**Health Insurance Plan (HIP/HMO)**

> **2004**

**Serving: Greater New York City Area (including Long Island and**

**surrounding counties)**

**Enrollment in this Plan is limited. You must live in our**

**Geographic service area to enroll. See page 8 for requirements.**

**Enrollment codes for this Plan:**

**511 High Option Self Only**

**512 High Option Self and Family**

**514 Standard Option Self Only**

**515 Standard Option Self and Family**

Dear Federal Employees Health Benefits Program Participant:

I am pleased to present this 2004 Federal Employees Health Benefits
(FEHB) Program plan brochure. The brochure describes the benefits this
plan offers you for 2004. Because benefits vary from year to year, you
should review your plan's brochure every Open Season -- especially
Section 2, which explains how the plan changed.

It takes a lot of information to help a consumer make wise healthcare
decisions. The information in this brochure, our FEHB Guide, and our
web-based resources, make it easier than ever to get information about
plans, to compare benefits and to read customer service satisfaction
ratings for the national and local plans that may be of interest. Just
click on www.opm.gov/insure!

The FEHB Program continues to be an enviable national model that offers
exceptional choice, and uses private-sector competition to keep costs
reasonable, ensure high-quality care, and spur innovation. The Program,
which began in 1960, is sound and has stood the test of time. It enjoys
one of the highest levels of customer satisfaction of any healthcare
program in the country.

I continue to take aggressive steps to keep the FEHB Program on the
cutting edge of employer-sponsored health benefits. We demand
cost-effective quality care from our FEHB carriers and we have
encouraged Federal agencies and departments to pay the full FEHB health
benefit premium for their employees called to active duty in the Reserve
and National Guard so they can continue FEHB coverage for themselves and
their families. Our carriers have also responded to my request to help
our members to be prepared by making additional supplies of medications
available for emergencies as well as call-up situations and you can help
by getting an Emergency Preparedness Guide at www.opm.gov. OPM's
HealthierFeds campaign is another way the carriers are working with us
to ensure Federal employees and retirees are informed on healthy living
and best-treatment strategies. You can help to contain healthcare costs
and keep premiums down by living a healthy life style.

Open Season is your opportunity to review your choices and to become an
educated consumer to meet your healthcare needs. Use this brochure, the
FEHB Guide, and the web resources to make your choice an informed one.
Finally, if you know someone interested in Federal employment, refer
them to www.usajobs.opm.gov.

Sincerely,

Kay Cole James

Director

Notice of the Office of Personnel Management's

Privacy Practices

THIS NOTICE DESCRIBES HOW MEDICAL INFORMATION ABOUT YOU MAY BE USED AND

DISCLOSED AND HOW YOU CAN GET ACCESS TO THIS INFORMATION. PLEASE REVIEW
IT

CAREFULLY.

By law, the United States Office of Personnel Management (OPM), which
administers the Federal Employees Health Benefits (FEHB) Program, is
required to protect the privacy of your personal medical information.
OPM is also required to give you this notice to tell you how OPM may use
and give out ("disclose") your personal medical information held by OPM.

OPM will use and give out your personal medical information:

• To you or someone who has the legal right to act for you (your
personal representative),

• To the Secretary of the Department of Health and Human Services, if
necessary, to make sure your privacy is protected,

• To law enforcement officials when investigating and/or prosecuting
alleged or civil or criminal actions, and

• Where required by law.

OPM has the right to use and give out your personal medical information
to administer the FEHB Program. For example:

• To communicate with your FEHB health plan when you or someone you have
authorized to act on your behalf asks for our assistance regarding a
benefit or customer service issue.

• To review, make a decision, or litigate your disputed claim.

• For OPM and the General Accounting Office when conducting audits.

OPM may use or give out your personal medical information for the
following purposes under limited circumstances:

• For Government health care oversight activities (such as fraud and
abuse investigations),

• For research studies that meet all privacy law requirements (such as
for medical research or education), and

• To avoid a serious and imminent threat to health or safety.

By law, OPM must have your written permission (an "authorization") to
use or give out your personal medical information for any purpose that
is not set out in this notice. You may take back ("revoke") your written
permission at any time, except if OPM has already acted based on your
permission.

By law, you have the right to:

• See and get a copy of your personal medical information held by OPM.

• Amend any of your personal medical information created by OPM if you
believe that it is wrong or if information is missing, and OPM agrees.
If OPM disagrees, you may have a statement of your disagreement added to
your personal medical information.

• Get a listing of those getting your personal medical information from
OPM in the past 6 years. The listing will not cover your personal
medical information that was given to you or your personal
representative, any information that you authorized OPM to release, or
that was given out for law enforcement purposes or to pay for your
health care or a disputed claim.

• Ask OPM to communicate with you in a different manner or at a
different place (for example, by sending materials to a P.O. Box instead
of your home address).

• Ask OPM to limit how your personal medical information is used or
given out. However, OPM may not be able to agree to your request if the
information is used to conduct operations in the manner described above.

• Get a separate paper copy of this notice.

For more information on exercising your rights set out in this notice,
look at www.opm.gov/insure on the Web. You may also call

1-202-606-0191 and ask for OPM's FEHB Program privacy official for this
purpose.

If you believe OPM has violated your privacy rights set out in this
notice, you may file a complaint with OPM at the following address:

Privacy Complaints

United States Office of Personnel Management

P.O. Box 707

Washington, DC 20004-0707

Filing a complaint will not affect your benefits under the FEHB Program.
You also may file a complaint with the Secretary of the United States
Department of Health and Human Services.

By law, OPM is required to follow the terms in this privacy notice. OPM
has the right to change the way your personal medical information is
used and given out. If OPM makes any changes, you will get a new notice
by mail within 60 days of the change. The privacy practices listed in
this notice are effective April 14, 2003.

Table of Contents

Introduction 4

Plain Language 4

Stop Health Care Fraud! 4

Preventing medical mistakes 5

Section 1. Facts about this HMO plan 7

How we pay providers 7

Who provides my health care? 7

Your Rights 7

Service Area 8

Section 2. How we change for 2004 9

Program-wide changes 9

Changes to this Plan 9

Section 3. How you get care 10

Identification cards 10

Where you get covered care 10

• Plan providers 10

• Plan facilities 10

What you must do to get covered care 10

• Primary care 10

• Specialty care 10

• Hospital care 11

Circumstances beyond our control 12

Services requiring our prior approval 12

Section 4. Your costs for covered services 13

• Copayments 13

• Deductible 13

• Coinsurance 13

Your catastrophic protection out-of-pocket maximum 13

Section 5. Benefits 14

Overview 14

\(a\) Medical services and supplies provided by physicians and other
health care professionals 15

\(b\) Surgical and anesthesia services provided by physicians and other
health care professionals 25

\(c\) Services provided by a hospital or other facility, and ambulance
services 28

\(d\) Emergency services/accidents 30

\(e\) Mental health and substance abuse benefits 32

\(f\) Prescription drug benefits 34

\(g\) Special features 36

• Service for deaf and hearing impaired 36

• Medical Case Management 36

• Travel benefit/services overseas 36

\(h\) Dental benefits 37

\(i\) Non-FEHB benefits available to Plan members 38

Section 6. General exclusions --- things we don't cover 39

Section 7. Filing a claim for covered services 40

Section 8. The disputed claims process 41

Section 9. Coordinating benefits with other coverage 43

When you have other health coverage 43

• What is Medicare? 43

• Should I enroll in Medicare? 43

• The Original Medicare Plan (Part A and Part B) 44

• Medicare + Choice 46

• TRICARE and CHAMPVA 46

• Workers' Compensation 47

• Medicaid 47

• When other Government agencies are responsible for your care 47

• When others are responsible for injuries 47

Section 10. Definitions of terms we use in this brochure 48

Section 11. FEHB facts 50

Coverage information 50

• No pre-existing condition limitation 50

• Where you can get information about enrolling in the FEHB Program 50

• Types of coverage available for you and your family 50

• Children's Equity Act 50

• When benefits and premiums start 51

• When you retire 51

When you lose benefits 51

• When FEHB coverage ends 51

• Spouse equity coverage 51

• Temporary Continuation of Coverage (TCC) 52

• Converting to individual coverage 52

• Getting a Certificate of Group Health Plan Coverage 52

Two new Federal Programs complement FEHB benefits 53

The Federal Flexible Spending Account Program -- FSAFEDS 53

The Federal Long Term Care Insurance Program 56

Index 57

Summary of benefits 58

Rates Back cover

Introduction

This brochure describes the benefits of HIP/HMO under our contract (CS
1040) with the United States Office of Personnel Management (OPM), as
authorized by the Federal Employees Health Benefits law. The address for
HIP Health Plan of New York (HIP) administrative offices is:

HIP Health Plan of New York

7 West 34th Street

New York, NY 10001

This brochure is the official statement of benefits. No oral statement
can modify or otherwise affect the benefits, limitations, and exclusions
of this brochure. It is your responsibility to be informed about your
health benefits.

If you are enrolled in this Plan, you are entitled to the benefits
described in this brochure. If you are enrolled in Self and Family
coverage, each eligible family member is also entitled to these
benefits. You do not have a right to benefits that were available before
January 1, 2004, unless those benefits are also shown in this brochure.

OPM negotiates benefits and rates with each plan annually. Benefit
changes are effective January 1, 2004, and changes are summarized on
page 57. Rates are shown at the end of this brochure (specify if
different).

Plain Language

FEHB brochures are written in plain language to make them responsive,
accessible, and understandable to the public. For instance,

• Except for necessary technical terms, we use common words. For
instance, "you" means the enrollee or family member; "we" means HIP.

• We limit acronyms to ones you know. FEHB is the Federal Employees
Health Benefits Program. OPM is the United States Office of Personnel
Management. If we use others, we tell you what they mean first.

• Our brochure and other FEHB plans' brochures have the same format and
similar descriptions to help you compare plans.

If you have comments or suggestions about how to improve the structure
of this brochure, let OPM know. Visit OPM's "Rate Us" feedback area at
www.opm.gov/insure or e-mail OPM at fehbwebcomments@opm.gov. You may
also write to OPM at the Office of Personnel Management, Insurance
Services Programs, Program Planning and Evaluation Group, 1900 E Street,
NW Washington, DC 20415-3650.

Stop Health Care Fraud!

Fraud increases the cost of health care for everyone and increases your
Federal Employees Health Benefits Program (FEHB) Program premium.

OPM's Office of the Inspector General investigates all allegations of
fraud, waste, and abuse in the FEHB Program regardless of the agency
that employs you or from which you retired.

Protect Yourself From Fraud - Here are some things you can do to prevent
fraud:

• Be wary of giving your plan identification (ID) number over the
telephone or to people you do not know, except to your doctor, other
provider, or authorized plan or OPM representative.

• Let only the appropriate medical professionals review your medical
record or recommend services.

• Avoid using health care providers who say that an item or service is
not usually covered, but they know how to bill us to get it paid.

• Carefully review explanations of benefits (EOBs) that you receive from
us.

• Do not ask your doctor to make false entries on certificates, bills or
records in order to get us to pay for an item or service.

• If you suspect that a provider has charged you for services you did
not receive, billed you twice for the same service, or misrepresented
any information, do the following:

• Call the provider and ask for an explanation. There may be an error.

If the provider does not resolve the matter, call us at 1-877-TELL-HIP
(1-877-835-5447) and explain the situation.

If we do not resolve the issue:

CALL --- THE HEALTH CARE FRAUD HOTLINE

1-202-418-3300

OR WRITE TO:

The United States Office of Personnel Management

Office of the Inspector General Fraud Hotline

1900 E Street, NW, Room 6400

Washington, DC 20415

• Do not maintain as a family member on your policy:

Your former spouse after a divorce decree or annulment is final (even if
a court order stipulates otherwise); or

Your child over age 22 unless he/she is disabled and incapable of self
support.

• If you have any questions about the eligibility of a dependent, check
with your personnel office if you are employed, with your retirement
office (such as OPM) if you are retired, or with the National Finance
Center if you are enrolled under Temporary Continuation of Coverage.

• You can be prosecuted for fraud and your agency may take action
against you if you falsify a claim to obtain FEHB benefits or try to
obtain services for someone who is not an eligible family member or who
is no longer enrolled in the Plan.

Preventing Medical Mistakes

An influential report from the Institute of Medicine estimates that up
to 98,000 Americans die every year from medical mistakes in hospitals
alone. That's about 3,230 preventable deaths in the FEHB Program a year.
While death is the most tragic outcome, medical mistakes cause other
problems such as permanent disabilities, extended hospital stays, longer
recoveries, and even additional treatments. By asking questions,
learning more and understanding your risks, you can improve the safety
of your own health care, and that of your family members. Take these
simple steps:

1\. Ask questions if you have doubts or concerns.

• Ask questions and make sure you understand the answers.

• Choose a doctor with whom you feel comfortable talking.

• Take a relative or friend with you to help you ask questions and
understand answers.

2\. Keep and bring a list of all the medicines you take.

• Give your doctor and pharmacist a list of all the medicines that you
take, including non-prescription medicines.

• Tell them about any drug allergies you have.

• Ask about side effects and what to avoid while taking the medicine.

• Read the label when you get your medicine, including all warnings.

• Make sure your medicine is what the doctor ordered and know how to use
it.

• Ask the pharmacist about your medicine if it looks different than you
expected.

3\. Get the results of any test or procedure.

• Ask when and how you will get the results of test or procedures.

• Don't assume the results are fine if you do not get them when
expected, be it in person, by phone, or by mail.

• Call your doctor and ask for your results.

• Ask what the results mean for your care.

4\. Talk to your doctor about which hospital is best for your health
needs.

• Ask your doctor about which hospital has the best care and results for
your condition if you have more than one hospital to choose from to get
the health care you need.

• Be sure you understand the instructions you get about follow-up care
when you leave the hospital.

5\. Make sure you understand what will happen if you need surgery.

• Make sure you, your doctor, and your surgeon all agree on exactly what
will be done during the operation.

• Ask your doctor, "Who will manage my care when I am in the hospital?"

• Ask your surgeon:

Exactly what will you be doing?

About how long will it take?

What will happen after surgery?

How can I expect to feel during recovery?

• Tell the surgeon, anesthesiologist, and nurses about any allergies,
bad reaction to anesthesia, and any medications you are taking.

Want more information on patient safety?

„ www.ahrq.gov/consumer/pathqpack.htm. The Agency for Healthcare
Research and Quality makes available a wide-ranging list of topics not
only to inform consumers about patient safety but to help choose quality
healthcare providers and improve the quality of care you receive.

„ www.npsf.org. The National Patient Safety Foundation has information
on how to ensure safer healthcare for you and your family.

„ www.talkaboutrx.org/consumer.html. The National Council on Patient
Information and Education is dedicated to improving communication about
the safe, appropriate use of medicines.

„ www.leapfroggroup.org. The Leapfrog Group is active in promoting safe
practices in hospital care.

„ www.ahqa.org. The American Health Quality Association represents
organizations and healthcare professionals working to improve patient
safety.

„ www.quic.gov/report. Find out what federal agencies are doing to
identify threats to patient safety and help prevent mistakes in the
nation's healthcare delivery system.

