Scott Austin David Mustone Leslie Okinaka Hunton & Williams LLP

1. Scott Austin David Mustone Leslie Okinaka Hunton & Williams LLP 2010 Health Care Reform – Employer Update

2. Presenters L. Scott Austin, Partner Tax & Erisa Dallas/Atlanta Offices (214) 979-3002 saustin@hunton.com David Mustone, Partner Tax & Erisa McLean Office (703) 714-7509 dmustone@hunton.com Leslie A. Okinaka, Partner Tax & Erisa New York Office (212) 309-1276 lokinaka@hunton.com

3. Hunton & Williams’ Health Care Reform Initiative • The Firm’s Healthcare Reform Group – • The Group’s website -- www.Huntonhealthcarereform.com-- is now fully operational •  Contains – • Final consolidated version of health care reform legislation • All government guidance issued to date, and • H&W client alerts and other client updates

4. Overview/Introduction • Initial Webinar • Focus of this Webinar – • Significant developments since last webinar • Other Issues/Items of interest • Opportunity for you to ask questions about matters/issues of concern to you

5. Compliance Items • Compliance/Enforcement -- • Government’s announced approach on initial compliance • Exempt Programs – Additional Thoughts • Retiree plans – Restructure into separate plan (if needed) to take advantage of exemption • Separate dental/vision programs • Upcoming Notice Requirements – Reminder • Availability of adult child coverage, elimination of lifetime limits, maintenance of grandfathered status etc. • Chart on notice requirements

6. Immediate Reforms/Changes-- Recent Developments • Adult Child Coverage • FAQ guidance on covered “children” -- a “safe harbor” • Generally, natural children, stepchildren, adopted children (including children place for adoption), and foster children • Requirement also applies to minors • Adult child health care costs can be reimbursed under a flexible spending account (even though FSA exempt)

7. Immediate Reforms/Changes-- Recent Developments (Cont’d) • Lifetime/Annual Dollar Limits -- Limited to “essential” health benefits • What are essential benefits – Scope/application • Ambulatory patient services, emergency services, hospitalization, maternity/newborn care, mental health & substance use disorder services, lab services, prescription drugs, preventive/wellness/chronic disease management & rehab/habilitative services & devices • Pending guidance, reasonablegoodfaith interpretation

8. Immediate Reforms/Changes -- Recent Developments (cont’d) • Coverage rescissions -- • Recent FAQ guidance on administrative processing & other delays • Reimbursement of OTC medicines under healthcare FSAs, HSAs and HRAs – • Recent government guidance • New W-2 reporting of cost of employer-provided health coverage -- • Postponed for 2011 • State tax issues

9. Grandfathered Status • Maintaining Grandfathered status -- FAQ guidance/clarifications • Impact of plan changes on continued grandfathered status • Coverage tier, prescription drug formulary & network changes • Roll of wellness programs • Impact of “anti-abuse” rule – eliminating a plan option • Change in insurance carriers – new gov’t position? • Relief for insured/multiemployer plans • Application of Notice Requirement

10. Immediate Reforms/Changes – Recent Developments for Non-Grandfathered Plans • Patient protections – Expanded claims review process • Must have an internal claims review process that complies with ERISA claims process rules • Compliance with additional standards postponed in some respects until 7/1/2011 (DOL Tech Rel 2010-02) • Must have an external claims review process • For insured (and nonERISA plans) – must comply with applicable state external review rules (that meet certain minimum standards for PYs beg. on/after 7/2011) • All other plans (including self-insured ERISA plans) – must follow federal standards • “Safe harbor” requirements in DOL Tech Rel 2010-01

11. Immediate Reforms/Changes – Recent Developments for Non-Grandfathered Plans(cont’d) • Patient Protections – No-cost preventive healthcare • Limits on usage etc.- reasonable medical management techniques okay • New HHS Reporting Requirements • Effective date? • New nondiscrimination rules for insured plans • Generally prohibits providing coverage/benefits for only (or are skewed in favor of) high-paid employees • Outstanding issues

12. Retiree Reinsurance Program – Recent Developments • Early retiree reinsurance program – Recent Developments • Program now open for reimbursement requests • Recent guidance on reimbursable expenses and submission of eligible retiree lists/cost data • New participant notice requirement • Use of reinsurance proceeds

13. Questions L. Scott Austin, Partner Tax & Erisa Dallas/Atlanta Offices (214) 979-3002 saustin@hunton.com David Mustone, Partner Tax & Erisa McLean Office (703) 714-7509 dmustone@hunton.com Leslie A. Okinaka, Partner Tax & Erisa New York Office (212) 309-1276 lokinaka@hunton.com