Retiree Benefits Enrollment Guide

Guide to 2009 benefits enrollment for IBM retirees

choose

well

what’s inside
Welcome to Annual Enrollment for 2009............................ 1 What’s New for 2009 ........................ 2 Your IBM Health Benefits
IBM Medical Options If You Are Not Eligible for Medicare .................................. 4 If You Are Eligible for Medicare .................................. 6 Prescription Drug Benefit Overview ......................... 12 IBM Dental Options ............................ 14 IBM Vision Options ............................. 16

when you’re ready to

enroll

You can enroll or make changes to your coverage online, via NetBenefits®:

1. 2. 3. 4.

Log on to www.netbenefits.com. On the Health & Insurance tab, select Get Started Now to begin your enrollment. When you’re satisfied with your elections, select Save Your Benefits on the Benefit Elections page; your elections will not be saved otherwise. The elections listed will be recorded as your new coverage and displayed on a confirmation screen. Save the confirmation number and print the page for your records. The confirmation screen will also direct you to any follow up activities to complete your enrollment.

Additional Enrollment Information
Special Enrollment Instructions for Medicare Advantage Plans ............ 17 To Enroll in a Health Savings Account ................................. 18 Confirmation of Your 2009 Benefits .... 18

IMPORTANT: Enrollment via NetBenefits is not available for the Aetna Medicare Open Plan (PFFS), Aetna Golden Medicare Plan (HMO), and other Medicare Advantage/ Cost health plans; see page 17 for instructions on enrolling in these medical options. You can also call the IBM Employee Services Center at 1-800-796-9876 to speak with a service representative on business days (excluding holidays recognized by the New York Stock Exchange) between 8:30 a.m. and 8:30 p.m. Eastern time. Special Service Numbers • Deaf and Hard of Hearing Access: 1-800-426-6537, available on business days (excluding holidays recognized by the New York Stock Exchange) between 8:30 a.m. and 6 p.m. Eastern time. • Overseas Access: Dial your country’s toll-free AT&T Direct® access number, then enter 800-796-9876. In the U.S., call 1-800-331-1140 to obtain AT&T Direct access numbers. From anywhere in the world, access numbers are available online at www.att.com/traveler or from your local operator. Enrollment for 2009 • Thursday, Oct. 30 — Friday, Nov. 21, 2008

Coverage for Your Family ............... 19 Other Programs and Services Available to IBM Retirees ................ 23 Contact Information ......................... 26 Administrative and Legal Information .............................. 28 For More Information
This guide summarizes the key features of your IBM health benefits. For detailed information on all of your retiree benefit plans, including covered services and exclusions, refer to About Your Benefits: Post-Employment, the IBM Summary Plan Description. Copies are available in the Reference Library on NetBenefits®, or by calling the IBM Employee Services Center at 1-800-796-9876. This guide is also available on compact disc (CD) by calling the IBM Employee Services Center.

Welcome to Annual Enrollment for 2009

welcome to annual enrollment for 2009
Annual enrollment is your opportunity to select your health benefits for the upcoming year. This guide will help, with an overview of IBM medical, dental and vision options, including useful feature comparison charts. IBM continuously looks for ways to expand your choices with lower-cost options. We will again offer medical options available through our association with Retiree Health AccessSM, an initiative/program sponsored by the Human Resources Policy Association (HRPA) and led by IBM. HRPA brings together the senior human resource executives of more than 250 of the largest U.S. employers, using the collective power of its membership to influence policy on health care, among other issues. Many of you will find these options very attractive — in many cases, the Retiree Health AccessSM options available from Aetna will offer lower costs than the IBM-only plans. You’ll find details about these options beginning on page 4 (for those not eligible for Medicare) and page 6 (for those eligible for Medicare) and in the enclosed comparison charts. Here’s a quick look ahead for 2009: • IBM is introducing GenericsAdvantage, a new component of the IBM Managed Pharmacy program that reduces your out-of-pocket costs when you buy generic instead of brand name prescription drugs under IBM medical options. See page 2 for details. • Two new Medicare Integration plans, offered through Retiree Health AccessSM, will be available to those eligible for Medicare. For more information, see page 2. • IBM will continue to offer “contribution-free” medical options*: – For non-Medicare eligible retirees, the IBM High Deductible PPO is available at no cost for retiree-only coverage.
*Note: Except for those eligible for the Future Health Account and Access-Only.

– For Medicare-eligible retirees, the IBM Medical Supplement option is available at no cost for all levels of coverage. – For Medicare-eligible retirees in some areas, two Retiree Health AccessSM options will also be available at no cost. • For most other IBM medical options, monthly contributions will increase — particularly if you cover a spouse/domestic partner or other eligible family members. • IBM will again share a portion of the federal government’s Medicare prescription drug reimbursement with our participants, lowering monthly contribution amounts $18 for individual coverage and $36 for Medicareeligible couples. IBM expects to share this subsidy with you as long as it is available. • Out-of-pocket costs — deductibles, copayments and coinsurance — for IBM retiree medical plan options have not increased in several years. • Your cost for coverage under most dental options will increase slightly; costs for vision coverage will not increase. As you make your benefit choices, consider what your total costs for coverage and care are likely to be under each option. While cost is important, it’s only part of the value equation. Think about your medical needs and those of the family members you cover, as well as how you access care under each option. The comparison charts and Health Plan Detail Sheets in your enrollment package include important information. Please note that you will only receive Health Plan Detail Sheets for fully insured medical and dental plans, if available in your area. For IBM’s self-insured medical and dental options, please refer to the enclosed comparison charts for medical coverage information and page 14 of this guide for dental coverage details. Contact information is available beginning on page 26.

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what’s new for 2009
Additional Retiree Health AccessSM Medical Options Available
For 2009, IBM will offer three Retiree Health AccessSM plans introduced a year ago, while adding two new plans for Medicare-eligible participants. Your Retiree Health AccessSM medical options depend on your eligibility for Medicare, as follows: • For non-Medicare eligible participants: – Aetna Open Choice PPO • For Medicare-eligible participants: – Aetna Medicare Open Plan (PFFS) (a Medicare Advantage private feefor-service plan) – Aetna Golden Medicare Plan (HMO) (a Medicare Advantage HMO plan, if available in your area) – New: Aetna Traditional Choice® Medicare Integration Plan A – New: Aetna Traditional Choice® Medicare Integration Plan B drug instead, you will pay the full* generic coinsurance plus the difference in cost between the generic and brand name drug. (*Note: The $20 per prescription maximum will not apply as it usually would for Medco participating pharmacies and mail order prescriptions.) However, • If your physician validates it is clinically indicated for you to use the brand name drug, you will only pay the brand name coinsurance (and not the difference in cost). • To ensure no disruption with your current prescriptions, if you’re currently using a brand name drug for which there is a generic equivalent, you will not be required at this time to alter your medical therapy unless you choose to. Medco, IBM’s pharmacy partner, will be introducing GenericsIncentive in 2009 — an opportunity to convert from a brand name drug to the generic equivalent and receive a free three-month supply of the generic medication by mail. Watch for details on this program in early 2009. Also as of Jan. 1, 2009, you will be able to refill your retail and mail prescriptions when you’ve used 65% of the medication you have on hand. Prior Authorization for Specialty Medications Effective Jan. 1, 2009, if you require a new prescription for a specialty medication, your doctor will first need to contact a Medco pharmacist for authorization to confirm that the treatment complies with standard clinical guidelines. This requirement will help ensure that you receive the proper drug, dose and treatment based on your diagnosis. If you are currently using one of these medications, a Medco review will not be required at this time.
Note: These program changes do not apply to those enrolled in HMOs or the IBM PPO with Health Savings Account.

IBM Managed Pharmacy Program
Use Generics and Save Money IBM is introducing GenericsAdvantage, a new component of the IBM Managed Pharmacy Program that reduces your out-of-pocket costs when you buy generic instead of brand name prescription drugs. According to the U.S. Food and Drug Administration, “A generic drug is identical, or bioequivalent to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price.” Beginning in 2009, for any new prescriptions, if a generic equivalent (identical active ingredient) is available and you choose a brand name

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

What’s New for 2009

Health Savings Account (HSA) Contribution Limits for 2009
A health savings account helps you pay for current eligible expenses or save for future health care needs. Unused savings remain invested, and any interest and investment earnings are not subject to federal taxes. You can use savings to pay for • your out-of-pocket expenses — including prescription drugs, deductibles and coinsurance — that are also eligible expenses under the IBM High Deductible PPO with HSA • certain medical expenses — such as laser eye surgery, hearing aids and batteries, and acupuncture — that the IRS considers “qualified medical expenses” • long-term care insurance premiums, subject to certain limits • premiums for COBRA coverage • Medicare premiums, once you are enrolled in Medicare

If you are not eligible for Medicare and enroll in the IBM High Deductible PPO with HSA, you may contribute up to $3,000 to a health savings account in 2009 and $5,950 if more than one individual is enrolled, according to IRS rules. If you are between the ages of 55 and 65, you can make an additional “catch-up” contribution of up to $1,000 in 2009.
Note: You may contribute up to the annual maximum amount, even if you are not enrolled in the IBM High Deductible PPO with HSA for the full calendar year. For more information about HSAs, refer to the 2009 Health Savings Account Participant Information for Non-Medicare Eligible Retirees document or About Your Benefits: Post-Employment, both available in the Reference Library on NetBenefits.

