1. INTRODUCTION TO HSA LTD TRUSTS A primer for HSA members covered by the Paramedical Professional Bargaining Association Collective Agreement April 2005

2. What is LTD? Long Term Disability is insurance against wage loss should you become ill or disabled and unable to work.

3. What is a “contribution rate?” The percentage that is deducted from regular pay in order to provide the necessary funds to sustain LTD benefits. Current rate: 3.0%

4. What does “off-set” mean? Additional negotiated wage increase, designed to be applied directly to fund the LTD plan.

5. What is “unfunded liability”? The amount by which the liabilities of a plan exceed plan assets, at a given date.

6. Where did it begin? Prior to 1986, employer-paid plan 1986 contract negotiations: HSA assumed responsibility for LTD, Accidental Death and Disability and Life Insurance benefits Negotiated 1.6% off-set LTD deduction set at.8%

7. Formal trust Established 1989  HSA solely responsible  Off-set increased from 1.6% to 2%  LTD contribution rate set at 1.0%  Under-funded at onset

8. Rate Increases 1991 Negotiations: 1991: Offset set at 2.4% 1992: Offset set at 2.3% By 1995: LTD contribution rate 1.75% Context: Offset has positive impact on other benefits, i.e., pension, overtime, call-back rates

9. Benefit Changes 1995: Benefit limited to 85% of earnings 1998: Discontinued Accidental Death and Disability and Life Insurance Context: Unfunded liability at $13.4 million.

10. New revenue… second plan 1998 Negotiations: One-time injection of $6 million for LTD conditional on second plan being established, and that benefits taxable Context: Wage guidelines; health restructuring and downsizing; increase in plan usage

11. Rate increases July 2002: Contribution rate increased to 2.25% July 2003: Contribution rate increased to 3.0% Context: Unfunded liability at $12.5 million. Increase covers cost of benefits and begins to address unfunded liability

12. Rate increases having effect 2004: Investments improve – 11% growth Unfunded liability growth slowing

13. Trust Assets and Liabilities (Combined) benefits 6 million 2.25% 3.0%

14. Steps taken to reduce liability  Reduced benefits  Increased contribution rates  Negotiations

15. Next step: streamline trusts Effective April 1 st, 2005 the LTD Plan #2 Benefits will be converted to non-taxable.  Same net benefit based on basic (i.e., single) tax bracket  More than $2 million projected in savings for the trust

16. Plan Booklet Plan benefits are not outlined in the Collective Agreement Separate plan booklet will be mailed to all HSA members covered by the PPBA Collective Agreement