Rewards U.S. Post-Employment Benefits. for Freescale Retirees and Terminated Disabled Participants

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1 Rewards. Health and Wellness Life and Disability Savings and Wealth Plus much more! 2007 U.S. Post-Employment Benefits for Freescale Retirees and Terminated Disabled Participants Effective January 1, 2007

2 This Summary Plan Description represents general information regarding the provisions of the Plans constituting your Freescale Rewards. You should not rely on this information other than as a general summary of the features of the Plans. Your rights are governed by the terms of the respective Plan documents. Refer to the Plan documents for complete information on your rights and obligations under the Plans. Also, any questions concerning the Plans shall be determined in accordance with the terms of the Plan documents and not this Summary Plan Description. You may obtain a copy of any Plan document upon written request to Freescale Rewards Customer Service. There may be a reasonable charge for such copies. In the event of any difference between the terms of this Summary Plan Description and the Plan documents, the terms of the Plan documents shall control. No person has the authority to make any oral or written statement or representation of any kind which is legally binding upon Freescale or which alters the Plan documents or any contracts or other documents maintained in conjunction with the Plans. Freescale has reserved the sole right at any time to amend, modify or terminate one or more of the Plans described in the book. This Summary Plan Description describes the Plans as effective on January 1, 2007, and the 401(k) Retirement Savings Plan as adopted and effective December 4, Please see the prior Motorola Summary Plan Description and Summaries of Material Modifications for information concerning Plan provisions prior to that date. Subsequent Summary Plan Descriptions or Summaries of Material Modifications will be provided to advise you of changes in the Plans as required by the Employee Retirement Income Security Act (ERISA). Freescale will provide without charge to any participant in the 401(k) Retirement Savings Plan a copy of the 401(k) Retirement Savings Plan and any other documents required to be delivered to such persons pursuant to Rule 428(b) under the Securities Act. Such requests should be directed to the attention of Benefits Department, Freescale Semiconductor, 6501 West William Cannon Drive, Austin, Texas 78735, phone

3 Rewards. Eligibility and coverage for Retirees Eligibility Requirements for Retirees Enrolling for Coverage Dependent Coverage When Coverage Begins and Ends When You Can Change Your Coverage Other Important Facts About Eligibility and Coverage Coordination of Benefits Continuation Rights Eligibility and coverage for TDPs Eligibility Requirements for TDPs Enrolling for Coverage Dependent Coverage When Coverage Begins and Ends When You Can Change Your Coverage Other Important Facts About Eligibility and Coverage Coordination of Benefits Continuation Rights Health Benefits for Retirees and TDPs Under Age 65 Freescale Post-Employment Health Plan Post-Employment Medical Plan Options Health Care Networks Care Management Maternity Care Program Transplant Services Program What s Covered What s Not Covered Behavioral Health Program Post-Employment Prescription Drug Program Health Maintenance Organization (HMO) Post-Employment Vision Plan Post-Employment Dental Plan Other Important Information Health Benefits for Retirees Age 65 and Over Health Benefits for Retirees Age 65 and Over Medicare Life and Disability (for TDPs and Retired Disabled Participants) Disability Income Plan Life Insurance Plans SPECIAL HEALTH PROGRAMS Wellness Programs/Activity Centers Long-Term Care Insurance savings and wealth 401(k) Retirement Savings Plan Accessing Your Account When Payments Begin Survivor Benefits More Facts About the 401(k) Retirement Savings Plan Important U.S. Tax Information General Administration General Administration Information HIPAA Privacy Notice Definitions Contact Information Rewards Table of Contents

4 introduction A Rewards Package to Fit Your Lifestyle Welcome to Freescale Rewards a competitive benefits package for Freescale retirees and terminated disabled participants (TDPs). Benefits for retirees/tdps and their dependents include health care plans and retirement savings investment options. This book is designed to provide you with useful information that helps you understand the benefits available to you and your dependents. About This Book You have many benefits available to you through the Freescale Post-Employment Health Plan, depending on your status as a retiree or terminated disabled participant (TDP). You also may have investment and distribution options through the 401(k) Retirement Savings Plan. If you are a TDP (or were disabled and receiving long-term disability benefits at the time of your retirement), you may have some life insurance and disability benefits as well. This book provides you with useful information to help you make decisions and take full advantage of the benefits available to you as a Freescale retiree/tdp. The book also acts as the official Summary Plan Description (SPD) for the portion of your Freescale benefits package that requires an SPD under the Employee Retirement Income Security Act (ERISA). This book is divided into the following sections: Health Benefits Eligibility for Retirees includes information on eligibility and enrollment requirements for all retirees (including those retirees who were disabled and receiving Long-Term Disability Benefits at the time of their retirement), their dependents and survivors under the Post-Employment Health Plan. Health Benefits Eligibility for Terminated Disabled Participants (TDPs) includes information on eligibility and enrollment requirements for all TDPs and their dependents under the Post- Employment Health Plan. Health Benefits for Retirees and TDPs Under Age 65 includes information you need to know regarding medical and dental plans, as well as Activity Centers and long-term care insurance. Health Benefits for Retirees Age 65 and Over includes information you need to know regarding medical plans, Activity Centers and long-term care insurance. (TDPs and their dependents or survivors are not offered age 65+ health coverage.) Life and Disability reviews benefits that remain available to TDPs and those retirees who were eligible for, and receiving, long-term disability benefits at the time of their retirement. Special Health Programs reviews wellness programs and long-term care insurance. Savings and Wealth reviews the investment and distribution options available under the 401(k) Retirement Savings Plan. Each section includes: Explanations of the benefit programs, with helpful charts and tables; Tips on getting the most from your benefits; and Important facts, dates and deadlines. Throughout the book, you will see references to where you can find additional information through various Web sites, toll-free numbers, addresses and other helpful sources. At the end of the book, you will find other important information, such as: General Administration Information Procedures for filing claims, your ERISA rights and other important Plan information. Definitions Explanations of commonly used terms and phrases. Contact Information A handy reference, conveniently located at the back of the book, of telephone numbers, Web sites and other resources available for additional benefit program information. Keep this book handy and refer to it often as your resource for information on the many benefits of Freescale Rewards. If you are a terminated disabled participant (TDP) There are some differences in the Post-Employment Health Plan between the TDP and retiree provisions. Watch for shaded boxes like this one throughout the book to obtain important information that is provided specifically for TDPs. If you have any questions, call Freescale Rewards Customer Service at 888-FSL-BENS. ii Rewards Introduction

5 Freescale Post-Employment Plan Benefits The chart below lists the various plans and programs available to Freescale retirees and TDPs. Post- Employment Plan Benefits post-employment benefits for retirees and Terminated disabled participants plan/program what it is who is eligible for more Retiree TDP information Post-Employment Health Plan Behavioral Health Program Maternity Care Program Transplant Services Program Post-Employment Prescription Drug Program Post-Employment Vision Plan Post-Employment Dental Plan Freescale health plan for you and your dependents. Access to quality behavioral health providers to help you remain healthy and drug-free. Educational, prescreening benefit designed for soon-tobe parents. Program through which designated facilities, meeting stringent quality standards, provide organ transplants for participants at an even higher level of benefit coverage. Program through which you purchase prescription drugs through approved retail and mail order network pharmacies. Routine vision care services, including vision examinations, eyeglasses and contact lenses. A plan that provides coverage for preventive and diagnostic dental services, dental treatment and other covered treatment. You and your covered dependents, if you enroll yourself and them You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65 You and your covered dependents, up to age 65, if you enroll yourself and them You and your covered dependents, up to age 65, if you enroll yourself and them You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65, if enrolled in the Post- Employment Health Plan You and your covered dependents, up to age 65 You and your covered dependents, up to age 65, if you enroll yourself and them Pages 1 68 Pages Page 36 Page 37 Pages Pages Pages chart continued on next page Rewards Introduction iii

6 post-employment benefits for retirees and Terminated disabled participants plan/program what it is who is eligible for more Retiree TDP information Humana Group Medicare Private Fee-for-Service (PFFS) Plan Grandfathered Nongrandfathered Activity Centers Long-Term Care Insurance Disability Income Plan Life Insurance Premium Payments Health insurance plans offered as part of the Post- Employment Health Plan, for retirees and their dependents who are age 65 and over. Onsite Freescale Activity Centers designed to give Freescale retirees the opportunity to be active and healthy. Insurance program offered through CNA to assist with costs related to long-term care. Income replacement plan for those who are disabled. Payment by Freescale of your Basic and Supplemental Life Insurance premiums, if you provide authorization. You and your covered dependents, age 65 and over, if you enroll yourself and them You and your spouse, if you enroll yourself and pay the required fees You and your spouse/ domestic partner, if you you elect coverage You, if you were eligible for and receiving benefits under Freescale s Disability Income Plan at the time of your retirement, for as long as you remain disabled and eligible to receive long-term disability benefits You, if you were eligible for and receiving long-term disability benefits at the time you retired, for as long as you remain disabled and eligible to receive long-term disability benefits Not available to TDPs or their dependents Pages Not available to TDPs Page 78 You and your spouse/ domestic partner, if you you elect coverage You, as a TDP, for as long as you remain disabled and eligible to receive long-term disability benefits You, if you separated employment under the Medical Leave of Absence Policy, while receiving longterm disability benefits, while you remain disabled and eligible to receive disability benefits Page 79 Pages Pages iv Rewards Introduction

7 Rewards. Health Benefits Eligibility for Retirees Eligibility Requirements for Retirees Enrolling for Coverage Dependent Coverage When Post-Employment Coverage Begins and Ends When You Can Change Your Coverage Other Important Facts About Eligibility and Coverage... 9 Coordination of Benefits Continuation Rights Freescale offers comprehensive health coverage to eligible retirees and their eligible dependents and survivors. This section summarizes the eligibility requirements and coverage options for retirees and their dependents in the Post-Employment Health Plan. Keep this book in a convenient place and refer to it regularly as your source of information for taking full advantage of the benefits available under the Plan. Retiree Eligibility and Coverage

8 Eligibility Requirements for Freescale Retiree Health Benefits For details on eligibility for retiree benefits, call Freescale Rewards Customer Service at 888-FSL-BENS. People retire at different ages and with varying years of service two factors that are used in determining eligibility for retiree benefits. You may be eligible for Freescale retiree health benefits if you meet specific age and service requirements when you retire. Age and Service Requirements You are eligible as a retiree for Freescale retiree health care and dental care coverage if: You are a current retiree (or spouse/domestic partner of a retiree) eligible for and receiving retiree health benefits; or When your employment terminates, your combined age and service equals at least 75 (for example, you re age 49 with 26 years of service), through December 2, 2007; or When your employment terminates, you are: Age 55 with 20 or more years of service; Age 56 with 18 or more years of service; Age 57 with 16 or more years of service; Age 58 with 14 or more years of service; Age 59 with 12 or more years of service; Age 60 or older with at least 10 years of service; or You were an employee age 55 or older on March 31, 1989 and you retire at age 65 or older. Note: Only full and complete years of age and years of service on U.S. payroll are counted (no partial years). You must satisfy the age and service requirements on or before December 2, 2007, to be eligible for retiree health and dental coverage. After December 2, 2007, no employee will be eligible for retiree health and dental benefits. If you do not meet the age and service requirements when your employment terminates, you are not eligible for Freescale retiree health benefits, but you may be eligible to continue health care coverage under the Freescale Employee Medical Plan under COBRA (the Consolidated Omnibus Budget Reconciliation Act). Check with Freescale Rewards Customer Service for complete details. Who Pays for Retiree Benefits If you enroll for Freescale retiree health benefits, you make a monthly after-tax contribution toward the cost of coverage for you and your covered dependents. Monthly contributions are reviewed annually and subject to change on an annual basis. You are responsible for paying your contributions. When you receive your first bill, be sure to check it carefully to make sure you are being billed for the coverage option you chose. Your first payment is due at the end of the month in which your coverage begins. Please be aware that no benefits are paid for claims during a month in which your contributions are outstanding. You may avoid this problem by having your contributions automatically deducted from your bank account each month. Alternatively, you can pay your contributions quarterly, semi-annually or yearly. For details, contact Freescale Rewards Customer Service at 888-FSL-BENS. If you are a terminated disabled participant (TDP) There are some differences in the Freescale Post-Employment Plan between the TDP and retiree eligibility requirements. Turn to pages for information on eligibility requirements for TDPs. If you have any questions, call Freescale Rewards Customer Service at 888-FSL-BENS. Cost-Sharing and Contributions for Coverage for Retirees In 1992, when the Financial Accounting Standards Board (FASB) changed the way retiree benefits expenses are reported to shareholders (in the guidance known as FAS 106 ), cost-sharing targets were established with an overall contribution maximum for retiree medical benefits. COST-SHARING FOR RETIREES ELIGIBLE FOR NONGRANDFATHERED COVERAGE The retiree contribution for each year is determined by the Plan Administrator. If you started employment with Motorola prior to January 1, 2002, and you meet the age and service requirements for retiree health care coverage as of December 2, 2007, Freescale currently makes coverage available to you and shares with you the cost of the plan s coverage and/or its administration. However, Freescale s share of claims costs shall not exceed, on an annual basis, a maximum of $5,890 for single coverage and $10,690 for family coverage for retirees under age 65. When Freescale s costs reach the maximum, retirees under age 65 will absorb a greater share of the projected costs. Although the maximum Retiree Eligibility and Coverage

9 affects the portion of the expenses you pay, it does not limit the coverage available to you as a retiree, as long as retiree coverage is provided. If you started employment with Motorola or Freescale on or after January 1, 2002, and meet the age and service requirements for retiree health care coverage as of December 2, 2007, you may participate in the Post- Employment Health Benefits Plan; however, you will pay the full cost of coverage. IF YOU ARE HIRED BY FREESCALE If you worked at Motorola prior to January 1, 2002, and terminated employment before becoming eligible for Motorola retiree health care coverage and are subsequently hired, you will retain the retiree health subsidy upon your subsequent retirement only if the time between your initial termination and hire date is less than five years. If you worked at Motorola prior to January 1, 2002, terminated employment after becoming eligible for Motorola retiree health care coverage and are subsequently hired, upon your subsequent retirement you will retain the retiree health care subsidy and retiree health care status that you had at your initial retirement. COST-SHARING FOR RETIREES ELIGIBLE FOR GRANDFATHERED COVERAGE If you met the eligibility requirements for retiree healthcare on or before December 1, 1992, and you are under age 65, your annual contribution increase will be based on the average active employee contribution increase. If you are over age 65, your annual contribution increase for grandfathered age 65+ coverage will be based on the Medical Consumer Price Index, not to exceed five percent of your current contribution amount. Important Note: The Plan Administrator determines the cost-sharing and contribution maximum each Plan Year based upon claim data analyzed by the third-party administrator. The Plan Administrator shall determine in its sole discretion whether the maximum Freescale contribution has been attained. Freescale also reserves the right in its discretion to modify contribution levels and/or plan design. coverage outside the united states Moving Your Primary Residence Outside of the United States Freescale Post-Employment Health Plan coverage is available only if you live in the U.S. or a U.S. territory (e.g; Puerto Rico, Guam). If you move your primary residence outside of the U.S., your coverage ends on the last day of the month during which you move. If You Vacation Abroad While you are traveling or vacationing outside of the U.S. for a period of 60 days or less, your pre-65 coverage under the Post-Employment Health Plan continues for emergency care expenses only. If you are eligible for Medicare, please note that Medicare rarely pays for hospital admissions outside of the U.S. and, in most instances, does not cover other medical services performed outside of the U.S. Separate rules apply to age 65+ coverage; see the Humana Evidence of Coverage booklet for details. ANNUAL REVIEW OF CONTRIBUTION AMOUNT Each year, the amount of your monthly contribution is reviewed and is subject to change. The amount that your contribution increases (if at all) depends on when you met the age and service requirements listed above. CONTRIBUTION INCREASES If you: Retired on or before December 1, 1992, or Are active and met age and service requirements on or before December 1, 1992 Retired before or after age 65, and Are active and met/will meet age and service requirements after December 1, 1992 and on or before December 2, 2007 And you are under age 65, your contribution increase is: Based on the average increase for active employees Based on Plan s total medical cost inflation And your are age 65 or over, your contribution increase is: Based on Medical Consumer Price Index (CP), not to exceed 5% of your current contribution amount Based on Plan s total medical cost inflation Retiree Eligibility and Coverage

10 Remember, once you enroll for the Post- Employment Health Plan, you may not cancel coverage and re-enroll at a later date. Enrolling for Coverage When you retire from Freescale you are offered: Continuation of your current coverage under the Freescale Employee Medical Plan (Freescale Medical Plan or HMO) and the Freescale Employee Dental Plan through COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985). This allows you to continue your health and dental care coverage when coverage would otherwise end, generally for up to 18 months. See the 2007 U.S. Benefits Book for details about COBRA under these Plans. Post-Employment Health Plan coverage (medical and, if you are under age 65, dental) if you are an eligible retiree. Therefore, as an eligible retiree, you have the following options: 1. Elect COBRA under the Employee Medical Plan and/or the Freescale Employee Dental Plan upon retirement and pay the necessary contributions (see the 2007 U.S. Benefits Book for more details), and Elect the Post-Employment Health Plan coverage at some point in the future provided you meet the creditable coverage requirement described below, or Never elect Post-Employment Plan coverage; or 2. Elect Post-Employment Health Plan coverage within 30 days of retirement for coverage to become effective the first day of the month following your last day of employment (and reject COBRA coverage); or 3. Reject COBRA coverage, and Elect Post-Employment Health Plan coverage at some point in the future, provided you meet the creditable coverage requirement described below, or Never elect Post-Employment Health Plan coverage. If you owe the active medical or dental plans any excess benefit or subrogated or reimbursed payment, you may not enroll in the Post-Employment Health Plan unless this amount is repaid within 30 days of retirement. If You Elect Post-Employment Plan Coverage Within 30 Days of Your Retirement To enroll, simply call Freescale Rewards Customer Service at 888-FSL-BENS. No health statement or physical examination is required, and pre-existing conditions are not excluded. Your coverage becomes effective the date of your retirement. If you do not enroll by the date of your retirement (or termination): If you are younger than age 65, you will be enrolled automatically in the 50 Percent Network-Only option If you are age 65 or older, you will have no coverage until you enroll in your appropriate Age 65+ coverage option If You Elect Post-Employment Plan Coverage More Than 30 Days After Your Retirement If you do not elect Post-Employment Health Plan coverage within 30 days of retirement, you may obtain this coverage at any time in the future if you meet certain creditable coverage requirements. You must provide a Certificate of Creditable Coverage from your previous insurance carrier within 30 days of the loss of coverage showing that you have had other medical coverage for a minimum of 12 prior months. If it has been less than 12 months since your retirement, you must provide proof that you have had other coverage since the date you retired. If you defer election of Post- Employment Plan coverage and enroll at a later date, your coverage becomes effective the date Freescale Rewards Customer Service approves your enrollment application. Remember, once you enroll for the Post-Employment Health Plan, neither you nor your dependent may cancel coverage and re-enroll at a later date. Once coverage under the Post-Employment Health Plan ends for any reason, you are no longer eligible for this coverage at any time in the future. The retiree benefits deferral option was implemented on January 1, 2003, under the Motorola plan. This option was carried over under the Freescale plan. Any eligible member who retired before January 1, 2003, and did not elect retiree coverage within 30 days is not eligible for retiree benefits. Suspension of Coverage Humanitarian Service You may elect to suspend your coverage under the Post-Employment Health Plan if you become eligible for other health care coverage due to providing service of a humanitarian nature, as determined in the Plan Administrator s sole discretion. You may resume Post-Employment Plan coverage within 30 days of the conclusion of such other coverage. Retiree Eligibility and Coverage

11 To resume Post-Employment Health Plan coverage, you will have to show that you had other health care coverage due to service of a humanitarian nature for the prior 12 months (or for the entire period of your humanitarian service, if less than 12 months). If you do not resume coverage within 30 days of the conclusion of your other coverage, you will be deemed to have declined coverage and you will not be eligible for Plan coverage again at any time in the future. Dual Freescale Employees The following provisions for retiree health coverage apply to a Freescale employee who is married to or in a domestic partnership with another Freescale employee at the time either spouse/domestic partner retires. When the first spouse/domestic partner retires, if he or she chooses not to enroll in the Post-Employment Health Plan, he or she may elect, within 30 days of the retirement date, to be covered as a dependent under the active spouse's/domestic partner s medical coverage (Employee Medical Plan). The active spouse/ domestic partner is allowed to enroll the retiree as a spouse/domestic partner at that time. When the second spouse/domestic partner retires, either spouse/domestic partner may elect coverage under the Post-Employment Health Plan within 30 days, provided that the spouse/domestic partner electing retiree health benefits qualified for this coverage on his or her retirement date. If neither spouse/domestic partner elects Post-Employment Health Plan coverage within 30 days of the retirement date of the second spouse to retire, either spouse/domestic partner may elect Post-Employment Health Plan coverage at any time in the future, provided that he or she meets the creditable coverage requirement described above. Dependent Coverage eligible dependents* For medical and dental coverage, you may enroll as a covered dependent: Your legally recognized spouse; Your domestic partner; Your unmarried children and stepchildren whom you may (but are not required to) properly claim as dependents on your federal tax return, through age 18 (or through age 23 if they are full-time students at an accredited college or vocational school); and/or Your domestic partner s unmarried children whom your domestic partner may (but is not required to) properly claim on your domestic partner s federal tax return, through age 18 (or through age 23 if they are full-time students at an accredited college or vocational school). * Parents and grandparents are NOT considered eligible dependents for this Plan. Full-time Student Requirements: You may be required to submit verification of full-time student status initially within 30 days of the dependent s 19th birthday and subsequently provide proof of full-time student status no less than once per calendar year. You are responsible for notifying Freescale Rewards Customer Service within 30 days of the date a dependent child is no longer in school or when his or her credit hours or courses fall below the school s requirement for full-time attendance. For purposes of determining whether a child is a full-time student, the spring semester or quarter is considered to extend until the fall semester or quarter begins, except in the final semester or quarter for a degree. Incapacitated Dependent Requirements: If a dependent child becomes incapable of sustaining employment because of mental or physical disability, such individual may remain a dependent under the Plan until such incapacity ends. You must furnish proof of incapacity and dependency to Freescale Rewards Customer Service within 60 days after the child s coverage would otherwise terminate. Dependents of retirees are not automatically covered under the Post-Employment Health Plan. You must enroll each dependent who was an eligible dependent as of your retirement (i.e., the day you terminate Dependents of retirees are not automatically covered under the Plan. You must elect family coverage and enroll each eligible dependent. Retiree Eligibility and Coverage

12 employment) within 10 months of retirement in the case of a pending birth or adoption, or within 30 days of a special change in status event (see page 8). If an individual was not eligible for coverage under the Employee Medical Plan as a dependent at the time of your retirement, he or she will not be eligible for coverage under the Post-Employment Health Plan. If you do not elect Post-Employment Health Plan coverage within 30 days of your retirement but enroll for coverage at some time in the future, you may enroll any dependent who was eligible under the Employee Medical Plan at the time of your retirement. Re-Establishing Coverage for a Child (age 19 and over) Coverage terminates if a dependent child (age 19 and over) stops attending school or is no longer considered a full-time student by the school (except in the final semester for a degree), or may no longer be properly claimed as your dependent on your Federal Income Tax. To re-establish coverage, you may be required to verify the child's full-time student status for the current semester to Freescale Rewards Customer Service within 30 days of a child s returning to school. Go online to freescale.com/rewards, or call Freescale Rewards Customer Service at 888-FSL-BENS. Coverage is effective the date the application is approved. If a child was not an eligible dependent at the time you retired, coverage cannot be re-established. Marriage/domestic partnership If you are married or in an eligible domestic partnership at the time of your retirement, your spouse/domestic partner is eligible for coverage. If you get married or establish a domestic partnership after retirement, your spouse/domestic partner is not eligible for Freescale Post-Employment health benefits. If your dependents get married, they lose their eligibility for coverage. Contact Freescale Rewards Customer Service for details. Divorce/end of domestic Partnership Your ex-spouse/domestic partner is not eligible to remain on your Plan after your marriage or domestic partnership ends. You must notify Freescale Rewards Customer Service within 30 days of the date of your divorce or the date your domestic partnership ends. Your ex-spouse/domestic partner may be eligible for COBRA coverage (see pages 11 12). If you get divorced, your dependents eligibility for coverage can be affected. To inquire about your dependent s continuing eligibility for benefits, you should contact Freescale Rewards Customer Service prior to the date of divorce. Unless your children meet the eligibility requirements for dependent children, you may not cover your children under the Freescale Post-Employment Health Plan if your divorce decree states that your former spouse is responsible for the children's health coverage. You may cover your dependent children if required under the terms of a Qualified Medical Child Support Order (QMCSO) and if the children were eligible under the Employee Medical Plan at the time of your retirement (for details, see page 8). Your Responsibility It is your responsibility to ensure that you and the dependents you enroll are eligible for coverage in accordance with the terms and conditions of the Plan. If you enroll a dependent who does not meet the eligibility requirements, or if you do not drop a dependent who no longer meets eligibility requirements, you will be required to repay any medical and dental expenses paid by the Plan as far back as administratively possible (not to exceed six years) for the ineligible dependent, offset by contributions paid toward this ineligible coverage. You will not receive reimbursement for any contributions paid for ineligible dependents. Freescale Rewards Customer Service may require verification of your dependent s status at any time. Retiree Eligibility and Coverage

13 When Post-Employment Health Plan Coverage Begins and Ends When Coverage Begins Coverage under the Freescale Post-Employment Health Plan for you and your covered dependents starts on the first day of the month following your retirement date, if you are eligible and you enroll for coverage within 30 days of your last day of employment. If you enroll in the Post-Employment Health Plan beyond 30 days after your retirement date, your coverage becomes effective the date your application is approved. Your coverage under the Humana Group Medicare PFFS Plan is effective the first of the month in which the retiree turns age 65 (or the first of the previous month if the retiree s birthday falls on the first of the month), if the retiree enrolls. This replaces coverage under the pre- 65 coverage options in the Freescale Post-Employment Medical Plan, which are for participants under age 65 only. When Your Coverage Ends Your coverage under the Freescale Post-Employment Health Plan ends on the earliest of the following dates: The last day of the month for which you paid a contribution if you have discontinued payments for any reason; The date you become re-employed by Freescale and become eligible for coverage under the Freescale Employee Medical Plan; 90 days after the Plan Administrator requires repayment from you or your covered dependent of amounts subject to reimbursement under any Freescale welfare plan, overpayments or mistaken payments, if you fail to repay or set up an acceptable repayment schedule; Your death; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. For Dental and Vision Coverage Only Unless your coverage ends as described above, your coverage under the Post-Employment Dental Plan and the Post-Employment Vision Plan ends on the last day of the month in which you reach age 65. When Dependent Coverage Ends Coverage for your dependent under the Post- Employment Health Plan ends automatically on the earliest of the following dates: The last day of the month in which he or she ceases to be an eligible dependent; The last day of the month in which your coverage ends for a reason other than death; The last day of the period for which you have paid for dependent coverage if you stop making your contributions; The date you become re-employed by Freescale, if you and your dependents are then eligible for coverage under the Freescale Employee Medical Plan; The last day of the month in which the dependent child enters the military service of any country (unless otherwise required by law); The last day of the month in which the dependent spouse/domestic partner enters the military service of any country but the U.S.; 90 days after the Plan Administrator requires repayment from you or your covered dependent of amounts that are subject to reimbursement under any Freescale welfare plan, overpayments or mistaken payments from any Freescale welfare plan, if you fail to repay or set up an acceptable payment schedule; After your death, the date your dependent child becomes covered by another group health plan that does not contain applicable pre-existing condition limitations; The date of a dependent s death; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. Unless your spouse s/domestic partner s coverage ends earlier as described above, your spouse s/domestic partner s coverage under the Post-Employment Medical Plan and Post-Employment Dental Plan ends on the last day of the month in which he or she reaches age 65. Your spouse s/domestic partner s coverage under the Humana Group Medicare PFFS Plan begins the first of the month following his or her 65th birthday, if he/she enrolls. In some cases, dependents may continue coverage under COBRA (the Consolidated Omnibus Budget Reconciliation Act). For details, see pages ENROLL IN MEDICARE BEFORE AGE 65 Before you or your covered family member reach age 65, you should take steps to enroll in Medicare. The Humana Group Medicare PFFS coverage options require you to be enrolled for Medicare before you can apply for coverage. To prevent a gap in coverage, contact the Social Security Administration at least three months before you turn 65 to start the Medicare enrollment process. See How to Enroll in Original Medicare on page 67 for details on enrolling in Medicare. You must notify Freescale Rewards Customer Service within 30 days when any of your dependents ceases being a dependent. Retiree Eligibility and Coverage

14 Survivor coverage If you are retired but are not covered by the Post- Employment Health Plan at the time of your death, no Freescale coverage is available to your surviving dependents, even if you were eligible for such coverage at the time of your death. If you die while employed by Freescale and while your dependents are covered by the Employee Medical Plan (or while covered under the Employee Medical Plan pursuant to a severance program or agreement) but after you become eligible to retire with retiree coverage, your surviving eligible dependents covered under the Employee Medical Plan at your death may elect coverage under the Post-Employment Health Plan within 30 days of your death. In some cases, dependents may continue coverage under COBRA. For details, see pages A dependent who elects COBRA under the Employee Medical Plan may not enroll in the Post-Employment Health Plan. Freescale Rewards Customer Service is a primary resource for answering your questions on eligibility, coverage and benefits. Call 888-FSL-BENS. When You Can Change Your Coverage Annual Enrollment Each year, you have an opportunity to change your pre-65 medical coverage option for the following year. When you elect a coverage change during annual enrollment, your change is effective the following January 1. Your annual coverage election remains in force during the year unless you change your elections in accordance with the provisions below. Special Change in Status Events Certain, limited events allow you to add a dependent who was an eligible dependent under the Employee Medical Plan at the time of your retirement but did not enroll in the Post-Employment Health Plan at that time. To establish coverage for your dependent in the following events, you must log on to freescale.com/rewards or call Freescale Rewards Customer Service at 888-FSL-BENS within 30 days of these events: Your dependent resumes school attendance on a full-time basis. You may be required to provide proof of full-time status for the current semester within 30 days of your dependent s return to school (provided he or she was an eligible dependent on your retirement date); Death of a spouse/domestic partner; Divorce of spouse or loss of domestic partner; Your eligible dependent ceases to be eligible for group health coverage under your spouse's or domestic partner s plan because of a change in your spouse's or domestic partner s employment status, or there has been a significant change in such coverage (provided your dependent was an eligible dependent on your retirement date); or Your spouse or domestic partner terminates employment, retires, moves from full-time to parttime employment, or incurs or returns from an unpaid leave of absence, and this change affects the eligibility for his or her group health care coverage (if you and your spouse were legally married, or you and your domestic partner qualified as domestic partners at the time of your retirement). Note: The self-employment of your spouse or domestic partner is not considered "employment" for the purposes of these special events. A change in coverage election due to one of these special events is effective the date of the event. You must provide updated information to Freescale Rewards Customer Service regarding your dependents, including the specific date on which any of your dependents ceases to be a dependent. QMCSO You may become subject to a Qualified Medical Child Support Order (QMCSO) that requires you to provide health coverage for a child who was eligible for coverage under the Employee Medical Plan at the time of your retirement. In that case, you may change your health benefits elections accordingly. The change is effective on the date the order is qualified. Freescale Rewards Customer Service will furnish QMCSO procedures describing the process to follow in entering a QMCSO at your request. An order will not be approved with respect to a child who does not meet the dependent eligibility conditions of the Post-Employment Health Plan. Retiree Eligibility and Coverage

