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T H E
H C S C
E M P L O Y E E S
P E N S I O N
P L A N
E F F E C T I V E D A T E : J A N U A R Y 1 , 2 0 1 5
P U B L I S H D A T E :
M A Y 1 , 2 0 1 6
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
1
T A B L E O F C O N T E N T S
INTRODUCTION 3
IMPORTANT TERMS 4-5
WHO IS ELIGIBLE 5
WHEN YOU BECOME A PARTICIPANT OF THE PLAN 5-6
COST OF THE PLAN 6
YOUR EMPLOYEE PENSION PLAN ACCOUNT 6-10
Employer Credits 7
Interest Credits 8
Transitional Benefit 9
Vesting 9
Withdrawals 10
WHEN YOU TERMINATE OR RETIRE 10-12
Payment Options 10
Joint and Survivor Annuity 11
Life Annuity with 10-Year Certain and Continuous Option 11
Life Annuity 12
Lump Sum Option 12
When Benefits Begin 13
Direct Rollovers 13-14
If You Return to Work with the Company 14
If You Transfer and Your Participation Ends 15
If You Take a Leave of Absence 15
If You Become Disabled 15-16
If You Die While You Are an Active Participant in the Plan 16
If You Die After You Terminate Employment 16-17
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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HOW TO APPLY FOR BENEFITS 17
CLAIMS PROCEDURES 17-18
OTHER CONSIDERATIONS 19-20
Statement of Your Employee Pension Plan Account 19
Tax Considerations 19
Consult Your Tax Advisor 19
Qualified Domestic Relations Orders 19-20
IF THE PLAN BECOMES TOP HEAVY 20
IF THE PLAN IS AMENDED OR TERMINATED 20-21
PLAN CONTINUATION AND DISCRETION 22
GOVERNMENTAL REQUIREMENTS AFFECTING BENEFITS 22
OTHER IMPORTANT INFORMATION 23-26
General Information about the Plan 23-24
Your Rights under the Employee Retirement Income Security Act of 1974 (ERISA) 25-26
APPENDIX – TRANSITIONAL FORMULA 27
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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I N T R O D U C T I O N
The financial protection provided by HEALTH CARE SERVICE CORPORATION (HCSC or
Company), a Mutual Legal Reserve Company, extends beyond your employment. While certain
benefits help protect you during the years you work here, your Pension Plan can help provide the
financial security you will need when you retire. Your Retirement Program includes THE 401(k)
PLAN and THE HCSC EMPLOYEES PENSION PLAN.
Whether you retire in 10 years or 25 years, the key to enjoying your retirement is how well you have
planned for it. That means look at what you will need for retirement and then decide how you can
best meet those needs.
In addition to The HCSC Employees Pension Plan, your retirement income will include the benefits
provided by Social Security, to which you and the Company have been contributing throughout your
career. You also have your personal savings. A component of this may be your savings in THE
401(k) PLAN.
Your pension, however, may be the primary part of your retirement income. Therefore, it is
important that you understand what the Pension Plan will provide.
The HCSC Employees Pension Plan is a cash balance plan, which has these advantages:
It is easy to understand;
It is completely funded by the Company;
It is designed to provide a benefit that increases with pay and interest credits throughout your
employment;
It’s portable — if you are vested when you terminate, you can take it with you when you leave
the Company; and,
It expresses your benefit in a lump sum amount — the same as THE 401(k) PLAN — making
it easier for you to estimate your total retirement savings.
This summary gives you many of the details of the Plan and how it works. The Plan is
governed by a legal plan document. If there is a difference between information contained in
this summary and the plan document, the plan document will govern. Please read this
summary carefully.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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I M P O R T A N T T E R M S There are a number of words and phrases that have a very specific meaning when used to describe
The HCSC Employees Pension Plan. The following explanations of these special terms are to help
you better understand your benefits.
Company means Health Care Service Corporation, a Mutual Legal Reserve Company, and each
subsidiary that is eligible to participate in the Plan.
Active Participant means an employee eligible to participate in the Plan who is either actively
employed, on an approved leave of absence, on short-term disability, or reclassified to long-term
disability.
Disability or Disabled means the inability to perform your job as defined by the Plan. (See the
Disability section of this summary for more information.)
Employer means the Company and each subsidiary that has adopted The HCSC Employees Pension
Plan.
Plan or Pension Plan or Employee Pension Plan means The HCSC Employees Pension Plan.
Administrative Committee means the Plan Administrative Committee appointed to administer the
Plan. (See the General Information section for the address of the Plan Administrative Committee).
Pay means your pensionable earnings (not total compensation) from the Company for services
rendered during the calendar year as reported on your Form W-2. Pay excludes severance payments,
retirement bonuses, service awards, accumulated sick leave, short-term disability reserve paid at
termination, unused vacation (PTO) pay for any period extending beyond 501 Hours of Service,
Performance Awards (from either or both the Health Care Service Corporation Long Term
Performance Plan and/or the Health Care Service Corporation Long Term Incentive Plan) exceeding
75% of your Base Compensation, and all other extraordinary compensation. Pay includes unused
vacation/paid time off (PTO) pay paid at termination (up to 501 Hours of Service), the amounts you
contribute to a Section 125 plan or 401(k) plan as pre-tax contributions, certain amounts deferred
under the Employer’s nonqualified deferred compensation program, and (on or after January 1,
2009) any Performance Awards distributed from the Health Care Service Corporation Long Term
Incentive Plan. Pay in excess of an indexed amount ($265,000 in 2016) is not included.
Plan Year is January 1 through December 31.
Social Security Wage Base is the amount of your “Pay” subject to the Old Age Survivor and
Disability Insurance (OASDI) portion of Social Security taxes. Each year the federal government
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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announces the wage base that will take effect on January 1 of the following year. The wage base
that will be used in determining your credits is the one in effect during each Plan Year.
Vesting is your right to the benefits earned when you leave the Company.
Vesting Service is the period of service used to determine your right to the benefits you have earned.
Generally, vesting service includes all of your service with the Company (and in certain situations
other industry related companies if you were hired before January 1, 2001). It excludes breaks in
service greater than 12 months. Depending on the length of your breaks, it may also exclude prior
periods of service.
Vesting Service (measured on an elapsed time basis from January 1, 2001) may be earned during
certain periods of leave, including qualified military service that must be credited under federal law,
or a leave of absence resulting from a disability. If you are on a leave of absence (including leave
under the Family and Medical Leave Act of 1993 [FMLA]), up to the first twelve months of leave
will be included as vesting service. If you are on a leave of absence for military service, your
qualified military service will be credited as vesting service in accordance with federal law.
W H O I S E L I G I B L E
You are eligible to participate in The HCSC Employees Pension Plan if you are:
Employed by an Employer.
You are NOT eligible to participate in The HCSC Employees Pension Plan if you are:
A leased employee or, an independent contractor for federal and income tax purposes; or
Represented by a collective bargaining agreement, unless your collective bargaining agreement
specifically provides for participation in The HCSC Employees Pension Plan.
A participant who is accruing benefits under any other qualified defined benefit plan sponsored
by the Company.
W H E N Y O U B E C O M E A P A R T I C I P A N T O F T H E P L A N
You become a participant of the Plan automatically as follows:
If you are a newly eligible full-time or part-time employee, you become a participant of the Plan
on the first anniversary of your date of hire.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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If you are not eligible to participate in the Plan, but you are reclassified into an employment
status under which you become eligible to participate in the Plan, you will become a participant
of the Plan on the first anniversary of your date of hire, or, if later, the date you are reclassified
as an employee who is eligible to participate in the Plan.
You should name a beneficiary when you become a participant of the Plan. If you die after becoming
vested in your employee pension plan account, your beneficiary will receive your benefit. If you
are single, you may name anyone you wish as your beneficiary. If you are married, the law requires
that your spouse be your primary beneficiary—unless both you and your spouse agree to designate
an "estate, trust, entity, or another individual" as beneficiary. If you designate someone other than
(or in addition to) your spouse as your primary beneficiary, your spouse must provide written,
notarized consent on forms acceptable to the Plan.
C O S T O F T H E P L A N
The cost for The HCSC Employees Pension Plan is completely paid by the Company. You are
neither required nor permitted to contribute to the Plan.