Please note that United Behavioral Health will change its name to OptumHealth Behavioral Solutions by United Behavioral Health, effective Jan. 1, 2009. This is a name change only; there will be no changes to the program and benefits.

IBM is introducing a new component of the IBM Managed Pharmacy Program –

GenericsAdvantage – that reduces your
out-of-pocket costs when you choose a generic instead of a brand name prescription drug.

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IBM Medical Options –
If You Are Not Eligible for Medicare
If you are not eligible for Medicare, you can choose from the medical options listed below. Your options (except the Aetna Open Choice PPO and HMOs, if available) will be administered by a single, regional health plan administrator, as indicated on your Personal Fact Sheet. However, certain services are provided through other administrators, as noted in the table below. Option IBM Low Deductible PPO IBM Medium Deductible PPO IBM High Deductible PPO IBM Exclusive Provider Organization IBM High Deductible PPO with HSA Aetna Open Choice PPO Typical HMO Medical Services Health plan Prescription Drugs Medco Mental Health/ Substance Abuse Optum Health Behavioral Solutions Optum Health Behavioral Solutions Health plan Optum Health Behavioral Solutions** Health plan Aetna HMO Condition/ Disease Management Matria

Health plan Health plan Health plan

Medco Medco Medco*

Matria Matria Matria**

Health plan Aetna HMO

Health plan*** Aetna HMO

Matria Aetna HMO

* Except IBM EPO – HealthPartners, which provides coverage directly for Medicare-eligible dependents ** Except IBM EPO – HealthPartners, which provides coverage directly *** If you enroll in the IBM High Deductible PPO with HSA administered by Empire BlueCross BlueShield, Empire will continue to provide prescription drug benefits through its new pharmacy benefit manager, WellPoint NextRx. You will receive further information directly from Empire. Note: If you live outside the network coverage area for the IBM self-insured options, you will be able to enroll in an Out-of-Area (OOA) option for the IBM Low, Medium and High Deductible PPO, and the IBM High Deductible PPO with HSA. Your Personal Fact Sheet will indicate whether you are eligible for these OOA options.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

IBM Medical Options – If You Are Not Eligible for Medicare

More about the Aetna Open Choice PPO
The Aetna Open Choice PPO is a fully-insured, high deductible, preferred provider organization plan. It offers the same type of coverage as other IBM options, but Aetna provides these services directly. The Aetna Open Choice PPO network is different from the networks available through other Aetna plans offered to you by IBM. You should call your providers and ask specifically whether they belong to the network. You can call Aetna at 1-800-248-9236 (TTY 1-800-325-4591) or log on to www.aetna.com and search under “Aetna Open Choice PPO” to determine if your provider is a member of the network. Under this type of plan, you meet a deductible, then pay a fixed fee (copayment) or percentage of the covered expense (coinsurance) — or a combination of both, depending on the service. A higher level of benefits is paid when you receive care from in-network providers. Application of the annual deductible and outof-pocket maximum for the Aetna Open Choice PPO works differently than it does under most other IBM medical options. The individual deductible and the out-of-pocket maximum applies only if you enroll for self-only coverage. If you enroll one or more dependents (in addition to yourself), the entire family deductible must be met before benefits are paid to any individual family member; and the entire out-ofpocket maximum must be met before certain benefits will be paid at 100%.
Note: According to guidelines governing the Retiree Health AccessSM program, the Aetna Open Choice PPO is not available to employees on Long-term Disability or the Medical Disability Income Plan. In addition, employees who retire based on years of service only must have attained 30 years of service as of Jan. 1, 2008, to be eligible to enroll in this option.

If You Choose No Coverage
Choose the No Coverage option only if you do not want IBM medical coverage — including prescription drug coverage — for 2009. If you decline coverage, you can enroll again in next year’s annual enrollment period for retirees, typically each fall, or if you experience a qualified status change during the year. However, if you are currently enrolled in No Coverage and want to enroll in the Aetna Open Choice PPO in 2009, or if you choose No Coverage for 2009 and wish to enroll at a future date, you will be required to provide proof of continuous coverage under another (non-IBM) employersponsored group medical plan in order to be eligible for the Aetna Open Choice PPO option.
Note: Participants in the Special Retiree Medical Option and those in Access-Only who do not enroll in IBM retiree health benefits for 2009 may not enroll during a future enrollment period and may not enroll for 2009 if not currently enrolled.

Meet MONICA and ROY
Monica and Roy are in their 50s. With their kids out of college, Monica left her job as a social worker to return to graduate school fulltime and has no other health care coverage. She has a thyroid condition, takes a generic medication and has periodic lab tests. Otherwise, she’s fairly healthy, although she may need outpatient surgery. Roy has allergies and suffers from a minor back injury. He visits his primary care physician and has seen a specialist about his back problem. Monica and Roy expect to have a fair amount of medical expenses next year, but with Monica in school, they don’t want the most expensive plan. They review the options available to them on their Personal Fact Sheet and examine the medical option comparison charts in their enrollment kit. DeCISION: They elect the IBM Medium Deductible PPO to limit their monthly contributions and to cover their prescription drug coverage needs.

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IBM Medical Options –
If You Are Eligible for Medicare
When you reach age 65 (or become eligible for Medicare due to disability), Medicare provides your primary coverage for medical services. All Medicare-eligible participants must be enrolled in Medicare Part A and Part B to be eligible for benefits under all IBM medical options, including Medicare Advantage and Medicare Integration plans. If you prefer Original Medicare coverage, you can choose one of these options that work with Original Medicare. • One of the following IBM-sponsored supplement options. Your choices include: – IBM Medical Supplement – IBM Medical/Prescription Drug Supplement – IBM Medical/Prescription Drug Supplement Plus – IBM Prescription Drug Supplement – Medicare Supplement HMOs, if available in your area OR • One of the two new Medicare Integration options offered through Retiree Health AccessSM. Your choices include: – Aetna Traditional Choice® Medicare Integration Plan A* – Aetna Traditional Choice® Medicare Integration Plan B* If you would like to enroll in a Medicare Advantage plan instead of Original Medicare, you can choose one of these options that will provide your Medicare coverage directly. • One of two options offered through Retiree Health AccessSM. Your choices include: – Aetna Medicare Open Plan (PFFS)* (a Medicare Advantage private fee-for-service plan) – Aetna Golden Medicare Plan (HMO)* (a Medicare Advantage HMO plan, if available in your area) • A Medicare Advantage/Cost health plan, if available in your area
Note: According to guidelines governing Retiree Health AccessSM, the Aetna Medicare Open Plan (PFFS), Aetna Golden Medicare Plan (HMO), and Aetna Traditional Choice® Medicare Integration Plans A and B are not available to employees on Long-term Disability or the Medical Disability Income Plan. In addition, employees who retire based on years of service only must have attained 30 years of service as of Jan. 1, 2008, to be eligible for Retiree Health AccessSM plans.

If You Choose No Coverage
Choose the No Coverage option only if you do not want IBM medical coverage — including prescription drug coverage — for 2009. If you decline coverage, you can enroll again during next year’s annual enrollment period for retirees, typically each fall, or if you experience a qualified status change during the year.
Note: Participants in the Special Retiree Medical Option and those in Access-Only who do not enroll in IBM retiree health benefits for 2009 may not enroll during a future enrollment period and may not enroll for 2009 if not currently enrolled.

