YOUR BENEFITS. A Plan Designed to Provide Security for Employees of. MERS, Inc. Economy Boat Store

YOUR BENEFITS A Plan Designed to Provide Security for Employees of MERS, Inc. Economy Boat Store Medical Expense Coverage Prescription Drugs Expense Coverage

Your benefit plan has been designed to provide financial help for you when a covered loss occurs. The plan is established through a Plan Document for MERS, Inc. ( MERS ) The plan has been established on a noninsured basis; all liability for payment of benefits is assumed by MERS. While Principal Life Insurance Company administers payment of claims, Principal Life Insurance Company has no liability for the funding of the benefit plan. While one of the functions of Principal Life Insurance Company is to process claims according to the plan provisions, all claims under the plan are paid by MERS and MERS owns the claim files. Therefore, the final decision on any disputed claim may involve review of these files by MERS. MERS has complete discretion to construe or interpret all provisions, to determine eligibility for benefits, and to determine the type and extent of benefits, if any, to be provided. MERS decisions in such matters shall be controlling, binding, and final. In any action to review any such decision by MERS, MERS shall be deemed to have exercised its discretion properly unless it is duly proved that MERS has acted arbitrarily and capriciously. As a covered Member of the plan, your rights and benefits are determined by the provisions of the Plan Document. This booklet briefly describes those rights and benefits. It outlines what you must do to be covered. It explains how to file claims. FUTURE OF PLAN. MERS reserves the right to change the plan or to terminate the plan at any time all in its sole discretion. PLEASE READ YOUR BOOKLET CAREFULLY. We suggest that you start with a review of the terms listed in the DEFINITIONS Section (at the back of the booklet). The meanings of these terms will help you understand the provisions of your plan. If MERS provides wellness screenings and related services at no cost to you and/or your Dependents (wellness programs), those wellness programs will be deemed provided pursuant to this plan. Please contact MERS for more information about any applicable wellness programs. The plan shall be construed and administered to comply in all respects with applicable federal law. The Plan Administrator may from time to time enter into agreements, directly or indirectly, with health care providers or other third parties that would require the payment of benefits or the processing of claims and appeals in a manner other than as set forth in the plan. To the extent of any such inconsistency, the plan and summary plan description shall be deemed to be amended to conform to the requirements of those agreements. Administered by: PRINCIPAL LIFE INSURANCE COMPANY Des Moines, IA 50392-0001 GH 100 GB H18015-2

YOUR ROLE IN CONTROLLING HEALTH CARE COSTS Making choices about your health can sometimes be difficult. When you seek health care, take the same approach you use for buying anything else. Ask questions. Make sure you get the most appropriate care for your condition. Use the following guidelines to help you be a wise health care consumer: Practice Good Health Habits. Staying healthy is the best way to control your medical costs. Eat a balanced diet, exercise regularly, and get enough sleep. Learn how to handle stress. Stop smoking and avoid excessive use of alcohol. See your Doctor Early. Do not let a minor problem become a major one. This makes treatment more difficult and expensive. Make Sure you Need Surgery. If your plan includes a second opinion program, get one if you are unsure about the surgery you face. If you need surgery, ask about same day surgery. Many procedures can be performed safely without a Hospital stay. You have these surgeries as an outpatient or at a place other than a Hospital and go home the same day. Use Outpatient Services for X-ray or Laboratory Tests. Outpatient preadmission and diagnostic tests can save costly room and board charges. Compare Prescription Drug Prices. Discuss the use of generic drugs with your doctor or pharmacist. Generic drugs are often cheaper than brand name drugs for the same quality. Consider Hospital Stay Alternatives. Home Health Care, Skilled Nursing Facilities, and Hospice Care services offer quality care in comfortable surroundings for less cost than staying in the Hospital. Review Medical Bills Carefully. Make sure you understand all charges and receive bills only for services you receive. Keep your medical records up-to-date. Talk to your Doctor. Discuss the need for treatment with your doctor. It is your body. To make wise health care decisions, you must understand the treatment and any risks or complications involved. Ask about treatment costs too. With today's health care costs, your doctor will understand your concern about your medical expenses. Be a wise health care consumer. Review your benefits carefully so you can make informed health care decisions. You can help control health care costs while getting the most your health care plan has to offer. BENEFIT ADVICE THE CLAIMS ADMINISTRATOR WANTS TO HELP YOU BE A WISE HEALTH CARE CONSUMER. PLEASE GIVE THE CLAIMS ADMINISTRATOR A CALL IF YOU HAVE ANY QUESTIONS ABOUT YOUR HEALTH CARE. SEE YOUR ID CARD FOR THE BENEFIT ADVICE PHONE NUMBER. SEE THE UTILIZATION MANAGEMENT REQUIREMENTS IN THIS BOOKLET FOR IMPORTANT INFORMATION. YOU MAY REFER TO THE CLAIM PROCEDURES SECTION OF THIS BOOKLET FOR MORE DETAILED INFORMATION. GH 103 GB H18015-2

