ASSOCIATION OF WASHINGTON CITIES EMPLOYEE BENEFIT TRUST
HEALTH CARE PROGRAM
INTERLOCAL AGREEMENT

This Agreement is made and entered into in the State of Washington by and
among the
Association of Washington Cities Employee Benet Trust (the "Trust") and cities and towns,
and noncity entities organized and existing under the Constitution or laws of the State of
Washington and who are members of the Trust ("Participating Cities and Towns," or
"Participating Non-City Entities"), all of whom are signatories to this Agreement.

RECITALS

WHEREAS, the Trust is an entity to which contributions by Participating Cities and
Towns and NonCity Entities (dened below) and Participating Employees (dened below)
are
paid and through which the Board of Trustees provides one or more insured health and welfare
benet plans or programs to Participating Employees, their covered dependents and other
beneciaries ("Beneciaries"), on whose behalf the contributions were paid; and

WHEREAS, the Trust qualies as a voluntary employee beneciary association within
the meaning of Section 501(c)(9) of the Internal Revenue Code ("VEBA"), providing for the
payment of life, sick, accident or other benets to Beneciaries; and

WHEREAS, the Trust and the Participating Cities and Towns have determined that it is
in the best interest of Participating Cities and Towns to jointly self-insure certain health benet
plans and programs for Beneciaries through a designated account within the Trust, while at the
same time having the Trust continue as the entity to which health and welfare benet plan or
program contributions are paid and through which insured health and welfare benet plans and
programs are provided to Beneciaries; and

WHEREAS, it appears economically feasible and practical for the parties to this
Agreement (dened below) to do so; and

WHEREAS, Chapter 48.62 RCW provides that two or more local government entities
may, by Interlocal agreement under Chapter 39.34 RCW, jointly self-insure health benet plans
and programs, and/or jointly hire risk management services for such plans
or programs by any

one or more of certain specied methods; and

WHEREAS, each local government entity that is a signatory hereto, as required by
WAC 200-110-030, acts upon the authority of a resolution adopting this Agreement and the
Health Care Program (dened below) created herein;

NOW, THEREFORE, for and in consideration of all of the mutual benets, covenants
and agreements contained herein, the parties hereto agree as follows:



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ARTICLE 1

DEFINITIONS

The following are denitions of terms used in the Agreement. Unless indicated
otherwise, other terms are dened where they are rst used. Dened terms are capitalized when
used in the dened context.

1.1    Agreement means this Interlocal Agreement entered into under the authority of Chapter
39.34 RCW and as required by RCW 48.62.031(2) between the Trust and Participating
Employers.

1.2   Association of Washington Cities or AWC means the Association of Washington
Cities, a not-for-prot membership association established pursuant to the laws of the
state of Washington for the purpose of providing various services to and on behalf of its
member cities.

1.3    Association of Washington Cities Employee Benefit Trust or the Trust means the trust
and all property and money held by such entity, including all contract rights and records,
established for the sole purpose of providing life, sick accident or other health and
welfare benets to Participating Employees, their covered dependents and other
beneciaries, and which is approved by the Internal Revenue Service as a VEBA.

1.4   Employee Benefits Advisory Committee or EBAC means the committee dened in
Article V of the Trust Agreement that may be delegated responsibility by the Board of
Trustees, including but not limited to: overseeing the operations of the Health Care
Program, analyzing and developing annual premium levels and benet coverage changes
for recommendation to the Board of Trustees and performing other duties
necessary to
ensure that the needs of Participating Employers are met and the long-term nancial
health of the Health Care Program is maintained.

1.5   Health Care Program means the joint self-insurance program offering self-insured
health benet options through the HCP Account.

1.6   HCP Account means a designated account within the Trust and created by this
Agreement, the Trust Agreement and Trust Health Care Program policies all under the
authority of Chapter 48.62 RCW to provide self-insured health benets to Participating
Employees, their covered dependents and other beneciaries and further described in
Article 6.

1.7   Non-City Entity means any public agency, public corporation, intergovernmental agency
or political subdivision, within the state of Washington that meets the requirements of
Article IX, Section l(c)(ii) and (iii) of the Trust Agreement for participation in the Health
Care Program.

1.8   Participating City means any city or town within the state of Washington that meets the
requirements of Article IX, Section 1(a) or Section l(b) of the Trust Agreement.

