A Covered Person whose Coverage ends under the Plan may be entitled to elect continuation of Coverage in accordance with this Section.

PART ONE - CONTINUATION OF BENEFITS REQUIRED UNDER FEDERAL LAW (COBRA)

A.

Qualifying Events

If your Coverage ends under this group medical Plan, you may be entitled to elect continuation of Coverage under this Plan. Coverage for your Dependents may also be continued if they are already covered under this Plan.

The Coverage continued must be the same as the Coverage you had at the time your Coverage would have ended. You may change your coverage, add or delete Dependents during the annual enrollment period or if you have a change in family status, as described in SECTION 2 - ENROLLMENT.

The Covered Person must elect continuation during the election period. If you qualify and choose to continue Coverage, a premium payment will be required. This payment will not exceed 102% of the group rate.

To receive the option to continue Coverage, your Coverage must have ended for one of the following reasons: (These reasons are known as qualifying events.)

1.

End of employment with UCAR for any reason. (This includes retirement and quitting employment on a voluntary basis.)

2.

Reduction of hours.

3.

Change to an ineligible class.

4.

Death of the Participant.

5.

Divorce or legal separation from the Participant.

6.

Loss of Dependent status for a Participant's child.

7.

Participant takes an unpaid leave of absence (other than a family or medical leave under the Family and Medical Leave Act).

B.

Notification Requirements and Election Period

The Participant or the Covered Dependent must notify UCAR's Human Resources Department within 60 days when divorce, legal separation, or loss of Dependent status for a Participant's child would end Coverage for a Covered Dependent.

Upon receiving such notification, the Human Resources Department will notify the Covered Person of the right to elect continuation of coverage within 14 days.

For any qualifying event, other than divorce, legal separation or loss of Dependent status, UCAR will notify the Covered Person of the right to elect continuation within 14 days of such qualifying event.

The individual must elect continuation by the later of:

1.

Sixty days after Coverage ends; or

2.

Sixty days after receiving notification of continuation rights from the Human Resources Department.

If the individual does not complete an election form within this time, he/she will be deemed to have declined COBRA coverage.

C.

Premium Payment

To continue Coverage, the individual must pay the full premium for the Plan, plus an additional 2% as allowed under COBRA to cover administrative expenses. Any premiums due for the month in which Coverage is elected and for the period since Coverage would have ended must be paid within 45 days of the date the election to continue Coverage is made. Premiums are due each month thereafter.

D.

End of Continuation

Continuation under the Plan will end on the earliest of the following dates:

1.

Eighteen (18) months from the date of the qualifying event for Covered Persons and eligible Dependents whose Coverage ended because of a reduction of hours, end of employment, or change to an ineligible class.

2.

Twenty-nine (29) months from the date of the qualifying event for Covered Persons who are disabled according to Social Security regulations at the time of termination of employment or reduction in hours.

3.

Thirty-six (36) months from the date of the qualifying event for Covered Persons whose Coverage ended because of:

The death of the Participant,

Loss of Dependent status for a Participant's child,

Divorce or legal separation from the Participant, or

4.

The end of the period for which a premium is paid, if the Covered Person fails to make a premium payment on the date specified by UCAR, or within 31 days after the date that the premium payment is due.

5.

The date the Covered Person becomes covered under any other group medical Plan. However, if the Covered Person becomes covered under another group medical Plan with pre-existing condition limitations that apply to that person, Coverage may continue under this Plan. Coverage will continue as long as the pre-existing condition limitations apply to the Covered Person under the other group medical Plan, as long as the Covered Person continues to pay the required premium; or

6.

The date the group medical Plan ends.

If a second qualifying event occurs and a second qualifying event occurs for a continuing Dependent before the end of 18 months of continuation, the Dependent may continue for the balance of 36 months, or, if sooner, until the earliest of points 3 through 6, as detailed above. Second qualifying events include death of the Participant, loss of dependent status of a Participant child, entitlement of the Participant to Medicare, and divorce or legal separation from the Participant.

If you acquire a new dependent through birth of a child or placement for adoption while you are covered under COBRA, the new dependent is eligible for COBRA coverage.

E.

Extended Coverage Period for Disabled Persons

COBRA coverage can be extended from 18 to 29 months for individuals who are disabled according to Social Security regulations at the time of termination or reduction in hours or within 60 days of coverage under COBRA. Coverage is extended to 29 months for the disabled individual and qualified family members. To be eligible for the additional 11 months of coverage, The Participant or Covered Dependent must notify UCAR of the disability within 60 days of receiving approval from Social Security for disability benefits, but before the 18-month period expires. The premium for the additional 11 months will be 150% of the full premium in effect at that time.

F.

Retirees

Retirees, as defined in SECTION 1 - ELIGIBILITY REQUIREMENTS may continue health insurance coverage. Surviving spouses of deceased retired UCAR employees are also eligible if the spouse was participating in the Plan at the time of the retiree's death. Retirees are responsible for paying the appropriate premium to the UCAR Human Resources Department in order for the coverage to be in effect and for claims to be paid.

PART TWO - CONVERSION

A.

In-Area Conversion

If a Covered Person remains in a Kaiser Permanente Service Area, he/she may make an application to Kaiser Permanente for medical Coverage to continue under a conversion plan if:

a Participant chooses not to elect COBRA; or

a Participant's COBRA Coverage ends.

Application and payment of the initial premium must be made within 31 days after termination of Coverage under the Plan. A medical conversion plan shall be issued in accordance with the terms and conditions in effect when you submit your application.

B.

Out-of-Area Conversion

Kaiser Permanente does not require a Covered Person who moves outside the Kaiser Permanente region to terminate Coverage. However, such persons are encouraged to transfer their medical Coverage to an alternate health plan that covers a full range of medical services. If such persons elect to continue their Kaiser Permanente membership, they will only be covered for initial Emergency care received while outside the Service Area.

Application to convert membership effective on the date of termination must be received at Kaiser Permanente within 31 days after termination of Coverage under this Plan.

January 2004