MAIN LINE HEALTH, INC. RETIREMENT INCOME PLAN SUMMARY PLAN DESCRIPTION Effective January 1, 2011
Topic MAIN LINE HEALTH, INC. RETIREMENT INCOME PLAN SUMMARY PLAN DESCRIPTION TABLE OF CONTENTS Page INTRODUCTION...1 What is the purpose of this booklet?...1 What is the Plan s goal?...1 Who is eligible to participate in the Plan?...2 When do I become a participant in the Plan?...2 What happens if I m reemployed by MLH after becoming a participant?...2 When am I entitled to benefits under the Plan?...3 PLAN BENEFITS...3 What types of benefits are available under the Plan?...3 Am I a Grandfathered Employee?...3 How are LIMR Faculty and Highly Compensated Employees' Benefits Calculated?...3 Am I eligible for a Transition Benefit for Longer-Service Employees?...4 How is my transition service calculated?...4 How is my normal retirement pension calculated?...4 What else do I need to know about benefit service?... 10 NORMAL RETIREMENT... 10 When am I eligible for a normal retirement pension?... 10 EARLY RETIREMENT... 11 When am I eligible for early retirement?... 11 How much is my pension reduced if it begins early?... 11 LATE RETIREMENT... 12 Is my pension affected if I keep w orking past my normal retirement date?... 12 DEFERRED VESTED PENSION... 13 When do I earn the right to a benefit from the Plan?... 13 How much is my deferred vested pension?... 13 How are vesting years determined?... 13 Can vesting years ever be forfeited?... 13 FORMS OF PENSION PAYMENTS... 14 What are the payment options for my pension?... 14 What is the normal form of payment?... 14 What are the optional forms of payment?... 15 DEATH BENEFITS... 16 What is the death benefit if I die before I retire, but w ith a vested pension benefit?... 16 What is the death benefit if I die w hile my pension is being paid?... 16 Can I choose w ho my beneficiary w ill be?... 17 CLAIMS FOR PENSION BENEFITS... 17 What is the Plan s claims procedure?... 17 What are my rights under ERISA?... 18 OTHER FACTORS AFFECTING YOUR PENSION... 19 Under w hat circumstances could my benefits be lost or reduced?... 19 What happens if I return to w ork for MLH after I have started receiving my pension?... 19 Can my benefits under the Plan be assigned to anyone?... 20 Does the law limit my benefits in any w ay?... 20 What happens if the Plan is top-heavy?... 20 Can the Plan ever be amended or terminated?... 20 If I retire or terminate employment, can I roll over my benefits to an IRA or another employer s plan? 20 Does the Pension Benefit Guaranty Corporation (PBGC) insure the Plan?... 21 ADMINISTRATIVE INFORMATION... 22
MAIN LINE HEALTH, INC. RETIREMENT INCOME PLAN SUMMARY PLAN DESCRIPTION INTRODUCTION What is the purpose of this booklet? This booklet is your official Summary Plan Description as required by the Employee Retirement Income Security Act of 1974 ( ERISA ). It summarizes the pension benefits currently provided by the Main Line Health, Inc. Retirement Income Plan (the Plan ), for employees w ith an hour of service w ith MLH on or after January 1, 2011, except for employees of Riddle Hospital w ho w ere participants in the Riddle Health System Employees Pension Plan (the Riddle Plan ) prior to January 1, 2011, and explains in nontechnical language how the Plan w orks. The Plan covers eligible employees of Main Line Health, Inc. ( MLH ) and other institutions that have adopted the Plan. These companies, collectively called the MLH are listed on Page 23 of this document. The Summary Plan Description for employees w ho w here participants in the Riddle Plan prior to January 1, 2011 is contained in a separate document w hich explains the rights and protections for those employees w ho participated in the Riddle Plan. This Summary Plan Description is not the Plan document. Instead, it is designed to provide you w ith a summary of benefits available under the Plan as in effect on January 1, 2011. Beginning January 1, 2011, all participants pension benefits in the Main Line Health Pension Plan ( MLH Pension Plan ) w ill be calculated using a new formula. If you currently (meaning, prior to January 1, 2011) participate in the MLH Pension Plan, you w ill not lose any benefit you have already earned under the current MLH Pension Plan formula as of December 31, 2010. In addition, if you w ere a grandfathered or transition employee as of December 31, 2002 w hen w e last made changes to the MLH Pension Plan, you w ill retain that status through this new change, how ever the benefit formula applied to your final average earnings, for grandfathered employees, and career earnings, for transition employees, w ill change. Other important details can be found in the Plan document. The terms of the Plan document w ill alw ays govern any benefit you may have under the Plan and if there is a conflict betw een the terms of the Plan and this booklet, the Plan document w ill control. Participation in the Plan does not create any contract of employment betw een MLH and you nor does it create a guarantee of any kind. Your participation does not affect the normal employment practices of any member of MLH in w hich individuals are not employed for a definite period of time but are employed at w ill. What is the Plan s goal? The Plan is designed to provide eligible employees of MLH w ith a source of income to supplement Social Security benefits during retirement. You do not contribute to the Plan. MLH pays the full cost. After you meet the Plan s eligibility requirements, you w ill earn a pension benefit as an eligible employee under the Plan based on your earnings and your length of service w ith MLH. The Plan offers a range of payment options to fit employees varying needs and personal situations. The Plan can be one of your most valuable assets as an employee of MLH. important features: Here are some You can take advantage of most career opportunities at MLH institutions, w hile continuing to earn benefits under the Plan You can receive full retirement benefits w hen you retire at or after age 65 w ith 5 vesting years or, if earlier, at or after age 65 if you have reached the 5 th anniversary of the date you became a Plan participant You can receive reduced retirement benefits as early as age 55 1
