Health and Welfare Coverage

HEALTH & WELFARE COVERAGE

FOR THE

PURMS JOINT SELF-INSURANCE AGREEMENT

Amended and Restated as of December 7, 2001

Overview of Coverages for PURMS Risk Pools

The Coverages Sections of the SIA set forth the Insuring Agreements, Exclusions, and other terms and conditions which comprise the Coverages provided by the Fund for the Members of its Risk Pools and, as applicable, their Employees under the SIA.�

The current Liability Coverage provided by the Fund for Members of the Liability Pool includes:� Commercial General Liability (SIA � III, �CGL�); Public Officials & Entity Liability (SIA � IV, �PO&E�); Automobile Liability (SIA � V); and Pollution Liability (� VI). The CGL Coverage was originally adopted on December 20, 1976, has been amended from time to time, and was unanimously re-adopted by the Members on December 7, 2001. The PO&E, Automobile and Pollution Liability Coverages were first adopted effective March 30, 1995. The PO&E Coverage was unanimously re-adopted by the Members on December 7, 2001.

The current Property Coverage provided by the Fund for Members of the Property Pool includes:� General Property Coverage (SIA � X) and Auto Physical Damage Coverage (SIA � XI). Both of these Property Coverages were originally adopted effective February 27, 1997.

Members of the Property Pool may participate in either or both Property Coverages (SIA � X and/or � XI).� Members of the Liability Pool must participate in all Liability Coverages provided by the Fund (SIA � III - VI).

The current Health & Welfare Coverage provided by the Fund for the Members of the H&W Pool is set forth in � XIV. The H&W Coverage was originally adopted on March 16, 2000, effective April 1, 2000, and was amended and restated and unanimously re-adopted be the Members as of December 7, 2001.

These Coverages, 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 COVERAGE

1. Definitions for Health & Welfare Coverage.� The Definitions set forth in the �Definitions� Section of the SIA (see, � II) apply to the interpretation of the Coverage provided by this H&W Coverage Section, except as may be modified specifically or by necessary implication by the Definitions set forth below which are specific to the H&W Coverage contained in this � XIV).

