By: Stefan Goodall

Professor Etti Barnoff

Employee Benefits

Employee Benefit Planning

Virginia Energy & Savings Company

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Table of Contents

Introduction of the Business 3

Mission Statement 3

Group Life Insurance 4

Accidental and Health Risk 5

Health Plan 8

Group Dental 11

Long-Term Care 13

Flexible Spending Account 14

Defined Benefit Pension Plan 15

Defined Contribution Pension Plan 16

401(K) Plan 17

Conclusion 19

Reference 20

Comparison 21

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Introduction:

Virginia Energy & Savings Company (VESC) was formed in 2005 with over 1,000 employees in Richmond, Virginia. By the year of 2015, we have expanded across the United States to New York and California. Throughout the years that we have expanded our companies, we have also expanded employment by tripling the amount the amount of when we initially started. We excel as a leader who will provide clean, safe, renewable solar energy at a cost that outweighs our competitors. By trying to implement widespread of energy efficiency retrofit project that is trying to pay for itself through the energy savings can be complex undertaking. There has been a tremendous need to implement the energy efficiency project throughout the world to reduce fossil fuel consumption, reduce greenhouse emissions, reduce the number of power plants being brought on the line, to reduce transmission and distribution line capacity constraints, and to capture all the electricity that is being lost and wasted as it travels through the power lines. With our company, we use renewable energy to harvest electricity, including wind, biomass fuel, and water that will be able to power hydroelectric generating facilities. BESC operates one of the largest solar power units with about 120 megawatts of solar capacity.

Mission Statement:

Virginia Energy & Savings Company is the largest solar power provider in the United States. Our company makes energy that are available to homeowners, business, schools, non-profits and government organizations for a lower price compared to what they are currently paying for energy that is being generated by burning fossil fuels like coal, oil and natural gas. Our goal is to encourage customers and public officials to think about putting energy efficiency first when they are making energy resource procurement or energy policy choices.

Equal Employment Opportunity:

Virginia Energy & Savings Company is an equal opportunity employer and is committed to having a diverse workforce. Minorities, females, individuals with disabilities and veterans are encouraged to apply for employment. BESC ensures a reasonable accommodation for all individuals protected by section 503 of the Rehabilitation Act of 1973, the Vietnam Veterans’ Readjustment Act of 1972, and Title I of the Americans with Disabilities Act of 1990, applicants that require accommodation in the application process may contact 1-800-SAVINGS (728-4647) for assistance.

Benefits:

Virginia Energy & Savings Company strives to make your experience with our company as good as possible by offering plans and programs with excellent coverage for employees and their families. All employees are rewarded with a competitive salary and wide-ranging benefits. Here is a brief overview of what may be included in your benefits:

Medical Coverage Dental Coverage Vacation and Paid Holidays Long-Term Care Insurance Vision Coverage Short and Long-Term disability 401(k) Plan Benefit Pension Plan Basic Life Insurance

VESC Group Life Insurance:

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Virginia Energy & Savings Company offers their full-time employees a term life insurance policy with a death benefit that amounts to 1.5 times your annual base pay that is paid by us, the employers. In order to be eligible for our benefits, you would have to be a full-time employee who is working 40 or more hours per week. The coverage will begin after 30 days of employment. If you are covered under our group life insurance plan, your beneficiary will receive a benefit that is equal to 1.5 times your annual salary. In the charts that we have provided down below, you are able to see how much you or your beneficiaries will receive from an accidental death or dismemberment on the ob. We also offer extra coverage for your spouse or dependents.

Current 2015Definitions of coverage and basic amounts Basic Group Life Insurance is equal to 1.5 times

your annual base pay (Employer pays)

Waiver of Premium in case of disability, life coverage continues without any additional charges (this is part of the Basic Group Coverage)

Convertibility, in case of termination of term life, you as the employee may covert your Basic Group Life Insurance policy into a whole life policy without evidence of insurability

Accelerated Benefit,, if an employee is diagnosed with a terminal illness that is expected to result in 6 to 12 months (terminal illness includes AIDS, a stroke, or Alzheimer’s disease), the employee can collect up to 50% of the policy, up to a maximum benefit of $50,000 to $250,000 while he/she is still living

Accidental Death & Dismemberment Insurance is equal to 1.5 times your annual base pay. Loss of limb(s) or sight, the employer will pay 50% of your AD&D coverage. Life Insurance will not pay out of if you survive an accident; it pays only in the event of your death (reference: 23: AD&D Provisions). – Employer pays

Supplements & Additions (ALL) Additional Coverage (i.e. Supplement term life up to 5 times your salary). This “additional” Coverage is paid by the employee

Additional coverage (i.e. Accidental Death and Dismemberment Insurance AD&D up to 5 times your salary). Employer pays for Accidental Death and Dismemberment (AD&D

Dependent Life Insurance can be purchased by full time employee for spouse up to $25,000 in benefits. Employee can purchase life insurance on his/her own child, $5,000 per child

Eligibility Regular, full-time employee working 40 hours per week who are active at work

