Stop Health Care Fraud!

Preventing medical mistakes

Section 1. Facts about this fee-for-service Plan

Section 2. How we change for 2005

Identification cards

We will send you an identification (ID) card when you enroll. You should carry your ID card with you at all times. You will need it whenever you receive services from a covered provider, or fill a prescription through a Preferred retail or internet pharmacy. Until you receive your ID card, use your copy of the Health Benefits Election Form, SF-2809, your health benefits enrollment confirmation letter (for annuitants), or your Employee Express confirmation letter.

If you do not receive your ID card within 30 days after the effective date of your enrollment, or if you need replacement cards, call the Local Plan serving the area where you reside and ask them to assist you, or write to us directly at: FEP Enrollment Services, 840 First Street, NE, Washington, DC 20065.You may also request replacement cards through our Web site, www.fepblue.org.

Where you get covered care

Under Standard Option, you can get care from any "covered professional provider" or "covered facility provider." How much we pay � and you pay � depends on the type of covered provider you use. If you use our Preferred, Participating, or Member providers, you will pay less.

Under Basic Option, you must use those "covered professional providers" or "covered facility providers" that are Preferred providers for Basic Option in order to receive benefits. Please refer to page 12 for the exceptions to this requirement. Refer to page 7 for more information about Preferred providers.

For Basic Option, the term "primary care provider" includes family practitioners, general practitioners, medical internists, pediatricians, obstetricians/gynecologists, and physician assistants.

� Covered professional providers

We consider the following to be covered professionals when they perform services within the scope of their license or certification:

Physicians � Doctors of medicine (M.D.); osteopathy (D.O.); dental surgery (D.D.S.); medical dentistry (D.M.D.); podiatric medicine (D.P.M.); and optometry (O.D.).

Other Covered Health Care Professionals � Professionals who provide additional covered services and meet the state's applicable licensing or certification requirements and the requirements of the Local Plan. Other covered health care professionals include:

- Audiologist � A professional who, if the state requires it, is licensed, certified, or registered as an audiologist where the services are performed.

- Clinical Psychologist � A psychologist who (1) is licensed or certified in the state where the services are performed; (2) has a doctoral degree in psychology (or an allied degree if, in the individual state, the academic licensing/certification requirement for clinical psychologist is met by an allied degree) or is approved by the Local Plan; and (3) has met the clinical psychological experience requirements of the individual State Licensing Board.

- Clinical Social Worker � A social worker who (1) has a master's or doctoral degree in social work; (2) has at least two years of clinical social work practice; and (3) if the state requires it, is licensed, certified, or registered as a social worker where the services are performed.

- Diabetic educator � A professional who, if the state requires it, is licensed, certified, or registered as a diabetic educator where the services are performed.

- Dietician � A professional who, if the state requires it, is licensed, certified, or registered as a dietician where the services are performed.

- Independent Laboratory � A laboratory that is licensed under state law or, where no licensing requirement exists, that is approved by the Local Plan.

- Nurse Midwife � A person who is certified by the American College of Nurse Midwives or, if the state requires it, is licensed or certified as a nurse midwife.

- Nurse Practitioner/Clinical Specialist � A person who (1) has an active R.N. license in the United States; (2) has a baccalaureate or higher degree in nursing; and (3) if the state requires it, is licensed or certified as a nurse practitioner or clinical nurse specialist.

- Nursing School Administered Clinic � A clinic that (1) is licensed or certified in the state where services are performed; and (2) provides ambulatory care in an outpatient setting � primarily in rural or inner-city areas where there is a shortage of physicians. Services billed for by these clinics are considered outpatient "office" services rather than facility charges.

- Nutritionist � A professional who, if the state requires it, is licensed, certified, or registered as a nutritionist where the services are performed.

- Physical, Speech, and Occupational Therapist � A professional who is licensed where the services are performed or meets the requirements of the Local Plan to provide physical, speech, or occupational therapy services.

