IBM CANADA LTD RETIREE FLEXIBLE BENEFITS PLAN

Transcription

1 IBM CANADA LTD RETIREE FLEXIBLE BENEFITS PLAN

2 Terms and Conditions This guide is intended to provide an overview of certain plans and programs in which you may participate. Complete details are found in formal plan documents, which are the complete and exclusive statement of the Company s obligations under the plan. The official plan documents shall govern in the event of a conflict between information contained in these or other documents and statements. The plan administrator retains exclusive authority and discretion to interpret the terms of the benefits plans and programs described herein. The Company reserves the right, in its sole discretion, to amend, change, suspend, or terminate any benefit or other plan, program, practice or policy of the Company at any time. The Company does not have an obligation to, and nothing contained in this guide shall be construed as creating an express implied obligation or promise on the part of the Company to, maintain, continue to offer, or make available such plans, programs, practices or policies.

3 INSIDE Introduction... 4 Provincial Health Care Benefits... 5 IBM Retiree Flexible Benefits Plan... 7 Eligibility... 7 Duration of Post Retirement Benefits... 8 Survivors Coverage... 8 Family Lifetime Maximum... 8 PRB Eligibility/Duration Summary Chart... 9 Eligible Dependents Annual Premium Catastrophic Coverage Annual Deductible Health Care Spending Account (HCSA) Claims Process How to Submit a Claim Claims Process Flowchart Claims Submission Deadlines Coordination of Benefits Retiree Life Insurance Life Insurance Conversion Designating a Beneficiary Your Benefits Resources Website 30 Taxable Benefits Extended Health and Dental Product. 32 Opportunity Programs Sun Life Financial Member Services Website Frequently Asked Questions Contact Information

4 INTRODUCTION This document is an overview of IBM s Post-Retirement Benefits (PRB) plan called the IBM Retiree Flexible Benefits Plan (the Plan ). When it comes to health care coverage, individual needs vary dramatically. The IBM Retiree Flexible Benefits Plan is designed to give you flexibility in how you spend your company provided health care dollars. If you meet the PRB eligibility requirements at the time of your retirement, you and your eligible dependents listed on your profile automatically receive coverage from the IBM Retiree Flexible Benefits Plan starting on the first day of your retirement. The length of time PRB will be available to you as a retiree will be determined by the rules outlined in the Duration of Post Retirement Benefits section. 4

5 PROVINCIAL HEALTH CARE BENEFITS Your provincial health care plan covers most basic health care expenses, including standard room ward hospitalization, physicians fees and once you reach age 65 selected prescription drugs. To qualify for coverage, you and your dependents must meet the eligibility criteria in your province of residence. In most provinces, IBM pays the cost of your provincial health plan coverage through a special payroll tax. In British Columbia, where individual premiums are required, the company pays the necessary premiums on your behalf as long you continue to be eligible for IBM s postretirement benefits, provided you were enrolled in your provincial health care plan through IBM. Please note that company paid premiums are a taxable benefit to you. For more information please contact the IBM Employee Services Contact Center at Provincial Health Care and Drug Benefits Provincial drug programs provide you with coverage for drugs included on an approved provincial formulary. In most of the provinces, provincial coverage for prescription drugs starts at age 65. Provincial drug coverage is either automatic or by an application which is sent by the government about 3 to 6 months prior to age 65. In some provinces you are required to pay part of the cost of your drugs (either a percentage of the cost or a flat dollar deductible). In many provinces, you must pay a set amount in order to be covered. In some provinces, coverage is only available for low income families. If you are eligible for provincial drug coverage, your provincial Medicare plan will be the first payer (in some instances, the only payer) for your prescription drug claims. 5

6 PROVINCIAL HEALTH CARE BENEFITS Regie de l'assurance Maladie Quebec (RAMQ) The Quebec Prescription Drug Insurance Plan specifies a minimum level of drug coverage for Quebec residents. Coverage under this plan is provided by RAMQ (Régie de l'assurance maladie du Québec) or by administrators of private employee benefit plans, such as IBM. Prescription drug reimbursement for IBM retirees in Quebec under age 65 Eligible IBM retirees under age 65 are not eligible for RAMQ and are therefore covered by the IBM Plan instead. As a result, all RAMQ-eligible prescription drugs must be submitted for reimbursement under the IBM Plan. The Plan will reimburse these expenses by the amount prescribed by the Quebec government. Any amount left over can be submitted for reimbursement under the catastrophic coverage (subject to meeting the deductible) and your HCSA. Prescription drug reimbursement for IBM retirees in Quebec age 65 or older Eligible IBM retirees age 65 and over are automatically enrolled for RAMQ coverage. Upon reaching age 65, retirees will have the choice to obtain RAMQ-eligible prescription drug coverage from either RAMQ or IBM. The cost of RAMQ coverage is subsidized by the provincial government. IBM is required to offer drug coverage to IBM retirees in Quebec who are age 65 or older, as an alternative to provincial drug coverage (RAMQ). If you choose to retain drug coverage through IBM after age 65, you will be required to pay the cost of this coverage to IBM. The IBM RAMQ-compliant plan coverage is not subsidized and the current annual premium is $3,100 /person/year. As a result, most retirees elect RAMQ coverage as the first payer for all their RAMQ-eligible prescriptions drugs. Under this arrangement you must submit all your RAMQ-eligible prescription drugs clams to RAMQ first, then, you can submit any unpaid amount to the IBM Plan for reimbursement under the catastrophic coverage (subject to meeting the deductible) and your HCSA. 6

