Resolution No. 72581
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RESOLUTION NO. 7258
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF VERNON APPROVING AND AUTHORIZING THE
RENEWAL AND EXECUTION OF THE MASTER STOP LOSS
POLICY (GUG-2RO3) BY AND BETWEEN THE CITY OF
VERNON AND UNITED OF OMAHA LIFE INSURANCE
COMPANY
WHEREAS, the Master Stop Loss Policy with United of
Omaha Life Insurance Company effective September 1, 1994, which
provided insurance coverage in excess of specified limits for the
City's self -insured health plan for hospital, surgical and medical
expenses, was approved by the City Council of the City of Vernon
by Resolution No. 6613 on April 18, 1995; and
WHEREAS, the Risk Manager has been able to negotiate a
reduction in rates, effective January 1, 1999; and
WHEREAS, the City Council of the City of Vernon desires
to renew the Master Stop Loss Policy (GUG-2R03) for the period of
January 1, 1999 through December 31, 1999, with the revised rates
taking effect January 1, 1999.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon
hereby finds and determines that the recitals contained
hereinabove are true and correct.
SECTION 2: The City Council of the City of Vernon
hereby approves the Master Stop Loss Policy (GUG-2R03), effective
January 1, 1999, with revised rates effective January 1, 1999, the
terms of which are stated in a memorandum dated December 30, 1998
from Bruce V. Malkenhorst, Finance Director, to the Finance
Committee of the City of Vernon, a copy of which has been made
� w
1 available to the City Council concurrently with this resolution,
2 and the City Council hereby orders said Amendment to be received
3 and filed by the City Clerk; provided, that the Amendment shall
4 contain terms consistent with those stated in the aforementioned
5 memorandum.
6 SECTION 3: The City Council of the City of Vernon
7 hereby authorizes the Mayor and the City Clerk to execute said
8 Policy for, and on behalf of, the City of Vernon; provided, that
9 the Amendment shall contain terms consistent with those stated in
10 the memorandum mentioned in Section 2 of this Resolution.
11 SECTION 4: The City Clerk of the City of Vernon shall
12 certify to the passage of this resolution, and thereupon and
13 thereafter the same shall be in full force and effect.
14 APPROVED AND ADOPTED this 5th day of January, 1999.
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EONIS C. MALB G, Mayor
17
ATTES
18 _ /G�� l%�G
19 BR UCE V. MALKGE�NHORST, City Clerk
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STATE OF CALIFORNIA )
)ss
COUNTY OF LOS ANGELES )
I, BRUCE V. MALKENHORST, City Clerk of the City of
Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 7258 was duly adopted by the City Council of the
City of Vernon at a regular meeting of the City Council duly held
on Tuesday, January 5, 1999, and thereafter was duly signed by the
Mayor of the City of Vernon.
(SEAL)
BRUCE V. MALKENHORST, City Clerk
-3-
SUPPORTING
DOCUMENTS
MEMORANDUM
TO: Gloria Orosco, Chief Deputy City Clerk
FROM: Joan Francone, Risk Manager 911j,�
DATE: April 7, 1999
SUBJECT: RENEWAL OF MASTER STOP LOSS POLICY GUG-2R03
Council approved renewal of the above referenced January 5, 1999.
Copy for your records.
JF/ca
Enclosure
United of Omaha Lift! Insurance Companq
Home Office: Mutual of Omaha Plaza., Omaha, Nebraska 68175
A Stock Company
(herein called United)
has issued this Policy to City of Vernon
(herein called Policyholder)
This policy is issued in consideration of the terms, conditions and limitations of this policy.
This policy is effective January 1, 1999, at 12:01 a.m., Standard Time, at the main office of the
Policyholder.
United agrees to reimburse the Policyholder for excess Plan Payments made for the benefit of employees
and their eligible dependents, in accord with the terms, conditions and limitations of this policy.
This policy is issued in and is subject to California law.
UNITED OF OMAHA LIFE INSURANCE COMPANY
GROUP POLICY NO. GUG-2R03
(herein Called Policy)
Unining(OWHil
A Mutual of Omaha Company
President
PC ?XL4.0�
Corporate Secretary
Form 5654GM-U-EZ
No. 5
93
STOP -LOSS INSURANCE
1. DEFINITIONS
Accumulation Period means the period beginning at 12:01 a.m. on January 1, 1999 and ending at
midnight on the earlier of a
(a) December 31, 1999; or
(b) any date this policy terminates in accord with General Provision 4.
Plan means the Health Coverage the Policyholder has agreed to provide for eligible employees and
their eligible dependents under a self-insurance health plan:
(a) which is in effect during the Accumulation Period;
(b) which is approved in writing by United; and
(c) which will include only those amendments approved in writing by United.
