Appendix 1

NJ TRANSIT Rail Operations

Medical Benefits Summary

March 13, 1989

Mr. D. T. Abbott

General Chairman B.L.E.

201 Avenue I

Matamoras, PA.  18336

RE: Health and Welfare Program/Cost Containment

Dear Mr. Abbott:

As discussed, here is the agreed upon contract language to be used as part of the Health and Welfare Program and Cost Containment measures implemented effective July 1, 1989.  This will also eliminate the present surgical schedule and replace it with the revised major medical coverage and prescription drug card contained herein:

Pre-Certification

Hospital admissions

All hospitals admissions require pre-certification.  Room and board charges will be paid at 100% when pre-certified.

If the pre-certification process is not followed, a 50% penalty be imposed on hospital room and board charges up to a maximum of $300.

If pre-admission certification is performed and the hospital stay extends beyond the certified number of days, room and board payment for days not certified as medically necessary will be reduced by 50%.

Emergency in-patient admissions

These admissions will not be subjected to the hospital pre-certification.  The certification process must be followed within forty-eight hours after emergency admission.  Cases involving extenuating circumstances may be granted an extension with the approval of NJ TRANSIT Rail Operations.

Continued Stay Review

There will be Continued Stay Review on all hospital confinements.  Hospital room and board charges will be paid at 50% for any additional days not certified.

Case Management Review

Case Management Review will be performed on all long-term hospital stays.  Options of alternative types of medical coverage will be considered and recommended to patients subject to long-term hospital confinement.

Any recommendations resulting from a Case Management Review will be subject to review by the attending physician or surgeon prior to presentation to the patient for consent.  The recommendations of the attending physician or surgeon will be part of the records made available to the patient.

It is understood that the patient is free to accept or reject any options proffered as a result of a Case Management Review.

The employee or dependent accepting and enrolling for alternative health care coverage as a result of recommendations from Case Management Review will have all medical services paid in accordance with the payment provisions of the Plan.

Out-Patient Surgery

Out-patient surgery will be paid at 100% when performed in an emergency or on a non-emergency basis on recommendation of the patients physician or surgeon at hospital out-patient facilities, ambulatory surguary-centers, birthing centers, or in the doctor's offices.

It is understood that as a result of an in-patient hospital admission pre-certification review, the use of such alternative facilities may be recommended by Intracorp.  If the recommendation is not acceptable to the patient who elects to enter the hospital, charges for the in-patient will be paid at 50%.

Second Surgical Opinion

There will be a mandatory second surgical opinion required for the elective non-emergency surgical procedures listed below.

Breast                         Hysterectomy

            Bunion                         Knee

            Cataract                       Prostate

            Gall Bladder                   Nose

            Hemorrhoids                    Tonsils & Adenoids

            Hernia                         Varicose Veins

If a second surgical opinion is not obtained, charges will be paid under major medical.

The cost of a second or at the option of the patient, a third-surgical opinion will be fully paid under this policy.

If the employee proceeds with the surgery, after obtaining the second or third surgical opinion, the employee will be held harmless and not suffer any reduction in benefits.

Weekend Admission

If an individual is admitted to a hospital on a Friday, Saturday, or Sunday for a non-emergency condition, no benefits for hospital charges will be paid for those days unless the weekend admission is actually on the day before a scheduled surgery.

Drug and Alcohol Treatment

Alcohol and Substance Abuse charges will be paid as presently covered under the Travelers Group Policy GA23000, as outlined below:

In-Patient Benefits

The Plan covers confinement of Employees and Dependents in a Treatment Center because of alcoholism and/or chemical dependency.  Payment will be made for the Reasonable Charges made by the Treatment Center for room, board, care and treatment as follows:

·         First Confinement         $5,000, then 80% of the balance,                                 not to exceed 30 days.

·         Second Confinement        $3,000, then 80% of the balance,                                 not to exceed 30 days.

If an Employee or Dependent voluntarily discontinues an approved treatment program before it is completed, the following will apply:

·         $100 will be paid for each day of that confinement

·         Benefits will not be paid for more than 30 days of that confinement.

·         There will be a limit of two confinements for an Employee or Dependent on his or her lifetime.

The Plan covers charges for up to $500 for transportation of the covered person to and from the Treatment Center in connection with each confinement for which In-Patient Benefits are payable.  The transportation must be to the Treatment Center which is deemed by the attending physician or a Qualified Counselor to provide the most appropriate, effective, and economical treatment program for the covered person.

Payment will be made for 80% of the Reasonable Charges which exceed the deductible up to the maximum amount.  The deductible is $100 and applies to each confinement.

Out-Patient Benefits

The Plan covers out-patient treatment rendered by a Qualified Counselor at a Treatment Center or an Out-patient Clinic

Payment will be made for 80% of the Reasonable Charges made by the Treatment Center of the Out-patient Clinic which exceed the deductible, up to $40 for each Episode of Treatment

Payment will be made for up to:

·         30 Episodes of Treatment during each benefit period, and

·         benefit periods during an employee or dependent's lifetime.

