1 Introducing a new way to get health care coverage for 2016 For Lilly Medicare-eligible retirees and dependents
2 Beginning in 2016, Lilly is introducing a new way for Medicare-eligible retirees and Medicare-eligible dependents to receive health care coverage. These changes do not affect your benefits for 2015, and there is no action you need to take right now. This guide explains what will be changing, what you can expect over the coming year, and what to do if you have questions now. It also introduces Towers Watson s OneExchange, our trusted partner who will support you during and after this change. Please review this information carefully to understand the changes to Lilly s benefits and what they mean for you and your family. Be sure to share this guide with a family member or someone who helps you make health care decisions. Retirees and family members who are not Medicare-eligible and are covered by a Lilly medical option will remain eligible for coverage under a Lilly option in 2016, as long as you continue to meet the eligibility requirements. When you and/or your family member become Medicare-eligible (generally at age 65), you will need to enroll in health coverage through OneExchange.
3 Introducing OneExchange Lilly is partnering with OneExchange to support you during and after this transition. OneExchange is the nation s largest and longest-standing private Medicare exchange. They are experts in providing objective advice and access to a robust and competitive individual Medicare market. OneExchange represents a wide variety of plans from more than 90 national and regional health insurance companies. OneExchange is not an insurance company. This fall, when it is time to evaluate and enroll in an individual Medicare supplement plan, OneExchange will provide personalized support from an experienced benefit advisor, so you can feel confident in selecting and enrolling in a plan that meets your needs and budget. Through OneExchange, you will have access to:»» Information mailed to your home to help you prepare for and complete enrollment for 2016 coverage»» Education and support about the types and costs of plans available to you»» Objective advice and decision-making support, based on your current coverage and expected future medical needs»» Assistance with enrolling in the health care coverage you choose»» Ongoing support after your enrollment, including help with coverage and claims questions Take Note Watch for this logo on upcoming mailings it means that they include important information about your medical coverage:
4 2 What s New for Medicare-eligible Retirees and Dependents for 2016 TODAY BEGINNING JANUARY 1, 2016 What you have today (if Medicare-eligible) A single health plan option, administered by Anthem and CVS Caremark No personal guidance for your health plan decisions Family coverage, meaning you select your benefits and cover your eligible family members if desired Certain Lilly drugs provided at no cost What you ll be eligible to receive beginning January 1, 2016, (or after, when becoming eligible for Medicare) You will have the ability to choose from a range of medical, prescription drug, dental, and vision plans from leading national and regional insurance companies. These plans are offered through a private Medicare supplement marketplace, which is different from the public health insurance exchanges created under the Affordable Care Act. OneExchange will connect you with an experienced benefit advisor who will provide you with personalized support as you select and enroll in the plan(s) that s best for you. You and each of your Medicare-eligible family members will select and enroll in your own Medicare supplement plan(s), with individual coverage. You can pick the same plan or different plans, depending on your preferences and health care needs. Any of your eligible dependents who are not yet Medicare-eligible will continue to have the opportunity to enroll in a Lilly health plan option. With your new Medicare supplement plan(s), Lilly drugs will no longer be available free of charge. Instead, they will be covered like all other prescription medications, depending on the plan you select. If you take a Lilly drug, or any other prescriptions, your benefit advisor at OneExchange can work with you to find a plan that includes coverage for your medications at the lowest possible cost.
5 3 TODAY BEGINNING JANUARY 1, 2016 What you have today (if Medicare-eligible) Make changes or elections through the Lilly Annual Enrollment process each fall Your retiree medical plan premiums are typically deducted from your monthly pension payment, and Lilly pays a portion of the cost of coverage You contact the Lilly Benefits Center, Anthem, and CVS Caremark with any questions about your coverage What you ll be eligible to receive beginning January 1, 2016, (or after, when becoming eligible for Medicare) This fall (or when you become eligible for Medicare, if later), you will no longer enroll for health care coverage through Lilly. You and/or your Medicare-eligible dependents will each select and enroll in new medical and prescription drug coverage through OneExchange. Dental and vision plans are available as well. OneExchange will continue to assist you if you have any questions about your health insurance or want to re-evaluate your coverage each year. Detailed information on how to prepare for your enrollment and instructions on how to evaluate options will be mailed to you in August. There is nothing you need to do right now. Lilly will continue to pay a portion of your retiree medical coverage; however, you will pay directly for your health premiums to your new insurer and for other out-of-pocket medical expenses. You will then be able to reimburse yourself for these costs from a tax-free account from Lilly called a Health Reimbursement Arrangement (HRA). You will no longer have health plan premiums deducted from your pension payment. As long as you are eligible and enroll in a Medicare supplement plan through OneExchange, Lilly will contribute annually into your HRA to help you pay for coverage. In August you will receive information about how much Lilly will contribute to your HRA. The amount you receive will be based on how your retiree medical cost-sharing works today. Once you enroll in a plan, OneExchange will be your primary contact for all health insurance-related information and support. You may also contact your insurance company if you have questions about coverage.