How the IBM Supplement Options Work with Original Medicare
Original Medicare provides primary coverage for most medical services, and IBM Medicare Supplement options and Medicare Supplement HMOs provide secondary coverage. This means that Original Medicare pays its portion, then the IBM plan determines if any additional benefits are payable, as shown in the table on the following page.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

IBM Medical Options – If You Are Eligible for Medicare

Generally, the IBM supplement options and Original Medicare provide the same level of reimbursement for medical services. In most cases, the IBM Medicare Supplement options provide no additional benefits for medical services until you reach the plan’s annual out-of-pocket maximum, as shown in the table below. You pay the 20% Medicare coinsurance until your IBM plan out-ofpocket maximum is satisfied, except for routine preventive services. After you’ve reached the IBM plan’s out-of-pocket maximum, the IBM plan pays the 20% Medicare coinsurance. You Pay • Medicare Part A and Part B annual deductible • Your IBM plan annual deductible (includes Medicare Part A and Part B annual deductible) • 20% of Medicare’s allowed amount (Medicare coinsurance) for most medical services, until the IBM plan’s out-of-pocket maximum is satisfied Medicare Pays IBM Plan Pays • 80% of Medicare’s allowed amount for most medical services, after Medicare’s annual deductible is satisfied • 20% of Medicare’s allowed amount (Medicare coinsurance) for most medical services, after the IBM plan’s out-of-pocket maximum is satisfied

How the Aetna Traditional Choice® Medicare Integration Plans Work with Medicare
If you choose one of these options, your primary medical coverage will be provided by Medicare, and secondary coverage will be provided by the Medicare Integration plan. (These plans do not provide coverage for prescription drugs.) These plans pay eligible amounts not paid by Medicare, such as Medicare coinsurance amounts you would pay otherwise, coordinating your benefit so that when combined with the amount paid by Medicare, the total benefits paid or provided by all plans do not exceed 100% of the total allowable expense. This means that Original Medicare pays its portion, then the Medicare Integration plan generally pays the remaining portion, as shown in the table below. Medicare Integration Plan A also covers Medicare Part A and Part B annual deductible amounts. Medicare Integration Plan A You Pay 0% for eligible services, up to Medicare’s allowed amount Medicare Integration Plan B • Medicare Part A and Part B annual deductible • 0% for eligible services, up to Medicare’s allowed amount 80% of Medicare’s allowed amount for most medical services, after you pay Medicare’s annual deductible 20% of Medicare’s allowed amount (Medicare coinsurance) for most medical services

Medicare Pays

80% of Medicare’s allowed amount for most medical services, after the Medicare Integration plan pays Medicare’s annual deductible • Medicare Part A and Part B annual deductible • 20% of Medicare’s allowed amount (Medicare coinsurance) for most medical services

Medicare Integration Plan Pays

Note: Annual maximum of $500 applies for routine/preventive care
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Things to Consider Before Enrolling in an Aetna Traditional Choice® Medicare Integration Plan Are you eligible to enroll? You must be enrolled in Medicare Part A and Part B. Also, according to guidelines governing the Retiree Health AccessSM program, the Aetna Traditional Choice® Medicare Integration Plans are not available to employees on Long-term Disability or the Medical Disability Income Plan. In addition, employees who retire based on years of service only must have attained 30 years of service as of Jan. 1, 2008, to be eligible. Are you covering a non-Medicare eligible spouse or dependent? If you enroll in the Aetna Traditional Choice® Medicare Integration Plans A or B, any nonMedicare eligible dependent(s) will be covered by the Aetna Open Choice PPO. Do you have other coverage for prescription drugs? Aetna Traditional Choice® Medicare Integration plans provide coverage for medical services only; they do not provide coverage for prescription drugs.

• If you do not have other prescription drug coverage, you should consider enrolling in a Medicare Part D prescription drug program offered outside of IBM. • If you don’t enroll in Medicare Part D prescription drug coverage when you are first eligible, you will pay higher premiums if you enroll later, unless you can show you have been enrolled in a prescription drug plan that offers creditable coverage. Refer to page 12 for IBM medical options that offer creditable coverage.

How Medicare Advantage Plans Work
A Medicare Advantage plan provides your Medicare Part A and B coverage directly. You do not lose that coverage while enrolled; it is assigned to the Medicare Advantage plan while you are enrolled and you continue to pay your Part B premium to Medicare. Here’s how most Medicare Advantage plans work: • After you pay a copayment or coinsurance amount, the plan will generally cover the remainder of the cost of most eligible health care expenses — such as hospitalization, lab tests and doctor visits — up to the amount Medicare allows for the service. As a result, you won’t need Medicare supplemental coverage. • You have no claim forms to file. • Depending on the plan you choose: – You may be required to choose a primary care physician (PCP) to coordinate your care. – You may need to use providers in the plan’s network for benefits to be payable. – You may receive additional benefits not covered by Original Medicare — such as prescription drugs, vision services and products, and other discounts.

Meet STEVE and JANICE
Steve and Janice, both 71, are generally active and see their doctors regularly for routine checkups. Steve is scheduled for knee replacement surgery and Janice takes a generic prescription medication for high cholesterol. They are both enrolled in Medicare Part A and Part B and are currently enrolled in the IBM Medical Supplement Plan. Because they’re on a fixed income, they’re concerned about expenses. They consider the new Aetna Traditional Choice® Medicare Integration Plan A offered through Retiree Health AccessSM because they think their reimbursement level will be greater, saving them money. They realize they will need to purchase a Medicare Part D prescription drug plan on their own for prescription coverage. DeCISION: They elect the Aetna Traditional Choice® Medicare Integration Plan A because of the low monthly cost and what they conclude is the better value.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

IBM Medical Options – If You Are Eligible for Medicare

• Your out-of-pocket costs for care (copayments or coinsurance) may be lower compared with Original Medicare coverage. • Medicare Advantage plans, like many HMOs, are fully insured. This means that the health plan administers benefit provisions, appeals, and pays the cost of claims directly — unlike self-insured plans where IBM administers benefit provisions, appeals, and pays the cost of claims.

Aetna Medicare Open Plan (PFFS) and Aetna Golden Medicare Plan (HMO) You must be enrolled in both Medicare Part A and Part B to participate in these plans, which provide primary coverage for doctor visits, specialists, hospitalization and prescription drugs, as well as 100% coverage for certain preventive services.

Aetna Medicare Open Plan (PFFS) A private fee-for-service plan Primary care physician Referrals for specialty care How the plan pays for care Not required Not required Benefits are available if your provider accepts the plan’s terms and conditions and is a Medicare-eligible provider; see below for details Included

Aetna Golden Medicare Plan (HMO) An HMO Required Required Benefits are only available if you use the plan’s network of providers

Coverage for prescription drugs Discounts for vision products and services Other discounts available

Included

Available

Available

Special rates for massage therapy, acupuncture and chiropractic services, vitamins and nutritional supplements If your provider is eligible to receive Medicare payments and accepts Medicare assignment, and also accepts the Aetna Medicare Open Plan (PFFS)’s terms and conditions: • After you satisfy the plan’s deductible, you’ll pay a copayment or coinsurance for eligible covered services. • The plan will pay the remainder, up to the Medicare allowable charge for each service.

Your Costs for Care under the Aetna Medicare Open Plan (PFFS) Before you enroll in this option, you should ask your doctors, hospitals and other providers if they are eligible for Medicare payment and if they will accept this plan’s terms and conditions. IMPORTANT: Providers not eligible to receive Medicare payments are not covered under the Aetna Medicare Open Plan (PFFS) even if they agree to the plan’s terms and conditions.

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If your provider is eligible to receive Medicare payments but does not accept Medicare assignment, and also accepts the Aetna Medicare Open Plan (PFFS)’s terms and conditions: • After you satisfy the plan’s deductible, you’ll pay – a copayment or coinsurance for your care – up to 15% over the Medicare allowable charge for the service, if your provider “balance bills” you (This same provision applies under Original Medicare.) • The plan will pay up to the Medicare allowable charge for the service, less the copayment or coinsurance you pay.

If your provider is eligible to receive Medicare payments but does not accept the Aetna Medicare Open Plan (PFFS)’s terms and conditions: • You should seek covered services from another provider; providers are not required to accept this plan. • Providers who do not accept this plan may not render services to an Aetna Medicare Open Plan (PFFS) member, except in emergency situations.
Note: The Medicare-eligible status of a provider can be confirmed by calling 1-800-MEDICARE or through the Medicare Web site at www.medicare.gov.

Other Medicare Advantage/Cost Health Plans

Meet MARCIA and BOB
Bob, 70, and Marcia, 67, stay active with daily hikes and swimming lessons with their grandsons. They see their doctors regularly for routine checkups. Bob is scheduled for hip surgery in January and Marcia needs treatment for carpal tunnel syndrome. She also takes a generic prescription medication for high cholesterol. They are both enrolled in Medicare Part A and Part B. Marcia and Bob consider switching to the Aetna Medicare Open Plan (PFFS) offered through Retiree Health AccessSM. They confirm their current providers are eligible to receive payment under Medicare and agree to treat patients under this plan. They are happy that they are not required to choose a primary care physician or obtain referrals for their upcoming specialty care. They also know that they will receive coverage for Medicare Part A and Part B service and coverage for additional services not available through Original Medicare through this plan, such as coverage for preventive care and discounts on vision care. In addition, the plan has a lower deductible for the services they will need. They realize they need to pay their Medicare Part B premium just as they do today and, based on where they reside, like the idea of a lower monthly cost. DeCISION: They elect the Aetna Medicare Open Plan (PFFS) because of the lower monthly cost with a better level of coverage.