Y O U R E M P L O Y E E P E N S I O N P L A N A C C O U N T
Your benefit under The HCSC Employees Pension Plan is shown as an account balance; however,
unlike a savings account or your 401(k) Plan account, this employee pension plan account represents
“credits” you have earned, rather than cash you have saved. All of the Plan’s assets are held in the
master trust fund and are not divided among individual accounts. The Plan Administrative
Committee maintains records of the total credits and will convert those credits into one of the forms
of payment provided by the Plan if you are vested when you leave the Company.
In addition, The HCSC Employees Pension Plan carries the protection of the federal government’s
Pension Benefit Guaranty Corporation (PBGC). That means that the benefits provided under the
Plan are insured to the extent permitted by the PBGC. See “If the Plan Is Amended or Terminated”
in this summary.
The statement of benefits provided each year will show your benefit as the current balance of your
employee pension plan account.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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E M P L O Y E R C R E D I T S
The Employer will credit your employee pension plan account with a certain percentage of your Pay
(as defined in this summary) that is determined by your age on the last day of the pay period.
Your Age
Percentage of Pay Credited
to Your Employee Pension
Plan Account
Percentage of Any Pay that
Exceeds the Social Security
Wage Base Credited to Your
Employee Pension Plan Account
Under 29 3.0% 2.0%
30 - 34 3.5% 2.0%
35 - 39 4.0% 2.0%
40 - 44 4.5% 2.0%
45 - 49 5.0% 2.0%
50 - 54 5.5% 2.0%
55 and Over 6.0% 2.0%
Credits are added to your employee pension plan account based on your Pay. When you move to a
new age bracket, your percentage will automatically increase for future credits.
ILLUSTRATION: EMPLOYER CREDITS
John Jones is a new participant in 2010. He is 30 years old, his bi-weekly Pay is $1,962, and the
Social Security Wage Base for the year is $106,800. Employer credits would be added to John’s
employee pension plan account equal to 3.5% of his Pay. If Mr. Jones' pay exceeds $106,800 for
the year, he will also be credited with an additional 2% for Pay that exceeds the Social Security
Wage Base.
.035 X $1,962 = $68.67
+.02
TOTAL
X $ 0 = 0
$ 1,962 $68.67
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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I N T E R E S T C R E D I T S
In addition to Employer credits, your employee pension plan account is credited with interest each
pay period. The interest rate credited to your employee pension plan account is established under
the Plan before the beginning of each new calendar quarter. The rate will continue in effect for that
quarter. There is no investment risk to you at any time.
The rate for interest credits is the annual rate of interest which is the greater of 2% or the annual rate
of interest on 30-year Treasury securities for the 4th full calendar month immediately preceding the
applicable calendar quarter, as published in the Federal Reserve Statistical Release.
The interest rate credited in prior periods should not be used as an indication of what future interest
credits will be.
ILLUSTRATION: HOW YOUR EMPLOYEE PENSION PLAN ACCOUNT CAN GROW
Let us continue to look at John Jones. If he continues in the Plan until age 65, if his Pay and the
Social Security Wage Base remain constant (for purposes of this illustration), and if his employee
pension plan account receives interest credits compounded to yield an effective annual rate of 6%,
here is how his employee pension plan account will look:
AGE
OPENING
BALANCE
EMPLOYER
CREDITS
INTEREST
CREDITS
CLOSING
BALANCE
During the First Year 30 $ 0 $1,785 $ 51 $1,836
During the Second Year 31 $1,836 $1,785 $162 $3,783
Over the remainder of his career, his employee pension plan account will look like this:
AGE BALANCE AGE BALANCE
35 $ 10,352 55 $ 121,447
40 $ 25,684 60 $180,270
45 $ 47,681 65 $258,988
50 $ 78,596
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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T R A N S I T I O N A L B E N E F I T
If you were an active, non-union participant in one of the predecessor plans listed below on
December 31, 2000, and you became a participant in The HCSC Employees Pension Plan, you may
be eligible to receive benefits under a formula called a transitional formula.
The predecessor plans are:
Texas Blue Cross Employees Retirement Plan; and
Non-Contributory Retirement Program for Employees of Illinois Blue Cross and Blue Shield.
If you were an Active Participant in the Non-Contributory Retirement Program For Certain
Employees of New Mexico Blue Cross and Blue Shield, Inc. on December 31, 2001, and you became
a participant of The HCSC Employees Pension Plan on January 1, 2002, you may also be eligible
for a “transitional formula.”
If you were an Active Participant in the Non-Contributory Retirement Program for certain
employees of Group Health Service of Oklahoma, Inc. on December 31, 2006, and you became a
participant of The HCSC Employees Pension Plan on January 1, 2007, you may also be eligible for
a “transitional formula.”
If you were an Active Participant in the Non-Contributory Retirement Program For Certain
Employees of Blue Cross and Blue Shield of Montana, Inc. on August 1, 2013, and you became a
participant of The HCSC Employees Pension Plan on January 1, 2015, you may also be eligible for
a “transitional formula.”
If you are eligible for “transitional formula,” please refer to the Appendix at the end of this summary.
V E S T I N G
You can receive your benefit when you leave the Company if you are "vested."
Vesting means that you have a right to receive the balance in your employee pension plan account.
You become vested in your employee pension plan account after you have completed three (3)
years of “Vesting Service,” or, while an Active Participant, upon the later of your 65th birthday
and the first anniversary of your date of hire. From that point on, you are 100% vested in your
account balance, including any future credits that may be added to your employee pension plan
account.
If you are not vested when you leave the Company, you will not receive any benefit.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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W I T H D R A W A L S
You cannot make withdrawals from your employee pension plan account until you are vested and
terminate employment.
Transfers within Health Care Service Corporation and its subsidiaries are not considered a
termination of employment.
W H E N Y O U T E R M I N A T E O R R E T I R E When you terminate or retire as a vested participant, and it is time to receive your benefit, The HCSC
Employees Pension Plan has various forms of payment available to meet your individual needs. You
may elect to receive your benefits under any of the alternatives described in the Payment Options
Section below.
P A Y M E N T O P T I O N S
Your Plan benefits are usually shown as a lump sum. However, you may also elect one of several
annuity options. Annuities provide a regular monthly benefit that is the actuarial equivalent of the
lump sum. You may elect a monthly benefit payable immediately, or defer benefits until you reach
age 65.
If you are married, the required normal form of payment is a Qualified Joint and 50% Survivor
Annuity. If you and your spouse do not want this type of annuity, you must provide your
spouse’s written, notarized consent to waive this type of annuity in order to elect an alternative
form of payment. If you are not married, the normal form of payment is a Life Annuity, unless you
choose to elect one of the alternative forms of payment.
The amount of your monthly benefit depends on the following:
The balance in your employee pension plan account when you leave;
Your age when your monthly payments begin; and,
The distribution option you elect.
The amount of your monthly benefit is affected by the applicable Revenue Ruling 2001-62 Mortality
Table and the interest rate used to convert your balance to an annuity. The rate used to calculate the
annuity is the rate in effect at the time you begin receiving benefits. Effective January 1, 2010, this
rate is the greater of (1) 4% or (2) the annual rate of interest on 30-year Treasury securities for the
4th full calendar month immediately preceding the calendar quarter in which your benefit is
calculated to commence, however, in no event will this interest rate be greater than 10%.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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Effective on and after July 1, 2016, you may elect to receive your benefit payable in one of the
following forms of payment described below and no other forms of payment will be available
(except, if you are a participant in the Blue Cross Blue Shield of Montana division who was not
otherwise eligible for an immediate distribution of benefits from a predecessor plan upon your
termination of service, effective January 1, 2016, you can elect to have payments commence as
described below (WHEN BENEFITS BEGIN) for a terminated vested participant either during the
initial election opportunity following termination of service or during the annual window election;
however, the payment options are limited to a lump-sum payment and immediately payable annuities
of the Life Annuity if you are not married and the Qualified Joint and 50% Survivor Annuity or
Qualified Optional 75% Survivor Annuity if you are married).
JOINT AND SURVIVOR ANNUITY
With a Joint and Survivor Annuity option, your retirement benefit is paid to you in monthly
payments for the rest of your life. Your payments are reduced from the basic Life Annuity so that,
if your spouse is still living when you die, either 50%, 75%, or 100% of your benefit will be paid to
your spouse each month after your death for the remainder of his/her life, depending upon the Joint
and Survivor option you elect. This option is known as the "Qualified Joint and 50% Survivor
Annuity" when 50% is the specified percentage and the "Qualified Optional Survivor Annuity" when
75% is the specified percentage.
