A closer look at your new medical plan options

Transcription

1 We re Making Changes for 2012 A closer look at your new medical plan options Be ready to make your best choice during Annual Enrollment: Tuesday, October 4, through Tuesday, October 25 Powering you to live well.

2 You have new options for your medical coverage that starts January 1, Now is the time to explore which medical plan option best fits your needs. To prepare: Learn about the benefits available under your two 2012 medical plan options. Review the examples in this brochure and explore which medical plan option fits your needs. Use the online medical plan option comparison tool, Choose My Best Plan Option (Plan Finder), available on EatonBenefits.com. Explore what your estimated out-of-pocket costs would be under both medical plan options. The new medical plan options have a lot in common with the existing options. They: Offer prescription drug coverage. Cover preventive care services at 100%. Pay benefits for the same types of care that are covered today by Eaton s medical plan options. Protect you from large medical expenses. Eaton s annual benefits enrollment period is Tuesday, October 4, through Tuesday, October 25, 2011.

3 1 For 2012, You Will Have a Choice of Two Medical Options Healthcare 80 This traditional option pays 100% for preventive care (with no deductible or copay). For some services, like visits to a doctor s office, you pay a copay and Eaton pays the rest. For other types of care, Eaton pays 80% of covered expenses after you pay the annual deductible. Your monthly cost for coverage is higher for this option than for the Consumer Health 90 option. With Healthcare 80, you will be able to participate in the Health Care Reimbursement Account (HCRA) to pay for qualified medical expenses with tax-free dollars. This option replaces, and is similar to, the Standard 80/20 option currently available. Why choose it You value the predictability of a more traditional plan option with set copays for some services and a lower deductible. In exchange for predictability, you are willing to pay more each month for this coverage, and potentially more out of pocket for your medical expenses for the entire year. If you want to use tax-free dollars for out-of-pocket medical expenses, you re comfortable with a Health Care Reimbursement Account with restrictions such as the use it by the end of the year or lose it rule. 2 Consumer Health 90 This new Consumer Health 90 option has a higher deductible but lower monthly contributions than the traditional plan option. This option offers you the opportunity to open a Health Savings Account, or HSA. Eaton contributes tax-free money to your HSA. You can make tax-free contributions, too. You decide when to use the HSA to pay for eligible out-of-pocket health care expenses. You can use it for immediate expenses, or you can invest your account and let your balance grow for later. The account is yours to keep even if you leave Eaton. Eaton pays 100% (with no deductible) for preventive care. For other types of care, Eaton pays 90% of covered expenses after you pay the annual deductible. This option replaces the High 90/10 option currently available. Why choose it You want to save tax-free dollars that you can use for health care expenses, and you want to decide how and when you use this money, now or later. You discover, after using the comparison tools for both options, that your outof-pocket costs for the Consumer Health option is lower. If your out-of-pocket health care expenses are more than what Eaton contributes to your HSA, you are prepared to pay up to the amount of your deductible before Eaton starts to pay benefits. Plus, your costs are limited by Eaton s out-of-pocket maximums, and your monthly contributions are lower.

