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

2. 2 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 Presenters

3. 3 Hunton & Williams’ Health Care Reform Initiative  The Firm’s Healthcare Reform Group –  The Group’s website -- www.Huntonhealthcarereform.com -- is now fully operationalwww.Huntonhealthcarereform.com  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. 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. 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. 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. 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, reasonable good faith interpretation

8. 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. 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. 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. 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. 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. 13 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 Questions