If your spouse dies before you do, the amount of your monthly annuity will remain the same.
LIFE ANNUITY WITH PERIOD CERTAIN OPTION
With a Life Annuity with either a 5-year Period Certain, a 10-Year Period Certain, or a 20-year
Period Certain option, your retirement benefit is paid to you in monthly payments for the rest of
your life, with the added provision that payments will be made for the remainder of the Period
Certain you elected (5, 10, or 20 years); however, effective on and after July 1, 2020, a 20-year
Period Certain will no longer be available. If you are married, and you and your spouse want your
benefit paid as a Life Annuity with a Period Certain option, you will need to provide your spouse’s
written, notarized consent.
You may name a new primary beneficiary at any time before payments commence. If you are
married, you are required to designate your spouse as your only primary beneficiary, and you cannot
change your primary beneficiary without your spouse’s notarized consent. If you die before the end
of the guarantee period, your primary beneficiary will receive your retirement payments until the
guarantee period is over. If you die after the end of the guarantee period, no payments are made to
anyone after your death. If both you and your primary beneficiary die before the end of the guarantee
period, the remainder of payments that are unpaid at the time of the last death will be paid to your
contingent beneficiary, or to the estate of the second to die.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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LIFE ANNUITY
With the Life Annuity option, your retirement benefit is paid to you in equal monthly payments for
the rest of your life. No payments are made to anyone after your death. If you are married, and you
and your spouse want your benefit paid as a Life Annuity, you will need to provide your spouse’s
written, notarized consent. The amount of each monthly payment will be larger than the monthly
amount you would receive under any of the other annuity options.
LUMP SUM OPTION
In addition to the annuity options available to you, you can elect to receive your entire retirement
benefit as an immediate single Lump Sum, even if you are a vested terminated participant who was
not otherwise entitled to elect a lump-sum option prior to July 1, 2016. The amount of your Lump
Sum is based on your employee pension plan account and the provisions of the Plan (or a transitional
formula-See APPENDIX). If you are married, and you and your spouse want your benefit paid as
a Lump Sum, you will need to provide your spouse’s written, notarized consent.
If you do not have a Cash Balance Account, the amount of your immediate single Lump Sum also
is affected by applicable Revenue Ruling 2001-62 Mortality Table and the interest rate used.
Effective January 1, 2010, the interest rate used is the greater of (1) 4% or (2) the annual rate of
interest on 30-year Treasury securities for the 4th full calendar month immediately preceding the
calendar quarter in which your benefit is calculated to commence, however, in no event will this
interest rate be greater than 10%. The interest rate used to convert the annuity or the lump sum is
the interest rate in effect at the time you begin receiving benefits. The actuarially equivalent value
of the Lump Sum will never be less than the value determined using the applicable mortality table
and the applicable interest rate defined in Section 417(e)(3) of the Internal Revenue Code.
NOTE: If you have a Cash Balance Account at retirement or termination of service, the amount of
the Lump Sum distribution on and after January 1, 2008 is equal to the balance of your Cash Balance
Account as of the time you receive payments, regardless of the mortality table and interest rate
described above.
If the value of your employee pension plan account, based on the Lump Sum Option, is $1,000 or
less when you retire or otherwise leave the Company, your benefit will automatically be calculated
and payable only as an immediate lump sum. Your spouse’s written, notarized consent is not
required for the $1,000 or less immediate Lump Sum.
If you take your benefit as a lump sum, you can continue to defer taxes by rolling it over into an
Individual Retirement Account (IRA), or into the qualified plan of another employer or you may be
eligible to pay the taxes on the distribution and roll it over into a Roth IRA. (See “Tax
Considerations” for more information.)
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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W H E N B E N E F I T S B E G I N
As a terminated vested participant you can elect to have payments commence as early as the
first day of the third month next following your date of termination of service or, if later, the
first day of the month coincident with or next following the 30th day after the date on which the
Administrative Committee informs you in writing of the amount of your benefit.
Upon receipt of your benefit election forms, you have 90 days to elect an immediate form of
payment. If you do NOT make your election within this 90-day period, your benefits will
automatically be deferred until age 65.
If you do NOT make your election for an immediate form of payment within this 90-day
period, you may elect to commence payment of your benefit before reaching age 65 upon the
following conditions:
If you have ten (10) or more years of Vesting Service when you terminate, you may
elect to receive benefits as early as age 55 (in some instances, age 40, only if you are a
transitioned participant in the Non-Contributory Retirement Program for Employees of
Illinois Blue Cross and Blue Shield). If you meet these requirements, all alternate forms
of payment are available for your election.
Effective on and after July 1, 2016, a new annual election will be offered during a
specific window of July 1 through September 30 each year, beginning with the year
after your employment terminated and ending with the year you reach age 65. The
payment options for this special annual election period are limited to a lump-sum
payment and immediately payable annuities of the Life Annuity if you are not married
and the Qualified Joint and 50% Survivor Annuity or Qualified Optional 75% Survivor
Annuity if you are married.
As an early retiree you can commence benefit payments on the first day of the third month
next following the date you retire from service or, if later, the first day of the month coincident
with or next following the 30th day after the date on which the Administrative Committee
informs you in writing of the amount of your benefit. Your benefit payments must commence
no later than your normal retirement date.
As a normal or late retiree your benefits will automatically be calculated to commence on the
first day of the month coincident with or next following your termination of service.
D I R E C T R O L L O V E R S
You may request that a direct transfer of all or a portion of your lump-sum distribution (if applicable)
be made to either a traditional Individual Retirement Account or Roth Individual Retirement
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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Account (IRA) or another employer’s eligible retirement plan willing to accept the transfer. A direct
transfer will result in no tax being due until you withdraw funds from the IRA or other employer’s
plan. Under certain circumstances all or a portion of the amount to be distributed may not qualify
for this direct rollover. If you actually receive all or part of your distribution rather than transferring
it directly, 20% of the distribution amount you receive may be withheld for federal income tax
purposes, even if you later place the entire amount in an IRA or employer plan.
If you decide to directly transfer all or a portion of your distribution amount, you (and your spouse,
if you are married) must first waive the annuity form of payment.
I F Y O U R E T U R N T O W O R K W I T H T H E C O M P A N Y
If you leave the Company before you are vested, no benefit is payable to you. However, if you
return to work for the Company or certain other subsidiaries of HCSC within five years of your
termination, the employee pension plan account you had when you left will be reinstated, with
interest, through the rehire date. The Vesting Service you had earned as of your termination also
will be reinstated.
Transfers within Health Care Service Corporation and its subsidiaries are not considered a
termination of employment.
If you leave the Company after you are vested, elect a deferred annuity, and later return to work for
the Company, the value of your deferred annuity will be reinstated to your employee pension plan
account. If you return to work for the Company or certain other subsidiaries of HCSC after your
annuity has begun, the annuity payments will cease for as long as you remain an Active Participant
in the Plan. Your annuity payments will begin again when you subsequently retire. You may take
the benefit you accrued since your rehire as either a lump sum or an annuity. You should consult
with your tax advisor if you are unsure which option is better suited to your particular circumstance.
If you leave the Company after you are vested, take your benefit as a lump sum, and later return to
work, the employee pension plan account you had when you left will be reinstated. However, upon
your subsequent termination or retirement, your employee pension plan account will be reduced by
the value of the benefit previously paid to you.
During your period of re-employment with the Company, you will accrue Employer credits and
interest credits in your employee pension plan account while you are an Active Participant of the
Plan.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
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I F Y O U T R A N S F E R A N D Y O U R P A R T I C I P A T I O N E N D S
If you transfer within the Company to a business that does not participate in the Plan, or to an
employment status not covered under the Plan, you will continue to earn Vesting Service. In
addition, your employee pension plan account will continue to earn interest credits. However, no
Employer credits will be allocated to your employee pension plan account.
I F Y O U T A K E A L E A V E O F A B S E N C E
If you take an authorized leave of absence for a reason other than qualified military service, you will
earn Vesting Service until the first anniversary of the date your leave started. You will not receive
Employer credits while you are on an unpaid leave; however, you will continue to earn interest
credits. If your leave of absence is for qualified military service, you will continue to earn Vesting
Service and receive Employer credits during your leave, as well as your interest credits.
