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HomeMy WebLinkAbout95-44 Resolution No. 95-44 RESOLUTION AUTHORIZING EXECUTION OF AN AGREEMENT WITH WASHINGTON NATIONAL INSURANCE COMPANY BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Richard B. Helwig, City Manager, be and is hereby authorized and directed to execute a Minimum Premium Agreement to Master Application for Group Insurance on behalf of the City of Elgin with Washington National Insurance Company for an employee health insurance program, a copy of which is attached hereto and made a part hereof by reference. s/ George VanDeVoorde George VanDeVoorde, Mayor Presented: March 8, 1995 Adopted: March 8, 1995 Omnibus Vote: Yeas 6 Nays 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk 4, MINIMUM PREMIUM AGREEMENT This Minimum Premium Agreement ("Agreement") is made between Washington National Insurance Company ("Washington National")and City of Elgin("Policyholder"). The purpose of this Agreement is to define the financial obligations of the parties relative to the Group Policy or Policies issued to the Policyholder by Washington National. Under this Agreement, the Policyholder and Washington National will divide between each other responsibility and liability for the payment of benefits. This Agreement also specifies the type and calculation of Premium owed by the Policyholder to Washington National. Page 1 of 16 MINIMUM PREMIUM AGREEMENT TABLE OF CONTENTS PAGE ARTICLE I: DEFINITIONS 3 ARTICLE II: CLAIM RESPONSIBILITIES 5 A''.TICLE III: ACCOUNTING 7 ARTICLE IV: PREMIUM 11 ARTICLE V: BANKING 13 ARTICLE VI: AMENDMENTS 14 ARTICLE VII: TERMINATION 14 ARTICLE VIII: LEGAL PROVISIONS 15 SCHEDULE A Page 2 of 16 MINIMUM PREMIUM AGREEMENT ARTICLE I - DEFINITIONS (A) "Agreement" means this Minimum Premium Agreement by and between the Policyholder and Washington National. (B) "Bank Account(s)" means the bank account(s) established by the Policyholder from which Washington National is authorized to draw the Policyholder's funds for Benefit Payments issued under the Group Policy, as well as any Premium. (C) "Benefit Payments" means checks issued for eligible claims for insured employees and dependents under Minimum Premium Coverages. (D) "Carryover Deficit" for any Contract Period is the deficit carried forward from the prior Contract Period as determined by the End of the Contract Period Experience Accounting for the prior Contract Period. The Carryover Deficit includes deficits created by Minimum Premium Coverages, other experience refunding coverages which are listed in Schedule A, and any deficit which exists on the effective date of this Agreement which was created by refunding coverages under the Group Policy. (E) "Claim Payor" means the entity designated by Washington National to perform claim payment administration. (F) "Contract Month" means a calendar month while this Agreement is in effect. The first Contract Month will begin on the effective date of this Agreement, and the last Contract Month will end on the termination date of this Agreement. (G) "Contract Period" is specified in Schedule A. The first Contract Period will begin on the effective date of this Agreement, and the last Contract Period will end on the termination date of this Agreement. (H) "Cumulative Benefit Payments" for any Contract Month is equal to that Contract Month's Monthly Benefit Payments for all Minimum Premium Coverages, plus the sum of the Monthly Benefit Payments for all Minimum Premium Coverages for all previous Contract Months in that Contract Period. (I) "Cumulative Claim Liability Limit" for any Contract Month is equal to that Contract Month's Monthly Claim Liability Limit plus the sum of the Monthly Claim Liability Limits for all previous Contract Months in that Contract Period. (J) "Cumulative Reimbursements" up to any Contract Month is equal to the sum of the Reimbursements for all previous Contract Months in that Contract Period. (K) "Cumulative Retrospective Premium" up to any Contract Month is equal to the sum of the Retrospective Premium for all previous Contract Months in that Contract Period. (L) "Exposure" for a Minimum Premium Coverage during a Contract Month means the number of insured employees and dependent units having that Minimum Premium Coverage at the beginning of the second prior Contract Month. For the first three Contract Months of the first Contract Period, the Exposure for a Minimum Premium Coverage is the number of insured employees and dependent units having that Minimum Premium Coverage at the beginning of the first Contract Month. (M) "Group Policy" means the insurance policy or policies issued to the Policyholder by Washington National. Page 3 of 16 MINIMUM PREMIUM AGREEMENT (N) "Minimum Premium Coverages" means the types of benefits, as specified in the Group Policy, that are covered by this Agreement. The Minimum Premium Coverages are listed in Schedule A. (0) "Minimum Premium Premium" means the monthly premium due from the Policyholder to Washington National,as described in Article IV, section(A), to cover retention costs,pooling charges, and any change in Reserves if Reserves are held by Washington National. (P) "Monthly Benefit Payments" are the sum of Benefit Payments issued during a particular Contract Month from the Policyholder's Bank Account, less rounds, voids,or other Benefit