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Financing (who pays for what coverage?) The Employer pays for AD&D based on the loss. Loss of limb(s) or sight, the employer will pay 50% of your AD&D coverage. If multiple loss, then the employer will pay 100% of your AD&D coverage. Life Insurance will not pay out if you survive an accident, it pays only in the event of your death

The employer will pay 1.5 times your salary for Basic Group Life Insurance

The employee pays for Dependent Life Insurance, Supplemental and Accelerated Life insurances

Tax Implications Premium on coverage greater than $50,000 are taxable income to you (based on the IRS Table PS-58)

Death Benefits paid to the beneficiary are not taxed (based on Dr. Baranoff’s Chapter 23)

Insurance Company Prudential Life Insurance Company (A+ Ratings from A.M. Best)

Accelerated Death and Dismemberment (AD&D)

Current plans for 2015What are the benefits for AD&D Accidental Death & Dismemberment Insurance is

equal to 1.5 times your annual base pay

Loss of limb(s) or sight, the employer will pay 5-% of your AD&D coverage. Multiple Loss of the employer will pay 100% of your AD&D coverage. Life Insurance will not pay out if you survive an accident, it will only pay out in the event of your death (employer pays)

Eligibility Regular, full-time employees working 40 hours a week who are active at work

Enrollment 30 days after employment

Cost and who pays for AD&D Company pays the full cost of Basic AD&D for any full-time employee. Employees pay for any supplemental coverage up to give times the annual salary long-term

Evidence of Insurability Enrollment after the eligibility period means that employee will have to provide evidence of insurability (reference: Chapter 20: Provisions for Eligibility)

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Provider: Insurance Co. with A.M. Best Rating Prudential Life Insurance Company (A+ Ratings from A.M. Best)

Accelerated Death and Dismemberment (AD&D) Provisions:

Employee loss of: Percentage of loss from AD&DLoss of hands 50%Loss of eyes 50%Loss of foot 50%

Multiple 100%

VESC Accident and Health Risks Coverage:

Sick life

Benefits for sick leave: The employee will receive regular pay for the time missed due to illness or injury (non-occupational) up to seven days per calendar year.

Cost of sick time: Our company will pay 100% of the seven days

Short-Term Disability

Definition of disability: The total and continuous inability of the employee to preform each and every duty of his or her regular occupation (inability to do your own job or a job for which you are qualified by education and training, non-occupational and occupational).

Benefits: Short-Term disability (STD) benefits are 70% of salary up to $5,000 per month after a seven-day waiting period. The maximum length of benefits for STD is six months.

Premium: Virginia Energy & Savings Company pays STD premiums and deducts such as normal business expense.

Exclusions:

An employee cannot collect STD benefits under the following conditions: For any period during which the employee is not under the care of physician Short-Term disability benefits are not paid for any period of disability caused by an intentionally

self-inflicted injury If the disability was incurred during war, whether declared or undeclared STD benefits are not paid for days during the period of disability used as sick-days personal

holidays, or vacation days If the employee is committing or attempting to commit a criminal act

Long-Term disability

Definition of disability: The total and continuous inability of the employee to engage in any and every gainful occupation for which he or she is qualified or shall reasonably become qualified by reason of training, education, or experience. (Inability to do a job for which you are qualified by education and training, or inability to work at all, occupational and non-occupational)

Benefits: LTD benefits are 60% of your basic monthly earnings, to a maximum of $5,000. Monthly LTD benefit will be reduced by amounts received from other benefit programs such as Social Security, workers’ compensation, and any other coinciding retirement plan.

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Cost of Coverage: The employee will pay the full cost through payroll deduction

LTD Exclusions:

An employee cannot collect LTD benefits under the following conditions:No benefits will be paid for disability caused by or resulting from:

War or any act of war, whether declared or undeclared, or active, full-time military duty Attempted suicide or self-inflicted injury, while sane or insane Any act of aggression committed by the insured, or commission or attempted commission of a

felony or involvement in an illegal occupation Any preexisting conditions until the member has been enrolled in the program for at least 12

months

Taxations: Benefits are not taxable to the employee, because the employee pays the entire premium from income after taxesTermination: Your long-term disability insurance coverage will automatically terminate on the earliest of the following:

The date you are no longer actively employed The date you are eligible to retire without reduction of retirement benefits The date you enter the military force of any country for active, full-time duty

Current plans for 2015

What are the Benefits

Sick Leave: 7 days, 100% of pay, after the 7th day then the employee will begin receiving Short-term disabilitySTD: 7 days to 6 months, 70% of pay up to $5K benefit per monthLTD: 6 months to age 65; 60% of pay up to $5K per month coordinated with WC and SSDI

Eligibility Regular, full-time employees working 40 hours a week who are active at work

Enrollment Coverage is automatic

When coverage begins 30 days after employment dateCost and who pays for the STD and LTD? Company pays for short-term (full cost);

employees pay for long-term through payroll deductions.

Definition of disability Definition of STD is from 7 days to 6 months, unable to do your own job due to occupational and non-occupational related injury or illness.

Definition of LTD is from 6 months to 2 years, unable to do any job related to your training and education; after 2 years unable to do any job due to non-occupational and occupational injury or illness.

