DRAFT #1 –1/26/16 (RR/TMc)

Plan Document LifeCare Medical Center Employee Flexible Benefits Plan

Amended and Restated January 2016 PKA20361.16.01.26

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ADMINISTRATION LifeCare Medical Center is the Flex Plan Administrator and Flex Plan Sponsor of the LifeCare Medical Center Employee Flexible Benefits Plan (the Flex Plan). MANY OF THE TERMS USED IN THE FLEX PLAN DOCUMENT HAVE SPECIAL MEANING. SUCH TERMS ARE SPECIFICALLY DEFINED IN THE SUMMARY PLAN DESCRIPTION(S) AND ARE ITALICIZED. A. Flex Plan Administrator’s Authority In addition to those powers, rights and duties delegated to it elsewhere in the Flex Plan, and to the extent the authority is not delegated to another person under this Flex Plan, the Flex Plan Administrator shall have the exclusive, final, and binding discretionary authority to: 1.

Resolve all questions relating to participation and coverage under this Flex Plan, including but not limited to, questions concerning eligibility, dates of participation, termination of participation, coverage and enrollment;

2.

Resolve all questions related to availability, reimbursement and payment of benefits, including determination of the amount, manner and time of reimbursement and payment of benefits and the sufficiency of proof of claims;

3.

Construe and interpret the terms and conditions of the Flex Plan and make factual and legal determinations regarding the Flex Plan or covered employees;

4.

Adopt rules of procedure that it determines may be necessary for the proper and efficient administration of the Flex Plan, consistent with the provision of the Flex Plan;

5.

Enforce the terms of the Flex Plan;

6.

Perform the final review of denied Claims and appeals of denied claims;

7.

Prepare and distribute, in such a manner as it determines to be appropriate, information explaining the Flex Plan;

8.

Maintain adequate records concerning the Flex Plan and its administration; and

9.

Appoint and retain persons or entities to assist in the administration of the Flex Plan and any other agents it deems advisable, including legal, accounting and actuarial services.

B. Delegation by the Flex Plan Administrator The Flex Plan Administrator may delegate any of its powers, including discretionary powers, to any individual, entity, agent or Committee as it determines to be reasonably necessary for the effective and efficient administration of the Flex Plan, subject to the condition that any such delegation may be revoked at any time. Such delegation may also include the right to redelegate such power. Any reference in the Flex Plan to the Flex Plan Administrator is also a reference to its designee. C. Information furnished by the Flex Plan Administrator The Flex Plan Administrator shall furnish to PreferredOne Administrative Services, Inc. (PreferredOne) any information that it may require from time to time. PreferredOne may rely upon the records of the Flex Plan Administrator as being correct. D. Information Furnished by Claimants Information furnished by a claimant or the claimant’s representative(s) shall be considered relied upon when making a claim determination. Claimants must furnish such information as considered necessary to properly carry out the terms of the Flex Plan.

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E. Limitation of Authority PreferredOne, the designated Third Party Administrator (TPA), or any person appointed by it, shall have no power to amend, modify or delete any of the terms of the Flex Plan, or to waive or fail to apply any requirements of eligibility for benefits under the Flex Plan without direction from the Flex Plan Administrator. F.

Compensation and Expenses The Flex Plan Administrator shall serve without compensation under the Flex Plan.

G. Authority to Amend and Terminate the Flex Plan The Flex Plan Sponsor, by action of its governing body or an authorized officer or Committee, reserves the right to amend or terminate this Flex Plan by written instrument to that effect. H. Disclosure of Summary Health Information to the Flex Plan Sponsor In accordance with the Privacy Standards, the Flex Plan, the Flex Plan Administrator or the Flex Plan Administrator’s designee on behalf of the Flex Plan may disclose Summary Health Information to the Flex Plan Sponsor, if the Flex Plan Sponsor requests the Summary Health Information for the purpose of (a) obtaining premium bids from health plans for providing health insurance coverage under this Flex Plan or (b) modifying, amending or terminating the Flex Plan. “Summary Health Information” may be individually identifiable health information and it summarizes the claims history, claims expenses or the type of claims experienced by individuals participating in the Flex Plan, but it excludes all identifiers that must be removed for the information to be de-identified within the meaning of the Privacy Standards, except that it may contain geographic information to the extent that it is aggregated by five-digit zip code. I.