TABLE OF CONTENTS Page SUMMARY OF BENEFITS... 1 HOW TO BE COVERED Members... 6 Dependents... 11 COBRA Continuation... 14 Federal Family and Medical Leave Act (FMLA)... 19 Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA)... 21 DESCRIPTION OF BENEFITS Medical Expense Coverage... 22 Comprehensive Medical... 23 Utilization Review... Prescription Drugs Expense Coverage... 31 36 Mail Service Maintenance Prescription Drugs... 40 Preexisting Condition Exclusion... 43 COORDINATION WITH OTHER BENEFITS... 45 SUBROGATION AND REIMBURSEMENT... 49 CLAIM PROCEDURES... 50 STATEMENT OF RIGHTS... 53 Supplemental Information... 55 DEFINITIONS... 56 GH 101 GB H18015-2

SUMMARY OF BENEFITS (effective March 1, 2010) This section highlights the benefits provided under your plan. The purpose is to give you quick access to the information you will most often want to review. Please read the other sections of this booklet for a more detailed explanation of your benefits and any limitations or restrictions that might apply. MEDICAL EXPENSE COVERAGE If you or one of your Dependents is sick or injured, Scheduled Benefits then in force will be payable for Medically Necessary Care. Scheduled Benefits are based on your class: Class Scheduled Benefits All Members and their Dependents... Comprehensive Medical, Prescription Drugs, and Mail Service Maintenance Prescription Drugs Preferred Provider Organization (PPO) Plan MERS has agreed to participate in a Preferred Provider Organization (PPO) network identified by the Claims Administrator for this plan. As you may know, Preferred Provider Organization networks are arrangements whereby Hospitals, Physicians, and other providers are contracted to furnish, at negotiated costs, medical care for the employees (and their Dependents) of participating employers. It is expected that MERS participation in the PPO will result in significant savings of funds needed to maintain the medical plan. Please note that MERS' participation in the PPO network does not mean that your choice of provider will be restricted. You may still seek needed medical care from any Hospital, Physician, or other provider you wish. However, in order to avoid higher charges and reduced benefit payments, you are urged to obtain such care from Preferred Providers whenever possible. A Preferred Provider directory is available by accessing Principal Life Insurance Company s website at www.principal.com or the PPO network s website. No matter how you access a directory, it is recommended that you (1) verify your provider s participation in the network before seeking treatment and (2) confirm PPO participation with your provider when making your appointment. MERS has the right to terminate the PPO portion of this plan if MERS or the PPO terminates the arrangement. In the event of termination, MERS will pay the level of benefits as described for medical care received from "Non-PPO Providers." In addition, the Cost Containment Administrator will assume responsibility for assisting you and your Dependents with the Hospital Admission Review requirements described under the heading "Utilization Management Requirements." Some Preferred Provider Organization (PPO) networks have arrangements that tie PPO networks in specific geographic locations together. These PPO networks allow you to receive benefits at the PPO level for medical care received when you or your Dependents are in another service area and use that PPO Provider. If you or your Dependents would like to see a PPO Provider in another service area, call the toll-free Benefit Phone number shown on your ID card to determine if a PPO network in that area is tied to your network. GH 102-1- GB H18015-2

MEDICAL EXPENSE COVERAGE PPO PROVIDER NON-PPO PROVIDER Lifetime Maximum Payment Limit $2,000,000 Calendar Year Deductible Per Person Per Family $ 500 $ 1,000 You pay one individual Deductible each calendar year. For satisfaction of the family Deductible, no more than one individual Deductible will apply for any one person. After you satisfy the Deductible, Comprehensive Medical benefits will be payable for Covered Charges at the rate of payment shown below. The Copayments shown below: will not count toward satisfaction of the Deductible; and will continue to apply after the Out-of-Pocket Expense limit and the Deductible are reached. Out-of-Pocket Maximums Per Person Per Family $ 5,000 $ 10,000 Unlimited Unlimited If the amount you pay for Covered Charges in any one calendar year reaches the Out-of-Pocket Expense Maximum shown above, Comprehensive Medical benefits payable will be 100% of additional Covered Charges (except as described below). The amounts that DO NOT apply toward your Out-of-Pocket Expense Maximum are: Copayments; and the amount you must pay because of penalty charges for failure to comply with Utilization Management Requirements as described below. SERVICE PPO PROVIDER NON-PPO PROVIDER Physician Visit Charges MRI, CAT, and PET Scans Physician Office/Clinic Surgery Preventive Care 19 Years of Age & Older Routine Physical Exams X-Ray and Lab services provided during the exam Routine Gynecological Exams and Pap Smear PSA Exam and Testing Mammograms Limited to a maximum benefit of $1,000 per calendar year Well Child Care to Age 19 Years Well Child Care X-Ray and Lab services provided during the exam Chiropractic Services by any Physician Limited to a maximum benefit of $500 per calendar year Allergy Injections and Serum Inpatient Hospital Care Outpatient Hospital Care (includes outpatient surgery) $20 Copay per visit, then plan pays 100% You pay Deductible, then plan pays 80% You pay Deductible, then plan pays 80% $20 Copay per visit, then plan pays 100% $20 Copay per visit, then plan pays 100% You pay Deductible, then plan pays 80% $20 Copay per visit, then plan pays 100% You pay Deductible, then plan pays 80% You pay Deductible, then plan pays 80% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% GH 102-2- GB H18015-2