Evidence of Insurability Enrollment after the eligibility period means that employee will have to provide evidence of insurability (reference: Chapter 20: Provisions for

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Eligibility)

Provider (self-insured or insurance company), A.M. Best Rating

Sick and Short term is Self-insured (Employer pays)Long Term Disability is insured by Aetna Incorporated – A.M. Best Rating “A” for Excellent (updated July 2015)

Tax Implication Employees do not pay taxes on premiums paid by employer for STD; but in the case of receiving benefits, taxes will be paid on the benefits (reference: Chapter 23-Galaxy Max Company) For LTD, employee pays the premium from income after taxes, and benefits in the case of disability are non-taxable.

VESC Health Plan

Virginia Energy & Saving Company has five health plans that only the employee can choose from, but if it is for the employee and his family then the price will be doubled from what you see in the chart and we will contribute $600 towards the premiums. Four of our plans are insured through Anthem BlueCross BlueShield (rating A++), which are Indemnity, PPO HSA with a high deductible, and PPO. Our other plan is a HMO plan which is insured through Kaiser Permanente. Each of the plans has different premiums. The indemnity and PPO has a premium that is paid by the employee after employer contribution, while the rest are covered by the employer contribution. The deductibles vary also; the indemnity clause and PPO have the lowest deductible while the HSA plans are respectively higher deductible, and the HMO has no deductibles.

Anthem BCBS Indemnity with Networks

Anthem BCBS PPO HSA with high deductible

Anthem BCBS PPO without HSA with lowest deductible

Kaiser Permanente Staff model HMO

Premiums that employee has to pay in addition to employers portion (if any)

$680 - $600 = $80 as an additional fee from the employee

$490 – $600 = 110The employee pays no additional amount, but has the option to put $110 into his HSA account

$630 - $600 = $30 as an additional fee from the employee

$590 - $600 = $10 as an additional monthly income

Benefits Comprehensive medical package with minimal preventive care. See any doctor with no referrals PCP & specialist,Allergy testing,Medical services and supplies, x-rays, laboratory, hospital stay, prescription drugs,

Preventive care is required by law is covered, as in other comprehensive plans (deductibles does not apply)x-raysPCPSpecialistAllergy testingPrenatalPrescription

Comprehensive care medical package with minimal preventive care, with increased preventive care and well-baby care. Medical services & Supplies, inpatient/outpatient care, doctor care,

Most preventive care, well baby, baby physical exams, immunizations, extended dental, vision. And prescription plans. You have Low-copay, accesses to providers only in quality emergency.

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therapy visits, maternity

Therapy visitsHSA: an account where you put money in and use it for medical use

It is transferable, tax deductible, contribute any time of the year

mental health care, prescriptions, x-rays, laboratory, therapy visits, ER visits are waived if admitted

Staff model: facility (you can go to a designated facility) Need to go see a gatekeeper in order to be referred to a specialist

Out of pocket expenses

Deductible: $500Coinsurance: 90/10

Copay: 20 for PCP40 for specialist Maximum per year: $2,000

This is lower since the premium is the highest of the four plans

$15 for prescriptions

Deductible: $2,550Coinsurance: 80/20

Copay: 25 for PCP45 for specialist

Maximum per year: $6,550

$10 for prescriptions

Deductible: $650Coinsurance: 80/20

Copay:35 for PCP45 for specialist

Maximum per year: $2,500

$10 for prescription

Deductible: $0Coinsurance: 85/15

Copay:15 for PCP25 for specialist

Maximum per year:$1,500

$10 for prescription

Choice of providers (PCP, specialist, etc)

No restrictions per network can use either with no penalty

Access to any provider in a large network and outside with network (with penalty)

Access to any provider in a large network and outside with network (with penalty)

Staff model: facility only. Other models: in networks only, with PCP as a gatekeeper

The way providers are being reimbursed

FFS, subject to usual, customary, and reasonable (UCR) limits

Discounted FFS Discounted FFS Staff model: salaries + bonuses

COBRA:

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) health benefit provision amended the Employee Retirement Income Security Act, the Internal Revenue Code and the public Health Service Act to require employers with group health plans to offer employees the opportunity to continue temporarily their group health care coverage under their employer’s plan if coverage ceases due to termination, layoff, or change in employment status (commonly known as a qualifying events). Qualified events are marriage, divorce, adoption of a child(ren), and death to a covered dependent, change in status or eligibility of a dependent; that will cause the employee to lose eligibility. Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) will extend coverage for up to eighteen (18) months when workers lose coverage because of termination or reduction of hours (www.cobrainsurance.com/cobra_faq). The Act would extend coverage up to twenty-nine (29) months to

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employees who are determined to have been disabled at any time during the first 60 days of COBRA coverage. This applies to the disabled employee’s nondisabled qualified beneficiaries as well (www.cobrainsurance.com/cobra_faq). The Act would extend up to thirty-six (36) months for spouses and dependents facing a loss of employer-provided coverage due to an employee’s death, a divorce or legal separation, or other “qualifying events” (www.cobrainsurance.com/cobra_faq). COBRA insurance gives you the exact same benefits and choices you had before leaving the company (www.quickanddirtytips.com). The Employer does not have to pay for the premiums, and the premiums may increase to the maximum rate allowed of the group rate.

