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HomeMy WebLinkAboutReso 63-2010RESOLUTION NO. 63-2010 CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION AUTHORIZING AN AGREEMENT WITH EMPLOYEE BENEFIT SERVICES, INC. ("EBS") TO PROVIDE EMPLOYEE BENEFITS ADMINISTRATION AND AUTHORIZING CITY MANAGER TO EXECUTE CONTRACT WHEREAS, the City offers a variety of employee benefits to City employees and retirees which are presently administered inlvernally by City staff; anal WHEREAS, the increasing complexity and volume of work associated with proper and effective administration of these benefits has increased significantly over time; and WHEREAS, the City does not currently have the sophisticated technology or staff necessary to effectively and efficiently administer the range of benefits offered to employees and retirees; and WHEREAS, City staff has conducted an informal Request for Proposal, interviewed candidates and concluded that Employee Benefit Systems, Inc. ("EBS"), a private benefits administration consulting provider, is best able to provide sophisticated, dependable and efficient administration of the City's benefits at a lower cost than can be currently provided by the City; and WHEREAS, City staff recommends that the City contract with EBS to provide employee benefits administration services for the City pursuant to the contract attached hereto as Exhibit «A „ NOW, THEREFORE, BE IT RESOLVED, that the City of South San Francisco hereby authorizes the agreement with EBS to provide employee benefit administration services; and BE IT FURTHER RESOLVED, that the City of South San Francisco hereby authorizes the City Manager to execute the contract on behalf of the City Council of the City of South San Francisco. ~ * * ~ I hereby certify that the forE;going Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regular meeting held on the 14`h day of July, 2010 by the following vote: AYES: Councilmembers Pedro Gonzalez, Richard A. Garbarino, and Karyl Matsumoto, Vice Mayor Kevin Mullin and Mayor Mark Addie~o NOES: None ABSTAIN: None ABSENT: None i ATTEST: ~~ .. Attachment A: Vendor Services A;~reement ~T~N~®~Z ~~~V~C~~ ~~~~EIVI~N'~' This Agreement between the City of South San Francisco ("Client") having a principal place of business at 400 Grand Avenue, South San Francisco, CA 94080 and Employee Benefit Specialists, Inc. ("Contractor") having a principal place of business at 5934 Gibraltar Drive, #206, Pleasanton, CA 94588 and shall be effective//r~~ 20111"Effective Date"). The purpose of this Agreement is to set forth the terms and coffin-d-itions under which Contractor shall provide services to Client and incorporate any future amendments or addendum by reference ("Agreement"). N®W TI~EiZEF®IZE, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged by the parties, Client and Contractor agree as follows: 1.0 Definitions 1.1 Definitions: As used in this Agreement, the following capitalized terms shall have the meaning set forth below: a) "ACH" shall mean. Automated Clearing House b) "Additional Services" shall mean the services to be performed by EBS pursuant to Exhibit C of this Agreement c) "Administrative Account" shall mean each unique user and name and password that grants access to the online system. d) "Administrative Services" shall mean the Basic Services and Additional Services, if any, to be performed by EBS to Exhibits B and C of this Agreement e) "Availability Commitment" shall mean 98.5 f) "Basic Services" shall mean, collectively, the services to be provided by EBS pursuant to Exhibit B of this Agreement g) "Client" shall mean the employer City of South San Francisco h) "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985 and its amendments. i) "EBS Online Service" or "Workterra" shall mean the suite of Internet-based online benefits enrollment and administration services provided by EBS and described in Exhibi'~t B. j) "EBS Services" shell mean the Basic Services to be provided and performed by EBS pursuant to Exhibit B of this Agreement k) "EBS Svstem" sha]~l mean the Online system or the administration systems used by EBS for billing, COBRA, etc. to be provided and performed by EBS pursuant to Exhibit B or C of this Proposal. 1) "Em~lovees" shall mean any person who is both eligible for coverage and covered as an employee under a Client's benefit Plan(s) on the day before the Qualifying Event. m) "Eligible Participant" shall mean an Employee of the Client who can participate in the Client's benefit Plan(s). For purposes of COBRA, an Eligible Participant is an Employee who has experienced a Qualifying Event, who has elected to continue health insurance coverage through COBRA, and who has made a timely premium payment pursuant to COBRA. For retiree, an Eligible Participant is a retired employee or surviving spouse `vho is eligible for Employer retiree benefits. n) "End User" shall :mean any person who accesses and uses the EBS Online and/or Administrative Services, or whose subscription or other benefits data is entered into and resides on the EBS system. o) "HIPAA" shall mE~an Health Insurance Portability and Accountability Act of 1996 and its amendments. p) "Plan" shall meant a distinct benefit program from a single vendor with unique rates, eligibility requirements, benefits and contribution levels (ex. Blue Cross High Option PPO and Blue Cross Low Option PPO are considered two different plans) q) "Plan Participant" shall mean an Employee or a Dependent both eligible and covered under the Client's Plans included in the EBS System(s). r) "Plan Providers" ;shall mean the insurance carrier, or other provider of a benefit plan s) "Qualified Beneficiary" shall mean a Plan Participant eligible for continuation of health insurance benefits due to the loss of such coverage due to certain events defined pursuant to COBRA. t) "Qualifying Event" shall mean the occurrence of a specific event as configured in the system consistent with plan rules such as (but not limited to) the following: a.) Death of a covered employee or covered retiree; b.) Termination of ernployment of a covered employee (for reasons other than gross misconduct) or reduction in employee's hours; c.) Divorce and/or legal separation from the covered employee; d.} Covered employee/retiree becoming entitled to Medicare; e.) Dependent children who cease to be eligible as "dependents" under provision(s) of the Plan(s); f.) customer filing for bankruptcy wlhereby loss or substantial elimination of benefits under Plans(s) within one year before or after the commencement of bankruptcy proceeding; and g.) Any other event resulting in a covered employee and/or dependent becoming qualified to continue coverage under the provisions of COBRA. u) "Software" shall mean the Contractor's software system. v) "Statement of WoY•k" SOW shall mean a document, which clearly defines the outcome of a requested change, modification or adjustment to any systems or procedures or processes. 2 2.0 Services 2.1 Basic Services: Contractor will provide to Client Enrollment, Eligibility/Data Integration, Billing, Funding, Customer Service, COBRA, Retiree Administration, EOI administration for life and DI group plans, qualifying event administration, leave of absence billing and Section. 125 Administration Services ("Services"), as more specifically set forth in Exhibit A. Client with notice to Contractor, may periodically, change the procedures and requirements set forth in Exhibit A and Client will supply Contractor with amendments to such procedures and requirements in the form of a Statement of Work, which shall be incorporated herein by reference. In addition, Client v~aill reimburse Contractor for all costs associated. with implementing the changes requested as outlined in the Statement of Work that is outside the general scope of work, and pay Contractor any increase in cost for services and fees as reasonably assessed against Client. 2.2 Additional Services: Client may require Contractor to perform other services in addition to the Services identified in Section 2.1. In such instances, each additional set of services shall be described in detail in a Statement of Work (SOW). Each SOW shall be attached hereto as individual exhibits and will contain, at a minimum: (i) a description of the services being provided and the term for which they are being provided, (ii) the fees to be paid by Client to Contractor for such services as established by Contractor, (iii) any service level commitments to which the parties agree, and (iv) any other terms and conditions to which the parties agree which supplement or amend the terms and conditions of this Agreement. Each SOW, any amendments and this Agreement shall be amended in writing from time-to-time to reflect any material modifications to Services provided to Client by Contractor or supplemented if the scope of such services expands. 2.3 Order of Precedence: This Agreement controls unless otherwise specifically provided in any SC>W. 3.0 Term & Termination 3.1 Term: The Agreement shall continue in full force and effect unless terminated sooner pursuant to the terms and conditions of this Agreement. 3.2 Termination: Either party can terminate this agreement on 90 days notice with or without cause. 3.3 Fee Guarantee: Contractor will guarantee the fees included herein in Exhibit A for the first two years of this Agreement. In the third year of the Agreement Contractor will guarantee that the fees will not increase in excess of 7.5% (if at all). In future years any fee increase proposed by Contractor must be communicated in writing to the Client a minimum of 90 days prior to the effective dates of the new fees. 3 In the event this Agreement is terminated pursuant to this Section 3.1 or 3.2, Client agrees to pay for all earned and unpaid accounts receivable due Contractor as determined by both parties. 