7 IBM RETIREE FLEXIBLE BENEFITS PLAN IBM s Retiree Flexible Benefits Plan provides an important supplement to your provincial health care benefits. The Plan has three components: an Annual Premium, Catastrophic Coverage with an Annual Deductible, and a Health Care Spending Account (HCSA). Annually, you will be charged a plan premium which will be automatically deducted from your HCSA. This mandatory premium provides you access to the Retiree Flexible Benefits Plan and is primarily intended to pay for Catastrophic Coverage (see Annual Premium for details). Catastrophic Coverage provides 90% reimbursement for eligible medical services or expenses not covered by your provincial health plan, once you reach an Annual Deductible (see Catastrophic Coverage for details). Each year, IBM allocates a set amount to your HCSA. You may use these funds to pay for a wide range of health related expenses, or to purchase private health insurance (see Health Care Spending Account for details). Eligibility While you may be eligible to retire (age 55 or 30 years of service) from IBM, you may or may not be eligible for IBM PRB. You are eligible for the Plan on your date of retirement if you meet one the following three eligibility requirements: 1. You were hired or rehired by IBM Canada Ltd. before April 17, 2000, are at least age 55 and have 10 or more years of credited IBM Service*, or have 30 years or more of credited IBM Service*. 2. You were hired or rehired by IBM Canada Ltd. between April 17, 2000 and December 31, 2004 (inclusive), are at least age 55 and have 15 or more years of credited IBM Service*. 3. You are a former ISM Employees and hired by IBM Canada Ltd. on January 1, 2001 as part of the amalgamation of ISM into IBM and are at least age 55 and have 10 or more years of credited IBM Service*, or have 30 years or more of credited IBM Service*. Any employee hired or rehired on or after January 1, 2005 is not eligible for post retirement benefits. *Only years of service attributed to regular full-time employment status will be counted towards the PRB criteria. 7

8 IBM RETIREE FLEXIBLE BENEFITS PLAN Duration of Post-Retirement Benefits The following rules are applied to determine the duration of IBM s PRB: If you meet the eligibility criteria for PRB on or before December 31, 2007, you and your eligible dependents on your profile will continue to receive PRB throughout your retirement, regardless of your age or when you retire. If you meet the eligibility criteria for PRB on or after January 1, 2008, you and your eligible dependents on your profile will continue to receive PRBs until the end of the calendar year in which you reach age 65. If you retire at age 65 (or older), you will not be eligible for PRB. When you reach age 65, any unused balance on your HCSA, if applicable, will not roll-over into the next calendar year. All eligible claims must be received at Sun Life Financial within 60 days of December 31 of that year. All retirees eligible for PRB will continue to receive the Retiree Life Insurance Plan benefit beyond age 65. Survivors Coverage If, at the time of your death, you were a retiree who was eligible for PRB throughout retirement, eligible dependents on your profile will continue to receive the same benefits coverage under the Plan. This coverage will continue for your surviving spouse s lifetime, and/or your eligible dependent children. Children that no longer meet the eligibility requirements under the terms and conditions of the Plan will not receive coverage. If, at the time of your death, you were a retiree who was eligible for PRBs until age 65 only, the eligible dependents on your profile will continue to receive the same benefits coverage under the Plan until the end of the calendar year in which you would have reached age 65. Coverage for your eligible dependent children will cease the earlier of when they no longer meet the eligibility requirements under the terms and conditions of IBM's policy or when you would have reached age 65. Family Lifetime Maximum If you retire on or after January 1, 2010 with PRB, the family lifetime maximum limit under the Plan will be $250,000. This lifetime maximum limit will not include the employee active claims history. Once the family lifetime maximum is reached, any further claims will not be reimbursed under the IBM Retiree Flexible Benefits Plan. 8

9 IBM RETIREE FLEXIBLE BENEFITS PLAN PRB Eligibility/Duration Summary Chart The following table summarizes the eligibility and duration of the PRB: Step 1: Step 2: Step 3: Step 4: Start on the left side of the chart and confirm your most recent IBM Canada hire or rehire date. Once you have confirmed your most recent IBM Canada hire or rehire date, look to the next columns which specify minimum age and minimum years of service requirements. If you meet these requirements, go to Step 3. Once you have confirmed that you are eligible for PRB, look at the next columns to determine the duration of your PRB. If you meet the PRB eligibility criteria on or before December 31, 2007, then you are eligible for PRB throughout retirement, regardless of when you actually retire. If you meet the eligibility criteria on or after January 1, 2008, then you are eligible for PRB until age 65 only, regardless of when you actually retire. If you joined IBM as part of a specific deal (includes acquisition, amalgamation, etc.) your eligibility criteria may differ. Please refer to details in the chart. 9

