City of Phoenix Retiree Benefits Information Meeting Changes effective January 1, 2016

What we’ll cover today. What is changing and why How this affects you Introducing OneExchange Going forward Questions & Answers

Background Feedback from retirees over the years: Retiree healthcare premiums are too high. There needs to be a lower family premium for couples. More choice in plan designs is desired. Some retirees need to cover only a child or spouse.

What is Changing The City of Phoenix is changing the way it provides health benefits to retirees and their eligible family members to address the concerns shared by retirees over the years. A competitive bidding process occurred earlier this year and OneExchange from Towers Watson was selected by a committee of retirees and staff to provide these services to City retirees. The Health Care Task Force, the Health Care Trust Board, the City Manager, and the City Council approved this change. Note: You pay no fees to OneExchange to provide these services. OneExchange staff do not receive commissions.

What is Changing There is no more “family coverage” in the Medicare marketplace. Every Medicare eligible person has their own coverage. MERP will be provided annually in January instead of monthly and will be held in a Health Reimbursement Arrangement (HRA) account administered by OneExchange. Medical premium payments will not be deducted from pension checks for coverage after December 2015.

How This Affects You How you select a medical, dental and/or vision plan. A highly qualified Benefit Advisor will speak with you and your spouse by phone to understand your needs and identify a small selection of plans. How you enroll.You will work with OneExchange via telephone to select and enroll in a plan and establish your HRA. Your support.Ongoing support will be available from OneExchange for questions and concerns. Payment.You will make premium payments directly to your insurance carrier.

Helping You Prepare For Your Upcoming Medicare Enrollment

Who We Are Transitions Can Be A Good Thing! OneExchange – For Your Benefit A Deeper Dive: Benefit Advisors, Private Exchange, Optimize Savings, Health Reimbursement for You Next Steps Questions and Answers © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 8

About OneExchange Towers Watson over 100 years experience First and Largest Private Medicare Exchange Personalized options with plans from a nationwide network of carriers More Choice, More Flexibility – Better Value Non-commissioned licensed advisor provides Ongoing help and support Over 1-million retirees served across 540+ employers Our 10th annual enrollment season Founded in 2004 © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 9 No fees for our service

OneExchange Service Centers Salt Lake City Dallas Hours Now through October 31 5 am to 6 pm AZ Time, M – F 100% U.S. Workforce © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. No Outsourcing! Hours Beginning November 1 6 am to 7 pm AZ Time, M – F

Wide selection of plans from leading national and regional carriers Medicare Plan Types Medicare Advantage HMO or PPO with Pharmacy Medicare Supplement (Medigap) Prescription Drug Plan (Part D) © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 11 or + Network based Designated PCP Emergency coverage throughout U.S. Some plans come with, vision and/or dental, gym membership, benefits. “Pay as You Go” No network See any doctor who takes Medicare 10 medical plan types through various carriers Must purchase Prescription Drug Plan separately “Pay Up Front”

Wide selection of plans from leading national / regional carriers Plans and Partners Medicare Advantage with Pharmacy Prescription Drug (Part D) Medical, Drug, Dental and Vision Plans © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 12

towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Your Future Coverage

Part A and Part B Your Future Coverage Your City Medical and Dental Coverage Ends 12/31/15 Your Future Coverage Begins 1/1/2016 Primary Coverage Medicare A and B Medicare Advantage Plan with Prescription Drug (MAPD) OR Medigap + Prescription Drug Optional Stand Alone Coverage Dental Plan Vision Plan You can enroll in these anytime © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 14

OPTION 1 Medicare Advantage Plan with Prescription Drug Coverage (MAPD)* MEDICARE ADVANTAGE © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 15 HMOPPO Allows out-of-network coverage for a higher out-of-pocket cost. Must stay in network and have a designated Primary Care Physician (PCP). Some include vision, dental, gym membership Both include coverage for urgent and emergency care anywhere in the United States.

Note: You may need to pay your first premium when you enroll in coverage. MEDIGAP PLAN PART D PLAN Medigap Plan + Separate Part D Pharmacy Plan © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 16 OPTION 2 10 Medigap plan types Choose a Part D Pharmacy Plan that meets your needs.

