits Check  2

1.6.   Claims Experience  2

1.7.   Claims Frequency Factor 2

1.8.   Claims Frequency Ratio  3

1.9.   Covered H&W Claim   3

1.10. Date of Membership  3

1.11. Debatable H&W Claims  3

1.12. Dependent Coverage  3

1.13. Dependents  3

1.14. Direct H&W Claims Costs  3

1.15. Eligible Employee  3

1.16. Eligible Employee Assessment Allocation  3

1.17. Eligible Employee Factor 3

1.18. Eligible Insured  3

1.19. Employee  4

1.20. Employee Demographic Categories  4

1.21. Employee Demographics  4

1.22. Fund’s Fiscal Year 4

1.23. H&W Assessments  4

1.24. H&W Assessment Share  4

1.25. H&W Claim   4

1.26. H&W Claims Costs  4

1.27. H&W Claims Experience  4

1.28. H&W Claims Experience Assessment Allocation  4

1.29. H&W Coverage  4

1.30. H&W General Assessment Formula  5

1.31. H&W Pool 5

1.32. H&W Pool Aggregate Stop Loss  5

1.33. H&W Pool Individual Stop Loss  5

1.34. H&W Pool Operational Costs  5

1.35. Incurred  5

1.36. Member Aggregate Stop Loss  5

1.37. Member Individual Stop Loss  5

1.38. Monthly H&W Assessment 5

1.39. Pool Recognized Aggregate Stop Loss Point 6

1.40. Pool Recognized H&W Claims  6

1.41. Post-Stop-Loss H&W Assessments  6

1.42. Post-Stop-Loss H&W Claims  6

1.43. PPO Charges  6

1.44. Primary ISL Method  6

1.45. Primary ISL Method Cross Check  6

1.46. Prior Monthly H&W Claims Experience  6

1.47. Prior Monthly H&W Premium   6

1.48. Recognized H&W Claim   7

1.50. Shared H&W Costs  7

1.51. Stop Loss Carrier 7

1.52. Stop Loss Coverage  7

1.53. Stop Loss Insurance  7

1.54. Stop Loss Point 7

1.55. Stop Loss Policy Year 7

1.56. Stop Loss Insurance Premium   7

1.57. Stop Loss Recognized H&W Claims  8

2.      Statement of H&W General Assessment Formula and Calculation of a Member’s Monthly H&W Assessment 8

2.1    H&W Claims Experience Assessment Allocation at 30%   8

2.2    Eligible Employee Assessment Allocation at 70%   9

2.3.   Determination of The Amount of a Member’s Monthly H&W Assessment 10

3.      Determination of Members’ Aggregate and Individual Stop Loss Points. 10

3.1.   Basic Function and Operation of Stop Loss Points  10

3.2.   Calculation of Member Stop Loss Points  11

3.3.   H&W Claims That Accrue Towards Satisfying a Member’s Stop Loss Points  16

4.      H&W Assessments in Excess of Pool  Recognized Aggregate Stop Loss  17

4.2.   Determination of When H&W Pool Has Reached its H&W Pool Aggregate Stop Loss, Effects of Same, Additional H&W Assessments and Refunds  17

5.      Procedures for Resolving “Debatable” H&W Claims, for Permitting “Allowed” H&W Claims, and the Effect of Resolution of Same re H&W General Assessment Formula  18

5.1.   Debatable H&W Claim   18

5.2.   “Recognized” or “Allowed” H&W Claims  19

6.      Former Members  20

7.      New Members  20

 


HEALTH & WELFARE POOL

GENERAL ASSESSMENT FORMULA

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Amended and Restated as of December 7, 2001

 

Overview of Assessment Formulas for PURMS Risk Pools

The “Assessment Formulas” Sections of the PURMS Joint Self-Insurance Agreement (“SIA”) set forth the formulas for assessing the Members of each Risk Pool for the Operational Costs the Fund incurs in operating their respective Risk Pools, including without limitation, Coverage Payments (all Risk Pools), Defense Costs (Liability Pool), Property Claim Costs (Property Pool), Direct H&W Claims Costs and Shared H&W Costs (H&W Pool), and the Direct and Shared Administrative Expenses of all Risk Pools.

The Liability Pool is governed by two Assessment Formulas, one for General Assessments and one for Premium Assessments.  The two current formulas for the Liability Pool are: 

(a)             The Liability General Assessment Formula (with Annual Assessment Limit) (SIA § VIII); and

(b)            The Liability Premium Assessment Formula (with Added-Risk Pass Through, and without Annual Assessment Limit) (SIA § IX). 

The Liability General Assessment Formula was first adopted by the Members of the Fund on December 20. 1976, has been amended from time to time, and was unanimously re-adopted on March 30, 1995. The Liability Premium Assessment Formula (with Added-Risk Pass Through and without Annual Assessment Limit) was unanimously re-adopted by the Board at its General Meeting on December 9, 1994, effective January 1, 1995. 

The Property Pool is also governed by two Assessment Formulas, one for General Assessments and one for Premium Assessments.  The two current formulas for the Property Pool are:  

(a)             The Property General Assessment Formula (with Annual Assessment Limit) (SIA § XII); and

(b)            The Property Premium Assessment Formula (without Annual Assessment Limit) (SIA § XIII).  The H&W Risk Pool is currently governed by one Assessment Formula entitled the H&W General Assessment Formula (SIA § XV).

The Property General Assessment and the Property Premium Assessment Formulas were unanimously adopted by the Members of the Fund effective February 27, 1997. 

Assessments of Members of the H&W Pool are governed by a single Assessment Formula called the H&W General Assessment Formula. (SIA § XV). This Formula covers both the self-insured portion of the H&W Pool’s Operational Costs as well as the cost of Stop Loss Insurance. The H&W General Assessment Formula was unanimously adopted by the Members of the Fund on March 16, 2000, effective April 1, 2000, and was amended and restated and unanimously re-adopted by the Members as of December 7, 2001.

These Formulas, as amended from time to time pursuant to § I, § 5.2, are specifically incorporated into the Interlocal Agreement and shall be deemed a part of that Agreement as if fully set forth therein.

 

HEALTH & WELFARE GENERAL ASSESSMENT FORMULA

1.     Definitions For H&W General Assessment Formula.  The Definitions set forth in the “Definitions” Section of the SIA (§ II) apply to the interpretation of the Fund's Assessment Formulas, except as may be modified specifically or by necessary implication by the Definitions set forth below which are specific to this H&W General Assessment Formula Section.

1.1.          Allowed H&W Claim--shall mean an H&W Claim which is not within the terms of an H&W Pool Member’s Coverage Booklet, but which is paid by the H&W Pool according to § XV, ¶¶ 5.2.2.2 and 5.2.3.

1.2.          Alternate ISL Method--shall mean the secondary method for determining a Member’s Individual Stop Loss Point if such Stop Loss Point, calculated under the Primary ISL Method in §XV, ¶ 3.2.4.1, does not satisfy the Primary ISL Method Cross Check set forth in § XV, ¶ 3.2.4.2.

1.3.          Assessment Formula--with respect to the H&W Pool, shall mean the Formula for calculating a Member’s Monthly H&W Assessment, which consists of a Member’s Direct H&W Claims Costs paid by the H&W Pool in the preceding month and such Member’s H&W Assessment Share of Shared H&W Costs determined under the H&W General Assessment Formula (§ XV).

1.1.          Average Claims Frequency Ratio--shall mean the average of all H&W Members’ Claims Frequency Ratios, as provided in § XV, ¶ 2.1(a).