In some parts of the country, IBM is able to make other Medicare Advantage/Cost health plans (including HMOs) available. To determine if these plans are available in your area, refer to your Personal Fact Sheet. Some plans require that you receive care from its network of providers, while others offer a choice each time you receive care, with varying levels of coverage for in- and out-of-network services. For information on provisions for plans offered in your area, including whether the plan offers coverage for non-Medicare eligible dependents, review your Health Plan Detail Sheets. Thinking about a Medicare Advantage Plan? Here are Some Things to Consider… Are you eligible to enroll? You may not enroll in a Medicare Advantage plan if: • You are not enrolled in Medicare Part A and Part B. • You are participating in a hospice program.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

IBM Medical Options – If You Are Eligible for Medicare

• You have end-stage renal disease. (This limitation does not apply to the Aetna Medicare Open Plan (PFFS) and the Aetna Golden Medicare Plan (HMO).) • You live in a county that restricts enrollment in Medicare Advantage plans. Before enrolling, call the health plan to confirm that it is available in your county of residence. Contact information is available on the Health Plan Detail Sheet for the plan. The Aetna Medicare Open Plan (PFFS) is available nationwide.
Note: According to guidelines governing the Retiree Health AccessSM program, the Aetna Medicare Open Plan (PFFS) and Aetna Golden Medicare Plan (HMO) are not available to employees on Long-term Disability or the Medical Disability Income Plan. In addition, employees who retire based on years of service only must have attained 30 years of service as of Jan. 1, 2008, to be eligible for the Retiree Health AccessSM program.

Is your doctor a member of the Medicare Advantage HMO’s network? Some Medicare Advantage HMO plans require that you receive care through their network of physicians, hospitals and other providers in order to receive coverage. For a list of doctors, hospitals, pharmacies and other providers that belong to your health plan’s network, contact the health plan directly at the phone number (or Web site) shown on your Health Plan Detail Sheet. Are you currently enrolled in a Medicare Part D prescription drug plan? If you enroll in a Medicare Advantage Plan that provides coverage for prescription drugs, you may not also enroll in a separate Medicare prescription drug plan. Review your Health Plan Detail Sheets to determine if the Medicare Advantage plan provides coverage for prescription drugs. Are you enrolling in a Medicare Advantage plan for the first time? You’ll need to call the IBM Employee Services Center to enroll. You’ll need to have your Medicare ID card available to provide your Medicare Health Insurance Claim Number (HICN), as well as the HICN for any Medicare eligible dependents you are enrolling. Depending on the Medicare Advantage plan you select, the IBM Employee Services Center may direct you to contact the plan to complete a Centers for Medicare and Medicaid Services (CMS) enrollment form. See page 17 for more information.

Are you covering a non-Medicare eligible spouse or dependent? If so, keep in mind: • If you enroll in an Aetna Retiree Health AccessSM plan, your non-Medicare eligible dependents will be covered by the Aetna Open Choice PPO, which provides different coverage than Retiree Health AccessSM plans available to Medicare-eligible participants. • Not all Medicare Advantage/Cost health plans offer coverage for non-Medicare eligible dependents. If a plan is available in your area, the Health Plan Detail Sheet for the plan and your Personal Fact Sheet will indicate whether it provides coverage for non-Medicare eligible dependents. • If the Medicare Advantage/Cost health plan offers coverage for non-Medicare eligible dependents, that coverage may be different from Medicare coverage, and the Medicare network may differ from its non-Medicare network.

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Prescription Drug Benefit Overview
Most IBM options that provide prescription drug benefits meet Medicare’s “creditable coverage” standard, as shown in the table below. This means that for most options, IBM’s coverage, on average for all plan participants, is expected to pay out as much as the standard Medicare Part D prescription drug coverage. (Refer to IBM’s Notice of Creditable Coverage, included in this enrollment package, for a complete list of the medical options that offer creditable coverage and to the enclosed Medical Option Comparison Charts and Health Plan Detail Sheets for coverage details.) Annual Maximum Benefit Plan Pays (Per Covered Individual) Your options if you are NOT eligible for Medicare IBM Low Deductible PPO IBM Medium Deductible PPO IBM High Deductible PPO IBM Exclusive Provider Organization* IBM High Deductible PPO with HSA Aetna Open Choice PPO** Typical HMO Your options if you ARE eligible for Medicare IBM Medical Supplement IBM Medical/Prescription Drug Supplement IBM Medical/Prescription Drug Supplement Plus IBM Prescription Drug Supplement Aetna Medicare Open Plan (PFFS) Aetna Golden Medicare Plan (HMO) No coverage for prescription drugs $3,500 No limit No limit No limit No limit Yes Yes Yes Yes Yes Aetna Aetna Medco No limit $2,500 $1,000 No limit No limit No limit*** Yes Yes No Yes No Yes Varies by HMO Health Plan Aetna Medco

Provides Creditable Coverage

Administrator

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Prescription Drug Benefit Overview

Annual Maximum Benefit Plan Pays (Per Covered Individual) Aetna Traditional Choice® Medicare Integration Plan A Aetna Traditional Choice® Medicare Integration Plan B Medicare Advantage/Cost Health Plan Medicare Supplement HMO****

Provides Creditable Coverage

Administrator

No coverage for prescription drugs

Varies by Plan Varies by HMO

Health Plan HMO

* Under IBM EPO – Health Partners, prescription drug benefits for Medicare-eligible dependents are administered by the health plan rather than by Medco. ** Under the Aetna Open Choice PPO, some states may mandate a level of coverage that differs from the coverage shown on your Health Plan Detail Sheets. Contact Aetna directly for details. *** There is no limit on what Aetna Open Choice PPO pays in a calendar year; however, prescription drug benefits are included in the plan’s $1.25 million medical lifetime maximum. **** Prescription drug coverage for the IBM Medicare Supplement Plan administered by MVP Select Care is administered by Medco.

Keep in mind that: • You can enroll in an IBM medical option that provides coverage for prescription drugs OR a Medicare Part D prescription drug plan, but not both. • If you are enrolling in a medical plan option that does not offer prescription drug coverage (IBM Medical Supplement or one of the Aetna Traditional Choice® Medicare Integration plans) and don’t enroll in Medicare Part D prescription drug coverage when you are first eligible, you will pay higher premiums if you enroll later, unless you can show that you have been enrolled in a plan that offers creditable coverage.

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IBM Dental Options
The IBM dental options available to you depend on your retirement date, as shown below. Option Covered Services* Maximum Benefits Plan Pays Per Covered Individual • $9,000 lifetime maximum combined for all covered services in Option A & Option B • $1,500 lifetime maximum per covered individual for orthodontia, included in the $9,000 lifetime maximum • $9,000 lifetime maximum combined for all covered services in Option A & Option B • No limit for nonorthodontic covered services • $1,500 lifetime maximum per covered individual for orthodontia (combined with payments previously received under Option A) • No limit*** Other Provisions

Options if you retired or became eligible for LTD benefits before Jan. 1, 2000 Dental Option A • Preventive/diagnostic • Basic and major restorative care • Orthodontia • Dental implants** • $40 annual deductible per covered individual • Patient pays amount charged which exceeds the scheduled reimbursement level

Dental Option B

• Preventive/diagnostic • Basic and major restorative care

• Patient pays amount charged which exceeds the scheduled reimbursement level • Patient pays amount charged which exceeds in-network reimbursement percentage. • Patient pays amount charged which exceeds out-ofnetwork scheduled reimbursement level. • In-network coverage only

MetLife PDP

• Preventive/diagnostic • Basic restorative care • Major restorative care (in-network only) • Orthodontia (in-network only) • Dental implants (in-network only)**

CIGNA DMA (also referred to as CIGNA DHMA), if available

• Preventive/diagnostic • Basic and major restorative care • Orthodontia

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

IBM Dental Options

Option

Covered Services*

Maximum Benefits Plan Pays Per Covered Individual • $500 yearly maximum for all covered services, combined for in-network & out-of-network

Other Provisions

Options if you retired or became eligible for LTD benefits on or after Jan. 1, 2000 IBM Dental Basic • Preventive/diagnostic • Basic restorative care • Patient pays amount charged which exceeds in-network reimbursement percentage. • Patient pays amount charged which exceeds out-of-network usual & prevailing reimbursement level. • $50 per covered individual for out-ofnetwork services; waived for preventive/diagnostic and orthodontia • Patient pays amount charged which exceeds in-network reimbursement percentage. • Patient pays amount charged which exceeds out-of-network usual & prevailing reimbursement level. • In-network coverage only

IBM Dental Plus

• Preventive/diagnostic • Basic and major restorative care • Orthodontia • Dental implants**

• $2,000**** yearly maximum combined for all non-orthodontic covered services, combined for in-network & out-of-network • $1,500 lifetime maximum per covered individual for orthodontia

CIGNA DMA (also referred to as CIGNA DHMA), if available

• Preventive/diagnostic • Basic and major restorative care • Orthodontia

• No limit***

* Frequency and treatment limits apply; contact the plan administrator for details. ** A pretreatment estimate is required for implants and other related services. *** Additional payment required for atypical orthodontia cases. **** If you became eligible for LTD benefits on or after Jan. 1, 2000, special provisions apply under IBM Dental Plus; contact the plan administrator for details.