Payment credits. If Individual Claim Pooling is elected, Medical Benefit Payments for any insured employee or dependent that exceed the Individual Claim Pooling Liability Amount during the Contract Period will not be included in Monthly Benefit Payments, except during the Post Termination Period. (Q) "Monthly Claim Liability Limit" for any Contract Month is equal to the sum of the result of(1)multiplied by (2), where: (1) is the Exposures for each Minimum Premium Coverage for that Contract Month; and (2) is the corresponding Monthly Claim Liability Limit Factors for each Minimum Premium Coverage. (R) "Monthly Claim Liability Limit Factors" are dollar amounts set by Washington National which are used for calculating the Policyholder's Monthly Claim Liability Limits. The Monthly Claim Liability Limit Factors are listed in Schedule A. (S) "Policyholder" means the entity indicated in Schedule A. (T) "Post Termination Liability Claim Limit" is equal to the sum of the result of(1) multiplied by(2), where: (I) is the average number of insured employees and dependent units for each Minimum Premium Coverage for the final two months of the last Contract Period; and (2) is the corresponding Post Termination Claim Liability Limit Factors for each Minimum Premium Coverage. (U) "Post Termination Claim Liability Limit Factors" are dollar amounts set by Washington National which are used for calculating the Policyholder's Post Termination Claim Liability Limit. The Post Termination Claim Liability Limit Factors are listed in Schedule A. (V) "Post Termination Premium" is equal to the sum of the result of(a) multiplied by (b), where: (a) is the Minimum Premium Premium for the last Contract Month of the last Contract Period; and (b) is the Post Termination Premium Factor shown in Schedule A. (W) "Post Termination Period" means the period following termination of this Agreement during which the Post Termination Claim Liability Limit applies. Schedule A indicates whether the Post Termination Claim Liability Limit applies, and, if it does apply, the period for which the Post Termination Claim Liability Page 4 of 16 MINIMUM PREMIUM AGREEMENT Limit applies. (X) "Premium" means the Minimum Premium Premium, and/or any Retrospective Premium, and/or the Post Termination Premium if applicable. (Y) "Reimbursement" for any Contract Month is the amount due from Washington National to the Policyholder for that Contract Month as calculated in Article III, sections (A), (B), and (D). (Z) "Reserves" are funds used to pay Run-Out Claims following the termination of this Agreement. Reserves are an obligation with Minimum Premium funding and may be held by either Washington National or the Policyholder. The holder of the Reserves is indicated in Schedule A. (AA) "Retrospective Premium" for any Contract Month is the amount due from the Policyholder to Washington National for that Contract Month as calculated in Article III, sections (A), (B), (C), and (D). (BB) "Run-Out Claims" means those Benefit Payments which are issued after the termination of this Agreement and are: (1) incurred while this Agreement is in effect; or (2) payable under any extension of benefits provision of the Group Policy. (CC) "Surplus Position for the last Contract Period" is determined by (1) minus (2) plus (3) minus (4) where: (1) is the Cumulative Claim Liability Limit for the last Contract Month of the last Contract Period; (2) is Cumulative Benefit Payments for the last Contract Month of the last Contract Period; (3) is Cumulative Reimbursements due or paid up to the last Contract Month of the last Contract Period; and (4) is Cumulative Retrospective Premium due or paid up to the last Contract Month of the last Contract Period,plus any Retrospective Premium due or paid as a result of the Monthly or Annual Claim Liability Accounting for the last Contract Month of the last Contract Period, plus any Retrospective Premium due or paid as a result of the End of the Contract Period Experience Accounting for the last Contract Period. If the above calculation yields an amount greater than zero, then the Surplus Position for the last Contract Period is equal to this amount. If the above calculation yields an amount less than or equal to zero, then the Surplus Position for the last Contract Period is equal to zero. ARTICLE II - CLAIM RESPONSIBILITIES (A) Claims Incurred Prior to the Effective Date of this Agreement For claims incurred prior to the effective date of this Agreement, the Policyholder will be financially liable for benefit amounts and responsible for claim payment administration. Page 5 of 16 MINIMUM PREMIUM AGREEMENT (B) Claims Incurred and Paid While this Agreement is in Effect For claims incurred and paid while this Agreement is in effect, the Policyholder will be financially liable for Benefit Payments in accordance with Article III, and Washington National will be responsible for claim payment administration. (C) Claims Paid After Termination of this Agreement (1) If Schedule A indicates Reserves are held by the Policyholder and a Post Termination Claim Liability Limit DOES apply, the Policyholder will be financially liable for all Run-Out Claims, except that there will be a limit to the Policyholder's financial liability during the Post Termination Period. The maximum amount of Run-Out Claims for which the Policyholder