w ith five vesting years You have a vested that is, nonforfeitable benefit after just five vesting years w ith MLH or any related institution Your surviving spouse is entitled to benefits if you are vested and die prior to your benefit election, w hether or not you are still actively employed by MLH. Who is eligible to participate in the Plan? As an employee of MLH (see list on Page 23), you are eligible to participate in the Plan if you are at least age 21 and have completed one eligibility year w ith a MLH institution. You are not eligible for the Plan if you are a non-employee physician, leased employee, or union employee. Effective January 1, 2007, faculty of the Lankenau Institute for Medical Research (LIMR) and highly-compensated employees in the LIMR Retirement Savings Plan as of December 31, 2006, began participating in the Plan, and continue to be eligible to participate in the Plan on the same basis. Eligibility Year An eligibility year is a 12-month period beginning on your date of hire or the first day of any subsequent calendar year in w hich you complete at least 1,000 hours of service w ith a MLH institution. Hour of Service Highly- Compensated Employee An hour of service means: Each hour for w hich you actually w ork and are entitled to be paid, including overtime hours. Paid holidays, paid vacations, paid hours for Basic Leave and Extended Leave time. Examples of the types of hours not included are Basic Leave Cash In, Unpaid Leave of Absence, On-call, and Non-productive Non-paid hours. If you are a full-time exempt employee, you w ill be credited w ith full-time hours of service for each calendar month in w hich you complete one hour of service. A highly-compensated employee is an individual w ho: Ow ned more than 5% of the company at any time during the year or the preceding year, or For the preceding year, received compensation in excess of the dollar limit ($110,000 for 2010 and 2011) and w as in the top 20% of employees w hen ranked by compensation. When do I become a participant in the Plan? You become a participant on the next January 1 or July 1 after you fulfill the eligibility requirements of reaching age 21 and completing one eligibility year w ith a MLH institution. What happens if I m reemployed by MLH after becoming a participant? If you leave MLH after reaching age 21 and completing one eligibility year, you w ill generally become a participant on your rehire date if you: Had a vested interest in the Plan at the time you terminated employment, or Are rehired before you have five consecutive one-year breaks in service. Break in Service A break in service is the 12-month period beginning on your employment date (or the first day of any calendar year after that) in w hich you do not complete 500 hours of service. Before w e determine if you incurred a break in service, you w ill be credited w ith up to 501 hours of service for any period of absence from w ork because of your pregnancy, the birth of your child, the placement of a child in your home for the purpose of adoption, or the caring for your child follow ing birth or placement for adoption. Please note that you w ill incur a break in service - 2 -
in a calendar year if you have few er than 500 hours of service, even if you do not terminate employment from MLH. If you are not vested and you incur 5 - consecutive one year breaks in service, you w ill forfeit your prior vesting service, even though you may not have terminated employment. See page 13 for more information regarding the forfeiture of vesting service. When am I entitled to benefits under the Plan? You are entitled to receive benefits under the Plan w hen you retire, or if you leave MLH before reaching retirement age but after completing five vesting years (as defined on Page 13). If you die, your husband or w ife may be entitled to survivor benefits. PLAN BENEFITS What types of benefits are available under the Plan? Normal Retirement Early Retirement Postponed Retirement Spousal Benefits (only to a surviving spouse) You can receive the full value of your pension benefit w hen you reach normal retirement age your 65 th birthday, provided you have at least five vesting years or, if earlier, at or after your 65 th birthday if you have reached the 5 th anniversary of the date you became a Plan participant. When you reach age 55 and have at least 5 years of benefit service, you may retire early and receive a reduced benefit. If you continue w orking for member of MLH after your normal retirement date, your postponed pension payments w ill begin the first day of the month after you actually retire. If you die before retiring, your spouse may be eligible to receive a survivor benefit. The amount w ill depend on several factors, including your years of vesting service, the benefit you accrued as of your date of death and the date payments commence to your spouse. Am I a Grandfathered Employee? MLH changed the Plan' s benefit formula effective January 1, 2003. At that time it w as determined w hether an employee met the criteria for grandfathered status. Under the revised Plan effective January 1, 2011, you w ill continue to be grandfathered if you w ere at least age 55 w ith 10 or more years of transition service w ith a MLH institution as of January 1, 2003. As a grandfathered employee, you w ill continue to have a final average earnings pension formula, but the multiplier used to calculate your pension benefit (effective January 1, 2011) w ill be reduced from the current formula. This change w ill not cause you to lose any benefits you accrued as of December 31, 2010. Your final pension benefit w ill include your accrued pension benefit as of December 31, 2010, plus additional benefits you accrued under the new formula beginning January 1, 2011. Who is a CHA Participant? You are a CHA Participant if you w ere a participant in the Community Health Affiliates Plan on December 31, 1993 and an employee of MLH on January 1, 1994. CHA Participants may be subject to different rules regarding, among other things, eligibility, participation, vesting, minimum benefits and optional forms of benefit. If you are a CHA Participant, please contact the Plan Administrator if you need information w hich is not included in this booklet. How are LIMR Faculty and Highly Compensated Employees' Benefits Calculated? From January 1, 2007 forw ard, your service and earnings w ith Lankenau Institute for Medical Research (LIMR) w ill be used to calculate your final monthly retirement benefit using the career average earnings formula as described on Page 4. This monthly payment w ill be in addition to - 3 -
