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(1,67)1 }erttf- 6°146 PEAK1 ',ADMINISTRATION ADMINISTRATIVE SERVICES AGREEMENT City of Bremerton TABLE OF CONTENTS ARTICLE I. INTRODUCTION 3 1.1 EFFECTIVE DATE AND TERM 3 1.2 SCOPE OF UNDERTAKING-GENERALLY 3 1.3 DEFINITIONS 3 ARTICLE II. PSP'S RESPONSIBILITIES 4 2.1 RECORDKEEPING 4 2.2 BONDING 4 2.3 CARE AND DILIGENCE 4 2.4 NO LIABILITY FOR CLAIMS AND EXPENSES 4 2.5 NON-DISCRETIONARY DUTIES;ADDITIONAL DUTIES 4 2.6 THIRD PARTY VENDORS 4 2.7 CUSTOMER SERVICE AND ELECTRONIC ADMINISTRATIVE SERVICES 5 2.8 INDEMNIFICATION BY PSP 5 ARTICLE III. CLIENT'S RESPONSIBILITIES 5 3.1 PROVIDE INFORMATION TO PSP 5 3.2 COMPLIANCE REPORTING 5 3.3 MEDICARE SECONDARY PAYER RULES COMPLIANCE 5 3.4 FIDELITY BOND . 5 3.5 PROCESSING CLAIMS REQUESTS 6 3.6 FMLA DETERMINATIONS 6 3.7 CONTINUATION LAW COMPLIANCE 6 3.8 QMCSO COMPLIANCE 6 3.9 FEES 6 3.10 INDEMNIFICATION BY CLIENT 6 3.11 DETERMINATION OF EMPLOYEE STATUS 6 ARTICLE IV. COMPENSATION 6 4.1 SERVICE CHARGES 6 4.2 PAYMENT OF CHARGES 7 ARTICLE V. GENERAL PROVISIONS 7 5.1 PROVISIONAL PAYMENT 7 5.2 LIMITATION ON DAMAGES 7 (i5 Peaki Administration 2016 5.3 AUDITS 8 5.4 NON-DISCLOSURE OF PROPRIETARY INFORMATION 8 5.5 DISCLOSURE OF INDIVIDUALLY IDENTIFIABLE HEALTH INFORMATION 8 5.6 NOTICES AND COMMUNICATIONS 8 5.7 TERMINATION OF AGREEMENT 9 5.8 DISPUTE RESOLUTION PROCEDURE 9 5.9 SUSPENSION OF SERVICES 9 5.10 INTERPRETATIONS 9 5.11 COMPLIANCE;NON-WAIVER 9 5.12 ASSIGNMENT;AMENDMENT 10 5.13 ENTIRE AGREEMENT;SEVERABILITY;HEADINGS 10 5.14 GOVERNING LAW 10 5.15 NO THIRD PARTY BENEFICIARIES 10 5.16 RELATIONSHIP OF THE PARTIES 10 5.17 FORCE MAJEURE 10 5.18 SURVIVAL 10 5.19 COUNTERPARTS 10 APPENDIX VEBA SERVICES APPENDIX 12 BENEFIT PLAN SERVICES APPENDIX 14 BENEFIT PLAN COMPLIANCE SERVICES APPENDIX 21 RETIREE ALTERNATIVE COVERAGE IN LIEU OF COBRA BILLING APPENDIX 30 ENROLLMENT AND BILLING SERVICES APPENDIX 33 dr HIPAA CONFIDENTIALITY APPENDIX 35 ®Peak1 Administration 2016 ADMINISTRATIVE SERVICES AGREEMENT THIS AGREEMENT, effective as of January 1, 2017, by and between City of Bremerton, ("Client") and PSP Administration,LLC,an Idaho limited liability company("PSP"). RECITALS 1. The Client desires to engage PSP to perform certain administrative and recordkeeping services described in this Agreement for Client. 2. PSP has agreed to perform for Client the administrative and recordkeeping services described in this Agreement. NOW,THEREFORE,in consideration of the mutual promises and covenants contained in this Agreement,and any attached exhibits and appendices,the Client and PSP agree as follows: ARTICLE I. INTRODUCTION 1.1 Effective Date and Term This Agreement is effective as of 1/1/2017 ("Effective Date") and will continue until terminated by either party in accordance with Article 5.7 of this Agreement. Each Appendix attached to this Agreement is incorporated into and made a part of this Agreement. An Appendix may have a later effective date than this Agreement to the extent that Client and PSP agree to the terms set forth in the Appendix after the Effective Date of this Agreement. 1.2 Scope of Undertaking-Generally PSP will perform the administrative responsibilities described in this Agreement, including any Appendices which are attached to and part of this Agreement.Client reserves to itself authority over all discretionary matters and decisions pertaining to any employee benefit plan to which this Agreement pertains. PSP will not be the named fiduciary,plan administrator,trustee or custodian of any employee benefit plan to which this Agreement pertains.Client acknowledges that PSP is not an accounting or law firm and no services provided by PSP will constitute or be construed as tax or legal advice. 1.3 Definitions The following definitions will apply to this Agreement and its Appendices,unless a term is defined differently in an Appendix: (a) Code-means the Internal Revenue Code of 1986 and regulations thereunder,as amended from time to time. (b) COBRA-means the Consolidated Omnibus Budget Reconciliation Act of 1985(as it appears in the Code and ERISA)and regulations thereunder,as amended from time to time. (c) ERISA-means the Employee Retirement Income Security Act of 1974 and regulations thereunder,as amended from time to time. (d) Fiduciary—means Plan Administrator,Client as the Named Fiduciary in the Plans,and any other person who satisfies the definition of"fiduciary"under ERISA. (e) HIPAA-means the Health Insurance Portability and Accountability Act of 1996 and regulations thereunder,as amended from time to time. (f) Named Fiduciary—is a term described in Section 402(a)(1)of ERISA that is applicable to the Plans subject to ERISA and means Client. (g) Plan Administrator—means Client. ©Peak1 Administration 2016 3 ARTICLE H. PSP's RESPONSIBILITIES PSP will perform the responsibilities described in this Article II and any additional responsibilities delegated to PSP in the Appendices which are attached to and part of this Agreement. 2.1 Recordkeeping PSP will maintain its usual and customary books, records, and documents,including electronic records related to the administrative services it performs pursuant to this Agreement for the lesser of the term of this Agreement or eight(8) years following the date the record was created,or received by PSP. During this retention period,with reasonable prior written notice to PSP,Client has the right to access these documents at PSP's offices at a mutually agreed upon time during normal business hours. PSP will deliver copies of all books,records and documents in its possession to Client or its designee as soon as possible, but no later than thirty(30) days after receipt of a written request from the Client. Client will pay the reasonable charges of PSP for compilation,duplication and transmission of such records. 2.2 Bonding In accordance with applicable law, PSP will maintain a fidelity bond covering its employees who handle Benefit Plan contributions provided to PSP by Client in accordance with the terms of this Agreement. This bond covers the handling of such funds from dishonesty,theft,forgery or alteration,and unexplained disappearance. 2.3 Care and Diligence PSP will exercise the same standard of reasonable care and due diligence in the exercise of its powers and the performance of its duties under this Agreement as would be exercised by a competent entity providing services similar to those provided by PSP under this Agreement: If PSP makes any payment under this Agreement to an ineligible person, or if more than the correct amount is paid, PSP will make a diligent effort to recover any payment, unrelated to inaccurate or untimely information that it makes to, or on behalf of, an ineligible person or any overpayment in accordance with applicable guidelines. However,PSP will not be liable for such payment unless PSP would otherwise be liable under another provision of this Agreement. It will not be considered a breach of this Agreement if PSP refuses to perform services generally required under this Agreement if the manner in which Client desires such services to be performed requires material changes to PSP's standard operating procedures. 2.4 No Liability for Claims and Expenses PSP does not insure or underwrite the liability for payment of claims under the Benefit Plan and is not financially responsible for the claims and/or expenses incident to the Benefit Plans. PSP has no duty or obligation to defend or pay any costs associated with any legal action or proceeding brought pertaining to eligibility for coverage or to recover benefits under the Benefit Plans. PSP will,however, provide to Client and/or Client's legal counsel,upon request and subject to any limitations described in this Agreement or under applicable law, documentation in PSP's possession pertaining to such claim for benefits and/or expenses. 2.5 Non-Discretionary Duties;Additional Duties The services to be performed by PSP under this Agreement are ministerial in nature and will generally be performed within the frameworks and policies established by Client.PSP does not have and will not exercise discretionary control over the Benefit Plans or any assets of the Benefit Plans.PSP and Client may agree to additional duties in writing as may be specified in the applicable Services Appendices from time to time. 2.6 Third Party Vendors PSP may contract with one or more third parties for purposes of assisting PSP with the fulfillment of its duties and responsibilities under this Agreement. PSP will indemnify Client and hold its officers,directors and employees harmless from any claim,demand,or expense arising from the act or omission of such third party. ©Peakl Administration 2016 4'. 2.7 Customer Service and Electronic Administrative Services PSP will provide certain electronic administrative services. PSP will not be in default of this Agreement, nor held responsible for,any cessation,interruption,or delay in the performance of its obligations under this Agreement due to events substantially beyond its control,including,but not limited to,acts of God,acts of a public enemy orgovernmental body in its sovereign capacity,war,fire,floods,strikes,epidemics,quarantine restrictions,civil unrest or riots,freight embargoes,unusually severe weather,breakdown of telephone,computer or automated mailing equipment(other than a breakdown of telephone, computer or automated mailing equipment owned by or under the control of PSP) or if either party is notified by a state or federal regulatory body or by any card issuing association(e.g.,VISA®or MasterCard' International)that any aspect of this Agreement does not comply with any applicable law,regulation, rule, policy,or order applicable to such party. The affected party will give the other party prompt written notice to that effect. Lack of funds by either party will not excuse timely performance. The party so affected will use commercially reasonable efforts to avoid or remove such causes of non-performance or delay,and will continue performance hereunder with reasonable dispatch whenever such causes are removed. 2.8 Indemnification by PSP PSP will indemnify Client and hold its officers, directors and employees harmless from and against all loss, liability, damages,expenses,reasonable attorneys'fees or other obligations resulting from,or arising out of the gross negligence of PSP that results in a breach by PSP of the standard of care set forth in Article 2.3 in this Agreement and then only to the extent permitted under Article 2.4 in this Agreement. However,in no event will PSP indemnify Client for Benefit Plan payments for which Client may become liable unless, and to the extent, such benefit payment would not have arisen but for PSP's breach of its standard of care as set forth in this Agreement. ARTICLE III. CLIENT'S RESPONSIBILITIES Client will be responsible for the obligations described in this Article Ill, any additional obligations described in the Appendices attached to this Agreement and any obligations not specifically delegated to PSP under Article II of this Agreement. 3.1 Provide Information to PSP Client will furnish the information that PSP determines is pertinent to fulfilling its responsibilities under this Agreement in the time and in the manner agreed to by Client and PSP. Client agrees that PSP may rely on all information provided to PSP as complete and accurate and PSI!'will have no duty to question the completeness or accuracy of such information.Client understands that PSP cannot accurately perform its duties under this Agreement without accurate and timely information.. Client will be solely responsible for any liability arising from or related to inaccurate and/or untimely information provided to PSP by or on behalf of Client(or any third party who has provided information to PSP). Client acknowledges PSP may,at its option,charge an additional fee if PSP performs additional processing as a result of inaccurate or untimely information. 3.2 Compliance Reporting Client will be responsible for preparing,distributing and filing all government reports,returns and other communications required by applicable law. 3.3 Medicare Secondary Payer Rules Compliance To the extent applicable,Client will provide to PSP,all information required to report information consistent with the Medicare Secondary Payer Rules in the manner and intervals designated by PSP. 3.4 Fidelity Bond Client will maintain a fidelity bond meeting the minimum requirements of ERISA and other applicable law. ©Peak1 Administration 2016 5;, 3.5 Processing Claims Requests Client will be responsible for processing any claims for benefits received prior to the Effective Date and(including any run-off claims submitted after the Effective Date) and maintaining legally required records of, or pertaining to, Prior Reimbursement Requests and Prior Administration sufficient to comply with applicable law(e.g.,IRS substantiation). 3.6 FMLA Determinations Client will make determinations regarding FMLA,including,but not limited to,whether FMLA applies.PSP will not make determinations regarding FMLA.Furthermore,PSP will be entitled to rely upon the information provided by Client and is under no obligation to independently verify such information. 3.7 Continuation Law Compliance Unless Client,Plan Administrator,and PSP have entered a Continuation Services Agreement Addendum,Client will comply with the applicable provisions of COBRA and state continuation laws,including,but not limited to,providing qualified beneficiaries covered by the Plans with initial COBRA notices,notices upon a qualifying event,notices of unavailability,termination notices,and other information concerning.COBRA elections. 3.8 QMCSO Compliance Plan Administrator will be responsible for all aspects of compliance with Section 609(a)of ERISA regarding qualified medical child support orders("QMCSO"),including,not limited to,establishing QMCSO procedures and determining whether a medical child support order is"qualified."Plan Administrators all provide notice to PSP of any Covered Individuals covered under the Plan by virtue of a QMCSO and of any Covered Individuals who cease to be covered under the Plan by virtue of the expiration of a QMCSO.PSP will be entitled to rely upon the information provided by Plan Administrator pertaining to QMCSOs. 3.9 Fees In consideration for the services provided by PSP consistent with this Agreement, Client will timely pay to PSP the applicable compensation and fees in accordance this Agreement. 3.10 Indemnification by Client Client will indemnify and hold harmless PSP,its officers,directors and employees(collectively"PSP Indemnitees")from and against all losses, penalties, liabilities, damages, expenses,or other obligations, including reasonable attorneys' fees, resulting from, or arising out of a claim, demand,:judgment; settlement agreement, regulatory action or proceeding,or lawsuit not directly attributable to the gross negligence of a PSP Indemnitee or a breach by PSP of the standard of care set forth in Article 2.3 in this Agreement. In addition,Client will indemnify and hold harmless PSP and PSP Indemnitees from and against any liability,expense,demand or other obligation resulting from any premium charge, tax,penalty or similar assessment arising from or related to the Benefit Plans... 3.11 Determination of Employee Status Client is responsible for determining whether,and to what extent,individuals are"employees,"of Client as defined in the Code. PSP will not be held liable for,and Client will indemnify and hold PSP harmless from,any and all damages, fines,penalties,or taxes which may be imposed as a result of the status of Client as a professional Client organization (PEO)or of any individual's status as an"employee." ARTICLE IV. COMPENSATION 4.1 Service Charges (a) The applicable services charges and fees for the services performed by PSP in accordance with this Agreement are stated below and in the applicable Services Appendices: Peak1 Administration 2016 6.: (b) Client expressly directs PSP to pay any fee,cost or charge then due to the PSP prior to application of funds to payment of claims or any other costs arising out of any Benefit Plan or subject matter of this Agreement. Client specifically directs that all funds provided to PSP under this Agreement will be disbursed in the following order:First to pay PSP Service Charges and fees,costs and related expenses incurred by PSP and second,to pay benefit claims arising under the respective Benefit Plan. (c) Section 5.12 notwithstanding,PSP may change the Service Charges for any reason at the beginning of each twelve (12)-month period beginning with the Effective Date set forth in Article 1.1 of this Agreement, provided that PSP notifies Client of such changes at least thirty (30) days before the beginning of such twelve(12)-month period. In addition,PSP may revise the Service Charges during the twelve(12)-month period,upon thirty(30)days prior written notice to Client, if changes to the Benefit Plans are made(regardless of the reason)that materially revise the nature or volume of the services contemplated by this Agreement. (d) Service charges will be assessed for any month during which services are performed or suspended pursuant to Section 5.9. (e) Interest will accrue on Service charges that have not been paid within thirty(30)days of the invoice date at the lesser of an interest rate of twelve percent(12%)annually,or the maximum interest rate permitted under applicable law.As part of its service fee, PSP will be entitled to retain any interest earned on funds held by PSP on Client's behalf in accordance with the terms of this Agreement. 