Section 1. Facts about this HMO plan

This Plan is a health maintenance organization (HMO). We require you to
see specific physicians, hospitals, and other providers that contract
with us. These Plan providers coordinate your health care services. The
Plan is solely responsible for the selection of these providers in your
area. Contact the Plan for a copy of their most recent provider
directory.

HMOs emphasize preventive care such as routine office visits, physical
exams, well-baby care, and immunizations, in addition to treatment for
illness and injury. Our providers follow generally accepted medical
practice when prescribing any course of treatment.

When you receive services from Plan providers, you will not have to
submit claim forms or pay bills. You only pay the copayments,
coinsurance, and deductibles described in this brochure. When you
receive emergency services from non-Plan providers, you may have to
submit claim forms.

You should join an HMO because you prefer the plan's benefits, not
because a particular provider is available. You cannot change plans
because a provider leaves our Plan. We cannot guarantee that any one
physician, hospital, or other provider will be available and/or remain
under contract with us.

How we pay providers

HIP contracts with medical groups and premier hospital centers in the
New York metropolitan area to operate multispecialty centers that
provide the convenience of offering comprehensive services. In addition,
HIP provides access to a network of physician and other providers that
do not practice in multispecialty centers. HIP does not compensate
health care providers in general or make specific payments intended to
limit or reduce the quality or scope of medical care you receive. HIP
pays health care providers on a fee-for-service basis, according to an
agreed fee schedule. Some providers prefer to be compensated on a
pre-payment or capitation basis, which is a fixed amount per member
assigned to the provider per month. Hospital facilities are generally
paid on an agreed fixed amount per day or the Diagnostic Related Group
Methodology (DRG). The DRG methodology pays a fixed amount per admission
according to the patient's diagnosis and general medical condition.

These Plan providers accept a negotiated payment from HIP. You will only
be responsible for the applicable Plan copayment or coinsurance amount
stated in this brochure.

Who provides my health care?

HIP is a mixed model plan that contracts with individual physicians,
medical groups, and hospitals to provide the benefits in this brochure.
HIP's mixed models consist of (a) a network of medical centers that
contract directly with HIP to provide health care services to HIP
members; (b) IPA network providers that are private physicians or an
association of physicians that contract with their member physicians and
HIP to provide health care services to HIP members; and (c) fee for
service providers or a fee for service health care organization that
receives a payment each time a reimbursable service is provided.

At the present time, approximately 19,000 professional medical providers
participate in HIP/HMO and provide medical services to more than 800,000
enrollees. Our network covers 117 medical specialties ranging from
family practice to urology. In addition to services from participating
medical providers, you can receive paramedical services including social
services, nutrition and health education at health centers.

Your Rights

OPM requires that all FEHB Plans provide certain information to their
FEHB members. You may get information about us, our networks, providers,
and facilities. OPM's FEHB website (www.opm.gov/insure) lists the
specific types of information that we must make available to you. Some
of the required information is listed below.

• HIP Health Plan of New York (HIP) was organized over 55 years ago as a
non-profit corporation.

• On December 1, 1978, HIP became a New York certified Health
Maintenance Organization (HMO).

• Responsibility for HIP/HMO policy and operations is vested in an
unpaid Board of Directors. This Board is composed of distinguished
representatives of labor, consumers, doctors and the general public. The
Board selects the principal administrative officer, the President, and
holds him responsible for the enforcement of Board policy and for the
operations of the Plan.

• HIP/HMO has Commendable Accreditation from the National Committee for
Quality Assurance (NCQA).

If you want more information about us and you are a current member, call
1-800-HIP-TALK (1-800-447-8255). If you are a potential member, please
call 1-888-866-7461 for more information, or write to HIP Health Plan of
New York, 7 West 34th Street, New York, NY 10001. You may visit our
website at http://www.hipusa.com.

Service Area

To enroll in this Plan, you must live in our Service Area. This is where
our providers practice. Our service area is: New York City (the Boroughs
of Manhattan, Brooklyn, Bronx, Queens, and Staten Island), all of
Nassau, Orange, Rockland, Suffolk and Westchester Counties.

Ordinarily, you must get your care from providers who contract with us.
If you receive care outside our service area, we will pay only for
emergency care benefits. We will not pay for any other health care
services out of our service area unless the services have prior plan
approval.

If you or a covered family member move outside of our service area, you
can enroll in another plan. If your dependents live out of the area (for
example, if your child goes to college in another state), you should
consider enrolling in a fee-for-service plan or an HMO that has
agreements with affiliates in other areas. If you or a family member
move, you do not have to wait until Open Season to change plans. Contact
your employing or retirement office.

Section 2. How we change for 2004

Do not rely on these change descriptions; this page is not an official
statement of benefits. For that, go to Section 5 Benefits. Also, we
edited and clarified language throughout the brochure; any language
change not shown here is a clarification that does not change benefits.

Program-wide changes

• We added information regarding two new Federal Programs that
complement FEHB benefits, the Federal Flexible Spending Account
Program - FSAFEDS and the Federal Long Term Care Insurance Program. See
pages 53 and 56.

• We added information regarding preventing medical mistakes. See page
5.

• We added information regarding enrolling in Medicare. See page 43.

• We revised the Medicare Primary Payer Chart. See page 45.

Changes to this Plan

• Your High Option share of the non-Postal premium will increase by 8.7%
for Self Only or 3.6% for Self and Family.

• Your Standard Option share of the non-Postal premium will increase by
8.8% for Self Only or 8.8% for Self and Family.

Section 3. How you get care

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
must show it whenever you receive services from a Plan provider, or fill
a prescription at a Plan pharmacy. Until you receive your ID card, use
your copy of the Health Benefits Election Form, SF-2809, your health
benefits enrollment confirmation (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 us at
1-800-HIP-TALK (1-800-447-8255).

Where you get covered care You get care from "Plan providers" and "Plan
facilities." You will only pay copayments and you will not have to file
claims.

• Plan providers Plan providers are physicians and other health care
professionals in our service area that we contract with to provide
covered services to our members. We credential Plan providers according
to the National Committee of Quality Assurance (NCQA) and other Industry
standards.

We list Plan providers in the provider directory, which we update
quarterly. For a current directory listing, members should call
1-800-HIP-TALK (1-800-447-8255). Potential members should call
1-888-866-7461. The list is also available on our Web site at
http://www.hipusa.com.

• Plan facilities Plan facilities are hospitals and other facilities in
our service area that we contract with to provide covered services to
our members. We list these in the provider directory, which we update
quarterly. The list is also on our Web site at http://www.hipusa.com.

What you must do to get It depends on the type of care you need. First,
you and each family member must choose

covered care a primary care physician. This decision is important since
your primary care physician

provides or arranges for most of your health care.

Our directory lists the locations and phone numbers of our primary care
doctors. It also indicates whether or not a doctor is accepting new
patients. After you select a specific provider from the directory, you
should call the provider to verify that he or she still participates
with HIP and is accepting new patients. You may also call our Customer
Service Department at 1-800-HIP-TALK (1-800-447-8255) to find out if
your doctor participates with HIP.

• Primary care Your primary care physician can be a family practitioner,
internist, or pediatrician. Your primary care physician will provide
most of your health care, or give you a referral to see a specialist.

If you want to change primary care physicians or if your primary care
physician leaves the Plan, call us. We will help you select a new one.

• Specialty care Your network, IPA or fee for service primary care
physician will refer you to a specialist for needed care. When you
receive a referral from your primary care physician, you must return to
the primary care physician after the consultation, unless your primary
care physician authorized a certain number of visits without additional
referrals. The primary care physician must provide or authorize all
follow-up care. Do not go to the specialist for return visits unless
your primary care physician gives you a referral.

Here are other things you should know about specialty care:

• If you need to see a specialist frequently because of a chronic,
complex, or serious medical condition, your primary care physician will
develop a treatment plan that allows you to see your specialist for a
certain number of visits without additional referrals. Your primary care
physician will use our criteria when creating your treatment plan (the
physician may have to get an authorization or approval beforehand).

• If you are seeing a specialist when you enroll in our Plan, talk to
your primary care physician. Your primary care physician will decide
what treatment you need. If he or she decides to refer you to a
specialist, ask if you can see your current specialist. If your current
specialist does not participate with us, you must receive treatment from
a specialist who does. Generally, we will not pay for you to see a
specialist who does not participate with our Plan.

• If you are seeing a specialist and your specialist leaves the Plan,
call your primary care physician, who will arrange for you to see
another specialist. You may receive services from your current
specialist until we can make arrangements for you to see someone else.

• If you have a chronic or disabling condition and lose access to your
specialist

because we:

• terminate our contract with your specialist for other than cause; or

• drop out of the Federal Employees Health Benefits (FEHB) Program and
you enroll in another FEHB Plan; or

• reduce our service area and you enroll in another FEHB Plan,

You may be able to continue seeing your specialist 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 until the end of your postpartum care, even if it is
beyond the 90 days.

• Hospital care Your Plan primary care physician or specialist will make
necessary hospital arrangements and supervise your care. This includes
admission to a skilled nursing or other type of facility.

If you are in the hospital when your enrollment in our Plan begins, call
our customer service department immediately at 1-800-HIP-TALK
(1-800-447-8255). If you are new to the FEHB Program, we will arrange
for you to receive care.

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 92nd 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 Program 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.

Circumstances beyond our control Under certain extraordinary
circumstances, such as natural disasters, we may have to delay your
services or we may be unable to provide them. In that case, we will make
all reasonable efforts to provide you with the necessary care.

Services requiring our prior Your primary care physician has authority
to refer you for most services. For certain

approval services, however, your physician must obtain approval from us.
Before giving approval, we consider if the service is covered, medically
necessary, and follows generally accepted medical practice.

The following are other services that require prior approval:

• Skilled nursing facility services • Hospice care

• Inpatient mental health • Inpatient hospital admissions (non-emergent)

• Ambulatory surgery services • Inpatient physical and occupational
therapies

• Outpatient hospital services • Inpatient substance abuse

• Home health care services • Organ transplants

• Durable medical equipment • Growth hormone

Section 4. Your costs for covered services

You must share the cost of some services. You are responsible for:

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

Example: When you see your primary care physician you pay a copayment of
\$10 per office visit and when you go to the Emergency Room, you pay
\$50 per visit.

• Deductible A deductible is a fixed expense you must incur for certain
covered services and supplies before we start paying benefits for them.

Example: The Standard Option coverage has a \$100 prescription drug
deductible that you must meet each calendar year.

• Coinsurance Coinsurance is the percentage of our negotiated fee that
you must pay for your care. We do not have coinsurance.

Your catastrophic protection

out-of-pocket maximum We do not have a catastrophic protection
out-of-pocket maximum.

Section 5. Benefits -- OVERVIEW

(See page 9 for how our benefits changed this year and page 58 for a
benefits summary.)

NOTE: This benefits section is divided into subsections. Please read the
important things you should keep in mind at the beginning of each
subsection. Also read the General Exclusions in Section 6; they apply to
the benefits in the following subsections. To obtain claims forms,
claims filing advice, or more information about our benefits, contact us
at 1-800-HIP-TALK (1-800-447-8255) or at our Web site at
http://www.hipusa.com. If you are a potential member, call us at
1-888-866-7641.

\(a\) Medical services and supplies provided by physicians and other
health care professionals 15-24

• Diagnostic and treatment services • Speech therapy

• Lab, X-ray, and other diagnostic tests • Hearing services (testing,
treatment, and supplies)

• Preventive care, adult • Vision services (testing, treatment, and
supplies)

• Preventive care, children • Foot care

• Maternity care • Orthopedic and prosthetic devices

• Family planning • Durable medical equipment (DME)

• Infertility services • Home health services

• Allergy care • Chiropractic

• Treatment therapies • Alternative treatments

• Physical and occupational therapies • Educational classes and programs

\(b\) Surgical and anesthesia services provided by physicians and other
health care professionals 25-27

• Surgical procedures • Oral and maxillofacial surgery

• Reconstructive surgery • Organ/tissue transplants

• Anesthesia

\(c\) Services provided by a hospital or other facility, and ambulance
services 28-29

• Inpatient hospital • Extended care benefits/skilled nursing care
facility benefits

• Outpatient hospital or ambulatory surgical center • Hospice care

• Ambulance

\(d\) Emergency services/accidents 30-31

• Medical emergency

• Ambulance

\(e\) Mental health and substance abuse benefits 32-33

\(f\) Prescription drug benefits .34-35

\(g\) Special features 36

• Medical Case Management Program

• Services for deaf and hearing impaired

• Travel benefit/services overseas

\(h\) Dental benefits 37

\(i\) Non-FEHB benefits available to Plan members 38

Summary of benefits 58

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Section 5 (a). Medical services and supplies provided by physicians

and other health care professionals

Here are some important things to keep in mind about these benefits:

• Please remember that all benefits are subject to the definitions,
limitations, and exclusions in this brochure and are payable only when
we determine they are medically necessary.

• Plan physicians must provide or arrange your care.

• We do not have a calendar year deductible for services described in
this section.

• Providers other than your Primary Care Physician are specialists under
the Standard Option coverage.

• Be sure to read Section 4, Your costs for covered services, for
valuable information about how cost sharing works. Also read Section 9
about coordinating benefits with other

coverage, including Medicare.

You pay

Benefit Description

High Option Standard Option

Diagnostic and treatment services

Professional services of physicians \$10 per office visit \$10 per
office visit to your primary care physician or

• In physician's office

• In an urgent care center \$20 per office visit to a specialist

• Office medical consultations

• Second surgical opinion

Professional services of physicians Nothing Nothing

• During a hospital stay

• In a skilled nursing facility

• At home

Not covered: Physical Examinations that are not necessary for All
charges. All charges.

medical reasons, such as those required for obtaining or

continuing employment or insurance

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Lab, X-ray and other diagnostic tests High Option Standard Option

You Pay You Pay

Tests, such as: \$10 per office visit \$10 per office visit to

your primary care physician or

\$20 per office visit to a specialist

• Blood tests

• Urinalysis

• Non-routine pap tests

• Pathology

• X-rays

• Non-routine Mammograms

• Cat Scans/MRI

• Ultrasound

• Electrocardiogram and EEG

Preventive care, adult

Routine screenings, such as: \$10 per office visit \$10 per office visit
to

your primary care

physician or

• Total Blood Cholesterol -- once every three years

• Colorectal Cancer Screening, including:

-- Fecal occult blood test

-- Sigmoidoscopy screening -- every five years starting at age 50 \$20
per office visit to a specialist

Prostate Specific Antigen (PSA) test -- one annually for men \$10 per
office visit \$10 per office visit to

your primary care

physician or

age 40 and older

• Annual standard diagnostic testing of prostate cancer,

including but not limited to a digital rectal examination and a

prostate-specific antigen testing for men age 50 and over who

are asymptomatic and for men age 40 and over with a family \$20 per
office visit to a specialist

history of prostate cancer or other prostate cancer risks.

Routine pap test \$10 per office visit \$10 per office visit to

your primary care

physician or

Note: The office visit is covered if pap test is received on

the same day; see Diagnosis and Treatment, above. \$20 per office visit
to a specialist

Routine mammogram -- covered for women age 35 and older, \$10 per office
visit \$10 per office visit to

your primary care

physician or

as follows:

• From age 35 through 39, one during this five year period

• From age 40 through 64, one every calendar year

• At age 65 and older, one every two consecutive calendar years \$20 per
office visit to a specialist

Not covered: Physical exams required for obtaining or continuing All
charges. All charges.

employment or insurance, attending schools or camp, or travel.