SERVICE PPO PROVIDER NON-PPO PROVIDER X-Ray and Laboratory Services Hospital Services Office/Clinic Services You pay Deductible, then plan pays 80% $20 Copay per visit, then plan pays 100% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% Quest Diagnostics Lab Card Program (outpatient lab tests only) Emergency Room Services Copay waived if admitted. Ambulance Benefits limited to $5,000 per calendar year. Home Health Care Limited to 100 visits per calendar year. Hospice Care Limited to $10,000 per episode. Skilled Nursing Facility Care Limited to $800 per day and 90 days for the same or related condition. Mental or Nervous Disorders Alcoholism or Drug Abuse All Other Covered Charges Plan pays 100% (Deductible waived) You pay $100 Copay per visit, in addition to the Deductible, then plan pays 80% You pay Deductible, then plan pays 80% You pay Deductible, then plan pays 80% You pay Deductible, then plan pays 80% You pay Deductible, then plan pays 80% Plan pays 100% (Deductible waived) You pay $100 Copay per visit, in addition to the Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% You pay Deductible, then plan pays 50% Benefits are payable the same as for any other Treatment or Service You pay Deductible, then plan pays 80% You pay Deductible, then plan pays 50% Medical Emergency If you or one of your Dependents requires treatment for a Medical Emergency and cannot reasonably reach a PPO Provider, benefits for such treatment received will be paid at the same level as a PPO Provider. Uncontrollable Providers For services provided by a Non-PPO emergency room Physician, anesthesiologist, radiologist, or pathologist, benefits will be payable at the PPO level when such services are provided at a PPO Hospital (inpatient, outpatient, and Hospital emergency room) or a licensed PPO freestanding surgical center. PHCS Healthy Directions (Not available with all PPO Networks) PHCS Healthy Directions is a savings program that may provide a solution for you and your Dependents while outside your primary PPO service area. This program provides access to healthcare providers through which you can receive PPO benefits and receive Treatment or Service at a negotiated rate. Before searching for a PHCS Healthy Directions provider, call the toll-free Benefit Phone number shown on your ID card to determine if your primary PPO network has providers in the area. If there are no PPO Providers in the area, call the PHCS Healthy Directions phone number shown on your ID card to locate a provider participating in PHCS Healthy Directions. Outpatient Laboratory Services - Quest Diagnostics Lab Card Program Quest Diagnostics is a laboratory provider that conducts outpatient testing. An agreement has been established with Quest Diagnostics to provide these services at a negotiated rate. GH 102-3- GB H18015-2

"Laboratory Services" means Covered Charges for testing of materials, fluids, or tissues obtained from patients for the purpose of screening, diagnosing a condition and for determining appropriate treatment. When you or your Dependent requires outpatient Laboratory Services, you or your Physician may choose any laboratory you wish. However, if you use Quest Diagnostics, the benefits will be more favorable. When utilizing Quest Diagnostics, there are two ways in which laboratory work is completed: - Specimens are drawn at the Physician s office or clinic and are sent to Quest Diagnostics for testing; or - The covered individual visits a contracted Quest Diagnostics collection site with a Physician s directive and has the specimen drawn. The specimen is then sent to Quest Diagnostics for testing. If you or your Dependent goes to a Physician's office or clinic and the Physician sends the laboratory work to a Quest Diagnostics facility for processing benefits will be paid at 100% of Covered Charges for the Laboratory Services. If you or your Dependent goes to a Physician s office or clinic and the Physician sends the laboratory work to a facility other than Quest Diagnostics, regular benefits will apply, including any applicable Deductibles or Copays. If you or your Dependent goes to a Quest Diagnostics contracted collection site with a Physician's directives, benefits will be paid at 100% of Covered Charges for the Laboratory Services. If the laboratory facility is not a Quest Diagnostics facility, regular benefits will apply including any applicable Deductibles or Copays. If you have questions about the Quest Diagnostics Lab Card program or need to find a participating lab, please call Quest Diagnostic s Client Services at: Utilization Management Requirements 1-800-646-7788 www.labcard.com Comprehensive Medical benefits payable for Hospital Inpatient Confinement Charges will be reduced by 25% unless a Hospital Admission Review is requested by you, a family member, or a Physician prior to, but no later than, the day of admission to a Hospital (for other than a Medical Emergency); and for a Medical Emergency, within two business days following a Hospital admission or as soon as reasonably possible thereafter. If a Hospital Admission Review is not requested in a timely manner as specified above, the 25% reduction in benefits payable will be applied, but only to the charges incurred up to the date a Hospital Admission Review is obtained. Benefits will be payable only for that part of the Hospital Inpatient Confinement Charges that the Cost Containment Administrator determines to be Medically Necessary Care. See page 31 for a complete description of Utilization Review. Certain exceptions apply to Hospital Inpatient Confinement Charges for maternity as described on page 31. The 25% reduction in Benefits Payable is a penalty for failure to comply with the Utilization Management Requirements listed. The reduction: - will not count toward the satisfaction of the Out-of-Pocket limits shown above; and - will not exceed $2,000 per individual each calendar year. NOTE: SEE PAGE 50 FOR IMPORTANT CLAIM PROCEDURES INFORMATION ON FILING YOUR MEDICAL CLAIMS. GH 102-4- GB H18015-2

