Medicare Benefits Choices 2011 Guide

Transcription

1 Medicare Benefits Choices 2011 Guide Important changes for Sandia National Laboratories Medicare Retirees, Surviving Spouses, & LTD Terminees Dear Sandia Medicare Retiree, Surviving Spouse, or Long Term Disability (LTD) Terminee: Open enrollment for 2011 is right around the corner. Sandia s 2011 open enrollment period runs from October 18 through November 16, In the past, the majority of retirees, surviving spouses, and LTD terminees have not been required to take any action during open enrollment unless they wanted to change medical plans or add/ drop a dependent. This year most retirees, surviving spouses, and LTD terminees and/or their eligible Medicare dependents will be required to take action during this open enrollment period. All benefit changes take effect January 1, 2011, for the 2011 calendar year. You are strongly encouraged to review all the information in this guide to ensure you do not have unintended gaps in health care coverage.

2 Contact information Extend Health Phone: (TTY: ) Online: Lovelace Senior Plan (NM) Phone: or (outside Albuquerque) Online: Presbyterian MediCare PPO (NM) Phone: or (outside Albuquerque) Online: Kaiser Senior Advantage Plan (CA) Phone: Online: Delta Dental of Michigan Phone: Online: Sandia National Laboratories Health Benefits & Employee Services Phone: HBES (4237) or ext (TTY: ) M-F 7 am - 7 pm MT

3 About this guide Important information regarding open enrollment for 2011 This Medicare Benefits Choices 2011 Guide is part of your open enrollment materials. Please keep this guide as a reference to use during open enrollment. Eligible pre-medicare dependents will receive a Pre-Medicare Benefits Choices 2011 Guide regarding pre-medicare options. If your eligible pre-medicare dependents do not receive the appropriate guide, please contact Extend Health at Extend Health s customer service line and website for Sandia will open on Monday, September 27, The toll-free number will be available M-F from 7 a.m. to 7 p.m. MT. Additional information may be found at Remember that you will not be able to enroll until open enrollment officially begins on October 18, All guides provided to retirees will be available on Sandia s web site at Table of contents: Open enrollment for Why the change? 6 Introducing Extend Health 7 Do you need to take action? 8 Become familiar with Medicare 10 Evaluate your options 11 Lovelace Senior Plan 12 Presbyterian MediCare PPO 13 Kaiser Senior Advantage 14 Your Spending Account 15 Examples of plan choices 16 How Your Spending Account works 17 Premium Sharing & YSA Credits 18 Surviving Spouse Premium & YSA Credits 20 LTD Terminee Premium & YSA Credits 22 Dental Care Program 24 Glossary of terms 25 Pre-open enrollment sessions 26 Calendar of events (TTY: ) M-F 7 am - 7 pm MT 3

4 Open enrollment for 2011 There are many important changes that you need to be aware of this year 1: Introducing Extend Health Sandia has partnered with Extend Health to provide all retiree health benefit administration services, beginning with this open enrollment period. All retirees, surviving spouses, and LTD terminees and/or their eligible Medicare dependents must make all open enrollment elections through Extend Health. More information on Extend Health can be found on page 7. Extend Health will send each Medicare individual a Getting Started Guide (mailed the week of September 27th) which will help you identify your needs and prepare you for open enrollment. In the Getting Started Guide, you will find: Helpful information about how to verify your profile and other things you need to do to prepare for open enrollment. A worksheet on your health history. Completing this worksheet will help Extend Health benefit advisors verify key information that will help streamline the enrollment process. During your conversation with a benefit advisor you will be able to schedule an appointment during open enrollment when Extend Health will call you to present the available options and capture your enrollment choice. Following the Getting Started Guide, Extend Health will send each eligible Medicare individual an Enrollment Guide (mailed the week of October 11th) which will provide step-by-step instructions on what actions you need to take during open enrollment. 2: Effective January 1, 2011, the UHC Senior Premier PPO Plan is being eliminated Each Medicare individual enrolled in the UHC Senior Premier PPO plan must take action during open enrollment. Sandia will continue to offer the Presbyterian Medicare Preferred Provider Organization (PPO) and the Lovelace Senior Plan to retirees, surviving spouses, and LTD terminees and their eligible Medicare dependents who live in New Mexico. Sandia will continue to offer the Kaiser Senior Advantage Plan to retirees, surviving spouses, and LTD terminees and their eligible Medicare dependents who live within the eligible Kaiser ZIP codes in Northern California. (Please refer to each plan section for 2011 changes). If you retired in 2010 and were a unionrepresented employee, please contact Extend Health regarding your benefit choices (TTY: ) M-F 7 am - 7 pm MT

5 3: Access to Your Spending Account If you are a Medicare retiree, surviving spouse, or LTD terminee living outside of New Mexico and the Kaiser Senior Advantage Plan service areas, you and your eligible Medicare dependents will have access to what is called Your Spending Account to buy an individual Medicare plan, and/or use toward Medicare premiums, and/or use toward out-of-pocket medical expenses. You will have access to a range of Medicare supplemental plan options, allowing you to choose the one that best fits your medical and prescription drug requirements. See page 15 for information on this option. Note: Those who live within New Mexico and the Kaiser Senior Advantage Plan service areas may also elect this Your Spending Account option. 4: Extend Health for payment of medical and/or dental coverage if you are a retiree, surviving spouse, or LTD terminee If you are a retiree or surviving spouse paying a premium for your medical and/ or dental coverage through Sandia, these are currently being deducted from your pension check. Effective January 1, 2011, health care premium deductions will no longer be taken from pension checks. Once you make your plan election, you will receive information from Extend Health regarding your new payment options. More information on this change will be coming from Extend Health. Please note that if you are a surviving spouse or LTD terminee, and are currently paying UnitedHealthcare Benefits Services (UHCBS) directly, Extend Health will be reaching out to you after open enrollment to transfer this payment to them, effective January 1, Any dental/vision COBRA premiums you may be paying will still be done through UHCBS. 5: Increased age limits for children The age limit to provide medical coverage for children has increased to the end of the month in which he/she turns 26. Look to your Enrollment Guide from Extend Health for more information on eligibility requirements (TTY: ) M-F 7 am - 7 pm MT 5