10 IBM RETIREE FLEXIBLE BENEFITS PLAN Eligible Dependents Your eligible dependents listed on your profile the day you retire from IBM will automatically receive coverage under the Plan. You can remove dependents from your Plan, but you may not add dependents for coverage after your date of retirement. A midyear coverage change to remove a dependent will not change your annual premium or deductible until the following year. Your eligible dependents include: Your spouse: A person to whom you are legally married; A person to whom you are not married but has been residing with you for at least one year in a conjugal relationship and you publicly represent as your common law spouse or same sex partner; or A person who is the parent of your child and to whom you are not married but resides with you in a conjugal relationship and you publicly represent as your common law spouse or same sex partner. Once the person registered on your profile as spouse no longer meets any of the above definitions, you are required to remove him/her from your profile. Your natural or legally adopted, unmarried children who are: Under age 19, or Age 19 but not yet age 25 (26 in Quebec), if they are not employed full- time and are principally dependent on you for support; or Other unmarried children, including step-children, brothers or sisters who are under age 19, principally dependent on you for support and, when not attending school, permanently reside in your household in a parent/child relationship; or Age 19 but not yet age 25 (26 in Quebec), if they are not employed full-time, are principally dependent on you for support and, when not attending school, permanently reside in your household in a parent/child relationship. An eligible child may remain covered after age 25 if he or she is mentally or physically incapable of earning a living, unmarried and principally dependent on you for support and maintenance at the time of reaching 25, 26 in Quebec (subject to approval by Sun Life prior to the child reaching age 25, 26 in Quebec). 10

11 IBM RETIREE FLEXIBLE BENEFITS PLAN Annual Premium You are required to pay an Annual Premium for Catastrophic Coverage under the Plan, based on your coverage category*. Your required premium is primarily intended to pay for Catastrophic Coverage and will be deducted at the beginning of each calendar year from your HCSA. If you retire part way through the year, your annual premium will be prorated based on your month of retirement for the first year. The chart below shows annual premiums as of January 1, Please note that if you live in Quebec, there may be an additional premium payable at age 65 or older based on the coverage provided through the Quebec Prescription Drug Insurance Plan (administered by RAMQ). Coverage Category Annual Premium You Only $ 228 You Plus One Dependent $ 456 You Plus Two or More Dependents $ 637 Annual premiums are subject to change in the future to reflect plan experience and the impact of future changes to Provincial Health Care Plans, as appropriate. * You will be assigned a coverage category (You Only, You Plus One, or You Plus Two or More) for the Catastrophic Coverage based on the eligible dependents you have on file at the time of your retirement. Catastrophic Coverage IBM recognizes that unpredictable medical expenses can threaten your financial security. Catastrophic Coverage provides a safety net in the event that you or an eligible dependent incurs significant medical expenses not covered elsewhere. It covers 90% of a defined list of selected and eligible expenses, after you reach your annual deductible. In all cases, the expenses must be medically necessary, reasonable and customary, and recommended by a physician. The Catastrophic Coverage requires that you pay the expense directly and then to file a claim for reimbursement (see Claims section below). Reasonable and customary expenses The Catastrophic Coverage sets reasonable and customary (R&C) limits on fees charged by hospitals, licensed paramedical practitioners and other providers for medically necessary treatment. These limits are based on the amounts that most providers typically charge in your geographic area. The plan covers expenses up to the R&C limit for covered services. You will be responsible for paying the portion of any expense over the limit. 11

12 IBM RETIREE FLEXIBLE BENEFITS PLAN Eligible Expenses under the Catastrophic Coverage Sample Eligible catastrophic expenses Ineligible catastrophic expenses Drugs prescribed by a medical practitioner or a dentist and dispensed by a licensed pharmacist, including insulin, allergy serums and other injectable drugs, when administered by a physician. In-home professional nursing care and services, to a calendar year maximum of $25,000 per employee or eligible dependent -- claims must be pre-approved by Sun Life Financial -- please provide a letter to Sun Life Financial from your doctor indicating: nature of the condition; medical necessity of the service to be provided; nature of nursing duties provided, and minimum level of nursing expertise required (i.e., R.N. or R.N.A.). Local ambulance to and from nearest hospital equipped to provide treatment. Treatment by x-ray, radium and radioactive isotopes. Medicated surgical dressings, cases, splints, trusses, crutches, braces. Rental of wheelchairs or hospital beds -- subject to pre-approval by Sun Life. Artificial limbs and eyes (purchased in Canada). Physiotherapy by a licensed physiotherapist, to a calendar year maximum of $1,000 per person. Supplies for insulin dependent diabetics, including blood glucose monitoring machines and blood-letting devices. Oxygen and its administration. Pacemakers. Dental Expenses Nursing home Semi-private Hospital bed Vision Care Expenses Expenses de-listed by your provincial health plan Expenses paid by your provincial health plan Expenses for products or procedures that aren't medically necessary or are considered experimental Cosmetic expenses or treatment, unless associated with an accident Expenses required due to a war, declared or undeclared Expenses for over the counter drugs, medicines or products (even when prescribed by a doctor) Expenses for the cost of insurance Any single purchase of drugs which would not reasonably be consumed within 90 days Any drug which does not have a drug identification number as defined by the Canadian federal legislation Any drug which is registered under Division 10 of the Regulation to the Food and Drugs Act, Canada Vitamins Vaccines For questions on whether a specific expense is eligible for reimbursement or to obtain pre-approval, contact Sun Life Financial at SUN-2244 ( ). 12