15 Other Important Facts About Eligibility and Coverage domestic Partner Benefits The term "dependent" under the Freescale benefit plans includes your domestic partner as well as the domestic partner's natural children, adopted children or children for whom your domestic partner is a legal guardian, provided you or your domestic partner may (but are not required to) properly claim the children as dependents on your (or your domestic partner's) tax return. To be eligible for domestic partner coverage under the Freescale benefit plans, the following eligibility requirements must be met: You and your domestic partner are registered as domestic partners in accordance with the applicable city, county or state laws; or In the absence of domestic partner registration, all of the following requirements must be met: You and your domestic partner are at least 18 years of age; You and your domestic partner are not related to one another to a degree that would prevent marriage under the law of the state in which you reside; Neither you nor your domestic partner is married to another person under statutory or common law, and neither of you is in another domestic partnership; You and your domestic partner are in a single, dedicated relationship with each other and have been in such relationship for a minimum of six consecutive months and intend to remain in the relationship indefinitely; and You and your domestic partner share the same residence and have shared the same residence for a minimum of six consecutive months. Note: If an individual was not eligible for coverage under the Employee Medical Plan as a dependent at the time of your retirement, he or she will not be eligible for coverage under the Post-Employment Health Plan. in the retiree s home, be in a relationship with the retiree that does not violate local law, be a citizen of the U.S. or a resident of the U.S. or a country contiguous to the U.S. and, for the retiree s taxable year, be over 50 percent supported by the retiree. For those domestic partners and their children who do not qualify as legal dependents of the Freescale retiree, the retiree must include in reportable income the value of any medical, dental and spouse/domestic partner and/or child(ren) life insurance coverage that Freescale provides for them. Therefore, before enrolling for domestic partner benefits, retirees should check with their tax advisers for assistance in determining the precise manner in which these additional benefits affect their personal income tax situations. Different rules may apply for state income tax purposes. Confidentiality of Health Information Freescale respects the confidentiality of your health information. As part of Freescale's efforts to continually improve the quality of care and customer service of the health plans, Freescale and its health care vendors look for opportunities to improve performance. As part of this effort, aggregate health care information (e.g., Austin compared with Phoenix) collected by the health plans is evaluated and reported. In some cases, courses of treatment are examined and compared with peer group norms. Based on reviews of health care information, a health care vendor may contact an individual regarding health care programs designed to enhance the care of the individual or his or her dependent. Otherwise, Freescale does not report the information to those vendors in a way that reveals the identity of individual Freescale employees or their family members. Check with Freescale Rewards Customer Service if you have any questions about your eligibility for coverage after your retirement. Tax Implications and Information While Freescale s definition of dependent includes your domestic partner and your domestic partner s eligible children (i.e., children whom you or your domestic partner may but are not required to properly claim as dependents on your or your domestic partner s tax return), most domestic partners and their children do not qualify under Internal Revenue Code Section 152 as dependents of the retiree. Generally, to be a Section 152 dependent for purposes of health and welfare benefits under the Plan, the domestic partner and/or children of the domestic partner must live As a participant in Freescale s health plans, your "protected health information" is subject to safeguard under the privacy provisions of the Health Insurance Portability and Accountability Act (HIPAA). Under HIPAA, the health plans have adopted policies that restrict the use and disclosure of your protected health information. Generally, use and disclosure are limited to payment and health care operation functions, and only the "minimum necessary" information may be used or disclosed. This is only a brief summary of HIPAA. A complete "privacy notice" that more fully describes the important uses and disclosures of protected health information and your rights under HIPAA begins on page 105. Retiree Eligibility and Coverage

16 NAIC rules prioritize how benefit payments are coordinated, to avoid duplication of benefits. Coordination of Benefits If you have medical and/or dental coverage under a group health plan or Medicare in addition to your Freescale health care benefit, National Association of Insurance Commissioners (NAIC) rules indicate which plan pays first. These rules prioritize how benefit payments are coordinated, to avoid duplication of benefits. The primary plan pays before a secondary plan. When the Freescale Post-Employment Health Plan is the secondary plan, it pays benefits only if the primary plan pays less of the allowable expenses than the Freescale Plan would have paid if it had been primary. When your Freescale Plan is the secondary plan, any allowable expenses that would have counted toward satisfying your deductible and/or annual out-of-pocket maximum are applied to the Freescale Plan. Exception: There is an exception for Medicare beneficiaries whose Medicare coverage is secondary by law. If you are a Medicare beneficiary, please refer to the "Coordination of Benefits for Participants Eligible for Medicare" section on the following page or call Freescale Rewards Customer Service for more information. Following is a summary of the NAIC rules. The first rule that applies determines which plan is primary and which is secondary. Rule 1: No Coordination of Benefits Provisions. If one plan does not have a coordination of benefits provision that is consistent with these rules, then it is the primary plan, while the plan with the coordination provision is the secondary plan. Rule 2: Dependent/Non-dependent. The plan that covers the person as a non-dependent (for example, because the person is an employee or retiree) is primary over a plan that covers that person as a dependent. Rule 3: Child of Parents NOT Separated or Divorced. In this case, the Birthday Rule applies. Under the Birthday Rule, benefits are paid first by the plan of the parent whose birthday is earlier in the year. If by chance both parents have the same birth date, then the plan of the parent who has been covered longer pays first. Example If Mom was born on March 21 and Dad was born on May 10, then Mom's plan would be considered primary, regardless of the actual years in which they were born. Rule 4: Child of Separated or Divorced Parents. If a court order specifies that one of the parents is responsible for the child s health coverage, the plan of that parent is primary. If the court decree awards joint custody without allocating responsibility for the child s health coverage, the Birthday Rule determines which parent s plan is primary. If no court order allocates responsibility for the child s health coverage, the plan of the custodial parent pays first, the plan of the spouse of the custodial parent (if any) pays second, the plan of the non-custodial parent pays next, and the plan of the spouse of the non-custodial parent (if any) pays last. Rule 5: Active or Inactive Employee. A plan that covers the person as a former employee (or dependent of a former employee) is secondary to a plan that covers the person as an active employee (or as a dependent of an active employee). If the other plan does not have this rule, and the plans do not agree on the order of benefits, then this rule does not apply. Rule 6: Continuation Coverage. COBRA coverage is secondary to the plan covering the person as an employee or a retiree. Note: This rule applies only when both plans provide either non-dependent coverage or dependent coverage to the person. However, if one plan provides dependent coverage and the other nondependent coverage, Rule 2 applies. Rule 7: Longer or Shorter Length of Coverage. If none of the above rules determines the order of payment, then the plan that has covered the person longer pays before the plan that has covered the person for the shorter period of time. Rule 8: Other Rules Don t Apply. If none of the above rules determine which plan is primary, then the expenses are shared equally between the plans. If you, your spouse, domestic partner or other dependent has health care coverage under a government-sponsored program in another country based on citizenship in that country, and you or your dependent are also covered under this Plan, the NAIC rules do not apply, and the Freescale Plan is secondary. You must notify Freescale Rewards Customer Service anytime you obtain or lose other health coverage. If you or a covered dependent has primary coverage under another medical or dental plan, you must file a claim for benefits under that coverage before your Freescale claim is processed. 10 Retiree Eligibility and Coverage

17 Coordination of Benefits for Participants Eligible for Medicare If you or any of your dependents are eligible for Medicare, the coordination of your benefits works differently from the NAIC rules. Congress has established rules to determine whether Medicare or another plan pays first. The Plan uses these rules if you are eligible for Medicare, and it has the right to apply them, even if you have not enrolled in Medicare. If you or your dependents are under age 65 and eligible for Medicare, then Medicare is generally primary over the Post-Employment Health Plan. If you are under age 65 and eligible for Medicare, and you elect Medicare Advantage (Medicare Part C) coverage, your coverage under the Freescale Plan will terminate (including benefits under the Retiree Drug Program), and you will permanently lose the right to re-enroll. If you or your dependents are age 65 or older and you are enrolled in the Humana Group Medicare PFFS Plan offered by Freescale, you are enrolled in a Medicare Advantage (Medicare Part C) plan. If you are age 65 or older and you elect Medicare Advantage (Medicare Part C) coverage other than the Humana Group Medicare PFFS Plan offered by Freescale your coverage under the Freescale Plan will terminate (including benefits under the Retiree Prescription Drug Program), and you will permanently lose the right to re-enroll. A different rule applies if you have end-stage renal disease (ESRD). If you have ESRD and are eligible for Medicare because of ESRD, the Post-Employment Health Plan is primary up to the first 30 months of your ESRD treatment. The 30- month period begins with the month in which you become eligible for Medicare benefits for ESRD. Thereafter, Medicare is primary. When this provision determines that Medicare is primary, the Plan pays secondary regardless of whether you/ your dependent (whoever is eligible) has enrolled in Medicare. Medicare is primary (and the Freescale Plan secondary) for your surviving dependent age 65 or older who is eligible for Medicare and covered under the Plan due to a survivor benefits provision. In such case, the Plan pays secondary regardless of whether your dependent has enrolled in Medicare. When the Freescale Plan is secondary, Freescale may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than 100 percent of total reimbursable expenses under the Post-Employment Health Plan. Medicare and Prescription Drugs Medicare began offering coverage for outpatient prescription drugs with the introduction of Medicare Prescription Drug plans Medicare Part D in Medicare Part D coverage is offered through private insurance companies. Each year, Freescale evaluates the prescription drug benefits of each pre-65 coverage option to determine if they offer creditable coverage. When a Freescale option offers creditable coverage, it means that, on average for all plan participants, the Freescale plan is expected to pay out as much as the standard Medicare prescription drug plan. This does not mean, however, that a creditable Freescale coverage option s drug benefits are always better than all Medicare drug plans on the market. Effective January 1, 2007, you may enroll in a Medicare Prescription Drug plan without affecting your continued eligibility for pre-65 Freescale Post-Employment Health Plan coverage. If you elect Medicare Part D coverage in addition to your pre-65 Freescale coverage, your Medicare Prescription Drug plan will be primary for your prescription drug coverage. However, it is highly unlikely that you will receive any additional prescription drug benefit from your Freescale coverage option when you have this double coverage. If you are age 65 or older and you elect a Medicare Prescription Drug plan (Medicare Part D coverage) other than the Humana Group Medicare PFFS Plan offered by Freescale your coverage under the Freescale Plan will terminate (including benefits under the Retiree Prescription Drug Program). So if you buy a Medicare Prescription Drug plan before you are age 65, you must drop that coverage in order to become covered by the Humana Group Medicare PFFS Plan. Please call Freescale Rewards Customer Service for more information. Pre-Existing Conditions The Freescale Post-Employment Health Plan does not have "pre-existing condition" restrictions. If you or your dependents are eligible for Medicare, then Medicare is generally primary over the Post- Employment Health Benefits Plan. Continuation Rights Health and Dental Coverage Continuation Rights A federal law known as COBRA (Consolidated Omnibus Budget Reconciliation Act) allows your dependents to continue health and dental care coverage under the Post-Employment Health Plan in certain situations when coverage would otherwise end. Upon a qualifying event (described below), your dependents may be able to continue coverage in the Post-Employment Health Plan. Continuation Coverage Your covered dependents have the right to continue medical and dental coverage for up to 36 months in any of the following events, which would result in your Retiree Eligibility and Coverage 11

18 COBRA allows your dependents to continue health and dental care coverage in certain situations when coverage would otherwise end. The right to continue COBRA coverage is subject to all applicable federal laws and regulations. If you have any questions regarding COBRA, contact Freescale Rewards Customer Service at 888-FSL-BENS. 12 Retiree Eligibility and Coverage dependents loss of coverage under the Plan (known as a "qualifying event"): You die; Your child or the child of your domestic partner no longer meets the definition of a dependent under the Plan; You divorce or become legally separated; or Your domestic partnership ends. Your eligible dependents must be covered by the Plan at the time of the COBRA event to be eligible for continuation of coverage. Your eligible dependent may also elect COBRA coverage for an eligible child who is born, adopted, or placed with him/her for adoption while COBRA coverage is in effect. Please Note: If a second qualifying event occurs within the 18- or 29-month period, the COBRA continuation period for medical and dental coverage may be extended for up to 36 months from the first qualifying event. Reporting a Qualifying Event You must notify Freescale Rewards Customer Service either in writing or by phone within 60 days of the date on which any of the following qualifying events occurs and results in your dependents' loss of health and/or dental coverage under the Plan: You divorce or become legally separated; Your domestic partnership ends; Your domestic partner no longer meets the definition of an eligible dependent under the Plan (see the definition of Domestic Partner in the Definitions section); Your child or the child of your domestic partner no longer meets the definition of a dependent under the Plan (see page 5 and the definition of Dependent in the Definitions section); Your covered dependent is determined to have been disabled under the Social Security Act at any time during the first 60 days of receiving continuation coverage; or You become entitled to Medicare. To report a qualifying event, please call Freescale Rewards Customer Service at 888-FSL-BENS. Deciding Whether to Continue Coverage Freescale Rewards Customer Service is notified within 30 days after the date you lose coverage under the Plan due to the qualifying event. Freescale Rewards Customer Service sends you a notice and election form within 14 days of receiving notification of the qualifying event. Your dependents have 60 days from the day coverage would otherwise end (or from the day the notice is sent to you, if later) to choose continuation coverage. If no election is made, their COBRA option is deemed waived. In that case, their medical and dental coverage ends on the last day of the month in which the qualifying event occurred. Each qualified beneficiary has an independent right to elect COBRA continuation coverage. In order to continue medical and dental coverage, your covered dependents must pay the full cost of coverage plus, an additional two percent fee for administrative costs. No benefits are payable under COBRA until the first premium payment is received. The first payment (due within 45 days of election) must include your dependents COBRA contribution for the entire period from the date coverage ended through the month of the payment. Subsequent payments are due on the first of the month whether or not you receive a bill. If Freescale Rewards Customer Service does not receive the monthly contribution within 30 days of the due date, coverage is permanently cancelled as of the last day of the month for which a contribution was paid. When Continuation Coverage Ends Continuation coverage ends when any of the following events occurs: You die; Your dependent reaches the end of the applicable maximum COBRA period for coverage; A monthly contribution is not paid within 30 days of its due date; Upon written request to cancel coverage; Your covered dependent becomes entitled to Medicare; Your covered dependent becomes covered under another group medical or dental plan that does not contain an applicable pre-existing condition rule; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. Please inform Freescale Rewards Customer Service of any changes in address or in personal circumstances so that Freescale Rewards Customer Service can give your covered dependents the necessary information concerning their rights to continuation of coverage. Moving Your Primary Residence Outside of the United States If you move your primary residence outside of the U.S., your and your dependents participation in the Post- Employment Health Plans ends as of the last day of the month during which you move. Other Continuation Rights You and your dependents may have additional health and dental coverage continuation rights in the event that Freescale is involved in a bankruptcy. You will be notified if these rules affect your coverage.

19 Rewards. Health Benefits Eligibility for Terminated Disabled Participants (TDPs) Eligibility and Contributions Enrolling for Coverage Dependent Coverage When Coverage Begins and Ends When You Can Change Your Coverage Other Important Facts Coordination of Benefits Continuation Rights Freescale offers comprehensive health coverage to eligible terminated disabled participants (TDPs) and their eligible dependents. This section summarizes the eligibility requirements and coverage options for TDPs and their eligible dependents in the Post-Employment Health Plan. Keep this book in a convenient place and refer to it regularly as your source of information for taking full advantage of the benefits available under the Plan. TDP Eligibility and Coverage 13

20 eligibility requirements for freescale tdp health benefits As a terminated disabled participant (TDP), as defined in the Definitions section of this book, you have the following health benefit coverage options under the Post-Employment Health Plan: Post-Employment Medical Plan Post-Employment Vision Plan Post-Employment Dental Plan Health benefit coverage is only available for your spouse/domestic partner and dependents who were eligible under the employee benefit plans at the time your employment was terminated. post-employment medical Plan The Post-Employment Medical Plan offers medical, hearing and prescription drug coverage; preventive screenings; and behavioral health and chemical dependency programs. For details, see pages post-employment Vision Plan The Post-Employment Vision Plan offers vision exam and correction coverage. For details, see pages post-employment Dental Plan The Post-Employment Dental Plan offers dental benefits that include preventive and diagnostic dental services, dental treatment, orthodontia and other covered treatment. For details, see pages If you have any questions about your current contribution rates, call Freescale Rewards Customer Service at 888-FSL-BENS. Eligibility and Contributions Eligibility Requirements You are eligible for the Post-Employment Health Plan as a terminated disabled participant (TDP) if your employment with Freescale ends due to disability under Freescale s Medical Leave Policy and you are entitled to benefits under the Freescale Disability Income Plan. To be eligible for the Plan, you must have participated in (or opted out of) the Freescale active employee medical and dental plans immediately before your employment ended. You are not eligible for the Plan if you elected COBRA continuation coverage under either of those plans. Who Pays for health Benefits If you enroll in the Post-Employment Health Plan, you make a monthly after-tax contribution toward the cost of coverage for you and your covered dependents. Freescale shares the costs of coverage with you based on your eligibility for and enrollment in Medicare. If you are eligible for and enroll in Medicare, your contributions may be lower than if you are not enrolled in Medicare. If you do not enroll in Medicare (or are not eligible for Medicare), your contributions are based on the same cost-sharing between Freescale and pre-65 retirees in the Post-Employment Health Plan. You are responsible for paying your contributions. When you receive your first bill, be sure to check it carefully to make sure you are being billed for the coverage option you chose. Your first payment is due at the end of the month in which your coverage begins. Please be aware that no benefits are paid for claims during a month in which your contributions are outstanding. You may avoid this problem by having your contributions automatically deducted from your bank account each month. Alternatively, you can pay your contributions quarterly, semi-annually or yearly. For details, contact Freescale Rewards Customer Service at 888-FSL-BENS. Freescale Subsidy for health care Coverage If you started employment with Motorola prior to January 1, 2002, and meet the requirements for health care coverage as a TDP, Freescale currently shares a portion of the cost of coverage with you. If you started employment with Motorola or Freescale on or after January 1, 2002, and meet the requirements for health care coverage as a TDP, you may participate in the Post- Employment Health Plan; however, you will pay the full cost of coverage. Annual Review of Contribution Amount Each year, the amount of your monthly contribution is reviewed and is subject to change. The amount that your contribution increases (if at all) depends on when your employment terminated (either before or after January 1, 2002). Important Note: As Freescale determines how the cost-sharing and contribution maximum may affect the monthly contributions and Plan design, this information will be shared with Plan participants. Freescale will consider the needs of participants and the future of Freescale in the decision-making process, but reserves the right in its discretion to modify contribution levels and/or Plan design. 14 TDP Eligibility and Coverage

21 Enrolling for Coverage When your employment with Freescale ends due to disability under Freescale s Medical Leave Policy and you are entitled to benefits under the Freescale Disability Income Plan, you are eligible to elect Post-Employment Plan coverage (and reject COBRA coverage) within 30 days of termination of employment for coverage to become effective the date of your termination. If you decline coverage, you may not enroll for coverage at any time in the future. If you owe the active medical or dental plan any excess benefit or subrogated or reimbursed payment, you may not enroll in the Post-Employment Health Plan unless this amount is repaid within 30 days of termination of your employment. If you do not elect Post-Employment Health Benefits Plan coverage within 30 days of your termination of employment, you may not later enroll unless you did not initially enroll because you were covered under another Freescale medical plan at that time. Dual Freescale Employees The following provisions for retiree health coverage apply to a Freescale employee who is married to or in a domestic partnership with another Freescale employee at the time either spouse/domestic partner becomes eligible for the Freescale Post-Employment Health Plan as a TDP. Dependent Coverage eligible dependents* For medical and dental coverage, you may enroll as a covered dependent: Your legally recognized spouse; Your domestic partner; Your unmarried children and stepchildren whom you may (but are not required to) properly claim as dependents on your federal tax return, through age 18 (or through age 23 if they are full-time students at an accredited college or vocational school); and/or Your domestic partner s unmarried children whom your domestic partner may (but is not required to) properly claim on your domestic partner s federal tax return, through age 18 (or through age 23 if they are full-time students at an accredited college or vocational school). * Parents and grandparents are NOT considered eligible dependents for this Plan. When the first spouse/domestic partner becomes eligible for the Freescale Post-Employment Health Plan as a TDP, and he or she chooses not to enroll, he or she may elect, within 30 days of the date coverage would begin, to be covered as a dependent under the active spouse s/domestic partner s medical coverage (Employee Medical Plan). The active spouse/domestic partner is allowed at that time to enroll the spouse/ domestic partner who is eligible for the Freescale Post- Employment Health Plan as a TDP as his or her spouse/ domestic partner. When the second spouse/domestic partner becomes eligible for the Freescale Post-Employment Health Plan, either spouse/domestic partner may elect coverage under the Post-Employment Health Plan within 30 days, provided that the spouse/domestic partner electing retiree health benefits qualified for this coverage on his or her retirement date. If neither spouse/domestic partner elects Post-Employment Health Plan coverage within 30 days of the retirement date of the second spouse to retire, the second spouse/domestic partner may elect Post-Employment Health Plan coverage for both eligible people at any time in the future, provided that the retiring spouse meets the creditable coverage requirement described on page 4. Full-time Student Requirements You may be required to submit verification of fulltime student status initially within 30 days of the dependent s 19th birthday and subsequently provide proof of full-time student status no less than once per calendar year. You are responsible for notifying Freescale Rewards Customer Service within 30 days of the date a dependent child is no longer in school or when his or her credit hours or courses fall below the school s requirement for full-time attendance. For purposes of determining whether a child is a full-time student, the spring semester or quarter is considered to extend until the fall semester or quarter begins, except in the final semester or quarter for a degree. Dependents of TDPs are not automatically covered under the Plan. You must elect family coverage and enroll each eligible dependent. TDP Eligibility and Coverage 15

22 You must notify Freescale Rewards Customer Service when any of your dependents cease being a dependent. Incapacitated Dependent Requirements: If a dependent child becomes incapable of sustaining employment because of mental or physical disability, such individual may remain a dependent under the Plan until such incapacity ends. You must furnish proof of incapacity and dependency to Freescale Rewards Customer Service within 60 days after the child s coverage would otherwise terminate. Dependents of TDPs are not automatically covered under the Post-Employment Health Plan. You must enroll each dependent who was an eligible dependent as of the date of your termination of employment, or within 10 months of termination in the case of a pending birth or adoption, or within 30 days of a special change in status event (see pages 18 19). If an individual was not eligible for coverage under the Employee Medical Plan as a dependent at the time of your termination of employment, he or she will not be eligible for coverage under the Post-Employment Health Plan. Re-Establishing Coverage for a Child (age 19 and over) Coverage ends if a dependent child (age 19 and over) stops attending school or is no longer considered a fulltime student by the school (except in the final semester for a degree), or may no longer be properly claimed as your dependent on your Federal Income Tax. To reestablish coverage, you may be required to verify the child's full-time student status for the current semester to Freescale Rewards Customer Service within 30 days of a child s returning to school. Go online to freescale. com/rewards or call Freescale Rewards Customer Service at 888-FSL-BENS. Coverage is effective the date the application is approved. If a child was not an eligible dependent at the time of your termination of employment, coverage cannot be re-established. Marriage/domestic partnership If you are married or in an eligible domestic partnership at the time of your termination, your spouse/domestic partner is eligible for coverage. If you get married or establish a domestic partnership after your termination of employment, your spouse/domestic partner is not eligible for Freescale Post-Employment health benefits. If your dependents get married, they lose their eligibility for coverage. Contact Freescale Rewards Customer Service for details. Divorce/end of domestic Partnership Your ex-spouse/domestic partner is not eligible to remain on your Plan after your marriage or domestic partnership ends. You must notify Freescale Rewards Customer Service within 30 days of the date of your divorce or the date your domestic partnership ends. Your ex-spouse/domestic partner may be eligible for COBRA coverage (see pages 22 23). If you get divorced, your dependents eligibility for coverage can be affected. To inquire about your dependent s continuing eligibility for benefits, you should contact Freescale Rewards Customer Service prior to the date of divorce. Unless your children meet the eligibility requirements for dependent children, you may not cover your children under the Freescale Post-Employment Health Plan if your divorce decree states that your former spouse is responsible for the children's health coverage. You may cover your dependent children if required under the terms of a Qualified Medical Child Support Order (QMCSO) and if the children were eligible under the Employee Medical Plan at the time of your retirement (for details, see page 19). Your Responsibility It is your responsibility to ensure that you and the dependents you enroll are eligible for coverage in accordance with the terms and conditions of the Plan. If you enroll a dependent who does not meet the eligibility requirements, or if you do not drop a dependent who no longer meets eligibility requirements, you will be required to repay any medical and dental expenses paid by the Plan as far back as administratively possible (not to exceed six years) for the ineligible dependent, offset by contributions paid toward this ineligible coverage. You will not receive reimbursement for any contributions paid for ineligible dependents. Freescale Rewards Customer Service may require verification of your dependent s status at any time. 16 TDP Eligibility and Coverage

23 When Coverage Begins and Ends When Coverage Begins Coverage under the Freescale Post-Employment Health Plan for you and your covered dependents starts on your termination date, if you are eligible and you enroll for coverage within 30 days of your last day of employment. When Your Coverage Ends Your coverage under the Freescale Post-Employment Health Plan ends on the earliest of the following dates: The last day of the month before you reach age 65; The last day of the month in which you are no longer entitled to receive benefits in accordance with the Freescale Disability Income Plan; The last day of the month for which you paid a contribution if you have discontinued payments for any reason; The date you become re-employed by Freescale and become eligible for coverage under the Freescale Employee Medical Benefits Plan; The date of your death*; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. *If you die while you are a terminated disabled participant, your covered dependents may continue their coverage under COBRA (the Consolidated Omnibus Budget Reconciliation Act). For details, see page 22. For Dental and Vision Coverage Only Unless your TDP coverage ends as described above, your coverage under the Post-Employment Dental Plan and the Post-Employment Vision Plan ends on the last day of the month in which you reach age 65. When Dependent Coverage Ends Coverage for your dependent under the Post- Employment Health Plan ends automatically on the earliest of the following dates: The last day of the month before your dependent reaches age 65; The last day of the month in which he or she ceases to be an eligible dependent; The last day of the month in which your coverage ends for a reason other than death; The last day of the period for which you have paid for dependent coverage if you stop making your contributions; The date you become re-employed by Freescale, if you and your dependents are then eligible for coverage under the Freescale Employee Medical Plan; The last day of the month in which the dependent child begins military service in any country (unless otherwise required by law); The last day of the month in which the dependent spouse/domestic partner enters the military service of any country other than the U.S.; 90 days after the Plan Administrator requests repayment from you or your covered dependent of amounts that are subject to reimbursement under any Freescale welfare plan, overpayments or mistaken payments from any Freescale welfare plan, if you fail to repay or set up an acceptable payment schedule; The last day of the month in which the dependent moves his or her primary residence abroad; After your death, the date a child becomes covered by another group plan that does not contain applicable pre-existing condition limitations; The date of your dependent s death; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. In some cases, dependents may continue coverage under COBRA (the Consolidated Omnibus Budget Reconciliation Act). For details, see page 22. Your coverage under the Post-Employment Health Plan ends on the last day of the month in which you reach age 65. Coverage Outside the United States Moving Your Primary Residence Outside of the United States Freescale Post-Employment Health Plan coverage is available only if you live in the U.S. or a territory (e.g., Puerto Rico, Guam). If you move your primary residence outside of the U.S., your coverage ends on the last day of the month during which you move. If You Vacation Abroad While you are traveling or vacationing outside of the U.S. for a period of 60 days or less, your TDP coverage under the Post-Employment Health Plan continues for emergency care expenses only. If you are eligible for Medicare, please note that Medicare rarely pays for hospital admissions outside of the U.S. and, in most instances, does not cover other medical services performed outside of the U.S. TDP Eligibility and Coverage 17

24 Survivor coverage If you are a terminated disabled participant and are receiving benefits under the Freescale Disability Income Plan but are not covered by the Post-Employment Health Plan at the time of your death, no Freescale coverage is available to your surviving dependents, even if you were eligible for such coverage at the time of your death. In some cases, dependents may continue coverage under COBRA. For details, see page 22. ENROLL IN MEDICARE BEFORE AGE 65 Freescale TDP coverage ends at age 65. This is when most people in the U.S. can have Medicare coverage begin. To avoid a gap in your medical coverage, you should begin the Medicare enrollment process at least three months before your 65th birthday by contacting the nearest office of the Social Security Administration (SSA). You do not need to start your monthly Social Security retirement benefits in order to enroll in Medicare. When you contact the SSA, you will need to provide proof of your eligibility with documents such as: Your Social Security card (or a record of your number); Your birth certificate; Proof of U.S. citizenship or lawful alien status if you were not born in the U.S.; Military discharge papers; or Last year s Form W-2 or tax return. If you are already getting retirement or disability benefits from Social Security or railroad retirement, you will be contacted by the SSA a few months before you turn 65. The SSA enrolls you for Medicare Parts A and B (Original Medicare) automatically and gives you other information you need. Medicare Part A covers hospital expenses. Medicare Part B covers physician and other expenses, and it requires a monthly premium. When you enroll for Part B, you have a number of options for making payment, including automatic withholding from your Social Security benefits. Medicare Part D covers outpatient prescription drugs. You buy this coverage from private insurance companies once each year. For most people, Medicare coverage may begin on the first day of the month before their 65th birthday. If your birthday falls on the first day of the month, your Medicare coverage may begin on the first day of the month before your birthday. For example: If your 65th birthday is May 10, 2007, your Medicare coverage may begin on May 1, If your 65th birthday is August 1, 2007, your Medicare coverage may begin on July 1, You may start the Medicare enrollment process up to 120 days before the date you want your Medicare to begin. If you are already age 65 or older, you may arrange to start your Original Medicare coverage on the day that your Freescale active plan coverage ends. Contact the nearest office of the Social Security Administration, and see these Web sites for more details: General information: socialsecurity.gov and medicare.gov Summary booklet on Medicare enrollment: socialsecurity.gov/pubs/10043.pdf Online enrollment tool: socialsecurity.gov/r&m2.htm Medicare and TRICARE: socialsecurity.gov/legislation/tricare.html Freescale Rewards Customer Service is a primary resource for answering your questions on eligibility, coverage and benefits. Call toll-free 888-FSL-BENS. When You Can Change Your Coverage You may drop your coverage or coverage for your dependents at any time. Your coverage change becomes effective the date of your request. Other Freescale Plan Coverage If you did not enroll for coverage under the Post-Employment Plan when you were first eligible because you were covered under any other Freescale medical plan (other than COBRA coverage) at that time (as a dependent or otherwise), you may enroll for coverage under this Plan within 30 days of the date you lose coverage under such other Freescale medical plan. Annual Enrollment Each year, you have an opportunity to change your medical coverage option for the following year. When you elect a coverage change during annual enrollment, your change is effective the following January 1. Your annual coverage election remains in force during the year unless you change your elections in accordance with the provisions below. Special Change in Status Events Certain, limited events allow you to add a dependent who was an eligible dependent under the Employee Medical Plan at the time of your termination of employment, but did not enroll in the Post-Employment Health Plan at that time. To establish coverage for your dependent in the following events, you must log on to freescale.com/rewards or call Freescale Rewards Customer Service at 888-FSL-BENS within 30 days of these events: 18 TDP Eligibility and Coverage