6 Why the change? Confronting soaring health care costs Like many other companies, Sandia is challenged to contain soaring health care costs without sacrificing quality or coverage for our employees and retirees. It is no secret that Sandia is operating in a rapidly changing world and a challenging economic environment. The economic and global landscapes are changing, as well as the national security environment. In this changing environment, Sandia faces unprecedented financial challenges associated with future pension and health care costs. Based on current assumptions, Sandia is estimating that approximately $2 billion in pension contributions will be required from Annual health care costs are projected to increase to approximately $250 million by Liabilities associated with post-retirement health care alone now exceed $1.2 billion. These projected pension and health care costs are unsustainable given Sandia s future budget forecasts. Moreover, Sandia National Labs and other DOE contractors are charged by DOE to keep their benefits at or below 105% of the Hewitt Benefits Valuation Study index. Since Sandia was over that index, we needed to make changes to demonstrate progress toward this goal. The active and retiree health care changes Sandia is implementing is Sandia s response to the NNSA directive to make practical adjustments toward greater compliance with contractual requirements (TTY: ) M-F 7 am - 7 pm MT

7 Introducing Extend Health Trusted advisor for hundreds of thousands of retirees Extend Health is a leading provider of retiree health benefit administration services and will give you and your eligible Medicare dependents personalized assistance to help you navigate through your health care options. Extend Health not only offers access to the Sandia-sponsored Lovelace Senior Plan and Presbyterian MediCare PPO plan in New Mexico, and the Sandia-sponsored Kaiser Senior Advantage Plan in Northern California, but also offers a variety of individual Medicare supplemental medical and prescription drug coverage options in the individual Medicare marketplace through what is called Your Spending Account (YSA). More information about the YSA can be found on page 15. An Extend Health licensed benefit advisor will provide: Individualized telephone support to help you make an informed and confident enrollment decision. Education about the differences between various plans, and the costs of each of those plans. Advice and decision making support, based on your current coverage and future needs. Assistance with enrolling in your chosen health care plan. Extend Health not only brings the expertise of licensed benefit advisors to help Medicare individuals make the right health care choices for them but also allows each Medicare individual to make an independent election. For example, if the Medicare retiree wants to enroll in the Presbyterian MediCare PPO and the Medicare spouse wants to enroll in the Lovelace Senior Plan, this will be allowed. This flexibility has been requested by our retirees for many years (TTY: ) M-F 7 am - 7 pm MT 7

8 Do you need to take action during open enrollment? First, review your medical plan coverage and determine whether you need or want to make a change: if your 2010 medical plan is: UHC Senior Premier PPO Presbyterian MediCare PPO Lovelace Senior Plan Kaiser Senior Advantage Plan In waived status then your 2011 medical plan will be: You must make a new election with Extend Health as the UHC Senior Premier PPO is being discontinued Presbyterian MediCare PPO Lovelace Senior Plan Kaiser Senior Advantage Plan* Will remain in waived status Note: You will not default into the YSA. *Kaiser Permanente Senior Advantage members who wish to continue with their current medical plan do not need to use Extend Health to enroll in Kaiser Permanente. Each Medicare individual will be able to make an independent election. For example, if a Medicare retiree is currently enrolled in the Presbyterian MediCare PPO and wants to remain in that plan, then the Medicare retiree does not need to make a medical plan election as he/she will continue in that plan. However, if the Medicare spouse is currently enrolled in the Presbyterian MediCare PPO but wants to elect the spending account option, then the Medicare spouse will need to call during open enrollment to get set up in that option (TTY: ) M-F 7 am - 7 pm MT

9 Second, review your dental plan coverage to identify if you want to make a change: Coverage: Dental take action: To enroll if not currently enrolled To waive coverage Third, review your dependent coverage for medical and/or dental: Coverage: Dependent Coverage take action: If you wish to add or drop a dependent, you must do so during open enrollment (TTY: ) M-F 7 am - 7 pm MT 9