© 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 17 MediGap Plans Medicare Supplement Insurance (Medigap) Plans BenefitsABCDFGKLMN Medicare Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used) 100% Medicare Part B coinsurance or copayment 100% 50%75%100% Blood (first 3 pints) 100% 50%75%100% Part A hospice care coinsurance or copayment 100% 50%75%100% Skilled nursing facility care coinsurance 100% 50%75%100% Part A deductible -100% 50%75%50%100% Part B deductible 100% Part B excess charges % ---- Foreign travel emergency (up to plan limits) --80% -- Source: CMS Out-of-Pocket limit in 2015 $4,940$2,470

Be sure to speak with your benefit advisor about ALL of your prescriptions to find the best plan. The amount you pay increases with the tier number. Tier 1 is the least expensive, tier 4 or 5 is the most expensive. Tier descriptions: Tier 1 preferred generic Tier 2 non-preferred generic Tier 3 preferred brand Tier 4 non-preferred brand Tier 5 specialty drugs or injectable medicine Part D Pharmacy Plans – 5 Tiers of Co-Pays © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 18 Use “Preferred Pharmacies” for the lowest out-of-pocket price

Medicare Prescription Drug Coverage 2016 Coverage Gap (“Donut Hole”) Initial Coverage © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 19 Deductible If you have a deductible, you pay full price until the deductible is met. You pay co-pays for the first $3,310 in retail cost for your medications. You pay $2.95 for generics and $7.40 for brand name or 5%, whichever is greater. The City will reimburse up to $25,000 per family member per year. Only 25% reach the Donut Hole This gap closes in 2020 Only 4% reach Catastrophic Catastrophic Coverage $0 to $360 You pay 45% of Brand Name and 58% of Generics until your out of pocket costs reach $4850; Pharmaceutical discounts will count towards the $4850 TrOOP

Catastrophic Coverage Special Payments Financial reimbursement will be provided by the City to those retirees or family members enrolled in OneExchange who reach the Catastrophic Coverage level of Part D. This benefit reimburses any prescription drug costs incurred in the Catastrophic Coverage level up to $25,000 per family member covered in a Medicare plan through OneExchange. This should be more than adequate. OneExchange will help you access these funds. What is Medicare Part D TrOOP? TrOOP is the true out-of-pocket maximum that includes the cost of prescription drugs incurred during the year — including any deductible, coinsurance co-pays and payments made in the coverage gap, or “donut hole.” Your premiums do not count toward TrOOP. The 2016 amount is $4,850. © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 20

towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. A Deeper Dive Into Our Process

Simplified Selection Evaluation Process Ongoing Help and Support Effortless Enrollment The Transition Process Secure – Efficient – Private © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 22 Your benefit advisor cannot ask you about your health conditions, upcoming surgeries, treatments, etc., but it will help them find the best plan for you if you share this information with them.

Coming to Your Mailbox Soon 2016 Getting Started Guide Pre-existing conditions will not limit your plan options * * Except end-stage renal disease. Make your First Contact Call Toll Free Medicare.OneExchange.com/phoenix © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 23

Coming to Your Mailbox in Mid-October 2016 Enrollment Guide Prepare for your call with a benefit advisor Review Medicare basics What to expect on your enrollment call FAQs Appointment confirmation © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 24

Benefit Advisors Licensed / Certified / Appointed OneExchange University™ Average age 43 Objective and unbiased 100% U.S. workforce NO COMMISSIONS or INCENTIVES to point you toward a particular carrier or plan. Call a Benefit Advisor Now through October 31 st : 5:00 am to 6:00 pm AZ Time M – F Beginning November 1 st : 6:00 a.m. to 7:00 p.m. AZ Time M – F © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Prescription Profiler Decision Support Tools Medicare.OneExchange.com/phoenix 24/7 access to your information Load in your prescriptions - Shorten your time on the phone with us! © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 26

Help Me Choose Comparison Tool Decision Support Tools © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 27

Enrollment Process Benefit Advisors can discuss coverage options with anyone Telephonic enrollment – 2 part process 100% of calls are recorded © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 28

A confirmation listing all your coverages through OneExchange will be mailed to your home shortly after you enroll. © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 29 Confirmation Notice

Ongoing Help and Support Navigation Enrollment Prescription changes Affordability concerns Reimbursement issues Late enrollment HRA Annual plan review The plans you select continue year to year. No need to re-enroll in the fall unless you want to make a plan change. We’re here to help you with: © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 30

towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Receiving MERP through a Health Reimbursement Arrangement (HRA)