Preventive care, adult (continued) High Option Standard Option

You Pay You Pay

Routine immunizations, in accordance with accepted medical \$10 per
office visit \$10 per office visit to

your primary care

physician or

practice and standards such as:

• Tetanus-diphtheria (Td) booster -- once every 10 years,

ages 19 and over (except as provided for under Childhood

immunizations) \$20 per office visit to a specialist

• Influenza vaccine, annually, age 65 and over

Not covered: All charges. All charges.

\- Autgenous vaccines

\- Adult immunizations related to foreign travel

Preventive care, children

• Childhood immunizations recommended by the American Nothing Nothing

Academy of Pediatrics

• Well-child care charges for routine examinations, Nothing Nothing

immunizations and care

• Examinations, such as:

-- Eye exams through age 17 to determine the need for

vision correction.

-- Ear exams through age 17 to determine the need for

hearing correction

-- Examinations done on the day of immunizations

Maternity Care High Option Standard Option

You Pay You Pay

Complete maternity (obstetrical) care, such as: \$10 first office visit;
waived in subsequent visits. \$10 first office visit; waived in
subsequent visits.

• Prenatal care

• Delivery

• Postnatal care

Note: Here are some things to keep in mind:

• You may remain in the hospital up to 48 hours after a regular

delivery and 96 hours after a cesarean delivery. We will

extend your inpatient stay if medically necessary.

• We cover routine nursery care of the newborn child during

the covered portion of the mother's maternity stay. We will

cover other care of an infant who requires non-routine

treatment only if we cover the infant under a Self and Family

enrollment.

• We pay hospitalization and surgeon services (delivery)

the same as for illness and injury. See Hospital benefits

(Section 5c) and Surgery benefits (Section 5b).

Not covered: Routine sonograms to determine fetal age, size All charges.
All charges.

or sex

Family Planning

A broad range of voluntary family planning services, limited to: \$10
per office visit \$10 per office visit to

your primary care

physician or

• Voluntary sterilization

• Surgically implanted contraceptives (such as Norplant)

• Injectable contraceptive drugs (such as Depo provera) \$20 per office
visit to a specialist

• Intrauterine devices (IUDs)

• Diaphragms

NOTE: We cover oral contraceptives under the prescription

drug benefit.

Not covered: reversal of voluntary surgical sterilization, All charges.
All charges.

genetic counseling.

Infertility Services High Option Standard Option

You Pay You Pay

Diagnosis and treatment of infertility, such as: \$10 per office visit
\$10 per office visit to

your primary care

physician or

• Artificial insemination:

-- Intravaginal insemination (IVI)

-- Intracervical insemination (ICI)

-- Intrauterine insemination (IUI) \$20 per office visit to a specialist

• Fertility drugs (injectables)

Note: We cover injectable fertility drugs under medical benefits

and oral fertility drugs under the prescription drug benefit.

Not covered: All charges. All charges.

• Assisted reproductive technology (ART) procedures, such as:

-- in vitro fertilization

-- embryo transfer, gamete GIFT and zygote ZIFT

-- Zygote transfer

• Services and supplies related to excluded ART procedures

• Cost of donor sperm

• Cost of donor egg

Allergy Care

Testing and treatment \$10 per office visit \$10 per office visit to

your primary care

physician or

Allergy injection

\$20 per office visit to a specialist

Allergy serum Nothing Nothing

Not covered: Provocative food testing and sublingual allergy All
charges. All charges.

desensitization

Treatment therapies High Option Standard Option

You Pay You Pay

• Chemotherapy and radiation therapy \$10 per office visit \$10 per
office visit to

your primary care

physician or

Note: High dose chemotherapy in association with autologous

bone marrow transplants are limited to those transplants listed

under Organ/Tissue Transplants on page 27. \$20 per office visit to a
specialist

• Respiratory and inhalation therapy

• Dialysis -- hemodialysis and peritoneal dialysis

• Intravenous (IV)/Infusion Therapy -- Home IV and

antibiotic therapy

• Growth hormone therapy (GHT)

Note: Growth hormone is covered under the prescription drug

benefit.

Note: -- We will only cover GHT when we preauthorize the

treatment. Growth Hormone must meet the medical necessity

guidelines in order for services to be approved.

Physical and occupational therapies

Up to 2 months per condition if significant improvement can \$10 per
office visit \$20 per office visit

be expected for the services of each of the following:

-- qualified physical therapists and

-- occupational therapists. Nothing per visit during covered inpatient
admission Nothing per visit during covered inpatient admission

Note: We only cover therapy to restore bodily function when

there has been a total or partial loss of bodily function due to

illness or injury.

• Cardiac rehabilitation following a heart transplant, bypass

surgery or a myocardial infarction

Not covered: All charges. All charges.

• long-term rehabilitative therapy

• exercise programs

Speech therapy

Up to 2 months of speech therapy each calendar year for \$10 per office
visit \$20 per office visit

services from the following: licensed or certified speech

therapists.

Hearing services (testing, treatment and supplies) High Option Standard
Option

You Pay You Pay

• First hearing aid and testing only when necessitated by \$10 per
office visit \$10 per office visit to

your primary care

physician or

accidental injury

• Hearing testing for children through age 17 (see

Preventive care, children) \$20 per office visit to a specialist

Not covered: All charges. All charges.

• all other hearing testing

• hearing aids, testing and examinations for them

Vision services (testing, treatment and supplies)

• Annual eye refractions \$10 per office visit \$20 per office visit

• Diagnosis and treatment of diseases of the eye

• Lenses following cataract removal

Not covered: All charges. All charges.

• Eyeglasses or contact lenses

• Eye exercises and orthoptics

• Radial keratotomy and other refractive surgery

Foot Care

Routine foot care when you are under active treatment for a \$10 per
office visit \$10 per office visit to

your primary care

physician or

metabolic or peripheral vascular disease, such as diabetes.

See orthopedic and prosthetic devices for information on

podiatric shoe inserts. \$20 per office visit to a specialist

Not covered: All charges. All charges.

• Cutting, trimming or removal of corns, calluses, or the free

edge of toenails, and similar routine treatment of

conditions of the foot, except as stated above

• Treatment of weak, strained or flat feet or bunions or

spurs; and of any instability, imbalance or subluxation of

the foot (unless the treatment is by open cutting surgery)

Orthopedic and prosthetic devices High Option Standard Option

You Pay You Pay

• Artificial limbs and eyes; stump hose \$10 per office visit \$10 per
office visit to

your primary care

physician or

• Externally worn breast prostheses and surgical bras,

including necessary replacements, following a mastectomy

• Internal prosthetic devices, such as artificial joints,

pacemakers, cochlear implants, and surgically implanted

breast implant following mastectomy. \$20 per office visit to a
specialist

Note: We pay internal prosthetic devices as hospital benefits;

see Section 5 (c) for payment information. See Section 5 (b) for

coverage of the surgery to insert the device. Nothing for the equipment
Nothing for the equipment

• Corrective orthopedic appliances for non-dental treatment

of temporomandibular joint (TMJ) pain dysfunction syndrome.

Note: Call us at 1-800-HIP-TALK (1-800-447-8255) as soon as

your Plan physician prescribes this equipment. We will arrange

with a health care provider to rent or sell you the equipment at

discounted rates and will tell you more about this services when

you call.

Not covered: All charges. All charges.

• Orthopedic and corrective shoes unless we determine

that the Member's condition requires a corrective shoe

that can only be made from a mold or cast of his or her foot.

• Arch supports

• Foot orthotics

• Heel pads and heel cups

• Lumbosacral supports

• Corsets, trusses, elastic stockings, support hose, and other

supportive devices

Durable medical equipment (DME) High Option Standard Option

You Pay You Pay

Rental or purchase, at our option, including repair and Nothing Nothing

adjustment, of durable medical equipment prescribed by your

Plan physician, such as oxygen and dialysis equipment. Under

this benefit, we also cover:

• hospital beds;

• wheelchairs;

• crutches;

• walkers;

• blood glucose monitors; and

• insulin pumps.

Note: Prior approval is required. Call us at

1-800-HIP-TALK (1-800-447-8255) as soon as your Plan

physician prescribes this equipment. We will arrange with a

health care provider to rent or sell you durable medical equipment

at discounted rates and will tell you more about this service when

you call.

Not covered: All charges. All charges.

• Motorized and customized wheel chairs

Home health services

• Home health care ordered by a Plan physician and provided Nothing
Nothing

by a registered nurse (R.N.), licensed practical nurse (L.P.N.),

licensed vocational nurse (L.V.N.), or home health aide.

• Services include oxygen therapy, intravenous therapy and

medications.

Note: Standard Option coverage has a 200 visit limit per calendar

year. High Option does not have a visit limit per calendar year.

Not covered: All charges. All charges.

• Nursing care requested by, or for the convenience of, the

patient or the patient's family;

• Home care primarily for personal assistance that does not

include a medical component and is not diagnostic,

therapeutic, or rehabilitative (i.e. hygiene, feeding,

exercising, moving the patient, homemaking,

companionship or giving oral medication).

Chiropractic

• Manipulation of the spine and extremities \$10 per office visit \$20
per office visit

• Adjunctive procedures such as ultrasound, electrical muscle

stimulation, vibratory therapy, and cold pack application

Note: You do not need a referral from your primary care doctor.

Alternative treatments High Option Standard Option

You Pay You Pay

No benefit. All charges. All charges.

We do not cover treatments such as but not limited to:

• naturopathic services

• hypnotherapy

• acupuncture

• biofeedback

Educational classes and programs

Coverage is limited to: \$10 per office visit \$10 per office visit to

your primary care

physician or

• Smoking Cessation -- In a HIP Free & Clear quit smoking

Program -- Up to \$100 for one smoking cessation program

per member per lifetime, including all related expenses

such as drugs. \$20 per office visit to a specialist

• Diabetes self-management

Section 5 (b). Surgical and anesthesia services provided by physicians

and other health care professionals

Here are some important things to keep in mind about these benefits:

• Please remember that all benefits are subject to the definitions,
limitations, and exclusions in this brochure and are payable only when
we determine they are medically necessary.

• Plan physicians must provide or arrange your care.

• We do not have a calendar year deductible for services described in
this section.

• Providers other than your Primary Care Physician are specialists under
the High and Standard Option

coverage.

• Be sure to read Section 4, Your costs for covered services, for
valuable information about how cost sharing works. Also read Section 9
about coordinating benefits with other coverage, including with
Medicare.

• The amounts listed below are for the charges billed by a physician or
other health care professional for your surgical care. Look in Section
5(c) for charges associated with the facility (i.e. hospital, surgical
center, etc.).

• YOUR PHYSICIAN MUST GET PRIOR APPROVAL OF SOME SURGICAL PROCEDURES.
Please refer to the prior approval information shown in Section 3 to be
sure which services require prior approval and identify which surgeries
require prior approval.

You pay

Benefit Description

High Option Standard Option

Surgical procedures

A comprehensive range of services, such as: Nothing Nothing

• Operative procedures

• Treatment of fractures, including casting

• Normal pre- and post-operative care by the surgeon

• Correction of amblyopia and strabismus

• Endoscopy procedures

• Biopsy procedures

• Removal of tumors and cysts

• Correction of congenital anomalies (see reconstructive

surgery)

• Surgical treatment of morbid obesity --- a condition in

which an individual weighs 100 pounds or 100% over his

or her normal weight according to current underwriting

standards; eligible members must be age 18 or over.

• Insertion of internal prosthetic devices. See Section 5(a) --

Orthopedic and prosthetic devices for device coverage

information.

• Voluntary sterilization

• Treatment of burns

Note: Generally, we pay for internal prostheses (devices)

according to where the procedure is done. For example, we

pay Hospital benefits for a pacemaker and Surgery benefits

for insertion of the pacemaker.

Not covered: All charges. All charges.

• Reversal of voluntary sterilization

• Routine treatment of conditions of the foot; see Foot care.

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Reconstructive surgery High Option Standard Option

You Pay You Pay

• Surgery to correct a functional defect Nothing Nothing

• Surgery to correct a condition caused by injury or illness if:

-- the condition produced a major effect on the

member's appearance and

-- the condition can reasonably be expected to be

corrected by such surgery

• Surgery to correct a condition that existed at or from birth

and is a significant deviation from the common form or

norm. Examples of congenital anomalies are: protruding

ear deformities; cleft lip; cleft palate; birth marks; webbed

fingers; and webbed toes.

• All stages of breast reconstruction surgery following a Nothing
Nothing

mastectomy, such as:

-- surgery to produce a symmetrical appearance on the

other breast;

-- treatment of any physical complications, such as

lymphedemas; and,

-- breast prostheses and surgical bras and replacements

(see Prosthetic devices).

Note: If you need a mastectomy, you may choose to have the

procedure performed on an inpatient basis and remain in the

hospital up to 48 hours after the procedure.

Not covered: All charges. All charges.

• Cosmetic surgery -- any surgical procedure (or any portion

of a procedure) performed primarily to improve physical

appearance through change in bodily form, except repair

of accidental injury

• Surgeries related to sex transformation

Oral and maxillofacial surgery

Oral surgical procedures, limited to: Nothing Nothing

• Reduction of fractures of the jaws or facial bones;

• Surgical correction of cleft lip, cleft palate or severe

functional malocclusion;

• Removal of stones from salivary ducts;

• Excision of leukoplakia or malignancies;

• Excision of cysts and incision of abscesses when done as

independent procedures; and

• Other surgical procedures that do not involve the teeth or

their supporting structures.

Not covered: All charges. All charges.

• Oral implants and transplants

• Procedures that involve the teeth or their supporting

structures (such as the periodontal membrane, gingiva,

and alveolar bone)

Organ/tissue transplants High Option Standard Option

You Pay You Pay

Limited to: Nothing Nothing

• Cornea

• Heart

• Heart/lung

• Kidney

• Kidney/Pancreas

• Liver

• Lung: Single -- Double

• Pancreas

• Allogeneic (donor) bone marrow transplants

• Autologous bone marrow transplants (autologous stem cell

and peripheral stem cell support) for the following

conditions: acute lymphocytic or non-lymphocytic

leukemia; advanced Hodgkin's lymphoma; advanced non-

Hodgkin's lymphoma; advanced neuroblastoma; breast

cancer; multiple myeloma; epithelial ovarian cancer; and

testicular, mediastinal, retroperitoneal and ovarian germ

cell tumors

• Intestinal transplants (small intestine) and the small intestine

with the liver or small intestine with multiple organs such as

the liver, stomach, and pancreas

Note: We cover related medical and hospital expenses of the

donor when we cover the recipient.

Not covered: All charges. All charges.

• Donor screening tests and donor search expenses, except

those performed for the actual donor

• Implants of artificial organs

• Transplants not listed as covered

Anesthesia

Professional services provided in -- Nothing Nothing

• Hospital (inpatient)

• Hospital outpatient department

• Skilled nursing facility

• Ambulatory surgical center

• Office

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Section 5 (c). Services provided by a hospital or other facility,

and ambulance services

Here are some important things to keep in mind about these benefits:

• Please remember that all benefits are subject to the definitions,
limitations, and exclusions in this brochure and are payable only when
we determine they are medically necessary.