10 Become familiar with Medicare How the parts combine to provide you with coverage Medicare benefits are broken into several component parts. To decide how to best meet your medical needs and budget, it helps to understand how these parts work together. The simple outline shown here will familiarize you with the parts of Medicare and assist you to choose what is best for you. Original Medicare (What you get): Part A & Part B Original Medicare consists of Part A & Part B. You automatically receive Part A & become eligible for Part B when you qualify for Medicare either due to age or disability. Part A provides you with inpatient care, and covers inpatient hospital stays, home health care, stays in skilled nursing facilities, and hospice care. The Part A deductible for 2010 is $1,100 for your first 60 days of inpatient care. There is no coinsurance for your first 60 days of inpatient care. Enrollment is automatic when you become Medicare-eligible. There is no premium if you have more than 10 years of Medicare-covered employment.* Part B provides you with outpatient care, and covers physician fees, and other medical services not requiring hospitalization. The Part B deductible is $155 for Part B covers 80% of medically necessary services. You are responsible for the remaining 20%. You must actively enroll in Part B. The monthly premium for 2010 is $96.40 for most individuals, depending on income (income adjustment rates may apply). Types of Medicare supplemental Plans: Medicare Advantage, Medigap, & Part D Medicare Advantage plans are offered by private companies to provide you with all your Medicare Part A and Part B benefits plus additional benefits. There are two versions of Medicare Advantage plans: MAPD and MA. MAPD plans include prescription drug coverage, MA plans do not. Within these two Medicare Advantage types there are three doctor networks: HMO, PPO, and Private Fee-for-Service Plans (PFFS). Medicare Advantage is also referred to as Part C. The Presbyterian MediCare PPO, the Lovelace Senior Plan, and the Kaiser Senior Advantage Plan are all MAPD plans being offered by Sandia. Note: You cannot enroll in a Medicare Advantage plan offered by Sandia in addition to another Medicare plan such as Part D. Medigap is supplemental insurance sold by private insurance companies to fill gaps in Original Medicare plan coverage. These 10 plans (labeled Plans A, B, C, D, F, G, K, L, M & N) offer standardized menus of benefits. (Massachusetts, Minnesota, and Wisconsin have their own versions of these plans). Medigap policies only work in conjunction with the Original Medicare plans. Generally, there is no prescription drug coverage. Part D refers to optional prescription drug coverage, which is available to all people who are eligible for Medicare. Plans are offered through private insurance companies. Part D covers generic and brand-name drugs included in the plan s formulary, which is a list of drugs the plan will pay for. Prescription drug plans may be purchased separately or as an add-on for Medicare Advantage plans that do not offer a prescription drug benefit (MA) or Medigap plans. * If your dependent is a foreign national and/or has not worked enough to qualify for Medicare Part A on their own, your dependent can purchase Medicare Part A. The cost for Part A in 2010 is $461 per month. However, if your dependent does not qualify for no-cost Part A due to insufficient Medicare-covered employment, once you turn 62, your dependent is then eligible for Part A at no cost (TTY: ) M-F 7 am - 7 pm MT

11 Evaluate your options What are the differences between Medicare supplemental plans? What are my out-of-pocket costs: Monthly premium Deductibles, Copayments, Coinsurance Does it include hospital coverage? The out-of-pocket cost of each plan will vary. Below is a general summary of what to expect with each plan. An Extend Health licensed benefit advisor will be able to provide more information. The range of plan premiums varies widely. If you elect to enroll in a Medicare Advantage plan, Medigap plan, and/or Part D plan, you must continue to pay your Medicare Part A (if applicable) and Part B premium and any additional premium charged by the plan(s). An Extend Health licensed benefit advisor will provide the premium rates in your area during open enrollment. Most Medigap services are covered with no additional out-of-pocket cost to you. There are no deductibles or coinsurance. Part D plans offer a wide range of copayments, deductibles, and coinsurance for prescription medications. Yes Not applicable Yes Most Medicare Advantage plans require a copayment or coinsurance at the time of service. Does it cover doctors and specialists? Doctors and specialists are covered. Any doctor that accepts original Medicare accepts these plans. Not applicable Doctors and specialists are covered. There are three types of Medicare Advantage doctor networks: HMO, PPO, and PFFS. Note: If you do not wish to change your current doctors you must know which plans they accept prior to enrolling. There are two versions of Medicare Advantage Plans: MAPD, which includes prescription drug coverage, and MA, which does not. Dental and vision coverage varies by plan. Separate dental and vision plans are available if you choose an MA plan that does not offer dental and vision coverage. Medicare Advantage plans cover urgent and emergency services nationwide, but some may not provide nationwide coverage for non-emergency services. If you live part of the year out-of-state, these plans may not be right for you. Does it have prescription drug coverage? Prescription drugs are not covered. You must enroll separately in a Part D plan to have prescription drug coverage. Prescription drugs are covered. Does it have dental and vision benefits? Dental and vision are not covered. However, separate dental and vision plans are available. Dental and vision are not covered. Does it cover me when I travel? Medigap plans are accepted by every Medicare-participating provider in the U.S., with some emergency benefits worldwide. If you travel frequently or live part of the year out-of-state, these plans may be right for you. Part D plans provide nationwide coverage from participating pharmacies (TTY: ) M-F 7 am - 7 pm MT 11

