IBT Bus Drivers Health Plan November 17, 2008 John Slatery Director, Benefits Department

Bus Drivers The Teamsters are organizing Bus Drivers across the country Negotiating health benefits for these workers is an important element of the organizing strategy The International Brotherhood of Teamsters Voluntary Employee Benefit Trust (IBT VEBA) is willing to assume the risk of coverage for these newly organized workers under certain conditions Specific plan design Options and Coverage Specific contribution requirements

The Teamsters are organizing Bus Drivers across the country

Negotiating health benefits for these workers is an important element of the organizing strategy

The International Brotherhood of Teamsters Voluntary Employee Benefit Trust (IBT VEBA) is willing to assume the risk of coverage for these newly organized workers under certain conditions

Specific plan design Options and Coverage

Specific contribution requirements

Why the IBT VEBA is Willing to Assume Risk The newly organized bus drivers represent a risk that many funds may not be willing to assume Never been insured before Low wage workers Existing health issues For many contracts the initial benefits that can be negotiated will be substantially less than traditional Teamster benefits Lower wage bus drivers employers will not be willing to provide Teamster level benefits Need to reduce administrative costs in order to maximize benefits Due to the potential risks represented by the bus drivers, the VEBA assumes the risks to protect the funds and offer the best benefits for the cost

The newly organized bus drivers represent a risk that many funds may not be willing to assume

Never been insured before

Low wage workers

Existing health issues

For many contracts the initial benefits that can be negotiated will be substantially less than traditional Teamster benefits

Lower wage bus drivers employers will not be willing to provide Teamster level benefits

Need to reduce administrative costs in order to maximize benefits

Due to the potential risks represented by the bus drivers, the VEBA assumes the risks to protect the funds and offer the best benefits for the cost

Plan Design Options for Bargainers

Bus Driver Plan Options for Bargainers with 3 year Rate Guarantees Monthly Rates (based on 12 months) Plans 1 / 2 : Composite Medical Only: $242.00 / $327.00 Composite Drug Only: $53.00 / $81.00 Composite Dental Only (Plan 1 only): $27.00 / $27.00 Composite Vision Only: $6.00 / $8.00 Composite Combined Rate (2009): $328.00 / $443.00 Composite Combined Rate (2010): $354.24 / $478.44 Composite Combined Rate (2011) : $382.58 / $516.72 Composite rates cover single and family members. IF the Bargainers choose to negotiated more money, we can provide a richer plan of benefits

Monthly Rates (based on 12 months) Plans 1 / 2 :

Composite Medical Only: $242.00 / $327.00

Composite Drug Only: $53.00 / $81.00

Composite Dental Only (Plan 1 only): $27.00 / $27.00

Composite Vision Only: $6.00 / $8.00

Composite Combined Rate (2009): $328.00 / $443.00 Composite Combined Rate (2010): $354.24 / $478.44 Composite Combined Rate (2011) : $382.58 / $516.72

Composite rates cover single and family members.

IF the Bargainers choose to negotiated more money, we can provide a richer plan of benefits

Rates for Plan Design Options

Lowest Cost Option: Single Coverage for Med/Rx/Dent/Vis. is $221/mo.

Mo. Composite Rates for Plans 1&2 and Sample Bargaining Language Medical: Plan 1-$242/ Plan 2-$327 Pres. Drug: Plan 1-$53 / Plan 2-$81 Dental: Plan 1-$27 (no plan 2) Vision: Plan 1-$6 / Plan 2-$8 SAMPLE Bargaining Language: The employer will pay a composite rate of XXX$ per month per each bargaining unit employee to the local IBT Taft-Hartley Fund for the first year of the contract and will pay no more than an 8% escalator for the second and third year of the contract. The employer and union agree to the plan design attached and that contributions remitted to the local IBT Taft-Hartley Health fund will be used to fund benefits underwritten and administered by the IBT VEBA.

Medical: Plan 1-$242/ Plan 2-$327

Pres. Drug: Plan 1-$53 / Plan 2-$81

Dental: Plan 1-$27 (no plan 2)

Vision: Plan 1-$6 / Plan 2-$8

SAMPLE Bargaining Language:

The employer will pay a composite rate of XXX$ per month per each bargaining unit employee to the local IBT Taft-Hartley Fund for the first year of the contract and will pay no more than an 8% escalator for the second and third year of the contract. The employer and union agree to the plan design attached and that contributions remitted to the local IBT Taft-Hartley Health fund will be used to fund benefits underwritten and administered by the IBT VEBA.

Additional Plan Information No pre-existing condition limitations Employers must contribute 80% of the cost for single coverage ($135/mo. for Medical is minimum—ee’s pay difference-$35) Annual inflation increase capped at 8% over 3 years All Bargaining Unit members are eligible and premium is due for each month of employment. If applicable, 9 month rates are available for 12 months of coverage. IBT Plan must have 1,000 participants by 2009-- census is required Plan is designed to help members get healthy Low or no copays for prescriptions related to diabetes and hypertension As comprehensive benefits are negotiated, members under the current plans will present less risk because they will have treated their chronic conditions

No pre-existing condition limitations

Employers must contribute 80% of the cost for single coverage ($135/mo. for Medical is minimum—ee’s pay difference-$35)

Annual inflation increase capped at 8% over 3 years

All Bargaining Unit members are eligible and premium is due for each month of employment. If applicable, 9 month rates are available for 12 months of coverage.

IBT Plan must have 1,000 participants by 2009-- census is required

Plan is designed to help members get healthy

Low or no copays for prescriptions related to diabetes and hypertension

As comprehensive benefits are negotiated, members under the current plans will present less risk because they will have treated their chronic conditions

How It Will Work Plan administrators are critical to providing this benefit If you are unsuccessful in obtaining a local Fund Administrator, the Benefits Department will find an IBT Health & Welfare Fund to assist you. Administrator receives and tracks eligibility and provides it to the IBT VEBA’s claim administrator Administrator collects money from employer, subtracts its fee(not in rates yet ), and sends the remainder to the IBT VEBA IBT VEBA funds all claim payments through its claim administrator--CIGNA Administrator is responsible for Payroll Audits but IBT VEBA takes on risk and manages Vendors, performs COBRA/HIPAA duties. IBT is committed to this plan as we hired a full time in-house administrator and a TPA, CIGNA, to make this work.

Plan administrators are critical to providing this benefit

If you are unsuccessful in obtaining a local Fund Administrator, the Benefits Department will find an IBT Health & Welfare Fund to assist you.

Administrator receives and tracks eligibility and provides it to the IBT VEBA’s claim administrator

Administrator collects money from employer, subtracts its fee(not in rates yet ), and sends the remainder to the IBT VEBA

IBT VEBA funds all claim payments through its claim administrator--CIGNA

Administrator is responsible for Payroll Audits but IBT VEBA takes on risk and manages Vendors, performs COBRA/HIPAA duties.

IBT is committed to this plan as we hired a full time in-house administrator and a TPA, CIGNA, to make this work.

Transfer of Premium, Eligibility Data for Bus Driver Plan