3.5 Post-'T'ermination Obligation and Du to Coo erate: Upon the expiration or earlier termination of this Agreement pursuant to Section 3.0, Contractor shall during the transition period, deliver to Client documents and data including those in. paper and electronic format, in Contractor's possession directly relating to Contractor's services for Client. Client shall direct shipment method and pay shipping and printing charges. Upon the expiration or ear]'.ier termination of this Agreement, Client shall direct Contractor where to deliver remaining products or deliverables, completed or in process, in Contractor's possession in a reasonable period of time. Contractor shall issue a final invoice for all outstanding, completed agreed work, which shall be paid by Client prior to delivery of documents and data. In the event that this Agreement is terminated for any reason, both parties will cooperate to effect an orderly transition of any and all remaining products, deliverables, and any raw materials for such products to Client or its designee. 3.6 Transition Unon Any Termination• If the Agreement is terminated fir any reason, Contractor, at Client's request may continue to provide full operational Services similar to those provided to Client before the termination, at the Contract rat;e. The Services shall also include, among other things access to Client or its designee of all Contractor's databases, reports, member related information., website, and all data necessary for Client or its designee to affect a smooth and seamless transition (collectively "Contractor Systems"). The full operational Services, if requested and access to Contractor Systems shall remain available not to eYCeed 90 days following the effective date of termination. During the ninety (90) day transition period, Contractor shall make proper arrangements to transfer all requested records and any other information related to services under the Agreement to Client or its designee in a timely manner. In any event, Client and Contractor shall reasonably cooperate with each other to affect a complete, orderly and effective transition to Client or its designee, for up to a ninety (90) day period following the effective date of the Agreement's termination. In addition, Client will be billed at the rates outlined in Exhibit B and for all work completed during such period and any expenses incurred which are reimbursable pursuant to this Agreement. In the event of a termination and Client designates a successor to Contractor in the performance of this Agreement, Contractor also shall provide all necessary cooperation to effect an orderly transition in the performance of all services under this Agreement. If at the request of Client, Contractor provides additional services, other than those contemplated in this Agreement following the effective date of 4 termination, Contractor shall be reimbursed for those services and expenses in accordance with the applicable fee schedule then in effect at the time of termination. If the additional services are not covered in the fee schedule, the parties agree to negotiate in good faith to arrive at a fee for the additional services. Client shall not be obligated to pay any amounts unless such fees or expenses are authorized by this Agreement or agreed to prior to incurring such expenses. 4.0 Payment 4.1 Payment to Contractor. For the Services to be performed under this Agreement, Client shall pay Contractor the amounts set forth on Exhibit B and B (1). Clien.t's payment of any invoice shall not be construed as acceptance of the work done. Unless otherwise provided herein, Contractor shall invoice Clientt for Services monthly in advance, and Client shall pay the amount due within thirty (30) days of invoice date, Client agrees to pay interest charges of 18 % per annum on all amounts that are 30 days past due. 4.2 Payment for Modification to Systems, Operations, and Special Services. If Client requests Contractor to perform special services or to modify any Contractor system or process or add any new development or operation not included in this A€;reement or initial set up, all of which will be presented to Contractor by Client as a Statement of Work, Contractor will advise Client of the time period required, the cost, if any, to complete and monthly charges to perform the special. service, modification or development. Upon Client's prior written agreement and approval, Contractor will accomplish the work as outlined in the Statement of Work and approved by Client. 5.0 Performance 5.1 Service Performance: Contractor agrees to meet the service performance standards provided in Exhibit C (Performance Standards). Each month shall have a separate calculation so that there is no carryover to subsequent month(s) of any prior month's performance. If Contractor's actual performance fails to meet such standards, Contractor agrees to pay the amount set forth in. Exhibit C for failure to meet the performance standards. 5.2 Failure to Meet Performance Standards: If Contractor's performance falls below any of the mutually agreed upon standards, Contractor shall immediately develop, and upon Client's approval of such, institute a plan of action to correct such deficiency. 5.3 Performance Qualifications: Contractor represents anal warrants that the Services shall be performed in a competent manner by qualified personnel and shall conform to the descriptions, criteria, and specifications set forth in this Agreement. 5 6.fl Audit 6.1 Audits: Contractor agrees that, during the term of this Agreement and for a period of two (2) years after the termination of this Agreement, Client or its designee(s) may, upon not less than ninety (90) calendar days notice to Contractor, at Client's sole expense, audit the relevant financial and quality records including Client's cash account(s), sources of information and analysis behind an.y quality metrics calculation and all data, information, and records created, used or maintained relating to Contractor's performance under this Agreement ("Audit"). Contractor shall reasonably cooperate with any such Audit and shall provide all financial records, data and other un- protected documentation specifically related to Client in its possession, which is reasonably requested by Client. Any such audit shall be conducted no more than once per year, shall use best efforts to avoid disruption of Contractor's business, and take place at mutually agreeable times during normal business hours unless mutually agreed to by both parties. Contractor agrees to promptly implement reasonable corrective actions to address all reasonable and verifiable deficiencies identified in any Client audit at its sole expense. Any corrective action, which was unforeseen or results in future expense to Contractor for Services will allow for Contractor's assessing additional fees and/ or costs. Notwithstanding the foregoing, any discrepancy identified in any quality audit shall invalidate all quality metrics reported during the period under audit and will trigger performance guarantee recalculation for such period(s). 7.0 Personnel 7.1 Personnel: The sole relationship of the parties is that of independent contractors and nothing in this Agreement or otherwise shall be deemed or construed to create any other relationship, including one of employment, joint venture, or agency. Contractor shall be solely responsible for any taxes of any type, including social security taxes, workers' compensation taxes or costs, unemployment compensation taxes or costs, or any other taxes or charges related to Contractor's or Contractor's personnel's receipt of compensation and performance of Services under this Agreement. Contractor is a corporation, limited liability company, or partnership that is, as applicable, duly formed and in good standing in the jurisdiction of its formation. Contractor has withheld properly all federal, state and local employment taxes from the wages of its employees, and otherwise has conducted and will conduct itself not as an individual or individuals but as a legal entity separate from the persons actually providing services pursuant to this Agreement. 7.2 StaffinP: Contractor shall make reasonable determinations concerning staffing and endeavor to maintain sufficient staff with skills and experience and match specific job requirements for key functions in order to adequately 6 discharge its duties under the Agreement, including at a level that enables it to respond appropt•iately to issues and problems and day-to-day service. 