• Plan physicians must provide or arrange your care and you must be
hospitalized in a Plan facility.

• We do not have a calendar year deductible for services described in
this section.

• Be sure to read Section 4, Your costs for covered services, for
valuable information about how cost sharing works. Also read Section 9
about coordinating benefits with other coverage, including with
Medicare.

• The amounts listed below are for the charges billed by the facility
(i.e., hospital or surgical center) or ambulance service for your
surgery or care. Any costs associated with the professional charge
(i.e., physicians, etc.) are covered in Sections 5 (a) or (b).

• YOUR PHYSICIAN MUST GET PRIOR APPROVAL OF HOSPITAL STAYS. Please refer
to Section 3 to be sure which services require prior approval.

You pay

Benefit Description

High Option Standard Option

Inpatient hospital

Room and board, such as Nothing \$500 per inpatient hospital admission

• ward, semiprivate, or intensive care accommodations;

• general nursing care; and

• meals and special diets.

NOTE: If you want a private room when it is not medically

necessary, you pay the additional charge above the semi-private

room rate.

Other hospital services and supplies, such as: Nothing Nothing (included
in the \$500 inpatient hospital admission copay)

• Operating, recovery, maternity, and other treatment rooms

• Prescribed drugs and medicines

• Diagnostic laboratory tests and X-rays

• Administration of blood and blood products

• Blood or blood plasma, if not donated or replaced

• Dressings, splints, casts, and sterile tray services

• Medical supplies and equipment, including oxygen

• Anesthetics, including nurse anesthetist services

• Take-home items

• Medical supplies, appliances, medical equipment, and

any covered items billed by a hospital for use at home

Not covered: All charges. All charges.

• Custodial care

• Non-covered facilities, such as nursing homes, schools

• Personal comfort items, such as telephone, television,

barber services, guest meals and beds

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Outpatient hospital or ambulatory surgical center High Option Standard
Option

You Pay You Pay

• Operating, recovery, and other treatment rooms Nothing Nothing

• Prescribed drugs and medicines

• Diagnostic laboratory tests, X-rays, and pathology services

• Administration of blood, blood plasma, and other biologicals

• Blood and blood plasma, if not donated or replaced

• Pre-surgical testing

• Dressings, casts, and sterile tray services

• Medical supplies, including oxygen

• Anesthetics and anesthesia service

NOTE: We cover hospital services and supplies related to

dental procedures when necessitated by a non-dental physical

impairment. We do not cover the dental procedures.

Not covered: blood and blood derivatives not replaced by All charges.
All charges.

the member

Extended care/skilled nursing care facility benefits

Skilled nursing facility (SNF): A comprehensive range of Nothing Nothing

benefits with no day limit when full-time skilled nursing care

is necessary and confinement in a skilled nursing facility is

medically necessary as determined by a Plan doctor and

approved in advance by the Plan.

Not covered: custodial care, rest cures, domiciliary or All charges. All
charges.

convalescent care

Hospice care

Up to 210 days in an approved hospice program for a Nothing Nothing

terminally ill member when a Plan doctor certifies that the

member is terminal and has a life expectancy of six months or

less. Covered services as follows when provided and billed

by the hospice:

• Inpatient and outpatient care

• Professional services of a physician

• Prescription drugs and medical supplies and

• Bereavement counseling for immediate family members

Not covered: All charges. All charges.

• Independent nursing, homemaker services

• Services or supplies not listed in the Hospice Program

• Services for respite care

• Nutritional supplements, non-prescription drugs or

substances, vitamins and minerals

Ambulance

• Local professional ambulance service when medically Nothing Nothing

appropriate

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Section 5 (d). Emergency services/accidents

Here are some important things to keep in mind about these benefits:

• Please remember that all benefits are subject to the definitions,
limitations, and exclusions in this brochure and, are payable only when
we determine they are medically necessary.

• We do not have a calendar year deductible for services described in
this section.

• We waive your emergency room copay if you are admitted to the hospital
for inpatient treatment.

• Be sure to read Section 4, Your costs for covered services, for
valuable information about how cost sharing works. Also read Section 9
about coordinating benefits with other coverage, including with
Medicare.

What is a medical emergency?

A medical emergency is the sudden and unexpected onset of a condition or
an injury that you believe endangers your life or could result in
serious injury or disability, and requires immediate medical or surgical
care. Some problems are emergencies because, if not treated promptly,
they might become more serious; examples include deep cuts and broken
bones. Others are emergencies because they are potentially
life-threatening, such as heart attacks, strokes, poisonings, gunshot
wounds, or sudden inability to breathe. There are many other acute
conditions that we may determine are medical emergencies -- what they
all have in common is the need for quick action.

What to do in case of emergency:

Call your Primary Care Physician (PCP). In extreme emergencies, if you
are unable to contact your PCP, call 911 or go to the nearest hospital
emergency room. Be sure to tell the emergency room personnel that you
are a Plan member so that they notify the Plan. You or a family member
should notify the Plan within 48 hours. You can call 1-888-HIP-AUTH
(1-888-447-2884).

Emergencies outside our service area: You must notify us within 48 hours
or on the first working day after your admission, unless it was not
reasonably possible to do so. If a Plan doctor believes that care can be
better provided in a Plan hospital, you will be transferred when
medically feasible with any transportation charges covered in full. All
follow-up care must be provided by participating providers.

Claims for emergency medical treatment must be sent to HIP/HMO within 45
days of the date you receive emergency services. The claim must include
all supporting documentation.

You pay

Benefit Description

High Option Standard Option

Emergency within our service area

• Emergency care at a doctor's office \$10 per office visit \$10 per
office visit

• Emergency care at an urgent care center \$50 per visit \$50 per visit

• Emergency care as an outpatient or inpatient at a hospital,

including doctors' services

Not covered: Elective care or non-emergency care All charges. All
charges.

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Emergency outside our service area High Option Standard Option

You Pay You Pay

• Emergency care at a doctor's office \$10 per office visit \$10 per
office visit

• Emergency care at an urgent care center \$50 per visit \$50 per visit

• Emergency care as an outpatient or inpatient at a hospital,

including doctors' services

Not covered: All charges. All charges.

• Elective care or non-emergency care

• Emergency care provided outside the service area if the

need for care could have been foreseen before leaving

the service area

• Medical and hospital costs resulting from a normal full-

term delivery of a baby outside the service area

Ambulance

Local ambulance service in an emergency condition or when Nothing
Nothing

approved by the plan.

See Section 5(c) for non-emergency service.

Not covered: air ambulance All charges. All charges.

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Section 5 (e). Mental health and substance abuse benefits

When you get our approval for services and follow a treatment plan we
approve, cost-sharing and limitations for Plan mental health and
substance abuse benefits will be no greater than for similar benefits
for other illnesses and conditions.

Here are some important things to keep in mind about these benefits:

• Please remember that all benefits are subject to the definitions,
limitations, and exclusions in this brochure and are payable only when
we determine they are medically necessary.

• We do not have a calendar year benefit.

• Be sure to read Section 4, Your costs for covered services, for
valuable information about how cost sharing works. Also read Section 9
about coordinating benefits with other coverage, including with
Medicare.

• YOU MUST GET PRIOR APPROVAL OF THESE SERVICES. See the instructions
after the benefits description below.

You pay

Benefit Description

High Option Standard Option

Mental health and substance abuse benefits

All diagnostic and treatment services recommended by a Plan Your cost
sharing responsibilities are no greater than for other illness or
conditions.

Your cost sharing responsibilities are no greater than for other illness
or conditions.

provider and contained in a treatment plan that we approve.

The treatment plan may include services, drugs, and supplies

described elsewhere in this brochure.

Note: Plan benefits are payable only when we determine the

care is clinically appropriate to treat your condition and only

when you receive the care as part of a treatment plan that we

approve.

• Professional services, including individual or group therapy \$10 per
office visit or \$10 per office visit to

your primary care

physician or

by providers such as psychiatrists, psychologists, or clinical

social workers

• Medication management Nothing for inpatient visits \$20 per office
visit to a specialist or

Note: Psychiatrist, psychologists, licensed clinical social

workers, etc. are specialists. The office visit copay for

specialists applies to services from these professionals. Nothing for
inpatient visits

• Diagnostic tests \$10 per office visit \$10 per office visit to

your primary care

physician or

\$20 per office visit to a specialist

• Services provided by a hospital or other facility Nothing \$500 per
inpatient hospital admission or nothing for outpatient services.

• Services in approved alternative care settings such as partial

hospitalization, half-way house, residential treatment, full-day

hospitalization, facility based intensive outpatient treatment

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Mental health and substance abuse benefits High Option Standard Option

(continued) You Pay You Pay

Not covered: Services we have not approved. All charges. All charges.

Note: OPM will base its review of disputes about treatment

plans on the treatment plan's clinical appropriateness. OPM

will generally not order us to pay or provide one clinically

appropriate treatment plan in favor of another.

Prior Approval To be eligible to receive these benefits you must obtain
a treatment plan and follow all of the following authorization
processes:

For mental health or substance abuse treatment, call 1-888-447-2526 for
authorization and help in selecting a provider. For mental health
services only, you may call a HIP mental health center directly. A
trained professional will assess your treatment needs and make all
necessary arrangements for you to see a participating provider at the
center. You do not need a referral from your primary care physician for
mental health and substance abuse services.

Limitation We may limit your benefits if you do not obtain a treatment
plan.

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Section 5 (f). Prescription drug benefits

Here are some important things to keep in mind about these benefits:

• We cover prescribed drugs and medications, as described in the chart
beginning on the next page.

• All benefits are subject to the definitions, limitations and
exclusions in this brochure and are payable only when we determine they
are medically necessary.

• Under HIP/HMO Standard Option coverage, each member must satisfy a
\$100 calendar year

prescription drug deductible. You do not have a prescription drug
deductible under the High Option coverage.

• Be sure to read Section 4, Your costs for covered services, for
valuable information about how cost sharing works. Also read Section 9
about coordinating benefits with other coverage, including with
Medicare.

There are important features you should be aware of. These include:

• Who can write your prescription. A licensed Plan doctor or referrral
doctor must write the prescription

• Where you can obtain them. You may fill the prescription at a
participating pharmacy. You may obtain generic maintenance drugs by mail
order.

• We use a formulary. Our formulary is a list of effective medications
and other items that we have approved for our members' use. A special
committee of medical and pharmacy professionals reviews the formulary
annually. We add or delete items on the list based on their findings. We
have found that the drugs on our formulary are safe, effective and
therapeutic in the treatment of disease or illness. We also believe that
our formulary improves patient outcomes while controlling drug costs.
Please call 1-800-HIP-TALK (1-800-447-8255) for a copy of our formulary.
We cover non-formulary drugs when prescribed by a Plan doctor after you
pay to a \$40 non-formulary copay.

• These are the dispensing limitations. A participating pharmacy will
provide up to a 30-day supply of your prescription. Under the High
Option Plan you will pay \$10 for generic formulary drugs or \$15 for
name brand formulary drugs or \$40 for non-formulary drugs. Under the
Standard Option plan you pay \$10 for generic formulary drugs, or \$20
for name brand formulary drugs, or \$40 for non-formulary drugs after
you satisfy a \$100 calendar year deductible. Plan members called to
active military duty (or members in time of national emergency) who need
to obtain prescribed medication should contact us.

You may obtain up to a 90-day supply of certain formulary maintenance
drugs through our mail order service. We will reduce your formulary
copay by 50% when you use our mail order service. Sexual dysfunction
drugs are not available by mail-order and require prior approval. There
are also limits on the number of pills that the pharmacy will fill.
Please contact

1-800-HIP-TALK (1-800-447-8255) for details. For further information on
using our mail order program, contact Express Scripts at 1-800-224-5502.
A generic equivalent will be dispensed if it is available, unless your
physician specifically requires a name brand.

• Why use generic drugs? Generic drugs contain the same active
ingredients and are equivalent in strength and dosage to the original
brand name product. Generic drugs cost you -- and us -- less money than
a brand name drug.

• When you have to file a claim. Please call 1-800-HIP-TALK
(1-800-447-8255) and we will send you a claim form. Under normal
circumstances, you do not have to file prescription drug claims. You
simply present your HIP/HMO card to the

participating pharmacy and pay the appropriate copay.

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You pay

Benefit Description

High Option Standard Option

Covered medications and supplies

We cover the following medications and supplies prescribed

by a Plan physician and obtained from a Plan pharmacy or

through our mail order program: For up to a 30-day supply at a
participating Retail Pharmacy:

\$10 for generic formulary drugs; \$15 for brand name formulary drugs;
or \$40 for non-formulary drugs

For up to a 30-day supply at a participating Retail Pharmacy:

(After the \$100 calendar year deductible) \$10 for generic formulary
drugs; \$20 for brand name formulary drugs; or \$40 for non-formulary
drugs

• Drugs and medicines that by Federal law of the United

States require a physician's prescription for their purchase,

except those listed below

• Insulin

• Disposable needles and syringes for the administration of

covered medications

• Nutritional supplements for the treatment of

phenylketonuria, branched chain ketonuria, galactosemia,

and homocystinuria

• Drugs for sexual dysfunction (see Prior authorization below)

• Fertility drugs (oral and injectable) Up to a 90-day supply by Mail
order:

\$15 for generic formulary drugs or \$22.50 name brand formulary drugs

Up to a 90-day supply by Mail order:

\$15 for generic formulary drugs or \$30 for name brand formulary drugs

Note: Non-formulary drugs are not available under our mail

order program.

Not covered: All charges. All charges.

• Drugs and supplies for cosmetic purposes

• Drugs to enhance athletic performance

• Drugs obtained at a non-Plan pharmacy; except for out-of-

area emergencies

• Vitamins, nutrients and food supplements even if a

physician prescribes or administers them

• Nonprescription medicines

• Medical supplies

Section 5 (g). Special features

Feature Description

Services for deaf and

hearing impaired The telephone number for the hearing impaired is
1-888-HIP-4TDD (1-888-447-4833).

Medical Case

Management We offer case management for members with chronic or
catastrophic illnesses or injuries.

Travel benefit/ services

overseas Please refer to the HIP Member Handbook.

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Section 5 (h). Dental benefits

Here are some important things to keep in mind about these benefits:

• Please remember that all benefits are subject to the definitions,
limitations, and exclusions in this brochure and are payable only when
we determine they are medically necessary.

• Plan dentists must provide or arrange your care.

• We do not have a calendar year deductible.

• We cover hospitalization for dental procedures only when a nondental
physical impairment exists which makes hospitalization necessary to
safeguard the health of the patient. See Section 5 (c) for inpatient
hospital benefits. We do not cover the dental procedure unless it is
described below.

• Be sure to read Section 4, Your costs for covered services, for
valuable information about how cost sharing works. Also read Section 9
about coordinating benefits with other coverage, including with
Medicare.

Accidental injury benefit High Option Standard Option

You Pay You Pay

We cover restorative services and supplies necessary to Nothing Nothing

promptly repair (but not replace) sound natural teeth

within 12 months of the date of the accident. The need for

these services must result from an accidental injury.

