Borgess Health 2014 Nonunion Benefit Update

1. Borgess Health2014 NonunionBenefit Update Pete Krueger Administrative Director HR Operations Al Hoffman Compensation and Benefits Manager

2. BH 2014 Benefit Update Today’s Agenda • Review of current dynamics • Paid Time Off • Retirement Programs • Healthcare Benefits • Questions

3. BH 2014 Benefit Update Our Reality Includes the Following Dynamics • Reductions in reimbursement • Increases in • Charity Care • Bad Debt • Affordable Care Act • Deployment of Symphony

4. BH 2014 Benefit Update These Dynamics Have Significant Impact • Affordable Care Act • New fees, taxes, and charges • New payment systems will be established with the goal to directly tie reimbursement to performance – ie HCAHPS/value based purchasing • Borgess will experience a significant reduction in Medicare payments • Conservative estimates indicate a $50 million reduction between FY 2013 and FY 2017

5. BH 2014 Benefit Update These Dynamics Have Significant Impact • Symphony Deployment • Standardize/Align Human Resources, Finance, and Supply Chain programs and services throughout Ascension Health provide significant opportunities for financial improvement through reduced costs or gains in efficiencies. • This process will in some cases require Borgess associates to change the way we work and follow a different set of policies/programs.

6. BH 2014 Benefit Update What does this all mean? • Borgess will continually have pressure to do more with less financial resources • Borgess must be more efficient in all that it does • Borgess must, where it can, leverage its relationship within Ascension to use buying power and market share to reduce its cost of operations • Borgess must ask all of its associates to continue to work together as a team to meet current and future challenges

7. BH 2014 Benefit Update And What Does This Mean for Benefit Programs • Symphony standardization/alignment of programs/policies will have positive financial implications, but will require associates to demonstrate additional flexibility • Associates need to be sure they understand benefit program changes and ask questions • Associates need to make educated choices regarding healthcare benefits, develop health habits, and be wise consumers.

8. BH 2014 Benefit Update Paid Time Off • Certain aspects of current PTO programs will change as of January 2014 • (Impact will vary to some BH companies) PTO Hours will be earned based on hours worked • Currently for BH Associates • Every pay period a PTO accrual is added to your PTO bank based on your status and years of service • As of January 1st • Associates will still accrue PTO every pay period but the accrual will be based on hours worked and years of service

9. BH 2014 Benefit Update Paid Time Off • Impact of accruing PTO based on Hours Worked • Associates with a status of less than fulltime will be recognized for working additional hours • PTO accruals will be applied to hours worked up to a maximum of 80 hours per pay period • The following hours will be considered hours worked for purposes of PTO accrual • Regular paid hours of work • Low need time • Paid PTO hours • Jury duty • Bereavement leave • Military leave • (Premium hours, such as call pay, stand by pay, etc. are excluded)

10. Paid Time Off • PTO accrual rates will be adjusted to account for the two additional holidays; and the number of holidays will increase from 6 recognized holidays to 8 • The intent is to designate the following days will be the new Borgess holidays: • New Year’s Day • President’s Day • Good Friday • Memorial Day • Independence Day • Labor Day • Thanksgiving • Christmas BH 2014 Benefit Update Where applicable, Holiday time will be separated from PTO accruals and as January 2014 – 2 different banks; Borgess Health will recognize 8 holidays

11. BH 2014 Benefit Update Paid Time Off • Impact of Revised Holiday Policy • As of 1/1/14 (example) • 1.0 FTE (40 hrs/wk) • receives 8 hours per holiday • .8 FTE (32 hrs/wk) • receives 6.4 hours per holiday • .6 FTE (24 hrs/wk) • receives 4.8 hours per holiday • Currently • FT receive 6 holidays • RPT/PT varies, but generally receive 3 holidays

12. BH 2014 Benefit Update Paid Time Off • Andrew Associate works 24 hours/week. He is fortunate that he is not scheduled to work any holiday in 2014. Prior to the new PTO policy, Andrew would have received 24 hours for holiday pay. However, in 2014 he will receive • New Year’s Day 4.8 hours • President’s Day 4.8 hours • Good Friday 4.8 hours • Memorial Day 4.8 hours • Independence Day 4.8 hours • Labor Day 4.8 hours • Thanksgiving 4.8 hours • Christmas 4.8 hours • Total = 38.4 Hours of holiday time

13. BH 2014 Benefit Update Paid Time Off • Impact of Revised Holiday Policy • What happens if I am scheduled to work a holiday? • Associates will not receive holiday pay up to their standard hours; • Instead, associates will have 90 days to utilize the hours for a given holiday • Any holiday time not utilized after this 90 day period will be lost • If the rescheduled holiday hours are cancelled at the supervisor’s request or utilizing the time causes the associate to work over their standard hours – the hours will be paid the first pay period following the 90 day window.