The first benefit period starts on the date an employee or a dependent incurs the first expense for covered out-patient treatment and ends 12 months later.  The second benefit period starts on the date an employee or dependent incurs the first expense for covered out-patient treatment after the end of the first benefit period, and ends 12 months later.

The deductible is $100 and applies to each benefit period.

A "Qualified Counselor" shall mean a qualified Alcohol Rehabilitation Counselor an Alcoholism Para-professional, or a Certified Addictions Counselor.

An "Episode Of Treatment" shall mean a period in which service or treatment is rendered to the patient alone, to the patient and Immediate Family, or to the patients Immediate Family alone, as part of a treatment program.

The "Immediate Family" shall mean the patient's wife or husband and children, and in the case of a Dependent Child who is the patient, the parents, brothers and sisters of the patient.

Exclusion

Treatment Center Expense Benefits for Alcoholism and Chemical Dependency are not payable for any of the following:

·         Confinement or out-patient care not recommended and approved by the attending physician or a Qualified Counselor; or

·         Charges that represent an admitting fee or deposit; or

·         Charges for Custodial Care; or

·         Charges incurred during the period of Initial Coverage; or

·         Charges covered under any other benefits of this Plan.

Other exclusions that apply to the Benefit are those listed as General Exclusions under the Travelers GA23000 Plan.

Health Maintenance Organizations

Health Maintenance Organizations (HMO's) will be offered as optional coverage to employees and dependents.

NJTRO will pay the premium cost in effect under this indemnified plan for the HMO's selected by the employee.

Any increase in future premiums under the indemnified plan will be paid to the HMO's providing medical services to the employee.

Any additional cost for affiliation with an HMO in excess of the monthly premium of the indemnified plan will be made to the HMO through weekly payroll deductions authorized by the employee.

An Open enrollment period will be established for 30 days once each year in which an employee may change his enrollment from the indemnified plan to an HMO, from one HMO to another or from an HMO back to the indemnified plan without concern for pre-existing conditions or medical evidence for the employee or dependents.

Listed below are HMO's presently being offered by the company:

CIGNA Healthplan                 HMO NJ

            CoMed                            HMO PA

            Foundation Health Plan           MediGroup

            Health America                   Oxford Healthplan

            Healthways                       RCHP

            HIP Of Greater NJ                U.S Healthcare

Major Medical Coverage

All surgical procedures shall be paid at 80% after the deductible under the major medical portion of the plan. Elective surgeries requiring a Second Surgical Opinion shall be paid at 50%, instead of 80%, if the Second Surgical Opinion is not obtained.  Other major medical expenses paid at 80% include hospital charges, doctors' visits, X-ray and laboratory, in-patient surgery, emergencies, and accidents.

The schedules listing maximum payments for surgical procedures, laboratory and x-ray examinations, and radiotherapy will be based on the higher of (1) usual and customary expense charges; or (2) no less than the schedule of benefits for identical procedures provided,  listed in the National Plan (Travelers Group Policy-GA23000).             

Annual Deductible

The maximum annual deductible for an individual under this plan will be $100 for each covered person up to an annual maximum of $300 for an employee and his covered dependents.

Once an employee, his dependents, or his family have attained their specific annual deductible, there will be no additional deductibles for any covered expenses.

Annual out-of-pocket costs

The maximum amount of out-of-pocket expense which an employee may have to pay annually will be $1,000.

The maximum amount of medical expense which a dependent of employee may have to pay annually will be $1,000, but in no event will the maximum out-of-pocket expense exceed $3,000 per family.

The term "annual" is defined as the calendar year commencing January 1 through December 31.

Prescription Drug Card

A prescription drug reimbursement program will be established covering charges for drugs and medicines obtained upon prescription by a licensed physician requiring a $4.50 co-pay when purchased through a registered pharmacy and a $2.50 co-pay when purchased through an authorized mail order outlet by an employee, dependent, or family member.

If you concur with the above, please indicate your concurrence by affixing your signature in the space provided below.

Sincerely,

Original signed by:

J. S. Baker

Director of Labor Relations

I CONCUR:

Original signed by:

D. T. Abbott

General Chairman

Brotherhood of Locomotive Engineers

                                            Appendix 2

Dental Benefits for Employees and Dependents

Maximum Benefit per Calendar Year

(Class I, II  and III Dental Services Only)........... $  1,000

Orthodontic Limit, Lifetime Maximum

(for Class IV Dental Services) ....................... $    750

Individual Deductible Amount ....... ................. $     50

Family Deductible Amount ............................. $    100

The Deductible does not apply to Class IV (Orthodontic)

Dental Services.

The Maximum Payment for each Dental Service will be the percentage of the Covered Dental Expense incurred for that service as shown below:

         Dental Service                    Payable At

            Class I   .....................   100%

            Class II  .....................    75%

            Class III .....................    50%

            Class IV  .....................    50%