4.2 Payment of Charges • All amounts due under this Agreement will be determined by PSP and billed to Client monthly, except as otherwise agreed by the Client and PSP,or as otherwise set forth in the Services Appendices. In addition to the Service Charges payable to PSP under this Agreement,Client will promptly pay PSP for any costs or expenses incurred by PSP related to (a)Client's failure to sufficiently fund claims,and/or(b)collection of amounts due PSP: For example, PSP may deduct the applicable Service Charges from any bank account that the Client is required to establish and maintain in accordance with this Agreement. All service charges are due on the date set forth in the invoice. ARTICLE V. GENERAL PROVISIONS 5.1 ProvlsionaI Payment PSP may transmit credit entries through ACH.A credit given by the Receiving Depository Financial Institution("RDFI") to the Client is provisional until the RDFI has received final settlement through a Federal Reserve Bank or has received payment as provided under Section 4A-403(a) of the Uniform Commercial Code. If the RDFI does not receive such payment for the credit entry,the RDFI is entitled to a refund from the Client In the amount of the credit to the Client's account,and PSP will not be considered to have paid the amount of the credit entry to Client.The rights and obligations of the parties pertaining to ACH transactions will be governed by and construed in accordance with the laws of the State of Utah,without giving effect to any conflicts of law principles. 5.2 Limitation on Damages EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,THE MAXIMUM TOTAL LIABILITY OF PSP TO CLIENT WILL BE LIMITED TO DIRECT MONEY DAMAGES IN AN AMOUNT NOT TO EXCEED THE LESSER OF:(A)THE TOTAL AMOUNT PAID BY CLIENT FOR THE DEFECTIVE SERVICE CAUSING THE DAMAGE DURING THE TWELVE (12) MONTHS IMMEDIATELY 'PRECEDING THE LOSS;OR(B)$20,000. THIS REMEDY IS CLIENT'S SOLE AND EXCLUSIVE REMEDY. PSP WILL NOT BE RESPONSIBLE FOR ANY SPECIAL,INCIDENTAL,OR CONSEQUENTIAL DAMAGES,PENALTIES OR TAXES EVEN IF PSP HAS KNOWLEDGE OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE. PSP WILL NOT BE RESPONSIBLE FOR FAILURE TO PROVIDE SERVICES IF DUE TO ANY CAUSE OR CONDITION BEYOND THE REASONABLE CONTROL OF PSP. ®Peaki Administration 2016 5.3 Audits Client,at its sole expense,may perform no more than one(1)audit each calendar year of the records in the possession of PSA specifically related to PSP's performance of its duties under this Agreement,subject to reasonable prior written notice to PSP. Audits must be performed during normal working hours established by PSP. An agent of Client may perform audits provided such agent signs a confidentiality agreement acceptable to PSP. Each party will provide such additional information and reports, in the usual format it maintains such requested information and reports, as the other party will reasonably request. PSP will be entitled to receive copies of the draft and final audit reports and will have the right to review and comment on audit findings prior to or simultaneous with the release of such report to Client. A Copy of PSP's comments will accompany the final audit report. Each party will provide reasonable assistance and information to the auditors. Client will reimburse PSP for PSPs'reasonable expenses, including copying and labor costs,in assisting Client to perform the audit. 5.4 Non-Disclosure of Proprietary information Client and PSP each acknowledge that as a result of entering into this Agreement,each party has,and will continue to reveal and disclose to the other party,information that is proprietary and/or confidential. Client and PSP each will:(a) keep such proprietary and/or confidential information of the other party in strict confidence; (b) not disclose confidential information of the other party to any third parties or to any of its employees not having a legitimate need to know such information;and(c)will not use confidential information of the other partyy for any purpose not directly related to and necessary for the performance of its obligations under this Agreement(unless required to do so by a court of competent jurisdiction or a regulatory body havingauthority to require such disclosure). For purposes of this Article, confidential information is any information identified as confidential and/or proprietary(or words of similar import);including,but not limited to,the parties' respective businesses or finances. The terms and conditions of this Section will survive the termination of this Agreement. Information revealed or disclosed by a party for any purpose not directly related to and necessary for the performance of such party's obligations under this Agreement will not be considered confidential information for purposes hereof:(i)if,when,and to the extent such information is or becomes generally available to the public without the fault or negligence of the party receiving or disclosing the information;or (ii)if the unrestricted use of such information by the party receiving or disclosing the information has been expressly authorized in writing and in advance by an authorized representative of the other party. 5.5 Disclosure of Individually Identifiable Health Information Both parties agree to the additional limitations and conditions set forth in any HIPAA Confidentiality Appendix with respect to Covered Individuals'health information created or received by PSP in the course of performing its obligations under this Agreement. If there is a conflict between this Agreement and the HIPAA Confidentiality Appendix,the HIPAA Confidentiality Appendix will control but only with respect to the subject matter of the HIPAA Confidentiality Appendix. 5.6 Notices and Communications All notices required or permitted to be given in this Agreement will be in writing and delivered by confirmed facsimile; by guaranteed overnight mail,with tracing capability;by first class United States mail,with postage prepaid;or by email addressed to the other party,at their respective addresses as set forth in the Contacts Appendix. PSP may communicate confidential,protected,privileged or otherwise sensitive information to Client through a named contact designated by Client("Named Contact").Client will indemnify PSP and hold it harmless for any such communications directed to Client through the Named Contact attempted via facsimile,mail,telephone,or e-mail,and acknowledges the possibility that such communications may be inadvertently misrouted or intercepted. 0 Peak1 Administration 2016 8;. 5.7 Termination of Agreement (a) Either party may terminate all,or part of this Agreement,for any reason subject to at least thirty(30) days prior written notice.This Agreement, however,will automatically terminate on the earliest of the following dates: i. The date that all Benefit Plans for which related services are provided under this Agreement have been terminated, or if later, the date Client notifies PSP all Benefit Plans have been terminated; ii. The date that Client becomes insolvent,bankrupt,subject to liquidation or conservatorship or receivership;or iii. The effective date of the termination of the Business Associate Agreement between the parties. • (b) PSP at its option may terminate this Agreement immediately upon written notice to Client effective as of the last day of the last period for which Client paid PSP the applicable service charges in accordance with the terms of this Agreement, if PSP determines that Client failed to make timely payments pursuant to this Agreement. Termination of this Agreement will not terminate the rights or obligations of either party arising out of a period prior to such termination. 5.8 Dispute Resolution Procedure (a) If either PSP or Client determines in good faith that a breach or dispute is sufficiently serious,the parties agree to attempt to resolve the breach or dispute in good faith and take remedial action to resolve it. If a dispute involving a material breach or violation of the terms of this Agreement is not successfully resolved by good faith remedial action or affirmative steps to cure the problem within thirty(30)days after the receipt of the written notice of the breach,the non-breaching party may elect to terminate this Agreement pursuant to Section 5.7. (b) Parties may also elect to follow an informal dispute resolution process by pursuing discussions between designees and their management and other normal business channels. Either party will have the right to seek immediate injunctive relief in the event of a violation of the confidentiality obligations or a breach of such party's intellectual property rights by the other party. 5.9 Suspension of Services PSP may,at its sole option upon written notice to Client,suspend its performance under this Agreement if Client does not timely and fully:(a)fund the claims for benefits processed by PSP;or(b)pay the fees and other charges due PSP pursuant to this Agreement,including for example overdraft fees and costs of collection. The fees payable to PSP under this Agreement will continue to accrue during the suspension period. 5.10 Interpretations The parties acknowledge and agree that both the rule of construction,to the effect that any ambiguities are resolved against the drafting party,and the terms and provisions of this Agreement,will be construed fairly as to all parties to this Agreement and not in favor of or against a party, regardless of which party was generally responsible for the preparation of this Agreement. 5.11 Compliance;Non-Waiver Failure by Client or PSP to insist upon strict performance of any provision of this Agreement will not modify such provision,render it unenforceable,or waive any subsequent breach. No waiver or modification of any of the terms or provisions of this Agreement will be valid unless in each instance the waiver or modification is accomplished pursuant to a written amendment signed by the authorized representatives of PSP and Client. m Peakl Administration 2016 9 5.12 Assignment;Amendment Except as otherwise provided in this Agreement, neither party can assign this Agreement without the other party's written consent,except that a tax affiliate(as defined in Section 414(b or c)of the Code)of PSP or Client may assume the respective obligations under this Agreement. This Agreement may be amended only by written agreement of duly authorized representatives of PSP and Client. 5.13 Entire Agreement;Severability;Headings This Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement,representation,warranty,covenant or agreement of any kind not expressly set forth In this Agreement will affect, or be used tointerpret, change or restrict, the express terms and'provisions of this Agreement. If a court declares any term of this Agreement invalid,the same will not affect the validity of any other provision,provided that the basic purposes of this Agreement are achieved through the remaining valid provisions. The headings of sections and subsections contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. 5.14 Governing Law This Agreement will be governed by and construed in accordance with the laws of the State of Idaho,without giving effect to any conflicts of law principles. 5.15 No Third Party Beneficiaries Nothing express or implied in this Agreement is intended to confer,nor will anything in this Agreement confer,upon any person other than Client,PSP and their respective successors or assigns,any rights,remedies or obligations whatsoever. 5.16 Relationship of the Parties PSP is,and will remain,an independent contractor and will not be an employee or partner of Client,engaged in a joint venture with Client,or governed by any legal relationship other than that of independent contractor. 5.17 Force Majeure PSP will not be in default of this Agreement,nor held responsible for,cessation,interruption or delay in the performance of its obligations under this section due to causes beyond its control such as natural disasters,or the inability to obtain sufficient materials or services required in the conduct of its services such as internet access. 5.18 Survival The indemnity,confidentiality and privacy provisions of this Agreement will survive any termination or expiration of this Agreement termination. 5.19 Counterparts The parties may execute this Agreement in two or more counterparts each of which will constitute an original and all of which together will constitute one instrument. 5.20 Attorneys'Fees In the event of a dispute over the terms of this Agreement or the rights and obligations of the parties pursuant to this Agreement,each party shall pay all its own attorney's fees and costs. ®.Peak1 Administration 2016 10 • • • IN WrTNESS WHEREOF,.Cilerit:and'fit sed •uniiettignet'ncersi,the same being duly authorized to do so • • . , ,• PSP Client ., - • , . ••• , , , . Signature Mayor. • Title Title • bate 608 Northwest Boulevard Suite 200 345:66!•,street3iitte•600. •- ; .4c • Strèéi Street • • . , cioetit'd!Alent:ID 83814 B•remerton,-Wk 98337 City/State/Zip Code City/State/Zip Code • • • •••• • . . • 9 ••• • • • • 0•••Pea4Atiqjiii4e#0p0A916, VEBA SERVICES APPENDIX The Client has established the Health Expense Reimbursement Account("VERA"), to provide benefits to participants under one or more employee benefit plans. Client has asked PSP to assist it with providing certain ministerial administrative services related to the VEBA. This Service Appendix is incorporated into and made a part of the Administrative Plan Services Agreement (the "Agreement"). The effective date of this Service Appendix is the effective date of the Agreement or if later,the date that both parties have signed this Service Appendix as set forth below. The responsibilities of the parties set forth in this Service Appendix are in addition to any responsibilities set forth in the Agreement. If there is a conflict between this Service Appendix and the Agreement,the Agreement controls. In consideration for the mutual promises set forth below,the Client and PSP agree as follows: A. Responsibilities of PSP The services PSP will perform pursuant to this Appendix are limited to the following: 1. Receivina Contributions. PSP will receive contributions which are due the VEBA from participating employers and participants.PSP's receiving duties will include the following: (a) PSP will, by the tenth (10th) business day of each month, record for the preceding month ("Reconciliation Period"): (i) the payments of employer contributions received; (ii) reconcile payments to the accompanying remittance form; (iii) post payments to the appropriate individual records;(iv)deposit contributions to the VEBA account designated from time to time by the Board of Trustees; and (v) close.each Reconciliation Period and perform appropriate electronic backup procedures. (b) PSP will receive participant contributions,post them to the appropriate individual records and deposit the participant contributions timely in the VEBA account designated by the Board of Trustees.PSP will not perform the reconciliation of the designated VEBA account. (c) PSP will maintain records of each contributor's reports on both a monthly and annual basis, showing the Reconciliation Periods reported, the contributions received, shortages and overpayments for each contributor and other information mutually agreed upon by PSP and Client. 2. Participant and Beneficiary Records. PSP will maintain,based solely on information provided by Client and participating employers,a record for each participant and beneficiary(as defined in the applicable plan document): (i) full name; (ii) address; (iii) Social Security Number (to the extent required by applicable law; (iv) identity of dependents; (v) date of birth; and (vi) any additional information appropriate to compute and pay benefits under the Benefit Plan. 3. Transfer of Data. PSP will establish a standard procedure for exchanging information. 4. Service Fee Billina. PSP will bill Client monthly for its service fees. B. Responsibilities of Client 1. Establishment and Operation of VEBA. Client has sole responsibility and authority for establishment and operation of the VEBA.It is Client's sole responsibility and duty to ensure that the VEBA complies in design and operation with all applicable laws and regulations,and PSP's provision of services under this Agreement does not relieve the Client of this obligation.Client will maintain the official records for the VEBA consistent with applicable law. In the event that it is finally determined by a taxing authority or a court the Client or any Benefit Plans offered through the Client,Client will be responsible for the payment of such taxes. PSP will have no responsibility under this Agreement to pay such taxes or assessments and Client will not be entitled to any reimbursement for amounts paid for such taxes ®Peakl Administration 2016 12 I • or assessments. Client understands that it is Client's responsibility to pay any tax, fee, penalty or assessments of a similar nature charged by the Internal Revenue Service,the Department of labor,or other federal and/or state governmental agency arising from or relating to the Client or Benefit Plans. Establishment and Operation of the Benefit Plans. Client has the sole responsibility and authority for establishment and operation of any employee benefit plans for which,pursuant to this Agreement, PSP is retained to perform administrative services.Client will have the sole discretionary authority and responsibility for designing,;administering, construing and interpreting the provisions of employee benefit plans and deciding all questions of fact arising under the Benefit Plans. It is Client's sole responsibility and duty to ensure that the Benefit Plans comply in design and operation with all applicable laws and regulations,and PSP's provision of services under this Agreement does not relieve the Client of this obligations Client will maintain the official records for the Benefit Pan consistent with applicable law. In the event that it is finally determined by a taxing authority or a court that premium taxes,or other taxes or assessments are due and payable by the Benefit Plans or Client,with respect to the Benefit Plans,the Client will be responsible for the payment of such taxes. PSP will have no responsibility under this Agreement to pay such,taxes or assessments and Client will not be entitled to any reimbursement for amounts paid for such taxes or assessments.Client understands that it is Client's responsibility to pay any tax,fee,penalty or assessments of a similar nature charged by the Internal Revenue Service, the Department of Labor, or other federal and/or state governmental agency arising from or relating to the Benefit Plans. 