25 Your dependent resumes school attendance on a fulltime basis. You may be required to provide proof of full-time status for the current semester within 30 days of your dependent s return to school (provided he or she was an eligible dependent on your termination date); Death of spouse/domestic partner; Divorce of spouse or loss of domestic partner; Your eligible dependent ceases to be eligible for group health coverage under your spouse's or domestic partner s plan because of a change in your spouse's or domestic partner s employment status or there has been a significant change in such coverage (provided your dependent was an eligible dependent on your termination date); or Your spouse or domestic partner terminates employment, retires, moves from full-time to part-time employment, or incurs or returns from an unpaid leave of absence, and this change affects the eligibility for his or her group health care coverage (if you and your spouse were legally married, or you and your domestic partner qualified as domestic partners at the time of your termination). A change in coverage election due to one of these special events is effective the date of the event. You must provide updated information to Freescale Rewards Customer Service regarding your dependents, including the specific date on which any of your dependents ceases to be a dependent. QMCSO You may become subject to a Qualified Medical Child Support Order (QMCSO) that requires you to provide health coverage for a child who was eligible for coverage under the Employee Medical Plan at the time of your termination of employment. In that case, you may change your health benefits elections accordingly. The change is effective on the date the order is qualified. Freescale Rewards Customer Service will furnish QMCSO procedures describing the process to follow in entering a QMCSO at your request. An order will not be approved with respect to a child who does not meet the dependent eligibility conditions of the Post-Employment Health Plan. Note: The self-employment of your spouse or domestic partner is not considered "employment" for the purposes of these special events. Other Important Facts About Eligibility and Coverage domestic Partner Benefits The term "dependent" under the Freescale benefit plans includes your domestic partner as well as the domestic partner's natural children, adopted children or children for whom your domestic partner is a legal guardian, provided you or your domestic partner may (but are not required to) properly claim the children as dependents on your (or your domestic partner's) tax return. You and your domestic partner are in a single, dedicated relationship with each other and have been in such relationship for a minimum of six consecutive months and intend to remain in the relationship indefinitely; and You and your domestic partner share the same residence and have shared the same residence for a minimum of six consecutive months. To be eligible for domestic partner coverage under the Freescale benefit plans, the following eligibility requirements must be met: You and your domestic partner are registered as domestic partners in accordance with the applicable city, county or state laws; or In the absence of domestic partner registration, all of the following requirements must be met: You and your domestic partner are at least 18 years of age; You and your domestic partner are not related to one another to a degree that would prevent marriage under the law of the state in which you reside; Neither you nor your domestic partner is married to another person under statutory or common law, and neither of you is in another domestic partnership; Note: If an individual was not eligible for coverage under the Employee Medical Plan as a dependent at the time of your termination of employment, he or she will not be eligible for coverage under the Post-Employment Health Plan at any time in the future. Tax Implications and Information While Freescale s definition of dependent includes your domestic partner and your domestic partner s eligible children (i.e., children whom you or your domestic partner may but are not required to properly claim as dependents on your or your domestic partner s tax return), most domestic partners and their children do not qualify under Internal Revenue Code Section 152 as dependents of the TDP. TDP Eligibility and Coverage 19

26 Generally, to be a Section 152 dependent for purposes of health and welfare benefits under the Plan, the domestic partner and/or children of the domestic partner must live in the TDP s home, be in a relationship with the TDP that does not violate local law, be a citizen of the U.S. or a resident of the U.S. or a country contiguous to the U.S. and, for the TDP s taxable year, be over 50 percent supported by the TDP. For those domestic partners and their children who do not qualify as legal dependents of the Freescale TDP, the TDP must include in reportable income the value of any medical, dental and spouse/domestic partner and/or child(ren) life insurance coverage that Freescale provides for them. Therefore, before enrolling for domestic partner benefits, TDPs should check with their tax advisers for assistance in determining the precise manner in which these additional benefits affect their personal income tax situations. Different rules may apply for state income tax purposes. Confidentiality of Health Information Freescale respects the confidentiality of your health information. As part of Freescale's efforts to continually improve the quality of care and customer service of the health plans, Freescale and its health care vendors look for opportunities to improve performance. As part of this effort, aggregate health care information (e.g., Austin compared with Phoenix) collected by the health plans is evaluated and reported. In some cases, courses of treatment are examined and compared with peer group norms. Based on reviews of health care information, a health care vendor may contact an individual regarding health care programs designed to enhance the care of the individual or his or her dependent. Otherwise, Freescale does not report the information to those vendors in a way that reveals the identity of individual Freescale employees or their family members. As a participant in Freescale s health plans, your "protected health information" is subject to safeguard under the privacy provisions of the Health Insurance Portability and Accountability Act (HIPAA). Under HIPAA, the health plans have adopted policies that restrict the use and disclosure of your protected health information. Generally, use and disclosure are limited to payment and health care operation functions, and only the "minimum necessary" information may be used or disclosed. This is only a brief summary of HIPAA. A complete "privacy notice" that more fully describes the important uses and disclosures of protected health information and your rights under HIPAA begins on page 105. NAIC rules prioritize how benefit payments are coordinated, to avoid duplication of benefits. Coordination of Benefits If you have medical and/or dental coverage under a group health plan or Medicare in addition to your Freescale health care benefit, National Association of Insurance Commissioners (NAIC) rules indicate which plan pays first. These rules prioritize how benefit payments are coordinated, to avoid duplication of benefits. The primary plan pays before a secondary plan. When the Freescale Post-Employment Health Plan is the secondary plan, it pays benefits only if the primary plan pays less of the allowable expenses than the Freescale Plan would have paid if it had been primary. When your Freescale Plan is the secondary plan, any allowable expenses that would have counted toward satisfying your deductible and/or annual out-of-pocket maximum are applied to the Freescale Plan. Exception: There is an exception for Medicare beneficiaries whose Medicare coverage is secondary by law. If you are a Medicare beneficiary, please refer to the "Coordination of Benefits for Participants Eligible for Medicare" section on the following page or call Freescale Rewards Customer Service for more information. If your spouse, domestic partner or other dependent has health care coverage under a government-sponsored program in another country based on his/her citizenship in that country and your dependent is covered under this Plan, the NAIC rules do not apply and the Freescale Plan is secondary. Following is a summary of the NAIC rules. The first rule that applies determines which plan is primary and which is secondary. Rule 1: No Coordination of Benefits Provisions. If one plan does not have a coordination of benefits provision that is consistent with these rules, then it is the primary plan, while the plan with the coordination provision is the secondary plan. Rule 2: Dependent/Non-dependent. The plan that covers the person as a non-dependent (for example, because the person is an employee or TDP) is primary over a plan that covers that person as a dependent. Rule 3: Child of Parents NOT Separated or Divorced. In this case, the Birthday Rule applies. 20 TDP Eligibility and Coverage

27 Under the Birthday Rule, benefits are paid first by the plan of the parent whose birthday is earlier in the year. If by chance both parents have the same birth date, then the plan of the parent who has been covered longer pays first. Example If Mom was born on March 21 and Dad was born on May 10, then Mom's plan would be considered primary, regardless of the actual years in which they were born. Rule 4: Child of Separated or Divorced Parents. If a court order specifies that one of the parents is responsible for the child s health coverage, the plan of that parent is primary. If the court decree awards joint custody without allocating responsibility for the child s health coverage, the Birthday Rule determines which parent s plan is primary. If no court order allocates responsibility for the child s health coverage, the plan of the custodial parent pays first, the plan of the spouse of the custodial parent (if any) pays second, the plan of the non-custodial parent pays next, and the plan of the spouse of the non-custodial parent (if any) pays last. Rule 5: Active or Inactive Employee. A plan that covers the person as a former employee (or dependent of a former employee) is secondary to a plan that covers the person as an active employee (or as a dependent of an active employee). If the other plan does not have this rule, and the plans do not agree on the order of benefits, then this rule does not apply. Rule 6: Continuation Coverage. COBRA coverage is secondary to the plan covering the person as an employee or a TDP. Note: This rule applies only when both plans provide either non-dependent coverage or dependent coverage to the person. However, if one plan provides dependent coverage and the other nondependent coverage, Rule 2 applies. Rule 7: Longer or Shorter Length of Coverage. If none of the above rules determines the order of payment, then the plan that has covered the person longer pays before the plan that has covered the person for the shorter period of time. Rule 8: Other Rules Don t Apply. If none of the above rules determine which plan is primary, then the expenses are shared equally between the plans. If you, your spouse, domestic partner or other dependent has health care coverage under a government-sponsored program in another country based on citizenship in that country, and you or your dependent are also covered under this Plan, the NAIC rules do not apply, and the Freescale Plan is secondary. You must notify Freescale Rewards Customer Service anytime you obtain or lose other health coverage. If you or a covered dependent has primary coverage under another medical or dental plan, you must file a claim for benefits under that coverage before your Freescale claim is processed. Coordination of Benefits for Participants Eligible for Medicare If you or any of your dependents are eligible for Medicare, the coordination of your benefits works differently from the NAIC rules. Congress has established rules to determine whether Medicare or another plan pays first. The Plan uses these rules if you are eligible for Medicare, and it has the right to apply them, even if you have not enrolled in Medicare. If you or your dependents are eligible for Medicare, then Medicare is generally primary over the Post- Employment Health Plan. If you are eligible for Medicare and you elect Medicare Advantage (Medicare Part C) coverage, your coverage under the Freescale Plan will terminate (including benefits under the Retiree Prescription Drug Program), and you will permanently lose the right to re-enroll. A different rule applies if you have end-stage renal disease (ESRD). If you have ESRD and are eligible for Medicare because of ESRD, the Post-Employment Health Plan is primary up to the first 30 months of your ESRD treatment. The 30-month period begins with the month in which you become eligible for Medicare benefits for ESRD. Thereafter, Medicare is primary. When this provision determines that Medicare is primary, the Plan pays secondary regardless of whether you/your dependent (whoever is eligible) has enrolled in Medicare. Medicare is primary (and the Freescale Plan secondary) for your surviving dependent age 65 or older who is eligible for Medicare and covered under the Plan due to a survivor benefits provision. In such a case, the Plan has the right to pay secondary regardless of whether your dependent has enrolled in Medicare. When the Freescale Plan is secondary, Freescale may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than 100 percent of total reimbursable expenses under the Post-Employment Health Plan. Medicare and Prescription Drugs Medicare began offering coverage for outpatient prescription drugs with the introduction of Medicare Prescription Drug plans Medicare Part D in Medicare Part D coverage is offered through private insurance companies. COBRA allows your dependents to continue health and dental care coverage in certain situations when coverage would otherwise end. TDP Eligibility and Coverage 21

28 Each year, Freescale evaluates the prescription drug benefits of each pre-65 coverage option to determine if they offer creditable coverage. When a Freescale option offers creditable coverage, it means that, on average for all plan participants, the Freescale plan is expected to pay out as much as the standard Medicare prescription drug plan. This does not mean, however, that a creditable Freescale coverage option s drug benefits are always better than all Medicare drug plans on the market. Effective January 1, 2007, you may enroll in a Medicare Prescription Drug plan without affecting your continued eligibility for Freescale Post-Employment Health Plan coverage as a TDP. If you elect Medicare Part D coverage in addition to your Freescale TDP coverage, your Medicare Prescription Drug plan will be primary for your prescription drug coverage. However, it is highly unlikely that you will receive any additional prescription drug benefit from your Freescale coverage option when you have this double coverage. Please call Freescale Rewards Customer Service for more information. PRE-EXISTING CONDITIONS The Freescale Post-Employment Health Plan does not have pre-existing conditions restrictions. Continuation Rights health and dental coverage Continuation rights A federal law known as COBRA (Consolidated Omnibus Budget Reconciliation Act) allows your dependents to continue health and dental care coverage under the Post-Employment Health Plan in certain situations when coverage would otherwise end. Upon a qualifying event (described below), your dependents may be able to continue coverage in the Post-Employment Health Plan. Continuation Coverage Your covered dependents have the right to continue medical and dental coverage for up to 36 months in any of the following events, which would result in your dependents loss of coverage under the Plan (known as a "qualifying event"): Your death; Your child or the child of your domestic partner no longer meets the definition of a dependent under the Plan; You divorce or become legally separated; or Your domestic partnership ends. Your eligible dependents must be covered by the Plan at the time of the COBRA event to be eligible for continuation of coverage. Your eligible dependent may also elect COBRA coverage for an eligible child who is born, adopted, or placed with him/her while COBRA coverage is in effect. Reporting a Qualifying Event You must notify Freescale Rewards Customer Service either in writing or by phone within 60 days of the date on which any of the following qualifying events occurs and results in your dependents' loss of health and/or dental coverage under the plan: You divorce or become legally separated; Your domestic partnership ends; Your domestic partner no longer meets the definition of an eligible dependent under the Plan (see the definition of Domestic Partner in the Definitions section); Your child or the child of your domestic partner no longer meets the definition of a dependent under the Plan (see page 15 and the definition of "Dependent" in the Definitions section); Your covered dependent is determined to have been disabled under the Social Security Act at any time during the first 60 days of receiving continuation coverage; or You become entitled to Medicare. To report a qualifying event, please call Freescale Rewards Customer Service at 888-FSL-BENS. 22 TDP Eligibility and Coverage

29 Deciding Whether to Continue Coverage Freescale Rewards Customer Service is notified within 30 days after the date you lose coverage under the Plan due to the qualifying event. Freescale Rewards Customer Service sends you a notice and election form within 14 days of receiving notification of the qualifying event. Your dependents have 60 days from the day coverage would otherwise end (or from the day the notice is sent to you, if later) to choose continuation coverage. If no election is made, their COBRA option is deemed waived. In that case, their medical and dental coverage ends on the last day of the month in which the qualifying event occurred. Each qualified beneficiary has an independent right to elect COBRA continuation coverage. In order to continue medical and dental coverage, your covered dependents must pay the full cost of coverage, plus an additional two percent fee for administrative costs. No benefits are payable under COBRA until the first premium payment is received. The first payment (due within 45 days of election) must include your dependents COBRA contribution for the entire period from the date coverage ended through the month of the payment. Subsequent payments are due on the first of the month whether or not you receive a bill. If Freescale Rewards Customer Service does not receive the monthly contribution within 30 days of the due date, coverage is permanently cancelled as of the last day of the month for which a contribution was paid. When Continuation Coverage Ends Continuation coverage ends when any of the following events occurs: Your dependent reaches the end of the applicable maximum COBRA period for coverage; A monthly contribution is not paid within 30 days of its due date; Upon written request to cancel coverage; Your covered dependent becomes entitled to Medicare; Your covered dependent becomes covered under another group medical or dental plan that does not contain an applicable pre-existing condition rule; Freescale ceases to provide any post-employment group health plan coverage; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. Please inform Freescale Rewards Customer Service of any changes in address or in personal circumstances so that Freescale Rewards Customer Service can give your covered dependents the necessary information concerning their rights to continuation of coverage. Other Continuation Rights You and your dependents may have additional health and dental coverage continuation rights in the event that Freescale is involved in a bankruptcy. You will be notified if these rules affect your coverage. The right to continue COBRA coverage is subject to all applicable federal laws and regulations. If you have any questions regarding COBRA, contact Freescale Rewards Customer Service at 888-FSL-BENS. TDP Eligibility and Coverage 23

30 Notes. 24 TDP Eligibility and Coverage

31 Rewards. Health Benefits for Retirees and TDPs Under Age 65 Freescale Post-Employment Health Plan Post-Employment Medical Plan Options Freescale Health Care Networks Care Management Maternity Care Program Transplant Services Program What s Covered What s Not Covered Behavioral Health Program Post-Employment Prescription Drug Program Health Maintenance Organization (HMO) Post-Employment Vision Plan Post-Employment Dental Plan Other Important Information Freescale offers retirees and TDPs a variety of health benefits under the Freescale Post-Employment Health Plan, including the Post-Employment Medical Plan, the Post-Employment Dental Plan, as well as a Post-Employment Prescription Drug Program and Long- Term Care Insurance. This section summarizes the Freescale benefits available to those participants who are under age 65. Health Benefits Participants Under Age 65 25

32 Freescale Post- Employment Health plan The Freescale Post-Employment Health Plan is available to help you and your family once your employment with Freescale ends. You and your eligible dependents under age 65 have the option of choosing Post-Employment Medical Plan and/or Post-Employment Dental Plan coverage if: You retire from Freescale before you reach age 65, and you meet the age and service requirements outlined on page 2; or You are under age 65 and your employment terminates under Freescale s Medical Leave Policy while you are receiving Disability Benefits. If you are covered under the Freescale Post-Employment Medical Plan, Post-Employment Dental Plan or Post- Employment Vision Plan, your spouse/domestic partner and eligible dependent children under age 65 may also participate in the Plans. Coverage is only available for your spouse/domestic partner and dependent children who were eligible under the Employee Medical Plan at the time of your retirement (as described on page 5) or your termination of employment (as described on page 15). If You Are a Retiree If you are still receiving Post-Employment Medical Plan benefits when you reach age 65, you will be eligible to transfer to coverage under the Humana Group Medicare PFFS Plan offered by Freescale. Dental and Vision coverage end for all participants at age 65. If You Are a Terminated Disabled Participant When you reach age 65, medical, dental and vision coverage ends for you and your dependents. If you have any questions, call Freescale Rewards Customer Service at 888-FSL-BENS. post-employment Medical Plan Freescale s Post-Employment Medical Plan offers medical, vision, hearing and prescription drug coverage; preventive screenings; and behavioral health programs. post-employment Dental Plan Freescale s Post-Employment Dental Plan for participants age 65 and under offers dental benefits that include preventive treatment, diagnostic services, restorative care and other covered treatment. Post-Employment Vision Plan Freescale's Post-Employment Vision Plan offers vision care benefits for participants age 65 and under that include exams, frames and lenses, and discounts for vision correction surgery. post-employment Medical plan Options Freescale, retirees/tdps and network providers are all partners in the Post-Employment Medical Plan. The Plan provides various options for coverage for you to choose based upon your personal circumstances. For information about who can be covered under this plan and when coverage begins, see Eligibility Requirements for Freescale Retiree Health Benefits, and Eligibility Requirements for Freescale TDP Health Benefits. Contact Freescale Rewards Customer Service for more information at 888-FSL- BENS, or online at: freescale.com/rewards. The various health care coverage options available to Freescale retirees and their dependents who are under age 65 are discussed on the following page. Monthly Contribution Your contribution toward the cost of Post-Employment Medical Plan coverage depends on: Your choice of an individual or family enrollment category; Your choice of coverage option; and Whether you and/or your covered spouse (if any) use tobacco products. When you enroll each year, you and your covered spouse must both complete a certification of tobacco use. The Plan offers a monthly contribution discount to retirees, TDPs, and their spouses who certify they have not used tobacco products for the past six months. Tobacco use status cannot change during the calendar year, even if you have a change in status [hyperlink]. You are notified of the contribution amounts, available coverage options, and tobacco use discounts when you first become eligible to participate. Monthly contributions and tobacco use discounts are reviewed annually and are subject to change. 26 Health Benefits Participants Under Age 65

33 Zero Deductible Coverage Option The Pre-65 Humana Preferred Provider Organization (PPO) Zero Deductible coverage option (referred to in this book as the Zero Deductible option) is both simple and easy-to-use. When you choose the Zero Deductible option and use providers in the PPO network, your benefits are paid from the very first dollar of your covered expenses, because it has no deductible. You pay only a copayment for office visits, and the Plan pays 80 percent coinsurance for most other covered network services. When your 20 percent share reaches your annual out-of-pocket maximum $3,000 per person, or $4,000 per family the Plan s coinsurance increases to 100 percent for most covered expenses. If you use non-network providers, you must first pay a deductible, then the Plan generally pays 60 percent coinsurance and requires higher out-of-pocket maximums. $750 Deductible Coverage Option The Pre-65 Humana Preferred Provider Organization (PPO) $750 Deductible coverage option (referred to in this book as the $750 Deductible option) lets you save on your monthly contributions while still enjoying the security of comprehensive medical coverage. You pay only a copayment for network office visits. For other network expenses, you pay a deductible: the first $750 each year for each covered person, up to a maximum of $1,500 for you and all your covered family members. After you satisfy the annual deductible, the Plan begins paying benefits of 70 percent coinsurance for most covered expenses. Your 30 percent share of the cost is limited by the out-of-pocket maximum to $5,000 per person, $10,000 per family. If you use non-network providers, you pay a higher deductible before the Plan pays 50 percent coinsurance and requires higher out-of-pocket maximums. 50 Percent Network-Only Coverage Option The Pre-65 Humana Exclusive Provider Organization (EPO) 50 Percent Network-Only coverage option (referred to in this book as the 50 Percent Network-Only option) is designed primarily for retirees who have medical coverage from another source such as through a spouse s employer. This option has a low cost and low benefits, but it allows retirees to continue their eligibility for Freescale post-employment medical coverage. You must live in an area served by a Humana EPO provider network to choose this coverage option. It pays a 50 percent coinsurance benefit for network treatment with no deductible, and its out-of-pocket maximum is $5,000 per person and $10,000 per family. No benefits are paid for non-network care. The chart on the following pages gives an overview of the costs and coinsurance amounts of the Pre-65 Post-Employment Medical Plan's coverage options. KEY TERMS NNF = Negotiated Network Fees R&C = Reasonable and Customary Charges Health Benefits Participants Under Age 65 27

34 FREESCALE PRE-65 POST-EMPLOYMENT MEDICAL PLAN When You Use a Network Provider (network-area and out-of-area participants) Zero Deductible Option $750 Deductible Option 50 Percent Network-Only Option Annual Deductible None Individual: $750 Family: $1,500 Coinsurance Your benefit from the Plan for most covered expenses Office Visit Copayment Network-area participants: 80% of NNF Out-of-area participants: 80% of R&C Network-area participants: Primary providers: $20 Specialty providers: $35 Out-of-area participants: All care: $20 Annual Out-of-Pocket Maximum Individual: $3,000 Family: $4,000 Out-of-area participants: These amounts include non-network care Aggregate Lifetime Maximum Benefit Network-area participants: 70% of NNF Out-of-area participants: 70% of R&C Network-area participants: Primary providers: $10 Specialty providers: $50 Out-of-area participants: All care: $10 Individual: $5,000 Family: $10,000 Out-of-area participants: These amounts include non-network care None 50% of NNF None Individual: $5,000 Family: $10,000 Excludes copayments, monthly contributions, reduced benefits, amounts greater than maximum benefits, non-network services, your share of prescription drug expenses, and any expenses not covered by the Plan. $5 million per person Includes benefits received while you were a participant in any Freescale or Motorola medical plan, both from network and non-network providers When You Use a Non-Network Provider (network-area participants only) Annual Deductible Individual: $400 Family: $800 Coinsurance Your benefit from the Plan for most covered expenses Zero Deductible Option $750 Deductible Option 50 Percent Network-Only Option Individual: $1,500 Family: $3,000 60% of R&C 50% of R&C 0% Office Visit Copayment None None None Annual Out-of-Pocket Maximum Individual: $4,500 Family: $6,000 Individual: $7,500 Family: $15,000 Excludes copayments, monthly contributions, reduced benefits, amounts greater than maximum benefits, amounts over R&C, network services, your share of prescription drug expenses, and any expenses not covered by the Plan. None None chart continued on next page 28 Health Benefits Participants Under Age 65

35 When You Use a Non-Network Provider (out-of-area participants only) Zero Deductible Option $750 Deductible Option 50 Percent Network-Only Option Annual Deductible None Individual: $750 Not available Family: $1,500 Coinsurance 80% of R&C 70% of R&C Not available Your benefit from the Plan for most covered expenses Office Visit Copayment All providers: $20 All providers: $10 Not available Annual Out-of-Pocket Maximum Individual: $3,000 Family: $4,000 Individual: $5,000 Family: $10,000 Not available Excludes copayments, monthly contributions, reduced benefits, amounts greater than maximum benefits, amounts over R&C, network services, your share of prescription drug expenses, and any expenses not covered by the Plan. Office Visit Copayments For the Zero Deductible and $750 Deductible options, you pay only a copayment for physician office visits. Once you pay your copayment, the Plan pays its benefit up to the negotiated network charge (network) or reasonable and customary charge (non-network). Separate copayment amounts apply to primary and specialty providers for in-network participants. The following are considered primary providers: Family practitioner General practitioner Internist Behavioral health provider Nurse practitioner Certified nurse midwife Obstetrician/gynecologist Pediatrician All other providers are considered specialty providers. See the chart on page 28 for details on office visit copayments. Annual Deductible The Zero Deductible and $750 Deductible options include both individual and family deductibles. A deductible is a specific amount of eligible medical expenses you must pay before the Plan begins paying benefits. The family deductible is a combined amount for all family members. However, in order to meet the family deductible, no more than the individual deductible amount for any one family member can be applied. Separate deductibles apply to network and non-network charges, and to out-of-area participants. Remember that your deductible starts over each January 1. Eligible expenses do not carry over from one year to the next, nor do they carry over from the Freescale Employee Medical Plan to the Freescale Post- Employment Health Plan. See the charts on pages for details on annual deductibles. Coinsurance For most covered expenses, the Plan pays its benefit as a percentage of the remaining covered expenses after you have met your annual deductible (if one is required). That percentage is the Plan s coinsurance. The Zero Deductible and $750 Deductible options have two coinsurance percentages: one for network charges, and one for non-network charges. For the out-of-area participants, the Plan applies the same coinsurance percentage to all charges. If you use the services of a network provider, the Plan s benefit is the network coinsurance percentage. This percentage applies to the negotiated network fee for the specific treatment. You pay only the remainder of the negotiated network fee, so long as you follow the Plan s rules for obtaining network care. If you use the services of a non-network provider and you live in a network location, the Plan s benefit is the non-network coinsurance percentage. Out-of-area participants have a single coinsurance percentage. This percentage applies to the reasonable and customary charge for that specific treatment. You pay all remaining charges, including any amounts that are above the reasonable and customary charge. Any charges over reasonable and customary are not applied to the out-of-pocket maximum. Copayments most often apply to network physicians office visits, and if you are an outof-area participant, to non-network physician s office visits. Health Benefits Participants Under Age 65 29

36 See the chart on pages for specific information on the amount of your outof-pocked maximums based on your chosen coverage options. Annual Out-of-Pocket Maximum To protect you and your family from the financial hardship of a serious injury or illness, there are annual out-of-pocket maximums for both network and nonnetwork services. Once you meet your annual out-ofpocket maximum, for the remainder of the calendar year the Plan s coinsurance increases to 100 percent of the negotiated network fee (network) or reasonable and customary charge (non-network). The individual out-of-pocket maximum applies to each covered person. The family out-of-pocket maximum is a combined amount for all family members. However, in order to meet the family out-of-pocket maximum, no more than the individual out-of-pocket maximum for any one family member can be applied. Separate out-of-pocket maximums apply to network and non-network charges, and to out-of-area participants. Remember that your out-of-pocket maximum starts over each January 1. Eligible expenses do not carry over from one year to the next, nor do they carry over from the Freescale Employee Medical Plan to the Freescale Post-Employment Health Plan. Amounts you pay as an annual deductible apply to your out-of-pocket maximum, but some other amounts you pay do not; those amounts are listed in the applicable charts. See the charts on pages for details on annual out-of-pocket maximums. If You Transfer from One Plan or Coverage Option to Another If you transfer midyear from one Freescale Plan to another (for example, from the Freescale Medical Plan for active employees to the Post-Employment Plan), or from one pre-65 coverage option to another (for example, from the 50 Percent Network-Only to the $750 Deductible option), most benefit maximums do not start over. In most cases, annual maximums for office visits and frequency of allowed services are accumulated and combined between plans/ coverage options as one calendar-year maximum. However, a new plan/coverage option will require a separate annual deductible and coverage option. Contact Freescale Rewards Customer Service for more information. Aggregate Lifetime Maximum The Plan has a $5,000,000 per person aggregate lifetime maximum benefit. This maximum includes benefits you or your dependents have received under any current or former Freescale or Motorola medical plan, other than a Freescale Post-Employment Medical coverage option for those age 65 and older (Age 65+ options). Voluntary Health Screenings The Post-Employment Medical Plan emphasizes preventive care and encourages you and your covered dependents to take advantage of voluntary screenings. These can be done at your primary provider s office and are covered as an office visit. A blood pressure screening, lipid panel profile, Body Mass Index (BMI) and health power profile are covered at 100 percent coinsurance if done at an onsite Freescale health screening. Partner with your physician to determine which options may be appropriate for you: For women: mammogram and pap smear For men: prostate-specific antigen and digital rectal exam For both: lipid panel profile, bone density test and glucose test Immunizations Immunizations, including vaccinations, receive 100 percent of the negotiated network fee coinsurance under the Zero Deductible and $750 Deductible options. If you use a nonnetwork provider, the coverage option generally pays its non-network benefit. The 50 Percent Network-Only option pays its regular coinsurance for immunizations. Covered Services See pages for an overview of medical services covered under this Plan. 30 Health Benefits Participants Under Age 65

37 Health Care Networks Health care networks are an integral part of Freescale s Post-Employment Medical Plan. If you are a networkarea, Post-Employment Medical Plan participant, you must use providers in the Freescale provider network in order to receive the Plan's highest level of benefit. The customized Freescale networks in various locations across the U.S. include health care providers and hospitals that meet specific standards established by the network administrators and agree to charge negotiated fees. Network Benefits When you use Freescale networks, you receive the network level of benefit after you meet your annual deductible (if any). You are responsible for paying the remaining percentage and any applicable copayments. When You Travel If you are traveling or vacationing away from home, you can go to the nearest facility that can treat your condition. If you are admitted to a hospital, remember to contact Care Management within 48 hours to receive network-level benefits. When Your Children Are Away at School If your child attends school (for example, a child away at college) in an area with a Post-Employment Medical Plan network, then he/she should choose a provider in that network. If there is no network available, then coverage is provided at the network level, but based on the reasonable and customary charge. Non-Network Benefits If you live in a network area but choose to use the services of non-network providers, your coverage for these services is generally at the non-network level after the deductible. You are responsible for paying the remaining charges plus any expenses exceeding reasonable and customary charges. The 50 Percent Network-Only Option, has no coverage for services provided by non-network providers, except in an emergency or in certain special circumstances described below. If the Plan Administrator determines that you live in a network area and you are unable to obtain specialized services from a network provider in your area, benefits for the covered expenses will be paid at the rate that otherwise applies to a network provider, if you obtain the Plan Administrator s approval before you incur them. Contact Freescale Rewards Customer Service for information regarding the process. Ancillary Providers Ancillary providers, such as anesthesiologists, radiologists, and assistant surgeons who are nonnetwork are paid at the network rate (applied to reasonable and customary charges) when: The care/treatment rendered is on an emergency or urgent care basis; The services of the ancillary provider are provided in conjunction with care/treatment rendered at a network facility; The services of the ancillary provider are ordered in conjunction with network office care and the participant is not permitted to choose the ancillary provider (for example, when a network physician is supported by a non-network anesthesiologist); or The Plan Administrator approves the use of a nonnetwork provider because a network provider is not available in the participant s location. Except as explained above, non-network ancillary providers are paid at the non-network rate when care/treatment is rendered at a non-network facility or when ordered in association with non-network office care. Different rules apply to laboratory services. If you receive services from non-network providers under the circumstances described in this section, these services are subject to the network deductible of your coverage option. The amount you pay related to those services is applied only to the network annual out-of-pocket maximum and does not count toward the non-network annual out-of-pocket maximum. For more information on networks, contact Care Management at 888-FSL-BENS. Health Benefits Participants Under Age 65 31