Who is Eligible for COBRA Health Insurance?You and your employer must meet certain requirements:

(a) Must provide a group health plan and have at least 20 or more employees on payroll. (Small employer plans are exempt from COBRA; Certain church plans are not subject to COBRA)

(b) Eligible for COBRA when they voluntarily leave a job, have their work hours reduced and lost benefits

(c) Or are terminated for any reason other than gross misconduct (d) Spouses and dependent children of former employees are eligible if the covered worker, dies, is

eligible for Medicare, or if legally separated or divorced (www.quickanddirtytips.com ). (e) An employer’s bankruptcy, only with respect to health coverage for retirees and their families

(www.cobrainsurance.com/cobra_faq) (f) Federal Government’s Group Health Plans are not subject to COBRA. However a separate law,

Federal Employees Health Benefits Amendments Act of 1988 requires the Federal government to offer its employee continuation coverage effective January 1, 1990 (www.cobrainsurance.com/cobra_faq).

How Would I receive COBRA Health Insurance Coverage? Employees must notify their Human Resources Department or Benefit Administrator within 30

days after one of the qualified events occurred. Beneficiaries of a qualified worker have up to 60 days to elect COBRA coverage after a qualifying

event(s), such as a divorce. After notifying your former employer of COBRA health coverage, they have to send you an

election notice within 14 days. After receiving the notice from your employer, you or your beneficiaries have up to 60 days to

decide whether or not to take the coverage. If you don’t make a decision by that time, you may lose your right to claim COBRA benefits (www.quickanddirtytips.com)

If an employee waive COBRA coverage during the election period, can the employee still get coverage at a later date? If a qualified beneficiary waives COBRA coverage during the election period, he or she may revoke the waiver of coverage before the end of the election period. A beneficiary may then elect COBRA coverage. Then, the plan need only provide continuation coverage beginning on the date the waiver is revoked.

Who pays for COBRA coverage? The initial premium payment must be made within 45 days after the date of the COBRA election

by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event. Premiums for successive periods of coverage are due on the date stated in the plan with a 30-day grace period for payments. Payment is considered to be made on the date it is sent to the plan.

If premiums are not paid by the first day of the period of coverage, the plan has the option to cancel coverage until payment is received and then reinstate coverage retroactively to the beginning of the period of coverage.

HIPAA:

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Health Insurance Portability and Accountability Act of 1996 (HIPPA) was enacted August 21, 1996 by the United States Congress and signed by President Bill Clinton in 1996. This Act prohibits any insurer from imposing pre-existing condition exclusions when an individual who is eligible transfers from one plan to another. After an individual is covered in a health plan for twelve months, pre-existing condition exclusions no longer applies. Previous coverage would not qualify, if there is a break in health insurance coverage for no more than sixty-three days. Most physician practices require you to sign a HIPAA privacy act that includes written authorization of persons the ability to share information in your medical record.

Privacy Rules for HIPAA

The offices for Civil Rights enforce the HIPAA Privacy Rule, which will protect the privacy of individually identifiable health information. The HIPAA Security Rule sets national standards for the security of electronic protected health information. The HIPAA Notification Rule requires covered entities and business associates to provide notification following a breach of unsecured protected health information and the confidentiality provisions of the Patient Safety Rule, which will protect identifiable information being used to analyze patient safety events and improve patient safety.

Protected Health Information (PHI)

Names Home Address Birthdate Fax Numbers

Biometric Finger Prints

Certificate and License Numbers

Telephone Numbers Admission Dates

Face Images Email Address Account Numbers Discharge Dates

Insurance Plan and Recipient ID Numbers

Employer, Household and Family Identifiers

Social Security Numbers

Decease Dates

Health Plan Beneficiary Numbers

Identifying Codes or Characteristics

Medical Records Numbers

Internet Protocol Numbers

Group Dental Plan for VESC:

Virginia Energy Savings Company group dental provides coverage for dental work you may incur. Group Dental plans are offered to our full-time employees working 40 or more hours per week and salaried employees. Employees can enroll their spouse and children(s) to the dental plan with an additional premium. Employees will be eligible and coverage is effective the first day of the month following employment. Delta Dental has a mission statement for “Keeping Everyone Smiling”, Delta Dental of Virginia offers access to the nation’s largest dentist network and delivering the best value for you as an employee. With an A.M Best rating of A- for excellent, this company provides our employees a piece of mind.

Participating Dentist will have a claim forms in the office and will complete and submit to Delta Dental at no charge, Payments will be made directly to the dentist for covered benefits, and the dentist will accept Delta Dental’s allowance for covered benefits (this means that you pay only the applicable coinsurance and deductible for these covered services.

