1. Page 1 Copyright © 2010 Raytheon Company. All rights reserved. Self-Insured Workers’ Compensation Program Frank Ruel

2. Page 2 Agenda  Raytheon Company Overview  Integrated Disability Program  Workers’ Compensation Program  Self Administration Benefits  Return to Work  Conclusion

3. Page 3 ›› A global leader in technology and innovation WHO WE ARE A technology and innovation leader specializing in defense, homeland security and other government markets throughout the world 2009 net sales: $25 billion 75,000 employees worldwide Headquarters: Waltham, Massachusetts

4. Page 4 ›› Ensuring the success of our customers To be the most admired defense and aerospace systems supplier through world-class people and technology. OUR VISION

5. Page 5 Raytheon Business Headquarters Global Headquarters Waltham, MA ›› 75,000 employees; 2009 net sales: $25 billion Integrated Defense Systems Tewksbury, MA Technical Services Reston,VA Intelligence and Information Systems Garland, TX Network Centric Systems McKinney, TX Missile Systems Tucson, AZ Space and Airborne Systems El Segundo, CA BD and Raytheon International Operations Rosslyn, VA

6. Page 6 Organization Chart Raytheon CEO General Counsel VP - Corp Services Risk Management EHS SVP HR VP - Benefits, Comp, PD, GHR Integrated Disability Programs

7. Page 7 Integrated Disability Program at Raytheon  Workers’ Compensation Self-Insured and self-administered in MA and RI Claims administered by Liberty Mutual nationwide (except MA/RI) as well as for U.S. employees working overseas  Short/Long-Term Disability Self-Insured throughout the U.S. for STD and LTD Employees can purchase optional coverage for higher benefit rates and long-term disability Claims are handled by MetLife.  Unemployment Compensation (Claims) Claims administered by TALX

8. Page 8 Raytheon Disability Program Absence Management Goals  Return to work initiatives Early and medically safe Whether Occ. or Non-Occ. Plan RTW- Lead discussions  Corp resource to consult and train re: Absence Management / productivity HR, management, and front-line leaders Safety and medical staff  Develop innovative RTW programs  Engage medical community and Raytheon Physicians

9. Page 9 Raytheon Workers’ Compensation Program (MA & RI)  Self-Insured Raytheon funded for workers’ compensation coverage Excess coverage through Liberty Mutual over retention level  Self-Administered “In-house” Claims processing – investigation, forms, claims decisions Bill Payment Utilization Review (UR) Loss Prevention Litigation Management – Outside Counsel  Other Resources On-site Clinics staffed with nurses and M.D.’s Medical Consultants Vocational Rehabilitation Specialists

10. Page 10 Advantages vs. Disadvantages of Self-Administration Pros  Integration with the Business Access to Raytheon facilities and Supervisors (in-person) Working relationships with management & safety Employer databases  Claim Analyst handles Conciliations  Manage medical-only claims  Integration of RMIS, Risktrac, MetLife Database, Medgate  Relationships with Doctors  TPA comparison Superior level of service Lower cost Cons  Bonding requirements  Personnel issues  Overhead costs Head count IT costs Office Space

11. Page 11 Raytheon Workers’ Compensation Program History  Self-Insured as of 1/1/1992  Self-Administered as of 1993  Currently cover about 15,000 employees (MA & RI) Union workforce ~ 2,300 Early 1990’s Union workforce ~10,000  Decreased claim volume due to: Reduction of touch-labor workforce in MA Proactive EHS initiatives WC reform

12. Page 12 Paid Lost Work Days – Insured vs. Self Insured Based on a 5-day work week

13. Page 13 Average Lost Time Claim Cost – Insured vs. Self Insured 1/01/07-12/31/2009 Val 4/1/2010. Loss limit of 250k

14. Page 14 Average Expense Cost – Insured vs. Self Insured 1/01/07-12/31/2009 Val 4/1/2010

15. Page 15 Jurisdictional Difficulties  No control of medical (choice of physician)  High SAWW, high compensation rates  MA Fee schedule - negotiated medical rates  Fairly liberal ALJ’s  Difficult to get relief from SIF  Legal issues Fee incentive for employee attorneys to file RTW can be lengthy legal process  No cap on TTD  Specific benefits Whole body disfigurement Very subjective system  Forms, forms, forms!

16. Page 16 Coordination of Benefits  Share data with Raytheon's Health Insurance Carriers (self-funded)  Coordination of benefits with MetLife for STD/LTD  Integrated Health Management (Mission:Health)  Share WC data with unemployment for contract employees

17. Page 17 Getting Absent Employees Back to Work  Temporary Job Accommodations Seek detailed restrictions Job rotation or alternative assignments Assistive devices and work station modifications  Raytheon Works with MD’s RTW promptly in a medically appropriate and safe manner Physician tours of our facilities Pre arranged fee arrangements for top notch Dr’s who get it. Employee Raytheon Physician

18. Page 18 The Employer Statement of Job Demands  Outlines the physical requirements of the job  Completed by the employee’s supervisor  Describes potential accommodations  It is NOT a job description  Can be forwarded to treating physicians

19. Page 19 The Lost Time Intervention Team (LTIT)  Medical (RN/MD), HR, Voc Rehab Experts and Claims  Reduced Hours and other accommodations are often used to ease return  Clear communications to the absent employee is an absolute necessity The worksite Return to Work Planning Forum

20. Page 20 Conclusions  Better service  Lower claims cost (especially expense)  Better RTW outcomes through integration with the business and personal relationships  Innovative forum to develop and create tools for RTW