The Uniformed Services Employment and Reemployment Rights Act (USERRA) and the Heroes
Earnings Assistance and Relief Tax of 2008 (HEART) are federal laws that guarantee certain
rights to individuals who enter qualified military service. If you have to leave the Company
because of qualified military service, your employment will not be terminated if you return to
work with the Company within the period of time that you have reemployment rights under
Federal law. Contributions, benefits and service credit with respect to qualified military service
will be provided as required by law.
HEART expands the benefits provided under USERRA to provide that if you are an Active
Participant in the Plan on the date your leave for qualified military service commences:
Death during qualified military service must be treated as though the Participant were
actively employed on the date of death.
Differential pay, if any, provided by the Employer after January 1, 2009 may be included
in compensation for purposes of determining retirement benefits.
For more information regarding USERRA's and HEART's impact on your benefits, contact the
Human Resources Department
I F Y O U B E C O M E D I S A B L E D
To be considered disabled (as defined by the Plan), you must (a) request Disability Retirement within
6 months of your date of leave due to disability and (b) be eligible for and receiving either disability
benefits under the Social Security Act or payments (other than Workers’ Compensation payments
or medical or hospitalization payments) under the long-term disability program maintained by the
Company.
If you become disabled before you retire, you will continue to receive Employer credits and interest
credits to your employee pension plan account for as long as you remain disabled (as defined by the
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
16
Plan), but no Employer credits will be allocated after the date you reach age 65. Your Employer
credits while disabled will continue based on your rate of pay before your disability.
Once you reach age 65, you will be considered retired, your employee pension plan account will
no longer receive Employer credits and your retirement benefit will be payable. You will continue
to receive interest credits until your benefit payments commence.
I F Y O U D I E W H I L E Y O U A R E A N A C T I V E P A R T I C I P A N T I N T H E
P L A N
If you are vested and you die while you are an Active Participant of the Plan, each surviving,
designated primary beneficiary will receive a Plan death benefit. If none survive, then each
surviving, designated contingent beneficiary will receive a Plan death benefit.
If you are married at the time of your death, your surviving spouse will be your primary beneficiary
and will receive 100% of your death benefit, unless at some time before your death, with your
spouse’s written, notarized consent, you designated someone other than (or in addition to) your
spouse as primary beneficiary. If you have designated multiple primary beneficiaries, and if
married, your spouse has consented, your Plan benefit will be calculated and divided into separate
death benefits in accordance with what you have specified on your designation of beneficiary form.
Each recipient of a death benefit can elect an immediate Lump Sum Payment or an immediate
monthly annuity. The amount of each benefit payment is affected by the interest rate used (as
described in the PAYMENT OPTIONS section) and in effect at the time the death benefit is
scheduled to begin.
If the value of the death benefit is $1,000 or less, it is automatically calculated and payable only as
an immediate Lump Sum Payment.
It is important to keep your beneficiary designation up-to-date. Contact the Plan Administrative
Committee if you want to change your beneficiary.
I F Y O U D I E A F T E R Y O U T E R M I N A T E E M P L O Y M E N T
If you die after you terminate and had already started receiving benefits, each surviving primary
beneficiary may be eligible for benefits based on the form of payment you chose.
If you had not yet elected a form of payment, your Plan benefit will be re-calculated as a death
benefit for each surviving primary beneficiary. Each recipient of a death benefit can elect an
immediate Lump Sum Payment or an immediate monthly annuity. The benefits can be deferred
until a later date. However, the amount of each benefit payment is affected by the interest rate used
(as described in the PAYMENT OPTIONS section) and in effect at the time the death benefit is
scheduled to begin.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
17
A death benefit will not be paid if you die after you terminate, and already received a Lump Sum
Payment, or commenced a single Life Annuity.
H O W T O A P P L Y F O R B E N E F I T S I F Y O U A R E A
D E F E R R E D A N N U I T A N T
Contact the Plan Administrative Committee for the forms you need to fill out to apply for benefits
under the Plan. When you are eligible to receive and desire to receive benefits, you should apply
for benefits at least 90 days before you intend to commence.
C L A I M S P R O C E D U R E S
If you wish to file a claim for benefits under the Plan, the Plan Administrative Committee will supply
you with all the forms necessary for the proper filing of your claim. You should contact the Plan
Administrative Committee for these forms.
It is your responsibility to inform the Plan Administrative Committee of any change in address.
If you apply for a benefit and all or part of it is denied, the Plan Administrative Committee will
notify you by written or electronic notification within 90 days after the receipt of your claim of either
(1) reasons for such adverse benefit determination, or (2) a notice indicating that special
circumstances require an extension of time (up to 90 additional days for a non-disability claim) to
process your claim. The extension notice will indicate the special circumstances requiring an
extension of time and the date by which the plan expects to render the benefit determination.
If your claim is wholly or partially denied, when you receive an initial notification of the adverse
benefit determination from the Plan Administrative Committee, it will contain:
the specific reason(s) for the adverse benefit determination;
a reference to the specific provisions of the Plan upon which the determination is based;
a description of any additional material or information that is needed to process your claim,
if any, and an explanation of why such material or information is necessary; and
a description of the Plan's review procedures and the time limits applicable to such
procedures, including a statement of your right to bring a civil action under ERISA
following an adverse benefit determination on review.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
18
If you decide to appeal the Plan Administrative Committee's decision, you
must submit a written application within 60 days after the receipt of a notification of an
adverse benefit determination;
may submit written comments, documents, records, and other information relating to the
claim for benefits;
will be provided, upon request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to your claim for benefits.
The review of your appeal will take into account all comments, documents, records, and other
information submitted by you relating to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination.
The Plan Administrative Committee will notify you by written or electronic notification within 60
days of the receipt of your appeal of either (1) a final decision on the matter, or (2) a statement
indicating that an extension of 60 days is needed to process your claim. In the case where an
extension is needed, the extension notice will indicate the special circumstances requiring an
extension of time and the date by which the plan expects to render the determination on your
appeal.
In the case of an adverse benefit determination of the claim on appeal, the notification will set
forth:
the specific reason(s) for the adverse determination;
reference to the specific plan provisions on which the benefit determination is based;
a statement of your rights to receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records, and other information relevant to your claim; and
a statement of your right to bring an action under ERISA.
The Plan Administrative Committee's decision on an appeal will be final. Once the above appeal
process has been followed, there will be no further administrative appeal on any ruling by the Plan
Administrative Committee.
No legal action related to the Plan to recover benefits or with respect to any other matter related to
the Plan may be commenced before the claimant has exhausted the Plan's claim and appeal
procedures. In no event may any such action be brought more than six months after the claim was
denied or deemed to be denied on appeal.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
19
O T H E R C O N S I D E R A T I O N S
There is some additional information you should know about the Plan.
S T A T E M E N T O F Y O U R E M P L O Y E E P E N S I O N P L A N A C C O U N T
You will be eligible to request a statement of your employee pension plan account balance once a
year. The Plan Administrative Committee may provide this in various forms to Active Participants
annually. Contact the Plan Administrative Committee with any questions.
T A X C O N S I D E R A T I O N S
Any amount you receive from the Plan is subject to federal income taxes. An additional 10% early
distribution federal excise tax generally will apply to lump sum distributions on all or a portion of
your employee pension plan account balance unless:
Distribution is being made because of your retirement at age 55 or older; or,
You roll over your employee pension plan account balance to the qualified plan of another
employer, or an IRA or Roth IRA, within 60 days of receiving it.
Currently federal tax law requires that 20% of your total taxable distribution be withheld if you do
not elect a direct rollover of your employee pension plan account balance. This withholding does
not represent the actual taxes you may be required to pay. These will be determined by your overall
tax situation. You will receive more information about tax withholding and rollovers when you
apply for benefits.
Other special tax rules may apply if you receive your employee pension plan account balance as a
lump sum distribution.
CONSULT YOUR TAX ADVISOR
This is only a brief summary of the federal tax consequences on a distribution from The HCSC
Employees Pension Plan. You also should review the state and local tax laws that may be applicable
to you. Because tax laws change from time to time, you should consult with a tax advisor at the
time of your election to determine what laws apply, and to discuss what other options and
alternatives you should consider.