7.3 Pre-Employment Screening: Contractor shall conduct or have conducted, at its' own expense,, pre-employment screenings on all new Contractor personnel, full time, part-time or temporary, assigned to perform Services. Contractor's personnel shall not begin providing services for Client until Contractor determines the appropriate pre-employment screenings have been completed with satisfactory results. Pre-employment screening shall include at a minimum, verification of the applicant's education as applicable where required by the scope of the job, professional licenses/certifications, employment history, involvement in any violations of law, and compliance with immigration laws. 8.0 Customer Service 8.1 Hours of Operation: Contractor agrees and warrants that it will staff its operation with competent personnel to respond to customer and Client management personnel calls and inquiries. All inquiries must be responded to within 1 business day hour of receiving such inquiry. The hours of operation will be 8:OOANI to 5:OOI'M Pacific Time. 9.0 Confidentiality 9.1 Confidential Information and Proprietary Information, Disclosure: Each party agrees that, information, data and other materials (including but not limited to de-identified employee information, computer programs and code and core business plans, financial records, acquisition plan and product licensing plan) disclosed by the parties to each other in the course of performing this Agreement, and any information or material derived from this information, whether in writing or otherwise, are confidential and proprietary subject to trade secret protection and privacy laws and regulations ("Confidential Information"). Each party agrees that such Confidential Information may not be copied, transmitted, publicly disclosed or disclosed to any non-parties, nor shall such Confidential Information be used for any purpose other than performance of this Agreement or as specifically authorized in writing by the other party unless otherwise required by ,law. Each party shall be deemed the owner of any Confidential Informafiion disclosed by that party to the other, including all patent, copyright, trademark, service mark, trade secret, and any and all other proprietary rights and interests therein, and nothing contained in this Agreement shall be construed as ;granting any rights, by license or otherwise, to any such Confidential Information disclosed pursuant to this Agreement. 9.2 Contractors Pr~rietarv Information: Any specification, work flow, drawings, sketches, models, computer or other apparatus programs, samples, tools, technical or business information or data, written or oral or otherwise furnished to Client under this Agreement, pursuant to the performance under this 7 Agreement, or in contemplation of this Agreement, and all system standards, systems interface, and electronic data interchange standards that facilitate the transfer of data or interface between and among Contractor and Client, or its designee, developed by or far Contractor shall remain Contractor's property. All copies of such Confidential Information in written, graphic or other tangible form shall be returned to Contractor at Contractor's request. Unless such Confidential Information was previously known to Client, free of any obligation to keep it in confidence, or has been or is subsequently made public by Client or lawfully by a third party, it shall be kept in confidence by Client, shall only be used only in performing under this Agreement, and may not be used for other purposes except upon such terms as may be agreed upon between Contractor and Client in writing 9.3 Protected Health and Personal Information. (a) Contractor understands and acknowledges that it may receive from or create or receive Protected Health Information on behalf of Client, as defined under the privacy regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and/or nonpublic personal information, as defined under the Grahmm-Leach Bliley Act and implementing regulations ("GLBA"), during the performance; of its obligations under this Agreement. (b) Except as otherwise specified herein, Contractor may use or disclose Protected Health Information received from or created or received on behalf of Client ("PHI") and nonpublic personal information received from or created or received on behalf of Client ("Personal Information.") to perform functions, activities, or services for, or on behalf of Client or as specified in this Agreement, provided that such use or disclosure would not violate the HIPAA privacy regulations, GLBA or other federal or state privacy laws applicable if done by Client. (c) With regard to its use and/ or disclosure of PHI or Personal Information., Contractor hereby agrees and represents and warrants to Client that Contractor shall: (1) not use or further disclose any PHI or Personal Information. other than as permitted by this Agreement or required by law; (2) at all times maintain and use appropriate safeguards to prevent uses or disclosures of any PHI or Personal Information other than as permitted by this Agreement or required by law; and (3) ensure that any Contractor, subcontractor or agent to whom it provides any PHI or Personal Information agrees in writing to the same conditions and restrictions that apply to Contractor with regard to the PHI or personal Information, including, without limitation, all of the requirements of this Section 9.0. 8 (d) With regard to its use and/or disclosure of PHI, Contractor hereby agrees, represents and warrants to Client that Contractor shall (1) report promptly to Client any use or disclosure of any PHI of which i~t becomes aware that is not permitted by this Agreement; (2) mitigate, to the extent practicable, any harmful effect that is known to Contractor of a use or disclosure of PHI by Contractor in violation of the requirements of this Agreement; (3) in the reasonable time and manner designated by Client, make available PHI in a Designated Record Set to Client, or as directed by Client, to an individual, in order for Client to respond to individual's requests for access to information about them in accordance with the HIPAA privacy regulations; (4) in the reasonable time and manner designated by Client, make any amendments or corrections to the PHI in a Designated Record Set that Client directs in accordance with the HIPAA privacy regulations; (5) in the reasonable time and manner designated by t~lient, documE~nt such disclosures of PHI and information related to such disclosures as would be required for Client to respond to a request by an individual for an accounting of disclosures of PHI in accordance with the HIPAA privacy regulations; (6) in the reasonable time and manner designated by Client, make available to Client, or as directed "by Client, to an individual, the information documented in accordance with subsection (5) above, to perrr~it Client to respond to a request by an individual for an accounting of disclosures, in accordance with the HIPAA privacy regulations; and (~ in the reasonable time and manner designated by Client or the Secretary of Health and Human Services ("HHS"), make its internal. practices, books, and records relating to the use and disclosure of PHI available to Client to the extent not protected by confidentiality or proprietary rights. (e) Each term and condition of this section required by HIPAA and/or GLBA shall be effective on the compliance date applicable to Client or this Agreement, under the HIPAA privacy regulations and/ or GLBA respectively. (f) Contractor agrees that this Agreement may be terminated by Client upon written notice to Contractor in the event that Client determines that Contractor has violated any material term of this section. Alternatively, Client may choose to provide Contractor with written notice of th.e existence of an alleged breach of Section 10 and afford Contractor an opportunity to cure said breach upon mutually agreeable terms. Failure to cure, or a determination by Client that a cure is not practicable or possible, shall be grounds for the immediate 9 termination of this Agreement. Contractor agrees to defend, indemnify, and hold harmless Client against any and all claims, liabilities judgments or damages asserted against, imposed upon or incurred by Client that arise out of willful or negligent violation of this section. (g) Upon termination of this Agreement for any reason, Contractor s]1a11 return to Client or upon confirmation of Client destroy all PHI anal/ or Personal Information, and retain no copies in any form whatsoever. This provision shall apply to PHI and/or Personal Information that is in the possession of subcontractors, Contractor, or agents of Contractor. (h) Unless otherwise specified in this Agreement, all capitalized terms in this section not otherwise defined have the meaning established for purposes of Title 45 parts 160 and 164 of the United States Code of Federal Regulations, as amended from time to time. (i) The parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for Client to comply with the requirements of HIPAA, the HIPAA privacy regulations, CiLBA, and other federal and state privacy and consumer rights laws and regulations applicable to Client. Contractor agrees to cooperate with and assist Client in order for Client to meet its obligations under applicable privacy laws and regulations. If there are material changes to the processes or services required as a result the Contractor additional fees may apply. (j) The terms and conditions of this section required by HIPAA shall be construed in light of any applicable interpretation of and / or guidance on the HIPAA privacy regulation issued by HHS from time to time. Any ambiguity in this section shall be resolved in favor of a meaning that permits Client to comply with applicable laws and regulations. 9.4 Survival. This section shall survive termination of this Agreement. 