13 IBM RETIREE FLEXIBLE BENEFITS PLAN Annual Deductible The Annual Deductible is the portion of your eligible catastrophic expenses that you pay outof-pocket each year before you can receive reimbursement. Claims submitted towards the annual deductible, but declined for reimbursement (i.e. because the deductible has not yet been satisfied or it is an ineligible catastrophic expense), can subsequently be reimbursed through your HCSA, if they are an eligible medical expense. Only selected and eligible catastrophic expenses (see eligible expenses above) can be applied toward the Annual Deductible. For example, semi-private hospital room, dental and vision care expenses, out of country medical expenses, and the annual premium do not qualify as eligible expenses toward your Annual Deductible. The Annual Deductible is reset each January 1. It is not pro-rated based on your retirement date. The Annual Deductible may change over time to reflect Plan experience and the future impact of changes to Provincial Health Care Plans, as appropriate. The Annual Deductible varies by the number of eligible dependents as follows: Coverage Category Annual Deductible (January 1, 2017) You Only $3,494 You Plus One Dependent $4,392 You Plus Two or More Dependents $4,992 If your coverage category is You Plus One or You Plus Two or More, your Annual Deductible may be reached with the combined eligible expenses of all family members. If any one family member s eligible expenses reach $3,494 in a calendar year, the Catastrophic Coverage will begin to reimburse 90% of additional eligible expenses for that person for the balance of the year. The remaining 10% unpaid balance will be used towards any outstanding deductible amounts for you and/or other dependents. Benefits will begin for you or other covered family members as soon as the remaining balance of the Annual Deductible for your coverage category has been reached. Please review the following scenarios for a retiree with eligible dependents: 13

14 IBM RETIREE FLEXIBLE BENEFITS PLAN Scenario 1: The selected and eligible expenses for Claimant 1 reached the $3,494 Annual Deductible; the balance of annual deductible has been met through a combination of selected and eligible expenses of other covered family members. As soon as eligible catastrophic expenses for Claimant 1 reach $3,494, Catastrophic Coverage begins to reimburse 90% of that claimant s additional eligible expenses for the balance of the year. Catastrophic Coverage will begin for other covered family members as soon as their combined eligible expenses reach the balance of the Annual Deductible. Annual Deductible Retiree Plus 1: $4,392 Retiree Plus 2 or More: $4,992 Claimant 1 $3,494 $3,494 Claimant 2 $896 $749 Claimant 3 N/A $749 Claimant 4 N/A $0 Total Deductible $4,392 $4,992 Scenario 2: The Annual Deductible is reached with the combined selected and eligible medical expenses of all covered family members. No one claimant need incur expenses of $3,494 before the Annual Deductible is reached and reimbursement begins. Annual Deductible Retiree Plus 1: $4,392 Retiree Plus 2 or More: $4,992 Claimant 1 $1,000 $1,500 Claimant 2 $3,392 $1,500 Claimant 3 N/A $1,992 Additional Claimant(s) N/A $0 Total Deductible $4,392 $4,992 14

15 IBM RETIREE FLEXIBLE BENEFITS PLAN Health Care Spending Account Each year, IBM allocates a set amount to your HCSA, regardless of your coverage category. You may use these funds to pay for a wide range of health related expenses and/or to purchase private health insurance. Your mandatory annual premium will be automatically deducted from your HCSA. HCSA Annual Deposit If you were hired or rehired by IBM on or after April 17, 2000 and have 15 or more years of service at retirement, your annual HCSA deposit is $2,100, less your annual premium. The $2,100 HCSA annual deposit will not increase in the future. If you were hired or rehired by IBM before April 17, 2000 (or are a former ISM employee who transitioned to IBM on January 1, 2001), and have 10 or more years of service at retirement, your annual HCSA deposit is based on your length of service at retirement, as follows: Complete Years of Service at Retirement Annual HCSA deposit* 10 years $1,600, less annual premium 11 years $1,700, less annual premium 12 years $1,800, less annual premium 13 years $1,900, less annual premium 14 years $2,000, less annual premium 15 years or more $2,100, less annual premium *For retirees who were regular part-time employees, your HCSA contribution is pro-rated based on your fulltime equivalent percentage. HCSA Rules The HCSA annual deposit is made to your account on January 1 of each year. If you retire mid-year, your HCSA deposit will be pro-rated based on the number of months remaining in the plan year (calendar year) based on your retirement date. For example, if you retire on July 1, you will receive 50% of your eligible HCSA annual deposit for your first year of retirement. The HCSA annual deposit will be reduced by the annual premium for the catastrophic plan (pro-rated if you retire mid-year). 15

16 IBM RETIREE FLEXIBLE BENEFITS PLAN If you have an eligible family status change (Life Event), your annual premium will change at the beginning of the next benefit plan year. This new premium will be automatically deducted from your HCSA annual deposit for the next plan year (calendar year). Once the money is deposited into your HCSA, it cannot be withdrawn except to reimburse eligible medical and dental expenses for you and your eligible dependents. You must use each year's HCSA contributions within two plan years or you will forfeit the balance. You must submit all claims within 90 days following the end of each plan year (calendar year). You may submit claims for your spouse and other eligible dependents as per the Income Tax Act. When you incur an expense that isn't covered by your catastrophic plan, you can file a claim against your HCSA on the same claim form. You are reimbursed for the eligible expense up to the remaining balance of the available amount in your HCSA. HCSA reimburses out-of-pocket health care expenses that would qualify as a medical expense tax credit under the Income Tax Act. Expenses that are reimbursed through your HCSA cannot also be claimed on your annual income tax form. To maximize the value from your HCSA, you must seek reimbursement from your provincial plan or other medical and dental plans before you use your HCSA balance. Premiums for private health insurance coverage may be submitted to the HCSA in the same manner as any other claim (see Claims Procedure for details). However, this expense will not apply toward your Annual Deductible or be an eligible expense for reimbursement under Catastrophic Coverage. 16