1.2.          Benefits Check--shall mean a check issued by the Administrator for the H&W Pool to a Medical Provider to pay for Medical Services provided to an Eligible Employee or Dependent.

1.3.          Claims Experience--shall mean a Member’s or potential New Member’s experience regarding the amounts and frequency of Health & Welfare Benefits claims for its Employees and Dependents.

1.4.          Claims Frequency Factor--shall mean the percentage that a Member’s Claims Frequency Ratio is to the total of all Claims Frequency Ratios of all H&W Pool Members.  A Member’s Claims Frequency Factor is used to weight a Member’s 30% Formula Component relating to its H&W Claims Experience based on the frequency of such Member’s H&W Claims in relation to the frequency of the H&W Claims of all H&W Pool Members.  (see § XV, ¶ 2.1).

1.5.          Claims Frequency Ratio--shall mean the Ratio resulting from dividing the total of all Benefits Checks issued by the H&W Pool to Medical Providers for each Member’s Eligible Employees and Dependents in the preceding month by the total number of each Member’s Eligible Employees in the preceding month, as provided in § XV, ¶ 2.1(b).

1.6.          Covered H&W Claim--shall mean an H&W Claim for which H&W Coverage is provided to an Eligible Employee (or Dependent) under the terms of the applicable Coverage Booklet and the SIA.

1.7.          Date of Membership--shall mean the date a Member of the Fund becomes a Member of a particular Risk Pool.

1.8.          Debatable H&W Claims--shall mean an H&W Claim for which H&W Coverage is neither clearly provided for, nor clearly precluded, by the terms of a Member’s Coverage Booklet and the SIA (see § XV, ¶ 5).

1.9.          Dependent Coverage--shall mean H&W Coverage provided for Medical Services rendered to an Eligible Employee’s Dependents, as that term is defined in the applicable Coverage Booklet. 

1.10.       Dependents--shall mean, without limitation, an Employee’s spouse or children or other dependents eligible for H&W Coverage, as determined by the terms in the applicable Coverage Booklet.

1.11.       Direct H&W Claims Costs--shall mean the dollar amount of a Member’s H&W Claims Costs which does not qualify for treatment as “Shared H&W Claims”, and which is passed through directly to a Member on a monthly basis as part of the Member’s Monthly H&W Assessment.

1.12.       Eligible Employee--shall mean an Employee who is enrolled by the Member with the Administrator for the H&W Pool as entitled to receive H&W Coverage for Medical Services, as determined by the terms of the applicable Coverage Booklet and the SIA.

1.13.       Eligible Employee Assessment Allocation--shall mean the dollar amount of the Formula Component of a Member’s H&W Assessment Share of 70% of the Shared H&W Cost based on the number of the Member’s Eligible Employees in relation to the number of Eligible Employees of all H&W Pool Members, as determined under the H&W General Assessment Formula, (see § XV, ¶ 2.2).

1.14.       Eligible Employee Factor--shall mean the percentage of an H&W Pool Member’s Eligible Employees in relation the number of Eligible Employees of all Members, (see § XV, ¶ 2.2(a)).

1.15.       Eligible Insured--shall mean either an Eligible Employee of a Member or a Dependent of an Eligible Employee entitled to H&W Coverage through a Member according to the terms of such Member’s Coverage Booklet.  The “Eligible Insureds” of a Member shall be all Eligible Employees and Dependents of such Member.

1.16.       Employee--with respect to the H&W Pool, shall mean the Employee of a Member of the H&W Pool, and unless otherwise inconsistent in the context, shall include such Employee’s Dependents, as determined by the terms of the applicable Coverage Booklet.

1.17.       Employee Demographic Categories--shall mean the three weighted risk categories that are used in connection with the H&W General Assessment Formula to establish the amount of a Member’s Aggregate Stop Loss and a Member’s Individual Stop Loss.  The three categories consist of (a) an Eligible Employee, (b) an Eligible Employee and one Dependent, and (c) an Eligible Employee and 2 or more Dependents, as provided more specifically in § XV, ¶ 3.2.3.

1.18.       Employee Demographics--shall mean the number or percentage of Eligible Employees and/or Dependents for each Member, verses the H&W Pool as a whole, with respect to each of the Employee Demographic Categories.

1.19.       Fund’s Fiscal Year--shall mean the annual accounting year for the Fund, which shall be the calendar year, unless otherwise determined by Majority Vote of the Board.

1.20.       H&W Assessments--shall mean any and all Assessments issued by the H&W Pool to its Members.

1.21.       H&W Assessment Share--shall mean the amount of money a Member of the H&W Pool becomes obligated to pay the H&W Pool on a monthly basis for Shared H&W Costs paid in the preceding month, as determined by the H&W General Assessment Formula.  A Member’s H&W Assessment Share, together with its Direct H&W Claims Costs from the preceding month, shall comprise a Member’s Monthly H&W Assessment.

1.22.       H&W Claim--shall mean a claim submitted by or on behalf of an Eligible Employee (or Dependent) arising from the rendering of Medical Services to an Eligible Employee (or Dependent) by a Medical Provider.

1.23.       H&W Claims Costs--shall mean the total dollar amount the H&W Pool paid to Medical Providers in the preceding month for Covered H&W Claims made by a Member’s Eligible Employees and their Dependents.

1.24.       H&W Claims Experience--shall mean the total dollar amount of H&W Claims paid by the H&W Pool on behalf of a Member.

1.25.       H&W Claims Experience Assessment Allocation--shall mean the dollar amount of the Formula Component of a Member’s H&W Assessment Share of 30% of the Shared H&W Costs based on the Member’s H&W Claims Experience in relation to the H&W Claims Experience of all H&W Pool Members, weighted by the Member’s Claims Utilization Frequency Factor as determined under the H&W General Assessment Formula (see § XV, ¶ 2.1).

1.26.       H&W Coverage--shall mean the insurance coverage provided by the H&W Pool for Health & Welfare Benefits and  Medical Services provided to each Member’s Eligible Employees and Dependents, in accordance with each Member’s Coverage Booklet and the terms of the SIA.

1.27.       H&W General Assessment Formula--shall mean the General Assessment Formula for the H&W Risk Pool, set forth in § XV.

1.28.       H&W Pool--shall mean the Risk Pool operated by the Fund that provides protection to its Members’ Eligible Employees and Dependents for Heath & Welfare Benefits, as specified in Members’ respective Coverage Booklets.

1.29.       H&W Pool Aggregate Stop Loss--shall mean the total dollar amount of established by contact with the Stop Loss Carrier at which any further payments by the H&W Pool for the H&W Claims of any and all Members are thereafter covered by Stop Loss Insurance.

1.30.       H&W Pool Individual Stop Loss--shall mean the dollar amount that is established by contact with the Stop Loss Carrier at which any further payments the H&W Pool would otherwise make in connection with a particular H&W Claim and/or an Eligible Employee or Dependent, or on some other basis established by the Stop Loss Carrier, are instead covered by Stop Loss Insurance, even though the H&W Pool’s Aggregate Stop Loss has not been reached.

1.31.       H&W Pool Operational Costs--shall mean all of the expenses the Fund incurs with respect to operation of the H&W Pool, including without limitation, Direct and Shared Administrative Expenses, Broker, Legal and Accounting fees, PPO Charges, Stop Loss Insurance Premiums, Shared H&W Claims and Direct H&W Claims Costs.

1.32.       Incurred--shall mean, with respect to an H&W Claim, shall mean the date that Medical Services were provided to an Eligible Employee or Dependent.