3. Reaulatory Compliance. Client will:(a)ensure that the VEBA,in design and operation,complies with all applicable laws and regulations; (b) calculate and pay any governmental or regulatory charges, assessments,fees and/or taxes due or payable by the Client or the Benefit Plans with respect to the establishment or operation of the Benefit Plans;(c)maintain the records of the Benefit Plans;and(d) respond to any state or federal governmental agency request for information or audit. 4. Enaaaement of Custodian. Client will select and engage a custodian for the assets of Client.Client will establish a deposit account for participating employer and participant accounts and implement the procedures required by the custodian to authorize PSP to deposit`remittances received from participating employers and participants into such account. C Peak1 Administration 2016 i3: BENEFIT PLAN SERVICES APPENDIX The Client has established the following employee benefit plans for which it is engaging PSP to assist it with performing certain ministerial administrative services: ❑ A Code Section 125 Plan to allow eligible employees who make a proper election to pay for their share of certain benefit plan coverage with pre-tax salary reductions("Cafeteria Plan"). ❑ A Flexible"Spending Account to allow participants to be reimbursed foreligible medical expenses ("FSA"). A Code Section 105 health expense,;;,reimbursement plans ("HRA") to allow participants to be reimbursed for eligible medical expenses. ❑ A Code Section 129 dependent care assistance plan to allow participants to be reimbursed for eligible dependent care assistance expenses("DCAP".) ❑ A Premium Only Section 125 Plan("POP"). ❑ A Health Savings Account("HSA"). ❑ A Parking/Mass Transit Fee Plan("Transportation Plan"). 0 A Section 115 Plan("Section 115 Plan") (Collectively the selected plans are referred to in this Appendix as"Benefit Plans") PSP will perform services only with respect to the employee benefit plans for which PSP has provided the sample plan documentation or,if PSP's sample plan documentation is not utilized,then only such plans identified by Client and agreed to by PSP pursuant to separate written notice. This Service Appendix is incorporated into, and made a part;of, the Administrative Services Agreement (the "Agreement"). The effective date of this Service Appendix is the effective date of the Agreement or if later,the date that both parties have signed this Service Appendix as set forth below.°The responsibilities of the parties set forth in this Service Appendix are in addition to any responsibilities set forth in the Agreement. If there is a conflict between this Service Appendix and the Agreement,the Agreement"controls. In consideration for the mutual promises set forth below,the Client and PSP agree as follows: A. Responsibilities of PSP The services PSP will perform pursuant to this Appendix are limited to the following: 1. Benefit Plan Documents and Forms. PSP will provide sample plan documentation for the Benefit Plans for review by Client and its selected legal counsel. Such documentation will include,but not necessarily be limited to, plan document, summary plan description ("SPD"), board resolutions, adoption agreement, plan information summary, resource manual, employee communications package, payroll stuffers, announcement letter, and enrollment forms. PSP will customize such documentation only to the extent necessary to incorporate the Client's responses to certain plan design questions submitted by PSP. Client understands and acknowledges that it Is responsible to ensure that all documents and forms for the Benefit Plans, including any template or sample documents and forms provided to Client by PSP in accordance with this Agreement,comply with the applicable laws and regulations. Although PSP has taken steps to provide sample documents and forms that are of the highest quality and intended to comply with the applicable laws, PSP cannot be aware of all of the facts and circumstances that may apply to Client or the Benefit Plans. • Peak1 Administration 2016 14 Consequently,PSP provides no warranty or representation regarding the compliance status of any documents or forms it provides to Client. ;2... Salary Reduction Elections. All elections and changes to elections will be processed in accordance with the terms of the plan document adopted by Client and provided to PSP. PSP will also process Change of Status Elections consistent with Client's instructions. PSP will also maintain on-going records of activity affecting each employee election. 3. Enrollment and Salary Election Services. PSP will process and maintain employee census and salary reduction and employer contribution information for the applicable Benefits Plans based on the information provided by Client, including initial enrollments in the Benefit Plans, annual enrollments and changes made to such payroll deductions in accordance with the terms of the plan document for applicable Benefit Plan. PSP will process initial enrollment forms, Change of Status Elections and revocation forms based on information provided by Client. PSP will provide forms to Client to use for communicating participant elections,terminations and changes. PSP will process and send Pay Cycle Contribution Billing Reports to Client confirming the deductions that should be taken for premiums,flexible spending accounts,and personal policy plans. PSP will,on an as requested basis,provide periodic re-enrollment services.On an annual basis,PSP will provide a Change of Status Report and renewal elections forms. 4. Processina of Reimbursements. PSP will process requests for reimbursements made by Participants in accordance with the terms of this Agreement, its standard operating procedures, and the particular plan. For HRA reimbursement claims,the participant must submit a voucher (on the form provided by PSP) stating that the amount claimed has not been, nor will be reimbursed under any other health plan or otherwise,along with written proof of the claim from a third party documenting the date incurred, the nature and,the cost of the claim. For FSA reimbursement claims, the participant must submit a voucher (on the form provided by PSP) stating that the amount claimed has not been,nor will be reimbursed under any other health plan or otherwise, along with written proof of the claim from a third party documenting the date incurred,the nature and the cost of the claim. For DCAP reimbursement claims, the participant must submit a voucher (form provided) containing the following required information: dependent's name; name,address and tax ID number of the dependent care provider; and the dates of services. Reimbursements under the 129 Plan are limited to the amount in the account. Unpaid portions of the DCAP voucher will be automatically paid during the check processing cycle after the next contribution has been posted to the account. 5. Participant Assistance. PSP will assist plan participants with general information pertaining to the Benefit Plans and answer routine questions concerning coverage status,claims status,complaint administration,and other general inquiries related to the Benefit Plans. Participants will have 24- hour access to their accounts balance,check history and voucher history for the current plan year via the Internet and access to PSP's call center during normal business hours. 6. Claims Processina. PSP will administer and process claims for benefits in accordance with the Plan Document and Summary Plan description.Based on the eligibility information provided by Client, PSP will initially determine if an individual is entitled to benefits under a Benefit Plan and will process submitted claims in its usual and customary manner for the service options elected by Client. PSP will have no duty or obligation with respect to claims processed prior to the Effective Date ("Prior Reimbursement Requests"), if any, and/or plan administration (or other) services arising prior to the Effective Date ("Prior Administration"), if any, regardless of whether such services were/are to be performed prior to or after the Effective Date. ©Peaki Administration 2016 15; 7. Claims Adjudication. PSP will have no discretionary authority to interpret the terms of a Benefit Plan or adjudicate claims.if processing a benefit"claim requires interpretation of ambiguous plan language,and Client has not previously indicated to PSP the proper interpretation of the language, then Client will be responsible for resolving the ambiguity or any other dispute.PSP will make the initial determination on the first(11 level of appeal(if a Benefit Plan has two(2)levels of appeal), regarding a claim for benefits under a Benefit Plan. 8. Benefit Payment Disbursements. PSP will disburse benefit payments that are determined to be payable in accordance with the terms of the applicable Benefit Plan as soon as reasonably possible after such determination is made,provided that sufficient funds have been made available by the Client(as set forth below)to pay such benefit payments.If sufficient funds have not been made available, PSP will notify Client that sufficient funds have not been made available. if sufficient funds have not been made available within thirty(30)days of the date that PSP has notified Client of the insufficiency,PSP in addition to its rights under the Agreement may,without risk of violating the Agreement or this Service Appendix, notify the affected participants that the Client has not made the funds available necessary to pay his or her claim. 9. Standard Reports. PSP will provide the Client its standard, written, semi-monthly reports summarizing the reimbursement account activities from the previous period, including a claims history report for all claims processed. PSP will provide electronically to Client, the following standard reports: standard reports for payroll setup of employee elections including employee deductions report; employee contribution report and Employee contribution spreadsheet; employee confirmation letters to verify elections when required;statements of participation by plan and participant as requested; annual reports of claim history and budget analysis reports; status andhistory reports such as account balance totals on each reimbursement check;account' balances report on the Employee Account Status letter on a monthly basis during the final quarter of the plan year and account history reports and check history reports. PSP will also provide its standard initial administrative form originals for duplication as needed: reimbursement claim forms;participant instructions for filing claim forms;election enrollment;termination;and change of election forms.On a pay cycle basis,PSP will provide its following standard: Contribution Billing Report or electronic contribution file to be used to reconcile with payroll deduction amounts; reimbursement checks and/or direct deposits to employees on a pay cycle basis or on an approved schedule upon receipt of expense receipts and approved claim vouchers; and on-line'Payment Registers. On a monthly basis, PSP will provide its standard following reports on an as needed basis:Cash Status Report;Request for Funds Report;and on-line Employee Account Balances. On an annual basis, PSP will provide: Employee Account Balance Report; and Plan Forfeitures and Account Close-Out reports. Also, if a separate Reimbursement Card Services Appendix is attached hereto, PSP will make available to covered individuals,use of an electronic payment card through which eligible medical and/or dependent care expenses may be paid. The terms of usage of such electronic payment card and the rights and responsibilities of PSP and the Client with respect to such card will be set forth,in a separate Appendix incorporated hereto by reference. PSP reserves the right to modify its standard reports. 10. Transfer of Data. PSP will establish a standard procedure for exchanging information. O PeakiAdministration 2016 • -16; B. Responsibilities of Client 1. Establishment and Operation Of the Benefit Plans. Client has the sole responsibility and authority for establishment and operation of any employee benefit plans for which, pursuant to this Agreement, PSP is retained to perform administrative services. Client will have the sole discretionary authority and responsibility for designing,administering,construing and interpreting the provisions of employee benefit plans and deciding all questions of fact arising under the Benefit Plans. It is Client's sole responsibility and duty to ensure that the Benefit Plans comply in design and operation with all applicable laws and regulations,and PSP's provision of services under this Agreement does not relieve the Client of this obligation.Client will maintain the official records for the Benefit Pan consistent with applicable law. In the event that it is finally determined by a taxing authority or a court that premium taxes,or other taxes or assessments are due and payable by the Benefit Plans or Client with respect to the Benefit Plans, the Client will be responsible for the payment of such taxes. PSP will have no responsibility under this Agreement to pay such taxes or. assessments and Client will not be entitled to any reimbursement for amounts paid for such taxes or assessments.Client understands that it is Client's responsibility to pay any tax,fee,penalty or assessments of a similar nature charged by the Internal Revenue Service,the Department of Labor, or other federal and/or stategovernmental agency arising from or relating to the Benefit Plans. 2. Plan Documentation. Client is responsible for reviewing draft plan documentation with its selected counsel to ensure that such documents comply with applicable law and that revisions made to such document by PSP on Client's instructions are complete and accurate. Client is responsible for making all other changes to the document(s)that it deems necessary. Client will notify PSP ofail such changes made by Client as soon as possible but nolater than the effective date of the changes. Client will provide PSP with a copy of the completed and properly executed plan document for each Benefit Plan.Client will provide PSP a'copy of each amendment to a Benefit Plan by the earlier of:(a)fifteen(15)business days prior to the effective date of the amendment;(b)the date Client adopts the amendment;or(c)as soon as administratively feasible. PSP is responsible for providing services related to an amendment only upon its written consent to such amendment. PSP may condition its consent upon client's agreement to pay increased service fees. 3. Distribution of Plan Information. Reimbursements and Participant Statements. Client will distribute to employees, participants and beneficiaries the SPD and any other documents necessary to comply with the participant disclosure requirements under ERISA and/or other applicable laws.Client is also responsible for distributing checks, Explanation of Benefits(EOBs), and participant statements of account to employees. 4. Enrollment and Salary Reduction Elections.Client will provide eligible employees with enrollment, salary reduction and change of election forms provided by PSP. Client will collect and submit the completed enrollment forms, election forms and/or change of election forms to PSP as soon as possible after receipt of such forms,but at least five(5)business days prior to the first billing cycle for which any enrollment,elections,or change of elections is effective. Client is responsible for determining who is eligible to participate in the respective Benefit Plans and who has satisfied the requirements to become a participant in the Plan. Client will report all participant additions, terminations,and changes to PSP and all such changes will be effective two(2)weeks after receipt. In addition,the Client is ultimately responsible for determining whether a requested change in election is permitted Peakl Administration 2016 17 5. Eliaibility Determination & information. Client will maintain current and accurate Benefit Plan eligibility and coverage records, determine and verify the individuals who satisfy eligibility requirements and provide current eligibility files to PSP in a format and at intervals acceptable to PSP.Client will notify PSP in writing of changes in eligibility(e.g.,addition,termination,retirement, change in family status,expiration of QMSCO,etc.)at least five(5)business days prior to the first billing cycle for which any such eligibility change is effective.Client is solely responsible for matters pertaining to Client's failure to provide PSP accurate or timely eligibility information.PSP will have no responsibilityfor billing or coverage errors related to Client's failure to provide PSP timely or., accurate information. 