4 How Your Medical Options Compare Healthcare 80 Consumer Health 90 Health Savings Account (HSA): Tax-Free Money From Eaton N/A Employee Only Coverage: $400 Employee + Others Coverage: $800 Annual Deductible: You Pay Individual: $750 Maximum of $1,500 per family $1,500 Employee Only Coverage $3,000 Employee + Others Coverage Examples of Covered Services: You Pay Preventive Care Primary Care Physician Office Visit Specialist Office Visit No cost to you (100% coverage for in-network services with no deductible) $25 copay per visit 100% up to deductible, then 10% $25 copay per visit 100% up to deductible, then 10% Inpatient Hospital $500 copay per admission, then 20% 100% up to deductible, then 10% Emergency Room $150 copay per visit for facility charges and100% up to deductible, then 20% for the ancillary ER charges 100% up to deductible, then 10% Prescription Drugs: You Pay Generic 10%, no deductible Select preventive medications: No cost to you. All others: 100% up to deductible, then 10% Brand Formulary 10%, no deductible 100% up to deductible, then 10% Brand Non-Formulary 10%, no deductible 100% up to deductible, then 10% Annual Out-of-Pocket Maximum: What You ll Pay for Eligible Charges Individual: $3,000 Maximum of $6,000 per family Includes your deductible and coinsurance, but excludes your copays, which will continue. $3,500 Employee Only Coverage $7,000 Employee + Others Coverage Includes all out-of-pocket costs. Quick Facts About the Medical Options The deductibles and out-of-pocket maximums work differently under the the Healthcare 80 and the Consumer Health 90 options. Under the Healthcare 80 option, Eaton will start to pay benefits for a family member once that member reaches the individual deductible amount, and for the entire family when the family deductible is met. A single family member cannot meet the entire family deductible. Similarly, with the out-of-pocket maximum amount, Eaton will pay 100% of eligible expenses for the remainder of the year, excluding certain copays, once a family member reaches the individual annual out-of-pocket maximum, or once the family out-ofpocket maximum is met by all family members. Under the Consumer Health 90 option, you must reach the family deductible before Eaton will start to pay benefits for any family member. The deductible may be met by one or several covered family members. Likewise, the annual out-of-pocket maximum may be met by one or several covered family members. Once it s met, Eaton will pay 100% of eligible expenses for all covered family members for the rest of the year. Both medical plan options include prescription drug coverage. But the Healthcare 80 and the Consumer Health 90 options pay benefits a little differently. With Healthcare 80, prescriptions are not subject to a deductible. With Consumer Health 90, you pay 100% of the cost until you reach the deductible. Then the plan pays 90% of the costs, with you paying 10%. Once you reach the out-of-pocket maximum, both plan options pay 100% of the cost of prescription drug coverage. (For more details, look in the 2012 Medical Plan Option Choices Library on EatonBenefits.com under Eaton Learn More Links.)

5 Your Cost for Coverage These are the monthly costs for medical coverage in 2012, based on annual base pay and eligibility for Healthy Incentives credits, for two coverage levels: Employee Only and Employee + Spouse/Domestic Partner + Child(ren), which is listed below as Family. Go to the 2012 Medical Plan Option Choices Library under Eaton Learn More Links at EatonBenefits.com to check the costs for the Employee + Spouse/Domestic Partner, or Employee + Child(ren) coverage levels. Healthcare 80 Consumer Health 90 Sample Coverage Levels No Healthy Incentives Credits Maximum Healthy Incentives Credits No Healthy Incentives Credits Maximum Healthy Incentives Credits Your Annual Base Pay: Under $75,000 Employee Only $99 $49 $90 $40 Family* $336 $236 $309 $209 Your Annual Base Pay: $75,000 $149,999 Employee Only $107 $57 $98 $48 Family* $364 $264 $337 $237 Your Annual Base Pay: $150,000 or more Employee Only $116 $66 $107 $57 Family* $391 $291 $364 $264 * Family coverage in this chart refers to Employee + Spouse/Domestic Partner + Child(ren). How to Qualify for Healthy Incentives Credits Healthy Incentives credits can be earned by employees and their spouses/domestic partners who are covered by Eaton s medical plan. To earn the Know Your Numbers Credit worth $25 per month: You must participate in a health screening event in your host country, or go to your doctor to get your numbers. Fill in your numbers on the special physician form and fax it to Quest Diagnostics, AND you ll need to complete the Health Assessment by October 25, You can do this by visiting EatonBenefits.com or calling ActiveHealth at (If you live in China, call ) To earn the Tobacco Free Credit worth $25 per month, by October 25, 2011: You must certify that you have been tobacco free for at least four months by visiting EatonBenefits.com (click Non-User Certification at the bottom of the Healthy Incentives page) or by calling ActiveHealth at (If you live in China, call ) OR if you can t certify that you have been tobacco free, you can earn the credit by enrolling in the Eaton Tobacco Cessation program by October 25, 2011, and then completing four sessions by February 1, Call for information. (Both you and your spouse/domestic partner can earn monthly credits if you are both covered by the Eaton medical plan.) Look for detailed instructions coming soon in the mail.