14. BH 2014 Benefit Update Paid Time Off • Holiday Example • Emily works July 4, 2014, she receives time and half for hours worked but not her holiday pay as she worked her standard hours • In order to receive her holiday, she needs to schedule an additional day off between July 4th and October 4th • If Emily doesn’t schedule that additional day, she will lose that holiday pay • If Emily’s supervisor can’t grant the time off for this day, Emily will automatically receive her holiday after the 90 day window expires

15. BH 2014 Benefit Update Paid Time Off • Other PTO Policy Revisions • Standard PTO maximum – 320 hours • PTO Sell • PTO sell options : 80 hours per year • A minimum of 80 hours must be retained within your PTO bank • Sells allowed twice per year (at a time of their choosing) – cash out will be at 90% of your base hourly rate • Revised PTO policy will be made available to associates prior to January 2014

16. BH 2014 Benefit Update Retirement Program - BLMH Transition to New Retirement Program • As of January 1, 2014, any accrued benefit under the defined benefit/pension program will be frozen • This benefit will be available to you under the normal provisions for a retiree under the Ascension Health Retirement/Pension program • After January 1, 2014, eligible associates will continue to receive a retirement benefit but will receive the benefit under a new Defined Contribution Retirement program

17. BH 2014 Benefit Update Retirement Program - BLMH Additional Clarification • Defined benefit retirement program • Promises a specific monthly benefit based on years of service and employee earnings • Defined contribution retirement program • Both the employer and employee contribute dollars into a retirement account whereby interest can be earned

18. BH 2014 Benefit Update Retirement Program-BLMH Comparison of Retirement Programs • Retirement Program as of 1/1/14 • Eligible to receive an Employer Automatic contribution (EAC) based on years of service: • 2% ------less than 5 years • 2.5% ----5 to 10 years • 3.0%---- 3.0% greater than 10 years and less than 15 years • 3.5%----greater than 15 years of service • Eligible for a 50% match to their 403(b) plan up to the first 5% that is deferred • Employer Match effective 1/1/14 – no waiting period for newhires • 5 year vesting for EAC • 3 year vesting for Employer Match • Retirement Program Through 12/31/13 • Eligible associate retirement benefit under the deferred benefit retirement will be frozen

19. BH 2014 Benefit Update Retirement Program – BLMH • Additional informational sessions will be scheduled and provided by Kris Hapke Borgess’ Transamerica Retirement Solutions Representative

20. BH 2014 Benefit Update Healthcare Benefits General Considerations • Borgess health benefits programs are a central component of your total rewards structure • Borgess health benefits compromise approximately between 30% to 40% of the average Borgess associate’s total compensation • Health and wellness benefits are an important part of Borgess’ ability to attract and retain associates • Healthcare expenses continue to trend higher • Most employers are sharing more of the cost of benefits with their associates

21. BH 2014 Benefit Update Healthcare Benefits Strategies to Impact Borgess Benefit Cost • Adjust associate benefit premiums • Revise plan designs • Encourage associates to be wise healthcare consumers – make the utilization of Tier 1 networks/providers a priority • Associates participate in Wellness programs and make a commitment to a healthy lifestyle • Leverage Ascension Health’s size to provide benefit programs at reduced cost • Borgess Health will utilize a more market competitive plan design

22. BH 2014 Benefit Update Healthcare Benefits SmartHealth Plan Design Changes as of January 1, 2014 • Deductible and Co-Insurance will be utilized for all benefit Tiers • Deductible: • The amount you have to pay out-of-pocket for expenses before the insurance company will cover the remaining costs • Co-Insurance • A co-sharing agreement between the insured and the insurer under a health insurance policy which provides that the insured will cover a set percentage of the covered costs after the deductible has been paid. • Copays • A fixed payment where the insured pays a specified amount of out-of-pocket expenses for health-care services such as doctor visits and prescriptions drugs at the time the service is rendered, with the insurer paying the remaining costs. Co-pays do not count towards and individual’s annual out of pocket maximum

23. 2014 Plan Design Feature Domestic/ Tier 1 In-Network/Tier2 Non-Network/Tier 3 Deductible $200 / $400 $600 / $1,200 $3,000 / $6,000 Coinsurance 90% / 10% 75% / 25% 50% / 50% Out-of-Pocket Maximum $1,400 / $2,800 $3,400 / $6,800 $6,000 / $12,000 $15 copay + $25 copay + Deductible + Office Visit - PCP Deductible Deductible Coinsurance $25 copay + $35 copay + Deductible + Office Visit - Spec Deductible Deductible Coinsurance $40 copay + $50 copay + Deductible + Urgent Care Deductible Deductible Coinsurance Hospital Inpatient Subject to Deductible / Coinsurance Hospital Outpatient Emergency Room $150 Deductible + Preventive Care 100% Coinsurance $7 / $15 /$30 In-house Rx N/A Covered up to 3x per year at in-house copays Retail Rx HRA Opportunity Wellness Program BH 2014 Benefit Update Healthcare Benefits 2014 SmartHealth Plan Design