- Physician Assistant � A person who is nationally certified by the National Commission on Certification of Physician Assistants in conjunction with the National Board of Medical Examiners or, if the state requires it, is licensed, certified, or registered as a physician assistant where the services are performed.

- Other professional providers specifically shown in the benefit descriptions in Section 5.

Medically underserved areas. In states that OPM determines are "medically underserved":

Under Standard Option, we cover any licensed medical practitioner for any covered service performed within the scope of that license.

Under Basic Option, we cover any licensed medical practitioner who is Preferred for any covered service performed within the scope of that license.

For 2005, the states are: Alabama, Alaska, Idaho, Kentucky, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, South Carolina, South Dakota, Texas, and Wyoming.

� Covered facility providers

Covered facilities include those listed below, when they meet the state's applicable licensing or certification requirements.

� Hospital � An institution, or a distinct portion of an institution, that:

(1) Primarily provides diagnostic and therapeutic facilities for surgical and medical diagnoses, treatment, and care of injured and sick persons provided or supervised by a staff of licensed doctors of medicine (M.D.) or licensed doctors of osteopathy (D.O.), for compensation from its patients, on an inpatient or outpatient basis;

(2) Continuously provides 24-hour-a-day professional registered nursing (R.N.) services; and

(3) Is not, other than incidentally, an extended care facility; a nursing home; a place for rest; an institution for exceptional children, the aged, drug addicts, or alcoholics; or a custodial or domiciliary institution having as its primary purpose the furnishing of food, shelter, training, or non-medical personal services.

Note: We consider college infirmaries to be Non-member hospitals. In addition, we may, at our discretion, recognize any institution located outside the 50 states and the District of Columbia as a Non-member hospital.

� Freestanding Ambulatory Facility � A freestanding facility, such as an ambulatory surgical center, freestanding surgi-center, freestanding dialysis center, or freestanding ambulatory medical facility, that:

(1) Provides services in an outpatient setting;

(2) Contains permanent amenities and equipment primarily for the purpose of performing medical, surgical, and/or renal dialysis procedures;

(3) Provides treatment performed or supervised by doctors and/or nurses, and may include other professional services performed at the facility; and

(4) Is not, other than incidentally, an office or clinic for the private practice of a doctor or other professional.

Note: We may, at our discretion, recognize any other similar facilities, such as birthing centers, as freestanding ambulatory facilities.

� Blue Quality Centers for Transplant (BQCT)

In addition to Preferred transplant facilities, you have access to the Blue Quality Centers for Transplant (BQCT), a centers of excellence program. BQCT institutions are selected based on their ability to meet defined clinical quality criteria that are unique for each type of transplant. BQCT negotiates a payment for transplant services performed during the transplant period (see page 114 for the definition of "transplant period").

Members who choose to use a BQCT facility for a covered transplant only pay the $100 per admission copayment under Standard Option, or the $100 per day copayment ($500 maximum) under Basic Option, for the transplant period. Members are not responsible for additional costs for included professional services. Regular Preferred benefits (subject to the regular cost-sharing levels for facility and professional services) are paid for pre- and post-transplant services performed in BQCT facilities before and after the transplant period.

BQCT institutions are available for seven types of transplants: heart; heart-lung; single or bilateral lung; liver; pancreas; simultaneous pancreas-kidney; and autologous or allogeneic bone marrow (see pages 53 through 55 for limitations).

All members (including those who have Medicare Part A or another group health insurance policy as their primary payer) must contact us at the customer service number listed on the back of their ID card before obtaining services. We will refer you to the designated Plan transplant coordinator for information about BQCT and approved facilities, and assistance in arranging for your transplant at a BQCT facility.

� Cancer Research Facility � A facility that is:

(1) A National Cooperative Cancer Study Group institution that is funded by the National Cancer Institute (NCI) and has been approved by a Cooperative Group as a bone marrow transplant center;

(2) An NCI-designated Cancer Center; or

(3) An institution that has a peer-reviewed grant funded by the National Cancer Institute (NCI) or National Institutes of Health (NIH) to study allogeneic or autologous bone marrow transplants and blood stem cell transplant support.

