4th Quarter 2007 Benefits Corner

by Al Horan, CRA's Benefits Chairperson

Important Decisions for You are on the Horizon

I would like to start by thanking Ken Smith for serving as your Benefits Committee Chairman for several years.

I am Al Horan, your new Benefits Committee Chairman. I am retired from Caltex where I managed their employee benefits and related areas for many years. I am joined on the Committee by Virginia Benfield, Linda Bulla, Bill Dodge, Herb Farrington and Richard Watkins who are for the most part employee benefits/human resources professionals from Chevron and its Legacy Companies. Our contact information is shown at the end of this article. We welcome your thoughts and comments and we stand ready to assist you.

As you are aware it's that time of year again when each of us must decide for calendar year 2008 whether to: (a) enroll in a Chevron Medical Plan and, if so, which Plan to choose; (b) remain with the Chevron Plan we elected for calendar year 2007 or choose a different plan; or (c) decline Chevron coverage for 2008 and, possibly, seek medical insurance elsewhere.  Here are a few thoughts to consider when making your choice.

• Open enrollment will be held from October 15th thru October 26th. As in the past, Chevron will mail every retiree a newsletter at the end of September, and a personal worksheet in early October.
• Annual enrollment is offered by Chevron to its Retirees and Qualified Survivors, including similar individuals from Legacy Companies. Qualified Survivors are spouses who were enrolled in a Chevron Plan at the time of the Retiree's death. However, if a Qualified Survivor subsequently declines or cancels Chevron coverage he/she may never rejoin a Chevron Medical Plan.  In addition, if a retiree terminates his/her coverage and subsequently passes away, their survivor will no longer be eligible for coverage.
• Chevron pays a portion of the Medical Plan premium. Their contribution may increase by up to 4% annually.
• Typically, three forms of medical coverage are offered by medical insurance providers - HMO (Health Maintenance Organization), PPO (Preferred Provider Organization) and an Indemnity Plan.
• HMO: Generally more restrictive than a PPO or an Indemnity Plan, but the premium cost is usually less. Typically, you are required to use the doctors and hospitals that are approved by the HMO. Further, your primary care physician, and possibly an oversight group within the HMO, must approve a referral to a specialist.
• PPO: Typically, an incentive, in the form of a higher reimbursement percentage, is extended if you see a network provider. Non-network providers are generally reimbursed at a lower percentage.
• Indemnity: Historically, this was the conventional form of coverage before the advent of HMO's and PPO's. Usually, you are not restricted to which providers you may see. Medicare supplemental insurance plans usually fall into this category.

Chevron essentially offers non-Medicare eligible Retirees and Qualified Spouses a choice of HMO or PPO  plans, and it basically offers Medicare eligible Retirees and Qualified Spouses a choice of three Indemnity Plans and an HMO in certain locations. Likewise, outside Chevron, medical insurers and associations typically offer non-Medicare eligible individuals a choice of HMO or PPO plans; and Medicare eligible individuals a choice of Indemnity Plans that supplement Medicare coverage. The payment of claims under a supplemental Medicare plan is predicated upon Medicare first paying their portion of a claim.

• If you are considering purchasing insurance outside Chevron, you should determine if the medical coverage has a waiting period or limitations/exclusions for  pre-existing medical conditions. The Chevron Medical Plans do not have a waiting period or limitation/exclusion for a pre-existing medical condition.
• If you are considering an HMO or PPO, either through Chevron or outside Chevron, you should review the list of recognized medical providers.
• Whether you are considering joining a Chevron Medical Plan or purchasing medical insurance elsewhere, you should compare the level of coverage and the premium cost of each plan.
• First, estimate your and any covered dependent's medical expenses for calendar year 2008. (One way of estimating these expenses is to start with your anticipated expenses for calendar year 2007 and add or subtract from it any major increase or decrease in cost that you expect in 2008, e.g., surgical costs. Your medical provider may be able to assist with estimating the cost of any new major medical expense.)
• Next, estimate the amount that would be reimbursable under each medical plan you are considering joining. And, to the extent applicable, add any estimated Medicare claim payments.
• Next, add your estimated premium cost, including any Medicare premiums, for calendar year 2008 to your estimated non-reimbursable medical expenses for calendar year 2008. (The difference between your estimated medical expenses for 2008 and what is estimated to be reimbursable or paid by Medicare under each plan.)
• Finally, compare your cost under each plan, which should include Medicare, if applicable, (the amounts calculated in the previous step) to determine which of the plans you are considering joining would be most cost effective. The examples that follow are strictly illustrative and are meant to give you a sense of the order of magnitude of each plan and therefore the amounts shown are only rough estimates for single individuals based on 2007 plan rules and costs. Since the facts and circumstances vary for each of us, we, therefore, encourage you to develop examples based on your individual circumstances.