will be financially liable during the Post Termination Period will be determined by the Post Termination Final Accounting as described in Article III, section (D)(1). Washington National will be responsible for claim payment administration during the Post Termination Period. The Policyholder will be financially liable for Run-Out Claims and responsible for claim payment administration for all Run-Out Claims issued after the Post Termination Period. Washington National will not be financially liable for Run-Out Claims or responsible for claim payment administration for Run-Out Claims issued after the Post Termination Period. (2) If Schedule A indicates Reserves are held by the Policyholder and a Post Termination Claim Liability Limit DOES NOT apply, the Policyholder will be financially liable for all Run-Out Claims and responsible for claim payment administration for all Run-Out Claims. Washington National will not be financially liable for any Run-Out Claims or responsible for claim payment administration for any Run-Out Claims. (3) If Schedule A indicates that Reserves are held by Washington National, Washington National will be financially liable for all Run-Out Claims and responsible for claim payment administration for all Run-Out Claims. However, the Policyholder may be liable for payment of Retrospective Premium as calculated in Article III, section (D)(2). The obligations stated in Article II, section(C), will survive the termination of this Agreement and remain in effect while any Run-Out Claims are outstanding and payable. (D) Benefit Payment Determination During the period of this Agreement, Washington National has the right to make final determinations of the Benefit Payments. Following termination of this Agreement, Washington National reserves the right to make final Benefit Payment determinations for all Run-Out Claims. Washington National will determine Benefit Payments in the same manner it would determine benefits under the Group Policy in the absence of this Agreement. In the event Washington National exercises its right to make final Benefit Payment determinations, the Policyholder agrees to accept Washington National's final Benefit Payment determinations. Nothing in this paragraph shall be construed to negate the Policyholder's obligation to pay Run-Out Claims as described in Article II, sections (C)(1) and (2). (E) Claim Submission If the Policyholder receives claims from insureds, the Policyholder is obligated to submit those claims to the Claim Payor within five business days of receipt. Page 6 of 16 MINIMUM PREMIUM AGREEMENT (F) Records The Policyholder agrees to furnish Washington National information relating to this Agreement upon request. All claim files, insured records, and other relevant records are the property of Washington National during the term of this Agreement and following termination. (G) Reporting (1) Washington National is responsible for Form 1099 reporting. (2) Washington National is responsible for providing Form 5500 information to the Policyholder. The Policyholder is responsible for reporting Form 5500 information to applicable government agencies. (3) Washington National is responsible for FICA withholding administration and reporting and payments of withheld amounts to applicable government agencies and the Policyholder. The Policyholder is responsible for making employer matching FICA payments to applicable government agencies. ARTICLE III - ACCOUNTING (A) Monthly or Annual Claim Liability Limit Accounting (1) If Schedule A indicates that the Claim Liability Limit Accounting Period is Monthly,then for each Contract Month Washington National will perform the following Monthly Claim Liability Limit Accounting calculation: The Cumulative Claim Liability Limit for that Contract Month,minus Cumulative Benefit Payments for that Contract Month, plus Cumulative Reimbursements due or paid up to that Contract Month, minus Cumulative Retrospective Premium due or paid up to that Contract Month. If the above Monthly Claim Liability Limit Accounting calculation yields an amount less than zero, Washington National will pay to the Policyholder a Reimbursement equal to the absolute value of this amount. If the above Monthly Claim Liability Limit Accounting calculation yields an amount greater than or equal to zero, the Policyholder will pay to Washington National a Retrospective Premium equal to the lesser of(a) or (b) where: (a) is the amount resulting from the Monthly Claim Liability Limit Accounting calculation above; and If Schedule A indicates that the Deferred Carryover Deficit Recovery does not apply, then: (b) is the absolute value of the Carryover Deficit, plus Cumulative Reimbursements due or paid up to that Contract Month, minus Cumulative Retrospective Premium due or paid up to that Contract Month. Page 7 of 16 MINIMUM PREMIUM AGREEMENT If Schedule A indicates that the Deferred Carryover Deficit Recovery does apply, then: (b) is Cumulative Reimbursements due or paid up to that Contract Month,minus Cumulative Retrospective Premium due or paid up to that Contract Month. (2) If Schedule A indicates that the Claim Liability Limit Accounting Period is Annual, then for the last Contract Month of each Contract Period, Washington National will perform the following Annual Claim Liability Limit Accounting calculation: The