6. Authorization to Access Medical Records. Client will, if required by law, notify each individual benefiting under the applicable Benefit Plan and provide each individual with an opportunity to opt out(if required),or obtain from each individual,an adequate authorization for release of any personal financial records and medical records in accordance with applicable state and federal laws to permit the PSP to perform its,obligations under this Agreement. 7. Regulatory Compliance. Client will: (a) ensure that the Benefit Plans, in design and operation, comply with all applicable laws and regulations,including,but not limited to,the Patient Protection and Affordable Care Act ("PPACA"),Code, ERISA, COBRA, FMLA, and HIPAA; (b) perform all nondiscrimination testing other than the testing specifically delegated to PSP in the attached Appendices; (c) take appropriate action to ensure the ongoing compliance of the Benefit Plan documents with applicable law; (d) file any required report or return with the applicable governmental agency;(e)calculate and pay any governmental or regulatory charges,assessments, fees and/or taxes due or payable,by the Client or the Benefit Plans with respect to the establishment or operation of the Benefit Plans;(f)maintain the records of the Benefit Plans and (g)respond to any state or federal governmental agency request for information or audit. 8. Named Fiduciary and Plan Administrator.. To the extent that a Benefit Plan is subject to ERISA, Client is the Named Fiduciary and Plan Administrator with respect to the Benefit Plan(s)as those terms are defined in Section(s)3(16)(A)and 402(a)(1)ERISA. 9. Verification of Information Provided by PSP. Client will verify information provided by PSP, including the Administrative Contribution Billing Reports, provided by PSP to ensure that the information accurately reflects the activity recorded in the Client's payroll and reconciling the payroll deductions amounts paid with pre-tax dollars with the Administrative Contribution Billing Reports provided for that purpose each pay cycle by PSP. 10. Claims Adjudication. PSP will refer to Client or its designee for final determination,any claim for benefits or coverage appealed after initial denial by PSP,or any class of claims specified in writing by the Client.Client will be responsible for the final appeal determination as to whether a claim is payable underthe terms of the Benefit Plans. Client will resolve all ambiguities and disputes relating to the eligibility,benefits,denial of claims or decisions regarding appeal or denial of claims, or any other plan document interpretation issues. 11. Funding and Liability for Claims and Benefit Plan Expenses. Client is responsible for payment of benefits under the Benefit Plans and Benefit Plan Expenses,including but not limited to,all benefits to participants in accordance with the plan document.Client will promptly make sufficient funds available to PSP for payment of benefits due for claims of individuals benefiting under the Benefit Plan. PSP will not advance its own funds if the Client does not provide sufficient funds for payment of claims.Client will also be responsible for payment of any costs or fees assessed to PSP associated with insufficient funding of claims. ®Peak1 Administration 2016 18 (a) Check Writing Autiionty'aye r.Client Account. If the Client chooses this option,the Client will make sufficient funds available from its general assets for amounts allocable to eligible reimbursement benefits under Benefit Plans by depositing funds in amounts specified by PSP from time to time in a Client-owned and named account(the"Account") at a financial institution selected by the Client and PSP,to facilitate the timely processing of claims under the Benefit Plans and give PSP withdrawal authority over such account. Client will also provide written proof that such funds have beenmade available. The Client bears sole responsibility for any fees imposed with.respect to the Account by the financial institution and Client and PSP agree that PSP's fees may be withdrawn from such account. (b) Benefits Payable from PSP's Custodial Account. If the Client chooses this option, Client will make sufficientfunds available from itsgeneral assets for amounts allocable to eligible reimbursement benefits under the plans, as indicated-by a claims report submitted by PSP,by electronically transferring such funds to a custodial clearing account designated by PSP': Client will make all transfers to PSP's account within two(2)days of receipt of the claims report from PSP. ' 12: ManaaementSupport. Client must provide management support in planning enrollment,meeting facilities and scheduling. 13. Client's Representation and Warranties Concernina Funds Provided to PSP. Client represents and warrants to PSP that: (a) any funds submitted by Client,any former employee and/or qualified beneficiary to PSP for purposes of funding benefits under this Agreement (Client Funds): (a) are and will remain the general assets of the plan sponsor; (b) are not "plan assets".within the meaning of ERISA;(c)were never held in an account,fund,or trust bearing the name or otherwise held in an account of a Benefit Plan or any participants or beneficiaries thereof; and(d)will remain subject to the claims of plan sponsor's creditors at all times. (b) Under this Agreement,where claims are paid by PSP through a custodial clearing account, the Client Funds will be held in a general account of Client until transferred to PSP as repayment for PSP's distributions on behalf of the Benefit Plans. The monies transferred to PSP constitute repayment of a debt owed by the Client to PSP and, upon proper transfer to PSP,become the property of PSP. i. neither it nor any of its employees, directors, representatives, fiduciaries, or emplovee Benefit Plans (or any entity performing services for Client or such plans),nor any of its predecessors,successors or assigns have represented or will represent to any participant or beneficiary of the Benefit Plans that a separate account,'fund,or trust is being held on behalf of the Benefit Plans that may be used to provide or secure benefits under the Benefit Plans; ii. Client will advise the participants and beneficiaries of the Benefit Plans that the benefitsunderthe Benefit Plans will at all times be paid out of the general assets of plan sponsor. ®Peaki Administration 2016 19 Additional Services Additional Fees These are provided only upon written request of the Client. 2. Consulting Services. PSP will provide Benefit Plan consulting,including but not limited Quote to,discussions regarding Benefit Plan design both initially and for any revisions regarding existing benefits, compliance and communications. The consulting includes cost estimates of initial plan,cost projections for any proposed plan revisions;and assistance in preparing summary plan descriptions 3. Requested changes to any standard administrative procedures established by PSP. Quote 4. Exchanging information by means other than the standard procedure established by Quote PSP. PSP will provide Client with several options for transferring data,including diskette, model file transferor if the foregoing transfer methods are not available for the Client's payroll system,in a mutually acceptable format. 5. Provide assistance to Client regarding an IRS audit of the Benefit Plan years for which Quote PSP was the service provider • ®Peakl Administration 2016 20a BENEFIT PLAN COMPLIANCE SERVICES APPENDIX The Client has established one or more employee benefit plans which are subject to various compliance requirements under the Internal Revenue Code,ERISA or other applicable law. Client has engaged PSP to assist it with the ministerial functions related to performing compliance requirements for the following employee benefit plans: ❑ A Code Section 125 Plan to allow eligible employees who make a proper election to pay for their share of certain benefit plan coverage with pre-tax salary reductions("Cafeteria Plan"). ❑ A Flexible Spending Account to fallow participants to be reimbursed for eligible medical expenses ("FSA"). N A Code Section 105 health expense reimbursement plans ("HRA") to allow participants to be reimbursed for eligible medical expenses. ❑ A Code Section 129 dependent care assistance plan to allow participants to be reimbursed for eligible dependent care assistance expenses("DCAP".) ❑ A Premium Only Section 125 Plan("POP"). ❑ A Health Savings Account("HSA"). ❑ A Parking/Mass Transit Fee Plan("Transportation Plan"). ❑ A Section 115 Plan("Section 115 Plan") El A Section 501(9)(c)Plan (Collectively the selected plans are referred to in this Appendix as"Benefit Plans"). PSP will provide assistance,designated below by Client,only with respect to the Benefits Plans selected above for which PSP has provided the sample plan documentation or,if PSP's sample plan documentation is not utilized,then only such plans identified by Client and agreed to by PSP pursuant to separate written notice. This Service Appendix is incorporated into and made a part of the Administrative Services Agreement (the "Agreement"). The effective date of this Service Appendix is the effective date of the Agreement or if later,the date that both parties have signed this Service Appendix as set forth below. The responsibilities of the parties set forth in this Service Appendix are in addition to any responsibilities set forth in the Agreement. If there is a conflict between this Service Appendix and the Agreement,the Agreement controls. • PSP and Client Responsibilities The services PSP will perform pursuant to this Appendix are limited to those identified below as PSP responsibilities. 1. Forms 5500. (a) PSP will assist Client in preparing the applicable Form 5500 for the: i, FSA ii. Ys. HRA PSP will assist Client in preparing the applicable Form 5500 by providing, upon written request from the Client,any information maintained in PSP's database that is required to be included on the Form 5500.Such information will be provided within thirty(30)days of the Client's request. ®Peak1 Administration 2016 21 (b) Client is responsible for determining whether a Form 5500 is required and for timely and accurately completing and submitting such Form 5500 to the appropriate governmental authority. Client is responsible for reviewing the information provided by PSP to ensure accuracy and completeness. 2. Discrimination Testing. PSP'will, for the fees in the attached fees schedule, perform the discrimination testing elected by Client below: ❑ (a) Cafeteria Plan Key Employee Concentration Test. i, PSP will perform once per plan year the Key Employee Concentration Test for the Cafeteria Plan only. PSP will provide Client each plan year with a form requestingidata necessary to complete the tests. PSP will complete the testing and provide a report summarizing its interpretations of the results, which are based solely on the information provided by Client and/or the data maintained by PSP in accordance with this Agreement,within a reasonable amount of time after receipt of the requested information in light of the applicable facts and circumstances that exist at the time PSP receives the completed data request form. ii. Client is responsible for completing the data request form and submitting it to PSP within the specified time frame. ❑ (b) Code Section 105(h)Eligibility Test. PSP will conduct,once per plan year,based solely on information provided by Client,the Eligibility Test required under Code Section 105(h).PSP will complete the testing and provide a report summarizing its interpretations of the results, which are based solely on the information provided by Client and/or the data • maintained by PSP in accordance with this Agreement, within a reasonable amount of time after receipt of the requested.information in light of the applicable facts and circumstances that exist at the time PSP receives the completed data request form. ii. Client is responsible for completing the data request form and submitting it to PSP within the specified time frame. (c) Code Section 129 Nondiscrimination Testing. PSP will conduct, once per plan year, based solely on information provided by Client,the following nondiscrimination testing required under Code Section 129: (i) Eligibility Test, (ii) fifty-five percent (55%) Average Benefits Test, and (iii) twenty-five percent (25%) Shareholder Concentration Test. PSP will provide Client,each plan year,with a form requesting data necessary to complete the tests. PSP will complete the testing and provide a report summarizing:its interpretations of the results, which are based solely on the information provided,by Client and information maintained by PSP in accordance with this Agreement,within a reasonable amount of time after receipt of the requested information in light of the applicable facts and circumstances that exist at the time PSPfreceives the completed data request form. ®Peak1 Administration 2016 f' ii. Client is responsible for completing the data request form and submitting it to PSP within the stated time period. Client is also responsible for performing any action required if the applicable plan becomes discriminatory. 3. Reporting under Code Section 6055 and 6056. (a) Responsibilities of PSP. For provider reporting forms required to be filed in each calendar year during the term of this Agreement, PSP will complete the applicable Form 1094-B or 1094-C and corresponding 1095-B or 1095-C, based solely on information provided by Client,for each Employee and non-employee identified by Client. ii. For each Employee who worked for more than one ALE Member of the same Aggregated ALE Group, PSP will complete a separate Form 1095-C from each employer. iii. PSP will provide to Client by the later of January 15th or ten(10) business days after receipt of an accurate and complete data spreadsheet,the completed Form 1094-B or 1094-C and Form 1095-B or 1095-C for Client to distribute to Employees and file with the IRS. (b) Responsibilities of Client.Client will: Determine who are/were full-time Employees during the relevant reporting period. ii. Determine if Client was an ALE during the relevant reporting period. iii. Determine if an offer of coverage for each Employee was "affordable" as that term is defined in Code§36 B(c)(2)(c)(i). iv. Determine whether the coverage offered during the relevant reporting period provides minimum value as that term is defined in 26 C.F.R.§54.4980H-1(a)(12). v. Ensure that the spreadsheet data transmitted to PSP for its use in preparing the IRS mandated reporting is complete, accurate, timely and in the format designated by PSP. vi. Review and verify the accuracy of Form 1094-B or 1094-C and corresponding 1095-B or 1095-C for each Employee and non-employee identified by Client and notify PSP of any changes within five(5)business days. vii. Distribute the 1095-C or 1095-B, as applicable, to each Employee in a manner designated by the IRS by January 31 of the year following the year to which the form relates. viii. File the Form 1094-B or 1094-C,along with the applicable Form 1095-B or 1095- Cs with the IRS,on or before February 28(or March 31 if filed electronically),or other date designated by the IRS, of the year following the year to which the forms relate. ix. Pay any penalties, including late filing penalties, for failure to file correct information returns and/or failure to furnish correct payee statements. P Peakl Administration 2016 23 x. Client is solely responsible for Client's compliance with federal,state and local statutes,ordinances or regulations. (c) Definitions. Whenever used in this Section 3,the following terms will have the respective meanings set forth'below,unless the context clearly requires otherwise,and when the defined meaning is,,intended,the term iscapitalized. i. Aggregated ALE Group. An Aggregated ALE Group refers to a group of ALE Members,treated as a single employer under section 41.4(b),414(c),414(m),or 414(o).An ALE Member is a member of an Aggregated ALE Group for a month if • it is treated as a single employer with the other members of:the group on any day of the calendar month. If an ALE is made up of only one person or entity, that one ALE Member is not part of an Aggregated ALE Group. Government entities and churches or conventions or associations of churches may apply a reasonable,good faith interpretation of the aggregation rules under section 414 in determining their status as an ALE or member of an Aggregated ALE Group. ii. Applicable Large Employer(ALE). An ALE is;for a particular calendar year, any single employer, or group of employers treated as an Aggregated_ALE Group, that employed an average of at least 50 full-time employees(induding full-time equivalent employees)on business days during the preceding calendar year.For purposes of determining an employer's average number of employees,disregard an employee for any month in which the employee has coverage under a plan describedin section 4980H(c)(2)(F) (generally, TRICARE or: Veterans Administration coverage).For 2015,an employer may determine its status as an ALE by reference to a period of atleast six consecutive months during 2014 rather than the entire 2014 calendar year.A new employer(that