Dental benefits

We have no other dental benefits.

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Section 5 (i). Non-FEHB benefits available to Plan members

The benefits on this part are not part of the FEHB contract or premium,
and you cannot file an FEHB disputed claim about them. Fees you pay for
these services do not count toward FEHB deductibles or out-of-pocket
maximums.

HIP VIP® Medicare Plan Benefits

HIP VIP® Medicare Plan is our Medicare + Choice Plan. You may enroll in
it if we offer it in the area where you live and you are enrolled in
Medicare A and B. If you have FEHB coverage and enroll in HIP VIP®
Medicare Plan, you receive the following benefits:

• You are entitled to all benefits under the FEHB Program.

• You are entitled to coverage for everything Medicare covers.

• You will have no copays for the following covered services:

-- PCP and specialty care

-- Prescriptions for generic and brand name formulary only

-- Worldwide emergency and urgently needed care

• One pair of free eyeglasses every 12 months

• \$500 towards the purchase of a hearing aid every 36 months

You may still enroll in HIP VIP® Medicare Plan if you are enrolled in
Medicare Parts A and B but have suspended your FEHB Program coverage.
However, your benefits will be different than those listed above. You
may find out more information about HIP VIP® Medicare Plan benefits by
calling 1-888-866-7461.

Fitness Program - HIP offers members discounts to fitness centers and
tennis clubs in the New York metropolitan area.

Alternative Medicine - The alternative medicine provides you with access
to discounted Acupuncture, Massage and Yoga Therapy

services through an agreement with American WholeHealth, Inc., a leading
national alternative medicine services organization.\*

Should you choose to seek such services, you will have access to the
large American WholeHealth, Inc. network of quality screened providers
at discount rates. You pay no additional plan premiums. The fees you are
charged will be at a discount off of the provider's usual rates. Present
your HIP ID card to the American WholeHealth, Inc. network provider in
order to obtain the discounted rate. Call 1-888-HIP-ALMD
(1-888-447-2563) for a list of American WholeHealth, Inc. network
providers.

Dental Care - We cover the following diagnostic and preventive services
when provided by participating HIP General Dentists:

• One examination (comprehensive or periodic every six months) - \$5 per
visit

• One prophylaxis (cleaning) every six months - \$10 per visit

• One topical fluoride (for children age 16 and under) every six
months - \$5 per visit

If you require other additional services, such as x-rays, fillings,
crowns or dentures, your participating HIP General Dentist will

provide them at a discounted rate. Please contact HIP's Dental Provider,
Careington International, at 1-800-290-0523 for a complete schedule of
current reduced member fees. All member fees must be paid directly to
the participating HIP General Dentist.

Optical

At a Participating Provider members pay a \$45 copay for a complete pair
of eyeglasses (from a select group of frames) every 24 months.

Questions?

If you have a question concerning Plan benefits or how to arrange for
care, contact the Plan's Customer Service Department or you may write to
the Plan at HIP/HMO, 7 West 34th Street, New York, NY 10001. A special
number, 1-888-HIP-4TDD (1-888-447-4833), is available for use by the
hearing impaired. You may also contact us at our Web site at
http://www.HIPUSA.com or call us at

1-800-HIP-TALK (1-800-447-8255).

\* Through HIP's agreement with American WholeHealth, Inc., this program
provides HIP members with discounts for services provided by American
WholeHealth, Inc. alternative medicine providers. American WholeHealth,
Inc. is responsible for credentialing and managing all program
practitioners. This program is not a covered benefit and HIP makes no
representations or guarantees regarding the efficacy or appropriateness
of the services made available. Use of these services is strictly the
member's decision and HIP is not responsible for any acts or omissions
of any American WholeHealth, Inc. alternative medicine provider.

Section 6. General exclusions --- things we don't cover

The exclusions in this section apply to all benefits. Although we may
list a specific service as a benefit, we will not cover it unless your
Plan doctor determines it is medically necessary to prevent, diagnose,
or treat your illness, disease, injury, or condition.

We do not cover the following:

• Care by non-Plan providers except for authorized referrals or
emergencies (see Emergency Benefits);

• Services, drugs, or supplies you receive while you are not enrolled in
this Plan;

• Services, drugs, or supplies that are not medically necessary;

• Services, drugs, or supplies not required according to accepted
standards of medical, dental, or psychiatric practice;

• Experimental or investigational procedures, treatments, drugs or
devices;

• Services, drugs, or supplies related to abortions, except when the
life of the mother would be endangered if the fetus were carried to term
or when the pregnancy is the result of an act of rape or incest;

• Services, drugs, or supplies related to sex transformations;

• Services, drugs, or supplies you receive from a provider or facility
barred from the FEHB Program;

• Expenses you incurred while you were not enrolled in this Plan; or

• Services, drugs, or supplies you receive without charge while in
active military service.

Section 7. Filing a claim for covered services

When you see Plan physicians, receive services at Plan hospitals and
facilities, or obtain your prescription drugs at Plan pharmacies, you
will not have to file claims. Just present your identification card and
pay your copayment, coinsurance, or deductible. You will only need to
file a claim when you receive emergency services from non-plan
providers. Sometimes these providers bill us directly. Check with the
provider. If you need to file the claim, here is the process:

Medical, hospital and In most cases, providers facilities file claims
for you. Physicians must file on the form

drug benefits HCFA-1500, Health Insurance Claim Form. Facilities will
file on the UB-92 form. For claims questions and assistance, call us at
1-800-HIP-TALK (1-800-447-8255).

When you must file a claim --- such as for services you receive outside
of the Plan's

service area --- submit it on the HCFA-1500 or a claim form that
includes the information shown below. Bills and receipts should be
itemized and show:

• Covered member's name and ID number;

• Name and address of the physician or facility that provided the
service or supply;

• Dates you received the services or supplies;

• Diagnosis;

• Type of each service or supply;

• The charge for each service or supply;

• A copy of the explanation of benefits, payments, or denial from any
primary payer --- such as the Medicare Summary Notice (MSN); and

• Receipts, if you paid for your services.

Submit your claims to: The address listed on the back of your

identification card.

Prescription drugs Under normal circumstances, you do not have to file
claims for your prescription drugs. Please call 1-800-HIP-TALK for
specific instructions and a claim form.

Submit your claims to: The address listed on the back of your

identification card.

Other supplies or services Submit your claims to: The address listed on
the back of your

identification card.

Deadline for filing your claim Send us all of the documents for your
claim as soon as possible. You must submit the claim by December 31 of
the year after the year you received the service, unless timely filing
was prevented by administrative operations of Government or legal
incapacity, provided the claim was submitted as soon as reasonably
possible.

When we need more information Please reply promptly when we ask for
additional information. We may delay processing or deny your claim if
you do not respond.

Section 8. The disputed claims process

Follow this Federal Employees Health Benefits Program disputed claims
process if you disagree with our decision on your claim or request for
services, drugs, or supplies -- including a request for
preauthorization:

Step Description

1 Ask us in writing to reconsider our initial decision. You must:

\(a\) Write to us within 6 months from the date of our decision; and

\(b\) Send your request to us at: HIP Health Plan of New York, 7 West
34th Street, New York, NY 10001; and

\(c\) Include a statement about why you believe our initial decision was
wrong, based on specific benefit provisions in this brochure; and

\(d\) Include copies of documents that support your claim, such as
physicians' letters, operative reports, bills, medical records, and
explanation of benefits (EOB) forms.

2 We have 30 days from the date we receive your request to:

\(a\) Pay the claim (or, if applicable, arrange for the health care
provider to give you the care); or

\(b\) Write to you and maintain our denial --- go to step 4; or

\(c\) Ask you or your provider for more information. If we ask your
provider, we will send you a copy of our request ---go to step 3.

3 You or your provider must send the information so that we receive it
within 60 days of our request. We will then decide within 30 more days.

If we do not receive the information within 60 days, we will decide
within 30 days of the date the information was due. We will base our
decision on the information we already have.

We will write to you with our decision.

4 If you do not agree with our decision, you may ask OPM to review it.

You must write to OPM within:

• 90 days after the date of our letter upholding our initial decision;
or

• 120 days after you first wrote to us --- if we did not answer that
request in some way within 30 days; or

• 120 days after we asked for additional information.

Write to OPM at: Office of Personnel Management, Office of Insurance
Programs, Health Insurance Group 3, 1900 E Street, NW, Washington, DC
20415-3630

Send OPM the following information:

• A statement about why you believe our decision was wrong, based on
specific benefit provisions in this brochure;

• Copies of documents that support your claim, such as physicians'
letters, operative reports, bills, medical records, and explanation of
benefits (EOB) forms;

• Copies of all letters you sent to us about the claim;

• Copies of all letters we sent to you about the claim; and

• Your daytime phone number and the best time to call.

Note: If you want OPM to review more than one claim, you must clearly
identify which documents apply to which claim.

Note: You are the only person who has a right to file a disputed claim
with OPM. Parties acting as your representative, such as medical
providers, must include a copy of your specific written consent with the
review request.

Note: The above deadlines may be extended if you show that you were
unable to meet the deadline because of reasons beyond your control.

Step Description

5 OPM will review your disputed claim request and will use the
information it collects from you and us to decide whether our decision
is correct. OPM will send you a final decision within 60 days. There are
no other administrative appeals.

If you do not agree with OPM's decision, your only recourse is to sue.
If you decide to sue, you must file the suit against OPM in Federal
court by December 31 of the third year after the year in which you
received the disputed services, drugs, or supplies or from the year in
which you were denied prior approval. This is the only deadline that may
not be extended.

OPM may disclose the information it collects during the review process
to support their disputed claim decision. This information will become
part of the court record.

You may not sue until you have completed the disputed claims process.
Further, Federal law governs your lawsuit, benefits, and payment of
benefits. The Federal court will base its review on the record that was
before OPM when OPM decided to uphold or overturn our decision. You may
recover only the amount of benefits in dispute.

NOTE: If you have a serious or life threatening condition (one that may
cause permanent loss of bodily functions or death if not treated as soon
as possible), and

\(a\) We haven't responded yet to your initial request for care or
preauthorization/prior approval, then call us at

1-800-HIP-TALK (1-800-447-8255) and we will expedite our review; or

\(b\) We denied your initial request for care or preauthorization/prior
approval, then:

• If we expedite our review and maintain our denial, we will inform OPM
so that they can give your claim expedited treatment too, or

• You may call OPM's Health Insurance Group 3 at 1-202-606-0755 between
8 a.m. and 5 p.m. eastern time.

Section 9. Coordinating benefits with other coverage

When you have other health coverage You must tell us if you or a covered
family member have coverage under another group health plan or have
automobile insurance that pays health care expenses without regard to
fault. This is called "double coverage."

When you have double coverage, one plan normally pays its benefits in
full as the primary payer and the other plan pays a reduced benefit as
the secondary payer. We, like other insurers, determine which coverage
is primary according to the National Association of Insurance
Commissioners' guidelines.

When we are the primary payer, we will pay the benefits described in
this brochure.

When we are the secondary payer, we will determine our allowance. After
the primary plan pays, we will pay what is left of our allowance, up to
our regular benefit. We will not pay more than our allowance. If we are
the secondary payer, we may be entitled to receive payment from your
primary plan.

What is Medicare? Medicare is a Health Insurance Program for:

• People 65 years of age and older.

• Some people with disabilities, under 65 years of age.

• People with End-Stage Renal Disease (permanent kidney failure
requiring dialysis or a transplant).

Medicare has two parts:

• Part A (Hospital Insurance). Most people do not have to pay for Part
A. If you or your spouse worked for at least 10 years in
Medicare-covered employment, you should be able to qualify for
premium-free Part A insurance. (Someone who was a Federal employee on
January 1, 1983 or since automatically qualifies.) Otherwise, if you are
age 65 or older, you may be able to buy it. Contact 1-800-MEDICARE for
more information.

• Part B (Medical Insurance). Most people pay monthly for Part B.
Generally, Part B premiums are withheld from your monthly Social
Security check or your retirement check.

If you are eligible for Medicare, you may have choices in how you get
your health care. Medicare + Choice is the term used to describe the
various health plan choices available to Medicare beneficiaries. The
information in the next few pages shows how we coordinate benefits with
Medicare, depending on the type of Medicare managed care plan you have.

• Should I enroll in Medicare? The decision to enroll in Medicare is
yours. We encourage you to apply for Medicare benefits 3 months before
you turn age 65. It's easy. Just call the Social Security Administration
toll-free number 1-800-772-1213 to set up an appointment to apply. If
you do not apply for one or both Parts of Medicare, you can still be
covered under the FEHB Program.

If you can get premium-free Part A coverage, we advise you to enroll in
it. Most Federal employees and annuitants are entitled to Medicare Part
A at age 65 without cost. When you don't have to pay premiums for
Medicare Part A, it makes good sense to obtain the coverage. It can
reduce your out-of-pocket expenses as well as costs to the FEHB, which
can help keep FEHB premiums down.

Everyone is charged a premium for Medicare Part B coverage. The Social
Security Administration can provide you with premium and benefit
information. Review the information and decide if it makes sense for you
to buy the Medicare Part B coverage.

If you are eligible for Medicare, you may have choices in how you get
your health care. Medicare + Choice is the term used to describe the
various health plan choices available to Medicare beneficiaries. The
information in the next few pages shows how we coordinate benefits with
Medicare, depending on the type of Medicare + Choice plan you have.

• The Original Medicare Plan The Original Medicare Plan (Original
Medicare) is available everywhere in the United

(Part A and Part B) States. It is the way everyone used to get Medicare
benefits and is the way most people get their Medicare Part A and Part B
benefits now. You may go to any doctor, specialist, or hospital that
accepts Medicare. The Original Medicare Plan pays its share and you pay
your share. Some things are not covered under Original Medicare, like
prescription drugs.

When you are enrolled in Original Medicare along with this Plan, you
still need to follow the rules in this brochure for us to cover your
care. You still pay the stated copays for your covered health care
services under the FEHB Program.

Claims process when you have the Original Medicare Plan --- You probably
will never have to file a claim form when you have both our Plan and the
Original Medicare Plan.

• When we are the primary payer, we process the claim first.

• When Original Medicare is the primary payer, Medicare processes your
claim first. In most cases, your claims will be coordinated
automatically and we will then provide secondary benefits for covered
charges. You will not need to do anything. To find out if you need to do
something to file your claims, call us at 1-800-HIP TALK

We do not waive any costs if the Original Medicare Plan is your primary
payer.

Medicare always makes the final determination as to whether they are the
primary payer. The following chart illustrates whether Medicare or this
Plan should be the primary payer for you according to your employment
status and other factors determined by Medicare. It is critical that you
tell us if you or a covered family member has Medicare coverage so we
can administer these requirements correctly.

Primary Payer Chart

A. When you - or your covered spouse - are age 65 or over and have
Medicare and you... The primary payer for the

individual with Medicare is\...

Medicare This Plan

1\) Are an active employee with the Federal government and...

• You have FEHB coverage on your own or through your spouse who is also
an active employee 4

• You have FEHB coverage through your spouse who is an annuitant 4

2\) Are an annuitant and...

