Miscellaneous Provisions

THE COORDINATION OF BENEFITS PROVISION

ORDER OF PAYMENT
When you are covered by more than one health care plan to which the Coordination of Benefits provision applies, the rules below are followed to determine which plan will be the first to pay its benefits:

The order of benefit payments is determined using the first of the following rules which applies:

1 . NON-DEPENDENT / DEPENDENT

a. The benefits of a plan which covers the person as an employee, member or subscriber (that is, other than as a dependent) are determined before those of a plan which covers the person as a dependent or COBRA Extendee, except if the person is a Medicare beneficiary;

b. If the covered individual is a Medicare beneficiary, then Medicare is:

i. primary to the plan(s) covering the person as a retiree, or as the dependent
of a retiree; and

ii. secondary to the plan(s) covering the person as an active employee or as the dependent of an active employee.

2. DEPENDENT CHILD / PARENTS NOT SEPARATED OR DIVORCED

a. The benefits of the plan of the parent whose birthday falls earlier in a year as determined before those of the plan of the parent whose birthday falls later in that year, but

b. if both parents have the same birthday, the benefits of the plan which covered the parent longer are determined before those of the plan which covered the other parent for a shorter period of time.

Note: The word birthday refers only to month and day in a calendar year, not the year in which the person was born. This is known as the "birthday rule".

c. If the other plan does not have the rule described above, but instead has a rule based upon the gender of the parent, and if, as a result, the plans do not agree on the order of benefits, the rule in the other plan will determine the order of benefits.

3. DEPENDENT CHILD / SEPARATED OR DIVORCED PARENTS

a. First, the plan of the parent with custody of the child;

b. then, the plan of the spouse of the parent with custody of the child;

c. finally, the plan of the parent not having custody of the child; and

d. if the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the child, and the entity obligated to pay or provide the benefits of the plan of that parent has actual knowledge of those terms, the benefits of that plan are determined first.

This paragraph does not apply with respect to any claim determination period or plan year during which any benefits are actually paid or provided before the entity has that actual knowledge.

4. ACTIVE / INACTIVE EMPLOYEE

The benefits of a plan which covers a person as an employee who is neither laid off nor retired (or as that employee's dependent) are determined before those of a plan which covers that person as a laid off or retired employee (or as that employee's dependent) or COBRA Extendee. If the other plan does

not have this rule, and if, as a result, the plans do not agree on the order of benefits, this paragraph is ignored.

5. LONGER / SHORTER LENGTH OF COVERAGE

If none of the above rules determines the order of benefits, the benefits of the plan which covered an employee, member or subscriber longer are determined before those of the plan which covered the person for the shorter time.

a. To determine the length of time a person has been covered under a plan, two plans shall be treated as one if the claimant was eligible under the second within 24 hours after the first ended.

Thus, the start of a new plan does not include:

i. a change in the amount of scope of a plan's benefits;

ii. a change in the entity which pays, provides or administers the plan's benefits; or

iii. a change from one type of plan to another (such as, from a single employer
plan to that of a multiple employer plan).

b. The claimants length of time covered under a plan is measured from the claimant's first date of coverage under that plan. If that date is not readily available, the date the claimant first became a member of the group shall be used as the date from which to determine the length of time the claimants coverage under the present plan has been in force.

HOW YOUR BENEFITS ARE PAID

The plan which is the first to determine its benefits will pay its benefits without regard to any other coverage. When this plan is secondary to another plan that is primary, we will first calculate the benefit AS IF THIS PLAN WAS PRIMARY. The benefit will then be reduced by the amount paid by the other plan. This method of coordination is referred to as Maintenance of Benefits.