Is,an employer that was,not in existence on any business day in the prior calendar year)is an ALE for the current calendar year if it reasonably expects to employ,and actually does employ,an average of at least 50 full-time employees(including full-time equivalent employees)on business days during the current calendar year. iii. Applicable Large Employer Member(ALE Member). An ALE Member is a single person or entity that is an ALE, or if applicable,each person or entity that is a • member'of an Aggregated ALE Group. A person or entity that does not have employees or only has employees with no hours of service(for example, only employees:whose entire service consists of work outside of the United States that does not count as hours of service under section,4980H) is not an ALE Member! iv. Employee. For this purpose,an employee is an individual who is an employee under the common-law standard for determining employer-employee relationships. An employee does not include a sole proprietor, a partner in a partnership,an S corporation shareholder who owns at least 2-percent of the S corporation, a leasedemployee within the meaning of section 414(n) of the Code, or a worker that is a qualified real estate agent or direct seller. If an employee is an employee of more than one employer of the same Aggregated ALE Group during a calendar month,the employee is treated as an employee of the employer for whom the employee has the greatest number of hours of service for that calendar month;if the employee has an equal number of hours of service for two or more employers of the same Aggregated ALE Group for the ®,Peakl Administration 2016 24 calendar month, those employers must treat one of the employers as the employer of that employee for that calendar month. v Full-time Employee. A full-time employee is an employee who,for a calendar month,is employed an average of at least 30 hours of service per week with the employer.For this purpose,130 service hours in a calendar month is treated as the monthly equivalent of at least 30 hours per week. ®Peak1 Administration 2016 25 FEDERAL COBRA SERVICES Appendix The Client has independently concluded that one or more of its Benefit Plans for which PSP has provided the sample plan documentation or,if PSP's sample plan documentation is not utilized,then only such plans identified by Client and agreed to by PSP pursuant to separate written notice,provide medical care and are subject to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985("COBRA"),as subsequently amended. Consequently, Client is required to perform certain acts in order to comply with COBRA.Client has engaged PSP to provide services related to COBRA administration for the following Benefit Plans: [Delineate Names of Applicable Plan(s)]("Health Plans") The effective date of this Service Appendix is the effective date of the Agreement or if later,the date that both parties have signed this Service Appendix as,set forth below. The responsibilities of the parties set forth in this Service Appendix are in addition to any responsibilities set forth in the Agreement. If there is a conflict between this Service Appendix and the Agreement,the Agreement controls. A. PSP Responsibilities The services PSP will perform pursuant to this Appendix for the Health Plans are limited to the following: 1. Initial COBRA Notice. PSP will distribute an Initial COBRA Notice by First Class Mail with Proof of Mailing to: the last known address, provided by Client, of each covered employee and, when required by applicable law,the covered spouse and/or dependents.After the effective date of this Agreement,PSP will send the Initial COBRA Notice to: (a) employees and,when required by applicable law,the covered spouse and/or dependents, who first become eligible under Health Plans after the effective date of this Agreement; or (b) all covered employees and,when required by applicable law,the covered spouse and/or dependents,under the Health Plans on the effective date of this Agreement. Such Initial Notice will be distributed to covered employees and/or covered spouses and/or dependents (if enrolling at a different date) as soon as reasonably possible but no later than fourteen(14)days after receiving the required information from the Client. 2. Election Notice. PSP will distribute a COBRA qualifying event notice and election form(collectively the "Election Form")to the address provided by Client of each Qualified Beneficiary entitled to elect federal COBRA continuation coverage after the effective date of this-Agreement, unless all Qualified Beneficiaries reside at the same address, in which case a single Election Form will be distributed in accordance with applicable law. Such notice will be distributed to Qualified Beneficiaries as soon as reasonably possible but no later than fourteen (14)days after receiving the required information from the Client. PSP will also notify Qualified Beneficiaries of their right to an extension of COBRA`continuation coverage upon proper notification of a second qualifying or determination of disability event that occurs during the eighteen(18)or twenty-nine(29)month COBRA period (if applicable) provided that the Qualified Beneficiary has timely and properly notified PSP of a second qualifying event or'disability determination. Such notice will be sent as soon as reasonably possible,but no later than,five(5)days after receipt of written notice of such event from the affected Qualified Beneficiary(or any other qualified beneficiary). (�Peak1 Administration 2016 26' 3 Processing COBRA Elections: (a) PSP will collect and process the Election Forms submitted by Qualified Beneficiaries and send a report to Client identifying which Qualified Beneficiaries elected COBRA coverage and the coverage they elected. An Election Form will be deemed by PSP to be timely sent by a Qualified Beneficiary if it received in the offices of PSP or,if earlier,is postmarked by a date that is no later than the date that is sixty-three(63)days from the date the notice was sent by PSP,except as otherwise instructed by the Client in writing. (b) PSP will process elections for COBRA Coverage under the applicable Health Plan. Determinations regarding eligibility for COBRA Coverage will be made in accordance with the written terms and conditions of the respective Plan.PSP will determine if a person is entitled to COBRACoverage based upon information provided to it by Plan Administrator. PSP will refer to Plan Administrator any claim or class of claims specified in writing by Plan Administrator as well as any claim that is disputed after the initial denial. The Plan Administrator will have final discretionary authority to make all determinations regarding COBRA Coverage under the applicable Health Plan. 4. Reinstatement. Provided the individual elects COBRA Coverage and timely pays any required premiums within the timeframes described in the election notification, PSP will complete and submit any required documentation to insurance carriers, Health Plan and/or third party service providers regarding reinstatement of the coverage for COBRA Coverage purposes. =5.. Open Enrollment and Changes in Coverage. PSP will send notices.to Qualified Beneficiaries of the right to make changes to their coverage during the Client's open Enrollment Period. Such notices will be distributed to the last known addresses of all Qualified Beneficiaries in the PSP records who are currently receiving COBRA coverage prior to the beginning,of the annual enrollment period. PSP will also process any requested mid-year changes in elections in accordance with the Client's plan documentation to the extent that Client has duly authorized PSP to do so with any health insurer or health plan. 6. Premium Billing and Collection. PSP will notify the Qualified Beneficiary of the amount due for the initial premium,which.will be considered due forty-five (45) days after the date the election is made. PSP will provide Qualified Beneficiary with coupons(i.e. payment booklet) notifying the Qualified Beneficiary of the amount due and the due date. All subsequent premiums will be due thirty (30) days after the due date, which will be considered the first day of each month of the COBRA continuation coverage period unless instructed otherwise in writing by the Client. Premiums will be considered timely received if they are received in the offices of PSP or,if earlier, postmarked by applicable due date(including any grace periods).Premiums collected by PSP will be deposited into a PSP bank account but will be accurately accounted for in the books. PSP will send all premiums collected the previous month to Client by the tenth(101 day after the end of the month,minus the administrative fee permitted under applicable law which PSP will retain as part of its administration'fee. PSP will submit premiums to third parties upon written instruction from the Client. In addition,PSP will retain any interest earned on such funds while held in a PSP account as an administrative fee. Notwithstanding the previous two sentences,premiums will not be commingled with PSP's own funds. 7 Notice of Termination and Conversion. If Client notifies PSP that conversion rights must be offered to a Qualified Beneficiary, PSP will send notice to the last known address of the Qualified Beneficiary in the PSP records that COBRA coverage is ending. PSP will simultaneously notify Qualified Beneficiaries that they are eligible for conversion coverage,where applicable ®Peakl Administration 2016 2� 8. Provider/Carrier Response. PSP will provide responses'to inquiries by providers and/or insurance carriers regarding coverage status of Qualified Beneficiaries. All responses will be based solely on the current information maintained by PSP as provided by Client. 9. Transfer of Data. PSP will establish a standard procedure for exchanging information. B Client Responsibilities 1. Initial and Annual Census. Client,at least two weeks prior to commencement of services under this Appendix,will submit to PSP the following information (a) Complete roster of all employees who are active participants in the Health Plans. This information may be submitted on forms provided by PSP,from computer recordsthat contain the same information requested on forms provided by PSP,or by providing copies of all Health Plan enrollment forms. (b) A completed and signed questionnaire regarding Health Plans offered by Client. A completed data sheet(provided by PSP)for each of the following:COBRA participants,Qualified Beneficiaries who have been notified and are in the election period, and Qualified Beneficiaries who have not been notified. Client will notify PSP of the total number of full time.equivalent employees maintained on Client's payroll records for the most recently completed calendar year. Initially,thisinformation will be provided upon execution of this Agreement.Thereafter,the information will be provided in writing to PSP by December 31 of each subsequent calendar year. PSP is entitled to rely upon the census information provided by Client and is under no obligation to independently verify such information. 2. Late Notification to PSP. '! PSP's responsibilities under this Agreement are triggered upon notification by Client and/or Plan Administrator as described in this Appendix.If such notification is not timely made, PSP will perform its responsibilities in a diligent manner. However, ultimate responsibility for any consequences, damages, etc., attributable in whole or in part to the late notification to PSP remain'.,,with Client and Plan Administrator. For purposes of this provision, "timely" refers to a period of time reasonably sufficient for PSP to perform its responsibilities within the time period required under COBRA. 3. Initial Notice. Client is required to review the Initial Notice with its selected legal counsel to ensure that it is consistent with applicable law,its Health Plans and any requirements imposed with regard to its Health Plans by the Health Plan vendors. Client will notify PSP of the names and addresses of each covered employee, covered spouse and covered dependent (if residing at a different address)as soon as reasonably possible after such individuals become covered under the Health Plans. 4. Alternative Coverage and COBRA Waivers. Client and Plan Administrator must notify PSP of any Alternative Coverage that'impacts the services that would otherwise be provided by PSP under this Agreement. PSP is entitled to rely on the information provided by Client and Plan Administrator.Client will obtain and provide to PSP the necessary COBRA waivers and alternative coverage elections for each Qualified Beneficiary if Client offers alternative coverage in lieu of COBRA coverage. �,Peakl Administration 2016 '18 • 5. Election Form. Client will review the Election Form with its selected legal counsel to ensure that it is consistent with applicable law,its health plans and any requirements imposed with regard to its health plans by the health plan vendors. 6. Eligibility and Notification to PSP of Right to Elect. Client is solely responsible for determining whether an initial Qualifying Event has occurred and for timely notifying PSP of the names and last known address of each Qualified Beneficiary entitled to elect coverage as well as the Qualifying Event that has occurred and coverage that is to be offered. Client is also responsible for notifying PSP which health plan options covering the Qualified Beneficiaries can be elected separately or not. 7. Review of COBRA Election Report. Client is responsible for reviewing the report of Qualified Beneficiaries who have elected COBRA submitted by PSP and notifying PSP of any errors of which it is aware within five(5)business days of receipt from PSP. 8. Open Enrollment and Changes in Coverage. Client,for each Benefit Plan,will notify PSP of the start and duration of the open enrollment period as well as the Benefit Plan options that must be made available to Qualified Beneficiaries during the open enrollment period. 9. Cost of COBRA Coverage. Client will notify PSP of the applicable premium(s)and any changes to the applicable premium(s)at least thirty(30)days prior to the start of the twelve-month period to which they relate 10. COBRA Coverage Conversion Rights. Client is responsible for notifying PSP of any conversion rights that must be offered. , 11. Continuation Coverage Required by State Law. Client is responsible for compliance with any applicable state law requiring the provision of continuation coverage. PSP will not provide ,administrative services withrespect to such continuation coverage. Optional Services Optional Fees These are provided only upon request of the Client. 1. Benefit Plan consulting, including but not limited to, discussions Quote regarding Benefit Plan design,compliance and communications. 2. Requested changes to any standard administrative procedures Quote established by PSP. 3. Exchanging information by means other than the standard procedure Quote established by PSP(as set forth above). PSP will provide Client with several options for transferring data, including diskette, model file transfer or if the foregoing transfer methods are not available for the Client's payroll system,in • a mutually acceptable format. f�Peakl Administration 2016 19: RETIREE ALTERNATIVE COVERAGE IN LIEU OF COBRA BILLING APPENDIX The Client has independently concluded that the Health Expense Reimbursement Account Plan ("Health Plan") is subject to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985("COBRA")and applicable state law,as subsequently amended. Consequently,Client is required to perform certain acts in order to comply with COBRA and state continuation of coverage laws.Client has determined that under the terms of the Health Plan certain retirees and their qualified beneficiaries may waive COBRA and elect alternative coverage in the form of self- paid retiree coverage under the Health Plan. Client has engaged PSP to perform services to assist with billing for retires alternative coverage in lieu of COBRA coverage. The effective date of this Service Appendix is the effective date of the Agreement or if later, the date that both parties have signed this Service Appendix as set forth below. The responsibilities of the parties set forth in this Service Appendix are in addition to any responsibilities set forth in the Agreement. If there is a conflict between this Service Appendix and the Agreement,the Agreement controls. PSP and Client Responsibilities' Client has asked PSP to provide the retiree self-pay coverage billing services indicated below for retirees and their qualified beneficiaries who have waived COBRA and elected alternative coverage in the form of self-paid retiree coverage under the Health Plan. 1. Premium Billing and Collection. (a)' PSP will notify the retiree and/or respective Qualified Beneficiary of the amount due for the initial premium,which will be considered due days after the date the election is made. PSP'will''provide the retiree and each Qualified Beneficiary with coupons (i.e. payment booklet) stating the initial premium amount due and the due date. All subsequent monthly premiums will be due thirty(30)days after the due date,which is the first day of each month of the retiree coverage period,unless instructed otherwise in writing by the Client. Premiums will be considered timely paid If received in the offices of PSP or postmarked by the applicable due date(including any grace period). Premiums collected by PSP will be deposited into a PSP bank account but will be accurately accounted for in the accounting records of PSP. PSP will send all premiums collected the previous month to Client by the tenth (lath) day of the succeeding month. Premiums collected by PSP will be deposited into a PSP bank account but will be accurately accounted for in the books. PSP will send all premiums collected the previous month to Client by the tenth (10th) day after the end of the month, minus the administrative fee permitted under;'applicable law which PSP will retain as part of its administration. PSP will submit the premiums collected to third parties upon written instruction from the Client. In addition, PSP will retain any interest earned on such funds while held in a PSP account as an administrative fee. Notwithstanding the previous two sentences,PSP will not comingle the'collected premiums with PSP's own funds. (b) Client is responsible for notifying PSP of the applicable retiree coverage premium and any changes to the applicable premiums at least thirty(30)days prior to the effective date of any such change. 