Special District Risk Management Authority Page 1:6 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING (HEREAFTER “MEMORANDUM”) IS
ENTERED INTO BY AND BETWEEN THE SPECIAL DISTRICT RISK MANAGEMENT AUTHORITY (HEREAFTER “SDRMA”) AND THE PARTICIPATING PUBLIC ENTITY (HEREAFTER “ENTITY”) WHO IS SIGNATORY TO THIS MEMORANDUM.
WHEREAS, on August 1, 2006, SDRMA in its capacity as a member of Public Risk Innovation, Solutions and Management (PRISM) and having executed the Joint Powers Agreement (JPA) governing PRISM, was appointed administrator for the purpose of enrolling small public entities into the Public Risk Innovation, Solutions and Management (PRISM) Health and/or Employee Benefits Small Group Program (hereinafter "PROGRAMrogram"); and WHEREAS, the terms and conditions of the PROGRAM as well as benefit coverage, rates, assessments, and premiums are governed by the PRISM Health Committee and/or PRISM Employee Benefits Committee for the PROGRAMrogram (the "COMMITTEEommittee") and not SDRMA; and
WHEREAS, ENTITY desires to enroll and participate in the PROGRAMrogram, acknowledging that SDRMA acts solely in an administrative capacity and does not establish Program terms.
NOW THEREFORE, SDRMA and ENTITY agree as follows:
1. DEFINITIONS. For purposes of this MEMORANDUM, unless the context otherwise requires, the following terms when capitalized have the respective meanings set out below and are applicable to the singular as well as to the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. a. “Committee” means the PRISM Health Committee and/or PRISM Employee Benefits Committee for the Program.
b. “Coverage Documents” means, except as otherwise provided herein, coverage documents from each carrier outlining the coverage provided, including terms and conditions of coverage, are controlling with respect to the coverage of the Program and will be provided by SDRMA to each ENTITY. Documents will be made available through the online SDRMA Portal and be accessible to approved users of the ENTITY.
c. “Program Participation Agreement” means the agreement issued by PRISM/AUS Underwriting to the Entity that details the final terms of acceptance and any special exceptions or terms that have been made a part of the underwriting approval and is required to be
Special District Risk Management Authority Page 2:6 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
completed and executed in order to constitute full acceptance as a member of the PRISM Small Group Program.
d. “Program” or “PRISM” means the Public Risk Innovation, Solutions and Management (PRISM) Health and/or Employee Benefits Small Group Program. e. “Program Documents” means the following:__SDRMA Program Administrative Guidelines, SDRMA Resolution, Program Underwriting application and any required underwriting documents, Program approval, Program Underwriting & Eligibility Rules and Program Participation Agreement.__________________________
12. PURPOSE. ENTITY is signatory to this MEMORANDUM for the express sole purpose of enrolling in the ProgramROGRAM.
23. ENTRY INTO PROGRAM. ENTITY shall enroll apply for participation in the ProgramROGRAM by making application through executing and all forms prescribed by SDRMA. SDRMA shall submit the completed forms to which shall be subject to approval by the ProgramROGRAM's Underwriter who has the authority to accept or reject Entity’s application in its sole discretion based on the Program’s and governing documents and in accordance with the Program’sapplicable eligibility guidelines.
34. MAINTENANCE OF EFFORT. Program ROGRAM is designed to provide an alternative provides health benefits solution to all participants active employees, retired employees, dependents of an active or retired employee and public officials of the ENTITY who satisfy requirements for participation. of the ENTITY including active employees, retired employees (optional), dependents (optional) and public officials (optional). ENTITY public officials may participate in the ProgramROGRAM only if they are currently being covered and their own ENTITY’s enabling act, plans and policies allow it. ENTITY must contribute at least the minimum percentage required by the eligibility requirements
45. PREMIUMS. ENTITY understands agrees and acknowledges that premiums and rates for the Program ROGRAM are set by the COMMITTEECommittee and that SDRMA’s Administrative Fee is set by SDRMA For each billing cycle,. ENTITY will remit the total monthly premiums based upon rates established amount billed by SDRMAfor each category of participants and the census of covered employees, public officials, dependents and retirees. PREMIUMs are based on a full month, and there are no partial months or prorated PREMIUMs. Enrollment for mid-year qualifying events and termination of coverage will be made in accordance with the SDRMA Program Administrative Guidelines.