Cumulative Claim Liability Limit for the last Contract Month of the Contract Period, minus the Cumulative Benefit Payments for the last Contract Month of the Contract Period. If the above Annual Claim Liability Limit Accounting calculation yields an amount less than zero, Washington National will pay to the Policyholder a Reimbursement equal to the absolute value of this amount. If the above Annual Claim Liability Limit Accounting calculation yields an amount greater than or equal to zero, the Policyholder will pay to Washington National a Retrospective Premium equal to the lesser of: (a) the amount resulting from the Annual Claim Liability Limit Accounting calculation above; or (b) the absolute value of the Carryover Deficit. (3) Medical Benefit Payments issued by Washington National which exceed the Individual Claim Pooling Liability Amount during the Contract Period will not be included in Monthly Benefit Payments used in the Monthly or Annual Claim Liability Limit Accounting Formula. (B) End of the Contract Period Experience Accounting The End of the Contract Period Experience Accounting will be performed by Washington National after the last Contract Month of each Contract Period and will include any Carryover Deficit and deficits or surpluses created by other experience refunding coverages which are listed in Schedule A. It will also include deficits or surpluses resulting from differences between actual and estimated Minimum Premium Premium amounts, unless the Policyholder has selected the Minimum Premium Premium Guarantee as indicated in Schedule A. (1) If the Monthly or Annual Claim Liability Limit Accounting calculation for the last Contract Month of the Contract Period yields an amount greater than zero, and the End of the Contract Period Experience Accounting indicates that no deficit exists,no Reimbursement is due from Washington National and no Retrospective Premium is due from the Policyholder. (2) If the Monthly or Annual Claim Liability Limit Accounting calculation for the last Contract Month of the Contract Period yields an amount greater than zero, and the End of the Contract Period Accounting indicates that a deficit exists, the Policyholder will pay to Washington National a Retrospective Premium equal to the lesser of: Page 8 of 16 MINIMUM PREMIUM AGREEMENT (a) the result of the Monthly or Annual Claim Liability Limit Accounting calculation for the last Contract Month of the Contract Period, minus and Retrospective Premium due or paid as a result of the Monthly or Annual Claim Liability Limit Accounting for the last Contract Month of the Contract Period; or (b) the absolute value of the deficit determined by the End of the Contract Period Experience Accounting. (C) Carryover Deficit Recovery Limit (1) If Schedule A indicates that the Carryover Deficit Recovery Limit does apply, then for each Contract Period, except for the last Contract Period while this Agreement is in effect, the amount of Carryover Deficit that is recoverable from Retrospective Premium will be limited to the lesser of: (a) the absolute value of the Carryover Deficit for that Contract Period; or (b) the result of(i) multiplied by (ii) where: (i) is the Carryover Deficit Recovery Limit Percentage indicated in Schedule A; and (ii) is the result of(A) multiplied by (B) where: (A) is the Cumulative Claim Liability Limit for the last Contract Month of the prior Contract Period, divided by the number of Contract Months in the prior Contract Period; and (B) is 12. (2) If there is a deficit which exists as of the effective date of this Agreement created by experience refunding coverages under the Group Policy, then, for the first Contract Period, the Cumulative Claim Liability Limit referenced in Article III, section (C)(1)(b)(ii)(A) is replaced by earned premium for the experience refunding coverages under the Group Policy. (D) Post Termination Final Accounting and Reserves (1) If Schedule A indicates that Reserves are held by the Policyholder and a Post Termination Claim Liability Limit DOES apply, Washington National will perform the following Post Termination Claim Liability Limit Accounting calculation after the Post Termination Period: The Post Termination Claim Liability Limit, minus Run-Out Claims issued during the Post Termination Period. Since Individual Claim Pooling terminates when this Agreement terminates, Medical Benefit Payments issued during the Post Termination Period which exceed the Individual Claim Pooling Liability Amount will be included in Run-Out Claims in the above Post Termination Claim Liability Limit Accounting formula. Page 9 of 16 MINIMUM PREMIUM AGREEMENT (a) If the above Post Termination Claim Liability Limit Accounting calculation yields an amount less than zero, Washington National will pay to the Policyholder a Reimbursement equal to the absolute value of this amount,minus the Surplus Position for the last Contract Period. (b) If the above Post Termination Claim Liability Limit Accounting calculation yields an amount greater than or equal to zero, and the End of the Contract Period Experience Accounting for the last Contract Period indicates that no deficit exists,no Reimbursement is due from Washington National and no Retrospective Premium is due from the Policyholder. (c) If the above Post Termination Claim Liability Limit Accounting calculation