My SAIC Benefits. Annual Enrollment Update. Our 2014 Benefits Program. October 2013

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1 My SAIC Benefits October 2013 Annual Enrollment Update Our 2014 Benefits Program What s Inside Our Approach to Health... Page 2 How Our Benefits Stack Up... Page Changes At-A-Glance... Page 3 Highlights of What s New... Page 4 New Benefits Web Site... Page 6 Enrollment Calendar... Page 8 We re pleased to continue to provide benefits and programs that support the health and well-being of our employees and their families. With our smaller company size, it was important to re-evaluate our total benefits program. We ve taken great care to consider our business needs and your priorities when it comes to benefits, resulting in a balancing of our suite of benefits to stay competitive and deliver good value. The changes we are introducing to the benefits program for 2014 were designed to meet several objectives. In addition to addressing priorities employees identified through the Benefits Survey conducted in June, they are focused on maintaining our competiveness with a scaled-down workforce. Look inside for more on the 2014 benefits program. 1

2 Our Approach to Health We know health benefits are important to you. This summer, we introduced two new enhancements to the health program Teladoc and additions to the Advantage and Essential plans preventive medications list. For 2014, we are streamlining and reducing the number of insurance providers for the medical and dental plans. This allows us to better manage costs for you and the Company. We listened to your concerns about the cost of health care plans. This year, employees who enroll in the Advantage Plan will see lower deductibles and out-of-pocket maximums. For 2014, we will continue to emphasize consumerism asking you to take charge of your health and get the right care at the right times. The approach simply makes good sense both for your health and wallet. Employees enrolled in our California and Mid-Atlantic Kaiser plans will see significant changes to plan features. These changes are designed to bring the Kaiser plans in line with our national plans and new health program approach. You may be aware that starting Jan. 1, 2014, important provisions of the Affordable Care Act (ACA), or the Health Care Reform law, take effect. As a result, SAIC could see as much as $5 million in additional plan costs for Despite this, with changes introduced to the health program in 2013 and those planned for 2014 we are well-positioned to keep program costs affordable for employees. In fact, with our national medical plans, employees will see only slight to moderate increases in premiums depending on the plan and coverage level selected. For the Advantage and Essential plans, premium contributions will not change for employee only coverage and increase by $4 to $5 per paycheck for family coverage. How Our Benefits Stack Up Based on results of a recent benchmarking study in which we participated with 12 peer organizations, many of our benefits, as well as our overall program, placed well. For example, results showed: Many of our peers are quickly adopting a medical plan strategy similar to our national consumer directed health plans. SAIC benefits, such as dental, life insurance, long-term disability, paid time off and the retirement plan, ranked at market or above market when compared to peer organizations. Providing competitive benefits drives our ability to retain and attract talented people. We are committed to delivering a competitive benefits program and equally committed to understanding your preferences when it comes to benefits and communicating the value and importance of our program. We re Listening Results from the Benefits Survey conducted in June provided insight on how you perceive the Company s benefits and your preferences for change. When asked about benefit priorities and the trade-offs needed among the possible changes to specific benefits, most survey respondents said that among the options presented, they would favor: Emphasizing managing health care deductibles and out-of-pocket limits Expanding the preventive medications list Changing the Company match for the 401(k) Plan to 4% Retaining the current disability sick leave plan of 80 hours SAIC considered this feedback as part of our overall evaluation of benefit program changes for We expanded the list of preventive medications and added an additional health resource Teladoc. We are continuing to work to address your concerns and preferences, and you will see that our 2014 benefits reflect much of what we heard from you. 2