Special District Risk Management Authority Page 3:6 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
Rates for the ENTITY and each category of participant will be determined by the COMMITTEE designated for the PROGRAM based upon advice from its consultants and/or a consulting Benefits Actuary and insurance carriers. In addition, SDRMA adds an administrative fee to premiums and rates for costs associated with administering the PROGRAM. Rates may vary depending upon factors including, but not limited to, demographic characteristics, loss experience of all public entities participating in the PROGRAM and differences in benefits provided (plan design), if any.
SDRMA will administrate a billing to ENTITY each month, with payments due by the date specified by SDRMA. Payments received after the specified date will accrue penalties up to and including termination from the PROGRAM. Premiums are based on a full month, and there are no partial months or prorated premiums. Enrollment for mid-year qualifying events and termination of coverage will be made in accordance with the SDRMA Program Administrative Guidelines.
Late Payment Penalties. ENTITY shall pay all PREMIUM invoices as billed to SDRMA, regardless of any changes to eligibility or adjustments to PREMIUMS that may occur during the billing month and not reflected in the PREMIUM invoice. SDRMA shall issue PREMIUM invoices to ENTITY prior to the coverage month in which they are due.
PREMIUM invoices are due by the due date stated on the invoice and considered delinquent thirty (30) calendar days from the due date. In addition to the outstanding balance due for any unpaid invoice, ENTITY shall be liable to SDRMA for a late payment penalty of 1% of the outstanding balance of any unpaid portion of such invoice effective (30) calendar days after the invoice due date. SDRMA reserves the right to terminate the MEMORANDUM and ENTITY’S Participation Agreement, including immediate cessation of all services under the Program, any time after it provides written notice to ENTITY of its failure to pay the amount due of any invoice.
56. BENEFITS. Benefits provided to ENTITY participants shall be as set forth in ENTITY’s Plan Summary for the Program ROGRAM and as agreed upon between the ENTITY and its recognized employee organizations as applicable. Not all plan offerings will be available to ENTITY, and plans requested by ENTITY must be submitted to ProgramROGRAM underwriter for approval.
6. COVERAGE DOCUMENTS. Except as otherwise provided herein, coverage documents from each carrier outlining the coverage provided, including terms and conditions of coverage, are controlling with respect to the coverage of the PROGRAM and will be provided by SDRMA to each ENTITY. SDRMA will provide each ENTITY with additional documentation, defined as the SDRMA Program Administrative Guidelines which provide further details on administration of the PROGRAM.
7. PROGRAM FUNDING. It is the intent of this MEMORANDUM to provide for a fully funded PROGRAM by any or all of the following: pooling risk; purchasing individual stop loss Special District Risk Management Authority Page 4:6 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
coverage to protect the pool from large claims; and purchasing aggregate stop loss coverage.
8. ASSESSMENTS. Should the PROGRAM not be adequately funded for any reason, pro-rata assessments to the ENTITY may be utilized to ensure the approved funding level for applicable policy periods. Any assessments which are deemed necessary to ensure approved funding levels shall be made upon the determination and approval of the COMMITTEE in accordance with the following:
a. Assessments/dividends will be used sparingly. Generally, any over/under funding will be factored into renewal rates.
b. If a dividend/assessment is declared, allocation will be based upon each ENTITY’S proportional share of total premiums paid for the preceding 3 years. An ENTITY must be a current participant to receive a dividend, except upon termination of the PROGRAM and distribution of assets.
c. ENTITY will be liable for assessments for 12 months following withdrawal from the PROGRAM.
d. Fund equity will be evaluated on a total PROGRAM-wide basis as opposed to each year standing on its own.
7. ASSESSMENTS AND DIVIDENDS. The Program annual premium, as approved by the Committee will be established at a level which is anticipated to provide adequate overall funding. The Program will directly manage surpluses and deficits. Premiums are targeted to fund expected claims (including incurred-but-not-reported (IBNR) and runout), reinsurance (if any), Program/administrative expenses, and any reserve or margin adopted by the Committee.