What is MERP? MERP is a monthly amount provided to qualified retirees to reduce their out-of-pocket healthcare expense. Basic MERP: An amount of $117 to $202 per month. This is received no matter where you get your medical coverage. Category MERP: An additional $100 per month for certain retirees based on union agreements. Category MERP is only available when you are enrolled in a medical plan through OneExchange. Supplemental MERP: This is an additional amount of $10 to $50 per month for those whose total annual pension is less than $25,000. MERP continues, but beginning January 1, 2016 it is delivered in an annual amount to a Health Reimbursement Arrangement (HRA). © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

What is an HRA? Tax-free account used to reimburse you for eligible health care expenses — you can set up automatic reimbursements for recurring expenses. Your HRA funding will be available January 1, 2016 Unused funds roll over If you are eligible for MERP, the City of Phoenix will make an annual contribution to a Health Reimbursement Account (HRA). You may use HRA funding to reimburse yourself for eligible medical, prescription drug, dental, and vision premiums, as well as eligible out-of-pocket healthcare expenses © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Health Reimbursement Arrangement You may be reimbursed up to the amount available in the HRA! © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Health Reimbursement Arrangement Options Reimbursements are up to the amount available in the HRA $ $ 1 2 Automatic Reimbursement (including recurring premiums 85% - 90% of claims are reimbursed through Automatic Reimbursement) Manual Reimbursement Participant OneExchange Insurance Carrier Participant OneExchange Insurance Carrier © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 34

Localized Slides  Plan examples are based on 2015 rates  2016 plan information is released October 2015

Plans Available in Maricopa County, Plan Type Number of Plans Offered (57) 2015 Monthly Premium Carriers [subject to change] Medicare Advantage13$0 - $178 Humana, SCAN Health Plan, AARP/UHC, Aetna, CareMore Health Plan, Cigna HealthSpring, Medigap/Medicare Supplement 24$72 - $413 BCBS of AZ, AARP/UHC, Humana, Loyal American by Cigna, Humana Connect Part D19$16 - $123 AARP/UHC, Aetna, Humana, WellCare, Coventry Health Care, Express Scripts SilverScript, BCBS of AZ, Cigna HealthSpring, *Plan availability is by zip code/county – there may be limited plan availability in some areas © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Plans Available in Maricopa County Plan Type Number of Plans Offered 2015 Monthly Premium Carriers Vision1$14 monthlyVision Service Plan (VSP) Dental5$23 - $47 Humana Dental, Renaissance Dental, MetLife Dental, Security Life Dental © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Medicare Advantage Plan BenefitCost2015 Premium$0 NetworkHMO Deductible$0 Doctor Copay$0 Specialist Copay$35 HospitalDays $289 per day Emergency Room$65 Rx – Deductible Retail Co-Pay Tiers $0 $5 / $15 / $45 / $95 / 33% 30 days Mail Order Co-Pay Tiers$0 / $0 / $125 / $27590 days © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Medigap Plan F + Prescription Drug Plan BenefitCost2015 Premium$242 ($223 Medical + $19 PDP) NetworkNot Applicable Deductible$0 Doctor Copay$0 Specialist Copay$0 Hospital$0 Emergency Room$0 Rx – Deductible Retail Co-Pay Tiers $0 $9 / $35 / 46% / 33%30 days Mail Order Co-Pay Tiers$23 / $87 / 46%90 days (76-year old male) © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Medigap Plan F + Prescription Drug Plan BenefitCost2015 Premium$242 ($223 Medical + $19 PDP) NetworkNot Applicable Deductible$0 Doctor Copay$0 Specialist Copay$0 Hospital$0 Emergency Room$0 Rx – Deductible Retail Co-Pay Tiers $0 $9 / $35 / 46% / 33%30 days Mail Order Co-Pay Tiers$23 / $87 / 46%90 days (75-year old female) © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Next Steps

Contact OneExchange Call now to complete your profile and schedule an enrollment appointment. For your appointment, you will need your Medicare card, prescription list, doctor and hospital information when you call. We are Ready! What You Need To Do: Action Required! You may also go online to create your profile at medicare.oneexchange.com/phoenix © 2015 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

towerswatson.com © 2014 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. Questions and Answers

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