1. Human Resources Update EPS Annual Conference - 2013

2. Topics • Long-term Care • 401(k) Plan • Health Care • CDH Only • Cost Comparison • Health Savings Account (HSA) • Changes/Additions for 2013 • Health Advocate • Dental/Vision • Who REALLY Pays for Coverage • Open Enrollment Background • Health Care Reform • Wellness • Recruiting for staff – Application for Employment/Predictive Index (PI) Survey • Standardized Job Descriptions • Payroll • Closing … Miscellaneous/Comments/Questions

3. Long-Term Care • Full-time EPS employees have been covered by the Company through Prudential for $50/day base plan • Companies, including Prudential, are getting out of the group long-term care business • LifeSecure will be offered effective July 1 – base plan will be $1,550/month; employees can enroll in LifeSecure and/or keep Prudential coverage (through direct bill) • Company will pay up to $16/month toward coverage through LifeSecure, or will reimburse up to $16/month to employees who waive LifeSecure coverage and retain coverage with Prudential • Employees are permitted to enroll in LifeSecure AND retain coverage through Prudential, in which case, Company will pay up to $16/month toward coverage through LifeSecure • Employees will handle enrollment by contacting LifeSecure

4. 401(k) Plan • MassMutual handles administration and investment platform for Plan • First Western works in combination with MassMutual and provides investment advice to the Plan overall, as well as provides individual investment advice to participants • Changes to contribution amounts/percentages and changes in fund selection are done online through MassMutual by the participant- www.retiresmart.com

5. Medical Plan – Why CDH Only?

6. Medical Plan – Why CDH Only? • CDH Plans cost less to employees and to employers • Improvements in health outcomes due to employees being more involved in their health care and taking more ownership/responsibility for providers that are chosen and costs involved in treatment • Keeping a PPO would have been unaffordable to employees and the company – the PPO plan alone for 2012 was 123.8% of budget • Although administrative & fixed costs continue to rise, claims paid, since we are self-insured, drives the cost; plan costs in 2012 were up 20% over costs of 2011 – average increase for most plans during 2012 was 10%

7. Why CDH Only? (Cont.) • In addition to claims paid, EPS has higher than average costs due to • Average employee age for most plans during 2012 was 41; the EPS average was 51 • Average member age for most plans during 2012 was 31; the EPS average was 41.5 • The 55-59 member age group with EPS represented 22% of the total enrollment and was the most costly group • Outpatient Facilities costs increased 90% in 2012 over 2011 and accounted for 45% of claim costs

8. CDH PLAN - REMEMBER Always check to make sure providers are in-network – United Healthcare Options PPO … just because a doctor is in network, does not mean connected facility or secondary place of treatment has agreed to be part of network … providers can change their network status any time (and many do) – it is up to the provider whether or not it is part of a network, and every participant is responsible for checking this prior to services

9. BASIC EXAMPLE OF COSTS OF PPO vs CDH (Consultants)

10. Health Savings Account (HSA) • A Health Savings Account is a tax-exempt, personal savings account that may be used to pay for qualified health care expenses and save for future qualified expenses • Contributions are made through payroll-deduction and are tax-free; contributions earn interest, which is also tax-free • Account is portable – the participant owns this account at all times and the account stays with the participant if he/she leaves the company • Participants reimburse themselves for eligible expenses, and unused contributions roll over year after year; receipts need to be kept to verify eligibility of expenses

11. Health Savings Account (Cont.) • Participant must be enrolled in EPS CDH Plan • Participant must not be covered under any other health plan that is not a CDH Plan • Participant must not be enrolled in Medicare • Participant must not be claimed as a dependent on another person’s tax filing

12. Health Savings Account (Cont.) • The IRS establishes annual maximums for each calendar year • For 2013, the maximum contributions established by the IRS are: • Single coverage $3,250 (Company will contribute $200 during 2013 toward this maximum) • Family coverage $6,450 (Company will contribute $400 during 2013 toward this maximum) • Can change amount during the year as long as it doesn’t exceed maximum • For 2014, the maximum contributions will be: • Single coverage $3,300 • Family coverage $6,550 • Anyone age 55+ may make an additional $1,000 contribution over the maximum

13. Changes/Additions for 2013 • Participants in the EPS health plans use the administrative services of UMR, a United Healthcare company • Nationalnetwork is United Healthcare Options PPO (versus multiple small networks throughout the country) • Nurse Lineavailable for all CDH participants (877-950-5083, Pin 197) • Switched pharmacy benefit manager to Optum Rx, which will result in better discounts for many prescriptions; also added coverage for preventative generic prescriptions with no deductible or co-pays [Note: By 2020, Rx costs are anticipated to exceed medical costs, regardless of the type of medical plan] • \ • Continuing services of HealthAdvocate at no cost to participant

14. Health Advocate Program HIPAA limits HR’s involvement in knowledge of individual claim information … UMR will work directly with any participant, as will Health Advocate Participants enrolled in the CDH plan have access to the Health Advocate program which provides a variety of services at no additional cost (program is being provided by the company) • Finding the right doctors and hospitals • Understanding EOBs (explanation of benefits) and resolving insurance claims • Obtaining cost estimates for medical procedures • Scheduling appointments, especially with hard-to-reach specialists • Working through a serious illness or injury • Obtaining services for elderly parents and parents-in-law • 866-695-8622 or HealthAdvocate.com