� Other facilities specifically listed in the benefits descriptions in Section 5(c).

What you must do to get covered care

Under Standard Option, you can go to any covered provider you want, but in some circumstances, we must approve your care in advance.

Under Basic Option, you must use Preferred providers in order to receive benefits, except under the special situations listed below. In addition, we must approve certain types of care in advance. Please refer to Section 4, Your costs for covered services, for related benefits information.

(1) Medical emergency or accidental injury care in a hospital emergency room and related ambulance transport as described in Section 5(d), Emergency services/accidents;

(2) Professional care provided at Preferred facilities by Non-preferred radiologists, anesthesiologists, certified registered nurse anesthetists (CRNAs), pathologists, emergency room physicians, and assistant surgeons;

(3) Laboratory and pathology services, X-rays, and diagnostic tests billed by Non-preferred laboratories, radiologists, and outpatient facilities;

(4) Services of assistant surgeons;

(5) Special provider access situations (contact your Local Plan for more information);

or

(6) Care received outside the United States and Puerto Rico.

Unless otherwise noted in Section 5, when services of Non-preferred providers are covered in a special exception, benefits will be provided based on the Plan allowance. You are responsible for the applicable coinsurance or copayment, and may also be responsible for any difference between our allowance and the billed amount.

� Transitional care

Specialty care: If you have a chronic or disabling condition and

� lose access to your specialist because we drop out of the Federal Employees Health Benefits (FEHB) Program and you enroll in another FEHB plan, or

� lose access to your Preferred specialist because we terminate our contract with your specialist for other than cause,

you may be able to continue seeing your specialist and receiving any Preferred benefits for up to 90 days after you receive notice of the change. Contact us or, if we drop out of the Program, contact your new plan.

If you are in the second or third trimester of pregnancy and you lose access to your specialist based on the above circumstances, you can continue to see your specialist and any Preferred benefits will continue until the end of your postpartum care, even if it is beyond the 90 days.

� Hospital care

We pay for covered services from the effective date of your enrollment. However, if you are in the hospital when your enrollment in our Plan begins, call us immediately. If you have not yet received your Service Benefit Plan ID card, you can contact your Local Plan at the telephone number listed in your local telephone directory. If you already have your new Service Benefit Plan ID card, call us at the number on the back of the card. If you are new to the FEHB Program, we will reimburse you for your covered expenses while in the hospital.

However, if you changed from another FEHB plan to us, your former plan will pay for the hospital stay until:

� You are discharged, not merely moved to an alternative care center; or

� The day your benefits from your former plan run out; or

� The 92^nd day after you become a member of this Plan, whichever happens first.

These provisions apply only to the benefits of the hospitalized person. If your plan terminates participation in the FEHB in whole or in part, or if OPM orders an enrollment change, this continuation of coverage provision does not apply. In such case, the hospitalized family member's benefits under the new plan begin on the effective date of enrollment.

How to get approval for . . .

� Your hospital stay

Precertification is the process by which � prior to your inpatient hospital admission � we evaluate the medical necessity of your proposed stay and the number of days required to treat your condition. Unless we are misled by the information given to us, we will not change our decision on medical necessity.

In most cases, your physician or hospital will take care of precertification. Because you are still responsible for ensuring that we are asked to precertify your care, you should always ask your physician or hospital whether they have contacted us.

Warning:

We will reduce our benefits for the inpatient hospital stay by $500 if no one contacts us for precertification. If the stay is not medically necessary, we will not pay any benefits.

How to precertify an admission

� You, your representative, your doctor, or your hospital must call us at the telephone number listed on the back of your Service Benefit Plan ID card any time prior to admission.

� If you have an emergency admission due to a condition that you reasonably believe puts your life in danger or could cause serious damage to bodily function, you, your representative, your doctor, or your hospital must telephone us within two business days following the day of the emergency admission, even if you have been discharged from the hospital.