6 Explore Which Medical Plan Option Is Right for You When you think about it, choosing the medical plan option that best fits your needs requires the same attention you would give to any major purchase. That means doing research and running the numbers. A good way to start is by comparing your potential out-of-pocket costs under each of your 2012 medical plan options. Here s how: Call CIGNA to obtain a summary of your health care usage for the past 12 or 18 months. You can use that information to estimate your usage for Then, go to EatonBenefits.com and click on Choose My Best Plan Option (Plan Finder) in the list on the left side of the screen from early September to October 4. (Also, find the link during the annual benefit enrollment period on Fidelity NetBenefits.) Fill in your numbers, adjusting for anticipated changes in your needs. You can even test different scenarios, assuming higher or lower costs. The comparison at the end will offer guidance about the medical plan option that s best for you. A sample of what you ll find in Choose My Best Plan Option (Plan Finder)

7 What Works for Others: A Sampling As these examples show, one size definitely doesn t fit all when it comes to choosing a medical option. And going with the most expensive option or the lowestcost option may not be the right answer either. It s all about finding the right balance between what you pay to have the coverage (the contributions you make each month) and what you pay when you receive care. These all assume that the employees have earned all Healthy Incentives credits to reduce contributions. Sara She s 27 years old, single and has no children. She s in good health and typically sees the doctor only a couple of times each year, including for her annual physical. Every once in a while, Sara has to take a prescription medication. Service Assumptions Entered Using Online Medical Comparison Tool, Choose My Best Plan Option (Plan Finder). These are assumptions based on past usage and anticipated needs. 1 annual physical for an adult 2 primary-care office visits 2 30-day generic prescription drugs Estimated Bottom-Line Cost Under Each Medical Plan Option Annual cost for coverage, plus out-of-pocket costs for care. Healthcare 80: $643 Consumer Health 90: $366 Sara is a light user of medical services. Consumer Health 90 is the best buy because she saves with a low contribution for coverage.

8 Javier Karen Ted He s 36 years old, and his wife just had a baby. His wife is fairly healthy and gets yearly preventive care, and their baby needs normal infant checkups and a couple of office visits for ear infections and other baby illnesses. Javier also gets his yearly physical, but he has seasonal allergies and occasionally visits the doctor. 2 annual physicals for adults 1 annual physical for a child 4 primary-care office visits 4 30-day generic prescription drugs Healthcare 80: $2,943 Consumer Health 90: $2,280 She s 44 years old and has three school-age children. Her husband has high blood pressure and takes medication for it. Two of her children go to the doctor for preventive care and a few illnesses during the year. Her other child plays several sports and is injured at least once each season. Sometimes those injuries require a trip to the ER. Karen makes sure to squeeze in her yearly checkup, too. 1 annual physical for an adult 2 annual physicals for children 3 primary-care office visits for children 2 specialist office visits for children 4 physical therapy sessions for a child 1 emergency room visit for a child 2 30-day generic prescription drugs for children 2 specialist office visits for an adult 4 brand-name prescription drugs via mail for an adult Healthcare 80: $3,837 Consumer Health 90: $4,762 He s 52 years old, single and has no children. He has an annual physical and takes a regular prescription for high cholesterol and high blood pressure (where a generic equivalent is not available). Ted suffers from Crohn s disease and sees a specialist twice a year. Because of complications from Crohn s disease, he can anticipate an inpatient hospital stay. To further treat his Crohn s disease, Ted uses an expensive specialty drug. 1 annual physical for an adult, plus lab work 2 MRI scans 5 primary-care office visits 4 specialist office visits 8 90-day brand-name prescription drugs 4 90-day specialty prescription drugs Healthcare 80: $3,813 Consumer Health 90: $3,580 For Javier, the Health Savings Account seed money makes a big difference. CIGNA International Consumer Health 90 is the best buy for his family. Healthcare 80 is the best buy for Karen s family because they are moderate users of medical services, and the deductible is lower. Ted is a heavy user of medical services. For him, Consumer Health 90 is the best buy.