any prior vested benefit that you may have already earned through previous participation in this Plan before August 1, 1999, w hen the LIMR Retirement Savings Plan w as introduced. Am I eligible for a Transition Benefit for Longer-Service Employees? You became eligible for a special transition benefit if you had 10 or more years of transition service and the sum of your age and years of transition service equaled 60 or more as of January 1, 2003. If you are eligible for the transition benefit, your final pension benefit w ill be increased by 1% for each year you w ork 1,000 hours or more after 2002 (up to a maximum of 10%), excluding years in w hich you w orked under MLH' s retiree return to w ork program. As a result of the changes made to the Plan, you w ill have a change in pension formula that w ill impact how your pension benefit is calculated beginning January 1, 2011. Benefits accrued beginning on that date w ill use the new formula (described on page 5), and the up to 10% increase on your total accrued benefit w ill be based on all of your MLH years of service credited to you. For instance, a transition employee at December 21, 2002, may have a maximum of 8 years of service as of December 31, 2010 (2003 through 2010); therefore as a transition employee you may only receive another tw o years tow ard the 10% maximum increase. How is my transition service calculated? You w ill generally be credited w ith a year of transition service for each year of employment w ith a MLH institution in the period beginning on your first day of w ork and ending on December 31, 2002. If you terminated employment and w ere rehired w ithin one year, your transition service w ill include the period betw een your termination of employment and your rehire date. If you terminated employment w hile you w ere on a leave of absence and w ere rehired w ithin one year of the first day of your leave of absence, your transition service w ill also include the period betw een the first day of your leave of absence and your rehire date. If you w ere absent for any other reason, you w ill be credited w ith transition service until the first anniversary of your absence. Certain pre-2003 employment w ill not be treated as transition service. For example, if you left active employment, due to either termination of employment or absence w ithout termination of employment and subsequently returned to w ork, your pre-break service w ill not be treated as transition service unless you: completed at least 5 years of vesting service or reached normal retirement age before you left; returned to active employment w ithin 5 years; or w ere absent for qualified military service and you return to w ork immediately follow ing such absence. How is my normal retirement pension calculated? Your annual retirement benefit has four parts. Benefits you earned before January 1, 2003: 1.375% of your final average earnings up to your covered compensation times your full and partial years of benefit service to a maximum of 30 years (excluding years of benefit service completed after 2002 unless you are a grandfathered employee), plus 2% of your final average earnings above your covered compensation times your full and partial years of benefit service to a maximum of 30 years (excluding years of benefit service completed after 2002 unless you are a grandfathered employee), plus 0.5% of your final average earnings times your full and partial years of benefit service - 4 -
over 30 years (excluding years of benefit service completed after 2002 unless you are a Grandfathered employee) Plus Benefits you earn for each year of benefit service beginning January 1, 2003: 1.375% times your career earnings for each year of benefit service completed after 2002 and prior to 2011 up to your covered compensation, plus 2% times your career earnings for each year of benefit service completed after 2002 and prior to 2011, above your covered compensation Plus Benefits you earn for each year of benefit service beginning January 1, 2011: 1.25% times your career earnings for each year of benefit service completed after 2010 up to your covered compensation, plus 1.75% times your career earnings for each year of benefit service completed after 2010 above your covered compensation Plus The annuity value of your Earned Leave Cash Balance Account, if you participated in this limited program in 1999. Note: For employees hired on or after January 1, 2011, there is a 35 year cap on benefits service. Here are some important terms to help you understand the plan formula. Final Average Earnings Your final average earnings (FAE) is your highest average pay during any 60 consecutive months during your last 120 months of employment (excluding months in w hich you w ere not a Plan participant) multiplied by 12. Your pay, for any month during a calendar year, w ill equal your pay for the calendar year divided by the number of months that you w orked for a member of MLH during the calendar year. Your FAE w ill be determined as of December 31, 2002 and w ill not be adjusted to reflect any pay increases you receive after 2002 (except for Grandfathered employees see below ). Year of Benefit Service A year of benefit service is a calendar year in w hich you complete 1,000 hours of service (see definition on Page 2) as an active Plan participant w ith a member of MLH. If you do not complete 1,000 hours of service during your first or last year of benefit service, you w ill be credited w ith 1 / 12 of a year of benefit service for each month in w hich you completed 83⅓ hours of service. For employees hired on or after January 1, 2011, years of benefit service are capped at 35 years. Covered Compensation Your covered compensation is the average of the w ages subject to Social Security tax each year during the 35 years ending w ith the year you reach Social Security Retirement Age (65 for those born before 1938; 66 for those born from 1938 through 1953; and 67 for those born in 1954 or later). Earnings or Pay Your earnings or pay is your annual base pay plus overtime, shift differential, - 5 -
