2015 Health care options

1. 2015 Health care options Introduction to Healthy Savings Plan Options

2. Agenda • Health care plan options for 2015 • Basics • How they work • Medical savings accounts • Introduction to ConnectYourCare • Open enrollment • Questions

3. Action required for open enrollment • For coverage you must go to the web and enroll • If you don’t enroll, your medical/prescription & dental/vision will be waived

4. Abbreviations

5. 2015 Health Care Plan Options Traditional Plan Option Healthy Savings Plan Option 1 (Funded) Healthy Savings Plan Option 2 (Unfunded)

6. Know your cost 63% Hormel Foods employees and family spend less than $1,000 out-of-pocket annually!

7. 2015 Health Care Plan Options • Traditional Plan Option • This plan is the previous low deductible offering. With this plan you may enroll in the health care flexible spending account (FSA). • Advantages include: Meet your deductible sooner Tax advantages with the FSA.

8. 2015 Health Care Plan Options • Healthy Savings Plan Options 1 & 2 High-deductible health plans (HDHP) Health savings account (HSA) Limited purpose flexible spending account (LPFSA) Advantages include: Lower contributions Tax advantages More control over your health care costs Opportunity to save money Company contribution to Option 1 to help offset deductible

9. Why offer a HDHP & HSA • Why is Hormel Foods offering this • Help save for health care in retirement • Flexibility and choice on how your money is spent • HSA funds are yours to keep and move with you • Use for current or future expenses • Lower weekly contributions • HSA tax-free opportunity

10. HDHP Deductible difference Under a HDHP, prescription drugs must be subject to the same deductible and out-of-pocket maximum as medical services. Some preventive drugs, such as birth control and prescribed prenatal vitamins, are not subject to the deductible. Family coverage – employee and dependents must meet the combined family deductible before coinsurance applies.

11. Agenda • Health care plan options for 2015 • Basics • How they work • Medical savings accounts • Introduction to ConnectYourCare • Open enrollment • Questions

12. Preventive Care HDHP and Traditional All in-network preventive care is 100 % covered and no deductible or coinsurance is required.

13. How the Traditional Plan Option works

14. How a HDHP plan works

15. In-Network Plan Comparison

16. Pre-Tax Contribution Options

17. Meet Ben • Single (Tier 1) • Light health care user. • Annual preventive exam • Fills several prescriptions for seasonal allergies. Ben’s expenses for the year are shown in the table to the right. These prices reflect negotiated in-network pricing through the BCBS provider network.

18. Meet Ben (continued)

19. Meet Ben (continued)

20. Meet Carla • Married to Matt • 3 children (one a recent baby) • Family coverage (Tier I) • Birth during the year. • 2 older children had minor illnesses throughout the year and incurred office visits (two each) and prescription costs. • Matt went to the emergency room once during the year. Carla’s expenses for the year are shown in the table to the right. These prices reflect negotiated in-network pricing through the BCBS provider network.

21. Meet Carla (continued)

22. Meet Carla (continued)

23. Agenda • Health care plan options for 2015 • Basics • How they work • Medical savings accounts • Introduction to ConnectYourCare • Open enrollment • Questions

24. 2015 Plan options

25. HSA Overview Advantages Savings vehicle for medical expenses • Triple tax savings • Interest / Investments • Flexible • Multiple uses • Easy Access • Yours to keep • Save for retirement • Change contribution anytime A 401K for health care

26. HSA Eligibility Cannot contribute to HSA if: • Any Veteran’s Administration health benefits in the last 3 months • Claimed as a dependent on someone else’s 2014 tax return • Health Reimbursement Arrangement (HRA) • Non qualified HDHP • Flexible Spending Account (FSA) • Enrolled in Medicare

27. Your HSA is a triple tax-free account. Health Savings Accounts (HSAs) can help you shoulder rising out-of-pocket medical costs.

28. Taxes + = = + You will not owe taxes or penalties on any HSA distributions (money you used) for qualified medical expenses. If you used HSA funds for non-qualified medical expenses, you must pay income tax and may have to also pay an additional 20% tax on those distributions.

29. IRS Limits • IRS Maximum limits for 2015 are • $3,350 for individual coverage and • $6,650 for family coverage. • Include both employer and employee contributions. • $1,000 catch-up contributions option for employees age 55 and older.

30. Savings with a FSA & HSA These expenses can be paid with tax-free dollars and save you up to 30%, depending on your tax bracket.

