DEVELOPMENT OF THENECA/IBEW FAMILY MEDICAL CARE

PLAN

NECA LABOR RELATIONSCONFERENCE

PLAN OVERVIEW

OCTOBER 2009

22

Healthcare in the U.S.

• 44,000,000 uninsured Americans

• 16.2% total GDP spent on healthcare in 2007 (estimated at 17% in 2008)

• Projected to be 19% by 2014

• Projected to be 25% by 2020

• U.S. has poorer health outcomes than many other nations, even though it spends 1/3 to 1/2 more than those nations.

• The future of government-sponsored national health plan is in doubt, although the current administration is taking a close look at some version of national coverage.

• Much of the coverage for electrical employees is provided through small plans and employers and is neither stable nor cost-effective.

33

Somebody Has to do Something….

• In 2003 and 2004, IBEW and NECA took on the job

• Began surveys and research on benefit plans and financing

• Extensive studies of existing plans in various regions

• Selection of IBEW 10th District as pilot group

44

Growth of the IBEW National Plan

• Began operations January 1, 2006

• 3,500 employees

• 12 Local Unions

• $17 million in assets

• Status as of July 1, 2009

• 13,800 employees

• 38 Local Unions

• $74 million in assets

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States Currently Participating

• Alabama

• Arkansas

• Florida

• Georgia

• Louisiana

• Michigan

• Mississippi

• Missouri

• North Carolina

• Ohio

• South Carolina

• Tennessee

• Texas

• Virginia

• Washington

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Trustees of the National Plan

• Current Union Trustees

• Lindell Lee

• Michael Long

• John Nickles

• Shane Roberts

• Current Employer Trustees

• Geary Higgins

• Howard Hughes

• Larry Moter

• Jerry Sims

• Kevin Tighe• Union Trustees selected by IBEW from Vice-Presidential Districts

• Employer Trustees selected by NECA

• Trustees’ obligation is to manage the Plan and its resources in the best interests of the participants

77

How the Board of Trustees Interacts

• Trustees accept input from all local plans and participant groups

• Two Trustees from each IBEW VP District help oversee the interests of their regions

• Local parties have options available for contract negotiations

88

Service Providers

Fund Counsel

Mr. Hugh Arnold, Arnold & KadjanMr. Gary Lieber, Schmeltzer, Aptaker & Shepard

PPO Network and Medical Claims Processor

Blue Cross Blue Shield of Georgia

Fund Administrator

Mr. Joel France, CompuSysMs. Jeri Hill, CompuSys

Fund Consultant/Actuary

Mr. Jack Diem, Blomquist & CompanyMr. Kurt Starbuck, Blomquist & Company

Life and AD&D Insurance

Union Labor Life Insurance Company

Dental Claims Processor

Metropolitan Life Insurance Company

Pharmacy Benefits Manager

Sav-Rx

Fund Auditor

Mr. Bruce Pavlik, Legacy Professionals

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Cost Benefits

• Reduced administration eliminates redundant services

• Larger asset pool allows professional management and more efficient asset allocations

• Reduced net operating expenses

• Reduced investment management expenses

• Larger volume discounts with providers

• Transparency of operations and expenses

• Flexibility with regard to reserves and funding

• Improved bargaining position through larger group

1010

Benefit Designs

• Several Plan design options available for smaller groups

• Various deductibles & out-of-pocket limits

• Dental or no dental

• Vision or no vision

• Life and A&D insurance options

• Plan 1 Standard Benefits

• Handouts provided

• Plan 10 Higher Benefits

• Handouts provided

• Customized Plans Available for Larger Groups

1111

Funding and Rating

• Pooled rates based on demographic and geographic factors

• Variation of pooling and self-funding for custom plans

1212

Advantages of Blue Card® Network

• No balance billing to participants.

• Lower out-of-pocket cost to participants, and savings to Plan.

• Same benefit schedule for participants regardless of region or state in which they receive medical care.

• All Blue Cross plans linked together nationally.

• Large national provider network:

• 270,416 primary care physicians

• 468,240 specialists

• 5,698 hospitals

• 80% of all physicians contract with Blue Cross

• 90% of all hospitals contract with Blue Cross

1313

Blue Card® National Network

Participant Access to Blue Card® Network

1) Participant shows I.D. card to his doctor or hospital.

2) Doctor or hospital submits the claim to the local Blue Cross plan.

3) The local Blue Cross plan transmits the claim to Blue Cross Blue Shield.

4) Blue Cross Blue Shield adjudicates the claim and credits the local Blue Cross plan.

5) The local Blue Cross plan sends payment to the doctor or hospital.

6) Blue Cross Blue Shield sends an EOB to the participant.7) Participant is billed his portion of the claim by the doctor or

hospital.

1414

Blue Cross Blue Shield of Georgia

• Claim adjudication is transitioning to CompuSys in early 2010

• BCBSGa provides access to national savings

• 90% all hospitals nationwide participate

• 80% all physicians nationwide participate

• Plan contracts directly with BCBSGa, so all fees and expenses are fully revealed

• Although Plan contracts directly with BCBSGa, participants can seamlessly access any Blue Cross provider in any state

• BCBSGa and local Blue Cross plan coordinate benefits behind the scenes

1515

Customer Service

• Enrollment or paperwork issues:

• Dedicated Fund Office

• Claim Issues

• Medical — Dedicated CompuSys office

• Dental — MetLife

• Vision — VSP

1616

Reporting for the National Plan

• The National Plan is a transparent Health and Welfare Plan

• Monitoring by auditor, consultant and two independent legal counsels

• CompuSys, the administrator, is the principal point of contact for issues and concerns, but decisions are made by Trustees

• The National Plan provides reports showing experience, utilization and trends

• All Plan information is completely available to the Trustees

1717

Special Fund (HRA)

• A special additional amount can be contributed on a tax-free basis to the employees’ Special Fund (HRA) accounts.

• Employee can use it to pay deductibles, copays or other qualifying expenses, including self-payments that otherwise would have to be paid with after-tax earnings.

• The reimbursable expenses are limited to specific allowable expenses under the Internal Revenue Code.

• Unused balances are carried forward from year to year and are not lost if not used. However, an employee’s balance is not vested—there is no provision for cashing in an account balance.

• If an employee dies while an account balance remains, his dependents can use it.

• Interest earned on accumulations in the Special Fund defrays the Fund’s operating expenses.

• Not available to non-bargaining employees.

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Special Fund (HRA)

Covered Expenses•Deductibles & co-payments

•Acupuncture

•Self-payments for Plan coverage

•Medical expenses not covered by the Plan

•Vision expenses not covered by the Plan

•Dental treatment not covered by the Plan

•Smoking cessation programs

•Certain transportation expenses

•Vision-correction surgery

•Weight loss programs

•Christian Science practitioners

Non-Covered Expenses•Cosmetic surgery or treatment

•Health club memberships or expenses

•Household help

•Maternity clothes

•Food or dietary supplements

1919

Implementation Steps

• Modify labor agreements to reflect new contribution rates

• Transition employees into eligibility under National Plan

• Terminate existing contracts

• Transfer COBRA qualified beneficiaries

• Transfer disabled employees

• Transfer retirees