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IBM Vision Options

IBM Vision Options
Your vision options include • IBM Vision Plan: Provides benefits for eye exams and eyewear both within and outside the VSP network, along with the same discounts offered by the VSP Vision Card • VSP Vision Card: Provides a free vision discount card that lets you save money on eye exams, eyewear and other vision care services from VSP network providers IBM Vision Plan In-Network Out-of-Network Annual eye exam; one pair Annual eye exam; one pair of glasses or contact lenses; of glasses or contact lenses 20% discount on additional up to dollar limits below pairs of glasses not covered by the plan Plan pays full eligible charge Up to $35 Plan pays full eligible charge; • Single vision: up to $25 certain lens options not • Bifocal: up to $40 included • Trifocal: up to $55 Plan pays up to $120 for certain frames; you may pay a portion for others • Elective: up to $105 • Elective: up to $120 • Medically Necessary: no charge with prior approval • Lenticular: up to $80 Up to $35 VSP Vision Card Discounts on eyewear and associated vision services, available from providers in the VSP network 20% discount on VSP provider’s fee 20% discount off the retail price on complete pairs of prescription glasses, including a variety of lens options

Benefits Available

Annual Eye Exam Lenses

Frames

Contact Lenses

• Medically Necessary: up to $165

Laser Vision Correction Surgery Eligible Providers

Filing Claims

No benefit coverage but savings may be available for LASIK or PRK surgery; contact VSP for details Contact VSP or visit www.vsp.com/ibm for a list of providers in your area Providers file claims on your behalf

Not applicable

15% discount on VSP provider’s fee for contact lens exams (fitting and evaluation services). Discounts are not available for contact lenses. On average, 15% discount available

Contact VSP or visit www.vsp.com/ibm for a list of providers in your area You pay for services when No claims to file; received, then submit the bill discounts are provided to VSP for reimbursement at time of purchase or service See any provider

If you have questions about available discounts or benefits, or to locate a provider in the VSP network, contact VSP directly at 1-888-877-4426 or log on to www.vsp.com/ibm.
16 Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Additional Enrollment Information

Additional

Enrollment Information
Other Medicare Advantage/Cost Health Plans If you and/or any Medicare-eligible dependent will be enrolling for the first time, or leaving or changing Medicare Advantage/Cost health plans (except those offered through Retiree Health AccessSM) for 2009, you must complete the following before your new coverage will take effect. Note: If you are not changing your enrollment for 2009, no action is required.

Special enrollment Instructions for Medicare Advantage Plans
If you are eligible for Medicare, you and any Medicare-eligible dependents must be enrolled in Medicare Part A and Part B and continue to pay your Part B premium to enroll in any Medicare Advantage plan, including Retiree Health AccessSM medical options. Note: You will not be able to enroll via NetBenefits for these plans. Aetna Medicare Open Plan (PFFS) and Aetna Golden Medicare Plan (HMO) You will no longer need to complete U.S. Centers for Medicare and Medicaid Services (CMS) enrollment forms if you enroll in the Aetna Medicare Open Plan (PFFS) or Aetna Golden Medicare Plan (HMO) option. After you have made your benefit selection, simply call the IBM Employee Services Center at 1-800796-9876 to enroll. This means • no waiting for enrollment forms from Aetna • no complicated forms to complete • more timely issuance of ID cards
Note: CMS approval is still required for any new enrollment into these plan options. Once you enroll through the IBM Employee Services Center, upon receipt of your enrollment Aetna will confirm your eligibility with CMS.

1.

Call the IBM Employee Services Center to enroll. You will not be able to enroll in a Medicare Advantage/Cost health plan directly on NetBenefits. You need your Medicare ID card to provide your Medicare Health Insurance Claim Number (HICN). Depending on the Medicare Advantage plan you select, the IBM Employee Services Center may direct you to contact the plan to complete a Centers for Medicare and Medicaid Services (CMS) enrollment form. If required, call the health plan and request a CMS form for each Medicareeligible individual (i.e., a form for you and a form for your spouse, if he or she is Medicare-eligible). You should request an application form if you are enrolling in a Medicare Advantage/Cost health plan and a disenrollment form if you are leaving one. Complete the CMS form(s) and return it to the health plan. If you do not submit the special forms required, your enrollment(s) will not take effect and you will be automatically enrolled in the IBM Medical/ Prescription Drug Supplement option.

2.

If you and/or any Medicare-eligible dependent will be enrolling for the first time or changing to a different Retiree Health AccessSM Medicare Advantage plan option, you will need to call the IBM Employee Services Center to enroll. You will need your Medicare ID card to provide your Medicare Health Insurance Claim Number (HICN). You will also need to provide the HICN for any Medicare-eligible dependent you also wish to enroll.

3.

By enrolling in a Medicare Advantage plan, you acknowledge that the health plan will release your information to Medicare and other health plans as necessary for treatment, payment and health care operations.

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If you do not submit the special forms required to disenroll from a Medicare Advantage/Cost health plan, your enrollment in a new option will not take effect and your Medicare coverage will remain assigned to the Medicare Advantage/ Cost health plan. You may disenroll from a Medicare Advantage plan at any time during the year and resume coverage under the IBM Medical Supplement, IBM Medical/Prescription Drug Supplement, IBM Medical/Prescription Drug Supplement Plus or IBM Prescription Drug Supplement. You’ll need to contact the IBM Employee Services Center for disenrollment instructions and to enroll in another IBM medical option.

Your HSA is a separate account and is not an IBM-sponsored benefit plan. You are solely responsible for understanding and following any rules governing HSAs and how contributions may be used. You may be offered investment options for the funds deposited in your HSA and should direct all questions to the bank or other sponsoring institution. All investments have some degree of risk and you are responsible for any investment elections. IBM assumes no responsibility or liability for your participants’ investment elections. If you have questions about HSAs, contact a tax or financial consultant or review the HSA Information Document or About Your Benefits: Post-Employment, which are both available in the Reference Library on NetBenefits.

To enroll in a Health Savings Account (HSA)

1.

Select the IBM High Deductible PPO with HSA as your medical option. Note: Federal law does not permit you to contribute to an HSA if your spouse covers you or any eligible dependents under a different health plan, or if you or your spouse participates in a Health Care Spending Account. Open your HSA with the trustee who administers the HSA for your health plan. If you have questions, contact your plan’s trustee directly. Decide how much you’d like to contribute to your HSA in 2009. (See page 3 for details.)

Confirmation of Your 2009 Benefits
• If you make changes to your benefits for 2009, you will receive a confirmation statement in the mail after you complete your enrollment. If you enroll online via NetBenefits and provide an e-mail address, you will also receive an e-mail confirming the date and time you successfully completed your online enrollment, along with a confirmation number. • If you do not make changes, your Personal Fact Sheet is the confirmation of your benefits for 2009. You will not receive a separate confirmation statement in the mail.

2.

3.

