Welcome Back to Module II of our overview on IBM s Benefits Program

Welcome Back to Module II of our overview on IBM s Benefits Program 1

Here again is the Agenda. We will now start our review of the Second Module. 2

This slide depicts the other Benefit Plans and Programs offered by IBM that we will cover. Keep in mind, you can go directly to individual slides of interest 3

This slide depicts the details around Paid Time Off, which includes up to 10 days per calendar year, excluding holidays A Table for prorating PTO is contained on the next chart. At separation from IBM, any days earned but not taken, will be paid out. As a long term supplemental employee, IBM s military time off policy allows you to fulfill your military obligations in compliance with applicable federal and state laws. Finally, LTS employees may also receive up to 10 paid days off for jury duty. Non-Speaking Notes Managers can also grant up to an additional 10 days off at their discretion. LTS Employees may also qualify for FMLA. No other Leaves of Absence apply. 4

Here is the Paid Time Off Schedule I alluded to in the prior chart F or California Employees, California state law requires that paid time off for eligible employees be accrued on a daily basis. In order to calculate accrued time off for California Long Term Supplemental employees: 1. Use the number of days accrued from the table above 2. Determine the percentage of the year the employee has been or will be employed this year. Use an on-line calendar to determine the day of the year and then divide by 365. 3. Multiply the result of Step 1 (amount of paid time off employee can earn in a year) by the result of Step 2 (percent of the year employed) and round up to the next half day. 5

The Holiday Plan for Long Term Supplemental Employees is pretty straightforward, as noted here on the slide Supplemental employees are paid for holidays scheduled during the work week. On commercial accounts, IBM management normally attempts to observe those holidays observed at the particular client s location. You will be informed in a separate communication if your holidays differ from those listed here. Working on a holiday - Some employees who are required to work on scheduled holidays may be eligible for extra pay or substitute time off as follows: Non-exempt employees who work on a holiday are paid at 1.5 times base pay for hours worked. Exempt employees may choose a substitute time to take off, normally within two weeks of the scheduled holiday. Holidays may not be taken in half-days and may not be carried over into the following year nor can they be cashed out Long Term Supplemental employees are also not eligible for personal choice holidays. 6

The IBM 401(k) Plus Plan allows you to save up to 80% of your pay for retirement while deferring your current income tax. A Post-tax, Roth, savings feature is also available where you may contribute up to 10% of your pay on an after tax basis. You are eligible to enroll in this program as soon as you are on the active payroll via Netbenefits. Your HRTM will provide details on how to enroll. Rollovers are acceptable from another employer s pre-tax qualified plan. Your HRTM will communicate rollover information to you if it applies. The Key Plan Features listed on the slide are pretty straight forward. In regard to 401(K) deductions Your HRTM will communicate the enrollment window to you. They will tell you the date you must complete your contribution deduction enrollment for you to have your deductions taken in the first available pay cycle. Please know IBM does not make retroactive deductions if employees enroll late in the 401(K) Plus Plan. However, employees that enroll after the 1 st payroll cycle can still contribute up to the regulatory amounts, and can change their deductions at any time throughout the year. Finally, we believe this is a great program, and we strongly encourage you to read the plan materials and to participate in it Non Speaking Notes: There is no IBM Match for LTS employees either pre- tax or after-tax The Disability Protection option is NOT available to LTS employees IBM employees in Puerto Rico are limited by local government requirements to a maximum annual deferral amount of $8,000 or 10% of eligible compensation, whichever is less. That dollar limit is reduced by the amount that an individual contributes to an IRA. 7

The IBM Employee Stock Purchase Plan enables employees to share in company ownership via payroll deduction at a 5% discount from the market price on the date of purchase Employees may purchase IBM Stock up to 10% of their pay to a maximum of $25,000 in a calendar year. The allowable contribution rates and other terms of purchase may change by offering period. A per-offering limit on the total ESPP share purchases helps IBM manage the rate of share consumption and more closely align the ESPP with shareholder interests. For instance, the limit in effect for the July 1 - December 31, 2012 offering period was four million shares. Employees can enroll or change their contribution level at any time during the offering period. However, you must be an IBM employee on the first day of the offering period in order to participate during that offering period. The offering periods normally run January 1 June 30; July 1 December 31. Participants may increase or decrease their ESPP contributions, add or delete a joint owner, or withdraw from the plan at any time. If you sell shares during the same offering period in which they were acquired, you will be dropped from the ESPP plan for the balance of that offering period as well as the following offering period. Payroll deductions are taken on an after-tax basis. Please understand, this plan is completely separate from the 401(k) Plus Plan in which IBM Stock is one of the many investment choices. 8