9 Taking Advantage of a Health Savings Account The Consumer Health 90 option gives you the choice to open a Health Savings Account (HSA) through Fidelity. (The Healthcare 80 option doesn t.) With an HSA, you control how and when you spend the money in it. You can use it to pay for eligible out-of-pocket health care expenses now, or let the balance grow and use it later. And it offers tax-free advantages. With an HSA, You re In Control The HSA is your account, and the money belongs to you until you spend it on eligible health care costs in future years regardless of the plan option you choose at Eaton or elsewhere. There is no use-it-or-lose-it provision! If you don t use the HSA one year, the money rolls over into the next. Eaton will contribute tax-free money to your account. When you open an HSA with Fidelity, you will receive $400 a year for Employee Only coverage, or $800 a year if you cover anyone in addition to yourself. The deposit will be made in January 2012 to help you get started. You can choose to contribute to your HSA up to the IRS annual limit of $3,100 for Employee Only coverage or $6,250 for Employee+Others coverage in 2012 (Eaton s contributions apply to the limit). If you will be age 55 or over next year, you can make an additional catch-up contribution of $1,000. Your contributions are exempt from federal taxes, as well as most state income taxes. FICA and Medicare are also not deducted from HSA contributions. You choose how to invest the money in your HSA. Through Fidelity, you will have access to over 4,000 investment options and the earnings are tax-free, or you can keep your HSA as cash. (Certain investment options have a minimum HSA balance required in order to invest.) When you use the money to pay for eligible health care expenses, the withdrawals are tax-free. You own the account and the money in it, including the contributions Eaton makes. Unlike with the Health Care Reimbursement Account, any unused funds roll over from year to year. And if you retire or leave Eaton, you take your HSA with you. You Must Activate Your HSA to Receive Eaton s Contribution To activate an HSA, you must take three steps when you go online or call Fidelity to enroll in your 2012 benefits during Annual Enrollment (October 4 25): 1. Elect the Consumer Health 90 medical plan option. 2. Elect to have an HSA. 3. Open your HSA with Fidelity. %TRIPLE TAX ADVANTAGE More details about investing and using your HSA will be included in the Welcome Kit you will receive from Fidelity in November.

10 Getting Ready to Make Your Choice Participate in an information session about your 2012 medical plan options, if you haven t already (in person at most work locations, or online via webinar). Now Through September R R Go online to EatonBenefits.com and click the Eaton Learn More Links for resources, including copies of information mailed to your home. Be sure to check out 2012 Medical Plan Option Choices Library periodically, as new documents will be added over the coming weeks. R RTake action to earn your Healthy Incentives credits. Be sure to have your important numbers taken, and go to EatonBenefits.com or call (or if you live in China) to complete the Health Assessment and earn your tobacco free credit. R RThink about how you and your family have used Eaton s medical coverage in the past, and estimate how you may use it in For help, you can call CIGNA to request a summary of your 2010 medical plan usage. R RCompare the options online. Find a link to Choose My Best Plan Option (Plan Finder) on EatonBenefits.com through October 4. (The link also will be available on Fidelity NetBenefits during Annual Enrollment, October 4 25.) This tool will assume you have earned and taken advantage of all Healthy Incentives credits. R Read the materials in the Annual Enrollment Kit that will arrive via in early October. In the kit, you ll find a quick guide with highlights of what you need to know when choosing your option. You ll also find important information about other Eaton benefits for 2012 and details about using a Health Savings Account (HSA). October 4 25: Annual Enrollment R Choose the medical coverage you want for This is also the time for you to review and update other benefits coverage, including dental, vision, reimbursement account, disability and life insurance coverage. If you are currently enrolled in an Eaton medical plan option and you don t make a new election by the October 25 deadline, you will be automatically covered by the Healthcare 80 option at the same coverage level you have today. This summary presents descriptions of the 2012 medical plan options that will be available to eligible Eaton employees. In the event of a conflict between this and any other descriptions of the benefit plans, the plan document, service agreements and insurance contracts will control. As with all Eaton-sponsored benefit plans, Eaton reserves the right to amend, modify, revoke or terminate the plans in whole or in part at any time. Neither this summary nor participation in any Eaton benefit plan constitutes a promise of continuing employment with Eaton.