12 Plan details: Lovelace Senior (LSP) A Medicare Advantage plan with prescription drug benefits This plan is fully-insured through the Lovelace Health Plan for eligible Medicare-primary participants who live in New Mexico. Benefits are available only from providers who are in the Lovelace Health System network. You can obtain information on this plan (including a provider directory, drug formulary list, etc.) by contacting Lovelace Customer Care Center at or ext. 1802, M-F, 8 a.m. to 5 p.m., or by attending a pre-open enrollment benefit fair. If there are any discrepancies between this information and the Evidence of Coverage, then the Evidence of Coverage supersedes. Eligibility This plan is available to Medicare-primary retirees, surviving spouses, LTD terminees, and their eligible Medicare-primary Class I and Class II dependents who: Reside in the state of New Mexico Are enrolled in both Medicare Part A and Part B, and Continue to pay Medicare Part A (if applicable) and Part B premiums. Changes Effective January 1, 2011 Annual in-network out-of-pocket maximum changing from none per person to $1,500 (excluding Medicare Part D prescription drugs) Annual routine physical copay decreasing from $10 to $0 Specialist office visit copay increasing from $20 to $30 In-network urgent care copay decreasing from $20 to $15 Outpatient surgery copay increasing from $50 to $100 Copay for CT/MRI/Pet scans decreasing from $50 to $0 Inpatient hospital admission copay increasing from $200 to $500 Skilled nursing facility copay increasing from $0 to $75 per day for days 21 through 100 DME copay increasing from $0 to $10 Retail generic copay increasing from $5 to $10 Retail preferred brand name copay decreasing from $32 to $20 Retail non-preferred brand name copay decreasing from $62 to $40 Mail order generic copay increasing from $15 to $20 Mail order preferred brand name copay decreasing from $96 to $40 Mail order non-preferred brand name copay decreasing from $186 to $80 Specialty drug copay increasing from $62 to 25% for a 30 day supply Mental health/substance abuse outpatient office visit copay decreasing from $40 to $30 Key points Primary Care Physician (PCP) is required. You must select a PCP or one will be assigned to you. Obtain a directory by contacting Lovelace Customer Care Center, Albuquerque Metro Area, at (505) or outside the Albuquerque area call (800) ext Lovelace Customer Care Center is available Monday through Friday, 8:00 a.m. to 5:00 p.m. Referrals to specialists are not required. Unlimited prescription drug coverage is available under this plan. By enrolling in this plan, you will automatically be enrolled in the Medicare Part D prescription drug benefit and will receive all of your prescription drug benefits through this Plan. You will be required to assign your Medicare benefits to the Lovelace Health plan; therefore, you cannot be enrolled in this plan and another Medicare Advantage plan or another Medicare Part D plan at the same time. When you select the Lovelace Senior plan, your regular Medicare benefits are provided by this plan. You must maintain your Medicare parts A and B enrollment in order to keep your coverage. You must inform the Lovelace Health plan and/ or Extend Health before moving or leaving the service area for more than six (6) months. Your permanent residence must be in the Lovelace Senior Plan service area, which is the state of New Mexico. Outside the service area, this plan covers only emergency care and urgently needed care. If you are hospitalized in a non-participating hospital for emergency care, you or a family member must call Lovelace Customer Care within 48 hours (or as soon as reasonably possible) (TTY: ) M-F 7 am - 7 pm MT

13 Plan details: Presbyterian MediCare PPO A Medicare Advantage plan with prescription drug benefits This plan is fully-insured through the Presbyterian Insurance Company, Inc. for eligible Medicare-primary participants who live in New Mexico. This PPO provides both in- and out-of-network benefits. You can obtain information on this plan (including a provider directory, drug formulary list, etc.) by by contacting Presbyterian at or , M-F, 8 a.m. to 8 p.m., or by attending a pre-open enrollment benefit fair. If there are any discrepancies between this information and the Evidence of Coverage, then the Evidence of Coverage supersedes. Eligibility This plan is available to Medicare-primary retirees, surviving spouses, LTD terminees, and their eligible Medicare-primary Class I and Class II dependents who: Reside in the state of New Mexico Are enrolled in both Medicare Part A and Part B, and Continue to pay Medicare Part A (if applicable) and Part B premiums. Changes Effective January 1, 2011 Annual in-network out-of-pocket maximum changing from none per person to $1,500 (excluding Medicare Part D prescription drugs) Annual combined in- and out-of-network out-of-pocket maximum changing from none per person to $10,000 (excluding Medicare Part D prescription drugs) In-network hospital copay increasing from $350 to $500 Chiropractic office visit copay decreasing from $30 to $20 Outpatient surgery copay decreasing from $150 to $100 (colon polyp removal decreasing from $150 to $0) Outpatient hospital facility charge decreasing from $150 to $100 Emergency care visit copay waived if admitted New acupuncture benefit (20 visits per year) - $30 copay innetwork/$55 copay out-of-network Prescription Drugs: Retail generic copay increasing from $5 to $10 Retail preferred brand copay decreasing from $35 to $20 Retail non-preferred brand copay decreasing from $55 to $40 Mail order generic copay increasing from $10 to $20 Mail order preferred brand copay decreasing from $87.50 to $40 Mail order non-preferred brand copay decreasing from $165 to $80 Key points Primary Care Physician (PCP) is not required. Referrals to specialists are not required. Unlimited outpatient prescription drug coverage is available under this Plan. By enrolling in this plan, you will automatically be enrolled in the Medicare Part D prescription drug benefit and will receive all of your prescription drug benefits through this plan. You will not be required to enroll in Medicare Part D or pay the additional Medicare Part D premium. You will be required to assign your Medicare benefits to Presbyterian MediCare PPO plan; therefore, you cannot be enrolled in the Presbyterian MediCare PPO plan and another Medicare Advantage plan or another Medicare Part D plan at the same time. When you select Presbyterian MediCare PPO, your regular Medicare benefits are provided by this Plan. You must maintain your Medicare parts A and B enrollment in order to keep your coverage. You must inform the Presbyterian Health Plan and/or Extend Health before moving or leaving the service area for more than six (6) months. Your permanent residence must be in the Presbyterian MediCare PPO service area, which is the state of New Mexico. Both in- and out-of-network coverage is available. You may go to any Medicareapproved practitioner or provider out of network that will accept you. Coverage is available worldwide for emergency and urgent care. If you are hospitalized in a non-participating hospital for emergency care, you or a family member must call Presbyterian Customer Services within 48 hours (or as soon as reasonably possible) (TTY: ) M-F 7 am - 7 pm MT 13