17 IBM RETIREE FLEXIBLE BENEFITS PLAN Eligible Expenses under the HCSA Eligible HCSA expenses Eligible expenses as outlined in the Income Tax Act include: Prescription drugs prescribed by a medical practitioner or dentist. Dental expenses, including preventive, diagnostic, restorative, orthodontic and therapeutic care. Hospital expenses, including semiprivate, preferred or private accommodation. Vision expenses, including eyeglasses and contact lenses. Hearing expenses, including hearing aids, and batteries. Licensed practitioners, including a nurse, chiropodist, massage therapist, occupational therapist, physiotherapist, psychologist, speech therapist and naturopath. Facilities, such as a nursing home, private hospital, alcohol or drug addiction treatment center. Medical devices and supplies, including crutches, needles, syringes, insulin, walker, hospital bed, wheel chair, orthopaedic shoes or boots. Insurance premiums for private health care insurance, including semi-private hospital, out-of-country medical and dental insurance. Ineligible HCSA expenses Examples of expenses not eligible for HCSA reimbursement include: 17 Exercise equipment. Health or fitness club dues. Funeral or burial expenses. Vaccinations for travel, even when taken for general health purposes. Non-prescription drugs or vitamins not prescribed by a doctor. This is not a complete list of eligible expenses. Refer to section 118.2(2) of the Income Tax Act for a current and complete list or call Sun Life Financial if you have questions regarding eligibility of expenses.

18 CLAIMS PROCESS All claims (ineligible and eligible) must go through the Catastrophic Coverage first so that they may be applied against the Annual Deductible. Here is how it works: Retirees with an external health and dental plan (i.e. spouse/partner plan or a private health insurance plan) 1. Submit your claim through the Catastrophic Coverage (and your spouse/dependent s claims as long as they don t have coverage elsewhere see Coordination of Benefits Section. The eligible amount on the claim will be applied first towards the Annual Deductible. When the Annual Deductible for your coverage category is satisfied, eligible expenses will be reimbursed at 90%. 2. Verify if you have coverage for this expense under another plan (spouse/partner/private). Submit any eligible amount or leftover amount to this plan next. 3. You may then claim any remaining unpaid portion of your expenses from either your spouse s/partner s plan or the IBM plan under your HCSA. Submit the claim to your HCSA. Remember, to maximize your HCSA balance, before you submit the claim for reimbursement through your HCSA, you should first obtain your full eligible reimbursement from an external health care plan, such as a spouse s/partner s plan or a private health insurance plan. Retirees without external health and dental plan 1. Submit your and your spouse s/dependent s claims through the Catastrophic Coverage. If the claim is eligible, the amount will first be applied towards the Annual Deductible applicable to your coverage category. When the Annual Deductible is satisfied, eligible expenses will be reimbursed at 90%. 2. At the same time, you can select to apply any unpaid balance of your claim under your HCSA. 18

19 CLAIMS PROCESS How to Submit a Claim Introducing Pay-Direct drug card Using your drug card is a fast and easy way to submit electronic claims for eligible prescription drug purchases directly at the pharmacy. When using your drug card, your claim will be reimbursed using the lowest-priced equivalent (usually the generic) version of that drug, if one is available (which means less out-of-pocket expense for you). The drug card will allow you to coordinate your claim with your provincial drug plan, and/or another benefit plan and will help ensure you re getting the appropriate coverage. All you do is present your drug card, and your pharmacist will submit your claim to Sun Life directly. Any eligible amount of your claim will be applied directly against your Annual Catastrophic deductible. If you have met the Annual Catastrophic deductible, any reimbursement will be processed directly at the pharmacy. If you have not met the Annual Catastrophic deductible, you will still be required to pay the full unpaid portion of your claim. You may be able to submit a Health Care Spending Account (HCSA) claim to recover this amount from the balance in your HCSA (if applicable). Additional features included in your drug card Every time you use your drug card the following new features will be applied to your drug claims: Electronic submission of claims at the pharmacy plus automatic tracking of eligible drug expenses towards your Annual Catastrophic deductible; (if you have an unpaid portion of your claim, you can consider submitting a HCSA claim to recover this expense). Generic drug substitution. Under generic drug substitution, when a doctor prescribes a drug, the pharmacist will dispense the lowest priced equivalent version of that drug (usually the generic), if one is available. Generic drugs are clinically identical to the counterpart brand name drug, with the same active ingredients, and they usually cost significantly less. There is generally no difference in the quality, purity, effectiveness or safety between generic and brand name drugs, so your level of treatment is fully maintained when using a generic equivalent. You can still purchase the higher-priced (usually brand name) drug, but your reimbursement will be for the lowest-priced equivalent unless you require an exception for medical reasons. Prior authorization may apply in a small number of cases where very expensive specialty drugs are used, but where less costly alternatives are available (such as some biologics for rheumatoid arthritis, for example). Prior authorization only affects some drugs, not every prescription you and/or your dependents may seek reimbursement for. You can find a list of the drugs and forms by going to 19