� Provide the following information:

- Enrollee's name and Plan identification number;

- Patient's name, birth date, and phone number;

- Reason for hospitalization, proposed treatment, or surgery;

- Name and phone number of admitting doctor;

- Name of hospital or facility; and

- Number of planned days of confinement.

� We will then tell the doctor and/or hospital the number of approved inpatient days and we will send written confirmation of our decision to you, your doctor, and the hospital.

Maternity care

You do not need to precertify a maternity admission for a routine delivery. However, if your medical condition requires you to stay more than 48 hours after a vaginal delivery or 96 hours after a cesarean section, then your physician or the hospital must contact us for precertification of additional days. Further, if your baby stays after you are discharged, then your physician or the hospital must contact us for precertification of additional days for your baby.

If your hospital stay

needs to be extended:

If your hospital stay � including for maternity care � needs to be extended, you, your representative, your doctor, or the hospital must ask us to approve the additional days.

What happens when you do not follow the precertification rules

If no one contacted us, we will decide whether the hospital stay was medically necessary.

� If we determine that the stay was medically necessary, we will pay the inpatient charges, less the $500 penalty. [See Section 5(c) for payment information.]

� If we determine that it was not medically necessary for you to be an inpatient, we will not pay inpatient hospital benefits. We will only pay for any covered medical supplies and services that are otherwise payable on an outpatient basis.

If we denied the precertification request, we will not pay inpatient hospital benefits or inpatient physician care benefits. We will only pay for any covered medical supplies and services that are otherwise payable on an outpatient basis.

When we precertified the admission but you remained in the hospital beyond the number of days we approved and you did not get the additional days precertified, then:

� for the part of the admission that was medically necessary, we will pay inpatient benefits, but

� for the part of the admission that was not medically necessary, we will pay only medical services and supplies otherwise payable on an outpatient basis and we will not pay inpatient benefits.

Exceptions:

You do not need precertification in these cases:

� You are admitted to a hospital outside the United States.

� You have another group health insurance policy that is the primary payer for the hospital stay. (See page 12 for special instructions regarding admissions to BQCT institutions.)

� Your Medicare Part A is the primary payer for the hospital stay. (See page 12 for special instructions regarding admissions to BQCT institutions.)

Note: If you exhaust your Medicare hospital benefits and do not want to use your Medicare lifetime reserve days, then you do need precertification.

� Other services

These services require prior approval under both Standard and Basic Option:

� Home hospice care � Contact us at the customer service number listed on the back of your ID card before obtaining services. We will request the medical evidence we need to make our coverage determination and advise you which home hospice care agencies we have approved.

� Partial hospitalization or intensive outpatient treatment for mental health/substance abuse � Contact us at the mental health and substance abuse number listed on the back of your ID card before obtaining services for intensive outpatient treatment or partial hospitalization from Preferred providers. We will request the medical evidence we need to make our coverage determination. We will also consider the necessary duration of either of these services.

� Organ/tissue transplants � Contact us at the customer service number listed on the back of your ID card before obtaining services. We will request the medical evidence we need to make our coverage determination. We will consider whether the facility is approved for the procedure and whether you meet the facility's criteria.

� Clinical trials for certain organ/tissue transplants � Contact our Clinical Trials Information Unit at 1-800-225-2268 for information or to request prior approval before obtaining services. We will request the medical evidence we need to make our coverage determination. Use this number only for prior approval of clinical trials for bone marrow and peripheral blood stem cell transplant support procedures for those conditions shown on pages 54 and 55 as covered only in clinical trials.

� Prescription drugs � Certain prescription drugs require prior approval. Contact our Retail Pharmacy Program at 1-800-624-5060 (TDD: 1-800-624-5077 for the hearing impaired) to request prior approval, or to obtain an updated list of prescription drugs that require prior approval. We will request the information we need to make our coverage determination. You must periodically renew prior approval for certain drugs. See page 85 for more about our prescription drug prior approval program, which is part of our Patient Safety and Quality Monitoring (PSQM) program.