10.0 ©wnership of Work Product 10.1 Work Product: For the purposes of this Agreement, "Work Product" is defined as all inventions, improvements, computer programs, discoveries, ideas, processes, systems, writings or other works existing at the time of this Agreement and made or conceived by Contractor, or its employees, agents or independent contractors, solely or jointly with others, and any such information or materials which (a) are produced as part of or in the course of performing the Services; or (b) are conceived of or made during the term of this Agreement by Contractor that are improvements, advances, changes or derivations of Cont:ractor's existing Work Product. Contractor will retain all 10 rights, title and interest it may have in its Work Product, including the source code, compilers, related documentation and materials, and any modifications and enhancements to the Work Product at all stages of development and upon completion, and all patents and copyrights in the Work Product, and nothing in this Agreement shall be construed to give Client any right, title or interest therein. C:Iient shall render all reasonably required assistance to Contractor to protect the rights described above. Client warrants it has all right, power and authority to affect all assignments, transfers, and waivers provided herein. Any jointly developed work product will be owned by Contractor who may use, license, modify or transfer such Work Product without permission, compensation or accounting to Client. Client has not and shall not assign, license or otherwise transfer ownership, rights, title, or interest in the Work Product to any third party (including but not limited to copyright, patent, trademark, trade secret or any other intellectual proprietary right} or allow any lien or other encumbrance to be placed on any part of the Work Product to be created pursuant to this Agreement. 11.0 ®wnership of Records 11.1 Ownership of Records: All Client-specific or related information, data, documents, records, reports shall at all times be considered the property of Client. Contractor may, however, retain copies of any documents that might be necessary to defend any suit relating to Contractor's Services under this Agreement. Contractor agrees that Contractor does not own and will not use, distribute or publish any data or information transmitted to or from Client, and will ;make no use of such data or information, whether individually or in aggregated form, except pursuant to the terms of this Agreement. The records described in this provision do not include Contractor's proprietary information. Client may request a copy of their data at any time during the contract period and for a period of 1 year following termination. Costs for creating and sending the data will be quoted based on the requested data points and format. EBS will require Client signature prior to any fees being incurred for this purpose. 12.0 Record 1dlaintenance 12.1 Records Retention: Contractor shall maintain complete records pertaining to all aspects of its Services under this Agreement and necessary to substantiate and verify Contractor's actions and decisions. The records shall be maintained for the period of time required under applicable law but for not less than three (3) years. Client will agree to pay any and all reasonable fees related to the physical retention of documents and retrieval of such documents and information for any Services rendered prior to the current service year. 11 13.0 Compliance with Laws 13.1 Compliance with Laws, Licenses: In the performance of Services under this Agreement, Contractor shall comply with all applicable statutes, or ordinances, rules and regulations of any and all federal, state and municipal regulatory authorities, including all applicable state Individual Conversion, privacy and consumer protection statutes, ordinances, rules and regulations. Contractor shall comply with reasonable standards of the industry and Client's reasonable instructions. In addition, in the conduct of its business and the performance of Services hereunder, Contractor, and all persons furnished by Contractor to perform Services, shall comply at their expense, where applicable, with all local, state and federal labor and tax laws, permits, licenses and certificsates in performance under this Agreement. Contractor agrees to indemnify, defend (at Client's request) and save harmless Client, its affiliates, and each of their officers, directors and employees from and against any losses, damages, claims, demands, suits, liabilities, fines, penalties and expenses (including reasonable attorneys' fees) that arise out of or result from a failure by Contractor to comply with any such laws and regulations provided such failure is caused through no fault of Client and was within or reasonably should have been within the direct control of the Contractor. 14.0 Indemnification 14.1 Indemnification: Each party hereby agrees to indemnify and hold harmless the other party, i.ts affiliates and their agents, directors, officers and employees, successors and assigns from and against any third party claims for losses, claims, damages, suits, liabilities, judgments, fines, penalties and expenses (including reasonable attorneys' fees) to the extent that they arise out of or result from the a party's own negligent acts or omission. Further, the indemnification granted under this Section expressly includes indemnification with respect to expense costs, legal fees, defense costs, court costs, or amounts paid in settlement or in satisfaction of any judgmE~nt or award. 15.0 Dispute Resolution 15.1 Dispute Resolution: The parties will work together in good faith to resolve any disputes about their relationship. If the parties are unable to resolve the dispute within 30 days following the date one party sent written notice of the dispute to the other party, the parties agree to participate in non-binding mediation. 16.0 Miscellaneous Provisions 16.1 Notices: All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered in person, via facsimile transmission, or by United States mail, certified or registered, 12 postage prepaid, return receipt requested, or otherwise actually delivered to the appropriate party as follows: If to Contractor: Employee Benefits Specialists, Inc. 5934 Gibraltar Dr., Suite 206 Pleasanton, CA 94588 If to Client: City of South San Francisco 400 Grand Ave. South San Francisco, c~a 94oso 16.2 Entirety: The terms and conditions of any and all Exhibits to this Agreement are incorporated herein by this reference and shall constitute part of this Agreement as is fully set forth herein. This Agreement, together with the Exhibits, constitute the entire Agreement between Client and Contractor and supersedes all prior agreements proposals, oral or written, and all other communications between the parties in relation to the subject matter of this Agreement. 1b.3 Amendment, Modification or Waiver: No amendment-modification, supplement to, or waiver of the Agreement or any of its provisions shall be binding unless made in writing and duly signed by both parties. A failure of either party to enforce at any time of the provisions of this Agreement, or to exercise any option which is herein provided, or to require at any time performance by either party to this Agreement or any of the provisions hereof, shall in no way be construed to be a waiver of such provision of this Agreement. 16.4 Invalid Provisions: If any of the provisions of this Agreement shall be invalid, illegal or unenforceable, by reason of any rule of law, administrative decision, judicial decision or public policy, all other conditions and provisions of this Agreement shall nonetheless remain in full force and effect, and the parties shall mutually agree to such changes to this Agreement as are necessary to cure the invalidity in as consistent a manner as possible with the original intent of the parties as expressed in the invalidated provision(s). 16.5 Severabilitv: In the event any one or more of the provisions of this Agreement shall for any reason be held to be invalid, illegal or unenforceable, the remaining provisions of this Agreement shall be unimpaired, and the invalid or unenforceable provision shall be replaced by a mutually acceptable provision, which, being valid, legal and enforceable, comes closest to the intent of the parties underlying the invalid, illegal or unenforceable provision. 13 16.b Waiver and Default: No Waiver of any default or breach of this Agreement shall be deemed a continuing waiver or waiver of any other breach or default. 16.7 Pronouns: All personal pronouns used in this Agreement shall include the other gender, whether used in the masculine or feminine or neuter gender, and the singular shall include the plural whenever and as often as may be appropriate. 16.8 Structural Change: Contractor shall promptly notify Client of any material changes in its structure or operations occurring during the term of this Agreement, including, without limitation: material changes in Contractor's composition, ownership, management, financial condition, information systems, insurance coverages or other matters materially affecting Contractor's operations. 16.9 Force Nlajeure: Neither party shall be deemed in default of this Agreement to the extent that performance of its obligations or attempts to cure any breach are delayed or prevented solely by reason of any act of God, fire, natural disaster, accident, flooding, wars, terrorist activities, riots, acts of government, and occurring without its fault or negligence; provided, that the party whose performance or attempts to cure is delayed or prevented gives the other party written notice as promptly as practicable upon such evE~nt or occurrence and exercises commercially reasonable efforts to resume performance or cure the breach as soon as possible. 