14 Plan details: Kaiser Senior Advantage A Medicare Advantage plan with prescription drug benefits This plan is fully-insured through Kaiser Permanente for eligible Medicare-primary participants who live in California, within Kaiser-designated service areas. You can obtain information on this plan by contacting the Kaiser Permenante Member Services Call Center at , M-F 7 a.m. to 7 p.m., weekends 7 a.m. to 3 p.m., or by visiting Or, for additional information, refer to the Kaiser Senior Advantage Plan Evidence of Coverage and Kaiser Chiropractic Evidence of Coverage at gov/resources/emp-ret/spd. If there are any discrepancies between this and the Evidence of Coverage, then the Evidence of Coverage supersedes. Eligibility This plan is available to the following who live within a Kaiser-designated service area (currently, Alameda, Contra Costa, Marin, Sacramento, San Francisco, San Joaquin, San Mateo, Solano, and Stanislaus counties are entirely inside a Kaiser service area; service areas for other Northern California counties are determined by specific ZIP codes within those counties). This plan is available to Medicareprimary retirees, surviving spouses, LTD terminees, and their eligible Medicareprimary Class I and Class II dependents who: Are enrolled in both Medicare Part A and Part B, and Continue to pay Medicare Part A (if applicable) and Part B premiums. Changes Effective January 1, 2011 Annual routine physical decreasing from $15 copay to no copay Outpatient surgery copay increasing from $50 to $100 Inpatient hospital admission copay increasing from $250 to $500 Ambulance copay increasing from $50 to $75 Skilled nursing copay increasing from no copay to $75 copay for the 21st through 100th day Key points Integrated health care with one stop access to medical offices, specialty offices, laboratory, pharmacy, and optical services at each facility. Kaiser Permanente providers and facilities must be used. If you access care outside Kaiser Permanente, your services may not be covered, except for emergency and urgent care. Self-referral to selected specialty departments; others require a referral from your Plan physician. You must reside within a Kaiser Permanente service area to be eligible for the Plan and may only leave the service area for a maximum of 90 continuous days. Coverage is available worldwide for emergency and urgent care. Medicare benefits must be assigned to Kaiser Permanente. Therefore, you cannot be enrolled in another Medicare Advantage Plan or Medicare Part D Plan at the same time you are enrolled in Kaiser Senior Advantage Plan. When you select Senior Advantage, your regular Medicare benefits are provided by Kaiser Permanente. You must maintain your Medicare Parts A and B enrollment in order to keep your Senior Advantage coverage. When you select Senior Advantage, you will automatically be enrolled in a Medicare Part D prescription drug benefit. You will receive all of your prescription drugs through the Senior Advantage Plan and pay the Senior Advantage prescription drug copays based upon the specific drug and quantity prescribed. You will not be required to pay the additional Medicare Part D premium to Medicare or the Senior Advantage Plan. Medicare will not pay for any medical care you receive from a non-kaiser Permanente health care provider unless you have been referred to the outside provider by a Kaiser Permanente physician. When you enroll in Senior Advantage, you agree to receive all your medical services through Kaiser Permanente, except for emergencies, urgent out-of-area care, or authorized referrals. Senior Advantage is designed for people who live in the Kaiser Permanente service area. If you plan to leave the service area for more than 90 days or move permanently outside the service area, you must disenroll from Senior Advantage (TTY: ) M-F 7 am - 7 pm MT

15 Plan details: Your Spending Account Use YSA funds to purchase an individual Medicare plan of your own choosing Your Spending Account (YSA) is set up in the retiree s, surviving spouse s, or LTD terminee s name to use to purchase an individual Medicare plan or use toward other eligible health care expenses (list below). Funds are provided on a tax-free basis. Under this arrangement, you, not Sandia, will be responsible for choosing your own medical coverage. Sandia will place an amount on January 1, 2011, into Your Spending Account to use toward this coverage. Licensed benefit advisors from Extend Health will assist you with finding the most cost-effective Medicare coverage that fits your individual requirements. Compare your medical choices: Extend Health offers enrollment assistance and advice in choosing from the variety of Medicare supplemental and prescription drug coverage options in the individual Medicare marketplace. You may combine supplemental plans (see page 11) into a package that covers all of your needs. For example, you may choose to remain in Original Medicare and select a Medigap policy and Part D prescription drug plan. Or, you may choose a Medicare Advantage plan that covers prescription drugs, and use your YSA funds to pay your MA and Part B premiums. See page 16 for examples of plan choices accessible through Extend Health. Eligibility The Your Spending Account option is available to Medicare-primary retirees, surviving spouses, LTD terminees, and their eligible Medicare-primary Class I and Class II dependents who: Are enrolled in both Medicare Part A and Part B, and Continue to pay Medicare Part A (if applicable) and Part B premiums. Key points Amounts that will be provided in the form of YSA credits are outlined under Medical Premium Sharing sections. The following are the qualified health care expenses that can be reimbursed: - Premiums for Medicare Part A (if applicable) and Part B - Premiums to pay for Tricare insurance - Premiums for individual Medicare supplemental insurance such as Medicare Advantage, Medigap, and Prescription Drug plans. Generally, you will have between plans to choose from depending upon your zip code. See page 16 for more information - Out-of-pocket expenses like deductibles and copays. You will submit claims to Extend Health and Extend Health will reimburse you from your account. To receive your reimbursements as quickly as possible, you are encouraged to establish direct deposit. Information will be provided in the Extend Health Your Spending Account Guide. Unless you establish direct deposit, all reimbursements will be made by check and mailed to the address on file with Extend Health. YSA accounts are set up as joint accounts. If your Medicare-eligible spouse elects YSA, you and your spouse will have one account. You can use the blended accounts toward any allowable expenses between the two of you. Any unused balance in your account rolls over and is available to use the next year (TTY: ) M-F 7 am - 7 pm MT 15

