Benefits Administration Update

1. Benefits Administration Update HR & Benefits Symposium Charlottesville, VA May 3, 2010

2. Topics • Possible Medical Plan changes for 2011 • Employee Assistance Program (EAP) • Delta Dental update • Life Insurance • Short Term Disability • Long Term Care • Tips for ambulance and air transport • Employee self service on-line enrollment

3. Topics - continued • Anthem update • FSA updates • VBA Retirement Plan options

4. Medical Plan Changes • Not looking to make very many for 2011 • But – want to price out these options: • Move HMO to 25, but make it Open Access • Imbedded family deductible for HDHP $3,000 • Increase tier 3 Rx co-insurance to max $150

5. Medical Plan Changes • Other things from healthcare reform legislation • Allow dependent coverage to age 26 • Participants need 60 day notice of material changes (change in services and co-pays or co-insurance) • Remove annual benefit limits as needed • Remove HMO co-pays for preventive care

6. Up in the Air & Other • W-2s for 2011 (Jan. 2012) will need to show the cost of coverage • Auto enroll in medical for groups > 200 • Effective date unclear • No guidance from HHS yet on CLASS act, small business tax credit, or retiree claims reimbursement for large claims

7. Other Medical Updates • Our total membership (employees plus their dependent) = 13,657 (5,820 deps) • 48% of membership is over 40 and drive 67% of expenses • Rx is 21.7% of our total medical cost • Our cancer screens are below goals for mammography, pap, PSA, and colon • 4 premature deliveries cost $641,127

8. On-Going Focus • Banking on Wellness – we gave back over $21,000 again in 2009 in incentives • Future Moms (none of the 4 preemies went through Future Moms) • Know your numbers • Get your preventive screenings done • Anything else you can do to help keep costs down

9. EAP Update 800-346-5484 • 5.87% use of the EAP in 2009 – more than 2008 • Slightly less than norm for single large employer our size • 78% of contact made by females • Top 4 topics – emotional, marital/couple, family/child issues, and legal • 14 Critical Incidence Stress debriefings

10. EAP Update - continued • Many resources available at www.AnthemEAP.com password VBA • Your COBRA and retired employees can access the EAP, too

11. Delta Dental Update

12. Life Insurance and Short Term Disability Plans Update

13. Life Insurance • Evaluation of entire program • Review of carrier options • Considerations: • Cost • Rate guarantees • Funding methods • Coverage options

14. Life Insurance • Coverage options • Higher amounts for Supplemental • Higher amounts for Dependent • Separating Spouse from Child • Higher Guaranteed Issue • Better Portability

15. Short Term Disability • Why Short Term Disability? • “Every Long Term Disability claim starts out as a Short Term Disability…” • Disability Claims Management • Fully Insured • Schedules to complement LTD • Seamless transition • Telephonic claim filing • Return-to-work coordinators • Focus on ability

16. ASO(Administrative Services Only) • No fixed premium • Claims + • Level of Service • Evaluate Only & Salary Continuation • Advice to Pay • Evaluate & Process • ACH, Wire Transfer • Optional Services • Duration Management • Return to Work Services • Supplemental Services • Rehab, underwriting, plan documents, appeal services

17. Long Term Care in the News!

18. Maxine sums up the HealthCare Bill… Take two of these and call me in the morning…

19. CLASS Act • Community Living Assistance Services and Supports Act • Much uncertainty • Secretary of HHS to issue regs, establish 3 plans, by October 2012 • Automatic enrollment – Employee must opt-out • Eligibility • 18, receiving taxed income, employed • NOT in hospital, nursing home, or jail

20. CLASS Act • Benefits • Based on 2 (or 3) of 6 ADLs • Eating, Toileting, Transferring, Bathing, Dressing, Continence • “Substantial supervision” • Life Independence Account • Home modifications, assistive technology, accessible transportation, homemaker services, home care aids, nursing support, etc. • Family caregivers

21. CLASS Act • Medicaid integration • Institutionalized – keep 5% • Home & Community Based – keep 50% • Funding • Premium - $5/month plus CPI • Benefit - $50/day plus CPI • “functional disability” – 6 levels • no lifetime limit • Participant must be enrolled and paid for 5 years • Secretary of HHS to determine Eligibility Assessment System by January 2012

22. Long Term Care • Greatest unfunded liability for most families • LTCi Plans with Unum offer great value • Base plan – employer sponsored or voluntary • $2,000 monthly, 3 years duration, Facility or Professional Home Care • Optional coverages – voluntary • $3,000 or $5,000 monthly, 6 years duration, Total Home Care, Inflation Protection

23. AMBULANCE TRAVEL

24. BlueCare, KeyCare and HDHP The VBA health plans cover professional ambulance services to or from the nearest facility or provider adequate to treat for condition. The service is billed through the facility and are covered the same as all other facility services, however there is a calendar year limit of $3,000. Air ambulance services are also covered when pre-authorization or in cases of threatened loss of life. Determining whether any ambulance services will be pre-authorized, Anthem will take into account whether appropriate, cost effective care is being provided at the facility where the covered person is located.

25. AMBULANCE TRAVEL-HMO • $100 copayment Medically necessary ambulance services will be provided if such services are pre-arranged and authorized by Anthem. In an emergency, HMO authorization is not required. Air ambulance service are also covered when pre-authorized or in cases of threatened loss of life. Determining whether an ambulance service will be pre-authorized, Anthem will take into account whether appropriate, cost –effective care is being provided at the facility where the member is located.

26. Employee Self ServiceOn-line Enrollment

29. Anthem Focus on 360° Health

30. Flex Spending Account Update

31. Flex Spending Update • On-line Pharmacy • No coordination with your medical plan • Over the counter drugs can not be reimbursed starting 1/1/2011 • Benefits Card usage • Complaints about requiring receipts • 1st notice within 48 hours, 2nd notice as reminder at 20 days, 3rd letter advises card shut off at 40 days

32. Retirement Plan Options

33. Our Solutions • 401(k) Plan • 2 different safe harbor matches available • Deferred Compensation Plans – Execs or Directors • Account balance style like 401(k) • Can wrap around 401(k) plan • Pension Plans • Traditional or Cash Balance • Our goal is to help you achieve your goals

34. 401(k) Safe Harbor • Match – 100% of the first 1% plus 50% of the next 5% (total of 3.5%) • Vesting – 100% after 2 years • Automatic Enrollment • No ADP/ACP Testing • Deferrals up to the maximum for that year • $16,500 (+$5,500 if over 50) for 2010

35. What’s nice about the Cash Balance Plan? • Provides a basic benefit that is risk-free to employees – it is a form of a pension plan • Simple formula – looks like a savings or 401(k) account • Lump sum available at any age with no limit • No “penalty” for early retirement • Benefits are portable • Monthly payment options are available • Assimilation of newly-acquired plans is simple via conversion of accrued benefit to beginning account balance

36. How does the Cash Balance plan work? • Employees have a hypothetical cash balance account which is credited annually with • Contributions (% of pay based on plan provisions) • Interest (tied to some external index, not the actual return on plan assets) • At retirement, termination, or death, the lump sum benefit (eligible for rollover) equals the accumulated account balance • Benefits can also be paid as a monthly annuity, at the election of the plan participant • When converting an existing traditional pension plan, a beginning account balance is created for each employee based on the value of their accrued benefit in the existing plan

37. More Questions?