1.1�� Adjusted Initial Deposit	--	shall mean an H&W Pool Member�s Initial Deposit after any adjustments to increase or decrease the amount of the Member�s Initial Deposit are made by the Administrative Committee to reflect� changes in such Member�s H&W Claims Experience, as provided in � I, � 13.2.2.
1.2�� 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.
1.3�� 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).
(i) 1.4�� Average Claims Frequency Ratio	--	shall mean the average of all H&W Members� Claims Frequency Ratios, as provided in � XV, � 2.1(a).
1.5�� 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.
1.6�� Borrowing Risk Pool	--	shall mean the Risk Pool receiving the InterPool Loan.
1.7�� 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.
1.8�� 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).
1.9�� 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).
1.10�� Cobra Coverage	--	shall mean the requirements of 26 CFR, Parts 54 and 602, applicable to non-federal governmental group health plans under the Public Health Service Act, and any applicable similar federal or State law, requiring the Members of the H&W Pool to which it applies to provide continuing H&W Coverage to any Employee of a Former Member or to an Eligible Employee that has ceased his/her employment relationship with a Member, or similar circumstance.
1.11�� Continuing �Treatment	--	shall mean the right, if provided for under the terms of such Employee�s applicable Coverage Booklet and otherwise consistent with the H&W Coverage provided under the SIA, of an Eligible Employee of a Former Member to receive continuing Medical Services after the Withdrawal Date for a Medical Condition for which Medical Services were first provided to such Employee during the H&W Coverage Period.
1.12�� Coverage Booklet	--	shall mean the written materials a Member provides to its Employees describing the scope and terms governing the Health & Welfare Benefits the Member is providing its Eligible Employees and their Dependents though the H&W Coverage provided by the H&W Pool.
1.13� 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.
1.14� Date of Membership	--	shall mean the date a Member of the Fund becomes a Member of a particular Risk Pool.
1.15� 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).
1.16� 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.�
1.17� 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.
1.18� 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.
1.19� Eligibility	--	shall mean the terms and conditions established by each Member for its Employees, as reflected in such Member�s Coverage Booklet, determining when such Employees and their Dependents are entitled to H&W Coverage.
1.20� 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.
1.21� 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).
1.22� 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)).
1.23� 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.
1.24� 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.
1.25� 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.
1.26� 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.
1.27� Extended Coverage H&W Claim	--	shall mean any H&W Claim for which H&W Coverage is provided by the H&W Pool for the Employee of a Former Member, after the effective date of such Member�s withdrawal from the H&W Pool, for a Medical Condition that gives rise to a right to Continuing Treatment for such Former Member�s Employee in accordance with such Member�s Coverage Booklet, or that involves mandated Continuing Treatment under the H&W Coverage for such Employee beyond the Former Member�s Withdrawal Date under the terms of COBRA, or similar law.
1.28� 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.
1.29� H&W Assessments	--	shall mean any and all Assessments issued by the H&W Pool to its Members.
1.30� 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.
1.31� 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.
1.32� 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.
1.33� H&W Claims Cut Off Date	--	shall mean the date upon which a Former Member assumes total financial responsibility for any unpaid Incurred H&W Claims and any Extended Coverage H&W Claims, and thereafter the H&W Pool ceases to have any financial responsibility with respect thereto, as determined in accordance with � I, � 20.4.2.1(a) or (b).� When applied to the H&W Pool in the context of the H&W Pool�s Dissolution, the �H&W Claims Cut Off Date� shall mean the date when any remaining financial responsibility for unpaid H&W Claims ceases for the H&W Pool.
1.34� 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.
1.35� 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).
1.35� H&W Claims Handling Fee	--	shall mean the dollar amount of the administrative fee per H&W Claim established annually by the H&W Pool and the Administrator, as reflected in the Administrator�s Contract, to cover the Administrator�s cost of processing and paying H&W Claims on behalf of a Former Member after expiration of the Mandatory H&W Claims Run-out Period, but before the H&W Claims Cut‑off Date.
1.37� 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.
1.38 H&W Coverage Period	--	shall mean the time period during which a Member is a Member of the H&W Pool, starting upon the effective date of such Member�s participation therein, and ceasing upon the effective date of a Member�s withdrawal from the H&W Pool or on the H&W Pool�s Dissolution Date.
1.39� H&W Coverage Year	--	shall mean the annual or other period of time over which H&W Pool Members� H&W Claims are accrued against their respective Stop Loss Points, which shall be the same period of time as encompassed by the Stop Loss Policy Year.
1.40� H&W General Assessment Formula	--	shall mean the General Assessment Formula for the H&W Risk Pool, set forth in � XV.
1.41� 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) 1.42� 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.
1.43� 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.
1.44� 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.