Medicare Eligible Example (all amounts shown are rough estimates for a calendar year):

Notes for Example:

1. The example is based on a two day hospital stay that cost $10,000; $4,200 of medical expenses; and $5,800 of prescription drugs. 2.  Reimbursements shown for Chevron and AARP include Medicare payments. 3.  Chevron is the Medicare Plus Plan. The premium is the 2007 annualized cost based on the full premium rate before the contribution holiday. 4.  AARP is Plan B and the Rx Saver Plan. 5.  Medicare is Part A (Hospital), Part B (Medical) and Part D (Prescription Drugs).

Non-Medicare Eligible Example (all amounts shown are rough estimates for a calendar year):

Notes for Example:

1.   The example is based on a two day hospital stay that cost $10,000; $4,200 of medical expenses; and $5,800 of prescription drug.  2.  Chevron is the Medical Plan - Option 2. The premium is the 2007 annualized cost based on the full premium rate before the contribution holiday.  3.  AARP is the Comprehensive Medical Plan with a $1,000 deductible (lowest offered ) and prescription drug coverage.

• If you are covered by Medicare and you wish to join a Chevron Medical Plan you must join Medicare Part A (Hospital) and Part B (Medical). You must not join Medicare Part C (Advantage Plans - HMO, PPO) or Part D (Prescription Drug Coverage).
• In the case of Medicare eligible Retirees, the drug coverage provided through the Chevron Medical Plans is better than Medicare drug coverage. There is no "Donut Hole."  ("Donut Hole," also known as a "Coverage Gap," exists under Medicare Part D (Prescription Drug Coverage). In 2007 under the standard prescription drug plan offered by Medicare, of the first $2,400 spent on prescription drugs you pay $798.75 (Deductible $265.00, plus Co-Insurance - $533.75) and Medicare pays the balance; then you pay 100% of the next $3,051.25; and finally after you spend $3,850.00 Medicare pays approximately 95% of the cost of any additional prescription drug.) Because of the complexity and the possibility of misunderstanding how the coverage works, we are providing below a comparison of Medicare Drug Coverage (Part D), and Chevron's Drug Coverage which is offered under all three of its Medical Plans for Medicare eligible individuals. (Please note, an example is not provided for non-Medicare individuals because their coverage does not have the same degree of complexity as coverage for Medicare individuals.) This illustration is meant to convey a sense of the differences between the plans only. The results will vary based on the facts and circumstances for each person. Further, 2007 plan rules were employed in developing the comparison.

Example (annual amounts are shown):

* Included in the premium charged under each Chevron Medical Plan.

Finally, assuming you join a Chevron Medical Plan, you owe it to yourself and your family to sign up for automatic monthly premium deductions from your bank account. This would avoid losing your coverage for non-payment or late payment of your monthly premiums possibly due to disability, travel or unforeseen circumstances. You should not risk losing coverage - it's too important! Retirees who lose their coverage must wait until the next annual enrollment to rejoin a Chevron Medical Plan and Survivors may NEVER REJOIN!

Contact Information for CRA's Benefits Committee:

Al Horan, Caltex: E-Mail: awhoran@verizon.net; Phone: 972-964-1787

Virginia Benfield, Texaco: E-Mail: vbenfield@comcast.net; Phone: 281-558-3807

Linda Bulla, Texaco: E-Mail: jo2nlin3a@earthlink.net; Phone: 615-832-1046

Bill Dodge, Chevron/Gulf: E-Mail: wndodge@sbcglobal.net; Phone: 512-996-8202

Herb Farrington, Unocal: E-Mail: herbf76@msn.com; Phone: 714-904-5825

Richard Watkins, Unocal: E-Mail: dwatkins@nctv.com; Phone: 903-451-3266

10/07