1.33.       Member Aggregate Stop Loss--shall mean the total dollar amount at which any further payments by the H&W Pool on H&W Claims by a Member’s Eligible Employees or Dependents shall constitute Shared H&W Claims and shall be reimbursed to the H&W Pool by Assessment of all Members (except for the Member that has reached its Aggregate Stop Loss) under the H&W General Assessment Formula, rather than being passed through to the Member as Direct H&W Claims Costs.  The amount of each Member’s Aggregate Stop Loss shall be determined in accordance with § XV, ¶ 3.2.3.

1.34.       Member Individual Stop Loss--shall mean the dollar amount at which any further payments by the H&W Pool on a particular H&W Claim or for an Eligible Employee or Dependent, or on some of other basis established by the Stop Loss Carrier, shall constitute a “Shared H&W Claim” and shall be reimbursed to the H&W Pool by Assessment of all Members (except for the Member that has reached its Individual Stop Loss) under the H&W General Assessment Formula, rather than being passed through to the Member as Direct H&W Claims Costs.  The amount of each Member’s Individual Stop Loss shall be determined in accordance with § XV, ¶ 3.2.4.

1.35.       Monthly H&W Assessment--shall mean the Assessment issued by the Administrator on a monthly basis to each Member (and as applicable, Former Member) of the H&W Pool to replenish such Members’ Initial Deposit which, as to each Member, shall consist of the Member’s Assessment Share of the total amount of all Members’ Shared H&W Costs paid in the preceding month, in an amount determined by the H&W General Assessment Formula, and the total amount of that Member’s Direct H&W Claims Costs paid in the preceding month.

1.36.       Pool Recognized Aggregate Stop Loss Point--shall mean the point at which the total of all Covered H&W Claims and all Pool Recognized H&W Claims equal the H&W Pool’s Aggregate Stop Loss.

1.37.       Pool Recognized H&W Claims--shall mean all H&W Claims where the H&W Coverage for such claim is reasonably debatable, as determined by the Administrative Committee, and which the Administrative Committee determines should be recognized by the H&W Pool for payment and for accrual toward the Member’s Stop Loss Points and the Pool Recognized Stop Loss Point.

1.38.       Post-Stop-Loss H&W Assessments--shall mean those portions of Member’s Monthly H&W Assessments relating to the H&W Pool paying Post-Stop-Loss H&W Claims, which shall be refunded to Members when and to the extent the H&W Pool has been reimbursed by the Stop Loss Carrier, as provided in § I, ¶¶ 4.2.2 and 4.2.3.

1.39.       Post-Stop-Loss H&W Claims--shall mean the total dollar amount paid by the H&W Pool on H&W Claims after the H&W Pool reached the Pool Recognized Aggregate Stop Loss Point.

1.40.       PPO Charges--shall mean the additional expenses incurred by the H&W Pool for the services provided by a preferred provider organization which shall be treated as a Shared H&W Cost under the H&W General Assessment Formula.

1.41.       Primary ISL Method--shall mean the preferred method for calculating an H&W Pool Member’s Individual Stop Loss Point, as provided in §XV, ¶ 3.2.4.1.

1.42.       Primary ISL Method Cross Check--shall mean the calculations set forth in §XV, ¶ 3.2.4.2 requiring the dollar amount of the Member’s Individual Stop Loss (calculated pursuant to the Primary ISL Method) to be multiplied times the number of that Member’s Eligible Employees to determine if the resulting number is equal to or greater than such Members’ Aggregate Stop Loss.  If so, then the Member’s Individual Stop Loss Point shall be that calculated under the Primary ISL Method.  If not, then the Alternative ISL Method in §XV, ¶ 3.2.4.3 shall be applied.

1.43.       Prior Monthly H&W Claims Experience--shall mean the monthly average of the total cost of the Claims an Initial H&W Member or a New H&W Member experienced for a Health & Welfare Benefits package for its Employees, similar to the Benefits package proposed for H&W Coverage by the H&W Pool, in the most recent consecutive twelve (12) months preceding the date of the application, provided that the last month of said 12 consecutive months does not end more than 3 months prior to the Date of Membership.

1.44.       Prior Monthly H&W Premium--shall mean the most recent monthly premium the Initial H&W Member or a New H&W Member paid prior to the Date of Membership in the H&W Pool for a Health & Welfare Benefits package for its Employees similar to the package proposed for H&W Coverage by the H&W Pool.

1.45.       Recognized H&W Claim--shall mean either a “Stop Loss Recognized Claim” (see § XV, ¶ 5.2.1) or a “Pool Recognized H&W Claim” (see § XV, ¶ 5.2.2.1).

1.46.       Shared H&W Claims--shall mean the amount of a Member’s H&W Claims Costs paid by the H&W Pool in the preceding month that exceeded either the Member’s Aggregate Stop Loss or the Member’s Individual Stop Loss, and which are not covered by Stop Loss Insurance.  Shared H&W Claims are paid as Shared H&W Costs to be reimbursed by the Members of the H&W Pool under the H&W General Assessment Formula.

1.47.       Shared H&W Costs--shall mean all of the H&W Pool Operational Costs except for a Member’s Direct H&W Claims Costs.  Shared H&W Costs shall include, without limitation, Administrative Expenses allocable to the H&W Pool, premiums for Stop Loss Insurance, PPO Charges and Shared H&W Claims, paid by the H&W Pool in or otherwise allocable to the preceding month.  All Shared H&W Costs shall be assessed to Members of the H&W Pool under the H&W General Assessment Formula.

1.48.       Stop Loss Carrier--shall mean the insurance company that provides Stop Loss Insurance for the H&W Pool and its Members.

1.49.       Stop Loss Coverage--shall mean the coverage provided by the Stop Loss Insurance.

1.50.       Stop Loss Insurance--shall mean the coverage provided by a Stop Loss Carrier to the H&W Pool and its Members that begins paying H&W Claims Costs at either the H&W Pool Aggregate Stop Loss or the H&W Pool Individual Stop Loss.

1.51.       Stop Loss Point--with respect to a Member, shall mean the dollar amount at which a Member ceases being directly responsible under its Monthly H&W Assessment for payments on a particular H&W Claim or for a particular Eligible Employee or Dependent (i.e. the Member Individual Stop Loss Point), or on all H&W Claims submitted by or made on behalf of all of the Member’s Eligible Employees and Dependents (i.e. the Member Aggregate Stop Loss Points), and further payments thereon are assessed as Shared H&W Claims under the H&W General Assessment Formula;

--with respect to the H&W Pool, shall mean the dollar amount at which the H&W Pool ceases being responsible for payments made on a particular H&W Claim or for a particular Eligible Employee or Dependent (i.e. the H&W Pool Individual Stop Loss Point),  or for any further payments made on any further H&W Claims by the Eligible Employees and Dependents of any Member (i.e. the H&W Pool Aggregate Stop Loss Point), and further payments thereon are covered by Stop Loss Insurance.

1.52.       Stop Loss Policy Year--shall mean the annual or other period of time covering the effective dates of the Stop Loss Insurance.

1.53.       Stop Loss Insurance Premium--shall mean the dollar amount paid by the H&W Pool for Stop Loss Insurance, monthly or annually, or otherwise.

1.54.       Stop Loss Recognized H&W Claims--shall mean those H&W Claims that the Stop Loss Carrier counts towards satisfaction of the H&W Pool Aggregate or Individual Stop Loss Points.