• You have FEHB coverage on your own or through your spouse who is also
an annuitant 4

• You have FEHB coverage through your spouse who is an active employee 4

3\) Are a reemployed annuitant with the Federal government and your
position is excluded from

the FEHB (your employing office will know if this is the case) 4\*

4\) Are a reemployed annuitant with the Federal government and your
position is not excluded

from the FEHB (your employing office will know if this is the case)
and...

• You have FEHB coverage on your own or through your spouse who is also
an active employee 4

• You have FEHB coverage through your spouse who is an annuitant 4

5\) Are a Federal judge who retired under title 28, U.S.C., or a Tax
Court judge who retired under

Section 7447 of title 26, U.S.C. (or if your covered spouse is this type
of judge) 4\*

6\) Are enrolled in Part B only, regardless of your employment status 4
for Part B services 4 for other services

7\) Are a former Federal employee receiving Workers' Compensation and
the Office of Workers'

Compensation Programs has determined that you are unable to return to
duty) 4\*\*

B. When you or a covered family member...

1\) Have Medicare solely based on end stage renal disease (ESRD) and...

• It is within the first 30 months of eligibility for or entitlement to
Medicare due to ESRD 4

(30-month coordination period)

• It is beyond the 30-month coordination period and you or a family
member

are still entitled to Medicare due to ESRD 4

2\) Become eligible for Medicare due to ESRD while already a Medicare
beneficiary and... 4for 30-month coordination period

• This Plan was the primary payer before eligibility due to ESRD

• Medicare was the primary payer before eligibility due to ESRD 4

C. When either you or your spouse are eligible for Medicare solely due
to disability and you

1\) Are an active employee with the Federal government and...

• You have FEHB coverage on your own or through your spouse who is also
an active employee 4

• You have FEHB coverage through your spouse who is an annuitant 4

2\) Are an annuitant and...

• You have FEHB coverage on your own or through your spouse who is also
an annuitant 4

• You have FEHB coverage through your spouse who is an active employee 4

D. Are covered under the FEHB Spouse Equity provision as a former spouse
4

\* Unless you have FEHB coverage through your spouse who is an active
employee

\*\* Workers' Compensation is primary for claims related to your
condition under Workers' Compensation

• Medicare + Choice If you are eligible for Medicare, you may choose to
enroll in and get your Medicare benefits from another type of
Medicare+Choice plan --- a Medicare+Choice plan. These are health care
choices (like HMOs) in some areas of the country. In most Medicare
managed care plans, you can only go to doctors, specialists, or
hospitals that are part of the plan. Medicare managed care plans provide
all the benefits that Original Medicare covers. Some cover extras, like
prescription drugs. To learn more about enrolling in a Medicare managed
care plan, contact Medicare at 1-800-MEDICARE (1-800-633-4227) or at
www.medicare.gov.

If you enroll in a Medicare+Choice plan, the following options are
available to you:

This Plan and our Medicare managed care plan: You may enroll in our
Medicare+Choice plan and also remain enrolled in our FEHB plan. In this
case, we do waive some of our copayments, coinsurance, or deductibles
for your FEHB coverage. Please contact us for further details.

This Plan and another plan's Medicare + Choice plan: You may enroll in

another plan's Medicare+Choice plan and also remain enrolled in our FEHB
plan. We will still provide benefits when your Medicare+Choice plan is
primary, even out of the managed care plan's network and/or service area
(if you use our Plan providers), but we will not waive any of our
copayments under the FEHB coverage. If you enroll in a Medicare+Choice
plan, tell us. We will need to know whether you are in the Original
Medicare Plan or in a Medicare+Choice plan so we can correctly
coordinate benefits with Medicare.

Suspended FEHB coverage to enroll in a Medicare + Choice plan: If you
are an annuitant or former spouse, you can suspend your FEHB coverage to
enroll in a Medicare+Choice plan, eliminating your FEHB premium. (OPM
does not contribute to your Medicare+Choice plan premium.) For
information on suspending your FEHB enrollment, contact your retirement
office. If you later want to re-enroll in the FEHB Program, generally
you may do so only at the next open season unless you involuntarily lose
coverage or move out of the Medicare+Choice plan's service area.

TRICARE and CHAMPVA TRICARE is the health care program for eligible
dependents of military persons, and retirees of the military. TRICARE
includes the CHAMPUS program. CHAMPVA provides health coverage to
disabled Veterans and their eligible dependents. If TRICARE or CHAMPVA
and this Plan cover you, we pay first. See your TRICARE or CHAMPVA
Health Benefits Advisor if you have questions about these programs.

Suspended FEHB coverage to enroll in TRICARE or CHAMPVA: If you are an

annuitant or former spouse, you can suspend your FEHB coverage to enroll
in one of these programs, eliminating your FEHB premium. (OPM does not
contribute to any applicable plan premiums.) For information on
suspending your FEHB enrollment, contact your retirement office. If you
later want to re-enroll in the FEHB Program, generally you may do so
only at the next Open Season unless you involuntarily lose coverage
under the program.

Workers' Compensation We do not cover services that:

• you need because of a workplace-related illness or injury that the
Office of Workers' Compensation Programs (OWCP) or a similar Federal or
State agency determines they must provide; or

• OWCP or a similar agency pays for through a third-party injury
settlement or other

similar proceeding that is based on a claim you filed under OWCP or
similar laws.

Once OWCP or similar agency pays its maximum benefits for your
treatment, we will cover your care. You must use our providers.

Medicaid When you have this Plan and Medicaid, we pay first.

Suspended FEHB coverage to enroll in Medicaid or a similar
State-sponsored program of medical assistance: If you are an annuitant
or former spouse, you can suspend your FEHB coverage to enroll in one of
these state programs, eliminating your FEHB

premium. For information on suspending your FEHB enrollment, contact
your retirement office. If you later want to re-enroll in the FEHB
Program, generally you may do so only at the next Open Season unless you
involuntarily lose coverage under the state program.

When other Government agencies We do not cover services and supplies
when a local, State, or Federal Government

are responsible for your care agency directly or indirectly pays for
them.

When others are responsible When you receive money to compensate you for
medical or hospital care for injuries or

for injuries illness caused by another person, you must reimburse us for
any expenses we paid. However, we will cover the cost of treatment that
exceeds the amount you received in the settlement.

If you do not seek damages you must agree to let us try. This is called
subrogation. If you need more information, contact us for our
subrogation procedures.

Section 10. Definitions of terms we use in this brochure

Calendar year January 1 through December 31 of the same year. For new
enrollees, the calendar year begins on the effective date of their
enrollment and ends on December 31 of the same year.

Coinsurance Coinsurance is the percentage of our allowance that you must
pay for your care.

See page 13.

Copayment A copayment is a fixed amount of money you pay when you
receive covered services.

See page 13.

Covered services Care we provide benefits for, as described in this
brochure.

Custodial care Custodial care is care which does not require the
continuing attention of trained medical personnel. Custodial care
includes any service which can be learned and provided by an average
individual who does not have medical training.

Deductible A deductible is a fixed amount of covered expenses you must
incur for certain covered services and supplies before we start paying
benefits for those services. See page 13.

Durable Medical Equipment, A "Covered Appliance" is one of the following
items which is prescribed by your Plan

Prosthetic Devices and physician, dispensed by a Plan provider and
approved by HIP. HIP maintains a list of

Orthopedic Devices Covered Appliances that contains items in each of the
categories listed below. This list is prepared by HIP and periodically
reviewed and modified. HIP will determine whether a Covered Appliance
should be customized, rented, purchased or repaired.

1\. Durable Medical Equipment, which is:

A. Primarily and customarily used to serve a medical purpose;

B. Generally not useful to a person in the absence of illness or injury;

C. Appropriate for use in the home;

D. Medically necessary for the care and treatment of the Member's
illness or injury.

2\. Prosthetic devices which replace all or part of an internal body
organ or external limb. However, dental prosthetics needed due to an
accidental injury to sound natural teeth if the service is provided
within twelve (12) months of the accident and necessary in treatment due
to congenital disease or anomaly will be covered.

3\. Orthopedic devices which are required for the treatment of injuries
or disorders of the skeletal system and associated muscles, joints and
ligaments.

Experimental or Experimental or investigational service means any
evaluation, treatment, services therapy,

investigational services or device which involves the application,
administration or use, of procedures, techniques, equipment, supplies,
products, remedies, vaccines, biological products, drugs,
pharmaceuticals, or chemical compounds if, as determined solely by the
Plan:

1\) Such evaluation, treatment, therapy, or device cannot be lawfully
marketed without approval of the United States Food and Drug
Administration or the New York Department of Health and Rehabilitative
Services, and approval for marketing has not, in fact been given at the
time such is furnished to the covered person; or

2\) Reliable evidence, as determined by the Plan, shows that such
evaluation, treatment, therapy, or device (a) is the subject of an
ongoing Phase I or II clinical investigation, or experimental or
research arm of a Phase III clinical investigation, or under study to
determine: maximum tolerated dosage(s), toxicity, safety, efficacy, or
efficacy as compared without the standard means for treatment or
diagnosis of the condition in

question; or (b) has not been proven safe and effective for the
treatment of the condition in question, as evidenced in the most
recently published medical literature in the United States, Canada or
Great Britain, using generally accepted scientific, medical or public
health methodologies or statistical practices; or (c) is not the
standard evaluation, treatment, therapy or device utilized by practicing
physicians in treating other patients with the same or similar
condition; or

3\) There is no consensus among practicing physicians that the
evaluation, treatment,

therapy or device is safe or effective for the treatment in question; or

4\) The consensus of opinion among experts is that further studies,
research, or clinical investigations are necessary to determine maximum
tolerated dosage(s), toxicity, safety, efficacy or efficacy as compared
with the standard means for treatment or diagnosis of the condition in
question.

Group health coverage An organization such as your employer arranged for
your coverage under this contract. The member's group has chosen to
engage HIP to make arrangements through which Medical Services and
Hospital Services will be delivered in accordance with the terms and
conditions of the certificate of coverage.

Medically necessary and Medically necessary and appropriate means those
health care services or supplies, deter-

appropriate mined solely by HIP or its designee, that are necessary to
prevent, diagnose, correct or cure conditions in the member that cause
acute suffering, endanger life, result in illness or infirmity,
interfere substantially with the member's capacity for normal activity
or threaten some significant disability and that could not have been
omitted under generally accepted medical standards or provided in a less
intensive setting.

Us/We "Us" and "we" refer to HIP Health Plan of New York.

You "You" refers to the enrollee and each covered family member.

Section 11. FEHB facts

Coverage Information

No pre-existing condition We will not refuse to cover the treatment of a
condition that you had before you enrolled

limitation in this Plan solely because you had the condition before you
enrolled.

Where you can get information See www.opm.gov/insure. Also, your
employing or retirement office can answer your

about enrolling in the questions, and give you a Guide to Federal
Employees Health Benefits Plans, brochures

FEHB Program for other plans, and other materials you need to make an
informed decision about your FEHB coverage. These materials tell you:

• When you may change your enrollment;

• How you can cover your family members;

• What happens when you transfer to another Federal agency, go on leave
without pay, enter military service, or retire;

• When your enrollment ends; and

• When the next open season for enrollment begins.

We don't determine who is eligible for coverage and, in most cases,
cannot change your enrollment status without information from your
employing or retirement office.

Types of coverage available Self Only coverage is for you alone. Self
and Family coverage is for you, your spouse,

for you and your family and your unmarried dependent children under age
22, including any foster children or stepchildren your employing or
retirement office authorizes coverage for. Under certain circumstances,
you may also continue coverage for a disabled child 22 years of age or
older who is incapable of self-support.

If you have a Self Only enrollment, you may change to a Self and Family
enrollment if you marry, give birth, or add a child to your family. You
may change your enrollment 31 days before to 60 days after that event.
The Self and Family enrollment begins on the first day of the pay period
in which the child is born or becomes an eligible family member. When
you change to Self and Family because you marry, the change is effective
on the first day of the pay period that begins after your employing
office receives your enrollment form; benefits will not be available to
your spouse until you marry.

Your employing or retirement office will not notify you when a family
member is no longer eligible to receive health benefits, nor will we.
Please tell us immediately when you add or remove family members from
your coverage for any reason, including divorce, or when your child
under age 22 marries or turns 22.

If you or one of your family members is enrolled in one FEHB plan, that
person may not be enrolled in or covered as a family member by another
FEHB plan.

Children's Equity Act OPM has implemented the Federal Employees Health
Benefits Children's Equity Act of 2000. This law mandates that you be
enrolled for Self and Family coverage in the Federal Employees Health
Benefits (FEHB) Program, if you are an employee subject to a court or
administrative order requiring you to provide health benefits for your
child (ren).

If this law applies to you, you must enroll for Self and Family coverage
in a health plan that provides full benefits in the area where your
children live or provide documentation to your employing office that you
have obtained other health benefits coverage for your children. If you
do not do so, your employing office will enroll you involuntarily as
follows:

• If you have no FEHB coverage, your employing office will enroll you
for Self and Family coverage in the Blue Cross and Blue Shield Service
Benefit Plan's Basic Option;

• If you have a Self only enrollment in a fee-for-service plan or in an
HMO that serves the area where your children live, your employing office
will change your enrollment to Self and Family in the same option of the
same plan; or

• If you are enrolled in an HMO that does not serve the area where the
children live, your employing office will change your enrollment to Self
and Family in the Blue Cross and Blue Shield Service Benefit Plan's
Basic Option.

As long as the court/administrative order is in effect, and you have at
least one child identified in the order who is still eligible under the
FEHB Program, you cannot cancel your enrollment, change to Self Only, or
change to a plan that doesn't serve the area in which your children
live, unless you provide documentation that you have other coverage for
the children. If the court/administrative order is still in effect when
you retire, and you have at least one child still eligible for FEHB
coverage, you must continue your FEHB coverage into retirement (if
eligible) and cannot cancel your coverage, change to Self Only, or
change to a plan that doesn't serve the area in which your children live
as long as the court/administrative order is in effect. Contact your
employing office for further information.

When benefits and The benefits in this brochure are effective on
January 1. If you joined this Plan during

premiums start Open Season, your coverage begins on the first day of
your first pay period that starts on or after January 1. If you changed
plans or plan options during Open Season and you receive care between
January 1 and the effective date of coverage under your new plan or
option, your claims will be paid according to the 2004 benefits of your
old plan or option. However, if your old plan left the FEHB Program at
the end of the year, you are covered under that plan's 2003 benefits
until the effective date of your coverage with your new plan.
Annuitants' coverage and premiums begin on January 1. If you joined at
any other time during the year, your employing office will tell you the
effective date of coverage.

When you retire When you retire, you can usually stay in the FEHB
Program. Generally, you must have been enrolled in the FEHB Program for
the last five years of your Federal service. If you do not meet this
requirement, you may be eligible for other forms of coverage, such as
temporary continuation of coverage (TCC).

When you lose benefits

• When FEHB coverage ends You will receive an additional 31 days of
coverage, for no additional premium, when:

• Your enrollment ends, unless you cancel your enrollment, or

• You are a family member no longer eligible for coverage.

You may be eligible for spouse equity coverage or Temporary Continuation
of Coverage (TCC), or a conversion policy (a non-FEHB individual
policy).