3 2014 Changes At-A-Glance Here s a preview of some of the key changes for 2014 benefits. Beginning on page 4, we provide more information to help you prepare for the upcoming enrollment period. Medical Dental Long-Term Disability Emergency child care program Lower annual deductible and annual out-of-pocket maximums for the Advantage Plan; see page 4 Lower Company funding to the Health Savings Account (HSA) for the Advantage Plan: - $250 when you enroll in employee only coverage (down from $500) - $500 when you also enroll dependents (down from $1,000) Full Company 2014 HSA contributions will be made in January; this is the last time the Company will make an automatic annual contribution to the HSA Anthem as our single provider for the Advantage and Essential medical plans; discontinuing Aetna Re-design of the Kaiser health plan to align with our national plans and focus on consumerism Changes to international health plans offered to employees on long-term international assignments and their dependents living in the U.S.; see page 5 Slight increase in the cost for Teladoc services from $38 to $40 per consultation Aetna as our single dental plan provider; discontinuing Cigna DHMO and Dominion DHMO You will be responsible for the full premium cost (pre-tax) when you elect dental coverage. Premiums will increase for the Aetna plans by $4 to $6 per paycheck for employee only coverage and $3 to $21 per paycheck for family coverage If you switch to the Aetna DHMO for 2014, premiums are estimated to decrease by $1 to $6 per paycheck The plan design will not change; the same dental services will continue to be covered Benefit changes from 66 ²/ ³ % to 60% of income replacement and is exempt from federal income tax if you become disabled and are eligible for benefits; see page 6 You will be responsible for the full premium cost (after-tax) when you elect long-term disability coverage Guaranteed acceptance if you enroll in coverage during annual enrollment; evidence of insurability will be waived Discontinuing program due to low utilization 401(k) Plan Company matches contributions up to 4% of pay (down from 6%) - dollar for dollar up to the first 3% of pay, then - 50 cents for every dollar on the next 2% of pay Immediate vesting in the Company match Comprehensive Leave Reduction in maximum comprehensive leave to 320 hours for everyone; no additional accruals beyond 320 hours Elimination of comprehensive leave payout Increase senior staff threshold from $78,000 to $150,000; individuals who meet the senior staff threshold before Jan. 1 will be grandfathered Modifications to personal time bank policy; see page 7 Please note that for 2014, there are no plan design changes to the TRICARE Supplement Plan and medical plans offered in Hawaii. In addition, you will continue to have the same vision, life, accidental death and dismemberment (AD&D), flexible spending accounts, employee assistance and work/life programs offered. 3

4 Highlights of What s New One Administrator for the Advantage and Essential Medical Plans Anthem In looking ahead to 2014, we evaluated plan administrators carefully. Anthem offers a broader network with more in-network providers in locations where our employees live. By consolidating providers, you will have access to more in-network doctors and facilities, saving both you and the Company money. Employees in the Aetna Advantage and Essential Plans will automatically default to the Anthem equivalent if no election is made during annual enrollment. Enhancements to the Advantage Plan Employees who enroll in the Advantage Plan for 2014 will see a reduction in deductibles (the lowest allowed by law for this type of plan) and out-of-pocket maximums. Advantage Plan Deductible Individual Family Out-of-Pocket Maximum Individual Family $1,500 $3,000 $4,500 $9,000 $1,250 $2,500 $3,000 $6,000 We know how important medical coverage is for our employees and families and are working to make our plans as affordable as possible by reducing the out-of-pocket maximum by one-third. For 2014, SAIC will again make a contribution to your Health Savings Account (HSA) when you enroll in the Advantage Plan. SAIC will make its full HSA contribution at the start of the new year in January. Please note that January 2014 will be the last automatic annual Company contribution to the HSA. Combined HSA contributions from you and SAIC to the Advantage Plan cannot exceed IRS limits of $3,300 for individual coverage or $6,550 for family coverage for Update on Defense of Marriage Act (DOMA) We are currently waiting for additional guidance on the recent U.S. Supreme Court ruling regarding samesex marriage and the implications for SAIC benefits. There are some things we already know. If you are legally married you can use pre-tax dollars to pay for health plan coverage for a same-sex spouse in The rules for domestic partners are not changing in accordance with IRS guidance. If you have a same-sex spouse, contact the Shared Services Center HR (SSC HR) for more information. You will need to provide a copy of your marriage certificate as documentation of your legal marriage. 4