$63 7 $65 6 $67 6 $69 6 $71 7 $73 9 $76 1 on-call pay, incentive pay, certain types of incentive bonuses, and any contributions that you make to the MLH Retirement Savings Plan. Your pay does not include scholarships, discretionary bonuses, expense reimbursements, severance payments, and health w aiver credits paid to you under the PerfectFit plan. The Internal Revenue Code limits the amount of pay that may be counted for Plan purposes each year. In 2011, the limit is $245,000, and may be increased in future years. Career Earnings Your career earnings are based on the pay you receive from a member of MLH after 2002 w hile you are an active participant in t he Plan. Career earnings are subject to the same Internal Revenue Code limitations as earnings or pay. Earned Leave Cash Balance Account Your Earned Leave Cash Balance Account consists of (1) credit for your December 31, 1999 earned leave, excluding any leave that w as cashed out or transferred to your 2000 earned leave bank, plus (2) interest, based on U.S. Treasury rates, credited annually to your account. The financial value of your Earned Leave Cash Balance Account w ill be included in your pension benefit calculation and w ill enhance the amount of your monthly pension benefit payments w hen you retire from all MLH institutions. Only a small number of employees participated in this limited program in 1999. Normally, earned leave is not cashed out w hen you retire. Example of normal retirement benefit calculation. Let s assume you are 45 years old on January 1 2003 and have w orked at MLH for 10 years. Your final average earnings on December 31, 2002 are $41,219. Your 2003 pay ($45,000) increases by 3% each year for the next 20 years of benefit service at MLH until you retire at age 65. Your covered compensation is $78,612 as of December 31, 2002 and $79,992 as of December 31, 2003. Your annual pension benefit w ould be calculated as follow s, including the change to the benefit formula w hich occurred in both 2003 and 2011: 1.375% x $41,219 final average earnings up to covered compensation Plus 2% x $0 final average earnings above covered compensation Plus 0.5% x $41,219 final average earnings x x x 10 years of benefit service up to 30 years = $5,668 10 years of benefit service up to 30 years = $0 0 years of benefit service over 30 years = $0 Annual normal retirement benefit earned before January 1, 2003 = $5,668 - PLUS - 1.375% x $45,000 career earnings up to covered compensation in 2003, plus $619 2% x $0 career earnings above covered compensation in 2003 $0 Benefits earned for each year of benefit service after 2003 04 05 06 07 08 09 10 Total Annual normal retirement benefit earned from 2003 through 2010 $5,501 - PLUS - 1.25% x $57,003 career earnings up to covered compensation in 2011, plus $713-6 -
$734 $756 $779 $802 $826 $851 $876 $903 $930 $958 $986 1.75% x $0 career earnings above covered compensation in 2011 Benefits earned in 2011 = $713 Benefits earned for each year of benefit service after 2011 12 13 14 15 16 17 18 19 20 21 22 Total Annual normal retirement benefit earned from 2011 to retirement $10,114 - EQUALS - Annual normal retirement benefit earned before 2003 $5,668 Annual normal retirement benefit earned from 2003 through 2010 + $5,501 Annual normal retirement benefit earned from 2011 to retirement + $10,114 Annual normal retirement benefit starting at age 65 = $21,283 Monthly normal retirement benefit starting at age 65 = $1,774 Example for Grandfathered Employees.* Let s assume you retire on January 1, 2012 at age 65 w ith final average earnings of $97,480, covered compensation of $67,008 and a total of 20 years of benefit service at December 31, 2010 and final average earnings of $99,795 and covered compensation of $67,344 as of December 31, 2011. Your annual pension benefit w ould be calculated as follow s: 1.375% x $67,008 final average earnings up to covered compensation Plus 2% x $30,472 final average earnings above covered compensation Plus 0.5% x $50,000 final average earnings x 1.25% x $67,344 final average earnings up to covered compensation Plus 1.75% x $32,451 final average earnings above covered compensation x 20 years of benefit service at 12/31/2010 = $18,427 x 20 years of benefit service = $12,189 0 years of benefit service over 30 years = $0 - EQUALS - Annual normal retirement benefit accrued as of 12/31/2010 starting at age 65 = x x - PLUS - $30,616 1 year of benefit service after 12/31/2010 = $842 1 year of benefit service after 12/31/2010 = $568 - EQUALS - Annual normal retirement benefit accrued after 12/31/2010 starting at age 65 = $1,410-7 -
- EQUALS - Annual normal retirement benefit starting at age 65 = $32,026 Monthly normal retirement benefit starting at age 65 = $2,669 * You w ere grandfathered if you w ere at least age 55 w ith 10 or more years of transition service as of January 1, 2003. Example for Transition Employees.* Let s assume you are age 50 on January 1, 2003 w ith 10 years of transition service. Because that adds up to 60, you are in the Transition Group. On December 31, 2002, your final average earnings are $36,638. Your 2003 pay ($40,000) increases by 3% each year for the next 20 years of benefit service at MLH until you retire at age 65. Your covered compensation is $71,760 and your annual pension benefit w ould be calculated as follow s: - 8 -