38 You must contact Care Management within 48 hours of an emergency or urgent care hospital admission or surgery, or your benefit is significantly reduced. Out-of-Area Participants The provider, hospital, and behavioral health networks are available in many Freescale locations. You are an out-ofarea participant if you do not live in one of these locations. If you are unsure whether you live in a network area, contact Freescale Rewards Customer Service. If you do not live in a network location, you may not enroll in the 50 Percent Network-Only option. You and your covered dependents may go to any eligible provider or hospital you wish and still be eligible for the highest level of benefits (provided you contact Care Management as required). Behavioral Health Network Specialty hospitals and facilities are included in Freescale s Behavioral Health network because of their expertise in psychiatric and chemical dependency services. To receive the highest level of benefit from your coverage option, you must use network providers. To find a network provider in your area, contact APS Healthcare at Refer to pages for Behavioral Health Program details. Care Management When you understand your health care options, you can make more informed decisions. That is why Freescale provides Care Management for all Post-Employment Medical Plan participants. Care Management is a utilization review and case management program. Care Management's staff includes physicians and registered nurses who work for independent health care management organizations that provide similar services to other major U.S. companies. Care Management is your direct line to health care professionals who work with you and your physician. By using Care Management, you will be a more active participant in making your health care choices. It is important to contact Care Management as outlined in this section to ensure that you receive the highest level of benefit available to you. The Care Management office is open 7:30 a.m. to 7:30 p.m. Central Time, Monday through Friday. After-hours inquiries by members will be responded to the next business day. All medical information given to Care Management is held in strict confidence. Contact Care Management by calling Freescale Rewards Customer Service, 888-FSL-BENS. WHEN TO CONTACT CARE MANAGEMENT As a Post-Employment Medical Plan participant, regardless of the coverage option you have chosen, you must contact Care Management and receive preauthorization in all of the following instances: Within 48 hours of an emergency or urgent care hospital admission; At least three days before a non-emergency hospital admission or at least three days prior to your scheduled or expected date of delivery for maternity; and At least three days before an inpatient hospitalization, partial hospitalization, residential treatment or intensive outpatient treatment for behavioral health. Important Note: Failure to contact Care Management for preauthorization in the circumstances listed above will result in your benefit being reduced to 50 percent coinsurance. All Post-Employment Medical Plan participants are required to contact Care Management to receive preapproval in all of the following instances: Rental/purchase of durable medical equipment, and major orthopedic braces/prosthetic appliances, but only for (and when) the total benefit amount exceeds $1,000; Purchase of diabetic pumps; Prior to obtaining tests or studies related to sleep disorder conditions; At least three days prior to receiving psychological testing, neuropsychological testing or biofeedback; For an extension of Home Health Care coverage beyond 90 days; and At least three days in advance if you are having any of the following medically necessary surgeries on an outpatient basis: Abdominoplasty (includes diastasis recti) Blepharoplasty or related procedures Bone marrow transplants 32 Health Benefits Participants Under Age 65

39 Breast augmentation Dental implants Excessive skin removal Extracorporeal shock wave therapy Gastroplasty or stapling/bypass Genioplasty Liposuction Mammoplasty and related procedures (unless such procedure is in connection with a mastectomy for cancer) and removal of breast implants and capsulotomy of the breast Mastectomy Orthognathic surgery Otoplasty Palatopharyngoplasty Penile prosthesis operation Rhinoplasty (with or without septoplasty) Sclerotherapy Temporomandibular joint disorder surgery Important Note: Failure to contact Care Management for preapproval in any of the circumstances listed above will result in your coinsurance being reduced to 0 percent. You should also contact Care Management in the following instances: To discuss alternatives to hospitalization such as outpatient centers, home health care and hospices; To obtain information about network providers; and To enroll in the Maternity Care program (see page 36). In an Emergency In an emergency, you or your covered dependent should immediately seek whatever care is necessary to safeguard health and well-being. However, you must contact Care Management within 48 hours of an emergency or urgent care hospital admission or surgery, or your coinsurance is reduced to 50 percent. How Care Management Works When you call Care Management, you must provide the following information: Then the Care Management physicians and nurses will: Give you a patient control number (if proposed admission date is given) to confirm that Care Management was notified; Contact your physician; and Discuss outpatient versus inpatient care and treatment alternatives, if needed. If you do not live in a network location, Care Management attempts to negotiate fees with the hospital you selected. Any discounts obtained by Freescale are passed on to you. There are some things that Care Management will not do, such as: Make your health care decisions for you; Interfere in your relationship with your physician; Diagnose your condition; Deliver medical care; Prescribe medication; Delay the processing of your medical claim; or Determine your benefit coverage. What if You Don t Contact Care Management If you do not contact Care Management, your benefit coverage will be reduced for all provider services and charges (i.e., surgeon, anesthesiologist, etc.) associated with inpatient confinemen. Important Note If you do not contact Care Management in all the circumstances requiring preapproval or preauthorization listed under "When to Contact Care Management" on pages 32 33, your benefits are greatly reduced; in some cases they are reduced to 0 percent. When in doubt, it is better to contact a Care Management representative. Contacting Care Management does not guarantee that the provider or facility is approved as a network provider, nor does preauthorization by Care Management guarantee coverage. Any questions about coverage or eligibility should be directed to Freescale Rewards Customer Service at 888-FSL-BENS. Retiree/TDP s name and identification number; Patient s name and birth date; Physician s name and telephone number; Hospital s name and telephone number; Reason for proposed hospital admission; and Proposed date of admission. Health Benefits Participants Under Age 65 33

40 Your Benefit Coverage with Care management To reach Case Management, call Freescale Rewards Customer Service, 888-FSL-BENS. Care Management and Hospitalization Care Management arranges with hospitals across the country to offer participants in the Post-Employment Medical Plan quality health care at competitive fees. These are called network hospitals. In order for you to receive the highest level of benefit, you must use network hospitals for non-emergency medical care. The coinsurance amounts listed in the chart below do not represent emergency admissions. For emergency admissions details, see page 33. Note: Any expenses for which you are responsible as a result of a Care Management reduction do not apply to your annual out-of-pocket maximum. MEDICAL INPATIENT ADMISSIONS Coinsurance When Care Management Is Contacted* If You Live in a Network Area Coinsurance When Care Management Is NOT Contacted* Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption Network hospital Non-network hospital 80% of NNF 60% of R&C 70% of NNF 50% of R&C 50% of NNF Not covered 50% of NNF 50% of R&C 50% of NNF 50% of R&C 50% of NNF Not covered If You Live Out-of-Area Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption** Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption** Network hospital Non-network hospital 80% of NNF 80% of R&C 70% of NNF 70% of R&C Not available Not available 50% of NNF 50% of R&C 50% of NNF 50% of R&C Not available Not available * Within prescribed time limits **The 50 Percent Network-Only option is not offered to participants who live out-of-area. 34 Health Benefits Participants Under Age 65

41 Behavioral Health Network Services To receive the highest level of benefit, you must use one of the specialty hospitals and facilities that are included in the Behavioral Health Network. Your coinsurance will be reduced if you do not contact Care Management as required, or if you live in a behavioral health network location and choose not to use a network facility. Note: Any expenses for which you are responsible as a result of a Care Management reduction do not apply to your annual out-of-pocket maximum. Behavioral Health ADMISSIONS Includes Inpatient Care and Residential Treatment Facilities Coinsurance When Care Management Is Contacted* Coinsurance When Care Management Is NOT Contacted* If You Live in a Network Area Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption Network hospital Non-network hospital 80% of NNF 50% of R&C 70% of NNF 50% of R&C 50% of NNF Not covered** 50% of NNF 50% of R&C 50% of NNF 50% of R&C 50% of NNF Not covered** If You Live Out-of-Area Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption** Zero Deductible Option $750 Deductible Option 50% Network- Only 0ption** Network hospital Non-network hospital 80% of NNF 80% of R&C 70% of NNF 70% of R&C 50% of NNF 50% of R&C 50% of NNF 50% of R&C 50% of NNF 50% of R&C 50% of NNF 50% of R&C * Within prescribed time limits **If you live in a Behavioral Health Network area and use a non-network hospital, the Plan's coinsurance is 0 percent. CaSe Management Occasionally a stay in a hospital or rehabilitation center may become extended, and expenses may become high. Sometimes your care may be complex, and medical requirements may become extraordinary. If you would like assistance managing these situations, you can ask Case Management for help. This program is voluntary and costs you nothing. You may contact Case Management on your own, as a result of a hospital admission or at the direction of the Plan Administrator. Following an initial review by Case Management, your case is assigned to an appropriate case manager and you are contacted to sign an authorization allowing the case manager to work with your providers. Sometimes a case will not be appropriate for Case Management. In this instance, Case Management notifies you in writing. Behavioral health Case Management is mandatory to obtain the highest level of benefits for behavioral health inpatient hospitalization, partial hospitalization, residential treatment or intensive outpatient care. Case Management offers you the services of specially trained case managers and physicians to assess your current condition and anticipate future needs. You are assigned a case manager who works with you and your health care providers to evaluate your treatment plan, help establish care goals, locate resources and assist with the management of the treatment plan. Important Note: If your behavioral health care provider recommends biofeedback, neuropsychological testing or psychological testing, you must obtain approval from Care Management prior to undergoing any of these training or testing procedures. If you do not obtain preapproval from Care Management, your coinsurance is reduced to 0 percent. Health Benefits Participants Under Age 65 35

42 Maternity Care program You should notify Care Management and enroll in the Maternity Care Program as soon as the pregnancy is confirmed. Contact Care Management at 888-FSL-BENS. Maternity Coverage and Maternity Care Program All coverage options in the Post-Employment Medical Plan include maternity benefits for retirees/tdps and their covered dependents. They also include the Maternity Care Program: a confidential, no-cost service provided by ActiveHealth Management. It is part of Freescale s commitment to providing the highest quality care to expectant mothers and their babies. Maternity Coverage The Plan includes these services as part of its routine maternity coverage: Charges made by a freestanding facility licensed to provide prenatal care, delivery and immediate postpartum care within twenty-four (24) hours after the delivery; Services and supplies furnished for prenatal care, delivery of a child or children, and postpartum care within twenty-four (24) hours after the delivery; Charges by the operating physician for performing the obstetrical procedure, related pre- and postoperative care, administration of an anesthetic; Services of any other physician for administration of a general anesthetic, not a local anesthetic; Routine nursery care for a newborn, while the mother is hospitalized for maternity care; and Lactation breast pump (maximum benefit of $250 per lifetime). Remember that maternity admissions require preauthorization. If you are not enrolled in the Maternity Care Program described below, you must contact Care Management by calling Freescale Rewards Customer Service at 888-FSL-BENS to have your admission authorized. While your benefits may be reduced for an unauthorized admission, the Plan will not: Reduce benefits for any maternity hospital stay for a covered mother or newborn child to less than 48 hours for vaginal delivery, or 96 hours for cesarean section; Require you to demonstrate that a hospital stay for childbirth is medically necessary; or Require an attending provider to complete a certificate of medical necessity in order to cover any part of a 48- hour (or 96-hour) maternity hospitalization. The length of stay is decided between the physician and the mother. Important Note: Contact Freescale Rewards Customer Service for detailed information regarding what you should do if your doctor discontinues his/her participation in the provider network during your pregnancy. Using a Midwife You may choose to use the services of a midwife, rather than a physician, for your maternity care. The midwife must be a licensed or certified nurse midwife (LNM, CNM) in order for you to receive benefits for his or her services. If the midwife is not a licensed or certified nurse midwife, the Plan's coinsurance will be 0 percent. Maternity Care Program The Maternity Care Program is a voluntary program. It was developed by obstetricians and perinatologists to help you learn more about your pregnancy and help you maintain maximum health for you and your baby. This special program provided through Care Management offers educational and prescreening treatments. By participating, you will learn how to identify any risk factors that may be present with your pregnancy and how to lower your risk of premature birth. It also gives you 24-hour telephone access to registered nurses who can answer your questions and provide you with important information on prenatal care and preparing for work/parenting responsibilities. Your active participation in the program also earns you a LifeCare Maternity Package. This kit includes best-selling books, LifeCare guides, and products for your baby (bib, diaper/bottle bag, magnet with baby s immunization schedule, and one-piece garment). Benefits of the Maternity Care Program Risk screenings at the 16th and 28th weeks of pregnancy to determine risks involving premature delivery, alcohol use, smoking, Rh factor, and diabetes all to help you decide if additional care is needed; Pre-screenings; Prenatal education booklet; Medical and social service referrals; and 24-hour baby hotline. 36 Health Benefits Participants Under Age 65

43 Organ transplants are covered under all options of the Post-Employment Medical Plan. However, for the Zero Deductible option and the $750 Deductible option, organ transplants are covered at a higher benefit level under the Transplant Services program. This higher benefit level is not included in the 50 Percent Network- Only option. The Transplant Services Program uses medical facilities that meet stringent criteria for quality care in organ transplantation. These facilities are located throughout the U.S. and specialize in bone marrow, heart, kidney, pancreas or liver transplants. HOW TO USE THE TRANSPLANT SERVICES PROGRAM When you require an organ transplant, you or your physician should contact Care Management by calling 888-FSL-BENS to begin the evaluation process. If the surgery is eligible for coverage, the Care Management Support transplant coordinator (a registered nurse) works with you, the patient (if a covered dependent), family members, medical personnel and Freescale Rewards Customer Service to answer questions and help make arrangements. The transplant coordinator may also review the treatment plan and follow up with the patient for one year after the surgery. WHAT S COVERED Surgery and Related Services Fees related to transplant surgery determined to be medically necessary by Care Management Support. This includes air ambulance, oxygen, attending medical personnel and post-surgical care for up to one year, if medically necessary. Donor Matches Expenses in determining whether any of the patient s immediate family members are suitable donors, up to three matches for unrelated individuals, and expenses for donor acquisition and transportation costs. Travel and Lodging Reimbursement of up to $10,000 per transplant for the cost of travel to and from the site of transplant surgery by: The patient A live organ donor, if necessary One adult family member, if the Plan Administrator or the attending physician determines it is necessary for the patient s well-being. The following expenses are eligible for reimbursement: Mileage, based on IRS business rate Airfare, instead of mileage, but only when travel is for more than 100 miles Lodging, up to IRS limits, at a facility associated with the transplant hospital (or recommended by Care Management). Costs for food and incidentals are not eligible for reimbursement. To receive the highest level of benefit, you must use one of the specialty hospitals and facilities recommended by Care Management Support. Your coinsurance will be reduced if you do not contact Care Management as required. Note: Any expenses for which you are responsible as a result of a Care Management reduction do not apply to your annual out-of-pocket maximum. Transplant Services program TRANSPLANT SERVICES PROGRAM When Care Management Is Contacted When Care Management Is NOT Contacted Zero Deductible Option $750 Deductible Option 50% Network- Only Option Zero Deductible Option $750 Deductible Option 50% Network- Only Option Network hospital Non-network hospital 100% of NNF 100% of NNF 50% of NNF 50% of NNF 50% of NNF 50% of NNF 60% of R&C 50% of R&C Not covered 50% of R&C 50% of R&C Not covered Health Benefits Participants Under Age 65 37

44 What s Covered Under the Post-Employment Medical Plan The Post-Employment Medical Plan provides coverage for a wide array of services. It is your responsibility to use the services of network providers and to follow Care Management requirements whenever applicable to receive the highest benefit level possible. Failure to follow the guidelines for contacting Care Management when required reduces your benefit. what s covered under the Post-Employment Medical plan service description Accidental Injury to Sound Natural Teeth Alcohol, Drug Treatment Initial treatment of sound, natural teeth accidentally injured. Treatment must be initiated within 30 days of the accident and completed within 24 months. A chewing injury is not considered an accident. Treatment of alcoholism or drug addiction is covered under the Behavioral Health Program. Allergy Treatment Physician-prescribed testing, treatment and injections for allergies. Exclusions apply. See page 42. Ambulance Benefits are based on billed charges Anesthesia Behavioral Health Care Program Blood Casts, Dressings, Prosthetic Appliances Contraceptives Convalescent Home/ Skilled Nursing Home Dental Implants Diagnostic Laboratory, Pathology and Radiology (X-ray) If medically necessary, ambulance service to a hospital for treatment. One round trip to another facility for medically necessary tests or treatment related to that confinement. Also, if medically necessary, emergency transportation by a regularly scheduled airline, railroad or air ambulance from the place you or your covered dependent becomes ill or injured to the nearest hospital qualified to provide special treatment. Services rendered by an anesthesiologist who is in constant attendance during the operation for the sole purpose of administering the anesthesia. Services rendered by a certified registered nurse anesthetist (CRNA), when billed in conjunction with services of a supervising anesthesiologist. Charges not to exceed 50 percent of the lesser of the negotiated network fee or reasonable and customary charge for the procedure, for each provider. Access to quality behavioral health providers. Whole blood, blood plasma or artificial blood products (excluding autologous blood, except for an impending surgical procedure) and the cost of its administration. Casts, dressings, splints, trusses, braces and crutches, prosthetic appliances and custom-made orthotics (limited to two pair per year) and Jobst Stockings, as prescribed by physician. Rental or purchase in amounts greater than $1,000 must be preapproved by Care Management. Physician-administered contraceptives such as IUDs, Norplant implants and Progestin injections to prevent conception. Excludes prescription contraceptives. For prescription contraceptives, see "What s Covered" in the Prescription Drug Program section, page 52. Medically necessary care in a convalescent home or skilled nursing home, including inpatient rehabilitation. Confinement must be in lieu of a hospital stay, and you or your covered dependent must be under the regular care of a physician. Care Management preapproval required for care beyond 90 days. Coverage only when medically necessary to correct an injury to sound natural teeth. No coverage for any related post-operative dental services such as crowns, dentures, abutments, connector bars, precision attachments or dental prostheses. Care Management preapproval required. A series of tests, invasive or noninvasive, or X-rays, used to determine a particular diagnosis. Benefit level, copayment and/or deductible (if any) depend on your coverage option and whether you receive the services in a physician s office, at an independent lab or in a hospital setting (either inpatient or outpatient). chart continued on next page 38 Health Benefits Participants Under Age 65

45 what s covered under the Post-Employment Medical plan service description Durable Medical Equipment Eye Examinations Gastric Bypass Health Screenings Hearing Aids Hearing Examinations Home Health Care Hospice Hospital Inpatient Hospital Outpatient Hospital Emergency Room, ER Physician Immunizations Lactation Breast Pump Rental, up to the maximum purchase price (or purchase, if deemed to be more cost-effective by the Plan) of standard wheelchair, standard hospital bed and other durable medical equipment necessary for treatment, as prescribed by a physician. Care Management preapproval required for rental or purchase in an amount greater than $1,000. Non-refractive examination of the eye performed by an eligible provider as a result of an injury or illness performed at a hospital, or at a physician s office. See Vision Plan section for coverage of routine vision care. If medically necessary, gastroplasty and stapling/bypass that is approved pursuant to procedures maintained by the Plan Administrator. Care Management preapproval required. Adult routine preventive health screenings (as recommended by your physician). Benefit level, copayment and/or deductible (if any) depend on whether you receive the services in your physician s office, in a hospital or radiology facility or if the services are performed onsite at Freescale. Covered screenings are: For women: mammogram and pap smear. For men: prostate specific antigen and digital rectal exam. For both: lipid panel, bone density, glucose and blood pressure. Costs for purchase of hearing aids, limited to one pair of hearing aids every two years with a maximum benefit of $650 per ear. Cleaning and checking of hearing aids. No frequency limit applies. Costs do not apply to $650 maximum. Routine hearing exams/care performed by an eligible provider. Limited to one examination every two years. Specified health care services performed in the home that must be: Prescribed by a physician; Provided by a licensed agency; For medically necessary care; and For the same or a related condition that caused a hospital confinement or in lieu of a hospital confinement. Care Management preapproval required for care beyond 90 days. An organization or facility that provides for the physical and psychological aspects of caring for the terminally ill, including bereavement counseling. Services must be provided through a hospital or other licensed facility, home health care agency or hospice. To qualify, you or your covered dependent must be terminally ill and have a life expectancy of six months or less. Care Management preauthorization required. Only semiprivate hospital room and board are covered, as well as other inpatient services for medical care and treatment. Must be medically necessary based on diagnosis. (If you have a private room, you pay the difference unless medically necessary, or if it is the only room available.) Care Management preauthorization required. Charges made by a hospital for outpatient treatment, such as outpatient surgery. Care Management preauthorization required in some cases see page 32. Charges made by a hospital or ER Physician for emergency treatment. Charges for vaccinations for the prevention of disease and illness as recommended by your health care provider. Lactation breast pumps provided based on the American Academy of Pediatrics recommendation that breastfeeding for the first 12 months provides all the nutrients a child needs for growth and development. Lifetime maximum benefit of $250. chart continued on next page Health Benefits Participants Under Age 65 39

46 what s covered under the Post-Employment Medical plan service description Mastectomies Maternity Care Nuclear Medicine, MRI, CT Scan, Ultrasound, Specialty Lab Procedures Nutritional Counseling Occupational Therapy Oral Surgery Orthognathic Surgery Outpatient Emergency, Urgent Care Physician s Fees Physical Therapy Prescription Drug Program Prescription Eye Lenses or Contacts Prescription Medicine Private Duty Nursing Radiation Therapy and Chemotherapy In connection with a covered mastectomy: All stages of reconstruction of the breast on which the mastectomy is performed; Surgery and reconstruction of the other breast to produce symmetrical appearance; and Prosthesis and physical complications of mastectomy including lymphedemas. Care Management preapproval required. Routine maternity care/delivery charges for the mother including initial diagnostic office visit and lab work, testing and radiology services. Care Management preauthorization required for hospitalization. Specialty diagnostic procedures performed at a hospital or other health care facility. Services provided by a registered dietician in individual sessions for covered persons with medical conditions requiring a special diet. Examples include diabetes mellitus, gestational diabetes, coronary artery disease, heart failure, severe obstructive airway disease, gout, renal failure, phenylketonuria (PKU) and hyperlipidemias. Occupational therapy by a registered and licensed therapist, necessary as a result of an illness, injury or congenital birth defect, provided the physician who prescribed it regularly reviews the treatment. Non-network benefits limited to $3,500 per calendar year. Surgery for the treatment of fractures or dislocations of the jaw or the cutting procedures of the mouth, excluding procedures for the teeth or gums. Surgery to alter relationships of dental arches and/or supporting bones, usually accomplished with orthodontic therapy. Surgery and postoperative therapy up to 26 visits. Care Management preapproval required. Note: Orthodontic treatment and crowns associated with TMJ treatment are not covered under this benefit. Treatment for emergency, accident or urgent care at an outpatient treatment center such as a surgicenter, outpatient department of a hospital or other ambulatory care center. Charges for visits for the treatment of an accident, illness, specialist consultation or covered preventive services. Physical therapy by a registered and licensed therapist, provided the physician who prescribed it regularly reviews the treatment. Non-network benefits limited to $3,500 per calendar year. Prescription drugs prescribed by a physician, dispensed by a licensed pharmacist and identified by a prescription number. See pages for program details. Medically necessary prescription eye lenses or contacts for the immediate treatment or postoperative care of medical conditions directly caused by disease or trauma if such benefit is not covered under the Vision Plan s medical necessity benefit (see page 56). Benefit excludes all cosmetic features and use not for primary wear (e.g., sunglasses). $200 annual maximum benefit. Charges for drugs prescribed by a physician and dispensed in an inpatient setting, outpatient hospital or surgicenter. Certain specialty drugs must be purchased through Caremark Specialty Pharmacy Services in order to be covered. See page 50 for details. Private duty nursing when the attending physician states in writing that the nursing care is necessary; covered up to a maximum of 90 days per calendar year. Private duty nursing care must be provided by a registered nurse or licensed practical nurse. The services provided must be for treatment, not for custodial care. Coverage for radiation therapy (X-ray, radium and radioactive isotope treatment) and chemotherapy. Certain specialty drugs must be purchased through Caremark Specialty Pharmacy Services in order to be covered. See page 50 for details. 40 Health Benefits Participants Under Age 65

47 what s covered under the Post-Employment Medical plan service description Respiratory Therapy Routine Physical Exams Sleep Studies Speech Therapy Sterilization Surgeon s Fees Surgical Assistant Temporomandibular Joint Disorder (TMD, formerly TMJ Treatment) Tobacco Cessation Programs Transplant Care Weight Control Programs Well-Child and Baby Care Wigs and Hairpieces Respiratory therapy prescribed by a physician. Coverage for exams beyond required or voluntary screenings or diagnostic lab services and X-rays. Includes adult, pediatric, school and sports physical exams. Diagnostic testing for the determination of sleep disorders. Care Management preapproval required. Speech therapy by a licensed and registered therapist, provided the physician who prescribed it regularly reviews the treatment. Non-network benefits limited to $3,500 per calendar year. Routine sterilization, including vasectomy and tubal ligation for the retiree/tdp and covered spouse/domestic partner, but not reversal of such procedure. Charges by the operating surgeon for an operation in or out of the hospital, in a physician s office, or in an outpatient treatment facility (such as a surgicenter). Note: Special payment rules apply to secondary, ancillary and bilateral surgical procedures. If medically necessary, surgical assistant charges not exceeding 20% allowance of the primary surgeon's contracted rate for all procedures. See page 31 for rules that apply when the Surgical Assistant is an Ancillary Provider. Nonsurgical treatment of TMD when prescribed by a physician. Note: Orthodontic and dental services associated with TMD treatment are not covered under this benefit. Aggregate maximum $3,000 per lifetime. Maximum lifetime benefit does not include up to 26 post-operative physical therapy visits following TMD surgery. Physician-prescribed and regularly reviewed medical treatment and prescription medicines provided as part of a smoking cessation program. Lifetime maximum benefit is three courses of treatment. Eligible organ transplant procedures for you and your covered dependents. These procedures are covered at a higher level if you are enrolled in the $0 Deductible or $750 Deductible Option and use the Transplant Services Program. See page 37 for details. A benefit shall be paid for a participant who is 150% of his/her recommended weight for services in connection with weight control programs that are medically necessary, including office visits, laboratory services and behavior modification services. Office visits and immunizations for will-child and baby care. Includes routine nursery care for a newborn, while the mother is hospitalized for maternity care. Care Management contact required. Wigs and hairpieces prescribed by a physician for hair loss caused by, but not limited to, chemotherapy, radiation therapy, alopecia areata, endocrine disorders, metabolic disorders, cranial surgery or severe burns. Excludes physiologic changes as a part of the aging process or hereditary factors. Maximum benefit of $1,000 per lifetime. Health Benefits Participants Under Age 65 41

48 What s Not Covered Under the Post-Employment Medical Plan When no statement is made in the Plan regarding a specific benefit, that benefit is not covered. Listed below are examples of services that are not covered under the Post-Employment Medical Plan. Contact Freescale Rewards Customer Service for additional information. what s not covered under the post-employment medical plan service Abortion Acupuncture Allergy Treatment Charges for Completion of Forms Charges for Missed Appointments Charges for Which You Are Not Liable Claims Filed After One Year Complications from Non-Covered Procedures Cosmetic or Plastic Surgery or Treatment Custodial Care Dental Treatment Educational Classes, Material, Testing and Reports Embryonic Genetic Testing Equipment Excessive Charges Experimental Medical Treatment Experimental Surgery Fast ForWord Gastroplasty, Lap Banding, or Stapling/Bypass description Abortion, except when medically necessary to preserve the mother s health and a physician documents such medical necessity. Acupuncture therapy or treatment. Except as provided in "Covered Expenses," food allergy injections or drops, blood testing for food allergies, body chemical analysis, provocation-neutralization testing or treatment, candida hypersensitivity, sublingual allergy testing or treatment, and treatment for multiple chemical sensitivity or environmental illness. Any charge by a provider for completion of forms. Any charge by a provider for missed appointments. Any charge for services that you or covered dependents are not legally required to pay. Claims filed after one year from the date the services are rendered. Complications that result from any non-covered treatment or non-medically necessary surgical procedures. Cosmetic or plastic surgery, unless such surgery is medically necessary to improve the functioning of any malformed or deformed part of the body, reconstructive surgery in connection with a mastectomy or treatment of an injury due to an accident. Non-medical services, supplies and treatment to train or assist you or your covered dependents with personal hygiene or other daily living activities. All dental treatment except an injury to a sound natural tooth and dental implants, as defined for coverage. Educational classes and material, including software, videos, books, pamphlets, etc., and any cost related to educational testing and preparation of reports. Expenses incurred to determine chromosomal abnormalities in the embryo. Costs related to the purchase, maintenance or repair of durable equipment such as wheelchair locking devices for vans, electronic dust filters, air conditioners, humidifiers, exercise equipment or conveyance equipment that may be used by other family members of the patient in the absence of illness or injury. Also, rental costs in excess of the purchase price, costs for deluxe durable equipment, maintenance and most repairs of medical equipment or rental cars. Charges by a network provider in excess of the provider s negotiated network fee, or charges by a non-network provider that are in excess of an amount that is reasonable and customary. Expenses for care or treatment, including drugs, that is experimental in nature and does not meet generally accepted standards of medical practice. Experimental surgery and experimental organ transplants. Acoustic and neural processing computer training program for speech improvement and any similar hearing or speech training program. Any gastroplasty, lap banding, or stapling/bypass not approved pursuant to procedures maintained by the Plan Administrator. chart continued on next page 42 Health Benefits Participants Under Age 65

49 what s not covered under the post-employment medical plan service Governmental Plans Hippo Therapy Hormone Replacement Therapy Incarceration Injury as a Result of Committing a Felony Lab Services Long-Term Residential Treatment and Care Military Service-Related Injury or Illness Non-Approved Treatment, Service or Product Non-Covered Newborns Non-Covered Providers Non-Covered Treatment Non-Licensed Professional Services Non-Professional Practices Nursing or Rest Home Paternity Testing Radiology Refractive Eye Surgery Replacement of Lost or Stolen Supplies Reversals of Surgery Routine Scans description Expenses paid by any governmental plan or law when coverage is not limited to the government s civilian employees and their dependents. Rehabilitation of individuals with physical, emotional and learning disabilities through equinefacilitated activities. Hormone replacement therapy received in connection with or because of a clinical diagnosis of transsexualism. Expenses incurred while incarcerated or in a penal institution. Expenses incurred as the result of injury sustained during the commission of a felony. Home test kits, over-the-counter lab tests and lab services not prescribed by an eligible physician. Long-term residential treatment and care rendered in a residential treatment center (except as covered under the Behavioral Health Program). Hospital care or treatment, services and supplies received in any U.S. government hospital (such as a veteran s hospital) or any hospital that makes no charge that you or a covered dependent is required to pay if it is due to a service-connected injury, illness or disability. Any service, treatment or product not approved by the Food and Drug Administration or not considered standard medical practice by the American Medical Association. Nursery and any medical expenses for any non-covered newborn dependent (for example, a child of your covered dependent child), except with respect to delivery and postnatal care while the mother is hospitalized for covered maternity care. Expenses for care or treatment provided by or ordered by an acupuncturist, a certified doula, herbalist, holistic health practitioner, massage therapist/practitioner, non-nurse midwife, operating room technician, oral facial myologist or surgical technologist, chiropractor, Christian Science practitioner, doctor of oriental medicine, emergency medical technician, holistic nurse, homeopathic doctor, hypnotherapist, myotherapist, naturopathic doctor or registered kinesiotherapist. Expenses for complications arising from or related to any non-covered treatment. Professional services by a provider who is not licensed to practice within the profession or who practices beyond the scope of his/her license. Services or supplies not provided in accordance with accepted medical or professional standards or practices. Medical care or treatment, services or supplies provided by a nursing home, rest home, convalescent home or similar place, except as specifically provided in the Plans. Tests performed to establish the paternity of a child. Radiology services not prescribed by an eligible physician. Surgical procedure to improve eyesight. Includes refractive laser treatment. Replacement of lost or stolen supplies, such as casts, dressings or prosthetic appliances. Charges for reversal of a surgical procedure. Routine scans such as heart, lung and body. Self-Inflicted Injury Medical care or treatment associated with an injury or illness incurred prior to January 1, 1998, that results from any suicide attempt or from any intentional self-inflicted injury, or from any purposeful self-action such as ingestion of any type of medication beyond the normal prescribed or recommended dosage. chart continued on next page Health Benefits Participants Under Age 65 43