If Program funds are insufficient (including funding IBNR), the Committee may impose premium assessments on all applicable participating Entities, consistent with the JPA, including ENTITY signing this MEMORANDUM. Entities that have withdrawn from the Program are liable for assessments attributable to plan year(s) in which they participated.
After appropriate reserves and obligations are funded and any Committee-approved margin is achieved, the Committee may declare a dividend or premium credit, using a formula recommended by the Program Underwriters and actuary.
98. WITHDRAWAL. ENTITY may withdraw from this MEMORANDUM and terminate its Program Participation Agreement for a subsequent calendar year subject to the following condition: ENTITY shall notify SDRMA and the PROGRAM in writing of its Special District Risk Management Authority Page 5:6 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
intent to withdraw at least 90 days prior to their requested withdrawal date. ENTITY shall notify SDRMA in writing of its intent to withdraw from this MEMORANDUM and terminate its Program Participation Agreement at least 120 days prior to January 1st of the subsequent calendar year in which it shall be effective . No withdrawal shall become effective until December 31 of the year that notice of termination is received. ENTITY may rescind its notice of intent to withdraw and terminate no later than October 1st.
Once ENTITY withdraws from the ProgramROGRAM, there is a 3-year waiting period to come back into the ProgramROGRAM, and the ENTITY will be subject to underwriting approval again.
10. LIAISON WITH SDRMA. Each ENTITY shall maintain staff to act as liaison with SDRMA and between the ENTITY and SDRMA’S designated PROGRAM representative.
9. ARBITRATION OF DISPUTES. To the extent permitted by law, all controversies between the ENTITY and SDRMA that may arise out of or relate to any of the services provided by SDRMA under the MEMORANDUM, or the construction, performance or breach of this or any other agreement between the ENTITY and SDRMA, whether entered into prior to, on or subsequent to the date hereof, shall be settled by binding arbitration in the City of Sacramento, California, under the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator(s) shall be final, and may be entered into any court having jurisdiction. 1110. GOVERNING LAW. This MEMORANDUM shall be governed in accordance with the laws of the State of California.
1211. VENUE. Venue for any dispute or enforcement shall be in the City of Sacramento, California.
1312. ATTORNEY FEES. The prevailing party in any dispute shall be entitled to an award of reasonable attorney fees.
14.13. COMPLETE AGREEMENT. This MEMORANDUM together with the related ProgramROGRAM documents Documents constitutes the full and complete agreement of the ENTITY. 1514. SEVERABILITY. Should any provision of this MEMORANDUM be judicially determined to be void or unenforceable, such determination shall not affect any remaining provision. 1615. AMENDMENT OF MEMORANDUM; WAIVER. This MEMORANDUM may not be modified, nor shall any provision hereof be waived or amended, except in a writing duly signed by authorized representatives of SDRMA and ENTITY. The failure of either Party to enforce at any time any provision of the MEMORANDUM shall not be construed to be a waiver of such provision, nor in any way to affect the validity of the MEMORANDUM or the
Special District Risk Management Authority Page 6:6 Tel 800.537.7790 Fax 916.231.4111
www.sdrma.org
right of either party thereafter to enforce each and every such provision.may be amended by the SDRMA Board of Directors and such amendments are subject to approval of ENTITY’S designated representative, or alternate, who shall have authority to execute this MEMORANDUM. Any If ENTITY who fails or refuses to execute an amendment to this MEMORANDUM by the deadline included in written notice of SDRMA’S execution of said amendment, SDRMA reserves the right to terminate shall be deemed to have withdrawn this MEMORANDUM and ENTITY’S Program Participation Agreement from the PROGRAM effective as of on the next annual renewal date. 1716. EFFECTIVE DATE. This MEMORANDUM shall become effective on the later of the first date of coverage for the ENTITY or the last date of signing of this MEMORANDUM by the Chief Executive Officer or Board President of SDRMA and the authorized person for the ENTITY.
1817. EXECUTION IN COUNTERPARTS. This MEMORANDUM may be executed in several counterparts, each of which shall be an original, all of which shall constitute but one and the same instrument.
In Witness Whereof, the undersigned have executed the MEMORANDUM as of the date set forth below.
Dated: By:
Special District Risk
Management Authority
Dated: By:
Agency ENTITY Name