6 4 When to Expect More Information If you or your dependent are or will be eligible for Medicare by January 1, 2016, this chart provides an overview of information you will receive and when, so that you are ready to enroll when the time comes: NOW August 2015 Late August early September Read the information in this packet to better understand what is changing and why. View a video message from John Lechleiter and Stephen Fry at lillyretireeinfo.com. Visit lillyretireeinfo.com if you d like to learn more about Medicare, Medicare supplement plans, and the individual Medicare marketplace. Call OneExchange at , if you have questions about the enrollment process and what to expect. Read information sent from Lilly including your HRA subsidy amount, a schedule of education sessions to be hosted by Lilly and OneExchange, and the OneExchange Getting Started Guide, which outlines the actions you will need to take. RSVP to attend an education session. Speak with a OneExchange representative over the phone to answer any questions about the change. The advisor will collect some information from you and schedule an enrollment call with you for the fall. Attend an education session or teleconference hosted by Lilly and OneExchange to learn more about your health care coverage options and the services available to you through OneExchange.
7 5 October Mid-December January 1, 2016 Read the Enrollment Guide sent from OneExchange, which explains how to evaluate your options, how to complete enrollment, and what to expect after enrollment. Participate in an enrollment call with a OneExchange benefits advisor to enroll in an individual Medicare supplemental plan between October 5 and December 31. Read the HRA guide mailed to your home from OneExchange, which includes detailed information on how to use your account. New coverage you ve selected begins. You will receive new health care ID cards directly from the insurer you selected. To make sure you stay informed, be sure to call the Lilly Benefits Center at with any updates to your contact information including updates to your *mailing address.
8 6 How much will Lilly contribute to my medical coverage? If you are currently Medicare-eligible (or will be by January 1, 2016), you will receive a personalized information packet mailed to your home in August that contains your HRA subsidy amount and other important information. Your HRA subsidy amount will be determined primarily by your retirement date and years of service. By law, rates and benefits for many of the individual Medicare supplement plans will be not be available until October 1, Our Company s long history proves that we have been able to adapt to change over time, and this also is true of our health care strategy. The health care market has changed significantly in recent years and will continue to evolve. This is our opportunity to help our retirees take advantage of these advances. I understand the concern that comes with change, but I assure you we are approaching this transition carefully so that you have the support you need. John Lechleiter, Chairman, President, and CEO of Eli Lilly and Company
9 7? Did you know? Compared to many company-sponsored group plans, the individual Medicare market can offer better value for retirees:»» On average, over the past several years, individual medical plans have experienced lower premium increases than group medical plans.»» Most retirees who select coverage through OneExchange will pay about the same or less than they did under their previous coverage options, while also selecting coverage more specifically tailored to their personal needs and budget. The Medicare Supplement Marketplace The private Medicare supplement marketplace provides you access to medical plans that will supplement Medicare Parts A and B. In order to enroll in a Medicare supplement plan, you must be enrolled in Medicare Parts A and B. The Medicare supplement marketplace is a well-established and cost-effective alternative to company-sponsored group medical coverage, and millions of retirees obtain coverage this way. Over the past few years, more and more companies have helped their Medicare-eligible retirees and Medicare-eligible dependents successfully move from company-sponsored plans to coverage through the Medicare market.