Utilization Management Requirements - Your Responsibilities Your medical ID card gives a toll-free telephone number to call for Hospital and surgery reviews. You must follow all of the requirements described on page 31--Utilization Review or your benefits will be reduced as described above. PRESCRIPTION DRUGS If drugs and medicines are prescribed to treat you or one of your Dependents for a sickness or injury, Prescription Drugs benefits payable will be 100% of Covered Charges, in excess of the Copays described below, for each prescription or each refill. PRESCRIPTION DRUGS RETAIL DRUGS MAIL SERVICE DRUGS Generic Drugs Preferred Brand Name Drugs Non-Preferred Brand Name Drugs $15 Copay $30 Copay $50 Copay $15 Copay $30 Copay $50 Copay Maximum Supply 30 days for each prescription 90 days for each prescription If you or one of your Dependents uses a Nonmember Pharmacy, Covered Charges may only be reimbursed up to the amount determined by the Payment Schedule established by the Plan Administrator for each prescription or refill. Each prescription and each refill will be filled with a Generic Prescription Drug if there is a generic equivalent available. If the Physician specifies that the medication must be a Preferred or non-preferred Brand Name Drug and has indicated Dispense as Written on the prescription, the Preferred or non-preferred Brand Name Drug Copayment amount, whichever is applicable, will apply. If a generic equivalent is available, and you choose a Preferred or non-preferred Brand Name Drug, you will pay the difference between the Generic Drug price and the Preferred or non-preferred Brand Name Drug price, in addition to the Generic Drug Copayment amount. If there is no generic equivalent available and a Preferred or non-preferred Brand Name Drug is dispensed, the Preferred Brand Name Drug Copayment amount or the non- Preferred Brand Name Drug Copayment amount, whichever is applicable, will apply. You will be provided information regarding the drugs included on the Preferred Brand Name Drugs list. When you receive a prescription from your Physician, you should encourage the Physician to prescribe one of the drugs from the list. Explain that your cost is significantly lower when you use a Preferred Brand Name Drug. Your employer also has a copy of this list. The majority of Generic Prescription Drugs are available at the lowest generic Copay. However, some generics are more expensive and are priced comparable to the Brand Name Drug. In those situations, you may be charged the Brand Name Drug Copay. In order to qualify for the generic Copay, a drug must be classified as generic by First DataBank/Medispan. NOTE: Any transaction at a pharmacy for prescription drug benefits is not a claim for benefits under the Employee Retirement Income Security Act (ERISA). To file a claim for benefits when utilizing a Member Pharmacy, contact the Pharmacy Benefit Manager at the telephone number listed on your or your Dependent's identification card. To file a claim for benefits when utilizing a Nonmember Pharmacy or when an identification card is not utilized at a Member Pharmacy, submit a prescription drug claim form to the Pharmacy Benefit Manager. If a prescription drug is not covered under Prescription Drug Expense Coverage or Mail Service Maintenance Prescription Drug Expense Coverage, it may be submitted for consideration under Medical Expense Coverage. GH 102-5- GB H18015-2

HOW TO BE COVERED - MEMBERS MEDICAL EXPENSE COVERAGE Eligibility To be eligible for coverage you must be a Member. Member means any person who is a full-time hourly or salaried employee. You will be eligible on the first of the calendar month that next follows the date you complete the Waiting Period. The Waiting Period is a period of two months during which you are continuously employed by MERS Economy Boat Store on a full time basis in one of the eligible classes listed above. Effective Date for Coverage You must request initial coverage on a form provided by MERS. The requested coverage will become effective on: - the date you are eligible, if the request is made on or before that date; or - the first of the calendar month that next follows the date of your request, if you make your request within 31 days after the date you are eligible. If request for coverage is made more than 31 days after the date an individual is eligible and other than during an Annual Open Enrollment Period or Special Enrollment Period described below, coverage for such individual will become effective as described below for Late Enrollees. If request for coverage is made more than 31 days after the date an individual is eligible but during an Annual Open Enrollment Period described below, coverage for such individual will become effective as described below under "Annual Open Enrollment Period." If request for coverage is made more than 31 days after the date an individual is eligible but during a Special Enrollment Period described below, coverage for such individual will become effective as described below under "Special Enrollment Periods." Late Enrollment Provisions - Late Enrollee. Late Enrollee means, with respect to coverage under an employer's Group Health Plan, a Member or Dependent who enrolls under the plan other than during: - the first period in which the individual is eligible to enroll under the Group Health Plan; or - a Special Enrollment Period described below. For the purpose of the first item listed above, only the most recent period of eligibility will be considered in determining whether an individual is a Late Enrollee if: - the individual loses eligibility under the Group Health Plan due to termination of employment or due to a general suspension of the Group Health Plan; and - the individual later becomes eligible again under the Group Health Plan due to resumption of employment or due to resumption of the Group Health Plan's coverage. The term "Late Enrollee" also means a Member or Dependent who: - was previously covered under the Plan but elected to terminate the coverage; and - reapplies for coverage more than 31 days after the termination date; and - does not qualify for one of the Special Enrollment Periods described below. GH 115-6- GB H18015-2

