Active employees and future retirees

Health Care Program Improvements,
Modifications and Administrative Changes

Effective upon ratification

During this round of negotiations, the UAW bargaining team successfully resisted efforts by the company to drastically curtail your health care benefits.

We agreed to the changes outlined below for active workers and future retirees, which are similar to existing programs at GM and Ford from 2006. These modifications will be implemented as soon as practicable following ratification (in most cases on 1/1/08).

Dental, orthodontic and hearing coverages were improved, as was access to primary care health practitioners.

HMOs and PPOs

Despite a prolonged effort by the company to offer only one health care option with higher cost sharing, your bargaining committee prevailed and maintained the SCN, PPO and HMO options with limited changes.

HMOs. Office visit copays will increase to $25.

PPOs. Office visit coverage remains unchanged at 50 percent. Deductibles will increase from $100 single/$200 family to $150 single/$300 family.

In addition, the HMO and PPO plans continue to be subject to review for cost effectiveness (as specified in the C-14 letter.)

Dental

The annual maximum and orthodontic maximums for dental coverage were increased to keep pace with inflation. The annual maximum will increase to $1,850 and the orthodontic maximum will increase to $2,200.

There were other dental changes, including: Bitewing X-rays will be available once every two years for ages 15 and older; topical fluoride will now be limited to enrollees under age 15; and dental HMOs will be eliminated.

Prescription Drugs

Drug Copays

Drug copays will change to: $5 generic/$11 brand/$16 Erectile Dysfunction (ED) at retail; and $11 generic/$16 brand/ $19 ED at mail.

These copays will apply to the Standard Care Network (SCN), PPOs and HMOs and will be subject to a maximum 3 percent annual increase to account for health care inflation. Beginning in 2016, increases will be capped at 4 percent annually for retirees; the cap will remain at 3 percent for active workers.

Drug Review Process

The independent prescription drug review process negotiated in 2003 was maintained. This means our outside expert reviews the clinical impact of drug tools for safety and appropriateness on an ongoing basis and makes recommendations to the parties for changes, which can only be implemented by mutual agreement. Several changes were reviewed and agreed to by the parties since 2006: These include:

Once-daily dosing for anti-depressants (Lexapro) and Alzheimer’s agents (Aricept); prior authorization for certain anabolic steroids, amphetamines and narcolepsy drugs (Provigil); appropriate duration for asthma injectables (Xolair) and osteoporosis (Forteo).

In addition, the parties agreed the consultant will analyze the following select drugs and drug classes for possible inclusion, by mutual agreement, in the program:

Reviewing and evaluating various tools related to specialty/biotech drugs; implementing step therapy for Hepatitis C drugs, Interferons, non-steroidal anti-inflammatory drugs and other anti-inflammatories; requiring prior authorization for Weight Loss agents, Multiple Sclerosis agents, Interferons, and Immune Globulins; appropriate dosing for Topical Anesthetics (e.g. Lidoderm) and Antivirals (e.g. Zovirax, Famvir).

Other negotiated drug changes include: limited coverage for vitamins (e.g. pre-natal, D, K, and Niacin); elimination of coverage for non-sedating antihistamines that are available over the counter (e.g. Claritin D). In addition, the Maintenance Drug List was updated, adding over 30 new drugs and removing four drugs for patient safety reasons.

New Pharmacy Network

A new specialty pharmacy retail network will be implemented as soon as practicable. This network will use the major chains in the current network, thus preserving access while securing better pricing. The parties also agreed to review a patient safety program that identifies drug-drug and drug-disease interactions and notifies the treating physician(s) of treatment options. If mutually agreed upon, this program will be implemented during the term of this agreement.

Primary Care

Access Improved

The primary care network was improved, allowing advanced practice nurses and physician assistants to fully practice under the scope of their licenses. This means members can go to these practitioners for diagnosis, prescriptions, tests and treatment for acute conditions (like infections) and chronic diseases like diabetes and heart disease.

Eligibility Changes

There were changes to eligibility for certain dependent children. Principally-supported children who are enrolled in the program as of ratification will be “grandfathered” — and there will be no new principally supported coverage available afterward. Legal guardianship has been limited to minor children who are related by blood to the primary enrollee or spouse. In addition, effective Jan. 1, 2009, children aged 19 and over will be covered only if they are full-time students. Such full-time student coverage will be available through age 24.

Immunizations Updated

Immunization coverage was expanded to include new doses and new vaccines per national recommendations.

DME and P&O Updated

Durable medical equipment and prosthetic and orthotic coverages have been updated to the Medicare levels.