10 8 Frequently Asked Questions The following questions and answers help to explain a little more about the changes and what they mean for you and Lilly. What is Lilly s long-term health care strategy? Lilly remains committed to contributing to a meaningful health benefit for our employees, our retirees, and their families. Why is Lilly making this change? Why now? We want our employees, our retirees, and their families to have access to quality health care coverage. That s why we evaluate our benefit programs. We must continually adapt our approach to provide quality benefits at the right cost. We believe this is the right time for change. The Medicare supplement market is well established, with competitive and affordable options. This change provides an opportunity to take advantage of innovation in the health care market, enabling flexibility, choice, and value. Will Lilly save money by making this change? Yes. Lilly will save money with this change, mainly in how we account for future benefit liabilities. We must continue to address the rising cost of health care. This change allows us to maintain an affordable and competitive health benefit for our retirees and their families. Why are you communicating this now when I cannot yet take action? We believe communicating changes to your benefits as decisions are finalized is the right thing to do even if we don t have all the answers yet. We ll ensure you have the time and information you need to take action when required. Will this new approach cost more than my current Lilly coverage? For the majority of retirees, Lilly s contributions to your Health Reimbursement Arrangement (HRA) will be sufficient to pay for a medical plan comparable to your current coverage. As long as you enroll in a Medicare supplement plan through OneExchange this fall (or once you become eligible for Medicare, if later), Lilly will contribute annually into an HRA to help you pay for coverage. What is a Health Reimbursement Arrangement (HRA)? An HRA is a tax-free account where Lilly will make contributions as long as you are eligible and enrolled in a Medicare supplement plan through OneExchange. You will have access to your account to reimburse yourself for the cost of your health care premiums and/or other eligible health expenses, such as co-payments and co-insurance. You ll receive more information about your account and how it works in December. Will I still be able to use my chosen doctor(s)? You will likely be able to find a plan that allows you to continue to use your current doctors. Your benefit advisor at OneExchange can work with you to help you find a plan that includes your current providers in their network.
11 9 What role does Lilly play in supporting Medicare Part D prescription drug coverage? Does this change reflect this support? Since 2010, contributions from Lilly and other pharmaceutical companies have helped millions of Medicare-eligible individuals save on their prescription drug costs. These contributions are helping lessen the effects of gaps in Medicare Part D prescription drug coverage (the doughnut hole ), resulting in more affordable coverage for seniors. Through this change, Lilly retirees will now be able to take advantage of these contributions. How does this change affect non-medicare-eligible retirees? The new way to buy health care coverage only applies to Medicare-eligible retirees and dependents. If you and/or your eligible family members are not Medicare-eligible and covered by a Lilly medical option, you remain eligible for coverage under a Lilly option in 2016, as long as you continue to meet the eligibility requirements. When you and/or your family member reach age 65, or otherwise become Medicare-eligible, you will enroll in health care coverage through OneExchange. If you are approaching Medicare eligibility, you will receive more information on the actions you should take during the year before your 65th birthday. If you are eligible for Medicare, but your dependent is not yet eligible, please note the following for those who will enroll through OneExchange by December 31, 2015: While the cost of coverage through the Lilly pre-medicare plan is higher, your spouse and/or dependents will continue paying lower post-medicare rates as they do today for up to three years, with annual cost increases subject to inflation. For example: If you are a 67-year-old retiree and your spouse is age 60 (and is a covered dependent), you will enroll through OneExchange, and your spouse will choose a Lilly pre-medicare option. Lilly will grandfather non-medicare-eligible dependents covered by a Medicare-eligible retiree as of December 31, 2015, at the lower Medicare-eligible premiums (with annual cost increases for inflation) for three years. After three years (so, beginning in 2019), the pre-medicare premiums will apply. Once your spouse turns age 65, or otherwise becomes Medicare-eligible, he or she will also enroll through OneExchange and receive the HRA contribution. What happens if I don t enroll in a plan through OneExchange? Traditional Lilly coverage for Medicare-eligible retirees/dependents will not be available for If you want to receive financial support from Lilly for your health benefits in the future, you must enroll in a medical plan through OneExchange by December 31, 2015, or when you become eligible for Medicare, if later. Should retirees expect more health plan changes in the future? We remain committed to providing access to meaningful health benefits for our employees and retirees. We will continue to update our programs to ensure they remain sustainable for the future.
12 The information provided in this guide is intended to give a general overview of important benefit information. While every effort has been made to make the information as complete and accurate as possible, Lilly s benefit plans are fully detailed in separate legal documents. In the event of any inconsistencies between these materials and the plan documents, the terms of the plan documents will control. The Company reserves the right to amend, modify, or terminate its benefit plans or services at any time at its discretion. January 2015