20 CLAIMS PROCESS mysunlife.ca/prior authorization. You can still have a choice of drugs for your condition. o If the drug you require is on the list, you and your doctor will need to fill out a prior authorization form before filling your prescription. Sun Life will review your request and let you know in writing if you are approved and the duration of your approval period. If you were reimbursed for one of the drugs included in the prior authorization program on or after September 4, 2016, you don t have to apply for authorization; you ll be considered pre-approved for reimbursement if you are reimbursed now. Coordination of benefits (COB) with Provincial Drug prescription plans (for example RAMQ, ODB, etc.) and/or any other benefit plan that you have. When you use your Pay-Direct Drug card as of January 1, 2017, be sure to provide your policy number and ID for those other plans so the pharmacist can coordinate. Access to Sun Life s Preferred Pharmacy Network, offering savings on prior authorization claims outside of Quebec as well as a range of services like: injection services (where available), smoking cessation clinics, e-refills, home delivery (where available), and patient assistance services from McKesson Canada, all across Canada. You can find out more about this at mysunlife.ca/sunlifepharmacynetwork. Online claim submission To submit your prescription drug claims, dental claims, and major paramedical claims online follow these steps: 1. Visit and sign on using your Access ID and Password. If you do not have an Access ID, Password or you have forgotten this information, follow the instructions on Sun Life s Website or contact Sun Life at the numbers listed below. 2. From the main screen, access IBM s contract number Select Submit a Claim under the Take me to menu on the right side of the screen or select the type of claim from Claims on the blue menu bar. 4. Follow the rest of the steps on Sun Life s Website to complete the submission of your claim, for example, if you are entering a prescription drug claim, the system will ask for the Drug Identification Number (DIN), date of the expense and the amount paid. 5. At the end of the claim submission process, on the Confirmation page, you will be asked: Do you want to submit this amount to your Health Care Spending Account? If you click yes, you will be directed to submit an online HCSA claim, please continue with the electronic submission of your claim. 20

21 CLAIMS PROCESS 6. You will be required to sign up for direct deposit. Select direct deposit under the Take me to menu on the right side of the screen and then select Register. 7. By providing your address Sun Life will send you an online notification when your claims have been processed. Important! Sun Life may randomly audit claims submitted online. If your claim is chosen for audit, Sun Life will ask you to mail your original receipts before processing your claim. Please be sure to keep your original receipts and supporting documentation. Introducing photo submission of claims through my Sun Life's mobile app (apple and android) Photo submission (digital image capture) is now available for the submission of benefits claim. You will be able to snap a photo of many of your benefits claims receipts and submit the claim through my Sun Life Mobile. To learn more go to sunlife.ca/mobile to download the app and explore the new features. 21

22 CLAIMS PROCESS Submitting a paper claim reimbursement form Follow these steps when submitting a paper claim for reimbursement: 1. Complete and sign a Catastrophic/HCSA (Sun Life Financial Policy 23540) claim form. (Note: Contract No. = Policy No., Member ID = IBM 6 digit serial number) 2. Submit the original bill and claim to Sun Life Financial with the following details: name, address and phone number of provider; dollar amount; patient's name; and date of service or purchase. Keep a copy of the claim form and bill for your records. 3. Indicate on the form if you wish to have any claim amounts not covered by the Catastrophic Coverage paid from your HCSA. 4. If you are coordinating benefits with an external plan, attach the original claim statement (also known as Explanation of Benefits) along with copies of the original receipts for any claims that you have previously submitted to this plan. 5. To be reimbursed from the Catastrophic Coverage, all claims must be received by Sun Life Financial before the deadline. At the start of the calendar year, for the first 90 days, you can submit expense from the previous year and current year. Once the 90-day grace period is over, only current year expenses are eligible for payment. Sun Life Financial will review your claim and pay the eligible amount by cheque, and also send you a claim (or Explanation of Benefits) statement to the home address indicated on your claim form showing: Expenses paid from your Catastrophic Coverage The expenses you submitted Eligible expenses toward your Annual Deductible Remaining amount of your deductible prior to your Catastrophic Coverage reimbursement commencing Eligible expenses paid out of your HCSA Your remaining HCSA balance If you have signed up for direct deposit, you will receive an letting you know that your claim has been processed. 22

23 CLAIMS PROCESS Claims Process Flowchart For greater clarity, the following flowchart summarizes the claims process from the information above: 23

24 CLAIMS PROCESS Claims Submission Deadline Catastrophic claims deadline Eligible catastrophic plan claims must be received by Sun Life Financial before the deadline. At the start of the calendar year, for the first 90 days, you can submit expense from the previous year and current year. Once the 90-day grace period is over, only current year expenses are eligible for payment. Sun Life Financial will consider all charges to be incurred on the date you receive the service, product, supplies or treatment. HCSA grace period for claims submission There is a 90 day grace period for you to submit your 2016 claims. For the first 90 days of 2017 you can submit both 2016 and 2017 claims. Once the grace period is over 2016 expenses are no longer eligible for payment. Your 2016 claims must be received by Sun Life Financial before March 31, 2017 which is the last day of the grace period. After this date only 2017 claims are eligible. HCSA Rollover Under Canada Revenue Agency (CRA) rules, dollars remaining from your 2016 HCSA will automatically roll over into the 2017 Benefit Plan Year and can be used against your 2017 claims. Any HCSA balance carried over from 2015 that is not used in 2016 will be forfeited as of December 31, Sun Life Financial will always apply your claims to the oldest money first to minimize your risk of forfeiture. Any 2017 claims to be applied against your 2016 rollover balance must be received and date stamped by Sun Life Financial on or before December 31,