1.45� H&W Pool Reserves	--	shall mean the total of all H&W Pool Members� Initial Deposits and Adjusted Initial Deposits, which yields a number designed to approximate three (3) months of reasonably anticipated H&W Claims Experience for all Members of the H&W Pool (see � I, � 13.2.1), and which is replenished on a monthly basis through Monthly H&W Assessments (see � I, � 13.2.3.1).
1.46� H&W Pool Fiscal Year	--	shall mean the annual accounting year for the H&W Pool, which shall be the calendar year, or the period of time encompassed by the Stop Loss Policy Year, if different from the calendar year.
1.47� Health & Welfare Benefits (or �Benefits�)	--	shall mean any and all Health and Welfare Benefits authorized by RCW 48.62, et. seq. for the H&W Pool to provide for Members� Eligible Employees and Dependents, but only as and to the extent such Benefits are defined in the Members� respective Coverage Booklets, and only to the extent such Benefits are consistent with the SIA.
1.48� 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.
1.49 Incurred H&W Claims	-- --	with respect to current H&W Pool Members, shall mean the Claims of Eligible Employees or Dependents for H&W Coverage which are allocable to a particular Coverage Year, or other time period, based on the date Medical Services are rendered to such Employee or Dependent.� with respect to a Former Member, shall mean all H&W Claims arising from Medical Services provided to Eligible Employees of a Former Member, or such Employee�s Dependents, during the H&W Coverage Period applicable to the Former Member, and shall include all Extended Coverage H&W Claims with respect to such Former Member.
1.50� Incurred Shared H&W Claims	--	shall mean the Incurred H&W Claims of the Former Member and the H&W Claims of the remaining Members of the H&W Pool that constitute Shared H&W Claims on the Former Member�s Withdrawal Date.
1.51� Initial Deposit	--	shall mean the amount of money an Initial H&W Pool Member or a New H&W Pool Member deposits with the H&W Pool in order to become a Member thereof, measured by three (3) times such Member�s Prior Monthly H&W Claims Experience, if available, or three (3) times such Member�s Prior Monthly H&W Premium, or as may be otherwise determined for a New H&W Member pursuant to � I, � 18.2.2.2.� The amount of the Initial Deposit may be reevaluated and adjusted every three (3) years, or sooner, as determined by the Administrative Committee, pursuant to � I, � 13.2.2.� Unless otherwise specified, the term Initial Deposit shall include and mean any Adjusted Initial Deposit.
1.52� Initial H&W Member	--	shall mean each of those local government entities that became a Member of the H&W Pool upon its formation on April 1, 2000.
1.53� Inter-Pool Loan	--	shall mean a short-term Loan by one Risk Pool to another under the terms and restrictions identified in � I, � 13.2.3.2.
1.54� Loaning Risk Pool	--	shall mean the Risk Pool making the Inter-Pool Loan.
1.55� Mandatory H&W Claims Run-out Period	--	shall mean the three (3) month period of time from the effective date of a Former Member�s withdrawal from the H&W Pool to the end of the third (3^rd) month following the Withdrawal Date during which the Former Member shall be assessed in accordance with � I, � 20.2.2.2.
1.56� Medical Condition	--	shall mean an Eligible Employee�s or Dependent�s physical health or other condition for which Medical Services are provided to such Employee or Dependent during the H&W Coverage Period.
1.57� Medical Incident	--	shall mean the occasion(s) upon which Medical Services are provided during the H&W Coverage Period to an Eligible Employee or Dependent for a Medical Condition.
1.58� Medical Information	--	shall mean any and all data relating to the Medical Services provided to Eligible Employees and their Dependents to the extent confidentiality and disclosure of such Information is governed by applicable State or Federal law.
1.59� Medical Provider	--	shall mean a person or entity that provides Medical Services to an Eligible Employee or Dependent for whom H&W Coverage is provided under the terms of the applicable Coverage Booklet and the SIA.
1.60� Medical Services	--	shall mean medical, drug prescription, dental, vision or other types of Health and Welfare Benefits provided to an Eligible Employee or Dependent by a Medical Provider.
1.61 �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.
1.62� 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.
1.63� 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.
1.64� New H&W Member	--	shall mean any local government entity that becomes a Member of the H&W Pool after its formation, in accordance with � I, � 18.
1.65� Per Capita Administrative Fee	--	shall mean the amount charged by the Administrator to the H&W Pool on a per Eligible Employee and/or Dependent basis for administration of the H&W Pool, as agreed between the Administrator and Administrative Committee, and approved by the Board.
1.66� Per Capita Costs	--	shall mean the charges for H&W Pool Operational Costs that are part of a Member�s Monthly H&W Assessment and are based on the number of Eligible Employees and/or Dependents of a Member, including but not limited to, the Stop-Loss Per Capita Rate, PPO Charges (if applicable to the Member) and the Per Capita Administrative Fee.
1.67� 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.
1.68� 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.
1.69� 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.
1.70� 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.
1.71� 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.
1.72� PPO Plan	--	shall mean the terms and conditions and services offered by a Preferred Provider Organization.
1.73� Preferred Provider Organization (or �PPO�)	--	shall mean an organization that has contracts with certain Medical Providers to accept reduced fees and charges for Medical Services.
1.74� 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.
1.75� Prior Monthly H&W Premium	--	shall mean the most recent monthly premium the Initial H&W Member or a N