16 Examples of plan choices What can be purchased using Your Spending Account? Below are samples of plan choices which can be purchased using Your Spending Account Funds and accessible through Extend Health Sample of plan choices available through Extend Health in Bernalillo CO., New Mexico: Number of plans offered 2010 monthly premium* Provider $ $17-80 $0-$36 2 or more insurance companies to choose from 7 or more insurance companies to choose from 2 or more insurance companies to choose from Sample of plan choices available through Extend Health in Alameda Co., California: Number of plans offered 2010 monthly premium* $72-$163 $24-$106 $0-$164 Provider 2 or more insurance companies to choose from 7 or more insurance companies to choose from 2 or more insurance companies to choose from Sample of plan choices available through Extend Health in Maricopa Co., Arizona: Number of plans offered monthly premium* Provider $77-$176 $18-$82 $0-$147 2 or more insurance companies to choose from 5 or more insurance companies to choose from 5 or more insurance companies to choose from * Plans and premiums for 2011 will be provided by an Extend Health benefit advisor during the open enrollment period (TTY: ) M-F 7 am - 7 pm MT

17 How Your Spending Account works How YSA reimbursement works If you choose the Your Spending Account option, you will become responsible for choosing and paying for your own health coverage. You will then be reimbursed by Extend Health, using YSA funds (TTY: ) M-F 7 am - 7 pm MT 17

18 Retiree Medical Premium Sharing & Your Spending Account Credits If you elect the Your Spending Account option, your annual credits will become available on January 1, 2011, for use in paying your monthly premiums. Important: You cannot enroll in a Sandia-sponsored group Medicare Advantage Plan and elect the Your Spending Account option. It is an either/or choice. The Centers for Medicare and Medicaid (CMS) regulates the premiums for the various individual market Medicare supplemental health options under Your Spending Account and these will not be available until open enrollment. Employees who retired prior to January 1, 1995 Employees who retired prior to January 1, 1995, will not be required to pay a premium share for themselves or any eligible Class I dependents for the Kaiser Senior Advantage Plan, the Lovelace Senior Plan, or the Presbyterian MediCare PPO at this time. (Exception: Retirees who retired prior to January 1, 1995, but who currently pay a portion of their medical coverage, will continue to do so.) You are eligible to elect the Your Spending Account option to use as described under Your Spending Account on page 15. The annual credit amounts you are eligible to receive are provided in Table A on the opposite page. Employees who retired after December 31, 1994, and before January 1, 2003 All employees who retired after December 31, 1994, pay a monthly premium for coverage in Kaiser Senior Advantage Plan, the Lovelace Senior Plan, or the Presbyterian MediCare PPO. Use Table B to find your monthly rate for your selected plan(s) as well as the annual credit amounts you are eligible to receive for Your Spending Account option. Employees who retired after December 31, 2002 Employees who retired after December 31, 2002, pay a monthly premium for coverage in Kaiser Senior Advantage Plan, the Lovelace Senior Plan, or the Presbyterian MediCare PPO based on a percentage of the full premium based on years of service. Use Tables C through F to find your monthly rate for your selected plans(s) as well as the annual credit amounts you are eligible to receive for the Your Spending Account option. Additional Employee Scenarios Employees who were hired (or rehired) as stated below will not have access to a Sandia-sponsored medical plan or the Your Spending Account option. Non-represented employees who were hired (or rehired) on or after January 1, 2009 OPEIU-represented employees who were hired (or rehired) on or after July 1, 2009 MTC- and SPA-represented employees who were hired (or rehired) on or after July 1, (TTY: ) M-F 7 am - 7 pm MT

19 TABLE A: Employees Who Retired Prior to January 1, 1995 Your Spending Account annual credit amount $1,728 $3,456 TABLE B: Employees Who Retired after 12/31/1994 and before 1/1/2003 OR after 12/31/2002 with 30+ years Presbyterian MediCare PPO monthly premium $14.40 $28.80 Lovelace Senior Plan monthly premium $7.74 $15.48 Kaiser Senior Advantage Plan monthly premium $22.44 $44.88 Your Spending Account annual credit amount $1,555 $3,110 TABLE C: Employees Who Retired After 12/31/2002 with years Presbyterian MediCare PPO monthly premium $21.60 $43.20 Lovelace Senior Plan monthly premium $11.61 $23.22 Kaiser Senior Advantage Plan monthly premium $33.66 $67.32 Your Spending Account annual credit amount $1,469 $2,938 TABLE D: Employees Who Retired after 12/31/2002 with years Presbyterian MediCare PPO monthly premium $36 $72 Lovelace Senior Plan monthly premium $19.35 $38.70 Kaiser Senior Advantage Plan monthly premium $56.10 $ Your Spending Account annual credit amount $1,296 $2,592 TABLE E: Employees Who Retired after 12/31/2002 with years Presbyterian MediCare PPO monthly premium $50.40 $ Lovelace Senior Plan monthly premium $27.09 $54.18 Kaiser Senior Advantage Plan monthly premium $78.53 $ Your Spending Account annual credit amount $1,123 $2,246 TABLE F: Employees Who Retired after 12/31/2002 with years 1 Medicare-eligible 2 Medicare-eligibles Presbyterian MediCare PPO monthly premium $64.80 $ Lovelace Senior Plan monthly premium $34.83 $69.66 Kaiser Senior Advantage Plan monthly premium $ $ Your Spending Account annual credit amount $950 $1,900 Note: Rates for Presbyterian MediCare PPO Plan, Lovelace Senior Plan, and Kaiser Senior Advantage Plan are subject to change based on Centers for Medicare and Medicaid (CMS) approval (TTY: ) M-F 7 am - 7 pm MT 19