$646 $665 $685 $706 $727 $749 $567 $583 $601 $619 $638 $657 $676 1.375% x $36,638 final average earnings up to covered compensation Plus 2% x $0 final average earnings above covered compensation Plus 0.5% x $36,638 final average earnings x x x 10 years of benefit service up to 30 years = $5,038 10 years of benefit service up to 30 years = $0 0 years of benefit service over 30 years = $0 Annual normal retirement benefit earned before January 1, 2003 = $5,038 - PLUS - 1.375% x $40,000 career earnings up to covered compensation in 2003, plus $550 2% x $0 career earnings above covered compensation in 2003 $0 Benefits earned in 2003 $550 Benefits earned for each year of benefit service after 2003 04 05 06 07 08 09 10 Total Annual normal retirement benefit earned from 2003 through 2010 = $4,891 - PLUS - 1.25% x $50,179 career earnings up to covered compensation in 2011, plus $627 1.75% x $0 career earnings above covered compensation in 2011 $0 Benefits earned in 2011 $627 Benefits earned for each year of benefit service after 2011 12 13 14 15 16 17 Total Annual normal retirement benefits earned from 2011 through 2017 $4,805 - EQUALS - Annual normal retirement benefit earned before January 1, 2003 $5,038 Annual normal retirement benefit earned from 2003 through 2010 + $4,891 Annual normal retirement benefit earned from 2011 to retirement + $4,805 Subtotal = $14,734 Maximum 10% increase (1% per year up to 10) x 110% Annual normal retirement benefit starting at age 65 = $16,207 Monthly normal retirement benefit starting at age 65 = $1,351 * You became eligible for a special transition benefit if you had 10 or more years of transition service and the sum of your age and service equaled 60 or more as of January 1, 2003. This means that w hen you retire, your final pension benefit w ill be increased by 1% for each year you w ork beginning January 1, 2003 (up to a maximum of 10%). 9
Special Rules If you w ere a participant, on December 31, 1988, in a predecessor pension plan maintained by Bryn Maw r Hospital, Lankenau Hospital, or Paoli Hospital, and you w ere age 50 or older on January 1, 1988, your benefit w ill be the greater of (a) the benefit under the Plan formula described above, based on your final average earnings, career earnings, years of benefit service and, if applicable, your Earned Leave Cash Balance Account w hen you actually retire, or (b) the benefit under your predecessor pension plan s benefit formula based on your pay and service as of December 31, 1992. If you are a CHA Participant, your benefit w ill be the greater of (a) the benefit under the Plan formula described above, based on your final average earnings, career earnings, years of benefit service and, if applicable, your Earned Leave Cash Balance Account w hen you actually retire, or (b) your accrued benefit derived from your employee contributions to the Community Health Affiliates Plan. What else do I need to know about benefit service? If you w ere a participant in the Lankenau Hospital Revised Retirement Plan for Employees, you w ill not receive years of benefit service for years before July 1, 1971 during w hich you: Did not make contributions to the plan, or Made contributions that you later w ithdrew. If you are vested in the plan and become disabled after completing at least 1,000 hours of service in the year before you became disabled, you w ill continue to earn years of benefit service (but not past normal retirement age) until you: Are no longer disabled, or Stop receiving benefits under any long-term disability plan sponsored by a member of MLH. For this purpose, you w ill be considered disabled if the Administrative Committee finds that you have a physical or mental impairment that prevents you from engaging in any substantial gainful employment for a MLH institution and your impairment is expected to continue indefinitely or result in death. You w ill not be considered disabled if your disability is a result of military service or criminal behavior. The Plan Administrator may require proof satisfactory to it, of such disability. Your years of benefit service w ill be forfeited if: Your vesting years are forfeited, or You terminate employment and receive a lump sum distribution of your vested benefit w ithin tw o years of your termination. If your years of benefit service are forfeited because you had few er than five vesting years w hen you terminated employment and you are re-employed by a MLH institution w ithin five years, your years of benefit service w ill be restored after you complete a vesting year follow ing your rehire date. See the section entitled Can vesting years ever be forfeited? on Page 13. NORMAL RETIREMENT When am I eligible for a normal retirement pension? You are entitled to receive the full value of your pension w hen you reach normal retirement age. You w ill reach normal retirement age on the earlier of: Your 65 th birthday, provided you have at least five vesting years, or At or after your 65 th birthday, if you have reached the 5 th anniversary of the date you became a Plan participant. How ever, if you w ere a participant in the Pension Plan for Employees of Community Health Affiliates on December 31,1993, your normal retirement age is 65. - 10 -
Normal retirement pension payments w ill generally commence on your normal retirement date. Your normal retirement date is the first day of the month on or next follow ing the date you reach your normal retirement age. EARLY RETIREMENT When am I eligible for early retirement? You may retire early and receive a reduced benefit w hen you reach age 55 and have at least 5 years of benefit service. If you w ere a participant in the Pension Plan for Employees of Community Health Affiliates on December 31,1993, you may generally retire at age 55 even if you have not completed five years of benefit service. Early retirement benefits are calculated using the same formula as normal retirement benefits, based on your final average earnings as of December 31, 2002 (or your early retirement date if you are a grandfathered employee), your applicable years of benefit service, your career earnings as of your early retirement date and, if you are enrolled in the program, your Earned Leave Cash Balance Account, as of the date you begin to receive benefits. If you w ait to start receiving benefits until you reach your normal retirement date, you w ill receive your full normal retirement benefit. If you decide to begin receiving benefits early, how ever, payments w ill be reduced because they are expected to be made over a longer period of time. How much is my pension reduced if it begins early? The portion of your pension attributable to your Earned Leave Cash Balance Account (if you are enrolled in the program) w ill be actuarially converted to an early retirement benefit if you begin to receive benefits before your Normal Retirement Date. The portion of your benefit earned under the final average pay and/or the career average formula (the formula benefit ) w ill be reduced in accordance w ith the tables set forth below. CAREER EARNINGS EMPLOYEES EARLY RETIREMENT REDUCTION FACTORS Amount of reduction Amount of normal retirement Age when benefit begins if pension begins early benefit you receive 55 60% 40% 56 56% 44% 57 52% 48% 58 48% 52% 59 43% 57% 60 38% 62% 61 32% 68% 62 25% 75% 63 18% 82% 64 9% 91% 65 0% 100% - 11 -
