INITIAL NOTICE OF CONTINUATION COVERAGE UNDER THE HEALTH PLAN OF KINDER MORGAN. Very Important Notice

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1 INITIAL NOTICE OF CONTINUATION COVERAGE UNDER THE HEALTH PLAN OF KINDER MORGAN Very Important Notice January 1, 2010 Dear Employee (and Spouse, if applicable): IT IS IMPORTANT THAT ALL COVERED INDIVIDUALS (EMPLOYEE, SPOUSE AND DEPENDENT CHILDREN) TAKE THE TIME TO READ THIS NOTICE CAREFULLY AND BE FAMILIAR WITH ITS CONTENTS. You are receiving this notice because you have recently become eligible for coverage by the Kinder Morgan Health & Welfare Benefit Plan (the Plan). This notice contains important information about your right to COBRA continuation coverage, which is a temporary extension of coverage by the Plan. The right to COBRA continuation coverage was created by a federal law, Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA continuation coverage may become available to you and to other members of your family who are covered by the Plan when you would otherwise lose your group health coverage. This notice generally explains COBRA continuation coverage, when it may become available to you and your family, and what you need to do to protect the right to receive it. This notice gives only a summary of your COBRA continuation coverage rights. For more information about your rights and obligations by the Plan and under federal law, you should either review the Plan's Summary Plan Description or get a copy of the Plan Document from the Plan Administrator. The Plan Administrator is: Director, Benefits Kinder Morgan 500 Dallas, Suite 1000 Houston, TX (713) COBRA Continuation Coverage COBRA continuation coverage is a continuation of Plan coverage when coverage would otherwise end because of a life event known as a qualifying event. Specific qualifying events are listed later in the notice. COBRA continuation coverage must be offered to each person who is a qualified beneficiary. A qualified beneficiary is someone who will lose coverage by the Plan because of a qualifying event. Depending on the type of qualifying event, employees, spouses of employees, and dependent children of employees may be qualified beneficiaries. Under the Plan, qualified beneficiaries who elect COBRA continuation coverage must pay for COBRA continuation coverage.

2 If you are an employee, you will become a qualified beneficiary if you will lose your coverage by the Plan because either one of the following qualifying events happens: 1. Your hours of employment are reduced and you no longer meet Plan eligibility requirements, or 2. Your employment ends for any reason other than your gross misconduct. If you are the spouse of an employee, you will become a qualified beneficiary if you will lose your coverage by the Plan because any of the following qualifying events happens: 1. Your spouse dies; 2. Your spouse's hours of employment are reduced and he or she no longer meets Plan eligibility requirements; 3. Your spouse's employment ends for any reason other than his or her gross misconduct; 4. Your spouse becomes enrolled in Medicare (Part A, Part B, or both); or 5. You become divorced or legally separated from your spouse. Your dependent children will become qualified beneficiaries if they will lose coverage by the Plan because any of the following qualifying events happens: 1. The parent-employee dies; 2. The parent-employee's hours of employment are reduced and he or she no longer meets Plan eligibility requirements; 3. The parent-employee's employment ends for any reason other than his or her gross misconduct; 4. The parent-employee becomes enrolled in Medicare (Part A, Part B, or both); 5. The parents become divorced or legally separated; or 6. The child stops being eligible for coverage by the Plan as a dependent child. Sometimes, filing a proceeding in bankruptcy under title 11 of the United States Code may be a qualifying event. If a proceeding in bankruptcy is filed with respect to Kinder Morgan and that bankruptcy results in the loss of coverage of any retired employee covered by the Plan, the retired employee is a qualified beneficiary with respect to the bankruptcy. The retired employee's spouse, surviving spouse, and dependent children will also be qualified beneficiaries if bankruptcy results in the loss of their coverage by the Plan. The Plan will offer COBRA continuation to qualified beneficiaries only after the Plan Administrator has been notified that a qualifying event has occurred. When the qualifying event is the end of employment or reduction of hours of employment, death of the employee, or enrollment of the employee in Medicare (Part A, Part B, or both), the employer must notify the Plan Administrator of the qualifying event. In addition, if the Plan provides retiree health coverage, then commencement of a proceeding in a bankruptcy with respect to the employer is also a qualifying event where the employer must notify the Plan Administrator of the qualifying event. You must notify the Plan Administrator of other qualifying events (divorce or legal separation of the employee and spouse or a dependent child's losing eligibility for coverage as a dependent child). The Plan requires you to notify the Plan Administrator, in writing, within 60 days after the qualifying event occurs to be eligible to receive COBRA continuation coverage. This notification may be made by