Note: State tax laws differ, so consult your tax advisor. Distributions you take that are not used for qualified medical expenses will be subject to taxes and may include a 10% penalty.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Coverage for Your Family

Coverage for

Your Family
“qualifying child” by any other taxpayer, and (6) meet the full-time student requirements Depending on your retirement date, you may cover these eligible dependents: • If you retired on or before Dec. 31, 2004, you may only enroll those dependents in your IBM medical, dental and/or vision coverage who met dependent eligibility guidelines as of that date. Any new dependents — such as those you gain through marriage, birth or adoption — after Dec. 31, 2004 are not eligible to enroll in your IBM medical, dental and/or vision coverage. • If you retired on or after Jan. 1, 2005, only those dependents who meet dependent eligibility guidelines as of your retirement date will be eligible to enroll in your IBM medical, dental and/or vision coverage. You may not enroll dependents you gain after your retirement date (for example, a new spouse, or a dependent child acquired by birth, adoption or marriage). For additional information, refer to About Your Benefits: Post-Employment, available in the Reference Library on NetBenefits, or by requesting a copy from the IBM Employee Services Center. IRS Requirements for Certain Dependents According to federal tax laws, dependents must meet certain tax requirements to enroll in IBM health coverage on a tax-free basis. Dependents who meet the coverage requirements under the IBM plan, but do not meet the tax requirements, may still enroll in IBM health coverage; however, the value of their coverage will be considered imputed income to you and will be taxed accordingly.

Under the IBM retiree health benefits plan, you may choose coverage for your eligible family members, including your spouse (same or opposite gender) or domestic partner and eligible dependent children. Before deciding, be sure to review this important information.

eligible Dependents
The following individuals are considered eligible dependents: • Your spouse • An eligible domestic partner (see page 20) • Your natural and legally adopted unmarried children under the age of 19. They maintain eligibility up to age 23 as long as they are not employed full-time, are principally dependent upon you for maintenance and support, and meet the full-time student requirements. • Your unmarried stepchildren under age 23 if they (1) are not employed full-time, and (2) receive over 50 percent of their support from you, the retiree, for maintenance and support, and (3) when not in attendance at school, are “permanently residing in your household” in what is considered a “parent/ child relationship,” and (4) meet the full-time student requirements • Other unmarried children under age 23 will be considered eligible if IBM determines that they (1) are not employed full-time, and (2) receive over 50 percent of their support from you, and (3) when not in attendance at school, are permanently residing in your household in what is considered a “parent/child relationship,” and (4) are subject to a court order under which you, the retiree, have been granted permanent legal guardianship of the child’s person and property, and (5) cannot be claimed as a

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Dependent children who meet IBM’s requirements for coverage, but do not meet the federal income tax law requirements for tax free health coverage include: • Children under 19 who live with a grandparent or sibling outside your home for more than half the year. • Children of an eligible domestic partner whom you have not legally adopted. • Children of an IBM employee or retiree whom a non-IBM employee or retiree spouse claims as dependents on his or her federal income tax return, provided both parents are living in the same household and file their federal income tax returns under “married filing separately” status. If your dependent child is no longer eligible because he or she will not meet IBM’s eligibility requirements as of Jan. 1, 2009, you may elect to continue his or her coverage for up to 36 months under the Transitional Medical Program (TMP), which is made available through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). When you call to disenroll your child, please request that information about TMP coverage be mailed to your dependent. If your dependent’s coverage is discontinued, your costs will be automatically adjusted to reflect your new level of coverage. For Those Covering Same Gender Spouses or Domestic Partners Special tax rules apply if you enroll a same gender spouse or domestic partner in IBM medical, dental or vision coverage. For more information, refer to the Domestic Partner Information Guide available in the Reference Library on NetBenefits or call the IBM Employee Services Center to request a copy.

Eligibility Verification Eligibility for health care benefits is determined in accordance with the eligibility requirements described above and in About Your Benefits: Post-Employment. IBM may require documentation to support the eligibility of any dependent enrolled in an IBM benefit plan. If the plan administrator learns you have enrolled an individual who is not an eligible dependent, that individual will be removed from coverage and you may be required to repay any benefits paid on behalf of such individual. In addition, you may be subject to loss of eligibility under the plans. If you enroll an eligible dependent for tax-free coverage who is not eligible for taxfree coverage, appropriate corrective actions will be taken.
Note: In certain states, some fully insured plans (e.g., HMOs) may offer coverage directly to dependents who are not eligible for coverage under an IBM plan. Contact the plan directly if you have questions.

How Medical Coverage is Provided for Dependents
You and your spouse or other dependents must be enrolled in the same IBM retiree medical option, even if your eligibility for Medicare is different. Your IBM medical options are determined by your eligibility for Medicare, but coverage will be provided according to each individual’s eligibility for Medicare, as shown in the table on page 22. Coverage for Non-Medicare Eligible Dependents About Primary Coverage under IBM Medicare Supplement Options If you cover a non-Medicare eligible dependent under an IBM Medicare Supplement option: • Your dependent must satisfy the individual annual deductible amount before benefits are payable, except for prescription drugs and routine preventive care.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Coverage for Your Family

• After that, the plan generally pays the following for covered services: – 80% of the discounted rate for care from a UnitedHealthcare network provider OR – 80% of the billed or “usual & prevailing” amount for care from a non-network provider, whichever is less. – 100% of the discounted or usual & prevailing amount once your out-ofpocket expenses reach the plan’s annual out-of-pocket maximum (Dependents are urged to obtain services from UnitedHealthcare network providers to receive the network discounts; dependents who do not use UnitedHealthcare network providers will be responsible for paying any charges above usual & prevailing rates.) Precertification is required for inpatient hospital stays for non-Medicare eligible dependents to ensure the treatment is appropriate, effective and medically necessary. If you don’t receive approval, you may be responsible for paying the full cost, plus a $150 penalty. Remember, if you choose the IBM Prescription Drug Supplement option, your non-Medicare eligible dependent(s) will not have coverage for medical services through IBM. If You Enroll in the Aetna Medicare Open Plan (PFFS) or Aetna Golden Medicare Plan (HMO), or Aetna Traditional Choice® Medicare Integration Plan A or B Your non-Medicare eligible dependents will be covered by the Aetna Open Choice PPO. There will not be any cross-application of the family deductible, out-of-pocket maximum, lifetime maximum, or other financial accumulators between your plan and your non-Medicare eligible dependent’s plan. For more information about these plans, call Aetna.

If You Enroll in a Medicare Advantage/Cost Health Plan Your non-Medicare eligible dependents will be covered by the plan’s non-Medicare benefits, if it provides this type of coverage. If a plan is available in your area, the Health Plan Detail Sheet for the plan and your Personal Fact Sheet will indicate whether it provides coverage for non-Medicare eligible dependents. Coverage for Medicare-Eligible Dependents About Prescription Drug Coverage Medicare-eligible individuals may be enrolled in an IBM medical option that provides coverage for prescription drugs or a Medicare prescription drug plan, but not both. If your Medicare-eligible dependent enrolls in a Medicare prescription drug plan and is also covered under an IBM medical option that provides prescription drug coverage, his or her coverage under the IBM plan will end. About In-Network Benefits To receive the in-network level of benefits under the following medical options, Medicare-eligible individuals must receive services from a health plan network provider who also participates with Medicare: • IBM Low Deductible PPO • IBM Medium Deductible PPO • IBM High Deductible PPO • IBM Exclusive Provider Organization • IBM High Deductible PPO with HSA • Aetna Open Choice PPO

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How Medical Coverage is Provided for Dependents Coverage is provided according to each individual’s eligibility for Medicare, as shown in the table below.
Dependents who are NOT eligible for Medicare Medical services Options if YOU are NOT eligible for Medicare IBM Low Deductible PPO IBM Medium Deductible PPO IBM High Deductible PPO IBM Exclusive Provider Organization IBM High Deductible PPO with HSA Aetna Open Choice PPO Typical HMO Options if YOU ARE eligible for Medicare IBM Medical Supplement Primary coverage IBM Medical/Prescription Drug Supplement IBM Medical/Prescription Drug Supplement Plus IBM Prescription Drug Supplement Aetna Medicare Open Plan (PFFS) Aetna Golden Medicare Plan (HMO) Aetna Traditional Choice® Medicare Integration Plan A Aetna Traditional Choice® Medicare Integration Plan B Medicare Advantage/ Cost Plan Medicare Supplement HMO Primary coverage Primary coverage Primary coverage Secondary coverage, after Medicare Primary coverage Primary coverage under the Aetna Open Choice PPO Primary coverage No coverage Secondary coverage, after Medicare Secondary coverage, after Medicare Secondary coverage, after Medicare No coverage No coverage Primary coverage Primary coverage Primary coverage Primary coverage Primary coverage Secondary coverage, after Medicare Primary coverage Prescription drugs Dependents who ARE eligible for Medicare Medical services Prescription drugs

Medical option

No coverage

Primary coverage

Primary coverage

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Other Benefits, Programs and Services Available to IBMers