Non-Participating Dentist, you may be required to pay the non-participating dentist in advance for the entire bill, complete claim forms and submit to Delta Dental. Payment will be made directly to you unless dentist agrees to accept payment from Delta Dental. Non-participating dentists have not agreed to accept Delta Dental’s allowance for their services. This means that, in addition to what delta Dental pays, you must pay the applicable coinsurance and deductible and difference between the non-participating dentist’s charges and Delta Dental’s payment for covered benefits.

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Coverage Basic Expanded Benefit LimitationsAnnual Benefit Maximum N/A $2,000/memberAnnual Deductible N/A $50/member

$150/familyDiagnostic and Preventive

1. Oral exams and cleaning

2. Fluoride treatment

3. Bitewing X-rays

4. Full mouth or panorex X-rays

Emergency treatment

Space maintainers

5. Occlusal guards

6. TMJ orthotic devices

7. Sealants

100% 100% No deductible or Maximum1. Twice in a plan

year

2. Twice in a plan year for dependents under age 19

3. Twice in a plan year

4. Once every three years

5. Once every three years

6. Once every three years

7. Only for non-carious, non-restored 1st and 2nd permanent molars for dependent children under age 19, limited to one application per tooth

Primary Dental Care1. Restorative (silver

and toothcolored filings; stainless stell crowns, and other restorative services)

2. Oral surgery (simple extractions and other minor surgical procedures)

3. Endodontics (root canal therapy and other Endodontic services)

4. Periodontics (scaling

N/A 80% Deductible Applies1. Retreatment limited

to once per surface in a 2 year period

2. Services covered under medical benefits are excluded

3. Repeat treatment is covered benefit only after 2 years from initial treatment

4. Limitation of 2-3 years applies based on services rendered

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and root planing, soft tissue and bony surgery, including grafts, and other Periodontic services)

5. Denture repair and recementation of existing crowns, bridges, and dentures

twice in a plan year5. Cost limited to ½

the cost of a new denture or prosthesis

Major Dental Care1. Crowns (single

crowns, inlays, and onlays)

2. Prosthodontics (partials or complete dentures and fixed bridges), Dental Implants

N/A 50% Deductible Applies1. Once per tooth

every 5 years, crowns for dependents under the age of 12 are not covered, inlays are limited to the benefit for resin restoration unless part of partial or bridge abutment, Onlays are limited to the benefit for a metallic restoration

2. Once every 5 years, fixed bridges or removable partials are not covered for dependents under age 16.

Orthodontic Benefits Rmovable fixed

appliance therapy and comprehensive therapy

N/A 50% No Deductible For adults and

children.

Health Risk: Long-Term Care Insurance

Virginia Energy and Savings Company offer long-term insurance. This coverage will help cover cost you may incur if you become unable to care for yourself in the future. These certain cost include nursing home care, home-health care, or personal day care for employees who are over the age of 65.

You can begin receiving your benefits approximately 90 days after you have been identified as a chronically ill person. Premium cost is deductible to the employer and they are non-taxable to the employee. Once you have been identified then you do not have to continue paying for the premium.

All full –time working employees at VESC will be eligible for this type of coverage. A full-time employee at VESC works at least 40 hours a week. An employee’s eligibility for this type of coverage depends on their inability to preform a certain number of daily activities.

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Benefits For the duration of 5 years, we will cover $300 of daily benefit

Eligibility Regular, full-time employees (working 40 hours per week and who are active)

When coverage begins You begin receiving your benefits approximately 90 days after you have been identified as a chronically ill person

Tax Implication Employer premium payments are tax-deductible

Benefits under the plan are not taxable to the employee

Insurance Company State Farm with an A.M. Best Rating A++

Virginia Energy Savings Company Flexible Spending Account

The Virginia Energy Saving Company offers a flexible spending account (FSA) that can help you to pay your out-of-pocket health care costs. The flexible spending account is a special account that you can put money into without paying any taxes on this money. You can use the money to pay dependent care expenses on a pretax dollar, medical, dental expense, and other miscellaneous such as eyeglasses. The money deposited into the FSA is usable until the plan ends at the end of the year; therefore, if you don’t spend the money before the plan ends at the end of the year, you lose the money (use it or lose it).

Virginia Energy and Savings Company’s FSA:

Eligibility Full-time employees who work 40 hours per week and are active

When coverage starts Begins in employment or the beginning of each year (January)

When coverage ends When your career ends as an employer for any reasons or if your salary stops for any reasons such as death, retirement or disability. You or your survivor also can submit claims until the date you left the payroll.

Contribution Employee can put up to $2,550 into FSA account each year. To be used for qualified medical expenses. Contributions will be deducted from each paycheck before federal income tax.

Accounts Dependent day care accounts plus health care accounts for health care expenses (tax-deductible expense).

Maximum Dependent Care Assistance maximum is $5,000

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Health care: $5,000 per year to each account.

If married and filing separate returns, the maximum is $2,500.

Reimbursement Eligible claims are paid monthly.

Reimbursements for insulin are allowed without a prescription.

Minimum claim is $10 per month.

Also administrator must receive claims by June 1st for the previous year’s expenses.

Unclaimed account balances must be forfeited.