The Travel Accident Insurance Plan provides benefits if you are traveling away from your job location or home on company business. Eligibility starts with the first day of your employment. The plan provides benefits of up to five times your annual compensation for accidental bodily injuries which result in death, dismemberment, loss of sight, hearing or speech. IBM pays the entire cost of coverage, which begins on your first day of employment Finally, benefits will be payable to the Beneficiaries you name Non-Speaking NOTES: Following are the reimbursement percentages for Dismemberment: A hand... 50% A foot... 50% Sight of an eye... 50% Speech and hearing in both ears 100% Speech... 50% Hearing in both ears... 50% 9

The Group Universal Life insurance program is a voluntary Term Life insurance program offered to IBM employees and their families, (spouse/domestic partner and children). It is administered and underwritten by Prudential Insurance Company of America. It is an Employee Pay ALL plan and is not sponsored or endorsed by IBM. The company is simply giving employees access to term Life Insurance at affordable group rates. By providing evidence of good health, you can purchase term life insurance of up to eight times your annual compensation to a maximum of $3 million. If you are eligible and enroll within 90 days of your date of hire, you will be eligible for Guaranteed Issue Term Life Insurance equal to 2 times your annual salary, not to exceed $750,000. Coverage for greater than 2 times annual base pay is available after providing "simplified" evidence of good health. The spouse guaranteed issue amount is $50,000 Like the GLI program there is an Accelerated Death Benefit available Premiums are based on your age, the amount of insurance procured and whether you are a smoker or non-smoker The program is portable and you can continue coverage at higher premiums should you leave IBM. Prudential will mail you a new hire kit to your home within two weeks of your DOH. It will contain additional details as well as enrollment instructions. Non-Speaking Notes: Eligibility: Employee must be at work and able to perform normal activities on the effective date of coverage. Employees will be instructed to access the website http://www.prudential.com/giwebenroll For ID, use IBM serial number including CAP for any alpha character; for PW, use DOB in this format: MMDDYYYY. The ACCESS code is 16000 This is not an employer-sponsored welfare benefit plan, nor is it endorsed by IBM. Any questions should be directed to The Prudential Insurance Company of America For Texas residents, (1) total employee life insurance, including basic life insurance provided by employer, may not exceed the greater of 8 times base pay or $250, 000 and (2) spouse/dp coverage is only permitted with employee participation and cannot exceed the employee s coverage amount.) 10

The EAP is available to all employees and their eligible dependents, even if you enrolled in an HMO or elect No Coverage through IBM. Working with your EAP counselor, you can learn skills and behaviors to assist you in gaining control of your situation. You may use this counseling session more than once during any given year to help you with different issues, or after a period of time if the same problem recurs. Remember, you can also take advantage of the informational resources available at any time and as often as you like. The Employee Assistance Program is not intended for treatment of long-term problems or mental illnesses. For more intensive treatment of serious, emotional problems or severe substance abuse issues, employees should utilize the mental health benefit provided under their medical plan. The EAP is Administered by Optum. You can call The toll-free number for the Clinical Referral Line 24 hours a day, 7 days a week. 11

The IBM Mental Health Care Program has three components, a Clinical Referral Line, the Employee Assistance Program which we discussed previously, and the Managed Mental Health Care Program. The Clinical Referral Line is available to all employees, regardless of the plan option they are enrolled in as is the EAP The Managed Mental Health Care Program is available to employees and dependents enrolled in the IBM PPO, IBM PPO Plus, IBM EPO and IBM High Deductible PPO with HSA Medical Plan options. It is not available to employees and dependents enrolled in HMOs. The Managed Mental Health Care Program is also administered by Optum and provides more intensive outpatient and inpatient treatment to participants Reference the IBM Health Benefits Comparison Charts included in your enrollment materials or the About Your Benefits: Health Care, Summary Plan Description document available in the Reference Library on NetBenefits for further details 12

IBM understands it is difficult to balance work and life responsibilities among your job, family, finances, and personal interests. Hence, we offer the LifeWorks Employee Work/Life Program which provides a wide variety of assistance to help you balance your interests and responsibilities. LifeWorks can provide you with practical information and advice on subjects in a number of ways, including: o Advice from experienced professionals and Referrals to care locators and other resources o Free booklets, Audio recordings, Articles, and Online information resources o Personal Assessment Tools LifeWorks is available to all employees and dependents at no cost. It's a free, fast, effective and easy to use program. Finally, LifeWorks consultants speak Spanish and they offer simultaneous translation into more than 140 other languages. Non-Speaking Note to HRTM retirees: For your personal access, use ID ibm and PW: retirees. Then, when registering, use your IBM retiree serial # (same one you had as regular employee), Do NOT use your supplemental serial #. 13