50 what s not covered under the post-employment medical plan service Services Payable Under Any Other Plan or Program Sex Therapy Spinal Manipulation Standard Stock Orthopedic Shoes Surgery Assist Telephone Consultation Therapeutic Schools and Camps Transsexual Surgery or Reversal Undocumented Expenses Vision Therapy Weight Control-Related Expenses Wigs and Hairpieces Wilbarger Protocol Work-Related Injury or Illness description Any medical service that is payable outside of Freescale s plans or programs. Therapy to improve sexual performance or enjoyment. Manual manipulation of the spine, even if performed in connection with another treatment. Orthopedic shoes not specifically custom-made for a person s exact podiatric need. Services of assisting individuals that are not considered medically necessary. Consultations with physicians or other providers except for pre-screening in the Maternity Care program and urgent care and emergency treatment for behavioral health or chemical dependency. Outdoor therapeutic programs, including Outward Bound-type camps and therapeutic schools. Transsexual surgery or reversal of same. Expenses for service or supply claims for which written documentation is not provided to the Plan Administrator. Physical therapy of the eyes and brain to treat visual problems. Expenses related to weight control (other than approved medical care for the treatment of morbid obesity). Any wig or hairpiece in connection with any physiologic change as part of the aging process or hereditary factors. A form of therapeutic treatment that includes a defined brushing technique for children and adults with sensory defensiveness. Injury or illness that occurs when you (or a covered dependent) are working for wage or profit, or injury or illness that is work-related, regardless of whether it occurs at Freescale or at any other job, if you (or the covered dependent) are entitled to workers compensation or similar benefits for such illness or injury. 44 Health Benefits Participants Under Age 65

51 Freescale offers a Behavioral Health Program to all Post-Employment Medical Plan participants. The goal is to help you and your covered dependents remain healthy and drug-free, and to provide access to quality providers. Using Care Management is mandatory to obtain the highest level of behavioral health benefits (see pages 32 35). Failure to follow the guidelines for contacting Care Management when required reduces your benefit. Behavioral Health program Behavioral Health benefits benefit Eligible Providers Inpatient Treatment Program* (no deductible applies) Annual Maximum Residential Treatment* Outpatient Treatment Program* (no deductible applies) Annual Maximum Outpatient Physician/ Therapist Visits Annual Maximum Chemical Dependency Courses of Treatment Maximum Annual Out-of-Pocket Maximum Description Network/Non-network: licensed psychiatrists, licensed nurse practitioners, licensed clinical psychologists, licensed social workers and other licensed behavioral health counselors. Acute 24-hour intensive nursing and medical attention Sub-Acute 24-hour nursing and medical monitoring as needed (therapeutic rehabilitation) For network care, there is no annual maximum for inpatient treatment. For non-network care there is an annual maximum benefit of 10 days. Medically necessary treatment in an overnight environment (limited to 90 consecutive days per calendar year, twice per lifetime). For non-network care there is an annual maximum benefit of 10 days. Day Care/Evening Treatment or Partial Hospitalization a structured program in which you meet for individual, group and family therapy Intensive Outpatient a structured program in which you meet for individual, group and family therapy at least three hours each day for three days or more per week For network care, there is no annual maximum. For non-network care there is a maximum benefit of 10 days per calendar year, applied separately to Day Care/Evening Treatment/Partial Hospitalization and to Intensive Outpatient care. For behavioral health network providers, you pay $20 office visit copayment, and the Plan pays the rest. For non-network providers, the non-network office visit benefit of your medical coverage option applies (no benefit is paid for non-network care under the 50 Percent Network-Only coverage option). Treatment plan submitted by provider is required for coverage to continue beyond 20 visits (network and non-network combined). For non-network care, annual maximum benefit of 20 visits. Three courses of treatment per covered person s lifetime (applies to all benefits paid under any Freescale or Motorola medical plan). Network care is included in your Post-Employment Medical Plan annual out-of-pocket maximum. Non-network care is not included in the annual out-of-pocket maximum unless you are an out-of-area participant living in an area not served by a Behavioral Health Program Network. *Care Management preauthorization required for network care. If Care Management is not contacted, benefits are reduced. Health Benefits Participants Under Age 65 45

52 Provider Network A network of quality behavioral health care providers is available in this Program. Each network provider holds the proper credentials and meets specific standards. They also agree to a "negotiated network fee," or a prearranged fee for care provided for you and your covered dependents. To receive the highest level of benefit, you must use network providers. Finding Network Providers There are two ways to find a Behavioral Health network provider: 1. Contact Care Management by calling Freescale Rewards Customer Service at 888-FSL-BENS to obtain information about providers in your area; or 2. Visit and enter Freescale as the company code to create your Web account. Coverage If You Live In a Network Area Network If you use a network provider, the Program pays its network level of benefit for inpatient care, partial hospitalization, residential treatment or intensive outpatient treatment. You are responsible for the remaining charges, up to the negotiated network fee in your coverage option. The amounts you pay count toward your annual network out-of-pocket maximum. See the Care Management section on pages for more information. For network outpatient visits, you pay only a $20 office visit copayment. The copayment you pay does not count toward your annual network out-of-pocket maximum. Your provider must submit a treatment plan to Care Management for review if you need more than 20 visits per calendar year. Non-Network You may use providers who are not in the Behavioral Health network. However, if you use a non-network provider, your benefit decreases regardless of whether you have reached the annual non-network out-of-pocket maximum for medical care. The Program will pay the non-network level of benefit in your coverage option, up to the reasonable and customary charge. You are responsible for all remaining charges, including amounts above the reasonable and customary level. In addition: You must use a licensed psychiatrist, licensed nurse practitioner, social worker or behavioral health counselor to receive non-network benefits; You are limited to ten days per calendar year for each of the following: inpatient treatment, partial hospitalization, residential treatment and intensive outpatient treatment; You are limited to 20 outpatient visits per calendar year; and Any expenses you incur do not apply to your annual non-network, out-of-pocket maximum. For more information on specific services covered under the Program, refer to the chart on page 45. Coverage If You Live Out-of-Area The Behavioral Health Program is available to you and your covered dependents even if you do not live in an area served by the Program s network. In this case, you may see any state-licensed behavioral health provider you choose, and the Program will pay the networklevel of benefit of your coverage option, but based on the reasonable and customary charge for covered medical services. You are responsible for paying any amounts above the reasonable and customary level. Your provider must submit a treatment plan to Care Management for review if you need more than 20 visits per calendar year (see further in this section for details). When you receive care from a non-network provider, you may be responsible for paying charges to the provider at the time of service and then filing for reimbursement (see the General Administration section for details). Preapproval for Testing and Biofeedback Care Management preapproval is required for the following services: Biofeedback; Neuropsychological testing; and Psychological testing. If your provider recommends you receive these services, you must contact Care Management at least three days prior to receiving testing or training. If preapproval through Care Management is not obtained before receiving these services, your coinsurance will be 0 percent. If You Require More Than 20 combined Outpatient Visits Per Calendar Year Your network provider must submit a treatment plan for any outpatient visit beyond the 20th combined visit to ensure you and your dependents receive the most appropriate care (there is no coverage for non-network care beyond the 20th outpatient visit). 46 Health Benefits Participants Under Age 65

53 The 20 visits are cumulative regardless of the number of providers you see, or their network status. For example, if you see two network providers in a calendar year for ten sessions each, you have reached 20 visits. In this case, you would need to ensure that a treatment plan is submitted for both providers if you plan to continue treatment with them. Failure to submit a treatment plan will result in a denial of your claims for any visits beyond 20. It is the provider s responsibility to submit the treatment plan, but it is your responsibility to know when the 20th visit is approaching and remind the provider of this requirement. If more than 20 visits are needed, it is recommended that your provider submit the initial treatment plan at approximately the 15th session. All subsequent treatment plans should be submitted two weeks prior to the last day authorized or before all sessions have been utilized, whichever comes first. The provider can submit the treatment plans to Care Management via fax at , or via a secure form at Non-network providers are not contractually bound to submit authorization requests beyond the 20th (combined) session. Prior to the start of outpatient therapy with a non-network provider, you should confirm the provider s policy regarding outpatient treatment plans. Payment for outpatient sessions that are not authorized after the 20th session will be the member s responsibility. Once the treatment plan is received, the clinical information is reviewed and your provider is sent a letter to communicate how many additional sessions have been authorized or to obtain further clinical information to determine medical necessity. The following treatments will not apply toward the 20- visit accumulator: Biofeedback (Care Management preapproval required); Electroconvulsive therapy visits; Family therapy where you are NOT the identified client; Inpatient consultation or therapy; Medication management; and Psychological or neuropsychological testing (Care Management preapproval required). If you have any questions about this process, you can contact Freescale Rewards Customer Service at 888-FSL-BENS. What s Not Covered The following services are not covered: Telephone consultations with any provider (except in the case of urgent or emergency care); Long-term and acute care at residential treatment centers; Therapeutic schools, and educational programs such as Outward Bound; More than one individual therapy session per date of service; Preparation of reports; Milieu therapy; and Psychological tests to determine job, occupational or school placement or for educational purposes. Health Benefits Participants Under Age 65 47

54 postemployment prescription drug program As part of the Freescale Post-Employment Health Plan, you and your covered dependents fill your covered prescriptions through the Post-Employment Prescription Drug Program. This program covers medically necessary drugs and medicines prescribed by your or your covered dependent s doctor on an outpatient basis. Some drugs and medicines are not covered by the program. Contact Caremark Customer Care for information on covered drugs. Annual Maximum Benefit There is a $6,000 maximum prescription drug benefit paid by Freescale for each individual covered under the Zero Deductible option and the $750 Deductible option per calendar year (combined Freescale cost of retail and mail order prescriptions). This maximum does not include medications purchased through Caremark Specialty Pharmacy Service. Type of Prescription Drug Zero Deductible Coverage Option $750 Deductible Coverage Option Retail up to 30-day supply Generic drugs You pay $5 copayment, the plan pays the rest Plan pays 50%, you pay the rest up to $100* Preferred drugs Plan pays 70%, you pay the rest up to $75* Plan pays 50%, you pay the rest up to $100* Non-preferred drugs Plan pays 50%, you pay the rest up to $100* Plan pays 50%, you pay the rest up to $100* Mail Order 90-day supply Generic drugs You pay $10 copayment, the plan pays the rest Plan pays 50%, you pay the rest up to $250* Preferred drugs Plan pays 70%, you pay the rest up to $175* Plan pays 50%, you pay the rest up to $250* Non-preferred drugs Plan pays 50%, you pay the rest up to $250* Plan pays 50%, you pay the rest up to $250* Annual Maximum Benefit $6,000 $6,000 * Plan pays any costs above this limit on your share of the cost You can review the Preferred Drug List and the Generic Drug List online at caremark.com. The annual prescription maximum begins when you are first covered by the Post-Employment Health Plan. For example, if you separate from employment in August and are first covered under the Post-Employment Health Plan in September, your annual maximum begins on September 1 and is applicable through December 31 of the year you separate from employment. There is no annual maximum benefit for the 50 Percent Network-Only option. Copayment Under the Zero Deductible coverage option, you pay only a copayment for generic drugs, as shown in the chart above. You pay your copayment directly to the pharmacy. The Plan s benefit is the remainder of the network negotiated cost of the generic drug. Coinsurance Zero Deductible & $750 Deductible Options For all other covered prescription drugs, the first part of the Plan s benefit is the coinsurance percentage shown in the chart above. You pay the rest of the network negotiated cost of the drug, but only up to the limit shown in the chart above. If the network negotiated cost of the drug is more than the Plan s coinsurance and your maximum share of the cost, the Plan will pay any remaining cost. Example Hope has the Zero Deductible coverage option. Her doctor prescribes a preferred brand drug with a network negotiated fee of $290 for a 30-day supply. Here is how Hope and the Plan share the cost of this medicine: Network negotiated charge $290 Plan s initial benefit (70 percent coinsurance) $203 Remainder of network negotiated charge $87 Less Hope s share (30 percent, up to $75) $ 75 Remainder (Plan s second benefit) $ 12 Plan pays $215 ($203 coinsurance + $12 remainder) Hope pays $75 48 Health Benefits Participants Under Age 65

55 Coinsurance 50 Percent Network-Only Option Under the 50 Percent Network-Only option, your coinsurance depends on the total amount you and the Plan spend on covered drugs throughout the calendar year. This chart shows the coinsurance that applies to each level of drug costs used by this coverage option. Total Cost of Your Covered Prescription Drugs During 2007 The dollar amounts shown in the chart change each calendar year, based on the basic coverage levels provided under a Medicare Prescription Drug Plan (PDP). While these benefits mirror a Medicare PDP, the prescription drug benefit in the 50 Percent Network- Only option is not a Medicare Part D plan. Generic Drugs A generic drug is the chemical copy of a brand-name prescription drug. Generic drugs cost about 50 percent less than brand-name drugs and they are: Dispensed in the same dosage; Taken in the same way; and Packaged in the same unit strength. 50 Percent Network-Only Option $0 $265 You pay 100%, Plan pays nothing $266 $2,400 Plan pays 75%, you pay 25% $2,401 $5, You pay 100%, Plan pays nothing $5, or more Plan pays 95%, you pay 5% (or, if greater, you pay $2.15 copayment for generic and multi-source drugs, and $5.35 copayment for all other drugs) To help preserve the quality of your health care and help control costs, you are encouraged to use generic drugs whenever they are medically appropriate for your illness or condition. It is standard pharmacy practice to substitute generic equivalents for brand-name drugs whenever possible. You will receive generic substitutes unless your physician will not allow it. If your physician allows a generic and you select a brandname drug, you pay the difference between the generic and brand-name drug, in addition to your brand-name share of the cost. A Generic Drug List identifying generic drugs covered under the Program is available at Step Therapy Program To help manage the cost of your prescription drug coverage, the Plan introduced a Step Therapy Program in It requires you to try a generic drug for at least 30 days before using specific brand-name drugs for certain types of treatment. This Program applies only to patients who have not used one of the specific brand-name drugs during the past 120 days. The Program follows current medical literature, manufacturer recommendations, and U.S. Food and Drug Administration guidelines. This chart shows the brand-name drugs covered by the Program as of January 1, 2007; it is subject to change. If you have questions about the treatments or drugs that are part of the Step Therapy Program, contact Caremark at , or visit Drug Class Ulcer Drugs Proton Pump Inhibitors Cholesterol Drugs Statins Brand-Name Drugs Requiring Step Therapy Aciphex Nexium Prevacid Protonix Zegerid Prilosec (brand-name only) Crestor Lescol Lescol XL Lipitor Mevacor (brandname only) Pravachol (brandname only) Zocor (brandname only) Altoprev Advicor Caduet Vytorin Generic Drugs (you must try one before using a brand-name drug) Nizatidine (Axid) Cimetidine (Tagamet) Famotidine (Pepcid) Ranitidine (Zantac) Omeprazole (Prilosec) Lovastatin (Mevacor) Pravastatin (Pravachol) Simvastatin (Zocor) If your doctor feels that you need to be prescribed a drug that does not follow this treatment order, he/she may request an exception by calling Caremark Prior Authorization at This line is not for patient use. If you have any questions on using the Prescription Drug Program, call Caremark at Health Benefits Participants Under Age 65 49

56 Preferred and Non-Preferred Drugs Preferred drugs are medications selected by clinical experts after meeting clinical and therapeutic criteria. These drugs help reduce overall out-of-pocket expenses without compromising quality or effectiveness. Your share of the cost of non-preferred drugs is the highest under the program. The Preferred Drug List includes preferred drug choices in selected drug categories. You and your doctor are encouraged to choose a preferred drug when it is medically appropriate. A copy of the Preferred Drug List is sent to you along with your medical plan identification card. If you have questions about the Preferred Drug List or wish to obtain the list to share with your doctor, contact Caremark at When new drugs come on the market, they enter the schedule as Non-Preferred Drugs. The Preferred Drug List is reviewed periodically. When changes are made that will require you to pay more for a drug you use, you will be notified. Therapeutic interchange ensures that you receive an appropriate medication at a lower cost to you. If your physician prescribes a non-preferred brand-name drug, Caremark Mail Service will contact your physician to determine if a similar drug on the Preferred Drug List can be substituted. If your physician allows the substitution, you will receive a preferred drug at the preferred drug coinsurance. If not, you will receive the prescribed brandname drug at the non-preferred drug coinsurance. Caremark Specialty Pharmacy Services Specialty medications or biotech drugs refer to medications made from living sources (e.g. microorganisms, blood cells, proteins), as opposed to traditional drug therapies, which are synthetic. Specialty drugs are often administered by injection by either the patient or the physician. Because biotech drugs are similar to substances found in the human body, they may be more effective in fighting hard-totreat conditions, such as multiple sclerosis, rheumatoid arthritis and growth hormone deficiency. Caremark Specialty Pharmacy Services offers specialty medications for a variety of chronic conditions including multiple sclerosis, rheumatoid arthritis, cystic fibrosis, hemophilia, immunologic disorders, Crohn s disease, Gaucher disease, pulmonary hypertension, Fabry disease, MPS 1, blood dyscrasia, growth hormone deficiency, hepatitis C and more. If you or a covered dependent has a condition that requires treatment with specialty drugs such as injectable medications, then you are required to use Caremark Specialty Pharmacy Services through our prescription drug partner, Caremark. Freescale has implemented the Caremark Specialty Pharmacy Service for participants to use exclusively for specialty drugs. This program is designed to contain costs, while offering individual ongoing patient support and utilization management. This service delivers patient medication within 48 to 72 hours and provides refill and delivery notification calls as well as easy refill ordering options. In addition, Caremark Specialty Pharmacy Services provides expert care services for participants such as counseling, informative diseaserelated materials and easy access to health experts 24 hours daily. Because specialty drugs are generally used to treat acute medical conditions and require frequent patient care and supervision, it is important for you and your physician to determine the necessary drug treatment plan. Therefore, it is not mandatory for you to refill your specialty medications in 90-day supplies for drugs purchased through the Caremark Specialty Pharmacy Service. For specialty drugs purchased through Caremark Specialty Pharmacy Service, the length of time covered by your prescription determines your Plan benefits. For specialty drug prescriptions you use for 30 days or less, the Plan uses the 30-day retail pharmacy benefit of your coverage option to calculate your benefit. For specialty drug prescriptions you use for days, the Plan uses the 90-day mail order pharmacy benefit of your coverage option to calculate your benefit. A complete list of specialty drugs that you are required to obtain through Caremark Specialty Pharmacy Services is located at You may also call Caremark at Important Note: Specialty medications obtained through Caremark Specialty Pharmacy Services do not apply toward any annual maximum in your coverage option. They do, however, apply to your medical plan Aggregate Lifetime Maximum. 50 Health Benefits Participants Under Age 65

57 How To Use the Program This Program provides two ways to fill your covered prescriptions: Up to a 30-day supply plus two 30-day-supply refills through retail network pharmacies (refillable for up to 90 days from the date of prescription); and Up to a 90-day supply plus three 90-day-supply refills through the mail order service (refillable for up to one year from the date of prescription). You pay a percentage of the network negotiated charge or a flat copayment for each prescription you purchase through retail or mail order. All prescriptions taken for more than 90 days must be filled by mail order. For these long-term or maintenance medications, ask your doctor to write two prescriptions: one for a 30-day supply with up to two 30-day-supply refills, which you should have filled at a retail pharmacy; the second for up to a 90-day supply (if appropriate) with as many as three 90-day-supply refills. You should send the second long-term prescription to the Caremark mail service pharmacy. Your doctor can forward your prescription to Caremark by telephone at , or by fax at Using a Retail Pharmacy Short-Term Perscriptions Only You must use a retail network pharmacy for medicines that need to be taken for just a short time. The Program has a nationwide network of pharmacies to serve you and your covered dependents. You may obtain your original prescription (up to a 30-day supply) and up to two refills at any retail network pharmacy. Steps to follow: 1. Locate a network pharmacy near you by calling (TTY: ). Or check online at: caremark.com. 2. Before the pharmacist fills your prescription, present your prescription and your Medical Plan card. Pay your share of the negotiated network charge at the time of purchase. 3. Sign the pharmacy s signature log when you receive your prescription, if you are asked to do so. Using Mail Order For Maintainance Medications Mail order fulfillment is required for all prescriptions used on a regular basis or for more than 90 days. Through mail order, your prescription is filled for the exact amount prescribed by your physician (up to the 90-day-supply limit). Allow 14 days for receipt of your medicine. Prescriptions are delivered either by the U.S. Postal Service or United Parcel Service. In an emergency, your prescriptions can be shipped overnight for an additional fee. Medications cannot be shipped outside of the United States. If you are planning a trip, have your prescription filled prior to your departure date. Questions about shipment may be addressed to Caremark at Steps to Follow Your physician may contact Caremark by either telephone or fax to submit your mail order prescription. Physician Orders by Telephone Ask your doctor to call Caremark Mail Service at to provide your basic patient health history profile, including any known medication allergies. Your doctor should then fax the prescription to This fax line is not for patient use. Physician Orders by Fax Ask your doctor to call Caremark Mail Service at to obtain information about the fax program. Caremark Mail Service will fax an order form to the doctor s office. The form includes instructions on how to use the program. The doctor should include any known medication allergies in the health history section. The form must be faxed directly from the physician s office to the Caremark Mail Service pharmacy at This fax line is not for patient use. Payment for Telephone and Fax Orders If your doctor submits your prescription, Caremark Mail Service contacts you to verify your address information and to determine your preferred method of payment. Mail a check (include your health plan identification number on your check) for your share of the network negotiated charge or copayment payable to Caremark Mail Service, or provide your credit card number (Visa, MasterCard, American Express or Discover). Please do not send cash. Health Benefits Participants Under Age 65 51

58 For a print-friendly version of these lists to share with your doctor, visit com Ordering by Mail Complete the Mail Order form for all new prescriptions. (You will receive a new order form and envelope with each delivery.) If this is your first time using the mail order service, obtain a Mail Order form from Caremark or online at caremark.com. If you transfer a prescription from a retail pharmacy to mail order, obtain a new prescription written for a 90- day supply. Make your check amount for your share of the network negotiated charge or copayment payable to Caremark Mail Service (include your prescription plan identification number on your check), or furnish your credit card number (Visa, MasterCard, American Express or Discover). Please do not send cash. Enclose your original prescription, the Mail Order form and your check (if applicable) in an envelope and mail them to: Caremark Mail Service P.O. Box Fort Worth, Texas Ordering Refills by Telephone or Online To order refills by phone, call (TTY: ). To order refills online, visit caremark.com. Drug Utilization Review Your prescription drug benefit includes a special feature called drug utilization review. This feature is designed to supplement your pharmacist s review of your prescription by electronically alerting your pharmacist to important information that has been previously provided to the pharmacy, such as your individual drug history. The pharmacist can review the identified possibilities of interaction among various drugs. If drug utilization review indicates that the potential for drug-related illness exists, an alert message is sent to your pharmacist. The pharmacist can then inform you, check with your physician or make a professional judgment whether to dispense your prescription. Your doctor s office may authorize the dispensing of a different medication. Drug utilization review is designed to catch potentially harmful drug interactions in advance, but it may not catch all potential problems. You are responsible for reviewing all your prescription drugs with your physician. PRIOR AUTHORIZATION Certain drug classes need prior authorization from Caremark before the Prescription Drug Program covers them. These drugs have the potential for serious side effects or for inappropriate uses. A detailed list of medications that require prior authorization review is online at caremark.com. Or your physician may call Caremark at The best way to avoid inconvenience is to have your physician call the prior authorization department before you go to the pharmacy. The prior authorization line is not for patient use. Other Important Facts You cannot refill a prescription at a retail pharmacy until you have used at least 75 percent of your current prescription. When filling via mail order, you must use 60 days of the 90-day supply prior to requesting a refill. For the drugs with prescription limits described on page 53, all medication must be used before a refill is requested. If your physician allows a generic and you select a brand-name drug, you pay the difference in price between the generic and brand-name drug in addition to your regular share of the negotiated network charge. The price difference you pay does not apply to any limit on your share of covered expenses. Therapeutic interchange ensures that you receive an appropriate medication at a lower cost to you. If your physician prescribes a non-preferred brand-name drug, Caremark will contact your physician to determine if a similar drug on the Preferred Drug List can be substituted. If your physician allows the substitution, you will receive a preferred drug at the preferred drug benefit level. If not, you will receive the prescribed brand-name drug at the non-preferred drug benefit level. If your physician s practice is in Texas, the law requires him or her to hand-write "brand necessary" or "brand medically necessary" on prescriptions when he or she feels that generic substitution is not appropriate. What s Covered Following is a short list of some common drugs that are covered: AIDS-related medicines; Allergy serum and syringes; Blood glucose testing strips and lancets; Drugs, biologicals, compound prescriptions or any other medical substance that federal law requires to be dispensed by a qualified pharmacist as prescribed by a physician; Fluoride supplements for patients through age 18; Growth hormones; 52 Health Benefits Participants Under Age 65

59 Injectables except as otherwise noted; Insulin and disposable hypodermic needles and syringes necessary to administer insulin; Prenatal, pediatric and geriatric vitamins; Prescription contraceptives; Prescription laxatives; Progesterone suppositories; Retin-A for patients through age 25 and Retin-A for patients without any age restriction for the treatment of severe acne and acne keratosis; and Schedule V controlled substances. If you want to find out if a particular drug is covered, call (TTY: ). What s Not Covered Following is a list of some common drugs that are not covered under the Program: Accutane through mail order (available through retail only); Anorexiants; Anti-wrinkle agents (e.g., Renova ); Any retail cost of drugs above the negotiated network fee; Cosmetic hair removal products (e.g. Vaniqa TM ); Drugs labeled "Caution limited by federal law to investigational use," or experimental drugs; Fluoride supplements for patients age 19 or older; Hair growth stimulants or other medicines for treatment of hair loss; Medical devices; Medicines for fertility purposes; Mifeprex ; Norplant ; Nutritional supplements; Over-the-counter medications that can be purchased without a prescription; Physician-administered contraception devices (see "What's Covered" in the Medical Plan on page 38); Prescription drugs purchased at a non-network pharmacy; Smoking deterrents such as nicotine gum and nicotine patches, and medicines for smoking cessation purposes, except smoking deterrents and medicines covered under the Tobacco Cessation Program; and Vitamins prescribed for dietary purposes or nonmedical purposes. Contact Caremark for more details on medicines that are not covered. DRUGS WITH PRESCRIPTION LIMITS The following drugs have limits based on FDA-approved prescribing guidelines, approved medical guidelines and/or the average utilization quantity for the drugs. The limits in the following chart affect only the amount of medication that the Prescription Drug Program pays for, not whether you can obtain greater quantities. The final decision regarding the amount of medication you receive remains between you and your physician. prescription drug limits Retail Limit 30-day supply Migraine Agents Amerge 1mg, 2.5mg tablets Axert 6.25mg, 12.5mg tablets Mail Limit 90-day supply Frova 2.5 mg tablets 9 27 Imitrex Injection Kits 4 12 Imitrex Nasal 5mg, 20mg units Imitrex 25mg, 50mg, 100mg tablets Maxalt / Maxalt MLT 5mg, 10mg tablets Migranal Nasal Kits 12 Zomig / Zomig ZMT 2.5mg tablets Zomig 5mg tablets 6 18 Erectile Dysfunction Viagra tablets 6 18 Muse units 6 18 Edex /Caverject units 6 18 Levitra tablets 6 18 Cialis tablets 6 18 Pain Management Stadol NS canisters 2 6 You can review the Preferred Drug List and the Generic Drug List online at caremark.com Health Benefits Participants Under Age 65 53

60 Health Maintenance Organization (HMO) When any covered member of your family becomes covered by Medicare, HMO coverage for all family members ends and you must choose a Freescale medical plan option within 30 days. If you live in the Phoenix area, and if you and your covered family members are not eligible for Medicare, you may be able to choose HMO coverage through Health Net. For details about this HMO coverage, review the Health Care Comparison Charts at You can also call Health Net at or visit their Web site at healthnet.com. Please note: You and your family members are not eligible for the HMO coverage option if: Your home ZIP Code is not in the Health Net service area; You are a terminated disabled participant; or You or a covered family member is covered by Medicare. In addition, when any covered person in your family becomes covered by Medicare, Health Net HMO TOPIC coverage is no longer available to you. When Medicare coverage starts for you or your family member, all the covered people in your family not eligible for Medicare must choose a Freescale medical coverage option. You should contact Freescale Rewards Customer Rewards at 888-FSL-BENS to choose a new coverage option when Health Net coverage ends. If you do not do so within 30 days, all the covered people in your family not covered by Medicare will be enrolled in the 50 Percent Network-Only option. Contact Health Net for a copy of its Certificate of Coverage, so you can be informed of the details of its coverage. That document, pages 1 24 and of this book (that contain information on general administration and your rights under ERISA), along with the provisions on the pages of this book listed in the chart below, constitute your Summary Plan Description for HMO Coverage. Pages of this benefits book that make up the Summary Plan Description for HMO Coverage Health eligibility and coverage 1 9, Freescale s right to amend/terminate the Plan Plan funding 103 Continuation of benefits under COBRA 11 12, Coverage of reconstructive surgery following mastectomy 40, 104 Minimum hospital stay for childbirth 36, 40, 104 Qualified Medical Child Support Orders 8, 19 Post- Employment VISION Plan Routine vision care services are included in the Post- Employment Vision Plan for participants under age 65. The services include routine eye exams, frames and eyeglass lenses, or contact lenses. If you are a TDP or if you meet the age and service requirements listed on page 2 at retirement, and you are under age 65, you may enroll yourself, your eligible spouse/ domestic partner under age 65 and any eligible dependent children in the Post-Employment Vision Plan. If you are age 65 or older when you retire or when you terminate employment as a TDP, you may not enroll yourself in the Post- Employment Vision Plan, but you may still choose to enroll your dependents (if any) who are under age 65. A NATIONAL NETWORK The Vision Plan offers a national network of ophthalmologists and optometrists administered by VSP. This is a different network of providers than the Post-Employment Medical Plan network. LOCATING YOUR NETWORK PROVIDER When you use a VSP network provider, you get the most value from your Vision Plan benefits. VSP offers two convenient ways to locate a network provider near your home or work, or to verify that your doctor is a VSP network provider: Visit To access this Web site for the first time, you must register and create a username and password. You can search for a VSP network provider by name or location. Call VSP s Member Services Department at The VSP automated service allows you to search for a network provider by ZIP Code or name. MAKING A Network APPOINTMENT Follow three quick steps to use the VSP network: 1. Call a VSP network provider for an appointment, and identify yourself as a Freescale Vision Plan participant. Allow at least 48 hours between your call and your appointment so the provider can verify your eligibility. Make sure you have the identification number of the 54 Health Benefits Participants Under Age 65