Other Programs and Services
Available to IBM Retirees
AfterIBM: Your Online Guide to Additional Programs for IBM Retirees
AfterIBM links to a variety of programs and resources available after you leave IBM. Visit www.ibm.com/employment/us/benefits/afteribm to learn more about • the Greater IBM Connection, the business network for current and former IBMers • On Demand Community, IBM’s network to help you expand the value and impact of your volunteer work • Retiree Charitable Contribution Campaign • the IBM Club for discounts on entertainment, leisure and recreational venues and events • Employee Purchase Program for PCs, notebooks, monitors and accessories • discounts on products, services and programs from IBM’s clients, partners and vendors • Thomas J. Watson Memorial Scholarship Program, an annual scholarship program that is open to children of IBM employees and retirees. Applications will be accepted for the 2009 Watson Scholarship program beginning September 2008. • community grants, including guidelines on how to apply for an IBM grant • matching grants, solutions and services available to eligible educational institutions • employment verification • jobs at IBM, because you may be reemployed as an IBM supplemental employee, provided that six months have passed from your date of retirement

employee Assistance Program
All benefits-eligible participants and their eligible family members have access to the Employee Assistance Program (EAP), which offers up to eight counseling sessions per situation per year at no cost to you. This benefit is available regardless of your benefits plan, or even if you elect No Coverage through IBM. To access the EAP, call Optum Health Behavioral Solutions’ referral line at 1-800-445-9720 (TTY: 1-800525-5668), available 24 hours a day, 7 days a week and staffed by licensed mental health professionals with clinical experience in treating a range of mental health and substance abuse care needs.

IBM Care Advantage Program
Available to non-Medicare-eligible participants*, the program gives you and any of your non-Medicare-eligible covered family members easy access to knowledgeable resources and support when you need medical care. The program offers you assistance in three ways: hospital precertification, care management and condition management.
*Note: Care Advantage is not available to those over age 65 enrolled in the IBM Prescription Drug Supplement, IBM Medical Supplement, IBM Medical/ Prescription Drug Supplement, IBM Medical/ Prescription Drug Supplement Plus, HMO, Retiree Health AccessSM or Medicare Advantage Plan options or to retirees or dependents who are eligible for Medicare. Similar services may be available through the health plan for HMO, Retiree Health AccessSM and Medicare Advantage options.
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If you require treatment for a significant medical condition, serious illness or injury, a Care Coordinator (a registered nurse from your health plan assigned to you and your family) can help you: • Learn about your illness, medical condition, or injury and treatment options. • Prepare for a healthy pregnancy. • Prepare for doctor visits to facilitate more productive discussions about your care. • Plan for your care after a hospital stay. • Precertify certain medical services, including hospitalization, and assess your need for home health care or other assistance, if necessary. Depending on your medical needs, a health care professional from your health plan may contact you directly. You may also call your health plan with a specific question about your treatment, or to request ongoing support. (See page 26 for contact information.)
Note: If you are enrolled in Aetna Open Choice PPO or an HMO, similar services may be provided by your health plan; contact the health plan for more information.

Assistance is available only after all other aid available from federal, state and other sources has been exhausted. Each case is individually reviewed to determine eligibility for IBM SCCAP assistance. Benefits, up to a lifetime maximum of $50,000 per child, are available until the child reaches age 23 or is no longer eligible under the IBM medical and dental plans, whichever occurs first. For more information, contact the IBM Employee Services Center.

UnitedHealthcare’s Optum Nurseline
If you enroll in the IBM Medical Supplement, IBM Medical/Prescription Drug Supplement or IBM Medical/Prescription Drug Supplement Plus option, you can call UnitedHealthcare’s Optum Nurseline service any time, day or night, to speak with a registered nurse who can • offer suggestions for self-care of an injury or illness • discuss the best course of action in routine or urgent care situations • provide information on general health care issues and diagnoses, chronic conditions, illness prevention, nutrition and fitness • suggest questions to ask your doctor You may also call to listen to any of the more than 1,100 health and well-being audio files available. To contact UnitedHealthcare’s Optum Nurseline, call 1-866-540-5920 (TTY: Call 1-800-855-2880 and ask for 1-866-540-5920).

IBM Special Care for Children Assistance Plan (SCCAP)
This plan provides reimbursement for certain expenses that are outside the scope of the coverage available under the IBM medical and dental plans for eligible children with mental retardation, physical disabilities or developmental disabilities.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Other Benefits, Programs and Services Available to IBMers

Crossover Claims Processing
If you enroll in the IBM Medical Supplement, IBM Medical/Prescription Drug Supplement or IBM Medical/Prescription Drug Supplement Plus option and register for crossover claims processing, UnitedHealthcare will credit your eligible Original Medicare Part A and Part B expenses to your IBM Supplement plan’s annual deductible and out-of-pocket maximum automatically. Using this process, UnitedHealthcare also pays any benefits to you automatically — you won’t need to submit claims. To register for crossover claims processing: • Call UnitedHealthcare to register by phone or request a crossover registration form. • You will need your Medicare ID number and suffix, located on your Medicare ID card, to complete your registration. • If your spouse is eligible for Medicare, you may enroll him or her at the same time. • Once you are registered (which can take four to six weeks while the Centers for Medicare and Medicaid Services activates the program), your Medicare Part A and Part B claims will be sent directly to UnitedHealthcare by your Medicare carrier.
Note: There is no need to re-register each year with UnitedHealthcare.

IBM Managed Pharmacy Program
The IBM Managed Pharmacy Program is available to those whose prescription drug coverage is administered by Medco (see page 12 for more information). • Coverage for short-term medication: You can use retail pharmacies for medication — such as an antibiotic for a sudden illness — for up to a 30-day supply. You’ll save money if you use a pharmacy that participates in Medco’s network. • Coverage for long-term medication: If you are taking medication for a chronic condition such as high blood pressure, you will receive benefits for a 30-day supply at a retail pharmacy (plus up to two refills) for the initial prescription only*. Subsequent refills must be ordered through Medco By Mail (mail order service) or you’ll pay the entire cost for the refill at the retail pharmacy.*
Note: If you are currently covered by the IBM Managed Pharmacy Program, are taking long-term medication and have filled an existing prescription three times, you must continue to order this medication through the Medco By Mail program.

• If your medication requires special handling: If you need covered prescription medication that requires special handling or administration — such as chemotherapy — and are currently receiving it through your doctor’s office or other treatment center, you can order it through Accredo, the Medco special care pharmacy. By ordering covered prescription medication this way, you may pay less for it overall. Additionally, you may be able to have it shipped directly to you or your doctor’s office at no additional charge. Contact Medco Member Services for more details. Please note that, effective Jan. 1, 2009, new provisions will apply to the IBM Managed Pharmacy Program. Refer to page 2 of this guide for more information.

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Contact Information
Administrator Medical Aetna Inc. Toll-free within the U.S.: 1-888-725-1841 Outside the U.S.: 1-860-273-0123 Aetna Open Choice Toll-free within the U.S.: PPO 1-800-248-9236 Aetna Golden Medicare Plan (HMO) Aetna Medicare Open Plan (PFFS) Aetna Traditional Choice® Medicare Integration Plans A and B CIGNA Outside the U.S.: 614-933-6000 Toll-free within the U.S.: 1-888-891-0751 Outside the U.S.: 614-933-6000 1-800-325-4591 1-800-628-3323 www.aetna.com Select Aetna Open Access Plans & Aetna Choice POS II www.aetna.com Select Aetna Open Choice PPO www.aetna.com Phone Number(s) TTY Number Web Site

1-800-325-4591

Toll-free within the U.S.: 1-800-244-6224 Outside the U.S.: 570-496-5803

1-800-266-1288

Prospective Members: www.cigna.com Existing Members: www.mycigna.com www.empireblue.com/ ibm www.health partners.com www.mvpselect care.com

Empire BlueCross Blue Shield IBM EPO – HealthPartners MVP-Select Care, Inc.

Toll-free within the U.S.: 1-800-238-6597 Outside U.S.: 1-845-695-4505 Toll-free within the U.S.: 1-800-883-2177 Outside the U.S.: 1-952-883-5000 Toll-free within the U.S.: 1-800-765-3773 Outside U.S. (call collect): 1-518-370-4793 Toll-free within the U.S.: Non-Medicare plans and all outof-area options: 1-877-222-4261 Medicare Plans: 1-866-540-5920 Toll-free outside the U.S.: 1-877-265-9200

1-800-241-6895

1-952-883-5127

1-800-662-1220

UnitedHealthcare

1-877-218-7138

www.myuhc.com ID = IBM Password = IBM

HMOs

See your Health Plan Detail Sheets for contact information.