• Spouse equity coverage If you are divorced from a Federal employee or
annuitant, you may not continue to get

benefits under your former spouse's enrollment. This is the case even
when the court has ordered your former spouse to supply health coverage
to you. But, you may be eligible for your own FEHB coverage under the
spouse equity law or Temporary Continuation of Coverage (TCC). If you
are recently divorced or are anticipating a divorce, contact your
ex-spouse's employing or retirement office to get RI 70-5, the Guide to
Federal Employees Health Benefits Plans for Temporary Continuation of
Coverage and Former Spouse Enrollees, or other information about your
coverage choices. You can also download the guide from OPM's website,
www.opm.gov/insure.

• Temporary Continuation If you leave Federal service, or if you lose
coverage because you no longer qualify as a

of Coverage (TCC) family member, you may be eligible for Temporary
Continuation of Coverage (TCC). For example, you can receive TCC if you
are not able to continue your FEHB enrollment after you retire, if you
lose your job, if you are a covered dependent child and you turn 22 or
marry, etc.

You may not elect TCC if you are fired from your Federal job due to
gross misconduct.

Enrolling in TCC. Get the RI 79-27, which describes TCC, and the RI
70-5, the Guide to Federal Employees Health Benefits Plans for Temporary
Continuation of Coverage and Former Spouse Enrollees, from your
employing or retirement office or from www.opm.gov/insure. It explains
what you have to do to enroll.

• Converting to You may convert to a non-FEHB individual policy if:

individual Coverage

• Your coverage under TCC or the spouse equity law ends (If you canceled
your

coverage or did not pay your premium, you cannot convert);

• You decided not to receive coverage under TCC or the spouse equity
law; or

• You are not eligible for coverage under TCC or the spouse equity law.

If you leave Federal service, your employing office will notify you of
your right to

convert. You must apply in writing to us within 31 days after you
receive this notice. However, if you are a family member who is losing
coverage, the employing or retirement office will not notify you. You
must apply in writing to us within 31 days after you are no longer
eligible for coverage.

Your benefits and rates will differ from those under the FEHB Program;
however, you will not have to answer questions about your health, and we
will not impose a waiting period or limit your coverage due to
pre-existing conditions.

• Getting a Certificate of The Health Insurance Portability and
Accountability Act of 1996 (HIPAA) is a Federal

Group Health Plan Coverage law that offers limited Federal protections
for health coverage availability and continuity to people who lose
employer group coverage. If you leave the FEHB Program, we will give you
a Certificate of Group Health Plan Coverage that indicates how long you
have been enrolled with us. You can use this certificate when getting
health insurance or other health care coverage. Your new plan must
reduce or eliminate waiting periods, limitations, or exclusions for
health related conditions based on the information in the certificate,
as long as you enroll within 63 days of losing coverage under this Plan.
If you have been enrolled with us for less than 12 months, but were
previously enrolled in other FEHB plans, you may also request a
certificate from those plans. For more information, get OPM pamphlet RI
79-27, Temporary Continuation of Coverage (TCC) under the FEHB Program.
See also the FEHB web site (www.opm.gov/insure/health); refer to the
"TCC and HIPAA" frequently asked questions. These highlight HIPAA rules,
such as the requirement that Federal employees must exhaust any TCC
eligibility as one condition for guaranteed access to individual health
coverage under HIPAA, and have information about Federal and State
agencies you can contact for more information.

Two new Federal Programs complement FEHB benefits

Important information OPM wants to be sure you know about two new
Federal programs that complement the FEHB Program. First, the Flexible
Spending Account (FSA) Program, also known as FSAFEDS, lets you set
aside tax-free money to pay for health and dependent care expenses. The
result can be a discount of 20 to more than 40% on services you
routinely pay for out-of-pocket. Second, the Federal Long Term Care
Insurance Program (FLTCIP) covers long term care costs not covered under
the FEHB.

The Federal Flexible Spending Account Program - FSAFEDS

• What is an FSA? It is a tax-favored benefit that allows you to set
aside pre-tax money from your paycheck to pay for a variety of eligible
expenses. By using an FSA, you can reduce your taxes while paying for
services you would have to pay for anyway, producing a discount that can
be over 40%!

There are two types of FSAs offered by the FSAFEDS Program:

Health Care Flexible Spending Account

(HCFSA) • Covers eligible health care expenses not reimbursed by this
Plan, or any other medical, dental, or vision care plan you or your
dependents may have

• Eligible dependents for this account include anyone you claim on your
Federal income tax return as a qualified dependent under the U.S.
Internal Revenue Service (IRS) definition and/or with whom you jointly
file your Federal income tax return, even if you don't have self and
family health benefits coverage. Note: The IRS has a broader definition
than that of a "family member" than is used under the FEHB Program to
provide benefits by your FEHB Plan.

• The maximum amount that can be allotted for the HCFSA is \$3,000
annually. The minimum amount is \$250 annually.

Dependent Care Flexible Spending Account

(DCFSA) • Covers eligible dependent care expenses incurred so you can
work, or if you are married, so you and your spouse can work, or your
spouse can look for work or attend school full-time.

• Eligible dependents for this account include anyone you claim on your
Federal income tax return as a qualified IRS dependent and/or with whom
you jointly file your Federal income tax return.

• The maximum that can be allotted for the DCFSA is \$5,000 annually.
The minimum amount is \$250 annually. Note: The IRS limits contributions
to a Dependent Care FSA. For single taxpayers and taxpayers filing a
joint return, the maximum is \$5,000 per year. For taxpayers who file
their taxes separately with a spouse, the maximum is \$2,500 per year.
The limit includes any child care subsidy you may receive.

• Enroll during Open Season You must make an election to enroll in an
FSA during the FEHB Open Season. Even if you enrolled during the initial
Open Season for 2003, you must make a new election to continue
participating in 2004. Enrollment is easy!

• Enroll online anytime during Open Season (November 10 through December
8, 2003) at www.fsafeds.com.

• Call the toll-free number 1-877-FSAFEDS (1-877-372-3337) Monday
through Friday, from 9 a.m. until 9 p.m. eastern time and a FSAFEDS
Benefit Counselor will help

you enroll.

What is SHPS? SHPS is a third-party administrator hired by OPM to manage
the FSAFEDS Program. SHPS is the largest FSA administrator in the nation
and will be responsible for enrollment, claims processing, customer
service, and day-to-day operations of FSAFEDS.

• Who is eligible to enroll? If you are a Federal employee eligible for
FEHB -- even if you're not enrolled in FEHB -- you can choose to
participate in either, or both, of the flexible spending accounts. If
you are not eligible for FEHB, you are not eligible to enroll for a
Health Care FSA. However, almost all Federal employees are eligible to
enroll for the Dependent Care FSA. The only exception is intermittent
(also called when actually employed \[WAE\]) employees expected to work
less than 180 days during the year.

Note: FSAFEDS is the FSA Program established for all Executive Branch
employees and Legislative Branch employees whose employers signed on.
Under IRS law, FSAs are not available to annuitants. In addition, the
U.S. Postal Service and the Judicial Branch, among others, are Federal
agencies that have their own plans with slightly different rules, but
the advantages of having an FSA are the same no matter what agency you
work for.

• How much should I Plan carefully when deciding how much to contribute
to an FSA. Because of the tax ben-

contribute to my FSA? efits of an FSA, the IRS places strict guidelines
on them. You need to estimate how much

you want to allocate to an FSA because current IRS regulations require
you forfeit any funds remaining in your account(s) at the end of the FSA
plan year. This is referred to as the "use-it-or-lose-it" rule. You will
have until April 29, 2004 to submit claims for your eligible expenses
incurred during 2003 if you enrolled in FSAFEDS when it was initially
offered. You will have until April 30, 2005 to submit claims for your
eligible expenses incurred from January 1 through December 31, 2004 if
you elect FSAFEDS during this Open Season.

The FSAFEDS Calculator at www.fsafeds.com will help you plan your FSA
allocations and provide an estimate of your tax savings based on your
individual situation.

• What can my HCFSA Every FEHB health plan includes cost sharing
features, such as deductibles you must meet

pay for? before the Plan provides benefits, coinsurance or copayments
that you pay when you and

the Plan share costs, and medical services and supplies that are not
covered by the Plan and for which you must pay. These out-of-pocket
costs are summarized on page 58 and detailed throughout this brochure.
Your HCFSA will reimburse you for such costs when they are for tax
deductible medical care for you and your dependents that is NOT covered
by this FEHB Plan or any other coverage that you have.

The IRS governs expenses reimbursable by a HCFSA. See Publication 502
for a comprehensive list of tax-deductible medical expenses. Note: While
you will see insurance premiums listed in Publication 502, they are NOT
a reimbursable expense for FSA purposes. Publication 502 can be found on
the IRS Web site at http://www.irs.gov/pub/irs-pdf/p502.pdf. If you do
not see your service or expense listed in Publication 502, please call a
FSAFEDS Benefit Counselor at 1-877-FSAFEDS (1-877-372-3337), who will be
able to answer your specific questions.

• Tax savings with an FSA An FSA lets you allot money for eligible
expenses before your agency deducts taxes from your paycheck. This means
the amount of income that your taxes are based on will be lower, so your
tax liability will also be lower. Without an FSA, you would still pay
for these expenses, but you would do so using money remaining in your
paycheck after Federal (and often state and local) taxes are deducted.
The following chart illustrates a typical tax savings example:

Note: This example is intended to demonstrate a typical tax savings
based on 27% Federal and 7.65% FICA taxes. Actual savings will vary
based upon in which retirement system you are enrolled (CSRS or FERS),
as well as your individual tax situation. In this example, the
individual received \$2,000 in services for \$1,424, a discount of
almost 36%! You may also wish to consult a tax professional for more
information on the tax implications of an FSA.

• Tax credits and You cannot claim expenses on your Federal income tax
return if you receive reimburse-

deductions ment for them from your HCFSA or DCFSA. Below are some
guidelines that may help

you decide whether to participate in FSAFEDS.

Health care expenses The HCFSA is tax-free from the first dollar. In
addition, you may be reimbursed from the HCFSA at any time during the
year for expenses up to the annual amount you've elected to contribute.

Only health care expenses exceeding 7.5% of your adjusted gross income
are eligible to be deducted on your Federal income tax return. Using the
example listed in the above chart, only health care expenses exceeding
\$3,750 (7.5% of \$50,000) would be eligible to be deducted on your
Federal income tax return. In addition, money set aside through a HCFSA
is also exempt from FICA taxes. This exception is not available on your
Federal income tax return.

Dependent care expenses The DCFSA generally allows many families to save
more than they would with the Federal tax credit for dependent care
expenses. Note that you may only be reimbursed from the DCFSA up to your
current account balance. If you file a claim for more than your current
balance, it will be held until additional payroll allotments have been
added to your account.

Visit www.fsafeds.com and download the Dependent Care Tax Credit
Worksheet from the Quick Links box to help you determine what is best
for your situation. You may also wish to consult a tax professional for
more details.

• Does it cost me anything Probably not. While there is an
administrative fee of \$4.00 per month for an HCFSA and

to participate in FSAFEDS? 1.5% of the annual election for a DCFSA, most
agencies have elected to pay these fees

out of their share of employment tax savings. To be sure, check the
FSAFEDS.com web site or call 1-877-FSAFEDS (1-877-372-3337). Also,
remember that participating in FSAFEDS can cost you money if you don't
spend your entire account balance by the end of the plan year and wind
up forfeiting your end of year account balance, per the IRS
"use-it-or-lose-it" rule.

• Contact us To find out more or to enroll, please visit the FSAFEDS Web
site at www.fsafeds.com, or contact SHPS by email or by phone. SHPS
Benefit Counselors are available from 9:00 a.m. until 9:00 p.m. eastern
time, Monday through Friday.

• E-mail: fsafeds@shps.net

• Telephone: 1-877-FSAFEDS (1-877-372-3337)

• TTY: 1-800-952-0450 (for hearing impaired individuals that would like
to utilize a text messaging service)

The Federal Long Term Care Insurance Program

It's important protection Here's why you should consider enrolling in
the Federal Long Term Care Insurance Program:

• FEHB plans do not cover the cost of long term care. Also called
"custodial care," long term care is help you receive when you need
assistance performing activities of daily living -- such as bathing or
dressing yourself. This need can strike anyone at any age and the cost
of care can be substantial.

• The Federal Long Term Care Insurance Program can help protect you from
the potentially high cost of long term care. This coverage gives you
control over the type of care you receive and where you receive it. It
can also help you remain independent, so you won't have to worry about
being a burden to your loved ones.

• It's to your advantage to apply sooner rather than later. Long term
care insurance is something you must apply for, and pass a medical
screening (called underwriting) in order to be enrolled. Certain medical
conditions will prevent some people from being approved for coverage. By
applying while you're in good health, you could avoid the risk of having
a change in health disqualify you from obtaining coverage. Also, the
younger you are when you apply, the lower your premiums.

• You don't have to wait for an open season to apply. The Federal Long
Term Care Insurance Program accepts applications from eligible persons
at any time. You will have to complete a full underwriting application,
which asks a number of questions about your health. However, if you are
a new or newly eligible employee, you (and your spouse, if applicable)
have a limited opportunity to apply using the abbreviated underwriting
application, which asks fewer questions. If you marry, your new spouse
will also have a limited opportunity to apply using abbreviated
underwriting. Qualified relatives are also eligible to apply with full
underwriting.

To find out more and Call 1-800-LTC-FEDS (1-800-582-3337) (TTY
1-800-843-3557)

to request an application or visit www.ltcfeds.com.

Two new Federal Programs complement FEHB benefits

Important information OPM wants to be sure you know about two new
Federal programs that complement the FEHB Program. First, the Flexible
Spending Account (FSA) Program, also known as FSAFEDS, lets you set
aside tax-free money to pay for health and dependent care expenses. The
result can be a discount of 20 to more than 40% on services you
routinely pay for out-of-pocket. Second, the Federal Long Term Care
Insurance Program (FLTCIP) covers long term care costs not covered under
the FEHB.

The Federal Flexible Spending Account Program - FSAFEDS

• What is an FSA? It is a tax-favored benefit that allows you to set
aside pre-tax money from your paycheck to pay for a variety of eligible
expenses. By using an FSA, you can reduce your taxes while paying for
services you would have to pay for anyway, producing a discount that can
be over 40%!

There are two types of FSAs offered by the FSAFEDS Program:

Health Care Flexible Spending Account

(HCFSA) • Covers eligible health care expenses not reimbursed by this
Plan, or any other medical, dental, or vision care plan you or your
dependents may have

• Eligible dependents for this account include anyone you claim on your
Federal income tax return as a qualified dependent under the U.S.
Internal Revenue Service (IRS) definition and/or with whom you jointly
file your Federal income tax return, even if you don't have self and
family health benefits coverage. Note: The IRS has a broader definition
than that of a "family member" than is used under the FEHB Program to
provide benefits by your FEHB Plan.

• The maximum amount that can be allotted for the HCFSA is \$3,000
annually. The minimum amount is \$250 annually.

Dependent Care Flexible Spending Account

(DCFSA) • Covers eligible dependent care expenses incurred so you can
work, or if you are married, so you and your spouse can work, or your
spouse can look for work or attend school full-time.

• Eligible dependents for this account include anyone you claim on your
Federal income tax return as a qualified IRS dependent and/or with whom
you jointly file your Federal income tax return.