5 Changes to the Kaiser Plans For 2014, we are updating key features of the California and Mid-Atlantic Kaiser plans so they align with our Advantage Plan. This move continues our focus on health care as a shared responsibility between you and the Company and toward encouraging greater individual accountability for decisions you make about your health. Here s a look at what s changing and your costs for care: Kaiser Plans Plan Features Annual Deductible N/A $1,000/individual $2,000/family Annual Out-of-Pocket Maximum California: $1,500/individual; $3,000/family Mid-Atlantic: $3,500/individual; $9,400/family $3,000/individual $6,000/family Coinsurance N/A 20% Health Savings Account (HSA) Not permitted by law Not permitted by law Covered Services Primary care/specialist office visits All other covered care $25 copay/primary care visits $50 copay/specialist visits $250 copay for hospital stays; various copays for other services Consolidating International Health Plans $20 copay/primary care and specialist visits Meet the deductible, then pay your share of costs (20%) For our employees who are on long-term international assignments and reside abroad, we are consolidating health plans and discontinuing the Cigna International Low Plan. The Cigna International High Plan will continue to be offered in There are no changes to the Cigna International High Plan for overseas employees; however, dependents living in the U.S. will have increases to the deductible, out-of-pocket maximum and coinsurance. The changes bring the stateside component of the plan more in line with the Advantage Plan. Employees in the Low Plan in 2013 will automatically default to the High Plan if no election is made during annual enrollment. Cigna High Plan Outside U.S. In-Network Inside U.S. Non-Network Inside U.S. Deductible $200/individual $1,000/individual $2,000/individual $400/family $2,000/family $4,000/family Out-of-Pocket Maximum $1,250/individual $2,500/family $2,000/individual $4,000/family $4,000/individual $8,000/family Coinsurance (your share) 15% 20% 40% Hospital Stays $200 copay, then 15% $250 copay, then 20% $250 copay, then 40% Due to significant increases for our International Health Plan by the insurance provider, the premium contributions are increasing $8 to $40 per paycheck for employees continuing coverage in the Cigna International High Plan. 5

6 Highlights of What s New Dental Plan Updates We re moving to one administrator Aetna. As a result, two of our dental plans will be discontinued Dominion DHMO and Cigna DHMO. If you are enrolled in a dental plan that will be discontinued and make no election during annual enrollment, you will automatically be enrolled in the Aetna DHMO if you reside in the Aetna DHMO service area or in the Aetna DPPO if you reside outside the Aetna DHMO service area. Employees will continue to have a choice of dental plans the Aetna DPPO and the lower cost Aetna DHMO. Please note that when you choose dental coverage for 2014, you will be responsible for covering the full premium cost with pre-tax contributions. Although you will pay the full premium cost for dental coverage, the plan design will not change. The same dental services that are covered today will continue to be covered in Changes to Long-Term Disability For 2014, the Long-Term Disability Plan (LTD) will provide a benefit of up to 60% of annual base pay. You will be responsible for the full premium cost, which is payable with after-tax payroll deductions. Because LTD premiums are payable with after-tax deductions, the benefit, should you become disabled and eligible for benefits, is exempt from Federal income tax. This results in a benefit level that is consistent with the 2013 benefit level for the buy-up LTD option. For some employees the premium costs may be lower. Similar to life insurance, long-term disability premium costs are based on age and salary. An Example: Assume both employees earn $86,000 a year Employee 2013 costs per paycheck 2014 costs per paycheck Change in per paycheck costs Leslie, age 37 $5.39 $5.29 ($0.10) Dan, age 47 $5.39 $10.58 $5.19 You will be automatically enrolled in the LTD Plan if no election is made during annual enrollment. In addition, you are guaranteed to be accepted if you enroll when you are first eligible. Cigna will continue as administrator of the long-term disability plan. mysaicbenefits.com Our Benefits Web Site has a New Home! Go to mysaicbenefits.com and explore. You ll find information about your current benefits and what s new for 2014 plus there s helpful information about health care reform and great resources and tools to help you learn, plan and save! 6