yields an amount greater than or equal to zero, and the End of the Contract Period Experience Accounting for the last Contract Period indicates that a deficit exists, the Policyholder will pay to Washington National a Retrospective Premium equal to the lesser of: (i) the amount resulting from the above Post Termination Claim Liability Limit Accounting calculation; or (ii) the absolute value of the deficit determined by the End of the Contract Period Experience Accounting for the last Contract Period. (2) If Schedule A indicates that Reserves are held by Washington National,Washington National will perform the following calculation after it has been determined by Washington National that all Run-Out Claims have been issued: Reserves established at the End of the Contract Period Experience Accounting for the last Contract Period, minus Run-Out Claims. If the above calculation yields an amount less than zero, and there is a positive Surplus Position for the last Contract Period, the Policyholder will pay to Washington National a Retrospective Premium equal to the lesser of: (a) the amount by which the Run-Out Claims exceed the Reserves established at the End of the Contract Period Experience Accounting for the last Contract Period; or (b) the Surplus Position for the last Contract Period. (E) Individual Claim Pooling If Schedule A indicates that Individual Claim Pooling in included, Washington National will pool per Contract Period, certain individual Medical Benefit Payments over a specified amount, referred to as the Individual Claim Pooling Liability Amount which is indicated in Schedule A. Prescription drug card and mail order drug coverages, if applicable, are not considered "Medical" coverages. The administration of Individual Claim Pooling will be as follows: (1) Washington National will be financially liable for Medical Benefit Payments and will issue those Medical Benefit Payments for any insured employee or dependent that exceed the Individual Claim Page 10 of 16 MINIMUM PREMIUM AGREEMENT Pooling Liability Amount during the Contract Period. (2) Any Medical Benefit Payments issued by Washington National which exceed the Individual Claim Pooling Liability Amount during the Contract Period will not be included in Monthly Benefit Payments used in the Monthly or Annual Claim Liability Limit Accounting Formula. (3) Any Medical Benefit Payments issued by Washington National which exceed the Individual Claim Pooling Liability Amount during the Contract Period will not be drawn from the Policyholder's Bank Account. (4) Individual Claim Pooling terminates on the date this Agreement terminates. (F) Refunds, Recoveries, Voids, and Credits (1) Except for recoveries received in connection with Medical Benefit Payments issued in excess of the Individual Claim Pooling Liability Amount, any refund or recovery of Benefit Payment amounts, or voids or credits received or applied, will reduce Benefit Payments issued during the Contract Month in which the recovery or refund is received, or the void or credit adjustment is made. (2) If Washington National issues Medical Benefit Payments for a claim in excess of the Individual Claim Pooling Liability Amount during the Contract Period, with subsequent recovery by Washington National or the Policyholder of monies paid on this claim either by the Policyholder or Washington National, Washington National has the right of receipt of such monies up to the total amount of such Benefit Payments issued by Washington National. The Policyholder agrees to immediately pay to Washington National any such monies received by the Policyholder and authorizes Washington National to negotiate payment of instruments written in the name of the Policyholder, on behalf of the Policyholder. Recovery of Individual Claim Pooling Liability amounts will not be used to reduce the total amount of Benefit Payments during the Contract Period in which the Benefit Payment was originally issued or in the Contract Period in which the recovery is received. This provision will apply regardless of the cause of the recovery or when it is received. This provision survives the termination of this Agreement and the Group Policy. ARTICLE IV - PREMIUM (A) Minimum Premium Premium (1) The Policyholder will pay to Washington National for each Contract Month that this Agreement is in effect a premium equal to the sum of the result of(a) multiplied by (b), where: (a) is the Minimum Premium Premium rates for all Minimum Premium Coverages shown in Schedule A for the Contract Month; and (b) is the corresponding number of insured employees and dependent units for that Contract Month. (2) Each Minimum Premium Premium will be due on the first day of the month for which it applies. (B) Retrospective Premium Page 11 of 16 MINIMUM PREMIUM AGREEMENT (1) Retrospective Premium for any Contract Month, as calculated in Article III, sections (A), (B), (C), and (D), is the amount due from the Policyholder for that Contract Month to Washington National. (2) The Policyholder will make funds available for Washington National to transfer via electronic fund transfer (EFT) immediately upon written notice. (C) Post Termination Premium (1) If Schedule A indicates Reserves are held by the Policyholder and a Post Termination Claim Liability Limit DOES apply, the Policyholder will pay to Washington National