Q U A L I F I E D D O M E S T I C R E L A T I O N S O R D E R S
Your benefits generally cannot be assigned to another person. However, federal law requires the
Plan to obey certain court orders for payment of a percentage of your employee pension plan account
directly to or on behalf of your spouse, former spouse, child or other dependents. If such a court
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
20
order is issued and the Plan determines that it is a Qualified Domestic Relations Order (QDRO), the
Plan must obey that order. Any payment made pursuant to a QDRO will not violate the rule of non-
assignability of benefits. The Plan Administrative Committee must be notified in writing of any
pending or potential domestic relations order. Upon receipt of written notification, the Company
will provide the interested parties with the Plan's QDRO procedures. You may request a copy of
these QDRO guidelines and procedures from the Company free of charge.
I F T H E P L A N B E C O M E S T O P H E A V Y
When more than 60% of the value of all benefits is attributable to the benefits of certain key
employees, the Plan is considered top heavy. If this should occur, federal law requires that an
accelerated vesting schedule and minimum benefit accrual and contribution requirements become
effective. It is unlikely that the Plan will ever become top heavy. If it does, you will receive more
information about the applicable provisions.
I F T H E P L A N I S A M E N D E D O R T E R M I N A T E D
If the Plan is amended, your benefits which were accrued before the amendment, will be protected.
If the Plan is terminated, your accrued benefit will become fully vested. None of the Plan’s assets
can revert to the Company until all benefits and other expenses owed by the Plan have been satisfied.
You will be notified, as required by law, at least 60 days before the proposed termination date.
The Employer reserves the right to purchase an annuity in full or partial settlement of benefits
provided under the Plan. Any such action would be taken in writing and maintained with the records
of the Plan. Plan termination or annuity purchase may be made for any reason, and at any time, and
may, in certain circumstances, result in the reduction or elimination of benefits or other features of
the Plan to extent permitted by law. The Plan may pay your pension benefit in the form of an annuity
purchased from a licensed insurance company. Once the plan purchases an annuity for you, the
insurance company will be responsible for paying your benefit. If the insurance company becomes
unable to pay, a state guaranty association may be responsible for all, part or none of the annuity. All
states, Puerto Rico and the District of Columbia have guaranty associations that protect
policyholders, up to specified limits, in the event an insurance company is financially unable to meet
its obligations. Generally, where the individual lives at the time the insurance company is unable to
pay determines which guaranty association is responsible. In certain circumstances, other factors,
such as where the insurance company is licensed to do business, determine which guaranty
association may be responsible.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
21
If the Plan is terminated, benefits under the Plan are insured by the Pension Benefit Guaranty
Corporation (PBGC), a federal insurance agency. If the Plan terminates without enough money to
pay all benefits, the PBGC may step in to pay pension benefits.
Most people receive all of the pension benefits they would have received under the Plan, but some
people may lose certain benefits.
The PBGC guarantee generally covers: (1) normal and early retirement benefits; (2) disability
benefits if you become disabled before the Plan terminates; and (3) certain benefits for your
survivors.
The PBGC guarantee generally does not cover: (1) benefits greater than the maximum guaranteed
amount set by law for the year in which the plan terminates; (2) some or all of benefit increases and
new benefits based on plan provisions that have been in place for fewer than 5 years at the time the
Plan terminates; (3) benefits that are not vested because you have not worked long enough to acquire
adequate vesting service; (4) benefits for which you have not met all of the requirements at the time
the plan terminates; (5) certain early retirement payments (such as supplemental benefits that stop
when you become eligible for Social Security) that result in an early retirement monthly benefit
greater than your monthly benefit at the plan’s normal retirement age; and (6) non-pension benefits,
such as health insurance, life insurance, certain death benefits, vacation pay, and severance pay.
Even if certain of your benefits are not guaranteed, you still may receive some of those benefits from
the PBGC depending on how much money the Plan has and on how much the PBGC collects from
Employers.
For more information about the PBGC and the benefits that it guarantees, contact the PBGC's
Technical Assistance Division. Inquiries should be directed to:
PBGC Technical Assistance Division
1200 K St., N.W.
Suite 930
Washington, DC 20005-4026
202-326-4000
(Not a toll-free number)
TTY/TDD users may call the federal relay service toll-free at 1-800-877-8339 and ask to be
connected to 202-326-4000. Additional information about the PBGC’s pension insurance program
is available through the PBGC’s web site on the Internet at http://www.pbgc.gov.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
22
P L A N C O N T I N U A T I O N A N D D I S C R E T I O N
The Company intends to continue The HCSC Employees Pension Plan indefinitely, but reserves the
right to amend, suspend, discontinue or terminate the program, in whole or in part, at any time and
for any reason. Additionally, the Committee which administers the Plan shall have the authority to
decide any questions arising on the administration, interpretation and application of the Plan and
such decisions shall be conclusive and binding on all parties. All actions and determinations made
by the Committee in good faith shall be final and not subject to review, except as may be provided
under the Claims procedures as described on pages 17-18.
G O V E R N M E N T A L R E Q U I R E M E N T S A F F E C T I N G
B E N E F I T S
F U N D I N G R E Q U I R E M E N T S
This Plan is subject to specific funding requirements, which are necessary in order to provide the
benefits described in this summary. If those requirements are not met within the ranges specified in
the IRS regulations, restrictions take effect, limiting the Plan's ability to accrue additional benefits,
improve benefits and/or make certain accelerated benefit payments (such as lump sum payments).
In no event will benefit restrictions cause your benefit to decrease. In the event the Plan becomes
subject to these restrictions, an explanation will be provided, describing the limitations under which
the Plan may operate and how it may affect your benefit.
B E N E F I T L I M I T A T I O N S R E Q U I R E D B Y I R S
The Internal Revenue Code places maximum benefit limits on the amount of benefits a participant
can receive from this defined benefit plan. This limitation changes annually and is unlikely to affect
your benefits under the Plan. Generally, the annual limit in 2016 was $210,000 per year as an
annuity for life beginning between ages 62 and 65. Other numerous adjustments apply such as
adjustments for payment beginning at different ages or under different forms of payment.
Benefit restrictions also apply to certain highly compensated employees (the 25 most highly
compensated current and former employees of the employer) to prevent them from taking lump sums
or other accelerated distributions that might weaken the funded status of the plan. You will be
notified, if you are affected by these restrictions.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
23
O T H E R I M P O R T A N T I N F O R M A T I O N
GENERAL INFORMATION ABOUT THE PLAN
SPONSOR (“EMPLOYER”): The main office of the Employer is:
Health Care Service Corporation
300 E. Randolph
Chicago, IL 60601
(312) 653 – 6000
However, all inquiries concerning the Plan should be
directed to:
Health Care Service Corporation
Plan Administrative Committee
Financial Benefits
1001 E. Lookout Drive
A-02-012
Richardson, TX 75082
(972) 766 – 6192
PLAN ADMINISTRATIVE
COMMITTEE:
Requests for forms and information concerning your
individual benefits should be directed to the following:
Health Care Service Corporation
Financial Benefits
1001 E. Lookout Drive
A-02.012
Richardson, TX 75082
(972) 766-6066
PLAN NAME: The HCSC Employees Pension Plan
IDENTIFICATION NUMBERS: Employer Number: 36 - 1236610
Plan Number: 004
PLAN TRUSTEE: Northern Bank & Trust Company
50 South La Salle Street
Chicago, IL 60602
TYPE OF PLAN: Defined Benefit Pension Plan
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
24
TYPE OF ADMINISTRATION: Employer Administered
AGENT FOR LEGAL PROCESS: Service of legal process should be made on the Plan
Administrative Committee at the address shown above.
Service of legal process may also be made upon the Plan
Trustee at the address shown above.
PARTICIPATING EMPLOYERS: A complete list of the Employers sponsoring the Plan is
available for review and can be obtained by participants and
beneficiaries upon written request to the Plan Administrative
Committee.
PLAN’S FISCAL YEAR END: December 31
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
25
YOUR RIGHTS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
(ERISA)
If you believe that your rights under the Plan have been violated, you have the right to bring legal
action against the Plan in a court of law. The Plan Administrative Committee is the agent named to
receive service of legal process. The Trustee may also receive service of legal process.
As a participant in this Plan, you are entitled to certain rights and protections under the Employee
Retirement Income Security Act of 1974 (ERISA). ERISA provides that all participants are entitled
to:
Examine, without charge, at the Company’s offices and at other specified locations,
such as worksites and union halls, all documents governing the Plan, including
insurance contracts and collective bargaining agreements, and a copy of the latest annual
report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor available
at the Public Disclosure Room of the Pension and Welfare Benefit Administration.