2. Notice of Termination Due to Retiree's Medicare Eliaibility: PSP will send to the last known address of the retiree and each covered Qualified Beneficiary recorded in its records written notification that retiree coverage is ending at least sixty(60)days prior to the date a retiree and each Qualified Beneficiary becomes eligible for Medicare as communicated by Client to PSP. Client will calculate ®Peak1 Administration 2016 30;; and notify PSP at least ninety(90)days prior to the date a retiree or other Qualified Beneficiary will become eligible for Medicare. 3't Provider/Carrier Response: PSP.will provide responses to inquiries by providers and/or insurance carriers regarding coverage{status of retirees and Qualified Beneficiaries. All responses will be based solely on the current information maintained by PSP as provided by Client. 4. Transfer of Data: PSP will establish a standard procedure for exchanging information. Client,at least two(2)weeks prior to commencement of services under this Agreement,Client will submit to PSP the following information: p , all employees who are active participants in the Health Plans.'This (a) Complete roster of information may be submitted on forms provided by PSP, from computer records that contain the same information requested on forms provided by PSP,or by providing copies of all Health Plan enrollment forms. (b) A completed and signed questionnaire regarding the Health Plan under which retiree alternative coverage is offered by Client. (c) A completed data sheet(provided by PSP)for each of the following:(i)retirees currently maintaining coverage in the Health Plan under retiree self-pay alternative coverage, () Qualified Beneficiaries who have been notified and are in the COBRA election period;and (c)Qualified Beneficiaries who have not been notified of the option to elect retiree self- pay coverage in lieu of COBRA. The responsibilities of PSP for retiree coverage premium billing are limited to those stated in this Appendix.The Client is solely responsible for all other aspects of retiree coverage under the Health Plan including, but not limited to, determining who is eligible for retiree self-pay coverage as alternative coverage to COBRA,obtaining and determining the sufficiency of all necessary COBRA waivers and elections for alternative coverage in the form of retiree self-pay coverage from each retiree and his/her Qualified Beneficiaries,determining the effectiveness of any such waivers and elections under applicable Federal and state continuation of group health plan coverage laws, maintaining the necessary plan documents,coordinating retiree coverage with insurance carriers, including any stop loss carrier, preparing and submitting all applicable governmental reporting, calculating and remitting all applicable taxes and fees imposed by state and/or Federal governmental agencies. Client may engage PSP to perform the services delineated below upon terms mutually agreed upon by Client and PSP in writing. Optional Services; Optional These are provided only upon request of the Client. Fees 1. Benefit Plan consulting, including but not limited to, discussions regarding Quote Benefit Plan design,compliance and communications. 2. Requested changes to any standard administrative procedures established by Quote PSP. 3. Exchanging information by means other than the standard procedure Quote established by PSP(as set forth above). PSP will provide Client with several options for transferring data, including diskette, model file transfer or if the foregoing transfer methods are not available for the Client's payroll system,in a mutually acceptable format. til Peaki Administration 2026 31> 2 least ninety(90)days prior to the date a retiree or other Qualified Beneficiary will become eligible for Medicare. 3: Provider/Carrier Response: PSP will provide responses to inquiries by providers and/or insurance carriers regarding coverage status of retirees and Qualified Beneficiaries. All responses will be based solely on the current information maintained by PSP as provided by Client. 4;< Transfer of Data: PSP will establish a standard procedure for exchanging information. Client,at least two(2)weeks prior to commencement of services under this Agreement,Client will submit to PSP the following information: (a) Complete roster of all employees who are active participants in the Health Plans. This information may be'submitted on forms provided by PSP,from computer records that contain the same information requested on forms provided by PSP,or by providing copies of all Health Plan enrollment forms. (b) A completed and signed questionnaire regarding the Health Plan under which retiree alternative coverage is offered by Client. (c) A completed data sheet(provided by PSP)for each of the following:(i)retirees currently maintaining coverage in the Health Plan under retiree self-pay alternative coverage, 0 Qualified Beneficiaries who have been notified and are in the COBRA election period;and (c)Qualified Beneficiaries who have not been notified of the option to elect retiree self- pay coverage in lieu of COBRA. The responsibilities of PSP for retiree coverage premium billing are limited to those stated in this Appendix.The Client is solely responsible for all otherraspects of retiree coverage under the Health Plan including, but not limited to, determining who is eligible for retiree self-pay coverage as alternative coverage to COBRA,obtaining and determining the sufficiency of all necessary COBRA waivers and elections for alternative coverage in the form of retiree self-pay coverage from each retiree and his/her Qualified Beneficiaries,determining the effectiveness of any such waivers and elections under applicable,1Federal and state continuation of.group health plan coverage laws, maintaining the necessary plan documents,coordinating retiree coverage with insurance carriers, including any stop loss carrier, preparing and submitting all applicable,governmental reporting, calculating and remitting',all applicable taxes and fees imposed by state and/or Federal governmental agencies. Client may engage PSP to perform the services delineated below upon terms mutually agreed upon by Client and PSP in writing. Optional Services Optional These are provided only;upon request of the Client. Fees 1. Benefit Plan consulting, including but not limited to, discussions regarding Quote Benefit Plan design,compliance and communications. 2. Requested changes to any standard administrative procedures established by Quote PSP. 3. Exchanging information by means other than the standard procedure Quote established by PSP(as set forth above). PSP will provide Client with several options for transferring data, including diskette, model file transfer or if the foregoing transfer methods are not available for the Client's payroll system,in a mutually acceptable format. Peakl Administration 2016 1 • ENROLLMENT AND BILLING SERVICES APPENDIX Client desires to utilize enrollment and billing products of PSP to assist Client with enrolling individuals in various group employee benefits. This Service Appendix is incorporated into, and made a part of, the Administrative Services Agreement (the "Agreement"). The effective date of this Service Appendix is the effective date of the Agreement or,if later,the date that both parties have signed this Service Appendix as set forth below. The responsibilities of the parties set forth in this Service Appendix are in addition to any responsibilities set forth in the Agreement. If there is a conflict between this Service Appendix and the Agreement,the Agreement controls. In consideration for the mutual promises set+forth below,the Client and PSP agree as follows: PSP and Client Responsibilities 1. PSP Enrollment. PSP will make available to Client an electronic employee benefit plan enrollment platform featured below to facilitate Client's enrollment of individuals that Client has determined have satisfied the applicable eligibility requirements in exchange for Client's payment to PSP of the fee below: BILLING MANAGEMENT SERVICE OPTIONS Full Service Billing Billing Software Access Services Option Features Peaks Client Peaki : Client • Administration Fee Administration Fee Peaki $4.00 Peaks $2.50 Consolidated PEPM Consolidated PEPM Billing Services Billing Services "PEPM"—Per "PEPM"—Per Employee Per Employee Per Month Month Enable its billing system within Peak 's Employee X ,.. X Benefit Management solution and generate monthly electronic bills for Client member groups on or within 5 days of the 15th of the month for the next month billed premium. Deposit premiums .remitted to Client c/o Peaki X Administration which reference the CLIENT invoice number into a US Bank Trust account in Client's name and apply such payments against the Client receivable listing maintained by Peaki Administration through its billing system.Peaki responsible for the reconciliation of the US Bank Trust account. Peaki will send Client a monthly detailed aged X X accounts receivable listing to Client on the 5th business day of each month.` Reconciling Client groups with vendor invoices X X X Providing audit support for account adjustments X X X Posting of AR adjustments to customer accounts as X X instructed by Client Peaki Administration 2016 2 Generate customer invoices for all policies being X X maintained within Peaki's Employee Benefit Management system and remit fully collected premium to specific carriers on behalf of Client X Client Member Invoices posted to Peak1 Customer X Portal X X Statements Posted to Peak1 Portal X Customer Support Dedicated Personnel. X' Customer Support for CLIENT Groups X XX X Accept electronic enrollment files(CDEX) X Coordinate and process all enrollment for product X ` lines , X Resolve eligibility and enrollment issues with X Participating Employers X Develop and maintain marketing, product guides and X materials X Develop: and distribute communication pieces for X Participating Employers 2. Online Enrollment to Employer Groups with Form 1094 and Form 1095 Reportina Obliaations. PSP will make its online enrollment service available to Employer Groups to facilitate Employer Group compliance with their Form 1094 and Form 1095 reporting obligations. As part of these services,PSP will: (a) Accept electronic enrollment files(CDEX); (b) Coordinate and process all enrollment for product lines; (c) Resolve eligibility and enrollment issues with participating Employer Groups;. (d) Develop and maintain marketing and product collaterals and materials; (e) Develop and distribute communication pieces for participating Employer Groups. \ ©Peakl Administration 2016 3 BUSINESS ASSOCIATE AGREEMENT Regarding DATA PRIVACY AND SECURITY This Business Associate Agreement (the °Agreement"), is made as of the 1 day of January, 2017 (the "Effective Date"), by and between Business Associate and Covered Entity(collectively the"Parties")to comply with privacy standards adopted by the U.S.Department of Health and Human Services as they may be amended from time to time, 45 CFR parts 160 and 164 ("the Privacy Rule") and security standards adopted by the U.S. Department of Health and Human Services as they may be amended from time to time,45 CFR parts 160, 162 and 164,subpart C ("the Security Rule"),and the Health Information Technology for Economic and Clinical Health(HITECH)Act,Title XIII of Division A and Title IV of Division B of the American Recovery and Reinvestment Act of 2009 and regulations promulgated thereunder and any applicable state confidentiality laws. RECITALS WHEREAS, Business Associate provides certain plan related services to or on behalf of Covered Entity; WHEREAS, in connection with these services, Covered Entity discloses to Business Associate certain PHI that is subject to protection under the HIPAA Rules;and WHEREAS,the HIPAA Rules require that Covered Entity receive adequate assurances that Business Associate will comply with certain obligations with respect to the PHI received in the course of providing services to or on behalf of Covered Entity. NOW THEREFORE, in consideration of the mutual promises and covenants herein,and for other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged,the Parties agree as follows: SECTION 1 DEFINITIONS The terms used in this Agreement but not otherwise defined in this Agreement have the same meaning ascribed in the HIPAA Rules: A. Breach. "Breach"will have the same meaning as the term"breach"in 45 CFR§§ 164.402. B. Breach of Security. "Breach of Security," as that term is defined in 45 CFR §164.402, and which includes the unauthorized acquisition, access, use,or disclosure of PHI which compromises the security or privacy of the PHI,except where an unauthorized person to whom such information is disclosed would not reasonably have been able to retain such information. C. Business Associate. "Business Associate"means Peak1 Administration,LLC. 1/25/2017 10:27 AM 1 D. Confidential Personal Information. "Confidential Personal Information" will mean an Individual's first name or first initial and last name in combination with any one or more of the following items, if the name and the items are not encrypted: a) social security number, driver's license number or government-issued identification number, or account number or credit or debit card number in combination with any required security code, access code, or password that would permit access to an Individual's financial account; or b) information that identifies an Individual and relates to:the physical or mental health or condition of the Individual;the provision of health care to the Individual;or payment for the provision of health care to the Individual. E. Covered Entity. "Covered Entity"means City of Bremerton F. Designated Record Set or DRS. "Designated Record Set'or"DRS"will have the meaning given to such term under the HIPAA Rules,including, but not limited to,45 CFR§164.501.B. G. Electronic Protected Health Information or PHI. 'Electronic Protected Health Information or PHI"will have the meaning in the Security Rule,45 CFR§160.103. H. HIPAA Rules. "HIPAA Rules" means the Privacy, Security, Breach Notification and Enforcement Rules 45 CFR 160 and 164. [. Information. "Information°will mean any"health information"as defined in 45 CFR§160.103. J. Individual. "Individual"will mean the person who is the subject of the PHI and will include a person who qualifies as a personal representative in accordance with 45 CFR§164.502(g). K. National Provider Identifier. °National Provider Identifier"refers to the rules under 45 CFR Part 162 that require HIPAA covered entities to utilize a ten digit identifier in PHI related transactions. L. Protected Health Information or PHI. "Protected Health Information or PHI°means"protected health information"as defined in 45 CFR§ 160.103 that is used,disclosed,transmitted or maintained in any form. 2 M. Required By Law. "Required By Law"has the same meaning as the term required by law in 45 CFR§164.501. N. Secretary. "Secretary"means the Secretary of the Department of Health and Human Services or his or her designee. 0. Security Incident. "Security Incident"will have the same meaning as the term Security Incident in 45 CFR§164.304. P. Unsecured PHI. "Unsecured PHI"will mean PHI that is not rendered unusable,unreadable,or undecipherable to unauthorized Individuals through the use of a technology or methodology specified by the Secretary. SECTION 2 CONFIDENTIALITY AND HIPAA The Parties will comply with all applicable federal and state laws governing the confidentiality and privacy of health information including,without limitation,the HIPAA Rules,and Confidential Personal Information. A. Purposes for which PHI May Be Disclosed to Business Associate. • In connection with the services provided by Business Associate to or on behalf of Covered Entity described in this Agreement and the service agreement, Covered Entity may disclose PHI to Business Associate in connection to any products and/or services rendered by Peak1 Administration LLC. B. Obligations of Business Associate. Business Associate represents warrants and covenants that: (1) Use and Disclosure of Protected Health Information. a) Business Associate, its directors, officers, subcontractors, employees, affiliates, agents, and representatives (collectively, "Representatives"): (i) will limit the use,transmission or disclosure of PHI and Confidential Personal Information to the minimum necessary consistent with the Covered Entity's policies and procedures to perform its duties and obligations under this Agreement and the agreement for services between the Covered Entity and the Business Associate ("Service Agreement"). The phrase "minimum necessary"will be interpreted in accordance with the Health Information Technology for Economic and Clinical Health Act("HITECH"),HIPAA Rules and government guidance on the definition(i.e.,that only PHI that is the minimum necessary to accomplish the intended purpose of the use, disclosure, or request is used or disclosed; and, the use of limited data sets when possible); (ii) will not use or disclose PHI other than as permitted or required by this Agreement,the Service Agreement,or as Required by Law;and(iii)will not use or disclose PHI in any manner that violates applicable laws or would violate such laws if used or disclosed in such manner by the Covered Entity. 