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Contact Information

Administrator Medco

Phone Number(s) Toll-free within the U.S.: 1-800-987-5254 Outside the U.S.: 1-800-497-4641

TTY Number 1-800-289-1089

Web Site www.medco.com

IBM Managed Pharmacy Program

IBM Mental Health Care Program Optum Health Behavioral Solutions Dental MetLife Toll-free within the U.S.: 1-800-872-6963 Outside the U.S.: AT&T direct access number +800-962-1401 CIGNA DMA Toll-free within the U.S.: 1-800-367-1037 1-800-962-5169 www.cigna.com/ consumer/services/ dental www.vsp.com/ibm 1-800-843-2896 www.metlife.com/ mybenefits Toll-free within the U.S.: 1-800-445-9720 Outside the U.S.: 267-216-3277 1-800-525-5668 www.liveandwork well.com Password = IBM

Vision Vision Service Plan Toll-free within the U.S.: 1-888-877-4426 Outside the U.S.: 916-635-7373 Employee Assistance Program Optum Health Behavioral Solutions Toll-free within the U.S.: 1-800-445-9720 Outside the U.S.: 267-216-3277 Contact the health plan administrator directly. 1-800-586-0322 1-800-255-0135 (GA Relay) 1-800-227-5746 (GA Speech) 1-866-540-5920 Call 1-800-855-2880 and ask for 1-866-540-5920 www.Matria Cares.com/IBM CareAdvantage 1-800-525-5668 www.liveand workwell.com Password = IBM 1-800-428-4833

Care Advantage Programs Care Coordination Matria Healthcare, Inc. Condition Management Program Nurse Helplines UnitedHealthcare’s Optum Nurseline N/A

Other Health Plans

Contact the health plan administrator directly.

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Administrative and Legal Information
About IBM’s Contributions for Coverage
Since the early 1990s, IBM has contributed a fixed, average amount of money each year, which is allocated among participants. The amount IBM contributes each year, on average, depends on eligibility for Medicare and retirement date, as shown in the table below. When the cost of a particular plan exceeds the amount IBM contributes, retirees and surviving spouses pay the difference in monthly contributions. Retirement Date Before Jan. 1, 1992 On or after Jan. 1, 1992 Not Eligible for Medicare $7,500 $7,000 Eligible for Medicare $3,500 $3,000 Medicare; you will receive an ID card for the Aetna plan you enroll in and your dependent will receive a separate ID card for the Aetna Open Choice PPO. However, if you enrolled in one of these options for 2008 and will remain enrolled for 2009, you will not receive new ID cards. Prescription Drug: Under the IBM Managed Pharmacy Program, if your prescription drug benefits are currently provided by Medco and the medical option you select for 2009 also provides prescription drug coverage through Medco, you will not receive a new prescription drug ID card. If you enroll in the Aetna Open Choice PPO, Aetna Medicare Open Plan (PFFS) or Aetna Golden Medicare Plan (HMO), you will receive a separate ID card for your prescription drug benefit. If you enrolled in one of these options for 2008 and will remain enrolled for 2009, you will not receive new ID cards. Dental: If you are not currently enrolled in the CIGNA DMA but enroll for 2009, you will receive a dental ID card. Participants in Dental Option A, Dental Option B, MetLife PDP, IBM Dental Basic or IBM Dental Plus do not receive ID cards. Vision: You will receive a vision ID card if you are enrolled in No Coverage for 2008 and enroll in the IBM Vision Plan or VSP Vision Card for 2009.

If you are not eligible for Medicare, IBM medical benefits provide your primary coverage; therefore, IBM contributes, on average, a higher amount than for those whose primary coverage is provided by Medicare.
Note: Certain groups, including participants in the Special Retiree Medical Option and Access-Only, do not receive subsidized benefits. The IBM subsidy is delivered differently through the Future Health Account for more recent retirees.

About ID Cards
ID cards for 2009 will be mailed between late December and mid-January. If you have questions, contact the administrator for your medical, dental or vision option. Medical: You will receive new medical ID cards if: • You enroll in a new medical option for 2009. • You are eligible for Medicare and change your enrollment to or from a Medicare Advantage plan (including the Aetna Medicare Open Plan (PFFS), Aetna Golden Medicare Plan (HMO) or a Medicare Supplement HMO). • You enroll in the Aetna Medicare Open Plan (PFFS), Aetna Golden Medicare Plan (HMO), or Aetna Traditional Choice® Medicare Integration Plan A or B and cover a dependent who is not eligible for

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Enrollment for 2009: Thursday, Oct. 30, 2008 — Friday, Nov. 21, 2008

Administrative and Legal Information

Transition of Care
If your health plan administrator is changing or you are selecting a new medical option for 2009 and you or one of your covered dependents is currently undergoing treatment for certain serious medical conditions or prenatal/maternity care, you may be eligible to continue receiving in-network benefits for a limited period of time, even if your doctor does not belong to your new plan network. Contact the administrator of your new medical option for more information.
Note: Transition of care is not available in all HMOs. If you are considering enrolling in an HMO for 2009, contact the HMO directly to determine whether transition of care is available.

Your personal health information will remain confidential and will not be shared outside the administration of the plan. Conversations with a Care Coordinator or personal care manager are confidential as required by federal and state privacy laws. It is important to remember that care managers provide support and information, but their services are not intended to replace those of your doctor. In an emergency, seek medical treatment immediately.

HIPAA Notification
IBM’s Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy policy is available in the Reference Library on NetBenefits, or you may contact the IBM Employee Services Center to request a copy.

Qualified Status Changes
A qualified status change is a specific change to your family, employment or coverage status that enables you to make certain benefit changes during the calendar year. These types of changes are defined by Internal Revenue Code Section 125 and include events like marriage, birth of a child, death, divorce and other changes which affect benefits eligibility for you and/or your dependents. You must call the IBM Employee Services Center or log on to NetBenefits to make eligible changes to your coverage within 30 days of the date of the qualified status change; otherwise, you will not be able to make changes until the next annual enrollment period.

Women’s Health and Cancer Rights Act of 1998
The Women’s Health and Cancer Rights Act of 1998 requires all group health plans that provide medical and surgical benefits with respect to a mastectomy must provide coverage for • reconstruction of the breast on which the mastectomy has been performed • surgery and reconstruction of the other breast to produce a symmetrical appearance • prostheses and treatment of physical complications of all stages of the mastectomy, including lymphedema These services must be provided in a manner determined in consultation with the attending physician and the patient. This coverage may be subject to annual deductibles and copayment provisions applicable to other such medical and surgical benefits provided under the plan. Refer to your benefit plan description for deductibles and copayment information applicable to the plan in which you choose to enroll.

Protecting Your Privacy
Medical and pharmacy claims data and Health Risk Assessment results may be used to determine if you or a covered family member might be eligible for care management, condition management, or other voluntary health support programs. IBM does not have access to personally identifiable health information for any employee, retiree or dependent from any source, and is not involved in identifying or notifying Care Advantage health plan or Matria program participants.

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This guide applies to eligible participants in the IBM retiree medical plan. This includes those eligible for the Special Retiree Medical Option (SRMO) or Access-Only, individuals receiving Medical Disability Income Plan (MDIP) or Long-term Disability (LTD) Plan benefits, and those eligible for benefits under the Future Health Account. This enrollment guide is intended to provide an overview of certain plans and programs in which you may participate. It is not an official Summary Plan Description and does not provide full details. Complete details can be found in the formal plan documents, which are the complete and exclusive statement of the company’s obligations under the plan. The official plan documents shall govern in the event of a conflict between information contained in these or other documents and statements. The plan administrator retains exclusive authority and discretion to interpret the terms of the benefit plans and programs described herein. The company reserves the right, in its sole discretion, to amend, change, suspend, or terminate any benefit or other plan, program, practice or policy of the company, at any time. The company does not have any obligation to, and nothing contained in this enrollment guide shall be construed as creating an express or implied obligation or promise on the part of the company to, maintain, continue to offer, or make available such plans, programs, practices or policies. Eligibility to participate in a plan or program or receipt of benefits does not constitute a promise or right of continued employment or render any person an employee of IBM. IBM and its affiliated companies do not endorse any HMO or other provider, or represent or warrant the quality of the care they provide. The decision to choose any health plan option or use any provider is the participant’s responsibility. Not all of the plans and programs within this enrollment guide pertain to all of IBM’s affiliated companies. For more information, contact the IBM Employee Services Center at 1-800-796-9876 (TTY for deaf and hard of hearing: 1-800-426-6537). From outside the United States, dial your country’s toll-free AT&T Direct® access number, then enter 800-796-9876. In the U.S., call 1-800-331-1140 to obtain AT&T Direct access numbers. From anywhere in the world, access numbers are available online at www.att.com/traveler or from your local operator.
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