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1.9   Participating Employee means any individual employed by a Participating Employer
and for whom the Participating Employer makes contributions to the Trust, and
any
individual who may have been so employed but is subsequently laid off, terminated,
or
retired.

1.10  Participating Employer means a Participating City or Non-City Entity that is also a
party to this Agreement.

1.11  Resolution means the resolution adopted by each Participating City or Non-City Entity
that authorizes the Health Care Program.

1.12  State Risk Manager or Risk Manager means the risk manager of the Risk Management
Division within the Department of Enterprise Services.

1.13  Stop Loss Insurance or Reinsurance means a promise by an insurance company that it
will cover losses of the Health Care Program over and above an agreed-upon individual
or aggregated amount, which definition shall be modied by any changes to the
denition of stop loss insurance in WAC 200-110-020.

1.14  Third-Party Administrator means the independent association, agency, entity or
enterprise which, through a contractual agreement, provides one or more of the following
ongoing services to the Health Care Program: pool management or administration
services, claims administration services, risk management services, or services for the
design, implementation, or termination of an individual or joint self-insurance program.

1.15  Trust Agreement means the Trust Agreement Governing the Trust amended and restated
July 1, 2013, and any subsequent amendments thereto.

1.16  Trustees or Board of Trustees means the following individuals and their successors,
who together, govern the Trust and the Health Care Program:

1.16.1 the AWC President and the AWC Vice President;

1.16.2 the EBAC Chair and the EBAC Vice Chair; and

1.16.3 an individual elected pursuant to the procedures in Article III, Section 5 of the
Trust Agreement to serve as the trustee from one of the following regions:

(a)    North East Region (known as the "North East Region Trustee");

(b)   North West Region (known as the "North West Region Trustee");

(0)    South East Region (known as the "South East Region Trustee"); and

((1)     South West Region (known as the "South West Region Trustee").

Individuals from NonCity Entities are not eligible to serve as Trustees.


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ARTICLE 2

PURPOSE

This Agreement is entered into for the purpose of authorizing the Health Care Program
created by the Trust to provide self-insured health benets to Participating Employees, their
covered dependents and other beneciaries. The Health Care Program shall comply with the
statutory provisions found in Chapters 48.62 and 39.34 RCW and the regulatory requirements
contained in WAC 200-110 applicable to joint self-insurance programs.

ARTICLE 3

PARTIES

Each party to this Agreement certies that it intends to participate in the Health Care
Program. Participating Employers are signatories of this Agreement to become effective on a
date to be mutually determined (the "Effective Date") and with such other Participating Cities
and Non-City Entities as may later be added to and become signatories to this Agreement.

ARTICLE 4

DURATION OF AGREEMENT

4.1   This Agreement shall become effective on the Effective Date.

4.2   This Agreement shall have perpetual duration unless terminated
as hereinafter provided.

ARTICLE 5

MEMBERSHIP COMPOSITION

The Health Care Program shall be open to Participating Cities and Non-City Entities.
Participation in the Health Care Program is voluntary and not a requirement ofAWC
membership. The Board of Trustees shall provide for the reasonable admission ofnew
Participating Cities and Non-City Entities.

ARTICLE 6

HCP ACCOUNT

6.1   All premium contributions by Participating Employers, Non-City Entities and
Participating Employees for use in the Health Care Program are deposited into the HCP
Account.

6.2   The HCP Account represents a pool of funds that is independent of all other Trust
or
AWC funds and independent of all other Participating Employer and Non-City Entity
funds. The funds deposited into the HCP Account are held, managed and expended only
for the Health Care Program and reasonable expenses, consistent with applicable state


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and federal statutes and rules governing joint self-insurance programs and self-insurance
programs generally.