a Post Termination Premium following termination of this Agreement equal to the sum of the result of(a) multiplied by (b), where: (a) is the Minimum Premium Premium for the last Contract Month of the last Contract Period; and (b) is the Post Termination Premium Factor shown in Schedule A. (2) The Post Termination Premium will be due immediately upon written notification by Washington National to the Policyholder of the Post Termination Premium amount due. (3) The Post Termination Claim Liability Limit option can only be elected or cancelled by written agreement of both parties, typically at renewal. If the Post Termination Claim Liability Limit is elected, it can not be unilaterally cancelled by the Policyholder at any time, including at termination of this Agreement. Unless Washington National consents to the cancellation of the Post Termination Claim Liability Limit,the Policyholder must pay the Post Termination Premium. (D) Non-Payment of Premium A grace period of the same length as that provided by the Group Policy will be granted for the payment of each Premium due after the first Premium. If: (1) any Premium is not paid by the Policyholder to Washington National within the grace period, this Agreement will automatically terminate at the end of that grace period. No written notice of such automatic termination is required. If this Agreement terminates for any reason, the Policyholder will be liable for all Premium due and unpaid, including a pro rata Premium for any time this Agreement is in effect during the grace period; or (2) Washington National is notified that there were not sufficient funds (NSF) in the Policyholder's Bank Account(s)to cover a check or electronic fund transfer(EFT) in payment of Premium due, then this Agreement will automatically terminate on the date on which the grace period for such Premium ends. No written notice of such automatic termination is required. This will be the case even if the check presented for payment by Washington National is found to be NSF after the end of the grace period. Washington National reserves the right to recover from the Policyholder charges related to non-sufficient funds (NSF) in the Policyholder's Bank Account(s) plus any applicable interest. Page 12 of 16 MINIMUM PREMIUM AGREEMENT ARTICLE V - BANKING (A) The Policyholder will establish a checking account upon which Washington National is authorized to draw checks for Benefit Payments issued by Washington National,and for which Washington National is allowed to act on the Policyholder's behalf with regard to the administration of this account for purposes of establishing and changing signature(s) which appear on checks issued for Benefit Payments, for printing of check stock, and for establishing electronic fund transfer (EFT) arrangements. (3) Washington National may initiate electronic fund transfers (EFT) from one of the Policyholder's Bank Accounts for Benefit Payments, and from another of the Policyholder's Bank Account(s)for Retrospective Premium and Post Termination Premium due to Washington National. (C) The Policyholder agrees to maintain funds in its Bank Account(s)both before and after termination of this Agreement which are adequate to cover checks for Benefit Payments issued by Washington National, Retrospective Premium, and Post Termination Premium. (D) The Policyholder agrees to establish and maintain a line of credit as required in an amount specified by Washington National upon which Washington National is authorized to draw in the event that the Policyholder fails to maintain funds in its Bank Account(s) as described in Article V, section (C). (E) Washington National will imprint the routing and account number of the Policyholder's designated Bank Account(s)at the bottom of its check stock. This section shall not apply when Washington National is not the Claim Payor. (F) To establish these banking arrangements referenced above: (1) the Policyholder is responsible for all of the following: (a) a Bank Resolution; (b) a W-9 form; (c) electronic fund transfer (EFT) authorization forms; (d) any special forms or instructions for making fund transfers; (e) all banking fees, if the Washington National designated bank is not used; and (f) establishing and maintaining a line of credit as required. (2) Washington National is responsible for all of the following: (a) establishing a bank account with the Washington National designated bank, if used; (b) administering escheats based on outstanding Benefit Payment check information received from the Policyholder; (G) Washington National reserves the right to recover from the Policyholder charges related to non-sufficient funds (NSF) in the Policyholder's Bank Account(s)plus any applicable interest. Page 13 of 16 • MINIMUM PREMIUM AGREEMENT ARTICLE VI - AMENDMENTS (A) During the first Contract Period, Washington National has the right to change the Minimum Premium Premium rates and/or the Factors of this Agreement at any time: (1) if the Minimum Premium Coverages are changed; or (2) if the provisions of the Group Policy have to be changed because of a change in law; or (3) if there is a change in the number of insured employees or dependent units covered for any of the Minimum Premium Coverages that equals or exceeds: (a) 10% in any Contract Month when compared to the prior Contract Month; or (b) 