Virginia Energy & Savings Company Standard Defined Benefit Pension Plan

Virginia Energy & Savings Company offers a standard defined benefit pension plan to its full-time employees working 40 hours a week. The pension plan is a form of retirement plan to provide you as an employee or your beneficiary with a monthly benefit.

Benefit Formula Using an unit credit formula, the Expected Benefit at age 65 formula of 2.556% (allowed compensation times 2.556% time Years of Service to age 65).

Eligibility Full-time employees that are working 40 hours per week. Must have worked 1,000 hours in a 12 month period

Normal Retirement Employee may retire and receive normal retirement benefits or at retirement age 65

Early Retirement Employee may retire early and receive benefits on or before age 65.Employee is eligible for early retirement on the first day or after age 65 with three years of vesting service

Insured Defined Benefit Pension Plans are insured by the Pension benefit Guaranty Corporation

Vesting Employee will become fully vested when you complete three years o vesting services or reach retirement at the age of 65

Payments:

Your payment plan will be paid out to you monthly at the end of each month. You also have the option for a lump sum payment if the present value of your pension is less than your benefit payment options include:

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If you are single, you will receive a single life pension If you are married, you will receive a 50%, 75% or 100% joint and survivor annuity pension with

your spouse as the beneficiary. If you are married you can receive 50% survivorship pension with your spouse as the beneficiary. If you are married and would like to receive your benefit in another form, you will need to provide your spouse’s written consent.

The survivorship option pays out for as long as you live. Benefits that will be paid out depend on your age and your beneficiary’s age when you begin receiving payments. If you choose survivorship and the beneficiary dies before you do, your amount will be increased to the amount you would receive under the single life option. A social security leveling option is available with any of the benefit forms. This leveling option pays a larger benefit until the participant is age 62 and then reduced payments after age 62.

The calculations for these plans can be seen below in the table:

EmployeesCurrent

age SalaryAllowed Comp.

Years of service

Years of service to

age 65 Max Benefit

Expected Benefit at

age 65 (2.556%*Yrse

r*Comp)

Present value of $1 annuity for 20 years at

3%

Amount needed at

RetirementYears to

retirement

Future Value of $1 annuity

at 3% for period to

retirement

Annual Contribution

at 3%Top Employee 56 310,000 265,000 15 24 210,000 14.877 3,124,170.00$ 9 10.159 307,527.32$

VIRGINIA ENERGY AND SAVINGS COMPANYStandard Defined Benefit Plan

Vesting Virginia Energy & Savings Company chose to use a cliff vesting option for its employees. Employees become 100% vested after three years of creditable service.

LoansLoans are not available under the retirement pension plan

Distributions:

As a valued employee of VESC, you or your beneficiaries may choose one of the following distribution options:

Guaranteed Payment: you may choose to have your pension payments guaranteed for a certain period of time after retirement. The payment options include five or ten years for a single lie pension or five years for a survivorship pension benefit

Lump-Sum Payment: you may request a lump-sum payment of $1,000 or more (in 100 increments) to your designated beneficiary or five years for a survivorship pension benefit

Pension Plan: Defined Contribution Plan:

VESC offers to its employees a money purchase defined contribution plan. This pension plan will offer you and/or your beneficiary with monthly benefits at retirement VESC sets the guidelines regarding eligibility, retirement age, vesting schedules, and funding methods. Benefits at retirement are determined by the set guidelines discussed further in the handbook.Following the Employee Retirement Income Security Act (ERISA) guidelines, VESC can offer a maximum of $265,000 compensation. Matching contributions are set at $53,000 or 100% of payroll.

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Eligibility Regular full time or part time employees who work at least 1,000 hours in a 12 month period

Retirement Full benefits can be redeemed at the age of 65Early retirement: early retirement benefits can be redeemed at the age of 65 with five years of vesting service.

Insured Money purchase plans are not insured Vesting Full vesting after completing 5 years of service or at retirement age of 65Benefit Formula VESC will contribute a set 10% of annual earnings to the employee’s account up to

$53,000 Formula Calculations:To further explain how the money purchase plan works, an example is provided in the following table:

At VESC we have a senior Engineer, John, who is 56 years old and has been with VESC for 24 years. He has an annual salary of $135,000 and chooses to match employer contributions of 10% to his money purchase plan.

Salary AllowedCompensation(2014 ERISA allows up to $265,000)

Years of Service

Contribution 10% ($135,000 * .10)

Years to Retirement

Sum of Annuity of $1 at 10%

Potential Sum of Retirement(Annuity sum at 10% * annual contribution)

$135,000 $135,000 24 $13,500 9 13.579 $183,316

The final sums of your retirement benefits vary by length of service, annual salary, retirement age, and matching contributions by employee and by VESC

Creditable Service:VESC counts services during times of approved leaves of absences, mandatory leaves for public service (jury duty, military service, etc.) and periods defined under in long term disability, services considered as creditable services. Part-time service is counted accordingly as it is. Vesting Schedule:VESC. uses a cliff vesting option for its employees. Employees are given 100% ownership in their retirement plan after 6 years of service. Any termination or separation from VESC before that period, employees have no right to the matching contributions made by VESC See 401(k) Matching Contribution Vesting Schedule

Virginia Energy Savings Company 401 (K) Virginia Energy Savings Company offers employees Section 401 (k) plan, which is also called VESC 401(k) plan, supplement to a retirement plan. Employees have the opportunity contribute the maximum deferral of up to $18,000 on a pretax basis with Virginia Energy Savings Company cares about our employees and to show that we have an employer matching contributions to help build retirement savings. Our 401(k) plan offers you several options of investing with varying portfolios to allow your savings to grow in the future. The taxes are differed on the employer matching contributions, your pretax deferral, and your return on investments until withdraws are made from your account.