15. Dental/Vision Coverage • Dental coverage remains the same as for 2012; participants who use DenteMax network providers will likely enjoy better discounts than if using providers outside of network • Vision coverage remains the same as for 2012

16. Who REALLY Pays for Coverage? • Medical Plan participation in 2012 • 79.2% of participants were consultants and support staff • 20.8% of participants were corporate employees • Fixed & variable costs for Medical Plan were approximately $1,087,228 • Consultants paid approximately 52.3% toward total costs for themselves & support staff • Support staff and corporate employees paid approximately 12.6% toward total costs • The Company paid approximately 35.1% toward total costs

17. Open Enrollment – Why the • Year-end is SO much fun for HR, that everyone else should have fun too! • People don’t have enough to do around the holidays … OR …

18. Open Enrollment (Cont.) • As a self-insured company, EPS needs to use a ‘reinsurer’ to protect against higher dollar claims • Some reinsurers will not lock in rates until mid November, as they want to see as much claim information for the current year as possible • Once rates are locked with reinsurer, we need to evaluate bids from the administrator for variable and fixed costs • Costs are then estimated/budgeted based on anticipated fixed and variable costs for the following year

19. Open Enrollment (Cont.) • Even though we may not receive fixed rates until early to mid-November, enrollment must be submitted to the administrator before the end of November to allow time to process information on their end for a January 1 effective date; most plans use January 1 as an effective date which requires extra time • Once elections are received in HR, we confirm elections with each person to make sure what they elected is what they wanted to elect; only then do we submit information to the administrator

20. Health Care Reform • Summary of Benefit Coverage (SBC) provided for 2013 Open Enrollment (OE); will continue to be required each year with OE and for new employees during the year • Medicare payroll tax increase went into effect 1/1/13 for any employee earning more than $200,000 (2.35% vs. 1.45%) • Company required to pay annual Patient-Centered Outcomes Research Institute Fee (PCORI) beginning in July, 2013 • Notices of Health Care Exchanges to be distributed to employees by October 1, 2013 – each state has elected whether to offer its own exchange or participate in the Federal exchange – approximately 40% of states have elected to participate in the Federal exchange; interested individuals will need to complete a 20+ page application annually

21. Health Care Reform • Pre-existing conditions will no longer apply to group plans effective January 1, 2014 • Individual mandated insurance coverage effective January 1, 2014 – penalty for not purchasing health insurance will start at $95/per year or 1% of annual income, whichever is higher; by 2016, penalty will be $695/year or 2.5% of annual income, whichever is higher (IRS is responsible for collecting the penalty since it will be considered a ‘tax’) – after 2016, IRS will collect a tax based on cost of living adjustments • Company required to pay annual Transitional Reinsurance Fee in 2014

22. Wellness • Incentivize versus penalize … which is better … offer discounts in premiums for participation in health screening/healthier habits or increase cost for lack of participation? • Current law permits companies to use health-related rewards or penalties as long as the amount doesn’t exceed 20% of the cost of the employee’s health coverage [most companies use 5-10% of employee premium costs as a target for incentives/penalties] • Will employees be open to health screening or will they consider it an invasion of privacy? (The company would not receive any information specific to any individual – only summaries of xx number of employees have xxxx, etc. – the health screening company would work directly with employees on any areas that could be improved)

23. Recruiting • When plans are being made to fill a position, managers need to work with HR, Joe & Duong/Toni before any steps are taken • Any person being considered for employment needs to complete an Application for Employment, as well as a Predictive Index (PI) survey • The Application for Employment provides legal verification that the person is a candidate, and obtains information not found on a resume, as well as attests that the information that is being provided is true and accurate • Predictive Index (PI) survey measures behavioral drives to predict how successful a person will be in a position

24. Recruiting (Cont.) • Only Human Resources prepares offer letters for candidates • Candidates being offered a position are informed that offer is contingent upon successful background check and ability to provide I-9 documentation on first day of employment • I-9 documentation must be completed by employee & manager on first day of employment, and employee must provide original documents for I-9 certification

25. Recruiting – Things to Remember Documents can be required by courts if any kind of discrimination is alleged … • No notes, highlights, etc. should be made on the Application or resume – make notes on a separate piece of paper • Ask only job-related interview questions (HR can assist with developing questions) • Applications must be kept for one year from time of recruitment, along with all interview notes

26. STANDARDIZED JOB DESCRIPTIONS HR will be working on developing standardized job descriptions for field support personnel later in the year – will need your and your staff’s assistance with this

27. Payroll • Employees are paid current … when an employee takes vacation and/or sick time, he/she is to submit record of time taken on either timesheets (if hourly employee) or Exception sheets (if salaried employee) as time is taken … this is the only way to accurately accrue time for eligible employees, and we need an audit trail for paid time off – if information is received after payroll is processed, Priscilla will adjust information in the next pay period • The ADP iPay portal not only provides pay statement information, but employees can also access prior W2s

28. In closing … Priscilla and Pam are available to work with anyone on HR issues or questions … just let us know how we can help