Note: Benefits for drugs to aid smoking cessation that require a prescription by Federal law are limited to one course of treatment per calendar year. Prior approval is required before benefits will be provided for additional medication. To obtain approval, the physician must certify the patient is participating in a smoking cessation program that provides clinical treatment, including counseling and behavioral therapies.

Note: Until we approve them, you must pay for these drugs in full when you purchase them � even if you purchase them at a Preferred retail pharmacy or through an internet pharmacy � and submit the expense(s) to us on a claim form. Preferred pharmacies will not file these claims for you.

Under Standard Option, members may use our Mail Service Prescription Drug Program to fill their prescriptions. However, the Mail Service Prescription Drug Program also will not fill your prescription until you have obtained prior approval. Caremark, the administrator of the Mail Service Prescription Drug Program, will hold your prescription for you up to thirty days. If prior approval is not obtained within 30 days, your prescription will be returned to you along with a letter explaining the prior approval procedures.

The Mail Service Prescription Drug Program is not available under Basic Option.

In addition to the types of care listed above, these services also require prior approval under Basic Option:

� Outpatient mental health and substance abuse treatment � You must call us at the number listed on the back of your ID card for mental health and substance abuse before receiving any outpatient professional or facility care. We will then provide you with the names and phone numbers of several Preferred providers to choose from and tell you how many visits we are initially approving.

Section 4. Your costs for covered services

This is what you will pay out-of-pocket for your covered care:

Copayments

A copayment is a fixed amount of money you pay to the provider, facility, pharmacy, etc., when you receive certain services.

Example: If you have Standard Option when you see your Preferred physician, you pay a copayment of $15 for the office visit and we then pay the remainder of the amount billed for the office visit. (You may have to pay separately for other services you receive while in the physician's office.) When you go into a Preferred hospital, you pay a copayment of $100 per admission. We then pay the remainder of the hospital bill for the covered services you receive.

Copayments do not apply to services and supplies that are subject to a deductible and/or coinsurance amount.

Note: If the billed amount (or the Plan allowance that providers we contract with have agreed to accept as payment in full) is less than your copayment, you pay the lower amount.

Deductible

Adeductible is a fixed amount of covered expenses you must incur for certain covered services and supplies before we start paying benefits for them. Copayments and coinsurance amounts do not count toward your deductible. When a covered service or supply is subject to a deductible, only the Plan allowance for the service or supply that you then pay counts toward meeting your deductible.

Under Standard Option, the calendar year deductible is $250 per person. Under a family enrollment, the calendar year deductible for each family member is satisfied and benefits are payable for all family members when the combined covered expenses of the family reach $500.

Note: If the billed amount (or the Plan allowance that providers we contract with have agreed to accept as payment in full) is less than the remaining portion of your deductible, you pay the lower amount.

Example: If the billed amount is $100, the provider has an agreement with us to accept $80, and you have not paid any amount toward meeting your Standard Option calendar year deductible, you must pay $80. We will apply $80 to your deductible. We will begin paying benefits once the remaining portion of your Standard Option calendar year deductible ($170) has been satisfied.

Note: If you change plans during Open Season and the effective date of your new plan is after January 1 of the next year, you do not have to start a new deductible under your old plan between January 1 and the effective date of your new plan. If you change plans at another time during the year, you must begin a new deductible under your new plan.

Under Basic Option, there is no calendar year deductible.

Coinsurance

Coinsurance is thepercentage of the Plan allowance that you must pay for your care. Your coinsurance is based on the Plan allowance, or billed amount, whichever is less. Under Standard Option only, coinsurance does not begin until you meet your deductible.

Example: You pay 10% of the Plan allowance under Standard Option for durable medical equipment obtained from a Preferred provider, after meeting your $250 calendar year deductible.

Note: If your provider routinely waives (does not require you to pay) your applicable deductible (under Standard Option only), coinsurance, or copayments, the provider is misstating the fee and may be violating the law. In this case, when we calculate our share, we will reduce the provider's fee by the amount waived.