Plan Payment means a health coverage expense which is paid under the terms of the Plan during the
Accumulation Period.
A Plan Payment does not include:
(a) Plan co -payment and/or deductible amounts;
(b) Payments which the Policyholder may recover under any Plan non duplication or coordination of
benefits; or
(c) Extra contractual costs or damages relating to the Plan.
An expense is considered incurred on the date the covered health services or supplies are received. A
Plan Payment is paid on the date the Policyholder's check or draft is issued.
Individual Stop -Loss Limit is equal to $100,000.
Aggregate Stop -Loss Limit equals the greater of:
(a) the average number of those persons covered monthly under the Plan during the Accumulation
Period multiplied by $7,791.67; or
(b) $1,566,126.
2. REIMBURSEMENT
If the sum of all Plan Payments for one person exceeds any Individual Stop -Loss Limit, United will
reimburse the Policyholder 100% of this excess.
If the sum of all Plan Payments for all persons during the Accumulation Period, excluding those Plan
Payments reimbursable under any Individual Stop -Loss Limit, exceeds any Aggregate Stop -Loss
Limit, United will reimburse 100% of this excess to the Policyholder.
3. MAXIMUM REIMBURSEMENT
United's liability under any Individual Stop -Loss Limit provision of this policy will not exceed
$9000,000.
United's liability under any Aggregate Stop -Loss Limit provision of this policy will not exceed
$Unlimited.
GENERAL PROVISIONS
1. PAYMENT OF PREMIUMS
The first premium Due Date is the effective date of this policy for the Period of Coverage beginning
on that date and ending on the last day of the same month. Premiums for each subsequent Period of
Coverage are due by the corresponding Due Date:
Period of CoverageDue Date
October 1 through October 31
October i
November 1 through November 30
November 1
December 1 through December 31
December 1
January 1 through January 31
January 1
February 1 through February 28 or 29
February 1
March 1 through March 31
March 1
April 1 through April 30
April l
May 1 through May 31
May l
June 1 through June 30
June 1
July 1 through July 31
July 1
August 1 through August 31
August 1
The premium payable for each Period of Coverage is the sum of the individual premiums for each
person insured, including any dependents' premiums. Individual premiums are based on an insured
person's classification when a Period of Coverage begins.
Payment should be made to United at the Home Office, unless an officer of United authorizes
payment to be made somewhere else.
If this policy terminates for any reason:
(a) the Policyholder is liable for all premiums to the date of termination, including premiums for any
grace period or part of any grace period; and
(b) all unpaid premiums are due no later than the date of termination.
2. GRACE PERIOD
After the first premium has been paid, the Policyholder has a grace period of 31 days from each Due
Date to pay the premium. This policy will remain in force during the grace period; except, if the
Policyholder has given advance written notice to United that this policy will terminate prior to the
end of the grace period, this policy will remain in force only until the termination date.
3. CHANGES IN STOP -LOSS LIMITS OR PREMIUM RATES
United has the right to adjust the Aggregate Stop -Loss Limit, the Individual Stop -Loss Limit and/or
the premium rates as of:
(a) the date there is an increase or decrease of 10% o or more in the number of those persons insured
since premiums were last changed; or
(b) the date coverage or eligibility standards under the Plan are revised.
United also has the right to adjust the premium rates:
(c) when the premium taxes payable by United increase (but only to the extent of the increase);
(d) when United assumes any policy administration previously performed by the Policyholder; or
(e) when any policy change is required to comply with state or federal law.
United must give at least 31 days advance written notice of any premium rate increase made in
accord with (c), (d) or (e).
4. POLICY TERMINATION
This policy will end at midnight on the earliest of
(a) the end of the grace period, if all due premium is not paid by then;
(b) the day chosen by the Policyholder, if advance written notice is given to United;
(c) the day a change in the Aggregate Stop -Loss Limit or Individual Stop -Loss Limit or a premium
increase is effective but has not been accepted in writing by the Policyholder;
(d) the end of the Accumulation Period;
(e) the day any Administrative Services Agreement between the Policyholder and United terminates;
(f the day the Policyholder discontinues the Plan or amends it without United's written consent; or
(g) the day the Policyholder ceases to make required contributions to the Plan bank account.
5. REINSTATEMENT AFTER THIS POLICY ENDS
If this policy terminates for any reason, it can be reinstated only:
(a) by an officer of United;
(b) in writing; and
(c) subject to any written conditions of reinstatement imposed by United.
6. INCONTESTABLE CLAUSE
United will not contest the validity, of this policy after it has been in force one year, except for
nonpayment of premium.
