Kaiser Permanente Health Reimbursement Account For Eligible Kaiser Permanente Employees Southern California Region November 2009

Overview  Effective January 1, 2010  Health Reimbursement Account (HRA)  Offered to eligible employees represented by Labor Management Partnership (LMP) Unions  Tax-free reimbursement for:  out-of-pocket eligible medical, dental, and vision care expenses.  HRA account funded with 80% of value of unused sick leave as of termination date  An account will be opened automatically when eligible  No action required  Retiree medical eligibility, medical plan and benefit levels are not affected by the HRA

HRA Participation  Eligible Groups Participating in the HRA:  Employees represented by LMP Unions participating in:  Earned Time Off Program, or  Work/Life Balance Time Off Program

Eligible Groups - SCal  Groups participating in the Earned Time Off Program  International Brotherhood of Teamsters, Local 166, AFL-CIO  Kaiser Permanente Association of Southern California Optometrists  Kaiser Permanente Nurse Anesthetists Association of Southern California  United Healthcare Workers-West, Healthcare Professionals Chapter  United Healthcare Workers-West, Psych-Social Chapter

Eligible Groups – SCal (Cont’d)  Groups participating in the Work/Life Balance Time Off Program  United Healthcare Workers—West  United Healthcare Workers-West, American Federation of Nurses  The Office and Professional Employees International Union, AFL-CIO, CLC, Local 30 (including the California Service Center)  United Food and Commercial Workers International Union, Bakersfield  United Food and Commercial Workers International Union, Clinical Laboratory Scientists  United Food and Commercial Workers International Union, Pharmacy  United Nurses Associations of California/Union of Health Care Professionals, NUHHCE, AFSCME, AFL-CIO-CLC  United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 7600

What is the HRA?  What is a Health Reimbursement Account?  The HRA, also referred to as a Health Reimbursement Arrangement, allows retirees and their eligible dependents to pay for out-of- pocket qualified medical, dental, vision, and hearing care expenses, as well as premiums paid to a Kaiser Permanente medical plan, on a tax-free basis.

Eligibility  Eligibility requirements at termination of employment:  At least age 55  15 or more years of Service  as defined under the KP-sponsored defined benefit plan, or the pension plan under the union trust, as applicable  HRA eligibility is independent of retirement eligibility  Age and years of Service requirement waived for Disability Retirement

Eligibility (cont’d)  Eligibility requirements at termination of employment (cont’d):  eligible for KP medical coverage on last day of employment  enrollment in plan not required  employees represented by the UFCW Pharmacy must be eligible for the union-sponsored medical plan  must be in an employee group that participates in the HRA  ACP may participate

Eligible Dependents  Legal spouse  Unless divorced or legally separated  Must be of the opposite sex to whom legally married under federal law  Domestic partner  If they qualify as a dependent on employee’s federal income taxes  May not use HRA account to pay expenses for the child of domestic partner if domestic partner claims the child as a dependent on his or her tax return  Your unmarried dependent children under age 25  If divorced, children will be considered eligible under the plan if employee is responsible for children’s support and have custody of children for more than half of the calendar year, per the IRC

Eligible Expenses  IRS determines which expenses are eligible (qualified) for reimbursement  May not also claim the expense through your health care plan, insurance program, or income taxes  Consult a tax advisor for tax implications

Eligible Expenses*  Acupuncture  Chiropractic care  Dental implants, supplies  Dental insurance premiums and copayments  Hearing exams and treatment  Long-term care insurance premiums *Sample list only, not a complete list

Eligible Expenses (cont’d)  Medical insurance premiums paid for a Kaiser Permanente medical plan only*  Medical copayments  Medicare premiums  Premiums paid under COBRA (medical, dental)  Substance Abuse Treatment  Vaccinations  Wheelchair * Unless you live in an area where KP medical is not offered, or if you are represented by the UFCW, Pharmacy in the Southern California Region

Ineligible Expenses*  Baldness treatments or hair transplants  Dancing lessons  Exercise equipment  Herbal and holistic drugs or remedies  Special diet foods  Swimming lessons  Vacation expenses (even if recommended by a doctor)  *Sample list only; not a complete list

How the HRA is established  On termination or retirement:  HRA-convertible sick leave hours converted at 80% of value  Kaiser Permanente deposits into HRA  No employee contributions allowed  $100 minimum required to establish account  No cost for this new benefit  Automatic participation, if eligible  No opt-out option

Work/Life Balance Time Off Program  Banked Sick Leave (BSL)  Unused hours accrued in 2006 and thereafter converted at 80% of value  Deposited into HRA  No Credited Service for post-2005 BSL hours

Earned Time Off Program  Extended Sick Leave (ESL)  Effective first pay period of 2010, two ESL banks  Current ESL bank  Pre-2010 ESL bank  ESL hours beginning first pay period 2010 go into current ESL bank  Unused ESL hours last pay period 2009 used to establish pre-2010 ESL bank  Accrued, unused ESL in current ESL account converted at 80% of value and deposited into HRA  No Credited Service for unused post-2009 ESL hours

When Your Account Opens  Welcome Kit from the HRSC  Notification of Enrollment Letter from Ceridian  Kaiser Permanente’s contribution to your HRA  Quarterly Statements

How to File for Reimbursement  Submit claims through Ceridian  Fax:  Mail : Ceridian FSA Services P.O. Box St. Petersburg, FL  Reimbursement via check or direct deposit  Check on the status of your claim or payment at  Submitting claims is easy

Claims Guidelines  Claims processed weekly  No limit on number of claims  No minimum/maximum dollar amount  Submit claims within 60 days  Unused funds carry over from year to year

Account Closes  HRA Account closes if:  Account balance is $0  Account is abandoned  Death, with no surviving eligible dependents  Upon the death of surviving eligible dependents  If during the termination or retirement process, you are deemed ineligible for the HRA

Account Suspended  Account suspended  If you are rehired and return to work at Kaiser Permanente in any capacity  Account Reactivated  When you terminate again  No minimum balance required

Customer Service  Ceridian Customer Service  or  Online at  Social Security number (with dashes)  Initial password/PIN  (last 4 numbers of your SSN reversed)

Contact Information  For HRA detailed questions, covered expenses and claims:  Ceridian  Monday-Friday, 5 a.m.-5 p.m. Pacific Time    For HRA general questions:  My HR Web site   Human Resources Service Center (HRSC)  KP-HRSC ( )

HRA Communications Timeline  Late November 2009  Customized communications sent to all impacted employees  Cover letter from region  Brochure containing  Summary of Material Modification (SMM)  Frequently Asked Questions (FAQ)  Claims process  January 1, HRA becomes effective

Thank you!