Example: If your physician ordinarily charges $100 for a service but routinely waives your 25% Standard Option coinsurance, the actual charge is $75. We will pay $56.25 (75% of the actual charge of $75).

Waivers

In some instances, a Preferred, Participating, or Member provider may ask you to sign a "waiver" prior to receiving care. This waiver may state that you accept responsibility for the total charge for any care that is not covered by your health plan. If you sign such a waiver, whether you are responsible for the total charge depends on the content of the contracts that the Local Plan has with its providers. If you are asked to sign this type of waiver, please be aware that, if benefits are denied for the services, you could be legally liable for the related expenses. If you would like more information about waivers, please contact us at the customer service number on the back of your ID card.

Differences between our allowance and the bill

Our "Plan allowance" is the amount we use to calculate our payment for certain types of covered services. Fee-for-service plans arrive at their allowances in different ways, so allowances vary. For information about how we determine our Plan allowance, see the definition of Plan allowance in Section 10.

Often, the provider's bill is more than a fee-for-service plan's allowance. Whether or not you have to pay the difference between our allowance and the bill will depend on the type of provider you use. In this Plan, we have the following types of providers:

� Preferred providers. These types of providers have agreements with the Local Plan to limit what they bill our members. Because of that, when you use a Preferred provider, your share of the provider's bill for covered care is limited.

Under Standard Option, your share consists only of your deductible and coinsurance or copayment. Here is anexample about coinsurance: You see a Preferred physician who charges $150, but our allowance is $100. If you have met your deductible, you are only responsible for your coinsurance. That is, under Standard Option, you pay just 10% of our $100 allowance ($10). Because of the agreement, your Preferred physician will not bill you for the $50 difference between our allowance and his/her bill.

Under Basic Option, your share consists only of your copayment or coinsurance amount, since there is no calendar year deductible. Here is anexample involving a copayment: You see a Preferred physician who charges $150 for covered services subject to a $20 copayment. Even though our allowance may be $100, you still pay just the $20 copayment. Because of the agreement, your Preferred physician will not bill you for the $130 difference between your copayment and his/her bill.

Remember, under Basic Option, you must use Preferred providers in order to receive benefits. See page 12 for the exceptions to this requirement.

� Participating providers. These types of Non-preferred providers have agreements with the Local Plan to limit what they bill our Standard Option members.

Under Standard Option, when you use a Participating provider, your share of covered charges consists only of your deductible and coinsurance or copayment. Here is an example: You see a Participating physician who charges $150, but the Plan allowance is $100. If you have met your deductible, you are only responsible for your coinsurance. That is, under Standard Option, you pay just 25% of our $100 allowance ($25). Because of the agreement, your Participating physician will not bill you for the $50 difference between our allowance and his/her bill.

Under Basic Option, there are no benefits for care performed by Participating providers; you pay all charges. See page 12 for the exceptions to this requirement.

� Non-participating providers. These Non-preferred providers have no agreement to limit what they will bill you.

Under Standard Option, when you use a Non-participating provider, you will pay your deductible and coinsurance � plus any difference between our allowance and the charges on the bill (except in certain circumstances � see page 114). For example, you see a Non-participating physician who charges $150. The Plan allowance is again $100, and you have met your deductible. You are responsible for your coinsurance, so you pay 25% of the $100 Plan allowance or $25. Plus, because there is no agreement between the Non-participating physician and us, the physician can bill you for the $50 difference between our allowance and his/her bill.

Under Basic Option, there are no benefits for care performed by Non-participating providers; you pay all charges. See page 12 for the exceptions to this requirement.

The following table illustrates examples of how much you have to pay out-of-pocket for services from a Preferred physician, a Participating physician, and a Non-participating physician. The table uses our example of a service for which the physician charges $150 and the Plan allowance is $100. For Standard Option, the table shows the amount you pay if you have met your calendar year deductible.