The following examples illustrates this:

Example 1: Doctor is out of network
Non-participating doctor’s charges = $108
Reasonable & Customary = $100
This plan, IF Primary, would pay (@80%) = $80
Other primary plan pays (@70%) = $70
This plan will pay ($80-$70) = $10
Member is responsible for = $28

Example 2: Doctor is in network
Aetna-participating doctor’s charges = $108
Reasonable & Customary = $100
Aetna’s negotiated fee = $90
This plan, IF Primary, would pay ($90-$15 co-payment) = $75
Other primary plan pays (@70%) = $70
This plan will pay ($75-$70) = $5
Member is responsible for = _$15

Example 3: Medicare is primary
Doctor is in network and accepts Medicare assignment:
Charges = _________ $108
Medicare allows = $ 85
This plan, IF Primary, would pay ($85 # -$15 co-payment) = $70
Medicare pays (@80% * $85) = $68
This plan will pay ($70-$68) = $2
Member is responsible for = _$15

# Doctors accepting Medicare assignment must reduce their charges to the amount Medicare allows.

In the event that this Plan is secondary payer but the other Plan contains a provision that states it is excess or always secondary or uses order of benefit determination rules which are inconsistent with the rules of this section, then this Plan shall pay its benefits first, but the amount of the benefits payable shall be determined as
if this Plan were the secondary Plan. Such payment shall be the limit of this Plan's liability.

When you are covered under more than one health plan you should not be expected to pay any more than you would have paid had you been covered under only one plan. To illustrate this, assume that you visit an Aetna Choice POS II provider, Aetna is secondary payer and the provider does not participate with the primary
plan.

Doctor’s charges $150
Primary plan allows $120
Primary plan pays @ 80% $ 96

If the primary plan is your only plan, you would be responsible to the doctor for $54 ($150 - $96). If Aetna Choice POS II was your only plan, you would be responsible for a $15 co-payment. Therefore, you should be responsible for the $15 co-payment after the doctor was paid $96 by the primary plan.

EFFECTS OF MEDICARE

Federal law requires that the Employer offer to active Employees and their covered Dependents, who are age 65 and over, the same health benefits as are available to younger Employees and Dependents. If you are 65 or over, and are covered under your Employees group health plan (this Plan) as an active Employee, Medicare (if entitled) will then become the secondary provider of coverage. The Plan will determine what benefits are covered; the remainder of the expenses may then be submitted to Medicare by you for reimbursement.

Medicare coverage is generally provided under 3 parts: A, B and D.

• Part A generally covers hospital care,

• Part B generally covers physician services, and

• Part D covers prescription drugs.

• Medicare Advantage plans, sometimes referrred to as Part C, offer HMO-type coverage.

Medicare Parts A and B
In the case of retired Medicare-eligible Employees and their covered Medicare-eligible dependents, the Plan's normal Coordination of Benefits provisions shall not apply; Medicare shall be the primary provider of coverage.

The Plan will reduce its benefits payable by any amount(s) paid or payable by Medicare. In the event such a Medicare-eligible individual chooses not to enroll for Medicare coverage (Parts A & B), this Plan's payment will still be based on the amount(s) Medicare would have paid had the individual elected coverage under both
Parts A & B of Medicare.

Important Note:
The Plan will not provide any benefits a Retiree or Retiree's Dependent is eligible to receive from Medicare, whether or not that person has enrolled in Part A and Part B of Medicare. Consequently, to avoid a drastic reduction in health benefits, it is essential that each eligible Retiree or Retiree's Dependent be enrolled in both Part A and Part B of Medicare if Medicare is primary to this Plan. If there is a charge for your Medicare Part A coverage because you do not meet the Social Security eligibility requirements, you may not need to enroll in Medicare Part A. If you are a retired Medicare-eligible
individual, your Employer may have agreed to contribute to the cost of your Medicare coverage. Please contact your District’s Health Benefits Representative for further information.

Medicare Part D
This Plan’s prescription drug coverage has been determined by an independent actuary to be as good or better (on average for all participants) for 2007, as the standard Medicare Part D plan. As such it is deemed to be Creditable Coverage and retirees and their dependents generally do not need to enroll in another Medicare Part D plan. This determination must be made each calendar year. If this Plan’s coverage is later determined to be not creditable, members will be informed via newsletter.