Disclosure of Protected Health Information to the Flex Plan Sponsor for Flex Plan Administration Purposes In order that the Flex Plan Sponsor may receive and use Protected Health Information (“PHI”) for Flex Plan Administration functions, as defined below, the Flex Plan Sponsor agrees to the following provisions, which are more fully described in the Flex Plan’s privacy notice, distributed to covered persons upon enrollment and available upon request from the Flex Plan Administrator: 1.

Not use or further disclose PHI other than as permitted or required by the Flex Plan Document or as Required by Law (as defined in the Privacy Standards);

2.

Ensure that any agents, including a subcontractor, to whom the Flex Plan Sponsor provides PHI received from the Flex Plan, the Flex Plan Administrator or the Flex Plan Administrator’s designee on behalf of the Flex Plan, agree to the same restrictions and conditions that apply to the Flex Plan Sponsor with respect to such PHI;

3.

Not use or disclose PHI for employment-related actions and decisions or in connection with any other benefit or employee benefit plan of the Flex Plan Sponsor, except pursuant to an authorization that meets the requirements of the Privacy Standards;

4.

Report to the Flex Plan any PHI use or disclosure that is inconsistent with the uses or disclosures provided for of which the Flex Plan Sponsor becomes aware;

5.

Make available PHI in accordance with Section 164.524 of the Privacy Standards (45 CFR § 164.524);

6.

Make available PHI for amendment and incorporate any amendments to PHI in accordance with Section 164.526 of the Privacy Standards (45 CFR § 164.526);

7.

Make available the information required to provide an accounting of disclosures in accordance with Section 164.528 of the Privacy Standards (45 CFR § 164.528);

8.

Make its internal practices, books and records relating to the use and disclosure of PHI received from the Flex Plan, the Flex Plan Administrator or the Flex Plan Administrator’s designee on behalf of the Flex Plan, available to the Secretary of the U.S. Department of Health and Human Services (“HHS”), or any other officer or employee of HHS to whom the authority involved has been delegated, for purposes of

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determining compliance by the Flex Plan with Part 164, Subpart E, of the Privacy Standards (45 CFR § 164.500 et seq.); 9.

If feasible, return or destroy all PHI received from the Flex Plan, the Flex Plan Administrator or the Flex Plan Administrator’s designee on behalf of the Flex Plan, that the Flex Plan Sponsor still maintains in any form and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made, except that, if such return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction of the PHI infeasible; and

10. Ensure that adequate separation between the Flex Plan and the Flex Plan Sponsor, as required in Section 164.504(f)(2)(iii) of the Privacy Standards (45 CFR § 164.504(f)(2)(iii)), is established as follows: a.

The following employees, or classes of employees, or other persons under control of the Flex Plan Sponsor shall be given access to the PHI to be disclosed: Human Resources Director Staff designated by Human Resources Director Chief Financial Officer Flex Plan Auditor Other persons to have access to PHI, including any employee or person who receives PHI relating to payment under, health care operations of, or other matters pertaining to, the Flex Plan(s) in the ordinary course of business: Title: Title:

b.

The access to and use of PHI by the individuals described previously in subsection (a.) shall be restricted to the Flex Plan Administration functions that the Flex Plan Sponsor performs for the Flex Plan.

c.

If any of the individuals described previously in subsection (a.) do not comply with the provisions of the Flex Plan Document (as amended) relating to use and disclosure of PHI, the Flex Plan Administrator shall impose reasonable sanctions as necessary, in its discretion, to ensure that no further non-compliance occurs. Such sanctions shall be imposed progressively (for example, an oral warning, a written warning, time off without pay and termination), if appropriate, and shall be imposed so that they are commensurate with the severity of the violation.