$150

$150

$150

$150

We set it at: 100

We set it at: 100

We set it at: 100

We set it at: 100

90% of our allowance: 90

Our allowance

less copay: 80

75% of our

allowance: 75

75% of our

allowance: 75

10% of our allowance: 10

Not applicable

25% of our

allowance: 25

25% of our

allowance: 25

Not applicable

20

Not applicable

Not applicable

No: 0

No: 0

No: 0

Yes: 50

$10

$20

$25

$75

*Under Basic Option, there are no benefits for care performed by Participating and Non-participating physicians. You must use Preferred providers in order to receive benefits. See page 12 for the exceptions to this requirement.

Note: Under Standard Option, had you not met any of your deductible in the above examples, only our allowance ($100), which you would pay in full, would count toward your deductible.

� Overseas providers. We pay overseas claims at Preferred benefit levels, using an Overseas Fee Schedule as our Plan allowance. Most overseas professional providers are under no obligation to accept our allowance, and you must pay any difference between our payment and the provider's bill. For facility care you receive overseas, we provide benefits in full after you pay the applicable copayment or coinsurance (and, under Standard Option, any deductible amount that may apply). See Section 5(i) for more information about our overseas benefits.

� Dental care. Under Standard Option, we pay scheduled amounts for routine dental services and you pay any balance. Under Basic Option, you pay $20 for any covered evaluation and we pay the balance for covered services. See Section 5(h) for a listing of covered dental services and additional payment information.

� Hospital care. You pay the coinsurance or copayment amounts listed in Section 5(c). Under Standard Option, you must meet your deductible before we begin providing benefits for certain hospital-billed services. Under Basic Option, you must use Preferred facilities in order to receive benefits. See page 12 for the exceptions to this requirement.

Your catastrophic protection out-of-pocket maximum for deductibles, coinsurance, and copayments

If the total amount of out-of-pocket expenses in a calendar year for you and your covered family members for deductibles (Standard Option only), coinsurance, and copayments (other than those listed below) exceeds $6,000 under Standard Option, or $5,000 under Basic Option, then you and any covered family members will not have to continue paying them for the remainder of the calendar year.

Standard Option Preferred maximum: If the total amount of these out-of-pocket expenses from using Preferred providers for you and your covered family members exceeds $4,000 in a calendar year under Standard Option, then you and any covered family members will not have to pay these expenses for the remainder of the calendar year when you continue to use Preferred providers. You will, however, have to pay them when you use Non-preferred providers, until your out-of-pocket expenses (for the services of both Preferred and Non-preferred providers) reach $6,000 under Standard Option, as shown above.

Basic Option maximum: If the total amount of these out-of-pocket expenses from using Preferred providers for you and your covered family members exceeds $5,000 in a calendar year under Basic Option, then you and any covered family members will not have to pay these expenses for the remainder of the calendar year.

The following expenses are not included under this feature. These expenses do not count toward your catastrophic protection out-of-pocket maximum, and you must continue to pay them even after your expenses exceed the limits described above.

� The difference between the Plan allowance and the billed amount. See pages 17-19;

� Expenses for services, drugs, and supplies in excess of our maximum benefit limitations;

� Under Standard Option, your 30% coinsurance for inpatient care in a Non-member hospital;

� Under Standard Option, your 25% coinsurance for outpatient care by a Non-member facility;

� Your expenses for mental conditions and substance abuse care by a Non-preferred professional or facility provider;

� Your expenses for dental services in excess of our fee schedule payments under Standard Option. See Section 5(h);

� The $500 penalty for failing to obtain precertification, and any other amounts you pay because we reduce benefits for not complying with our cost containment requirements;

� Under Basic Option, coinsurance you pay for non-formulary brand-name drugs; and

� Under Basic Option, your expenses for care received from Participating/Non-participating professional providers or Member/Non-member facilities, except for coinsurance and copayments you pay in those special situations where we do pay for care provided by Non-preferred providers. Please see page 12 for the exceptions to the requirement to use Preferred providers.