7. INFORMATION TO BE FURNISHED BY THE POLICYHOLDERIPRIVACY
The Policyholder is responsible for keeping confidential Plan records. These records are to be kept in
a way which will assure the privacy of medical and other personal information. The records must
show:
(a) persons covered by classification, and any persons eligible but not covered;
(b) the amount of money contributed by the Policyholder toward premiums; and
(c) any other Plan information which United may reasonably request.
These records and any other Plan information which the Policyholder has or reviews will be used by
the Policyholder only for the purpose of Plan administration.
The Policyholder will furnish, as United requires, any Plan information on United's forms which are
needed for policy administration.
The Policyholder's books and records which may have a bearing on the coverage under this policy
shall be open to United for inspection. The books and records may be inspected at any reasonable
time while this policy is in force and for one year afterwards.
8. POLICY CHANGES
No change in this policy is valid unless approved in writing by an officer of United. No agent has
authority to change this policy or to waive any of its provisions.
The Policyholder accepts the provisions of this policy by its signature.
United of Omaha Life Insurance Company
AMENDMENT RIDER
This rider is made a part of Group Policy GUG-2R03.
This rider is effective January 1, 1999.
If the provisions of this rider and those of the policy do not agree, the provisions of this rider will apply.
1. The Plan Payment DEFINITION is changed to include the following paragraph:
Plan Payment means a health coverage Expense which is incurred on behalf of
(1) an eligible employee, who, following the first day in the Accumulation Period on which such
employee is Actively at Work; or
(2) an eligible dependent (other than a child born while the Employee is covered under the Plan),
who, following the first day in the Accumulation Period on which such dependent:
a. is not hospital confined;
b. is not confined in any institution or facility other than a hospital or at home or elsewhere due
to an injury or sickness; or
c. is not disabled, either physically or mentally, to the extent of being unable to perform all of
the usual and customary duties and activities (the "normal activities") of a person of the same
age and sex who is in good health.
Coverage will not take effect in the case of paragraphs (2)(a.) or (b.) above, until such confinement
ends and is no longer medically necessary, as determined by the Company medical staff and/or an
independent medical review, and in the case of paragraph (2)(c.) above, until the full resumption of
all normal activities.
2. The following Definitions are added to the policy:
Company means the insurer shown on the face of this policy.
Actively at Work means working for the Policyholder for pay at least 40 hours a week at the
employee's regular job and customary place of employment.
EXCEPTION: In the event of subsequent reissues of this policy, the active at work and confinement
requirements will apply only to new Plan participants and their eligible dependents. It does not apply
to employees and their dependents eligible during previous accumulation periods.
Expense means the expense incurred for a covered service or supply. A physician has to order or
prescribe the service or supply. Expense is considered incurred on the date the service or supply is
received. Expense does not include any charge:
(a) for a service or supply which is not Medically Necessary; or
(b) which is in excess of the Usual and Customary Charge for a service or supply
9242GR-EZ REIMB CA 93
Medically Necessary
A Medically Necessary service or supply means one which is ordered by a physician and which we
or a party or entity selected by us determines is:
(a) provided for the diagnosis or direct treatment of an injury or sickness;
(b) appropriate and consistent with the symptoms and findings or diagnosis and treatment of the
insured person's injury or sickness;
(c) provided in accord with generally accepted medical practice on a national basis; and
(d) the appropriate supply or level of service which can be provided on a cost efficient basis
(including, but not limited to inpatient vs. outpatient care, electric vs. manual wheelchair, surgical
vs. medical or other types of care.
The fact that the insured person's physician prescribes services or supplies does not automatically
mean such services or supplies are Medically Necessary and covered by the policy.
Usual and Customary Charge means a charge for a service or supply which is no higher than a
90th percentile of the Company's prevailing health care charges data. This data reflects a current
statistical sampling of charges for services and supplies in the same or a comparable area.
In the event of multiple surgery or multiple surgeons in attendance during one operation, or for
services or supplies for which data is unavailable, usual and customary will be determined by the
charges generally incurred for cases of comparable nature and severity in the particular geographical
area concerned.
1. The following provisions are added to the policy:
Reimbursement
The Policyholder agrees to actively pursue any reimbursement rights it may have pursuant to its
self -insured plan. The Policyholder agrees to reimburse the Company for any amounts recovered on
the basis that the Company shall be entitled to recover first, in full, any sums paid by them before the
Policyholder shares in any amounts so recovered.