16.10 Survival: Any provisions of this Agreement which by their nature, extend beyond the expiration of termination of this Agreement shall survive the expiration and termination of this Agreement and shall remain in effecl: until all such obligations are satisfied. 16.11 Choice of Laws: The construction, interpretation and performance of this Agreement and all transactions under this Agreement shall be governed by the laws of the State of California, except to the extent (a) federal law applies, or (b) the performance of the Agreement in a particular respect or a transaction pursuant hereto is specifically subject to the applicable law (including administrative regulations and judicial decisions thereunder) of another jurisdiction, in which event such law shall govern. 16.12 No Third Party Rights: This Agreement shall not provide third parties with any remedy, cause, liability, reimbursement, claim of action, or other right in law or in equity for any matter governed by or subject to the provisions of this Agreement. 16.13 Construction: This Agreement shall be construed without regard to the party that drafted it. An.y ambiguity shall not be interpreted against either party 14 shall, instead, be resolved in accordance with other applicable rules concerning the interpretation of contracts, 16.14 Discster Recoveries and Business Continuation Plan FBCP): Contractor agrees to take all reasonable steps to prevent the interruption of the delivery of Services to Client. In addition, Contractor shall make preparations for anticipated interruption affecting delivery of Services in order to reduce the impact ~rhere reasonably possible. 16.15 PIea-~ The headings in this Agreement are for the purposes of reference only and shalt not limit or affect the meaning of any of the provisions hereof. 16.16 Autht~rity to Si n; Each s~F the persons signing this Agreement represents and warrants that that person is a duly authorized officer, director or agent of •• the party on whose behalf the person is signing, and further represents and warrants that the person signing has the power and authority to bind the party, and that the party has the legal power to enter into this Agreement. 16.17. Limitation of Liability: Except for the obligation to indemnify against third party claims and with respect to claims for breach of the provisions relating to confidentiality, neither party shall be liable to the other for lost Hme, lost profits, or far special, indirect, consequential or incidental damages of any kind, regardless of the form or basis of the claim, City of Sout an Francisco ~ ~_ _. B ... Y ~j r~ 242 ~. N(,, ~°~C.:,~t-- Print Name Print ~'itle /~~/i~ Date Employee Benefit Specialists, Inc. ~,___,`, ~I By f,_ Print Name Print Title ~~ ~ ~-- ;,~C°, l Date A~~cu~~cd~ j~o ~or,~n; aQ~v~ ]s ~~H~~ ~~ A SERVICES Contractor shall provide the following Services on behalf of City of South San Francisco: General Enrollment Contractor will offer an online enrollment system configured for Client. The systerr~ will provide a complete self-service enrollment feature that includes the plans listed below (up to 8 carriers and 12 plans included): Medical: Blue Shield and wiser (plans to be named) Dental: Delta Dental Vision: VSl' Ancillary Lines: Standard Life Insurance Company §457 Deferred Compensation (excluding interface file to vendors) Retirement Health Savings (excluding interface file to vendor) Health Savings Account (excludin.g interface file to vendor) §125 plan EBS will create a timeline for the implementation process for client sign off. The implementation document will list all deliverables with required delivery dates and responsible party. Delivery of items after agreed upon dates may impact other dates on the timeline including system delivery. All changes to the timeline will be documented and distributed by EBS to all implementation participants listed in the original document. Client has final sign off the svstem before it is moved to production and opened for live processing. During the system configuration each year, Contractor will provide Client with a timeline for deliverables and events and regular updates regarding information received and still outstanding. The Client will have final sign off authority prior to the system going live. Any requested or required changes to the system after the Client sign off will be charged to the Client. An estimate of the time and charges for the system updates will be quoted to the Client prior to the work beginning. Examples of the types of changes that could be incurred include but would not be limited to corrections/changes to rates, plan names, eligibility rules, employer contributions, and other meta data. The rate for changes is $175.00 per hour. An estimated number of hours lb will be quoted based on the requested changes/corrections and employer signature is required prior to any fees being incurred. Employees will use the system to enroll in the covered plans as they become eligible throughout the year. Based on the information provided and approved by the client the enrollment system will, among other things: 1. Not allow for incomplete enrollments. 2. Provide all rate and contribution information automatically. 3. Will only allow employees to enroll in or view the benefits for which they are eligible. 4. Allow employees to make changes throughout the enrollment period. 5. Allow enrollment data to be updated to the Contractor database on a real time basis. 6. Allow employees to view and print an enrollment summary. 7. Include employee data fields that can be configured as required. S. Other features are available and can be utilized based on Client data entered into the system. It is the Client's responsibility to ensure that all information provided to Contractor is up to date and accurate. All updates to the rates, benefits or other information included in the system for the proper functioning of the enrollment system are provided to EBS at least 45 days prior to the effective date of the change. Fees may apply for system corrections or updates. Eligibility/Data Integration Contractor will provide eligibility maintenance (data integration) for Client. Contractor will send to Client vendors (as listed herein) eligibility files no less than twice per month, and no more frequently than once per day. Such files shall be full or change only (as requested by vendor) and shall include all eligibility information in the format required by each listed vendor. Contractor's Benefits Administration system will provide Clients with an online system to update all status and enrollment information necessary for the enrollment and termination of employees and eligible dependents into the covered Plans. Client personnel will have varying levels of access to view all current coverage elections and/or enter change information on a daily basis. This Internet-based application will be accessible by Client, seven days a week, 24 hours a day, subject to scheduled maintenance. It is the Client's responsibility to ensure that alI plan and vendor information is accurate and up to date. Any changes to the vendors must be communicated to Contractor at least 45 days before the effective date of the required file delivery date to the new carrier. Vendor file format changes that require re-formatting by EBS for eligibility to continue to update properly will be charged to the employer. EBS will notify the Client of the required change, 17 and provide an estimate of the time and charges required to meet the new file mapping requirements. The Benefits Administration tools include, without limitation, the following components: 1. Workterra - A benefits enrollment and employer eligibility administration program that provides administrators with decision-support environment to aid users with benefit election and change functions. Presentation of benefit choices for participants will be specific to the benefits for which they are eligible. The system will provide the ability to (i) perform real time calculations involving eligibility rules and cost calculations, (ii) enter and manage demographic and dependent information, and (iii) supply coordination of benefits information regarding other health policies that may cover the client and end user (if applicable). The system will reduce or eliminate the need for paper forms and can accommodate future and retroactive dates. Clients will have the ability to produce 18 standard reports from the system in either a PDF or Excel format. 2. Administrator -The administrative functionality contained within the system will allow the following day-to-day activities to be performed: (i) data maintenance including the ability to review and update personal, dependent, employment, benefits election and benefit plan data; (ii) the ability to manage both the current year and succeeding year's enrollment activities through one interface; (iii) the ability to view person, employment and election history at a specific point in time or on a sequential basis; and (iv) the ability to view and print a legal grade audit trail for each employee. 3. Reporter - An online application that will allow administrators to select, configure, schedule, run, view, download and print standard and ad hoc reports. Reports can be downloaded in a delimited format (including Excel) to be further manipulatE~d. 4. Distribution -Contractor will distribute data to Client, Client's Broker, and listed vendors. The distribution of all information will be in accordance with applicable laws and regulations, including the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). All enrollment and change information will be provided to Plan providers electronically not less than twice per month. The parties acknowledge that Client or vendors, depending on business need may, request an increase in frequency up to a daily basis. 