EligibilityIn order to be eligible for for Virginia Energy Savings Company 401(k) plan, you have to be a full-time employee, completed one year of continuous service with the company, and must have completed a minimum of 1,000 hours of services during a year. Enrollment starts on the first day of the following month when you have completed that first year of the year of service. The employee does not qualify for a 401(k) plan if he or she is no longer employed.

Employer Matching

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The employer matching contribution for any full-time employee will be 25 percent ($.25 for every $1.00) that the employee contributes, up to 5 percent of your salary.

VestingVirginia Energy Savings Company's matching contribute have a vesting schedule of 20 percent for each year of services and fully vested at after five years of services. Vesting is simply the right you have as a employee to your money in your 401(k) account. Here is an example of our vesting schedule, if you as an employee left VESC three years after joining the 401(k) plan and therefore you will have all the rights to your investments and 60 percent of the matching funds.

Vesting Schedule for Matching Contribution:

Completed Yeas of Services Percentage Vested on Employer’s Matching1 year 20%2 year 40%3 year 60%4 year 80%5 year 100%

Withdrawals Employees can withdraw from their VESC 401(k) plans for certain hardships, as long two conditions are met such as:1. In order to withdraw from the 401(k) plan it must be a necessary and severe financial hardship such as:-Medical expenses incurred by the participant or the participant's spouse or dependents-Funeral or burial expenses for certain family members-Preventing an eviction or foreclosure from a primary residence -Expenses for repair of damage to an employee's principal residence-Costs relating to the purchase of a principal residence -Tuition and related educational fees and expenses2. Funds from the VESC 401(k) plan are not available from any other resources. The requirements will be deemed met from the following circumstances:-Employee has obtain all distributions other than hardship distributions and non taxable loans are available -Distribution does not go over the amount that is needed for the hardship-Contributions will be suspended for 12 months after the distribution and the maximum contribution in the year following the suspension will be reduced by the amount contributed in the prior year.Loans under the VESC 401(k) PlanLoans taken from a VESC 401(k) plan has a minimum loan amount of $1,000 and maximum loan amount is either $50,000 or 50 percent whichever is less of the vesting balance. There are two different option of loans an employee can choose from:-General Purpose: 6 to 60 months to repay back the loan-Primary Residence: 61 to 180 months to repay back the loan. House, condominium, co-op, mobile home, new home construction are eligible residence.

InvestmentEmployee bears all risk of investments associated with VESC 401(k) Savings Accounts. You as the employee have several investment funds with Wells Fargo Bank, which you can select your own level of risk. -Virginia Energy Savings Company Stock Fund-Wells Fargo Mutual Fund Center-Invest Independently with WellsTradeFor more information contact a Wells Fargo Advisor, who can offer you the helpful support of an investment professional

Termination

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The VESC 401(k) plan will cease to exist when employment terminates.

Hypothetical LossesThe first loss/benefit payment scenario comes from the Life Insurance:Mr. Smith, a 35-year-old full-time employee who makes an annual base salary of $42,250 dies in an automobile accident on May 10, 2015 while leave church. The accident was not Mr. Smith fault. Claim was reported on three days after the investigation on May 13, 2015. Mr. Smith is covered though VESC Basic Life Insurance plan and Accidental Death & Dismemberment (AD&D).The Beneficiary will receive the following benefits:

1 ½ times pay of base salary or $63,375 from Prudential Insurance for basic life 1 ½ times pay of base salary or $63,375 from Prudential Insurance for AD&D

Total amount of benefits received is $126,750.00The second loss/benefit payment scenario comes from the Health Insurance:Ms. Jane, a 30-year-old full time employee who has an emergency where she has to stay in the hospital for four days with a cost of $300 per day for inpatient care. She also has to have 3 x-rays which cost $50 each. Ms. Jane has health insurance from VESC, her coverage is a PPO plan with a low deductible. Her coinsurance is 80/20, so she is responsible for 20 percent.