2.     Statement of H&W General Assessment Formula and Calculation of a Member’s Monthly H&W Assessment.  The H&W General Assessment Formula shall have two (2) Formula Components (a Member’s H&W Claims Experience Assessment Allocation and the Member’s Eligible Employee Assessment Allocation) which shall be applied to the total of the Shared H&W Costs paid by the H&W Pool in, or otherwise allocable to, the preceding month of the H&W Pool’s operations.  Shared H&W Costs are all expenses of operating the H&W Pool (i.e., the H&W Pool Operational Costs), but excluding Direct H&W Claims Costs which are passed through to the Member.  The total of each Member’s H&W Claims Experience Assessment Allocation and its Eligible Employee Assessment Allocation shall constitute each Member’s H&W Assessment Share of such Shared H&W Costs.  A Member’s H&W Assessment Share, together with the amount of such Member’s Direct H&W Claims Costs incurred in the preceding month, shall comprise such Member’s Monthly H&W Assessment.

A Member’s H&W Assessment Share of the Shared H&W Costs under the H&W General Assessment Formula shall be determined as follows:

2.1  H&W Claims Experience Assessment Allocation at 30%.  Thirty percent (30%) of the amount of the Shared H&W Costs paid in, or otherwise allocable to, the preceding month of H&W Pool operations shall be assessed to the H&W Pool Members under the H&W General Assessment Formula based on the relative Claims Frequency Factors derived from each Member’s H&W Claims Experience in the preceding month.  The Formula steps for deriving this Formula Component are as follows:

(a)             First, the Average Claims Frequency Ratio shall be determined for the H&W Pool by taking the total of all Benefits Checks issued to Medical Providers for all Members’ Eligible Employees and Dependants in the preceding month and dividing that total by the total number of Eligible Employees (not including Dependents) of all Members in the preceding month.

(b)            Second, the Claims Frequency Ratio for each Member shall be determined by taking the total of all Benefits Checks issued by the H&W Pool to Medical Providers for each Member’s Eligible Employees and Dependents in the preceding month and dividing that total by the total number of each Member’s Eligible Employees (not including Dependents) in the preceding month.

(c)             Third, each Member’s Claims Frequency Ratio (determined in sub ¶ (b) above) will be divided by the H&W Pool’s Average Claims Frequency Ratio (determined in sub ¶ (a) above).

(d)            Next, to convert Members’ Ratios to relative percentages, the number yielded for each Member under sub ¶ (c) above will be divided by the total of all Members’ Claims Frequency Ratios, and the resulting percentage shall be deemed a Member’s Claims Frequency Factor.

(e)             Finally, the Member’s Claims Frequency Factor will be multiplied times 30% of the preceding month’s Shared H&W Costs.  The resulting dollar amount for each Member shall be such Member’s H&W Claims Experience Allocation, the first of the two Formula Components that establish the amount of each Member’s H&W Assessment Share portion of its Monthly H&W Assessment.

Example:  Assume a total of Shared H&W Costs (i.e., all H&W Pool Operational Costs, but excluding all Members’ Direct H&W Claims Costs) for the preceding month in the amount of $11,350.  Further assume that the total number of Benefits Checks issued to Medical Providers for payment of H&W Claims for all Members’ Eligible Employees and Dependents in the preceding month was 344, and the total number of such Checks issued in the preceding month for Member A’s Eligible Employees and Dependents was 143.  Further assume that the total number of Eligible Employees for all Members in the preceding month was 192, and that the total number of Eligible Employees for Member A in the preceding month was 70.

Based on the above numbers, calculation of Member A’s “H&W Claims Experience Assessment Allocation” with respect to the $11,350 of Shared H&W Costs from the preceding month is as follows:

(a)             The Average Claims Frequency Ratio for the H&W Pool is 1.79 (i.e. 344 Benefits Checks issued for all Members’ Employees and Dependents divided by 192, the total number of all Members’ Eligible Employees).

(b)            The Claims Frequency Ratio for Member A is 2.04 (i.e. 143 Benefits Checks issued for Member A’s Eligible Employees and Dependents divided by 70, the number of Member A’s Eligible Employees).

(c)             Next, Member A’s Claims Frequency Ratio is divided by the H&W Pool’s Average Claims Frequency Ratio yielding the number 1.13966 (1.79 from sub¶ (a) above divided by 2.04 from sub¶ (b) above).

(d)            Member A’s Claims Frequency Factor is the relative percentage Member A’s Claims Frequency Ratio bears to the total of the Ratios of all Members, or .173 (assuming the total of all Members’ Claims Frequency Ratios is 6.58, the 1.13966 calculated under sub¶ (c) above, divided by 6.58, yields .173).

(e)             The thirty percent (30%) Assessment Allocation for all Members for H&W Claims Experience is determined by multiplying thirty percent (30%) times the $11,350 amount of Shared H&W Costs for the preceding month, yielding $3,405.  Therefore, Member A’s H&W Claims Experience Assessment Allocation is determined by multiplying Member A’s Claims Frequency Factor of .173 (calculated under sub¶ (d) above) times $3,405 (30% of the Shared H&W Costs), and Member A’s Assessment Share for this Formula Component is $589.06.

2.2  Eligible Employee Assessment Allocation at 70%.  Seventy percent (70%) of the amount of the Shared H&W Costs paid in, or otherwise allocable to, the preceding month of H&W Pool operations shall be assessed to the H&W Pool Members under the H&W General Assessment Formula based on the number of Eligible Employees each Member employed in the preceding month.  The Formula steps for deriving this Formula Component are as follows:

(a)             First, each Member’s Eligible Employee Factor will be determined by dividing the number of each Member’s Eligible Employees in the preceding month by the total of all Eligible Employees for all Members in the preceding month.

(b)            Second, each Member’s Eligible Employee Factor (as determined in sub ¶ (a) above) will then be multiplied times seventy percent (70%) of the preceding month’s Shared H&W Costs.  The resulting dollar amount for each Member shall be such Member’s Eligible Employee Assessment Allocation, the second of the two Formula Components that establish the amount of each Member’s H&W Assessment Share portion of its Monthly H&W Assessment.

Example:  Assume a total of Shared H&W Costs (i.e. all H&W Pool Operational Costs, but excluding all Members’ Direct H&W Claims Costs) for the preceding month in the amount of $11,350.  Further assume that the total number of Eligible Employees (not including Dependents) for all Members of the H&W Pool in the preceding month was 192, and that the total number of Eligible Employees (not including Dependents) for Member A for the preceding month was 70.  Member A’s Eligible Employee Factor will then be determined by dividing the number of Member A’s Eligible Employees in the preceding month by the total number of all Eligible Employees for all Members in the preceding month (i.e., 70 ÷192 = 36.45%).  Finally, the seventy percent (70%) Assessment Allocation for Eligible Employees is determined by multiplying seventy percent (70%) times the $11,350 amount of Shared H&W Costs for the preceding month, yielding $7,945.  Therefore, Member A’s Eligible Employees Assessment Allocation is determined by multiplying Member A’s Eligible Employee Factor of 36.45% times $7,945 (70% of the Shared H&W Costs), and Member A’s Assessment Share for this Formula Component is $2,8965.95.

2.3.          Determination of The Amount of a Member’s Monthly H&W Assessment.  A Member’s H&W Assessment Share of the preceding month’s Shared H&W Costs shall be the total of the two amounts determined for the Member under ¶¶ 2.1 and 2.2 above (i.e., a Member’s H&W Claims Experience Assessment Allocation, plus that Member’s Eligible Employee Assessment Allocation).  The amount of the Member’s H&W Assessment Share, plus the amount of the Member’s Direct H&W Claims Costs paid in the preceding month, shall be the amount of the Member’s current Monthly H&W Assessment.