GRANDFATHERED EMPLOYEES EARLY RETIREMENT REDUCTION FACTORS Amount of reduction Amount of normal retirement Age when benefit begins if pension begins early benefit you receive 55 40% 60% 56 37% 63% 57 34% 66% 58 31% 69% 59 28% 72% 60 25% 75% 61 20% 80% 62 15% 85% 63 10% 90% 64 5% 95% 65 0% 100% TRANSITION GROUP EMPLOYEES EARLY RETIREMENT REDUCTION FACTORS Amount of reduction Amount of normal retirement Age when benefit begins if pension begins early benefit you receive 55 50% 50% 56 47% 53% 57 43% 57% 58 40% 60% 59 36% 64% 60 33% 67% 61 27% 73% 62 20% 80% 63 13% 87% 64 7% 93% 65 0% 100% LATE RETIREMENT Is my pension affected if I keep working past my normal retirement date? If you continue to w ork after your normal retirement date, any additional applicable years of benefit service and pay w ill be used to determine your pension benefit. In addition, if you are enrolled in the Earned Leave Cash Balance program, your account w ill continue to be credited w ith interest. You w ill begin receiving your pension as of the first of the month follow ing the earlier of your termination of employment or the month in w hich you have less than 73 hours of service. - 12 -
DEFERRED VESTED PENSION When do I earn the right to a benefit from the Plan? You w ill be entitled to a benefit from the Plan once you become vested, w hich happens w hen you: Complete five vesting years, or Reach your normal retirement age (as defined on Page 3) w hile you are still a MLH employee. If you are entitled to a benefit from the Plan and you terminate prior to your early retirement date or your normal retirement date, you w ill have a deferred vested pension benefit under the Plan. Your Earned Leave Cash Balance Account is immediately vested. How much is my deferred vested pension? Deferred vested pension benefits are calculated using the same formula as normal retirement benefits, based on your final average earnings as of December 31, 2002, any applicable years of benefit service, your career earnings as of the date on w hich you terminated employment and, if eligible, your Earned Leave Cash Balance Account as of the date you begin to receive benefits. You are entitled to receive an unreduced benefit beginning on your normal retirement date. How ever, you may choose to have reduced payments begin as early as the first day of the month follow ing the date on w hich you reach age 55 and have completed at least five years of benefit service, in w hich case your reduced payments w ill be calculated as described in " Early Retirement" on Page 11. How are vesting years determined? You w ill earn a vesting year for each calendar year in w hich you complete at least 1,000 hours of service (as defined on Page 2) w ith a MLH institution. In addition, you w ill be credited w ith vesting years for employment w ith certain Jefferson Health System employers if you transfer to a MLH institution from one of these employers w ith no break in continuous employment. Can vesting years ever be forfeited? Yes, under certain circumstances. If you terminate employment and are later rehired as an eligible employee, any vesting years you completed before you left w ill be forfeited unless you complete a vesting year after you return, and either: You had a vested interest in the Plan at the time you terminated employment (excluding a vested interest in employee contributions), or You are rehired before you incur five consecutive breaks in service. Forfeiture of vesting years Example #1 Let s suppose you w ork at Paoli Hospital for tw o years and leave Paoli to w ork elsew here. After one year, you start w orking at Lankenau Hospital. 2 years 1 year Paoli Elsew here Lankenau In Example #1, w hen you begin w orking at Lankenau as an eligible employee, you w ill participate in the Plan immediately. Your past service at Paoli w ill be counted because, although you w ere not vested w hen you left Paoli, you came back to w ork at a MLH institution before incurring five consecutive breaks in service. Example #2 Let s suppose you w ork at Bryn Maw r Hospital for five years and then leave to raise your child full-time. After six years, you rejoin the w orkforce and start w orking at Paoli Hospital as an eligible employee. 5 years 6 years Bryn Maw r Time off Paoli - 13 -
Once you have five vesting years w ith MLH, you w ill be vested under the Plan. In Example #2, w hen you begin w orking at Paoli, you w ill part icipate in the Plan immediately. Your past service at Bryn Maw r w ill be counted because you w ere vested w hen you left Bryn Maw r as an eligible employee. Special Rules You w ill be fully vested in the value of any employee contributions that you made under the Lankenau Hospital Revised Retirement Plan for Employees or the Pension Plan for Employees of Community Health Affiliates that w ere transferred to the Retirement Income Plan, along w ith interest on those contributions. You w ill also be fully vested in the value of your Earned Leave Cash Balance Account (as defined on Page 6), if you participated in this program w hen it w as offered in 1999. FORMS OF PENSION PAYMENTS What are the payment options for my pension? Unless you choose otherw ise, your Plan benefit w ill be paid in the normal form described later in this section. If the present value of your benefit is $5,000 or less, it w ill be paid in the form of a lump sum, as described below. If the value of your benefit exceeds $5,000, you may elect one of the optional forms of payment described on the follow ing pages. You should consider your financial needs, your health and that of your spouse, and any other income you may have, and then select the most appropriate option. If you don t w ant to receive benefits in the normal form, you must file a w ritten election w ith the Human Resource Department no more than 90 days before your benefit starting date. If you are married, your spouse may be required to give w ritten, w itnessed consent to your election of an