Inpatient Hospital Services is $300 per stay $300 times 4 days equals a total of $1,200 Her deductible is $650 $1,200 minus the deductible $650 equals $550 $550 * 20 percent equals $110 $650 deductible plus $110 equals $760 3 x-rays each cost $50 equals $150 Total expense $760 plus $150 equals $910 So Ms. Jane has to pay a total of $910.00

Conclusion

The management of VESC hopes that the benefits we offer are clear to you. Our studies indicate that our benefits package far exceeds the norms of our industry. We are very interested in your well-being, and this has motivated us to provide you with the best care possible. Should you have questions, please contact our HR department at 11-800-SAVINGS (728-4647) or email us at virginiaenergycorporate@vesc.com

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References Page

Employee Benefit and Retirement Planning Textbook by Leimberg and McFaddenEnterprise and Individual Risk Management by BaranoffInternal Revenue Service websiteDominion Resources websitePension Benefit Guaranty Corporation websiteNotes from class “Spotlight on your benefits” published by Department of Human Resources Management – Commonwealth of Virginia

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This is a comparison of someone at Dominion Resources:

Dominion Medical Plan Summary of Benefits and Coverage Details: Anthem** Option C

Website: anthem.com 1-800-348-1966;

Cost Sharing

Annual Individual Deductible $476 (in-network & out of network services combined to satisfy deductibleAnnual Family Deductible $952 (in-network & out of network services combined to satisfy deductibleOut of Network Annual: Individual $476; Family $952; in-network & out of network services combined to satisfy deductible Lifetime Maximum: In network and Out of Net Work – No limitCoinsurance Percentage: In Network: 80% covered; after the deductible is metCoinsurance Percentage: Out of Network: 60% covered; after the deductible is metAnnual Individual Out of Pocket Maximum $1912; includes deductible (in-network)Annual Family Out of Pocket Maximum $3824; includes deductible (in-network)Out of Network Annual Individual Out of Pocket Maximum $3,346Out of Network Annual Family Out of Pocket Maximum $6,692

Outpatient Services Option CPrimary Care (PCP) Office Copay: In Network: 80% covered; after the deductible is met Out of Network: 60% covered; after the deductible is metSpecialist Copay: In Network: 80% covered; after the deductible is met Out of Network: 60% covered; after the deductible is met

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Preventive Care Option CRoutine Exams In Network 100% Covered; Out of Network Not coveredOther Preventive Services In Network 100% Covered; Out of Network Not coveredWell woman exam (includes pap) In Network 100% Covered; Out of Network Not coveredMammogram In Network 100% Covered; Out of Network Not coveredImmunizations In Network 100% Covered; Out of Network Not coveredPediatric Exams In Network 100% Covered; Out of Network Not coveredImmunizations (child) In Network 100% Covered; Out of Network Not covered

Outpatient CareOutpatient lab/x-ray services In Network 80% Covered after deductible is met; Out of Network: 60% Covered after the deductible is metOutpatient X-ray In Network 80% Covered after deductible is met; Out of Network: 60% Covered after the deductible is metOutpatient surgery In Network 80% Covered after deductible is met; Out of Network: 60% Covered after the deductible is metPhysical/Occupational therapy surgery In Network 80% Covered after deductible is met; Out of Network: 60% Covered after the deductible is met

Family Planning/Maternity CareOffice Visit: Pre/postnatal In Network 80% Covered after deductible is met; Out of Network: 60% Covered after the deductible is met

HearingHearing Exams In Network: Not Covered Out of Network: Not Covered Hearing Aids In Network: Not Covered

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Out of Network: Not Covered

VisionRoutine Vision Exams In Network: Not Covered Out of Network: Not Covered Glasses/contact lenses In Network: Not Covered Out of Network: Not Covered

Inpatient ServicesInpatient CareInpatient lab and X-ray In Network: 80% covered; after deductible is met Out of Network: 60% covered; after deductible is met; subject to network allowance Inpatient physician and surgeon services In Network: 80% covered; after deductible is met Out of Network: 60% covered; after deductible is met; subject to network allowance

Inpatient Room and BoardHospital Copay In Network: Not applicable; Out of Network: Not applicable Inpatient Hospital In Network: 80% covered after deductible is met; preauthorization required; Out of Network: 60% covered after deductible is met; preauthorization required

Emergency CareEmergency Room (not followed by admission) In Network $100 copay (copay waived if admitted)

then 80% covered after deductible is met;

Out of Network $100 copay (copay waived if admitted) then 80% covered after deductible is met

Urgent Care Clinic Visit In Network: 80% covered after deductible is met Out of Network: 60% covered after deductible is metAmbulance Services 80% covered after deductible is met

**Anthem; P. O. Box 105187 Atlanta GA 30348-5187

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Basic Services Continued:Routine Extractions, Endodontics (root canal therapy),Periodontics, Gingivoplasty or gingivectomy:In Network 90% covered; Out of Network: 80% Covered

Emergency Treatment for dental plan In Network: 100% covered; Out of Network: 100% Covered

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Tints In Network Covered in full; Out of Network: Not Covered

Frame Benefits In Network $0 copay; $80 retail allowance; 20% discount off balance over $80; limited to one pair every other calendar year Out of Network Up to $65 reimbursement; limited to one pair every other calendar year

Contact LensesMedically Necessary lenses In Network covered in full; Out of Network up to $100 reimbursement

Elective Lenses In Network $0 copay; Up to $110 retail allowance; 15% discount off balance over $110; limited to one pair every calendar year; in lieu of spectable lenses.

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Out of Network Up to $100 reimbursement

EyeMed Vision Care 4000 Luxottica Place Mason, Ohio 45040

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