THE QUALIFYING EVENTS

As an employee of Seattle Pacific University covered by the University's Group Health Plans you and your covered dependents have a right to continue coverage if:

1. You lose your health coverage because of reduction in hours or you are terminated (for reasons other than gross misconduct on your part.)

As the spouse of an employee of Seattle Pacific University covered by the University's Group Health Plans, you have the right to continue coverage for yourself if you lose health coverage under your health plan for any of the following reasons:

1. Your spouse dies;
2. Your spouse stops working (for reasons other than gross misconduct) or reduces hours of employment;
3. Divorce or legal separation from your spouse; or
4. Your spouse becomes entitled to Medicare benefits.

A covered dependent child of an employee of Seattle Pacific University covered by the University's Group Health Plans may continue coverage if health coverage under your health plan is lost for any of the following reasons:

1. The death of a parent;
2. The employee terminates employment (for reasons other than gross misconduct) or reduces hours of employment with Seattle Pacific University;
3. The parents divorce or legally separate;
4. The employee/parent becomes entitled to Medicare; or
5. The child ceases to be an "eligible dependent child" under the University's Group Health Plans.

Effective January 1, 1997, dependent children eligible for continued coverage includes those born or adopted after a qualifying event occurs. The newborn and adopted children have the same rights as a dependent child who had coverage the day before the qualifying event.

Under the law, you or a family member has the responsibility to inform SPU's benefit manager of a divorce, legal separation, or a child's loss of dependent status under your selected health plan. You must inform the administrator within 60 days of the later event or the date on which coverage would otherwise end because of the event in order to be eligible for continued health coverage. In addition, in event of birth or adoption of a child after the qualifying event, you must notify the administrator of the birth or adoption of the child you wish to enroll under the plan. (The prior sentence is effective January 1, 1997) Similar rights may apply to certain retirees, spouses and dependent children if SPU begins bankruptcy proceedings and these individuals lose coverage.

COBRA ELECTION PERIOD

When the administrator is notified that one of these events has occurred, the administrator will in turn notify you of your right to continue coverage. Under the law, you have at least 60 days from the date you would lose coverage because of one of the events described above to inform the administrator that you want to continue coverage. The 60 days starts with the later of the qualifying event or the date of the administrator's election notice.

If you do not elect to continue coverage within 60 days, your health insurance will end as provided in the plan.

DESCRIPTION AND MAXIMUM LENGTH OF COBRA COVERAGE

If you continue coverage, you will receive coverage identical to that provided under the plan for similarly situated employers or family members. You may continue coverage for 36 months unless you lost health coverage because of termination of employment or reduction in hours. In that case, the maximum continuation period is 18 months.

If you are covered for an 18-month period (due to termination or a reduction in hours) and a second event occurs that would qualify you for continued coverage, you may extend coverage to 36 months. A second event includes death of the spouse, divorce, legal separation, or Medicare entitlement.

The 18-month period may also be extended if, at the time of the qualifying event or during the first 60 days of COBRA coverage (effective January 1, 1997) you were disabled (as determined by Social Security). Your coverage period may be extended from 18 months to a maximum of 29 months. To obtain these extended 11 months of benefits you must notify the administrator of Social Security's determination of disability within 60 days of the date the determination is made and before the initial 18 months of COBRA coverage ends. The extension will end if, during the 11-month period, a final determination is made by Social Security that you are no longer disabled. You must notify the plan administrator within 30 days of any final determination that you are no longer disabled.

In no event will continuation coverage last beyond 3 years (36 months) from the date of the original qualifying event. The 36 months is counted from the date of the first qualifying event.

The law provides that your continuation of coverage may end for any of the following reasons:

· SPU no longer provides health coverage to any employees;
· You do not pay the premium for your continuation coverage by the required deadline;
· You become covered under another group health plan which has no pre-existing condition exclusions or limitation that apply to you (effective January 1, 1997);
· You become entitled to Medicare benefits;
· Your maximum continuation period (18, 29 or 36 months) ends; or
· There has been a final determination by Social Security that you are no longer disabled, and you have completed at least 18 months of COBRA coverage (this applies only to those who qualify for an 11 month period).

You do not have to show that you are insurable to choose continuation coverage. However, COBRA coverage is provided subject to your eligibility for your coverage; the administrator reserves the right to terminate your COBRA coverage retroactively if you are determined to be ineligible.

PREMIUM PAYMENTS

The premium you will be charged will be not more than 102% of the total cost of providing coverage. The premium for a Social Security disabled person can be as much as 150% of the cost of coverage for the 19th through 29 months coverage.

You will be notified of the cost of continuing benefits if you experience a qualifying event (See Election Form). You will have 45 days from the election date to pay the first premium; after that, premiums will be due and payable once each month. You will have a 30 day grace period to pay each monthly premium. The first payment should cover premium due from the date you lost coverage through the date you elected COBRA Any monthly premium that becomes due during the 45 day period is payable at the end of the 45 day period.

FUTURE CHANGES IN BENEFITS AND PREMIUMS

If Seattle Pacific University changes any regular health plan benefits during your continuation period, your coverage will also be changed in the same manner. You will be notified of any changes in benefits and/or rates during your continuation period.

Note: Premiums may change only once in the determination year of the plan (every 12 months) Prop Reg. 1.162-26, Q.45

IF YOU DO NOT ACT BY THE ELECTION DEADLINE

If you or your dependents do not complete the Election Form and return it to the Plan Administrator within 60 days of receiving the Election Form/Notice of COBRA rights (or within 60 days of the Qualifying Event if that is the later), you and your dependents will lose your right to elect continuation coverage.

At the end of COBRA coverage, you may be eligible for an individual conversion policy under your health plan. This depends on whether such conversion policies are otherwise available to members of the group at the time or your state requires conversion policies be available. The cost and benefits of the conversion policy may be different from those under COBRA.

If you have any questions about your rights under COBRA, please contact the plan administrator. Also, if you have changed marital status, or you or your spouse have changed addresses, please notify the Plan Administrator at the above address. You may use the attached form for notifying us of a qualifying event.