optional form. Your spouse s consent is not required if you can demonstrate to the Human Resource Department that you: Cannot locate your spouse, or Have been abandoned, have been recently divorced, or are legally separated from your spouse, and have a court order or decree to that effect. Your spouse s consent is also not required if you elect a 66.67%, 75% or 100% Joint and Survivor Annuity w ith your spouse designated as the beneficiary. What is the normal form of payment? For single participants Single Life Annuity Under this form of payment, you w ill receive monthly benefits for as long as you live. Once you die, all benefit payments w ill stop. For married participants 50% Joint and Survivor Annuity The 50% Joint and Survivor Annuity provides you w ith a reduced monthly payment throughout your lifetime w hether or not your spouse survives you. If you die before your spouse, 50% of your monthly benefit w ill be paid to your spouse each month for the remainder of his or her life. Your reduced benefit under this payment option w ill be actuarially equivalent to the monthly benefit you w ould have received as a single participant under the single life annuity. Automatic Small Benefit Lump Sum If the present value of your pension benefit is betw een $1,000 and $5,000, the Plan w ill automatically pay the benefit to you in the form of a lump sum as soon as administratively practical follow ing your completion of the cash-out election form. Your consent is not required for amounts less than $1,000. - 14 -
Automatic Rollover IRA If the present value of your pension benefit is betw een $1,000 and $5,000 and you do not complete an election for a cash-out, direct rollover, or combination of the tw o, the distribution must be rolled over into an IRA established by MLH. What are the optional forms of payment? If the normal form does not meet your needs, you can choose one of the follow ing optional forms of payment by notifying the Human Resources Department, in w riting, before your pension benefits begin. Life Annuity with 5 Years (60 Months), 10 Years (120 Months), or 15 Years (180 Months) Guaranteed This option provides a reduced monthly payment for your life, but guarantees payments for 5 years (60 months), 10 years (120 months), or 15 years (180 months), w hichever you elect. If you die before receiving the guaranteed number of payments, your designated beneficiary w ill receive your monthly payment for the balance of the guaranteed period. If your beneficiary dies before you start to receive benefits, your election is automatically cancelled and you w ill need to designate a new beneficiary or select a different option. If your beneficiary dies before you but after you start receiving benefits, you may name a new beneficiary, but you cannot elect another form of benefit. If both you and your beneficiary die before the guaranteed number of payments have been made, the balance of the payments w ill be made to the estate of the last survivor. Joint and Survivor Annuity If you choose this form, your monthly payments w ill be reduced, but you may elect to have 50%, 75%, or 100% of that amount paid after your death to your designated beneficiary for his or her lifetime. The reduction in your monthly payments depends on your age and the age of your beneficiary. If you are married and w ish to designate a beneficiary other than your spouse, your spouse must give w ritten, w itnessed consent to your election. If your beneficiary dies before you start to receive benefits, your elect ion is automatically cancelled and you w ill need to designate a new beneficiary or select a different option. If your beneficiary dies before you but after you start receiving benefits, you w ill continue to receive your reduced benefit for life and may not name a new beneficiary. CHA Life Annuity with Three Years (36 Months) or 15 Years (180 Months) Guaranteed If you w ere a participant in the Community Health Affiliates Plan on December 31, 1993, you may choose to receive a reduced monthly payment for your life, w ith guaranteed payments for three years (36 months). If you die before receiving the guaranteed number of payments, your designated beneficiary w ill receive your monthly payments for the balance of the guaranteed period. If your beneficiary dies before you start to receive benefits, your election is automatically cancelled and you w ill need to designate a new beneficiary or select a different option. If your beneficiary dies before you but after you start receiving benefits, you may name a new beneficiary, but you cannot elect another form of benefit. If both you and your beneficiary die before the guaranteed number of payments have been made, the balance of the payments w ill be made to the estate of the last survivor. CHA 66.67% Joint and Survivor Annuity If you w ere a participant in the Community Health Affiliates Plan on December 31, 1993, you may choose to have 66.67% of your reduced monthly payment paid after your death to your designated beneficiary for his or her lifetime. The reduction in your monthly payments depends on your age and the age of your beneficiary. If you are married and w ish to - 15 -
designate a beneficiary other than your spouse, your spouse must give w ritten, w itnessed consent to your election. If your beneficiary dies before you start to receive benefits, your election is automatically cancelled and you w ill need to designate a new beneficiary or select a different option. If your beneficiary dies before you but after you start receiving benefits, you w ill continue to receive your reduced benefit for life and may not name a new beneficiary. CHA 66.67% Joint and Survivor Annuity with 10 Years Guaranteed If you w ere a participant in the Community Health Affiliates Plan on December 31, 1993, you may choose to have 66.67% of your reduced monthly payment paid after your death to your primary beneficiary for his or her lifetime. If you and your primary beneficiary die before receiving payments for 10 years (120 months), your secondary beneficiary w ill receive payments for the balance of the guaranteed period. If either beneficiary dies before you start receiving benefits, your election is automatically cancelled and you w ill need to designate a new