- Effective Date for Late Enrollees A Late Enrollee can only request coverage during an Annual Open Enrollment Period or Special Enrollment Period. Coverage for a Late Enrollee will become effective on the March 1 st following the Annual Open Enrollment Period, provided on such date: - the Member continues to meet the Plan's definition of a Member; and - for Dependent coverage, the Dependents continue to meet the Plan's definition of Dependent. The individual will be subject to the plan s Preexisting Condition Exclusion provisions, as described on page 43, when his or her coverage becomes effective. - Annual Open Enrollment Period An Annual Open Enrollment Period will be available for any Member or Dependent who failed to enroll: - during the first period in which he or she was eligible to enroll, or during any subsequent Special Enrollment Period; or - during any previous Annual Open Enrollment Period; or - within 31 days after the termination date, if the individual was previously covered under the Plan but elected to terminate the coverage. To qualify for enrollment during the Annual Open Enrollment Period, the Member or Dependent: - must meet the eligibility requirements described in the Plan, including satisfaction of any applicable Waiting Period; and - may not be covered under an alternate medical expense coverage offered by the employer, unless the Annual Open Enrollment Period happens to coincide with a separate open enrollment period established for coverage election. The Annual Open Enrollment Period will be determined by MERS each year. The effective date for any qualified individual requesting coverage during the Annual Open Enrollment Period will be each March 1 st. The individual will be subject to the plan s Preexisting Condition Exclusion provisions, as described on page 43, when his or her coverage becomes effective. - Special Enrollment Periods If you or your Dependent requests enrollment after the first period in which you or your Dependent was eligible to enroll but during a Special Enrollment Period as described below, you or your Dependent will be a Special Enrollee and will not be considered a Late Enrollee. If MERS offers different benefit options, a benefit option transfer may also be made if your request is due to a Special Enrollment Period and you complete the appropriate enrollment form within the time specified for a Special Enrollment Period as described below. The effective date of the benefit option transfer will coincide with the effective date of your applicable Special Enrollment. The Special Enrollment Periods are: - Loss of Other Coverage: A Special Enrollment Period will apply to you or your Dependent if all of the following conditions are met: - You or your Dependent were covered under another Group Health Plan or had other Health Insurance Coverage at the time of initial eligibility, and declined enrollment solely due to the other coverage; and GH 115-7- GB H18015-2

- The other coverage terminated due to loss of eligibility (including loss due to legal separation, divorce, death, cessation of Dependent status, termination of employment or reduction in work hours, incurring a claim that meets or exceeds the other coverage lifetime limit on all benefits, when the individual no longer resides, lives, or works in a service area and there is no other benefit package available under the other Group Health Plan, or when the other Group Health Plan no longer offers any benefits to a class of similarly situated individuals), or due to termination of employer contributions (or, if the other coverage was under a COBRA or state continuation provision, and - Request for enrollment is made within 31 days after the other coverage terminates or after a claim is denied due to reaching the lifetime limit of all benefits under the other health coverage. The effective date of coverage will be the first of the calendar month that next follows the date of the request for enrollment. NOTE: For the purpose of the second item listed above: - "Loss of eligibility" does not include a loss due to failure of the individual to pay contributions on a timely basis or termination of coverage for cause (such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the health coverage); and - "Employer contributions" include contributions by any current or former employer (of the individual or another person) who was contributing to the coverage of the individual. - Newly Acquired Dependents: A Special Enrollment Period will apply to you or your Dependent if: - You are enrolled (or are eligible to be enrolled but have failed to enroll during a previous enrollment period); and - A person becomes your Dependent through marriage, birth, adoption or Placement for Adoption; and - Request for enrollment is made within 31 days after the date of the marriage, birth, adoption, or Placement for Adoption. The effective date of your or your Dependent's coverage will be: - In the event of marriage, the date of the request for enrollment; or - In the event of a Dependent child's birth, the date of such birth; or - In the event of a Dependent child's adoption or Placement for Adoption, the date of such adoption or Placement for Adoption, whichever is earlier. - Court-Ordered Coverage: A Special Enrollment Period will apply to your Dependent child if: - You are enrolled but have failed to enroll the Dependent child during a previous enrollment period; and - You are required by a court or administrative order to provide health coverage for the Dependent child; and - Request for enrollment is made within 31 days after the issue date of the court or administrative order. The effective date of the Dependent child's coverage will be the first of the calendar month that next follows the date of the request for enrollment. A copy of the procedures governing qualified medical child support orders (QMCSO) can be obtained from the Plan Administrator without charge. - Medicaid or Children s Health Insurance Program (CHIP): A Special Enrollment Period will apply to you and your Dependent if: GH 115-8- GB H18015-2