5. Secure Data Transport -Contractor will provide Client the ability to send and receive data (including protected health information) to and from Contractor via a HIPAA compliant secure technology. COBRA EBS will provide COBRA administration for the Client for the plans and carriers specifically noted herein. The administrative services included are: 18 Qualifying event notices -EBS will receive updated information on employee status through regular electronic files from the Client payroll or other system. That information will be uploaded by EBS within 2 days or delivery into our Workterra online enrollment and eligibility system. EBS will update our COBRA system based on that information weekly, and all qualifying events letters will be printed and sent to the qualified beneficiaries via first class mail. The Client will have online access to view all qualified beneficiaries in the COBRA system. The information that they will be able to view includes name, address, DOT, DOB, and ARRA qualification. In addition the site allows the employer to see the dates that all correspondence has been sent and view a PDF of that correspondence. Payment information is also available including the last payment made (date and amount) anal the next payment due (date and amount). COBRA participants will have access to their payment and enrollment information as v~~ell. EBS will bill the COBRA participants via coupons and collect payments made by chE~ck or ACH debit. All payments will be posted to the individual accounts and be viewable online. The employer will be billed for the ARRA amounts and the total premiums sent to the carriers on a monthly basis. Note that EBS will not send partial payments. EBS will maintain the COBRA eligibility with the carriers via the regularly scheduled eligibility files. These files will be sent a minimum of twice per month and a maximum of once per day as per the carrier requirements. The COBRA information will be included with the active and retired participants. Client will have access through Workterra to run reports as well. EBS will bill the Client for their COBRA contributions (includes ARRA) and include those payments along with active and retired participant payments monthly. Consolidated Billing EBS will download all eligibility for the month for each plan and line of coverage included in the Workterra system. EBS will forward an electronic billing statement to the Client each month on specified dates. The Client will pay as billed from each statement, forwarding all funds to EBS. EBS will forward the premium and fee payments to all carriers and vendors with required back up documentation. The consolidated billing statement will include current and adjusted amounts due for each line of coverage for the plans and carriers listed herein. retiree Administration 19 Retirees will be provided enrollment information from Client upon their termination of employment. The retiree will forward enrollment elections to EBS, EBS will key i:hose elections into WT and their eligibility will be forwarded to the carriers (for plans and carriers listed herein) electronically along with the active and COBRA participants. EBS will bill retirees via coupon billing, collect the premiums through hardcopy checks or ACH debit. Payments will be posted to the individual accounts. The employer and the employees will be able to view the payment information online. Enrollment information can be viewed online as well. EBS will send out letters to the retirees prior to their b5th birthday, enroll them m the Medicare supplement plans and forward the enrollments to the carriers as per their requirements. EBS will terminate retiree coverage on the appropriate dates (if the retirees age out of the plans based on eligibility rules) and send~out COBRA notices. Surviving spouses will be enrolled in coverage as per the eligibility rules. EBS will bill the Client for any retiree coverage contributions. Employer will be able to view copies of all correspondence created from the system (payment coupons, credit notices, late notices etc.) Section 125 Administration EBS will provide Section 125 administration services (medical reimbursement and dependent care) for the employees of the Client whose enrollment information is included in the Workterra system. The administrative services include claims adjudication. Participants can forward claims to EBS via mail, fax, electronic and debit card. The mailed and faxed claims are adjudicated daily by the EBS claims department based on the date on which they are received. The electronic submission of a claim requires copies of the substantiation to be mailed or faxed before a reimbursement can be processed. These are entered into the system based on the date on which they are received. J Debit card transactions are typically up to 85 % auto-adjudicated for medical, prescription and dental expenses. Those that cannot be automatically approved will rf~quire substantiation which will be requested by EBS. EBS will perform one discrimination test per year. EBS will provide the 5500 form filing service. EBS will provide a plan document and master SPD. 20 Twice per year EBS will mail a hardcopy statement to participants to provide balancE~ and claim information and remind them of the deadlines to incur and claim. E~31 Administration For group plans that require Evidence of Insurability, Workterra will be configured to have the form "pop up" on the enrollment screen for a benefit elected over the guarantee issue amount. The form will have instructions for the employee to print and mail. (If a carrier will accept online EOI forms that information will be forwarded electronically.) EBS will receive the information on the underwriting from the vendors and update the system. Once an election has been updated in the system with the carrier allowed amount of coverage the new payroll deduction (if applicable) will be included on the next payroll file. EBS will monitor the EOI list to ensure prompt response from the employee and the vendors. Leave of Absence Billing Client will notify EBS of unpaid leaves through regular file or other means. EBS will create billing coupons and send to the employee. The employee can pay through check or ACH debit, all payments will be posted to the employee's account, reconciled and forwarded. with the regular monthly vendor payments. EBS will establish payment rules with the Client to ensure timely payment from the employees to maintain active coverage. Fulfillment If requested, and for a fee to be agreed upon, Contractor will provide fulfillment services, including printing and bulk mail services. Contractor will mail and receive all open enrollment or initial announcement materials for the programs being enrolled. and administered by Contractor. Client will provide or approve any and all enrollment and announcement materials. Customer Services Contractor will provide an operator attended toll free customer service line for Client personnel and their employees for enrollment system and questions and issues as they relate to eligibility and billing. The customer service line shall be available Monday through Friday from 8 a.m. to 5 p.m. Pacific Time, except national and other posted holidays. EBS offers bi-lingual operators for participant customer service (however there may be times when bi-lingual operators are not available.) 21 E?s~iIBI'T ~ FEES ~~ __ - .~. System Training Included dministrative Seats seats included II others $250.00 per user Payroll files 1500.00 per file one time set up fee Changes to file after initial sign off $175/hour all hourly charges quoted in advance and employer signature required before work is started File s=eeds Included Set up and maintenance of vendor files is included for up to 8 carriers and 12 plans. All others charged on an hourly basis of $175/hour. Implementation Fee $2500.00 one time set up fee No annual setup fee EBS Management of Online System 3.25 PEPM Includes fully configured system with employe plans, rates, eligibility rules and other Client specific data as outline in set up documents. Consolidated Billing $1.25 PEPM ection 125 administration 0.65 PEPM Includes plan document (and SPD), discrimination testing, debit card, direct deposit, and check reimbursement. Online and toll free automated employee access, and' online access for employer, and annual account statements mailed to participant homes. 