3 completing an Employee Benefits Change Form and providing supporting documentation as noted on this form. Once the Plan Administrator receives notice that a qualifying event has occurred, COBRA continuation coverage will be offered to each of the qualified beneficiaries. COBRA continuation coverage will begin either (1) on the date of the qualifying event or (2) on the date that Plan coverage would otherwise have been lost for each qualified beneficiary who elects COBRA continuation coverage, depending on the nature of the Plan. COBRA continuation coverage is a temporary continuation of coverage. When the qualifying event is the death of the employee, enrollment of the employee in Medicare (Part A, Part B, or both), your divorce or legal separation, or a dependent child losing eligibility as a dependent child, COBRA continuation coverage lasts for up to 36 months. For what period of time may coverage be continued? 18 Months of Continued Coverage If the event causing the loss of coverage is a termination of employment (other than for reasons of gross misconduct) or a reduction in work hours, each qualified beneficiary will have the opportunity to continue coverage for up to 18 months from the date of the qualifying event. CALIFORNIA RESIDENTS ONLY As required by California Assembly Bill (AB) 1401, continuation of health care coverage is extended to all Cal-COBRA eligible individuals for up to 36 months effective January 1, 2003, regardless of the beneficiary s qualifying event. 29 Months of Continued Coverage Continuation of coverage may be extended up to 29 months if any qualified beneficiary is disabled within the first 60 days of COBRA coverage in accordance with the provisions of the Social Security Act. The extension to up to 29 months is available only if the qualified beneficiary provides notice of the disability determination within the 18-month period after the qualified event. The notice must be given within 60 days of the date of the disability determination to the company. The company must also be notified of any final determination that the qualified beneficiary is no longer disabled. 36 Months of Continued Coverage If the event causing the loss of coverage was the death of the employee, divorce, legal separation, or a dependent child ceasing to be a dependent child under the Health Plan of the company, each beneficiary will have the opportunity to continue coverage up to 36 months from the date of the qualifying event. Second qualifying event extension of 18-month period of continuation coverage If your family experiences another qualifying event while receiving COBRA continuation coverage, the spouse and dependent children in your family may be eligible for additional months of COBRA continuation coverage, up to a maximum of 36 months. This extension is available to the spouse and dependent children if the former employee dies, enrolls in Medicare (Part A, Part B, or both), or becomes divorced or legally separated. The extension is also available to a dependent child when that child stops being eligible by the Plan as a dependent child. In all of these cases, you must make sure that the Plan Administrator is notified of the second qualifying event within 60 days of the second qualifying event. Under What Circumstances May Continuation Coverage Be Terminated? The law provides that if elected and paid, continuation coverage may end prior to the maximum continuation period for any of the following reasons: 1. The company, ceases to provide any group health plan to any of its employees; 2. Any required premium for continuation coverage is not paid in a timely manner;

4 3. A qualified beneficiary becomes covered under another group health plan, unless there are pre-existing conditions not covered by that plan. If the qualified beneficiary becomes covered by another group health plan and that plan contains a pre-existing condition limitation that affects coverage, COBRA continuation coverage cannot be terminated. However, if the other plan's pre-existing condition rule does not apply by reason of HIPAA's restrictions on pre-existing conditions, COBRA coverage may be terminated; 4. A qualified beneficiary becomes entitled to Medicare; 5. A qualified beneficiary extended continuation coverage to 29 months due to a Social Security disability and a final determination has been made that the qualified beneficiary is no longer disabled; or 6. A qualified beneficiary