Example:  With respect to Member A in the Examples in ¶¶ 2.1 and 2.2 above, assuming Member A’s Direct H&W Claims Costs for the preceding month was $4,824, Member A’s current Monthly H&W Assessment would be $8,309.02 (i.e., $4,824 of Direct H&W Claims Costs, plus $589.07 for Member A’s H&W Claims Experience Assessment Allocation, plus $2,895.95 for Member A’s Eligible Employee Assessment Allocation).

3.     Determination of Members’ Aggregate and Individual Stop Loss Points.

3.1.          Basic Function and Operation of Stop Loss Points.

3.1.1.               H&W Pool Stop Loss Points.  The H&W Pool has two (2) Stop Loss Points.  When either Stop Loss Point is reached, H&W Claims that otherwise would be paid by the Member (as Direct H&W Claims Costs) or by the H&W Pool (as Shared H&W Claims) are instead paid by Stop Loss Insurance.  The “H&W Pool Aggregate Stop Loss” is the total dollar amount of Stop Loss Recognized H&W Claims at which point further payments by the H&W Pool for the H&W Claims of any and all Members are thereafter paid by the Stop Loss Insurance.  The “H&W Pool Individual Stop Loss” is any circumstance in which a dollar amount is established with a Stop Loss Carrier at which any further payments the H&W Pool would otherwise make in connection with an H&W Claim and/or an Eligible Employee or Dependant are instead covered by Stop Loss Insurance, even though the H&W Pool Aggregate Stop Loss has not been reached.  The H&W Pool Individual Stop Loss may be based on a specified dollar amount per H&W Claim, or per a particular Covered H&W Claim for the balance of the Stop Loss Policy Year, or per H&W Claims for a particular Eligible Employee for the balance of the Stop Loss Policy Year, or per some other basis as determined by the Stop Loss Carrier and agreed to by the Fund.  The dollar amounts of both of these H&W Pool Stop Loss Points will be established by agreement between the Fund and the Stop Loss Carrier and normally will be redetermined or reset at the end of each Stop Loss Policy Year.

3.1.2.               Member Stop Loss Points.  Each Member of the H&W Pool also has two (2) Stop Loss Points.  When expenditures by the H&W Pool for a Member’s Direct H&W Claims Costs reaches either Stop Loss Point, H&W Claims that otherwise would be paid by the Member as Direct H&W Claims Costs are instead assessed to all Members (except the Member that has reached the Stop Loss Point) as Shared H&W Claims under the H&W General Assessment Formula.  The “Member Aggregate Stop Loss” is the total dollar amount at which any further payments by the H&W Pool on H&W Claims by a Member’s Eligible Employees and Dependents shall constitute Shared H&W Claims and shall be reimbursed to the H&W Pool by Assessment of all Members (except the Member that has reached its Aggregate Stop Loss Point) under the H&W General Assessment Formula, rather than being passed through to the Member as “Direct H&W Claims Costs.”  The “Member Individual Stop Loss” is the total dollar amount at which any further payments the H&W Pool makes in connection with an H&W Claim or an Eligible Employee or Dependent are thereafter treated as a Shared H&W Claim and shall be reimbursed to the H&W Pool by Assessment of all Members (except the Member that has reached its Individual Stop Loss Point) under the General Assessment Formula, rather than being passed through to the Member as “Direct H&W Claims Costs.”  The basis for calculating and applying the Member Individual Stop Loss shall be the same as that employed by the Stop Loss Carrier for determining when the H&W Pool Individual Stop Loss has been reached (See ¶ 3.1.1 above).  The dollar amount of each of these Member Stop Loss Points shall be established according to ¶¶ 3.2.3 and 3.24, respectively, below.

3.2.          Calculation of Member Stop Loss Points.

3.2.1.               Total of Members’ Aggregate Stop Loss Points Shall Equal the H&W Pool Stop Loss.  The amounts of Members’ respective Aggregate Stop Loss Points are determined in the first instance by the amount of the H&W Pool Aggregate Stop Loss.  The total of all Members’ Aggregate Stop Loss Points must equal the amount of the H&W Pool Aggregate Stop Loss so that, when money spent by the H&W Pool on all Members’ H&W Claims equals the H&W Pool’s Aggregate Stop Loss Point, the Stop Loss Insurance will begin paying for all subsequent H&W Claims.

3.2.2.               Formulas for Determining Member Stop Loss Points Are Weighted Based on the Number of Employees and Dependents Receiving H&W Coverage.  To more accurately tailor the amounts of a Member’s Stop Loss Points to the risk posed by the number of Eligible Employees and Dependents receiving H&W Coverage through that Member, the Employees insured through that Member shall be divided into the three (3) Employee Demographic Categories: (a) an Eligible Employee with No-Dependent Coverage; (b) an Eligible Employee with One-Dependent Coverage; and (c) an Eligible Employee with Two (or more) Dependent Coverage.

3.2.3.               Calculation of a Member’s Aggregate Stop Loss Based on Member’s Employee Demographics.  A Member’s Aggregate Stop Loss shall be calculated as follows:

(a)             The total of all of the Members’ Eligible Employees with No-Dependent Coverage shall be determined.

(b)            The total of all of the Members’ Eligible Employees with One-Dependent Coverage shall be determined and then multiplied by 2, which determines the number of Eligible Insureds in this Category.

(c)             The total of all of the Members’ Eligible Employees with Two-Dependent Coverage shall be determined and then multiplied by 3, which determines the number of Eligible Insureds in this Category.

(d)            Next, the percentage that the number of Eligible Insureds in each of the three H&W Pool’s Employee Demographic Categories is of the total in all Demographic Categories for all Members shall be calculated by dividing the total of the Eligible Insureds in each of the H&W Pool Employee Demographic Categories (as determined in sub¶s (a) – (c) above) by the of Eligible Insureds for all H&W Pool Employee Demographic Categories.  This yields the weighted percentage of risk each H&W Pool Employee Demographic Category poses vis-à-vis the total risk of the H&W Pool.

(e)             Next, each of the three percentages established for each of the H&W Pool’s Employee Demographic Categories determined pursuant to sub¶(d) above shall be multiplied times the amount of the H&W Pool Aggregate Stop Loss.  As a result, the total of the dollar amounts of each of the three (3) H &W Pool Employee Demographic Categories will equal the dollar amount of the H&W Pool’s Aggregate Stop Loss.  This will ensure that the H&W Pool will be able to assess and collect sufficient monies from all Members to pay for all H&W Claims in the Coverage Year up to the point where the Stop Loss Insurance takes over payment of all further H&W Claims.

(f)              Next, the process set forth in sub¶¶s (a), (b) and (c) above will be repeated for each Member with respect to its own Employee Demographic Categories to determine the weighted number of Eligible Insureds in each of the Member’s Employee Demographic Categories (i.e., the Formula will total a Member’s Eligible Employees with No-Dependent, One-Dependent and Two–Dependent Coverage, and multiply the number of Eligible Employees in each Demographic Category by the factors of 1, 2 and 3, respectively).

(g)             Then, the total Eligible Insureds in each Employee Demographic Category for each Member will be divided by the total Eligible Insureds in each of the corresponding Demographic Categories for all Members of the H&W Pool derived from the calculations made in sub¶¶s (a), (b) and (c) above.