Obtain copies of all documents governing the operation of the Plan, including insurance
contracts and collective bargaining agreements, and copies of the latest annual report
(Form 5500 Series) and updated summary plan description upon written request to the
Plan Administrative Committee. The Company may make a reasonable charge for the
copies.
Receive an annual funding notice providing information about the funding status and
financial condition of the Plan, including the Plan's funding percentage, assets and
liabilities, and a description of the benefits guaranteed by the PBGC. The Plan
Administrative Committee is required by law to furnish each participant with a copy of
this annual funding notice.
Obtain a statement telling you whether you have a right to receive a benefit on your
Normal Retirement Date and if so, what your benefits would be at your Normal
Retirement Date if you stop working under the Plan now. If you do not have a right to
a benefit, the statement will tell you how many more years you have to work to get a
right to a benefit. This statement must be requested in writing. The Plan is not required
to provide the statement more than once every twelve (12) months. The Plan must
provide the statement free of charge.
Department of Labor Regulations also require that you, as a participant, or any beneficiary of the
Plan can obtain, without charge, a copy of the procedures governing a qualified domestic relations
order (QDRO) from the Plan Administrative Committee.
In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are
responsible for the operation of the Plan. The people who operate your Plan, called “fiduciaries” of
the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including the Company, your union, or any other person, may fire you or
otherwise discriminate against you in any way just to prevent you from obtaining a benefit or from
exercising your powers under ERISA.
If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why
this was done, to obtain copies of documents relating to the decision without charge, and to appeal
any denial, all within certain time schedules.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
26
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request
materials from the Company and do not receive them within 30 days, you may sue in a federal court.
In such a case, the court may require the Company to provide the materials and pay you up to $110
a day until you receive the materials, unless the materials were not sent because of reasons beyond
the control of the Company. If you have a claim for benefits which is denied or ignored, in whole
or in part, you may sue in a state or Federal court. In addition, if you disagree with the plan's decision
or lack thereof concerning the qualified status of a domestic relations order or a medical child
support order, you may file suit in Federal court. If it happens that Plan fiduciaries misuse the Plan’s
money or if you are discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor or you may file suit in a Federal court. The court will decide who
should pay court costs and legal fees. If you are successful, the court may order the person you have
sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees,
for example, if it finds that your claim is frivolous.
If you have any questions about your Plan, you should contact the Plan Administrative Committee.
If you have any questions about this statement or about your rights under ERISA, or if you need
assistance in obtaining documents from the plan administrator, you should contact the nearest Area
Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits
Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington,
D.C., 20210. You may also obtain certain publications about your rights and responsibilities under
ERISA by calling the hotline of the Employee Benefits Security Administration.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
27
A P P E N D I X
T R A N S I T I O N A L F O R M U L A – I F Y O U P A R T I C I P A T E D I N A
P R I O R P L A N
In order to minimize the effect for certain participants in changing to a new formula, a transitional
formula was created. How the transitional formula is calculated and its effect on your final benefit
is based on which of three groups you belong to, based on your age and/or service as of the Plan’s
transition date.
If you were a participant in the Texas Blue Cross Employees Retirement Plan, the Non-Contributory
Retirement Program for Employees of Illinois Blue Cross and Blue Shield, the Non-Contributory
Retirement Program For Certain Employees of New Mexico Blue Cross and Blue Shield, Inc., or
the Non-Contributory Retirement Program for certain employees of Group Health Service of
Oklahoma, Inc. as of the applicable transition date, the three groups are determined as follows:
You are a member of the “Grandfathered” group, if on the transition date, being actively
employed by the Company, (a) your age plus your Vesting Service equaled or exceeded 60,
or (b) you had 15 or more years of Vesting Service.
You are a member of the “Vested” group, if on the transition date, being actively employed
by the Company, you had 5 or more years of Vesting Service, and you did not qualify for
the “Grandfathered” group.
You are a member of the “Non-Vested” group, if on the transition date, being actively
employed by the Company, you had less than 5 years of Vesting Service, and you did not
qualify for the “Grandfathered” group.
If you were a participant in either the Texas Blue Cross Employees Retirement Plan or the Non-
Contributory Retirement Program for Employees of Illinois Blue Cross and Blue Shield as of
the transition date of December 31, 2000, your transitional benefit will be calculated as follows:
If you are a “Grandfathered” participant, you will continue to accrue your benefit under
the formula in effect on December 31, 2000, instead of accruing benefits under the cash
balance formula. In effect, the cash balance formula was never adopted for you.
If you are a “Vested” participant, you will receive the greater of the following benefits:
(a) The benefit you accrued under the formula in effect on December 31, 2000, plus the
benefit you accrue under the cash balance formula based on your service after
December 31, 2000
OR
(b) The benefit you would have accrued at your date of termination under the formula in
effect on December 31, 2000, if credited service had stopped at December 31, 2000,
but pay increases had continued to your date of termination; plus, the benefit you
accrue under the cash balance formula based on your service after December 31, 2000.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
28
If you are a “Non-Vested” participant, you will receive the benefit you accrued under the
formula in effect on December 31, 2000, plus the benefit you accrue under the cash balance
formula based on your service after December 31, 2000.
If you are a prior participant in the Non-Contributory Retirement Program For Certain
Employees of New Mexico Blue Cross and Blue Shield, Inc. as of the transition date of December
31, 2001, your transitional benefit will be calculated as follows:
If you are a “Grandfathered” participant, you will continue to accrue your benefit under the
New Mexico Plan formula in effect on December 31, 2001, instead of accruing benefits under
the cash balance plan. In effect, the cash balance plan was never adopted for you.
If you are a “Vested” participant, you will receive the greater of the following benefits:
(a) The benefit you accrued under the New Mexico Plan formula in effect on December
31, 2001, plus the benefit you accrue under the cash balance formula based on your
service after December 31, 2001
OR
(b) The benefit you would have accrued at your date of termination under the New Mexico
Plan formula in effect on December 31, 2001, if DLS (Defined Lump Sum) credits had
stopped at December 31, 2001, but pay increases had continued to your date of
termination, plus the benefit you accrue under the cash balance formula based on your
service after December 31, 2001.
If you are a “Non-Vested” participant, you will receive the benefit you accrued under the New
Mexico Plan formula in effect on December 31, 2001, plus the benefit you accrue under the
cash balance formula based on your service after December 31, 2001.
If you were a participant in the Non-Contributory Retirement Program for certain employees
of Group Health Service of Oklahoma, Inc. as of the transition date of December 31, 2006, your
transitional benefit will be calculated as follows:
If you are a “Grandfathered” participant, you will continue to accrue your benefit under
the formula in effect on December 31, 2006, instead of accruing benefits under the cash
balance formula. In effect, the cash balance formula was never adopted for you.
If you are a “Vested” participant, you will receive the greater of the following benefits:
(a) The benefit you accrued under the formula in effect on December 31, 2006, plus the
benefit you accrue under the cash balance formula based on your service after
December 31, 2006
OR
(b) The benefit you would have accrued at your date of termination under the formula in
effect on December 31, 2006, if credited service had stopped at December 31, 2006,
but pay increases had continued to your date of termination; plus, the benefit you
accrue under the cash balance formula based on your service after December 31, 2006.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
29
If you are a “Non-Vested” participant, you will receive the benefit you accrued under the
formula in effect on December 31, 2006, plus the benefit you accrue under the cash balance
formula based on your service after December 31, 2006.
NOTE: Effective January 1, 2007, if you are a “Grandfathered” or “Vested” participant,
your Final Average Earnings will be calculated using a different methodology from the
previous Oklahoma plan. Final Average Earnings will be based on monthly pay instead of
calendar year pay.
T R A N S I T I O N A L F O R M U L A – I F Y O U P A R T I C I P A T E D I N A
P R I O R P L A N , T E R M I N A T E D E M P L O Y M E N T A T A N Y T I M E
A N D A R E R E H I R E D O N O R A F T E R A U G U S T 1 , 2 0 1 0
If you were covered by any of the transitional formulae above, but terminated employment at any
time and were rehired on or after August 1, 2010, you will not accrue additional benefits after your
rehire date under the transitional formula and your pay used under the transitional formula will be
determined as of the date of your earlier termination. After you rehire, you will accrue benefits in
an employee pension plan account as described in the section “YOUR EMPLOYEE PENSION
PLAN ACCOUNT” of this Summary and your benefit paid after you again terminate employment
will be based on the sum of your benefit under the transitional formula at your previous termination
date and that accrued under your employee pension plan account after your rehire.