notifies the company that they wish to cancel continuation coverage. When Must A Decision To Continue Be Made? A covered employee, spouse or dependent has 60 days from the date coverage would otherwise terminate or the date the election notice is sent to you, whichever date is later. How Are Premium Payments Made? For the first premium payment you have 45 days from the date you elect to continue coverage to pay the retroactive premium. Thereafter your premiums are payable on a monthly basis. There is a grace period of 30 days for the regularly scheduled monthly premiums. If your payment is not received on a timely basis, your insurance will be canceled. Important Notifications Required By An Employee, Spouse And Dependent The employee, spouse or other family member has the responsibility to inform the company, in writing, of a divorce, legal separation, or a child losing dependent status under the Health Plan of the company. This notification must be made within 60 days from whichever date is later, the date of the event or the date on which coverage would be lost because of the event. Please check with the Human Resources/Benefits Department for procedures to follow in making this notification. If this notification is not completed in a timely manner, then rights to continuation coverage may be forfeited. Eligibility Premiums And Potential Conversion Rights A qualified beneficiary does not have to show that they are insurable to elect continuation coverage. The company, however, reserves the right to verify eligibility status and terminate continuation coverage retroactively if you are determined to be ineligible or if there has been a material misrepresentation of the facts. A qualified beneficiary may have to pay all of the applicable premium plus a 2% administration charge for continuation coverage. These premiums may be adjusted in the future if the applicable premium amount changes. In addition, if continuation coverage is extended from 18 months to 29 months due to a Social Security disability, the company can charge up to 150% of the applicable premium during the extended coverage period. There is a grace period of 30 days for the regularly scheduled monthly premiums. If a plan contains a right to convert to an individual policy, that benefit will also be made available to qualified beneficiaries under COBRA. When the COBRA continuation coverage expires, the qualified beneficiary will be provided with the option of enrolling in the conversion health plan normally available under the plan. However, if the qualified beneficiary has for some reason ceased coverage before the applicable 18, 29, or 36 month period terminates, this conversion right will not be offered. Keep Your Plan Informed Of Address Changes To protect your family's rights, you should keep the Plan Administrator informed of any changes in the addresses of family members. You should also keep a copy, for your records, of any notices you send to the Plan Administrator. Questions? If you have questions about your COBRA continuation coverage, contact the Kinder Morgan Benefit Department at (800) , prompt 1, ext or contact the nearest Regional or District Office of the U.S Department of Labor's Employee Benefits Security Administration (EBSA). Addresses and phone numbers of Regional and District EBSA Offices are available on EBSA's website at

5 January 1, 2010 The Health Insurance Portability and Accountability Act of 1996 (HIPAA) includes some provisions that may affect decisions you make about your participation in the Group Health Plan under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). These provisions are as follows: 1. Under COBRA, if the qualifying event is a termination or reduction in hours of employment, affected qualified beneficiaries are entitled to continue coverage for up to 18 months after the qualifying event, subject to various requirements. Prior to HIPAA, this 18-month period could be extended for up to 11 months (for a total COBRA coverage period of up to 29 months from the initial qualifying event) if an individual was determined by the Social Security Administration, under the Social Security Act, to have been disabled at the time of the qualifying event and if the Plan Administrator was notified of that disability determination within 60 days of the determination and before the end of the original 18-month period. Under HIPAA, if a qualified beneficiary is determined by the Social Security Administration to be disabled under the Social Security Act at any time during the first 60 days of COBRA coverage, the 11-month extension is available to all individuals who are qualified beneficiaries due to the termination or reduction in hours of employment. The disabled individual may be a covered employee or any other qualified beneficiary. However, to be eligible for the 11-month extension, affected individuals must still comply with the notification requirements in a timely fashion. 