2008 Annual Enrollment

Training Presentation April 2008

Agenda

    Overview of 2008-2009 benefits – What’s new and/or changing July 1 What you need to do – Enrollment dates and My Benefits Access Benefits enrollment Questions?

2

2008-2009 Benefits

Overview of 2008-2009 Health Benefits

        Medical Dental Vision Flexible Spending Accounts Basic Life Insurance Optional Life Insurance Basic Accidental Death and Dismemberment Optional Accidental Death and Dismemberment      Short-term Disability (if offered by your sector) Long-term Disability Employee Assistance Program Group Legal Voluntary Insurance (through the Northrop Grumman Federal Credit Union) 4

What’s Changing July 1

   Medical – New carrier for Premium and Preferred PPOs – – Prescription drug changes under the PPO and EPO options Reduced lifetime maximum of $12,500 for infertility treatment under PPO and EPO options Flexible Spending Accounts limit of $2,500 for highly compensated employees  reduced annual Cost increases for Premium PPO and Cigna EPP 5

Anthem Blue Cross

   Provider network is the same as the Blue Cross Blue Shield network New medical ID cards issued before July 1, 2008 Access to Anthem’s care management program, 360 Degree Health 6

Prescription Drug Changes

   Generic preferred refills (PPO and EPO options) Mandatory mail-order for maintenance medications (PPO and EPO options) Step Therapy program for PPO participants 7

Flexible Spending Accounts

 If you earn $100,000 or more in 2008, your annual contribution limit to the Dependent Care FSA will be reduced to $2,500 8

Employee costs

  Changes to how employee contributions are calculated Significant cost increases for Premium PPO and Cigna EPP options 9

Lumenos HRA Plan

Care

(in-network) • 100% coverage services • No deductions

Benefit plan year allocation from Northrop Grumman Plan pays 100% when funds are available Employee ’s responsibility if expenses exceed the benefit plan year HRA allocation Paid only as expenses are incurred Can be reduced or eliminated by HRA rollover Additional protection covers the services allowed by Northrop Grumman You pay coinsurance for covered services 100% coverage after coinsurance maximum is met

10

Lumenos HRA Plan

Employee Plan Year Amounts Employee + Spouse Employee + Child(ren) Health Reimbursement Account (HRA) $1,000 $1,500 $1,500 Bridge $800 $1,200 $1,200 Traditional Health Coverage

Coinsurance Maximum

Family $2,000 $1,600 $4,200

90% covered for in-network providers 60% of R&C for out-of-network providers

$6,300 $6,300 $8,400

Mental Health/Substance Abuse and prescription drug benefits are covered under the plan.

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Comparing the Medical Plan Options

I want to choose a PCP to coordinate all my care and specialist referrals I want to visit any provider I choose, without referrals I want to be able to go out of network, even if it’s at a higher cost (but still covered) I want Northrop Grumman to help me pay for some of my expenses through a company funded HRA

PPO

 

EPO

 (in most cases)

Lumenos HRA Plan

 

HMO

  12

Comparing the Medical Plan Options

I want 100% coverage for preventive care I want the lowest paycheck contributions I am worried about health care costs rising, and want a plan that helps me manage that better

PPO

 (after a small copay)

EPO

 (after a small copay)

Lumenos HRA Plan



HMO

 (after a small copay)   13

Example: Sharon

   Average user of health care benefits Family coverage Potential health care services/needs (with assumed actual cost of service): – Three routine preventive care visits ($125 each) – – – – Two specialist visits ($175 each) 20 physical therapy visits for treating sports-related injury ($100 per visit) Two generic maintenance prescriptions filled monthly ($20 each per month) One preferred brand prescription ($60) 14

Example: Sharon’s Costs

Preventive care Specialist visit Lumenos HRA Plan

$0

+

2 visits @ $175 per visit = $350

+ Preferred PPO

3 visits @ $20 copay = $60

+

2 visits @ $40 copay = $80

+ Premium PPO

3 visits @ $15 copay = $45

+

2 visits @ $30 copay = $60 +

Physical therapy

* This example assumes in-network services only.

20 visits @ $100 per visit = $2,000 5 visits @ $100 per visit up to individual annual deductible = $500 + Remaining 15 visits @ 10% coinsurance per visit = $150 3 visits @ $100 per visit up to individual annual deductible = $300 + Remaining 17 visits @ 10% coinsurance per visit = $170 15

Example: Sharon’s Costs (cont.)

Prescription drugs Total Lumenos HRA Plan

2 generic Rx each month for 12 months @ $20 retail cost = $480 + 1 preferred brand Rx at $60 retail cost = $60 

$2,890 Preferred PPO

2 generic Rx each month for 12 months @ $5 copay = $120 + 1 preferred brand Rx at $20 copay = $20 

$930 Premium PPO

2 generic Rx each month for 12 months @ $5 copay = $120 + 1 preferred brand Rx at $20 copay = $20 

$715

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Example: Sharon’s Costs (cont.)

Amount covered by Health Reimbursement Account (HRA) funded by Northrop Grumman to help pay for cost of coverage Total out-of-pocket for Sharon after using HRA Annual paycheck cost Lumenos HRA Plan

$2,000 (Sharon’s total HRA at the beginning of the plan year is $2,000) 

$890

$

Preferred PPO

$0 

$930

$$

Premium PPO

$0 

$715

$$$ 17

What You Need To Do

What You Need To Do

 Review – – – Current benefits coverage and 2008-2009 options with eligible family members How you use your benefits, and what your needs will be in the coming benefit plan year Whether you could save money by choosing a different (but still appropriate) option 19

What You Need To Do (cont.)

 Enroll – Use the tools and resources at My Benefits Access to evaluate your options – – Make changes to current health benefits coverage during your enrollment period If You Don’t Enroll • Continue current coverage for medical, dental, vision, life, disability, and AD&D (as applicable) at new plan year costs • Current coverage in following plans will continue unless you make a change: – Health Care and/or Dependent Care FSAs – Group Legal plan 20

Benefits Enrollment

Two Enrollment Periods

April 28



May 9

Corporate / Newport News / Integrated Systems / Information Technology /Space Technology

May 12



May 23

Mission Systems / Electronic Systems / Ship Systems / Technical Services 22

How to Enroll > Online

 Go to Benefits OnLine at http://benefits.northropgrumman.com

the “Enroll With Your Sector” button – – – and click on Select your sector to review general benefits and enrollment information Log into My Benefits Access • First-time visitors will need to set up a user ID and password Make your elections and print a confirmation statement 23

How to Enroll > By Phone

 No Web Access? – – Call the Northrop Grumman Benefits Center (NGBC) at 1-800-894-4194 to enroll • If hearing impaired, will need to use a relay service through TTY/TDD provider Available Monday through Friday, 9:00 a.m. to 6:00 p.m. Eastern time 24