Should the Policyholder fail to actively pursue its reimbursement rights under it's self -insured plan*
and the Company is liable for claims under this policy, any expenses the Company incurs pursuing
the right of reimbursement shall be deducted from the amount recovered. Furthermore, the amount
recovered shall then be used to offset the claim liability of the Company and only then will any
remaining amount be paid to the Policyholder.
Any recovery which has been made under this policy will be applied to the Accumulation Period in
which the expense was incurred.
Pre-existing Conditions
These Pre-existing Conditions will apply if an employee or dependent:
(a) becomes covered under the plan after its effective date;
(b) becomes covered under the plan on its effective date and was not covered under qualifying prior
coverage on the day before this plan became effective; or
(c) becomes covered under the plan on its effective date and was covered under qualifying prior
coverage for a period of less than six months.
Pre-existing Conditions Provision
If an employee or dependent received treatment or service for an injury or sickness in the 90 day
period before that person was covered under the plan:
(a) the company will not pay benefits for that injury, sickness or any related condition until the
earlier of:
(1) the day after a 90 day period has passed from the time that person was covered and during
which no treatment or service was received for that injury, sickness or related condition; or
(2) the day after a six consecutive month period has passed from the time that person was
covered; and
(b) we will pay only for loss or expense incurred after such 90 day or six month period. Payment will
be in accord with the provisions of the plan.
Effect Of A Pre-existing Condition
If an employee or dependent becomes covered under the plan on its effective date and was covered
under qualifying prior coverage for a period less than six months :
1. Benefits will be paid in accordance with the provisions of the plan if the employee or dependent
person satisfies the preexisting conditions provisions under:
(a) this plan; or
(b) qualifying prior coverage, giving consideration towards continuous time covered or the
period during which no treatment or service was received under both plans.
2. If the employee or dependent cannot satisfy the preexisting conditions provision of this plan nor
that of the qualifying prior coverage, no benefits will be payable under this plan.
3. If there was no preexisting conditions provision under the qualifying prior coverage, then there
will be no preexisting conditions provision applied under this group plan.
All related conditions shall be considered to be one injury or sickness.
Definitions
Pre-existing Condition means a condition manifesting itself in a manner that would cause a person
to seek medical advice, diagnosis, care or treatment, or for which medical advice, diagnosis, care or
treatment was recommended or received (including the use of prescription medications) during the
six consecutive months immediately before the effective date of coverage.
Qualifying prior coverage means:
(a) any individual or group policy, contract or program that is written or administered by a:
(1) disability insurer;
(2) nonprofit hospital service plan;
(3) health care service plan;
(4) fraternal benefits society;
(5) self -insured employer plan; or
(6) any other entity in California or elsewhere;
which arranges or provides hospital, medical and surgical coverage not designed to supplement
other private or governmental plans.
(b) the Federal Medicare program pursuant to Title XVIII of the Social Security Act;
(c) the Medicaid program pursuant to Title XIX of the Social Security. Act; or
(d) any other publicly sponsored program in California or elsewhere which provides hospital,
medical and surgical care;
in effect within 30 days prior to the effective date of coverage under the plan. However, the 30 days
will be increased to 90 days if:
(a) the person's employment ended;
(b) the availability of health coverage offered through or sponsored by an employer has terminated;
or
(c) an employer's contribution toward health coverage has terminated;
provided application is made under the plan within the applicable enrollment period.
Qualifying prior coverage includes continuation or conversion coverage, but does not include:
(a) accident only;
(b) credit;
(c) disability income;
(d) Medicare Supplement;
(e) long term care;
(f) dental;
(g) vision;
(h) coverage issued as a supplement to liability insurance;
(i) insurance arising out of a worker's compensation or similar law;
(j) automobile medical payment insurance; or
(k) insurance under which benefits are payable with or without regard to fault that is statutorily
required to be contained in any liability insurance policy or equivalent self-insurance.
An exception to this Pre-existing Conditions provision applies to the following congenital
craniofacial anomalies when a group plan has been provided by an employer immediately prior to an
employees change in employment and the effective date of this plan, and for which payment had
commenced by the qualifying prior coverage:
(1) cleft lip and palate (as defined in ICD-9-CM Diagnosis Code 749, International Classification
of Disease, 9th Revision, Clinical Modification, Volume 1, Section Edition, September,
1980);
(2) acrocephalosyndactyly (as defined in ICD-9-CM Diagnosis Code 755.55, cranio only); and
(3) other congenital musculoskeietal anomalies (as defined in ICD-9-CM Diagnosis Code 756.0).
UNITED OF OMAHA LIFE INSURANCE COMPANY
President
PREMIUM RIDER
This rider is made a part of Group Policy GUG-2R03.
This rider is effective January 1, 1999.