- You or your Dependent is covered under a Medicaid or CHIP plan and coverage terminated as a result of loss of eligibility for Medicaid or CHIP coverage and your request for enrollment is made within 60 days after the date coverage is terminated; or - You become eligible for premium assistance under Medicaid or CHIP to purchase coverage under this plan and request for enrollment is made within 60 days after the date eligibility for premium assistance is determined. The effective date of coverage will be the first of the calendar month that next follows the date of the request for enrollment. Effective Date for Benefit Changes Change by Plan Amendment A change in the amount of a Member's Scheduled Benefits because of a change in the Schedule of Coverage by amendment to this group plan will be effective on the date of change. Termination Unless continued as provided below or on pages 14-21, your coverage and your dependent s coverage will cease on the earliest of: - the date the Group plan terminates; or - the end of the calendar month in which you cease to belong to a class for which coverage is provided; or - the end of the calendar month in which you cease to be a Member; or - the date you reach the Comprehensive Medical Lifetime Maximum Payment Limit; or - the end of the calendar month in which you cease to be actively employed. Certificate of Creditable Coverage The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires a certificate of Creditable Coverage be issued to individuals losing health coverage. A certificate of Creditable Coverage will be issued automatically when your coverage under the plan terminates or when continued coverage terminates. You may also request a certificate of Creditable Coverage at any time while covered and up to 24 months after the date coverage terminates. For further information contact: Principal Life Insurance Company 711 High Street Des Moines, IA 50392-0001 Phone: 1-800-843-1371 Continuation If you cease to be actively employed because of sickness or injury, your coverage will be continued until the earlier of: - the date your coverage would otherwise cease as provided above; or - the end of the calendar month in which you recover. If you cease to be actively employed because you are on layoff or leave of absence, your coverage will be continued until the earliest of: - the date your coverage would otherwise cease as provided above; or - the end of the calendar month in which the layoff or leave of absence ends; or - the date you become eligible for other group coverage; or - the date three month after the end of the calendar month in which you cease to be actively employed. GH 115-9- GB H18015-2

In addition, by paying the required contribution, if any, your coverage may be continued under the continuation provisions described on pages 14-21. Further definition of a Dependent s qualification for medical plan coverage is found in a later section of this Booklet. GH 115-10- GB H18015-2

HOW TO BE COVERED - DEPENDENTS MEDICAL EXPENSE COVERAGE Eligibility You will be eligible for coverage for your Dependents on the later of: - the date you are eligible for Member coverage; or - the date you first acquire a Dependent. Effective Date Dependent coverage is available only with respect to Dependents of Members currently covered for Member coverage. If a Member is eligible for Dependent coverage, such coverage will become effective under the same terms as described earlier for Member coverage. If Dependent coverage is then in effect for any other Dependent, a new Dependent will be covered on the date acquired. However, you must notify the Plan Administrator within 31 days after the date the Dependent is acquired. If such notice is not given to the Plan Administrator within the 31- day period, the Dependent will be subject to the Late Enrollment provisions. With respect to medical benefits for a newborn or newly adopted Dependent child, effective date provisions are modified as described below. Coverage for a Newborn or Newly Adopted Child A newly born or newly adopted Dependent child will be covered for medical benefits from the moment of birth, or on the date of adoption or Placement for Adoption (whichever is earlier), provided the child meets the definition of a Dependent child. Any applicable prior application or first of the calendar month provisions will be waived with respect to such child. However, if you are required to contribute toward the cost of Dependent coverage, you must notify MERS within 31 days after the date of birth, adoption, or Placement, in order to continue the child's coverage beyond the 31-day period. If such notice is not given to MERS within the 31-day period, the child will be subject to the Late Enrollment provisions. If the child's coverage terminates because you fail to request coverage (or pay the required contribution) within the 31-day period following the child's date of birth, adoption or Placement, benefits will be payable only for covered expenses incurred by the child during the 31-day period in which coverage was in force. Termination Unless continued as provided on pages 14-21: - Coverage for all of your Dependents will terminate on the earliest of: - the end of the calendar month in which you cease to belong to a class for which Dependent Coverage is provided; or - the date Dependent Coverage is removed from the Group plan; or - the date that Dependent reaches the Comprehensive Medical Lifetime Maximum Payment Limit; or - the date your Member Coverage ceases. - Coverage for any one Dependent will terminate on the last day of the calendar month in which he or she ceases to be your Dependent. GH 125-11- GB H18015-2

Certificate of Creditable Coverage The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires a certificate of Creditable Coverage be issued to individuals losing health coverage. A certificate of Creditable Coverage will be issued automatically when your coverage under the plan terminates or when continued coverage terminates. You may also request a certificate of Creditable Coverage at any time while covered and up to 24 months after the date coverage terminates. For further information contact: Principal Life Insurance Company 711 High Street Des Moines, IA 50392-0001 Phone: 1-800-843-1371 Continuation - Developmentally Disabled or Physically Handicapped Children Coverage will be continued beyond the maximum age for a Dependent child, provided that: - the child is incapable of self-support as the result of a Developmental Disability or Physical Handicap and became so before reaching the maximum age and is dependent on you for primary support; and - except for age, the child continues to be meet the definition of Dependent; and - proof of the child's incapacity is sent to the MERS within 31 days after the date the child reaches the maximum age; and - further proof that the child remains incapable of self-support is provided when MERS requests such information; and - the child undergoes examination by a Physician when MERS requests such examination. MERS will pay for these examinations and will choose the Physician to perform them. Coverage for a Dependent child who qualifies as described above may be continued until the earlier of: - the date coverage would cease for any reason other than the child's attainment of the maximum age; or - the date the child becomes capable of self-support or otherwise fails to qualify as set forth above. - Students on a Medical Leave of Absence If a child s Medical Expense Coverage would otherwise end because he or she ceases to qualify as a Full-Time Student as defined in this plan due to a medical condition, the child s coverage must continue provided: - the child has provided written certification from his or her treating Physician that the child s absence is medically necessary; and - this plan is in force. Such continued coverage will terminate on the earliest of: - the child advises that he or she does not intend to return to school full-time; or - the date the child fails to qualify as provided above; or - the date the coverage would otherwise cease as provided above; or - the date the child reaches the maximum age for a Full-Time Student; or - 12 months has elapsed since the child s coverage continuation began and the child has not returned to school full time; or - the certification period for the medically necessary leave of absence has expired. GH 125-12- GB H18015-2