IBM offers access to Discounted goods and services through the IBM Club and some of our business partners The IBM Club is a group that brings employees and retirees, as well as their families, together outside of work to participate in activities that are social, cultural or recreational. The IBM Club also makes available discounts to entertainment, leisure and recreational venues and events. The IBM Club home page also includes a link to the IBM Clubs where discounts may be provided at the local or national level. IBM Clubs exist in about 150 locations worldwide today. Traditionally, clubs have been the strongest at locations with large IBM populations. Discounts for IBMers is your single destination for all discounts on products, services and programs available to employees from IBM's clients, partners and vendors. IBMers in the U.S. can take advantage of these discounts, which leverage IBM's buying power to benefit IBMers and support our clients' interests by giving their products greater exposure. The Beneplace website also provides access to the Employee Purchase Program, through which employees can purchase Lenvovo laptops and desktops at discounted prices and IBM Certified Used Equipment at significant savings. 14

There are several resources available to you We often sponsor a Transition website on which additional information, including FAQs, may be posted. Your HR Transition Manger will communicate this information to you if available. The IBM Employee Services Center is available from 8:30 AM to 8:30 PM, Monday through Friday, to provide information, problem resolution assistance, and enrollment over the phone. You may call the 2008 number before your DOH for information and enrollment once your enrollment window opens, and the 9876 number after your IBM DOH The NetBenefits web site is a powerful tool for enrolling in Benefits, making enrollment changes during the year if you have a qualified status change, and for obtaining information on IBM s Benefit Programs. There are many features within the NetBenefits Tool. o Coverage Advisor helps you think through your annualized Medical needs, estimate your healthcare expenses for each plan option, and calculate projected tax savings for enrolling in the Health Care Spending Account or IBM High Deductible PPO with HSA. o The Provider Directory helps you determine participating providers in the various Plan Administrator Networks, although, using the Plan Administrator websites will provide a more current view of Participating Providers. o There is an Extensive Reference Library with a great deal of useful Benefits information o You can view your benefit options and enroll in your IBM benefits online from anywhere you have internet access after your Date of Hire, using your Social Security number or Customer ID and PIN. 15

o Your HR Transition Manager will apprise you when NetBenefits is available to you. After you are connected to IBM Systems you will have access to the You and IBM Web Site which houses details on each Benefit Program including all the IBM Summary Plan Description Documents, a few of which are available in the NetBenefits Reference Library today 15

This Appendix is intended to provide additional details on specific benefits topics referenced in the presentation modules 16

This slide is a text only version of the color map shown on slide 8, depicting IBM s Medical Plan Carriers by state It should help in situations where employees prefer to print the information with a black and white printer 17

The next several slides contain specific details around Preventive Care Services Covered under the IBM PPO, IBM PPO Plus, IBM EPO, and IBM High Deductible PPO with HSA medical options discussed on slide 5 Please be sure to review these details here on this slide, along with the covered Preventive Services, Eligibility Requirements, and covered immunizations on the remaining slides. You should advance these slides using the Page up or Down buttons on your keyboard as you move through them at you own pace If you are considering an HMO coverage, please check with the specific HMO plan to understand the coverage for Preventive Care Services 18

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Here is the list of the Routine Preventive Care Services Covered under the IBM PPO, IBM PPO Plus, IBM EPO, and IBM High Deductible PPO with HSA medical options discussed on slide 5 What s NOT Covered at 100% or Deductible Free you might ask? -- If you receive screenings in the course of diagnosis or treatment for a particular condition, you may be required to meet a deductible and pay any applicable coinsurance or copayment. This means any subsequent or follow up diagnostic testing, performed as a result of findings indicated by the routine/ preventive services visit, will not be eligible for 100% reimbursement or waiver of the deductible. In terms of HMO coverage, please check with the individual HMOs your interested in to understand what their covered Preventive Care Services entail 22

Here is the list of the Routine Preventive Care Services Covered under the IBM PPO, IBM PPO Plus, IBM EPO, and IBM High Deductible PPO with HSA medical options discussed on slide 5 What s NOT Covered at 100% or Deductible Free you might ask? -- If you receive screenings in the course of diagnosis or treatment for a particular condition, you may be required to meet a deductible and pay any applicable coinsurance or copayment. This means any subsequent or follow up diagnostic testing, performed as a result of findings indicated by the routine/ preventive services visit, will not be eligible for 100% reimbursement or waiver of the deductible. In terms of HMO coverage, please check with the individual HMOs your interested in to understand what their covered Preventive Care Services entail 23

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This concludes our presentation Thank you for taking the time to educate yourselves on the Benefits IBM offers I hope you will take full advantage of the additional resources discussed today as you make your enrollment decisions. As we close this discussion, I want to welcome you to IBM and wish you continued success in your career with us. 27