Note: If you change to another plan during Open Season, we will continue to provide benefits between January 1 and the effective date of your new plan.

� If you had already paid the out-of-pocket maximum, we will continue to provide benefits as described on this page until the effective date of your new plan.

� If you had not yet paid the out-of-pocket maximum, we will apply any expenses you incur in January (before the effective date of your new plan) to our prior year's out-of-pocket maximum. Once you reach the maximum, you don't need to pay our deductibles, copayments, or coinsurance amounts (except as shown on this page) from that point until the effective date of your new plan.

Note: Because benefit changes are effective January 1, we will apply our next year's benefits to any expenses you incur in January.

Note: If you change options in this Plan during the year, we will credit the amounts already accumulated toward the catastrophic protection out-of-pocket limit of your old option to the catastrophic protection out-of-pocket limit of your new option. If you change from Self Only to Self and Family, or vice versa, during the calendar year, please call us about your out-of-pocket accumulations and how they carry over.

When Government facilities
bill us

Facilities of the Department of Veterans Affairs, the Department of Defense, and the Indian Health Service are entitled to seek reimbursement from us for certain services and supplies they provide to you or a family member. They may not seek more than their governing laws allow.

If we overpay you

We will make diligent efforts to recover benefit payments we made in error but in good faith. We may reduce subsequent benefit payments to offset overpayments.

Note: We will generally first seek recovery from the provider if we paid the provider directly, or from the person (covered family member, guardian, custodial parent, etc.) to whom we sent our payment.

If you�

� are age 65 or over; and

� do not have Medicare Part A, Part B, or both; and

� have this Plan as an annuitant or as a former spouse, or as a family member of an annuitant or former spouse; and

� are not employed in a position that gives FEHB coverage. (Your employing office can tell you if this applies.)

Then, for your inpatient hospital care,

� the law requires us to base our payment on an amount � the "equivalent Medicare amount" � set by Medicare's rules for what Medicare would pay, not on the actual charge;

� you are responsible for your deductible (Standard Option only), coinsurance, or copayments you owe under this Plan;

� you are not responsible for any charges greater than the equivalent Medicare amount; we will show that amount on the explanation of benefits (EOB) form that we send you; and

� the law prohibits a hospital from collecting more than the equivalent Medicare amount.

And, for your physician care, the law requires us to base our payment and your applicable coinsurance or copayment on�

� an amount set by Medicare and called the "Medicare approved amount," or

� the actual charge if it is lower than the Medicare approved amount.

Participates with Medicare or accepts Medicare assignment for the claim and is in our Preferred network

Standard Option:

your deductibles, coinsurance, and copayments

Basic Option:

your copayments and coinsurance

Participates with Medicare or accepts Medicare assignment and is not in our Preferred network

Standard Option:

your deductibles, coinsurance, and copayments, and any balance up to the Medicare approved amount

Basic Option:

all charges

Does not participate with Medicare, and is in our Preferred network

Standard Option:

your deductibles, coinsurance, and copayments, and any balance up to 115% of the Medicare approved amount

Basic Option:

your copayments and coinsurance, and any balance up to 115% of the Medicare approved amount

Note: In many cases, your payment will be less because of our Preferred agreements. Contact your Local Plan for information about what your specific Preferred provider can collect from you.

Does not participate with Medicare and is not in our Preferred network

Standard Option:

your deductibles, coinsurance, copayments, and any balance up to 115% of the Medicare approved amount

Basic Option:

all charges

It is generally to your financial advantage to use a physician who participates with Medicare. Such physicians are permitted to collect only up to the Medicare approved amount.

Our explanation of benefits (EOB) form will tell you how much the physician or hospital can collect from you. If your physician or hospital tries to collect more than allowed by law, ask the physician or hospital to reduce the charges. If you have paid more than allowed, ask for a refund. If you need further assistance, call us.

When you have the
Original Medicare Plan
(Part A, Part B, or both)