20% at any time during a Contract Period. In this case, the change in the number of insured employees or dependent units covered will be determined by comparing the number of insured employees or dependent units covered for any Minimum Premium Coverages at the beginning of the first Contract Month of the Contract Period with the number of insured employees or dependent units covered for any Minimum Premium Coverages at the beginning of any subsequent Contract Month in that Contract Period. (4) upon addition or deletion of coverage for subsidiary or affiliated companies or corporate divisions. The effective date of the change in Premium Rates and Factors will be the first day of the Contract Month following the effective date of the event in Article VI, sections (A)(1), (2), (3), and (4)that requires such change. (B) For all Contract Periods following the first Contract Period, Washington National has the right to change the Individual Claim Pooling Liability Amount, the Premium Rates, and the Factors of this Agreement at any time. The effective date of any such change will be the first day of a Contract Month. ARTICLE VII - TERMINATION (A) This Agreement will terminate: (1) upon 31 days advance written notice of termination by either the Policyholder or Washington National to the other party; (2) immediately upon termination of the Group Policy issued by Washington National to the Policyholder; (3) immediately upon failure of the Policyholder to comply with any term or condition of this Agreement, such as, but not limited to, failure to: (a) pay any Premium as specified in this Agreement; or (b) adequately fund the Bank Accounts established to cover Benefit Payments and Premium; or Page 14 of 16 MINIMUM PREMIUM AGREEMENT (4) if any state or other jurisdiction enacts or amends a law or regulation which, in the opinion of Washington National prohibits the continuance of this Agreement, this Agreement will terminate on the effective date of the law, regulation or amendment, as determined by Washington National. (B) The Group Policy will terminate automatically upon termination of this Agreement unless Washington National and the Policyholder have reached prior written agreement that termination of this Agreement will not automatically result in termination of the Group Policy. ARTICLE VIII - LEGAL PROVISIONS (A) Entire Agreement This Agreement contains the entire agreement between the parties and sets forth in full the services to be rendered by Washington National. It may only be modified or amended by written agreement of the parties hereto and any representation or statement not expressly set forth hereunder will not be binding on any party hereto in any respect. (B) Hold Harmless The Policyholder agrees to indemnify and hold Washington National harmless from any liability or cost from any demand, claim or action brought against, or settlement, award or judgement, including attorney fees, levied against Washington National in connection with the Policyholder's failure to meet its obligations under the terms of this Agreement. (C) Invalid Provisions If a provision of this Agreement is found to be illegal for any reason by statute, regulation, or court, the finding will not affect the remaining provisions of this Agreement. This Agreement will be construed and enforced as if the invalid or illegal provision had not been included in this Agreement either on the effective date or the date the provision is held to be invalid or illegal. It is provided, however, that the basic purpose of this Agreement must be achieved through the remaining valid and legal provisions. (D) No Waiver Failure to enforce any term or provision of this Agreement shall not constitute a waiver of any term or provision. (E) Litigation If a lawsuit is brought with respect to a claim subject to this Agreement and processed by Washington National pursuant to Washington National's right to make final Benefit Payment determinations, Washington National will defend that suit. Washington National has the right to settle any lawsuit when, in Washington National's judgment, it appears expedient to do so. If any settlement or judgment is paid from Washington National funds and the Policyholder is obligated to pay those Benefits Payments in accordance with the terms of this Agreement, the Policyholder will reimburse Washington National for the amount of Benefit Payments included in the settlement or judgment. Page 15 of 16 MINIMUM PREMIUM AGREEMENT (F) Clerical Error In the event of a clerical error, the parties agree to revert to the position in which they would have been had the clerical error not occurred. This Agreement is effective March 1, 1995 . WASHINGTON NATIONAL POLICYHOLDER INSURANCE CO I'ANY By B CI C Y�_� Y � __ � r_ gn y(re Signature Title Title t(.3 r Date bate Page 16 of 16 SCHEDULE A POLICYHOLDER: City of Elgin GROUP POLICY NUMBER(S): EB 640083 CONTRACT PERIOD: The Contract Period is from November 1, 1994, to November 1, 1995. INDIVIDUAL CLAIM POOLING: X Is not included. Is included. Effective 1, 199_the Individual Claim Pooling Liability Amount per insured employee or dependent is $ . Individual Claim Pooling is accumulated per Contract Period and applies to Medical coverage. RESERVES ARE HELD BY: X The Policyholder. Washington National Insurance Company (Washington National). CLAIM LIABILITY