(h)             Finally, each of the three Ratios in each of the three Employee Demographic Categories for each Member derived from the calculations set forth in sub¶ (g) above shall be multiplied times the dollar amounts calculated for the three corresponding H&W Pool Employee Demographic Categories under sub¶ (e) above.  The total of the three resulting dollar amounts in a Member’s three Employee Demographic Categories derived in the sub¶  (h) above shall be the amount of that Member’s Aggregate Stop Loss. 

Example:  Assume Member A has 15, 15 and 40 Eligible Employees in the three respective Employee Demographic Categories (a) – (c), and also assume that the totals of all Members’ Eligible Employees in each of the respective Employee Demographic Categories (a) – (c) are 49, 54 and 84.  Member A’s Aggregate Stop Loss Point shall be calculated as follows:

(a)             The total of all Members’ Eligible Employees with No-Dependent Coverage is 49.

(b)            The total of all Members’ Eligible Employees with One-Dependent Coverage is 59, and multiplied by 2, is 118 Eligible Insureds.

(c)             The total of all Members’ Eligible Employees with Two-Dependent Coverage is 84, and multiplied by 3, is 252 Eligible Insureds.

(d)            The percentage that each of the three H&W Pool Employee Demographic Categories is as to all Eligible Insureds for all Members, 49, 118 and 252, respectively, are divided by 419 (i.e. the number of all Eligible Insureds for all Members) yielding: 11.69% of the Eligible Insureds have No-Dependent Coverage; 28.16% have One-Dependent Coverage; and 60.14% have Two-Dependent Coverage.

(e)             The amount of money that must be collected from each H&W Pool Employee Demographic Category is then determined by multiplying each of the percentages derived in sub¶ (d) above times the amount of the H&W Pools’ Aggregate Stop Loss (assumed for this Example to be $907,668), yielding $106,147.32, $255,620.16 and $545,900.56 which must be collected, respectively, from the Eligible Insureds’ in each Employee Demographic Category.

(f)              Then, the number of Eligible Employees in each Employee Demographic Category for each Member shall be weighed to determine the number of Eligible Insureds in each Category in the same manner as for the H&W Pool in ¶¶s (a) – (c) above, yielding 15, 30 and 120 Eligible Insureds,  respectively, for Member A.

(g)             Next, the relative percentage that the number of Eligible Insureds in each of Member A’s Employee Demographic Categories is as to all Eligible Insureds of such Member is determined.  Member A has 30.61% of Eligible Insureds with No-Dependent Coverage (i.e. 15 divided by 49); 25.42% with One-Dependent Coverage (i.e. 30 divided by 118), and 47.62% with Two Dependent Coverage (i.e. 120 divided by 252).

(h)             Finally, each of the percentages derived for Member A in sub¶ (g) above (i.e., 30.61%, 25.42% and 47.62%) will be multiplied times the dollar amounts that must be collected from the Eligible Insureds in each H&W Pool Employee Demographic Category determined in sub¶ (e) above, yielding $32,494.07 (i.e. 30.61% X $106,147.32), $64,988.14 (i.e. 25.42% X $255,620.16), and $259,952.60 (i.e. 47.62% X $545,900.56), respectively.

The total of the dollar amounts in each of Member A’s Employee Demographic Categories is Member A’s Aggregate Stop Loss Point (for the preceding month), or $357,434.81 (i.e. $32,494.07 + $64,988.14 + $259,952.60 =  $357,434.81).

3.2.4.         Calculation of a Member’s Individual Stop Loss Point. At all times, the basis used by the Stop Loss Carrier for measuring how and when the H&W Pool has reached its Individual Stop Loss shall also be used by the H&W Pool to calculate and determine how and when Members have reached their Individual Stop Loss Points.  The Administrator shall provide H&W Pool Members with reasonable notice and explanation of any changes in the basis upon which the Stop Loss Carrier determines how and when the H&W Pool’s, and therefore the Members’, Individual Stop Loss Points are calculated.  A Members’ Individual Stop Loss Point shall be as determined under ¶¶s 3.2.4.1 below; provided that if the Primary ISL Method Cross Check in ¶3.2.4.2 below is not satisfied, then a Members’ Individual Stop Loss Point shall be calculated according to ¶3.2.4.3 below.

3.2.4.1.        “Primary ISL Method” to Determine a Member’s Individual Stop Loss Point. The Primary ISL Method for calculating a Member’s Individual Stop Loss Point involves exactly the same step as set fort in sub¶s (a)-(d), (f) and (g) of ¶3.2.3 above for determining a Member’s Aggregate Stop Loss.  With the numbers derived from the sub¶s (a)-(d), (f) and (g) above, a Member’s Individual Stop Loss Point under the Primary ISL Method is as follows:

(h)             The percentage for each of the three H&W Pool Demographic Categories determined in sub¶ (d) above shall be multiplied times the percentages derived in the corresponding Employee Demographic Categories for the Member in sub¶ (g) above. 

Example.  Thus, for Member A in the Examples used above:  11.69% x 30.61% = 3.578%; 28.16% x 25.42 = 7.158%; and 60.14% x 47.62% = 28.638%.

(i)              Finally, each of the three percentages derived under sub¶ (h) above shall be multiplied times the amount of the H&W Pool’s Individual Stop Loss.  The total of the three resulting dollar amounts shall be the Member’s Individual Stop Loss Point; provided that the Primary ISL Method Cross Check in ¶3.2.4.2 below is satisfied. 

Example.  Assuming that the H&W Pool’s Individual Stop Loss is $60,000, Member A’s Individual Stop Loss Point based on the percentages derived in sub¶ (h) would be $23,624.40 (i.e., the total of 3.578% x $60,000 = $2,146.80; 7.158% x $60,000 = $4,294.86; and 28.638% x $60,000 = $17,182.80).

3.2.4.2.        Primary ISL Method Cross Check.  If a Member’s Individual Stop Loss Point calculated under ¶3.2.4.1 above, multiplied times the number of a Member’s Eligible Employees, results in a dollar amount that is equal to or greater than the amount of that Member’s Aggregate Stop Loss, then that Member’s Individual Stop Loss Point as calculated by the Primary ISL Method in ¶3.2.4.1 above shall be applied.  If the resulting dollar amount is less than the Member’s Aggregate Stop Loss, then the Alternate ISL Method in ¶3.4.2.3 below shall apply.

Example.  Member A’ Aggregate Stop Loss is $357,434.81 (see ¶3.2.3 (h) above).  Member A’s Individual Stop Loss calculated under the Primary ISL Method in ¶3.2.4.1 is $23,624.40.  Multiplying $23,624.40 times 70, the number of Member A’s Eligible Employees, yields $1,653,708.  Because this number is greater than Member A’s $357,434.81 Aggregate Stop Loss, Member A’s Individual Stop Loss Point shall remain at $23,624.40 under the Primary ISL Method.

3.2.4.3.        Alternate ISL Method to Determine a Member’s Individual Stop Loss Point.  If the Primary ISL Method Cross Check in ¶3.4.2.2 above is not satisfied, this Alternate ISL Method shall determine the amount of a Member’s Individual Stop Loss Point, which shall be the dollar amount resulting from dividing the Member’s Aggregate Stop Loss by the number of that Member’s Eligible Employees.

Example:  Assuming that Member A’s Individual Stop Loss calculated under the Primary ISL Method did not satisfy the Cross Check in ¶3.2.4.2 above (which is not the case), the Alternate ISL Method would be applied to Member A as follows:  Member A’s Aggregate Stop Loss of $357,434.81 is divided by 70, the number of Member A’s Eligible Employees, which yields an Individual Stop Loss Point for Member A of $5,106.21.  (However, since Member A’s Individual Stop Loss under the Primary ISL Method did satisfy the Cross Check, the step of calculating Member A’s Individual Stop Loss under this Alternate ISL Method would not have occurred).