T R A N S I T I O N A L F O R M U L A – I F Y O U P A R T I C I P A T E D I N T H E
N O N - C O N T R I B U T O R Y R E T I R E M E N T P R O G R A M F O R
C E R T A I N E M P L O Y E E S O F B L U E C R O S S A N D B L U E S H I E L D
O F M O N T A N A , I N C . , A S I N E F F E C T O N O R B E F O R E A U G U S T
1 , 2 0 1 3
In order to minimize the effect for certain participants in changing to a new formula, a transitional
formula was created for those employees who became actively employed by the Company and were
participants in the Non-Contributory Retirement Program for Certain Employees of Blue Cross and
Blue Shield of Montana, Inc. (“Predecessor Plan”), as in effect on or before August 1, 2013. How
the transitional formula is calculated and its effect on your final benefit is based on which of three
groups you belong to, based on your age and/or service as of the Plan’s transition date.
The three groups are determined as follows:
You are a member of the “Group I Participants” group, if on the transition date, being
actively employed by the Company and a participant in the Predecessor Plan, (a) your age
plus your Vesting Service equaled or exceeded 75, or (b) you had 25 or more years of
Vesting Service.
You are a member of the “Group II Participants” group, if on the transition date, being
actively employed by the Company and a participant in the Predecessor Plan, your age plus
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
30
your Vesting Service equaled or exceeded 60, and you did not qualify for the “Group I
Participants” group.
You are a member of the “Group III Participants” group, if on the transition date, being
actively employed by the Company and a participant in the Predecessor Plan, you did not
qualify for “Group I Participants” or “Group II Participants” groups.
If you were a participant in the Non-Contributory Retirement Program for Certain Employees of
Blue Cross and Blue Shield of Montana, Inc., as in effect on or before August 1, 2013, your
transitional benefit will be calculated as follows:
If you are a “Group I Participant,” you will continue to accrue your benefit under the
formula in effect in the Predecessor Plan on August 1, 2013, instead of accruing benefits
under the cash balance formula for as long as you remain in continuous employment with
the Company (subject only to changes in regulatory requirements). In effect, the cash
balance formula was never adopted for you. If you terminate employment at any time and
are rehired on or after August 1, 2013, you will not accrue additional benefits after your
rehire date under the transitional formula and your pay used under the transitional formula
will be determined as of the date of your earlier termination. After you are rehired, you will
accrue benefits in an employee pension plan account as described in the section “YOUR
EMPLOYEE PENSION PLAN ACCOUNT” of this Summary and your benefit paid after
you again terminate employment will be based on the sum of your benefit under the
transitional formula at your previous termination date and that accrued under your employee
pension plan account after your rehire.
If you are a “Group II Participant,” your accrued benefit will be the sum of (1) your benefit
determined as of December 31, 2014, under the formula in effect in the Predecessor Plan,
based on your age, “compensation” and “service” as of that date, adjusted for any increase
in age or “compensation,” but not “service,” after that date; plus (2) any benefits earned by
you under the cash balance formula based on your employment on and after January 1, 2015.
If you are a “Group III Participant,” your accrued benefit will be the sum of (1) your
benefit determined as of December 31, 2014, under the formula in effect in the Predecessor
Plan, based on your age, “compensation” and “service” as of that date, adjusted for any
increase in age but not “compensation” or “service,” after that date; plus (2) any benefits
earned by you under the cash balance formula based on your employment on and after
January 1, 2015.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
31
E X A M P L E O F D E C E M B E R 3 1 , 2 0 0 0 F O R M U L A F O R
P A R T I C I P A N T S I N T H E T E X A S B L U E C R O S S E M P L O Y E E S
R E T I R E M E N T P L A N
If you are a Grandfathered participant, when you leave, your monthly benefit from the Plan will be
based on your years of Benefit Service, your Final Average Monthly Earnings and your monthly
Covered Compensation. The amount is determined by the following formula:
1.5% X FINAL AVERAGE MONTHLY
EARNINGS X
YEARS OF BENEFIT
SERVICE
PLUS
0.5% X
FINAL AVERAGE MONTHLY
EARNINGS IN EXCESS OF THE
MONTHLY COVERED
COMPENSATION THAT APPLIES
TO YOU
X
YEARS OF BENEFIT
SERVICE NOT TO
EXCEED 35 YEARS
EXAMPLE: NORMAL RETIREMENT (AGE 65)
Suppose you retire at age 65 with 30 years of Benefit Service. Your monthly Average Covered
Compensation is $2,755.00. Let us assume your Final Average Monthly Earnings are $3,000.00.
.015 X $3,000 X 30 = $1,350.00
PLUS
.005 X $3,000 - $2,755 X 30 = $36.75
EQUALS
YOUR AGE 65 MONTHLY 10 YEARS CERTAIN AND LIFE TIME BENEFIT = $1,386
F INAL AVERAGE MONTHLY EARNINGS
This means your average monthly earnings during the 60 consecutive calendar months of
employment out of your last 120 completed calendar months with the Company that give you your
highest average earnings. Any calendar month in which you are not credited with at least one hour
of benefit service will be excluded when determining your consecutive calendar months of
employment. If you have less than 60 calendar months of employment, the actual calendar months
of employment will be used to figure your Final Average Monthly Earnings.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
32
E X A M P L E O F D E C E M B E R 3 1 , 2 0 0 0 F O R M U L A F O R
P A R T I C I P A N T S I N T H E N O N - C O N T R I B U T O R Y R E T I R E M E N T
P R O G R A M F O R E M P L O Y E E S O F I L L I N O I S B L U E C R O S S A N D
B L U E S H I E L D
If you are a Grandfathered participant, your monthly pension benefit at your Normal Retirement
Date is calculated based on the following formula:
1% TIMES YOUR AVERAGE MONTHLY EARNINGS TIMES YOUR TOTAL YEARS OF CREDITED SERVICE
PLUS
¾ OF 1% TIMES YOUR AVERAGE MONTHLY EARNINGS IN EXCESS OF $550 PER MONTH TIMES YOUR
TOTAL YEARS OF CREDITED SERVICE
EXAMPLE: NORMAL RETIREMENT
Frank Smith turned 65 in September, 2015. At that time, he had 30 years of Credited Service. He
is single, and his total salary during the highest paid 60 consecutive months of the last 5 years is
$120,000. His Normal Retirement Date is October 1, 2015, and his monthly pension, calculated as
follows, becomes payable on October 30, 2015:
1. Total salary, highest paid consecutive 60 months $120,000.00
2. Average Monthly Earnings ($120,000 ÷60) 2,000.00
3. 1% of Average Monthly Earnings 20.00
4. Multiplied by 30 years of Credited Service 600.00
5. Average Monthly Earnings in excess of $550 1,450.00
6. ¾ of 1% of Average Monthly Earnings in excess of $550 (from Step 5) 10.88
7. Step 6 multiplied by 30 years of Credited Service 326.25
8. Monthly pension for life (Step 4 plus Step 7) $926.25
Frank Smith will receive a monthly pension of $926.25 for life.
AVERAGE MONTHLY EARNINGS
Your Average Monthly Earnings are based on the highest 60 consecutive months of your pay during
your last 10 years of Credited Service.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
33
E X A M P L E O F D E C E M B E R 3 1 , 2 0 0 1 F O R M U L A F O R
P A R T I C I P A N T S I N T H E N O N - C O N T R I B U T O R Y R E T I R E M E N T
P R O G R A M F O R C E R T A I N E M P L O Y E E S O F N E W M E X I C O
B L U E C R O S S A N D B L U E S H I E L D , I N C .
If you are a Grandfathered participant, your retirement benefit is calculated according to the
following formula:
The sum of:
1. Your Total Base Retirement Credits multiplied by your Final Average Salary on the date you
terminate employment, and
2. Your Total Excess Retirement Credits (if any) multiplied by the amount of your Final Average
Salary (on the date you terminate) that exceeds the three-year rolling average of the Social
Security Wage Base (SSWB) for the three years before you terminate.
The Standard Retirement Table is used to calculate your retirement benefit.