3 b) Business Associate and its Representatives will provide adequate training to their respective workforces to ensure compliance with this Agreement and applicable law. c) Subject to the restrictions stated in Section 2(B)(1)(a) above and throughout this Agreement,Business Associate may use the information received from Covered Entity if necessary for(i)the proper management and administration of Business Associate;or(ii)to carry out the legal responsibilities of Business Associate. d) As between Business Associate and Covered Entity, all Plan confidential information, Confidential Personal Information and PHI will be and remain the sole property of Covered Entity or the Individual to whom the Confidential Personal Information or PHI relates,including any and all forms and copies of any such PHI developed or maintained by Business Associate or its Representatives. Neither Business Associate nor any of its Representatives will compile or distribute analyses to or for third parties using any PHI without Covered Entity's express written consent. (2) Availability of Books and Records. Business Associate will permit Covered Entity and Secretary and other regulatory and accreditation authorities to audit Business Associate's internalpractices,books and records at reasonable times as they pertain to the use and disclosure of PHI received from,or created,maintained or received by Business Associate on behalf of,Covered Entity in order to ensure that Covered Entity and Business Associate are in compliance with the requirements of this Agreement and;the HIPAA Rules or other applicable laws and regulations. Business Associate will cooperate in such audits and will provide copies of any documents reasonably requested by Covered Entity at no charge. (3) Access of Individuals to Information. a) Business Associate will, within five (5) days of a written request by Covered Entity or a request for information consistent with applicable law, make PHI about an Individual contained in a DRS available to the Covered Entity to enable Covered Entity to respond to a request by the Individual for access pursuant to 45 CFR§164.524 or to the requesting Individual if the Business Associate receives the request directly.Business Associate will make available to Covered Entity such PHI for so long as such information is maintained in the DRS. b) If Business Associate maintains a DRS for Covered Entity that is not maintained by Covered Entity,it will permit an Individual to inspect or copy PHI about the Individual in that set as directed by Covered Entity to meet the requirements of 45 CFR § 164.524, and RCW 70.02 when applicable. If the PHI is in electronic format,the Individual will have a right to obtain a copy of such information in electronic format and, if the Individual chooses, to direct that an electronic copy be transmitted directly to an entity or person designated by the Individual in accordance with HITECH section 13405 (c). Under the HIPAA Rules the Covered Entity is required to take action on such requests as soon as possible, but not later than 30 days following receipt of the request. When RCW 70.02.080 is applicable,the Covered Entity is required to take action not later than fifteen(15)working days following receipt of the request. Business Associate will make reasonable efforts to assist Covered Entity in meeting this deadline.The information will be provided in the form or format requested if it is readily producible in such form or format;or in summary,if the Individual has agreed in advance to accept the information in summary form.A reasonable,cost-based fee for copying health information may be charged. If Covered Entity maintains the requested records,Covered Entity, rather than Business Associate will permit access according to its policies and procedures implementing the Privacy Rule. 4 c) Any denial of access to PHI determined by Covered Entity pursuant to 45 CFR§ 164.524, and conveyed to Business Associate by Covered Entity,will be the responsibility of Covered Entity,including resolution or reporting of all appeals or complaints arising from denials. d) Business Associate will support Covered Entity in a manner that enables Covered Entity to meet its obligations under 45 CFR§164.524 and RCW 70.02 when applicable. (4) Amendment of Information. If Business Associate maintains PHI in a Designated Record Set,Business Associate will make amendments to PHI at the request and direction of Covered Entity pursuant to 45 CFR 164.526 and RCW 70.02.100. If Business Associate maintains a record in a Designated Record Set that is not also maintained by Covered Entity,Business Associate will accommodate an Individual's request to amend PHI only in conjunction with a determination by Covered Entity that the amendment is appropriate according to 45 CFR§164.526. Pursuant to RCW 70.02.100, such amendments must be made as promptly as required under the circumstances but no later than ten(10)days after receiving a request. (5) Accounting of Permitted Disclosures. a) Disclosure Accounting. To allow Covered Entity to meet its disclosure accounting obligations under 45 CFR§164.528: (i) Disclosures Subject to Accounting. Business Associate will record the information specified below("Disclosure Information")for each disclosure of PHI, not exempt from disclosure accounting as specified below,that Business Associate makes to Covered Entity or to a third party. (ii) Disclosures Not Subject to Accounting. Business Associate will not be obligated to record Disclosure Information or otherwise account for disclosures of PHI if the Covered Entity is not Required By Law to account for such disclosures. b) Disclosure Information. With respect to any disclosure by Business Associate of PHI that is not exempt from disclosure accounting,Business Associate will record the following Disclosure Information as applicable to the type of accountable disclosure made: (i) Disclosure Information Generally. Except for repetitive disclosures of PHI as specified'below,the Disclosure Information that Business Associate must record for each `accountable disclosure is (i) the disclosure date, (ii) the name and (if known)address of the entity or Individual to which Business Associate made the disclosure,(iii)a brief description of the PHI disclosed,and (iv)a brief statement of the purpose of the disclosure. (ii) Disclosure Information for Repetitive Disclosures. For repetitive disclosures of PHI that Business Associate makes for a single purpose to the same person or entity (including Covered Entity), the Disclosure Information that Business Associate must record is either the Disclosure Information specified above for each accountable disclosure, or(i) the Disclosure Information specified above for the first of the repetitive accountable disclosures;(ii)the frequency,interval,or number 5 of the repetitive accountable disclosures; and (iii) the date of the last of the repetitive accountable disclosures. c) Availability of Disclosure Information. Business Associate will maintain the Disclosure Information for at least six(6)years following the date of the accountable disclosure to which the Disclosure Information relates(three(3)years for disclosures related to an Electronic Health Record, starting with the date specified by the Department of Health and Human Services(HHS)). Business Associate will make the Disclosure Information available to Covered Entity within fifteen(15)calendar days following Covered Entity's request for such Disclosure Information to comply with an Individual's request for disclosure accounting. Effective as of the date specified by HHS with respect to disclosures related to an Electronic Health Record, Business Associate will provide the accounting directly to an Individual making such a disclosure request,if a direct response is requested by the Individual, d) Business Associate will support Covered Entity in a manner that enables Covered Entity to meet its obligations under 45 CFR§164.528 as soon as practicable,but not later than sixty(60)days. (6) Compliance with Electronic Transactions Rule. a) If Business Associate conducts in whole or in part electronic transactions on behalf of Covered Entity for which HHS has established standards, Business Associate will comply, and will require any Representatives it involves with the conduct of such transactions to comply, with each applicable requirement of the Electronic Transactions Rule. Business Associate will also comply with the National Provider Identifier requirements,if and to the extent applicable. (7) De-identified Information. Business Associate may use and disclose de-identified health information only with the prior written approval from the Covered Entity,and only if the PHI is de-identified in compliance with the HIPAA Rules. Moreover, Business Associate will review and comply with the requirements of this Agreement. (8) Notice of Privacy Practices. Business Associate will abide by the limitations of Covered Entity's Notice of Privacy Practices,of which it has knowledge. Any use or disclosure permitted by this Agreement may be amended by changes to Covered Entity's Notice of Privacy Practices; provided, however,that the amended Notice of Privacy Practice will not affect permitted uses and disclosures on which Business Associate relied prior to receiving notice of such amended Notice of Privacy Practice., (9) Withdrawal of Authorization. If the use or disclosure of PHI under this Agreement is based upon an Individual's specific authorization for the use or disclosure of his or her PHI, and the Individual revokes such authorization, the effective date of such authorization has expired,or such authorization is found to be defective in any manner that renders it invalid,Business Associate will,if it has notice of such revocation,expiration,or invalidity,cease the use and disclosure of the Individual's PHI except to the extent it has relied on such use or disclosure,or if an exception under the HIPAA Rules expressly applies. (10) Knowledge of HIPAA Rules. 6 Business Associate will review and understand the HIPAA Rules as it applies to Business Associate,and to comply with the applicable requirements of the HIPAA Rules,as well as any applicable amendments. C. Obligations of Covered Entity. (1) Use and Disclosure of Protected Health Information. Covered Entity,its employees,affiliates,agents,and representatives: (a) Will comply with the HIPAA Rules in its use or disclosure of PHI; (b) Will not use or disclose PHI in any manner that violates applicable federal and state laws; (c) Will not request Business Associate to use or disclose PHI in any manner that violates applicable federal and state laws if such use or disclosure were done by Covered Entity; (d) May request Business Associate to disclose PHI directly to another party only for the purposes allowed by the HIPAA Rules; (e) Will provide Business Associate with any changes in or revocation of permission by Individual to use or disclose PHI if these changes affect Business Associate's permitted or required uses and disclosures; (f) Will notify Business Associate of any restrictions to the use or disclosure of PHI that Covered Entity has agreed to consistent with 45 CFR§ 164.522;and (g) Will comply with the requirements of HITECH. SECTION 3 DISCLOSURE TO THIRD PARTIES A. Subcontractors and Agents. Business Associate will obtain and maintain a written agreement with each Representative that has or will receive,create,maintain,transmit orhave access to PHI,on behalf of Business Associate,under which such Representative agrees to the same restrictions,requirements,and conditions that apply to Business Associate pursuant to this Agreement and applicable law. Business Associate will also: (1) obtain reasonable assurances from the person to whom the PHI and Confidential Personal Information is disclosed that it will be held confidentially and used or further disclosed only to the minimum amount necessary consistent with applicable state and federal law,as Required By Law, or for the authorized purpose for which it was disclosed, and (2) obligate such person to promptly notify Business Associate of any instances of which it becomes aware in which the confidentiality of the PHI has been breached. Business Associate will ensure that any Representative of Business Associate agrees to implement reasonable and appropriate safeguards to protect the confidentiality,integrity,and availability of the paper or electronic PHI and Confidential Personal Information that it creates,receives,maintains,or transmits on behalf 7 of the Covered Entity. Business Associate will be liable to Covered Entity for any acts,failures or omissions of any of its Representatives in providing the services as if they were Business Associate's own acts,failures or omissions,to the extent permitted by law. Business Associate will specifically advise its Representatives of,and require that its Representatives comply in all respects with the terms of this Agreement. B. Receiving Remuneration in Exchange for PHI. Neither Business Associate nor any of its Representatives will,directly or indirectly,receive remuneration in exchange for any use, transfer or access to any PHI or Confidential Personal Information of an Individual unless the Covered Entity or Business Associate obtained from the Individual a prior valid authorization that complies with applicable law that includes a specification of whether the PHI or Confidential Personal Information can be further exchanged for remuneration by the entity receiving PHI of that Individual. SECTION 4 SAFEGUARDS A. Implement Safeguards to Protect Confidentiality. Business Associate will develop, implement, use and maintain appropriate administrative, technical, and physical safeguards, consistent with the size and complexity of Business Associate's operations to ensure that PHI or Confidential Personal Information is not used or disclosed other than as provided by this Agreement or as required by Law. Business Associate will implement administrative,physical and technical safeguards in compliance with Subpart C of 45 CFR Part 164 to reasonably and appropriately protect the confidentiality, integrity, and availability of any paper or electronic PHI it creates, receives, maintains, or transmits on behalf of Covered Entity in a manner consistent with the terms of this Agreement,the Service Agreement and applicable law. Business Associate will assure that all PHI will be secured when accessed by Business Associate's Representatives. Any access to PHI by Business Associate's Representatives will be limited to legitimate business needs while working with PHI. Any personnel changes by Business Associate eliminating the legitimate business needs for such Representative to access to PHI—either by revision of duties or termination —will be immediately reported to Covered Entity.Such reporting will be made no later than the third business day after the personnel change becomes effective. B. Implement Safeguards to Protect Electronic Protected Health Information. Business Associate will develop, implement, and use appropriate administrative, physical, and technical safeguards consistent with applicable law and this Agreement that reasonably and appropriately protect the confidentiality, integrity, and availability of the PHI and Confidential Personal Information that it creates, receives, maintains or transmits on behalf of Covered Entity. Business Associate will ensure that PHI and Confidential Personal Information contained in portable devices or removable media is encrypted. Such safeguards will include,without limitation, implementing written policies and procedures in compliance with HIPAA and ARRA,conducting a security risk assessment, and training Business Associate employees who will have access to PHI with respect to the policies and procedures required by applicable HIPAA Rules. C. Annual Guidance. Business Associate will,at its own cost and effort,monitor the issuance of guidance by the Secretary on the most effective and appropriate technical safeguards for use in carrying out the security standards in subpart C of part 164 of title 45,Code of Federal Regulations. D. Privacy Provisions. The enhanced HIPAA privacy requirements including but not necessarily limited to accounting for certain PHI disclosures for treatment, restrictions on the sale of PHI, restrictions on marketing and fundraising communications, payment and health care operations contained Subtitle D of the HITECH Act that apply to the Covered entity will equally apply to the Business Associate. SECTION 5 REPORTING OF BREACHES,IMPROPER DISCLOSURES, AND SECURITY INCIDENTS A. Breaches. (1) Reporting of Privacy or Security Breach. Business Associate will report to Covered Entity any use or disclosure of PHI by Business Associate or