3.3.            H&W Claims That Accrue Towards Satisfying a Member’s Stop Loss Points.

3.3.1.         Payments that Count Toward Satisfying a Member’s Aggregate Stop Loss.  The following H&W Claims payments count towards satisfying a Member’s Aggregate Stop Loss:

(a)       All Direct H&W Claims Costs paid by the H&W Pool to be reimbursed by such Member to the H&W Pool;

(b)       The total of the portions of such Member’s H&W Assessment Shares that relate to paying for Shared H&W Claims (except for the Shared H&W Claims that originate from such Member’s own Eligible Employees and Dependents); and

(c)       Any other types of expenditures incurred in connection with such Member’s H&W Claims that are recognized by the Stop Loss Carrier as counting towards satisfying the H&W Pool Aggregate Stop Loss. The total of the payments made by or on behalf of a Member under sub-¶¶s (a) through (c) above shall be deemed to be such Member’s “Accrued Stop Loss Payments”.

3.3.2.         Effect of a Member reaching its Aggregate Stop Loss Point.  Except as provided otherwise in ¶ 4 below, a Member that reaches its Member Aggregate Stop Loss Point during an H&W Coverage Year shall not thereafter be obligated to reimburse the H&W Pool as Direct H&W Claims Costs the amounts of payments made for H&W Claims by the Member’s Eligible Employees and Dependents for the remainder of such Coverage Year, nor for its Assessment Share of the costs of other Members’ Shared H&W Claims.  All payments on H&W Claims by such Member’s Eligible Employees and Dependents thereafter shall be treated as Shared H&W Claims and the cost thereof shall be assessed to all other Members of the H&W Pool under the H&W General Assessment Formula.  For the remainder of the H&W Coverage Year, the Member that reached its Aggregate Stop Loss Point shall continue to be obligated to pay its Assessment Share of all H&W Pool Operational Costs (except for H&W Claims Costs), and therefore, such Member’s H&W Assessment Shares shall be determined under the H&W General Assessment Formula after excluding all H&W Claims Costs thereafter paid by the H&W Pool for all Members, including the Member that reached its Aggregate Stop Loss Point. In the event that all Members reach their respective Member Aggregate Stop Loss Points prior to the end of the Stop Loss Policy Year, the amount of the Accrued Stop Loss Payments for all Members of the H&W Pool shall be reset to zero, as if it was the beginning of a Stop Loss Policy Year, effective as of the date the last Member reached its Aggregate Stop Loss Point.

3.3.3.         Payments That Count Towards Satisfying a Member’s Individual Stop Loss.  All monies paid by the H&W Pool on a particular H&W Claim and/or for an Eligible Employee or Dependent of a Member, or on some other basis where the amounts of such payments are recognized by the Stop Loss Carrier as counting towards satisfying the H&W Pool’s Individual Stop Loss, shall be accrued by the H&W Pool toward that Member’s Individual Stop Loss for the Coverage Year.  All such amounts shall also be accrued towards such Member’s Aggregate Stop Loss for the same period.

3.3.4.         Effect of a Member Reaching its Individual Stop Loss.  Once the total of the payments made by the H&W Pool on a particular H&W Claim and/or for a particular Eligible Employee or Dependent of a Member (or on some other basis recognized by the Stop Loss Carrier as counting toward the H&W Pool’s Individual Stop Loss) reaches that Member’s Individual Stop Loss Point, any further payments made on such Claim shall be treated as a Shared H&W Claim and shall be assessed to all Members (except for the Member that has reached its Individual Stop Loss Point) under the H&W General Assessment Formula.  Thereafter, such payments shall continue to be treated as a Shared H&W Claim until the total amount that has been paid thereon equals the H&W Pool’s Individual Stop Loss, at which point any further such payments required shall be paid by, or reimbursed to the H&W Pool by, the Stop Loss Insurance.  All other Members’ payments on their H&W Assessment Shares relating to such Shared H&W Claim shall be accrued toward each such Member’s respective Aggregate Stop Loss Point.  The Member that reached its Individual Stop Loss Point shall continue to pay its own Direct H&W Claim Costs (unless and until the Member reaches its Member Aggregate Stop Loss) and its H&W Assessment Share of all other Members’ Shared H&W Claims.

4.               H&W Assessments in Excess of Pool  Recognized Aggregate Stop Loss.

4.1.            Determination of When H&W Pool Has Reached the Pool Recognized Aggregate Stop Loss and Effect of Same.  The H&W Pool will be deemed to have reached the Pool Recognized Aggregate Stop Loss Point when the money spent by the H&W Pool on all Members’ H&W Claims in a Coverage Year, including H&W Pool Recognized Claims, equals the amount of the H&W Pool’s Aggregate Stop Loss Point, even if, at the time this occurs, one or more Members have not yet reached their Member Aggregate Stop Loss Points.  All H&W Claims paid by the H&W Pool after reaching the Pool Recognized Aggregate Stop Loss Point (i.e., all “Post-Stop Loss H&W Claims”) shall be treated as Shared H&W Costs and shall be assessed to all Members, if necessary, including the Members whose Employees or Dependents generated the respective H&W Claims, under the H&W General Assessment Formula.

4.2.            Determination of When H&W Pool Has Reached its H&W Pool Aggregate Stop Loss, Effects of Same, Additional H&W Assessments and Refunds.

4.2.1.         Further H&W Claims Incurred are Responsibility of Stop Loss Carrier.  When payments by the H&W Pool on H&W Claims reach the Pool Recognized Aggregate Stop Loss Point, and if such Claims are also Stop Loss Recognized Claims, it will become the responsibility of the Stop Loss Carrier thereafter to pay, or reimburse the H&W Pool for, any further H&W Claims for the remainder of the Coverage Year/Stop Loss Policy Year.  If some of such Claims do not constitute Stop Loss Recognized Claims and the Stop Loss Carrier requires additional payments by the H&W Pool on H&W Claims before agreeing that the H&W Pool Aggregate Stop Loss has been reached, such additional Claims shall be assessed as Shared H&W Claims (See also, ¶ 4.1 above).  Notwithstanding the H&W Pool reaching the Pool Recognized Aggregate Stop Loss Point, all Members shall continue to be responsible for paying their H&W Assessment Shares of H&W Pool Operational Costs, including all H&W Claims Costs incurred in the remainder of the Coverage Year, as provided in ¶ 4.2.2 below.

4.2.2.         Members are Subject to H&W Assessments for H&W Claims as Shared H&W Claims Even After Reaching H&W Pool Aggregate Stop Loss Point.  Paragraph 4.2.1 above identified circumstances necessitating further H&W Assessments of the Members to pay H&W Claims despite the fact that the H&W Pool Aggregate Stop Loss Point has been reached (i.e., where the Stop Loss Carrier refuses to consider certain H&W Claims payments as counting toward satisfaction of the H&W Pool Aggregate Stop Loss, and requires further H&W Claims payments by the H&W Pool to trigger the Stop Loss Coverage).  Other circumstances may occur where it is necessary to assess Members even beyond the H&W Pool reaching the H&W Pool Aggregate Stop Loss Point (i.e., where there is an “indemnity” versus “pay on behalf of” Stop Loss Policy; or where the Stop Loss Carrier requires an accounting to establish that the H&W Pool Aggregate Stop Loss has been satisfied before paying further H&W Claims; or where the Stop Loss Policy contains terms restricting Claims payments or reimbursements during the Stop Loss Policy claims runout period).  Therefore, notwithstanding satisfaction of the H&W Pool Aggregate Stop Loss, and triggering of the Stop Loss Coverage, all Members shall be subject to further H&W Assessments for Post-Stop-Loss H&W Claims and H&W Pool Operational Costs.