Hearing Aid Coverage Re-Designed

Hearing aid coverage was substantially improved so that members receive a single $2,000 allowance for hearing

aids, ear molds and associated devices every three years. If members go to network providers, hearing aids are available at discounted network rates. In addition, the allowed amount for the hearing evaluation test was updated to $139 effective Oct. 1, 2007. This amount will be updated each October for inflation increases.

Cardiac Rehabilitation Expanded

The cardiac rehabilitation pilot program, first started in southeastern Michigan, has been expanded to include the entire United States.

Current and future retirees

Health Care Modifications and Administrative Changes

Effective upon ratification and court approval

Overview

After Jan. 1, 2010, the retiree medical benefits described in this section will be provided through a funded, independent trust called a Voluntary Employee Beneficiary Assocation (VEBA), as described on page 7. As noted on page 7, Chrysler’s contributions to the VEBA are based on reasonable projections of the future cost of the benefits described below. If actual experience is different from those projections, the trustees will have the authority to make benefit adjustments to allow the funds in the VEBA to continue to provide benefits for the lives of the covered retirees.

The actual cost for all other retirees and surviving spouses will be monthly contributions of $11 for individual coverage and $22 for family coverage in the first year of the plan. Deductibles and co-insurance payments will also be implemented, with a maximum potential out-of-pocket cost for such payments of $265 for an individual and $530 for a family.

Retirees and surviving spouses who choose not to enroll in the Modified Plan will be covered at no cost under a plan that covers only catastrophic health care expenses.

The tentative agreement is subject to ratification by active UAW Chrysler members and court approval.

Table One Retiree payments under modified health care plan
	*The out-of-pocket maximums shown left include the deductible and the coinsurance payments of 10 percent in network and 30 percent out of network. “Excluded charges” are not counted for purposes of meeting the deductible or out-ofpocket maximum (see Definitions, see above.) These amounts do not apply to low income retirees. (See below.)

Protection for Low-Income Retirees

UAW bargainers negotiated protection for approximately 15,000 Chrysler retirees with pension incomes below certain defined levels.

Retirees or surviving spouses who have annual Chrysler pension benefit income of $8,000 or less and a monthly benefit rate of $33.33 or less will be exempt from the contribution, deductible and co-insurance provisions. People in this protected group will also retain the current prescription drug co-payments. The only changes in the health plan for this group will be the "Modifications and Administrative Changes” described below.

Table Two New Prescription Co-payments

These co-payments do not apply to UAW Chrysler retirees and surviving spouses with $8,000 or less in pension income and a benefit rate of $33.33 or less per month per year of active service. This group will continue to be covered by the current drug co-payment arrangement.

Protection from Health Care Inflation

To make certain the monthly contributions, co-payments, deductibles and out-of-pocket maximums remain affordable for retirees over the long term, the tentative agreement provides that contributions, co-payments, deductibles and out-of-pocket maximums will increase by no more than 3 percent per year through 2015, and by no more than 4 percent beginning in 2016.

Modifications and Administrative Changes

Upon ratification and court approval, the tentative agreement will also make a number of other changes to the health care plan. These include:

• A new $53 emergency room co-payment will be applied in the case of an emergency room visit. It will be waived if there is an admission to the hospital. This co-payment does not apply to active employees or retirees protected under the low-income provisions.

• For retirees, dependent spouses, and surviving spouses eligible for Medicare Part B, plan payments will be based on the Medicare allowable charges whether the physician used participates in Medicare or not.

• Claims of retired employees eligible for Medicare Part B who do not enroll in Part B will be paid as if Medicare Part B were primary on the claim.

• Those current retirees (mostly surviving spouses) who never enrolled in Part B and are therefore subject to the Medicare Part B late enrollment penalty will have the penalty fully paid to date by Chrysler or else the modification in the above bullet will not apply to them.

• Services related to non-covered cosmetic surgery will not be covered.

• Hold harmless provisions will be amended so that the program will not be responsible for all fees charged above “reasonable and customary” except in situations where the enrollee does not have the ability or control to select a provider to perform the service, such as an anesthesiologist.

• The parties will encourage Medicare Part B enrollees to have Medicare pay for medications that are covered by Part B by using pharmacies that electronically bill Medicare. If electronic billing capability becomes widely available in the pharmacy network, by mutual agreement, this electronic filing may become part of the program. In that event, those utilizing pharmacies without electronic billing capability will have to seek reimbursement from the drug carrier through submission of a paper claim.

Legal Action Required to Protect Future Rights of UAW Chrysler Retirees

For the health care modifications affecting current and future retirees to take effect, a court must approve the agreement. By obtaining court approval, we will make certain the future rights of retirees are not compromised in any way as a result of these changes. We have insisted — and Chrysler has agreed — that it will not require any of the monthly contributions, deductibles, or co-insurance described above until after court approval of this agreement.

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