25 CLAIMS PROCESS Coordination of Benefits If you are covered by two employers' health care plans, insurance industry coordination of benefits rules apply to the IBM s Retiree Flexible Benefits Plan. For all eligible catastrophic coverage claims, coverage under any external plan will be coordinated with IBM s Plan, based on the following guidelines: Your expenses: IBM is first payer. Submit claims for your own expenses to IBM s Retiree Flexible Benefits Plan first. You may then claim any unpaid portion of your expenses under your spouse s plan or any external plan you may have. Your spouse s expenses: IBM is second payer. Submit your spouse s claims to their plan first. You may then submit any unpaid portion of the expenses under IBM s Retiree Flexible Benefits Plan. Note, however, that the maximum benefit payment you can receive from both plans is limited to what the IBM plan would have paid on its own. Your children s expenses: Insurance industry guidelines require the spouse whose birthday is earlier in the calendar year to submit claims for the dependent children to his or her plan first. For example, if you were born in April and your spouse was born in July, then you submit all claims for your children under IBM's Retiree Flexible Benefits Plan first. If you are separated or divorced, claims for your dependents should be sent first to the plan of the custodial parent. If your spouse is also an IBM retiree under the IBM Retiree Flexible Benefits Plan, your spouse will have his or her own HCSA and Catastrophic Coverage under the Plan. Your spouse must submit claims under his or her IBM Retiree Flexible Benefits Plan first, and may then claim any unpaid portion under your plan. Note, however, that the maximum benefit payment you can receive from both plans is limited to what the IBM plan would have paid on its own had it been the only source of coverage for you and your spouse. If your spouse is an active IBMer, your spouse must submit claims to his or her IBM Flexible Benefits Plan first, and then claim any unpaid portion under your Retiree Flexible Benefits Plan. Note, however, that the maximum benefit payment you can receive from both plans is limited to what the IBM Retiree Flexible Benefits Plan would have paid on its own. 25

26 CLAIMS PROCESS Scenario 1 Jeff retires from IBM at age 56. He and his wife, Joan, are in good health and rarely have medical expenses that are not covered by provincial health care. They each go to the dentist once a year and purchase eyeglasses from time to time. Here s how IBM s Retiree Flexible Benefits Plan works for Jeff and Joan. Jeff s coverage is You Plus 1. His annual HCSA of $2,100 is automatically reduced by his annual premium of $456, leaving an HCSA balance of $1,644. Jeff and Joan incur the following expenses not covered elsewhere throughout the year: Service (*) Jeff Joan Total Dental checkups $100 $100 $200 Fillings $100 $100 Crowns $400 $400 Eyeglasses $300 $300 Podiatrist $150 $150 Orthotics $350 $350 Total $500 $1,000 $1,500 (*) The costs of the services are for calculation purposes, and do not represent real costs. Total HCSA claims for the year amount to $1,500, leaving $144 to be rolled over for use in the following calendar year. That means Jeff s HCSA balance at the beginning of the following year will be $1,788 ($1,644 + $144), after deducting his $456 You Plus 1 annual premium. 26

27 CLAIMS PROCESS Scenario 2 Susan retires from IBM to spend more time with her husband Paul. They have two children, 20-year-old Lindsay who is still living at home and attending university, and 25-year old Brian who has moved out. Here s how IBM s Retiree Flexible Benefits Plan works for Susan and her family. Susan has You Plus 2 or More coverage. Her $2,100 HCSA is automatically reduced by her annual premium of $637, leaving an HCSA balance of $1,463. The Catastrophic Coverage annual deductible for Retiree Plus 2 or More coverage is $4,992 for selected and eligible expenses which includes an individual annual limit of $3,494. Susan and her eligible dependents incur the following expenses not covered elsewhere throughout the year: Susan Paul Lindsay Total Dental checkups $100 $100 $100 $300 Fillings $150 $150 Eyeglasses $300 $300 $600 Nursing* $3,494 $3,494 Drugs* $1,300 $700 $2,000 Physiotherapy* $900 $900 Total $1,300 $4,894 $1,250 $7,444 * Eligible expenses that apply to the annual Catastrophic Coverage deductible. Total annual expenses for Susan s family amount to $7,444. She is able to claim $1,463 under her HCSA, leaving $5,981. Paul s $3,494 nursing expense satisfies the maximum individual deductible of $3,494. As a result, Susan is able to claim all of Paul s drug expenses of $1,300 under Catastrophic Coverage and receive a reimbursement of 90% of his claim, or $1,170. In addition, Susan and Lindsay s combined physiotherapy ($900) and drug ($700) expenses of $1,600 satisfy the remaining $1,498 You Plus 2 or More Annual Deductible of $4,992. As a result, Susan is able to claim an additional $102 ($1600 expenses less $1,498 remaining deductible) under Catastrophic Coverage, and receives a reimbursement of 90% of the claim, or $