22 ;aBR~ $10.00 per qualifying event notice $10.00 per month per COBRA $10.00 per month administration fee includes, participant billing and collection via coupon billing, 3.00 per COBRA Rights notice for new eligibility maintenance with carriers via hires electronic files, updating elections and of premium collected from erminations in EBS system to properly reflect participant all COBRA activity, premium reconciliation and payment to vendors (including employer contributions.) Leave of Absence Biiiling $4.00 PPPM EBS will bill and collect premiums, reconcile and forward to the carriers with the active employee payments. Qualifying Event $0.75 PEPM Retiree Administration $7.50 PPPM ystem Changes $175.00 per hour 7ver Age Dependent Processing Included EBS will terminate overage dependents from coverage based on employer rules for each line of coverage. Data Scrubbing or 1=iie Conversion $175/hour 23 Additional Fees: ~a ~dg~~.d.H~ a.,' ~'T~~~~3 v Implementation Fee 3 Year Contract (1 Months Fees) (One time only fee due implementation phase year one) No implementation charges will be incurred by client for any future versions or releases of EES software. Annual Rate & Plan Changes Included in Monthly Fee (Up to 20 hours of re-programming, all hours after that are charged at $175 per hour) (Unless there are substantial plan, funding or other changes 20 hours is more than adequate for the new plan year.) Additional Carrier Feeds (any time after initial set up) per map Mid-year benefit changes Mid-Year rate changes Employee Support Employer Support Electronic Data file reconciliation per plan per plan Included in Monthly Fee Included in Monthly Fee Included in Monthly Fee Custom reports per report (includes 20 hours of programming additional hours will be quoted when necessary) Custom Forms per form Administrative Accounts each (Employer System Access Password Accounts) NOTE: More than one person can use the same administrative password. The history in the system will show the administrative password and the IP address of the computer that was used so that changes made by more than one person under the same password can still be differentiated. In addition there is a feature in the system that can be made mandatory or optional that is a journal where notes can be added to the system after each change oi• page view to have the user explain the actions taken in the system. 24 ~l;~ii~~ S j%SiC~~l ZTiJ~~S; System Set or System Configuration is the process of setting up all plan information, rules and rates into the EBS online system to ensure proper administration. The system will be configured in such a way as to ensure that all eligibility information can be loaded easily and will not allow employees who are not eligible for certain benefits to be enrolled in those benefits, to ensure that the proper rates apply to each benefit plan, and that errors can be greatly reduced or eliminated by creating strict rules in the system so that it becomes an easy use intuitive system. EBS will provide 3 Administrative accounts or Company Administrator Passwords. Each additional administrative account will be charged to the client at $250 per account, one time. Administrative accounts can be utilized by more than one person and are completely transferable amongst Employer personnel. Administrative accounts allow the employer access to print reports, create new employee accounts, reset passwords, perform enrolment fiinctions, etc. Included in this is the set up for the secure transport utility. The access is via a web browser only, no software or hardware is required. Employers can elect other methods of HIPAA compliant secure data transfer. The system set up also includes data mapping and transformation to any format required by the carrier including HIPAA compliant formats for the listed number of carriers. Additional or new data feeds will incur additional fees as outlined above. There are several standard reports in the system, which are included in the monthly fees. Custom reports are available for the client to develop. If necessary, EBS can develop custom reports at the fee listed above. The reports are not available on an ongoing basis to clients once they are no longer utilizing the EBS system and have terminated EBS' services using the online platform. EBS' enrollment technology allows employers to upload forms for their employees that they can populate and then print (i.e. overage dependent, claim forms). PLEASE NOTE: this fee listed above only applies to documents that EBS must convert to an up-loadable format. Any documents provided to EBS in the requisite format will be uploaded at no additional charge. Files that are not provided in a format that can be automatically uploaded and require conversion to PDF or other will be quoted upon request prior to any fees being incurred. Note: This is a preliminary proposal and the fees are subject to change based on actual vs. anticipated workload. 25 Hardcopy Reports from Client Data Feed to Client Payroll System Additional Data Feed to Client (includes 20 hours programming) month per report type one map per client included per additional map Multiple Payroll Schedules Wire Transfer of funds (No charge for ACH transfers or checks) included in Monthly Fee per Wire NOTE: EBS will include the payroll reconciliation of the voluntary bills listed, and premium payment, eligibility reconciliation and assumption of liability for reported and rec;eived payroll deductions and reported billed amounts tJTpo~a request of t.ia~ Client ~~S wgll p~rf®rn~. dcpcradent aa~dit services as quoted ~~rei~i. Assumptions: 430 eligible employees (active only) Assume 25% enrolled as employee only and therefore not required to participate Assume 40% of population with enrolled dependents will not require further communication due to completion online 1. Dependent Audit Includes Initial mailing $ 3.00 per letter Follow up process $20.00 per person =i. Otlael• Set up of Single Sign On capabilities with 457 and RHS vendors $175 per hour -fees will be quoted based on anticipated hours after specifications have been discussed with vendors and SSF to provide deductions for these plans on the payroll file. This is a one-time set up fee. A quote will be provided to the City with the estimated number of hours for signature prior to work beginning. EBS will create a 457 "plan" and RHS "plan" into Workterra where employees car. enter their deductions which EBS will include on the payroll files as per the Client's specifications. Client will continue to notify these vendors of deduction amounts. There is no charge for 26 adding these "plans" to the system. (Note the word "plan" is in quotes because they are not plans as defined herein but a mechanism to collect deduction changes.) EBS will post Standard Life Insurance claim forms on the Workterra site at no charge and update these as per notice from the client. No charge. (Claim questions will be directed to Standard.) Medicare Rebates to retirees: $5.00 per quarter per participant for quarterly reimbursements. Other reimbursements schedules will be quoted upon request. HSA -set up will be quoted based on specifications of the single sign on at $175/hour, the quote will be provided to the City with the estimated number of hours for signature prior to work beginning. Additional Employees: Conference Center Authority South San Francisco Housing Authority The PEPM fees for the actives -and the PPPM fees for the COBRA will be the same as the City fees. EBS will include these employees in the system for eligibility management and will include these employees on the consolidated bills for premiums and fees. 27 E^~~~aT c sER~~cE IJ~~EI; A~~EEMElvI'T EI3S Perf®rmance Guarantees Fligi~ili anti a~~oll Fife Managen~en~: Vendor files must be received on scheduled dates, in the agreed upon format. Notice must be provided to EBS of file delivery. Delays caused by file transmission errors, unreported file layout changes or any other factor not within the direct control of EBS will not be subject to this guarantee. Metric Penal Comments Files processed within 2 % of monthly fee business days of scheduled dates EBS will deliver eligibility % of monthly fee The percentage will be data to listed carriers and calculated on asemi-annual other parties on or before basis based on a contract the due dates 99 % of the year. time. EBS will not be responsible for transmission errors beyond our immediate control. EBS will not be responsible for carrier data entry or file issues, late or incorrect file posting errors by receiving parties. Billing and Reconciliation EBS is responsible for accurate payments and distributions for all products administerE~d via Workterra. This includes all forms of payments from payroll deduction, bank drafts,~EFT, direct billing and credit card payments. Metric Penal Comments 97% accuracy of billing to % of monthly admin fee Includes monthly distribution) adjustments based on • Payroll: the amount adds/ terms. deducted to the amount paid to Reports will be provided carriers monthly in aggregate and • Bank Draft: amount by client drafted to amount aid to carriers ~g Deliver billing statements °% of monthly fee Additional penalties will on or before scheduled apply each additional ~ dates 99% of the time' scheduled business days that the billing statement is delayed. The percentage is calculated based on a contract year. EBS will process carrier % of monthly fee Discrepancies are counted payments with 98% as errors against all possible accuracy rate.' payments, a percentage is calculated to determine compliance with this standard. EBS will forward carrier % of monthly fee Payment must be received payments to carriers within on scheduled due dates and 5 business days of complete bills are required to be paid and accurate a ment4 as billed`` 1 EBS will not be responsible for delays caused by employer, employee or other payment arrangement delays in forwarding funds to EBS. EBS will not forward its own funds for the payment of any plan fees, charges, premiums, or claims. EBS will not be responsible for delays caused by banking issues or other intermediary delays. EBS will be responsible for properly instituting the payment :process on the scheduled dates. 