“Flex Plan Administration” functions are defined as activities that would meet the definition of payment or health care operations, but do not include functions to modify, amend or terminate the Flex Plan or solicit bids from prospective issuers. “Flex Plan Administration” functions include quality assurance, claims processing, auditing, monitoring and management of carve-out plans, such as vision and dental. “Flex Plan Administration” functions do not include any employment-related functions or functions in connection with any other benefit or benefit plans. The Flex Plan, the Flex Plan Administrator or the Flex Plan Administrator’s designee on behalf of the Flex Plan shall disclose PHI to the Flex Plan Sponsor only upon receipt of a written certification by the Flex Plan Sponsor that (a) the Flex Plan Document has been amended to incorporate the above provisions and (b) the Flex Plan Sponsor agrees to comply with such provisions. J.

Disclosure of Certain Enrollment Information to the Flex Plan Sponsor Pursuant to Section 164.504(f)(1)(iii) of the Privacy Standards (45 CFR § 164.504(f)(1)(iii)), the Flex Plan, the Flex Plan Administrator or the Flex Plan Administrator’s designee on behalf of the Flex Plan may disclose to the Flex Plan Sponsor information about whether an individual is participating in the Flex Plan or is enrolled in or has disenrolled from a health insurance issuer or health maintenance organization offered by the Flex Plan to the Flex Plan Sponsor.

K. Disclosure of PHI to Obtain Stop-Loss or Excess Loss Coverage The Flex Plan Sponsor hereby authorizes and directs the Flex Plan, through the Flex Plan Administrator, the Flex Plan Administrator’s designee or PreferredOne Administrative Services, Inc., the third party

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administrator, to disclose PHI to stop-loss carriers, excess loss carriers or managing general underwriters (MGUs) for underwriting and other purposes in order to obtain and maintain stop-loss or excess loss coverage related to claims for benefits under the Flex Plan. Such disclosures shall be made in accordance with the Privacy Standards. L. Other Disclosures and Uses of PHI With respect to all other uses and disclosures of PHI, the Flex Plan shall comply with the Privacy Standards. M. Administrative, Physical and Technical Safeguards. (Terms used are not otherwise defined herein will have the meaning attributed to them under the Standards for Security Standards for the Protection of Electronic Protected Health Information, Title 45, Parts 160 and 164, Subpart C, of the Code of Federal Regulations, promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996, Public Law 104-91). The Flex Plan will implement adequate administrative, physical and technical safeguards that will reasonably and appropriately protect the confidentiality, integrity and availability of e-PHI that it creates, receives, maintains or transmits on behalf of the Flex Plan including: 1.

The Flex Plan Sponsor will ensure that the adequate separation between the Flex Plan and the Flex Plan Sponsor in its capacity as other than the Flex Plan Administrator is supported by reasonable and appropriate security measures.

2.

The Flex Plan Sponsor will ensure that any agent, including a subcontractor, to whom it provides e-PHI received from the Flex Plan agrees to implement reasonable and appropriate security measures to protect the e-PHI.

The Flex Plan Sponsor will report to the Flex Plan any material Security Incident of which it becomes aware not already known by the Flex Plan.