• The maximum that can be allotted for the DCFSA is \$5,000 annually.
The minimum amount is \$250 annually. Note: The IRS limits contributions
to a Dependent Care FSA. For single taxpayers and taxpayers filing a
joint return, the maximum is \$5,000 per year. For taxpayers who file
their taxes separately with a spouse, the maximum is \$2,500 per year.
The limit includes any child care subsidy you may receive.

• Enroll during Open Season You must make an election to enroll in an
FSA during the FEHB Open Season. Even if you enrolled during the initial
Open Season for 2003, you must make a new election to continue
participating in 2004. Enrollment is easy!

• Enroll online anytime during Open Season (November 10 through December
8, 2003) at www.fsafeds.com.

• Call the toll-free number 1-877-FSAFEDS (1-877-372-3337) Monday
through Friday, from 9 a.m. until 9 p.m. eastern time and a FSAFEDS
Benefit Counselor will help

you enroll.

What is SHPS? SHPS is a third-party administrator hired by OPM to manage
the FSAFEDS Program. SHPS is the largest FSA administrator in the nation
and will be responsible for enrollment, claims processing, customer
service, and day-to-day operations of FSAFEDS.

• Who is eligible to enroll? If you are a Federal employee eligible for
FEHB -- even if you're not enrolled in FEHB -- you can choose to
participate in either, or both, of the flexible spending accounts. If
you are not eligible for FEHB, you are not eligible to enroll for a
Health Care FSA. However, almost all Federal employees are eligible to
enroll for the Dependent Care FSA. The only exception is intermittent
(also called when actually employed \[WAE\]) employees expected to work
less than 180 days during the year.

Note: FSAFEDS is the FSA Program established for all Executive Branch
employees and Legislative Branch employees whose employers signed on.
Under IRS law, FSAs are not available to annuitants. In addition, the
U.S. Postal Service and the Judicial Branch, among others, are Federal
agencies that have their own plans with slightly different rules, but
the advantages of having an FSA are the same no matter what agency you
work for.

• How much should I Plan carefully when deciding how much to contribute
to an FSA. Because of the tax ben-

contribute to my FSA? efits of an FSA, the IRS places strict guidelines
on them. You need to estimate how much

you want to allocate to an FSA because current IRS regulations require
you forfeit any funds remaining in your account(s) at the end of the FSA
plan year. This is referred to as the "use-it-or-lose-it" rule. You will
have until April 29, 2004 to submit claims for your eligible expenses
incurred during 2003 if you enrolled in FSAFEDS when it was initially
offered. You will have until April 30, 2005 to submit claims for your
eligible expenses incurred from January 1 through December 31, 2004 if
you elect FSAFEDS during this Open Season.

The FSAFEDS Calculator at www.fsafeds.com will help you plan your FSA
allocations and provide an estimate of your tax savings based on your
individual situation.

• What can my HCFSA Every FEHB health plan includes cost sharing
features, such as deductibles you must meet

pay for? before the Plan provides benefits, coinsurance or copayments
that you pay when you and

the Plan share costs, and medical services and supplies that are not
covered by the Plan and for which you must pay. These out-of-pocket
costs are summarized on page 58 and detailed throughout this brochure.
Your HCFSA will reimburse you for such costs when they are for tax
deductible medical care for you and your dependents that is NOT covered
by this FEHB Plan or any other coverage that you have.

The IRS governs expenses reimbursable by a HCFSA. See Publication 502
for a comprehensive list of tax-deductible medical expenses. Note: While
you will see insurance premiums listed in Publication 502, they are NOT
a reimbursable expense for FSA purposes. Publication 502 can be found on
the IRS Web site at http://www.irs.gov/pub/irs-pdf/p502.pdf. If you do
not see your service or expense listed in Publication 502, please call a
FSAFEDS Benefit Counselor at 1-877-FSAFEDS (1-877-372-3337), who will be
able to answer your specific questions.

• Tax savings with an FSA An FSA lets you allot money for eligible
expenses before your agency deducts taxes from your paycheck. This means
the amount of income that your taxes are based on will be lower, so your
tax liability will also be lower. Without an FSA, you would still pay
for these expenses, but you would do so using money remaining in your
paycheck after Federal (and often state and local) taxes are deducted.
The following chart illustrates a typical tax savings example:

Annual Tax Savings Example With FSA Without FSA

If your taxable income is: \$50,000. \$50,000.

And you deposit this amount into a FSA: \$ 2,000. \$0-

Your taxable income is now: \$48,000. \$50,000.

Subtract Federal & Social Security taxes: \$13,807. \$14,383.

If you spend after-tax dollars for expenses: -\$0- \$ 2,000.

Your real spendable income is: \$34,193. \$33,617.

Your tax savings: \$576. \$0-

Note: This example is intended to demonstrate a typical tax savings
based on 27% Federal and 7.65% FICA taxes. Actual savings will vary
based upon in which retirement system you are enrolled (CSRS or FERS),
as well as your individual tax situation. In this example, the
individual received \$2,000 in services for \$1,424, a discount of
almost 36%! You may also wish to consult a tax professional for more
information on the tax implications of an FSA.

• Tax credits and You cannot claim expenses on your Federal income tax
return if you receive reimburse-

deductions ment for them from your HCFSA or DCFSA. Below are some
guidelines that may help

you decide whether to participate in FSAFEDS.

Health care expenses The HCFSA is tax-free from the first dollar. In
addition, you may be reimbursed from the HCFSA at any time during the
year for expenses up to the annual amount you've elected to contribute.

Only health care expenses exceeding 7.5% of your adjusted gross income
are eligible to be deducted on your Federal income tax return. Using the
example listed in the above chart, only health care expenses exceeding
\$3,750 (7.5% of \$50,000) would be eligible to be deducted on your
Federal income tax return. In addition, money set aside through a HCFSA
is also exempt from FICA taxes. This exception is not available on your
Federal income tax return.

Dependent care expenses The DCFSA generally allows many families to save
more than they would with the Federal tax credit for dependent care
expenses. Note that you may only be reimbursed from the DCFSA up to your
current account balance. If you file a claim for more than your current
balance, it will be held until additional payroll allotments have been
added to your account.

Visit www.fsafeds.com and download the Dependent Care Tax Credit
Worksheet from the Quick Links box to help you determine what is best
for your situation. You may also wish to consult a tax professional for
more details.

• Does it cost me anything Probably not. While there is an
administrative fee of \$4.00 per month for an HCFSA and

to participate in FSAFEDS? 1.5% of the annual election for a DCFSA, most
agencies have elected to pay these fees

out of their share of employment tax savings. To be sure, check the
FSAFEDS.com web site or call 1-877-FSAFEDS (1-877-372-3337). Also,
remember that participating in FSAFEDS can cost you money if you don't
spend your entire account balance by the end of the plan year and wind
up forfeiting your end of year account balance, per the IRS
"use-it-or-lose-it" rule.

• Contact us To find out more or to enroll, please visit the FSAFEDS Web
site at www.fsafeds.com, or contact SHPS by email or by phone. SHPS
Benefit Counselors are available from 9:00 a.m. until 9:00 p.m. eastern
time, Monday through Friday.

• E-mail: fsafeds@shps.net

• Telephone: 1-877-FSAFEDS (1-877-372-3337)

• TTY: 1-800-952-0450 (for hearing impaired individuals that would like
to utilize a text messaging service)

The Federal Long Term Care Insurance Program

It's important protection Here's why you should consider enrolling in
the Federal Long Term Care Insurance Program:

• FEHB plans do not cover the cost of long term care. Also called
"custodial care," long term care is help you receive when you need
assistance performing activities of daily living -- such as bathing or
dressing yourself. This need can strike anyone at any age and the cost
of care can be substantial.

• The Federal Long Term Care Insurance Program can help protect you from
the potentially high cost of long term care. This coverage gives you
control over the type of care you receive and where you receive it. It
can also help you remain independent, so you won't have to worry about
being a burden to your loved ones.

• It's to your advantage to apply sooner rather than later. Long term
care insurance is something you must apply for, and pass a medical
screening (called underwriting) in order to be enrolled. Certain medical
conditions will prevent some people from being approved for coverage. By
applying while you're in good health, you could avoid the risk of having
a change in health disqualify you from obtaining coverage. Also, the
younger you are when you apply, the lower your premiums.

• You don't have to wait for an open season to apply. The Federal Long
Term Care Insurance Program accepts applications from eligible persons
at any time. You will have to complete a full underwriting application,
which asks a number of questions about your health. However, if you are
a new or newly eligible employee, you (and your spouse, if applicable)
have a limited opportunity to apply using the abbreviated underwriting
application, which asks fewer questions. If you marry, your new spouse
will also have a limited opportunity to apply using abbreviated
underwriting. Qualified relatives are also eligible to apply with full
underwriting.

To find out more and Call 1-800-LTC-FEDS (1-800-582-3337) (TTY
1-800-843-3557)

to request an application or visit www.ltcfeds.com.

Index

Do not rely on this page; it is for your convenience and may not show
all pages where the terms appear.

Accidental injury 37

Allergy tests 19

Alternative treatment 24

Allogenetic (donor) bone

marrow transplant 27

Ambulance 29,31

Anesthesia 27

Autologous bone marrow transplant 27

Biopsies 25

Blood and blood plasma 28

Breast cancer screening 16

Casts 28

Catastrophic protection 13

Changes for 2004 9

Chemotherapy 20

Childbirth 18

Chiropractic 23

Cholesterol tests 16

Claims 40

Coinsurance 13,40,46,48

Colorectal cancer screening 16

Congenital anomalies 25

Contraceptive devices and drugs 18

Coordination of benefits 43

Covered charges 13

Covered providers 10

Crutches 23

Deductible 7,13,38,40

Definitions 48

Dental care 37

Diagnostic services 15,16

Disputed claims review 41

Donor expenses (transplants) 27

Dressings 28

Durable medical equipment (DME) 23

Educational classes and programs 24

Effective date of enrollment 10

Emergency 30,31

Experimental or investigational 39

Eyeglasses 21

Family planning 18

Fecal occult blood test 16

Fraud 4

General Exclusions 39

Hearing services 21

Home health services 23

Hospice care 29

Hospital 11

Immunizations 17

Infertility 19

Inpatient Hospital Benefits 28

Insulin 23,35

Laboratory and pathological services 16

Machine diagnostic tests 16

Magnetic Resonance Imagings (MRIs) 16

Mail Order Prescription Drugs 34,35

Mammograms 16

Maternity Benefits 18

Medicaid 47

Medically necessary 49

Medicare 38,40,43,44,45,46

Mental Conditions/Substance Abuse

Benefits 32,33

Neurological testing 16

Newborn care 17,18

Non-FEHB Benefits 38

Nurse

• Licensed Practical Nurse 23

• Nurse Anesthetist 28

• Registered Nurse 23

Nursery charges 18

Obstetrical care 18

Occupational therapy 20

Ocular injury 21

Office visits 4,13

Oral and maxillofacial surgery 26

Orthopedic devices 22

Out-of-pocket expenses 13,38,43,53

Outpatient facility care 29

Oxygen 23

Pap test 16

Physical examination 15

Physical therapy 20

Physician 15

Preventive care, adult 7,16

Preventive care, children 17

Prescription drugs 34,35

Preventive services 16,17

Prior approval 12

Prostate cancer screening 16

Prosthetic devices 22

Psychologist 32

Psychotherapy 32

Radiation therapy 20

Renal dialysis 43,45

Room and board 28

Second surgical opinion 15

Skilled nursing facility care 29

Smoking cessation 24

Speech therapy 20

Splints 28

Sterilization procedures 18

Subrogation 47

Substance abuse 32

Surgery 25

• Anesthesia 27

• Oral 26

• Outpatient 29

• Reconstructive 26

Syringes 35

Temporary continuation of coverage..51,52

Transplants 20,27

Treatment therapies 20

Vision services 21

Well child care 17

Wheelchairs 23

Workers' compensation 47

X-rays 16

Summary of benefits for the Health Insurance Plan (HIP/HMO) 2004

• Do not rely on this chart alone. All benefits are provided in full
unless indicated and are subject to the definitions, limitations, and
exclusions in this brochure. On this page we summarize specific expenses
we cover; for more detail, look inside.

• If you want to enroll or change your enrollment in this Plan, be sure
to put the correct enrollment code from the cover on your enrollment
form.

• We only cover services provided or arranged by Plan physicians, except
in emergencies.

High Option Standard Option Page

Benefits You Pay You Pay \#

• Medical services provided by physicians: Office visit copay: \$10
primary care or \$10 specialist Office visit copay: \$10 primary care or
\$20 specialist 15

• Diagnostic and treatment services provided in the office

• Inpatient hospital visits or consultations

Services provided by a hospital: 28

• Inpatient Nothing \$500 per admission

• Outpatient Nothing Nothing

Emergency benefits: 30

• In-area \$50 per visit \$50 per visit

• Out-of-area \$50 per visit \$50 per visit

Mental health and substance abuse treatment Regular cost Sharing Regular
cost Sharing 32

Prescription drugs

Up to 30 day supply from a participating retail pharmacy After \$100
deductible 34

\$10 per generic

formulary; \$15 per brand name formulary; \$40 non-formulary \$10 per
generic formulary; \$20 per brand name formulary; \$40 non-formulary

Up to a 90 day supply of maintenance drugs by mail-order \$15 generic
formulary; \$22.50 brand name formulary

\$15 generic formulary; \$30 brand name formulary

Dental Care (Accidental Injury Only) Nothing Nothing 37

Vision Care \$10 copay per visit. \$20 copay per visit. 21

One annual eye refraction

Special features: Service for deaf and hearing impaired, Medical Case
Management Programs, 36

Travel benefit/services overseas

Protection against catastrophic costs Stated copays 13

(your catastrophic protection out-of-pocket maximum)

2004 Rate Information for

HIP Health Plan of New York

Non-Postal rates apply to most non-Postal enrollees. If you are in a
special enrollment category, refer to the FEHB Guide for that category
or contact the agency that maintains your health benefits enrollment.

Postal rates apply to career Postal Service employees. Most employees
should refer to the FEHB Guide for United States Postal Service
Employees, RI 70-2. Different postal rates apply and a special FEHB
guide is published for Postal Service Inspectors and Office of Inspector
General (OIG) employees (see RI 70-2IN).

Postal rates do not apply to non-career postal employees, postal
retirees, or associate members of any postal employee organization who
are not career postal employees. Refer to the applicable FEHB Guide.

Non-Postal Premium Postal Premium

Biweekly Monthly Biweekly

Type of Gov't Your Gov't Your USPS Your

Enrollment Code Share Share Share Share Share Share

Greater New York City Area

High Option

Self Only 511 \$109.57 \$ 36.52 \$237.40 \$ 79.13 \$129.65 \$ 16.44

High Option

Self & Family 512 \$277.09 \$131.94 \$600.36 \$285.87 \$327.12 \$ 81.91

Standard Option

Self Only 514 \$ 87.72 \$ 29.24 \$190.06 \$ 65.35 \$103.80 \$ 13.16

Standard Option

Self & Family 515 \$245.61 \$ 81.87 \$532.16 \$177.38 \$290.64 \$ 36.84