6.3   The HCP Account is subject to audit by the State Auditor's Ofce.

ARTICLE 7

TRUSTEE POWERS RELATED TO HEALTH CARE PROGRAM

The Board of Trustees is provided with the powers and functions established under
RCW 48.62.031 to accomplish the following:

7.1    Promote the economical and efcient means by which health benets coverage is made
available to Participating Employers and Non-City Entities and provided to Participating
Employees, their covered dependents and other beneciaries;

7.2   Protect the nancial integrity of the Health Care Program through purchase of Stop Loss
Insurance or Reinsurance in such form and amount as needed;

7.3   Contract for or otherwise provide risk management and loss control services;

7.4   Contract for or otherwise provide legal counsel for the defense of claims and other legal
services;

7.5   Consult with the state insurance commissioner and the State Risk Manager;

7.6   Obligate the Participating Employers and Non-City Entities to pledge revenues or
contribute money to secure the obligations or pay the expenses of the Health Care
Program, including the establishment of a reserve or fund for coverage; and

7.7   Exercise all other powers and perform all other functions reasonably necessary to carry
out the purposes of the Health Care Program, Chapter 48.62 RCW and Chapter 200-110
WAC.

ARTICLE 8

ORGANIZATION OF HEALTH CARE PROGRAM

8.1    The operations of the Health Care Program are managed by the Board of Trustees or its
delegates. The Trustees or any delegates review and analyze Health Care Program-
related matters and make operational decisions regarding premium contributions,
reserves, plan options and benets in compliance with Chapter 48.62 RCW.

8.2   The Board of Trustees has decision authority consistent with the Trust Agreement, Health
Care Program policies, Chapter 48.62 RCW and Chapter 2001 10 WAC.



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ARTICLE 9

RESPONSIBILITIES OF THE TRUSTEES

9.1    The Board of Trustees shall discharge its responsibilities under this Agreement as
follows:

9.1.1  Provide for the efcient management and operation of the Health Care Program;

9.1.2  Provide for health benet coverage options for Participating Employees, their
covered dependents and other beneciaries;

9.1.3  Determine the level of Stop Loss Insurance or Reinsurance coverage for claims
expenses above the amounts deemed appropriate for self-insurance;

9.1.4  Ensure that the Health Care Program meets required state and federal statutes and
rules;

9.1.5  Contract with vendors required to meet the responsibilities established by the
Trust Agreement, Health Care Program policies, and applicable state and federal
statutes and rules;

9.1.6  Maintain the balance between meeting the Health Care Program needs of
Participating Employers and the long-term nancial integrity of the Health Care
Program;

9.1.7  Prepare an annual nancial report on the operations of the Health Care Program;
and

9.1.8  Provide for other services deemed appropriate by the Board of Trustees to meet
the purposes of this Agreement.

9.2   The Board of Trustees may delegate the responsibilities described in this Article 9 to the
EBAC or other delegates at its complete discretion.

ARTICLE 10

RESPONSIBILITIES OF THE PARTICIPATING EMPLOYERS

In order to participate in the Health Care Program, Participating Employers shall:

10.1  Be a Participating City or NonCity Entity in good standing and comply with the
requirements of admission or qualication as established by the Board of Trustees;

10.2  Adopt this Agreement by Resolution, agreeing to its terms and provisions;

10.3  Submit the Resolution and Agreement to the Trust;


742343476 0053138-00001                        6

10.4  Read the terms, conditions and representations set forth in the application agreement
related to participation in the Health Care Program;

10.5  Designate an employee of the Participating Employer to be a contact person for all
matters relating to the Participating Employer's participation in the Health Care Program;

10.6  Pay premiums for the Health Care Program to the Third-Party Administrator no later than
the tenth day of the month in which the premium is due;

10.7  By formal action of the legislative body of the Participating Employer, approve policies
and procedures necessary to secure protected health information ("PHI") in accordance
with Chapter 70.02 RCW and the Health Insurance Portability and Accountability Act
("HIPAA") privacy and security rules, codied at 45 C.F.R. Parts 160-164;

10.8  Provide the Health Care Program with such information or assistance as is necessary for
the Health Care Program to meet its responsibilities under this Agreement; and

10.9  Cooperate with and assist the Health Care Program and any insurer of Stop Loss
Insurance or Reinsurance, in all matters relating to the administration and operation of the
Health Care Program and all matters relating to this Agreement.

10.10 Comply with all bylaws, rules, regulations and policies adopted by the Board of Trustees
relating to the Health Care Program.

ARTICLE 11

RESERVE FUND INVESTMENT

All reserve fund investments from the HCP Account shall be made in a manner that is
consistent with RCW 48.62.111, Chapter 39.59 RCW, WAC 200-110-090 and the Health Care
Program Investment Policy.