In addition, under certain conditions, your Dependent's Medical Expense Coverage may be continued after the date it would normally terminate. See the continuation provisions described on pages 14-21. GH 125-13- GB H18015-2

COBRA CONTINUATION Federal Required Continuation - Consolidated Omnibus Budget Reconciliation Act (COBRA) COBRA applies to any employer (except the federal government and religious organizations) that: (a) maintains a group health coverage; and (b) normally employed 20 or more employees on a typical business day during the preceding calendar year. For this purpose, employee means full-time employees and full-time equivalent for part-time employees. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires that your group plan allow qualified persons (described below) to continue group health coverage after it would normally end. The term group health coverage includes any medical, dental, vision care, and prescription drug coverages that are part of your plan. A. Qualified Persons/Qualifying Events Continuation of group health coverage must be offered to the following persons if they would otherwise lose that coverage as a result of the following events: (1) A Member (and any covered Dependents) following the Member s: (a) termination of employment for a reason other than gross misconduct; or (b) a reduction in work hours. (Note: Taking a family or medical leave under the Federal Family & Medical Leave Act (FMLA) is not a qualifying event under COBRA. A Member qualifies for COBRA when the Member does not return to work after the end of FMLA leave); and (2) A Member s former spouse (and any Dependent children) following a divorce or legal separation from the Member; and (3) A Member s surviving spouse (and any Dependent children), following the Member s death; and (4) A Member s Dependent child following loss of status as a Dependent under the terms of the group plan (e.g., attaining the maximum age, marriage, joining the armed forces, etc.); and (5) A Member s spouse (and any Dependent children) following the Member s entitlement to Medicare; and (6) A Member s Dependent child who is born to or placed for adoption with the Member who is on COBRA continuation due to termination of employment or reduction in work hours; and (7) If the group plan covers retired Members, a retired Member and his/her Dependents (or surviving Dependents) when retiree health benefits are substantially eliminated or terminated within one year before or after the employer files Chapter 11 (United States Code) bankruptcy proceedings. B. Maximum Continuation Period Following a qualifying event, health coverage can continue up to the maximum continuation period. The maximum continuation period for a Member (and any Dependents) following a termination of employment or reduction in work hours is 18 months. The maximum continuation period for a Member s Dependent child that is born to or placed for adoption with the Member while on COBRA continuation will extend to the end of the Member s maximum continuation period. Following a termination of employment or reduction in work hours, a qualified person may request an 11-month extension of COBRA continuation. The maximum COBRA continuation will be 29 months (see Disabled Extension, Section D). GH 117 B -14- GB H18015-2

When a Member becomes entitled to Medicare before employment terminates or work hours are reduced, the maximum continuation period for the Dependents will be the longer of: (1) 36 months dating back to the Member s entitlement to Medicare; or (2) 18 months from the date of the qualifying event (termination of employment or reduction in work hours). The maximum continuation period for qualified Dependents following a qualifying event described in A (2) through A (5) is 36 months. If the group plan covers retired Members and the qualifying event is the employer s bankruptcy filing, the following rules apply: (1) If the retired Member is alive on the date of the qualifying event, the retired Member and his or her spouse and Dependent children may continue coverage for the life of the retired Member. In addition, if the retired Member dies while covered under COBRA, the spouse or Dependent children may continue coverage for an additional 36 months. (2) If the retired Member is not alive on the date of the qualifying event, his or her spouse may continue coverage to the date of his or her death. C. Second Qualifying Events If during an 18-month continuation period (or, 29 months for qualified persons on the disabled extension), a second qualifying event described in A (2) through A (5) occurs, the maximum continuation period may be extended for the qualified Dependents up to 36 months. That is, following a second qualifying event, qualified Dependents may continue for up to a maximum of 36 months dating from the Member s termination of employment or reduction in work hours. The extension is only available if the second qualifying event described in A (2) through A (5), absent the first qualifying event, results in a loss of coverage for Dependents under the group plan. A Member s Dependent child who is born to or placed for adoption with the Member who is on COBRA continuation may also be eligible for a second qualifying event that occurred prior to birth or placement for adoption. D. Disabled Extension Following a termination of employment or reduction in work hours, a qualified person (Member or Dependent) who has been determined disabled by the Social Security Administration either before or within 60 days after the qualifying event may request an extension of the continued coverage from 18 months to 29 months. A Member s Dependent child who is born to or placed for adoption with the Member who is on COBRA continuation must be determined disabled by the Social Security Administration within 60 days after the date of birth or placement for adoption. The disabled extension also applies to each qualified person (the disabled person and any family members) who is not disabled and who is on COBRA continuation as a result of termination of employment or reduction in work hours. The 11-month extension for all qualified persons will end the earlier of (a) 30 days following the date the disabled person is no longer determined by Social Security to be disabled, or (b) the date continuation would normally end as outlined in Section E below. E. Termination of Continued Coverage Continued coverage ends the earliest of the following: (1) The date the maximum continuation period ends; or (2) The date the qualified person enrolls in Medicare. However, this does not apply to a person who is already enrolled in Medicare on the date he or she elects COBRA or to a person who is on COBRA due to the employer s bankruptcy filing as described in A (7); or GH 117 B -15- GB H18015-2

