Retiree Medical Insurance Plan Financial Health of the Plan James Clagett, HRSCM May 29, 2009

2 Agenda  Summary of 2008 RMIP Costs  Plan Funding & Participation  Financial Trends  Medicare Review & Preliminary Findings  Questions

3 Summary of Retiree Medical Plan Costs Expenses before Medicare Reimb. Deductibles & Copayments Expenses After Medicare Medical Claims $49.2$10.5$6.9$31.8 Prescription $7.5 $1.6$2.0 $5.5 Dental Claims $16.2--$2.6$12.0 Administrative Fees -- $2.7 Total $72.9$12.1$11.5$52.0 Cost of Savings $2.6* Total Medicare $14.7 * Cost of Savings from Medicare is paid directly to retirees

4 Plan Funding & Participation May 29, Contributions in Millions Retiree Contributions$12.9 Continuation Contributions $0.7 Bank Group Contributions$38.8 Total Plan Contributions$ Avg. Number of Retirees4,4944,6965,001 Avg. Number of Participants8,1348,5909,225 Plan Participation

5 RMIP Cost Per Retiree May 29, 2009

6 RMIP Financial Trends Average RMIP4.3%10.8%0%7.5%0%4.4% U.S. Average9.1%8.3%8%11% (Projected) 9% 9.1% Contribution Rate Increase History  Why no Bank increase in 2009?  RDS Medicare subsidy  New pharmacy contract (7% savings)

7 Medicare Review  Currently Compensation Management and a working group from the 1818 Society are conducting a joint review of Medicare discounts  What is the appropriate Medicare discount  How should the discount be allocated between participants  Review will be completed by the end of 2009  Some preliminary findings

8 RMIP Medicare Savings RMIP Savings From Medicare Annual (Millions) Average Savings Per Medicare Participant (Annual) Avg. Per Medicare Participant (Monthly) Total claims paid by Medicare $13.1$4,366$364 Total RX rebates$1.6$533$44 Total direct savings from Medicare $14.7$4,898$408 Calendar Year 2008 RMIP Medicare Savings Number of participants enrolled in Medicare: 3,000

9 Estimated Retiree Savings From Medicare Retiree Savings From Enrollment in Medicare Annual (in millions) RMIP Medicare discount $1.0 Medicare Cost of Savings (COS) $2.6 Reduction of plan expenses (retiree portion 25%) $2.7 Rx Rebates (retiree portion 25%) $0.4 Total savings from Medicare passed on to retirees $6.7 *  Estimated retiree contributions to Medicare Part B $4.25 million * Savings do not include lower negotiated rates from Medicare providers

10 Financial Health of the Plan Questions?