20 Surviving Spouse Medical Premium Sharing & Your Spending Account Credits If you elect the Your Spending Account option, your annual credits will become available on January 1, 2011, for use in paying your monthly premiums. Your surviving spouse is only eligible to enroll in the Surviving Spouse Medical Plan as long as he/she is your covered dependent at the time of your death. Important: You cannot enroll in a Sandia-sponsored group Medicare Advantage Plan and elect the Your Spending Account option. It is an either/or choice. The Centers for Medicare and Medicaid (CMS) regulates the premiums for the various individual market Medicare supplemental health options under Your Spending Account and these will not be available until open enrollment. The surviving spouse (and any dependents enrolled at the time of death) may continue coverage by paying shown on the following page: Note: If you remarry, you are no longer eligible for a Sandia-sponsored medical plan or Your Spending Account (TTY: ) M-F 7 am - 7 pm MT

21 Surviving spouse of a retiree or regular employee with 15 or more years of service Surviving spouses of a retiree or regular employee with 15 or more of service pay a monthly premium for coverage in Kaiser Senior Advantage Plan, the Lovelace Senior Plan, or the Presbyterian MediCare PPO. Use Table A to determine your monthly premium amount as well as the annual credit amounts you are eligible to receive for the Your Spending Account option. Surviving spouse of a regular employee with less than 15 years of service Surviving spouses of a regular employee with less than 15 years of service pay 100% of the premium for coverage in Kaiser Senior Advantage Plan, the Lovelace Senior Plan, or the Presbyterian MediCare PPO. Use Table B to determine your monthly premium amount. Additional Surviving Spouse Scenarios Surviving spouses of an employee in the categories below will not have access to a Sandia-sponsored medical plan or the Your Spending Account option. Surviving spouse of a non-represented employee who was hired (or rehired) on or after January 1, 2009 Surviving spouse of an OPEIUrepresented employee who was hired (or rehired) on or after July 1, 2009 Surviving spouse of an MTC- or SPArepresented employee who was hired (or rehired) on or after July 1, 2010 TABLE A: Surviving spouse of a retiree or regular employee with 15 or more years of service Presbyterian MediCare PPO monthly premium $72 Lovelace Senior Plan monthly premium $38.70 Kaiser Senior Advantage Plan monthly premium $ Your Spending Account annual credit amount $864 TABLE B: Surviving spouse of a regular employee with less than 15 years of service Presbyterian MediCare PPO monthly premium $144 Lovelace Senior Plan monthly premium $77.40 Kaiser Senior Advantage Plan monthly premium $ Note: Rates for Presbyterian MediCare PPO Plan, Lovelace Senior Plan, and Kaiser Senior Advantage Plan are subject to change based on Centers for Medicare and Medicaid (CMS) approval (TTY: ) M-F 7 am - 7 pm MT 21

22 Long-Term Disability Terminee Premium Sharing & Your Spending Account Credits If you elect the Your Spending Account option, your annual credits will become available on January 1, 2011, for use in paying your monthly premiums. Important: You cannot enroll in a Sandia-sponsored group Medicare Advantage Plan and elect the Your Spending Account option. It is an either/or choice. The Centers for Medicare and Medicaid (CMS) regulates the premiums for the various individual market Medicare supplemental health options under Your Spending Account and these will not be available until open enrollment. The LTD terminee monthly premiums vary based on when you became an LTD terminee. Employees who became an LTD terminee prior to January 1, 1995 Employees who became an LTD terminee prior to January 1, 1995 will not be required to pay a premium share for themselves or any eligible Class I dependents for the Kaiser Senior Advantage Plan, Lovelace Senior Plan, or Presbyterian MediCare PPO at this time. You are eligible to elect the Your Spending Account option as described on page 15. The annual amount eligible for use is provided in Table A. Employees who became an LTD terminee after December 31, 1994 and prior to January 1, 2003 Employees who became an LTD terminee after December 31, 1994, pay a monthly premium for coverage in the Kaiser Senior Advantage Plan, Lovelace Senior Plan, or Presbyterian MediCare PPO equal to 10% of the cost. You are eligible to elect the Your Spending Account option as described on page 15. The annual amount eligible for use is provided in Table B. Employees Who Became an LTD terminee after December 31, 2002 Employees who became an LTD terminee after December 31, 2002, pay a monthly premium for coverage in the Kaiser Senior Advantage Plan, Lovelace Senior Plan, or Presbyterian MediCare PPO equal to 35% of the cost. You are eligible to elect the Your Spending Account option as described on page 15. The annual amount eligible for use is provided in Table C. Additional LTD terminee scenarios Employees who were hired (or rehired) as stated below and became an LTD terminee will not have access to a Sandia-sponsored medical plan or the Your Spending Account option. Non-represented employees who were hired (or rehired) on or after January 1, 2009 OPEIU-represented employees who were hired (or rehired) on or after July 1, 2009 MTC- and SPA-represented employees who were hired (or rehired) on or after July 1, (TTY: ) M-F 7 am - 7 pm MT