ARTICLE 12

FINANCIAL RECORDS

12.1  The Board of Trustees shall develop estimated revenue and expenditures to establish a
budget for each scal year covering January 1 through December 31 annually. Actual
Health Care Program revenues and expenditures shall be monitored monthly by the
Board of Trustees and reported at its quarterly meetings.

12.2  The accounting records of the Health Care Program are maintained in accordance with
methods prescribed by the State Auditor's ofce under the authority of Chapter 43.09
RCW. The Health Care Program also follows applicable accounting standards
established by the Governmental Accounting Standards Board ("GASB"). Year-end
nancial reporting is done on an accrual basis and submitted to the Ofce of the State
Auditor as required by Chapter 200-110 WAC. Once reviewed and approved by the


742343476 0053138-00001                        7

Ofce of the State Auditor the year-end nancial report is transmitted to the Ofce of the
State Risk Manager.

12.3  Financial records of the Health Care Program shall be subject to audit by the Ofce of the
State Auditor. Year-end nancial reports and audit results shall be made available to
interested parties. The Health Care Program shall provide nancial information as
required by state statute and rule to the Ofce of the State Risk Manager.

ARTICLE 13

PARTICIPATING EMPLOYER TERMINATION AND WITHDRAWAL

13.1  A Participating Employer must remain in good standing with the Trust and adhere to the
requirements of this Agreement. In the event that a Participating Employer fails to be a
Participating City or Non-City Entity in good standing, participation in the Health Care
Program shall automatically terminate without notice as shall all health and welfare
benets provided through the Health Care Program.

13.2  The Board of Trustees may take action to terminate membership or deny membership in
the Health Care Program where it determines that such termination or denial is in the best
interest of the Health Care Program

13.3  When a Participating Employer's eligibility in the Health Care Program is affected due to
merger or annexation, the affected Participating Employer may petition the Board of
Trustees to remain in the Health Care Program.

13.4  A Participating Employer may only withdraw its participation in the Health Care
Program at the end of the calendar year and must provide written notice to the Trust at
least thirty-one (31) days in advance of the end of the calendar year (December 31st).

13.5  In the event of withdrawal or non-renewal, the Health Care Program will cover any of the
Participating Employer's remaining outstanding Health Care Program claims expenses
incurred prior to the Participating Employer's withdrawal from or non-renewal in the
Health Care Program.

13.6  No Participating Employer, because of withdrawal or any other reason, has any right or
interest in the HCP Account because of its nature as a rate stabilization fund. In the event
any Participating Employer withdraws from the Health Care Program, its Participating
Employees, their covered dependents and other beneciaries and any Consolidated
Omnibus Budget Reconciliation Act of 1985 as amended (COBRA) participants and
contract personnel and dependents approved by the Board of Trustees, shall forfeit all
right and interest to the HCP Account.



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ARTICLE 14

TERMINATION OF HEALTH CARE PROGRAM

14.1  In the event the Health Care Program is terminated, the Board of Trustees shall distribute
the remaining funds in the HCP Account to the Trust or any successor association
authorized by Chapter 39.34 RCW for like purposes for use in any program with similar
purposes.

14.2  Upon termination, this Agreement and the HCP Account shall continue for the purpose of
paying remaining outstanding claims and expenses and fullling all other functions
necessary to complete the business of the Health Care Program.

ARTICLE 15

MEETINGS, NOTICES AND COMMUNICATIONS

15.1  The Board of Trustees and the EBAC, if any responsibilities for Trust management have
been delegated thereto, shall provide notice of their regular and special meetings and hold
their meetings in accordance with Chapter 42.30, RCW Open Public Meetings Act.

15.2  Communications with Participating Employers may occur using mail, email or posting
on
the Health Care Program website. The website shall be partitioned to provide
information for the general public and information specific to Participating Employers
and their employees.

15.3  Communications may come directly from the Health Care Program, through the
Third-Party Administrator or through another vendor on behalf of the Health Care
Program.

ARTICLE 16

AMENDMENTS TO INTERLOCAL AGREEMENT

16.1  The Board of Trustees shall review and analyze any proposed amendment to this
Agreement. An amendment may be proposed for review by any party to this Agreement.

16.2  The Board of Trustees upon its discretion may take action by resolution on
any
amendment at any regular meeting of the Board of Trustees.