LIMIT ACCOUNTING PERIOD: X Monthly Annual CARRYOVER DEFICIT RECOVERY LIMIT: X Does not apply. Does apply with a Carryover Deficit Recovery Limit Percentage of 15%. DEFERRED CARRYOVER DEFICIT RECOVERY: X Does not apply. Does apply. POST TERMINATION CLAIM LIABILITY LIMIT: X Does not apply. Does apply for a period of _days with a Post Termination Premium Factor of MINIMUM PREMIUM COVERAGE(S) FOR WHICH THE POLICYHOLDER IS ASSUMING LIABILITY UNDER THIS MINIMUM PREMIUM AGREEMENT: Medical OTHER EXPERIENCE REFUNDING COVERAGE(S): None Page 1 of 2 SCHEDULE A MINIMUM PREMIUM PREMIUM GUARANTEE: Is not effective for this Contract Period. X Is effective for this Contract Period. If the Minimum Premium Premium Guarantee is effective for this Contract Period, Washington National will guarantee that retention, pooling charges, and any Reserve changes will equal the Minimum Premium Premium generated by the Minimum Premium rates and the enrollment during the Contract Period. This guarantee does not apply where new legislation affecting expenses becomes effective during the Contract Period, or where existing legislation is interpreted by a governmental or administrative body in a manner which affects expenses. COVERED MINIMUM MONTHLY POST TERMINATION EE/DEP UNITS PREMIUM CLAIM LIABILITY CLAIM LIABILITY BY COVERAGE PREMIUM RATES LIMIT FACTORS LIMIT FACTORS Medical Class B $30.06 $461.77 n/a Class C $35.37 $543.10 n/a Class E $28.87 $443.31 n/a This Schedule A is effective from March 1, 1995, to March 1, 1996, or the termination of this Minimum Premium Agreement, whichever is earlier, and replaces any Schedule A for prior Contract Periods. WASHINGTON NATIONAL POLICYHOLDER INSURANCE COMPANY By By / By A Signature S _nature i Title Title Y73/9r _ 3_erg- Date I ate Page 2 of 2 MINIMUM PREMIUM AGREEMENT AGGREGATE POOLING AMENDMENT Washington National Insurance Company and City of Elgin (Contractholder) agree that, in consideration of payment by the Contractholder of an additional premium charge, the Contractholder's liability shall be limited as described below under the Minimum Premium Agreement between Washington National and the Contractholder. If at the end of the contract year, the Contractholder has paid all amounts due under the Agreement, has paid all premiums due including any retrospective premiums due, and the benefit payments made by the Contractholder through the Bank exceed the Claim Liability Limit, then the amount of this excess after being reduced by any surplus from experience-rated coverages shall not be carried forward to subsequent contract years as a deficit. This Amendment shall not apply to any deficits created by expenses or experience under experience-rated coverages. This Amendment shall supersede any terms of the Minimum Premium Agreement between Washington National and the Contractholder which are inconsistent with the Minimum Premium Agreement. This Amendment is effective November 1, 1994. Washington National Policyholder Insurance Company By i.�i �'h.� By - ig; . re ''gr►ature Title Title Date Date 7 SCHEDULE A • POLICYHOLDER: CITY OF ELGIN GROUP POLICY NUMBER(S): EB 640083 CONTRACT PERIOD: The Contract Period is from November 1 , 1994 to November 1 , 1995 • INDIVIDUAL CLAIM POOLING: El Is not included. ❑ Is included. Effective the Individual Claim Pooling Liability Amount per insured employee or dependent is . Individual Claim Pooling is accumulated per Contract Period and applies to Medical coverage. RESERVES ARE HELD BY: © • The Policyholder. Ei Washington National Insurance Company (Washington National). CLAIM LIABILITY LIMIT ACCOUNTING PERIOD: © Monthly ❑ Annual CARRYOVER DEFICIT RECOVERY LIMIT: © Does not apply. ❑ Does apply with a Carryover Deficit Recovery Limit Percentage of 15%. DEFERRED CARRYOVER DEFICIT RECOVERY: © Does not apply. ❑ Does apply. POST TERMINATION CLAIM LIABILITY LIMIT: t Dl Does not apply. ❑ Does apply for a period of days with a Post Termination Premium Factor • MINIMUM PREMIUM COVERAGES(S) FOR WHICH THE POLICYHOLDER IS ASSUMING LIABILITY UNDER THIS MINIMUM PREMIUM AGREEMENT: MEDICAL. OTHER EXPERIENCE REFUNDING COVERAGES: NONE Page 1 of 2 • SCHEDULE A �Y MINIMUM PREMIUM PREMIUM GUARANTEE: ❑ Is not effective for this Contract Period. © Is effective for this Contract Period. If the Minimum Premium Premium Guarantee is effective for this Contract Period, Washington National will guarantee that retention, pooling charges, and any Reserve changes will equal the Minimum Premium Premium generated by the Minimum Premium rates and the enrollment during the Contract Period. This guarantee does not apply where new legislation affecting expenses becomes effective during the Contract Period, or where existing legislation is interpreted by a governmental or administrative body in a manner which affects expenses. COVERED MINIMUM MONTHLY POST TERMINATION EE/DEP UNITS PREMIUM CLAIM LIABILITY CLAIM LIABILITY BY COVERAGE PREMIUM RATES LIMIT FACTORS LIMIT FACTORS Class E $30. 13 $458.83 N/A • This Schedule A is effective from October 1 , 1995 to March 1 , 1996 , or the termination of this Minimum Premium Agreement, whichever is earlier, and replaces any Schedule A for prior Contract Periods. WASHINGTON NATIONAL POLICYHOLDER INSURANCE COMPANY By GI By et - �—� 1k" ' Signa \lee ld cn-i- gilzWF-i,,JG Title Title 11 — io-g(' . ) Date \ Date Page 2 of 2