61 VISION PLAN BENEFITS SERVICE FREQUENCY VSP NETWORK OUT-OF-NETWORK Vision Examination Once per calendar year You pay $20 copayment, plan pays the rest Eyeglass Lenses Once per calendar year You pay $25 copayment, plan pays the rest Eyeglass Frames Contact Lenses Once every two calendar years Once per calendar year, in lieu of eyeglass lenses You pay $45 copayment, plus discounted charge for costs over the $145 retail allowance; plan pays up to $145 Plan pays up to $110 for lenses and services for fitting; you pay the rest Laser Surgery No limits Discounted charges from selected VSP-contracted facilities * Additional benefit allowance may be available for some conditions requiring medically necessary contact lenses. Please contact your VSP provider. Plan pays up to $45, you pay the rest Plan pays up to amount shown below, you pay the rest: Single vision: $45 Lined bifocal: $65 Lined trifocal: $85 Plan pays up to $47, you pay the rest Plan pays up to $105 for lenses and services for fitting; you pay the rest No benefit Freescale retiree/tdp on hand when you call, as this information is required in order to make an appointment. 2. After you schedule an appointment, the network provider contacts VSP to verify your eligibility and benefit coverage. If you are not eligible for benefits at that time, the provider will let you know. 3. Go to your scheduled appointment. You do not need to take any kind of benefit form with you, and you do not have to submit a claim form when you use a network provider. At the time of your appointment, you will pay the applicable copayment(s) plus any additional amounts for which you are responsible. As you are choosing among your contact lenses and eyeglasses options, you may ask the provider how much you will have to pay for each item. If your eligibility for benefits is denied, it may be for one of the following reasons: You may not be eligible because you are not a Post- Employment Vision Plan participant, or you may be so new to the Plan that your name is not yet in the VSP database. In this case, call VSP Member Services at to clarify the situation. You may not have waited long enough between provider visits. Refer to the Vision Plan Benefits chart above to see the allowed frequency of visits. You may also check online at vsp.com to see what services you have available now or by what date in the future. USING AN OUT-OF-NETWORK PROVIDER If you use an out-of-network provider, the level of benefits you receive will be lower than if you use a VSP network provider. You will need to pay in full at the time of services and then submit your itemized bill for reimbursement. You will be reimbursed according to the out-of-network reimbursement amounts. Refer to the out-of-network reimbursement amounts on the Vision Plan Benefits chart above. For reimbursement, send your itemized receipts to: VSP P.O. Box Sacramento, California Be sure to write the retiree/tdp s name, identification number, and paid in full on each receipt you submit. WHAT S COVERED This section first describes Plan benefits for services from VSP network providers. Benefits from out-ofnetwork providers are at the end of each item. Vision Examination Professional vision exams include a comprehensive analysis of the visual functions and, when necessary, the prescription of corrective lenses. You pay only a $20 copayment at the time of the network exam. For out-of-network care, the Plan pays up to $45. Eyeglass Lenses The Plan covers clear glass or plastic single-vision or multi-focal lenses up to 65 millimeters in size. Related costs of fitting and adjusting are also covered. Remember, you must directly pay the network provider the $25 copayment, plus the cost of any additional lens treatments, such as tints, dyes, coatings, or oversize lenses (including photochromatic, laminated, scratch-resistant, or UV); see Cosmetic Materials. For out-of-network care, the Plan pays up to the amounts shown in the Vision Plan Benefits chart above. The Post-Employment Vision Plan began as a separate Plan from the Post-Employment Medical Plan in It requires an enrollment and monthly contribution that are separate from your medical coverage. Health Benefits Participants Under Age 65 55

62 Eyeglass Frames You can choose from a wide selection of frames that are covered with just your $45 copayment. Or if you want, you may buy up and choose a more expensive frame. In that case, you pay the $45 copayment plus an additional amount, depending on the price of the frames you choose. You pay all these amounts directly to your network provider. For out-of-network care, the Plan pays up to $47. Contact Lenses You can choose to buy contact lenses instead of eyeglass lenses and frames. You are responsible for paying any charges for network care over $110. For out-of-network care, the Plan pays up to $105. Medically Necessary Contact Lenses Certain eye conditions that cannot be treated with eyeglasses may qualify you for medically necessary contact lenses, but only with VSP s approval. These conditions include aphakia, anisometropia, high ametropia, nystagmus, and keratoconus. You pay only a $45 copayment for medically necessary contact lenses from network providers, and the Plan pays the rest. For out-of-network care, the Plan pays up to $210. Frequency You are eligible to receive products and services once in a one- or two-year calendar period, depending on the service. Refer to the Vision Plan Benefit chart on page 55 for frequency details. Low Vision Benefit If you suffer vision loss that prevents you from reading, moving around in unfamiliar surroundings, or completing desired tasks, you may be eligible for the Vision Plan s low vision benefit. Your network provider must contact VSP to receive authorization to cover supplemental testing for low vision evaluation, low vision prescription services, and optical and non-optical aids. VSP network providers also offer discounts of up to 20% on lens extras, such as scratch resistant and antireflective coatings and progressive lenses. They also offer a 15% discount on fees for contact lens fitting and evaluation to patients who received a covered eye exam in the past 12 months. What s Not Covered There are no benefits for professional services or materials associated with: Orthoptics or vision training and any associated supplemental testing; Non-prescription eyeglasses or contact lenses (including Plano lenses); Two pairs of glasses in lieu of bifocals; Retinal photographs; Eyeglass lenses, frames or contacts furnished under this Program that are lost or broken (except at the normal intervals when services are otherwise available); Medical or surgical treatment of the eyes; Any eye examination, or any corrective eyewear, required by an employer as a condition of employment; Vision therapy; and Any charges over and above reasonable and customary. Cosmetic Materials Because the Vision Plan is designed to attend to your visual needs, cosmetic materials and enhancements are not covered. But for an additional fee, you can request the following: Blended lenses; Oversize lenses (only over 65mm); Progressive multifocal lenses; Photochromic or tinted lenses (Pink 1 or 2 tints are covered); Coated or laminated lenses; A frame that costs more than the Plan allowance; Cosmetic lenses; Optional cosmetic processes; and UV protected lenses. 56 Health Benefits Participants Under Age 65

63 Regular dental care is important to maintaining good health. That s why Freescale offers the Post- Employment Dental Plan for participants under age 65. Regardless of your medical plan choice, you can choose cost-effective dental coverage. If you are a TDP or if you meet the age and service requirements listed on page 2 at retirement, and you are under age 65, you may enroll yourself, your eligible spouse/domestic partner under age 65 and any eligible dependent children in the Post-Employment Dental Plan. If you are age 65 or older when you retire or when you terminate employment as a TDP, you may not enroll yourself in the Post-Employment Dental Plan, but you may still choose to enroll your dependents (if any) who are under age 65. postemployment dental plan POST-EMPLOYMENT DENTAL PLAN BENEFITS Annual Deductible Individual: $200 Family: $600 Preventive Services Basic Services Major Services Prosthodontic Services Annual Maximum Benefit Orthodontic Services Play pays 100% of maximum allowable fee or predetermined charge, no deductible. Plan pays 80% of maximum allowable fee or predetermined charge, after deductible. Plan pays 50% of maximum allowable fee or predetermined charge, after deductible. Plan pays 50% of maximum allowable fee or predetermined charge, after deductible. $2,000 per person in combined preventive, basic, major, and prosthodontic benefits. 50% of maximum allowable fee or predetermined charge, after deductible, up to $2,000 per person per lifetime includes benefits paid under any current or former Freescale and Motorola dental plan. Monthly Contribution You and Freescale share the cost of single or family dental coverage, and you pay a monthly after-tax contribution. You will be notified of the contribution amounts at the time you become eligible to participate in the Plan and annually thereafter. ANNUAL DEDUCTIBLE Before the Post-Employment Dental Plan pays its share of some dental expenses, you pay an annual deductible. This is the amount of eligible dental expenses that you must pay each calendar year before the Plan pays most benefits. A separate $200 deductible applies to each covered person in your family. You do not pay a deductible for Preventive Services before the Plan begins paying benefits. The $600 family deductible is a combined amount for all family members. However, in order to meet the family deductible, no more than $200 for any one family member can be applied. Remember that your deductible starts over each January 1. Eligible expenses do not carry over from one year to the next, nor do they carry over from the Freescale Employee Dental Plan to the Freescale Post-Employment Dental Plan. COINSURANCE You share the cost of covered dental services with the Plan. Generally, the Plan pays: 100 percent coinsurance for preventive services, no deductible; 80 percent coinsurance for basic services, after the deductible; 50 percent coinsurance for major services, after the deductible; 50 percent coinsurance for prosthodontic services, after the deductible; and 50 percent coinsurance for orthodontic services, after the deductible. You pay the remaining amount, including amounts above the maximum allowable fee, when you use a non-network dentist. Health Benefits Participants Under Age 65 57

64 covered expenses The Post-Employment Dental Plan pays covered expenses only. In order to be covered, an expense must be incurred while you or your covered dependent are covered for that benefit under the Plan, and be an eligible expense under the Plan (see pages 59 61). If you incur an expense that is not eligible for coverage under the Plan (see pages 62 63), you are responsible for paying 100 percent of that expense. Annual Maximum Benefit The Post-Employment Dental Plan has an annual maximum benefit of $2,000 per covered person for eligible dental services (not including orthodontic services). The annual maximum does not include benefits you received (in the year that you retired) under the Freescale Employee Dental Plan. Your annual maximum benefit amount starts over when you enroll in the Post-Employment Dental Plan. Orthodontic Services The aggregate lifetime maximum benefit for orthodontic services is $2,000 per covered person. This amount includes any benefits paid under any current or former Freescale and Motorola dental plan. The Plan s deductible must be satisfied before you receive benefits for orthodontic services. Network Providers You may select any dentist to provide your dental care. To help control costs, the Plan contracts with a network of dentists in the U.S. who have agreed to accept reduced fees for the dental procedures they provide. Using the services of these network dentists reduces your out-of-pocket costs. These dentists have also agreed not to charge you any amount that exceeds the fees agreed upon, aside from deductibles, your share of expenses, and fees for procedures not covered. If you have questions about whether a particular dentist is a network dentist or need verification about the status of a provider, please contact HumanaDental at You can also visit: com/dentistfinder. If you need further assistance, call Freescale Rewards Customer Service at 888-FSL-BENS. If you choose to receive your dental care from a nonnetwork dentist, of if you recieve care while abroad, covered expenses (listed further in this section) are payable on a maximum allowable fee basis. This means that the Plan will pay its portion based on the maximum allowable fee for that service, as determined by HumanaDental. Predetermination of benefits It is a good idea to find out what the Post-Employment Dental Plan will pay before you have work done. It is easy to get a predetermination of benefits. Just have your dentist submit to HumanaDental an itemized description of the recommended procedure and how much it will cost. HumanaDental will review this pretreatment estimate and return it to you and your dentist along with a description of what expenses are covered. HumanaDental takes into account alternate procedures, services or courses of treatment based on professionally endorsed standards of dental care (see Alternative Procedures section below). Services are subject to all terms and provisions of the Plan at the time treatment is rendered. A predetermination of benefits remains effective for 90 days. If your treatment will begin more than 90 days after the date that treatment is authorized, you must submit another treatment plan. Before you schedule dental appointments, you should discuss with your dentist the amount to be paid by the Plan and your financial obligation for the proposed treatment. 58 Health Benefits Participants Under Age 65

65 Alternative Procedures Certain dental care can be provided in different ways to produce the desired result. In determining covered expenses under the Plan, HumanaDental considers alternative courses of treatment. Benefits under the Plan are based on the covered expenses for the least expensive services that would produce a professionally satisfactory result, as determined by HumanaDental. If you and your dentist decide on a more expensive course of treatment, you will be responsible for 100 percent of any excess charges. Your benefits are limited to the lesser of the maximum allowable fee or predetermined charge, and are subject to any deductible and your share of expenses for the least costly treatment. Extension of Benefits When your Post-Employment Plan coverage ends, as described on [cross-reference], the Plan will provide an additional 30 days of limited coverage to allow you to complete the following treatments that began while your regular coverage was in effect: root canal treatments, and installation of crowns, bridgework, or partial or complete dentures. You must submit claims for these expenses within 90 days from the date your regular coverage ends. What s Covered The Plan covers several categories of covered expenses, including preventive services, basic services, major services, prosthodontics services, and orthodontic services. For all covered expenses, the following services are considered an integral part of the entire dental service, rather than a separate service: Local anesthetics; Temporary dental services, including, but not limited to, stainless steel crowns on permanent teeth; and Study models and diagnostic casts. Following are some examples of covered services. Contact HumanaDental at for detailed information regarding covered dental services. Preventive Services You are encouraged to see your dentist for preventive dental care to reduce the risk of more serious and costly dental treatment. To help, the Post-Employment Dental Plan pays 100 percent coinsurance based on the maximum allowable fee or predetermined charge for preventive services. These benefits are not subject to the Plan's deductible. PREVENTIVE SERVICES Oral examinations Emergency care Cleanings (routine prophylaxis) Bitewing X-rays Miscellaneous X-rays Full mouth or panorex X-rays Topical fluoride Sealants Space maintainers WHAT S COVERED / FREQUENCY LIMITS Limited to two per calendar year. Oral examinations and palliative (emergency) treatment for relief of dental pain. Limited to two per calendar year. Limited to two sets per calendar year. Including, but not limited to, periapical X-rays. Limited to one in a 36-month period, unless necessary due to an accidental injury. For dependent children through age 18 only. Limited to two per calendar year. A prophylaxis performed in conjunction with a fluoride treatment is considered a separate dental service. For dependent children through age 14 only. Limited to one per tooth per lifetime on the occlusal surface of permanent molars and bicuspids which are free of decay and restoration. For dependent children through age 13 only. For fixed or removable appliances to maintain a space created by the premature loss of a primary tooth or teeth. Health Benefits Participants Under Age 65 59

66 BASIC SERVICES The Post-Employment Dental Plan pays 80 percent coinsurance based on the maximum allowable fee or predetermined charge for basic services, after you pay your deductible. Treatment records may be required by HumanaDental to determine benefits. See the chart below for examples of covered basic services. BASIC SERVICES Fillings Stainless steel crowns Analgesia General anesthesia Extractions Oral surgery Drug injections Periodontics Endodontics Recementation Occlusal guards Harmful habit appliance WHAT S COVERED / FREQUENCY LIMITS Amalgam and composite. On primary teeth. Drugs administered for pain relief. When administered by a dentist in connection with oral or dental surgery and when dentally necessary or necessary due to a medical condition that presents a high risk to the patient. Not covered for routine extractions or surgical removal of erupted teeth. Includes routine extractions, orthodontic extractions of primary teeth, and surgical extractions of erupted teeth. Includes surgical extractions of impacted teeth; pre- and post-operative care. Includes osseous (bone) surgery. When done in conjunction with oral surgery. Limited to two exams per calendar year. Two maintenance procedures per calendar year following active periodontal therapy. Root planing and scaling limited to one in a 36-month period, limited to four quadrants. Periodontal surgery limited to one per quadrant in a 24-month period, and treatment includes three months post-surgical care. Includes periodontal splinting. Vital pulpotomies and root canal treatments. Final restorations are considered a separate service. For inlays/onlays, crowns, bridges, and veneers. In connection with periodontal surgery and/or bruxism. For dependent children through age 13 only. MAJOR SERVICES The Post-Employment Dental Plan pays 50 percent coinsurance based on the maximum allowable fee or predetermined charge for major services, after you pay your deductible. Treatment records may be required by HumanaDental to determine benefits. See below for examples of covered major services and the limitations on their benefits. Inlays or onlays, and their maintenance/repair; Crowns non-precious and semi-precious, and their maintenance/repair; Post/core build-ups for crowns; Porcelain; Veneers and their maintenance/repair limited to the upper or lower anterior teeth; and Replacement of an inlay/onlay, crown, or veneer that cannot be repaired covered only after five years from initial placement and unserviceable, or when necessary as a result of an accidental injury. PROSTHODONTIC SERVICES The Post-Employment Dental Plan pays 50 percent coinsurance based on the maximum allowable fee or predetermined charge for prosthodontic services, after you pay your deductible. Treatment records may be required by HumanaDental to determine benefits. See below for examples of covered prosthodontic services and the limitations on their benefits. Fixed or removable bridgework installation and maintenance/repairs; Post/core build-ups for bridgework; Partial and complete dentures installation and maintenance/repairs, and six months post-installation care; Overdentures installation and maintenance/repairs, and six months post-installation care; Relining and rebasing limited to one in a 24-month period; Tissue conditioning limited to four treatments per appliance per calendar year, only in conjunction with complete or partial dentures or a relining expense covered by the Plan; Implant prosthesis see What s Not Covered on page 62; 60 Health Benefits Participants Under Age 65

67 Replacement of bridge, partial or complete denture, or overdenture that cannot be repaired covered only: After five years from initial placement; When necessary as a result of an accidental injury while wearing the appliance; or When dentally necessary due to other treatment (e.g., extraction of natural teeth rendering a bridge unserviceable). Bridges, dentures, and overdentures to replace teeth that were missing when your coverage first began under the Freescale Dental Plan (for active employees) or this Post-Employment Dental Plan are covered only when other natural teeth are extracted while your Plan coverage is in force. ORTHODONTIC SERVICES The Post-Employment Dental Plan pays 50 percent coinsurance based on the maximum allowable fee or predetermined charge for orthodontic services, after you pay your deductible. The Plan s lifetime maximum benefit for orthodontic services is $2,000, which includes orthodontic benefits paid under any current or former Freescale or Motorola dental plan. Treatment records may be required by HumanaDental to determine benefits. Benefits for orthodontic services do not apply toward your annual benefit maximum. Covered orthodontic services are braces and necessary adjustments, and expenses incurred for: Treatment and appliances for tooth guidance, interception and correction; and Services related to covered orthodontic treatment, including records and extractions of permanent teeth. Orthodontic services are considered to begin when the bands are placed or teeth are extracted in preparation for orthodontic care. Benefit payments are prorated by HumanaDental over the treatment period. The lesser of 25 percent of the total case fee or the dentist s fee is allowed for the down payment. The balance is prorated monthly over the treatment period. If the treatment plan ends before the treatment is complete, the Plan will stop paying the monthly benefit. The Plan does not pay benefits for orthodontic services that began before coverage began under this Plan or under the Freescale Dental Plan for active employees. Health Benefits Participants Under Age 65 61

68 For more information, call HumanaDental at regarding dental services that are not covered. What s Not Covered Although the Post-Employment Dental Plan covers a large number of dental services, there are certain exclusions and limitations. Please contact HumanaDental for more information regarding what s not covered. The Post-Employment Dental Plan does not provide benefits for: Any accidental injury arising from or sustained in the course of any occupation or employment for compensation, profit or gain for which: Benefits are provided or payable under any Workers Compensation or Occupational Disease Act or Law; or Coverage was available under any Workers Compensation or Occupational Disease Act or Law regardless of whether such coverage was actually purchased; Any covered expenses to the extent of any amount received from others for the accidental injuries or losses which necessitate such benefits. "Amounts received from others" specifically includes, without limitation, liability insurance, Workers Compensation, uninsured motorists, underinsured motorists, "no-fault" and automobile med-pay payments. Any expense in excess of the maximum allowable fee or predetermined charge for the service, treatment or supply in the locality where furnished; Any expense incurred prior to your effective date under the Plan or after the date your coverage under this Plan terminates, except for any Extension of Benefits; Any hospital charges or for services of any anesthesiologist; Any loss caused by or contributed to: War or any act of war, whether declared or not; Any act of international armed conflict, or any conflict involving armed forces of any international authority; Services and supplies: For which no charge is made, or for which you would not be required to pay if you did not have coverage, unless charges are received from and reimbursable to the United States government or any of its agencies as required by law; or Furnished by or payable under any plan or law through any government or any political subdivision (not including Medicare or Medicaid); or Furnished for a military service-connected accidental injury by or under an agreement with a department or agency of the United States government, including the Department of Veterans Affairs; Any service that is considered cosmetic dentistry, unless such service is necessary as a result of an accidental injury. Personalization or characterization of prosthetic devices is considered cosmetic dentistry; Appliances or restorations for increasing vertical dimension, restoring occlusion, correction of congenital or developmental malformations, or replacing tooth structure lost by attrition, abrasion, or erosion; Athletic mouth guards; Caries susceptibility testing, lab tests, anaerobic cultures, sensitivity testing; Completion of forms or failure to keep an appointment with the dentist; Diagnosis and treatment of temporomandibular joint dysfunction (TMJ), including, but not limited to, charges for: TMJ exams, X-rays and consultations; TMJ surgery, kinesiographic analysis and muscle testing; TMJ splints and appliances; splint equilibration and adjustments or physical therapy for symptoms including, but not limited to, headaches; Duplicate appliances; Fees for treatment by other than a dentist, except that scaling or cleaning of teeth and topical application of fluoride may be performed by a licensed dental hygienist. The treatment must be rendered under the supervision and guidance of the dentist in accordance with generally accepted dental standards; General anesthesia unless administered by a dentist in connection with oral and dental surgery only when dentally necessary or necessary due to a medical condition that presents a high risk to the patient. This also excludes general anesthesia administered in connection with routine extractions and the surgical removal of erupted teeth; Gold foil fillings and their maintenance/repairs. Alternate services will be applied allowing benefits for amalgam restorations; Implants, including the prosthesis placed over the implant and adjustments of the prosthesis. However, if one or more implants are used to replace missing teeth, an alternate benefit may be considered a covered expense, as follows: If there is one missing, unreplaced tooth in the arch, the alternate benefit will be based on a conventional three unit bridge; 62 Health Benefits Participants Under Age 65

69 If there are two or more missing teeth in the arch, but other natural teeth are present, the alternate benefit will be based on a conventional partial denture; If there are no natural teeth present in the arch, the alternate benefit will be based on a conventional denture. If it is determined that an alternate benefit is payable under the Plan, the alternate benefit is applicable only to the prosthesis placed over the implant(s) rather than toward the implant placement. An alternate benefit is payable only if a prosthesis benefit is otherwise payable under the Plan, subject to the missing tooth limitation and frequency provisions of the Plan; Major Restorative and Prosthodontic Services on other than permanent teeth; Occlusal adjustments; Osteotomies; Precious (gold) crowns and their maintenance/ repairs. Alternate services will be applied allowing benefits for a semi-precious crown; Prescription drugs or pre-medications; Precision or semi-precision attachments; Preventive control programs including but not limited to, oral hygiene instruction, plaque control, take home items or dietary planning; Pulp caps; Pulp tests; Replacement of lost, broken or stolen appliances, unless appliance is more than five years old; Site therapy; Sterilization/infection control fees; Services not dentally necessary or services which do not have uniform professional endorsement; Services provided by a person who ordinarily resides in your home or who is a family member; Stressbreakers; and Veneers and their maintenance/repairs on bicuspid and molar teeth. If you have any questions about what expenses are covered, call HumanaDental toll-free at Other Important Information In enrolling for the Post-Employment Dental Plan, you (the covered person) agree that by accepting, and in return for, the payment of covered expenses by the Plan, that: The Plan shall be repaid the full amount of the covered expenses it pays from any amount you receive from others for the accidental injuries or losses that necessitated such covered expenses. The Plan's right to repayment comes before the right of any other person or entity, including you. The right to recover amounts from others for the accidental injuries or losses which necessitate covered expenses is jointly owned by the Plan and you, and the Plan is subrogated to your rights to that extent. Regardless of who pursues those rights, the funds recovered shall be used to reimburse the Plan as prescribed above; the Plan has no obligation to pursue the rights for an amount greater than the amount that it has paid, or may pay in the future. The rights to which the Plan is subrogated come before and above the rights of any other person or entity, including you. You will cooperate with the Plan in any effort to recover from others for the accidental injuries and losses that necessitate covered expense payments by the Plan. You will notify the Plan immediately of any claim asserted and any settlement entered into, and will not do anything to prejudice the rights and interests of the Plan. Neither the Plan nor you will be entitled to costs or attorney fees from the other for the prosecution of the claim. RIGHT TO COLLECT NEEDED INFORMATION You must cooperate with HumanaDental and when asked, assist HumanaDental by: Authorizing the release of dental information including the names of all providers from whom you received dental attention; Obtaining dental information and/or records from any provider as requested by HumanaDental; Providing information regarding the circumstances of your accidental injury; Providing information about other insurance coverage Health Benefits Participants Under Age 65 63

70 and benefits, including information related to any accidental injury for which another party may be liable to pay compensation or benefits; and Providing information HumanaDental requests to administer the Plan. If you do not provide this necessary information, any pending or subsequent claims pertaining to the accidental injury for which the information is sought will be denied until you provide the information. DUTY TO COOPERATE IN GOOD FAITH You (the covered person) are obliged to cooperate with HumanaDental in order to protect the Plan s recovery rights. Cooperation includes: Promptly notifying HumanaDental that you may have a claim; Providing HumanaDental with relevant information, and signing and delivering such documents as HumanaDental reasonably requests to secure the Plan s recovery rights; You agree to obtain the Plan s consent before releasing any party from liability for payment of dental expenses; You agree to provide HumanaDental with a copy of any summons, complaint or any other process serviced in any lawsuit in which you seek to recover compensation for your accidental injury and its treatment; You will do whatever is necessary to enable HumanaDental to enforce the Plan s recovery rights and will do nothing after loss to prejudice the Plan s recovery rights; and You agree that you will not attempt to avoid the Plan s recovery rights by designating all (or any disproportionate part) of any recovery as exclusively for pain and suffering. If you (the covered person) fail to provide HumanaDental such notice or cooperation, or your actions result in prejudice to the Plan s rights, this will be deemed a material breach of this Plan and will result in you being held personally responsible for repayment. In such an event, the Plan may deduct from any pending or subsequent claim made under this Plan any amounts you owe the Plan until such time as your cooperation is provided and the prejudice ceases. 64 Health Benefits Participants Under Age 65

71 Rewards. Health Benefits for Retirees Age 65 and Over Age 65+ Coverage Options Medicare Freescale provides eligible retirees with health benefits coverage that coordinates with Medicare. This section offers eligibility information about the Freescale Post- Employment Health Plan coverage for those enrollees who are age 65 and over. Keep this book in a convenient place, and refer to it regularly as your source of information for taking full advantage of the benefits available. Health Benefits Retirees Age 65 and Over 65

72 Health benefits for retirees age 65 and over You may obtain additional information about your Medicare options by contacting your state insurance counseling office, calling Medicare at or visiting the Web site medicare.gov. AGE 65+ MEDICAL COVERAGE OPTIONS There are two medical coverage options for Freescale retirees age 65 and over who meet the age and service requirements listed on page 2. This section describes the eligibility for medical coverage for retirees (and their spouses/domestic partners) who are age 65 or older. For details on coverage available for spouses/domestic partners who are under age 65, see Health Benefits for Retirees and TDPs Under Age 65 beginning on page 14. There is no Age 65+ coverage for TDPs and their dependents, except for disabilities that begin after age 62. ELIGIBILITY If you met the age and service requirements (listed on page 2) on or before December 1, 1992, you are eligible for the Grandfathered Humana Group Medicare Private Fee-for-Service (PFFS) option ( ). If you meet the Freescale Post-Employment Health Plan requirements as of the date you retire (but after December 1, 1992), you are eligible for the Nongrandfathered Humana Group Medicare Private Fee-for-Service (PFFS) option ( ). If you were a retiree before age 65 and participated in the Post-Employment Medical Plan, you get the opportunity to enroll in the coverage option that applies to you when you reach age 65. Freescale Rewards Customer Service will send you information about your available coverage option before you reach age 65. If you enroll, your Age 65+ coverage option will begin on the first day of the month in which you reach age 65 (or on the first day of the previous month if your birthday falls on the first day of the month). If you first become eligible for Freescale Post- Employment Health Plan coverage after reaching age 65, then you will get the opportunity to enroll in the Age 65+ coverage option that applies to you according to the rules set forth under Enrolling for Coverage on pages 4 5. Your spouse/domestic partner, if under age 65, and dependent children may remain in the Post-Employment Medical Plan, Post-Employment Dental Plan and Post- Employment Vision Plan as long as they remain eligible and you continue to pay the required contributions. However, if your spouse/domestic partner is covered under the Post-Employment Medical Plan when he or she reaches age 65, he or she will get the opportunity to enroll in the same Age 65+ coverage option that applies (or will apply) to you. Post-Employment Dental Plan and Post-Employment Vision Plan coverage end for all participants when they reach age 65. If your dependent first becomes eligible for retiree health care coverage after attaining age 65, then he or she will get the opportunity to enroll in the Age 65+ coverage option that applies (or will apply) to you. Remember, coverage is available only for your spouse/ domestic partner and dependents who were eligible for coverage under the Employee Benefits Plan at the time of your retirement and continue to be eligible dependents. Moving Your Primary Residence Outside of the United States If you move your primary residence outside of the U.S., your and your dependents participation in the Post- Employment Health Plans ends as of the last day of the month during which you move. SOCIAL SECURITY It is not necessary for you to actually receive Social Security benefits in order to qualify for Medicare benefits. However, to enroll for Medicare, it is necessary for you to establish with the Social Security Administration your eligibility for retirement benefits and Medicare. Plus, you must be enrolled for Original Medicare in order to enroll in your Freescale Age 65+ coverage option. If you are age 65 (or approaching 65), notify your local Social Security office. You will have to provide proof of birth and some other required documents establishing your right to benefits, including Medicare. You should do this within three months before your 65th birthday. Otherwise, your Age 65+ coverage option may not begin when you reach age 65, even if you have retired and are no longer eligible for coverage by your Pre-65 coverage option. 66 Health Benefits Retirees Age 65 and Over

73 MEDICARE There are two parts to your Original Medicare benefits. Part A benefits are for hospitalization, and Part B benefits are for other medical expenses. You must be enrolled for both Parts A and B in order to be covered by a Freescale Age 65+ medical coverage option. The Medicare program has various coverage options: Original Medicare plan (Parts A and B) fee-forservice plan offered by the federal government Medicare Supplement ( Medigap ) policies private insurance that pays in addition to Original Medicare coverage Medicare Advantage plans (Part C) private insurance plans that replace Original Medicare coverage Medicare Prescription Drug plans (Part D) private insurance plans offering prescription drug coverage to Medicare beneficiaries Both the grandfathered and nongrandfathered coverage options of the Humana Group Medicare PFFS Plan are Medicare Advantage plans. You may not be covered by both a Humana Group Medicare PFFS Plan and a separate Medicare Prescription Drug plan (Part D). How to Enroll in Original Medicare If you are already getting retirement or disability benefits from Social Security or railroad retirement, you will be contacted by the Social Security Administration (SSA) a few months before you turn 65. The SSA enrolls you for Original Medicare automatically and gives you other information you need. If you are not receiving retirement or disability benefits, it is up to you to enroll in Medicare by contacting the SSA 3 4 months before you want its coverage to begin. You do not need to start your monthly Social Security retirement benefits in order to enroll in Medicare. When you contact the SSA, you will need to provide proof of your eligibility with documents such as: Your Social Security card (or a record of your number); Your birth certificate; Proof of U.S. citizenship or lawful alien status if you were not born in the U.S.; Military discharge papers; or Last year s Form W-2 or tax return. Medicare Part B coverage requires a monthly premium. When you enroll, you have a number of options for making payment, including automatic withholding from your Social Security benefits. For most people, Original Medicare coverage may begin on the first day of the month before their 65th birthday. If your birthday falls on the first day of the month, your Medicare coverage may begin on the first day of the month before your birthday. For example: If your 65th birthday is May 10, 2007, your Medicare coverage may begin on May 1, If your 65th birthday is August 1, 2007, your Medicare coverage may begin on July 1, You may start the Medicare enrollment process up to 120 days before the date you want your Medicare to begin. If you are already age 65 or older, you may arrange to start your Original Medicare coverage on the day that your Freescale active plan coverage ends. Contact the nearest office of the Social Security Administration, and see these Web sites for more details: General information: socialsecurity.gov and medicare.gov Summary booklet on Medicare enrollment: socialsecurity.gov/pubs/10043.pdf Online enrollment tool: socialsecurity.gov/r&m2.htm Medicare and TRICARE: socialsecurity.gov/legislation/tricare.html Private Contracting Physicians may enter into "private contracts" with Medicare enrollees and set their own fees for services. These private contracts must state explicitly that the patient must pay the entire fee charged by the physician for these services, and the physician may not bill Medicare. You may not be asked to sign a private contract in an emergency. Physicians who want to privately contract with Medicare enrollees for services covered by Medicare must declare that they will not bill Medicare for any services for two years. Under private contracts, physicians who opt out of Medicare can charge Medicare enrollees any amount for services covered by Medicare. Physicians must, however, treat all Medicare enrollees alike. If they establish private contracts with some, they cannot bill Medicare for others. Medicare enrollees, however, may privately contract with a physician for some services and still use Medicare for services from other physicians who do bill Medicare. Freescale's Age 65+ coverage options do not cover benefits that are not recognized by Medicare. Therefore, services rendered under private contract with a physician who has opted out of Medicare will not receive any benefit coverage under the Plans. Important Note: Enrolling for a Medicare drug plan permanently ends eligibility for Freescale post-employment medical coverage for you and all covered family members. Health Benefits Retirees Age 65 and Over 67