24. BH 2014 Benefit Update Healthcare Benefits Example • Physician Office Visits • Currently when you see your Borgess primary care provider you pay an office co-pay of $15 • Beginning in January, your office co-pay will remain the same, however you will have to satisfy a deductible as well • January 15th, you go to your Primary Care Provider (PCP), due to the flu and this is your 1st medical visit for the year. The total office visit expense is $100. Your patient responsibility for this visit will be as follows: • Copay ----------$15 • Deductible-----$85

25. BH 2014 Benefit Update Healthcare Benefits Associate SmartHealth Premiums • On average, Borgess Health associate premiums represent approximately 22.5% of medical/Rx benefit costs • Survey data indicates that a majority of employers share costs with associates at a rate of 25% or higher • As of January 1, 2014, SmartHealth benefit premiums will be targeted at a 25% contribution rate

26. Healthcare Benefits 2014 Rates BH 2014 Benefit Update

27. BH 2014 Benefit Update Healthcare Benefits 2014 Additional Benefit Changes • Dental • Vision • Basic Life • Family AD & D Coverage • Network Exclusions • Short Term Disability Rates • Benefit Term Date • Additional Dependent Coverage • HRA-Wellness Program

28. BH 2014 Benefit Update Healthcare Benefits 2014 Dental Changes • 3 Dental Plans for 2014 • Dental Comprehensive Plus (Formally known as the High Dental Plan) • No Plan Design Changes • Dental Comprehensive (Formally known as the Standard Dental Plan) • Deductible is reduced from $100 per participant to $25 Individual / $75 Family • Dental Basic (New Plan Offering for 2014) • 100% Preventive • 50% Basic (No Major Coverage) • No Major services covered • $500 Annual Max

29. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Healthcare Benefits 2014 Vision Changes • New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames or contact lenses • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year

30. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Healthcare Benefits 2014 Other Plan Changes • Basic Life & AD&D Coverage • Current Plan allows up to 1.5 times coverage of your annual salary • New Plan allows up to 2 times coverage of your annual salary • Voluntary Associate & Family AD&D plan • A supplemental plan that you can purchase Accidental Death and Dismemberment Coverage for you and your family. Coverage levels available are 1 – 10 times your annual salary

31. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Healthcare Benefits 2014 Other Plan Changes • Network Exclusions • All current network exclusions for 2014 have been eliminated (Bronson, Spectrum, Lakeland & Metro) • Services at these entities will be covered at Tier 2 • OB High Risk and Inpatient Peds will continued to be covered at Tier 1 at any Blue Cross/Blue Shield provider • Short Term Disability • Borgess will continue to subsidize a large portion of this benefit • Associates premiums will be based upon their age and income

32. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Healthcare Benefits 2014 Other Plan Changes • Termination of Benefits • Currently benefits term at midnight on your last day of employment • Benefits will now terminate on the last day of the month that contains your termination date • Dependent Children benefit coverage terms on their 26th birthday • Dependent Coverage • Borgess will be expanding its definition of dependents and will now cover any child with respect to whom the Eligible Associate has been granted court appointed full legal (both managing and possessory conservatory) custody or guardianship

33. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Healthcare Benefits 2014 Other Plan Changes • Health Reimbursement Account (HRA) • This is an account that reimburses associates for their out of pocket medical expenses • This account is “Employer Funded” • Funds from this account can be rolled over for up to 3 years • Account works very similar to a Flexible Spending Account (FSA) • Funds are tax free

34. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Healthcare Benefits 2014 Other Plan Changes • HRA Opportunities for 2014 • Must be enrolled in SmartHealth to participate • $600 in total rewards will be available to associates • $350 for completion of an HRA (Health Risk Appraisal); HRQ (Health Risk Questionnaire) and a follow up documented visit with your PCP (Primary Care Provider) • - These funds will be made available in your account with-in 2 weeks after completion of these activities • $250 for activities related to fitness and other related wellness activities. These funds will be made available at the end of the calendar year.

35. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Healthcare Benefits 2013 Wellness Awards • The distribution of the 2013 Wellness awards will change slightly, when they are awarded in January 2014 • If the associate earned a Level 5 award, the prize selection that will be available for the participant is as follows: • $325 Cash (taxable) • 1 Year Fitness Center Membership • Premium offset (January thru August) • - Example – If you earn $500, you will receive $29.41 a pay period for 17 pay periods to off set your premiums. This program will have to stop prior to 9/1, as this will not be supported by Symphony.

36. New Vision Provider • VSP a national vision provider that provides vision care to over 59 • million participants • Well Vision Exam • Focuses on your eyes and overall wellness • Every calendar year. $10 Co-Pay • Frames • $130 allowance for a wide selection of frames • 20% off amount over your allowance • Every calendar year • Lenses • Single vision, lined bifocal, and lined trifocal lenses • Polycarbonate lenses for dependent children • Every calendar year BH 2014 Benefit Update Next Steps • Benefit Enrollment Packets will be mailed October 4th • Detailed Information will be available and posted on the HR Intranet site (www.hr.borgess.com) • Benefit Q&A drop in sessions will be made available the weeks of October 7th and 14th (specific times and locations will be posted on the HR intranet site)