2. A child that is born to or placed for adoption with the covered employee during a period of COBRA coverage will be eligible to become a qualified beneficiary. In accordance with the terms of the employer's group health plan(s) and the requirements of Federal law, these qualified beneficiaries may be added to COBRA coverage upon proper notification to the Plan Administrator of the birth or adoption. 3. If you were covered by a group health plan(s) prior to your employment with Kinder Morgan, your previous employer s insurance carrier should have provided you with a Certificate of Creditable Coverage, a form required by the HIPAA law that describes the health coverage you and your dependents, if any, have or had, and the dates you were covered. IF YOU HAVE NOT RECEIVED A CERTIFICATE OF CREDITABLE COVERAGE AND ARE ENTITLED TO ONE, PLEASE CONTACT YOUR FORMER EMPLOYER. Once you deliver the Certificate of Creditable Coverage to us, you are exempt from any pre-existing condition exclusions in our group health plan(s), provided you had twelve months of creditable coverage (eighteen months if a late enrollment) and have not had more than a sixty-three day gap in coverage. 4. HIPAA restricts the extent to which group health plans may impose pre-existing condition limitations. 5. Under COBRA, your right to continuation coverage terminates if you become covered by another employer's group health plan that does not limit or exclude coverage for your pre-existing conditions. If you become covered by another group health plan and that plan contains a pre-existing condition limitation that affects you, your COBRA continuation coverage cannot be immediately terminated. However, if the other plan's pre-existing condition rule does not apply to you by reason of HIPAA's restrictions on pre-existing condition clauses, the employer's group health plan(s) may terminate your COBRA coverage.

6 Special Enrollment for Loss of Other Coverage If you are declining enrollment for yourself or your dependents (including your spouse) because of other health insurance or group health plan coverage, you may be able to enroll yourself and your dependents in this plan if you or your dependents lose eligibility for that other coverage (or if the employer stops contributing towards your or your dependents other coverage). However, you must request enrollment within 30 days after you or your dependents other coverage ends (or after the employer stops contributing toward the other coverage). In addition, if you have a new dependent as a result of marriage, birth, adoption, or placement for adoption, you may be able to enroll yourself and your dependents. However, you must request enrollment within 30 days after the marriage, birth, adoption, or placement for adoption. The ( CHIP ) Children's Health Insurance Program ("CHIP") Reauthorization Act of 2009 (the "Act") Effective April 1, 2009, if you or your eligible dependents; (1) lose coverage under your respective state Medicaid or child health plan (CHIP); or (2) become eligible for premium assistance under the Medicaid or child health plan (CHIP), you or your eligible dependents will be eligible to enroll in the Kinder Morgan group health and/or welfare plans. You must request coverage no later than sixty 60 days after the new qualifying event(s). Michelle s Law Continuation of Coverage Effective January 1, 2010, Michelle s law (Federal HR 2851) extends coverage to a dependent who suffers from a serious illness or injury which results in the dependent taking a medically necessary leave of absence from a post secondary institution, (College) or changing to a part-time student status. Michelle s law applies to a dependent child who was enrolled on the Plan on the basis of being a student immediately before the first day of medically necessary leave of absence. Coverage will continue until the earlier of: one year after the first day of medically necessary leave; or the date on which coverage would otherwise terminate under the Plan (Age 25). The period of coverage begins on the date the written certification by the student s physician, determines the illness or injury began which prevents the dependent child from attending school or change to less than fulltime status. Physician verification of serious illness or injury Verification that the dependent child is suffering from a serious illness or injury and that the leave of absence is medically necessary must be supported by a clinical certification of need from a physician licensed to practice medicine in all its branches. To request special enrollment or obtain more information or you have any questions about COBRA, or if you have changed marital status, or you or your spouse have changed addresses or, for any applicable forms please contact the Kinder Morgan Benefit Department at (800) , prompt 1, ext Sincerely, Kinder Morgan Revised 10/1/2009