4.2.3.         Refund to Members of Post-Stop-Loss H&W Assessments.  Upon and to the extent of payment or reimbursement to the H&W Pool by the Stop Loss Carrier for the Post-Stop-Loss H&W Claims the H&W Pool paid in a Stop Loss Policy Year, the H&W Pool shall refund the reimbursement money to the Members of the H&W Pool, without interest, in the same amounts that each such Member contributed under its H&W Assessment Shares for such Post-Stop-Loss H&W Claims.

5.               Procedures for Resolving “Debatable” H&W Claims, for Permitting “Allowed” H&W Claims, and the Effect of Resolution of Same re H&W General Assessment Formula.

5.1.            Debatable H&W Claim.  A “Debatable H&W Claim” is an H&W Claim for which H&W Coverage is not clearly provided for, and is not clearly precluded by, the terms of the applicable Coverage Booklet and the SIA.  If a Member (but not an Employee on his/her own) believes a particular H&W Claim that previously has been denied H&W Coverage through exhaustion of all Appeal Procedures (see § I, ¶ 17) is a “Debatable H&W Claim,” the Member may thereafter apply to the Administrative Committee requesting that the denied H&W Claim be treated as a “Recognized H&W Claim” (either as a “Stop Loss Recognized H&W Claim” or as a “Pool Recognized H&W Claim”).

5.2.            “Recognized” or “Allowed” H&W Claims.  A Member’s request that a denied H&W Claim be treated as a “Recognized H&W Claim” shall be resolved as follows:

5.2.1.         If Stop Loss Carrier Would Count Payments on the Denied H&W Claim Towards the H&W Pool’s Stop Loss Points, the Claim shall be Treated as a “Stop-Loss Recognized H&W Claim”.  If the Stop Loss Carrier agrees to recognize payment by the H&W Pool on the denied H&W Claim as counting towards satisfaction of the H&W Pool’s Aggregate (and/or Individual) Stop Loss Points, the denied Claim shall be deemed a “Stop-Loss Recognized H&W Claim” and shall be treated as a Covered H&W Claim as if it had not been denied in the first instance.  All payments on such H&W Claim shall accrue toward such Member’s Aggregate and Individual Stop Loss Points.

5.2.2.         If Stop Loss Carrier Will Not Count Payment on the Denied H&W Claim Towards the H&W Pool’s Stop Loss Points, the Claim May or May Not be Deemed a “Pool Recognized H&W Claim”.  If the Stop Loss Carrier will not recognize payment by the H&W Pool on the denied H&W Claim as counting towards satisfaction of the H&W Pool’s Aggregate (and/or Individual) Stop Loss Points, and if the Member still desires that the denied H&W Claim receive H&W Coverage and be paid by the H&W Pool, then:

5.2.2.1.        Pool Recognized H&W Claim.  If the Administrative Committee concludes that it is truly reasonably debatable whether the denied H&W Claim is entitled to H&W Coverage under the terms of the applicable Coverage Booklet and the SIA, the Administrative Committee shall denominate the Claim as a “Pool Recognized H&W Claim.”  If the Claim is deemed a “Pool Recognized H&W Claim,” then it shall be treated for all purposes, including whether the Claim would have been accounted for as a Direct & H&W Claims Cost or a Shared H&W Claim, as if it had never been denied.  The amounts paid by the H&W Pool on such Claim shall be counted toward the Member’s Aggregate and Individual Stop Loss Points, and against the Pool Recognized Stop Loss Point; provided, however, that all “Post-Stop-Loss H&W Claims” shall be treated as Shared H&W Costs, and all Members, including the Member that requested treatment of the denied Claim as a Pool Recognized H&W Claim, shall pay their Assessment Shares thereof under the H&W General Assessment Formula, even if the Stop Loss Carrier does not agree that the H&W Pool Aggregate Stop Loss Point has been reached because it does not count one or more Pool Recognized H&W Claims as applying toward satisfaction of the H&W Pool Aggregate Stop Loss.

5.2.2.2.        Allowed H&W Claims.  If the Administrative Committee concludes that H&W Coverage for the denied H&W Claim is not reasonably debatable and that the Claim is not entitled to H&W Coverage, the Administrative Committee shall denominate the Claim as an “Allowed H&W Claim.”  If the Claim is deemed an “Allowed H&W Claim,” then it shall be treated as a Direct H&W Claim Cost to the Member and shall not be counted either toward such Member’s Aggregate Stop Loss or its Individual Stop Loss, or toward the Pool Recognized Aggregate Stop Loss Point.

5.2.3.         Member’s Right to Seek H&W Coverage as “Allowed H&W Claim” at any Time.

5.2.3.1.        “Allowed H&W Claims” without Exhaustion of Appeal Procedures.  At any time after the initial denial of H&W Coverage for a particular H&W Claim, and regardless of whether the Appeal Procedures have been exhausted with respect to the Claim, the Member may submit a written request to the Administrative Committee to treat the Claim as an “Allowed H&W Claim.”  Upon receiving such request, the Administrative Committee shall deem the Claim to be an “Allowed H&W Claim,” and it shall thereafter be treated under all circumstances as a Direct H&W Claims Cost to the Member making the request, and payments thereon by the H&W Pool shall not be counted either toward such Member’s Aggregate Stop Loss or its Individual Stop Loss, or toward the Pool Recognized Stop Loss Point.  Any Member requiring and receiving treatment of a denied H&W Claim as an Allowed H&W Claim thereby agrees to indemnify and hold the Fund, the H&W Pool, the Administrative Committee and the Administrator harmless for any liability that arises in any way from the Allowed H&W Claim, and if such Member is also a Member of the Liability Pool, the Member further agrees that any such liability shall not be Covered by the Liability Pool.

5.2.3.2.        “Allowed H&W Claim” Pending Exhaustion of Appeal Procedures.  If a Member that has invoked and is pursuing its rights under the Appeal Procedures with respect to a denied H&W Claim wishes to have the Claim paid by the H&W Pool pending a final determination of H&W Coverage under the Appeal Procedures, the Member may make written request to the Administrative Committee to treat the Claim as an “Allowed H&W Claim” in the interim, in which case the H&W Pool will pay the Claim as a “Direct H&W Claims Cost” for the Member.  If, as a result of the Appeal Procedures, H&W Coverage is provided for the previously denied Claim, then the Claim will be treated as if it had not been denied at the time presented, and if appropriate, re-characterized and re-accounted for as a Shared H&W Claim.  If the appeal results in affirmance of the denial, the Claim shall be treated as an “Allowed H&W Claim.”

6.               Former Members.  After the effective date of a Former Member’s Withdrawal from the H&W Pool, the Former Member’s obligations with respect to the H&W General Assessment Formula, and its Incurred H&W Claims and Extended Coverage H&W Claims, shall be as set forth in ¶ 20.2.2, which deals with the rights and obligations of a Former Member.

7.               New Members.  The H&W General Assessment Formula shall be applied so that, for a period of six (6) years following its Date of Membership, the New Member’s H&W Assessment Share is based only on H&W Claims that were Incurred after the New Member’s Date of Membership.