7 Important Information about the 401(k) Plan SAIC is committed to helping employees invest in their futures and build financial security. We are pleased to continue the 401(k) Plan. Although you are not required to elect or take action on the 401(k) Plan during annual enrollment, there are important changes to the plan for 2014: The Company s match is changing to 100% on the first 3% of pay plus 50% on the next 2% of pay, for a maximum of 4%. We are eliminating the vesting requirement. As of Jan. 1, 2014, you will be vested immediately in any Company contributions. This means there will no longer be a waiting period before you have full ownership of your account balance both your contributions and now the Company s matching contributions. We ve taken great care to consider our business needs and your priorities when it comes to benefits and ensure our programs remain competitive. Even with changes proposed for 2014, SAIC s 401(k) plan remains competitive at market with peer organization and competitor plans. Vanguard will continue as administrator of the 401(k) Plan Changes to Comprehensive Leave Program We are introducing several changes to the comprehensive leave program to bring the program more in line with practices in our market. Changes for 2014 include: Reduction in the maximum comprehensive leave to a 320-hour limit for all; there will be no accruals beyond 320 hours Elimination of the comprehensive leave payout; the last elected payout will be early December 2013 Automatic payout in early January 2014 of any comprehensive leave hours in excess of 280 hours Increase in the senior staff threshold from $78,000 to $150,000 Modifications to the Personal Time Bank policy to include a reduction in the weekly carryover limit to 10 hours The increase in the senior staff threshold takes effect Jan. 1, Individuals who meet the $78,000 threshold on or before Dec. 31, 2013 will be grandfathered under existing plan rules. The automatic payout in January 2014 will be the last automatic payout. Employees with a comprehensive leave balance in excess of 280 hours (as of mid-december) will receive an automatic payout of any hours over 280. The comprehensive leave balance for the January automatic payout will be measured in mid-december. As a result, the automatic payout combined with time taken at the end of December may result in comprehensive leave balances below 280 hours. Compared to competitor and peer organizations, SAIC s maximum comprehensive leave accrual is currently significantly above market. Even with the reduction in the maximum accrual to the new 320-hour limit, the maximum for 2014 will still be at or above market. This lower maximum is market competitive and it provides additional support to our Company from a business accounting perspective, helping us to compete more effectively and win business. 7

8 Get Ready! What You Need to Do Visit our new SAIC benefits web site at mysaicbenefits.com Attend a virtual annual enrollment meeting at your convenience for details on what s changing You ll also find: Annual enrollment preview Highlights of benefits, resources and tools A Benefits User s Guide Enrollment Checklist FAQs Link to Enroll and When Week of Oct. 28 Enroll in your 2014 benefits Nov. 7 to Nov benefits take effect Jan. 1, 2014 Take a closer look at SAIC, your benefits and what you need to know for annual enrollment. Visit mysaicbenefits.com for more information about your 2014 benefits. Important Reminders If you recently moved, remember to update your home address online in the PeopleSoft system by Oct. 31, Mark the date! Annual enrollment begins Nov. 7. Don t procrastinate. Enroll early! When you go online to enroll, remember to print a confirmation statement of your 2014 elections before you leave the enrollment system. Questions? Contact the Shared Services Center HR (SSC HR) at [email protected] or via telephone at and select option 3. Assistance is available Monday Friday, 8:00 a.m. 6:00 p.m. ET. Visit mysaicbenefits.com to learn, plan and enroll! SAIC has made every attempt to ensure the accuracy of this information. If there is any discrepancy between this newsletter and the insurance contracts or other legal documents, the legal documents will always govern. As with all of its benefits, SAIC reserves the right to amend or discontinue the benefits described in this document in the future, as well as change how eligible employees and the Company share the cost at any time. This newsletter does not create any employment agreement of any kind or a guarantee of continued employment with SAIC. 8