UNDERSTANDING This Plan Document, which incorporates all Summary Plan Description(s) (“SPDs”) applicable to the Flex Plan, is attached to and forms a part of the Health Services Network Access and Administration Agreement between LifeCare Medical Center and PreferredOne Administrative Services, Inc. Flex Plan Sponsor hereby amends and restates this Flex Plan, effective January 1, 2016, to permit covered employees to elect health FSA benefits, and dependent care FSA benefits (“FSA benefits”) and to pay for such benefits with employee contributions. The Flex Plan also permits covered employees to elect premium payment benefits for purposes of payment of the employee’s share of premium costs under other group benefit programs offered by the employer and to pay for such benefits with employee contributions. Employee contributions are paid on a pre-tax salary reduction basis for the applicable FSA benefits, and premium payment benefits. Employee contributions are applied by the employer to pay contributions for FSA benefits, premium payment benefits, and for purposes of this Plan and the Internal Revenue Code (“Code”) are considered to be employer contributions. The Flex Plan is “self-insured” which means that for FSA benefits, Flex Plan Sponsor pays FSA benefits from employer contributions as a claim for FSA benefits and associated expenses are incurred and submitted for reimbursement under the FSA portion of the Flex Plan. Employer has contracted with an independent claims administrator, PreferredOne Administrative Services, Inc. (“PreferredOne”), to provide claim processing and other services relating to FSA benefits under the Flex Plan. However, your employer operates and administers its premium payment benefits option internally. This Flex Plan is intended to qualify as a “cafeteria plan” under Code Section 125 and regulations thereunder. The health FSA portion of the Flex Plan is intended to qualify as a self-insured medical expense reimbursement program under Code Section 105, and the dependent care FSA benefit is intended to qualify as a dependent care assistance program under Code Section 129. The premium payment benefits, health FSA benefits, and dependent care FSA benefits are part of a single Flex Plan and share the same Plan Document. However, under the Code and the Employee Retirement Income Security Act of 1974 (ERISA), different disclosure, reporting, non-discrimination, applicable COBRA continuation coverage and covered person's rights apply to each benefit type. The health FSA portion of the Flex Plan and the employer’s other group benefit programs for which premiums are paid under this Flex Plan are subject to ERISA while the dependent care FSA benefit is not subject to ERISA. As a result, certain provisions of the Flex Plan Plan Document and SPD, such as the “Rights of Covered Persons”

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section, are applicable only to the health FSA portion of the Flex Plan, as required by ERISA laws. Such provisions are noted in this Flex Plan Plan Document and SPD. The provisions of the Flex Plan Plan Document and SPD applicable to the health FSA are intended to comply with ERISA, as amended. This Plan Document together with all incorporated Summary Plan Description(s) and any Flex Plan amendments constitutes the entire Plan Document of the Flex Plan. Although this Flex Plan allows eligible employees to enroll for premium payment benefits to pay for other group benefit programs, the actual terms and conditions for coverage and benefits under such other group benefit programs are determined by the separate certificates of coverage, summary plan descriptions and insurance policies applicable to other such other group benefit programs. The applicable certificates of coverage, summary plan descriptions and insurance policies for the other group benefits programs will be provided to you separately from the SPD for the Flex Plan. Effective January 1, 2016, this restated Plan Document, including the incorporated restated Summary Plan Description(s), supersedes and replaces any prior plan document or summary plan description(s) for this Flex Plan. This Flex Plan is maintained for the exclusive benefit of covered persons. This Plan Document and Summary Plan Description (SPD) may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same applicable instrument.

Signatures for the Plan Document Flex Plan Sponsor Lifecare Medical Center

Third Party Administrator PreferredOne Administrative Services, Inc.

_________________________________________ Company Representative

__________________________________________ Company Representative

_________________________________________ Title

__________________________________________ Title

_________________________________________ (Please print name of Company Representative)

__________________________________________ (Please print name of Company Representative)

_________________________________________ Date

_________________________________________ Date

PreferredOne Website Agreement. Following receipt of the required signature, the Summary Plan Description can be posted on the Employer section of PreferredOne’s website. Would you like your SPD added to PreferredOne’s website? Please circle one: YES NO

Initial______

Signatures for the SPD The SPD will be printed following receipt of the following signature(s).

Flex Plan SPD

Flex Plan Sponsor Lifecare Medical Center

Third Party Administrator PreferredOne Administrative Services, Inc.

Adopted and agreed to by:

Accepted and Received by:

______________________________________________ Company Representative Date

____________________________________________ Company Representative Date

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