any Representatives not permitted by this Agreement and the Service Agreement along with any Breach or possible Breach of Unsecured PHI. Business Associate will treat the Breach or possible Breach as being discovered in accordance with 45 CFR§164.410.Business Associate will make the report to Covered Entity's Privacy Official immediately following the discovery of a breach of such information. Initial notification of the breach does not need to be in compliance with Sub Title D Title IV Section 13402 of the HITECH Act;however, Business Associate must provide to Covered Entity in writing all information necessary for Covered Entity to comply with Sub Title D Title IV Section 13402 of the HITECH Act without delay,and in no case later than 15 days following the discovery of the breach. If a delay in notification is requested by a law-enforcement official in accordance with 45 CFR § 164.412, Business Associate may delay notifying Covered Entity for the applicable time period. Business Associate will prepare a written assessment of the risk of harm to the Individuals affected by the Breach and provide the same to the Covered Entity as soon as reasonably possible after discovery of the Breach. Business Associate will update its assessment as additional information is obtained and will provide all updated assessments to Covered Entity as soon as reasonably possible but not later than five(5)days after Business Associate obtains additional information. (2) Contents of Report of Breach. Business Associate's written report of a Breach and assessment required under paragraph (1) above pertaining to a Breach or possible Breach will include, at a minimum:(a)the identification of each Individual whose PHI has been, or is reasonably believed to have been, accessed, acquired, or disclosed during the Breach; (b) the date of the Breach, possible Breach, or other non-permitted use, access or disclosure, if known;(c)the nature and scope of the Breach,possible Breach,or other non-permitted use or disclosure;(d) who impermissibly used or to whom the information was impermissibly disclosed or committed the Breach; • (e)the investigational actions Business Associate took or will take to prevent further non-permitted uses or disclosures;(f)the Business Associate's written assessment of whether there is a low probability that the PHI has been compromised,along with the basis for its assessment;(g)a description of the Business Associate's 9 response to the Breach,including steps taken to mitigate the risk of harm;(h)steps affected Individuals should take to protect themselves;and(i)if the Business Associate asserts that the impermissible use or disclosure falls within one of the exceptions to the definition of"breach"under 45 CFR §164.402,which exception. The Business Associate will promptly notify Covered Entity,in writing,of any additional information relevant to the impermissible use, access or disclosure of information as it becomes available. The Business Associate,upon request by the Covered Entity,will provide Covered Entity all information relevant to Business Associate's written assessment of harm to affected Individuals. (3) Breach Notification to Individuals. Business Associate expressly recognizes that Covered Entity has certain reporting and disclosure obligations to the Secretary and the Individual in case of a security breach of Unsecured PHI. Business Associate must provide to Covered Entity in writing all information necessary for Covered Entity to comply with Sub Title D Title IV Section 13402 of the HITECH Act without reasonable delay,and in no case later than 30 days following the discovery of the breach.Business Associate's duty to notify Covered Entity of any breach does not permit Business Associate to notify those Individuals whose PHI has been breached by Business Associate without the express written permission of Covered Entity to do so. Any and all notification to those Individuals whose PHI has been breached will be made under the direction,review and control of Covered Entity. (4) Breach Notification for Other Confidential Personal Information. In addition to the reporting under paragraph 1,Business Associate will notify Covered Entity of any breach of computerized Confidential Personal Information.Such notification will include the information required under paragraph(2)above. (5) Mitigation. In the event of a Breach by Business Associate or any Representative, Business Associate at its sole cost will,in consultation with Covered Entity,mitigate,to the extent practicable,any harmful effect of such Breach that is known to Business Associate. Business Associate will cooperate with Covered Entity in preparing and providing notification to affected Individuals or Secretary of a Breach of Unsecured PHI that the Covered Entity determines is appropriate. The Business Associate will pay all reasonable costs incurred by Covered Entity related to addressing a Breach of Unsecured PHI maintained or under the control of Business Associate or its Representatives. B. Improper Disclosures. Business Associate will track all disclosures of PHI to third parties, including those made to Business Associate's Representatives, other than those disclosures that meet the exception criteria of 45 CFR § 164.528. Business Associate will report to Covered Entity any use or disclosure of any PHI by Business Associate or its Representatives that does not constitute a Breach,but is an unauthorized or improper use or disclosure of any PHI under this Agreement or applicable federal and state laws.Business Associate will report to Covered Entity any such unauthorized use or disclosure as soon as practicable, but in no event later than five (5) business days of the date on which Business Associate becomes aware of such use or disclosure. In the event of an unauthorized use or disclosure, Business Associate will at its sole cost, in consultation with 10 Covered Entity,mitigate,to the extent practicable,any harmful effect of any such disclosure that is known to Business Associate under the same terms that Business Associate would mitigate a Breach. C. Security Incidents. Business Associate will report to Covered Entity any attempted or successful(1)unauthorized access, use, disclosure,modification,or destruction of Electronic PHI,or(2)interference with Business Associate's system operations in Business Associate's information systems that contain Electronic PHI, of which Business Associate becomes aware. Business Associate will make this report by the fifth (5th) day of the month immediately following any such security incident,except if any such security incident resulted in a disclosure not permitted by this Agreement or Breach of Unsecured PHI, Business Associate will make the report in accordance with the provisions set forth in the paragraph above. D. Equitable Remedies. Business Associate acknowledges and agrees that Covered Entity will suffer irreparable damage upon Business Associate's breach of this Agreement,and that such damages will be difficult to quantify. Business Associate acknowledges and agrees that Covered Entity may file an action for an injunction to enforce the terms of this Agreement against Business Associate, in addition to any other remedy Covered Entity may have. Where Covered Entity has knowledge of any material breach by Business Associate, Covered Entity may take proceedings against Business Associate before any Court having jurisdiction to obtain an injunction or any legal proceedings to cure or stop such material breach,without more notice than is set forth in Section B.H.of this Agreement. E. Penalties for Noncompliance. Business Associate acknowledges that it is subject to civil and criminal enforcement for failure to comply with the HIPAA Rules and RCW 70.02 and sections 1176 and 1177 of the Social Security Act(42 USC§ 1320d- 5, 1320d-5) will apply to Business Associate with respect to such violation in the same manner that such sections apply to Covered Entity if it violates such provisions. SECTION 6 TERM AND TERMINATION A. General Term and Termination. This Agreement will become effective on the Effective Date and will terminate upon the termination or expiration of the Service Agreement and when all PHI and Confidential Personal Information provided by either party to the other, or created or received by Business Associate on behalf of Covered Entity is, in accordance with Section 6.0 below,destroyed or returned to Covered Entity or, if it is not feasible to return PHI or Confidential Personal Information, the protections are extended to such information, in accordance with the terms of this Agreement. B. Material Breach. Where either Party has knowledge of a material breach by the other Party of its obligations under this Agreement, and if a cure is possible,the breaching Party will have an opportunity to cure. If the breaching 11 Party does not cure the breach within ten(10)business days of breaching Party's receipt of notice from the non-breaching Party,the non-breaching Party may terminate this Agreement and the Service Agreement. Covered Entity will have the right to cure any breach of Business Associate's obligations under this Agreement at the sole expense of Business Associate. Covered Entity will give Business Associate notice of its election to cure any such breach,and Business Associate will cooperate fully in the efforts by Covered Entity to cure Business Associate's breach.Business Associate will remit payment to the Covered Entity for costs incurred to cure Business Associate's breach within fifteen(15)business days of Covered Entity's request for payment. In the event that either Party has knowledge of a material breach of this Agreement by the other Party and cure is not possible, the non-breaching Party may terminate this Agreement and the Service Agreement. When neither cure nor termination is feasible, the non-breaching Party may report the violation to the Secretary. C. Effect of Termination. (1) Return or destruction of PHI and Confidential Personal Information if feasible. Except as provided in paragraph (2)of this sub-section below, upon termination of this Agreement for any reason,Business Associate will,if feasible,return all PHI and Confidential Personal Information received from Covered Entity, or created or received by Business Associate and its subcontractors on behalf of Covered Entity that Business Associate maintains in any form.Business Associate will not retain any copies of the PHI or Confidential Personal Information. If return of PHI or Confidential Personal Information is not feasible, Business Associate will destroy all such information in accordance with applicable law and guidelines published by HHS,after retaining the records for such length of time as is required by Washington law that is applicable to Washington cities and their contractors. Business Associate will document in writing the destruction of PHI and Confidential Personal Information by the Business Associate including at a minimum: • Date of destruction. • Method of destruction. • Description of the destroyed record series or medium. • Inclusive dates covered. • The signatures of the Individuals supervising and witnessing the destruction. • Any other requirement of the Washington State Archives local government records retention schedule. Business Associate must provide destruction documentation to Covered Entity within thirty (30) days of destruction. °Returned"records shall be provided to Covered Entity within thirty(30)days of termination of Agreement,or as otherwise agreed by the Parties in writing. This provision will also apply to PHI and Confidential Personal Information that is in the control of Representatives of Business Associate. (2) Procedure When Return or Destruction is not Feasible. 12 If Business Associate notifies Covered Entity of the conditions that make return or destruction of PHI and Confidential Personal Information infeasible,upon mutual agreement of the Parties that return or destruction of PHI and Confidential Personal Information is infeasible, Business Associate will extend the protections of this Agreement to the PHI and Confidential Personal Information retained and limit further uses and disclosures of the PHI and Confidential Personal Information to those purposes that make the return or destruction infeasible, for as long as Business Associate or any Representative maintains the PHI or Confidential Personal Information. (3) Continuing Privacy and.Security Obligation. Business Associate's obligation to protect the privacy and safeguard the security of PHI and Confidential Personal Information and report any impermissible use or disclosure as specified in this Agreement will be continuous and survive termination or other conclusion of this Agreement. D. Transition. Upon termination of this Agreement for any reason, Business Associate upon request by Covered Entity will transmit the PHI and Confidential Personal Information maintained,created or received by Business Associate or its Representatives to the entity or Individual designated by Covered Entity. SECTION 8 MISCELLANEOUS A. Regulatory References. A reference in this Agreement to a Section in the HIPAA Rules or RCWs means the Section as in effect or as amended. B. Interpretation. Any ambiguity in this Agreement will be resolved to permit Covered Entity to comply with the HIPAA Rules. C. No Third Party Beneficiaries. Except as expressly provided for in the HIPAA Rules,there are no third party beneficiaries to this Agreement. Business Associate's obligations under this Agreement are owed to the Covered Entity only. D. Amendment. The Parties will take any action necessary to amend this Agreement from time to time to enable the Covered Entity and Business Associate to comply with the requirements of the HIPAA Rules, the Health Insurance Portability and Accountability Act, Public Law 104-191 and HITECH or other applicable privacy laws. This Agreement may not be modified except by a written amendment or modification executed by both Parties. 13 E. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be an original, but all of which taken together will constitute one instrument.An electronic copy of an executed original will be valid as an original. F. Conflicting Terms. In the event any terms of this Agreement conflict with any terms of the Service Agreement,the terms of this Agreement will govern and control. G. Idaho Law;Submission to Jurisdiction:Waiver of Jury Trial. THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF IDAHO,TO THE EXTENT NOT PREEMPTED BY FEDERAL LAW,WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY IN THIS AGREEMENT SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KOOTENAI COUNTY AND OF ANY IDAHO STATE COURT SITTING IN KOOTENAI COUNTY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 14 H. Notices. All notices,requests,approvals,demands and other communications required or permitted to be given under this Agreement must be in writing and delivered either personally, or by certified mail with postage prepaid and return receipt requested,or by overnight courier to the party to be notified. All communications will be deemed given when received. The addresses of the parties will be as follows;or as otherwise designated by any party through notice to the other party: If to Covered Entity: City of Bremerton Human Resources Department 345 6th Street,Suite 600 Bremerton,WA 98337 If to Business Associate: Peak1 Administration, LLC 608 Northwest Boulevard,Suite 200 Coeur d'Alene, ID 83814 Survival. The obligations of Business Associate under Sections 2,3b,4,5,6 and 7 will survive the termination or other completion of this Agreement for as long as Business Associate maintains any PHI of the Covered Entity. J. Merger. This Agreement constitutes the entire understanding between the parties and supersedes any and all prior or contemporaneous understandings and agreements,whether oral or written,between the parties,with respect to the matters of this Agreement. K. Waiver. A failure by either party to enforce the other party's performance of a provision of this Agreement will not constitute a waiver of the right to subsequently enforce that provision or any other provision of this Agreement. L. Severability. If a court of competent jurisdiction finds a provision of this Agreement unenforceable,it will not be given effect, and the remainder of the Agreement will be enforced as if such provision was not included. M. Recitals. The recitals on page one(1)of this Agreement are restated and incorporated by this reference,and will form part of this Agreement. N. Headings. 15 Headings within this Agreement are for convenience only and will have no effect in limiting or extending the language of the provisions to which they refer. 0. Assignment. Neither party may directly or indirectly assign or transfer this Agreement by operation of law or otherwise without the prior consent of the other Party.All obligations contained in this Agreement will extend to and be binding upon the Parties to this Agreement and their respective successors,assigns,and designees. P Attorneys'Fees. In case of a dispute involving the terms of this Agreement or the duties of the parties under this Agreement, each party shall pay all its own attorney's fees and costs. IN WITNESS WHEREOF,the authorized representatives of the Covered Entity and Business Associate have executed this Agreement as of the Effective Date. COVERED ENTITY—CITY OF BREMERTON By: Its: Mayor BUSINESS ASSOCIATE—PEAK1 By: /. % C/7/eZian • ,� 8y `� Its: Human Resources Manager Its: By: Its: 140812 16