2 In order for this standard to apply any required Employer information must be received on or before scheduled delivery dates in the agreed upon format. EBS, Inc. will n.ot be responsible for delays caused by the employer, carriers, or any other factor that is bE~yond the immediate and direct control of EBS, Inc. EBS, Inc. must have: access to all information required to process the payments,, adequate employer funds, and 45 day prior written notice of any plan changes, to be held responsible for any delays. To meet payment deadlines, EBS, Inc. will process all payments with the information available on the scheduled processing date. 3 EBS will not be responsible for errors created by incorrect information provided by the employer, carrier or other outside party. EBS will only be responsible for information that has been provided in a timely manner in the agreed upon format. 4 This metric does not apply to payroll deduction plans. The funds for these will be sent each pay period and then processed and paid once per month. Employer will forward only the deductions actually taken from the participant's paychecks. EBS will reconcile funds received to the eligibility in the system and forward accordingly. 29 'T'echnology There shall be four problem levels, with the severity level initially determined based on Client's system configuration. Below is the definition of severity levels for the self-service online enrollment feature, the eligibility management feature (accepting employer eligibility, forwarding data to carriers on scheduled dates), and administration features (reporting, billing, COBRA, and 125). A Severifiy 1 defect is one in which primary system functions of the Basic Services far the System are non-operational (in other words the system is not usable at all by the employer and or the employees). Contractor will use its best efforts to fix Severity 1 defects within one business days (48 hours on weekends on holidays). Penalty equal to _% of monthly fee. Open Enrollment Periods -This is the period that Employees are accessing the system during the once annual specified open enrollment period to elect benefits for the new plan year. Contractor will use best efforts to correct Severity 1 defects within 24 hours. A Severity 2 defect is one in which the Basic Services are operational but main functionality is not available (system is usable but functionality not optimal, ex. can enroll but the system is very slow). Contractor will use all commercially reasonable efforts to fix Severity 2 defects within three business days. Penalty equal to _% of monthly fee. Open Enrollment Periods -This is the period that Employees are accessing the system during the once annual specified open enrollment period to elect benefits for the new• plan year. Contractor will use best efforts to correct Severity 2 defects in 2 business days. A Severity 3 defect is one in which the Basic Services are operational and the impact on the client is not severe.(System available for main functionality but some functions not optimally available (ex. reports not available on demand but must be scheduled.) For Severity 3 defects, Contractor will initiate diligent efforts to eliminate noted systems problems within a mutually agreed upon time period. Penalty equal to _% of monthly fee. A Severity 4 defect is one which has a minor impact. Characteristics include perceived shortcomings, dissatisfaction or questions with regard to the Basic Services. Contractor will, in cooperation with Client, determine any necessary or operational action to take. with respect to Severity 4 defects. Contractor shall provide a telephone contact for Severity 1 and Severity 2 problems seven days a week, 24 hours a day. Telephone support for Severity 3 and Severity 4 shall be provided between 8:00 a.m. and ~ :00 p.m. Pacific Time. 30 Employee Benefit Specialists, Inc. (EBS) will provide technical support Monday through Friday Barn to 5pm Pacific not including holidays (except for Open Enrollment Periods and Severity One Issues see above) to assist Customer with issues pertaining to the Workterra System (system) set forth herein. Times begin when monitoring alerts are discovered and validated.) System Availability Commitment a. The system will, subject to the exceptions listed in sections 8(a) and 8(b), be available for a percentage of each calendar month equal to the Service Level Commitment as specif7ically set forth herein (referred to herein as the "Availability Commitment"). The availability of the system for a given month will be calculated according to the formula included herein. b. For purposes of this calculation, the Workterra system will be deemed to be unavaiilable if its monitoring agent fails to respond to a request issued by EBS' monitoring soft~Nare. Further, the Managed Device(s) will not be deemed Unavailable for any downtime or outages excluded from such calculation by reason of the exceptions set forth herein. Monitoring Agent -EBS licenses software that monitors the hardware and software ort a 24 hour - 7 day a week basis. The software cycles through the testing phases; first it tests i:o see if the hardware is functioning, then it tests the software by opening pages, it will record if a page cannot open, or if it can open the time it takes for the page to load. It also monitors many other items such as storage capacity and memory etc. All on a constant basis. The system sends immediate alerts for hardware and software issues. EBS is notified immediately for any downtime for either the hardware or software. Upon notification from the client or the monitoring agent EBS will send Client a response in writing noting the start of a unscheduled system downtime. Quarterly downtime schedules will be sent to the client. Patch/Upgrade Notification and System Deployment. EBS will provide Customer with notification of patches/updates within 5 business days after release. Installation services for patches/upgrades will be scheduled during a mutually agreed upon maintenance window where allowable, EBS reserves the right to determine the scheduled for all upgrades and patches. Notifications and Deployment services are subject to the exceptions noted below. Availability Calculation. The availability of the EBS Workterra System for a given rnonth will be calculated according to the following formula (referred to herein as the "Availability"): Where: Total minutes in the month x total servers =TMM Total minutes in month Managed Device(s) unavailable =TMU And: Availability =((TMM-TMU) x 100)/TMM EBS uses a 30 day month which translates to 43,200 minutes for the above TMM calculation. The number of servers changes based on need (as of January 1, 2008 there are 6). 31 Exceptions a. The Workterra System will not be considered to be Unavailable for any outage that results from any maintenance performed by EBS (i) of which Customer is notified 24 hours in advance; (ii) during Customer.'s implementation period; (iii) during EBS' then-current standard maintenance windows (collectively referred to herein as "Scheduled Maintenance"); or (iv) as a result of Customer requests outside of the normally scheduled maintenance. b. The Workterra System will not be considered Unavailable for any outage unavailability due to (i) Customer acts or omissions of Customer or its agents, failures of equipment or facilities provided by Customer, network unavailability outside of EBS' system; (ii) issues arising from bugs or other problems in the software, firmware or hardware of EBS' suppliers; (iii) delays or failures due to circumstances beyond EBS' reasonable control that could not be avoided by its exercise of due care; or (iv) any outage or downtime to EBS' Network. 1<Zemedies. Subject to the exceptions provided for herein, Customer will have the rights set forth bE~low. a. If the Availability of the System (as calculated above) for a given month is less than the applicable Service Level Commitment, Customer will receive one (1) Service Credit for the first 100 minute increment by which the allowable unavailability is exceeded. Thereafter, for each additional 100-minute increment by which the allowable outage is exceeded, Customer will receive one (1) additional Service Credit for the Managed Device(s). To summarize EBS will refund one day's fees for every 100 minutes of downtime in Excess of the Service Level Commitment, up to a total of 30% for any given month. The eligibility for a credit is determined based on each 30 day month period. The downtime is not counted in consecutive minutes, but total minutes during the month. b. For purposes of this Agreement a Service Credit will be deemed to be an amount equal 1/30th of the total monthly fee for the System, which are affected (herein referred to as "Service Credit"). The total Service Credits for a given month will, in no event, excE~ed an amount equal to 30 % of the then-current Services monthly fee. Service Credits will be recognized for billing purposes in the month following the month giving rise to such Service Credits. All service credits will be calculated assuming a 30-day month. Customer's right to receive service credit(s) will be Customer's exclusive remedy for EBS' failure to satisfy the Availability Commitment. c. In the event Customer is not current in its payment obligations when an outage occurs, remedies will accrue, but Service Credits will not be issued until Customer becomes current in its payment obligations. d. To receive Service Credits Customer must submit a written request within 30 days after the date which the System was Unavailable, or Customer's right to receive Service Credits with respect to such unavailability will be waived. 32