23 TABLE A: Employee who became an LTD terminee prior to January 1, 1995 Your Spending Account annual credit amount $1,728 $3,456 TABLE B: Employees who became an LTD terminee after December 31, 1994 and prior to January 1, 2003 Presbyterian MediCare PPO monthly premium $14.40 $28.80 Lovelace Senior Plan monthly premium $7.74 $15.48 Kaiser Senior Advantage Plan monthly premium $22.44 $44.88 Your Spending Account annual credit amount $1,555 $3,110 TABLE C: Employees Who Became an LTD terminee after December 31, Medicare-eligible 2 Medicare-eligibles Presbyterian MediCare PPO monthly premium $50.40 $ Lovelace Senior Plan monthly premium $27.09 $54.18 Kaiser Senior Advantage Plan monthly premium $78.53 $ Your Spending Account annual credit amount $1,123 $2,246 Note: Rates for Presbyterian MediCare PPO Plan, Lovelace Senior Plan, and Kaiser Senior Advantage Plan are subject to change based on Centers for Medicare and Medicaid (CMS) approval (TTY: ) M-F 7 am - 7 pm MT 23

24 Dental Care Program The Sandia Dental Care Program is administered by Delta Dental of Michigan The Sandia Dental Care Program is available to retired employees and their eligible dependents. Monthly premiums become effective on January 1, You can obtain information on this plan (including the ability to check benefits, eligibility, claims information, print ID cards, and find a provider) by visiting For additional information, refer to the Dental Care Program summary at key points: Coinsurance coverage is based on a percentage of the maximum approved fee for the following types of services: Basic and restorative services (including fillings, extractions, endodontic and periodontal services) will be covered at 80%. Major services (such as crowns, prosthodontics, and specified implant procedures) will be covered at 50%. Orthodontic services will be covered at 50% Preventive services (such as oral examinations, routine cleanings, and x-rays) will be covered at 100% Annual deductible of $50 per individual up to a family annual maximum deductible of $150 Annual maximum benefit for non-orthodontic covered services is $1500 Lifetime maximum benefit for orthodontic covered services is $1800 Employees who retired prior to January 1, 2009 Employees who retired prior to January 1, 2009, will not be required to pay a dental TABLE A: Employees Who Hired Prior to 01/01/2009 and Retired after 12/31/08 premium share for themselves or any eligible Class 1 dependents at this time. Employees who were hired prior to January 1, 2009, and retired after December 31, 2008 Employees who hired prior to January 1, 2009, and retired after December 31, 2008, pay a monthly dental premium share. Rates are based on retiree, retiree plus one, or retiree plus three or more eligible dependents. Use Table A to find your rate. Additional Employee Scenarios Employees who were hired (or rehired) as stated below pay the full monthly dental premium. Rates are based on retiree, retiree plus one, or retiree plus three or more eligible dependents. Use Table B to find your rate. Non-represented employees who were hired (or rehired) on or after January 1, 2009 OPEIU-represented employees who were hired (or rehired) on or after July 1, 2009 MTC- and SPA-represented employees who were hired (or rehired) on or after July 1, 2010 Retiree only monthly premium $9.00 Retiree plus 1 monthly premium $17.00 Retiree plus 2 (or more) monthly premium $26.00 TABLE B: Additional employee scenarios: Non-represented employees who were hired (or rehired) on or after January 1, 2009 OPEIU-represented employees who were hired (or rehired) on or after July 1, 2009 MTC- and SPA-represented employees who were hired (or rehired) on or after July 1, 2010 Retiree only monthly premium $45.00 Retiree plus 1 monthly premium $87.00 Retiree plus 2 (or more) monthly premium $ (TTY: ) M-F 7 am - 7 pm MT

25 Glossary of terms This list explains some of the more important Medicare concepts and terms. Coinsurance: A set percentage of covered expenses that a Medicare user must pay out-of-pocket. Copayment (Copay): A set charge, collected at the time of service and paid by the Medicare user for certain services including prescription drugs. Deductible: The amount paid out-ofpocket toward covered medical expenses before the plan begins paying. Gap : Medicare drug plans may have a coverage gap, sometimes called the donut hole. Most plans offer generic drug coverage in the gap. In 2011, the initial coverage limit increases to $2,840 just a $10.00 increase but the cost of single source brand name drugs inside the coverage gap will be discounted by 50%. HMO (Health Maintenance Organization): Except for urgent care or emergencies, an HMO only covers care that is provided by primary care doctors, specialists, or hospitals in the plan s network. Out-of-Pocket Maximum: The maximum you will pay each year (e.g. copays). Medicare Advantage Plans: These are health plan options that are approved by Medicare but run by private insurance companies. Medicare Advantage plans vary by the type of doctor network they provide: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Private Fee-for-Service. Medigap (Medicare Supplement Insurance) Policies: These policies are sold by private insurance companies to fill gaps in Original Medicare plan coverage. In general, with a Medigap policy, beneficiaries get help paying for some of the health care costs not covered by the Original Medicare plan. Part D (Medicare Prescription Drug Plans): These stand-alone plans add prescription drug coverage to the Original Medicare plan, some Medicare Cost plans, some Medicare Private Feefor-Service plans. Medicare Prescription Drug plans are offered by insurance companies and other private companies approved by Medicare. PFFS plans: These plans cover visits to any primary care doctor, specialist, or hospital that accepts the terms of the plan s payment. PFFS plans usually include a prescription drug plan. PPO plans: These plans cover visits to any physician whether they are in or out of the plan s network. However, you will pay less if you use primary care doctors, specialists, and hospitals in the plan s network. A PPO usually includes a prescription drug plan (TTY: ) M-F 7 am - 7 pm MT 25