74 Monthly Contribution You are notified of the contribution amounts when you first become eligible to participate. The amount of your monthly contribution is reviewed annually and is subject to change (see pages 2 3 for details). For more information, you may contact Freescale Rewards Customer Service at 888-FSL-BENS. ENROLLMENT AND BENEFITS Benefits under the Freescale Age 65+ coverage options are provided under group insurance contracts with Humana. If you are eligible, you may request an Evidence of Coverage booklet that explains both how you enroll in the option that applies to you, the benefits the option offers, when coverage begins and ends (in addition to the information on pages 7 8 of this SPD), and other important Plan information. Humana has a dedicated phone line for Freescale retirees to get information about their Age 65+ coverage options: When the first spouse/domestic partner retires, if he or she chooses not to enroll in an Age 65+ coverage option, he or she may elect, within 30 days of retirement date, to be covered as a dependent under the active spouse s/domestic partner s medical coverage (Freescale Employee Medical Plan). The active spouse/domestic partner is allowed to enroll the retiree as a spouse/domestic partner at that time. If the second spouse/domestic partner retires at age 65 or older, either spouse/domestic partner may elect family coverage under their applicable Age 65+ coverage option. This gives maximum flexibility to, for example, Freescale couples where one person is eligible for the Nongrandfathered option and the other is eligible for the Grandfathered option. If you have questions about your eligibility, please call Freescale Rewards Customer Service at 888-FSL-BENS. DUAL FREESCALE EMPLOYEES The following provisions for retiree health coverage apply to a Freescale employee who is married to or in a domestic partnership with another Freescale employee at the time either spouse/domestic partner retires at age 65 or older. 68 Health Benefits Retirees Age 65 and Over

75 Rewards. As a former employee of Freescale, certain disability and life insurance benefits remain available to you if: security for TDPs and retired disabled participants Life and Disability Disability Income Plan Life Insurance Plans You are a TDP; or You retire under Freescale s Human Resources Medical Leave Policy, or a predecessor policy, while receiving disability benefits under the Freescale Disability Income Plan; AND You continue to be eligible for disability benefits under the Plan; or You apply for continuation of life insurance coverage. This section summarizes your benefits under the Life Insurance and Disability plans and provides information to help you understand the tools available to enhance your family s security when you are disabled. Keep this book in a convenient place and refer to it regularly as your source of information about life and disability benefits. Life and Disability TDPs and Retired Disabled Participants 69

76 Disability Income Plan (for TDPs and retired disabled participants) Disability benefits provide you with income even though you are unable to work. If you are a TDP or if you retired under Freescale s Human Resources Medical Leave Policy (or a predecessor policy) while receiving disability benefits under the Freescale Disability Income Plan, Freescale will continue your disability income replacement in accordance with the provisions of the Freescale Disability Income Plan. Long-Term Disability Benefits Long-term disability, for the purposes of the Freescale Disability Income Plan, is defined as your ongoing, continuous inability, by reason of a medically determined physical or mental impairment, to work in any substantial and gainful employment. In order for you to remain eligible to receive disability income replacement, you must: Be under the regular care of a physician; Be unable to engage in any substantial and gainful employment; Not engage in any substantial and gainful employment; Provide Freescale with documentation from your physician certifying your continuing disability; and Provide documentation from the Social Security Administration as the Plan requires. You must notify the Long-Term Disability Management Program prior to engaging in any employment while receiving Disability benefits. Substantial and Gainful Employment Substantial and gainful employment means employment that would afford you earnings potential (which may be, in the Plan Administrator s discretion, based on evidence of labor market conditions) that equals or exceeds your Long-Term Disability benefits, or any occupation that the Plan Administrator, in its discretion, determines to be substantial and gainful employment. Employment for which a participant earns less than the "substantial gainful activity" amount set with regard to Social Security disability will be deemed to not be substantial and gainful employment. Physician Care Requirements Your physician must be qualified to treat your disabling condition; and You must have at least one visit with your physician in each 30-day period of your disability, unless waived by the Plan Administrator. Certifying Your Continuing Disability Freescale teams with an outside disability management company whose physicians and registered nurses work in conjunction with Freescale to administer the Disability Income Plan. During your disability period, a representative from this team stays in contact with you, your physician and Freescale Rewards Customer Service. You must certify that you are disabled in accordance with Freescale s procedures. If you do not certify your disability, your benefits under the Plan will end. Freescale has the right to have a physician of its choice examine you (at Freescale s expense) during the time of your disability. If you do not cooperate with the physician s recommendation for treatment, your disability benefits will cease. Your Benefit Amount The amount of your disability benefit payment depends on your base salary at the time you became disabled, and whether you are receiving any other disability benefits. You will receive 60 percent of your base salary, or $10,000 per month, whichever is less ($6,000 per month maximum if you became disabled prior to January 1, 2003). Your disability benefits may be reduced in accordance with the Integration of Benefits rules. See pages for more information. Benefit checks for Long-Term Disability are issued monthly. Any disability benefit payable for a period of less than one month is paid on the basis of 1/30th of the monthly benefit for each day you are disabled. How base salary is Determined Base salary includes the annual base salary, prior year commissions (including quarterly, draw or other), prior quarter shift differential and lump sum pay you were receiving from Freescale as of the date you became disabled. Your annual base salary is then divided by 12 to determine your monthly rate of pay for disability benefits. If you were working for Freescale for less than 12 months when you became disabled, your base salary is calculated using figures from your actual period of employment. Base salary does not include overtime, bonuses, incentive plan payments, moving allowances, educational allowances, noncash payments or overseas allowances. The following components of compensation are based on your employee status: 70 Life and Disability TDPs and Retired Disabled Participants

77 Non-Exempt Employees Your annual base salary means your annualized base rate of pay. Exempt Employees Your annual base salary means your annualized base salary. Shift Differential Any shift premiums you earned are included in determining your coverage. This amount is determined by calculating the annualized shift premiums earned in the preceding quarter. You must work a full calendar quarter before this method applies. Lump Sum Pay If you received a lump sum pay increase in lieu of an increase to your base salary, your salary for disability benefits includes your lump sum pay. Commissioned Salespersons Your coverage is either the midpoint of your salary grade or your current year s earnings plus prior year s commission (including quarterly, draw or other), whichever is greater. If You Worked Less Than 35 Hours per Week Your coverage is your highest annualized calendar quarter salary of the last four quarters you worked. You must have worked a full calendar quarter before this method applies. What s Not Covered Benefits are not payable for disability caused by or resulting from: A cosmetic or transsexuality procedure that alters appearance but does not restore or improve impaired physical function, except when performed for the repair of defects resulting from an accident, replacement of diseased tissue that has been surgically removed or treatment of a birth defect; Alcoholism or substance abuse, unless you are being treated in a Freescale-approved rehabilitation program; Any accident, illness or injury that relates to services you performed for a for-profit entity that is not Freescale or a related company that offers this Plan to its employees or services you performed for hire for a not-for-profit entity; Any illness/injury arising while you are incarcerated or in a penal institution; Conditions treated or diagnosed with test analysis, research studies, unconventional methods and procedures not considered accepted medical practice in the health care industry; Engaging in a felony; Environmental illness or multiple chemical sensitivity (including, but not limited to, pesticides, volatiles or chlorinated hydrocarbons); Fatigue, nervous exhaustion or stress of daily living; For U.S.-based participants treatment received abroad, unless treatment is received on an urgent/ emergency basis; Illness or injury arising in the course of any occupation or employment for salary or profit that is covered by workers compensation; Mental health condition diagnosed solely by a general practitioner beyond 30 days, except if you are being treated by a psychiatrist or psychologist as of the 30th day of disability, or unless the Plan Administrator extends the 30-day period for an additional 30 days; Service in the armed forces of any country; or Silver mercury amalgam sensitivity. Also, the Plan does not pay physician or other service provider charges for completion of forms, missed appointments, telephone consultations or examinations (unless the examination is ordered by the Plan Administrator), or for copying and sending your records, including charges for telephone calls. Benefits are paid only while you are under the regular care and treatment of a physician. A confirmation from your physician is required for continuation of benefit payments. How Long Benefits Will Be Paid If you remain disabled and eligible for Long-Term Disability benefits, you will receive benefits up to age 65 if the disability occurs before age 60. If your disability starts at age 60 or after, you are eligible to receive benefits for up to five years (including the 180 days you received Short-Term Disability benefits). There are exceptions to this length of coverage if your disability is primarily caused by a mental, nervous, alcohol- or drug-related condition as explained below. If You Have a Mental, Nervous or Alcohol/Drug-Related Condition If your disability is caused primarily by any mental, nervous, alcohol- or drug-related condition, there is a maximum lifetime cap of up to 24 months of Long-Term Disability payments. This 24-month lifetime maximum benefit includes any Long-Term Disability benefits you received before you retired from Freescale. For more information, contact the Disability Plan Administrator tollfree at Life and Disability TDPs and Retired Disabled Participants 71

78 Mental, nervous, alcohol- and drug-related conditions subject to the 24-month limitation may include, but are not limited to, the following: Alcohol/substance-related disorders; Anxiety disorders; Eating disorders; Mood/depressive disorders; and Schizophrenia and other psychotic disorders. You will be notified by the Plan Administrator if your condition is subject to the 24-month limitation. Filing for Social Security Disability If you continue to be disabled beyond 180 days, in order to continue receiving disability benefits under the Plan you must provide evidence to the Plan Administrator that you have filed for Social Security disability benefits. You are required to exhaust all levels of application and appeal for these Social Security benefits. Proof of filing for such award will be required no later than the first anniversary of your disability, or disability benefits under the Plan will cease until proof of filing is received by the Plan Administrator. For disabilities that began on or after January 1, 2002, documentation of a disability Social Security proof of filing, award or denial of disability Social Security benefits must be received by the Plan Administrator no later than 90 days after the first anniversary of your disability, or your benefits will permanently cease. If, at any time, the Plan Administrator has a good-faith belief that you are receiving Social Security benefits at the same time as you are receiving disability benefits under the Plan, the Plan Administrator may request documentation of your Social Security status. If you do not provide such documentation to the Plan Administrator within 90 days of the Plan Administrator s request, your disability benefits will permanently cease. When Disability Benefits End Your coverage under the Plan ends on the earliest of the following dates: The day you are no longer disabled; The end of the month in which you reach the 24-month lifetime maximum benefit for primary diagnosis of a mental, nervous or alcohol/drugrelated condition; The last day of the month in which you turn age 65 if you became disabled before age 60; The last day of the month which is 60 calendar months (five years) after the start of your disability if you become disabled at age 60 or after; The date you fail to meet the Social Security filing requirement applicable to you; The day you commit or attempt to commit fraudulent activity against the Plan, Freescale or any related company; The date you engage in a felony; The date the Plan Administrator determines you have failed to provide satisfactory evidence of continuing disability; The date the Plan Administrator determines you have failed to cooperate with a request for an examination; The date you do not cooperate with a physician s recommendation for care and treatment; 90 days after the Plan Administrator requests repayment from you or your covered dependent of amounts that are subject to reimbursement under any Freescale welfare plan, overpayments or mistaken payments from any Freescale welfare plan, if you fail to repay or set up an acceptable payment schedule; The date the Plan Administrator determines you have failed to provide information requested by the Plan Administrator; The date the Plan Administrator determines you have failed to notify the Long-Term Disability Management program that you are engaging in employment; The last day of the month of your death; or The day the Plan terminates or the effective date of an amendment eliminating such coverage. Disability benefits are suspended during any period you are incarcerated because you have been convicted of, or pled guilty or no contest to, a crime that is not a felony, except to the extent the Plan Administrator determines not to suspend your benefits. Integration of Benefits Your disability benefits from Freescale are coordinated with certain other payments for which you are eligible. For example, your benefit from this Plan is reduced by: Any payment for which you are eligible under Social Security, including primary disability or old age, widow(er) or dependent awards; including any annual cost of living adjustments; Any workers compensation payment; Any payment made pursuant to occupational disease act or law or any state compulsory disability benefit law; and 72 Life and Disability TDPs and Retired Disabled Participants

79 Disability, severance pay or retirement or other income benefits from Freescale for the same period as the Plan s payment (except benefits under the Freescale 401(k) Retirement Savings Plan). Benefits are paid only while you are under the regular care and treatment of a physician. A confirmation from your physician is required for continuation of benefit payments. Continuation and conversion rights Continuation and conversion rights do not apply to Long-Term Disability coverage. Disabilities Incurred Prior to January 1, 1994 If you became disabled prior to January 1, 1994, different Plan provisions affecting your benefit level may apply to you. Please contact Freescale Rewards Customer Service for more information. The Basic Life Insurance and Supplemental Life Insurance benefits that you were enrolled in at the time you terminated employment, either as a TDP or as a retired disabled participant, will continue if you were retired under Freescale s Human Resources Medical Leave Policy (or a predecessor policy), and you remain eligible for benefits under the Freescale Disability Income Plan. You must apply to continue this coverage within 30 days of receiving your "Disability Waiver of Premium" notice. If you apply in this time period, Freescale will continue to cover your Basic Life Insurance and Supplemental Life Insurance coverage premiums in accordance with the provisions of the Freescale Group Life Insurance Benefit Plan, at the same level of coverage in force at the time you became disabled. life insurance Plans (for TDPs and retired disabled participants) life insurance plans type of insurance benefit amount Basic Life Insurance (no cost to you) 1 times eligible compensation rounded to the next higher $100 Maximum benefit $1,000,000 Supplemental Life Insurance (if elected prior to becoming disabled) 1, 2 or 3 times eligible compensation rounded to next higher $100 Maximum benefit $1,000,000 when combined with Basic Life Insurance benefit Your compensation Determines Your Coverage Eligible compensation for life insurance benefits includes your annual base salary, prior year commissions (including quarterly, draw or other), prior year quarter shift differential and lump sum pay at the time you first became disabled. Eligible compensation does not include overtime, incentive pay, bonuses, moving allowances, educational allowances, noncash payments or overseas allowances. Your eligible compensation is rounded to the next higher $100. The following components of compensation are calculated according to your employee status: Non-Exempt Employees Your annual base salary means your annualized base rate of pay. Call Freescale Rewards Customer Service at 888-FSL-BENS if you have any questions regarding your life insurance coverage. Life and Disability TDPs and Retired Disabled Participants 73

80 Consult your tax adviser for more information. For details on the "living benefit," contact Freescale Rewards Customer Service. A primary beneficiary is a person, trust or estate designated to receive the benefit under your life insurance plan. A contingent beneficiary is the person, trust or estate designated to receive the benefit if no primary beneficiary exists at the time the benefit becomes payable. You may not designate your will as your beneficiary. Exempt Employees Your annual base salary means your annualized base salary. Shift Differential Any shift premiums you earned are included in determining your coverage. This amount is determined by calculating the annualized shift premiums earned in the preceding quarter. You must have worked a full calendar quarter before this method applies. Lump Sum Pay If you received a lump sum pay increase in lieu of an increase to your base salary, eligible compensation includes your lump sum pay. Commissioned Salespersons Your coverage is either the midpoint of your salary grade or your current year s earnings plus prior year s commission (including quarterly, draws or other), whichever is greater. If You Worked Fewer Than 35 Hours Per Week Your coverage is your highest annualized calendar quarter salary of the last four quarters you worked. You must have worked a full calendar quarter before this method applies. PAYING FOR COVERAGE For the first nine months after your disability retirement or TDP status begins, you pay the cost of all coverage. If you apply for coverage within 30 days after receiving your Disability Waiver of Premium notice, Freescale will pay the full cost of your Basic Life Insurance for you. You pay the cost of Supplemental Life Insurance. The cost of this extra coverage is based on the amount of the coverage you chose, and on your age, according to the following age groupings: Under age 25 Age 45 to 49 Age 25 to 29 Age 50 to 54 Age 30 to 34 Age 55 to 59 Age 35 to 39 Age 60 to 64 Age 40 to 44 Age 65 and older Your contribution amount is also based on your tobacco use status. When you enroll each year, you complete a certification of tobacco use. The Plan offers discounted coverage rates to employees who certify they have not used tobacco products for the past six months. Tobacco use status cannot change during the calendar year, even if you have a change in status. Naming Your Beneficiaries You can name one or more primary beneficiaries and one or more contingent beneficiaries. To change a primary or contingent beneficiary, you can designate them online at freescale.com/rewards or you can call the Freescale Rewards Customer Service Center at 888-FSL-BENS. No other type of agreement or document (such as a will or divorce settlement agreement) may be used to change your beneficiary. However, the Plan Administrator will recognize a valid Qualified Domestic Relations Order that assigns your benefits. If you do not designate a beneficiary, then the Plan will pay your benefits in accordance with the Basic Life Insurance Policy. This policy provides that if you do not designate a beneficiary, benefits are paid to the first of the following beneficiary classes in which there is a surviving person: Your spouse; Your children; Your parents; Your brothers and sisters; or Your executors or administrators. How the Benefit is Paid If you die while you are covered by Basic Life Insurance or Supplemental Life Insurance, the total benefit is paid to your designated beneficiary or beneficiaries. Benefits may be paid in a lump sum or in installments. Your beneficiary or beneficiaries can get more information from Freescale Rewards Customer Service regarding the form in which they may receive benefits. TAX ALERT Life insurance benefits are tax-free if your coverage does not exceed $50,000. Therefore, if your Basic Life Insurance and Supplemental Life Insurance coverage exceeds $50,000, you must include in your gross income the cost of the excess coverage reduced by the amount of your Supplemental Life Insurance premiums. For this purpose, the cost is computed using a uniform premium table published by the Internal Revenue Service. The taxable amount, if any, is reported to you on your Form W-2 ( C in Box 12). Talk to your accountant or financial adviser for more information regarding taxation of life insurance. Exclusions Life insurance benefits are not paid to the designated beneficiary if the insured s death was caused by the beneficiary while involved in the commission of, or attempt to commit, a felony. In such a case, benefits are paid to the contingent beneficiary and if no contingent beneficiary was designated, benefits are paid in accordance with applicable state law. 74 Life and Disability TDPs and Retired Disabled Participants

81 Living Benefit Life Insurance Coverage If you have a life expectancy of nine months or less, you may elect to receive 50 percent of your eligible Basic Life Insurance and Supplemental Life Insurance benefit. Life expectancy must be certified by your physician. Prior to this payment of your accelerated life benefit, Freescale must obtain from you (and any assignee or irrevocable beneficiary) a signed agreement for the payout. This payment may be taxable. The amount of your death benefit is reduced by any living benefit you receive. Consult your tax adviser for more information. For details on the Living Benefit, contact Freescale Rewards Customer Service at 888-FSL-BENS. When Basic and Supplemental Life Insurance Continuation Coverage Ends If you became disabled prior to age 60, your Basic and Supplemental Life Insurance continuation coverage ends on the earlier of: Age 65; The date you no longer are disabled; The date your coverage ends under the Freescale Disability Income Plan; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. If you became disabled at age 60 or older, your Basic and Supplemental Life Insurance continuation coverage ends on the earlier of: Five years after the onset of your disability; Age 70; The date you no longer are disabled; The date your coverage ends under the Freescale Disability Income Plan; or The date the Plan terminates or the effective date of an amendment eliminating such coverage. Regardless of when you became disabled, your Supplemental Life Insurance continuation coverage will end on the last day of the month for which you paid your required contributions for Supplemental Life benefits. Conversion Rights* When your Freescale coverage ends, your Basic Life Insurance and Supplemental Life Insurance may be converted to an individual life insurance policy. You can choose any type of insurance except term insurance. The minimum amount you may convert is $2,000, and the maximum is the total coverage you had under Basic Life and Supplemental Life. However, you must apply for the conversion within 31 days after your coverage ends, and you must pay the contribution that applies to your age, class of risk and the type of policy for which you apply. Participants have certain restricted conversion rights in the event the master policy is terminated. Participants are informed of such rights in the event of master policy termination. *Note: Special rules may apply if you became disabled during 1993 or prior to Please contact Freescale Rewards Customer Service for more information Conversion applications are available by calling Freescale Rewards Customer Service at 888-FSL-BENS. All completed applications should be sent to: United of Omaha Life Insurance Company Attn: S-1 Group Conversion Mutual of Omaha Plaza Omaha, Nebraska Information for Survivors Filing a Claim In the event of your death, Freescale Rewards Customer Service provides assistance to your survivors, including providing complete information about filing claims after notification of the death has been received. Terms of Life Insurance Policies Certain life insurance benefits described above may be provided by life insurance policies purchased by Freescale. These insurance policies are deemed a part of the Plan and together with the Plan determine the benefits to which you are entitled. If there is any conflict between the terms of the Plan document and an insurance policy, the terms of the Plan document will control. However, if the terms of the insurance policy result in a lesser benefit, then the insurance policy will govern. You have the right to examine any insurance policies as described in the General Administration section of this book. Assignment of life insurance benefits may be available under certain circumstances. Contact Freescale Rewards Customer Service for more information. Life and Disability TDPs and Retired Disabled Participants 75

82 Notes. 76 Life and Disability TDPs and Retired Disabled Participants

83 Rewards. Special Health Programs Wellness Programs Activity Centers Long-Term Care Insurance Freescale provides eligible retirees and TDPs with the opportunity to use special health programs. Keep this book in a convenient place, and refer to it regularly as your source of information for taking full advantage of these special benefit opportunities. Health Benefits Retirees Age 65 and Over 77

84 wellness PROGRAMs/ ACTIVITY CENTERS Humana Wellness Programs Visit for information about wellness programs available to you, including: Flu Vaccinations Annual immunizations to help protect you and your family from the potentially serious effects of the flu. Health Screening and Health Power Profile Program Annual screenings help you identify potential risk factors for disease. Your results provide you with a tool for working with your physician and creating a personal health plan. Mammogram Annual screening for early detection of breast cancer. Humana Online Wellness Resources Visit to obtain discounts on a variety of quality wellness products. They include vitamins, minerals, herbal supplements, sports nutrition products, health-related books and videos, skin care products and more. Health Net HMO Wellness Programs If you are enrolled in the Health Net HMO, the Humana wellness programs described above do not apply to you. For information about Health Net wellness benefits, call Health Net at , or visit their Web site at healthnet.com. activity Centers As a retired Freescale employee (if you meet the age and service requirements listed on page 2), you are eligible for membership at a Freescale Activity Center for a reduced monthly fee, with a six-month or oneyear commitment. (Contact your nearest Activity Center for the current monthly rate.) You pay by check to the Activity Center where you originate your membership. Enrollment in a Freescale activity Center When you retire from Freescale, you are eligible for "retiree membership" if you meet the eligibility requirements for retiree health care benefits. If you are a member of a Freescale Activity Center as a Freescale Employee, terminate employment and meet the eligibility requirements for retiree health care benefits, you will then be eligible to join as a retiree and pay the applicable membership rate. Your first monthly payment for your Activity Center membership is due the first of the month following your retirement date. If you enroll at any time after your retirement, payment is due immediately upon enrollment. You are responsible for paying any additional expenses such as locker rental, individual sport lessons or classes, or personal training. A physician s release may be required for enrollment if two or more risk factors are present. Risk factors may be identified during the voluntary enrollment interview process and are based on risk factor guidelines set forth by the American College of Sports Medicine (ACSM). Examples of risk factors include certain diseases or conditions, family history, medications and symptoms. For more information, contact your local Freescale Activity Center. Membership in one Freescale Activity Center gives you access to all other centers if you live near more than one facility or travel to other areas where one is located. If you (1) were a member at an Activity Center as a Freescale employee, (2) are not eligible for retiree health care coverage upon retirement, and (3) are a spouse or domestic partner of another Freescale employee who remains an employee, you may reenroll as a "spouse or domestic partner" and pay the applicable membership rate at selected locations. If you are not eligible for retiree health care coverage, your membership ends on your last day of employment. If your spouse or domestic partner is also a member at the Activity Center, Freescale will refund the unused membership for your spouse or domestic partner. If you are a tdp Activity Centers are not available to TDPs or their dependents. If you are a member of a Freescale Activity Center at the time your employment terminates, your membership ends on the date of your termination. If your spouse/domestic partner has a paid membership in an Activity Center, his or her membership also ends on the date of your termination. Freescale will refund the unused membership for your spouse or domestic partner. If you have any questions, call Freescale Rewards Customer Service at 888-FSL-BENS. 78 Health Benefits Retirees Age 65 and Over

85 You and your spouse can prepare now for the possibility of facing rising costs of health care and professional long-term care services in the future as the result of an accident or illness. CNA Insurance Companies offers Freescale retirees and TDPs the opportunity to purchase long-term care insurance, for which you pay a monthly premium for coverage. Should long-term care services become necessary in the future, your insurance will reimburse you for eligible expenses, up to the limits you choose. If you have Long-Term Care insurance coverage prior to your retirement, you must call CNA to arrange for direct billing. You may still enroll for CNA Long-Term Care insurance after your retirement (or separation from employment). If you enroll for CNA Long-Term Care insurance as a retiree or TDP, you will be required to complete a CNA Long Form Application for coverage. CNA underwriting can ask for further information if necessary to determine eligibility for coverage. The Long-Term Care group insurance program is offered to you directly by CNA and is not a Freescale-sponsored plan. For details on Long-Term Care insurance, please call CNA at , or you may visit them at (password: trycnagltc). long-term care insurance Health Benefits Retirees Age 65 and Over 79

86 Notes. 80 Health Benefits Retirees Age 65 and Over

87 Rewards. financial security for you and your family Savings and Wealth 401(k) Retirement Savings Plan Accessing Your Account When Payments Begin Survivor Benefits More Facts About the 401(k) Retirement Savings Important U.S. Tax Information The Freescale 401(k) Retirement Savings Plan can play an integral role in your personal financial security. This section summarizes your benefits under the Plan and helps provide the information and tools necessary for you to make informed choices and decisions. Keep this book in a convenient place and refer to it regularly as your source of information for building your financial security under the Plans. Savings and Wealth 81

88 401(k) Retirement Savings Plan Your Future Is Now While you were an active employee, Freescale offered you a 401(k) plan to help you create financial security. As a retiree or a TDP, you can now receive benefits you have earned from participating in the 401(k) Retirement Savings Plan. Your 401(k) Retirement Savings Plan account remains invested in the Plan until you receive full distribution. Your account is not taxable until you withdraw funds from your account. Motorola 401(k) accounts If you separated employment as a TDP or a retiree on or before December 3, 2004, your 401(k) account can be accessed by calling Motorola s TIME System at or by visiting rewards. If you separated employment as a TDP or a retiree after December 3, 2004, your 401(k) account can be accessed by calling 888-FSL-BENS. Your Contributions Your contributions to the 401(k) Retirement Savings Plan stop when you no longer receive pay from Freescale. Your contributions are not considered part of your current earnings, so they are not subject to federal income taxes, or the income taxes of most states, until you withdraw them from your account. Matching Contributions Matching Contributions to your account end when you stop receiving a paycheck from Freescale. Matching Contributions are made for active employees each pay period, based on your Participant Contributions for that pay period. If, at the end of the year, you have not received the maximum match you could have received on your contributions (for example, if you contributed more than five percent of your compensation early in the year but reduced or stopped your contributions after a few months), Freescale may make an additional "true-up" contribution to bring you up to the maximum match based on your actual Participant Contributions. You must have contributed at least five percent of your pay to receive a true-up contribution (subject to certain changes in the deferral limits under the tax code). To be entitled for a "trueup" Matching Contribution, you must be employed at Freescale at the end of the year or have separated employment as a TDP or retiree during the year at age 55 or older with five or more years of service. Vesting In Your 401(k) Benefit You are 100 percent vested in your own contributions, Company Contributions, and investment returns on those contributions. This means you have the right to receive the full value of your account when you leave Freescale for any reason. Remember, the value of your account is subject to investment market increases and decreases. There is no guarantee that you will receive an amount equal to or greater than what has been contributed to your account. For former General Instrument (GI) employees, your Company Contribution account under the GI Savings Plan became 100 percent vested on December 31, 2000, if you were an employee participating in the GI Savings Plan on that date. Investing Your Plan Account You decide how to invest your account balance for as long as you have an account in the Plan. Your account balance includes your contributions and any contributions made by Freescale, as adjusted for any investment returns or losses on those amounts. You choose how to invest your account in one or more of the 10 investment funds that make up the 401(k) Retirement Savings Plan Trust, as well as the Self- Directed Brokerage Account. As with any investment you make, there are no guarantees against losses. Each fund is subject to increases and decreases in dollar value as the financial markets respond to economic, social and political conditions. 82 Savings and Wealth

89 At any given time, your account balance may have decreased in value rather than increased. In general, the "riskier" funds are more likely to have greater "ups and downs" than less risky funds, but may have a greater potential for higher positive returns over the long term. Monthly and historical investment returns of the funds are available from the interactive telephone system or YBR Web site (see "Accessing Your Account," page 84). The 401(k) Retirement Savings Plan is intended to constitute a plan described in Section 404(c) of the Employee Retirement Income Security Act (ERISA) and Section c-1 of Title 29 of the Code of Federal Regulations ("404(c) Regulations"). This means that the fiduciaries of the Plan may be relieved of liability for any losses that are the direct and necessary result of investment decisions made, and investment instructions given, by you as a Plan participant or beneficiary with respect to the investment of money in your accounts in the Plan s various funds. If you elect a partial distribution or installments, the balance of your account (after each payment) remains invested in the funds you have elected. You have the same investment options as active employees. Investment returns may increase or decrease the amount of your future payments. You can transfer balances among investment funds at any time, with these exceptions: International Value Fund and International Growth Fund Amounts transferred into these funds must remain in them for at least 14 days Short-term trading redemption fees Please see current fund information on the Your Benefit Resources TM Web site for any additional redemption fees that may be imposed for short-term trading activities. Transfers may be made based on a specific percentage from one investment fund to another, or you may realign your entire account. Changes confirmed before the close of the New York Stock Exchange (normally 4 p.m. Eastern time) are normally processed at the end of that day. Changes confirmed after the market closes, on weekends or on market holidays are processed at the end of the next business day. A table of the investment funds available is included on the following page. guidedchoice GuidedChoice TM, an independent investment advice service chosen by Freescale, can choose your investments. Fees will apply if you choose to allow GuidedChoice to manage your account for you. Please see Get investment advice from GuidedChoice at for additional information on applicable fees. GuidedChoice advice is based on the book Modern Portfolio Theory, written by one of GuidedChoice's founders, Harry Markowitz, Ph.D., Nobel laureate. Modern Portfolio Theory proposes that there is a perfect mix of asset classes (different types of stocks and bonds) that you can invest in at different risk levels that will get you to your maximum return over the long run. Using a proprietary process, GuidedChoice combines economic data and fund style analysis with personal factors (such as your age, salary, a five percent savings rate, etc.) and other assumptions (such as a retirement age of 65, single marital status, mortality tables based on gender, plus 10 years, etc.) to determine the funds in which you could be invested to ensure the maximum return. You may also make changes online by accessing freescale.com/rewards, or by calling Freescale Rewards Customer Service at 888-FSL-BENS. Keep in mind, GuidedChoice is still available to help you determine the right contribution rate, risk level and fund combination, even if only as a second opinion. Just click Get investment advice from GuidedChoice at freescale.com/rewards to be connected. Note: Historical performance of a fund can only give you an idea of the risk level involved, it does not tell you how the fund will perform in the future. For additional fund information, consult the Prospectus for the 401(k) Retirement Savings Plan Investment funds. Savings and Wealth 83