beneficiary or select a different option. If your primary beneficiary dies before you but after you start receiving benefits, you w ill continue to receive your reduced benefit for life and may not designate a new primary beneficiary. If your secondary beneficiary dies before you but after you start receiving benefits, you may name a new secondary beneficiary, but you cannot elect another form of benefit. CHA Cash Refund Option If you w ere a participant in the Community Health Affiliates Plan on December 31, 1993, you may choose to receive a reduced monthly benefit for your lifetime. Under this option, if the value of your benefit (as of the date benefits begin) exceeds the total benefit paid to you during your lifetime, your beneficiary w ill receive a lump-sum payment equal to the excess amount. DEATH BENEFITS What is the death benefit if I die before I retire, but with a vested pension benefit? If you die before you retire and you are not legally married, no benefit is payable. If you are legally married and die before you begin to receive benefits, your surviving spouse is entitled to a benefit if you die after you are vested (even if you are no longer employed by a MLH institution). The benefit paid to your spouse w ill be calculated assuming that: Your employment ended on the date of your death (or termination of employment, if earlier); You retired, immediately before the benefit commencement date elected by your spouse, after electing a 50% Joint and Survivor Annuity (as defined on Page 14); and You died the next day. If the present value of the death benefit is $5,000 or less, the Plan w ill automatically pay the benefit to your spouse in a lump sum as soon as practical after your death. Otherw ise, the death benefit w ill be paid to your spouse in the form of a monthly annuity. Payments to your spouse may begin, at his or her election, as early as the date on w hich you could have begun to receive benefits or as late as your normal retirement date. What is the death benefit if I die while my pension is being paid? If you die after your benefits have started, any death benefits w ill be paid according to the option you selected. - 16 -
Can I choose who my beneficiary will be? If you are married w hen you retire, you w ill be deemed to have designated your spouse as beneficiary unless you designate another beneficiary in w riting and your spouse gives w ritten, notarized consent. CLAIMS FOR PENSION BENEFITS What is the Plan s claims procedure? Initial Claim. A Participant or beneficiary ( claimant ) w ho believes himself or herself to be entitled to benefits under the Plan, and w ho has not begun to receive those benefits, may claim benefits by submitting w ritten notification to the Plan Administrator. Forms are available online or from your Human Resources Department. Processing of your retirement request w ill take approximately 90 days. Procedure for Appeal. In the event the claim is w holly or partially denied, the Plan Administrator shall, w ithin 90 days (or 45 days if the claim involves disability) of receiving the claim, inform the claimant of the reason or reasons for the denial; the reference to the specific Plan provisions on w hich the denial w as based; any additional material or information that may be necessary to perfect the claim, w ith the applicable reasons; the procedure for review ing the denial of the claim and the time limits applicable to such procedures; and a statement of the claimant s right to bring a civil action under Section 502(a) of ERISA follow ing an adverse decision on appeal. If special circumstances require an extension for processing the claim, the Plan Administrator s review period may be extended for 90 days after the initial review period. If the claim involves disability, how ever, the review period may be extended for 30 days w ith a second 30 -day extension, if necessary. The Plan is required to notify the claimant of any extension in the review period. During the 60-day period (or 180-day period if the claim involves disability) follow ing the date on w hich the denial is received, the claimant or his or her representative shall have the opportunity to appeal to the Plan Administrator for review of the denial by requesting such review in w riting to the Plan Administrator. The claimant or his or her representative shall, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant to the claimant s claim for benefits and shall have an opportunity to submit w ritten comments, documents, records, and other information relevant to the claimant s claim for benefits. Decision on Appeal. No later than 60 days (or 45 days if the claim involves disability) after its receipt of the request for review, the Plan Administrator shall render a decision in w riting, stating the specific reasons for the decision; specific Plan references on w hich the determination w as based; that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his claim; any additional appeal procedures offered under the Plan and the claimant s right to receive information about such procedures; and the claimant s right to bring a civil action under Section 502(a) of ERISA. If special circumstances require extension, and upon prior w ritten notice to the claimant, the Plan Administrator s decision may be given w ithin 120 days (or 90 days if the claim involves disability) after receipt of the request for review. If the Plan has a Committee or Board of Governors designated as the appropriate named fiduciary, a decision does not have to be made w ithin the period described above if the Committee or Board meets at least four times a year. In such case, the decision must be made at the first meeting after the request is filed, except that w hen a request is filed less than 30 days prior to a meeting, the decision may be delayed until the date of the second meeting after the request is filed. In no event shall the decision be made later than the third meeting after the request is filed. If the time limitations set forth above have not been exceeded, you may not bring an action in a court of law unless the claims review procedure is exhausted and a final determination has been made. In addition, you may not sue if you failed to file your claim or appeal the Plan - 17 -