YOUR FULL AGE AT
END OF YEAR OF
CREDITED SERVICE
BASE RETIREMENT CREDIT
PERCENTAGES (PERCENTAGES OF
FINAL AVERAGE SALARY)
EXCESS RETIREMENT CREDIT
PERCENTAGES (PERCENTAGE OF
FINAL AVERAGE SALARY ABOVE
THREE-YEAR AVERAGE SSWB)
Below 35 4% 1%
35 – 39 5% 2%
40 – 44 7% 2%
45 - 49 8% 3%
50 – 54 10% 3%
55 - 59 13% 4%
60 and over 16% 4%
F INAL AVERAGE SALARY
Final Average Salary refers to the average of the highest five consecutive calendar years of annual
earnings with your Employer from your last 10 years of Credited Service under the Program.
Earnings up to your year of retirement or termination (but not including it) are considered.
BASE RETIREMENT CREDIT PERCENTAGES
The Base Retirement Credit Percentages are shown in the Standard Retirement Table. A Base
Retirement Credit Percentage corresponds to each year of your age in which you earn a year of
Credited Service. Your age as of the end of the year, or, if earlier, the date of your termination of
employment, is used to determine your Base Retirement Credit Percentages.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
34
EXCESS RETIREMENT CREDITS AND THE THREE-YEAR AVERAGE TAXABLE
WAGE BASE
If your final average salary exceeds the three-year rolling average of the Social Security Taxable
Wage Base (SSWB) for the three years before the year you terminate; Excess Retirement Credits
apply to you. (for example, the SSWB was $68,400 in 1998, $72,600 in 1999, and $76,200 in 2000.
Therefore, for terminations in 2001, the three-year rolling average of the SSWB was $72,400. The
three-year rolling average of the SSWB for 2009, 2010, and 2011 is $106,800.) Excess Retirement
Credits are provided for your income above a three-year average of the most recent Social Security
Wage Base. Although you may accrue Excess Retirement Credits each year, you are entitled to the
lump sum benefit for Excess Retirement Credits only if your final average salary in the year you
terminate employment exceeds the three-year average SSWB.
TOTAL BASE RETIREMENT CREDITS AND TOTAL EXCESS RETIREMENT
CREDITS
This is the sum of the percentages earned during each of your years of Credited Service. Your Total
Base Retirement Credits are limited to 400%, unless you are a member of the Bridge Group. (You
are a member of the Bridge Group if you were an employee of the BCBS NM on January 1, 1997
and the sum of your age and Credited Service on December 31, 1996 equals at least 65.) If you are
eligible for Total Excess Retirement Credits, that amount is limited to 100%.
Regardless of when you end your employment with your Employer, if you have completed at least
five years of Vesting Service, your Program benefit will be calculated using the Retirement Credit
Percentage formula. The amount of your benefit is established as of your termination date. The
following example shows how to calculate a lump sum retirement benefit.
EXAMPLE OF LUMP SUM BENEFIT
Jane was hired at age 24 and terminates in 2001 at age 49. She has 25 years of Credited Service.
(The three-year average SSWB for terminations in 2001 is $72,400.)
Step 1: Determine Your Final Average Salary
YEAR SALARY
2001 $78,000
2000 $77,000
1999 $76,000
1998 $75,000
1997 $74,000
Final Average Salary = $380,000 ÷ 5 = $76,000
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
35
Step 2: Calculate Your Base Retirement Credits
AGE DURING YEAR
OF SERVICE
YEARS OF
CREDITED
SERVICE
BASE RETIREMENT CREDIT
PERCENTAGE
TOTAL BASE
RETIREMENT
PERCENTAGE
Under 35 11 4% 44%
35 – 39 5 5% 25%
40 – 44 5 7% 35%
45 – 49 4 8% 32%
TOTAL BASE RETIREMENT CREDITS 136%
Step 3: Calculate Your Base Retirement Benefit
Final Average Salary $76,000
Multiplied by your Total Base Retirement Credits x 136%
Equals Base Retirement Benefit $103,360
Step 4: Calculate Your Excess Retirement Credits
AGE DURING YEAR
OF SERVICE
YEARS OF
CREDITED
SERVICE
EXCESS RETIREMENT CREDIT
PERCENTAGE
TOTAL EXCESS
RETIREMENT
PERCENTAGE
Under 35 11 1% 11%
35 – 39 5 2% 10%
40 – 44 5 2% 10%
45 – 49 4 3% 12%
TOTAL EXCESS RETIREMENT CREDITS 43%
Step 5: Calculate Your Excess Retirement Benefit
Final Average Salary $76,000
Less 3-year average of SSWB in year of termination $72,400
Equals Excess Final Average Salary $3,600
Multiplied by your Total Excess Retirement Credits x .43
Equals Excess Credit Benefit $1,548
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
36
Step 6: Determine Your Total Benefit
Base Retirement Benefit $103,360
Plus Excess Retirement Benefit + 1,548
Equals Total Retirement Benefit $104,908
Jane’s Lump Sum Benefit at age 49 totals $104,908. Her benefit is payable as a lump sum when
she terminates, if she chooses that method of payment. Otherwise, her benefit would be paid as a
monthly annuity method of payment.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
37
E X A M P L E O F D E C E M B E R 3 1 , 2 0 0 6 F O R M U L A F O R
P A R T I C I P A N T S I N T H E N O N - C O N T R I B U T O R Y R E T I R E M E N T
P R O G R A M F O R C E R T A I N E M P L O Y E E S O F G R O U P H E A L T H
S E R V I C E S O F O K L A H O M A , I N C .
If you are a Grandfathered participant, when you leave, your monthly benefit from the Plan will be
based on your years of Credited Service and your Final Average Earnings. The amount is
determined by the following formula:
2.0% X FINAL AVERAGE EARNINGS ÷ 12 X
YEARS OF CREDITED
SERVICE NOT TO
EXCEED 30 YEARS
EXAMPLE: NORMAL RETIREMENT (AGE 65)
Suppose you retire at age 65 with 30 years of Credited Service. Let us assume your Final Average
Earnings are $36,000.00.
.02 X $36,000 ÷ 12 X 30 = $1,800
EQUALS
YOUR AGE 65 MONTHLY 5 YEARS CERTAIN AND LIFE TIME BENEFIT = $1,800
F INAL AVERAGE EARNINGS
This means your average earnings for the five highest calendar years of employment out of your last
10 years of employment (the years do not need to be consecutive). If you have less than five years
of employment, the actual years of employment will be used to figure your Final Average Earnings.
Note: Effective January 1, 2007, if you are a “Grandfathered” or “Vested” participant, your Final
Average Earnings will be calculated using a different methodology from the previous Oklahoma
plan. Final Average Earnings will be based on monthly pay instead of calendar year pay.
T H E H C S C E M P L O Y E E S P E N S I O N P L A N
38
E X A M P L E O F F O R M U L A F O R P A R T I C I P A N T S I N T H E N O N -
C O N T R I B U T O R Y R E T I R E M E N T P R O G R A M F O R C E R T A I N
E M P L O Y E E S O F B L U E C R O S S A N D B L U E S H I E L D O F
M O N T A N A , I N C . , A S I N E F F E C T O N O R B E F O R E A U G U S T 1 ,
2 0 1 3
If you are a Group I Participant, when you leave, your monthly benefit from the Plan will be based
on your years of Benefit Service and your Final Average Earnings minus the Primary Social Security
Benefit offset. The amount is determined by the following formula:
2.0% X FINAL AVERAGE EARNINGS ÷ 12 X
YEARS OF BENEFIT
SERVICE NOT TO EXCEED
30 YEARS
MINUS
1.6667% X PRIMARY SOCIAL SECURITY
BENEFIT OFFSET X
YEARS OF BENEFIT
NOT TO EXCEED 30 YEARS
EXAMPLE: NORMAL RETIREMENT (AGE 65)
Suppose you retire at age 65 with 30 years of Benefit Service. Let us assume your Final Average
Earnings are $36,000.00. Your monthly Primary Social Security Benefit is $1,200.00.
.02 X $36,000 ÷ 12 X 30 = $1,800
MINUS
.016667 X $1,200 X 30 = $600
EQUALS
YOUR AGE 65 MONTHLY LIFE TIME BENEFIT = $1,200
F INAL AVERAGE EARNINGS
This means your average monthly earnings during the 60 consecutive calendar months of
employment out of your last 120 completed calendar months with the Plan or Plans that give you
your highest average earnings. If you have less than 60 calendar months of employment, the actual
calendar months of employment will be used to figure your Final Average Earnings.
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