28 RETIREE LIFE INSURANCE The Retiree Life Insurance Plan pays tax-free benefits to your beneficiary if you pass away while covered by the IBM Retiree Flexible Benefits Plan. Claims must be made within 6 years of the date of death. In the event of your death, your beneficiary or your next of kin should notify the IBM Employee Services Contact Centre. See Contact Information below. IBM pays the full cost of your retiree life insurance plan coverage. The coverage amount you receive is as follows: Plan Eligibility Age Coverage Amount Full-time Under age 65 $12,500 Full-time Age 65 or older $10,000 80% Part-time Under age 65 $10,000 80% Part-time Age 65 or older $8,000 60% Part-time Under age 65 $7,500 60% Part-time Age 65 or older $6,000 50% Part-time Under age 65 $6,250 50% Part-time Age 65 or older $5,000 Your coverage will automatically be reduced on your 65th birthday. Life Insurance Conversion Upon retirement, you may convert your current employee life insurance coverage and/or your spousal life insurance up to a maximum of $1,000,000 by contacting Sun Life and answering a few simple health questions over the phone. Alternatively, if your preference is not to provide Proof of Insurability, you can convert your current employee life insurance coverage and/or your spousal life insurance up to a maximum of $200,000. If you wish to take advantage of the life insurance conversion option you must apply for this life insurance coverage within 30 days from your retirement date. To convert your insurance, please contact Sun Life Financial Customer Solution Center at between 8:30 am and 4:30 pm EST. Important: In the event of your death within 30 days of the date your IBM employee life insurance coverage ceases, the amount you could have converted will be paid as a death benefit under this plan, even if you did not apply for conversion. 28

29 RETIREE LIFE INSURANCE Designating a Beneficiary Your beneficiary information registered in Your Benefits Resources TM Website ( under your IBM employee life insurance coverage at the time of your retirement will automatically continue for your IBM retiree life insurance plan. You can choose or change your beneficiary in accordance with insurance regulations at any time (except where restricted by provincial legislation) on the YBR Website. To complete your beneficiary designation via YBR: Log on to YBR Click on "Beneficiaries" under the Health and Insurance menu. Select from your current listed dependents your desired beneficiary(ies) and/or add a new beneficiary. This can be your Estate, a Trust, an Organization, or a person. Confirm your selections and percentages (for multiple beneficiaries). Once you have confirmed your beneficiary elections, a form will be sent to you. Based on your selected "Preferred Form of Correspondence", the form will be posted onto YBR under the "Your Secure Mailbox" link or mailed to your address on file via Canada Post. Complete this form as requested and mail all pages to Aon Hewitt by the deadline date indicated on the front of the form. If you do not have access to the internet please contact the IBM Employee Services Contact Centre. See Contact Information section. 29

30 YOUR BENEFITS RESOURCES WEBSITE To access YBR you will need: Internet access (e.g. at your home, library, etc...) YBR s URL link: ( Your YBR Access ID and password (PIN). If have forgotten either your User ID or PIN, please click on the corresponding links on YBR to walk through the steps to obtain your User ID and/or to log in by responding to your security questions. See instructions below: If you forget your User ID From the Log on page, click on I forgot my User ID Enter your 6-digit IBM serial number and birth date Your User ID will be retrieved and displayed on the Log on page Enter your PIN to continue the logging on process If you forget your PIN From the Log on page, click on I forgot my password If a Hint is available as a part of your security setup, it will be displayed If the Hint does not help, click on Answer Your Security Questions Correctly answer the three (3) security questions which will be displayed The account will lock after 5 incorrect attempts at entering the PIN Resetting the PIN ( Send Me a New Password) is the only way to unlock your profile; your old PIN will be voided and you will need to use the new PIN to access YBR YBR security model setup If you are to forget your PIN on future visits to the YBR website, the YBR security model setup will assist you in accessing the YBR website without resetting and waiting for a new PIN. The security setup is a one time process, the setup steps are as follows: Access the YBR Log on page ( Enter your 6-digit IBM serial number and PIN (current or a new temporary reset PIN) Create a new User ID (you can continue to use your 6-digit IBM serial number, or create a different User ID) Create a new PIN and Hint (this will only display for employees who are using a temporary recently reset PIN to access YBR at this time) Answer a minimum of 5 out of 15 security questions Once the setup has been completed, you will be logged onto the YBR website. 30

31 TAXABLE BENEFITS The value of your IBM retiree life insurance coverage is a taxable benefit to you federally and in all Provinces. You will receive the applicable income tax form annually based on the cost of your coverage paid on your behalf by IBM. The value of your healthcare coverage (catastrophic coverage and HCSA) under the IBM Retiree Flexible Benefit Plan is tax-free federally and in all Provinces except Quebec. In the province of Quebec, contributions paid by an employer under a plan providing healthcare insurance are subject to income tax. IBM s total annual contribution to your HCSA is therefore your taxable benefit value. The annual premium you pay that is automatically deducted from your HCSA covers the rest of the cost of the Plan so your only taxable benefit is the value of IBM s HCSA contribution. You will receive the applicable income tax forms annually and this taxable benefit must be included in your income tax return to the Minister of Revenue of Quebec. 31

32 EXTENDED HEALTH AND DENTAL PRODUCT IBM has made arrangements with Sun Life to provide access to an optional Extended Health and Dental product that will not require medical evidence to be eligible for coverage. Upon retirement, you will be given a 30-day opportunity to review the product and determine if you would like to purchase this coverage from Sun Life. The coverage would be effective from your first day of retirement. If you purchase the product you will pay premiums for the selected coverage directly to Sun Life. There is a choice of purchasing health coverage only or combined health and dental coverage. The cost of premiums for this coverage is an eligible expense under your HCSA. For more information on the extended health care and dental plan please contact Sun Life Financial Customer Solution Center at between 8:30 am and 4:30 pm EST. 32