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Additional Questions and Answers - November 15, 2007.

1. What is meant by “fully insured” vs. “self insured”?

A self insured group health plan is one in which the employer assumes the financial risk for providing health care benefits to its employees. Typically the employer pays a third party (an insurance company) to administer the plan. The employer pays the costs – claims and administrative expenses – themselves. If these costs exceed the premiums collected the employer is responsible for this additional expense.

If fully insured, the employer pays a fixed premium to an insurance company. The insurance company then pays the costs – claims and administrative expenses. If these costs exceed the premium collected, the insurance company is responsible for this additional expense.

2. My spouse has health insurance through his/her employer. It is fully insured and the premiums are paid post tax. Is this eligible for reimbursement from the HRA if I am a retired participant?

Yes. Attached is an opinion letter from Krieg DeVault, LLC (our legal counsel) regarding this matter.

3. I am currently on the state disability. I am now eligible for retirement. Will I qualify for the HRA?

Yes. Attached is an opinion letter from Krieg DeVault, LLC regarding this issue.

4. Are Tri-Care premiums (health care coverage through the military) eligible for reimbursement from the HRA?

No.

5. Is insurance purchased from the Indiana Comprehensive Health Insurance Association (ICHIA) eligible for reimbursement?

No. Although this was mentioned as an option during the October informational sessions, it has since been determined that it is not eligible as this association is not considered an insurer by the IRS.

6. What happens to the funds in my account if I am a retired participant and I do not submit any reimbursement claims for 6 months, a year, 5 years, or even longer?

The funds will remain in your account until both you and your spouse and/or eligible dependents are deceased. The state’s third party administrator may contact you to ensure you are still alive, but the funds may be used at any time.

7. Are COBRA expenses (associated with the state’s plans) eligible for reimbursement from the HRA if I am a recently retired participant?

No. They are not fully insured.

8. Are long-term care premiums eligible for reimbursement from the HRA if I am a retired participant?

Yes, if the plan is fully-insured.

9. Are premiums for a fully-insured vision plan eligible for reimbursement from the HRA if I am a retired participant?

Yes.

10. Are premiums for a fully-insured dental plan eligible for reimbursement from the HRA if I am a retired participant?

Yes.

11. Do the accounts bear interest?

Yes. However, all administrative costs related to this plan must be paid from accrued interest first.

12. When will contributions be made to my account?

For retired participants, the bonus contribution ($1,000 x eligible years of service) will be credited to your account within 60 days of your retirement date.

For active employees, the state will credit your account with the annual contribution each summer for all active employees who were employed continuously between January 1 and the date of the contribution that year (no later than June 30). Employees who retire prior to July 1 will not receive the annual contribution.

13. Am I eligible for this benefit if I am retiring from the state and I had an interruption in service 10 years ago, but am eligible for an unreduced retirement benefit and have more than 15 years of state service (in total)?

Yes.

14. What happens if I have an interruption in state service 2 years from now after accumulating several thousand dollars in my account? What if I return 3 years later, and eventually receive an unreduced retirement benefit and have more than 15 years of state service (in total)?

The funds in your account – the annual contributions – will revert to the state to be used to fund other participants. However, annual contributions will begin again (from zero) when you return, and you will be eligible for the bonus contribution ($1,000 x eligible years of service) if you retire prior to June 30, 2017.

15. If I retire prior to the IRS ruling regarding the 401(h), will I be eligible to participate in the 401(h)?

No. However, this will not impact your eligibility for participation in the Health Reimbursement Arrangement.

16. Will anything change regarding the conversion of vacation days if I retire in the near future?

No. Nothing will change until the 401(h) plan is approved by the IRS. Their approval is not guaranteed, and is not expected until mid 2008 at the very earliest. If and when this approval is received, additional time will be required to implement. Until that time, the current policy regarding the conversion of vacation days remains in effect.