90 INVESTMENT FUNDS Type of Fund Freescale Investment Fund Description Risk Stable Value Fund (Deutsche Asset Management) Bond Fund (PIMCO Moderate Duration) Balanced Fund (Oakmark Equity & Income) Combination of short-term, fixed income securities such as U.S. Treasury bills, guaranteed insurance contracts and bank investment contracts; growth through short-term income Combination of U.S. Treasury bills, certificates of deposit, corporate bonds and government bonds; long-term growth through short- to long-term income Combination of domestic stocks, bonds and cash equivalents; long-term growth through capital appreciation and income Lowest All investments involve some degree of risk. Even if an investment is categorized as lower risk, that investment could incur losses at any time, and these losses may exceed the losses incurred during the same period by an investment categorized as higher risk. Large-Cap Value Fund (High Point Select Value and NFJ Dividend Value) S&P 500 Index Fund (Northern Trust) Large-Cap Growth Fund (Polen Capital Management) International Value Fund (Morgan Stanley) International Growth Fund (Julius Baer) Small-Cap Value Fund (Wells Capital Management and Buckhead Capital) Small-Cap Growth Fund (Calamos Investments and Driehaus Capital Management) Self-Directed Brokerage Account (Hewitt Financial Services) Combination of two investment managers investing in a diversified portfolio of large capitalization domestic common stocks, providing dividend income and some capital appreciation through value-oriented stocks Contains 500 large capitalization domestic common stocks in the S&P 500 Index A diversified portfolio of large capitalization domestic common stocks, providing some capital appreciation through growthoriented stocks Equity securities of non-u.s. common stock providing dividend income and some capital appreciation through value-oriented stocks Equity securities of non-u.s. common stock providing some capital appreciation through growth-oriented stocks Combination of two investment managers investing in medium and small capitalization domestic common stocks, providing dividend income and some capital appreciation through valueoriented stocks Combination of two investment managers investing in medium and small capitalization domestic common stocks, providing some capital appreciation through growth-oriented stocks Highest Accessing Your Account Freescale offers two ways to access your 401(k) Retirement Savings Plan account via telephone using the interactive telephone system, and online using the Your Benefits Resources TM (YBR) Web site. Getting Information via the interactive telephone system Freescale s computerized, interactive telephone system includes an automated voice response system as well as access to Customer Service Representatives who can answer your questions and assist you in performing transactions. The interactive system helps you get 401(k) Retirement Savings Plan information and make elections at the touch of a button. The first time you call the interactive telephone system, you are asked to change your Personal Identification Number (PIN) to one of your choice. Changing your PIN authorizes future changes and initiation of transactions through the telephone system. The interactive telephone system is confidential, easy to use and available 24 hours every day. Just call 888-FSL-BENS and follow the step-by-step directions. 84 Savings and Wealth

91 your benefits resources (YBR) web site Visit the YBR Web site to manage your 401(k) Retirement Savings Plan online 24 hours a day. This easy-to-use site is loaded with your balance and benefit information, allowing you to make adjustments when it is most convenient for you. There are several layers of security built into the YBR site to protect your personal data. Any information submitted through the site is encoded with Secured Socket Layer encryption. This means that even if the information you submit is somehow intercepted by a third party on its way to our servers, it is scrambled and virtually impossible to decode. The first time you visit the YBR site, click Register as a New User to create your individual user ID and password. If you have already created your individual user ID and password, then you may immediately access the site to review important information about your Freescale 401(k) Retirement Savings Plan. To access the YBR site, visit freescale.com/rewards. What You Can Do Through both the interactive telephone system and the YBR site, you may check: Your account balance; Your investment elections; Amount available for full or partial distribution; and Fund descriptions and performance. You may request the following transactions for your account: Transfer existing account balances among funds or realign your entire account; and Create benefit projection scenarios for your account, provided you are not in payment status. To receive Plan Investment Information To comply with Section 404(c) of ERISA and the 404(c) Regulations, the Plan names the person who holds the position of Director of Global Rewards from time to time as the fiduciary ("404(c) Fiduciary") who is responsible for providing Plan investment information upon request of a Plan participant or beneficiary. The address of the 404(c) Fiduciary who is responsible for providing Plan investment information is: Freescale Rewards Customer Service Center P.O. Box 1407 Lincolnshire, Illinois In addition to the material you receive from the Plan, you have the right to request additional information to help you decide which investment options to select. The information you may request includes: A description of the annual operating expenses of each investment alternative (for example, investment management fees, administrative fees, etc.) which reduce your rate of return, and the aggregate amount of expenses expressed as a percentage of average net assets of the investment alternative. Copies of any prospectuses, financial statements and reports, and any other materials relating to the investment alternatives, to the extent this information is provided to the Plan. With respect to each investment alternative, a list of assets comprising the portfolio, the value of each asset (or the proportion of the investment alternative which it comprises); and with respect to each asset which is a fixed rate investment contract issued by a bank, savings and loan association or insurance company, the name of the issuer of the contract, the term and the rate of return on the contract. Information concerning the value of shares or units in the investment alternatives, and information about the past and current investment performance, net of expenses, on a reasonable and consistent basis. Information concerning the value of shares or units in the investment alternative held in your account. How Your Account Is Paid If the vested value of your 401(k) Retirement Savings Plan account is $1,000 or less (determined without regard to any amount in your rollover account) when payments begin, you automatically receive it as a lump sum. You may take the total amount in cash, or you may roll it over into a traditional Individual Retirement Account (IRA) or another eligible plan. If the vested value of your account is more than $1,000, you have several payment options depending on when you began working at Freescale and when your employment ends. If you elect a partial distribution or installments, the balance of your account (after each payment) remains invested in the funds you have elected. You have the same investment options as active employees. Investment returns may increase or decrease the amount of your future payments. Call Rewards Customer Service at 888-FSL- BENS. To access YBR, visit rewards. Savings and Wealth 85

92 your payment options option reason for which option can be elected description of option You can request a payment option by calling the interactive telephone system. A Customer Service Representative can assist you with a rollover and other payment options. Lump Sum Direct Rollover Partial Distribution You may choose this option no matter why your employment ends. You may choose this option no matter why your employment ends. You may choose this option no matter why your employment ends. Single payment of vested amount of your account. This option is automatic unless you choose another option. Transfer by Freescale of all or a portion of your account to another qualified employer plan, traditional IRA, Section 403(b) annuity or Section 457 governmental plan. A single payment of part of your account, but at least $5,000. No more than one partial distribution in any three-month period. Installments You may choose this option if you were hired before 1996 and your employment ends due to retirement at age 55 or older. Payments made once a year over a certain number of years not exceeding your life expectancy. Upon your death, your beneficiary receives the remainder of your account in one single-sum payment. Combination You may choose this option no matter why your employment ends. Various combinations of the options for which you are eligible. When Payments Begin Distributions are processed and mailed weekly. For example, your account balance is normally determined as of the close of business on Tuesday for requests confirmed before market close on that day and normally mailed on Thursday. You request a payment option by calling Freescale Rewards Customer Service. A Customer Service Representative can assist you with a rollover and other payment options. Benefit payments may begin after your termination of employment with Freescale. Your date of termination is the last day you work. If you are on a layoff or leave of absence, your termination date is the date your layoff or leave is ended by you or by Freescale without your returning to work. When Your Vested Account Balance Is More than $1,000 If You Request a Payment Option You receive payment along with an account statement confirming the account value and payment option. Any payment due to you (or your beneficiary) begins to be paid as soon as administratively possible after: Your employment with Freescale ends or you are determined to have become totally and permanently disabled; and Your request for payment is confirmed after speaking with a Customer Service Representative or after you request it through the interactive telephone system. You do not have to speak to a Customer Service Representative for a lump-sum distribution paid in cash. If You Do Not Request a Payment Option Your vested balance is held in the Plan until you request a method of payment. Once you reach age 70 1 /2 and have terminated employment with Freescale, the Plan requires that you begin taking distributions by April 1 of the following year. You have the same payment options described above. The payment option you choose applies to all subsequent payments. Information regarding your options is sent to your last address on file in January following the year in which you turn age 70 1 /2. When Your Vested Account Balance Is $1,000 or Less (without rollovers) Freescale mails (to your last known address) a lump-sum payment of the total amount due to you. A distribution statement is sent documenting the distribution and the taxation. If you prefer to roll over your 401(k) Retirement Savings Plan distribution, your request must be confirmed by Freescale Rewards Customer Service within 30 days of your last day worked; otherwise, you receive a lump-sum payment within 60 days of your last day worked. Whether your account balance is greater or less than $1,000 is determined without regard to any amounts in your rollover account. 86 Savings and Wealth

93 Survivor Benefits In case of your death, your entire vested account balance (less any outstanding loan balance) is payable to the beneficiary or beneficiaries you have designated with the Plan. If you are married, your account is paid to your surviving spouse unless you designated another beneficiary and your spouse consented in a notarized writing to the designation. You may revoke or change your designation at any time before you die. If you are married and you change your designation to name a beneficiary other than your spouse, you must have your spouse s written, notarized consent for the designation to be effective. You should review your designation of beneficiary if your marital status changes. If you marry after you file a designation of beneficiary, your designation becomes invalid to the extent you need spousal consent but do not have it. If you have designated your spouse as beneficiary and you later are separated or divorced, your designation remains effective unless you change it online or by calling Freescale Rewards Customer Service at 888-FSL-BENS. If there is no beneficiary designation on file, or if it is invalid (for example, you did not complete a new designation when you got married), benefits are paid: To your surviving spouse/domestic partner; if none, then To your children (in equal shares if more than one); if none, then To your parents (in equal shares if both parents survive you); or if none, then To your estate. If your surviving spouse is your beneficiary, he or she may request payment of your account balance immediately, or at any time before December 31 of the year in which you would have turned 70. While your account balance remains in the Plan, your spouse or other beneficiary is entitled to direct how the account is invested, as described on pages Your spouse may elect to receive his or her survivor benefit in the form of a lump sum or a direct rollover. A nonspouse or same-sex spouse beneficiary may choose an immediate lump-sum distribution or may defer the distribution until no later than December 31 of the fifth year after your death. If your account balance is $1,000 or less at the time of your death (disregarding rollover amounts), the account balance is distributed in a lump sum at the end of the month following the month in which you died. You should review your designation of beneficiary if your marital status changes. Savings and Wealth 87

94 Conduit IRAs are established solely to receive distributions from another qualified plan. More Facts About the 401(k) Retirement Savings Plan rollovers from the Motorola Pension Plan The 401(k) Retirement Savings Plan accepts rollovers of lump-sum benefits from the Motorola Pension Plan for former participants. You must have a balance in the 401(k) Retirement Savings Plan in order to roll over amounts from the Portable Pension Plan (or from the Traditional Pension Plan for lump-sum distributions of benefits valued at $1,000 or less). You must first request a benefit commencement package for the Pension Plan from Motorola s TIME System at You may then elect a direct rollover on the request form without additional paperwork. Speak with a Customer Service Representative for more information on this rollover feature. Loans From Your Account When your employment ends, you cannot continue to make loan payments. If you do not repay your loan within 30 days of the last day you work at Freescale, the outstanding loan balance plus accrued interest is automatically considered taxable income. You should consider repaying your Plan loan before you request distribution, or within 30 days of your last day worked, to avoid taxes if you plan to roll over your Plan benefit. You may repay the loan balance by calling Freescale Rewards Customer Service at 888-FSL-BENS and requesting a loan payoff coupon. Rollovers From Other Plans and IRAs The 401(k) Retirement Savings Plan accepts rollovers from other companies plans (which qualify under Section 401(a) of the Internal Revenue Code) and from conduit Individual Retirement Accounts (IRAs) or annuities. The Plan also accepts rollovers from traditional IRAs, Section 403(b) annuities and Section 457 governmental plans. The Plan does not accept stock or other noncash property or any after-tax amounts as part of a rollover. The distribution must be by check. You must first request a Rollover Form from Freescale Rewards Customer Service. The Rollover Form should be completed by you and the IRA financial institution or by the administrator of your former employer s qualified plan. Once the rollover request is approved, you are mailed a rollover coupon. When you send the check from the former qualified plan or IRA, the rollover coupon must accompany it. Keeping Your Records Current It is very important that you keep your Human Resources records up to date. Your mailing address and beneficiary designation in particular need to be on file in case benefit payments need to be sent to you or your beneficiary. Qualified Domestic Relations Order (QDRO) A Qualified Domestic Relations Order is a court order, judgment or decree in connection with alimony, marital property rights or child support requirements. If a Domestic Relations Order complies with the Retirement Equity Act of 1984, as amended, Freescale recognizes it as a Qualified Domestic Relations Order and makes payments to the alternate payee (your spouse, former spouse, child or other dependent) as specified in the Qualified Domestic Relations Order. You may contact Freescale Rewards Customer Service at 888-FSL-BENS for details. From abroad, call Savings and Wealth

95 Before you take money from the 401(k) Retirement Savings Plan you should know which U.S. federal tax rules apply to your payment. The tax treatment of payments depends on who receives payment, the reason payment is taken, and in some cases, the age of the payment recipient. The chart below tells you which U.S. tax regulations or special tax treatment may apply in your circumstances. The chart is followed by a detailed explanation of payment options, rollovers, income tax withholding, and special rules for surviving spouses, alternate payees and other beneficiaries. IMPORTANT U.S. TAX INFORMATION important U.S. tax information if you are whether you may roll over your payment Special tax treatments that may apply to your lump sum payment: Capital Gains 10-Year Averaging 10% Additional Income Tax (before age 59 1 /2) Employee Yes Yes* Yes* Yes** Surviving Spouse Yes Yes* Yes* No Alternate Payee, Spouse or Former Spouse (QDRO Beneficiary) Yes Yes* Yes* No Other Beneficiary No Yes* Yes* No *Applies only if you (retiree) were born before January 1, **Applies only if you are less than 59 1/2 when you receive payment, but does not apply if you separate from Freescale during or after the year you reach age 55. Summary In addition to describing the U.S. federal tax treatment of distributions, this section explains how you can continue to defer U.S. federal income tax on your retirement savings in the 401(k) Retirement Savings Plan. All or part of any payments you receive from the Plan may be eligible for rollover to a traditional IRA or another eligible plan. Your payment cannot be rolled over to a Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings Account (formerly known as an education IRA). An "eligible plan" includes a plan qualified under Section 401(a) of the Internal Revenue Code, including a 401(k) plan, profit-sharing plan, defined benefit plan, stock bonus plan, employee stock purchase plan, a money purchase plan, a section 403(a) annuity plan, a section 403(b) tax-sheltered annuity, and an eligible section 457(b) plan maintained by a governmental employer (a "governmental 457 plan ). An eligible plan is not legally required to accept a rollover. Before you decide to roll over your payment to another employer plan, you should find out whether the plan accepts rollovers, and if so, the types of distributions it accepts as a rollover. You should also find out about any documents that are required to be completed before the receiving plan will accept a rollover. Even if a plan accepts rollovers, it might not accept rollovers of certain types of distributions, such as aftertax amounts. If this is the case, and your distribution includes after-tax amounts, you may wish instead to roll your distribution over to a traditional IRA or split your rollover amount between the employer plan in which you will participate and a traditional IRA. If an employer plan accepts your rollover, the plan may restrict subsequent distributions of the rollover amount or may require your spouse s consent for any subsequent distribution. A subsequent distribution from the plan that accepts your rollover may also be subject to different tax treatment than distributions from Freescale s plans. Check with the administrator of the plan that is to receive your rollover prior to making the rollover. Remember, this information is only a summary. More information is available from the IRS and professional tax advisors. Savings and Wealth 89

96 To speak with a Customer Service Representative or use the interactive telephone system, call Freescale Rewards Customer Service at 888-FSL-BENS. From abroad, call A payment from the Plan that is eligible for "rollover" can be taken in two ways. You can have all or any portion of your payment either: 1. Paid in a "direct rollover" to a traditional IRA or, if you choose, to another eligible plan that will accept it; or 2. Paid to you. If you choose a direct rollover: Your payment is not taxed in the current year, and no income tax is withheld. Your payment is made directly to your traditional IRA or, if you choose, to another qualified employer plan that accepts your rollover. Your benefit cannot be rolled over to a Roth IRA, SIMPLE IRA or Coverdell Education Savings Account, because these are not traditional IRAs. Your payment is taxed later when you take it out of the IRA or the other eligible plan. Depending on the type of plan, the later distribution may be subject to different tax treatment than it would be if you received a taxable distribution from this Plan. If you choose to have a Plan payment that is eligible for rollover paid to you: You receive only 80 percent of the payment because the Plan is required to withhold 20 percent of the taxable amount of the payment and send it to the IRS as income tax withholding to be credited against your taxes. Your payment is taxed in the current year unless you roll it over. You may be able to use special tax rules that could reduce the tax you owe. However, if you receive the payment before age 59 1 /2 you may also have to pay an additional 10 percent tax. You can roll over the payment by paying it to your traditional IRA or to another eligible plan that accepts your rollover within 60 days of receiving the payment. The amount rolled over is not taxed until you take it out of the IRA or employer plan. If you want to roll over 100 percent of the payment to a traditional IRA or an eligible plan, you must find other money to replace the 20 percent that was withheld. If you roll over only the 80 percent that you received, you are taxed on the 20 percent that is not rolled over. Payments That Can and Cannot Be Rolled Over Payments from the Plan may be eligible rollover distributions. This means that they can be rolled over to a traditional IRA or to another eligible plan that accepts rollovers. Payments from a Plan cannot be rolled over to a Roth IRA, a SIMPLE IRA or a Coverdell Education Savings Account. The Rewards Customer Service Center should be able to tell you what portion of your payment is an eligible rollover distribution. Non-Taxable Payments After-tax employee contributions generally are contributions you make from your own pay that are already taxed. Distributions that include after-tax contributions may be rolled directly into a traditional IRA or into another employer plan qualified under Section 401(a) or 403(a) that accepts after-tax contributions and separately accounts for them, but they cannot be paid to you first and then rolled over. Also, you cannot first roll over after-tax contributions to a traditional IRA and then roll over that amount into an employer plan. You cannot roll over after-tax contributions to a governmental 457 plan. Freescale Rewards Customer Service should be able to tell you how much of your payment is the taxable portion and how much (if any) is the after-tax employee contribution portion. It is your obligation to keep track of the after-tax contributions you roll over to a traditional IRA and report them to the IRS on the applicable forms. This will make it possible to determine the nontaxable amount of any future distributions from the traditional IRA. The following types of payment cannot be rolled over: Payments Spread over Long Periods You cannot roll over a payment if it is part of a series of equal (or almost equal) payments that are made at least once a year and will last for: Your lifetime (or life expectancy); Your lifetime and your beneficiary s lifetime (or life expectancies); or A period of 10 years or more. 90 Savings and Wealth

97 Required Minimum Payments Beginning in the year you reach age 70 1 /2 or retire, whichever is later, a certain portion of your payment cannot be rolled over because it is a "required minimum payment" that must be paid to you. Corrective Distributions A distribution that is made to correct a failed nondiscrimination test or because legal limits on certain contributions were exceeded cannot be rolled over. Loans Treated as Distributions The amount of a plan loan that becomes a taxable deemed distribution because of a default cannot be rolled over. However, a loan offset amount is eligible for rollover, as discussed below. Ask the administrator of this plan if distribution of your loan qualifies for rollover treatment. Hardship Distributions A hardship distribution from the 401(k) Retirement Savings Plan is not eligible for rollover. Direct Rollover You can choose a direct rollover of all or any portion of your payment that is an eligible rollover distribution, as described above. In a direct rollover, the eligible rollover distribution is paid directly from the Plan to a traditional IRA or other eligible employer plan that accepts rollovers. If you choose a direct rollover, you are not taxed on a payment until you later take it out of the IRA or the other eligible employer plan. In addition, no federal income tax withholding is required for any portion of your Plan benefits for which you choose a direct rollover. Direct Rollover to a traditional IRA You can open a traditional IRA to receive a direct rollover. If you choose to have your payment made directly to a traditional IRA, contact an IRA sponsor (usually a financial institution) to find out how to have your payment made in a direct rollover to a traditional IRA at that institution. If you are unsure of how to invest your money, you can temporarily establish a traditional IRA to receive the payment. However, in choosing a traditional IRA, you may wish to consider whether the traditional IRA you choose will allow you to move all or part of your payment to another traditional IRA at a later date, without penalties or other limitations. Direct Rollover to a Plan If your new employer has a qualified plan and you want a direct rollover to that plan, ask the administrator of that plan whether it will accept a rollover. For distributions on or after January 1, 2002, this can include Section 403(b) annuities and Section 457 governmental plans. An employer plan is not legally required to accept a rollover. If your new employer s plan does not accept a rollover, you can choose a direct rollover to a traditional IRA. If the employer plan accepts your rollover, the plan may provide restrictions on the circumstances under which you may later receive a distribution of the rollover amount or may require spousal consent to any subsequent distribution. Check with the administrator of that plan before making your decision. Change in Tax Treatment Resulting from a Direct Rollover The tax treatment of any payment from the eligible employer plan or traditional IRA receiving your direct rollover might be different than if you received your benefit in a taxable distribution directly from the Plan. For example, if you were born before January 1, 1936, you might be entitled to 10-year averaging or capital gains treatment, as explained below. However, if you have your benefit rolled over to a Section 403(b) annuity, a governmental 457 plan, or a traditional IRA in a direct rollover, your benefit will no longer be eligible for that special treatment. See the sections below entitled "Additional 10 Percent Tax if You Are Under Age 59 1 /2 " and "Special Tax Treatment." Direct Rollover of a Series of Payments If you receive eligible rollover distributions that are paid in a series for less than 10 years, your choice to make or not make a direct rollover for a payment applies to all later payments in the series until you change your election. You are free to change your election for any later payment in the series. Savings and Wealth 91

98 Taxes on a Payment Made to You If your Plan benefit can be rolled over as described on pages and you have the payment made to you, it is subject to 20 percent income tax withholding. The payment is taxed in the year you receive it unless, within 60 days, you roll it over to a traditional IRA or another eligible plan that accepts rollovers. If you do not roll it over, special tax rules may apply. Mandatory Income Tax Withholding If any portion of the payment to you is an eligible rollover distribution, and you do not elect a direct rollover, the Plan is required by law to withhold 20 percent of the taxable amount. This amount is sent to the IRS as federal income tax withholding. Voluntary Income Tax Withholding If any portion of your payment is not an eligible rollover distribution but is taxable, the mandatory withholding rules described above do not apply. In this case, you may choose not to have withholding apply to that portion. The Plan Administrator can provide you the appropriate election form. Example If your eligible rollover distribution is $10,000, only $8,000 will be paid to you because the Plan must withhold $2,000 as income tax. However, when you prepare your income tax return for the year, you will report the full $10,000 as a payment from the Plan. You will report the $2,000 as tax withheld, and it will be credited against any income tax you owe for that year. Example Your eligible rollover distribution is $10,000 and you choose to have it paid to you. You will receive $8,000 and $2,000 will be sent to the IRS as income tax withholding. Within 60 days after receiving the $8,000 you may roll over the entire $10,000 to a traditional IRA or eligible plan. See IRS Form 5329 for more information on the additional 10 percent tax. 60-Day Rollover Option If you have an eligible rollover distribution paid to you, you can still decide to roll over all or part of it to a traditional IRA or another eligible plan that accepts rollovers. If you decide to roll over, you must contribute the amount of the payment you received to a traditional IRA or another eligible plan within 60 days after you receive the payment. The portion of your payment that is rolled over will not be taxed until you take it out of the IRA or the other eligible plan. You can roll over up to 100 percent of the eligible rollover distribution, including an amount equal to the 20 percent that was withheld. If you choose to roll over 100 percent, you must find other money within the 60- day period to contribute to the traditional IRA or the other eligible plan to replace the 20 percent that was withheld. On the other hand, if you roll over only the 80 percent that you received, you will be taxed on the 20 percent that was withheld. Additional 10 percent Tax if You Are Under Age 59 1/2 If you receive a payment before you reach age 59 1 /2 and you do not roll it over, then, in addition to the regular income tax, you may have to pay an extra tax equal to 10 percent of the taxable portion of the payment. The additional 10 percent tax generally does not apply to To do this, you roll over the $8,000 you received from the Plan, and you will have have to find $2,000 from other sources (your savings, a loan, etc.). In this case, the entire $10,000 is not taxed until you take it out of the IRA or eligible plan. If you roll over the entire $10,000, when you file your income tax return you may get a refund of part or all of the $2,000 withheld. If, on the other hand, you roll over only $8,000, the $2,000 you did not roll over is taxed in the year it was withheld. When you file your income tax return, you may get a refund of part of the $2,000 withheld. (However, any refund is likely to be larger if you roll over the entire $10,000.) See IRS Form 5329 for more information on the additional 10 percent tax. your payment if it is: Paid to you because you separate from Freescale during or after the year you reach age 55; Paid because you retire due to disability; Paid to you as equal (or almost equal) payments over your life or life expectancy (or your and your beneficiary s lives or life expectancies); 92 Savings and Wealth

99 Used to pay certain deductible medical expenses; Paid directly to the government to satisfy a federal tax levy; or Paid to an alternate payee under a Qualified Domestic Relations Order. The additional 10 percent tax will normally not apply to distributions from a governmental 457 plan, except to the extent the distribution is attributable to an amount you rolled over to that plan (adjusted for investment returns) from the Plan. Any amount rolled over from a governmental 457 plan to the Freescale 401(k) Retirement Savings Plan will become subject to the additional 10 percent tax if it is distributed to you before you reach age 59 1 /2, unless one of the exceptions applies. Special Tax Treatment If your eligible rollover distribution is not rolled over, it is taxed in the U.S. in the year you receive it. However, if the payment qualifies as a "lump-sum distribution," it may be eligible for special tax treatment. A lump-sum distribution is a payment, within one year, of your entire balance under the Plan (and certain other similar plans of the employer) that is payable to you after you have reached age 59 1 /2 or because you have separated from service with Freescale. For a payment to qualify as a lump-sum distribution, you must have been a participant in the Plan for at least five years before the year in which you received the distribution. The special tax treatment for lump-sum distributions is as follows: 10-Year Averaging If You Were Born Before January 1, 1936 If you receive a lump-sum distribution and you were born before January 1, 1936, you can make a one-time election to figure the tax on the payment by using 10-year averaging (using 1986 tax rates). Ten-year averaging often reduces the tax you owe. Capital Gains Treatment If You Were Born Before January 1, 1936 In addition, if you receive a lump-sum distribution and you were born before January 1, 1936, and if you were a participant in the Plan before 1974, you may elect to have the part of your payment that is attributable to your pre-1974 participation in the Plan taxed as longterm capital gains at a rate of 20 percent. There are other limits on this special tax treatment for lump-sum distributions. For example, you can generally elect this special tax treatment only once in your lifetime, and the election applies to all lump-sum distributions that you receive in that same year. If you have previously rolled over a payment from the Plan (or certain other similar plans of the employer), you cannot use this special tax treatment for later payments from the Plan. You may not elect this special tax treatment if you rolled amounts into this Plan from a 403(b) taxsheltered annuity contract or from an IRA not originally attributable to a qualified employer plan. If you roll over your payment to a traditional IRA, governmental 457 or 403(b) annuity, you will not be able to use this special tax treatment for later payments from the IRA plan or annuity. Also, if you roll over only a portion of your payment to an IRA, governmental 457 plan or 403(b) annuity, this special tax treatment is not available for the rest of the payment. Repayment of Plan Loans If you end your employment and have an outstanding loan from your 401(k) Retirement Savings account, the Plan Administrator may reduce (or "offset") your balance in the Plan by the amount of the loan you have not repaid. The amount of your loan offset is treated as a distribution to you at the time of the offset and is taxed unless you roll over an amount equal to the amount of your loan offset to another eligible plan or a traditional IRA within 60 days of the date of the offset. If the amount of your loan offset is the only amount you receive or are treated as having received, no amount is withheld from it. If you receive other payments of cash or property from the Plan, the 20 percent withholding amount will be based on the entire amount paid to you, including the amount of the loan repayment. The amount withheld will be limited to the amount of other cash or property paid to you (other than any employer securities). The amount of a defaulted plan loan that is deemed a taxable distribution cannot be rolled over. See IRS Form 4972 for additional information on lump-sum distributions and how you elect the special tax treatment. Savings and Wealth 93

100 Surviving Spouses, Alternate Payees and Other Beneficiaries In general, the rules summarized in this section that apply to Freescale employees/retirees also apply to payments to surviving spouses or former spouses who are "alternate payees" under a Qualified Domestic Relations Order (QDRO), which is an order issued by a court, usually in connection with a divorce or legal separation. Some of these rules also apply to a deceased Freescale employee s beneficiary who is not a spouse. However, there are some exceptions for payments to surviving spouses, alternate payees and other beneficiaries that should be mentioned. If You Are a Surviving Spouse or Alternate Payee You may choose to have an eligible rollover distribution paid in a direct rollover to a traditional IRA or other eligible plan or paid to you. If you have it paid to you, you can keep it or roll it over yourself to a traditional IRA or to another eligible employer plan that accepts rollovers. If you are a beneficiary other than the surviving spouse, or an alternate payee spouse or former spouse, you cannot choose a direct rollover and you cannot roll over the payment yourself. If You Are a Surviving Spouse, an Alternate Payee or Another Beneficiary Your payment is generally not subject to the additional 10 percent tax described on pages 92 93, even if you are younger than age 59 1 /2. You may be able to use the special tax treatment for lump-sum distributions. If you receive a payment because of the employee s death, you may be able to treat the payment as a lump-sum distribution if the employee met the appropriate age requirements, whether or not the employee had five years of participation in the Plan. Where To Go For More Information This notice summarizes only the U.S. federal (not state or local) tax rules that may apply to your payment. The rules described in this section are complex and contain many conditions and exceptions that are not included in this book. Therefore, you may want to consult a professional tax advisor before you take a payment of your benefits from the Plan. You can find more specific information on the tax treatment of payments from qualified retirement plans in IRS Publication 575: Pension and Annuity Income, and IRS Publication 590: Individual Retirement Arrangements. These publications are available from your local IRS office, on the IRS s Web site at irs.gov, or by calling (within the U.S.). 94 Savings and Wealth

101 Rewards. General Administration General Administration Information HIPAA Privacy Notice Definitions Contact Information This section provides guidance on procedures for filing your claims and appeals for your benefits, your ERISA rights and other important Plan information. It also includes definitions of commonly used terms and phrases and a convenient list of telephone numbers, Web sites and other resources available for additional benefit program information. Keep this book in a convenient place, and refer to it often as your source of information for taking full advantage of the benefits available under the Plans. General Administration 95