ARTICLE 17

PROHIBITION ON ASSIGNMENT

17.1  No Participating Employer may assign any right or claim of interest it may have under
this Agreement.


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17.2  No creditor, assignee or third-party beneciary of any employer shall have the right,
claim or title to any party, share, interest, premium or asset of the Trust, HCP Account
or
the Health Care Program.

ARTICLE 18

HEALTH CLAIM DISPUTES AND APPEALS

In the event that a dispute arises over a health claim, the procedures, adjudication
requirements and administrative remedies shall be found in the Health Care Program's plan
document applicable to the Health Care Program covering the claimant.

ARTICLE 19

PLAN ADMINISTRATION DISPUTES AND APPEALS

19.1  In the event that a dispute arises between a Participating Employer and the Health Care
Program, the Participating Employer shall document the circumstances causing the
dispute and submit a written request for review of the disputed circumstances to the
Board of Trustees. Upon review of such information, the Board of Trustees shall attempt
to resolve the dispute.

19.2  If the Board of Trustees' resolution to the dispute is deemed unsatisfactory, then
alternative dispute resolution through mediation or binding arbitration may be
necessary.

ARTICLE 20

ENFORCEMENT OF TERMS OF AGREEMENT

20.1  The Board of Trustees may enforce the terms of this Agreement.

20.2  In the event legal action is initiated to enforce any term or provision of this
Agreement against any present or previous Participating Employer, the prevailing party
shall receive such reimbursement of costs as the court deems reasonable for attorneys'
fees and costs related to the relevant legal action.

ARTICLE 21

DEFAULT

21.1  If any Participating Employer fails to perform any term or condition of this Agreement
and such failure continues for a period of sixty (60) days after the Board of Trustees has
given the Participating Employer written notice describing such failure, the Participating
Employer shall be considered in default.

21.2  Upon default, the Board of Trustees may immediately cancel the Participating
Employer's participation in the Health Care Program without additional notice or
exercise some other remedy otherwise provided by law.

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21.3  The rights and remedies of the Board of Trustees are cumulative in nature and pursuit of
any particular remedy shall not be deemed an election of remedies or a waiver of any
other remedies available hereunder or otherwise available by law.

ARTICLE 22

NO WAIVERS

No waiver or forbearance of a breach of any covenant, term, or condition of this
Agreement shall be construed to be a waiver or forbearance of any other or subsequent breach of
the same or of any other covenant, term or condition, and the acceptance of any performance
hereunder, or the payment of any sum ofmoney after the same has become due or at a time when
any other default exists hereunder, shall not constitute a waiver or right to demand payment of all
sums owing or a waiver of any other default then or thereafter existing.

ARTICLE 23

CONTRACT MANAGEMENT

The Health Care Program shall designate a person to whom the State Risk Manager shall
forward legal process served upon the Risk Manager; The AWC Chief Executive Ofcer
(designee or successor). The Health Care Program Director shall be responsible for and
shall be the contact person for all communications regarding the performance of this
Agreement.

ARTICLE 24

SEVERABILITY

If any provision of this Agreement or any provision of any document incorporated by
reference shall be held invalid, such invalidity shall not affect the other provisions of this
Agreement which can be given effect without the invalid provision, if such remainder conforms
to the requirements of applicable law and the fundamental purpose of this Agreement, and to this
end the provisions of this Agreement are declared to be severable.

ARTICLE 25

COUNTERPART COPIES

This Agreement may be signed in counterpart or duplicate copies and any signed
counterpart or duplicate copy shall be equivalent to a signed original for all purposes.




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ARTICLE 26

HEADINGS

The Article and Section headings in this Agreement are inserted for convenience only
and are not intended to be used in the interpretation of the contents of the Articles and Sections
they introduce.

ARTICLE 27

AGREEMENT COMPLETE

This Agreement and the documents referenced herein contains all the terms and
conditions agreed to by the parties. No other understandings, oral or otherwise, regarding the
subject matter of this Agreement shall be deemed to exist or to bind the parties hereto.

[Signature page follows]













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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement.

Association of Washington Cities           Participating Emgloyer
Employee Benefit Trust
\ 2/,.
Signature:             f3 1 '
Signature:

Name:  Michael A. McCarty          Name (print):

Title:    Chief Executive Ofcer              Title:

Date: -'  u
3 0
'u           /5           Date:
'

Effective Date: January 1, 2014

















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