(3) The end of the last coverage period for which payment was made if payment is not made prior to the expiration of the grace period. (See Grace Period, Section I.); or (4) The date the group plan is terminated (and not replaced by another group health plan); or (5) The date the qualified person becomes covered by and has satisfied the preexisting exclusion provision of another group health plan, however, this does not apply to a person who is already covered by the other group health plan on the date he or she elects COBRA. NOTE: Persons who, after the date of COBRA continuation election, become entitled to Medicare or become covered under another group health plan and have satisfied the preexisting exclusion provision, are not eligible for continued coverage. However, if the group plan covers retired Members, continued coverage for retired persons and their Dependents (or surviving Dependents) due to qualifying event A (7) above may not be terminated due to Medicare coverage. F. Employer/Plan Administrator Notification Requirement When a Member or Dependent becomes ineligible and loses group health coverage due to termination of employment, reduction in work hours, death of the Member, the Member entitlement to Medicare, or if the group plan covers retired Members, the commencement of the employer s Chapter 11 (United States Code) bankruptcy proceedings, the employer must notify the Plan Administrator of the qualifying event. The Plan Administrator must notify the qualified person of the right to COBRA continuation within 14 days after receiving notice of a qualifying event from the employer. G. Qualified Person Notice and Election Requirements Qualified persons must notify the Plan Administrator within 60 days after (a) the date of a qualifying event (i.e., divorce, legal separation, or a child ceases to be a Dependent child under the terms of the group plan) (b) the date the qualified person would otherwise lose coverage as a result of a qualifying event; or (c) the date the qualified person is first informed of this notice obligation; otherwise the right to COBRA continuation ends. This 60- day notice period applies to initial and second qualifying events. Qualified persons who request an extension of COBRA due to disability must submit a written request to the Plan Administrator before the 18-month COBRA continuation period ends and within 60 days after the latest of the following dates: (a) the date of disability determination by the Social Security Administration; (b) the date of the qualifying event; (c) the date the qualified person would otherwise lose coverage as a result of a qualifying event; or (d) the date the qualified person is first informed of this notice obligation; otherwise the right to the disabled extension ends. Qualified persons must also notify the Plan Administrator within 30 days after the date the Social Security Administration determines the qualified person is no longer disabled. Notification of a qualifying event to the Plan Administrator must include the following information: (a) name and identification number of the Member and each qualified beneficiary; (b) type and date of initial or second qualifying event; (c) if the notice is for an extension due to disability, a copy of any letters from the Social Security Administration and the Notice of Determination; and (d) the name, address and daytime phone number of the qualified person (or legal representative) that the Plan Administrator may contact if additional information is needed to determine COBRA rights. Within 14 days after receiving notice of a qualified event from the qualified person, the Plan Administrator must provide the qualified person with an election notice. Qualified persons must make written election within 60 days after the later of: (a) the date group health coverage would normally end; or (b) the date of the Plan Administrator s elec- GH 117 B -16- GB H18015-2

tion notice. The election notice must be returned to the Plan Administrator within this 60- day period; otherwise the right to elect COBRA continuation ends. Each qualified person has an independent right to elect COBRA. A covered Member may elect COBRA continuation on behalf of his/her covered spouse. A covered Member, parent, or legal guardian may elect COBRA continuation on behalf of his/her covered Dependent children. To protect COBRA rights, the Plan Administrator must be informed of any address changes for covered Members and Dependents. Retain copies of any notices sent to the Plan Administrator. H. Monthly Cost Persons electing continued coverage can be required to pay 102% of the cost for the applicable coverage (COBRA permits the inclusion of a 2% billing fee). Persons who qualify for the disabled extension and are not part of the family unit that includes the disabled person can be required to continue to pay 102% of the cost for the applicable coverage during the disability extension. Persons who qualify for the disabled extension and are part of the family unit that includes the disabled person can be required to pay 148% of the cost for the applicable coverage (plus a 2% billing fee) for the 19 th through the 29 th month of coverage (or through the 36 th month if a second qualifying event occurs during the disabled extension). I. Grace Period Qualified persons have 45 days after the initial election to remit the first contribution. The first contribution must include all contributions due when sent. All other contributions (except for the first contribution) will be timely if made within the Grace Period. Grace Period means the first 30-day period following a contribution due date. Except for the first contribution, a Grace Period of 30 days will be allowed for payment of contributions. Continued coverage will remain in effect during the Grace Period provided payment is made prior to the expiration of the Grace Period. If payment is not made prior to the expiration of the Grace Period, continued coverage will terminate at the end of the last coverage period for which payment was made. J. Plan Changes Continued coverage will be subject to the same benefits and rate changes as the group plan. K. Newly Acquired Dependents A qualified person may elect coverage for a Dependent acquired during COBRA continuation. All enrollment and notification requirements that apply to Dependents of active Members apply to Dependents acquired by qualified persons during COBRA continuation. Coverage for a newly acquired Dependent will end on the same dates as described for qualified persons in Section B above. Exception: Coverage for newly acquired Dependents, other than the Member s Dependent child who is born to or placed for adoption with the Member, will not be extended as a result of a second qualifying event. GH 117 B -17- GB H18015-2