1. Healthcare Reform Update HAMA Fall Meeting October 6, 2010

2. 1 Purpose of today’s session 1  Discuss background of US Healthcare reform  Review current provisions of new law  Consider key questions for our industry  Share Hilton’s current process

3. 2 Situation Summary 2  2,650 page legislation was enacted in March 2010 – contains employer mandates including the requirement that large employers offer coverage or pay a penalty  New state exchanges will be established – they must meet federal guidelines and are to be operated by non-profit entities  Individuals will be required to maintain coverage or pay a penalty (penalty may not exceed cost of coverage)  Subsidies will be provided to low and middle income participants to buy exchange coverage  The new law will be financed through taxes on employers, insurers, drug and device makers, high income earners, and cuts to Medicare  Employer-sponsored systems will need to adjust to accommodate the new law  This is just the beginning – regulatory guidance and additional legislation will be forthcoming  Without aggressive action, employer healthcare costs could double in the next five years

4. 3 PPACA Overview – Timing of Key Reform Provisions Early Retiree ReinsuranceEmployer Distribution of Uniform Summary of Benefits to Participants Limit of Health Care FSA Contributions Employer Responsibility to Provide Minimum Health coverage Lifetime Limits ProhibitedQuality of Care ReportNotice to Inform Employees of Coverage Options in Exchange Free Choice Vouchers Preexisting Conditions Exclusions Prohibited for Children Automatic Enrollment for 2014**Individual Responsibility to Purchase Insurance or Pay Penalty Only Reasonable Annual Limits Permitted Medicare Tax on High-Income Individuals State Insurance Exchanges Effective Appeals Process*Medicare Part D Subsidy No Longer Tax-Free Preexisting Condition Exclusions Prohibited Over-the-Counter Medicines Not Reimbursable Under FSA Annual Limits Prohibited HSA Excise Tax IncreaseAutomatic Enrollment** Employer Reporting of Health Coverage on Form W-2 Limit of 90-Day Waiting Period for Coverage in Plan Phase-out of Part D Donut HoleIncreased Rewards Cap for in Wellness Participation Medicare Advantage Payments Lower Employer Reporting of Health Insurance Information to Participants and the Government Coverage for Preventive Health Services* Excise Tax on High-Cost Coverage (2018) 105(h) Non-Discrimination Rules Apply to Insured Plans* 2011201220132014 and beyond * Grandfathered ** Effective date unclear

5. 4 Key Questions for Our Industry 4  What are the biggest issues for Hospitality? – Expanded Eligibility – More Benefits Mandates – Additional Administrative Requirements – Increased Cost Exposure

6. 5 The Road Ahead— A Major Decision Point for Employers Managed Defined Contribution  Subsidy fixed with company-driven increase  Coverage via individual market (private or public Exchanges)  Worksite health shifts to focus on return to work, absence reduction, productivity gains Aggressive Health Management  Heavy emphasis on health risk improvement and cost management  Sophisticated use of data analytics to drive design, program management, vendor accountability  Migration from incentives to penalties and “requirement gates” to access better benefits  House money, house rules “ “When you get to the fork in the road, take it.” — Yogi Berra 2014+

7. 6 Hilton’s Current Process Integrating Impacts Working through the design, administration and communication implications Thinking Ahead Using this opportunity to establish sustainable approach that will work now and in the future (vs. build on approaches that are not working now) Engaging Leaders Presenting high-level cost analysis and plan to senior leaders Connecting with Our Team Members Educating team members and their families in context of what they can control – their health and how to use the healthcare system Acting Now Creating a detailed 3 to 5 year plan and working it immediately (vs. waiting for all the answers)

8. 7 End Of Healthcare Reform Update