The premiums for the policy will be as follows:
Individual Stop -Loss Insurance Premium:
Eachperson...................................................................................................................... $65.10 per month.
Aggregate Stop -Loss Insurance Premium:
Eachperson........................................................................................................................ $1.67 per month.
Dated: February 10, 1999
UNITED OF OMAHA LIFE INSURANCE COMPANY
President
Form 105GR-EZ
HEALTH CONVERSION
GUG-2R03
Stop -Loss Insurance
Definition
Conversion Coverage means individual or family hospital, surgical and medical insurance issued
without evidence of good health.
Available to Employees
Conversion coverage is available to an employee whose Plan coverage ends because his or her eligibility
ends; except conversion coverage is not available when:
(a) the Plan ends, the employer withdraws from the Plan or the policy ends;
(b) the employee has similar individual or group coverage;
(c) the employee is eligible for or has Medicare coverage; or
(d) the employee has been covered under the Plan less than three months immediately before Plan
coverage ends.
Available to Dependents
Conversion coverage is available to a dependent whose Plan coverage ends because:
(a) the employee's Plan coverage ends;
(b) of death, divorce or annulment; or
(c) a child reaches the limiting age in the Plan;
except conversion coverage is not available when:
(a) the Plan ends, the employer withdraws from the Plan or the policy ends;
(b) a dependent has similar individual or group coverage;
(c) a dependent is eligible for or has Medicare coverage; or
(d) the employee has been insured under the Plan less than three months immediately before the
dependent's Plan coverage ends.
Option to Obtain Conversion Coverage
If a completed application and the first premium payment is sent to us within 31 days from when Plan
coverage ends,* conversion coverage will be issued in accord with:
(a) our rules; and
(b) the conversion law in effect when application is made.
6074GI-U-EZ
NOTE: *Application must be made when Plan coverage ends; not when any extended benefits under
the Plan end.
Application may be made:
(a) by the employee:
(1) for the employee;
(2) for an employee and any dependent whose Plan coverage ends because the employee's health
insurance ends; or
(3) for any dependent who does not have the legal capacity to apply; or
(b) by any dependent to whom conversion coverage is available.
Conditions
Conversion coverage begins immediately after Plan coverage ends. Expense for which benefits are
payable under the Plan will not be paid under the conversion coverage. Coverage for conditions which
are excluded under the Plan may be excluded under the conversion coverage.
Conversion coverage will be issued only if.
(a) the Policyholder pays United the amount shown in the policy for each conversion application;
and
(b) the Policyholder verifies:
(1) that the employee was covered under the Plan for at least three months immediately before
Plan coverage ended;
(2) that an applicant was covered under the Plan on the date coverage ended; and
(3) that the application and first premium were submitted within 31 days after Plan coverage
ended.
NOT IN LIEU OF WORKER'S COMPENSATION RIDER
This rider is made a part of Group Policy GUG-2RO3.
This rider is effective January 1, 1999.
If the provisions of this rider and those of the policy do not agree, the provisions of this rider will apply.
Not in Lieu of Worker's Compensation
The policy is not in lieu of and does not affect any requirement for coverage by worker's compensation
insurance.
UNITED OF OMAHA LIFE INSURANCE COMPANY
President
7295GR-EZ
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro -Tern
Wm. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL McCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator / City Clerk
FAX (323) 581-7924
Finance Committee
City of Vernon
Honorable Members:
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
December 30, 1998
DAVID B. BREARLEY
City Attorney
FAX: (626) 330-5818
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 588-2761
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 583-1983
DAVE TELFORD
Fire Chief
FAX: (323) 581-1385
BRUCE W. OLSON
Police Chief
FAX: (323) 583-5236
The Risk Manager is requesting to renew the Mutual of Omaha
Medical/Dental/Vision/Life Insurance Program with the following rate
increases.
Life Insurance
AD&D Insurance
Dependent Life Insurance
Medial/Dental/Vision Fees
PPO Access Fee
Utilization Management Fee
Specific Stop Loss Fee
Aggregate Stop Loss
Current
$.39/$1000
$.05/$1000
$.38/dependent unit
6.2% of claims
$1.00/ee/mo
$1.68/ee/mo
$62.00/ee/mo
$1.59/ee/mo
Adlusted Offer
6.5% of claims
$2.00/ee/mo
$2.00/ee/mo
$65.10/ee/mo
$1.67/ee/mo
It is hereby recommended that renewal of the Mutual of Omaha Insurance
Program, with the above referenced rate increases, be approved
effective January 1, 1999 thru December 31, 1999.
Very truly yours,
Bruce V. Malkenhorst
Director of Finance
BVM/gst
enclosures