Health Reimbursement Accounts (HRA) 101 Union Delegates Conference 2010 Los Angeles, CA

2 Overview Effective January 1, 2010 Offered to eligible employees represented by Coalition Unions Tax-free reimbursement for: –out-of-pocket eligible medical, dental, and vision care expenses. Funded with 80% of value of unused sick leave as of employee’s termination date Retiree medical eligibility, medical plan and benefit levels are not affected by the HRA

3 What is the HRA? The Health Reimbursement Account allows retirees to pay for out-of-pocket qualified medical, dental, vision, and hearing care expenses. The HRA also covers: expenses of eligible dependents premiums paid to a Kaiser Permanente medical plan, tax-free

4 Who can participate? Employees represented by LMP Unions participating in: Earned Time Off Program, or Work/Life Balance Time Off Program Participants must meet these requirements: *  55 or older  15 years of service or more† * age and years of service waived for Disability Retirement † as defined under the KP-sponsored defined benefit plan, or the pension plan under the union trust as applicable

5 Who can participate? (cont’d) Eligible for KP medical coverage on last day of employment  enrollment in plan not required  employees represented by the UFCW Pharmacy must be eligible for the union-sponsored medical plan Must be in employee groups that participate in the HRA Alternate Compensation Program included

6 Who can participate? (cont’d) HRA-convertible sick leave hours vary according to different collective bargaining agreements. Different groups of employees:  Employees in the Attendance Program  Employees with an “annual refresh’’ provision to their sick leave program  Employees in the Extended Sick Leave program  Georgia region employees, who follow a unique system of sick leave accrual

7 Who can participate? (cont’d) Eligible Dependents Legal spouse –Unless divorced or legally separated –Must be of the opposite sex to whom legally married under federal law Domestic partner –If they qualify as a dependent on employee’s federal income taxes –May not use HRA account to pay expenses for the child of domestic partner if domestic partner claims the child as a dependent on his or her tax return Your unmarried dependent children under age 25 –If divorced, children will be considered eligible under the plan if employee is responsible for children’s support, and, has custody of children for more than half of the calendar year, per the Internal Revenue Code

8 Eligible Expenses IRS determines which expenses are eligible (qualified) for reimbursement May not also claim the expense through your health care plan, insurance program, or income taxes Consult a tax advisor for tax implications

9 Eligible expenses: examples Premiums –Dental insurance premiums and co-payments –Long-term care insurance premiums –Medicare –Cobra Equipment and Supplies –Dental implants, supplies –Wheelchair Care and Treatment –Acupuncture –Chiropractic care –Hearing exams and treatment

10 Ineligible expenses: examples Baldness treatments or hair transplants Dancing lessons, swimming lessons Exercise equipment Herbal and holistic drugs or remedies Special diet foods Vacation expenses (even if recommended by a doctor)

11 How is the HRA established? On termination or retirement: –HRA-convertible sick leave hours converted at 80% of value Kaiser Permanente deposits into HRA No employee contributions allowed $100 minimum required to establish account –No cost for this new benefit –Automatic participation, if eligible No opt-out option

12 HRA transfers Work/Life Balance Time Off Program Banked Sick Leave (BSL) –Unused hours accrued in 2006 and thereafter converted at 80% of value –Deposited into HRA No conversion to Credited Service for post-2005 BSL hours

13 HRA transfers Earned Time Off Program Extended Sick Leave (ESL) –Effective first pay period of 2010, employees have two ESL banks Current ESL bank Pre-2010 ESL bank –ESL hours beginning first pay period 2010 go into current ESL bank –Unused ESL hours last pay period 2009 go into pre ESL bank –Accrued, unused ESL in current ESL account converted at 80% of value and deposited into HRA No Credited Service for unused post-2009 ESL hours

14 How to File for Reimbursement –Fax: –Mail : Ceridian FSA Services P.O. Box St. Petersburg, FL Reimbursement via check or direct deposit Check on the status of your claim or payment at – Submit claims through Ceridian:

15 Claims Guidelines Claims processed weekly –No limit on number of claims –No minimum/maximum dollar amount Submit claims within 60 days Unused funds carry over from each year

16 Account Closures HRA Account closes if: –Account balance is $0 –Account is abandoned –Death of employee, with no surviving eligible dependents –Death of surviving eligible dependents –If during the termination or retirement process, you are deemed ineligible for the HRA

17 Account Suspension or Reactivation Account suspended –If you are rehired and return to work at Kaiser Permanente in any capacity Account Reactivated –When you terminate again: No minimum balance required

18 Contact Information For HRA detailed questions, covered expenses and claims: –Ceridian Monday-Friday, 5 a.m.-5 p.m. Pacific Time For HRA general questions: –My HR Web site –Human Resources Service Center (HRSC) KP-HRSC ( ) Ceridian Customer Service – or – Online at Social Security number (with dashes) Initial password/PIN –(last 4 numbers of your SSN reversed)

19 Questions?