31. Savings that really add up Say you contribute $3,000 to your HSA each year until retirement. Assuming you use $1,500 a year for medical expenses, earn 8% a year in interest and investments, and reinvest all earnings, your savings can really add up.

32. HSA have 2 types of users Spenders Savers Contribute the maximum amount they can afford but pay for qualified expenses out of pocket Use the HSA as an additional retirement savings vehicle Maintain a tax shelter Building a health care nest egg • Contribute the amount they plan to use in a given year • Budget and save on OOP cost • Company contributions can help meet deductible • Direct premium savings to HSA • Don’t skip preventive care – its free

33. Limited Purpose FSA • What does Limited Purpose mean? Only dental and vision expenses - $2,500 per year - Able to pair with HSA to save more money - Tax advantage

34. Weekly contributions < $75,000 Based one employee earnings… Wellness program deductions are in addition to the contributions listed above.

35. Weekly contributions $75,000 - $149,999

36. Weekly contributions >$150,000

37. Plan Comparison Tool CYC / Pivot Website Be Prepared and Know Your Medical Spending • Average annual total medical cost (Remember to exclude preventive) • Average annual Rx cost • Average annual dental/vision costs • Future planned expenses (pregnancy, surgery, etc…) • Available online in September 2014 • Each 2015 plan feature will be pre-loaded into the tool • You will need to input your estimated costs • You will be notified when the tool is available

38. Know your medical spending Determine your typical annual medical expenses:1) Go to the BCBS website 2) Login/register for your account 3) Search by: • PAST claims: • Date • Cost • EOB (explanation of benefits) • FUTURE costs • “Find a Doctor” tool - compare costs and quality of 300+ procedures.

39. Know your prescription spending Determine your typical prescription expenses:1) Go to the PRIME website 2) Login/register for your account 3) Search by: • PAST claims: • Date – click on medicine for details • FUTURE costs • “Find Medicine” tool - compare costs and pharmacies.

40. Agenda • Health care plan options for 2015 • Basics • How they work • Medical savings accounts • Introduction to ConnectYourCare • Open enrollment • Questions

41. Why ConnectYourCare? Connect • Offers HSA, FSA, LPFSA, DCFSA • Online Claims Submission & Processing Your • 24x7 Customer Service • Health Care Payment card Care • Direct Deposit Reimbursement • HSA On-Demand

42. HSA On Demand HSA On Demand allows you access to your full annual election amount. Access is available on the first day of your eligibility.

43. CYC – Health Care Payment Card

44. CYC Mobile –Access on the go • View : Account balances Transaction history Claims details FAQs • Receive Important account alerts • Take a photo of your receipt and upload it directly to the system • Submit a new claim • Available for Android, iPhone and Windows Phones

45. HSA Interest Earnings HSA Bank provides • Competitive interest rates Credited each month based on account balance • Daily Balance Interest Rate APY • $25,000 or more 1.49% 1.50% • $15,000.00 - $24,999.99 1.49% 1.50% • $10,000.00 - $14,999.99 1.49% 1.50% • $5,000.00 - $9,999.99 0.25% 0.25% • $2,500.00 - $4,999.99 0.15% 0.15% • Less Than $2,500 0.10% 0.10% • Investment options TD Ameritrade Brokerage Option DEVENIR Mutual Fund Selection Option

46. CYC – File cabinet Claims can be “filed away” Funds allowed to be used today or be saved for future expenses HSA owned by you and 100% vested from day one HSA goes with you if you change jobs or health plans. HSA use for retirement health care expenses and post 65 Medicare premiums

47. CYC - FSA • If you have a FSA, you can pay for medical, prescription, dental, or vision expenses. • Minimum of $52 • Maximum of $2,500 • CYC will be the provider as of 1/1/2015

48. FSA & LPFSA- Rollover Balances up to $500 will rollover each year as long as the employee elects the coverage for the following year. In 2015 the balances that are $500 or less from 2014 will be added to the accounts on March 31, 2015.

49. CYC - Dependent Care FSA • Pre-tax money for eligible dependent day care expenses so you and /or your spouse can work, look for work, or attend school full-time. - Child care for under age 13 at a day camp, nursery school or private sitter - Before and after school care - Care of an incapacitated adult • $52 -$5,000 per year • Funds must be in the account to be reimbursed • CYC will be the provider as of 1/1/2015

50. Where do I go for more information? www.connectyourcare.com/hormel Pivot > HR/Benefits>Employee Benefits